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09-0707_REGENCY THEATRES, INC_Participation AgreementPARTICIPATION AGREEMENT by and between SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY and REGENCY THEATRES, INC. DOCSOC/ 1339956v5/022299-0083 • 100. DEFINITIONS TABLE OF CONTENTS 200. AGENCY'S PURCHASE OF OPERATING COVENANT L-1 Page 201. Conveyance of Operating Covenant.............................................................................5 202. Operating Covenant Purchase Price..............................................................................5 203. Payment of Operating Covenant Purchase Price...........................................................5 204. Repayment of Operating Covenant Purchase Price......................................................5 205. Conditions Precedent to Payment of the Operating Covenant Purchase Price .............6 206. Representations and Warranties....................................................................................7 206.1 Agency Representations...................................................................................7 206.2 Participant's Representations............................................................................7 300. COVENANTS AND RESTRICTIONS....................................................................................8 301. Use in Accordance with Redevelopment Plan, Agreement and Operating Covenant.......................................................................................................................8 302. Operating Covenant.......................................................................................................8 302.1 Covenant to Operate Movie Theatre on Site....................................................8 302.2 No Competing Theatre; Operation to Maximize Sales and Use Tax Revenues........................................................................................................... 8 302.3 Default and Closure..........................................................................................8 302.4 Covenants to Run with Land............................................................................9 303. Use of the Site...............................................................................................................9 303.1 Compliance With Laws....................................................................................9 303.2 Maintenance......................................................................................................9 303.3 Hazardous Materials.........................................................................................9 304. Indemnification.............................................................................................................9 304.1 Generally...........................................................................................................9 304.2 Defense of Claims...........................................................................................10 304.3 Third Party Litigation Concerning Agreement...............................................10 305. Nondiscrimination Covenants....-.-... ......... ......... - ............ ......... Il 306. Insurance Requirements..............................................................................................12 306.1 Insurance Requirements..................................................................................12 306.2 Additional Insurance Requirements...............................................................13 307. Effect of Violation of the Terms and Provisions of this Agreement ...........................13 308. Recordation of Operating Covenant............................................................................13 309. E-Verify.......................................................................................................................14 400. DEFAULTS AND REMEDIES..............................................................................................14 401. Default.........................................................................................................................14 402. Institution of Legal Actions.........................................................................................14 403. Termination by Participant..........................................................................................14 404. Termination by Agency...............................................................................................15 405. Repayment of Operating Covenant Purchase Price in Event of Default.....................15 406. Acceptance of Service of Process...............................................................................15 407. Rights and Remedies Are Cumulative........................................................................15 408. Inaction Not a Waiver of Default................................................................................15 409. Applicable Law...........................................................................................................15 410. Attorneys' Fees...........................................................................................................16 DOCSOC/1339956v5/022299-0083 0 0 Table of Contents (Continued) Page 500, GENERAL PROVISIONS......................................................................................................16 Attachment No. 501. Notices, Demands and Communications Between the Parties... ... ............................. 16 502. Enforced Delay; Extension of Times of Performance................................................16 Attachment No. 503. Transfers of Interest in Site or Agreement..................................................................17 5 Attachment No. 503.1 Prohibition......................................................................................................17 503.2 Permitted Transfers.........................................................................................17 503.3 Agency Consideration of Requested Transfer................................................18 503.4 Assignment and Assumption Agreement.......................................................18 503.5 Successors and Assigns..................................................................................18 503.6 Assignment by Agency...................................................................................18 504. Non Liability of Officials and Employees of Agency.................................................18 505. Relationship Between Agency and Participant...........................................................18 506. City as Third Party Beneficiary...................................................................................18 507. Agency Approvals and Actions...................................................................................19 508. Counterparts................................................................................................................19 509. Integration...................................................................................................................19 510. Titles and Captions...................................................................................................... 19 511. Interpretation...............................................................................................................19 512. No Waiver...................................................................................................................19 513. Modifications..............................................................................................................19 514. Severability.................................................................................................................19 515. Computation of Time... ............................................................................................... 20 516. Legal Advice...............................................................................................................20 517. Time of Essence..........................................................................................................20 518. Cooperation.................................................................................................................20 519. Conflicts of Interest.....................................................................................................20 ATTACHMENTS Attachment No. 1 Attachment No, 2 Attachment No. 3 Attachment No. 4 Attachment No. 5 Attachment No. 6 Legal Description Operating Covenant Certificate of Compliance Personal Guaranty Consent of Spouse Movie Theatre Description ii DOCS001339956v5/022299-0083 PARTICIPATION AGREEMENT This PARTICIPATION AGREEMENT ("Agreement") is entered into as of July 7, 2009 ("Date of Agreement") by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and REGENCY THEATRES, INC., a California corporation ("Participant"). RECITALS A. Agency is a California redevelopment agency duly formed and exercising powers pursuant to the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("Redevelopment Law"). B. Participant has entered into the Theatre Lease (defined below) with Alfa Plaza, LLC ("Owner") to lease from Owner certain real property generally located at 26762 Verdugo Street in the City of San Juan Capistrano ("Site"). The Site is more particularly described in the Theatre Lease and the Legal Description. The Site is located in Agency's San Juan Capistrano Central Redevelopment Project ("Redevelopment Project"). C. The Site is currently developed with a movie theatre shell. The Owner is in the process of rehabilitating and remodeling the structure currently located at the Site to enable a portion of the Site to be leased to Participant for use and operation as a four (4) screen Regency Theatres brand movie theatre with a concession stand and V.I.P. area (collectively, "Movie Theatre"). In addition, Owner is remodeling other portions of the Site for operation by other, unrelated entities as a coffee shop, ice cream parlor, or other, similar businesses. D. Agency and Participant now desire for Participant to operate the Movie Theatre at the Site E. The Redevelopment Plan for the Redevelopment Project provides for Agency to encourage owners and tenants of real property within the Redevelopment Project to participate in the redevelopment of their property and authorizes Agency to acquire any interest in real property. F. The parties desire to enter into this Agreement in order to provide for Agency's purchase from Participant of the Operating Covenant, an interest in real property, as described in more detail herein. In consideration of Participant's sale of the Operating Covenant to Agency, this Agreement provides for Agency to pay the Operating Covenant Purchase Price to Participant and for Participant to repay the Operating Covenant Purchase Price to Agency in ten (10) equal, annual installments, without interest. G. The operation by Participant of the Movie Theatre on the Site, as provided for in this Agreement, is in the vital and best interest of the City of San Juan Capistrano and the welfare of its residents and is in accordance with the public purposes and provisions of applicable state and local laws. NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agency and Participant hereby agree as follows: DOCSOCI 1339956v5(022299-0083 0 100. DEFINITIONS • All terms not otherwise defined herein shall have the meanings set forth below: "Agency" means the San Juan Capistrano Community Redevelopment Agency, 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, and any assignee of or successor to its rights, powers and responsibilities. "Agreement" means this Participation Agreement between Agency and Participant. "CertiTcate of Compliance" means the Certificate of Continuing Compliance with Operating Covenant and Participation Agreement in the form set forth as Attachment No. 3 and incorporated herein. "City" means the City of San Juan Capistrano, California. "Claims" means any and all claims, actions, suits, proceedings, losses, costs, damages, liabilities, deficiencies, fines, penalties, punitive damages, or expenses (including, without limitation, attorneys' fees, expert witness fees, and court and litigation costs). "Closure" means the failure of Participant to operate the Movie Theatre on the Site for thirty (30) or more consecutive days, other than for reasons of Enforced Delay. "Conditions Precedent" means the conditions precedent to Agency's obligation to pay the Operating Covenant Purchase Price described in Section 205. "Consent of Spouse" means the Consent of Spouse set forth as Attachment No. 5 and incorporated herein, which shall be executed by the spouse of Lyndon Golin as a Condition Precedent to payment of the Operating Covenant Purchase Price. "County" means the County of Orange, California. "Date ofAgreement" means the date set forth in the first paragraph hereof. "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 401 hereof. "Enforced Delay" is defined in Section 502. "Environmental Law" means any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117, 25122.7 or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (vi) Section 1004 of DOCSOC/1339956v5/022299-0083 0 0 the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seg. (42 U.S.C. Section 6903), (vii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., or (viii) any state or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction over Participant or the Site. "Executive Director" means the Agency's Executive Director or his authorized designee. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the City, or any other political subdivision in which the Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over Agency, the Participant or the Site, including, without limitation, all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City Municipal Code, all applicable disabled and handicapped access requirements, all applicable federal, state, and local public works requirements, including the requirement to pay prevailing wages and hire apprentices pursuant to Labor Code Section 1720 et seq., the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and all other applicable federal, state, and local laws. "Hazardous Materials" means any substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "acutely hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code. Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (ix) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), (x) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq. (42 U.S.C. Section 9601), (xi) Methyl - Tertiary Butyl Ether, or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to the environment. "Legal Description" means the legal description of the Site attached hereto as Attachment No. 1 and incorporated herein. 3 DOCSOC/1339956v5/022299-0083 0 9 "Movie Theatre" means a four (4) screen movie theatre, concession stand, V.I.P. area, and associated services and facilities to be operated by Participant at the Site under the Regency Theatres brand name or such other brand reasonably approved by Agency in its sole, exclusive discretion. The Movie Theatre shall at all times conform to the detailed Movie Theatre Description set forth in Attachment No. 6 and incorporated herein. "Movie Theatre Description" means the detailed description of the Movie Theatre set forth in Attachment No. 6 and incorporated herein, including the facilities and services required to be provided at the Movie Theatre throughout the entire Operating Covenant Period. "Notice" means a notice in the form prescribed by Section 501 hereof. "Operating Covenant" means the Operating Covenant which is attached hereto as Attachment No. 2 and incorporated herein. "Operating Covenant Period' shalt commence as of the date the Operating Covenant is executed and recorded against Participant's leasehold interest in the Site and continue for a period of ten (10) Years thereafter. "Operating Covenant Purchase Price" means the purchase price to be paid by Agency to Participant in exchange for the Operating Covenant. "Owner' means the owner of fee title to the Site, currently Alpha Plaza, LLC. "Participant" means Regency Theatres, Inc., a California corporation, and its permitted successors and assigns. "Participant Payment Date" is defined in Section 204. "Personal Guaranty" means the Personal Guaranty in substantially the form attached hereto as Attachment No. 4 and incorporated herein. "Redevelopment Law" means the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project, adopted on July 12, 1983 by Ordinance No. 488 of the City Council of the City of San Juan Capistrano, as the same has been and may be amended from time to time. "Redevelopment Project" means the San Juan Capistrano Central Redevelopment Project, adopted by the City Council of City pursuant to the Redevelopment Plan. "Regulatory Approvals" means any and all such approvals as may be required from the City or any other applicable governmental agency, to allow the Site to be operated and utilized as the Movie Theatre. "Sales and Use Tax Revenue" means that portion of taxes derived and received by the City and available in the City's general fund for unrestricted use from the imposition of the Sales Tax Law, on transactions having the Site as a point of sale. 4 DOCSOC/ 133995Ov5/022299-0083 "Sales Tax Law" means the Bradley Bums Uniform Local Sales and Use Tax Law, California Revenue and Taxation Code Section 7200, et seq., as amended, or any successor statute, law or regulation. "Site" means that certain real property generally located at 26762 Verdugo Street in the City of San Juan Capistrano, County of Orange, State of California, as more particularly described in the Theatre Lease and the Legal Description. "Theatre Lease" means that certain Theatre Lease by and between Owner and Participant, dated April 27, 2009, pursuant to which Participant shall lease the Site from Owner for a term of not fewer than ten (10) Years for purposes of operating the Movie Theatre thereon. "Transfer" is defined in Section 503.1 hereof. "Year" means a twelve (12) month period, the first of which shall commence on the first day following the date the Operating Covenant is recorded against the Site and terminate on the date which is twelve (12) months thereafter and the remainder of which shall commence on the day following the termination date of the previous Yearand terminate twelve (12) months thereafter. 200. AGENCY'S PURCHASE OF OPERATING COVENANT. 201. Conveyance of Operating Covenant. Participant hereby agrees to convey to Agency and Agency hereby agrees to purchase from Participant the Operating Covenant attached hereto as Attachment No. 2 and incorporated herein, subject to the terms, conditions, and restrictions set forth in this Agreement. The Operating Covenant shall be recorded against Participant's leasehold interest in the Site in the Official Records of Orange County, California concurrently with Agency's payment of the Operating Covenant Purchase Price. 202. Operating Covenant Purchase Price. In accordance with its authority as a redevelopment agency under the Redevelopment Law and in consideration of the sale by Participant to Agency of the covenants set forth in Section 300, et seq. hereof and in the Operating Covenant, Agency hereby agrees to pay to Participant Four Hundred Fifty Thousand Dollars ($450,000) ("Operating Covenant Purchase Price"). 203. Payment of Operating Covenant Purchase Price. Agency shall pay the Operating Covenant Purchase Price to Participant within thirty (30) days following satisfaction by Participant or waiver by Agency of each of the Conditions Precedent set forth in Section 205. The Operating Covenant Purchase Price shall be paid by Agency to Participant concurrently with execution and recordation of the Operating Covenant against Participant's leasehold interest in the Site and delivery of the Personal Guaranty to Agency. 204. Repayment of Operating Covenant Purchase Price. Participant shall repay the Operating Covenant Purchase Price to Agency in ten (10) equal annual installments of Forty -Five Thousand Dollars ($45,000), to be made on the last day of each of the first (I") through tenth (10`h) Years following recordation of the Operating Covenant against the Site ("Participant Payment Date"). Not later than thirty (30) days prior to each Participant Payment Date, Participant shall execute and deliver to Agency a Certificate of Compliance for the previous Year. In the event of a Closure or any Default hereunder or under the Operating Covenant which is not cured within the time set forth in Section 401, Participant shall immediately repay the entire Operating Covenant 5 DOC SOC/ 1339956v5/022299-0083 0 0 Purchase Price to Agency, plus interest on the outstanding remaining balance thereof at the rate of ten percent (10%) per annum. This repayment obligation shall be described in more detail in the Operating Covenant and guaranteed by execution and delivery to Agency of the Personal Guaranty by Lyndon Golin, Participant's President and sole shareholder. 205. Conditions Precedent to Payment of the Operating Covenant Purchase Price. Agency's obligation to pay the Operating Covenant Purchase Price is expressly conditioned upon the satisfaction by Participant of each of the Conditions Precedent (a) through (i), inclusive, described below. Such Conditions Precedent are solely for the benefit of the Agency, and shall be fulfilled by Participant (or waived by the Agency in its sole discretion) within the time periods provided for herein. (a) Completion of Movie Theatre Shell. All improvements to the Movie Theatre required to have been completed by Owner (as described in Exhibit "C" of the Theatre Lease) shall have been completed to the satisfaction of Agency. (b) Execution and Recordation of Operating Covenant. The Operating Covenant shall have been executed by Participant and delivered to Agency and shall be ready to be recorded against Participant's leasehold interest in the Site in a first, senior, non - subordinate lien position concurrently with Agency's payment of the Operating Covenant Purchase Price to Participant. Such Operating Covenant shall be and remain an encumbrance against Participant's leasehold interest in the Site in first lien priority until the end of the Operating Covenant Period. A Memorandum of Lease must be recorded against the Site to permit the Operating Covenant to be recorded against Regency's leasehold interest therein. (c) Delivery of Personal Guaranty and Consent of Spouse. The Personal Guaranty shall have been executed by Lyndon Golin and the Consent of Spouse shall have been executed by the spouse of Lyndon Golin; both documents shall have been delivered to Agency. (d) Theatre Lease. Participant and Owner shall have entered into the Theatre Lease and the Theatre Lease shall be in full force and effect. A Memorandum of Lease shall have been recorded against the Site. (e) E -Verify Program. Participant shall have provided a certification to Agency evidencing Participant's registration with E -Verify, along with Participant's E -Verify registration number, in accordance with Section 309. (f) Insurance. Participant shall have provided proof of insurance as required by Section 306 of this Agreement. (g) Regulatory Approvals. Participant shall have obtained any and all legally required Regulatory Approval(s) from the City and all other applicable govemmental agency(ies) related to Participant's lease of the Site and operation of the Movie Theatre thereon. (h) Payment of Taxes. No ad valorem real or personal property taxes or assessments assessed with respect to Participant's leasehold interest in the Site or ownership and/or operation of the Movie Theatre thereon shall be delinquent. 6 DOCSOC/1339956v5/022299-0083 (i) No Default. There shall exist no condition, covenant, event or act which would constitute an event of Default hereunder, or which, upon the giving of notice or the passage of time, or both, would constitute an event of Default. 0) Environmental Condition of the Site. Participant shall not be in Default of the requirements of this Agreement regarding the environmental condition of the Site. 206. Representations and Warranties. 206.1 Agency Representations. Agency represents and warrants to Participant as of the Date of Agreement as follows: (a) Agency is a public body, corporate and politic, existing pursuant to the Redevelopment Law, which has been authorized to transact business pursuant to action of the City Council of the City. (b) The execution, performance and delivery of this Agreement by Agency have been fully authorized by all requisite actions on the part of Agency. (c) Agency's execution, delivery and performance of its obligations under this Agreement will not constitute a Default or a breach under any contract, agreement or order to which Agency is a party or by which it is bound. Until the final disbursement of the Operating Covenant Purchase Price, Agency shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 206.1 not to be true as of such date, immediately give written notice of such fact or condition to Participant. Such exception(s) to a representation shall not be deemed a breach by Agency hereunder, but shall constitute an exception which Participant shall have a right to approve or disapprove, 206.2 Participant's Representations. Participant represents and warrants to Agency as of the Date of Agreement and until the expiration of the Operating Covenant Period as follows: (a) Authority. Participant has full right, power and lawful authority to undertake all obligations as provided herein. The execution, performance and delivery of this Agreement by Participant have been fully authorized by all requisite actions on the part of Participant. (b) Experience. Participant is an experienced operator of movie theatres and is authorized by the State of California to engage in the business of operating movie theatres. (c) No Conflict. To the best of Participant's knowledge, Participant's execution, delivery and performance of its obligations under this Agreement will not constitute a Default or a breach under any contract, agreement or order to which Participant is a party or by which it is bound. (d) No Participant Bankruptcy. Participant is not the subject of a current or threatened bankruptcy proceeding. 7 DOCSOCI 339956v51022299-6083 0 Until the expiration of the Operating Covenant Period, Participant shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 206.2 not to be true as of such date, immediately give written notice of such fact or condition to Agency. Such exception(s) to a representation shall not be deemed a breach by Participant hereunder, but shall constitute an exception which Agency shall have a right to approve or disapprove. 300. COVENANTS AND RESTRICTIONS 301. Use in Accordance with Redevelopment Plan, Agreement and Operating Covenant. Participant covenants and agrees to devote, use, operate, and maintain the Site and the Movie Theatre in accordance with the Redevelopment Plan, the Operating Covenant, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the Movie Theatre, this Agreement and the Operating Covenant. All uses conducted on the Site, including, without limitation, all activities undertaken by Participant pursuant to this Agreement, shall conform to the Redevelopment Plan, all applicable provisions of the City Municipal Code, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the Movie Theatre and the recorded documents pertaining to and running with the Site. 302. Operating Covenant. Participant hereby covenants and agrees to each of the following covenants: 302.1 Covenant to Operate Movie Theatre on Site. Throughout the Operating Covenant Period, Participant shall operate (or cause its successors or assigns to operate) the Movie Theatre on the Site on a continuous basis, in compliance with all Governmental Requirements and Regulatory Approvals, with such Site devoted to the presentation to the public of newly -released, feature length motion pictures as the principal activity conducted on the Site. Food sales, video games, and related uses may also be conducted at the Site as a secondary and incidental use to the primary use of operating a Movie Theatre at the Site. In addition, pre-screening of such motion pictures and other promotional events and activities may also be conducted on the Site as a secondary use incidental to the primary use of operating a Movie Theatre at the Site. No other uses may be conducted on the Site during the Operating Covenant Period without the prior written approval of Agency, which approval may be granted, refused, or conditioned as provided in Section 503 hereof. 302.2 No Competing Theatre; Operation to Maximize Sales and Use Tax Revenues. Participant further covenants and agrees that during the Operating Covenant Period, Participant will not own, lease, and/or operate through Participant, or any entity in which Participant has at least a twenty five percent (25%) interest in profits and losses and/or management control, any other movie theatre within a two (2) mile radius of the boundaries of the Site. Participant shall use commercially reasonable efforts to operate (or to cause its successors or assigns to operate) the Movie Theatre on the Site in such a manner as to produce the maximum amount of Sales and Use Tax Revenues to be received by the City. 302.3 Public Service Announcements. Agency shall have the right to run public service announcements ("PSA") at the Movie Theatre prior to films, at no charge, during the time when advertisements are shown and prior to the presentation of movie trailers. Agency shall prepare (at Agency's cost) and provide to Participant any PSAs which Agency wishes to be shown at the Movie Theatre within a reasonable time prior to the date on which such PSAs are to be shown. 8 DOCSOC/I 339956v5/022299-0083 Agency shall have the right to show at least one (1) PSA prior to each film shown at the Movie Theatre. 302.4 Default and Closure. Except with the prior written consent of Agency for each instance, which consent may be granted or withheld in Agency's reasonable discretion, a Closure shall, at Agency's option, constitute a Default hereunder and under the Operating Covenant. Termination of the Theatre Lease prior to the tenth (10`h) Year following execution and recording of the Operating Covenant shall constitute a Default hereunder and under the Operating Covenant triggering Agency's right to accelerate repayment of the Operating Covenant Purchase Price, with interest, as set forth in Section 204 and the Operating Covenant. 302.5 Covenants to Run with Land. The requirements of this Section 302 shall be included in the Operating Covenant and shall run with the land and bind all successors and assignees of Participant's leasehold interest in the Site. 303. Use of the Site. 303.1 Compliance With Laws. Participant shall carry out the design, construction and operation of the Movie Theatre in conformity with all Governmental Requirements and Regulatory Approvals, including all entitlements and/or permits issued by the City for the Movie Theatre, as such entitlements and/or permits may be modified from time to time. 303.2 Maintenance. Participant shall maintain the Site and the Movie Theatre, including all landscaping thereon, in a clean and attractive condition in accordance with the City Municipal Code, all Governmental Requirements, all Regulatory Approvals, and the Operating Covenant. 303.3 Hazardous Materials. Participant shall not cause or permit the presence, use generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Site in violation of any applicable Environmental Law. 304. Indemnification. 304.1 Generally. Participant shall indemnify, protect, defend (with counsel selected by Agency), and hold harmless Agency and City, and their respective officers, employees, contractors, agents, representatives, and volunteers, from and against any and all Claims of any kind or nature in any way arising from or relating to this Agreement, the Operating Covenant, the Personal Guaranty, or the implementation or approval of this Agreement, the Operating Covenant, or the Personal Guaranty, including without limitation: (i) Claims for any damages to property or injuries to persons. including accidental death, which may be caused by any acts or omissions of Participant whether such activities or performance thereof be by Participant or by anyone directly or indirectly employed or contracted with by Participant and whether such damage shall accrue or be discovered before or after termination of this Agreement, (ii) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Site in violation of any applicable Environmental Law, whenever discovered, (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Site, whenever DOCSOC/ 1339956v5/022299-0083 discovered, and (iv) any and all Claims and/or "increased costs" (as defined in Labor Code Section 1781, as it may be amended from time to time) which, in connection with the design, construction, and/or operation of the Movie Theatre, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Participant with any Governmental Requirements or Regulatory Approvals, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Participant to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the rehabilitation of the Site, including, without limitation, any and all public works (as defined by applicable law), Participant shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. The foregoing indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. The foregoing indemnity shall survive termination of this Agreement and the Operating Covenant and shall continue after completion of the rehabilitation of the Site by Owner and commencement of operation of the Movie Theatre by Participant. 304.2 Defense of Claims. Participant shall have the obligation to defend against any Claims as provided in Section 304.1; provided, however, that this obligation to defend shall not be effective if and to the extent that Participant determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, in which case Participant shall compromise or settle such action in a way that fully protects Agency and City from any liability or obligation. In this regard, Participant's obligation and right to defend shall include the right to hire (subject to written approval by Agency and City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against Participant, Agency, or City. If Participant defends any such action, as set forth above, (i) Participant shall indemnify and hold harmless Agency and City and their officers, employees, contractors, agents, representatives, and volunteers from and against any claims, losses, liabilities, or damages assessed or awarded against either of them by way of judgment, settlement, or stipulation and (ii) Agency shall be entitled to settle any such claim only with the written consent of Participant, not to be unreasonably withheld, and any settlement without such reasonable consent shall release Participant's obligations under this Section 304.2 with respect to such settled claim. Notwithstanding anything to the contrary herein, Participant shall not be liable for any such claims which are caused by the sole negligence or willful acts of Agency or its officers, employees, contractors, agents, representatives, and volunteers. 304.3 Third Party Litigation Concerning Agreement. Participant shall defend (with counsel selected by Agency), at its expense, including attorney and expert witness fees, indemnify, and hold harmless City, Agency, and/or their officers, employees, contractors, agents, representatives, and volunteers from any claim, action or proceeding brought by a person or entity not a party to this Agreement against Agency, City, and/or their officers, employees, contractors, agents, representatives, and volunteers to attack, set aside, void, or annul the approval of this Agreement. Agency shall promptly notify Participant of any claim, action, proceeding or 10 DOCSOC/ 1339956v5/022299-0083 0 0 determination included within this Section 304.3. Agency and/or City, as applicable, may, in their discretion, participate in the defense of any such claim, action, proceeding or determination. 305. Nondiscrimination Covenants. Participant covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Site. The foregoing covenants shall run with the land. Participant shall refrain from restricting the rental, sale or lease of the Site on the basis of any categories described above. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, 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 him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use. occupancy, tenure, or enjoyment of the DOCSOCl1339956v5(022299-0083 0 0 premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." The covenants established in this Section 305 shall, without regard to technical classification and designation, be binding for the benefit and in favor of Agency and its successors and assigns, and shall remain in effect in perpetuity. 306. Insurance Requirements. 306.1 Insurance Requirements. Participant, at Participant's expense, shall throughout the term of this Agreement maintain and comply with the following insurance and related requirements. (a) Commercial property insurance covering the premises, fixtures, equipment, buildings, all property situated in, on, or constituting a part of the Movie Theatre, including the tenant improvements (defined as "Tenant's Work" in the Theatre Lease) required to be constructed or installed by Participant. Participant shall also provide builder's all-risk insurance using an inland marine form during the period of any construction, major alteration or improvement. Coverage shall be for the full replacement value of the improvements. (b) Plate Glass insurance covering the full replacement cost of all plate glass at the Movie Theatre (c) Commercial general liability insurance on Insurance Services Office form CG 20 10 or equivalent that pays on behalf of the insured and provides defense in addition to limits. Participant shall obtain an endorsement to the policy adding City and Agency, their officials, employees and agents as additional insureds. Coverage shall not exclude suits between insureds. (d) Comprehensive Automobile Liability coverage, including owned, hired and non -owned vehicles, in an amount not less than one million dollars per occurrence ($1,000,000.00). (i) As to the foregoing insurance requirements (a) to (d) inclusive of this Section 306.1, coverage and limits shall apply to the full extent of the policy with no limitation to vicarious liability for additional insureds and extending coverage to any location for operations or activities necessary or incidental to the operations of the premises. Coverage limits shall be no less than One Million Dollars and No Cents ($1,000,000.00) per occurrence. Coverage provided by Participant is intended to apply first on a primary non-contributing basis in relation to any insurance or self-insurance of City or Agency. Deductibles are not permitted unless approved in writing by City and Agency. (e) Workers' compensation and employer's liability insurance written on a policy form providing statutory benefits as required by law. Employer's liability limits shall be no less than $1,000,000.00 dollars per accident or disease. 12 DOCSOC/ 1339956v5/022299-0083 0 0 306.2 Additional Insurance Requirements. (a) Participant agrees to waive rights of subrogation as to City and Agency and to have all policies of insurance required by this Agreement endorsed to permit such waiver, if necessary. All insurance is to be provided by insurers admitted and authorized to do business in the state of California with a minimum A.M. Best's rating of A -Class V11. All policies shall be endorsed to reflect that the policies shall not be canceled, non -renewed or reduced in scope or stated limits until City and Agency have been provided thirty (30) days advance written notice of such change. The insurance coverage and limits required here shall not be construed as a limit of Participant's liability. Participant agrees to respond for any losses with respect to this agreement incurred by City and not covered by Participant's insurance whether by reason of coverage being inapplicable or by Participant's failure to obtain coverage. (b) Proof of insurance using certificates of insurance and required endorsements must be delivered to City and Agency prior to execution of this Agreement. If Participant fails to comply, City has the right but not the duty to purchase such coverage and charge the premium to Participant who must promptly pay said premium. Participant shall also provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with equivalent policies. Such proof shall be furnished at least two weeks prior to the expiration of the coverages. (c) Participant agrees to provide immediate notice to City and Agency of any claim or loss against Participant that includes City or Agency as a defendant. City and Agency assume no obligation by such notice, but have the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City or Agency. (d) Participant agrees to periodically monitor and enforce Owner's compliance with Owner's insurance obligations under Section 13.2 of the Theatre Lease. 307. Effect of Violation of the Terms and Provisions of this Agreement. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of Agency and City and their successors and assigns, as to those covenants which are for their benefit. The covenants contained in this Agreement shall remain in effect for the periods of time specified therein. The covenants against discrimination shall remain in effect in perpetuity. Agency and City are deemed the beneficiaries of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of Agency and City, without regard to whether Agency and City have been, remain or are owners of any land or interest in the Site or in the Redevelopment Project. Agency and City shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which they or any other beneficiaries of this Agreement and covenants may be entitled. 308. Recordation of Operating Covenant. Participant agrees to execute, acknowledge and record in the official records of Orange County, as an encumbrance to the Site, the Operating Covenant substantially in the form attached hereto as Attachment No.2 and incorporated herein 13 DOCSOC/ 1339956v5/022299-0083 0 0 concurrently with and as a Condition Precedent to Agency's payment of the Operating Covenant Purchase Price. 309. E -Verify. If Participant is not already enrolled in the U.S. Department of Homeland Security's E -Verify program, Participant shall enroll in the E -Verify program within fifteen (15) days of the Date of Agreement to verify the employment authorization of new employees assigned to perform work at the Movie Theatre and/or otherwise perform work for Participant in the City. Participant shall verify employment authorization through the E -Verify program within three (3) days of hiring any and all new employees who will perform work at the Movie Theatre and/or employees who otherwise perform work for Participant in the City. Information pertaining to the E - Verify program can be found at http://www.uscis.gov, and Participant may access the registration page at https:/,/www.vis-dhs.com/employerregistration. Participant shall certify its registration with E -Verify and provide its registration number to Agency within sixteen (16) days of the Date of Agreement; provision of this certification and registration number is a Condition Precedent under Section 205. Participant shall annually certify to Agency that Participant has complied with this requirement throughout the entire previous Year and failure to comply with this requirement or to provide the required annual certification shall constitute a Default hereunder and under the Operating Covenant. 400. DEFAULTS AND REMEDIES 401. Default. Subject Enforced Delay, failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party cures such default within thirty (30) days from receipt of such notice, or if the nature of such default is that it cannot reasonably be expected to be cured within such thirty (30) day period, if such party, with due diligence, commences to cure, correct or remedy such failure or delay within thirty (30) days from receipt of such notice, and shall complete such cure, correction or remedy with diligence. 402. Institution of Legal Actions. In addition to any other rights or remedies set forth herein and subject to the restrictions otherwise set forth in this Agreement, either party may institute an action at law or equity to seek specific performance of the terms of this Agreement and the Operating Covenant, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy set forth herein or otherwise consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California. 403. Termination by Participant. In the event that Participant is not in Default under this Agreement and Agency is in Default under this Agreement and such Default is not cured within the time set forth in Section 401 hereof, then this Agreement and the Operating Covenant may, at the option of Participant, be terminated by written notice thereof to Agency. From the date of the written notice of termination of this Agreement by Participant to Agency and thereafter this Agreement and the Operating Covenant shall be deemed terminated and there shall be no further rights or obligations between the parties, except that if Agency is in Default hereunder, Participant may pursue any remedies it has at law or equity. 14 DOCS00 1339956v5/022299-0083 0 0 404. Termination by Agency. In the event that Agency is not in Default under this Agreement and prior to Agency's payment of the Operating Covenant Purchase Price to Participant: (a) Participant is in Default of this Agreement and fails to cure such Default within the time set forth in Section 401 hereof; or (b) One or more of the Conditions Precedent has not been fulfilled on or before sixty (60) days after the date of this Agreement and such Condition Precedent is not satisfied after Notice and an opportunity to cure as provided in Section 401 hereof, and such failure is not caused by Agency; then this Agreement, the Operating Covenant, and any rights of Participant or any assignee or transferee with respect to or arising out of this Agreement, the Operating Covenant or the Site, shall, at the option of Agency, be terminated by Agency by written notice thereof to Participant. From the date of the written notice of termination of this Agreement by Agency to Participant and thereafter this Agreement shall be deemed terminated, Agency shall not be obligated to disburse any portion of the Operating Covenant Purchase Price, and there shall be no further rights or obligations between the parties, except that if Participant is in Default hereunder Agency may pursue any remedies available to Agency at law or equity. 405. Repayment of Operating Covenant Purchase Price in Event of Default. In addition to all other remedies which may be available to Agency as set forth herein, in the event of a Default under the Operating Covenant (including a Closure) during the Operating Covenant Period, the entire remaining balance of the Operating Covenant Purchase Price, including interest thereon as provided in the Operating Covenant, shall become immediately due and payable to Agency in accordance with the terms of the Operating Covenant. 406. Acceptance of Service of Process. In the event that any legal action is commenced by Participant against Agency, service of process on Agency shall be made by personal service upon the Secretary or Executive Director of Agency or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Participant, service of process on Participant shall be made by personal service upon the President of Participant, whether made within or outside the State of California, or in such other manner as may be provided by law. 407. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other party. 408. Inaction Not a Waiver of Default. Any failures 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, or deprive either such 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. 409. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 15 DOCSOC/ 1339956v5/022299-0083 410. Attorneys' Fees. In any action between the parties to interpret, enforce, reform, modify, rescind or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs, expert witness fees and reasonable attorneys' fees. 500. GENERAL PROVISIONS 501. Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given by any commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice. To Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director With a copy to: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Thomas P. Clark, Jr. To Participant: Regency Theatres, Inc. 22231 Mulholland Hwy., Ste. 208 Calabasas, California 91302 Attention: Lyndon Golin Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 502. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to events beyond the reasonable control of the parties, which may include the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; unusually severe weather; acts or omissions of the other party; or acts or failures to act of a public or governmental agency or entity (other than the acts or failures to act of Agency or City which shall not excuse performance by Agency). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause ("Enforced Delay"). Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Participant. Notwithstanding any provision of this Agreement to the contrary, the lack 16 DOCSOC/ 1339956v5/022299-0083 0 0 of funding to operate the Movie Theatre shall not constitute grounds of Enforced Delay pursuant to this Section 502. 503. Transfers of Interest in Site or Agreement. 503.1 Prohibition. The qualifications and identity of Participant as the operator of the Movie Theatre are of particular concern to Agency. Furthermore, the parties acknowledge that Agency has negotiated the terms of this Agreement in contemplation of the operation of the Movie Theatre and the property tax increment and Sales and Use Tax Revenues to be generated by the operation of the Movie Theatre on the Site in a manner that will constitute a significant draw to customers. No voluntary or involuntary successor in interest of Participant shall acquire any rights or powers under this Agreement, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the whole or any part of Participant's interest in the Site or the Movie Theatre thereon, nor shall any other movie theatre other than a Regency brand movie theatre be operated thereon, either in addition to or in replacement of the Movie Theatre on the Site, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the Movie Theatre being operated upon the Site (collectively referred to herein as a "Transfer"), without the prior written approval of Agency, which approval shall not be unreasonably withheld. The transfer, sale, or other conveyance of a majority of shares in Participant shall constitute a Transfer subject to the prohibition set forth in this Section 503.1. Any Transfer by Participant during the Operating Covenant Period shall constitute a Default hereunder and under the Operating Covenant and shall result in acceleration of Participant's obligation to repay the Operating Covenant Purchase Price pursuant to Section 204 hereof and the Operating Covenant. This Section 503.1 shall be of no further force and effect following the expiration of the Operating Covenant Period. 503.2 Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of a Transfer shall not be required in connection with any of the following: (a) Any Transfer to an entity or entities in which Participant or Participant's shareholders retains a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retains management and control of the transferee entity or entities, and a Regency brand movie theatre (or another Agency -authorized movie theatre) is operating on the Site. (b) The granting of easements or permits to facilitate rehabilitation and/or operation of the Movie Theatre. (c) Any requested assignment for financing purposes (subject to such financing being considered and approved by Agency), including the grant of a deed of trust to secure the funds necessary for acquisition of Participant's leasehold interest in the Site, construction and permanent financing of the rehabilitation of the Movie Theatre, or a refinancing of a mortgage secured by Participant's leasehold interest in the Site and/or the Movie Theatre. In the event of a Transfer by Participant under subparagraphs (a) and (b) above not requiring Agency's prior approval, Participant nevertheless agrees that at least thirty (30) days prior to such Transfer it shall give written notice to Agency of such assignment and satisfactory evidence that the assignee has assumed in writing through an assignment and assumption agreement of all of the obligations of this Agreement. 17 DOCSOC/1 339956v5/022299-0083 • 0 503.3 Agency Consideration of Requested Transfer. Agency agrees that it will not unreasonably withhold approval of a request for approval of a Transfer made pursuant to this Section 503, provided Participant delivers written notice to Agency requesting such approval. Such notice shall be accompanied by sufficient evidence demonstrating that the proposed assignee, sublessee, or new movie theatre operator has received all necessary Regulatory Approvals and evidence regarding the proposed transferee's operational qualifications and experience and its financial commitments and resources, in sufficient detail to enable Agency to evaluate the proposed assignee, sublessee, or operator pursuant to the criteria set forth in this Section 503 and as reasonably determined by Agency. Agency may, in considering any such request, take into consideration such factors as (i) the quality and reputation of any new brand of movie theatre to be operated at the Site, (ii) the Sales and Use Tax Revenues projected to be received from the Site, (iii) the transferee's past performance as an operator of a movie theatre, (iv) the current financial condition of the transferee, and similar factors. Agency agrees not to unreasonably withhold its approval of any such requested Transfer, taking into consideration the foregoing factors. 503.4 Assignment and Assumption Agreement. An assignment and assumption agreement in form satisfactory to Agency's legal counsel shall also be required for all proposed Transfers. Within thirty (30) days after the receipt of Participant's written notice requesting Agency approval of a Transfer pursuant to this Section 503, Agency shall either approve or disapprove such proposed Transfer or shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, Participant shall promptly furnish to Agency such further information as may be reasonably requested. Agency shall not release or cancel the Personal Guaranty unless Agency determines, in its sole and exclusive discretion that the proposed transferee will provide an equivalent form of security for repayment of the Operating Covenant Purchase Price. 503.5 Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon Participant and its permitted successors and assigns. Whenever the term "Participant" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 503.6 Assignment by Agency. Agency may assign or transfer any of its rights or obligations under this Agreement at any time without obtaining the approval of Participant. 504. Non Liability of Officials and Employees of Agency. No member, official or employee of Agency or the City shall be personally liable to Participant or any successor in interest, in the event of any Default or breach by Agency or for any amount which may become due to Participant or its successors, or on any obligations under the terms of this Agreement. 505. Relationship Between Agency and Participant. It is hereby acknowledged that the relationship between Agency and Participant is not that of a partnership or joint venture and that Agency and Participant shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, Agency shall have no rights. powers, duties or obligations with respect to the development, operation, maintenance or management of the Movie Theatre or the Site. 506. City as Tbird Party Beneficiary. The City and its successors and assigns shall be intended third party beneficiaries of this Agreement. City shall have full right and ability (but no 18 DOCSOC/1339956v5/022299-0083 0 0 obligation) to enforce each and every agreement, covenant and restriction in this Agreement. No other person(s) or entity(ies) shall have any right of action hereunder. 507. Agency Approvals and Actions. Agency shall maintain authority of this Agreement and the authority to implement this Agreement through the Executive Director (or his duly authorized representative). The Executive Director shall have the authority to make approvals, issue interpretations. waive provisions, make and execute further agreements and/or enter into amendments of this Agreement on behalf of Agency so long as such actions do not materially or substantially change the uses permitted on the Site, or materially or substantially add to the costs incurred or to be incurred by Agency as specified herein, and such interpretations, waivers and/or amendments may include extensions of time to perform hereunder. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the Agency Board. 508. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. 509. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. 1 through 6, which together with the Agreement constitute the entire understanding and agreement of the parties, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. 510. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. References to section numbers are to sections in this Agreement, unless expressly stated otherwise. 511. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 512. No Waiver. A waiver by either party of a breach of any of the covenants, conditions, restrictions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 513. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 514. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to 19 DOCSOC/ 1339956x5/022299-0083 persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 515. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 516. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 517. Time of Essence. Time is expressly made of the essence with respect to the performance by Agency and Participant of each and every obligation and condition of this Agreement. 518. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 519. Conflicts of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. (Signatures appear on following page.] 20 DOCSOC/ 1339956v5/022299-0083 0 IN WITNESS WHEREOF, the parties hereto have signed this Participation Agreement as of the date first set forth above. Stradling Yocca Carlson & Rauth Agency Counsel AGENCY: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic By: Chairperson PARTICIPANT: REGENCY THEATRES, INC., a California corporation B _ yndon Golin, President 21 DOCSOC/ 1339956v5/022299-0083 E ATTACHMENT NO. 1 LEGAL DESCRIPTION LOT 40 OF TRACT NO. 103 AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET IN WIDTH LYING EASTERLY AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION THEREOF DESCRIBED AS FOLLOWS: COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT NO. 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE WESTERLY PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM SAID NORTHERLY LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. ALONG WITH: LOT 43, AS SHOWN ON A LICENSED SURVEYOR'S MAP, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 2, PAGES 31 TO 38 INCLUSIVE, RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE WESTERLY 12 FEET. ALONG WITH: THAT PORTION OF LOT 40 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK I I, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: ATTACHMENT NO. 1-1 DOCSOC/ 1339956v5/022299-0083 • COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET 1N WIDTH LYING EASTERLY OF AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALONG WITH: LOT 42 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 TO 30 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PROPERTY: BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 42, SAID CORNER BEING ON THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY: THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET: THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST ALONG THE SOUTHERLY LINE OF GARDEN STREET 202.60 FEET TO A POINT: THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT ON THE SOUTHERLY LINE OF THE ABOVE MENTIONED LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST ALONG THE SOUTHERLY LINE OF LOT 42, 201.44 FEET TO THE POINT OF BEGINNING. ALONG WITH: THAT PORTION OF LOT 41 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK I1, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS. RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: DOCSOC/ 1339956v 5/022299-0083 BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 41; RUNNING THENCE NORTH 9 DEGREES 40 MINUTES WEST 84.41 FEET ALONG THE WEST LINE OF SAID LOT 41 TO THE NORTHWEST CORNER THEREOF: THENCE NORTH 84 DEGREES 28 MINUTES EAST 41.13 FEET ALONG THE NORTHERLY LINE OF SAID LOT 41 TO A POINT WHICH IS LOCATED 201.44 FEET SOUTH 84 DEGREES 28 MINUTES WEST FROM THE SOUTHEAST CORNER OF LOT 42 OF SAID TRACT NO. 103; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 41; THENCE SOUTH 84 DEGREES 27 MINUTES WEST 35.55 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 41 TO THE POINT OF BEGINNING. ALONG WITH: THAT PORTION OF LOT 42 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BACK 11, PAGES 29 TO 33, INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF SAID ORANGE COUNTY, DESCRIBED AS FOLLOWS: BEGINNING TO THE MOST EASTERLY CORNER OF SAID LOT, SAID CORNER BEING IN THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY; THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET; THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST, ALONG THE SOUTHERLY LINE OF GARDEN STREET, 202.60 FEET TO A POINT; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST, ALONG THE SOUTHERLY LINE OF SAID LOT, 201.44 FEET TO THE POINT OF BEGINNING. END Assessor Parcel Number: 121-150-27 3 DOC SOC/ 1339956x5/022299-0083 0 ATTACHMENT NO.2 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attn: Executive Director 0 This document is exempt from the payment recording fee pursuant to Government Code Sections 6103 and 27383. OPERATING COVENANT This OPERATING COVENANT ("Operating Covenant") is made as of 20 , by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and REGENCY THEATRES, INC., a California corporation ("Participant"), with reference to the following: A. Agency and Participant have executed a Participation Agreement, dated as of , 2009 ("Agreement"), which provides for the sale of this Operating Covenant with respect to certain real property located in the City of San Juan Capistrano ("City"), County of Orange, State of California, more fully described in Exhibit "A" attached hereto and incorporated herein by this reference ("Site"). The Agreement is available for public inspection and copying at the office of Agency, 32400 Paseo Adelanto, San Juan Capistrano, California. All of the terms, conditions, provisions and covenants of the Agreement are incorporated in this Operating Covenant by reference as though written out at length herein and the Agreement and this Operating Covenant shall be deemed to constitute a single instrument or document. B. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Agreement. C. The Agreement provides for, among other things, Participant's conveyance to Agency of this Operating Covenant and recordation of this Operating Covenant against Participant's leasehold interest in the Site in the Official Records of Orange County, California. This Operating Covenant is intended to encumber Participant's leasehold interest in the Site and run with the land. D. The foregoing recitals constitute a substantive part of this Operating Covenant. NOW, THEREFORE, Participant hereby conveys to Agency the following Operating Covenant: 1. Use in Accordance with Redevelopment Plan, Agreement and Operating Covenant. Participant covenants and agrees to devote, use, operate, and maintain the Site and the Movie Theatre in accordance with the Redevelopment Plan, the Operating Covenant, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the ATTACHMENT NO. 2-1 DOCSOC/ 1339956v 5/022299-0083 Movie Theatre, this Operating Covenant and the Agreement. All uses conducted on the Site, including, without limitation, all activities undertaken by Participant pursuant to this Operating Covenant and the Agreement, shall conform to the Redevelopment Plan, all applicable provisions of the City Municipal Code, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the Movie Theatre and the recorded documents pertaining to and running with the Site. 2. Operating Covenant. Participant hereby covenants and agrees to each of the following covenants: (a) Covenant to Operate Movie Theatre on Site. Throughout the Operating Covenant Period, Participant shall operate (or cause its successors or assigns to operate) the Movie Theatre on the Site on a continuous basis, in compliance with all Governmental Requirements and Regulatory Approvals, with such Site devoted to the presentation to the public of newly -released, feature length motion pictures as the principal activity conducted on the Site. Food sales, video games, and related uses may also be conducted at the Site as a secondary and incidental use to the primary use of operating a Movie Theatre at the Site. In addition, pre-screening of such motion pictures and other promotional events and activities may also be conducted on the Site as a secondary use incidental to the primary use of operating a Movie Theatre at the Site. No other uses may be conducted on the Site during the Operating Covenant Period without the prior written approval of Agency, which approval may be granted, refused, or conditioned as provided in Section 4 of this Operating Covenant. The Movie Theatre shall at all times comply with the Movie Theatre Description attached to the Agreement as Attachment No. 6. (b) No Competing Theatre; Operation to Maximize Sales and Use Tax Revenues_ Participant further covenants and agrees that during the Operating Covenant Period, Participant will not own, lease, and/or operate through Participant, or any entity in which Participant has at least a twenty five percent (25%) interest in profits and losses and/or management control, any other movie theatre within a two (2) mile radius of the boundaries of the Site. Participant shall use commercially reasonable efforts to operate (or to cause its successors or assigns to operate) the Movie Theatre on the Site in such a manner as to produce the maximum amount of Sales and Use Tax Revenues (defined in the Agreement) to be received by the City. (c) Public Service Announcements. Agency shall have the right to run public service announcements ("PSA") at the Movie Theatre prior to films, at no charge, during the time when advertisements are shown and prior to the presentation of movie trailers. Agency shall prepare (at Agency's cost) and provide to Participant any PSAs which Agency wishes to be shown at the Movie Theatre within a reasonable time prior to the date on which such PSAs are to be shown. Agency shall have the right to show at least one (1) PSA prior to each film shown at the Movie Theatre. (d) E -Verify Compliance. Pursuant to the Agreement, Participant has enrolled in the U.S. Department of Homeland Security's E -Verify program and shall verify the employment authorization of any and all new employees assigned to perform work at the Movie Theatre and/or employees who otherwise perform work for Participant in the City through the E -Verify program within three (3) days of hiring any such employees. Participant shall annually certify to Agency that Participant has complied with this requirement and failure to comply with this requirement or to provide the required annual certification shall constitute a Default hereunder and under the Agreement. ATTACHMENT NO. 2-2 DOCSOC/ I 339956v5/022299-0083 9 • (e) Default and Closure. Except with the prior written consent of Agency for each instance, which consent may be granted or withheld in Agency's reasonable discretion, a Closure shall, at Agency's option, constitute a Default hereunder. Termination of the Theatre Lease prior to the tenth (10th) Year following execution and recording of the Operating Covenant shall constitute a Default hereunder and under the Operating Covenant triggering Agency's right to accelerate repayment of the Operating Covenant Purchase Price, with interest, as set forth in Section 3 of the Operating Covenant. (f) Certificate of Compliance. Not later than thirty (30) days prior to each Participant Payment Date (defined in Section 3(a)), Participant shall execute and deliver to Agency a Certificate of Compliance for the previous Year in substantially the form attached to the Agreement as Attachment No. 3. 3. Repayment Obligation. (a) Repayment of Operating Covenant Purchase Price. Participant shall repay the Operating Covenant Purchase Price to Agency in ten (10) equal annual installments of Forty -Five Thousand Dollars ($45,000), to be made on the last day of each of the first (I") through tenth (10t) Years following recordation of the Operating Covenant against the Site ("Participant Payment Date"). The entire outstanding principal balance to be paid by Participant to Agency hereunder, together with all accrued and unpaid interest and all other sums owing under this Operating Covenant, shall, if not sooner paid, become due and payable on [ , 20_J. (b) Interest Rate. No interest shall accrue on Participant's obligation to repay the Operating Covenant Purchase Price to Agency except as set forth in Section 3(c) below. (c) Closure or Default. In the event of a Closure or any Default hereunder or under the Operating Covenant which is not cured within the time set forth in Section 401 of the Agreement, Participant shall immediately repay the entire Operating Covenant Purchase Price to Agency, plus interest on the outstanding remaining balance thereof at the rate of ten percent (10%) per annum. Upon cure of the Closure or other Default, the interest rate shall return to the amount set forth in Section 3(b) above. (d) Security. Participant's repayment obligation shall be secured by execution and delivery to Agency of the Personal Guaranty attached to the Agreement as Attachment No. 4 by Lyndon Golin, Participant's President and sole shareholder. Participant shall cause the Consent of Spouse (in substantially the form attached to the Agreement as Attachment No. 5) to be executed by Lyndon Golin's spouse and delivered to the Agency concurrently with the Personal Guaranty. (e) Prepayment. Participant may, at any time, prepay any amounts outstanding under this Operating Covenant in whole or in part without premium or penalty. A payment of principal only is known as a "Prepayment." When Participant makes a Prepayment, it shall advise Agency in writing that it is doing so. Participant may make a full Prepayment or partial Prepayment without paying a prepayment charge. Participant will use such Prepayments to reduce the amount of principal that Participant owes under this Operating Covenant; however, Agency may apply any Prepayment to the accrued and unpaid interest on the Prepayment amount before applying Participant's Prepayment to reduce the principal amount of the Operating Covenant. If Participant makes a partial Prepayment, there will be no changes in the due dates of the payments required hereunder unless Agency agrees in writing to those changes. ATTACHMENT NO. 2-3 DOCSOC/1339956v5/022299-0083 (f) Usury Lave Compliance. It is Participant's and Agency's intention to comply with any applicable usury law. If for any reason Agency should have received as interest an amount which would exceed the highest lawful rate, such amount which would be in excess of the permitted interest shall, at Agency's option, be applied to the reduction of principal of this Note and not to the payment of interest, or be refunded to Participant. All agreements between Participant and Agency are expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to Agency for the use, forbearance or detention of money under this Operating Covenant exceed the maximum permissible under applicable law. This provision shall control over any other provision in this Operating Covenant or in any other agreement between Participant and Agency related hereto. 4. Transfers of interest in Site or Agreement. (a) Prohibition. The qualifications and identity of Participant as the operator of the Movie Theatre are of particular concern to Agency. Furthermore, the parties acknowledge that Agency has negotiated the terms of the Agreement and this Operating Covenant in contemplation of the operation of the Movie Theatre and the property tax increment and Sales and Use Tax Revenues to be generated by the operation of the Movie Theatre on the Site, in a manner that will constitute a significant draw to customers. No voluntary or involuntary successor in interest of Participant shall acquire any rights or powers under the Agreement, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the whole or any part of Participant's interest in the Site or the Movie Theatre thereon, nor shall any other movie theatre other than a Regency brand movie theatre be operated thereon, either in addition to or in replacement of the Movie Theatre on the Site, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the Movie Theatre being operated upon the Site (collectively referred to herein as a "Transfer"), without the prior written approval of Agency, which approval shall not be unreasonably withheld. The transfer, sale, or other conveyance of a majority of shares in Participant shall constitute a Transfer subject to the prohibition set forth in this Section 4(a). Any Transfer by Participant during the Operating Covenant Period shall constitute a Default hereunder and shall result in acceleration of Participant's obligation to repay the Operating Covenant Purchase Price pursuant to Section 3 hereof. This Section 4(a) shall be of no further force and effect following the expiration of the Operating Covenant Period. (b) Permitted Transfers. Notwithstanding any other provision of the Agreement or this Operating Covenant to the contrary, Agency approval of a Transfer shall not be required in connection with any of the following: (i) Any Transfer to an entity or entities in which Participant or Participant's shareholders retains a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retains management and control of the transferee entity or entities, and a Regency brand movie theatre (or another Agency -authorized movie theatre) is operating on the Site. (ii) The granting of easements or permits to facilitate rehabilitation and/or operation of the Movie Theatre. (iii) Any requested assignment for financing purposes (subject to such financing being considered and approved by Agency), including the grant of a deed of trust to secure the funds necessary for acquisition of Participant's leasehold interest in the Site, construction and ATTACHMENT NO. 2-4 DOCSOC/1339956v51022299-0083 permanent financing of the rehabilitation of the Movie Theatre, or a refinancing of a mortgage secured by Participant's leasehold interest in the Site and/or the Movie Theatre. In the event of a Transfer by Participant under subparagraphs (i) and (ii) above not requiring Agency's prior approval, Participant nevertheless agrees that at least thirty (30) days prior to such Transfer it shall give written notice to Agency of such assignment and satisfactory evidence that the assignee has assumed in writing through an assignment and assumption agreement of all of the obligations of the Agreement and this Operating Covenant. (c) Agency Consideration of Requested Transfer. Agency agrees that it will not unreasonably withhold approval of a request for approval of a Transfer made pursuant to this Section 4, provided Participant delivers written notice to Agency requesting such approval. Such notice shall be accompanied by sufficient evidence demonstrating that the proposed assignee, sublessee or new movie theatre operator has received all necessary Regulatory Approvals and evidence regarding the proposed transferee's operational qualifications and experience and its financial commitments and resources, in sufficient detail to enable Agency to evaluate the proposed assignee, sublessee, or operator pursuant to the criteria set forth in this Section 4 and as reasonably determined by Agency. Agency may, in considering any such request, take into consideration such factors as (i) the quality and reputation or any new brand of movie theatre to be operated at the Site, (ii) the Sales and Use Tax Revenues projected to be received from the Site, (iii) the transferee's past performance as an operator of a movie theatre, (iv) the current financial condition of the transferee, and similar factors. Agency agrees not to unreasonably withhold its approval of any such requested Transfer, taking into consideration the foregoing factors. (d) Assignment and Assumption Agreement. An assignment and assumption agreement in form satisfactory to Agency's legal counsel shall also be required for all proposed Transfers. Within thirty (30) days after the receipt of Participant's written notice requesting Agency approval of a Transfer pursuant to this Section 4, Agency shall either approve or disapprove such proposed assignment or shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, Participant shall promptly furnish to Agency such further information as may be reasonably requested. Agency shall not release or cancel the Personal Guaranty (defined in the Agreement) unless Agency determines in its sole and exclusive discretion that the proposed transferee will provide an equivalent form of Security for repayment of the Operating Covenant Purchase Price. 5. Use of the Site. (a) Compliance With Laws. Participant shall carry out the design, construction and operation of the Movie Theatre in conformity with all Governmental Requirements and Regulatory Approvals, including all entitlements and/or permits issued by the City for the Movie Theatre, as such entitlements and/or permits may be modified from time to time. (b) Hazardous Materials. Participant shall not cause or permit the presence, use generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Site in violation of any applicable Environmental Law. ATTACHMENT NO. 2-5 DOCSOC/1339956v5/022299-0083 0 0 6, Indemnification. (a) Generally. Participant shall indemnify, protect, defend (with counsel selected by Agency), and hold harmless Agency and City, and their respective officers, employees, contractors, agents, representatives, and volunteers, from and against any and all Claims of any kind or nature in any way arising from or relating to the Agreement, this Operating Covenant, the Personal Guaranty, or the implementation or approval of the Agreement, this Operating Covenant, or the Personal Guaranty, including without limitation: (i) Claims for any damages to property or injuries to persons, including accidental death, which may be caused by any acts or omissions of Participant whether such activities or performance thereof be by Participant or by anyone directly or indirectly employed or contracted with by Participant and whether such damage shall accrue or be discovered before or after termination of the Agreement and this Operating Covenant, (ii) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Site in violation of any applicable Environmental Law, whenever discovered, (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Site, whenever discovered, and (iv) any and all Claims and/or "increased costs" (as defined in Labor Code Section 1781, as it may be amended from time to time) which, in connection with the design, construction, and/or operation of the Movie Theatre, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Participant with any Governmental Requirements or Regulatory Approvals, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Participant to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the rehabilitation of the Site, including, without limitation, any and all public works (as defined by applicable law), Participant shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. The foregoing indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. The foregoing indemnity shall survive termination of the Agreement and this Operating Covenant and shall continue after completion of the rehabilitation of the Site by Owner and commencement of operation of the Movie Theatre by Participant. (b) Defense of Claims. Participant shall have the obligation to defend against any Claims as provided in Section 6(a); provided, however, that this obligation to defend shall not be effective if and to the extent that Participant determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, in which case Participant shall compromise or settle such action in a way that fully protects Agency and City from any liability or obligation. In this regard, Participant's obligation and right to defend shall include the right to hire (subject to written approval by Agency and City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terns of such settlement, and the right to pay any judgments assessed against Participant, Agency, or City. If Participant defends ATTACHMENT NO. 2-6 DOCSOU 1339956v5/022299-0083 any such action, as set forth above, (i) Participant shall indemnify and hold harmless Agency and City and their officers, employees, contractors, agents, representatives, and volunteers from and against any claims, losses, liabilities, or damages assessed or awarded against either of them by way of judgment, settlement, or stipulation and (ii) Agency shall be entitled to settle any such claim only with the written consent of Participant, not to be unreasonably withheld, and any settlement without such reasonable consent shall release Participant's obligations under this Section 6(b) with respect to such settled claim. Notwithstanding anything to the contrary herein, Participant shall not be liable for any such claims which are caused by the sole negligence or willful acts of Agency or its officers, employees, contractors, agents, representatives, and volunteers. (c) Third Party Litigation Concerning Agreement. Participant shall defend (with counsel selected by Agency), at its expense, including attorney and expert witness fees, indemnify, and hold harmless City, Agency, and/or their officers, employees, contractors, agents, representatives, and volunteers from any claim, action or proceeding brought by a person or entity not a party to this Operating Covenant against Agency, City, and/or their officers, employees, contractors, agents, representatives, and volunteers to attack, set aside, void, or annul the approval of the Agreement and/or this Operating Covenant. Agency shall promptly notify Participant of any claim, action, proceeding or determination included within this Section 6(c). Agency and/or City, as applicable, may, in their discretion, participate in the defense of any such claim, action, proceeding or determination. 7. Nondiscrimination. There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Operating Covenant, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises which are the subject of this Operating Covenant. The foregoing covenants shall run with the land. This covenant regarding non-discrimination shall remain in effect in perpetuity. 8. Insurance. (a) Insurance Requirements. Participant, at Participant's expense, shall throughout entire Operating Covenant Period maintain and comply with the following insurance and related requirements. (i) Commercial Property Insurance covering the premises, fixtures, equipment, buildings, all property situated in, on, or constituting a part of the Movie Theatre, including the tenant improvements (defined as "Tenant's Work" in the Theatre Lease) required to be constructed or installed by Participant. Participant shall also provide builder's all-risk insurance using an inland marine form during the period of any construction, major alteration or improvement. Coverage shall be for the full replacement value of the improvements. (ii) Plate Glass insurance covering the full replacement cost of all plate glass at the Movie Theatre. ATTACHMENT NO. 2-7 DOCS OCf 1339956v5/022299-0083 0 0 (iii) Commercial General Liability Insurance on Insurance Services Office form CG 20 10 or equivalent that pays on behalf of the insured and provides defense in addition to limits. Participant shall obtain an endorsement to the policy adding City and Agency, their officials, employees and agents as additional insureds. Coverage shall not exclude suits between insureds. (iv) Comprehensive Automobile Liability coverage, including owned, hired and non -owned vehicles in an amount not less than one million dollars per occurrence ($1,000,000.00). (A) As to the foregoing insurance requirements (a) to (d) inclusive of this Section 8(a), coverage and limits shall apply to the full extent of the policy with no limitation to vicarious liability for additional insureds and extending coverage to any location for operations or activities necessary or incidental to the operations of the premises. Coverage limits shall be no less than One Million Dollars and No Cents ($1,000,000.00) per occurrence. Coverage provided by Participant is intended to apply first on a primary non-contributing basis in relation to any insurance or self-insurance of City or Agency. Deductibles are not permitted unless approved in writing by City and Agency. (v) Workers' Compensation and Employer's Liability Insurance written on a policy form providing statutory benefits as required by law. Employers liability limits shall be no less than $1,000,000.00 dollars per accident or disease. (b) Additional Insurance Requirements. (i) Participant agrees to waive rights of subrogation as to City and Agency and to have all policies of insurance required by this Agreement endorsed to permit such waiver, if necessary. All insurance is to be provided by insurers admitted and authorized to do business in the state of California with a minimum A.M. Best's rating of A -Class VII. All policies shall be endorsed to reflect that the policies shall not be canceled, non -renewed or reduced in scope or stated limits until City and Agency have been provided thirty (30) days advance written notice of such change. The insurance coverage and limits required here shall not be construed as a limit of Participant's liability. Participant agrees to respond for any losses with respect to this agreement incurred by City and not covered by Participant's insurance whether by reason of coverage being inapplicable or by Participant's failure to obtain coverage. (ii) Proof of insurance using certificates of insurance and required endorsements must be delivered to City and Agency prior to execution of this Agreement. If Participant fails to comply, City has the right but not the duty to purchase such coverage and charge the premium to Participant who must promptly pay said premium. Participant shall also provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with equivalent policies. Such proof shall be furnished at least two weeks prior to the expiration of the coverages. (iii) Participant agrees to provide immediate notice to City and Agency of any claim or loss against Participant that includes City or Agency as a defendant. City and Agency assume no obligation by such notice, but have the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City or Agency. ATTACHMENT NO. 2-8 DOCSOC/ 1339956v5/022299-0083 0 0 (iv) Participant agrees to periodically monitor and enforce Owner's compliance with Owner's insurance obligations under Section 13.2 of the Theatre Lease. 9. Performance of Maintenance. (a) Participant shall maintain the Site and the Movie Theatre in accordance with the Maintenance Standards, as hereinafter defined. Said improvements shall include, but not be limited to, buildings, sidewalks, pedestrian lighting, landscaping, irrigation of landscaping, architectural elements identifying the Site and any and all other improvements on the Site. (b) To accomplish the maintenance, Participant shall either staff or contract with and hire licensed and qualified personnel to perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirements of this Operating Covenant. (c) The following standards ("Maintenance Standards") shall be complied with by Participant and its maintenance staff, contractors or subcontractors: 1. Landscape maintenance shall include, but not be limited to: watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 2. Clean up maintenance shall include, but not be limited to: maintenance of all sidewalks, paths and other paved areas in clean and weed free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. 3. All maintenance work shall conform to all applicable federal and state Occupational Safety and Health Act standards and regulations for the performance of maintenance. A. Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied in strict accordance with all governing regulations. Precautionary measures shall be employed recognizing that all areas are open to public access. 5. The Site and Movie Theatre shall be maintained in conformance and in compliance with the approved Site construction and architectural plans and design scheme, as the same may be amended from time to time with the approval of the City, and reasonable commercial development maintenance standards for similar projects, including but not limited to: painting and cleaning of all exterior surfaces and other exterior facades comprising all private improvements and public improvements to the curbline. ATTACHMENT NO. 2-9 DOCSOC/1339956v5/022299-0083 0 0 6. The Site and Movie Theatre shall be maintained as required by this Section in good condition and in accordance with the custom and practice generally applicable to comparable automobile dealership facilities located in Southern California. (d) Failure to Maintain Site and Movie Theatre. In the event Participant does not maintain the Site or the Movie Theatre in the manner set forth herein and in accordance with the Maintenance Standards, Agency and/or City shall have the right to maintain such private and/or public improvements, or to contract for the correction of such deficiencies, after written notice to Participant. However, prior to taking any such action, Agency agrees to notify Participant in writing if the condition of said improvements does not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Participant to cure the deficiencies. Upon notification of any maintenance deficiency, Participant shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification states the problem is urgent relating to the public health and safety of the City or Agency, then Participant shall have forty eight (48) hours to rectify the problem. In the event Participant fails to correct, remedy, or cure or has not commenced correcting, remedying or curing such maintenance deficiency after notification and after the period of correction has lapsed, then City and/or Agency shall have the right to maintain such improvements. Participant agrees to pay Agency such charges and costs. Until so paid, Agency shall have a lien on Participant's leasehold interest in the Site for the amount of such charges or costs, which lien shall be perfected by the recordation of a "Notice of Claim of Lien" against Participant's leasehold interest in the Site. Upon recordation of a Notice of a Claim of Lien against Participant's leasehold interest in the Site, such lien shall constitute a lien on Participant's leasehold interest in the Site prior and superior to all other monetary liens except: (i) all taxes, bonds, assessments, and other levies which, by law, would be superior thereto; (ii) the lien or charge of any mortgage, deed of trust, or other security interest then of record made in good faith and for value, it being understood that the priority of any such lien for costs incurred to comply with the Agreement and this Operating Covenant shall date from the date of the recordation of the Notice of Claim of Lien. Any such lien shall be subject and subordinate to any lease or sublease of the interest of Participant in the Site or any portion thereof and to any easement affecting the Site or any portion thereof entered into at any time (either before or after) the date of recordation of such a Notice. Any lien in favor of Agency created or claimed hereunder is expressly made subject and subordinate to any mortgage or deed of trust made in good faith and for value, recorded as of the date of the recordation of the Notice of Claim of Lien describing such lien as aforesaid, and no such lien shall in any way defeat, invalidate, or impair the obligation or priority of any such mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly subordinates his interest, of record, to such lien. No lien in favor of Agency created or claimed hereunder shall in any way defeat, invalidate, or impair the obligation or priority of any lease, sublease or easement unless such instrument is expressly subordinated to such lien. Upon foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure purchaser shall take title to the Site free of any lien imposed by Agency that has accrued up to the time of the foreclosure sale, and upon obtaining Participant's leasehold interest in the Site, such foreclosure purchaser shall only be obligated to pay costs associated with the Agreement and this Operating Covenant accruing after the foreclosure purchaser acquires Participant's leasehold interest in the Site. If Participant's leasehold interest in the Site is ever legally divided with the written approval of Agency and title to various portions of the Site is held under separate leasehold interests, then the burdens of the maintenance obligations set forth herein and in the Agreement and the charges levied by Agency to reimburse Agency for the cost of undertaking such maintenance obligations of ATTACHMENT NO. 2-10 DOCSOC/1339956v5/022299-0083 0 0 Participant and its successors and the lien for such charges shall be apportioned among the lessees of the various portions of the Site under different leases according to the square footage contained in the respective portions of the Site leased by them. Upon apportionment, no separate owner/lessee of a portion of the Site shall have any liability for the apportioned liabilities of any other separate owner/lessee of another portion of the Site, and the lien shall be similarly apportioned and shall only constitute a lien against the portion of the Site owned/leased in by the owner/lessee who is liable for the apportioned charges levied by Agency and secured by the apportioned lien and against no other portion of the Site. Participant acknowledges and agrees City and Agency may also pursue any and all other remedies available in law or equity. Participant shall be liable for any and all attorneys' fees, and other legal costs or fees incurred in collecting said maintenance costs. 10. Miscellaneous Provisions. (a) If any provision of this Operating Covenant or portion thereof, or the application to any person or circumstances, shall to any extent be held invalid, inoperative or unenforceable, the remainder of this Operating Covenant, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby; it shall not be deemed that any such invalid provision affects the consideration for this Operating Covenant; and each provision of this Operating Covenant shall be valid and enforceable to the fullest extent permitted by law. (b) This Operating Covenant shall be construed in accordance with the laws of the State of California. (c) This Operating Covenant shall be binding upon and inure to the benefit of the successors and assigns of Participant. (d) Defaults under this Operating Covenant shall be governed by Section 400, et seq. of the Agreement. (e) In the event action is instituted to enforce any of the provisions of this Operating Covenant, the prevailing party in such action shall be entitled to recover from the other party thereto as part of the judgment, reasonable attorney's fees, expert witness fees, and costs. (f) Notices relating to this Operating Covenant shall be given as provided in Section 501 of the Agreement. (g) The City and its successors and assigns shall be intended third party beneficiaries of this Operating Covenant. City shall have full right and ability (but no obligation) to enforce each and every agreement, covenant and restriction in this Operating Covenant. No other person(s) or entity(ies) shall have any right of action hereunder. 11. Effect of Operating Covenant. All covenants and agreements established in this Operating Covenant shall, without regard to technical classification and designation, run with the land and be binding on Participant and each successor and assignee of Participant's leasehold interest in the Site, for the benefit of and in favor of Agency, City, and their successor and assigns. The covenants contained in this Operating Covenant shall remain in effect for the periods of time specified therein. Agency and City are deemed the beneficiaries of the terms and provisions of this Operating Covenant and of the covenants running with the land, for and in their own rights and for ATTACHMENT NO. 2-11 DOCSOC/ 1339956v5/022299-0083 the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Operating Covenant and the covenants running with the land have been provided. The Operating Covenant shall run in favor of Agency and City, without regard to whether Agency or City have been, remain or are owners of any land or interest in the Site or in the Project Area. Agency and/or City shall have the right, if any provision of the Operating Covenant is breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which they or any other beneficiaries of this Operating Covenant may be entitled. [Signatures appear on following page.] ATTACHMENT NO. 2-12 DOCSOC/1339956v5/022299-0083 IN WITNESS WHEREOF, the parties hereto have executed this Operating Covenant as of the day and year first set forth above. ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Counsel AGENCY: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic 0 Executive Director PARTICIPANT: REGENCY THEATRES, INC., a California corporation By: q2A- L ndon Golin, President ATTACHMENT NO. 2-13 DOCSOC/1339956v5/022299-0083 OPERATING COVENANT ACCEPTED FOR RECORDING: ALPHA PLAZA, LLC, a California limited liability company Printed ATTACHMENT NO. 2-14 DOCSOC/ I 339956v5/022299-0083 EXHIBIT "A" TO ATTACHMENT NO.2 LEGAL DESCRIPTION OF SITE LOT 40 OF TRACT NO. 103 AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET IN WIDTH LYING EASTERLY AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION THEREOF DESCRIBED AS FOLLOWS: COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT NO. 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE WESTERLY PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM SAID NORTHERLY LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. ALONG WITH: LOT 43, AS SHOWN ON A LICENSED SURVEYOR'S MAP, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 2, PAGES 31 TO 38 INCLUSIVE, RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE WESTERLY 12 FEET. ALONG WITH: THAT PORTION OF LOT 40 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: EXHIBIT "A" TO ATTACHMENT NO. 2 DOCSOC/ 1339956v5/022299-0083 0 0 COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING: THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET IN WIDTH LYING EASTERLY OF AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALONG WITH LOT 42 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 TO 30 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PROPERTY: BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 42, SAID CORNER BEING ON THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY: THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET: THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST ALONG THE SOUTHERLY LINE OF GARDEN STREET 202.60 FEET TO A POINT: THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT ON THE SOUTHERLY LINE OF THE ABOVE MENTIONED LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST ALONG THE SOUTHERLY LINE OF LOT 42, 201.44 FEET TO THE POINT OF BEGINNING. ALONG WITH: THAT PORTION OF LOT 41 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: DOCSOC/1339956v5/022299-0083 0 0 BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 41; RUNNING THENCE NORTH 9 DEGREES 40 MINUTES WEST 84.41 FEET ALONG THE WEST LINE OF SAID LOT 41 TO THE NORTHWEST CORNER THEREOF: THENCE NORTH 84 DEGREES 28 MINUTES EAST 41.13 FEET ALONG THE NORTHERLY LINE OF SAID LOT 41 TO A POINT WHICH IS LOCATED 201.44 FEET SOUTH 84 DEGREES 28 MINUTES WEST FROM THE SOUTHEAST CORNER OF LOT 42 OF SAID TRACT NO. 103; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT 1N THE SOUTHERLY LINE OF SAID LOT 41; THENCE SOUTH 84 DEGREES 27 MINUTES WEST 35.55 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 41 TO THE POINT OF BEGINNING. ALONG WITH: THAT PORTION OF LOT 42 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BACK 11, PAGES 29 TO 33, INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF SAID ORANGE COUNTY. DESCRIBED AS FOLLOWS: BEGINNING TO THE MOST EASTERLY CORNER OF SAID LOT, SAID CORNER BEING IN THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY; THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET; THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST, ALONG THE SOUTHERLY LINE OF GARDEN STREET, 202.60 FEET TO A POINT; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST, ALONG THE SOUTHERLY LINE OF SAID LOT, 201.44 FEET TO THE POINT OF BEGINNING. END Assessor Parcel Number: 121-150-27 DOC SOC/ 1339956v5/022299-0083 0 0 STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, Notary Public, (Print Name of Notary Public) personally appeared who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ Individual ❑ Corporate Officer Title(s) Title Or Type Of Document ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator Number Of Pages ❑ Other: Signer is representing: Name Of Persons) Or Entity(ics) Date Of Documents Signer(s) Other Than Named Above DOCSOC/ 1339956v5/022299-0083 0 0 STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, Notary Public, (Print Name of Notary Public) personally appeared who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ Individual ❑ Corporate Officer Title(s) Title Or Type Of Document ❑ Partner(s) ❑ Limited ❑ General ❑ Attomey-In-Fact ❑ Trustee(s) ❑ Guardian/Conservator Number Of Pages ❑ Other: Signer is representing: Name Of Persons) Or Entity0es) Date Of Documents Signer(s) Other Than Named Above DOCSOC/ 1339956v5/022299-0083 0 ATTACHMENT NO.3 0 CERTIFICATE OF CONTINUING COMPLIANCE WITH OPERATING COVENANT AND PARTICIPATION AGREEMENT TO: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director The undersigned, �Vw &pj4n, being duly authorized to execute this Certificate of Continuing Compliance with Operating Covenant and Participation Agreement ("Certificate") on behalf of Regency Theatres. Inc., a California corporation ("Participant"), hereby represents, warrants, and certifies that: I. He has read and is thoroughly familiar with the provisions of the Participation Agreement ("Agreement") by and between Agency and Participant dated as of J u - � 7ti3 , 2009 and the "Operating Covenant" dated as of J a.,.t S7 , 20�L, executed by Participant and recorded against the Site in the Official Records of Orange County, California. Capitalized terms used herein shall have the same meaning as set forth in the Agreement; and 2. As of the date of this Certificate, continuously and throughout the prior Year, Participant has operated a Movie Theatre at the Site in accordance with all terms, covenants, conditions, restrictions, and agreements set forth in the Agreement and the Operating Covenant. In addition, As of the date of this Certificate, continuously and throughout the prior Year, the Movie Theatre has complied with the Movie Theatre Description attached to the Agreement as Attachment No. 6. 3. At no time since the date of filing of the last Certification of Continuing Compliance with Operating Covenant and Participation Agreement (or the Date of Agreement if this is the first such Certificate) has Participant failed to operate a Movie Theatre at the Site for thirty (30) or more consecutive days. 4. Participant is enrolled in the U.S. Department of Homeland Security's E -Verify program and, as of the date of this Certificate and continuously and throughout the prior Year, Participant has verified the employment authorization of any and all new employees assigned to perform work at the Movie Theatre and/or employees who otherwise perform work for Participant in the City through the E -Verify program within three (3) days of hiring any such employees. 5. Participant is not in Default under the terms of the Agreement or the Operating Covenant. PARTICIPANT: REGENCY THEATRES, INC., a California corporate / Byf! L� " Lyndon Golin, President ATTACHMENT NO. 3-1 DOCSOC/ 1339956x5/022299-0083 0 0 ATTACHMENT NO.4 PERSONAL GUARANTY This PERSONAL GUARANTY ("Guaranty"), dated as of june, 'L3, 2009, is executed and delivered by LYNDON GOLIN, an individual ("Guarantor"), at the solicitation of REGENCY THEATRES, INC., a California corporation ("Participant"), for the benefit and in favor of SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"). RECITALS A. Agency and Participant have executed a Participation Agreement, dated as of Jyw.oZJ , 2009 ("Agreement"), which provides for Participant's conveyance to Agency of an "Operating Covenant" with respect to certain real property generally located at 26762 Verdugo Street in the City of San Juan Capistrano ("City"), County of Orange, State of California ("Site"). Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Agreement. B. Concurrently with the execution and delivery of this Guaranty, Participant has executed and delivered the Operating Covenant to Agency and has permitted the Operating Covenant to be recorded against the Site. The Operating Covenant requires Participant to pay an amount of Four Hundred Fifty Thousand Dollars ($450,000) to Agency in ten (10) equal annual installments of Forty -Five Thousand Dollars ($45,000) as repayment of the Operating Covenant Purchase Price advanced to Participant by Agency pursuant to the Agreement, and to perform certain other obligations as set forth therein. C. Guarantor is the President and sole shareholder of Participant and, as such, will benefit indirectly by virtue of the Agreement and Participant's conveyance of the Operating Covenant to Agency. D. In order to induce Agency to purchase the Operating Covenant and to consummate the transactions contemplated by the Agreement, and in consideration thereof, Guarantor has agreed to guaranty the prompt and complete repayment of the Operating Covenant Purchase Price, all interest thereon, if any, and all of Agency's reasonable fees and expenses, if any, incurred in connection with enforcement of its rights hereunder and under the Agreement and the Operating Covenant (collectively, the "Liabilities"). NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby agrees as follows: 1. Defined Terms; Construction. (a) All terms used herein shall have the meaning set forth in the Agreement unless otherwise specified. (b) The words "hereby," "hereof," "herein" and "hereunder" and words of like import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. Section references herein are to this Guaranty unless otherwise specified. ATTACHMENT NO. 4-1 DOCSOC/ 1339956v5/022299-0083 (c) All terms defined in this Guaranty in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified. (d) The parties hereto have participated jointly in the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or interpretation arises, this Guaranty shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Guaranty. 2. Liabilities. Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Agency, as primary obligor and not merely as surety, until the final payment in full of the Liabilities has been made, (a) the due and punctual payment of the Liabilities, when and as the same shall become due and payable, whether at maturity, by acceleration, or otherwise; it being the intent of Guarantor that the guaranty set forth herein shall be a guaranty of payment and not a guaranty of collection; and (b) the punctual and faithful performance, keeping, observance, and fulfillment by Participant of all of the agreements, conditions, covenants, and obligations of Participant contained in the Operating Covenant. 3. Continuing Guaranty. This Guaranty includes Liabilities arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing or renewing the Liabilities, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional Liabilities after prior Liabilities have been satisfied in whole or in part. To the maximum extent permitted by law, Guarantor hereby waives any right to revoke this Guaranty as to future Liabilities. If such a revocation is effective notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Agency, (b) no such revocation shall apply to any Liabilities in existence on the date of receipt by Agency of such written notice (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such revocation shall apply to any Liabilities made or created after such date to the extent made or created pursuant to a legally binding commitment of Agency in existence on the date of such revocation, (d) no payment by Guarantor, Participant, or from any other source, prior to the date of Agency's receipt of written notice of such revocation shall reduce the maximum obligation of Guarantor hereunder, and (e) any payment by Participant or from any source other than Guarantor subsequent to the date of such revocation shall first be applied to that portion of the Liabilities as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of Guarantor hereunder. 4. Performance under this Guaranty. In the event that Participant fails to make any payment of any Liabilities when due, or if a Closure or Default under the Operating Covenant or Agreement shall otherwise occur and be continuing, Guarantor shall cause such payment in respect of the Liabilities to be made. 5. Primary Obligations. This Guaranty is a primary and original obligation of Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional, and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions. Guarantor hereby agrees (i)that it is directly liable to Agency, (ii) the obligations of Guarantor hereunder are independent of the obligations of Participant, and (iii) a separate action may be brought against Guarantor, whether such action (or actions) is ATTACHMENT NO. 4-2 DOCSOC/1339956v5/022299-0083 brought against Participant or whether Participant is joined in such action. Guarantor hereby agrees that its liability hereunder shall not be contingent upon the exercise or enforcement by Agency of whatever remedies it may have against Participant or Guarantor, or the enforcement of any lien or realization upon any security by Agency. Guarantor hereby agrees that any release which may be given by Agency to Participant shall not release Guarantor. Guarantor consents and agrees that Agency shall not be under any obligation to marshal any property or assets of Participant in favor of Guarantor, or against or in payment of any or all of the Liabilities. 6. Representations and Warranties. Guarantor represents and warrants as of the date of this Guaranty: (a) Guarantor is an individual residing in the State of Califomia, has the corporate power and authority to own its property and assets and to transact the business in which it is engaged. (b) Guarantor has duly executed and delivered this Guaranty, and this Guaranty constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor's rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). (c) Neither the execution, delivery or performance by Guarantor of this Guaranty, nor compliance by it with the terms and provisions hereof, (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental authority applicable to Guarantor, or (ii) will conflict or be inconsistent with or result in any breach, in any material respect, of any of the terms, covenants, conditions or provisions of, or constitute a default, in any material respect, under, or result in the creation or imposition of (or the obligation to create or impose) any lien upon any of the property or assets of Guarantor pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other agreement, contract or instrument to which Guarantor is a party or by which it or any of its property or assets is bound or to which it may be subject. (d) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made prior to date hereof), or exemption by, any Governmental Authorities is required to authorize, or is required in connection with, the execution, delivery and performance of this Guaranty. (e) Guarantor is currently informed of the condition (financial and otherwise) of Participant and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Liabilities. Guarantor has read and understands the terms and conditions of the Operating Covenant. Guarantor will continue to keep itself informed of Participant's condition (financial and otherwise) and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Liabilities. 7. Waivers. (a) To the fullest extent permitted by applicable law, Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any financial accommodations made or extended under the Operating Covenant, or the creation or existence of any Liabilities; (iii) notice of the amount of ATTACHMENT NO. 4-3 DOCSOC/1339956v5/022299-0083 0 0 the Liabilities, subject, however, to Guarantor's right to make inquiry of Agency to ascertain the amount of the Liabilities at any reasonable time; (iv) notice of any adverse change or other development in the condition (financial or otherwise) of Participant or of any other fact that might increase Guarantor's risk hereunder; (v) notice of presentment for payment, demand, protest, and notice thereof as to the Operating Covenant; (vi) notice of any Closure or Default; and (vii) all other notices (except if such notice is specifically required to be given to Guarantor under this Guaranty) and demands to which Guarantor might otherwise be entitled. (b) To the fullest extent permitted by applicable law, Guarantor hereby waives the right by statute or otherwise to require Agency to institute suit against Participant or to exhaust any rights and remedies which Agency has or may have against Participant. In this regard, Guarantor agrees, that it is bound to the payment of all Liabilities, whether now existing or hereafter arising, as fully as if the Liabilities were directly owing to Agency by Guarantor. Guarantor further waives any defense arising by reason of any disability or other defense (other than the defense that the Liabilities shall have been fully and finally performed and indefeasibly paid in full in cash, to the extent of any such payment) of Participant or by reason of the cessation from any cause whatsoever of the liability of Participant in respect thereof. (c) To the fullest extent permitted by applicable law, Guarantor hereby waives: (i) any right to assert against Agency any defense (legal or equitable), set-off, counterclaim, or claim which Guarantor may now or at any time hereafter have against Participant; (ii) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Liabilities or any security therefor; (iii) any right or defense arising by reason of any claim or defense based upon an election of remedies by Agency including any defense based upon an impairment or elimination of Guarantor's rights of subrogation, reimbursement, contribution, or indemnity of Guarantor against Participant; and (iv) the benefit of any statute of limitations affecting Guarantor's liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Liabilities shall similarly operate to defer or delay the operation of such statute of limitations applicable to Guarantor's liability hereunder. (d) Until the repayment in full of the Liabilities has occurred, (i) Guarantor hereby postpones and agrees not to exercise any right of subrogation Guarantor has or may have as against Participant with respect to the Liabilities; (ii) Guarantor hereby postpones and agrees not to exercise any right to proceed against Participant or any other Person now or hereafter liable on account of the Liabilities for contribution, indemnity, reimbursement, or any other similar rights (irrespective of whether direct or indirect, liquidated or contingent); and (iii) Guarantor hereby postpones and agrees not to exercise any right it may have to proceed or to seek recourse against or with respect to any property or asset of Participant or any other Person now or hereafter liable on account of the Liabilities. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor shall not exercise any rights of subrogation, contribution, indemnity, reimbursement or other similar rights against, and shall not proceed or seek recourse against or with respect to any property or asset of, Participant (including after payment in full of the Liabilities) if all or any portion of the Liabilities have been satisfied in connection with an exercise of available remedies. For purposes of this Guaranty, "Person" means and includes an individual, a partnership, a joint venture, a limited liability company, a corporation (including any non-profit corporation), a trust, an unincorporated organization, a group, a governmental authority, or any other entity or form of business enterprise. ATTACHMENT NO. 4-4 DOCSOC/1339956v5/022299-0083 0 0 (e) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2787, 2799, 2808, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2847, 2848, AND 2855, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A, 580B, 580C, 580D, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR LAWS OF ANY OTHER APPLICABLE JURISDICTION. (f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, Guarantor waives all rights and defenses arising out of an election of remedies by Agency, even though such election of remedies has destroyed Guarantor's rights of subrogation and reimbursement against Participant by the operation of applicable law, INCLUDING SECTION 580D OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR ANY SIMILAR LAWS OF ANY OTHER APPLICABLE JURISDICTION. (g) Without limiting the generality of any other waiver or other provision set forth in this Guaranty, Guarantor hereby also agrees to the following waivers: (i) Agency's right to enforce this Guaranty is absolute and is not contingent upon the genuineness, validity or enforceability of the Liabilities or the Operating Covenant. Guarantor waives all benefits and defenses it may have under California Civil Code Section 2810 or any similar laws in any other applicable jurisdiction and agrees that Agency's rights under this Guaranty shall be enforceable even if Participant had no liability at the time of execution of the Operating Covenant or the Liabilities are unenforceable in whole or in part, or Participant ceases to be liable with respect to all or any portion of the Liabilities. (ii) Guarantor waives all benefits and defenses it may have under California Civil Code Section 2809 or any similar laws in any other applicable jurisdiction with respect to its obligations under this Guaranty and agrees that Agency's rights under the Operating Covenant will remain enforceable even if the amount guaranteed hereunder is larger in amount and more burdensome than that for which Participant is responsible. The enforceability of this Guaranty against Guarantor shall continue until all Liabilities under the Operating Covenant have been paid in full and shall not be limited or affected in any way by any impairment or any diminution or loss of value of any security or collateral for Participant's obligations under the Operating Covenant, from whatever cause, the failure of any security interest in any such security or collateral or any disability or other defense of Participant, or any pledgor of collateral for Participant's obligations to Agency in connection with the Operating Covenant. (iii) Guarantor waives all benefits and defenses it may have under California Civil Code Sections 2845, 2849 and 2850 or any similar laws of any other applicable jurisdiction with respect to its obligations under this Guaranty, including the right to require Agency to (A) proceed against Participant, any pledgor of collateral for Participant's obligations to Agency or any other Person in connection with the Liabilities, (B) proceed against or exhaust any other security or collateral Agency may hold, or (C) pursue any other right or remedy for Guarantors benefit, and agrees that Agency may exercise its right under this Guaranty without taking any action against Participant, any pledgor of collateral for Participant's obligations to Agency in connection with the Liabilities, and without proceeding against or exhausting any security or collateral Agency holds. ATTACHMENT NO. 4-5 DOC SOC/ 1339956x5/022299-0083 8. Bankruptcy. (a) Guarantor agrees that the liability of Guarantor under this Guaranty shall in no way be limited by (i) the release or discharge of Participant in any creditor proceeding, receivership, bankruptcy or other similar proceeding, (ii) the impairment, limitation or modification of the liability of Participant or of any remedy for the enforcement of Participant's liability, resulting from the operation of any present or future provision of Title t I of the United States Bankruptcy Code, as amended, or any other statute or proceeding affecting creditors' rights generally, (iii) the rejection or disaffirmance of any Liabilities by Participant or any portion thereof in any such proceeding, or (iv) the cessation, from any cause whatsoever, whether consensual or by operation of law, of the liability of Participant to the Agency. In the event that bankruptcy, insolvency, receivership or similar creditors' rights proceedings are instituted against Participant, Guarantor hereby waives any rights of indemnification and/or subrogation it may have against Participant so long as any Liabilities are outstanding. (b) Guarantor agrees that it shall file all claims against Participant in any bankruptcy or other similar proceeding in which the filing of claims is required by law on any indebtedness of Participant to Guarantor, and will assign to the Agency all rights of Guarantor. If Guarantor does not file such claim, the Agency, as attorney in fact for Guarantor, is authorized to do so in the name of Guarantor to the extent of amounts guaranteed hereunder or, in the Agency's discretion, to assign the claim and to file a proof of claim in the name of the Agency or the Agency's nominee. In all such cases, whether in bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to the Agency the full amount of any such claim, and, to the full extent necessary for that purpose, Guarantor assigns to the Agency all of Guarantor's rights to any such payments or distributions to which Guarantor would otherwise be entitled. All monies or other property of Guarantor at any time in the possession of the Agency may be held by the Agency as security for any and all obligations of Guarantor to the Agency no matter how or when arising, whether absolute or contingent, whether due or to become due, and whether under this Guaranty or otherwise. 9. Releases. Guarantor consents and agrees that without notice to or by Guarantor and without affecting or impairing the obligations of Guarantor hereunder, Agency may, by action or inaction, compromise or settle, shorten or extend the Maturity Date or any other period of duration or the time for the payment of the Liabilities, or discharge the performance of the Liabilities, or may refuse to enforce the Liabilities, or otherwise elect not to enforce the Liabilities, or may, by action or inaction, release Participant from the terms and provisions of the Operating Covenant or may grant other indulgences to Participant, or may amend or modify in any manner and at any time (or from time to time) any one or more of the Liabilities, the Operating Covenant (including any increase or decrease in the principal amount owing to Agency under the Operating Covenant or the interest, fees or other amounts that may accrue from time to time in respect thereof), or may, by action or inaction, release or substitute Participant, or may enforce, exchange, release, or waive, by action or inaction, any security for the Liabilities, or any portion thereof. 10. No Election. Agency shall have the right to seek recourse against Guarantor to the fullest extent provided for herein and no election by Agency to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Agency's right to proceed in any other form of action or proceeding or against other parties unless Agency has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Agency under any document or instrument evidencing the ATTACHMENT NO. 4-6 DOCSOC/I 339956x5/022299-0083 0 0 Liabilities shall serve to diminish the liability of Guarantor under this Guaranty except to the extent that Agency finally and unconditionally shall have realized indefeasible payment in full of the Liabilities by such action or proceeding. 11. Revival and Reinstatement. If the incurrence or payment of the Liabilities or the transfer by Guarantor to Agency of any property of Guarantor should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if Agency is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Agency is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of Agency related thereto, the liability of Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made. 12. Payments; Application. All payments to be made hereunder by Guarantor shall be made in lawful money of the United States of America, by wire transfer in immediately available funds. and without deduction (whether for taxes or otherwise) or offset and shall be applied to the Liabilities in accordance with the terms of the Operating Covenant. 13. Cumulative Remedies. No remedy under this Guaranty is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every other remedy given under this Guaranty, and those provided by law. No delay or omission by Agency to exercise any right under this Guaranty shall impair any such right nor be construed to be a waiver thereof. No failure on the part of Agency to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Guaranty preclude any other or further exercise thereof or the exercise of any other right. 14. Termination. Upon the repayment in full of the Liabilities, this Guaranty shall terminate, and Agency upon request by Guarantor shall promptly execute and deliver such documents and instruments and take such further action reasonably requested by Guarantor, at Guarantor's expense, as shall reasonably be necessary to evidence such termination with respect to Guarantor. 15. City as Third Party Beneficiary. The City and its successors and assigns shall be intended third party beneficiaries of this Guaranty. City shall have full right and ability (but no obligation) to enforce each and every obligation of Guarantor under this Guaranty. No other person(s) or entity(ies) shall have any right of action hereunder. 16. Successors and Assigns. All rights of Agency under this Guaranty shall inure to the benefit of Agency and its permitted successors and assigns, and all obligations of Guarantor shall bind its successors and assigns. Notwithstanding the foregoing, Guarantor shall not assign this Guaranty without the prior written consent of Agency. 17. Applicable Law. All questions concerning the construction, validity, and interpretation of this Guaranty shall be governed by and construed in accordance with the domestic laws of the State of California, without giving effect to any choice of law or conflict of law provision ATTACHMENT NO. 4-7 DOCSOC/ 1339956v5/022299-0083 0 i that would cause the application of the laws of any jurisdiction other than the State of California. Each of the parties hereby irrevocably and unconditionally consents to submit and submits to the exclusive jurisdiction of the state and federal courts sitting in Orange County, California for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (and agrees not to commence any action relating thereto except in such courts). Each of the parties hereby irrevocably and unconditionally waives any objection to the laying of venue of any action arising out of this Guaranty in such courts and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum. Each party hereby consents to process being served in any such action by the mailing of a copy thereof to the address set forth in Section 20 below and agrees that such service upon receipt shall constitute good and sufficient service of process or notice thereof. Nothing in this paragraph shall affect or eliminate any right to serve process in any other manner contemplated by applicable law. Each of the parties agrees that service of any court paper may be made in such manner as may be provided under applicable laws or court rules governing service of process. 18. Enforcement Costs. If: (a) this Guaranty is placed in the hands of an attorney for collection or is collected through any legal proceeding; (b) an attorney is retained to represent Agency in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors' rights and involving a claim under this Guaranty; or (c) an attorney is retained to represent Agency in any proceedings whatsoever in connection with this Guaranty and Agency prevails in any such proceedings as described in subsections (a), (b), and/or (c) of this Section, then Guarantor shall pay to Agency upon demand all reasonable attorneys' fees, expert witness fees, costs, and expenses incurred in connection therewith (all of which are referred to collectively herein as "Enforcement Costs"), in addition to all other amounts due hereunder, regardless of whether all or a portion of such Enforcement Costs are incurred in a single proceeding or multiple proceedings brought to enforce this Guaranty. 19. Severability. If any term or other provision of this Guaranty is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Guaranty shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Guaranty so as to effect the original intent of the parties as closely as possible, in a mutually acceptable manner, to the end that transactions contemplated hereby are fulfilled to the extent possible. 20. Notice. Any approval, disapproval, demand, document or other notice which either party may desire to give to the other party under this Guaranty must be in writing and may be given by any commercially acceptable means to the party to whom the notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by notice. If to Guarantor: Lyndon Golin 22670 Liberty Bell Road Calabasas, California 91302 ATTACHMENT NO. 4-8 DOCSOC/7 339956v5/022299-0083 0 0 with a copy to: Regency Theatres 22231 Mulholland Hwy., Ste. 208 Calabasas, California 91302 Attention: Lyndon Golin If to Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 With a copy to: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Thomas P. Clark, Jr. Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 21. Amendments, Waivers and Consents. This Guaranty may be amended and any provision of this Guaranty may be waived, only if such amendment or waiver is set forth in a writing executed by Agency. 22. Guarantor's Acknowledgement. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor hereby acknowledges and agrees that Agency's rights and remedies under this Guaranty are not, and shall not be, subordinate to or limited by the rights and remedies of any other party, including, without limitation, any construction or permanent lender. 23. Section Titles. The section titles herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof. 24. Entire Agreement. This Guaranty and the documents referred to herein contain the entire agreement between the parties and supersede any prior understandings, agreements, or representations by or between the parties, written or oral, with respect to the subject matter hereof. 25. Execution in Counterparts. This Guaranty may be executed in multiple counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same instrument. Signatures Appear on Next Page ATTACHMENT NO. 4-9 DOCSOCl 1339956v51022299-0083 0 • IN WITNESS WHEREOF, the undersigned have executed and delivered this Personal Guaranty as of the date first written above. "Guarantor" LYNDON GOLIN�an individual '7 Lyndon Golin "Agency" SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic Executive Director ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Counsel ATTACHMENT NO. 4-10 DOC SOC/ 1339956v5/022299-0083 ATTACHMENT NO.5 CONSENT OF SPOUSE The undersigned acknowledges that the undersigned has read the PARTICIPATION AGREEMENT ("Participation Agreement") by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY ("Agency") and REGENCY THEATRES, INC. ("Participant"), dated as of , 2009, including all attachments thereto, and the PERSONAL GUARANTY ("Personal Guaranty") executed by LYNDON GOLIN ("Guarantor") in favor of Agency, dated as of , 2009. Capitalized terms used in this Consent of Spouse and not otherwise defined herein have the meanings given to them in the Participation Agreement. The undersigned, intending to be legally bound: 1. represents and warrants that the undersigned is the spouse of Lyndon Golin; 2. consents to and approves the execution, delivery and performance by the undersigned's spouse of, and agrees to be bound by, the Personal Guaranty with respect to the obligations of the Participant under the Participation Agreement; 3. consents to and approves the consummation of the transactions contemplated by the Participation Agreement; 4. agrees to execute and deliver any document, and to take any other action, that Agency, Participant or Guarantor may reasonably request for the purpose of facilitating, consummating or evidencing any of the transactions contemplated by the Personal Guaranty and/or the Participation Agreement; 6. irrevocably appoints Lyndon Golin (with full power of substitution) as the undersigned's agent and attorney-in-fact for the purpose of executing and delivering (on behalf of the undersigned) any contract, consent or other document, and for the purpose of taking any other action, relating directly or indirectly to the Personal Guaranty and/or the Participation Agreement; and 7. represents and warrants that the undersigned has had the opportunity to obtain legal advice, from counsel of the undersigned's own choosing and independent of the undersigned's spouse, as to the undersigned's legal rights and as to the legal effect of this Consent of Spouse. The representations, warranties, covenants, obligations and other provisions set forth in this Consent of Spouse shall continue throughout the entire Operating Covenant Period, notwithstanding any investigation conducted with respect thereto or any knowledge of any other person. Dated: , 2009 Signature Printed Name ATTACHMENT NO. 5-1 DOCSOC/ 1339956v5/022299-0083 0 0 ATTACHMENT NO.6 MOVIE THEATRE DESCRIPTION The Regency Franciscan Plaza theatre will be comprised of four (4) screens, a concession stand, a beer and wine bar, a full kitchen and a game room. The theatre will offer a high-end movie - going experience with state-of-the-art presentation, featuring stadium seating, wall to wall screens, digital sound and high -back leather love -seats with reserved seating. The theatre located upstairs will combine the dining and movie -going experiences, and will feature "Rick's American Cafe," a Moroccan -themed dining lounge which will offer movie-goers a luxurious V.I.P experience with an auditorium featuring wait staff, large reclining leather seats and service beer, wine and hot food. The programming will feature a combination of commercial and specialized films to cast the widest net and to cater to the residents of San Juan Capistrano and beyond. The theatre will operate with matinees and evening shows daily and will also be marketed as an event space for wine tasting events, screenings, parties, corporate meetings and educational space for large groups going to the Mission from the Train Station. ATTACHMENT NO. 6-1 DOCSOC/ 1339956v5/022299-0083 0 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493.1171 (949) 493-1053 FAx www.sanjuancapistrano.org TRANSMITTAL "*I Regency Theatres, Inc Attn: Lyndon Golin 22231 Mulholland Hwy, Suite 208 Calabasas, CA 91302 DATE: August 17, 2009 Jwa► � • F o�,�, IA(IAIAAIiFI mslD 1961 1776 MEMBERS OF THE CITY COUNCIL SAM ALLEVATO LAURA FREESE THOMAS W. HRISAR MARK NIELSEN DR. LONDRES USO FROM: Christy Jakl, Administrative Specialist, City Clerk's Office (949) 443-6310 RE: Participation Agreement — Regency Theatres, Inc Enclosed: (1) Original, Participation Agreement — Regency Theatres, Inc If you have questions concerning the agreement, please contact Douglas D. Dumhart, Economic Development Manager at (949) 443-6316. Cc: Douglas D. Dumhart, Economic Development Manager San Juan Capistrano: Preserving the Past to Enhance the Future 0 Printed on 100% recycled paper 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 4931171 (949) 493-1053 FAX wwwsanjuancapistrano. org TRANSMITTAL TO Woodruff, Spradlin & Smart Attn: Vanessa Lodlin 555 Anton Boulevard, Suite 1200 Costa Mesa, CA 92626 DATE: August 17, 2009 MEMBERS OF THE CITY COUNCIL FROM: Christy Jakl, Administrative Specialist, City Clerk's Office (949) 443-6310 RE: Participation Agreement — Regency Theatres, Inc Enclosed: (1) Original, Participation Agreement —Regency Theatres, Inc SAM ALLEVATO LAURA FREESE THOMAS W. HRIBAR MARK NIELSEN OR LONDRES USO If you have questions concerning the agreement, please contact Douglas D. Dumhart, Economic Development Manager at (949) 443-6316. Cc: Douglas D. Dumhart, Economic Development Manager San Juan Capistrano: Preserving the Past to Enhance the Future " Printed on 100% recycled paper SVS Today's Date: June 25, 2009 • CONTRACT TRANSMITTAL CIP No. (if any): Transmittal Routing (Check All That Apply) ❑ City Attorney ❑ City Manager ® City Clerk Project Manager's Last Name: Douglas Dumhart Phone Extension: X 6316 Council or CRA Meeting Date (if applicable): 7/7/09 APPROVING AUTHORITY: (Check One) ED Mayor H CRA Chair Executive Director Provide (1) executed original contract for each signing party, including the Agency. If the agreement is to be recorded — only (1) original will be recorded with certified copies going to other parties. Please provide the mailing address of any party to receive an agreement — unless the mailing address is included within the body of the agreement: (Not necessary if information is included in the contract) Name(s) Street City St Zip Regency Theatres, Inc., Attn: Lyndon Golin 22231 Mulholland Hwy., Suite 208 Calabasas CA 91302 OTHER INSTRUCTIONS: 1. Please return a copy of executed agreements for our files. 0 AGENDA REPORT TO: Joe Tait, Interim Executive Directord- is CRA 7/7/2009 FROM: Douglas D. Dumhart, Economic Development Manager D1 SUBJECT: Consideration of Participation Agreement (Regency Theatres) (*City Council Priority No. 19A) RECOMMENDATION: By motion, approve the Participation Agreement with Regency Theatres, which provides for an Agency loan to Regency Theatres in the amount of $450,000. SUMMARY: On March 17, 2009, the Agency Board of Directors approved the concept of providing Regency Theatres with financial assistance in the form of a ten-year $450,000 interest free loan. Agency special counsel and staff have prepared a Participation Agreement by and between the Redevelopment Agency and Regency Theatres to effectuate this request for financial assistance for the Boards' consideration. The Participation Agreement provides for the Agency to acquire from Regency Theatres an operating covenant in exchange for Agency's agreement to forego interest on its loan to Regency Theatres of $450,000. The operating covenant requires Regency Theatres to operate the movie theatre on a continual basis, devoted to the presentation to the public of newly -released feature length motion pictures as the principal activity at the premises for at least ten years. Regency Theatres will repay the operating covenant in ten (10) equal installments of $45,000 on the last day of each of the first through tenth years following recordation of the operating covenant. In the event the theatres are closed before the ten year term, Regency will be required to immediately repay the outstanding balance at a rate of 10% per annum. The Participation Agreement requires Lyndon Golin, President and sole shareholder of Regency Theatres, Inc., to personally guaranty repayment of the Agency loan. BACKGROUND: Regency Theatres is interested in bringing back movie -going to San Juan Capistrano with a renovation and re -opening of the Franciscan Plaza Theatre located at 26762 Verdugo Street (formerly Edwards Theatres). Re -opening the Franciscan Plaza movie theatre will require major capital investment from both the landlord and Regency. Agenda Report • • Page 2 July 7, 2009 The Regency Franciscan Plaza will be comprised of four screens, a concession stand, a beer and wine bar, a full kitchen and a game room. The theatre will offer a high-end movie -going experience with state-of-the-art presentation, featuring stadium seating, wall-to-wall screens, digital sound and high -back leather loveseats with reserved seating. Combining the dining and movie -going experience, the theatre upstairs will feature "Rick's American Cafe," a Moroccan -themed lounge which will offer movie-goers a luxurious V.I.P experience with an auditorium featuring wait staff, large reclining leather seats and service beer, wine and hot food. The programming will feature a combination of commercial and specialized film to cast the widest net to cater to the residents of San Juan Capistrano and beyond. The theatre will operate with matinees and evening shows daily and will also be marketed as an event space for wine tastings, screenings, parties, corporate meetings and educational space for large groups going to the Mission from the train station. Regency's tenant improvement costs would include seating of auditoriums, installation of projection equipment, lobby floor and fixtures, building and equipping a concession stand, building a bar and equipping the VIP lounge, and various theatre signage and fixtures. Regency estimates the cost of such tenant improvements to exceed $450,000. In addition to Regency's tenant improvements, Regency will be making a significant investment in start up operating costs during the initial three years of operation while the theatre stabilizes. The Franciscan Plaza Movie Theatre building has a limited number of screens and seating capacity. This limited capacity makes the return on investment for this location very minimal. Due to the amount of improvements needed, limited venue size, requisite reserves required for start up operations, the tight credit market and short supply of financing in today's economy, Regency is seeking assistance from the Redevelopment Agency in the form of a "no interest ten year term loan" to finance the project costs. FINANCIAL CONSIDERATIONS: The Agency has programmed in Fiscal Year (FY) 08/09 one million dollars ($1,000,000) for Business Recruitment and Retention from the 2008 Tax Allocation Bond proceeds. The request for a commercial rehab loan from Regency Theatres is consistent with the expenditure intent of these funds. COMMISSIONS/BOARD REVIEW, RECOMMENDATIONS: The upstairs VIP auditorium is proposed to offer a range of exclusive services to the movie-goer including reclining leather seats and a full service bar which will serve beer, wine and gourmet snacks. The beer and wine sales will require a conditional use permit (CUP), an ABC license and possibly a Council resolution of public convienence or necessity. Agenda Report • • Page 3 July 7, 2009 NOTIFICATION: Lyndon Golin, Regency Theatres Alberto Mobrici, Alfa Plaza, LLC RECOMMENDATION: By motion, approve the Participation Agreement with Regency Theatres, which provides for an Agency loan to Regency Theatres in the amount of $450,000. Respectfully submitted, Douglass D. Dumhart Economic Development Manager Attachment 1. Participation Agreement. 0 0 PARTICIPATION AGREEMENT by and between SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY and REGENCY THEATRES, INC. DOCSOC/ 1339956v5/022299-0083 ATTACHMENT 0 0 TABLE OF CONTENTS Page 100. DEFINITIONS..........................................................................................................................2 200. AGENCY'S PURCHASE OF OPERATING COVENANT.....................................................5 201. Conveyance of Operating Covenant.............................................................................5 202. Operating Covenant Purchase Price..............................................................................5 203. Payment of Operating Covenant Purchase Price...........................................................5 204. Repayment of Operating Covenant Purchase Price......................................................5 205. Conditions Precedent to Payment of the Operating Covenant Purchase Price .............6 206. Representations and Warranties....................................................................................7 206.1 Agency Representations...................................................................................7 206.2 Participant's Representations............................................................................7 300. COVENANTS AND RESTRICTIONS....................................................................................8 301. Use in Accordance with Redevelopment Plan, Agreement and Operating Covenant.......................................................................................................................8 302. Operating Covenant.......................................................................................................8 302.1 Covenant to Operate Movie Theatre on Site....................................................8 302.2 No Competing Theatre; Operation to Maximize Sales and Use Tax Revenues........................................................................................................... 8 302.3 Default and Closure..........................................................................................8 302.4 Covenants to Run with Land............................................................................9 303. Use of the Site...............................................................................................................9 303.1 Compliance With Laws....................................................................................9 303.2 Maintenance......................................................................................................9 303.3 Hazardous Materials.........................................................................................9 304. Indemnification............................................................................................................. 9 304.1 Generally...........................................................................................................9 304.2 Defense of Claims...........................................................................................10 304.3 Third Party Litigation Concerning Agreement...............................................10 305. Nondiscrimination Covenants..................................................................................... 11 306. Insurance Requirements..............................................................................................12 306.1 Insurance Requirements..................................................................................12 306.2 Additional Insurance Requirements...............................................................13 307. Effect of Violation of the Terms and Provisions of this Agreement ...........................13 308. Recordation of Operating Covenant............................................................................ 13 309. E-Verify.......................................................................................................................14 400. DEFAULTS AND REMEDIES..............................................................................................14 401. Default.........................................................................................................................14 402. Institution of Legal Actions.........................................................................................14 403. Termination by Participant..........................................................................................14 404. Termination by Agency...............................................................................................15 405. Repayment of Operating Covenant Purchase Price in Event of Default.....................15 406. Acceptance of Service of Process...............................................................................15 407. Rights and Remedies Are Cumulative........................................................................15 408. Inaction Not a Waiver of Default................................................................................15 409. Applicable Law...........................................................................................................15 410. Attorneys' Fees...........................................................................................................16 i DOCSOC/ 1339956v5/022299-0083 • Table of Contents (Continued) • Page 500. GENERAL PROVISIONS......................................................................................................16 Attachment No. 501. Notices, Demands and Communications Between the Parties....................................16 2 502. Enforced Delay; Extension of Times of Performance................................................16 Attachment No. 503. Transfers of Interest in Site or Agreement..................................................................17 5 Attachment No. 503.1 Prohibition......................................................................................................17 503.2 Permitted Transfers.........................................................................................17 503.3 Agency Consideration of Requested Transfer................................................18 503.4 Assignment and Assumption Agreement.......................................................18 503.5 Successors and Assigns..................................................................................18 503.6 Assignment by Agency...................................................................................18 504. Non Liability of Officials and Employees of Agency.................................................18 505. Relationship Between Agency and Participant...........................................................18 506. City as Third Party Beneficiary ...................................................................................18 507. Agency Approvals and Actions...................................................................................19 508. Counterparts................................................................................................................19 509. Integration...................................................................................................................19 510. Titles and Captions......................................................................................................19 511. Interpretation ...............................................................................................................19 512. No Waiver...................................................................................................................19 513. Modifications..............................................................................................................19 514. Severability.................................................................................................................19 515. Computation of Time..................................................................................................20 516. Legal Advice...............................................................................................................20 517. Time of Essence..........................................................................................................20 518. Cooperation.................................................................................................................20 519. Conflicts of Interest.....................................................................................................20 ATTACHMENTS Attachment No. 1 Attachment No. 2 Attachment No. 3 Attachment No. 4 Attachment No. 5 Attachment No. 6 Legal Description Operating Covenant Certificate of Compliance Personal Guaranty Consent of Spouse Movie Theatre Description ii DOCSOC/ 1339956v5/022299-0083 PARTICIPATION AGREEMENT This PARTICIPATION AGREEMENT ("Agreement") is entered into as of , 2009 ("Date of Agreement") by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and REGENCY THEATRES, INC., a California corporation ("Participant"). RECITALS A. Agency is a California redevelopment agency duly formed and exercising powers pursuant to the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("Redevelopment Law"). B. Participant has entered into the Theatre Lease (defined below) with Alfa Plaza, LLC ("Owner") to lease from Owner certain real property generally located at 26762 Verdugo Street in the City of San Juan Capistrano ("Site"). The Site is more particularly described in the Theatre Lease and the Legal Description. The Site is located in Agency's San Juan Capistrano Central Redevelopment Project ("Redevelopment Project"). C. The Site is currently developed with a movie theatre shell. The Owner is in the process of rehabilitating and remodeling the structure currently located at the Site to enable a portion of the Site to be leased to Participant for use and operation as a four (4) screen Regency Theatres brand movie theatre with a concession stand and V.I.P. area (collectively, "Movie Theatre"). In addition, Owner is remodeling other portions of the Site for operation by other, unrelated entities as a coffee shop, ice cream parlor, or other, similar businesses. D. Agency and Participant now desire for Participant to operate the Movie Theatre at the Site E. The Redevelopment Plan for the Redevelopment Project provides for Agency to encourage owners and tenants of real property within the Redevelopment Project to participate in the redevelopment of their property and authorizes Agency to acquire any interest in real property. F. The parties desire to enter into this Agreement in order to provide for Agency's purchase from Participant of the Operating Covenant, an interest in real property, as described in more detail herein. In consideration of Participant's sale of the Operating Covenant to Agency, this Agreement provides for Agency to pay the Operating Covenant Purchase Price to Participant and for Participant to repay the Operating Covenant Purchase Price to Agency in ten (10) equal, annual installments, without interest. G. The operation by Participant of the Movie Theatre on the Site, as provided for in this Agreement, is in the vital and best interest of the City of San Juan Capistrano and the welfare of its residents and is in accordance with the public purposes and provisions of applicable state and local laws. NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agency and Participant hereby agree as follows: DOCSOC/ 1339956v5/022299-0083 • 100. DEFINITIONS s All terms not otherwise defined herein shall have the meanings set forth below: "Agency" means the San Juan Capistrano Community Redevelopment Agency, 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, and any assignee of or successor to its rights, powers and responsibilities. "Agreement" means this Participation Agreement between Agency and Participant. "Certificate of Compliance" means the Certificate of Continuing Compliance with Operating Covenant and Participation Agreement in the form set forth as Attachment No. 3 and incorporated herein. "City" means the City of San Juan Capistrano, California. "Claims" means any and all claims, actions, suits, proceedings, losses, costs, damages, liabilities, deficiencies, fines, penalties, punitive damages, or expenses (including, without limitation, attorneys' fees, expert witness fees, and court and litigation costs). "Closure" means the failure of Participant to operate the Movie Theatre on the Site for thirty (30) or more consecutive days, other than for reasons of Enforced Delay. "Conditions Precedent" means the conditions precedent to Agency's obligation to pay the Operating Covenant Purchase Price described in Section 205. "Consent of Spouse" means the Consent of Spouse set forth as Attachment No. 5 and incorporated herein, which shall be executed by the spouse of Lyndon Golin as a Condition Precedent to payment of the Operating Covenant Purchase Price. "County" means the County of Orange, California. "Date of Agreement' means the date set forth in the first paragraph hereof. "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 401 hereof. "Enforced Delay" is defined in Section 502. "Environmental Law" means any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117, 25122.7 or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (vi) Section 1004 of DOCSOC/ 1339956v5/022299-0083 0 0 the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq. (42 U.S.C. Section 6903), (vii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., or (viii) any state or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction over Participant or the Site. "Executive Director" means the Agency's Executive Director or his authorized designee. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the City, or any other political subdivision in which the Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over Agency, the Participant or the Site, including, without limitation, all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City Municipal Code, all applicable disabled and handicapped access requirements, all applicable federal, state, and local public works requirements, including the requirement to pay prevailing wages and hire apprentices pursuant to Labor Code Section 1720 et seq., the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and all other applicable federal, state, and local laws. "Hazardous Materials" means any substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "acutely hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (ix) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), (x) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq. (42 U.S.C. Section 9601), (xi) Methyl - Tertiary Butyl Ether, or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to the environment. "Legal Description" means the legal description of the Site attached hereto as Attachment No. 1 and incorporated herein. 3 DOC SOC/ 1339956v5/022299-0083 0 0 "Movie Theatre" means a four (4) screen movie theatre, concession stand, V.I.P. area, and associated services and facilities to be operated by Participant at the Site under the Regency Theatres brand name or such other brand reasonably approved by Agency in its sole, exclusive discretion. The Movie Theatre shall at all times conform to the detailed Movie Theatre Description set forth in Attachment No. 6 and incorporated herein. "Movie Theatre Description" means the detailed description of the Movie Theatre set forth in Attachment No. 6 and incorporated herein, including the facilities and services required to be provided at the Movie Theatre throughout the entire Operating Covenant Period. "Notice" means a notice in the form prescribed by Section 501 hereof. "Operating Covenant" means the Operating Covenant which is attached hereto as Attachment No. 2 and incorporated herein. "Operating Covenant Period" shall commence as of the date the Operating Covenant is executed and recorded against Participant's leasehold interest in the Site and continue for a period of ten (10) Years thereafter. "Operating Covenant Purchase Price" means the purchase price to be paid by Agency to Participant in exchange for the Operating Covenant. "Owner" means the owner of fee title to the Site, currently Alpha Plaza, LLC. "Participant" means Regency Theatres, Inc., a California corporation, and its permitted successors and assigns. "Participant Payment Date" is defined in Section 204. "Personal Guaranty" means the Personal Guaranty in substantially the form attached hereto as Attachment No. 4 and incorporated herein. "Redevelopment Law" means the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project, adopted on July 12, 1983 by Ordinance No. 488 of the City Council of the City of San Juan Capistrano, as the same has been and may be amended from time to time. "Redevelopment Project" means the San Juan Capistrano Central Redevelopment Project, adopted by the City Council of City pursuant to the Redevelopment Plan. "Regulatory Approvals" means any and all such approvals as may be required from the City or any other applicable governmental agency, to allow the Site to be operated and utilized as the Movie Theatre. "Sales and Use Tar Revenue" means that portion of taxes derived and received by the City and available in the City's general fund for unrestricted use from the imposition of the Sales Tax Law, on transactions having the Site as a point of sale. DOCSOC/ 1339956v5/022299-0083 0 0 "Sales Tax Law" means the Bradley Bums Uniform Local Sales and Use Tax Law, California Revenue and Taxation Code Section 7200, et seq., as amended, or any successor statute, law or regulation. "Site" means that certain real property generally located at 26762 Verdugo Street in the City of San Juan Capistrano, County of Orange, State of California, as more particularly described in the Theatre Lease and the Legal Description. "Theatre Lease" means that certain Theatre Lease by and between Owner and Participant, dated April 27, 2009, pursuant to which Participant shall lease the Site from Owner for a term of not fewer than ten (10) Years for purposes of operating the Movie Theatre thereon. "Transfer" is defined in Section 503.1 hereof. "Year" means a twelve (12) month period, the first of which shall commence on the first day following the date the Operating Covenant is recorded against the Site and terminate on the date which is twelve (12) months thereafter and the remainder of which shall commence on the day following the termination date of the previous Year and terminate twelve (12) months thereafter. 200. AGENCY'S PURCHASE OF OPERATING COVENANT. 201. Conveyance of Operating Covenant. Participant hereby agrees to convey to Agency and Agency hereby agrees to purchase from Participant the Operating Covenant attached hereto as Attachment No. 2 and incorporated herein, subject to the terms, conditions, and restrictions set forth in this Agreement. The Operating Covenant shall be recorded against Participant's leasehold interest in the Site in the Official Records of Orange County, California concurrently with Agency's payment of the Operating Covenant Purchase Price. 202. Operating Covenant Purchase Price. In accordance with its authority as a redevelopment agency under the Redevelopment Law and in consideration of the sale by Participant to Agency of the covenants set forth in Section 300, et seq. hereof and in the Operating Covenant, Agency hereby agrees to pay to Participant Four Hundred Fifty Thousand Dollars ($450,000) ("Operating Covenant Purchase Price"). 203. Payment of Operating Covenant Purchase Price. Agency shall pay the Operating Covenant Purchase Price to Participant within thirty (30) days following satisfaction by Participant or waiver by Agency of each of the Conditions Precedent set forth in Section 205. The Operating Covenant Purchase Price shall be paid by Agency to Participant concurrently with execution and recordation of the Operating Covenant against Participant's leasehold interest in the Site and delivery of the Personal Guaranty to Agency. 204. Repayment of Operating Covenant Purchase Price. Participant shall repay the Operating Covenant Purchase Price to Agency in ten (10) equal annual installments of Forty -Five Thousand Dollars ($45,000), to be made on the last day of each of the first (1") through tenth (10`h) Years following recordation of the Operating Covenant against the Site ("Participant Payment Date"). Not later than thirty (30) days prior to each Participant Payment Date, Participant shall execute and deliver to Agency a Certificate of Compliance for the previous Year. In the event of a Closure or any Default hereunder or under the Operating Covenant which is not cured within the time set forth in Section 401, Participant shall immediately repay the entire Operating Covenant DOCSOC/ 1339956v5/022299-0083 0 0 Purchase Price to Agency, plus interest on the outstanding remaining balance thereof at the rate of ten percent (10%) per annum. This repayment obligation shall be described in more detail in the Operating Covenant and guaranteed by execution and delivery to Agency of the Personal Guaranty by Lyndon Golin, Participant's President and sole shareholder. 205. Conditions Precedent to Payment of the Operating Covenant Purchase Price. Agency's obligation to pay the Operating Covenant Purchase Price is expressly conditioned upon the satisfaction by Participant of each of the Conditions Precedent (a) through (i), inclusive, described below. Such Conditions Precedent are solely for the benefit of the Agency, and shall be fulfilled by Participant (or waived by the Agency in its sole discretion) within the time periods provided for herein. (a) Completion of Movie Theatre Shell. All improvements to the Movie Theatre required to have been completed by Owner (as described in Exhibit "C" of the Theatre Lease) shall have been completed to the satisfaction of Agency. (b) Execution and Recordation of Operating Covenant. The Operating Covenant shall have been executed by Participant and delivered to Agency and shall be ready to be recorded against Participant's leasehold interest in the Site in a first, senior, non - subordinate lien position concurrently with Agency's payment of the Operating Covenant Purchase Price to Participant. Such Operating Covenant shall be and remain an encumbrance against Participant's leasehold interest in the Site in first lien priority until the end of the Operating Covenant Period. A Memorandum of Lease must be recorded against the Site to permit the Operating Covenant to be recorded against Regency's leasehold interest therein. (c) Delivery of Personal Guaranty and Consent of Spouse. The Personal Guaranty shall have been executed by Lyndon Golin and the Consent of Spouse shall have been executed by the spouse of Lyndon Golin; both documents shall have been delivered to Agency. (d) Theatre Lease. Participant and Owner shall have entered into the Theatre Lease and the Theatre Lease shall be in full force and effect. A Memorandum of Lease shall have been recorded against the Site. (e) E -Verify Program. Participant shall have provided a certification to Agency evidencing Participant's registration with E -Verify, along with Participant's E -Verify registration number, in accordance with Section 309. (f) Insurance. Participant shall have provided proof of insurance as required by Section 306 of this Agreement. (g) Regulatory Approvals. Participant shall have obtained any and all legally required Regulatory Approval(s) from the City and all other applicable governmental agency(ies) related to Participant's lease of the Site and operation of the Movie Theatre thereon. (h) Payment of Taxes. No ad valorem real or personal property taxes or assessments assessed with respect to Participant's leasehold interest in the Site or ownership and/or operation of the Movie Theatre thereon shall be delinquent. 6 DOCSOC/ 1339956v5/022299-0083 (i) No Default. There shall exist no condition, covenant, event or act which would constitute an event of Default hereunder, or which, upon the giving of notice or the passage of time, or both, would constitute an event of Default. 0) Environmental Condition of the Site. Participant shall not be in Default of the requirements of this Agreement regarding the environmental condition of the Site. 206. Representations and Warranties. 206.1 Agency Representations. Agency represents and warrants to Participant as of the Date of Agreement as follows: (a) Agency is a public body, corporate and politic, existing pursuant to the Redevelopment Law, which has been authorized to transact business pursuant to action of the City Council of the City. (b) The execution, performance and delivery of this Agreement by Agency have been fully authorized by all requisite actions on the part of Agency. (c) Agency's execution, delivery and performance of its obligations under this Agreement will not constitute a Default or a breach under any contract, agreement or order to which Agency is a party or by which it is bound. Until the final disbursement of the Operating Covenant Purchase Price, Agency shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 206.1 not to be true as of such date, immediately give written notice of such fact or condition to Participant. Such exception(s) to a representation shall not be deemed a breach by Agency hereunder, but shall constitute an exception which Participant shall have a right to approve or disapprove. 206.2 Participant's Representations. Participant represents and warrants to Agency as of the Date of Agreement and until the expiration of the Operating Covenant Period as follows: (a) Authority. Participant has full right, power and lawful authority to undertake all obligations as provided herein. The execution, performance and delivery of this Agreement by Participant have been fully authorized by all requisite actions on the part of Participant. (b) Experience. Participant is an experienced operator of movie theatres and is authorized by the State of California to engage in the business of operating movie theaters. (c) No Conflict. To the best of Participant's knowledge, Participant's execution, delivery and performance of its obligations under this Agreement will not constitute a Default or a breach under any contract, agreement or order to which Participant is a party or by which it is bound. (d) No Participant Bankruptcy. Participant is not the subject of a current or threatened bankruptcy proceeding. 7 DOCSOC/ 1339956v5/022299-0083 0 0 Until the expiration of the Operating Covenant Period, Participant shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 206.2 not to be true as of such date, immediately give written notice of such fact or condition to Agency. Such exception(s) to a representation shall not be deemed a breach by Participant hereunder, but shall constitute an exception which Agency shall have a right to approve or disapprove. 300. COVENANTS AND RESTRICTIONS 301. Use in Accordance with Redevelopment Plan, Agreement and Operating Covenant. Participant covenants and agrees to devote, use, operate, and maintain the Site and the Movie Theatre in accordance with the Redevelopment Plan, the Operating Covenant, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the Movie Theatre, this Agreement and the Operating Covenant. All uses conducted on the Site, including, without limitation, all activities undertaken by Participant pursuant to this Agreement, shall conform to the Redevelopment Plan, all applicable provisions of the City Municipal Code, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the Movie Theatre and the recorded documents pertaining to and running with the Site. 302. Operating Covenant. Participant hereby covenants and agrees to each of the following covenants: 302.1 Covenant to Operate Movie Theatre on Site. Throughout the Operating Covenant Period, Participant shall operate (or cause its successors or assigns to operate) the Movie Theatre on the Site on a continuous basis, in compliance with all Governmental Requirements and Regulatory Approvals, with such Site devoted to the presentation to the public of newly -released, feature length motion pictures as the principal activity conducted on the Site. Food sales, video games, and related uses may also be conducted at the Site as a secondary and incidental use to the primary use of operating a Movie Theatre at the Site. In addition, pre-screening of such motion pictures and other promotional events and activities may also be conducted on the Site as a secondary use incidental to the primary use of operating a Movie Theatre at the Site. No other uses may be conducted on the Site during the Operating Covenant Period without the prior written approval of Agency, which approval may be granted, refused, or conditioned as provided in Section 503 hereof. 302.2 No Competing Theatre; Operation to Maximize Sales and Use Tax Revenues. Participant further covenants and agrees that during the Operating Covenant Period, Participant will not own, lease, and/or operate through Participant, or any entity in which Participant has at least a twenty five percent (25%) interest in profits and losses and/or management control, any other movie theatre within a two (2) mile radius of the boundaries of the Site. Participant shall use commercially reasonable efforts to operate (or to cause its successors or assigns to operate) the Movie Theatre on the Site in such a manner as to produce the maximum amount of Sales and Use Tax Revenues to be received by the City. 302.3 Public Service Announcements. Agency shall have the right to run public service announcements ("PSA") at the Movie Theatre prior to films, at no charge, during the time when advertisements are shown and prior to the presentation of movie trailers. Agency shall prepare (at Agency's cost) and provide to Participant any PSAs which Agency wishes to be shown at the Movie Theatre within a reasonable time prior to the date on which such PSAs are to be shown. 8 DOCSOC/ 1339956v5/022299-0083 Agency shall have the right to show at least one (1) PSA prior to each film shown at the Movie Theatre. 302.4 Default and Closure. Except with the prior written consent of Agency for each instance, which consent may be granted or withheld in Agency's reasonable discretion, a Closure shall, at Agency's option, constitute a Default hereunder and under the Operating Covenant. Termination of the Theatre Lease prior to the tenth (10`h) Year following execution and recording of the Operating Covenant shall constitute a Default hereunder and under the Operating Covenant triggering Agency's right to accelerate repayment of the Operating Covenant Purchase Price, with interest, as set forth in Section 204 and the Operating Covenant. 302.5 Covenants to Run with Land. The requirements of this Section 302 shall be included in the Operating Covenant and shall run with the land and bind all successors and assignees of Participant's leasehold interest in the Site. 303. Use of the Site. 303.1 Compliance With Laws. Participant shall carry out the design, construction and operation of the Movie Theatre in conformity with all Governmental Requirements and Regulatory Approvals, including all entitlements and/or permits issued by the City for the Movie Theatre, as such entitlements and/or permits may be modified from time to time. 303.2 Maintenance. Participant shall maintain the Site and the Movie Theatre, including all landscaping thereon, in a clean and attractive condition in accordance with the City Municipal Code, all Governmental Requirements, all Regulatory Approvals, and the Operating Covenant. 303.3 Hazardous Materials. Participant shall not cause or permit the presence, use generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Site in violation of any applicable Environmental Law. 304. Indemnification. 304.1 Generally. Participant shall indemnify, protect, defend (with counsel selected by Agency), and hold harmless Agency and City, and their respective officers, employees, contractors, agents, representatives, and volunteers, from and against any and all Claims of any kind or nature in any way arising from or relating to this Agreement, the Operating Covenant, the Personal Guaranty, or the implementation or approval of this Agreement, the Operating Covenant, or the Personal Guaranty, including without limitation: (i) Claims for any damages to property or injuries to persons, including accidental death, which may be caused by any acts or omissions of Participant whether such activities or performance thereof be by Participant or by anyone directly or indirectly employed or contracted with by Participant and whether such damage shall accrue or be discovered before or after termination of this Agreement, (ii) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Site in violation of any applicable Environmental Law, whenever discovered, (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Site, whenever DOCSOC/1 339956x5/022299-0083 0 0 discovered, and (iv) any and all Claims and/or "increased costs" (as defined in Labor Code Section 1781, as it may be amended from time to time) which, in connection with the design, construction, and/or operation of the Movie Theatre, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Participant with any Governmental Requirements or Regulatory Approvals, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Participant to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the rehabilitation of the Site, including, without limitation, any and all public works (as defined by applicable law), Participant shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. The foregoing indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. The foregoing indemnity shall survive termination of this Agreement and the Operating Covenant and shall continue after completion of the rehabilitation of the Site by Owner and commencement of operation of the Movie Theatre by Participant. 304.2 Defense of Claims. Participant shall have the obligation to defend against any Claims as provided in Section 304.1; provided, however, that this obligation to defend shall not be effective if and to the extent that Participant determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, in which case Participant shall compromise or settle such action in a way that fully protects Agency and City from any liability or obligation. In this regard, Participant's obligation and right to defend shall include the right to hire (subject to written approval by Agency and City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against Participant, Agency, or City. If Participant defends any such action, as set forth above, (i) Participant shall indemnify and hold harmless Agency and City and their officers, employees, contractors, agents, representatives, and volunteers from and against any claims, losses, liabilities, or damages assessed or awarded against either of them by way of judgment, settlement, or stipulation and (ii) Agency shall be entitled to settle any such claim only with the written consent of Participant, not to be unreasonably withheld, and any settlement without such reasonable consent shall release Participant's obligations under this Section 304.2 with respect to such settled claim. Notwithstanding anything to the contrary herein, Participant shall not be liable for any such claims which are caused by the sole negligence or willful acts of Agency or its officers, employees, contractors, agents, representatives, and volunteers. 304.3 Third Party Litigation Concerning Agreement. Participant shall defend (with counsel selected by Agency), at its expense, including attorney and expert witness fees, indemnify, and hold harmless City, Agency, and/or their officers, employees, contractors, agents, representatives, and volunteers from any claim, action or proceeding brought by a person or entity not a party to this Agreement against Agency, City, and/or their officers, employees, contractors, agents, representatives, and volunteers to attack, set aside, void, or annul the approval of this Agreement. Agency shall promptly notify Participant of any claim, action, proceeding or 10 DOCSOC/ 1339956v5/022299-0083 0 s determination included within this Section 304.3. Agency and/or City, as applicable, may, in their discretion, participate in the defense of any such claim, action, proceeding or determination. 305. Nondiscrimination Covenants. Participant covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Site. The foregoing covenants shall run with the land. Participant shall refrain from restricting the rental, sale or lease of the Site on the basis of any categories described above. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, 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 him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or. group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the 11 DOCSOC/ 1339956x5/022299-0083 • 0 premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." The covenants established in this Section 305 shall, without regard to technical classification and designation, be binding for the benefit and in favor of Agency and its successors and assigns, and shall remain in effect in perpetuity. 306. Insurance Requirements. 306.1 Insurance Requirements. Participant, at Participant's expense, shall throughout the term of this Agreement maintain and comply with the following insurance and related requirements. (a) Commercial property insurance covering the premises, fixtures, equipment, buildings, all property situated in, on, or constituting a part of the Movie Theatre, including the tenant improvements (defined as "Tenant's Work" in the Theatre Lease) required to be constructed or installed by Participant. Participant shall also provide builder's all-risk insurance using an inland marine form during the period of any construction, major alteration or improvement. Coverage shall be for the full replacement value of the improvements. (b) Plate Glass insurance covering the full replacement cost of all plate glass at the Movie Theatre (c) Commercial general liability insurance on Insurance Services Office form CG 20 10 or equivalent that pays on behalf of the insured and provides defense in addition to limits. Participant shall obtain an endorsement to the policy adding City and Agency, their officials, employees and agents as additional insureds. Coverage shall not exclude suits between insureds. (d) Comprehensive Automobile Liability coverage, including owned, hired and non -owned vehicles, in an amount not less than one million dollars per occurrence ($1,000,000.00). (i) As to the foregoing insurance requirements (a) to (d) inclusive of this Section 306.1, coverage and limits shall apply to the full extent of the policy with no limitation to vicarious liability for additional insureds and extending coverage to any location for operations or activities necessary or incidental to the operations of the premises. Coverage limits shall be no less than One Million Dollars and No Cents ($1,000,000.00) per occurrence. Coverage provided by Participant is intended to apply first on a primary non-contributing basis in relation to any insurance or self-insurance of City or Agency. Deductibles are not permitted unless approved in writing by City and Agency. (e) Workers' compensation and employer's liability insurance written on a policy form providing statutory benefits as required by law. Employer's liability limits shall be no less than $1,000,000.00 dollars per accident or disease. 12 DOCSOC/ 1339956v5/022299-0083 0 0 306.2 Additional Insurance Requirements. (a) Participant agrees to waive rights of subrogation as to City and Agency and to have all policies of insurance required by this Agreement endorsed to permit such waiver, if necessary. All insurance is to be provided by insurers admitted and authorized to do business in the state of California with a minimum A.M. Best's rating of A -Class VII. All policies shall be endorsed to reflect that the policies shall not be canceled, non -renewed or reduced in scope or stated limits until City and Agency have been provided thirty (30) days advance written notice of such change. The insurance coverage and limits required here shall not be construed as a limit of Participant's liability. Participant agrees to respond for any losses with respect to this agreement incurred by City and not covered by Participant's insurance whether by reason of coverage being inapplicable or by Participant's failure to obtain coverage. (b) Proof of insurance using certificates of insurance and required endorsements must be delivered to City and Agency prior to execution of this Agreement. If Participant fails to comply, City has the right but not the duty to purchase such coverage and charge the premium to Participant who must promptly pay said premium. Participant shall also provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with equivalent policies. Such proof shall be furnished at least two weeks prior to the expiration of the coverages. (c) Participant agrees to provide immediate notice to City and Agency of any claim or loss against Participant that includes City or Agency as a defendant. City and Agency assume no obligation by such notice, but have the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City or Agency. (d) Participant agrees to periodically monitor and enforce Owner's compliance with Owner's insurance obligations under Section 13.2 of the Theatre Lease. 307. Effect of Violation of the Terms and Provisions of this Agreement. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of Agency and City and their successors and assigns, as to those covenants which are for their benefit. The covenants contained in this Agreement shall remain in effect for the periods of time specified therein. The covenants against discrimination shall remain in effect in perpetuity. Agency and City are deemed the beneficiaries of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of Agency and City, without regard to whether Agency and City have been, remain or are owners of any land or interest in the Site or in the Redevelopment Project. Agency and City shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which they or any other beneficiaries of this Agreement and covenants may be entitled. 308. Recordation of Operating Covenant. Participant agrees to execute, acknowledge and record in the official records of Orange County, as an encumbrance to the Site, the Operating Covenant substantially in the form attached hereto as Attachment No. 2 and incorporated herein 13 DOCSOC/ 1339956x5/022299-0083 0 0 concurrently with and as a Condition Precedent to Agency's payment of the Operating Covenant Purchase Price. 309. E -Verify. If Participant is not already enrolled in the U.S. Department of Homeland Security's E -Verify program, Participant shall enroll in the E -Verify program within fifteen (15) days of the Date of Agreement to verify the employment authorization of new employees assigned to perform work at the Movie Theatre and/or otherwise perform work for Participant in the City. Participant shall verify employment authorization through the E -Verify program within three (3) days of hiring any and all new employees who will perform work at the Movie Theatre and/or employees who otherwise perform work for Participant in the City. Information pertaining to the E - Verify program can be found at http://www.uscis.gov, and Participant may access the registration page at https://www.vis-dhs.com/employerregistration. Participant shall certify its registration with E -Verify and provide its registration number to Agency within sixteen (16) days of the Date of Agreement; provision of this certification and registration number is a Condition Precedent under Section 205. Participant shall annually certify to Agency that Participant has complied with this requirement throughout the entire previous Year and failure to comply with this requirement or to provide the required annual certification shall constitute a Default hereunder and under the Operating Covenant. 400. DEFAULTS AND REMEDIES 401. Default. Subject Enforced Delay, failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party cures such default within thirty (30) days from receipt of such notice, or if the nature of such default is that it cannot reasonably be expected to be cured within such thirty (30) day period, if such party, with due diligence, commences to cure, correct or remedy such failure or delay within thirty (30) days from receipt of such notice, and shall complete such cure, correction or remedy with diligence. 402. Institution of Legal Actions. In addition to any other rights or remedies set forth herein and subject to the restrictions otherwise set forth in this Agreement, either party may institute an action at law or equity to seek specific performance of the terms of this Agreement and the Operating Covenant, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy set forth herein or otherwise consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California. 403. Termination by Participant. In the event that Participant is not in Default under this Agreement and Agency is in Default under this Agreement and such Default is not cured within the time set forth in Section 401 hereof, then this Agreement and the Operating Covenant may, at the option of Participant, be terminated by written notice thereof to Agency. From the date of the written notice of termination of this Agreement by Participant to Agency and thereafter this Agreement and the Operating Covenant shall be deemed terminated and there shall be no further rights or obligations between the parties, except that if Agency is in Default hereunder, Participant may pursue any remedies it has at law or equity. 14 DOCSOC/ 1339956v5/022299-0083 0 0 404. Termination by Agency. In the event that Agency is not in Default under this Agreement and prior to Agency's payment of the Operating Covenant Purchase Price to Participant: (a) Participant is in Default of this Agreement and fails to cure such Default within the time set forth in Section 401 hereof; or (b) One or more of the Conditions Precedent has not been fulfilled on or before sixty (60) days after the date of this Agreement and such Condition Precedent is not satisfied after Notice and an opportunity to cure as provided in Section 401 hereof, and such failure is not caused by Agency; then this Agreement, the Operating Covenant, and any rights of Participant or any assignee or transferee with respect to or arising out of this Agreement, the Operating Covenant or the Site, shall, at the option of Agency, be terminated by Agency by written notice thereof to Participant. From the date of the written notice of termination of this Agreement by Agency to Participant and thereafter this Agreement shall be deemed terminated, Agency shall not be obligated to disburse any portion of the Operating Covenant Purchase Price, and there shall be no further rights or obligations between the parties, except that if Participant is in Default hereunder Agency may pursue any remedies available to Agency at law or equity. 405. Repayment of Operating Covenant Purchase Price in Event of Default. In addition to all other remedies which may be available to Agency as set forth herein, in the event of a Default under the Operating Covenant (including a Closure) during the Operating Covenant Period, the entire remaining balance of the Operating Covenant Purchase Price, including interest thereon as provided in the Operating Covenant, shall become immediately due and payable to Agency in accordance with the terms of the Operating Covenant. 406. Acceptance of Service of Process. In the event that any legal action is commenced by Participant against Agency, service of process on Agency shall be made by personal service upon the Secretary or Executive Director of Agency or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Participant, service of process on Participant shall be made by personal service upon the President of Participant, whether made within or outside the State of California, or in such other manner as may be provided by law. 407. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative; and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other party. 408. Inaction Not a Waiver of Default. Any failures 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, or deprive either such 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. 409. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 15 DOCSOC/ 1339956v5/022299-0083 0 9 410. Attorneys' Fees. In any action between the parties to interpret, enforce, reform, modify, rescind or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs, expert witness fees and reasonable attorneys' fees. 500. GENERAL PROVISIONS 501. Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given by any commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice. To Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director With a copy to: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Thomas P. Clark, Jr. To Participant: Regency Theatres, Inc. 22231 Mulholland Hwy., Ste. 208 Calabasas, California 91302 Attention: Lyndon Golin Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 502. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to events beyond the reasonable control of the parties, which may include the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; unusually severe weather; acts or omissions of the other party; or acts or failures to act of a public or governmental agency or entity (other than the acts or failures to act of Agency or City which shall not excuse performance by Agency). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause ("Enforced Delay"). Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Participant. Notwithstanding any provision of this Agreement to the contrary, the lack 16 DOCSOC/ 1339956v5/022299-0083 0 0 of funding to operate the Movie Theatre shall not constitute grounds of Enforced Delay pursuant to this Section 502. 503. Transfers of Interest in Site or Agreement. 503.1 Prohibition. The qualifications and identity of Participant as the operator of the Movie Theatre are of particular concern to Agency. Furthermore, the parties acknowledge that Agency has negotiated the terms of this Agreement in contemplation of the operation of the Movie Theatre and the property tax increment and Sales and Use Tax Revenues to be generated by the operation of the Movie Theatre on the Site in a manner that will constitute a significant draw to customers. No voluntary or involuntary successor in interest of Participant shall acquire any rights or powers under this Agreement, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the whole or any part of Participant's interest in the Site or the Movie Theatre thereon, nor shall any other movie theatre other than a Regency brand movie theatre be operated thereon, either in addition to or in replacement of the Movie Theatre on the Site, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the Movie Theatre being operated upon the Site (collectively referred to herein as a "Transfer"), without the prior written approval of Agency, which approval shall not be unreasonably withheld. The transfer, sale, or other conveyance of a majority of shares in Participant shall constitute a Transfer subject to the prohibition set forth in this Section 503.1. Any Transfer by Participant during the Operating Covenant Period shall constitute a Default hereunder and under the Operating Covenant and shall result in acceleration of Participant's obligation to repay the Operating Covenant Purchase Price pursuant to Section 204 hereof and the Operating Covenant. This Section 503.1 shall be of no further force and effect following the expiration of the Operating Covenant Period. 503.2 Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of a Transfer shall not be required in connection with any of the following: (a) Any Transfer to an entity or entities in which Participant or Participant's shareholders retains a minimum of fifty-one percent (51 %) of the ownership or beneficial interest and retains management and control of the transferee entity or entities, and a Regency brand movie theatre (or another Agency -authorized movie theatre) is operating on the Site. (b) The granting of easements or permits to facilitate rehabilitation and/or operation of the Movie Theatre. (c) Any requested assignment for financing purposes (subject to such financing being considered and approved by Agency), including the grant of a deed of trust to secure the funds necessary for acquisition of Participant's leasehold interest in the Site, construction and permanent financing of the rehabilitation of the Movie Theatre, or a refinancing of a mortgage secured by Participant's leasehold interest in the Site and/or the Movie Theatre. In the event of a Transfer by Participant under subparagraphs (a) and (b) above not requiring Agency's prior approval, Participant nevertheless agrees that at least thirty (30) days prior to such Transfer it shall give written notice to Agency of such assignment and satisfactory evidence that the assignee has assumed in writing through an assignment and assumption agreement of all of the obligations of this Agreement. 17 DOCSOC/ 1339956v5/022299-0083 0 0 503.3 Agency Consideration of Requested Transfer. Agency agrees that it will not unreasonably withhold approval of a request for approval of a Transfer made pursuant to this Section 503, provided Participant delivers written notice to Agency requesting such approval. Such notice shall be accompanied by sufficient evidence demonstrating that the proposed assignee, sublessee, or new movie theatre operator has received all necessary Regulatory Approvals and evidence regarding the proposed transferee's operational qualifications and experience and its financial commitments and resources, in sufficient detail to enable Agency to evaluate the proposed assignee, sublessee, or operator pursuant to the criteria set forth in this Section 503 and as reasonably determined by Agency. Agency may, in considering any such request, take into consideration such factors as (i) the quality and reputation of any new brand of movie theatre to be operated at the Site, (ii) the Sales and Use Tax Revenues projected to be received from the Site, (iii) the transferee's past performance as an operator of a movie theatre, (iv) the current financial condition of the transferee, and similar factors. Agency agrees not to unreasonably withhold its approval of any such requested Transfer, taking into consideration the foregoing factors. 503.4 Assignment and Assumption Agreement. An assignment and assumption agreement in form satisfactory to Agency's legal counsel shall also be required for all proposed Transfers. Within thirty (30) days after the receipt of Participant's written notice requesting Agency approval of a Transfer pursuant to this Section 503, Agency shall either approve or disapprove such proposed Transfer or shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, Participant shall promptly furnish to Agency such further information as may be reasonably requested. Agency shall not release or cancel the Personal Guaranty unless Agency determines, in its sole and exclusive discretion that the proposed transferee will provide an equivalent form of security for repayment of the Operating Covenant Purchase Price. 503.5 Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon Participant and its permitted successors and assigns. Whenever the term "Participant" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 503.6 Assignment by Agency. Agency may assign or transfer any of its rights or obligations under this Agreement at any time without obtaining the approval of Participant. 504. Non Liability of Officials and Employees of Agency. No member, official or employee of Agency or the City shall be personally liable to Participant or any successor in interest, in the event of any Default or breach by Agency or for any amount which may become due to Participant or its successors, or on any obligations under the terms of this Agreement. 505. Relationship Between Agency and Participant. It is hereby acknowledged that the relationship between Agency and Participant is not that of a partnership or joint venture and that Agency and Participant shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Movie Theatre or the Site. 506. City as Third Party Beneficiary. The City and its successors and assigns shall be intended third party beneficiaries of this Agreement. City shall have full right and ability (but no 18 DOCSOC/1339956v5/022299-0083 0 0 obligation) to enforce each and every agreement, covenant and restriction in this Agreement. No other person(s) or entity(ies) shall have any right of action hereunder. 507. Agency Approvals and Actions. Agency shall maintain authority of this Agreement and the authority to implement this Agreement through the Executive Director (or his duly authorized representative). The Executive Director shall have the authority to make approvals, issue interpretations, waive provisions, make and execute further agreements and/or enter into amendments of this Agreement on behalf of Agency so long as such actions do not materially or substantially change the uses permitted on the Site, or materially or substantially add to the costs incurred or to be incurred by Agency as specified herein, and such interpretations, waivers and/or amendments may include extensions of time to perform hereunder. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the Agency Board. 508. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. 509. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. 1 through 6, which together with the Agreement constitute the entire understanding and agreement of the parties, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. 510. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. References to section numbers are to sections in this Agreement, unless expressly stated otherwise. 511. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 512. No Waiver. A waiver by either party of a breach of any of the covenants, conditions, restrictions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 513. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 514. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to 19 DOCSOC/ 1339956v5/022299-0083 0 i persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 515. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 516. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 517. Time of Essence. Time is expressly made of the essence with respect to the performance by Agency and Participant of each and every obligation and condition of this Agreement. 518. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 519. Conflicts of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. [Signatures appear on following page.] 20 DOC SOC/ 1339956v5/022299-0083 0 0 IN WITNESS WHEREOF, the parties hereto have signed this Participation Agreement as of the date first set forth above. ATTEST: Agency Secretary APPROVED AS TO FORM: wkRACl Stradling Yocca Carlson & Rauth Agency Counsel AGENCY: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic Chairperson PARTICIPANT: REGENCY THEATRES, INC., a California corporation Bye2 Lyndon Golin, President 21 DOC SOC/ 1339956v5/022299-0083 0 0 ATTACHMENT NO. 1 LEGAL DESCRIPTION LOT 40 OF TRACT NO. 103 AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET IN WIDTH LYING EASTERLY AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION THEREOF DESCRIBED AS FOLLOWS: COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT NO. 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE WESTERLY PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM SAID NORTHERLY LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. ALONG WITH: LOT 43, AS SHOWN ON A LICENSED SURVEYOR'S MAP, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 2, PAGES 31 TO 38 INCLUSIVE, RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE WESTERLY 12 FEET. ALONG WITH: THAT PORTION OF LOT 40 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: ATTACHMENT NO. 1-1 DOCSOC/ 1339956v5/022299-0083 0 0 COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET IN WIDTH LYING EASTERLY OF AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALONG WITH: LOT 42 OF TRACT NO, 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 TO 30 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PROPERTY: BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 42, SAID CORNER BEING ON THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY: THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET: THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST ALONG THE SOUTHERLY LINE OF GARDEN STREET 202.60 FEET TO A POINT: THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT ON THE SOUTHERLY LINE OF THE ABOVE MENTIONED LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST ALONG THE SOUTHERLY LINE OF LOT 42, 201.44 FEET TO THE POINT OF BEGINNING. ALONG WITH: THAT PORTION OF LOT 41 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: 2 DOCSOC/ 1339956v5/022299-0083 BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 41; RUNNING THENCE NORTH 9 DEGREES 40 MINUTES WEST 84.41 FEET ALONG THE WEST LINE OF SAID LOT 41 TO THE NORTHWEST CORNER THEREOF: THENCE NORTH 84 DEGREES 28 MINUTES EAST 41.13 FEET ALONG THE NORTHERLY LINE OF SAID LOT 41 TO A POINT WHICH IS LOCATED 201.44 FEET SOUTH 84 DEGREES 28 MINUTES WEST FROM THE SOUTHEAST CORNER OF LOT 42 OF SAID TRACT NO. 103; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 41; THENCE SOUTH 84 DEGREES 27 MINUTES WEST 35.55 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 41 TO THE POINT OF BEGINNING, ALONG WITH: THAT PORTION OF LOT 42 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BACK 11, PAGES 29 TO 33, INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF SAID ORANGE COUNTY, DESCRIBED AS FOLLOWS: BEGINNING TO THE MOST EASTERLY CORNER OF SAID LOT, SAID CORNER BEING IN THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY; THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET; THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST, ALONG THE SOUTHERLY LINE OF GARDEN STREET, 202.60 FEET TO A POINT; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST, ALONG THE SOUTHERLY LINE OF SAID LOT, 201.44 FEET TO THE POINT OF BEGINNING. END Assessor Parcel Number: 121-150-27 VOCSOC/13399560/022299-0083 0 ATTACHMENT NO.2 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attn: Executive Director 0 This document is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 and 27383. OPERATING COVENANT This OPERATING COVENANT ("Operating Covenant") is made as of 20_, by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and REGENCY THEATRES, INC., a California corporation ("Participant"), with reference to the following: A. Agency and Participant have executed a Participation Agreement, dated as of 2009 ("Agreement"), which provides for the sale of this Operating Covenant with respect to certain real property located in the City of San Juan Capistrano ("City"), County of Orange, State of California, more fully described in Exhibit "A" attached hereto and incorporated herein by this reference ("Site"). The Agreement is available for public inspection and copying at the office of Agency, 32400 Paseo Adelanto, San Juan Capistrano, California. All of the terms, conditions, provisions and covenants of the Agreement are incorporated in this Operating Covenant by reference as though written out at length herein and the Agreement and this Operating Covenant shall be deemed to constitute a single instrument or document. B. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Agreement. C. The Agreement provides for, among other things, Participant's conveyance to Agency of this Operating Covenant and recordation of this Operating Covenant against Participant's leasehold interest in the Site in the Official Records of Orange County, California. This Operating Covenant is intended to encumber Participant's leasehold interest in the Site and run with the land. D. The foregoing recitals constitute a substantive part of this Operating Covenant. NOW, THEREFORE, Participant hereby conveys to Agency the following Operating Covenant: 1. Use in Accordance with Redevelopment Plan, Agreement and Operating Covenant. Participant covenants and agrees to devote, use, operate, and maintain the Site and the Movie Theatre in accordance with the Redevelopment Plan, the Operating Covenant, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the ATTACHMENT NO. 2-1 DOCSOCl1339956v51022299-0083 0 0 Movie Theatre, this Operating Covenant and the Agreement. All uses conducted on the Site, including, without limitation, all activities undertaken by Participant pursuant to this Operating Covenant and the Agreement, shall conform to the Redevelopment Plan, all applicable provisions of the City Municipal Code, all entitlements, permits, Regulatory Approvals, and Governmental Requirements applicable to the Site and the Movie Theatre and the recorded documents pertaining to and running with the Site. 2. Operating Covenant. Participant hereby covenants and agrees to each of the following covenants: (a) Covenant to Operate Movie Theatre on Site. Throughout the Operating Covenant Period, Participant shall operate (or cause its successors or assigns to operate) the Movie Theatre on the Site on a continuous basis, in compliance with all Governmental Requirements and Regulatory Approvals, with such Site devoted to the presentation to the public of newly -released, feature length motion pictures as the principal activity conducted on the Site. Food sales, video games, and related uses may also be conducted at the Site as a secondary and incidental use to the primary use of operating a Movie Theatre at the Site. In addition, pre-screening of such motion pictures and other promotional events and activities may also be conducted on the Site as a secondary use incidental to the primary use of operating a Movie Theatre at the Site. No other uses may be conducted on the Site during the Operating Covenant Period without the prior written approval of Agency, which approval may be granted, refused, or conditioned as provided in Section 4 of this Operating Covenant. The Movie Theatre shall at all times comply with the Movie Theatre Description attached to the Agreement as Attachment No. 6. (b) No Competing Theatre; Operation to Maximize Sales and Use Tax Revenues. Participant further covenants and agrees that during the Operating Covenant Period, Participant will not own, lease, and/or operate through Participant, or any entity in which Participant has at least a twenty five percent (25%) interest in profits and losses and/or management control, any other movie theatre within a two (2) mile radius of the boundaries of the Site. Participant shall use commercially reasonable efforts to operate (or to cause its successors or assigns to operate) the Movie Theatre on the Site in such a manner as to produce the maximum amount of Sales and Use Tax Revenues (defined in the Agreement) to be received by the City. (c) Public Service Announcements. Agency shall have the right to run public service announcements ("PSA") at the Movie Theatre prior to films, at no charge, during the time when advertisements are shown and prior to the presentation of movie trailers. Agency shall prepare (at Agency's cost) and provide to Participant any PSAs which Agency wishes to be shown at the Movie Theatre within a reasonable time prior to the date on which such PSAs are to be shown. Agency shall have the right to show at least one (1) PSA prior to each film shown at the Movie Theatre. (d) E -Verify Compliance. Pursuant to the Agreement, Participant has enrolled in the U.S. Department of Homeland Security's E -Verify program and shall verify the employment authorization of any and all new employees assigned to perform work at the Movie Theatre and/or employees who otherwise perform work for Participant in the City through the E -Verify program within three (3) days of hiring any such employees. Participant shall annually certify to Agency that Participant has complied with this requirement and failure to comply with this requirement or to provide the required annual certification shall constitute a Default hereunder and under the Agreement. ATTACHMENT NO. 2-2 DOCSOC/ 1339956v5/022299-0083 0 0 (e) Default and Closure. Except with the prior written consent of Agency for each instance, which consent may be granted or withheld in Agency's reasonable discretion, a Closure shall, at Agency's option, constitute a Default hereunder. Termination of the Theatre Lease prior to the tenth (10th) Year following execution and recording of the Operating Covenant shall constitute a Default hereunder and under the Operating Covenant triggering Agency's right to accelerate repayment of the Operating Covenant Purchase Price, with interest, as set forth in Section 3 of the Operating Covenant. (f) Certificate of Compliance. Not later than thirty (30) days prior to each Participant Payment Date (defined in Section 3(a)), Participant shall execute and deliver to Agency a Certificate of Compliance for the previous Year in substantially the form attached to the Agreement as Attachment No. 3. 3. Repayment Obligation. (a) Repayment of Operating Covenant Purchase Price. Participant shall repay the Operating Covenant Purchase Price to Agency in ten (10) equal annual installments of Forty -Five Thousand Dollars ($45,000), to be made on the last day of each of the first (191) through tenth (101h) Years following recordation of the Operating Covenant against the Site ("Participant Payment Date"). The entire outstanding principal balance to be paid by Participant to Agency hereunder, together with all accrued and unpaid interest and all other sums owing under this Operating Covenant, shall, if not sooner paid, become due and payable on [ , 20__J. (b) Interest Rate. No interest shall accrue on Participant's obligation to repay the Operating Covenant Purchase Price to Agency except as set forth in Section 3(c) below. (c) Closure or Default. In the event of a Closure or any Default hereunder or under the Operating Covenant which is not cured within the time set forth in Section 401 of the Agreement, Participant shall immediately repay the entire Operating Covenant Purchase Price to Agency, plus interest on the outstanding remaining balance thereof at the rate of ten percent (10%) per annum. Upon cure of the Closure or other Default, the interest rate shall return to the amount set forth in Section 3(b) above. (d) Security. Participant's repayment obligation shall be secured by execution and delivery to Agency of the Personal Guaranty attached to the Agreement as Attachment No. 4 by Lyndon Golin, Participant's President and sole shareholder. Participant shall cause the Consent of Spouse (in substantially the form attached to the Agreement as Attachment No. 5) to be executed by Lyndon Golin's spouse and delivered to the Agency concurrently with the Personal Guaranty. (e) Prepayment. Participant may, at any time, prepay any amounts outstanding under this Operating Covenant in whole or in part without premium or penalty. A payment of principal only is known as a "Prepayment." When Participant makes a Prepayment, it shall advise Agency in writing that it is doing so. Participant may make a full Prepayment or partial Prepayment without paying a prepayment charge. Participant will use such Prepayments to reduce the amount of principal that Participant owes under this Operating Covenant; however, Agency may apply any Prepayment to the accrued and unpaid interest on the Prepayment amount before applying Participant's Prepayment to reduce the principal amount of the Operating Covenant. If Participant makes a partial Prepayment, there will be no changes in the due dates of the payments required hereunder unless Agency agrees in writing to those changes. ATTACHMENT NO. 2-3 DOCSOC/ 1339956v5/022299-0083 0 0 (f) Usury Law Compliance. It is Participant's and Agency's intention to comply with any applicable usury law. If for any reason Agency should have received as interest an amount which would exceed the highest lawful rate, such amount which would be in excess of the permitted interest shall, at Agency's option, be applied to the reduction of principal of this Note and not to the payment of interest, or be refunded to Participant. All agreements between Participant and Agency are expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to Agency for the use, forbearance or detention of money under this Operating Covenant exceed the maximum permissible under applicable law. This provision shall control over any other provision in this Operating Covenant or in any other agreement between Participant and Agency related hereto. 4. Transfers of Interest in Site or Agreement. (a) Prohibition. The qualifications and identity of Participant as the operator of the Movie Theatre are of particular concern to Agency. Furthermore, the parties acknowledge that Agency has negotiated the terms of the Agreement and this Operating Covenant in contemplation of the operation of the Movie Theatre and the property tax increment and Sales and Use Tax Revenues to be generated by the operation of the Movie Theatre on the Site, in a manner that will constitute a significant draw to customers. No voluntary or involuntary successor in interest of Participant shall acquire any rights or powers under the Agreement, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the whole or any part of Participant's interest in the Site or the Movie Theatre thereon, nor shall any other movie theatre other than a Regency brand movie theatre be operated thereon, either in addition to or in replacement of the Movie Theatre on the Site, nor shall Participant make any total or partial sale, transfer, conveyance, assignment, subdivision, or sublease of the Movie Theatre being operated upon the Site (collectively referred to herein as a "Transfer"), without the prior written approval of Agency, which approval shall not be unreasonably withheld. The transfer, sale, or other conveyance of a majority of shares in Participant shall constitute a Transfer subject to the prohibition set forth in this Section 4(a). Any Transfer by Participant during the Operating Covenant Period shall constitute a Default hereunder and shall result in acceleration of Participant's obligation to repay the Operating Covenant Purchase Price pursuant to Section 3 hereof. This Section 4(a) shall be of no further force and effect following the expiration of the Operating Covenant Period. (b) Permitted Transfers. Notwithstanding any other provision of the Agreement or this Operating Covenant to the contrary, Agency approval of a Transfer shall not be required in connection with any of the following: (i) Any Transfer to an entity or entities in which Participant or Participant's shareholders retains a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retains management and control of the transferee entity or entities, and a Regency brand movie theatre (or another Agency -authorized movie theatre) is operating on the Site. (ii) The granting of easements or permits to facilitate rehabilitation and/or operation of the Movie Theatre. (iii) Any requested assignment for financing purposes (subject to such financing being considered and approved by Agency), including the grant of a deed of trust to secure the funds necessary for acquisition of Participant's leasehold interest in the Site, construction and ATTACHMENT NO. 2-4 DOCSOC/ I 339956v5/022299-0083 0 0 permanent financing of the rehabilitation of the Movie Theatre, or a refinancing of a mortgage secured by Participant's leasehold interest in the Site and/or the Movie Theatre. In the event of a Transfer by Participant under subparagraphs (i) and (ii) above not requiring Agency's prior approval, Participant nevertheless agrees that at least thirty (30) days prior to such Transfer it shall give written notice to Agency of such assignment and satisfactory evidence that the assignee has assumed in writing through an assignment and assumption agreement of all of the obligations of the Agreement and this Operating Covenant. (c) Agency Consideration of Requested Transfer. Agency agrees that it will not unreasonably withhold approval of a request for approval of a Transfer made pursuant to this Section 4, provided Participant delivers written notice to Agency requesting such approval. Such notice shall be accompanied by sufficient evidence demonstrating that the proposed assignee, sublessee or new movie theatre operator has. received all necessary Regulatory Approvals and evidence regarding the proposed transferee's operational qualifications and experience and its financial commitments and resources, in sufficient detail to enable Agency to evaluate the proposed assignee, sublessee, or operator pursuant to the criteria set forth in this Section 4 and as reasonably determined by Agency. Agency may, in considering any such request, take into consideration such factors as (i) the quality and reputation or any new brand of movie theatre to be operated at the Site, (ii) the Sales and Use Tax Revenues projected to be received from the Site, (iii) the transferee's past performance as an operator of a movie theatre, (iv) the current financial condition of the transferee, and similar factors. Agency agrees not to unreasonably withhold its approval of any such requested Transfer, taking into consideration the foregoing factors. (d) Assignment and Assumption Agreement. An assignment and assumption agreement in form satisfactory to Agency's legal counsel shall also be required for all proposed Transfers. Within thirty (30) days after the receipt of Participant's written notice requesting Agency approval of a Transfer pursuant to this Section 4, Agency shall either approve or disapprove such proposed assignment or shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, Participant shall promptly furnish to Agency such further information as may be reasonably requested. Agency shall not release or cancel the Personal Guaranty (defined in the Agreement) unless Agency determines in its sole and exclusive discretion that the proposed transferee will provide an equivalent form of Security for repayment of the Operating Covenant Purchase Price. 5. Use of the Site. (a) Compliance With Laws. Participant shall carry out the design, construction and operation of the Movie Theatre in conformity with all Governmental Requirements and Regulatory Approvals, including all entitlements and/or permits issued by the City for the Movie Theatre, as such entitlements and/or permits may be modified from time to time. (b) Hazardous Materials. Participant shall not cause or permit the presence, use generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Site in violation of any applicable Environmental Law. ATTACHMENT NO. 2-5 DOCSOC/ 1339956x5/022299-0083 0 6. Indemnification. (a) Generally. Participant shall indemnify, protect, defend (with counsel selected by Agency), and hold harmless Agency and City, and their respective officers, employees, contractors, agents, representatives, and volunteers, from and against any and all Claims of any kind or nature in any way arising from or relating to the Agreement, this Operating Covenant, the Personal Guaranty, or the implementation or approval of the Agreement, this Operating Covenant, or the Personal Guaranty, including without limitation: (i) Claims for any damages to property or injuries to persons, including accidental death, which may be caused by any acts or omissions of Participant whether such activities or performance thereof be by Participant or by anyone directly or indirectly employed or contracted with by Participant and whether such damage shall accrue or be discovered before or after termination of the Agreement and this Operating Covenant, (ii) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Site in violation of any applicable Environmental Law, whenever discovered, (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Site, whenever discovered, and (iv) any and all Claims and/or "increased costs" (as defined in Labor Code Section 1781, as it may be amended from time to time) which, in connection with the design, construction, and/or operation of the Movie Theatre, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Participant with any Governmental Requirements or Regulatory Approvals, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Participant to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the rehabilitation of the Site, including, without limitation, any and all public works (as defined by applicable law), Participant shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. The foregoing indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. The foregoing indemnity shall survive termination of the Agreement and this Operating Covenant and shall continue after completion of the rehabilitation of the Site by Owner and commencement of operation of the Movie Theatre by Participant. (b) Defense of Claims. Participant shall have the obligation to defend against any Claims as provided in Section 6(a); provided, however, that this obligation to defend shall not be effective if and to the extent that Participant determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, in which case Participant shall compromise or settle such action in a way that fully protects Agency and City from any liability or obligation. In this regard, Participant's obligation and right to defend shall include the right to hire (subject to written approval by Agency and City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against Participant, Agency, or City. If Participant defends ATTACHMENT NO. 2-6 DOCSOC/ 1339956v5/022299-0083 any such action, as set forth above, (i) Participant shall indemnify and hold harmless Agency and City and their officers, employees, contractors, agents, representatives, and volunteers from and against any claims, losses, liabilities, or damages assessed or awarded against either of them by way of judgment, settlement, or stipulation and (ii) Agency shall be entitled to settle any such claim only with the written consent of Participant, not to be unreasonably withheld, and any settlement without such reasonable consent shall release Participant's obligations under this Section 6(b) with respect to such settled claim. Notwithstanding anything to the contrary herein, Participant shall not be liable for any such claims which are caused by the sole negligence or willful acts of Agency or its officers, employees, contractors, agents, representatives, and volunteers. (c) Third Party Litigation Concerning Agreement. Participant shall defend (with counsel selected by Agency), at its expense, including attorney and expert witness fees, indemnify, and hold harmless City, Agency, and/or their officers, employees, contractors, agents, representatives, and volunteers from any claim, action or proceeding brought by a person or entity not a party to this Operating Covenant against Agency, City, and/or their officers, employees, contractors, agents, representatives, and volunteers to attack, set aside, void, or annul the approval of the Agreement and/or this Operating Covenant. Agency shall promptly notify Participant of any claim, action, proceeding or determination included within this Section 6(c). Agency and/or City, as applicable, may, in their discretion, participate in the defense of any such claim, action, proceeding or determination. 7. Nondiscrimination. There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Operating Covenant, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises which are the subject of this Operating Covenant. The foregoing covenants shall run with the land. This covenant regarding non-discrimination shall remain in effect in perpetuity. 8. Insurance. (a) Insurance Requirements. Participant, at Participant's expense, shall throughout entire Operating Covenant Period maintain and comply with the following insurance and related requirements. (i) Commercial Property Insurance covering the premises, fixtures, equipment, buildings, all property situated in, on, or constituting a part of the Movie Theatre, including the tenant improvements (defined as "Tenant's Work" in the Theatre Lease) required to be constructed or installed by Participant. Participant shall also provide builder's all-risk insurance using an inland marine form during the period of any construction, major alteration or improvement. Coverage shall be for the full replacement value of the improvements. (ii) Plate Glass insurance covering the full replacement cost of all plate glass at the Movie Theatre. ATTACHMENT NO. 2-7 DOCSOC/1339956v5/022299-0083 (iii) Commercial General Liability Insurance on Insurance Services Office form CG 20 10 or equivalent that pays on behalf of the insured and provides defense in addition to limits. Participant shall obtain an endorsement to the policy adding City and Agency, their officials, employees and agents as additional insureds. Coverage shall not exclude suits between insureds. (iv) Comprehensive Automobile Liability coverage, including owned, hired and non -owned vehicles in an amount not less than one million dollars per occurrence ($1,000,000.00). (A) As to the foregoing insurance requirements (a) to (d) inclusive of this Section 8(a), coverage and limits shall apply to the full extent of the policy with no limitation to vicarious liability for additional insureds and extending coverage to any location for operations or activities necessary or incidental to the operations of the premises. Coverage limits shall be no less than One Million Dollars and No Cents ($1,000,000.00) per occurrence. Coverage provided by Participant is intended to apply first on a primary non-contributing basis in relation to any insurance or self-insurance of City or Agency. Deductibles are not permitted unless approved in writing by City and Agency. (v) Workers' Compensation and Employer's Liability Insurance written on a policy form providing statutory benefits as required by law. E'mployer's liability limits shall be no less than $1,000,000.00 dollars per accident or disease. (b) Additional Insurance Requirements. (i) Participant agrees to waive rights of subrogation as to City and Agency and to have all policies of insurance required by this Agreement endorsed to permit such waiver, if necessary. All insurance is to be provided by insurers admitted and authorized to do business in the state of California with a minimum A.M. Best's rating of A -Class VII. All policies shall be endorsed to reflect that the policies shall not be canceled, non -renewed or reduced in scope or stated limits until City and Agency have been provided thirty (30) days advance written notice of such change. The insurance coverage and limits required here shall not be construed as a limit of Participant's liability. Participant agrees to respond for any losses with respect to this agreement incurred by City and not covered by Participant's insurance whether by reason of coverage being inapplicable or by Participant's failure to obtain coverage. (ii) Proof of insurance using certificates of insurance and required endorsements must be delivered to City and Agency prior to execution of this Agreement. If Participant fails to comply, City has the right but not the duty to purchase such coverage and charge the premium to Participant who must promptly pay said premium. Participant shall also provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with equivalent policies. Such proof shall be furnished at least two weeks prior to the expiration of the coverages. (iii) Participant agrees to provide immediate notice to City and Agency of any claim or loss against Participant that includes City or Agency as a defendant. City and Agency assume no obligation by such notice, but have the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City or Agency. ATTACHMENT NO. 2-8 DOCSOC/ 1339956v5/022299-0083 0 0 (iv) Participant agrees to periodically monitor and enforce Owner's compliance with Owner's insurance obligations under Section 13.2 of the Theatre Lease. 9. Performance of Maintenance. (a) Participant shall maintain the Site and the Movie Theatre in accordance with the Maintenance Standards, as hereinafter defined. Said improvements shall include, but not be limited to, buildings, sidewalks, pedestrian lighting, landscaping, irrigation of landscaping, architectural elements identifying the Site and any and all other improvements on the Site. (b) To accomplish the maintenance, Participant shall either staff or contract with and hire licensed and qualified personnel to perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirements of this Operating Covenant. (c) The following standards ("Maintenance Standards") shall be complied with by Participant and its maintenance staff, contractors or subcontractors: 1. Landscape maintenance shall include, but not be limited to: watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 2. Clean up maintenance shall include, but not be limited to: maintenance of all sidewalks, paths and other paved areas in clean and weed free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or wisightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. 3. All maintenance work shall conform to all applicable federal and state Occupational Safety and Health Act standards and regulations for the performance of maintenance. 4. Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied in strict accordance with all governing regulations. Precautionary measures shall be employed recognizing that all areas are open to public access. 5. The Site and Movie Theatre shall be maintained in conformance and in compliance with the approved Site construction and architectural plans and design scheme, as the same may beamended from time to time with the approval of the City, and reasonable commercial development maintenance standards for similar projects, including but not limited to: painting and cleaning of all exterior surfaces and other exterior facades comprising all private improvements and public improvements to the curbline. ATTACHMENT NO. 2-9 DOC SOC/ 1339956v5/022299-0083 0 0 6. The Site and Movie Theatre shall be maintained as required by this Section in good condition and in accordance with the custom and practice generally applicable to comparable automobile dealership facilities located in Southern California. (d) Failure to Maintain Site and Movie Theatre. In the event Participant does not maintain the Site or the Movie Theatre in the manner set forth herein and in accordance with the Maintenance Standards, Agency and/or City shall have the right to maintain such private and/or public improvements, or to contract for the correction of such deficiencies, after written notice to Participant. However, prior to taking any such action, Agency agrees to notify Participant in writing if the condition of said improvements does not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Participant to cure the deficiencies. Upon notification of any maintenance deficiency, Participant shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification states the problem is urgent relating to the public health and safety of the City or Agency, then Participant shall have forty eight (48) hours to rectify the problem. In the event Participant fails to correct, remedy, or cure or has not commenced correcting, remedying or curing such maintenance deficiency after notification and after the period of correction has lapsed, then City and/or Agency shall have the right to maintain such improvements. Participant agrees to pay Agency such charges and costs. Until so paid, Agency shall have a lien on Participant's leasehold interest in the Site for the amount of such charges or costs, which lien shall be perfected by the recordation of a "Notice of Claim of Lien" against Participant's leasehold interest in the Site. Upon recordation of a Notice of a Claim of Lien against Participant's leasehold interest in the Site, such lien shall constitute a lien on Participant's leasehold interest in the Site prior and superior to all other monetary liens except: (i) all taxes, bonds, assessments, and other levies which, by law, would be superior thereto; (ii) the lien or charge of any mortgage, deed of trust, or other security interest then of record made in good faith and for value, it being understood that the priority of any such lien for costs incurred to comply with the Agreement and this Operating Covenant shall date from the date of the recordation of the Notice of Claim of Lien. Any such lien shall be subject and subordinate to any lease or sublease of the interest of Participant in the Site or any portion thereof and to any easement affecting the Site or any portion thereof entered into at any time (either before or after) the date of recordation of such a Notice. Any lien in favor of Agency created or claimed hereunder is expressly made subject and subordinate to any mortgage or deed of trust made in good faith and for value, recorded as of the date of the recordation of the Notice of Claim of Lien describing such lien as aforesaid, and no such lien shall in any way defeat, invalidate, or impair the obligation or priority of any such mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly subordinates his interest, of record, to such lien. No lien in favor of Agency created or claimed hereunder shall in any way defeat, invalidate, or impair the obligation or priority of any lease, sublease or easement unless such instrument is expressly subordinated to such lien. Upon foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure purchaser shall take title to the Site free of any lien imposed by Agency that has accrued up to the time of the foreclosure sale, and upon obtaining Participant's leasehold interest in the Site, such foreclosure purchaser shall only be obligated to pay costs associated with the Agreement and this Operating Covenant accruing after the foreclosure purchaser acquires Participant's leasehold interest in the Site. If Participant's leasehold interest in the Site is ever legally divided with the written approval of Agency and title to various portions of the Site is held under separate leasehold interests, then the burdens of the maintenance obligations set forth herein and in the Agreement and the charges levied by Agency to reimburse Agency for the cost of undertaking such maintenance obligations of ATTACHMENT NO. 2-10 DOCSOC/ 1339956x5/022299-0083 0 0 Participant and its successors and the lien for such charges shall be apportioned among the lessees of the various portions of the Site under different leases according to the square footage contained in the respective portions of the Site leased by them. Upon apportionment, no separate owner/lessee of a portion of the Site shall have any liability for the apportioned liabilities of any other separate owner/lessee of another portion of the Site, and the lien shall be similarly apportioned and shall only constitute a lien against the portion of the Site owned/leased in by the owner/lessee who is liable for the apportioned charges levied by Agency and secured by the apportioned lien and against no other portion of the Site. Participant acknowledges and agrees City and Agency may also pursue any and all other remedies available in law or equity. Participant shall be liable for any and all attorneys' fees, and other legal costs or fees incurred in collecting said maintenance costs. 10. Miscellaneous Provisions. (a) If any provision of this Operating Covenant or portion thereof, or the application to any person or circumstances, shall to any extent be held invalid, inoperative or unenforceable, the remainder of this Operating Covenant, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby; it shall not be deemed that any such invalid provision affects the consideration for this Operating Covenant; and each provision of this Operating Covenant shall be valid and enforceable to the fullest extent permitted by law. (b) This Operating Covenant shall be construed in accordance with the laws of the State of California. (c) This Operating Covenant shall be binding upon and inure to the benefit of the successors and assigns of Participant. (d) Defaults under this Operating Covenant shall be governed by Section 400, et seq. of the Agreement. (e) In the event action is instituted to enforce any of the provisions of this Operating Covenant, the prevailing party in such action shall be entitled to recover from the other party thereto as part of the judgment, reasonable attorney's fees, expert witness fees, and costs. (f) Notices relating to this Operating Covenant shall be given as provided in Section 501 of the Agreement. (g) The City and its successors and assigns shall be intended third party beneficiaries of this Operating Covenant. City shall have full right and ability (but no obligation) to enforce each and every agreement, covenant and restriction in this Operating Covenant. No other person(s) or entity(ies) shall have any right of action hereunder. 11. Effect of Operating Covenant. All covenants and agreements established in this Operating Covenant shall, without regard to technical classification and designation, run with the land and be binding on Participant and each successor and assignee of Participant's leasehold interest in the Site, for the benefit of and in favor of Agency, City, and their successor and assigns. The covenants contained in this Operating Covenant shall remain in effect for the periods of time specified therein. Agency and City are deemed the beneficiaries of the terms and provisions of this Operating Covenant and of the covenants running with the land, for and in their own rights and for ATTACHMENT NO. 2-11 DOCSOC/ 1339956v5/022299-0083 0 0 the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Operating Covenant and the covenants running with the land have been provided. The Operating Covenant shall run in favor of Agency and City, without regard to whether Agency or City have been, remain or are owners of any land or interest in the Site or in the Project Area. Agency and/or City shall have the right, if any provision of the Operating Covenant is breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which they or any other beneficiaries of this Operating Covenant may be entitled. [Signatures appear on following page.] ATTACHMENT NO. 2-12 DOCSOC/ 1339956v5/022299-0083 0 11 IN WITNESS WHEREOF, the parties hereto have executed this Operating Covenant as of the day and year first set forth above. ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Counsel AGENCY: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic 0 Executive Director PARTICIPANT: REGENCY THEATRES, INC., a California corporation 0 Lyndon Golin, President [Participant to provide corporate resolution providing authority to enter into Participation Agreement.] ATTACHMENT NO. 2-13 DOCSOC/1339956v5/022299-0083 0 0 OPERATING COVENANT ACCEPTED FOR RECORDING: ALPHA PLAZA, LLC, a California limited liability company Printed ATTACHMENT NO. 2-14 1)0CSOC/ 1339956v5/022299-0083 0 EXHIBIT "A" TO ATTACHMENT NO. 2 LEGAL DESCRIPTION OF SITE LOT 40 OF TRACT NO. 103 AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET IN WIDTH LYING EASTERLY AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION THEREOF DESCRIBED AS FOLLOWS: COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT NO. 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE ALONG SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE WESTERLY PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM SAID NORTHERLY LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. ALONG WITH: LOT 43, AS SHOWN ON A LICENSED SURVEYOR'S MAP, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 2, PAGES 31 TO 38 INCLUSIVE, RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE WESTERLY 12 FEET. ALONG WITH: THAT PORTION OF LOT 40 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: EXHIBIT "A" TO ATTACHMENT NO. 2 DOCSOC/ 1339956v5/022299-0083 0 9 COMMENCING AT A POINT IN THE NORTHERLY LINE OF LOT 42 OF SAID TRACT NO. 103, SAID POINT BEING SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST 202.60 FEET FROM THE NORTHEAST CORNER OF SAID LOT 42; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42, SAID POINT BEING SOUTH 84 DEGREES 28 MINUTES 00 SECONDS WEST 201.44 FEET FROM THE SOUTHEAST CORNER OF SAID LOT 42; THENCE CONTINUING SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF LOT 41 OF SAID TRACT 103; THENCE SOUTH 84 DEGREES 27 MINUTES WEST ALONG SAID SOUTHERLY LINE 15.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 9.50 FEET TO A POINT IN A LINE THAT IS PARALLEL WITH AND DISTANT SOUTHERLY 9.50 FEET FROM THE NORTHERLY LINE OF SAID LOT 40; THENCE LINE TO A POINT IN THE WESTERLY LINE OF SAID LOT 40; THENCE NORTHERLY ALONG SAID WESTERLY LINE TO THE NORTHWEST CORNER OF SAID LOT 40; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LOT 40 TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM THE WESTERLY 13.00 FEET OF SAID LOT, BEING A STRIP OF LAND 13.00 FEET IN WIDTH LYING EASTERLY OF AND CONTIGUOUS TO THE RIGHT OF WAY OF THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, AS DESCRIBED IN DEED RECORDED FEBRUARY 27, 1936 IN BOOK 807 PAGE 286 OF OFFICIAL RECORDS. ALONG WITH: LOT 42 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 TO 30 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PROPERTY: BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 42, SAID CORNER BEING ON THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY: THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET: THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST ALONG THE SOUTHERLY LINE OF GARDEN STREET 202.60 FEET TO A POINT: THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT ON THE SOUTHERLY LINE OF THE ABOVE MENTIONED LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST ALONG THE SOUTHERLY LINE OF LOT 42, 201.44 FEET TO THE POINT OF BEGINNING. ALONG WITH: THAT PORTION OF LOT 41 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: DOCSOC/ 1339956v5/022299-0083 BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 41; RUNNING THENCE NORTH 9 DEGREES 40 MINUTES WEST 84.41 FEET ALONG THE WEST LINE OF SAID LOT 41 TO THE NORTHWEST CORNER THEREOF: THENCE NORTH 84 DEGREES 28 MINUTES EAST 41.13 FEET ALONG THE NORTHERLY LINE OF SAID LOT 41 TO A POINT WHICH IS LOCATED 201.44 FEET SOUTH 84 DEGREES 28 MINUTES WEST FROM THE SOUTHEAST CORNER OF LOT 42 OF SAID TRACT NO. 103; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 84.18 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 41; THENCE SOUTH 84 DEGREES 27 MINUTES WEST 35.55 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 41 TO THE POINT OF BEGINNING. ALONG WITH: THAT PORTION OF LOT 42 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BACK 11, PAGES 29 TO 33, INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF SAID ORANGE COUNTY. DESCRIBED AS FOLLOWS: BEGINNING TO THE MOST EASTERLY CORNER OF SAID LOT, SAID CORNER BEING IN THE WESTERLY PROPERTY LINE OF THE CALIFORNIA STATE HIGHWAY; THENCE NORTH 5 DEGREES 23 MINUTES 00 SECONDS WEST ALONG THE ABOVE MENTIONED PROPERTY LINE 136.88 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF GARDEN STREET; THENCE SOUTH 84 DEGREES 07 MINUTES 30 SECONDS WEST, ALONG THE SOUTHERLY LINE OF GARDEN STREET, 202.60 FEET TO A POINT; THENCE SOUTH 5 DEGREES 52 MINUTES 30 SECONDS EAST 135.66 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 42; THENCE NORTH 84 DEGREES 28 MINUTES 00 SECONDS EAST, ALONG THE SOUTHERLY LINE OF SAID LOT, 201.44 FEET TO THE POINT OF BEGINNING. END Assessor Parcel Number: 121-150-27 DOCSOC/ 1339956x5/022299-0083 • STATE OF CALIFORNIA COUNTY OF On personally appeared ss. before me, , Notary Public, (Print Name of Notary Public) who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attomey-In-Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DOCSOC/ 1339956v5/022299-0083 DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Of Documents Signerts) Other Than Named Above STATE OF CALIFORNIA COUNTY OF On personally appeared 0 0 ss. before me, , Notary Public, (Print Name of Notary Public) who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER Cl Individual 0 Corporate Officer DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator Number Of Pages ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) Signer(s) Other Than Named Above DOCSOC/ 1339956v5/022299-0083 0 ATTACHMENT NO.3 0 CERTIFICATE OF CONTINUING COMPLIANCE WITH OPERATING COVENANT AND PARTICIPATION AGREEMENT TO: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director The undersigned, , being duly authorized to execute this Certificate of Continuing Compliance with Operating Covenant and Participation Agreement ("Certificate") on behalf of Regency Theatres, Inc., a California corporation ("Participant"), hereby represents, warrants, and certifies that: 1. He has read and is thoroughly familiar with the provisions of the Participation Agreement ("Agreement") by and between Agency and Participant dated as of 2009 and the "Operating Covenant" dated as of 20, executed by Participant and recorded against the Site in the Official Records of Orange County, California. Capitalized terms used herein shall have the same meaning as set forth in the Agreement; and 2. As of the date of this Certificate, continuously and throughout the prior Year, Participant has operated a Movie Theatre at the Site in accordance with all terms, covenants, conditions, restrictions, and agreements set forth in the Agreement and the Operating Covenant. In addition, As of the date of this Certificate, continuously and throughout the prior Year, the Movie Theatre has complied with the Movie Theatre Description attached to the Agreement as Attachment No. 6. 3. At no time since the date of filing of the last Certification of Continuing Compliance with Operating Covenant and Participation Agreement (or the Date of Agreement if this is the first such Certificate) has Participant failed to operate a Movie Theatre at the Site for thirty (30) or more consecutive days. 4. Participant is enrolled in the U.S. Department of Homeland Security's E -Verify program and, as of the date of this Certificate and continuously and throughout the prior Year, Participant has verified the employment authorization of any and all new employees assigned to perform work at the Movie Theatre and/or employees who otherwise perform work for Participant in the City through the E -Verify program within three (3) days of hiring any such employees. 5. Participant is not in Default under the terms of the Agreement or the Operating Covenant. PARTICIPANT: REGENCY THEATRES, INC., a California corporation Lyndon Golin, President [Participant to provide corporate resolution providing authority to enter into Participation Agreement.] ATTACHMENT NO. 3-1 DOC SOC/ 1339956v5/022299-0083 9 0 ATTACHMENT NO.4 PERSONAL GUARANTY This PERSONAL GUARANTY ("Guaranty"), dated as of _, 2009, is executed and delivered by LYNDON GOLIN, an individual ("Guarantor"), at the solicitation of REGENCY THEATRES, INC., a California corporation ("Participant"), for the benefit and in favor of SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"). RECITALS A. Agency and Participant have executed a Participation Agreement, dated as of , 2009 ("Agreement"), which provides for Participant's conveyance to Agency of an "Operating Covenant" with respect to certain real property generally located at 26762 Verdugo Street in the City of San Juan Capistrano ("City"), County of Orange, State of California ("Site"). Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Agreement. B. Concurrently with the execution and delivery of this Guaranty, Participant has executed and delivered the Operating Covenant to Agency and has permitted the Operating Covenant to be recorded against the Site. The Operating Covenant requires Participant to pay an amount of Four Hundred Fifty Thousand Dollars ($450,000) to Agency in ten (10) equal annual installments of Forty -Five Thousand Dollars ($45,000) as repayment of the Operating Covenant Purchase Price advanced to Participant by Agency pursuant to the Agreement, and to perform certain other obligations as set forth therein. C. Guarantor is the President and sole shareholder of Participant and, as such, will benefit indirectly by virtue of the Agreement and Participant's conveyance of the Operating Covenant to Agency. D. In order to induce Agency to purchase the Operating Covenant and to consummate the transactions contemplated by the Agreement, and in consideration thereof, Guarantor has agreed to guaranty the prompt and complete repayment of the Operating Covenant Purchase Price, all interest thereon, if any, and all of Agency's reasonable fees and expenses, if any, incurred in connection with enforcement of its rights hereunder and under the Agreement and the Operating Covenant (collectively, the "Liabilities"). NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby agrees as follows: 1. Defined Terms; Construction. (a) All terms used herein shall have the meaning set forth in the Agreement unless otherwise specified. (b) The words "hereby," "hereof," "herein" and "hereunder" and words of like import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. Section references herein are to this Guaranty unless otherwise specified. ATTACHMENT NO. 4-1 DOCSOC/ 1339956v5/022299-0083 (c) All terms defined in this Guaranty in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified. (d) The parties hereto have participated jointly in the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or interpretation arises, this Guaranty shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Guaranty. 2. Liabilities. Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Agency, as primary obligor and not merely as surety, until the final payment in full of the Liabilities has been made, (a) the due and punctual payment of the Liabilities, when and as the same shall become due and payable, whether at maturity, by acceleration, or otherwise; it being the intent of Guarantor that the guaranty set forth herein shall be a guaranty of payment and not a guaranty of collection; and (b) the punctual and faithful performance, keeping, observance, and fulfillment by Participant of all of the agreements, conditions, covenants, and obligations of Participant contained in the Operating Covenant. 3. Continuing Guaranty. This Guaranty includes Liabilities arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing or renewing the Liabilities, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional Liabilities after prior Liabilities have been satisfied in whole or in part. To the maximum extent permitted by law, Guarantor hereby waives any right to revoke this Guaranty as to future Liabilities. If such a revocation is effective notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Agency, (b) no such revocation shall apply to any Liabilities in existence on the date of receipt by Agency of such written notice (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such revocation shall apply to any Liabilities made or created after such date to the extent made or created pursuant to a legally binding commitment of Agency in existence on the date of such revocation, (d) no payment by Guarantor, Participant, or from any other source, prior to the date of Agency's receipt of written notice of such revocation shall reduce the maximum obligation of Guarantor hereunder, and (e) any payment by Participant or from any source other than Guarantor subsequent to the date of such revocation shall first be applied to that portion of the Liabilities as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of Guarantor hereunder. 4. Performance under this Guaranty. In the event that Participant fails to make any payment of any Liabilities when due, or if a Closure or Default under the Operating Covenant or Agreement shall otherwise occur and be continuing, Guarantor shall cause such payment in respect of the Liabilities to be made. 5. Primary Obligations. This Guaranty is a primary and original obligation of Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional, and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions. Guarantor hereby agrees (i)that it is directly liable to Agency, (ii) the obligations of Guarantor hereunder are independent of the obligations of Participant, and (iii) a separate action may be brought against Guarantor, whether such action (or actions) is ATTACHMENT NO. 4-2 DOCSOC/ 1339956v5/022299-0083 0 0 brought against Participant or whether Participant is joined in such action. Guarantor hereby agrees that its liability hereunder shall not be contingent upon the exercise or enforcement by Agency of whatever remedies it may have against Participant or Guarantor, or the enforcement of any lien or realization upon any security by Agency. Guarantor hereby agrees that any release which may be given by Agency to Participant shall not release Guarantor. Guarantor consents and agrees that Agency shall not be under any obligation to marshal any property or assets of Participant in favor of Guarantor, or against or in payment of any or all of the Liabilities. 6. Representations and. Warranties. Guarantor represents and warrants as of the date of this Guaranty: (a) Guarantor is an individual residing in the State of California, has the corporate power and authority to own its property and assets and to transact the business in which it is engaged. (b) Guarantor has duly executed and delivered this Guaranty, and this Guaranty constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor's rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). (c) Neither the execution, delivery or performance by Guarantor of this Guaranty, nor compliance by it with the terms and provisions hereof, (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental authority applicable to Guarantor, or (ii) will conflict or be inconsistent with or result in any breach, in any material respect, of any of the terms, covenants, conditions or provisions of, or constitute a default, in any material respect, under, or result in the creation or imposition of (or the obligation to create or impose) any lien upon any of the property or assets of Guarantor pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other agreement, contract or instrument to which Guarantor is a party or by which it or any of its property or assets is bound or to which it may be subject. (d) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made prior to date hereof), or exemption by, any Governmental Authorities is required to authorize, or is required in connection with, the execution, delivery and performance of this Guaranty. (e) Guarantor is currently informed of the condition (financial and otherwise) of Participant and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Liabilities. Guarantor has read and understands the terms and conditions of the Operating Covenant. Guarantor will continue to keep itself informed of Participant's condition (financial and otherwise) and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Liabilities. 7. Waivers. (a) To the fullest extent permitted by applicable law, Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any financial accommodations made or extended under the Operating Covenant, or the creation or existence of any Liabilities; (iii) notice of the amount of ATTACHMENT NO. 4-3 DOCSOC/ 1339956v5/022299-0083 the Liabilities, subject, however, to Guarantor's right to make inquiry of Agency to ascertain the amount of the Liabilities at any reasonable time; (iv) notice of any adverse change or other development in the condition (financial or otherwise) of Participant or of any other fact that might increase Guarantor's risk hereunder; (v) notice of presentment for payment, demand, protest, and notice thereof as to the Operating Covenant; (vi) notice of any Closure or Default; and (vii) all other notices (except if such notice is specifically required to be given to Guarantor under this Guaranty) and demands to which Guarantor might otherwise be entitled. (b) To the fullest extent permitted by applicable law, Guarantor hereby waives the right by statute or otherwise to require Agency to institute suit against Participant or to exhaust any rights and remedies which Agency has or may have against Participant. In this regard, Guarantor agrees, that it is bound to the payment of all Liabilities, whether now existing or hereafter arising, as fully as if the Liabilities were directly owing to Agency by Guarantor. Guarantor further waives any defense arising by reason of any disability or other defense (other than the defense that the Liabilities shall have been fully and finally performed and indefeasibly paid in full in cash, to the extent of any such payment) of Participant or by reason of the cessation from any cause whatsoever of the liability of Participant in respect thereof. (c) To the fullest extent permitted by applicable law, Guarantor hereby waives: (i) any right to assert against Agency any defense (legal or equitable), set-off, counterclaim, or claim which Guarantor may now or at any time hereafter have against Participant; (ii) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Liabilities or any security therefor; (iii) any right or defense arising by reason of any claim or defense based upon an election of remedies by Agency including any defense based upon an impairment or elimination of Guarantor's rights of subrogation, reimbursement, contribution, or indemnity of Guarantor against Participant; and (iv) the benefit of any statute of limitations affecting Guarantor's liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Liabilities shall similarly operate to defer or delay the operation of such statute of limitations applicable to Guarantor's liability hereunder. (d) Until the repayment in full of the Liabilities has occurred, (i) Guarantor hereby postpones and agrees not to exercise any right of subrogation Guarantor has or may have as against Participant with respect to the Liabilities; (ii) Guarantor hereby postpones and agrees not to exercise any right to proceed against Participant or any other Person now or hereafter liable on account of the Liabilities for contribution, indemnity, reimbursement, or any other similar rights (irrespective of whether direct or indirect, liquidated or contingent); and (iii) Guarantor hereby postpones and agrees not to exercise any right it may have to proceed or to seek recourse against or with respect to any property or asset of Participant or any other Person now or hereafter liable on account of the Liabilities. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor shall not exercise any rights of subrogation, contribution, indemnity, reimbursement or other similar rights against, and shall not proceed or seek recourse against or with respect to any property or asset of, Participant (including after payment in full of the Liabilities) if all or any portion of the Liabilities have been satisfied in connection with an exercise of available remedies. For purposes of this Guaranty, "Person" means and includes an individual, a partnership, a joint venture, a limited liability company, a corporation (including any non-profit corporation), a trust, an unincorporated organization, a group, a governmental authority, or any other entity or form of business enterprise. ATTACHMENT NO. 4-4 DOCSOC/ 1339956v5/022299-0083 0 0 (e) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2787, 2799, 2808, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2847, 2848, AND 2855, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A, 580B, 580C, 580D, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR LAWS OF ANY OTHER APPLICABLE JURISDICTION. (f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, Guarantor waives all rights and defenses arising out of an election of remedies by Agency, even though such election of remedies has destroyed Guarantor's rights of subrogation and reimbursement against Participant by the operation of applicable law, INCLUDING SECTION 580D OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR ANY SIMILAR LAWS OF ANY OTHER APPLICABLE JURISDICTION. (g) Without limiting the generality of any other waiver or other provision set forth in this Guaranty, Guarantor hereby also agrees to the following waivers: (i) Agency's right to enforce this Guaranty is absolute and is not contingent upon the genuineness, validity or enforceability of the Liabilities or the Operating Covenant. Guarantor waives all benefits and defenses it may have under California Civil Code Section 2810 or any similar laws in any other applicable jurisdiction and agrees that Agency's rights under this Guaranty shall be enforceable even if Participant had no liability at the time of execution of the Operating Covenant or the Liabilities are unenforceable in whole or in part, or Participant ceases to be liable with respect to all or any portion of the Liabilities. (ii) Guarantor waives all benefits and defenses it may have under California Civil Code Section 2809 or any similar laws in any other applicable jurisdiction with respect to its obligations under this Guaranty and agrees that Agency's rights under the Operating Covenant will remain enforceable even if the amount guaranteed hereunder is larger in amount and more burdensome than that for which Participant is responsible. The enforceability of this Guaranty against Guarantor shall continue until all Liabilities under the Operating Covenant have been paid in full and shall not be limited or affected in any way by any impairment or any diminution or loss of value of any security or collateral for Participant's obligations under the Operating Covenant, from whatever cause, the failure of any security interest in any such security or collateral or any disability or other defense of Participant, or any pledgor of collateral for Participant's obligations to Agency in connection with the Operating Covenant. (iii) Guarantor waives all benefits and defenses it may have under California Civil Code Sections 2845, 2849 and 2850 or any similar laws of any other applicable jurisdiction with respect to its obligations under this Guaranty, including the right to require Agency to (A) proceed against Participant, any pledgor of collateral for Participant's obligations to Agency or any other Person in connection with the Liabilities, (B) proceed against or exhaust any other security or collateral Agency may hold, or (C) pursue any other right or remedy for Guarantor's benefit, and agrees that Agency may exercise its right under this Guaranty without taking any action against Participant, any pledgor of collateral for Participant's obligations to Agency in connection with the Liabilities, and without proceeding against or exhausting any security or collateral Agency holds. ATTACHMENT NO. 4-5 DOCSOC/ 1339956v5/022299-0083 S. Bankruptcy. (a) Guarantor agrees that the liability of Guarantor under this Guaranty shall in no way be limited by (i) the release or discharge of Participant in any creditor proceeding, receivership, bankruptcy or other similar proceeding, (ii) the impairment, limitation or modification of the liability of Participant or of any remedy for the enforcement of Participant's liability, resulting from the operation of any present or future provision of Title 11 of the United States Bankruptcy Code, as amended, or any other statute or proceeding affecting creditors' rights generally, (iii) the rejection or disaffirmance of any Liabilities by Participant or any portion thereof in any such proceeding, or (iv) the cessation, from any cause whatsoever, whether consensual or by operation of law, of the liability of Participant to the Agency. In the event that bankruptcy, insolvency, receivership or similar creditors' rights proceedings are instituted against Participant, Guarantor hereby waives any rights of indemnification and/or subrogation it may have against Participant so long as any Liabilities are outstanding. (b) Guarantor agrees that it shall file all claims against Participant in any bankruptcy or other similar proceeding in which the filing of claims is required by law on any indebtedness of Participant to Guarantor, and will assign to the Agency all rights of Guarantor. If Guarantor does not file such claim, the Agency, as attorney in fact for Guarantor, is authorized to do so in the name of Guarantor to the extent of amounts guaranteed hereunder or, in the Agency's discretion, to assign the claim and to file a proof of claim in the name of the Agency or the Agency's nominee. In all such cases, whether in bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to the Agency the full amount of any such claim, and, to the full extent necessary for that purpose, Guarantor assigns to the Agency all of Guarantor's rights to any such payments or distributions to which Guarantor would otherwise be entitled. All monies or other property of Guarantor at any time in the possession of the Agency may be held by the Agency as security for any and all obligations of Guarantor to the Agency no matter how or when arising, whether absolute or contingent, whether due or to become due, and whether under this Guaranty or otherwise. 9. Releases. Guarantor consents and agrees that without notice to or by Guarantor and without affecting or impairing the obligations of Guarantor hereunder, Agency may, by action or inaction, compromise or settle, shorten or extend the Maturity Date or any other period of duration or the time for the payment of the Liabilities, or discharge the performance of the Liabilities, or may refuse to enforce the Liabilities, or otherwise elect not to enforce the Liabilities, or may, by action or inaction, release Participant from the terms and provisions of the Operating Covenant or may grant other indulgences to Participant, or may amend or modify in any manner and at any time (or from time to time) any one or more of the Liabilities, the Operating Covenant (including any increase or decrease in the principal amount owing to Agency under the Operating Covenant or the interest, fees or other amounts that may accrue from time to time in respect thereof), or may, by action or inaction, release or substitute Participant, or may enforce, exchange, release, or waive, by action or inaction, any security for the Liabilities, or any portion thereof. 10. No Election. Agency shall have the right to seek recourse against Guarantor to the fullest extent provided for herein and no election by Agency to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Agency's right to proceed in any other form of action or proceeding or against other parties unless Agency has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Agency under any document or instrument evidencing the ATTACHMENT NO. 4-6 DOCSOC11339956v51022299-0083 Liabilities shall serve to diminish the liability of Guarantor under this Guaranty except to the extent that Agency finally and unconditionally shall have realized indefeasible payment in full of the Liabilities by such action or proceeding. 11. Revival and Reinstatement. If the incurrence or payment of the Liabilities or the transfer by Guarantor to Agency of any property of Guarantor should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if Agency is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Agency is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of Agency related thereto, the liability of Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made. 12. Payments; Application. All payments to be made hereunder by Guarantor shall be made in lawful money of the United States of America, by wire transfer in immediately available funds, and without deduction (whether for taxes or otherwise) or offset and shall be applied to the Liabilities in accordance with the terms of the Operating Covenant. 13. Cumulative Remedies. No remedy under this Guaranty is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every other remedy given under this Guaranty, and those provided by law. No delay or omission by Agency to exercise any right under this Guaranty shall impair any such right nor be construed to be a waiver thereof. No failure on the part of Agency to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Guaranty preclude any other or further exercise thereof or the exercise of any other right. 14. Termination. Upon the repayment in full of the Liabilities, this Guaranty shall terminate, and Agency upon request by Guarantor shall promptly execute and deliver such documents and instruments and take such further action reasonably requested by Guarantor, at Guarantor's expense, as shall reasonably be necessary to evidence such termination with respect to Guarantor. 15. City as Third Party Beneficiary. The City and its successors and assigns shall be intended third party beneficiaries of this Guaranty. City shall have full right and ability (but no obligation) to enforce each and every obligation of Guarantor under this Guaranty. No other person(s) or entity(ies) shall have any right of action hereunder. 16. Successors and Assigns. All rights of Agency under this Guaranty shall inure to the benefit of Agency and its permitted successors and assigns, and all obligations of Guarantor shall bind its successors and assigns. Notwithstanding the foregoing, Guarantor shall not assign this Guaranty without the prior written consent of Agency. 17. Applicable Law. All questions concerning the construction, validity, and interpretation of this Guaranty shall be governed by and construed in accordance with the domestic laws of the State of California, without giving effect to any choice of law or conflict of law provision ATTACHMENT NO. 4-7 DOCS001339956v57022299-0083 • 6 that would cause the application of the laws of any jurisdiction other than the State of California. Each of the parties hereby irrevocably and unconditionally consents to submit and submits to the exclusive jurisdiction of the state and federal courts sitting in Orange County, California for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (and agrees not to commence any action relating thereto except in such courts). Each of the parties hereby irrevocably and unconditionally waives any objection to the laying of venue of any action arising out of this Guaranty in such courts and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum. Each party hereby consents to process being served in any such action by the mailing of a copy thereof to the address set forth in Section 20 below and agrees that such service upon receipt shall constitute good and sufficient service of process or notice thereof. Nothing in this paragraph shall affect or eliminate any right to serve process in any other manner contemplated by applicable law. Each of the parties agrees that service of any court paper may be made in such manner as may be provided under applicable laws or court rules governing service of process. 18. Enforcement Costs. If (a) this Guaranty is placed in the hands of an attorney for collection or is collected through any legal proceeding; (b) an attorney is retained to represent Agency in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors' rights and involving a claim under this Guaranty; or (c) an attorney is retained to represent Agency in any proceedings whatsoever in connection with this Guaranty and Agency prevails in any such proceedings as described in subsections (a), (b), and/or (c) of this Section, then Guarantor shall pay to Agency upon demand all reasonable attorneys' fees, expert witness fees, costs, and expenses incurred in connection therewith (all of which are referred to collectively herein as "Enforcement Costs"), in addition to all other amounts due hereunder, regardless of whether all or a portion of such Enforcement Costs are incurred in a single proceeding or multiple proceedings brought to enforce this Guaranty. 19. Severability. If any term or other provision of this Guaranty is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Guaranty shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Guaranty so as to effect the original intent of the parties as closely as possible, in a mutually acceptable manner, to the end that transactions contemplated hereby are fulfilled to the extent possible. 20. Notice. Any approval, disapproval, demand, document or other notice which either party may desire to give to the other party under this Guaranty must be in writing and may be given by any commercially acceptable means to the party to whom the notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by notice. If to Guarantor: Lyndon Golin 22670 Liberty Bell Road Calabasas, California 91302 ATTACHMENT NO. 4-8 DOCSOC/ 1339956v5/022299-0083 with a copy to: Regency Theatres 22231 Mulholland Hwy., Ste. 208 Calabasas, California 91302 Attention: Lyndon Golin If to Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 With a copy to: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Thomas P. Clark, Jr. Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 21. Amendments, Waivers and Consents. This Guaranty may be amended and any provision of this Guaranty may be waived, only if such amendment or waiver is set forth in a writing executed by Agency. 22. Guarantor's Acknowledgement. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor hereby acknowledges and agrees that Agency's rights and remedies under this Guaranty are not, and shall not be, subordinate to or limited by the rights and remedies of any other party, including, without limitation, any construction or permanent lender. 23. Section Titles. The section titles herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof. 24. Entire Agreement. This Guaranty and the documents referred to herein contain the entire agreement between the parties and supersede any prior understandings, agreements, or representations by or between the parties, written or oral, with respect to the subject matter hereof. 25. Execution in Counterparts. This Guaranty may be executed in multiple counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same instrument. Signatures Appear on Next Page ATTACHMENT NO. 4-9 DOCSOC/ 1339956v5/022299-0083 0 0 IN WITNESS WHEREOF, the undersigned have executed and delivered this Personal Guaranty as of the date first written above. "Guarantor" LYNDON GOLIN, an individual Lyndon Golin "Agency" SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic Executive Director ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Agency Counsel ATTACHMENT NO. 4-10 DOC SOC/ 1339956v5/022299-0083 0 0 ATTACHMENT NO.5 CONSENT OF SPOUSE The undersigned acknowledges that the undersigned has read the PARTICIPATION AGREEMENT ("Participation Agreement") by and between the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY ("Agency") and REGENCY THEATRES, INC. ("Participant"), dated as of [ 20091, including all attachments thereto, and the PERSONAL GUARANTY ("Personal Guaranty") executed by LYNDON GOLIN ("Guarantor") in favor of Agency, dated as of [ , 2009]. Capitalized terms used in this Consent of Spouse and not otherwise defined herein have the meanings given to them in the Participation Agreement. The undersigned, intending to be legally bound: 1. represents and warrants that the undersigned is the spouse of Lyndon Golin; 2. consents to and approves the execution, delivery and performance by the undersigned's spouse of, and agrees to be bound by, the Personal Guaranty with respect to the obligations of the Participant under the Participation Agreement; 3. consents to and approves the consummation of the transactions contemplated by the Participation Agreement; 4. agrees to execute and deliver any document, and to take any other action, that Agency, Participant or Guarantor may reasonably request for the purpose of facilitating, consummating or evidencing any of the transactions contemplated by the Personal Guaranty and/or the Participation Agreement; 6. irrevocably appoints Lyndon Golin (with full power of substitution) as the undersigned's agent and attorney-in-fact for the purpose of executing and delivering (on behalf of the undersigned) any contract, consent or other document, and for the purpose of taking any other action, relating directly or indirectly to the Personal Guaranty and/or the Participation Agreement; and 7. represents and warrants that the undersigned has had the opportunity to obtain legal advice, from counsel of the undersigned's own choosing and independent of the undersigned's spouse, as to the undersigned's legal rights and as to the legal effect of this Consent of Spouse. The representations, warranties, covenants, obligations and other provisions set forth in this Consent of Spouse shall continue throughout the entire Operating Covenant Period, notwithstanding any investigation conducted with respect thereto or any knowledge of any other person. Dated: 2009 Signature Printed Name ATTACHMENT NO. 5-1 DOCSOC/ 1339956v5/022299-0083 0 0 ATTACHMENT NO. 6 MOVIE THEATRE DESCRIPTION The Regency Franciscan Plaza theatre will be comprised of four (4) screens, a concession stand, a beer and wine bar, a full kitchen and a game room. The theater will offer a high-end movie - going experience with state-of-the-art presentation, featuring stadium seating, wall to wall screens, digital sound and high -back leather love -seats with reserved seating. The theatre located upstairs will combine the dining and movie -going experiences, and will feature "Rick's American Cafe," a Moroccan -themed dining lounge which will offer movie-goers a luxurious V.I.P experience with an auditorium featuring wait staff, large reclining leather seats and service beer, wine and hot food. The programming will feature a combination of commercial and specialized films to cast the widest net and to cater to the residents of San Juan Capistrano and beyond. The theater will operate with matinees and evening shows daily and will also be marketed as an event space for wine tasting events, screenings, parties, corporate meetings and educational space for large groups going to the Mission from the Train Station. ATTACHMENT NO. 6-1 DOCS00I 339956v57022299-0083 NOTIFICATION OF MEETING OF POTENTIAL INTEREST SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY The Board of Directors of San Juan Capistrano Community Redevelopment Agency will meet at 6:30 p.m. on Tuesday, July 7, 2009, in the City Council Chamber in City Hall, to consider: "Consideration of Participation Agreement (Regency Theatres)(City Council Priority No. 19A)" — Item No. D1. If you have specific thoughts or concerns regarding this item, you are encouraged to participate in this decision making process. You can communicate with the Board of Directors through correspondence addressed to the Board and/or by attending the meeting and speaking to the Board during the public meeting. Correspondence related to this item must be received at the City Clerk's office by 5:00 p.m. on Monday, July 6, 2009 to allow time for the Board to consider its content. If you would like to speak at the meeting, please complete a yellow "Request to Speak" form found inside the entrance to the Council Chamber. This form is turned in at the staff table, just in front of the Council dais. You will be called to speak by the Chairman when the item is considered. You have received this notice at the request of the City staff member Douglas D. Dumhart, Economic Development Manager. You may contact that staff member at (949) 443-6316 with any questions. The agenda, including agenda reports, is available to you on our web site: www.sanivancaoistrano.org. If you would like to subscribe to receive a notice when agendas are posted to the web site, please make that request by sending an e-mail to: citvclerk(cDsa n i u ancaoistrano. org. Meg Monahan, MMC City Clerk cc: Lyndon Golin, Regency Theatres; Alberto Mobrici, Alfa Plaza, LLC 32400 Paseo Adelanto a San Juan Capistrano • California 92675 (949) 493.1171 G(YiV OF SAN Jl./aN ('AI'I?I'HA\U t`j J Jau iuml.pvnai. j fu N'mmn � xy PI d �aimim�nlmd nt Imniln�n,n 8cirr oe d+a' ulnv 11r1e+rs.wo2 NOTIFICATION OF MEETING OF POTENTIAL INTEREST SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY The Board of Directors of San Juan Capistrano Community Redevelopment Agency will meet at 6:30 p.m. on Tuesday, July 7, 2009, in the City Council Chamber in City Hall, to consider: "Consideration of Participation Agreement (Regency Theatres)(City Council Priority No. 19A)" — Item No. D1. If you have specific thoughts or concerns regarding this item, you are encouraged to participate in this decision making process. You can communicate with the Board of Directors through correspondence addressed to the Board and/or by attending the meeting and speaking to the Board during the public meeting. Correspondence related to this item must be received at the City Clerk's office by 5:00 p.m. on Monday, July 6, 2009 to allow time for the Board to consider its content. If you would like to speak at the meeting, please complete a yellow "Request to Speak" form found inside the entrance to the Council Chamber. This form is turned in at the staff table, just in front of the Council dais. You will be called to speak by the Chairman when the item is considered. You have received this notice at the request of the City staff member Douglas D. Dumhart, Economic Development Manager. You may contact that staff member at (949) 443-6316 with any questions. The agenda, including agenda reports, is available to you on our web site: www.sanivancaoistrano.org. If you would like to subscribe to receive a notice when agendas are posted to the web site, please make that request by sending an e-mail to: citvclerk(cDsa n i u ancaoistrano. org. Meg Monahan, MMC City Clerk cc: Lyndon Golin, Regency Theatres; Alberto Mobrici, Alfa Plaza, LLC 32400 Paseo Adelanto a San Juan Capistrano • California 92675 (949) 493.1171 V Participation Agreement Regency Theaters Regency Theaters Request • Request for assistance due to tight credit market • 10 -year $450,000 interest free loan. • To cover tenant improvement costs: Furniture, fixtures and equipment. Operating Covenant • Requires Regency Theaters to operate for 10 years. • First rate Theater devoted to newly - released feature length motion pictures • No competing Theater; maximize sales and use tax. • Right to run no fee PSA's prior to films. Operating Covenant • Regency to repay in ten years • Equal installments of $45,000 • Last day of each year following recordation of covenant. • If theaters close before 10 -years repayment of outstanding balance at a rate of 10% per annum. Participation Agreement • Provides for Indemnification of Agency and City. • Nondiscrimination Covenants. • E -verify. • Default remedies. • Transfers of Interest. The End. 0 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493.1171 (949) 4931053 FAx www sanJuancapistrano. org TRANSMITTAL TO: IAOAIIAA111 ' nuunAR � 1961 1776 Stradling, Yocca, Carlson and Rauth Attn: Tom Clark 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660 DATE: August 26, 2009 MEMBERS OF THE CITY COUNCIL FROM: Christy Jakl, Administrative Specialist, City Clerk's Office (949) 443-6310 RE: Participation Agreement — Regency Theatres, Inc Enclosed: (1) Original, Participation Agreement — Regency Theatres, Inc SAM ALLEYATO LAURAFREESE THOMAS W. HRIBAR MARK NIELSEN DR. LONDRES USO If you have questions concerning the agreement, please contact Douglas D. Dumhart, Economic Development Manager at (949) 443-6316. Cc: Douglas D. Dumhart, Economic Development Manager San Juan Capistrano: Preserving the Past to Enhance the Future 0 PrinumI on 1W% r yded paper 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 4931171 (949) 493-1053 FAx www.sanjuancap[strano. org TRANSMITTAL TO Woodruff, Spr in & Smart Attn: Vane Lodlin 555 Ant Boulevard, Suite 1200 Cost esa, CA 92626 TE: August 17, 2009 MEMBERS OF THE CITY COUNCIL FROM: Christy Jakl, Administrative Specialist, City Clerk's gKce (949) 443-6810 RE: Participation Agreement — Regency Theatres, Enclosed: SAM ALLEVATO LAURA FREESE THOMAS W. HRIBAR MARK NIELSEN DR. LONDRES USO (1) Original, Participation Zrning egency Theatres, Inc If you have questions agreement, please contact Douglas D. Dumhart, Economic Development M) 443-6316. Cc: Douglas D Economic Development Manager San Juan Capistrano: Preserving the Past to Enhance the Future 40 Pnnletl on 100% recyGetl paper