09-1221_REGENCY THEATRES, INC_Operating CovenantRECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
San Juan Capistrano
Community Redevelopment Agency
32400 Paseo Adelanto
San Juan Capistrano, California 92675
Attn: Executive Director
Recorded in Official Records, Orange County
Tom Daly, Clerk -Recorder
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200900068239411:51 am 12121/09
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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 December 1, 2009,
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 July 7,
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.
K 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.
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
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
DOCSOC/1381073v2/022299-0083
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.
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(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 tinder 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 (1") through
tenth (10b) 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 suras owing under this
Operating Covenant, shall, if not sooner paid, become due and payable on the tenth (101h)
anniversary of the first (1 st) disbursement of the Operating Covenant Purchase Price.
(b) Interest Rate. No interest shall accrue on P'articipant'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. .P'articipant'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 manes 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
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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.
(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 Lshareholders 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,
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(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
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 force 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
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about, or the transportation of any Hazardous Materials to or from, the Site in violation of any
applicable Environmental Law.
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 1'781, 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
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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 therm 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.
(e) 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.
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(ii) Plate Glass insurance covering the full replacement cost of all plate
glass at the Movie Theatre.
(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.
(1v) 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. Employer'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 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 covcred 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
DOCSOC/ 13 81.073v2/022299-0083
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.
(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:
I. 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.
4. Any and all chemicals, unhealthful substances, and pesticides used in
and during maintenancc 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.
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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 andin accordance with the
Maintenance Standards, Agency and/or City shall have the right to maintain such private andlor
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 casement 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
10
DOCS OC/ 13 8107 3 v2/022299-0083
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
ll
DOC SOC/ i 381073v2/022299-0083
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.
12. Subordination to Landlord's Financing. The Agency hereby acknowledges that
this Operating Covenant only affects the leasehold interest of the Participant in the Theatre Lease,
and is not intended to restrict the rights of Owner. Agency also acknowledges that this Operating
Covenant is, and shall remain, subordinate to any existing and/or future financing secured by the
Site, which may be obtained by Owner.
13, Owner's. Non -Responsibility. Under no circumstances shall Owner be responsible
for repaying any of the moneys advanced by the Agency to the Participant hereunder.
14. Removal of the Lien. If, for any reason, the Theatre Lease with Participant
terminates or the Operating Covenant terminates, upon written request of Owner, Agency shall
promptly provide Owner with sufficient documentation to remove the lien of record created by the
Operating Covenant, as may be .reasonably requested by Owner.
[Signatures appear on following page.]
12
DOCSOC/ 13 81073x2/022299-0083
IN WITNESS WHEREOF, the paries hereto have executed. this Operating Covenant as of
the day and year first set forth above.
ATTEST:
Maria Morris, ge�tcy Secretary
APPROVED AS 11TO FORM:
Stradling Yocca Carlson & Rauth
Agency Counsel
AGENCY:
SAN JUAN CAPISTRANO COMMUNITY
REDEVELOPMENT AGENCY, a public body,
corporate and politic
By:
Joe T# Executive Director
PARTICIPANT:
REGENCY THEATRES, INC., a California
corporation
B
�"Yndon Golin, President
13
DOC S OC/ 1381073v2/022299-0083
OPERATING COVENANT
ACCEPTED FOR RECORDING:
ALFA PLAZA, LLC a California limited liability
company
fl
By:
Alberto Mobrici, Managing Member
14
DOC S OC/ 1381073v2/022299-0083
PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT
State of California )
County of Orange ) ss.
City of San .Tuan Capistrano )
(Gov't Code 40814 & Civil Code 1181.)
On December 1. 1, 2009, before me, Maria Morris,_ Agency_ Secretary, personally appeared
Joe Tait, Executive Director, who proved to me on the basis of satisfactory evidence to the be
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, and that by his/her/there signature
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.
(SEAL)
Capacity Claimed by Signers
Executive Director
Title
Signers are Representing
Community Redevelopment Agency
WITNESS my hand and official seal.
Maria Morn s,
OPTIONAL
Description of .Attached Document
Title or Type of Document
Operating Covenant — San Juan Capistrano Community
Redevelopment Agency & Regency Theatres, Inc
Number of Mages: 20
STATE OF CALIFORNIA )
ss.
COUNTY OF
On °C �% ,before me, J~ G'�i t ell , Notary Public,
(Print Name of Notary Pubtic)
personally appeared/�'bt'/
who proved to me on the basis of satisfactory evidence to be the person whose narne(� is/a76
subscribed to the within instrument and acknowledged to the that he/slcthPy executed the same
in his/herAf= authorized capacity < and that by his/hc44- eir signature on the instrument the
personas or the entity upon behalf of which the person 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.
w
Y �
WITNESS.my,4and and official seal.
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
❑ Attorney - In- Fact
❑ Trustee(s)
❑ Guardian/Conservator
❑ Other:
Signer is representing:
Name OfPerson(s) Or Fntity(ies)
DOCSOC/ 13 S 1073 v 2/022299-0083
DESCRIPTION OF ATTACHED DOCUMENT
.mm,..�
�e. Or T t3cicument
T Number Of Pages
C f _
Pate Of Documents
Signer(s) Other Than Named Above
STATE OF CALIFORNIA
t6-' ss.
COUNTY OF
;t
r
On before me,.,"�",Notary Public,
(Print Name of Notary Public)
personally appeared i ?' 't r'. t` i . ,. t') ( .i
who proved to cele on the basis of satisfactory evidence to be the person(s) whose name(sf is/are
subscribed to the within instrument and acknowledged to me that heAshe/they executed the same
in his/her/their authorized capacity(ies), and that byfiis/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.
;y A SCsNIA MAFC3iNA DE nARRIGA
�< Comrnisrton # 1684095 WITNESS my hand and official seal.
Notary Public - California
Orange Coun4y � y
EViy Comm. Fxpims Aug 24, 2A l it 4
rr r j C ir' .6 { _ fi„i'�', 1�'L✓.- f./ ,4 0 ` `i,f ✓!^ Fi
OPTIONAL
Though the data below is not required by taw, 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
�0.... Individual
S ....
El Corporate Officer
Titte(s) � � l itte Or TYpt Of Doctlmcnt
❑ Partner(s) ❑ Limited
❑ General
❑ Attorney- ln-Fact
❑ Trustee(s)
❑ Guardian/Conservator
❑ Other:
Signer is representing:
Name Of PeNOJI(s) Or Cmiiy(ies)
DOC SOC/ i 3 810 73 Q/t122299-0083
Num r tgc
Os
0
bate Of Documents
t
Signers) Other Than famed Above
EXHIBIT "A"
LEGAL DESCRIPTION OF SITE
LOT 40 OF TRACT NO. 103 AS Sl -TOWN 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 ATA 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 WESTALONG 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 FEETFROM 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 SURVEYO '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-1
DOCS00 13 81073v2/022299-0083
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 1.35.66 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 14IGHWAY: 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:
EXHIBIT A-2
DOC SOC! [ 381073v2/022299-0083
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 SOU'T'HEAST
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.
Assessor Parcel Number: 121-150-27
EXHIBIT A-3
DDCSOC/1381073 v2/022299-0083