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Resolution Number 22-11-14-021 RESOLUTION NO. 22-11-14-02 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH THE CITY OF SAN JUAN CAPISTRANO AND 26874 ORTEGA HIGHWAY LLC FOR THE SALE OF APPROXIMATELY 0.81 ACRES OF CITY-OWNED PROPERTY LOCATED AT 26874 OLD MISSION ROAD (FORMERLY ORTEGA HIGHWAY) (ASSESSOR PARCEL NUMBERS: 124-160-56, 124-160-57) AND FINDING THAT APPROVAL OF THIS RESOLUTION IS EXEMPT FROM CEQA UNDER STATE CEQA GUIDELINES SECTION 15332 WHEREAS, the City of San Juan Capistrano (“City”) currently owns in fee that certain real property, known as the Downtown Property, generally located at 26874 Old Mission Road (formerly Ortega Highway) in the City of San Juan Capistrano (APNs: 124-160-56 and 124-160-57) and depicted in Exhibit “A” attached to this resolution and incorporated by reference herein (the “Property”); and WHEREAS, on October 3, 2017, the City entered into an exclusive right to negotiate agreement with 26874 Ortega Highway LLC (Frontier Real Estate Investments), for the potential acquisition and development of the Property; and WHEREAS, on October 18, 2022, the City adopted Resolution No. 22-10-18-01 declaring the property exempt surplus land pursuant to the Surplus Land Act and the City’s intention to sell the Property and setting time for a public hearing to consider the sale of the property; and WHEREAS, the City and Developer required additional time to finalize the Disposition and Development Agreement and continued that hearing to November 14, 2022; and WHEREAS, Developer’s proposed acquisition of the Property is in the public interest and convenience of the City and the community, and the health, safety and welfare of the City’s taxpayers and residents, and will further the goals and objectives of the City’s general plan by: (i) strengthening the City’s land use and social structure, and (ii) alleviating economic and physical blight on the City Property and in the surrounding community. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, DOES HEREBY RESOLVE AND FIND AS FOLLOWS: Section 1. Recitals. The Recitals set forth above are true and correct and are incorporated into this Resolution by this reference. Section 2. Findings. The City Council intends to sell the City Property to Developer and, based upon the Recitals and all other 2 information and testimony provided, finds that the public interest and convenience require the sale of the Property to Developer. Section 3. Hearing. Pursuant to California Government Code section 37423, a duly noticed public hearing was held by the City on November 14, 2022. Section 4. CEQA Compliance. The City Council of the City hereby finds and determines that the DDA and resulting proposed project are categorically exempt from further environmental review under State CEQA Guidelines, Section 15332, In-Fill Development Projects (Class 32). The entire Project (which includes the project approvals given on October 4, 2022, as well as the action on the purchase agreements that are the subject of this Resolution) is exempt per Section 15332 because the Project meets the required conditions for Class 32. The City filed and posted a Notice of Exemption for the Project on October 7, 2022, with the Orange County Clerk-Recorder. As explained in the October 4, 2022, staff report on the El Camino Specific Plan, the Project is consistent with the applicable General Plan designation and all applicable General Plan policies as well as with applicable zoning designations and regulations outlined in the El Camino Specific Plan; in all respects where the El Camino Specific Plan does not specify a development standard, the Project is consistent with the San Juan Capistrano General Plan and Title 9 of the Municipal Code, Land Use. The Project occurs within city limits on a project site of less than five acres and is substantially surrounded by urban uses. Specifically, the Project is located at 31776 El Camino Real in the City of San Juan Capistrano, consists of 1.68 acres, and is surrounded by Town Center (commercial), Community Park (public), and Town Center Edge (commercial) zoning to the north, south, and east, respectively, and Town Center (commercial) zoning to the west. The Project site has no value, as a habitat for endangered, rare, or threatened species because the majority of the Project site has already been developed and is currently improved with a commercial building, parking lot, and associated improvements on the parcels. Therefore, the site is not habitat for endangered, rare, or threatened species. Approval of the Project would not result in any significant effects relating to traffic, noise, air quality, or water quality. Analysis has been conducted to ensure the Project does not result in any significant effects relating to traffic and water quality, including the following: a Traffic Sensitivity Analysis accepted by the City Traffic Engineer and the Preliminary Water Quality Management Plan approved by the Public Works Department. Further, there is no evidence that the Project would result in significant effects relating to air quality or noise. The site can be adequately served by all required utilities and public services; the Project site is currently 3 serviced by all required utilities, including but not limited to electricity, gas, garbage, water, and sewer and therefore would remain adequately serviced. None of the exceptions to the categorical exemptions identified in CEQA Guidelines, section 15300.2 apply. There is nothing unusual about the Project site or the Project itself that would lead to a potentially significant impact. And, even if an unusual circumstance did exist (one does not), based on the studies performed, there is no reasonable possibility that the Project would have a significant effect on the environment. The Project site is already developed with a commercially operating playhouse, the Project’s Traffic Sensitivity Analysis concluded that the Project would not result in a significant increase of inbound and outbound traffic, would provide adequate access, and would provide adequate off-street parking. Further, the Project will not result in damage to scenic resources within a highway officially designated as a state scenic highway; the closest officially designated state scenic highway is located near Anaheim and therefore the Project will not result in damage to scenic resources within or near such highway. Further, the Project is not located on a site which is included on any list compiled pursuant to Government Section 65962.5; the Project site has not been designated as a hazardous waste site. Further, the Project will not cause a substantial adverse change in the significance of a historic resource; specifically, there would be no substantial adverse change in the significance of the Blas Aguilar Adobe for the reasons outlined in this report and staff’s presentation. Thus, the exceptions are not triggered, and the Class 32 categorical exemption applies to the Project as a whole, including the City Council’s approval of this Resolution. Section 5. Approval of Agreement. The City hereby approves the Agreement, in substantially the form attached to this Resolution as Exhibit “A” and incorporated herein by this reference, subject to any non- substantive revisions approved by the City Attorney and authorizes the City Manager to sign and enter into the Agreement and directs the City Manager to perform the obligations of the City pursuant to the Agreement and to take any such actions as are reasonably necessary to meet the intent of this Resolution. Section 6. Severability. If any provision of this Resolution or the application of any such provision to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution that can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The City declares that the City would have adopted this Resolution irrespective of the invalidity of any particular portion of this Resolution. 4 Section 7. Certification. The City Clerk of the City of San Juan Capistrano shall certify to the adoption of this Resolution. Section 8. Effective Date. This Resolution shall become effective immediately upon its adoption. APPROVED AND ADOPTED THIS 14th day of November 2022. ________________________________ HOWARD HART, MAYOR PRO TEM ATTEST: ________________________________ MARIA MORRIS, CITY CLERK STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF SAN JUAN CAPISTRANO ) I, Maria Morris, appointed City Clerk of the City of San Juan Capistrano, do hereby certify that the foregoing Resolution No. 22-11-14-02 was duly adopted by the City Council of the City of San Juan Capistrano at an Adjourned Regular meeting thereof, held the 14th day of November 2022, by the following vote: AYES: COUNCIL MEMBERS: Bourne, Farias, and Mayor Pro Tem Hart NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Mayor Reeve RECUSED: COUNCIL MEMBERS: Taylor ____________________________ MARIA MORRIS, CITY CLERK 5 EXHIBIT A DISPOSITION AND DEVELOPMENT AGREEMENT (Downtown Property) [Attached behind this cover page] 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) between THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation and 26874 ORTEGA HIGHWAY LLC a California limited liability company (Parking Lot Property) EXHIBIT A DRAFT 61147.20021\32812677.5 -1- This 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) (“Agreement”) is dated as of __________, 2022 (“Date of Agreement”), for reference purposes only, and is entered into by and between the City of San Juan Capistrano, a California municipal corporation (“City”), and 26874 Ortega Highway LLC, a California limited liability company (“Developer”). The City and the Developer are sometimes referred to in this Agreement, each individually, as a “Party,” or collectively, as the “Parties.” RECITALS This Agreement is entered into with reference to the following recitals of fact (“Recitals”) that City and Developer believe to be true as of the Effective Date of this Agreement: A. The City is the owner of that certain real property located at 26874 Ortega Highway and (APNs 124-160-56 and 124-160-57), in San Juan Capistrano, more specifically described in Exhibit A attached hereto and incorporated herein by this reference (“Property”). B. On October 18, 2017, the City and Developer entered into an exclusive negotiation agreement for potential development of the Property (“Exclusive Negotiation Agreement”). On October 15, 2018, the City and Developer entered into the First Amendment to that Exclusive Negotiation Agreement, extending the time for Developer to submit Property-related documents to the City. On September 22, 2021, the City and Developer entered into the Second Amendment to that Exclusive Negotiation Agreement. The Developer proposed the acquisition and redevelopment of the Property as a mixed-use project, including ground floor retail and restaurant space, professional and creative office space, part of the “Project” (as defined in Section 1.1.57), including 140 on-grade and structured parking stalls on the Property. C. The Developer’s proposed acquisition of the Property and subsequent construction and completion of the Project on the Property pursuant to the terms of this Agreement is in the best interest of the City and the health, safety and welfare of the City’s taxpayers and residents and is in accordance with the public purposes set forth in applicable law. Implementation of this Agreement will further the goals and objectives of the City’s general plan by: (i) strengthening the City’s land use and social structure, and (ii) alleviating economic and physical blight on the Property and in the surrounding community. D. The City desires to sell the Property to the Developer for the development of the Project and the Developer desires to purchase the Property from the City for the same purpose. NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by City and Developer, the Parties agree as follows: DRAFT 61147.20021\32812677.5 -2- TERMS AND CONDITIONS ARTICLE I DEFINITIONS; REPRESENTATIONS AND WARRANTIES; EFFECTIVE DATE 1.1 Definitions. All initially capitalized terms not otherwise defined in this Agreement shall have the following meanings: 1.1.1 “Additional Insureds” has the meaning ascribed to such term in Section 5.10. 1.1.2 “Affiliate” means and refers to any person or entity, directly or indirectly, Controlling or Controlled by or under common Control with the Developer, whether by direct or indirect ownership of equity interests, by contract or otherwise. 1.1.3 “CEQA” means the California Environmental Quality Act, Public Resources Code Sections 21000, et seq. 1.1.4 “Certificate of Completion” means the written certification of City that the construction of the Project has been completed in compliance with the terms and conditions of this Agreement, substantially in the form of Exhibit G attached to this Agreement. 1.1.5 “City” means the City of San Juan Capistrano, California, a California municipal corporation. 1.1.6 “City Manager” means the City Manager of the City or his or her designee or successor in function. 1.1.7 “City Requirements” has the meaning ascribed to the term in Section 2.6.1. 1.1.8 “City’s Title Notice Response” means the written response of the City to the Developer’s Title Notice, in which the City either (i) elects to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice, or (ii) elects not to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice. 1.1.9 “Close of Escrow” or “Closing” means the recording of the Grant Deed for the Property in the Official Records of the Recorder of the County, and completion of each of the actions set forth in ARTICLE III by the Escrow Holder for the City to sell the Property to the Developer and the Developer to purchase the Property from the City. 1.1.10 “Completion of Construction” means the issuance of a Certificate of Completion has been issued. DRAFT 61147.20021\32812677.5 -3- 1.1.11 “Construction Costs” means the total cost incurred by Developer in acquiring the Property and constructing the Project in accordance with this Agreement. 1.1.12 “Construction Lender” means a Lender(s) that provide(s) a Construction Loan to the Developer to pay the Construction Costs of all or a portion of the Project. 1.1.13 “Construction Loan” means a Loan obtained by Developer from a Construction Lender to finance all or part of the Construction Costs in conformity with the Financing Plan. 1.1.14 “Construction Loan Deed of Trust(s)” means the Lien(s) required by a Construction Lender to secure the Developer’s performance under the associated Construction Loan. 1.1.15 “Control” means and refers to possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by ownership of equity interests, by contract or otherwise. 1.1.16 “Controlling” and “Controlled” mean and refer to exercising or having Control. 1.1.17 “County” means the County of Orange, California. 1.1.18 “Developer’s Title Notice” means a written notice from the Developer to the City indicating the Developer’s acceptance of the state of the title to the Property, as described in the Preliminary Report, or the Developer’s objection to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property, describing in suitable detail the actions that the Developer reasonably believes are indicated to cure or correct each of the Developer’s objections. 1.1.19 “Developer’s Title Notice Waiver” means a written notice from the Developer to the City waiving the Developer’s previous objection in the Developer’s Title Notice to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property. 1.1.20 “Due Diligence Investigations” means the Developer’s due diligence investigations of the Property to determine the suitability of the Property for development and operation of the Project, including, without limitation, investigations of the environmental and geotechnical suitability of the Property, as deemed appropriate in the reasonable discretion of the Developer, all at the sole cost and expense of the Developer. 1.1.21 “Due Diligence Investigation Conclusion “Approval Notice” means a written notice of the Developer delivered to the City and the Escrow Holder, prior to the end of the Due Diligence Period, indicating the Developer’s acceptance of the condition of the Property or indicating the Developer’s rejection of the condition of the Property and refusal to accept a conveyance of fee title to the Property, describing in reasonable detail the actions that the Developer reasonably believes are indicated to allow the Developer to accept the condition of the Property. DRAFT 61147.20021\32812677.5 -4- 1.1.22 “Due Diligence Period” means the date commencing on the Effective Date and ending at 5:00 p.m. on the thirtieth (30th) day following the Effective Date. 1.1.23 “Earnest Money Deposit” means Fifty Thousand Dollars ($50,000.00) payable in cash or other immediately available funds. The Earnest Money Deposit shall include the remaining balance of the Initial Deposit, as such term is defined and funds provided pursuant to the ENA. 1.1.24 “Effective Date” has the meaning ascribed to the term in Section 1.3. 1.1.25 “ENA” means the Exclusive Negotiation Agreement (Downtown Properties), dated October 3, 2017, by and between City and 26874 Ortega Highway, LLC, and any executed Amendments, including the First Amendment to the Exclusive Negotiation Agreement (Downtown Properties), dated October 10, 2018. 1.1.26 "Entitlements” means all land use approvals and entitlements required by the City (in the exercise of its governmental power) and any other Governmental Authority with jurisdiction over the Property in connection with the development of the Property, subject to conditions of approval acceptable to Developer in Developer’s sole discretion. 1.1.27 “Entitlements Condition” means, that (a) the Entitlements have been issued by all applicable Governmental Authorities, (b) all applicable appeal periods with respect to such issuance have expired without appeal having been filed or, if an appeal is filed, such appeal has been denied, and no legal action has been instituted against Developer or the City alleging the invalidity of such entitlements, and (c) the Entitlements remain in full force and effect. 1.1.28 “Environmental Claims” has the meaning ascribed to the term in Section 5.9. 1.1.29 “Environmental Laws” means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property, occupational or environmental conditions on, under, or about the Property, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) [42 USC Section 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USC Section 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USC Section 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act (“HMTA”) [49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et seq.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; DRAFT 61147.20021\32812677.5 -5- the California Underground Storage of Hazardous Substances Act [California Health & Safety Code Section 25288 et seq.]; the California Hazardous Substances Account Act [California Health & Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [California Water Code Section 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use. 1.1.30 “Environmental Matters” has the meaning ascribed to the term in Section 5.9. 1.1.31 “Escrow” has the meaning ascribed to the term in Section 2.1. 1.1.32 “Escrow Closing Date” has the meaning ascribed to the term in Section 3.6. 1.1.33 “Escrow Holder” means Fidelity National Title Company. 1.1.34 “Escrow Opening Date” has the meaning ascribed to the term in Section 3.1. 1.1.35 “Event of Default” has the meaning ascribed to the term in Section 7.1.1. 1.1.36 “Financing Commitment” means (a) one or more commitment(s) from one or more Construction Lender(s) agreeing to provide sufficient funds which, when combined with the Developer’s equity contribution and the financial assistance to be provided by the City pursuant to this Agreement, is sufficient, as determined by the City in its reasonable discretion, to fully fund the Project’s Construction Costs, or (b) a letter from one or more Construction Lender(s) indicating approval of a loan to the Developer for the development of the Property. 1.1.37 “FIRPTA Affidavit” means an affidavit complying with Section 1445 of the United States Internal Revenue Code. 1.1.38 “Grant Deed” means a deed in the form of Exhibit D to this Agreement, conveying all of the City’s interest in the Property to the Developer. 1.1.39 “Governmental Agency” means any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city, or otherwise) whether now or later in existence. 1.1.40 “Governmental Requirements” means all codes, statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental Agency. DRAFT 61147.20021\32812677.5 -6- 1.1.41 “Hazardous Substances” means, without implied limitation, substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the Toxic Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section 25316 of the California Health and Safety Code; other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under federal, state, or local laws or regulations and in the regulations adopted pursuant to said laws, and shall also include manure, asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317. 1.1.42 “Indemnified Parties” has the meaning ascribed to the term in Section 5.9. 1.1.43 “Lender” means any state or federally chartered bank, savings and loan, capital investment group, or other third -party financial institution which routinely makes Loans to developments and developers such as the Project and the Developer in the normal course of business and which has been approved by the City pursuant to Section 6.3, and such entities successors and assigns. 1.1.44 “Lien” means any mortgage, deed of trust, or other security instrument encumbering Developer’s fee interest in the Property and/or Project, or any part thereof, or any pledge or other agreement given as security for the repayment of a Loan and by which a Lender would be able to acquire any interest in the Developer upon the Developer’s breach of any obligation under the Lender’s Loan Documents. 1.1.45 “Loan” means any loan or third-party equity/capital contribution (e.g. mezzanine financing) for the Project other than that provided by the City. 1.1.46 “Loan Documents” means the various documents and instruments made by and between the Developer and a Lender that evidence a Loan and the security for repayment of such Loan. 1.1.47 “Maintenance Deficiency” has the meaning ascribed to the term in Section 5.3.1. 1.1.48 “Normal Business Hours” means the normal business hours of the City. As of the Effective Date, the City’s normal business hours are Monday through Thursday, between the hours of 7:30 a.m. and 5:30 p.m. Pacific Time. DRAFT 61147.20021\32812677.5 -7- 1.1.49 “Notice of Agreement” means the notice in the form of Exhibit E to this Agreement to be recorded against the Property at the Close of Escrow to provide constructive record notice of the existence and application of this Agreement to the Property. 1.1.50 “Party” means, individually, the City or the Developer, as applicable. 1.1.51 “Parties” means, collectively, the City and the Developer. 1.1.52 “PCO Statement” means a preliminary change of ownership statement provided for in California Revenue and Taxation Code Section 480.3. 1.1.53 “Permitted Exceptions” means (i) any and all items shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the Developer accepts, pursuant to Section 2.4; (ii) any exceptions from coverage under the proposed Title Policy resulting from the Developer’s activities on the Property; (iii) non-delinquent property taxes and assessments; (iv) this Agreement; or (v) the Grant Deed. 1.1.54 “Permitted Transfer” means and refers to any of the following types of Transfers by the Developer, where the person or entity to which such Transfer is made expressly assumes the obligations of the Developer under this Agreement in a written instrument satisfactory to the City. 1.1.54.1 Any Transfer of stock or equity of the Developer that does not change management or operational Control of the Property or the Project; 1.1.54.2 Any Transfer of any interest in the Developer or the Property or Project or any portion thereof irrespective of the percentage of ownership (i) to any other owner of any interest in the Developer; or (ii) to any Affiliate, or (iii) to any other person or entity in which any holder of an interest (including any beneficial interest) in the Developer is a manager, officer or partner or in which any of the aforementioned is a shareholder, member or partner (including a beneficial owner), provided that with respect to any transfer of any interest in the Property or Project, the person or entity to which such Transfer is made expressly assumes the obligations of the Developer under this Agreement; and 1.1.54.3 Any Lien given to Lender in connection with a Loan approved by the City pursuant to Section 6.3. 1.1.55 “Plans and Specifications” has the meaning ascribed to the term in Section 2.6.1. 1.1.56 “Preliminary Report” means a preliminary report issued by the Title Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title Policy. The Parties acknowledge that they may prepare one (1) or more Preliminary Reports for each parcel, or group of parcels, comprising the Property. In such case, all reports, notices, and objection letters which pertain to the Preliminary Report for the entirety of the Property shall apply separately to each Preliminary Report associated with a parcel or a group of parcels. DRAFT 61147.20021\32812677.5 -8- 1.1.57 “Project” means the construction and redevelopment of the Property with 140 on-grade and structured parking stalls; and including all required or associated on-site and off-site improvements, all hardscape and all landscaping, all as specifically described in the Scope of Development, and all to be developed in accordance with the Plans and Specifications to be approved by the City and any conditions imposed by the City in its approval of the Plans and Specifications. 1.1.58 “Project Completion Date” means that date set forth therefor by which a Certificate of Completion shall be issued for the Project, as more particularly provided in the Schedule of Performance. The Project Completion Date shall be no later than the date which is five (5) years after the Close of Escrow. 1.1.59 “Property” means that real property, and all current and future improvements thereon (including, without implied limitation, the Project), legally described in Exhibit A. 1.1.60 “Property Transfer” means and refers to any “change in ownership,” as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the Property. 1.1.61 “Purchase Price” means the amount of One Million Three Hundred One Thousand Dollars ($ 1,301,000), in cash or immediately available funds. The Purchase Price is the appraised fair market value of One Million Nine Hundred Thousand Dollars ($1,900,000) less Five Hundred Ninety -Nine Thousand Dollars ($599,000) as payment for the Additional Parking. 1.1.62 “Record”, “recorded”, “recording” or “recordation” each mean and refer to recordation of the referenced document in the official records of the Recorder of the County of Orange, California. 1.1.63 “Schedule of Performance” means the schedule for the performance of certain actions by the Parties pursuant to this Agreement, attached to this Agreement as Exhibit C. 1.1.64 “Scope of Development” means the detailed description of the Project attached to this Agreement as Exhibit B. 1.1.65 “Title Company” means Fidelity National Title Company. 1.1.66 “Title Policy” means an ALTA (2021) standard owners’ policy of title insurance issued by the Title Company, with coverage in the full amount of the Purchase Price and insuring fee title to the Property, subject only to the Permitted Exceptions. However, at Developer’s option, Developer may require that the Title Policy be issued with ALTA extended coverage. City shall pay for the premium associated with standard coverage; Developer shall pay for any additional premium for ALTA extended coverage and any survey required in connection therewith. DRAFT 61147.20021\32812677.5 -9- 1.1.67 “Transfer” means any of the following: 1.1.67.1 Any total or partial sale, assignment, conveyance, trust, power, or transfer in any other mode or form, by the Developer of more than a 49% interest in the Developer’s interest in this Agreement, the Property, or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest in the Developer’s interest in this Agreement, the Property or the Project; or 1.1.67.2 Any total or partial sale, assignment, conveyance, or transfer in any other mode or form, of or with respect to any interest in the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest in any interest in the Developer; or 1.1.67.3 Any merger, consolidation, sale, or lease of all or substantially all of the assets of the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest of all or substantially all of the assets of the Developer; or 1.1.67.4 Any Property Transfer; or 1.1.67.5 The recordation of any deed of trust, mortgage, Lien or similar encumbrance against all or any portion of the Property or the Project. 1.1.68 “Unavoidable Delay” means any delay that is caused by the exclusively by the other party or that is beyond the control of the City or the Developer, including delay caused by strikes, acts of God, weather, epidemics or pandemics (including any governmental orders, restrictions or regulations issued in connection therewith, inability to obtain labor or materials, inability to obtain governmental permits or approvals, governmental restrictions, civil commotion, fire, third -party lawsuits, or similar causes, but excluding circumstances subject to Section 8.7.2. 1.2 Representations and Warranties. 1.2.1 City Representations and Warranties. The representations and warranties of City contained in this Section 1.2.1 shall be based upon the actual knowledge of the City Manager as of the Effective Date. All representations and warranties contained in this Section 1.2.1 are true and correct as of the Effective Date. City’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. City hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Developer has been made in material reliance by Developer on such covenants, representations and warranties: 1.2.1.1 City is a California municipal corporation, duly formed and operating under the laws of the State of California. City has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. DRAFT 61147.20021\32812677.5 -10- 1.2.1.2 The persons executing any instruments for or on behalf of City have been authorized to act on behalf of City and this Agreement is valid and enforceable against City in accordance with its terms and each instrument to be executed by City pursuant hereto or in connection therewith will, when executed, shall be valid and enforceable against City in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by City. 1.2.1.3 City has taken all requisite action and obtained all requisite consents for agreements or matters to which City is a party in connection with entering into this Agreement and the instruments and documents referenced herein and in connection with the consummation of the transactions contemplated hereby. The City shall transfer the Property to Developer at Closing free and clear of any leases or tenancies by or through the City, and in connection therewith shall terminate any leases or occupancy agreement affecting the Party to entered into or assumed by the City or any of its agencies. City has evaluated the Project in accordance with CEQA. City has determined that the Project, including the City’s action on this Agreement, is exempt from environmental review pursuant to Title 14, California Code of Regulations, section 15332. City has further determined that none of the exceptions to the categorical exemptions applies. City filed a Notice of Exemption memorializing this determination on October 7, 2022. 1.2.1.4 Except as set forth in the materials delivered to Developer by the City, to the best of the City Manager’s knowledge, with no duty to investigate: (a) the has not used, stored, transported, generated, disposed of or released (or caused to be used, stored, transported, generated, disposed of or released) on, within, under, about or from the Property any Hazardous Substances; (b) the City has not installed, operated or maintained any underground storage tanks on or adjacent to the Property; (c) the City has not received any written notice of any violation of the Property of any Environmental Laws; (d) the Property is not currently under investigation for the violation of any Environmental Laws; (e) the Property has not been subject to a deposit of any Hazardous Substances in material violation of any Environmental Laws; (f) there has been no discharge, migration or release of any Hazardous Substances from, into, on, under or about the Property in material violation of Environmental Laws; and (g) there is not now any asbestos- containing materials or any polychlorinated biphenyls used in hydraulic oils, electrical transformers other equipment in violation of Environmental Laws. City makes no representation regarding the actions of third parties or the state of the Property except as expressly disclosed herein. 1.2.1.5 If the City becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the City under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the City’s knowledge and/or belief as of a certain date, the City will give immediate written notice of such changed fact or circumstance to the Developer. 1.2.2 Developer Representations and Warranties. The representations and warranties of Developer contained in this Section 1.2.2 shall be based upon the actual knowledge of Dan Almquist as of the Effective Date. All representations and warranties contained in this Section 1.2.2 are true and correct as of the Effective Date. Developer’s liability for DRAFT 61147.20021\32812677.5 -11- misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by City has been made in material reliance by City on such covenants, representations and warranties: 1.2.2.1 Developer is a California limited liability company, lawfully entitled to do business in the State of California and the City. Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of Developer hereby represent and warrant that such persons have the power, right and authority to bind Developer. 1.2.2.2 Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required for Developer’s authorization to enter into Agreement. 1.2.2.3 Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which Developer is a party or by which Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to Developer or to the Property. 1.2.2.4 This Agreement is, and all agreements, instruments and documents to be executed by Developer pursuant to this Agreement shall be, duly executed by and shall be valid and legally binding upon Developer and enforceable in accordance with their respective terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of in compliance with this Agreement by Developer. 1.2.2.5 If the Developer becomes aware of any act or circumstance that would materially change or render materially incorrect, in whole or in part, any representation or warranty made by the Developer under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Developer’s knowledge and/or belief as of a certain date, the Developer will give prompt written notice of such changed fact or circumstance to the City. 1.3 Effective Date. This Agreement is dated _______, 2022 for reference purposes only. This Agreement shall not become effective until the date on which all of the following are true (“Effective Date”): (i) this Agreement is approved and executed by the appropriate authorities of Developer and delivered to City; (ii) has delivered to City a certified copy of the official action taken by all of the members of the Developer approving this Agreement, in the form attached to this Agreement as Exhibit F; (iii) following all legally required notices and hearings, this Agreement is approved by the City Council; and (iv) this Agreement is executed by the authorized representatives of City. DRAFT 61147.20021\32812677.5 -12- 1.4 Exhibit List. The following is a list of the Exhibits attached to this Agreement. Each of the Exhibits is incorporated by this reference into the text of this Agreement. Exhibit A Legal Description of Property Exhibit B Scope of Development Exhibit C Schedule of Performance Exhibit D Form of Grant Deed Exhibit E Form of Notice of Agreement Exhibit F Form of Official Action of Developer Exhibit G Form of Certificate of Completion ARTICLE II PROPERTY DISPOSITION 2.1 Purchase and Sale. In exchange for the Purchase Price and the Developer’s other covenants and undertakings set forth in this Agreement, the City shall sell the Property to the Developer and the Developer shall purchase the Property from the City pursuant to the terms and conditions of this Agreement. For the purposes of exchanging funds and documents to complete the sale from the City to the Developer and the purchase by the Developer from the City of the Property pursuant to the terms of this Agreement, the City and the Developer agree to open an escrow (“Escrow”) with the Escrow Holder. ARTICLE III of this Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale of the Property, as contemplated by this Agreement. The Developer and the City shall execute such further escrow instructions, consistent with the provisions of this Agreement, as may be reasonably requested by the Escrow Holder. In the event of any conflict between the provisions of this Agreement and any other escrow instructions requested by the Escrow Holder, the provisions of this Agreement shall control. 2.2 Payment of Purchase Price. The Developer shall deposit the Purchase Price into Escrow, subject to credit to the Developer for the Earnest Money Deposit. 2.3 Earnest Money Deposit. Concurrent with its opening of the Escrow, the Developer shall deposit into Escrow the Ernest Money Deposit. The Escrow Holder shall deposit the Earnest Money Deposit into an interest -bearing account. All interest earned on such funds shall be added to the original principal amount of the Earnest Money Deposit and be considered part of the same. The Earnest Money Deposit shall be nonrefundable upon the conclusion of the Due Diligence Period. Upon the Close of Escrow, the Earnest Money Deposit shall be credited to the Developer toward the Purchase Price and paid to the City as part of the Purchase Price. Should Escrow fail to close, the Earnest Money Deposit shall be forfeited by Developer and shall be paid to the City upon the cancelation of Escrow in accordance with Section 3.10. 2.4 Title Approval. As soon as practicable following the opening of the Escrow, the City shall obtain from Title Company the Preliminary Report and deliver a copy of the Preliminary Report to the Developer. Within thirty (30) days following the Developer’s receipt of a Preliminary Report for the entire Property, the Developer shall deliver the Developer’s Title Notice to the City. If the Developer fails to deliver the Developer’s Title Notice to the City within thirty DRAFT 61147.20021\32812677.5 -13- (30) days following the Developer’s receipt of the Preliminary Report, the Developer will be deemed to disapprove the status of title to the Property and refuse to accept title to the Property, in which case the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder. Within twenty (20) days following receipt by the City of Developer’s Title Notice, if any, the City shall serve City’s Title Notice Response. The City acknowledges that the Developer disapproves of the Covenant and Agreement to Provide Required Parking recorded on June 18, 1969 in Book 8994, at Page 60, of Official Records (the “Pacific T&T Parking Covenant”) and the Developer need not include the Pacific T&T Parking Covenant in the Developer’s Title Notice. The City shall execute and record a document terminating the Pacific T&T Parking Covenant at or prior to the Close of Escrow (the “Termination Document”). If Developer’s Title Notice does not object to any matter in the Preliminary Report in addition to the Pacific T&T Parking Covenant, the City shall not be required to serve City’s Title Notice Response. If the City does not serve City’s Title Notice Response, if necessary, within twenty (20) days following its receipt of Developer’s Title Notice, the City shall be deemed to elect not to remove any matter objected to in Developer’s Title Notice, if any, from the Preliminary Report. If the City elects in City’s Title Notice Response to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, the City shall cause the removal of each such objectionable matter from the Preliminary Report within sixty (60) days following receipt by the Developer of City’s Title Notice Response or such other period of time that may be agreed to in writing by both the City and the Developer. If the City is unwilling or unable to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, then, within ten (10) days following the Developer’s receipt of City’s Title Notice Response stating that the City is unwilling to remove or cause the removal of any matter objected to in Developer’s Title Notice or upon the expiration of the above sixty (60) day time period during which the City elected to remove such objectionable matters from the Preliminary Report and was unable to do so, the Developer may either (1) refuse to accept the title to and conveyance of the Property, in which case the Parties shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) waive its objection to any items set forth in Developer’s Title Notice by delivering Developer’s Title Notice Waiver to the City. Failure by the Developer to deliver Developer’s Title Notice Waiver, where City’s Title Notice Response or the City’s failure to serve City’s Title Notice Response indicates the City’s election not to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, for the City to deliver City’s Title Notice Response under this Agreement, will be deemed the Developer’s continued refusal to accept the title to and conveyance of the Property, in which case the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder. 2.4.1 If at any time prior to the Close of Escrow the Title Company issues an updated Preliminary Report containing any previously undisclosed matter affecting title to the Property, or the City becomes aware of any previously undisclosed matter affecting title to the Property, following the delivery of the Developer’s Title Notice, the City shall provide written notice to the Developer of such matter, together with any updated Preliminary Report related to such matter. The City and the Developer shall have such rights and obligations with respect to DRAFT 61147.20021\32812677.5 -14- such previously undisclosed title matters as they did with respect to any title matters set forth in the original Preliminary Report as set forth in Section 2.4. 2.4.2 Before exercising any right a Party may have under this Section 2.4 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non-terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non-terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable title matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable title matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such title matter unless such agreement is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving such title matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10. 2.5 Developer Investigations. 2.5.1 The Developer shall have until the expiration of the Due Diligence Period to complete all of its Due Diligence Investigations with respect to the entirety of the Property. The Developer shall complete all of its Due Diligence Investigations within the Due Diligence Period and shall conduct all of its Due Diligence Investigations at its sole cost and expense. The Developer shall rely solely and exclusively upon the results of its Due Diligence Investigations of the Property, including, without limitation, investigations regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Property by the Developer and any other matters relevant to the condition or suitability of the Property for the Project, as the Developer may deem necessary or appropriate. City makes no representation or warranty to the Developer relating to the condition of the Property or suitability of the Property for any intended use or development by the Developer. The Developer shall deliver a Due Diligence Investigation Conclusion Notice to the City and the Escrow Holder prior to the end of the Due Diligence Period. If the Developer does not unconditionally accept the condition of the Property by delivery of its Due Diligence Investigation Conclusion Notice indicating such acceptance prior to the end of the Due Diligence Period, the Developer shall be deemed to have rejected the condition of the Property and refused to accept conveyance of title to the Property. If the condition of the Property is rejected or deemed rejected by the Developer, then the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder. The Developer shall accept all conditions of the Property, without any liability of the City whatsoever, upon the Developer’s acceptance of the condition of the Property indicated in its Due Diligence Investigation Conclusion Notice, subject to the City’s express representations and warranties set forth in this Agreement and the documents delivered by the City at Closing. The Developer’s delivery of its Due Diligence Investigation Conclusion Notice indicating the Developer’s unconditional acceptance of the DRAFT 61147.20021\32812677.5 -15- condition of the Property shall evidence the acceptance of the condition of the Property by the Developer in its existing “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition, as of the last day of the Due Diligence Period, subject to the City’s express representations. In its sole discretion, the Developer may accept the Property in its “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition at any time before the end of the Due Diligence Period. The Developer shall conduct during the Due Diligence Period such environmental assessment(s) of the Property as the Developer deems appropriate, subject to the City’s express representations and warranties set forth in this Agreement and the documents delivered by the City at Closing. Any Due Diligence Investigations of the Property by the Developer shall not unreasonably disrupt any then existing use or occupancy of the Property or the operations of the City. The Developer shall be liable for any damage or injury to any person or property arising from the acts of the Developer, its employees, agents or representatives during the course of any Due Diligence Investigations on the Property and the Developer shall indemnify, defend with counsel reasonably acceptable to the City and hold harmless the City and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any Due Diligence Investigations by the Developer on the Property, other than any liabilities or claims arising from either (a) the mere discovery of any pre- existing conditions or (b) the negligence or willful misconduct of City or any employees, officers, elected officials or agents of the City. Prior to its initial entrance upon the Property, the Developer shall deliver copies of policies or certificates of insurance to the City evidencing compliance by the Developer with the insurance requirements of Section 5.10.2 (other than 5.10.2.1.4 [Casualty]). 2.5.2 Before exercising any right a Party may have under this Section 2.5 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non-terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non-terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable Due Diligence matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable Due Diligence matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such Due Diligence matter unless such obligation is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving the objectionable Due Diligence matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10. 2.6 Developer to Obtain all Project Entitlements. 2.6.1 Pursuant to the ENA, Developer has developed and presented to City staff and the City Council for review, and Council has approved, a proposed conceptual development plan for the Project on the Property that describes and depicts: (1) the location and placement of proposed improvements; (2) the architecture and elevations of the proposed DRAFT 61147.20021\32812677.5 -16- improvements; (3) the location of the Replacement Parking Spaces and the Additional Parking Spaces (collectively, the “Plans and Specifications”). 2.6.2 The City’s zoning, building and land use regulations (whether contained in ordinances, the City’s municipal code, conditions of approval, policies, practice or elsewhere) (collectively, the “City Requirements”), shall be applicable to the use and development of the Project on the Property by the Developer. The Developer acknowledges that all Plans and Specifications and any changes to the Plans and Specifications shall be subject to the City Requirements. No action by the City with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any City Requirements regarding the Property, the Project, the Developer, any successor-in-interest of the Developer or any successor-in-interest to the Property. The City Requirements may only be changed or waived by modification or variance approved by the City and consistent with this Agreement. No entitlement, permit or other approval from the City for development of the Project on the Property shall attach to any portion of the Property or otherwise become effective to allow the Developer to develop the Project on the Property until after the Developer owns fee title to that portion of the Property to which such entitlement, permit or other approval pertains. Under no circumstances shall the Developer commence construction of any portion of the Project on the Property prior to the Developer owning fee title to the Property. 2.6.3 The approval of the Scope of Development shall not be binding on the City Council or the Planning Commission of the City regarding any approvals of the Project required by such bodies. The Developer obtains no right to develop the Project on the Property or any portion of the Property by virtue of this Agreement, except that following the Close of Escrow, the Developer shall possess the same rights as any other owner of property within the Property that desires to develop its property in a manner consistent with the City’s General Plan. If any revisions of the Scope of Development are required by a Governmental Agency (other than the City) having jurisdiction over the Property or the Project, the Developer shall promptly make any such revisions that are generally consistent with the Scope of Development. 2.6.4 Notwithstanding any provision to the contrary in this Agreement, following the Close of Escrow, the Developer agrees to accept and comply fully with any and all conditions of approval applicable to all approvals, permits and other governmental actions regarding the development or operation of the Project on the Property, so long as such conditions of approval are consistent with the Scope of Development and this Agreement in all material respects. 2.6.5 Developer to Pay All Costs and Expenses. The Parties agree that the City shall not provide any financial assistance to the Developer in connection with the Project except as may be expressly set forth in this Agreement. The Developer shall be solely responsible for paying for the costs of all design work, construction, labor, materials, fees and permit expenses associated with the Project. The Developer shall pay any and all fees pertaining to the review and approval of the Project by the City, any other Governmental Agency and utility service providers, including the costs of preparation of all required construction, planning and other documents reasonably required by a Governmental Agency pertinent to the development or operation of the Project on the Property, including, but not limited to, specifications, drawings, plans, maps, permit applications, land use applications, zoning applications, environmental review and disclosure DRAFT 61147.20021\32812677.5 -17- documents and design review documents. The Developer shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for sewer or utility improvements and connections, that may be required in development of the Project, whether located on or off of the Property. The Developer shall obtain any and all necessary approvals, prior to the commencement of applicable portions of construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. In accordance with this Section 2.6.5, Developer shall be responsible for the costs, or immediate reimbursement to the City upon delivery of an invoice for the costs, of the following: 2.6.5.1 All fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the Property or the Project or the negotiation of this Agreement that may be undertaken by the Developer; and 2.6.5.2 All fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City of any and all applications and other documents and information to be submitted to the City by the Developer pursuant to this Agreement or otherwise associated with the Project. 2.6.6 The Developer shall obtain all entitlements, permits and other approvals for use and development of the Project on the Property from each Governmental Agency, within the time period for such actions specifically set forth in the Schedule of Performance, subject to any extensions of time authorized by this Agreement upon the occurrence of an Unavoidable Delay. ARTICLE III ESCROW INSTRUCTIONS 3.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow shall be the first date on which a fully executed copy of this Agreement and Earnest Money Deposit are deposited with Escrow Holder (“Escrow Opening Date”). The Developer shall cause the Escrow to be opened within five (5) days following the Effective Date. Escrow Holder shall promptly confirm in writing to each of the Parties the date of the Escrow Opening Date. This ARTICLE III shall constitute the joint escrow instructions of the City and the Developer to Escrow Holder for conduct of the Escrow to complete the purchase and sale of the Property between them, as contemplated in this Agreement. 3.2 Conditions to Close of Escrow. The conditions set forth below shall be satisfied or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the Party benefited by any unsatisfied condition shall not be required to proceed to close Escrow. 3.2.1 Developer’s Conditions to Close of Escrow. The Developer’s obligation to purchase the Property from the City on the Escrow Closing Date shall be subject to DRAFT 61147.20021\32812677.5 -18- the satisfaction of the following conditions precedent, each of which can only be waived in writing by the Developer: 3.2.1.1 The Developer agrees to accept the title to and conveyance of the Property, pursuant to Section 2.4; 3.2.1.2 The Developer delivers its Due Diligence Investigation Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional acceptance of the condition of the Property, prior to the expiration of the Due Diligence Period; 3.2.1.3 The Termination Document has been recorded; 3.2.1.4 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer; 3.2.1.5 The City has deposited the items into the Escrow required by Section 3.4; 3.2.1.6 The representations, warranties and covenants of the City set forth in Section 1.2.1 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; 3.2.1.7 The Entitlements Condition has been satisfied; and 3.2.1.8 The City has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow. 3.2.2 City’s Conditions to Close of Escrow. The City’s obligation to sell the Property to the Developer on or before the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, which can only be waived in writing by the City: 3.2.2.1 The Developer has deposited the Purchase Price less the Earnest Money Deposit into Escrow; 3.2.2.2 The Developer agrees to accept the title to and conveyance of the Property, pursuant to Section 2.4; 3.2.3 The Developer has timely delivered its Due Diligence Investigation Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional acceptance of the physical condition of the Property, prior to the expiration of the Due Diligence Period; 3.2.4 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer; 3.2.5 The City’s Planning Commission finds, pursuant to Government Code Section 65402, that the Project is consistent with the City’s General Plan; DRAFT 61147.20021\32812677.5 -19- 3.2.6 The Entitlements Condition has been satisfied; 3.2.7 The Developer has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow; 3.2.8 The representations, warranties and covenants of the Developer set forth in Section 1.2.2 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; and 3.2.9 The Developer deposits the funds and items into the Escrow required by Section 3.3 for the Escrow. 3.3 Developer’s Escrow Deposits. Following satisfaction or waiver of each of the Developer’s conditions to Close of Escrow set forth in Sections 3.2.1, as applicable, the Developer shall deposit the following funds and documents into Escrow at least two (2) business days prior to the Escrow Closing Date in a writing delivered to the Parties: 3.3.1 Purchase Price and Other Funds. The Purchase Price, less the amount of the Earnest Money Deposit, plus any additional funds required to be deposited into Escrow by the Developer under the terms of this Agreement to close the Escrow, all in immediately available funds. 3.3.2 PCO Statement. A PCO Statement executed by the authorized representative(s) of the Developer. 3.3.3 Acceptance of Grant Deed. The Certificate of Acceptance of the Deed, in the form attached to the Grant Deed, executed by the authorized representative(s) of the Developer in recordable form. 3.3.4 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the Developer in recordable form. 3.4 City’s Escrow Deposits. Following satisfaction or waiver of each of the City’s conditions to Close of Escrow set forth in Sections 3.2.2, as applicable, the City shall deposit the following documents into Escrow at least two (2) business days prior to the Escrow Closing Date: 3.4.1 Grant Deed. The Grant Deed executed by the authorized representative(s) of the City in recordable form. 3.4.2 FIRPTA Affidavit (City). The FIRPTA Affidavit completed and executed by the authorized representative(s) of the City. 3.4.3 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the City in recordable form. 3.4.4 Termination Document. The Termination Document executed by the authorized representative(s) of the City in recordable form if not previously recorded. DRAFT 61147.20021\32812677.5 -20- 3.5 Closing Procedure. When each of the Developer’s Escrow required deposits, as set forth in Section 3.3, and each of the City’s Escrow required deposits, as set forth in Section 3.4, are deposited into Escrow, Escrow Holder shall request confirmation in writing from both the City and the Developer that each of their respective conditions to the Close of Escrow, as set forth in Section 3.2, are satisfied or waived. Upon Escrow Holder’s receipt of written confirmation from both the City and the Developer that each of their respective conditions to the Close of Escrow are either satisfied or waived, Escrow Holder shall close the Escrow for the Property by doing all of the following: 3.5.1 Recordation of Documents. File the following with the Office of the Recorder of the County, for recordation in the order set forth in Section 3.7, (i) the Grant Deed, with the Developer’s certificate of acceptance attached, (ii) the Notice of Agreement, (iii) the Termination Document, if applicable, and (iv) if applicable, the Construction Loan Deed of Trust. 3.5.2 Distribution of Recorded Documents. Distribute each recorded document to the Party or person designated for such distribution in Section 3.7. 3.5.3 PCO Statement. File the PCO Statement with the Office of the Recorder of the County. 3.5.4 FIRPTA Affidavit. File the FIRPTA Affidavit with the United States Internal Revenue Service. 3.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer. 3.5.6 Purchase Price. Deliver the Purchase Price to the City, less the City’s share of Escrow closing costs, and less any other charges to the account of the City, and return any remaining funds held by Escrow Holder for the account of the Developer to the Developer, less the Developer’s share of Escrow closing costs, and less any other charges to the account of the Developer, all set forth in preliminary closing statements prepared by the Escrow Holder and approved by each party prior to Closing. 3.6 Close of Escrow. Close of Escrow shall occur no later than the later of: (1) the tenth (10th) business day following Escrow Holder’s receipt of written confirmation from both the City and the Developer of the satisfaction or waiver of all conditions precedent to the Close of Escrow for the Property, or (2) thirty (30) days from the end of the Due Diligence Period (the “Escrow Closing Date”). If for any reason the Close of Escrow has not occurred by the Escrow Closing Date, then any Party not then in default of this Agreement may cancel the Escrow and terminate this Agreement, subject to the notice and cure provisions of Section 7.1 (to the extent applicable), without liability to any other Party or any other person for such termination and cancellation, by delivering written notice of termination to the other Party(ies) and Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section 3.10 if the non-terminating Party is not in default or pursuant to Section 7.2 or 7.3 (as applicable) if the non-terminating Party is in default. Without limiting the right of any Party to terminate this Agreement, pursuant to the preceding sentence, if Escrow does not close on or before the Escrow Closing Date, and no Party has exercised its contractual right to cancel Escrow and terminate this Agreement before such time, then Escrow shall close as soon as reasonably possible following the first date on which Escrow DRAFT 61147.20021\32812677.5 -21- Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement. Notwithstanding the foregoing, Escrow shall close no later December 31, 2022. 3.7 Recordation and Distribution of Documents. As applicable, Escrow Holder shall cause the following documents to be recorded in the official records of the Recorder of the County in the following order of priority at the Close of Escrow: (i) the Grant Deed, with the Developer’s certificate of acceptance attached, (ii) the Notice of Agreement, and (iii) the Construction Loan Deed of Trust and related loan documents, if applicable, and (iv) any other documents to be recorded through Escrow upon the joint instructions of the Parties. All recorded documents shall provide that they are to be returned to Escrow Holder after recordation. When originals of such recorded documents are returned to Escrow Holder, Escrow Holder shall deliver: (i) the original Grant Deed, with the Developer’s original certificate of acceptance attached, to the Developer and copies to the City, each showing all recording information, (ii) the original of the Notice of Agreement to the City, with copies to the Developer, each showing all recording information, (iii) the Construction Loan Deed of Trust and related loan documents to the Construction Lender for the Project, with copies to the Developer and the City, each showing all recording information, and (iv) the original of any other document recorded at the close of Escrow to the Party or other person designated in the joint escrow instructions of the Parties for such recordation and a copy of each such document to the other Party or Parties, each showing all recording information. 3.8 Escrow Closing Costs, Taxes and Title Policy Premium. The City and the Developer shall each pay one-half (1/2) of the Escrow fees and such other costs as Escrow Holder may charge for the conduct of the Escrow. Escrow Holder shall notify the Developer and the City of the costs to be borne by each of them at the Close of Escrow by delivering the Escrow Holder’s estimated closing/settlement statement to both the City and the Developer at least four (4) business days prior to the Escrow Closing Date. The City shall pay the premium charged by the Title Company for the standard Title Policy for the Property, exclusive of any endorsements or other supplements to the coverage of such Title Policy that may be requested by the Developer, as well as documentary transfer taxes and any and all other charges, fees and taxes levied by a Governmental Authority relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement. The Developer shall pay any and all recording fees relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement. 3.9 Escrow Cancellation Charges. If the Escrow fails to close due to either the City’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the City shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close due to the Developer’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Developer shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close for any reason other than the material default of either the Developer or the City and the Escrow is cancelled and this Agreement is terminated, the Developer and the City shall each pay one-half (1/2) of any ordinary and reasonable Escrow and title order cancellation charges. 3.10 Escrow Cancellation. If this Agreement is terminated and the Escrow cancelled pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement DRAFT 61147.20021\32812677.5 -22- and cancel the Escrow, other than due to the material default of another Party, the Parties shall do each of the following: 3.10.1 Cancellation Instructions. The Parties shall, within three (3) business days of receipt of Escrow Holder’s written request, execute any reasonable Escrow cancellation instructions requested by Escrow Holder. 3.10.2 Return of Funds and Documents. Within ten (10) days of receipt by the Parties of a settlement statement of Escrow and title order cancellation charges from Escrow Holder: (i) the Developer or Escrow Holder shall return to the City any documents previously delivered by the City to the Developer or Escrow Holder; (ii) the City or Escrow Holder shall return to the Developer all documents previously delivered by the Developer to the City or Escrow Holder; (iii) Escrow Holder shall return to the Developer any funds deposited by Developer into Escrow, including the Earnest Money Deposit, less the Developer’s share of customary and reasonable Escrow and title order cancellation charges, if any; and (iv) Escrow Holder shall return to the City any funds deposited by City into Escrow if it has already been deposited, less the City’s share of customary and reasonable Escrow and title order cancellation charges, if any. 3.11 Report to IRS. Following the Close of Escrow and prior to the last date on which such report is required to be filed with the Internal Revenue Service, if such report is required pursuant to Section 6045(e) of the Internal Revenue Code, Escrow Holder shall report the gross proceeds of the purchase and sale of the Property to the Internal Revenue Service on Form 1099- B, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow Holder shall deliver a copy of the filed form to the City and the Developer. 3.12 Holdback Pending Property Characterization. No later than the third anniversary of the Close of Escrow, Developer shall cause this Property and the adjacent Parking Structure property to be graded in accordance with grading plans approved by the City. If an underground storage tank is discovered in the Project, City shall reimburse Developer the actual reasonable costs to handle and manage (and if required, remove and lawfully dispose of) such underground storage tank in the manner approved by Government authorities with jurisdiction up to the amount of One Hundred Thousand Dollars ($100,000) in total for this property and the adjacent Parking Structure property. If Developer is required to remove the underground storage tank from the Property and dispose of the same, any permit needed for such removal, transport and/or disposal shall list City as the hazardous materials “generator.” As part of City’s obligation to reimburse Developer the costs for handling and managing any such underground storage tank, Developer shall submit to City Manager invoices and other reasonable documentation supporting Developer’s request for a disbursement. City shall have thirty (30) days to review and approve the reimbursement, and such approval shall not to be unreasonably withheld, conditioned or delayed. Upon approval of the invoices, City shall disburse the approved funds to Developer. After all excavation has been completed in the course of grading the Property to its approximate rough grade, and prior to any final or post-grading excavations for foundations, underground utilities, or other underground facilities or structures, if an underground storage tank has not been discovered in the Property, the City shall have no additional obligations related to the presence, removal or disposal of the underground storage tank. Any costs above the $100,000 shall be borne exclusively by Developer. DRAFT 61147.20021\32812677.5 -23- ARTICLE IV PROJECT DEVELOPMENT 4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow. 4.2 Developer Changes to Plans and Specifications During Course of Construction. The Developer shall have the right during the course of construction of the Project to make “minor field changes,” without seeking the approval of the City, if such changes do not affect the type of use to be conducted within all or any portion of a structure. “Minor field changes” shall be defined as those changes from the approved Plans and Specifications that have no substantial effect on the Project or are made in order to expedite the work of construction in response to field conditions. The Developer shall submit all other changes, i.e. those changes which are not “minor field changes”, to the City for its review and approval no less than fifteen (15) days prior to the date that the Developer intends to implement such changes. The City shall have ten (10) days from its receipt of such proposed changes to review the same and advise the Developer in writing whether such changes are acceptable to the City in its reasonable discretion; provided that, with respect to any proposed change that is disapproved by the City, the City shall, concurrent with its disapproval of such change provide Developer with written notice identifying in detail the grounds for the City’s disapproval of such change and any portion of such disapproved change that is acceptable to the City as proposed or modifications to such proposed changed required for it to be acceptable to the City. Any proposed changes which are not disapproved by the City within such ten (10) day period shall be deemed approved. Nothing contained in this Section 4.2 shall be deemed to constitute a waiver of or change in the City Requirements governing “minor field changes” or other changes or in any approvals by the City otherwise required for “minor field changes.” or other changes. Notwithstanding the foregoing, Developer shall not make any changes which are inconsistent with the Entitlements without the approval of the City. 4.3 Construction Start and Completion of Project. The Developer shall commence construction of the Project in accordance with the Schedule of Performance and, thereafter, shall diligently proceed to complete the construction of the Project in a good and workmanlike manner in substantial conformity with the approved plans, specifications, and conditions for the Project approved by the City and the Schedule of Performance. The Developer shall obtain a Certificate of Completion on or before the Project Completion Date, subject to Unavoidable Delays. The Developer will, promptly upon completion of construction of the Project, cause the Project to be inspected by each Governmental Agency with jurisdiction over the Project required to inspect the DRAFT 61147.20021\32812677.5 -24- Project in accordance with this Agreement, shall correct any defects and deficiencies that may be disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and other licenses, permits and authorizations necessary for the operation and occupancy of the completed Project. The Developer shall do and perform all of the foregoing acts and things and cause to be issued and executed all such occupancy certificates, licenses, and authorizations for the Project on or before the date set forth therefor in the Schedule of Performance as the completion date for the Project. After commencement of the work of improvement of the Project, the Developer shall not permit the work of improvement of the Project to cease or be suspended for a time period in excess of thirty (30) consecutive calendar days, subject to Unavoidable Delays. 4.4 Compliance with Laws. All work performed in connection with the development of the Project shall comply with all Governmental Requirements. 4.5 Schedule of Performance. The Schedule of Performance establishes various dates and times for the accomplishment of various tasks assigned to the City and the Developer and the satisfaction of the conditions precedent to the close of the Escrow. The Parties agree that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent, in view of the large investment of resources that all Parties recognize will be required for assembly of the Property and the undertaking of the Project. If the date or time for the performance of a task or the satisfaction of a condition, as set forth in either the text of this Agreement or in the Schedule of Performance, is reasonably likely not to be achieved, then prior to such date or time set forth in the text of this Agreement or the Schedule of Performance, the Parties shall consider whether a modification to the text of this Agreement or to the Schedule of Performance is indicated. Any decision to approve a modification to a time or date established in either the text of this Agreement or the Schedule of Performance shall be subject to the discretion of each Party, not to be unreasonably withheld, conditioned or delayed. Any modification of a time or date for performance of a particular task or satisfaction of a particular condition that does not result in a change of more than one hundred eighty (180) days may be approved on behalf of the City by the City Manager, in his or her reasonable discretion. A modification of a time or date for performance of a task or satisfaction of a condition (or a series of such modifications) that results in an aggregate change of more than one hundred eighty (180) days shall be subject to the approval of the City Council, in its sole and absolute discretion. If performance of a task or satisfaction of a condition in the Schedule Performance is prevented or delayed by Unavoidable Delays, the deadline for completion of such task or satisfaction of such condition shall be extended by the period of such Unavoidable Delays. 4.6 Developer Attendance at City Meetings. The Developer agrees to have one or more of its employees or consultants who are knowledgeable regarding this Agreement and the development of the Project, such that such person(s) can meaningfully respond to City questions regarding the progress of the Project, attend City Council meetings, when requested to do so on not less than ten (10) days prior written notice by City staff. 4.7 City’s Right to Inspect Project and Property. Officers, employees, agents and representatives of the City shall have the right of reasonable access to the Property upon at least twenty-four (24) hours’ prior notice to Developer, without the payment of charges or fees, during normal construction hours, during the period of construction of the Project. Such officers, employees, agents or representatives of the City shall be those persons who are designated by the DRAFT 61147.20021\32812677.5 -25- City Manager. Any and all officers, employees, agents or representatives of the City who enter the Property shall identify themselves at the construction management office on the Property, upon their entrance on to the Property, and shall at all times be accompanied by a representative of the Developer, while on the Property. The Developer shall have the right to have a representative of the Developer available for this purpose at all times during normal construction hours. The City shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the City of the right of access to the Property provided in this Section 4.7, other than injury, property damage or liability arising from the negligence or willful misconduct of the Developer or its officers, agents or employees. The City shall inspect relevant portions of the Property, prior to issuing any written statements reflecting adversely on the Developer’s compliance with the terms and conditions of this Agreement pertaining to development of the Project. If in the City’s reasonable judgment it is necessary, the City shall have the further right, from time to time, to retain a consultant or consultants to inspect the Project and verify compliance by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees that any such inspections are for the sole purpose of protecting the City’s rights under this Agreement, are made solely for the City’s benefit, that the inspections may be superficial and general in nature, and are for the purposes of informing the City of the progress of the Project and the conformity of the Project with the terms and conditions of this Agreement, and that the Developer shall not be entitled to rely on any such inspection(s) as constituting an approval, satisfaction or acceptance of any materials, workmanship, conformity of the Project with this Agreement or otherwise. The Developer agrees to make its own regular inspections of the work of construction of the Project to determine that the quality of the Project and all other requirements of the work of construction of the Project are being performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the City in writing should the Developer’s inspections show any matters that will prevent the entire Project from being completed by the Project Completion Date set forth therefore in the Schedule of Performance. Without limiting the foregoing, the Developer shall permit the City upon reasonable notice to examine and copy all books and account records and other papers relating to the Property and the construction of the Project. The Developer will use commercially reasonable efforts to cause all contractors, subcontractors and materialmen to cooperate with the City to enable such examination. 4.8 Cost of Construction. The cost and expense of undertaking and completing the Project, including, without limitation, constructing all legally imposed on-site and off-site improvements, and providing all utilities therefor, shall be borne by Developer at its sole cost, expense and liability. Developer shall be solely responsible for payment of all City land use, construction, inspection, plan check and development impact fees (collectively, “Development Fees”) imposed by the City with respect to the development of the Project. Developer shall bear all costs and expenses associated with the processing and obtaining of the entitlements and shall bear all costs and expenses (except to the extent expressly set forth otherwise in this Agreement), associated with any and all terms, conditions, requirements, mitigation measures and other exactions imposed on, or required in connection with, the entitlements. DRAFT 61147.20021\32812677.5 -26- 4.9 Prevailing Wages. 4.9.1 The Developer acknowledges that the City has not made any representation, express or implied, to the Developer or any person associated with the Developer regarding whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. The Developer agrees with the City that the Developer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification. 4.9.2 The Developer, on behalf of itself, its successors, and assigns, waives and releases the City from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 4.9, which reads as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 4.9.2. _________________ Developer’s Initials 4.9.3 Additionally, in accordance with Section 7.7, the Developer shall indemnify, defend with counsel acceptable to the City and hold the City harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of the Project. 4.10 Replacement Parking Spaces and Additional Parking Spaces. The Developer shall, as a result of the Project, (a) make sixty-five (65) parking spaces (collectively, the “Replacement Parking Spaces”) available in perpetuity for parking available to the public, subject to the Developer’s general rules and fees charged for short term parking at the Project, (b) shall not restrict the use of any of the Replacement Parking Spaces to or for the exclusive benefit of the owners and/or occupants of the Project or any other real property, and (c) shall not permit the Replacement Parking Spaces to be encumbered by an off street parking covenant for the benefit of the owner of the Project or any other real property (collectively, the “Replacement Parking Restriction”). In addition to the Replacement Parking Spaces, Developer shall provide twenty (20) parking spaces (“Additional Parking Spaces”) immediately adjacent to the Replacement Parking Spaces. The Additional Parking Spaces shall be made available to the public in perpetuity under the same terms and conditions as the Replacement Parking Spaces. The City has determined DRAFT 61147.20021\32812677.5 -27- that (a) the benefit of obtaining the Additional Parking Spaces subject to the Replacement Parking Restriction will benefit the City’s taxpayers and residents, including the owners, occupants, and visitors to the real properties and businesses in the vicinity of the Property by providing additional available parking over the existing parking stock, (b) the Developer’s anticipated cost of constructing the Additional Parking Spaces in the Project of approximately Thirty Thousand Dollars ($30,000) per parking space is a fair measure of the value to the City of such Additional Parking Spaces, and (c) the fair market value of the Replacement Parking Restriction on such Additional Parking Spaces is Five Hundred Ninety-Nine Thousand Dollars ($599,000). Accordingly, the Purchase Price shall be reduced by the amount of Five Hundred Ninety -Nine Thousand Dollars ($599,000) in consideration of Replacement Parking Restriction on such Additional Parking Spaces. 4.11 Certificate of Completion. 4.11.1 Following the substantial completion of construction of the Project, and upon written request from the Developer for issuance of a Certificate of Completion for the Project, the City shall inspect the Project to determine whether or not the Project has been substantially completed in compliance with this Agreement. As used herein, completion of the Project (or substantial completion of the Project, as the case may be) shall be deemed to mean substantial completion of construction of the shell of the buildings in the Project as well as all surface parking areas, and landscaping areas. If the City determines that the Project is complete (or substantially complete, as the case may be) and in compliance with this Agreement, the City Manager shall furnish the Developer with a Certificate of Completion for the Project. If the City determines that the Project is not in compliance with this Agreement, the City Manager shall send written notice of each non-conformity to the Developer. Upon issuance of the final certificate of occupancy for the development of the Project, based on the plans submitted by the Developer to the City, the City shall furnish the Developer with a Certificate of Completion for the Project if a Certificate of Completion was not previously issued. 4.11.2 Upon the Developer’s substantial completion of the Project, the Developer shall request and be entitled to receive a Certificate of Completion, including the right of the City Manager to issue the Certificate of Completion, except that the Certificate of Completion, upon issuance, shall be evidence of the City’s conclusive determination of satisfactory substantial completion of the entirety of the Project pursuant to the terms of this Agreement. A Certificate of Completion shall be evidence of the City’s conclusive determination of satisfactory completion of the Project to which it pertains pursuant to the terms of this Agreement. After the recordation of a Certificate of Completion for the Project, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property improved with the Project shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement regarding construction or installation of the Project except that such person shall be bound by any reservations, covenants, conditions, restrictions and other interests recorded against the Property pursuant to this Agreement and the Grant Deed. 4.11.3 If the City fails or refuses to issue a Certificate of Completion following written request from the Developer, the City shall, within fifteen (15) calendar days of the Developer’s written request or within three (3) calendar days after the next regular meeting of the DRAFT 61147.20021\32812677.5 -28- City Council, whichever date occurs later, provide the Developer with a written statement setting forth the reasons for the City’s failure or refusal to issue a Certificate of Completion. The statement shall also contain the City’s opinion of the action(s) the Developer must take to obtain a Certificate of Completion from the City. If the reason for the Developer’s failure to complete the Project is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building “punch- list” items, the City may issue its Certificate of Completion upon the posting of a bond or irrevocable standby letter of credit by the Developer in a form reasonably acceptable to the City in an amount representing the fair value of the work on the Project remaining to be completed, as reasonably determined by the City. If the City fails to provide such written statement, within the specified time period, the Developer shall be deemed conclusively and without further action of the City to have satisfied the requirements of this Agreement with respect to the Project, as if a Certificate of Completion had been issued by the City pursuant to this Agreement. A Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any parts thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants, restrictions or conditions contained in the Grant Deed or any other instruments recorded against the Property pursuant to this Agreement. A Certificate of Completion is not evidence of the compliance of the Project with any City Requirements or any building code, conditions of approval, land use, zoning or other requirements of the City or any Governmental Agency with jurisdiction over the Property, other than the City. ARTICLE V DEVELOPER COVENANTS 5.1 Covenant to Maintain Property on Tax Rolls. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.1.1 The entire Property shall remain on the County secured real property tax rolls for twenty (20) years from the date of issuance of a Certificate of Completion for the Project. 5.1.2 The Developer shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment on each December 10 and April 10 during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. The Developer further covenants and agrees to provide to the City, on or before July 31 of each year, commencing in the calendar year following the calendar year in which a Certificate of Completion is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Developer and the County regarding the Property and all improvements thereon, with respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the Developer in payment of all property tax payments that are made to the County regarding DRAFT 61147.20021\32812677.5 -29- the Property and all improvements thereon (or other reasonably acceptable evidence of such payment), with respect to the preceding County fiscal year. 5.1.3 The covenants of this Section 5.1 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. 5.2 No Conveyance to Tax Exempt Entity. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.2.1 The Developer shall not use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property, the Project, or any portion of any of the foregoing to any entity or person, or for any use of the Property, the Project, or any portion of any of the foregoing, that is partially or wholly exempt from the payment of real or personal property taxes or that would cause the exemption of the payment of all or any portion of real or personal property taxes otherwise assessable regarding the Property, the Project, or any portion of any of the foregoing, without the prior written consent of the City, which may be withheld in the City’s sole and absolute discretion for a period of twenty (20) years from the date of issuance of the certificate of completion for the Project by the City. 5.2.2 If the Property, or any portion of the Property, shall be conveyed, transferred or sold to any entity or person that is partially or wholly exempt from the payment of real or personal property taxes otherwise assessable against the Property, or any portion thereof, without the prior written consent of the City, then, at the City’s election and in addition to all other remedies available to the City under this Agreement or at law or in equity, the Developer shall pay to the City a fee in lieu of payment of such taxes each year in an amount determined by the City to be one percent (1%) of the “full cash value” of the Property, or portion thereof, as may be subject to such exemption from payment of real or personal property taxes. The City’s determination of “full cash value” for in-lieu payment purposes under this Section 5.2.2 shall be established by the City each year, if necessary, by reference to the real or personal property tax valuation principles and practices generally applicable to a county property tax assessor under Section 1 of Article XIIIA of the California Constitution. The City’s determination of “full cash value” and that an in-lieu payment is due shall be conclusive on such matters. If the City determines that an amount is payable as an in-lieu payment under this Section 5.2.2 in any tax year, then such amount shall be paid to the City for that tax year within forty-five (45) days following transmittal by the City to the Developer of an invoice for payment of the in-lieu amount. The covenants of this Section 5.1 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. DRAFT 61147.20021\32812677.5 -30- 5.3 Maintenance Condition of the Property. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.3.1 The areas of the Property that are subject to public view (including all existing and future improvements, paving, walkways, landscaping, exterior signage and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described above (a “Maintenance Deficiency”), then the City shall notify the Developer in writing of the Maintenance Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance Deficiency, the City shall have the right to enter the Property and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be available to the City to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the City for the abatement of a Maintenance Deficiency on the Property pursuant to this Section Error! Reference source not found. shall become a lien on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days after written demand for payment from the City to the Developer, the City shall have the right to enforce the lien in the manner provided in Section 5.3.1. 5.3.2 Graffiti, as this term is defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property, shall be removed by the Developer by either painting over the evidence of such vandalism with a paint that has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water, as appropriate. If any such graffiti is not removed within ninety-six (96) hours following the time of the discovery of the graffiti, the City shall have the right to enter the Property and remove the graffiti, without notice to the Developer. Any sum reasonably expended by the City for the removal of graffiti from the Property pursuant to this Section 5.3.2, shall be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after written demand to the Developer from the City, the City shall have the right to enforce its lien in the manner provided in Section 5.3.2. 5.3.3 The Parties further mutually understand and agree that the rights conferred upon the City under this Section 5.3 expressly include a grant by the Developer of a security interest in the Property with the power to establish and enforce a lien or other encumbrance against the Property or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the obligations of the Developer and it successors under Section 5.3.1, 5.3.2 or Section 5.3.3, including the reasonable attorneys’ fees and costs of the City associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney. DRAFT 61147.20021\32812677.5 -31- 5.3.4 The provisions of this Section 5.3, shall be a covenant running with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. Nothing in the foregoing provisions of this Section 5.3 shall be deemed to preclude the Developer from making any alteration, addition, or other change to any structure or improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City. 5.4 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.4.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property. The covenant of this Section 5.4 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement. 5.4.2 The covenant of this Section 5.4 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. 5.5 Form of Non-Discrimination and Non-Segregation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.5.1 The Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants: 5.5.1.1 In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” DRAFT 61147.20021\32812677.5 -32- 5.5.1.2 In leases: “The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.” 5.5.1.3 In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. 5.5.2 The covenant of this Section 5.5 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. 5.6 Prohibited Uses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.6.1 Notwithstanding uses allowed in the applicable specific plan, no portion of the Property shall be used for a junkyard, adult entertainment, adult movie theater, adult bookstore, massage parlor, pawn shop, dollar store, check cashing center (the foregoing shall in no event prohibit banking facilities within a grocery store or a walk up ATM), payday loan or other similar business, laundromat (not including full service dry cleaners), marijuana dispensary, tattoo parlor or fortuneteller, or for the sale of narcotics paraphernalia, or for the long term treatment, storage or disposal of Hazardous Materials. 5.6.2 The covenant of this Section 5.4.2 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. 5.7 Survival of Special Development Covenants. All of the covenants set forth in 0, inclusive, shall be a covenant running with the land of the Property and each such special development covenant shall survive the Close of Escrow, execution and recordation of the Grant Deed, and issuance and recordation of any Certificate of Completion for the time period specifically set forth in each such special development covenant. The Parties acknowledge that although the special development covenants apply to the entirety of the Property, portions of the Project and Property may, in accordance with the Permitted Transfer requirements, be sold or otherwise transferred to various successors and assigns of the Developer. Accordingly, the City DRAFT 61147.20021\32812677.5 -33- agrees that with respect to enforcement of any of the special development covenants, it is understood and agreed that, in the event of a breach of any of the special development covenants, the City will seek to enforce those covenants only against the then-current owner(s) of that portion of the Property which is not in compliance with any one or more the special development covenants. No owner of any portion of the Property which is in compliance with the special development covenants shall be liable for the breach of any of the special development covenants by any other owner of any other portion of the Property; provided, however, that the foregoing shall not preclude City from seeking damages against any prior owner of any portion of the Property if, during the tenure of such owner’s ownership, such owner’s portion of the Property was not in compliance with any one or more of the special development covenants. 5.8 Developer Covenant to Defend this Agreement. The Developer acknowledges that the City is a “public entity” and/or “public agency” as defined under applicable California law. Therefore, the City must satisfy the requirements of certain California statutes relating to the actions of public entities and public agencies including, without limitation, CEQA. Also, as a public body, the City’s action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. The Developer assumes the risk of delays and damages that may result to the Developer from any third-party legal actions related to the City’s approval of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event that an error, omission or abuse of discretion by the City is determined to have occurred. If a third- party files a legal action regarding the City’s approval of this Agreement or the pursuit of the activities contemplated by this Agreement, either the City may terminate this Agreement on thirty (30) days written notice to the Developer of the City’s intent to terminate this Agreement, referencing this Section 5.8, without any further obligation to perform the terms of this Agreement and without any liability to the Developer resulting from such termination, unless the Developer unconditionally agrees to indemnify and defend the City, with legal counsel acceptable to the City, against such third-party legal action, as provided in the next sentence. Within thirty (30) days of receipt of the City’s notice of intent to terminate this Agreement, as provided in the preceding sentence, the Developer may offer to defend the City, with legal counsel reasonably acceptable to the City, in the third-party legal action and pay all of the court costs, attorney fees, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Any such offer from the Developer must be in writing and reasonably acceptable to the City in both form and substance, which acceptance by the City shall not be unreasonably withheld, conditioned or delayed. Nothing contained in this Section 5.8 shall be deemed or construed to be an express or implied admission that the City is liable to the Developer or any other person or entity for damages alleged from any alleged or established failure of the City to comply with any statute, including, without limitation, CEQA. The Developer’s defense of such third -party actions as described in this Section 5.8 shall constitute an Unavoidable Delay. 5.9 Environmental Indemnity of the City by the Developer. The Developer agrees, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and approved by the City) the City and its commissions, agents, attorneys, officers, employees, and authorized representatives (collectively, the “Indemnified Parties”), from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including, without limitation, attorney fees, disbursements and costs of attorneys, DRAFT 61147.20021\32812677.5 -34- environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever (collectively, “Environmental Claims”) that may, at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Indemnified Parties, directly or indirectly relating to or arising from any of the following “Environmental Matters” existing or occurring during or arising from the Developer’s ownership of the Property or construction or operation of the Project: 5.9.1 The presence of Hazardous Materials on, in, under, from or affecting all or any portion of the Property or the Project. 5.9.2 The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under, from or affecting the Property or the Project. 5.9.3 The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Materials on, in, under, from or affecting the Property or the Project. 5.9.4 The failure of the Developer, its agents or contractors, to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants and the like in connection with the Developer’s activities on the Property or regarding the Project. 5.9.5 The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release, potential release or discharge of Hazardous Materials on, in, under, from or affecting the Property or the Project. 5.9.6 The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Materials existing, stored or generated on, in, under or from the Property or the Project. 5.9.7 Any investigation, inquiry, order, hearing, action or other proceeding by or before any governmental agency in connection with any Hazardous Materials on, in, under, from or affecting the Property or the Project or the violation of any Environmental Law relating to the Property or the Project. 5.9.8 The Developer shall pay to the Indemnified Parties all costs and expenses including, without limitation, reasonable attorneys' fees and costs, incurred by the Indemnified Parties in connection with enforcement of the aforementioned environmental indemnity. 5.10 Insurance. In order to protect the City and its commissions, agents, attorneys, officers, employees and authorized representatives (collectively, “Additional Insureds”) against any and all claims and liability for death, injury, loss and damage resulting from the Developer’s actions in connection with this Agreement, the Property, and the Project, the Developer shall secure and maintain the insurance coverage, described in and required by this Section 5.10. The DRAFT 61147.20021\32812677.5 -35- City shall not have any obligation to allow Developer to access the Property under this Agreement until the Developer provides the required policies and/or certificates evidencing the insurance required by this Section 5.10 to the City and the City approves such evidence of insurance. The Developer shall pay any deductibles and self-insured retentions under all insurance policies obtained by Developer in satisfaction of the terms of this Agreement. Developer shall retain all insurance policies as set forth in this Section 5.10 while this Agreement is in effect and, if the Closing occurs, until recordation of the Certificate of Completion. 5.10.1 Workers’ Compensation Insurance Requirement. If the Developer has any employees, the Developer shall submit written proof that the Developer is insured against liability for workers’ compensation in accordance with the provisions of Section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by Section 1861 of the Labor Code: “I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of the Agreement.” The Developer shall require each contractor and sub-contractor performing work on the Project to provide workers’ compensation coverage for all of such contractor’s or sub-contractor’s employees, unless the contractor’s or sub-contractor’s employees are covered by workers’ compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub-contractor to provide adequate workers’ compensation insurance covering such employees. Each workers’ compensation policy procured pursuant to this Section 5.10.1 shall contain a full waiver of subrogation clause in favor of the Additional Insureds. 5.10.2 Liability and Permanent Insurance Requirements. 5.10.2.1 The Developer shall maintain in full force and effect, until the issuance of the Certificate of Completion, subject to Section 5.10.2.6, the following insurance coverage: 5.10.2.1.1 Commercial General Liability Insurance coverage, including, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically covering all indemnity obligations of the Developer pursuant to this Agreement), Products- Completed Operations Hazards, Personal Injury (including bodily injury and death), and Property Damage for liability arising out of the construction of the Project and/or the Developer’s operations concerning the Property or the Project. The commercial general liability insurance coverage shall have minimum limits for Bodily Injury and Property Damage liability of TWO MILLION DOLLARS ($2,000,000) each occurrence and FOUR MILLION DOLLARS ($4,000,000) aggregate. DRAFT 61147.20021\32812677.5 -36- 5.10.2.1.2 Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy. 5.10.2.1.3 If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Project, or any portion of the Project, the Developer shall require each such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($1,000,000). 5.10.2.1.4 Upon acceptance of the Project or any portion thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100% of the replacement value of all portions of the Project so accepted. During the construction of the Project, the Developer shall require that each contractor performing work on the Project maintain the following insurance coverage, as specified below, at all times during the performance of said work, or the Developer shall provide for such contractors “wrap” coverage, as specified below, at all times during the performance of said work: 5.10.2.1.5 The Developer shall maintain Builder’s Risk Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to 100% of the completed insurable value of the Project or portion of the Project on which such contractor is performing work. 5.10.2.1.6 Each general contractor and each sub-contractor shall maintain Commercial General Liability Insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Project from claims involving bodily injury and/or death and damage to the property of others. 5.10.2.1.7 Each general contractor and each sub-contractor shall maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor’s obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such automobile liability insurance shall be provided by a business or commercial vehicle policy. 5.10.2.2 The insurance required in Section 5.10.2.1.1 and Section 5.10.2.1.2 above shall include, endorsements naming the Additional Insureds as additional insured for liability arising out of this Agreement and any operation related to this Agreement. DRAFT 61147.20021\32812677.5 -37- 5.10.2.3 Any insurance coverage required under this Agreement shall not be written on a “claims made” basis. The applicable certificate of insurance must clearly provide that the coverage is on an “occurrence” basis. The requirements of this Section 5.10.2.3 shall survive any expiration or termination of this Agreement and the recordation of the Grant Deed and any Certificate of Completion. 5.10.2.4 Receipt by the City of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement. 5.10.2.5 Subject to Section 5.10.2.3, all of the insurance coverage required under this Section 5.10 shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the issuance of the Certificate of Completion and shall not be reduced, modified, or canceled without, at least, thirty (30) days prior written notice to the City. Also, phrases such as “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon the company” shall not be included in the policies of insurance in the cancellation wording of any certificates of insurance or any coverage for the Additional Insureds. The Developer shall promptly obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy. 5.10.2.6 insurance to be obtained and maintained by the Developer under this Section 5.10 shall be issued by a company or companies listed in the then current “Best’s Key Rating Guide” publication with a minimum of an “A:VII” rating and be admitted to conduct business in the State of California by the State of California Department of Insurance or otherwise approved by the City. 5.10.2.7 The City will not accept self-insurance in satisfaction of the insurance requirements of this Section 5.10. 5.10.2.8 All insurance obtained and maintained by the Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any insurance maintained by the Additional Insureds. 5.10.2.9 Insurance coverage in the minimum amounts set forth in this Section 5.10 shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude the Additional Insureds from taking such other actions as are available to them under any other provision of this Agreement or otherwise at law. Failure by the Developer to maintain all insurance coverage required by this Section 5.10 in effect shall be an Event of Default by the Developer. The City, at its sole option, may exercise any remedy available to them in connection with such an Event of Default. Alternatively, the City may, at its sole option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Developer for any premiums and associated costs paid by the City for such insurance coverage. Any election by the City to purchase or not to purchase insurance DRAFT 61147.20021\32812677.5 -38- otherwise required to be carried by the Developer shall not relieve the Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement. ARTICLE VI PROJECT FINANCING 6.1 Intentionally Omitted. 6.2 Unauthorized Liens. Except as provided in Section 6.3, until recordation of the Certificate of Completion, the Developer shall not record, and shall not allow to be recorded, against the Property, or any portion thereof, any Lien not expressly authorized by this Agreement. Until recordation of the Certificate of Completion, the Developer shall remove, or shall have removed, any unauthorized Lien made or recorded against the Property or any portion of the Property, or shall bond over or otherwise assure the satisfaction thereof to the reasonable satisfaction of the City. After one hundred twenty (120) calendar days prior written notice to the Developer, the City shall have the right, but not the obligation, to satisfy any unauthorized Lien made or recorded prior to recordation of the Certificate of Completion to the extent not bonded over or otherwise cured as permitted pursuant to the preceding sentence, and receive reimbursement from the Developer for any amounts paid in satisfying any such Lien, within thirty (30) days of the City’s delivery to the Developer of written demand therefore together with reasonable supporting evidence thereof. Nothing in this Section 6.2, though, shall require the Developer to pay or make provisions for the payment of any tax, assessment, lien, or charge that the Developer is in the process of contesting the validity or amount thereof, in good faith, and so long as such contest shall not subject the Property, or any portion thereof, to forfeiture or sale. 6.3 Rights of Lenders and City Regarding Permitted Loans and Liens. 6.3.1 Intentionally Omitted. 6.3.2 Whenever the City delivers any notice or demand to the Developer regarding any breach or default by the Developer under this Agreement that, if not timely cured by the Developer, would entitle the City to terminate this Agreement, the City shall send a copy of such notice to each affected Lender of which the City has received notice and a contact address for transmittal of such notices. Whenever the City delivers any notice or demand to the Developer regarding any breach or default by the Developer under this Agreement that, if not timely cured by the Developer, would entitle the City to exercise its power of termination of the fee estate of all or any portion of the Property pursuant to Section 7.6, the City shall at the same time send a copy of such notice or demand to each affected Lender of which the City has received notice and a contact address for transmittal of such notice. Each affected Lender receiving a copy of any such notice shall have the right, at its option, to commence the cure or remedy of any such default of the Developer and to diligently proceed with such cure or remedy, within one hundred eighty (180) calendar days following its receipt of notice of the default, subject to Unavoidable Delays. If a default of the Developer under this Agreement cannot, with diligence, be remedied or cured, or the remedy or cure of such default cannot be commenced, within such one hundred eighty (180) calendar day period, the Lender shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer, but in no event beyond three hundred sixty five DRAFT 61147.20021\32812677.5 -39- (365) calendar days following its receipt of notice of the default, subject to Unavoidable Delays. If such default of the Developer can only be remedied or cured by the Lender upon obtaining possession of the Property, the Lender shall seek to obtain possession of the Property with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default of the Developer within one hundred eighty (180) calendar days after obtaining possession of the Property, subject to Unavoidable Delays. Nothing contained in this Agreement shall be deemed to permit or authorize any Lender to undertake or continue the construction of any portion of the Project (beyond the extent necessary to conserve or protect improvements or construction already made), without expressly assuming the Developer’s obligations under this Agreement by written agreement approved by the City, in which the Lender agrees to complete, in the manner provided in this Agreement, the improvements to which the Lien or title of the Lender relates, which approval shall not unreasonably be withheld, delayed, or conditioned by the City. 6.3.3 In any case where, one hundred eighty (180) calendar days after delivery of notice of a default of the Developer under Section 6.3.2, such default remains uncured and the affected Lender has not exercised the option provided in Section 6.3.2 to construct the applicable portions of the Project, or has exercised the option, but has not proceeded diligently in accordance with Section 6.3.2 above, the City shall have the option, in the City’s sole and absolute discretion, to purchase the Loan of such Lender and any security interest of such Lender under its Loan Documents by payment to the Lender of the amount of the unpaid Loan that remains outstanding, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the Lender by the Developer under its Loan Documents. 6.3.4 After expiration of the one hundred eighty (180) calendar day period provided for in Section 6.3.3, any affected Lender may demand, in writing, that the City act to exercise or forego the option granted in Section 6.3.3. If the City fails to exercise the right granted in Section 6.3.3 within sixty (60) calendar days from the date of the City’s receipt of such written demand from a Lender, the City shall be conclusively deemed to have waived its right of purchase of that Lender’s interest pursuant to Section 6.3.3. 6.3.5 In the event of an uncured default or breach by the Developer under any Loan Documents, where the Lender has not exercised its option to complete the Project under Section 6.3.2, the City may cure the default of the Developer under the applicable Loan Documents, but is under no obligation to do so, prior to completion of any sale or foreclosure of the Property or any portion thereof under the applicable Loan Documents. The City shall be entitled to reimbursement from the Developer of all reasonable costs and expenses incurred by the City in curing any default of the Developer under any Loan Documents. 6.3.6 In any case where a Lender has acquired title to all or any portion of the Property or Project through foreclosure, deed in lieu of foreclosure, or any other means, and such Lender proposes to enter into an agreement to transfer the Property and/or Project, or any portion thereof, to a third party transferee, the Lender shall provide the City with written notice thereof, which notice shall include a reasonably detailed description of the terms and conditions of the proposed transaction. The City shall have the option, but not the obligation, to purchase the Property and/or Project on substantially the same terms as described in the Lender’s notice, which option, if ever, shall be exercised by written notice from the City to the Lender within twenty (20) days following the City’s receipt of the Lender’s notice. If the City elects not to exercise its option, DRAFT 61147.20021\32812677.5 -40- then, subject to Section 8.2.1, the Lender may complete the transaction described in its notice, provided that such transaction is closed on materially identical terms and conditions as those described in the Lender’s notice to the City. If the Lender and third-party transferee desire to materially amend the terms of their proposed transaction, the Lender shall give the City written notice of the proposed modifications and the City shall once again have the right to elect to acquire the Property and the Project (or portion thereof) on terms and conditions substantially similar to those modified terms. If, for any reason, the proposed transaction between the Lender and third- party transferee fails to close within one (1) year following the date on which the City first receives notice of the proposed transaction (or notice of the proposed modified transaction, whichever is later), then the City once again have the right to elect to acquire the Property and/or Project pursuant to this Section 6.3.6. 6.3.7 The restrictions set forth in this Section 6.3 shall remain in effect only until the recordation of the Certificate of Completion for the Project. ARTICLE VII DEFAULTS, REMEDIES AND TERMINATION 7.1 Defaults - General. 7.1.1 Subject to any extensions of time provided for in this Agreement, failure or delay by any Party to perform any term or provision of this Agreement shall constitute an “Event of Default” under this Agreement; provided, however, that if a Party otherwise in default commences to cure, correct or remedy such default, within thirty (30) calendar days after receipt of written notice from the injured Party specifying such default, and shall diligently prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such Party shall not be deemed to be in default under this Agreement and no Event of Default shall be deemed to have occurred. 7.1.2 The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the non-defaulting Party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. 7.1.3 Any failure or delays by any Party in asserting any of their rights and/or remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by any Party in asserting any of its rights and/or remedies shall not deprive that Party of its right to institute and maintain any actions or proceedings that it may deem necessary to protect, assert or enforce any such rights or remedies. 7.1.4 In addition to other acts or omissions of the Developer that may legally or equitably constitute a default or breach of this Agreement, the occurrence of any of the following specific events, prior to the issuance of a Certificate of Completion for the Project, shall constitute an “Event of Default” under this Agreement and shall not be subject to the notice and cure provisions of Section 7.1.1: 7.1.4.1 Intentionally Omitted. DRAFT 61147.20021\32812677.5 -41- 7.1.4.2 Any representation, warranty or disclosure made to the City by the Developer regarding this Agreement or the Project is materially false or misleading, whether or not such representation or disclosure appears in this Agreement, if not promptly corrected after Developer’s receipt of notice of same. 7.1.4.3 The Developer fails to make any payment or deposit of funds required under this Agreement or to pay any other charge set forth in this Agreement, following seven (7) business days’ written notice to the Developer from the City of such failure reasonably documenting the City’s calculation of any such charge the amount of which is not stated in this Agreement. 7.1.4.4 The construction of the Project is delayed or suspended for a period in excess of that permitted under Section 4.3 or the Developer has not been issued, or entitled to be issued, a Certificate of Completion by the Project Completion Date. 7.1.4.5 There occurs any event of dissolution, reorganization or termination of the Developer that adversely and materially affects the operation or value of the Property or the Project, and such event is not corrected within five (5) business days following written notice of such event from the City to the Developer. 7.1.4.6 The Developer Transfers its interest in this Agreement, the Property, or the Project, or any portion thereof, whether voluntarily or involuntarily or by operation of law, in violation of the terms and conditions of this Agreement and such action is not cured within the period prescribed in Section 8.2.1. 7.1.4.7 A receiver is appointed to conduct the affairs of the Developer under state or federal law. 7.1.4.8 The Developer’s legal status as authorized by the Secretary of State of the State of California to transact business in California is suspended or terminated. 7.2 LIQUIDATED DAMAGES TO THE CITY. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROWTHE CITY MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE CITY SHALL BE RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT TO SELL OR CONVEY THE PROPERTY OR ANY PORTION THEREOF AND ANY SUCH ESCROW CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE CITY TO THE DEVELOPER OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS. THE CITY AND THE DEVELOPER ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL, IF NOT IMPOSSIBLE, TO ASCERTAIN THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY THE CITY IN THE EVENT OF A CANCELLATION OF THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW. HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES THE CITY WOULD SUFFER IN THE EVENT OF A CANCELLATION OF THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DRAFT 61147.20021\32812677.5 -42- DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW, THE CITY AND THE DEVELOPER AGREE THAT A REASONABLE ESTIMATE OF THE CITY’S DAMAGES IN SUCH EVENT IS THE TOTAL SUM OF FIFTY THOUSAND DOLLARS ($50,000) (THE “LIQUIDATED DAMAGES AMOUNT”). THEREFORE, UPON THE CANCELLATION OF THE ESCROW BY THE CITY DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF THE ESCROW, ESCROW HOLDER SHALL IMMEDIATELY CANCEL THE ESCROW AND PAY THE LIQUIDATED DAMAGES AMOUNT TO THE CITY, IN PART, FROM THE EARNEST MONEY DEPOSIT WITHIN FIVE (5) DAYS OF ESCROW CANCELLATION. RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL BE THE CITY’S SOLE AND EXCLUSIVE REMEDY UPON THE CANCELLATION OF THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW. CITY’S INITIALS: _____ DEVELOPER’S INITIALS: _____ 7.3 DEVELOPER’S ELECTION RE: SPECIFIC ENFORCEMENT OF AGREEMENT OR WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND LIMITATION ON RECOVERY OF DAMAGES PRIOR TO CLOSE OF ESCROW. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT PERTAINING TO THE CONVEYANCE OF THE PROPERTY BY THE CITY UNDER THIS AGREEMENT PRIOR TO CLOSE OF ESCROW, THE DEVELOPER SHALL, AS ITS SOLE AND EXCLUSIVE REMEDY, HAVE THE RIGHT TO EXERCISE ONE OF THE ALTERNATIVE REMEDIES DESCRIBED IN SECTIONS 7.3 AND 7.3.2. THE DEVELOPER’S ELECTION, ONCE MADE, SHALL BE IRREVOCABLE 7.3.1 WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND LIMITATION ON RECOVERY OF DAMAGES. THE DEVELOPER MAY WAIVE THE REMEDIES SET FORTH IN SECTION 7.3.2 AND MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE DEVELOPER SHALL BE RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT TO PURCHASE OR ACCEPT TITLE TO THE PROPERTY AND ANY SUCH ESCROW CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE DEVELOPER TO THE CITY OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS. THE DEVELOPER SHALL BE LIMITED TO RECOVERING ANY AMOUNTS ACTUALLY EXPENDED BY THE DEVELOPER IN REASONABLE RELIANCE ON THIS AGREEMENT PRIOR TO THE DATE OF THE OCCURRENCE OF THE EVENT OF DEFAULT BY THE CITY, NOT TO EXCEED FIFTY THOUSAND DOLLARS ($50,000). THE DEVELOPER WAIVES ANY RIGHT TO RECOVER ANY OTHER SUMS FROM THE CITY ARISING FROM AN EVENT OF DEFAULT BY THE CITY PRIOR TO THE CLOSE OF ESCROW. THE DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 7.3, WHICH CIVIL CODE SECTION READS AS FOLLOWS: DRAFT 61147.20021\32812677.5 -43- “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 7.3. DEVELOPER’S INITIALS ____________ IN CONNECTION WITH THE WAIVERS OF THIS SECTION 7.3, THE DEVELOPER FURTHER WAIVES THE RIGHT TO RECORD A NOTICE OF PENDENCY OF ACTION AGAINST ALL OR ANY PORTION OF THE PROPERTY EXCEPT DEVELOPER MAY RECORD SUCH A NOTICE IN CONNECTION WITH ANY SUIT FOR SPECIFIC PERFORMANCE PERMITTED HEREUNDER IN THE EVENT DEVELOPER ELECTS NOT TO WAIVE ITS RIGHT TO SEEK SPECIFIC PERFORMANCE UNDER SECTION 7.3.2. 7.3.2 SPECIFIC PERFORMANCE. THE DEVELOPER MAY WAIVE THE REMEDIES SET FORTH IN SECTION 7.3 AND, IN ACCORDANCE WITH CIVIL CODE SECTION 3384, ET SEQ.,INSTITUTE AN ACTION AGAINST THE CITY FOR SPECIFIC PERFORMANCE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT WHICH WERE TO HAVE BEEN COMPLETED BY THE CITY PRIOR TO THE CLOSE OF ESCROW. 7.4 Legal Actions. 7.4.1 Except as otherwise provided by Section 7.3, any Party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy available to that Party under this Agreement or at law or in equity. Such legal actions must be instituted in the Superior Court of the State of California in and for the County of Orange, California, in any other appropriate court within the County of Orange, California. 7.4.2 The procedural and substantive laws of the State of California shall govern the interpretation and enforcement of this Agreement, without regard to conflicts of laws principles. The Parties acknowledge and agree that this Agreement is entered into, is to be fully performed in and relates to real property located in the City of San Juan Capistrano, County of Orange, California. 7.5 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties set forth in this ARTICLE VII are non- exclusive and cumulative, and the exercise by any Party of one or more of such rights or remedies DRAFT 61147.20021\32812677.5 -44- 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(ies). 7.6 City Power of Termination Regarding the Property. 7.6.1 The City hereby reserves a power of termination pursuant to Civil Code Sections 885.010, et seq., exercisable by the City, in its sole and absolute discretion, upon thirty (30) calendar days written notice to the Developer referencing this Section 7.6, to terminate the fee interest of the Developer in the Property and/or any improvements to the Property and revest such fee title in the City and take possession of all or any portion of such real property and improvements, without compensation to the Developer, upon the occurrence of an Event of Default by the Developer following the Close of Escrow and prior to the issuance of the Certificate of Completion. 7.6.2 The thirty (30) calendar day written notice specified Section 7.6.1 shall specify the Event of Default by the Developer triggering the City’s exercise of its power of termination. The City shall proceed with its remedy set forth in Section 7.6.1 only if the Developer continues in default for a period of sixty (60) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion. 7.6.3 The rights of the City under this Section 7.6 shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit: 7.6.3.1 Each Lien recorded against the Property and specifically authorized by this Agreement as a Permitted Transfer; 7.6.3.2 Any leases, declarations of covenants, conditions and restrictions, easement agreements or other recorded documents or interests applicable to the Property and specifically authorized by this Agreement as a Permitted Transfer. 7.6.4 Upon the City’s exercise of its power of termination pursuant to this Section 7.6, the Developer or its successors or assigns shall convey by grant deed to the City title to the Property, as specified in the City’s notice pursuant to Section 7.6.1, and all improvements thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by the Developer and a notary in a manner suitable for recordation. The City may enforce its rights pursuant to this Section 7.6 by means of an injunctive relief or forfeiture of title action filed in any court of competent jurisdiction. 7.6.5 Upon the revesting in the City of title to the Property, whether by grant deed or court decree, the City shall exercise its reasonable good faith efforts to resell the Property at its then fair market value, as soon and in such manner as the City shall, in its sole discretion, find feasible and consistent with the objectives of the City’s General Plan, to a qualified and responsible person or persons (as reasonably determined by the City) who will assume the Developer’s obligations to begin and/or complete and/or operate that portion of the Project located on the Property, or such other replacement development acceptable to the City, in its sole and DRAFT 61147.20021\32812677.5 -45- absolute discretion. Upon any such resale of the Property (or any portion thereof), the proceeds to the City from such sale shall be applied as follows: 7.6.5.1 First, to pay any and all amounts required to release/reconvey any Lien recorded against all or any portion of the Property; and 7.6.5.2 Second, to reimburse the City on its own behalf or on behalf of the City for all actual internal and third-party costs and expenses previously or currently incurred by the City related to the Property, the Project, or this Agreement, including, but not limited to, customary and reasonable fees or salaries to third-party personnel engaged in such actions, in connection with the recapture, management and resale of the Property or any part thereof; all taxes, assessments and utility charges paid by the City with respect to the Property or portion thereof; any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred by the Developer with respect to the acquisition of the Property or the construction of the Project; and amounts otherwise owing to the City by the Developer or its successors or assigns pursuant to the terms of this Agreement; and 7.6.5.3 Third, to the extent that any proceeds from such resale are, thereafter, available, taking into account any prior encumbrances with a claim thereto, to reimburse the Developer, or its successors in interest to the equal to the sum of: (1) the Purchase Price; and (2) the third-party costs actually incurred and paid by the Developer regarding the development of the Project located on the Property, including, but not limited to, pro rata costs of carry, taxes, and other items as set forth in a cost certification to be made by the Developer to the City prior to any such reimbursement, which certification shall be subject to the City’s reasonable approval; provided, however, that the Developer shall not be entitled to reimbursement for any expenses to the extent that such expenses relate to any loans, Liens or other encumbrances that are paid by the City pursuant to the provisions of sub-sections 7.6.5.1 or 7.6.5.2 above. 7.6.5.4 Any portion of the proceeds from the resale of the Property remaining after the foregoing applications shall be retained by the City as their sole and exclusive property. 7.6.6 IMMEDIATELY FOLLOWING THE THIRTY (30) DAY PERIOD SPECIFIED IN SECTION 7.6.1, ABOVE, THE CITY, ITS EMPLOYEES AND AGENTS SHALL HAVE THE RIGHT TO REENTER AND TAKE POSSESSION OF THE PROPERTY AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR COMPENSATION TO THE DEVELOPER. BY INITIALING BELOW, THE DEVELOPER HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL RIGHTS THAT THE DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1162, AS THOSE STATUTES MAY BE AMENDED, REPLACED, RENUMBERED OR SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT. DEVELOPER’S INITIALS ____________ DRAFT 61147.20021\32812677.5 -46- 7.6.7 THE DEVELOPER ACKNOWLEDGES AND AGREES THAT THE CITY’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY PURSUANT TO THIS SECTION 7.6 MAY WORK A FORFEITURE OF THE ESTATE IN THE DEFAULTED PORTION OF THE PROPERTY CONVEYED TO THE DEVELOPER THROUGH THE GRANT DEED. THE DEVELOPER HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL EQUITABLE AND LEGAL DEFENSES THAT THE DEVELOPER MAY HAVE TO SUCH FORFEITURE, INCLUDING, BUT NOT LIMITED TO, THE DEFENSES OF LACHES, WAIVER, ESTOPPEL, SUBSTANTIAL PERFORMANCE OR COMPENSABLE DAMAGES. THE DEVELOPER FURTHER EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL RIGHTS AND DEFENSES THAT THE DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3275 OR ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT. THE DEVELOPER ACKNOWLEDGES THAT THE TERMS AND CONDITIONS OF THIS AGREEMENT REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTUE OF THE EXERCISE OF THE CITY’S POWER OF TERMINATION PROVIDED IN THIS SECTION 7.6 AND FURTHER ACKNOWLEDGE THAT IT HAS RECEIVED INDEPENDENT AND ADEQUATE CONSIDERATION FOR ITS WAIVER AND RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO SECTION 7.6.6. AND THIS SECTION 7.6.7. DEVELOPER’S INITIALS ____________ 7.7 Developer Indemnification of the City. In addition to any other specific indemnification or defense obligations of the Developer set forth in this Agreement, the Developer agrees to indemnify, defend (upon written request by the City and with counsel reasonably acceptable to the City and hold harmless the Indemnified Parties, from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney’s fees of counsel retained by the Indemnified Parties, expert fees, costs of staff time, and investigation costs, of whatever kind or nature, that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any act, omission, fault or negligence, whether active or passive, of the Developer or the Developer’s officers, agents, employees, independent contractors or subcontractors of any tier, relating in any manner to this Agreement, any work to be performed by the Developer related to this Agreement, the Property, or the Project, or any authority or obligation exercised or undertaken by the Developer under this Agreement. Without limiting the generality of the foregoing, the Developer’s obligation to indemnify the Indemnified Parties shall include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Indemnified Parties or their agents or employees or representatives, any workers’ compensation or prevailing wage determination, claim or suit or any other matter arising from or connected with any goods or materials provided or services or labor performed regarding the Project or the Property on behalf of the Developer by any person or entity. DRAFT 61147.20021\32812677.5 -47- ARTICLE VIII GENERAL PROVISIONS. 8.1 Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement in their entirety by this reference. 8.2 Restrictions on Transfers. The Developer acknowledges that the qualifications and identity of the Developer are of particular importance to the City. The Developer further recognizes and acknowledges that the City has relied and is relying on the specific qualifications and identity of the Developer in entering into this Agreement with the Developer and, as a consequence, Transfers are permitted only as expressly provided in this Agreement. The Developer shall promptly notify the City in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such person, of which information the Developer or any of its partners, members or officers are notified or may otherwise have knowledge or information . 8.2.1 Except as expressly permitted in this Agreement, the Developer represents to the City that it has not made and agrees that it will not make or create, or suffer to be made or created, any Transfer other than a Permitted Transfer. In deciding whether to approve or disapprove any proposed Transfer, the City may consider the proposed transferee’s financial strength and the experience of the proposed transferee and its senior management in undertaking and successfully completing projects of a similar type and size as the Project or that portion of the Project proposed to be transferred. Any Transfer made in contravention of this Section 8.2 shall be voidable at the election of the City and this Agreement may be terminated by the City or the City may exercise any other remedy available to the City under the terms of this Agreement, provided, however, that (i) the City shall first notify the Developer in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty (20) calendar days following its receipt of such written notice to commence and, thereafter, diligently and continuously proceed to cure the default of the Developer and submit evidence of the initiation and satisfactory completion of such cure to the City, in a form and substance reasonably satisfactory to the City. 8.2.2 The Developer shall provide the City no less than thirty (30) days prior written notice of any proposed Permitted Transfer which the Developer desires to enter into prior to the recordation of a Certificate of Completion for the Project subject to the Transfer, other than a Permitted Transfer for which no notice shall be required. The Developer shall have the burden of demonstrating to the City’s reasonable satisfaction that the proposed Permitted Transfer meets the conditions and requirements of this Agreement with respect to Permitted Transfers. 8.2.3 In connection with the City’s review of any request for approval of any proposed Transfer under this Section 8.2, the Developer agrees to reimburse the City for those third party costs and expenses incurred by the City in connection with its review of the Developer’s request for approval, including, without implied limitation, the reasonable fees and costs of those DRAFT 61147.20021\32812677.5 -48- outside consultants and legal counsel retained by the City to assist it in its review of the Developer’s request, including the City Attorney. 8.2.4 Anything in this Agreement to the contrary notwithstanding, the restrictions and prohibitions on Transfers contained in this Section 8.2 shall terminate upon issuance of a Certificate of Completion for the Project. 8.3 Notices, Demands and Communications Between the Parties. 8.3.1 Any and all notices, demands or communications submitted by any Party to another Party pursuant to or as required by this Agreement shall be proper, if in writing and dispatched by messenger for immediate personal delivery, by a nationally recognized overnight courier service or by registered or certified United States Mail, postage prepaid, return receipt requested, to the principal office of the City or the Developer, as applicable, as designated in Section 8.3.2. Such written notices, demands or communications may be sent in the same manner to such other addresses as either Party may from time to time designate. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is delivered by personal delivery, one (1) business day after it is deposited for delivery with a nationally recognized overnight courier service or three (3) calendar days after it is placed in the United States Mail, as provided in this Section 8.3. 8.3.2 The following are the authorized addresses for the submission of notices, demands or communications to the Parties: TO DEVELOPER: 26874 ORTEGA HIGHWAY LLC 31791 Los Rios Street San Juan Capistrano, CA 92675 Attn: Dan Almquist (T) 949-302-1389 Email: dan@frontierrei.com REQUIRED COPY TO: Michael Burnett 7321 Veering Circle Huntington Beach, CA 92648 Email: mwb@frontierrei.com Rutan & Tucker, LLP 18575 Jamboree Road, 9th Floor Irvine, CA 92612 Attention: John A. Ramirez DRAFT 61147.20021\32812677.5 -49- TO CITY: REQUIRED COPY TO: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: City Manager (T) 949-493-1171 (F) Best Best & Krieger, LLP 18101 Von Karman Ave, Suite 1000 Irvine, CA 92614 Attention: Elizabeth Wagner Hull (T) 949-263-2600 (F) 949-260-0972 8.4 Conflict of Interest. No member, official or employee of the City, having any conflict of interest, direct or indirect, related to this Agreement, the Property, or the development or operation of the Project shall participate in any decision relating to this Agreement. The Parties represent and warrant that they do not have knowledge of any such conflict of interest. 8.5 Warranty Against Payment of Consideration for Agreement. Each party warrants to the other that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section 8.5, shall not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer. 8.6 Non-liability of City, Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer, or any successor in interest of the Developer, in the event of any default or breach by the City under this Agreement or for any amount that may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement, except as may arise from the gross negligence or willful acts of such member, official or employee. 8.7 Unavoidable Delay; Extension of Time of Performance. 8.7.1 Subject to specific provisions of this Agreement, performance by any Party under this Agreement shall not be deemed, or considered to be, in default where any such default is due to an Unavoidable Delay that is not attributable to the fault of the Party claiming an extension of time to perform. An extension of time for any Unavoidable Delay shall be for the period of the Unavoidable Delay and shall commence to run from the date of occurrence of the Unavoidable Delay, if the Party asserting the existence of the Unavoidable Delay provides the other Parties with written notice of the occurrence of the Unavoidable Delay, within ten (10) business days of the noticing Party becoming aware of such asserted Unavoidable Delay. Otherwise, the extension of time for an Unavoidable Delay shall commence on the date of receipt of written notice of the occurrence of the Unavoidable Delay by the Parties not requesting an extension of time to perform due to such Unavoidable Delay. DRAFT 61147.20021\32812677.5 -50- 8.7.2 The Parties expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of either of them that may have provided a basis for entering into this Agreement and that occur at any time after the execution of this Agreement, do not constitute an Unavoidable Delay and do not provide any Party with grounds for asserting the existence of an Unavoidable Delay in the performance of any covenant or undertaking arising under this Agreement. Each Party expressly assumes the risk that changes in general economic conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such Party under this Agreement. 8.8 Binding on Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns. 8.9 Entire Agreement. 8.9.1 This Agreement shall be executed in three (3) duplicate originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement includes pages (exclusive of signature pages) and exhibits, that constitute the entire understanding and agreement of the Parties regarding the Property, the Project, and the other subjects addressed in this Agreement. 8.9.2 This Agreement integrates all of the terms and conditions mentioned in this Agreement or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to the Property, the Project, and the other subjects addressed in this Agreement. 8.9.3 None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with any deed conveying title to the Property and this Agreement shall continue in full force and effect before and after such conveyances. 8.9.4 All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representative(s) of all Parties. 8.10 Execution of this Agreement. Following execution of three (3) originals of this Agreement by the authorized representative(s) of the Developer and delivery of such originals prior to consideration by the City Council, to the City, accompanied by an official action of the governing body of the Developer authorizing the individuals executing this Agreement on behalf of the Developer to execute and perform this Agreement, in form and substance acceptable to the City, this Agreement shall be subject to the review and approval by the City Council, in their sole and absolute discretion, no later than forty-five (45) calendar days after such date of delivery to the City. If the City have not approved, executed, and delivered an original of this Agreement to the Developer within the foregoing time period, then no provision of this Agreement shall be of any force or effect for any purpose. DRAFT 61147.20021\32812677.5 -51- 8.11 Survival of Indemnity Obligations. All general and specific indemnity and defense obligations of the Parties set forth in this Agreement shall survive the expiration or termination of this Agreement, the execution or recordation of the Grant Deed, and/or the issuance and recordation of any Certificate of Completion. 8.12 Time Declared to be of the Essence. As to the performance of any obligation hereunder as to which time is a component thereof, the performance of such obligation within the time provided is of the essence. [Signatures on Following Pages] DRAFT 61147.20021\32812677.5 SIGNATURE PAGE TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) CITY: THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation Dated:_________________, 2022 By: City Manager ATTEST: ____________________________ City Clerk APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER LLP By: _______________________ City Attorney DRAFT 61147.20021\32812677.5 SIGNATURE PAGE TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) DEVELOPER: 26874 ORTEGA HIGHWAY LLC, a California limited liability company Dated:_____________________ By: Dan M. Almquist, Manager DRAFT 61147.20021\32812677.5 EXHIBIT A EXHIBIT A TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) Legal Description of the Property The land situated in the City of San Juan Capistrano, County of Orange, State of California, described as follows: PARCEL 1: THAT PORTION OF LOT 20 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, LYING WESTERLY OF THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 23 OF SAID TRACT NO. 103. APN: A PORTION OF 124-160-57 PARCEL 2: LOT 23 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ANY PORTION OF SAID LOT 23 NOT INCLUDED IN THE DEED FROM ROSA RIOS TO MARIA BALBANEDO RUIZ, RECORDED SEPTEMBER 29, 1885 IN BOOK 146, PAGE 102 OF DEEDS, RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, WHICH DEED DESCRIBES THE FOLLOWING: BEGINNING AT THE NORTHWEST CORNER OF LOT 1 IN BLOCK 10 OF THE TOWN OF SAN JUAN CAPISTRANO; THENCE SOUTH 10-1/2 DEGREES EAST TO A STAKE, A DISTANCE OF 51 FEET; THENCE SOUTH 7-1/2 DEGREES WEST, 31 FEET TO THE CORNER OF RIVERINS LAND; THENCE SOUTH 82 DEGREES EAST, 125 FEET TO A STAKE; THENCE NORTHERLY TO THE SOUTH LINE OF OLIVE STREET, A DISTANCE OF 79 FEET; THENCE NORTH 81 DEGREES WEST ALONG THE SOUTH BOUNDARY OF OLIVE STREET, 145 FEET TO THE POINT OF BEGINNING, BEING THE WEST ONE-HALF OF SAID LOT 1; REFERENCE BEING HEREBY MADE TO THE OFFICIAL PLAT OF SAID TOWN ON FILE IN THE RECORDER'S OFFICE OF LOS ANGELES COUNTY, CALIFORNIA. ALSO EXCEPTING THEREFROM THAT PORTION OF SAID LAND DESCRIBED AS PARCEL 102505-1 IN FINAL ORDER OF CONDEMNATIONS RECORDED JULY 24, 2013 AS INSTRUMENT NO. DRAFT 61147.20021\32812677.5 EXHIBIT A 2013000442463 AND JULY 25, 2013 AS INSTRUMENT NO. 2013000445919, BOTH OF OFFICIAL RECORDS. APN: A PORTION OF 124-160-57 PARCEL 3: THAT PORTION OF LOT 20 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, LYING EASTERLY OF THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 23 OF SAID TRACT NO. 103. APN: A PORTION OF 124-160-57 PARCEL 4: LOT 21 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM, THAT PORTION THEREOF LYING WESTERLY OF THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 22 OF SAID TRACT NO. 103. ALSO EXCEPTING THEREFROM, THAT PORTION DESCRIBED IN DEED TO THE STATE OF CALIFORNIA RECORDED OCTOBER 2, 1956 IN BOOK 3662, PAGE 435 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. APN: A PORTION OF 124-160-57 PARCEL 5: LOT 3 IN BLOCK 10 OF SAN JUAN CAPISTRANO, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGES 120 AND 121 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, AND THE WEST ONE-HALF OF GARCIA STREET ADJOINING SAID LOT ON THE EAST, ABANDONED BY ORDER OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY NOVEMBER 16, 1920 IN BOOK 15, PAGE 304 OF MINUTE BOOKS. EXCEPTING THEREFROM THE SOUTHERLY 94.00 FEET THEREOF. APN: A PORTION OF 124-160-57 PARCEL 6: DRAFT 61147.20021\32812677.5 EXHIBIT A THAT PORTION OF LOT 21 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEASTERLY CORNER OF LOT 23 OF SAID TRACT; THENCE NORTH 8 DEGREES 11' 49" EAST ALONG THE EASTERLY LINE OF SAID LOT 23, A DISTANCE OF 28.88 FEET TO A CURVE CONCAVE NORTHERLY AND HAVING A RADIUS OF 1050.00 FEET; THENCE FROM A TANGENT BEARING SOUTH 88 DEGREES 50' 22" EAST, EASTERLY ALONG SAID CURVE, THROUGH AN ANGLE OF 1 DEGREE 57' 37", AN ARC DISTANCE OF 35.92 FEET TO A POINT IN THE WESTERLY PROLONGATION OF THE SOUTHERLY LINE OF THAT PARCEL OF LAND CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED OCTOBER 2, 1956 IN BOOK3662, PAGE 435 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER, DISTANT ALONG SAID WESTERLY PROLONGATION, WESTERLY 6.49 FEET FROM THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 22 OF SAID TRACT; THENCE EASTERLY ALONG SAID WESTERLY PROLONGATION, 6.49 FEET TO SAID SOUTHERLY PROLONGATION; THENCE SOUTHERLY ALONG SAID SOUTHERLY PROLONGATION, 32.42 FEET TO THE SOUTHERLY LINE OF SAID LOT 21; THENCE WESTERLY ALONG SAID SOUTHERLY LINE, TO THE POINT OF BEGINNING. EXCEPTING THEREFROM ALL MINERALS, OILS, GASES AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, THAT MAY BE WITHIN OR UNDER SAID LAND WITHOUT, HOWEVER, THE RIGHT TO DRILL, DIG OR MINE THROUGH THE SURFACE THEREOF, AS EXCEPTED IN THE FROM THE STATE OF CALIFORNIA RECORDED APRIL 18, 1962 IN BOOK 6079, PAGE 258 OF OFFICIAL RECORDS. APN: A PORTION OF 124-160-57 PARCEL 11: THAT PORTION OF SAID LAND CONVEYED TO THE STATE OF CALIFORNIA AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT RECORDED JULY 24, 2013, AS INSTRUMENT NO. 2013000442463 OF OFFICIAL RECORDS, DESCRIBED AS FOLLOWS: PARCEL 102505-1 FOR STATE HIGHWAY PURPOSES, ALL OF THAT REAL PROPERTY DESCRIBED AS FOLLOWS: COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF EL CAMINO REAL (NORTH), 56’ WIDE, AND THE CENTERLINE OF THE CITY STREET CALLED ORTEGA HIGHWAY, ESTABLISHED PER R621, BEING THE INTERSECTION OF LINE “L102” WITH LINE “L115” SHOWN ON SHEET 3 OF R621; THENCE ALONG SAID “L102” AND ORTEGA HIGHWAY CENTERLINE, DRAFT 61147.20021\32812677.5 EXHIBIT A (1) S84°43’58”E 82.64’;THENCE AT RIGHT ANGLES TO LAST SAID CENTERLINE, (2) S05°16’02”W 40.00’; TO THE TRUE POINT OF BEGINNING IN LINE “L156” SHOWN ON SHEET 3 OF R621, BEING IN THE SOUTHERLY BOUNDARY OF SAID ORTEGA HIGHWAY ESTABLISHED PER R621, FROM SAID BEGINNING POINT THE EASTERLY TERMINUS OF “L156” BEARS S84°43’58”E 7.12’; THENCE LEAVING SAID ORTEGA HIGHWAY BOUNDARY, (3) S06°01’44” W 1.18’; THENCE, (4) S84°16’08” E 82.59’, TO A POINT IN LINE “L157” SHOWN ON SHEET 3 OF R621, BEING IN SAID ORTEGA HIGHWAY BOUNDARY, FROM LAST SAID POINT THE NORTHERLY TERMINUS OF “L157” BEARS N08°15’33” E 4.61’; THENCE ALONG SAID ORTEGA HIGHWAY BOUNDARY, (5) N08°15’33” E 4.61’; TO A POINT IN NONTANGENT CURVE OF RADIUS OF 1039.96’, CONCAVE NORTHERLY, A RADIAL LINE TO LAST SAID POINT BEARS S01°05’36” W; THENCE WESTERLY ALONG SAID CURVE, (6) AN ARC LENGTH OF 75.76’, THROUGH A CENTRAL ANGLE OF 04°10’26”; THENCE LEAVING LAST SAID CURVE ALONG A TANGENT LINE, (7) N84°43’58” W 7.12’, TO THE TRUE POINT OF BEGINNING. EXCEPTING THE PORTION THEREOF, IF ANY, SITUATED WITHIN ORTEGA HIGHWAY PORTION OF APN: 124-160-56 PARCEL 12: THAT PORTION OF LOT 21 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33, INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF EASTERLY LINE OF EL CAMINO REAL SOUTH, 25.00 FEET HALF WIDTH AND THE SOUTHERLY LINE OF ORTEGA HIGHWAY 40.00 FEET HALF WIDTH AS SHOWN ON RECORD OF SURVEY NO. 2009-1078, AS FILED IN BOOK 246, PAGES 32 TO 43, INCLUSIVE, OF RECORD OF SURVEYS, IN SAID COUNTY RECORDERS OFFICE; THENCE, ALONG THE SOUTHERLY LINE OF SAID ORTEGA HIGHWAY SOUTH 84°43'58" EAST 55.49 FEET, SHOWN AS "L156" ON SAID RECORD OF SURVEY, TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS 1040.00 FEET; DRAFT 61147.20021\32812677.5 EXHIBIT A THENCE, ALONG SAID CURVE IN A SOUTHEASTERLY DIRECTION, THROUGH A CENTRAL ANGLE OF 04°10'26" AN ARC LENGTH OF 75.76 FEET, SHOWN AS "C116" ON SAID RECORD OF SURVEY, TO THE WESTERLY OF SAID LOT 21, SHOWN AS "L157" ON SAID RECORD OF SURVEY; THENCE, ALONG SAID WESTERLY LINE, SOUTH 08°15'33" WEST 1.98 FEET TO THE TRUE POINT OF BEGINNING; THENCE, CONTINUING ALONG SAID WESTERLY LINE, SOUTH 08°15'33" WEST 8.10 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1050.00 FEET, A RADIAL LINE BEARS SOUTH 01°09'43" WEST, SHOWN ON AS "C117" ON SAID RECORD OF SURVEY; THENCE, ALONG SAID CURVE IN A SOUTHEASTERLY DIRECTION THROUGH A CENTRAL ANGLE OF 01°58'32" AN ARC LENGTH OF 36.20 FEET TO A LINE THAT PASSES THROUGH THE POINT OF INTERSECTION OF THE EAST LINE OF LOT 23 OF SAID TRACT NO. 103 WITH THE SOUTH RIGHT OF WAY LINE OF THE CALIFORNIA STATE HIGHWAY AS DESCRIBED IN DEED RECORDED IN BOOK 1046, PAGE 292 OF OFFICIAL RECORDS, IN SAID COUNTY RECORDER; THENCE, ALONG SAID LINE, SHOWN AS "L158" ON SAID RECORD OF SURVEY, SOUTH 73°49'14" EAST 99.05 FEET TO THE EAST LINE OF SAID LOT 21; THENCE, ALONG SAID EAST LINE, SHOWN AS "L159" ON SAID RECORD OF SURVEY, NORTH 19°12'13" EAST 15.68 FEET TO THE NORTHERLY CORNER OF THE LAND DESCRIBED AS PARCEL DD102506-01-01 IN DIRECTOR'S DEED RECORDED JULY 27, 2018 AS INSTRUMENT NO. 2018000274958, IN THE OFFICE OF SAID COUNTY RECORDER AND THE BEGINNING OF A NON-TANGENT CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 617.08 FEET, A RADIAL LINE BEARS NORTH 14°39'41" EAST; THENCE, ALONG SAID CURVE IN A WESTERLY DIRECTION, THROUGH A CENTRAL ANGLE OF 09°11'35", AN ARC LENGTH OF 99.02 FEET TANGENT AT ITS ENDPOINT TO A LINE WHICH BEARS NORTH 84°31'54" WEST FROM THE TRUE POINT OF BEGINNING; THENCE, ALONG SAID LINE, NORTH 84°31'54" WEST 38.12 FEET TO THE TRUE POINT OF BEGINNING. DRAFT 61147.20021\32812677.5 EXHIBIT B EXHIBIT B TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) Scope of Development Developer to construct the project substantially in conformance with the El Camino Specific Plan project plans and specifications approved by the City Council on October 4, 2022. The project includes an approximately 27,457 square foot retail, restaurant, and office building, and an approximately 196 space, four-story parking structure with approximately 2,600 square feet of retail space. Approved Project Plans and Specifications are available at the City Clerk’s Office incorporated by reference. DRAFT 61147.20021\32812677.5 EXHIBIT C EXHIBIT C TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) Schedule of Performance Action Date Action to be Completed By 1. Effective Date See Section 1.3 2. Developer to open Escrow and, concurrently, deposit Earnest Money Deposit into Escrow Within 5 days following the Effective Date 3. Due Diligence Period commences The date of the Escrow Opening Date 4. N/A 5. Developer to deliver Developer’s Title Notice to Agency Within 30 days following date of the Escrow Opening Date 6. City to deliver City’s Title Notice Response to Developer, if appropriate Within 20 days following City’s Receipt of Developer’s Title Notice 7. Developer to deliver Developer’s Title Notice Waiver, if appropriate Within 10 days following Developer’s receipt of City’s Title Notice Response 8. Developer to deliver its Due Diligence Investigation Conclusion Notice On or before the end of the Due Diligence Period 9. Due Diligence Period ends On the 30th day following the Escrow Opening Date DRAFT 61147.20021\32812677.5 EXHIBIT C Action Date Action to be Completed By 15. Escrow Closing Date 10 business days after Escrow Holder’s receipt of confirmation from the City and the Developer of the satisfaction or waiver of all conditions precedent to the close of escrow or 30 days from end of due diligence period. Notwithstanding the foregoing, no later than 12/31/22. 16. Developer to commence construction of the Project; Developer to transmit Project Commencement Notice to City No later than the 3rd anniversary of the Close of Escrow 17. Developer to complete construction and installation of the Project (issuance of Certificate of Completion for the entire Project by the City) No later than the 5th anniversary of the Close of Escrow DRAFT 61147.20021\32812677.5 EXHIBIT D EXHIBIT D TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) Form of Grant Deed [Attached Behind This Page] DRAFT 61147.20021\32812677.5 EXHIBIT D RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: _____________ THE CITY OF SAN JUAN CAPISTRANO GRANT DEED PART ONE FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE CITY OF SAN JUAN CAPISTRANO, a California municipal corporation (“Grantor” or “City”), hereby grants to 26874 ORTEGA HIGHWAY LLC, a California limited liability company (“Grantee”), that certain real property located in the City of San Juan Capistrano, County of Orange, State of California, specifically described in Exhibit “A” attached to this Grant Deed (“Property”) and made a part of this Grant Deed by this reference. PART TWO The conveyance of the Property by the Grantor to the Grantee in Part One is subject to the following community development terms, conditions, covenants and restrictions: Section 1. Conveyance Subject to Terms of a Disposition and Development Agreement. The Property is conveyed subject to that certain 2022 Disposition and Development Agreement (Parking Lot Property), dated as of _______, 2022, between the Grantor and the Grantee (the “Agreement”). The provisions of the Agreement are incorporated into this Grant Deed by this reference and are deemed to be a part of this Grant Deed, as though fully set forth in this Grant Deed. Section 2. Condition of Property. The Grantee acknowledges and agrees that the Property is conveyed by the Grantor to the Grantee in its “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS CONDITION,” as of the date of recordation of this Grant Deed, with no warranties, expressed or implied, as to the environmental or other physical condition of the Property, the presence or absence of any patent or latent environmental or other physical condition on or in the Property, or any other matters affecting the Property, except as expressly set forth in the Agreement. Section 3. Obligation to Refrain from Discrimination. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: DRAFT 61147.20021\32812677.5 EXHIBIT D 3.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Grantee, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property. The covenant of this Section 3 shall run with the land of the Property and shall be enforceable against the Grantee and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement. 3.2 The covenant of this Section 3 shall run with the land of the Property in perpetuity, shall be enforceable against the Grantee and its successors and assigns, and shall be covenants set forth in the Grant Deed. Section 4. Form of Non-Discrimination and Non-Segregation Clauses. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 4.1 The Grantee, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants: (a) In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” (b) In leases: “The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.” (c) In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, DRAFT 61147.20021\32812677.5 EXHIBIT D creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. 4.2 The covenants of this Section 4 shall run with the land of the Property in perpetuity. Section 5. 5.1 Covenant to Maintain Property on Tax Rolls. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.1.1 The entire Property shall remain on the County secured real property tax rolls for twenty (20) years from the date of issuance of a Certificate of Completion for the Project. 5.1.2 The Developer shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment on each December 10 and April 10 during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. The Developer further covenants and agrees to provide to the City, on or before July 31 of each year, commencing in the calendar year following the calendar year in which a Certificate of Completion is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Developer and the County regarding the Property and all improvements thereon, with respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the Developer in payment of all property tax payments that are made to the County regarding the Property and all improvements thereon (or other reasonably acceptable evidence of such payment), with respect to the preceding County fiscal year. The covenants of this Section 5.1 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. 5.2 No Conveyance to Tax Exempt Entity. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.2.1 The Developer shall not use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property, the Project, or any portion of any of the foregoing to any entity or person, or for any use of the Property, the Project, or any portion of any of the foregoing, that is partially or wholly exempt from the payment of real or personal property taxes or that would cause the exemption of the payment of all or any portion of real or personal property taxes otherwise assessable regarding the Property, the Project, or DRAFT 61147.20021\32812677.5 EXHIBIT D any portion of any of the foregoing, without the prior written consent of the City, which may be withheld in the City’s sole and absolute discretion for a period of 20 years from the date of issuance of the certificate of completion for the Project by the City. 5.2.2 If the Property, or any portion of the Property, shall be conveyed, transferred or sold to any entity or person that is partially or wholly exempt from the payment of real or personal property taxes otherwise assessable against the Property, or any portion thereof, without the prior written consent of the City, then, at the City’s election and in addition to all other remedies available to the City under this Agreement or at law or in equity, the Developer shall pay to the City a fee in lieu of payment of such taxes each year in an amount determined by the City to be one percent (1%) of the “full cash value” of the Property, or portion thereof, as may be subject to such exemption from payment of real or personal property taxes. The City’s determination of “full cash value” for in-lieu payment purposes under this Section 5.2.2 shall be established by the City each year, if necessary, by reference to the real or personal property tax valuation principles and practices generally applicable to a county property tax assessor under Section 1 of Article XIIIA of the California Constitution. The City’s determination of “full cash value” and that an in-lieu payment is due shall be conclusive on such matters. If the City determines that an amount is payable as an in-lieu payment under this Section 5.2.2 in any tax year, then such amount shall be paid to the City for that tax year within forty-five (45) days following transmittal by the City to the Developer of an invoice for payment of the in-lieu amount. The covenants of this Section 5.2 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. 5.3 Maintenance Condition of the Property. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.3.1 The areas of the Property that are subject to public view (including all existing and future improvements, paving, walkways, landscaping, exterior signage and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described above (a “Maintenance Deficiency”), then the City shall notify the Developer in writing of the Maintenance Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance Deficiency, the City shall have the right to enter the Property and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be available to the City to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the City for the abatement of a Maintenance Deficiency on the Property pursuant to this Section 5.3.1 shall become a lien on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days after written demand for payment from the City to the Developer, the City shall have the right to enforce the lien in the manner provided in Section 5.3.4. DRAFT 61147.20021\32812677.5 EXHIBIT D 5.3.2 Graffiti, as this term is defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property, shall be removed by the Developer by either painting over the evidence of such vandalism with a paint that has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water, as appropriate. If any such graffiti is not removed within ninety-six (96) hours following the time of the discovery of the graffiti, the City shall have the right to enter the Property and remove the graffiti, without notice to the Developer. Any sum reasonably expended by the City for the removal of graffiti from the Property pursuant to this Section 5.3.2, shall be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after written demand to the Developer from the City, the City shall have the right to enforce its lien in the manner provided in Section 5.3.4. 5.3.3 The Parties further mutually understand and agree that the rights conferred upon the City under this Section 5.3 expressly include a grant by the Developer of a security interest in the Property with the power to establish and enforce a lien or other encumbrance against the Property or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the obligations of the Developer and it successors under Section 5.3.1, 5.3.2 or Section 5.3.3, including the reasonable attorneys’ fees and costs of the City associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney. 5.3.4 The provisions of this Section 5.3, shall be a covenant running with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. Nothing in the foregoing provisions of this Section 5.3 shall be deemed to preclude the Developer from making any alteration, addition, or other change to any structure or improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City. Section 8 Grantor Power of Termination Regarding the Property. 8.1 The Grantor hereby reserves a power of termination pursuant to Civil Code Sections 885.010, et seq., exercisable by the Grantor, in its sole and absolute discretion, upon thirty (30) calendar days written notice to the Grantee referencing this Section 8.1, to terminate the fee interest of the Grantee in the Property and/or any improvements to the Property and revest such fee title in the Grantor and take possession of all or any portion of such real property and improvements, without compensation to the Grantee, upon the occurrence of an Event of Default by the Grantee following the Close of Escrow and prior to the issuance of the Certificate of Completion for Property. 8.2 The thirty (30) calendar day written notice specified Section 8.1 shall specify the Event of Default by the Grantee triggering the Grantor’s exercise of its power of termination. The Grantor shall proceed with its remedy set forth in Section 8.1 only if the Grantee continues in default for a period of sixty (60) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion. DRAFT 61147.20021\32812677.5 EXHIBIT D 8.3 The rights of the Grantor under this Section 8 shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit: (1) Each Lien recorded against the Property and specifically authorized by this Agreement as a Permitted Transfer; (2) Any leases, declarations of covenants, conditions and restrictions, easement agreements or other recorded documents or interests applicable to the Property and specifically authorized by this Agreement as a Permitted Transfer. 8.4 Upon the Grantor’s exercise of its power of termination pursuant to this Section 8, the Grantee or its successors or assigns shall convey by grant deed to the Grantor title to the Property, as specified in the Grantor’s notice pursuant to Section 8.1, and all improvements thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by the Grantee and a notary in a manner suitable for recordation. The Grantor may enforce its rights pursuant to this Section 8.4 by means of an injunctive relief or forfeiture of title action filed in any court of competent jurisdiction. 8.5 Upon the revesting in the Grantor of the Property, whether by grant deed or court decree, the Grantor shall exercise its reasonable good faith efforts to resell the Property at its then fair market value, as soon and in such manner as the Grantor shall, in its sole discretion, find feasible and consistent with the objectives of the City’s General Plan, to a qualified and responsible person or persons (as reasonably determined by the Grantor) who will assume the Grantee’s obligations to begin and/or complete and/or operate the Project located on the Property, or such other replacement development acceptable to the Grantor, in its sole and absolute discretion. Upon any such resale of the Defaulted Portion of the Property (or any portion thereof), the proceeds to the Grantor from such sale shall be applied as follows: (1) First, to pay any and all amounts required to release/reconvey any Lien recorded against all or any portion of the Property; and (2) Second, to reimburse the Grantor on its own behalf or on behalf of the City for all actual internal and third-party costs and expenses previously or currently incurred by the Grantor, or the City related to the Property, the Project, or this Agreement, including, but not limited to, customary and reasonable fees or salaries to third-party personnel engaged in such actions, in connection with the recapture, management and resale of the Property or any part thereof; all taxes, assessments and utility charges paid by the City and/or the Grantor or authority with respect to the Property or portion thereof; any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred by the Grantee with respect to the acquisition of the Property or the construction of the Project and amounts DRAFT 61147.20021\32812677.5 EXHIBIT D otherwise owing to the Grantor or authority by the Grantee or its successors or assigns pursuant to the terms of this Agreement; and (3) Third, to the extent that any proceeds from such resale are, thereafter, available, taking into account any prior encumbrances with a claim thereto, to reimburse the Grantee, or its successors in interest to the equal to the sum of: (1) Purchase Price; and (2) the third-party costs actually incurred and paid by the Grantee regarding the development of the Project, including, but not limited to, pro rata costs of carry, taxes, and other items as set forth in a cost certification to be made by the Grantee to the Grantor prior to any such reimbursement, which certification shall be subject to the Grantor’s reasonable approval; provided, however, that the Grantee shall not be entitled to reimbursement for any expenses to the extent that such expenses relate to any loans, Liens or other encumbrances that are paid by the Grantor pursuant to the provisions of sub-sections (1) or (2) above. (4) Any portion of the proceeds from the resale of the Property remaining after the foregoing applications shall be retained by the Grantor as its sole and exclusive property. 8.6 IMMEDIATELY FOLLOWING THE THIRTY (30) DAY PERIOD SPECIFIED IN SECTION 8.1, ABOVE, THE GRANTOR, ITS EMPLOYEES AND AGENTS SHALL HAVE THE RIGHT TO REENTER AND TAKE POSSESSION OF THE PROPERTY AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR COMPENSATION TO THE GRANTEE. BY INITIALING BELOW, THE GRANTEE HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL RIGHTS THAT THE GRANTEE MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1162, AS THOSE STATUTES MAY BE AMENDED, REPLACED, RENUMBERED OR SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT. GRANTEE’S INITIALS ____________ 8.7 THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE GRANTOR’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY PURSUANT TO THIS SECTION 8.7 MAY WORK A FORFEITURE OF THE ESTATE IN THE PROPERTY CONVEYED TO THE GRANTEE THROUGH THE GRANT DEED. THE GRANTEE HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL EQUITABLE AND LEGAL DEFENSES THAT THE GRANTEE MAY HAVE TO SUCH FORFEITURE, INCLUDING, BUT NOT LIMITED TO, THE DEFENSES OF LACHES, WAIVER, ESTOPPEL, SUBSTANTIAL PERFORMANCE OR COMPENSABLE DAMAGES. THE GRANTEE FURTHER EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL RIGHTS AND DEFENSES THAT THE GRANTEE MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3275 OR ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT. THE GRANTEE ACKNOWLEDGES THAT THE TERMS AND CONDITIONS OF THE AGREEMENT REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTUE OF THE EXERCISE OF THE GRANTOR’S POWER OF TERMINATION PROVIDED IN THIS SECTION 8.7 AND DRAFT 61147.20021\32812677.5 EXHIBIT D FURTHER ACKNOWLEDGE THAT IT HAS RECEIVED INDEPENDENT AND ADEQUATE CONSIDERATION FOR ITS WAIVER AND RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO SECTION 8.6 AND THIS SECTION 8.7. GRANTEE’S INITIALS ____________ PART THREE Section 9. Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 9 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow. Section 10. Covenants Run with the Land of the Property. Each of the covenants and agreements contained in this Grant Deed touch and concern the Property and each of them is expressly declared to be a community development covenant that runs with the land for the benefit of the Grantor or the City of San Juan Capistrano, as the successor public agency to the Grantor, and such covenants run with the land in favor of the Grantor for the entire period that such covenants are in full force and effect, regardless of whether the Grantor is or remains an owner of any land or interest in land to which such covenants relate. The Grantor, in the event of any breach of any such covenants, has the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings, to enforce the curing of such breach, as provided in the Agreement or by law. The covenants contained in this Grant Deed are for the benefit of and are enforceable only by the Grantor or the City of San Juan Capistrano, as the successor public agency to the Grantor, and shall survive the execution and recordation of this Grantor Deed and the issuance and recordation of each and every Certificate of Completion, for the time period set forth above for each covenant. Section 11. Costs and Attorneys’ Fees for Enforcement Proceeding. If legal proceedings are initiated to enforce the rights, duties or obligations of any of the covenants set forth in this Grant Deed, then the prevailing party in such proceeding shall be entitled to collect its reasonable attorney fees and costs from the other party in addition to any other damages or relief obtained in such proceedings. Section 12. Effect of Unlawful Provision; Severability. In the event that any provision of this Grant Deed is held to be invalid or unlawful by a final judgment of a court of competent jurisdiction, such invalidity shall not affect the validity of any other provision of this Grant Deed. DRAFT 61147.20021\32812677.5 EXHIBIT D IN WITNESS WHEREOF, the Grantor has caused this Grant Deed to be executed by its authorized representative(s) on this ____ day of _____________, 2022. GRANTOR: THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation By: ___________________________ City Manager [ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED] DRAFT 61147.20021\32812677.5 EXHIBIT D EXHIBIT A TO GRANT DEED Property Legal Description The land situated in the City of San Juan Capistrano, County of Orange, State of California, described as follows: PARCEL 1: THAT PORTION OF LOT 20 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, LYING WESTERLY OF THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 23 OF SAID TRACT NO. 103. APN: A PORTION OF 124-160-57 PARCEL 2: LOT 23 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ANY PORTION OF SAID LOT 23 NOT INCLUDED IN THE DEED FROM ROSA RIOS TO MARIA BALBANEDO RUIZ, RECORDED SEPTEMBER 29, 1885 IN BOOK 146, PAGE 102 OF DEEDS, RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, WHICH DEED DESCRIBES THE FOLLOWING: BEGINNING AT THE NORTHWEST CORNER OF LOT 1 IN BLOCK 10 OF THE TOWN OF SAN JUAN CAPISTRANO; THENCE SOUTH 10-1/2 DEGREES EAST TO A STAKE, A DISTANCE OF 51 FEET; THENCE SOUTH 7-1/2 DEGREES WEST, 31 FEET TO THE CORNER OF RIVERINS LAND; THENCE SOUTH 82 DEGREES EAST, 125 FEET TO A STAKE; THENCE NORTHERLY TO THE SOUTH LINE OF OLIVE STREET, A DISTANCE OF 79 FEET; THENCE NORTH 81 DEGREES WEST ALONG THE SOUTH BOUNDARY OF OLIVE STREET, 145 FEET TO THE POINT OF BEGINNING, BEING THE WEST ONE-HALF OF SAID LOT 1; REFERENCE BEING HEREBY MADE TO THE OFFICIAL PLAT OF SAID TOWN ON FILE IN THE RECORDER'S OFFICE OF LOS ANGELES COUNTY, CALIFORNIA. ALSO EXCEPTING THEREFROM THAT PORTION OF SAID LAND DESCRIBED AS PARCEL 102505-1 IN FINAL ORDER OF CONDEMNATIONS RECORDED JULY 24, 2013 AS INSTRUMENT NO. 2013000442463 AND JULY 25, 2013 AS INSTRUMENT NO. 2013000445919, BOTH OF OFFICIAL RECORDS. APN: A PORTION OF 124-160-57 DRAFT 61147.20021\32812677.5 EXHIBIT D PARCEL 3: THAT PORTION OF LOT 20 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, LYING EASTERLY OF THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 23 OF SAID TRACT NO. 103. APN: A PORTION OF 124-160-57 PARCEL 4: LOT 21 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM, THAT PORTION THEREOF LYING WESTERLY OF THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 22 OF SAID TRACT NO. 103. ALSO EXCEPTING THEREFROM, THAT PORTION DESCRIBED IN DEED TO THE STATE OF CALIFORNIA RECORDED OCTOBER 2, 1956 IN BOOK 3662, PAGE 435 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. APN: A PORTION OF 124-160-57 PARCEL 5: LOT 3 IN BLOCK 10 OF SAN JUAN CAPISTRANO, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGES 120 AND 121 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, AND THE WEST ONE-HALF OF GARCIA STREET ADJOINING SAID LOT ON THE EAST, ABANDONED BY ORDER OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY NOVEMBER 16, 1920 IN BOOK 15, PAGE 304 OF MINUTE BOOKS. EXCEPTING THEREFROM THE SOUTHERLY 94.00 FEET THEREOF. APN: A PORTION OF 124-160-57 PARCEL 6: THAT PORTION OF LOT 21 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: DRAFT 61147.20021\32812677.5 EXHIBIT D BEGINNING AT THE SOUTHEASTERLY CORNER OF LOT 23 OF SAID TRACT; THENCE NORTH 8 DEGREES 11' 49" EAST ALONG THE EASTERLY LINE OF SAID LOT 23, A DISTANCE OF 28.88 FEET TO A CURVE CONCAVE NORTHERLY AND HAVING A RADIUS OF 1050.00 FEET; THENCE FROM A TANGENT BEARING SOUTH 88 DEGREES 50' 22" EAST, EASTERLY ALONG SAID CURVE, THROUGH AN ANGLE OF 1 DEGREE 57' 37", AN ARC DISTANCE OF 35.92 FEET TO A POINT IN THE WESTERLY PROLONGATION OF THE SOUTHERLY LINE OF THAT PARCEL OF LAND CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED OCTOBER 2, 1956 IN BOOK3662, PAGE 435 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER, DISTANT ALONG SAID WESTERLY PROLONGATION, WESTERLY 6.49 FEET FROM THE SOUTHERLY PROLONGATION OF THE EASTERLY LINE OF LOT 22 OF SAID TRACT; THENCE EASTERLY ALONG SAID WESTERLY PROLONGATION, 6.49 FEET TO SAID SOUTHERLY PROLONGATION; THENCE SOUTHERLY ALONG SAID SOUTHERLY PROLONGATION, 32.42 FEET TO THE SOUTHERLY LINE OF SAID LOT 21; THENCE WESTERLY ALONG SAID SOUTHERLY LINE, TO THE POINT OF BEGINNING. EXCEPTING THEREFROM ALL MINERALS, OILS, GASES AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, THAT MAY BE WITHIN OR UNDER SAID LAND WITHOUT, HOWEVER, THE RIGHT TO DRILL, DIG OR MINE THROUGH THE SURFACE THEREOF, AS EXCEPTED IN THE FROM THE STATE OF CALIFORNIA RECORDED APRIL 18, 1962 IN BOOK 6079, PAGE 258 OF OFFICIAL RECORDS. APN: A PORTION OF 124-160-57 PARCEL 11: THAT PORTION OF SAID LAND CONVEYED TO THE STATE OF CALIFORNIA AS SET FORTH AND DESCRIBED IN THAT CERTAIN DOCUMENT RECORDED JULY 24, 2013, AS INSTRUMENT NO. 2013000442463 OF OFFICIAL RECORDS, DESCRIBED AS FOLLOWS: PARCEL 102505-1 FOR STATE HIGHWAY PURPOSES, ALL OF THAT REAL PROPERTY DESCRIBED AS FOLLOWS: COMMENCING AT THE INTERSECTION OF THE CENTERLINE OF EL CAMINO REAL (NORTH), 56’ WIDE, AND THE CENTERLINE OF THE CITY STREET CALLED ORTEGA HIGHWAY, ESTABLISHED PER R621, BEING THE INTERSECTION OF LINE “L102” WITH LINE “L115” SHOWN ON SHEET 3 OF R621; THENCE ALONG SAID “L102” AND ORTEGA HIGHWAY CENTERLINE, (1) S84°43’58”E 82.64’;THENCE AT RIGHT ANGLES TO LAST SAID CENTERLINE, (2) S05°16’02”W 40.00’; TO THE TRUE POINT OF BEGINNING IN LINE “L156” SHOWN ON SHEET 3 OF R621, BEING IN THE SOUTHERLY BOUNDARY OF SAID ORTEGA DRAFT 61147.20021\32812677.5 EXHIBIT D HIGHWAY ESTABLISHED PER R621, FROM SAID BEGINNING POINT THE EASTERLY TERMINUS OF “L156” BEARS S84°43’58”E 7.12’; THENCE LEAVING SAID ORTEGA HIGHWAY BOUNDARY, (3) S06°01’44” W 1.18’; THENCE, (4) S84°16’08” E 82.59’, TO A POINT IN LINE “L157” SHOWN ON SHEET 3 OF R621, BEING IN SAID ORTEGA HIGHWAY BOUNDARY, FROM LAST SAID POINT THE NORTHERLY TERMINUS OF “L157” BEARS N08°15’33” E 4.61’; THENCE ALONG SAID ORTEGA HIGHWAY BOUNDARY, (5) N08°15’33” E 4.61’; TO A POINT IN NONTANGENT CURVE OF RADIUS OF 1039.96’, CONCAVE NORTHERLY, A RADIAL LINE TO LAST SAID POINT BEARS S01°05’36” W; THENCE WESTERLY ALONG SAID CURVE, (6) AN ARC LENGTH OF 75.76’, THROUGH A CENTRAL ANGLE OF 04°10’26”; THENCE LEAVING LAST SAID CURVE ALONG A TANGENT LINE, (7) N84°43’58” W 7.12’, TO THE TRUE POINT OF BEGINNING. EXCEPTING THE PORTION THEREOF, IF ANY, SITUATED WITHIN ORTEGA HIGHWAY PORTION OF APN: 124-160-56 PARCEL 12: THAT PORTION OF LOT 21 OF TRACT NO. 103, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 11, PAGES 29 THROUGH 33, INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF EASTERLY LINE OF EL CAMINO REAL SOUTH, 25.00 FEET HALF WIDTH AND THE SOUTHERLY LINE OF ORTEGA HIGHWAY 40.00 FEET HALF WIDTH AS SHOWN ON RECORD OF SURVEY NO. 2009-1078, AS FILED IN BOOK 246, PAGES 32 TO 43, INCLUSIVE, OF RECORD OF SURVEYS, IN SAID COUNTY RECORDERS OFFICE; THENCE, ALONG THE SOUTHERLY LINE OF SAID ORTEGA HIGHWAY SOUTH 84°43'58" EAST 55.49 FEET, SHOWN AS "L156" ON SAID RECORD OF SURVEY, TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS 1040.00 FEET; THENCE, ALONG SAID CURVE IN A SOUTHEASTERLY DIRECTION, THROUGH A CENTRAL ANGLE OF 04°10'26" AN ARC LENGTH OF 75.76 FEET, SHOWN AS "C116" ON SAID RECORD OF SURVEY, TO THE WESTERLY OF SAID LOT 21, SHOWN AS "L157" ON SAID RECORD OF SURVEY; THENCE, ALONG SAID WESTERLY LINE, SOUTH 08°15'33" WEST 1.98 FEET TO THE TRUE POINT OF BEGINNING; DRAFT 61147.20021\32812677.5 EXHIBIT D THENCE, CONTINUING ALONG SAID WESTERLY LINE, SOUTH 08°15'33" WEST 8.10 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1050.00 FEET, A RADIAL LINE BEARS SOUTH 01°09'43" WEST, SHOWN ON AS "C117" ON SAID RECORD OF SURVEY; THENCE, ALONG SAID CURVE IN A SOUTHEASTERLY DIRECTION THROUGH A CENTRAL ANGLE OF 01°58'32" AN ARC LENGTH OF 36.20 FEET TO A LINE THAT PASSES THROUGH THE POINT OF INTERSECTION OF THE EAST LINE OF LOT 23 OF SAID TRACT NO. 103 WITH THE SOUTH RIGHT OF WAY LINE OF THE CALIFORNIA STATE HIGHWAY AS DESCRIBED IN DEED RECORDED IN BOOK 1046, PAGE 292 OF OFFICIAL RECORDS, IN SAID COUNTY RECORDER; THENCE, ALONG SAID LINE, SHOWN AS "L158" ON SAID RECORD OF SURVEY, SOUTH 73°49'14" EAST 99.05 FEET TO THE EAST LINE OF SAID LOT 21; THENCE, ALONG SAID EAST LINE, SHOWN AS "L159" ON SAID RECORD OF SURVEY, NORTH 19°12'13" EAST 15.68 FEET TO THE NORTHERLY CORNER OF THE LAND DESCRIBED AS PARCEL DD102506-01-01 IN DIRECTOR'S DEED RECORDED JULY 27, 2018 AS INSTRUMENT NO. 2018000274958, IN THE OFFICE OF SAID COUNTY RECORDER AND THE BEGINNING OF A NON-TANGENT CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 617.08 FEET, A RADIAL LINE BEARS NORTH 14°39'41" EAST; THENCE, ALONG SAID CURVE IN A WESTERLY DIRECTION, THROUGH A CENTRAL ANGLE OF 09°11'35", AN ARC LENGTH OF 99.02 FEET TANGENT AT ITS ENDPOINT TO A LINE WHICH BEARS NORTH 84°31'54" WEST FROM THE TRUE POINT OF BEGINNING; THENCE, ALONG SAID LINE, NORTH 84°31'54" WEST 38.12 FEET TO THE TRUE POINT OF BEGINNING. DRAFT 61147.20021\32812677.5 EXHIBIT D CERTIFICATE OF ACCEPTANCE OF GRANT DEED The undersigned hereby acknowledges acceptance by 26874 Ortega Highway, LLC, a California limited liability company, the Grantee in the within Grant Deed, of the delivery of the subject Property described in the within Grant Deed from the City of San Juan Capistrano. GRANTEE: 26874 Ortega Highway LLC, a California limited liability company Dated: _____________________ By: _________________________ Dan M. Almquist, Manager [ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED] DRAFT 61147.20021\32812677.5 EXHIBIT E EXHIBIT E TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) Form of Notice of Agreement [Attached Behind This Page] DRAFT 61147.20021\32812677.5 EXHIBIT E RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: The City of San Juan Capistrano 32400 Paseo Adelanto. San Juan Capistrano, California 92675 Attn: City Manager Exempt from Recording fee pursuant to Gov’t Code § 27383 NOTICE OF AGREEMENT 2022 Disposition and Development Agreement (Parking Lot Property) TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that 26874 Ortega Highway, LLC, a California limited liability company (the “Developer”) and the City of San Juan Capistrano, a California municipal corporation (the “City”) entered into an agreement entitled 2022 Disposition and Development Agreement (Parking Lot Property) dated as of ______, 2022 (the “Agreement”). A copy of the Agreement is on file with the City and is available for inspection and copying by interested persons as a public record of the City at the City’s offices located at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, during the City’s regular business hours. The Agreement affects the real property described in Exhibit A attached to this Notice of Agreement (the “Property”). The meaning of defined terms, indicated by initial capitalization, used in this Notice of Agreement shall be the same as the meaning ascribed to such terms in the Agreement. PLEASE TAKE FURTHER NOTICE that the Agreement contains certain development covenants running with the land of the Property and other agreements between the Developer and the City affecting the Property, as set forth below (all section references are to the Agreement): Section 4.1 of the Agreement provides: 4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The DRAFT 61147.20021\32812677.5 EXHIBIT E covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow. Section 5.1 of the Agreement provides: 5.1 Covenant to Maintain Property on Tax Rolls. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.1.1 The entire Property shall remain on the County secured real property tax rolls for twenty (20) years from the date of issuance of a Certificate of Completion for the Project. the full term of this Agreement. 5.1.2 The Developer shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment on each December 10 and April 10 during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. The Developer further covenants and agrees to provide to the City, on or before July 31 of each year, commencing in the calendar year following the calendar year in which a Certificate of Completion is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Developer and the County regarding the Property and all improvements thereon, with respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the Developer in payment of all property tax payments that are made to the County regarding the Property and all improvements thereon (or other reasonably acceptable evidence of such payment), with respect to the preceding County fiscal year. 5.1.3 The covenants of this Section 5.1 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. Section 5.2 of the Agreement provides: 5.2 No Conveyance to Tax Exempt Entity. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.2.1 The Developer shall not use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property, the Project, or any portion of any of the foregoing to any entity or person, or for any use of the Property, the Project, or any portion of any of the foregoing, that is partially or wholly exempt from the payment of real or personal property taxes or that would cause the exemption of the payment of all or any portion of real or personal property taxes otherwise assessable regarding the Property, the Project, or any portion of any of the foregoing, without the prior written consent of the City, which may be withheld in the City’s sole and absolute discretion for a period of twenty (20) years from the date of issuance of the certificate of completion for the Project by the City. Section 5.3 of the Agreement provides: DRAFT 61147.20021\32812677.5 EXHIBIT E 5.3 Payment in Lieu of Sales Tax. 5.3.1 Developer and City anticipate that Developer shall be open for business and generating sales tax collected pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Revenue and Taxation Code Section 7200, et seq.) (“Sales Tax Law”) in the City by ____________. Developer has anticipated that Developer will generate approximately $____ per quarter in Sales Tax received by City (“City Sales Tax”). If Developer has not commenced generating sales tax received by the City by _____________, Developer, its successors or assigns shall pay to the City, in lieu of payment of such taxes, the City Sales Tax amount per quarter until such time as City is receiving sales tax from the Project. If the City determines that the City Sales Tax amount is payable by Developer to the City as an in-lieu payment pursuant to this Section in any quarter, then such amount shall be paid to the City for that quarter within fifteen (15) days following transmittal by the City to the Developer of an invoice for payment of the City Sales Tax in-lieu amount. 5.3.2 If Developer is not open for business and generating sales tax pursuant to the Sales Tax Law by _____________, Developer shall be in Default under this Agreement. 5.3.3 The covenants of this Section 5.3 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns. Section 5.4 of the Agreement provides: 5.4 Maintenance Condition of the Property. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.4.1 The areas of the Property that are subject to public view (including all existing and future improvements, paving, walkways, landscaping, exterior signage and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described above (a “Maintenance Deficiency”), then the City shall notify the Developer in writing of the Maintenance Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance Deficiency, the City shall have the right to enter the Property and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be available to the City to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the City for the abatement of a Maintenance Deficiency on the Property pursuant to this Section 5.4.1 shall become a lien on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days after written demand for payment from the City to the Developer, the City shall have the right to enforce the lien in the manner provided in Section 5.4.4. 5.4.2 Graffiti, as this term is defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property, shall be removed by the Developer by either painting over the evidence of such vandalism with a paint that has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents DRAFT 61147.20021\32812677.5 EXHIBIT E or water, as appropriate. If any such graffiti is not removed within ninety-six (96) hours following the time of the discovery of the graffiti, the City shall have the right to enter the Property and remove the graffiti, without notice to the Developer. Any sum reasonably expended by the City for the removal of graffiti from the Property pursuant to this Section 5.4.2, shall be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after written demand to the Developer from the City, the City shall have the right to enforce its lien in the manner provided in Section 5.4.4. The Parties further mutually understand and agree that the rights conferred upon the City under this Section 5.4 expressly include a grant by the Developer of a security interest in the Property with the power to establish and enforce a lien or other encumbrance against the Property or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the obligations of the Developer and it successors under Section 5.4.1, 5.4.2 or Section 5.4.3, including the reasonable attorneys’ fees and costs of the City associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney. 5.4.5 The provisions of this Section 5.4, shall be a covenant running with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. Nothing in the foregoing provisions of this Section 5.4 shall be deemed to preclude the Developer from making any alteration, addition, or other change to any structure or improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City. Section 5.5 of the Agreement provides: 5.5 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that: 5.5.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property. The covenant of this Section 5.5 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement. 5.5.2 The covenant of this Section 5.5 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. DRAFT 61147.20021\32812677.5 EXHIBIT E This NOTICE OF AGREEMENT is dated as of _________________, 2022, and has been executed on behalf of the Developer and the City by and through the signatures of their authorized representative(s) set forth below. This Notice of Agreement may be executed in counterparts and when fully executed each counterpart shall be deemed to be one original instrument. CITY: THE CITY OF SAN JUAN CAPISTRANO a California municipal corporation Dated: _________________, 2022 By: _______________________________ City Manager ATTEST: ____________________________ City Clerk APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER LLP By: _______________________ City Attorney DRAFT 61147.20021\32812677.5 EXHIBIT E DEVELOPER: 26874 ORTEGA HIGHWAY, LLC, a California limited liability company Dated: _____________________ By: _________________________ Dan Almquist, Manager [ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED] DRAFT 61147.20021\32812677.5 EXHIBIT E EXHIBIT A TO NOTICE OF AGREEMENT Legal Description of Property The land situated in the City of San Juan Capistrano, County of Orange, State of California, described as follows: [TO BE INSERTED]DRAFT 61147.20021\32812677.5 EXHIBIT F EXHIBIT F TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) Form of Official Action of Developer CERTIFICATION OF LLC AUTHORITY The undersigned members of 26874 Ortega Highway LLC, a California limited liability company (the “LLC”), do certify that we are all of the members of the LLC and that there are no other members. We further certify that any one (1) of the following named persons, individually: DAN M. ALMQUIST be, and they are, authorized and empowered for and on behalf of and in the name of the LLC to execute and deliver that certain 2022 Disposition and Development Agreement (Parking Lot Property) (), dated ______, 2022, between the City of San Juan Capistrano, a California municipal corporation, (“City”) and the LLC (the “Agreement”), to purchase certain real property located in the City of San Juan Capistrano, California, as specifically described in the Agreement, and all other documents to be executed by the LLC in connection with the transactions contemplated in the Agreement, and to take all actions that may be considered necessary to conclude the transactions contemplated in the Agreement and perform the other obligations of the LLC pursuant to the Agreement. The authority conferred shall be considered retroactive, and any and all acts authorized in this document that were performed before the execution of this Certificate are approved and ratified. The authority conferred shall continue in full force and effect until the City of San Juan Capistrano, a California municipal corporation shall have received notice in writing from the LLC of the revocation of this Certificate. We further certify that the activities covered by the foregoing certifications constitute duly authorized activities of the LLC; that these certifications are now in full force and effect; and that there is no provision in any document under which the LLC is organized and/or that governs the LLC’s continued existence, limiting the power of the undersigned to make the certifications set forth in this certificate, and that such certifications are in conformity with the provisions of all such documents. LLC Members: ____________________________ Dan M. Almquist DRAFT 61147.20021\32812677.5 EXHIBIT F ____________________________ Michael W. Burnett, Trustee ____________________________ Richard P. Kelter, Trustee ____________________________ Patrick Kent, Trustee DRAFT 61147.20021\32812677.5 EXHIBIT G EXHIBIT G TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Parking Lot Property) Form of Certificate of Completion [Attached Behind This Page]DRAFT 61147.20021\32812677.5 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: ________________________________ ________________________________ ________________________________ ________________________________ Attention: Exempt from Recording fee pursuant to Gov’t Code § 27383 CITY OF SAN JUAN CAPISTRANO CERTIFICATE OF COMPLETION (Parking Lot Property) I, Ben Siegel, City Manager of the City of San Juan Capistrano (the “City”) certify that: Section 1. The Project described as [______________________] required to be constructed in accordance with that certain 2022 Disposition and Development Agreement (Parking Lot Property), dated _______, 2022 (“DDA”), between the City and _____________, a California limited liability company (the “Developer”), on that certain real property specifically described in the legal description(s) attached to this Certificate of Completion as Exhibit A (the “Property”), is complete in accordance with the provisions of the Agreement. This Certificate of Completion constitutes conclusive evidence of the City’s determination of the Developer’s satisfaction of its obligation under the Agreement to construct and install the Project on the Property, including any and all buildings, parking areas, landscaping areas and related improvements necessary to support or meet any requirements applicable to the Project and its use and occupancy on the Project, whether or not such improvements are located on or off the Property or on other property subject to the Agreement. Notwithstanding any provision of this Certificate of Completion, the City may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the Agreement and the Grant Deed by which the Property was conveyed to the Developer by the City under the Agreement. The Agreement is an official record of the City and a copy of the Agreement may be inspected at the City’s office located at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, during the City’s regular business hours. DATED AND ISSUED this _____ day of ______________, _____. THE CITY OF SAN JUAN CAPISTRANO DRAFT 61147.20021\32812677.5 a California municipal corporation By: ___________________________ City Manager DRAFT 61147.20021\32812677.5 EXHIBIT A TO CERTIFICATE OF COMPLETION Legal Description of the Property The land situated in the City of San Juan Capistrano, County of Orange, State of California, described as follows: TO BE INSERTED DRAFT 61147.20021\32812677.5 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF ________________ ) On ________________, before me, , 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 ______________________________ (Seal) DRAFT