Exhibit 10.34


 


THIRD
IMPLEMENTATION AGREEMENT


 


TO


 


OWNER
PARTICIPATION AGREEMENT


 


by and between


 


THE COMMUNITY REDEVELOPMENT AGENCY


 


OF THE CITY OF LOS ANGELES


 


and


 


SL NO HO, LLC


 


North Hollywood Redevelopment Project


 

















 


THIRD
IMPLEMENTATION AGREEMENT


 


This THIRD IMPLEMENTATION AGREEMENT TO OWNER PARTICIPATION AGREEMENT
(this “Third Implementation Agreement”) is entered into as of October 1,
2004 by and between THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS
ANGELES, a public body, corporate and politic (the “Agency”), and SL NO HO,
LLC, a California limited liability company (the “Developer”). The Agency and
the Developer are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”


 


RECITALS


 


The following Recitals are a substantive part of this Third
Implementation Agreement. Unless otherwise defined herein, capitalized terms in
this Third Implementation Agreement shall have the meaning given to them in the
OPA, as hereinafter defined in Recital A.


 


A.       The Agency and Developer
entered into that certain Owner Participation Agreement dated as of March 5,
2002, as amended by that certain First Implementation Agreement to Owner
Participation Agreement dated as of November 18, 2002 and by that certain
Second Implementation Agreement to Owner Participation Agreement dated as of December 12,
2004 and that certain Partial Assignment and Consent to Assignment dated December 21,
2003 by and among SL NoHo, LLC, SF No Ho, LLC, and the Agency (the “OPA”).


 


B.        Pursuant to the OPA, the
Developer is obligated to design, finance and develop the Project on the Site.


 


C.        Through this Third
Implementation Agreement, the Developer and the Agency intend to amend the
provisions relating to the Acquisition Funds and the Developer Advance.


 


D.        The parties are entering
into this Third Implementation Agreement for good and valuable consideration,
the receipt of which is hereby acknowledged.


 


NOW, THEREFORE, the Agency and the Developer agree that the OPA shall
be amended as follows:


 


AGREEMENT


 


1.         Subarea C
Improvements. A second paragraph shall be added to Section 103.1 (c) Subarea
C Improvements to read as follows:


 


1

















 


“The Parties recognize that the current design of the proposed Subarea
C improvements may not use the available public space efficiently and may not
provide optimum pedestrian circulation throughout Subarea C. In recognition of
the potential benefits to the Project, the Agency and the Developer shall
consider in good faith a redesign to the Subarea C improvements to allow for a
change in density and uses to address issues relating to the operation of the
Academy of Arts and Science Complex and to better address pedestrian access
through Academy Plaza to Lankershim Boulevard. In addition, the redesign may
include proposed sites mutually acceptable to the Parties for the relocation of
community.clinic. Nothing in this Section 103.1(c) shall obligate the
Developer to make any redesign of Subarea C or the Agency to approve any
redesign or change in use of Subarea C.”


 


2.         Acquisition Funds.
Section 402.1.2 Agency Bond Funds shall be deleted and replaced with the
following:


 


“Agency Funds. Subject to all the terms and conditions of this
Agreement, and within the time set forth in the Schedule of Performance, the
Agency shall provide as Acquisition Funds the following amounts: Ten Million
Eighty Eight Thousand Five Hundred Ninety Seven Dollars ($10,088,597) from
Agency funds; Three Million Eight Hundred Thirty Two Thousand Three Hundred
Fifty Eight Dollars ($3,832,358) from proceeds received by the Agency from the
Developer for the purchase of Subarea A; Four Hundred Forty Thousand Five
Hundred Dollars ($440,500) in Economic Development Initiative grant funds from
the HUD Loan; and any additional Economic Development Initiative grant funds
released to the Agency from the interest reserve fund held by the City as part
of the HUD Loan pursuant to the terms of the HUD Loan documents.


 


3.         Original Letter of
Credit. Section 402.6.1 Original Letter of Credit, as amended by the
Second Implementation Agreement, shall be deleted and replaced with the
following:


 


“Section 402.6.1 Original Letter of Credit. Pursuant to Section 402.6,
the Developer has agreed to advance to the Agency the necessary funds, over and
above the Acquisition Funds, to pay the Agency’s Acquisition Costs plus the
Agency’s costs of complying with the Relocation Laws. To partially secure the
Developer’s obligation to advance funds to the Agency, the Developer shall
provide the Original Letter of Credit to the Agency. Provided the Agreement has
not theretofore been terminated pursuant to Section 1003, the Developer
shall deliver to the Agency cash or an irrevocable at-sight, standby letter of
credit, first approved in writing by the Agency as to form, content and issuer,
in an amount determined in the second paragraph of this Section 402.6.1
and otherwise complying with the requirements of this Agreement (the “Original
Letter of Credit”).


 


The Original Letter of Credit shall consist of an amount estimated to
be


 


2

















 


the
difference between the amount of the projected Developer Advance and the
immediately available Acquisition Funds, as established by the Agency based on
budgets prepared by the Agency and reviewed by the Developer. The amount of the
Original Letter of Credit shall be in an amount equal Nine Million Forty Three
Thousand Four Hundred Sixty One Dollars ($9,043,461). The Purchase Price for
the parcels comprising Subarea A, Subarea B-l and B-2 and Subarea C is
calculated at Twelve Million Three Hundred Six Thousand Five Hundred Thirty
Nine Dollars ($12,306,539). The Developer paid a portion of the Purchase Price
to the Agency at the close of escrow for the purchase of the Subarea A Acquisition
Parcels in the amount of Three Million Eight Hundred Thirty Two Thousand Three
Hundred Fifty Eight Dollars ($3,832,358). In addition, concurrently with the
close of escrow for the Subarea A Acquisition Parcels, the Developer advanced
to the Agency as part of the Original Letter of Credit the amount of One
Million One Hundred Sixty Seven Thousand Six Hundred Forty Two Dollars
($1,167,642). The Developer shall also receive a credit in the amount of Five
Million Five Hundred Twenty Five Thousand Eight Hundred Nineteen Dollars
($5,525,819) as an advance under the Original Letter of Credit upon the
Developer’s assumption of the HUD Loan. The Five Million Five Hundred Twenty
Five Thousand Eight Hundred Nineteen Dollars ($5,525,819) represents the
difference between the Fourteen Million Dollars ($14,000,000), the amount of
the HUD Loan to be assumed by the Developer, and Eight Million Four Hundred
Seventy Four Thousand One Hundred Eighty One Dollars ($8,474,181) which is the
remaining amount of the Purchase Price to be paid by the Developer for both
Subarea B and Subarea C ($12,306,539 minus $3,832,358 paid at the close of
escrow at Subarea A). Notwithstanding the foregoing, in the event the Agency
fails to convey Subarea C to the Developer in accordance the terms of the OPA
through no fault of the Developer, the amount of the Purchase Price paid by the
Developer which is attributable to purchase of Subarea C shall be considered
part of the Original Letter of Credit and such amount shall be added to the
Pre-conveyance Termination Note delivered to the Developer by the Agency as of
the close of escrow for the conveyance of Subarea B to the Developer.


 


The balance of the Original Letter of Credit in the amount of Two
Million Three Hundred Fifty Thousand Dollars ($2,350,000) shall be provided in
two installments. The Developer shall advance funds to purchase the MTA Parcel
in the estimated amount of Three Hundred Thousand Five Hundred Dollars
($300,500). The Developer shall advance the funds for the purchase of the MTA
Parcel promptly following notice to the Developer by the Agency that the MTA is
ready to close escrow on the conveyance of the MTA Parcel. The balance of the
Original Letter of Credit in the amount of Two Million Forty Five Thousand
Dollars ($2,045,000) shall be provided by the Developer as of the earlier of (i) the
close of escrow for the conveyance of Subarea C to the Developer and (ii) April 1,
2005, subject to any events of enforced delay as specified in Section 1105
of this OPA or any written extension to be granted to the Developer in the
Agency’s sole discretion. Notwithstanding the amount of the Original Letter of
Credit provided


 


3

















 


to
the Agency by the Developer, the Developer shall be obligated to advance to the
Agency the necessary funds, over and above the Acquisition Funds, to pay the
Agency’s Acquisition Costs plus the Agency’s costs of complying with the
Relocation Laws.


 


The Parties acknowledge that costs attributable to acquisition of the
Project Site may exceed the sources of funds currently identified to pay for
such costs. The Agency and the Developer shall work together to attempt to
identify and obtain reasonable alternative funding sources for any excess costs
prior to requiring the Developer to provide funds in excess of the Original
Letter of Credit Amount of Nine Million Forty Three Thousand Four Hundred Sixty
One Dollars ($9,043,461). Notwithstanding the foregoing, the Parties agree that
in the event reasonable alternative funding sources cannot be identified and
obtained by the Agency, the Developer shall provide the required funds no later
than thirty (30) days following the Agency’s written request for such funds. In
the event the Developer provides funds in the excess of the Nine Million Forty
Three Thousand Four Hundred Sixty One Dollars ($9,043,461) Original Letter of
Credit amount, the Agency agrees to negotiate in good faith with the Developer
a mutually agreeable arrangement by which the Developer shall be reimbursed in
a commercially reasonable manner for the excess funds advanced. To the extent
funds are released to the Agency from the interest reserve account of the HUD
Loan prior to the close of escrow for the conveyance of Subarea C to the
Developer, the Developer’s obligation to pay Two Million Three Hundred Fifty
Thousand Dollars ($2,350,000) at the close of escrow for Subarea C shall be
reduced by the amount of interest reserve funds released to the Agency.”


 


4.         Special Developer
Advance of Costs. A new Section 402.6.3 Special Developer Advance of
Costs shall be added to read as follows:


 


“402.6.3 Special Developer Advance of Costs. Prior to the date
of the Third Implementation Agreement the Agency closed escrow on the purchase
of the LADOT Parcel. The close of escrow occurred prior to the Agency receipt
of funds from the HUD Loan. To enable the Agency to close escrow on the LADOT
Parcel, the Developer made a special advance of costs to the Agency in the
amount of Nine Hundred Fifty Eight Thousand Two Hundred Twelve Dollars and
Ninety Six Cents ($958,212.96). Upon the receipt of funds under the HUD Loan
and concurrently with the close of escrow for the conveyance of Subarea B-l and
Subarea B-2 to the Developer, the Agency shall repay the special Developer
advance in the amount of Nine Hundred Fifty Eight Thousand Two Hundred Twelve
Dollars and Ninety Six Cents ($958,212.96).”


 


5. Security for Developer Advance. Section 402.8 Security
for Developer Advance shall be amended by adding the following to the end of
the Section:


 


“Following the conveyance by the Agency of Subarea B-l and Subarea B-2
to the Developer, the Pre-Conveyance Termination Note given to the Developer


 


4

















 


by
the Agency shall be in the amount of Six Million Nine Hundred Ninety Three
Thousand Nine Hundred Sixty One Dollars ($6,993,961) and shall be secured by
the Pre-Conveyance Deed of Trust recorded against the Acquisition Parcels owned
by the Agency in Subarea C. Notwithstanding the foregoing, the Pre-Conveyance Termination
Note shall provide that in the event the Developer fails to provide the balance
of the Original Letter of Credit in the amount of Two Million Three Hundred
Fifty Thousand Dollars ($2,350,000), when required pursuant to Section 402.6.1.
and the Agency does not convey Subarea C to the Developer, the Agency shall
receive the first Two Million Three Hundred Fifty Thousand Dollars ($2,350,000)
of sale proceeds (or such lesser amount if the Developer has advanced funds to
purchase the MTA Parcel) prior to making any payment to the Developer under the
Pre-Conveyance Note in the event of sale of the Acquisition Parcels encumbered
by the Pre-Conveyance Deed of Trust or in the event of a foreclosure under the
Pre-Conveyance Deed of Trust by the Developer, the principal amount of the
Pre-Conveyance Note shall automatically be reduced by Two Million Three Hundred
Fifty Thousand Dollars ($2,350,000) (or such lesser amount if the Developer has
advanced funds to purchase the MTA Parcel)”


 


6.         MTA Parcel. Section 406.1
MTA Parcel shall be deleted and replaced with the following:


 


“The Agency shall make every reasonable effort to negotiate, in
consultation with the Developer, an agreement with the MTA pursuant to which
the MTA will convey to the Developer the fee interest in the MTA Parcel or such
easements or interests in the MTA Parcel as are necessary or convenient to
allow the Developer to develop the Subarea B Improvements and reserving such
interests as the MTA requires for the operation and maintenance of the blast
relief vent located on the MTA Parcel. The Agency shall cause to be conducted
such appraisals of the MTA Parcel as are required by the MTA. The Developer
shall pay directly to the MTA the purchase amount for the fee interest in or
the easements on the MTA Parcel through an escrow opened by the Agency or MTA
for the purchase of such interests.”


 


7.         Conditions Precedent.
The following subsections of Section 506.1 Conditions Precedent and
Closing Obligations shall be amended and a new subsection 506.1 .(16) shall be
added, all relating solely to the conveyance by the Agency of Subarea B-l and
B-2 to the Developer. The original provisions Section 506.1 shall govern
the conditions for the conveyance of Subarea C to the Developer by the Agency.
The subsections of Section 506.1 which are not amended by this Third
Implementation Agreement shall continue to apply as preconditions to the
conveyance of Subarea B-l and B-2 to the Developer.


 


“1. The Developer shall have submitted and the Agency shall have
approved the Developer’s Evidence of Financing for the development of Subarea
B-2 prior to the conveyance of Subarea B-2 and the Developer shall submit and


 


5

















 


obtain
Agency approval of the Developer’s Evidence of Financing for the development of
Subarea B-l within sixty (60) days following the conveyance of Subarea B-l.


 


2. The Developer shall have obtained all required land use entitlements
and the City’s approval of construction and landscaping plans for the development
of Subarea B-2 prior to the conveyance of Subarea B-2 and shall have obtain all
required land use entitlements and the City’s approval of construction and
landscaping plans for the development of Subarea B-l within one hundred eighty
(180) days following the conveyance of Subarea B-l.


 


4. The Developer shall have obtained all City approvals required to
secure a grading and excavation permit for the development of the applicable
permit for the development of Subarea B-2 prior to the conveyance of Subarea
B-2 and shall obtain all City approvals required to secure a grading and
excavation permit for the development of the applicable permit for the
development of Subarea B-l within one hundred eighty (180) days following the
conveyance of Subarea B-l.


 


13. Prior to the conveyance of Subarea B-l and Subarea B-2, the
Developer shall have delivered to the Agency the Guaranty for the HUD Loan in
the amount of the Purchase Price and in a form reasonably acceptable to the
Agency and the City and shall have executed an assumption agreement in a form
reasonably acceptable to the Agency and the City pursuant to which the
Developer assumes the Agency obligations under the HUD Loan documents.


 


8.         Uses, Operation and
Maintenance. A new Section 801.1.15 and Section 801.1.16 shall be
added as follows:


 


“15. Cooperate in good faith with and support the formation and
operation of a Business Improvement District (“BID”) which includes Subareas
B-l, B-2, and C. The Developer’s financial obligation, if any, under the BID
shall be determined in accordance with engineer’s report and the adopted BID
plan.”


 


“16. The following job creation and reporting requirements shall apply:


 


(a)       Subject
to the assignment of the HUD Loan to the Developer by the Agency, the Developer
shall comply with the Job Creation requirements set forth in the Employment
Action Plan attached as Exhibit G. to the loan agreement
documenting the HUD Loan. The Developer shall make a good faith effort to meet
the goal of creating four hundred fifty two (452) full time equivalent jobs at
the Project. The new jobs shall be created within three (3) years
following the date that a certificate of occupancy or temporary certificate of
occupancy (whichever is earlier) is issued for the Subarea B-l Improvements.
The Developer shall report the newly created jobs to the City in accordance
with the requirements of the Employment Action Plan.


 


6
















 


(b)                     The Developer shall report the newly created jobs to the City until the
earlier of (i) the time that four hundred fifty two (452) full time
equivalent jobs have been created and reported and (ii) three (3) years
following the date that a certificate of occupancy or temporary certificate of
occupancy (whichever is earlier) is issued for the Subarea B-l Improvements
(the “Job Reporting Period”). The Developer’s job creation and reporting
requirements shall continue for the Job Reporting Period notwithstanding the
full repayment of the HUD Loan.


 


(c)                      In the event that at the expiration of the Job Reporting Period, the
City determines that the Developer has failed to make a good faith effort, as
defined in Section 7.3 of the loan agreement documenting the HUD Loan, to
create the full four hundred fifty two (452) full time equivalent jobs, the
Developer shall pay to the City the amount of Three Thousand Five Hundred
Dollars ($3,500) per full time equivalent job that the City reasonably
determines the Developer has failed to make a good faith effort to create. In
the event the City determines that the Developer has failed to make a good
faith effort to create the full four hundred fifty two (452) full time
equivalent jobs and prior to the imposition by the City of any required payment
by the Developer, the Developer may request that the City extend the job
reporting period for an additional two (2) year period. This payment
obligation shall survive prepayment of the HUD Loan.


 


9.                          Public-Private Feasibility Agreement: Section 1.B. A new Section I.B.3. of Attachment No. 8
Public-Private Feasibility Agreement is added to read as follows:


 


“3. As a special repayment provision for the funds provided to the
Agency by the Developer under the Original Letter of Credit pursuant to Section 402.6.1,
in the event the Agency has fully paid all Acquisition Costs and the costs of
complying with Relocation Laws and funds provided under the Original Letter of
Credit remain unspent, the Agency shall reimburse the unspent funds to the
Developer promptly upon the Agency’s determination that such funds are no
longer needed for Acquisition Costs or relocation costs. In addition, following
the assignment of the HUD loan pursuant to Section I.A. of the Attachment No. 8
Public-Private Feasibility Agreement, in the event the City has determined that
EDI funds remain in the City’s interest reserve account to be disbursed which
are not required for interest payments on the HUD Loan and the Agency has
determined that that such funds are no longer needed for Acquisition Costs or
relocation costs, the EDI funds, with the approval of the City, shall be used
to reimburse the Developer for funds provided under the Original Letter of
Credit pursuant to Section 402.6.1.


 


10.                    Public-Private Feasibility Agreement: Section I.D. Section I.D.8 of Attachment No. 8
Public-Private Feasibility Agreement is deleted and replaced with the
following:


 


“8. The Agency obligation pursuant to the Paragraph I.D. shall cease
for


 


7

















 


each
Subarea in any Operation Year in which the Annual Return Shortfall for the
Subarea equals zero, and in any event, shall cease as to Subarea A upon the
earlier to occur of (i) the Agency has made total payments across all
Subareas pursuant to the Paragraph I.D. in the amount of Five Million Dollars
($5,000,000) plus the total interest that has accrued pursuant to Paragraph
I.D.6, if any, and (ii) February, 2029, and shall cease as to Subareas
B-l, B-2 and C as of February, 2029.”


 


11.                    Currently Available Funds. Section III of Attachment No. 8
Public-Private Feasibility Agreement is deleted and replaced with the
following:


 


“III. Agency Resources. Subject to all the terms and conditions
of this Agreement, the Agency shall use the following amounts as Acquisition
Funds for the Agency’s acquisition of the Project Site: Ten Million Eighty
Eight Thousand Five Hundred Ninety Seven Dollars ($10,088,597) from Agency
funds; Three Million Eight Hundred Thirty Two Thousand Three Hundred Fifty
Eight Dollars ($3,832,358) from proceeds received by the Agency from the
Developer for the purchase of Subarea A; Four Hundred Forty Thousand Five
Hundred Dollars ($440,500) in Economic Development Initiative grant funds from
the HUD Loan and any additional Economic Development Initiative grant funds
released to the Agency from the interest reserve fund held by the City as part
of the HUD Loan pursuant to the terms of the HUD Loan documents. A sources and
uses for Project Site acquisition costs, current as of the date of the Third
Implementation Agreement, is attached as Exhibit A to the Third
Agreement for informational purposes.”


 


12.                    No Other Changes, Consistency. Notwithstanding any changes and deletions
contained herein, all other provisions of the OPA remain the same. In the event
of any conflict between the terms of the OPA and this Third Implementation
Agreement, the terms of this Third Implementation Agreement shall govern.


 


13.                    Effectiveness of Third Implementation
Agreement. This Third
Implementation Agreement is dated for convenience only and shall only become
effective on the date which is the latest of (i) the date this Third
Implementation Agreement is executed by the Developer, (ii) the date this
Third Implementation Agreement is approved and executed by the Agency and (iii) the
date this Third Implementation Agreement is approved by the City.


 


8

















 


IN WITNESS WHEREOF, the parties hereby have executed this Third
Implementation Agreement as of the Effective Date.


 


	
   

  	
  DEVELOPER:

  
	
   

  	
   

  
	
   

  	
  SL
  No Ho, LLC

  a California limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael E.
  Wise

  
	
   

  	
   

  	
  Michael
  E. Wise

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Authorized
  Member

  



 


 


	
   

  	
  AGENCY:

  
	
   

  	
   

  
	
   

  	
  THE
  COMMUNITY REDEVELOPMENT

  AGENCY OF THE CITY OF LOS ANGELES,

  CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Authorized
  Signatory

  
	
   

  	
   

  	
  Robert
  Ovrom

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chief
  Executive Officer

  



 


 


	
  APPROVED
  AS TO FORM:

  	
   

  
	
   

  	
   

  
	
  ROCKARD
  J. DELGADILLO

  	
   

  
	
  CITY
  ATTORNEY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  
	
   

  	
  Assistant/Deputy
  City Attorney

  	
   

  
	
   

  	
   

  
	
  APPROVED
  AS TO FORM:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  
	
   

  	
  Agency
  Special Counsel

  	
   

  



 


9

















 


EXHIBIT A


 


NoHo Commons

Source of Funds for Agency Land Acquisition/Relocation Activities


 


A.                      Funding from the Developer


 


	
  $

  	
  350,000

  	
   

  	
  Reimbursement
  for Agency Costs FY03 (Fund 5273)

  	
   

  
	
  $

  	
  3,832,358

  	
   

  	
  Subarea
  A Closing, Land Purchase (Fund 5273)

  	
   

  
	
  $

  	
  1,167,642

  	
   

  	
  Subarea
  A Closing, Developer Advance/Note (Fund 5273)

  	
   

  
	
  $

  	
  2,350,000

  	
   

  	
  Subarea
  C and MTA Closing, Developer Advance/Note (Fund 5273)

  	
   

  
	
  $

  	
  8,474,181

  	
   

  	
  Portion
  of 108 Loan Assumed by Developer for Land Purchase (Fund 2249)

  	
   

  
	
  $

  	
  5,525,819

  	
   

  	
  Portion
  of 108 Loan Assumed by Developer as Developer Advance/Note (Fund 2249)

  	
   

  
	
  $

  	
  21,700,000

  	
   

  	
  Subtotal Developer

  	
   

  



 


B.                        Funding From the Agency


 


	
  $

  	
  10,088,597

  	
   

  	
  NH
  Redevelopment Project Area Resources (Various Funds)

  	
   

  
	
  $

  	
  440,500

  	
   

  	
  EDI
  Grant (Fund 3802)

  	
   

  
	
  $

  	
  3,000,000

  	
   

  	
  CDBG
  Grant/Loan (Fund 2258)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  13,529,097

  	
   

  	
  Subtotal Agency

  	
   

  



 


C.                        Grand
Total of Funds Available for Land Acquisition/Relocation


 


	
  $

  	
  35,229,097