**Exhibit 10.35**

 

**AGREEMENT CONTAINING COVENANTSAFFECTING REAL PROPERTY**

 

| RECORDING  REQUESTED BY  AND WHEN RECORDED RETURN TO: |   | FREE  RECORDING REQUESTED  (Gov’t Code Section 6103) |
|-------------------------------------------------------|--------|----------------------------------------------------------------|

 

TheCommunity Redevelopment Agency ofthe City of Los Angeles, California

354South Spring Street, Suite 800

LosAngeles, California 90013

Attn:Director of Housing

 

WITHA COPY TO:

 

SFNo Ho, LLC

c/oFF Realty LLC

5510Morehouse Drive, Suite 200

SanDiego, California 92121Attn: Pat Gavin, Esq.

 

AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY

 

ThisAGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY (this “**Covenant Agreement**”) is made and entered into by and betweenthe COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES (the “**Agency**”) and SFNOHO, LLC, a California limited Liabilitycompany (the “**Owner**”) with reference to thefollowing:

 

A.       Ownerholds fee title to that certain real property described in the legaldescription attachedhereto as Exhibit A and incorporated herein by this reference, andshown on the Site Map attached hereto as Exhibit B and incorporated herein bythis reference (the “**Property**”).

 

B.        TheProperty is subject to the Redevelopment Plan for the North Hollywood RedevelopmentProject (the “**Redevelopment Project**”) approvedand adopted on February 21, 1979 by Ordinance No. 152030 of the CityCouncil of the City of Los Angeles, as amended to the Date of Agreement.

 

C.        ThisCovenant Agreement is made pursuant to that certain Owner ParticipationAgreement by and between the Agency and SL NO HO, LLC, a California limitedliability company.

 

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(“SLNo Ho”) dated March 5, 2002 as amended by that certain FirstImplementation Agreement to Owner Participation Agreement dated as of November 18,2002, that certain Second Implementation Agreement to Owner ParticipationAgreement dated as of December 12, 2003, and that certain PartialAssignment Of Owner Participation Agreement And Consent To Assignment dated December 18,2003 by and among the Agency, the Owner and SL No Ho (the “**OPA**”),which is a public record on file at the offices of the Agency. The Property isa portion of the real property referred to in the OPA as the “**Site**”. In the event of any conflict between the OPA and thisCovenant Agreement, the terms of the OPA shall prevail.

 

D.       Allcapitalized terms in this Covenant Agreement shall have the meaning ascribed tothem in the OPA, unless provided otherwise herein.

 

Agencyand Owner agree as follows:

 

I.              Owner hereby covenants and agrees on behalf ofitself and any successors and assigns in the Property or any portion thereof orany improvements thereon or any interest therein that Owner, such successorsand assigns shall comply with and be bound by the following covenants(hereinafter referred to as the “**Construction Covenants**”):

 

A.       Developand construct improvements on the Property solely in accordance with the RedevelopmentPlan, all applicable Grant Deeds, this Covenant Agreement, the OPA (includingbut not limited to the Scope of Development and the Concept Plan), and plansapproved by the City of Los Angeles.

 

II.             Owner hereby covenants and agrees on behalf ofitself and any successors and assigns in the Property or any portion thereof orany improvements thereon or any interest therein that Owner, such successorsand assigns shall comply with and be bound by the following covenants(hereinafter referred to as**the “**SurvivingCovenants**”):

 

A.       Devotethe Property, or cause the Property to be devoted, to uses solely in accordancewith the Redevelopment Plan, all applicable Grant Deeds, this CovenantAgreement, the OPA (including but not limited to the Scope of Development andthe Concept Plan), and plans approved by the City of Los Angeles.

 

B.        Pay whendue all real estate taxes, and the special taxes or assessments of any bondfinancing issued by the Agency or City in connection with the redevelopment ofthe Property, assessed and levied on the Property or any portion thereof or anyimprovements thereon or any interest therein and refrain from appealing, challengingor contesting in any manner the validity or

 

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amountof any ad valorem property tax assessment, encumbrance or lien, or the specialtax or lien of such bonds; provided, however, that Owner may appeal, challengeor contest (i) the initial assessment of the assessed value of theProperty following the issuance of the Release of Construction Covenants byAgency to the extent that such initial assessment is more than ten percent(10%) higher than the Project Cost approved by the Agency pursuant to the OPA;and (ii) any increase in assessment of the Property improperly assessedbecause of a purported change of ownership where no such change took place; and(iii) any assessment occurring by reason of a bona fide arms-length saleof the Property or any portion thereof to the extent such assessment results inan assessment in excess of the purchase price of such bona fide arms-lengthsale, provided, however, that no such appeal, challenge or contest results inan assessment which is lower than that existing prior to such sale.

 

C.        Notdiscriminate upon the basis of race, color, creed, religion, sex, sexualpreference/orientation, age, disability, medical condition, Acquired ImmuneDeficiency Syndrome (AIDS) acquired or perceived, retaliation for having fileda discrimination complaint, marital status, national origin or ancestry in thesale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of theProperty, or any improvements erected or to be erected thereon, or any partthereof.

 

D.       Pay when due the AgencyParticipation Payment in accordance with the provisions of the OPA.

 

E.        Complywith the Living Wage Ordinance of the City of Los Angeles to the fullest extentapplicable.

 

F.        Solelyat Owner’s expense, maintain and repair or cause to be maintained and repairedthe Property and all improvements thereon (including but not limited to landscaping,public art, lighting and signage), in a first quality condition, free ofdebris, waste and graffiti, and in compliance with the terms of the Redevelopment Plan, this Covenant Agreement, the City of Los Angeles MunicipalCode, and the following:

 

1.     All improvements on the Property shall bemaintained in good condition in accordance with the custom and practicegenerally applicable to comparable first quality office, residential, restaurant, retail and parking improvements, as applicable, in Los Angeles County, and inconformance and compliance with all plans, drawings and related documentsapproved by the Agency, all conditions of approval of land use entitlementsadopted by the City or the Planning Commission of the City of Los Angeles,including painting and cleaning of all exterior surfaces of all private improvements and public improvementsto the curb line.

 

2.     Owner shall assume responsibility for theoperation and maintenance (including repair, 

 

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restorationand reconstruction) of all of the improvements constructed on the Property andthe costs thereof, and Agency and the City shall have no liability for costs ofsuch operation and maintenance by Owner or for any claims arising from theoperation and maintenance (including repair, restoration and reconstruction) ofsuch improvements. Without limiting the generality of the foregoing, Owner, inthe maintenance of the improvements, shall observe the following standards:

 

a.     Maintainthe surface of all automobile and pedestrian areas level, smooth and evenlycovered with the type of surfacing materials originally installed thereon orsuch substitute thereof as shall be in all respects equal thereto or better inquality, appearance and durability;

 

b.     Maintainsuch appropriate entrance, exit and directional signs, markers and lights asshall be reasonably required and in accordance with the practices prevailing inthe operation of similar developments;

 

c.     Cleanlighting fixtures and relamp and/or reballast as needed;

 

c.     Repaint striping, markers, directional signs,etc., as necessary to maintain in first-class condition;

 

e.     Provide appropriate security personnel andsecurity measures. Owner shall seek the advice of the police department inplanning appropriate security measures;

 

f.      Maintain public right-of-way items between theProperty and the street in accordance with City law and policy;

 

g.     Maintain all surface and storm lateral drainage systems on the Property; and

 

h.     Maintain all sanitary sewer lateral connectionson or to the Property.

 

3.     Landscape maintenance shall include, withoutlimitation, watering/irrigation; fertilization; mowing; edging;trimming of grass; pruning, trimming and shaping of trees and shrubs tomaintain a natural and healthy appearance, road visibility, and irrigationcoverage; replacement, as needed, of all plant materials; control of weeds inall planters, shrubs, lawns, ground covers, or other planted areas; and stakingfor support of trees.

 

4.     All maintenance and clean-up procedures shallincorporate water and energy conservation measures, use of non-or low- VOCproducts, natural fertilizers, no- or low-toxic pest 

 

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control, recycling of green waste and other recyclable waste consistentwith the Waste Reduction and Recycling Program Plan.

 

5.     Prepare andimplement a Waste Reduction and Recycling Program Plan in substantialaccordance with the terms of the OPA for the design, demolition andconstruction of the improvements on the Property and for the management andoperation of all occupancies of the improvements on the Property. Facilitiesshall be provided and maintained to accommodate the physical requirements forthese outreach programs for all project occupants and employees to reduce theoutput of solid waste, including yard waste, through recycling and reduction ofwaste at the source.

 

6.     Provide forthe commissioning of all buildings and building systems during appropriatedesign stages and upon completion of construction of the improvements on theProperty and arrange for periodic monitoring of the operations of all buildingsand systems by the U.S. Green Building Council or similar organizationacceptable to the Agency, in substantial accordance with the terms of the OPA.The Developer agrees to report the rating certification, commissioning andmonitoring results to the Agency and the City.

 

7.     Prepare andimplement a coordinated Signage Plan, in accordance with the terms of the OPAand the Design for Development establishing sign design standards for allexterior identification, commercial, information and directional signage.

 

8.     Requirethat all mechanical and telecommunications equipment be enclosed withinbuildings, concealed from view or incorporated and treated as architecturalfeatures. All equipment shall serve the improvements on the Property only andshall be removed when no longer required for service.

 

9.     Clean-upmaintenance shall include, without limitation, maintenance of all sidewalks,paths and other paved areas in a clean and weed-free condition; maintenance ofall such areas clear of dirt, mud, trash, debris or other matter which isunsafe or unsightly; removal of all trash, litter and other debris fromimprovements and landscaping; clearance and cleaning of all areas so maintainedprior to the end of each day on which maintenance operations are performed toensure that all cuttings, weeds, leaves and other debris are properly disposedof by maintenance workers.

 

10.   If the Agency gives written notice to Owner that the maintenance orcondition of the Property or any portion thereof or any improvements thereondoes not comply with this Covenant Agreement and such notice describes thedeficiencies, Owner shall correct, remedy or cure the deficiency within thirty(30) days following the submission of such

 

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notice,unless the notice accurately states that the deficiency is an urgent matterrelating to public health and safety in which case Owner shall cure thedeficiency with all due diligence and shall complete the cure at the earliestpossible time. In the event Owner fails to maintain the Property or any portionthereof or any improvements thereon in accordance with this Covenant Agreementand fails to cure any deficiencies within the applicable period describedabove, the Agency shall have, in addition to any other rights and remedieshereunder, the right to maintain the Property and the improvements thereon, orportion thereof, or to contract for the correction of any deficiencies, and Owner shall beresponsible for payment of all such reasonable costs incurred by the Agency.

 

11.   Curate the public art on the Site according to guidelines provided in,and to further the goals of, the Agency’s “Public Art Policy”.

 

G.            Thereshall be no discrimination against or segregation of any person, or group ofpersons, on account of race, color, creed, religion, sex, sexualpreference/orientation, age, disability, medical condition, Acquired ImmuneDeficiency Syndrome (AIDS) acquired or perceived, retaliation for having fileda discrimination complaint, marital status, national origin or ancestry in thesale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of theProperty nor shall Owner itself or any person claiming under or through itestablish or permit any such practice or practices of discrimination orsegregation with reference to the selection, location, number, use or occupancyof tenants, lessees, subtenants, sublessee, or vendees of the Property.

 

H.            Ownershall refrain from restricting the rental, sale or lease of theProperty or improvements thereon, or any portion thereof, on the basis of race,color, creed, religion, sex, sexual preference/orientation, age, disability,medical condition, Acquired Immune Deficiency Syndrome (AIDS) acquired orperceived, retaliation for having filed a discrimination complaint, marital status,national origin or ancestry of any person. All deeds, leases or contracts forthe sale, lease, sublease, Transfer, use, occupancy, tenure or enjoyment of theProperty or improvements thereon, or any portion thereof shall contain or besubject to substantially the following nondiscrimination or nonsegregationclauses:

 

1.     In deeds:“The grantee herein covenants by and for itself, its heirs, executors,administrators, successors and assigns, and all persons claiming under or throughthem, that there shall be no discrimination against or segregation of, anyperson or group of persons on account of race, color, creed, religion, sex,sexual preference/orientation, age, disability, medicalcondition, Acquired Immune Deficiency Syndrome (AIDS) acquired or perceived,retaliation for having filed a discrimination complaint, marital status,national origin or ancestry in the sale, lease, sublease, transfer, use,occupancy, tenure or enjoyment of the land herein conveyed, nor shall the granteeitself or any person claiming under or through

 

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it,establish or permit any such practice or practices of discrimination orsegregation with reference to the selection, location, number, use or occupancyof tenants, lessees, subtenants, sublessee, or vendees in the land hereinconveyed. The foregoing covenants shall run with the land.”

 

2.     In leases:“The lessee herein covenants by and for itself, its heirs, executors,administers, successors and assigns, and all persons claiming under or throughthem, and this lease is made and accepted upon and subject to the followingconditions: That there shall be no discrimination against or segregation of anyperson or group of persons, on account of race, color, creed, religion, sex,sexual preference/orientation, age, disability, medical condition, AcquiredImmune Deficiency Syndrome (AIDS) acquired or perceived, retaliation for havingfiled a discrimination complaint, marital status, national origin or ancestryin the leasing. subleasing, renting, transferring, use, occupancy, tenure orenjoyment of the land herein leased, nor shall lessee itself, or any personclaiming under or through it, establish or permit such practice or practices ofdiscrimination or segregation with reference to the selection, location,number, use or occupancy of tenants, lessees, sublessee, subtenants, or vendeesin the land herein leased.”

 

3.     Incontracts: “There shall be no discrimination against or segregation of anyperson or group of persons on account of race, color, creed, religion, sex,sexual preference/orientation, age, disability, medical condition, AcquiredImmune Deficiency Syndrome (AIDS) acquired or perceived, retaliation for havingfiled a discrimination complaint, marital status, national origin or ancestryin the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment ofthe land or premises, nor shall the transferee itself or any person claimingunder or through it, establish or permit any such practice or practices ofdiscrimination or segregation with reference to the selection, location,number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendeesof the land or premises.”

 

I.              Provide the Hazardous Substance indemnity,waiver and release required by the OPA.

 

J.             Providethe general indemnity and insurance required by the OPA.

 

K.            Priorto the date that the Agency issues a Release of Construction Covenants for theProperty, the Owner shall not sell, convey, assign, lease or otherwise transferin any way any interest in said Property or any portion thereof or anyimprovements thereon, or permit any change to occur in the ownership of theOwner or its successors or assigns (collectively “Transfers”), except asexpressly permitted by terms of the OPA.

 

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III.           All obligations of the Owner under this Covenant Agreement (and all ofthe terms, covenants and conditions of this Covenant Agreement) shall bebinding upon the Owner, its successors and assigns and every successor ininterest of the Property or any portion thereof or any interest therein,jointly and severally, for the benefit and in favor of the Agency, its successorsand assigns, and the City of Los Angeles. All rights of the Owner under thisCovenant Agreement shall inure to the benefit of the Owner and its permittedsuccessors and assigns.

 

IV.           This Covenant Agreement shall not merge into any other agreementbetween Agency and Owner.

 

V.            Breachof any of the covenants, conditions, restrictions, or reservations contained inthis Covenant Agreement shall not defeat or render invalid the lien of anymortgage or deed of trust made in good faith and for value as to the Property,whether or not said mortgage or deed of trust is subordinated to this CovenantAgreement, but unless otherwise herein provided, the terms, conditions,covenants, restrictions and reservations of this Covenant Agreement shall be binding and effective against the holder ofsuch mortgage or deed of trust and any owner of the Property, or any partthereof whose title thereto is acquired by foreclosure, trustee’s sale, orotherwise.

 

VI.           The Construction Covenants shall remain in effect until the recording ofthe Release of Construction Covenants to be issued by the Agency with respectto all improvements to be constructed pursuant to the OPA. The covenantsagainst discrimination set forth in Sections II.C., II.G., and II.H.hereof shall remain in effect in perpetuity. All other covenants (“SurvivingCovenants”) shall remain in effect until a date which is forty (40) years afterthe date this Covenant Agreement is recorded, unless and until they expireearlier in accordance with the express terms thereof, except for the covenantset forth in Section II.D hereinabove to pay the Agency ParticipationPayment, which shall remain in effect for forty (40) years from the OperatingCommencement Date unless and until terminated in accordance with the Buyoutprovisions set forth in Section 605.4 of the OPA. Upon the issuance andrecordation of the Release of Construction Covenants by the Agency pursuant tothe OPA, Owner shall have the right to have this Covenant Agreement restatedand re-recorded with the deletion of the Construction Covenants, and the Agencyagrees to enter into documents as may be reasonably required, subject to theapproval of Agency legal counsel as to form, so as to effectuate the provisionsof this paragraph.

 

VII.          Upon written request, Agency shall execute, acknowledge and deliver anestoppel certificate upon which Owner and any Transferee or mortgagee of all ora portion of Owner’s interest in the Property can rely, stating whether Agencyhas knowledge of any default by Owner or any successor or assign under theterms of the OPA.

 

VIII.        If any provision of this Covenant Agreement is determined by a court ofcompetent jurisdiction to be illegal, invalid or enforceable, such provisionwill be deemed to be severed and deleted from the

 

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CovenantAgreement as a whole and neither such provision, nor its severance and deletionshall in any way affect the validity of the remaining provisions of thisCovenant Agreement.

 

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IN WITNESS WHEREOF, theAgency and Owner have caused this instrument to be executed on their behalf bytheir respective officers thereunto duly authorized.

 
|   | COMMUNITY REDEVELOPMENT  AGENCY                  |
|--------|--------------------------------------------------|
|   | OF THE CITY OF LOS  ANGELES (“Agency”) |
|   |                                             |
|   |                                             |
| Dated: | 12-19-03                                         |   | By: | /s/  Robert R. Ovrom |
|   |                                             | Robert  R. Ovrom |
|   |                                             |   |
|   | Its:                                             | Chief  Executive Officer |
|        |                                                  |  |  |  |

 

APPROVED AS TO FORM

Rockard J. Delgadillo,

City Attorney

 

 
| By:                         | /s/ Authorized  Signatory |   |
|-----------------------------|---------------------------|--------|
|                        | Agency General Counsel    |   |
|                        |                      |
|                        |                      |
| Goldfarb &  Lipman |                      |
|                        |                      |
| By:                         | /s/ Authorized  Signatory |   |
|                        | Agency Special Counsel    |   |

 

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|   | SF NO HO LLC, |
|--------|---------------|
| Dated: | 12/19/03      |   | a California limited  liability company (“Owner”) |
|   |          |
|   | By:           | California Housing Fund  LLC, |
|   |          | a Delaware limited  liability company |
|   | Its:          | authorized member |
|   |          |
|   |          |
|   |          | By: | FF California Housing  Fund LLC, |
|   |          |   | a Delaware limited  liability company |
|   |          | Its: | manager |
|   |          |   |
|   |          |   |
|   |          | By: | /s/ Patrick J. Gavin |
|   |          |   |   |
|   |          | Name: | Patrick J. Gavin |
|   |          |   |   |
|   |          | Title: | Vice President |
|        |               |  |  |  |  |  |

 

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THE COMMUNITYREDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

 

ALL PURPOSEACKNOWLEDGEMENT

 
| State of California   | }      |   |
|-----------------------|--------|--------|
| County of Los Angeles |   |

 
| On   | DECEMBER 19, 2003       |   | before me, | AMELIA  RODRIGUEZ, NOTARY PUBLIC |
|------|-------------------------|--------|------------|----------------------------------|
| DATE | NAME, TITLE OF  OFFICER |

 
| personally appeared | ROBERT  R. OVROM           |
|---------------------|----------------------------|
|                | NAME(S) OF  SIGNER(S) |

 

x personally known to me - OR -

 

o proved to me on the basis ofsatisfactory evidence to be the person(s) whose name(s) is/are subscribedto the within instrument and acknowledged to me that he executed the same inhis authorized capacity (ies), and that by his signature(s) on the instrumentthe person(s), or the entity upon behalf of which the person(s) acted,executed the instrument.

 

WITNESS my hand and official seal.

 

AMELIA RODRIGUEZ

Commission # 1446602

Notary Public - CaliforniaLos Angeles County

My Comm. Expires Oct 21, 2007

 
| /s/ Authorized  Signatory |   |
|---------------------------|--------|
| SIGNATURE OF NOTARY       |   |

 

 
| Title of Type of Document             | AGREEMENT CONTAINING COVENANTS AFFECTING REAL  PROPERTY |
|---------------------------------------|---------------------------------------------------------|
| Number of Pages                       | 11+ATTACHMENTS                                          |  Date of Document |   |
| Signer(s) Other Than Named Above |                                                    |
|                                       |                                                         |  |  |  |

 
| RM-7 | Remember to  attach form to actual document | 11/92 |
|------|---------------------------------------------|-------|

 

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**CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT**

 
| STATE OF CALIFORNIA   | )                                        |
|-----------------------|------------------------------------------|
|                  | )      ss. |
| COUNTY OF LOS ANGELES | )                                        |

 
| On   | December 19,  2003 | ,      | before me,                             | Renee Lindsey, Notary Public |
|------|-------------------------|--------|----------------------------------------|------------------------------|
| Date |                    |   | Name And Title  Of Officer [ILLEGIBLE] |

 
| personally appeared | Patrick  J. Gavin  |
|---------------------|--------------------|
|                | Name of  Signer(s) |

 

o personally known to me – **OR** – 

 

x proved to me on the basis ofsatisfactory evidence to be the person whosename is subscribed to the withininstrument and acknowledged to me that heexecuted the same in his authorized capacity, and thatby his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

 

 
| WITNESS my hand and official seal. |   |
|------------------------------------|--------|
|                               |   |
| /s/ Renee  Lindsey                 |   |
| Signature of Notary Public         |   |

 

**OPTIONAL**

 

Though the data below is not required by law, it mayprove valuable to persons relying on the document and could prevent fraudulentreattachment of this form.

 
| **CAPACITY CLAIMED BY SIGNER** | **DESCRIPTION OF****ATTACHED DOCUMENT** |
|--------------------------------|-----------------------------------------|
| ** **                     | ** **                              |
| o                              | Individual                              |   |
| o                              | Corporate Officer                       |   |
|                           |                                    |   |   |
| Title(s)                       | Title or Type of  Document              |
|                           |                                    |
| o                              | Partner(s)                              | o | Limited |   |
|                           |                                    | o | General |   |
| o                              | Attorney-In-Fact                        | Number Of Pages |
| o                              | Trustee(s)                              |   |
| o                              | Guardian/Conservator                    |   |
| o                              | Other:                                  |   |   |   |
|                           | Date Of Document                        |
|                                |                                         |  |  |  |  |  |  |

 
| Signer is representing:                |   |
|----------------------------------------|--------|
| Name Of  Person(s) Or Entity(ies) |   |
|                                   |   |   |
|                                   |   | Signer(s) Other  Than Named Above |

 

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