**Exhibit 10.31**

 

 

**OWNERPARTICIPATION AGREEMENT**

 

**by andbetween**

 

 

**THECOMMUNITY REDEVELOPMENT AGENCYOF THE CITY OF LOS ANGELES**

 

**“Agency”**

 

 

**and**

 

 

**SL NO HO,LLC**

 

**“Developer”**

 

 

**December,2001**

 

**NorthHollywood Redevelopment Project**

 

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**TABLE OFCONTENTS**

 
| RECITALS         |   |                                                          | 1  |
|------------------|--------|---------------------------------------------------------------|----|
| ARTICLE  1.      |   | SUBJECT  OF THE AGREEMENT                                     | 2  |
| Section 101 |   | PURPOSE  OF THE AGREEMENT                                     | 2  |
| Section 102 |   | THE  DEVELOPMENT SITE                                         | 3  |
| Section 103 |   | PROJECT  DESCRIPTION AND PHASING                              | 4  |
| §  103.1    |   | Project  Description                                          | 4  |
| §  103.2    |   | Project  Phasing                                              | 7  |
| Section 104 |   | THE  REDEVELOPMENT PLAN                                       | 8  |
| Section 105 |   | THE  PROJECT AREA                                             | 8  |
| Section 106 |   | PARTIES  TO THE AGREEMENT                                     | 9  |
| §  106.1    |   | The  Agency                                                   | 9  |
| §  106.2    |   | The  Developer                                                | 9  |
| Section 107 |   | PROHIBITION  AGAINST TRANSFERS OR CHANGES IN OWNERSHIP        | 9  |
| Section 108 |   | PAYMENT  OF COSTS AND GOOD FAITH DEPOSIT                      | 9  |
| §  108.1    |   | Developer  Payment of Agency Costs                            | 9  |
| §  108.2    |   | Good  Faith Deposit                                           | 10 |
| Section 109 |   | EVIDENCE  OF FINANCING                                        | 11 |
| §  109.1    |   | Reimbursement  of Agency’s Costs                         | 13 |
| ARTICLE  2.      |   | DEFINITIONS                                                   | 13 |
| ARTICLE  3.      |   | DESIGN  AND DEVELOPMENT                                       | 19 |
| Section 301 |   | SCOPE  OF DEVELOPMENT                                         | 19 |
| Section 302 |   | MITIGATION  MONITORING PROGRAM                                | 19 |
| Section 303 |   | DRAWINGS  AND PLANS                                           | 19 |
| §  303.1    |   | Concept  Plan                                                 | 20 |
| §  303.2    |   | Master  Plan                                                  | 20 |
| §  303.3    |   | Schematic  Design Drawings                                    | 20 |
| §  303.4    |   | Design  Development Drawings                                  | 21 |
| §  303.5    |   | Fifty  Percent Complete Construction Documents                | 21 |
| §  303.6    |   | Final  Construction Documents                                 | 21 |
| Section 304 |   | PHASING  OF DEVELOPMENT                                       | 21 |
| Section 305 |   | PERMITS  AND OTHER ENTITLEMENTS                               | 22 |
| Section 306 |   | AGENCY  APPROVAL OF PLANS, DRAWINGS, AND RELATED DOCUMENTS    | 22 |
| §  306.1    |   | Substantially  Consistent                                     | 22 |
| §  306.2    |   | Approval  Process                                             | 23 |
| §  306.3    |   | Changes  to Approved Plans                                    | 23 |
| §  306.4    |   | Governmental  Requirements                                    | 23 |
| §  306.5    |   | No  Reliance                                                  | 23 |
| Section 307 |   | AGENCY  APPROVAL OF ARCHITECT AND CONTRACTOR                  | 24 |
| Section 308 |   | ENVIRONMENTAL  REPRESENTATIONS AND COVENANTS                  | 24 |
| §  308.1    |   | Developer’s  Environmental Representations and Covenants | 24 |
| §  308.2    |   | Agency’s  Environmental Representations and Covenants    | 26 |
| Section 309 |   | DEMOLITION  AND CLEARANCE                                     | 26 |
| Section 310 |   | PUBLIC  IMPROVEMENTS                                          | 27 |
| §  310.1    |   | Dedication  of Property                                       | 27 |

 

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| §  310.2    |   | Construction  Bonds                                                           | 27 |
|------------------|--------|-------------------------------------------------------------------------------|----|
|             |   | §  310.2.1 Requirements                                                  | 27 |
|             |   | §  310.2.2 Schedule for Delivery                                         | 28 |
| Section 311 |   | INTENTIONALLY  OMITTED                                                        | 28 |
| Section 312 |   | COSTS  OF CONSTRUCTION                                                        | 28 |
| Section 313 |   | SCHEDULE  OF PERFORMANCE                                                      | 28 |
| Section 314 |   | PROJECT  DEVELOPMENT PROGRESS REPORTS                                         | 29 |
| Section 315 |   | AGENCY’S  RIGHTS OF ACCESS                                               | 29 |
| Section 316 |   | INDEMNIFICATION  AND INSURANCE                                                | 29 |
| §  316.1    |   | Developer’s  Indemnity                                                   | 29 |
| §  316.2    |   | Insurance  Requirements                                                       | 29 |
|             |   | §  316.2.1 Policy Requirements                                           | 30 |
|             |   | §  316.2.2 General                                                       | 30 |
| §  316.3    |   | Restoration                                                                   | 32 |
| §  316.4    |   | Rights  of Mortgagees                                                         | 33 |
| Section 317 |   | CONSTRUCTION  SIGNS                                                           | 33 |
| Section 318 |   | COMPLIANCE  WITH LAWS AND POLICIES; COMMUNITY BENEFITS PACKAGE                | 33 |
| §  318.1    |   | Non-Discrimination  During Construction: Equal Opportunity                    | 34 |
| §  318.2    |   | Employment  and Contracting Procedures                                        | 34 |
|             |   | §  318.2.1 Utilization of Minority and Women Businesses (M/WBE)          | 34 |
|             |   | §  318.2.2 Utilization of Project Area Residents                         | 35 |
|             |   | §  318.2.3 One Stop Employment Center                                    | 35 |
|             |   | §  318.2.4 Information and Documentation                                 | 36 |
| §  318.3    |   | Prevailing  Wages                                                             | 36 |
| §  318.4    |   | Public  Art Policy                                                            | 38 |
| §  318.5    |   | Living  Wage                                                                  | 38 |
| Section 319 |   | RELEASE  OF CONSTRUCTION COVENANTS (CERTIFICATE OF COMPLETION)                | 38 |
| ARTICLE  4.      |   | SITE  ASSEMBLY                                                                | 40 |
| Section 401 |   | DEVELOPER  PARCELS                                                            | 40 |
| §  401.1    |   | Obtaining  Title                                                              | 40 |
| §  401.2    |   | Condition  of Title                                                           | 40 |
| §  401.3    |   | Retention  and Development                                                    | 40 |
| §  401.4    |   | Relocation  Obligations                                                       | 41 |
|             |   | §  401.4.1 Indemnification for Relocation Claims                         | 41 |
| Section 402 |   | AGENCY  ACQUISITION OF PROPERTY                                               | 42 |
| §  402.1    |   | Acquisition  Funds                                                            | 42 |
|             |   | §  402.1.1 HUD Loan                                                      | 42 |
|             |   | §  402.1.2 Agency Bond Funds                                             | 43 |
|             |   | §  402.1.3 Community Development Block Grant Funds                       | 43 |
|             |   | §  402.1.4 Additional Public Funds                                       | 44 |
| §  402.2    |   | Acquisition  and Relocation Estimates                                         | 44 |
| §  402.3    |   | Appraisals  and Appraisal Advance                                             | 44 |
| §  402.4    |   | Environmental  Due Diligence                                                  | 44 |
| §  402.5    |   | Acquisition  and Relocation Budgets                                           | 44 |
| §  402.6    |   | Developer  Advance of Costs                                                   | 45 |
|             |   | §  402.6.1 Original Letter of Credit                                     | 45 |
|             |   | §  402.6.2 Cost Overruns                                                 | 45 |
| §  402.7    |   | Precondition  to Agency’s Right to Make Draws Under the Letter of Credit | 46 |

 

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| §  402.8    |   | Security  for Developer Advance                                                                  | 46 |
|------------------|--------|--------------------------------------------------------------------------------------------------|----|
| Section 403 |   | ACQUISITION  PARCELS                                                                             | 47 |
| §  403.1    |   | Developer’s  Efforts to Acquire                                                             | 47 |
| §  403.2    |   | Agency  Acquisition of Acquisition Parcels                                                       | 47 |
| §  403.3    |   | Agency  Offers to Purchase                                                                       | 47 |
| §  403.4    |   | Eminent  Domain Actions; Orders for Possession                                                   | 48 |
| §  403.5    |   | Settlement  of Eminent Domain Actions                                                            | 48 |
| Section 404 |   | SUBAREA  D PARCELS                                                                               | 48 |
| Section 405 |   | LADOT  PARCEL                                                                                    | 49 |
| Section 406 |   | MTA  PROPERTY                                                                                    | 49 |
| §  406.1    |   | MTA  Parcel                                                                                      | 49 |
| §  406.2    |   | MTA  Right of Way                                                                                | 49 |
| ARTICLE  5.      |   | CONVEYANCE  OF AGENCY ACQUIRED PROPERTY                                                          | 50 |
| Section 501 |   | AGREEMENT  TO SELL AND PURCHASE; REDEVELOPMENT PURPOSE                                           | 50 |
| Section 502 |   | PERMITTED  ENCUMBRANCES                                                                          | 50 |
| Section 503 |   | CONSIDERATION                                                                                    | 51 |
| §  503.1    |   | Agency  Parcels, Acquisition Parcels, the MTA Parcel, and the LADOT Parcel                       | 51 |
| Section 504 |   | CONVEYANCE  ESCROW                                                                               | 51 |
| Section 505 |   | CONDITION  OF TITLE AND TITLE INSURANCE                                                          | 53 |
| Section 506 |   | CONVEYANCE  OF TITLE AND DELIVERY OF POSSESSION                                                  | 54 |
| §  506.1    |   | Conditions  Precedent and Closing Obligations                                                    | 54 |
|             |   | §  506.1.1 Additional Condition Precedent to Conveyance of Any Portion of  Subareas A and B | 56 |
|             |   | §  506.1.2 Additional Condition Precedent to Conveyance of Any Portion of  Subareas B and C | 56 |
| §  506.2    |   | Conditions  Precedent to Developer’s Closing Obligations                                    | 56 |
| Section 507 |   | ORDERS  OF POSSESSION                                                                            | 57 |
| Section 508 |   | SUITABILITY  OF THE SITE                                                                         | 58 |
| §  508.1    |   | Zoning  of the Site                                                                              | 58 |
| Section 509 |   | REPRESENTATIONS  AND WARRANTIES AND INDEMNIFICATION                                              | 59 |
| Section 510 |   | PRELIMINARY  WORK BY DEVELOPER AND RIGHT OF ENTRY                                                | 60 |
| ARTICLE  6.      |   | PROJECT  FINANCING                                                                               | 60 |
| Section 601 |   | PROJECT  COSTS                                                                                   | 60 |
| §  601.1    |   | Project  Cost Budget                                                                             | 60 |
| §  601.2    |   | Definition  of Project Costs                                                                     | 61 |
| Section 602 |   | DEVELOPER’S  OBLIGATIONS                                                                    | 63 |
| Section 603 |   | AGENCY’S  OBLIGATIONS                                                                       | 63 |
| §  603.1    |   | Agency’s  Obligation Limited                                                                | 64 |
| Section 604 |   | AGENCY  ASSISTANCE IN OBTAINING OTHER FUNDING                                                    | 64 |
| §  604.1    |   | EDA  Grant                                                                                       | 64 |
| §  604.2    |   | EDI  Grant                                                                                       | 64 |
| Section 605 |   | AGENCY  PARTICIPATION rN PROJECT                                                                 | 64 |
| §  605.1    |   | Intent                                                                                           | 64 |
| §  605.2    |   | Form of  Participation                                                                      | 66 |
| §  605.3    |   | Effect  of Sale or Refinance                                                                     | 66 |
|             |   | §  605.3.1 Sale                                                                             | 66 |
|             |   | §  605.3.2 Refinance                                                                        | 67 |
| §  605.4    |   | Buyout  Provisions                                                                               | 67 |

 

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| ARTICLE  7.       |   | LIMITATIONS  ON TRANSFER AND ENCUMBRANCE                                   | 68 |
|-------------------|--------|----------------------------------------------------------------------------|----|
| Section 701  |   | RECOGNITION  OF REDEVELOPMENT PURPOSE                                      | 68 |
| Section 702  |   | CONDITIONS  FOR TRANSFER                                                   | 68 |
| §  702.1     |   | Agency  Approval; Documentation; Agency’s Cost to Review              | 68 |
| §  702.2     |   | Transferee’s  Assumption of Agreement                                 | 69 |
| §  702.3     |   | Transfers  Null and Void                                                   | 69 |
| §  702.4     |   | Intentionally  Omitted                                                     | 69 |
| §  702.5     |   | Security  Interests                                                        | 69 |
| §  702.6     |   | Leasing  of Space                                                          | 70 |
| §  702.7     |   | Sale  or Lease Following the Issuance of Release of Construction Covenants | 70 |
| Section 703  |   | NO  ENCUMBRANCES EXCEPT TO FINANCE DEVELOPMENT                             | 70 |
| §  703.1     |   | Advance  Notice to Agency; Agency Approval                                 | 70 |
| §  703.2     |   | Unapproved  Encumbrances                                                   | 71 |
| §  703.3     |   | Holder  Not Obligated to Construct; Holder’s Right to Cure            | 71 |
| §  703.4     |   | Holder’s  Failure to Complete Improvements                            | 71 |
| §  703.5     |   | Agency  Notice of Default; Agency’s Right to Cure                     | 72 |
| ARTICLE  8.       |   | CONTINUING  OBLIGATIONS                                                    | 72 |
| Section 801  |   | USE  OF THE SITE                                                           | 72 |
| §  801.1     |   | Uses,  Operation, And Maintenance                                          | 72 |
| §  801.2     |   | Management  Of The Site And Improvements                                   | 74 |
| Section 802  |   | COMPLIANCE  WITH FEDERAL, STATE, AND LOCAL LAW                             | 75 |
| Section 803  |   | OBLIGATION  TO REFRAIN FROM DISCRIMINATION                                 | 75 |
| §  803.1     |   | No  Discrimination or Segregation                                          | 75 |
| §  803.2     |   | Form of  Nondiscrimination and Nonsegregation Clauses                 | 76 |
| Section 804  |   | AGREEMENT  CONTAINING COVENANTS AFFECTING REAL PROPERTY                    | 77 |
| §  804.1     |   | Recordation                                                                | 77 |
| §  804.2     |   | Effect,  Duration, and Release of Covenants                                | 77 |
| ARTICLE  9.       |   | RECIPROCAL  EASEMENT AGREEMENTS                                            | 77 |
| ARTICLE  10.      |   | DEFAULTS,  REMEDIES, AND TERMINATION                                       | 78 |
| Section 1001 |   | DEFAULT                                                                    | 78 |
| §  1001.1    |   | Event  of Default                                                          | 78 |
| §  1001.2    |   | Default  Notice                                                            | 78 |
| Section 1002 |   | RIGHTS  AND REMEDIES                                                       | 79 |
| §  1002.1    |   | Institution  of Legal Actions                                              | 79 |
| §  1002.2    |   | Acceptance  of Service of Process                                          | 79 |
| §  1002.3    |   | Right  of Reverter                                                         | 79 |
| Section 1003 |   | TERMINATION  BEFORE CONVEYANCE                                             | 81 |
| §  1003.1    |   | Termination  by Agency on Developer’s Default                         | 81 |
| §  1003.2    |   | Termination  by Developer                                                  | 81 |
| §  1003.3    |   | Termination  by Agency or Developer                                        | 82 |
| Section 1004 |   | AGENCY’S  OPTION TO ACQUIRE                                           | 82 |
| §  1004.1    |   | Term  of Option                                                            | 82 |
| §  1004.2    |   | Option  Price                                                              | 83 |
| §  1004.3    |   | Form of  Title and Title Insurance                                    | 83 |
| §  1004.4    |   | Exercise  of Option                                                        | 83 |
| Section 1005 |   | ASSIGNMENT  OF CONTRACTS AND PLANS                                         | 84 |
| ARTICLE  11.      |   | GENERAL  PROVISIONS                                                        | 84 |

 

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| Section 1101 |   | NON-MERGER                                                    | 84 |
|-------------------|--------|---------------------------------------------------------------|----|
| Section 1102 |   | NOTICES,  DEMANDS AND COMMUNICATIONS BETWEEN THE PARTIES      | 84 |
| Section 1103 |   | CONFLICT  OF INTEREST                                         | 85 |
| Section 1104 |   | NON-LIABILITY  OF CITY AND AGENCY OFFICIALS AND EMPLOYEES     | 85 |
| Section 1105 |   | ENFORCED  DELAY IN PERFORMANCE; FORCE MAJEURE                 | 85 |
| Section 1106 |   | INSPECTION  OF BOOKS AND RECORDS                              | 86 |
| Section 1107 |   | APPROVALS                                                     | 86 |
| Section 1108 |   | AGENCY’S  AUTHORIZED REPRESENTATIVE                      | 86 |
| Section 1109 |   | REAL  ESTATE COMMISSIONS; FINDER’S FEES                  | 86 |
| Section 1110 |   | DEVELOPER’S  REPRESENTATIONS AND WARRANTIES              | 87 |
| Section 1111 |   | RELATIONSHIP  OF THE PARTIES                                  | 87 |
| Section 1112 |   | BINDING  UPON SUCCESSORS AND ASSIGNS                          | 87 |
| Section 1113 |   | INTERPRETATION  OF AGREEMENT; TERMINOLOGY; APPLICATION OF LAW | 88 |
| Section 1114 |   | WAIVERS                                                       | 88 |
| Section 1115 |   | TIME  OF THE ESSENCE                                          | 88 |
| Section 1116 |   | ATTORNEYS’  FEES AND COSTS                               | 88 |
| Section 1117 |   | SEVERABILITY                                                  | 88 |
| Section 1118 |   | NON-EXCLUSIVITY                                               | 88 |
| Section 1119 |   | ENTIRE  UNDERSTANDING OF THE PARTIES                          | 88 |
| Section 1120 |   | AMENDMENTS  TO THIS AGREEMENT                                 | 89 |
| Section 1121 |   | NO  THIRD PARTY BENEFICIARIES                                 | 89 |
| Section 1122 |   | AUTHORITY  TO SIGN                                            | 89 |
| Section 1123 |   | INCORPORATION  BY REFERENCE                                   | 89 |
| Section 1124 |   | ESTOPPEL  CERTIFICATES                                        | 89 |
| Section 1125 |   | COMPOSITION  OF AGREEMENT                                     | 89 |
| Section 1126 |   | FURTHER  ASSURANCES                                           | 89 |
| Section 1127 |   | TIME  FOR ACCEPTANCE                                          | 89 |

 

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LIST OF ATTACHMENTS

 
| ATTACHMENT  NO. 1    |   | SCOPE  OF DEVELOPMENT                                                |
|----------------------|--------|----------------------------------------------------------------------|
| ATTACHMENT  NO. 2    |   | SITE  MAP                                                            |
| ATTACHMENT  NO. 3    |   | HOUSING  MANAGEMENT PLAN REQUIREMENTS                                |
| ATTACHMENT  NO. 4    |   | FORM OF  AFFORDABILITY COVENANTS                                |
| ATTACHMENT  NO. 5    |   | CONCEPT  PLAN                                                        |
| ATTACHMENT  NO. 6    |   | PARCEL  OWNERSHIP                                                    |
| ATTACHMENT  NO. 7    |   | SCHEDULE  OF PERFORMANCE                                             |
| ATTACHMENT  NO. 8    |   | PUBLIC-PRIVATE  FEASIBILITY AGREEMENT                                |
| ATTACHMENT  NO. 9    |   | PUBLIC  ART POLICY                                                   |
| ATTACHMENT  NO. 10   |   | COMMUNITY  BENEFITS PACKAGE                                          |
| ATTACHMENT  NO. 11   |   | FORM OF  RELEASE OF CONSTRUCTION COVENANTS                      |
| ATTACHMENT  NO. 12-A |   | FORM OF  PRE-CONVEYANCE TERMINATION NOTE                        |
| ATTACHMENT  NO. 12-B |   | FORM OF  PRE-CONVEYANCE TERMINATION DEED OF TRUST               |
| ATTACHMENT  NO. 13   |   | FORM OF  GRANT DEED                                             |
| ATTACHMENT  NO. 14   |   | FORM OF  AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY |
| ATTACHMENT  NO. 15   |   | FORM OF  MEMORANDUM OF AGENCY OPTION                            |
| ATTACHMENT  NO. 16   |   | FORM OF  ASSIGNMENT OF CONTRACTS AND PLANS                      |
| ATTACHMENT  NO. 17   |   | LIST  OF ENVIRONMENTAL REPORTS                                       |

 

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**OWNERPARTICIPATION AGREEMENT**

 

This OWNER PARTICIPATION AGREEMENT (this “Agreement”) is entered intoas of December, 2001, by and between the **COMMUNITYREDEVELOPMENT 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 Developerare sometimes referred to herein individually as a **“Party”**and collectively as the **“Parties,”**

 

**RECITALS**

 

The following Recitals are a substantive part of this Agreement. Thecapitalized terms used in this Agreement, not otherwise defined in the text,are defined in Article 2 herein.

 

A.        The Agency is authorizedand empowered under the Community Redevelopment Law, California Health andSafety Code Sections 33000, *et seq.,*toassist in the redevelopment of real property within the North HollywoodRedevelopment Project in conformity with the Redevelopment Plan. Specifically,the Agency is authorized and empowered to enter into agreements to improve theeconomic conditions of the North Hollywood Redevelopment Project, to acquireand dispose of property, to prepare or cause the preparation of building sitesfor construction, to receive consideration for the provision by the Agency ofredevelopment assistance, to make and execute contracts and other instrumentsnecessary or convenient to the exercise of its powers, and to incurindebtedness to finance or refinance redevelopment projects.

 

B.        On June 23,1999,JAR No Ho Project LLC, a California Limited Liability Company (**“JAR No Ho”**) executed an Offer to NegotiateExclusively for the retention, acquisition, and development of a portion of theNorth Hollywood Redevelopment Project Area described in the Offer as the Site,and the Offer to Negotiate Exclusively was accepted by the Agency on July 13,1999, in accordance with the terms and conditions set forth therein. An Amendedand Restated Exclusive Right to Negotiate (**“ERN”**)that extended the exclusive negotiation period until January 31, 2001 wasapproved by the Agency’s Governing Board on July 20, 2000 and was approvedby the City Council of the City of Los Angeles on August 15, 2000. TheAgency and the Developer entered into the ERN on August 23, 2000.

 

C.        On February 5,2001, JAR No Ho and the Developer entered into an Acquisition and ContributionAgreement and on December, 2001 entered into an Amended and Restated OperatingAgreement for SL No Ho, LLC (collectively, the **“JV Agreement”**)**,**inwhich JAR No Ho agreed to convey all of its right, title and interest in theSite and the Project to the Developer upon the execution of this Agreement.

 

D.        The Agency, by enteringinto this Agreement with the Developer, has satisfied its obligations to JAR NoHo regarding JAR No Ho’s rights as a property owner in the Project Area, assuch rights are set forth in the Agency’s “Rules Governing

 

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Participationand Preferences by Owners, Operators of Businesses, and Tenants in the NorthHollywood Redevelopment Project.”

 

E.         The Developer proposesto design, finance, and develop on the Site a phased multi-use developmentincluding an office, residential and retail development, community-servinguses, and associated parking, (the **“Project”**)****as more fully set forth in Section 103of this Agreement and in the Scope of Development, attached hereto asAttachment 1 (**“Scope of Development”**).To induce the Developer to cause construction and Completion of the Project,and in light of the local revenues, including sales and property tax revenues thatare expected to be generated by the redevelopment of the Site and operation ofthe Project thereon, the Agency and the Developer desire to enter into thisAgreement in order to provide assistance subject to certain conditionsprecedent and in accordance with the terms of this Agreement.

 

F.         In accordance with thegoals of the Community Redevelopment Law and the Redevelopment Plan for theNorth Hollywood Redevelopment Project, the Agency desires to provide suchassistance to induce the redevelopment of the Site and the construction andoperation of the Project because such actions will help to eliminate blight inthe North Hollywood Redevelopment Project, increase the employmentopportunities within the North Hollywood Redevelopment Project, and generateadditional sales and property taxes and other local revenues for the community.The Developer’s acquisition of the Site, the redevelopment thereof, andoperation of the Project thereon pursuant to the terms of this Agreement are inthe vital and best interests of the City of Los Angeles (the **“City”**)****andthe health, safety, and welfare of its residents and are in accord with thepublic purposes and provisions of applicable state and local laws andrequirements under which the redevelopment of the North Hollywood RedevelopmentProject has been undertaken.

 

G.        The Redevelopment Planfor the North Hollywood Redevelopment Project was approved and adopted on February 21,1979,prior to which an Environmental Impact Report was certified, and subsequentEnvironmental Impact Reports have been certified for various amendments to theRedevelopment Plan. On January 31, 2001 by Resolution No. 5969, theAgency (as the lead agency pursuant to the California Environmental QualityAct, Section 21000 etseq. of the California PublicResources Code, and the CEQA Guidelines, 14 California Code of RegulationsSections 15000 etseq. (**“CEOA”**))certified the completion of a Supplemental Environmental Impact Report (**“SEIR”**) for the Project to be implementedin furtherance of the Redevelopment Plan for the North Hollywood RedevelopmentProject. Immediately following approval of this Agreement, the Agency filed aNotice of Determination pursuant to CEQA.

 

NOW, THEREFORE, the Agency and the Developer agree as follows:

 

**ARTICLE 1SUBJECT OF THE AGREEMENT**

 

**SECTION 101         PURPOSEOF THE AGREEMENT**

 

The purpose of this Agreement is to effectuate the public purposes ofthe Agency by providing for the assemblage of the Site through the Agency’sacquisition and conveyance to the Developer of those portions of the Site thatare not included in the

 

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DeveloperParcels, and the phased development and operation by the Developer on the Siteof the improvements described in the Scope of Development.

 

**SECTION 102         THEDEVELOPMENT SITE**

 

(a) Subject to the provisions of paragraphs (b) and (c) immediatelyfollowing, the **“Site”** is thatcertain real property generally bounded by Cumpston Street on the north,Vineland Avenue and Blakeslee Avenue on the east, the Academy Entertainment andBusiness Complex on the south, and Lankershim Boulevard on the west in LosAngeles, California, illustrated on the **“SiteMap”**(which is attached hereto and incorporated herein as AttachmentNo. 2} and more particularly described in **“Parcel Ownership”**(which is attached hereto and incorporatedherein as Attachment No. 6). The Site consists of a **“Subarea A”,**a **“Subarea B”,**a **“Subarea C”,**anda **“Subarea D”,**each of which isillustrated and designated as such on the Site Map. A **“Subarea”**as used in this Agreement, shallmean Subarea A, Subarea B, Subarea C, and/or Subarea D, as the contextrequires. At such time as the final tract map, if any, is recorded for aSubarea, the legal descriptions from such tract map shall govern without the needfor an amendment of this Agreement.

 

(b)       The Agency and Developermay by mutual written agreement exclude from the Site all or any portion of theSite which has not theretofore been conveyed to Developer. In the event anyportion is excluded from the Site pursuant to this paragraph (b), the followingshall apply:

 

(i)  Developer and the Agency shall cooperate in signingimplementation agreements and/or other documents necessary or appropriate toeffectuate the intent of this paragraph (b), including without limitation andto the extent applicable, a reconveyance of the Pre-Conveyance Termination Deedof Trust.

 

(ii)  If and to the extent required by the reduction in size ofthe Site, Developer shall submit for approval by the Agency, and the Agency’sGoverning Board if required and subject to completion of any review required bythe California Environmental Quality Act, Site Modifications (as defined in Article 2)reflecting such reduced Site.

 

(c)       It is contemplated bythe Parties that the Los Angeles Unified School District (**“LAUSD”**)****willacquire Subarea D or a portion thereof for construction of a high school, inwhich case the Agency may exclude the applicable portion of Subarea D from theSite. If the LAUSD decides not to acquire Subarea D or any portion thereof, oracquires Subarea D or any portion thereof and thereafter decides to dispose ofSubarea D or any portion thereof, Subarea D or the applicable portion thereofshall be included in the Site. The Agency hereby grants the Developer anexclusive right to negotiate Site Modifications for the development of thatportion of Subarea D that is included in the Site. It is the Parties’ intentthat, to the fullest extent practicable, the Site Modifications for the portionof Subarea D included in the Site shall provide for the construction of retail,office and/or residential improvements of a scale and density consistent withthe proposed project analyzed in the certified SEIR for the Project. Thisexclusive right to negotiate shall terminate on **a**date that is three (3) years after the Date ofAgreement. Developer understands that the Agency may refuse to extend thisexclusive negotiation period beyond the termination date and may at that timebegin negotiations with other development entities without furthersolicitation. The Developer agrees that, if the

 

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Agencydetermines that the parties are not making appropriate progress or thenegotiations are not proceeding in a diligent manner during the exclusive negotiationperiod, the Agency may at its option terminate the negotiations and beginnegotiations with other development entities without further solicitation;provided, that the Agency shall first provide written notice to the Developer,stating the facts on which the Agency is basing its contention that the partiesare not making appropriate progress or the negotiations are not proceeding in adiligent manner, and providing a reasonable time, but not less than ten (10) days,to correct the matter.

 

**SECTION 103         PROJECTDESCRIPTION AND PHASING**

 

**§103.1        Project Description**

 

The Project shall include the following improvements, as more fully setforth in, and in conformance with, the Scope of Development. All of theimprovements on the Site shall be developed in accordance with plans and landuse entitlements approved by the City. The assemblage of the Site and thephased development and operation of the improvements on the Site, and thefulfillment generally of this Agreement are in the vital and best interests ofthe City and the health, safety, morals and welfare of its residents, and inaccord with the public purposes and provisions of applicable federal, state andlocal laws and requirements.

 

Retail and commercial products and services offered by tenants shall beconsistent with a first class retail/office development. Retail tenantselection shall be consistent with and enhance the entertainment/retailcharacter of the Project and the NoHo Arts and Entertainment District. Becausethe Project is an integral part of the NoHo Arts and Entertainment District,retail tenant selection shall acknowledge, reinforce, and complement theDistrict, the North Hollywood Commercial Core and the Academy Complex and itsplaza. Every reasonable effort shall be used to attract and lease to firstclass specialty retail and entertainment tenants. Flea markets, thrift storesor liquidation outlets, swap shows or “outlet stores” selling merchandise thatis used, damaged or discontinued shall be prohibited. Any off-price and valueoriented tenants shall be limited to stores such as Nordstrom Rack, Ann TaylorLoft, or other stores of similar quality. If a supermarket is included in theProject, it shall be a first class full service supermarket or a first classspecialty supermarket. Except for the single 60,000 square foot retail space inSubarea B, retail tenant spaces shall generally be limited to 20,000 squarefeet in size, except for tenants such as Barnes & Noble, Border’s, orsimilar non-discount quality retailers.

 

The Agency shall have the right to approve each tenant proposed by theDeveloper as being in conformance with this Section 103.1. The Developermust notify the Agency of each proposed tenant in sufficient time for theAgency to approve or disapprove as provided herein. Within twenty (20) days ofthe date the Developer notifies the Agency of a proposed tenant, the Agencyshall advise the Developer in writing that the tenant is in conformance withthe parameters set forth in this Section 103,1 or give specific reasonswhy the Agency believes the proposed tenant is not in conformance with theparameters of this Section 103.1. If the Agency fails to respond withinsuch twenty (20) day period, the proposed tenant shall be deemed to be inconformance with the parameters set forth in this Section 103.1 withoutany further approval rights from the Agency.

 

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(a)  **“Subarea A Improvements”**.

 

The Developer shall construct a residential complex containingapproximately 550 units and associated parking. In the alternative, theDeveloper may construct either (i) approximately 600,000 square feet ofoffice space, or (ii) approximately 277 residential units andapproximately 300,000 square feet of office space. These alternativedevelopment scenarios are more fully set forth in the Scope of Development andthe Concept Plan. Within the time set forth in the Schedule of Performance, theDeveloper shall inform the Agency as to which development scenario it willconstruct on Subarea A

 

(b)  **“Subarea B Improvements”**.

 

The Developer shall construct a retail and residential complexincluding approximately 247 residential units, approximately 186,000 squarefeet of retail and restaurant space and a parking structure providingsufficient parking to comply with City code requirements.

 

(c)  **“Subarea C Improvements”**.

 

The Developer shall construct approximately 42,000 square feet ofretail and restaurant space, approximately 200,000 square feet of office space,a parking structure providing sufficient parking to comply with City coderequirements, approximately nine residential units and the CommunityImprovements described in this paragraph. The Developer shall construct a raw,shell facility of approximately 20,000 square feet for the Valley Community Clinicwithin or adjacent to the parking structure in Subarea C (the **“Community Improvements”**). Upon completion,the Developer shall offer to lease the Community Improvements to the ValleyCommunity Clinic for the base rent sum of one dollar ($1) per year plus triplenet charges, including without limitation, pro rata share of common areaexpenses and property taxes, for a twenty (20) year term. If, within ninety(90) days from the date the Developer offers to lease the space as providedherein, the Valley Community Clinic fails to enter into a lease for theCommunity Improvements or, for any reason, subsequently fails to occupy orvacates the space, then the Developer’s obligation to lease to Valley CommunityClinic shall terminate and the Developer shall use the Community Improvementsin a manner consistent with the Scope of Development and Agency-approved plans;provided that, the Agency has the right to designate another public use of theCommunity Improvements, mutually agreeable between Developer and Agency, at thelease terms set forth herein within thirty (30) days after the termination ofthe Developer’s obligation to lease to Valley Community Clinic. The Developershall provide up to 500 square feet of office space sufficient to accommodatethe One-Stop Employment Center required by § 318.2.3 of this Agreement, to beoperated by an entity designated by the Agency.

 

(d)  **“Subarea D Improvements”**.

 

(1) If the Developer acquires the Subarea D Parcels or any portionthereof, the Developer shall, subject to completion of the review required bythe California Environmental Quality Act, construct the improvements in theSite Modifications agreed to pursuant to Section 102(c) hereof.

 

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(e)  **Affordable Housing; Conversionto Sale Units; Day Care**

 

(1) **Affordable HousingRequirements.**At least twenty percent (20%) of the residentialunits, not including live-work units, developed on Subarea A and Subarea Bshall be available to Very Low Income, Low Income, and Moderate Incomehouseholds, at Affordable Rent, including a reasonable utility allowance (**“Restricted Units”**). Of those RestrictedUnits, seventeen percent (17%) shall be available to Very Low Incomehouseholds, fifty percent (50%) shall be available to Low Income households,and thirty three percent (33%) shall be available to Moderate Incomehouseholds. The Restricted Units shall be distributed across the apartments andresidential lofts as follows. No less than five percent (5%) and no more thanten percent (10%) of the residential lofts shall be required to be RestrictedUnits, which shall be available to Very Low Income, Low Income, and ModerateIncome households, in the same proportion as required for the total RestrictedUnits in the Project. The balance of the Restricted Units shall be evenlydistributed across one-bedroom and two-bedroom apartments, with each unit type(i.e., one-bedroom or two-bedroom) available to Very Low Income, Low Income andModerate Income households in the same proportion as required for the totalRestricted Units in the Project. Within the time period established in theSchedule of Performance, the Developer shall submit to the Agency for itsapproval a proposed management plan for the rental units that meets therequirements set forth in the **“Housing****Management Plan Requirements”**attachedhereto as Attachment No. 3 and incorporated by this reference. As acondition precedent to the Agency’s obligation to convey any portion of SubareaA or Subarea B to the Developer, the Developer shall execute and deliver to theEscrow Agent for recording in the Official Records of Los Angeles County the **“Affordability Covenants”**appended to thisAgreement as Attachment No. 4 and incorporated by this reference. TheAffordability Covenants shall be recorded with reference to the residentialunits developed on Subarea A and Subarea B. The Affordability Covenants shallprovide that the income-restricted units must remain available at AffordableRent for the longest feasible period, but not less than forty (40) years fromCompletion. The Restricted Units shall be made available on a first preferencebasis to any Very Low Income, Low Income, or Moderate Income persons who aredisplaced from the Site, on a second preference basis to any Very Low Income, LowIncome, or Moderate Income persons who are displaced from the North HollywoodRedevelopment Project as a result of Agency actions, and on a third preferencebasis to any Very Low Income, Low Income, or Moderate Income persons who aredisplaced as a result of Agency actions elsewhere. In addition, market rateresidential units shall be made available on a first preference basis topersons who are displaced from the Site but do not qualify for theincome-restricted units, on a second preference basis to persons who aredisplaced from the North Hollywood Redevelopment Project as a result of Agencyactions but do not qualify for the income-restricted units, and on a thirdpreference basis to persons who are displaced as a result of Agency actionselsewhere. Upon the Agency’s request and at the Agency’s expense, the Developershall hold vacant residential units for a period of not more than 30 days forthe relocation of persons displaced as a result of Agency actions, as morefully set forth in the Management Plan Requirements (Attachment No. 3).

 

Developer’s obligations with respect to the provision of RestrictedUnits set forth herein shall be excused to the extent and only to the extentthat the Agency fails to provide the Affordable Housing Subsidy set forth inthe Public-Private Feasibility Agreement (Attachment No. 8).

 

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For purposes of this § 103.1(e)(1), the following definitions shallapply.

 

***“Affordable Rent”***

means (a) for Very Low Income, 30% of 50% of Area Median Incomeadjusted for family size appropriate for the unit; (b) for Low Income, 30%of 60% of Area Median Income adjusted for family size appropriate for the unit,provided that for Low Income whose incomes exceed 60% of Area Median Income,Affordable Rent shall not exceed 30% of the actual gross income of thehousehold; and (c) for Moderate Income, 30% of 110% of area median incomeadjusted for family size appropriate for the unit.

 

***“Area Median Income”***

means the median income for Los Angeles County as determined by HUD andpublished from time to time by the California Department of Housing andCommunity Development.

 

***“Very Low Income”***

means persons or families whose income, adjusted for family size, isnot more than 50% of the Area Median Income.

 

***“Low Income”***

means persons or families whose income, adjusted for family size, isabove 50% of Area Median Income, but does not exceed 80% of Area Median Income.

 

***“Moderate Income”***

means persons or families whose income, adjusted for family size, isabove 80% of median income but does not exceed 120% of area median income.

 

(2) **Conversion to Sale Units.**In order to further the Agency’s goal of promoting home ownership in theProject Area, the Developer agrees to include in its entitlement applicationpackage for the residential lofts and the live-work units to be developed onSubareas B and C those actions, such as air rights subdivision, that will beneeded for future conversion to sale units, which conversion shall be atDeveloper’s sole discretion. Prior to any such conversion, the Agency and theDeveloper shall enter into an implementation agreement that will preserve theaffordability of those sale units to Very Low Income, Low Income, and ModerateIncome households, consistent with the requirements of § 103.1(e)(1).

 

(3) **Day Care Requirements.**The Developer shall use commercially reasonable efforts to include a**“Day Care Center”**to serve the communityand particularly the tenants of the office improvements. The construction andoperation of the Day Care Center shall occur at the earliest commerciallypracticable time and shall conform to state and local laws and regulationsgoverning day care centers. The Developer shall provide day care services atrates that are affordable to low- and moderate-income persons in conformancewith the requirements of the **“CommunityBenefits Package”,**appended as Attachment No. 10 andincorporated by this reference.

 

**§103.2        Project Phasing**

 

Development of the Site is anticipated to occur in the phases describedbelow, as more fully set forth in the Schedule of Performance.

 

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In **“Phase 1”**, theDeveloper shall develop on Subarea A the Subarea A Improvements conforming toplans approved by the Agency and the City.

 

In **“Phase 2”**, theDeveloper shall develop on Subarea B the Subarea B Improvements conforming toplans approved by the Agency and the City.

 

In **“Phase 3”**, theDeveloper shall develop on Subarea C the Subarea C Improvements conforming toplans approved by the Agency and the City.

 

In **“Phase 4”**, tothe extent required by § 103.1(d), the Developer shall develop on Subarea D theSubarea D Improvements conforming to plans approved by the Agency and the City.

 

The Agency may, in its discretion and at the request of the Developersetting forth in reasonable detail the basis for the request, modify thephasing of improvements to reflect market factors or other changed conditionsthat make the phasing as set forth herein commercially unreasonable,impracticable or unfeasible. The Agency and the Developer may agree to advanceor delay or otherwise modify the phasing set forth in the Schedule ofPerformance. The Parties’ agreement to such modifications shall not beunreasonably withheld.

 

**SECTION 104         THEREDEVELOPMENT PLAN**

 

This Agreement is made in accordance with, in implementation of, andsubject to the redevelopment plan for the North Hollywood RedevelopmentProject, which was approved and adopted on February 21, 1979 by Ordinance No. 152,030of the City Council of the City of Los Angeles and most recently amended on October 2,1997 by Ordinance No. 171,745. That Amended Redevelopment Plan for theNorth Hollywood Redevelopment Project (**“RedevelopmentPlan”**)****is incorporatedherein by reference and made a part hereof as though fully set forth herein.

 

Any amendments hereafter to the Redevelopment Plan which change theuses or development permitted on the Site as described in this Agreement, orotherwise change the restrictions or controls that apply to the Site, oradversely affect or impair any of the rights or obligations of the Developer orthe holder or beneficiary of any Mortgage obtained in accordance with Section .109and Section 703 of this Agreement (a **“Mortgagee”**)****shall not apply to the Developer or theSite without the prior written consent of the Developer and such Mortgagee,which may be withheld in their discretion. No other amendments to theRedevelopment Plan shall require the consent of the Developer or suchMortgagee.

 

**SECTION 105         THEPROJECT AREA**

 

The **“Project Area”**islocated in the City of Los Angeles, California. The exact boundaries of theProject Area are specifically and legally described in the Redevelopment Plan.

 

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**SECTION 106         PARTIESTO THE AGREEMENT**

 

**§106.1        The Agency**

 

The Agency is a public body, corporate and politic, exercisinggovernmental functions and powers and organized and existing under Part 1of Division 24 of the California Health and Safety Code (Section 33000, etseq.). The principal office of the Agency is located at 354 South SpringStreet, Los Angeles, California 90013 or such other location of which notice isgiven pursuant to Section 1102 of this Agreement. **“Agency”** as used in this Agreement includesthe Community Redevelopment Agency of the City of Los Angeles and any assigneeof or successor to its rights, powers and responsibilities.

 

**§106.2        The Developer**

 

The Developer is a California limited liability company. The Developeragrees that it shall make full and continuing disclosure to the Agency of thelegal entities constituting the Developer and their respective roles, economicinterests, financial commitments, and responsibilities in the planning,development and operation and maintenance of the Project. The principal officeof the Developer is located at 5757 Wilshire Boulevard, Penthouse 30, LosAngeles, California 90036 or such other location of which notice is givenpursuant to Section 1102 of this Agreement. **“Developer”**as used in this Agreement includes any permittedassignee or successor in interest of SL No Ho, LLC, as herein provided.

 

**SECTION 107         PROHIBITIONAGAINST TRANSFERS OR CHANGES IN OWNERSHIP**

 

The Developer represents and agrees that the Developer’s undertakingspursuant to this Agreement are, and will be used for, the purpose ofredevelopment of the Site and not for speculation in landholding. The Developerrecognizes and acknowledges that (i) the redevelopment of the Site isimportant to the general welfare of the community; (ii) the public aidsset forth in this Agreement have been made available by law and by the Agencyand the City on the conditions stated herein, for the purpose of making suchredevelopment possible; and (iii) the Developer’s qualifications andidentity are of particular concern to the community and to the Agency. TheDeveloper further recognizes that it is because of the Developer’squalifications and identity that the Agency is entering into this Agreementwith the Developer. Accordingly, the Developer shall comply with the provisionsof Article 7 of this Agreement, relating to limitations on transfer andencumbrance.

 

**SECTION 108         PAYMENTOF COSTS AND GOOD FAITH DEPOSIT**

 

**§108.1        Developer Payment of Agency Costs**

 

The Developer acknowledges that the Agency has incurred and willcontinue to incur substantial costs relating to this Agreement and the Project.Therefore, the Developer agrees that, within the times set forth in theSchedule of Performance, it will deliver to the Agency the amount of THREEHUNDRED AND FIFTY THOUSAND DOLLARS ($350,000) in two (2) installments ofOne Hundred and Seventy Five Thousand Dollars ($175,000) as partialreimbursement of those costs. These payments will be nonrefundable to theDeveloper except only in the event of the termination of this Agreement by theDeveloper in accordance with Section 1003.2 (iii) of this Agreement,

 

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andmust be in the [Illegible] of (i) cash or (ii) a cashier’s or[Illegible] check issued by a national or state bank first approved in writingby the Agency.

 

**§108.2        Good Faith Deposit**

 

(a)  No later than eighty (80) days after the execution by theDeveloper of this Agreement, the Developer shall deliver to the Agency asecurity deposit (the “Good Faith Deposit”) in the amount of FIVE HUNDREDTHOUSAND DOLLARS ($500,000), of which $75,000 has already been deposited by theDeveloper. The Agency and the Developer agree that such $75,000 shall beretained by the Agency as part of the Good Faith Deposit required by thisAgreement. The Agency shall be under no obligation to pay or earn interest onthe Good Faith Deposit. Notwithstanding the foregoing, if the Good FaithDeposit is in the form of immediately available funds, the Agency agrees thatthe Good Faith Deposit shall be placed in an interest bearing account with afinancial institution reasonably acceptable to the Agency and Developer.

 

(b)  If, prior to the Developer’s delivery to the Agency of theHUD Loan Letter of Credit or Guarantee (in the event of the availability of theHUD Loan) and the Original Letter of Credit in accordance with the provisionsof this Agreement, the Agency terminates this Agreement pursuant to § 1003.1(relating to Developer’s default), the Agency shall be entitled to retain theGood Faith Deposit (plus interest accrued thereon, if any) as liquidateddamages. If this Agreement terminates for any other reason, including withoutlimitation, pursuant to § 1003.2 or § 1003.3, the Good Faith Deposit (plusinterest accrued thereon, if any) shall be returned to the Developer.

 

(c)  The Developer and the Agency acknowledge and agree that itwould be extremely difficult to quantify the loss or damage to the Agency inthe event of a termination pursuant to § 1003.1 (relating to Developer’sdefault) prior to the Developer’s delivery to the Agency of both the HUD LoanLetter of Credit or Guarantee (in the event of the availability of the HUDLoan) and the Original Letter of Credit in accordance with the provisions ofthis Agreement and that FIVE HUNDRED THOUSAND DOLLARS ($500,000) is a reasonableestimate of such loss or damage as of the Date of Agreement and the Agencyshall be entitled to retain the Good Faith Deposit (plus interest accruedthereon, if any), without any deduction, offset or recoupment (or any rightthereof) whatsoever and the Agency shall be entitled to those liquidateddamages in addition to performance pursuant to any Payment and PerformanceBonds theretofore delivered to the Agency; provided that, nothing in this §108.2 shall preclude, limit or interfere with the Agency’s exercise of itspurchase option rights pursuant to Section 1004 of this Agreement.

 

(d)  The Good Faith Deposit shall be in the form, reasonablyacceptable to the Agency, of (i) cash; or (ii) cashier’s or certifiedcheck issued by a national or state bank first approved in writing by theAgency; or (iii) an irrevocable and unconditional letter of credit firstapproved by the Agency as to form, content and issuer, or (iv) theownership by the Agency pursuant to documentation approved by the Agency’slegal counsel of a beneficial interest in funds contained in an account of anational or state bank first approved in writing by the Agency. If the GoodFaith Deposit is in the form of a letter of credit, the term thereof shall beat least one (1) year and shall be automatically renewable. Subject to theterms and conditions of this paragraph, the Developer shall have the right,from time to time, to substitute one form of the Good Faith Deposit for anyother form in which the Good Faith Deposit was previously delivered to theAgency.

 

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(e)  If this Agreement has not been terminated and the Good FaithDeposit has not been previously disposed of as set forth in this Agreement, theGood Faith Deposit (plus, if the Good Faith Deposit was made in cash andinvested, interest accrued thereon, if any, as provided in paragraph (a),above) shall be returned to the Developer upon the timely posting by Developerof both the HUD Loan Letter of Credit or Guarantee (in the event of theavailability of the HUD Loan) in the amount and form required by thePublic-Private Feasibility Agreement (Attachment No. 8) and the OriginalLetter of Credit in the amount and form required by § 402.6 of this Agreement.Upon such return of the Good Faith Deposit to Developer, the liquidated damagesprovisions of this § 108.2 shall no longer be in effect, and the rights andremedies of the parties hereto with respect to damages shall be as referred toin Section 1002 herein below.

 

**BY SIGNING THEIR INITIALS IN THE SPACE BELOW, THE DEVELOPERAND THE AGENCY ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND ALL OF THEPROVISIONS OF THIS SECTION 108.2 AND HAVE VOLUNTARILY AGREED TO ALL OF ITSPROVISIONS.**

 
| Developer | /s/  Authorized Signatory |   | Agency | /s/  Authorized Signatory |   |
|-----------|---------------------------|--------|--------|---------------------------|--------|

 

**SECTION 109         EVIDENCEOF FINANCING**

 

Within the times established in the Schedule of Performance for eachSubarea, the Developer shall submit to the Agency evidence reasonablysatisfactory to the Agency that the Developer has obtained sufficient equitycapital and commitments for the financing necessary for the assemblage, anddevelopment of such Subarea in accordance with this Agreement (**“Evidence of Financing”**).****The commitments for financing shall be insuch form and content acceptable to the Agency as reasonably evidences alegally binding, firm and enforceable commitment; provided however, that suchcommitments may be subject to standard and customary conditions (including butnot limited to conditions regarding the status of title, receipt of allrequired consents, licenses and permits and approvals of plans, specificationsand studies). The Agency shall approve or disapprove such Evidence of Financingwithin the times established in the Schedule of Performance. Such approvalshall not be unreasonably withheld. If the Agency shall disapprove the Evidenceof Financing, the Agency shall do so by written notice to the Developerspecifying the reasons for its disapproval. The Developer shall promptly obtainand submit to the Agency new Evidence of Financing. The Agency shall approve ordisapprove the new Evidence of Financing in the same manner and within the sametimes established in this Section 109 for the approval or disapproval ofthe Evidence of Financing initially submitted to the Agency.

 

The Evidence of Financing shall consist of the following:

 

1.  Project Cost Budget. Acurrent budget of all anticipated costs for the acquisition of the applicableSubarea and the development and construction of the improvements thereon as setforth in the Scope of Development and Concept Plan and provided for in thisAgreement, in addition to the mitigation measures required pursuant to theEnvironmental Impact Report for the Project, together with a sources and usesstatement. In addition, the Project Cost Budget shall be prepared inconformance with the requirements of Section 601 hereof.

 

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2.  General Contract. Acopy of the contract, in a type [Illegible] form acceptable to the Agency,between the Developer and the general contractor for site preparation of theapplicable Subarea and the construction of the improvements thereon, consistentwith the Project Cost Budget and certified by the Developer to be a true andcorrect copy thereof.

 

3.  Construction Loan. Ifthe Developer intends to obtain some or all of the financing from aconstruction lender, a copy of all construction loan documents (e.g., notes,trust deeds, indentures, loan agreements, etc.) and permanent loan documents ifa condition of the construction loan, necessary to assure closing of theconstruction loan and complete funding for the development and construction ofthe improvements on the applicable Subarea as set forth in the Scope ofDevelopment and Concept Plan and provided for in this Agreement.

 

4.  Full Equity Financing.If the Developer intends to self finance the full cost of construction of theimprovements on any Subarea, without a construction loan, evidence satisfactoryto the Agency that the Developer has, at the time such evidence of financing isrequired to be demonstrated, sufficient equity capital, in sufficiently liquidform, not otherwise encumbered by any pledge or grant of a security interest toa third party, to assure complete funding for the development and constructionof the improvements on such Subarea as set forth in the Scope of Developmentand Concept Plan and provided for in this Agreement. The Developer shall havethe right to use any funds or assets available to the Developer for actualpayment of costs, notwithstanding that said funds or assets may be differentfrom the sources of equity capital utilized to demonstrate the evidence ofequity financing required by this Agreement. The Developer’s evidence of equityfinancing shall be satisfied by evidence of any combination of the following:

 

(a) Cash, on deposit in a construction account, checking account,money market account, escrow or other immediately available form of deposit,held in the name of the Developer, over which the Developer retains the rightto direct investments;

 

(b) An irrevocable direct pay letter of credit, in favor of theDeveloper, drawn on a bank or other financial institution first approved inwriting by the Agency, with a term that is consistent with the anticipated needfor funds during the construction period, the terms of which are consistent withthis Agreement;

 

(c) An available line of credit with a bank or other financialinstitution reasonably approved in writing by the Agency’s Administrator ordesignee, the terms of which are consistent with this Agreement, provided thatthe collateral or assets pledged by the Developer for such line of credit shallnot otherwise be utilized to demonstrate the evidence of equity financingrequired by this Agreement, unless the Developer has the right to substitutesuch collateral or assets with other collateral or assets which othercollateral or assets are not otherwise utilized to demonstrate the evidence ofequity financing required by this Agreement and which may or may not be liquid;or

 

(d) Evidence of any other comparable form of assets that theAgency’s Administrator or designee reasonably determines is sufficiently liquidto assure that it will be available to the Developer when needed to pay projectexpenses.

 

5.  Partial Equity Financing.If the construction loan is insufficient to pay all construction costs withrespect to any Subarea, evidence reasonably satisfactory to the Agency ofsources of capital sufficient to demonstrate that the Developer has, at thetime such evidence of financing is required to be demonstrated, sufficientequity capital, in sufficiently liquid form, not otherwise encumbered by anypledge or grant of a security

 

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interestto a third party to cover the excess, if any, of the [Illegible] constructionover the financing authorized by mortgage loans. The Agency shall approve afinancial statement as evidence of sources of equity capital if such isapproved by the lender making the mortgage loan and the Agency approves suchmortgage lender.

 

Atany time prior to the times provided in this Agreement for submission ofEvidence of Financing, the Developer may submit to the Agency’s Administratoror designee for review, comment and, if deemed appropriate by the Agency’sAdministrator or designee, approval, any loan applications to be made by theDeveloper or pro forma loan documentation provided by the proposed lender;provided that review, comments and approval, if any, by the Agency’sAdministrator or designee shall be for the sole purpose of determining andadvising the Developer whether such loan applications or pro forma loandocuments are consistent with the requirements of this Agreement. All commentsand approvals, if any, shall be in writing and shall be made promptly. Anyitems so submitted and approved by the Agency’s Administrator or designee shallnot be subject to subsequent disapproval.

 

**§109.1        Reimbursement of Agency’s Costs**

 

The Agency shall provide appropriate assistance to the Developer asreasonably necessary to close the Developer’s construction and permanentloan(s), such as providing estoppel certificates, legal opinions, etc.,provided however that all contracted costs for consulting or legal servicesincurred by the Agency to provide such assistance shall be paid by theDeveloper. With respect to each loan closing, the Developer shall deliver aretainer to Agency in the sum of FIVE THOUSAND DOLLARS ($5,000), concurrentlywith the submission of Evidence of Financing, to be applied to the payment ofAgency’s costs. The internal administrative costs of Agency shall be charged atthe actual and reasonable cost thereof and shall not exceed a total cost of TWOTHOUSAND DOLLARS ($2,000) for each loan closing. The Agency’s costs forconsultants or legal services required for providing such assistance shall bethe actual sums billed to the Agency for such consulting or legal services,pursuant to Board-approved professional services contracts. All Agency costs inexcess of $5,000 shall be paid within ten (10) days after written requesttherefor by the Agency. If costs incurred by the Agency (includingadministrative costs) for a loan closing equal less than $5,000, the balanceshall be refunded promptly following the closing. Notwithstanding any otherprovision in this Agreement, the Developer’s obligation to pay such Agency costsshall survive the termination of this Agreement.

 

**ARTICLE 2DEFINITIONS**

 

Each capitalized term used but not otherwise defined in the text ofthis Agreement is defined as follows.

 

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***“Acquisition Costs”***

 

means the costs of acquiring any portion of the Site incurred by theAgency by negotiation or eminent domain including, but not limited to, thepurchase price, just compensation for the taking or threatened taking ofproperty interests (land, building, fixtures, equipment, loss of goodwill, andimprovements); costs for payment of goodwill as provided in California law foreminent domain actions; fees and actual expenses of acquisition agents; escrowfees; costs of drawing the deeds for each property acquired; recording fees;notary fees, premiums for title insurance policies and litigation guarantees;any state, county or city documentary stamps or transfer tax, court costs,witness fees, expert witness fees; prorated taxes; appraisal fees; reasonableattorney fees; deposits to obtain an order of prejudgment possession; amountsto satisfy judgments of condemnation; costs necessary to permit earlyacquisition of property interests where delays would create a hardship for theowner; abandonment costs and/or damages that the Agency may be ordered to payin any eminent domain proceeding; and any additional costs incurred to settleor pay claims of inverse condemnation, or judgments in inverse condemnation.

 

***“Acquisition Funds”***

 

means the proceeds of various loans, grants, bonds, and other publicfunding sources set forth in § 402.1 of this Agreement that are provided forthe payment of Acquisition Costs for any portion of the Site acquired by theAgency.

 

***“Acquisition Parcels”***

 

means those parcels within the Site to which fee title is held by thirdparties as of the Date of Agreement, except for the LADOT Parcel and the MTAParcel. The Acquisition Parcels are identified on Attachment 6 (“**Parcel Ownership**”),****incorporated herein by this reference.

 

*“**Agency**”*

 

means the Community Redevelopment Agency of the City of Los Angeles,and any assignee of or successor to its rights, powers and responsibilities.

 

***“Agency Parcels”***

 

means those parcels within the Site to which the Agency holds fee titleas of the Date of Agreement. The Agency Parcels are identified on the ParcelOwnership attached hereto as Attachment 6, incorporated herein by thisreference.

 

***“Agreement”***

 

means this Owner Participation Agreement between the Agency and theDeveloper.

 

*“**City**”*

 

means the City of Los Angeles, a California municipal corporation.

 

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***“Complete” or “Completion”***

 

means, with respect to the improvements to be constructed on the Siteor on any Subarea, the point in time when all of the following shall haveoccurred: (1) to the extent a certificate of occupancy is required,issuance of a permanent certificate of occupancy by the City for theimprovements, and to the extent a certificate of occupancy is not required bythe City, the issuance of a certificate of completion from the City; providedthat, the Agency shall accept a temporary certificate of occupancy if it isreasonably satisfied that all conditions referenced therein will be met and apermanent certificate of occupancy will be issued within a time period that isreasonably acceptable to the Agency; (2) expiration of the time for filinga claim pursuant to Civil Code Sections 3115-3117, after recordation of aNotice of Completion by the Developer or its contractor; (3) certificationby the project architect that such improvements (with the exception of “punchlist”items) have been completed in a good and workmanlike manner and substantiallyin accordance with the approved plans and specifications; and (4) anymechanic’s liens that have been recorded or stop notices that have beendelivered have been paid, settled or otherwise extinguished, discharged,released, waived, bonded around or insured against. Anything herein to thecontrary notwithstanding, (a) Completion of the residential improvementsto be constructed on Subarea A shall not be deemed to have occurred until theAgency has approved a proposed management plan for the rental units pursuant to§ 103.1 (e) of this Agreement; and (b) Completion of the retailimprovements on any Subarea shall not be deemed to have occurred until theAgency has each tenant proposed by Developer in accordance with the proceduresset forth in Section 103.1 of this Agreement and to the extent required bySection 319 below.

 

***“Concept Plan”***

 

means a master concept plan for the Site that is a functional andaesthetic resolution of urban design issues for the development of the Site,consistent with the Scope of Development, including: a plan showing thelocation and physical interrelationship of the improvements to be developed onthe Site; a delineation of Subarea and parcel boundaries for the Projectimprovements and phasing, on- and off-site improvements, and easements; andpreliminary site and landscape design (site plan, ground level building plans,landscape scheme, vehicular and pedestrian access and circulation, andparking). The Concept Plan is attached hereto as Attachment No. 5 and isincorporated herein by this reference, as the same may be amended from time totime in accordance with this Agreement.

 

***“Conditions Precedent”***

 

has the meaning given to it in § 506.1 hereof.

 

***“Date of Agreement”***

 

means the date this Agreement was executed by the Agency and shall bethe effective date of this Agreement, as set forth in the first paragraphhereof.

 

***“Date of Approval”***

 

means the date this Agreement was approved by the Board ofCommissioners of the Agency.

 

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***“Day”***

 

means a calendar day, unless otherwise specified.

 

***“Developer”***

 

means SL No Ho, LLC and any permitted assignee of or successor to itsrights, powers and responsibilities.

 

***“Developer Advance”***

 

means, for any portion of the Site to be acquired by the Agencypursuant to this Agreement, the amount of the Agency’s Acquisition Costs plusthe Agency’s cost of complying with Relocation Laws. The Developer Advanceshall be calculated based on the budgets prepared by the Agency and reviewed bythe Developer pursuant to § 402.5 of this Agreement.

 

***“Developer Parcels”***

 

means those parcels within the Site to which the Developer holds feetitle as of the Date of Agreement or for which the Developer has entered into abinding purchase agreement as of the Date of Agreement (including those parcelsto be conveyed to the Developer from Jar No Ho pursuant to the JV Agreement),and those portions of the Site, if any, to which the Developer obtains feetitle from, or enters into a binding purchase agreement with, persons orentities other than the Agency prior to termination of this Agreement.Notwithstanding the foregoing, if any parcels subject to a binding purchaseagreement (including those parcels to be conveyed to the Developer from Jar NoHo pursuant to the JV Agreement) are not conveyed to Developer in accordancetherewith, other than due to a default on the part of Developer, such parcelsshall be deemed Acquisition Parcels for purposes of this Agreement. TheDeveloper Parcels as of the Date of Agreement are identified on Attachment 6 (“ParcelOwnership”) incorporated herein by this reference.

 

***“Event of Default”***

 

has the meaning given to it in Section 1001.1 herein.

 

***“Governmental Requirements “***

 

means all laws, ordinances, statutes, codes, rules, regulations, ordersand decrees of the United States, the State of California, the County of LosAngeles, the City of Los Angeles, or any other political subdivision in whichthe Site is located, and of any other political subdivision, agency orinstrumentality exercising jurisdiction over the Agency, the Developer, theimprovements on the Site, or the Site or any portion thereof.

 

***“Hazardous Materials”***

 

as used in this Agreement means any substance, material or waste whichis or becomes regulated by the United States government, the State ofCalifornia, or any local or other governmental authority, which is (i) definedas a “hazardous waste,” “acutely hazardous waste,” “restricted hazardous waste,”or “extremely hazardous waste” under Sections 25115, 25117 or 25122.7, orlisted pursuant to Section 25140, of the California Health and SafetyCode; (ii) defined as a “hazardous substance” under Section 25316 ofthe California Health and Safety Code; (iii) defined as a “hazardousmaterial,” “hazardous

 

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substance,”or “hazardous waste” under Section 25501 of the California Health andSafety Code; (iv) defined as a “hazardous substance” under Section 25281of the California Health and Safety Code; (v) petroleum; (vi) asbestos;(vii) a polychlorinated biphenyl; (viii) listed under Article 9or defined as “hazardous” or “extremely hazardous” pursuant to Article 11of Title 22 of the California Code of Regulations, Chapter 20; (ix) designatedas a “hazardous substance” pursuant to Section 311 of the Clean Water Act(33 U.S.C. Section 1317); (x) defined as a “hazardous waste” pursuantto Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903);(xi) defined as a “hazardous substance” pursuant to Section 101 of theComprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.Section 9601); or (xii) any other substance, whether in the form of asolid, liquid, gas or any other form whatsoever, which by any governmentalrequirements is defined as “hazardous” or harmful to the environment.

 

***“LADOT Parcel”***

 

means that parcel within the Site to which fee title is held by the LosAngeles Department of Transportation (**“LADOT”**)****as of the Date of Agreement. The LADOTParcel is identified on Attachment 6 (“Parcel Ownership”), incorporated hereinby this reference.

 

***“MTA Parcel”***

 

means that parcel within the Site to which fee title is held by the LosAngeles County Metropolitan Transit Authority (“**MTA**”) as of the Date of Agreement. The MTA Parcel isidentified on Attachment 6 (“Parcel Ownership”), incorporated herein by thisreference.

 

***“MTA Right of Way”***

 

means that certain right of way within the Site to which title is heldby the MTA as of the Date of Agreement. The MTA Right of Way is identified onAttachment 6 (“Parcel Ownership”), incorporated herein by this reference.

 

***“Payment and Performance Bonds”***

 

means bonds issued by a surety company admitted in the State ofCalifornia and regulated by the State of California Department of Insurance,Best’s Rated “A” or otherwise acceptable to the Agency Administrator, in whichthe City or Agency is the obligee, as their interests may appear, guaranteeingpayment for and faithful performance and Completion (within the respectivetimes provided in this Agreement) of the improvements on the Site in accordancewith drawings or plans, as appropriate, that specifically describe the work tobe performed in sufficient detail for the issuance of such Payment andPerformance Bonds.

 

***“Project Costs”***

 

means the total actual cost to the Developer of acquiring, planning,designing, permitting, financing, and causing the construction of, andconstructing, the improvements on the Site, as set forth in Section 601herein.

 

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***“Relocation Laws”***

 

means all applicable state and local relocation laws, including,without limitation, the California Relocation Assistance Law, Government Code Section 7260,et, seq, and the implementing regulations thereto in theCalifornia Code of Regulations, Title 24, Section 6000, et. seq.and the local implementing regulations thereto, and all applicable federalrelocation laws, including, without limitation, the Uniform RelocationAssistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C.4201-4655, and 49 CFR Part 24, the acquisitions and eminent domain laws inGovernment Code Section 7267, et. seq. and Code of CivilProcedure Section 1240.000, et. seq. and any otherapplicable federal, state or local enactment, regulation or practice providingfor relocation assistance and benefits, acquisition and/or compensation ofproperty interests (including, without limitation, goodwill and furnishings,fixtures and equipment, leasehold bonus value, and moving expenses).

 

***“Schedule of Performance”***

 

means the Schedule of Performance attached hereto as Attachment No. 7(**“Schedule of Performance”**)****and incorporated herein by this reference,setting forth the dates and/or time periods by which certain obligations setforth in this Agreement must be accomplished. The Schedule of Performance issubject to revision from time to time as mutually agreed upon in writingbetween the Developer and the Agency, and the Agency’s Administrator ordesignee is authorized to make such revisions on behalf of the Agency as he orshe deems reasonably necessary.

 

***“Scope of Development”***

 

is attached hereto as No. 1 (**“Scopeof Development”**)****andincorporated herein by this reference, as the same may be amended from time totime in accordance with this Agreement. The Scope of Development describes theurban design objectives and standards and development criteria for the Project,including the scale and quality of the improvements to be constructed by theDeveloper pursuant to the terms and conditions of this Agreement.

 

***“Site Modifications”***

 

means modification of the Scope of Development, the Concept Plan, theSchedule of Performance, and previously approved plans and drawings, whichshall, to the maximum extent feasible and consistent with sound planningprinciples, conform to the existing Scope of Development, Concept Plan, andpreviously approved plans and drawings, and shall include necessarymodifications to the Mitigation Monitoring Program for the Project to addressthe impact of the proposed revisions to the Scope of Development and ConceptPlan. Site Modifications shall be subject to the completion of the reviewrequired by the California Environmental Quality Act and to the approval of theAgency’s Governing Board and the City Council, to the extent and in the mannerrequired by law or Agency procedures.

 

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***“Subarea D Parcels”***

 

means those parcels within the Site identified as the “Subarea DParcels” on the Parcel Ownership attached hereto as Attachment 6 and furtheridentified as Acquisition Parcels for purposes of this Agreement.

 

**ARTICLE 3.DESIGN AND DEVELOPMENT**

 

**SECTION 301         SCOPEOF DEVELOPMENT**

 

Subsequent to and conditioned upon the conveyance of a Subarea (to theextent not already acquired by the Developer), as set forth in the Schedule ofPerformance, the Developer shall develop, or cause to be developed, thatSubarea in accordance with and within the limitations established in the Scopeof Development (Attachment No. 1). The Developer shall prepare plans forthe Project and obtain approval for those plans in accordance with theprovisions of this Article 3. In the event of any inconsistency, caused bythe City’s approval process, between the narrative description of thedevelopment of the Project set forth in the Scope of Development on the onehand, and in the plans and permits approved by the City for development of theSite on the other hand, the City-approved plans and permits shall governwithout the necessity for an amendment to this Agreement. The Developer shallconstruct and complete the improvements on the Site in a high quality andworkmanlike manner, free from material defects and in accordance with thisAgreement, the Scope of Development, the Concept Plan, Schematic Drawings,Design Development Drawings, Construction Drawings, and the City-approvedplans, drawings, and related documents.

 

**SECTION 302         MITIGATIONMONITORING PROGRAM**

 

The Developer shall comply with the CEQA Mitigation Monitoring Programadopted by the Agency concurrently with its approval of this Agreement, as thatprogram may from time to time be amended to reflect the Scope of Development,consistent with its original intent. The Developer shall also submit to theAgency and to LADOT for their approval a Traffic Mitigation Phasing Plan forthe Project that is consistent with the proposed phasing of the Project setforth in this Agreement.

 

**SECTION 303         DRAWINGSAND PLANS**

 

The Developer shall prepare and submit construction drawings andrelated documents for the development of the Project on the Site to the Agencyfor review (including, but not limited to, architectural review) and writtenapproval as and at the times established in the Schedule of Performance(Attachment No. 7). The construction drawings and related documents shallbe consistent with the Scope of Development and Concept Plan and shall include,without limitation, such drawings as may reasonably be required to show thelocation, orientation, visual and functional connections, bulk and massing,height, plazas and other pedestrian areas, finish materials and other principalfeatures of the Project, including signage, in the context of the Site and itsenvirons. In connection with its submittal to the Agency for the approvalsrequired by this Agreement, the Developer shall provide to the Agency suchelevations, sections, plot plans, specifications, diagrams and other designdocuments at each of the stages described herein as may reasonably be requiredby the Agency for its review. The construction

 

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drawingsand related documents shall incorporate the [Illegible] mitigation measuresadopted by the Agency in conjunction with its approval of the Final EIR and anyconditions imposed by the City entitlements. The construction drawings andrelated documents shall be submitted in five stages: Schematic Design Drawings,Final Design Drawings, Design Development Drawings, Fifty Percent ConstructionDocuments, and Final Construction Documents. Any items so submitted andapproved in writing by the Agency shall not be subject to subsequentdisapproval.

 

During the preparation of all drawings and plans, the Agency staff andthe Developer shall hold progress meetings as needed to coordinate thepreparation of, submission to, and review of construction plans and relateddocuments by the Agency. The Agency staff and the Developer shall communicateand consult informally as frequently as is necessary to insure that the formalsubmittal of any documents to the Agency can receive prompt and speedyconsideration.

 

**§303.1        Concept Plan**

 

The Concept Plan for the Project is attached hereto as Attachment No. 5(**“Concept Plan”**),****incorporated herein by this reference. Indesigning and constructing the Project as specified in the Concept Plan, theDeveloper shall cause all subsequent design documents to be consistent with theScope of Development, the Concept Plan, and the signage criteria for theProject approved by the Agency and more fully described in the REAs (as definedin Article 9 hereof). The Scope of Development and the Concept Planestablish the baseline design standards from which the Developer shall prepareall subsequent Project documents.

 

**§303.2        Master Plan**

 

The Developer shall prepare and submit a Master Plan to provide aframework for the phased development of the Project. The Master Plan shallreflect and flow from the Scope of Development and the Concept Plan and providea landmark development for North Hollywood. The Master Plan shall be a completeand detailed elaboration of the Scope of Development and Concept Plan, subjectto any modifications and/or conditions imposed by the Agency’s Governing Boardin conjunction with its approval of the Agreement. The Master Plan shalladdress all components of the Project including site planning, building layout,major building elevation treatments, major landscape and plaza elements, vehicularand pedestrian circulation scheme, parking, and the functional and visualrelationship of the Project with neighboring uses.

 

**§303.3        Schematic Design Drawings**

 

The Developer shall prepare and submit Schematic Design Drawings, alongwith outline specifications, which generally describe the project design forthe Site and which are more specific and detailed than the Concept Plan and theMaster Plan. The submittal shall illustrate how the Project addresses andresolves the urban design and development objectives, criteria and issuesrelated to the development of the Site consistent with the Scope ofDevelopment, the Concept Plan and the Master Plan. The submittal shall includethe phasing plan and the refined delineation of parcel boundaries for the Projectimprovements and phasing, on- and off-site improvements, any easements, andschematic architectural and landscape design drawings (site plan, ground levelbuilding plans, floor and roof plans, building elevations and sections,signage, landscape/hardscape scheme, pedestrian plazas and other elements,vehicular and pedestrian access and circulation,

 

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parking, site lightingand site perimeter treatment) showing among other details as pertinent, thelocation, type, size and quality of materials, design treatments and features.A schematic Art Plan shall be included which shall indicate the design,location and artist of all components of the submittal. The Schematic DesignDrawing submittal shall include sufficient detail and all related documentsrequired to obtain land use entitlements for the Project from the City as wellas any other related documents reasonably required by the Agency.

 

**§303.4        Design Development Drawings**

 

The Design Development Drawings shall be based on and reflect a naturaldesign and development progression from the approved Schematic Design Drawings.The Design Development Drawings shall indicate estimated wall thickness,structural dimensions, and delineation of site features and elevations, thebuilding cores, materials and colors, fine art, landscaping, a refined exteriorsignage plan and other features. The drawings shall Fix and describe all designfeatures, as well as the size, character, and quality of the Project as toarchitectural, structural, and mechanical systems. Key details shall beprovided in preliminary form. Samples of key materials to be used shallaccompany the Design Development Drawings submittal along with a Final Art Planand progressively more detailed specifications.

 

**§303.5        Fifty Percent Complete ConstructionDocuments**

 

The Developer shall prepare and submit 50% Complete ConstructionDocuments, including 50% Working Drawings, which shall be in sufficient detailto obtain an excavation and foundation permit. This submittal is to showfurther design and development of the Site and natural progression from theapproved Design Development Drawings. The submittal shall include thelandscaping and fine arts aspects as well at the 50% Working Drawing stagealong with a draft of final specifications and material samples.

 

**§303.6        Final Construction Documents**

 

The Developer shall prepare and submit to the Agency and the City FinalConstruction Documents for the development of each Subarea in sufficient detailto obtain a building permit for processing as required for City approval withinthe times established in the Schedule of Performance. Pursuant to § 103.2hereof, the Developer may construct the Project in Phases. Final ConstructionDocuments for each Phase are to be a continuation of approved 50% CompleteConstruction Documents. The Final Construction Documents for each Phase mustprovide all the detailed information necessary to obtain building permits forthat Phase. The Final Construction Documents shall include, without limitationcomplete building (floor plans, roof plans, elevations and sections), site,landscape/hardscape, lighting, exterior signage and graphics and fine art plansand construction details, elevations of major public spaces requirements,standards, specifications and schedules and tabulation of areas and uses. TheDeveloper shall provide additional material samples upon the reasonable requestof the Agency.

 

**SECTION 304         PHASING OF DEVELOPMENT**

 

Construction of the improvements on the applicable Subarea for eachPhase, as described in § 103.2 of this Agreement, shall commence within thetime specified in the Schedule of Performance and only after receipt of allnecessary permits for the work to be

 

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undertakenin that [Illegible]. The Developer shall diligently [Illegible] to Completionthe construction of each Phase of the Project within the time specified in theSchedule of Performance using all commercially reasonable efforts to completethe Project within the time specified. The Agency agrees to cooperate in goodfaith with the Developer and to use all reasonable efforts to implement thisAgreement in a way that will permit phased development of the Project.

 

**SECTION 305         PERMITSAND OTHER ENTITLEMENTS**

 

The Developer shall prepare and submit to the City all applicationsrequired for entitlements for the Project, which shall, among other things,depict and describe building locations, densities, subdivision lot lines,landscaping and circulation, for review and written approval or disapproval bythe City within the times established in the Schedule of Performance.

 

The Site shall be developed as generally established in the requiredentitlements, as such entitlements may be amended from time to time with theCity’s approval in the manner required by law. Any such changes shall be withinthe limitations of the Scope of Development.

 

Before commencing construction or development of any building,structure or other work of improvement upon each Subarea, the Developer shallat its own expense secure, or cause to be secured, any and all permits whichmay be required by the City or any other governmental agency havingjurisdiction over such construction, development or work. The Agency shallprovide all proper assistance to the Developer in securing permits from othergovernmental agencies. This Agreement shall not be construed to limit in anymanner (i) the right or the authority of the City of Los Angeles, or anyother governmental agency having jurisdiction, to require public improvements,dedications, exactions or other conditions of approval in connection with thedevelopment of the Site or any portion thereof; or (ii) the Developer’sresponsibility to pay for the cost of . complying therewith.

 

**SECTION 306         AGENCYAPPROVAL OF PLANS, DRAWINGS, AND RELATED DOCUMENTS**

 

Within the time established in the Schedule of Performance, theDeveloper shall submit to the Agency for approval the required plans, drawings,and related documents for each Subarea. For purposes of this Section 306, “approval”means approval by the Agency Administrator or designee. Any items submitted bythe Developer and approved in writing by the Agency shall not be subject tosubsequent disapproval or failure to certify. Approval of progressively moredetailed drawings and specifications will be promptly granted by the Agency ifthey are substantially consistent with, the Scope of Development and theConcept Plan and the plans and drawings earlier approved by the Agency. Thesole purpose of the Agency’s review of the plans, drawings and relateddocuments is to ensure consistency with the Redevelopment Plan, the Design forDevelopment for the Commercial Core, and this Agreement.

 

**§306.1        Substantially Consistent**

 

In determining whether the Developer’s submittals are substantiallyconsistent with previously approved submittals, the Agency shall take intoaccount such factors as industry standards, architectural and engineeringdesign and local construction practices,

 

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coderequirements, applicable plan check and permit condition [Illegible] technologystandards, and timely availability of building materials.

 

**§306.2        Approval Process**

 

The Agency shall approve or disapprove the Developer’s submittals withinthe times established in the Schedule of Performance. The Agency’s failure toeither approve or disapprove the Developer’s submittals within the timesestablished in the Schedule of Performance shall be deemed an approval;provided however, that no submittal shall be deemed approved unless the requestfor approval contains the following provision, in capital letters and boldprint, setting forth the appropriate number of days as provided for theapproval of such submittal in the Schedule of Performance:

 

**NOTICE IS HEREBY GIVEN THAT FAILURE TO APPROVE OR DISAPPROVETHE REQUESTED MATTER WITHIN DAYS SHALL BE DEEMED AN APPROVAL PURSUANT TO §306.2 OF THE OWNER PARTICIPATION AGREEMENT.**

 

To be effective, any disapproval shall state in writing the reasons fordisapproval and the changes requested by the Agency. Such reasons and changesshall be substantially consistent with the Scope of Development and ConceptPlan and any items previously approved or deemed approved by the Agencyhereunder. The Developer shall revise any disapproved submittal and resubmit tothe Agency promptly after receipt of the notice of disapproval.

 

**§306.3        Changes to Approved Plans**

 

If after the Agency’s approval of a submittal, the Developer wishes tomake a change to that submittal, the Developer shall submit the proposed changeto the Agency for its approval or disapproval. If the modified submittalconforms to the requirements of this Agreement and the approvals previouslygranted by the Agency under this Section 306, the change shall not bedeemed to be a material change and shall be approved by the Agency. If theAgency reasonably determines that the modified submittal is not substantiallyconsistent with prior approvals or is not substantially consistent with theRedevelopment Plan or this Agreement, including the Scope of Development andthe Concept Plan, the Agency shall disapprove the modified submittal and shallset forth in writing the reasons for its disapproval. The Agency shall approveor disapprove the modified submittal in the same manner and within the sametimes as provided in § 306.2 for approval or disapproval of initial submittalsto the Agency.

 

**§306.4        Governmental Requirements**

 

If any governmental official, agency, department or bureau havingjurisdiction over the Project or the Site requires material revisions ofAgency-approved plans, drawings, or related documents, the Developer and theAgency shall cooperate to attempt to obtain a waiver of that requirement or todevelop a mutually acceptable revision of those plans, drawings, or relateddocuments.

 

**§306.5        No Reliance**

 

The Agency neither undertakes nor assumes nor will have anyresponsibility or duty to the Developer or to any Transferee or to any otherthird party to review, inspect, supervise, pass judgment upon or inform theDeveloper, Transferee or any third party of

 

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anymatter in connection with the development or construction or rehabilitation ofimprovements to be constructed on the Site, whether regarding the quality,adequacy or suitability of the plans, any labor, service, equipment or materialfurnished to the Site, any person furnishing the same, or otherwise. TheDeveloper, any Transferee and all third parties shall rely upon its or theirown judgment regarding such matters, and any review, inspection, supervision,exercise of judgment or information supplied to the Developer, Transferee or toany third party by the Agency in connection with such matter is for the publicpurpose of redeveloping the Site, and neither the Developer nor any Transferee(except for the purposes set forth in this Agreement) nor any third party isentitled to rely thereon. The Agency shall not be responsible for any of thework of construction, rehabilitation, improvement or development of the Site.

 

**SECTION 307         AGENCYAPPROVAL OF ARCHITECT AND CONTRACTOR**

 

Within the time established in the Schedule of Performance, theDeveloper shall submit to the Agency for approval the name and qualificationsof its architect, landscape architect, art consultant, civil engineer, andgeneral contractor for the Project. Such approvals shall not be unreasonablywithheld. To be effective, any disapproval shall state in writing the reasonsfor disapproval.

 

**SECTION 308         ENVIRONMENTALREPRESENTATIONS AND COVENANTS**

 

**§308.1        Developer’s EnvironmentalRepresentations and Covenants**

 

The Developer shall promptly deliver to the Agency copies of all “Phase1” and/or “Phase 2” investigations, soils reports, geotechnical data, and otherinformation regarding the physical condition of the Developer Parcels that isin the possession or control of the Developer (**“Developer Environmental Reports”**). The Agency acknowledgesits prior receipt of the Developer Environmental Reports described in the Listof Environmental Reports (Attachment No. 17).

 

Except as provided in the contents of the reports delivered to theAgency by the Developer pursuant to the immediately preceding paragraph, as ofthe Date of Agreement the Developer hereby represents and warrants to the Agencythat it has no actual knowledge of, and has not received any notice orcommunication from any governmental agency having jurisdiction over theDeveloper Parcels, notifying the Developer of the uncured presence of HazardousMaterials beyond non-reportable background levels in, on, or under theDeveloper Parcels or any portion thereof. “Actual knowledge” as used hereinshall not impose a duty of investigation and shall be limited to the actualknowledge of the Developer and its principals, employees and agents who haveparticipated in the preparation of this Agreement or the operation, management,or ownership of the Developer Parcels, and information in the possession orcontrol of Developer as of the Date of Agreement.

 

The Developer shall immediately advise the Agency in writing if theDeveloper obtains actual knowledge of any of the following: (a) anypending or threatened environmental claim against the Developer, any DeveloperParcel or any other parcel conveyed to Developer pursuant to this Agreement, (b) anycondition or occurrence on any Developer Parcel or any other parcel conveyed toDeveloper pursuant to this Agreement that (i) results in materialnoncompliance by the Developer with any

 

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applicable GovernmentRequirement, (ii) could reasonably [Illegible] [Illegible] to cause anyDeveloper Parcel or any other parcel conveyed to Developer pursuant to thisAgreement to be subject to any restrictions on the ownership, occupancy, use ortransferability of any Developer Parcel, or any other parcel conveyed toDeveloper pursuant to this Agreement under any Governmental Requirement, or (iii) couldreasonably be anticipated to form the basis of an environmental claim againstthe Developer, any Developer Parcel, or any other parcel conveyed to Developerpursuant to this Agreement.

 

The Developershall take every reasonable precaution to prevent the release of any HazardousMaterials located in, on or under any Developer Parcel, or any other parcelconveyed to Developer pursuant to this Agreement, or any portion thereof. Suchprecautions shall include compliance with all Governmental Requirements withrespect to Hazardous Materials; provided, however, the Developer shall have theright in good faith to contest or challenge any asserted non-compliance. Inaddition, the Developer shall install and utilize such equipment and implementand adhere to such procedures as are consistent with commercially reasonablestandards as respects the disclosure, storage, use, removal and disposal ofHazardous Materials.

 

The Developershall be solely responsible, at its own expense, for the disposal andremediation of any Hazardous Materials discovered during construction of theimprovements on the Site and for the costs of complying with all GovernmentalRequirements with respect to such Hazardous Materials. Notwithstanding theimmediately preceding sentence, if the Developer discovers during constructionof the improvements on a Subarea, that an Acquisition Parcel contains HazardousMaterials that require remediation, and the Agency and the Developer mutuallydetermine that the uninsured costs of remediating those Hazardous Materialswould impose a substantial cost or delay in the Completion of thoseimprovements, the following provisions will apply. The Agency and the Developermust use every reasonable effort to agree to commercially reasonable SiteModifications that would, to the greatest extent feasible, reduce the requiredremediation of that Acquisition Parcel. The Agency will establish a cap on theDeveloper’s uninsured remediation costs for that Acquisition Parcel equal tofifty percent (50%) of those uninsured remediation costs (the **“Remediation Cap”**). Any reasonablynecessary uninsured remediation costs incurred by the Developer that exceed theRemediation Cap will be reimbursed by the Agency, using that portion of theAvailable Site Generated Property Tax Increment that is not otherwisedesignated for repayment of the Agency Obligation pursuant to thePublic-Private Feasibility Agreement (Attachment No. 8). For the purposesof this paragraph, the term “uninsured remediation costs” shall mean theDeveloper’s remediation costs less any deductible under any insurancemaintained under this § 308.1 and less any offset for Hazardous Materials thatwas incorporated into the purchase price or condemnation award paid to theprevious owner by the Agency pursuant to this Agreement. As a conditionprecedent to the Agency’s reimbursement obligation, the Developer must have,prior to beginning construction of any improvements on the applicableAcquisition Parcel, obtained environmental insurance on that parcel thatprovides coverage for the remediation of the Hazardous Materials disclosedthrough a Phase 2 Environmental Assessment, to the extent such insurance isgenerally available at commercially reasonable rates. Further, the Developermust have consulted with the Agency regarding the results of the Phase 2Environmental Assessment and the environmental insurance to be obtained by theDeveloper, prior to obtaining such insurance. If the Agency incurs areimbursement obligation to the Developer pursuant to this paragraph, theDeveloper must seek

 

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contribution from[Illegible] responsible parties, if the [Illegible] recovery exceeds theestimated litigation costs, including reasonable attorneys’ fees. Any suchrecovery, whether by settlement judgment, or otherwise, after deduction of theDeveloper’s litigation costs, including reasonable attorneys’ fees, must bedistributed between the Agency and the Developer in proportion to the uninsuredremediation costs borne by each.

 

The Agency agreesthat, in acquiring any portion of the Site for conveyance to the Developer, itwill use every reasonable effort to assure that the seller of such property isnot released from its existing liability for the Developer’s cost ofremediating Hazardous Materials.

 

**§308.2           Agency’s EnvironmentalRepresentations and Covenants**

 

The Agency shallpromptly give the Developer copies of all “Phase 1” and/or “Phase *2”*investigations, soils reports,geotechnical data, and other information regarding the physical condition ofthe Agency Parcels that is in the possession or control of the Agency (**“Agency Environmental Reports”**). TheDeveloper hereby acknowledges its prior receipt of the Agency EnvironmentalReports described in the List of Environmental Reports (Attachment No. 17).

 

Except as providedin the contents of the reports delivered to the Developer by the Agency pursuantto the immediately preceding paragraph, as of the Date of Agreement the Agencyhereby represents and warrants to the Developer that it has no actual knowledgeof, and has not received any notice or communication from any governmentalagency having jurisdiction over the Agency Parcels, notifying the Agency of theuncured presence of Hazardous Materials beyond non-reportable background levelsin, on, or under the Agency Parcels or any portion thereof. “Actual knowledge”as used herein shall not impose a duty of investigation and shall be limited tothe actual knowledge of the Agency and its officers, employees and agents, whohave participated in the preparation of this Agreement or the operation,management, or ownership of the Agency Parcels, and information in thepossession or control of the Agency as of the Date of Agreement,

 

The Agency shallimmediately advise the Developer in writing if the Agency obtains actualknowledge of any of the following: (a) any pending or threatenedenvironmental claim against the Agency or any Agency Parcel, or any otherparcel acquired by the Agency pursuant to this Agreement, (b) anycondition or occurrence on any Agency Parcel or any other parcel acquired bythe Agency pursuant to this Agreement that (i) results in materialnoncompliance by the Agency with any applicable Governmental Requirement, (ii) couldreasonably be anticipated to cause any Agency Parcel or any other parcelacquired by the Agency pursuant to this Agreement to be subject to anyrestrictions on the ownership, occupancy, use or transferability of any AgencyParcel, or any other parcel acquired by the Agency pursuant to this Agreementunder any Governmental Requirement, or (iii) could reasonably beanticipated to form the basis of an environmental claim against the Agency, anyAgency Parcel, or any other parcel acquired by the Agency pursuant to thisAgreement.

 

**SECTION 309         DEMOLITION AND CLEARANCE**

 

Upon conveyance ofany portion of the Site to the Developer, the Developer shall be responsible,at its expense, for the demolition, disposal and clearance of all above- andbelow-ground structures and improvements, underground storage tanks, debris,

 

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contaminated soil[Illegible] [Illegible] structures and obstructions on, [Illegible] [Illegible]in those portions of the Site (**“SiteClearance”**). Within the time specified in the Schedule ofPerformance, the Developer shall propose to the Agency the means and methodsand prepare and submit plans and specifications in accordance with allapplicable State and Federal regulations and guidelines for the Site Clearance,including removal of asbestos and lead-based paint (the **“Site Clearance Plans”**). The Agency shallhave thirty (30) days from receipt of the Site Clearance Plans to approve ordisapprove the proposed Site Clearance Plans, which approval shall not beunreasonably withheld, and, if denied, shall include the reasons therefore, orit shall be deemed approved.

 

Upon the Agency’sconveyance to the Developer of any portion of the Site, the Developer shallcommence and complete the Site Clearance as to such portion of the Site inaccordance with the Site Clearance Plans. The Developer shall carry out theSite Clearance in conformity with all applicable laws and GovernmentalRequirements, including all applicable federal and state labor laws andrequirements.

 

Prior tocommencement of any Site Clearance, the Developer agrees to procure, or causeits contractor to procure, Payment and Performance Bonds covering the SiteClearance in accordance with the Site Clearance Plans.

 

**SECTION 310 PUBLICIMPROVEMENTS**

 

**§310.1           Dedication of Property**

 

Conditioned uponthe Developer’s acquisition of fee title, the Developer shall dedicate to theCity those portions of the Site that are reasonably required for the LankershimBoulevard and Chandler Boulevard street improvements and for construction ofother public improvements required by the City as a condition of its approvalof any final tract map or other entitlement for the Site. To the extentapproved by the City, the Developer shall be entitled to utilize the dedicationof said portions of the Site for any applicable fees, credits, conditions,mitigations, mitigation measures or other City requirements otherwise allowed bylaw.

 

**§310.2           Construction Bonds**

 

*§310.2.1        Requirements*

 

The Developershall obtain Payment and Performance Bonds, naming the City or the Agency asobligee, as their interests may appear, covering labor, materials and faithfulperformance of the construction of all public improvements to be constructed oneach Subarea in accordance with the plans and drawings approved by the Agency.For the purpose of this Section 310, the term “public improvements” shallmean those public improvements required to be constructed as a condition ofapproval of any entitlement or final tract map for a Subarea. Each such bondshall be in the amount equal to one hundred percent (100%) of the constructionprice in an Agency-approved construction contract between the Developer and itscontractor. The Agency shall agree to accept the bonds required by the City.The Developer shall deliver to the Agency a certificate or certificates fromthe bonding company(s) issuing such bonds.

 

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*§310.2.2        Schedule for Delivery*

 

The Developershall provide to the Agency or the City, as their interests may appear, Paymentand Performance Bonds for all public improvements to be constructed on theSubarea, to be provided upon the earlier of the recordation of any final tractmap or the submittal to the Agency pursuant to the Schedule of Performance of aPreliminary Subdivision (Redevelopment) Map along with a metes and boundsdescription for that Subarea and, in any event, prior to commencing constructionof the improvements to be developed on that Subarea.

 

**SECTION 311         INTENTIONALLY OMITTED**

 

**SECTION 312         COSTS OF CONSTRUCTION**

 

The cost ofassembling the Site and constructing all improvements thereon or in connectiontherewith (including, without limitation, all work described in the Scope ofDevelopment and all conditions of approval, infrastructure, dedications andmitigation measures related to approval of entitlements, and all demolition,grading, excavation and site improvement and remediation, and all itemsreferred to in the definition of Project Costs set forth in § 601.2 below)shall be borne solely by the Developer, except as follows:

 

1.         The Agency shall comply with thePublic-Private Feasibility Agreement attached hereto as Attachment No. 8.

 

2.         The Agency shall at no cost to theDeveloper, perform all required affordable housing obligations arising underthe Community Redevelopment Law, including, without limitation, the provisionof replacement housing, inclusionary housing and the expenditure of apercentage of tax increment revenue on low- and moderate-income housing. Toeffectuate the foregoing, the Agency shall, to the extent required to offsetthe reduction in revenue resulting from the inclusion of those affordablehousing units required to be constructed on Subareas A and B pursuant to §103.1, provide the Affordable Housing Assistance described in thePublic-Private Feasibility Agreement (Attachment No. 8).

 

The Developershall use all commercially reasonable efforts to have the Agency and the Citynamed as obligees on any payment and performance bonds that the Developer isrequired to provide to its lender(s).

 

**SECTION 313         SCHEDULE OF PERFORMANCE**

 

Following theAgency’s conveyance or delivery of possession of each Subarea (to the extent notalready acquired by the Developer), the Developer shall promptly begin andthereafter diligently prosecute to Completion the construction of theimprovements thereon and the development thereof as provided in the Scope ofDevelopment, the Concept Plan, Master Plans, Schematic Drawings, DesignDevelopment Drawings, Construction Drawings, and the City-approved plans andpermits.

 

The Developershall begin and complete all construction and development on each Subarea orportion thereof within the times specified in the Schedule of Performance(Attachment No. 7), subject to events of force majeur. The Schedule ofPerformance is

 

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subject to revision fromtime to time as mutually agreed [Illegible] [Illegible] writing between theDeveloper and the Agency.

 

**SECTION 314         PROJECT DEVELOPMENT PROGRESS REPORTS**

 

During periods ofconstruction, the Developer shall submit to the Agency written reports of theprogress of the construction when and as requested by the Agency, but not morefrequently than monthly. The reports shall include information relating to theDeveloper’s compliance with applicable federal, state, and local law (includingbut not limited to the payment of prevailing wages), Agency policies, and theCommunity Benefits Package, to the extent applicable, and shall be in such formand detail as may be reasonably required by the Agency and shall include areasonable number of construction photographs (if requested) taken since thelast report by the Developer.

 

**SECTION 315         AGENCY’S RIGHTS OF ACCESS**

 

Representatives ofthe Agency shall have a reasonable right of access to the Site or any portionthereof, without charges or fees, at normal construction hours during theperiod of construction for the purposes of this Agreement, including, but notlimited to, the inspection of the work being performed in constructing theimprovements on the Site. Representatives of the Agency shall be those who areso identified in writing by the Agency’s Administrator. The Agency’srepresentatives shall not interfere with any work being done at the Site duringsuch access. The Developer shall have the right to accompany the Agencyrepresentatives during such Site access.

 

**SECTION 316         INDEMNIFICATION OF INSURANCE**

 

**§316.1           Developer’s Indemnity**

 

The Developershall defend, indemnify, assume all responsibility for, and hold theIndemnitees harmless from and against any and all Loss arising from any acts oromissions of the Developer or any of its agents, contractors, subcontractors oremployees relating to the subject matter of this Agreement, including but notlimited to (i) the design, development and construction of theimprovements upon the Site, whether the damage shall accrue or be discoveredbefore or after termination of this Agreement, (ii) any breach or defaultby the Developer of its obligations under this Agreement (other than underthose provisions hereof which expressly limit the Agency’s remedies), and (iii) theoperation and use of the Project. The Developer shall not be liable for anyLoss arising from the wrongdoing or gross negligence of any of the Indemnitees.As used herein, (i) “Loss” shall mean all loss, costs and expenses arisingout of all claims, demands, losses, damages, liens, liabilities, injuries,deaths, penalties, relocation or disruption of use, fines, lawsuits and otherproceedings, judgments and awards rendered therein, including reasonableattorneys’ fees and costs, and (ii) **“Indemnitees”**shall mean the Agency, the City, and their respective board members,commissioners, council members, officers, employees and agents. The Developer’sduty to indemnify shall survive the termination of this Agreement.

 

**§316.2          Insurance Requirements**

 

The Developershall maintain or cause to be maintained, and keep in full force and effect,the following insurance coverage issued by companies admitted to do business

 

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in California unlessotherwise approved by the Agency’s [Illegible] Management Division (whichapproval shall not be unreasonably withheld or delayed).

 

§316.2.1         Policy Requirements

 

1.         Commercial General LiabilityInsurance. A policy of commercial general liability insurance (occurrenceform) having a combined single limit of not less than Two Million Dollars($2,000,000) per occurrence, and Ten Million Dollars ($10,000,000) in theaggregate, providing coverage for, among other things, blanket contractualliability, premises, products/completed operations, bodily injury, propertydamage and personal injury coverage, with deletion of the exclusion forexplosion, collapse or underground hazard, if applicable. The commercialgeneral liability insurance policy shall be broad form and provide for andprotect the Agency and the City against incurring any legal cost in defendingclaims for alleged loss.

 

2.         Automobile Liability Insurance.The Developer shall require contractors working on the Site to havecomprehensive automobile liability insurance having a combined single limit ofnot less than One Million Dollars ($1,000,000) per occurrence and Two MillionDollars ($2,000,000) in the aggregate, and insuring the contractor againstliability for claims arising out of ownership, maintenance, or use of anyowned, hired or non-owned automobiles.

 

3.         Workers’ Compensation and Employer’sLiability Insurance. Workers’ compensation insurance having limits not lessthan those required by state statute and federal statute, if applicable, andcovering all persons employed by the Developer and the Developer’s contractorsin the conduct of its operations on the Site (including the “all states” andvolunteer’s endorsements, if applicable), together with employer’s liabilityinsurance coverage in the amount of at least One Million Dollars ($1,000,000).

 

4.         Property Insurance. A Builder’sRisk policy of insurance or equivalent (including boiler and machinerycomprehensive form, if applicable) covering the Project during the course ofconstruction in an amount equal to the full replacement cost thereof. An “allrisk” policy of insurance or equivalent (including boiler and machinerycomprehensive form, if applicable) covering the improvements on the Site in anamount equal to the full insurable replacement cost thereof (including costsattributable to a change in laws), without deduction for depreciation, withsuch reasonable deductible amounts as may be customary from time to time inother comparable mixed-use commercial developments. Such, “all risk” policy ofinsurance or equivalent shall insure against all risks, including loss or damageby earthquake (with coverage levels based on maximum probable loss analysis asset forth in a seismic analysis prepared by a licensed engineer), to the extentsuch earthquake coverage is available at commercially reasonable rates, fire,windstorm, aircraft, vehicle, smoke damage, water damage, flood, sprinklerleakage, riot civil commotion and terrorist acts. The Developer can satisfy itsobligations under this paragraph by having such obligations fulfilled by atenant, subtenant or operating agent.

 

*§316.2.2        General*

 

1.         Insurance Companies. Insurancerequired to be maintained pursuant to this Agreement shall be written bycompanies licensed to do business in California and having a “GeneralPolicyholders Rating” of at least “A” (or such higher rating as may be

 

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required by a Mortgage)as set forth in the most current issue of “Best’s Key Rating Guide.”

 

2.         Certificates of Insurance. TheDeveloper shall monitor the insurance of Developer’s contractors and maintainproof of such insurance during construction. The Developer shall deliver to theAgency certificates of insurance with original endorsements for all coveragesrequired by this § 316.2. The certificates and endorsements of each insurancepolicy shall be signed by a person authorized by the insurer to bind coverageon its behalf. The certificates and endorsements shall be on forms reasonablyacceptable to the Agency. The Developer shall furnish the Agency withcertificates of insurance and the Developer’s contractors shall provide same tothe Developer prior to commencement of construction and certificates of renewalor “binders” thereof at least ten (10) days prior to expiration of eachpolicy, but in all events prior to expiration. Each certificate shall expresslyprovide that such policies shall not be cancelable or otherwise subject tomodification except after sixty (60) days’ prior written notice to the Agency(except in the case of cancellation for nonpayment of premium in which casecancellation shall not take effect until at least ten (10) days’ writtennotice has been given to each additional insured).

 

3.         Additional Insureds. Allpolicies of insurance required hereunder (other than worker’s compensationinsurance) shall name “The Community Redevelopment Agency of the City of LosAngeles, California” and “The City of Los Angeles” as additional insureds. Thecommercial general liability policy required under Paragraph 1 of § 316.2.1above shall provide for severability of interest.

 

4.         Excess Coverage. Any umbrellaliability policy or excess liability policy shall be in “following form” andshall contain a provision to the effect that, if the underlying aggregate isexhausted, the excess coverage will drop down as primary insurance.

 

5.         Notification of Incidents. TheDeveloper shall promptly notify the Agency of the occurrence of any accidentsor incidents in connection with the Project which could give rise to a claimunder any of the insurance policies required under this § 316.2. The Developershall notify its insurer of the occurrence of any accidents or incidents inconnection with the Project within the time periods required under eachinsurance contract and shall provide a copy of that notice to the Agency.During construction, the Developer shall require the contractors to comply withthe requirements of this Paragraph 5.

 

6.         Full Insurable Value. The term “fullinsurable value” shall mean the actual replacement cost (without deduction fordepreciation) of the covered improvements immediately before such casualty orother loss, including the cost of construction of the improvements,architectural and engineering fees, and inspection and supervision. Developershall make available to the Agency upon request, for its review and approval, alldocuments, data and resources used in determining the full insurable value.

 

7.         No Cancellation. All policies ofinsurance shall not be subject to cancellation, reduction in coverage, ornon-renewal except after notice in writing shall have been sent to the Agencynot less than ten (10) days prior to expiration or thirty (30) days priorto the effective date of any other cancellation, amendment or reduction incoverages.

 

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8.         Premiums. The Developer agreesto pay all premiums timely for all insurance required by this § 316.2 and, atits sole cost and expense, to comply and secure compliance with all insurancerequirements necessary for the maintenance of such insurance.

 

9.         Certificates. The Developershall submit insurance certificates with appropriate endorsements as proof ofinsurance required by this Agreement to the Agency prior to commencement ofconstruction.

 

10.       Blanket Policies Compliance. Theinsurance described in this § 316.2 may be carried under a policy or policiescovering other liabilities and locations of the Developer and/or may besatisfied in whole or in part under any plan of self insurance permittedhereunder from time to time.

 

11.       Waiver of Subrogation. TheDeveloper shall use its reasonable efforts to ensure that each policy ofproperty insurance relating to the Project, shall permit a waiver ofsubrogation.

 

12.       Duration of Obligations. TheDeveloper shall, for each Subarea, obtain the policies required in § 316.2.1within the time set forth in the Schedule of Performance and shall maintainsuch policies until the issuance of a Release of Construction Covenants forthat Subarea.

 

13.       Notice. Developer shall send allrequired insurance information to the Agency’s Risk Management Division at 354South Spring Street, Suite 500, Los Angeles, California 90013. Allcorrespondence shall reference Agency Contract No. 4075.

 

**§316.3           Restoration**

 

If any of theimprovements to be constructed on the Site are damaged or destroyed prior tothe issuance of a Release of Construction Covenants by the Agency and providedthe proceeds together with any deductible under any insurance maintained underthis Section 316 are sufficient, as the Agency and the Developer mutuallydetermine, then, as soon as reasonably practicable thereafter, suchimprovements shall be repaired, rebuilt and restored by the Developer at leastto a condition substantially equivalent to their condition immediately prior tothe damage or destruction, to the extent permitted by law. Such repair,reconstruction and restoration shall be in accordance with this Agreement,including but not limited to the Scope of Development, the Concept Plan, andCity-approved plans and permits. If and to the extent that, as the Agency andthe Developer mutually determine, the proceeds together with any deductibleunder any insurance maintained under this Section 316, are insufficient topay the substantial cost of such repair, rebuilding or restoration due to adefault by the Developer with respect to its obligations to maintain suchinsurance under this Agreement, then the Developer shall nevertheless beobligated to pay the cost of such repair, rebuilding, or restoration. Anymaterial changes that the Developer proposes to make to the design of the replacementor repaired improvements shall be subject to the Agency’s approval under Section 306of this Agreement. If and to the extent that the proceeds together with anydeductible under any insurance maintained under this Section 316, areinsufficient to pay the substantial cost of such repair, rebuilding orrestoration notwithstanding that the Developer has performed its obligations tomaintain insurance under this under this Section 316, then the Developershall not be obligated to repair, rebuild or restore the improvements. If theAgency and the Developer mutually determine that the Developer is not requiredto

 

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repair, rebuild or[Illegible] the Improvements pursuant to this [Illegible], then the Developershall demolish and remove the improvements and restore the affected portion ofthe Site to a clean and level condition, to the extent such proceeds aresufficient to pay the costs of that work. Within thirty (30) days following thewritten request of the Developer, describing accurately and with specificitythe affected portion of the Site and certifying that it has been restored to aclean and level condition to the extent required hereunder, the Agency shallfurnish the Developer with an executed and acknowledged Release of ConstructionCovenants (as defined in Section 319 hereof), with respect to that portionof the Site.

 

**§316.4           Rights of Mortgagees**

 

If any Mortgageehas the right to retain any proceeds or control the disbursement of anyproceeds and in fact exercises such right, but notwithstanding the exercise bysuch Mortgagee of such right there remain proceeds which are insufficient topay the cost or repair, rebuilding or restoration of all structures which werecovered by the insurance policy or policies in question, but which aresufficient to pay the cost of repair, rebuilding or restoration of the damagedor destroyed improvements, then, subject to the rights of Mortgagees, theDeveloper shall be obligated to prioritize the use of the remaining proceeds soas to repair, rebuild and restore such improvements in the manner set forth in§316.3.

 

**SECTION 317         CONSTRUCTION SIGNS**

 

The Developershall provide the construction site signs (**“ConstructionSigns”**)****in accordancewith the Agency’s standards for such signs set forth in the Scope ofDevelopment (Attachment 1). The Construction Signs shall be erected on the Siteprior to commencing construction of the improvements on a Subarea and inlocations reasonably approved by the Agency.

 

**SECTION 318         COMPLIANCE WITH LAWS AND POLICIES ;COMMUNITY BENEFITS PACKAGE**

 

The Developershall carry out the design and construction of the improvements on the Site Inconformity with all applicable laws, including all applicable federal, state,and local labor standards, the City zoning and development standards, building,plumbing, mechanical and electrical codes, and all other provisions of the CityMunicipal Code, and all applicable disabled and handicapped accessrequirements, including without limitation the Americans With Disabilities Act,42 U.S.C. Section 12101, *et seq.,*GovernmentCode Section 4450, *et seq.,*GovernmentCode Section 11135, *et seq.,*andthe Unruh Civil Rights Act, Civil Code Section 51, *et seq.*The Developer shall also complywith all requirements arising out of the use of public funds in the acquisitionof any portion of the Site or in the construction of any improvements on theSite, including but not limited to requirements arising from the HUD Loan andEDI Grant, and the federal reporting requirements arising from the Agency’sadministration thereof. Notwithstanding the foregoing, the Developer shall havethe right in good faith to contest or challenge any asserted non-compliance. Inaddition, the Developer shall comply with Agency policies as of the Date ofAgreement and the City of Los Angeles ordinances and policies and theprovisions of the Community Benefits Package attached as Attachment No. 10to this Agreement, which collectively include but are not limited to thefollowing. Between the

 

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Community Benefitspackage and the other terms of this Agreement, those provisions that impose agreater obligation on the Developer or are more restrictive of the Developer’srights shall be controlling of the Developer’s rights and obligations underthis Agreement.

 

**§318.1           Non-Discrimination DuringConstruction: Equal Opportunity**

 

The Developer, foritself and its successors and assigns, and transferees agrees that in theconstruction of the improvements on the Site provided for in this Agreement:

 

(1)       It will not discriminate against anyemployee or applicant for employment because of race, color, creed, religion,sex, sexual preference/orientation, age, disability, medical condition,Acquired Immune Deficiency Syndrome (AIDS) acquired or perceived, retaliationfor having filed a discrimination complaint, marital status, national origin orancestry (**“nondiscrimination factors”**).The Developer will take affirmative action to ensure that applicants areemployed, and that employees are treated without regard to thenondiscrimination factors during employment including, but not limited to,activities of: upgrading, demotion, or transfer; recruitment or recruitmentadvertising, layoff or termination; rates of pay or other forms ofcompensation; and selection for training, including apprenticeship. TheDeveloper agrees to post in conspicuous places, available to employees andapplicants for employment, the applicable nondiscrimination clause set forthherein;

 

(2)       It will, ensure that its solicitations oradvertisements for employment are in compliance with the aforementionednondiscrimination factors; and

 

(3)       It will cause the foregoing provisions tobe inserted in all contracts for the construction of the improvements enteredinto after the effective date of this Agreement; provided, however, that theforegoing provisions shall not apply to contracts or subcontracts for standardcommercial supplies or raw materials.

 

**§318.2           Employment and ContractingProcedures**

 

It is the intentof the Redevelopment Plan to preserve the area’s existing employment base andrevitalize the local commercial economy. Accordingly, residents of the ProjectArea shall be provided reasonable preferences in any new employment created asa result of the redevelopment work generated through Agency assistance. Also,to the greatest extent feasible, contracts for work to be performed inconnection therewith shall be awarded to business concerns that are located inor owned in substantial part by persons residing in the Project Area.

 

The Developer andthe Agency acknowledge and agree that it is the policy of the Agency to promoteand ensure economic advancement of minorities and women as well as othereconomically disadvantaged persons through employment and in the award ofcontracts and subcontracts for construction in redevelopment project areas.Subject to the foregoing, the Developer shall employ or select employees,contractors and subcontractors possessing the necessary skill, expertise, experience,cost level and efficiency for the development of the Project.

 

*§318.2.1        Utilization of Minority and WomenBusinesses (M/WBE)*

 

(a)        The Agency’s goal is that contracts andsubcontracts awarded by developers and their prime contractors be awarded to MBEfirms in a dollar amount that is equal to twenty percent (20%), and WBE firmsin a dollar amount equal to five percent

 

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(5%) of the [Illegible]of all contracts to be awarded in connection with any Agency redevelopmentproject.

 

(b)       The Developer shall use commerciallyreasonable efforts to seek out and award contracts and advocate the seeking outand awarding of contracts and subcontracts for the development of the Projectto contracting firms that are located or owned in substantial part by personsresiding in the Project Area and to those firms representative of minoritiesand women. This requirement applies to both the construction and operationsphases of the Project.

 

*§318.2.2        Utilization of Project Area Residents*

 

Developer shallcomply with the provisions of the **“FirstSource Hiring Plan”** included in the Community Benefits Package, inconnection with the development, construction and initial opening of theProject. Such agreement provides, among other things, that the Developer shallin all general contracts for the development of the Project (and itscontractors shall in all subcontracts thereunder), require that to the greatestextent feasible, the labor force in all categories be comprised of residentswithin the Project Area. The Developer and its contractors shall also, to thegreatest extent feasible, require that such labor force be diversified andtherefore, proportionately representative of the minorities and women residingin the in the Project Area. This paragraph shall require the commerciallyreasonable efforts of Developer and its contractors but shall not require thehiring of any person unless such person has the experience and ability, andwhere necessary, the appropriate trade union affiliation, to qualify suchperson for the job. The Developer and its contractors shall make commerciallyreasonable efforts to include within its employ, directly or indirectly,twenty-five percent (25%) of the aggregate number of construction hires fromProject Area residents.

 

*§318.2.3        One Stop Employment Center*

 

The Developeracknowledges that the Project will generate construction and permanent jobson-site as well as permanent jobs from the development of new and expandingbusiness opportunities in the immediately surrounding area. The Developeragrees to cooperate in increasing the access of the community to these jobopportunities by providing for a **“One StopEmployment Center”**in accordance with paragraph (3) of § 103.1hereof. As needed to comply with Agency, City, or HUD requirements, theDeveloper shall earlier provide an equivalent temporary facility on the Site.In conjunction with the City’s Community Development Department (**“CDD”**) or other agreed vendor of suchservices, the Developer will make a good faith commercially reasonable effortto coordinate with the City’s existing job outreach and training deliverysystem to provide job opportunities created by the Project to the participantsin CDD’s employment programs. The Developer agrees to reasonably cooperate withCDD and trade unions in recruiting the work force for the Project from targetpoverty census tracts City-wide and from census tracts within a three-mileradius of the Site. To assist the Developer in its outreach efforts, the Agencyor CDD will provide the Developer with the zip codes comprising the targetpoverty census tracts.

 

During themanagement and operation of the Project, the Developer shall make a continuingreasonable commitment to ensure the participation of its management and vendorsin utilizing CDD’s job training programs to provide employment opportunities atall levels to qualified persons from target poverty census tracts City-wide andthose census tracts within a three-mile radius of the Site. The Developer shallalso, through its

 

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leases, encourage its[Illegible] to take advantage of local talent [Illegible]**local businesses and to utilize theOne-Stop Employment Center for the tenants’ hiring needs.

 

The Developeragrees to monitor the participation of its contractor, subcontractors andvendors in CDD’s outreach and job training program. The Developer will reportto the Agency on its performance in meeting its job training and outreach goalsin a format and at such times as mutually and reasonably agreed to by theAgency and the Developer. The Agency and the Developer shall cooperate indeveloping forms reasonably acceptable to the Agency and the Developer forreporting such information to the Agency by zip codes.

 

*§318.2.4        Information and Documentation.*

 

(a)       During the construction and operation ofthe improvements on the Site, Developer shall provide to the Agency all reportsrequired pursuant to this Agreement and such information and documentation asreasonably requested by the Agency.

 

(b)       The Developer shall monitor and enforce,or shall cause its general contractor to monitor and enforce, the affirmativeaction and equal opportunity requirements imposed by this Agreement. In theevent Developer fails to monitor of enforce these requirement, the Agency may,after notice from the Agency and an opportunity to cure such failure as setforth in Section 1001 of this Agreement, declare Developer in default ofthis Agreement and pursue any of the remedies available under this Agreement.

 

(c)       As requested, the Agency shall providesuch technical assistance necessary to implement this § 318.2.

 

**§318.3           Prevailing Wages**

 

The Developershall pay or cause to be paid to all workers employed in connection with theconstruction of the Project (excluding demolition of existing improvements andconstruction of tenant improvements), not less than the prevailing rates ofwages, as provided in the statutes applicable to Agency public work contracts,including without limitation Sections 33423-33426 of the California Health andSafety Code and Sections 1770-1880 of the California Labor Code, in accordancewith the Agency’s “Policy on Payment of Prevailing Wages By PrivateRedevelopers or Developers” dated February 1986. In addition to anyrestitution required by the Agency’s Policy and/or applicable law, theDeveloper or any owner determined by the Agency to have violated any provisionof the Agency’s Policy, shall forthwith pay the following as a penalty to theAgency:

 

(1)       Payment of less than prevailing wages:$50 per calendar day, or portion thereof, for each worker paid less thanprevailing wages.

 

(2)       Failure to provide all reasonablyrequested records and/or provide access to job site or worker: $500 per day, orportion thereof.

 

(3)       If the construction work covered underthis Agreement is financed in whole or in part with assistance provided under aprogram of the U.S. Department of Housing and Urban Development or some othersource of Federal funding, Developer shall comply with or cause its contractorand all subcontractors to comply with the requirements of the Davis-Bacon Act(40 U.S.C. 276 et seq.) To the extent applicable to the Project, theDavis-Bacon Act requires the payment of wages to all laborers and

 

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mechanics at a rate[Illegible] than the minimum wage specified the Secretary of Labor in theperiodic wage rate determinations as described in the Federal Labor StandardsProvisions (HUD-4010) available from the Agency’s Compliance Division. TheAgency represents and warrants that Agency policies as of the Date of Agreementdo not require the use of the HUD Loan proceeds or any other federal funds forconstruction of improvements.

 

(4)       Prior to the commencement of grading workin connection with the construction of the improvements on the Site, and assoon as practicable in accordance with the Schedule of Performance, theDeveloper shall contact the Agency to schedule a pre-construction orientationmeeting with the Developer and with the General Contractor to explain suchmatters as the specific rates of wages to be paid to workers in connection withthe development of the Project, pre-construction conference requirements,record keeping and reporting requirements necessary for the evaluation of theDeveloper’s compliance with this § 318.3.

 

(5)       The Developer shall monitor and enforcethe prevailing wage requirements imposed on its contractors and subcontractors,including withholding payments to those contractors or subcontractors whoviolate these requirements. In the event that the Developer fails to monitor orenforce these requirements against any contractor or subcontractor, theDeveloper shall be liable for the full amount of any underpayment of wages,plus costs and reasonable attorneys’ fees, as if the Developer was the actualemployer, and the Agency may withhold monies owed to the Developer, may imposepenalties on the Developer in the amounts specified herein, may take actiondirectly against the contractor or subcontractor as permitted by law, and/ormay declare the Developer in default of this Agreement and pursue any of theremedies available under this Agreement.

 

(6)       Any contractor or subcontractor who is atthe time of bidding debarred by the Labor Commissioner pursuant to Section 1777.1of the California Labor Code is ineligible to bid on the construction of any ofthe improvements to be constructed on the Site or to receive any contract orsubcontract for work covered under this Agreement. Any contractor or subcontractorwho is at the time of the contract listed in the List of Parties Excluded FromFederal Procurement or Nonprocurement Programs issued by the U.S. GeneralServices Administration pursuant to Section 3(a) of the Davis-BaconAct is ineligible to receive a contract for work covered under this Agreement.

 

(7)       By entering into this Agreement, theDeveloper certifies that it is not a person or firm ineligible to be awardedGovernment contracts by virtue of Section 3 (a) of the Davis-BaconAct or 29 CFR 5.12(a)(l) or to be awarded HUD contracts or participate inHUD programs pursuant to 24 CFR Part 24. The Developer agrees to include,or cause to be included, the above provision, to be applicable to contractorsand subcontractors, in each contract and subcontract for work covered underthis Agreement.

 

(8)       Tenant improvements are outside therequirements of this § 318.3.

 

(9)       For the purposes of assuring compliancewith the provisions of this § 318.3, representatives of the Agency and the Cityshall have the reasonable right of access and inspection, without charges orfees and at normal construction hours, to any construction trailer located onthe Site where relevant records are kept by the Developer or its designee. TheAgency and the City shall indemnify and pay for the defense of the Developerand hold it harmless from any damage caused and all liability, loss, cost and

 

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expense including,without limitation, reasonable attorneys’ fees and costs, arising out of thisright of access and inspection.

 

(10)                The Developeragrees to include, or cause to be included, the requirements of this § 318.3 inall bid specifications for work covered under this Agreement and to beapplicable to all contractors and subcontractors, in each contract andsubcontract for work covered under this Agreement.

 

**§318.4****                       PublicArt Policy**

 

The Developeragrees to conform to all of the requirements of the Agency’s **“Public Art Policy”**as specifically setforth in Attachment No. 9 attached hereto.

 

**§318.5****                       LivingWage**

 

The Developer andthe Agency agree that any individuals employed directly by the Developer, theAgency or any of their respective contractors or subcontractors in theimprovements, shall be paid wages (the **“LivingWage”**) during the operations and maintenance of the Project or anyportion thereof, not less than the minimum wages determined in accordance withthe City’s **“Living Wage Ordinance”**andin accordance with the **“Living Wage Plan”**containedin the Community Benefits Package. Further, the Developer agrees to encouragetenants and prospective tenants of the Project to pay their employees theLiving Wage by, among other things, (i) including in tenant packagesreferences to the Living Wage and the Developer’s support thereof, and (ii) providingan example by implementing the Living Wage Plan as to Developer’s employees.All other things being equal (including but not limited to economic terms andfinancial strength), the Developer shall, in its selection of tenants in theProject, provide a preference to tenants that are willing to make a commitmentto paying a Living Wage to their employees. The Developer’s obligation tocomply with the City’s Living Wage Ordinance shall apply for the entire timeduring which that Ordinance is in effect. The Developer’s obligation to complywith the remaining obligations in this Section 318.5 shall continue forthe duration of the Continuing Covenants in the Agreement Containing CovenantsAffecting Real Property (Attachment No. 14). The City shall be responsiblefor monitoring the Developer’s compliance with the City’s Living Wage Ordinanceand the provisions of this § 318.5.

 

**SECTION 319****                          RELEASEOF CONSTRUCTION CONVENANTS (CERTIFICATE OF COMPLETION)**

 

Promptly afterCompletion of all construction and development required by this Agreement to becompleted by the Developer upon or with respect to each Subarea and uponwritten request by the Developer, the Agency shall furnish the Developer withan executed and acknowledged **“Release ofConstruction Covenants”**in substantially the form appended to thisAgreement as Attachment No. 11 and incorporated herein by this reference;provided that, the Agency shall not be obligated to issue a Release ofConstruction Covenants until the Developer has submitted the Certified ProjectCost Statement required by Section 601 of this Agreement. The Agency maynot withhold the Release of Construction Covenants for a Subarea if the Developerhas Completed the initial tenant improvements for at least ninety percent (90%)of the restaurant, retail, and office space in that Subarea and the Agency hasdetermined that the Developer is otherwise entitled to a Release ofConstruction Covenants for that Subarea. If the initial

 

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tenant improvements forat least ninety percent (90%) of the restaurant, retail, and office space in aSubarea have not been Completed solely due to the fact that the space has notbeen fully leased and if the Developer is otherwise fully entitled to a Releaseof Construction Covenants for that Subarea, the Agency shall not be required toissue a Release of Construction Covenants for that Subarea, but the Agency shallprovide a certificate of estoppel setting forth the reason it is withholdingthe Release of Construction Covenants and the Agency shall agree, subject toobtaining appropriate protections of the Agency’s security, to subordinate theconstruction covenants for that Subarea to the lien of Developer’s lender. TheAgency shall not unreasonably withhold or delay the Release of ConstructionCovenants. The Release of Construction Covenants shall be a conclusivedetermination of satisfactory Completion of the construction required by thisAgreement upon or with respect to the Subarea, and a termination of theconstruction covenants contained in this Agreement and the constructioncovenants of the Agreement Containing Covenants Affecting Real Property asthose covenants apply to that Subarea, and the Release of ConstructionCovenants shall so state. Upon issuance of the Release of ConstructionCovenants, the Agency shall release any Payment and Performance Bonds for theimprovements covered by that Release of Construction Covenants.

 

The Release ofConstruction Covenants shall be in such form as to permit it to be recorded inthe Recorder’s Office of Los Angeles County.

 

If the Agencyrefuses or fails to furnish a Release of Construction Covenants after writtenrequest from the Developer, the Agency shall, within thirty (30) days of itsreceipt of the written request, provide the Developer with a written statementof the reasons the Agency refused or failed to furnish the Release ofConstruction Covenants. The statement shall also contain the Agency’s opinionof the action the Developer must take to obtain a Release of ConstructionCovenants; provided, however, that the statement need not contain technicalinformation or instructions.

 

If the reason forthe Agency’s refusal to issue a Release of Construction Covenants is confinedto the Developer’s failure to complete specific punch list items, the Agencyshall issue the Release of Construction Covenants upon the posting of a Paymentand Performance Bond by the Developer, first approved in writing by the Agencyas to form and substance, in favor of the Agency in an amount representing thefair value of the work not yet completed. The bond shall specify a deadline forcompletion of the outstanding items, which shall be the earliest reasonabledate and shall not be more than ninety (90) days after the issuance of theRelease of Construction Covenants.

 

If the Agencyfails to issue either a Release of Construction Covenants or the writtenstatement describing its reasons for refusing to furnish a Release ofConstruction Covenants within thirty (30) days of its receipt of the Developer’swritten request therefor, then the Developer may submit to the Agency bycertified mail a second request. If the Agency fails to issue either a Releaseof Construction Covenants or the written statement described in the immediatelypreceding paragraph within ten (10) days of its receipt of the secondrequest from the Developer, then the Developer shall be deemed entitled to suchRelease of Construction Covenants; provided that, both the first and secondrequests for a Release of Construction Covenants must be accompanied byevidence of Completion of the improvements and provided further that, thesecond request must contain the following statement, in bold print, allcapitals, 14-point type:

 

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**NOTICEIS HEREBY GIVEN THAT FAILURE TO RESPOND TO THIS REQUEST IN WRITING WITHIN 10BUSINESS DAYS IN THE MANNER REQUIRED BY SECTION 319 OF THE OWNER PARTICIPATIONAGREEMENT SHALL BE DEEMED AN APPROVAL OF THIS REQUEST PURSUANT TO THAT SECTION.**

 

The Release ofConstruction Covenants shall not constitute evidence of compliance with orsatisfaction of any obligation of the Developer to any holder of a mortgage, orany insurer of a mortgage securing money loaned to finance the improvements, orany part thereof, or of the Developer’s performance of any obligation underthis Agreement other than completion of the construction to which the Releaseof Construction Covenants pertains. The Release of Construction Covenants isnot a notice of completion as referred to in Section 3093 of theCalifornia Civil Code.

 

**ARTICLE 4.  SITEASSEMBLY**

 

**SECTION 401****                         ****DEVELOPER PARCELS**

 

**§ 401.1****          Obtaining Title**

 

Within the timeset forth in the Schedule of Performance, the Developer shall acquire all ofJAR No Ho’s right, title and interest in the Developer Parcels from Jar No Hopursuant to the JV Agreement.

 

**§401.2****             Condition of Title**

 

The Developerhereby covenants and agrees that, from the Date of Agreement and continuing atall times until the Agency issues a Release of Construction Covenants for theimprovements to be constructed on the applicable Subarea, it shall not recordany liens, covenants, restrictions, easements, or leases against the DeveloperParcels or otherwise permit any encumbrances to be recorded against theDeveloper Parcels, except for (i) encumbrances approved by the Agency,which approval shall not be unreasonably withheld; (ii) the covenants,conditions, restrictions and easements arising out of the provisions of thisAgreement, including but not limited to, dedication for street purposes; and (iii) thoseeasements and covenants burdening the Developer Parcels and/or the Site arisingfrom agreements previously entered into between the Developer and third partieswith respect to property abutting the Developer Parcels and/or the Site;provided however, that such easements and covenants referenced in clause (iii) donot impede or render the development of the Site pursuant to this Agreementeconomically infeasible and are otherwise consistent with the development ofthe Site pursuant to this Agreement.

 

**§401.3****             Retention andDevelopment**

 

The Developershall, subject to the conditions for transfer set forth in Section 702,retain fee title to the Developer Parcels and construct the improvements on theDeveloper Parcels, as provided in this Agreement.

 

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**§401.4****             RelocationObligations**

 

All right(s) topossession of all portions of the Developer Parcels necessary for constructionand operation of the Project pursuant to this Agreement shall be cleared by theDeveloper at its sole cost and expense. The relocation of any occupants orbusinesses, if any, required for construction and operation of the Project,including provision of relocation assistance and benefits pursuant toRelocation Laws, shall be the sole financial responsibility of the Developer.Relocation obligations, if any, which arise from the Developer Parcels and/or thisAgreement shall be administered by the Agency (or its designee, a qualifiedrelocation consultant chosen by the Agency) in conformity with the RelocationLaws, with such costs of administration paid by the Developer. The Developershall deliver a retainer to the Agency in the sum of THIRTY THOUSAND DOLLARS($30,000), to be applied to the payment of Agency’s costs. The internaladministrative costs of the Agency shall be charged at the actual andreasonable cost thereof not to exceed a total amount of FIVE THOUSAND DOLLARS($5,000). The Agency’s costs for consultants or legal services required forproviding such assistance shall be the actual sums billed to the Agency forsuch consulting or legal services pursuant to Board-approved professionalservices contracts. All Agency costs in excess of $30,000 shall be paid withinten (10) days after written request therefor by the Agency. If costsincurred by the Agency (including internal administrative costs) equal lessthan $30,000, the balance shall be refunded to the Developer. Notwithstandingany other provision in this Agreement, the Developer’s obligation to pay suchAgency costs shall survive the termination of this Agreement.

 

All of the costand expenses incurred or to be incurred by Developer to cause the vacating ofthe Developer Parcels and/or relocation of all occupants and businesses fromthe Developer Parcels for construction and operation of the Project (including,but not limited to, payments made to displaced persons and businesses, pre- orpost-relocation rental payments, fees and actual expenses of attorneys,relocation consultants and other experts employed to effect the relocation ofoccupants and businesses, etc.) shall be the sole financial responsibility ofthe Developer. Any costs arising out of or related in any respect to suchdisplacement, such as, but without limitation, claims for loss of businessgoodwill, payment for furniture, fixtures and equipment, payment for leaseholdbonus value, and any other compensable interest under Relocation Laws shall bethe sole financial responsibility of the Developer.

 

*§401.4.1**                       Indemnificationfor Relocation Claims*

 

The Developerhereby covenants and agrees to indemnify, save, protect, hold harmless, pay forand defend the Agency, its members, officers, employees, representatives,agents, and consultants, from and against any and all liabilities, suits,actions, claims, demands, penalties, damages (including, without limitation,penalties, fines and monetary sanctions), losses, costs, or expenses, including,without limitation, reasonable consultants’ and reasonable attorneys’ fees, orrelocation benefits claimed or payable under the Relocations Laws which may nowor in the future be incurred or suffered by the Agency by reason of, orresulting from, in full or in part, or in any respect whatsoever from thedisplacement of businesses or other occupants of the Developer Parcels pursuantto this Agreement. This indemnification shall survive the termination of thisAgreement.

 

The Developer, onbehalf of itself and any and all successors and assigns, hereby fully andfinally releases the Agency, the City, and their respective past and present

 

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elective and appointedboards, commissions, officials, employees, representatives and agents from anyand all manner of actions, causes of actions, suits, obligations, liabilities,judgments, executions, debts, claims, and demands of every kind and naturewhatsoever, known and unknown, which the Developer or any of its successors orassigns may now have or hereafter obtain against the Agency or the City ortheir respective past and present elective and appointive boards, commissions,officials, employees, representatives and agents by reason of, arising out of,relating to, or resulting from, in full or in part, or in any respectwhatsoever from the displacement of businesses or other occupants of theDeveloper Parcels pursuant to this Agreement. The parties agree that, withrespect to the release of claims as set forth above, all rights under Section 1542of the California Civil Code and any similar law of any state or territory ofthe United States are expressly waived. Section 1542 reads as follows:

 
|   | **Civil  Code Section 1542. Certain claims not affected by general releases.**A  general release does not extend to claims which the creditor does not know or  suspect to exist in his favor at the time of executing the release which if  known by him must have materially effected his settlement with the debtor. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ** **                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                         |   |
|   | Developer’s Initials                                                                                                                                                                                                                                                                                                    |   |

 

**SECTION 402****                          AGENCYACQUISITION OF PROPERTY**

 

It is the intentof the Parties that the Agency’s acquisition of the Site (to the extent notfirst acquired by the Developer) pursuant to this Agreement shall be funded bya combination of available public funds (referred to herein as **“Acquisition Funds”**) and a Letter of Credit(as defined in Section 402.6.2) provided by the Developer. As set forthmore fully in § 402.6, the Letter of Credit shall be in an amount that, whenadded to the available Acquisition Funds, equals the total amount of theDeveloper Advance (which is defined in Article 2 of this Agreement andwhich includes Acquisition Costs and the Agency’s costs of complying withRelocation Laws). It is also the intent of the Parties that the Agency, to theextent feasible, shall acquire property by first drawing upon the availableAcquisition Funds before making draws upon the Developer Letter of Credit, andin its use of Acquisition Funds, by first drawing upon the Agency bond fundsdescribed in Section 402.1.2 and the CDBG Funds described in Section 402.1.3,before drawing upon the HUD Loan; provided that, the Parties acknowledge andagree that parcels will be acquired as they become available.

 

**§402.1****                       AcquisitionFunds**

 

*§402.1.1**                       HUD Loan*

 

(a) It isanticipated that a loan from the United States Department of Housing and UrbanDevelopment (“**HUD**”) in theapproximate amount of fourteen million dollars ($14,000,000) may be available,through the City’s Community Development Department, to partially fund theacquisition of the Site (**“HUD Loan”**).

 

(b) TheAgency shall make every reasonable effort to enter into a loan agreement withthe City for the HUD Loan by the date provided in the Schedule of Performanceon

 

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terms reasonablyacceptable to the Agency. It is understood and agreed that the Agency will drawdown only that portion of the HUD Loan proceeds that is needed, when added toother available Acquisition Funds, to acquire the Acquisition Parcels. TheAgency and the Developer acknowledge and agree that the obtaining of the HUDLoan is subject to the final approval of HUD.

 

(c) TheDeveloper acknowledges and agrees that the Agency’s use of the proceeds of theHUD Loan as Acquisition Funds will cause the development of the Project to besubject to certain HUD requirements (**“HUDRequirements”**). The Developer agrees that it shall fully comply withthose HUD Requirements in its development and operation of the Project.

 

(d) If theAgency is unable to obtain the HUD Loan by the date provided in the Schedule ofPerformance, then the Agency and the Developer shall use every reasonableeffort to identify and obtain other replacement funding for the HUD Loan on orbefore the date set forth in the Schedule of Performance for the Developer todeliver the Original Letter of Credit to the Agency, as such time may beextended in accordance with the requirements of this Agreement.

 

(e) If theAgency is unable to obtain the HUD Loan by the date provided in the Schedule ofPerformance and the Agency is unable to obtain replacement funding for both theHUD Loan and the EDI Grant described in Section 604.2, then the Developershall have the right to terminate this Agreement.

 

(f) In theevent the HUD Loan is obtained by the Agency, in consideration of theconveyance of the Agency Parcels and the Acquisition Parcels from the Agency tothe Developer and the performance by the Agency of its obligations under thisAgreement, the Developer covenants and agrees that it shall execute anassignment and assumption agreement in a form and substance approved by theAgency’s Administrator and legal counsel, by which the Developer shallexpressly assume and be bound by the duty to perform the Agency’s repaymentobligations under the HUD Loan, except to the extent of the Agency’s HUD LoanRepayment Obligation set forth in the Public-Private Feasibility Agreement(Attachment No. 8). The Developer shall execute such assignment andassumption agreement within thirty (30) days of receipt by Developer of writtennotice from the Agency that the City has approved the agreement between theCity and the Agency for the HUD Loan, provided that the Agency shall havedelivered copies of the HUD Loan documents to the Developer.

 

*§402.1.2**                       AgencyBond Funds*

 

Subject to all theterms and conditions of this Agreement, and within the time set forth in theSchedule of Performance, the Agency shall provide as Acquisition Funds theamount of FIVE MILLION DOLLARS ($5,000,000) in Agency bond proceeds or other availablefunds for acquisition.

 

*§402.1.3**                       CommunityDevelopment Block Grant Funds*

 

The Agency shalluse every reasonable effort to obtain a Community Development Block Grant inthe amount of THREE MILLION DOLLARS ($3,000,000) (**“CDBG Funds”**) to be used by the Agency as Acquisition Funds.

 

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*§402.1.4**                       AdditionalPublic Funds*

 

If the Agency’scosts of acquiring the Acquisition Parcels, the LADOT Parcel, and the MTAParcel substantially exceed the amount set forth in the acquisition andrelocation budgets prepared pursuant to § 402.5, the Agency shall use its goodfaith efforts to identify sources of additional public funds that may beavailable to finance the acquisition of those parcels and to reasonably assistthe Developer in obtaining such funds. The Agency’s agreement to provide thisassistance shall in no way be deemed to constitute a pledge of Agency funds ora monetary obligation of the Agency. Any additional public funds obtainedpursuant to this paragraph shall be included as Acquisition Funds for thepurpose of determining the amount of the Letter of Credit.

 

**§ 402.2****                    Acquisitionand Relocation Estimates**

 

Within the timeprovided in the Schedule of Performance, the Agency shall prepare or cause tobe prepared preliminary estimates of the costs associated with acquiring theAcquisition Parcels (to the extent not first acquired by the Developer), theLADOT Parcel, and the interests in the MTA Parcel to be acquired pursuant to §406.1 of this Agreement. Such estimates shall include the Agency’s AcquisitionCosts and the Agency’s cost, if any, of complying with Relocation Laws, andshall indicate the Acquisition Funds, if any, expected to be allocated to eachParcel. The Agency shall consult with the Developer in preparing thepreliminary estimates.

 

**§ 402.3****                    Appraisalsand Appraisal Advance**

 

Upon receipt ofthe Developer’s request for assistance, pursuant to § 403.1, the Agency shallprepare or cause to be prepared acquisition appraisals for the Acquisition Parcelsto be acquired by the Agency pursuant to Section 403 of this Agreement (tothe extent not first acquired by the Developer). The Agency’s costs ofobtaining such appraisals shall be included in the Agency’s Acquisition Costs.The Agency shall provide the person(s) preparing such appraisals with allPhase I and Phase II Environmental Assessments prepared by the Agency for suchparcels or prepared by the Developer and delivered to the Agency and found tobe reasonably satisfactory for such purposes by the Agency Administrator ordesignee.

 

**§ 402.4****                    EnvironmentalDue Diligence**

 

Within the timeset forth in the Schedule of Performance, the Agency shall, for eachAcquisition Parcel to be acquired by the Agency pursuant to Section 403 ofthis Agreement (to the extent not first acquired by the Developer), the LADOTParcel, and the MTA Parcel, for which Phase I Environmental Assessments havenot already been ordered by the Agency or provided to the Developer, conduct orcause to be conducted a Phase I Environmental Assessment by a companyreasonably acceptable to Developer. The Agency’s costs of obtaining such PhaseI Assessments shall be included in the Agency’s Acquisition Costs.

 

**§ 402.5****                    Acquisitionand Relocation Budgets**

 

Within the timeprovided in the Schedule of Performance, the Agency shall prepare or cause tobe prepared budgets for the Agency’s acquisition of the Acquisition Parcels tobe acquired by the Agency pursuant to Section 403 of this Agreement (tothe extent not first acquired by the Developer), the LADOT Parcel, and the MTAParcel,

 

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which shall include[Illegible] estimates of Acquisition Costs, the [Illegible], if any, ofcomplying with Relocation Laws, and available Acquisition Funds. The budgetsshall include a reasonable description or itemization of the costs in eachcategory. The Agency shall submit the budgets to the Developer for its review.The Agency Administrator shall determine the amount of the Developer Advancebased upon the budgets.

 

**§ 402.6****                    DeveloperAdvance of Costs**

 

The Developershall advance to the Agency the amount of the Developer Advance less theavailable Acquisition Funds as provided in this § 402.6. The Agency shall haveno obligation to repay or reimburse the Developer for any portion of theDeveloper Advance except as provided in the **“Public-PrivateFeasibility Agreement”**(Attachment No. 8) and, subject to theprovisions of § 402.8, the Pre-Conveyance Termination Note and thePre-Conveyance Termination Deed of Trust.

 

*§402.6.1**                    OriginalLetter of Credit*

 

Subject to theextension provisions in the last sentence of this paragraph, and provided theAgreement has not theretofore been terminated pursuant to Section 1003,within the time set forth in the Schedule of Performance, the Developer shalldeliver to the Agency an irrevocable at-sight, standby letter of credit, firstapproved in writing by the Agency as to form, content and issuer, in an amountdetermined pursuant to this § 402.6.1, and otherwise complying with the requirementsof this Agreement (the **“Original Letter ofCredit”**). The Developer may, by written notice delivered to theAgency within the time originally required for delivery of the Original Letterof Credit, extend the time for delivery of the Original Letter of Credit by upto sixty (60) days; but in no event shall the time for delivery to the Agencyof the Original Letter of Credit be later than two hundred and ten (210) daysafter the Date of Agreement.

 

The Original Letter ofCredit shall be in an amount equal to the difference between the total amountof the Developer Advance and the immediately available Acquisition Funds, asestablished by the Agency Administrator based on the budgets prepared by theAgency and reviewed by the Developer pursuant to § 402.5. The Agency shallconsult with the Developer in determining the amount of the Developer Advanceand shall provide written notice to the Developer of the amount of the OriginalLetter of Credit no later than thirty (30) days prior to the date the Developeris required to deliver the Original Letter of Credit to the Agency.

 

*§402.6.2**                    CostOverruns*

 

If the Agencydetermines that the amount of the Developer Advance is likely to exceed thebudget amount, or that the Acquisition Funds are not available in the budgetamount used to calculate the amount of the Original Letter of Credit, theAgency shall consult with the Developer regarding the reasons for the increasein the Developer Advance and the need for additional letter(s) of creditand/or amendment(s) to the Original Letter of Credit. Within thirty (30)days after the Agency provides written notice to the Developer, or earlier ifpayment is ordered by a court or referee, the Developer shall deliver to theAgency additional letter(s) of credit and/or amendment(s) to theOriginal Letter of Credit, first approved in writing by the Agency as to form,content and issuer (each referred to herein as an **“Additional Letter of Credit”**), in such amounts as areproperly requested by the Agency. The Agency may provide such notice at anytime

 

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and from time to time.The Original Letter of Credit, together [Illegible] all Additional Letters ofCredit, are referred to collectively herein as the **“Letter of Credit.”**

 

The Agency shallhave the right to draw on the Letter of Credit from time to time to pay any andall Acquisition Costs and/or costs associated with complying with RelocationLaws. The only condition for any draw on the Letter of Credit shall be acertification by the Agency Administrator or designee that the draw ispermitted under the terms of this Agreement, including without limitation, §402.7 and § 402.8 hereof. The Developer and the Agency shall consult to attemptto schedule relocating and business closures to lawfully minimize AcquisitionCosts and costs of complying with Relocation Laws without delaying completionof the Project. Within fifteen (15) days following each draw on the Letter ofCredit, the Agency shall provide the Developer with a written report showingthe specific nature and amount of each such draw. The Developer shall beresponsible to pay to the issuer of the letter of credit all interest incurredin respect to each and every draw on the Letter of Credit.

 

The term of theOriginal Letter of Credit shall be not less than one (1) year, and suchterm shall be subject to extension if Acquisition Costs or costs of complyingwith Relocation Laws will or might be incurred following the scheduledexpiration of the Letter of Credit. The Original Letter of Credit and anyAdditional Letters of Credit shall contain the “Automatic Renewal Clause”required by the Agency’s policy governing letters of credit. The Agency shallbe entitled to draw down the full amount of the Letter of Credit in the eventthe Developer fails to renew or replace the Letter of Credit not later than 30days prior to its expiration date. The condition shall be satisfied upon thedelivery of the renewed or new Letter of Credit acceptable to the Agency DeputyAdministrator for Financial Services and Chief Financial Officer or his/herdesignee. If the Letter of Credit has expired and the Agency gives writtennotice to the Developer that Acquisition Costs will or may be incurredfollowing such expiration, the Developer shall immediately cause the issuanceof a new letter of credit first approved in writing by the Agency as to form,content and issuer, in the amount properly requested by the Agency.

 

**§ 402.7****                    Preconditionto Agency’s Right to Make Draws Under the Letter of Credit**

 

Notwithstandingany provision hereof to the contrary, the Agency shall not draw on the Letterof Credit unless, prior to or concurrently with such draw, the Agency has, withrespect to those portions of the applicable Subarea that have not been acquiredby the Developer, either (i) adopted, in the sole discretion of theAgency, a resolution of necessity pursuant to California Code of CivilProcedure Sections 1245.210 etseq. authorizing the acquisitionthereof using the Agency’s power of eminent domain; (ii) acquired feetitle; or (iii) entered into a binding and enforceable agreement topurchase fee title without contingencies on the seller’s obligations other thanthe payment of the purchase price, and opened an escrow for purposes ofacquiring title. It is the intent of the Parties, as previously set forth inthis Section 402, that to the extent feasible, the Agency shall not drawon the Letter of Credit so long as Acquisition Funds remain available.

 

**§ 402.8****                    Securityfor Developer Advance**

 

The Agency shall not drawon the Letter of Credit unless, prior to or concurrently with each such draw,the Agency’s Administrator has executed and delivered to the Developer onbehalf of the Agency a promissory note in substantially the form appended tothis

 

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Agreement as Attachment No. 12-Aand incorporated herein by this reference (the **“Pre-Conveyance Termination Note”**), the performance of whichshall be secured by a deed(s) of trust first reasonably approved inwriting by the Agency and the Developer in the form appended to this Agreementas Attachment No. 12-B (the **“Pre-ConveyanceTermination Deed of Trust”**) as revised to reflect the reconveyanceprovisions of this Section 402.8, which the Agency’s Administrator shallexecute, acknowledge and deliver on behalf of the Agency concurrently with thePre-Conveyance Termination Note(s). The Agency shall not encumber any portionof the Site during the term of this Agreement except in implementing theprovisions of this § 402.8 or as otherwise reasonably agreed by the Developer,and shall not during such term take any steps to impair the contemplatedsecurity to be provided by the Pre-Conveyance Termination Deed(s) ofTrust. The property subject to the Pre-Conveyance Termination Deed(s) ofTrust shall be any portion of the Acquisition Parcels then owned by the Agency,and, if and only if the Agency does not obtain the HUD Loan, the AgencyParcels; provided that the Agency’s Administrator shall execute, acknowledgeand deliver additional Pre-Conveyance Termination Deed(s) of Trust assubsequent parcels are acquired using the proceeds of the Letter of Credit. ThePre-Conveyance Termination Deed(s) of Trust shall provide for reconveyancethereunder of the property subject to the Pre-Conveyance Termination Deed(s) ofTrust that either (a) is conveyed to Developer, or (b) is excludedfrom the Site pursuant to Section 102 of this Agreement, or (c) is tobe conveyed to a third party as provided by Section 3(b) of thePre-Conveyance Termination Promissory Note, subject to concurrent payment ofNet Sales Proceeds to Developer. The Pre-Conveyance Termination Deed(s) ofTrust shall also provide for reconveyance to the Agency, at no cost to theAgency, of any Agency Parcels encumbered by such deed(s) of trust if theAgency terminates this Agreement because of a Developer Event of Default.

 

**SECTION 403****                          ACQUISITIONPARCELS**

 

**§ 403.1****                    Developer’sEfforts to Acquire**

 

During the 90-day periodimmediately following the Date of Approval of this Agreement, the Developershall use all commercially reasonable efforts to acquire fee title to theAcquisition Parcels, or as much thereof as possible, through voluntarynegotiation without any Agency involvement. The Developer shall, prior to theexpiration of that 90-day period, either complete the documentation of theacquisition or request in writing the Agency’s assistance in acquiring thoseportions of the Acquisition Parcels that the Developer was unable to acquire orexecute an agreement to acquire.

 

**§ 403.2****                    AgencyAcquisition of Acquisition Parcels**

 

The Agency may, inits sole discretion, decide either to limit its attempts to acquire theAcquisition Parcels to voluntary negotiation with the property owners or toconsider exercising its power of eminent domain. The Agency expressly reservesthe right, and hereby agrees, to substantially comply with all applicable lawsin connection with any exercise or potential exercise of the power of eminentdomain.

 

**§ 403.3****                    AgencyOffers to Purchase**

 

The Agency may, inits sole discretion, attempt to acquire the Acquisition Parcels or any portionthereof through voluntary negotiation with the property owner. The Agencyshall, for any portion of the Acquisition Parcels sought to be acquired by the

 

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Agency, cause to be[Illegible] two independent appraisals by licensed appraisers in privatepractice, subject to Agency policy. Based upon such appraisals, the Agencyshall establish an amount that it believes to be just compensation for theproperty sought to be acquired, which amount shall not be less than theproperty’s appraised fair market value. Prior to establishing the amount ofjust compensation for any portion of the Acquisition Parcels, the Agency shallconsult with the Developer regarding such amount. The Agency expressly reservesto itself the authority to determine the terms of any such offer and to controlthe course and timing of the negotiations.

 

**§ 403.4****                    EminentDomain Actions; Orders for Possession**

 

(a) TheAgency may, in its sole discretion, decide to consider exercising its power ofeminent domain in the acquisition of the Acquisition Parcels or any portionthereof. Nothing in this Agreement shall be deemed to obligate the Agency topursue the acquisition of the Acquisition Parcels or any portion thereofthrough the exercise of eminent domain. If the Agency chooses to exercise itspower of eminent domain in acquiring the Acquisition Parcels or any portionthereof and such acquisition cannot be completed prior to the date forconveyance of the property to the Developer as specified in the Schedule ofPerformance, the Agency shall use every reasonable effort to obtain an order ofprejudgment possession to allow the Developer to take possession of suchproperty pursuant to Section 507 of this Agreement.

 

(b) If theAgency determines in its sole discretion not to adopt a resolution of necessitypursuant to California Code of Civil Procedure Sections 1245.210 etseq.to authorize the acquisition of all or any part of the Acquisition Parcels usingthe Agency’s power of eminent domain and such acquisition cannot be completedthrough voluntary negotiation prior to the date for conveyance of the propertyto the Developer as specified in the Schedule of Performance, then theDeveloper and the Agency may agree to exclude such portion of the AcquisitionParcels from the Site, pursuant to Section 102 of this Agreement.

 

**§ 403.5****                    Settlementof Eminent Domain Actions**

 

If the Agencychooses to exercise its power of eminent domain in acquiring the AcquisitionParcels or any portion thereof, the Agency may continue to negotiate with theproperty owner to reach a settlement of the condemnation action. The Agencyshall advise the Developer regarding the terms of such settlement offers, butthe Agency expressly reserves to itself the authority to determine the terms ofany such settlement. If the Agency is successful in negotiating a settlementthat results in a dismissal of the condemnation action, the Developer shallremain obligated to pay the costs of such condemnation action and thesettlement thereof, in accordance with the terms of this Agreement.

 

**SECTION 404****                         ****SUBAREA D PARCELS**

 

It is contemplatedby the Parties that the LAUSD will acquire the Subarea D Parcels fordevelopment of a high school. Ifthe LAUSD decides not to acquire Subarea D or any portion thereof, or acquiresSubarea D or any portion thereof and thereafter decides to dispose of Subarea Dor any portion thereof, Subarea D or the applicable portion thereof shall beincluded in the Site and the Agency and the Developer shall use good faithefforts to agree on Site Modifications for that property pursuant to Section 102(c).If

 

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theAgency and the developer agree on those Site Modifications, and subject tofirst obtaining the approval of the Agency Board and the City Council in themanner required by law, the property shall be treated as Acquisition Parcelsfor purposes of this Agreement and the Agency shall make every reasonableeffort to acquire expeditiously that property (to the extent not first acquiredby the Developer) for conveyance to the Developer pursuant to this Agreement.

 

**SECTION 405****                         ****LADOT PARCEL**

 

The Agency shall use every reasonable effort to enter into areplacement parking agreement with LADOT within the time provided in theSchedule of Performance, whereby LADOT will convey to the Agency fee title tothe LADOT Parcel in exchange for the Agency providing replacement parking ormaking a cash purchase. If the Agency is unable to enter into that agreementwithin the time provided in the Schedule of Performance, then the Developer andthe Agency shall use every reasonable effort to agree to Site Modificationsreflecting LADOT’s continued ownership of the LADOT Parcel.

 

**SECTION 406****                         ****MTA PROPERTY**

 

**§ 406.1****                   ****MTA Parcel**

 

The Agency shall make every reasonable effort to enter into anagreement with the MTA within the time provided in the Schedule of Performance,whereby the MTA will convey to the Agency such easements or interests in theMTA Parcel as are necessary or convenient to the implementation of thisAgreement and reserving such interests as the MTA requires for operation andmaintenance of the blast relief vent located on the MTA Parcel.

 

**§ 406.2****                   ****MTA Right of Way**

 

If the LAUSD acquires Subarea D, the Agency shall make every reasonableeffort to enter into an agreement with the MTA and the LAUSD within the timeprovided in the Schedule of Performance, whereby the MTA and the LAUSD willcooperate with the Agency and the Developer to relocate the MTA Right of Way,in order to facilitate the development of the Project pursuant to thisAgreement. The Developer agrees to reasonably cooperate with the Agency, theLAUSD, and the MTA in identifying a substitute location for the MTA Right ofWay and acquiring and conveying to the MTA such interests as are reasonablynecessary to accomplish the relocation. If the Agency is enters into suchagreement with the MTA and the LAUSD within the time provided in the Scheduleof Performance, then the Developer shall submit to the Agency for its approvalSite Modifications reflecting the new location of the MTA Right of Way. TheAgency and the Developer agree to use good faith efforts to agree upon any SiteModifications required pursuant to this § 406.2.

 

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**ARTICLE 5.CONVEYANCE OF AGENCY ACQUIRED PROPERTY**

 

**SECTION 501****                         ****AGREEMENT TO SELL ANDPURCHASE; REDEVELOPMENT PURPOSE**

 

Conditioned upon the Agency’s prior acquisition of title to theAcquisition Parcels (to the extent not first acquired by the Developer), theLADOT Parcel, and the MTA Parcel, (and/or upon obtaining orders of prejudgmentpossession) and in accordance with, subject to, and conditioned on all theterms, covenants, and conditions of this Agreement, and in consideration of theperformance by the Developer of all of its obligations under this Agreement infurtherance of the Redevelopment Plan, the Agency agrees to sell to theDeveloper that portion of the Site to which the Agency holds title and the Developeragrees to purchase that portion of the Site from the Agency, for theconsideration and subject to the terms, conditions and provisions set forthherein,

 

**SECTION 502****                         ****PERMITTED ENCUMBRANCES**

 

Within the time specified in the Schedule of Performance, the Agencyand the Developer shall approve the **“PermittedEncumbrances”**with respect to each parcel to be conveyed by theAgency to the Developer pursuant to this Agreement. Such approval shall not beunreasonably withheld. The Developer agrees not to object to any encumbranceagainst title, including without limitation, those easements and covenantsburdening the Site arising from agreements previously entered into between theAgency and third parties with respect to property abutting the Site (**“Prior Agency Encumbrances”**), unless suchencumbrance, in Developer’s reasonable judgment, would materially impair theDeveloper’s ability to use or finance the property affected thereby for thepurposes set forth in this Agreement. The Agency agrees to use reasonableefforts to cooperate with the Developer and such third parties so that suchPrior Agency Encumbrances (i) do not materially impede or render thedevelopment of the Site pursuant to this Agreement economically infeasible and (ii) areotherwise consistent with the development of the Site pursuant to thisAgreement. Notwithstanding the foregoing, the Developer may object to anymonetary lien other than current real property taxes and assessments. If theDeveloper objects to a title matter on a parcel to be conveyed by the Agency tothe Developer, the Agency will have twenty-five (25) days either (a) toremove the objected-to matter or commit in writing to remove it on or beforethe closing at which the affected parcel will be conveyed to the Developer, or (b) ifthe Agency is unwilling or unable to remove it, to so advise the Developer inwriting. If the Agency advises the Developer that the Agency is unwilling orunable to remove an objected-to matter, then the Developer shall havetwenty-five (25) days to advise the Agency in writing that the Developer eitherwithdraws its objection or refuses to do so, in which latter event thecondition precedent regarding the approval of Permitted Encumbrances will havefailed. In that event, the Developer and the Agency may agree to exclude thatparcel from the Site, as provided in Section 102 of this Agreement.Notwithstanding the above, the Developer hereby approves as a PermittedEncumbrance (i) any deed of trust, security agreement and fixture filing(with assignment of rents) previously recorded against any parcel to securerepayment of the HUD Loan, provided that any such deed of trust, securityagreement and fixture filing (with assignment of rents) is made subordinate toDeveloper’s construction financing for development of the Site pursuant heretoand to Developer’s permanent financing as such shall change from time to time,as approved by HUD; and (ii) the easements and encumbrances arising out ofthe “Declaration of Covenants, Conditions, and Restrictions and Reservation ofEasements for the Academy”

 

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datedOctober 16, [Illegible] recorded with the Registrar-Record [Illegible] LosAngeles County, and the Developer hereby acknowledges its receipt and review ofthat document.

 

**SECTION 503****                         ****CONSIDERATION**

 

**§503.1****                      ****Agency Parcels, AcquisitionParcels, the MTA Parcel, and the LADOT Parcel**

 

The Developer’s purchase price for the Agency Parcels, the AcquisitionParcels, the MTA Parcel, and the LADOT Parcel, or any portion thereof, shall becalculated at Twenty Five and No/100 Dollars per square foot ($25.00/sf), plusthat portion of the Agency’s costs, consisting of escrow fees, costs ofclearing title and obtaining title insurance, ALTA surveys, geotechnicalstudies, and Phase I environmental assessments, in the amount of $1.26 persquare foot (collectively, the **“PurchasePrice”**). The Developer shall pay the Purchase Price to the Agency atthe times and in the manner and form set forth in the Public-PrivateFeasibility Agreement (Attachment No. 8).

 

**SECTION 504****                         ****CONVEYANCE ESCROW**

 

The Agency agrees to open an escrow in the City of Los Angeles for theconveyance pursuant to Section 501, of the Agency Parcels, the AcquisitionParcels (to the extent not first acquired by the Developer), the LADOT Parcel,and the MTA Parcel with Chicago Title Insurance Company, as escrow agent (**“Escrow Agent”**),****within the time provided in the Schedule of Performance.

 

Section 102, Section 106, Article 2, Section 402through Section 406 inclusive, and Section 501 through Section 510inclusive, of this Agreement constitute the joint escrow instructions of theAgency and the Developer, and a duplicate original of this Agreement shall bedelivered to the Escrow Agent upon the opening of the escrow. In connectionwith each separate closing contemplated hereunder, the Agency and the Developershall provide additional escrow instructions consistent with this Agreement, asneeded to carry out the intent of this Agreement. The Escrow Agent is herebyempowered to act under such instructions, and upon indicating its acceptancethereof in writing, delivered to the Agency and the Developer within five (5) daysafter opening of the escrow, the Escrow Agent shall carry out its duties asescrow agent hereunder. Any amendment to the escrow instructions shall be inwriting and signed by both the Agency and the Developer. At the time of anyamendment, the Escrow Agent shall agree to carry out its duties as Escrow Agentunder such amendment.

 

As will be more particularly described in the additional escrowinstructions, the Escrow Agent is authorized to:

 
| 1.     | Pay, and charge the Developer and the Agency for any  fees, charges and costs payable under this Section 504 of this  Agreement. Before such payments are made, the Escrow Agent shall notify the  Agency and the Developer of the fees, charges and costs necessary to clear  title and close the escrow, which shall be subject to the reasonable approval  of the Agency and the Developer. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                |
| 2.     | Disburse funds and deliver  the Grant Deed and other documents to the parties entitled thereto when the  Agency and the Developer have fulfilled the conditions of the escrow with  respect to any Subarea.                                                                                                                                                                                         |

 

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| 3. | Record any instruments delivered through this escrow  if necessary or proper to vest title in the Developer in accordance with the  terms and provisions of the escrow instructions portion of this Agreement (Section 102,  Section 106, Article 2, Section 402 through Section 406  inclusive, and Section 501 through Section 510 inclusive). |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

All communications from the Escrow Agent to the Agency or the Developershall be directed to the addresses and in the manner established in Section 1102of this Agreement controlling notices, demands, and communications between theAgency and the Developer.

 

The Developer shall pay in escrow to the Escrow Agent the followingfees, charges and costs promptly after the Escrow Agent has notified theDeveloper of the amount of such fees, charges, and costs, but not earlier thantwo (2) business days prior to the scheduled date for the close of escrow:

 
| 1.     | one-half  of the escrow fee, recording fees, and notary fees;                      |
|--------|------------------------------------------------------------------------------------|
|   |                                                                               |
| 2.     | the  premiums for the title insurance policies as set forth in this Agreement; and |
|   |                                                                               |
| 3.     | any State, County, or City documentary stamps or  transfer tax.                    |

 

Subject to Section 503 providing for inclusion in the Developer’sPurchase Price of a portion of the Agency’s costs, the Agency shall pay inescrow to the Escrow Agent the following fees, charges and costs promptly afterthe Escrow Agent has notified the Agency of the amount of such fees, charges,and costs, but not earlier than two (2) business days prior to thescheduled date for the close of escrow:

 
| 1.     | Costs  necessary to place the title in the condition for conveyance required by the  provisions of this Agreement;  |
|--------|---------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                |
| 2.     | one-half  of the escrow fee, recording fees, and notary fees;                                                       |
|   |                                                                                                                |
| 3.     | ad valorem taxes and assessments, if any, levied,  assessed or imposed for the period prior to conveyance of title. |

 

Ad valorem taxes and assessments, if any, on any portion of the Siteconveyed to the Developer by the Agency pursuant to this Agreement, and taxesupon this Agreement or any rights hereunder, levied, assessed or imposed forany period commencing after conveyance of title or possession to the Developer,shall be borne by the Developer.

 

All funds received in this escrow shall be deposited by the EscrowAgent in a separate interest bearing account acceptable to the Developer andthe Agency with any state or national bank doing business in the State ofCalifornia and reasonably approved by the Developer and the Agency, and allinterest accruing on the account shall be payable to the Party which depositedthe funds.

 

If the escrow is not in condition to close on or before the time forconveyance established in the Schedule of Performance for any Subarea, as suchtime may be extended by mutual written agreement of the Parties, either Partywho has fully performed the acts to be performed before the conveyance of titlemay, in writing directed to the Escrow Agent, demand the return of its money,papers, and/or documents. No demand for return shall be recognized untilfifteen (15) days after the Escrow Agent (or the Party making such demand) hasmailed copies of the demand to the other Party or parties at the address ofthat Party’s principal place of business. Objections, if any, shall

 

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beraised by written Notice to the Escrow Agent and to the other Party within the15-day period, in which event the Escrow Agent is authorized to hold all money,papers, and documents included in the demand for return until instructed by amutual written agreement of the Parties, or upon failure thereof, by a court ofcompetent jurisdiction. If no objections are made within the 15-day period, theEscrow Agent shall immediately return the demanded money, papers, or documents,and provided that the failure of a closing condition with respect to any parcelis not due to a default by either Party (in which case Article 10 shallgovern), the Parties may agree to exclude such parcel from the Site inaccordance with Section 102(b) hereof.

 

**SECTION 505****                         ****CONDITION OF TITLE AND TITLEINSURANCE**

 

The Agency shall convey to the Developer fee title to the AgencyParcels, the Acquisition Parcels (to the extent not first acquired by theDeveloper), the LADOT Parcel, and those easements or interests in the MTAParcel acquired by the Agency pursuant to § 406.1, free and clear of allrecorded liens, encumbrances, covenants, restrictions, easements, leases, taxesand other defects, except (i) the Permitted Encumbrances agreed uponpursuant to Section 502 hereof; and (ii) the covenants, conditions,restrictions and easements arising out of the provisions of this Agreement,including but not limited to, dedication for street purposes.

 

The Agency shall convey to the Developer title to the Agency Parcels,the Acquisition Parcels (to the extent not first acquired by the Developer),the LADOT Parcel, and the MTA Parcel in the condition provided in this Section 505of this Agreement by one or more grant deeds substantially in the form attachedhereto and incorporated herein as Attachment No. 13 (**“Grant Deed”**).

 

Title to the Agency Parcels, the Acquisition Parcels (to the extent notfirst acquired by the Developer), the LADOT Parcel, and the MTA Parcel shall beconveyed free of any possession or right of possession except that of theDeveloper, unless waived by the Developer in writing in its discretion.

 

Subject to any mutually agreed upon extension of time, the Agency shalldeposit with the Escrow Agent at least two (2) business days before thedate established for the conveyance in the Schedule of Performance the GrantDeed or other instrument conveying to the Developer each of the applicableAgency Parcels, Acquisition Parcels (to the extent not first acquired by theDeveloper) LADOT Parcel, and MTA Parcel.

 

Concurrently with the conveyance of the applicable Agency Parcels,Acquisition Parcels (to the extent not first acquired by the Developer), LADOTParcel, and MTA Parcel to the Developer (or upon the Agency subsequentlyobtaining fee title), the Escrow Agent shall cause the filing of the applicableGrant Deed and Agreement Containing Covenants Affecting Real Property forrecordation among the land records in the Office of the County Recorder of LosAngeles County.

 

Concurrently with recordation of the Grant Deeds or instrumentsconveying possession of the applicable Agency Parcels, Acquisition Parcels (tothe extent not first acquired by the Developer), LADOT Parcel, and MTA Parcel,and as a precondition to the Developer’s obligation to close escrow, ChicagoTitle Insurance Company (**“Title Company”**)shall provide and deliver to the Developer a title insurance policy or policiesissued by the Title Company, effective as of the applicable closing date,insuring that the Developer’s interest in the applicable Agency Parcels,Acquisition Parcels (to the extent

 

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notfirst acquired by the Developer), LADOT Parcel, and MTA Parcel is in thecondition required by Section 505 of this Agreement. The Title Companyshall provide the insurance policies, including any endorsements or extendedcoverage required by the Developer, and the title insurance policies shall bein such amount as the Developer may require, provided that the Developer paysany cost of such policies, including any endorsements or extended coverage.

 

Concurrently with the issuance of the title policy or policies for theAgency Parcels, the Acquisition Parcels (to the extent not first acquired bythe Developer), the LADOT Parcel, and the MTA Parcel, and as a precondition tothe Developer’s obligation to close escrow, the Title Company shall provide theDeveloper with such further policies, additional endorsements, and extendedcoverage as the Developer reasonably requires to insure its title in theapplicable Agency Parcels, Acquisition Parcels (to the extent not firstacquired by the Developer), LADOT Parcel, and MTA Parcel, including but notlimited to an additional title policy or policies to insure the amount of theDeveloper’s estimated construction costs of the improvements on the applicableportion of the Site, provided however that the Developer shall pay the costs ofsuch additional endorsements and extended coverage.

 

**SECTION 506****                         ****CONVEYANCE OF TITLE ANDDELIVERY OF POSSESSION**

 

**§ 506.1****                   ****Conditions Precedent andClosing Obligations**

 

Subject to any mutually agreed upon extension of time, the Agency’sobligation to convey to the Developer title to any portion of the AgencyParcels, the Acquisition Parcels (to the extent not first acquired by theDeveloper), the LADOT Parcel, and the MTA Parcel shall be subject to thesatisfaction, on or before the date specified in the Schedule of Performance,of all conditions precedent to conveyance of those parcels expressly set forthin this Agreement, including without limitation the following:

 
| 1.     | The  Developer shall have submitted and the Agency shall have approved the Developer’s  Evidence of Financing in accordance with Section 109 of this Agreement.                                                                                                                                                                                       |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                            |
| 2.     | The  Developer shall have obtained all required land use entitlements and the  City’s approval of construction and landscaping plans for development of the  applicable Subarea.                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                            |
| 3.     | If  applicable, the Developer shall have deposited into escrow a fully executed  instrument dedicating to the City that portion of the parcel being conveyed  to the Developer that the City shall require for the construction of the  public improvements as a condition of approval of any final tract map or  other entitlement for the applicable Subarea. |
|   |                                                                                                                                                                                                                                                                                                                                                            |
| 4.     | The  Developer shall have obtained all City approvals required to secure a grading  and excavation permit for the development of the applicable Subarea.                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                            |
| 5.     | The  Developer shall have obtained all approvals from governmental entities having  jurisdiction over the applicable Subarea, other than the City, if any,  required in connection with the development of the applicable Subarea.                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                            |
| 6.     | The Developer shall have  submitted evidence reasonably satisfactory to the Agency demonstrating that  the Developer has obtained all insurance, with respect to the applicable  Subarea, required under this Agreement.                                                                                                                                        |

 

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| 7.     | The  Developers representations and warranties set [Illegible] Section 1110  of this Agreement shall be true and correct in all material respects as of  the date of conveyance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 8.     | The  Developer shall be in substantial compliance with its obligations under this  Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 9.     | The  Developer shall have signed in recordable form, for recordation concurrently  with the close of escrow an **“Agreement  Containing Covenants Affecting Real Property”** reasonably approved  as to form and content by the Agency’s legal counsel, and in the form of  Attachment No. 14 hereto, burdening the applicable Subarea with the  covenants running with the land to be imposed by this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 11.    | The  Developer shall have delivered to the Agency the Original Letter of Credit  and any subsequently required letter(s) of credit in accordance with §  402.6 of this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 12.    | If  applicable, the Developer shall have executed and delivered to the Agency a  reconveyance or partial reconveyance (as applicable) of the Pre-Conveyance  Termination Deed of Trust with respect to any parcel then being conveyed to  the Developer, in form and substance reasonably satisfactory to the Agency.  In addition, the Developer shall have cancelled any Pre-Conveyance  Termination Note for that parcel and delivered the same to Escrow Agent with  instructions to release such cancelled Pre-Conveyance Termination Note to the  Agency upon the closing of the conveyance of that parcel.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 13.    | The  Developer shall have delivered to the Agency the HUD Letter of Credit or Guaranty  required by the Public-Private Feasibility Agreement (Attachment No. 8).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 14.    | The  Developer shall have delivered to the Agency satisfactory evidence that it  holds or will hold upon the closing, fee title to the Developer Parcels  contained within the applicable Subarea free and clear of all recorded liens,  encumbrances, covenants, restrictions, easements, leases, taxes and other  defects, except (i) encumbrances approved by the Agency, which approval  shall not be unreasonably withheld; (ii) the covenants, conditions,  restrictions and easements arising out of the provisions of this Agreement,  including but not limited to, dedication for street purposes; and  (iii) those easements and covenants burdening the Developer Parcels  and/or the Site arising from agreements previously entered into between the  Developer and third parties with respect to property abutting the Developer  Parcels and/or the Site; provided however, that such easements and covenants  referenced in clause (iv) do not impede or render the development of the  Site pursuant to this Agreement economically infeasible and are otherwise  consistent with the development of the Site pursuant to this Agreement. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 15.    | The Agency shall not be obligated to close escrow on  any parcel unless the close of escrow on all parcels within the applicable  Subarea (except the Developer Parcels) shall occur simultaneously.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

 

As a preconditionto close of escrow, zoning of the applicable Subarea shall be such as to permitdevelopment of the applicable Subarea and construction of the improvementsthereon in accordance with the provisions of this Agreement and the use,operation and maintenance of the improvements on the applicable Subarea inaccordance

 

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with the provisions ofthis is Agreement. The Agency shall provide all proper assistance to theDeveloper in connection therewith, and it shall not take any action tointerfere with the Developer’s attempt to obtain any discretionary orministerial permits required for the development of the applicable Subareapursuant to this Agreement.

 

*§506.1.1**                   AdditionalCondition Precedent to Conveyance of Any Portion of Subareas A and B*

 

The Agency’sobligation to convey to the Developer any portion of Subareas A and B shall alsobe subject to the Agency having approved the management plan for theresidential units that is required by § 103.1(e) of this Agreement.

 

The Developershall have signed in recordable form, for recordation concurrently with theclose of escrow the **“Affordability Covenants”**reasonably approved as to form and content by the Agency’s legal counsel, andin the form of Attachment No. 4 hereto, burdening the applicable propertywith the covenants running with the land to be imposed by those covenants.

 

*§506.1.2**                   AdditionalCondition Precedent to Conveyance of Any Portion of Subareas B and C*

 

The Agency’sobligation to convey to the Developer any portion of Subareas B and C shallalso be subject to the Agency having approved the REA’s required by Article 9hereof.

 

The foregoingconditions in this § 506.1 are for the sole benefit of the Agency. If any ofthe foregoing conditions is not satisfied for any reason, the Agency shall havethe right, in its sole election, either to waive such condition and proceed tothe close of escrow, or in the alternative, to pursue an agreement with theDeveloper to exclude the affected parcels from the Site, in which case theParties shall proceed in accordance with Section 102(b) hereof.

 

**§ 506.2****                    ConditionsPrecedent to Developer’s Closing Obligations**

 

Subject to anymutually agreed upon extension of time, the Developer’s obligation to acceptfrom the Agency title to any portion of the Agency Parcels, the AcquisitionParcels (to the extent not first acquired by the Developer), the LADOT Parcel,and the MTA Parcel shall be subject to the satisfaction, on or before the datespecified in the Schedule of Performance, of all conditions precedent toconveyance of those parcels expressly set forth in this Agreement, includingwithout limitation the following:

 
| 1.     | The  Developer shall have obtained all required land use entitlements and the  City’s approval of construction plans for the development of the applicable  Subarea.                                                          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                               |
| 2.     | The  Developer shall have obtained all City approvals required to secure a grading  and excavation permit for the applicable Subarea.                                                                                              |
|   |                                                                                                                                                                                                                               |
| 3.     | The  Developer shall have obtained all approvals from governmental entities having  jurisdiction over the applicable Subarea, other than the City, if any,  required in connection with the development of the applicable Subarea. |
|   |                                                                                                                                                                                                                               |
| 4.     | The Agency shall be in  substantial compliance with its obligations under this Agreement.                                                                                                                                          |

 

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| 5.     | The  Title Company shall be committed to issue a title insurance policy or  policies insuring fee title of all parcels in the applicable Subarea (except  the Developer Parcels) in accordance with the requirements and conditions set  forth in Section 505 hereof.                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                         |
| 6.     | The  Developer shall not be obligated to close escrow on any parcel unless the  close of escrow on all parcels within the applicable Subarea (except the  Developer Parcels) shall occur simultaneously.                                                                                     |
|   |                                                                                                                                                                                                                                                                                         |
| 7.     | The Developer shall have satisfied, or will satisfy  upon the closing, any and all conditions of the financing commitments  contained in the Developer’s Evidence of Financing for the applicable Subarea  approved by the Agency in accordance with Section 109 of this Agreement |

 

As a preconditionto close of escrow, zoning of the applicable Subarea shall be such as to permitdevelopment of the applicable Subarea and construction of the improvementsthereon in accordance with the provisions of this Agreement and the use,operation and maintenance of the improvements on the applicable Subarea inaccordance with the provisions of this Agreement.

 

The foregoingconditions in this § 506.2 are for the sole benefit of the Developer. If any ofthe foregoing conditions is not satisfied for any reason, the Developer shallhave the right, in its sole election, either to waive such condition andproceed to the close of escrow, or in the alternative, to pursue an agreementwith the Agency to exclude the affected parcels from the Site, in which casethe Parties shall proceed in accordance with Section 102(b) hereof.

 

**SECTION 507****                          ORDERSOF POSSESSION**

 

At (or prior to,if requested by the Developer in accordance with the terms of this Agreement)the dates for conveyance to the Developer of title to the Acquisition Parcels(to the extent not first acquired by the Developer), as set forth in theSchedule of Performance, the Agency may convey and the Developer shall acceptconveyance of any portion of the Acquisition Parcels to which the Agency hasnot obtained title, but in which the Agency has a right of exclusive possessionpursuant to an order of prejudgment possession or similar judicial order (**“Condemnation Parcel”**), if the followingconditions are met:

 
| 1.     | The  Agency delivers exclusive possession of the Condemnation Parcel to the  Developer; and                                                                                                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                              |
| 2.     | All  occupants, if any, have been relocated from the Condemnation Parcel as of the  date of such conveyance; and                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                              |
| 3.     | The  Title Company is committed to issue a title policy insuring the Developer’s  interest in the Condemnation Parcel, subject only to exceptions permitted  pursuant to Section 505 of this Agreement and satisfying all other  requirements set forth in Section 505 hereof; and |
|   |                                                                                                                                                                                                                                                                                              |
| 4.     | The  Agency is diligently proceeding with all condemnation actions; and                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                              |
| 5.     | The Agency deposits the  Grant Deed to the Condemnation Parcel in the escrow provided in  Section 504 of this Agreement, for recordation and delivery to the  Developer upon the Agency obtaining fee title.                                                                                 |

 

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If the Agency[Illegible] possession of the Condemnation [Illegible] as herein provided, theDeveloper shall not terminate this Agreement under the provisions of § 1003.2of this Agreement, but shall accept such right of possession and shall proceedwith the development of the Site in accordance with the Scope of Development.

 

The Agency shalldiligently proceed with all condemnation actions to obtain final judgments insuch matters on or before the date set forth in the Schedule of Performance forthe conveyance of title to the Developer, and take any other action necessaryto perfect the transfer of title to the Developer.

 

All references toconveyance of title in this Agreement shall, without limitation, also be deemedto include the conveyance of a Condemnation Parcel permitted hereunder.

 

**SECTION 508      SUITABILITY OF THE SITE**

 

Prior to the closeof escrow for the conveyance to the Developer of any portion of the Site, theDeveloper shall have the right, at its sole cost and expense, to engage its ownenvironmental consultant (**“Developer’sEnvironmental Consultant”**), to make such investigations as theDeveloper deems necessary, including without limitation any “Phase 1” and/or “Phase2” investigations, soil reports, geotechnical data, and any other informationregarding the physical condition of that portion of the Site, and the Agencyshall promptly be provided a copy of all reports and test results provided byDeveloper’s Environmental Consultant (the **“EnvironmentalReports”**), without creating any liability for the Developer or thepreparer of such Environmental Reports. Prior to the date set forth in theSchedule of Performance, the Agency shall give the Developer copies of all “Phase1” and/or “Phase 2” investigations, soils reports, geotechnical data, and otherinformation regarding the physical condition of that portion of the Site, ifany, actually known by the Agency’s Administrator or designee to exist in thefiles of the Agency.

 

The AgencyParcels, the Acquisition Parcels (to the extent not first acquired by theDeveloper), LADOT Parcel, and the MTA Parcel shall be delivered from the Agencyto the Developer in an “as is” physical condition, with no warranty, express orimplied by the Agency as to the presence of Hazardous Materials, or thecondition of the soil, its geology or the presence of known or unknown faults.If the condition of the Site is not in all respects entirely suitable for theuse or uses to which the Site will be put, then it is the sole responsibilityand obligation of the Developer to place the Site in all respects in acondition entirely suitable for the development thereof at the sole cost, riskand expense of the Developer, subject to the provisions of § 308.1 hereof.

 

**§ 508.1       Zoningof the Site**

 

It shall be theDeveloper’s responsibility at its sole cost and expense, to ensure that thezoning of each Subarea shall be such as to permit the development and use ofthat Subarea in accordance with the provisions of this Agreement. The Developershall use every commercially reasonable effort to obtain any variances,conditional use permits or other discretionary or ministerial approvals neededto implement this Agreement. The Agency shall use reasonable and appropriateefforts to cooperate with the Developer in seeking any variances, conditionaluse permits or other discretionary or ministerial approvals needed to implementthis Agreement, without liability to the Agency. If the Developer reasonablydetermines that the approved zoning or entitlement of a Subarea willsubstantially impede or render the development of that Subarea pursuant to this

 

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Agreement [Illegible]**infeasible, the Developer may [Illegible]to the Agency for approval Site Modifications for that Subarea.

 

**SECTION 509      REPRESENTATIONS AND WARRANTIES ANDINDEMNIFICATION**

 

The Developerhereby represents and warrants, to its actual knowledge, that the development,construction and uses of the Site permitted under this Agreement do not requirethe presence of any Hazardous Substance on the Site in quantities above what isconsidered commercially necessary for the uses contemplated in this Agreement.By this Agreement, the Developer provides to the Agency, effective upon thelater of (i) the Date of Agreement, or (ii) the date the Developeracquires title to the applicable parcel, an indemnification of the Agency andthe City and their respective members, officers, employees, agents, contractorsand consultants relating to the environmental condition of the Developer Parcelsand any other parcel conveyed by the Agency to the Developer pursuant to thisAgreement and the presence of Hazardous Materials thereon, as set forth below.Therefore, except for damage caused by the wrongdoing or gross negligence ofthe Agency, its employees, officers or agents, the Developer hereby agrees toindemnify, defend and hold harmless the Agency and the City and theirrespective members, officers, agents, employees, contractors and consultants,from any claims, actions, suits, legal and administrative proceedings,liability, injury, deficiency, damages, fines, penalties, punitive damages,costs and expenses (including, without limitation, the cost of any cleanup,remediation, removal, mitigation, monitoring or testing of Hazardous Materials,and reasonable attorneys’ fees) resulting from, arising out of, or based upon (i) thepresence, release, use, generation, discharge, storage or disposal of anyHazardous Materials on, under, in or about, or the transportation of anyHazardous Materials to or from, the Developer Parcels and any other parcelconveyed by the Agency to the Developer pursuant to this Agreement; or (ii) theviolation, or alleged violation, of any statute, ordinance, order, rule,regulation, permit, judgment or license relating to the use, generation,release, discharge, storage, disposal or transportation or Hazardous Materialson, under, in or about, to or from, the Developer Parcels and any other parcelconveyed by the Agency to the Developer pursuant to this Agreement.

 

From the later of (i) theDate of Agreement, or (ii) the date the Developer acquires the applicableparcel, except to the extent caused by the wrongdoing or gross negligence ofthe Agency, its members, officers, employees, agents, contractors andconsultants, the Developer hereby waives, releases and discharges the Agency,the City and their respective members, officers, employees, agents, contractorsand consultants, from any and all present and future claims, demands, suits,legal and administrative proceedings, and from all liability for damages,losses, costs, liabilities, fees and expenses (including, without limitation,attorneys’ fees) arising out of or in any way connected with the Agency’s orthe Developer’s use, maintenance, ownership or operation of the DeveloperParcels and any other parcel conveyed by the Agency to the Developer pursuantto this Agreement, any Hazardous Materials on the Developer Parcels and anyother parcel conveyed by the Agency to the Developer pursuant to thisAgreement, or the existence of Hazardous Materials contamination in any stateon the Developer Parcels and any other parcel conveyed by the Agency to theDeveloper pursuant to this Agreement, however the Hazardous Materials came tobe placed there, except to the extent arising out of the wrongdoing or grossnegligence of the Agency or its employees, officers or agents. The Developeracknowledges that it is aware of and familiar with the provisions of Section 1542of the California Civil Code, which provides as follows:

 

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“A general [Illegible]**does not extend to claims which the[Illegible] does not know or suspect to exist in his favor at the time ofexecuting the release, which if known by him must have materially affected hissettlement with the debtor.”

 

As such relates tothis Article 5, Developer hereby waives and relinquishes all rights andbenefits that it may have under Section 1542 of the California Civil Code.

 

**SECTION 510      PRELIMINARY WORK BY DEVELOPER AND RIGHT OFENTRY**

 

Commencing uponthe Date of Agreement, representatives of the Developer shall have the right ofaccess to and entry upon such properties that are owned by the Agency or ofwhich the Agency has possession, at all reasonable times, for the purposes ofconducting any investigations pursuant to Section 508 hereof andperforming any required clean up and removal of Hazardous Materials, and forthe purposes of making such further surveys and tests as the Developer deemsnecessary and/or desirable to carry out this Agreement.

 

In addition, uponthe request of the Developer at any time after the Date of Agreement and in allnegotiated purchase agreements for the acquisition of the Acquisition Parcels,the LADOT Parcel, and the MTA Parcel, or any portion thereof, the Agency shalluse good faith efforts to require the sellers to permit the Developer to havethe right to enter such properties, and to obtain pre-condemnation orders topermit the Developer the right to enter where the owner’s consent for entrycannot be obtained, for the purpose of conducting any tests and inspections inaccordance with this Section 510, at the Developer’s sole cost andexpense. The Agency agrees to assign such entry rights as it acquires pursuanthereto to the Developer.

 

To the extent providedby the foregoing, the Developer shall have the right to conduct investigationson and beneath all portions of the Site and all improvements thereon todetermine the presence of Hazardous Materials. The Developer agrees to pay theentire costs of such investigations.

 

The Developerhereby agrees to indemnify, defend and hold harmless the Agency and the City,and their officers, employees, agents, contractors and consultants, for any andall claims, liability and damages arising out of any work or activity of theDeveloper, its agents, or its employees pursuant to this Section 510,except to the extent caused by the wrongdoing or gross negligence of theAgency, its officers, employees, agents, contractors or consultants, andprovide to the Agency such assurances, including proof of insurance, as theAgency may reasonably require.

 

**ARTICLE 6. PROJECT FINANCING**

 

**SECTION 601      PROJECT COSTS**

 

**§601.1      Project Cost Budget**

 

As a conditionprecedent to the Agency’s obligation to convey any portion of a Subarea, Developershall submit and obtain the Agency’s approval of a Project Cost Budget. TheProject Cost Budgets for the Subareas shall reasonably reflect the Project proformas used to determine the Agency Obligation set forth in the Public-Private

 

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Feasibility AgreementAttachment No, 8), and shall state [Illegible] anticipated amount of ProjectCosts and shall include a separate dollar amount for each category (1 through17) in the definition of Project Costs in § 601.2 below and a reasonabledescription or itemization of the costs in each category.

 

Except forApproved Post-Construction Capital Expenditures provided for in § 601.2 below,a cost or expense that is not included in the Project Cost Budget approved bythe Agency shall not be a Project Cost for purposes of this Agreement unlessthe Developer submits evidence reasonably satisfactory to the Agency, at theearliest practicable date, demonstrating that such cost or expense isreasonable and necessary for the initial construction of improvements on theapplicable Subarea and was not reasonably foreseeable on the date the Agencyapproved the Project Cost Budget for that Subarea.

 

**§ 601.2          Definition of Project Costs**

 

**“ProjectCosts”** as used herein (for purposes of the Developer’sEvidence of Financing and calculating the Agency Participation Payment and theAgency obligation pursuant to Paragraph I.D. of the Public-Private FeasibilityAgreement) means the Developer’s actual costs and expenses of acquiring the Site(which for any portion of the Site that the Developer acquires from the Agencyis defined as the Purchase Price paid by the Developer for that property) andthe following actual costs and expenses of the development work to be performedby or on behalf of the Developer for or in connection with the development ofthe improvements required or contemplated by this Agreement and plans approvedby the City on or with respect to the Site, to the extent that such costs andexpenses are incurred and paid for by the Developer to third parties or toDeveloper’s employees (provided that such charges are not included in theDeveloper’s Overhead Fee and do not exceed the amount a third party wouldreasonably charge for such services) in connection with the initial constructionand are either included in the Agency-approved Project Cost Budget or approvedin writing by the Agency pursuant to § 601.1 above.

 

1.     Landdevelopment work, including demolition and excavation, asbestos abatement,soils compaction and remediation, utility relocation and abandonment andoff-site improvements.

 

2.     Construction of theimprovements on the Site and installation of the required fixtures, furniture,machinery and equipment, and repair of any damage caused and arising duringconstruction from a casualty not covered by insurance proceeds.

 

3.     Building permits andentitlement fees not paid for or reimbursed by the Agency.

 

4.     Premiums for casualty, publicliability and property damage and other similar insurance during constructionand on bonds securing work against liens for labor and materials.

 

5.     Real estate taxes andassessments upon the Site or the improvements during the period ofconstruction.

 

6.     Interest on constructionloans prior to the issuance by the Agency of the Release of ConstructionCovenants.

 

7.     Fees for (i) architects,engineers, accountants; and (ii) real estate and financial advisors andattorneys previously identified to the Agency.

 

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8.     Purchasing fees paid to thirdparties not affiliated with the Developer in connection with the purchase offurniture, fixtures and equipment.

 

9.     Development fees or the valueof dedications or other in lieu credits paid to government agencies, includingtraffic mitigation costs and fees and other governmental exactions.

 

10.   Charges and premiums forsearching and insuring title.

 

11.   Out-of-pocket costs incurred bythe Developer in connection with construction financing, including, withoutlimitation, commitment fees, mortgage broker fees, standby fees and fees of alike nature, printing and duplicating expenses, documentary transfer taxstamps, mortgage taxes, and recording charges.

 

12.   Customary and reasonablepre-opening expenses.

 

13.   Costs of required studies,reports and inspections.

 

14.   Broker’s commissions or findersfees for land assembly and leasing.

 

15.   The cost of initial tenantimprovements paid for by the Developer to be reimbursed to the Developer in theform of rental payments, but excluding any such costs to the extent reimbursedor paid for in any other form by any third party, and the cost of the leasebuy-out of an existing tenant within the Site improvements developed by theDeveloper where necessary to obtain the initial occupancy of another tenanttherein.

 

16.   Other customary and reasonablecosts in connection with the initial construction and not otherwise included incategories 1 through 15 above, provided that such costs are supported bydocumentation reasonably acceptable to the Agency.

 

17.   A Developer’s Overhead Fee ofthree percent (3 %) of an amount equal to (i) the sum of items 1 through16 of this § 601.2, plus (ii) other costs not included in theAgency-approved Project Cost Budget and approved by the Agency pursuant to §601.1 herein.

 

Prior to the Agency’sissuance of the Release of Construction Covenants for a Subarea pursuant tothis Agreement, the Developer shall submit to the Agency, for the review andwritten approval or disapproval of the Agency’s Administrator, a statement (**“Certified Project Cost Statement”**) settingforth the total amount of Project Costs, a separate amount for each category inthe definition of Project Costs in this § 601.2, and a reasonable descriptionor itemization of the costs incurred in each category, together with a certificateof an independent certified public accountant reasonably acceptable to theAgency (**“Accountant”**). TheCertified Project Cost Statement shall be adjusted as needed to reflectallowable additional costs incurred and savings realized subsequent to itssubmission to the Agency and before the Agency’s issuance of the Release ofConstruction Covenants. The Accountant’s certificate shall be addressed to theAgency, and shall state that the Accountant is familiar with the definition ofProject Costs in this Agreement and shall attest to the accuracy of theCertified Project Cost Statement, subject to usual and customaryqualifications. The Accountant shall be selected by the Developer, but shall beone of the following:

 

i)                 ArthurAndersen & Co., LLP;

 

ii)              Deloitte &Touche, LLP;

 

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iii)           Ernst &Young,LLP;

 

iv)          KMPG Peat Marwick, LLP;

 

v)             Price WaterhouseCoopers, LLP;

 

vi)          Any national accountingfirm, first approved in writing by the Agency, having at the time of deliveryof the Certified Project Cost Statement a reputation and stature in theaccounting community comparable to the foregoing firms as of the Date ofAgreement.

 

The partiesacknowledge that additional significant capital expenditures involving itemsincluded as Project Costs under § 601.2 above, and related tenant improvementsand lease-buyouts as described for initial tenancies under § 601.2 above, maybe made by the Developer after the recordation of the Release of ConstructionCovenants, which expenditures are not a normal re-tenanting expense, are not amaintenance or operational expenditure typical for the normal maintenance oroperation of a development similar to the subject development, and are not madein connection with the initial tenanting of commercial space within theimprovements developed on the Site, but are instead made in order to materiallyaugment Gross Revenues. Such expenditures meeting the description of theimmediately preceding sentence (**“ProposedPost-Construction Capital Expenditures”**) shall not be included inProject Costs for any purpose under this Agreement, unless first submitted tothe Agency’s Administrator and approved as a Project Cost (**“Approved Post-Construction Capital Expenditures”**).The Agency’s Administrator shall reasonably consider any ProposedPost-Construction Capital Expenditure submitted for approval or disapproval,but must take into account whether that approval will have any material adverseeconomic impact on the Agency’s economic interests, including withoutlimitation the Agency Participation Payments.

 

**SECTION 602      DEVELOPER’S OBLIGATIONS**

 

Except for theAgency’s agreement to provide financial assistance pursuant to § 402.1 andexcept for the obligations of the Public-Private Feasibility Agreement, theDeveloper shall be responsible for the payment of all costs associated with theacquisition of the Site and the construction and operation of the improvementson the Site pursuant to this Agreement and the plans approved by the City.

 

**SECTION 603      AGENCY’S OBLIGATIONS**

 

The Developer andthe Agency acknowledge and agree that, due to substantial project costs in theareas of property acquisition, and relocation, the development of the Site ascontemplated under this Agreement would not be feasible in the absence of thefinancial assistance provided for in the Public-Private Feasibility Agreement(Attachment No. 8), the Developer’s agreement to initially advance suchcosts and the Agency’s conditional agreement to reimburse a portion of suchcosts.

 

The Agency shallmake the payments required in and shall otherwise comply with thePublic-Private Feasibility Agreement appended to this Agreement as Attachment No. 8and incorporated herein by this reference.

 

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**§ 603.1       AgencyObligation Limited**

 

Without limitingeither Party’s rights or remedies in the event of the other Party’s default,the Agency shall have no obligation to reimburse the Developer for any costspaid or amounts advanced by the Developer pursuant to this Agreement except asspecified in the Public-Private Feasibility Agreement, and, subject to theprovisions of § 402.8 of this Agreement, the Pre-Conveyance Termination Noteand the Pre-Conveyance Termination Deed of Trust.

 

**SECTION 604      AGENCY ASSISTANCE IN OBTAINING OTHERFUNDING**

 

**§604.1          EDA Grant**

 

The Agency and theDeveloper shall use every reasonable effort to cause the City to enter into acooperation agreement with the Agency whereby the City will provide an EconomicDevelopment Assistance Grant in an amount sufficient to pay the costs ofconstructing any off-Site public improvements required by the City as acondition of Project entitlement and any required off-Site mitigation measures.

 

**§604.2          EDI Grant**

 

The Agency shalluse every reasonable effort to obtain an Economic Development Initiative Grant(“EDI Grant”) from HUD in the approximate amount of ONE MILLION, EIGHT HUNDREDTHOUSAND DOLLARS ($1,800,000), to be used for the payment of a portion of theinterest accruing on the HUD Loan. The Agency and the Developer acknowledge andagree that the obtaining of the EDI Grant is subject to the final approval ofHUD.

 

**SECTION 605         AGENCY PARTICIPATION IN PROJECT**

 

**§605.1          Intent**

 

It is the intent of theParties that the Agency will be repaid for the full amount of financialassistance for Site acquisition that is provided by the Agency pursuant to §402.1.2 of this Agreement (the Agency bond funds) and for the full amount ofthe Agency Obligation to be paid to the Developer pursuant to the Public-PrivateFeasibility Agreement attached hereto as Attachment No. 8, with suchrepayment to be made solely through the Developer’s payment of the AgencyParticipation Payments as required by this Section 605. In addition, it isthe intent of the Parties that the Agency will be paid the amount by which thefair market value of the Agency Parcels at the time of conveyance to theDeveloper exceeds the Developer’s Purchase Price for those Parcels, with suchpayment to be made solely through the Developer’s payment of the AgencyParticipation Payments as required by this Section 605. It is also theintent of the Parties that the Agency and the public will participate in thefinancial success of the Project through the Developer’s payment of the AgencyParticipation Payments.

 

For purposes ofcalculation and payment of the Agency Participation Payment, the followingterms shall have the following respective meanings:

 

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**“ProjectElement”**means, a subset of the improvement to be developedon the Site pursuant to this Agreement, which has been reasonably, mutuallydefined and identified by the Agency and the Developer as a Project Elementbased upon Subarea and land use.

 

**“Developer’sAnnual Return”**means, solely for purposes of determining theAgency Participation Payment, for each Project Element, an amount equal toeleven and one-half percent (11.5%) of Adjusted Project Costs (and shallinclude Annual Return Shortfalls, if any, without interest thereon).

 

**“AdjustedProject Costs”**means, for each Project Element, Project Costsas approved by the Agency, plus Approved Post-Construction CapitalExpenditures, if any, plus the total of all Annual Return Shortfalls, if any.

 

**“ApprovedPost-Construction Capital Expenditures”**means, for eachProject Element, capital expenditures made by the Developer after therecordation of the Release of Construction Covenants, if any, approved as aProject Cost by the Agency pursuant to § 601.1 of this Agreement.

 

**“AnnualReturn Shortfall”**means, for each Project Element, the amountin any Operating Year by which the calculated amount of the Developer’s AnnualReturn exceeds the Net Operating Income.

 

**“AgencyParticipation Payment”**means, for each Project Element ineach Operating Year, an amount equal to twenty percent (20%) of an amount equalto the Net Operating Income for that Operating Year less the Developer’s AnnualReturn.

 

**“NetOperating Income”**means, for each Project Element, the GrossRevenues less a defined **“Operating Cost.”**TheOperating Cost shall be defined for each Project Element and shall be based onstandards established by the Building Owners and Managers Association **(“B.O.M.A. Standards”)**for comparable landuses and elements.

 

**“GrossRevenues”**means, for each Project Element, all revenue of anykind or nature received by the Developer or the Developer’s agents eachOperating Year from the rental, lease, licensing, operation, use or ownershipof the Project Element, and any sale, assignment, or lease of the on- andoff-site signage rights associated with the Project Element; provided, however,that the proceeds of any sale of signage rights shall be equitably allocated toreflect an annualized income; and further provided, that pursuant to § 605.3below, Gross Revenues shall not include any proceeds from the sale orrefinancing of the Project Element. In addition, Gross Revenues shall notinclude (i) sales tax, the payment of which is not included in OperatingCosts, (ii) amounts refunded by the Developer to the payor, (iii) amountsreceived in reimbursement for utilities, to the extent those utilities are notincluded in Operating Costs, (iv) amounts received from sale of fixtures,equipment, or property that are not stock in trade, and (vi) “bad debt.”The term “bad debt” shall refer to amounts accrued and payable to theDeveloper, but which were not in fact collected or received by the Developer.The Developer agrees that it will use every commercially reasonable effortconsistent with this Agreement, to maximize the Gross Revenues from eachProject Element.

 

**“OperatingCommencement Date”**means, for each Project Element, a datethat is twenty four (24) months immediately following the date of issuance bythe City of the final Certificate of Occupancy for the development of the ProjectElement.

 

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“**Operating [Illegible]**” means, for eachProject Element, [Illegible] twelve month period that commences on theOperating Commencement Date and each anniversary of the Operating CommencementDate, provided that the Developer may convert Operating Years to calendaryears, provided appropriate and equitable adjustments are made for any partialyear to the reasonable satisfaction of the Agency’s Administrator, and providedthat there is no reduction in the required forty-year term of the AgencyParticipation Payments.

 

**§****605.2       Form ofParticipation**

 

As an additionalconsideration for the performance by the Agency of its obligations hereunder,the Developer shall, for each Project Element, pay the **“Agency Participation Payment”**to theAgency each **“Operating Year”**commencingwith the **“Operating Commencement Date”.**Theobligation of the Developer to make the Agency Participation Payments shallcontinue for a period of forty (40) Operating Years after the OperatingCommencement Date, subject to the Buyout provisions provided below, and shall,during such 40-year term, survive the sale, Transfer or refinance of the Siteor any portion thereof and the improvements on the Site or any portion thereof,and not be affected or reduced in any way by reason of any such sale, Transferor refinance, except as otherwise expressly provided in this Section 605.

 

The Developershall pay to the Agency, for each Project Element, the Agency ParticipationPayment for each Operating Year within ninety (90) days of the end of suchOperating Year, together with a certified statement submitted for the Agency’sapproval or disapproval documenting in detail the basis for the calculation ofthe Agency Participation Payment due to the Agency for that Project Element.Each Agency Participation Payment shall be made in an amount consistent withthe Agency approved certified statement for the subject Operating Year.

 

**§ 605.3       Effectof Sale or Refinance**

 

Upon the sale orrefinance of a Project Element, the Agency Participation Payment shall berevised as follows:

 

*§605.3.1       Sale*

 

(a) TheDeveloper shall within thirty (30) days of the sale of a Project Element, payto the Agency a payment equal to ten percent (10%) of the Net Proceeds of suchsale, with Net Proceeds defined as the amount by which the gross sale proceedsexceeds the sum of the Developer’s reasonable and customary transaction costsfor the sale and the Adjusted Project Costs for the Project Element.

 

(b) For thepurpose of calculating future Agency Participation Payments for that ProjectElement, the Adjusted Project Costs for that Project Element shall be definedas the gross proceeds of the sale,

 

(c) In theevent the first sale of a Project Element is a bona fide arms-length sale to athird party in which the Developer has no financial, ownership or otherinterest (a “First Sale”), then the First Sale shall result in the payment tothe Agency required by sub-section (a) of this Section 605.3.1, andshall affect future Agency Participation Payments as described in sub-section (b) ofthis Section 605.3.1, but upon any subsequent

 

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saleof the Project Element no such sub-section (a) payment [Illegible] be madeto the Agency and no such sub-section (b) adjustment to the definition ofAdjusted Project Costs shall be made. All Agency Participation Payments madefollowing a First Sale shall be made and calculated based upon using the grossproceeds of such First Sale as the Adjusted Project Costs.

 

*§ 605.3.2       Refinance*

 

(a) The Developer shall within thirty (30) days of a refinance ofa Project Element that occurs prior to a First Sale of that Project Element,pay to the Agency a payment equal to ten percent (10%) of the Net Proceeds ofsuch refinance, with Net Proceeds defined as the amount by which the grossrefinancing proceeds exceeds the sum of the amount of the equity attributableto the applicable refinanced Project Element and construction or permanentmortgage debt attributable to the refinanced Project Element that is repaid,the Developer’s reasonable and customary refinancing costs, and any accruedAnnual Return Shortfalls for that Project Element.

 

(b) For the purpose of calculating future Agency ParticipationPayments for that Project Element, the Adjusted Project Costs for the ProjectElement shall be increased by the amount of the Net Proceeds of any refinancingof that Project Element that occurs prior to a First Sale of that ProjectElement.

 

**§ 605.4       Buyout Provisions**

 

“Buyout” means, for each Project Element, the termination of theDeveloper’s obligation to continue paying any further Agency ParticipationPayments beyond the Effective Date by paying the Buyout Amount to the Agency.

 

For the first ten years following the Operating Commencement Date for aProject Element, no Buyout shall be permitted for that Project Element.Commencing with the tenth (10th) anniversary ofthe Operating Commencement Date for a Project Element, the Developer may at anytime Buyout the Agency Participation Payments for that Project Element andterminate any obligation to continue paying any further such AgencyParticipation Payment by paying the Buyout Amount for that Project Element tothe Agency within sixty (60) days of the Effective Date, provided Developershall have given . Agency written notice of its intent to effect such Buyout,and shall have identified in such written notice the Effective Date of suchBuyout, and further provided such identified Effective Date shall be a date whichis on or after the date the Agency receives such written notice.

 

Following the tenth anniversary of the Operating Commencement Date fora Project Element, the “Buyout Amount” means an amount equal to the greater of:

 

(a)                     the amountobtained by multiplying the amount of Agency Participation Payment for thetwelve month period immediately prior to the Effective Date by ten (10); or

(b)                    the amount ofSix Million Dollars ($6,000,000) increased by a six percent (6%) annual ratecalculated from the Operating Commencement Date for that Project Element to theEffective Date, pro rated to that Project Element in the same proportion thatthe total square footage of the Project Element bears to the total squarefootage of the constructed Project.

 

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“Effective Date” means, for each Project Element, the date on which theBuyout, if any, occurs.

 

**ARTICLE 7.LIMITATION ON TRANSFER AND ENCUMBRANCE**

 

**SECTION 701         RECOGNITIONOF REDEVELOPMENT PURPOSE**

 

The Developer recognizes and acknowledges that;

 

1.                          Developmentof the Site is important to the general welfare of the community; and

 

2.                          Substantialfinancing and other public aids have been made available by law and by thegovernment for the purpose of making redevelopment possible; and

 

3.                          TheDeveloper’s qualifications and identity are of particular concern to thecommunity and the Agency.

 

Accordingly, the Developer agrees to comply with the provisions of thisArticle 7.

 

**SECTION 702.****        CONDITIONS FOR TRANSFER**

 

§ 702.1           Agency Approval: Documentation: Agency’s Costto Review

 

For the reasons set forth above in Section 701, the Developershall not (except as set forth in § 106.2 hereof), prior to the Agency’sissuance of the Release of Construction Covenants, assign this Agreement norsell the Site or any portion thereof, nor lease (except as provided in § 702.6hereof) nor make any total or partial conveyance or transfer in any mode orform of all or any part of the Site or the improvements thereon, or anyinterest therein, nor shall there be any change in the identity of theDeveloper or change in the ownership of the Developer or in the relativeproportions thereof, or with respect to the identity of the parties in controlof the Developer or the degree thereof, by any method or means (other than suchchanges occasioned by the death or incapacity of any individual),(collectively, “**Transfer**”),without the prior written approval of the Agency, which approval shall not beunreasonably withheld or delayed if the Agency reasonably determines that theproposed Transferee (as defined herein below) has qualifications equal to orbetter than the assignee provided for in § 106.2 hereof, as of the Date ofAgreement in all material respects, including but not limited to (a) financialstrength, (b) experience in the successful development, operation,management and marketing of restaurant, office, residential, and retailimprovements, as applicable to the Subarea or Project Element that is thesubject of the proposed Transfer, (c) character and reputation, and (d) theability to perform all of the applicable agreements, undertakings, andcovenants of this Agreement, the Grant Deed, the Agreement Containing CovenantsAffecting Real Property and all other applicable agreements entered into by theDeveloper which relate to the development, management, operation, maintenance,and restoration of the Site and of the improvements thereon. The Developershall promptly notify the Agency of any and all changes whatsoever in theidentity of the parties in ownership or control of the Developer or the degreethereof, of which it or any of its officers have been notified or otherwisehave knowledge or information. Any entity formation agreements and documents(or changes therein) related to a Transfer, as well as the agreements and

 

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documents[Illegible] any Transfer, shall be subject to the [Illegible] of the Agency’sAdministrator in connection with its approval of the Transfer.

 

To assist the Agency in determining whether or not the proposedTransferee is so qualified, the Developer shall furnish to the Agency at noexpense to the Agency, prior to that Transfer, detailed and complete financialstatements of the proposed Transferee, certified by the Chief Financial Officer(or his or her equivalent) of the proposed Transferee, together with detailedand complete information about the business of the proposed Transferee,including its experience in developing and operating improvements of the typeto be constructed on the Site, the use to be made of the Site and theimprovements thereon by the proposed Transferee, projections by the proposedTransferee of the sources of funds to be used to pay any indebtedness that theproposed Transferee will assume or take subject to, or agree to pay, in connectionwith the Transfer, and other claims on and requirements for those funds,together with any other information the Agency may reasonably require to assistthe Agency in determining whether or not the proposed Transferee is soqualified. To the extent permitted by law, if the Developer or such Transfereeprovides the Agency with any proprietary financial information relating to aproposed Transferee, the Agency shall not, without the Developer’s priorwritten consent, disclose or make any such financial information available tothe public.

 

The Developer shall pay all costs of consulting and legal servicesincurred by the Agency to review any Transfer proposed by the Developer. Thecosts of the Agency for consultants or legal services required for providingsuch assistance shall be the actual sums billed to the Agency for suchconsulting or legal services. All costs shall be paid within ten (10) daysafter written request by the Agency.

 

**§ 702.2          Transferee’sAssumption of Agreement**

 

Approval by the Agency of any Transfer shall be conditioned upon suchassignee, conveyee or transferee (collectively **“Transferee”**)****agreeing,in writing, to assume the rights and obligations thereby transferred and tokeep and perform all covenants, conditions and provisions of this Agreement,the Grant Deed and the Agreement Containing Covenants Affecting Real Propertythat are applicable to the rights acquired.

 

**§ 702.3          TransfersNull and Void**

 

Any purported Transfer shall be null and void unless it complies withthe terms of this Section 702.

 

**§ 702.4          IntentionallyOmitted**

 

**§ 702.5          SecurityInterests**

 

The limitations on Transfer contained in this Section 702 shallnot be deemed to apply to or prevent, nor shall the Agency’s approval berequired under this Section in connection with, the granting of anysecurity interest expressly permitted under this Agreement (it being understoodthat the granting of such a security interest shall not be considered aTransfer pursuant to this Section, but shall be governed solely by the provisionsof Section 703 of this Agreement); nor the exercise by any mortgagee ofits right to foreclose its mortgage by power of sale or judicial foreclosure;nor any Transfer

 

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ofan interest by mortgagee having acquired the Developer’s interest in the Siteas a result of its rights under the mortgage, or by any successor to themortgagee whose interest shall have been acquired by, through or under anymortgage or shall have been derived immediately from any holder thereof.Notwithstanding the foregoing provisions of this paragraph § 702.5, thelimitations on Transfer contained in this Section shall apply to anymortgagee that acquires its interest in the Site or the improvements thereonother than by the exercise of its rights pursuant to the mortgage or deed inlieu of foreclosure.

 

**§ 702.6          Leasingof Space**

 

With respect to the leasing of space for occupancy prior to the Agency’sissuance of a Release of Construction Covenants for the applicable Subarea, theDeveloper shall not be required to submit the documentation otherwise requiredfor a Transfer by § 702.1, nor obtain the assignment and assumptionagreement otherwise required by § 702.2, nor pay the costs referred to in §702.1; provided, however, that such lease shall contain appropriate provisionsconforming the use and operation of the premises to this Agreement and thecovenants of the Grant Deed and the Agreement Containing Covenants AffectingReal Property, and further provided, that the Developer has complied with Section 103.1of this Agreement.

 

**§ 702.7          Saleor Lease Following the Issuance of Release of Construction Covenants**

 

Notwithstanding the foregoing, no Agency approval is required for anyTransfer of all or any part of the Site or the improvements thereon for whichthe Developer has obtained, or is entitled to obtain pursuant to Section 319hereof, a Release of Construction Covenants.

 

**SECTION 703         NOENCUMBRANCES EXCEPT TO FINANCE DEVELOPMENT**

 

**§ 703.1          AdvanceNotice to Agency; Agency Approval**

 

Notwithstanding Section 702, mortgages, deeds of trust, sale andlease-back financing, or any other form of conveyance required for anyreasonable method of financing are permitted, but only for the purpose ofsecuring loans of funds to be used only for financing the acquisition of theSite and the construction of improvements on the Site, and any otherexpenditures necessary and appropriate to develop the Site in accordance withthis Agreement, including without limitation the Project Costs. The Developershall notify the Agency in advance of any mortgage, deed of trust, or sale andlease-back financing, if the Developer proposes to enter into the same. TheAgency shall have the right to approve or disapprove any such mortgage or deedof trust, but the Agency shall not unreasonably withhold or delay its approvalif the Developer submits evidence reasonably satisfactory to the Agencydemonstrating (a) that the mortgage, deed of trust or other securityinstrument is consistent with the provisions of this Agreement; and (b) themortgage, deed of trust or other security instrument expressly acknowledgesthat the rights of any holder or person acquiring title through or followingforeclosure are subordinate and subject to the provisions of the Grant Deed andthe Agreement Containing Covenants Affecting Real Property. The Developer shallnot enter into any mortgage or deed of trust without having first obtained theAgency’s written approval or a

 

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writtenwaiver of its right to approve. The words **“mortgage”**and **“deed of trust”** as used hereininclude all other modes of financing real estate acquisition, construction, andland development.

 

**§ 703.2          UnapprovedEncumbrances**

 

The Developer shall not place or allow to be placed on the Site or anypart thereof or the improvements thereon, any mortgage, deed of trust,encumbrance or lien other than as expressly authorized by § 401.1 hereof (butapplying to the Developer Parcels and any other parcel acquired by the Developerpursuant to this Agreement) and this Section 703. The Developer shallremove or cause to be removed any levy or attachment made on the Site or anypart thereof, or assure the satisfaction thereof within a reasonable time butin any event prior to a sale thereunder.

 

**§ 703.3          HolderNot Obligated to Construct; Holder’s Right to Cure**

 

The holder of any mortgage, deed of trust or other security interestauthorized by this Agreement (the **“Mortgagee”**)shall in no way be obligated by the provisions of this Agreement to constructor complete the construction of improvements, or to guarantee such constructionor completion. Each such holder shall (insofar as the rights of the Agency areconcerned) have the right at its option to cure or remedy or commence to cure orremedy any Developer default consistent with the terms and conditions of thisAgreement. Nothing contained in this Agreement shall be deemed to permit orauthorize such holder to undertake or continue the construction or completionof the improvements without first having expressly assumed the Developer’sobligations to the Agency by written agreement reasonably satisfactory to theAgency. The holder in that event must agree to complete, in the manner providedin this Agreement, the improvements to which the lien or title of such holderrelates, and submit evidence reasonably satisfactory to the Agency that it hasthe financial responsibility and, itself or through contract with qualifiedparties, the qualifications necessary to perform such obligations. Any suchholder properly Completing such improvements shall be entitled, upon requestmade to the Agency, to a Release of Construction Covenants from the Agency withrespect to such improvements, in accordance with Section 319 hereof.

 

**§ 703.4          Holder’sFailure to Complete Improvements**

 

If the holder of a mortgage, deed of trust, or other security interestundertakes the construction or completion of the improvements on any portion ofthe Site and thereafter fails to achieve Completion of those improvements withinthe time specified in the Schedule of Performance, following the expiration ofthe applicable cure period pursuant to § 1001.3 hereof, the Agency shall haveall rights and remedies against that holder as may be available at law or inequity to cure, correct or remedy any default, to obtain specific performance,to recover damages for any default, or to obtain any other remedy consistentwith the purpose of this Agreement. Such rights and remedies are cumulative,and except with respect to rights and remedies expressly declared to beexclusive in this Agreement, the exercise of one or more of such rights orremedies shall not preclude the exercise, at the same or different times, ofany other rights or remedies for the same default or any other default by theholder.

 

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**§703.5           AgencyNotice of Default; Agency’s Right to [Illegible]**

 

The documents executed in connection with any mortgage or deed of trustencumbering any portion of the Site shall provide that the Agency shall havethe right to receive notices of default by the Developer thereunder and areasonable opportunity to cure any such default.

 

**ARTICLE 8.CONTINUING OBLIGATIONS**

 

**§ 801        USEOF THE SITE**

 

**§ 801.1  Uses, Operations, and Maintenance**

 

The Developer hereby covenants and agrees on behalf of it and anysuccessors and assigns in the Site or any portion thereof or any improvementsthereon or any interest therein that the Developer and such successors andassigns shall:

 

1.                         Developand construct improvements on the Site solely in substantial accordance withthe Redevelopment Plan, the Grant Deed, the Agreement Containing CovenantsAffecting Real Property, the terms of this Agreement (including but not limitedto the Scope of Development), and plans approved by the City.

 

2.                         Devotethe Site, or cause the Site to be devoted, to uses solely in accordance withthe Redevelopment Plan, the Grant Deed, the Agreement Containing CovenantsAffecting Real Property, the terms of this Agreement (including but not limitedto the Scope of Development), and plans approved by the City.

 

3.                         Use everycommercially reasonable effort to operate or cause the office, restaurant, andretail improvements on the Site to be operated and continuously open forbusiness to the general public in accordance with the standards set forth inthis Agreement, the Grant Deed and the Agreement Containing Covenants AffectingReal Property.

 

4.                         Installand curate the public art on the Site according to guidelines provided in, andto further the goals of, the “Public Art Policy” attached hereto as 9.

 

5.                         Maintain,repair and operate the Site and all improvements constructed or to beconstructed thereon (including landscaping, public art, lighting and signage),or cause the Site and all such improvements to be maintained, in a firstquality condition, free of debris, waste and graffiti, and in compliance withthe terms of the Redevelopment Plan, the Agreement Containing CovenantsAffecting Real Property, the City of Los Angeles Municipal Code, and aMaintenance Program approved by the Agency, which shall provide for thefollowing:

 

(a)                     Allimprovements on the Site shall be maintained in good condition in accordancewith the custom and practice generally applicable to comparable first qualityoffice, residential, restaurant or retail improvements, as applicable, in LosAngeles County, and in conformance and compliance with all plans, drawings andrelated documents approved by the Agency pursuant to this Agreement, allconditions of approval of land use entitlements adopted by the City or thePlanning Commission, including painting and cleaning of all exterior surfacesof all private improvements and of public improvements to the curb line.

 

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(b)                    Landscapemaintenance shall include, without limitation, watering/irrigation;fertilizing; mowing; edging; trimming of grass; pruning, trimming and shapingof trees and shrubs to maintain a natural and healthy appearance, roadvisibility, and irrigation coverage; replacement, as needed, of all plantmaterials; control of weeds in all planters, shrubs, lawns, ground covers, orother planted areas; and staking for support of trees.

 

(c)                     Clean-upmaintenance shall include, without limitation, maintenance of all sidewalks,paths and other paved areas in a clean and weed-free condition; maintenance ofall areas clear of dirt, mud, trash, debris or other matter that is unsafe orunsightly; removal of all trash, litter and other debris from improvements and landscaping;clearance and cleaning of all areas so maintained before the end of each day onwhich maintenance operations are performed to ensure that all cuttings, weeds,leaves and other debris are properly disposed of by maintenance workers.

 

(d)                    All maintenanceand clean-up procedures shall incorporate water and energy conservationmeasures, use of non- or low-VOC products, natural fertilizers, non- orlow-toxic pest control, recycling of green waste and other recyclable wasteconsistent with the Waste Reduction and Recycling Program Plan.

 

6.                         Prepareand implement a Waste Reduction and Recycling Program Plan in substantialaccordance with the terms of this Agreement for the design, demolition andconstruction stages of each Phase of the Project and for the management andoperation of all Project occupancies. Facilities shall be provided andmaintained to accommodate the physical requirements for these identifiedprograms. Implementation shall include continuing education and outreachprograms for all project occupants and employees to reduce the output of solidwaste, including yard waste, through recycling and reduction of waste at thesource.

 

7.                         Providefor the commissioning of all buildings and building systems during appropriateProject design stages and upon completion of construction and arrange forperiodic monitoring of the operations of all buildings and systems by the U. S.Green Building Council or similar organization acceptable to the Agency, insubstantial accordance with the terms of this Agreement. The Developer agreesto report the rating certification, commissioning and monitoring results to theAgency and the City.

 

8.                         Prepareand implement a coordinated Signage Plan, in accordance with the terms of thisAgreement and the Design for Development establishing sign design standards forall exterior identification, commercial, information and directional signage.

 

9.                         Requirethat all mechanical and telecommunications equipment be enclosed withinbuildings, concealed from view or incorporated and treated as architecturalfeatures. All equipment shall serve the Project only and shall be removed whenno longer required for service.

 

10.                   If the Agencygives written notice to the Developer that the maintenance or condition of theSite or any portion thereof or any improvements thereon does not comply withthis Agreement and such notice describes the deficiencies, the

 

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Developer [Illegible]correct, remedy or cure the [Illegible] within thirty (30) days following thesubmission of such notice, unless the notice accurately states that thedeficiency is an urgent matter relating to public health and safety, in whichcase the Developer shall cure the deficiency with all due diligence and shallcomplete the cure at the earliest possible time. If the Developer fails tomaintain the Site or any portion thereof or any improvements thereon inaccordance with this Agreement and fails to cure any deficiencies within theapplicable period described above, the Agency shall have, in addition to anyother rights and remedies hereunder, the right to maintain the Site and theimprovements thereon, or portion thereof, or to contract for the correction ofany deficiencies, and the Developer shall be responsible for payment of allsuch costs incurred by the Agency.

 

11.                   Pay when dueall real estate taxes and any special taxes or assessments of any bondfinancing issued by the Agency or City in connection with the redevelopment ofthe Site, assessed and levied on the Site or any portion thereof or anyimprovements thereon or any interest therein and refrain from appealing,challenging or contesting in any manner the validity or amount of any advalorem property tax assessment, encumbrance or lien; provided, however, thatthe Developer may appeal, challenge or contest (i) the initial assessmentof the assessed value of the Site or Subarea, as applicable, following theissuance of the Release of Construction Covenants by the Agency, to the extentthat such initial assessment is more than ten percent (10%) higher than theProject Cost approved by the Agency pursuant to Section 601 of thisAgreement; and (ii) any increase in assessment of the Site improperlyassessed because of a purported change of ownership where no such change tookplace; and (iii) any assessment occurring by reason of a bona fidearms-length sale of the Site or any portion thereof to the extent suchassessment results in an assessment in excess of the purchase price of suchbona fide arms-length sale, provided, however, that no such appeal, challengeor contest results in an assessment that is lower than that existing prior tosuch sale.

 

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

 

13.                   Refrain frommaking any Transfer of all or any portion of the Site, or any improvementsthereon, or any interest therein prior to the issuance of a Release of ConstructionCovenants, without the prior written approval of the Agency’s Administrator inaccordance with Section 702 hereof.

 

14.                   Pay when duethe Agency Participation Payment in accordance with Section 605 of thisAgreement.

 

**§801.2          Management Of The SiteAnd Improvements**

 

At all times, theDeveloper shall manage or cause to be managed the Site and all improvementsthereon in a prudent and business-like manner as necessary to maintain the Siteand all improvements thereon in a first-class condition. The Developer shallsubmit

 

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to the Agency for itsapproval, which shall not be [Illegible] withheld, an operation and maintenanceplan for those improvements on the Site that are not subject to a REA approvedby the Agency, which shall include, but not be limited to the items listed inthis §801.2.

 

The Developershall assume responsibility for the operation and maintenance (includingrepair, restoration and reconstruction) of all of the improvements constructedon the Site and the costs thereof, and the Agency and the City shall have noliability for costs of such operation and maintenance by the Developer or forany claims arising from the operation and maintenance (including repair,restoration and reconstruction) of such improvements. Without limiting thegenerality of the foregoing, the Developer, in the maintenance of theimprovements, shall observe the following standards:

 

1.                         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.

 

2.                         Maintainsuch appropriate entrance, exit and directional signs, markers and lights asshall be reasonably required and in accordance with prevailing practices in theoperation of similar developments.

 

3.                         Cleanlighting Fixtures and relamp and/or reballast as needed.

 

4.                         Repaintstriping, markers, directional signs, etc., as necessary to maintain infirst-class condition.

 

5.                         Provideappropriate security personnel and implement reasonable security measures. TheDeveloper shall seek the advice of the police department in planningappropriate security measures.

 

6.                         Maintainpublic right-of-way items between the property and the street in conformancewith City law and policy.

 

7.                         Maintainall surface and storm lateral drainage systems on the Site.

 

8.                         Maintainall sanitary sewer lateral connections on or to the Site.

 

**SECTION 802         COMPLIANCE WITH FEDERAL, STATE, ANDLOCAL LAW**

 

The Developershall operate and maintain the Project and all the improvements on the Site inconformity with all Governmental Requirements, including, without limitation,all applicable federal and state labor standards.

 

**SECTION 803         OBLIGATION TO REFRAIN FROMDISCRIMINATION**

 

**§803.1          No Discrimination orSegregation**

 

The Developercovenants by and for itself and any successors in interest that there shall beno discrimination against or segregation of any person or group of persons onaccount of race, color, creed, religion, sex, sexual preference/orientation,age, disability, medical condition, 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 Project, nor shall theDeveloper itself, or any person claiming under or

 

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through it, [Illegible]permit any such practice or [Illegible]**ofdiscrimination or segregation with reference to the selection, location,number, use or occupancy of tenants, lessees, subtenants, sublessees or vendeesof the Project. The foregoing covenants shall run with the land.

 

**§ 803.2          Form of Nondiscrimination andNonsegregation Clauses**

 

The Developershall refrain from restricting the rental, sale or lease of the Site orimprovements thereon, or any portion thereof, on the basis 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 of any person. All deeds, leases or contracts forthe sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of theSite 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 orthrough it, that there shall be no discrimination against or segregation of,any person 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 premises herein conveyed, nor shall the grantee itself or any personclaiming under or through it, establish or permit any such practice orpractices of discrimination or segregation with reference to the selection,location, number, use or occupancy of tenants, lessees, subtenants, sublesseesor vendees in the land or premises herein conveyed. The foregoing covenantsshall run with the land.”

 

2.                         Inleases: “The lessee herein covenants by and for itself, its heirs, executors,administrators, successors, and assigns, and all persons claiming under orthrough it, and this lease is made and accepted upon and subject to thefollowing conditions: That there shall be no discrimination against orsegregation of any person 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 leasing, subleasing, transferring, use,occupancy, tenure or enjoyment of the land or premises herein leased, nor shallthe lessee itself, or any person claiming under or through it, establish orpermit such practice or practices of discrimination or segregation withreference to the selection, location, number, use or occupancy of tenants,lessees, sublessees, subtenants or vendees in the land or premises hereinleased.”

 

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

 

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with reference[Illegible] the selection, location, number, use [Illegible] occupancy oftenants, lessees, subtenants, sublessees or vendees of the land or premises.”

 

**SECTION 804         AGREEMENTCONTAINING COVENANTS AFFECTING REAL PROPERTY**

 

**§804.1          Recordation**

 

As a conditionprecedent to the recordation of the Grant Deed(s) for each Subarea, theDeveloper shall execute and deliver to the Escrow Agent for recording in theOfficial Records of Los Angeles County an Agreement Containing CovenantsAffecting Real Property with respect to that Subarea in substantially the formappended to this Agreement as Attachment No. 14 and incorporated herein bythis reference. Agreements Containing Covenants Affecting Real Property shallbe recorded with reference to the entire Site.

 

**§804.2          Effect Duration, andRelease of Covenants**

 

The covenantsestablished in this Agreement, the Grant Deeds and the Agreements ContainingCovenants Affecting Real Property shall, without regard to technicalclassification and designation, be binding on the Developer and any successorin interest to the Site, or any part thereof, for the benefit and in favor ofthe Agency, its successors and assigns, and the City. The covenants againstdiscrimination shall remain in effect in perpetuity. All covenants contained inthis Agreement and the covenants for the construction of improvements on theSite contained in the Grant Deeds and the Agreements Containing CovenantsAffecting Real Property shall expire with respect to each Subarea upon therecording of the Release of Construction Covenants with respect to such Subareato be issued by the Agency pursuant to this Agreement. All other covenantsshall remain in effect pursuant to the applicable provisions of the Grant Deedand the Agreement Containing Covenants unless and until they expire inaccordance with the terms thereof.

 

**ARTICLE 9. RECIPROCAL EASEMENTAGREEMENTS**

 

This Agreement isintended to provide for the development and operation of the Site as a coherentand unified whole as provided in the Scope of Development. Accordingly, whereappropriate as provided in the Scope of Development, as a condition precedentto each close of escrow for property to be conveyed by the Agency to theDeveloper, the Developer and the Agency shall cooperate in the recordation inthe land records of the County of Los Angeles of Reciprocal Easement Agreements(**“REA’s”**) approved by the Agency.The REA’s shall include, but not be limited to, provisions addressing:

 

(i)       theuse of each Subarea as an integrated development, including public open spaceand parking facilities and providing for the common use thereof;

 

(ii)      standardsand procedures conforming to the terms of this Agreement for the repair,maintenance, alteration and construction of the improvements on each Subarea;

 

(iii)     standardsand procedures conforming to the terms of this Agreement for the operation andmanagement of the improvements on each Subarea;

 

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(iv)                the [Illegible] ofexisting easements and rights [Illegible] way, including but not limited to theeasement benefiting the property commonly known as the Academy Project;

 

(v)                   publicliability and fire and extended coverage insurance for common areas; and

 

(vi)                signage criteriafor each Subarea.

 

The Agency Administratoror designee shall sign each REA solely to indicate the Agency’s approval of theREA’s terms and each REA shall provide that its terms shall not be modifiedwithout the Agency’s written consent, which shall not be unreasonably delayedor withheld.

 

**ARTICLE 10. DEFAULTS, REMEDIES, ANDTERMINATION**

 

**SECTION 1001      DEFAULT**

 

**§1001.1       Event of Default**

 

The occurrence ofany of the following shall constitute a default under this Agreement (an **“Event of Default”**):

 

1. Failure by aParty to perform any material term or provision of this Agreement within thetime specified in said term or provision (as such time may be extended pursuantto Section 1105 of this Agreement or by mutual written consent of theParties) unless such failure is cured within ten (10) business days aftera Default Notice has been given to the defaulting Party by the Party claiming adefault.

 

2. Failure by aParty to observe or perform any other material term or provision of thisAgreement unless such failure is cured within thirty (30) days after a DefaultNotice has been given to the defaulting Party by the Party claiming a default(as such time may be extended pursuant to Section 1105 of this Agreementor by mutual written consent of the Parties); provided that if the nature ofsuch failure is (a) such that the same cannot be reasonably cured within athirty (30) day period, and (b) is other than the payment of a sum ofmoney, a Party shall not be deemed to be in default if it diligently commencessuch cure within such period and thereafter diligently proceeds to cure suchfailure as soon as reasonably possible but in no event later than one-hundredand twenty (120) days following delivery of the Default Notice.

 

**§ 1001.2       Default Notice**

 

As used herein, a **“Default Notice”**shall mean a writtennotice,

 

(i) specifyingthe nature of the default;

 

(ii) containingthe following statement, in bold print, all capitals, 14-point type:

 

**“NOTICE IS HEREBY GIVEN THAT FAILURE TO CURE THE SPECIFICDEFAULT COULD RESULT IN TEH TERMINATION OF THE OWNER PARTICIPATION AGREEMENTAND/OR THE LOSS OF VALUABLE RIGHTS YOU HAVE UNDER THAT AGREEMENT”;**

 

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and,

 

(iii) given in accordance with Section 1102 below.

 

**SECTION 1002      RIGHTSAND REMEDIES**

 

Except as otherwise expressly provided in this Agreement, upon theoccurrence of an Event of Default, the injured Party shall have all rights andremedies against the defaulting Party as may be available at law or in equityto cure, correct or remedy any default, to obtain specific performance, torecover damages for any default, or to obtain any other remedy consistent withthe purpose of this Agreement. Such rights and remedies are cumulative, andexcept with respect to rights and remedies expressly declared to be exclusivein this Agreement, the exercise of one or more of such rights or remedies shallnot preclude the exercise, at the same or different times, of any other rightsor remedies for the same default or any other default by the defaulting Party.

 

**§ 1002.1       Institutionof Legal Actions**

 

In addition to any other rights or remedies (and except as otherwiseprovided in this Agreement), either Party may institute legal action to cure,correct or remedy any default, to recover damages for any default, or to obtainany other remedy consistent with the purpose of this Agreement. The cureperiods set forth in Section 1001.1 herein shall not be interpreted toprevent an injured Party from, at any time following delivery of the DefaultNotice, seeking a remedy reasonably determined to be necessary to preventfurther material damage. Legal actions must be instituted in the Superior Courtof the County of Los Angeles, State of California, in any other appropriate courtof that county, or in the United States District Court for the Central Districtof California.

 

**§ 1002.2       Acceptanceof Service of Process**

 

In the event that any legal action is commenced by the Developeragainst the Agency, service of process on the Agency shall be made by personalservice upon the Administrator, or in such other manner as may be provided bylaw.

 

In the event that any legal action is commenced by the Agency againstthe Developer, service of process on the Developer shall be made by personalservice upon the Developer (or upon a member of the Developer) and shall bevalid whether made within or without the State of California, or in such manneras may be provided by law.

 

**§ 1002.3       Rightof Reverter**

 

The Developer represents and agrees that the Developer’s undertakingspursuant to this Agreement are, and will be used for, the purpose ofredevelopment of the Site and not for speculation in landholding. Therefore,after the Agency’s conveyance of any portion of the Site to the Developer, the Agencyshall have the right, at its option, to reenter and take possession of thatportion of the Site with all improvements thereon, and revest in the Agency theestate theretofore conveyed to the Developer, if after conveyance of title andprior to the recordation of the Release of Construction Covenants to be issuedby the Agency, the Developer or its successors or assigns, in breach of thisAgreement as follows:

 

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1.                         Subjectto the provisions of Section 1105 herein below, [Illegible] to proceedwith the construction of the improvements on the Site as required by thisAgreement for a period of ninety (90) days after written notice thereof fromthe Agency;

 

2.                         Subjectto the provisions of Section 1105 herein below, abandons or materiallysuspends construction of the improvements on the Site for a period of ninety(90) days after written notice thereof from the Agency;

 

3.                         Assignsor purports to assign this Agreement (or any rights therein), or sells, Transfers,conveys, assigns or leases the whole or any part of the Site, or any of theimprovements to be constructed thereon, in violation of this Agreement, whichis not corrected within thirty (30) days of such assignment, sale, Transfer,conveyance, or lease.

 

Such right toreenter and repossess shall be subject to and limited by and shall not defeat,render invalid or limit:

 

1.                         Any bonafide mortgage, deed of trust or other security instrument, provided that suchmortgage, deed of trust or other security instrument is permitted by thisAgreement; or

 

2.                         Anyrights or interest provided in this Agreement for the protection of the holderof such bona fide, permitted mortgages, deeds of trust or other securityinstruments.

 

Upon the revestingin the Agency of title to any portion of the Site as provided in this § 1002.3,the Agency shall, pursuant to its responsibilities under the CaliforniaCommunity Redevelopment Law (Health and Safety Code Sections 33000 et seq.),use its every reasonable effort to resell the reverting properties as soon aspossible and in such manner as the Agency shall find feasible and consistentwith the objectives of the law and of the Redevelopment Plan, to a qualifiedand responsible party or parties (as determined by the Agency), who will assumethe obligation of making or completing the improvements, or such otherimprovements in their stead, as shall be reasonably satisfactory to the Agencyand in accordance with the uses specified for the Site in the RedevelopmentPlan. Upon such resale by the Agency of the reverting properties or any portionthereof, the proceeds thereof shall be applied as follows:

 

1.                         First, toreimburse the Agency on its own behalf and/or on behalf of the City of LosAngeles, for all costs and expenses of the Agency incident to such sale and/orconveyance, for all costs and expenses incurred by the Agency (less any netincome derived by the Agency therefrom in connection with such management); alltaxes, assessments and water and sewer charges with respect thereto; anypayments made, or necessary to be made, to discharge or prevent from attachingor being made any subsequent encumbrances or liens due to obligations, defaultsor acts of the Developer, its successors or transferees; any expenditures madeor obligations incurred with respect to the making or completion of theimprovements or any part thereof on the reverting properties, or with respectto the removal of the improvements on the reverting properties and therestoration of the reverting properties to a level condition; and any amountsotherwise owing to the Agency by the Developer or its successors ortransferees; and

 

2.                         Second,to reimburse the Developer, its successors or transferees up to the amountequal to the sum of (A) the Developer’s acquisition costs allocable to thereverting properties and (B) Project Costs allocable to the revertingproperties, less (C)

 

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gains or income withdrawnor made by the Developer [Illegible] successors or assigns therefrom or fromthe improvements thereon or as a result of any amounts payable by the Agencypursuant to this Agreement.

 

3.                         Anybalance remaining after such reimbursements shall be retained by the Agency asits property.

 

The rightsestablished in this § 1002.3 are to be interpreted in light of the fact thatthe purpose of this Agreement is the redevelopment of the Site and not landspeculation. After a Release of Construction Covenants has been recorded forany portion of the Site, the Agency will, if requested by the Developer,quitclaim to the Developer the Agency’s right of reverter for that portion ofthe Site.

 

**SECTION 1003      TERMINATION BEFORE CONVEYANCE**

 

**§1003.1       Termination by Agency onDeveloper’s Default**

 

In addition toother remedies set forth in this Agreement, the Agency may terminate thisAgreement at its option with respect to any then-unconveyed Subarea if an Eventof Default occurs, including but not limited to:

 

(i)        TheDeveloper (or any successor or assign of the Developer) assigns or purports toassign this Agreement or any right therein or its interest in the Site or anyportion thereof or any improvements thereon, contrary to the provisions of thisAgreement; or

 

(ii)       Thereis a change in ownership of the Developer contrary to the provisions of thisAgreement; or

 

(iii)      TheDeveloper defaults in its obligation to acquire the Developer Parcels, withinthe time and as required by § 401.1 herein; or

 

(iv)     TheDeveloper fails to timely submit the Original Letter of Credit or anyadditional Letter of Credit in accordance with all of the requirements of thisAgreement; or

 

(v)      TheDeveloper fails to timely execute the Agreement Containing Covenants AffectingReal Property or to permit the recordation thereof or to perform any of itsmaterial obligations thereunder; or

 

(vi)     TheDeveloper fails to accept a conveyance of any portion of the Site when requiredby the provisions of this Agreement, provided that all of Developer’sconditions set forth in § 506.2 hereof have been either satisfied or waived.

 

**§1003.2       Termination by Developer**

 

In addition to otherremedies set forth in this Agreement, the Developer shall have the right toterminate this Agreement with respect to any then-unconveyed portion of theSite at its option if:

 

(i)                       (a) theAgency, in violation of the terms of this Agreement, fails to convey fee titleto the Developer, provided that all of Agency’s conditions set forth in § 506.1hereof have been either satisfied or waived; and (b) the Developerdelivers a Default Notice pursuant to § 1001.2 above and any pertinent cureperiod applicable pursuant to § 1001.3 with respect thereto has expired; or

 

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(ii)                    if, prior tothe [Illegible] Developer is required by this Agreement to deliver to Agencythe Original Letter of Credit, the Developer, after and despite diligent andgood faith efforts, is unable to obtain the Original Letter of Credit by reasonof material changes in the condition of the national financial marketsinvolving the widespread and general unavailability of capital so as tomaterially adversely affect the availability or feasibility of the financing ofthe development of the Site pursuant to this Agreement, and such inability toobtain the Original Letter of Credit by reason of such material changes isdocumented in an opinion obtained by the Developer from an economic orfinancial expert approved by the Agency, who has established qualifications inthe national real estate and capital markets; or

 

(iii)                 the Agency, priorto the time the Developer is required by this Agreement to deliver to theAgency the Original Letter of Credit and the HUD Letter of Credit or Guaranty,fails to obtain the street widening property acquisition funds and the off-siteimprovement funds contemplated by Paragraphs IV and V of the Public-PrivateFeasibility Agreement, or

 

(iv)                the Agency, priorto the date provided in the Schedule of Performance, fails to obtain both theHUD Loan and the EDI Grant pursuant to Section 402.1.1(d), or substitutepublic funds in the event or to the extent such funds are not obtained.

 

**§1003.3       Termination by Agency orDeveloper**

 

Either the Agencyor the Developer may terminate this Agreement with respect to anythen-unconveyed portion of a Subarea upon thirty (30) days written notice tothe other in the event that all land use entitlements required for thedevelopment of that Subarea pursuant to this Agreement are not finally approvedby the City and all other governmental agencies having jurisdiction thereof,within the time provided in the Schedule of Performance, as such time may beextended by mutual consent of the Parties.

 

**SECTION 1004      AGENCY’S OPTION TO ACQUIRE**

 

In considerationof the Agency’s covenants and agreements hereunder, the Developer hereby grantsto the Agency an exclusive and irrevocable option to purchase the DeveloperParcels, or any portion thereof, pursuant to the terms of this Section 1004(**“Agency Option”**). The Developerhereby agrees to the recordation against the Developer Parcels in the landrecords of the County of Los Angeles, within the time set forth in the Scheduleof Performance, of a memorandum of the Agency Option in the form of the **“Memorandum of Agency Option”**attached asAttachment No. 15, incorporated by reference. The provisions of this Section 1004shall survive the termination of this Agreement.

 

**§ 1004.1       Term of Option**

 

The Agency mayexercise the Agency Option for the Developer Parcels within a Subarea at anytime prior to midnight of the last day of an eighteen- (18-) month period thatcommences upon the earlier of (a) the date of the Agency’s termination ofthis Agreement with respect to that Subarea due to the Developer’s default,pursuant to §

 

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1003.1 hereof or (b) [Illegible]earliest date that the Agency can exercise its right to reenter and takepossession of any portion of that Subarea pursuant to § 1002.3 hereof (**“Option Period”**).

 

**§1004.2       Option Price**

 

The optionpurchase price shall be established as follows. For the Developer Parcelsidentified as Assessor’s Parcel No. 2350-013-012 and No. 2350-013-013,the option purchase price shall be the appraised fair market value at the timeof the Agency’s exercise of its option. For the other Developer Parcels thathave been acquired by the Developer prior to the Date of Approval of thisAgreement, the option purchase price shall be the appraised fair market valueas of the Date of Approval of this Agreement.

 

For the DeveloperParcels that are acquired by the Developer after the Date of Approval of thisAgreement, the option purchase price shall be the lesser of (i) theDeveloper’s acquisition costs for the Developer Parcel less rental and otherincome derived from that Developer Parcel and (ii) an amount equal to theappraised fair market value of that Developer Parcel increased by ten percent(10%); provided that, the Agency may, in its discretion, seek approval from theAgency Board of Commissioners to increase this ceiling on the option purchaseprice.

 

For the purposesof this § 1004.2, the Developer shall be deemed to have acquired a DeveloperParcel if the Developer either holds fee title to the parcel or has enteredinto a binding agreement to purchase the parcel. Appraised fair market value,for purposes of determining the Agency’s option purchase price, shall bedetermined pursuant to Agency policies and procedures. The option purchaseprice shall be paid in cash upon closing of escrow.

 

**§1004.3       Form of Title andTitle Insurance**

 

Title to theDeveloper Parcels shall be conveyed by grant deed. Title shall be free andclear of all encumbrances and possessory interests except those previouslywaived in writing by the Agency. The Developer authorizes the Agency to applyfor a preliminary commitment for title insurance on the Developer’s behalfimmediately upon exercise of the Agency Option. Building or any userestrictions general to the area and utility easements not inconsistent withthe uses contemplated under this Agreement shall not be deemed encumbrances. Ifthe Agency Option is exercised, the Agency shall be entitled to possession fromthe time of the closing of the sale. The Developer Parcels shall be deliveredfrom the Developer to the Agency in an “as is” physical condition, with nowarranty, express or implied by the Developer as to the presence of HazardousMaterials, or the condition of the soil, its geology or the presence of knownor unknown faults, except to the extent of the Developer’s representations madepursuant to § 308.1 of this Agreement; provided that, the Developer shall, atthe Agency’s request, remove those improvements that the Developer caused to beconstructed upon the Developer Parcels and restore the Developer Parcels to alevel condition.

 

**§1004.4       Exercise of Option**

 

The Agency shallexercise its Agency Option by giving written notice of exercise of the optionon or before the date that is ninety (90) days prior to the expiration of theOption Period. This notice may be personally delivered to the Developer ormailed to the Developer by certified mail, return receipt requested, or it maybe recorded in the land records of the County of Los Angeles with a copy mailedto the Developer. The Agency

 

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shall exercise its AgencyOption with respect to all of the Developer Parcels contained within aparticular Subarea, or it shall have no right to exercise its Agency Optionwith respect to any Developer Parcel within that same Subarea. The Developerhereby agrees that if the Agency fails to exercise the Agency Option in regardto a particular Developer Parcel, the Developer shall waive any defense orobjection it may have to the Agency’s exercise of its power of eminent domainwith respect to that Developer Parcel.

 

**SECTION 1005      ASSIGNMENT OF CONTRACT AND PLANS**

 

Any and allinformation provided to the Agency pursuant to this Agreement (including butnot limited to architectural plans, engineering studies and environmentalstudies), shall become the property of the Agency, without any liability to theDeveloper or the preparer of such materials. In the event of the Agency’stermination of this Agreement with respect to a Subarea because of theDeveloper’s default, pursuant to § 1003.1 hereof or if the Agency has the rightto reenter and take possession of any portion of a Subarea pursuant to § 1002.3hereof, the Agency shall have the right, in its sole discretion, to takepossession of any such information and use such information in connection withthe development of the Site; provided, that such use shall be without liabilityto the Developer or its contractors who prepared such materials. To effectuatethe foregoing provision, the Developer agrees to execute and deliver to theAgency, concurrently with the Developer’s execution of this Agreement, an **“Assignment of Contracts and Plans”**in theform of Attachment No. 16, incorporated by reference.

 

**ARTICLE 11.   GENERAL PROVISIONS**

 

**SECTION 1101      NON-MERGER**

 

None of the terms,covenants, agreements or conditions set forth in this Agreement shall be deemedto be merged with any Grant Deed or Agreement Containing Covenants AffectingReal Property.

 

**SECTION 1102      NOTICES, DEMANDS AND COMMUNICATIONSBETWEEN THE PARTIES**

 

Formal notices,demands and communications between the Agency and the Developer shall besufficiently given if dispatched by registered or certified mail, postageprepaid, return receipt requested, by facsimile, or by courier not affiliatedwith the sender at the cost of the sending Party with written evidence ofreceipt, to the principal offices of the Agency and of the Developer asdesignated in § 106.1 and § 106.2, respectively. In addition, copies of DefaultNotices to the Developer shall be given to the following persons:

 

Clifford P. Goldstein,Partner J. H. Snyder Co.5757 Wilshire Blvd., Penthouse 30 Los Angeles, CA. 90036

 

Michael Wise, PartnerJ. H. Snyder Co.5757 Wilshire Blvd., Penthouse 30Los Angeles, CA. 90036

 

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Peter [Illegible]****Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro,LLP Eighteenth Floor 2121 Avenue of the Stars Los Angeles, CA. 90067

 

Such writtennotices, demands and communications may be sent in the same manner to suchother addresses as either Party may from time to time designate, as provided inthis Section.

 

**SECTION 1103      CONFLICT OF INTEREST**

 

To the extentprohibited by law, no member, official or employee of the Agency shall have anypersonal interest, direct or indirect, in this Agreement nor shall any suchmember, official or employee participate in any decision relating to theAgreement which affects his or her personal interests or the interests of anycorporation, partnership or association in which he or she is directly orindirectly interested.

 

The Developerwarrants that it has not paid or given, and will not pay or give, any thirdparty any money or other consideration for obtaining this Agreement.

 

**SECTION 1104      NON-LIABILITY OF CITY AND AGENCY OFFICIALSAND EMPLOYEES**

 

No member,official or employee of the City or the Agency shall be personally liable tothe Developer, or any successor in interest, in the event of any default orbreach by the Agency or for any amount which may become due to the Developer orits successor or on any obligations under the terms of this Agreement. TheDeveloper hereby waives and releases any claim it may have against any member,official or employee of the Agency or the City with respect to any default orbreach by the Agency (or the City) or for any amount which may become due tothe Developer or its successors, or on any obligations, under the terms of thisAgreement. The Developer makes such release with full knowledge of Civil Code Section 1542and hereby waives any and all rights thereunder to the extent of this release. Section 1542of the Civil Code provides as follows:

 

“A general releasedoes not extend to claims which the creditor does not know or suspect to existin his favor at the time of executing the release, which if known by him musthave materially affected his settlement with the debtor.”

 

**SECTION 1105      ENFORCED DELAY IN PERFORMANCE; FORCEMAJEURE**

 

For the purposesof any of the provisions of this Agreement, neither the Agency nor theDeveloper, as the case may be, nor any successors in interest, shall beconsidered in breach of, or default in, its obligations under this Agreement(excepting therefrom obligations to pay money) as a result of the enforceddelay in the performance of such obligations due to causes beyond itsreasonable control and without its fault or negligence, including but notlimited to failure of governmental agencies (other than the Agency) to act orto issue necessary entitlements, permits or licenses, acts of God, acts of thepublic enemy, acts of the Federal Government, acts of the other Party(including but not limited to delays in performing such other Party’sobligations pursuant to this Agreement), fires, floods, earthquakes, epidemics,quarantine restrictions, strikes, labor disputes, freight embargoes, inabilityto obtain materials or supplies or unusually severe

 

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weather or delays ofcontractors or subcontractors due to such [Illegible]; it being the purpose andintent of this provision that in the event of the occurrence of any suchenforced delay, the time or times for performance of the obligations of theAgency or the Developer, as the case may be, shall be extended for the periodof the enforced delay. Provided that the Party seeking the benefit of theprovisions of this Section shall promptly notify the other Party inwriting of such enforced delay and of the causes thereof, the extension of timefor performance shall run from ten (10) days prior to the date on whichsuch notice is given, but in no event earlier than the date of commencement ofthe cause. Financial inability alone shall not extend the time for performance,or excuse non-performance or untimely performance, of any obligation under thisAgreement.

 

**SECTION 1106      INSPECTION OF BOOKS**

 

The Agency has theright upon three (3) business days’ notice (excluding weekends and holidays)at all reasonable times to inspect the books and records of the Developerpertaining to the Site as pertinent to the purposes of this Agreement. Thebooks and records referred to in this Section 1106 shall be maintained ormade available in a single location in Los Angeles County.

 

**SECTION 1107      APPROVALS**

 

Except asexpressly provided otherwise in this Agreement, approvals required of theAgency or the Developer shall not be unreasonably withheld or delayed. If thisAgreement requires the Developer to submit plans, drawings or other documentsor information to the Agency for approval, which shall be deemed approved ifnot acted on by the Agency within the specified time, said plans, drawings orother documents shall be accompanied by a letter stating that they are beingsubmitted and will be deemed approved unless disapproved by the Agency withinthe stated time. If the Developer fails to include such a letter with itssubmission, said plans, drawings or other documents shall not be deemedapproved based on the Agency’s failure to act within the specified time.

 

**SECTION 1108      AGENCY’S AUTHORIZED REPRESENTATIVE**

 

Unless otherwisespecified or the context requires otherwise, all references to the Agency inthis Agreement and its attachments shall mean the Administrator of the Agencyor any officer or employee of the Agency to whom the Administrator or the Boardof the Agency delegates authority to perform, carry out and/or enforce thisAgreement. Unless otherwise specified or the context requires otherwise, allreferences to the Agency Administrator shall mean the Administrator or his orher designee.

 

**SECTION 1109      REAL ESTATE COMMISSIONS; FINDER’S FEES**

 

The Agency shallnot be liable for any real estate commission or brokerage or finder’s fees thatmay arise from this Agreement. The Developer agrees to indemnify and holdharmless the Agency from any claim by any broker, agent or finder retained bythe Developer. Each Party represents to the other Party that it has notincurred any liability for the payment of any real estate commission orbrokerage or finder’s fee in connection with this Agreement and the Developeragrees that the Developer shall be solely responsible for any cost or expensein connection with any such commission or fee that arises out of any actiontaken by the Developer.

 

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**SECTION 1110      DEVELOPER’S REPRESENTATIONS AND WARRANTIES**

 

The Developerhereby represents the following to the Agency for the purpose of inducing theAgency to enter into this Agreement and to consummate the transactionscontemplated hereby, all of which shall be true as of the Date of Agreement:

 

1.                         TheDeveloper has the legal power, right and authority to enter into this Agreementand the instruments and documents referenced herein to which the Developer is aparty, to consummate the transactions contemplated hereby, to take any steps oractions contemplated hereby, and to perform its obligations hereunder.

 

2.                         Allrequisite action has been taken by the Developer and all requisite consents forDeveloper have been obtained in connection with entering into this Agreementand the instruments and documents referenced herein to which the Developer is aparty, and the consummation of the transaction contemplated hereby.

 

3.                         This Agreementis duly executed by the Developer, and all agreements, instruments anddocuments to be executed by the Developer pursuant to this Agreement shall, atsuch time as they are required to be executed hereunder, be duly executed bythe Developer, and each such agreement is, or shall be at such time as it isrequired to be executed hereunder, valid and legally binding upon the Developerand enforceable in accordance with its terms and the execution and deliverythereof shall not, with due notice or the passage of time, constitute a defaultunder or violate the terms of any indenture, agreement or other instrument towhich the Developer is a party.

 

4.                         There isno litigation pending or threatened that, in the reasonable opinion of theDeveloper, would materially interfere with the Developer’s performance of itsduties and obligations hereunder.

 

5.                         TheDeveloper is not the subject of a bankruptcy proceeding.

 

6.                         TheDeveloper is not developing any of the improvements on the Site for the purposeof relocating a big box retailer or auto dealership that has a market area thatincludes the Site within its boundaries. Solely for purposes of this paragraph,the terms “relocating”, “big box retailer”, “auto dealership” and “market area”shall have the meaning given to them in California Health & SafetyCode Section 33426.7.

 

**SECTION 1111      RELATIONSHIP TO PARTIES**

 

Nothing containedin this Agreement shall be deemed or construed as creating a partnership, jointventure, or any other relationship between the parties hereto, other than asexpressly specified in the provisions contained herein, or cause the Agency tobe responsible in any way for the debts or obligations of the Developer or anyother party.

 

**SECTION 1112      BINDING UPON SUCCESSORS AND ASSIGNS**

 

This Agreement shallbe binding upon and inure to the benefit of the permitted successors ininterest, transferees and assigns of each of the Parties. Any reference in thisAgreement to a Party shall be deemed to apply to the permitted successor ininterest, transferee or assign of that Party who has acquired an interest incompliance with the terms of this Agreement or through action of law.

 

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**SECTION 1113 INTERRPRETATION OF [Illegible][Illegible] TERMINOLOGY; APPLICATION OF LAWS**

 

This Agreement hasbeen negotiated at arm’s length and between persons sophisticated andknowledgeable in the matters addressed in this Agreement. In addition, eachParty has been given the opportunity to consult with experienced andknowledgeable legal counsel. Accordingly, any rule of law (including CivilCode section 1654) or legal decision that would require interpretation of anyambiguities in this Agreement against the Party that has drafted it is notapplicable and is waived. The provisions of this Agreement shall be interpretedin a reasonable manner to effectuate the purpose and intent of the parties tothis Agreement.

 

When the contextso requires when used in this Agreement, the masculine gender shall be deemedto include the feminine and neuter gender and the neuter gender shall be deemedto include the masculine and feminine gender. When the context to requires whenused in this Agreement, the singular shall be deemed to include the plural. Theparagraph and section headings have been used for convenience only, and shallnot be used in the interpretation hereof.

 

**SECTION 1114 WAIVERS**

 

The waiver by theAgency of any term, covenant, or condition herein contained shall not be awaiver of such term, covenant, or condition on any subsequent breach.

 

**SECTION 1115 TIME OF ESSENCE**

 

Time is of theessence of this Agreement and each and all of its provisions in whichperformance is a factor.

 

**SECTION 1116 ATTORNEYS’ FEES AND COSTS**

 

If any action orproceeding is brought by either Party against the other under this Agreement,whether for interpretation, enforcement or otherwise, the prevailing Partyshall be entitled to recover all costs and expenses, including the reasonablefees of its attorney and any expert witnesses in such action or proceeding.This provision shall also apply to any post-judgment action by either Party,including without limitation efforts to enforce a judgment.

 

**SECTION 1117 SEVERABILITY**

 

Any provision ofthis Agreement that shall prove to be invalid, void, or illegal shall in no wayaffect, impair, or invalidate any other provision hereof and such otherprovisions shall remain in full force and effect.

 

**SECTION 1118 NON-EXCLUSIVITY**

 

No remedy orelection hereunder shall be deemed exclusive but shall, wherever possible, becumulative with all other remedies at law or in equity.

 

**SECTION 1119 ENTIRE UNDERSTANDING OF THE PARTIES**

 

This Agreement,including any document or instrument incorporated herein by reference, containsa complete and final expression of the agreement between the Agency

 

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and the Developer,[Illegible] here are no promises, representations, [Illegible], warranties, orinducements either express or implied other than as are set forth in thisAgreement. Any and all previous discussions or agreements between the Agencyand the Developer with respect to the premises, whether oral or written, aresuperseded by this Agreement.

 

**SECTION 1120 AMENDMENTS TO THIS AGREEMENT**

 

No amendment,change, or addition to, or waiver of termination of, this Agreement or any parthereof shall be valid unless in writing and signed by both the Agency and theDeveloper.

 

**SECTION 1121 NO THIRD PARTY BENEFICIARIES**

 

The parties tothis Agreement acknowledge and agree that the provisions of this Agreement arefor the sole benefit of the Agency and the Developer, and not for the benefit,directly or indirectly, of any other person or entity, except as otherwiseexpressly provided herein.

 

**SECTION 1122 AUTHORITY TO SIGN**

 

The individualexecuting this Agreement on behalf of the Developer hereby represents that hehas full authority to do so and to bind the Developer to perform pursuant tothe terms and conditions of this Agreement.

 

**SECTION 1123 INCORPORATION BY REFERENCE**

 

Each of theattachments and exhibits attached hereto is incorporated herein by thisreference.

 

**SECTION 1124 ESTOPPEL CERTIFICATES**

 

Each Party heretoagrees that upon reasonable notice at reasonable times it shall, at the requestof the other Party, execute estoppel certificates regarding the status of theperformance of the other Party of its obligations hereunder. The Agency’sAdministrator shall be authorized to execute such estoppel certificates onbehalf of the Agency.

 

**SECTION 1125 COMPOSITION OF AGREEMENT**

 

This Agreement isexecuted in eight (8) duplicate originals, each of which is deemed to bean original. This Agreement includes Ninety One (91) pages and Seventeen(17) attachments.

 

**SECTION 1126 FURTHER ASSURANCES**

 

The Parties agreeto take such further actions and execute such further documents as arereasonably necessary or desirable to effectuate the intent of this Agreement,including but not limited to further actions and further documents required byDeveloper’s lenders, so long as such further actions or such further documentsdo not materially alter any of the terms of this Agreement.

 

**SECTION 1127 TIME FOR ACCEPTANCE**

 

This Agreementshall not take effect unless and until it is approved, executed and deliveredby the Agency. This Agreement must be authorized, executed and delivered by

 

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theAgency within ninety (90) days after the Developer’s delivery to the Agency ofthis Agreement executed by the Developer, or the Developer may terminate thisAgreement on written notice to the Agency. The date of this Agreement (**“Date of Agreement”**) shall be the date onwhich it is executed by the Agency.

 
|                                 |                            | **DEVELOPER:**                                                              |
|--------------------------------------|---------------------------------|-----------------------------------------------------------------------------|
|                                 |                            | ** **                                                                  |
|                                 |                            | SL No Ho, LLC  a California limited liability company                       |
|                                 |                            |                                                                        |
|                                 |                            |                                                                        |
| Date:                                | Dec  6, ‘01                |                                                                        | By: | /s/ Clifford P.  Goldstein |
|                                 |                            |                                                                        |   | Its: | CLIFFORD P. GOLDSTEINAUTHORIZED MEMBER |
|                                 |                            |                                                                        |
| ** **                           | ** **                      | ** **                                                                  |
| ** **                           | ** **                      | **AGENCY****:**                                                             |
|                                 |                            |                                                                        |
|                                 |                            | THE  COMMUNITY REDEVELOPMENT AGENCY OF  THE CITY OF LOS ANGELES, CALIFORNIA |
|                                 |                            |                                                                        |
|                                 |                            |                                                                        |
| Date:                                | 3/5/02                          |                                                                        | By: | /s/ Authorized Signatory |
|                                 |                            |                                                                        |   | Administrator |
| ATTEST                               |                            |                                                                        |
|                                 |                            |                                                                        |   |
| By:                                  | /s/ Authorized  Signatory       |                                                                        |   |
|                                 | Agency Secretary                |                                                                        |   |
|                                 |                            |                                                                        |   |
| APPROVED AS TO FORM:                 |                            |                                                                        |
|                                 |                            |                                                                        |
| ROCKARD J. DELGADILLO  CITY ATTORNEY |                            |                                                                        |
|                                 |                            |                                                                        |   |
| By:                                  | /s/ Authorized  Signatory       |                                                                        |   |
|                                 | Assistant/Deputy City  Attorney |                                                                        |   |
|                                 |                            |                                                                        |   |
| APPROVED AS TO FORM:                 |                            |                                                                        |
|                                 |                            |                                                                        |   |
| KANE, BALLMER &  BERKMAN    |                            |                                                                        |
|                                 |                            |                                                                        |   |
| By:                                  | /s/ Authorized  Signatory       |                                                                        |   |
|                                 | Special Counsel to the  Agency  |                                                                        |   |
|                                      |                                 |                                                                             |  |  |  |  |

 

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JARNo Ho Project [Illegible]**(“JARNo Ho”), its successors and [Illegible], joins herein for the purpose ofconsenting to the terms of this Agreement and, for consideration received,covenants to convey to the Developer, pursuant to the JV Agreement, thoseDeveloper Parcels that are owned or controlled by JAR No Ho or any of itsmembers as of the Date of Agreement. For consideration received, JAR No Hohereby grants to the Agency an exclusive and irrevocable option to purchasethose Developer Parcels or any portion thereof pursuant to the terms of Section 1004of this Agreement, provided that, the term of the Agency Option for thoseDeveloper Parcels shall commence upon JAR No Ho’s failure to convey thoseDeveloper Parcels to the Developer within the time set forth in the Schedule ofPerformance. JAR No Ho agrees to cooperate with the Agency in the recordationin the land records of Los Angeles County of a Memorandum of Agency Option inthe form of Attachment No. 15 to this Agreement.

 
|   |     |   | JAR  No Ho Project LLC  a California limited liability company                     |
|--------|----------|--------|------------------------------------------------------------------------------------|
|   |     |   |                                                                               |
|   |     |   | JARCO/SLG&G,  LLC,                                                             |
|   |     |   | A  California limited liability company,                                           |
|   |     |   | Its  managing member                                                               |
|   |     |   |                                                                               |
|   |     |   | JARCO  COMMERCIAL REAL ESTATE, INC.  A California corporation  Its managing member |
|   |     |   |                                                                               |   |
|   |     |   |                                                                               |   |
| Date:  | 12-10-01 |   | By:                                                                                | /s/ J. Allen Radford |
|   |     |   |                                                                               |   | J. Allen Radford |
|   |     |   | Its:                                                                               |   | President |

 

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ATTACHMENT NO 8

 

PUBLIC-PRIVATE FEASIBILITY AGREEMENT

 

**I.         Use of Available Site-GeneratedProperty Tax Increment**

 

**A.**                      **HUD loan Repayment** - Subject to all ofthe terms and conditions of this Agreement (including, without limitation, theprovisions of Paragraph I.E. below limiting the Agency’s payment obligationhereunder to particular sources of funds), the amount payable by the Agencyunder this paragraph I.A.2 of this Attachment No. 8 shall be the principalamount of SIX MILLION FIFTY THOUSAND DOLLARS ($6,050,000) plus any interestthereon as provided in this Paragraph I.A.

 

1.                          TheAgency will use every reasonable effort to enter into a cooperation agreementwith the City whereby the City will provide an EDI Grant to the Agency in theamount of ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000) to be appliedby the Agency to the payment of interest accruing on the HUD Loan.

 

2.                          Subjectto all of the terms and conditions of this Agreement, on or before September 30of each year, beginning with the first September 30 which follows theCompletion Date, but not earlier than the date of the Agency’s first draw offunds from the HUD Loan, and continuing until the HUD Loan has been paid infull, the Agency shall apply to the repayment of the HUD Loan an amount equalto the lesser of (i) fifty percent (50%) of Available Site-GeneratedProperty Tax Increment received by the Agency during the prior Agency FiscalYear, or (ii) such portion of such Available Site-Generated Property TaxIncrement received by the Agency during the prior Agency fiscal year that issufficient to pay the annual payment of principal and accrued interest on theHUD Loan for that year to the extent such annual debt service exceeds theavailable EDI Grant funds. Agency payments of interest on the HUD Loan shallnot reduce the principal amount of the Agency obligation under this Paragraph IA. The Agency hereby covenants to refrain from taking any action that woulddiminish or impair in any way its receipt (and subsequent payment of the Agencyobligation) of Available Site-Generated Property Tax Increment.

 

3.                          Subjectto all of the terms and conditions of this Agreement, on or before September 30of each year, beginning with the first September 30 which follows theCompletion Date, but not earlier than the date of the Agency’s first draw offunds from the HUD Loan, and continuing until the HUD Loan has been paid infull, the Developer shall pay to the Agency an amount that is sufficient.

 

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when added to theavailable EDI Grant funds and the Available Site-Generated Property TaxIncrement to be paid for such fiscal year by the Agency pursuant to ParagraphI.A.2, to pay the annual payment of principal and accrued interest on the HUDLoan for that year. Within the time set forth in the Schedule of Performance,the Developer shall deliver to the Agency either (i) an irrevocableat-sight, standby letter of credit, first approved in writing by the AgencyAdministrator and legal counsel as to form, content and issuer, in an amountequal to the principal amount of the HUD Loan (**“HUD Letter of Credit”**); or (ii) a continuing absolutewritten guaranty of Developer’s obligations under this Paragraph I.A.3 firstapproved in writing by the Agency Administrator and legal counsel as to form,content and issuer, in an amount equal to the principal amount of the HUD Loan,and reasonably found by the Agency Administrator or designee to be issued by aperson or persons of sufficient creditworthiness and sufficient and availablenet worth (**“HUD Guaranty”**) (theHUD Letter of Credit and the HUD Guaranty are sometimes referred to in thisAgreement as the **“HUD Letter of Credit orGuaranty”**). The Agency shall have the right to draw or obtainpayment on the HUD Letter of Credit or Guaranty upon the Developer’s failure tomake any payment to the Agency required by this Paragraph I.A.3, and with noduty on the part of the Agency to first enforce any remedy to collect amountsin default from Developer. In the event the Agency obtains the HUD Loan, thenthe payment by Developer of all amounts due under this Paragraph I.A.3 and thedelivery to Agency by Developer of the HUD Letter of Credit or Guaranty shallsatisfy, to the extent of the principal amount of the HUD Loan, the Developer’sobligation to pay the Purchase Price to the Agency otherwise required by Section 503.1of the Owner Participation Agreement. The amount of the HUD Letter of Credit orGuaranty shall be reduced at the close of escrow for the conveyance of thefinal portion of the Site from the Agency to the Developer, to an amount equalto the Developer’s total Purchase Price to the Agency otherwise required by Section 503.1of the Owner Participation Agreement and may be further reduced with the priorwritten approval of the Agency Administrator or designee based upon a proventrack record of generated Available Site-Generated Property Tax Increment.

 

4.                          If (i) theDeveloper pays to the Agency an amount sufficient to repay the principalbalance and accrued interest on the HUD Loan, or (ii) the Agency is unableto obtain the HUD Loan and the Original Letter of Credit required of theDeveloper is increased as a result thereof (either of which shall be the **“Trigger Event”**), the Agency shallthereafter make payments to the Developer of Available Site-Generated PropertyTax Increment as set forth in this Paragraph I.A.4. The principal amount of theAgency

 

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obligation under thisParagraph 1.A.4 shall equal the unpaid principal balance of the Agencyobligation under this Paragraph I.A. on the date of the Trigger Event (the **“Unpaid Principal”**). The Unpaid PrincipalShall bear interest at the rate of six percent (6%) per annum from the date ofthe Trigger Event. Subject to all the terms and conditions of this Agreement,on or before September 30 of each year, beginning with the first September 30that follows the date of the Trigger Event and continuing until the UnpaidPrincipal and any accrued interest thereon has been paid in full, the Agencyshall pay the Developer an amount equal to fifty percent (50%) of AvailableSite-Generated Property Tax. Increment received by the Agency during the priorAgency Fiscal Year. The Agency hereby covenants to refrain from taking anyaction that would diminish or impair in any way its receipt (and subsequentpayment of the Unpaid Principal and interest thereon) of AvailableSite-Generated Property Tax Increment.

 

5.                          TheAgency payments required by Paragraph I.A.2 and Paragraph I.A.4 (if applicable)shall continue until the earlier of (i) the payment of amounts by theAgency under Paragraph I.A.2 and Paragraph I.A.4 (if applicable) which togetherare sufficient to pay the principal amount of $6,050,000 and any accruedinterest thereon, or (ii) February, 2029. Interest prior to any TriggerEvent shall be calculated at the rate of interest for the HUD Loan. No furtherpayments shall be required of the Agency under either Paragraph I.A.2 orParagraph I.A.4 upon the termination of the Agency obligation pursuant to thisParagraph I.A.5.

 

**B.****                      Repaymentof Developer’s Advance of Costs –****Subjectto all of the terms and conditions of this Agreement (including, withoutlimitation, the provisions of Paragraph I.E. below limiting the Agency’spayment obligation hereunder to particular sources of funds), the principalamount payable by the Agency to the Developer under this Paragraph I.B. of thisAttachment No. 8 shall be an amount equal to (i) the amount of theDeveloper Advance determined pursuant to Section 402.6 of the OwnerParticipation Agreement; less (ii) the Acquisition Funds used by theAgency to acquire any portion of the Site; plus (iii) in the event theAgency obtains the HUD Loan and the Developer provides the HUD Letter of Creditor Guaranty as required by the Owner Participation Agreement, an amount equalto the amount, if any, by which the principal amount of the HUD Loan exceedsthe Purchase Price; less (iv) an amount equal to the Purchase Price to theextent the payment by Developer of the Purchase Price is not satisfied underParagraph I.A.3 above; which net amount shall bear interest at the rate of sixpercent (6%) per annum from the date of disbursement.

 

1.                          Subjectto all of the terms and conditions of this Agreement, on or before September 30of each year, beginning with the first

 

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September 30 whichfollows the Completion Date and continuing until the Agency obligation underthis Paragraph 1.8. (and any accrued interest thereon) has been paid in full,the Agency shall pay to the Developer an amount equal to forty percent (40%) ofAvailable Site-Generated Property Tax Increment received by the Agency duringthe prior Agency Fiscal Year. The Agency hereby covenants to refrain fromtaking any action that would diminish or impair in any way its receipt (andsubsequent payment of the Agency obligation and interest thereon) of AvailableSite-Generated Property Tax Increment.

 

2.                          TheAgency obligation pursuant to this Paragraph I.B. shall continue until the earlierof (i) payment in full of this Paragraph I.B Agency obligation or (ii) February,2029.

 

**C.****                      Paymentof Qualifying Remediation Costs –** Subject to all of the terms andconditions of this Agreement (including, without limitation, the provisions of Section 308.1of the Owner Participation Agreement and Paragraph I.E. below limiting theAgency’s payment obligation hereunder to particular sources of funds), theAgency shall annually pay to the Developer an amount equal to the lesser of (i) fortypercent (40%) of Available Site-Generated Property Tax Increment received bythe Agency during the prior Agency Fiscal Year and (ii) such portion ofsuch Available Site-Generated Property Tax Increment that is equal to one-half(1/2) of the unreimbursed portion of the Developer’s uninsured remediationcosts pursuant to Section 308.1 of the Owner Participation Agreement.

 

1.                          TheAgency obligation pursuant to this Paragraph I.C. shall be subordinate to theAgency obligation pursuant to Paragraph I.B.

 

2.                          TheAgency obligation pursuant to this Paragraph I.C. shall continue until theearlier of (i) payment in full of this Agency obligation or (ii) February,2029.

 

**D.****                      Paymentof Annual Return Shortfall —** Subject to all the terms and conditions ofthis Agreement (including, without limitation, the provisions of Paragraph I.E.below limiting the Agency’s payment obligation hereunder to particular sourcesof funds), on or before September 30 of each year, beginning with thefirst September 30 that follows the later of (i) the end of the firstoccurring Stabilization Year, and (ii) the first date on which theassessed value of a Subarea reflects the completion of the improvements on thatSubarea pursuant to the Owner Participation Agreement, and continuing until theAgency obligation under this Paragraph I.D. has been paid in full, the Agencyshall pay to the Developer an amount equal to the lesser of (i) ninetypercent (90%) of Available Site- Generated Property Tax Increment received bythe Agency during the

 

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prior Agency Fiscal Yearand (ii) the total amount of the Annual Return Shortfall, if any, acrossall Subareas.

 

1.                          “StabilizationYear” as used herein shall mean, for any Subarea, the earlier of (i) thecalendar year in which actual revenues from the rental of Project Elements inthe Subarea achieve ninety percent (90%) of the scheduled revenues from therental of Project Elements in that Subarea for any one consecutive three monthperiod, at one hundred percent (100%) occupancy (with allowance for a tenpercent (10%) revenue vacancy), and (ii) twenty-four (24) months followingthe issuance of a temporary Certificate of Occupancy for all of theimprovements in that Subarea.

 

2.                          “AnnualReturn Shortfall” as used herein shall mean, for each Subarea, the amount inany Operating Year by which the calculated amount of the Developer’s AnnualReturn exceeds the sum of (i) Net Operating Income for that OperatingYear, plus (ii) payments made by the Agency during that Operating Year pursuantto Paragraph I.A. and Paragraph I.C., plus (iii) an amount equal to thedifference between the fair market rent for the Restricted Units within thatSubarea and the Affordable Rent for those Restricted Units.

 

3.                          “OperatingYear” as used herein shall mean, for each Subarea, the calendar year precedingthe first year during which the Agency is obligated to make the payments setforth in this Paragraph I.D., and each succeeding year.

 

4.                          “Developer’sAnnual Return” as used herein shall mean an amount equal to (i) forSubarea A, 10.05% of Adjusted Project Costs, (ii) for Subarea B, 10.52% ofAdjusted Project Costs, and (iii) for Subarea C, 10.85% of AdjustedProject Costs.

 

5.                          “AdjustedProject Costs” as used herein shall mean, for each Subarea, Project Costs asapproved by the Agency, plus Approved Post-Construction Capital Expenditures,if any. Project Costs shall not include any Letter of Credit provided by theDeveloper to the Agency pursuant to Section 402.6 of the OwnerParticipation Agreement.

 

6.                          Anyportion of the Annual Return Shortfall payable to the Developer pursuant tothis Paragraph I.D. that remains unpaid in any Operating Year shall accrue,together with annual interest at the rate of six percent (6%).

 

7.                          At leastthirty days before the date that the Agency obligation under this ParagraphI.D. becomes due for each Operating Year and continuing until the Agencyobligation has been paid in full,

 

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[Illegible] Developershall submit to the Agency for the review and written approval or disapprovalof the Agency’s Administrator a Certified Project Cost Statement in the formrequired by Section 601.2 of the Owner Participation Agreement.

 

8.                          TheAgency obligation pursuant to this Paragraph I.D. shall cease for each Subareain any Operating Year in which the Annual Return Shortfall for that Subareaequals zero, and in any event, shall cease as to all Subareas upon the earlierto occur of, (i) the Agency has made total payments across all Subareas pursuantto this Paragraph I.D. in the amount of FIVE MILLION DOLLARS ($5,000,000) plusthe total interest that has accrued pursuant to Paragraph I.D.6, if any, and (ii) February,2029.

 

9.                          TheAgency obligation pursuant to this Paragraph I.D. shall be subordinate to theAgency obligation pursuant to Paragraph I.A., Paragraph I.B., and ParagraphI.C.

 

**E.****                        LimitedObligation –** The Agency obligation pursuant to Paragraph I.A.,Paragraph I.B., Paragraph I.C., and Paragraph I.D. are special and limitedobligations payable solely from the sources of funds expressly identified inthis Section I. As to a given Subarea or Phase or Project Element, theAgency shall have no obligation to pay any amounts to Developer pursuant tothis Section I unless the Completion Date shall have occurred as to thatSubarea or Phase or Project Element and a Developer Event of Default shall nothave occurred as to any of its obligations under the Owner ParticipationAgreement or the Agreement Containing Covenants Affecting Real Property or theGrant Deed applicable to that Subarea or Phase or Project Element.

 

**II.****                       AffordableHousing Subsidy –** The Agency shall make the following payments to theDeveloper in a total amount equal to the amount required to offset theprojected reduction in revenue resulting from the recordation of theAffordability Covenants against the residential units to be constructed onSubareas A and B (**“Housing Subsidy”**).The Housing Subsidy shall be allocated equitably across the Restricted Unitsconstructed on Subareas A and B. The Developer’s obligations with respect tothe provision of Restricted Units set forth in Section 103.1(e)(1) ofthe Owner Participation Agreement shall be excused to the extent and only tothe extent that the Agency fails to provide the Housing Subsidy.

 

**A.****                      HOMEFunds –** The Agency shall use every reasonable effort to obtain from theCity HOME funds in the amount of FIVE MILLION DOLLARS ($5,000,000) (**“HOME Funds”**) to reimburse the Developerfor that portion of the Developer’s costs that is attributable to theacquisition of property for the residential units. Subject to all the terms andconditions of this Agreement, the Agency shall pay to the Developer upon thecommencement of construction for the residential units to be constructed

 

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on Subareas A and B thatportion of the HOME funds that does not exceed the amount of the HousingSubsidy.

 

**B.****                      CurrentlyAvailable Housing Trust Funds —** Upon the commencement of constructionfor the residential units to be constructed on Subareas A and B, the Agencyshall pay to the Developer the lesser of (i) SIX MILLION TWO HUNDREDTHOUSAND DOLLARS ($6,200,000) of currently available funds in the NorthHollywood Housing Trust Fund (**“CurrentlyAvailable Housing Trust Funds”**), or (ii) such portion of suchCurrently Available Housing Trust Funds that is required, when added to theHOME Funds, to pay the Housing Subsidy.

 

**C.****                      Site-GeneratedHousing Trust Funds —** Subject to all of the terms and conditions ofthis Agreement, on or before September 30 of each year, beginning with thefirst September 30 which follows the Completion Date for the residentialunits to be constructed on Subareas A and B, and continuing until the HousingSubsidy has been paid in full, the Agency shall pay to the Developer an amountequal to the lesser of (i) one hundred percent (100%) of the amount of taxincrement revenues from the Site that was set aside pursuant to Sections33334.2 etseq. of the California Health and Safety Code or anysuccessor law for low and moderate-income housing purposes during the priorAgency Fiscal Year (**“Site-Generated HousingTrust Funds”**), and (ii) such portion of such Site-GeneratedHousing Trust Funds that is required, when added to the HOME Funds and theCurrently Available Housing Trust Funds, to pay the Housing Subsidy within anamortization period that commences with the Completion Date for the residentialunits to be constructed on Subareas A and B and terminates at the end of AgencyFiscal Year 2028-2029. The Agency hereby covenants to refrain from taking anyaction that would diminish or impair in any way its receipt (and subsequentpayment of the Housing Subsidy) of Site-Generated Housing Trust Funds.

 

**D.****                      NorthHollywood Housing Trust Funds —** Subject to all of the terms andconditions of this Agreement, on or before September 30 of each year,beginning with the first September 30 which follows the Completion Datefor the residential units to be constructed on Subareas A and B and continuinguntil the Housing Subsidy has been paid in full, the Agency shall pay to theDeveloper an amount equal to the lesser of (i) one hundred percent (100%)of the amount of tax increment revenues from the North Hollywood RedevelopmentProject that was set aside pursuant to Sections 33334.2 etseq.of the California Health and Safety Code or any successor law for low-andmoderate-income housing purposes during the prior Agency Fiscal Year (**“North Hollywood Housing Trust Funds”**), and(ii) such portion of such North Hollywood Housing Trust Funds that isrequired, when added to the HOME Funds, the Currently Available Housing TrustFunds, and the Site-Generated Housing Trust Funds, to pay the Housing Subsidywithin an amortization period that commences with the Completion Date for the residentialunits to be constructed on Subareas

 

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A and [Illegible][Illegible] terminates at the end of Agency Fiscal Year 2028-2029. The Agencyhereby covenants to refrain from taking any action that would diminish orimpair in any way its receipt (and subsequent payment of the Housing Subsidy)of North Hollywood Housing Trust Funds.

 

**E.****                        LimitedObligation —** The Agency’s obligation to pay the Housing Subsidy is aspecial and limited obligation payable solely from the sources of fundsexpressly identified in this Section II. As to a given Subarea, the Agencyshall have no obligation to pay any amounts to Developer pursuant to this Section IIunless the Completion Date shall have occurred for the residential units to beconstructed on the applicable Subarea and a Developer Event of Default shallnot have occurred as to any of its obligations under the Owner ParticipationAgreement or the Agreement Containing Covenants Affecting Real Property or theGrant Deed or the Affordability Covenants, as such pertain to the applicableSubarea.

 

**III.****                   CurrentlyAvailable Tax Allocation Bond Funds —** Subject to all the terms andconditions of this Agreement, the Agency shall use FIVE MILLION DOLLARS($5,000,000) of currently available tax allocation bond funds as AcquisitionFunds for the Agency’s acquisition of property to be conveyed to the Developerpursuant to the Owner Participation Agreement.

 

**IV.****                  PropertyAcquisition for Street Widening —** The Agency and the Developer shalluse every reasonable effort to cause the City to enter into a cooperationagreement with the Agency whereby the City will provide THREE MILLION DOLLARS($3,000,000) of Community Development Block Grant funds to the Agency for theAgency’s use in acquiring property for street widening on the Site.

 

**V.****                      EDA Fundsfor Off-Site Improvements —** The Agency and the Developer shall useevery reasonable effort to cause the City to enter into a cooperation agreementwith the Agency whereby the City will provide funds sufficient to pay the costof constructing any off-Site public improvements required by the City as acondition of Project entitlement and any required off-Site mitigation measures.

 

**VI.****                  Definitions—** Unless otherwise defined in this Public-Private Feasibility Agreement,capitalized terms contained herein shall have the meaning given to them in theOwner Participation Agreement.

 

**A.**                      “AgencyFiscal Year” as used herein shall mean each twelve-month period beginning on July 1and ending on June 30.

 

**B.**                      “AvailableSite-Generated Property Tax Increment” means the total ad valorem property taxincrement revenue allocated to and received by the Agency in any fiscal yearpursuant to Section 33670(b) of the California Health and SafetyCode, as said statute may be amended from time to

 

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time, by application ofthe one percent (1%) tax levied against real property as permitted by Article XIIIAof the California Constitution in an amount reasonably attributed by the Agencysolely to an increase in the assessed value of the Site over and above itsassessed value as of the Date of Agreement, but specifically excludingtherefrom all of the following: (i) a portion of such tax incrementrevenues equal to the percentage of tax increment revenues from theredevelopment project area as a whole that is set aside pursuant to Sections33334.2 etseq. of the California Health and Safety Code or anysuccessor law for low- and moderate-income housing purposes; and (ii) aportion of such tax increment revenues equal to the portion of tax incrementrevenue from the redevelopment project area as a whole that the Agency isrequired to pay to any and all governmental entities pursuant to any provisionof law, as amended from time to time, or pursuant to tax sharing/pass-throughagreements (including any and all agreements entered into prior to the OwnerParticipation Agreement by the Agency and such governmental entitiesimplementing the tax sharing/pass-through agreements); and (iii) a portionof such tax increment revenues equal to the percentage of tax incrementrevenues in the redevelopment project area as a whole which the Agency may berequired by the State of California to pay from time to time, including, by wayof example and without limiting the generality of the foregoing, any paymentswhich the Agency may be required to pay to the Education Revenue AugmentationFund pursuant to Section 33681 etseq. of the CaliforniaHealth and Safety Code; and (iv) the amount of any revenues received bythe Agency that are attributable to any special taxes or assessments orvoter-approved indebtedness; and (v) charges for County administrativecharges, fees or costs equal to the percentage of such charges in the ProjectArea as a whole.

 

**C.**                      “CompletionDate” as used herein shall mean, for the improvements on each Subarea, the dateof “Completion” as that term is defined in Article 2 of the OwnerParticipation Agreement; provided that, tenant improvements shall not berequired to have been completed.

 

**D.**                      “ReimbursementTerm” as used herein means the period during which Agency is obligated to makepayments to the Developer to the extent set forth in this Public-PrivateFeasibility Agreement.

 

**VII.****              GeneralProvisions**

 

**A.**                      ThisPublic-Private Feasibility Agreement is part of the Owner ParticipationAgreement and is subject to all of the terms and conditions thereof.

 

**B.**                      The Agencyshall have the right at its option, and as a non-exclusive remedy, to set offamounts owed by the Developer to the Agency due to an Event of Default arisingfrom Developer’s failure to pay amounts due under the Owner ParticipationAgreement, including but not limited to the

 

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Agency ParticipationPayments, against amounts payable by the Agency to the Developer under thisPublic-Private Feasibility Agreement.

 

**C.**                      The Agency’sobligations hereunder may be prepaid by the Agency, in whole or in part, at anytime and from time to time without penalty, from any funds lawfully availableto the Agency for such purposes.

 

**D.**                      The Agency’sobligation to pay Available Site-Generated Property Tax Increment in accordancewith this Public-Private Feasibility Agreement shall be subordinate to theAgency’s existing bonded indebtedness and bond issuance(s) and therefunding or refinancing thereof and any future bonds the Agency may issue andthe bonded indebtedness incurred in connection therewith, provided that theAgency determines at the time of issuance of any such future bonds that suchissuance and indebtedness will not materially adversely affect the Agency’sability to perform its obligations under the Owner Participation Agreement.Bonded indebtedness includes any indebtedness incurred by the Agency for bonds,notes, interim certificates, debentures, certificates of participation or otherobligations issued by the Agency. The Agency’s obligation to pay a portion ofAvailable Site-Generated Property Tax Increment under this Public-PrivateFeasibility Agreement is not and shall not be construed as a “pledge” ofproperty tax revenues for purposes of Section 33671.5 of the California Health and Safety Code.

 

**E.**                        Anybalance remaining in the Agency’s payment obligations under this Public-PrivateFeasibility Agreement after the Reimbursement Term has ended shallautomatically be deemed forgiven.

 

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