Document:

Exhibit 10.34

 

THIRD
IMPLEMENTATION AGREEMENT

 

TO

 

OWNER
PARTICIPATION AGREEMENT

 

by and between

 

THE COMMUNITY REDEVELOPMENT AGENCY

 

OF THE CITY OF LOS ANGELES

 

and

 

SL NO HO, LLC

 

North Hollywood Redevelopment Project

 

 

THIRD
IMPLEMENTATION AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

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

 

AGREEMENT

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

	
   

  	
  DEVELOPER:

  
	
   

  	
   

  
	
   

  	
  SL
  No Ho, LLC

  a California limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael E.
  Wise

  
	
   

  	
   

  	
  Michael
  E. Wise

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Authorized
  Member

  

 

 

	
   

  	
  AGENCY:

  
	
   

  	
   

  
	
   

  	
  THE
  COMMUNITY REDEVELOPMENT

  AGENCY OF THE CITY OF LOS ANGELES,

  CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Authorized
  Signatory

  
	
   

  	
   

  	
  Robert
  Ovrom

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chief
  Executive Officer

  

 

 

	
  APPROVED
  AS TO FORM:

  	
   

  
	
   

  	
   

  
	
  ROCKARD
  J. DELGADILLO

  	
   

  
	
  CITY
  ATTORNEY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  
	
   

  	
  Assistant/Deputy
  City Attorney

  	
   

  
	
   

  	
   

  
	
  APPROVED
  AS TO FORM:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  
	
   

  	
  Agency
  Special Counsel

  	
   

  

 

9

 

EXHIBIT A

 

NoHo Commons

Source of Funds for Agency Land Acquisition/Relocation Activities

 

A.                      Funding from the Developer

 

	
  $

  	
  350,000

  	
   

  	
  Reimbursement
  for Agency Costs FY03 (Fund 5273)

  	
   

  
	
  $

  	
  3,832,358

  	
   

  	
  Subarea
  A Closing, Land Purchase (Fund 5273)

  	
   

  
	
  $

  	
  1,167,642

  	
   

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

  	
   

  
	
  $

  	
  2,350,000

  	
   

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

  	
   

  
	
  $

  	
  8,474,181

  	
   

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

  	
   

  
	
  $

  	
  5,525,819

  	
   

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

  	
   

  
	
  $

  	
  21,700,000

  	
   

  	
  Subtotal Developer

  	
   

  

 

B.                        Funding From the Agency

 

	
  $

  	
  10,088,597

  	
   

  	
  NH
  Redevelopment Project Area Resources (Various Funds)

  	
   

  
	
  $

  	
  440,500

  	
   

  	
  EDI
  Grant (Fund 3802)

  	
   

  
	
  $

  	
  3,000,000

  	
   

  	
  CDBG
  Grant/Loan (Fund 2258)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  13,529,097

  	
   

  	
  Subtotal Agency

  	
   

  

 

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

 

	
  $

  	
  35,229,097Exhibit 10.35

 

AGREEMENT CONTAINING COVENANTS
AFFECTING REAL PROPERTY

 

	
  RECORDING
  REQUESTED BY

  AND WHEN RECORDED RETURN TO:

  	
   

  	
  FREE
  RECORDING REQUESTED

  (Gov’t Code Section 6103)

  

 

The
Community Redevelopment Agency of

the City of Los Angeles, California

354
South Spring Street, Suite 800

Los
Angeles, California 90013

Attn:
Director of Housing

 

WITH
A COPY TO:

 

SF
No Ho, LLC

c/o
FF Realty LLC

5510
Morehouse Drive, Suite 200

San
Diego, California 92121

Attn: Pat Gavin, Esq.

 

AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY

 

This
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY (this “Covenant Agreement”) is made and entered into by and between
the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES (the “Agency”) and SFNOHO, LLC, a California limited Liability
company (the “Owner”) with reference to the
following:

 

A.       Owner
holds fee title to that certain real property described in the legal
description attached

hereto as Exhibit A and incorporated herein by this reference, and
shown on the Site Map attached hereto as Exhibit B and incorporated herein by
this reference (the “Property”).

 

B.        The
Property is subject to the Redevelopment Plan for the North Hollywood Redevelopment
Project (the “Redevelopment Project”) approved
and adopted on February 21, 1979 by Ordinance No. 152030 of the City
Council of the City of Los Angeles, as amended to the Date of Agreement.

 

C.        This
Covenant Agreement is made pursuant to that certain Owner Participation
Agreement by and between the Agency and SL NO HO, LLC, a California limited
liability company.

 

1

 

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

 

D.       All
capitalized terms in this Covenant Agreement shall have the meaning ascribed to
them in the OPA, unless provided otherwise herein.

 

Agency
and Owner agree as follows:

 

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

 

A.       Develop
and construct improvements on the Property solely in accordance with the Redevelopment
Plan, all applicable Grant Deeds, this Covenant Agreement, the OPA (including
but not limited to the Scope of Development and the Concept Plan), and plans
approved by the City of Los Angeles.

 

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

 

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

 

B.        Pay when
due all real estate taxes, and the special taxes or assessments of any bond
financing issued by the Agency or City in connection with the redevelopment of
the Property, assessed and levied on the Property or any portion thereof or any
improvements thereon or any interest therein and refrain from appealing, challenging
or contesting in any manner the validity or

 

2

 

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

 

C.        Not
discriminate upon the basis 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
Property, or any improvements erected or to be erected thereon, or any part
thereof.

 

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

 

E.        Comply
with the Living Wage Ordinance of the City of Los Angeles to the fullest extent
applicable.

 

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

 

1.     All improvements on the Property shall be
maintained in good condition in accordance with the custom and practice
generally applicable to comparable first quality office, residential, restaurant, retail and parking improvements, as applicable, in Los Angeles County, and in
conformance and compliance with all plans, drawings and related documents
approved by the Agency, all conditions of approval of land use entitlements
adopted by the City or the Planning Commission of the City of Los Angeles,
including painting and cleaning of all exterior surfaces of all private improvements and public improvements
to the curb line.

 

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

 

3

 

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

 

a.     Maintain
the surface of all automobile and pedestrian areas level, smooth and evenly
covered with the type of surfacing materials originally installed thereon or
such substitute thereof as shall be in all respects equal thereto or better in
quality, appearance and durability;

 

b.     Maintain
such appropriate entrance, exit and directional signs, markers and lights as
shall be reasonably required and in accordance with the practices prevailing in
the operation of similar developments;

 

c.     Clean
lighting fixtures and relamp and/or reballast as needed;

 

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

 

e.     Provide appropriate security personnel and
security measures. Owner shall seek the advice of the police department in
planning appropriate security measures;

 

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

 

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

 

h.     Maintain all sanitary sewer lateral connections
on or to the Property.

 

3.     Landscape maintenance shall include, without
limitation, watering/irrigation; fertilization; mowing; edging;
trimming of grass; pruning, trimming and shaping of trees and shrubs to
maintain a natural and healthy appearance, road visibility, and irrigation
coverage; replacement, as needed, of all plant materials; control of weeds in
all planters, shrubs, lawns, ground covers, or other planted areas; and staking
for support of trees.

 

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

 

4

 

 

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

 

5.     Prepare and
implement a Waste Reduction and Recycling Program Plan in substantial
accordance with the terms of the OPA for the design, demolition and
construction of the improvements on the Property and for the management and
operation of all occupancies of the improvements on the Property. Facilities
shall be provided and maintained to accommodate the physical requirements for
these outreach programs for all project occupants and employees to reduce the
output of solid waste, including yard waste, through recycling and reduction of
waste at the source.

 

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

 

7.     Prepare and
implement a coordinated Signage Plan, in accordance with the terms of the OPA
and the Design for Development establishing sign design standards for all
exterior identification, commercial, information and directional signage.

 

8.     Require
that all mechanical and telecommunications equipment be enclosed within
buildings, concealed from view or incorporated and treated as architectural
features. All equipment shall serve the improvements on the Property only and
shall be removed when no longer required for service.

 

9.     Clean-up
maintenance shall include, without limitation, maintenance of all sidewalks,
paths and other paved areas in a clean and weed-free condition; maintenance of
all such areas clear of dirt, mud, trash, debris or other matter which is
unsafe or unsightly; removal of all trash, litter and other debris from
improvements and landscaping; clearance and cleaning of all areas so maintained
prior to the end of each day on which maintenance operations are performed to
ensure that all cuttings, weeds, leaves and other debris are properly disposed
of by maintenance workers.

 

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

 

5

 

notice,
unless the notice accurately states that the deficiency is an urgent matter
relating to public health and safety in which case Owner shall cure the
deficiency with all due diligence and shall complete the cure at the earliest
possible time. In the event Owner fails to maintain the Property or any portion
thereof or any improvements thereon in accordance with this Covenant Agreement
and fails to cure any deficiencies within the applicable period described
above, the Agency shall have, in addition to any other rights and remedies
hereunder, the right to maintain the Property and the improvements thereon, or
portion thereof, or to contract for the correction of any deficiencies, and Owner shall be
responsible for payment of all such reasonable costs incurred by the Agency.

 

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

 

G.            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, 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
Property nor shall Owner itself or any person claiming under or through it
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, subtenants, sublessee, or vendees of the Property.

 

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

 

1.     In deeds:
“The grantee herein covenants by and for itself, its heirs, executors,
administrators, successors and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of, any
person or group of persons on account of race, color, creed, religion, sex,
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 land herein conveyed, nor shall the grantee
itself or any person claiming under or through

 

6

 

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

 

2.     In leases:
“The lessee herein covenants by and for itself, its heirs, executors,
administers, successors and assigns, and all persons claiming under or through
them, and this lease is made and accepted upon and subject to the following
conditions: That there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, religion, sex,
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 leasing. subleasing, renting, transferring, use, occupancy, tenure or
enjoyment of the land herein leased, nor shall lessee itself, or any person
claiming under or through it, establish or permit such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sublessee, subtenants, or vendees
in the land herein leased.”

 

3.     In
contracts: “There shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed, religion, sex,
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 land or premises, nor shall the transferee itself or any person claiming
under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees
of the land or premises.”

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

VI.           The Construction Covenants shall remain in effect until the recording of
the Release of Construction Covenants to be issued by the Agency with respect
to all improvements to be constructed pursuant to the OPA. The covenants
against discrimination set forth in Sections II.C., II.G., and II.H.
hereof shall remain in effect in perpetuity. All other covenants (“Surviving
Covenants”) shall remain in effect until a date which is forty (40) years after
the date this Covenant Agreement is recorded, unless and until they expire
earlier in accordance with the express terms thereof, except for the covenant
set forth in Section II.D hereinabove to pay the Agency Participation
Payment, which shall remain in effect for forty (40) years from the Operating
Commencement Date unless and until terminated in accordance with the Buyout
provisions set forth in Section 605.4 of the OPA. Upon the issuance and
recordation of the Release of Construction Covenants by the Agency pursuant to
the OPA, Owner shall have the right to have this Covenant Agreement restated
and re-recorded with the deletion of the Construction Covenants, and the Agency
agrees to enter into documents as may be reasonably required, subject to the
approval of Agency legal counsel as to form, so as to effectuate the provisions
of this paragraph.

 

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

 

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

 

8

 

Covenant
Agreement as a whole and neither such provision, nor its severance and deletion
shall in any way affect the validity of the remaining provisions of this
Covenant Agreement.

 

9

 

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

 

	
   

  	
  COMMUNITY REDEVELOPMENT
  AGENCY

  
	
   

  	
  OF THE CITY OF LOS
  ANGELES (“Agency”)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 

  	
  12-19-03

  	
   

  	
  By:

  	
  /s/
  Robert R. Ovrom

  
	
   

  	
   

  	
  Robert
  R. Ovrom

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chief
  Executive Officer

  
					

 

APPROVED AS TO FORM

Rockard J. Delgadillo,

City Attorney

 

 

	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  
	
   

  	
  Agency General Counsel

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Goldfarb &
  Lipman

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Authorized
  Signatory

  	
   

  
	
   

  	
  Agency Special Counsel

  	
   

  

 

10

 

	
   

  	
  SF NO HO LLC,

  
	
  Dated: 

  	
  12/19/03

  	
   

  	
  a California limited
  liability company (“Owner”)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  California Housing Fund
  LLC,

  
	
   

  	
   

  	
  a Delaware limited
  liability company

  
	
   

  	
  Its:

  	
  authorized member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  FF California Housing
  Fund LLC,

  
	
   

  	
   

  	
   

  	
  a Delaware limited
  liability company

  
	
   

  	
   

  	
  Its:

  	
  manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Patrick J. Gavin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Patrick J. Gavin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
							

 

11

 

THE COMMUNITY
REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

 

ALL PURPOSE
ACKNOWLEDGEMENT

 

	
  State of California

  	
  }

  	
   

  
	
  County of Los Angeles

  	
   

  

 

	
  On

  	
  DECEMBER 19, 2003

  	
   

  	
  before me,

  	
  AMELIA
  RODRIGUEZ, NOTARY PUBLIC

  
	
  DATE

  	
  NAME, TITLE OF
  OFFICER

  

 

	
  personally appeared

  	
  ROBERT
  R. OVROM

  
	
   

  	
  NAME(S) OF
  SIGNER(S)

  

 

x personally known to me - OR -

 

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

 

WITNESS my hand and official seal.

 

AMELIA RODRIGUEZ

Commission # 1446602

Notary Public - California

Los Angeles County

My Comm. Expires Oct 21, 2007

 

	
  /s/ Authorized
  Signatory

  	
   

  
	
  SIGNATURE OF NOTARY

  	
   

  

 

 

	
  Title of Type of Document

  	
  AGREEMENT CONTAINING COVENANTS AFFECTING REAL
  PROPERTY

  
	
  Number of Pages

  	
  11+ATTACHMENTS

  	
   Date of Document

  	
   

  
	
  Signer(s) Other Than Named Above

  	
   

  
					

 

	
  RM-7

  	
  Remember to
  attach form to actual document

  	
  11/92

  

 

 

CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT

 

	
  STATE OF CALIFORNIA

  	
  )

  
	
   

  	
  )      ss.

  
	
  COUNTY OF LOS ANGELES

  	
  )

  

 

	
  On

  	
  December 19,
  2003

  	
  ,

  	
  before me, 

  	
  Renee Lindsey, Notary Public

  
	
  Date

  	
   

  	
   

  	
  Name And Title
  Of Officer [ILLEGIBLE]

  

 

	
  personally appeared

  	
  Patrick
  J. Gavin

  
	
   

  	
  Name of
  Signer(s)

  

 

o personally known to me – OR – 

 

x proved to me on the basis of
satisfactory evidence to be the person whose
name is subscribed to the within
instrument and acknowledged to me that he
executed the same in his authorized capacity, and that
by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

 

 

	
  WITNESS my hand and official seal.

  	
   

  
	
   

  	
   

  
	
  /s/ Renee
  Lindsey

  	
   

  
	
  Signature of Notary Public

  	
   

  

 

OPTIONAL

 

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

 

	
  CAPACITY CLAIMED BY SIGNER

  	
  DESCRIPTION OF ATTACHED DOCUMENT

  
	
   

  	
   

  
	
  o

  	
  Individual

  	
   

  
	
  o

  	
  Corporate Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title(s)

  	
  Title or Type of
  Document

  
	
   

  	
   

  
	
  o

  	
  Partner(s)

  	
  o

  	
  Limited

  	
   

  
	
   

  	
   

  	
  o

  	
  General

  	
   

  
	
  o

  	
  Attorney-In-Fact

  	
  Number Of Pages

  
	
  o

  	
  Trustee(s)

  	
   

  
	
  o

  	
  Guardian/Conservator

  	
   

  
	
  o

  	
  Other:

  	
   

  	
   

  	
   

  
	
   

  	
  Date Of Document

  
								

 

	
  Signer is representing:

  	
   

  
	
  Name Of
  Person(s) Or Entity(ies)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signer(s) Other
  Than Named Above

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