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HomeMy WebLinkAbout2017-09-19 e-packet@200Tuesday, September 19, 2017 2:00 PM City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Hall, City Manager's Conference Room 400 Grand Avenue, South San Francisco, CA Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda September 19, 2017Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, the Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency will hold a Regular Meeting on Tuesday, September 19, 2017, at 2:00 p.m., in the Large Conference Room, Top Floor at City Hall, 400 Grand Avenue, South San Francisco, California. In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the City Clerk ’s Office located at City Hall. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue, South San Francisco, California 94080. In compliance with Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the South San Francisco City Clerk’s Office at (650) 877-8518. Notification 48 hours in advance of the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. Page 2 City of South San Francisco Printed on 9/20/2017 September 19, 2017Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda Chairperson: Selected by: Neil Cullen Largest Special District of the type in H&R Code Section 34188 Vice Chair: Selected by: Michael Krause San Mateo County Superintendent of Schools Assistant Superintendent, Business Services South San Francisco Unified School District Alternate: Dr. Shawnterra Moore Superintendent, South San Francisco Unified School District Board Members: Selected by: Mark Addiego Mayor of the City of South San Francisco Councilmember, City of South San Francisco Barbara Christensen Chancellor of California Community College Director of Community/Government Relations, San Mateo County Community College District Reyna Farrales San Mateo County Board of Supervisors Deputy County Manager, San Mateo County Paul Scannell San Mateo County Board of Supervisors (Public Member) Adena Friedman Mayor of the City of South San Francisco Senior Planner, City of South San Francisco Counsel Craig Labadie Advisory: Marian Lee –Assistant City Manager, City of South San Francisco Richard Lee – Finance Director, City of South San Francisco Alex Greenwood – Director of Economic and Community Development, City of South San Francisco Jason Rosenberg – City Attorney, City of South San Francisco Krista Martinelli – City Clerk, City of South San Francisco Page 3 City of South San Francisco Printed on 9/20/2017 September 19, 2017Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda Call To Order. Roll Call. Agenda Review. Public Comments. MATTERS FOR CONSIDERATION Motion to approve the Minutes from the meetings of January 31, 2017 and July 18, 2017. 1. Report regarding a resolution approving the final sale price of $3,500,000 for the disposition of the properties located at 200 Linden Avenue, 212 Baden Avenue, and 216 Baden Avenue (APNs 012334130, 012334160, 012334030 and 012334040). (Julie Barnard, Economic Development Coordinator) 2. Resolution approving the final sale price of $3,500,000 for the disposition of the properties located at 200 Linden, 212 Baden, and 216 Baden Avenue (APNs 012334130, 012334160, 012334030 and 012334040), pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. 2a. Report regarding a resolution approving the final sale price of $1,200,000 for the disposition of 201-219 Grand Avenue (APNs 012-316-110, 012-316-100, 012-316-090 and 012-316-080). (Julie Barnard, Economic Development Coordinator) 3. Resolution approving the final sale price of $1,200,000 for the disposition of 201-219 Grand Avenue (APNs 012-316-110, 012-316-100, 012-316-090 and 012-316-080), pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. 3a. Page 4 City of South San Francisco Printed on 9/20/2017 September 19, 2017Oversight Board to the Successor Agency to the former Redevelopment Agency Regular Meeting Agenda FUTURE AGENDA ITEMS 636 El Camino Real Commercial Space. Adjournment. Page 5 City of South San Francisco Printed on 9/20/2017 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-945 Agenda Date:9/19/2017 Version:1 Item #:1. Motion to approve the Minutes from the meetings of January 31, 2017 and July 18, 2017. City of South San Francisco Printed on 9/13/2017Page 1 of 1 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-709 Agenda Date:9/19/2017 Version:1 Item #:2. Report regarding a resolution approving the final sale price of $3,500,000 for the disposition of the properties located at 200 Linden Avenue,212 Baden Avenue,and 216 Baden Avenue (APNs 012334130,012334160, 012334030 and 012334040).(Julie Barnard, Economic Development Coordinator) RECOMMENDATION Staff recommends that the Oversight Board adopt a resolution approving the final sale price of $3,500,000 for the disposition of the properties located at 200 Linden Avenue,212 Baden Avenue,and 216 Baden Avenue, pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. BACKGROUND/DISCUSSION The properties subject to this proposed Disposition and Development Agreement (DDA)were originally acquired by the South San Francisco Redevelopment Agency (Redevelopment Agency),and include 200 Linden Avenue,212 Baden Avenue,and 216 Baden Avenue (collectively the “Properties”or “200 Linden”). Upon the dissolution of redevelopment agencies by the State of California,the California Department of Finance (DOF)authorized the transfer of the former Redevelopment Agency’s property assets to the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Successor Agency”).The Successor Agency was then required to develop a Long Range Property Management Plan (LRPMP)that governs the disposition and use of all former redevelopment agency properties.The LRPMP calls for the subject sites to be retained by the City for future development.Following approval of the LRPMP by both the Oversight Board and the DOF,the properties have been transferred to the City for disposition consistent with the LRPMP. Through a competitive solicitation process,the City of South San Francisco selected Hisense REUS,LLC (Hisense)as the developer for the properties located at 200 Linden.The developer was selected because they offered the highest price of $3,500,000,for-sale housing,and a proposal to provide ground floor retail of either a drug store or a grocery store. On November 21,2016,the Oversight Board approved sale price of $3,500,000 as part of an Exclusive Negotiating Rights Agreement (ENRA)between the Successor Agency,the City of South San Francisco and Hisense Real Estate (USA), LLC for the sale and development of the properties. The ENRA was effective on November 30,2016,with an initial term of seven months and an option to extend by an additional 60 days upon the payment of $25,000.On June 5,2017,Hisense opted to extend the ENRA term and paid the non-refundable,non-applicable $25,000 fee.This fee covers the expenses related to staff and City Attorney time,without drawing from the deposit paid.The new ENRA expiration date was August 29, City of South San Francisco Printed on 9/14/2017Page 1 of 3 powered by Legistar™ File #:17-709 Agenda Date:9/19/2017 Version:1 Item #:2. City Attorney time,without drawing from the deposit paid.The new ENRA expiration date was August 29, 2017. The City and developer are currently working in good faith until the DDA is executed. As per the ENRA,Hisense paid a $300,000 deposit.Costs associated with staff and City Attorney costs are deducted from this deposit,with the remainder being applicable to the purchase price.South San Francisco staff has been working closely with Hisense to negotiate a DDA for the final sale of the properties. Disposition and Development Agreement (DDA) The purpose of a DDA is to establish the terms and procedures for conveying the property.The full DDA is found as Exhibit A in the associated resolution. The major business terms are summarized below: Purchase Price: Hisense's initial offer remains unchanged, with a purchase price of $3,500,000. Open of Escrow:Escrow will open only when the following have been satisfied:1)Developer submits a financing plan to the City;2)Developer has obtained all necessary permits and approvals from the City;and 3) Developer has submitted its demolition and grading permit package to the Building Division. Close of Escrow:Escrow on the property will close 10 days following all conditions precedent in the DDA have been met.In order for the developer to begin demolition and grading,the property must first be conveyed to the developer,escrow will close,and the property conveyed when construction documents are 90 percent complete. In addition, the following documents will be deposited into escrow five days before Close of Escrow: ·Final financing plan,which includes a proforma which details all costs associated with the development, ·Evidence of availability of funds, which should align with the costs outlined in the proforma, ·Evidence of the construction loan or source of funding for construction, ·Executed contract with construction contractor(s). Next Steps Under the current projected timeline,the project would begin demolition and site work,and open escrow,in December 2017.Following close of escrow,which is expected to be in April/May of 2018,funding would be released to the taxing entities. FISCAL IMPACT The proposed DDA would have the following direct fiscal impacts: a)Cash payment of $3,500,000 to the taxing entities (less any credits due from the original deposit); and b)City fees (including fees for building permits,in lieu park,sewer capacity,childcare,public safety,etc.) totaling approximately $2.9 million. In addition,by enabling a $63 million mixed-use housing project,the proposed DDA would have indirect, ongoing fiscal benefits in the form of increased property tax revenues and sales tax revenue. City of South San Francisco Printed on 9/14/2017Page 2 of 3 powered by Legistar™ File #:17-709 Agenda Date:9/19/2017 Version:1 Item #:2. CONCLUSION Staff recommends that the Oversight Board adopt a resolution approving the final sale price of $3,500,000 for the disposition of the properties located at 200 Linden Avenue,212 Baden Avenue,and 216 Baden Avenue, pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. City of South San Francisco Printed on 9/14/2017Page 3 of 3 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-710 Agenda Date:9/19/2017 Version:1 Item #:2a. Resolution approving the final sale price of $3,500,000 for the disposition of the properties located at 200 Linden,212 Baden,and 216 Baden Avenue (APNs 012334130,012334160,012334030 and 012334040), pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. WHEREAS,on June 29,2011,the Legislature of the State of California (“State”)adopted Assembly Bill x1 26 (“AB 26”),which amended provisions of the State’s Community Redevelopment Law (Health and Safety Code sections 33000 et seq.)(“Dissolution Law”),pursuant to which the former Redevelopment Agency of the City of South San Francisco was dissolved on February 1, 2012; and WHEREAS,the City became the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Successor Agency”); and WHEREAS, pursuant to Health and Safety Code Section 34191.5(c)(2)(C), property shall not be transferred to a successor agency, city, county or city and county, unless a Long Range Property Management Plan (“LRPMP”) has been approved by the Oversight Board and the California Department of Finance (“DOF”); and WHEREAS,in accordance with the Dissolution Law,the Successor Agency prepared a Long Range Property Management Plan (“LRPMP”),which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”)on May 21, 2015, and was approved by the Department of Finance (“DOF”) on October 1, 2015; and WHEREAS,consistent with the Dissolution Law and the LRPMP,certain real properties located in the City of South San Francisco,that were previously owned by the former Redevelopment Agency was transferred to the Successor Agency (“Agency Properties”); and WHEREAS,on October 18,2016,the City entered into an Amended and Restated Master Agreement for Taxing Entity Compensation (“Compensation Agreement”)with the various local agencies who receive shares of property tax revenues from the former redevelopment project area (“Taxing Entities”),which provides that upon approval by the Oversight Board of the sale price,and consistent with the LRPMP,the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency; and WHEREAS,on February 8,2017,the City adopted Resolution 16-2017 approving the transfer of the Agency City of South San Francisco Printed on 9/20/2017Page 1 of 4 powered by Legistar™ File #:17-710 Agenda Date:9/19/2017 Version:1 Item #:2a. WHEREAS,on February 8,2017,the City adopted Resolution 16-2017 approving the transfer of the Agency Properties from the Successor Agency to the City and in accordance with the requirements set forth in the LRPMP,and on February 21,2017,the Oversight Board adopted a resolution approving the transfer of the Redevelopment Properties from the Successor Agency to the City; and WHEREAS,consistent with the LRPMP and the Oversight Board resolution,the Successor Agency and City executed and recorded grant deeds transferring the Agency Properties to the City; and WHEREAS,the real property located at 200 Linden Avenue,212 Baden Avenue,and 216 Baden Avenue (“200 Linden”)located in the City of South San Francisco,California,known as Assessor Parcel Numbers (“APNs”) 012334130,012334160,012334030 and 012334040 are Agency Properties and are subject to the provisions of the LRPMP and the Compensation Agreement; and WHEREAS,City Council selected Hisense REUS,LLC (“Developer”)to develop the properties located at 200 Linden in a manner consistent with the LRPMP; and WHEREAS,the City and the Successor Agency approved an Exclusive Negotiating Rights Agreement (ENRA) between the Successor Agency,the City of South San Francisco (“City”),and Developer in order to negotiate a disposition agreement consistent with the LRPMP; and WHEREAS,the City has been working closely with Developer to negotiate a Disposition and Development Agreement (DDA) for the sale and disposition of the properties; and WHEREAS,the City and the Developer now wish to enter into a DDA for the disposition and development of 200 Linden, attached hereto and incorporated herein as Exhibit A; and WHEREAS,because the City is obligated to dispose of the Agency Properties in accordance with the LRPMP and to satisfy goals,objectives and purposes of the Redevelopment Plan and the Redevelopment Dissolution Statutes,the Agency Properties are not “surplus”property of the City and are not subject to the disposition requirements and procedures of the Surplus Lands Act (Government Code Section 54220 et seq.); and WHEREAS,the disposition of the Properties in accordance with the LRPMP and to satisfy goals,objectives and purposes of the Redevelopment Plan and the Redevelopment Dissolution Statutes constitutes a “common benefit”that may take place under authority of California Government Code Section 37350 and/or other disposition authority deemed appropriate by the City; and WHEREAS,on January 28,2015,the City Council certified an Environmental Impact Report (EIR),State Clearinghouse number 2013102001,in accordance with the provisions of the California Environmental Quality Act (Public Resources Code,§§21000,et seq.,CEQA)and CEQA Guidelines,which analyzed the potential environmental impacts of the development within the Downtown Station Area Specific Plan (DSASP); and WHEREAS,on January 28,2015,the City Council also adopted a Statement of Overriding Considerations City of South San Francisco Printed on 9/20/2017Page 2 of 4 powered by Legistar™ File #:17-710 Agenda Date:9/19/2017 Version:1 Item #:2a. WHEREAS,on January 28,2015,the City Council also adopted a Statement of Overriding Considerations (SOC)in accordance with the provisions of the California Environmental Quality Act (Public Resources Code, §§21000,et seq.,CEQA)and CEQA Guidelines,which carefully considered each significant and unavoidable impact identified in the EIR and found that the significant environmental impacts are acceptable in light of the Downtown Station Area Specific Plan’s economic, legal, social, technological and other benefits; and WHEREAS,CEQA allows for limited environmental review of subsequent projects under a program EIR when an agency finds that a project would not create any new environmental effects beyond those previously analyzed under a program EIR and would not require any new mitigation measures; and WHEREAS,the development of the Property was contemplated in the DSAP EIR,and the execution of a Disposition and Development Agreement for development consistent with the DSAP would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the Downtown Station Area Specific Plan Program EIR certified by the City Council, nor would any new mitigation measures be required; and WHEREAS,on September 6,2017,the City Council adopted a resolution approving the execution of the Disposition and Development Agreement with Hisense REUS, LLC; and WHEREAS,the approval of the final sale price and the implementation of the amended LRPMP through this Resolution itself does not commit the Oversight Board to any action that may have a significant effect on the environment; and WHEREAS,therefore,no subsequent or supplemental environmental review is required pursuant to CEQA Guidelines § 15162. NOW,THEREFORE,BE IT RESOLVED that the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco does hereby resolve as follows: 1.The foregoing recitals are true and correct and made a part of this Resolution. 2.Finds that the proposed actions in this Resolution are consistent with the Long Range Property Management Plan. 3.Approves a final sale price of $3,500,000 as set forth in the Disposition and Development Agreement between the City of South San Francisco and Hisense REUS,LLC for the sale and development of the properties located at 200 Linden Avenue,212 Baden Avenue,and 216 Baden Avenue,attached hereto as Exhibit A.The sale proceeds from the disposition of the properties will be distributed to the taxing entities according to Section 5 of the Amended and Restated Master Agreement for Taxing Entity Compensation. 4.Approves of the City Manager,or his designee,executing the Disposition and Development Agreement, City of South San Francisco Printed on 9/20/2017Page 3 of 4 powered by Legistar™ File #:17-710 Agenda Date:9/19/2017 Version:1 Item #:2a. 4.Approves of the City Manager,or his designee,executing the Disposition and Development Agreement, attached hereto as Exhibit A,and any necessary documents related to the Disposition and Development Agreement,and take all actions necessary to implement this intent of this Resolution,subject to approval as to form by the City Attorney. ***** City of South San Francisco Printed on 9/20/2017Page 4 of 4 powered by Legistar™ Exhibit A: Disposition and Development Agreement 1 DISPOSITION AND DEVELOPMENT AGREEMENT by and between THE CITY OF SOUTH SAN FRANCISCO and HISENSE REUS,LLC Dated ________, 2017 2 THIS DISPOSITION AND DEVELOPMENT AGREEMENT (this “Agreement”) is entered into effective as of ____________, 2017 (“Effective Date”) by and between the City of South San Francisco, a municipal corporation (“City”) and Hisense REUS, LLC, a California limited liability company (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties.” RECITALS A. The City of South San Francisco is the owner of certain real property located in the City of South San Francisco, California, known as County Assessor’s Parcel Numbers (“APN”) 012-334-130 (200 Linden Avenue), 012-334-160 (216 Baden Avenue), 012-334-040 and 012-334-030 (212 Baden Avenue), as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Property”). B. On June 29, 2011, the Legislature of the State of California (the “State”) adopted Assembly Bill x1 26 (“AB 26”), which amended provisions of the State’s Community Redevelopment Law (Health and Safety Code sections 33000 et seq)(the “Dissolution Law”), pursuant to which the former Redevelopment Agency of the City of South San Francisco was dissolved on February 1, 2012. The City became the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Successor Agency”), and in accordance with the Dissolution Law, the Successor Agency prepared a Long Range Property Management Plan (“LRPMP”), which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”) on May 21, 2015, and was approved by the Department of Finance (“DOF”) on October 1, 2015. C. Consistent with the Dissolution Law and the LRPMP, certain real properties located in the City of South San Francisco, that were previously owned by the former Redevelopment Agency were transferred to the Successor Agency (“Agency Properties”). On October 18, 2016, the City entered into an Amended and Restated Master Agreement for Taxing Entity Compensation (“Compensation Agreement”) with the various local agencies who receive shares of property tax revenues from the former redevelopment project area (“Taxing Entities”), which provides that upon approval by the Oversight Board of the sale price, and consistent with the LRPMP, the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency. D. On February 8, 2017, the City adopted Resolution 16-2017 approving the transfer of the Agency Properties from the Successor Agency to the City and in accordance with the requirements set forth in the LRPMP, and on February 21, 2017, the Oversight Board adopted a resolution approving the transfer of the Agency Properties from the Successor Agency to the City. E. Consistent with the LRPMP and the Oversight Board resolution, the Successor Agency and City executed and recorded grant deeds transferring the Agency Properties to the City. The Property is one of the Agency Properties and is subject to the provisions of the LRPMP and the Compensation Agreement. 3 F. The City is interested in selling the Property to Developer for the construction of a 97 residential condominium units and approximately 6,,200 square feet of commercial retail space on the Property (“Project”). G. On November 30, 2016, City of South San Francisco and Agency and Developer entered into an Exclusive Negotiation Rights Agreement (“ENRA”) that provided the Developer the exclusive right to collaborate and negotiate with the Agency and the City for the purpose of reaching agreement on a project description, appropriate land uses, economic feasibility, and a definitive agreement whose terms and conditions would govern any conveyance of the Property and the development of the Property. H. This Agreement sets forth the understanding of the Parties with respect to the conveyance and development the Property. The City Council has determined that the disposition and development of the Property pursuant to this Agreement will be of benefit to the community and to the taxing entities that will share in the property taxes assessed against the Property I. City seeks development of the Property in a manner consistent with: (i) the LRPMP, (ii) the Downtown Station Area Specific Plan, and (iii) the Redevelopment Plan adopted by the former Redevelopment Agency. J. Upon satisfaction of the conditions precedent set forth in this Agreement and subject to the terms and conditions set forth in this Agreement the City will convey the Property to Developer. K. A material inducement to City to enter into this Agreement is the agreement by Developer to develop the Project within the time periods specified herein and in accordance with the provisions hereof, and the City would be unwilling to enter into this Agreement in the absence of an enforceable commitment by Developer to take such actions and complete such work in accordance with such provisions and within such time periods. L. Concurrent with City Council approval of the ENRA, Developer delivered to the City Three Hundred Thousand Dollars ($300,000) (the “Deposit”) as a deposit towards the Purchase Price (as defined in Section 3.2 below). NOW, THEREFORE, in consideration of the mutual covenants contained herein and good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. ARTICLE I DEFINITIONS 1.1. Definitions. The following terms shall have the meanings set forth in the Sections referenced below whenever used in this Agreement and the Exhibits attached hereto. Additional terms are defined in the Recitals and text of this Agreement. “Approved Partnership Agreement” is defined in Section 7.3. “Certificate of Completion” is defined in Section 5.11. 4 “City Council” means the City Council of the City of South San Francisco. “City Manager” means the City Manager of the City of South San Francisco. “Claims” is defined in Section 5.13. “Closing Date” or “Close of Escrow” shall be the date that escrow closes for conveyance of the Property to Developer. “Conditions of Approval” is defined in Section 5.4. “Construction Plans” is defined in Section 5.6. “Deposit” is defined in Recital L. “Environmental Laws” is defined in Section 4.9.2. “Financing Plan” is defined in Section 3.4.1. “Grant Deed” is defined in Section 3.1. “Hazardous Material” is defined in Section 4.9.l. “Improvements” is defined in Section 2.3. “lndemnitees” is defined in Section 5.13. “Memorandum” is defined in Section 2.2. “Official Records” means the Official Records of San Mateo County. “Project” is defined in Recital F. “Property” is defined in Recital A. “Repurchase Option” is defined in Section 9.9. “Successor Agency” is defined in Recital B. “Transfer” is defined in Section 7.2. 1.2. Exhibits. The following exhibits are attached hereto and incorporated into this Agreement by this reference: A Legal Description of Property B Form of Memorandum C Form of Affordable Housing Agreement D Development Schedule E Form of Grant Deed 5 F Building Permit Submittal Requirements G Form of Certificate of Completion H Form of Subordination Agreement ARTICLE II REPRESENTATIONS; EFFECTIVE DATE; PROJECT SCOPE 2.1. Developer’s Representations. Developer represents and warrants to City as follows, and Developer covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.1 not to be true, Developer shall immediately give written notice of such fact or condition to City. Developer acknowledges that City shall rely upon Developer’s representations made herein notwithstanding any investigation made by or on behalf of City. 2.1.1. Authority. Developer is a limited liability company, duly organized and in good standing under the laws of the State of California. Developer has the full right, power and authority to undertake all obligations of Developer under this Agreement and all other documents and instruments to be executed and delivered by Developer pursuant to this Agreement. The execution, performance and delivery of this Agreement and all other documents and instruments to be executed and delivered by Developer pursuant to this Agreement have been duly authorized by all requisite actions. The persons acting on behalf of Developer to execute this Agreement and all other documents and instruments to be executed by Developer pursuant to this Agreement have been duly authorized to do so. This Agreement constitutes, and when executed, all other documents and instruments to be executed by Developer pursuant to this Agreement will constitute, valid and binding obligations of Developer, enforceable in accordance with their respective terms. 2.1.2. No Conflict. Developer’s execution, delivery and performance of its obligations under this Agreement and the documents and instruments to be executed by Developer pursuant to this Agreement, will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound. 2.1.3. No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of Developer to perform its obligations under this Agreement. 2.1.4. No Developer Bankruptcy. Developer is not the subject of a bankruptcy or insolvency proceeding. 2.2. Effective Date: Memorandum. The obligations of Developer and City hereunder shall be effective as of the Effective Date which date is set forth in the preamble to this Agreement. A Memorandum of this Agreement substantially in the form attached hereto as Exhibit B (the “Memorandum”) will be recorded against the Property on the Closing Date. 6 2.3. Scope of Development. The Project will include the construction of: (i) approximately 97 residential condominium units which may be subject to change during the entitlement process; (ii) subject to Section 2.4 below, at least one on-site parking space for each residential unit; and (iii) approximately 6,200_ square feet of commercial retail space (all of the foregoing are collectively referred to herein as the “Improvements”). 2.3.1. Retail Space. The commercial retail space shall be constructed in a manner that is consistent with all applicable zoning regulations. Further, Developer shall employ Good Faith Efforts to occupy ground floor retail space with a pharmacy or small market. If a pharmacy or small market is not feasible, Developer shall employ Good Faith Efforts to occupy ground floor retail space with restaurants or other active retail tenant s. Personal and financial services, offices, medical clinics and other similar uses are not permitted. For the purposes of this section, Good Faith Efforts shall constitute detailed progress reports from Developer’s broker that outline the companies contacted, contact name, dates and times of meetings, and any follow-up outreach. These reports are required every 60 days beginning with the execution date of this Agreement. If, after Good Faith Efforts by Developer, securing one of the foregoing preferred uses with a signed lease or Letter of Intent for the ground floor retail space is shown to be infeasible, Developer and City agree to meet and confer regarding the additional permissible uses for the ground floor retail space. The City shall not issue Certificates of Occupancy for the Project’s residential units until Developer provides executed retail leases for the foregoing preferred uses of ground floor retail space, or until Developer provides Basic Improvements to ground floor retail space. For the purposes of this section, Basic Improvements shall be defined as acc ess to mechanical, electrical and plumbing connections, which must include access to drain and waste; to heating, ventilation and air conditioning (HVAC); to electrical subpanels; and to floor slabs, at four locations throughout the retail space for future use. 2.4. Conditions of Approval. Developer has submitted a formal planning application to City for entitlements required for the Project. Developer agrees that it will develop the Project in accordance with the requirements resulting from the City’s review and approval of the planning application, including but not limited to all applicable Conditions of Approval adopted by the City for the Project. 2.5. Inclusionary Housing Requirements. Developer shall be subject to the City’s inclusionary affordable housing requirement as set forth under City Municipal Code Chapter 20.380. The Parties shall negotiate and execute an Affordable Housing Agreement, in a form similar to the Form of Affordable Housing Agreement, attached hereto as Exhibit C, which will also be a condition of approval of Developer’s entitlements. The Affordable Housing Agreement shall satisfy the requirements set forth under Chapter 20.380 of the South San Francisco Municipal Code , and the State Density Bonus Law, as applicable , and will include, among other terms, the selection method for qualifying prospective homeowners for affordable units will include a local preference to individuals who work and/or reside within City. 7 2.6. Residential Unit and Bedroom Count. The Parties agree that the number of residential units and the mix of bedroom count will be determined during the entitlement period. ARTICLE III DISPOSITION OF THE PROPERTY; CONDITIONS PRECEDENT TO CLOSING 3.1. Purchase and Sale of Property. The City represents that as of the Effective Date, the City holds fee simple absolute title to the Property, and is authorized to convey the Property for development consistent with this Agreement pursuant to the LRPMP. Provided that all conditions precedent set forth in this Agreement have been satisfied or waived, City shall sell to Developer, and Developer shall purchase, the fee simple absolute interest in the Property in accordance with and subject to the terms, covenants and conditions of this Agreement, free and clear of all exceptions to title except: (a) applicable building and zoning laws and regulations, (b) taxes and assessments accruing subsequent to recordation of the Grant Deed, (c) exceptions as shown on the preliminary title report for the Property (“Title Report”) as reasonably approved by Developer, and (d) such other conditions, liens, encumbrances, restrictions, easements and exceptions as Developer may approve in writing, which approval shall not be unreasonably withheld. All of the foregoing are collectively hereinafter referred to as “Developer’s Permitted Exceptions.” Conveyance of the Property shall be effectuated by grant deed substantially in the form attached hereto as Exhibit E (the “Grant Deed”). 3.2. Purchase Price. City agrees to sell the Property to Developer for the sum of Three Million, Five Hundred Thousand Dollars ($3,500,000) (the “Purchase Price”). 3.3. Deposit. Developer has submitted a $300,000 Deposit directly to the City in connection with the execution of the ENRA. This Deposit will be retained by the City and shall not be deposited into escrow. Pursuant to the ENRA, $15,000 of the Deposit was applied for Successor Agency staff costs. Additionally, twenty thousand dollars ($20,000) from the Deposit will be applied toward payment for Economic Development & Housing Division (“EDH”) staff and City Attorney time. The remainder amount of the Deposit ($265,000) will be applied toward the Purchase Price upon conveyance of the Property from City to Developer at Closing. Within five days of the opening of escrow, Developer shall place escrow the remaining balance of the Purchase Price, in available U.S. funds. 3.3.1. Forfeiture of Deposit. In the event that Developer does not meet the requirements, conditions, and/or timelines set forth in this Agreement, or that Developer opts not to proceed with Closing, the Deposit will be retained by the City in its entirety. In the event that City’s non-performance results in the termination of the Project, the Deposit shall be refunded to Developer in its entirety less any fees associated with the ENRA and with this Agreement. 3.4. Conditions Precedent. City’s obligation to sell the Property to Developer is conditioned upon the satisfaction of all of the requirements set forth in each subsection of this Section 3.4, unless any such condition is waived by City acting in the discretion of its City Manager. Prior to the opening of escrow and the conveyance of the Property: 8 3.4.1. Financing Plan. Developer shall submit for City’s review and approval an updated financing plan detailing Developer’s plans for financing the acquisition of the Property and the construction and permanent financing of the Project (hereinafter the “Financing Plan”). The City acknowledges and agrees that the Financing Plan may change depending on, among other things, available financing sources and terms. The Financing Plan shall indicate all sources of funds necessary to pay, when due, the estimated costs of Project development, including without limitation acquisition costs and hard and soft construction costs, and shall be accompanied by evidence that all such funds have been firmly committed by Developer, equity investors or lending institutions, subject only to commercially reasonable conditions. The Financing Plan shall include development and operating pro formas which set out in detail Developer’s plan for financing the costs of acquisition, construction and operation of the Project. City staff shall promptly review the proposed Financing Plan (and proposed modifications thereto), and acting through the City Manager, the City shall approve such plan in writing within fifteen (15) business days following receipt provided that the plan conforms to the requirements of this Article. If the City does not approve the Financing Plan (or any modification), the City shall set forth its objections in writing and notify Developer of the reasons for its disapproval. Developer shall thereafter submit a revised Financing Plan that addresses the reasons for disapproval, and the City shall grant Developer a reasonable extension of the time deadlines set forth in this Agreement as required to restructure the Financing Plan, subject to the outside time limit for completion set forth the Project Development Schedule, attached as Exhibit D. The City’s review of the Financing Plan (and modifications thereto) shall be limited to determining if the contemplated financing will be available, if the financing contemplated in the Financing Plan would provide sufficient funds to undertake and complete the development and construction of the Improvements, and determining if it is consistent with the terms of this Agreement. City approval of the Financing Plan shall be a condition precedent to City’s obligation to convey the Property to Developer. However, the City’s approval of the Financing Plan shall not be unreasonably withheld. 3.4.2. Permits and Approvals; Cooperation. Unless specifically stated otherwise in this Agreement, Developer shall have obtained all local and state entitlements, permits, licenses and approvals required for the construction of the Project on the Property, including without limitation, design review and use permit approval. City staff shall work cooperatively with Developer to assist in coordinating the expeditious processing and consideration of all permits, entitlements and approvals necessary for construction of the Project on the Property as contemplated by this Agreement. 3.4.3. Demolition and Grading Permit Submittal. Developer shall have submitted complete applications for both a demolition permit and a grading permit to the City’s Building Division. 3.5. Escrow. Escrow shall not open until Developer has satisfied all conditions precedent set forth in Section 3.4 of this Agreement. City and Developer shall open escrow at the office of Chicago Title Company (“Title Company” or “Escrow Agent”) in order to consummate the conveyance of the Property to Developer and the closing of escrow for the transactions contemplated hereby. 9 3.5.1. Costs of Closing and Escrow. Developer shall pay all title insurance premiums, cost and expenses for policies Developer elects to purchase in connection with the acquisition of the Property and the financing of the Project If Developer elects to purchase title insurance policy, City will provide the standard owner affidavits regarding tenants, work on site, and other standard terms to permit the Title Company’s issuance of an ALTA policy. Developer shall pay all applicable conveyance and recording fees, transfer taxes, city and county taxes, escrow fees and closing costs incurred in connection with the conveyance of the Property and the Closing. 3.6. Escrow Instructions; Deposit of Funds; Recordation of Documents. City shall provide Escrow Agent with a copy of this Agreement, which together with such supplemental instructions as City or Developer may provide and which are consistent with the intent of this Agreement or which are otherwise mutually agreed upon by City and Developer, shall serve as escrow instructions for the conveyance of the Property. 3.7. Closing. Unless the Parties agree otherwise, subject to force majeure, escrow shall not close, and the Property shall not transfer from City to Developer, until Developer has satisfied all conditions precedent outlined in this Agreement. Close of Escrow shall occur within ten (10) business days following the Developer’s satisfaction or City’s written waiver of all conditions precedent to conveyance of the Property as set forth in Section 3.9. Provided that all conditions precedent to conveyance of the Property have been satisfied or waived in writing, City shall deposit into escrow the executed Grant Deed and executed copies of all documents to which each is a party. On the Closing Date the Escrow Agent shall cause the Grant Deed, the Memorandum, and the Deed of Trust to be recorded in the Official Records. 3.8. Review of Title. Developer shall obtain a preliminary title report for the Property within sixty (60) days following the Effective Date and shall provide a copy of the Title Report to City. Developer shall notify City of any objections Developer has to exceptions to title (“Title Exceptions”) within ten (10) business days following Developer’s receipt of the Title Report. Developer’s failure to object within such period shall be deemed to be approval of the condition of title to the Property. If Developer objects to any Title Exception, City shall use reasonable efforts at City expense to remove from title or otherwise satisfy each such exception in a form that is reasonably satisfactory to Developer no later than fourteen (14) days prior to the Closing Date. 3.9. City’s Conditions to Closing. City’s obligation to convey the Property to Developer and close of escrow is conditioned upon Developer’s satisfaction, or City’s written waiver, of the following conditions: 3.9.1. No Default. There shall exist no condition, event or act which would constitute a material breach or default under this Agreement, or which, upon the giving of notice or the passage of time, or both, would constitute such a material breach or default. 3.9.2. Representations. All representations and warranties of Developer contained herein or in any certificate delivered in connection with the transactions 10 contemplated by this Agreement shall be true and correct in all material respects as of the Close of Escrow. 3.9.3. Due Authorization and Good Standing. Developer shall have delivered to City of each of the following: (i) certificate of good standing, certified by the Secretary of State indicating that Developer is properly organized and authorized to do business in the State of California, (ii) a certified resolution indicating that Developer’s manager or managing member, as applicable, has authorized the transactions contemplated by this Agreement and that the persons executing this Agreement have been duly authorized to do so, and (iii) certified copies of Developer’s LLC-1 and operating agreement, certified as accurate and complete by Developer’s manager or managing member, as applicable. 3.9.4. Execution. Delivery and Recordation of Documents. Developer shall have executed, acknowledged as applicable, and delivered to City this Agreement and all other documents required in connection with the transactions contemplated hereby, including without limitation a counter-signed original of the Grant Deed. Concurrently with the Closing, the Grant Deed, the Memorandum, and the Deed of Trust shall be recorded in the Official Records. 3.9.5. Final Pro Forma. Developer shall deposit into Escrow the final Pro Forma acceptable to City at least five (5) days prior to Closing. 3.9.6. Evidence of Availability of Funds. At least five (5) days p rior to Closing, Developer shall submit to City evidence reasonably satisfactory to City that (i) all conditions to the release and expenditure of funds described in the approved Financing Plan as the source of construction financing for the Project have been met and that such funds will be available upon conveyance of the Property, (ii) all approvals, permits, and authorizations which are conditioned upon conveyance will be received promptly after conveyance, and (iii) all construction financing (including draws subsequent to the initial draw of funds) will be available upon conveyance of the Property to Developer. 3.9.7. Construction Loan. Developer must provide evidence that any construction loan secured for the Project has cleared at least five (5) days prior to Closing. 3.9.8. Construction Contract, Plans. Budget and Schedule. City shall approve the general contractor, the construction budget and schedule, and the construction contract for the Project, and City shall approve the final Construction Plans and specifications for the Project. Such approvals shall not b e unreasonably withheld, provided that Developer demonstrates the general contractor is licensed by the State of California as a general contractor and has reputable experience with developments comparable to the Project . Developer shall have executed and deposited into Escrow, at least five (5) days prior to Closing, the full Construction Contract for the Project as approved and accepted by City. 3.9.9. Building Permit Submittal. Developer shall have submitted to City and a building permit application which shall contain ninety percent (90%) complete construction drawings. For purposes of satisfaction of this Section 3.9.9, the building permit application shall meet the standards set forth in Exhibit F, Building Permit Submittal 11 Requirements. Upon submittal of the building permit application, Developer shall also deposit with the City an amount equal to one-half (½) of the estimated amount of all fees applicable to the Project otherwise due at the time of building permit issuance. Such fees shall be forfeited to City if Developer fails to satisfy any timing obligations as required under this Agreement or Development Schedule set forth in Exhibit D. Developer shall also have delivered evidence satisfactory to City that Developer has obtained any other permits required to construct the Project, or that the receipt of such permits is subject only to such conditions as City shall reasonably approve. 3.9.10. Insurance: Payment and Performance Bonds. Developer shall have provided evidence reasonably satisfactory to City that Developer has obtained insurance coverage meeting the requirements set forth in Article XI and shall have provided to City performance bonds or other assurance of completion reasonably satisfactory to City pursuant to the requirements set forth in Section 5.17. 3.10. Developer’s Conditions to Closing. Developer’s obligation to proceed with the acquisition of the Property is subject to the City’s satisfaction or Developer’s waiver of the following conditions: (a) No Default. City shall not be in default under the terms of this Agreement, and all representations and warranties of City contained herein shall be true and correct in all material respects. (b) Execution of Documents. City shall have executed and acknowledged the Grant Deed, the Memorandum, and all other documents required hereunder, and shall have delivered such documents into escrow. ARTICLE IV CONDITION OF THE SITE; ENVIRONMENTAL MATTERS 4.1. Access to Site: Inspections. Prior to the Close of Escrow, Developer and Developer’s authorized representatives may enter upon and conduct further reviews and assessments of the physical and environmental condition of the Property and the condition of the existing improvements. Developer shall provide proof of liability insurance acceptable to City. Developer’s inspection, examination, survey and review of the Property shall be at Developer’s sole expense. Developer shall provide City with copies of all reports and test results promptly following completion of such reports and testing. Developer hereby agrees to notify the City twenty four (24) hours in advance of its intention to enter the Property and will provide workplans, drawings, and descriptions of any intrusive sampling it intends to do. Developer must keep the Property in a safe condition during its entry. Developer shall repair, restore and return the Property to its condition immediately preceding Developer’s entry thereon at Developer’s sole expense Developer will not permit any mechanics liens, stop notices or other liens or encumbrances to be placed against the Property prior to Close of Escrow. Without limiting any other indemnity provisions set forth in this Agreement, Developer shall indemnify, defend (with counsel approved by City) and hold the Indemnitees harmless from and against all Claims resulting from or arising in connection with entry upon the Property by Developer or Developer’s agents, employees, 12 consultants, contractors or subcontractors pursuant to this Section 4.1; provided, however, that Developer will have no indemnification obligation with respect to gross negligence or willful misconduct of any City Indemnitees Developer’s indemnification obligations set forth in this Section 4.1 shall survive the Close of Escrow and the termination of this Agreement. 4.2. Environmental Disclosure. To the extent the City has copies of environmental investigation reports, City will provide copies to Developer upon request; but the Parties acknowledge that City will not be conducting a public records search of any regulatory agency files-although the City urges Developer to do so to satisfy itself regarding the environmental condition of the Property. By execution of this Agreement, Developer: (i) acknowledges that it will have an opportunity to conduct its own independent review and investigation of the Property prior to the Close of Escrow; (ii) agrees to rely solely on its own experts in assessing the environmental condition of the Property and its sufficiency for its intended use; and (iii) waives any and all rights Developer may have to assert that the City failed to disclose information about the environmental condition of the Property. 4.3. Property Sold “AS IS.” Developer specifically acknowledges that the City is selling and Developer is purchasing the Property on an “AS IS”, “WHERE IS” and “WITH ALL FAULTS” basis and that Developer is not relying on any representations or warranties of any kind whatsoever, express or implied, from City, or its employees, board members, agents, or brokers as to any matters concerning the Property. City makes no representations or warranties as to any matters concerning the Property, including without limitation: (i) the quality, nature, adequacy and physical condition of the Property, including, but not limited to, appurtenances, access, landscaping, parking facilities, (ii) the quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii) the existence, quality, nature, adequacy and physical condition of utilities serving the Property, (iv) the development potential of the Property, and the Property’s use, merchantability, or fitness, suitability, value or adequacy of the Property for any particular purpose, (v) the zoning or other legal status of the Property or any other public or private restrictions on use of the Property, (vi) the compliance of the Property or its operation with any Environmental Laws, covenants, conditions and restrictions of any governmental or quasi-governmental entity or of any other person or entity, (vii) the presence or removal of Hazardous Material, substances or wastes on, under or about the Property or the adjoining or neighboring property; (viii) the quality of any labor and materials used in any improvements on the Property, or (ix) the condition of title to the Property. 4.4. Developer to Rely on Own Experts. Developer understands that, notwithstanding the delivery by City to Developer of any materials, including, without limitation, third party reports, Developer will rely entirely on Developer’s own experts and consultants and its own independent investigation in proceeding with the acquisition of the Property. 4.5. Release by Developer. Effective upon the Close of Escrow, Developer WAIVES, RELEASES, REMISES, ACQUITS AND FOREVER DISCHARGES the Indemnitees and any person acting on behalf of the City, from any and all Claims, direct or 13 indirect, known or unknown, foreseen or unforeseen, which Developer now has or which may arise in the future on account of or in any way arising out of or in connection with the physical condition of the Property, the presence of Hazardous Material in, on, under or about the Property, or any law or regulation applicable thereto including, without limiting the generality of the foregoing, all Environmental Laws. DEVELOPER ACKNOWLEDGES THAT DEVELOPER IS FAMILIAR WITH SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH PROVIDES AS FOLLOWS: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. BY INITIALING BELOW, DEVELOPER EXPRESSLY WAIVES THE BENEFITS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE WITH RESPECT TO THE FOREGOING RELEASE : Developer’s initials: __________ 4.6. Developer’s Post-Closing Obligations. Developer hereby covenants and agrees that: 4.6.1. Developer shall not knowingly permit the Property or any portion thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Material or otherwise knowingly permit the presence or release of Hazardous Material in, on, under, about or from the Property with the exception of limited amounts of cleaning supplies and other materials customarily used in construction, rehabilitation, use or maintenance of residential properties similar in nature to the Property and any commercial uses developed as part of the Project, and used, stored and disposed of in compliance with Environmental Laws. 4.6.2. Developer shall keep and maintain the Property and each portion thereof in compliance with, and shall not cause or permit the Project or the Property or any portion of either to be in violation of, any Environmental Laws. 4.6.3. Upon receiving actual knowledge of the same, Developer shall immediately advise City in writing of: (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Developer, or the Property pursuant to any applicable Environmental Laws; (ii) any and all claims made or threatened by any third party against the Developer or the Property relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Material; (iii) the presence or release of any Hazardous Material in, on, under, about or from the Property; or (iv) Developer’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Project classified as “Border Zone Property” under the 14 provisions of California Health and Safety Code, Sections 25220 et seq., or any regulation adopted in connection therewith, that may in any way affect the Property pursuant to any Environmental Laws or cause it or any part thereof to be designated as Border Zone Property. The matters set forth in the foregoing clauses (i) through (iv) are hereinafter referred to as “Hazardous Materials Claims”). The City shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claim. 4.6.4. Without the City’s prior written consent, which shall not be unreasonably withheld or delayed, Developer shall not take any remedial action in response to the presence of any Hazardous Material in, on, under, or about the Property (other than in emergency situations or as required by governmental agencies having jurisdiction in which case the City agrees to provide its consent), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claim. 4.7. Environmental Indemnity. To the greatest extent allowed by law, Developer shall indemnify, defend (with counsel approved by City with input from Developer) and hold Indemnitees harmless from and against all Claims resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Material on, under, in or about the Property, or the transportation of any such Hazardous Material to or from, the Property, or (ii) the failure of Developer, Developer’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing to comply with Environmental Laws, unless caused by the City’s active or passive negligence. The foregoing indemnity shall further apply to any residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Material, and irrespective of whether any of such activities were or will be undertaken in accordance with Environmental Laws. City shall use reasonable efforts to assign to Developer any indemnities relating to the presence of Hazardous Materials that City has received from Pacific Steel, Pacific Gas & Electric and any other prior owner of the Property. 4.8. No Limitation. Developer hereby acknowledges and agrees that Developer’s duties, obligations and liabilities under this Agreement are in no way limited or otherwise affected by any information the City may have concerning the Property and/or the presence in, on, under or about the Property of any Hazardous Material, whether the City obtained such information from the Developer or from its own investigations, unless such information was known to the City at the time of execution of this Agreement and/or the time of the close of escrow for the conveyance of the Property to the Developer but not disclosed to Developer. 4.9. Definitions. 4.9.1. “Hazardous Material” means any chemical, compound, material, mixture, or substance that is now or may in the future be defined or listed in, or otherwise classified pursuant to any Environmental Laws (defined below) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, “infectious waste’’, 15 “toxic substance’’, toxic pollutant”, or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, or toxicity. The term “hazardous material” shall also include asbestos or asbestos-containing materials, radon, chrome and/or chromium, polychlorinated biphenyls, petroleum, petroleum products or by-products, petroleum components, oil, mineral spirits, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable as fuel, perchlorate, and methy tert-butyl ether, whether or not defined as a hazardous waste or hazardous substance in the Environmental Laws. 4.9.2. “Environmental Laws” means any and all federal, state and local statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations or directives, or any other requirements of governmental authorities, as may presently exist, or as may be amended or supplemented, or hereafter enacted, relating to the presence, release, generation, use, handling, treatment, storage, transportation or disposal of Hazardous Material, or the protection of the environment or human, plant or animal health, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. § 9601), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Porter-Cologne Water Quality Control Act (Cal. Water Code § 13000 et seq.), the Toxic Mold Protection Act (Cal. Health & Safety Code § 26100, et seq.), the Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code § 25249.5 et seq.), the Hazardous Waste Control Act (Cal. Health & Safety Code § 25100 et seq.), the Hazardous Materials Release Response Plans & Inventory Act (Cal. Health & Safety Code § 25500 et seq.), and the Carpenter-Presley-Tanner Hazardous Substances Account Act (Cal. Health and Safety Code, Section 25300 et seq.). ARTICLE V DEVELOPMENT OF THE PROPERTY 5.1. Development Schedule. Subject to Section 11.2, Developer shall commence construction of the Project within sixty (60) days following conveyance of the Property to Developer, and in no event later than June 3 0 , 20 18, and shall diligently prosecute to completion the construction of the Project. Each party shall use diligent and commercially reasonable efforts to perform the obligations to be performed by such party pursuant to this Agreement within the times periods set forth herein, and if no such time is provided, within a reasonable time, designed to permit issuance of a final certificate of occupancy for the Project by the date specified in Exhibit D. Subject to Section 11.2 and the City’s issuance of permits and approvals, Developer’s failure to commence or complete the Project in accordance with the time periods specified in this Section 5.1 shall be an Event of Default hereunder. 16 5.2. Cost of Acquisition and Construction. Except as expressly set forth herein, Developer shall be solely responsible for all direct and indirect costs and expenses incurred in connection with the acquisition of the Property, including without limitation appraisal fees, title reports and any environmental assessments Developer elects to undertake. Except as expressly set forth herein, all costs of designing, developing and constructing the Improvements and the Project and compliance with the Project approvals, including without limitation all off-site and on-site improvements required by City in connection therewith, shall be borne solely by Developer and shall not be an obligation of the City 5.3. Project Approvals. Developer acknowledges that the execution of this Agreement by City does not relieve Developer from the obligation to apply for and to obtain from City and all other agencies with jurisdiction over the Property, all necessary approvals, entitlements, and permits for the development of the Project (including without limitation approval of the Project in compliance with CEQA), nor does it limit in any manner the discretion of the City or any other agency in the approval process. Developer shall pay the actual cost of contract consultants that will be used by the City for all necessary planning and processing activities of the Project, which have been reasonably approved by Developer, including, but not limited to, permits, entitlements, and City staff time and legal fees pursuant to a reimbursement agreement to be entered into by and between City and Developer, which shall provide for Developer the right to audit all contrac ts and invoices. Prior to the Closing, Developer shall have submitted a building permit application package that is at least ninety percent (90%) complete complying with standards set forth in Exhibit F, Building Permit Submittal Requirements, and shall have obtained all other entitlements, permits, licenses and approvals required for the development and operation of the Project. 5.4. Conditions of Approval. Developer shall develop the Property in accordance with the terms and conditions of this Agreement and in compliance with the terms and conditions of all approvals, entitlements and permits that the City or any other governmental body or agency with jurisdiction over the Project or the Property has granted or issued as of the date hereof or may hereafter grant or issue in connection with development of the Project, including without limitation, all mitigation measures imposed in connection with environmental review of the Project and all conditions of approval imposed in connection with any entitlements, approvals or permits (all of the foregoing approvals, entitlements, permits, mitigation measures and conditions of approval are hereafter collectively referred to as the “Conditions of Approval”). 5.5. Fees. Developer shall be solely responsible for, and shall promptly pay when due, all customary and usual fees and charges of City and all other agencies with jurisdiction over development of the Property in connection with obtaining building permits and other approvals for the Project, including without limitation, those related to the processing and consideration of amendments, if any, to the current entitlements, any related approvals and permits, environmental review, architectural review, and any subsequent approvals for the Project. 5.6. Construction Pursuant to Plans. Developer shall develop the Project in accordance with the approved Construction Plans, the Conditions of Approval, and all other 17 permits and approvals granted by the City pertaining to the Project. Developer shall comply with all directions, rules and regulations of any fire marshal, health officer, building inspector or other officer of every governmental agency having jurisdiction over the Property or the Project. Each element of the work shall proceed only after procurement of each permit, license or other authorization that may be required for such element by any governmental agency having jurisdiction. All design and construction work on the Project shall be performed by licensed contractors, engineers or architects, as applicable. 5.7. Change in Construction Plans. If Developer desires to make any material change in the approved Construction Plans, Developer shall submit the proposed change in writing to City for its written approval, which approval shall not be unreasonably withheld or delayed if the Construction Plans, as modified by any proposed change, conform to the requirements of this Agreement and any approvals issued by City after the Effective Date. Unless a proposed change is approved by City within thirty (30) days, it shall be deemed rejected. If rejected, the previously approved Construction Plans shall continue to remain in full force and effect. Any change in the Construction Plans required in order to comply with applicable codes shall be deemed approved, so long as such change does not substantially nor materially change the architecture, design, function, use, or amenities of the Project as shown on the latest approved Construction Plans. Nothing in this Section is intended to or shall be deemed to modify the City’s standard plan review procedures. 5.8. Rights of Access. For the purpose of ensuring that the construction of the Project is completed in compliance with this Agreement, Developer shall permit representatives of the City to enter upon the Property following 24 hours written notice (except in the case of emergency in which case such notice as may be practical under the circumstances shall be provided). 5.9. Disclaimer. Developer acknowledges that the City is under no obligation, and City neither undertakes nor assumes responsibility or duty to Developer or to any third party, to in any manner review, supervise, or inspect the progress of construction or the operation of the Project. Developer and all third parties shall rely entirely upon its or their own supervision and inspection in determining the quality and suitability of the materials and work, the performance of architects, subcontractors, and material suppliers, and all other matters relating to the construction and operation of the Project. Any review or inspection undertaken by the City is solely for the purpose of determining whether Developer is properly discharging its obligations under this Agreement, and shall not be relied upon by Developer or any third party as a warranty or representation by the City as to the quality of the design or construction of the improvements or otherwise. 5.10. Defects in Plans. City shall not be responsible to Developer or to any third party for any defect in the Construction Plans or for any structural or other defect in any work done pursuant to the Construction Plans. Developer shall indemnify, defend (with counsel approved by City) and hold harmless the Indemnitees from and against all Claims arising out of, or relating to, or alleged to arise from or relate to defects in the Construction Plans or defects in any work done pursuant to the Construction Plans whether or not any insurance policies shall 18 have been determined to be applicable to any such Claims. Developer’s indemnification obligations set forth in this Section shall survive the expiration or earlier termination of this Agreement and the recordation of a Certificate of Completion. It is further agreed that City does not, and shall not, waive any rights against Developer which they may have by reason of this indemnity and hold harmless agreement because of City’s acceptance, or Developer’s deposit with City of any of the insurance policies described in this Agreement. Developer’s indemnification obligations pursuant to this Section shall not extend to Claims arising due to the gross negligence or willful misconduct of the Indemnitees. 5.11. Certificate of Completion for Project. Promptly after completion of construction of the Project, issuance of a final Certificate of Occupancy or equivalent by the City and the written request of Developer, the City will provide an instrument (“Certificate of Completion”) so certifying, provided that at the time such certificate is requested all applicable work has been completed. The Certificate of Completion shall be substantially in the form attached hereto as Exhibit G and shall constitute conclusive evidence that Developer has satisfied its obligations regarding the construction of the Project and development of the Property. At Developer’s option the Certificate of Completion shall be recorded in the Official Records. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a deed of trust or mortgage securing money loaned to finance the Project or any part thereof and shall not be deemed a notice of completion under the California Civil Code, nor shall such Certificate provide evidence that Developer has satisfied any obligation that survives the expiration of this Agreement. 5.12. Equal Opportunity. There shall be no discrimination on the basis of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the hiring, firing, promoting or demoting of any person engaged in construction work on the Property, and Developer shall direct its contractors and subcontractors to refrain from discrimination on such basis. 5.13. Prevailing Wage Requirements. To the full extent required by applicable federal and state law, Developer and its contractors and agents shall comply with California Labor Code Section 1720 et seq. and the regulations adopted pursuant thereto (“Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of such provisions. If applicable, Developer shall submit to City a plan for monitoring payment of prevailing wages and shall implement such plan at Developer’s expense. The Developer shall reimburse the City for any costs incurred by the City in ensuring compliance with this Section 5.13. Developer shall indemnify, defend (with counsel approved by City) and hold the City, and its elected and appointed officers, officials, employees, agents, consultants, and contractors (collectively, the “lndemnitees”) harmless from and against all liability, loss, cost, expense (including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) which directly or indirectly, in whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection 19 with, or relate to, the payment or requirement of payment of prevailing wages (including without limitation, all claims that may be made by contractors, subcontractors or other third party claimants pursuant to Labor Code Sections 1726 and 1781) in connection with the Project, the failure to comply with any state or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to the Prevailing Wage Laws, or any act or omission of Developer related to this Agreement with respect to the payment or requirement of payment of prevailing wages, whether or not any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that City does not and shall not waive any rights against Developer which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or Developer’s deposit with City of any of the insurance policies described in this Agreement. The provisions of this Section 5.13 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project. Developer’s indemnification obligations set forth in this Section shall not apply to Claims arising solely from the gross negligence or willful misconduct of the Indemnitees. 5.14. Compliance with Laws. Developer shall carry out and shall cause its contractors to carry out the construction of the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations, including without limitation, all applicable federal and state labor laws and standards, applicable provisions of the California Public Contracts Code (if any), the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City’s Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq.. Developer shall indemnify, defend (with counsel approved by City) and hold harmless the Indemnitees from and against any and all Claims arising in connection with the breach of Developer’s obligations set forth in this Section whether or not any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that City does not and shall not waive any rights against Developer which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or Developer’s deposit with City of any of the insurance policies described in this Agreement. Developer’s indemnification obligations set forth in this Section shall not apply to Claims arising solely from the gross negligence or willful misconduct of the Indemnitees. Developer’s defense and indemnification obligations set forth in this Section 5.14 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project. 5.15. Liens and Stop Notices. Until the issuance of a Certificate of Completion, Developer shall not allow to be placed on the Property or any part thereof any lien or stop notice on account of materials supplied to or labor performed on behalf of Developer. If a claim of a lien or stop notice is given or recorded affecting the Project or the Property, Developer shall within twenty (20) days of such recording or service: (a) pay and discharge (or cause to be paid and discharged) the same; or (b) effect the release thereof by recording and delivering (or causing to be recorded and delivered) to the party entitled thereto a surety 20 bond in sufficient form and amount; or (c) provide other assurance satisfactory to City that the claim of lien or stop notice will be paid or discharged. 5.16. Right of City to Satisfy Liens on the Property. If Developer fails to satisfy or discharge any lien or stop notice on the Property pursuant to and within the time period set forth in Section 5.15 above, the City shall have the right, but not the obligation, to satisfy any such liens or stop notices at Developer’s expense and without further notice to Developer and all sums advanced by City for such purpose shall be part of the indebtedness secured by the Deed of Trust. In such event Developer shall be liable for and shall immediately reimburse City for such paid lien or stop notice. Alternatively, the City may require Developer to immediately deposit with City the amount necessary to satisfy such lien or claim pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against Developer. Developer shall file a valid notice of cessation or notice of completion upon cessation of construction work on the Property for a continuous period of thirty (30) days or more, and shall take all other reasonable steps to forestall the assertion of claims or liens against the Property. The City may (but has no obligation to) record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Property. 5.17. Performance and Payment Bonds. Prior to commencement of construction work on the Project, Developer shall provide, or cause its general contractor to deliver, to the City copies of payment bond(s) and performance bond(s) issued by a reputable insurance company licensed to do business in California, each in a penal sum of not less than one hundred percent (100%) of the scheduled cost of construction of the Project pursuant to the Construction Contract to be executed by Developer. The bonds shall name the City as co- obligee. In lieu of such performance and payment bonds, subject to City’s approval of the form and substance thereof, Developer may submit evidence satisfactory to the City one of the following: 5.17.1. Developer shall cause its general contractor to provide evidence of Subcontractor Default Insurance covering one hundred percent (100%) of the Project subcontract value. Contractor shall require those Subcontractors that do not enroll in the Subcontractor Default Insurance Policy to furnish payment bond(s) and performance bond(s) in forms acceptable to and approved by the City. General Contractor shall schedule the City and Developer to the Subcontractor Default Insurance policy via a Scheduled Entity Endorsement; or 5.17.2. the contractor’s ability to commence and complete construction of the Project in the form of an irrevocable letter of credit, pledge of cash deposit, certificate of deposit, or other marketable securities held by a broker or other financial institution, with signature authority of the City required for any withdrawal, or a completion guaranty in a form and from a guarantor acceptable to City. Such evidence must be submitted to City in approvable form in sufficient time to allow for review and approval prior to the scheduled construction start date. 5.18. Insurance Requirements. Developer shall maintain and shall cause its contractors to maintain all applicable insurance coverage specified in Article X. 21 ARTICLE VI USE OF THE PROPERTY 6.1. Maintenance. Following conveyance of the Property to Developer, Developer shall at its own expense, maintain the Property, landscaping and common areas in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Property (including without limitation, the landscaping, driveways, parking areas, and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property. Developer shall prevent and/or rectify any physical deterioration of the Property and shall make all repairs, renewals and replacements necessary to keep the Property and the improvements located thereon in good condition and repair. 6.2. Taxes and Assessments. Following conveyance of the Property to Developer, Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, payroll, withholding, sales, and other taxes assessed against the Property and payable by Developer, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that Developer shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax, assessment, or charge, the Developer, on Final Determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. “Final Determination” for purposes of this Section means and includes the Developer’s having exercised all appeal rights that it is entitled to exercise and chooses to do so. 6.3. Obligation to Refrain from Discrimination. Developer shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Developer covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Developer or any person claiming under or through Developer 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, sublessees or vendees in, of, or for the Property or part thereof. Developer shall include such provision in all deeds, leases, contracts and other instruments executed by Developer, and shall enforce the same diligently and in good faith. 22 ARTICLE VII LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT AND CONTROL OF DEVELOPER 7.1. Identity of Developer; Changes Only Pursuant to this Agreement. Developer and its principals have represented that they possess the necessary expertise, skill and ability to carry out the development of the Property pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Developer and its principals are of particular concern to the City. It is because of these qualifications, experience, financial capacity and expertise that the City has entered into this Agreement with Developer. No voluntary or involuntary successor, assignee or transferee of Developer shall acquire any rights or powers under this Agreement, except as expressly provided herein. 7.2. Prohibition on Transfer. Prior to the issuance of a Certificate of Completion, Developer shall not, except as expressly permitted by this Agreement, directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the whole or any part of the Property, the Project, the Improvements, or this Agreement, without the prior written approval of City, which approval shall not be unreasonably withheld. Any such attempt to assign this Agreement without the City’s consent shall be null and void and shall confer no rights or privileges upon the purported assignee. In addition to the foregoing, prior to the issuance of a Certificate of Completion, except as expressly permitted by this Agreement, Developer shall not undergo any significant change of ownership without the prior written approval of City. For purposes of this Agreement, a “significant change of ownership” shall mean a transfer of the beneficial interest of more than fifty percent (50%) in aggregate of the voting control of Developer, taking all transfers into account on a cumulative basis; provided however, neither the admission of investor limited partners, nor the transfer of beneficial or ownership interests by an investor limited partner to subsequent limited partners shall be restricted by this provision, nor shall the admission of a Passive Investor Member nor the transfer of a beneficial or ownership interest by a Passive Investor Member to another Passive Investor Member be restricted by this provision. “Passive Investor Member” means a member who pursuant to Developer’s operating agreement is not authorized to actively manage or otherwise operate the business of the company. 7.3. Permitted Transfers. Notwithstanding any contrary provision hereof, the prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of temporary easements or permits to facilitate development of the Property; (ii) the dedication of any property required pursuant to this Agreement; (iii) the lease or sale of individual residences to tenants or homebuyers for occupancy as their principal residence or the lease of any commercial space to individual tenants; (iv) assignments creating security interests for the purpose of financing the acquisition, construction or permanent financing of the Project or the Property in accordance with the approved Financing Plan as it may be updated with City approval, and subject to the requirements of Article VIII, or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) a Transfer to a limited partnership or limited liability company in which the managing general partner or manager or managing member is under the direct or 23 indirect voting control of, or under common control, with Developer (“Approved Partnership”); (vi) the admission of limited partners or Passive Investor Members and any transfer of limited partnership interests or Passive Investor Member interests, as applicable, in accordance with Developer’s agreement of limited partnership or operating agreement, as applicable, provided that the partnership agreement or operating agreement, as applicable, and/or the instrument of Transfer provides for development and operation of the Property and Project in a manner consistent with this Agreement; (vii) the removal of the general partner by the investor limited partner for a default under the Partnership Agreement, provided the replacement general partner is reasonably satisfactory to City; (viii) the transfer of the general partner’s interest to a nonprofit entity that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended, provided such replacement general partner is reasonably satisfactory to City; or (ix) the transfer of any partnership or membership interest to a trust controlled by the transferor for estate planning interests. 7.4. Requirements for Proposed Transfers. The City may consent, which consent shall not be unreasonably withheld, to a proposed Transfer of this Agreement which is not a Permitted Transfer, the Property or portion thereof if all of the following requirements are met (provided however, the requirements of this Section 7.4 shall not apply to Transfers described in Section 7.3): 7.4.1. The proposed transferee demonstrates to the City’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably determined by the City to competently complete the Project and to otherwise fulfill the obligations undertaken by the Developer under this Agreement. 7.4.2. The Developer and the proposed transferee shall submit for City review and approval all instruments and other legal documents proposed to effect any Transfer of this Agreement, the Property or interest therein together with such documentation of the proposed transferee’s qualifications and development capacity as the City may reasonably request. 7.4.3. The proposed transferee shall expressly assume all of the rights and obligations of the Developer under this Agreement arising after the effective date of the Transfer and all obligations of Developer arising prior to the effective date of the Transfer (unless Developer expressly remains responsible for such obligations) and shall agree to be subject to and assume all of Developer’s obligations pursuant to the Conditions of Approval and all other conditions, and restrictions set forth in this Agreement. 7.4.4. The Transfer shall be effectuated pursuant to a written instrument satisfactory to the City in form recordable in the Official Records. Consent to any proposed Transfer may be given by the City Manager unless the City Manager in his discretion, refers the matter of approval to the City Council. If a proposed Transfer has not been approved in writing within thirty (30) days following City’s receipt of written request by Developer, it shall be deemed rejected. 24 7.5. Effect of Transfer without Consent. 7.5.1. In the absence of specific written agreement by the City, no Transfer by Developer shall be deemed to relieve the Developer or any other party from any obligation under this Agreement. 7.5.2. If, in violation of this Agreement, the Developer Transfers all or any part of the Property or the Improvements prior to the recordation of the Certificate of Completion for the Project, the City shall be entitled to receive from Developer the amount by which the consideration payable for such Transfer exceeds the sum of (a) the Purchase Price for the Property, and (b) the costs incurred by Developer in connection with the improvement and development of the Property, including carrying charges, interest, fees, taxes, assessments and escrow fees. Such excess consideration shall belong to and be paid to the City by the Developer and until so paid, the City shall have a lien on the Property for such amount. The provisions of this Section 7.5.2 have been agreed upon so as to discourage land speculation by Developer; accordingly, these provisions shall be given a liberal interpretation to accomplish that end. Following the recordation of the Certificate of Completion, the provisions of this Section 7.5.2 shall have no further force and effect. 7.5.3. Without limiting any other remedy City may have under this Agreement, or under law or equity, it shall be an Event of Developer Default hereunder entitling City to terminate this Agreement if without the prior written approval of the City, Developer assigns or Transfers this Agreement, the Improvements, or the Property prior to the issuance of a Certificate of Completion. This Section 7.5.3 shall not apply to Transfers described in clauses (i), (ii), (iii), (iv) and (vi) of Section 7.3). 7.6. Recovery of Costs. Developer shall reimburse City for all City costs, including but not limited to reasonable attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to effect a Transfer under this Agreement and in reviewing the qualifications and financial resources of a proposed successor, assignee, or transferee within ten days following City’s delivery to Developer of an invoice detailing such costs. ARTICLE VIII SECURITY FINANCING AND RIGHTS OF MORTGAGEES 8.1. Mortgages and Deeds of Trust for Development. Prior to issuance of the Certificate of Completion, mortgages and deeds of trust, or any other reasonable security instrument are permitted to be placed upon the Property or the Improvements only for the purpose of securing loans for the purpose of financing the acquisition of the Property, the design and construction of the Improvements, and other expenditures reasonably necessary for development of the Property pursuant to this Agreement. Developer shall not enter into any conveyance for such financing that is not contemplated in the Financing Plan as it may be updated with City approval, without the prior written approval of the City Manager or his designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security instrument used in financing real estate acquisition, construction and land development. 25 8.2. Holder Not Obligated to Construct. The holder of any mortgage, deed of trust authorized by this Agreement shall not be obligated to complete construction of the Improvements or to guarantee such completion. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. 8.3. Notice of Default and Right to Cure. Whenever City delivers any notice of default hereunder, City shall concurrently deliver a copy of such notice to each holder of record of any mortgage or deed of trust secured by the Property or the Improvements, provided that City has been provided with the address for delivery of such notice. City shall have no liability to any such holder for any failure by the City to provide such notice to such holder. Each such holder shall have the right, but not the obligation, at its option, to cure or remedy any such default or breach within the cure period provided to Developer extended by and additional sixty (60) days. In the event that possession of the Property or the Improvements (or any portion thereof) is required to effectuate such cure or remedy, the holder shall be deemed to have timely cured or remedied the default if it commences the proceedings necessary to obtain possession of the Property or Improvements, as applicable, within sixty (60) days after receipt of the City’s notice, diligently pursues such proceedings to completion, and after obtaining possession, diligently completes such cure or remedy. A holder who chooses to exercise its right to cure or remedy a default or breach shall first notify City of its intent to exercise such right prior to commencing to cure or remedy such default or breach. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction of the Project (beyond the extent necessary to conserve or protect the same) without first having expressly assumed in writing Developer’s obligations to City under this Agreement. The holder in that event must agree to complete, in the manner provided in this Agreement, the Project and the Improvements and submit evidence reasonably satisfactory to City that it has the development capability on staff or retainer and the financial capacity necessary to perform such obligations. Any such holder properly completing the Project pursuant to this Section shall assume all rights and obligations of Developer under this Agreement and shall be entitled to a Certificate of Completion upon compliance with the requirements of this Agreement. 8.4. Failure of Holder to Complete Improvements. In any case where, six (6) months after default by Developer in completion of construction of the Improvements, the holder of record of any mortgage or deed of trust has exercised its option to construct, but then has not proceeded diligently with construction, City shall be afforded those rights against such holder that it would otherwise have against Developer under this Agreement. 8.5. City Right to Cure Defaults. In the event of a breach or default by Developer under a mortgage or deed of trust secured by the Property or the Improvements, City may cure the default, without acceleration of the subject loan, following prior notice thereof to the holder of such instrument and Developer. In such event, Developer shall be liable for, and City shall be entitled to reimbursement from Developer for all costs and expenses incurred by City associated with and attributable to the curing of the default or breach. 26 8.6. Holder to be Notified. Developer agrees to use best efforts to ensure that each term contained herein dealing with security financing and rights of holders shall be either inserted into the relevant deed of trust or mortgage or acknowledged by the holder prior to its creating any security right or interest in the Property or the Improvements. 8.7. Modifications to Agreement. City shall not unreasonably withhold consent to modifications of this Agreement requested by Project lenders or investors provided such modifications do not alter City’s substantive rights and obligations under this Agreement. 8.8. Estoppel Certificates. Either Party shall, at any time, and from time to time, within fifteen (15) days after receipt of written request from the other Party, execute and deliver to such Party a written statement certifying that, to the knowledge of the certifying Party: (i) this Agreement is in full force and effect and a binding obligation of the Parties (if such be the case), (ii) this Agreement has not been amended or modified, or if so amended, identifying the amendments, and (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, describing the nature of any such defaults. ARTICLE IX DEFAULTS, REMEDIES AND TERMINATION 9.1. Event of Developer Default. The following events shall constitute an event of default on the part of Developer (“Event of Developer Default”): 9.1.1. Developer fails to commence or complete construction of the Project within the times set forth in Section 5 .1 and Exhibit D, or subject to force majeure, abandons or suspends construction of the Project prior to completion for a period of sixty (60) days or more; 9.1.2. A Transfer occurs, either voluntarily or involuntarily, in violation of Article VII; 9.1.3. Developer fails to maintain insurance as required pursuant to this Agreement, and Developer fails to cure such default within ten (10) days; 9.1.4. Subject to Developer’s right to contest the following charges pursuant to Section 6.2, if Developer fails to pay prior to delinquency taxes or assessments due on the Property or the Project or fails to pay when due any other charge that may result in a lien on the Property or the Project, and Developer fails to cure such default within thirty (30) days of date of delinquency 9.1.5. Upon the imposition of any lien as a result of failure to pay taxes or assessments due on the Property or Project; 9.1.6. A default arises under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan; 27 9.1.7. Any representation or warranty contained in this Agreement or in any application, financial statement, certificate or report submitted to the City in connection with this Agreement proves to have been incorrect in any material and adverse respect when made and continues to be materially adverse to the City; 9.1.8. If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Developer or any manager, managing member or general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Developer or any general partner, managing member, or manager thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Developer or any manager, managing member or general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; 9.1.9. A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging the Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of the Developer or seeking any arrangement for Developer under bankruptcy law or any other applicable debtor’s relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Developer in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of the Developer; 9.1.10. Developer shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution; 9.1.11. The Developer shall have voluntarily suspended its business or Developer shall have been dissolved or terminated; 9.1.12. A default arises under a Note or Deed of Trust that Developer obtains after close of es crow, but prior to a certificate of occupancy is issued and remains uncured beyond any applicable cure period; or 9.1.13. Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 9.1 and unless a shorter cure period is specified for such default, the default continues for ten (10) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which City shall have given written notice of the default to Developer; provided however, if the default is of a nature that it cannot be cured within thirty (30) days, a Developer Event of Default shall not arise hereunder if Developer commences to cure the default within thirty (30) days and thereafter prosecutes 28 the curing of such default with due diligence and in good faith to completion and in no event later than ninety (90) days after receipt of notice of the default. 9.2. City Default. An event of default on the part of City (“Event of City Default”) shall arise hereunder if City fails to keep, observe, or perform any of its covenants, duties, or obligations under this Agreement, and the default continues for a period of thirty (30) days after written notice thereof from Developer to City, or in the case of a default which cannot with due diligence be cured within thirty (30) days, City fails to commence to cure the default within thirty (30) days of such notice and thereafter fails to prosecute the curing of such default with due diligence and in good faith to completion. 9.3. City Right to Terminate Agreement. If an Event of Developer Default shall occur and be continuing beyond any applicable cure period, then City shall, in addition to other rights available under law or this Agreement, have the right to terminate this Agreement. However, if a nonmonetary breach is of a nature that it cannot be cured within the applicable cure period, Developer shall commence to cure within said cure period and diligently complete such cure within a reasonable time thereafter but in no event later than one hundred twenty ( 120) days. If, after the expiration of the applicable cure period, City elects to terminate this Agreement, City shall give written notice to Developer and to any mortgagee entitled to such notice specifying the nature of the default and stating that this Agreement shall expire and terminate on the date specified in such notice, and upon the date specified in the notice, this Agreement and all rights of Developer under this Agreement, shall expire and terminate. 9.4. City Remedies and Rights Upon an Event of Developer Default. Upon the occurrence of an Event of Developer Default and the expiration of any applicable cure period, City shall have all remedies available under this Agreement or under law or equity, including, but not limited to the right to bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any other remedy consistent with the purpose of this Agreement. 9.5. Developer’s Remedies Upon an Event of City Default. Upon the occurrence of an Event of City Default, in addition to pursuing any other remedy allowed at law or in equity or otherwise provided in this Agreement, Developer may bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any other remedy consistent with the purpose of this Agreement, and may pursue any and all other remedies available under this Agreement or under law or equity to enforce hereunder. 9.6. Remedies Cumulative; No Consequential Damages. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different time, of any other rights or remedies for the same or any other default by the other Party. Notwithstanding anything to the contrary set forth 29 herein, a Party’s right to recover damages in the event of a default shall be limited to actual damages and shall exclude consequential damages. 9.7. Inaction Not a Waiver of Default. No failure or delay by either Party in asserting any of its rights and remedies as to any default shall operate as a waiver of such default or of any such rights or remedies, nor deprive either Party of its rights to institute and maintain any action or proceeding which it may deem necessary to protect, assert or enforce any such rights or remedies in the same or any subsequent default. 9.8. Right of Reverter. If following conveyance of the Property to Developer, Developer (i) fails to begin construction of the Project within the time specified in Section 5.1 as such date may be extended pursuant to the terms hereof, (ii) abandons or suspends construction work for a period of thirty (30) days after written notice from City, (iii) fails to complete construction of the Project by the time specified in Section 5.1 and Exhibit D as such date may be extended pursuant to the terms hereof, or (iv) directly or indirectly, voluntarily or involuntarily Transfers the Property or this Agreement in violation of Article VII, the City may re-enter and take possession of the Property or any portion thereof with all improvements thereon without payment or compensation to Developer, and revest in the City the estate theretofore conveyed to the Developer. The interest created pursuant to this Section 9.8 shall be a “power of termination” as defined in California Civil Code Section 885.010, and shall be separate and distinct from the City’s option to purchase the Property under the same or similar conditions specified in Section 9.9. City’s rights pursuant to this Section 9.8 shall not defeat, render invalid or limit any mortgage or deed of trust permitted by this Agreement or any rights or interests provided in this Agreement for the protection of the holders of such mortgages or deeds of trust. Upon revesting in the City of title to the Property or any portion thereof as provided in this Section 9.8, the City shall use best efforts to resell the Property or applicable portion thereof and as soon as possible, in a commercially reasonable manner to a qualified and responsible party or parties (as determined by the City) who will assume the obligation of making or completing the Project in accordance with the uses specified for such property in this Agreement and in a manner satisfactory to the City. Upon such resale of the Property or any portion thereof the sale proceeds shall be applied as follows: (a) First, to reimburse the City for all costs and expenses incurred by City, including but not limited to salaries of personnel and legal fees incurred in connection with the recapture and resale of the Property; all taxes and assessments payable prior to resale, and all applicable water and sewer charges; any payments necessary to discharge any encumbrances or liens on the Property at the time of revesting of title thereto in the City or to discharge or prevent from attaching any subsequent encumbrances or liens due to obligations, defaults, or acts of the Developer, its successors or transferees; any expenditures made or obligations incurred with respect to the completion of the Project or any part thereof on the Property; and any other amounts owed to the City by Developer and its successors or transferee. (b) Second, to reimburse the City for damages to which each is entitled under this Agreement by reason of the Developer’s default. 30 (c) Third, to reimburse the Developer, its successor or transferee, up to the amount equal to: (1) The payment made to the City for the Property; plus (2) The fair market value of the improvements Developer has placed on the Property or applicable portion thereof; less (3) Any gains or income withdrawn or made by the Developer from the Property or applicable portion thereof or the improvements thereon. Notwithstanding the foregoing, the amount calculated pursuant to this subsection (c) shall not exceed the fair market value of the Property or applicable portion thereof, together with the improvements thereon as of the date of the default or failure which gave rise to the City’s exercise of the right of reverter. (4) Any balance remaining after such reimbursements shall be retained by the City. The rights established in this Section 9.8 are to be interpreted in light of the fact that the City will convey the Property to the Developer for completion of the Project as specified herein and not for speculation. 9.9. Option to Purchase. Enter and Possess. The City shall have the additional right at its option to purchase, enter and take possession of the Property with all improvements thereon (the “Repurchase Option”), if after conveyance of the Property, Developer (i) fails to begin construction of the Project within the time specified in Section 5.1 and Exhibit D as such date may be extended pursuant to the terms hereof, (ii) abandons or suspends construction of the Project for a period of thirty (30) days after written notice from City, (iii) fails to complete construction of the Project by the time specified in Section 5.1 and Exhibit D as such date may be extended pursuant to the terms hereof, or (iv) directly or indirectly, voluntarily or involuntarily Transfers the Property or this Agreement in violation of Article VII. To exercise the Repurchase Option, the City shall pay to the Developer cash in an amount equal to: 1. The City’s distribution of the net proceeds of the Purchase Price in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency pursuant to the Compensation Agreement; plus 2. The fair market value of any new improvements constructed by Developer and existing on the Property at the time of exercise of the Option; plus 3. Any gains or income withdrawn or made by the Developer from the applicable portion of the Property or the improvements thereon; less 31 4. The value of any liens or encumbrances on the applicable portion of the Property which the City assumes or takes subject to; less 5. Any damages to which the City is entitled under this Agreement by reason of Developer’s default. In order to exercise the Repurchase Option, City shall give Developer notice of such exercise, and Developer shall, within thirty (30) days after receipt of such notice, provide City with a summary of all of Developer’s costs incurred as described in this Section. Within thirty (30) days of City’s receipt of such summary, City shall pay into an escrow established for such purpose cash in the amount of all sums owing pursuant to this Section 9.9, and Developer shall execute and deposit into such escrow a grant deed transferring to City all of Developer’s interest in the Property, or portion thereof and the improvements located thereon. 9.10. Future Sale of Property. If the City exercises the Repurchase Option pursuant to Section 9.9, the City will make reasonable efforts to remarket the property for development consistent with the LRPMP. In the event that the City sells the property following exercise of the Repurchase Option, the City shall pay to the Developer cash in an amount equal to: 1. Sale proceeds from the sale of the Property, or Three Million, Five Hundred Thousand Dollars ($3,500,000), whichever is lower; minus 2. The amount paid to the Developer pursuant to Section 9.9; minus 3. The City’s costs incurred in selling the property, including but not limited to staff time, attorney’s fees and any third party consultants. 9.11. Memorandum of Right of Reverter/Option to Purchase. The parties shall cause a memorandum or memoranda of the rights granted the City in Sections 9.8 and 9.9 of this Agreement to be recorded in the Official Records at the time of the Close of Escrow for conveyance of the Property to Developer. In lieu of such memorandum, in City’s and City’s discretion, the rights afforded City pursuant to Sections 9.8 and 9.9 may be described in the Grant Deed. The City will not withhold consent to reasonable requests for subordination of the Repurchase Option to deeds of trust provided for the benefit of construction lenders identified in the Financing Plan provided that the instruments effecting such subordination include reasonable protections to the City in the event of default, including without limitation, extended notice and cure rights. A subordination agreement substantially in the form of Exhibit H shall be deemed reasonable. 9.12. Construction Plans. If this Agreement is terminated pursuant to Section 9.3, or otherwise, the Developer, at no cost to the City, shall be entitled to take possession of all construction plans and studies in the Developer’s possession or in the possession of the Developer’s consultants related to development of the Project on the Property, including without limitation, the Construction Plans, subject only to the rights of senior construction lenders identified in the Financing Plan as it may be updated with City approval, which shall 32 not be unreasonably withheld. The Developer shall deliver to the City electronic and hard copies of such plans, including but not limited to the CAD files, and have the full right to use them as the City deems appropriate. In the event the City utilizes the construction plans or studies, the City shall indemnify the Developer for any claims arising from the use of construction plans or studies by the City pursuant to this Section 9.11. 9.13. Rights of Mortgagees. Any rights of the City under this Article I X shall not defeat, limit or render invalid any mortgage or deed of trust permitted by this Agreement or any rights provided for in this Agreement for the protection of holders of such instruments. Any conveyance or reverter of the Property to the City pursuant to this Article I X shall be subject to mortgages and deeds of trust permitted by this Agreement. 9.14. Assignment. The City shall have the right to assign the Repurchase Option to any other governmental entity. ARTICLE X INDEMNITY AND INSURANCE 10.1. Indemnity. Developer shall indemnify, defend (with counsel approved by City) and hold Indemnitees harmless from and against any and all Claims, including without limitation, Claims arising directly or indirectly, in whole or in part, as a result of or in connection with Developer’s or Developer’s contractors, subcontractors, agents or employees development, construction, improvement, operation, ownership or maintenance of the Project or the Property, or any part thereof or otherwise arising out of or in connection with Developer’s performance under this Agreement. Developer’s indemnification obligations under this Section 11.1 shall not extend to Claims resulting from the gross negligence or willful misconduct of Indemnitees. The provisions of this Section 11.1 shall survive the issuance of a Certificate of Completion for the Project and the expiration or earlier termination of this Agreement. It is further agreed that City does not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement. 10.2. Liability and Workers Compensation Insurance. (a) Prior to initiating work on the Project and continuing through the issuance of the Certificate of Completion, Developer and all contractors working on behalf of Developer on the Project shall maintain a commercial general liability policy in the amount of Five Million Dollars ($5,000,000) each occurrence, Ten Million Dollars ($10,000,000) annual aggregate, together with Five Million Dollars ($5,000,000) excess liability coverage including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds. (b) Until issuance of the Certificate of Completion, Developer and all contractors working on behalf of Developer shall maintain a comprehensive automobile liability coverage in the amount of Five Million Dollars ($5,000,000), combined single limit 33 including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to City evidence satisfactory to City that Developer and any contractor with whom Developer has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers’ compensation insurance as required by law. Automobile liability policies shall name the Indemnitees as additional insureds. (c) Upon commencement of construction work and continuing until issuance of a Certificate of Completion, Developer and all contractors working on behalf of Developer shall maintain a policy of builder’s all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis naming City as loss payee. (d) Developer shall maintain property insurance covering all risks of loss (other than earthquake), including flood (if required) for 100% of the replacement value of the Project with deductible, if any, in an amount acceptable to City, naming City as loss payee. (e) Companies writing the insurance required hereunder shall be approved to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best’s rating of no less than A: VII. The Commercial General Liability and comprehensive automobile policies required hereunder shall name the Indemnitees as additional insureds. Builder’s Risk and property insurance shall name City as loss payee. (f) Prior to commencement of construction work, Developer shall furnish City with certificates of insurance in form acceptable to City evidencing the required insurance coverage and duly executed endorsements evidencing such additional insured status. The certificates shall contain a statement of obligation on the part of the carrier to notify City of any material adverse change, cancellation, termination or non-renewal of the coverage at least thirty days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal. (g) If any insurance policy or coverage required hereunder is canceled or reduced, Developer shall, within ten (10) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, City may, without further notice and at its option, procure such insurance coverage at Developer’s expense, and Developer shall promptly reimburse City for such expense upon receipt of billing from City. (h) Coverage provided by Developer shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the City. Developer shall furnish the required certificates and endorsements to City prior to the commencement of construction of the Project, and shall provide City with certified copies of the required insurance policies upon request. If Developer maintains broader coverage and/or higher limits than the minimum shown above, the City shall be entitled to the broader coverage and/or higher limits maintained. Any available insurance 34 proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. ARTICLE XI MISCELLANEOUS PROVISIONS 11.1. No Brokers. Each Party warrants and represents to the other that no person or entity can properly claim a right to a real estate commission, brokerage fee, finder’s fee, or other compensation with respect to the transactions contemplated by this Agreement. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section shall survive the close of escrow and the expiration or earlier termination of this Agreement. 11.2. Enforced Delay: Extension of Times of Performance. Subject to the limitations set forth below, performance by either Party shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended where delays are due to: war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, , epidemics, quarantine restrictions, freight embargoes, governmental restrictions or priority, litigation, including court delays, unusually severe weather, acts or omissions of the other Party, acts or failures to act of any public or governmental agency or entity (provided that the acts or failures to act of City shall not excuse performance by City), or any other cause beyond the affected Party’s reasonable control. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Party within thirty (30) days of the commencement of the cause and such extension is not rejected in writing by the other Party within ten (10) days of receipt of the notice. Neither Party shall unreasonably withhold consent to an extension of time pursuant to this Section. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Developer, City (acting in the discretion of the City Manager unless he or she determines in his or her discretion to refer such matter to the City Council). City and Developer acknowledge that adverse changes in economic conditions, either of the affected Party specifically or the economy generally, changes in market conditions or demand, and/or inability to obtain financing to complete the Project shall not constitute grounds of enforced delay pursuant to this Section. Each Party expressly assumes the risk of such adverse economic or market changes and/or financial inability, whether or not foreseeable as of the Effective Date. 11.3. Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other Parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed 35 delivered on receipt if delivery is confirmed by a return receipt; or (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service; or (iv) email transmission to the email addresses noted below, in which case notice will be deemed delivered upon transmittal, provided that a duplicate hard copy of the email is promptly delivered by first-class or certified mail or by overnight delivery. City: City of South San Francisco 400 Grand Ave. South San Francisco, CA 94080 Attn: City Manager Email: mike.futrell@ssf.net cc: julie.barnard@ssf.net with a copy to: Meyers Nave 555 12th Street, Suite 1500 Oakland, CA 94607 Attn: Jason Rosenberg Email: jrosenberg@meyersnave.com Developer: Hisense Real Estate (USA), LLC 235 Grand Ave. # 203 South San Francisco, CA 94080 Attn: Kenneth Cui Email: kencui@yahoo.com with a copy to: James Braden Law Offices 44 Montgomery Street, Suite 1210 San Francisco, CA 94104 Attention: James M. Braden Telephone: (415) 398-6865 Email: braden@sf-lawyer.com 11.4. Attorneys’ Fees. If any Party fails to perform any of its obligations under this Agreement, or if any dispute arises among the Parties concerning the meaning or interpretation of any provision hereof, then the prevailing Party in any proceeding in connection with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements. 36 11.5. Waivers: Modification. No waiver of any breach of any covenant or provision of this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no waiver shall be valid unless in writing and executed by the waiving Party. An extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act, and no extension shall be valid unless in writing and executed by the Party granting the extension. This Agreement may be amended or modified only by a written instrument executed by the Parties. 11.6. Binding on Successors. Subject to the restrictions on Transfers set forth in Article VI, this Agreement shall bind and inure to the benefit of the Parties and their respective permitted successors and assigns. Any reference in this Agreement to a specifically named Party shall be deemed to apply to any permitted successor and assign of such Party who has acquired an interest in compliance with this Agreement or under law. 11.7. Survival. All representations made by Developer hereunder and Developer’s obligations pursuant to Sections 4.1. 4.5. 4.7, 5.10. 5.13, 5.14, 9.12. 10.1. 11.1 and 11.18 shall survive the expiration or termination of this Agreement and the issuance and recordation of a Certificate of Completion. None of the provisions, terms, representations, warranties and covenants of this Agreement are intended to or shall be merged by any grant deed conveying the Property to Developer or any successor in interest, and neither such grant deed nor any other document shall affect or impair the provisions, terms, representations, warranties and covenants contained herein. 11.8. Construction. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of all Parties, and the Parties agree, that since all Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it. 11.9. Action or Approval. Whenever action and/or approval by City is required under this Agreement, the City Manager of the City of South San Francisco or his designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager determines in his discretion that such action or approval requires referral to City Council for consideration. 11.10. Entire Agreement. This Agreement, including Exhibits A through H, attached hereto and incorporated herein by reference, contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof. 11.11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto having additional signature pages 37 executed by the other Party. Any executed counterpart of this Agreement may be delivered to the other Party by facsimile or by email with PDF format attachment, and shall be deemed as binding as if an originally signed counterpart was delivered. 11.12. Severability. If any term, provision, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unenforceability. 11.13. No Third Party Beneficiaries. Nothing contained in this Agreement is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder. 11.14. Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. 11.15. Non-Liability of Officials, Employees and Agents. No officer, official, employee or agent of City shall be personally liable to Developer or its successors in interest in the event of any default or breach by City or for any amount which may become due to Developer or its successors in interest pursuant to this Agreement. 11.16. Time of the Essence: Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a “business day” means a day that is not a Saturday, a Sunday, a federal holiday or a state holiday under the laws of California. 11.17. Dispute Resolution. Any controversy, dispute or claim related to or arising from this Agreement or in any way arising from the dealings of the parties with one another, shall be resolved by the following steps in the following sequence: (A) By non-binding Mediation before, and in accordance with the rules of, the Judicial Arbitration and Mediation Services ("JAMS"), conducted by a mutually agreed to retired Judge, who has experience either as a Court Judge or as a private Mediator or Arbitrator in the fields of both Land Use and Municipal Law, with exclusive venue in San Francisco, California and in no other place. (B) If that Mediation fails to resolve the dispute, then by binding Arbitration before, and in accordance with the rules of, JAMS, conducted by a mutually agreed to retired Judge, who has experience either as a Court Judge or as a private Mediator or Arbitrator in the fields of both Land Use and Municipal Law, with exclusive venue in San Francisco, California and in no other place. In any such arbitration, the prevailing party shall be entitled to an award of reasonable attorney's fees and costs. 38 11.18. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. 11.19. General Indemnification. Developer shall indemnify, defend (with counsel approved by City) and hold harmless the Indemnitees from all Claims (including without limitation, attorneys’ fees) arising in connection with any claim, action or proceeding to attack, set aside, void, or annul any approval by the City or any of its agencies, departments, commissions, agents, officers, employees or legislative body concerning the Project or this Agreement. The City will promptly notify Developer of any such claim, action or proceeding, and will cooperate fully in the defense. The City may, within its unlimited discretion, participate in the defense of any such claim, action or proceeding, and if the City chooses to do so, Developer shall reimburse City for reasonable attorneys’ fees and expenses incurred. 11.20. Inspection of Books and Records. Upon request, Developer shall permit the City to inspect at reasonable times and on a confidential basis those books, records and all other documents of Developer necessary to determine Developer’s compliance with the terms of this Agreement. SIGNATURES ON FOLLOWING PAGE(S ). 39 IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above. CITY By: _________________________ City Manager ATTEST: By: ___________________________ City Clerk APPROVED AS TO FORM: By: _______________________________ City Attorney DEVELOPER: Hisense Real Estate (USA), LLC, a California limited liability company By: __________________________ Its: Managing Member EXHIBIT A LEGAL DESCRIPTION PROPERTY The land referred to is situated in the County of San Mateo, City of South San Francisco, State of California, and is described as follows: PARCEL ONE: Lot 8, Block 140, as delineated upon that certain Map entitled "South San Francisco, San Mateo County, California", filed for record in the office of the Recorder of the County of San Mateo, State of California, on March 1st, 1892 in Book "B" of Maps, at Page 6, and a copy entered in Book 2 of Maps at Page 52. APN: 012-334-030 JPN: 012-033-334-03 PARCEL TWO: Lots 6 and 7, Block 140, as delineated upon that certain Map entitled "South San Francisco, San Mateo County, California", filed for record in the office of the Recorder of the County of San Mateo, State of California, on March 1st, 1892 in Book "B" of Maps, at Page 6, and a copy entered in Book 2 of Maps at Page 52. APN: 012-334-040 JPN: 012-033-334-04 PARCEL THREE: Lots 11, 12, 13 and 14 in Block 140, as shown on that certain Map entitled "South San Francisco, San Mateo Co. Cal., Plat No. 1", filed for record in the office of the Recorder of the County of San Mateo on March 1, 1892 in Book "B" of Maps, at Page 6, and copied into Book 2 of Maps at Page 52. APN: 012-334-130 JPN: 012-033-334-13 PARCEL FOUR: Lots 9 and 10 in Block 140, as shown on that certain Map entitled "South San Francisco San Mateo Co. Cal. Plat No. 1", filed in the office of the County Recorder of San Mateo County, State of California, on March 1, 1892, in Book "B" of Maps, at Page 6 and copied into Book 2 of Maps, at Page 52. APN: 012-334-160 JPN: 012-033-334-16 EXHIBIT B FORM OF MEMORANDUM [to be provided upon execution] EXHIBIT C FORM OF AFFORDABLE HOUSING AGREEMENT RECORDING REQUESTED BY: COMMUNITY DEVELOPMENT DEPARTMENT CITY OF SOUTH SAN FRANCISCO 400 GRAND AVENUE SOUTH SAN FRANCISCO, CA 94080 WHEN RECORDED MAIL TO: ECONOMIC AND COMMUNITY DEVELOPMENT CITY OF SOUTH SAN FRANCISCO 400 GRAND AVENUE SOUTH SAN FRANCISCO, CA 94080 Documentary Transfer Tax $ EXEMPT County of San Mateo City of South San Francisco  _____________________________ Right of Way Agent AFFORDABLE HOUSING AGREEMENT FOR BELOW MARKET RATE PROPERTY This Affordable Housing Agreement for Below Market Rate Property (“Agreement”) is entered into as of this _____ day of _____________, 2017, by and between the City of South San Francisco (“City”) and Hisense REUS LLC (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties.” RECITALS WHEREAS, Chapter 20.380 of the South San Francisco Municipal Code sets forth the requirements for Inclusionary Housing (“Inclusionary Housing Ordinance”); and WHEREAS, the Developer is, or will become, the fee simple owner of that certain real property (“Property”) located in the City of South San Francisco, State of California, and more particularly described in Exhibit A attached hereto. WHEREAS, the Developer intends to construct ninety-seven (97) for-sale housing units and approximately 6,200 square feet of commercial retail space on the Property (the “Project”) and has submitted site development plans for the Project; and WHEREAS, as a condition of development of the Project, Developer must comply with the City of South San Francisco’s housing policies and programs as set forth in the City’s Inclusionary Housing Ordinance first adopted by the City Council on December 12, 2001, as it applies to the provision of affordable housing. WHEREAS, the Developer proposes meeting these requirements by selling the required number of Below Market Rate Units (defined below); and NOW THEREFORE, the City and the Developer agree as follows: AGREEMENT 1. As a condition of developing and constructing ninety-seven (97) condominiums on the Property, Developer shall designate twenty (20) units as Below Market Rate Units and shall make these units available for sale as Below Market Rate Units (the “Below Market Rate Units”). The number of Below Market Rate Units shall be equal to twenty percent (20%) of the total number of condominiums to be built upon the Property and identified in Exhibit B. The Below Market Rate Units shall be affordable to low- and moderate- income households guaranteed by deed restrictions or other enforceable covenants running with the land. Developer shall sell: (i) ___ (_) two -bedroom housing unit(s) and ___ (_) one-bedroom unit(s) in the Project to a household whose annual gross income does not exceed sixty percent (60%) of the unadjusted median income (“Low-Income Household”) for a San Mateo County household in the San Francisco Primary Metropolitan Statistical Area, published annually by the Department of Housing and Urban Development (as adjusted annually, the “Base Median Income”); (ii) ___ (_) two-bedroom unit and ______ (_) one-bedroom unit(s) to a household whose annual gross income does not exceed seventy percent (70%) of the unadjusted median income; (iii) ___ (_) three-bedroom unit, ____ (_) two-bedroom unit(s) and _____ (_) one-bedroom unit(s) to a household whose annual gross income does not exceed eighty percent (80%) of the unadjusted median income; (iv) ____ (_) two-bedroom unit(s) and _____ (_) one-bedroom unit(s) to a household whose annual gross income does not exceed ninety percent (90%) of the unadjusted median income; (v) ____ (_) two-bedroom unit(s) and _____ (_) one-bedroom unit(s) to a household whose annual gross income does not exceed one hundred percent (100%) of the unadjusted median income; and (vi) ____ (_) three-bedroom unit, ____ (_) two-bedroom unit(s) and ____(_) one-bedroom unitsto a household whose annual gross income does not exceed one hundred ten percent (110%) of the unadjusted median income, (jointly “Low and Moderate-Income Households”). 2. Developer shall sell the Below Market Rate Units at a price that will result in an allowable housing expense for a for-sale unit (as defined in Section 20.380.002 of the Inclusionary Housing Ordinance) that does not exceed thirty percent (30%) of the gross monthly income for Low- and Moderate-Income Households, adjusted for household size. 3. The Below Market Rate Units shall be located within the Downtown Station Area Specific Plan area. The Developer and the City acknowledge this is an ideal area for such Below Market Rate Units as it is in close proximity to and has access to employment opportunities, urban services and transportation facilities. 4. Occupancy of the Below Market Rate Units shall be established concurrently with occupancy of the market rate units located on the Property. This requirement shall be effective as of the date the first unit is occupied on the Property. This requirement for the Below Market Rate Units shall remain in effect even in the event all market rate units on the Property become unoccupied. 5. Developer shall require the buyer of the Below Market Rate Units to execute a Resale Restriction and Option to Purchase Agreement substantially in the form attached hereto as Exhibit C (“Resale Restriction Agreement”). The Resale Restriction Agreement shall be recorded against the parcel containing the Below Market Rate Units upon close of escrow of sale for such Below Market Rate Units. The Below Market Rate Units shall remain restricted and affordable to Low- and Moderate Income Households for a term of fifty-five (55) years, commencing on the date each Below Market Rate Unit is sold. The restrictions shall apply to all subsequent buyers. 6. Developer shall sell the Below Market Rate Units to eligible Low- and Moderate- Income Household pursuant to Section 2. Developer shall work with the City and/or the City’s First Time Homebuyer Administrator to identify and qualify eligible buyers for said units. At the time of sale, Developer shall pay an administrative fee to reimburse the City for all administrative and processing costs and fees incurred in processing the sale of the Below Market Rate Units, which may include the First Time Homebuyer Administrator fees. 7. The Below Market Rate Units shall remain owner-occupied units. 8. Developer shall indemnify, defend with counsel selected by the City in consultation with Developer, and hold harmless the City and its officials, officers, employees, agents, and volunteers from and against any and all losses, liability, claims, suits, actions, damages, and causes of action arising or allegedly arising out of or relating in any manner to Developer’s performance or nonperformance under this Agreement, except to the extent arising from the gross negligence or willful misconduct of the City. The provisions of this section shall survive the expiration or other termination of this Agreement or any release of part or all of the Property from the burdens of this Agreement. 9. Developer shall reimburse the City for all administrative/processing costs and fees incurred in processing the Agreement, which may include reasonable attorney’s fees and cost, and implementing the requirements of the Inclusionary Housing Ordinance. 10. Developer hereby subjects the Property to the covenants, conditions and restrictions set forth in this Agreement. The Parties hereby declare their express intent that all such covenants, conditions and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon Developer’s successors in title to the Property. All covenants without regard to technical classification or designation shall be binding for the benefit of the City, and such covenants shall run in favor of the City. Each and every contract, deed or other instrument hereafter executed applicable to or conveying the Property or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, conditions and restrictions, regardless of whether such covenants, conditions and restrictions are set forth in such contract, deed or other instrument. This Agreement shall be recorded on the Property upon final map recordation or, if a map is not being processed, prior to the issuance of building permits for the Property. 11. Prior to the sale of the Below Market Rate Units to eligible Low- and Moderate- Income Households, the Developer may not transfer the whole or any part of the Property, the Project or this Agreement unless (i) such transfer is to a limited liability company or limited partnership or corporation formed for purposes of carrying out the Project and which takes title to the Property, (ii) the Developer first notifies the City of the proposed transfer or assignment and delivers to the City the organizational documents of the transferee or assignee (the "Transferee"), and (iii) the Developer causes the Transferee to execute an agreement, in form and substance approved in writing by the City, accepting and assuming (and releasing Developer from) the obligations of the Developer under this Agreement. Developer shall reimburse City for all City costs, including but not limited to reasonable attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to effect a permitted transfer or assignment under this Agreement within ten (10) days following City’s delivery of an invoice detailing such costs. 12. Provided that Developer has complied with all of the terms and conditions set forth herein, upon the sale by Developer of the Below Market Rate Units, Developer shall be released from, and shall have no further obligations under this Agreement. Such release shall be effective upon the sale and shall not require any further action or documentation by any party to this Agreement. 13. Any amendments to this Agreement shall be processed in the same manner as an original application for approval pursuant to Section 20.380.014 of the South San Francisco Municipal Code. Nothing, however, shall prevent the body granting final approval of the project development, from modifying the location and phasing of the Below Market Rate Units as a condition of approval for the Project. 14. The laws of the State of California shall govern this Agreement without regard to principles of conflicts of laws. In the event that either party brings any action against the other under this Agreement, the parties agree that trial of such action shall be vested exclusively in the state courts of California in the County of San Mateo or in the United States District Court for the Northern District of California. 15. If a party to this Agreement brings any action, including an action for declaratory relief, to enforce or interpret the provision of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose. 16. If a court of competent jurisdiction finds or rules that any provision of this Agreement is invalid, void, or unenforceable, the provisions of this Agreement not so adjudged shall remain in full force and effect. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement. 17. Any notice or demand shall be made by certified or registered mail, return receipt requested, or reliable overnight courier to the address of the respective parties set forth below: Developer: ______________________________ ______________________________ ______________________________ City: City of South San Francisco - City Clerk 400 Grand Avenue South San Francisco, CA 94080 18. Notwithstanding any previous provision of this Agreement, the terms of this Agreement shall be interpreted in accordance with the provisions of Chapter 20.380 of the South San Francisco Municipal Code. IN WITNESS THEREOF, the parties have executed this Agreement as of the date first written above. DEVELOPER : By: ________________________________ Name Printed: _______________________ Its: _________________________________ CITY: CITY OF SOUTH SAN FRANCISCO By: ___________________________ Mike Futrell City Manager APPROVED AS TO FORM: ______________________________ Jason Rosenberg, City Attorney SIGNATURES MUST BE NOTARIZED EXHIBIT D DEVELOPMENT SCHEDULE Deadline Obligation 60 days from DDA execution City Council approves all entitlements for the Project 60 days from entitlements Open Escrow 60 days from entitlements Demo and grading permit submitted to City 60 days from entitlements First draft of Financing Plan submitted to City 180 days from entitlements Building permit submittal 5 days before Close of Escrow Final Financing Plan (includes final proforma and funding sources Final Construction Contract Executed Developer to provide construction contract, evidence of insurance, performance and payment bonds, permits Bonds, guarantees etc payment of ½ permit and impact fees Close of Escrow 10 days after City determines that CDs are 90% complete Within 60 days following Closing Date Developer to commence Project construction Within 18 months following project construction commencement Developer to Complete Project Construction EXHIBIT E FORM OF GRANT DEED [to be provided upon execution] EXHIBIT F BUILDING PERMIT SUBMITTAL REQUIREMENTS To determine the completeness of a plan submittal, the City will vet the construction drawings through the plan review process for the following purposes:  Identify non code compliant issues with the project.  Determine whether the non-code compliant issues are major or minor issues. o Example of Major Issues - Footings are too small. Stairs are not wide enough. The building is too tall for the type of construction, egress, etc. o Example of Minor Issues - Millwork isn't the proper height, contrasting stripes are not provided at stairs, door handle height is too tall, etc.  Repeat process until all major issues are resolved with a limited number of minor issues remaining. This should be the milestone the City accepts as "90% CD" Items that need to be included in the submittal package:  General items o Conditions of approval o Compliance Memorandum  Architectural Plans o Accessibility  Structural o Calculations o Soil Reports  Electrical  Mechanical  Plumbing  Calgreen  Energy Documentation EXHIBIT G FORM OF CERTIFICATE OF COMPLETION [to be provided upon execution] EXHIBIT H FORM OF SUBORDINATION AGREEMENT [to be provided upon execution] 2840779.4 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-917 Agenda Date:9/19/2017 Version:1 Item #:3. Report regarding a resolution approving the final sale price of $1,200,000 for the disposition of 201-219 Grand Avenue (APNs 012-316-110,012-316-100,012-316-090 and 012-316-080).(Julie Barnard,Economic Development Coordinator) RECOMMENDATION Staff recommends that the Oversight Board adopt a resolution approving the final sale price of $1,200,000 for the disposition of 201-219 Grand Avenue (APNs 012-316-110,012-316-100,012-316-090 and 012-316-080),pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. BACKGROUND In December 2015,the City of South San Francisco approved the entitlements for the Grand and Linden Projects, which includes the two following downtown properties (“Project”): •201-219 Grand Avenue (Successor Agency to the Redevelopment Agency of the City of South San Francisco,or “Successor Agency”owned properties),which is entitled for a mixed-use project with 46 housing units, ground floor commercial, a leasing office and a resident lounge; and •418 Linden (City-owned site),which is entitled for residential use only project with 38 residential units, with some flexibility to allow for live/work spaces. At the time of approval,the City Council and Successor Agency approved a Disposition and Development Agreement (DDA)with Brookwood Equities,LLC.In the ensuing months,Brookwood was unable to advance the project,and as a result the City Council and Successor Agency terminated the DDA.According to the terms of the DDA,after termination,the City retained the project entitlements,which allowed the City to solicit a new developer with the entitled development.Staff conducted an extensive Request for Proposals (RFP) process,and selected a developer,ROEM Development Corporation (ROEM).On January 23,2017,the Oversight Board to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”) approved the Successor Agency’s recommendation of ROEM as the developer for the 201 Grand site. Exclusive Negotiating Rights Agreement (ENRA) Following the selection of ROEM,staff and the Developer negotiated an ENRA.The purpose of the ENRA was to establish procedures and standards for the negotiation between the City and ROEM in order to reach a Purchase and Sale Agreement (PSA). Key business points that are contained in the ENRA include the following. •A sale price of $1,000,000 for 418 Linden (City owned site) City of South San Francisco Printed on 9/14/2017Page 1 of 3 powered by Legistar™ File #:17-917 Agenda Date:9/19/2017 Version:1 Item #:3. •A sale price of $1,200,000 for 201 Grand (Successor Agency owned site) ·Deposit: $200,000 deposit upon execution of the ENRA ·Term:The ENRA was set initially at 120 days with administrative authority to extend by 90 days at a charge to the developer of $25,000 The original ENRA term expired on August 2,2017.Prior to the ENRA expiration,in order to allow for additional time to negotiate,ROEM exercised its option to extend the ENRA for 90 days.Pursuant to the ENRA,they paid the non-refundable,non-applicable $25,000 fee.This fee covered the expenses related to staff and City Attorney time,without drawing from the deposit paid.The new ENRA expiration date is October 31, 2017. Subsequent Negotiations On June 21,2017,ROEM informed staff that they had recently received new construction bids that showed that the Project was facing a $5.8 million shortfall.Staff worked with ROEM to identify possible solutions,which resulted in the following key project revisions: 1.Reduction of Linden Land Price: •Reduce the purchase price of the City’s parcel (418 Linden) by $500,000. 2.Injection of Affordable Housing Funds: •The City will contribute $3.5 million in City Affordable Housing Funds. 3.Developers Reduction in Return on Cost (ROC): •ROEM agreed to reduce their ROC from 6.0 percent to 5.75 percent.The developer did caution that reducing the Project’s ROC may significantly reduce the number of equity funders willing to invest in the Project, but they feel comfortable proceeding with the reduced return. 4.Developer Concessions: •ROEM identified cost reductions,approximately $1 million through measures that do not impact exterior design.These include modest reductions to soft costs,using standard doors to avoid the need to pay for custom doors, etc. The Project’s income and value has been impacted by the inclusion of Below Market Rate (BMR)units,and therefore an offset is needed to make the development economically viable.In order to ensure that this project gets built and to demonstrate the City’s commitment to disposing the properties in a manner consistent with the LRPMP,the City agreed to invest $4 million in these developments.This includes the above mentioned $500,000 reduction in sale price for the City owned property,as well as a grant of $3,500,000 in Affordable Housing Funds. Purchase and Sale Agreement While working to close the funding shortfall,the developer and City have negotiated several necessary agreements for the conveyance and construction of the development.These include the Purchase and Sale Agreements,Development Agreement (DA)and Affordable Housing Agreement (AHA).Note that the key business points that were included in the aforementioned agreements have been conveyed from the former City of South San Francisco Printed on 9/14/2017Page 2 of 3 powered by Legistar™ File #:17-917 Agenda Date:9/19/2017 Version:1 Item #:3. DDA with Brookwood with some minor adjustments where necessary. Some of the key business points contained in the 201 Grand PSA are as follows. •Purchase Price: 201 Grand Avenue:$1,200,000 •Open of Escrow: Escrow will open when the PSA is executed. •Close of Escrow (COE) will occur upon the occurrence of all of the following: -ROEM has provided proof of equity and debt financing commitments,which include proof of equity and debt, -ROEM has provided the City with a Proforma, -ROEM has obtained all building permits, -ROEM has provided the City with an executed construction contract, and -ROEM has provided the City with a Completion Guaranty. Next Steps If the Oversight Board approves the sale price,the City will execute all agreements and ROEM will proceed immediately with efforts to reach building permit submittal,with close of escrow and projected to be in April- May 2018. CONCLUSION Staff recommends that the Oversight Board adopt a resolution approving the final sale price of $1,200,000 for the disposition of 201-219 Grand Avenue (APNs 012-316-110,012-316-100,012-316-090 and 012-316-080), pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5, with the proceeds to be distributed to the local taxing entities. City of South San Francisco Printed on 9/14/2017Page 3 of 3 powered by Legistar™ City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:17-918 Agenda Date:9/19/2017 Version:1 Item #:3a. Resolution approving the final sale price of $1,200,000 for the disposition of 201-219 Grand Avenue (APNs 012-316-110,012-316-100,012-316-090 and 012-316-080),pursuant to the approved Long Range Property Management Plan and Health and Safety Code Section 34191.5,with the proceeds to be distributed to the local taxing entities. WHEREAS,on June 29,2011,the Legislature of the State of California (“State”)adopted Assembly Bill x1 26 (“AB 26”),which amended provisions of the State’s Community Redevelopment Law (Health and Safety Code sections 33000 et seq.)(“Dissolution Law”),pursuant to which the former Redevelopment Agency of the City of South San Francisco was dissolved on February 1, 2012; and WHEREAS,the City became the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Successor Agency”); and WHEREAS, pursuant to Health and Safety Code Section 34191.5(c)(2)(C), property shall not be transferred to a successor agency, city, county or city and county, unless a Long Range Property Management Plan (“LRPMP”) has been approved by the Oversight Board and the California Department of Finance (“DOF”); and WHEREAS,in accordance with the Dissolution Law,the Successor Agency prepared a Long Range Property Management Plan (“LRPMP”),which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”)on May 21, 2015, and was approved by the Department of Finance (“DOF”) on October 1, 2015; and WHEREAS,consistent with the Dissolution Law and the LRPMP,certain real properties located in the City of South San Francisco,that were previously owned by the former Redevelopment Agency was transferred to the Successor Agency (“Agency Properties”); and WHEREAS,on October 18,2016,the City entered into an Amended and Restated Master Agreement for Taxing Entity Compensation (“Compensation Agreement”)with the various local agencies who receive shares of property tax revenues from the former redevelopment project area (“Taxing Entities”),which provides that upon approval by the Oversight Board of the sale price,and consistent with the LRPMP,the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency; and WHEREAS,on February 8,2017,the City adopted Resolution 16-2017 approving the transfer of the Agency City of South San Francisco Printed on 9/20/2017Page 1 of 4 powered by Legistar™ File #:17-918 Agenda Date:9/19/2017 Version:1 Item #:3a. WHEREAS,on February 8,2017,the City adopted Resolution 16-2017 approving the transfer of the Agency Properties from the Successor Agency to the City and in accordance with the requirements set forth in the LRPMP,and on February 21,2017,the Oversight Board adopted a resolution approving the transfer of the Redevelopment Properties from the Successor Agency to the City; and WHEREAS,consistent with the LRPMP and the Oversight Board resolution,the Successor Agency and City executed and recorded grant deeds transferring the Agency Properties to the City; and WHEREAS,the real property located at 201 Grand Avenue,207 Grand Avenue,and 217-219 Grand Avenue (“201 Grand”)located in the City of South San Francisco,California,known as Area Parcel Numbers (APNs) 012-316-110,012-316-100,012-316-090 and 012-316-080 are Agency Properties and are subject to the provisions of the LRPMP and the Compensation Agreement; and WHEREAS,On March 22,2017,City Council selected ROEM Development Corporation (“Developer”)to develop the properties located at 201 Grand in a manner consistent with the LRPMP; and WHEREAS,the City Council and the Successor Agency approved an Exclusive Negotiating Rights Agreement (ENRA)between the Successor Agency,the City of South San Francisco (“City”),and Developer in order to negotiate a disposition agreement consistent with the LRPMP; and WHEREAS,the City has been working closely with Developer to negotiate a Purchase and Sale Agreement (“PSA”) for the sale and disposition of the properties; and WHEREAS,the City and the Developer now wish to enter into a PSA for the Purchase and Sale of 201 Grand, attached hereto and incorporated herein as Exhibit A; and WHEREAS,because the City is obligated to dispose of the Agency Properties in accordance with the LRPMP and to satisfy goals,objectives and purposes of the Redevelopment Plan and the Redevelopment Dissolution Statutes,the Agency Properties are not "surplus"property of the City and are not subject to the disposition requirements and procedures of the Surplus Lands Act (Government Code Section 54220 et seq.); and WHEREAS,the disposition of the Properties in accordance with the LRPMP and to satisfy goals,objectives and purposes of the Redevelopment Plan and the Redevelopment Dissolution Statutes constitutes a "common benefit"that may take place under authority of California Government Code Section 37350 and/or other disposition authority deemed appropriate by the City; and WHEREAS,approval of the PSA is considered a “project”for purposes of the California Environmental Quality Act, Pub. Resources Code § 21000, et seq. (CEQA); and WHEREAS,on January 28,2015,the City Council certified an Environmental Impact Report (EIR),State Clearinghouse number 2013102001,in accordance with the provisions of the California Environmental Quality Act (Public Resources Code,§§21000,et seq.,CEQA)and CEQA Guidelines,which analyzed the potential City of South San Francisco Printed on 9/20/2017Page 2 of 4 powered by Legistar™ File #:17-918 Agenda Date:9/19/2017 Version:1 Item #:3a. Act (Public Resources Code,§§21000,et seq.,CEQA)and CEQA Guidelines,which analyzed the potential environmental impacts of the development within the Downtown Station Area Specific Plan (DSASP); and WHEREAS,on January 28,2015,the City Council also adopted a Statement of Overriding Considerations (SOC)in accordance with the provisions of the California Environmental Quality Act (Public Resources Code, §§21000,et seq.,CEQA)and CEQA Guidelines,which carefully considered each significant and unavoidable impact identified in the EIR and found that the significant environmental impacts are acceptable in light of the Downtown Station Area Specific Plan’s economic, legal, social, technological and other benefits; and WHEREAS,CEQA allows for limited environmental review of subsequent projects under a program EIR when an agency finds that a project would not create any new environmental effects beyond those previously analyzed under a program EIR and would not require any new mitigation measures; and WHEREAS,the development of the Property was contemplated in the DSAP EIR,and the execution of a Purchase and Sale Agreement for development consistent with the DSAP would not result in any new significant environmental effects or a substantial increase in the severity of any previously identified effects beyond those disclosed and analyzed in the Downtown Station Area Specific Plan Program EIR certified by the City Council, nor would any new mitigation measures be required; and WHEREAS,therefore,no subsequent or supplemental environmental review is required pursuant to CEQA Guidelines § 15162. NOW,THEREFORE,BE IT RESOLVED that the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco does hereby resolve as follows: 1.The foregoing recitals are true and correct and made a part of this Resolution. 2.Finds that the proposed actions in this Resolution are consistent with the Long Range Property Management Plan. 3.Approves a final sale price of $1,200,000 as set forth in the Purchase and Sale Agreement between the City of South San Francisco and ROEM Development Corporation for the sale and development of the properties located at 201 Grand Avenue,207 Grand Avenue,and 217-219 Grand Avenue attached hereto as Exhibit A.The sale proceeds from the disposition of the properties will be distributed to the taxing entities according to Section 5 of the Amended and Restated Master Agreement for Taxing Entity Compensation. 4.Approves of the City Manager,or his designee,executing the Purchase and Sale Agreement attached hereto as Exhibit A,and any necessary documents related to the Purchase and Sale Agreement,and take all actions necessary to implement this intent of this Resolution,subject to approval as to form by the City Attorney. City of South San Francisco Printed on 9/20/2017Page 3 of 4 powered by Legistar™ File #:17-918 Agenda Date:9/19/2017 Version:1 Item #:3a. ***** City of South San Francisco Printed on 9/20/2017Page 4 of 4 powered by Legistar™ 1 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS 201-219 Grand Avenue THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (“this Agreement”), dated _______, 2017, for reference purposes only, is made by and between the City of South San Francisco, a municipal corporation, (“City” or the “Seller”) and ROEM Development Corporation, a California corporation (“Buyer”). Seller and Buyer are collectively referred to herein as the “Parties.” RECITALS A. The City of South San Francisco is the owner of certain real property located in the City of South San Francisco, California, at 201-219 Grand Avenue, known as County Assessor's Parcel Numbers 012-316-110, 012-316-100, 012-316-090 and 012-316-080 and more particularly described in Exhibit A attached hereto (the "Grand Property" or the “Property” herein). B. On June 29, 2011, the Legislature of the State of California (the “State”) adopted Assembly Bill x1 26 (“AB 26”), which amended provisions of the State’s Community Redevelopment Law (Health and Safety Code sections 33000 et seq) (the “Dissolution Law”), pursuant to which the former Redevelopment Agency of the City of South San Francisco was dissolved on February 1, 2012. The City became the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Successor Agency”), and in accordance with the Dissolution Law, the Successor Agency prepared a Long Range Property Management Pl an (“LRPMP”), which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”) on May 21, 2015, and was approved by the Department of Finance (“DOF”) on October 1, 2015. C. Consistent with the Dissolution Law and the LRPMP, certain real properties located in the City of South San Francisco, that were previously owned by the former Redevelopment Agency was transferred to the Successor Agency (“Agency Properties”). On October 18, 2016, the City entered into an Amended and Restated Master Agreement for Taxing Entity Compensation (“Compensation Agreement”) with the various local agencies who receive shares of property tax revenues from the former redevelopment project area (“Taxing Entities”), which provides that upon approval by the Oversight Board of the sale price, and consistent with the LRPMP, the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency. D. On February 8, 2017, the City adopted Resolution 16-2017 approving the transfer of the Agency Properties from the Successor Agency to the City and in accordance with the requirements set forth in the LRPMP, and on February 21, 2017, the Oversight Board adopted a resolution approving the transfer of the Redevelopment Properties from the Successor Agency to the City. 2 E. Consistent with the LRPMP and the Oversight Board resolution, the Successor Agency and City executed and recorded grant deeds transferring the Agency Properties to the City. The Grand Property is one of the Agency Properties and is subject to the provisions of the LRPMP and the Compensation Agreement. F. The City desires to sell the Grand Property to Buyer for the construction of a high- density, mixed-use project, including 46 residential units, nine (9) of which are required to be below market rate units, and approximately 6,000 square feet of ground floor commercial units (the “Grand Project”), as further described in the Grand Affordable Housing Agreement substantially in the form attached hereto as Exhibit B (the “AHA”). Development of the Grand Project is described and defined in the Development Agreement between the City and Buyer, substantially in the form attached hereto as Exhibit C (the “DA”). Upon Closing, the AHA and the DA will be recorded in the official records of San Mateo County. G. In order to assist in the construction of affordable units, upon Closing, Seller will provide Buyer a grant in the amount Five Hundred and Twenty Five Thousand Dollars ($525,000.00) from City Affordable Housing In-Lieu Fees, and a grant in the amount of One Million Two Hundred and Twenty Five Thousand ($1,225,000.00) from City Affordable Housing Bond Funds to partially finance the Project on the Grand Property (“City Grants”), as set forth in this Agreement and the DA. The terms and conditions associated with Buyer’s use of the City Grants after the Closing are set forth in the DA. H. On April 4, 2017, City of South San Francisco and Agency and Buyer entered into an Exclusive Negotiation Rights Agreement (“ENRA”) that provided the Buyer the exclusive right to collaborate and negotiate with the City for the purpose of reaching agreement on a project description, appropriate land uses, economic feasibility, and a definitive agreement whose terms and conditions would govern any conveyance and development of the Property. In furtherance thereof, Buyer submitted a deposit in the amount of Two Hundred Thousand Dollars ($200,000.00) to City to reimburse the costs Seller would incur in preparation of this Agreement and the Purchase and Sale Agreement for the Linden Project (“ENRA Deposit”). Upon execution of the ENRA, City provided Buyer with copies, but not ownership, of all City owned non-privileged studies, surveys, plans, specifications, reports, and other documents with respect to the Property that City had in its possession or control, which had not already been provided to Buyer (“Bridging Documents”). I. The Grand Property and the Grand Project are fully entitled, and have obtained planning approval from the Design Review Board, Planning Commission, Successor Agency and City Council as well as the Oversight Board. The Grand Project entitlements include Planning Project: P15-0014; Use Permit UP15-0003; Design Review DR15-0016 and Parking Exception PE15-0001 (collectively herein the “Project Approvals”). Buyer acknowledges and agrees that execution of this Agreement by Agency does not constitute approval for the purpose of the issuance of building permits for the Project, does not limit in any manner the discretion of Agency in such approval process if any, and does not relieve Buyer from the obligation to apply for and obtain any, if necessary, entitlements, approvals, and permits, for construction of the Grand Project on the Grand Property including without limitation, the approval of architectural plans, the issuance of any certificates regarding historic resources required in connection with the Project (if 3 any), and any required environmental review in the event Buyer seeks revisions to any of the above Project Approvals. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, Seller and Buyer hereby agree as follows: AGREEMENT 1. INCORPORATION OF RECITALS AND EXHIBITS. The Recitals set forth above and the Exhibits attached to this Agreement are each incorporated into the body of this Agreement as if set forth in full. 2. PURCHASE AND SALE. 2.1. Subject to the terms and conditions set forth herein, Seller agree to sell the Property to Buyer, and Buyer hereby agrees to acquire the Property from Seller. 2.2. The purchase price for the Property to be paid by Buyer to City is One Million Two Hundred Thousand Dollars ($1,200,000.00), payable in all cash at Closing. Seller shall distribute the net sale proceeds to the taxing entities pursuant to Section 5 of the Compensation Agreement. 3. ESCROW. 3.1. Escrow Account. This sale shall be consummated through an “Escrow” established with Chicago Title Insurance Company; Escrow Agent: Sherri Keller, 675 N. First Street, San Jose, CA 95112 (“Escrow Holder”). Escrow Holder shall perform all escrow and title services in connection with this Agreement. 3.2. Opening of Escrow; Effective Date. Within three (3) business days of the date that Seller has obtained approval of this executed Agreement by the City Council, approval of the sale price by the Oversight Board, and approval of the executed DA and the executed AHA by the City Council, Seller shall open an escrow account with Escrow Holder by depositing this executed Agreement, the executed DA and the executed AHA into Escrow. The date the executed Agreement, DA and AHA are received by Escrow Holder, as established and confirmed by Escrow Holder, shall be deemed the “Effective Date.” By such deposit Escrow Holder is authorized and instructed to act in accordance with the provisions of this Agreement, which Agreement shall constitute Escrow Holder’s escrow instructions. 3.3. Buyer’s Deposit; Application of Prior ENRA Deposit. Within three (3) business days of the Effective Date, Seller will deposit the one half of the remaining, unused, portion of the ENRA Deposit into Escrow, and Buyer will deposit the di fference between the amount deposited by Seller and $100,000.00, so that the total deposit held in Escrow for the Grand Property as Buyer’s deposit is One Hundred Thousand Dollars ($100,000.00) (the “Deposit”). Note that the other one half of the remaining, unused, portion of the ENRA Deposit will be deposited into the Linden Property Escrow. The Deposit is non-refundable, except in the event of a Seller breach, and is applicable toward the Purchase Price. 4 3.4. Seller’s Administration Fee. Within three (3) business days of the Effective Date, Buyer shall deposit funds in the amount of Fifteen Thousand Dollars ($15,000.00) with Escrow Holder (the “Administration Fee”). Escrow Holder shall immediately release the Administration Fee to Seller, and throughout the term of this Agreement, Seller may draw upon the Administration Fee to compensate it for the cost of reasonably necessary third-party assistance, legal fees and staff time incurred by Seller in administering the sale of the Property. Seller will notify Buyer of the identify, qualifications, scope of work and budget for any third party consultants that will be paid for from the Administration Fee, prior to authorizing work under any such third party contract, and will provide Buyer a written account of the Administration Fee, including copies of any third party invoices under approved scopes of work (excluding any information subject to attorney client privilege) upon Buyer’s request. All costs and fees shall be charged at City’s actual cost and all staff time shall be charged at City’s standard rate. Seller shall deposit the Administration Fee in a separate interest bearing account of Seller and any interest, when received by Seller, will become part of the Administration Fee. City shall account for all deposits, interest earnings and withdraws from the Administration Fee consistent with all reporting requirements of the State of California Department of Finance. The unused portion of the Administration Fee, if any, shall be credited against the Purchase Price at Closing, or returned to Buyer if this Agreement is terminated, for any reason, prior to Closing. 4. APPROVAL OF CONDITION OF TITLE; PROPERTY DISCLOSURE REQUIREMENTS. 4.1. Condition of Title/Preliminary Title Report. At the Closing, Seller shall convey title to the Property to Buyer by grant deed in Escrow Holder’s standard form (the “Grant Deed”). As a condition to Buyer’s obligation to close escrow hereunder, title to the Property to be conveyed to Buyer shall be subject only to the Permitted Exceptions (as defined below). Promptly following the execution of this Agreement, Seller shall deliver or cause the Escrow Holder to deliver to Buyer a preliminary title report issued by Escrow Holder and dated within ten (10) days of the mutual execution of this Agreement (the “Preliminary Title Report”) showing the state of title to the Property, together with copies of all matters shown as exceptions therein. Buyer may also obtain a survey or updated survey of the Property (the “Survey”), at Buyer's sole cost and expense. Buyer shall have the right within the first twenty (20) days following the Effective Date (the “Title Review Period”), to give Seller written notice (“Buyer’s Title Notice”) of Buyer’s disapproval of any title exceptions or matters set forth in the Title Report or Survey, or any other matters affecting Title to the Property (collectively, the “Title Objections”). If Buyer timely gives the Buyer’s Title Notice, Seller shall elect, within fifteen (15) days following receipt of Buyer’s Title Notice, by written notice given to Buyer, whether to remove or delete from the title to be conveyed to Buyer prior to the Closing any or all of the Title Objections. If Buyer fails to timely give the Buyer’s Title Notice, or if Seller fai ls to make such election within the aforementioned fifteen (15) day period, then Seller shall be deemed to have elected not to remove any Title Objections. Upon receipt of Seller’s written notice (or deemed election not to remove the Title Objections), Bu yer may elect, within the Title Review Period, to either (i) terminate this Agreement, in which event all rights and obligations hereunder (except for those that expressly survive the termination of this Agreement) shall cease and the Deposit shall be promptly returned to Buyer, or (ii) waive any title or survey objections it may have, without a 5 reduction of the Purchase Price. If Buyer fails to make an election referred to in the immediately preceding sentence, by written notice to Seller within the Title Review Period, then Buyer shall be deemed to have elected the option to terminate this Agreement as set forth in clause (i) above. As used herein, “Permitted Exceptions” shall mean: (i) non-delinquent liens for real estate taxes and assessments; (ii) any other liens, easements, encumbrances, covenants, conditions and restrictions of record described in the Preliminary Title Report, except those that Seller has expressly agreed to remove pursuant to Paragraph 5(b) above; provided, however, that the lien of any deed of trust shall not be a Permitted Exception in any event; (iii) the DA; (iv) the AHA; and (v) local, state and federal laws, ordinances or governmental regulations including, but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Property. Seller will provide Buyer with standard owner affidavits regarding tenants, work on site, etc. if applicable as may reasonably be required by the Title to permit Title Company’s issuance of an ALTA title insurance policy. Delivery of title in accordance with the foregoing shall be evidenced by the willingness of the Escrow Holder to issue, at Closing, at Buyer’s cost, an ALTA Owner’s Policy of Title Insurance in the amount of the Purchase Price showing fee simple title to the Property vested in Buyer (or its assignee), subject only to the Permitted Exceptions and the standard exclusions to coverage shown on such Policy of Title Insurance (the “Title Policy”). 4.2 Environmental and Natural Hazards Disclosure. California Health & Safety Code section 25359.7 requires owners of non-residential real property who know, or have reasonable cause to believe, that any release of hazardous substances are located on or beneath the real property to provide written notice of same to the buyer of real property. Other applicable laws require Seller to provide certain disclosures regarding natural hazards affecting the Property. During the period of time between the execution of the ENRA and the execution of this Agreement, Seller shall make all necessary disclosures required by law 5. BUYER’S SCHEDULE OF PERFORMANCE 5.1. Buyer’s Schedule of Performance. Subject to Force Majeure Delays (as defined in Section 8.4), Buyer shall complete the following milestones in furtherance of the Closing, in accordance with the following schedule: Deadline Milestone (a) Within two (2) months after Effective Date Buyer shall have completed 50% of the Construction Drawings and submitted the Financial Proforma to Seller (b) Within four (4) months after Effective Date Buyer shall have completed all Final Plans and submitted 100% construction drawings to the City for building permits, and submitted an Updated Proforma to Seller 6 Deadline Milestone (c) Within five (5) months after Effective Date Buyer shall have secured Construction Financing and executed a contract with a general contractor for construction of the Project in accordance with the final plans (d) Within six (6) months after Effective Date Buyer and Seller shall have satisfied (or waived in writing) all contingencies to Closing set forth in this Agreement, and be prepared to Close Escrow 6. CLOSING AND PAYMENT OF PURCHASE PRICE 6.1. Closing. The close of escrow (the “Closing” or “Close of Escrow”) shall be deemed to occur on the date the Grant Deed is recorded and Buyer’s funds are released to Seller and the City Grants are released to Buyer, which shall occur within ten (10) days of the date that all of Buyer’s contingencies to Closing set forth in Section 6.2 and Seller’s contingencies to Closing set forth in Section 6.3 have been satisfied, or waived in writing, or such other date that the Parties agree in writing, each in their sole discretion. 6.2. Buyer’s Conditions to Closing. Buyer's obligation to purchase the Property is subject to the satisfaction of all of the following conditions or Buyer's written waiver thereof (in Buyer’s sole discretion) on or before the Closing Date: (a) Buyer has approved the condition of the Property and Waived any further Due Diligence Contingency. Buyer has used the period of time between the execution of the ENRA and the date of the execution of this Agreement as its “Due Diligence Contingency Period” to complete physical inspections of the Property and due diligence related to the purchase of the Property. Pursuant to paragraph 9 of the ENRA, Seller has made available to Buyer for review or copying at Buyer’s expense all non-privileged studies, surveys, plans, specifications, reports, and other documents with respect to the Property that Seller has in its possession or control, which have not already been provided. Buyer understands that notwithstanding the delivery by City to Buyer of any materials, including, without limitation, third party reports, Buyer has relied entirely on Buyer’s own experts and consultants and its own independent investigation in proceeding with the acquisition of the Property. Studies or documents prepared by Seller and its agents solely for the purpose of negotiating the terms of the Purchase Agreement were not required to be provided by Seller to Buyer. Buyer acknowledges that it has completed its due diligence with respect to the physical condition of the Property and is satisfied with respect to such and will provide Seller further written evidence of its acceptance of the condition of the property and its wavier of any due diligence contingency prior to Closing. (b) Seller have performed all obligations to be performed by Seller pursuant to this Agreement. (c) Seller’s representations and warranties herein are true and correct in all material respects as of the Closing Date. 7 (d) Buyer has approved the Title Report, and Title Company is irrevocably committed to issue a ALTA Extended Title Policy to Buyer upon recordation of the Grant Deed and effective as of the Closing Date, insuring title to Buyer in the full amount of the Purchase Price, subject only to the Permitted Exceptions. (e) Seller has deposited the City Grants into Escrow with instructions to release the City Grants to Buyer, only upon the Closing. (f) The Property is free of all occupants, licensees, tenants, and is prepared to be delivered “vacant” to Buyer at Closing. (g) Buyer has secured binding commitments, subject only to commercially reasonable conditions, for all funding necessary for the successful and feasible purchase of the Property and completion of the Project. (h) Thirty (30) days prior to Closing, Buyer’s construction loan, if any, for the Project shall have closed, or shall be ready to close concurrently with the Closing. (i) Five (5) days before closing, Buyer shall have obtained approval of Buyer’s Final Proforma from City, and shall have deposited the approved Final Proforma into Escrow. (j) Buyer has completed all Final Plans and construction drawings and has obtained all building and other permits from the City and other issuing agencies required to construct the Project pursuant to all Final Plans and as required and necessary for the Buyer to satisfy the obligations set forth in the DA and AHA. (k) Buyer shall have executed a construction contract with a qualified and reputable general contractor for the Project, which construction contract shall be enforceable, contain a “prevailing wage” requirement, and require contractor to commence construction promptly upon issuance of the final building permit, and shall have deposited a copy thereof into Escrow five (5) days before Closing. (l) Buyer or Buyer’s General Contractor shall obtain, or cause to be obtained, and deliver to Seller the following bonds: (a) a labor and materials/payment bond or bonds for the general contract, which shall be equal to one hundred percent (100%) of all costs of construction to be incurred pursuant to the general contract, and (b) a performance bond or bonds for the general contractor in an amount equal to one hundred percent (100%) of all costs to be incurred pursuant to the general contract (collectively, the "Bonds"). The Bonds shall be in commercially reasonable form and substance, and name Seller as obligee. (m) Buyer’s General Contractor shall have submitted to City’s Building Department for City’s approval, detailed final construction plans for construction of the Project on the Property (the “Construction Plans”). As used herein “Construction Plans” means the final construction documents that are in conformance with the Bridging Construction Documents (“BCDs”) and Owner’s Minimum Requirements (“OMRs”) and upon which Buyer and Buyer’s contractors shall rely in constructing the Project (including the landscaping, parking, and common areas) and shall include, without limitation, the site development plan, final architectural drawings, 8 landscaping, exterior lighting and signage plans and specifications, materials specifications, final elevations, and building plans and specifications. The Construction Plans shall be based upon the scope of development set forth in the BCDs and upon the Project Approvals, and shall not materially deviate therefrom without the express written consent of Seller. Provided the Construction Plans are consistent with the BCDs, approval of the Construction Plans by City shall be deemed approval thereof by Seller. (n) Buyer is prepared to deliver a guaranty of completion of the Project in accordance with the terms of this Agreement, substantially in the form of Exhibit D ("Completion Guaranty") attached hereto. 6.3. Seller’s Conditions to Closing. The Close of Escrow and Seller’s obligation to sell and convey the Property to Buyer are subject to the satisfaction of the following conditions or Seller’s written waiver (in Seller’s sole discretion) of such conditions on or before the Closing Date or any sooner date stated below: (a) Buyer has performed all obligations to be performed by Buyer pursuant to this Agreement before Closing Date. (b) Buyer's representations and warranties set forth herein are true and correct in all material respects as of the Closing Date. (c) Buyer’s Financing Commitments. Forty-five (45) days prior to Closing, Buyer has provided Seller written confirmation, acceptable to Seller, which approval shall not be unreasonably withheld, that Buyer has obtained financing commitments for the acquisition and construction financing for the acquisition and development of the Property: (d) Construction Loan. Thirty (30) days prior to Closing, Buyer’s construction loan, if any, for the Project shall have closed, or shall be ready to close concurrently with the Closing. (e) Proforma. Thirty (30) days before closing, Buyer shall have obtained approval of Buyer’s Final Proforma from City, and shall have deposited the approved Final Proforma into Escrow. (f) Buyer shall have completed all Final Plans and construction drawings and has obtained all building and other permits from the City and other issuing agencies required to construct the Project pursuant to all Final Plans and as required and necessary for the Buyer to satisfy the obligations set forth in the DA and AHA. (g) Buyer shall have executed a construction contract with a qualified and reputable general contractor for the Project, which construction contract shall be enforceable, contain a “prevailing wage” requirement, and require contractor to commence construction promptly upon issuance of the final building permit, and shall have deposited a copy thereof into Escrow five (5) days before Closing. (h) Buyer or Buyer’s General Contractor shall have obtained and delivered to Seller the following bonds: (a) a labor and materials/payment bond or bonds for the 9 general contract, which shall be equal to one hundred percent (100%) of all costs of construction to be incurred pursuant to the general contract, and (b) a performance bond or bonds for the general contractor in an amount equal to one hundred percent (100%) of all costs to be incurred pursuant to the general contract (collectively, the "Bonds"). The Bonds shall be in commercially reasonable form and substance and shall name Seller as obligee. (i) Construction Plans. Buyer’s General Contractor shall have submitted to City’s Building Department for City’s approval, detailed final construction plans for construction of the Project on the Property (the “Construction Plans”). As used herein “Construction Plans” means the final construction documents that are in conformance with the Bridging Construction Documents (“BCDs”) and Owner’s Minimum Requirements (“OMRs”) and upon which Buyer and Buyer’s contractors shall rely in constructing the Project (including the landscaping, parking, and common areas) and shall include, without limitation, the site development plan, final architectural drawings, landscaping, exterior lighting and signage plans and specifications, materials specifications, final elevations, and building plans and specifications. The Construction Plans shall be based upon the scope of development set forth in the BCDs and upon the Project Approvals, and shall not materially deviate therefrom without the express written consent of Seller. Provided that the Construction Plans are consistent with the BCDs, approval of the Construction Plans by City shall be deemed approval thereof by Seller. (j) Buyer’s Completion Guaranty. Buyer has delivered its Completion Guaranty to Escrow Holder. 6.4. Closing Deliveries. 6.4.1 Delivery of Documents and Closing Funds. At or prior to Closing, Seller and Buyer shall each deposit such other instruments as are reasonably required by the Title Company or otherwise required to close the escrow and consummate the conveyance of the Property in accordance with the terms hereof, including but not limited to the following: 6.4.1.1 Deliveries by Seller. At or before Closing, Seller shall deposit the following into escrow: (i) one (1) original executed and acknowledged Grant Deed; (ii) one (1) duly executed non-foreign certification for the Property in accordance with the requirements of Section 1445 of the Internal Revenue Code of 1986, as amended; (iii) one (1) duly executed California Form 593-W Certificate for the Property or comparable non-foreign person affidavit to satisfy the requirements of California Revenue and Taxation Code Section 18805(b) and 26131; (iv) title to all Bridging Documents; and (v) funds in the total amount of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) for the City Grants. 6.4.1.2 Condition to disbursement of City Grants. City’s obligation to provide Seller with City Grants in the total amount of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) at the Closing Date is conditioned upon Close of Escrow. If the Closing does not occur, for any reason whatsoever, the City has no obligation to deliver the City Grants to Buyer. 6.4.1.3 Deliveries by Buyer. No less than five (5) business days prior to the close of escrow, Buyer shall deposit into escrow: (i) immediately available funds 10 which together with the Deposit plus interest thereon, if any, is equal to: a) the Purchase Price as adjusted by any prorations between the Parties; (b) all escrow fees (including the costs of preparing documents and instruments) and recording fees and all transfer taxes; (c) the cost of the Title Policy and title report costs (d) any other costs that are the responsibility of Buyer under this Agreement; (ii) a fully executed Completion Guarantee executed by Buyer; and, (iii) one (1) original executed Preliminary Change of Ownership Report for the Property. 6.4.2. Escrow Instructions. This Agreement constitutes the joint escrow instructions (JEI) of Seller and Buyer with respect to the conveyance of the Property to Buyer, and the Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. The parties shall use reasonable good faith efforts to close the escrow for the conveyance of the Property in the shortest possible time. All funds received in the escrow shall be deposited in interest-bearing accounts for the benefit of the depositing Party in any state or national bank doing business in the State of California. All disbursements shall be made by check or wire transfer from such accounts. If, in the opinion of either Party, it is necessary or convenient in order to accomplish the Closing, such Party may provide supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The Closing shall take place as set forth in Section 6.4.3 below. Escrow Agent is instructed to release Seller’s and Buyer’s escrow closing statements to the respective parties. 6.4.3 Authority of Escrow Agent. Escrow Agent is authorized to, and shall: (a) Pay and charge Buyer for the premium of the Title Policy, including any endorsements requested by Buyer. (b) Pay and charge Buyer for escrow fees, charges, and costs as provided in Section 6.4.1.2. (c) Disburse to Seller the Purchase Price, less Seller’s share of any escrow fees, costs and expenses, and record the Grant Deed when both the Buyer Conditions Precedent and Seller Conditions Precedent have been fulfilled or waived in writing by Buyer and Seller, as applicable. Immediately following recordation of the Grant Deed, Escrow Agent shall record the DA and AHA. (d) Disburse to Buyer the City Grants. (e) Do such other actions as necessary, including obtaining and issuing the Title Policy, to fulfill its obligations under this Agreement. (f) Direct Seller and Buyer to execute and deliver any instrument, affidavit, and statement, and to perform any act, reasonably necessary to comply with the provisions of FIRPTA, if applicable, and any similar state act and regulations promulgated thereunder. (g) Prepare and file with all appropriate governmental or taxing authorities uniform settlement statements, closing statements, tax withholding forms including IRS 1099 -S forms, and be responsible for withholding taxes, if any such forms are provided for or required by law. 11 (h) Deliver to Buyer the certificate of title to those Bridging Documents for which Buyer has previously requested transfer of ownership from Seller to Buyer, the Non-Foreign Affidavit, the California Certificate and the original recorded grant deed; 6.4.4 Pro-Rations. At the close of escrow, the Escrow Agent shall make the following prorations: (i) property taxes will be prorated as of the close of escrow based upon the most recent tax bill available, including any property taxes which may be assessed after the close of escrow but which pertain to the period prior to the transfer of title to the Property to Buyer, regardless of when or to whom notice thereof is delivered; and (ii) any Seller reimbursement for the unapplied portion of the Administrative Fee. 7. REPRESENTATIONS, WARRANTIES AND COVENANTS. 7.1. Seller’s Representations, Warranties. In addition to the representations, warranties and covenants of Seller contained in the other sections of this Agreement, Seller hereby represents, warrants and covenants to Buyer that the statements below in this Section 7.1 are each true and correct as of the Closing Date provided however, if to Seller’s actual knowledge any such statement becomes untrue prior to Closing, Seller will notify Buyer in writing and Buyer will have three (3) business days thereafter to determine if Buyer wishes to proceed with Closing. If Buyer determines it does not wish to proceed, then the terms of Section 8 will apply. As used herein, the term “to Seller’s best knowledge” shall mean the knowledge of :_______________, with duty of inquiry. (a) Authority. Seller is a public agency, lawfully formed, in existence and in good standing under the laws of the State of California. Seller has the full right, capacity, power, authority, and all necessary approvals to enter into and carry out the terms of this Agreement. This Agreement has been duly executed by Seller, and upon delivery to and execution by Buyer is a valid and binding agreement of Seller. (b) Encumbrances. Other than the approval and recordation of the DA and AHA at Closing, Seller has not alienated, encumbered, transferred, mortgaged, assigned, pledged, or otherwise conveyed its interest in the Property or any portion thereof, nor entered into any Agreement to do so, and there are no liens, encumbrances, mortgages, covenants, conditions, reservations, restrictions, easements or other matters affecting the Property, except for the Permitted Exceptions. Seller will not, directly or indirectly, alienate, encumber, transfer, mortgage, assign, pledge, or otherwise convey its interest prior to the Close of Escrow, as long as this Agreement is in force. (c) There are no agreements affecting the Property except those which have been disclosed by Seller. There are no agreements which will be binding on the Buyer or the Property after the Close of Escrow. (d) Condemnation. To Seller’s best knowledge, there are not presently pending any eminent domain or condemnation actions against the Property or any part thereof; and Seller has not received written notice of any eminent domain or condemnation actions being contemplated that would affect the Property or any part thereof. 12 (e) Claims. To Seller’s best knowledge, Seller has not received written notice of any claims or of any legal actions or proceedings in any court pending against the Property or against Seller that may affect the Property or Seller’s ability to consummate the transaction contemplated in this Agreement. To Seller’s best knowledge, Seller has not received any written notice that the condition of the Property is in violation of any laws or regulations or the requirements of any insurance underwriters or policies. (f) Lease; Occupancy Rights; Superior Rights. There are no leases, occupancy rights, rights of first refusal or rights of first offer that affect the Property. Seller will deliver the property vacant and free of any lease agreements or occupancy rights prior to or at close of escrow. (g) No Conflict. The execution and delivery of this Agreement, and the sale and conveyance of the Property contemplated hereby, do not and will not (a) violate the terms of any order, writ or decree of any court or judicial or regulatory authority or body binding upon Seller, (b) conflict with or result in a breach of any condition or provision or constitute a default under or pursuant to the terms of any contract, mortgage, lien, lease, agreement, debenture or instrument to which Seller is a party, or which is or purports to be binding upon Seller or upon the Property, or (c) to Seller’s best knowledge, violate any rule, regulation, statute or law applicable to Seller. (h) Historical Designation of the Property. To Seller’s best knowledge, Seller has not received written notice of any pending applications for or current designations of the Property as a historic building or landmark. (i) Property Documents. All Bridging Documents provided by Seller to Buyer are true, correct and complete copies of all documents and information relating to the Property in Seller’s possession and control. To the extent that Seller’s Bridging Documents were prepared by third parties or for third parties, including a previous potential buyer of the Property, Seller represents to Buyer that Seller has the right to provide such materials to Buyer and is not prohibited by contract or otherwise from disclosing such materials to Buyer, but Seller does not make any representation about Buyer’s ability or inability to use or rely on any such materials, or the accuracy or completeness thereof. Seller shall not be liable to Buyer or any other party for any detrimental reliance on such third-party materials. (j) Environmental Laws. To Seller’s best knowledge, the Property is not in violation of any federal, state, local or administrative agency ordinance, law, rule, regulation, order or requirement relating to environmental conditions or Hazardous Material (“Environmental Laws”). To Seller’s best knowledge, Seller has not used, manufactured, generated, treated, stored, disposed of, or released any Hazardous Materials on, under or about the Property or transported any Hazardous Materials over the Property except in compliance with Environmental Laws. For the purposes hereof, “Hazardous Material” shall mean any substance, chemical, waste or other material which is listed, defined or otherwise identified as “hazardous” or “toxic” under any federal, state, local or administrative agency ordinance or law, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. and the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., or any regulation, order, rule or requirement adopted thereunder, as well as any formaldehyde, urea, 13 polychlorinated biphenyls, petroleum, petroleum product or by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture thereof, radon, asbestos, and “source,” “special nuclear” and “by-product” material as defined in the Atomic Energy Act of 1985,42 U.S.C. §§ 3011 et seq. 7.2. Seller’s Covenants. From the Effective Date, through the Closing, Seller covenants as follows: (a) Seller shall terminate all maintenance or service contracts and utilities relating to and servicing the Property, as of the Closing Date. (b) Seller shall remove all fixtures, furnishings and equipment and personal property (“FF&E”) that is not adhered to or an integral improvement to the Property as of the Closing Date, so that the Property is delivered in a vacant, broom-clean condition with all trash and personal effects removed. (c) Seller shall maintain and operate the Property in its present state of repair and in substantially the same condition as on the Effective Date. (d) Seller shall pay all liens, encumbrances, taxes, penalties, interest and assessments on the Property, and perform all covenants thereunder, before they become delinquent or a default would occur thereunder. (e) Seller shall maintain in effect all insurance policies relative to the Property in full force and effect. (f) Seller shall promptly notify Buyer if any of the representations and warranties set forth in this Agreement become untrue prior to the Closing Date. The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Seller contained in this Agreement are conditions precedent to Buyer’s obligation to proceed with the Closing hereunder. The foregoing representations and warranties shall survive the expiration, termination, or close of escrow of this Agreement and shall not be deemed merged into the deed upon closing. 7.3. Buyer’s Representations and Warranties. In addition to the representations, warranties and covenants of Buyer contained in the other sections of this Agreement, Buyer hereby represents, warrants and covenants to Seller that the statements below in this Section 7.3 are each true as of the Effective Date, and, if to Buyer’s actual knowledge any such statement becomes untrue prior to Closing, Buyer shall so notify Seller in writing and Seller shall have at least three (3) business days thereafter to determine if Seller wishes to proceed with Closing. (a) Buyer has the full right, capacity, power and authority to enter into and carry out the terms of this Agreement. This Agreement has been duly executed by Buyer, and upon delivery to and execution by Seller shall be a valid and binding agreement of Buyer. 14 (b) Buyer is not bankrupt or insolvent under any applicable federal or state standard, has not filed for protection or relief under any applicable bankruptcy or creditor protection statute, and has not been threatened by creditors with an involuntary application of any applicable bankruptcy or creditor protection statute. (c) Buyer accepts and acknowledges that after the Closing, the Property will be subject to the DA and AHA, which will be recorded against the Property at Closing. The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Buyer contained in this Agreement are conditions precedent to Seller’s obligation to proceed with the Closing hereunder. 7.4. Property Sold, “AS IS”. Buyer specifically acknowledges that the Seller is selling the Property on an “AS IS”, “WHERE IS” and “WITH ALL FAULTS” basis and that, subject to Seller's representations, warranties, covenants and obligations set forth in this Agreement, and all exhibits attached hereto and incorporated herein, and any obligations arising under applicable law, Buyer is not relying on any representations or warranties of an y kind whatsoever, express or implied, from Seller, or its employees, appointed or elected officials, agents, or brokers as to any matters concerning the Property. The Seller makes no representations or warranties as to any matters concerning the Property, including without limitation: (i) the quality, nature, adequacy and physical condition of the Property, (ii) the quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii) the existence, quality, nature, adequacy and physical condition of utilities serving the Property, (iv) the development potential of the Property, and the Property's use, habitability, merchantability, or fitness, suitability, value or adequacy of the property for any particular purpose, (v) except as otherwise provided in this Agreement, the zoning or other legal status of the Property or any other public or private restrictions on use of the Property, (vi) the compliance of the Property or its operation with any Environmental Laws, covenants, conditions and restrictions of any governmental or quasi-governmental entity or of any other person or entity, (vii) the presence or removal of Hazardous Materials, substances or wastes on, under or about the Property or the adjoining or neighboring property; (viii) the quality of any labor and materials used in any improvements on the Property, (ix) the condition of title to the Property, (x) the leases, service contracts, or other agreements affecting the Property, or (xi) the economics of the operation of the Property. 8. DEFAULT, REMEDIES, TERMINATION. 8.1. Default Remedies – General. Failure by either Party to perform any action or covenant required by this Agreement within sixty (60) days following receipt of written Notice from the other Party specifying the failure shall constitute a “Default” under this Agreement; provided, however, that if the failure to perform cannot be reasonably cured within such sixty (60) day period, a Party shall be allowed additional time as is reasonably necessary to cure the failure so long as such Party commences to cure the failure within the sixty (60) day period and thereafter diligently prosecutes the cure to completion. 8.2. Default. 15 8.2.1 Remedies. 8.2.1.1 Default by Buyer; Seller’s Remedies. Upon the occurrence of an uncured Default by Buyer, Seller’s remedies shall be limited to (i) liquidated damages pursuant to Section 8.2.2 and (ii) termination of this Agreement pursuant to Section 8.3. 8.2.1.2 Default by Seller; Buyer’s Remedies. Upon the occurrence of a Default by Seller under this Agreement, Buyer’s remedies shall be limited to obtaining specific performance or injunctive relief, or terminating this Agreement, and in either event, return of the Deposit and any unused portion of the Administrative Fee. 8.2.2 Liquidated Damages. SUBJECT TO NOTICE AND EXPIRATION OF APPLICABLE CURE PERIODS AND ANY PERMITTED EXTENSIONS OF TIME AS PROVIDED IN THIS AGREEMENT, IF IN THE EVENT OF A BUYER DEFAULT AS SET FORTH IN 8.2.1.1, SELLER WILL SUFFER DAMAGES AND THAT IT IS IMPRACTICABLE AND INFEASIBLE TO FIX THE ACTUAL AMOUNT OF SUCH DAMAGES. THEREFORE, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF TH IS AGREEMENT, IN THE EVENT OF AN UNCURED DEFAULT, BUYER, WITHIN THIRTY (30) DAYS FOLLOWING SELLER’S WRITTEN DEMAND THEREFOR, SHALL TURN OVER ALL REPORTS AND PLANS IN THE BUYER’S ACTUAL OR CONSTRUCTIVE POSSESSION THAT HAVE BEEN PREPARED BY AND FOR BUYER RELATED TO THE PROJECT AND THE PROPERTY (WITH THE EXCEPTION OF BUYER’S INTELLECTUAL PROPERTY, CONFIDENTIAL FINANCIAL INFORMATION, AND ANY INFORMATION SUBJECT TO LEGAL PRIVILEGE) (THE “MATERIALS”). THE BUYER’S DEPOSIT AND MATERIALS SHALL SERVE AS LIQUIDATED DAMAGES TO THE SELLER FOR A DEFAULT SPECIFIED IN SECTION 8.2.1.1. THE VALUE OF THE BUYER’S DEPOSIT AND MATERIALS CONSTITUTES A REASONABLE ESTIMATE OF THE DAMAGES THAT THE SELLER WOULD INCUR IN THE EVENT OF A DEFAULT. RETENTION OF THE BUYER’S DEPOSIT, AND MATERIALS SHALL BE THE SELLER’S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER IN THE EVENT OF A DEFAULT A DEFAULT SPECIFIED IN SECTION 8.2.1.1, AND THE SELLER WAIVES ANY AND ALL RIGHT TO SEEK OTHER RIGHTS OR REMEDIES AGAINST BUYER, INCLUDING WITHOUT LIMITATION, SPECIFIC PERFORMANCE. THE LIQUIDATED DAMAGES PROVIDED FOR HEREIN IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF SECTIONS 3275 OR 3369 OF THE CALIFORNIA CIVIL CODE, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO THE SELLER PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE. SELLER WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. BY PLACING ITS INITIALS BELOW, BUYER AND SELLER SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE, THE REASONABLENESS OF THE AMOUNT OF LIQUIDATED DAMAGES AGREED UPON, AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. INITIALS: _________ ______________ SELLER BUYER 16 8.3. Termination. This Agreement may be terminated by the Party for whom a condition is intended to benefit: (i) if there is an uncured Default, after notice from the Party not in default and expiration of all cure periods, (ii) if there is a failure of an express Buyer Contingency to Closing (Section 6.2) or Seller Contingency to closing (6.3) (which is not waived by the Party whom the condition benefits) by timely notice from the Party whom the condition benefits, (iii) a representation or warranty of a Party becomes untrue prior to Closing under Section 7.1 or 7.3 (which is not waived by the Party whom the condition benefits), or Seller cannot satisfy a covenant to Closing set forth in Section 7.3 , (iv) upon mutual written consent of the Parties, each in its sole discretion. Upon termination, the Parties will also cooperate to record a notice of termination or quitclaim deed. 8.4 Force Majeure Delay. All obligations in this Agreement shall not be deemed to be in default, all performance and other dates specified in those sections shall be extended, where delays are due to: war; insurrection; strikes and labor disputes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; litigation and arbitration, including court delays; legal challenges to this Agreement, legal challenges to the Project Approvals, or legal challenges to any other approval required from any public agency other than the Seller for the Project, or any initiatives or referenda regarding the same; environmental conditions, pre-existing or discovered, delaying the construction or development of the Property or any portion thereof; unusually severe weather but only to the extent that such weather or its effects (including, without limitation, dry out time) result in delays that cumulatively exceed thirty (30) days for every winter season occurring after commencement of construction of the Project; acts or omissions of the other Party; or acts or failures to act of any public or governmental agency or entity (except that acts or failures to act of Seller shall not excuse performance by Seller); moratorium; or a Severe Economic Recession (each a “Force Majeure Delay”). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Party within sixty (60) days of the commencement of the cause. If notice is sent after such sixty (60) day period, then the extension shall commence to run no sooner than sixty (60) days prior to the giving of such notice. Buyer’s inability or failure to obtain financing or otherwise timely satisfy shall not be deemed to be a cause outside the reasonable control of the Buyer and shall not be the basis for an excused delay unless such inability, failure or delay is a direct result of a Severe Economic Recession. “Severe Economic Recession” means a decline in the monetary value of all finished goods and services produced in the United States, as measured by initial quarterly estimates of United States Gross Domestic Product (“GDP”) published by the United States Department of Commerce Bureau of Economic Analysis (and not subsequent monthly revisions), lasting more than four (4) consecutive calendar quarters. Any quarter of flat or positive GDP growth shall end the period of such Severe Economic Recession. 9. BROKERS. Seller represents that no real estate broker has been retained by Seller in the sale of the Property or the negotiation of this Agreement. Buyer represents that no real estate broker has been retained by Buyer in the procurement of the Property or negotiation of this Agreement. Neither Seller nor Buyer shall pay or be liable for any commissions or brokerage fees for the sale of the Property. Buyer and Seller shall indemnify, hold harmless and defend each other from any and all claims, actions and liability for any breach of the preceding sentence, and any commission, finder’s fee, or similar charges arising out of Buyer’s or Seller’s conduct. 17 10. ASSIGNMENT. Buyer may not assign its rights or delegate its duties under this Agreement without Seller’s prior written consent, which may be withheld in Seller’s sole discretion, except for an assignment to a “Buyer Permitted Transferee”, set forth in subsections (a)-(c) below, which shall not require Seller’s consent under this Section 10 (each a “Buyer Permitted Transferee”): (a) Any transfer for financing purposes to secure the funds necessary for construction and/or permanent financing of the Project; (b) An assignment of this Agreement to an Affiliate of Buyer; (c) A special purpose entity created by Buyer for the development of the Grand Property to serve as the ownership entity for the Project. For the purposes of this Section 10, “Affiliate of Buyer” means an entity or person that is directly or indirectly controlling, controlled by, or under common control with Buyer. For the purposes of this definition, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity or a person, whether through the ownership of voting securities, by contract, or otherwise, and the terms “controlling” and “controlled” have the meanings correlative to the foregoing. Upon execution of an assignment and assumption agreement between Buyer, as assignor, and a Buyer Permitted Transferee, ROEM Development Corporation shall be released from all obligations under this Agreement, and thereafter, for purposes of this Agreement and where the context warrants, a reference to the Buyer shall be to the applicable Permitted Transferee. 18 11. ENVIRONMENTAL INDEMNITY. Effective upon Close of Escrow, to the fullest extent allowed by law, Buyer agrees to unconditionally and fully indemnify, protect, defend (with counsel satisfactory to Seller), and hold Seller, and their respective elected and appointed officers, officials, employees, agents, consultants and contractors harmless from and against any and all claims (including without limitation third party claims for personal injury, real or personal property damage, or damages to natural resources), actions, administrative proceedings (including without limitation both formal and informal proceedings), judgments, damages, punitive damages, penalties, fines, costs (including without limitation any and all costs relating to investigation, assessment, analysis or clean-up of the Property), liabilities (including without limitation sums paid in settlements of claims), interest, or losses, including reasonable attorneys’ and paralegals’ fees and expenses (including without limitation any such fees and expenses incurred in enforcing this Agreement or collecting any sums due hereunder), together with all other costs and expenses of any kind or nature (collectively, the “Costs”) that arise directly or indirectly from or in connection with the presence, suspected presence, release, or suspected release, of any Hazardous Materials in, on or under the Property or in or into the air, soil, soil gas, groundwater, or surface water at, on, about, around, above, under or within the Property, or any portion thereof, except those Costs that arise solely as a result of actions by Seller or actions by the Seller. The indemnification provided pursuant to this Section shall specifically apply to and include claims or actions brought by or on behalf of employees of Buyer or any of its predecessors in interest and Buyer hereby expressly waives any immunity to which Buyer may otherwise be entitled under any industrial or worker’s compensation laws. In the event the Seller suffers or incurs any Costs, Buyer shall pay to Seller the total of all such Costs suffered or incurred by the Seller upon demand therefore by Seller. The indemnification provided pursuant to this Section shall include, withou t limitation, all loss or damage sustained by the Seller due to any Hazardous Materials: (a) that are present or suspected by a governmental agency having jurisdiction to be present in the Property or in the air, soil, soil gas, groundwater, or surface water at, on, about, above, under, or within the Property (or any portion thereof) or to have emanated from the Property, or (b) that migrate, flow, percolate, diffuse, or in any way move onto, into, or under the air, soil, soil gas, groundwater, or surface water at, on, about, around, above, under, or within the Property (or any portion thereof) after the date of this Agreement as a result of Seller’s or its predecessors’ activities on the Property. The provisions of this Section 10 shall survive the termination of this Agreement and the Close of Escrow. 12. HAZARDOUS MATERIALS; DEFINITIONS. 12.1. Hazardous Materials. As used in this Agreement, “Hazardous Materials” means any chemical, compound, material, mixture, or substance that is now or may in the future be defined or listed in, or otherwise classified pursuant to any Environmental Laws (defined below) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, infectious waste”, toxic substance”, toxic pollutant”, or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, or toxicity. The term “Hazardous Materials” shall also include asbestos or asbestos-containing materials, radon, chrome and/or chromium, polychlorinated biphenyls, petroleum, petroleum products or by-products, petroleum components, oil, mineral spirits, natural gas, natural gas liquids, liquefied natural gas, and synthetic gas usable as fuel, perchlorate, and methyl tert butyl ether, whether or not defined as a hazardous waste or hazardous substance in the Environmental Laws. 19 12.2. Environmental Laws. As used in this Agreement, “Environmental Laws” means any and all federal, state and local statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations or directives, or any other requirements of governmental authorities, as may presently exist, or as may be amended or supplemented, or hereafter enacted, relating to the presence, release, generation, use, handling, treatment, storage, transportation or disposal of Hazardous Materials, or the protection of the environment or human, plant or animal health, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. § 9601), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Porter-Cologne Water Quality Control Act (Cal. Water Code § 13000 et seq.), the Toxic Mold Protection Act (Cal. Health & Safety Code § 26100, et seq.), the Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code § 25249.5 et seq.), the Hazardous Waste Control Act (Cal. Health & Safety Code § 25100 et seq.), the Hazardous Materials Release Response Plans & Inventory Act (Cal. Health & Safety Code § 25500 et seq.), and the Carpenter-Presley-Tanner Hazardous Substances Account Act (Cal. Health and Safety Code, Section 25300 et seq.). 13. RELEASE BY BUYER. Effective upon the Close of Escrow, and subject to Seller's representations under this Agreement and any obligations arising under this Agreement or applicable law, Buyer waives releases, remises, acquits and forever discharges Seller, and its officers, directors, appointed and elected officials, managers, employees and agents, and any other person acting on behalf of Seller, from any and all claims, actions, causes of action, demands, rights, damages, costs, expenses and compensation whatsoever, direct or indirect, known or unknown, foreseen or unforeseen, which Buyer now has or which may arise in the future on account of or in any way arising from or in connection with the physical condition of the Property or any law or regulation applicable thereto including, without limiting the generality of the foregoing, any federal, state or local law, ordinance or regulation pertaining to Haz ardous Materials. This Section 13 shall survive the termination of this Agreement and the Close of Escrow. BUYER ACKNOWLEDGES THAT BUYER IS FAMILIAR WITH SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH PROVIDES AS FOLLOWS: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. BY INITIALING BELOW, BUYER EXPRESSLY WAIVES THE BENEFITS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE WITH RESPECT TO THE FOREGOING RELEASE: 20 Buyer’s initials: _____________ 14. LOSS BY FIRE OR OTHER CASUALTY/CONDEMNATION (a) If prior to the Closing Date the Property is materially damaged or condemned, or if Seller receives notice of pending or threatened condemnation proceedings, as defined in subparagraph (c) below, Buyer shall have the right, exercisable by giving written notice of such decision to Seller within fifteen (15) calendar days after receiving written notice of such damage, condemnation, or threatened condemnation to elect to proceed with this Agreement, subject to the terms and conditions of this Section 14. If Buyer fails to give such written notice of its intent to proceed with the transaction, Buyer shall be deemed to have elected to terminate this Agreement, in which case neither party shall have any further rights or obligations hereunder (except for those that expressly survive the termination of this Agreement) and the Deposit shall be returned to Buyer. (b) In the event of any damage to or condemnation of the Property, whether or not material, upon the Closing all insurance or condemnation proceeds payable to Seller by reason of such damage, destruction, or condemnation shall be paid or assigned to Buyer, less such sums as may have been expended by Seller for the repair or restoration of the Property. (c) For the purpose of this paragraph, the phrase “materially damaged or condemned” shall be deemed to mean a loss or damage to the Property the cost of repair or replacement of which exceeds Five Hundred Thousand Dollars ($500,000.00) or which results in diminution in land area which results in a loss of any net square footage of the Property or any condemnation of the Property, threatened or actual. Seller shall notify Buyer in writing within two (2) days of any material damage, condemnation or threatened condemnation. 15. MISCELLANEOUS. 15.1. Attorneys’ Fees. If any party employs counsel to enforce or interpret this Agreement, including the commencement of any legal proceeding whatsoever (including insolvency, bankruptcy, arbitration, mediation, declaratory relief or other litigation), the prevailing party shall be entitled to recover its reasonable attorneys’ fees and court costs (including the service of process, filing fees, court and court reporter costs, investigative fees, expert witness fees, and the costs of any bonds, whether taxable or not) and shall include the right to recover such fees and costs incurred in any appeal or efforts to collect or otherwise enforce any judgment in its favor in addition to any other remedy it may obtain or be awarded. Any judgment or final order issued in any legal proceeding shall include reimbursement for all such attorneys’ fees and costs. In any legal proceeding, the “prevailing party” shall mean the party determined by the court to most nearly prevail and not necessarily the party in whose favor a judgment is rendered. 15.2. Interpretation. This Agreement has been negotiated at arm’s length and each party has been represented by independent legal counsel in this transaction and this Agreement has been reviewed and revised by counsel to each of the Parties. Accordingly, each party hereby waives any benefit under any rule of law (including Section 1654 of the California 21 Civil Code) or legal decision that would require interpretation of any ambiguities in this Agreement against the drafting party. 15.3. Survival. All indemnities, covenants, representations and warranties contained in this Agreement shall survive Close of Escrow. 15.4. Successors. Except as provided to the contrary in this Agreement, this Agreement shall be binding on and inure to the benefit of the Parties and their successors and assigns. 15.5. Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of California. 15.6. Integrated Agreement; Modifications. This Agreement (and all exhibits incorporated herein) contains all the agreements of the Parties concerning the subject hereof any cannot be amended or modified except by a written instrument executed and delivered by the parties. There are no representations, agreements, arrangements or understandings, either oral or written, between or among the parties hereto relating to the subject matter of this Agreement that are not fully expressed herein. In addition there are no representations, agreements, arrangements or understandings, either oral or written, between or among the Parties upon which any party is relying upon in entering this Agreement that are not fully expressed herein. 15.7. Severability. If any term or provision of this Agreement is determined to be illegal, unenforceable, or invalid in whole or in part for any reason, such i llegal, unenforceable, or invalid provisions or part thereof shall be stricken from this Agreement, any such provision shall not be affected by the legality, enforceability, or validity of the remainder of this Agreement. If any provision or part thereof of this Agreement is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision this is in keeping with the intent of the Parties as expressed herein. 15.8. Notices. Any delivery of this Agreement, notice, modification of this Agreement, collateral or additional agreement, demand, disclosure, request, consent, approval, waiver, declaration or other communication that either party desires or is required to give to the other party or any other person shall be in writing. Any such communication may be served personally, or by nationally recognized overnight delivery service (i.e., Federal Express) which provides a receipt of delivery, or sent by prepaid, first class mail, return receipt requested, with a courtesy copy delivered via e-mail, to the party’s address as set forth below: To Buyer: ROEM Development Corporation Attn: Alex Sanchez 1650 Lafayette Street Santa Clara, CA 95050 Telephone: (408) 984-5600 x16 Email: asanchez@roemcorp.com 22 with a copy to: Situs Law, PC Attn: Summer Ludwick 10 Almaden Blvd., Suite 1250 San Jose, CA 95113 Tel (408) 299-0100 Email: sludwick@situslaw.com To Seller: City of South San Francisco Attn: Mike Futrell 400 Grand Avenue South San Francisco, CA 94080 Tel (650) 877-8501 Email: mike.futrell@ssf.net Copy to: julie.barnard@ssf.net with a copy to: Meyers Nave Attn: Jason Rosenberg 555 12th Street, Suite 1500 Oakland, CA 94607 Tel (510) 808-2000 Email: jrosenberg@meyersnave.com If to Escrow Holder: Chicago Title Insurance Company Escrow Agent: Sherri Keller 675 N. First Street San Jose, CA 95112 Tel (408)993-2325 Email: Sherri.keller@ctt.com Any such communication shall be deemed effective upon personal delivery or on the date of first refusal to accept delivery as reflected on the receipt of delivery or return receipt, as applicable. Any party may change its address by notice to the other party. Each party shall make an ordinary, good faith effort to ensure that it will accept or receive notices that are given in accordance with this section and that any person to be given notice actually receives such notice. 15.9. Time. Time is of the essence to the performance of each and every obligation under this Agreement. 15.10. Days of Week. If any date for exercise of any right, giving of any notice, or performance of any provision of this Agreement falls on a Saturday, Sunday or federal observed holiday, the time for performance will be extended to 5:00 p.m. on the next business day. 15.11. Reasonable Consent and Approval. Except as otherwise provided in this Agreement, whenever a Party is required or permitted to give its consent or approval under this Agreement, such consent or approval shall not be unreasonably withheld or delayed. If a Party is required or permitted to give its consent or approval in its sole and absolute discretion or if 23 such consent or approval may be unreasonably withheld, such consent or approval may be unreasonably withheld but shall not be unreasonably delayed. 15.12. Cooperation and Further Assurances. Each Party agrees to cooperate with the other in this transaction and, in that regard, shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to carry out the intent and purposes of this Agreement. 15.13. Waivers. Any waiver by any Party shall be in writing and shall not be construed as a continuing waiver. No waiver will be implied from any delay or failure to take action on account of any default by any Party. Consent by any Party to any act or omission by another Party shall not be construed to be consent to any other subsequent act or omission or to waive the requirement for consent to be obtained in any future or other instance. 15.14. Signatures/Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one of such completely executed counterparts shall be sufficient proof of this Agreement. Copies of original signatures shall suffice for all purposes. 15.15. Access to Property. Prior to the Closing, Seller shall cooperate to enable representatives of Buyer to obtain the right of access to all portions of the Property for the purposes of implementing this Agreement. Buyer agrees to provide written notice to Seller at least twenty four (24) hours prior to undertaking any studies or work upon the Property. Buyer shall indemnify, defend, protect and hold Seller and Seller Parties harmless from any Claims arising out of the acts, omissions, negligence or willful misconduct of Buyer or its employees, agents, contractors, subcontractors or representatives (each a “Buyer Party” and, collectively, the “Buyer Parties”) in connection with such studies and investigations, except for Claims arising from or related to any pre-existing condition on or of the Property or Claims to the extent caused by the active negligence or willful misconduct of Seller or its employees, agents, contractors or representatives. In addition, in the event Buyer or any Buyer Party causes any damage to any portion of the Property, Buyer shall promptly restore the Property as nearly as possible to the physical condition existing immediately prior to Buyer’s entry onto the Property. Buyer’s indemnification obligations set forth in this Section 15.15 shall survive Closing or the termination of this Agreement. 15.16. Memorandum of Agreement. A Memorandum of Agreement in substantially the form of Exhibit E attached hereto and incorporated herein by this reference shall be executed and recorded against the Property immediately following recordation of the Grant Deed. 15.17. Relationship Between Seller and Buyer. It is hereby acknowledged that the relationship between Seller and Buyer is not that of a partnership or joint venture and that Seller and Buyer shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the exhibits hereto, Seller shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Project. 24 15.18. Seller Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by Seller, the City Manager of the City of South San Francisco, or its designee is authorized to act on behalf of Seller. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. SELLER: CITY OF SOUTH SAN FRANCISCO By: _______________________________ Mike Futrell City Manager ATTEST: By: _______________________________ City Clerk APPROVED AS TO FORM: By: _______________________________ Jason Rosenberg City Attorney BUYER: ROEM DEVELOPMENT CORPORATION, a California corporation By: _______________________________ Robert Emami, President APPROVED AS TO FORM: By: _______________________________ Counsel for Buyer 25 Chicago Title Insurance Company agrees to act as Escrow Holder in accordance with the terms of this Agreement. CHICAGO TITLE INSURANCE COMPANY By: Name: Its: Dated: 26 LIST OF EXHIBITS Exhibit A Legal Description Exhibit B Affordable Housing Agreement Exhibit C Development Agreement Exhibit D Completion Guaranty Exhibit E Memorandum of Agreement 27 Exhibit A LEGAL DESCRIPTION 201 Grand Avenue For APN/Parcel ID(s): 012-316-110 THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATEO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS: LOT 29 IN BLOCK 140, AS SHOWN ON THAT CERTAIN MAP ENTITLED, "SOUTH SAN FRANCISCO, SAN MATEO COUNTY, CALIFORNIA, PLAT NO. 1", FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE OF CALIFORNIA, ON MARCH 1, 1892 IN BOOK "B" OF MAPS AT PAGE(S) 6, AND A COPY ENTERED IN BOOK 2 OF MAPS AT PAGE 52. 207 Grand Avenue For APN/Parcel ID(s): 012-316-100 THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATEO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS: LOT 28, IN BLOCK 140, AS DESIGNATED ON THE MAP ENTITLED “SOUTH SAN FRANCISCO, SAN MATEO CO. CAL, PLAT NO. 1”, WHICH MAP WAS FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON MARCH 1, 1892 IN BOOK “B” OF MAPS, AT PAGE 6, AND A COPY ENTERED IN BOOK 2 OF MAPS, AT PAGE 52. 217-219 Grand Avenue For APN/Parcel ID(s): 012-316-080 012-316-090 THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN MATEO, CITY OF SOUTH SAN FRANCISCO, AND DESCRIBED AS FOLLOWS: LOTS 25, 26 AND 27 IN BLOCK 140, AS DESIGNATED ON THE MAP ENTITLED “SOUTH SAN FRANCISCO, SAN MATEO CO. CAL, PLAT NO. 1”, WHICH MAP WAS FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON MARCH 1, 1892 IN BOOK “B” OF MAPS, AT PAGE 6, AND A COPY ENTERED IN BOOK 2 OF MAPS, AT PAGE 52. 28 Exhibit B AFFORDABLE HOUSING AGREEMENT [to be provided upon execution] 29 Exhibit C DEVELOPMENT AGREEMENT [to be provided upon execution] 30 Exhibit D COMPLETION GUARANTY [to be provided upon execution] 31 Exhibit E FORM OF MEMORANDUM OF AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: APN: Space above this line for recorder’s use MEMORANDUM OF PURCHASE AGREEMENT THIS MEMORANDUM OF PURCHASE AGREEMENT (this “Memorandum”) is made effective as of the ____ day of _______, _____, by and between_______, a California____________ (“Seller”), and _____________________ (“Buyer”), with reference to the following facts: A. Seller and Buyer have entered into that certain Purchase and Sale Agreement and Joint Escrow Instructions, dated _________, 2017 (the “Agreement”), providing for, among other things, the sale by Seller to Buyer of the real property more particularly described on Exhibit “A” (the “Property”). B. Seller and Buyer now desire to set forth a memorandum of public record of such Agreement. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, it is hereby agreed as follows: 1. Purchase. Seller has agreed to sell to Buyer, and Buyer has agreed to purchase from Seller, the Property upon the terms and subject to the conditions contained in the Agreement, all of which terms and conditions are hereby incorporated herein by this reference as though fully set forth herein. 2. Termination. If not acquired by Buyer pursuant to the Purchase Agreement, this Memorandum shall terminate as of the date the Agreement terminates in accordance with its terms and in no event later than ______________. 3. Purpose. This Memorandum is prepared solely for the purpose of recordation, and it in no way modifies the provisions of the Agreement. 4. No Change in Ownership. The recording of this document does not constitute a change in ownership. The recording is for the sole purpose of placing third parties on notice that the Seller has entered into a contract to sell the subject property and that the sale is 32 pending until such time as a Grant Deed is recorded or a Quitclaim Deed releasing the Memorandum is recorded. IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the date first written above. Seller: By: _________________________________ Name: _______________________________ Its: _________________________________ Date: _____________________________ Buyer By: _________________________________ Name: _______________________________ Its: _________________________________ Date: _____________________________