HomeMy WebLinkAbout07 FIRST AMENDMENT TO DISPOSITION & DEVELOPMENT AGREEMENT WITH 1C TUSTIN LEGACY, LLC (aka REGENCY) Agenda Item 7
AGENDA REPORT Reviewed: 131�(
City Manager
Finance Director N/A
MEETING DATE: JULY 5, 2016
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: CITY MANAGER'S OFFICE
SUBJECT: FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT
AGREEMENT WITH 1C TUSTIN LEGACY, LLC (aka REGENCY)
SUMMARY
First Amendment to the Disposition and Development Agreement (DDA) with 1 C Tustin
Legacy, LLC (aka Regency). The DDA for Parcel 1 C was approved by the City Council
on October 20, 2015. This amendment will change the parties to whom the healthcare
portion of the site is transferred. No changes are proposed for type of development, as
previously approved, for either the retail portion of the site or the healthcare portion of the
site.
RECOMMENDATION
Authorize the City Manager to execute the First Amendment to the Disposition and
Development Agreement with 1C Tustin Legacy, LLC subject to any non-substantive
modifications as may be deemed necessary and/or recommended by the City's special
real estate counsel or the City Attorney.
FISCAL IMPACT
This recommended Amendment to the DDA has no financial or fiscal impacts upon the
existing DDA. The negotiated terms and conditions in the existing DDA remain unchanged.
BACKGROUND/DISCUSSION
This Amendment will change the parties to whom the healthcare portion of the site is
transferred. In February 2016, Regency informed the City that it will not transfer the
healthcare parcel to SN Properties as intended in the DDA. Under this Amendment,
Regency will retain its option to purchase the healthcare parcel for the purpose of
transferring: 1) a portion of the site to Hoag Memorial Hospital Presbyterian for the
development of a 60,000 square foot medical office building; and, 2) a portion of the site
to 2C Tustin Legacy, LLC, an affiliate of Regency, for the development of the two support
retail buildings comprising not less than 15,000 square feet. It is also the intent to transfer
a portion of the site to Health South for the development of an acute care facility, this will
be transferred through the Regency affiliate (2C Tustin Legacy, LLC) stated above.
Agenda Report
July 5, 2016
Page 2
Hoag and Health South, under the DDA, are approved Healthcare Developers, with this
Amendment the Regency affiliate would be approved as a Healthcare Developer. It is
currently contemplated by Regency that the healthcare parcel will close escrow
concurrent with the retail parcel and the other healthcare developers, that is, Hoag and
Health South.
The developer of the retail center remains 1 C Tustin Legacy LLC (aka Regency Centers)
as stated in the DDA. The approved uses for the healthcare parcel remain as stated in
the DDA, that is, a healthcare complex comprised of a medical office building, support
retail uses, and an acute care facility.
Conveyance of the property is based on the developer meeting certain closing conditions
in the DDA which requires that the minimum project be permit ready. For the
neighborhood shopping center to meet this condition, construction drawings for the grocer
and the drugstore must be complete and ready for approval. For the healthcare site, the
medical office building and the support retail buildings must meet the same standard for
approval as the neighborhood center. Because the Regency affiliate (2C Tustin Legacy)
is taking the place of SN Properties late in the process, construction drawings for the
support retail buildings may not be permit ready which would delay conveyance and
commencement of construction of the medical office building. To allow for timely
conveyance, Regency has agreed in this Amendment to guarantee the construction and
completion of the retail support buildings in order to receive a Certificate of Completion.
Joh A. Buchanan
ctor of Economic Development
Attachment: First Amendment to the DDA
FIRST AMENDMENT TO TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT FOR DISPOSITION PARCEL 1C
This FIRST AMENDMENT TO TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT FOR DISPOSITION PARCEL 1C (this "First
Amendment") is entered into as of June 21, 2016.(the "First Amendment Effective Date") by
and between the CITY OF TUSTIN(as more fully defined in the Original DDA(defined below),
the "City") and IC TUSTIN LEGACY, LLC, a Delaware limited liability company (as more
fully defined in the Original DDA, "Developer"). The City and Developer are sometimes
referred to herein individually as a"Party" and collectively as the"Parties".
RECITALS
A. The City and Developer entered into that certain Tustin Legacy Disposition and
Development Agreement for Disposition Parcel 1 C dated as of October 20, 2015 (the "Original
DDA")pursuant to which, among other things, the City agreed to sell, and the Developer agreed
to purchase, the Property (as defined in the Original DDA). Initially capitalized terms not
defined herein shall have the respective meanings assigned to such terms in the Original DDA.
The Original DDA as amended by this First Amendment is referred to herein as the
"Agreement".
B. Developer has informed the City that it shall not Transfer the Healthcare Parcel to
SN. Instead, following the acquisition of the Healthcare Parcel by Developer, Developer intends
to Transfer the Medical Office Parcel to Hoag, as the Healthcare Developer of the Medical
Office Parcel (the"Medical Office Healthcare Developer" or"MOHCD"), and to Transfer the
remaining portions of the Healthcare Property, consisting of Parcels 10, 11 and 13 (as shown on
the Site Map attached as Attachment 3 to the Original DDA) to an Affiliate of Developer, 2C
Tustin Legacy, LLC, a Delaware limited liability company, as a second Healthcare Developer
(the "Regency Healthcare Developer" or "RHCD"), with the result that there shall be two
Healthcare Developers under the Agreement. Thereafter, RHCD intends, but is not required to,
convey Parcel 10, the "Rehabilitation Building Parcel' to HealthSouth (as defined below),
which will be an End User (and not a Healthcare Developer), or to another End User approved
by the City in accordance with this Agreement.
C. In connection with (i) such Transfers, (ii)the request by Developer that City
approve Hoag and RHCD as Healthcare Developers and approve HealthSouth as an End User,
and (iii)the removal of SN as Healthcare Developer, the City and Developer desire to amend the
Original DDA to modify the rights and obligations of the Parties and to correct certain other
provisions of the Agreement as further set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing Recitals, which are hereby
incorporated in the operative provisions of this First Amendment by this reference, and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Parties further agree as follows:
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1. Modification to Section 1.1.7 of the Original DDA. Section 1.1.7 of the Original DDA
is hereby deleted in its entirety and replaced with the following:
"In accordance with the RFP response of Developer, Developer intends to
acquire and develop the Retail Property(as defined below) and to identify and
transfer the Healthcare Property (as defined below) to two entities, each of
which shall act as a Healthcare Developer as to that portion of the Healthcare
Property to be acquired by such entity, for development of medical and
healthcare uses as further described below. Specifically, Developer intends to
convey fee simple title in(a) Parcel 12 of the Healthcare Property as shown on
the Site Plan attached hereto as Attachment 3 ("Medical Office Parcel'),
upon which construction of a medical office building consisting of
approximately 60,000 GBA ("Medical Office Building") is proposed, to
Hoag Memorial Hospital Presbyterian, a California nonprofit public benefit
corporation (specifically excluding any successor or assign thereof, "Hoag"),
pursuant to that certain Agreement of Purchase and Sale and Joint Escrow
Instructions dated as of June , 2016, by and between Developer and Hoag
("Hoag PSA"); and (b) the remaining portions of the Healthcare Property,
consisting of Parcels 10, 11 and 13 as shown on the Site Plan attached hereto
as Attachment 3 ("Other Healthcare Parcels") to ""an Affiliate of
Developer, 2C Tustin Legacy, LLC, a Delaware limited liability company
("RHCD"),pursuant to that certain Agreement of Purchase and Sale and Joint
Escrow Instructions dated as of June_, 2016, by and between Developer
and RHCD ("RHCD PSA"). Developer has submitted to the City the
information required by Section 2.2.3(b) of this Agreement with respect to
each of Hoag and RHCD, and each of Hoag and RHCD have been approved
by the City as an Approved Healthcare Developer. Prior to a Transfer by
Developer to any Healthcare Developer approved by the City in its sole
discretion in accordance with this Agreement, Developer shall be responsible
for and shall undertake all responsibilities of Healthcare Developer under this
Agreement."
2. Modification to Section 1.2 of the Original DDA. The last sentence of Section 1.2 of
the Original DDA is hereby deleted in its entirety and replaced with the following:
"As further set forth in Sections 7.1.1(a) and 7.22(1), in no event shall the
Healthcare Property Close of Escrow occur prior to the Retail Property Close
of Escrow. The Parties currently contemplate that the Healthcare Property
Close of Escrow will occur concurrently with the Retail Property Close of
Escrow. However, a condition subsequent to the Healthcare Property Close of
Escrow is the immediately subsequent sale by Developer to Hoag and RHCD
of their respective components of the Healthcare Property, and in the event
that such condition subsequent cannot be met as of the date of the Retail
Property Close of Escrow, then Developer shall continue to have the right to
exercise the Option and to thereby extend the date of the Healthcare Property
Close of Escrow."
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3. Modification to Section 1.4.4 of the Original DDA. Section 1.4.4 of the Original DDA
is hereby deleted in its entirety and replaced with the following:
"1.4.4 Healthcare Developer.
(a) Developer shall, as a condition subsequent to the
Healthcare Property Close of Escrow, and concurrently with its conveyance of
the applicable Healthcare Parcels, assign its rights and obligations under this
Agreement and the Other Agreements with respect to development of the
Healthcare Vertical Improvements on the Healthcare Parcel as follows:
(i)with respect to the Medical Office Parcel, to Hoag, and (ii)with respect to
the Other Healthcare Parcels, to RHCD. Each of Hoag and RHCD has been
approved by the City as an Approved Healthcare Developer with respect to
the Transfer of those portions of the Healthcare Property to be acquired by it,
respectively. Wherever the term Healthcare Developer is used in this
Agreement, the term shall be deemed to include both the Healthcare
Developer with respect to the Medical Office Parcel and the Healthcare
Developer with respect to the Other Healthcare Parcels, each as to its
applicable portion of the Healthcare Parcel.
(b) Notwithstanding that RHCD is an Affiliate of REG and
Developer, Developer hereby waives its right to Transfer the Other Healthcare
Parcels to RHCD pursuant to Section 2.2.2, and the City and Developer agree
to apply the requirements of Section 2.2.3(b) with respect to the Transfer by
Developer to RHCD of the Other Healthcare Parcels and the rights and
obligations as Healthcare Developer with respect thereto. Accordingly, the
Transfer from Developer and RHCD (i) shall be treated as a non-Affiliate
Transfer pursuant to Section 2.2.3(b) of the Agreement, (ii) and the Transfer
and each of Healthcare Developer and RHCD shall be subject to all conditions
of the Agreement and the Other Agreements that would be applicable to a
Transfer by Developer to a Healthcare Developer that is not an Affiliate of
Developer, including without limitation, the provisions of Section 14.2.6, and
(iii) shall not be subject to the provisions of Sections 2.2.1(d)(oor 2.2.2(a);
provided, however, that the provisions of Section 2.2.1(d)(ii) shall remain in
full force and effect.
(c) Each assignment shall be carried out in accordance with the
requirements of this Agreement, including by execution by Developer and
each Healthcare Developer of an agreement in substantially the form and
substance of the Healthcare Assignment and Assumption Agreement attached
hereto as Attachment 16B or as otherwise approved by the City in its sole
discretion ("HCD Assignment'), pursuant to which each Healthcare
Developer shall assume and agree to comply with the terms of this Agreement
with respect to and perform all obligations of"Healthcare Developer" under
this Agreement with respect to the portion of the Healthcare Property to be
acquired by it, including, unless otherwise agreed by Developer and such
Healthcare Developer and approved by the City, all obligations of
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"Developer" with respect to the portions of the Healthcare Property acquired
by it, construction of the Healthcare Vertical Improvements thereon, and use
and maintenance of the Healthcare Project and the Improvements located
thereon and all matters related thereto. Without limiting any of its approval
rights under this Agreement, the City agrees to cooperate with Developer by
executing a consent to assignment in form attached to the HCD Assignment in
connection with execution by Developer and an Approved Healthcare
Developer of an HCD Assignment.
(d) Prior to the First Amendment Effective Date, the City has
approved HealthSouth Corporation, a Delaware corporation("HealthSouth"),
as an approved Pad Transferee pursuant to Sections 2.2.3(c)(i) and (iD of this
Agreement. As a condition to Transfer of Parcel 10 to HealthSouth, RHCD
and HealthSouth shall comply with the requirements of Sections 2.2.3(c)(iii)
throughviii . '
4. Modification to Section 1.8.3 of the Original DDA. The penultimate sentence of
Section 1.8.3 of the Original DDA is hereby deleted in its entirety and replaced with the
following:
"Within thirty (30) calendar days following the earlier of(x) the conveyance
of Parcel 10 to HealthSouth, or to another End User approved by the City
pursuant to Section 2.2.3(c), by RHCD or(y) the Healthcare Property Outside
Closing Date, the remaining amount of the City Costs Deposit then held by
the City, if any, shall be promptly returned by the City to Developer,provided
that the return of such funds shall not terminate the obligations of each of
Developer and Healthcare Developer to pay all City Transaction Expenses
arising or incurred prior to issuance of the Certificate of Compliance for its
respective portion of the Project."
5. Modification to Section 2.2.2(a)(iii) of the Original DDA. Section 2.2.2(a (iii) of the
Original DDA is hereby deleted in its entirety and replaced with the following:
(iii) if previously executed and delivered to the City, the Retail
Equity Funding Letter, the REG Guaranty, the HCD Equity Funding Letter
and/or the HCD Guaranty shall remain in full force and effect following such
Transfer without any defaults thereunder and without any modifications
thereto other than modifications that have been consented to by the City in its
sole discretion; provided that, notwithstanding any other provision of this
Agreement to the contrary, in the event of and as a condition precedent to any.
Transfer by (1) Hoag to a Developer Affiliate or (2) any Hoag Developer
Affiliate to another Hoag Developer Affiliate, Hoag shall deliver to the City
an HCD Guaranty in the form attached to this Agreement as Attachment 14B
unless the City determines, in its sole discretion, to accept in lieu thereof a
reaffirmation of the obligations of Hoag under the Agreement (including
Sections 2.2.2(a)(i))notwithstanding such Transfer.
Tustin_Regency_-_First_Amend=nt_to_DDA(FINAL)(2) 4 City of Tustin/Regency Centers First Amendment to DDA
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6. Modification to Section 2.2.3 of the Orisinal DDA.
6.1 Section 2.2.3(b)(iv). Section 2.2.3(b)(iv) of the Original DDA is hereby deleted
in its entirety and replaced with the following:
"(iv) The Parties agree that Healthcare Property Transferor shall assign
and each Healthcare Developer shall assume all rights and obligations of Developer
related to the portion of the Healthcare Project being acquired by such Healthcare
Developer, including the development of Healthcare Vertical Improvements to be
constructed on the portion of the Healthcare Parcel being acquired by it, and those
additional corresponding rights and obligations under this Agreement and the Other
Agreements, including the following.
(A) Each Healthcare Developer, by HCD Assignment
acknowledged and Recorded, shall assume from and after the date of such Transfer the
rights and obligations of the Developer under this Agreement and the Other Agreements
with respect to those portions of the Healthcare Project and the Healthcare Property
acquired by such Healthcare Developer, and the Improvements thereon, including: (i)the
obligations to construct and Complete the Healthcare Horizontal Improvements and the
Minimum Healthcare Vertical Improvements on the portion of the Healthcare Parcel
acquired by it, and (ii) the obligations retained by the Healthcare Property Transferor
with respect to the construction and Completion of the Minimum Horizontal
Improvements on the Healthcare Parcel and the construction and Completion of the work
described in the Slope Parcel Easement and Landscape Installation and Maintenance
Agreement, for which work the Healthcare Developers shall be obligated to carry out
only to the extent Developer fails to perform such obligations in a timely manner
accordance with the Schedule of Performance, and with respect to the foregoing, shall be
subject to all of the other terms and conditions of this Agreement, as further provided in
the relevant HCD Assignment;
(B) Each Healthcare Developer shall have agreed in
writing for the benefit of the Healthcare Property Transferor and the City that such
Healthcare Developer's development of the Healthcare Property acquired by it and the
construction of the Minimum Horizontal Improvements by it, if required by the preceding
clause (A), shall be in full compliance with the then-existing Entitlements and the
Approved Plans;
(C) as a condition precedent to the Healthcare Property
Close of Escrow and to each subsequent Transfer to a Healthcare Developer, the
Controlling Person of the each Approved Healthcare Developer or, if such Controlling
Person is not approved by the City as the Healthcare Guarantor, another Person approved
by the City in its sole discretion as the Healthcare Guarantor in accordance with
Section 4.6, shall deliver to the City an HCD Guaranty, it being anticipated that REG
shall provide the HCD Guaranty with respect to the Other Healthcare Parcels. The City
hereby agrees that solely to the extent that Hoag(as opposed to a Hoag Affiliate or other
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Approved Healthcare Developer) is the approved Medical Office Healthcare Developer
(and subject to the provisions of Section 2.2.2(a)(iii)), that no HCD Guaranty shall be
required with respect to the Medical Office Parcel. However, notwithstanding any other
provision of this Agreement to the contrary, in the event that Hoag shall make any
Transfer, whether to a Developer Affiliate or to any other Person, as a condition to such
Transfer Hoag shall, or shall cause another Person meeting the requirements of
Section 4.6.4(e) and 4.6.5, as Healthcare Guarantor, to provide a Healthcare Guaranty in
the form of Attachment 14B as a condition such Transfer unless, with respect to a
Transfer to a Developer Affiliate, Hoag is excused from the obligation to provide an
HCD Guaranty pursuant to the terms of Section 2.2.2(a (iii). Any Transfer made by
Hoag in contravention of the foregoing provisions shall be void and of no force and effect
and shall be a default under the Agreement.
(D) for avoidance of doubt, unless otherwise agreed by
the City in its sole discretion, upon the execution and delivery of each HCD Assignment,
the Healthcare Developer that executed such HCD Assignment shall be deemed to have
assumed and shall be obligated to comply with and perform: (1) all obligations of
Healthcare Developer under this Agreement and the Other Agreements with respect to
the portions of the Healthcare Property and Healthcare Project acquired by such
Healthcare Developer and the Improvements existing or to be constructed thereon, (2) all
obligations of Developer under this Agreement and the Other Agreements with respect to
the Healthcare Property, the Healthcare Project, and the Improvements thereon, including
all requirements of each of the provisions of this Agreement and the Other Agreements
that are expressly imposed only upon Developer, but apply with respect to the Healthcare
Property, the Healthcare Project and/or the Improvements thereon, but only with respect
to the portions of the Healthcare Property and the Healthcare Project acquired by such
Healthcare Developer and the Improvements existing or to be constructed thereon."
6.2 Section 2.2.3(c)(vii). Section 2.2.3(c)(vii) of the Original DDA is hereby deleted
in its entirety and replaced with the following:
"(vii) If the Pad Transferee is proposed to hold: (A) a leasehold interest
in the Building Pad, Developer shall use its reasonable efforts to cause the Ground Lease
to include a right of Developer or Healthcare Developer, as applicable, either (1) to
terminate the applicable Ground Lease or(2) to buy out such leasehold interest (provided
that such lease may include one or both of the foregoing remedies, in Developer's or
Healthcare Developer's discretion) or(B) the fee interest in such Building Pad, Developer
or Healthcare Developer, as applicable, shall, as a condition to Transfer of the Building
Pad, use its reasonable efforts to have (1) a written option or(2) other legally enforceable
right to purchase such fee interest; but if the foregoing cannot be obtained, in all events
shall obtain a recorded right of first offer executed by Developer or Healthcare
Developer, as applicable, and the Pad Transferee ("ROFO") meeting the requirements of
Section 8.13."
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7. Modification to Section 3.1.15 of the Original DDA. Section 3.1.15 of the Original
DDA is hereby deleted in its entirety and replaced with the following:
"3.1.15
(a) Prior to the First Amendment Effective Date, Developer
and Hoag, as the Medical Office Healthcare Developer, have executed and
delivered the Hoag PSA, a copy of which has been delivered by Developer to
the City. The Hoag PSA: (i) is in full force and effect and has not been
amended or modified, (ii) will not be further modified, amended or terminated
by Developer without the prior consent of City, and (iii) provides for a
termination of the Hoag PSA in the event that the City, prior to the Healthcare
Property Close of Escrow, determines that Hoag does not meet the other
requirements or conditions of this Agreement, including the financial
standards required by the City. Upon satisfaction of the conditions precedent
set forth in Section 7.2.1 and without any other requirement or condition
except pursuant to the terms of the Hoag PSA or any other HCD Agreement
entered into by Hoag and Developer, Developer is, and as of the Healthcare
Property Close of Escrow shall be, obligated to sell to Hoag, and Hoag has
agreed to acquire, all right, title and interest of Developer under this
Agreement with respect to the Medical Office Parcel and the development
thereof, and as of the Healthcare Property Close of Escrow shall be obligated
to assume and comply with the obligations of Healthcare Developer and other
obligations of Developer under this Agreement (including execution of the
HCD Assignment and the HCD Agreements, if any, required to comply with
the terms of this Agreement) required to be satisfied with respect to the
Healthcare Developer and/or the Healthcare Property, whether prior to or
following the Healthcare Property Close of Escrow. Developer acknowledges
that, notwithstanding the execution by Hoag and Developer of the Hoag PSA,
and that City has approved Hoag as the Medical Office Healthcare Developer,
the City has the right, in its sole discretion, to approve and/or disapprove any
amendments to the Hoag PSA and any future HCD Agreements with Hoag, as
further set forth in Section 2.2.3(b) and/or Section 4.6. For the avoidance of
doubt and notwithstanding anything to the contrary contained in this
Agreement, the City hereby agrees that an HCD Guaranty shall not be
required in connection with the Transfer and development of the Medical
Office Parcel so long as Hoag Memorial Hospital Presbyterian, a California
nonprofit public benefit company, is the approved Medical Office Healthcare
Developer.
(b) Prior to the First Amendment Effective Date, Developer
and RHCD have executed and delivered the RHCD PSA, a copy of which has
been delivered by Developer to the City. The RHCD PSA: (i) is in full force
and effect and has not been amended or modified, (ii) will not be further
modified, amended or terminated by Developer without the prior consent of
City in its sole discretion, and (iii) provides for a termination of the RHCD
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PSA in the event that the City, prior to the Healthcare Property Close of
Escrow, determines that either RHCD or RHCD's Healthcare Guarantor does
not meet the other requirements or conditions of this Agreement, including the
financial standards and guarantees required by the City. Upon satisfaction of
the conditions precedent set forth in Section 7.2.1 and without any other
requirement or condition except pursuant to the terms of the RHCD PSA or
any other HCD Agreement entered into by Hoag and Developer, Developer is,
and as of the Healthcare Property Close of Escrow shall be, obligated to sell to
RHCD, and RHCD has agreed to acquire, all right, title and interest of
Developer under this Agreement with respect to the Other Healthcare Parcels
and the development thereof, and as of the Healthcare Property Close of
Escrow shall be obligated to assume and comply with the obligations of
Healthcare Developer and other obligations of Developer under this .
Agreement (including execution of the HCD Assignment, the HCD Guaranty
and the HCD Agreements, if any, required to comply with the terms of this
Agreement) required to be satisfied with respect to the Healthcare Developer
and/or the Healthcare Property, whether prior to or following the Healthcare
Property Close of Escrow. Developer acknowledges that, notwithstanding the
execution by RHCD and Developer of the RHCD PSA, and that City has
approved RHCD as a Healthcare Developer, the City has the right, in its sole
discretion, to approve and/or disapprove any amendment to the RHCD PSA
and any future HCD Agreements with RHCD, as further set forth in
Section 2.2.3(b)and/or Section 4.6."
8. Modification to Section 4.6 of the Original DDA.
8.1 Each reference in Section 4.6.4(a), (b) and (dl to "Healthcare Developer" is
hereby modified to state "each Healthcare Developer", the term "the Healthcare Project" shall
mean and refer to that portion of the Healthcare Project acquired by such Healthcare
Developer, the term "Healthcare Financing Plan" is hereby modified to state "each Healthcare
Financing Plan", and the terms "Healthcare Guarantor" and "Healthcare Controlling Person"
shall be deemed to refer to the entity having such capacity on the part of each Healthcare
Developer individually; provided, however, that in no event shall the Healthcare Developer on
the Medical Office Parcel be permitted to obtain a Construction Loan nor shall the City
approve any Mortgage affecting the Medical Office Parcel as a Permitted Mortgage. Further,
(1) each Healthcare Developer shall be obligated independently to satisfy the requirements in
Section 4.6.4(a) and N to provide an HCD Equity Funding Letter meeting the requirements of
the respective Section and (2) the obligations related to the Healthcare Controlling Person and
the Healthcare Guarantor (as applicable) approved by the City in Section 4.6.4(b) shall be
applicable with respect to each Healthcare Developer as to its Healthcare Controlling Person
and Healthcare Guarantor(as applicable). Further, in the first sentence of Section 4.6.4(a), the
phrase "prior to the Effective Date" is hereby replaced with the phrase "on or before the First
Amendment Effective Date".
8.2 Section 4.6.4(c) of the Original DDA is hereby deleted in its entirety and replaced
with the following:
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"(c) With respect to the Other Healthcare Parcels only (and
specifically excluding the Medical Office Parcel), the City will accept: (i) (A)
for Parcels 11 and 13, collectively, one(1)Construction Loan provided by a
Permitted Mortgagee procured by a Healthcare Developer and (B) for
Parcel 10, one (1) Construction Loan provided by a Permitted Mortgagee
procured by a Healthcare Developer or an End User and which, in each case,
is on terms not materially different than the financing terms set forth on the
Healthcare Financing Plan; (ii) as a Permitted Mortgagee any lender that is a
Qualified Institutional Lender, or any lender that is not a Qualified
Institutional Lender so long as such lender is specifically identified in the
Healthcare Financing Plan approved by the City prior to the Healthcare
Property Close of Escrow or as otherwise agreed by the City in its sole
discretion."
8.3 Sections 4.6.4(e) and fD of the Original DDA are hereby deleted in their entirety
and replaced with the following:
"(e) Developer shall incorporate into the HCD Agreements and
the purchase and sale agreement to be entered into between RHCD and
HealthSouth("HealthSouth PSA")(or any other purchase and sale agreement
with an End User for the Rehabilitation Building Parcel) the automatic
termination of such agreements in the event that the City, prior to the
Healthcare Property Close of Escrow, shall determine that it does not approve
any of the Healthcare Developer or the Healthcare Guarantor(s), or such
Healthcare Developer or Healthcare Guarantor(s) do not meet the other
requirements or. conditions of this Agreement, including the financial
standards and guarantees required by the City. The effectiveness of any such
HCD Agreements and the HealthSouth PSA (or any other End User purchase
and sale agreement for the Rehabilitation Building Parcel) shall be
conditioned on (i) the approval by the City of the Healthcare Developer and
the Healthcare Guarantor(s), and(ii)the satisfaction of the conditions set forth
in Section 2.2.4, and this Section 4.6.4. For avoidance of doubt, as further set
forth in Section 18.21, no Person identified as a Healthcare Developer,
Approved Healthcare Developer, Pad Transferee, Approved Pad Transferee,
End User or Approved End User shall obtain rights under this Agreement
unless and until it acquires fee title to or a ground lease interest in a portion of
the Healthcare Property and no such Person shall in any event be a third-party
beneficiary of this Agreement.
(f) Developer shall indemnify, protect, defend, assume all
responsibility for and hold harmless the City and the City Indemnified Parties
with counsel reasonably acceptable to the City, from and against any and all
Claims arising from or relating to the negotiations between Developer and any
proposed or approved Healthcare Developer, the HCD Agreements, the HCD
Assignment or any other agreement between a proposed or approved
Healthcare Developer and/or Pad Transferee and Developer, including the
negotiations and agreements between RHCD, Hoag, and/or HealthSouth, and
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RHCD shall indemnify, protect, defend, assume all responsibility for and hold
harmless the City and the City Indemnified Parties with counsel reasonably
acceptable to the City, from and against any and all Claims arising from or
relating to the negotiations between RHCD and any proposed or approved
future Healthcare Developer and/or Pad Transferee, including the negotiations
and agreements between RHCD and HealthSouth."
9. Modification to Section 4.6.5(a) of the Original DDA. Section 4.6.5(a) of the Original
DDA is hereby deleted in its entirety and replaced with the following:
4.6.5 HCD Guaranty.
(a) As a condition precedent to the Healthcare Property Close
of Escrow, Developer shall cause (a) with respect to the Other Healthcare
Parcels, the Controlling Person or other guarantors of RHCD (or of such other
Approved Healthcare Developer as may acquire the Other Healthcare Parcels)
acceptable to the City in its sole discretion, and(b)with respect to the Medical
Office Parcel, solely to the extent that the Medical Office Parcel is acquired
by an Approved Healthcare Developer other than Hoag (including, without
limitation, any Affiliate of Hoag), the Controlling Person or other guarantors
of such other Approved Healthcare Developer as may acquire the Medical
Office Parcel (including, without limitation, any Affiliate of Hoag) acceptable
to the City in its sole discretion (each, a "Healthcare Guarantor" and
collectively the "Healthcare Guarantors"),to each provide to Developer and
the City:
(i) a fully executed and effective HCD Guaranty, such that
there shall be one guaranty with respect to the Medical Office Parcel and the
obligations of the Healthcare Developer that is the owner thereof(but only to
the extent that an Approved Healthcare Developer other than Hoag, including,
without limitation, any Affiliate of Hoag, acquires fee title to the Medical
Office Parcel), and one guaranty with respect to the Other Healthcare Parcels
and the obligations of the Healthcare Developer that is the owner thereof in
substantially the form and substance of the guaranty set forth in
Attachment 14B or as otherwise acceptable to the City in its sole discretion
(provided that if REG is the Healthcare Guarantor with respect to the Other
Healthcare Parcels, such HCD Guaranty may, but is not required to, be
combined with the Guaranty provided by REG for the Retail Property), which
HCD Guaranties shall remain in effect until the Recording of the Certificate of
Compliance for the Healthcare Project and shall guarantee, among other
things:
(A) with respect to the Medical Office Parcel, upon the
Healthcare Property Close of Escrow and the execution of the HCD
Assignment with respect thereto, payment of all Development Costs and the
Completion of the Medical Office Building and such other Minimum
Healthcare Improvements that are to be constructed, or caused to be
Tustin_Regency_-First_Amendment to DDA(FINAL)(2) 10 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
constructed, by the Medical Office Healthcare Developer on the Medical
Office Parcel including the Horizontal Improvements to be constructed on the
Medical Office Parcel, and Development Costs to remove any such
improvements, including the Improvements, which are not completed and/or
are abandoned;
(B) with respect to the Other Healthcare Parcels, upon
the Healthcare Property Close of Escrow, payment of all Development Costs
and the Completion of the Minimum Healthcare Improvements (including the
Horizontal Improvements) that are to be constructed, or caused to be
constructed, by Healthcare Developer on the Other Healthcare Parcels, but
excluding any Buildings to be constructed by Pad Transferees, and
Development Costs to remove any such improvements, including the
Improvements, which are not completed and/or are abandoned;
(C) the indemnities and other obligations of Healthcare
Developer pursuant to Sections 5.5, 8_8, 8_9, 8.11, 8.12, 10.1, 10.2 and 1°.12.1
of this Agreement, and
(D) the costs and expenses incurred by the City, if any,
in enforcement by the City of its rights and/or remedies with respect to non-
performance by each Healthcare Developer of its obligations under this
Agreement and the Other Agreements, including the exercise by the City of
the Right of Repurchase or Right of Reversion with respect to the Healthcare
Parcel or any portion thereof, but excluding the Repurchase Price applicable
to any Reacquired Property actually acquired by the City pursuant to the Right
of Repurchase;provided that the City shall be entitled to retain the Reacquired
Property so acquired in its entirety, notwithstanding any contribution or
payment made by Developer, Healthcare Developer, REG or HCD Guarantor
pursuant to the HCD Guaranty; and
(E) Attorneys' fees and costs incurred by the City in
connection.with the enforcement of each HCD Guaranty; and
For the avoidance of doubt, the City hereby agrees that provided that Hoag is
the Person acquiring the Medical Office Parcel, then solely during the time
period in which Hoag is and remains the Approved Healthcare Developer to
which Developer is Transferring fee title to the Medical Office Parcel or
remains the fee owner of the Medical Office Parcel, any and all deliveries,
conditions to the Healthcare Property Close of Escrow, for the Medical Office
Parcel and other requirements under this Agreement related to the HCD
Guaranty for the Medical Office Parcel or Healthcare Guarantor of the
Medical Office Parcel shall be inapplicable to Hoag's acquisition and
development of the Medical Office Parcel. Delivery of an HCD Guaranty
shall be required as a condition to any Transfer by Hoag of its interest in all or
any portion of the Healthcare Project, including without limitation any
Tustin_Regency_-_First_Amendiment_to_DDA(FINAL)(2) 11 City of Tustin{Regency Centers First Amendment to DDA
June 29,2016
Transfer to a Healthcare Developer Affiliate (unless Hoag is specifically
released from such obligation by the City pursuant to the terms of Section
2.2.2(a)(iii)) and failure of Hoag to deliver an HCD Guaranty at the time of
such Transfer if requested by the City shall be a Material Default of MOHCD
under the Agreement."
10. Modification to Section 7.1.1 of the Original DDA.
10.1 Section 7.1.1.(b). The first sentence of Section 7.1.1(b) of the Original DDA is
hereby revised by deleting the phrase "or the City has not approved SN or Hoag as Healthcare
Developer,".
10.2 Section 7.1.1(e). The following subsection(e) is added at the end of Section 7.1.1
of the Original DDA.
"(e) Notwithstanding any other provision of this Agreement, at the Healthcare
Property Close of Escrow, Developer shall be required to acquire the entirety of the
Healthcare Property, and shall not be entitled to acquire only a portion thereof and,
accordingly, Healthcare Developer's exercise of the Option shall be with respect to the
entirety of the Healthcare Property(i.e., Parcels 10, 11, 12 and 13 as depicted on the Site
Plan attached to the Agreement as Attachment 3), and Developer shall not have the right
to exercise the Option as to only a portion of the Healthcare Parcel."
11. Modification to Sections 7.2.1 and 7.2.2 of the Original DDA.
11.1 Sections 7.2.1(e) and 7.2.2(fl. In each of Section 7.2.1(e) and Section 7.2.2 of
the Original DDA, after the phrase "all building permits for the Minimum Healthcare
Improvements" the following parenthetical is inserted: "(but expressly excluding the 15,000
GBA of Medical Uses and/or Healthcare Retail Uses)".
11.2 Section 7.2.2(h). In Section 7.2.2(h) of the Original DDA, the words "SN PSA"
in the last sentence thereof shall be replaced with the words "Hoag PSA or RHCD PSA, as
applicable".
11.3 Section 7.2.2(i). Section 7.2.2(i) of the Original DDA is hereby deleted in its
entirety and replaced with the following:
" (i) Construction Loan Closing. In the event that either RHCD or HealthSouth
proposes to utilize a Construction Loan with respect to the Other Healthcare Parcels
meeting the requirements of Sections 2.2.4, 4.6.4 c and 17 of this Agreement, the
Permitted Mortgagee for such Construction Loan shall be prepared to close the
Construction Loan substantially concurrently with the Healthcare Property Close of
Escrow, and Developer shall have provided to the City written verification from Escrow
confirming that the deed of trust to be recorded in conjunction with the closing of the
Construction Loan, if any, has been fully executed and acknowledged and in Recordable
form and deposited into Escrow by the Permitted Mortgagee for the Construction Loan,
Tustin_Regency_-_First_Amendment_to DDA(FINAL)(2) 12 City of Tustin/Regency Centers First Amendment to DDA
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substantially in the amount set forth in the Financing Plan approved by the City pursuant
to Section 4.6.4."
12. Modification to Section 8.1.5(b) of the Original DDA. Section 8.1.5(b) of the Original
DDA is hereby deleted in its entirety and replaced with the following:
"(b) Vertical Improvements. Following (i) the Retail Property Close of Escrow,
Developer shall construct or cause the construction of the Minimum Retail Vertical
Improvements and(ii) following the Healthcare Property Close of Escrow,the Healthcare
Developer acquiring the Medical Office Parcel shall construct or cause the construction
of the Medical Office Building of not less than 60,000 GBA and the Healthcare
Developer acquiring the Other Healthcare Parcels shall cause the remainder of the
Minimum Healthcare Vertical Improvements to be constructed thereon, in each case, in
accordance with the respective Schedule of Performance, the Scope of Development, the
Approved Plans or other plans and specifications prepared by Developer and approved by
the City, the Entitlements, the Development Permits and all other Governmental
Requirements."
13. Modification to Section 8.2.5 of the Original DDA. Section 8.2.5 of the Original DDA
is hereby deleted in its entirety and replaced with the following:
"8.2.5 Licenses.
(a) In the event that the Retail Property Close of Escrow and
the Healthcare Property Close of Escrow do not take place concurrently,
Developer shall enter into a license agreement in substantially the form and
substance of the License Agreement attached as Attachment 27 or as
otherwise approved by the City and Developer each in its sole discretion
pursuant to which the City shall grant to Developer a limited and revocable
license to enter upon the portions of the Development Parcels continued to be
owned by the City following the Retail Property Close of Escrow for the
purposes of carrying out the construction of the Minimum Horizontal
Improvements.
(b) In the event that the Retail Property Close of Escrow and
the Healthcare Property Close of Escrow take place concurrently, Developer
shall be required, as an additional condition to each Close of Escrow for the "
benefit of the City, to obtain a license from each of the Healthcare Developers
and, if a concurrent or immediately subsequent conveyance to HealthSouth is
anticipated, from HealthSouth, providing Developer with the irrevocable right
to enter upon the portions of the Development Parcels owned by such Persons
for the purposes of carrying out the construction of the Minimum Horizontal
Improvements and all other Horizontal Improvements on the Healthcare
Property which shall remain effective until Completion of such work. Such
licenses shall specifically state that they are fully assignable to the City, at the
request of City and at no cost to the City or Developer, in the event the City
exercises the Right of Repurchase or Right of Reversion as to any portion of
Tustin Regency_-_First_Amendment_to_DDA(FINAL)(2) 13 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
the Property. Prior -to the Completion of the Minimum Horizontal
Improvements and all other Horizontal Improvements on the Healthcare
Property, no such license shall be amended, modified, revoked or terminated
by Developer or any Healthcare Developer nor shall any action be taken by
any of the foregoing that would have the effect of amending, modifying,
revoking or terminating any such license, without the prior written consent of
the City in its sole discretion."
14. New Section 8.13. The following text is added to the Agreement as Section 8.13.
"8.13 Right of First Offer.
8.13.1 ROFO. Developer, on behalf of itself and its successors and
assigns owning all or any portion of the Other Healthcare Parcels, hereby covenants for the
benefit of the City that in the event that a Healthcare Developer is required to obtain a ROFO in
connection with its Transfer of a Building Pad to a Pad Transferee, the ROFO shall run with the
land for the benefit of the Healthcare Developer owning the Other Healthcare Parcels and shall,
at a minimum, contain the following provisions:
(a) The City shall be an express third party beneficiary to the ROFO and the
ROFO shall provide that if the right of first offer under the ROFO is exercised, the Person so
exercising the right may, without approval of the then-owner of the Property subject to the
ROFO, assign the ROFO to the City or nominate the City or an entity to be formed by the City as
the entity that shall acquire the affected Property;
(b) The ROFO shall include terms substantially in the form and substance as
those identified on Exhibit 1 attached to the First Amendment to DDA.
8.13.2 City Right to Step Into Developer Shoes. Until the earlier of(a)
the issuance of a Certificate of Compliance for the Healthcare Property or (b) such date as the
Pad Transferee that is a party to the ROFO is issued a building permit by the City, the City shall
have the right to require that the Developer or Healthcare Developer, as applicable, for whose
benefit the right of first offer under the ROFO is made ("ROFO Party"), exercise the right of
first offer under the ROFO,provided that if City requires such exercise (a) the City shall provide
written notice thereof to the ROFO Party and the owner of the affected Property not less than
five(5) calendar days prior to the termination of the period for exercise of the right of first offer,
(b) upon receipt of such notice from the City the ROFO Party shall promptly, and in all events
prior to the expiration of the time period for exercise thereof, at the election of the ROFO Party,
either(i) exercise the right of first offer on its own behalf, in which event the ROFO Party shall
be obligated, for the benefit of the City, to acquire the affected Property pursuant to the ROFO,
or (ii) exercise the right of first offer on behalf of the City, in which event the acquisition of the
affected portion of the Property shall be at City's sole cost and expense and the ROFO Party shall
within five (5) calendar days of its exercise of the right of first offer for the benefit of the City
assign the ROFO to the City.
8.13.3 Modification of ROFO. With respect to each such ROFO,
Healthcare Developer shall: (i) within one (1) Business Day after its delivery or receipt thereof,
Tustin_Regency_-_First_Amendment to—DDA(FINAL)(2) 14 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
as applicable,provide the City with a copy of any notice or statement sent or received by it under
or in connection with the ROFO and any HCD Agreement affecting the ROFO, (ii) take all steps
to comply with and maintain the ROFO, without default by it thereunder, and (iii) exercise and
enforce all rights granted to it by the ROFO, including without limitation by using commercially
reasonable efforts to cause the Pad Transferee to comply with and maintain the ROFO without
default thereunder. Not less than twenty (20) business days prior to execution thereof,
Healthcare Developer shall provide the City with copies of all proposed amendments, alterations,
supplements, modifications, terminations, and waivers to or affecting the ROFO or the right of
first offer contained therein ("ROFO Modifications"). Healthcare Developer and any Pad
Transferee shall not modify, amend, alter, supplement, terminate, or waive the ROFO or enter
into any agreement that would have the effect of modifying, amending, altering, supplementing,
terminating or waiving the ROFO or the right of first offer contained therein without the prior
written consent of the City, which consent may be granted or withheld in the City's sole
discretion. RHCD, on behalf of itself and each End User, acknowledges and agrees that no
ROFO Modification shall be effective with respect to or bind the City in any manner unless
RHCD and Pad Transferee shall, prior to the execution thereof, have obtained the consent of the
City thereto. The ROFO shall provide that RHCD may assign the ROFO to the City without
consent of Pad Transferee. The ROFO shall run with the land burdening the Rehabilitation
Building Parcel for the benefit of RHCD and Parcels 11 and 13. Notwithstanding the foregoing,
RHCD shall not assign the ROFO to any Person other than City except in connection with a
Transfer of all of RHCD's interests in and to Parcels 11 and 13."
15. Modification to Attachment 1 of the Original DDA.
15.1 New Terms. The following terms are added, in the appropriate alphabetical
order, to the existing list of definitions in Attachment 1 to the Original DDA:
15.1.1 "First Amendment Effective Date" shall mean the date set forth in
the preamble to the First Amendment to DDA.
15.1.2 "First Amendment to DDA" and "First Amendment" shall mean
that certain First Amendment to the Original DDA executed by Developer and City.
15.1.3 "HealthSouth" shall have the meaning set forth in Section 1.4.4(d).
15.1.4 "HealthSouth PSA" shall have the meaning set forth in
Section 4.6.4(e).
15.1.5 "Hoag PSA" shall have the meaning set forth in Section 1.1.7.
15.1.7 "MOHCD" or "Medical Office Healthcare Developer" shall have
the meaning set forth in Section 1.1.7.
15.1.8 "Other Healthcare Developer" shall mean any Person, including
RHCD, approved by the City as an Approved Healthcare Developer with respect to the
Other Healthcare Parcels.
15.1.9 "RHCD" shall have the meaning set forth in Section 1.1.7.
Tustin_Regency_-_First_Amendment_w_DDA(FINAL)(2) 15 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
15.1.10 "RHCD PSA" shall have the meaning set forth in Section 1.1.7.
15.1.11 "ROFO" shall have the meaning set forth in Section 2.2.3(c)(vii).
15.1.12 "ROFO Modifications" shall have the meaning set forth in
Section 8.13.3.
15.1.13 "ROFO Party" shall have the meaning set forth in Section 8.13.2.
15.2 Deleted Terms. The following terms and definitions are hereby deleted in their
entirety from Attachment 1 to the Original DDA: "SN"and"SN PSA".
15.3 Modified Terms. The definitions of the following terms are hereby deleted in
their entirety and replaced by the following:
15.3.1 "Developer" shall mean 1C Tustin Legacy, LLC, as of the Effective
Date of the Agreement, and each and every Successor Owner following any Transfer or
Transfer of Control pursuant to a Permitted Transfer or any other Transfer or Transfer of
Control approved by the City, as described in Section 2.2, including each and every
Healthcare Developer with respect to the Healthcare Parcel.
15.3.2 "Developer Affiliate" shall mean REG, or any Person that Controls, is
Controlled by or is under common Control with REG or 1 C Tustin Legacy LLC.
15.3.3 "HCD Agreements" shall mean one or more (i) purchase and sale
agreements between Developer and an Approved Healthcare Developer for all or any
portion of the Healthcare Property and which may also allocate rights and obligations
between Developer and Healthcare Developer under this Agreement with respect to
acquisition and development of the Healthcare Parcel, the Healthcare Project and the
Improvements located thereon, and (ii) if required by this Agreement, a ROFO, each in
form and substance approved by the City in its sole discretion, as the same may be
amended from time to time with the approval of the City in its sole discretion.
15.3.4 "HCD Assignment' shall have the meaning set forth in
Section 1.4.4(c).
15.3.5 "HCD Guaranty" shall mean one or more Guaranties, each in
substantially the form and substance of the guaranty attached as Attachment 14B or as
otherwise approved by the applicable Healthcare Developer, Developer and the City,
each in its sole discretion.
15.3.6 "Memorandum of DDA" shall mean a memorandum of record of this
Agreement to be Recorded against the Property substantially in the form and substance of
the memorandum attached to the Agreement as Attachment 12, as the same shall be
modified to reflect the execution of the First Amendment to DDA.
15.3.7 "Healthcare User" shall mean (a) with respect to Parcels 10 and 12,
any Person that operates a non-residential hospital, medical office, office, skilled nursing
Tustin Regency_-_First_Amendment—to—DDA(FINAL)(2) 16 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
or other healthcare related facility, and (b) with respect to Parcels 11 and 13, any Person
that operates non-residential hospital, medical office, office, skilled nursing or other
healthcare related facility or Healthcare Parcel Retail Uses.
15.3.8 "Project Architect" shall mean (a)with respect to the Retail Project,
Architects Orange and (b)with respect to the Medical Office Building, Boulder
Associates, or such other architect proposed by an Approved Healthcare Developer, who
shall have experience in designing healthcare facilities similar to those proposed for the
Healthcare Property, and approved by the City."
16. Approval of Healthcare Developers and Healthcare Guarantors.
16.1 Subject to Section 16.2 below,Developer has requested, and City hereby confirms
its approval of the following in accordance with Section 2.2.3(h)(ii)of the Agreement:
(a) Hoag is an Approved Healthcare Developer with respect to the Medical Office
Parcel and, solely to the extent that Hoag (expressly excluding any Affiliate of Hoag)
remains the Approved Healthcare Developer of the Medical Office Parcel, then no
Healthcare Guarantor is required under this Agreement as to the Medical Office Parcel,
and
(b) RHCD is an Approved Healthcare Developer with respect to the Other Healthcare
Parcels and REG is an Approved Guarantor with respect thereto.
16.2. As of the First Amendment Effective Date, the City has not received or approved
the HCD Agreements and/or HCD Assignments between either Developer and Hoag or between
Developer and RHCD and accordingly, the City reserves its right to review and approve, in its
sole discretion, the foregoing documents in accordance with Sections 2.2.3(bb)(ii)(A) and (E) of
the Agreement. The City Council hereby delegates review and approval of the foregoing
agreements to the City Manager or its designee. The Parties acknowledge and agree that City
approval of the Developer/Hoag HCD Agreements and HCD Assignment and of the
Developer/RHCD HCD Agreements and HCD Assignment pursuant to Sections 2.2.3(b)(ii)(A)
and (E) shall be a condition precedent to the Healthcare Property Close of Escrow of the benefit
of the City.
Tustin Regency__Fast_Amendmentto_DDA(FINAL)(2) 17 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
17. Miscellaneous.
17.1 Agreement Ratified. Except as specifically amended or modified herein, each
and every term, covenant, and condition of the Original DDA as amended is hereby ratified and
shall remain in full force and effect. Each and every reference to the"Agreement" in the Original
DDA shall be deemed to refer to the Original DDA as amended by this First Amendment.
17.2 Governing Law. This instrument shall be interpreted and construed in
accordance with the laws of the State of California.
17.3 Binding Agreement. This First Amendment shall be binding upon and inure to
the benefit of the Parties hereto and their respective heirs, representatives, successors and
permitted assigns.
17.4 Counterparts. This First Amendment 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 document.
18. Non-Disturbance A reement. The Original DDA is hereby amended by adding the
following as a new Section 2.2.3(c)(ix):
"2.2.3(c)(ix). In connection with the sale by Healthcare Developer of the Rehabilitation
Building Parcel to HealthSouth, and solely because development of the Rehabilitation
Building Parcel is restricted by its entitlements and parking requirements to specific
rehabilitation uses and does not comprise part of the Minimum Vertical Improvements on
the Healthcare Parcel, the City has agreed to enter into a Recognition, Non-Disturbance
and Attornment Agreement ("HealthSouth NDA") substantially in the form and
substance of the NDA attached to the First Amendment to DDA as Exhibit 2 or as
otherwise approved by the City in its sole discretion. Except as otherwise agreed to by
the City and Developer,the City shall deposit an NDA into the escrow for such sale upon
ten (10) days written request from Developer with instructions to such escrow holder to
deliver the NDA to the End User upon the close of such escrow or to return the same to
the City if such escrow does not close and such other instructions as a reasonably
required by the City. Nothing contained in this Section shall limit any of the City's rights
to approve a transfer of one of the Other Healthcare Parcels in accordance with this
Agreement."
{signatures on following page}
Tustin_Regency_-_First_Amendment_to DDA(FINAL)(2) 18 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
IN WITNESS WHEREOF, City and Developer have executed this First Amendment as of the
First Amendment Effective Date.
CITY OF TUSTIN:
Dated:
By:
Jeffrey C. Parker,
City Manager
ATTEST:
By:
Erica Rabe, City Clerk
APPROVED AS TO FORM
By:
David Kendig, City Attorney
Armbruster Goldsmith&Delvac LLP
Special Real Estate Counsel to the City
By:
Amy E. Freilich
Tustin_Regency_-_First_Amendment_to DDA(FINAL)(2) 19 City of Tustin/Regency Centers First Amendment to DDA
June 29,2016
DEVELOPER:
1C TUSTIN LEGACY, LLC,
a Delaware limited liability company
By: Regency Centers, L.P.,
Delaware limited partnership
Its Sole Member
By: Regency Centers Corporation,
a Florida corporation
Its General Partner
By:
John Mehigan
Vice President
Tustin_Regency_-_First_Amendment_to DDA(FINAL)(2) 20 City of'rustin/Regency Centers]First Amendment to DDA
June 29,2016
EXHIBIT 1
TERMS OF RIGHT OF FIRST OFFER
1. In the event the Buyer proposes to offer or sell Parcel 10 of Parcel Map 2015-127
(the "Property"), the Buyer shall first offer to sell the Property to Seller in accordance with the
following provisions:
1.1 Buyer shall deliver a notice ("Offer Notice)to Seller stating (i) its good
faith intention to sell the Property, and (ii) the price, terms, and conditions on which it
proposes to sell the Property.
1.2 By written notification given by Seller("Acceptance Notice"), within
twenty(20) calendar days after Seller has delivered such Offer Notice to the City(as
defined below), time being of the essence, Seller may elect to purchase the Property on
the terms and conditions specified in the Offer Notice.
1.3 If the Acceptance Notice is not given in a timely manner, Seller shall be
conclusively deemed to have waiver Seller's election to purchase the Property and
Buyer may, during the twelve (12) month period ("Permitted Sale Period")following the
expiration of the period provided in Section 1.2 above, offer to sell the Property to any
person or persons at a price not less than ninety-five percent(95%) of, and otherwise
on terms and conditions not materially more favorable to such persons than, those
specified in the Offer Notice. If Buyer does not complete the sale of the Property in
accordance with the foregoing requirements before the end of the Permitted Sale
Period, the right of first offer provided hereunder shall be deemed to be revived and the
Property shall not be offered for sale or sold unless first reoffered to Seller in
accordance with this Section.
1.4 In the event Seller fails to exercise its rights under this Section and
Buyer sells the Property to a third party, or the rights under this Section expire because
Buyer commences construction, Seller's rights under this Section shall automatically
terminate and Seller shall execute and deliver to Buyer, within five (5) Business Days
after request therefor by Buyer, such instruments deemed necessary or appropriate by
Buyer in recordable form evidencing such termination.
1.5 The City of Tustin (the "City") is a third party beneficiary of this right of
first offer(this "ROFO"). This ROFO may be assigned by Seller to the City or any other
third party without the consent of Buyer. The ROFO.shall run with the land and shall
burden the Property for the benefit of Seller and Parcels 11 and 13 of Parcel Map 2015-
127. Notwithstanding the foregoing, Seller shall not assign this ROFO to any Person
other than City except in connection with a Transfer(as defined in that certain Tustin
Legacy Disposition and Development Agreement for Disposition Parcel 1 C dated as of
October 20, 2015, as amended from time to time)of all of Seller's interests in and to
Parcels 11 and 13 of Parcel Map 2015-127.
EXHIBIT 2
HEALTHSOUTH NDA
CITY OF TUSTIN OFFICIAL BUSINESS
REQUEST DOCUMENT TO BE
RECORDED AND TO BE EXEMPT
FROM RECORDING FEES PER
GOVERNMENT CODE 6103 AND
27383.
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Space Above This Line Reserved for Recorder's Use
RECOGNITION,NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS RECOGNITION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(this"Agreement") is entered into this day of 2016
(as further defined in Section 1 below, the "Effective Date") by and among HEALTHSOUTH
CORPORATION, a Delaware corporation ("Owner"), and 2C TUSTIN LEGACY, LLC, a
Delaware limited liability company, a Healthcare Developer under the DDA (defined below
("Healthcare Developer"), and THE CITY OF TUSTIN, CALIFORNIA, a municipal
corporation duly organized and existing under and by virtue of the laws of the State of California
(the "City"). Each of Owner, Healthcare Developer, and the City are referred to as a "Party"
and all of them are sometimes referred to as the"Parties."
WITNESSETH:
A. The City and 1 C Tustin Legacy, LLC, a Delaware limited liability company, as
the "Developer" under the DDA, have entered into that certain Tustin Legacy Disposition and
Development Agreement for Disposition Parcel 1C, dated as of October 20, 2015 (including all
attachments thereto), which, as the same may be amended,updated or modified from time to time
is referred to herein as the "DDA", with respect to the real property described therein as the
"Development Parcels." The Development Parcels include certain land described in the DDA as
the Healthcare Parcels as legally described on Exhibit A attached hereto and incorporated herein
by this reference, which pursuant to the DDA, were previously conveyed, or are being conveyed
contemporaneously with this Agreement, by the City to Developer, and a portion of which was
subsequently conveyed, or is being conveyed contemporaneously with this Agreement, by
Developer to Healthcare Developer. Initially capitalized terms set forth in this Agreement and not
defined herein shall have the meanings set forth therefor in the DDA.
B. Pursuant to the DDA, the following documents have been executed and recorded
in the Official Records against all of the Development Parcels: (i) Memorandum of Tustin Legacy
Disposition and Development Agreement for Parcel 1C (the "Memorandum") dated
, 2016 and recorded on , 20 as Instrument
No. in the official records of Orange County, California (the "Official
Records"); (ii) that certain Slope Easement and Landscape Installation and Maintenance
Agreement dated as of , 20_ and recorded on , 20 as
Instrument No. (the "Slope/Landscape Agreement") and (iii) Declaration of
Covenants, Conditions and Restrictions dated as of , 20_
and recorded on , 20_as Instrument No. (the"CC&Rs").
C. Immediately prior to the conveyance of the Healthcare Parcels by the City to
Developer pursuant to that certain Quitclaim Deed dated , 20 and recorded on
, 20 as Instrument No. in the Official Records,
("Quitclaim Deed"), the City executed and Developer accepted that certain Declaration of
Special Restrictions, dated as of 20_ and recorded on ,
20_ as Instrument No. in the Official Records (the "Healthcare Parcel Special
Restrictions"; collectively with the Quitclaim Deed, the Memorandum, the Slope/Landscape
Agreement and the CC&Rs, the"Property Documents").
D. Pursuant to (a) that certain Quitclaim Deed dated of even date herewith and to be
recorded in the Official Records, Healthcare Developer has conveyed to Owner the portion of the
Healthcare Parcel legally described on Exhibit B attached hereto and incorporated herein by this
reference (the "Owner Parcel") and (b)that certain Assignment and Assumption Agreement by
and between Healthcare Developer and Owner dated as of the date of the Quitclaim Deed and to
be recorded in the Official Records ("Assignment and Assumption Agreement"), Owner has
assumed certain obligations of Healthcare Developer set forth in the DDA. The Quitclaim Deed,
the Assignment and Assumption Agreement and the CC&Rs are collectively referred to as the
"HCD/Owner Agreements".
E. Owner is proposing to construct upon the Owner Parcel and thereafter operate an
acute medical rehabilitation facility containing up to 75,000 square feet of GBA in accordance
with MCAS Tustin Specific Plan/Reuse Plan (`Specific Plan") Amendment 2015-002 and
Conditional Use Permit 2015-11 in compliance with all applicable laws, rules, regulations,
ordinances, the DDA and the Property Documents, including without limitation, parking
requirements set forth in the Tustin City Code and the Specific Plan (`Owner Vertical
Improvements").
F. Pursuant to obligations under the DDA assigned to Healthcare Developer,
Healthcare Developer agreed to Complete or cause Completion of construction of the Horizontal
Improvements on the Healthcare Parcel, including on the Owner Parcel, within the time periods
and subject to the additional terms and conditions set forth in the DDA, in the event construction
of the Horizontal Improvements on the Healthcare Parcel, including on the Owner Parcel, is not
Completed by Developer. Further, as set forth in Section 3.19 of that certain Development
Agreement by and between Developer and the City recorded on November 9, 2015 as Instrument
No. 2015000578729 in the Official Records ("Development Agreement"), Developer has agreed
to a restriction (`Permit Restriction") pursuant to which the City shall not issue building permits
for construction of the Owner Vertical Improvements or any other vertical improvements upon the
Owner Parcel until the date upon which the City issues a first foundation or other building permit
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for construction on Parcel 12 (comprising a portion of the Healthcare Parcels) for a medical office
building("Permit Restriction Date").
G. Under the terms of the DDA, Owner and its successors and assigns owning all or
any portion of the Property ("Owner Successors") are obligated to comply with the requirements
of the DDA and the Property Documents which apply to the Owner Parcel and/or the Owner
including without limitation the obligations of Healthcare Developer under the DDA and the
Property Documents relating to the Owner Parcel which have been assumed by Owner pursuant to
the Assignment and Assumption Agreement;
H. Section 2.2.3(c)(i) of the DDA provides the City with the right to approve among
other things: (1) any proposed Pad Transferee on the Healthcare Parcels; (ii) the terms of
conveyance documents and all other Transfer documents proposed to be executed by Healthcare
Developer and Owner, to confirm that they comply and do not conflict with the terms and
requirements of the DDA and the Property Documents, and (iii) the building type, size and use of
the Owner Vertical Improvements or any other improvements to be constructed on the Owner
Parcel.
I. As required by the DDA, Healthcare Developer and Owner have requested that
City provide its consent to (i)the Transfer of the Owner Parcel by Healthcare Developer to Owner
and (ii) Owner as an approved Pad Transferee and in addition, have requested that City execute
this Agreement. As a condition to consent by the City to the foregoing, Healthcare Developer and
Owner have agreed to comply with the terms of this Agreement and have provided City with
copies of each of the HCD/Owner Agreements in the form and substance of the documents they
intend to execute to consummate the Transfer, which documents have been reviewed and accepted
by the City("Acceptable Agreements").
J. The Parties desire to enter into this Agreement in order to (i) acknowledge certain
obligations of Owner to comply with the requirements of the DDA, the Property Documents and
the HCD/Owner Agreements (collectively, the Documents"), (ii) establish certain rights and
remedies of City and Owner with respect to each other; (iii) waive the City's right to exercise the
City's Right of Repurchase and the City's Right of Reversion with respect to the Owner Interests
(defined below) during the period of its ownership by Owner and/or any Applicable Owner
Successor(as defined below) (the "Ownership Period") all on the terms and conditions specified
in this Agreement"). An "Applicable Owner Successor" is an Owner Successor that is not any of
the following: (i) any successor or assign to a Developer or a Healthcare Developer taking title to
the Owner Parcel as a result of reacquisition of the Property subsequent to the original conveyance
to Owner, (ii) a Developer, (iii) a Healthcare Developer, (iv) a Developer Affiliate, or(v) an HCD
Affiliate.
AGREEMENT
NOW, THEREFORE, in consideration of their mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged,the Parties hereby agree as follows:
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1. Effective Date. Notwithstanding any prior execution of this Agreement by the City, this
Agreement shall not be delivered or deemed delivered by the City until the later of(a) the date of
conveyance of the Owner Parcel to Owner and(b)the Permit Restriction Date. The Effective Date
of this Agreement shall be the date upon which such delivery by the City is made.
2. Non-Disturbance. The City hereby agrees that during the Ownership Period, City shall
take no action that would result in the termination or disturbance of Owner's or any Owner
Successor's title, occupancy, possession or other right or interest in the Owner Parcel and all
easements and rights, if any, appurtenant thereto (collectively, the "Owner Interests") by or
through exercise of the City's Right of Repurchase or the City's Right of Reversion under the
DDA; provided that nothing herein shall restrict the City from exercising the City's Right of
Repurchase or Right of Reversion under the DDA during any period in which the Owner Parcel is
owned by an Applicable Owner Successor.
3. The City's Rights.
3.1. Notwithstanding the Non-Disturbance provisions provided in Section 2, nothing
in this Agreement shall impair or modify: (a) the City's rights and remedies under the DDA
and/or the Property Documents with respect to the Right of Repurchase or Right of Reversion of
the Development Parcels other than with respect to the Owner Interests during the Ownership
Period as specifically set forth in Section 2, and/or(b) all other City rights and remedies contained
in the DDA and the Property Documents. Without limiting the foregoing, Owner acknowledges
that the DDA contains provisions that may, among other things, result in the City exercising the
Right of Reversion or Right of Repurchase as to other portions of the Development Parcels and/or
as to interests of other Persons in the Owner Parcel, or exercising its other remedies set forth in the
DDA and the Property Documents, and such exercise shall not obligate City to assume any
obligations under the DDA and the Property Documents with respect to the acquired Property,
including without limitation construct any or all Improvements upon the Development Parcels,
including without limitation, Horizontal Improvements required for development of the Owner
Vertical Improvements, all or any portion of the Development Parcels being developed by a
Person other than Developer or Healthcare Developer and/or being developed for currently
unforeseen uses. In the event the City exercises its Right of Reversion or Right of Repurchase and
thereby acquires all or any portion of the Healthcare Property (excluding the Owner Parcel), City
agrees and acknowledges, in its Proprietary Capacity, that, provided Owner has obtained such
entitlements and permits as are-required to permit such development, if any, Owner shall have the
right and shall be first afforded the opportunity (at Owner's option exercised in its sole and
absolute discretion and its sole cost and expense) after Developer,Healthcare Developer and Hoag
Memorial Hospital Presbyterian, to complete the Horizontal Improvements and On-Lot
Improvements as are required by the entitlements or otherwise necessary to permit Owner to
construct and operate the Owner Vertical Improvements and/or other uses permitted by the
Specific Plan and the Documents on the Owner Parcel.
3.2. Exercise of Remedies Voluntary. Nothing in this Agreement shall obligate the
City to exercise the Right of Repurchase or Right of Reversion or to exercise any other remedy
against any Developer or Healthcare Developer, the Development Parcels, Owner or the Owner
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Interests and the exercise of such remedies by the City shall be a right and not an obligation of
the City.
4. On-Going Obligations of Healthcare Developer.
4.1. Notwithstanding anything to the contrary contained in this Agreement or any of
the Documents, Healthcare Developer on behalf of itself and its successors and assigns, hereby
represents,warrants, acknowledges and agrees that:
(a) Healthcare Developer, including Owner and any Owner Successors, and
the Healthcare Parcel, including the Owner Parcel, are and shall remain subject to this
Agreement, the DDA (except as expressly modified herein as to the Owner and Applicable
Owner Successors during the Ownership Period) and the Property Documents.
(b) Healthcare Developer retains and is not released or relieved from
performance of all the obligations under the DDA and the Property Documents relating to the
Owner Parcel, including, but not limited to, construction of the Horizontal Improvements (to the
extent not timely performed by Developer in accordance with the DDA) and performance of
Healthcare Developer's maintenance and indemnity obligations with respect to the Healthcare
Parcel, including the Owner Parcel, payment of all Development Costs and all Ongoing Matters
and those additional matters described in Sections 2.2.3(c)(v) through (viii) of the DDA,
inclusive.
(c) Healthcare Developer shall provide to the City a copy of any notice or
statement under the Documents that it provides to Owner or any Owner Successor pertaining to
default by such Owner or Owner Successor thereunder.
5. Obligations of Owner.
5.1. Notwithstanding anything to the contrary contained in this Agreement or any of
the Documents, Owner hereby represents, warrants, acknowledges and agrees for the benefit of
the City that:
(a) Pursuant to the Assignment and Assumption Agreement, Owner has,
among other things, assumed the obligation to perform in accordance with or otherwise comply
with the requirements of the DDA with respect to the Owner Interests from and after the
effective date of the Assignment and Assumption Agreement, including without limitation, the
following:
(i) the restrictions on Mortgages;
(ii) the Transfer and Transfer of Control restrictions set forth in
Sections 2.1 through 2.4 of the DDA, inclusive;
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(iii) Sections 4.5.1 and 4.5.2 of the DDA (inclusive) including,
without limitation,the release set forth in Section 4.5.2 (f)of the DDA;
(iv) the indemnities and other requirements of Sections 10.1 through
10.7 of the DDA,inclusive; and
(v) the covenants and use restrictions set forth in Sections 12.1
through 12.8 of the DDA, inclusive.
(b) Owner, each Owner Successor and the Owner Parcel are and shall
remain subject to this Agreement, the DDA (except as expressly modified herein as to the
Owner and Applicable Owner Successors) and the Property Documents and to all rights and
remedies of the City under the DDA and the Property Documents, including without limitation,
the Right of Repurchase and the Right of Reversion except and unless specifically modified by
Section 2 of this Agreement;
(c) Without limiting Owner's rights to enforce this Agreement in accordance
with its terms, Owner, on behalf of itself and all Owner Successors, consents to and hereby
relinquishes and waives any and all Claims, known or unknown, foreseen or unforeseen, against
the City with respect to the Permit Restriction.
(d) Owner shall provide to the City a copy of any notice or statement under
the Documents that it provides to Developer Healthcare Developer or their respective successors
or assigns pertaining to default by Healthcare Developer or its successors and assigns thereunder.
(e) Owner and each Owner Successor shall, upon the execution of this
Agreement and thereafter upon the request of City or any City Successor (defined below),
provide the City or City Successor with an estoppel certificate, in form and substance attached
hereto as Exhibit `B" or otherwise reasonably acceptable to the City Successor, stating, among
other things, or identifying any exceptions to the following: (1) that a complete, true and correct
copy of the HCD/Owner Agreements is attached thereto and is unmodified and in full force and
effect (or, if there have been modifications, that such HCD/Owner Agreement is in full force and
effect, as modified and stating the modifications; (2) to its knowledge, there are no defaults,
claims thereof, any condition which, with the giving of notice and/or the passage of time or both,
could become a default by it or by City, Developer or Healthcare Developer with respect to their
respective obligations under the Documents or any one thereof or under the performance of any
term, covenant or condition contained in any of the Documents; (3) it has no claim, charge,
defense or offset against any amounts payable under the Documents or any one thereof, except
for any claims, charges, defenses or offsets specified in said estoppel certificate; (4) it is not
aware of any default under the Documents which has not been cured, except as to defaults
specified in said certificate; (6) that it has no right to terminate the Documents or any one
thereof.
(f) All claims, demands or causes of action which Owner or any Owner
Successor may have or may have had against Developer and/or Healthcare Developer as of the
date City succeeds to the position of Healthcare Developer under the Documents or under any
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provisions of, or with respect to the Documents, or on account of any matter, condition or
circumstance arising out of the relationship of Healthcare Developer and Owner under the
Documents, Owner's occupancy of the Owner Parcel or Developer's or Healthcare Developer's
prior ownership thereof, shall be enforceable solely against the prior Developer and/or prior
Healthcare Developer (i.e., the predecessor(s) in interest to City Successor) as applicable to the
extent provided in the Documents, and neither the City nor any other City Successor shall be
subject to any such claim,demand or cause of action.
6. City as Successor to Developer or Healthcare Developer. The following shall apply if the
City succeeds to the interest of Developer or Healthcare Developer, whether through or in lieu of
the exercise by the City of any of its rights and/or remedies pursuant to this Agreement, the DDA or
the Property Documents or otherwise (for purposes of this Agreement the term "City Successor"
shall mean the City, in its capacity as the successor to Developer and/or Healthcare Developer's
interest, and any other successor in interest to such interest under the DDA and to the Development
Parcels, and their respective successors and assigns, and any person claiming the same by, through
or under any of the foregoing):
6.1. Nothing contained in this Agreement shall be interpreted to release Owner,
Owner Successor or the Owner Parcel from the obligations imposed under the Documents. Any
interest of the City Successor under the Documents acquired by the City shall not merge with any
other interests of City in the Owner Parcel including without limitation any right, title or interest
of the City under the DDA or the Property Documents, the Right of Repurchase and the Right of
Reversion and/or other rights or remedies available to the City under the DDA or any of the
Property Documents.
6.2. The following shall be binding upon Owner, each Successor Owner and the
Owner Parcel for the benefit of City and each City Successor:
(a) The City Successor shall not be liable for or bound by any act or
omission of Developer and/or Healthcare Developer or any predecessor in interest to such City
Successor.
(b) The City Successor shall not be liable for payment of any sums due
from Developer or Healthcare Developer to Owner including, without limitation, any refunds,
payment, reimbursement or damages owed from Healthcare Developer to Owner. Without
limiting the foregoing, with respect to all such items, Owner agrees to look solely to Healthcare
Developer and any Guarantor of Healthcare Developer and not to any City Successor.
(c) Owner hereby waives and relinquishes with respect to each City
Successor all offsets, counterclaims and defenses which Owner may have against Healthcare
Developer or any predecessor in interest thereof including, without limitation, any offset,
abatement or right of deduction provided for under the terms of the Documents.
(d) The City Successor shall not be bound by any agreement between
Developer and Healthcare Developer and/or Healthcare Developer and Owner, including
without limitation, the HCD/Owner Agreements, purporting to cancel, surrender, amend or
7
modify the obligations of Owner and Healthcare Developer under the Documents unless such
change has been approved in writing by the City or City Successor in writing.
(e) The City Successor shall not be required to rebuild, repair or restore any
damage to the Owner Parcel or the Development Parcels, the Horizontal Improvements or any
other Improvements or any portion thereof caused by the occurrence of a casualty or following
a condemnation of all or any portion of the Owner Parcel regardless of whether or not there are
sufficient insurance or condemnation proceeds to pay the cost of such rebuilding, repair or
restoration.
(f) The City Successor shall not be liable with respect to any obligation to
complete any site work or build out or maintain any improvements for the Owner Parcel
including, without limitation, any portion of the Owner Vertical Improvements, the Minimum
Horizontal Improvements, any other Horizontal Improvements, the On-Lot Improvements or
any other improvements to be built upon the Owner Parcel, the Slope Parcel, the Landscaping
Areas(as defined in the Slope Agreement) or the Development Parcels, and/or any obligation to
pay for any of the foregoing or to pay any construction improvement allowance to Owner.
(g) Without limiting the applicability of any other provision of this
Agreement, in no event shall City or City Successor be liable for any payments required to be
made by Developer or Healthcare Developer to Owner under the HCD/Owner Agreements, the
DDA, the Property Documents or otherwise.
(h) Each City Successor shall be released and relieved of any obligation of
the Developer and Healthcare Developer accruing after the transfer, sale, assignment or
conveyance by it to another person or entity of the title to the Owner Parcel.
(i) Healthcare Developer and Owner hereby waive and release the City
Successor from any claims either of them may have arising out of or related to Hazardous
Materials located in, on, under, or around the Owner Parcel whether arising or relating to the
period before or after the Effective Date.
0) Nothing in this Agreement shall be construed to limit or restrict in any
way Healthcare Developer's and Owner's environmental indemnities contained in Section 10.2
of the DDA, which remain in full force and effect,unmodified.
(k) Notwithstanding any other provision of the Documents, the City
Successor shall not be liable or responsible for any enforcement, cleanup, removal, remedial or
other governmental or regulatory actions, or for any agreements or orders threatened, instituted
or completed pursuant to any federal, state or local laws, ordinances, regulations or policies
relating to any Hazardous Materials, or for any indemnities under the Documents concerning
the presence, release or discharge of any Hazardous Materials on, under or about the Owner
Parcel, or for any permits and waste discharge requirements issued to and/or required of Owner
or Healthcare Developer by any governmental body or by the City, or any claims made or
threatened by any person or governmental body or by the City against Owner or Healthcare
Developer or the Owner Parcel relating to damage, contribution, cost recovery compensation,
loss or injury resulting from the presence, release or discharge of any Hazardous Materials on,
8
under or about the Owner Parcel whether made the responsibility of City, Developer,Healthcare
Developer, Owner or any other Person under the Documents.
7. Certain Agreements by Healthcare Developer and Owner. Healthcare Developer, as
Healthcare Developer under the DDA, and Owner, each represent, warrant,covenant, acknowledge
and agree for themselves and their heirs, successors and assigns and for the benefit of the City, that:
7.1. Except as expressly set forth herein, this Agreement does not constitute a waiver
by City of any of its rights under the DDA or the Property Documents. Except as expressly set
forth herein, this Agreement does not in any way release Healthcare Developer and/or Owner
from their respective obligations to comply with the terms, provisions, conditions, covenants,
agreements and clauses of the DDA or the Property Documents, including, without limitation,
the release set forth in Section 4.5.2(f) of the DDA, the indemnity set forth in Section 5.5 of the
DDA, the insurance required in Section 11 of the DDA and the indemnity, environmental
indemnity and related requirements set forth in Section 10.1 through 10.7 of the DDA.
7.2. The provisions of this Agreement do not impair or modify the City's Right of
Repurchase or Right of Reversion contained in the DDA with respect to property other than as
expressly set forth in Section 2 with respect to the Owner Parcel.
7.3. Neither the City nor any City Successor shall have any obligation nor shall the
City or any City Successor incur any liability with respect to any warranties of any nature
whatsoever, whether pursuant to the Documents or otherwise, including, but not limited to, any
warranties respecting suitability for development, use, compliance with zoning, Developer's,
Healthcare Developer's or Owner's title, Developer's, Healthcare Developer's or Owner's
authority, habitability, fitness for purpose or possession of the Healthcare Parcel or the Owner
Parcel.
7.4. Owner meets the requirements under the DDA of a permitted Pad Transferee and
an End User and has not engaged and will not engage in any Prohibited Uses upon the Owner
Parcel.
7.5. Healthcare Developer and Owner have provided the City with true and correct
copies of the executed HCD/Owner Agreements which shall, unless modified with the consent of
the City, be in the form of the Acceptable Agreements delivered to the City prior to execution by
the City of this Agreement.
8. Notices. All notices, demands, consents, requests and other communications required or
permitted to be given under this Agreement shall be in writing and shall be deemed conclusively to
have been duly given (a) when hand delivered to the other Party; (b)three (3) Business Days after
such notice has been sent by U.S. Postal Service via certified mail, return receipt requested,postage
prepaid, and addressed to the other Party as set forth below; (c)the next Business Day after such
notice has been deposited with an overnight delivery service reasonably approved by the Parties
(Federal Express, Overnite Express, United Parcel Service and U.S. Postal Service are deemed
approved by the Parties),postage prepaid, addressed to the Party to whom notice is being sent as set
forth below with next-business-day delivery guaranteed, provided that the sending Party receives a
confirmation of delivery from the delivery service provider; or (d) when transmitted if sent by
facsimile transmission or email to the fax number or email address set forth below; provided that
notices given by facsimile or email shall not be effective unless either (i) a duplicate copy of such
9
notice is promptly sent by any method permitted under this Section 18.6 other than by facsimile or
email (provided that the recipient Party need not receive such duplicate copy prior to any deadline
set forth herein); or(ii)the receiving Party delivers a written confirmation of receipt for such notice
either by facsimile, email or any other method permitted under this Section. Any notice given by
facsimile or email shall be deemed received on the next Business Day if such notice is received
after 5:00 p.m. (recipient's time) or on a non-Business Day. Unless otherwise provided in
writing, all notices hereunder shall be addressed as follows:
City: Jeffrey C. Parker
City Manager City of Tustin
300 Centennial Way
Tustin,CA 92780
Fax: 714-838-1602
Email: jparker@tustinca.org
With a copy to: David Kendig
Woodruff Spradlin& Smart, APC
555 Anton Boulevard, #1200
Costa Mesa, CA 92626
Fax: (714)415-1183
Email: dkendig@wss-law.com
Healthcare Developer: Mr. John T. Mehigan
Vice President, Investments
Regency Centers, L.P.
915 Wilshire Boulevard, Suite 2200
Los Angeles, CA 90017
Fax: (213)624-2280
E-mail:jmehigan@regencycenters.com
With a copy to: Drew M. Emmel Esq.
Allen Matkins Leck Gamble Mallory&Natsis LLP
1900 Main Street, Fifth Floor
Irvine, CA 92614-7321
Fax: (949) 553-8354
E-mail: demmel@allenmatkins.com
Owner: HealthSouth Corporation
3660 Grandview Parkway, Suite 200
Birmingham,AL 35243
Attention: Art Wilson
Fax:
Email: art.wilson@healthsouth.com
With a copy to: Bradley Arant Boult Cummings LLP
200 Clinton Avenue West, Suite 900
10
Huntsville, Alabama 35801
Attn: Benjamin W. Hutton
Fax: (256) 517-5273
Email: bhutton@bradley.com
Any Party may by written notice to the other Party in the manner specified in this
Agreement change the address to which notices to such Party shall be delivered.
9. Miscellaneous.
9.1 Agreement Supersedes. This Agreement supersedes any inconsistent provision of
the HCD/Owner Agreements.
9.2 Modification. No amendment, change, modification or supplement to this
Agreement shall be valid and binding on the Parties unless in writing, signed by all of the Parties,
acknowledged by a notary public and duly recorded in the Official Records.
9.3 Applicable Law. This Agreement shall be governed by, interpreted under, construed
and enforced in accordance with the laws of the State of California, irrespective of California's
choice-of-law principles. The parties hereto agree that the resolution of any dispute between or
among them, or any of them, shall be resolved in accordance with the procedures and in the venue
and subject to the service of process and other provisions set forth in Section 18.1 of the DDA.
9.4 Legal Fees and Costs. If any Party to this Agreement institutes any action, suit,
counterclaim or other proceeding for any relief against another Party, declaratory or otherwise
(collectively an "Action"), to enforce the terms hereof or to declare rights hereunder or with
respect to any inaccuracies or material omissions in connection with any of the covenants,
representations, warranties or obligations on the part of the other Party to this Agreement, then the
Prevailing Party in such Action shall be entitled to have and recover of and from the other Party all
costs and expenses of the Action, including (a) the Prevailing Party's reasonable attorneys' fees
which shall be payable at the actual contractual hourly rate for City's litigation counsel at the time
the fees were incurred, but in no event more than $200.00 per hour and (b) costs actually incurred
in bringing and prosecuting such Action and/or enforcing any judgment, order, ruling or award
(collectively, a "Decision") granted therein, all of which shall be deemed to have accrued on the
commencement of such Action and shall be paid whether or not such Action is prosecuted to a
Decision. Any Decision entered in any final judgment shall contain a specific provision providing
for the recovery of all costs and expenses of suit, including reasonable attorneys' fees and expert
fees and costs (collectively "Costs") incurred in enforcing, perfecting and executing such
judgment. For the purposes of this paragraph, Costs shall include in addition to Costs incurred in
prosecution or defense of the underlying action, reasonable attorneys' fees, costs, expenses and
expert fees and costs incurred in the following: (a)post judgment motions and collection actions;
(b)contempt proceedings; (c) garnishment, levy, debtor and third party examinations;
(d) discovery; (e)bankruptcy litigation; and (f) appeals of any order or judgment. "Prevailing
Party" within the meaning of this Section 18.2 includes a Party who agrees to dismiss an Action in
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consideration for the other Party's payment of the amounts allegedly due or performance of the
covenants allegedly breached, or obtains substantially the relief sought by such Party.
9.5 No Partnership. Nothing contained in this Agreement shall be deemed or construed
to create a partnership,joint venture or any other relationship between the parties or cause the City
to be responsible in any way for the debts or obligations of Healthcare Developer or Owner.
9.6 Construction and Interpretation of Agreement. This Agreement shall be construed
and interpreted pursuant to the provisions of Section 18.11 of the DDA.
9.7 Limitations on Damages PUable by the City. The provisions of Section 18.5.1,
18.5.2 and 18.5.3 of the DDA, are incorporated herein by this reference and as used therein, the
term "Developer" shall mean and include the Healthcare Developer and the Owner; provided,
however, that Healthcare Developer and Owner acknowledge that the actual damages payable
by the City pursuant to Section 18.5.3(a) of the DDA shall in no event exceed $100,000 paid in
the aggregate to any one or more of Developer, Healthcare Developer and Owner.
9.8 No Waiver. No waiver of any provision or consent to any action under this
Agreement shall constitute a waiver of any other provision or consent to any other action, whether
or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a
Party to provide a waiver in the future except to the extent specifically set forth in writing. All
waivers of the provisions of this Agreement must be in writing and signed by the appropriate
authorities for the City and Healthcare Developer and all amendments hereto must be in writing
and signed by the appropriate authorities of the City and Healthcare Developer.
9.9 Successors and Assigns. This Agreement and the covenants, conditions, restrictions,
obligations, rights and benefits contained herein are hereby agreed by Healthcare Developer, Owner
and the City to be covenants running with the land and enforceable as equitable servitudes for the
benefit of the City and against the Healthcare Parcels and the Owner Parcel, and are hereby declared
to be and shall be binding upon the Owner Parcel, Healthcare Developer, Owner and the successors
and assigns of Healthcare Developer and/or Owner owning or leasing all or any portion of the
Owner Parcel but the terms of Section 2 of this Agreement shall not benefit Developer, Healthcare
Developer, a Developer Affiliate or a HCD Affiliate. Notwithstanding the foregoing, no Transfer,
including by Transfer of Control, shall be valid or have any force or effect unless the City shall
have provided its prior written consent thereto as may be required by the DDA.
9.10 Counterparts. This Agreement may be executed in two or more separate
counterparts, each of which, when so executed, shall be deemed to be an original. Such
counterparts shall, together, constitute and shall be one and the same instrument. This Agreement
shall not be effective until the execution and delivery by the Parties of at least one set of
counterparts. The Parties agree to recognize execution of this Agreement by facsimile or other
electronically transmitted signatures; provided that such execution by facsimile or electronic
transmission shall not be effective unless a manually executed copy of the signature page is
promptly sent by U.S. Postal Service, postage prepaid or overnight delivery service or is hand
delivered to the Parties. The Parties hereby authorize each other to detach and combine original
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signature pages and consolidate them into a single identical original. Any one of such completely
executed counterparts shall be sufficient proof of this Agreement.
9.11 Preparation Costs. Healthcare Developer shall pay to the City the City's out-of-
pocket fees and expenses, including legal fees, incurred with respect to the preparation and delivery
of this Agreement.
9.12 Consent of City. Execution and delivery by the City of this Agreement shall
constitute the consent required pursuant to Section 2.2.3(c) of the DDA with respect to Transfer to
Owner and constitutes the City's acknowledgment that the requirements of Section 2.2.3(c)(i)(B)
and [(C) and Section 2.2.3(c)(ii)] and Section 2.2.3(c)(iv) of the DDA have been satisfied with
respect to the Transfer described in this Agreement, provided that neither this consent nor
execution by the City of this Agreement constitute evidence of compliance with or satisfaction of
any obligation of Developer, Healthcare Developer or Owner under the DDA or any of the
Property Documents, or any other agreement between Developer or Healthcare Developer and/or
the City, except for the obligation of Healthcare Developer to obtain the City's consent to a
Transfer to Owner.
9.13 Authority. Each of the signatories to this Agreement represents that he/she is
authorized to sign the Agreement on behalf of such party, that all approvals, resolutions, orders,
ordinances and/or consents which must be obtained to bind such party have been obtained, and that
no further approvals, acts, resolutions, orders, ordinances and/or consents are required to bind such
party to this Agreement.
{signatures commence on following page}
13
IN WITNESS WHEREOF,the Parties hereto have caused this Agreement to be duly executed
as of the date first above set forth.
"CITY"
City of Tustin
Dated: By:
Jeffrey C.Parker
City Manager
ATTEST:
By:
Erica Rabe,City Clerk
APPROVED AS TO FORM
By:
David Kendig,City Attorney
Armbruster Goldsmith&Delvac LLP
Special Tustin Counsel
By.
Amy E. Freilich
"HEALTHCARE DEVELOPER:
{INSERT}
Dated: By:
Name:
Title:
14
f
I
"OWNER"
HEALTHSOUTH CORPORATION
a Delaware corporation
Dated: By:
Name:
Title:
15
EXHIBIT "A" TO EXHIBIT 2
LEGAL DESCRIPTION
[TO BE INSERTED]
1
EXHIBIT 'B" TO EXHIBIT 2
'FORMT Or ESTOPPEL CERTIFICATE
[TO BE INSERTED]