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HomeMy WebLinkAbout13 TUSTIN LEGACY DDA 04-02: VESTAR/KIMCO 07-19-04CITY OF TUSTIN City Clerk's Office DATE: July 19, 2004 Inter -Com TO: HONORABLE MAYOR AND CITY COUNCIL FROM: MARIA R. HUIZAR, CHIEF DEPUTY CITY CLERK SUBJECT: REPLACEMENT PAGES ON AGENDA ITEM 13 - TUSTIN LEGACY DDA 04-02 (VESTAR) Attached are the following pages that should be replaced on Agenda Item 13: • Page 35 Attachment 2 — Page 1 • Attachment 7 — Pages 2-3 If you have any questions, please call my office at 573-3025 c: City Manager City Attorney SAAgmda C=mt\M=0 Agenda It®sdm Closings, 7.1 Time and Place of Initial Close of Escrow. The Initial Close of Escrow shall take place on the Closing Date. subject to the satisfaction of the conditions set forth in Sections 7.2 through 7.6, and shall take place at the offices of Escrow Holder, or at such other place that the City selects. "Initial Closing Date' shall mean December 15, 2004, provided that if all other conditions to the Initial Close of Escrow have been satisfied or waived but the statutory appeals period for the approval of the Vesting Tentative Tract Map (as referenced in Sections 7.2.4 and 3_�) and/or the approval of the Concept Plan and Design Review (as referenced in Sections 7.2.5 and 7.3.6) has not run and/or there is any pending litigation or initiative or referendum filed with the Tustin City Clerk before the Initial Closing Date with respect to such approval(s) which raises a significant issue that materially adversely affects the Project, then the City shall by written notice to Developer extend the Initial Closing Date and the obligations of Developer and the City with respect to the initial Close of Escrow to a date that the City determines in its sole discretion. but not later than December 15, 2005. The Closing Date may also be extended upon mutual written agreement of the Parties. 7.2 Developer's Conditions Precedent to Initial Close of Escrow. The Developer's .obligation to purchase Developer Fee Property A and Developer Fee Property B, to sublease Developer Sublease Property A. Developer Sublease Property B, Developer Sublease Property C. Developer Sublease Property D and Developer Sublease Property E, to lease the remainder of Itie Lease Property. and to the Initial Close of Escrow is subject to and conditioned upon the Developer's satisfaction or the Developer's written waiver as to each of the following conditions tt� Initial Close of Escrow ("Developer's Closing Conditions") on or before the Initial Closing I)ate: 7.2.1 The City's Document Deliveries. The City's execution and delivery to Escrow Holder of the following documents, which documents the City shall deliver to Escrow 1101 later than one (1) Business Day prior to the Initial Close of Escrow: (a) a Quitclaim Deed for Developer Fee Property A and Developer Fee Property B, executed by the City. acknowledged and in Recordable form; (b) the Ground Lease for (i) Developer Fee Parcel C and Developer Lee Parcel D and (ii) Developer Sublease Property A, Developer Sublease Property B, Developer Sublease Property C. Developer Sublease Property D and Developer Sublease Property E, executed by the City; (c) the Memorandum of DDA executed by the City, acknowledged and in Recordable form: (d) the Memorandum of Ground Lease executed by the City, acknowledged and in Recordable form; (e) the Special Restrictions, executed by the City, acknowledged and m Recordable form: (f) the Bill of Sale executed by the City; Juh. 12.2004 -35- Disposition and Development X -4;i a vowr 8 Agreement ATTACHMENT NO.2 LEGAL DESCRIPTION OF DEVELOPER SUBLEASE PARCEL A, DEVELOPER SUBLEASE, PARCEL B, DEVELOPER SUBLEASE PARCEL C, DEVELOPER SUBLEASE PARCEL D AND DEVELOPER SUBLEASE PARCEL E Developer Sublease Parcel A Lot 14. as shown on Tentative Tract Map 16695 Developer Sublease Parcel B Lot 13. as shown on Tentative Tract Map 16695 Developer Sublease Parcel C I.ot 21. Lot 22 and Lot 23, as shown on Tentative Tract Map 16695 Developer Sublease Parcel D Lot 24, Lot 28 and Lot 29. as shown on Tentative Tract Map 16695 Developer Sublease Parcel E Lot 25 and Lot 26, as shown on Tentative Tract Map 16695 F incl Lot configurations for each of the foregoing Developer Sublease Parcels to be as approved on the Final Tract Map by the City of Tustin. `%estar DDA Attachment No. 2 — Page 1 Legal Description of 0'"12.'04 Developer Sublease Parcels X4(;; !,34112" Action Timing F. Developer delivers to Escrow Final Upon later of August 1, 2004 or 5 calendar [:)DA Deposit for acquisition of the Developer days following execution of DDA by City Fee Parcels at Initial Close of Escrow 1- Developer delivers to City all required 7 calendar days prior to Initial Close of ('losing submittals including insurance. Escrow evidence of financing, etc. G. Developer delivers to Fscrow the 1 Business Day prior to Initial Close of balance of Initial Closing Purchase Price and Escrow all document deliveries required for initial Close of Escrow. H. City delivers to Escrow all document 1 Business Day prior to Initial Close of deliveries required for Initial Close of Escrow. Escrow. i. Initial Closing Date for fee transfer of December 15, 2004 Developer Fee Parcels A and B and lease/ sublease of lease Parcels (see below). Subleasine and Acquisition of Developer Lease Parcels V Developer delivers to Escrow all 7 calendar days prior to Initial Close of required tease submittals including insurance, Escrow. etc. B. Developer delivers to Escrow signed 1 Business Day prior to Initial Close of Ground Lease and first annual payment of Escrow. rent thereunder. l.. City delivers Ground Lease to Escrow. I Business Day prior to Initial Close of Escrow. D (!round Lease Effective Date. 1.. Payment of Ground Lease rent. Initial Closing Date Annually on Initial Closing Date and on each subsequent anniversary of the Ground Lease effective date. I City notifies Developer of acquisition Within 30 calendar days of Navy ,)I' Developer Sublease Parcel(s) from Navy conveyance of applicable Developer and sets date for Subsequent Closing thereof Sublease Parcel(s) to.the City to Developer. Westar DDA Attachment No. 7 — Page 2 Schedule of Performance u- t �":'v4 1 X41)! x,3911'7 7 Action (i. Developer delivers to Escrow Subsequent Purchase Price for Developer Sublease Parcel(s) Timing 1 Business Day prior to applicable Subsequent Closing. 1-l. Close of Subsequent Closing Escrow 30 calendar days after City notice to Developer of City acquisition of fee title; subject to extension per Section 7.7.1 of the DDA. 4. All Entitlement Approvals; City Proprietary and Governmental Design Approvals, a Developer submits Preliminary Plans B Developer submits Tcntative Vesting Tract Map, Concept Plan and Design Review application. and conditional use permit applications, as applicable, with related drawings and documents to City which are considered by City as complete C. City in its Governmental Capacity considers and approves Tentative Vesting Tract Map. Concept Plan & Design Review 1). City in its Proprietary Capacity approves Basic Concept Plans F. Developer submits complete Final Tract Map with related drawings and documents to City Cite approves Final Tract Map(s) March 29, 2004 June 21, 2004 July 19, 2004 Within 5 calendar days of City approval of Tentative Vesting Tract Map, Concept Plan and Design Review Within 15 calendar days of City Council approvals specified in Section 4.0 above By December 6, 2004, provided Developer shall be responsible for completing all City and County requested corrections and all conditions of approval of the Tentative Tract Map to the satisfaction of City in its sole discretion on or before November 30, 2004 t i Developer causes the Recording of the Within 15 calendar days following approval Final "Tract Map(s) of the Final Tract Map(s) by City Vestar DDA Attachment No. 7 — Page 3 Schedule of Performance 07 12'04 rrc•ur' n�y� i„ Agenda Item Reviewed. AGENDA REPORT City Manager Finance Director MEETING DATE: JULY 19, 2004 TO: WILLIAM A. HUSTON, CITY MANAGER FROM: REDEVELOPMENT AGENCY STAFF SUBJECT: TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (DDA 04-02) FOR COMMERCIAL RETAIL SITE SUMMARY Approval is requested of a Disposition and Development Agreement (DDA 04-02) between the City of Tustin and VESTARXIMCO TUSTIN, L.P. ("Developer") for the sale and development of the commercial retail site at Tustin Legacy ("Prgect"). RECOMMENDATION That the City Council: Adopt Resolution No. 04-60 finding that (a) an Initial Study evaluated the Project ("DDA 04-02") and all pending development entitlement applications in light of the MCAS Tustin Final Joint Program EIS/EIR ("MCAS Tustin FEIS/EIR") certified by the City on January 16, 2001 and the adopted Mitigation Monitoring Report Program for the MCAS Tustin FEIS/EIR to determine whether, in accordance with CEQA requirements, any additional environmental documentation is required in connection with approval of the DDA 04-02 and other pending entitlement applications; (b) based on findings in the Initial Study (i) the environmental effects of the Project are within the scope of the MCAS Tustin FEIS/EIR and were fully examined in the MCAS Tustin FEIS/EIR, (ii) no substantial changes are proposed in the Project or have occurred with respect to circumstances under which the Project is being undertaken since certification of the MCAS Tustin FEIS/EIR, (iii) no new information has become available since the certification of the FEIS/EIR, and (iv) pursuant to Public Resources Code Section 21116 and the requirements of CEQA regulations promulgated with respect thereto including Title 14 California Code of Regulations Section 15168 (c) no additional environmental analysis, action or document is required by the CEQA; and, (c) all applicable mitigation measures described in the adopted Mitigation Monitoring Report for the MCAS Tustin FEIS/EIR are incorporated into this Project or will be conditions of approval of pending entitlements for the Project. 13 July 19, 2004 City Council Report to William Huston Tustin Legacy Disposition and Development Agreement 04-02 2. Subject to non -substantial modifications as may be determined necessary by the City's Special Counsel or the City Manager prior to execution, approve and authorize the City Manager, or designee, to execute DDA 04-02 between the City of Tustin and VESTARXIMCO TUSTIN L.P. and to carry out all actions necessary to implement the DDA including execution of all related documents including the ground lease, any necessary subordination agreement and, upon satisfaction of all conditions and obligations of Developer thereto, to transfer the subject site in phases to the Developer. FISCAL IMPACT The Project involves a number of phased sales over a period of time largely based on the Navy's remediation schedule. The Developer's purchase price for the portion of the Project south of the Loop Road ( Developer Fee Parcel A and Sublease Parcels A and B) will total $19,001,520, of which $18,435,150 is for Developer Fee Parcel A, to be paid at an initial closing, and $566,370 to be paid when Sublease Parcels A and B are ready for conveyance. The Developer's purchase price for the portion of the Project north of the South Loop Road will total $14,412,641. As part of the initial conveyance, the Developer will purchase Developer Parcel B at a price of $4,601,722. The Developer will have the option of either paying the purchase price of Developer Parcel B upfront or utilizing deferred payment provisions of the DDA. The purchase price for the remainder of the Developer Fee parcels and Sublease parcels north of the Loop Road will be based on the formula of $8.50 a square foot of land area. It is currently estimated that this will total an additional $9,810,920 in sale proceeds. Based on timing provisions in the DDA, the Developer will also be making a Tustin Legacy Fair Share Backbone Infrastructure Contribution of $22,800,000 for portions of the Project site south of the Loop Road and $13,530,000 for portions of the Project site north of the Loop Road. In conclusion, the total purchase price for the site at full conveyance will be $33,414,161 and $36,330,000 in Tustin Legacy Fair Share Backbone Infrastructure Contributions. BACKGROUND In October 2002, the City issued a Request for Proposals (RFP) to a short-list of pre- qualified developers as part of the second phase of the disposition strategy and developer selection process for a major retail commercial site located at the northwest corner of Barranca Parkway and Jamboree Road at Tustin Legacy. On May 19, 2004 after a detailed technical evaluation process and further discussions with each responding development team, the City Council entered into an Exclusive Agreement to Negotiate (ENA) with Vestar Development II, LLC. Two amendments to the ENA were July 19, 2004 City Council Report to William Huston Tustin Legacy Disposition and Development Agreement 04-02 subsequently approved on December 30, 2003 and on February. 26, 2004. The First Amendment to the ENA extended the time frame for negotiation. The Second Amendment added additional land area to the transaction to include property to the north of the South Loop Road (a portion of Reuse Plan Disposal Parcel 12). The Second Amendment to the ENA expired on April 26, 2004. DISCUSSION Following months of. negotiation, a Development and Disposition Agreement ("DDA") has been completed by the City for development of the Tustin Legacy commercial retail site. The primary purpose of the DDA is to effectuate the MCAS Tustin Reuse Plan/ Specific Plan (Specific Plan) in accordance with the terms and conditions of the Navy Conveyance Agreement and Federal Quitclaim Deeds. The DDA provides for the Developer's phased purchase of approximately 87.4 acres of land generally bounded by a future extension of Warner Avenue on the north, Jamboree Road on the east, Barranca Parkway on the south and a future extension of Tustin Ranch Road north from Von Karman Avenue. The DDA further provides for the phased development of the site by the Developer to consist of demolition of the existing structures on the site, removal of existing utilities and construction of a high quality, Class "A", commercial retail project. Improvements will also include an accompanying set of amenities, all further identified in the DDA's Scope of Development (DDA Attachment 8). The DDA will require the Developer to secure all required land use entitlements from the Tustin Planning Commission and City Council as defined by the Schedule of Performance (DDA Attachment 7). Vertical and Horizontal Improvements as well as certain Tustin Legacy Backbone Infrastructure Program Improvements will be constructed in compliance with all provisions of the DDA and with all "Conditions of Approval" stipulated by the Planning Commission, City Council and other applicable governmental agencies with jurisdiction. A concept plan, design review and tentative tract map approval will be required by or Planning Commission and City Council, as applicable, and these entitlements will also be a condition of any initial escrow closing. The DDA requires the Developer to fund all project development costs including but not limited to, the acquisition of the site, construction of on-site and off-site improvements and all public utility improvements related to developing the site, as well as a portion of Tustin Legacy Backbone Infrastructure. The DDA also provides for review of more detailed construction plans at later stages of design development to assure conformity with DDA requirements and entitlements that may be granted by the City. The following are a number of key business terms of the DDA: July 19, 2004 City Council Report to William Huston Tustin Legacy Disposition and Development Agreement 04-02 The project will include a megaplex theatre complex (containing a minimum of 14 screens and 3,000 seats), specialty retail uses, restaurants, and both "big box' and "lifestyle" components containing approximately 1,006,100 square feet of floor area. Vertical Improvements are expected to be constructed within stipulated time frames based on whether a portion of the development is a minor pad, lease parcel or is considered within the Minimum Project threshold defined by the DDA (a minimum of 545,000 square feet of floor area). The first phase of development will largely include proposed development south of the South Loop Road and also include a major retail pad north of the South Loop Road parallel to Tustin Ranch Road and eight minor pads (one minor pad is located north of the South Loop Road). Developer will have 24 months to complete that portion of the Project consistent with the Minimum Project threshold, not including development of minor pads. On minor pads, the Developer will have 5 years following the initial escrow closing date, unless a minor pad is considered a lease parcel by the DDA, in which case the applicable provisions related to a lease parcels would apply. On lease parcels, Developer will have 30 months following any subsequent escrow closing date for the affected parcel. Developer will be initially purchasing approximately 59.5 acres (47 acres within Developer Fee Parcel A and 12.4 acres in Developer Fee Parcel B) and ground leasing approximately 27.9 acres of the site. The purchase price for Developer Fee Parcel A and Sublease Parcels A and B will total $19,001,520, of which $18,435,150 is for Developer Fee Parcel A to be paid at an initial closing and $566,370 to be paid when Sublease Parcels A and B are ready for conveyance. The sale price for that portion of the project north of the Loop Road will total $14,412,641 . As part of the initial conveyance, the Developer will purchase approximately 12.4 acres of the land area north of the South Loop Road (Developer Fee Parcel B) at a price of $4,601,722. The purchase price for the remainder of the Developer Fee parcels and Sublease parcels will be based on the formula of $8.50 a square foot of land area. It is currently estimated that this will total an additional $9,810,920 in sale proceeds . The above purchase price to be paid by the Developer is not less than the fair market value of the site based on an independent appraisal and the project does not require any public subsidy. The Developer retains the option of paying the full purchase price of Developer Fee Parcel B or utilizing a deferred payment option which permits a 90% deferral of the purchase price of this parcel subject to a promissory note and Deed of Trust securing the balance of the purchase price with the balance bearing interest at the rate of 6.36% per annum, compounded annually after close of the initial escrow. Principal of the note and all accrued interest will be due and payable upon the earlier of: the last subsequent closing of remaining parcels not yet conveyed for the July 19, 2004 City Council Report to William Huston Tustin Legacy Disposition and Development Agreement 04-02 project; the closing of Developer's refinancing of its first permanent loan with respect to any portion of the project following replacement of its construction loan; transfer by the Developer of those portions of the project owned by Developer (excluding minor pads), or; the 15th anniversary of the initial escrow closing date. • The City will receive subsequent participation in the project in an amount of 25% of any percentage rent paid by tenants to Developer or any successor interest for a period of 20 years. The ground lease acreage includes parcels which the City currently leases from the Navy under a Lease in Furtherance of Conveyance (LIFOC) and other portions of the site which require assemblage with LIFOC parcels in order to accommodate development. The lease term is ten (10) years or earlier if all of, or the last portion of, the lease parcels are available for conveyance with options to extend. The base rent under the ground lease is $1,000 per year. The Developer will be restricted from utilizing any lease parcel for economic purposes or from generating economic returns. However, the Developer will not be precluded from utilizing any lease parcel for parking, landscaping and special event purposes. • Developer is responsible for completion of all off-site and on-site infrastructure improvements necessary for development of the site as well as making a Tustin Legacy Fair Share Backbone Infrastructure Contribution of $22,800,000 for portions of the project site south of the Loop Road and $13,530,000 for portions of the project site north of the Loop Road. Developer will be required to pay a share of the $13,530,000 obligation attributable to its initial acquisition of Developer Fee Parcel (north of the Loop Road). Developer will also be responsible for design and construction of certain infrastructure constituting a portion of the Tustin Legacy Backbone Infrastructure, including but not limited to improvements to Barranca Parkway, the extension of Tustin Ranch Road, and the extension of Warner Avenue. To the extent that Developer's infrastructure expenses for Tustin Legacy Backbone Infrastructure exceed the Developer's fair share contribution, the City would reimburse the Developer in the future pursuant to a reimbursement agreement to be completed prior to initial escrow closing. • Given the City's desire to ensure a Class A, high quality retail center and the developer's desire to ensure that any City approvals of tenants was expeditious, significant effort was given to identifying DDA pre -approved users, prohibited users and prohibited uses. The DDA includes other provisions which are typical to such agreements. These include, but are not limited to: a schedule of performance, restrictions on the ability of the Developer to transfer the DDA, certain rights of reversion or repurchase in favor of July 19, 2004 City Council Report to William Huston Tustin Legacy Disposition and Development Agreement 04-02 the City in the event of an inability to cure certain defaults by the Developer, use restrictions and non-discrimination provisions, maintenance covenants, requirements for insurance including environmental insurance, and indemnification, including environmental indemnification in favor of the City and default provisions and remedies. The Developer is currently processing entitlement permits for the Project (Tentative Tract Map, variance and conditional use permit applications). Once entitlements are approved for the Project, the Developer will be responsible for preparing complete public and private construction level improvement plans and will be required to obtain building permits within the time schedules identified in the DDA. Provisions of the DDA anticipate an initial escrow closing on November 9, 2004 with Vertical and Horizontal Improvements estimated to begin in March 2005. Any initial openings can be expected in March to April of 2006. Pursuant to the National Environmental Policy Act (NEPA) as implemented by the Council on Environmental Quality Regulations (40 CFR parts 1600-1608) and the California Environmental Quality Act (CEQA) (Calif. Public Resources Code Sec. et. Seq. 21000) and the State CEQA Guidelines (Title 14 Cal. Code of Regulations, Section 16000 et. Seq.), the City of Tustin and Department of Navy completed a Final Joint Program Environmental Impact State me WEnvironmental Impact Report for the Disposal and Reuse of the Marine Corps Air Station (MCAS) Tustin (the MCAS Tustin FEIS/EIR). The MCAS Tustin FEIS/EIR was certified as adequate under CEQA by the Tustin City Council on January 16, 2001. Based on the FEIS/EIR, the City Council adopted a General Plan Amendment and the MCAS Tustin Specific Plan. An Initial Study has been prepared for DDA 04-02 and pending entitlement applications for the Project. Based upon review of the project and the FEIS/EIR, it has been determined that environmental issues related to the Project have previously been addressed and evaluated in the MCAS Tustin FEIS/EIR. No additional environmental analysis or action is required. Mitigation measures identified in the MCAS Tustin FEIS/EIR, as applicable, are included in the DDA or will be conditions of approval of pending entitlements for the Project; therefore, staff recommends that the City Council find that: (i) the environmental effects of the Project are within the scope of the MCAS Tustin FEIS/EIR and were fully examined in the MCAS Tustin FEIS/EIR, (ii) no substantial changes are proposed in the Project or have occurred with respect to circumstances under which the Project is being undertaken since certification of the MCAS Tustin FEIS/EIR, (iii) no new information has become available since that the certification of the MCAS Tustin FEIS/EIR, and (iv) pursuant to Public Resources Code Section 21116 and the requirements of CEQA regulations promulgated with respect thereto including Title 14 California Code of Regulations Section 15168(c), no additional environmental analysis, action or document is required and no new mitigation measures would be required. All applicable mitigation measures described in the July 19, 2004 City Council Report to William Huston Tustin Legacy Disposition and Development Agreement 04-02 adopted Mitigation Monitoring Report for the MCAS Tustin FEIS/EIR are incorporated into this Project or will be conditions of approval of pending entitlements for the Project. CONCLUSION The Tustin Legacy Retail site is a critically important parcel in the overall development of Tustin Legacy as it is a gateway site to the Tustin Legacy project and a highly visible southern entrance to the City of Tustin. Given the site's central location in Orange County, the site presents a unique opportunity to create an extraordinary environment for retail and entertainment uses. The benefits to be derived from the project are numerous and will have long lasting impacts to the City and community. The financial commitments by Developer have been fully evaluated and the DDA protects the interests of the City. Special counsel Amy Freilich was also a City negotiator on this transaction and has been an tremendous assistance to staff on this matter. Christine Shingleton Assistant City Manage/ Attachments: Resolution No. 04-60 DDA 04-02 Note: Due to the size of the draft DDA attachment, only a limited distribution was made. Copies are available for review in the Office of the City Clerk. RESOLUTION NO.04-60 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, FINDING THAT PURSUANT TO PUBLIC RESOURCES CODE SECTION 2116 AND SECTION 15168(c) OF STATE CEQA GUIDELINES THE PROJECT IS WITHIN THE SCOPE OF THE FINAL JOINT PROGRAM MCAS ENVIRONMENTAL IMPACT STATEMENT/ENVIRONMENTAL IMPACT REPORT (MCAS TUSTIN FEIS/EIR) AND NO NEW ENVIRONMENTAL DOCUMENT IS REQUIRED; APPLICABLE MITIGATION MEASURES HAVE BEEN INCORPORATED INTO THE PROJECT OR WILL BE CONDITIONS OF APPROVAL ON PENDING ENTITLEMENT APPLICATIONS The City Council of the City of Tustin hereby finds, determines and orders: A. That Disposition and Development Agreement (DDA) 04-02 and the respective development entitlement applications and plans (Concept Plan 04-001, Design Review 04-010, Conditional Use Permit 04-015, Vested Tentative Tract Map No. 16695, and Variance 04-002) are considered collectively a "Project" pursuant to the terms of the California Environmental Quality Act; and B. That an initial study was prepared (Exhibit A) to evaluate the potential impacts associated with the Project. The City Council hereby finds that this project is within the scope of the previously approved MCAS Tustin Final Program EIS/EIR previously certified on January 16, 2001. Based on the initial study, the effects of the Project relating to all environmental impact issues were examined in the MCAS FEIS/EIR. The applicable mitigation measures developed in the MCAS Tustin FEIS/EIR are incorporated into DDA 04-02 or will be conditions of entitlement approvals (Concept Plan 04-001, Design Review 04-010, Conditional Use Permit 04-015, Vested Tentative Tract Map No. 16695, and Variance 04- 002). C. That the environmental effects of the Project are within the scope of the MCAS Tustin FEIS/EIR and were fully examined in the MCAS Tustin FEIS/EIR; no substantial changes are proposed in the Project or have occurred with respect to circumstances under which the Project is being undertaken since certification of the MCAS Tustin FEIS/EIR; no new information has become available since the certification of the MCAS Tustin FEIS/EIR, and pursuant to Public Resources Code Section 2116 and the requirements of CEQA regulations promulgated with respect thereto including Title 14 California Code of Regulations Sections 15162 and 15168(c), no additional environmental analysis, action or document is required by the CEQA. Resolution No. 04-60 Page 2 PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on the 6th day of July 2004. TONY KAWISHIMA, Mayor PAMELA STOKER City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex -officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 04-60 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 6th day of July 2004, by the following vote: COUNCILMEMBER AYES: COUNCILMEMER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER CITY CLERK EXHIBIT A OF RESOLUTION NO. 04-60 COMMUNITY DEVELOPMENT DEPARTMENT 300 Centennial Way, Tustin, CA 92780 (714) 573-3100 ENVIRONMENTAL ANALYSIS CHECKLIST For Projects With Previously Certified/Approved Environmental Documents: Environmental Impact Statement/Environmental Impact Report (EIS/EIR) for the Disposal and Reuse of Marine Corps Air Station (MCAS) Tustin This checklist and the following evaluation of environmental impacts (Attachment 1 of Exhibit A of Resolution No. 3924) takes into consideration the preparation of an environmental document prepared at an earlier stage of the proposed project. The checklist and evaluation evaluate the adequacy of the earlier document pursuant to Section 15162 and 15168 of the California Environmental Quality Act (CEQA) Guidelines. A. BACKGROUND Project Title(s): Development of "The District at Tustin Legacy" Lead Agency: City of Tustin, 300 Centennial Way, Tustin, California 92780 Lead Agency Contact Person: Matt West Phone: (714) 573-3118 Project Location: Planning Areas 16, 17, and 19 of the MCAS -Tustin Specific Plan (Reuse Plan Disposition parcels 10, 11, and 12), the future Warner Avenue to the north, the future Tustin Ranch Road to the west, Planning Area 18 (Reuse Plan Disposal Parcel 9) to the southwest, Barranca Parkway to the south, Jamboree Road to the east. Project Sponsor's Name and Address: Vestar Development/ Kimco Tustin, L.P. 2425 East Camelback Road Phoenix, AZ 85016 General Plan Designation: MCAS Tustin Specific Plan Zoning Designation: SP -1 Specific Plan, Planning Areas 16, 17, and 19 Project Description: Approval of a Disposition and Development Agreement (DDA) between the City of Tustin and Vestar Development and Concept Plan 04-001, Vesting Tentative Tract Map 16695, Design Review 04-010, Conditional Use Permit 04-015, and Variance 04-002 for the purpose of developing 1,006,100 square feet of retail uses within a development to be known as "The District at Tustin Legacy". Surrounding Uses: North and West: Existing former MCAS Tustin Airfield Facilities South: Light IndustrialBusiness Parks East: Jamboree Road/Industrial Uses Northeast: Existing Single -Occupancy Hotel B. Previous Environmental Documentation: Program Final Environmental Impact Statement/Environmental Impact Report (Program FEIS/EIR) for the Disposal and Reuse of Marine Corps Air Station (MCAS) Tustin (State Clearinghouse #94071005) certified by the Tustin City Council on January 16, 2001. ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" as indicated by the checklist in Section D below. ❑Land Use and Planning ❑Population and Housing ❑Geology and Soils ❑Hydrology and Water Quality ❑Air Quality ❑Transportation & Circulation ❑Biological Resources ❑Mineral Resources ❑Agricultural Resources C. DETERMINATION: On the basis of this initial evaluation: ❑Hazards and Hazardous Materials ❑Noise ❑Public Services ❑Utilities and Service Systems ❑Aesthetics ❑Cultural Resources ❑Recreation ❑Mandatory Findings of Significance ❑ I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. ❑ I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A NEGATIVE DECLARATION will be prepared. ❑ I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. ❑ I find that the proposed project MAY have a significant effect(s) on the environment, but at least one effect 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets, if the effect is a "Potentially Significant Impact' or "Potentially Significant Unless Mitigated." An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. ® I find that although the proposed project could have a significant effect on the environment, there WILL NOT be a significant effect in this case because all potentially significant effects 1) have been analyzed adequately in an earlier EIR pursuant to applicable standards, and 2) have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. ❑ I find that although the proposed project could have a significant effect on the environment, there WILL NOT be a significant effect in this case because all potentially significant effects 1) have been analyzed adequately in an earlier NEGATIVE DECLARATION pursuant to applicable standards, and 2) have ERROR: timeout OFFENDING COMMAND: timeout STACK: 28 33 44 44 25 28 44 50 28 25 50 28 25 28 50 44 50 39 33 50 50 25 50 45 28 44 49 28 28 28 78 25 33 51 25 50 44 50 28 50 50 44 25 50 44 44 50 -mark- been avoided or mitigated pursuant to that earlier NEGATIVE DECLARATION, including revis EXHIBIT A OF RESOLUTION NO. 04-60 COMMUNITY DEVELOPMENT DEPARTMENT 300 Centennial Way, Tustin, CA 92780 (714) 573-3100 ENVIRONMENTAL ANALYSIS CHECKLIST For Projects With Previously Certified/Approved Environmental Documents: Environmental Impact Statement/Environmental Impact Report (EIS/EIR) for the Disposal and Reuse of Marine Corps Air Station (MCAS) Tustin This checklist and the following evaluation of environmental impacts (Attachment 1 of Exhibit A of Resolution No. 3924) takes into consideration the preparation of an environmental document prepared at an earlier stage of the proposed project. The checklist and evaluation evaluate the adequacy of the earlier document pursuant to Section 15162 and 15168 of the California Environmental Quality Act (CEQA) Guidelines. A. BACKGROUND Project Title(s): Development of "The District at Tustin Legacy" Lead Agency: City of Tustin, 300 Centennial Way, Tustin, California 92780 Lead Agency Contact Person: Matt West Phone: (714) 573-3118 Project Location: Planning Areas 16, 17, and 19 of the MCAS -Tustin Specific Plan (Reuse Plan Disposition parcels 10, 11, and 12), the future Warner Avenue to the north, the future Tustin Ranch Road to the west, Planning Area 18 (Reuse Plan Disposal Parcel 9) to the southwest, Barranca Parkway to the south, Jamboree Road to the east. Project Sponsor's Name and Address: Vestar Development/ Kimco Tustin, L.P. 2425 East Camelback Road Phoenix, AZ 85016 General Plan Designation: MCAS Tustin Specific Plan Zoning Designation: SP -1 Specific Plan, Planning Areas 16, 17, and 19 Project Description: Approval of a Disposition and Development Agreement (DDA) between the City of Tustin and Vestar Development and Concept Plan 04-001, Vesting Tentative Tract Map 16695, Design Review 04-010, Conditional Use Permit 04-015, and Variance 04-002 for the purpose of developing 1,006,100 square feet of retail uses within a development to be known as "The District at Tustin Legacy". Surrounding Uses: North and West: Existing former MCAS Tustin Airfield Facilities South: Light Industrial/Business Parks East: Jamboree Road/Industrial Uses Northeast: Existing Single -Occupancy Hotel B. Previous Environmental Documentation: Program Final Environmental Impact Statement/Environmental Impact Report (Program FEIS/EIR) for the Disposal and Reuse of Marine Corps Air Station (MCAS) Tustin (State Clearinghouse #94071005) certified by the Tustin City Council on January 16, 2001. ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact" as indicated by the checklist in Section D below. ❑Land Use and Planning ❑Population and Housing ❑Geology and Soils ❑Hydrology and Water Quality ❑Air Quality ❑Transportation & Circulation ❑Biological Resources ❑Mineral Resources ❑Agricultural Resources C. DETERMINATION: On the basis of this initial evaluation: ❑Hazards and Hazardous Materials ❑Noise ❑Public Services ❑Utilities and Service Systems ❑Aesthetics ❑Cultural Resources ❑Recreation ❑Mandatory Findings of Significance ❑ I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. ❑ I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A NEGATIVE DECLARATION will be prepared. ❑ I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. ❑ I find that the proposed project MAY have a significant effect(s) on the environment, but at least one effect 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets, if the effect is a "Potentially Significant Impact" or "Potentially Significant Unless Mitigated." An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. ® I find that although the proposed project could have a significant effect on the environment, there WILL NOT be a significant effect in this case because all potentially significant effects 1) have been analyzed adequately in an earlier EIR pursuant to applicable standards, and 2) have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. ❑ I find that although the proposed project could have a significant effect on the environment, there WILL NOT be a significant effect in this case because all potentially significant effects 1) have been analyzed adequately in an earlier NEGATIVE DECLARATION pursuant to applicable standards, and 2) have been avoided or mitigated pursuant to that earlier NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project. Preparer: Minoo Ashabi, Associate Planner Christine A. Shingleton, Assistant City Manager Elizabeth A. Binsack, Community Development Director D. EVALUATION OF ENVIRONMENTAL IMPACTS See Attached Date: Date Date EVALUATION OF ENVIRONMENTAL IMPACTS I. AESTHETICS — Would the project: a) Have a substantial adverse effect on a scenic vista? b) Substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? c) Substantially degrade the existing visual character or quality of the site and its surroundings? d) Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? II. AGRICULTURE RESOURCES: In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Dept. of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Would the project: a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non- agricultural use? b) Conflict with existing zoning for agricultural use, or a Williamson Act contract? c) Involve other changes in the existing environment which, due to their location or nature, could result in conversion of Farmland, to non-agricultural use? III. AIR OUALITY: Where available, the significance criteria established by the applicable air quality management or air pollution control district may be relied upon to make the following determinations. Would the project: a) Conflict with or obstruct implementation of the applicable air quality plan? b) Violate any air quality standard or contribute substantially to an existing or projected air quality violation? c) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non - attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? d) Expose sensitive receptors to substantial pollutant concentrations? e) Create objectionable odors affecting a substantial number of people? No Substantial New More Change From Significant Severe Previous Impact Impacts Analysis ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ IV. BIOLOGICAL RESOURCES: - Would the project: a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, regulations or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means? d) Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? e) Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? f) Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan? V. CULTURAL -1. -Would the project: a) Cause a substantial adverse change in the significance of a historical resource as defined in § 15064.5? b) Cause a substantial adverse change in the significance of an archaeological resource pursuant to § 15064.5? c) Directly or indirectly destroy a unique paleontological resource or site or unique geologic feature? d) Disturb any human remains, including those interred outside of formal cemeteries? VI. GEOLOGY AND SOILS: - Would the project: a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: No Substantial New More Change From Significant Severe Previous Impact Impacts Analysis ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ i) Rupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. ii) Strong seismic ground shaking? iii) Seismic -related ground failure, including liquefaction? iv) Landslides? b) Result in substantial soil erosion or the loss of topsoil? c) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off-site landslide, lateral spreading, subsidence, liquefaction or collapse? d) Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building Code (1994), creating substantial risks to life or property? e) Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems where sewers are not available for the disposal of waste water? VII.HAZARDS AND HAZARDOUS MATERIALS: Would the project: a) Create a significant hazard to the public or the environment through the routine transport, use, or disposal of hazardous materials? b) Create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school? d) Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard for people residing or working in the project area? f) For a project within the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working in the project area? No Substantial New More Change From Significant Severe Previous Impact Impacts Analysis ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? VIII. HYDROLOGY AND WATER QUALITY: — Would the project: a) Violate any water quality standards or waste discharge requirements? b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre- existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion or siltation on- or off-site? d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding on - or off-site? e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff? f) Otherwise substantially degrade water quality? g) Place housing within a 100 -year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? h) Place within a 100 -year flood hazard area structures which would impede or redirect flood flows? i) Expose people or structures to a significant risk of loss, injury or death involving flooding as a result of the failure of a levee or dam? j) Inundation by seiche, tsunami, or mudflow? IX. LAND USE AND PLANNING — Would the project: a) Physically divide an established community? ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ID No Substantial ❑ New More Change From Significant Severe Previous g) Impair implementation of or physically interfere with an Impact Impacts Analysis adopted emergency response plan or emergency evacuation ❑ ❑ plan? ❑ ❑ h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? VIII. HYDROLOGY AND WATER QUALITY: — Would the project: a) Violate any water quality standards or waste discharge requirements? b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre- existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion or siltation on- or off-site? d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding on - or off-site? e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff? f) Otherwise substantially degrade water quality? g) Place housing within a 100 -year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? h) Place within a 100 -year flood hazard area structures which would impede or redirect flood flows? i) Expose people or structures to a significant risk of loss, injury or death involving flooding as a result of the failure of a levee or dam? j) Inundation by seiche, tsunami, or mudflow? IX. LAND USE AND PLANNING — Would the project: a) Physically divide an established community? ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ID ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ b) Conflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? c) Conflict with any applicable habitat conservation plan or natural community conservation plan? X. MINERAL RESOURCES — Would the project: a) Result in the loss of availability of a known mineral resource that would be of value to the region and the residents of the state? b) Result in the loss of availability of a locally -important mineral resource recovery site delineated on a local general plan, specific plan or other land use plan? XI. NOISE — Would the project result in: a) Exposure of persons to or generation of noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? b) Exposure of persons to or generation of excessive groundborne vibration or groundborne noise levels? c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? d) A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excess noise levels? XII.POPULATION AND HOUSING — Would the project: a) Induce substantial population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere? No Substantial New More Change From Significant Severe Previous Impact Impacts Analysis ❑ ❑ ❑ ❑ ED ❑ ❑ ❑ ❑ ED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ No Substantial New More Change From Significant Severe Previous Impact Impacts Analysis c) Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere? ❑ ❑ XIII. PUBLIC SERVICES a) Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the public services: Fire protection? Police protection? Schools? Parks? Other public facilities? XIV. RECREATION — a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? b) Does the project include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse physical effect on the environment? XV. TRANSPORTATION/TRAFFIC — Would the project: a) Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e. result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections)? b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? d) Substantially increase hazards due to a design feature (e.g. sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? e) Result in inadequate emergency access? f) Result in inadequate parking capacity? ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ g) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)? XVI. UTILITIES AND SERVICE SYSTEMS — Would the project: a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has adequate capacity to serve the project's projected demand in addition to the provider's existing commitments? f) Be served by a landfill with sufficient permitted capacity to accommodate the project's solid waste disposal needs? g) Comply with federal, state, and local statutes and regulations related to solid waste? XVII. MANDATORY FINDINGS OF SIGNIFICANCE a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? b) Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? No Substantial New More Change From Significant Severe Previous Impact Impacts Analysis ❑ ❑ ❑ ❑ ED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ATTACHMENT 1 OF EXHIBIT A OF RESOLUTION NO. 3919 Evaluation of Environmental Impacts PLANNING AREAS 16,17 AND 19 OF MCAS TUSTIN SPECIFIC PLAN VESTAR DEVELOPMENT — "THE DISTRICT AT TUSTIN LEGACY" DISPOSITION AN DEVELOPMENT AGREEMENT 04-002, VESTING TENTATIVE TRACT MAP 16695, CONCEPT PLAN 04-001, DESIGN REVIEW 04-010, CONDITIONAL USE PERMIT 04-015, AND VARIANCE 04-002 BACKGROUND The former Marine Corps Air Station (MCAS) Tustin was officially closed on July 2, 1999. The City was designated as the Local Redevelopment Authority (LRA) for the reuse of MCAS Tustin and, acting as such, approved a Reuse Plan that provided for future land uses at the former MCAS Tustin on October 1996, subsequently amended on September 1998 ("the Reuse Plan"). The Reuse Plan was subsequently reviewed and approved by the United States Department of Housing and Urban Development (HUD) as consistent with federal law regarding the homeless. In accordance with the provisions of the National Environmental Policy Act ("NEPA") of 1969, as amended, and the California Environmental Quality Act ("CEQA"), the federal government and City prepared a Joint Final Program Environmental Impact Statement/Environmental Impact Report for the Reuse and Disposal of MCAS Tustin. On January 16, 2001, the City of Tustin certified the Final Joint Program Environmental Impact Statement/Environmental Impact Report for the disposal and reuse of MCAS -Tustin (referenced as FEIS/EIR herein). The project is within the MCAS Tustin Specific Plan, which includes 1,000 acres that have been conveyed by deed from the Department of the Navy to the City of Tustin and approximately 153 acres conveyed by lease to the City of Tustin for redevelopment of the former Marine Corps Air Station (MCAS). The project site includes approximately 111.77 gross acres within Planning Areas 16, 17, and 19 of the MCAS Tustin Specific Plan and an additional seven (7) parcels leased to the City of Tustin by the Department of Navy, known as Lease In Furtherance of Conveyance (LIFOC) parcels, as legally described in Navy documents as parcels III -C-3, III -C- 4, III -C-5, III -D-9, III -D-11, II -D-10, and portions of parcels III -H-13 and IV -G-3. The site is bounded by future Warner Avenue to the north, future Tustin Ranch Road to the west, the existing Army Reserve site to the southwest, Barranca Parkway to the south, and Jamboree Road to the east. Portions of Reuse Plan Disposition Parcels 8, 14, 16, 27, and 31 are also included within the boundaries of the vesting Tentative Tract Map for the sole purpose of showing the ultimate Warner Avenue, South Loop Road, and Tustin Ranch Road right-of-way improvements. The proposed project is a subdivision request for a vesting Tentative Tract Map (VTTM 16695) for the purpose of creating approximately twenty-nine (29) numbered lots and twelve (12) lettered lots to accommodate approximately 1,006,100 square feet of retail development known as "The District at Tustin Legacy." The project request is also for Concept Plan 04-001 to verify the project is consistent with the intent of the Specific Plan as a whole, Design Review 04-010 to review the site plan and building designs, Conditional Use Permit 04-015 to review two (2) drive-through restaurants, a movie theater, a gas station, master sign program, and shared Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 2 parking analysis, and Variance 04-002 to construct the movie theater building fifteen (15) feet from Barranca Parkway where a minimum thirty (30) foot building setback is required, and at a height of sixty (60) feet where a maximum fifty (50) foot height is permitted within Planning Area 19 of the MCAS Tustin Specific Plan. Primary access to the site will be provided at the intersections of Warner Avenue and South Loop Road, Tustin Ranch Road and South Loop Road, and Barranca Parkway and Millikan Avenue. Excepting the requested variances, the proposed project is consistent with the requirements and intent of the Specific Plan. The applicant is proposing 1,006,100 square feet of commercial uses and Alternative #1 in the FEIS/EIR for MCAS Tustin previously analyzed 1,442,710 square feet of commercial uses within Planning Areas 16, 17, and 19. All related environmental impacts were considered for the FEIS/EIR and all applicable implementation measures and mitigation measures are either included in the Mitigation Monitoring Program (Attachment 2 of Exhibit A of Resolution No. 3919), DDA 04-02, or as conditions of project approval, as identified in the Mitigation Monitoring Program. The following information provides background support for the conclusions identified in the Environmental Analysis Checklist. I. AESTHETICS — Would the project: a) Have a substantial adverse effect on a scenic vista? b) Substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? c) Substantially degrade the existing visual character or quality of the site and its surroundings? d) Create a new source of substantial light or glare, which would adversely affect day or nighttime views in the area? The project is not located on a scenic highway nor will it affect a scenic vista. Development of the vacant aircraft facilities, parking aprons, and open areas of short grasses would be replaced by a more urban view with vertical elements, such as buildings, driveways, parking lots, and landscaping. Development of commercial uses within Planning Areas 16, 17, and 19 was considered within the FEIS/EIR and will have no negative aesthetic effect on the site when mitigation measures are incorporated with approval of the project. All exterior design is required to be in compliance with Section 2.17.3 (B) — Urban Design Guidelines for Non -Residential Development of MCAS Tustin Specific Plan, the applicable development standards in Sections 3.8.2 and 3.8.4, and the Landscape Concept Section 2.17.2 as they relate to design of Warner Avenue, Tustin Ranch Road, Barranca Parkway, Jamboree Road, the South Loop Road, primary street corners, and project entries. The applicant is requesting to construct a movie theater building fifteen (15) feet from Barranca Parkway where a minimum thirty (30) foot building setback is required and at a Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 3 height of sixty (60) feet where a maximum fifty (50) foot height is permitted within Planning Area 19 of the MCAS Tustin Specific Plan and will be processed in accordance with Section 4.2.4. In accordance with the FEIS/EIR, the proposal includes a design review application process in accordance with Section 4.2.2 for Development Project review, which will ensure that. the design of the project is cohesive and in harmony with the surrounding development. The project will utilize a variety of lighting methods to create distinct lighting sub -areas, or districts, on the project site through the use of pole- and wall - mounted light fixtures, in -grade and above grade uplights, festival lighting in trees, etc; however, all exterior lighting would be designed to reduce glare, create a safe night environment, and avoid impacts to surrounding properties in compliance with Section 2.17.3 (B) of the MCAS Tustin Specific Plan and the City's Security Ordinance. The proposed project will result in no substantial changes to the environmental impacts previously evaluated with the certified Program FEIS/EIR. Mitigation/Monitoring Required: Mitigation measures have been adopted by the Tustin City Council in the FEIS/EIR; these measures are included in the Mitigation Monitoring Program for the project or as conditions of approval for the project as identified in Attachment 2 of Exhibit A of Resolution No. 04-60. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin Security Ordinance Tustin General Plan II. AGRICULTURE RESOURCES: In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Dept. of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Would the project: a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non-agricultural use? b) Conflict with existing zoning for agricultural use or a Williamson Act contract? c) Involve other changes in the existing environment which, due to their location or nature, could result in conversion of Farmland to non-agricultural use? The project would have a minimal impact to Reuse Plan Disposal Parcel 31 and not impact prime farmland, unique farmland, or farmland of statewide importance as shown on maps prepared pursuant to the Farmland Managing and Monitoring Program of the California Resources Agency, to non-agricultural use. Also, the property is not zoned for agricultural use or a Williamson Act Contract, nor does the proposed use involve other changes in the Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 4 existing environment that could result in the conversion of farmland to non-agricultural use. Existing portions of the site are identified as "Airfield Operations/Agricultural" in the Specific Plan; however, except for an extremely small portion of Parcel 31, no area of the project site is currently used or designated as agricultural land. Consequently, no mitigation measures are necessary and no substantial change is expected from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: In certifying the FEIS/EIR, the Tustin City Council adopted Findings of Fact and Statement in Overriding Consideration concluding that impacts to agricultural resources were unavoidable (Resolution No. 00-90). No mitigation is required. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (Page 3-84, 4-109 through 114) Resolution No. 00-90 Reuse Plan and MCAS Tustin Specific Plan Tustin General Plan III. AIR QUALITY: Where available, the significance criteria established by the applicable air quality management or air pollution control district may be relied upon to make the following determinations. Would the project: a) Conflict with or obstruct implementation of the applicable air quality plan? b) Violate any air quality standard or contribute substantially to an existing or projected air quality violation? C) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non -attainment under an applicable federal or state ambient air quality standard (including releasing emissions that exceed quantitative thresholds for ozone precursors)? d) Expose sensitive receptors to substantial pollutant concentrations? e) Create objectionable odors affecting a substantial number of people? All air quality environmental impacts related to development of the entire Specific Plan area (including the project site) were considered in the adopted FEIS/EIR. Development of the entire project would: 1) be inconsistent with the 1994 and 1997 South Coast Air Basin (SCAB) Air Quality Management Plan (AQMP); 2) exceed South Coast Air Quality Management District (SCAQMD) thresholds of significance for CO, NO, and ROC from long-term operation emissions from mobile (vehicular) and stationary sources; and 3) would exceed SCAQMD thresholds of significance during some or all phases of the project for peak reduced emissions of suspended particulates (PM10), reactive organic compounds (ROC), and oxides of nitrogen (NOX) due to construction activities. However, a Statement of Overriding Considerations for the FEIS/EIR was adopted by the Tustin City Council on January 16, 2001, identifying specific justifiable economic, legal, Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 5 social, technological, or other considerations. Since the proposed project includes 1,006,100 square feet of retail development with a maximum floor area ratio (FAR) of .32, which is less than the 1,442,710 square feet and permitted FAR range of .32-.54 analyzed in the FEIS/EIR for the project area, no additional impacts are anticipated. Construction air emissions are also anticipated and would result from the following four (4) construction activities: 1) demolition (which may include asbestos removal); 2) mass grading; 3) site preparation and utility installation; and 4) building construction. Consequently, no substantial change is expected from the analysis previously completed in the FEIS/EIR. Mitigation/Monitoring Required: Specific mitigation measures have been adopted by the Tustin City Council in certifying the FEIS/EIR for operational and construction activities. However, the FEIS/EIR also concluded that the Reuse Plan related operational air quality impacts were significant and could not be fully mitigated. A Statement of Overriding Considerations for the FEIS/EIR was adopted by the Tustin City Council on January 16, 2001 (Resolution No. 00-90). Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-143 through 153, 4-207 through 4-230 and pages 7-41 through 7-42) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Resolution No. 00-90 Tustin General Plan IV. BIOLOGICAL RESOURCES: - Would the project: a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means? d) Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 6 e) Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? f) Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional or state habitat conservation plan? The FEIS/EIR found that implementation of the Reuse Plan and MCAS Tustin Specific Plan would not result in impacts to federally listed threatened or endangered plant or animal species, however, the FEIS/EIR determined that implementation of the Reuse Plan and MCAS Tustin Specific Plan (including the proposed project site) could impact jurisdictional waters/wetlands and the southwestern pond turtle, which is identified as a "species of special concern" by the California Department of Fish and Game (CDFG), or have an impact on jurisdictional waters/wetlands. Mitigation measures were included in the MCAS Tustin FEIS/EIR to require the relocation of the turtles and establishment of an alternative off-site habitat, and to require the applicant will obtain Section 404, Section 1601, and other permits as necessary for areas on the project site affecting jurisdictional waters of the U.S. or vegetated wetlands. Therefore, no substantial change is expected from the analysis previously completed in the FEIS/EIR for MCAS Tustin. The proposed project is within the scope of development considered with the analysis of the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: Mitigation measures have been adopted by the Tustin City Council in the FEIS/EIR; these measures are included in the Mitigation Monitoring Program for the project or as conditions of approval for the project as identified in Attachment 2 of Exhibit A of Resolution No. 04-60. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-75 through 3- 82, 4-103 through 4-108, and 7-26 through 7-27) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan V. CULTURAL RESOURCES: - Would the project: a) Cause a substantial adverse change in the significance of a historical resource as defined in §15064.5? b) Cause a substantial adverse change in the significance of an archaeological resource pursuant to § 15064.5? c) Directly or indirectly destroy a unique paleontological resource or site or unique geologic feature? d) Disturb any human remains, including those interred outside formal cemeteries? Numerous archaeological surveys have been conducted at the former MCAS Tustin site. In Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 7 1988, the State Office of Historic Preservation (SHPO) provided written concurrence that all open spaces on MCAS Tustin had been adequately surveyed for archaeological resources. Although one archaeological site (CA -ORA -381) has been recorded within the Reuse Plan area, it is believed to have been destroyed. It is possible that previously unidentified buried archaeological or paleontological resources within the project site could be significantly impacted by grading and construction activities. With the inclusion of mitigation measures identified in the MCAS Tustin FEIS/EIR that require construction monitoring, potential impacts to cultural resources can be reduced to a level of insignificance. No substantial change is expected from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: Mitigation measures have been adopted by the Tustin City Council in the FEIS/EIR; these measures are included in the Mitigation Monitoring Program for the project or as conditions of approval for the project as identified in Attachment 2 of Exhibit A of Resolution No. 04-60. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-68 through 3- 74, 4-93 through 4-102 and 7-24 through 7-26) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan VI. GEOLOGY AND SOILS: — Would the project: a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: • Rupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning map, issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. • Strong seismic ground shaking? • Seismic -related ground failure, including liquefaction? • Landslides? b) Result in substantial soil erosion or the loss of topsoil? C) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off-site landslide, lateral spreading, subsidence, liquefaction or collapse? d) Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building Code (2001), creating substantial risks to life or property? e) Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems where sewers are not available for the Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 8 disposal of wastewater? The FEIS/EIR indicates that impacts to soils and geology resulting from implementation of the Reuse Plan and MCAS Tustin Specific Plan would include non -seismic hazards (such as local settlement, regional subsidence, expansive soils, slope instability, erosion, and mudflows) and seismic hazards (such as surface fault displacement, high-intensity ground shaking, ground failure and lurching, seismically induced settlement, and flooding associated with dam failure. However, the FEIS/EIR for MCAS Tustin concluded that compliance with state and local regulations and standards, along with established engineering procedures and techniques, would avoid unacceptable risk or the creation of significant impacts related to such hazards. No substantial change is expected for development of the project from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: Compliance with existing rules and regulations would avoid the creation of potential impacts. No mitigation is required. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-88 through 3- 97, 4-115 through 4-123 and 7-28 through 7-29) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan VII. HAZARDS AND HAZARDOUS MATERIALS: — Would the project: a) Create a significant hazard to the public or the environment through the routine transport, use or disposal of hazardous materials? b) Create a significant hazard to the public or the environment through reasonable foreseeable upset and accident conditions involving the release of hazardous materials into the environment? c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school? d) Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles or a public airport or public use airport, would the project result in a safety hazard for people residing or working in the project area? Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 9 f) For a project within the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working in the project area? g) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? The project will not create a significant hazard to the public through the transport, use, or disposal of hazardous materials, nor are there reasonably foreseeable upset and accident conditions at the property. Construction and operation of commercial uses would not emit hazardous emissions within a quarter mile of an existing or proposed school. The Navy has prepared and approved a Finding of Suitability to Transfer (FOST), in compliance with the MCAS Tustin FEIS/EIR, determining that the Quitclaimed portions of the project site are suitable for transfer and reuse as previously planned within the Reuse Plan for MCAS Tustin and as shown in the MCAS Tustin Specific Plan. The Navy has also prepared and approved a Finding of Suitability Lease (FOSE), in compliance with the MCAS Tustin FEIS/EIR, determining that the remaining portion of the project site currently leased to the City of Tustin by the Department of Navy are limited areas where lease restrictions are in place to prevent human exposure to potential contaminants while Navy remedial action and ongoing investigations are being concluded. These areas, as they affect portions of the site to be sub -leased and conveyed to the Developer are identified on Vesting Tentative Tract Map 16695 as lots 13, 14, 21, 22, 23, 24, 25, 26, and 28. In addition, the project is at least two (2) miles from John Wayne Airport, lies within a flight approach or departure corridor, and is within the within the boundaries of the Airport Environs Land Use Plan (AELUP); however, the Airport Land Use Commission of Orange County has not adopted an Accidental Potential Zone (APZ) in the AELUP for MCAS Tustin. As a result, it does not pose an aircraft -related safety hazard for future residents or workers. The project site is not located in a wildland fire danger area. No substantial change is expected from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: Compliance with existing deed restrictions, rules, and regulations would avoid the creation of potential impacts; no mitigation is required. Sources: Field Observation FEIS/EIR for Disposal and Reuse of MCAS Tustin pages (3-106 through 3- 117, 4-130 through 4-138 and 7-30 through 7-31) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Finding of Suitability to Transfer (FOST) for Southern Parcels 4-8, 10-2, 14, and 42, and Parcels 25, 26, 30-33, 37 and Portion of 40 and 41 Finding of Suitability to Lease (FOSL) for Southern Parcels Care -out Areas Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 10 1, 2, 3, and 4 Airport Environs Land Use Plan (AELUP) Tustin General Plan VIII. HYDROLOGY AND WATER QUALITY: - Would the project: a) Violate any water quality standards or waste discharge requirements? b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge, such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre-existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in flooding on- or off-site? d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner, which would result in flooding on- or off-site? e) Create or contribute runoff water which would exceed the capacity of existing or planned storm water drainage systems or provide substantial additional sources of polluted runoff? f) Otherwise substantially degrade water quality? g) Place housing within a 100 -year flood hazard area as mapped on a federal Flood hazard Boundary of Flood Insurance Rate Map or other flood hazard delineation map? h) Place within a 100 -year flood hazard area structures, which would impede or redirect flood flows? i) Expose people or structures to a significant risk of loss, injury or death involving flooding, including flooding as a result of the failure of a levee or dam? j) Inundation by seiche, tsunami, or mudflow? The Final MCAS Tustin Reuse Plan/Specific Plan FEIS/EIR analyzed potential impacts associated with hydrology and water quality assuming a development potential of 1,442,707 square feet within Planning Area 16, 17, and 19 on the former MCAS Tustin. The proposed development includes 1,006,100 square feet of commercial uses. In addition, in accordance with implementation measures in the FEIS/EIR, the City of Tustin and County of Orange entered into Cooperative Agreement D02-119 and an amendment to the agreement to ensure the improvement of regional channel facilities through the Tustin Legacy site, including preparation of a Runoff Management Plan (ROMP) that documents the existing watershed conditions and outlines a plan to mitigate development runoff through appropriate backbone infrastructure to accommodate issues of urban drainage, flood protection, and stormwater Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 11 quality. The developer will be required to provide final engineering documents and plans that are consistent with the requirements of the proposed ROMP. The project site is partially developed with several buildings and ancillary site improvements such as parking areas. The remainder of the site is vacant. The site currently drains from the northwest to the southeast; an existing earthen channel located adjacent to and running parallel with Jamboree Road conveys a majority of the runoff from the site. No part of the site is within a flood zone, as determined by FEMA, and there are no dams in the vicinity. The project site is not expected to be subject to seiche, tsunami, or mudflow. As discussed in the Hazardous Materials section, there are several existing parcels that are leased to the City of Tustin from the Department of the Navy (DON), known as "Leases in Furtherance of Conveyance (LIFOC)," that contain soil and groundwater contamination. These parcels underlie portions of Reuse Plan Disposition Parcels 11 and 12 and the future South Loop Road within the project area, and area identified on the Vesting Tentative Tract Map 16695 as Lots 13, 14, 21, 22, 23, 24, 25, and 26, and Lot C. The FEIS/EIR found that reuse would not be impacted by hazardous materials in the groundwater or soil since the DON is in the process of implementing various remedial actions that will remove, manage, or isolate potentially hazardous substances located within the site. The DON has committed to an expedited schedule to support the rapid transfer of affected parcels to support early reuse as planned in the approved Reuse Plan/Specific Plan for MCAS Tustin. The developer will be required to obtain DON approval for any construction activities within any LIFOC parcels on their site and comply with any lease restrictions to protect the DON's remediation activities and prevent the spread of contamination. Until the property is conveyed, the terms of the ground lease with the Developer would preclude economic uses of the property with the exception of parking, landscaping, and hardscape improvements. Water Quality As noted in the MCAS Tustin FEIS/EIR, reuse development would increase the amount of impervious surfaces on the project site, resulting in contaminants commonly associated with urban development including motor oils, fuel, and other vehicular fluids, and trash being washed by rain and carried with runoff into local and regional waterways. In addition, temporary site clearing, grading operations, and dewatering have the potential to dislodge dirt, surface materials, and contaminated groundwater that could be carried off-site into the storm drain system. However, the FEIS/EIR acknowledged that all reuse projects would be required to comply with the Total Maximum Daily Load (TMDL) for sediment and salinity in the Newport Bay watershed, which requires compliance with the Drainage Area Master Plan (DAMP) and the National Pollution Discharge Elimination System (NPDES), including the treatment of wastewater, if contaminated, preparation of a Storm Water Prevention Plan (SWPPP) that would implement specific best management practices (BMP) and preparation of a Water Quality Management Plan (WQMP). Compliance with state and local regulations and standards, along with established engineering procedures and techniques, would reduce potential impacts to water quality during construction and long- term operation to a less than significant level. Consequently, no substantial change is expected from the analysis previously completed in the FEIS/EIR for the reuse of MCAS Tustin. Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 12 Groundwater Other than construction dewatering, the project will not require continued groundwater pumping nor contribute significantly to groundwater recharge, which is anticipated to occur in off-site retention basins. The FEIS/EIR did not identify any significant impacts to groundwater. Compliance with federal, state, and local regulations and standards, along with established engineering procedures and techniques, would reduce any possible impacts to groundwater during construction and long-term operation to a less than significant level. Consequently, no substantial change is expected from the analysis previously completed in the FEIS/EIR for the reuse of MCAS Tustin. Drainage As noted in the MCAS Tustin FEIS/EIR, reuse and redevelopment would increase the overall amount of impervious surfaces and surface water runoff. Utilizing the existing storm drain system would not be practical since the system is undersized. As such, a conceptual storm drain plan was developed in coordination with the Orange County Flood Control District and included in the MCAS Tustin Specific Plan to identify necessary backbone infrastructure to carry the twenty-five (25) year return frequency storm. As discussed above, the Runofff Management Plan also discusses specified requirements related to drainage. The project developer is required to install portions of the public backbone drainage system surrounding the project site and comply with the ROMP to prevent impacts to the downstream regional storm drainage system. As part of these improvements, the developer proposes to lower and cover a portion of the existing Barranca Channel (a regional channel owned by the OCFCD) and the existing private drainage channel within the site adjacent to Jamboree Road and replace this drainage channel elsewhere on the project site. As required by the FEIS/EIR, the developer will be required to obtain Section 404 permits from the United States Army Corps of Engineers and Section 1601 agreements from the California Department of Fish and Game to modify these channels. As required by the FEIS/EIR, the project developer would also be required to design and construct all necessary on-site (local) drainage systems to adequately convey or contain the 10 -year runoff, 25 -year runoff, and 100 -year runoff, including any necessary improvements associated with relocating and piping the existing earthen channel that runs parallel to Jamboree Road on Reuse Plan Disposition Parcel 11. In addition to designing for the 10 - year and 25- year runoffs, the developer will be required to ensure that on-site project improvements would not result in increased 100 -year peak discharges within and downstream of the project limits, and would not worsen existing drainage conditions at storm drains, culverts, and other street crossings, including regional flood control facilities or construct adequate on-site flood control infrastructure. With adherence to the applicable implementation measures in the MCAS Tustin FEIS/EIR, no significant drainage impacts are anticipated. Mitigation/Monitoring Required: Compliance with existing rules and regulations would reduce any potential impacts related to water quality and groundwater to a level of Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 13 insignificance and no mitigation is required. Measures related to hydrology and drainage shown in Attachment 2 were adopted by the Tustin City Council in the FEIS/EIR for Disposal and Reuse of MCAS Tustin; these measures are included in the Mitigation Monitoring Program for the project or as conditions of approval for the project. Sources: Field Observation FEIS/EIR for Disposal and Reuse of MCAS Tustin Reuse Plan and MCAS Tustin Specific Plan FEMA Map (1999) Tustin General Plan Runoff Management Plan Cooperative Agreement D02-119, as amended IX. LAND USE AND PLANNING: Would the project: a) Physically divide an established community? b) Conflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited, to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? c) Conflict with any applicable habitat conservation plan or natural community conservation plan? The City of Tustin is the controlling authority over implementation of the Reuse Plan for the former base, such as land use designations, zoning categories, major arterial roadways, urban design, public facilities, and infrastructure systems. On February 3, 2003, the Tustin City Council approved the Specific Plan for MCAS Tustin that established land use and development standards for development of the site. The proposed project complies with the development standards in Chapters 2.17.3.13, 3.8.2 and 3.8.4 of the Specific Plan, and compliance with state and local regulations and standards would avoid the creation of significant land use and planning impacts. Also, the proposed project will not conflict with any habitat conservation plan or natural community conservation plan. Consequently, no substantial change is expected from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: Compliance with existing rules and regulations would avoid the creation of potential impacts. Consequently, no mitigation is required. Sources: Field Observation FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-3 to 3-17, 4-3 to 4-13 and 7-16 to 7-18) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 14 X. MINERAL RESOURCES: Would the project: a) Result in the loss of availability of a known mineral resource that would be a value to the region and the residents of the state? b) Result in the loss of availability of a locally important mineral resource recovery site delineated on a local general plan, specific plan or other land use plan? The MCAS Tustin FEIS/EIR indicates that no mineral resources are known to occur anywhere within the Reuse Plan area. The proposed project will not result in the loss of mineral resources known to be on the site or identified as being present on the site by any mineral resource plans. Consequently, no substantial change is expected from the analysis previously completed in the FEIS/EIR. Mitigation/Monitoring Required: No mitigation is required. Sources: Field Observation FEIS/EIR for Disposal and Reuse of MCAS Tustin (Page 3-91) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan XI. NOISE: Would the project: a) Exposure of persons to or generation of noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? b) Exposure of persons to or generation of excessive ground borne vibration or ground borne noise levels? c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? d) A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project expose people residing or working in the project area to excessive noise levels? f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels? As discussed in more detail in the Transportation/Traffic section of this analysis, the proposed project is anticipated to operate under the maximum permitted average daily trips (ADT) identified in the MCAS Reuse Plan Traffic Study, and since Figure 3.14-1 of the Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 15 MCAS Tustin FEIS/EIR establishes noise contours around 65 Community Noise Equivalent Levels (CNEL) based upon aircraft and traffic levels, the proposed project is not anticipated to generate additional traffic noise beyond that anticipated by the FEIS/EIR. In addition, Table 3.14-2 identifies regional commercial centers, which include commercial retail, banks, restaurants, and movie theater uses, and are "normally compatible" with community noise levels up to 75 CNEL. The FEIS/EIR indicates that existing uses on other roadways surrounding the site would not experience noise levels that exceed those established as acceptable for the affected land use resulting from the full build -out of MCAS Tustin, and impacts would be less than significant. Since the proposed project is consistent with the amount and type of land uses and traffic generation analyzed in the FEIS/EIR, no substantial change is expected from the analysis previously completed in the approved FEIS/EIR for MCAS Tustin. The City of Tustin will ensure that construction activities will comply with the adopted mitigation measures from the FEIS/EIR, and with local regulations and standards identified in the City's Noise Ordinance (i.e. restricted days and hours of construction activities). While the FEIS/EIR requires an acoustical study to assess reuse traffic noise impacts to existing sensitive receptors adjacent to Warner Avenue, between Harvard Avenue and Culver Drive, the completion of this study would occur prior to Warner Avenue, in its entirety, being connected at Red Hill Avenue. Mitigation/Monitoring Required: Mitigation measures have been adopted by the Tustin City Council in the FEIS/EIR; these measures are included in the Mitigation Monitoring Program for the project or as conditions of approval for the project as identified in Attachment 2 of Exhibit A of Resolution No. 04-60. Sources: Field Observation FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-154 to 3-162, 4-231 to 4-243 and 7-42 to 7-43) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan XII. POPULATION & HOUSING: Would the project: a) Induce substantial population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere? c) Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere? The proposed project will not add new housing, remove existing housing, or displace any people to necessitate construction of additional housing. No substantial change is expected Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 16 from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: No mitigation is required. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-18 to 3-34, 4- 14 to 4-29 and 7-18 to 7-19) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan XIII. PUBLIC SERVICES a) Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times, or other performance objectives for any of the public services: The FERVEIS for MCAS Tustin requires developers of the site to contribute to the creation of public services such as fire and police protection services, schools, libraries, recreation facilities, and biking/hiking trails; however, new facilities will be provided within the Master Developer footprint to which the applicant will contribute a fair share. Fire Protection. The proposed project will be required to meet existing Orange County Fire Authority (OCFA) regulations regarding construction materials and methods, emergency access, water mains, fire flow, fire hydrants, sprinkler systems, building setbacks, and other relevant regulations. Adherence to these regulations would reduce the risk of uncontrollable fire and increase the ability to efficiently provide fire protection services to the site. The number of existing fire stations in the areas surrounding the site will meet the demands created by the proposed project. A future fire station is also proposed within the Specific Plan area at Edinger Avenue and the West Connector Road. Police Protection. The need for police protection services is assessed on the basis of resident population estimates, square footage of non-residential uses, etc. Development of the site would not increase the need for police protection services in addition to what was anticipated in the FEIS/EIR. The developer as a condition of approval for the project would be required to work with the Tustin Police Department to ensure that adequate security precautions are implemented in the project at plan check. Schools. The proposed project is located within Tustin Unified School District (TUSD). As a condition of approval for the project, the developer would be required to pay applicable school fees prior to issuance of the building permit. Other Public Facilities (Libraries). Implementation of the entire Reuse Plan would only Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 17 result in a library demand of up to approximately 2,500 square feet of library space. This relatively small amount of space is well below the library system's general minimum size of 10,000 square feet for a branch library and would not trigger the need for a new facility. General Implementation Requirements: To support development in the reuse plan area, the Reuse Plan/Specific Plan requires public services and facilities to be provided concurrent with demand. The proposed project will be required to comply with FEIS/EIR implementation measures adopted by the Tustin City Council. No substantial change is expected from the analysis previously completed in the approved FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: Mitigation measures have been adopted by the Tustin City Council in the FEIS/EIR; these measures are included as conditions of approval for the project as identified in Attachment 2 of Exhibit A of Resolution No. 04-60. Sources: Field Observation FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-47 to 3-57, 4- 56 to 4-80 and 7-21 to 7-22) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan XIV. RECREATION a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities, such that substantial physical deterioration of the facility would occur or be accelerated? b) Does the project include recreational facilities or require the construction or expansion of recreational facilities, which might have an adverse physical effect on the environment? The Reuse Plan, as a whole, provides for a new 85.5 -acre Regional Park, a 24 -acre Community Park and two Neighborhood Parks of more than five -acres and regional and community riding and hiking paths through the property. While the Reuse Plan process identifies individual developers' requirements for park land dedications, pursuant to the City's Subdivision Ordinance, commercial subdivisions are exempt from Park Land dedications or fees in lieu. The commercial project would provide pedestrian walkways on he project site and a Class H bikeway along Barranca Parkway not affecting existing recreational facilities, so no change is expected from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: No mitigation is required. Sources: Field Observation Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 18 FEIS/EIR for Disposal and Reuse of MCAS Tustin pages 3-47 to 3-57, 4-56 to 4-80 and 7-21 to 7-22 Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin City Code Section 9331d (1) (b) Tustin General Plan XV. TRANSPORTATION/TRAFFIC: Would the project: a) Cause an increase in traffic, which is substantial in relation to the existing traffic load and capacity of the street system (i.e., result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections)? b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? d) Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? e) Result in inadequate emergency access? f) Result in inadequate parking capacity? g) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)? The FEIS/EIR indicates that transportation and circulation impacts would be created through the phased development of the approved Reuse Plan and MCAS Tustin Specific Plan. A projected 216,445 Average Daily Trips (ADT) would be generated by full redevelopment of the base by year 2020 that, if left unmitigated, would overburden existing roadways and intersections surrounding the base property. The FEIS/EIR indicates that traffic circulation activities at MCAS Tustin generated a baseline of 12,400 ADT when the base was fully operational (1993). The FEIS/EIR considered the traffic impacts and developed a mitigation program to reduce potential impacts to a level of insignificance. In accordance with the FEIS/EIR, the applicant will be conditioned to participate in its fair share responsibility for both on-site and off-site circulation mitigation and implementation measures. The project site will be accessed from future Warner Avenue, future Tustin Ranch Road, and Barranca Parkway. Internal circulation of the site would be accessed from the public South Loop Road via private drive -aisles in compliance with the roadway standards of MCAS Tustin Specific Plan Section 2.5.2(B) related to secondary arterials. Table 7-3 of the MCAS Tustin FEIS/EIR establishes a trip budget which allocates Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 19 maximum thresholds of average daily trips (ADT) by planning area based upon land use. The project site, located within Planning Areas 16, 17, and 19, is identified to permit up to 35,650 ADTs; the proposed development is projected to generate up to 33,933 ADTs, which results in 1,717 fewer overall trips. The project development will be phased based upon the development phasing exhibit (Attachment 3 of Exhibit A of Resolution No. 04-60) and as follows: • Phase 1 (Minimum Project) will include development in Planning Areas 16, 17, and 19 equivalent to 641,394 square feet, which will generate 19,411 ADT. Phase 1 Minimum Project does not include the eight Minor Pads within Planning Area 19. Phase 1 Minimum Project will be completed no later than twenty-four months following the permit issuance date, as identified in DDA 04-02. • Phase 1 (Minimum plus 8 -Minor Pads Project) includes the Phase 1 Minimum Project and the eight Minor Pads located in Planning Area 19, which is equivalent to 705,100 square feet of development and generates 24,671 ADT. The Minor Pads are to be completed no later than five -years following the Initial Closing Date, unless such Minor Pad is a Lease Parcel in which event the provision applicable to Lease Parcels shall apply, as identified in DDA 04-02. • Phase 2 includes the complete build -out of the project in Planning Areas 16 (including 301,000 square feet within LIFOC Parcels), 17 and 19, equivalent to 1,006,100 square feet of development and generates 33,933 ADT. Phase 2 development will be completed no later than thirty -months following the Subsequent Closing Date for the affected parcel, as identified in DDA 04-02. Tables 4.12-7, 4.12-8, and 4.12-9 of the FEIS/FEIR identify threshold criteria for implementation of mitigation improvements at arterial intersections based upon cumulative ADT's approved for the entire Legacy Project. Based upon the project phasing plan, the cumulative ADT for the Phase 1 Minimum Project (19,411 ADT) and the previously approved ADT (6,177 ADT) for Reuse Plan Disposition Parcels 33 and 34 is 25,588 ADT and is within the cumulative minimum threshold criteria required for arterial intersection improvements, which is 32,000 ADT. The cumulative ADT for Phase 1 Full Project (24,617 ADT) and the previously approved ADT (6,177 ADT) is 30,848 ADT and is also within the cumulative minimum threshold criteria required for arterial intersection improvements. Consequently, no substantial change is expected from the traffic analysis previously completed in the approved FEIS/FEIR for MCAS Tustin. The cumulative ADT for Phase 2 (33,933 ADT) and the previously approved ADT (6,177 ADT) is 40,110, which is greater than the minimum threshold criteria of 32,000 ADT. This triggers arterial improvements at the intersections of Grand Avenue/Edinger Avenue and the SR -55 Southbound Ramps/Edinger Avenue in the City of Santa Ana. Improvements at the intersection of Grand Avenue/Edinger Avenue are subject to provisions of a Settlement Agreement between Tustin and Santa Ana, dated February 22, 2001. Improvements at the SR -55 Southbound Ramps/Edinger Avenue are programmed to be completed as part of the City's Edinger Avenue Widening between SR -55 and 1400' east of Red Hill Avenue Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 20 Project (CIP No. 7147). Table 4.12-10 of the FEIS/FEIR identifies threshold criteria for implementation of on-site mitigation improvements. The minimum ADT criteria for roadway improvements is 27,000 ADT (cumulative). Based upon the aforementioned traffic information for each development phase, it is concluded that the Phase 1 Minimum Project ADT and the previously approved ADT, which is 25,588 ADT, is under the minimum threshold. Therefore, the roadway improvements in Table 4.12-10 are not required with this phase of development. However, the Phase 1 Full Project ADT and the Phase 2 ADT, along with the previously approved ADT, are both over the minimum threshold and would trigger the construction of Landsdowne Road, West Connector Road, and North Loop Road between Red Hill Avenue and West Connector. The requirement to improve Edinger Avenue adjacent to the Legacy Project was completed in 2002. In addition, the City has programmed the construction of the Valencia North Loop Road and Armstrong Avenue within MCAS Tustin Project (CIP No. 7139) for completion within the next 24 -months. This project includes the construction of the roadway improvements in Table 4.12-10 associated with the minimum threshold of 27,000 ADT. This would fulfill roadway mitigation improvements associated with full build -out of the project. The project is adjacent to and results in traffic impacts at the intersection of Jamboree Road/Barranca Parkway. The traffic analysis prepared as part of the FEIS/FEIR considered traffic impacts at this location and determined that significant unavoidable traffic impacts would remain at this location. A statement of overriding considerations was adopted as part of the FEIS/FEIR. The project is proposing to design and construct roadway improvements in the City of Irvine as part of the orderly development of the project and the entire Tustin Legacy. Improvements include the widening of the north side of Barranca Parkway, consisting of relocation of electrical transmission lines and utilities in the roadway medians, reconstruction of the medians and left turn pockets, adding travel lanes, and Class I and Class H bicycle lanes. The widening of the Barranca Parkway is a mitigation measure of the Irvine Business Complex (IBC) Project in the City of Irvine, but is necessary at this time to facilitate orderly development of this project. The project is also conditioned to improve Warner Avenue in the City of Irvine from the East City boundary to near Construction Circle, and to improve the Warner Avenue Southbound on and off ramps at Jamboree Road where they intersect with the future South loop Road. The project applicant is conditioned to coordinate any construction activity in the City of Irvine with their staff and obtain all necessary City permits. In addition, construction activities are required to comply with all transportation related FEIS/EIR Implementation and Mitigation Measures (e.g., lane closures, street/utility construction, construction vehicle traffic, etc.). With these mitigation measures, potential impacts to transportation and circulation resources can be reduced to a level of insignificance. Mitigation/Monitoring Required: A Statement of Overriding Considerations for traffic Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 21 impacts at the intersection of Jamboree RoadBarranca Parkway was adopted by the Tustin City Council in the FEIS/FEIR. However, mitigation measures were adopted by the Tustin City Council in the FEIS/EIR; these measures are included in the Mitigation Monitoring Program for the project or as conditions of approval for the project as identified in Attachment 2 of Exhibit A of Resolution No. 04-60. Sources: Field Observation FEIS/EIR for Disposal and Reuse of MCAS Tustin (Pages 3-118 through 3- 142, 4-139 through 4-206 and 7-32 through 7-41) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan Development Phasing Plan XVI. U'T'ILITIES AND SERVICE SYSTEMS: Would the project: a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? e) Result in a determination by the wastewater treatment provider, which serves or may serve the project that it has adequate capacity to serve the project's projected demand in addition to the provider's existing commitments? f) Be served by a landfill with sufficient permitted capacity to accommodate the project's solid waste disposal needs? g) Comply with federal, state, and local statutes and regulations related to solid waste? The FEIR/EIR analyzed new off-site and on-site backbone utility systems required for development of the site as necessary to support the proposed retail development, including water, sewer, drainage, electricity, natural gas, telephone, cable television, and solid waste management. The proposed project is consistent with the permitted uses analyzed in the FEIS/EIR, and the project is under the assumed 1,442,710 square feet of commercial uses. In accordance with the FEIS/EIR, the applicant is required to pay a fair share towards off- site infrastructure and installation of on-site facilities. In addition, development of the site is required to meet federal, state, and local standards for design of waste water treatment, drainage system for on-site and off-site, and water availability. Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 22 No substantial change is expected from the analysis previously completed in the FEIS/EIR for MCAS Tustin. Mitigation/Monitoring Required: Mitigation measures have been adopted by the Tustin City Council in the FEIS/EIR; these measures are included in the Mitigation Monitoring Program for the project or as conditions of approval for the project as identified in Attachment 2 of Exhibit A of Resolution No. 04-60. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (pages 3-35 through 3- 46, 4-32 through 4-55 and 7-20 through 7-21) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Tustin General Plan XVII. MANDATORY FINDINGS OF SIGNIFICANCE a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? b) Does the project have impacts that are individually limited but cumulatively considerable? ("Cumulatively considerable" means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects.) c) Does the project have environmental effects, which will cause substantial adverse effects on human beings, either directly or indirectly? The FEIS/EIR previously considered all environmental impacts associated with the implementation of the Reuse Plan and MCAS Tustin Specific Plan and the proposed project is within the scope of the FEIS/EIR. With the enforcement of FEIS/EIR mitigation and implementation measures approved by the Tustin City Council in the Mitigation Monitoring Program for the project or as conditions of approval, the proposed project would not cause unmitigated environmental effects that will cause substantial effects on human beings either directly or indirectly nor degrade the quality of the environment, substantially reduce the habitats or wildlife populations to decrease or threaten, eliminate, or reduce animal ranges, etc. To address cumulative impacts, a Statement of Overriding Consideration for the FEIS/EIR was adopted by the Tustin City Council on January 16, 2001 (Resolution No. 00-90) for issues relating to aesthetics, cultural and paleontological resources, agricultural resources, and traffic/circulation. The project does not create any impacts that have not been previously addressed by the Attachment 1 of Exhibit A of Resolution No. 04-60 Evaluation of Environmental Impacts DDA 04-02, VTTM 16695, CP 04-001, DR 04-010, CUP 04-015, VAR 04-002 Page 23 FEIS/EIR. Sources: Field Observations FEIS/EIR for Disposal and Reuse of MCAS Tustin (pages 5-4 through 5-11) Reuse Plan and MCAS Tustin Specific Plan (Pages 2-167 through 2-171, 3- 105 through 110, 3-115 through 118) Resolution No. 00-90 Tustin General Plan CONCLUSION The proposed project's effects were previously examined in the FEIS/EIR for MCAS Tustin. No new effects will occur, no substantial increase in the severity of previously identified significant effects will occur, no new mitigation measures will be required, no applicable mitigation measures previously not found to be feasible would in fact be feasible, and no new mitigation measures or alternatives applicable to the project that have not been considered are needed to substantially reduce effects of the project. A Mitigation and Monitoring and Reporting Program and Findings of Overriding Considerations were adopted for the FEIS/EIR on January 16, 2001 (Resolution No. 00-90), and will apply to the proposed project, as applicable. S:\Cdd\MATnVestar\ENV\Vestar-Initial Study-analysis.doc a� -d o U � �i it � • � ami • cl cn N C t bW aim Fo o.5� o o V C U� U 14 VW I.. 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O E i > by F ` °cl d b4 ❑ � O w un ° .cqs� Cd U "" O to o U M cn .0 o . .�]� OA Q cn C'° 1) C's a °o, to Cd cqj a a i a°i an abi��, oco ' y C >> cUd .� CJ O N ab N 0 >, U `p., U w 00 0 C's a° a b b� .J r. ° o a o a� •o '� " ccl O ,�, N m c� A o °" ° o a o F cd (1) M ? O � W � N N TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (RETAIL DEVELOPMENT) by and between CITY OF TUSTIN and VESTAR / KIMCO TUSTIN, L.P. A CALIFORNIA LIMITED PARTNERSHIP DATED: July _, 2004 TABLE OF CONTENTS Page 1. SUBJECT AND PURPOSE OF AGREEMENT; PARTIES; APPLICABLE REQUIREMENTS............................................................................................................. 2 1.1 Background Regarding MCAS Tustin...................................................................2 1.2 Description of Parcels............................................................................................3 1.3 Purpose of Agreement............................................................................................4 1.4 Parties to the Agreement.......................................:................................................ 5 1.5 Federal Requirements Applicable to Tustin Legacy .............................................. 5 1.6 Local Requirements Applicable to Tustin Legacy.................................................6 1.7 Not a Development Agreement..............................................................................6 1.8 Recording of Memorandum of this Agreement and Memorandum of GroundLease.........................................................................................................7 1.9 Definitions..............................................................................................................7 2. PROHIBITION AGAINST TRANSFERS AND TRANSFERS OF CONTROL.............7 2.1 Importance of Developer Qualifications................................................................7 2.2 Transfers and Transfers of Control........................................................................7 2.3 Additional Provisions Regarding Developer.......................................................13 2.4 Assignment by Operation of Law........................................................................14 2.5 Remedies For Improper Transfers.......................................................................14 3. REPRESENTATIONS AND WARRANTIES................................................................14 3.1 Developer's Representations and Warranties......................................................14 3.2 Developer Covenants Regarding Representations and Warranties ......................17 3.3 City Representations and Warranties...................................................................17 4. CONVEYANCE AND SUBLEASING OF PROPERTY FROM CITY TO DEVELOPER...................................................................................................................18 4.1 Property................................................................................................................18 4.2 Purchase Price...................................................................................................... 20 4.3 Escrow.................................................................................................................. 24 4.4 Property Conveyed and Subleased "As -Is"; Release ........................................... 24 5. DEVELOPER'S DUE DILIGENCE INVESTIGATION................................................30 5.1 Due Diligence Period...........................................................................................30 5.2 Limited License....................................................................................................30 18405:6390691.8 i Disposition and Development July 12, 2004 Agreement TABLE OF CONTENTS (continued) Page 5.3 Insurance..............................................................................................................31 5.4 Indemnity.............................................................................................................31 5.5 Review of Certain Records and Materials............................................................31 5.6 Communications with City and Third Parties ...................................................... 32 5.7 Termination Notice..............................................................................................32 6. , TITLE; SURVEY............................................................................................................. 32 6.1 Survey by Developer............................................................................................32 6.2 Permitted Exceptions...........................................................................................33 6.3 Supplemental Title Reports..................................................................................33 6.4 ALTA Policy; Endorsements............................................................................... 34 7: CLOSINGS......................................................................................................................35 7.1 Time and Place of Initial Close of Escrow...........................................................35 7.2 Developer's Conditions Precedent to Initial Close of Escrow .............................35 7.3 The City's Conditions Precedent.........................................................................37 7.4 Additional Initial Close of Escrow. Conditions....................................................40 7.5 No Financing Contingency..................................................................................41 7.6 Procedures for Conveyance and Subleasing of Property.....................................41 7.7 Subsequent Closings............................................................................................44 8. DEVELOPMENT OF THE DEVELOPER PARCELS...................................................48 8.1 Scope of Development.........................................................................................48 8.2 Timing and Conditions of Project Development..................................................51 8.3 Land Use Matters.................................................................................................52 8.4 Financial Status....................................................................................................54 8.5 Communication to and Consents of Federal Government...................................55 8.6 Design Approval..................................................................................................55 8.7 Construction Covenants.......................................................................................59 8.8 City Rights of Access...........................................................................................60 8.9 Disclaimer of Responsibility by City...................................................................60 8.10 CC&Rs.................................................................................................................60 8.11 Local, State and Federal Laws.............................................................................60 18405:6390691.8 ii Disposition and Development July 12, 2004 Agreement TABLE OF CONTENTS (continued) Page 8.12 Taxes, Assessments, Encumbrances and Liens....................................................61 8.13 Tustin Legacy Backbone Infrastructure Program................................................61 8.14 District Formation................................................................................................65 8.15 School Impact Fees..............................................................................................65 8.16 Effect on Existing Utilities...................................................................................65 8.17 Release of Bonds, Deposits, or Letter of Credit...................................................65 9. CERTIFICATE OF COMPLIANCE............................................................................... 65 9.1 Certificate of Compliance Defined......................................................................65 9.2 Conclusive Presumption from Certificate of Compliance...................................66 9.3 Release of Bonds..................................................................................................66 9.4 Not Evidence........................................................................................................66 9.5 Conditions to Issuance of Certificate of Compliance...........................................66 10. INDEMNIFICATION AND ENVIRONMENTAL PROVISIONS................................69 10.1 Developer's Indemnification................................................................................69 10.2 Environmental Indemnity.....................................................................................70 10.3 Duration of Indemnities.......................................................................................71 10.4 Claim Response....................................................................................................71 10.5 Release Notification and Remedial Actions.........................................................71 11. INSURANCE ................................................................................................................... 72 11.1 Required Insurance...............................................................................................72 11.2 General Insurance Requirements.........................................................................75 12. COVENANTS, CONDITIONS AND RESTRICTIONS................................................76 12.1 Use Covenants......................................................................................................76 12.2 Notification and Approval of End Users..............................................................77 12.3 Maintenance Covenant.........................................................................................77 12.4 Subsequent Participation...................................................................................... 78 12.5 Non -Discrimination and Equal Opportunity........................................................82 12.6 Obligation to Refrain from Discrimination..........................................................82 12.7 Deed Restrictions/Covenants Running with the Land ......................................... 83 13. POTENTIAL AND MATERIAL DEFAULTS.....:......................................................... 84 18405:6390691.8 iii Disposition and Development July 12, 2004 Agreement TABLE OF CONTENTS (continued) Page 13.1 Potential Defaults................................................................................................. 84 13.2 Material Defaults. Following written notice and failure to cure within the time periods set forth in this Section 13.2, each Potential Default shall become a Material Default that shall be deemed to have occurred upon the expiration of the applicable cure period...............................................................84 13.3 Certain City Remedies.........................................................................................85 13.4 Right of Purchase................................................................................................. 86 13.5 Right of Reversion............................................................................................... 88 13.6 Lien Rights...........................................................................................................91 13.7 Failure to Timely Pay Amounts.Due....................................................................91 13.8 Due Diligence Information; Products..................................................................91 14. NONOCCURRENCE OF A CONDITION TO THE INITIAL CLOSE OF ESCROW.........................................................................................................................92 14.1 Failure of a Condition Absent a Material Default................................................92 14.2 Failure to Close the Initial Close of Escrow; Material Default of Developer.............................................................................................................93 14.3 Failure to Close; Material Default of City...........................................................94 14.4 Material Default by Both Parties..........................................................................96 14.5 Subsequent Closings............................................................................................96 15. MORTGAGES AND MORTGAGEE PROTECTION...................................................96 15.1 Right To Encumber.............................................................................................. 96 15.2 Permitted Mortgages; Permitted Mortgagees.......................................................97 15.3 The City's Acknowledgment of Permitted Mortgagee........................................99 15.4 Change in Loan Documents.................................................................................. 99 15.5 Initial Notice.........................................................................................................99 15.6 Effect of a Mortgage..........................................................................................100 15.7 Foreclosure Without the City's Consent............................................................100 15.8 Rights and Obligations of Permitted Mortgagee Acquiring Title......................100 15.9 No Impact on Lien.............................................................................................102 15.10 Right of The City to Cure Mortgage Default; Other Conveyance for FinancingDefault................................................................................................102 15.11 Mortgagee Protections.......................................................................................102 18405:6390691.8 iv Disposition and Development July 12, 2004 Agreement TABLE OF CONTENTS (continued) Page 15.12 Failure of Permitted Mortgagee to Complete Improvements.............................104 15.13 Amendment; Termination..................................................................................104 15.14 Condemnation or Insurance Proceeds................................................................104 15.15 Loss Payable Endorsement to Insurance Policy.................................................104 15.16 Modification of Article; Conflicts......................................................................105 15.17 No Subordination...............................................................................................105 15.18 Constructive Notice and Acceptance.................................................................105 15.19 Bankruptcy Affecting the Developer.................................................................105 15.20 New Agreement and Ground Lease with Permitted Mortgagee ........................105 15.21 Priority of New Agreement................................................................................106 16. GENERAL PROVISIONS.............................................................................................107 16.1 Consent to Jurisdiction; Service of Process .......................................................107 16.2 Legal Fees and Costs...........................................................................................107 16.3 Modifications or Amendments...........................................................................108 16.4 Applicable Law...................................................................................................108 16.5 Further Assurances.............................................................................................108 16.6 Rights and Remedies are Cumulative................................................................108 16.7 Notices, Demands and Communications between the Parties ...........................108 16.8 Force Majeure Delay..........................................................................................110 16.9 Conflict of Interest.............................................................................................112 16.10 Nonliability of City Officials and Employees ....................................................112 16.11 Inspection of Books and Records.......................................................................112 16.12 Approvals...........................................................................................................112 16.13 Real Estate Commissions...................................................................................113 16.14 Date and Delivery of Agreement.......................................................................113 16.15 Constructive Notice and Acceptance.................................................................113 16.16 Survival of Covenants, Representation and Warranties.....................................113 16.17 Construction and Interpretation of Agreement ...................................................113 16.18 Time of Essence.................................................................................................114 16.19 Fees and Other Expenses...................................................................................114 18405:6390691.8 v Disposition and Development July 12, 2004 Agreement TABLE OF CONTENTS (continued) Page 16.20 No Partnership....................................................................................................115 16.21 Compliance with Law........................................................................................115 16.22 Binding Effect....................................................................................................115 16.23 No Third Party Beneficiaries.............................................................................115 16.24 Counterparts.......................................................................................................115 16.25 Authority of Signatories to Agreement..............................................................115 16.26 Entire Agreement, Waivers and Amendments ...................................................115 16.27 Approval Procedures..........................................................................................116 16.28 Confidentiality....................................................................................................116 16.29 Proprietary and Governmental Roles: Actions by Parties..................................116 16.30 Consent...............................................................................................................116 18405:6390691.8 vi Disposition and Development July 12, 2004 Agreement TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (RETAIL DEVELOPMENT) This TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (RETAIL DEVELOPMENT) (the "Agreement') is entered into as of July _, 2004 (the "Effective Date") by and between the CITY OF TUSTIN (as more fully defined in Section 1.4.1, "City") and VESTAR/KIMCO TUSTIN, L.P., a California limited partnership (as more fully defined in Section 1.4.2, the "Developer"). The City and the Developer are sometimes referred to in this Agreement individually as a "Party" and collectively as the "Parties." The Parties agree as follows: Subiect and Purpose of Agreement; Parties; Applicable Requirements. 1.1 Background Regarding MCAS Tustin. 1.1.1 Pursuant to the Defense Base Closure and Realignment Act of 1990, (Part A of Title XXIX of Public Law 101-510; 10 U.S.C. Section 2687 Note), as amended (the "Base Closure Law") the Federal Government determined to close the Marine Corps Air Station -Tustin ("MCAS Tustin") located substantially in the City of Tustin, California. In 1992, the City was designated as the Lead Agency or Local Redevelopment Authority for preparation of a reuse plan for -MCAS Tustin in order to facilitate the closure of MCAS Tustin and its reuse in furtherance of the economic development of the City and surrounding region. The MCAS Tustin Reuse Plan developed in accordance with this procedure was adopted by the City Council of the City of Tustin (the "City Council") on October 17, 1996 and amended in September 1998 (the "Reuse Plan"). 1.1.2 A Final Joint Environmental Impact Statement/Environmental Impact Report for the Disposal and Reuse of MCAS Tustin (the "Final EIS/EIR") and Mitigation Monitoring and Reporting Program for the Final EIS/EIR were adopted by the City on January 16, 2001. In March 2001, a Record of Decision was issued by the United States Department of the Navy ("Navy") approving the Final EIS/EIR and the Reuse Plan. 1.1.3 In May 2002, the Navy approved an Economic Development Conveyance of Property at MCAS Tustin and agreed to convey 1153 acres of MCAS Tustin to the City. On May 13, 2002, a total of 977 acres, including the Developer Fee Parcels (defined in Section 1.2.3) which are the subject of this Agreement, were conveyed by the Federal Government, acting by and through the Navy, to the City by Federal Deed, in accordance with the provisions of the Conveyance Agreement. Additional acreage, including the Developer Sublease Parcels (defined in Section 1.2.4), is leased by the City pursuant to that certain Lease in Furtherance of Conveyance dated May 13, 2002 between the Federal Government, acting by and through the Navy, as ground lessor, and the City, as ground lessee (the "LIFOC"). The portion of MCAS Tustin located within the City of Tustin is referred to in this Agreement as "Tustin Legacy." July 12, 2004 -2- Disposition and Development 18405:6390691.8 Agreement 1.1.4 On February 3, 2003, the City approved and adopted the MCAS Tustin Specific Plan (the "Specific Plan") by Ordinance No. 1257 setting forth the zoning and entitlement framework for future development of Tustin Legacy. The Specific Plan conforms to and implements the Reuse Plan and the City's existing General Plan. Tustin Legacy is also located within the MCAS Tustin Redevelopment Project Area. 1.1.5 The City desires to effectuate development of Tustin Legacy, including the Developer Parcels (defined in Section 1.2.2), through the sale, leasing and development of such property in accordance with applicable federal and local requirements. Tustin Legacy, including the Project described in this Agreement, shall be developed in accordance with all Governmental Requirements, including implementing redevelopment plans, the Reuse Plan, the General Plan and the Specific Plan. 1.1.6 Developer was the selected respondent with respect to that certain Request for Proposals, Commercial Retail and Development, Planning Areas 17 and 19 issued by the City in October 2002 (the "RFP") which sought an experienced retail developer for development of a "Class A" shopping and entertainment venue upon Reuse Plan Disposal Parcels 10 and 11 and reserved Reuse Plan Disposal Parcel 12 for future expansion opportunities by the selected Developer. The RFP did not include the property upon which the Army Reserve is located (referred to herein as "Reuse Plan Disposal Parcel 9") which is immediately adjacent to Reuse Plan Disposal Parcels 10 and 11. 1.2 Description of Parcels. 1.2.1 The City intends to convey to the Developer portions of Specific Plan Planning Areas 17 and 19 (also referred to in the Specific Plan and in this Agreement as "Reuse Plan Disposal Parcels 10 and 11") and Specific Plan Planning Area 16 (also referred to in the Specific Plan and in this Agreement as "Reuse Plan Disposal Parcel 12") within Tustin Legacy. Reuse Plan Disposal Parcels 10, 11 and 12 are referred to herein collectively as the "Reuse Plan Disposal Parcels". 1.2.2 The property to be conveyed, or leased or subleased and ultimately conveyed, to Developer pursuant to this Agreement consists of those portions of the Reuse Plan Disposal Parcels remaining after deducting therefrom the Right of Way Parcels. Such remainder of the Reuse Plan Disposal Parcels, constituting approximately 87.4 acres of land, is referred to herein as the "Developer Parcels", and consists of the Developer Fee Parcels and the Developer Sublease Parcels (each as defined below). Upon satisfaction of the conditions set forth in this Agreement: (a) certain of the Developer Fee Parcels will be transferred from the City to the Developer by Quitclaim Deed at the Initial Close of Escrow (defined below); (b) the remainder of the Developer Fee Parcels will be leased to the Developer via the Ground Lease at the Initial Close of Escrow; (c) the City's ground leasehold interest in the Developer Sublease Parcels will be subleased to the Developer via the Ground Lease at the Initial Close of Escrow; and (d) at certain Subsequent Closings (defined below), the City's fee interest in each of the leased Developer Fee Parcels and, when obtained, the Developer Sublease Parcels will be transferred to Developer by Quitclaim Deed. The terms "Developer Parcels", "Developer Fee Parcels" and "Developer Sublease Parcels" exclude the Right of Way Parcels. In addition, the City may require certain fee dedications, including for widening of Barranca Parkway and Jamboree Road, July 12, 2004 -3- Disposition and Development 18405:6390691.8 Agreement as a condition of approval of the Entitlements. From and after the dedication and acceptance by the City of any such fee dedication parcels, the terms "Developer Parcels", "Developer Fee Parcels" and "Developer Sublease Parcels" shall exclude the land dedicated to the City, referred to herein as the "City Dedication Parcels". 1.2.3 The "Developer Fee Parcels" are comprised of (a) "Developer Fee Parcel A" consisting of approximately 47.02 acres of land, (b) "Developer Fee Parcel B" consisting of approximately 12.43 acres of land, (c) "Developer Fee Parcel C" consisting of approximately 8.51 acres of land, and (d) "Developer Fee Parcel D" consisting of approximately 7.53 acres of land, each of which are legally described on Attachment No. I and depicted on Attachment No. 1B to this Agreement. 1.2.4 The "Developer Sublease Parcels" are comprised of (a) "Developer Sublease Parcel A" consisting of approximately 1.01 acres of land; (b) "Developer Sublease Parcel B" consisting of approximately .44 acres of land, (c) "Developer Sublease Parcel C" consisting of approximately 4.49 acres of land, (d) "Developer Sublease Parcel D" consisting of approximately 5.40 acres of land and (e) "Developer Sublease Parcel E" consisting of approximately .57 acres of land, each of which are legally described on Attachment No. 2A and depicted on Attachment No. 2B to this Agreement. 1.2.5 Developer Fee Parcel C and Developer Fee Parcel D initially shall be ground leased by the City to Developer concurrently with the ground sublease by the City to Developer of the Developer Sublease Parcels. The leased and subleased parcels are referred to herein collectively as the "Lease Parcels." 1.3 Purpose of Agreement. 1.3.1 Purpose. The purpose of this Agreement is (a) to effectuate the Reuse Plan and the Specific Plan, in accordance with the terms and conditions set forth therein and in the Federal Documents, through disposition and development of portions of Tustin Legacy as further described in this Agreement, (b) to provide for disposition by the City to the Developer of the Developer Parcels and certain related improvements, for the maintenance of such land and improvement by the Developer and the construction of the Project by the Developer on the Developer Parcels and certain adjacent property, including the Right of Way Parcels and the City Dedication Parcels and (c) to impose certain covenants, conditions and restrictions upon the Developer Parcels and upon the development thereof and upon Developer and each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner in order to assure the development, use, operation and maintenance of the Developer Parcels and each portion thereof as a Class A Shopping Center as further required by this Agreement and the Special Restrictions. All undertakings pursuant to this Agreement are for the purpose of development of the Project and not for speculation in land holding. 1.3.2 Project Definition. The "Project" consists of construction and installation of a high-quality "Class A" retail project containing a cinema, specialty retail uses, restaurants, and both "big box" and "lifestyle" components, with approximately 1,006,100 square feet of building area and approximately 4,500 parking spaces, including a complete set of accompanying high quality amenities. The Parties intend that the Project will function as the July 12, 2004 -4- Disposition and Development 18405:6390691.8 Agreement centerpiece and leading retail/entertainment element within Tustin Legacy, as further described in the Scope of Development attached hereto as Attachment No. 8. The Project shall include the following Improvements: (a) the Horizontal Improvements, to include on-site and off-site public and private infrastructure improvements such as roadways and utilities, (b) the Vertical Improvements, consisting of the Retail Buildings and Additional Improvements and including a complete accompanying set of amenities, and (c) certain Tustin Legacy Backbone Infrastructure Program Improvements all as further described in Article 8 and in the Scope of Development. 1.3.3 Health, Safety and Welfare. The disposition of the Developer Parcels, the development and Completion of the Project pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the citizens of the City and the health, safety, morals, and welfare of its residents, and are in accord with the public purposes and provisions of applicable federal, state, and local laws and requirements. 1.4 Parties to the Agreement. 1.4.1 City. The City is a municipal corporation of the State of California. The term "City" as used in this Agreement shall mean the City of Tustin and each assignee or successor to the City's rights, powers and responsibilities. The City Council shall have the right, in its sole discretion, to assign its rights and obligations to any agency or instrumentality of the City, including the Tustin Community Redevelopment Agency or the Tustin Public Financing Authority. 1.4.2 Developer. The term "Developer" as used in this Agreement shall solely mean Vestar/Kimco Tustin, L.P., a California limited partnership, which is the Developer as of the Effective Date, and any Successor Owner (a) to which a Transfer meeting the requirements of Section 2.2 has been made and (b) which has been approved in writing by the City as "Developer" and (c) which has assumed in writing all of Developer's rights and obligations under this Agreement as required by Section 2.2.2. 1.4.3 Relationship of the Parties. It is hereby acknowledged that the relationship of the City to the Developer is neither a partnership nor a joint venture and that neither the City nor the Developer shall be deemed or construed for any purpose to be the agent of the other Party, and neither Party shall have the power or the authority to speak on behalf of the other Party or to bind the other Party to any contractual or other obligation. Prior to Close of Escrow with respect to each Developer Parcel, the Developer may only with respect to such parcel characterize itself to third parties as the prospective developer and purchaser/ground sublessee of the Property (defined in Section 4.1.1). The Developer shall not at any time hold itself out to the City or to any other third party as an agent of the City, as applicable, and shall not, by any act or omission, mislead any third party into believing, or allow any third party to continue in the mistaken belief, that the Developer is an agent of the City or has the power or authority to bind the City to any contractual or other obligation. 1.5 Federal Requirements Applicable to Tustin Le2acy. 1.5.1 Federal Documents Applicable. The Parties acknowledge and agree that this Agreement is entered into as part of an Economic Development Conveyance of Tustin July 12, 2004 -5- Disposition and Development 18405:6390691.8 Agreement Legacy to the City pursuant to the Base Closure Law, the Conveyance Agreement, the terms and conditions of the Federal Deed, and the terms and conditions of the LIFOC, including the Environmental Restriction pursuant to California Civil Code Section 1471 contained in the Federal Deed and/or the LIFOC. This Agreement is and shall be subject to the terms and conditions of the Federal Documents and the rights, obligations and remedies of the Federal Government thereunder, and nothing contained in this Agreement shall be construed in a manner that is inconsistent with the rights, obligations and remedies of the Federal Government thereunder. 1.5.2 No Modification of Federal Documents. No provision of this Agreement shall modify or in any way change the terms of the Federal Documents, and in the event of conflict between this Agreement and the terms of the Federal Documents, as the case may be, then the terms of the applicable Federal Document shall prevail. If any provision of this Agreement in any way limits the Federal Government in its administration of the Base Closure Law, this Agreement shall be deemed amended so as to comply with the Federal Documents. 1.6 Local Requirements Applicable to Tustin Legacy. . 1.6.1 Governmental Requirements. This Agreement is subject to all Governmental Regulations, including the General Plan, the Specific Plan, the Reuse Plan and any redevelopment plan enacted prior to or following the Effective Date with respect to the Project, each of which is incorporated in this Agreement by reference and made a part hereof as though fully set forth in this Agreement and as more fully set forth in Section 8.1.4, but the foregoing is not intended to diminish any rights that Developer may have under applicable vesting principles and law. 1.6.2 Coordination with Tustin Legacy. The Developer acknowledges that: (a) prior to and concurrently with the disposition of the Property, the City has been and shall be negotiating the disposition to various developers of other portions of Tustin Legacy, and (b) through approval of the Specific Plan and through preparation of additional design and development guidelines, the City is seeking to coordinate design and development of the entirety of Tustin Legacy. The Developer agrees to comply with the design and development guidelines set forth in the Specific Plan and to coordinate the development of the Project, within the parameters of this Agreement, including the Schedule of Performance, with the additional design parameters determined by the City in connection with development of the remainder of Tustin Legacy, but the foregoing shall not require alteration of design after approval by the City of the Approved Project Plans. 1.7 Not a Development Agreement. This Agreement is not a development agreement as provided in Government. Code Section 65864 and, as further set forth in Section 8.3.2, is not a grant of any entitlement, permit, land use approval or vested right in favor of the Developer, the Project or the Project Site. The City shall use good faith efforts, within applicable legal constraints and consistent with applicable City policies, to take such actions as may be necessary or appropriate to effectuate and carry out this Agreement in a timely and commercially reasonable manner. July 12, 2004 -6- Disposition and Development 18405:6390691.8 Agreement 1.8 Recording of Memorandum of this Agreement and Memorandum of Ground Lease. The Parties shall Record against the Developer Parcels, in accordance with Sections 7.6.5(b) and 12.7.2, a memorandum of this Agreement in substantially the form and substance of the Memorandum attached hereto as Attachment No. 11 (the "Memorandum of DDA"). The Parties shall Record against the Lease Parcels, in accordance with Sections 7.6.5(b) and 12.7.2, a memorandum of the Ground Lease in substantially the form and substance of the memorandum of ground lease/sublease attached thereto (the "Memorandum of Ground Lease"). 1.9 Definitions. Initially capitalized terms used in this Agreement and not otherwise defined in the text of this Agreement or in the Attachments shall have the meanings set forth in Attachment No. 2. 2. Prohibition Against Transfers and Transfers of Control. 2.1 Importance of Developer Oualifications. The Developer represents and agrees that its undertakings pursuant to this Agreement are for the purpose of development of the Project and not for speculation in land holding. The Developer further recognizes that the qualifications and identity of the Developer are of particular concern to the City and community in light of the following: (a) The importance of the development of the Developer Parcels and Tustin Legacy to the general welfare of the community; (b) The fact that a change in ownership or control of the Developer or of its members, or any other act or transaction involving or resulting in a significant change in ownership control of the Developer or the degree of control thereof as described in the remainder of this Article 2 is for practical purposes a transfer or disposition of the Property then owned by the Developer. (c) That it is because of the qualifications and identity of the Developer and its Key Employees that the City is entering into the Agreement with the Developer. 2.2 Transfers and Transfers of Control. 2.2.1 Restrictions on Transfers. For the reasons set forth in Section 2. 1, the Developer, on behalf of itself and all Successor Owners and each Person claiming by, through or under Developer or any Successor Owner, hereby acknowledges and agrees that prior to the Recordation of a Final Certificate of Compliance, or solely with respect to Parcels for which a Partial Certificate of Compliance is issued and Recorded, prior to the Recordation of such Partial Certificate of Compliance: (a) No Person shall acquire any rights or powers under this Agreement except as set forth in this Section 2.2; (b) 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 in July 12, 2004 -7- Disposition and Development 18405:6390691.8 Agreement the City's sole discretion, except to the extent such right of consent is specifically modified or waived pursuant to Section 2.2.4 (Minor Pad Transfers), Section 2.2.6 (Foreclosure Transfers), Section 2.2.7 (Retail Space Leases) or Article 15 (Mortgages); (c) No Transfer, including by Retail Space Lease, with respect to any Developer Parcel or portion thereof for which fee title continues to be held by the Navy, shall be valid or have any force or effect unless the Navy shall have provided its prior written consent, which shall be governed by Section 8.5.2; and (d) No Transfer to a Mortgagee shall be valid or enforceable with respect to the Developer Parcels unless such Mortgagee is a Permitted Mortgagee and the Mortgage is a Permitted Mortgage entered into in compliance with the requirements and conditions of Article 15, including consent of the City as and to the extent required therein. In addition, until Recordation of a Final Certificate of Compliance, and notwithstanding any Transfer, the Developer Parcels shall continue to be subject to this Agreement (subject to the effect of any Recorded Partial Certificate of Compliance with respect to release of the Developer Parcels to which such Partial Certificate(s) of Compliance are applicable from specified provisions of this Agreement), the Special Restrictions and the CC&Rs, and each Transferee and Successor Owner, and all Persons claiming by, through or under Developer or such Transferee or Successor Owner, unless specifically indicated as obligated to take "subject to" (such as in Sections 2.2.3(b), 2.2.4(b), and 2.2.7) shall be deemed to have assumed and shall be obligated to comply with all covenants, conditions and restrictions set forth herein and therein as "Developer". 2.2.2 Transfers of Control and Transfers Generally. The following conditions shall apply to each Transfer which is not a Retail Space Lease under Section 2.2.7, a Minor Pad Transfer governed by Section 2.2.4, or a collateral assignment of the Project or the Property or any portion thereof to a Permitted Mortgagee pursuant to Article 15: (a) The prior written consent of the City in its sole discretion shall have been obtained, provided, however, that a Preapproved User shall not be disapproved on the basis of its intended use; (b) If applicable, the prior written consent of the Navy shall have been obtained; (c) Developer shall have provided to the City at least twenty (20) Business Days prior to the date of any proposed Transfer: (i) the name of the proposed Transferee; (ii) all of the material proposed terms of the Transfer; (iii) current audited financial statements of the proposed Transferee (or financial statements certified by an officer of the proposed Transferee, if the proposed Transferee does not have audited financial statements); (iv) the names of all Persons who own, directly or indirectly, a five percent (5%) or more interest in the proposed Transferee; (v) an officer's certificate describing other real estate projects developed by, leased by, or sold by the proposed Transferee in California over the preceding five (5) year period, and the dates of involvement by the proposed Transferee with such projects and the success of the projects, made by the manager, president or other person with appropriate July 12, 2004 -8- Disposition and Development 18405:6390691.8 Agreement authority from the proposed Transferee to do so; (vi) all relevant instruments and other legal documents relating to future development, use or maintenance of the Property; and (vii) such other relevant information as the City may reasonably request in connection with its consent rights and the consent rights of the Navy under this Agreement, the LIFOC and/or the Ground Lease. With respect to a Major Pad Transferee who is an End User, Developer shall provide to the City at least twenty (20) Business Days prior to the date of any proposed Transfer the following information (in lieu of the information described above): (A) the name of the proposed Transferee; (B) current audited financial statements of the proposed Transferee (or financial statements certified by an officer of the proposed Transferee if the proposed Transferee does not have audited financial statements, or a net worth letter from the certified public accountant from the proposed Transferee); (C) the name of the proposed initial End User of such Retail Pad; and (D) such other relevant information, including material proposed terms of the Transfer as the City may reasonable request in connection with its consent rights and the consent rights of the Navy under this Agreement, the LIFOC, and/or the Ground Lease; (d) Unless (i) the Transfer is a Transfer to a Permitted Mortgagee governed by Section 15.8 or (ii) the Transfer is a Major Pad Transfer and such assumption obligation is expressly waived by the City pursuant to City Non -Disturbance and Attornment Agreement entered into in accordance with Section 2.2.3, the Transferee at the time of Transfer shall expressly assume for itself and its successors and assigns, and for the benefit of the City, by instrument in writing satisfactory to the City and in the form and substance of the instrument attached hereto as Attachment No. 18, acknowledged and Recorded, all the rights and obligations of the Developer under this Agreement and the Special Restrictions arising from and after the date of such Transfer as to the Parcel or Parcels acquired by it, and shall agree to be subject to all the conditions and restrictions to which the Developer is subject by reason of this Agreement, the Special Restrictions and the CC&Rs, including the posting of Performance Bonds or other financial security as required by this Agreement. 2.2.3 Major Pad Transfers. Provided that (a) the City has consented to the proposed Transfer and the Transfer otherwise complies with Section 2.2.2 and (b) the Major Pad Transferee and Developer shall have executed in favor of the City a written agreement in the form and substance of the City Non -Disturbance and Attornment Agreement attached hereto as Attachment No. 21A (or in other form agreed to by the City in its sole discretion ) which shall include the provisions required by clauses (i) through (iii) below, the City shall execute such City Non -Disturbance and Attornment Agreement which shall be effective commencing upon the date of legal Transfer of fee title or ground lease interest in the Major Pad to the Transferee. Under such agreement, the Major Pad Transferee shall not be required to assume the obligations of the Developer under this Agreement arising from and after the date of such Major Pad Transfer as required by Section 2.2.24, shall not be subject to the Right of Reversion provisions set forth in Section 13.5 and, provided that the Developer Parcels are covered by an environmental insurance policy meeting the requirements of Section 11. 1.4 and with a term that expires no earlier than the tenth (10th) anniversary of the Initial Closing, the Major Pad Transferee shall not be obligated with respect to the environmental indemnity contained in Section 10.2.1. The City Non - Disturbance and Attornment Agreement shall include the following: (i) Until the earlier of Recordation of a Partial Certificate of Compliance for the applicable Major Pad or a Final Certificate of Compliance for the Project, July 12, 2004 -9- Disposition and Development 18405:6390691.8 Agreement upon the occurrence of (x) default of the Special Restrictions by the Major Pad Transferee, its Successor Owner or any End User of such Major Pad or (y) failure of the Major Pad Transferee or its Successor Owner on or before the Pad Completion Trigger Date to Complete the Vertical Improvements on its Retail Pad and stock and open for a minimum of one (1) calendar day a retail establishment operated by an End User approved in accordance with Section 12.2, then such Major Pad shall be subject to the following rights of Developer and/or the City from and after such Major Pad's applicable Pad Completion Trigger Date: (A) if the Major Pad Transferee holds (aa) a leasehold interest in the Major Pad, the lease shall include a right of Developer, 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 discretion) or (bb) the fee interest in such Major Pad, the Developer shall have (1) a written option or (2) other legally enforceable right to purchase such fee interest, in each case (aa)(1) and (2) and (bb) (1)and (2), for a purchase price not to exceed the Book Value of the End User's interest in the Retail Pad and the Improvements thereon; (B) the City shall have an explicit right to enforce the Developer's rights described in clause (i), in the name of the City or, at the City's election, in the name of Developer for the City's account, and the City shall be an explicit third -party beneficiary in the contract setting forth such Developer rights if such rights are not set forth in a City Non -Disturbance and Attornment Agreement; in addition, the City shall have the express right to seek specific performance (x) against Developer requiring Developer to exercise its rights and remedies under agreements with the Major Pad Transferee (but in such circumstance the City and Developer shall agree upon a reasonable extension of the Schedule of Performance with respect to Developer's obligation to Complete the Vertical Improvements on such Major Pad in order to permit Developer to seek an appropriate Transferee approved by the City for such Major Pad and (y) against the Major Pad Transferee or its successor in interest directly in the event that Developer fails to directly enforce its rights and remedies; and (C) the foregoing shall not impair the City's Right of Purchase or Right of Reversion contained in this Agreement with respect to property not Transferred to the Major Pad Transferee; (ii) The Major Pad Transferee shall be "subject to" this Agreement, the Special Restrictions and the CC&Rs; and (iii) The Developer shall retain all the obligations under this Agreement relating to such Major Pad, including construction of the Horizontal Improvements and Developer's Backbone Infrastructure Work, payment of the Project Fair Share Contribution and the performance of Developer's maintenance obligations, subject, however, to Developer's right to assign (i) to the Major Pad Transferee the obligation to carry out construction of the Vertical Improvements on the Major Pad and (ii) its maintenance obligations in accordance with Section 12.3. July 12, 2004 -10- Disposition and Development 18405:6390691.8 Agreement Prior to execution by Developer and the Major Pad Transferee of a lease or purchase contract, the Major Pad Transferee and the City shall, at the request of either such party, enter into a letter agreement attaching a form of City Non -Disturbance and Attornment Agreement acceptable to each in its sole discretion; provided that such City Non -Disturbance and Attornment Agreement shall not be executed by either such party and shall not be effective until the date of legal Transfer of the Major Pad by the Developer to the Major Pad Transferee. 2.2.4 Minor Pad Transfers. Transfer of a Minor Pad which is not part of a larger conveyance of the Property shall not be subject to Section 2.2.2 or require the approval of the City; provided that: (a) until the earlier of Recordation of a Partial Certificate of Compliance for the applicable Minor Pad or a Final Certificate of Compliance for the Project, Developer shall provide at least twenty (20) calendar days' prior written notice to the City of each proposed Minor Pad Transfer, such notice to include the name of the proposed Minor Pad Transferee and, if different, the name of the proposed initial End User for the corresponding Retail Pad; (b) the Minor Pad Transferee shall be "subject to" this Agreement, the Special Restrictions and the CC&Rs; and (c) Developer shall retain all of the obligations under this Agreement relating to such Minor Pad, including construction of the Horizontal Improvements and Developer's Backbone Infrastructure Work, payment of the Project Fair Share Contribution and the performance of Developer's maintenance obligations, subject, however, to Developer's right to assign (i) to the Minor Pad Transferee the obligation to carry out construction of the Vertical Improvements on the Minor Pad and (ii) its maintenance obligations in accordance with Section 12.3. (i) Upon request of the Developer, the City shall enter into a City Non -Disturbance and Attornment Agreement with Developer and the Minor Pad Transferee in the form and substance of Attachment No. 21 B (or in other form agreed to by the City in its sole discretion) providing that the Minor Pad Transferee will not be subject to the Right of Reversion, and that with respect to exercise of the Right of Purchase that (a) the purchase price of such Minor Pad shall not exceed the End User's Book Value for the End User's interest in the Retail Pad and the Improvements thereon and (b) the Right of Purchase shall not commence except upon the occurrence of (i) default by the Minor Pad Transferee, its Successor Owner or any End User under the Special Restrictions, or (ii) failure of the Minor Pad Transferee or its Successor Owner to Complete the Vertical Improvements on its Minor Pad on or before the Pad Completion Trigger Date. 2.2.5 Assignment of Rights to Permitted Mortgagee. Subject to the provisions of this Section 2.2 and Article 15, Developer may conditionally or unconditionally assign its rights and obligations under this Agreement to the holder of a Permitted Mortgage as required to obtain financing for development of the Project on the Developer Parcels or refinancing thereof. July 12, 2004 -11- Disposition and Development 18405:6390691.8 Agreement 2.2.6 Foreclosure Transfers. (a) Notwithstanding the provisions of Section 2.2.1 and/or 2.2.2(x), a Transfer to a Permitted Mortgagee which acquires fee title and/or a leasehold and/or subleasehold interest by reason of a Foreclosure shall not require the consent of the City or Developer or constitute a Potential Default or Material Default under this Agreement. (b) With respect to a Transfer to any Transferee which acquires title at a Foreclosure sale or from a Permitted Mortgagee following a Foreclosure and which Transferee is not a Permitted Mortgagee, the provisions of Section 2.2.2 shall apply; however, the City shall not withhold its consent to such Transfer so long as the Transferee shall meet each of the following criteria: (1) have a reputation as a quality builder of retail developments of the scope and constructed of the quality described by this Agreement; (2) be licensed to do business in the State of California; (3) have a reputation for fair and honest business dealings with persons or entities generally; (4) have a sufficient net worth to undertake the obligations to be performed by Developer; and (5) have successfully constructed, marketed and leased Class A retail complexes; provided that if the Transfer occurs at a Foreclosure sale, the information required under Section 2.2.2(c) shall be provided as soon as practicable, and in no event more than thirty (30) calendar days following the Transfer. 2.2.7 Retail Space Leases. Except as set forth in Section 12.2 with respect to approval of Retail Space Leases prior to the Initial Lease -Up Date, a Transfer pursuant to a Retail Space Lease shall not be subject to Section 2.2.2 or require the approval of the City; provided, however, that all Retail Space Leases and Retail Space Tenants shall comply with and be "subject to" the terms and conditions of this Agreement (including the use restrictions set forth in Section 12.1), the Special Restrictions and the CC&Rs. 2.2.8 Release of Developer from Obligations Under this Agreement. In the absence of (a) specific prior written agreement by the City, pursuant to which the City expressly releases the Developer; or (b) execution by the City and Recording of a Final Certificate of Compliance, no Transfer shall constitute a release of the Developer from any of its obligations under this Agreement; provided that with respect to a Transfer in accordance with Section 2.2 of the entirety of Developer's then -remaining interest in the Project (i.e., excluding Retail Pads sold to third parties in prior transactions) which includes written assumption by the Transferee of the obligations set forth in Section 2.2, the City's written consent to such Transfer shall release the Developer for matters occurring subsequent to the Transfer. Notwithstanding the foregoing, in no event shall the Developer be released from any obligation of Developer under this Agreement, including pursuant to any indemnity or release, accruing during the period in which Developer was a Party to this Agreement. 2.2.9 City Estoppel. At the closing of any permitted Pad Transfer, Parcel Transferor upon execution of any Retail Space Lease, and from time to time thereafter within twenty (20) calendar days of the City's receipt of a written request therefor, the City shall execute and deliver to Developer and the Pad Transferee a City Estoppel, in the form attached hereto as Attachment No. 20 (or in other form agreed to by the City in its sole discretion) but with such modifications as are necessary in the City's sole discretion to ensure the accurateness of the statements made therein; provided, however, that if requested more frequently than July 12, 2004 -12- Disposition and Development 18405:6390691.8 Agreement annually as to any one Retail Pad and with respect to each request for an estoppel for a Retail Space Lease, Developer shall pay to the City of the City's out-of-pocket fees and expenses, including legal fees, incurred with respect to the preparation and delivery thereof subject to a per estoppel cap on fees and expenses of $2,500; provided, however, that if Developer presents a completed estoppel which requires no changes, there shall be no charge for the first Retail Space Lease for each Retail Pad in a given calendar year. 2.3 Additional Provisions Regarding Developer. 2.3.1 Developer Qualifications. The Developer represents and warrants to the City that (a) Developer is a California limited partnership, (b) Developer is qualified to do business in the State of California, (c) Developer has one general partner, Vestar California XXX, LLC, an Arizona limited liability company (the "General Partner"), which manages Developer's operations; (d) General Partner is a manager -managed limited liability company and has five (5) managers, and (e) General Partner is qualified to do business in the state of its formation (Arizona) and in the State of California. 2.3.2 Developer Changes. The Developer shall promptly notify the City of any and all Transfers of Control and with respect thereto shall comply with the provisions of this Article 2 governing Transfers, and shall promptly notify the City of all other changes whatsoever in (a) the identity of General Partner or any other party in control of the Developer or the degree thereof, Developer's other partners, General Partner's managers, or any changes to Developer's or General Partner's organizational jurisdiction or structure, and (b) all other material information concerning the Developer and its associates related to the Project, of which Developer, General Partner, or any of their partners or managers have been notified or otherwise have knowledge or information. A Change in Ownership in Developer or General Partner as a result of the death of Lee T. Hanley, Richard Kuhle, David Larcher, Paul Rhodes, Peter Thomas, Allan Kasen, Edward Reading, Patrick McGinley, Jeffrey Axtell or Michael Garner to a family member or members of such deceased individual, and/or to one or more trusts for the benefit of a family member or members of such deceased individual, shall be deemed approved provided that it does not effect a Transfer of Control and provided, further, that following such Change in Ownership, Developer shall remain bound by the terms of this Agreement. 2.3.3 Key Employees. The Developer represents and warrants that the Developer's key employees or representatives ("Key Employees") who will be directly involved in the development, so long as each is employed by Developer, are as follows: Lee T. Hanley - Chairman and Chief Executive Officer Richard J. Kuhle - President Peter G. Thomas - Chief Financial Officer Paul Rhodes — Senior Vice President of Construction Allan Kasen — General Counsel Edward Reading — Vice President of Finance Patrick McGinley — Vice President of Property Management Jeffrey Axtell — Project Director Michael Garner — Regional Director of Property Management David Ristau — California Director of Design and Construction July 12, 2004 -13- Disposition and Development 18405:6390691.8 Agreement 2.3.4 Unsatisfactory Performance. The Developer agrees to substitute any of its consultants and professionals working on the Project as reasonably requested by the City if the City determines, in its reasonable discretion, that such consultants or professionals are performing in a demonstrably unsatisfactory manner and Developer is unable after the exercise of reasonable efforts to resolve the issues raised by the City regarding the consultants or professional. 2.4 Assignment by Operation of Law. Neither this Agreement nor any interest therein shall be assignable by the Developer by operation of law (including the Transfer of this Agreement by testacy or intestacy). Any involuntary assignment or Transfer shall constitute a Material Default by the Developer which shall not be subject to extension for Force Majeure Delay. In such event, this Agreement shall not be treated as an asset of the Developer. The following is a nonexclusive list of acts which shall be considered an involuntary assignment or Transfer: (a) If the Developer is or becomes bankrupt or insolvent or if any involuntary proceeding is brought against the Developer (unless, in the case of a petition filed against the Developer, the same is dismissed within ninety (90) calendar days), or the Developer makes an assignment for the benefit of creditors, or institutes a proceeding under or otherwise seeks the protection of federal or State bankruptcy or insolvency laws, including the filing of a petition for voluntary bankruptcy or instituting a proceeding for reorganization or arrangement; (b) If a writ of attachment or execution is levied on this Agreement or on any Parcel, or on any portion thereof, where such writ is not discharged within ninety (90) calendar days; or (c) If, in any proceeding or action in which the Developer is a party, a receiver is appointed with authority to take possession of a Parcel, or any portion thereof, where possession is not restored to the Developer within ninety (90) calendar days. 2.5 Remedies For Improper Transfers. Any purported Transfer that does not comply with the requirements of Article 2 or that is made in a manner or with the effect or intent to circumvent the restrictions on Transfers and Transfers of Control set forth in this Agreement shall, at the election of the City, be null and void and such Transfer shall be a Material Default under this Agreement as of the date of the Transfer by the violating party, which date shall not be extended by Force Majeure Delay. In the event of (a) a failure by Developer to comply with the requirements of this Article 2 with respect to any Transfer or (b) a failure of any Transferee to execute the assumption agreement required by Section 2.2, if applicable, the City shall have all remedies available to it at law and in equity, including those specified in this Agreement. Representations and Warranties. 3.1 Developer's Representations and Warranties. As an inducement to the City to enter into this Agreement and to perform its obligations hereunder, the Developer represents and warrants to the City as follows: (a) The Developer has the necessary expertise, experience, qualifications and legal status necessary to perform as the Developer pursuant to this Agreement July 12, 2004 -14- Disposition and Development 18405:6390691.8 Agreement and to construct and Complete the Project, and, without limiting the foregoing, the Developer is experienced in the development, management and leasing of retail shopping centers of the size and type described in this Agreement and understands the process and requirements associated with projects such as the Project described herein; (b) The Developer's acquisition, leasing and/or subleasing of the Property, development of the Project and its other undertakings pursuant to this Agreement are for the purpose of timely redevelopment of the Developer Parcels in accordance with the Schedule of Performance attached to this Agreement and not for speculation or land holding; (c) The Developer is a limited partnership, duly formed, qualified, and validly existing and in good standing under the laws of the State of California, and is duly qualified to do business in each other jurisdiction where the operation of its business or its ownership of property or the performance of Developer's obligations under this Agreement make such qualification necessary; (d) The Developer has all requisite power and authority required to enter into this Agreement, the Ground Lease, and the other instruments and documents referenced in this Agreement, subject to any conditions set forth in this Agreement for the benefit of Developer, to consummate the transactions contemplated hereby and thereby, to take any steps contemplated thereby or hereby, and to perform its obligations hereunder and thereunder. No consent of any Person is required in connection with any of the foregoing. (e) All required action has been taken.by the Developer and, subject to all conditions set forth in this Agreement for the benefit of Developer, the Developer has obtained all required consents in connection with entering into this Agreement, the Ground Lease and the instruments and documents referenced in this Agreement to which the Developer is or shall be a party and the consummation of the transactions contemplated hereby. (f) The individuals executing this Agreement, the Ground Lease and the other instruments and documents referenced in this Agreement on behalf of the Developer have the legal power, right and actual authority to bind the Developer to the terms and conditions hereof and thereof. (g) This Agreement is duly authorized, executed and delivered by the Developer and all documents required in this Agreement to be executed by the Developer pursuant to this Agreement shall be, at such time as they are required to be executed by the Developer, duly authorized, executed and delivered by the Developer and are or shall be, at such time as the same are required to be executed hereunder, valid, legally binding obligations of and enforceable against the Developer in accordance with their terms. The Developer has duly authorized, executed and delivered any and all other agreements and documents required to be executed and delivered in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement. (h) Neither the execution or delivery of this Agreement or the documents referenced in this Agreement, nor the incurring of the obligations set forth in this Agreement, and the documents referenced in this Agreement, nor the consummation of the July 12, 2004 -15- Disposition and Development 18405:6390691.8 Agreement transactions in this Agreement contemplated, nor compliance with the terms of this Agreement and the documents referenced in this Agreement, will violate any provision of law, any order of any court or other government entity or conflict with or result in the breach of any terms, conditions, or provisions of, or constitute a default under any bond, note, or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan partnership agreement, lease or other agreements or instruments to which the Developer or any of its members are a party or which affect any of the Property. (i) No attachments, execution proceedings, assignments of benefit to creditors, bankruptcy, reorganization or other proceedings are pending or, to the best of Developer's knowledge, threatened against the Developer or its partners or against General Partner or its managers. 0) The Developer is relying solely upon its own inspections and investigations in proceeding with this Agreement and the transactions contemplated hereby, and is not relying on the accuracy or reliability of any information provided to it by the City, on any oral or written representation (excepting only representations of the City expressly set forth in Section 3.3) or on the non -disclosure of any facts or conclusions of law made by the City, or any of its elected and appointed officials, officials, employees, agents, attorneys or representatives made in connection with this Agreement. In making such investigation and assessment, the Developer has been provided access to any persons, records or other sources of information which it has deemed appropriate to review and it has thereafter completed such investigation and assessment. (k) The Developer acknowledges that the City has not made and will not make any representations or warranties concerning compliance or non-compliance of any of the Property or any portion thereof with Environmental Laws or the existence or non-existence of Hazardous Materials in relation to the Property or any portion thereof or otherwise. (1) There are no adverse conditions or circumstances, no pending or, to the best of the Developer's knowledge, threatened litigation, no governmental action, nor any other condition which could prevent or materially impair the Developer's ability to demolish the improvements existing on the Project Site as of the Effective Date and develop the Project as contemplated by the terms of this Agreement. (m) The Developer has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement, other than the normal cost of conducting business and cost of professional services such as architects, engineers and attorneys. (n) All reports, documents, instruments, information and forms of evidence delivered by the Developer to the City concerning or related to this Agreement and the transactions contemplated hereby are, to the best of the Developer's knowledge, accurate, correct and sufficiently complete at the time of submission to give the City true and accurate knowledge of the subject matter, and do not contain any misrepresentation or omission. July 12, 2004 -16- Disposition and Development 18405:6390691.8 Agreement (o) As of the Effective Date, the Developer has equity capital and bonding capacity and as of the Initial Close of Escrow, Developer shall deliver to the City evidence of financing as required by Section 7.3.4, including firm, binding financing commitments, sufficient to (i) pay through Completion, all costs of development of the Project and the construction, marketing and sale of all the Improvements as further described in the Scope of Development; and (ii) enable the Developer to perform and satisfy all the covenants of the Developer contained in this Agreement. (p) The Developer does not have any contingent obligations or any other contracts the performance or nonperformance of which could affect the ability of the Developer to carry out its obligations hereunder. The Developer has not and shall not undertake such additional projects as could reasonably be expected to jeopardize the sufficiency of such equity, capital and firm and binding commitments for the purposes expressed in clause o above and in the preceding sentence. (q) There are no legal proceedings either pending or, to the best of the Developer's knowledge, threatened, to which the Developer is or may be made a party, or to which any of the Developer's property, or the Property, is or may become subject, which has not been fully disclosed in the documents submitted to the City and which could materially affect the ability of the Developer to carry out its obligations hereunder. Developer's representations and warranties set forth in this Section 3.1 shall be deemed to be restated at the Initial Close of Escrow and at each Subsequent Closing as to transactions and documents related to such Closing, and, as so restated, shall survive the Initial Close of Escrow, each Subsequent Closing and the termination of this Agreement and shall not be merged with any Quitclaim Deed or the Ground Lease. In addition, each representation and warranty in this Section 3.1 other than those set forth in clauses (h), (i), (1), (n) and (p), is deemed to be an ongoing representation and warranty during the term of this Agreement and shall not be merged into any Quitclaim Deed or into the Ground Lease. As used in this Section 3. 1, "to the best of the Developer's knowledge" means the best knowledge of the Key Employees after conducting commercially reasonable inquiry. 3.2 Developer Covenants Regarding Representations and Warranties. The Developer shall promptly advise the City in writing if there is any material change pertaining to any matters set forth or referenced in Section 3.1 or if Developer becomes aware of any representation or warranty in Section 3.1 being or becoming untrue in any material respect. 3.3 City Representations and Warranties. As an inducement to the Developer to enter into this Agreement and perform its obligations hereunder, the City represents and warrants to the Developer as follows: (a) The City is a municipal corporation incorporated within and existing pursuant to the laws of the State of California. (b) The City has all requisite power and authority required to enter into this Agreement, and subject to all conditions set forth in this Agreement for the benefit of the City, the Ground Lease and the instruments referenced in this Agreement, to consummate the July 12, 2004 -17- Disposition and Development 18405:6390691.8 Agreement transaction contemplated hereby and to take any steps contemplated thereby or hereby, and to perform its obligations hereunder and thereunder. No consent of any additional individual, official, board, division, judicial or administrative body, authority or other party is required in connection with any of the foregoing. (c) All required action has been taken by the City and, subject to all conditions set forth in this Agreement for the benefit of the City, the City has obtained all required consents in connection with entering into this Agreement and the consummation of the transactions contemplated hereby. (d) The individual executing this Agreement, the Ground Lease and the instruments referenced in this Agreement on behalf of the City has the legal power, right and actual authority to bind the City to the terms and conditions hereof and thereof. (e) This Agreement is duly authorized, executed and delivered by the City and all documents required in this Agreement to be executed by the City pursuant to this Agreement shall be, at such time as they are required to be executed by the City, duly authorized, executed and delivered by the City and are or shall be, at such time as the same are required to be executed hereunder, valid, legally binding obligations of and enforceable against the City in accordance with their terms. (f) There are no legal proceedings either pending or, to the best of the City Manager's and Assistant City Manager's knowledge (without inquiry) threatened, to which the City is or may be made a party, or to which any of the City's property, including the Property, is or may become subject, which has not been fully disclosed in the documents submitted to the Developer and which could reasonably affect the ability of the City to carry out its obligations hereunder. The City's representations and warranties set forth in this Section 3.3 shall be deemed to be restated at the Initial Close of Escrow and at each Subsequent Closing as to transactions and documents related to each such closing, and as so restated shall survive the Initial Close of Escrow, each Subsequent Closing and the termination of this Agreement and shall not be merged with any Quitclaim Deed or the Ground Lease. 4. Conveyance and Subleasing of Property from City to Developer. 4.1 Property. 4.1.1 Exclusions from Property. The "Property" consists of (a) the Developer Fee Parcels, together with (i) all existing improvements, if any, presently located on the Developer Fee Parcels, and (ii) all Personal Property associated with the foregoing (collectively, the "Developer Fee Property" and when referring to Developer Fee Parcel A through Developer Fee Parcel D individually, "Developer Fee Property A" through "Developer Fee Property D", respectively) (b) the Developer Sublease Parcels, together with (i) all existing improvements, if any, presently located on the Developer Sublease Parcels, and (ii) all Personal Property associated with the foregoing (collectively, the "Developer Sublease Property" and when referring to Developer Sublease Parcels A through E individually, "Developer Sublease Property A" through "Developer Sublease Property E", respectively), subject in each case to July 12, 2004 -18- Disposition and Development 18405:6390691.8 Agreement all Permitted Exceptions and such other title exceptions as may be applicable to the Developer Parcels, or any one of them, and provided, further, that the terms "Property", "Developer Fee Property" and "Developer Sublease Property" shall exclude the following rights and interest which shall be explicitly reserved to the City: (a) Any and all oil, oil rights, minerals, mineral rights, natural gas, natural gas rights and other hydrocarbon by whatsoever name known, geothermal steam and rights thereto and all products derived from any of the foregoing, that may be within or under the Developer Parcels together with the perpetual right of drilling, mining, exploring for and storing in and removing the same from the Developer Parcels or any other land, including the right to whipstock or directionally drill and mine from lands other than the Developer Parcels, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Developer Parcels and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to re-drill, re-tunnel, equip, maintain, repair, deepen and operate any such well or mines; but without, however, the right to drill, mine, store, explore or operate through the surface of the Developer Parcels or otherwise to materially affect the use or operation of the Developer Parcels as anticipated by this Agreement; and (b) Any and all water, water rights or interests therein appurtenant or relating to the Developer Parcels or owned or used by the City in connection with or with respect to the Developer Parcels no matter how acquired by the City, whether such water rights shall be riparian, overlying, appropriative, littoral, percolating, prescriptive, adjudicated, statutory or contractual, together with the perpetual right and power to explore, drill, re-drill and remove the same from or in the Developer Parcels, to store the same beneath the surface of the Developer Parcels and to divert or otherwise utilize such water, rights or interests on any other property owned or leased by the City; but without, however, any right to enter upon or use the surface of the Developer Parcels in the exercise of such rights or otherwise to materially affect the use or operation of the Developer Parcels as anticipated by this Agreement. 4.1.2 City Leasehold Interests. As of the Effective Date, the City holds a leasehold, not fee, interest in the LIFOC Parcels (within which lie the Developer Sublease Parcels) and for purposes of the Initial Close of Escrow described in Article 7, the interest conveyed to Developer with respect to each Developer Sublease Parcel will be a sublease of the City's ground leasehold interests and no fee interest will be conveyed. To facilitate the transactions contemplated hereby, the interest conveyed to Developer with respect to each other Lease Parcel at the Initial Close of Escrow will be a ground lease of the City's fee interest, as more fully set forth in Article 7. 4.1.3 Conveyances. The Parties anticipate that subsequent to the Initial Close of Escrow the City will from time to time in accordance with the LIFOC receive fee title to certain LIFOC Parcels from the Navy, and it is the intent of the Parties that promptly after such Navy conveyance(s) of LIFOC Parcels, the City shall quitclaim its fee interest with respect to each Developer Sublease Property, and to certain adjoining Developer Fee Parcels that are Lease Parcels, to Developer in one or more Subsequent Closings, on the terms and conditions set forth in Section 7.7. In addition, in order to provide for the orderly transfer and development of the Property in accordance with the Preliminary Plan and the Scope of Development, the Parties intend to coordinate the conveyance by the City to Developer of portions of the Developer Fee July 12, 2004 -19- Disposition and Development 18405:6390691.8 Agreement Property owned by the City as of the Effective Date with the transfer by the Navy to the City of the adjoining LIFOC Parcels. The Parties therefore agree that conveyances of the Developer Fee Property and the Developer Sublease Property shall be carried out pursuant to the terms of Article 7 and shall be coordinated as follows: (a) At the Initial Close of Escrow, the City shall convey to Developer by Quitclaim Deed fee title to Developer Fee Property A and Developer Fee Property B, shall lease to Developer, by Ground Lease, a leasehold interest in Developer Fee Property C and Developer Fee Property D, and shall sublease to Developer, by Ground Lease, a subleasehold interest in Developer Sublease Property A, Developer Sublease Property B, Developer Sublease Property C, Developer Sublease Property D and Developer Sublease Property E. (b) At one or more Subsequent Closings and in accordance with the terms of Section 7.7, the following conveyances shall occur: (i) Promptly following conveyance by the Navy to the City of each of Developer Sublease Parcel A and/or Developer Sublease Parcel B, the City shall convey to Developer in fee by Quitclaim Deed the corresponding Developer Sublease Property; (ii) Promptly following conveyance by the Navy to the City of Developer Sublease Parcel C, the City shall convey to Developer in fee by Quitclaim Deed the corresponding Developer Sublease Property and Developer Fee Property C; and (iii) Promptly following conveyance by the Navy to the City of Developer Sublease Parcel D and Developer Sublease Parcel E, the City shall convey to Developer in fee by Quitclaim Deed the corresponding Developer Sublease Property and Developer Fee Property D. 4.2 Purchase Price. 4.2.1 Purchase Price. As consideration for the sale of the Property by the City to the Developer, the Developer shall pay to the City the Purchase Price (defined in Section 4.2.2). 4.2.2 Purchase Price. The "Purchase Price" shall be the sum of the Initial Closing Purchase Price and the Subsequent Purchase Price (each defined below) and shall be payable in accordance with the provisions of Sections 4.2.3 and 4.2.4 and Article 7: (a) The following amounts are payable at the Initial Close of Escrow (the "Initial Closing Purchase Price"): (i) For Developer Fee Property A, Eighteen Million Four Hundred Thirty Five Thousand One Hundred Fifty and No/100 Dollars ($18,435,150.00); and (ii) For Developer Fee Property B, Four Million Six Hundred One Thousand Seven Hundred Twenty One and 50/100 Dollars ($4,601,721.50). Developer shall have the option of paying the portion of the Purchase Price attributable to Developer Fee Property B either in cash, wire transfer or cashier's check per the provisions of Section 4.2.3(d) July 12, 2004 -20- Disposition and Development 18405:6390691.8 Agreement or to utilize the deferred payment provisions of Section 4.2.3(b) and (c) for a deferred payment of ninety percent (90%) of such Developer Fee Property B purchase price. (b) The following amounts are payable at the Subsequent Closing of each additional Developer Fee Property and each Developer Sublease Property (the "Subsequent Purchase Price"), respectively: (i) For Developer Sublease Property A and Developer Sublease Property B, collectively, Five Hundred Sixty Six Thousand Three Hundred Seventy and No/100 Dollars ($566,370.00) which shall be divided pro rata between the Parcels on a net square footage basis in the event the Parcels are not transferred to Developer in fee at the same Subsequent Closing. (ii) For each of Developer Fee Property C and Developer Fee Property D, Developer Sublease Property C, Developer Sublease Property D and Developer Sublease Property E, an amount equal to the product of $8.50 per square foot multiplied by the total net land square footage of each corresponding Developer Parcel after deducting therefrom any Right of Way Parcels or other public roadway dedications within the land area of such Developer Parcel, with the exact acreage of each Developer Parcel reasonably determined by the City within the time period and pursuant to the methodology set forth in clause (a)(ii) above, totaling Nine Million Eight Hundred Ten Thousand Nine Hundred Nineteen and 50/100 Dollars ($9,810,919.50). 4.2.3 Payment of Initial Closing_ Purchase Price. The Initial Closing Purchase Price for the Property shall be payable by the Developer to the City at the Initial Close of Escrow, as follows: (a) Deposit (i) ENA Deposit. The Developer has paid to the City a deposit of One Hundred Thousand and No/ 100 Dollars ($100,000.00) (the "ENA Deposit") in connection with the execution of that certain Exclusive Negotiation Agreement dated July 1, 2003, by and between the City and the Developer (as the same may have been amended from time to time, the "ENA"). The ENA Deposit has been used by the City to pay the City's costs incurred in connection with the drafting, negotiation, execution, implementation and/or termination of the ENA and this Agreement, including third party fees and costs incurred for legal counsel, financial, engineering and other consultants ("City Transaction Expenses"). Developer agrees that the ENA Deposit has been fully expended for City Transaction Expenses and is non-refundable and hereby waives any and all Claims it may have against the City with respect to calculation of City Transaction Expenses and/or refund of the ENA Deposit. At the Initial Close of Escrow, the ENA Deposit shall be a credit against the Initial Closing Purchase Price. (ii) Initial DDA Deposit. An earnest money deposit ("Initial DDA Deposit") of One Hundred Thousand and No/ 100 Dollars ($100,000.00) shall be delivered by the Developer to the City within five (5) calendar days of the City's execution of this Agreement. After its receipt thereof, the City shall hold the Initial DDA Deposit in the City's July 12, 2004 -21- Disposition and Development 18405:6390691.8 Agreement trust account until its application in accordance with this Section 4.2.3(a). No interest shall accrue on the Initial DDA Deposit. Developer shall be entitled to use all or a portion of the Initial DDA Deposit to defray its costs incurred prior to the termination of the Due Diligence Period (including prior to the Effective Date) in connection with its evaluation of the condition of the Property and the feasibility of the Project, including title and survey costs incurred with respect to the Property, all third party fees and costs incurred for legal counsel, financial and other consultants, engineering and all other costs reasonably incurred in connection with such planning evaluation (the "Developer Transaction Expenses"). In order to obtain such reimbursement, Developer shall submit to the City one or more invoices setting forth amounts constituting Developer Transaction Expenses for which reimbursement is sought, together with reasonable supporting documentation therefor. Subject to clause iii) below, within sixty (60) calendar days of the City's receipt of each Developer Transaction Expense invoice, the City shall either reimburse the requested Developer Transaction Expenses to Developer (or such amount as are approved by the City), or notify Developer of the City's objection to such request, setting forth the basis of such objection in reasonable detail. In'no event shall the amount to be reimbursed to Developer as Developer Transaction Expenses exceed the amount of the Initial DDA Deposit. Any amount of the Initial DDA Deposit remaining after reimbursement of eligible Developer Transaction Expenses will be transferred by the City to the Escrow Holder on or immediately before the Initial Close of Escrow and thereafter applied to the Initial Closing Purchase Price or, if applicable, applied to the City as liquidated damages. Amounts reimbursed to Developer shall not be credited against the Initial Closing Purchase Price. In the event of a Material Default of this Agreement by the Developer, then the Initial DDA Deposit (or such portion as then remains after reimbursements to the Developer of Developer Transaction Expenses) shall be paid to the City as part of the liquidated damages due pursuant to Section 14.2, and no further reimbursement of Developer Transaction Expenses shall be made, including with respect to any then -pending invoice for Developer Transaction Expense reimbursement, nor shall Developer be entitled to any such reimbursement upon and after such Material Default, except for expenses reimbursed by City to Developer prior to that time. (iii) Final DDA Deposit. At the close of the Due Diligence Period (or upon such earlier date as the Developer waives in writing all remaining Due Diligence Matters and notifies the City of its election to proceed to closing), unless the Developer has provided a Termination Notice in accordance with Section 5.7, the Developer shall deliver to the City an additional amount of Two Hundred Thousand and No/100 Dollars ($200,000.00) (the "Final DDA Deposit"). The City shall promptly thereafter place the Final DDA Deposit into an escrow account established with Escrow Holder. (iv) DDA Deposit. The Initial DDA Deposit and the Final DDA Deposit (if made) are referred to collectively as the "DDA Deposit". Unless the Developer has provided a Termination Notice in accordance with Section 5.7, after expiration of the Due Diligence Period (or such earlier date as the Developer has waived in writing all remaining due diligence items and notified the City of its election to proceed to closing) the DDA Deposit shall be nonrefundable except as otherwise expressly provided in Sections 14.1.4 or 14.3.3. In the event of a Material Default of this Agreement by the Developer prior to the Initial Close of Escrow, the entire amount of the DDA Deposit (less any amounts previously reimbursed to Developer as Developer Transaction Expenses under Section 4.2.2(b)(ii)), and in no case less July 12, 2004 -22- Disposition and Development 18405:6390691.8 Agreement than Two Hundred Thousand and No/100 Dollars ($200,000.00) shall be liquidated damages to the City as further set forth in Section 14.2. (v) The DDA Deposit, less any amount reimbursed to Developer pursuant to Section 4.2.3(a)(ii), plus the ENA Deposit are collectively the "Purchase Price Credit". (b) Purchase Money Note and Deed of Trust. On or before the Initial Closing Date, Developer shall execute and deposit into Escrow a promissory note in favor of the City in the principal amount equal to ninety percent (90%) of the Purchase Price Developer Fee Parcel B (determined as set forth in Section 4.2.2(a)(ii)) bearing interest at the rate of 6.36% per annum, compounded annually on each anniversary of the Initial Close of Escrow, substantially in the form and substance of the instrument attached hereto as Attachment No. 23 ("City Note"), which City Note shall be secured by Developer Fee Property B, and evidenced by a deed of trust substantially in the form and substance of the instrument attached hereto as Attachment No. 24 ("City Deed of Trust"), which Developer shall also execute and deliver to Escrow on or before the Initial Closing Date. Principal under the City Note and all accrued and unpaid interest thereon shall be due and payable on the earlier of: (a) the last Subsequent Closing for the Remainder Parcels; (b) the closing of Developer's refinancing of its first permanent loan with respect to any portion of the Project following the replacement of its construction loan with such first permanent loan; (c) the Transfer by Developer of the entirety of the balance of the Project owned by Developer, excluding Minor Pads or (d) the fifteenth (15th) anniversary of the Initial Closing Date. Upon request therefor by Developer, the City shall subordinate the lien of the City Deed of Trust to a Fee Property B Permitted Mortgage only. The City in its capacity as lender and the Major Pad Transferee upon Developer Fee Property B shall execute a non -disturbance and attornment agreement in a form acceptable to each in its sole discretion, but containing provisions customarily provided in such agreements; provided, however, that nothing in such non -disturbance and attornment agreement shall modify, waive or limit the provisions of the City Non -Disturbance and Attornment Agreement between such parties, provided that Developer shall pay City's costs and expenses, including reasonable attorneys fees in connection with drafting and delivering of same. (c) Payment of the Balance of the Initial Closing Purchase Price. No later than one (1) Business Day prior to the Initial Close of Escrow, the Developer shall deposit with Escrow Holder an amount (the "Developer's Closing Payment") which shall be equal to (i) the Initial Closing Purchase Price less the Purchase Price Credit and less the principal amount of the City Note, plus (ii) such additional amount as is necessary to cover all closing costs to be paid by the Developer pursuant to Section 7.6.1(b), plus (y) the rental due under the Ground Lease for the initial year of the Ground Lease term, as adjusted for any net credits or debits to the City for closing costs and/or prorations in accordance with Sections 7.6.4 and 7.6.5. (d) Payments in Immediately Available Funds. Funds delivered to City or Escrow Holder under this Agreement shall be in the form of cash, wire transfer (to such account as City or Escrow Holder notifies the Developer in writing) or by cashier's check drawn on good and sufficient funds on a federally insured bank in the State of California and made payable to the order of City or Escrow Holder, as the case may be. July 12, 2004 -23- Disposition and Development 18405:6390691.8 Agreement 4.2.4 Subsequent Purchase Price. The Subsequent Purchase Price for the fee interest in each Lease Parcel shall be payable by the Developer to the City at the Subsequent Closing(s), in the amount set forth in Section 4.2.2(b) and in the manner set forth in Section 7.7. 4.2.5 Ground Lease Rent. Nothing in the foregoing overrides or modifies the rental provisions of the Ground Lease, which are an obligation of the Developer separate from the payment of the Purchase Price. 4.3 Escrow. Not later than five (5) calendar days after the execution of this Agreement by the City, the Developer and the City shall each deliver an executed original counterpart of this Agreement to Escrow Holder. For purposes of this Agreement, the "Opening of Escrow" shall be the date that Escrow Holder receives an executed original counterpart to this Agreement signed by the Developer and the City. Upon the written acceptance of this Agreement by Escrow Holder, this Agreement shall constitute the joint escrow instructions of the Developer and the City to Escrow Holder to open an escrow (the "Escrow"). Upon Escrow Holder's receipt of the DDA Deposit and Escrow Holder's written acceptance of this Agreement, Escrow Holder is authorized to act in accordance with the terms of this Agreement. The Developer and the City shall execute Escrow Holder's general escrow instructions upon request, with such modifications thereto as the Developer and the City may reasonably require; provided, however, that, if there is any conflict or inconsistency between such general escrow instructions and this Agreement, this Agreement shall control. Escrow Holder shall not prepare any further escrow instruction restating or amending this Agreement unless specifically so instructed by the City and the Developer in writing. Any supplemental escrow instructions must be in writing and signed by the City and the Developer and accepted by the Escrow Holder to be effective. 4.4 Property Conveyed and Subleased "As -Is"; Release. 4.4.1 Investigation.`Developer has conducted with respect to all matters other than the Due Diligence Matters, and shall have conducted prior to the end of the Due Diligence Period with respect to all Due Diligence Matters, Developer's own investigation of the Project Site and all matters related to the Property and the Project including the state of title, including easements, covenants, conditions and/or restrictions affecting the Property, if any, the physical condition thereof, the physical condition of all structures located upon each of the Developer Parcels and the Project Site and, as applicable, the accessibility and location of utilities, and all mechanical, plumbing, sewage, and electrical systems located therein, suitability of soils, environmental and other investigations regarding the Property and the Project Site. The Developer has reviewed with respect to all matters other than the Due Diligence Matters, and shall have reviewed prior to the end of the Due Diligence Period with respect to all Due Diligence Matters, all items that in the Developer's sole judgment affect or influence the Developer's purchase and/or sublease of the Property, Developer's use of the Property and the Project Site and the Developer's willingness to consummate the transactions described by this Agreement. (a) The Developer acknowledges and agrees that: (i) its determination to enter into this Agreement and, subsequent to the Effective Date, not to terminate this Agreement prior to the close of the Due July 12, 2004 -24- Disposition and Development 18405:6390691.8 Agreement Diligence Period and to proceed to Initial Close of Escrow, constitutes Developer's agreement that Developer, in consummating the transactions described in this Agreement: (1) has been given the opportunity (except as noted in (iii) below) to inspect the Property and the Project Site and review the information and documentation affecting the Property and the Project Site, including the Due Diligence Matters and the Navy produced or identified documentation reflecting the Navy's knowledge of the environmental condition of the Property and the Project Site and is relying solely on its own investigation of the Property and the Project Site, including such investigation prior to and during the Due Diligence Period, and review of such information and documentation in determining the physical, economic and legal condition of the Property and the Project Site, and not on any information provided or to be provided by the City or the agents of the City, (2) has performed its own assessment of Property, including the environmental condition of the Property, the presence of Hazardous Materials on the Property and the Project Site, the suitability of the soil for improvements to be constructed, the implications of land use restrictions on the development plan for the Project and the Project Site and the consequences of any subsequently discovered contamination on or adjacent to the Property and the Project Site, and (3) has been provided with access to all information in the possession of the City which it has requested, including (w) the Federal Documents, (x) all environmental reports and statements listed on Attachment No. 10 attached hereto and all reports either attached to or referenced in the Conveyance Agreement, (y) the FOST, the FOSL and the LIFOC and (z) the Environmental Baseline Survey which is incorporated into the FOST, FOSL and LIFOC by reference; (ii) information provided to the Developer by or on behalf of the City with respect to the Property and the Project Site was obtained from a variety of sources and that the City has not made any independent investigation or verification of such information and makes no representations as to the accuracy or completeness of such information; and (iii) access to the Developer Sublease Property has been and is restricted by the Navy so that Developer has not been and may not be permitted, subject to the Navy's sole discretion, to undertake intrusive testing as a part of its pre-acquisition inspection of the Developer Sublease Property, and Developer is nevertheless satisfied with the nature and extent of its permissible investigation of the physical condition and other matters relating to the Developer Sublease Property and is willing to consummate the transactions described by this Agreement notwithstanding the restriction on access to the Developer Sublease Property. 4.4.2 AS -IS; WHERE -IS. (a) No Representations or Warranties. The Developer recognizes that the City would not sell and/or lease and subsequently sell the Developer Fee Property or sublease and subsequently sell the Developer Sublease Property except on an "AS, IS, WHERE IS, WITH ALL FAULTS" basis, and the Developer acknowledges that the City has made no representations or warranties of any kind whatsoever (excepting only representations of the City July 12, 2004 -25- Disposition and Development 18405:6390691.8 Agreement expressly set forth in this Agreement), either express or implied in connection with any matters with respect to the Property or any portion thereof. Developer's determination to enter into this Agreement and, subsequent to the Effective Date not to terminate this Agreement prior to the close of the Due Diligence Period and to proceed to Initial Close of Escrow constitutes Developer's agreement that Developer, in consummating the transactions described in this Agreement, is buying and/or leasing the Developer Fee Property, subleasing the Developer Sublease Property, and later will be buying the Lease Property, in each case in an "AS IS, WHERE IS, WITH ALL FAULTS" condition, in its present state and condition and with all faults, if any. The Developer further acknowledges and agrees that, except as otherwise specifically provided in Section 3.3, the City has not made and does not make and specifically negates and disclaims any representations, warranties, promises, agreements or guaranties of any kind or character, whether express or implied, oral or written, past, present or future, whether by the City or any of its agents, elected or appointed officials, representatives or employees, of concerning or with respect to: (i) the value of the Property or the income to be derived from the Property; (ii) the existence or nonexistence of any liens, easements, covenants, conditions, restrictions, claims or encumbrances affecting the Property; (iii) the suitability of the Property and/or the Project Site for any and all future development, uses and activities which the Developer may conduct thereon, including the development of the Project described in this Agreement; (iv) the habitability, merchantability or fitness for a particular purpose of the Property and/or the Project Site; (v) the manner, quality, state of repair or lack of repair of the Property and/or the Project Site; (vi) the nature, quality or condition of the Property and/or the Project Site including water, soil and geology; (vii) the compliance of or by the Property and/or the Project Site or its operation with any Governmental Requirement, including the National Environmental Policy Act, CEQA and the Americans with Disabilities Act of 1990; (viii) the manner or quality of the construction or materials, if any, incorporated into the Property and/or the Project Site; (ix) the presence or absence of Hazardous Materials, including asbestos or lead paint at, on, under, or adjacent to the Property and/or the Project Site; (x) the content, completeness or accuracy of the information, documentation, studies, reports, surveys and other materials, delivered to the Developer in connection with the review of the Property and/or the Project Site and the transactions contemplated in this Agreement; July 12, 2004 -26- Disposition and Development 18405:6390691.8 Agreement (xi) the conformity of the existing improvements on the Property, if any, to any plans or specifications for the Property and/or the Project Site; (xii) compliance of the Property with past, current or future statutes, laws, codes, ordinances, regulations or Governmental Requirements relating to zoning, subdivision, planning, building, fire, safety, health or environmental matters and/or covenants, conditions, restrictions or deed restrictions; (xiii) the deficiency of any undershoring or of any drainage; (xiv) the fact that all or a portion of the Property may be located on or near an earthquake fault line or falls within an earthquake fault zone established under the Alquist-Priolo Earthquake Zone Act, California Public Resources Code Sections 262 1-2630 or within a seismic hazard zone established under the Seismic Hazards Mapping Act, California Public Resources Code, Sections 2690-2699.6 and Sections 3720-3725; (xv) the existence or lack of vested land use, zoning or building entitlement affecting the Property; (xvi) the construction or lack of construction of Tustin Legacy or if constructed, the construction of Tustin Legacy in accordance with design guidelines, plans and specifications previously or to be prepared therefor; (xvii) the contents of the Federal Documents, the Base Closure Law, the FOST and the FOSL; and (xviii) with respect to any other matters. (b) Environmental Condition of the Developer Parcels; Restrictions. The Developer acknowledges and agrees that: (i) the City has acquired and/or leased the LIFOC Parcels from the Navy, (ii) the Navy has conducted an Environmental Baseline Survey for Reuse Plan Disposal Parcels 10, 11 and 12; (iii) the Navy determined that Parcels I -C-1 and I -D-4 were suitable for transfer and issued the FOST; (iv) in accordance with the City's recent leasing of the LIFOC Parcels, the Navy determined that the LIFOC Parcels were suitable for leasing and issued the FOSL; (v) the City makes no representation or warranty as to the environmental condition of Reuse Plan Disposal Parcels 10, 11 and 12, including the Developer Parcels, the Navy's obligations with respect to the environmental condition of the foregoing property or of the Project Site or any portion thereof, or of the adequacy or accuracy of any environmental report that has been rendered; (vi) there may be some residual contamination on Parcels I -C-1, I -D-4, II -D-10, III -C-3, III -C -S, III -D-9 and/or III -D-11 and/or the Property and/or the Project Site as a result of Navy historic activities; (vii) the Navy has agreed to accept certain limited responsibility for any contamination it caused, including any contamination discovered after transfer from the Navy, in accordance with existing Governmental Requirements including the National Defense Authorization Act For Fiscal Year 1993 as amended (Public Law No. 102-434) Section 330; and (ix) based on an agreement between the Navy and DTSC, the deed restrictions contained in the Federal Deed and LIFOC are binding upon successors and assigns of the City and are enforceable by DTSC pursuant to a conveyed property right from the Navy to DTSC. July 12, 2004 -27- Disposition and Development 18405:6390691.8 Agreement (c) Federal Documents. The Developer acknowledges and agrees that the purchase of the Developer Fee Property is subject to the terms and conditions set forth in the Conveyance Agreement and the Federal Deed and the sublease and subsequent purchase of the Developer Sublease Property is subject to the terms and conditions of the LIFOC and each subsequent Federal Government quitclaim deed conveying such property to the City, in each case including all matters, issues, contingencies, deed restrictions, environmental restrictions, leases, and obligations as stated therein. Upon conveyance and/or sublease of the Property to the Developer, the Developer shall assume and faithfully perform any covenants running with the land and obligations (i) set forth in the Federal Deed and each subsequent Federal Government quitclaim deed as obligations to be performed by "Grantee or its successors or assigns" and (ii) set forth in the LIFOC as obligations to be performed by "Lessee", as more fully set forth in and subject to the terms of the Ground Lease. (d) No Unauthorized Representations. No Person acting on behalf of the City is authorized to make, and by execution hereof, the Developer acknowledges that no Person has made, any representation, agreement, statement, warranty, guarantee or promise regarding the Property or the transaction contemplated in this Agreement or the past, present or future zoning, land use entitlements, construction, physical condition, presence or extent of Hazardous Materials or other status of the Property except as may be expressly set forth in this Agreement. No representation, warranty, agreement, statement, guarantee or promise, if any, made by any person acting on behalf of the City that is not contained in Agreement will be valid or binding on the City. 4.4.3 Release. Save and except for the explicit covenants, representations and warranties of the City set forth in Section 3.3 and, as to the Lease Parcels only, the explicit covenants, representations of the City set forth in the Ground Lease, the Developer on behalf of itself and each Successor Owner and every Person claiming by, through or under the Developer or any Successor Owner (each a "Releasing Party", and collectively, the "Releasing Parties"), hereby waives, as of the Effective Date, and agrees to waive, as of the Initial Close of Escrow and as of each Subsequent Closing Date, the right of each Releasing Party to recover from, and fully and irrevocably releases, the City and its elected and appointed officials, employees, agents, attorneys, affiliates, representatives, contractors, successors and assigns (individually, a "Released Party", and collectively, the "Released Parties") from any and all Claims that the Developer or any Releasing Party may now have or hereafter suffer or acquire arising from or related to: (a) any information or documentation supplied by any of the Released Parties ("Due Diligence Information"); (b) any condition of the Property, the Project Site, or any current or future improvement thereon, known or unknown by any Releasing Party or any Released Party; (c) any construction defects, errors, omissions or other conditions, latent or otherwise, including environmental matters, as well as economic and legal conditions on or affecting the Property, or any portion thereof; (d) the existence, Release, threatened Release, presence, storage, treatment, transportation or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to the Property, the Project Site, or any current or future improvement thereon or any portion thereof; (e) claims of or acts or omission to act of any Governmental Authority or any other third party arising from or related to any actual, threatened, or suspected Release of a Hazardous Material on, in, under, from, about, or adjacent to the Property or any current or future improvement thereon, including any Investigation or Remediation at or about the Property, the Project Site, or any current or future improvement thereon; (f) the cost or extent of July 12, 2004 -28- Disposition and Development 18405:6390691.8 Agreement the Tustin Legacy Backbone Infrastructure Program or the Developer's Backbone Infrastructure Work; (g) the amount of the Project Fair Share Contribution set forth in this Agreement; (h) the formation of any community facilities district in connection with therecoupment or payment of the Project Fair Share Contribution (except with respect to Claims against the City which might arise with respect to agreements between the City and Developer entered into subsequent to the Initial Close of Escrow relating to community facility districts); (i) school related development fees and/or 0) any restriction on access to the Developer Sublease Property for pre-acquisition inspection; provided, however, that the foregoing release by the Releasing Parties shall not apply to the extent that any Claim is the result of the gross negligence, willful misconduct or fraud of the City or its elected and appointed officials, employees, representatives, agents or consultants arising after the Initial Close of Escrow. This release includes Claims of which the Developer is presently unaware or which the Developer does not presently suspect to exist which, if known by the Developer, would materially affect the Developer's release to the Released Parties. The Developer specifically waives the provision of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." In this connection and to the extent permitted by law, the Developer on behalf of itself, and the other Releasing Parties hereby agrees, represents and warrants, which representation and warranty shall survive the Initial Close of Escrow, each Subsequent Closing and the termination of this Agreement and shall not be merged with any Quitclaim Deed or the Ground Lease, that (x) it realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to Claims or controversies which are presently unknown, unanticipated and unsuspected, (y) the waivers and releases in this Agreement have been negotiated and agreed upon in light of that realization and (z) the Developer, on behalf of itself and the other Releasing Parties, nevertheless hereby intends to release, discharge and acquit the Released Parties from any such unknown Claims and controversies which might in any way be included as a material portion of the consideration given to the City by the Developer in exchange for the City's performance hereunder. BY INITIALING BELOW, DEVELOPER ACKNOWLEDGES THAT (A) IT HAS READ AND FULLY UNDERSTANDS THE PROVISIONS OF THIS SECTION, (B) IT HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (C) IT HAS ACCEPTED AND AGREED TO THE TERMS SET FORTH IN THIS SECTION. CITY'S INITIALS DEVELOPER'S INITIALS This release shall run with the land for the benefit of the City Benefited Property and the City and all governmental successors and governmental assigns of the City owning all or any July 12, 2004 -29- Disposition and Development 18405:6390691.8 Agreement portion of the City Benefited Property and burdening the Developer and the Developer Parcels and the Successor Owners thereof and all Persons claiming by, through or under the Developer or any Successor Owner and, to further evidence its effectiveness with respect to Successor Owners of the Developer Parcels, shall be included in its entirety in each Quitclaim Deed, in the Special Restrictions and in the Ground Lease. Developer's Due Diligence Investigation. 5.1 Due Diligence Period. The Developer's obligation to purchase and/or lease the Developer Fee Property and to sublease the Developer Sublease Property at the Initial Close of Escrow shall be contingent upon the Developer's approval, in the Developer's sole discretion, of the results of such inspection, examination and other due diligence with regard solely to (i) environmental matters, including the presence and concentration of Hazardous Materials, if any, and (ii) geotechnical data, including soil types and compaction (collectively, the "Due Diligence Matters"), as each of the foregoing relate to the suitability of the Property for construction of the Project as the Developer may elect to conduct during the period commencing on the Effective Date and ending at 4:00 P.M. Pacific Time on August 1, 2004 (such period, the "Due Diligence Period"). "Due Diligence Matters" expressly exclude (x) all other matters relating to and conditions of the Property, other than those set forth in the foregoing clauses (i) and (ii), (y) those items known by the Developer as of the Effective Date, and (z) those items expressly accepted by the Developer or waived by the Developer as set forth in Section 4.4 and/or the ENA. The Developer acknowledges and agrees that the Due Diligence Period is adequate time to complete such investigation. 5.2 Limited License. The City hereby grants to the Developer and the Developer's officers, directors, employees, agents, representatives, tenants, prospective tenants, prospective Retail Pad purchasers, contractors or other Persons accessing the Property or the Project Site by, through or with the permission or under the direction or auspices of Developer ("Developer Representatives") a revocable license to enter upon the Developer Fee Parcels and, subject to the consent of the Navy, the Developer Sublease Parcels for purposes of (a) conducting the Developer's due diligence inspection and/or (b) obtaining data and making surveys and tests necessary to carry out this Agreement, provided that, prior to the effectiveness of such license, the Developer shall: (i) deliver to the City written evidence that the Developer has procured the insurance required under Section 11; (ii) give the City twenty-four (24) hours telephonic or written notice of any intended access which involves work on the Developer Parcels or may result in any impairment of the use of the Developer Parcels, the Project Site or any adjacent portion of the Tustin Legacy by any then -current owners, occupants or contractors; (iii) access the Developer Parcels in a safe manner; (iv) conduct no environmental testing, sampling, invasive testing or boring without the written consent of the City in its sole discretion; (v) allow no dangerous or hazardous condition created by the Developer or Developer's Representatives; (vi) comply with all Governmental Requirements and obtain all permits required in connection with such access; and (vii) conduct inspections and testing during normal business hours and subject to the rights of then -current owners, occupants and contractors, if any, and only after obtaining the City's prior consent, which other than as set forth in clause iv above shall not be unreasonably withheld. This limited license shall commence on the Effective Date, may be revoked by the City during the continuation of any Potential Default or Material Default of this Agreement by the Developer or upon termination of this Agreement by any Party, and shall be July 12, 2004 -30- Disposition and Development 18405:6390691.8 Agreement automatically revoked and terminated upon the earlier to occur of a delivery by Developer of a Termination Notice or the Initial Close of Escrow. 5.3 Insurance. From and after the Effective Date, and as a condition precedent to exercise by Developer or Developer's Representatives of the license granted in Section 5.2, the Developer shall obtain, at the Developer's sole cost and expense, a policy of commercial general liability insurance covering the liability of the Developer, Developer's Representatives and the City arising out of any investigative activities, in an amount and provided by a carrier reasonably approved by the City and shall deliver to the City a certificate thereof on form approved by the City. Such policy shall meet the requirements of Sections 11.1 and 11.2 and shall name the City and, with respect to the LIFOC Parcels only, the Navy as additional insureds. Prior to commencement of any work on the Developer Parcels or any other portion of the Project Site, the Developer shall provide the City with a certificate of such insurance meeting the requirements of Section 11.1 evidencing the effectiveness of the foregoing coverage. Such policy of insurance shall be kept and maintained in force following the Initial Close of Escrow or the earlier termination of this Agreement and so long after such date as necessary to cover any claims of damages suffered by Persons or property resulting from any acts or omissions of the Developer or the Developer's Representatives. 5.4 Indemnitv. Developer hereby agrees to protect, indemnify, defend and hold harmless the City and its elected and appointed officials, employees, agents, attorneys, representatives, contractors, successors and assigns from and against any and all Claims arising from or related to (a) the acts and omissions of Developer and Developer's Representatives in connection with exercise of the license provided in Section 5.2 or pursuant to the ENA, (b) entry onto the Property or the Project Site by the Developer or the Developer's Representatives, (c) the activities of, work on or use of the Property or the Project Site by the Developer or the Developer's Representatives, including with respect to any inspections, surveys, tests, Investigations and studies (collectively "Inspections") carried out by the Developer or the Developer's Representatives on or adjacent to the Property or the Project Site, in each case whether occurring prior to or following the Effective Date; provided, however, that the foregoing indemnity shall not apply to any diminution in the value of the Property or the Project Site resulting solely from Developer's discovery of any pre-existing condition, pre-existing circumstance or pre-existing Hazardous Material on the Property or the Project Site. The Developer shall keep the Property and the Project Site free and clear of any mechanics' liens or materialmen's liens related to the Developer's Inspection of the Property and the Project Site. The indemnification by the Developer set forth in this Section 5.4 shall survive the Initial Close of Escrow, the Subsequent Closings and the termination of this Agreement and shall not be merged into any Quitclaim Deed or the Ground Lease. 5.5 Review of Certain Records and Materials. The City shall, within ten (10) Business Days of the Effective Date and at no cost to the Developer, provide the Developer with copies of all City -produced plans, reports, studies, investigations and other materials the City may have that are pertinent to the Property, the Project Site and/or development of the Project; provided, however, that the City makes no representation, warranty or guaranty regarding the completeness or accuracy of such plans, reports, studies, investigations and other materials. The Developer shall also have the right to enter the City's offices to review files and materials, including the right to examine those books, records and files of the City relating to the July 12, 2004 -31- Disposition and Development 18405:6390691.8 Agreement environmental and other condition of the Property or the Project Site which the City determines in its sole discretion are not or subject to attorney-client privilege or other privilege rules. The City agrees to make all such books, records and files available to the Developer and the Developer's attorneys, accountants and other representatives at City Hall any time during business hours on Business Days upon reasonable notice from the Developer. 5.6 Communications with City and Third Parties. From and after the Effective Date, the Developer and the Developer's representatives shall communicate directly with (a) Ms. Christine Shingleton, the Assistant City Manager, who shall be the administrator of this Agreement on behalf of the City and such other employees, consultants and attorneys of the City as may be designated by the Assistant City Manager from time to time; (b) with the City staff, planning commission members, and staff and members of other public agencies; and (c) with third parties to all agreements affecting the Property in connection with the Developer's proposed purchase of the Developer Fee Property, sublease and subsequent purchase of the Developer Sublease Property, and development of the Project. Nothing in the foregoing shall restrict the Developer from responding to inquiries from the City Council or communicating with the City Council as requested by the City. The City staff shall have the right, but not the obligation, to attend and participate in any and all meetings with other public agencies, the general public, and other interested parties with regards to the Project and upon request therefor by any City Councilmember, with such City Councilmember. Upon request of the City, the Developer shall promptly provide the City with a copy of each item of correspondence (including any enclosures and attachments) sent or received by the Developer in connection with entitlement, community or governmental approval of the Project. 5.7 Termination Notice. On or before the expiration of the Due Diligence Period, the Developer may notify the City in writing of the Developer's election not to purchase and/or lease the Developer Fee Property and not to sublease the Developer Sublease Property and to terminate this Agreement (the "Termination Notice"). If the City has not received the Termination Notice on or before the end of the Due Diligence Period, the Developer will be deemed to have waived all remaining due diligence contingencies and elected to purchase and/or lease the Developer Fee Property and sublease the Developer Sublease Property on the Closing Date, subject only to the satisfaction of the Closing Conditions set forth in Sections 7.1 through 7_4. This Agreement shall automatically terminate in accordance with the procedures set forth in Section 14.1.4 upon the City's receipt of the Termination Notice. 6. Title; Survey. 6.1 Survey by Developer. Developer has, at the Developer's sole expense, obtained a survey for the Developer Parcels ("Survey") prepared by Development Resource Consultants, Inc. ("Surveyor"), which Survey has been certified by the Surveyor to the City, the Developer and the Title Company. The Survey depicts: (a) the boundaries of the Developer Parcels, the Right of Way Parcels and all City Dedication Parcels, (b) the location of all improvements, perimeter improvements, easements, roads, rights-of-way and encroachments located within twenty (20) feet of the boundary of the Developer Parcels, (c) all other Permitted Exceptions susceptible to depiction on a map or survey identified by reference to the recording information applicable to the documents creating them and (d) any portion of the Developer Parcels, the Right of Way Parcels and/or the City Dedication Parcels lying within a flood hazard area. The July 12, 2004 -32- Disposition and Development 18405:6390691.8 Agreement Developer has fully satisfied itself with respect to the subject matter of the Survey and hereby waives any and all rights to further due diligence with respect to the matters addressed by the Survey. Developer agrees to indemnify and hold the City and its elected and appointed officials, employees, agents, attorneys, affiliates, representatives, contractors and successors and assigns free and harmless from any and all Claims which the Developer shall incur or sustain as a result of inaccuracy in the legal description for the Developer Parcels, the Right of Way Parcels or the City Dedication Parcels. The indemnification by the Developer set forth in this Section 6.1 shall survive the Initial Close of Escrow, the Subsequent Closings and the termination of this Agreement and shall not be merged into any Quitclaim Deed or the Ground Lease. 6.2 Permitted Exceptions. Attached hereto as Attachment No. 22 are preliminary title report(s) issued to Developer by the Title Company with respect to the Developer Parcels (collectively the "Preliminary Title Reports"). The Developer acknowledges and agrees that it has delivered all Preliminary Title Reports to the City. The Developer and the City each acknowledge and agree that it has reviewed the Preliminary Title Reports and the other relevant documents referenced below, and Developer acknowledges and agrees that it has approved all matters shown on the Preliminary Title Reports and waives any and all rights to further due diligence with respect to the matters addressed by the Preliminary Title Reports. Developer shall take title to or lease the Developer Fee Parcels, shall sublease the Developer Sublease Parcels, and subsequently shall acquire title to the Lease Parcels in each case subject to the following (collectively the "Permitted Exceptions"): (a) all covenants, restrictions and encumbrances, liens, exceptions, leases, restrictions, deed restrictions and qualifications set forth in or permitted or contemplated by this Agreement, the Special Restrictions and the Federal Documents as applicable; (b) all exceptions indicated in the Preliminary Title Reports, and (c) unless removed from title in accordance with Section 6.3, any and all further title exceptions as may be found in any subsequent update of title, which state of title shall be insured by a California Land Title Association Owner's Policy for the Developer Fee Parcels and a California Land Title Association Leasehold Policy for the Lease Parcels (collectively the "CLTA Policy"). Within ten (10) calendar days following the Effective Date, Developer shall at Developer's sole cost and expense, cause Title Company to prepare and deliver to the Developer one or more preliminary title commitments from Title Company (collectively the "Title Commitment") committing to issue the CLTA Policy to the Developer. 6.3 Supplemental Title Reports. Following the issuance of the Title Commitment by the Title Company, within ten (10) calendar days after the Developer's receipt of any report issued by the Title Company concerning the Developer Parcels (a "Supplemental Title Report"), Developer shall provide the City a copy of such Supplemental Title Report and shall specify in writing the Developer's disapproval of any item or exception shown on such Supplemental Title Report not previously included in the Preliminary Title Reports and/or the Title Commitment ("Disapproved Exception"), together with the Developer's suggested cure thereof; provided, however that the Developer shall not have the right to disapprove any such item or exception if (a) Developer has specifically consented to such item, including all exceptions arising pursuant to this Agreement and all matters appearing on the Preliminary Title Reports and/or the Title Commitment, (b) such item or exception first arose prior to the Effective Date, but was inadvertently or negligently excluded by the Title Company from the Preliminary Title Reports and/or the Title Commitment or (c) such item or exception did not arise as a result of the act of or negligent omission to act of the City. Failure of the Developer to disapprove any July 12, 2004 -33- Disposition and Development 18405:6390691.8 Agreement item or exception shown on any such Supplemental Title Report on or before the expiration of such ten (10) calendar day period shall be deemed to be an approval of the matters set forth in such Supplemental Title Report. If the Developer designates a Disapproved Exception, the Developer shall specify in writing its reason for such disapproval and the City shall have the right, but not the obligation, to (x) remove or cure the Disapproved Exception to the reasonable satisfaction of the Developer, or (y) elect not to cure such Disapproved Exception. If the City fails to notify the Developer of the City's election to remove or cure such Disapproved Exception or exception within ten (10) calendar days after the City's receipt of the Developer's notice of disapproval, the City shall be deemed to have elected not to cure such Disapproved Exception. If the City elects or is deemed to have elected not to cure any such Disapproved Exception then the Developer's exclusive remedy shall be: (i) to accept such Disapproved Exception and proceed to take title to the Developer Parcels in the manner set forth in this Agreement and without either deduction or offset to the Purchase Price, and waive such Disapproved Exception without cause of action hereunder against the City, or (ii) to provide written notice to the City within five (5) calendar days after the City's election or deemed election, of the Developer's election to terminate this Agreement and the Escrow, in which case the DDA Deposit, to the extent previously paid by the Developer, shall be refunded to the Developer in accordance with Sections 4.2 and 14.1.4. The Developer's failure to provide the City within said five (5) calendar day period with written notice of either the Developer's acceptance of such Disapproved Exception or the Developer's election to terminate this Agreement shall constitute the Developer's acceptance of such Disapproved Exception and its election not to terminate this Agreement under the foregoing clause (ii). In the event the Developer shall not have terminated this Agreement under clause(ii) of the preceding sentence, then all matters and exclusions or exceptions from title insurance coverage shown in such supplement which the Developer shall have accepted pursuant to this Section 6.3 (other than those which the City has agreed to cure as provided in this Section 6.3), together with all Permitted Exceptions described in Section 6.2 shall be deemed Permitted Exceptions. 6.4 ALTA Policy; Endorsements. It shall be a condition precedent to the Developer's obligation to close that the Title Company issue the CLTA Policy with policy amount as requested by the Developer, not to exceed the Initial Closing Purchase Price for the Developer Fee Parcels or the Subsequent Purchase Price for the Lease Parcels. It shall not be a condition precedent to the Developer's obligation to close that the CLTA Policy show only exceptions to fee title that are Permitted Exceptions; the Property is being sold and/or subleased by the City "as is." The Developer shall have the right, at its sole expense, to request and obtain ALTA extended coverage owner's and/or leasehold policies of insurance (collectively the "ALTA Policy") and any additional title endorsements ("Developer's Title Endorsements") as the Developer deems necessary; provided that the issuance of the ALTA Policy and the Developer's Title Endorsements shall not delay the Initial Close of Escrow and shall not be a condition precedent to the Initial Close of Escrow or the Subsequent Closings. The Developer shall pay for one-half (1/2) of the cost of the CLTA Policy and any excess cost attributable to obtaining the ALTA Policy, as well as the cost of the Developer's Title Endorsements, and the cost of a lender's policy of title insurance, if any. The title policies obtained by the Developer are collectively referred to as "Developer's Title Policy." July 12, 2004 -34- Disposition and Development 18405:6390691.8 Agreement Closings. 7.1 Time and Place of Initial Close of Escrow. The Initial Close of Escrow shall take place on the Closing Date, subject to the satisfaction of the conditions set forth in Sections 7.2 through 7.6, and shall take place at the offices of Escrow Holder, or at such other place that the City selects. "Initial Closing Date" shall mean November 9, 2004, provided that if all other conditions to the Initial Close of Escrow have been satisfied or waived but the statutory appeals period for the approval of the Vesting Tentative Tract Map (as referenced in Sections 7.2.4 and 7.3.5) and/or the approval of the Concept Plan and Design Review (as referenced in Sections 7.2.5 and 7.3.6) has not run and/or there is any pending litigation or initiative or referendum filed with the Tustin City Clerk before the Initial Closing Date with respect to such approval(s) which raises a significant issue that materially adversely affects the Project, then the City shall by written notice to Developer extend the Initial Closing Date and the obligations of Developer and the City with respect to the Initial Close of Escrow to a date that the City determines in its sole discretion, but not later than November 9, 2005. The Closing Date may also be extended upon mutual written agreement of the Parties. 7.2 Developer's Conditions Precedent to Initial Close of Escrow. The Developer's obligation to purchase Developer Fee Property A and Developer Fee Property B, to sublease Developer Sublease Property A, Developer Sublease Property B, Developer Sublease Property C, Developer Sublease Property D and Developer Sublease Property E, to lease the remainder of the Lease Property, and to the Initial Close of Escrow is subject to and conditioned upon the Developer's satisfaction or the Developer's written waiver as to each of the following conditions to Initial Close of Escrow ("Developer's Closing Conditions") on or before the Initial Closing Date: 7.2.1 The City's Document Deliveries. The City's execution and delivery to Escrow Holder of the following documents, which documents the City shall deliver to Escrow not later than one (1) Business Day prior to the Initial Close of Escrow: (a) a Quitclaim Deed for Developer Fee Property A and Developer Fee Property B, executed by the City, acknowledged and in Recordable form; (b) the Ground Lease for (i) Developer Fee Parcel C and Developer Fee Parcel D and (ii) Developer Sublease Property A, Developer Sublease Property B, Developer Sublease Property C, Developer Sublease Property D and Developer Sublease Property E, executed by the City; (c) the Memorandum of DDA executed by the City, acknowledged and in Recordable form; (d) the Memorandum of Ground Lease executed by the City, acknowledged and in Recordable form; (e) the Special Restrictions, executed by the City, acknowledged and in Recordable form; (f) the Bill of Sale executed by the City; July 12, 2004 -35- Disposition and Development 18405:6390691.8 Agreement (g) the Infrastructure Construction and Payment Agreement, executed by the City; (h) a federal FIRPTA Affidavit executed by the City; (i) California's Real Estate Withholding Exemption Certificate Form 593-W; 0) a consent to subordination in the form and substance of the consent to subordination attached at Attachment No. 19 ("Subordination") executed by the City to evidence acknowledgement and consent in favor of each Permitted Mortgagee intending to make a loan with respect to the Developer Parcel(s) upon or following the Initial Close of Escrow, acknowledged and in Recordable form, or in other form agreed to by the City in its sole discretion. (k) such proof of the City's authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of the City to act for and/or bind the City as may be reasonably required by Title Company and/or the Developer; and (l) such other documents or instruments as Escrow Holder may reasonably request to consummate the transaction contemplated in this Agreement. 7.2.2 Title Policy. The Title Company shall be in a position to convert the Title Commitment to the CLTA Policy and issue same to the Developer. 7.2.3 Contracts. Except for (a) the LIFOC and the rights of the City and Navy thereunder, (b) rights of the Navy under the Federal Documents, if any, (c) contracts regarding the demolition of existing structures on certain Developer Parcels, or (d) as approved by the Developer in writing, arising from the Developer, or constituting a Permitted Exception, there shall exist no leases, licenses, contracts or rights of occupancy between the City and any third party with respect to the Developer Fee Parcels or Developer Sublease Parcels to be conveyed, leased or subleased, as the case may be, at the Initial Close of Escrow that shall survive the Initial Close of Escrow. 7.2.4 Vesting Tentative Tract Mai; Final Map. The City, acting in its Governmental Capacity, shall have approved (a) the Vesting Tentative Tract Map for the Developer Parcels and Right of Way Parcels and all appeals periods for challenge of such approvals shall have expired without challenge, or if challenged, shall have been resolved to the reasonable satisfaction of Developer and the City and (b) upon satisfaction by Developer of all conditions thereto, the Final Tract Map. 7.2.5 Concept Plan and Design Review. The City, acting in its Governmental Capacity, shall have approved the Concept Plan and Design Review for the Project, which shall be substantially in conformance with the Preliminary Plan and the Scope of Development, and all appeals periods for challenge of such approval shall have expired without challenge, or if challenged, shall have been resolved to the reasonable satisfaction of Developer and the City. July 12, 2004 -36- Disposition and Development 18405:6390691.8 Agreement 7.2.6 City's Representations and Warranties. The City's representations and warranties set forth in this Agreement shall be true and correct as of the Closing Date. 7.2.7 City's Covenants. The City shall not be in default of any covenant or agreement to be performed by the City under this Agreement. 7.2.8 Environmental Insurance. The Developer, if it has so elected pursuant to Section 11.1.4(a), has become an additional named insured on the City's Environmental Insurance Policy, provided that Developer has complied with the requirements of Section 11.1.4(a). 7.3 The City's Conditions Precedent. The City's obligations to quitclaim Developer Fee Property A and Developer Fee Property B, to sublease Developer Sublease Property A, Developer Sublease Property B, Developer Sublease Property C, Developer Sublease Property D and Developer Sublease Property E, to lease the remainder of the Lease Property, to deliver the Quitclaim Deed and Ground Lease for such Property to Escrow, and to the Initial Close of Escrow is subject to and conditioned upon the satisfaction of, or the City's written waiver, of each of the following conditions to Initial Close of Escrow ("City Closing Conditions") on or before the Initial Closing Date: 7.3.1 Documents to be Delivered Upon Execution of this Agreement. Prior to or concurrently with the execution of this Agreement by the Developer, the following shall have occurred: (a) The Developer shall have obtained and delivered to the City a binder or certificate evidencing the liability insurance required by Section 5.3; and (b) The Developer shall have delivered to the City (i) a declaration certified by the Manager of General Partner that the following documentation submitted by the Developer to the City prior to the Effective Date is true and correct as of Initial Close of Escrow: (w) documentation relating to the corporate, partnership, limited liability or other similar status, as the case may be, of the Developer's limited partnership and its partners (and, if any partner is a limited partnership, its general partners, and if any partner is a limited liability company, its members), including, as applicable: articles of incorporation, California foreign entity registration, certificate of limited partnership, limited partnership agreement and (as to the Developer and General Partner only) Statement of Information and Operating Agreement (including any amendments thereto); (x) copies of all resolutions or other necessary actions taken by such entity to authorize the execution of this Agreement and any other documents or instruments required by this Agreement; (y) a certificate of status issued by the Arizona and California Secretaries of State; and (z) a copy of any Fictitious Business Name Statement if any, as published and filed with the Clerk of Orange County; and (ii) certificates of good standing and tax good standing of the Developer and General Partner as the case may be, issued by the California Secretary of State within thirty (30) calendar days of the Initial Close of Escrow. 7.3.2 Developer's Delivery of Purchase Price; Other Costs. Not later than one (1) Business Day prior to the Initial Close of Escrow, the Developer shall deliver to Escrow (a) the Developer's Closing Payment and such other amounts which are necessary, as set forth in July 12, 2004 -37- Disposition and Development 18405:6390691.8 Agreement Section 4.2.2, to equal to the Initial Closing Purchase Price, including, as determined by Developer pursuant to Section 4.2.3(b), either ten percent (10%) of the Purchase Price for Developer Fee Parcel B if the City Note and City Deed of Trust are executed and delivered, or if not, the entirety of the Purchase Price allocable to Developer Fee Parcel B, (b) all other sums required to pay the Developer's closing costs, including, any other sums required to be paid by the Developer as a condition to Initial Close of Escrow, (c) if applicable, and not previously paid, the amount due from Developer to City with respect to the proration of the premium for the City's Environmental Insurance Policy as described in Section 11.1.4, and (d) any other costs explicitly set forth in this Agreement as costs to be paid by Developer at the Initial Close of Escrow. 7.3.3 Developer's Document Deliveries. The Developer's execution and delivery to Escrow Holder of the following, which documents the Developer shall deliver to the Escrow not later than one (1) Business Day prior to the Initial Close of Escrow: (a) a Quitclaim Deed for Developer Fee Property A and Developer Fee Property B executed by the Developer, acknowledged and in Recordable form; (b) the Ground Lease for (i) Developer Fee Property C and Developer Fee Property D and (ii) Developer Sublease Property A, Developer Sublease Property B, Developer Sublease Property C, Developer Sublease Property D and Developer Sublease Property E, executed by the Developer; (c) the Memorandum of DDA executed by the Developer, acknowledged and in Recordable form; (d) the Memorandum of Ground Lease executed by the Developer, acknowledged and in Recordable form; (e) the City Note, executed by the Developer; (f) the City Deed of Trust, executed by the Developer, acknowledged and in Recordable form; (g) the Special Restrictions, executed by the Developer, acknowledged and in Recordable form; (h) the Bill of Sale executed by the Developer; (i) the Infrastructure Construction and Payment Agreement, executed by the Developer; 0) the CC&Rs executed by the Developer, acknowledged and in Recordable form; (k) a Subordination, in the form and substance of the subordination attached to this Agreement as Attachment No. 19 ("Subordination") executed by each Permitted July 12, 2004 -38- Disposition and Development 18405:6390691.8 Agreement Mortgagee, acknowledged and in Recordable form, or in other form agreed to by the City in its sole discretion; (1) a reaffirmation of the Developer's representations and warranties set forth in Section 3.1 in form and substance acceptable to the City; (m) a certification by the Developer that the final Project budget for the Horizontal Improvements and the Vertical Improvements approved by the City prior to the Effective Date remains a reasonable budget; (n) such proof of the Developer's authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of the Developer to act for and/or bind the Developer as may be reasonably required by Title Company and/or the City; and (o) such other documents or instruments as Escrow Holder may reasonably request to consummate the transaction contemplated in this Agreement. 7.3.4 Evidence of Financinl?. The Developer shall have submitted to the City the following evidence of financing: (a) Demonstration to the satisfaction of the Assistant City Manager or designee (i) the availability of funds sufficient to pay all costs relating to acquisition of the Developer Parcels and development of the Project on the Project Site, including sufficient equity capital, bonding capacity and commitment for funding of the Improvements, in writing from a Permitted Mortgagee(s) and (ii) no material adverse change in the financial capacity or condition of Developer or its financial or organizational relationships with Kimco from that presented to the City in Developer's response to the RFP. (b) A letter from a federally insured financial institution to the effect that the Developer has established a commercial account with such financial institution and a good and established relationship with such financial institution. (c) Such other documents, as the City, in its good faith discretion, determines will assist in the evaluation of whether the Developer is able to acquire the Developer Parcels, construct the Improvements and perform in a timely manner all of its other obligations and commitments set forth in this Agreement. 7.3.5 Vesting Tentative Tract Map; Final Map. The City, acting in its Governmental Capacity, shall have approved (a) the Vesting Tentative Tract Map for the Developer Parcels and Right of Way Parcels and all appeals periods for challenge of such approvals shall have expired without challenge, or if challenged, shall have been resolved to the reasonable satisfaction of Developer and the City; and (b) upon satisfaction by Developer of all conditions thereto, the Final Tract Map. 7.3.6 Concept Plan and Design Review. The City, acting in its Governmental Capacity, shall have approved the Concept Plan and Design Review for the Project, which shall July 12, 2004 -39- Disposition and Development 18405:6390691.8 Agreement be substantially in conformance with the Preliminary Plan and the Scope of Development, and all appeals periods for challenge of such approval shall have expired without challenge, or if challenged, shall have been resolved to the reasonable satisfaction of Developer and the City. 7.3.7 CC&Rs; Special Restrictions; Infrastructure Construction and Payment Agreement. The City shall have approved, in its sole discretion, the form and substance of the CC&Rs, the Special Restrictions and the Infrastructure Construction and Payment Agreement. 7.3.8 Title Policy. The Title Company shall be in a position to issue a 1970 ALTA lender's policy of title insurance to the City insuring the priority of the City Deed of Trust as a first lien upon Developer Fee Parcel B, subject only to subordination, if applicable, in accordance with Sections 4.2.3(b) and 15.2(8) (the "City's Title Policy"). 7.3.9 Project Fair Share Contribution; Developer's Backbone Infrastructure Work. Developer shall have delivered to the City at Developer's election, a cash deposit, a surety bond or a letter of credit, in each case meeting the requirements of Section 8.13.3(a) in a dollar amount equal to the greater of (a) the sum of the Initial Contribution and the Developer Fee Parcel B Contribution and (b) the then -estimated cost of Developer's Backbone Infrastructure Work, including reasonable contingency, which sum shall be approved by the Director in its sole discretion as reasonable to cover the cost of such work. 7.3. 10 Developer's Representations and Warranties. The Developer's representations and warranties set forth in this Agreement shall be true and correct as of the Closing Date. 7.3.11 Developer's Covenants. The Developer shall not be in default of any covenant or agreement to be performed by the Developer under this Agreement. 7.3.12 Insurance Policies. The Developer shall have submitted to the City evidence of insurance policies required to be obtained by the Developer pursuant to Article 11, including the Environmental Insurance required by Section 11. 1.4 and shall have submitted binders for such policies to the City at least seven (7) calendar days prior to the Initial Closing Date. 7.4 Additional Initial Close of Escrow Conditions. In addition to the provisions of Sections 7.2 and 7_3, the Initial Close of Escrow of the Property shall be conditioned upon the following Closing Conditions, which shall be for the benefit of each of the City and the Developer: (a) Closing Cost Statement. Escrow Holder shall have delivered at least two (2) Business Days prior to the Closing Date a statement of costs to each of the City and the Developer. (b) Supplementary Escrow Instructions. The City and the Developer shall have prepared and approved any supplemental Escrow instructions as may be needed. July 12, 2004 -40- Disposition and Development 18405:6390691.8 Agreement (c) Closing Certificate. The City and the Developer shall each submit to Escrow Holder a certificate stating that all Closing Conditions for its benefit have been satisfied or waived. 7.5 No Financing Contingency. The Developer acknowledges that it has examined its ability to purchase and/or lease the Developer Fee Property, to sublease the Developer Sublease Property, to subsequently purchase the Lease Property, and to develop the Project, including the Developer's ability to obtain financing therefor. As a condition precedent to entering into this Agreement, the Developer has provided evidence, satisfactory to the City, of the Developer's ability to obtain such financing. The Developer acknowledges and agrees that the Developer's purchase, lease and sublease of the Property is subject to no financing contingency whatsoever with respect to either private or public financing. 7.6 Procedures for Conveyance and Subleasing of Property. 7.6.1 Costs and Expenses. The costs and expenses of the Initial Close of Escrow shall be allocated as follows: (a) City's Costs. The City shall pay (i) the premium for the CLTA Policy; (ii) one-half (1/2) of all Escrow fees and costs; (iii) all documentary transfer taxes, if any; and (iv) the City's share of prorations, if any. Except as provided in this Agreement, the City shall pay the fees of all consultants (including lawyers and environmental, engineering and land use consultants) engaged by it. (b) Developer's Costs. The Developer shall pay (i) the entire cost of, and shall be responsible for obtaining, any extended coverage, lender's or other title policy or endorsements in excess of a CLTA Policy, including the City Title Policy and all endorsements reasonably requested by the City with respect to such policy, (ii) the entire cost of the Survey and any additional land surveys required in connection with the foregoing; (iii) document recording charges for the Quitclaim Deed, the Memorandum of DDA, the Memorandum of Ground Lease, the Special Restrictions, the City Deed of Trust, the CC&Rs and other Recorded documents; (iv) one-half (1/2) of all Escrow fees and costs; and (v) the Developer's share of prorations. The Developer shall pay the fees of all consultants and employees (including lawyers and environmental, engineering and land use consultants) engaged by it. (c) Other Costs. All costs and expenses related to the Initial Close of Escrow and the transfer of the Property to the Developer not otherwise allocated in this Agreement shall be allocated between the Developer and the City in accordance with the customary practice in Orange County, California. 7.6.2 Possession. The City shall deliver possession of the Property at the Initial Close of Escrow. 7.6.3 Deliveries to Developer Upon Initial Close of Escrow. The City agrees to deliver to the Developer, on or prior to the Initial Closing Date, outside of Escrow, the following items: July 12, 2004 -41- Disposition and Development 18405:6390691.8 Agreement (a) Records and Plans. To the extent in the City's possession, originals or copies of records and plans that will affect the Property after the Initial Close of Escrow. (b) Licenses and Permits. To the extent in the City's possession, originals or copies of all licenses and permits affecting the Property. 7.6.4 Prorations. (a) General. Rentals, revenues and other income, if any, from the conveyed Property shall be prorated on a cash basis as of 11:59 P.M. Pacific Time on the day preceding the Initial Close of Escrow. Tax payments shall be prorated in accordance with Section 7.6.4(b). (b) Taxes. The Developer shall be responsible for all taxes, assessments, fees and charges imposed by any Governmental Authority with respect to the Property conveyed to Developer in fee or by Ground Lease and all existing and future improvements thereon from and after the Initial Close of Escrow with respect to such Property, regardless of whether Developer's interest in the assessed portion of the Developer Parcel(s) is a fee interest or ground subleasehold interest. If, after the Initial Close of Escrow, any real estate taxes or possessory interest taxes are assessed against any conveyed parcel pertaining to the period prior to the Initial Close of Escrow, the City agrees to contact the applicable taxing authority and seek recognition and enforcement of its tax exemption. The provisions of this Section 7.6.4(b) shall survive the termination of this Agreement and the Initial Close of Escrow and shall not merge into any Quitclaim Deed or the Ground Lease. (c) Other Expenses. Any expenses relating to the conveyed Property (other than taxes) shall be prorated on an accrual basis as of the Initial Close of Escrow. The City shall pay all amounts due thereunder which accrue prior to the Initial Close of Escrow, and, unless previously paid by the Developer, the Developer shall pay all amounts accruing on the Initial Close of Escrow and thereafter. (d) Method of Proration. All prorations shall be made in accordance with customary practice in Orange County, except as otherwise expressly provided in this Agreement. The Developer and the City agree to cause a schedule of prorations to be prepared prior to the Initial Closing Date. Such prorations, if and to the extent known and agreed upon as of the Initial Closing Date, shall be paid by the Developer to the City (if the prorations result in a net credit to the City) or by the City to the Developer (if the prorations result in a net credit to the Developer) by increasing or reducing the cash to be paid by the Developer at the Initial Close of Escrow. Any such prorations not determined or not agreed upon as of the Initial Close of Escrow shall be paid by the Developer to the City, or by the City to the Developer, as the case may be, in cash as soon as practicable following the Initial Close of Escrow. A copy of the schedule of prorations as agreed upon by the Developer and the City shall be delivered to Escrow Holder at least three (3) Business Days prior to the Closing Date. All prorations provided for in this Section shall be on an "actual day" basis and a three hundred sixty-five (365) day year. If one or more of the conveyed Developer Parcels is part of a larger tax parcel, which as of the Initial Close of Escrow remains unsegregated on the County Tax Assessor's Roll for the coming July 12, 2004 -42- Disposition and Development 18405:6390691.8 Agreement fiscal year, Escrow Holder shall charge the Developer and credit the City for taxes and assessments allocated to the Developer Parcels on an acreage basis compared to the acreage for the entire larger unsegregated parcel, which acreage figures for allocation purposes shall be fairly and equitably determined and supplied to Escrow Holder by the City and reasonably approved by the Developer. The Parties shall cooperate in good faith to cause the Developer Parcels to be separately assessed and segregated in Developer's name on the current tax roll at the earliest possible time. 7.6.5 Disbursements and Other Actions by Escrow Holder. At the Initial Close of Escrow and subject to the satisfaction or waiver by the benefited party of the Closing Conditions and the additional conditions to closing described in Section 7.4, Escrow Holder shall promptly undertake all of the following in the manner indicated below: (a) Funds. Debit or credit all matters addressed in Section 7.6.1 and prorate all matters addressed in Section 7.6.4 and disburse to the City the Initial Closing Purchase Price (as adjusted by the foregoing debits, credits and prorations) deposited with Escrow Holder by the Developer. (b) Recording. Cause to be Recorded, in the following order, the Final Tract Map (which shall be executed by the City) if not previously recorded, the Memorandum of DDA, the Special Restrictions, the Quitclaim Deed, the City Deed of Trust, the Memorandum of Ground Lease, the CC&Rs, the Subordinations, if any, and thereafter, any other documents which the Developer and the City may mutually direct, or which may be required by the terms of this Agreement to be Recorded, obtain conformed copies thereof and distribute same to the Developer and the City. (c) Title Policies. Direct the Title Company to issue Developer's Title Policy to the Developer and the City's Title Policy to the City. Concurrent with the issuance of the Developer's Title Policy and the City's Title Policy, the Title Company shall provide such endorsements as may be requested by the respective insured parties. (d) Delivery of Documents to Developer and City. Deliver to the Developer and the City original counterparts (and conformed copies, if applicable) of the Quitclaim Deed, the Ground Lease, the Memorandum of DDA, the Memorandum of Ground Lease, the Special Restrictions, the City Note, the City Deed of Trust, the CC&Rs, the Bill of Sale, the FIRPTA Affidavit, the California Form 593-W and any other documents (or copies thereof) deposited into Escrow by the Developer or the City pursuant hereto, and deliver to the Developer and the City a certified copy of their respective Escrow closing statements. (e) Other Actions. Take such other actions as the Developer and the City direct pursuant to mutually executed supplemental Escrow instructions. 7.6.6 Notice. All communications from the Escrow Holder shall be directed to the addresses and in the manner established in Section 16.7 for notices, demands and communications between the Parties. July 12, 2004 -43- Disposition and Development 18405:6390691.8 Agreement 7.7 Subsequent Closings. 7.7.1 Scheduling of Subsequent Closings. No later than thirty (30) calendar days after the City has received a quitclaim from the Federal Government conveying: (a) Developer Sublease Parcel A, (b) Developer Sublease Parcel B, (c) Developer Sublease Parcel C, or (d) Developer Sublease Parcels D and E; the City shall notify Developer of its acquisition and shall establish a date for close of escrow with respect to such acquired Developer Sublease Parcels and associated Developer Fee Parcels, as described in Section 4.1.3(b), to Developer, which date shall be thirty (30) calendar days following the date of the City's notice (such date a "Subsequent Closing Date" and each such Closing a "Subsequent Closing"); provided, however, that in the event that Developer was to have Transferred all or a portion of the applicable Lease Parcels to an approved End User concurrently with or immediately following such Subsequent Closing, and such intended End User has defaulted under or is otherwise unable to fulfill its obligations under the proposed Pad Transfer documents or does not proceed under the Pad Transfer documents because it is not required to do so and provided, further, that such proposed Pad Transferee's non-performance was not caused by a default of Developer, Developer may, by providing written notice to the City and Escrow Holder at least five (5) Business Days prior to a given Subsequent Closing Date, extend such Subsequent Closing Date, as to the affected Parcels only, for a period not to exceed six (6) months. Each Subsequent Closing shall take place upon the terms and subject to the conditions set forth below. The property conveyances at each Subsequent Closing shall be as follows: (i) Upon acquisition by the City of fee title to Developer Sublease Parcel A and satisfaction by Developer of the Closing Conditions set forth below for the benefit of the City, the City shall convey Developer Sublease Property A to Developer by Quitclaim Deed. (ii) Upon acquisition by the City of fee title to Developer Sublease Parcel B and satisfaction by Developer of the Closing Conditions set forth below for the benefit of the City, the City shall convey Developer Sublease Property B to Developer by Quitclaim Deed. (iii) Upon acquisition by the City of fee title to Developer Sublease Parcel C and satisfaction by Developer with the Closing Conditions set forth below for the benefit of the City, the City shall convey Developer Sublease Property C to Developer by Quitclaim Deed, together with Developer Fee Property C. (iv) Upon acquisition by the City of fee title to Developer Sublease Parcel D and Developer Sublease Parcel E and satisfaction by Developer with the July 12, 2004 -44- Disposition and Development 18405:6390691.8 Agreement Closing Conditions set forth below for the benefit of the City, the City shall convey Developer Sublease Property D and Developer Sublease Parcel E to Developer by Quitclaim Deed, together with Developer Fee Property D. 7.7.2 Developer's Conditions Precedent to each Subsequent Closing. The Developer's obligation to purchase the aforesaid property and to close Escrow with respect to each Subsequent Closing is subject to and conditioned upon the satisfaction of, or the Developer's written waiver, of each of the following conditions to Subsequent Closing: (a) Document Delivery. The City's execution and delivery to Escrow Holder of the following documents, which documents the City shall deliver to Escrow not later than one (1) Business Day prior to the Initial Close of Escrow: (i) Navy's Finding of Suitability to Transfer for the applicable Developer Sublease Parcel(s); (ii) a Quitclaim Deed for the applicable Property executed by the City, acknowledged and in Recordable form; (iii) an amendment to or termination of the Ground Lease, as applicable, removing the applicable Lease Parcel(s) from the operation thereof, executed by the City; (iv) an amendment to the Memorandum of Ground Lease acknowledging termination of the Ground Lease as to the applicable Lease Parcel(s), executed by the City, acknowledged and in Recordable form; (v) an amendment to the Memorandum of DDA, Special Restrictions and CC&Rs adding thereto the applicable Developer Parcels, executed by the City, acknowledged and in Recordable form, unless such documents have previously been Recorded against and are already applicable thereto; (vi) a Bill of Sale executed by the City; (vii) at the last Subsequent Closing with respect to the Remainder Parcels or at any earlier Subsequent Closing at which the principal and accrued interest on the City Note is then or has previously been paid in full, a termination of the City Note executed by the City and the release of the City Deed of Trust executed by the City, acknowledged and in Recordable Form; (viii) a federal FIRPTA Affidavit executed by the City; (ix) California's Real Estate Withholding Exemption Certificate Form 593-W; (x) such proof of the City's authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, July 12, 2004 18405:6390691.8 ---- r ___ __.. _. -45- Disposition and Development Agreement documents or certificates on behalf of the City to act for and/or bind the City as may be reasonably required by Title Company and/or the Developer; and (xi) such other documents or instruments as Escrow Holder may reasonably request to consummate the transaction contemplated in this Agreement. (b) Title Policy. The Title Company shall be in a position to convert the CLTA Policy issued for the transferred Lease Parcel from a leasehold policy to an owner's policy. (c) City's Representations and Warranties. The City's representations and warranties set forth in this Agreement shall be true and correct as of the Subsequent Closing Date. (d) City's Covenants. The City shall not be in default of any covenant or agreement to be performed by the City under this Agreement or the Ground Lease. 7.7.3 City's Conditions Precedent to each Subsequent Closing. The City's obligations to sell the aforesaid property and to close Escrow with respect to each Subsequent Closing is subject to and conditioned upon the satisfaction of, or the City's written waiver, of each of the following conditions to Subsequent Closing: (a) Document Delivery. The Developer's execution and delivery to Escrow Holder of the following documents, which documents the City shall deliver to Escrow not later than one (1) Business Day prior to the Initial Close of Escrow: (i) a Quitclaim Deed for the applicable Property executed by the Developer, acknowledged and in Recordable form; (ii) a Bill of Sale executed by the Developer, (iii) an amendment to or termination of the Ground Lease, as applicable, removing the applicable Lease Parcel(s) from the operation thereof, executed by the Developer; (iv) an amendment to the Memorandum of Ground Lease acknowledging termination of the Ground Lease as to the applicable Lease Parcel(s), executed by the Developer, acknowledged and in Recordable form; (v) an amendment to the Memorandum of DDA, Special Restrictions and CC&Rs adding thereto the applicable Developer Parcels, executed by the Developer, acknowledged and in Recordable form, unless such documents have previously been Recorded against and are already applicable thereto; (vi) Subordinations as described in clause d below, executed by each Mortgagee holding a Mortgage secured in whole or in part by any portion of the Property, acknowledged and in Recordable form, July 12, 2004 -46- Disposition and Development 18405:6390691.8 Agreement (vii) A reaffirmation of the Developer's representations and warranties set forth in Section 3.1 in form and substance acceptable to the City; (viii) a reaffirmation of the Release described in Section 4.4.3 in form and substance acceptable to the City; (ix) such proof of the Developer's authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of the Developer to act for and/or bind the Developer as may be reasonably required by Title Company and/or the City; and (x) such other documents or instruments as Escrow Holder may reasonably request to consummate the transaction contemplated in this Agreement; (b) Developer's Delivery of Purchase Price. Not later than one (1) Business Day prior to each Subsequent Closing, the Developer shall deliver to Escrow (a) the Subsequent Purchase Price for the applicable Property as set forth or calculated in Section 4.2.2(b) plus (b) all other sums required to pay the Developer's closing costs, and other sums required to be paid by the Developer as a condition to Subsequent Closing. (c) Payment of Additional Developer Monetary Obligations. Not later than one (1) Business Day prior to (i) each Subsequent Closing, Developer shall deliver to Escrow the amount of the Remainder Parcels Contribution allocable to the Developer Sublease Parcels and Developer Fee Parcels being conveyed, and (ii) the last Subsequent Closing for a Remainder Parcel, or at any earlier Subsequent Closing if previously due and payable in accordance with the terms of the City Note and not previously paid, payment in full of the principal under the City Note together with all interest and other sums due thereon through such Subsequent Closing Date. (d) Subordination of Mortgages. Each Mortgagee shall have executed an delivered a Subordination Agreement in favor of the City in the form and substance of the document attached as Attachment No. 19, subordinating the priority of the lien of its Mortgage to this Agreement, the Special Restrictions and the CC&Rs. (e) Repurchase; Reversion. The City shall not have commenced to exercise or exercised its Right of Purchase or Right of Reversion with respect to any portion of the Developer Parcels, any termination right pursuant to the Ground Lease or any foreclosure under the City Deed of Trust. (f) Insurance Policies. The Developer shall have submitted to the City evidence of insurance policies required to be obtained by the Developer pursuant to Article 11. (g) Developer's Representations and Warranties. The Developer's representations and warranties set forth in this Agreement and the Ground Lease shall be true and correct as of the Subsequent Closing Date. July 12, 2004 -47- Disposition and Development 18405:6390691.8 Agreement (h) No Developer Default. The Developer shall not be in Potential Default or Material Default of any covenant or agreement to be performed by the Developer under this Agreement or in default under the Special Restrictions, the City Note, the City Deed of Trust or the Ground Lease. 7.7.4 Additional Subsequent Closing Conditions; Disbursements and Other Actions by Escrow Agent. (a) The conditions and actions set forth above in Sections 7.4, 7.6.1, 7.6.2, 7.6.4 and 7.6.5 shall be applicable to each Subsequent Closing. To further such intent, wherever in such sections the term "Closing Conditions" is used, it shall refer to the conditions to Subsequent Closing set forth in Sections 7.7.2 and 7.7.3 and wherever in such sections the term "Escrow" is used, it shall refer to the escrow opened with Escrow Holder with respect to the Subsequent Closing. In addition, the term "Subsequent Closing" shall replace the term "Initial Close of Escrow" the term "Subsequent Purchase Price" shall replace the term "Initial Closing Purchase Price" and the term "Subsequent Closing Date" shall replace the term "Initial Closing Date" whenever set forth in such sections. (b) With respect to instruction to Escrow Holder to Record and transmit documents set forth in Section 7.6.5(b), Escrow Holder shall cause the following Documents to be Recorded in the following order: (i) Quitclaim Deed; (ii) amendment to the Memorandum of DDA, Special Restrictions and CC&Rs; (iii) the amendment to the Memorandum of Ground Lease; (iv) Subordinations; and (v) Release of City Deed of Trust. With respect to delivery of documents, Escrow Holder shall deliver to the Developer and the City original counterparts (and confirmed copies, if applicable) of each of the documents executed by either of the Parties or by any Mortgagee or deposited into Escrow with respect to the Subsequent Closing and shall deliver to each of Developer and City a certified copy of their respective Escrow closing statements pertaining to the Subsequent Closing. 7.7.5 No Contin eg ncies. Except as specifically set forth in the foregoing list of conditions to Subsequent Closing for the benefit of each Party, there shall be no contingencies of any type, including, title, survey, financing, physical condition or otherwise applicable to the Subsequent Closing. Time is of the essence with respect to each Subsequent Closing and the Subsequent Closing Dates shall not be extended by Force Majeure Delay or otherwise except upon mutual written agreement of the Parties. 8. Development of the Developer Parcels. 8.1 Scope of Development. 8. 1.1 Requirement to Develop the Project. The Scope of Development attached to this Agreement as Attachment No. 8 sets forth the overall plan for the Project and development of the Project Site, including: (a) design, development and construction of the Required Horizontal Improvements and the Vertical Improvements, (b) design and construction of improvements upon the City Dedication Parcels and the Right of Way Parcels and (c) design and construction of Developer's Backbone Infrastructure Work. The Developer shall develop the Project Site in the manner described in and consistent with the Scope of Development and in July 12, 2004 -48- Disposition and Development 18405:6390691.8 Agreement accordance with the Schedule of Performance and the Approved Project Plans, all as further described below. Until the issuance of a Final Certificate of Compliance, or a Partial Certificate of Compliance as to the applicable Parcel, and except as excepted by Sections 2.2.3, 2.2.4, 2.2.7 or 15.8.3, no -Person (including any Permitted Mortgagee) shall be permitted or authorized to undertake the construction of any improvements on the Project Site, including the Improvements, unless it shall have first assumed in writing all obligations of Developer under this Agreement, for the portion of the Property in which such Person has an interest, by written assignment agreement in the form attached to this Agreement as Attachment No. 18, provided further that the foregoing restriction does not apply to tenant improvements constructed in a Retail Space pursuant to contracts entered into by Developer or a Successor Owner. 8.1.2 Control of Development. The Developer shall have control over the design and layout of the Horizontal Improvements and the Vertical Improvements (including height, shape and location of the Vertical Improvements, size of floorplates, and special landscaping and art features) and over the special uses to be incorporated therein, subject to (i) the approval of the City thereto in its Governmental Capacity as entitling agency (including any conditional use permit review which may be necessitated by particular proposed uses or design features of End Users or Pad Transferees) and (ii) the provisions of this Agreement, including the Basic Concept Plans approval provisions for the benefit of the City, which are undertaken by the City in its Proprietary Capacity. Design and construction of all Improvements upon the City Dedication Parcels and the Right of Way Parcels and Developer's Backbone Infrastructure Work shall be subject to City governmental review and approval in its sole discretion and subject to City bid contract requirements, prevailing wages, City design and construction standards and other requirements established for design and construction of public improvements by Governmental Requirements. 8.1.3 Project Development Costs. Within the time period set forth in the Schedule of Performance, the Developer shall design and construct the Project at the Developer's sole cost and expense. Without limiting the generality of the foregoing, the Developer hereby agrees that all costs associated with planning, designing, constructing and financing the Project, preparing the Project Site and constructing the Improvements and Developer's Backbone Infrastructure Work, including all hard costs, soft costs, interest and lender fees, the cost of services, fees, exactions, dedications, cost overruns, profit, overhead, consultants' fees, liens, taxes, legal fees and wages required to be paid to any person employed by the Developer, any Successor Owner, or their contractors or subcontractors at each tier, and the costs of the Project Fair Share Contribution (collectively, the "Development Costs"), shall be the responsibility of the Developer without any cost or liability to the City. Construction of Developer's Backbone Infrastructure Work shall be a credit against the Project's Fair Share Contribution as and to the extent set forth in Section 8.13. 8.1.4 Compliance with Governmental Requirements and Other Requirements. The Project shall be developed and maintained in accordance with this Agreement, the Special Restrictions and all Governmental Requirements, including the Specific Plan, the Reuse Plan, the MCAS Tustin Redevelopment Plan, the Entitlements, the Approved Project Plans, the Development Permits and the Federal Documents. July 12, 2004 -49- Disposition and Development 18405:6390691.8 Agreement 8.1.5 Construction of Specific Project Components; Phasing;. (a) Time Periods for Construction. (i) Minimum Project. Within six (6) months following the Initial Close of Escrow and in accordance with the requirements of the Schedule of Performance, Developer shall submit to the City a complete application for the first building permit for the Minimum Project. Within six months following the earlier of (x) the actual date of submittal by Developer of a complete application by the Developer for the first building permit for the Minimum Project and (y) the first anniversary of the Initial Close of Escrow (the "Minimum Project Permit Date"), Developer shall submit complete applications for all building permits and other permits and approvals required for development of the Minimum Project from each Governmental Authority having jurisdiction. Immediately after receipt of all permits and approvals, Developer shall promptly begin and thereafter diligently prosecute to Completion (x) Developer's Backbone Infrastructure, (y) all Required Horizontal Improvements and (z) all Vertical Improvements comprising the Minimum Project in accordance with the requirements of and within the time periods established by this Agreement, including the Schedule of Performance and the Vesting Tentative Tract Map and in accordance with the Special Restrictions, the Approved Project Plans, the Entitlements, the Development Permits, the Specific Plan, the Reuse Plan and all other Governmental Requirements, as well as all requirements of private utility purveyors. Developer shall Complete the Minimum Project on or before the date that is twenty-four (24) months following the Minimum Project Permit Date (the "Minimum Project Completion Date") and, except as set forth in clause(ii) below with respect to Lease Parcels, shall complete the remainder of the Improvements on Developer Fee Parcel A and Developer Fee Parcel B, including all Retail Buildings on Minor Pads, on or before the date that is five (5) years from the Initial Close of Escrow (the "Improvements Completion Date"). (ii) Lease Parcels. Vertical Improvements on each Retail Pad located on a Lease Parcel shall be Completed on or before the date that is twenty-four (24) months after the date all building permits are issued for the Improvements on such Retail Pad (such date for the final Retail Pad on the Lease Parcels for which building permits are timely issued, the "Lease Parcel Retail Completion Date"), provided that Developer shall submit complete applications for all required building permits within six (6) months of the Subsequent Closing Date at which Developer acquired fee title to the Lease Parcels comprising the relevant Retail Pad. (b) Phasing. The City acknowledges and agrees that the Project may be constructed and Completed in Phases and as necessary to accommodate any phased acquisition of the Property due to existing LIFOC restrictions provided that: (i) the Phases shall be clearly identified on the Vesting Tentative Tract Map and/or on the Concept Plan and Design Review as such submittals may be revised and approved by the City, (ii) the first Phase of the Project shall not be less than the Minimum Project, (iii) the Required Horizontal Improvements and the Tustin Legacy Backbone Infrastructure Improvements (identified in the Scope of Work attached as Attachment No. 8) shall be completed as part of the Minimum Project, (iv) conditions of City approval may require certain additional Improvements to be constructed and Completed as part of the Minimum Project, and (iv) upon Completion thereof, each Phase shall comply with all Governmental Requirements, including all Specific Plan requirements and July 12, 2004 -50- Disposition and Development 18405:6390691.8 Agreement Entitlement conditions of approval for development on the Developer Parcels, without reliance upon Improvements to be constructed in future Phases. Subject to the foregoing, the City agrees to cooperate in good faith with the Developer to implement this Agreement so as to permit development of the Project in Phases. (c) Construction on Developer Sublease Parcels. Developer acknowledges and agrees that the construction of Improvements on the Developer Sublease Parcels prior to the Subsequent Closing(s) for such Developer Sublease Parcels requires the prior consent and approval of the Navy, which shall be governed by Section 8.5 and the provisions of the Ground Lease. (d) Construction on Retail Pads. The Vertical Improvements on Retail Pads may be constructed and Completed by each corresponding Pad Transferee, but subject to the time limits for such construction set forth in Section 8.1.5 or such additional time as set forth in any City Non -Disturbance and Attornment Agreement executed by the City and such Pad Transferee. 8.2 Timing and Conditions of Project Development. 8.2.1 Schedule of Performance. Attached hereto as Attachment No. 7 is a Schedule of Performance which sets forth the schedule for submissions, approvals and actions, including the design and construction of the Improvements. The Parties acknowledge and agree that the City is entering into this Agreement with the expectation, that the projections in the Schedule of Performance will be met. Following conveyance and/or sublease of the Property to the Developer, the Developer shall promptly begin and thereafter diligently prosecute to completion all steps required by the Schedule of Performance including design, construction and development of the Improvements within the time specified in the Schedule of Performance. The City may, in its sole discretion and upon written request from the Developer, extend the time specified in the Schedule of Performance. Any such agreed upon changes shall be within the limitations of the Specific Plan, the Reuse Plan, the Entitlements, applicable Development Permits and all other Governmental Requirements. Any extensions shall be requested in writing by Developer and evidenced by written notice from the Assistant City Manager or designee. 8.2.2 Conditions Relating to Timinyand Sequencing of the Development of the Project. The following are express conditions precedent to the right of the Developer to proceed with development of the Project: (a) As a condition precedent to Initial Close of Escrow and to each Subsequent Closing, but subject to the rights of Developer to post security for Developer's Backbone Infrastructure Work as described in Section 8.13, Developer shall pay the portion of the Project Fair Share Contribution due in connection with such conveyance. (b) Prior to the issuance of the first permit for construction of the Horizontal Improvements, the Developer shall provide, or cause its general contractor to provide, a Performance Bond meeting the requirements of this Agreement securing its obligations to construct the Required Horizontal Improvements and naming the City as a covered obligee thereunder. July 12, 2004 -51- Disposition and Development 18405:6390691.8 Agreement (c) Prior to issuance of a building permit for any Vertical Improvements, the Developer shall provide, or cause its general contractor to provide, or the applicable Pad Transferee or its general contractor shall provide a Performance Bond meeting the requirements of this Agreement securing its obligations to construct such Vertical Improvements and naming the City as a covered obligee thereunder. 8.3 Land Use Matters. 8.3.1 Entitlements and Development Permits. It is the responsibility of the Developer, without cost to the City: (a) to process, obtain and maintain all land use approvals and entitlements legally required by the City or any other Governmental Authority as a condition to development of the Developer Parcels and construction of the Improvements shown in the Scope of Development and the Preliminary Plan as the same may be modified from time to time with the approval of the City, including the Vesting Tentative Tract Map and the Final Tract Map(s), the Concept Plan and Design Review approval and Conditional Use Permit(s) as may be applicable for proposed specific use(s) (collectively, "Entitlements"); (b) to process, obtain and maintain any and all permits, certificates and approvals which may be required by the City or any other Governmental Authority to subdivide the Developer Parcels for retail and commercial development and to construct the Improvements (collectively, "Development Permits"); and (c) to assure that the design, construction, use, operation, maintenance, repair and replacement of the Improvements is carried out in accordance with the provisions of this Agreement and the Special Restrictions, and is permitted by zoning, all applicable City land use requirements and all other Governmental Requirements. Nothing contained in this Agreement shall be deemed to entitle the Developer to any Entitlement or Development Permit or other City approval necessary for the development of the Project, or to the waiver of any applicable City requirements relating thereto and the failure of the City to issue or approve any Entitlement described in this Agreement, including to certify or approve any CEQA document, to approve any Vesting Tentative Tract Map, Final Tract Map(s), Concept Plan and Design Review or Conditional Use Permit, or to issue any Development Permit shall not be a default of the City under this Agreement. 8.3.2 Agreement Does Not Grant Entitlements. This Agreement does not (a) grant any land use entitlement to the Developer, (b) supersede, nullify or amend any condition which may be imposed by the City in its Governmental Capacity in connection with approval of the Project, (c) guarantee to the Developer or any other party any profits from the development of the Developer Parcels, or (d) amend any City laws, codes or rules. 8.3.3 Required Entitlements. This Agreement and the development of the Project shall be subject to the following Entitlement review processes of the City, certain of which are Closing Conditions: (a) Vesting Tentative Tract Map and Final Tract Map approval; (b) Concept Plan and Design Review approval; (c) Conditional Use Permit or other permit approval to the extent required by the City Code to permit the uses contemplated in the Preliminary Plan or Approved Project Plan. Without limiting the foregoing, in developing and constructing the Project, the Developer shall ensure that the Project complies with all applicable development standards in the Specific Plan, the City Code and with all building codes, landscaping, signage and parking requirements, except as may be permitted through variances and modifications. July 12, 2004 -52- Disposition and Development 18405:6390691.8 Agreement 8.3.4 Map Dedications. The Vesting Tentative Tract Map and the Final Tract Map(s) shall incorporate all required dedications described in this Agreement and/or otherwise required or approved by the City. 8.3.5 City Review of Land Use Applications. Consistent with this Agreement, the City agrees, without cost or other liability to the City, to support the Developer's efforts to obtain the Entitlements and Development Permits required for the full implementation of this Agreement. The City will seek to expedite review of entitlement applications where reasonably required in order to meet the deadlines set forth in the Schedule of Performance. Without limiting any other provision of this Agreement, the Developer shall pay all permit fees and other fees and costs normally charged by the City in connection with application for and review and approval of Entitlements and Development Permits. 8.3.6 CEQA Requirements. (a) The Parties acknowledge and agree that CEQA is applicable to the development of the Project. The Developer acknowledges that the Final EIS/EIR prepared for MCAS Tustin is a program EIR and may not fully satisfy the requirements of CEQA with respect to development of the Project. The Developer shall be responsible, at its own cost and expense, for obtaining CEQA approvals and certifications, if any, required by the City and any other Governmental Authority for development of the Project. The Developer agrees to cooperate with the City in obtaining information to determine the environmental impact of the Project, if any. The Developer acknowledges that the City shall prepare any supplemental environmental information, if any, as may need to be completed in order to effect compliance with CEQA, as determined by the City in its sole discretion, and the Developer shall be responsible to pay all costs incurred by the City to prepare or to cause to its consultants to prepare such environmental documents and shall enter into such agreements to pay such costs as the City shall require. (b) The Developer acknowledges that the Specific Plan and the Final EIS/EIR for MCAS Tustin each establish a non-residential trip budget estimate for the Developer Parcels of 35,650 average daily trips ("ADTs") collectively, which trip budget shall not be exceeded by the Developer in the planning, development, managing and leasing of the Project. (c) The Developer has applied for a permit from the California Department of Fish and Game to seek to relocate the Southwestern Pond Turtle ("Turtle") population from the Project Site. Developer shall, at its sole cost and expense, carry out all Turtle relocation and other measures, if any required by the Final EIS/EIR and/or by the California Department of Fish and Game in connection with such permit. (d) The Developer has applied for a permit under Section 404 of the Clean Water Act of 1972 (33 U.S.C. Section 1344) in connection with proposal discharge of fill material into approximately 2.29 acres of waters of the United States. Developer shall, at its sole cost and expense, carry out all work and mitigation measures required by the U.S. Army Corps of Engineers in connection with such permit. July 12, 2004 -53- Disposition and Development 18405:6390691.8 Agreement 8.3.7 Tract Map Conditions. The Developer acknowledges and agrees that the City in its Governmental Capacity shall require certain satisfaction of conditions and dedication of certain property (including the Right of Way Parcels and the City Dedication Parcels), as determined by the City in its sole discretion, in connection with its approval of the Vesting Tentative Tract Map and the Final Tract Map(s). Developer shall use its best efforts to satisfy or bond on or before the Initial Closing Date in accordance with the requirements of the Vesting Tentative Tract Map, all conditions to obtain Final Tract Map approval, including dedication of all land required to be dedicated as a prerequisite to City Council approval of the Final Tract Map. Failure of Developer to utilize its best efforts to satisfy the conditions of the Vesting Tentative Tract Map and to obtain Final Tract Map approval on or before the date that is ninety (90) calendar days after the City approval of the Vesting Tentative Tract Map shall be a Material Default under this Agreement. 8.3.8 Disapproval or Conditions to Other Entitlements. In the event that prior to the Initial Close of Escrow the City disapproves any Entitlements that are required under the Specific Plan or result from changes to the Specific Plan made after the Effective Date, or approves such Entitlements subject to conditions that are not consistent with the Specific Plan at in existence on the Effective Date and have a material adverse effect, in the reasonable judgment of the City and the Developer, on the Developer's ability to carry out this Agreement and/or to develop the Project, the City and the Developer agree to cooperate in good faith and meet and confer regarding the impact resulting from such City action. If the Parties cannot agree upon a resolution of such disapproval or material adverse effect within thirty (30) calendar days following the commencement of such negotiations, either Party may terminate this Agreement in accordance with Section 14.1. 8.3.9 Compliance with Re ug_latory Requirements. Until such time as Developer has acquired in fee all Developer Parcels, Developer shall obtain the prior written consent of the City to all regulatory permit applications made by Developer with respect to the Project or the Project Site affecting or relating to any portion of the Developer Property owned by the City in fee or leased by the City pursuant to the LIFOC. 8.4 Financial Status. 8.4.1 Financial Capability. Until issuance of the Final Certificate of Compliance, the Developer shall continue to be responsible for demonstrating to the City the financial capacity of Developer and its capital partner, Kimco, and the capability of Developer to perform its obligations under this Agreement. Within thirty (30) calendar days following the Effective Date and thereafter upon request of the City, the Developer shall submit such financial information of the Developer and Kimco as the City may reasonably request, together with financial information on the members and/or partners of Kimco and its respective members, partners, shareholders and/or other owners down to such tier at which substantial assets are identified. If the City is not reasonably satisfied with the financial status of the Developer, Kimco or the proposed joint venture development entity following review of the aforesaid financial information and the joint venture agreement of Developer and Kimco, the City shall be entitled to obtain the financial information of other members and/or partners of the proposed development entity (and their respective members, partners, shareholders and/or other owners at each tier until substantial assets are identified). The Developer shall identify with specificity any July 12, 2004 -54- Disposition and Development 18405:6390691.8 Agreement submitted documents which the Developer wants the City to maintain as confidential documents and a statement as to why the request is consistent and complies with the provisions of the Public Records Act of the State of California. The City shall not disseminate such information and shall take all reasonable steps to maintain such confidentiality, including maintenance of such documents at a non-public location, unless otherwise required by law. The City's staff, agents, negotiators and consultants may review the statements as necessary as long as such parties agree to maintain the confidentiality of such statements. 8.4.2 Additional Information. The Developer understands and agrees that the City reserves the right at any time to reasonably request from the Developer additional information, including information, data and commitments to ascertain the depth of the capability and desire of each of Developer, General Partner, Vestar and Kimco, or other equity participants, to develop the Project expeditiously. 8.5 Communication to and Consents of Federal Government. 8.5.1 Restricted Communications with Federal Government. Unless otherwise agreed by the City and the Developer in writing, the Developer shall have no direct communications with the Navy, the Department of the Army or any subdivision thereof, it being agreed that all such communications with the Navy, the Department of the Army or any subdivision thereof or agents acting for the Federal Government regarding any Developer Parcel, Reuse Plan Disposal Parcel 9, any other portion of the Project Site, the Federal Documents or the transactions contemplated by this Agreement and all communication regarding any of the foregoing matters shall be conducted by and through the City, unless otherwise authorized in writing by the City. 8.5.2 Navy Consent. With respect to those matters for which the consent and/or approval of the Navy is required under this Agreement or for such other matters as the City reasonably believes would facilitate the development of the Retail Project: (a) such consent and/or approval shall be requested by the City in accordance with the Federal Documents and (b) the City makes no representation or warranty as to the likelihood or timing of obtaining any such consent and/or approval nor any conditions which may be required therewith. Notwithstanding the foregoing, the City shall have no obligation to address matters related to acquisition or development of Reuse Plan Disposal Parcel 9. 8.6 Design Approval. 8.6.1 Design Review. It is understood and agreed to by the Developer that the quality, character and uses proposed for the Project are of particular importance to the City. In furtherance of the development of Tustin Legacy and the foregoing, the City, acting in its Governmental Capacity, shall require Concept Plan and Design Review approval as part of the Entitlements. In addition, in its Proprietary Capacity as the current owner and/or ground lessee of the real property that is the subject of this Agreement, the City will require Basic Concept Plans review and approval for the Project as further set forth in this Section 8.6, in addition to and without affecting the review provisions of Sections 8.1.2 and 8_3. Review of design documents by the City in its Proprietary Capacity only shall be subject to time periods set forth below. July 12, 2004 -55- Disposition and Development 18405:6390691.8 Agreement 8.6.2 Plan Development and Cost. All plans and specifications for the Project shall be prepared by the Developer at the Developer's sole cost and expense and subject to the requirements set forth in this Article 8. 8.6.3 Process for Governmental Review. The Parties acknowledge that the City shall have the right to review all plans and submissions, including any changes therein, through its normal plan review and Entitlement process and that the City may exercise its governmental discretion in review of any of the plans and submissions. The Developer has previously submitted to the City a preliminary site plan for the Project (the "Preliminary Plan"), a copy of which is attached as Attachment No. 9A, graphically depicting the overall plan for development of the Improvements on the Project Site. Within the timeframe shown in the Schedule of Performance, Developer shall submit for approval by the City in its Governmental Capacity, final design drawings and related documents conforming to the requirements of the City Code and including the required contents listed in Chapter 4 of the Specific Plan. The Community Development Department is authorized pursuant to City Code to approve minor changes to building plans after approval by the City provided such changes do not significantly reduce the quality of the development concept or the design and materials to be used in enhancing the architecture and aesthetics of the Improvements. 8.6.4 Coordination. The Developer and the Project Architect shall meet with representatives of the City to review and come to a clear understanding of the planning and design criteria required by the City. During the preparation of all plans and specifications for the Project, staff of the City and the Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of such plans. The staff of the City and the Developer shall communicate and consult as frequently as necessary to facilitate prompt and speedy consideration of the Developer's submittals. 8.6.5 Proprietary Review. The City in its Proprietary Capacity shall have the right of reasonable architectural review of all Basic Concept Plans in accordance with Section 8.6.6, including with respect to exterior elevations, exterior materials (including selections and colors) and the size, bulk and scale for all buildings. The Developer acknowledges and agrees that the City's Community Development Department is responsible for reviewing the working drawings and issuing the appropriate Development Permits. The exercise by the Assistant City Manager's office of its right to inspect or review the Basic Concept Plans, drawings and related documents for development of the Project: (a) shall be an exercise of the City's proprietary function and not its governmental function; (b) shall not constitute an approval by the City of any Entitlements or Development Permits; (c) shall not constitute a determination by the City of the engineering or structural design, sufficiency or integrity of the improvements contemplated by such plans, drawings and related documents, and (d) shall not constitute a determination by the City of the compliance of such plans, drawings and related documents with any applicable building codes, safety features and standards. Any inspection or approval of plans and drawings made or granted pursuant to this Agreement shall not constitute an inspection or approval of the quality, adequacy or suitability of such plans, specifications or drawings, nor of the labor, materials, services or equipment to be furnished or supplied in connection therewith. The Developer acknowledges and agrees that the City in its Proprietary Capacity may approve or disapprove Basic Concept Plans in order to satisfy the City's obligation to promote the sound development and redevelopment of land, to promote a high level of design that will impact the July 12, 2004 -56- Disposition and Development 18405:6390691.8 Agreement surrounding development proposed at Tustin Legacy, and to provide an environment for the social, economic and psychological growth and well-being of the citizens of the City. The Developer shall not be entitled to damages or compensation as a result of the City's disapproval, conditional approval or failure to approve or disapprove Basic Concept Plans. 8.6.6 Process for Proprietary Review. The Developer shall submit two sets of Basic Concept Plans for the Improvements to the City. Such sets of Basic Concept Plans shall be submitted in writing over the signature of the Developer or a representative duly authorized by the Developer in writing. If the City approves such Basic Concept Plans, the City shall endorse its approval on one set of such Basic Concept Plans and return them to the Developer. The City shall conclusively be deemed to have given its approval to such sets of Basic Concept Plans unless, prior to the later to occur of (i) five (5) calendar days after the City approval of the Vesting Tentative Tract Map or (ii) fifteen (15) Business Days after the City's receipt of such sets of Basic Concept Plans, the City gives written notice of disapproval to the Developer specifying in reasonable detail each item that the City disapproves and the reasons for such disapproval. If necessary, the Developer shall make changes in response to the City's notice of disapproval and resubmit such Basic Concept Plans to the City for review and approval in accordance with the provisions of this Section 8.6.6 (and in such case the City's review period shall be ten (10) Business Days). Submissions of plans by the Developer with respect to partial portions of the Project or the Developer Parcels shall be permitted, provided that the same shall be sufficient to permit review by the City for the purposes set forth above. 8.6.7 Approved Project Plans. Upon (i) approval by the City in its Governmental Capacity of the Entitlements as described in this Article 8, (ii) approval by the City in its Proprietary Capacity of the Basic Concept Plans under Section 8.6, and (iii) approval of construction level drawings by the City in its Governmental Capacity, then such approved plans and drawings (collectively the "Approved Project Plans") shall govern development of the Improvements on the Project Site. In addition to any other rights to approve or disapprove the construction level drawings in its Governmental Capacity, the City may disapprove such documents if they are not consistent with the Entitlements and the Basic Concept Plans previously approved, do not represent a logical or commercially reasonable implementation thereof, and/or do not provide for construction of the same square footage as set forth therein. Developer shall not construct any Improvements on the Project Site unless the same are shown in the Approved Project Plans or unless the prior written consent of the City in its Proprietary Capacity and the approval of the City in its Governmental Capacity are obtained to any modification thereof. To the extent of any inconsistencies between the plans identified in the Scope of Development or the Preliminary Plans and the Approved Project Plans, the Approved Project Plans shall govern and control as to the development of the Developer Parcels. 8.6.8 Later Stage Design and Construction. The Developer shall not commence or permit commencement of any work of construction in connection with any subsequent development or any redevelopment of the Project, other than Vertical Improvements constructed in accordance with the Approved Project Plans, interior construction work, building facade replacements or building repair or restoration on the same footprint following a casualty, without the prior written consent of the City. If the Developer contemplates any action not permitted by the foregoing, then in addition to any obligations of the Developer to submit design drawings to the City pursuant to the requirements of the City Code, the Developer shall submit the applicable July 12, 2004 -57- Disposition and Development 18405:6390691.8 Agreement Basic Concept Plans to the City for its proprietary approval in accordance with Sections 8.6.5 and 8.6.6 prior to commencing any construction work. The City shall have the right to approve or disapprove any such Basic Concept Plans in accordance with the standards and procedures for the City's review and approval set forth in such sections. 8.6.9 Exculpation. The City shall not be liable in damages to the Developer or to any owner, lessee, any licensee or other Person, on account of (a) any approvals or disapproval by the City, including by the Assistant City Manager or designee whether made in the governmental or Proprietary Capacity of the City of any design documents, including any Basic Concept Plans submittal, whether or not defective or whether or not in compliance with applicable laws or ordinances; (b) any construction, performance or nonperformance by the Developer or any owner, lessee, licensee or other Person of any work on the Project Site, whether or not pursuant to Approved Project Plans or whether or not in compliance with applicable laws or ordinances; (c) any mistake in judgment, negligence, action or omission in exercising its rights, powers and responsibilities hereunder; and/or (d) the enforcement or failure to enforce any of the provisions of this Agreement or the Special Restrictions. Every Person who makes design submittals for approval agrees by reason of such submittal, and the Developer and every subsequent owner of the Developer Parcels or any portion thereof agrees by acquiring title thereto or an interest therein, not to bring any suit or action against the City seeking to recover any such damages and expressly waives any such claim or cause of action which it would otherwise be entitled to assert. The review of any design submittals shall not constitute the assumption of any responsibility by, or impose any liability upon, the City as to the accuracy, efficacy, sufficiency or legality thereof nor decrease or diminish any liability, duties, responsibilities, or obligations of the Developer under this Agreement or otherwise. 8.6. 10 No Supervision or Control. The City (whether acting in its governmental or Proprietary Capacity) does not have any right and hereby expressly disclaims any right, of supervision or control over the architects, designers, engineers or persons responsible for drafting or formulating of the plans, drawings and related documents of the Developer. 8.6.11 City of Irvine Approvals. The Developer acknowledges that certain on- site and off-site infrastructure improvements may require the review and approval of the City of Irvine. The City hereby advises Developer that approval by the City of Irvine of on-site and off- site infrastructure improvement permits are ministerial permit approvals, provided such work is consistent with the original MCAS Tustin Specific Plan and EIS/EIR. Because modifications to the Scope of Work have been accommodated to permit alternative designs where Irvine approvals cannot be obtained, Developer and City agree that any City of Irvine infrastructure approvals or permits shall not be conditions precedent to Initial Close of Escrow or any Subsequent Closing. The City agrees to cooperate in good faith with Developer to obtain any necessary ministerial permits to be issued by the City of Irvine, provided, however, that the City makes no representation or warranty as to the availability of or requirements for obtaining such permits, and provided, further, that in the event that the City of Irvine approvals or property owner acquisition approvals within the City of Irvine cannot be obtained after a good faith effort by Developer as determined by the City, an alternative design shall be required subject to approval of the Director, as further described in the Scope of Development attached as Attachment No. 8. July 12, 2004 -58- Disposition and Development 18405:6390691.8 Agreement 8.6.12 Orange County Approvals. The Developer acknowledges that as a condition to the widening of Barranca Parkway (which widening comprises a portion of Developer's Backbone Infrastructure Work) adjacent to Reuse Plan Disposal Parcel 9, Developer may be required to obtain licenses and/or other approvals from Orange County with respect to the Barranca channel and the overcrossing of such channel to accommodate the new Tustin Ranch Road. The City agrees to cooperate in good faith with Developer to obtain any necessary permits to be issued by Orange County, provided, however, that the City makes no representation or warranty as to the availability of or requirements for obtaining such permits, and provided, further, that the Parties agree that any such permits shall not constitute Entitlements, nor shall the acquisition of such permits be a condition precedent to the Initial Close of Escrow or any Subsequent Closing. 8.7 Construction Covenants. With respect to construction of the Project, the Developer hereby covenants and agrees as follows: (a) The Developer shall maintain throughout the term of this Agreement, sufficient equity, capital and firm binding commitments for financing necessary to (i) pay through Completion, all costs of development, construction, marketing, sale and/or leasing, operation and management of all the Improvements as defined in the Scope of Development; and (ii) enable the Developer to perform and satisfy all the covenants of the Developer contained in this Agreement, the Ground Lease, and the CC&Rs. The Developer shall not undertake any additional project if it could reasonably be expected to jeopardize the sufficiency of any equity, capital and firm and binding commitments for the purposed expressed in the preceding sentence. (b) The development of the Project shall be done in a professional and competent manner. The Developer shall perform all work required to complete the Project and related work in accordance with all Governmental Requirements and at the level of quality set forth in the Scope of Development and Sections 1.3.2 and 8_7. (c) The Developer shall be responsible for the timeliness and quality of all work performed and materials and equipment furnished in connection with the Project, whether the work, materials and equipment are performed and furnished by the Developer or through subcontractors, sub -subcontractors (of all tiers) and suppliers. (d) The Developer shall promptly cause to be removed or bonded against (such bonding to be by the provision of bonds satisfying California statutory requirements) any and all mechanic's liens, stop notices and/or bonded stop notices that are recorded and/or served by subcontractors, sub -subcontractors (of all tiers) and suppliers in connection with the Project. (e) Subject to Section 8.2.1, the Developer shall commence the development of the Project promptly and shall diligently pursue to Completion and shall Complete development of the Project in accordance with the time periods set forth in the Schedule of Performance and in all events, on or before the dates set forth for Completion of the Project in Section 8.1.5(a). July 12, 2004 -59- Disposition and Development 18405:6390691.8 Agreement 8.8 City Rights of Access. In addition to any rights it may have in its Governmental Capacity or pursuant to the Ground Lease, representatives of the City shall have the reasonable right of access to all portions of the Developer Parcels, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including the inspection of the work being performed in constructing the Improvements. The City agrees to indemnify, defend and hold the Developer harmless for any and all claims, liability and damages arising out of any such non-governmental inspection or other activity on the Developer Parcels by the City, or their respective agents, employees or contractors permitted pursuant to this Section 8.8, except to the extent caused by the negligence or willful misconduct of the Developer. 8.9 Disclaimer of Responsibility by City. The City neither undertakes nor assumes nor will have any responsibility or duty to the Developer, any Successor Owner or to any other third party to review, inspect, supervise, pass judgment upon or inform the Developer, any Successor Owner or any third party of any matter in connection with the development or construction of Improvements, whether regarding the quality, adequacy or suitability of the plans, any labor, service, equipment or material furnished for development of the Project, any person furnishing same, or otherwise. The Developer, any Successor Owner and all third parties shall rely upon its or their own judgment regarding such matters, and any review, inspection, supervision, exercise of judgment or information supplied to the Developer, any Successor Owner or to any third party by the City in connection with such matter is for the public purpose of developing the Project, and neither the Developer nor any Successor Owner nor any third party is entitled to rely thereon. The City shall not be responsible for any of the work of construction, improvement or development of the Project. 8.10 CC&Rs. As a condition precedent to the Initial Close of Escrow, the Developer shall prepare, submit and Record against the entirety of the Developer Parcels conditions, covenants and restrictions and including references to the provisions of Sections 4.4.3, 8.6, 12.1, 12.2, 12.3, 12.5, 12.6 and 12.7, design guidelines for development of the Developer Parcels and other requirements included in the conditions of approval for the Vesting Tentative Tract Map and Final Tract Map(s) for the Project (as approved by the City, the "CC&Rs"). If the City has not approved or disapproved CC&Rs meeting the foregoing requirements within twenty (20) Business Days after their submission to the City, the proposed CC&Rs shall be deemed disapproved. 8.11 Local. State and Federal Laws. The Developer shall carry out the construction of the Project, including all Improvements, in conformity with all Governmental Requirements, including all applicable federal and State labor laws and requirements and shall investigate the applicability of and, if and to the extent applicable, pay prevailing wages meeting the requirements of State law or Davis -Bacon act wages required by federal law, or if both are applicable, meeting the higher of the foregoing requirements. The Developer's Backbone Infrastructure Work and other off-site infrastructure work, if any, is subject to the foregoing prevailing wage requirements, as well as all public bidding requirements, as if Developer's Backbone Infrastructure Work were being completed by the City. The Developer hereby agrees that with respect to the remainder of the Project, Developer shall be fully responsible for determining whether the foregoing wage requirements are applicable and agrees to indemnify, defend and hold the City and its elected and appointed officials, employees, agents, attorneys, July 12, 2004 -60- Disposition and Development 18405:6390691.8 Agreement affiliates, representatives, contractors, successors and assigns free and harmless from and against any and all Claims arising from or related to compliance by the Developer or the Developer's officers, directors, employees, agents, representatives, consultants and/or contractors (at every tier) in construction of the Project with the prevailing wage requirements imposed by State law and/or the Davis -Bacon Act requirements imposed by federal law. 8.12 Taxes, Assessments, Encumbrances and Liens. The Developer shall pay when due and prior to delinquency all real estate taxes and assessments assessed and levied on or against all portions of the Developer Parcels subsequent to the conveyance of fee thereto by the City to the Developer. The Developer shall not place, or allow to be placed, on its interests in the Developer Parcels, Retail Buildings, Leases, or any portion thereof, any Mortgage or encumbrance of lien not authorized by this Agreement. The Developer shall remove, or shall have removed, any levy or attachment made on its interests in the Property (or any portion thereof), or shall assure the satisfaction thereof within a reasonable time but in any event prior to Foreclosure. Nothing contained in this Agreement shall be deemed to prohibit the Developer from contesting the validity or amount of any tax, assessment, encumbrance or lien, or to limit the remedies available to the Developer in respect thereto. 8.13 Tustin Legacy Backbone Infrastructure Program. 8.13.1 Developer's Agreements Regarding Tustin Legacy Backbone Infrastructure Contribution. The Developer acknowledges and agrees that: (a) the development of the Project, together with the development of the remainder of Tustin Legacy, will contribute to the need for Tustin Legacy backbone infrastructure located both on and off of the Developer Parcels (the "Tustin Legacy Backbone Infrastructure Program"), including Tustin Legacy roadway improvements; traffic and circulation mitigation to support the Tustin Legacy project; domestic and reclaimed water; sewer; telemetry; storm drains and flood control channels; utilities backbone (electricity, gas, telephone, cable, telecommunications, etc.); (b) the Developer shall make a fair share contribution to development by the City of the Tustin Legacy Backbone Infrastructure Program on behalf of the Project, which contribution amount is described in Section 8.13.3(a) as the Project Fair Share Contribution; (c) the Developer has had an opportunity to review the budgets, plans and projections developed by the City in connection with the Tustin Legacy Backbone Infrastructure Program and the studies prepared by the City in connection therewith; (d) there is an essential nexus between the imposition on the Project of the Project Fair Share Contribution (defined below) and the requirement that Developer construct Developer's Backbone Infrastructure Work and a legitimate governmental interest; and (e) such obligations are roughly proportional to and reasonably and rationally related to the Project and the impacts that will be caused by development of the Project. 8.13.2 Developer's Backbone Infrastructure Work. In addition to Developer's obligations to pay the Project Fair Share Contribution, Developer shall be responsible for design and construction of that portion of the infrastructure constituting a portion of the Tustin Legacy Backbone Infrastructure Program described in Section 2.1.5 of the Scope of Development attached to this Agreement as Attachment No. 8 ("Developer's Backbone Infrastructure Work") which work shall be covered by the Performance Bond or other security described in Section 8.13.3(d). Design and construction of Developer's Backbone Infrastructure Work shall be carried out in accordance with (a) the Scope of Development and the Schedule of July 12, 2004 -61- Disposition and Development 18405:6390691.8 Agreement Performance; (b) plans and specifications prepared by the Developer and approved by the City; (c) all Governmental Requirements, including payment of prevailing wages related to construction of the Tustin Legacy Backbone Infrastructure Program Improvements, and all requirements and regulations of the City including applicable zoning and (iv) the provisions of Section 8.1.2. 8.13.3 Payment for Project Fair Share Contribution and Developer's Backbone Infrastructure Work. In connection with development of the Project, the Developer hereby agrees to fund the "Project Fair Share Contribution", which is defined as the amount allocated to the Project as its fair share allocation of the Tustin Legacy Backbone Infrastructure Program and shall be equal to Thirty Six Million Three Hundred Thirty Thousand and No/100 Dollars ($36,330,000.00). Twenty -Two Million Eight Hundred Thousand and No/100 Dollars ($22,800,000.00) of the Project Fair Share Contribution is allocated to the Developer Fee Parcel A, Developer Sublease Parcel A and Developer Sublease Parcel B ("South of Loop Road Contribution") and shall be paid or secured in a lump sum at the Initial Close of Escrow as further set forth below. The remainder of the Project Fair Share Contribution, totaling Thirteen Million Five Hundred Thirty Thousand and No/100 Dollars ($13,530,000.00), is allocated to the remaining Developer Parcels ("North of Loop Road Contribution") and shall be paid on a parcel by parcel basis at the Initial Closing and at each Subsequent Closing, as further described below. The Project Fair Share Contribution is an independent obligation of the Developer and is due and payable in accordance with the terms of this Agreement in addition to (and not as a component of) the Purchase Price and/or the Subsequent Participation; provided, however, that Developer shall be entitled, as and to the extent set forth below, to deduct from cash payments to the City of Project Fair Share Contribution the actual, reasonable costs and expenses of Developer in designing and constructing Developer's Backbone Infrastructure Work and shall be entitled to reimbursement from the City of reasonable amounts expended by it for Developer's Backbone Infrastructure Work in excess of the Project Fair Share Contribution. As a condition precedent to Initial Close of Escrow, Developer shall enter into an infrastructure agreement with the City governing construction of Developer's Backbone Infrastructure Work and the repayment by the City of excess contributions of Developer to the Tustin Legacy Backbone Infrastructure Program, if any (the "Infrastructure Construction and Payment Agreement"). Payment of the Project Fair Share Contribution shall be made as described below and in Section 8.13.4: (a) As a condition precedent to the Initial Close of Escrow, Developer shall pay in cash to the City (i) the South of Loop Road Contribution and (ii) that portion of the North of Loop Road Contribution attributable to Developer Fee Parcel B in the amount of Six Million Thirty Thousand Nine Hundred Sixty Two and 06/100 ($6,030,962.06) based on the net square footage of the area identified on the Vesting Tentative Tract Map as Developer Fee Parcel B (the "Developer Fee Parcel B Contribution" and collectively, with the South of Loop Road Contribution, the "Initial Closing Contribution"); provided, however, that in lieu of a cash payment for the Initial Closing Contribution, Developer may provide a letter of credit or a surety bond meeting the requirements set forth in clause d below. (b) Upon the execution by Developer of construction contracts for Developer's Backbone Infrastructure Work ("Construction Contracts") and as a condition precedent to issuance of the first building permit for any building within the Project, Developer July 12, 2004 -62- Disposition and Development 18405:6390691.8 Agreement shall (i) provide to the City a Performance Bond in the total amount of the cost of Developer's Backbone Infrastructure Work for the entirety of the Project, including reasonable contingency, as established by the construction contract(s) and approved by the Director ("Estimated Backbone Infrastructure Cost"), naming the City as covered obligee, with surety and in form and substance each acceptable to the City in its sole discretion and meeting the requirements of the City Code, or shall cause its contractor to provide to the City a Performance Bond meeting the foregoing requirements, or shall provide alternative security as described in clause d below; and (ii) pay to the City in cash (or the City shall retain from cash proceeds received by it as the Initial Closing Contribution), an amount equal to the positive difference, if any, after deducting from the total Initial Closing Contribution the amount of the Estimated Backbone Infrastructure Cost secured pursuant to clause NO) above. The intent of the foregoing is that the City be secured for the payment of the Project Fair Share Contribution by means of (x) Performance Bonds for the Developer's Backbone Infrastructure Work in the amount of the Estimated Backbone Infrastructure Cost and (y) cash for any positive difference between the Project Fair Share Contribution then or previously due and the Estimated Backbone Infrastructure Costs. The City, upon receipt from Developer or Successor Owner of all security required pursuant to this clause (b), shall release to Developer or Successor Owner excess security received by it at the Initial Close of Escrow, if any. (c) As a condition precedent to Subsequent Closing for the Remainder Parcels, Developer shall pay in cash to the City the pro rata share of the remaining North of Loop Road Contribution attributable to such Parcel, which shall be equal to the North of Loop Road Contribution less the Developer Fee Parcel B Contribution divided pro -rata among the Remainder Parcels on a per net square foot basis (net of Right of Way Parcels and roadway dedications); provided, however, that to the extent that the Estimated Backbone Infrastructure Cost secured pursuant to clause b above exceeds the sum of the total Project Fair Share Contribution previously or then due, Developer shall not be obligated to make.a cash payment at the time of such Subsequent Closing. (d) The City acknowledges that in lieu of the cash payment of the Initial Closing Contribution and/or provision of the Performance Bonds securing the Estimated Backbone Infrastructure Cost, the Developer may provide the following forms of security: (i) a letter of credit issued by an Institutional Lender and naming the City as the sole beneficiary, allowing the City to draw upon a sight draft stating that Developer has failed to meet any obligation under this Agreement relating to the Developer's Backbone Infrastructure Work, (ii) a surety bond from a nationally recognized surety company and naming the City as a covered obligee thereunder, or (iii) a cash deposit. (e) To the extent that the City determines, at any time following determination of the Estimated Backbone Infrastructure Cost that the actual cost of Developer's Backbone Infrastructure Work has decreased such that it is less than the amount of the Project Fair Share Contribution then or previously due and payable (the "Negative Difference"), and the July 12, 2004 -63- Disposition and Development 18405:6390691.8 Agreement Developer has not previously paid cash under Section 8.13.3(a), (b) or (c) for such Negative Difference, the Developer, within ten (10) Business Days following the date of the City's written notice thereof, shall provide to the City a cash payment in the amount of the Negative Difference or if requested by Developer and approved by the City in -its sole discretion, security meeting the requirements of Section 8.13.3(d) in the amount of the Negative Difference as necessary to fully secure, in accordance with the City Code, Developer's Backbone Infrastructure Work and the portion of the Project Fair Share Contribution then or previously due and payable. (f) To the extent that the cost of Developer's Backbone Infrastructure Work is determined at any time by the Public Works Director to have increased such that the security provided by the Developer pursuant to this Section is less than the then -estimated cost to complete Developer's Backbone Infrastructure Work, the City may, in its sole discretion, require the Developer to post additional security meeting the requirements of this Section to secure such estimated additional costs. (g) Upon completion by Developer of Developer's Backbone Infrastructure Work, Developer shall submit to the City a statement setting forth all amounts expended by Developer in design and construction of Developer's Backbone Infrastructure Work. Such amount, upon approval thereof by the City, together with additional sums, if any, paid by the Developer on account of the Tustin Legacy Backbone Infrastructure Program and actually collected by the City is referred to herein as "Developer's Infrastructure Payment". To the extent that Developer's Infrastructure Payment exceeds the Project Fair Share Contribution, the amount of the excess shall be reimbursed to Developer in accordance with the provisions of the Infrastructure Construction and Payment Agreement, which shall provide that the City shall pay such excess to Developer upon the first to occur of City's receipt of (i) any land sale proceeds from those parcels denominated on the Reuse Plan as within Planning Areas 7, 8, 9, 10, 11, 12, 13, 14 or 15 which are in excess of the cost of Tustin Legacy Backbone Infrastructure design and construction costs for the Valencia North Loop Road and Armstrong Avenue Infrastructure Improvements Project No. 7139 or (ii) to the extent the City determines to issue such bonds, bond proceeds from a Community Facilities District or assessment district covering Tustin Legacy with a plan of work that includes Developer's Backbone Infrastructure Work; provided that the City shall have no obligation to reimburse Developer until the South of Loop Road Contribution and the North of Loop Road Contribution each have been paid in full (provided that the Infrastructure Construction and Payment Agreement shall further address the issue of reimbursement in the event of delay of delivery of the LIFOC Parcels) and all of Developer's Backbone Infrastructure Work has been fully completed to the satisfaction of the City. To the extent that Developer's Infrastructure Payment is less than the Project Fair Share Contribution, Developer shall pay to the City in cash, within ten (10) Business Days after written demand therefor by the City and as a condition precedent to issuance of a Final Certificate of Compliance, the full amount of the difference, such that the Project Fair Share Contribution then due is paid in full. 8.13.4 Developer Default. If Developer is at any time in Material Default of its obligations under this Agreement with respect to performance of Developer's Backbone Infrastructure Work or the posting of security with respect thereto, the City, without waiving any other remedy it may have, may elect to require Developer to pay the amount of any deficit in the Project Fair Share Contribution to the City in full, within ten (10) Business Days after written July 12, 2004 -64- Disposition and Development 18405:6390691.8 Agreement demand therefor by the City. Such amounts shall bear interest from the date due at the Default Rate. 8.14 District Formation. The Developer hereby acknowledges and agrees that the City shall have the right to determine, in its sole discretion, to fund through imposition of an assessment district or community facilities district for various municipal services and operating expenses associated with Tustin Legacy, including street sweeping, traffic signal maintenance, landscape and park maintenance, lighting, flood and storm drain protection, police and fire protection, ambulance and paramedic services, recreation program services and other services and facilities at Tustin Legacy. 8.15 School Impact Fees. The Developer also acknowledges and agrees that the Developer Parcels are subject to imposition of developer school impact fees by the Tustin Unified School District, may be subject to Measure G approved for the Tustin Unified School District, and may be subject to a future community facilities district for financing of school facilities to benefit the Tustin Unified School District pursuant to an agreement between the City and the Tustin Unified School District. The Developer hereby agrees that it will not oppose a determination by the City or the Tustin Unified School District to form any such district and to include all or any portion of the Developer Parcels therein. 8.16 Effect on Existing Utilities. Notwithstanding any other provision of this Agreement, Developer shall not alter, modify, repair, replace, or relocate (each an "Alteration") any part of the Utility Systems without the prior written consent of the City, which the City shall not unreasonably withhold, provided that it shall be deemed reasonable for the City to withhold its consent to such Alteration if the City determines that such Alteration is disapproved by the Navy, may interfere with the construction and operation of the Project, may negatively impact public health and safety, may negatively impact the logical and orderly future phasing of Tustin Legacy Backbone Infrastructure Work, may interfere with the Navy's operations, including without limitation, Remediation of Hazardous Materials, on the LIFOC Parcels or may interfere with the development or reuse of any portion of MCAS Tustin or negatively affect utility services in the surrounding community. 8.17 Release of Bonds, Deposits, or Letter of Credit. Any Performance Bonds provided to the City as security under this Agreement or any related contract will be released in accordance with standard City rules and procedures upon (a) Completion of the entirety of the work that is the subject of such Performance Bond, and (b) payment in fully of any deficit or outstanding obligation relating thereto. 9. Certificate of Compliance. 9.1 Certificate of Compliance Defined. After (a) Completion of all construction and development required to be undertaken by the Developer in conformity with this Agreement and in accordance with the Schedule of Performance (as such periods may be extended) and (b) satisfaction by Developer of the Conditions Precedent set forth below, in each case to the satisfaction of the City in its sole discretion, the City shall deliver to the Developer or Successor Owner owning fee title a "Final Certificate of Compliance" for the entirety of the Project or, July 12, 2004 -65- Disposition and Development 18405:6390691.8 Agreement for one or more Parcels, but less than the entire Project, a "Partial Certificate of Compliance", upon written request therefor by the Developer or Successor Owner owning fee title. The Conditions Precedent to issuance of a Partial Certificate of Compliance for any Parcel or to issuance of a Final Certificate of Compliance for the Project are set forth in Section 9.5. Each Certificate of Compliance shall be in the form set forth on Attachment No. 15. 9.2 Conclusive Presumption from Certificate of Compliance. Each Certificate of Compliance shall be, and shall so state, conclusive determination of satisfactory completion of the obligations of the Developer pursuant to this Agreement with respect to such Parcel(s). [CHRIS?] 9.3 Release of Bonds. Upon issuance of the applicable Certificate of Compliance, the City shall release the portion of any Performance Bonds for the Improvements covered in their entirety by such Certificate of Compliance. Each Certificate of Compliance shall be in such form as to permit it to be Recorded. 9.4 Not Evidence. Issuance by the City of a Certificate of Compliance shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any insurer of a Mortgage securing money loaned to finance the Improvements, nor any part thereof. Such Certificate of Compliance is not notice of completion as referred to in Section 3093 of the California Civil Code. 9.5 Conditions to Issuance of Certificate of Compliance. 9.5.1 Generally. Upon written request therefor by the Developer, the City shall furnish the Developer with a Final Certificate of Compliance for the Developer Parcels or with respect to particular Parcel(s), a Partial Certificate of Compliance upon satisfaction of the Conditions Precedent set forth in Section 9.5.2. Each Certificate of Compliance shall be, and shall so state, conclusive determination of satisfactory Completion of the Improvements required by this Agreement, and of full compliance with the terms hereof. After the Recording of a Certificate of Compliance, any Person then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Parcel(s) against which such Certificate of Compliance was Recorded shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement with respect to such Improvements, except that such Party shall continue be bound by releases contained in Section 4.4.3, the indemnities, covenants, conditions and restrictions contained in Articles 10 and 12 and the Quitclaim Deed(s) and the Special Restrictions and all other provisions of this Agreement that remain applicable until issuance of a Final Certificate of Compliance. Issuance of the Certificate(s) of Compliance shall not waive any rights or claim that the City may have against any party for latent or patent defects in design, construction or similar matters under any applicable law, nor shall it be evidence of satisfaction of any of the Developer's obligations to others, not a party to this Agreement. Each Certificate of Compliance shall be in such form as to permit it to be Recorded. 9.5.2 Conditions Precedent. The City shall not be obligated to issue the Final Certificate of Compliance for the Project as a whole, or a Partial Certificate of Compliance with respect to any Parcel or the Minimum Project, unless and until each of the following has occurred (the "Conditions Precedent"), provided, however, that no Certificate of Compliance July 12, 2004 -66- Disposition and Development 18405:6390691.8 Agreement shall be issued for any Parcels unless and until a Partial Certificate of Compliance has issued for the Minimum Project: (a) Completion of the Improvements on one or more individual Parcel(s) in accordance with the requirements of this Section 9.5, which in the case of the Minimum Project shall be Completion of 545,000 square feet of development on Developer Fee Parcels A and B and Developer Sublease Parcels A and B and, in the case of all other Improvements, shall be Completion of buildings with the square footages depicted on the final construction drawings comprising a portion of the Approved Project Plans, and in each case otherwise meeting the requirements of the Approved Project Plans and this Agreement; (b) issuance of a certificate of occupancy by the City for each and every Retail Building within the Project or Parcel for which a Certificate of Compliance is sought; (c) with respect to a Partial Certificate of Compliance for the Minimum Project, such Partial Certificate of Compliance shall be issued only upon: (i) Completion of the Minimum Project together with the Completion of Developer's Backbone Infrastructure Work and all Required Horizontal Improvements (ii) issuance by the City of a certificate of occupancy for each and every Retail Building within the Retail Pads comprising the Minimum Project as necessary to meet the minimum square footage requirements for the Minimum Project; provided, however, that variation between maximum authorized square footage on a parcel and square footage actually built per the Approved Project Plans (or a reconfiguration of buildings in the Minimum Project which is approved in the Approved Project Plans) shall not affect issuance of a Certificate of Compliance for the Minimum Project so long as the minimum square footage requirements for the Minimum Project have been satisfied; (d) final inspection of the Project Site or the Parcel(s) on which the Improvements are located by or on behalf of the City and determination by the City that all Vertical Improvements required in connection with the applicable Parcel have been Completed in conformance with this Agreement, including the Approved Project Plans and all Governmental Requirements; (e) final inspection of the Project Site and determination by the City that all Required Horizontal Improvements and all Developer's Backbone Infrastructure Work required in connection with the Project have been Completed in conformance with this Agreement, including the Approved Project Plans and all Governmental Requirements; (f) issuance of a certificate of substantial completion for the Project, the Minimum Project or the Improvements on the Parcel, as applicable, by the Project Architect; (g) release or bonding in accordance with California law of all liens or rights to record liens from the general contractor and all subcontractors having served valid July 12, 2004 -67- Disposition and Development 18405:6390691.8 Agreement preliminary 20-day notices, or the endorsements to their respective Mortgagee's title insurance policies, and the statutory period for filing liens having expired; (h) payment by the Developer to the City of all funds then owing to the City under this Agreement, the Ground Lease, the City Note, the City Deed of Trust and/or the Special Restrictions, including payment of the then-due Project Fair Share Contribution, and as further set forth in Attachment No. 6; (i) with respect to the portion of the Developer Parcels for which a Certificate of Compliance is sought, all Subsequent Closings shall have occurred and the Ground Lease shall have terminated; 0) no Developer Potential Default or Material Default shall have occurred and be continuing and (k) With respect to a Final Certificate of Compliance only following Completion of all Improvements to be Completed upon the Project Site in accordance with the Approved Project Plans, including the square footages depicted for such Improvements on the final construction drawings comprising a portion of the Approved Project Plans, and issuance of a certificate of occupancy by the City for each and every Retail Building within the Project as shown on the Approved Project Plans. 9.5.3 City Obligations. The City shall not unreasonably withhold or delay issuance of any Certificate of Compliance. If the City refuses or fails to issue a Certificate of Compliance after written request from the Developer, provided each of the conditions established in Section 9.5.2 have been satisfied, the City shall within ten (10) Business Days of the written request, provide a written statement which details the reasons the City refused or failed to issue the Certificate of Compliance. The statement shall also contain a statement of the actions that the Developer must take to obtain a Certificate of Compliance. 9.5.4 Effect of Final Certificate of Compliance. Upon Recording of a Final Certificate of Compliance: (a) the DDA shall terminate as to the Developer Parcels and shall be of no further force and effect; (b) any Person then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Certified Parcel(s) shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under the DDA with respect to the Certified Improvements, except that as to the Certified Improvements, the Certified Parcel(s) and all Persons owning, leasing or occupying the Certified Parcel(s) and/or the Certified Improvements, each of the Quitclaim Deeds, the Special Restrictions, the provisions of the Memorandum of DDA which expressly survive the termination of the DDA; the Ground Lease (if then in effect); the CC&Rs, and any and all obligations contained in the Federal Deed and in each quitclaim deed from the Federal Government conveying fee title to a LIFOC Parcel to the City and in the LIFOC ( unless such obligations are released by the Federal Government or the LIFOC is terminated) shall survive the termination of the DDA each in accordance with its terms July 12, 2004 -68- Disposition and Development 18405:6390691.8 Agreement (except that general references to compliance with the DDA shall not affect the termination of the DDA) in perpetuity unless a shorter time period is indicated therein; and (c) the documents and provisions specified in clause N above shall not merge with any deed or any transfer of any portion of the Developer Parcel, and shall survive the issuance of the Certificate of Compliance. 9.5.5 Effect of Partial Certificate of Compliance. A Partial Certificate of Compliance shall have the effects set forth in this Article 9 and other applicable provisions of the DDA, and the City shall have no further proprietary right of review of design pursuant to Section 8_6 of the DDA as to any Parcel for which a Partial Certificate of Compliance shall have been issued. 10. Indemnification and Environmental Provisions. 10.1 Developer's Indemnification. As a material part of the consideration for this Agreement, and to the maximum extent permitted by law, the Developer shall indemnify, protect, defend, assume all responsibility for and hold harmless the City and its appointed and elected officials, agents, attorneys, affiliates, employees, contractors and representatives (the "City Indemnified Parties") and, with respect to the LIFOC Parcels only, the Federal Government and its appointed and elected officials, agents, attorneys, affiliates, employees, contractors and representatives (collectively, with the City Indemnified Parties, the "Indemnified Parties"), with counsel reasonably acceptable to the City, from and against any and all Claims including environmental Claims resulting or arising from or in any way connected with the following, provided the Developer shall not be responsible for (and such indemnity shall not apply to) the gross negligence or willful misconduct of the Indemnified Parties: (a) The Developer's marketing, sale, lease or use of the Developer Parcels in any way; (b) All acts and omissions of Developer in connection with the Project, the Project Site, the Property, or any portion of any of the foregoing; (c) Any plans or designs for Improvements prepared by or on behalf of the Developer, including any errors or omissions with respect to such plans or designs; (d) Any loss or damage to the City resulting from any inaccuracy in or breach of any representation or warranty of the Developer, or resulting from any breach or default by the Developer, under this Agreement; and (e) Any development or construction of any Horizontal Improvements and/or Vertical Improvements by the Developer, whether regarding the quality, adequacy or suitability of the plans, any labor, service, equipment or material furnished to the Developer Parcels, any person furnishing the same, or otherwise. July 12, 2004 -69- Disposition and Development 18405:6390691.8 Agreement 10.2 Environmental Indemnity. 10.2.1 Developer Indemnity. As a material part of the consideration for this Agreement, and effective as to each of the Developer Parcels and the Property, upon the Developer's acquisition of fee and/or leasehold interest to all or any portion thereof, the Developer on behalf of itself and Successor Owners and each and every Person claiming by, through or under Developer or any Successor Owner, hereby agrees that Developer and each Successor Owner shall, to the maximum extent permitted by law, indemnify, protect, defend, assume all responsibility for and hold harmless the Indemnified Parties from and against any and all Claims resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to any portion or portions of said lands, regardless whether any such condition is known or unknown now or upon acquisition and regardless whether any such condition pre-exists acquisition or is subsequently caused, created or occurring, provided, however, that neither the Developer nor any Successor Owner shall be responsible for (and such indemnity shall not apply to) to the gross negligence or willful misconduct of the Indemnified Parties. This environmental indemnity shall run with the land, shall be included in each Quitclaim Deed, the Special Restrictions, the Ground Lease and the Memorandum of Ground Lease and shall be binding upon Developer and Successor Owners; provided, however, that such indemnity shall not be binding upon Tenants under Retail Space Leases or Minor Pad Transferees who are End Users or upon Major Pad Transferees who are End Users and are released from such indemnity obligation pursuant to a City Non -Disturbance and Attomment Agreement entered into pursuant to Section 2.2. 10.2.2 Pad Transferee and Retail Space Tenant Indemnity. As a material part of the consideration for this Agreement, and effective as to each of Developer Parcels and the Property, Developer, on behalf of itself and Successor Owners and each and every Person claiming by, through or under Developer or any Successor Owner, hereby agrees that Developer and each Successor Owner shall include the following indemnity in favor of the Indemnified Parties in each Retail Space Lease and in each deed and/or ground lease effecting a Pad Transfer (and incorporating the defined terms required to interpret the following provision): "[Each Pad Transferee/Tenant] on behalf of itself and each and every Person claiming by, through or under [Pad Transferee/Tenant], including without limitation, successors and assigns of such [Pad Transferee/Tenant] owning or leasing all or any portion of [defined premises] to the maximum extent permitted by law, shall indemnify, protect, defend, assume all responsibility for and hold harmless the City and its appointed and elect officials, agents, attorneys, affiliates, employees, contractors and from and against any and all Claims resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to or occurring on or about any portion or portions of the [defined premises] caused or created by such [Pad Transferee/Tenant] or its officers, directors, members, partners, agents, affiliates, employees, contractors, consultants or representatives, or with respect to pre-existing July 12, 2004 -70- Disposition and Development 18405:6390691.8 Agreement conditions, exacerbated by negligent act or omission of any of the foregoing (but with respect to such exacerbation, only to the extent of the exacerbation)." 10.3 Duration of Indemnities. The indemnities set forth in this Article 10 shall survive the Initial Close of Escrow, the Subsequent Closings and the termination of this Agreement and shall not merge into any Quitclaim Deed or the Ground Lease. 10.4 Claim Response. In the event that any Environmental Agency or other third party brings, makes, alleges, or asserts a Claim, arising from or related to any actual, threatened, or suspected Release of Hazardous Materials on or about the Developer Parcels, including any Claim for Investigation or Remediation on or about the Developer Parcels, or such Environmental Agency or other third party orders, demands, or otherwise requires that any Investigation or Remediation be conducted on or about the Developer Parcels, the Developer shall promptly upon its receipt of notice thereof, notify the City in writing and hereafter shall promptly and responsibly respond to such Claim. Further, upon receipt of such Claim, order, demand or requirement, the Developer shall (a) take such reasonable measures, as necessary or appropriate, to reasonably dissuade such Environmental Agency or other third party from bringing, making, alleging, or asserting any Claim against the City arising from or related to any actual, threatened, or suspected Release of Hazardous Material on or about the Developer Parcels, including any Claim for Investigation or Remediation on or about the Developer Parcels, and (b) request that the Environmental Agency not issue any order, demand, or requirement to the City under any of the Environmental Laws, or any other local, regional, State or federal law, or seek penalties or take other punitive action against the City, in connection with, arising from, or related to any actual, threatened, or suspected Release of Hazardous Material on or about the Developer Parcels, including any Investigation or Remediation on or about the Developer Parcels. 10.5 Release Notification and Remedial Actions. If any Release of a Hazardous Material is discovered on or about the Developer Parcels and regardless of the cause, -the Developer shall promptly (a) provide written notice (or in the event of emergency, telephonic notice, followed by written notice) of any such Release to the City and the Navy and (b) at Developer's sole risk and expense and solely under the name of the Developer (but without prejudice to the Developer's or the City's rights against any responsible party or against the Federal Government pursuant to Section 330, Fiscal Year 1993, National Defense Authorization Act Public Law 102-484 or against any environmental insurer): (i) remove, treat, and dispose of the released Hazardous Material on the Developer Parcels in compliance with and to the extent required by each and every applicable Environmental Law, or if such removal is prohibited by any Environmental Laws, take whatever action is required by any Environmental Law; (ii) take such other action as is necessary to have the full use and benefit of the Developer Parcels as contemplated by this Agreement; and (iii) provide the City and the Navy with satisfactory evidence of the actions taken as required in this Section. The Developer shall provide to the City, within thirty (30) calendar days of the City's request therefor, a bond, letter of credit, evidence of environmental insurance meeting the requirements of Section 11. 1.4 and applicable to the required action or other financial assurance evidencing to the City's satisfaction that all necessary funds are readily available to pay the costs and expenses of the actions required by this Section and to discharge any assessments or liens established against the Project Site as a result July 12, 2004 -71- Disposition and Development 18405:6390691.8 Agreement of the presence of the Hazardous Material Release on or about the Developer Parcels. The City and Developer will coordinate any response action with appropriate environmental insurance carriers. Nothing set forth herein requires Developer to perform an obligation of the Federal Government. An obligation of the Federal Government shall not include any purported obligation for which the Federal Government has denied responsibility in writing. 11. Insurance. 11.1 Required Insurance. Without limiting the City's rights to indemnification, the Developer shall procure and maintain, at its own cost and expense, and furnish or cause to be furnished to the City, evidence of the following policies of insurance naming the Developer as insured and, except for automobile insurance and Workers' Compensation insurance, the City as additional insureds. All such insurance shall be kept in force with respect to each Developer Parcel until the Completion with respect to such Developer Parcel. 11.1.1 Liability Insurance. Commencing upon the Initial Close of Escrow, the Developer shall maintain or cause to be maintained commercial general liability insurance, to protect against loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever on or about the Developer Parcels or the Project Site and the business of the Developer on the Project Site, or in connection with the operation thereof, resulting directly or indirectly from any acts or activities of the Developer or anyone directly or indirectly employed or contracted with or acting for the Developer, or under its respective control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person occurring on or about the Developer Parcels or related to the Project Site and the business of the Developer on the Project Site, or in connection with the operation thereof, caused directly or indirectly by or from acts or activities of the Developer or any Person acting for the Developer, or under its control or direction. Such insurance shall also provide for and protect the City against incurring any legal cost in defending claims for alleged loss. Such insurance shall be maintained in full force and effect until issuance of a Final Certificate of Compliance for the Project and so long thereafter as necessary to cover any claims of damages suffered by persons or property prior to issuance of a Final Certificate of Compliance for the Project, resulting from any acts or omissions of the Developer, the Developer's employees, agents, contractors, suppliers, consultants or other related parties. The amount of insurance required hereunder shall include comprehensive general liability, personal injury and automobile liability with limits of at least Five Million Dollars ($5,000,000.00) combined single limit per occurrence. The insurance shall be issued by a company authorized by the Insurance Department of the State of California and rated A -VII or better (if an admitted carrier) or A -X (if offered, by a surplus line broker), by the latest edition of Best's Key Rating Guide, except that the City will accept workers' compensation insurance rated B -VIII or better or from the State Compensation Fund. Subject to the prior approval of the City attorney and City risk manager, such insurance may be provided by an umbrella insurance policy otherwise meeting the requirements of this Article 11. A City or Accord certificate evidencing the foregoing and designating the City, the Tustin Community Redevelopment Agency, the Tustin Public Financing Authority and, as to the LIFOC Parcels only, the Navy, as additional named insureds shall be delivered to and approved by the City as a condition to Initial Close of Escrow. The procuring of such insurance and the July 12, 2004 -72 Disposition and Development 18405:6390691.8 Agreement delivery of policies or certificates evidencing the same shall not be construed as a limitation of Developer's obligation to indemnify the City, its consultants, officers and employees. The insurance certificate shall name the City and its elected and appointed officials, agents, representatives and employees as additional insureds under the policy. The certificate shall contain a statement of obligation on the part of the carrier to notify the City of any cancellation or termination of the coverage at least thirty (30) calendar days in advance of the effective date of any such cancellation or termination. Coverage provided hereunder by the Developer shall be primary to, and not contribute with any insurance or self-insurance maintained by the City, and the policy shall contain such an endorsement. The insurance policy, by endorsement, shall contain a waiver of subrogation for the benefit of the City, and this fact shall be set forth also on the certificate. 11. 1.2 Workers' Compensation Insurance. Commencing upon the Initial Close of Escrow, the Developer shall obtain, and thereafter maintain or cause to be maintained, workers' compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the workers' compensation laws now in force in California,. or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such workers' compensation insurance shall cover all persons employed by the Developer in connection with the Project and shall cover liability within statutory limits for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with the Project or the operation thereof by the Developer. Notwithstanding the foregoing, the Developer may, in compliance with the laws of the State of California and in lieu of maintaining such insurance, self -insure for workers' compensation in which event the Developer shall deliver to the City evidence that such self-insurance has been approved by the appropriate State authorities. The Developer shall also furnished (or cause to be furnished) to the City evidence satisfactory to the City that any contractor with whom it has contracted for performance of work on the Developer Parcels or otherwise pursuant to this Agreement carries workers' compensation insurance required by law. 11.1.3 Property Insurance. Commencing upon the Initial Close of Escrow, the Developer shall obtain, and thereafter maintain or cause to be maintained, for all buildings, a policy or policies of insurance against loss or damage to the Developer Parcels and the Improvements thereon and all property of an insurable nature located upon the Developer Parcels, resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in special clauses of property loss coverage form policies for the full replacement value of the Improvements, including builder's risk coverage meeting the foregoing requirements during the pendency of any construction on the Developer Parcels. Such insurance shall be maintained in an amount not less than one hundred percent (100%) of the full insurable value of the Improvements on the Developer Parcels. 11. 1.4 Environmental Insurance. From and after the Initial Close of Escrow, the Developer shall have obtained and shall thereafter maintain environmental insurance in accordance with one of the following clauses a and/or, in its discretion: (a) become additional named insured on the pollution legal liability policy issued to the City by Indian Harbor Insurance Company (Policy Number PEC0010756) July 12, 2004 -73- Disposition and Development 18405:6390691.8 Agreement (the "City's Environmental Insurance Policy"), a copy of which has been delivered to the Developer, but solely with respect to the Developer Parcels and subject to the following: (i) the limitation on liability for loss, remediation expense and legal defense with respect to the Developer Parcels shall be Five Million Dollars ($5,000,000.00); (ii) Developer shall pay all deductibles/self insured retention amounts for any claim or Developer first party loss for which the insurance applies associated with any of the Developer Parcels and due or payable under the City's Environmental Insurance Policy unless the claimed loss, remediation expense or legal defense expense is due solely to the willful misconduct of the City; (iii) Developer shall have paid to the City by separate check on or before the Initial Closing Date Seventy -Five Thousand Eight Hundred Twenty Dollars ($75,820.00) to the City as pro rata reimbursement to the City of its expenditures in purchasing the City's Environmental Insurance Policy; provided that if Developer elects to become an additional named insured on the City's Environmental Insurance Policy, City shall have no obligation to enter into any City Non -Disturbance and Attornment Agreement with any third party unless and until Developer provides an extension to the City's Environmental Insurance Policy as to the Developer Parcels or a new environmental insurance policy as to the Developer Parcels meeting the requirements of Section 11.1.4(b) commencing no later than the termination date of the City's Environmental Insurance Policy and with a term expiring no earlier than the tenth (10th) anniversary of the Initial Closing; or (b) obtain its own pollution legal liability insurance coverage for the Developer Parcels, including coverage for loss, remediation expense and defense expenses, and naming the City as an additional insured to address pollution risks at the Developer Parcels. Such policy shall comply with the following: (i) the policy shall be written by the insurance company selected by the Developer and reasonably approved by the City; (ii) the policy shall provide no less than Five Million Dollars ($5,000,000.00) in coverage, subject to a maximum Two Hundred Thousand and No/100 Dollars ($200,000.00) deductible per claim, to protect against claims and loss from liability relating to known and unknown conditions on the Developer Parcels for no less than a 10 -year term from the Initial Closing Date with an extended 5 -year reporting period, including this Agreement and the Special Restrictions as covered contracts and containing coverage substantially equivalent to that provided by the City's Environmental Insurance Policy, in form and content acceptable to the City; (iii) to the extent that Developer elects to obtain its own pollution legal liability insurance coverage and decides not to be named as additional named insured on the City's policy, the Developer's policy shall (1) name, as additional named insureds, the City, the Tustin Community Redevelopment Agency and the Tustin Public Financing Authority, (2) be paid for in full by the Developer at the time of issuance and (3) shall be endorsed as non -cancelable by the Developer without the written consent of the City in its sole discretion to such cancellation; and (iv) the policy shall be written to indicate that the City's Environmental Insurance Policy is primary with respect to overlapping coverage and, if issued July 12, 2004 -74- Disposition and Development 18405:6390691.8 Agreement by the same insurer which issued the City's Environmental Insurance Policy, that there is no "stacking of limits" with the City's Environmental Insurance Policy. Nothing in this Agreement precludes Developer from obtaining additional environmental insurance in the event it decides to be named as additional named insured on the City's Environmental Insurance Policy with such terms and provisions subject to Developer's sole discretion. 11.2 General Insurance Requirements. 11.2.1 Cancellation; Additional Insureds. All policies or certificates of insurance shall provide that such policies shall not be canceled, reduced in coverage or limited in any manner without at least thirty (30) calendar days prior written notice to the City. Any liability insurance policy (other than automobile or workers' compensation policies) shall name the City as an additional insured. 11.2.2 Full Insurable Value. The term "full insurable value" as used in this Article 11 shall mean the cost determined by mutual agreement of the City and the Developer (excluding the cost of excavation, foundation and footings below the lowest floor and without deduction for depreciation) of providing similar Improvements of equal size and providing the same habitability as the Improvements immediately before such casualty or other loss, but using readily -available contemporary components, including the cost of construction, architectural and engineering fees, and inspection and supervision. 11.2.3 Additional Requirements. All insurance provided under this Article 11 shall be for the benefit of the Developer and the City. The Developer agrees to timely pay all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance. The Developer agrees to submit binders or certificates evidencing such insurance to the City on the City's standard form prior to the Initial Close of Escrow. Within thirty (30) calendar days, if practicable, but in any event prior to expiration of any such policy, copies of renewal policies, or certificates evidencing the existence thereof, shall be submitted to the City. All insurance provided for under this Article 11 shall be provided by insurers licensed to do business in the State of California and with a Best's rating of A -VII or better, with the exception of the pollution legal liability policy, which rating and licensing location shall be as approved by the City. 11.2.4 Self -Help. If the Developer fails or refuses to procure and maintain insurance as required by this Agreement, the City shall have the right, at the City's election, and upon ten (10) calendar days prior notice to the Developer, to procure and maintain such insurance. The premiums paid by the City shall be treated as a loan, due from the Developer, to be paid on the first calendar day of the month following the date on which the premiums were paid. The City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). July 12, 2004 -75- Disposition and Development 18405:6390691.8 Agreement 12. Covenants, Conditions and Restrictions. The following covenants, conditions and restrictions shall run with the land for the period set forth in each case below and shall be binding upon Developer and each Successor Owner, and upon each and every Person claiming by, through or under Developer or any Successor Owner, for the benefit of the City Benefited Parcels and the City and all governmental successors and governmental assigns of the City owning all or any portion of the City Benefited Property. 12.1 Use Covenants. 12.1.1 Restrictions. The Developer covenants and agrees for itself, and each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, that: (a) The Developer Parcels and each part thereof shall be utilized only for lawful retail uses typical for a Class A Shopping Center and containing only Preapproved Users, other Class A Users and other incidental uses typically located in a Class A Shopping Center (including entertainment, restaurant food services, theaters and sale of goods, products and services to customers) and including up to two fast food drive-through restaurants, in each case subject to approval by the City in its Governmental Capacity with respect to uses requiring City permit approval under the City Code; provided, however, that unless otherwise agreed by the City (acting in its Proprietary Capacity) in its sole discretion and approved by the City in its Governmental Capacity if required by the City Code (i) no additional fast food drive-through restaurants or drive-through service establishments may be located on the Developer Parcels, and (ii) additional fast food restaurants without drive-through service shall not be located on Minor Pads, on Lot 12 or on Lots 18 through 29 as shown on the Preliminary Plans. (b) Neither Developer nor any Successor Owner, nor any person claiming by, through or under Developer or any Successor Owner, including any End User, shall (i) use the Parcels or any portion thereof for any Prohibited Use, or (ii) Transfer or Lease the Parcels or any portion thereof to any Prohibited User. (c) Each End User shall be a Class A User. (d) All End Users shall be subject to this Agreement, the CC&Rs and the Special Restrictions. The covenants in this Section 12. 1.1 shall remain in force and effect until the date which is the thirtieth (30th) anniversary of the Recording of the Final Certificate of Compliance. 12.1.2 Further Restriction on Lease Parcels. Prior to the Subsequent Closing with respect thereto, Tenant shall not utilize any Lease Parcel or any portion of the Lease Property for economic purposes or to generate economic returns, provided that nothing in the foregoing shall preclude Tenant from utilizing any Lease Parcel for parking, landscaping and special event purposes, without charge therefor, subject to compliance with this Agreement, the Special Restrictions, the CC&Rs and all applicable laws or ordinances. July 12, 2004 -76- Disposition and Development 18405:6390691.8 Agreement ........... ___ T 12.2 Notification and Approval of End Users. Without limiting the generality of the foregoing and, in order to assist the City in enforcing the use covenants set forth in Section 12.1, Developer hereby covenants and agrees on behalf of itself and Successor Owners and each and every Person claiming by, through or under Developer or any Successor Owner as follows: (a) Prior to the Initial Lease -Up Date for each Retail Building, the City shall have the right to approve in its reasonable discretion, Major End Users which are not identified as Preapproved Users on Attachment No. 13; (b) Following the Initial Lease -Up Date for each Retail Building, the City shall have no approval rights with respect to End Users except as set forth in Section 12.2(c); and (c) Developer shall provide the City with written notice of the identity of each End User and the intended operational location of such End User at least fifteen (15) Business Days prior to Lease execution in order to permit the City to confirm that the covenants set forth in Sections 12.1 and 12.2 have not been violated. In addition, with respect to any Lease for which City consent is required, Developer shall provide to the City, within such time period, such additional information as the City may reasonably require in order to provide its informed consent. In the event the City determines in its reasonable discretion that any proposed End User would violate the use covenants set forth in Section 12.1 or 12.2 and the City provides Developer with written notice of its determination on or before the date which is ten (10) Business Days following its receipt of such notice, the Developer shall be prohibited from entering into a Lease with such End User. (d) Nothing in this Agreement shall (i) prohibit the City, in its sole discretion from approving an End User which is not a Class A User provided that such End User is consistent with the character of a Class A Shopping Center or (ii) obligate the City to exercise its approval or enforcement rights with respect to the use covenants set forth herein, for the benefit of the City or any third parties. 12.3 Maintenance Covenant. 12.3.1 Maintenance Standards. Developer, on behalf of itself and each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, hereby covenants and agrees, from and after the Initial Close of Escrow, to maintain the Developer Parcels in the same aesthetic and sound condition (or better) as the condition of the Property at the time of the transfer of the Property to the Developer and consistent with the following requirements: (a) From the date of commencement of construction until issuance of a Partial or Final Certificate of Compliance for any Parcel, the Developer and its successors and assigns shall maintain the Improvements under construction on such Parcel consistent with best construction industry practice. (b) Upon Completion of all or any portion of the Improvements, the Developer, its successors and assigns shall maintain the Improvements in the same aesthetic and sound condition or better as the condition of such Improvements at the time the City issues a July 12, 2004 -77- Disposition and Development 18405:6390691.8 Agreement Partial of Final Certificate of Compliance, excepting only reasonable wear and tear and replacement of Improvements following casualties, such replacement to be consistent with this Agreement and subject to all applicable City approvals and review. The standard for the quality of maintenance of the Improvements required by this Section 12.3.1(b) shall be met whether or not a specific item of maintenance is listed below. However, representative items of maintenance shall include: (i) maintenance, repair and replacement on a regular schedule, consistent with like Class A Shopping Centers in Orange County, of private streets, roads, drives, bike paths, alleyways, sidewalks, utilities (except to the extent owned or controlled by a utility franchisee), common areas, landscaping, hardscaping and fountains; (ii) frequent and regular inspection for graffiti or damage or deterioration or failure, and immediate repainting or repair or replacement of all surfaces, fencing, walls, equipment, etc., as necessary; (iii) emptying of trash receptacles and removal of litter; (iv) regular sweeping of roadways and sidewalks throughout the Developer Parcels; (v) fertilizing, irrigating, trimming and replacing vegetation as necessary; (vi) cleaning windows on a regular basis; (vi) painting the buildings on a regular program and prior to the deterioration of the painted surfaces; (vii) conducting roof inspections on a regular basis and maintaining roofs in a leak -free and weather -tight condition. (c) In the event the Developer or any Successor Owner fails to maintain the Improvements in accordance with the standard for the quality of maintenance, the City or its designee shall have the right but not the obligation to enter the Developer Parcels upon reasonable notice to the Developer or its successor or assigns, correct any violation, and hold the Developer, or such Successor Owner, responsible for the cost thereof, and such cost, until paid, shall constitute a lien on the applicable Parcel. (d) Maintenance responsibilities shall be vested in one entity for all the Developer Parcels; provided, however, that the Developer shall have the right (i) to assign its maintenance responsibilities under this Agreement (x) to a Transferee of Developer's interest as "Developer" under this DDA and the Special Restrictions pursuant to Transfer meeting the requirements of Section 2.2, or (y) to a Development Association to be created through the CC&Rs, upon which assignment the Developer shall have no further liability under this Section 12.3 or (ii) to subcontract its maintenance responsibilities under this agreement to such Development Association or an Affiliate of Developer or a first class property management company, provided that such subcontracting shall not relieve the Developer of any liability for its obligations under this Section 12.3. 12.3.2 Duration of Covenants. The covenants in Section 12.3.1 shall remain in full force and effect for fifty (50) years unless released at an earlier date by the City in writing. 12.4 Subsequent Participation. 12.4.1 Subsequent Participation Obligation. tom. The Developer hereby covenants and agrees on behalf of itself and each Person, including each Successor Owner, receiving the Percentage Rent to pay to the City the Subsequent Participation, commencing on the Subsequent Participation Trigger Date for each Retail Building and continuing for twenty (20) years thereafter with respect to each such Retail Building; provided, however, that no Subsequent Participation shall be payable by an End User unaffiliated with the Developer which subleases or contracts with a concessionaire or sublessee who pays the End User a portion of the sales July 12, 2004 -78- Disposition and Development 18405:6390691.8 Agreement revenues received from the goods of such concessionaire or sublessee; provided, that the sales revenues of such concessionaire or sublessee shall be counted as sales of the End User for purposes of calculating any percentage rent obligation of the End User. The obligation to pay the Subsequent Participation shall be set forth in the Special Restrictions, and shall run with and bind each Parcel for such twenty (20) year period as more fully set forth therein. Without the prior written consent of the City in its sole discretion, Developer shall not forgive, waive, or alter any past -due rental obligation under any Lease in a manner that would negatively affect the amount of the Subsequent Participation that would be owed to the City if such rent were paid, or the City's rights with respect thereto. (a) "Subsequent Participation" shall mean an amount equal to twenty-five percent (25%) of the Percentage Rent paid under all Leases in which all or a portion of the rental is Percentage Rent, provided that: (i) for any Lease in which Percentage Rent is the only rental to be paid, the Subsequent Participation shall be an amount equal to twenty -rive percent (25%) of the excess, if any, of (x) the annual rental paid under such Lease in each full calendar year commencing with the second calendar year after the Lease commencement date over (y) the total rental paid in the first full calendar year following such Lease commencement date, and (ii) for any Lease in which a base rental provision is suspended as a result of a occurrence of a condition subsequent (such as the closure of an unrelated anchor retailer), the Subsequent Participation shall be an amount equal to twenty -rive percent (25%) of the excess, if any, of (x) the annual rental paid under such Lease in each lease year that the occurrence continues less (y) the base rental amount which would have been due under such Lease in the absence of the occurrence of the condition subsequent. (b) "Percentage Rent" shall mean all rental charged by or payable to Developer or any Successor Owner, whether directly or through an Affiliate, management company or other intermediary, under any Retail Space Lease, that is based upon a percent or ratio of net or gross sales within such Retail Space, as the same may be more fully detailed in a given Lease, and shall not include any base rental rate. (c) "Subsequent Participation Trigger Date" shall mean with respect to each Retail Building, the date that is one (1) year following the date of issuance of the first temporary certificate of occupancy by the City for a Retail Space within such building. 12.4.2 Annual Statement and Payment of Subsequent Participation. All Subsequent Participation shall be paid lump sum in arrears for the preceding twelve-month period. On or before May 31 following the Subsequent Participation Trigger Date and each May 31 thereafter, Developer shall submit to the City the Subsequent Participation due for the previous calendar year, together with a detailed annual accounting statement setting forth the annual rental for each Tenant, the amount of rent and the amount of Percentage Rent charged each Tenant, and Developer's computation of the annual Subsequent Participation due by Developer based on such Percentage Rent or other rental, if any. All payments due and owing shall be payable to the City of Tustin and delivered to the City of Tustin Finance Director at 300 Centennial Way, Tustin, California, 92780, or to such third party and/or at such other place July 12, 2004 -79- Disposition and Development 1840.5:6390691.8 Agreement as the City may designate in writing from time to time. If any Subsequent Participation payment or any part thereof to be made by Developer to City pursuant to this Agreement shall be overdue for more than ten (10) calendar days, Developer shall pay to City, in additional to all principal amounts due, interest from the date of such payment or part thereof was due until the date paid at the Default Rate. 12.4.3 Right of Inspection and Audit of Records. (a) Developer and each Successor Owner shall keep full and accurate accounts, records and other pertinent data showing the financial, operations of the shopping center and directly related to the calculation of the percentage rent revenues. Such records shall be kept on the basis of sound accounting principles applied on a consistent basis. Such records shall be kept for a period of three (3) years after the end of the calendar year to which such records pertain. The City shall be entitled to inspect, examine and copy, at Developer's or Successor Owner's expense for such copying, as applicable, the records pertaining to the applicable calendar year as is necessary or appropriate for the purpose of monitoring the Subsequent Participation payments, provided that such inspection, examination and copying shall be upon five (5) Business Days prior notice to Developer or Successor Owner (as applicable, the "Audited Owner"). Such inspection, examination and copying shall be made at such time and place as the Audited Owner may reasonably designate, provided that the designated place must be at an office located in Orange County or Los Angeles County, California. The Audited Owner shall cooperate fully with City in making the inspection. (b) In the event of a dispute between the Audited Owner and the City regarding the calculations of a given payment of Subsequent Participation, the City or its designated agent shall have the right to audit the records for the purpose of verifying the amount of Subsequent Participation and of Subsequent Participation payments, subject to the following terms and conditions: (i) The City shall have the right to make such audit, not more than once for any calendar year within three (3) years following the later of receipt of the applicable annual statement and/or payment of Subsequent Participation associated with such statement; (ii) The City shall give the Audited Owner at least fifteen (15) calendar days written notice of City's desire to conduct such audit, and such audit shall be made during normal business hours at the Project Site, or at such other such time and place as the Audited Owner may reasonably designate; (iii) Such audit shall be limited to the records (including Retail Space Leases) reasonably necessary, in the City auditors' reasonably determination, to perform the calculation of and analyze the payment of the Subsequent Participation; (iv) Such audit shall be performed by an independent Certified Public Accountant (not being compensated on a contingent basis) or by the City's Finance Department, using generally acceptable accounting procedures consistently applied; and July 12, 2004 -80- Disposition and Development 18405:6390691.8 Agreement (v) City hereby agrees that except as may be required by law or to pursue remedies against the Audited Owner under this Agreement and/or the Special Restrictions, (1) neither the City nor its agents or auditors shall disclose or use the information contained in the records for any purpose other than for audit purposes or enforcement of City's rights regarding the Subsequent Participation as permitted in this Agreement and/or the Special Restrictions, and (2) City, its agents or its auditors shall keep such records, or copies thereof, confidential and shall take all steps reasonably necessary to assert and enforce such confidentiality without prejudice to the Audited Owner's rights under this Agreement or the Special Restrictions. (c) If City has not requested an audit for a particular calendar year within the time periods specified for record retention in clause a above, then the City shall be deemed to have waived its right to audit the records for such calendar year, or to any adjustment of the Subsequent Participation payment for such calendar year, and the facts contained in the annual statement for such calendar year shall be conclusive and binding on Developer or Successor Owner, as applicable, and City. (d) If it is properly determined by audit that any statement of Subsequent Participation was not accurate and/or that additional sums are owed by any Audited Owner to the City, the Audited Owner shall promptly, and in no event later than (30) calendar days after written demand therefor, provide the City with a corrected statement and pay to the City such sums as are necessary to correct the underpayment together with interest thereon calculated from the original due date at the Default Rate. In addition, if after audit, the City determines that the amount of the Subsequent Participation or the payment obligation of the Audited Owner with respect thereto in any calendar year was understated by three percent (3%) or more of the amount actually due for the calendar year, or such party had underpaid the City by three percent (3%) or more of the amount actually due for the audit period, then the Audited Owner shall pay to the City the cost of such audit. If is properly determined by audit that the City has been overpaid by any Audited Owner, such Audited Owner shall be entitled to credit the amount of the overpayment, without interest, against subsequent payments of Subsequent Participation due from such Audited Owner to City. (e) If any Audited Owner disputes the audit obtained by the City and within 30 calendar days after its receipt of the audit provides written notice of such dispute to the 'City, the City shall, at such Audited Owner's sole cost and expense, retain a "Big 4" accounting firm of its choice to review and approve or disapprove (with specific corrections) the original audit. As a condition precedent to City's retention of a "Big 4" accounting firm, the Auditing Owner shall provide City with a cash deposit for the cost of such review audit equal to the then - estimated fee plus a contingency of 25% of such fee. The determination of the "Big 4" accounting firm shall be final. 12.4.4 No Interest in Project. The City's entitlement to receive the Subsequent Participation as set forth herein does not confer upon the City any proprietary or other interest in the Property or the Project. July 12, 2004 -81- Disposition and Development 18405:6390691.8 Agreement 12.5 Non -Discrimination and Equal Opportunity. 12.5.1 Federal Deed. The Developer covenants and agrees, for itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, that (a) it shall not discriminate against any employee or applicant for employment on any basis prohibited by law and (b) it has received, read, understands and agrees to be bound with respect to the entirety of the Project and by the non-discrimination covenant contained in the Federal Deed between the Federal Government, as GRANTOR, and the City, as GRANTEE, which states as follows: "Non -Discrimination. GRANTEE covenants for itself, its successors and assigns, that it will comply with all applicable provisions of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act of 1975 in the use, occupancy, sale or lease of the Property. The foregoing shall not be construed to prohibit the operation of federal or state approved programs focusing on the special needs of the homeless, veterans, victims of domestic violence and other classes of persons at risk; nor shall it be construed to prohibit employment practices not otherwise prohibited by law. The GRANTOR shall be deemed a beneficiary of this covenant without regard to whether it remains the owner of any land or interest therein in the locality of the Property hereby conveyed and shall have the sole right to enforce this covenant in any court of competent jurisdiction." 12.5.2 Equal Opportunity. The Developer shall provide equal opportunity in all employment practices. 12.6 Obligation to Refrain from Discrimination. The Developer covenants and agrees for itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, that: (a) There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Developer Parcels or in development of the Project, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Developer Parcels or in development of the Project; (b) No Person shall restrict the sale or Transfer of the Developer Parcels or any portion thereof on the basis of the race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry of any person; and July 12, 2004 -82- Disposition and Development 18405:6390691.8 Agreement (c) All deeds, leases or contracts shall contain or be subject to substantially the following non-discrimination or non -segregation clauses: (i) In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and each and every Person claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (ii) In leases: "The lessee herein covenants by and for itself, its successors and assigns, and each and every Person claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased." (iii) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land." 12.7 Deed Restrictions/Covenants Running with the Land. 12.7.1 Covenants Running With Land. The obligations of the Developer set forth in this Agreement shall be covenants running with the land, shall be set forth in the Special Restrictions, Quitclaim Deeds and, if applicable, the Ground Lease, and shall be binding upon the Developer, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner for the benefit of the City Benefited Property and the City and all governmental successors and governmental assigns of the City owning all or any portion of the City Benefited Property in perpetuity unless specifically released in accordance with the terms in this Agreement, the Special Restrictions, the Quitclaim Deeds or the Ground Lease. Each Quitclaim Deed shall provide that any future transfer or conveyance of the Developer Parcels or any portion thereof shall include notice of the covenants, conditions and restrictions contained in this Agreement and the Special Restrictions and in addition shall include those disclosures and environmental covenants contained in the Federal Deed or in subsequent July 12, 2004 -83- Disposition and Development 18405:6390691.8 Agreement quitclaim deeds by the Federal Government with respect to the LIFOC Parcels, as applicable. Each Quitclaim Deed shall convey the Developer Parcels described therein, subject to reservations, covenants and restrictions as set forth in the Federal Documents, this Agreement, the Special Restrictions, the CC&Rs, the Permitted Exceptions, and any other matters specifically agreed to by the Developer in writing or which the Developer is deemed to have accepted. 12.7.2 Special Restrictions. To effectuate this Article 12 and the provisions of Article 13 with respect to the Developer Parcels, concurrently with and as a condition of the Initial Close of Escrow and each Subsequent Closing the Developer and the City shall execute and cause the Recording of the Special Restrictions, which shall include all provisions set forth in this Article 12, the City's Right of Purchase set forth in Section 13.4, the Right of Reversion set forth in Section 13.5, the release set forth in Section 4.4, the provisions of Article 10 and such other restrictions or covenants running with the land set forth in this Agreement as the City may deem necessary or appropriate to carry out this Agreement and the Ground Lease. This Agreement, the Special Restrictions, the Memorandum of DDA, the Ground Lease, the Memorandum of Ground Lease, the Right of Reversion and the CC&Rs shall be superior in priority to all Mortgages, and the City Deed of Trust shall be superior in priority to all Mortgages on Developer Fee Parcel B other than the Developer Fee Parcel B Permitted Mortgage as described in Section 15.2(a). 13. Potential and Material Defaults. 13.1 Potential Defaults. Except as otherwise provided in this Agreement, it shall be a "Potential Default" if a party (the "Defaulting Party"): (a) fails to pay timely any sum required to be paid by the Defaulting Party pursuant to this Agreement, the Special Restrictions and/or the Ground Lease; or (b) fails to perform any obligation required to be performed by the Defaulting Party under Section 7.7, except to the degree caused by the other Party's failure to perform under Section 7.7; or (c) fails to perform, or delays in the performance of, in whole or in part, any obligation required to be performed by the Defaulting Party as provided in this Agreement (including failure to perform within the time periods for performance set forth in this Agreement), other than as set forth in clauses (a) or (b) above. The other Party (the "Injured Party") may give written notice to the Defaulting Party of such Potential Default at any time after the occurrence thereof, which notice shall state the particulars of the Potential Default. 13.2 Material Defaults. Following written notice and failure to cure within the time periods set forth in this Section 13.2, each Potential Default shall become a Material Default that shall be deemed to have occurred upon the expiration of the applicable cure period. 13.2.1 Monetary or Subsequent Closing Default. A Potential Default under Sections 13.1 (a) or 13.1(b) shall become'a "Material Default" if it is not cured within fifteen July 12, 2004 -84- Disposition and Development 18405:6390691.8 Agreement (15) Business Days of receipt of the notice of Potential Default. The foregoing cure period for Potential. Defaults under Sections 13.1(a) or 13.1(b) may not be extended by Force Majeure Delays. 13.2.2 Other Non -Monetary Defaults. A Potential Default under Section 13.1(c) shall become a "Material Default" if it is not cured, at the Defaulting Party's expense, (a) within thirty calendar (30) calendar days after receipt of the written notice of such Potential Default from the Injured Party, or (b) if such cure cannot be reasonably accomplished within such thirty (30) calendar day period, within an additional one hundred fifty (150) calendar days from the expiration of such thirty (30) day period, but only if the Defaulting Party has commenced such cure within such thirty (30) calendar day period and diligently pursues such cure to completion, or (c) within such longer period of time as may be granted by the City in the City's sole discretion, taking into account the nature of the Potential Default and whether Developer is exercising diligence and using commercially reasonable efforts to cure such Potential Default. Except as expressly set forth with respect to the Right of Purchase and the Right of Reversion, the foregoing cure periods for Potential Defaults under Section 13.1(c) may be extended by Force Majeure Delays. 13.3 Certain City Remedies. 13.3.1 Remedies Generally. In the event the Developer is in Material Default, in addition to all other rights the City may have in law or at equity, or as otherwise provided in this Agreement, the City may do any or all of the following: of Section 13.4; (a) exercise the Right of Purchase, subject to the terms and conditions (b) record a lien against the Property in accordance with Section 13.6. (c) sue for damages it may have incurred, including related to any Developer Parcel(s) which the City has not elected to purchase as provided in clause a above; (d) seek specific performance of the obligations of the Developer, including, with respect to non -monetary Material Defaults causing the non-occurrence of a Subsequent Closing, the specific performance of Developer's obligation to take title to the Developer Sublease Parcel(s) that are the subject of such Subsequent Closing; (e) terminate this Agreement and/or the Ground Lease with respect to all, or any portion of the Developer Parcels; (f) for a Material Default prior to the Initial Close of Escrow, keep the entire DDA Deposit as liquidated damages in accordance with Section 14.2, as applicable; (g) retain and enforce any Performance Bonds, or exercise its rights to draw upon any letter of credit or to pursue a claim under any guaranty or other security provided in connection with this Agreement, the Project, Developer's Backbone Infrastructure Work, the Project Fair Share Contribution or the Developer Parcels; and July 12, 2004 -85- Disposition and Development 18405:6390691.8 Agreement (h) if applicable given the nature of the Material Default, exercise its Right of Reversion pursuant to Section 13.5. 13.3.2 Effect of Termination. In the event the City terminates this Agreement pursuant to Section 13.3.1(e), the City shall retain its Right of Reversion under Section 13.5 notwithstanding the termination of this Agreement. 13.4 Ri!ht of Purchase. The City's "Right of Purchase" means the right of the City to purchase any or all Developer Parcels to which. Developer or any Successor Owner then holds fee title ("Owner"), together with the Improvements thereon, and/or to purchase the Improvements on and the Owner's ground subleasehold interest in any or all Developer Parcels to which Owner then holds a ground subleasehold interest or to purchase the Improvements on and terminate Owner's ground subleasehold interest in such Developer Parcels. The City shall have the right to exercise the Right of Purchase at any time within three (3) years after the date that the Owner became in Material Default; provided that upon Owner's cure of such Material Default, the Right of Purchase shall not be exercisable with respect to such cured Material Default only. Further, the Right of Purchase may be modified or waived by the City in its sole discretion pursuant to City Non -Disturbance and Attornment Agreement executed by the City in favor of a Retail Space Tenant or Pad Transferee. The Right of Purchase shall be exercised as follows: 13.4.1 Fair Market Value Determination. The purchase price for Developer Parcels for which Owner holds (a) fee title shall be the Fair Market Value of such Developer Parcels and (b) the leasehold interest, shall be the Fair Market Value of the Owner's interest as "landlord" therein) and the purchase price for Developer Parcels that remain under the Ground Lease shall be solely the Fair Market Value of any Improvements constructed on such Developer Parcel following the Effective Date, in each case determined in accordance with Section 13.4.2. The "Fair Market Value" of the interest that the City has elected to purchase ("Repurchase Property") shall be determined upon appraisal conducted by independent real estate appraisers selected as hereafter provided, who shall be members of The Appraisal Institute and a Certified General Appraiser in the State of California with not less than ten (10) years experience in appraisal of Class A shopping centers. The Fair Market Value shall be the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obligated to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the full knowledge of all the uses and purposes for which the property is reasonably adaptable and available, including the use limitations contained in this Agreement, the Special Restrictions, the LIFOC, the Ground Lease and the CC&Rs. Valuation of the Repurchase Property shall be based on an analysis of, where applicable: recent sales of comparable sites and similar properties in Orange County, taking into account the use limitations contained in this Agreement, the Special Restrictions, the LIFOC, the Ground Lease and the CC&Rs; an income approach based on the potential fair market rental for the property, and/or a replacement cost approach considering the estimated depreciation cost of the Improvements, together with the value of the land, where applicable. 13.4.2 Appraise . Within five (5) Business Days after Owner's receipt of written notice of the City's election to repurchase ("Selection Period") each Owner and the City shall each select one (1) appraiser ("Appraiser"). Each Appraiser shall deliver to each party their July 12, 2004 -86- Disposition and Development 18405:6390691.8 Agreement written determinations of the fair market value of the Repurchase Property on the date that is twenty (20) Business Days after expiration of the Selection Period (the "Determination Date"). If the difference between the fair market values determined by the Appraisers does not exceed three percent (3%) of the lesser of such appraised values, then the Fair Market Value shall be the average of the appraisals. If, however, the difference between the appraisals shall exceed three percent (3%) of the lesser of such amounts, then the Appraisers shall, within five (5) Business Days following the Determination Date select a third appraiser meeting the qualifications stated above ("Third Appraiser") who shall provide his or her written determination of the fair market value of the Repurchase Property within twenty (20) Business Days after his or her selection. If there is a third appraisal, the Fair Market Value for the Repurchase Property shall be the average of the two (2) appraisals nearest in value. The Owner and the City shall each bear the cost of the Appraiser they select and shall share equally the cost of the Third Appraiser. All such determinations of Fair Market Value shall be final and binding upon the Parties. 13.4.3 Election to Proceed. Following determination of the Fair Market Value, the City shall determine whether or not to proceed with the purchase of the Repurchase Property and shall, within ten (10) Business Days after its receipt of the final determination of Fair Market Value, provide written notice to Owner of its election to proceed or not to proceed to close of escrow with respect to the Repurchase Property. Failure to provide such notice shall be deemed an election not to proceed. 13.4.4 Escrow. If the City elects to proceed with the purchase, the City shall promptly open an escrow with an escrow agent designated by the City for the purchase and sale, and Owner and the City shall execute an escrow agreement that shall provide that the Owner shall pay all costs of the escrow and shall include such usual and ordinary terms as are reasonably required by the escrow agent and by the transaction and shall authorize escrow holder, prior to disbursement of any remaining funds to Owner, to pay in full all Mortgages and liens affecting the property, in order of priority. No later than five (5) Business Days after the opening of escrow (a) the Owner shall deposit into the escrow (i) with respect to its fee ownership, appropriate grant deeds conveying fee title to the Developer Parcels to the City and with respect to its leasehold interest, appropriate assignment of lease or lease termination agreements, as applicable and (ii) all funds in excess of the Fair Market Value of the Repurchase Property necessary to pay all costs of escrow and to pay in full all Mortgages, liens, claims and encumbrances affecting the Repurchase Property, (b) the City shall deposit into the escrow the Fair Market Value of the Repurchase Property and (c) Escrow shall close, and title to the Repurchase Property shall be conveyed to the City no later than two (2) Business Days thereafter. The Owner shall comply with its obligations under Section 13.8 and shall direct escrow holder to pay, directly from escrow all Mortgages, liens, claims and encumbrances affecting the Repurchase Property. In no event shall the City have any liability for the failure of Owner to pay to Permitted Mortgagee any sums due to it under its loan documents. Title shall be delivered to the City free and clear of any and other than: encumbrances and claims other than monetary liens that were of title as of the date of the Initial Close of Escrow, and any liens, claims or encumbrances approved in writing by the City. 13.4.5 Developer Representations. In the event the City purchases any Developer Parcels pursuant to the Right of Purchase, under no circumstances shall the Developer have any right or claim to, or against, the purchased Developer Parcels or any portion thereof. In July 12, 2004 -87- Disposition and Development 18405:6390691.8 Agreement addition, (a) the City's right to retain and enforce any Performance Bonds and/or apply any funds delivered pursuant to this Agreement shall survive such purchase, and the City shall have no obligation to reimburse the Developer for any Reimbursable Costs or to release any Performance Bonds and/or return any funds, and (b) the Developer shall be deemed to represent and warrant that all construction of all Improvements on the purchased Developer Parcels as of the date of purchase are in conformity with all applicable laws and Governmental Requirements, which representation and warranty shall survive the close of such escrow. Notwithstanding the purchase of any Developer Parcels by the City, this Agreement shall remain in full force and effect with respect to the Developer Parcels not purchased by the City. 13.4.6 Termination of Riaht of Purchase. The Right of Purchase shall be of no further force and effect after the Recording by the City of a Final Certificate of Compliance or a Partial Certificate of Compliance as to the affected Developer Parcel(s). 13.5 Right of Reversion. Notwithstanding that such portion of the Developer Parcels may be encumbered by one or more Mortgages or Permitted Mortgages, on the terms and subject to the conditions set forth in this Section 13.5, the City shall have the right (the "Right of Reversion") (a) to terminate this Agreement and/or the Ground Lease as to the Developer Parcels or any portion thereof and/or Improvements thereon and (b) thereafter to re-enter the affected Developer Parcel(s) and/or Improvements and revest title thereto in the City, such title to be subject to any Permitted Mortgage (but not to any other Mortgage). The Parties agree that time is of the essence with respect to the Right of Reversion. The Parties agree that the Schedule of Performance sets forth dates upon which Completion of the Project and the components thereof is required. The time periods set forth in clauses (a) and (b) below, including the Reversion Action Dates, are not the required Completion Dates and are not intended to govern Potential Default or Material Default with respect to such Completion Dates, but rather, to set forth the first date after such Material Default at which reversion can take place. 13.5.1 Material Defaults Triggeringthe Right of Reversion. The City may exercise the Right of Reversion upon the occurrence of any of the following each of which shall be a Material Default hereunder for which the Right of Reversion shall apply: (a) Developer fails to Complete (i) within six (6) years from the Initial Close of Escrow, the Minimum Project and all additional Improvements required by this Agreement to be constructed on the Developer Parcels and not described in clauses (ii) or (iii) below, which in the case of the Minimum Project shall be 545,000 square feet of development and in the case of all other Improvements, shall be the square footage depicted on the final construction drawings comprising a portion of the Approved Project Plans and otherwise meeting the requirements of the Approved Project Plans, (ii) the Vertical Improvements on any Lease Parcel within six (6) years from the date of the Subsequent Closing at which Developer acquired such Lease Parcel, or (iii) the Vertical Improvements on all Minor Pads within eight (8) years after the Initial Close of Escrow (each such date a "Reversion Action Date" with respect to the relevant development), subject only to the notice provisions set forth in Section 13.5.2(a). .(b) The Developer abandons or substantially suspends construction of the Project for a period of one hundred eighty (180) consecutive calendar days, and such July 12, 2004 -88- Disposition and Development 18405:6390691.8 Agreement Potential Default becomes a Material Default in accordance with the notice and cure provisions of Section 13.2, subject, however, to the exercise of the notice, cure and stay provisions of Section 13.5.2(b). (c) A Potential Default arises because a voluntary or involuntary Transfer takes place without express assumption by the Transferee of the Developer's obligations under this Agreement to the extent required under Section 2.2, and such Potential Default becomes a Material Default in accordance with the notice and cure provisions of Section 13.2, subject, however, to the exercise of the notice, cure and stay provisions of Section 13.5.2(b). 13.5.2 Conditions to Exercise of the Right of Reversion. (a) With respect to Section 13.5.1(a), the City shall be entitled to exercise the Right of Reversion at any time on or after the applicable Reversion Action Date provided that (i) the City has provided notice to the Developer pursuant to Section 16.7 and to any Permitted Mortgagee to which notice is due pursuant to Section 15.11(c) at least six (6) months prior to its exercise of the Right of Reversion, which notice may be provided at any time following the relevant Final Completion Date. (b) With respect to any Material Default described in Section 13.5.1(b) or (c), the City shall be entitled to exercise the Right of Reversion during the continuance of such Material Default at any time within one (1) year after such Right of Reversion could first be exercised with respect to such Material Default, subject to the following conditions (the "Reversion Conditions"): (i) the City provided written notice of the underlying Potential Default to the Developer or its Successor Owner pursuant to Section 16.7 and to each Permitted Mortgagee to which notice is due pursuant to Section 15.11(c); and (ii) such Material Default has not been cured by Developer within the time periods set forth in Section 13.2.2 or by any Permitted Mortgagee to which notice is due in accordance with Section 15.11(c) within the time periods set forth in Section 15.11(c); and (iii) if any Permitted Mortgagee has commenced and diligently prosecuted to completion Foreclosure proceedings in accordance with Sections 2.2.6 and 15.11, then (A) the Right of Reversion triggered by such Material Default shall be stayed for a period of three (3) years from the date upon which the Permitted Mortgagee obtains title to such portion of the Developer Parcels, and (B) thereafter may only be exercised with respect to that particular Material Default if such Permitted Mortgagee has not within such three (3) year period either (x)(1) assumed all obligations of the Developer under this Agreement, including the obligation to construct the Improvements in accordance with a revised Schedule of Performance agreed to by the Permitted Mortgage and the City and, thus, to step into the role of Developer hereunder and (2) commenced and diligently prosecuted to Completion the construction of the Improvements or (y) sold the affected portion of the Developer Parcels. July 12, 2004 -89- Disposition and Development 18405:6390691.8 Agreement The occurrence of each independent Material Default under Section 13.5.1 shall serve to trigger (or re -trigger) the City's Right of Reversion, subject only with respect to Material Defaults described in Section 13.5.1(b), to the potential stay set forth in clause (b)(iii) above. 13.5.3 Exercise of Right of Reversion. So long as the Right of Reversion triggering event has not been cured as of the date of exercise and/or the City's right to exercise has not been stayed in accordance with Section 13.5.2(b)(iii), the City may exercise its Right of Reversion by delivery of notice to (a) the fee owner of the property subject to revesting, and (b) all Permitted Mortgagees holding Permitted Mortgages with respect to affected portions of the Developer Parcels, provided that the City shall not exercise the Right of Reversion without first providing the Developer, if applicable, and all Permitted Mortgagees holding Permitted Mortgages with respect to affected portions of the Developer Parcels a reasonable opportunity to address the City Council at a public meeting. If the City chooses to exercise its Right of Reversion, in accordance with the provisions of this Agreement, Developer agrees to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable law to consummate the revesting of the Property or portions thereof, including to execute and deliver such other documents, certificates, agreements, deeds and other writings and to take such other actions as may be reasonably necessary to consummate such revesting. 13.5.4 Sale of Revested Property. Upon the revesting in the City of title to any portion of the Developer Parcels or any Improvements the City shall, pursuant to its responsibilities under state law, use reasonable efforts to resell such Property, or any party thereof, as soon and in such manner as the City shall find feasible and consistent with the objectives of this Agreement to a qualified and responsible party or parties (as determined by the City), who will assume the obligation of making or completing the Improvements. Upon such resale of the Property, or any party thereof, the proceeds thereof shall be applied: (a) first, to repayment in full of all delinquent tax and delinquent assessment liens; (b) second, to repayment in full of the outstanding balance of the Permitted Mortgage; (c) third, to reimburse the City on its own behalf for all costs and expenses incurred by the City, including salaries of personnel engaged in such action, in connection with the recapture, management and resale of the Property, or any part thereof; all taxes, assessments and water and sewer charges with respect to the Property or any part thereof; any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer or any Successor Owner or each and every Person claiming by, through or under Developer or any Successor Owner; any expenditures made or obligations incurred with respect to the making or completion of the agreed improvements or any part thereof on the Property, or any part thereof; and any amounts otherwise owing to the City by the Developer and/or any Successor Owner; July 12, 2004 -90- Disposition and Development 18405:6390691.8 Agreement (d) Fourth, to reimburse the Developer up to the amount equal to: (i) the sum of that portion of the Purchase Price paid to the City by the Developer for the Repurchase Property; and (ii) the costs incurred for the development of the Property, or any part thereof, or for the construction of the agreed Improvements thereon, less (iii) the Permitted Mortgage; and (e) Any balance remaining after such reimbursements shall be retained by the City as its property. 13.5.5 Continuation of Agreement. This Agreement shall remain in full force and effect with respect to portions of the Developer Parcels not revested in the City, but the termination of this Agreement shall be effective as of the date title to the Developer Parcels and/or Improvements, is (are) revested in the City. 13.5.6 Termination of R4,,ht of Reversion. The Right of Reversion shall be of no further force and effect after the Recording by the City of a Final Certificate of Compliance or a Partial Certificate of Compliance as to the Parcel subject thereto. 13.6 Lien Rights. Developer, on behalf of itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner for the benefit of the City and its successors and assigns hereby agrees that the delinquent amount of any payments due hereunder, together with any late charges or interest due on any such delinquent payment, reasonable attorneys' fees, experts' fees and consultants' fees and collection costs related to such delinquent payment, shall, to the greatest extent permitted by applicable law, be a lien and charge upon the Developer Parcels owned by the defaulting Person and shall be a continuing lien upon such property in favor of the City, effective upon Recordation of a notice of delinquency, which lien and charge shall be paramount to the lien and charge of any Mortgage upon such defaulting Person's interest in the Property, subject only to the priority of a first lien which is a Permitted Mortgage. 13.7 Failure to Timely Pay Amounts Due. If the Potential Default under Section 13.1 becomes a Material Default, then in addition to any other remedies conferred upon the Injured Party pursuant to this Agreement, Developer shall pay to City, in additional to all principal amounts due, interest from the date of such payment or part thereof was due until the date paid at the Default Rate. 13.8 Due Diligence Information; Products. 13.8.1 Surrender of Due Diligence Information. Within five (5) Business Days following a termination of this Agreement, the Developer shall use commercially reasonable efforts to return to the City all written Due Diligence Information in the Developer's possession. The Developer's obligation to return Due Diligence Information to the City is without representation or warranty of any kind by the Developer. 13.8.2 Surrender of Transferable Products. In connection with the proposed Project, the Developer shall be preparing or causing to be prepared architectural and other products, surveys, plans, reports, tests, studies and investigations with respect to the Property and the proposed Project (collectively, "Products"). All Products shall be prepared at the July 12, 2004 -91- Disposition and Development 18405:6390691.8 Agreement Developer's sole cost and expense. If this Agreement is terminated for any reason other than a Material Default by the City, then, with respect to all Products other than architectural products; financial or economic estimates, projections and evaluations; studies and information related to potential tenants, lenders and investors (the Products not subject to such exclusions the "Transferable Products"), the City may request that the Developer, for consideration to be mutually agreed, transfer the Developer's rights to any or all of the Transferable Products identified by the City, but in no event shall the cost to the City exceed Five Hundred Dollars ($500.00). Upon such request, the Developer shall deliver to the City copies of all Transferable Products requested by the City together with a bill of sale therefor, provided that the Developer makes no representation, warrantee or guarantee regarding the completeness or accuracy of the Transferable Products, and the Developer does not covenant to convey the copyright or other ownership rights of third parties thereto. Such Transferable Products shall thereupon be free of all claims or interests of the Developer or any liens or encumbrances. Upon the City's acquiring the Developer's rights to any or all of the Transferable Products, the City shall be permitted to use, grant, license or otherwise dispose of such Transferable Products to any person or entity for development of the Project or any other purpose; provided, however, that the Developer shall have no liability whatsoever to the City or any transferee or title to the Transferable Products in connection with the use of the Transferable Products. 14. Nonoccurrence of a Condition to the Initial Close of Escrow. 14.1 Failure of a Condition Absent a Material Default. 14.1.1 In the event the Initial Closing Date is extended for any of the reasons set forth in this Section 14.1 not caused by a Material Default by either Party, either Party shall have the right to terminate this Agreement as hereinafter provided: (a) In the event a final decision in any litigation brought by a third party or approval of a referendum or initiative results in the inability of the City to convey and/or sublease the Property to the Developer, or of the Developer to perform its material obligations hereunder, either Party shall have the right, upon thirty (30) calendar days prior written notice to the other Party and the Escrow Holder, to terminate this Agreement. (b) In the event litigation, referendum, or initiative brought by a third party remains pending on the Initial Closing Date or the any Subsequent Closing Date (including, for the Initial Close of Escrow, as the same may have been extended by the City in accordance with Section 7.1), and (i) such ongoing challenge prevents the City from conveying and/or subleasing the Property to the Developer, or (ii) in the event the Assistant City Manager or designee reasonably determines that such litigation is the cause of the Developer's inability to perform its material obligations hereunder despite the Developer's best efforts to do so, either Party shall have the right, upon thirty (30) days written notice to terminate this Agreement upon written notice to the other Party and the Escrow Holder. (c) In the event of the passage of a referendum or initiative that results in the inability of the City to convey and/or sublease the Property to the Developer or the inability of the Developer to perform its material obligations hereunder, either Party shall have July 12, 2004 -92- Disposition and Development 18405:6390691.8 Agreement right, upon thirty (30) calendar days prior written notice to the other Party and the Escrow Holder, to terminate this Agreement. (d) In the event that the circumstances creating the right of termination in Sections 14.1.1(a) through (c) above has been cured during such thirty (30) -day period, the right to terminate shall likewise be extinguished. 14.1.2 If the Initial Close of Escrow does not occur on or before 5:00 p.m., California Time, on the Initial Closing Date, because of (a) the inability of the Parties to resolve a dispute arising under to Section 8.3.8 or (b) the failure to occur of a Closing Condition for reasons other than (i) a Material Default solely by the Developer (which is governed by Section 14.2); (ii) a Material Default solely by the City (which is governed by Section 14.3), or (iii) a Material Default by both Parties (which is governed by Section 14.4), either Party may, by delivery of written notice to the other and to the Escrow Holder, terminate this Agreement. 14.1.3 In the event either the Developer or the City are in Potential Default as of the Initial Closing Date, the Party in Potential Default -shall not have the right to terminate the Agreement pursuant to this Section 14.1 until and unless the Potential Default is cured prior to the time the Potential Default becomes a Material Default. 14.1.4 Upon any termination under this Section 14. 1, or a termination under Sections 14.3.4, 14.4.2 or 14.4.3, or a termination following the City's receipt of a Termination Notice in accordance with Section 5.7, each Party shall pay one-half (1/2) of Escrow Holder's normal cancellation charges and any Closing Costs. Developer shall be paid the remainder of the DDA Deposit and all interest accrued thereon or such lesser amount as remains in Escrow after payment to Developer of the Developer Transaction Expenses under Section 4.2.3(a)(ii). In the event of a termination as provided in this Section 14.1.4, the Developer shall comply with Section 13.7 before any amount of the DDA Deposit is returned to the Developer, and shall indemnify the City as provided in Section 5.4. The termination of this Agreement pursuant to this Section 14.1.4 shall constitute a waiver of any rights, claims, causes of action, or demands either Party may have against the other or the Property, or any portion thereof, but shall not terminate or release any liability or obligations of the Developer to comply with Section 13.8 and to indemnify the City as provided in Section 5.4. 14.1.5 In the event of a termination as provided in this Section 14. 1, under no circumstances shall the Developer have any right or claim to, or against, the Property, the Project Site or any portion thereof. 14.2 Failure to Close the Initial Close of Escrow; Material Default of Developer. IF THE INITIAL CLOSE OF ESCROW DOES NOT CLOSE ON OR BEFORE 5:00 P.M., CALIFORNIA TIME, ON THE INITIAL CLOSING DATE, SOLELY AS A RESULT OF DEVELOPER'S MATERIAL DEFAULT (INCLUDING FAILURE TO DELIVER SUFFICIENT FUNDS TO CAUSE THE CLOSING TO OCCUR IN A TIMELY MANNER, IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 7), THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS AGREEMENT IN THE SPACE PROVIDED BELOW THAT: July 12, 2004 -93- Disposition and Development 18405:6390691.8 Agreement (a) THE DDA DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY THE CITY AS THE RESULT OF DEVELOPER'S MATERIAL DEFAULT IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, WHICH DAMAGES WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO QUANTIFY, THAT THE DDA DEPOSIT CONSTITUTES A REASONABLE ESTIMATE OF THE CITY'S DAMAGES IN SUCH EVENT, AND THAT THE REMEDY PROVIDED FOR IN THIS AGREEMENT IS NOT A PENALTY OR FORFEITURE AND IS A REASONABLE LIMITATION ON DEVELOPER'S POTENTIAL LIABILITY AS A RESULT OF SUCH DEFAULT. (b) DEVELOPER SHALL PAY THE FULL AMOUNT OF ESCROW AGENT'S CHARGES AS A RESULT OF SUCH MATERIAL DEFAULT AND TERMINATION AND ALL CLOSING COSTS, WHETHER OR NOT DEVELOPER CONTESTS SUCH TERMINATION. (c) DEVELOPER SHALL COMPLY WITH THE REQUIREMENTS OF SECTIONS 13.7 AND 13.8. (d) AS A RESULT OF DEVELOPER'S MATERIAL DEFAULT IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND FAILURE OF THE INITIAL CLOSE OF ESCROW TO OCCUR ON OR BEFORE THE INITIAL CLOSING DATE, THE CITY SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AND THE ESCROW BY WRITTEN NOTICE TO ESCROW AGENT, WHEREUPON THE CITY SHALL BE RELEASED FROM ITS OBLIGATION HEREUNDER TO SELL, LEASE AND/OR SUBLEASE THE PROPERTY TO DEVELOPER OR DEVELOPER'S PERMITTED SUCCESSOR OWNER, AND THE CITY SHALL RETAIN THE DDA DEPOSIT AND ALL ACCRUED INTEREST THEREON AND/OR ESCROW AGENT SHALL RELEASE THE DDA DEPOSIT AND ALL ACCRUED INTEREST THEREON TO THE CITY, TO THE EXTENT NOT ALREADY SO RELEASED, AS LIQUIDATED DAMAGES, WHICH DAMAGES SHALL BE THE CITY'S SOLE AND EXCLUSIVE REMEDY HEREUNDER IN THE EVENT OF SUCH BREACH, EXCEPT FOR THE CITY'S RIGHTS AND REMEDIES FOR A SEPARATE BREACH, IF ANY, OF THE CONFIDENTIALITY AND/OR INDEMNIFICATION PROVISIONS OF THIS AGREEMENT AND/OR THE PROVISIONS OF SECTIONS 13.7 AND 13.8. Initials of City Initials of Developer 14.3 Failure to Close; Material Default of City. 14.3.1 If the Initial Close of Escrow does not occur on or before 5:00 p.m., California time, on the Initial Closing Date, solely as a result of the City's Material Default in the performance of its obligations under this Agreement, then, so long as the Developer is not in Potential Default or Material Default, the Developer shall have the right, by providing notice to the City of its election to do so, either: (a) to purchase Developer Fee Property A and Developer Fee Property B and lease and/or sublease the Lease Property pursuant to this Agreement July 12, 2004 -94- Disposition and Development 18405:6390691.8 Agreement notwithstanding such City Material Default, whereupon such City Material Default shall be deemed waived as against the City and all third parties; or (b) to terminate this Agreement and to cancel Escrow. 14.3.2 In the event City receives timely notice of the Developer's election to purchase Developer Fee Property A and Developer Fee Property B and lease and/or sublease, as applicable, the Lease Property notwithstanding the City's Material Default, the Developer shall deliver Developer's Closing Payment into Escrow no later than ten (10) Business Days after the City's receipt of said notice. Upon delivery of Developer's Closing Payment into Escrow and payment by Escrow Holder of the Purchase Price to the City, the City shall convey title to Developer Fee Property A and Developer Fee Property B and lease and/or sublease the Lease Property as provided in this Agreement, and the Developer shall be deemed to have waived the City's Material Default. In the event the City fails to deliver the Quitclaim Deed and Ground Lease into Escrow within five (5) Business Days after the Developer has delivered Developer's Closing Payment into Escrow, the Developer shall have the right to bring an action in equity or otherwise against the City or subsequent owners, lessors or sublessors of the Property for specific performance of Article 7 and payment of Developer's actual out-of-pocket fees and expenses incurred on the Project due to such Material Default in an amount not to exceed Twenty -Five Thousand Dollars ($25,000.00). In such event the City shall pay the full amount of Escrow Holder's reasonable charges and Closing Costs. 14.3.3 In the event the City receives timely notice of the Developer's election to terminate this Agreement: (a) The Developer shall be entitled to a full refund of the DDA Deposit and all interest accrued thereon, or such amount as remains after reimbursements of Developer Transaction Expenses under Section 4.2.3(a)(ii). The City shall pay the full amount of Escrow Holder's reasonable charges. The Developer shall comply with its obligations under Sections 13.7 and 13.8. The Developer shall not be entitled to pursue an action against the City for damages as a result of the City's Material Default. (b) The termination of this Agreement pursuant to this Section 14.3.3 shall not terminate or release any liability or obligations of the Developer: to comply with Sections 13.7 and 13.8 and to indemnify the City as provided in Section 5.4. In the event of a termination as provided in this Section 14.3, under no circumstances shall the Developer have any right or claim to, or against, the Property, the Project Site or any portion thereof. (c) The termination of this Agreement pursuant to this Section 14.3.3 shall constitute a waiver of any rights, claims, causes of action, or demands either Party may have against the other, except as expressly provided above. 14.3.4 In the event either (x) the City does not receive, within twenty (20) Business Days after the Initial Closing Date, notice of the Developer's election either to purchase the Developer Fee Property and sublease the Developer Sublease Property pursuant to Section 14.3.1 a notwithstanding such City Material Default or to terminate this Agreement pursuant to Section 14.3.1(b), or (y) the Developer has elected to purchase the Developer Fee Property and sublease the Developer Sublease Property pursuant to Section 14.3.1(a) but fails to deliver July 12, 2004 -95- Disposition and Development 18405:6390691.8 Agreement Developer's Closing Payment into Escrow no later than ten (10) Business Days after the City's receipt of said notice, then in each case the City shall have the right to terminate this Agreement by providing written notice of its election to do so to the Developer, such termination to be pursuant to the provisions of Section 14.1.4. 14.4 Material Default by Both Parties. 14.4.1 If the Initial Close of Escrow does not close on or before 5:00 p.m., California time, on the Initial Closing Date as a result of the Material Default of each Party in the performance of its respective obligations under this Agreement, the provisions of this Section 14.4 shall apply. 14.4.2 If the Developer is in Material Default of its obligation to deliver Developer's Closing Payment as provided in Section 7.3.2, or to provide the evidence of financing as provided in Section 7.3.4, or to comply with Developer's obligations under Section 7.3.9, and the City has deposited into Escrow the Quitclaim Deed and the Ground Lease as provided in Section 7.2.1(a), the City shall have the right, notwithstanding any Potential Default or Material Default of the City, to terminate this Agreement in accordance with Section 14.1.4. 14.4.3 If the City is in Material Default of its obligation to deposit into Escrow the Quitclaim Deed and the Ground Lease as provided in Section 7.2.1(a), and the Developer has delivered Developer's Closing Payment as provided in Section 7.3.2, has provided the evidence of financing as provided in Section 7.3.4, and has complied with Developer's obligations under Section 7.3.9, the Developer shall have the right, notwithstanding any Potential Default or Material Default of the Developer, to terminate this Agreement in accordance with Section 14.1.4. 14.4.4 Except as provided above in Sections 14.4.2 and 14.4.3, in the event both Parties are in Material Default with respect to their obligations to close Escrow on the Initial Closing Date, each Party may exercise any and all rights it may have to seek monetary damages from the other Party. Notwithstanding the foregoing, in no event may either Party be entitled to specific performance or other equitable relief, and in no event shall the Developer file a lis pendens against the Property. 14.5 Subsequent Closings. This Article 14 does not apply to the obligations to close the Subsequent Closings or to matters other than default with respect to Initial Close of Escrow, which are addressed by the Potential Default and Material Default provisions of Article 13. 15. Mortgages and Mortgagee Protection. 15.1 Right To Encumber. All Mortgages shall be subject to and subordinate to this Agreement, the Right of Reversion, the Special Restrictions, the CC&Rs and the Ground Lease. Subject to the foregoing and the terms, conditions and limitations of this Article 15, the Developer shall have the right to encumber its fee interest in the Developer Fee Parcels and/or its ground subleasehold interest in the Developer Sublease Parcels only with a Permitted Mortgage. July 12, 2004 -96- Disposition and Development 18405:6390691.8 Agreement 15.2 Permitted Mortgages; Permitted Mortgagees. Until Recording of the Final Certificate of Compliance or a Partial Certificate of Compliance with respect to Developer Parcels for which a Partial Certificate of Compliance is issued, the following shall apply to every Mortgage with respect to the Developer Parcels or any portion thereof: (a) Except as set forth in Section 15.2(8), the Developer shall not encumber the Developer Parcels with any Mortgage without the prior written consent of the City in its sole discretion; any encumbrance in violation of this Article 15 shall be a prohibited Transfer and a Material Default by Developer. (b) The Developer's right to execute and deliver Mortgage(s) shall be limited to one trust deed Mortgage executed and delivered to obtain financing necessary to pay for acquisition of the Developer Parcels and for Development Costs for the Project on the Project Site; provided that the City in its sole discretion, may consent to a refinancing thereof or to a second Mortgage being a Permitted Mortgage. (c) Neither this Agreement, the Ground Lease nor the Property (nor any portion thereof) shall be cross -collateralized with any other contract or real or personal property, nor shall this Agreement, the Ground Lease or the Property (or any portion thereof) serve as additional security for any other loan by a Mortgagee, nor any other debt of Developer, in each case without the City's consent in its sole discretion; provided, however, that a Permitted Mortgagee which has made more than one Mortgage to Developer secured by (but only by) all or any portion of the Property and by no other property may cross-collateralize such Mortgages. (d) The Developer shall not transfer the Property or any portion thereof to a third party for purposes of a sale-leaseback transaction. (e) At least ten (10) Business Days prior to entering into any Mortgage, the Developer shall deliver to the City the proposed Mortgagee's loan documents and such other information, including the name and current audited financial statements of the proposed Mortgagee, as may be reasonably necessary for the City to confirm the matters described in this Section 15.2, and the City shall have the right to review the loan documents to ascertain that they comply with the provisions of this Section 15.2, including: (i) Whether the proposed Mortgagee is an Institutional Lender and, if the proposed Mortgagee is not an Institutional Lender, the Developer shall provide the City with the following additional information: (i) the names of all Persons who own, directly or indirectly, a five percent (5%) or more interest in the proposed Mortgagee, (ii) a statement describing other real estate projects for which financing has been provided by the proposed Mortgagee in California over the preceding five (5) year period, the dates of involvement by the proposed Mortgagee with such projects and the success of the projects, which statement shall by made under penalty of perjury by the manager, president or other person with appropriate authority from the proposed Mortgagee to do so, (iii) a final draft of the proposed Mortgage and (iv) such other relevant information that the City may reasonably request. (ii) The loan documents shall include a Subordination executed by the Permitted Mortgagee (and with acknowledgement and consent of the City) acknowledging July 12, 2004 -97- Disposition and Development 18405:6390691.8 Agreement (A) subordination of the Permitted Mortgage to this Agreement, the Ground Lease, the Special Restrictions and the CC&Rs, (B) that its Mortgage is subject to this Agreement, including to the New Agreement provisions set forth in Sections 15.20 and 15.21, and, if applicable, the Ground Lease, and (C) the applicability of the Right of Reversion and the Right of Purchase, in accordance with Article 15, to the Permitted Mortgage and following expiration of any relevant Permitted Mortgagee's cure rights provided in this Agreement. (iii) The loan documents shall include a provision requiring (A) the Mortgagee to provide notice to the City concurrently with the provision of any notice to the Developer of any event which has occurred which is (or which becomes upon such notice, the passage of time or both) a default under the loan documents or which would trigger the commencement of any cure periods under the loan documents, and (B) providing the City with a right to cure any such default or nascent default up to one week before the completion of any Foreclosure. (iv) For construction Mortgages for the original construction of the Improvements, the City shall have determined that the amount of the construction loans provided for in the loan documents, together with the equity to be committed by the Developer for the construction of the Project, shall be sufficient to pay for the costs of constructing the Project in accordance with the construction budget, including appropriate construction contingencies reflected in such loan documents. (f) The Subordination, executed and acknowledged by the Mortgagee and the City, shall be Recorded at the closing of the Permitted Mortgage; (g) Until such time as the City Note has been paid in full, any Mortgage on Developer Fee Property B, to be a Permitted Mortgage ("Fee Parcel B Permitted Mortgage"), shall be independent of and shall not be cross -collateralized or cross -defaulted with any Mortgage on the remainder of the Property, such that the City Deed of Trust shall be subordinated only to the Fee Parcel B Permitted Mortgage, and to no other Mortgages; and (h) No Developer Sublease Parcel nor Developer's ground subleasehold interest therein shall be encumbered by a Mortgage unless and until such parcels are owned in fee by the Developer. (i) Mortgages meeting the above requirements and made with Mortgagees determined by the City, in its reasonable discretion, to be Institutional Lenders shall be Permitted Mortgages (and the Mortgagees thereof Permitted Mortgagees) without further consent of the City. Mortgages meeting the above requirements and made with Mortgagees determined by the City, in its reasonable discretion, to be Non -Institutional Lenders, shall be Permitted Mortgages (and the Mortgagees thereof Permitted Mortgagees) only after Developer obtains the prior written consent of the City in its sole discretion. 0) No Mortgage shall be a Permitted Mortgage and no Mortgagee shall be a Permitted Mortgagee or be entitled to the protections provided to Permitted Mortgagees under this Agreement unless such proposed Mortgagee and its Mortgage has been reviewed and, if required, consented to, by the City pursuant to this Section 15.2. July 12, 2004 -98- Disposition and Development 18405:6390691.8 Agreement (k) Notwithstanding any other provision of this Agreement, the City Deed of Trust shall be a Permitted Mortgage and the City shall, with respect to its beneficial interest thereunder, be a Permitted Mortgagee, entitled to all protections under this Agreement afforded to Permitted Mortgagees. 15.3 The City's Acknowledgment of Permitted Mortgagee. 15.3.1 Acknowledgement of Permitted Lender Status. Within fifteen (15) calendar days following the Developer's delivery of the loan documents and information required under Section 15.2, the City shall acknowledge receipt of the name and address of any Mortgagee (or proposed Mortgagee), and either (a) confirm in writing to the Developer and such Mortgagee that such Mortgagee is (or would be, upon closing of its loan) a Permitted Mortgagee and has (or would have) all the rights of a Permitted Mortgagee under this Agreement and is (or would be) an Institutional Lender, if applicable, or (b) if the City determines that any proposed Mortgagee does not or would not qualify as such or as an Institutional Lender or meet the other criteria set forth in Section 15.2, give notice of such determination to the Developer and the proposed Mortgagee, which notice shall specify the basis for such determination. 15.3.2 City Estoppel. At the closing of any Permitted Mortgage and from time to time thereafter (but no more frequently than annually) within twenty (20) calendar days of the City's receipt of a written request therefor, the City shall execute and deliver to the Permitted Mortgagee a City Estoppel, in the form attached hereto as Attachment No. 20 but with such modifications as are necessary in the City's sole discretion to ensure the accurateness of the statements made therein. 15.4 Change in Loan Documents. 15.4.1 Prior to Loan Closing. Following approval by the City of loan documents and Subordination as satisfying the requirements of Section 15.2, but prior to closing of the loan evidenced by such loan documents, the Developer shall not modify or agree to modify those loan documents in a manner affecting the requirements of Section 15.2 without the prior written approval of the City in its sole discretion. 15.4.2 Following Loan Closinc. Following approval by the City of loan documents and Subordination as satisfying the requirements of Section 15.2 and closing of the loan evidenced by such loan documents, the Developer shall not, without the prior written approval of the City in its sole discretion, modify or agree to modify the loan documents in a manner that (a) increases the financial obligations of Developer by more than Four Million Dollars ($4,000,000.00), (b) increases the indebtedness secured by the Permitted Mortgage by more than Four Million Dollars ($4,000,000.00) or (c) modifies or affects the loan provisions satisfying the requirements of Section 15.2, provided that so long as Developer maintains an equity interest of at least fifteen percent (15%) in the Property owned by it, such City prior written approval for modifications described in clauses (a), (b) and (c) shall not be unreasonably withheld. 15.5 Initial Notice. If the Developer enters into any Mortgage(s) reviewed and, if required, consented to, by the City pursuant to Section 15.2, then the Mortgagee(s) thereunder, if July 12, 2004 -99- Disposition and Development 18405:6390691.8 Agreement confirmed by the City as Permitted Mortgagee(s) pursuant to Section 15.3, shall be entitled to the Permitted Mortgagee protections provided for under this Agreement from and after such time as the Developer or such Permitted Mortgagee has provided the City notice, in accordance with the provisions of Section 16.7, of the name and address of such Mortgagee, accompanied by a copy of the executed Mortgage. 15.6 Effect of a Mortgage. In the absence of any Foreclosure, no Mortgagee, as such, in the exercise of its rights under its Mortgage or this Agreement, shall be deemed to be a Successor Owner or mortgagee -in -possession of the Property so as to require such Mortgagee to assume or otherwise be obligated to perform any of the Developer's obligations under this Agreement. 15.7 Foreclosure Without the City's Consent. If a Permitted Mortgagee acquires all or any portion of the Property in a Foreclosure, the provisions of Section 15.8 shall govern such acquisition and the rights and obligations of such Permitted Mortgagee. If a Permitted Mortgagee does not acquire the portion of the Property which was the subject of a Foreclosure action, or if it does acquire by Foreclosure such portion of the Property but then subsequently Transfers all or any portion of such acquired portion of the Developer Parcels, then upon such Foreclosure, (a) all of the provisions contained in this Agreement shall be binding upon and benefit the Transferee which acquires title to or a leasehold interest in all or any portion of the Developer Parcels, and (b) provided that such Person assumes the obligations of the Developer under this Agreement in accordance with Section 2.2.2(d), (i) the City shall recognize such Transferee as the Developer under this Agreement and (ii) the acquiring Person and the City shall meet and confer in good faith to revise the Schedule of Performance as reasonably necessary to provide adequate time for such Person to satisfy the obligations of the Developer hereunder. 15.8 Rights and Oblivations of Permitted Mortgagee Acquiring Title. 15.8.1 Limitations on Construction Obligation. Except as set forth in Section 15.8.5, a Permitted Mortgagee obtaining title to, a leasehold interest in, or possession of all or any portion of the Property as a result of Foreclosure shall not be obligated to perform any of the Developer's obligations under this Agreement, including to construct or Complete any Improvements or to guarantee such construction or Completion thereof. 15.8.2 No Authority to Construct. Except as set forth in Section 15.8.3 with respect to protective advances or preservation or protection of existing Improvements, (i) nothing in this Agreement shall be deemed or construed to permit or authorize any Permitted Mortgagee to devote the Property or any part thereof to any uses, or to construct any improvements thereon, other than those uses and or Improvements provided for or authorized by this Agreement and (ii) any and all construction of improvements on the Developer Parcels or the remainder of the project Site whether by or at the direction of the Permitted Mortgage or by any other Person, shall be carried out in accordance with all the terms and conditions of this Agreement, including Section 15.8.3. 15.8.3 Protection of Collateral. Notwithstanding the prohibition on construction set forth in Section 8.1.1, during or after a Foreclosure, the Permitted Mortgagee shall be entitled July 12, 2004 -100- Disposition and Development 18405:6390691.8 Agreement to take such actions as are reasonably necessary to conserve or protect Improvements already made, but such right shall not include new construction except as is necessary to protect exposed elements of such previously constructed Improvements and except in a manner consistent with such previously constructed Improvements and the requirements of this Agreement. Upon assumption by the Permitted Mortgagee of the obligations of Developer, the Permitted Mortgagee must agree to Complete, in the manner provided in this Agreement, the Improvements upon the property to which the lien or title of such Permitted Mortgagee relates. Any Permitted Mortgagee assuming such obligations, properly Completing Improvements upon Developer Parcels owned by it and satisfying all other Conditions Precedent thereto, shall be entitled, upon written request made to the City, to a Certificate of Compliance from the City for such Parcels in accordance with the terms of this Agreement. 15.8.4 Limitation on Liability. In the event that a Permitted Mortgagee assumes the obligations of Developer under this Agreement, such Permitted Mortgagee shall only be liable or bound by Developer's obligations hereunder for such period as the Permitted Mortgagee is in possession and/or control of the portion of the Property in which the Permitted Mortgagee has acquired its interest and, furthermore, notwithstanding anything to the contrary contained in this Agreement, shall only be liable to the extent of its interest (whether fee or leasehold) in the portion of the Developer Parcels and the Improvements thereon. 15.8.5 Obligation of Mortgagee in Possession. Upon obtaining title to, leasehold interest in or possession of the Property or any portion thereof, and notwithstanding any other provision of this Agreement to the contrary, each Permitted Mortgagee shall be obligated to perform the following with respect to the portion of the Developer Parcels owned by it, even if it does not assume the obligations of Developer under this Agreement: (a) keep the real property taxes and assessments current; (b) timely fulfill all the obligations of Developer as "lessor" or "landlord" under any Lease then in effect on such portion of the Property as and to the extent set forth in any non -disturbance and attornment agreement or other similar agreement entered into by and between the Permitted Mortgagee and any Retail Space Tenant and/or Pad Transferee or, if no such agreement is in effect for a given Lease, keep such Lease in force and effect so long as there is no default thereunder as defined therein; (c) abate weeds and other hazards and nuisances on such portion of the Developer Parcels, in a commercially reasonable manner including Investigations and Remediation of Hazardous Materials as and to the extent required by Environmental Laws which are applicable to lenders and pursuing rights under any Environmental Insurance policy to cause the clean-up of the property in accordance with Environmental Laws; (d) maintain property and liability insurance in commercially reasonable amounts, and, if applicable, any other insurance required of Developer as "lessor" or "landlord" under any Lease then in effect; (e) fulfill Developer's obligations under the Special Restrictions with respect to any Lease then in effect; July 12, 2004 -101- Disposition and Development 18405:6390691.8 Agreement (f) erect and maintain barricades and fencing as reasonably necessary to protect the public and the Improvements already constructed; and (g) maintain in a commercially reasonable manner (but in any event subject to all Environmental Laws) erosion control. 15.9 No Impact on Lien. Except in the event of the City's exercise of the Right of Reversion and Right of Purchase provisions contained in Article 15 (and subject to the rights of Permitted Mortgagees under Articles 13 and 15 of this Agreement) breach of any of the covenants, conditions, restrictions, or reservations contained in this Agreement shall not affect the lien of any Permitted Mortgage made in good faith and for value as to the Property or any portion of the Property or interest therein. Except as otherwise provided in this Agreement, the terms, conditions, covenants, restrictions and reservations of this Agreement shall be binding and effective against the Permitted Mortgagee and any owner/ground sublessee of the Property, or any portion of the Property, whose title thereto or possession thereof is acquired by Foreclosure or otherwise. 15.10 Right of The City to Cure Mortgage Default; Other Conveyance for Financing Default. In the event of an uncured default by the Developer under a Permitted Mortgage prior to the issuance of a Certificate of Compliance with respect to the Property secured thereby, and so long as the Permitted Mortgagee has not exercised its option to assume the obligations hereunder and complete the Improvements, the City may at its option, but shall not be obligated to, cure the default at any time up to one week prior to completion of any Foreclosure. In such event, the City shall be entitled to reimbursement by the Developer of all direct and actual costs and expenses incurred by the City in curing the default. Such reimbursement amount may be secured at the City's option by a lien against the Developer Parcels. 15.11 Mortgagee Protections. Each Permitted Mortgagee of a then -existing Permitted Mortgage affecting a portion of the Property which has provided notice to the City as required by Section 15.5 shall, until its Permitted Mortgage is satisfied of record or until written notice of satisfaction is given by the Permitted Mortgagee to the City, be entitled to the following: (a) Provision of concurrent notice of any default by any Party hereunder, provided, however, that a failure of a Party to deliver a concurrent copy of such notice of default to the Permitted Mortgagee shall not affect in any way the validity of the notice of default as it relates to the defaulting Party, but in any subsequent proceedings arising from the notice of default with respect to which there was a failure to provide the requested concurrent notice to the Permitted Mortgagee, the interest of the Permitted Mortgagee and its lien upon the affected Parcel shall not be affected in any way until such time as it has received proper notice and all cure periods with respect thereto have expired, and provided, further, the giving of any notice of default or the failure to deliver a copy to any Permitted Mortgagee shall in no event create any liability on the part of the Person so declaring a default. (b) The right, but not the obligation, at any time prior to the earlier to occur of exercise of the Right of Reversion, the exercise of the Right of Purchase or the termination of this Agreement and without payment of any additional penalty or assumption of July 12, 2004 -102- Disposition and Development 18405:6390691.8 Agreement the obligations of Developer under this Agreement, to cure or remedy such Potential Default or Material Default, to effect any insurance, to pay any amounts due to the City, to make any repairs or improvements, to do any other act or thing required of Developer under this Agreement and/or the Ground Lease and to do any act or thing which may be necessary and proper to be done in the performance and observance of this Agreement and/or the Ground Lease to prevent termination of this Agreement and/or the Ground Lease. To carry out the foregoing, the Developer hereby agrees that such Permitted Mortgagee and its agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by such Permitted Mortgagee shall be as effective to prevent a termination of this Agreement as the same would have been if done by Developer. (c) Notwithstanding any other provision of this Agreement or the Ground Lease to the contrary, if any Potential Default or Material Default shall occur which, pursuant to any provision of this Agreement or the Ground Lease, entitles the City to terminate this Agreement and/or the Ground Lease and/or to exercise its Right of Reversion, the City shall not be entitled to terminate this Agreement or the Ground Lease or to revest any portion of the Developer Parcels unless (i) the City, following the expiration of any periods of time given Developer in this Agreement or the Ground Lease, as the case may be, to cure such Potential Default or Material Default, shall have given written notice to such Permitted Mortgagee stating the City's intent to terminate this Agreement and/or the Ground Lease, and (ii) within ninety (90) calendar days after delivery of such notice, such Permitted Mortgagee shall fail to either: (A) cure the Potential Default or Material Default if the same consists of the nonperformance by Developer of any covenant or condition of this Agreement or the Ground Lease requiring the payment of money by Developer to the City, other than payments required under Sections 4.2.3, 8.2.2 or 8.13.2 (provided, however, that nothing set forth in this Agreement shall restrict or limit the right of City to exercise its remedies with respect to Performance Bonds provided by Developer in accordance with this Agreement or the Ground Lease or any Entitlements or Development Permits); and (B) if the Potential Default or Material Default is not of the type described in clause A above, either, in such Permitted Mortgagee's sole discretion, (x) cure such Potential Default or Material Default, if the same is capable of being cured within such ninety (90) calendarday period, or (y) commence, or cause any trustee under the Permitted Mortgage to commence, and thereafter diligently pursue to completion, steps and proceedings to Foreclosure; provided that except as extended by clause d below, such Foreclosure shall be completed within a maximum of eighteen (18) months following the commencement of such proceeding. Any Potential Default or Material Default which does not involve a covenant or condition of this Agreement requiring the payment of money by the Developer to the City shall be deemed cured if any Permitted Mortgagee shall diligently pursue to completion Foreclosure and shall, upon acquiring title to all or any portion of the Developer Fee Property and/or a ground subleasehold interest in the Developer Sublease Property, thereafter undertake its obligations (if any) with respect such portion of the Property pursuant to Section 15.8. (d) If such Permitted Mortgagee is prohibited from commencing or prosecuting Foreclosure by any process or injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving July 12, 2004 -103- Disposition and Development 18405:6390691.8 Agreement Developer (other than any such process, injunction or court action occurring in response to any negligence or misfeasance of Permitted Mortgagee), the times specified in clause (c)(B)(y) above, for commencing or prosecuting a Foreclosure or other proceedings shall be extended for the period of the prohibition; provided that the Permitted Mortgagee shall have fully cured any Potential Default or Material Default required by clause (c)(B)(x) above and shall continue to perform and/or cure all such obligations as and when the same fall due. (e) No Permitted Mortgagee shall have the right to use the failure of the City to provide notice to any other Mortgagee as a claim, defense or estoppel to application of these provisions with respect to such Permitted Mortgagee's Permitted Mortgage. 15.12 Failure of Permitted Mortgagee to Complete Improvements. Upon the earlier of (a) the applicable Final Completion Date or (b) the date upon which all cure periods of Developer have expired following Material Default by Developer in Completion of construction of the Improvements on the Developer Parcels under this Agreement, and the notice required by Section 15.11 to a Permitted Mortgagee was properly given, and such Permitted Mortgagee has not cured or commenced to cure as required by Section 15.11, the City may, at its option, upon thirty (30) calendar days' written notice to the Developer and such Permitted Mortgagee either: (a) purchase the Permitted Mortgage by payment to the Permitted Mortgagee of all amounts thereunder, including all unpaid principal, interest, late fees and all other advances and amounts secured by the Permitted Mortgage; (b) exercise its Right of Purchase the Developer Parcels pursuant to Section 13.4, or (c) subject to the Reversion Conditions, exercise its Right of Reversion with respect to the applicable portions of the Developer Parcels pursuant to Section 13.5. 15.13 Amendment; Termination. No amendment or modification to this Agreement may impair or materially alter a Permitted Mortgagee's rights hereunder, or increase a Permitted Mortgagee's obligations hereunder (whether ongoing or contingent obligations) without the consent of such Permitted Mortgagee, provided that such Permitted Mortgagee has agreed that its consent will not be unreasonably withheld, and provided, further, that such Permitted Mortgagee has agreed that its consent is not required for modifications to Attachment Nos. 13, 16 or 17 that are made in accordance with Section 16.3. Developer shall not terminate this Agreement (nor, if applicable, the Ground Lease) as to any portion of the Developer Parcels which is subject to any Permitted Mortgage without first obtaining the prior written consent of all Permitted Mortgagees whose Permitted Mortgages encumber that portion of the Developer Parcels. 15.14 Condemnation or Insurance Proceeds. Except as otherwise expressly set forth in this Agreement or the Ground Lease, the rights of any Permitted Mortgagee, pursuant to its Permitted Mortgage, to receive condemnation or insurance proceeds which are otherwise payable to such Permitted Mortgagee or to a Party which is its mortgagor shall not be impaired. 15.15 Loss Payable Endorsement to Insurance Policy. The City agrees that the name of the senior -most Permitted Mortgagee may be added as the primary loss payee to the "loss payable endorsement" attached to any and all insurance policies required to be carried by Developer under this Agreement. July 12, 2004 -104- Disposition and Development 18405:6390691.8 Agreement 15.16 Modification of Article; Conflicts. Following the Initial Close of Escrow, no Party shall unreasonably withhold its consent to industry standard modifications to the mortgagee protection provisions of this Agreement reasonably requested by a Permitted Mortgagee, provided that the rights of any such Party will not be materially impaired, diminished, limited or delayed, nor the obligations of such Party increased in any material respect as a result of such modifications, and provided, further, the Developer and the City hereby agree that the City shall have no obligation to make any modifications to this Agreement pursuant to this Section prior or as a condition to Initial Close of Escrow. 15.17 No Subordination. This Agreement shall not be subordinated to any Mortgage, ground lease or other instrument without the express written consent of the Parties hereto, each in its sole discretion. 15.18 Constructive Notice and Acceptance. Until such time as a Final Certificate of Compliance is Recorded with respect to the Developer Parcels and subject to the provisions of Article 2, all of the provisions contained in this Agreement shall be binding upon and benefit any Person who acquires fee title to or a ground subleasehold interest in a portion of the Property, in accordance with their terms and subject to the effect of a Partial Certificate of Compliance. 15.19 Bankruptcy Affecting the Developer. Developer and City hereby agree that this Agreement (including the Right of Purchase and Right of Reversion contained herein), each Quitclaim Deed and the Ground Lease shall contain and consist of covenants running with the land and that neither this Agreement, any Quitclaim Deed nor the Ground Lease shall be subject to rejection in bankruptcy and Developer hereby waives its rights to reject this Agreement, any Quitclaim Deed and/or the Ground Lease in bankruptcy. If, notwithstanding the foregoing, the Developer, as debtor in possession, or a trustee in bankruptcy for the Developer seeks to and does reject this Agreement, any Quitclaim Deed or the Ground Lease in connection with any proceeding involving the Developer under the United States Bankruptcy Code or any similar state or federal statute for the relief of debtors (a "Bankruptcy Proceeding"), then without waiver of any right of the City to challenge such rejection, the Developer and the City hereby agree for the benefit of the City and each and every Permitted Mortgagee that such rejection shall, subject to such Permitted Mortgagee's acceptance, be deemed the Developer's assignment of the Agreement, Quitclaim Deed or Ground Lease and the Developer Parcels corresponding thereto to the Developer's Permitted Mortgagee(s) in the nature of an assignment in lieu of foreclosure. Upon such deemed assignment, neither this Agreement nor the Ground Lease shall terminate and each Permitted Mortgagee shall, subject to compliance with Section 2.2, become the Developer hereunder as if the Bankruptcy Proceeding had not occurred, unless such Permitted Mortgagee(s) shall reject such deemed assignment by written notice to the City within fifteen (15) calendar days after receiving notice of the Developer's rejection of this Agreement in Bankruptcy Proceedings. 15.20 New Agreement and Ground Lease with Permitted Mortgagee. 15.20.1 Request by Senior Permitted Mortgagee. In the event of termination of this Agreement and/or the Ground Lease for any reason (including by reason of any Material Default by Developer or by reason of the disaffirmance thereof by Developer, as a debtor-in- possession, or by a receiver, liquidator or trustee for Developer or its property), the City, if July 12, 2004 -105- Disposition and Development 18405:6390691.8 Agreement requested by the then -most senior Permitted Mortgagee (or by the next most senior Permitted Mortgagee if Permitted Mortgagees with more senior priority do not so request) will enter into a new disposition and development agreement and/or ground sublease with the Permitted Mortgagee or other party requesting the same, provided that such party is the then -owner of the Property, upon the same terms, provisions, covenants and agreements set forth in this Agreement and/or the Ground Lease and commencing as of the date of termination of this Agreement and/or the Ground Lease, as the case may be (collectively, the "New Agreement"), subject to the following: (a) such Permitted Mortgagee or requesting party shall have provided written notice to the City requesting the New Agreement within thirty (30) calendar days after the date of termination of this Agreement; (b) such Permitted Mortgagee or requesting party shall pay to the City at the time of the execution and delivery of the New Agreement those sums specified in Section 15.11 c which would, at the time of the execution and delivery thereof be due and unpaid pursuant to this Agreement but for its termination, and in addition thereto any reasonable attorneys' fees and experts' fees and court costs and court expenses (including attorney's and expert's fees) to which the City shall have been subjected by reason of Developer's Material Default; and (c) such Permitted Mortgagee or requesting party shall, subject to the provisions of Section 15.7. 15.8 and 15.11, perform and observe all covenants in this Agreement to be performed and observed by a Permitted Mortgagee, and failure to do so shall, after notice and opportunity to cure as provided by this Agreement, be a Material Default under this Agreement. 15.20.2 Request by City. In the event of termination of this Agreement for any reason (including by reason of any Material Default by Developer or by reason of the disaffirmance thereof by Developer, as a debtor-in-possession, or by a receiver, liquidator or trustee for Developer or its property) the then -most senior Permitted Mortgagee, if requested by the City, and provided that such party is the then -owner of the Property, will enter into a new Agreement with the City requesting a new Agreement upon the same terms, provisions, covenants and agreements set forth in this Agreement and commencing as of the date of termination of this Agreement ("New Agreement"), subject to the following: (a) the City shall have provided written notice to such Permitted Mortgagee requesting the' New Agreement within thirty (30) calendar days after the date of termination of this Agreement, with a copy to each other Permitted Mortgagee; and (b) the Permitted Mortgagee shall be subject to the provisions of Section 15.7. 15.8 and 15.11 and shall perform and observe all covenants in this Agreement to be performed and observed by a Permitted Mortgagee and failure to do so shall, after notice and opportunity to cure, shall be a Material Default under this Agreement. 15.21 Priority of New Agreement. Any New Agreement shall be prior to any Mortgage or other lien, charge, or encumbrance on the Property and each Mortgagee shall July 12, 2004 -106- Disposition and Development 18405:6390691.8 Agreement execute such additional consents and/or subordination agreements as may reasonably requested by the City or the new Developer to evidence the priority of the New Agreement to all Mortgages, whether Recorded prior or subsequent to execution of the New Agreement. 16. General Provisions. 16.1 Consent to Jurisdiction; Service of Process. The Parties hereto agree that all actions or proceedings arising in connection with this Agreement and/or the Property shall be tried and litigated exclusively in the Superior Court of the County of Orange, State of California, in any other appropriate court of that county, or in the United States District Court for the Central District of California. This choice of venue is intended by the Parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between or among the Parties with respect to or arising out of this Agreement in any jurisdiction other than that specified in this Section. Each Party hereby waives any right that it may have to assertforum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this Section, and stipulates that the state and federal courts located in the County of Orange, State of California, shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy or proceeding arising out of this Agreement. Each Party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this Section 16.1 by means of registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices as set forth in this Agreement, or in the manner set forth in Section 16.7(a) or LcJ pertaining to notice. Any final judgment rendered against a Party in any action or proceeding shall be conclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law. 16.2 Legal Fees and Costs. If any Party to this Agreement institutes any action, suit, counterclaim, appeal, arbitration or mediation 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 or warranties on the part of the other Party to this Agreement, or in any other manner with respect to this Agreement, then the "Prevailing Party" (defined below) in such Action, whether by arbitration or final judgment, shall be entitled to have and recover of and from the other Party all costs and expenses of the Action, including reasonable attorneys' fees and costs (at the Prevailing Party's attorneys' then -prevailing rates as increased from time to time by the giving of advanced written notice by such counsel to such Party) incurred in bringing, prosecuting and/or defending 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 such Action shall contain a specific provision providing for the recovery of attorneys' fees and costs incurred in enforcing such Decision. A court or arbitrator shall fix the amount of reasonable attorneys' fees, experts' fees and consultants' fees and costs upon the request of either Party. Any judgment or order 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 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, July 12, 2004 -107- Disposition and Development 18405:6390691.8 Agreement reasonable attorneys' 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 16.2 includes a Party who agrees to dismiss an Action in 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. 16.3 Modifications or Amendments. No amendment, change, modification or supplement to this Agreement shall be valid and binding on any of the Parties unless it is represented in writing and signed by each of the Parties hereto. From time to time the Parties may by mutual written agreement update each of Attachment Nos. 13, 16 and/or 17 and substitute such updated Attachment for the Attachment attached hereto as of the Effective Date, and such substitution shall not be deemed an amendment of this Agreement as a whole nor require the Recording of a replacement Memorandum of DDA. 16.4 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. 16.5 Further Assurances. Each of the Parties hereto shall execute and deliver at their own cost and expense, any and all additional papers, documents, or instruments, and shall do any and all acts and things reasonably necessary or appropriate in connection with the performance of its obligations hereunder in order to carry out the intent and purposes of this Agreement. 16.6 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. Except as otherwise specifically set forth in this Agreement, wherever a Party has a right to damages for the Material Default of another Party: (a) such damages shall be limited to direct (actual) damages for the default of the other Party and (b) each of the Parties, on behalf of itself and its successors and assigns, hereby expressly waives, releases and relinquishes any and all right to any expectation, anticipation, indirect, consequential, exemplary or punitive damages. 16.7 Notices, Demands and Communications between the Parties. 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 United States mail 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 a national overnight delivery service reasonably approved by the Parties (Federal 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 received by the recipient July 12, 2004 -108- Disposition and Development 18405:6390691.8 Agreement Party when sent by facsimile transmission or email at the number or email address set forth below (provided, however, that notices given by facsimile or email shall not be effective unless either (i) a duplicate copy of such notice is promptly sent by any method permitted under this Section 16.7 other than by facsimile or email; 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: If to the City: Tustin City Hall 300 Centennial Way Tustin, CA 92780 Attention: City Manager and Attention: Assistant City Manager Facsimile: (714) 838-1602 With a copy to: City Attorney, City of Tustin Woodruff Spradlin & Smart 701 S. Parker Street, Suite 8000 Orange, CA 92868-4760 Attention: Lois E. Jeffrey, Esq. Facsimile: (714) 835-7787 With a copy to: Steefel, Levitt & Weiss A Professional Corporation 550 South Hope Street, Suite 1665 Los Angeles, CA 90071 Attention: Amy E. Freilich, Esq. Facsimile: 310-599-3450 If to the Developer: Vestar/KIMCO Tustin, L.P., 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Richard Kuhle Facsimile: 602-955-2298 With a copy to: Vestar Development Company 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Allan J. Kasen, Esq. Facsimile: 602-955-2298 July 12, 2004 -109- Disposition and Development 18405:6390691.8 Agreement With a copy to (for legal notices): Capitol Corporate Services, Inc. 455 Capitol Mall Complex, Suite 217 Sacramento, CA 95814 Telephone: 800-327-4842 Facsimile: 800-770-1332 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. 16.8 Force Majeure Delay. 16.8.1 Definition of Force Majeure Delay. "Force Majeure Delay" shall mean the occurrence of any of the following events when such event is beyond the control of the claiming Party and such Party's contractors and consultants and is not due to an act or omission of such Party or any consultant, contractor or other Person for whom such Party may be contractually or legally responsible, which directly, materially and adversely affects the ability of the claiming Party to meet its non -monetary obligations under this Agreement, including the deadlines imposed by the Schedule of Performance or the ability of the Developer to Complete the Project, and which events (or the effect of which events) could not have been avoided by due diligence and use of reasonable efforts by the Party claiming Force Majeure Delay: (a) An epidemic, blockade, quarantine, rebellion, war, insurrection, act of terrorism, strike or lock -out, riot, act of sabotage, civil commotion, act of a public enemy, freight embargo, or lack of transportation; (b) Unusually severe weather; (c) Reasonably unforeseeable physical condition of the Property including the presence of Hazardous Materials; (d) Fire, earthquake or other casualty, in each case only if causing material physical destruction or damage on the Property; (e) Any lawsuit restraining, enjoining, challenging, or delaying construction of the Project, which is vigorously defended by the claiming Party and which directly impairs the ability of the claiming Party to perform despite the best efforts of such Party to do so, provided however that the foregoing shall not apply to a Party's performance regarding the Initial Close of Escrow, which is governed by Article 7 and Section 14.1; (f) The passage of a referendum or initiative that results in the inability of such Party to perform its material obligations hereunder; and (g) Any change in Governmental Regulation or adoption of any new Governmental Regulation which is materially inconsistent with Governmental Regulations in effect as of the Effective Date. July 12, 2004 -110- Disposition and Development 18405:6390691.8 Agreement 16.8.2 Limitation. The term "Force Majeure Delay" shall be limited to the matters listed Section 16.8.1 above and specifically excludes from its definition the following matters which might otherwise be considered Force Majeure Delay: (a) The suspension, termination, interruption, denial or failure to obtain or nonrenewal of any Entitlement, Development Permit, license, consent, authorization or approval which is necessary for the development of the Project, except for any such matter resulting from a lawsuit or referendum as described in Section 16.8.1(e) orfes; (b) Any change in a Government Regulation which was proposed or was otherwise reasonably foreseeable at the Effective Date; (c) Failure of the Developer or any Successor Owner to perform any obligation to be performed by the Developer or any Successor Owner hereunder as the result of adverse changes in the financial condition of Developer or such Successor Owner, as applicable; (d) Failure of the Developer or any Successor Owner to provide any Performance Bond or other financial security required by this Agreement when due or to submit evidence of financing of the Project or to perform any obligation to be performed by the Developer or any Successor Owner hereunder as the result of adverse changes in the market conditions unless the Developer or such Successor Owner demonstrates to the satisfaction of the Assistant City Manager or designee in its sole discretion that (x) the Developer or such Successor Owner was unable to obtain such Performance Bonds and/or financing despite making best efforts to do so, and (y) such Performance Bonds and/or financing are unavailable on terms which are commercially feasible because of generally applicable economic conditions affecting the credit market which then exist and which are materially worse than the conditions which prevail as of the Effective Date. (e) Failure to submit documentation as and when required by Sections 2.2, 2_3 or 15.2 as applicable; (f) Failure to submit Basic Concept Plans for Improvements when required pursuant to the Schedule of Performance; (g) Failure to acquire, maintain and submit evidence of insurance policies as required by Article 11; (h) Failure to execute documents; and (i) All other matters not listed in Section 16.8.1(a) through W above. 16.8.3 Procedure. If any Party (the "First Party") believes that an extension of time is due to it due to Force Majeure Delay, it shall notify the other Party (the "Second Party") in writing within thirty (30) calendar days from the date upon which the First Party becomes aware of such Force Majeure Delay, describing the Force Majeure Delay, when and how the First Party obtained knowledge thereof, the date the event commenced, the steps the First Party anticipates taking to respond to such Force Majeure Delay, and the estimated delay resulting from such Force Majeure Delay and response. The extension for Force Majeure Delay shall be July 12, 2004 -111- Disposition and Development 18405:6390691.8 Agreement granted or denied in the Second Party's reasonable discretion. If the Second Party's decision with respect to such request is disputed by the First Party, the matter shall be resolved in accordance with Section 16.1. If the First Party fails to notify the Second Party in writing of its request for a given Force Majeure Delay within the thirty (30) calendar days specified above, there shall be no extension for such Force Majeure Delay. 16.8.4 All time periods under this Agreement, including in the Schedule of Performance, relating to non -monetary obligations under this Agreement may be extended for Force Majeure Delay in accordance with this Section 16.8, except as set forth in Section 16.8.5 and except that neither the Initial Closing Date nor any Subsequent Closing Date shall be extended by any Force Majeure Delay, but may only be extended as set forth in Section 7.1 and Section 7.7.1, respectively. 16.8.5 Not Applicable to Reversion Action Dates. The time periods set forth in Section 13.5.1(a) shall not be extended for Force Majeure Delay, but may only be extended in writing by the City in its sole discretion. 16.9 Conflict of Interest. No appointed or elected official or employee of the City shall have any personal interest, direct or indirect, in this Agreement nor shall any official or employee participate in any decision relating to the Agreement which affects his interests or the interests of any corporation, partnership, or association in which he is directly or indirectly interested. The Developer warrants that it has not paid or given and will not pay or give any third person any money or other consideration for obtaining this Agreement. 16.10 Nonliability of City Officials and Employees. No elected or appointed official, representative, employee, agent, consultant, legal counsel or employee of the City shall be personally liable to the Developer, or any successor in interest in the event of any default or breach by the City for any amount which may become due to the Developer or successor or on any obligation under the terms of this Agreement. 16.11 Inspection of Books and Records. The City shall have the right at all reasonable times, upon ten (10) calendar days written notice, to inspect the books and records of the Developer pertaining to the Developer Parcels as pertinent to the purposes of this Agreement. The Developer shall also have the right at all reasonable times to inspect the books and records of the City, upon ten (10) calendar days written notice, pertaining to the Developer Parcels as pertinent to the purposes of this Agreement. 16.12 Approvals. (a) Except as otherwise expressly provided in this Agreement, proprietary approvals required of the City or the Developer in this Agreement, including the Attachments hereto, shall not be unreasonably withheld, conditioned or delayed. (b) Any matter required by this Agreement to be submitted to the City shall be deemed submitted upon the submittal to the Assistant City Manager or designee. (c) Except where the terms of this Agreement expressly require the approval of a matter or the taking of any action by the City Council, any matter to be approved July 12, 2004 -112- Disposition and Development 18405:6390691.8 Agreement by the City shall be deemed approved, and any matter to be taken by the City shall be deemed taken, upon the written approval by the Assistant City Manager or designee. 16.13 Real Estate Commissions. 16.13.1 No City Liability. The City shall not be liable for any real estate commissions, brokerage fees or finders fees which may arise from this Agreement. The Developer represents that it has engaged no broker, agent or finder in connection with this Agreement or the transactions identified in this Agreement. The Developer hereby agrees to indemnify and hold the City and its elected and appointed officials, employees and representatives harmless from any losses and liabilities arising from or in any way related to any claim by any broker, agent, or finder retained by the Developer regarding this Agreement or development of the Project or the transactions identified in this Agreement or the purchase or sale of other property at or adjacent to the Developer Parcels. 16.13.2 City Representation. The City represents that it has engaged no broker, agent, or finder in connection with this Agreement or the transactions identified in this Agreement. 16.14 Date and Delivery of Agreement. Notwithstanding anything to the contrary contained in this Agreement, the Parties intend that this Agreement shall be deemed effective, executed and delivered for all purposes under this Agreement and for the calculation of any statutory time periods based on the date an agreement between the Parties is effective, executed and/or delivered, as of the Effective Date. 16.15 Constructive Notice and Acceptance. Every Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such Person acquired an interest in the Project or Property. 16.16 Survival of Covenants, Representation and Warranties. The covenants, representations and warranties, and indemnities specified in this Agreement shall survive any investigation made by any Party hereto and the closing of the transactions contemplated hereby. 16.17 Construction and Interpretation of Agreement. (a) The language in all parts of this Agreement shall in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against any Party. The Parties hereto acknowledge and agree that this Agreement has been prepared jointly by the Parties and has been the subject of arm's length and careful negotiation over a considerable period of time, that each Party has been given the opportunity to independently review this Agreement with legal counsel, and that each Party has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement shall not be interpreted or construed against the Party preparing it; instead other rules of interpretation and construction shall be utilized. The provisions of California Civil Code Section 1654 are specifically waived by each Party hereto. July 12, 2004 -113- Disposition and Development 18405:6390691.8 Agreement (b) If any term or provision of this Agreement, the deletion of which would not adversely affect the receipt of any material benefit by any Party hereunder, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby and each other term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. It is the intention of the Parties hereto that in lieu of each clause or provision of this Agreement that is illegal, invalid, or unenforceable, there be added as a part of this Agreement an enforceable clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible. (c) Any matters or facts included in Article 1 shall be conclusively deemed true. (d) The captions of the sections and subsections in this Agreement are inserted solely for convenience and under no circumstances are they or any of them to be treated or construed as part of this instrument. (e) References in this instrument and in the Attachments hereto to "this Agreement" mean, refer to and include this instrument as well as any riders, schedules, exhibits, addenda and attachments hereto (which are hereby incorporated in this Agreement by this reference) and all other documents expressly incorporated by reference in this instrument. Any references to any covenant, conditions, obligation and/or undertaking "herein," "hereunder," or "pursuant hereto") (or language of like import) shall mean, refer to and include the covenants, obligations and undertakings existing pursuant to this Agreement and any riders, schedules, exhibits, addenda, attachments or other documents affixed to or expressly incorporated by reference in this instrument. (f) As used in this Agreement and as the context may require, the singular includes the plural and vice versa and the masculine gender includes the feminine and vice versa. (g) As used in this Agreement the words "include" and "including" mean respectively "include, without limitation" and "including, without limitation". (h) Unless otherwise indicated, references in this Agreement to sections, paragraphs, clauses, exhibits, attachments and schedules are to the same contained in or attached to this Agreement and all attachments and schedules referenced in this Agreement are incorporated in this Agreement by this reference as through fully set forth in this Section. 16.18 Time of Essence. Time is of the essence with respect to all provisions of this Agreement in which a definite time for performance is specified; provided, however, that the foregoing shall not be construed to limit or deprive a Party of the benefits of any cure period or Force Majeure Delay expressly provided for in this Agreement. 16.19 Fees and Other Expenses. Except as otherwise provided in this Agreement, each of the Parties hereto shall pay its own fees and expenses, including attorneys' fees, experts' fees and consultants' fees and costs, in connection with negotiation and preparation of this Agreement and compliance with its terms. July 12, 2004 -114- Disposition and Development 18405:6390691.8 Agreement 16.20 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 hereto other than purchaser and seller and landlord and tenant according to the provisions contained in this Agreement, or cause the City to be responsible in any way for the debts or obligations of the Developer. 16.21 Compliance with Law. The Developer agrees to comply with all the requirements now in force, or which may thereafter be in force, of all municipal, county, state and federal authorities, pertaining to the Project Site, the Developer Parcels and the Improvements as well as operations conducted thereon. 16.22 Binding Effect. This Agreement and terms, provisions, promises, covenants conditions and restrictions contained herein shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors and assigns. 16.23 No Third Party Beneficiaries. This Agreement has been made and entered into solely for the benefit of the Parties to this Agreement and their respective successors and permitted assigns. Nothing in this Agreement confers any rights or remedies on any other Person. Nothing in this Agreement relieves or discharges the obligation or liability of any third Persons to any Parties to this Agreement. 16.24 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 signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States, postage prepaid or is hand delivered, and such manually signed page is actually received by the other Party within five (5) calendar days of its execution. The Parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Agreement. 16.25 Authority of Signatories to Agreement. Each person executing this Agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Agreement on behalf of the Parties for which execution is made. 16.26 Entire Agreement, Waivers and Amendments. (a) This Agreement is executed in [five (5)] duplicate originals, each of which is deemed to be an original. (b) This Agreement, including the Attachments hereto, together with any related documents referred to or incorporated by reference in this Agreement constitute the entire agreement between or among the Parties with respect to the subject matter hereof. This Agreement supersedes and replaces any and all prior agreements, proposed agreements, negotiations and communications, oral or written, and contains the entire agreement between the Parties as to the subject matter hereof and any and all prior agreements, understandings or July 12, 2004 -115- Disposition and Development 18405:6390691.8 Agreement representations are hereby terminated and canceled in their entirety. Each Party hereby acknowledges that no other Party hereto, nor its agents or attorneys, have made any promises, representations or warranties whatsoever, expressed or implied, not contained in this Agreement, to induce such Party to execute this Agreement, and each Party acknowledges that it has not executed this Agreement in reliance on any such promise, representation or warranty not contained in this Agreement. (c) 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 or the Developer and all amendments hereto must be in writing and signed by the appropriate authorities of the City and the Developer. Any amendment to the Agreement shall require the approval of the City Council of the City. 16.27 Approval Procedures. This Agreement, when executed by the Developer and delivered to the City, will then be scheduled for a public hearing before the City Council. This Agreement must be authorized, executed and delivered by the City within sixty (60) calendar days after date of signature by the Developer or the Developer shall have the authority to withdraw its offer to enter into this Agreement upon written notice to the City. The Effective Date of this Agreement shall be the date when this Agreement has been executed by the City and delivered to the Developer, which shall be the date first set forth above. 16.28 Confidentiality. Subject to the provisions of the California Public Records Act (Government Code Section 6250 et seq.), which governs the City's use and disclosure of its agreements and records, the City and the Developer hereby agree that each shall keep confidential information provided by the other and denominated as confidential and will not disclose any such information to any person or entity without obtaining the prior written consent of the other Party, except that the City shall have the right to disclose any information contained in any third party reports obtained by the Developer and required to be disclosed by it pursuant to law. 16.29 Proprietary and Governmental Roles: Actions by Parties. Except where clearly and expressly provided otherwise in this Agreement, the capacity of the City in this Agreement shall be as owner, lessor, assembler, redeveloper and/or seller of property only ("Proprietary Capacity"), and any obligations or restrictions imposed by this Agreement on the City, shall be limited to that capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect the governmental capacities of each, including enacting laws, inspecting structures, reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions of each pursuant to federal, state or local law ("Governmental Capacity"). In addition, nothing in this Agreement shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City under applicable Governmental Requirements. 16.30 Consent. In any instance in which a Party shall be requested to consent to or approve of any matter with respect to which such Party's consent or approval is required by any July 12, 2004 -116- Disposition and Development 18405:6390691.8 Agreement of the provisions of this Agreement, such consent or approval shall be given in writing. In addition, whenever not expressly otherwise stated: (a) the City, when acting in its Proprietary Capacity shall not unreasonably withhold its approval with respect to matters requiring its approval hereunder; (b) Developer shall not unreasonably withhold its approval with respect to matters requiring its approval hereunder, and (c) City, when acting in its Government Capacity, shall be permitted to utilize its sole discretion in accordance with applicable law with respect to matters requiring its approval. [signature page follows] July 12, 2004 -117- Disposition and Development 18405:6390691.8 Agreement IN WITNESS WHEREOF, the City and the Developer have signed this Agreement as of the date first set forth above. Dated: ATTEST: By: Pamela Stoker City Clerk Dated: APPROVED AS TO FORM Special Counsel for the City STEEFEL, LEVITT & WEISS A PROFESSIONAL CORPORATION By: July 12, 2004 18405:6390691.8 -118- City of Tustin, California By: William Huston, City Manager Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: _ Name: Title: Disposition and Development Agreement LIST OF ATTACHMENTS ATTACHMENT NO. 1 LEGAL DESCRIPTION OF DEVELOPER FEE PARCEL A; ATTACHMENT NO. 7 DEVELOPER FEE PARCEL B; DEVELOPER FEE PARCEL C; ATTACHMENT NO. 8 AND DEVELOPER FEE PARCEL D ATTACHMENT NO.2 LEGAL DESCRIPTION OF DEVELOPER SUBLEASE ATTACHMENT NO. 9B PARCEL A; DEVELOPER SUBLEASE PARCEL B; ATTACHMENT NO. 15 DEVELOPER SUBLEASE PARCEL C; DEVELOPER ATTACHMENT NO. 16 SUBLEASE PARCEL D, AND DEVELOPER SUBLEASE ATTACHMENT NO. 17 PARCEL E ATTACHMENT NO. 3 GLOSSARY OF DEFINED TERMS ATTACHMENT NO.4 QUITCLAIM DEED ATTACHMENT NO. 5 GROUND LEASE ATTACHMENT NO. 6 SPECIAL RESTRICTIONS ATTACHMENT NO. 7 SCHEDULE OF PERFORMANCE ATTACHMENT NO. 8 SCOPE OF DEVELOPMENT ATTACHMENT NO. 9A PRELIMINARY PLANS ATTACHMENT NO. 9B MINIMUM PROJECT ATTACHMENT NO. 10 INDEX OF HAZARDOUS MATERIALS REPORTS ATTACHMENT NO. 11 MEMORANDUM OF DDA ATTACHMENT NO. 12 BILL OF SALE ATTACHMENT NO. 13 PREAPPROVED USERS ATTACHMENT NO. 14 CONTRACTS ATTACHMENT NO. 15 CERTIFICATE OF COMPLIANCE ATTACHMENT NO. 16 PROHIBITED USERS ATTACHMENT NO. 17 PROHIBITED USES ATTACHMENT NO. 18 ASSIGNMENT AND ASSUMPTION AGREEMENT ATTACHMENT NO. 19 SUBORDINATION ATTACHMENT NO. 20 CITY ESTOPPEL ATTACHMENT NO. 21A CITY NONDISTURBANCE AND ATTORNMENT AGREEMENT FOR MAJOR PAD TRANSFEREES ATTACHMENT NO. 21B CITY NONDISTURBANCE AND ATTORNMENT AGREEMENT FOR MINOR PAD TRANSFEREES Vestar DDA -ii- 07/12/04 18405:6391127.7 ATTACHMENT NO. 21C CITY NONDISTURBANCE AND ATTORNMENT AGREEMENT FOR RETAIL SPACE TENANTS ATTACHMENT NO. 22 PRELIMINARY TITLE REPORTS ATTACHMENT NO. 23 CITY NOTE ATTACHMENT NO. 24 CITY DEED OF TRUST Vestar DDA -iii- 07/ 12/04 18405:6391127.7 ATTACHMENT NO.1 LEGAL DESCRIPTION OF DEVELOPER FEE PARCEL A, DEVELOPER FEE PARCEL B, DEVELOPER FEE PARCEL C AND DEVELOPER FEE PARCEL D Developer Fee Parcel A Lots 1-12 and Lot 15, as shown on Tentative Tract Map 16695 Developer Fee Parcel B Lot 16, Lot 17, Lot 18 and Lot 19, as shown on Tentative Tract Map 16695 Developer Fee Parcel C Lot 20, as shown on Tentative Tract Map 16695 Developer Fee Parcel D Lot 27, as shown on Tentative Tract Map 16695 Final Lot configurations for each of the foregoing Developer Fee Parcels to be as approved on the Final Tract Map by the City of Tustin. Vestar DDA Attachment No. 1 — Page 1 Legal Description of 07/12/04 Developer Fee Parcels 18405:6391127.7 ATTACHMENT NO. 1B i IN 11 AWN! 0 �f Y 0 N t T mjj A X m 0 3,To -i 2� a. F= Z (n L, W �- V) U- o j W—u- w 0 a_ ui Cl Y B 1§ O 0 II iiiii@ZQ L . li a 'Kil" V bg ATTACHMENT NO.2 LEGAL DESCRIPTION OF DEVELOPER SUBLEASE PARCEL A, DEVELOPER SUBLEASE PARCEL B, DEVELOPER SUBLEASE PARCEL C, DEVELOPER SUBLEASE PARCEL D AND DEVELOPER SUBLEASE PARCEL E Developer Sublease Parcel A Lot 13, as shown on Tentative Tract Map 16695 Developer Sublease Parcel B Lot 14, as shown on Tentative Tract Map 16695 Developer Sublease Parcel C Lot 21, Lot 22 and Lot 23, as shown on Tentative Tract Map 16695 Developer Sublease Parcel D Lot 24, Lot 28 and Lot 29, as shown on Tentative Tract Map 16695 Developer Sublease Parcel E Lot 25 and Lot 26, as shown on Tentative Tract Map 16695 Final Lot configurations for each of the foregoing Developer Sublease Parcels to be as approved on the Final Tract Map by the City of Tustin. Vestar DDA Attachment No. 2 — Page 1 Legal Description of 07/12/04 Developer Sublease Parcels 18405:6391127.7 ATTACHMENT NO. 2B 0 3MJAW I f0 Al Y ill 0 i N m = 0 � ^ W Q C 8 3 J rujLLJ g Q E 3 3 N Ld JN�'F zwo�FJ N m �N ae Ckf Ld W n- o U w 0 0 3MJAW I f0 Al Y ill m 39 0 x O 0 Ld m z Lu L� L) w < < < LU _j 0 cL < C.) Lu _j LIj z F= wwii z < P LLI U) 4=�p m as 0 Ck: LU a - o L) 39 a O O M II -v Z w a U N I 0 Ln r W Q F U Z 0 n. J AW C 4F- LLJ J 0 R (n m J V) E e as 0 }O Q' !- W d U O m Q m 1\ I5 3x IAV I 10 Al bg C14 O W 0 z L) cr co < –i U CL < 0 LLI LLI I UU En U) P: z < Z LLI (Dm P: LLJ fn –i 0 –j 0 X—> - LU a_ O L) m 3x IAV I 10 Al bg I 5 U V) N I AV I 10 Al 0 bd �j M C14 m 7 uxi A ui z 0 ui 0 ir co UJ U-) Z -i U) " Z < LM/) P: LLI , o L V) 0 �7 L) O N I AV I 10 Al 0 bd �j ATTACHMENT NO.3 GLOSSARY OF DEFINED TERMS For purposes of this Agreement, the following capitalized terms shall have the following meanings: "Action" shall have the meaning set forth in Section 16.2. "Additional Improvements" shall mean all Vertical Improvements other than Retail Buildings. "ADTS" shall have the meaning set forth in Section 8.3.6(b). "Affiliate" shall mean (1) any Person directly or indirectly Controlling, Controlled by or under common Control with another Person; (2) any Person owning or Controlling fifty-one percent (51 %) or more of the outstanding voting securities of such other Person; and (3) if that other Person is an officer, director, member or partner, any company for which such Person acts in any such capacity. "Agreement" shall mean this Tustin Legacy Disposition and Development Agreement (Retail Development) including all Attachments attached hereto. "ALTA Policy" shall have the meaning set forth in Section 6.4. "Alteration" shall have the meaning set forth in Section 8.16. "Appraiser" shall have the meaning set forth in Section 13.4.2. "Approved Project Plans" shall have the meaning set forth in Section 8.6.7. "Assistant City Manager" shall mean Ms. Christine Shingleton, or her successor in such capacity. "Audited Owner" shall have the meaning set forth in Section 12.4.3(a). "Bankruptcy Proceeding" shall have the meaning set forth in Section 15.19. "Base Closure Law" shall mean the Defense Base Closure and Realignment Act of 1990, Part A of Title XXIX of Public Law 101-510; 10 U.S.C. Section 2687, as amended. "Basic Concept Plans" shall mean documents and plans for the Improvements which: (a) shall describe the proposed use and include plans and renderings showing in reasonable detail the proposed size, land coverage, floor area, gross square footage, shape, height, bulk, massing, location, exterior material, exterior color scheme, setback and elevation of such Improvements; (b) shall include (i) a pedestrian and vehicular circulation and traffic plan showing all ingress and egress to public streets or roads and including a statement of impact; (ii) utilities and service connections plan; (iii) a landscape plan; (iv) a signage plan; and (v) a grading, drainage and Vestar DDA Attachment No. 3 — Page 1 Glossary of Defined Terms 07/12/04 18405:6391127.7 utility plan; and (c) shall be prepared and stamped approved by an architect and/or engineer licensed to practice in the State of California. "Bill of Sale" shall mean the bill of sale to be executed and delivered by the City at the Initial Close of Escrow and at each Subsequent Closing, and executed by Developer to acknowledge acceptance, which bill of sale shall convey to the Developer title to the Personal Property located on the then -conveyed Parcels. Each Bill of Sale shall be in substantially the form and substance of the document attached hereto as Attachment No. 12. "Book Value shall mean the book value of the Retail Pad on the records of the End User owning such Retail Pad on the date of calculation thereof, and shall consist of the sum of: (a) the applicable land account for the property which encompasses, among other items, purchase price, if applicable, and capitalized soft costs and (b) the applicable building account which encompasses, among other things, hard initial construction and renovation costs and capitalized soft costs, less accumulated depreciation on the building and applicable equipment. "Business Day(s)" shall mean any day on which City Hall is open for business and shall specifically exclude Fridays when City Hall is officially closed, Saturday, Sunday and all legal holidays. "CC&Rs" shall have the meaning set forth in Section 8.10. "CEQA" shall mean the California Environmental Quality Act and implementing regulations and guidelines, set forth in Cal. Public Resources Code Section 21000 et seg., and Cal. Code of Regulations, title 14, Section 15000 et seq, respectively. "Certificate of Compliance" shall mean a certificate to be issued with respect to one or more Parcels by the City acting in its Proprietary Capacity, upon Completion of all of the Improvements and satisfaction of all additional Conditions Precedent thereto with respect to such Parcel(s), as described in Article 9 of this Agreement. "Change in Ownership" shall mean any direct or indirect sale, any execution of a contract or other agreement to sell or option to purchase such membership interest, stock, partnership interest or other beneficial interest, or any assignment or pledge of such membership interest, stock, partnership interest or other beneficial interest, including any assignment or pledge for security purposes. "City" shall have the meaning set forth in Section 1.4.1. "City Benefited Property" shall mean the Right of Way Parcels owned or leased by the City as of the Effective Date. "City Closing Conditions" shall have the meaning set forth in Section 7.3. "City Code" shall mean the Tustin City Code for the City of Tustin, California, as the same may be amended from time to time. "City Council" shall have the meaning set forth in Section 1.1.1. Vestar DDA Attachment No. 3 — Page 2 Glossary of Defined Terms 07/12/04 18405:6391127.7 "City Dedication Parcels" shall mean those portions of the Developer Parcels, if any, for which Developer shall (following Initial Close of Escrow and in connection with or as a condition to obtaining Entitlements or Recording a Final Map): (a) offer to dedicate to the City (i) with respect to the Developer Fee Parcels or a Developer Sublease Parcel for which Developer has obtained fee title, in fee or (ii) in the case of the right of way for the San Joaquin storm drain channel, an easement (b) in the case of a Developer Sublease Parcel under the Ground Sublease, offer to release its ground subleasehold interest. The City Dedication Parcels shall, following acceptance thereof by the City, be owned by the City and shall, be utilized for, among other things, construction of public roadway and right of way improvements and related utilities, all of which shall be constructed by the Developer as part of the Project. "City Deed of Trust" shall mean a deed of trust securing the performance of the City Note, substantially in the form attached hereto as Attachment No. 24. "City Estoppel" shall mean an estoppel certificate to be executed and delivered by the City to a Permitted Mortgagee in conjunction with a Permitted Mortgage, or to Developer and a Pad Transferee or End User, or to a Successor Owner or to Tenants under Retail Space Leases, in each case in the form and substance of the estoppel attached hereto as Attachment No. 20 (or in other form agreed to by the City in its sole discretion). "City Hall" shall mean the seat of government for the City of Tustin, presently located at 300 Centennial Way, Tustin, California. "City Indemnified Parties" shall have the meaning set forth in Section 10.1. "City Non -Disturbance and Attornment Agreement" shall mean a recognition, non- disturbance and attornment agreement to be executed and delivered by the City to Major Pad Transferees, in substantially the form and substance attached hereto as Attachment No. 21 A; to Minor Pad Transferees, in substantially the form and substance attached hereto as Attachment No. 21B; and to End Users under Retail Space Leases, in substantially the form and substance attached hereto as Attachment No. 21 C. "City Note" shall mean that certain promissory note substantially in the form attached hereto as Attachment No. 23. "City Title Policy" shall mean any title insurance policy obtained by the City from the Title Company in connection with this Agreement. "City Transaction Expenses" shall have the meaning set forth in Section 4.2.3(a). "City's Environmental Insurance Policy" shall have the meaning set forth in Section 11.1.4(a). "Claim" or "Claims" shall mean any and all claims, actions, causes of action, demands, orders, or other means of seeking or recovering losses, damages, liabilities, costs, expenses (including attorneys' fees, fees of expert witnesses, and consultants' and court and litigation costs), costs and expenses attributable to compliance with judicial and regulatory orders and all Vestar DDA Attachment No. 3 — Page 3 Glossary of Defined Terms 07/12/04 18405:6391127.7 losses, damages, liabilities, costs, expenses, requirements, fines, penalties, liens, taxes, or any type of compensation whatsoever, direct or indirect, known or unknown, foreseen or unforeseen. "Class A Shopping Center" shall mean a first-class retail shopping center containing: (a) Class A Users, (b) no Prohibited Uses and no Prohibited Users and (c) no greater number of fast food, fast food drive-through and service retail drive-through uses than is permitted by the City in its sole discretion pursuant to Section 12.1.1(a). "Class A User" shall mean any Preapproved User or any other retailer or restaurateur of a type and quality similar to the Preapproved Users, provided that any Person or user represented by a user or tenant category on the list of Preapproved Users attached as Attachment No. 13 but not specifically listed thereon shall not be a Class A User if such Person is identified as a Prohibited User on Attachment No. 16 or such use is identified as a Prohibited Use on Attachment No. 17. "Closing Conditions" shall mean the Developer Closing Conditions and the City Closing Conditions. "Closing Date" shall mean the Initial Closing Date and each Subsequent Closing Date, as applicable. "CLTA Policy" shall have the meaning set forth in Section 6.2. "Community Development Department" shall mean the Community Development Department of the City of Tustin, California. "Complete" and "Completion" shall mean, with respect to the Project or, if the Project is constructed in Phases or on a Parcel -by -Parcel basis, with respect to a given Phase or Parcel, the point in time when all of the following shall have occurred with respect to the Project or such Phase or Parcel: (1) all Required Horizontal Improvements and Developer's Backbone Infrastructure Work shall to have been completed in accordance with this Agreement; (2) all Vertical Improvements have been completed in accordance with this Agreement; (3) the issuance of a certificate of occupancy by the City with respect to each and every building upon a Parcel or within a Phase, or, to the extent a certificate of occupancy is not required by the City for particular Improvements, the equivalent final inspection, signoff or other permit activity with respect to such Improvements, (4) the Recording of a Notice of Completion by the Developer, its Successor Owner or such entity's contractor; (5) a certification by the Project Architect that such Improvements (with the exception of minor "punch list" items) have been completed in a good and workmanlike manner and substantially in accordance with the approved plans and specifications; and (6) any mechanic's liens that have been recorded or stop notices that have been delivered have been paid, settled or otherwise extinguished, discharged, released, waived, bonded around or insured against. "Completion Date" and "Completion Dates" shall mean, as applicable, the Minimum Project Completion Date, the Improvements Completion Date and the Lease Parcel Retail Completion Date, individually or collectively as the context dictates. Vestar DDA Attachment No. 3 — Page 4 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Concept Plan and Design Review" shall mean the City's concept plan and design review approvals as required by the City Code, which shall be part of the Entitlements. "Conditional Use Permit" shall mean those certain conditional use permits, if any, required for development of the Project on the Developer Parcels, which shall be part of the Entitlements. "Conditions Precedent" or "Condition Precedent" shall mean all conditions precedent, to the City's issuance of a Partial Certificate of Compliance or a Final Certificate of Compliance, as the case may be set forth in Section 9.5.2. "Construction Contracts" shall have the meaning set forth in Section 8.13.3(2). "Contracts" shall mean those third -party leases, licenses, contracts or other agreements regarding rights of occupancy, if any, listed on Attachment No. 14. "Control", "Controlled" or "Controlling" shall mean the power to direct the management. It shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity. "Conveyance Agreement" shall mean that certain Agreement Between The United States of America and the City of Tustin, California for the Conveyance of a portion of the Former Marine Corps Air Station Tustin, dated May 13, 2002. "Costs" shall have the meaning set forth in Section 16.2. "DDA Deposit" shall have the meaning set forth in Section 4.2.3(a)(iv). "Decision" shall have the meaning set forth in Section 16.2. "Default Rate" shall mean an interest rate of eight percent (8%) per annum, compounded annually, but in no event in excess of the maximum legal rate. "Defaulting Party" shall mean a Party to this Agreement who is either in Potential Default or in Material Default. "Determination Date" shall have the meaning set forth in Section 13.4.2. "Developer" shall have the meaning set forth in Section 1.4.2. "Developer Fee Parcels", "Developer Fee Parcel A", "Developer Fee Parcel B", "Developer Fee Parcel C" and "Developer Fee Parcel D" shall have the meanings set forth in Section 1.2.3. Vestar DDA Attachment No. 3 — Page 5 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Developer Fee Property", "Developer Fee Property A", "Developer Fee Property B", "Developer Fee Property C" and "Developer Fee Property D" shall have the meanings set forth in Section 4.1.1. "Developer Parcel B Contribution" shall have the meaning set forth in Section 8.13.3(a)(i). "Developer Parcels" shall have the meaning set forth in Section 1.2.2. "Developer Representatives" shall have the meaning set forth in Section 5.2. "Developer Sublease Parcels", "Developer Sublease Parcel A", "Developer Sublease Parcel B", "Developer Sublease Parcel C", "Developer Sublease Parcel D" and "Developer Sublease Parcel E" shall have the meanings set forth in Section 1.2.4. "Developer Sublease Property", "Developer Sublease Property A", "Developer Sublease Property B", "Developer Sublease Property C", "Developer Sublease Property D" and "Developer Sublease Property E" shall have the meanings set forth in Section 4.1.1. "Developer Transaction Expenses" shall have the meaning set forth in Section 4.2.3(a)(ii). "Developer's Backbone Infrastructure Work" shall have the meaning set forth in Section 8.13.2. "Developer's Closing Conditions" shall have the meaning set forth in Section 7.2. "Developer's Closing Payment" shall have the meaning set forth in Section 4.2.3(c). "Developer's Infrastructure Payment" shall have the meaning set forth in Section 8.13.3(2). "Developer's Title Endorsements" shall have the meaning set forth in Section 6.4. "Developer's Title Policy" shall have the meaning set forth in Section 6.4. "Development Association" shall mean an association which may be created to oversee and implement the CC&Rs. "Development Costs" shall have the meaning set forth in Section 8.1.3. "Development Permits" shall have the meaning set forth in Section 8.3.1, and shall include any site plan, grading permit, foundation permit, construction permit, building permit or other permit, certificate or approval as may be necessary to subdivide the Developer Parcels, the City Dedication Parcels and the Right of Way Parcels, and to construct the Improvements. "Director" shall mean the City of Tustin Director of Public Works. "Disapproved Exception" shall have the meaning set forth in Section 6.3. Vestar DDA Attachment No. 3 — Page 6 Glossary of Defined Terms 07/12/04 18405:6391127.7 "DTSC" shall mean the California Department of Toxic and Substance Control. "Due Diligence Information" shall have the meaning set forth in Section 4.4.3. "Due Diligence Matters" shall have the meaning set forth in Section 5.1. "Due Diligence Period" shall have the meaning set forth in Section 5.1. "Effective Date" shall have the meaning set forth in the first paragraph of this Agreement. "ENA" shall have the meaning set forth in Section 4.2.3(a)(i). "ENA Deposit" shall have the meaning set forth in Section 4.2.3(a)(i). "End User" shall mean a Person operating a retail business in any Improvement (including any Retail Building or Retail Space) on any Parcel, whether such Person holds a fee interest, ground leasehold interest, or other leasehold interest in such Parcel or portion thereof. "Entitlements" shall have the meaning set forth in Section 8.3.1. "Environmental Agency" shall mean the United States Environmental Protection Agency; the California Environmental Protection Agency and all of its sub -entities, including any Regional Water Quality Control Board, the State Water Resources Control Board, the Department of Toxic Substances Control, the South Coast Air Quality Management District, and the California Air Resources Board; the City; any Fire Department or Health Department with jurisdiction over the Property; and/or any other federal, state, regional or local governmental agency or entity that has or asserts jurisdiction over Hazardous Substance Releases or the presence, use, storage, transfer, manufacture, licensing, reporting, permitting, analysis, disposal or treatment of Hazardous Materials in, on, under, about, or affecting the Project and/or the Project Site. "Environmental Laws" shall mean any federal, state, regional or local laws, ordinances, rules, regulations, requirements, orders, directives, guidelines, or permit conditions, in existence as of the Effective Date or as later enacted, promulgated, issued, modified or adopted, regulating or relating to Hazardous Materials, and all applicable judicial, administrative and regulatory decrees, judgments and orders and common law, including those relating to industrial hygiene, public safety, human health, or protection of the environment, or the reporting, licensing, permitting, use, presence, transfer, treatment, analysis, generation, manufacture, storage, discharge, Release, disposal, transportation, Investigation or Remediation of Hazardous Materials. Environmental Laws shall include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.) ("CERCLA"); the Resource Conservation and Recovery Act, as amended, (42 U.S.C. Section 6901 et seq.) ("RCRA"); the federal Water Pollution Control Act, as amended, (33 U.S.C. Section 1251 et seq.); the Toxic Substances Control Act, as amended, (15 U.S.C. Section 2601 et seq.); the Hazardous Substances Account Act (Chapter 6.8 of the California Health and Safety Code Section 25300 et seq.); Chapter 6.5 commencing with Section 25100 (Hazardous Waste Control) and Chapter 6.7 commencing with Section 25280 (Underground Vestar DDA Attachment No. 3 — Page 7 Glossary of Defined Terms 07/12/04 18405:6391127.7 Storage of Hazardous Substances) of the California Health and Safety Code; and the California Water Code, Sections 13000 et sea. "Escrow" shall have the meaning set forth in Section 4.3. "Escrow Holder" shall mean First American Title Insurance Company. "Estimated Backbone Infrastructure Costs" shall have the meaning set forth in Section 8.13.3(b). "Fair Market Value" shall have the meaning set forth in Section 13.4.1. "Federal Deed" shall mean that certain "Quitclaim Deed and Environmental Restriction Pursuant to California Civil Code Section 1471" made by the Federal Government in favor of the City, dated May 13, 2002. "Federal Documents" shall mean the Conveyance Agreement, the Federal Deed, the LIFOC and each quitclaim deed from the Federal Government in favor of the City conveying title to one of more of the LIFOC Parcels. "Federal Government" shall mean the United States of America, by and through the Secretary of the Navy, or designee. "Fee Parcel B Permitted Mortgage" shall have the meaning set forth in Section 15.2(c). "Final Certificate of Compliance" shall have the meaning set forth in Section 9.1. "Final DDA Deposit" shall have the meaning set forth in Section 4.2.3(a)(iii). "Final EIS/EIR" shall have the meaning set forth in Section 1.1.2. "Final Tract Map" or "Final Tract Maps" shall mean a final tract map or final tract maps approved by the City for the Developer Parcels or any Phase thereof in accordance with the Subdivision Map Act and the City Municipal Code and Recorded. "FIRPTA Affidavit" shall mean an affidavit in form reasonably satisfactory to the Developer certifying that the City is not a "foreign person" under the federal Foreign Investment in Real Property Act. "Force Majeure Delay" shall have the meaning set forth in Section 16.8.1 as limited by Section 16.8.2. "Foreclosure" shall mean the foreclosure of any Permitted Mortgage (or any sale thereunder), whether by judicial proceedings or by virtue of any power of sale or any conveyance of all or any portion of the Property and/or Improvements from Developer to any Permitted Mortgagee through acceptance of a deed in lieu of foreclosure or other appropriate proceedings in the nature thereof. Vestar DDA Attachment No. 3 — Page 8 Glossary of Defined Terms 07/12/04 18405:6391127.7 "FOSL" shall mean the Department of Navy finding and determination that Parcels III -C-3 and III -C -S were suitable for leasing to the City, pursuant to document entitled "Finding of Suitability to Lease" dated February 28, 2002. "FOST" shall mean the Department of Navy finding and determination that Parcel I -C-1 was suitable for transfer to the City, pursuant to document entitled "Finding of Suitability to Transfer" dated September 28, 2001. "General Partner" shall have the meaning set forth in Section 2.3.1. "General Plan" shall mean the most current general plan for the City of Tustin. "Governmental Authority" shall mean any and all federal, state, county, municipal and local governmental and quasi -governmental bodies and authorities (including the United States of America, the State of California and any political subdivision, public corporation, district, joint powers authority or other political or public entity) or departments thereof,having or exercising jurisdiction over the Parties, the Project, the Project Site, the Developer Parcels, the City Dedication Parcels or such portions thereof as the context indicates. "Governmental Capacity" shall have the meaning set forth in Section 16.29. "Governmental Requirements" shall mean all laws, statutes, codes, ordinances, rules, regulations, standards, guidelines and other requirements issued by any Governmental Authority having jurisdiction over the Parties, the Project, the Property and/or the Project Site or any component thereof and including the City Code, the Specific Plan, the Reuse Plan, the Entitlements, the Approved Project Plans and the Development Permits. "Ground Lease" shall mean a ground lease in form and substance of the Ground Lease and Sublease attached hereto as Attachment No. 4 to be executed and delivered by the City at the Initial Close of Escrow to sublease to Developer the Developer Sublease Parcels. "Hazardous Materials" shall mean and include the following: (a) "Hazardous Substance", "Hazardous Material", "Hazardous Waste", or "Toxic Substance" under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. subsection 9601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. subsection 5101, et seq., or the Resource Conservation and Recovery Act, 42 U.S.C. subsection 6901, et seq.; (b) An "Extremely Hazardous Waste", a "Hazardous Waste", or a "Restricted Hazardous Waste", under subsections 25115, 25117, or 25122.7 of the California Health and Safety Code, or is listed or identified pursuant to subsection 25140 or 44321 of the California Health and Safety Code; (c) "Hazardous Material", "Hazardous Substance", "Hazardous Waste", "Toxic Air Contaminant", or "Medical Waste" under subsections 25281, 25316, 25501, 25501.1, 117690 or 39655 of the California Health and Safety Code; Vestar DDA Attachment No. 3 — Page 9 Glossary of Defined Terms 07/12/04 18405:6391127.7 (d) "Oil" or a "Hazardous Substance" listed or identified pursuant to Section 311 of the Federal Water Pollution Control Act, 33 U.S.C. Section 1321, as well as any other hydro carbonic substance or by-product; (e) Listed or defined as a "Hazardous Waste", "Extremely Hazardous Waste", or an "Acutely Hazardous Waste" pursuant to Chapter 11 of Title 22 of the California Code of Regulations; (f) Listed by the State of California as a chemical known by the State to cause cancer or reproductive toxicity pursuant to Section 25249.9(a) of the California Health and Safety Code; (g) A material which due to its characteristics or interaction with one or more other substances, chemical compounds, or mixtures damages or threatens to damage, health, safety, or the environment, or is required by any law or public agency to be remediated, including remediation which such law or public agency requires in order for the property to be put to any lawful purpose; (h) Any material whose presence would require remediation pursuant to the guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual, whether or not the presence of such material resulted from a leaking underground fuel tank; (i) Pesticides regulated under the Feral Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. subsection 136 et seg.; 0) Asbestos, PCBs and other substances regulated under the Toxic Substances Control Act, 15 U.S.C. subsection 2601 et sea.; (k) Any radioactive material including any "source material", "special nuclear material", "by-product material", "low-level wastes", "high-level radioactive waste", "spent nuclear fuel" or "transuranic waste", and any other radioactive materials or radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C. subsection 2011 et seq., the Nuclear Waste Policy Act, 42 U.S.C. subsection 10101 et seq., or pursuant to the California Radiation Control Law, California Health and Safety Code subsection 114960 et seq.; (1) Regulated under the Occupational Safety and Health Act, 29 U.S.C. subsection 651 et sm., or the California Occupational Safety and Health Act, California Labor Code subsection 6300 et seq.; and/or (m) Regulated under the Clean Air Act, 42 U.S.C. subsection 7401 et seg. or pursuant to Division 26 of the California Health and Safety Code. "Horizontal Improvements" shall mean the infrastructure improvements and utilities, whether on the Developer Parcels or off the Developer Parcels, which are required to be constructed or installed on or in connection with the development of the Developer Parcels as further described on Attachment No. 8 to this Agreement, including (a) all public and private Vestar DDA Attachment No. 3 — Page 10 Glossary of Defined Terms 07/12/04 18405:6391127.7 streets, roadways, drives, alleyways, sidewalks; (b) all utilities required for the Project to the boundary of each Retail Building or other Vertical Improvement requiring such utility access, (c) construction of the San Joaquin storm drain at a capacity and in a location approved by the Director, (d) retention of on-site water from the Project in below grade structures constructed on the Project site unless other interim storm drain water detention facilities attributable to the Project are approved by the Director and (e) necessary wetlands and Southwest Pond Turtle mitigation required by the Final EIS/EIR. "Horizontal Improvements" shall not include the Project Fair Share Contribution or the Tustin Legacy Backbone Infrastructure Program Improvements, but shall in no event be less than the Required Horizontal Improvements. "Improvements" shall mean Vertical Improvements and Horizontal Improvements, collectively, and as the context requires shall also include the Developer's Backbone Infrastructure Work. "Improvements Completion Date" shall have the meaning set forth in Section 8.1.5(a)(i). "Indemnified Parties" shall have the meaning set forth in Section 10.1. "Infrastructure Construction and Payment Agreement" shall have the meaning set forth in Section 8.13.3. "Initial Close of Escrow" shall mean the transfer of fee title to the Developer Fee Parcels by the City to the Developer, the grant of a ground subleasehold interest in the Developer Sublease Parcels from -the City to the Developer, the transfer of ownership of the other Property from the City to the Developer, and the execution and Recording of the documents associated therewith as more fully set forth in Sections 7.1 through 7_6. "Initial Closing Contribution" shall have the meaning set forth in Section 8.13.3(a). "Initial Closing Date" shall have the meaning set forth in Section 7.1. "Initial Closing Purchase Price" shall have the meaning set forth in Section 4.2.2(a). "Initial DDA Deposit" shall have the meaning set forth in Section 4.2.3(a)(ii). "Initial Lease -Up Date" shall mean with respect to each Retail Building or Retail Pad the date at which Leases with End Users have been executed for no less than ninety percent (90%) of such Retail Building or Retail Pad, as applicable. "Injured Party" shall have the meaning set forth in Section 13.1. "Inspections" shall have the meaning set forth in Section 5.4. "Institutional Lender" shall mean a nationally chartered bank, national association, federal association bank, savings and loan association, investment bank, state chartered bank, lending institution or other institutional lender which has a net worth of Five Billion Dollars ($5,000,000,000) or more. Vestar DDA Attachment No. 3 — Page l l Glossary of Defined Terms 07/12/04 18405:6391127.7 "Investigation(s)" shall mean any observation, inquiry, examination, sampling, monitoring, analysis, exploration, research, inspection, canvassing, questioning and/or surveying of or concerning the Property or any adjacent or affected properties, including the improvements thereon, or the air, soil, surface water and groundwater, and the surrounding population or properties, or any of them, to characterize or evaluate the nature, extent or impact of Hazardous Materials. "Key Employees" shall have the meaning set forth in Section 2.3.3. "Kimco" shall mean Kimvest, Inc. a Delaware Corporation. "Lease" shall mean, as a noun, an agreement between the Developer or a Successor Owner and a Tenant to lease, sublease or license any Improvement or portion thereof, including any Retail Space, and, as a verb, shall mean the leasing by Developer or a Successor Owner of any Improvement or portion thereof, including any Retail Space, to a Tenant, but shall exclude lease or ground lease of real property. "Lease Parcel Retail Completion Date" shall have the meaning set forth in Section 8.1.5(a)(ii). "Lease Parcels" shall mean the Developer Sublease Parcels, Developer Fee Parcel C an d Developer Fee Parcel D, which Developer Parcels are subject to the Ground Lease as of the Initial Close of Escrow. "Lease Property" shall mean all Developer Fee Property or Developer Sublease Property, as the case may be, on the Lease Parcels. "LIFOC" shall have the meaning set forth in Section 1.1.3. "LIFOC Parcels" shall mean the portions of Reuse Plan Disposal Parcels 10, 11 and 12 which are subject to the LIFOC as of the Effective Date. "Major End User" shall mean an End User that utilizes or intends to utilize a Retail Space or Retail Pad exceeding 20,000 rentable square feet. "Major Pad" shall mean any Retail Pad which is not a Minor Pad. "Material Default" shall mean the state a Party to this Agreement is in after proper notice is provided of a Potential Default and the appropriate cure period, if any, has lapsed, all as provided in Section 13.2. "MCAS Tustin" shall mean the Marine Corps Air Station -Tustin. "Memorandum of DDA" shall have the meaning set forth in Section 1.8. "Memorandum of Ground Lease" shall have the meaning set forth in Section 1.8. Vestar DDA Attachment No. 3 — Page 12 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Minimum Project" shall mean construction of 545,000 square feet of rentable area which shall be constructed generally in the locations shown on Attachment No. 9B. "Minimum Project Completion Date" shall have the meaning set forth in Section 8.1.5(a)(i). "Minimum Project Permit Date" shall have the meaning set forth in Section 8.1.5(a)(i). "Minor End User" shall mean an End User that is not a Major End User. "Minor Pad" shall mean (a) any Retail Pad on which a Retail Building of no more than 20,000 rentable square feet is to be constructed and which is one of the following eight (8) Parcels: Lot 5, Lot 6, Lot 7, Lot 8, Lot 9, Lot 10, Lot 11 and Lot 19 as depicted on Attachment No. 9A, and (b) if approved by the City in its sole discretion, any additional parcel created for a building of less than 20,000 square feet with the total number of Minor Pads not to exceed a maximum of eleven (11). "Mortgage" shall mean any indenture of mortgage or deed of trust, bond, grant of taxable or tax exempt funds from a governmental agency or other security interest and the documents governing a sale-leaseback transaction, together with all loan documents related thereto. "Mortgagee" shall mean any mortgagee, beneficiary (or any agent for one or more lenders acting in such capacity) under any deed of trust, trustee of bonds, governmental agency which is a grantor of funds, and, with respect to any Parcel which is the subject of a sale- leaseback transaction, the Person acquiring fee title. "Navy" shall mean the United States Department of Navy. "Navy LIFOC Parcels" shall mean Parcels II -D-10, III -C-3, III -C-5, III -D-9 and III -D- 11, which as of the Effective Date are leased by the City from the Navy pursuant to the LIFOC. "Negative Difference" shall have the meaning set forth in Section 8.13.3(e). "New Agreement" shall have the meaning set forth in Section 15.20.1 or Section 15.20.2, as applicable. "Non -Institutional Lender" shall mean a lender that does not meet the minimum standards to quality as an Institutional Lender. "North of Loop Road Contribution" shall have the meaning set forth in Section 8.13.3. "Notice of Completion" shall mean the notice of completion filed by the Developer after the Completion of each Improvement, as required, pursuant to California Civil Code Section 3093. "Opening of Escrow" shall have the meaning set forth in Section 4.3. Vestar DDA Attachment No. 3 — Page 13 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Owner" shall have the meaning set forth in Section 13.4. "Pad Completion Trigger Date" shall mean (a) with respect to the Lease Parcels, three (3) years after the delivery of the applicable Retail Pad by Developer or any Successor Owner to the initial End User thereof, and (b) with respect to the remaining Developer Parcels, the earlier of (i) three (3) years after the delivery of the applicable Retail Pad by Developer or any Successor Owner to the initial End User thereof, or (ii) five (5) years after the execution date of the initial Transfer documents for the applicable Retail Pad by which Developer shall have Transferred such Retail Pad to a third party. "Pad Transfer" shall mean any Transfer, including by sale or ground lease of the fee interest, of a Retail Pad. "Pad Transferee" shall mean a Person to whom Developer has Transferred a Retail Pad. "Parcel" shall mean each of the Developer Parcels and each of the Retail Pads or other legally subdivided parcel or parcels formed by subdivision of one or more Developer Parcels and approved by the City pursuant to the Subdivision Map Act and the City Municipal Code. "Partial Certificate of Compliance" shall have the meaning set forth in Section 9.1. "Parties" shall mean the City and the Developer, collectively. "Party" shall mean either the City or the Developer, individually, as parties to this Agreement, and "Parties" shall mean both the City and the Developer. "Percentage Rent" shall have the meaning set forth in Section 12.4.1(b). "Performance Bonds" shall mean bonds issued by a surety company admitted in the State of California and regulated by the State of California Department of Insurance, Best's Rated "A" or better and otherwise acceptable to the Assistant City Manager and City Attorney in their sole discretion, in which the City is a named obligee. The Performance Bonds shall guarantee payment for and faithful performance and completion (within the respective times provided in this Agreement) of the Vertical Improvements, the Horizontal Improvements, and the Project Fair Share Contribution, as the case may be, in accordance with drawings or plans, as appropriate, that specifically describe the work to be performed in sufficient detail for the issuance of such Performance Bonds. Upon completion of the work to which a Performance Bond pertains, such bonds shall be released or returned, as applicable, in accordance with City rules and procedures. "Permitted Exceptions" shall have the meaning set forth in Section 6.2 as may be modified by Section 6.3. "Permitted Mortgage" shall mean any indenture of mortgage or deed of trust, bonds, grant of taxable or tax-exempt funds from a governmental agency or other conveyance of a security interest in a Parcel(s), to a Permitted Mortgagee or the conveyance of such Parcel to the Permitted Mortgagee or its Successor Owner or purchaser in connection with a Foreclosure which satisfies all of the criteria set forth in Article 15 of this Agreement. Vestar DDA Attachment No. 3 — Page 14 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Permitted Mortgagee" shall mean a Mortgagee meeting the criteria set forth in Section 15.2 and accordingly entitled to the Permitted Mortgagee protections provided by this Agreement. For purposes of any acts under a Permitted Mortgage with respect to and/or following a Foreclosure thereunder, "Permitted Mortgagee" shall mean such Permitted Mortgagee or any wholly-owned subsidiary thereof designated by the Permitted Mortgagee to take title to the foreclosed property. The participation, securitization or assignment of a loan (or any portion thereof) by a Permitted Mortgagee (acting in an individual capacity or as agent for other lenders) shall not give rise to any requirement that each lender participating in such participation, securitization or assignment itself be a Permitted Mortgage (acting in an individual capacity or as agent for other lenders), so long as (a) at the inception of the loan, the originating and agent lender is a Permitted Mortgagee, and (b) at the time of any subsequent assignment of the loan, the Successor Owner and agent lender is a Permitted Mortgagee. "Person" shall mean an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, joint venture, firm, joint stock company, unincorporated association, Governmental Authority, governmental agency or other entity, domestic or foreign And shall include each and every member, partner, owner, shareholder, creditor and investor in any of the foregoing entities. "Personal Property" shall mean (a) all tangible personal property appurtenant to the Developer Parcels and (b) all Transferred Utility Systems, collectively. "Phase" shall mean a subset of the Project that relates to all or any portion of the Developer Parcels (and, as applicable, adjacent portions of the Project Site) and which is to be developed at one time, as set forth agreed in accordance with the terms of the Agreement as part of the Approved Project Plans and Entitlements. "Potential Default" shall mean any event described in Section 13.1 or any other event that with the passage of time or the giving of notice or both could result in the occurrence of a Material Default. "Preapproved User" shall mean any of the entities listed on Attachment No. 13 in their capacity as businesses engaged in retail operations, sales of goods or services, restaurant services or other retail uses which are not Prohibited Uses. "Preliminary Plan(s)" shall have the meaning set forth in Section 8.6.3. "Preliminary Title Reports" shall have the meaning set forth in Section 6.2. "Prevailing Party" shall have the meaning set forth in Section 16.2. "Products" shall have the meaning set forth in Section 13.8.2. "Prohibited User" shall mean those Persons identified on Attachment No. 16. "Prohibited Use" shall mean any use, whether by Developer, a Tenant or any other entity, set forth on Attachment No. 17, which use shall be prohibited on the Developer Parcels. Vestar DDA Attachment No. 3 — Page 15 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Project" shall have the meaning set forth in Section 1.3.2. "Project Architect" shall mean the architect or engineer, as applicable, designated in writing by the Developer for a particular product type or improvement. "Project Fair Share Contribution" shall have the meaning set forth in Section 8.13.3. "Project Site" shall mean, collectively, the Property and any other land upon which the Project, including off-site improvements and Developer's Backbone Infrastructure Work or any portion thereof, will be constructed. "Property" shall have the meaning set forth in Section 4.1.1. "Proprietary Capacity" shall have the meaning set forth in Section 16.29. "Purchase Price" shall have the meaning set forth in Section 4.2.2. "Purchase Price Credit" shall have the meaning set forth in Section 4.2.3(a)(v). "Quitclaim Deed" shall mean (a) for the Initial Close of Escrow, the quitclaim deed to be executed and delivered by the City at the Initial Close of Escrow to quitclaim all of the City's interests in Developer Fee Parcel A and Developer Fee Parcel B (subject to Section 4.1 and the terms of this Agreement) to the Developer, and (b) for each Subsequent Closing, the quitclaim deed to be executed and delivered by the City at the Subsequent Closing to quitclaim all of the City's interests in the remaining Developer Fee Parcels and the Developer Sublease Parcels, as the case may be (subject to Section 4.1 and the terms of this Agreement), to the Developer. Each Quitclaim Deed shall be in substantially the form and substance of the deed attached hereto as Attachment No. 4, acknowledged and in Recordable form. "Record", "Recording" and "Recorded" shall mean to record the specified instrument, or the current or past recording of the specified instrument, in the official records of Orange County California. "Recordable" shall mean with respect to any document, that such document has been acknowledged and is otherwise in a form that would permit the Recordation thereof. "Reimbursable Costs" shall mean all out -of pocket hard costs, governmental fees, costs of services other than legal services, consultants' fees, and wages required to be paid to any person employed by the Developer, which costs and fees are reasonably incurred and actually paid by the Developer in connection with the design and construction of the Project. Reimbursable Costs shall not include any costs or fee incurred by Developer as a result of the Developer's: breach of any provision of this Agreement, violation of or noncompliance with any Governmental Requirement, negligence, fraud or willful misconduct. "Release" (with respect to Hazardous Materials) shall mean any releasing, or threat of releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing or dumping into the environment. Vestar DDA Attachment No. 3 — Page 16 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Released Party" and "Released Parties" shall have the meanings set forth in Section 4.4.3. "Releasing Party" and "Releasing Parties" shall have the meanings set forth in Section 4.4.3. "Remediate" or "Remediation' shall mean any response or remedial action as defined under Section 101 (25) of CERCLA, and similar actions with respect to Hazardous Materials as defined under comparable state and local laws, and any other cleanup, removal, containment, abatement, recycling, transfer, monitoring, storage, treatment, disposal, closure, restoration or other mitigation or remediation of Hazardous Materials or Releases required by any Environmental Agency or within the purview of any Environmental Laws. "Repurchase Property" shall have the meaning set forth in Section 13.4.1. "Required Horizontal Improvements" shall mean the Horizontal Improvements that are required to be constructed by the terms of the Entitlements, including the subdivision improvement agreement or deferred improvement agreement between the Developer and the City as a condition of obtaining a Final Tract Map or Final Tract Maps for a particular portion of the Developer Parcels or Phase or Parcel of the Project. "Retail Building" shall mean each building constructed on any Parcel that is used or intended to be used, in whole or in part and either directly or through a Retail Space Lease, for retail purposes, sales of goods or services, restaurants or similar commercial (but not freestanding office, research or development) purposes. "Retail Pad" shall mean any legally subdivided lot upon one or more Developer Parcels which is intended to be or is sold or ground leased to a third party for construction and development thereon of Retail Space(s), and shall include Minor Pads and Major Pads. "Retail Space" shall mean any building, demised portion of a building, or free-standing stand or kiosk that is Leased or is intended to be Leased for retail purposes, sales of goods or services, restaurants or similar commercial (but not independent office, research or development) purposes, but shall exclude Retail Pads. "Retail Space Lease" shall mean each Lease of a Retail Space but shall exclude leases of real property (ground leases), including the Ground Lease. "Retail Space Tenant" shall mean any End User Leasing a Retail Space. "Reuse Plan" shall have the meaning set forth in Section 1.1.1. "Reuse Plan Disposal Parcel 9" shall have the meaning set forth in Section 1.1.6. "Reuse Plan Disposal Parcel 10"; "Reuse Plan Disposal Parcel 11" and "Reuse Plan Disposal Parcel 12" shall have the meanings set forth in Section 1.2.1. Vestar DDA Attachment No. 3 — Page 17 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Lease Parcels Retail Completion Date" shall have the meaning set forth in Section 8.1.5(d). "Remainder Parcels" shall mean Developer Fee Parcel C, Developer Fee Parcel D, Developer Sublease Parcel C, Developer Sublease Parcel D and Developer Sublease Parcel E. "Reuse Plan Disposal Parcels" shall have the meaning set forth in Section 1.2.1. "Reversion Conditions" shall have the meaning set forth in Section 13.5.2(b). "Reversion Action Date" shall have the meaning set forth in Section 13.5.1(a). "RFP" shall have the meaning set forth in Section 1.1.6. "Right of Purchase" shall have the meaning set forth in Section 13.4. "Right of Reversion" shall have the meaning set forth in Section 13.5. "Right of Way Parcels" shall mean those portions of the Reuse Plan Disposal Parcels described in Section 1. 1.4 reserved or to be reserved by the City for infrastructure purposes, including backbone roadway, storm drainage and utility systems to be developed as part of Tustin Legacy, which such Right of Way Parcels shall be in the locations identified on the Vesting Tentative Tract Map for the Project. "ROMP" shall have the meaning set forth in Section 2.1.5(a) of the Scope of Development. "Schedule of Performance" shall mean the document attached as Attachment No. 7 to this Agreement, setting forth the dates and time periods for submissions, approvals and actions, including the construction of the Improvements. "Scope of Development" shall mean the description of the Project attached as Attachment No. 8. "Selection Period" shall have the meaning set forth in Section 13.4.2. "South of Loop Road Contribution" shall have the meaning set forth in Section 8.13.3. "Special Restrictions" shall mean that certain Declaration of Special Restrictions to be executed by the Parties in the form and substance of the document attached hereto as Attachment No. 6, as the same may be amended from time to time in writing by the parties. "Specific Plan" shall have the meaning set forth in Section 1.1.4. "State" shall mean the State of California. "Subdivision Map Act" shall mean the California Subdivision Map Act as codified in Cal. Government Code Section 66410 et sea. Vestar DDA Attachment No. 3 — Page 18 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Subordination" shall have the meaning set forth in Section 7.2.1 (J) and 7.3.3(k). "Subsequent Closing" shall have the meaning set forth in Section 7.7.1. "Subsequent Closing Date" shall have the meaning set forth in Section 7.7.1. "Subsequent Participation" shall have the meaning set forth in Section 12.4.1(a). "Subsequent Participation Trigger Date" shall have the meaning set forth in Section 12.4.1(c). "Subsequent Purchase Price" shall have the meaning set forth in Section 4.2.2(b). "Successor Owner" shall mean each and every Person owning or acquiring any right, title or interest in or to all or any portion of the Developer Parcels, but shall exclude Tenants under Retail Space Leases. "Supplemental Title Report" shall have the meaning set forth in Section 6.3. "Survey" shall have the meaning set forth in Section 6.1. "Surveyor" shall have the meaning set forth in Section 6.1. "Tenant" shall mean any Person who Leases any Retail Space or other space on the Developer Parcels and thereunder operates (or is constructing Vertical Improvements with the intent to operate) a retail or other commercial business in such space. "Termination Notice" shall have the meaning set forth in Section 5.7. "Third Appraiser" shall have the meaning set forth in Section 13.4.2. "Title Commitment" shall have the meaning set forth in Section 6.2. "Title Company" shall mean First American Title Insurance Company. "Transfer" shall mean the transfer, sale, assignment, lease, license, concession, gift, hypothecation, mortgage, pledge or encumbrance, or other similar conveyance of the Developer's interests in this Agreement, all or any portion of the Developer Parcels, the Improvements thereon, any other Property, or any portion thereof or interest therein, including any Pad Transfer whether voluntary, involuntary, by operation of law or otherwise, or any agreement to do so; the granting of any Mortgage, easement, license, lien or other encumbrance other than to the City and/or the execution of any installment land sale contract or similar instrument affecting all or a portion of the Developer Parcels, the Improvements thereon, any other Property, or any portion thereof or interest therein; and shall also include Pad Transfers, Transfer of Control of the Developer, or any conversion of the Developer to an entity form other than that of the Developer at the time of execution of this Agreement, but shall exclude Retail Space Leases. Vestar DDA Attachment No. 3 — Page 19 Glossary of Defined Terms 07/12/04 18405:6391127.7 "Transfer of Control" shall mean any one or more of the following, whether made directly or through an intermediary, and whether made in one transaction or in more than one transaction during the Term and whether occurring as a single event or a series of events which result, on a cumulative basis, in (1) if the Developer is a limited liability company, a change in forty-nine percent (49%) or more of the managing members or the interests of the members thereof in Developer or which reduces or adversely impacts the managerial powers of such percentage of managing members or members; (2) if the Developer is a corporation, a change in forty-nine percent (49%) or more of the directors of the Developer or of control of the voting shares of the Developer which reduces or adversely impacts the managerial powers of such percentage of directors; (3) if the Developer is a partnership, a change in forty-nine percent (49%) or more of the general partner of the Developer or a change in control of the general partnership interests of the Developer which reduces or adversely impacts the managerial powers of such general partner; (4) if the Developer is other than a limited liability company, a corporation or a partnership, any direct or indirect change in actual control or ownership of the beneficial interests of the Developer; (5) any Change in Ownership, directly or indirectly, of forty-nine percent (49%) or more in the management of General Partner or any entity or entities that have a Controlling interest in Developer or any Controlling entity, whether such entity or entities consist of limited liability companies, partnerships, corporations, individuals or other structure; (6) a reduction or adverse effect upon the managerial powers of forty-nine percent (49%) or more of General Partner, its managers, general partners, directors, individuals or other Controlling entity of any entity or entities that have a Controlling interest in Developer , as applicable, or (7) if the party having a Control of Developer is an individual, the person ceases to have Control. "Transferable Products" shall have the meaning set forth in Section 13.8.2. "Transferee" shall mean any Person to which a Transfer is made, including any Successor Owner, Pad Transferee, Mortgagee or Permitted Mortgagee, but shall exclude Leases to Retail Space Tenants. "Transferred Utility Systems" shall mean those Utility Systems in the Developer Parcels which shall be transferred from the City to the Developer pursuant to Bill of Sale. "Turtle" shall have the meaning set forth in Section 8.3.6(c). "Tustin Legacy" shall have the meaning set forth in Section 1.1.3. "Tustin Legacy Backbone Infrastructure Program" shall have the meaning set forth in Section 8.13.1. "Utility Systems" shall mean all utility distribution systems transferred by the Federal Government to the City and shall include the following: (a) all current City -owned electrical, gas, telephone and cable television systems, including distribution lines, pad mounted and overhead distribution poles and/or transformers, (b) all conduits and duct banks from outlet or master meters or connection points outside the Developer Parcels to end usage points on the Developer Parcels; and (c) all water, sewer, and storm drain systems (does not include culvert Vestar DDA Attachment No. 3 — Page 20 Glossary of Defined Terms 07/12/04 18405:6391127.7 ditches), including distribution lines and pipelines from outlet or master meters or connection points outside the Developer Parcels to end usage points on the Developer Parcels. "Vertical Improvements" shall mean all of the buildings, structures, landscaping and improvements, other than the Horizontal Improvements and Developer's Backbone Infrastructure Work to be constructed or installed on the Developer Parcels, consistent with the Specific Plan, the Reuse Plan, the Approved Project Plan, the Entitlements, and the Development Permits, and includes Retail Buildings and Additional Improvements. "Vesting Tentative Tract Map" shall mean vesting tentative tract map no. 16695 to be considered and approved or disapproved by the City in accordance with the Subdivision Map Act and the City Municipal Code. Vestar DDA Attachment No. 3 — Page 21 Glossary of Defined Terms 07/12/04 18405:6391127.7 ATTACHMENT NO.4 QUITCLAIM DEED Vestar DDA Attachment No. 4 Quitclaim Deed 07/12/04 18405:6391127.7 ATTACHMENT NO.4 QUITCLAIM DEED 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: Assistant City Manager The City of Tustin 300 Centennial Way Tustin, CA 92780 Mail Tax Statements to: Vestar/KIMCO Tustin, L.P., 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Richard Kuhle Space Above This Line Reserved for Recorder's Use CITY QUITCLAIM DEED FOR PARCEL[(S)] [INSERT DEVELOPER PARCEL(S) BEING QUITCLAIMED] AND RESTRICTIONS, INCLUDING ENVIRONMENTAL RESTRICTION PURSUANT TO CIVIL CODE SECTION 1471 This City Quitclaim Deed For Parcel[(s)] [INSERT DEVELOPER PARCEL(S) BEING QUITCLAIMED] and Restrictions, including Environmental Restriction pursuant to Civil Code Section 1471 ("Quitclaim Deed") is made this _ day of [November], 200[4], by the City of Tustin, California, a municipal corporation of the State of California (the "GRANTOR"), in favor of Vestar/Kimco Tustin, L.P., a California limited partnership (the "GRANTEE"). RECITALS: WHEREAS: A. The United States of America ("Government") and the GRANTOR entered into that certain Agreement between the United States of America and the City of Tustin, California, 7/12/2004 Attachment No. 4 — Page 1 Quitclaim Deed 18405:6391258.6 for the Conveyance of a Portion of the Former Marine Corps Air Station Tustin dated May 13, 2002 (the "Conveyance Agreement"); B. Pursuant to the Conveyance Agreement, the Government conveyed property at the Marine Corps Air Station Tustin (such property, the "Grantor Property") to the GRANTOR pursuant to that certain [ Quitclaim Deed] dated May 13, 2002 ("Government Deed"); C. Pursuant to California Civil Code §1471, the Government determined that it is reasonably necessary to impose certain restrictions on the use of the Grantor Property to protect present and future human health or safety or the environment as a result of the presence of hazardous materials on portions of the Grantor Property described hereinafter with particularity; D. The GRANTOR and the GRANTEE entered into the Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of July [_], 2004 (the "DDA"), for the sale and development of a portion of the Grantor Property, and into a Memorandum of Disposition and Development Agreement (Retail Development) (the "Memorandum of DDA") to be recorded in the Official Records of the County of Orange, California (the "Official Records") of even date with and immediately prior to the recording of this Quitclaim Deed; E. The GRANTOR and the GRANTEE have also entered into the Declaration of Special Use Restrictions (the "Special Restrictions") which shall be recorded immediately prior to the Recording of this Quitclaim Deed in the Official Records; and F. The GRANTOR desires to convey and the GRANTEE desires to acquire a portion of the Grantor Property to facilitate economic redevelopment in accordance with the Reuse Plan approved by the Government for Marine Corp Air Station Tustin. NOW THEREFORE, the GRANTOR, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby remise, release and forever quitclaim to the GRANTEE, all of GRANTOR's right, title and interest in and to that certain real property, comprising approximately [Fill in for specific Developer Parcel(s) being conveyed] acres, more or less, more particularly described as [Insert Developer Parcel(s) being quitclaimed] on Exhibit "A" attached hereto and incorporated herein by this reference (the "Developer Parcels"). 1. TOGETHER WITH (a) all existing improvements presently located on the Developer Parcels and (b) all Utility Systems located on the Developer Parcels and conveyed by the Government to GRANTOR (the Developer Parcels and the matters described in clauses (a) and b of this paragraph 1, collectively referred to herein as the "Developer Property"), 2. EXCEPTING THEREOUT AND THEREFROM, however, and reserving to the GRANTOR, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following: 2.1 Any and all oil, oil rights, minerals, mineral rights, natural gas, natural gas rights and other hydrocarbon by whatsoever name known, geothermal steam and all products derived from any of the foregoing, that may be within or under the Developer Parcels together 712/2004 Attachment No. 4 — Page 2 Quitclaim Deed 18405:6391258.6 with the perpetual right of drilling, mining, exploring for and storing in and removing the same from the Developer Parcels or any other land, including the right to whipstock or directionally drill and mine from lands other than the Developer Parcels, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Developer Parcels and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to re -drill, re -tunnel; equip, maintain, repair, deepen and operate any such well or mines; but without, however, the right to drill, mine, store, explore or operate through the surface of the Developer Parcels or otherwise to materially affect the use or operation of the Developer Parcels as anticipated in the DDA. 2.2 Any and all water, water rights or interests therein appurtenant or relating to the Developer Parcels or owned or used by the GRANTOR in connection with or with respect to the Developer Parcels no matter how acquired by the GRANTOR, whether such water rights shall be riparian, overlying, appropriative, littoral, percolating, prescriptive, adjudicated, statutory or contractual, together with the perpetual right and power to explore, drill, re -drill and remove the same from or in the Developer Parcels, to store the same beneath the surface of the Developer Parcels and to divert or otherwise utilize such water, rights or interests on any other property owned or leased by the GRANTOR; but without, however, any right to enter upon or use the surface of the Developer Parcels in the exercise of such rights or otherwise materially adversely affect the use or operation of the Developer Parcels as anticipated in the DDA. 3. SUBJECT TO THE FOLLOWING NOTICES, COVENANTS, RESTRICTIONS, AND CONDITIONS, which shall be binding upon and enforceable against the Developer Property and the GRANTEE, and its successors and assigns, in perpetuity: 3.1 The GRANTEE agrees to accept conveyance of the Developer Property subject to all covenants, conditions, restrictions, easements, rights-of-way, reservations, rights, agreements and encumbrances of record, including, without limitation, the DDA, the Memorandum of DDA and the Special Restrictions, which are covenants running with the land and are binding upon GRANTEE and all successors and assigns of GRANTEE owning all or any portion of Developer Property for the benefit of the GRANTOR and its successors and assigns, unless or until such responsibilities and obligations are released pursuant to the provisions of the aforesaid documents. 3.2 The Government Deed conveying the Developer Property to the GRANTOR was recorded prior to recordation of this Quitclaim Deed. The GRANTOR has no knowledge regarding the accuracy of information provided by the Government regarding the environmental condition of the Developer Property and makes no warranties regarding the environmental conditions of the Developer Property. The GRANTOR has no knowledge regarding the accuracy or adequacy of the Government's remediation of the Developer Property as provided in the deed conveying the Developer Property to the GRANTOR, and the GRANTOR has taken no steps to abate any such conditions. The GRANTOR has no actual knowledge of any false, misleading or materially incomplete or inaccurate statements with regard to the Government information or the accuracy or adequacy of the Government's remediation of the Developer Property, or of any omission of a material fact pertaining to same, and the GRANTOR has not received notice from any person that the Government information is false, misleading or omits to state a material fact. 7/12/2004 Attachment No. 4 — Page 3 Quitclaim Deed 18405:6391258.6 3.3 The italicized information below is copied verbatim (except as discussed below) from the Government Deed conveying the Grantor Property to the GRANTOR. To the extent applicable to the Developer Property conveyed hereunder, by acceptance of this Deed the GRANTEE hereby acknowledges and assumes all responsibilities placed upon the GRANTOR under the terms of the aforesaid Government Deed. Within the italicized information only, the term "Grantor" shall mean the Government, the term "Grantee" shall mean the City of Tustin and the term "Property" shall mean the Grantor Property, including, without limitation, the Developer Property; to avoid confusion, the words "Government" have been added in brackets after the word "Grantor", and "City of Tustin' has been added in parenthesis after the word "Grantee". "2.2 A FOST has been completed and an Environmental Baseline Survey ( "EBS ") report is referenced in the FOST. The FOST and EBS reference environmental conditions on the Property and on other property not subject to this Deed. Grantee ["City of Tustin"] acknowledges that it has received copies of the EBS and the FOST and that all documents referenced therein have been made available to Grantee ["City of Tustin "] for inspection and copying. " 2.3 Except as otherwise provided herein, or as otherwise provided by law, the Grantee ["City of Tustin"] acknowledges that it has inspected, is aware of, and accepts the condition and state of repair of the Property, and that the Property is conveyed "as is" and "where is" without any representation, promise, agreement, or warranty on the part of the Grantor ["Government"] regarding such condition and state of repair, or regarding the making of any alterations, improvements, repairs or additions. Except for the environmental remediation which may be required to be undertaken by Grantor ["Government"] pursuant to Paragraph 2.6 below, the Grantee ["City of Tustin "] further acknowledges that the Grantor ["Government"] shall not be liable for any latent or patent defects in the Property except to the extent required by applicable law. 2.4 Notice And Covenants: 2.4.1. Notices: Hazardous Substance Notification. Pursuant to 42 U.S.C. § 9620(h)(3)(A), and the provisions of 40 C.F.R. part 373, the GRANTOR ("Government") has made a complete search of its files and records concerning the Property and hereby gives notice that based on that research no hazardous substances were stored, released, or disposed of on the Property. 2.4.2. Grant of Covenant [CERCLA 42 U.S.C. Section 9620 (h)(3)(A)(ii)(I)J. The GRANTOR( "Government") covenants and warrants that all remedial action necessary to protect human health and the environment with respect to any hazardous substance remaining on the Property has been taken before the date of transfer. 2.4.3. Additional Remediation Obligation [CERCLA 42 U.S.C. Section 9620 (h)(3)(A)(ii)(H)J. The GRANTOR("Government") covenants and warrants that GRANTOR ("Government") shall conduct any additional remedial action found to be necessary after the date of transfer for any hazardous substance existing on the Property 7/12/2004 Attachment No. 4 — Page 4 Quitclaim Deed 18405:6391258.6 prior to the date of this Deed. This covenant shall not apply to the extent that the GRANTEE ( "City of Tustin ") caused or contributed to any release or threatened release of any hazardous substance, pollutant, or contaminant. 2.4.4. Access [CERCLA 42 U.S.C. Section 9620 (h)(3)(A)(iii)]. In connection with GRANTOR's ("Government") covenant in 2.4.3 above and in connection with ongoing remediation on GRANTOR's ( "Government ") property adjacent to the Property, GRANTEE ( "City of Tustin") agrees on behalf of itself, its successors and assigns, as a covenant running with the land, that GRANTOR ("Government"), or its officers, agents, employees, contractors and subcontractors, shall have the right, upon reasonable notice to GRANTEE ( "City of Tustin"), to enter upon the Property in any case in which a response or corrective action is found to be necessary at such property after the date of this deed or such access is necessary to carry out a response action or corrective action on adjoining property. Neither GRANTEE ( "City of Tustin "), nor its successors and assigns, shall have any claim on account of such entries against the United States or any of its officers, agents, employees, contractors or subcontractors. The right to enter shall include the right to conduct tests, investigations and surveys, including, where necessary, drilling, test -pitting, boring and other similar activities. Such right shall also include the right to construct, operate, maintain or undertake any other response or corrective action as required or necessary, including, but not limited to monitoring wells, pumping wells and treatment facilities, and the installation of associated utilities. In exercising these rights of access, except in case of imminent and substantial endangerment to human health or the environment, the GRANTOR ( "Government ") (1) shall give the GRANTEE ( "City of Tustin") reasonable notice of any action to be taken related to such remedial or corrective actions on the Property, and (2) make reasonable efforts to minimize interference with the on-going use of the Property. Furthermore, the GRANTOR ( "Government ") and GRANTEE ( "City of Tustin") agree to cooperate in good faith to minimize any conflict between the necessary environmental investigation and remediation activities and the GRANTEE's ( "City of Tustin") use of the Property. Any inspection, survey, investigation or other response, corrective or remedial action undertaken by GRANTOR ( "Government") will, to the maximum extent practical, be coordinated with representatives designated by the GRANTEE ( "City of Tustin"). In connection with GRANTOR's ("Government") remedial actions described above, GRANTEE ( "City of Tustin ") agrees on behalf of itself, its successors and assigns, as a covenant running with the land, to comply with the provisions of any health or safety plan in effect during the course of any such action. 2.5 Indemnification Regarding Transferees. The GRANTOR ("Government ") hereby recognizes its obligations under Section 330 of the National Defense Authorization Act of 1993 (Pub. L. 102-484), as amended, regarding indemnification of transferees of closing Department of Defense property. 2.6 Non -Discrimination. GRANTEE ( "City of Tustin") covenants for itself, its successors and assigns, that it will comply with all applicable provisions of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act of 1975 in the use, occupancy, sale or lease of the 7/12/2004 Attachment No. 4 — Page 5 Quitclaim Deed 18405:6391258.6 Property. The foregoing shall not be construed to prohibit the operation of federal or state approved programs focusing on the special needs of the homeless, veterans, victims of domestic violence and other classes of persons at risk, nor shall it be construed to prohibit employment practices not otherwise prohibited by law. The GRANTOR ("Government") shall be deemed a beneficiary of this covenant without regard to whether it remains the owner of any land or interest therein in the locality of the Property hereby conveyed and shall have the sole right to enforce this covenant in any court of competent jurisdiction. 3. FLOOD PLAIN NOTIFICATION. To the extent that any portion of the Property lies within a floodplain as defined in Section 6(c) of Executive Order No. 11988, Floodplain Management, dated May 24, 1977, construction, development and other uses of that portion of the Property could be restricted by the standards and criteria of the National Flood Insurance Program of the Federal Emergency Management Agency, or other applicable regulations. 4. NO HAZARD TO AIR NAVIGATION. GRANTEE ( "City of Tustin") covenants for itself, its successors and assigns, that in connection with any construction or alteration on the Property, it will obtain a determination of no hazard to air navigation from the Federal Aviation Administration in accordance with Title 14, Code of Federal Regulations, part 77, entitled "Objects Affecting Navigable Airspace, " or under the authority of the Federal Aviation Act of 1958, as amended. 3.4 The responsibilities and obligations placed upon the GRANTOR by the Government shall run with the land and be binding on the GRANTEE and all subsequent owners of the Developer Property unless pr until such responsibilities and obligations are released pursuant to the provisions set forth in the Government deed. 3.5 As further set forth in the DDA, the GRANTEE acknowledges that is has examined the Developer Property and is buying the Developer Property from the GRANTOR in as "AS IS, WHERE IS, WITH ALL FAULTS" condition, in its present state and condition and with all faults, which provisions shall survive the close of escrow related to this transaction and do not merge with this Quitclaim Deed. 3.6 The DDA imposes certain covenants, conditions and restrictions on the Developer Property, including the Release contained in Section 4.4.3 of the DDA, and certain non- discrimination and non -segregation covenants, each of which is set forth verbatim below in italics and each of which is hereby declared to be a covenant running with the land in perpetuity. Within the italicized language which follows, certain terms shall have the following meanings: the term "Developer" shall mean the "GRANTEE" hereunder; the term "City" shall mean the "GRANTOR" hereunder; the term "Agreement" shall mean the "DDA"; the term "Closing Date" shall mean the date first set forth above on this Quitclaim Deed; the term "Property" shall mean the "Developer Property" conveyed pursuant to this Quitclaim Deed; the term "Project" shall mean the entertainment and retail development described in the DDA to be carried out by Developer on the Developer Parcel; the term "Quitclaim Deed" shall mean this Quitclaim Deed; and the term "City Benefited Property" shall mean the parcels legally described on Exhibit `B" to this Quitclaim Deed; 7/12/2004 Attachment No. 4 — Page 6 Quitclaim Deed 18405:6391258.6 follows: 3.6.1 Release. Section 4.4.3 of the DDA provides as follows: [INSERT SECTON 4.4.3 FROM DDA HERE] 3.6.2 Environmental Indemnity. Section 10.2.1 of the DDA provides as [INSERT SECTON 10.2.1 FROM DDA HERE] 3.6.3 Claims Response. Section 10.4 of the DDA provides as follows: [INSERT SECTON 10.4 FROM DDA HERE] 3.6.4 Definitions of Initially Capitalized Terms in Release Provisions. The DDA, including Attachment No. 2 thereto, sets forth the following definitions for the defined terms contained in the above Release: [INSERT REQUIRED DEFINITIONS FROM DDA HERE] 3.6.5 Non -Discrimination and Non -Segregation Requirements. In addition to the Non -Discrimination covenant contained in Section 3.3 of this Quitclaim which is repeated in Section 12.5 of the DDA, Sections 12.5 and 12.6 of the DDA provide as follows: [INSERT SECTIONS 12.5 AND 12.6 FROM DDA HERE] 4. This Quitclaim Deed is made and accepted upon the covenants, conditions, restrictions and other matters set forth in that certain Declaration of Special Restrictions by and between GRANTEE and GRANTOR and in that certain Declaration of Covenants, Conditions and Restrictions executed by GRANTEE, each dated of even date herewith, each recorded in the Official Records of even date with the recording of this Quitclaim Deed [for Subsequent Closings fill in correct recording information] and each of which are incorporated herein by reference with the same force and effect as though fully set forth herein and subject to reservations, covenants and restrictions as set forth in the Federal Documents. Each future transfer or conveyance of the Developer Parcels or any portion thereof shall include notice of the Declaration of Covenants, Conditions and Restrictions and the Special Restrictions and in addition shall include those disclosures and environmental covenants contained in the Federal Deed. 5. The terms of this Quitclaim Deed, including without limitation the provisions of Sections 3.6.1 through 3.6.5 of this Quitclaim Deed, are hereby agreed and declared by the GRANTEE and the GRANTOR and declared to be covenants running with the land and enforceable as restrictions and equitable servitudes against the Developer Parcel, and are hereby declared to be and shall be binding upon the Developer Parcel and the GRANTEE and all successors and assigns of the GRANTEE owning all or any portion of the Developer Parcel for 7/12/2004 Attachment No. 4 — Page 7 Quitclaim Deed 18405:6391258.6 the benefit of the City Benefited Property (legally described on Exhibit `B" attached to this Quitclaim Deed and incorporated herein by this reference) and the GRANTOR and the successors and assigns of the GRANTOR owning all or any portion the City Benefited Property. IN WITNESS WHEREOF, the GRANTOR, the CITY OF TUSTIN, has caused this Quitclaim Deed to be executed on the day first above written. ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation I5N City of Tustin, California Dated: William A. Huston City Manager ACKNOWLEDGEMENT OF GRANTEE'S COVENANTS TO INDICATE ACKNOWLEDGEMENT AND ACCEPTANCE of this Quitclaim Deed and the covenants and agreements contained in this Quitclaim Deed, the GRANTEE has executed this document on the date written below. Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member Name: Title: 7/12/2004 Attachment No. 4 — Page 8 Quitclaim Deed 18405:6391258.6 STATE OF CALIFORNIA COUNTY OF ORANGE On ss. before me, in and for said state, personally appeared a Notary Public , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) 7/12/2004 Attachment No. 4 — Page 9 Quitclaim Deed 18405:6391258.6 EXHIBIT "A" DEVELOPER PARCELS A-1 18405:6391258.6 EXHIBIT `B" CITY BENEFITED PROPERTY B-1 18405:6391258.6 ATTACHMENT NO.5 GROUND LEASE vestar DDA Attachment No. 5 Ground Lease 07/12/04 18405:6391127.7 ATTACHMENT NO.5 GROUND LEASE AND SUBLEASE BETWEEN THE CITY OF TUSTIN AND VESTAR/KIMCO TUSTIN, L.P. This GROUND LEASE AND SUBLEASE (this "Ground Lease") is entered into as of , 2004 ("Lease Commencement Date") by and between the CITY OF TUSTIN, a municipal corporation of the State of California ("Landlord"), and VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("Tenant"). RECITALS A. Pursuant to the Defense Base Closure and Realignment Act of 1990, (Part A of Title XXIX of Public Law 101-510; 10 U.S.C. Section 2687 Note), as amended (the "Base Closure Law") the United States of America, acting through the Department of the Navy (the "Federal Government") determined to close the Marine Corps Air Station- Tustin ("MCAS Tustin") located substantially in the City of Tustin, California. In 1992, the Landlord was designated as the Lead Agency or Local Redevelopment Authority for preparation of a reuse plan for MCAS Tustin in order to facilitate the closure of MCAS Tustin and its reuse in furtherance of the economic development of the City and surrounding region. The MCAS Tustin Reuse Plan developed in accordance with this procedure was adopted by the City Council of the City of Tustin (the "City Council") on October 17, 1996 and amended in September, 1998 (the "Reuse Plan"). B. A Final Joint Environmental Impact Statement/Environmental Impact Report for the Disposal and Reuse of MCAS Tustin (the "Final EIS/EIR") and Mitigation Monitoring and Reporting Program for the Final EIS/EIR were adopted by the Landlord on January 16, 2001. In March 2001, a Record of Decision was issued by the Department of the Navy approving the Final EIS/EIR and the Reuse Plan. C. In May 2002, the Federal Government approved an Economic Development Conveyance of Property at MCAS Tustin and agreed to convey 1153 acres of MCAS Tustin to the Landlord. Since May 13, 2002, a total of approximately 1,000 acres have been conveyed by the Federal Government to the Ground Lease by Federal Deed, in accordance with the provisions of the Conveyance Agreement. Additional acreage is leased by the Landlord from the Federal Government pursuant to that certain Lease in Furtherance of Conveyance dated May 13, 2002 between the Federal Government, as ground lessor, and Landlord, as ground lessee (the "LIFOC"). The portion of MCAS Tustin located within the City of Tustin is referred to in this Agreement as "Tustin Legacy." D. Landlord and Federal Government have agreed upon a method of conveyance of such leased acreage as set forth in the Conveyance Agreement and Finding of Suitability to Lease dated February 28, 2002 (the "FOSL"). E. Landlord and Tenant have previously entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated July _, 2004 (the "DDA"), a memorandum of which shall be recorded in the Official Records of the County of 7/12/2004 Attachment No. 5 — Page 1 Ground Lease and Sublease 18405:6391947.6 Orange concurrently with Recordation of the memorandum of this Ground Lease, pursuant to which Landlord has agreed to purchase certain "Property" from Landlord upon the terms and conditions set forth therein, including certain Property subject to the LIFOC, following conveyance thereof by the Federal Government to Landlord. Initially capitalized terms used in this Ground Lease and not defined herein shall have the meanings set forth in the DDA. F. Landlord and Tenant have executed that certain Declaration of Special Restrictions, dated of even date herewith (the "Special Restrictions"), which shall be recorded against the Property concurrently with Recordation of the memorandum of this Ground Lease. G. The DDA contemplates that the Landlord will, promptly following conveyance of the Developer Sublease Parcel(s) from the Federal Government to Landlord, convey such Developer Sublease Parcels(s), and certain the adjacent Developer Fee Parcels which are Lease Parcels, to Tenant (each Lease Parcel so conveyed, a "Conveyed Parcel"). Pursuant to the DDA, Landlord and Tenant have agreed (i) upon a method of conveyance by Landlord to Tenant of the Conveyed Parcels at one or more Subsequent Closings following conveyance by Federal Government to Landlord of such property in accordance with the FOSL, and (ii) to enter into this Ground Lease until the conveyance by Landlord to Tenant of each of the Conveyed Parcels or the earlier termination of this Ground Lease in accordance with its terms. H. Landlord and Tenant agree that the subleasehold interest created hereby is junior to and subject to the provisions of the LIFOC, such that with respect to the Developer Sublease Parcels this Ground Lease is a "sublease" in accordance with applicable laws, statutes and ordinances. NOW, THEREFORE, in consideration of the terms, covenants and conditions hereinafter set forth, Landlord and Tenant hereby agree as follows: AGREEMENT I . Lease Property; Governing Documents. 1.1 Developer Fee Property. Landlord does hereby lease, rent, and demise to Tenant and Tenant does hereby hire and rent from Landlord, the "Developer Fee Parcels", consisting of the following parcels of real property, each as legally described on Exhibit "A-1" to this Ground Lease: (a) "Developer Fee Parcel C"; and (b) "Developer Fee Parcel D"; together with all improvements and fixtures, if any, and all Transferred Utility Systems currently thereon (the "Existing Improvements"). The Developer Fee Parcels and the Existing Improvements thereon are collectively referred to in this Ground Lease as the "Developer Fee Property". From and after the quitclaim by Landlord to Tenant of each of the Developer Fee Parcels (which conveyance may take place in one or more Subsequent Closings) the term "Developer Fee Property" shall exclude the Developer Fee Parcels and all Existing Improvements thereon then or previously conveyed to Tenant in fee. 7/12/2004 Attachment No. 5 — Page 2 Ground Lease and Sublease 18405:6391947.6 1.2 Developer Sublease Property. Landlord does hereby sublease, rent, and demise to Tenant and Tenant does hereby hire and rent from Landlord, the "Developer Sublease Parcels", consisting of the following parcels of real property each as legally described on Exhibit "A-2" to this Ground Lease: (a) "Developer Sublease Parcel A"; (b) "Developer Sublease Parcel B"; (c) "Developer Sublease Parcel C"; (d) "Developer Sublease Parcel D"; and (e) "Developer Sublease Parcel E"; together with all Existing Improvements, if any, currently thereon. The Developer Sublease Parcels and the Existing Improvements thereon are collectively referred to in this Ground Lease as the "Developer Sublease Property". From and after the quitclaim by Landlord to Tenant of each of the Developer Sublease Parcels (which conveyance may take place in one or more Subsequent Closings) the term "Developer Sublease Property" shall exclude the Developer Sublease Parcels and all Existing Improvements thereon then or previously conveyed to Tenant in fee. The Developer Fee Parcels and the Developer Sublease Parcels are collectively referred to herein as the "Lease Parcels", and the Developer Fee Property and the Developer Sublease Property is collectively referred to herein as the "Lease Property". 1.3 LIFOC. 1.3.1 Incorporated Provisions. With respect to the Developer Sublease Property only, the following provisions of the LIFOC are incorporated herein as though fully set forth herein: (a) Article 6 (Condition of Property), (b) Article 7 (Environmental Baseline Survey and FOSL), (c) Article 8 (Alterations); (d) Article 9 (Access by Government), (e) Article 10 (Utilities and Services) (f) Article 11 (Non -Interference), (g) Article 12 (Protection & Maintenance Services), (h) Article 13 (Environmental Protection Provisions) (except for Sections 13.19(a) and 13.20 a ), (i) Article 15 (Environmental Contamination), 7/12/2004 Attachment No. 5 — Page 3 Ground Lease and Sublease 18405:6391947.6 0) Article 16 (Non -Environmental Indemnification) (k) Article 17 (Insurance) (provided, however, that in the event of any conflict with the DDA, the more stringent provision shall apply), (1) Article 18 (Labor Provisions), (m) Article 22 (Failure to Insist on Compliance), (n) Article 24 (Covenant Against Contingency Fees), (o) Article 25 (Liens), (p) Article 27 (Easements and Rights of Way), (q) Article 29 (Surrender), and (r) Article 33 (Applicable Rules and Regulations) except in each case that (i) "Lessee" shall mean Tenant hereunder, (ii) "Government" shall mean Landlord hereunder, (iii) Landlord shall be under no obligation to perform any obligation of Federal Government under the LIFOC with respect to the Developer Sublease Property, and (iv) the provisions regarding the extent of the property constituting the Lease Property, the Rent and other specific information shall be as set forth in this Ground Lease. 1.3.2 LIFOC Superiority. Tenant represents that it received, read and is familiar with the terms of the LIFOC, a true and correct copy of which is attached hereto as Exhibit `B". By entering into this Ground Lease, Tenant agrees to be bound by all terms, conditions, and covenants of the LIFOC as incorporated herein. In addition to the foregoing and not as a limitation thereof, Tenant acknowledges that Landlord's right, title and interest to the Developer Sublease Property arise solely under the LIFOC, and Tenant shall assume and faithfully perform all covenants running with the land and all obligations (i) with respect to the Developer Fee Parcels, set forth in the Federal Deed as obligations to be performed by "Grantee or its successors or assigns" and (ii) with respect to the Developer Sublease Property, set forth in the LIFOC as obligations to be performed by "Lessee". 1.3.3 LIFOC Parcel Limitations. Notwithstanding any provision of this Ground Lease, Landlord and Tenant hereby agree as follows: (a) Tenant will not do or permit anything to be done in or on the Developer Sublease Property which will cause the occurrence of a default by Landlord under the LIFOC; (b) if the LIFOC expires or is terminated for any reason other than the prior conveyance by the Federal Government to Landlord of all of the Conveyed Parcels, then this Ground Lease shall thereupon terminate with respect to each Developer Sublease Parcel still governed by this Ground Lease, without any liability to Landlord under this Ground Lease, the DDA or otherwise (unless such expiration or termination is caused by a material default of Landlord under the LIFOC), as if such termination date were the scheduled expiration date of the Term, as defined in Section 2, provided that so long as no Tenant Event of Default exists, Landlord shall take all commercially reasonable actions within Landlord's control (i) to keep the LIFOC in full force and effect during the term of this Ground Lease and (ii) to 7/12/2004 Attachment No. 5 — Page 4 Ground Lease and Sublease 18405:6391947.6 cause the Federal Government to transfer the Developer Sublease Parcels to Landlord upon the satisfaction of all conditions precedent thereto set forth in the Federal Documents. 1.3.4 Limitation of Liability. Landlord shall have no liability for any Federal Government default under the LIFOC. Without limiting the foregoing, Tenant agrees that Landlord shall not be obligated to perform any of the Federal Government's obligations under the LIFOC, and that neither this Ground Lease nor any of Tenant's obligations hereunder, under the DDA, or under the Special Restrictions shall be affected by any Federal Government default under the LIFOC, except to the extent that the LIFOC is terminated. 1.3.5 Effect of Subsequent Closings. Upon transfer by the Federal Government to Landlord of each Developer Sublease Parcel and the release of such Developer Sublease Parcel from the premises leased by Landlord as "Lessee" under the LIFOC, until the conveyance by Landlord of such Developer Sublease Parcel to Tenant at a Subsequent Closing, this Ground Lease shall, as to such Developer Sublease Parcel only and without further action by either of the parties, become a direct lease of such Developer Sublease Parcel to Landlord, upon and subject to each of the terms and conditions set forth herein or incorporated herein by reference, as though such Developer Sublease Parcel were Developer Fee Parcel. 1.4 Federal Documents. Tenant acknowledges and agrees that the lease of the Developer Fee Property and the sublease of the Developer Sublease Property is subject to the terms and conditions set forth in the Federal Documents, in each case including all matters, issues, contingencies, deed restrictions, environmental restrictions, leases, and obligations as stated therein. 1.5 DDA; Special Restrictions. Tenant acknowledges and agrees that Tenant, this Ground Lease, and the Lease Property are subject and subordinate to all terms, conditions, and covenants of the DDA and the Special Restrictions, and that any Material Default under the DDA or under the Special Restrictions shall be an Event of Default under this Ground Lease. 1.6 Priority. As between Landlord and Tenant, in the event of any conflict between this Ground Lease and the DDA or the Special Restrictions, the DDA or Special Restrictions, as the case may be, shall control. In addition, with respect to the Developer Sublease Property or any portion thereof, in the event of any conflict in the rights of Tenant under this Ground Lease and the rights of Landlord under the LIFOC, the terms, conditions and covenants of the LIFOC shall control. 2. Term, Commencement; Termination. 2.1 Term. 2. 1.1 Commencement and Termination. Subject to Sections 2.3 and 2_4, the term ("Term") of this Ground Lease shall be for the period of ten (10) years beginning on the Lease Commencement Date and ending on the earlier of: (a) the date that is the tenth (1 Oth) anniversary of the Lease Commencement Date (the "Lease Termination Date") or (b) the date of the Subsequent Closing conveying to Tenant all of, or the last portion of, the Lease Parcels, unless the Term is extended in accordance with the provisions of Section 2.2 or sooner terminated in accordance with the provisions of Sections 17 or 18. 7/12/2004 Attachment No. 5 — Page 5 Ground Lease and Sublease 18405:6391947.6 2.1.2 Earlier Termination with respect to Conveyed Parcels. This Ground Lease shall automatically terminate with respect to the applicable Conveyed Parcels upon the Subsequent Closing thereof, as if such date were the stated expiration date contained herein for such Conveyed Parcels, and neither party hereto shall have any further obligation under this Ground Lease with respect to such Conveyed Parcels (other than any obligations which otherwise would survive termination of this Ground Lease). From and after each such Subsequent Closing, all references to the Lease Property shall be deemed to exclude such Conveyed Parcels (and any Lease Property thereon or associated therewith) and this Ground Lease shall continue in full force and effect with respect to the remainder of the Lease Property. 2.2 Extension. This Ground Lease shall be automatically extended for a one year term (to the next anniversary of the Lease Commencement Date) upon the Lease Termination Date, and upon each subsequent expiration date arising as a result of an extension pursuant to this Section 2.2, if on such date all of the following are true: (a) this Ground Lease has not been earlier terminated in accordance with its terms, (b) no Tenant Default or Event of Default under this Ground Lease and/or no Potential Default or Material Default under the DDA or the Special Restrictions has then occurred and is continuing, and (c) either (i) the LIFOC remains in full force and effect with respect to one or more of the Developer Sublease Parcels or (ii) the Developer Sublease Property has been conveyed in fee by the Federal Government to Landlord pursuant to the LIFOC (such that the LIFOC has then terminated or is no longer in effect as to the entirety of Developer Sublease Property) but Landlord has not yet conveyed the remaining Lease Parcels to Tenant. 2.3 Inspection. Tenant acknowledges that (a) it has inspected the Lease Property in accordance with, and subject to the terms of, the DDA and (b) that it has no additional inspection or review rights under this Ground Lease. 2.4 Commencement of Possession. If Landlord is unable to give possession of the Lease Property on the Lease Commencement Date, this Ground Lease shall not be void or voidable and Landlord shall not be subject to any liability for such failure to give possession on such date, but except to the degree that such failure is the fault of Tenant, the Rent (as defined in Section 3) shall not commence until Landlord has delivered possession of the Lease Property to Tenant. No such failure to give possession on the Lease Commencement Date shall in any way affect the obligations of Tenant hereunder or under the DDA, nor shall the same be construed in any way to extend the Term of this Ground Lease. 2.5 Surrender. Upon the expiration of the Term or its termination by Tenant or Landlord, other than as a result of the conveyance to Tenant of the entirety of the then remaining Lease Property, Tenant shall quietly and peacefully remove itself and its personal property (but not any portion of the Lease Property) from the Lease Parcels and surrender the possession of the Lease Property to the Landlord in such improved condition as may have resulted from any improvement made therein by Tenant, as the same are required to be constructed, Completed and maintained in accordance with the DDA and the Special Restrictions. Such removal shall be at Tenant's sole cost and expense. During such period prior to surrender, all obligations assumed by Tenant under this Ground Lease shall remain in full force and effect. Landlord may, in its discretion following thirty (30) days notice to Tenant, declare any property which has not been removed from the Lease Property upon surrender as abandoned property. 7/12/2004 Attachment No. 5 — Page 6 Ground Lease and Sublease 18405:6391947.6 3. Rent 3.1 Generally. For purposes of this Ground Lease, Base Rent and Additional Rent are hereinafter collectively referred to as "Rent". All Rent payments due and owing shall be made by Tenant and shall be made payable to the City of Tustin and delivered to the City of Tustin Finance Director at 300 Centennial Way, Tustin, California, 92780, or to a third party at such other place as the Landlord may designate in writing from time to time. 3.2 Base Rent. Tenant shall tender as Base Rent the sum of One Thousand Dollars ($1000) per year, which Base Rent shall be due and payable on the Lease Commencement Date and upon each anniversary of the Lease Commencement Date upon which this Ground Lease remains in effect. The Base Rent shall not be prorated or reduced upon the conveyance of any portion of the Developer Sublease Property to Landlord or the release of any portion of the Developer Sublease Property as a result thereof. Only the Base Rent set forth in this Section 3.2. shall be considered revenues to Landlord pursuant to the Conveyance Agreement, it being agreed that all other sums due under this Ground Lease, including sums denominated as Additional Rent, are taxes or other expenses which are direct obligations of the Tenant regardless of whether such sums are paid directly or pass through Landlord and are not revenue or profit to Landlord. 3.3 Additional Rent. In addition to the Base Rent, the Tenant shall pay the following direct operating expenses and additional cost reimbursements set forth in this Section 3.3, with all sums payable by Tenant to Landlord being deemed "Additional Rent" for California statutory remedy purposes. 3.3.1 Operating Expenses. Tenant shall directly pay all charges, impositions, costs and expenses of every nature and kind relating to the Lease Property ("Operating Expenses"), but excluding any rent which may be owed from Landlord to the Federal Government under the LIFOC. In addition, Tenant shall pay for or directly perform all protection and maintenance services for the Developer Sublease Property as described in Section 11, in Section 12 of the LIFOC, and in the DDA. Any costs incurred by Landlord resulting from Tenant's failure to perform under this Section 3.3.1 shall be a "Cost Reimbursement" obligation under Section 3.3.2. During the Term, Tenant shall submit to Landlord a monthly statement detailing the services provided and all costs incurred by Tenant to perform such services during the period covered by such statement (each an "Operating Expense Statement"). For purposes of calculating damages and Additional Rent in the event of a Tenant Event of Default, Landlord shall be entitled to utilize the greater of its actual costs or the average monthly costs incurred by Tenant to perform such services during the term of this Ground Lease, as reflected on the Additional Rent Statements. 3.3.2 Additional Cost Reimbursement. All sums payable by Tenant to Landlord under this Ground Lease which are not Base Rent or Operating Expenses shall be deemed a "Cost Reimbursement." "Cost Reimbursement" shall include any and all costs incurred by Landlord, whether under the LIFOC, the DDA or otherwise, which (a) specifically are attributable to an action (or inaction) of Tenant under this Ground Lease, (b) constitute a Claim and/or Loss incurred by Landlord with respect to the Developer Sublease Property or Tenant's use thereof or action or inaction with respect thereto and/or (c) arise as a result of or are related to Tenant's failure to provide the protection and maintenance services as required by Section 3.3 7/12/2004 Attachment No. 5 — Page 7 Ground Lease and Sublease 18405:6391947.6 of the LIFOC and Sections 3.3 and 11 of this Ground Lease, and shall include amounts owing from Landlord to the Federal Government as a result of any of the foregoing. Upon incurring any such Cost Reimbursement expense, Landlord shall advise Tenant in writing of such costs and Tenant shall be obligated to pay to Landlord the full amount of the Cost Reimbursement within 30 calendar days of the date of such invoice for such costs. 3.4 Default Interest Rate. If any payment or any part thereof to be made by Tenant to Landlord pursuant to the terms of this Ground Lease shall not be paid when due, then in addition to any other remedies available to Landlord under this Ground Lease or otherwise, Tenant shall pay to Landlord, interest from the date of such payment or part thereof was due until the date paid at the greater of (a) the Current Value of Funds rate published by the Secretary of Treasury pursuant to 31 U.S.C. 3717 (Debt Collection Act of 1982) or (b) eight percent (8%) per annum, compounded annually, but in no event in excess of the maximum legal rate. 3.5 No Waiver. Nothing herein or in the imposition or acceptance by Landlord of default interest shall be construed as a waiver of any rights of Landlord arising out of any default of Tenant hereunder or under the DDA; the right to collect any such default interest is separate and apart from any rights or remedies of Landlord relating to any such default by Tenant. 3.6 Net Lease. Tenant hereby acknowledges and agrees that this Ground Lease is intended to be a triple net lease to the Landlord and except as expressly stated herein Landlord is not responsible for any costs, charges, expenses and outlays of any nature whatsoever arising from or relating to the Lease Property, or the use and occupancy thereof, or the contents thereof or the business carried on therein, and that Tenant shall pay all charges, impositions, costs and expenses of every nature and kind relating to the Lease Property. As set forth in Section 11, all costs of maintenance and repair of the Lease Property, all costs of insuring the Developer Sublease Property, as identified in Section 15, and all Taxes, as that term is defined in Section 7, attributable to the Lease Property shall be paid directly by Tenant. 4. Use of Lease Property. 4.1 Permitted and Prohibited Uses. 4. 1.1 DDA Restrictions. Subject to all applicable restrictions in the DDA (including Section 12.1 thereof), the Special Restrictions, Section 4.1.2 hereunder and, with respect to the Developer Sublease Property, the LIFOC and the FOSL, and consistent with each of the foregoing and the MCAS Tustin Specific Plan/Reuse Plan, Tenant may use and occupy the Lease Property for the design, construction and operation of the Improvements, as defined in and subject to the DDA. Tenant shall not use the Lease Property for any Prohibited Use or any other purpose unless expressly agreed to by the Landlord in writing. 4.1.2 No Economic Use. Prior to the Subsequent Closing with respect thereto, Tenant shall not utilize any Lease Parcel or any portion of the Lease Property for economic purposes or to generate economic returns, provided that nothing in the foregoing shall preclude Tenant or its tenants, Pad Transferees, customers and invitees from utilizing any Lease Parcel for parking, access, landscaping and special event purposes, without charge therefor, subject to 7/12/2004 Attachment No. 5 — Page 8 Ground Lease and Sublease 18405:6391947.6 compliance with the DDA, the Special Restrictions, the CC&Rs, the Navy rights of access set forth in the DDA and/or the Federal Deeds, and all applicable laws or ordinances. 4.1.3 Filming Restriction. There shall be no filming on the Developer Sublease Property portraying the U. S. Military without prior written authorization from Landlord. 4.2 Compliance With NEPA. Any use or uses of the Lease Property shall be consistent with the National Environmental Policy Act Record of Decision for the disposal and reuse of MCAS Tustin, and all conditions expressed therein as well as all conditions expressed in any other environmental action with respect to the uses of the Lease Property prepared for compliance with NEPA. 4.3 No Commitment for Future Conveyance. Tenant understands and acknowledges that this Ground Lease is not and does not constitute a commitment by Landlord or Federal Government to create any commitment with regard to the ultimate disposal of the Lease Property, in whole or in part or in any order of priority, to Tenant. 4.4 Environmental Matters. Tenant shall not conduct environmental testing, sampling, invasive testing or boring on the Leased Property without the written consent of the Landlord in its sole discretion, nor allow any dangerous or hazardous condition created by the Tenant to exist or continue. In accordance with 10 U.S.C. 2692, Tenant is prohibited from storing or disposing non -Department of Defense approved toxic or hazardous materials, which includes materials that are of an explosive, flammable, or pyrotechnic in nature, on a military installation, except to the extent authorized by a statutory exception to 10 U.S.C. 2692 or as authorized by the Secretary of Defense or his or her designee. In the event that Tenant desires to store or dispose of any hazardous materials, which includes materials that are explosive, flammable, or pyrotechnic in nature, on the Developer Sublease Property, Tenant shall comply with the provisions of Section 20. 4.5 Historic Preservation. Tenant shall not undertake any activity that may affect an identified historic or archeological property, including excavation, construction, alteration, maintenance or repairs of the Lease Property in a manner that is inconsistent with the Memorandum of Agreement Among the United States Federal Government, the California State Historic Preservation Officer and the Advisory Council on Historic Preservation for the Disposal and Reuse of Marine Corps Air Station, Tustin, Orange County, California ("MOA"). Buried cultural materials may be present on the Lease Property. If such materials are encountered, Tenant shall stop work immediately and notify Federal Government and Landlord. 5. "AS -IS" Tenant's Responsibility 5.1 AS -IS: WHERE -IS. 5. 1.1 No Representations or Warranties. Tenant recognizes that Landlord would not lease or sublease, nor subsequently sell, to Tenant the Lease Property except on an "AS, IS, WHERE IS, WITH ALL FAULTS" basis, and Tenant acknowledges that the Landlord has made no representations or warranties of any kind whatsoever (excepting only representations of the Landlord expressly set forth in this Ground Lease), either express or implied in connection with any matters with respect to the Lease Property or any portion thereof. 7/12/2004 Attachment No. 5 — Page 9 Ground Lease and Sublease 18405:6391947.6 Tenant's determination, subsequent to the Effective Date under the DDA, not to terminate the DDA and to proceed to Initial Close of Escrow thereunder constitutes Tenant's agreement that Tenant, in consummating the transactions described in this Ground Lease, is leasing or subleasing the Lease Property, as may be the case, and later will be buying the Lease Property, in each case in an "AS IS, WHERE IS, WITH ALL FAULTS" condition, in its present state and condition and with all faults, if any. Tenant further acknowledges and agrees that, except as otherwise specifically provided in this Ground Lease or the DDA, the Landlord has not made and does not make and specifically negates and disclaims any representations, warranties, promises, agreements or guaranties of any kind or character, whether express or implied, oral or written, past, present or future, whether by the Landlord or any of its agents, elected or appointed officials, representatives or employees, of concerning or with respect to: (a) the value of the Lease Property or the income to be derived from the Property; (b) the existence or nonexistence of any liens, easements, covenants, conditions, restrictions, claims or encumbrances affecting the Lease Property; (c) the suitability of the Lease Property and/or the Project Site for any and all future development, uses and activities which Tenant may conduct thereon, including the development of the Project described in the DDA; (d) the habitability, merchantability or fitness for a particular purpose of the Lease Property and/or the Project Site; (e) the manner, quality, state of repair or lack of repair of the Lease Property and/or the Project Site; (f) the nature, quality or condition of the Lease Property and/or the Project Site including water, soil and geology; (g) the compliance of or by the Lease Property and/or the Project Site or its operation with any Governmental Requirement, including the National Environmental Policy Act, CEQA and the Americans with Disabilities Act of 1990; (h) the manner or quality of the construction or materials, if any, incorporated into the Lease Property and/or the Project Site; (i) the presence or absence of Hazardous Materials, at, on, under, or adjacent to the Lease Property and/or the Project Site; 0) the content, completeness or accuracy of the information, documentation, studies, reports, surveys and other materials, delivered to Tenant in connection with the review of the Lease Property and/or the Project Site and the transactions contemplated in the DDA; (k) the conformity of the existing improvements on the Lease Property, if any, to any plans or specifications for the Lease Property and/or the Project Site; 7/12/2004 Attachment No. 5 — Page 10 Ground Lease and Sublease 18405:6391947.6 (1) compliance of the Lease Property with past, current or future statutes, laws, codes, ordinances, regulations or Governmental Requirements relating to zoning, subdivision, planning, building, fire, safety, health or environmental matters and/or covenants, conditions, restrictions or deed restrictions; (m) the deficiency of any undershoring or of any drainage; (n) the fact that all or a portion of the Lease Property may be located on or near an earthquake fault line or falls within an earthquake fault zone established under the Alquist-Priolo Earthquake Zone Act, California Public Resources Code Sections 262 1-2630 or within a seismic hazard zone established under the Seismic Hazards Mapping Act, California Public Resources Code, Sections 2690-2699.6 and Sections 3720-3725; (o) the existence or lack of vested land use, zoning or building entitlement affecting the Lease Property; (p) the construction or lack of construction of Tustin Legacy or if constructed, the construction of Tustin Legacy in accordance with design guidelines, plans and specifications previously or to be prepared therefor; (q) the contents of the Conveyance Agreement, the Federal Deed, the Base Closure Law, the FOST, the FOSL and the LIFOC; and (r) with respect to any other matters. 5.1.2 Environmental Condition of Lease Parcels; Restrictions. Tenant acknowledges and agrees that: (i) the Landlord has acquired and/or leased the LIFOC Parcels from the Federal Government, (ii) the Federal Government has conducted an Environmental Baseline Survey for Reuse Plan Disposal Parcels 10, 11 and 12; (iii) the Federal Government determined that Parcels I -C-1 and I -D-4 were suitable for transfer and issued the FOST; (iv) in accordance with the Landlord's recent leasing of the LIFOC Parcels, the Federal Government determined that the LIFOC Parcels were suitable for leasing and issued the FOSL; (v) the Landlord makes no representation or warranty as to the environmental condition of Reuse Plan Disposal Parcels 10, 11 and 12, including the Lease Property, the Federal Government's obligations with respect to the environmental condition of the foregoing property or of the Project Site or any portion thereof, or of the adequacy or accuracy of any environmental report that has been rendered; (vi) there may be some residual contamination on Parcels I -C-1, I -D-4, II -D-10, III -C-3, III -C -S, III -D-9 and/or III -D-11 and/or the Lease Property and/or the Project Site as a result of Federal Government historic activities; (vii) the Federal Government has agreed to accept certain limited responsibility for any contamination it caused, including any contamination discovered after transfer from the Federal Government, in accordance with existing Governmental Requirements including the National Defense Authorization Act For Fiscal Year 1993 as amended (Public Law No. 102-434) Section 330; and (ix) based on an agreement between the Federal Government and DTSC, the deed restrictions contained in the Federal .Deed and LIFOC are binding upon successors and assigns of the Landlord and are enforceable by DTSC pursuant to a conveyed property right from the Federal Government to DTSC. 7/12/2004 Attachment No. 5 — Page 11 Ground Lease and Sublease 18405:6391947.6 6. Utilities. 6.1 Provision of Utilities. The obtaining of utility services shall be solely the responsibility of Tenant. Any separate metering of utilities required by any utility provider shall be the responsibility of Tenant. Tenant shall pay all service charges, and all initial utility deposits and fees, for water, electricity, sewage, janitorial, trash removal, gas, telephone, pest control and any other utility services furnished to the Lease Property and the improvements on the Lease Property during the entire term of this Ground Lease ("Utilities"). Tenant shall pay for all Utilities prior to delinquency. If any such Utilities are not separately metered or billed to Tenant for the Lease Property but rather are billed to and paid by Landlord, Tenant shall pay to Landlord, as Cost Reimbursements, its pro rata share of the cost of such services, as reasonably determined by Landlord. If any Utilities are not separately metered, Tenant shall have the right to determine Tenant's consumption by either submetering, survey or other methods designed to measure consumption with reasonable accuracy. Landlord shall not be liable for any reason for any loss or damage resulting from an interruption of any of these services. Landlord may designate the provider of Utilities and in such event Tenant shall use such designated provider; provided that Tenant shall have no claim of any type, for any failure of such provider to provide such service, and Tenant's remedy, if any, shall be limited to such provider. 6.2 AS -IS; Tenant's Responsibility. Tenant acknowledges and agrees that Landlord in no way warrants the condition or adequacy of the Utilities on the Lease Property for the purposes intended by Tenant. Any construction on, modifications to or replacement of the Utilities shall be undertaken, performed and completed solely in accordance with the provisions of the DDA. Tenant shall be responsible for all costs related to such construction, modification or replacement, as more fully set forth in the DDA. 6.3 Access. Tenant acknowledges that the Utilities may be used by the Federal Government for the provision of ongoing Federal Government activities on MCAS Tustin. Landlord and the Federal Government shall at all times have full access to the Lease Property for operation, maintenance, repair and replacement of these systems as may be required. Such operation, maintenance, repair and replacement activities shall take priority over the provision of Utilities to Tenant, whether provided by Landlord or other utility service providers, or any use of the Lease Property by Tenant in the event of any conflict and Landlord and the Federal Government shall not be liable for any loss or damage resulting from the disconnection or interruption of Utilities services to Tenant or any interference with Tenant's use of the Lease Property necessitated by such activities. The determination to disconnect or interrupt Tenant's utility service or interfere with Tenant's use of the Lease Property is within the sole discretion of Landlord, provided that Landlord will, subject to the terms of the DDA or otherwise, provide Tenant with ten (10) business days prior notice of such determination. 7. Taxes. 7.1 Generally. Tenant shall pay prior to delinquency all Taxes (as hereinafter defined) levied or imposed against the Lease Property or against Landlord's and/or Tenant's interest therein during the Term. "Taxes" shall mean all taxes, assessments, fees and charges imposed by any Governmental Authority with respect to the Leased Premises, or the operation of the Lease Property. Taxes shall not include income taxes, excess profit taxes, franchise taxes, or 7/12/2004 Attachment No. 5 — Page 12 Ground Lease and Sublease 18405:6391947.6 other taxes imposed or measured on or by the income of Landlord from the operation of the Lease Property, provided, however, that if, due to a future change in the method of taxation or assessment, any income, profit, franchise or other tax, however designated, shall be imposed in substitution, in whole or in part, for (or in lieu of) any tax, assessment or charge which would otherwise be included within the definition of Taxes, such other tax shall be deemed to be included within Taxes as defined herein to the extent of such substitution. There shall be added to Taxes the expenses of any contests (administrative or otherwise) of Taxes incurred during the taxing year, but only to the extent such contests result in a reduction of Taxes for such year or any other year during the Term. In the event that Landlord is required by law to collect such Tax, Tenant shall pay such Tax to Landlord as a Cost Reimbursement within ten (10) business days of demand and Landlord shall remit any amounts so paid to Landlord to the appropriate Governmental Authority. 7.2 Future Taxes. The interest created by this Ground Lease may at some time be subject to property taxation under the laws of the State of California. If property taxes are imposed, the party in whom the possessory interest is vested may be subject to the payment of the taxes levied on such interest. This notice is included in this Ground Lease pursuant to the requirements of Section 107.6(a) of the Revenue and Taxation Code of the State of California. 7.3 Proration. All Taxes with respect to the Lease Property shall be prorated as set forth in Section 7.6.4(d) of the DDA, which is incorporated herein by reference. Tenant's obligation to pay Taxes during the last year of the Term shall survive the termination of this Ground Lease. 8. Access by Federal Government and Landlord. In addition to access required under other provisions of this Ground Lease, the Federal Government and Landlord shall be allowed access to the Lease Property at all reasonable times throughout the term of this Ground Lease, for any reasonable purposes upon prior written notice to Tenant, provided that Landlord's access will be on the terms and conditions set forth in Section 8.8 of the DDA. Tenant shall have no claim against the Federal Government or Landlord for exercise of their rights of access hereunder. 9. Covenants of Tenant. 9.1 Standard of Maintenance. Tenant shall construct and maintain and keep the Lease Property in accordance with and as required by the DDA, the Special Restrictions and the CC&Rs. 9.2 Compliance With Laws. Tenant shall not make or permit to be made any use of the Lease Property or any part thereof (i) which would violate any of the covenants, agreements, terms, provisions, and conditions of this Ground Lease, the DDA or, with respect to the Developer Sublease Property, the LIFOC; or (ii) which would directly or indirectly violate any federal, state or local law, ordinance, rule or governmental regulation or would be a Prohibited Use; or (iii) which will suffer or permit the Lease Property or any part thereof to be used in any manner or permit anything to be brought into or kept therein which, in the reasonable judgment of Landlord, shall in any way impair or tend to impair the character, reputation or appearance of the Lease Property or which will impair or interfere with or tend to impair or interfere with any 7/12/2004 Attachment No. 5 — Page 13 Ground Lease and Sublease 18405:6391947.6 of the services performed by Landlord. Tenant shall comply with all laws, enactments, rules, ordinances and regulations of all governmental authorities relating or applicable to Tenant's occupancy of the Lease Property and all covenants of the DDA and, with respect to the Developer Sublease Property, the LIFOC, governing use of the Lease Property. Tenant shall obtain all permits and licenses required by the City of Tustin acting in its governmental capacity as more fully set forth in the DDA, and shall pay all required fees. 9.3 Additional Costs. In addition to all other liabilities for breach of any covenant of this Section 9.3, Tenant shall pay to Landlord an amount equal to any increase in insurance premiums payable by Landlord caused by such breach. 10. Assignment and Subletting. 10.1 No Transfer. For the reasons set forth in Section 2.1 of the DDA, the Tenant, on behalf of itself and all Successor Owners and each Person claiming by, through or under Tenant or any Successor Owner, hereby acknowledges and agrees that prior to the Recordation of a Final Certificate of Compliance: (a) No Person shall acquire any rights or powers under this Ground Lease except as set forth in Section 2.2 of the DDA; (b) No Transfer, including by Transfer of Control, shall be valid or have any force or effect unless the Landlord shall have provided its prior written consent thereto in the Landlord's sole discretion, except to the extent such right of consent is specifically modified or waived pursuant to Section 2.2.4 (Minor Pad Transfers), Section 2.2.6 (Foreclosure Transfers), Section 2.2.7 (Retail Leases) or Article 15 (Mortgages) of the DDA; (c) No Transfer of any interest in any Developer Sublease Parcels, including by Retail Lease, shall be valid or have any force or effect unless the Federal Government shall have provided its prior written consent, which shall be governed by Section 8.5 of the DDA; and (d) No Transfer to a Mortgagee shall be valid or enforceable with respect to the Lease Parcels unless such Mortgagee is a Permitted Mortgagee and the Mortgage is a Permitted Mortgage entered into in compliance with the requirements and conditions of Article 15 of the DDA, including consent of the Landlord as and to the extent required therein. In addition, notwithstanding any Transfer, the Lease Parcels shall continue to be subject to the DDA, the Special Restrictions and the CC&Rs. 10.2 Direct Collection of Rent: Sublease Rental. If, with the consent of Landlord, this Ground Lease is assigned or if the Lease Property or any part thereof is sublet or occupied by anybody other than Tenant, Landlord may, after a Tenant Event of Default, collect Rent from the assignee, Tenant, or occupant, and apply the net amount collected to the Rent herein reserved and other sums due from Tenant hereunder. The collection of Rent from an assignee or occupant shall not release Tenant from its obligation to pay Rent or other sums owed by Tenant to the extent the same has not otherwise been collected from such assignees or occupants. If Landlord consents to such subletting or assignment, it shall nevertheless be a condition to the effectiveness thereof that a fully executed copy of the sub -sublease or assignment is furnished to Landlord and 7/12/2004 Attachment No. 5 — Page 14 Ground Lease and Sublease 18405:6391947.6 that any assignee assumes in writing all obligations of Tenant under this Ground Lease and, with respect to the Developer Sublease Parcels, the LIFOC. No consent to any assignment, subletting or occupancy shall be deemed a waiver of any of Tenant's obligations contained in this Ground Lease or, with respect to the Developer Sublease Parcels, the LIFOC or the acceptance of the assignee, Tenant or occupant as Tenant, nor a release of Tenant from further performance of any covenants and obligations under this Ground Lease or, with respect to the Developer Sublease Parcels, the LIFOC. 10.3 No Waiver. Any consent given by Landlord to a Transfer of all or any portion of this Ground Lease shall not constitute a waiver of the necessity of such consent to any subsequent Transfer. 10.4 Landlord Assignment. Landlord may, in its sole discretion and without consent of Tenant, assign this Ground Lease to any Person, including the Tustin Community Redevelopment Agency and/or Tustin Public Finance Authority. 11. Protection and Maintenance Services. In light of the circumstance that the Existing Improvements are to be demolished, the services to be provided by Tenant hereunder shall include the furnishing of all labor, supervision, materials, supplies, and equipment necessary to furnish the maintenance to preserve the safety of the Lease Property and to maintain it in a non - nuisance condition, including fencing; pavement and grounds maintenance (including grass cutting, shrub trimming and tree removal); pest control; security within the Lease Property; refuse collection, removal, and disposal, all as necessary for the protection of the Lease Property and persons in the vicinity of the Lease Property. Nothing contained herein shall release Tenant from (a) its obligations with respect to the Utility Systems as set forth in Section 12.2, and (b) maintenance of roadways and other access for the Navy in, on, over, across and through the Lease Parcels as and to the extent required for access by the Navy to the LIFOC Parcels, including as set forth in the LIFOC and in the easements in favor of the Navy set forth in the Federal Deeds conveying WAS Tustin to Landlord. 11.1 Maintenance. Tenant shall, at Tenant's own expense, maintain and repair the Lease Property, including, without limitation, the Transferred Utility Systems, in accordance with the terms of the DDA, the Special Restrictions and, with respect to the Developer Sublease Parcels, the LIFOC. Both Landlord and Federal Government, upon due notice, may inspect the Lease Property to ensure Tenant's performance of required maintenance. Such obligations shall include repair and maintenance of all Transferred Utility Systems on the Lease Parcels, including distribution lines, connections and equipment which solely support Lease Property, to the extent that such Transferred Utility Systems are in use by or affect utilities in use by third parties. This responsibility extends from the Lease Property to the point of connection with the Utility System that serves users other than Tenant. These systems may include but are not limited to: heating plants, steam lines, traps, transformers, substations, power distribution lines (overhead and underground), poles, towers, gas mains, water and sewage mains, water tanks, fire protection systems, hydrants, lift stations, manholes, isolation valves, meters, storm water system and catch basins. Tenant shall ensure only trained and qualified persons are utilized in performance of the maintenance and protection services specified in this paragraph. 7/12/2004 Attachment No. 5 — Page 15 Ground Lease and Sublease 18405:6391947.6 11.2 Security and Fire Protection. Tenant shall provide for all security and safety within the Lease Property. Any crimes or other offenses, including traffic offenses and crimes and offenses involving damage to or theft of Federal Government property, shall be reported to the appropriate authorities for their investigation and disposition to Landlord and to Federal Government as property owner. 11.3 Services. Tenant shall be responsible, at its cost and expense, for obtaining and providing any and all services, not otherwise provided by Landlord in accordance with the terms of this Ground Lease, which may be required in connection with Tenant's use or occupancy of the Lease Property. 12. Transferred Utility Systems 12.1 Definition of Transferred Utility Systems. For purposes of this Ground Lease, the following terms shall have the meanings set forth below: (a) "Utility Systems" shall mean all utility distribution systems and shall include the following: (i) all current Landlord -owned electrical, gas, telephone and cable television systems, including distribution lines, pad mounted and overhead distribution poles and/or transformers, (ii) all conduits and duct banks from outlet or master meters or connection points outside the Developer Parcels to end usage points on the Developer Parcels; and (ii) all water, sewer, and storm drain systems (does not include culvert ditches), including distribution lines and pipelines from outlet or master meters or connection points outside the Developer Parcels to end usage points on the Developer Parcels. (b) "Transferred Utility Systems" shall mean those Utility Systems in the Lease Parcels which were or will be transferred from the Navy to the Landlord and which are not being used by or reserved for future use by the Tenant or any third Person as public service infrastructure. 12.2 Utility Systems Alteration. Tenant agrees not to alter, modify, repair, replace, or relocate (each an "Alteration") any part of the Utility Systems without the prior written consent of the Landlord, which the Landlord shall not unreasonably withhold, provided that it shall be deemed reasonable for the Landlord to withhold its consent to such Alteration if the Landlord determines that such Alteration may interfere with the construction and operation of the Project, may negatively impact public health and safety, may negatively impact the logical and orderly future phasing of Tustin Legacy Backbone Infrastructure Work, may interfere with the Navy's operations, including without limitation, Remediation of Hazardous Materials, on the LIFOC Parcels or may interfere with the development or reuse of any portion of MCAS Tustin. 13. Indemnity. 13.1 Tenant's Indemnification. As a material part of the consideration for this Ground Lease, and to the maximum extent permitted by law, Tenant shall indemnify, protect, defend, assume all responsibility for and hold harmless the Landlord and its appointed and elected officials, agents, attorneys, affiliates, employees, contractors and representatives and the federal government and its agencies and employees, including the Federal Government (collectively referred to as the "Indemnified Parties"), with counsel reasonably acceptable to 7/12/2004 Attachment No. 5 — Page 16 Ground Lease and Sublease 18405:6391947.6 the Landlord, from and against any and all Claims resulting or arising from or in any way connected with the following, provided Tenant shall not be responsible for (and such indemnity shall not apply to) the gross negligence or willful misconduct of the Indemnified Parties: way; (a) Tenant's marketing, sale, lease or use of the Lease Property in any (b) any other activities of Tenant; (c) any plans or designs for Improvements prepared by or on behalf of Tenant, including any errors or omissions with respect to such plans or designs; (d) any Alteration of the Utility Systems (whether or not consented to by the Landlord) or Tenant's failure to obtain consent prior to any such Alteration, (e) any loss or damage to the Landlord resulting from any inaccuracy in or breach of any representation or warranty of Tenant or resulting from any breach or default by Tenant under this Ground Lease; and (f) any development or construction of any Improvements by Tenant, whether regarding the quality, adequacy or suitability of the plans, any labor, service, equipment or material furnished to the Lease Property, any person furnishing the same, or otherwise. 13.2 Environmental Indemnity. 13.2.1 Tenant Indemnity. As a material part of the consideration for this Agreement, and effective as to each of Developer Parcels, the Property and the Project Site, upon the Tenant's acquisition of a leasehold interest to all or any portion of the Developer Parcels, the Tenant on behalf of itself and Successor Owners and each and every Person claiming by, through or under Tenant or any Successor Owner, hereby agrees that Tenant and each Successor Owner shall, to the maximum extent permitted by law, indemnify, protect, defend, assume all responsibility for and hold harmless the Indemnified Parties from and against any and all Claims, including environmental Claims, resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to any portion or portions of said lands, regardless whether any such condition is known or unknown now or upon acquisition and regardless whether any such condition pre-exists acquisition or is subsequently caused, created or occurring, provided, however, that neither the Tenant nor any Successor Owner shall be responsible for (and such indemnity shall not apply to) to the gross negligence or willful misconduct of the Indemnified Parties; provided, however, that such indemnity shall not be binding upon subtenants of Tenant under Retail Space Leases or Minor Pad Transferees who are End Users or upon Major Pad Transferees who are End Users and are released from such indemnity obligation pursuant to City Non -Disturbance and Attornment Agreement entered into pursuant to Section 2.2 of the DDA. 7/12/2004 Attachment No. 5 — Page 17 Ground Lease and Sublease 18405:6391947.6 13.2.2 Pad Transferee and Retail Space Tenant Indemnity. As a material part of the consideration for this Agreement, and effective as to each of Developer Parcels, the Property and the Project Site, Tenant, on behalf of itself and Successor Owners and each and every Person claiming by, through or under Tenant or any Successor Owner, hereby agrees that Tenant and each Successor Owner shall include the following indemnity in favor of the Indemnified Parties in each Retail Space Lease and in each deed and/or ground lease effecting a Pad Transfer (and incorporating the defined terms required to interpret the following provision): "[Each Pad Transferee/Tenant] on behalf of itself and each and every Person claiming by, through or under [Pad Transferee/Tenant], including without limitation, successors and assigns of such [Pad Transferee/Tenant] owning or leasing all or any portion of [defined premises] to the maximum extent permitted by law, shall indemnify, protect, defend, assume all responsibility for and hold harmless the Landlord and its appointed and elect officials, agents, attorneys, affiliates, employees, contractors and from and against any and all Claims resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to or occurring on or about any portion or portions of the [defined premises] caused or created by such [Pad Transferee/Tenant] or its officers, directors, members, partners, agents, affiliates, employees, contractors, consultants or representatives, or with respect to pre-existing conditions, exacerbated by negligent act or omission of any of the foregoing (but with respect to such exacerbation, only to the extent of the exacerbation)." 13.3 Release. Save and except for the explicit covenants, representations and warranties of the Landlord and any other "Released Party" (as defined below) set forth in this Ground Lease or, with respect to the Lease Property in the DDA, Tenant and any Person claiming by, through or under Tenant, including any Assignee, any Mortgagee, any subtenant, and all voluntary and involuntary successors of Tenant owning, occupying or Leasing all or any portion of the Lease Parcels or any current or future improvement thereon ("Releasing Party"), hereby waives, as of the date of execution of this Ground Lease and as of each Subsequent Closing, its right to recover from, and fully and irrevocably releases, Landlord and its elected and appointed officials, employees, agents, attorneys, affiliates, representatives, contractors, successors and assigns (individually, a "Released Party", and collectively, the "Released Parties") from any and all Claims that Tenant may now have or hereafter suffer or acquire for any costs, losses, liabilities, damages, expenses, demands, actions or causes of action: (a) arising from any information or documentation supplied by any of the Released Parties ("Due Diligence Information"); (b) arising from any condition of the Property, the Project Site, or any current or future improvement thereon, known or unknown by any Releasing Party or any Released Party; (c) arising from any construction defects, errors, omissions or other conditions, latent or otherwise, including environmental matters, as well as economic and legal conditions on or affecting the Lease Property, or any portion thereof; (d) arising from the existence, Release, threatened Release, presence, storage, treatment, transportation or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to the Lease Property, the Project 7/12/2004 Attachment No. 5 — Page 18 Ground Lease and Sublease 18405:6391947.6 Site, or any current or future improvement thereon or any portion thereof; (e) by any Governmental Authority or any other third party arising from or related to any actual, threatened, or suspected Release of a Hazardous Material on, in, under, from, about, or adjacent to the Lease Property or any current or future improvement thereon, including any Investigation or Remediation at or about the Lease Property or any current or future improvement thereon; (f) arising from the Tustin Legacy Backbone Infrastructure Program, Tenant's "Developer's Backbone Infrastructure Work", the cost or extent thereof; (g) the amount of the Project Fair Share Contribution as set forth in the DDA; and/or (h) arising from the formation of any community facilities district in connection with the recoupment or payment of the Project Fair Share Contribution or any school related development fees unless specifically agreed to in writing by the Landlord after the Effective Date of the DDA; provided, however, that the foregoing release by the Releasing Parties shall not apply to the extent that any Claim is the result of the willful misconduct or fraud of the Landlord or its elected and appointed officials, employees, representatives, agents or consultants arising after the Commencement Date. This release includes Claims of which Tenant is presently unaware or which Tenant does not presently suspect to exist which, if known by Tenant, would materially affect Tenant's release to the Released Parties. Tenant specifically waives the provision of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." In this connection and to the extent permitted by law, Tenant hereby agrees, represents and warrants, which representation and warranty shall survive the Lease Commencement Date, the Subsequent Closings and the termination of this Ground Lease and not be merged with any Quitclaim Deed or the DDA, that Tenant realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to Claims or controversies which are presently unknown, unanticipated and unsuspected, and Tenant further agrees, represents and warrants, which representation and warranty shall survive the Lease Commencement Date, the Subsequent Closings and the termination of this Ground Lease and not be merged with any Quitclaim Deed or the DDA, that the waivers and releases in this Ground Lease have been negotiated and agreed upon in light of that realization and that Tenant, on behalf of itself and the other Releasing Parties, nevertheless hereby intends to release, discharge and acquit the Released Parties from any such unknown Claims and controversies which might in any way be included as 7/12/2004 Attachment No. 5 — Page 19 Ground Lease and Sublease 18405:6391947.6 a material portion of the consideration given to Landlord by Tenant in exchange for Landlord's performance hereunder. BY INITIALING BELOW, TENANT ACKNOWLEDGES THAT (A) IT HAS READ AND FULLY UNDERSTANDS THE PROVISIONS OF THIS SECTION, (B) IT HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (C) IT HAS ACCEPTED AND AGREED TO THE TERMS SET FORTH IN THIS SECTION. LANDLORD'S INITIALS TENANT'S INITIALS LANDLORD'S INITIALS TENANT'S INITIALS This release shall run with the land for the benefit of Landlord and all owners and successor owners to Landlord's interest in the Lease Property. 14. Tenant's Liability Extends to Its Contractors and Sublessees. Tenant's liability shall extend to the performance of work or the use of Lease Property by any contractor, assignee, or sublessee of Tenant under this Ground Lease. 15. Insurance. On or before the Lease Commencement Date, Tenant shall obtain at Tenant's sole cost and expense insurance of the types required by, in the amounts set forth in, and otherwise in conformance with by Sections 11.1 and 11.2 of the DDA. Prior to commencement of any work on the Lease Parcels or any other portion of the Project Site, Tenant shall provide Landlord with certificates of such insurance meeting the requirements of Section 11.1 of the DDA. Such policies of insurance shall be kept and maintained in force until the termination of this Ground Lease in full and so long thereafter as necessary to cover any claims of damages suffered by persons or property resulting from any acts or omissions of Tenant, Tenant's employees, agents, contractors, suppliers, consultants or other related parties. 16. Default. It shall constitute an event of default ("Event of Default") under this Ground Lease if: 16.1 Payment. Tenant fails to pay in full any sum required to be paid hereunder, and such failure continues for a period of fifteen (15) Business Days after written notice to Tenant from Landlord. 16.2 Performance. Tenant fails to perform or observe any term obligation, covenant, or agreement hereunder, other than as described in Section 16.2, and such failure continues for within thirty (30) calendar days after receipt of the written notice of such potential Event of Default from Landlord, or (b) if such cure cannot be reasonably accomplished within such thirty 7/12/2004 Attachment No. 5 — Page 20 Ground Lease and Sublease 18405:6391947.6 (30) day period, within ninety (90) days after receiving written notice of such potential Event of Default, but only if the Tenant has commenced such cure within such thirty (30) calendar day period and diligently pursues such cure to completion, or (c) within such longer period of time as may be expressly provided in the DDA with respect to a Potential Default thereunder or granted by the Landlord in the Landlord's sole discretion, taking into account the nature of the potential Event of Default and Tenant's diligence and good faith efforts to cure such potential Event of Default, provided that the foregoing cure periods may be extended by Force Majeure Delays; or 16.3 Transfer. Tenant Transfers, or purports to Transfer, the Lease Property or any part thereof other than in the manner and upon the conditions set forth herein; or 16.4 DDA Material Default. There occurs any Material Default of Tenant under the DDA; or 16.5 Failure to Close. A Subsequent Closing fails to occur on the date established therefor under the DDA, except as a result of an act or omission of Landlord. 16.6 Failure to Vacate. Tenant fails to vacate the Lease Property on the Lease Termination Date unless this Ground Lease (a) is terminated as a result of the conveyance of all Lease Parcels to Tenant in one or more Subsequent Closings, or (b) is otherwise renewed or extended as set forth herein. 17. Landlord's Remedies. 17.1 Ground Lease Remedies. If an Event of Default hereunder shall have occurred which has not been cured pursuant to Sections 16.1 or 16.2, or any other Event of Default described in Section 16, Landlord may, at its option, exercise any one or more of the following remedies: 17. 1.1 Termination of Ground Lease. Landlord may terminate this Ground Lease, by written notice to Tenant, without any right by Tenant to reinstate its rights by payment of Rent or other sums due or other performance of the terms and conditions hereof. Upon such termination, Tenant shall immediately surrender possession of the Lease Property then leased or subleased hereunder to Landlord, and Landlord shall immediately become entitled to receive from Tenant an amount equal to the aggregate cost of all Rent, which is due and owing for the entire term of the Ground Lease to Landlord but unpaid or unperformed by Tenant. 17.1.2 Reletting. With or without terminating this Ground Lease, as Landlord may elect, Landlord may re-enter and repossess the Lease Property then leased 'or subleased hereunder, or any part thereof, and lease them to any other person upon such terms as Landlord shall deem reasonable, for a term within or beyond the Term; provided, that any such reletting prior to termination shall be for the account of Tenant, and Tenant shall remain liable for the cost of (i) Rent, and other sums which would be payable under this Ground Lease by Tenant in the absence of such expiration, termination or repossession, less (ii) the net proceeds, if any, of any reletting effected for the account of Tenant after deducting from such proceeds all of Landlord's expenses, reasonable attorneys' fees and expenses, employees' expenses, alteration costs, expenses of preparation for such reletting and all costs and expenses, direct or indirect, incurred as a result of Tenant's breach of this Ground Lease. If the Lease Property are, at the time of 7/12/2004 Attachment No. 5 — Page 21 Ground Lease and Sublease 18405:6391947.6 default, sublet or leased by Tenant to others, Landlord may, as Tenant's agent, collect Rents due from any Tenant tenant or other Tenant subtenant and apply such Rent rental to the Rent and other amounts sums due hereunder without in any way affecting Tenant's obligation to Landlord hereunder. Such agency, being given for security, is hereby declared to be irrevocable. 17.1.3 Acceleration of Rent. Landlord may declare the cost of Base Rent and all Additional Rent other sums due hereunder (with the amount of Cost Reimbursements to be based on historical amounts and Landlord's estimates for future amounts) for the entire balance of the then current term immediately due and payable, together with all other charges, payments, costs, and expenses payable by Tenant as though such amounts were payable in advance on the date the Event of Default occurred. 17.1.4 Rent Minus Fair Market Value. Landlord may declare immediately due and payable from Tenant, in addition to any damages or other amounts becoming due from Tenant under any other provision of this Ground Lease, an amount equaling the difference between the Rent reserved in this Ground Lease from the date of the default to the expiration date and the then fair market value of the Lease Property for the same period. 17.1.5 Payment of Costs Incurred by Landlord under LIFOC. Landlord may declare immediately due and payable from Tenant As Additional Rent, in addition to any damages or other amounts becoming due from Tenant under any other provision of this Ground Lease, all amounts due and payable by Landlord under the LIFOC arising in whole or in part from the default by Tenant under this Ground Lease, including those sums due pursuant to Section 18.2 of this Ground Lease and all attorneys, consultants and experts fees and other costs and expenses incurred by Landlord in enforcing its rights under the LIFOC or this Ground Lease. 17.1.6 Removal of Contents by Landlord. With respect to any portion of the Lease Property which is vacant or which is physically unoccupied by Tenant, Landlord may remove all persons and property therefrom, and store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, without service of notice or resort to legal process (all of which Tenant expressly waives) and without being deemed guilty of trespass or becoming liable for any loss or damage which may be occasioned thereby. Landlord shall have a lien for the payment of all sums agreed to be paid by Tenant herein upon all Tenant's property, which lien is to be in addition to Landlord's lien now or hereafter provided by law. 17.1.7 Right of Distress and Lien. In addition to all other rights and remedies of Landlord, if an Event of Default shall occur, Landlord shall, to the extent permitted by law, have a right of distress for Rent and lien on all of Tenant's fixtures, merchandise and equipment in the Lease Property, as security for Rent and all other charges sums payable hereunder. 17.2 DDA Remedies. Landlord may exercise any and all remedies available to it under the DDA. 17.3 Survival of Tenant's Obligations. No expiration or termination of this Ground Lease (except as expressly provided herein) and no repossession of the Lease Property or any part thereof shall relieve Tenant of its liabilities and obligations hereunder, all of which shall 7/12/2004 Attachment No. 5 — Page 22 Ground Lease and Sublease 18405:6391947.6 survive such expiration, termination or repossession, and Landlord may, at its option, sue for and collect all Rent and other charges sums due hereunder at any time as when such charges accrue. 17.4 Not Exclusive Right. No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy herein or by law provided, but each shall be cumulative and in addition to every other right or remedy given herein or now or hereafter existing at law or in equity or by statute. 17.5 Expenses. In the event that Landlord commences suit for the repossession of the Lease Property, for the recovery of Rent or any other amount due under the provisions of this Ground Lease, or because of the breach of any other covenant herein contained on the part of Tenant to be kept or performed, and a breach shall be established, Tenant shall pay to Landlord all expenses incurred in connection therewith, including reasonable attorneys', experts' and consultants' fees. 18. Termination. 18.1 Termination upon Subsequent Closings. This Ground Lease shall terminate with respect to each Conveyed Parcel upon the Subsequent Closing therefor between the Landlord, as "City", and Tenant, as "Developer", under the DDA. If such Subsequent Closing conveys the full remainder of Lease Parcels then under the scope of this Ground Lease, such that Tenant holds fee title to the entirety of Lease Parcels, then this Ground Lease shall terminate without any further action by either Party hereunder. 18.2 Termination by Federal Government of the LIFOC. The Federal Government has the right to terminate the LIFOC on account of a breach by Landlord, the Lessee thereof, of any of the terms and conditions of the LIFOC. In the event of a breach involving the performance of any obligation under the LIFOC, the LIFOC provides that Landlord, as the Lessee thereunder, shall be afforded sixty (60) days from the receipt of the Federal Government's notice of intent to terminate, unless Federal Government determines that a shorter period is required, to commence action to complete the performance of the obligation or otherwise cure the subject breach and avoid termination of the LIFOC, which action to cure is to be completed within a reasonable period of time. Landlord agrees to immediately, and in any event within one (1) Business Day after Landlord's receipt, provide a copy of any such notice to Tenant. In the event that any such notice is delivered to Landlord as the "Lessee" under the LIFOC, for any such breach occasioned or caused by the action, negligence or inaction of Tenant, or any party acting on behalf of or through Tenant, for an obligation, covenant or undertaking of Tenant under this Ground Lease, then Tenant shall either commence action to complete the performance of the obligation or otherwise cure the subject breach and avoid termination of this Ground Lease and the LIFOC, which action to cure is to be completed within a reasonable period of time, or immediately advise the Landlord of Tenant's intended course of action to cure the breach if it cannot be reasonably cured within the ten working day period specified and the estimated date as to when said action will be completed. Tenant shall either cure such breach within thirty (30) days from the date of receipt by Landlord of the Federal Government's notice of intent to terminate, or Tenant shall provide its plan and program in writing as to its proposed action to complete the performance of the obligation and shall commence such cure of the breach as soon as reasonable and possible under the circumstances 7/12/2004 Attachment No. 5 — Page 23 Ground Lease and Sublease 18405:6391947.6 and complete such action to cure within a reasonable period of time in light of the nature of the breach and any circumstances beyond Tenant's reasonable control. If Tenant should fail to cure within the grace periods provided above, and the Federal Government does not terminate the Ground Lease as it pertains to the Developer Sublease Parcels under the provisions of the LIFOC, then Landlord shall have the option to terminate this Ground Lease, without the necessity of providing further notice or rights of cure to Tenant. In the event that the Federal Government shall elect to terminate the LIFOC on account of the breach by Tenant of any of the terms and conditions hereof or of the LIFOC to be performed by Tenant, Tenant shall indemnify Landlord against any claims the Federal Government may have against Landlord for any of the following under the LIFOC: 18.2.1 The costs incurred by the Federal Government in resuming possession of the Developer Sublease Property. 18.2.2 The costs incurred in the Federal Government's performance of any of Tenant's obligations under this Ground Lease; and with respect to the Developer Sublease Property. 18.2.3 An amount equal to the aggregate of any obligations, and charges assumed hereunder pursuant to Section 3 and not therefore paid or satisfied, which amounts shall be due and payable at the time when such obligations, and charges would have accrued or become due and payable under this Ground Lease. 18.3 Termination by Federal Government for Other Than Breach. In addition to the right to terminate the LIFOC for breach, the Federal Government is entitled to terminate the LIFOC in the event of a National Emergency (as defined in the LIFOC) as declared by the President or the Congress of the United States and the Federal Government makes a reasonable determination that such National Emergency requires the use by the United States of America of the Developer Sublease Property, or such National Emergency otherwise necessitates the use of MCAS Tustin and such use will materially interfere with the "Lessee's" use under the LIFOC or any Tenant's use of the Developer Sublease Property. In the event of a termination for a National Emergency, the Landlord as "Lessee" under the LIFOC, is to be provided with no less than 30 days written notice of such termination and shall immediately provide Tenant with a copy of any notification it receives from the Federal Government relative to such termination. Landlord shall meet and confer with Tenant and the government to determine what is a reasonable time for Tenant to vacate the Developer Sublease Property, considering the factors of the nature of the exiting uses of Tenant, the consequences which would be affected if such termination is required and the losses and penalties which would be engendered if such termination is required. Landlord shall provide Tenant with as long and reasonable time as is under the facts and circumstances acceptable to the Federal Government relative to such termination. In the event of such termination, Tenant and Landlord as Lessee under the LIFOC shall have only such remedies as are otherwise available under the law with respect to compensation from the Federal Government for such termination. Tenant shall not seek and shall not have any claim against Landlord for any such termination by the Federal Government, except to the extent that Landlord obtains recovery therefor from the Federal Government on behalf of Tenant with respect to the Developer Sublease Property. 7/12/2004 Attachment No. 5 — Page 24 Ground Lease and Sublease 18405:6391947.6 18.4 Termination by Landlord under the DDA. Landlord may, at its sole discretion, terminate this Ground Lease, by written notice to Tenant, without any right by Tenant to reinstate its rights by payment of Rent and any other sums due or other performance of the terms and conditions hereof, upon any exercise by Landlord of its rights under Article 13 of the DDA. Upon such termination, Tenant shall immediately surrender possession of the Lease Property to Landlord, and Landlord shall immediately become entitled to receive from Tenant an amount equal to the aggregate cost of all Rent and all other sums, which are due and owing for the entire term of the Ground Lease to Landlord but unpaid or unperformed by Tenant. 19. Vacation of Developer Sublease Property. Tenant acknowledges that the LIFOC provides that in the event environmental contamination is discovered on the Developer Sublease Property which creates, in the Federal Government's determination, an imminent and substantial endangerment to human health or the environment, then notwithstanding any other termination rights and procedures contained in this Ground Lease, the Federal Government may require the Landlord to require that Tenant vacate the Developer Sublease Property for such period of time, and to such extent, as the Federal Government determines in good faith is necessary to abate the danger. The Federal Government shall use its best efforts to minimize disruption of Tenant's operations. The Federal Government will also use its best efforts to provide temporary accommodations for use by Tenant during the period of such vacation action. Neither the Federal Government nor Landlord shall be liable for the exercise of authority, which is in conformity with this subsection, but the Federal Government nevertheless shall not be relieved of any liability it may have under the Federal Tort Claims Act, the comprehensive Environmental Response, Compensation and Liability Act, and other statutory and common law, if it would be liable in its role as the generator or disposer of the environmental contamination, or as the present, or former, owner or operator of the Developer Sublease Property. 20. Environmental Provisions. 20.1 Claim Response. In the event that any Environmental Agency or other third party brings, makes, alleges, or asserts a Claim, arising from or related to any actual, threatened, or suspected Release of Hazardous Materials on or about the Project Site, including any Claim for Investigation or Remediation on the Project Site, or such Environmental Agency or other third party orders, demands, or otherwise requires that any Investigation or Remediation be conducted on the Project Site, Tenant shall promptly upon its receipt of notice thereof, notify Landlord in writing and hereafter shall promptly and responsibly respond to such Claim Further, upon receipt of such Claim, order, demand or requirement, Tenant shall (a) take such reasonable measures, as necessary or appropriate, to reasonably dissuade such Environmental Agency or other third party from bringing, making, alleging, or asserting any Claim against Landlord arising from or related to any actual, threatened, or suspected Release of Hazardous Material on or about the Project Site, including any Claim for Investigation or Remediation on the Project Site, and (b) request that the Environmental Agency not issue any order, demand, or requirement to Landlord under any of the Environmental Laws, or any other local, regional, State or federal law, or seek penalties or take other punitive action against Landlord, in connection with, arising from, or related to any actual, threatened, or suspected Release of Hazardous Material on or about the Project Site, including any Investigation or Remediation on or about the Project Site. 7/122004 Attachment No. 5 — Page 25 Ground Lease and Sublease 18405:6391947.6 20.2 Release Notification and Remedial Actions. If any Release of a Hazardous Material is discovered on the Project Site arising from the actions of Tenant, or Tenant's officers, directors, members, partners, agents, affiliates, employees, contractors, consultants or representatives, Tenant shall promptly (a) provide written notice (or in the event of emergency, telephonic notice, followed by written notice) of any such Release to Landlord and the Federal Government and (b) at Tenant's sole risk and expense and solely under the name of Tenant (but without prejudice to Tenant's or Landlord's rights against any responsible party or against the Federal Government pursuant to Section 330, Fiscal Year 1993, National Defense Authorization Act Public Law 102-484): (i) remove, treat, and dispose of the released Hazardous Material on the Project Site in compliance with all applicable Environmental Laws, or if such removal is prohibited by any Environmental Laws, take whatever action is required by any Environmental Law; (ii) take such other action as is necessary to have the full use and benefit of Lease Parcels as contemplated by this Ground Lease; and (iii) provide Landlord and the Federal Government with satisfactory evidence of the actions taken as required in this Section. Tenant shall provide to Landlord, within thirty (30) days of Landlord's request therefor, a bond, letter of credit or other financial assurance, including evidence of applicable environmental insurance, evidencing to Landlord's satisfaction that all necessary funds are readily available to pay the costs and expenses of the actions required by this Section and to discharge any assessments or liens established against the Project Site as a result of the presence of the Hazardous Material release on the Project Site. 20.3 Hazardous Materials Handling Plan. Tenant acknowledges that prior to commencement of operations on the Developer Sublease Property, it must have a Federal Government -approved response plan in accordance with Section 13.10 of the LIFOC, which is incorporated herein by reference. 20.4 Additional Provisions. Tenant acknowledges that certain state and federal agencies have rights with respect to the "Leased Premises" under the LIFOC, and that Tenant may not utilize the Federal Government's hazardous materials facilities, all as more fully set forth in Sections 13.3 through 13.9 of the LIFOC, which are incorporated herein by reference. 21. Compliance With ADA. Tenant represents, warrants and covenants that: Tenant shall conduct its business in accordance with the requirements of the Americans with Disabilities Act of 1990 (the "Act") and with all other applicable federal, state and local, statutes, rules, regulations and ordinances relating to handicap accessibility. 22. Labor Laws. Tenant agrees that in addition to the provisions of the DDA and the Special Restrictions, which are applicable to the entire Property (as defined in the DDA), the provisions of this Section 22 apply solely to the Developer Sublease Property through application of corresponding provisions of the LIFOC during the Term of this Ground Lease. 22.1 Equal Opportunity. In accordance with Article 18 of the LIFOC, unless Tenant is exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of 7/12/2004 Attachment No. 5 Page 26 Ground Lease and Sublease 18405:6391947.6 October 13, 1967, Tenant agrees as follows during the term of this Lease, with respect to the Developer Sublease Property: 22.1.1 Tenant will not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin. Tenant shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin. Such action shall include, but not be limited to the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination, rate of pay or other forms of compensation and selection for training, including apprenticeship. Tenant agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by Government setting forth the provisions of this nondiscrimination. 22.1.2 Tenant shall, in all solicitations or advertisements for employees placed at the Developer Sublease Property by or on behalf of Tenant, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex or national origin. 22.1.3 Tenant shall send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding a notice to be provided by the Federal Government, advising the labor union or worker's representative of Tenant's commitments under this Equal Opportunity Clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment. 22.1.4 Tenant shall comply with all provisions of Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, and of the rules, regulations, and relevant orders of the Secretary of Labor of the United States of America. 22.1.5 Tenant shall furnish all information and reports required by Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, and by the rules, regulations, and orders of the Secretary of Labor or pursuant thereto, and will permit access to its books, records, and accounts by the government and the Secretary of labor for purposes of investigating to ascertain compliance with such rules, regulations and orders. 22.1.6 In the event of Tenant's noncompliance with the equal opportunity clause of this Ground Lease or with any said rules, regulations or orders, this Ground Lease may be canceled, terminated or suspended in whole or in part and Tenant may be declared ineligible for further Federal Government contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by law. 22.1.7 Tenant shall include the above provisions in every sublease unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of 7/12/2004 Attachment No. 5 — Page 27 Ground Lease and Sublease 18405:6391947.6 October 13, 1967, so that such provisions will be binding upon each sublessee. Tenant will take such action with respect to any sublessee as the Federal Government may direct as a means of enforcing such provisions including sanctions for noncompliance; provided, however, that in the event Tenant becomes involved in, or is threatened with, litigation with the sublessee as a result of such direction by the Federal Government, Tenant may request the United States to enter into such litigation to protect the interests of the United States. 22.1.8 Tenant shall refrain from restricting the sale of the property on the basis of the race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All deeds, leases or contracts shall contain or be subject to substantially the following non-discrimination or non -segregation clauses: (a) In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased." (c) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land 22.2 Labor Standards. To the extent applicable to the Developer Sublease Property pursuant to the LIFOC or to the Developer Fee Parcels pursuant to the Federal Deed, Tenant shall comply with all federal labors laws and related regulations including, Fair Labor Standards Act (29 U.S.C. 201-219), Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330, 7/122004 Attachment No. 5 — Page 28 Ground Lease and Sublease 18405:6391947.6 Walsh- Healy Public Contracts Act (41 U.S.C. 35-45), Davis -Bacon Act (40 U.S.C. 276a to 276a-7), and, McNamara -O'Hara Service Contract Act (41 U.S.C. 351-358). 23. Schedule of Performance. Tenant shall commence the development of the Project promptly and shall assure the completion of the development of the Project in accordance with the projections set forth in the Schedule of Performance. 24. Leasehold Mortgages. 24.1 No Subordination. The fee estate and Landlord's interest under this Ground Lease shall not be subordinate to any Mortgage. 24.2 Subject to Ground Lease. All Mortgages and all renewals, modifications, consolidations, replacements and extensions thereof, shall be subject and subordinate to this Ground Lease and, with respect to the Developer Sublease Property, to the LIFOC and the holder(s) of each such Mortgage shall subordinate in writing to the LIFOC. Each Mortgagee shall, as a condition precedent to approval by Landlord or the Mortgage as a permitted Transfer, execute such instruments and/or documents as the Federal Government or Landlord reasonably request be signed. 24.3 Cross -Collateralization Prohibited. This Ground Lease and the leasehold estate created hereby shall not be cross -collateralized to serve as additional security for any loan by any Mortgage, which is also secured by real property other than the Lease Property, the other Property under the DDA, the improvements thereon, any portion thereof or any interest therein. 24.4 Estoppel Certificate. 24.4.1 Tenant shall, at any time and from time to time, upon not less than twenty (20) calendar days' prior request by Landlord, execute, acknowledge and deliver to Landlord, or to such other persons who may be designated in such request, a statement in writing certifying that this Ground Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications) and, if so, the dates to which the rent and any other charges have been paid in advance, and such other items requested by Landlord, including without limitation, the lease commencement date and expiration date, rent amounts, and that no offsets or counterclaims are present. 24.4.2 Landlord shall, at any time and from time to time, upon not less than twenty (20) calendar days' prior request by Tenant, execute, acknowledge and deliver to Landlord, or to such other persons who may be designated in such request, a statement in writing certifying that this Ground Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications) and, if so, the dates to which the rent and any other charges have been paid in advance, and such other items requested by Tenant, including without limitation, the lease commencement date and expiration date, rent amounts, and that no offsets or counterclaims are present, but with such modifications as are necessary in the Landlord's sole discretion to ensure the accurateness of the statements made therein; provided, however, that if requested more frequently than annually as to any one Lease Parcel, Tenant shall pay to the Landlord of the Landlord's out-of-pocket expenses, including legal fees, incurred with respect to the preparation and delivery thereof. 7/12/2004 Attachment No. 5 — Page 29 Ground Lease and Sublease 18405:6391947.6 25. Limitation on Liability. In consideration of the benefits accruing hereunder, Tenant and all successors and assigns covenant and agree that, in the event of any actual or alleged failure, breach or default hereunder by Landlord: (a) Tenant's sole and exclusive recourse shall be against Landlord's interest in the Lease Property and Tenant shall not have any right to satisfy any judgment which it may have against Landlord from any other assets of Landlord; (b) no official, officer, employee, contractor, agent, beneficiary or trustee of Landlord (each a "Landlord Party") shall be sued or named as a party in any suit or action (except as may be necessary to secure jurisdiction over Landlord); (c) no service of process shall be made against any Landlord Party (except as may be necessary to secure jurisdiction over Landlord); (d) no Landlord Party shall be required to answer or otherwise plead to any service of process; (e) no judgment will be taken against any Landlord Party; (f) any judgment taken against any Landlord Party may be vacated and set aside at any time nunc pro tunc; (g) no writ of execution will ever be levied against the assets of any Landlord Party; and (h) these covenants and agreements are enforceable both by Landlord and also by any Landlord Party. 26. Quiet Possession. Upon Tenant paying the Rent reserved and the other sums due hereunder and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Lease Property for the entire Term hereof, subject to all the provisions of this Ground Lease, the DDA and the Special Restrictions. 27. Dispute Resolution. Any disputes arising under this Ground Lease that involve or relate to the Federal Government or the Federal Government's interpretation of the LIFOC that are subject to resolution under the Contracts Disputes Act, 431 U.S.C. Section 601 et seq. pursuant to the provisions of Section 23 of the LIFOC shall be resolved under that Act. All other disputes that may arise under this Ground Lease shall be resolved in accordance with the provisions of the DDA. 28. General Provisions. 28.1 Consent to Jurisdiction. The Parties hereto agree that all actions or proceedings arising in connection with this Ground Lease and/or the Property shall be tried and litigated exclusively in the Superior Court of the County of Orange, State of California, in any other appropriate court of that county, or in the United States District Court for the Central District of California. This choice of venue is intended by the Parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between or among the Parties with respect to or arising out of this Ground Lease in any jurisdiction other than that specified in this Section. Each Party hereby waives any right that it may have to assert forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this Section, and stipulates that the state and federal courts located in the County of Orange, State of California, shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy or proceeding arising out of this Ground Lease. Each Party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this Section 29.1 by means of registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices as set forth in this Ground Lease, or in the manner set forth in Section 29.3 of this Ground Lease pertaining to notice. Any final judgment rendered against a Party in any action or proceeding shall be 7/122004 Attachment No. 5 — Page 30 Ground Lease and Sublease 18405:6391947.6 conclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law. 28.2 Legal Fees and Costs. If any Party to this Ground Lease institutes any action, suit, counterclaim, appeal, arbitration or mediation 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 or warranties on the part of the other Party to this Ground Lease, or in any other manner with respect to this Ground Lease, then the Prevailing Party in such Action, whether by arbitration or final judgment, shall be entitled to have and recover of and from the other Party all costs and expenses of the Action, including reasonable attorneys' fees, experts' fees and consultants' fees and costs (at the Prevailing Party's then -prevailing rates as increased from time to time by the giving of advanced written notice by such counsel to such Party) incurred in bringing, prosecuting and/or defending 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 such Action shall contain a specific provision providing for the recovery of attorneys' fees and costs incurred in enforcing such Decision. A court or arbitrator shall fix the amount of reasonable attorneys' fees, experts' fees and consultants' fees and costs upon the request of either Party. Any judgment or order 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, experts' fees and consultants' 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 29.2 includes a Party who agrees to dismiss an Action in 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. 28.3 Notices. Any notice required to be given under the terms of this Ground Lease to Landlord or Tenant shall be delivered as set forth in the DDA. Any notice required to be given to Federal Government shall be delivered as set forth in the LIFOC. 28.4 Modifications or Amendments. No amendment, change, modification or supplement to this Ground Lease shall be valid and binding on any of the Parties unless it is represented in writing and signed by each of the Parties hereto. 28.5 Applicable Law. This Ground Lease 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. 28.6 Further Assurances. Each of the Parties hereto shall execute and deliver at their own cost and expense, any and all additional papers, documents, or instruments, and shall do any and all acts and things reasonably necessary or appropriate in connection with the performance 7/12/2004 Attachment No. 5 — Page 31 Ground Lease and Sublease 18405:6391947.6 of their respective obligations hereunder in order to carry out the intent and purposes of this Ground Lease. 28.7 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Ground Lease, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. Except as otherwise specifically set forth in this Ground Lease, wherever a Party has a right to damages for the Event of Default of another Party: (a) such damages shall be limited to direct (actual) damages for the default of the other Party and (b) each of the Parties, on behalf of itself and its successors and assigns, hereby expressly waives, releases and relinquishes any and all right to any expectation, anticipation, indirect, consequential, exemplary or punitive damages. 28.8 Conflict of Interest. No appointed or elected official or employee of Landlord shall have any personal interest, direct or indirect, in this Ground Lease nor shall any official or employee participate in any decision relating to the this Ground Lease which affects his interests or the interests of any corporation, partnership, or association in which he is directly or indirectly interested. Tenant warrants that it has not paid or given and will not pay or give any third person any money or other consideration for obtaining this Ground Lease. 28.9 Nonliability of City Officials and Employees. No elected or appointed official, representative, employee, agent, consultant, legal counsel or employee of Landlord shall be personally liable to Tenant, or any successor in interest in the event of any default or breach by Landlord for any amount which may become due to Tenant or successor or on any obligation under the terms of this Ground Lease. 28.10 Inspection of Books and Records. Landlord shall have the right at all reasonable times, upon ten (10) days written notice, to inspect the books and records of Tenant pertaining to the Lease Property as pertinent to the purposes of this Ground Lease. Tenant shall also have the right at all reasonable times to inspect the books and records of Landlord, upon ten (10) days written notice, pertaining to the Lease Property as pertinent to the purposes of this Ground Lease. 28.11 Approvals. (a) Except as otherwise expressly provided in this Ground Lease, proprietary approvals required of Landlord or Tenant in this Ground Lease, including the Attachments hereto, shall not be unreasonably withheld, conditioned or delayed. (b) Any matter required by this Ground Lease to be submitted to Landlord shall be deemed submitted upon the submittal to the Assistant City Manager or designee. (c) Except where the terms of this Ground Lease expressly require the approval of a matter or the taking of any action by the City Council, any matter to be approved by Landlord shall be deemed approved, and any matter to be taken by Landlord shall be deemed taken, upon the written approval by the Assistant City Manager or designee. 7/12/2004 Attachment No. 5 — Page 32 Ground Lease and Sublease 18405:6391947.6 28.12 Real Estate Commissions. 28.12.1 Landlord represents that it has engaged no broker, agent, or finder in connection with this Ground Lease or the transactions identified in this Ground Lease, Landlord shall not be liable for any real estate commissions, brokerage fees or finders fees which may arise from this Ground Lease. 28.12.2 Tenant represents and warrants that it has not dealt with a broker, agent or other person in connection with this Ground Lease and that no broker, agent or other person was responsible for this transaction. Tenant agrees to defend with counsel acceptable to Landlord, indemnify and hold Landlord harmless from and against any claims by any broker, agent or other person claiming a commission or other form of compensation by virtue of that person's business relationship with Tenant with regard to this transaction. The provisions of this Section 29.12.2 shall survive the termination of this Ground Lease. 28.13 Date and Delivery of Ground Lease. Notwithstanding anything to the contrary contained in this Ground Lease, the Parties intend that this Ground Lease shall be deemed effective, executed and delivered for all purposes under this Ground Lease and for the calculation of any statutory time periods based on the date an agreement between the Parties is effective, executed and/or delivered, as of the Lease Commencement Date. 28.14 Survival of Covenants, Representation and Warranties. The covenants, representations and warranties, and indemnities specified in this Ground Lease shall survive any investigation made by any Party hereto and the closing of the transactions contemplated hereby. 28.15 Construction and Interpretation of Ground Lease. 28.15.1 The language in all parts of this Ground Lease shall in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against any Party. The Parties hereto acknowledge and agree that this Ground Lease has been prepared jointly by the Parties and has been the subject of arm's length and careful negotiation over a considerable period of time, that each Party has been given the opportunity to independently review this Ground Lease with legal counsel, and that each Party has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Ground Lease, this Ground Lease shall not be interpreted or construed against the Party preparing it; instead other rules of interpretation and construction shall be utilized. The provisions of California Civil Code Section 1654 are specifically waived by each Party hereto. 28.15.2 If any term or provision of this Ground Lease, the deletion of which would not adversely affect the receipt of any material benefit by any Party hereunder, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Ground Lease shall not be affected thereby and each other term and provision of this Ground Lease shall be valid and enforceable to the fullest extent permitted by law. It is the intention of the Parties hereto that in lieu of each clause or provision of this Ground Lease that is illegal, 7/12/2004 Attachment No. 5 — Page 33 Ground Lease and Sublease 18405:6391947.6 invalid, or unenforceable, there be added as a part of this Ground Lease an enforceable clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible. 28.15.3 Any matters or facts included in Article 1 of this Ground Lease shall be conclusively deemed true. 28.15.4 The captions of the sections and subsections in this Ground Lease are inserted solely for convenience and under no circumstances are they or any of them to be treated or construed as part of this instrument. 28.15.5 References in this instrument and in the Attachments hereto to "this Ground Lease" mean, refer to and include this instrument as well as any riders, schedules, exhibits, addenda and attachments hereto (which are hereby incorporated in this Ground Lease by this reference) and all other documents expressly incorporated by reference in this instrument. Any references to any covenant, conditions, obligation and/or undertaking "herein," "hereunder," or "pursuant hereto") (or language of like import) shall mean, refer to and include the covenants, obligations and undertakings existing pursuant to this Ground Lease and any riders, schedules, exhibits, addenda, attachments or other documents affixed to or expressly incorporated by reference in this instrument. 28.15.6 As used in this Ground Lease and as the context may require, the singular includes the plural and vice versa and the masculine gender includes the feminine and vice versa. 28.15.7 As used in this Ground Lease the words "include" and "including" mean respectively "include, without limitation" and "including, without limitation". 28.15.8 Unless otherwise indicated, references in this Ground Lease to sections, paragraphs, clauses, exhibits, attachments and schedules are to the same contained in or attached to this Ground Lease and all attachments and schedules referenced in this Ground Lease are incorporated in this Ground Lease by this reference as through fully set forth in this Section. 28.16 Time of Essence. Time is of the essence with respect to all provisions of this Ground Lease in which a definite time for performance is specified; provided, however, that the foregoing shall not be construed to limit or deprive a Party of the benefits of any grace period provided for in this Ground Lease. 28.17 Fees and Other Expenses. Except as otherwise provided in this Ground Lease, each of the Parties hereto shall pay its own fees and expenses, including attorneys' fees and costs, in connection with negotiation and preparation of this Ground Lease. 28.18 No Partnership. Nothing contained in this Ground Lease shall be deemed or construed to create a partnership, joint venture or any other relationship between the parties hereto other than purchaser and seller and landlord and tenant according to the provisions contained in this Ground Lease, or cause Landlord to be responsible in any way for the debts or obligations of Tenant. 712/2004 Attachment No. 5 — Page 34 Ground Lease and Sublease 18405:6391947.6 28.19 Compliance with Law. Tenant agrees to comply with all the requirements now in force, or which may thereafter be in force, of all municipal, county, state and federal authorities, pertaining to the Project Site, the Lease Property and the Improvements as well as operations conducted thereon 28.20 Binding Effect. This Ground Lease and the terms, provisions, promises, covenants and conditions hereof shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors and assigns. 28.21 No Third Party Beneficiaries. This Ground Lease has been made and entered into solely for the benefit of the Parties to this Ground Lease and their respective successors and permitted assigns. Nothing in this Ground Lease confers any rights or remedies on any persons other Person. Nothing in this Ground Lease relieves or discharges the obligation or liability of any third Persons to any Parties to this Ground Lease. 28.22 Counterparts. This Ground Lease 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 Ground Lease 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 Ground Lease by facsimile signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States, postage prepaid or is hand delivered, and such manually signed page is actually received by the other Party within five (5) days of its execution. The Parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Ground Lease. 28.23 Authority of Signatories to Ground Lease. Each person executing this Ground Lease represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Ground Lease on behalf of the Parties for which execution is made. Each Party represents and warrants to the other that the execution of this Ground Lease and the performance of such Party's obligations hereunder have been duly authorized and that the agreement is a valid and legal agreement binding on such Party and enforceable in accordance with its terms. 28.24 Entire Agreement, Waivers and Amendments. This Ground Lease, including the Attachments hereto, together with any related documents referred to or incorporated by reference in this Ground Lease constitute the entire agreement between or among the Parties with respect to the subject matter hereof. This Ground Lease supersedes and replaces any and all prior agreements, proposed agreements, negotiations and communications, oral or written, and contains the entire agreement between the Parties as to the subject matter hereof and any and all prior agreements, understandings or representations are hereby terminated and canceled in their entirety. Each Party hereby acknowledges that no other Party hereto, nor its agents or attorneys, have made any promises, representations or warranties whatsoever, expressed or implied, not contained in this Ground Lease, to induce such Party to execute this Ground Lease, and each Party acknowledges that it has not executed this Ground Lease in reliance on any such promise, representation or warranty not contained in this Ground Lease. No waiver of any provision or consent to any action under this Ground Lease shall constitute a waiver of any other provision or 7/12/2004 Attachment No. 5 — Page 35 Ground Lease and Sublease 18405:6391947.6 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 Ground Lease must be in writing and signed by the appropriate authorities of Landlord or Tenant and all amendments hereto must be in writing and signed by the appropriate authorities of Landlord and Tenant. Any amendment to the Ground Lease shall require the approval of the City Council of the City. 28.25 Memorandum of Ground Lease. At the time set forth in Article 7 of the DDA, the Parties shall execute and record a Memorandum of Ground Lease in the form attached hereto as Exhibit "C". [signature page follows] 7/12/2004 Attachment No. 5 — Page 36 Ground Lease and Sublease 18405:6391947.6 IN WITNESS WHEREOF, Landlord has, by action of the City of Tustin City Council, authorized this Ground Lease to be executed for and on behalf of the City of Tustin by the Assistant City Manager or City Manager, and Tenant has caused the same to be executed by its duly authorized officer on the date first above written. "LANDLORD" City of Tustin, California By: William A. Huston, City Manager Attest: Date: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation La "TENANT" Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member IM Name: Title: 7/12/2004 Attachment No. 5 — Page 37 Ground Lease and Sublease 18405:6391947.6 EXHIBIT A-1 DEVELOPER FEE PARCELS Developer Fee Parcel C Lot 20, as shown on Tentative Tract Map 16695 Developer Fee Parcel D Lot 27, as shown on Tentative Tract Map 16695 Final Lot configurations for each of the foregoing Developer Fee Parcels to be as approved on the Final Map by the City of Tustin EXHIBIT A-2 DEVELOPER SUBLEASE PARCELS Developer Sublease Parcel A Lot 13, as shown on Tentative Tract Map 16695 Developer Sublease Parcel B Lot 14, as shown on Tentative Tract Map 16695 Developer Sublease Parcel C Lot 21, 22, and Lot 23, as shown on Tentative Tract Map 16695 Developer Sublease Parcel D Lot 24, 28 and Lot 29, as shown on Tentative Tract Map 16695 Developer Sublease Parcel E Lot 25 and Lot 26, as shown on Tentative Tract Map 16695 Final Lot configurations for each of the foregoing Developer Fee Parcels to be as approved on the Final Map by the City of Tustin EXHIBIT B LIFOC (TO BE INSERTED PRIOR TO EXECUTION) EXHIBIT "C" MEMORANDUM OF GROUND LEASE 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: ) Assistant City Manager ) The City of Tustin ) 300 Centennial Way ) Tustin, CA 92780 ) MEMORANDUM OF GROUND LEASE This MEMORANDUM OF GROUND LEASE is made as of _, 200_, by and between CITY OF TUSTIN, a municipal corporation of the State of California ("Landlord"), and VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("Tenant") . Recitals. 1.1 Lease Parcels. Landlord is the owner in fee simple of that certain real property situated in Orange County, California ("Developer Fee Parcels"), and leases that certain real property situated in Orange county, California ("Developer Sublease Parcels" and, with the Developer Free Parcels, the "Lease Parcels"), each has more particularly described in Exhibit "A" attached hereto. 1.2 DDA. Landlord and Tenant have previously entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated 2004 (the "DDA"), a memorandum of which was recorded in the Official Records of the County of Orange as Instrument No. on , 2004. Capitalized terms not otherwise defined herein have the meaning set forth in the DDA. 1.3 Ground Lease. Pursuant to a Ground Lease and Sublease dated as of - , 200_ (the "Ground Lease"), Landlord and Tenant have entered into an agreement whereby Tenant shall lease the Developer Fee Parcels and sublease the Developer Sublease Parcels, in each case on the terms and conditions set forth in the Ground Lease. C-1 18405:6391947.6 2. Lease of Lease Parcels. Landlord has leased the Lease Parcels to Tenant subject to all of the terms and conditions of the Ground Lease, all of which are incorporated herein by this reference. 3. Term. The term of the Ground Lease is ten (10) years commencing 20_ ("Lease Commencement Date") and expiring on _20 — ,20_ ("Lease Termination Date"), unless sooner terminated pursuant to the terms and conditions of the Ground Lease, or pursuant to applicable law, or unless extended in accordance with the terms and conditions of the Ground Lease. 4. Subsequent Closings. The Parties intend that from time to time after the Lease Commencement Date, following the conveyance by the Federal Government to the Landlord of fee title to one or more Developer Sublease Parcels, the Landlord will convey such Developer Sublease Parcels and, and in certain instances the adjacent Developer Fee Parcels, to Tenant, in each case subject to the terms and conditions of and as more fully set forth in the DDA. Following each such conveyance, if any, the Parties will execute and Record a Memorandum of Ground Lease attesting to such conveyance and releasing the conveyed parcels from the Ground Lease property. 5. Environmental Indemnity. 5.1 Tenant Indemnity. As a material part of the consideration for the Ground Lease, and effective as to each of Developer Parcels, the Property and the Project Site, upon the Tenant's acquisition of a leasehold interest to all or any portion of the Developer Parcels, the Tenant on behalf of itself and Successor Owners and each and every Person claiming by, through or under Tenant or any Successor Owner, hereby agrees that Tenant and each Successor Owner shall, to the maximum extent permitted by law, indemnify, protect, defend, assume all responsibility for and hold harmless the Indemnified Parties from and against any and all Claims, including environmental Claims, resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to any portion or portions of said lands, regardless whether any such condition is known or unknown now or upon acquisition and regardless whether any such condition pre-exists acquisition or is subsequently caused, created or occurring, provided, however, that neither the Tenant nor any Successor Owner shall be responsible for (and such indemnity shall not apply to) to the gross negligence or willful misconduct of the Indemnified Parties; provided, however, that such indemnity shall not be binding upon subtenants of Tenant under Retail Space Leases or Minor Pad Transferees who are End Users or upon Major Pad Transferees who are End Users and are released from such indemnity obligation pursuant to City Non -Disturbance and Attornment Agreement entered into pursuant to Section 2.2 of the DDA. 5.2 Pad Transferee and Retail Space Tenant Indemnity. As a material part of the consideration for the Ground Lease, and effective as to each of Developer Parcels, the Property and the Project Site, Tenant, on behalf of itself and Successor Owners and each and every Person claiming by, through or under Tenant or any Successor Owner, hereby agrees that Tenant and each Successor Owner shall include the following indemnity in favor of the Indemnified Parties C-2 18405:6391947.6 in each Retail Space Lease and in each deed and/or ground lease effecting a Pad Transfer (and incorporating the defined terms required to interpret the following provision): "[Each Pad Transferee/Tenant] on behalf of itself and each and every Person claiming by, through or under [Pad Transferee/Tenant], including without limitation, successors and assigns of such [Pad Transferee/Tenant] owning or leasing all or any portion of [defined premises] to the maximum extent permitted by law, shall indemnify, protect, defend, assume all responsibility for and hold harmless the Landlord and its appointed and elect officials, agents, attorneys, affiliates, employees, contractors and from and against any and all Claims resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to or occurring on or about any portion or portions of the [defined premises] caused or created by such [Pad Transferee/Tenant] or its officers, directors, members, partners, agents, affiliates, employees, contractors, consultants or representatives, or with respect to pre-existing conditions, exacerbated by negligent act or omission of any of the foregoing (but with respect to such exacerbation, only to the extent of the exacerbation)." 6. Effect on Mortgages; Right To Encumber. The DDA and the Ground Lease place certain restrictions on the ability of Tenant to encumber the Lease Parcels. Mortgages complying with the terms of the DDA and entered into by Tenant with Permitted Mortgagees shall be deemed to be "Permitted Mortgages"; provided, however that all Mortgages shall be subject and subordinate to the DDA, including, without limitation, the Landlord's Right of Reversion and Right of Purchase set forth therein. 7. Acknowledgment and Assumption by Tenant. By entering the Ground Lease the Tenant hereby acknowledges and assumes all responsibilities placed upon the Tenant under the terms of the Ground Lease, the DDA and the Special Restrictions. 8. Public Documents. The documents constituting the DDA are public documents and may be reviewed at the official offices of the Landlord. 9. Interpretation; Notice. This Memorandum of Ground Lease is prepared for recordation and notice purposes only and in no way modifies the terms, conditions, provisions and covenants of the Ground Lease, the DDA or the Special Restrictions. In the event of any inconsistency between terms, conditions, provisions and covenants of this Memorandum of Ground Lease and the Ground Lease, the DDA, or the Special Restrictions, the terms, conditions, provisions and covenants of the Ground Lease, the DDA or the Special Restrictions, as the case may be, shall prevail. [signature page follows] C-3 18405:6391947.6 IN WITNESS WHEREOF, Landlord has, by action of the City of Tustin City Council, authorized this Ground Lease to be executed for and on behalf of the City of Tustin by the Assistant City Manager or City Manager, and Tenant has caused the same to be executed by its duly authorized officer on the date first above written. Attest: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation LE C-4 18405:6391947.6 "LANDLORD" City of Tustin, California By: William A. Huston, City Manager Date: "TENANT" Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: _ Name: Title: ATTACHMENT NO.6 SPECIAL RESTRICTIONS Vestar DDA Attachment No. 6 Special Restrictions 07/12/04 18405:6391127.7 ATTACHMENT NO.6 DECLARATION OF SPECIAL RESTRICTIONS 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: Assistant City Manager The City of Tustin 300 Centennial Way Tustin, CA 92780 Space Above This Line Reserved for Recorder's Use DECLARATION OF SPECIAL RESTRICTIONS This DECLARATION OF SPECIAL RESTRICTIONS (this "Declaration") is made as of , 2004 by the CITY OF TUSTIN, a municipal corporation of the State of California (the "City"), and is acknowledged by VESTAR/KIMCO TUSTIN, L.P., a California limited partnership (the "Developer"). A. Pursuant to the Defense Base Closure and Realignment Act of 1990 (Part A of Title XXIX of Public Law 101-510; 10 U.S.C. Section 2687 Note), as amended (the "Base Closure Law"), the Marine Corps Air Station -Tustin ("MCAS Tustin") located substantially in the City of Tustin, California was closed by the United States of America, acting by and through the Department of the Navy (the "Federal Government"). In 1992, the City was designated as the Lead Agency or Local Redevelopment Authority for preparation of a reuse plan for MCAS Tustin in order to facilitate the closure of MCAS Tustin and its reuse in furtherance of the economic development of the City and surrounding region. The MCAS Tustin Reuse Plan developed in accordance with this procedure was adopted by the City Council of the City of Tustin (the "City Council") on October 17, 1996 and amended in September, 1998 (as amended, the "Reuse Plan"). B. A Final Joint Environmental Impact Statement/Environmental Impact Report for the Disposal and Reuse of MCAS Tustin (the "Final EIS/EIR") and Mitigation Monitoring and Reporting Program for the Final EIS/EIR were adopted by the City on January 16, 2001. In March 2001, a Record of Decision was issued by the Department of the Navy ("Navy") approving the Final EIS/EIR and the Reuse Plan. C. In May 2002, the Navy approved an Economic Development Conveyance of Property at MCAS Tustin and agreed to convey 1153 acres of MCAS Tustin to the City. On 7/12/2004 Attachment No. 6 — Page I Declaration of Special Restrictions 18405:6392234.6 May 13, 2002, a total of 977 acres, including the Developer Fee Parcels (defined in the DDA) were conveyed by the Navy to the Sublease by Federal Deed, in accordance with the provisions of the Conveyance Agreement, and additional acreage, including the Developer Sublease Parcels (defined in the DDA), is leased by the City from the Navy pursuant to that certain Lease in Furtherance of Conveyance dated May 13, 2002 between the Navy, as ground lessor, and City, as ground lessee (the "LIFOC"). The portion of MCAS Tustin located within the City of Tustin is referred to in this Declaration as "Tustin Legacy." D. As a result of the Federal Deed and LIFOC, the City owns a fee interest in the Developer Fee Parcels and holds a leasehold interest in the Developer Sublease Parcels. The Developer Fee Parcels and Developer Sublease Parcels are collectively referred to as the "Developer Parcels". The City also owns the City Benefited Property, as well as other parcels which are part of the Tustin Legacy and adjacent parcels containing City -owned infrastructure (collectively the "Benefited Property") which property is adjacent to and directly affected by the development and maintenance of the Developer Parcels. E. City and Developer have previously entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated July _, 2004 (the "DDA"), pursuant to which City has agreed to purchase certain "Property" from City upon the terms and conditions set forth therein. Capitalized terms not otherwise defined herein have the meaning set forth in the DDA. F. The City intends that the owners and/or lessees of the Developer Parcels, including the Developer under the DDA, develop, manage and maintain the Project as an integrated Class A Shopping Center. The DDA and the CC&Rs executed by the Developer and approved by the City and recorded against the Property immediately following the recordation of these Special Restrictions (collectively, the "General Restrictions") each contains certain covenants, conditions and restrictions on the Property which have been set forth by the City as necessary for the development of such Class A Shopping Center, which have been agreed to by the Developer and which by their terms survive the Completion of the Project and the termination of the DDA. G. In connection with Developer's execution of the DDA and acquisition of the Property, Developer has represented to the City that Developer will develop the Project in accordance with the DDA and with the covenants, conditions, rights, restrictions and limitations described in the DDA and in this Declaration. This Declaration is intended to set forth those rights of the City and obligations of Developer and its Successor Owners under the DDA which shall remain in full force and effect for the term specified herein notwithstanding the termination of the DDA and/or the issuance by the City of a Final Certificate of Compliance of the Project or a Partial Certificate of Compliance for all or any portion of the Project. The City is selling the Developer Fee Parcels, and subleasing and subsequently selling the Developer Sublease Parcels, to Developer on the basis of Developer's continuing compliance with the DDA and the covenants, conditions and restrictions set forth in this Declaration and the ultimate Completion and operation of the Project as a Class A Shopping Center, including, without limitation, Developer's representations and warranties set forth in the DDA. 7/122004 Attachment No. 6 — Page 2 Declaration of Special Restrictions 18405:6392234.6 H. To create and preserve the value, desirability and attractiveness of the Property, Developer, will hereafter hold and convey title to and/or leasehold interest in all of the Property subject to those certain protective covenants, conditions, restrictions and easements set forth herein. I. The City now desires to impose on the Project this Declaration, for these purposes, among others: (i) to preserve the general plan for the development, improvement, operation and use of Tustin Legacy, including of the Project as a Class A Shopping Center as more fully set forth in the DDA, (ii) to insure proper use and maintenance of the Project, (iii) to protect each owner, occupant and End User of each Parcel, and the customers and invitees of such End Users including the residents of the City of Tustin, from improper development and use of the Property that would derogate from such Class A Shopping Center, (iv) to prevent the erection on the Property of Improvements built of improper design or materials, (v) to encourage the maintenance of Improvements which are conforming to the requirements of the DDA and a Class A Shopping Center, and, (vi) in general, to provide for a high quality of development and maintenance of the Project. NOW, THEREFORE, the City hereby covenants and declares that the Property, and every Parcel or interest therein, is now held and shall hereafter be held, transferred, sold, leased, conveyed and occupied subject to the covenants, conditions, restrictions and easements herein set forth, each and all of which is and are for, and shall inure to the benefit of and pass with, each Parcel and every portion of or interest in the Project and shall apply to every owner, occupant and End User thereof, and their successors and assigns. These covenants, conditions, restrictions and easements shall run with the Property and every part thereof. 1. Property Affected by this Declaration. The "Property", consisting of (a) the "Developer Parcels," defined as that certain [ ] acre property, more or less, located in the City of Tustin, County of Orange, California which land is legally described on Attachment No 1 attached hereto and incorporated herein by this reference together with (b) all existing improvements, if any, presently located on the Developer Fee Parcels, and (c) all Personal Property associated with the foregoing, but provided that the term "Property" shall exclude the following rights and interests which shall be explicitly reserved to the City: (a) Any and all oil, oil rights, minerals, mineral rights, natural gas, natural gas rights and other hydrocarbon by whatsoever name known, geothermal steam and rights thereto and all products derived from any of the foregoing, that may be within or under the Developer Parcels together with the perpetual right of drilling, mining, exploring for and storing in and removing the same from the Developer Parcels or any other land, including the right to whipstock or directionally drill and mine from lands other than the Developer Parcels, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Developer Parcels and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to re -drill, re -tunnel, equip, maintain, repair, deepen and operate any such well or mines; but without, however, the right to drill, mine, store, explore or operate through the surface of the Developer Parcels or otherwise to materially affect the use or operation of the Developer Parcels as anticipated by in the DDA and in this Declaration; and 7/12/2004 Attachment No. 6 — Page 3 Declaration of Special Restrictions 18405:6392234.6 (b) Any and all water, water rights or interests therein appurtenant or relating to the Developer Parcels or owned or used by the City in connection with or with respect to the Developer Parcels no matter how acquired by the City, whether such water rights shall be riparian, overlying, appropriative, littoral, percolating, prescriptive, adjudicated, statutory or contractual, together with the perpetual right and power to explore, drill, re -drill and remove the same from or in the Developer Parcels, to store the same beneath the surface of the Developer Parcels and to divert or otherwise utilize such water, rights or interests on any other property owned or leased by the City; but without, however, any right to enter upon or use the surface of the Developer Parcels in the exercise of such rights or otherwise materially affect the use or operation of the Developer Parcels as anticipated in the DDA and in this is Declaration. 2. Covenants and Agreements. For the benefit of the Benefited Property, as an inducement for the City to enter into the DDA and consummate the transactions contemplated therein, the violation of any of the general use covenants, conditions and restrictions set forth in Sections 2.1 through 2_4, for the period(s) set forth therein, shall at the City's option constitute a Default hereunder and entitle the City to exercise any of the rights and remedies set forth herein. The covenants, conditions and restrictions set forth in this Declaration are collectively referred to herein as the "Restrictions". 2.1 Use Covenants and Restrictions. 2.1.1 The Developer covenants and agrees for itself, and each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, that: (a) The Developer Parcels and each part thereof shall be utilized only for lawful retail uses typical for a Class A Shopping Center and containing only Preapproved Users, other Class A Users and other incidental uses typically located in a Class A Shopping Center (including entertainment, restaurant food services, theaters and sale of goods, products and services to customers) and including up to two fast food drive-through restaurants, in each case subject to approval by the City in its Governmental Capacity with respect to uses requiring City permit approval under the City Code; provided, however, that unless otherwise agreed by the City (acting in its Proprietary Capacity) in its sole discretion and approved by the City in its Governmental Capacity if required by the City Code (i) no additional fast food drive-through restaurants or drive-through service establishments may be located on the Developer Parcels, and (ii) additional fast food restaurants without drive-through service shall not be located on Minor Pads, on Lot 12 or on Lots 18 through 29 as shown on the Preliminary Plans. (b) Neither Developer nor any Successor Owner, nor any person claiming by, through or under Developer or any Successor Owner, including any End User, shall (i) use the Parcels or any portion thereof for any Prohibited Use, or (ii) Transfer or Lease the Parcels or any portion thereof to any Prohibited User. (c) Each End User shall be a Class A User. (d) All End Users shall be subject to the DDA, this Declaration and the CC&Rs. 7/12/2004 Attachment No. 6 — Page 4 Declaration of Special Restrictions 18405:6392234.6 The covenants in this Section 2.1.1 shall remain in force and effect until the date which is the thirtieth (30th) anniversary of the Recording of the Final Certificate of Compliance. 2.1.2 Further Restriction on Lease Parcels. Prior to the Subsequent Closing with respect thereto, Tenant shall not utilize any Lease Parcel or any portion of the Lease Property for economic purposes or to generate economic returns, provided that nothing in the foregoing shall preclude Tenant or its tenants, Pad Transferees, customers and invitees from utilizing any Lease Parcel for parking, landscaping and special event purposes, without charge therefor, subject to compliance with this Declaration, the DDA, the CC&Rs and all applicable laws or ordinances. 2.2 Maintenance Covenants. 2.2.1 Developer, on behalf of itself and each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, hereby covenants and agrees, from and after the Initial Close of Escrow, to maintain the Developer Parcels in the same aesthetic and sound condition (or better) as the condition of the Property at the time of the transfer of the Property to the Developer and consistent with the following requirements: (a) From the date of commencement of construction until issuance of a Partial or Final Certificate of Compliance for any Parcel, the Developer and its successors and assigns shall maintain the Improvements under construction on such Parcel consistent with best construction industry practice. (b) Upon Completion of all or any portion of the Improvements, the Developer, its successors and assigns shall maintain the Improvements in the same aesthetic and sound condition or better as the condition of such Improvements at the time the City issues a Partial of Final Certificate of Compliance, excepting only reasonable wear and tear and replacement of Improvements following casualties, such replacement to be consistent with this Declaration and subject to all applicable City approvals and review. The standard for the quality of maintenance of the Improvements required by this Section 2.2.1(b) shall be met whether or not a specific item of maintenance is listed below. However, representative items of maintenance shall include: (i) maintenance, repair and replacement on a regular schedule, consistent with like Class A Shopping Centers in Orange County, of private streets, roads, drives, bike paths, alleyways, sidewalks, utilities (except to the extent owned or controlled by a utility franchisee), common areas, landscaping, hardscaping and fountains; (ii) frequent and regular inspection for graffiti or damage or deterioration or failure, and immediate repainting or repair or replacement of all surfaces, fencing, walls, equipment, etc., as necessary; (iii) emptying of trash receptacles and removal of litter; (iv) regular sweeping of roadways and sidewalks throughout the Developer Parcels; (v) fertilizing, irrigating, trimming and replacing vegetation as necessary; (vi) cleaning windows on a regular basis; (vi) painting the buildings on a regular program and prior to the deterioration of the painted surfaces; (vii) conducting roof inspections on a regular basis and maintaining roofs in a leak -free and weather -tight condition. (c) In the event the Developer or any Successor Owner fails to maintain the Improvements in accordance with the standard for the quality of maintenance, the 7/12/2004 Attachment No. 6 — Page 5 Declaration of Special Restrictions 18405:6392234.6 City or its designee shall have the right but not the obligation to enter the Developer Parcels upon reasonable notice to the Developer or its successor or assigns, correct any violation, and hold the Developer, or such Successor Owner, responsible for the cost thereof, and such cost, until paid, shall constitute a lien on the applicable Parcel. (d) Maintenance responsibilities shall be vested in one entity for all the Developer Parcels; provided, however, that the Developer shall have the right (i) to assign its maintenance responsibilities under this Declaration (x) to a Transferee of the entirety of the Developer Parcels, or (y) to a Development Association to be created through the CC&Rs, upon which assignment the Developer shall have no further liability under this Section 2.2.1 or (ii) to subcontract its maintenance responsibilities under this Declaration to such Development Association or an Affiliate of Developer or a first class property management company, provided that such subcontracting shall not relieve the Developer of any liability for its obligations under this Section 2.2.1. 2.2.2 The covenants in Section 2.2.1 shall remain in full force and effect for fifty (50) years from the recording date of this Declaration unless released at an earlier date by the City in writing. 2.3 Nondiscrimination Covenants. 2.3.1 The Developer covenants and agrees, for itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, that (a) it shall not discriminate against any employee or applicant for employment on any basis prohibited by law and (b) it has received, read, understands and agrees to be bound with respect to the entirety of the Project and by the non-discrimination covenant contained in the Federal Deed between the Federal Government, as GRANTOR, and the City, as GRANTEE, which states as follows: "Non -Discrimination. GRANTEE covenants for itself, its successors and assigns, that it will comply with all applicable provisions of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act of 1975 in the use, occupancy, sale or lease of the Property. The foregoing shall not be construed to prohibit the operation of federal or state approved programs focusing on the special needs of the homeless, veterans, victims of domestic violence and other classes of persons at risk; nor shall it be construed to prohibit employment practices not otherwise prohibited by law. The GRANTOR shall be deemed a beneficiary of this covenant without regard to whether it remains the owner of any land or interest therein in the locality of the Property hereby conveyed and shall have the sole right to enforce this covenant in any court of competent jurisdiction." 2.3.2 The Developer shall provide equal opportunity in all employment practices. 7/12/2004 Attachment No. 6 — Page 6 Declaration of Special Restrictions 18405:6392234.6 2.3.3 Obligation to Refrain from Discrimination. The Developer covenants and agrees for itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, that: (a) There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Developer Parcels or in development of the Project, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Developer Parcels or in development of the Project; (b) No Person shall restrict the sale or Transfer of the Developer Parcels or any portion thereof on the basis of the race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry of any person; and (c) All deeds, leases or contracts shall contain or be subject to substantially the following non-discrimination or non -segregation clauses: (i) In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and each and every Person claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (ii) In leases: "The lessee herein covenants by and for itself, its successors and assigns, and each and every Person claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: that there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased." (iii) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination 7/12/2004 Attachment No. 6 — Page 7 Declaration of Special Restrictions 18405:6392234.6 or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land." 2.4 Subsequent Participation. 2.4.1 Subsequent Participation Obligation. The Developer hereby covenants and agrees on behalf of itself and each Person, including each Successor Owner, receiving the Percentage Rent to pay to the City the Subsequent Participation, commencing on the Subsequent Participation Trigger Date for each Retail Building and continuing for twenty (20) years thereafter with respect to each such Retail Building; provided, however, that no Subsequent Participation shall be payable by an End User unaffiliated with the Developer which subleases or contracts with a concessionaire or sublessee who pays the End User a portion of the sales revenues received from the goods of such concessionaire or sublessee; provided, that the sales revenues of such concessionaire or sublessee shall be counted as sales of the End User for purposes of calculating any percentage rent obligation of the End User. Without the prior written consent of the City in its sole discretion, Developer shall not forgive, waive, or alter any past -due rental obligation under any Lease in a manner that would negatively affect the amount of the Subsequent Participation that would be owed to the City if such rent were paid, or the City's rights with respect thereto. (a) "Subsequent Participation" shall mean an amount equal to twenty-five percent (25%) of the Percentage Rent paid under all Leases in which all or a portion of the rental is Percentage Rent, provided that: (i) for any Lease in which Percentage Rent is the only rental to be paid, the Subsequent Participation shall be an amount equal to twenty-five percent (25%) of the excess, if any, of (x) the annual rental paid under such Lease in each full calendar year commencing with the second calendar year after the Lease commencement date over (y) the total rental paid in the first full calendar year following such Lease commencement date, and (ii) for any Lease in which a base rental provision is suspended as a result of a occurrence of a condition subsequent (such as the closure of an unrelated anchor retailer), the Subsequent Participation shall be an amount equal to twenty-five percent (25%) of the excess, if any, of (x) the annual rental paid under such Lease in each lease year that the occurrence continues less (y) the base rental amount which would have been due under such Lease in the absence of the occurrence of the condition subsequent. (b) "Percentage Rent" shall mean all rental charged by or payable to Developer or any Successor Owner, whether directly or through an Affiliate, management company or other intermediary, under any Retail Lease, that is based upon a percent or ratio of net or gross sales within such Retail Space, as the same may be more fully detailed in a given Lease, and shall not include any base rental rate. (c) "Subsequent Participation Trigger Date" shall mean with respect to each Retail Building, the date that is one (1) year following the date of issuance of the first temporary certificate of occupancy by the City for a Retail Space within such building. 7/12/2004 Attachment No. 6 — Page 8 Declaration of Special Restrictions 18405:6392234.6 2.4.2 Annual Statement and Payment of Subsequent Participation. All Subsequent Participation shall be paid lump -sum in arrears for the preceding twelve-month period. On or before May 31 following the Subsequent Participation Trigger Date and each May 31 thereafter, Developer shall submit to the City the Subsequent Participation due for the previous calendar year, together with a detailed annual accounting statement setting forth the annual rental for each Tenant, the amount of rent and the amount of Percentage Rent charged each Tenant, and Developer's computation of the annual Subsequent Participation due by Developer based on such Percentage Rentor other rental, if any. All payments due and owing shall be payable to the City of Tustin and delivered to the City of Tustin Finance Director at 300 Centennial Way, Tustin, California, 92780, or to such third party and/or at such other place as the City may designate in writing from time to time. If any Subsequent Participation payment or any part thereof to be made by Developer to City pursuant to this Declaration shall be overdue for more than ten (10) calendar days, Developer shall pay to City, in additional to all principal amounts due, interest from the date of such payment or part thereof was due until the date paid at the Default Rate. 2.4.3 Right of Inspection and Audit of Records. (a) Developer and each Successor Owner shall keep full and accurate accounts, records and other pertinent data showing the financial operations of the shopping center and directly related to the calculation of the percentage rent revenues. Such records shall be kept on the basis of sound accounting principles applied on a consistent basis. Such records shall be kept for a period of three (3) years after the end of the calendar year to which such records pertain. The City shall be entitled to inspect, examine and copy, at Developer's or Successor Owner's expense for such copying, as applicable, the records pertaining to the applicable calendar year as is necessary or appropriate for the purpose of monitoring the Subsequent Participation payments, provided that such inspection, examination and copying shall be upon five (5) Business Days prior notice to Developer or Successor Owner (as applicable, the "Audited Owner"). Such inspection, examination and copying shall be made at such time and place as the Audited Owner may reasonably designate, provided that the designated place must be at an office located in Orange County or Los Angeles County, California. The Audited Owner shall cooperate fully with City in making the inspection. (b) In the event of a dispute between the Audited Owner and the City regarding the calculations of a given payment of Subsequent Participation, the City or its designated agent shall have the right to audit the records for the purpose of verifying the amount of Subsequent Participation and of Subsequent Participation payments, subject to the following terms and conditions: (i) The City shall have the right to make such audit, not more than once for any calendar year within three (3) years following the later of receipt of the applicable annual statement and/or payment of Subsequent Participation associated with such statement; (ii) The City shall give the Audited Owner at least fifteen (15) calendar days written notice of City's desire to conduct such audit, and such audit shall be made 7/12/2004 Attachment No. 6 — Page 9 Declaration of Special Restrictions 18405:6392234.6 during normal business hours at the Project Site, or at such other such time and place as the Audited Owner may reasonably designate; (iii) Such audit shall be limited to the records (including Retail Leases) reasonably necessary, in the City auditors' reasonably determination, to perform the calculation of and analyze the payment of the Subsequent Participation; (iv) Such audit shall be performed by an independent Certified Public Accountant (not being compensated on a contingent basis) or by the City's Finance Department, using generally acceptable accounting procedures consistently applied; and (v) City hereby agrees that except as may be required by law or to pursue remedies against the Audited Owner under the DDA or this Declaration, (1) neither the City nor its agents or auditors shall disclose or use the information contained in the records for any purpose other than for audit purposes or enforcement of City's rights regarding the Subsequent Participation as permitted in the DDA or this Declaration, and (2) City, its agents or its auditors shall keep such records, or copies thereof, confidential and shall take all steps reasonably necessary to assert and enforce such confidentiality without prejudice to the Audited Owner's rights under the DDA or this Declaration. (c) If City has not requested an audit for a particular calendar year within the time periods specified in clause a above, then the City shall be deemed to have waived its right to audit the records for such calendar year, or to any adjustment of the Subsequent Participation payment for such calendar year, and the facts contained in the annual statement for such calendar year shall be conclusive and binding on Developer or Successor Owner, as applicable, and City. (d) If it is properly determined by audit that any statement of Subsequent Participation was not accurate and/or that additional sums are owed by any Audited Owner to the City, the Audited Owner shall promptly, and in no event later than (30) calendar days after written demand therefor, provide the City with a corrected statement and pay to the City such sums as are necessary to correct the underpayment together with interest thereon calculated from the original due date at the Default Rate. In addition, if after audit, the City determines that the amount of the Subsequent Participation or the payment obligation of the Audited Owner with respect thereto in any calendar year was understated by three percent (3%) or more of the amount actually due for the calendar year, or such party had underpaid the City by three percent (3%) or more of the amount actually due for the audit period, then the Audited Owner shall pay to the City the cost of such audit. If, after audit by a "Big 4" accounting firm, it is properly determined that the City has been overpaid by any Audited Owner, such Audited Owner shall be entitled to credit the amount of the overpayment, without interest, against subsequent payments of Subsequent Participation due from such Audited Owner to City.. 2.4.4 No Interest in Project. The City's entitlement to receive the Subsequent Participation as set forth herein does not confer upon the City any proprietary or other interest in the Property or the Project. 7/12/2004 Attachment No. 6 — Page 10 Declaration of Special Restrictions 18405:6392234.6 2.5 Release. Save and except for the explicit covenants, representations and warranties of the City set forth in Section 3.3 and, as to the Lease Parcels only, the explicit covenants, representations of the City set forth in the Ground Lease, the Developer on behalf of itself and each Successor Owner and every Person claiming by, through or under the Developer or any Successor Owner (each a "Releasing Party", and collectively, the "Releasing Parties"), hereby waives, as of the Effective Date, and agrees to waive, as of the Initial Close of Escrow and as of each Subsequent Closing Date, the right of each Releasing Party to recover from, and fully and irrevocably releases, the City and its elected and appointed officials, employees, agents, attorneys, affiliates, representatives, contractors, successors and assigns (individually, a "Released Party", and collectively, the "Released Parties") from any and all Claims that the Developer or any Releasing Party may now have or hereafter suffer or acquire arising from or related to: (a) any information or documentation supplied by any of the Released Parties ("Due Diligence Information"); (b) any condition of the Property, the Project Site, or any current or future improvement thereon, known or unknown by any Releasing Party or any Released Party; (c) any construction defects, errors, omissions or otter conditions, latent or otherwise, including environmental matters, as well as economic and legal conditions on or affecting the Property, or any portion thereof; (d) the existence, Release, threatened Release, presence, storage, treatment, transportation or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to the Property, the Project Site, or any current or future improvement thereon or any portion thereof; (e) claims of or acts or omission to act of any Governmental Authority or any other third party arising from or related to any actual, threatened, or suspected Release of a Hazardous Material on, in, under, from, about, or adjacent to the Property or any current or future improvement thereon, including any Investigation or Remediation at or about the Property, the Project Site, or any current or future improvement thereon; (f) the cost or extent of the Tustin Legacy Backbone Infrastructure Program or the Developer's Backbone Infrastructure Work; (g) the amount of the Project Fair Share Contribution set forth in this Declaration; (h) the formation of any community facilities district in connection with the recoupment or payment of the Project Fair Share Contribution (except with respect to Claims against the City which might arise with respect to agreements between the City and Developer entered into subsequent to the Initial Close of Escrow relating to community facility districts); (i) school related development fees and/or 0) any restriction on access to the Developer Sublease Property for pre-acquisition inspection; provided, however, that the foregoing release by the Releasing Parties shall not apply to the extent that any Claim is the result of the gross negligence, willful misconduct or fraud of the City or its elected and appointed officials, employees, representatives, agents or consultants arising after the Initial Close of Escrow. This release includes Claims of which the Developer is presently unaware or which the Developer does not presently suspect to exist which, if known by the Developer, would materially affect the Developer's release to the Released Parties. The Developer specifically waives the provision of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." 712/2004 Attachment No. 6 — Page 11 Declaration of Special Restrictions 18405:6392234.6 In this connection and to the extent permitted by law, the Developer on behalf of itself, and the other Releasing Parties hereby agrees, represents and warrants, which representation and warranty shall survive the Initial Close of Escrow, each Subsequent Closing and the termination of this Declaration and shall not be merged with any Quitclaim Deed or the Ground Lease, that (x) it realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to Claims or controversies which are presently unknown, unanticipated and unsuspected, (y) the waivers and releases in this Declaration have been negotiated and agreed upon in light of that realization and (z) the Developer, on behalf of itself and the other Releasing Parties, nevertheless hereby intends to release, discharge and acquit the Released Parties from any such unknown Claims and controversies which might in any way be included as a material portion of the consideration given to the City by the Developer in exchange for the City's performance hereunder. BY INITIALING BELOW, DEVELOPER ACKNOWLEDGES THAT (A) IT HAS READ AND FULLY UNDERSTANDS THE PROVISIONS OF THIS SECTION, (B) IT HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (C) IT HAS ACCEPTED AND AGREED TO THE TERMS SET FORTH IN THIS SECTION. CITY'S INITIALS DEVELOPER'S INITIALS This release shall run with the land for the benefit of the City Benefited Property and the City and all governmental successors and governmental assigns of the City owning all or any portion of the City Benefited Property and burdening the Developer and the Developer Parcels and the Successor Owners thereof and all Persons claiming by, through or under the Developer or any Successor Owner and, to further evidence its effectiveness with respect to Successor Owners of the Developer Parcels, shall be included in its entirety in each Quitclaim Deed, in this Declaration and in the Ground Lease. 2.6 Environmental Indemnification and Environmental Provisions. 2.6.1 Developer Indemnity. As a material part of the consideration for this Declaration, and effective as to each of the Developer Parcels and the Property, upon the Developer's acquisition of fee and/or leasehold interest to all or any portion thereof, the Developer on behalf of itself and Successor Owners and each and every Person claiming by, through or under Developer or any Successor Owner, hereby agrees that Developer and each Successor Owner shall, to the maximum extent permitted by law, indemnify, protect, defend, assume all responsibility for and hold harmless the Indemnified Parties from and against any and all Claims resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to any portion or portions of said lands, regardless whether any such condition is known or unknown now or upon acquisition and regardless whether any such condition pre-exists acquisition or is subsequently caused, created or occurring, provided, however, that neither the Developer nor any Successor Owner shall be responsible for (and such indemnity shall not apply to) to the gross negligence or willful 7/12/2004 Attachment No. 6 — Page 12 Declaration of Special Restrictions 18405:6392234.6 misconduct of the Indemnified Parties. This environmental indemnity shall run with the land, shall be included in this Declaration, each Quitclaim Deed, the Ground Lease and the Memorandum of Ground Lease and shall be binding upon Developer and Successor Owners; provided, however, that such indemnity shall not be binding upon Tenants under Retail Space Leases or Minor Pad Transferees who are End Users or upon Major Pad Transferees who are End Users and are released from such indemnity obligation pursuant to a City Non -Disturbance and Attornment Agreement entered into pursuant to Section 2.2 of the DDA. 2.6.2 Pad Transferee and Retail Space Tenant Indemnity. As a material part of the consideration for this Declaration, and effective as to each of Developer Parcels and the Property, Developer, on behalf of itself and Successor Owners and each and every Person claiming by, through or under Developer or any Successor Owner, hereby agrees that Developer and each Successor Owner shall include the following indemnity in favor of the Indemnified Parties in each Retail Space Lease and in each deed and/or ground lease effecting a Pad Transfer (and incorporating the defined terms required to interpret the following provision): "[Each Pad Transferee/Tenant] on behalf of itself and each and every Person claiming by, through or under [Pad Transferee/Tenant], including without limitation, successors and assigns of such [Pad Transferee/Tenant] owning or leasing all or any portion of [defined premises] to the maximum extent permitted by law, shall indemnify, protect, defend, assume all responsibility for and hold harmless the City and its appointed and elect officials, agents, attorneys, affiliates, employees, contractors and from and against any and all Claims resulting or arising from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under, from, about or adjacent to or occurring on or about any portion or portions of the [defined premises] caused or created by such [Pad Transferee/Tenant] or its officers, directors, members, partners, agents, affiliates, employees, contractors, consultants or representatives, or with respect to pre-existing conditions, exacerbated by negligent act or omission of any of the foregoing (but with respect to such exacerbation, only to the extent of the exacerbation).". 2.6.3 Duration of Indemnities. The indemnities set forth in this Article 10 shall survive the Initial Close of Escrow, the Subsequent Closings and the termination of this Declaration and shall not merge into any Quitclaim Deed or the Ground Lease. 2.6.4 Claim Response. In the event that any Environmental Agency or other third party brings, makes, alleges, or asserts a Claim, arising from or related to any actual, threatened, or suspected Release of Hazardous Materials on or about the Developer Parcels, including any Claim for Investigation or Remediation on or about the Developer Parcels, or such Environmental Agency or other third party orders, demands, or otherwise requires that any Investigation or Remediation be conducted on or about the Developer Parcels, the Developer shall promptly upon its receipt of notice thereof, notify the City in writing and hereafter shall promptly and responsibly respond to such Claim. Further, upon receipt of such Claim, order, demand or requirement, the Developer shall (a) take such reasonable measures, as necessary or appropriate, to reasonably dissuade such Environmental Agency or other third party from bringing, making, alleging, or asserting any Claim against the City arising from or related to any actual, threatened, or suspected Release of Hazardous Material on or about the Developer 7/12/2004 Attachment No. 6 — Page 13 Declaration of Special Restrictions 18405:6392234.6 Parcels, including any Claim for Investigation or Remediation on or about the Developer Parcels, and (b) request that the Environmental Agency not issue any order, demand, or requirement to the City under any of the Environmental Laws, or any other local, regional, State or federal law, or seek penalties or take other punitive action against the City, in connection with, arising from, or related to any actual, threatened, or suspected Release of Hazardous Material on or about the Developer Parcels, including any Investigation or Remediation on or about the Developer Parcels. 2.6.5 Release Notification and Remedial Actions. If any Release of a Hazardous Material is discovered on or about the Developer Parcels and regardless of the cause, the Developer shall promptly (a) provide written notice (or in the event of emergency, telephonic notice, followed by written notice) of any such Release to the City and the Navy and (b) at Developer's sole risk and expense and solely under the name of the Developer (but without prejudice to the Developer's or the City's rights against any responsible party or against the Federal Government pursuant to Section 330, Fiscal Year 1993, National Defense Authorization Act Public Law 102-484 or against any environmental insurer): (i) remove, treat, and dispose of the released Hazardous Material on the Developer Parcels in compliance with and to the extent required by each and every applicable Environmental Law, or if such removal is prohibited by any Environmental Laws, take whatever action is required by any Environmental Law; (ii) take such other action as is necessary to have the full use and benefit of the Developer Parcels as contemplated by this Declaration; and (iii) provide the City and the Navy with satisfactory evidence of the actions taken as required in this Section. The Developer shall provide to the City, within thirty (30) calendar days of the City's request therefor, a bond, letter of credit, evidence of environmental insurance meeting the requirements of Section 11. 1.4 and applicable to the required action or other financial assurance evidencing to the City's satisfaction that all necessary funds are readily available to pay the costs and expenses of the actions required by this Section and to discharge any assessments or liens established against the Project Site as a result of the presence of the Hazardous Material Release on or about the Developer Parcels. The City and Developer will coordinate any response action with appropriate environmental insurance carriers. Nothing set forth herein requires Developer to perform an obligation of the Federal Government. An obligation of the Federal Government shall not include any purported obligation for which the Federal Government has denied responsibility in writing. 2.7 Environmental Insurance. The Developer shall maintain environmental insurance in accordance with one of the following Sections 2.7.1 and/or 2.7.2, in its discretion: 2.7.1 become additional named insured on the pollution legal liability policy issued to the City by Indian Harbor Insurance Company (Policy Number PEC0010756) (the "City's Environmental Insurance Policy"), a copy of which has been delivered to the Developer, but solely with respect to the Developer Parcels and subject to the following: (i) the limitation on liability for loss, remediation expense and legal defense with respect to the Developer Parcels shall be Five Million Dollars ($5,000,000.00); (ii) Developer shall pay all deductibles/self insured retention amounts for any claim or Developer first party loss for which the insurance applies associated with any of the Developer Parcels and due or payable under the City's Environmental Insurance Policy unless the claimed loss, remediation expense or legal defense expense is due solely to the willful misconduct of the City; (iii) Developer shall have paid to the City by separate check on or before the Initial Closing Date Seventy -Five Thousand 7/12/2004 Attachment No. 6 — Page 14 Declaration of Special Restrictions 18405:6392234.6 Eight Hundred Twenty Dollars ($75,820.00) to the City as pro rata reimbursement to the City of its expenditures in purchasing the City's Environmental Insurance Policy; provided that if Developer elects to become an additional named insured on the City's Environmental Insurance Policy, City shall have no obligation to enter into any City Non -Disturbance and Attornment Agreement with any third party unless and until Developer provides an extension to the City's Environmental Insurance Policy as to the Developer Parcels or a new environmental insurance policy as to the Developer Parcels meeting the requirements of Section 11.1.4(b) commencing no later than the termination date of the City's Environmental Insurance Policy and with a term expiring no earlier than the tenth (10th) anniversary of the Initial Closing; or 2.7.2 obtain its own pollution legal liability insurance coverage for the Developer Parcels, including coverage for loss, remediation expense and defense expenses, and naming the City as an additional insured to address pollution risks at the Developer Parcels. Such policy shall comply with the following: (a) the policy shall be written by the insurance company selected by the Developer and reasonably approved by the City; (b) the policy shall provide no less than Five Million Dollars ($5,000,000.00) in coverage, subject to a maximum Two Hundred Thousand and No/100 Dollars ($200,000.00) deductible per claim, to protect against claims and loss from liability relating to known and unknown conditions on the Developer Parcels for no less than a 10 -year term from the Initial Closing Date with an extended 5 -year reporting period, including the DDA and this Declaration as covered contracts and containing coverage substantially equivalent to that provided by the City's Environmental Insurance Policy, in form and content acceptable to the City; (c) to the extent that Developer elects to obtain its own pollution legal liability insurance coverage and decides not to be named as additional named insured on the City's policy, the Developer's policy shall (1) name, as additional named insureds, the City, the Tustin Community Redevelopment Agency and the Tustin Public Financing Authority, (2) be paid for in full by the Developer at the time of issuance and (3) shall be endorsed as non- cancelable by the Developer without the written consent of the City in its sole discretion to such cancellation; and (d) the policy shall be written to indicate that the City's Environmental Insurance Policy is primary with respect to overlapping coverage and, if issued by the same insurer which issued the City's Environmental Insurance Policy, that there is no "stacking of limits" with the City's Environmental Insurance Policy. Nothing in this Declaration precludes Developer from obtaining additional environmental insurance in the event it decides to be named as additional named insured on the City's Environmental Insurance Policy with such terms and provisions subject to Developer's sole discretion. 3. Enforcement of Covenants. 7/12/2004 Attachment No. 6 — Page 15 Declaration of Special Restrictions 18405:6392234.6 3.1 General Purpose and Constructive Notice. The Restrictions shall run and pass with each and every portion of the Property and be binding upon the Developer, its successors and assigns; provided, however, that from and after any Pad Transfer permitted under the DDA, the City's rights and remedies under this Declaration shall only be enforceable against the Parcel on which the applicable violation has occurred, and/or against the respective Transferee and/or End User owning or having acquired an interest in such Parcel. These Restrictions shall benefit the City Benefited Property and other parcels owned by the City and located in the City of Tustin, California, and be enforceable solely by the City notwithstanding any future Transfer of the City Benefited Property or other parcels or any portion thereof. Except as specifically set forth herein, the Restrictions shall remain in full force and effect for the period of time specified in Sections 2.1 through 2_5, notwithstanding the City's exercise of any right or remedy herein. Every Person that now or hereafter owns or acquires any right, title or interest in or to any portion of the Property is and shall be conclusively deemed to have consented to and agreed to every Restriction, provision, covenant, condition, right and limitation contained herein, whether or not any reference to this Declaration is contained in the instrument by which such Person acquired such interest in the Property or portion thereof. 3.2 Inspection. Upon twenty-four (24) hours notice, or such longer period as may be explicitly set forth in Sections 2.1 through 2_5 or the DDA, and subject to the reasonably security provisions of Developer or any Transferee or End User, the City and its authorized representatives may from time to time enter upon and inspect the Property, Project Site or any portion thereof or any Improvements thereon for purposes of ascertaining compliance with the Restrictions, but without obligation to do so or liability therefor. 3.3 Other Restrictions. This Declaration and the Restrictions contained herein are not the exclusive source of restrictions on the development and construction of the Project and the use of the Property. Nothing contained herein shall prejudice or diminish in any way the City's rights or authority in its governmental capacity, nor the rights and authority of any other Governmental Authority having jurisdiction over the Project or any portion thereof, and the exercise of any rights or remedies by the City hereunder shall be considered separate from and independent of any breach or violation by Developer, any Transferee or any End User which is also a breach or violation of any Governmental Requirements. 4. Potential and Material Defaults. In the event of any breach, violation or failure to perform or satisfy any of the Restrictions which has not been cured within the applicable cure period set forth below, the City may in its sole discretion enforce any one or more of the remedies set forth in Section 4.3, or any other rights or remedies to which the City may be entitled by law or equity, whether or not set forth herein. To the maximum extent allowable by law, all remedies provided herein or by law or equity shall be cumulative and not exclusive. 4.1 Potential Defaults. Except as otherwise provided in this Declaration, it shall be a "Potential Default" if: (a) fails to pay timely any sum required to be paid pursuant to this Declaration; or 7/12/2004 Attachment No. 6 — Page 16 Declaration of Special Restrictions 18405:6392234.6 (b) fails to perform, or delays in the performance of, in whole or in part, any obligation required to be performed under, or otherwise violates the provisions of this Declaration, other than as set forth in Section 4.1(a). 4.2 Material Defaults. (a) A Potential Default under Section 4.1(a) shall become a "Material Default" if it is not cured within fifteen (15) Business Days of receipt of the notice of Potential Default. The foregoing cure period for Potential Defaults under Sections 4.1(a) shall not be extended by Force Majeure Delay. (b) A Potential Default under Section 4.1(b) shall become a "Material Default" if it is not cured, at the defaulting Person's expense, (i) within thirty (30) calendar days after receipt of the written notice of such Potential Default from the City, or (b) if such cure cannot be reasonably accomplished within such thirty (30) calendar day period, within one hundred fifty (150) days after receiving written notice of such Potential Default, but only if the defaulting Person has commenced such cure within such thirty (30) calendar day period and diligently pursues such cure to completion, or (c) within such longer period of time as may be expressly granted by the City in the City's sole discretion, taking into account the nature of the Potential Default and diligence and good faith efforts of the defaulting Person to cure such Potential Default. The foregoing cure periods for Potential Defaults under Section 4.1(b) may be extended by Force Majeure Delay. (c) Following written notice and failure to cure within the time periods set forth in this Section 4.2, each Potential Default shall become a Material Default that shall be deemed to have occurred upon the expiration of the applicable cure period. 4.3 Certain City Remedies. In the event of a Material Default, in addition to all other rights the City may have in law or at equity including, without limitation, all rights and remedies set forth in the DDA (unless the DDA is terminated or such remedies are expressly waived by the City in writing with respect to the affected party) and/or any non -disturbance agreement, and, in addition, the City may do any or all of the following: (a) The City may bring a suit for damages for any compensable breach of or noncompliance with any of the Restrictions, or declaratory relief to determine the enforceability of any of the Restrictions; or (b) The City may bring an action in equity or otherwise for specific performance to enforce compliance with the Restrictions or an injunction to enjoin the continuance of any such breach or violation thereof, whether or not the City exercises any other remedy set forth herein, it being recognized that a particular or ongoing violation of one or more of the Restrictions may cause the City to suffer material injury or damage not compensable in money (including irreparable effects on the type and quality of development on the Benefited Property or portions thereof, and on the ability of the City or any third party to continue the maintenance of the Project or any portion thereof as a Class A Shopping Center); or (c) The City may Record a lien against the Parcel which is the subject of the Material Default, such lien to be in accordance with Section 1367.1 of the California Civil 7/12/2004 Attachment No. 6 — Page 17 Declaration of Special Restrictions 18405:6392234.6 Code, provided, that the City may commence the notice periods required thereunder concurrently with any notice periods set forth in Section 4.2. Such lien shall generally describe the Material Default and the amounts owed with respect thereto, including the method of calculation of the amount, a statement that the City has a right to inspect the defaulting Person's records, and an itemized statement of the charges owed by the defaulting Person. Such lien shall be prior to all subsequent liens recorded against the Parcel, except that the lien may provide for the subordination thereof to any other liens and encumbrances in the City's sole discretion, subject only to the priority of a first lien which is a Permitted Mortgage. 4.4 Failure to Timely Pay Amounts Due. If the Potential Default under Section ,.aL becomes a Material Default, then in addition to any other remedies conferred upon the City pursuant to this Declaration, the defaulting Person shall pay to City, in additional to all principal amounts due, interest from the date of such payment or part thereof was due until the date paid at the default rate of eight percent (8%) per annum, compounded annually, but in no event in excess of the maximum legal rate. 4.5 Rights of the City as Governmental Authority. Nothing contained herein shall prejudice or diminish in any way the City's rights or authority in its governmental capacity, nor the rights and authority of any other Governmental Authority having jurisdiction over the Project or any portion thereof, and the exercise of any rights or remedies by the City hereunder shall be considered separate from and independent of any breach or violation by Developer, any Transferee or any End User which is also a breach or violation of any Governmental Requirements. 4.6 Rights of Mortgagees and Mortgagee Protection. 4.6.1 Amendment; Termination. No amendment or modification to this Declaration may impair or materially alter a Permitted Mortgagee's rights hereunder, or increase a Permitted Mortgagee's obligations hereunder (whether ongoing or contingent obligations) without the consent of such Permitted Mortgagee, provided that such Permitted Mortgagee has agreed that its consent will not be unreasonably withheld, and provided, further, that such Permitted Mortgagee has agreed that its consent is not required for modifications to Attachment Nos. 13, 16 or 17 that are made in accordance with Section 16.3 of the DDA. Developer shall not terminate the DDA nor this Declaration (nor, if applicable, the Ground Lease) as to any portion of the Developer Parcels which is subject to any Permitted Mortgage without first obtaining the prior written consent of all Permitted Mortgagees whose Permitted Mortgages encumber that portion of the Developer Parcels. 4.6.2 No Subordination. This Declaration shall not be subordinated to any Mortgage, ground lease or other instrument without the express written consent of the Parties hereto, each in its sole discretion. 4.6.3 New Agreement and Ground Lease with Permitted Mortgagee. (a) Request by Senior Permitted Mortgagee. In the event of termination of the DDA and/or the Ground Lease for any reason (including by reason of any Material Default by Developer or by reason of the disaffirmance thereof by Developer, as a 7/12/2004 Attachment No. 6 — Page 18 Declaration of Special Restrictions 18405:6392234.6 debtor-in-possession, or by a receiver, liquidator or trustee for Developer or its property), the City, if requested by the then -most senior Permitted Mortgagee (or by the next most senior Permitted Mortgagee if Permitted Mortgagees with more senior priority do not so request) will enter into a new disposition and development agreement and/or ground sublease with the Permitted Mortgagee or other party requesting the same, provided that such party is the then - owner of the Property, upon the same terms, provisions, covenants and agreements set forth in the DDA and/or the Ground Lease and commencing as of the date of termination of the DDA and/or the Ground Lease, as the case may be (collectively, the "New Agreement"), subject to the following: (i) such Permitted Mortgagee or requesting party shall have provided written notice to the City requesting the New Agreement within thirty (30) calendar days after the date of termination of the DDA and/or the Ground Lease, as applicable; (ii) such Permitted Mortgagee or requesting party shall pay to the City at the time of the execution and delivery of the New Agreement those sums specified in Section 15.11(c) of the DDA which would, at the time of the execution and delivery thereof be due and unpaid pursuant to the DDA or this Declaration but for its termination, and in addition thereto any reasonable attorneys' fees and experts' fees and court costs and court expenses (including attorney's and expert's fees) to which the City shall have been subjected by reason of Developer's Material Default; and (iii) such Permitted Mortgagee or requesting party shall, subject to the provisions of Section 15.7. 15.8 and 15.11 of the DDA, perform and observe all covenants in the DDA and this Declaration to be performed and observed by a Permitted Mortgagee, and failure to do so shall, after notice and opportunity to cure as provided by the DDA, be a Material Default under the DDA. (b) Request by City. In the event of termination of the DDA and/or the Ground Lease for any reason (including by reason of any Material Default by Developer or by reason of the disaffirmance thereof by Developer, as a debtor-in-possession, or by a receiver, liquidator or trustee for Developer or its property) the then -most senior Permitted Mortgagee, if requested by the City, and provided that such party is the then -owner of the Property, will enter into a new Agreement with the City requesting a new Agreement, upon the same terms, provisions, covenants and agreements set forth in the DDA and/or the Ground Lease and commencing as of the date of termination of the DDA and/or the Ground Lease, as the case may be ("New Agreement"), subject to the following: (i) the City shall have provided written notice to such Permitted Mortgagee requesting the New Agreement within thirty (30) calendar days after the date of termination of the applicable agreement, with a copy to each other Permitted Mortgagee; and (ii) the Permitted Mortgagee shall be subject to the provisions of Section 15.7, 15.8 and 15.11 of the DDA unless a Final Certificate of Compliance has been Recorded and shall perform and observe all covenants in this Agreement to be performed and 7/12/2004 Attachment No. 6 — Page 19 Declaration of Special Restrictions 18405:6392234.6 observed by a Permitted Mortgagee and failure to do so shall, after notice and opportunity to cure, shall be a Material Default under this Agreement. (c) Priority of New Agreement. Any New Agreement shall be prior to any Mortgage or other lien, charge, or encumbrance on the Property and each Mortgagee shall execute such additional consents and/or subordination agreements as may reasonably requested by the City or the new Developer to evidence the priority of the New Agreement to all Mortgages, whether Recorded prior or subsequent to execution of the New Agreement. 5. DDA. Memorandum of DDA and Declaration Run With the Land. The DDA, the Memorandum of DDA and this Declaration, including, without limitation, the provisions recited and set forth above, and all other obligations, agreements, covenants, conditions and restrictions set forth in the DDA, the Memorandum of DDA and/or this Declaration, are hereby agreed by the Developer and the City to be covenants running with the land and enforceable as equitable servitudes against the Developer Parcels, and are hereby declared to be and shall be binding upon the Developer Parcels and the Developer and the successors and assigns of the Developer owning all or any portion of the Developer Parcels for the benefit of the City Benefited Property (legally described on Attachment No. 2 attached hereto) and the City and the governmental successors and governmental assigns of the City owning all or any portion of the City Benefited Property. 6. Acknowledgment and Assumption by Developer. By acceptance of the Quitclaim Deed the Developer hereby acknowledges and assumes all responsibilities placed upon the Developer under the terms of the Quitclaim Deed, the DDA and this Declaration. 7. Public Documents. The documents constituting the DDA are public documents and may be reviewed at the official offices of the City. 8. Interpretation. In the event of any inconsistency between terms, conditions, provisions and covenants of this Declaration and the DDA, the terms, conditions, provisions and covenants of the DDA shall prevail. 9. Miscellaneous. 9.1 Modification. No amendment, change, modification or supplement to this Declaration shall be valid and binding unless it is represented in writing and signed by the City. 9.2 Applicable Law. This Declaration 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. 9.3 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Declaration, the rights and remedies of the City are cumulative, and the exercise by the City of one or more such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the same defaulting Person or a different defaulting Person. 7/12/2004 Attachment No. 6 — Page 20 Declaration of Special Restrictions 18405:6392234.6 9.4 Conflict of Interest. No appointed or elected official or employee of the City shall have any personal interest, direct or indirect, in this Declaration nor shall any official or employee participate in any decision relating to the Declaration which affects his interests or the interests of any corporation, partnership, or association in which he is directly or indirectly interested. The Developer warrants that it has not paid or given and will not pay or give any third person any money or other consideration for obtaining this Declaration. 9.5 Nonliability of City Officials and Employees. No elected or appointed official, representative, employee, agent, consultant, legal counsel or employee of the City shall be personally liable under this Declaration. 9.6 Inspection of Books and Records. The City shall have the right at all reasonable times, upon ten (10) days written notice, to inspect the books and records of the Developer, any Transferee and any End User pertaining to the Developer Parcels as pertinent to the purposes of this Declaration. 9.7 Construction and Interpretation of Declaration. (a) The language in all parts of this Declaration shall in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against any Person. (b) If any term or provision of this Declaration, the deletion of which would not adversely affect the receipt of any material benefit by the City hereunder, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Declaration shall not be affected thereby and each other term and provision of this Declaration shall be valid and enforceable to the fullest extent permitted by law. It is the intention of the City that in lieu of each clause or provision of this Declaration that is illegal, invalid, or unenforceable, there be added as a part of this Declaration an enforceable clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible. (c) Any matters or facts included in Recitals A through I of this Declaration shall be conclusively deemed true. (d) The captions of the sections and subsections in this Declaration are inserted solely for convenience and under no circumstances are they or any of them to be treated or construed as part of this instrument. (e) References in this instrument to "this Declaration" mean, refer to and include this instrument as well as any riders, schedules, exhibits, addenda and attachments hereto (which are hereby incorporated in this Declaration by this reference) and all other documents expressly incorporated by reference in this instrument. Any references to any covenant, conditions, obligation and/or undertaking "herein," "hereunder," or "pursuant hereto') (or language of like import) shall mean, refer to and include the covenants, obligations and undertakings existing pursuant to this Declaration and any riders, schedules, exhibits, addenda, attachments or other documents affixed to or expressly incorporated by reference in this instrument. 7/12/2004 Attachment No. 6 — Page 21 Declaration of Special Restrictions 18405:6392234.6 (f) As used in this Declaration and as the context may require, the singular includes the plural and vice versa and the masculine gender includes the feminine and vice versa. (g) As used in this Declaration the words "include" and "including" mean respectively "include, without limitation" and "including, without limitation". (h) Unless otherwise indicated, references in this Declaration to sections, paragraphs, clauses, exhibits, attachments and schedules are to the same contained in or attached to this Declaration. 9.8 Time of Essence. Time is of the essence with respect to all provisions of this Declaration in which a definite time for performance is specified; provided, however, that the foregoing shall not be construed to limit or deprive the City of the benefits of any grace period provided for in this Declaration. 9.9 Bindinu Effect. This Declaration and the terms, provisions, promises, covenants and conditions hereof shall be binding upon and inure to the benefit of the City and its respective legal representatives, successors and assigns. 9.10 Counterparts. This Declaration 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 Declaration shall not be effective until the execution by the City of at least one set of counterparts. Any one of such completely executed counterparts shall be sufficient proof of this Subordination. [signature page follows] 7/12/2004 Attachment No. 6 — Page 22 Declaration of Special Restrictions 18405:6392234.6 IN WITNESS WHEREOF, the City has executed this Declaration as of the date first set forth above. Dated: ATTEST: By: Pamela Stoker City Clerk 'Dated: APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation ACKNOWLEDGED AND AGREED: Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: _ Name: Title: City of Tustin, California an William Huston, City Manager 7/12/2004 Attachment No. 6 — Page 23 Declaration of Special Restrictions 18405:6392234.6 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) 7/12/2004 Attachment No. 6 — Page 24 Declaration of Special Restrictions 18405:6392234.6 ATTACHMENT 1 LEGAL DESCRIPTION OF DEVELOPER PARCELS [To Be Attached] 7/12/2004 Attachment 1 — Page 1 Legal Description of Developer Parcels 18405:6392234.6 ATTACHMENT 2 CITY BENEFITED PROPERTY [To Be Attached] 7/12/2004 Attachment 2 — Page l City Benefited Property 18405:6392234.6 ATTACHMENT NO.7 SCHEDULE OF PERFORMANCE NOTE: References herein to "the Agreement" and "DDA" mean the Tustin Legacy Disposition and Development Agreement (Retail Development) of which this Attachment is a part; references to "Attachments" mean the Attachments to the DDA unless otherwise specified. Except as otherwise noted, all capitalized terms defined within the DDA and the Attachments shall retain the meanings as defined in the Disposition and Development Agreement. Action Execution of Agreement A. Developer delivers evidence of Developer's ability to obtain financing B. City executes DDA C. "Effective Date" of DDA D. City delivers executed DDA and Attachments to Escrow Timing Condition precedent to execution by City of DDA Within 5 calendar days following City Council approval of Developer executed DDA Date of execution by City of DDA Within 5 calendar days following execution of DDA by City E. Developer delivers executed DDA and Within 7 calendar days following action by Attachments and documents required City on DDA, and resolution of any pursuant to Section 7.3.1 to Escrow remaining issues 2. Acquisition of Developer Fee Parcels A. Developer delivers Initial DDA Deposit to Escrow B. Developer acquisition of own Preliminary Title Reports for Developer Parcels. C. Acquisition by Developer of Title Commitments D. Due Diligence Period ends Within 5 calendar days following execution of DDA by City Prior to the Effective Date Within 10 calendar days following execution of DDA by City August 1, 2004 (for environmental and geotechnical issues only) unless terminated earlier by Developer Vestar DDA Attachment No. 7 — Page 1 Schedule of Performance 07/12/04 18405:6391127.7 Action Timing E. Developer delivers to Escrow Final Upon later of August 1, 2004 or 5 calendar DDA Deposit for acquisition of the Developer days following execution of DDA by City Fee Parcels at Initial Close of Escrow F. Developer delivers to City all required 7 calendar days prior to Initial Close of Closing submittals including insurance, Escrow evidence of financing, etc. G. Developer delivers to Escrow the 1 Business Day prior to Initial Close of balance of Initial Closing Purchase Price and Escrow all document deliveries required for Initial Close of Escrow. H. City delivers to Escrow all document 1 Business Day prior to Initial Close of deliveries required for Initial Close of Escrow. Escrow. I. Initial Closing Date for fee transfer of November 9, 2004 Developer Fee Parcels A and B and lease/ sublease of Lease Parcels (see below). 3. Subleasing and Acquisition of Developer Lease Parcels A. Developer delivers to Escrow all 7 calendar days prior to Initial Close of required lease submittals including insurance, Escrow. etc. B. Developer delivers to Escrow signed I Business Day prior to Initial Close of Ground Lease and first annual payment of Escrow. rent thereunder. C. City delivers Ground Lease to Escrow. l Business Day prior to Initial Close of Escrow. D. Ground Lease Effective Date. E. Payment of Ground Lease rent. Initial Closing Date Annually on Initial Closing Date and on each subsequent anniversary of the Ground Lease effective date. F. City notifies Developer of acquisition within 30 calendar days of Navy of Developer Sublease Parcel(s) from Navy conveyance of applicable Developer and sets date for Subsequent Closing thereof Sublease Parcel(s) to the City to Developer. Vestar DDA Attachment No. 7 — Page 2 Schedule of Performance 07/12/04 18405:6391127.7 Action G. Developer delivers to Escrow Subsequent Purchase Price for Developer Sublease Parcel(s) Timing 1 Business Day prior to applicable Subsequent Closing. H. Close of Subsequent Closing Escrow 30 calendar days after City notice to Developer of City acquisition of fee title; subject to extension per Section 7.7.1 of the DDA. 4. All Entitlement Approvals; City Proprietary and Governmental Design Approvals. A. Developer submits Preliminary Plans March 29, 2004 B. Developer submits Tentative Vesting June 21, 2004 Tract Map, Concept Plan and Design Review application, and conditional use permit applications, as applicable, with related drawings and documents to City which are considered by City as complete C. City in its Governmental Capacity July 19, 2004 considers and approves Tentative Vesting Tract Map, Concept Plan & Design Review D. City in its Proprietary Capacity approves Basic Concept Plans E. Developer submits complete Final Tract Map with related drawings and documents to City F. City approves Final Tract Map(s) Within 5 calendar days of City approval of Tentative Vesting Tract Map, Concept Plan and Design Review Within 15 calendar days of City Council approvals specified in Section 4.0 above By October 18, 2004, provided Developer shall be responsible for completing all City and County requested corrections and all conditions of approval of the Tentative Tract Map to the satisfaction of City in its sole discretion on or before October 12, 2004 G. Developer causes the Recording of the Within 15 calendar days following approval Final Tract Map(s) of the Final Tract Map(s) by City Vestar DDA Attachment No. 7 — Page 3 Schedule of Performance 07/12/04 18405:6391127.7 Action 5. Demolition, Grading and Building Permits: Performance Bonds . A. Developer submits plans and application for demolition permit and rough grading permit on entire Project Site B. City issues demolition permit C. City issues permits for rough grading Timing Anytime after Tentative Tract Map approval, but no later than 30 calendar days following the Initial Closing Date Within five (5) calendar days of approval by the Community Development Department of submittals required by Section 5.A, but no earlier than the Initial Closing Date After (a) Initial Close of Escrow and Community Development Department approval of plans for rough grading, and (b) Developer's payment of all applicable permit fees, payment of Project Fair Share Contribution and satisfaction of all applicable conditions of approval D. Developer submits to City complete . On Minimum Project, a complete application for final grading and building application for the first grading and permits including final grading plans and final building permit within six (6) months construction and related documents from the Initial Close of Escrow and for E. City issues final grading and building permits consistent with any approved phasing balance of Minimum Project within six (6) months after submittal of complete application for the first such permit • On Lease Parcels, a complete application within six (6) months following applicable Subsequent Closing Within 15 calendar days following Community Development Department approval of complete final grading and building plans and Developer's payment of all permit fees and satisfaction of all applicable conditions of approval, including provision to City of Performance Bonds for Horizontal Improvements, Vertical Improvements, Project Fair Share Contribution and Developer's Backbone Infrastructure Work, and execution by Developer and City of the Infrastructure Reimbursement Agreement Vestar DDA Attachment No. 7 — Page 4 Schedule of Performance 07/12/04 18405:6391127.7 Action Timing 6. Construction of the Improvements A. Developer commences construction within twenty (20) calendar days following issuance of building permits for the Minimum Project, Lease Parcels, Minor Pads, or other Improvements as applicable. B. Completion of construction of the Improvements 7. Partial Certificates of Compliance A. Developer submits request for issuance of a Partial Certificate of Compliance by City Developer shall complete construction of Improvements as follows: On Minimum Project, no later than twenty-four (24) months following Minimum Project Permit Date On Lease Parcels, twenty-four (24) months after the date building permits are issued for Improvements on such Lease Parcel, provided that Developer shall submit complete applications for such permits within six (6) months from the Subsequent Closing Date for the affected Lease Parcel. On Minor Pads and for all Improvements required by the DDA in addition to Minimum Project square footages, but excluding Improvements on Lease Parcels, no later than five (5) years following Initial Closing Date. Upon completion of all Improvements required by the DDA and satisfaction of all Conditions Precedent set forth in DDA for the applicable Parcel(s) or Phase of Development; provided that no Partial Certificate of Compliance shall be issued for any portion of the Project until Completion of the Minimum Project. B. The City approves or disapproves the within 30 calendar days following request for issuance of a Partial Certificate of submission of request for Partial Certificate Compliance of Compliance and satisfaction of all conditions precedent set forth in DDA Vestar DDA Attachment No. 7 — Page 5 Schedule of Performance 07/12/04 18405:6391127.7 Action C. The City shall cause the Recording of the Partial Certificate of Compliance against the applicable Parcel(s) Final Certificate of Compliance A. Developer submits request for issuance of the Final Certificate of Compliance by City B. The City approves or disapproves the request for issuance of the Final Certificate of Compliance C. The City shall cause the Recording of the Final Certificate of Compliance against all Parcels Timing Within 10 calendar days following issuance of Partial Certificate of Compliance by City Upon completion of all Improvements required by the DDA and satisfaction of all Conditions Precedent set forth in DDA Within 30 calendar days following submission of request for Final Certificate of Compliance and satisfaction of all conditions precedent set forth in DDA Within 10 calendar days following issuance of Final Certificate of Compliance by City Vestar DDA Attachment No. 7 — Page 6 Schedule of Performance 07/12/04 18405:6391127.7 ATTACHMENT NO.8 SCOPE OF DEVELOPMENT Note: References herein to the "Agreement" and the "DDA" shall mean the Disposition and Development Agreement of which this Attachment is a part; references to "Attachments" mean the Attachments to the Agreement unless otherwise specified. Capitalized terms not otherwise defined in this Attachment have the meaning set forth in the Agreement. 1.0 General Information The Developer Parcels are delineated on Attachment No. 1 and Attachment No. 2. The Developer Parcels, City Dedication Parcels and the adjacent Barranca Parkway right-of-way are subject to easements, obligations and encumbrances, including the following: a) An easement set forth in an instrument recorded December 14, 1971 in favor of the Orange County Flood Control District for flood control and incidental purposes as it affects a portion of current Parcel I -C-1 and I -C-6 (existing Barranca parkway right-of- way), a portion of Parcel I -D-4, and a portion of I -D-13 (existing Barranca Parkway right-of-way) and adjacent public right-of-way and right-of-way easement areas parallel to Reuse Plan Disposal Parcel 9. b) An easement, covenant and conditions contained in the Quitclaim Deed from the United States of America, as Grantor, to the City of Tustin, California, as Grantee, Recorded May 14, 2002 as Instrument No. 20020404593 of the official records of Orange County California ("Navy Conveyance"). The provisions of Section 5.1 of the Quitclaim Deed reserve for the Grantor (the "Navy") an easement for ingress and egress on, over, or across (i) Windmill Road (the "roadway") as located on Developer Fee Parcels A, B, C, and D and (ii) those portions of the Developer Sublease Parcels depicted as Lots 13, 14, 19, 20, 21, 22, 23, 24, 25, 26, 28 and 29 on the Vesting Tentative Tract Map for purposes of access to certain areas of the LIFOC Parcels, including the Developer Sublease Parcels, which remain in ownership of the Grantor as the effective date of the Navy Conveyance (the "remaining lands"). To the extent that the roadway is abandoned or otherwise ceases to exist to provide access to the remaining lands after the date of the Navy Conveyance, and said access continues to be required, said Easements shall be on, across, and over such other improved and unimproved roads provided by Grantee, or its successors and assign, (in this case, to be constructed by the Developer), that provide equivalent access to the remaining lands. c) The Developer shall file and receive City approval of an application for a Vesting Tentative Tract Map for the Developer Parcels, including additional necessary land use entitlements as may be required by Tustin City Code or the Specific Plan. The Vesting Tentative Tract Map shall contain requirements that (a) several portions of the Reuse Plan Disposal Parcels be dedicated in fee simple for public streets and other easement dedications for storm drains and other public improvements as required in the Final EIS/EIR and in the conditions of any entitlements or for the Tentative Tract Map, and Vestar DDA Attachment No. 8 — Page 1 Scope of Development 07/12/04 18405:6391127.7 (b) additional dedications may be made thereafter for all necessary and appropriate easements and rights necessary for the development of the Project, including, but not limited to, easements and rights of vehicular access, pedestrian access, parking, sanitary sewers, storm drains, domestic water and reclaimed water, electrical power, telephone, cable, and natural gas. 2.0 Developer Improvements 2.1 Definition of Improvements The Developer shall construct or cause to be constructed on the Developer Parcels all of the Horizontal Improvements and the Vertical Improvements and shall construct or cause to be constructed to serve the Project certain private and public infrastructure and Developer's Backbone Infrastructure Work, including any necessary Tustin Legacy Backbone Infrastructure set forth in this Scope of Development, as required as mitigation measures in the Final EIS/EIR or as required and approved by the City, including the City Planning Commission and City Council. This Attachment presents the scope of development and minimal specific design criteria. Additional requirements may be contained in conditions of approval of the entitlements for the Project. The Improvements shall generally consist of the following: 2.1.1 Vertical Improvements. Developer shall complete the development of the Vertical Improvements to consist of construction and installation of a high quality "Class A" retail project containing both "big box" and "lifestyle" components, consisting of approximately 558,100 square feet of building area within Planning Areas 17 and 19 south of the South Loop Road and approximately 448,000 square feet in Planning Area 16 north of the South Loop Road with a complete set of high quality amenities, to function as the centerpiece and leading retail/entertainment element within Tustin Legacy. The Project Design shall be excellent, exceeding the commercial retail development at the Market Place within the City of Tustin, as determined by the City in its reasonable discretion and as more fully described in Section 3.1 of this Attachment No. 8. The area north of the South Loop Road shall consist of three "big box" buildings, freestanding retail and restaurant pads, and inline retail tenant spaces adjacent to the western- most "big box" building at the northeast corner of the intersection of Tustin Ranch Road and South Loop Road with supporting parking facilities and landscaping as required by the Specific Plan. A specially designed and landscaped crossing with special pavement treatment and traffic controls to support pedestrian crossings shall be located at the central intersection to create a pedestrian orientation and facilitate pedestrian movements across the South Loop Road. The area south of the South Loop Road shall contain a central lifestyle component perpendicular to Barranca Parkway, inline retail tenant spaces, a minimum 14 -screen megaplex motion picture theater complex and freestanding retail and restaurant pads with supporting parking facilities and landscaping as required by the Specific Plan. A specially designed project identifies focus treatment at the corner of Jamboree Road and Barranca Parkway with a major water element shall be provided. An adequate number of parking spaces for all recommended uses, as required Vestar DDA Attachment No. 8 — Page 2 Scope of Development 07/12/04 1840.5:6391127.7 by the Specific Plan and as supported by a Traffic Study and Shared Parking Analysis Report subject to review and approval of the City shall be required. The Project shall also include a complete set of accompanying high quality amenities, to function as the centerpiece and leading retail/entertainment element within- Tustin Legacy. Vertical Improvements shall include buildings, architectural amenities, parking, security lighting, pedestrian amenities, and trash enclosures. Design of all Vertical Improvements shall be consistent with requirements of the Specific Plan, development standards contained in Section 3 of this Attachment, and additional requirements contained in any conditions of approval of the entitlements for the Project. 2.1.2 Theater Complex. The megaplex theater complex shall contain a minimum of 14 screens and a minimum of 3,000 seats. The seating shall be stadium -style. The cinema lobby shall be attractive and inviting with a snack bar offering standard cinema food products. 2.1.3 Description of Tenant Mix. Developer shall use commercially reasonable efforts to obtain AMC or other alternative theatre End User approved by the City as the End User with respect to the cinema project and Costco as the End User with respect to Developer Fee Parcel D, Developer Sublease Parcel D and Developer Sublease Parcel E. In addition, Developer shall develop and implement a development and outreach program in order to seek to bring to the center new unique tenants which may not have achieved regional or national prominence, in order to create variety in the Project and to provide an attraction to the Project that is not achieved by other regional malls in Orange County. In addition, the Developer shall use commercially reasonable efforts to obtain three higher -end dining facility End Users for the Project. 2.1.4 Horizontal Improvements. Developer shall be responsible for all Horizontal Improvements which include any necessary private and public infrastructure and utilities including: a) all grading, on-site private streets, roadways drives, alleyways, sidewalks; b) all utilities including connection of all utilities, including but not limited to sewer, domestic and reclaimed water, electrical, gas, telephone, cable and telecommunication service connections from their origin or Tustin Legacy Backbone Infrastructure Program locations as shown in the MCAS Tustin Specific Plan or as modified by private utility purveyors and as approved by the Director of Public Works to the property line and from the property line to the buildings and uses on the Developer Parcel; c) any drainage improvements needed to convey site drainage including Developer's retention of on-site water from the Project in below -grade structures constructed on the Project Site unless other interim storm drain water detention facilities attributable to the Project are approved by the Tustin Director of Public Works ; d) any common area landscape or hardscape improvements including the landscape of lots and common areas on the Developer Parcel and other improvements within the existing and proposed public right-of-way as may be required and approved by the Planning Commission and City Council, as applicable, with approval of Vesting Tentative and Vestar DDA Attachment No. 8 — Page 3 Scope of Development 07/12/04 18405:6391127.7 Final Tract Maps, Concept Plan approval, Design Review, any Conditional Use Permits, or other required entitlements. 2.1.5 Tustin Legacy Backbone Infrastructure Work Program Improvements. Developer shall be responsible for design and construction of certain Tustin Legacy Backbone Program Improvements, to include the following: (a) the full north side widening and improvement to Barranca Parkway between Jamboree Road and the future Tustin Ranch Road, including any necessary improvements to the Barranca Channel and its undercrossing of Barranca Parkway in accordance with the City's Run-off Management Plan for Tustin Legacy (ROMP) and all necessary right-of- way improvements adjacent to Reuse Plan Disposal Parcel (the Army Reserve Property) (b) intersection enhancements to the intersection of Barranca Parkway and Jamboree Road required in the Final EIS/EIR; (c) intersection enhancements to the intersection of Barranca and Millikan to serve the Project to the extent supported by a Developer submitted traffic study which shall be subject to review and approval of the City and designed in a manner complying with all Specific Plan development standards; (d) the full width improvement of Tustin Ranch Road from Barranca Parkway to Warner Avenue including a median width generally on Tustin Ranch Road of 34 feet (the additional right-of-way areas for this expanded median from what is proposed at 24 feet in the Specific Plan will be provided from land area to the west of Reuse Plan Disposal Parcels 10 and 11 and 12), modification to the Barranca Parkway median and landscaping, modification to the south leg of Von Karman and any necessary right-of- way acquisitions and improvements in the City of Irvine to accommodate the above noted improvements, and any necessary improvements to the Barranca Channel necessary for the Tustin Ranch Road crossing and for wetlands mitigation required in the Final EIS/EIR, provided that in the event that the City of Irvine approvals or property owner acquisition approvals within the City of Irvine cannot be obtained after a good faith effort by Developer as determined by the City, an alternative design shall be required subject to approval of the Tustin Director of Public Works; (e) the full width improvement of the South Loop Road from Tustin Ranch Road northeasterly to a new extension of Warner Avenue including intersection improvements to the intersection of the South Loop Road and Tustin Ranch Road and the intersection of the South Loop Road and Warner Avenue, and the extension of the South Loop Road north of Warner Avenue to create a new intersection at the on and off -ramps from the southbound Jamboree Road to Warner including any necessary right-of-way, and design and construction of a new driveway on the east side of South Loop Road to serve the SRO Development in the City of Irvine. In the event that City of Irvine approvals or property owner acquisition approvals within the City of Irvine cannot be obtained after a good faith effort by Developer, as determined by the City, an alternative design shall be required. Such alternative design shall be subject to review and approval by the Tustin Vestar DDA Attachment No. 8 — Page 4 Scope of Development 07/12/04 18405:6391127.7 Director of Public Works and shall be designed and completed by Developer within the timeframes for construction required by the Tustin Director of Public Works and the Final EIS/EIR, provide that so long as Developer has received and complied with all City entitlement approvals, the failure of the Developer to secure City of Irvine approvals or approvals of affected property owners in the City of Irvine to the street widening design shall not affect Developer's ability to secure from the City required permit approvals for the Project, including site and building permits, inspections, and certificates of occupancy for the Project; and (f) the full width improvement of Warner Avenue from its current terminus west of Jamboree Road to the future South Loop Road including all necessary right-of-way acquisitions and improvements in the City of Irvine to accommodate the realignment and widening of existing Warner Avenue and Jamboree Road ramps, provided that in the event that City of Irvine approvals or property owner acquisition approvals within the City of Irvine cannot be obtained after a good faith effort by Developer, as determined by the City, an alternative design shall be required, and such alternative design shall be subject to review and approval of the Tustin Director of Public Works and shall be designed and completed by Developer within the time frames of construction required by the Tustin Director of Public Works and the Final EIS/EIR; the Parties acknowledge that any such realignment of Warner Avenue could impact the lot configuration of Developer Fee Parcel D, and provided that Developer has received and complied with all City Entitlement approvals, the failure of the Developer to secure City of Irvine approvals or approvals of affected property owners in the City of Irvine to the street widening design shall not affect Developer's ability to secure from the City of Tustin required permit approvals for the Project, including site and building permits and inspections and certificates of occupancy for the Project. Full width improvements include all master planned systems including streets, bikeways (Class II), street lighting, traffic lights, bus turn -outs, domestic water lines, gas, storm drainage, telephone, electricity, cable TV, sewage and reclaimed water, telemetry and any necessary telecommunication systems and as shown in the Specific Plan and/or Irvine Ranch Water District Sub Area Master Plan for Tustin Legacy, and/or as approved by the City and responsible private utility purveyors. Intersection enhancements shall include the creation of extension or left -turn lanes, additions or modifications of signal apparatus including loops and interconnects, striping modifications as necessary and restoration of landscaping medians, any necessary relocation of Southern California Edison transmission lines within Barranca Parkway medians impacted by left turn enhancements or median modifications. All scope of work for design and construction includes right-of-way acquisition, surveying, rough and precise grading for the Backbone Infrastructure work, export of dirt as required, soil and materials testing, asphalt paving, including any necessary overlays, driveways, sidewalks, concrete, curb and gutter, landscaping and raised landscaping medians, street lighting, all traffic control, striping and signage and other work to construct improvements in accordance with Tustin City standards. Bus stop locations shall be approved by the Director of Public Works and the OCTA and shall be designed northbound on Tustin Ranch Road south of the South Loop Road, southbound on Tustin Ranch Road south of the South Loop Road, eastbound on the South Loop Road east of Tustin Ranch Road and at the intersection Vestar DDA Attachment No. 8 — Page 5 Scope of Development 07/12/04 18405:6391127.7 of Barranca Parkway and Tustin Ranch Road and at the intersection of Warner Avenue and South Loop Road. Traffic signals shall be designed and constructed at the intersection of Barranca Parkway and Tustin Ranch Road, at the intersection of Tustin Ranch Road and the South Loop Road, and the intersection of Tustin Ranch Road and Warner Avenue, and at the intersection of the South Loop Road and Warner Avenue. Additional traffic signals and measures shall be identified in the Project entitlement process as determined necessary by the Director of Public Works, which will be Developer requirements, but will not be included in the Tustin Legacy Backbone Infrastructure Program Improvements. Storm drain improvements will also include construction of the San Joaquin storm drain at a capacity and in a location approved by the Director of Public Works and necessary wetlands and Southwest Pond Turtle mitigation required by the Final EIS/EIR and the Department of Fish and Game (all of which will not be considered part of the Tustin Legacy Backbone Infrastructure Program Improvements but required Developer Horizontal Improvements). It is expected that San Joaquin storm drain improvements would be dedicated to the City as an easement, with landscaping, surface parking and loading areas permitted within the easement. Storm drain improvements will also include removal and replacement of the existing 72 -inch RCP with a minimum 84 -inch RCP in Barranca Parkway from the San Joaquin Channel to the vicinity of Construction Circle in the City of Irvine. All storm drain improvements shall comply with the City's ROMP. The Developer shall also be responsible for retaining on-site water from the Project in below -grade structures constructed on the Project Site unless other interim storm drain water detention facilities attributable to the Project are approved by the Director of Public Works (this will not be a reimbursable part of the Developer's Backbone Infrastructure Work, but will be Developer's sole responsibility and will be a required Developer Horizontal Improvement). Developer shall also be required to accept upstream storm that might cross the Property and detain/retain on the Property such upstream water so that the release of said water into downstream regional flood control systems does not exceed historical flow rates or the downstream capacity of such systems. With the exception of the design and construction of the San Joaquin storm drain, other off- site storm drain improvements or additional sizing or modifications required by any and all upstream conditions, including retention/detention on the Property of upstream waters shall be considered Tustin Legacy Backbone Infrastructure Program Improvements. Developer's obligation shall include design and construction of all transitional components of the Tustin Legacy Backbone Infrastructure Program that are determined by the City, in its sole discretion, to be necessary to construct and operate the Project, protect the public health and safety and/or create an opportunity for a logical and orderly future phasing of Tustin Legacy Backbone Infrastructure Work which are to be connected to Developer's Backbone Infrastructure Work. Developer acknowledges that the new backbone systems shall be replacing existing systems owned by the City or utility purveyors located on the Developer Parcels, in or adjacent to the future rights-of-way areas and that Developer may utilize such existing systems on a temporary basis; and that although Developer may utilize such existing systems on a temporary basis, Developer shall show all existing systems (even if subject to temporary reuse) for demolition or abandonment on the plans if they are determined by the City or any private utility purveyor owning such system to be unnecessary and Developer Vestar DDA Attachment No. 8 — Page 6 Scope of Development 07/12/04 18405:6391127.7 shall, at its sole cost and expense, demolish and abandon such existing systems upon cessation of use thereof by Developer; (g) The Developer shall be responsible for funding and construction of the improvements identified below adjacent to the existing Army Reserve property (Reuse Plan Disposal Parcel 9). The actual scope of work and costs to be incurred for these improvements shall be subject to written concurrence by the City and the Army Reserve: i) within the required right-of-way area of Barranca Parkway adjacent to Reuse Plan Disposal Parcel 9, the relocation of Army Reserve signage currently located in the right-of-way area, its flagpole, associated electrical service, and curbs and gutters, including replacement of existing curb cuts from the existing Army Reserve facility to the Barranca Parkway right-of-way and landscape improvements in accordance with City of Tustin standards along the Barranca Parkway frontage of Reuse Plan Disposal Parcel 9; ii) provision of ingress and egress to Reuse Plan Disposal Parcel 9 from the future Tustin Ranch Road between Barranca Parkway and the northerly boundary of Reuse Plan Disposal Parcel 9; and iii) landscaping improvement of any additional setback area from the right-of- way of Tustin Ranch Road to the westerly boundary of Reuse Plan Disposal Parcel 9. 2.1.6 Compliance with Codes and Conditions. The construction of Improvements must be in compliance with the Specific Plan and all City planning, building, electrical, plumbing, mechanical, fire codes, public and private street standards as well as compliance with all "Conditions of Approval" stipulated by the City and any applicable governmental agency having jurisdiction including the Planning Commission and City Council approvals. All Tustin Legacy Backbone Infrastructure Work shall be, publicly bid and awarded to the lowest responsible bidder; the contract shall require payment of prevailing wages based on California law. As more particularly described and provided in Sections 8.3 and 8.6 of the Agreement, all final working drawings, specifications, grading plans, soil reports, landscaping plans, color and finish schedules shall be approved prior to start of the construction. 2.1.7 Compliance with DDA. The Developer shall comply with all provisions of the Agreement related to the planning, design, construction, and operation of the Improvements. 2.2 Schedule of Performance The Developer shall commence and complete the Improvements by the respective times established in the Schedule of Performance (Attachment No. 7). Vestar DDA Attachment No. 8 — Page 7 Scope of Development 07/12/04 18405:6391127.7 3.0 Development Standards The Improvements shall be designed and developed as a planned development in which all construction will have high architectural quality and character, both individually and in the context of the surrounding area. All public spaces, open space, and individual yard areas shall be designed, landscaped and developed with the same quality. Particular attention shall be paid to enhancing pedestrian activities, minimizing mass, scale, and bulk and to the selection of color and materials. The City and Developer will cooperate and direct their consultants, architects and/or engineers to cooperate so as to ensure the continuity and coordination necessary for the proper and timely completion of development of Improvements. All of the Improvements shall conform to all applicable federal, state, county and City regulations, the regulations of the Specific Plan and the City Code and the conditions of City resolutions. However, it is acknowledged that Developer is processing a request for a 15 foot setback along Barranca Parkway for the megaplex theater complex instead of the 30 foot setback required by the Specific Plan which City has agreed to consider in public hearings on Entitlements for the Project. Developer agrees to comply with all other building and landscape setbacks required by the Specific Plan. The Developer acknowledges the responsibility to obtain any approvals required by any governmental agency, utility or other agency, including the City, which has jurisdiction over all of any portion of the Improvements. All "Conditions of Approval" stipulated by an applicable jurisdiction shall be incorporated into the final design and noted in the construction documents by the architects, engineers and other consultants. The Developer shall make all necessary applications by such time(s) as will be consistent with the timely commencement and completion of various portions of the Improvements as identified in the Schedule for Performance. In addition, the following development standards shall apply to the Developer Improvements: 3.1 Architecture and Project Design The project design quality shall be excellent, exceeding the similarly sized commercial retail development at the "Market Place" within the City of Tustin as of the date of this Agreement, as determined by the City in its reasonable discretion. The standards of quality of materials, construction and amenities of the Project shall be equivalent or compare favorably with the quality of materials, construction and amenities at the "Desert Ridge Marketplace" in Phoenix, Arizona that was previously constructed by Developer. The proposed Project should be built around a framework of design elements, including a strong circulation system emphasizing pedestrian friendly lay -out of buildings, parking and access driveways, an open space network that provides focal points, creation of an architectural design framework and creation of a landscape framework that establishes an element of continuity but separate identity for the Project. Visual continuity should be achieved through streetscape design, entry features, and Project landscaping. Quality standards will include landscaping in accordance with a landscaping palette reasonably approved by the City, appropriate front, rear and side architectural building features and roof top screening of equipment, including upgraded exterior building materials on buildings visible to Vestar DDA Attachment No. 8 — Page 8 Scope of Development 07/12/04 18405:6391127.7 the public from the Developer Parcel, Tustin Ranch Road, the South Loop Road, Barranca Parkway and Jamboree Road and inclusion of a water feature on the Property adjacent to the Barranca Parkway/Jamboree Road intersection similar to that depicted in the Developer's Proposal or otherwise acceptable to the City in its reasonable discretion. Consistent architecture style shall be evident in all elements of design, from all elevations of the structures and treatment of roofs and parapets, down to smaller elements such as street furniture and trash enclosures. Particular attention shall also be paid to massing, scale, color, and expression of such quality for the Project shall be true to the distinctive and unique elements of Tustin and Tustin Legacy as described in the Developer's Preliminary Plan submitted to City on June 21, 2004 as may be further developed by the Parties and as approved as part of any required entitlements by the City. In connection with the foregoing, City acknowledges that the Project shall be different in architectural theme from the "Desert Ridge Marketplace" property described above and therefore may utilize different materials and amenities than those at "Desert Ridge Marketplace". In general, the design of the Project shall encourage active participation by pedestrians by providing suitable and attractive amenities in the Project and by reinforcing internal relationships between the uses through streetscape design, pedestrian and bikeway linkages, and site planning techniques. A strong visual identity for the Project shall be created through creative design of community entries, landscape design along roadways, signage and placement of views. The ground level of buildings shall emphasize commercial uses that invite pedestrian activity. Large planes of solid walls shall be avoided and storefront windows and storefront design elements are encouraged at the pedestrian level. Views should be framed by vertical elements in the Project such as trees and buildings. The placement and design of plazas or other gathering areas on the site that provide view opportunities into the site are encouraged. Architectural features such as arcades or recessed storefronts shall be used to encourage interaction between the activities of the building and adjacent outdoor pedestrian activity. Colorful awnings, creative signage, storefront encroachments and other design features which add human scale and interest to the streetscape are encouraged where they are consistent with the large design theme of the Project. The Project shall also be designed in compliance with the Urban Design Plan guidelines, land use and development standards, signage and off-street parking standards and all applicable provisions of the Specific Plan as well as all site plan design objectives and provisions contained in Developer's Preliminary Plan submittal dated June 21, 2004 as may subsequently modified by any City entitlement approvals. 3.2 Vehicular Access. The placement of vehicular driveways shall be coordinated with the needs of proper street traffic flow. In the interest of minimizing traffic congestion, the City will control the number and location of curb breaks for access to the site for off-street parking and truck loading. Any full unrestricted access to the site from Barranca Parkway will need to be opposite Millikan Avenue and also coordinated with the City of Irvine. No access driveway east of the Millikan location as shown on Preliminary Plan submitted June 21, 2004 shall be authorized. All access driveways shall require written approval of the City of Tustin and with respect to access driveways on Barranca Parkway will need to be coordinated with the City of Irvine, subject to Developer's reasonable efforts and subject to provisions of Section 8.13.3 of the DDA and Section 2.1.5 of this Attachment No. 8. Vestar DDA Attachment No. 8 — Page 9 Scope of Development 07/12/04 18405:6391127.7 3.3 Loading. Adequate loading and unloading space shall be provided as approved by the City. Loading spaces visible from any abutting street to the Project shall be landscaped to screen an unsightly or barren appearance consistent with requirements of the Specific Plan and/or City Code, as applicable. 3.4 Signs. Signs shall be designed to contribute positively to the environment. Signs identifying the Project and individual building use will be permitted, but their height, size, location, color, lighting and design shall be subject to City entitlement approvals and must conform to provisions of the Specific Plan and/or City Code, as applicable and shall be at a scale appropriate to the overall design of the Project. 3.5 Screening. All outdoor storage of materials or equipment shall be screened to the extent and manner required by the City. Screening of air conditioning and other equipment on the buildings shall be incorporated into the architectural design of the buildings. Tops of equipment shall be compatibly screened from view from the Jamboree Road alignment and from future mid - rise buildings which may be located or constructed in the immediate area to the north or west of the Project and from adjacent roadways. 3.6 Landscaping. The Developer shall provide and maintain landscaping within the public right-of-way and within all setback areas along all street frontages and on the Developer Parcels as required by the MCAS Tustin Specific Plan, City Landscape Guidelines and plans and drawings approved by the City. 3.7 Utilities. All utilities on the Project Site, including on the Developer Parcels, shall be undergrounded. 3.8 Maximum Development Thresholds/ Non -Residential Land Use/Trip Budget. Development on the Developer Parcels shall not exceed the Non-residential Land Use/Trip Budget for Planning Area 17 and 19 (Reuse Plan Disposal Parcels 10 and 11) as shown in Table 3-3 of the MCAS Tustin Specific Plan and in the Final EIS/EIR for the Disposal and Reuse of MCAS Tustin. This maximum Trip Budget identified in Table 3-3 is 35,650 Average Daily Trips ("ADTs") for the Developer Parcels collectively. 4.0 Site Preparation and Demolition. The Developer shall effect any site preparation (including demolition and relocation of utilities) necessary for the provision of the Horizontal Improvements and Vertical Improvements. All such work shall be a the sole cost and expense of Developer except to the extent such work is pre -approved to be included in the Tustin Legacy Backbone Infrastructure Program and funded through provisions of the Agreement related to such. Site preparation may consist of the following: A. Demolition. Demolition activities shall include: 1. Insofar as necessary to provide the Improvements, the reduction and removal of any structures and improvements from the Project Site, including subsurface structures, and Vestar DDA Attachment No. 8 - Page 10 Scope of Development 07/12/04 18405:6391127.7 the removal of all bricks, lumber, pipes, equipment and other materials and all debris and rubbish resulting from such demolition. Insofar as necessary to provide the Improvements, the removal of all paving (including catch basins, curbs, gutters, drives and sidewalks) within or on the Site. 3. Removal and abandonment by public utility companies of such utility lines, installation, facilities and related equipment within the Site required to effectuate the purposes of the Project and this Agreement. The Developer will also be responsible for accepting a Bill of Sale of all City -owned Utility Systems previously owned by the military on the site and for removal and abandonment of those systems for construction of Improvements. The City is not responsible in any way for the filling of any excavation, nor for grading or compaction. Soil conditions shall be solely the responsibility of the Developer. B. Soil Conditions. The Developer assumes responsibility to deal with all portions of the Site in an "as is", "where is" condition, as more fully set forth in Article 4 of the Agreement. It shall be solely the responsibility of Developer, at Developer's expense, to investigate and determine the soil and subsurface conditions of the Project Site. In the event such investigation indicates the conditions are not in all respects entirely suitable for the use or uses to be included in the Project, then the City shall have no responsibility or obligation to take such action as may be necessary to place the Developer Parcels and the soil conditions of the Developer Parcels in all respects in a condition entirely suitable for the development of the Project Site. C. Subdivision Compliance. The Developer shall be responsible for the preparation and processing of maps as may be required pursuant to the Subdivision Map Act and City Code enacted pursuant thereto, and with complying with conditions imposed as a condition of map approval. 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Those documents referenced in the FOST, FOSL and/or LIFOC and the Environmental Baseline Study as applicable to the Developer Parcels, if any. 2. Those documents referenced in the Administrative Record File Index for MCAS Tustin and applicable to the Developer Parcels, if any. The Administrative Record File Index for MCAS Tustin is available for public review at the University of California, Irvine, Government Information Department, Main Library, contact Yvonne Wilson (949) 824- 7362 Vestar DDA Attachment No. 10 —Page 1 Index of Hazardous Materials Reports 07/12/04 18405:6391127.7 ATTACHMENT NO. 11 MEMORANDUM OF DDA Vestar DDA Attachment No. 11 Memorandum of DDA 07/12/04 18405:6391127.7 ATTACHMENT NO. 11 MEMORANDUM OF DDA 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: Assistant City Manager The City of Tustin 300 Centennial Way Tustin, CA 92780 MEMORANDUM OF TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (RETAIL DEVELOPMENT) This MEMORANDUM OF TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT (RETAIL DEVELOPMENT) ("Memorandum of DDA") is made as of July _, 2004 ("DDA Effective Date") by and between the CITY OF TUSTIN, a municipal corporation of the State of California (the "City"), and VESTAR/KIMCO TUSTIN, L.P., a California limited partnership (the "Developer") to confirm that the City and the Developer have entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of the DDA Effective Date (the "DDA") affecting the real property described below. The City and the Developer are sometimes referred to herein individually as a "Party" and collectively as the "Parties." Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the DDA. Property Affected by the DDA. 1.1 The "Property" affected by the DDA consists of (a) the "Developer Parcels," defined as that certain 87.4 acre property, more or less, located in the City of Tustin, County of Orange, California which land is legally described on Attachment No. IA and Attachment No. 2A and depicted on Attachment No. 1 B and Attachment No. 2B attached hereto and incorporated herein by this reference together with (b) all existing improvements, if any, presently located on the Developer Parcels, and (c) all Personal Property associated with the foregoing, but provided that the term "Property" shall exclude the following rights and interests which shall be explicitly reserved to the City: (a) Any and all oil, oil rights, minerals, mineral rights, natural gas, natural gas rights and other hydrocarbon by whatsoever name known, geothermal steam and rights thereto 7/12/2004 Attachment No. 11 — Page 1 Memorandum of DDA 18405:6391301.4 and all products derived from any of the foregoing, that may be within or under the Developer Parcels together with the perpetual right of drilling, mining, exploring for and storing in and removing the same from the Developer Parcels or any other land, including the right to whipstock or directionally drill and mine from lands other than the Developer Parcels, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Developer Parcels and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to re -drill, re -tunnel, equip, maintain, repair, deepen and operate any such well or mines; but without, however, the right to drill, mine, store, explore or operate through the surface of the Developer Parcels or otherwise to materially affect the use or operation of the Developer Parcels as anticipated in the DDA; (b) Any and all water, water rights or interests therein appurtenant or relating to the Developer Parcels or owned or used by the City in connection with or with respect to the Developer Parcels no matter how acquired by the City, whether such water rights shall be riparian, overlying, appropriative, littoral, percolating, prescriptive, adjudicated, statutory or contractual, together with the perpetual right and power to explore, drill, re -drill and remove the same from or in the Developer Parcels, to store the same beneath the surface of the Developer Parcels and to divert or otherwise utilize such water, rights or interests on any other property owned or leased by the City; but without, however, any right to enter upon or use the surface of the Developer Parcels in the exercise of such rights or otherwise to materially affect the use or operation of the Developer Parcels as anticipated in the DDA; and (c) Upon the dedication to and acceptance by the City of certain City Dedication Parcels pursuant to the approved Final Tract Map for the Developer Parcel, the term "Developer Parcels" shall exclude the City Dedication Parcels. 1.2 Immediately prior to the recordation of this Memorandum of DDA: (a) certain of the Developer Parcels and the existing improvements have been conveyed by the City to the Developer pursuant to that certain "City Quitclaim Deed for Parcels [INSERT QUITCLAIMED PARCELS] and Restrictions, Including Environmental Restriction Pursuant to Civil Code Section 1471" ("Quitclaim Deed"), (b) certain of the Developer Parcels have been leased by the City to Developer and the remainder of the Developer Parcels have been subleased by the City to the Developer pursuant to that certain "Ground Lease and Sublease" between the City and Developer (the "Ground Lease"), and (c) the Personal Property has been conveyed in part by the City to the Developer in fee pursuant to a Bill of Sale (the "Bill of Sale") and in part by lease pursuant to the Ground Lease. 1.3 This Memorandum of DDA has been executed as of the DDA Effective Date and shall be recorded immediately prior to the execution by the City and the Developer and recordation against the Developer Parcels of that certain Declaration of Special Use Restrictions executed by Developer and the City (the "Special Restrictions"), the Quitclaim Deed, the Ground Lease and the Bill of Sale. The DDA, this Memorandum of DDA and the Special Restrictions, and all covenants, conditions, restrictions and obligations set forth therein, in the Quitclaim Deed and/or the Ground Lease (as applicable), and in the Bill of Sale shall be binding upon the Property and shall govern the use and development of the Property by the Developer and its successors and assigns owning all or any portion thereof for the benefit of the City and the City Benefited Property described on Attachment No. 3 attached hereto and incorporated 7/12/2004 Attachment No. 11 — Page 2 Memorandum of DDA 18405:6391301.4 herein by this reference and the successors and assigns of the City owning all or any portion thereof 2. Effect of DDA. The DDA and the Special Restrictions each impose certain obligations, agreements, covenants, conditions and restrictions with respect to the Property and Developer's acquisition, development, use, operation and ultimate disposition thereof, that run with the Developer Parcels as further set forth below. Among these obligations are the following: (a) Certain restrictions on transfer, conveyance and/or assignment of the DDA and/or all or any portion of the Property, whether voluntary or involuntary, and certain restrictions on the Transfer of Control of Developer contained in Section 2.2 of the DDA, that terminate upon execution and recordation by the City of the Final Certificate of Compliance or at such earlier time as is specified in the DDA; (b) Certain restrictions on Mortgages contained in Article 2 and Article 15 of the DDA, that terminate upon execution and recordation by the City of the Final Certificate of Compliance or at such earlier time as is specified in the DDA; (c) The Releases contained in Section 4.4.3 of the DDA (copied verbatim in the Special Restrictions and in the Quitclaim Deed and to be included in each subsequent deed with respect to the Property) that remain in effect in perpetuity; (d) The environmental indemnity and environmental provisions contained in Sections 10.2 and 10.3 of the DDA (copied verbatim in the Special Restrictions and the Quitclaim Deed and to be included in each subsequent deed with respect to the Property) that remain in effect in perpetuity; (e) The use covenants and restrictions contained in Section 12.1 and 12.2 of the DDA that terminate upon the earlier of the date that is (i) the thirtieth (30th) anniversary of the date of the Final Certificate of Compliance or (ii) the fiftieth (50th) anniversary of the DDA Effective Date; (f) The maintenance covenants contained in Section 12.3 of the DDA (each copied verbatim in the Special Restrictions) that terminate upon the fiftieth (50th) anniversary of the DDA Effective Date; (g) Certain obligations of Developer to the City to pay Subsequent Participation contained in Section 12.4 of the DDA (copied verbatim in the Special Restrictions); (h) The non-discrimination covenants contained in Sections 12.5 and 12.6 of the DDA (copied verbatim in the Special Restrictions and the Quitclaim Deed and to be included in each subsequent deed with respect to the Property) that remain in effect in perpetuity; (i) The Right of Purchase in favor of the City, contained in Section 13.4 of the DDA (copied verbatim below), that terminates upon execution and recordation by the City of the Final Certificate of Compliance or at such earlier time as is specified in the DDA; and 7/12/2004 Attachment No. 11 — Page 3 Memorandum of DDA 18405:6391301.4 0) The Right of Reversion in favor of the City contained in Section 13.5 of the DDA (copied verbatim below), that terminates upon execution and recordation by the City of the Final Certificate of Compliance or at such earlier time as is specified in the DDA. 3. Right of Purchase and Right of Reversion. For ease of reference only, the following italicized Sections are copied verbatim from the DDA: [insert DDA Sections 13.4 and 13.5 verbatiml. 4. Effect on Mortgages, Right To Encumber. Notwithstanding any other provision of the DDA, the Developer shall have the right to encumber the fee title to portions of the Developer Parcels owned by it with a Permitted Mortgage made by a Permitted Mortgagee subject to compliance with the terms, conditions and limitations set forth in Section 2.2 and Article 15 of the DDA. Mortgages complying with the terms of said section and entered into by Developer with Permitted Mortgagees shall be deemed to be "Permitted Mortgages"; provided, however, that all Mortgages shall be subject and subordinate to the DDA, including, without limitation, the City's Right of Reversion and Right of Purchase contained therein. 5. Certificate of Compliance. Upon the Developer's satisfaction of the Conditions Precedent set forth in Section 9.5 of the DDA with respect to either a Partial or Final Certificate of Compliance, the City shall furnish the Developer with the appropriate Certificate of Compliance in recordable form upon written request therefor by the Developer. Such Certificate of Compliance shall be binding upon the Parties to this Memorandum of DDA, their successors and assigns, and shall be deemed the City's conclusive determination of satisfactory Completion of the Improvements covered by such Certificate of Compliance and compliance with all other conditions required by the DDA, subject only to such continuing terms of the DDA and/or obligations of the Developer as are set forth therein, in the Special Restrictions and in the CC&Rs. 6. DDA, Memorandum of DDA and Special Restrictions Run With the Land. The DDA, this Memorandum of DDA and the Special Restrictions, including, without limitation, the provisions recited and set forth above, and all other obligations, agreements, covenants, conditions and restrictions set forth in the DDA, this Memorandum of DDA and the Special Restrictions are hereby agreed by the Developer and the City to be covenants running with the land and enforceable as equitable servitudes against the Developer Parcels, and are hereby declared to be and shall be binding upon the Developer Parcels and the Developer and the successors and assigns of the Developer owning all or any portion of the Developer Parcels for the benefit of the City Benefited Property and the City and the successors and assigns of the City owning all or any portion of the City Benefited Property. 7. Acknowledgment and Assumption by Developer. By acceptance of the Quitclaim Deed and the Ground Lease, the Developer hereby acknowledges and assumes all responsibilities placed upon the Developer under the terms of the Quitclaim Deed, the Ground Lease, the DDA and the Special Restrictions. 8. Public Documents. The documents constituting the DDA are public documents and may be reviewed at the official offices of the City. 7/12/2004 Attachment No. I 1 — Page 4 Memorandum of DDA 18405:6391301.4 9. Interpretation; Notice. This Memorandum of DDA is prepared for recordation and notice purposes only and in no way modifies the terms, conditions, provisions and covenants of the DDA, the Quitclaim Deed, the Ground Lease or the Special Restrictions. In the event of any inconsistency between terms, conditions, provisions and covenants of this Memorandum of DDA and the DDA, the terms, conditions, provisions and covenants of the DDA shall prevail. 10. Attachments. The Attachments attached to this Memorandum of DDA are hereby incorporated by this reference into this Memorandum of DDA as though fully set forth in this Section. [signature page follows] 7/12/2004 Attachment No. 11 — Page 5 Memorandum of DDA 18405:6391301.4 IN WITNESS WHEREOF, the City and the Developer have signed this Memorandum of DDA as of the DDA Effective Date. ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation LIN City of Tustin, California Dated: William A. Huston City Manager Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: _ Name: Title: 7/12/2004 Attachment No. 11 - Page 6 Memorandum of DDA 18405:6391301.4 STATE OF CALIFORNIA ss. COUNTY OF ORANGE On , before me, in and for said state, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. a Notary Public WITNESS my hand and official seal. Notary Public in and for said State (SEAL) 7/12/2004 Attachment No. 11 — Page 7 Memorandum of DDA 18405:6391301.4 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) 7/12/2004 Attachment No. 11 — Page 8 Memorandum of DDA 18405:6391301.4 ATTACHMENTS Attachment No. I Legal Description of Developer Fee Parcel A, Developer Fee Parcel B, Developer Fee Parcel C and Developer Fee Parcel D Attachment No. 1B Depiction of Developer Fee Parcel A, Developer Fee Parcel B, Developer Fee Parcel C and Developer Fee Parcel D Attachment No. 2A Legal Description of Developer Sublease Parcel A, Developer Sublease Parcel B, Developer Sublease Parcel C, Developer Sublease Parcel D and Developer Sublease Parcel E Attachment No. 2B Depiction of Developer Sublease Parcel A, Developer Sublease Parcel B, Developer Sublease Parcel C, Developer Sublease Parcel D and Developer Sublease Parcel E Attachment No. 3 City Benefited Property 7/12/2004 Attachment No. 11 — Page 9 Memorandum of DDA 18405:6391301.4 ATTACHMENT NO. 1A LEGAL DESCRIPTION OF DEVELOPER FEE PARCEL A, DEVELOPER FEE PARCEL B, DEVELOPER FEE PARCEL C AND DEVELOPER FEE PARCEL D Developer Fee Parcel A Lots 1-12 and Lot 15, as shown on Tentative Tract Map 16695 Developer Fee Parcel B Lot 16, Lot 17, Lot 18 and Lot 19, as shown on Tentative Tract Map 16695 Developer Fee Parcel C Lot 20, as shown on Tentative Tract Map 16695 Developer Fee Parcel D Lot 27, as shown on Tentative Tract Map 16695 Final Lot configurations for each of the foregoing Developer Fee Parcels to be as approved on the Final Tract Map by the City of Tustin. ATTACHMENT NO. 1B pq S, TY EE .... - ......... . —IeIYY OF IRVINE m m 0 m im M-1 0 m < 0 m -rI m V) m titT wo vrf r -j m U) 0 > PIE O's Q rri > > . 0 rn x > 2:: a)O -.1 IW m m 0 m im M-1 Zy 0 x z III UJ m ��|/ 7� moi| ZIn �2 ,u- 0 . v) j cL 0 _j W Lu o cc L w ATTACHMENT NO.2 A LEGAL DESCRIPTION OF DEVELOPER SUBLEASE PARCEL A, DEVELOPER SUBLEASE PARCEL B, DEVELOPER SUBLEASE PARCEL C, DEVELOPER SUBLEASE PARCEL D AND DEVELOPER SUBLEASE PARCEL E Developer Sublease Parcel A Lot 13, as shown on Tentative Tract Map 16695 Developer Sublease Parcel B Lot 14, as shown on Tentative Tract Map 16695 Developer Sublease Parcel C Lot 21, Lot 22 and Lot 23, as shown on Tentative Tract Map 16695 Developer Sublease Parcel D Lot 24, Lot 28 and Lot 29, as shown on Tentative Tract Map 16695 Developer Sublease Parcel E Lot 25 and Lot 26, as shown on Tentative Tract Map 16695 Final Lot configurations for each of the foregoing Developer Sublease Parcels to be as approved on the Final Tract Map by the City of Tustin. 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I ..j:in n Jr . ..._. __.... ... .. tuwiI ILIM T19 R - itutwn. u r ut tul I r y _ y I .rte _..... t I ' _V. - I ATTACHMENT NO.3 CITY BENEFITED PROPERTY (to be attached prior to execution) ATTACHMENT NO. 12 BILL OF SALE Vestar DDA Attachment No. 12 Bill of Sale 07/12/04 18405:6391127.7 ATTACHMENT NO. 12 BILL OF SALE FOR FORMER MILITARY PERSONAL PROPERTY LOCATED AT THE FORMER MARINE CORPS AIR STATION, TUSTIN This Bill of Sale ("Bill of Sale") dated as of 200_ is made by and between the CITY OF TUSTIN, a municipal corporation organized under the laws of the State of California ("City"), acting in its capacity as the Local Redevelopment Authority for the disposition and conveyance of portions of the former Marine Corps Air Station Tustin, and VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("Developer"). RECITALS A. Pursuant to the Agreement Between the United States of America and the City of Tustin, California For the Conveyance of a Portion of the Former Marine Corps Air Station Tustin, dated May 13, 2002 ("Conveyance Agreement") dated May 13, 2002, the Federal Government through the Secretary of the Navy ("Navy") conveyed or leased to the City portions of the former Marine Corps Air Station Tustin ("City Property"). B. The City and Developer entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of , 2004 (the "DDA") that provides, among other things, for the conveyance of the portion of the former MCAS Tustin referred to in the DDA as the "Developer Parcels" from the City to Developer by quitclaim deed and the lease and sublease of an additional portion of the former MCAS Tustin from the City to Developer by Ground Lease. Those Developer Parcels conveyed by the City to Developer in fee by Quitclaim Deed dated the date hereof are referred to herein as "Conveyed Parcels." Initially capitalized terms used and not otherwise defined in this Bill of Sale shall have the meanings set forth in the DDA. C. Pursuant to this Bill of Sale, the City intends to transfer to the Developer (1) all tangible personal property appurtenant to the Conveyed Parcels ("Miscellaneous Personal Property"), and (2) all utility distribution systems owned by the City and located on the Conveyed Parcels (as more fully described in Section 2.2 below the "Transferred Utility Systems" and, collectively with Miscellaneous Personal Property, "Personal Property"). AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and other consideration set forth herein, it is mutually agreed as follows: 1. Transfer. For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the City hereby quitclaims and transfers to Developer all of its right, title and interest in (a) the Miscellaneous Personal Property and (b) the Transferred Utility Systems (defined in Section 2 below). 771272004 Attachment No. 12 — Page 1 Bill of Sale 18405:6391882.4 2. Definition of Transferred Utility Systems. For purposes of this Bill of Sale the following terms shall have the meanings set forth below: 2.1 "Utility Systems" shall mean all utility distribution systems and shall include the following: (a) all current City -owned electrical, gas, telephone and cable television systems, including distribution lines, pad mounted and overhead distribution poles and/or transformers, (b) all conduits and duct banks from outlet or master meters or connection points outside the Developer Parcels to end usage points on the Developer Parcels; and (c) all water, sewer, and storm drain systems (does not include culvert ditches), including distribution lines and pipelines from outlet or master meters or connection points outside the Developer Parcels to end usage points on the Developer Parcels. 2.2 "Transferred Utility Systems" shall mean those Utility Systems in the Conveyed Parcels which were or will be transferred from the Navy to the City and which are not being used by or reserved for future use by the City or any third Person as a public service infrastructure. 3. Utility Systems Alteration. Developer agrees not to alter, modify, repair, replace, or relocate (each an "Alteration") any part of the Utility Systems without the prior written consent of the City, which the City shall not unreasonably withhold, provided that it shall be deemed reasonable for the City to withhold its consent to such Alteration if the City determines that such Alteration may interfere with the construction and operation of the Project, may negatively impact public health and safety, may negatively impact the logical and orderly future phasing of Tustin Legacy Backbone Infrastructure Work, may interfere with the Navy's operations, including without limitation, Remediation of Hazardous Materials, on the LIFOC Parcels or may interfere with the development or reuse of any portion of MCAS Tustin. 4. Reversion. In the event of a termination of the DDA by reason of default by Developer or Successor Owner or upon the exercise of the City's "Right of Purchase" or "Right of Reversion" with respect to all or any portion of the Conveyed Parcels, at the option of the City, all right, title and interest of Developer in and to the Transferred Utility Systems and/or the Miscellaneous Personal Property shall, upon written notice from the City to Developer, pass to and become the property of the City, which shall have an immediate right to the Transferred Utility Systems and/or the Miscellaneous Personal Property, as the case may be, and, in each case, Developer, its successors and assigns, shall forfeit all right, title, and interest in and to such Personal Property. The Developer hereby agrees for itself and its successors and assigns to execute any assignments, transfers of title, bills of sale or other documents to effectuate the foregoing. 5. Former Military Property; No Warranty. The Personal Property conveyed under this Bill of Sale was acquired by the City from the Navy by reason of the closure of the former Marine Corps Air Station Tustin. Buyer hereby understands and acknowledges that the City has no knowledge and makes no representations as to the accuracy of the description of the Transferred Utility Systems or the Personal Property's fitness, adequacy or safety for any particular purpose. The Personal Property is delivered to Buyer on an "AS -IS -WHERE -IS" basis and the City makes no warranty of any kind, and particularly no warranty as to its usability generally or as to its fitness or safety for any particular purpose. 7/12/2004 Attachment No. 12 — Page 2 Bill of Sale 18405:6391882.4 6. Indemnification. The City shall not be responsible for, and the Developer agrees that it shall be responsible for and at all times shall relieve, indemnify, protect, defend and hold harmless the City and its appointed and elected officials, agents, attorneys, affiliates, employees, contractors and representatives (collectively referred to as the "Indemnified Parties"), from any and all claims and demands, actions, proceedings, losses, liens, costs and judgments of any kind and nature whatsoever, including expenses incurred by the Indemnified Parties in defending against legal actions, for death or injury to persons or damage to property and for civil fines and penalties arising or growing out of, or in any manner connected with, any Alteration of the Transferred Utility Systems (whether or not consented to by the City) or Developer's failure to obtain consent prior to any such Alteration, or the ownership, use, operation, maintenance, storage, sale or lease of any Personal Property transferred under this Bill of Sale. 7. Miscellaneous. 7.1 Modification. No amendment, change, modification or supplement to this Bill of Sale shall be valid and binding on the Parties unless it is represented in writing and signed by each of the Parties. 7.2 Applicable Law. This Bill of Sale 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. 7.3 Bindin Effect. ffect. This Bill of Sale and the terms, provisions, promises, covenants and conditions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors and assigns. 7.4 Counterparts. This Bill of Sale 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 Bill of Sale shall not be effective until the execution and delivery by the Parties of at least one set of counterparts. The Parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Bill of Sale. [signature page follows] 7/12/2004 Attachment No. 12 — Page 3 Bill of Sale 18405:6391882.4 IN WITNESS WHEREOF, the parties hereto have, on the respective dates set forth below, duly executed this Bill of Sale. ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation LIN City of Tustin, California an Dated: William A. Huston City Manager Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: _ Name: Title: 7/12/2004 Attachment No. 12 — Page 4 Bill of Sale 18405:6391882.4 ATTACHMENT NO. 13 PREAPPROVED USERS The following is a list of Preapproved Users. This list is intended to be limited to the specific users or tenants identified hereon, as determined by a registered brand/trademark name. No Affiliate of any user or tenant listed below that is not itself listed below shall be considered a Preapproved User. Preapproved Users are not permitted uses or users as of right if their use requires special discretionary approvals as may be required by the City pursuant to the Specific Plan or the City Code (i.e. certain drive-through uses and users, certain entertainment uses, theatres, etc.) or if portions of their business operations are specifically prohibited or regulated by the City Code. Acquisition of required discretionary approvals under the City Code is required in all cases and is not waived for Preapproved Users. A Bear is Born Anthropologie A Pea in the Pod Apple Store, The Aaron Brothers April Cornell Abercrombie & Fitch Apropos Abuelo's Mexican Food Embassy Archiver's Acorn Arden B Ad Farrow Co. Harley-Davidson Armani Exchange (A/X) Adidas Adobe Gila's Adray's Adventure 16 Aerosoles After Thoughts AGAVE Al & Ed's Autosound Alcatraz Brewing Co. All American Sausage Co. Allen Allen, USA Alpen Rock House Amadeus Spa AMC Theatres American Brands American Eagle Outfitters American Nostalgia Ames at The Commons Anchor Blue Angles Colors, Cuts & Perms Ann Taylor Ann Taylor Factory Store Anna's Linens Aromatic Art & Frame Gallery Art Juxja Posed Art's Deli AT&T Wireless At -Ease Women's & Home Store Athlete's Foot, The Au Bon Pain August Maxx Auntie Anne's Pretzels Aveda AX Armani Exchange B. Dalton Books Baby Gap Babystyle Bag in Style Bahama Breeze Bakers Shoe's Balano Jewelry Balistone Bally's Bamboo Club Banana Joe's 7/12/2004 Attachment No. 13 — Page 1 Preapproved Users 18405:6395663.3 Banana Republic Bombay Bang & Olufsen Bonefish Grill Banister Shoe Studio Boot Barn Bank of America Borders Books, Music & Cafe Barbeques Galore Bose Bare Elegance Breuners Home Furnishings Bare Escentuals Brighton Collectibles Barnes & Noble Booksellers Brio Tuscan Grille Bristol Farms Barney's New York Brooks Brothers Bass Pro Shops Brookstone Bath & Body Works Bubba Gump Shrimp Co. Bayou Brewery Company Buca de Beppo BB King's Build -A -Bear Workshop BC Sports Collectibles Burger King BCBG Max Azria Burke Willams Day Spa Beach Access Busy Bee Beach Bums Board Shop Cache Bear Rock Cafe Cafe Odyssey Beauty Collection Cafe Tu Tu Tango BeBe California Cafe Bed Bath & Beyond California Candy Creations Bella Mari Restaurant California Pizza Kitchen Ben & Jerry's Ice Cream & Frozen Yogurt Calvin Klein Benchley Luggage & Gifts Canyon Cafe Benetton Capelli International Salon Berean Christian Stores Carl's Jr. Best Buy Cartoonsville Eatery & FunHouse Best Buy Digital Casa Bacardi Betsey Johnson Casmetic Company Store Between the Sheets Caswell -Massey Beverages & More Cathy Jean Shoes Big 5 Celebration of Golf Big Bowl Celebrity Eyeworks Big Dog Sportswear Celine Bikes Direct Cellular Style Kiosk Bikini's to Die For Cento & Fanti Billabong Century Theatres BJ's Pizza, Grill & Brewery Champps Americana BJ's Wholesale Charles David Blockbuster Entertainment Charley's Grilled Subs Bloomingdale's Home Store Charley's Steakery Bloomingdale's Charlie Kabob Blossom Charlotte Bodega Chocolates Chasen's Bodies in Motion Cheeseburger in Paradise Body Shop, The 7/12/2004 Attachment No. 13 — Page 2 Preapproved Users 18405:6395663.3 Cheesecake Factory Cowboy Palace Cheryl & Co. Cozumel Chevy's Fresh Mex Crate & Barrel Chicago Pizza & Brewery Crazy Horse Saloon Chick-fil-A Crazy Horse Steakhouse & Nightclub Chick's Sporting Goods Crazy Shirts Chico's Creperie de Paris Child's Play Toys Crescent Jewelers Chili's Crew China Grill/Red Square Cristophe Salon Chinese Taste Crystallure Chipotle Mexican Grill Cuban Cigar Factory Christopher & Banks Cup `O Joe / MoJoe Lounge Chuck E. Cheese D.O.C. Optique Cingular Wireless Daily Grill Cinnabon Dairy Queen Circuit City Dakota Watch Co. Claim Jumper Damon & Pythias Claire's Danny's Gourmet Market Claire's Boutiques Daphne's Greek Cafe Claire's Accessories Dapy Classic Tailoring Darva at The Commons Club Libby Lu Dave & Buster's Club Monoco Corp Dave's Surf Shop Coach David's Bridal Coco's David's Shoes Coffee Bean & Tea Leaf Co. Dearden's Cohiba Deb Stores Cold Stone Creamery Delia's Cold Water Creek Denim Place Cole Haan Design Within Reach Color Your World Dick Clark's American Bandstand Grill Comacho's Mexican Restaurant Dicks Sports Comic Town Diedrich Coffee Comp USA Diesel Computer City Dillards Concept 4 Discovery Channel Connelly Billiards Discovery Zone Container Store Disney Store Cookielious Dive (The) Cool Planet DKNY Copeland's Don Pablo's Mexican Kitchen Corner Bakery Dragon Bowl Cosi D'Sergio's Jewelers Cost Plus DSW Costco Duke's of Hawaii 7/12/2004 Attachment No. 13 — Page 3 Preapproved Users 18405:6395663.3 Duxiana Earful of Books, Inc. Earthbound Trading Company East Side Mario's Easy Spirit Easylife furniture EB Games eBar at Nordstrom Ecotage Salon & Day Spa Ecru Eddie Bauer Einstein Brothers' Bagels El Torito El Torito Express El Torito Grill Electronics Boutique Elm Street Endangered Species Chocolate Enzo ESPN Caf6 Ethan Allen Ethan Allen Kids Ethel M. Chocolates Everything But Water Express Express Men Eye Candy Faconnable Fado Irish Pub Famous Famiglia Famous Footwear Fashion Nails Fashion Q Fat Tuesday Fatburger Field of Dreams Fila Filco Appliances, TV, Camera & Audio Finish Line Firedance Restaurant First Cut Fish Market, The Fitigues Flat Top Grill Flat Wok Fleming's Prime Steakhouse & Wine Bar Flight Centre Foot Locker For Joseph For Your Entertainment Music & Movies Forever 21 Fossil Stores Fox & Hound Fox Sports / Fox Entertainment / Fox Family Francoli Gourmet Emporio Free People French Connection Fresh Lemonade Friday's Friends By Isaac Front Row Sports Grill FRY'S Electronics Fuddrucker's Fuji Film Fun Factory Funnel Factory Fuzio International Pasta Gadzooks Galyans Trading Company Games Workshop Gamestop Gameworks Gap Gap Body Gap Kids Gart Gary's Island GARYS & Company GARYS Cole Haan GARYS International Garys Island Home Furnishings Garys Per Donna Gelato Paradiso Gelson's Market Georgiou Gingiss Girl Mania Glow GNC Go Rave Girl Godiva Chocolatier 7/122004 Attachment No. 13 — Page 4 Preapproved Users 18405:6395663.3 Gold Crown Hallmark House of Fabrics Golden Spoon Frozen Yogurt Houstons Restaurant Golf Galaxy Howl at the Moon Golf USA Hudson's Grill of America, Inc. Golfsmith Hugo Boss Goodthings Icara Gordon Biersch Brewing Company ICE Accessories Gottschalks Icing By Claire's Graeter's Ice Cream Illuminations Graham Central Station IKEA Grasshoppers ImagiMax Great Train Store (The) Imaginarium Grilled Expedition Impostors GUESS Improv Comedy Club GUESS? Kids Indigo Palms Denim Co. Guinness World of Records Museum In -N -Out Burger Gymboree International House of Pancakes Haagen-Dazs Islands Restaurant Habana J&H T -Shirts Habit J. Crew Hall of Frames J. Jill Hallmark J.T. Schmid's Hanna Andersson Jackson's Sportsbar Happy Nails & Spa Jamba Juice Hard Rock Cafe Janie and Jack Hard Times Cafe Javier's Grill & Cantina Harley Davidson Cafe Jax Grill Harold's Stores JC Penny's Harry & David Jerry's Famous Deli Hat World Jerry's Restaurant Henry's Market Jewelry Doctor Hidden Dreams Fine Art Gallery Jillians Hi -Health Jimmy Buffet's Margaritaville Hilo Hattie Jody Maroni's Sausage Kingdom Hinson Ltd. Johnny Rockets Hold Everything Joseph A Bank Clothiers HOLLISTER Co. Journey's Hollywood Studio Store Juice It Up! Hollywood Video Jumpin Boba Home Depot Just For Feet Home Goods Just Sports Home to Garden KCET Store of Knowledge Homestead House, Inc Keg Steakhouse & Bar Hot Topic Kelly's Coffee & Fudge Houdini's Magic Shop Ken Crane's Home Entertainment House of Blues Hospitality Kenneth Cole 7/12/2004 Attachment No. 13 — Page 5 Preapproved Users 18405:6395663.3 Keva Juice Kids Foot Locker Kiehl' s Kincaid Galleries King's Crab Shack King's Fish House Kinkos Kirkland's Kodak On Stage Kohls Koji's Sushi & Shabu Shabu Kona Grill Krispy Kreme Doughnuts L' Occitane L.A. Italian Kitchen L'Occitane La Paz Restaurants La Salsa Mexican Food Labeltex Ladies Foot Locker Lahaina Galleries Lamps Plus Landmark Interiors Landry's Seafood Restaurants, Inc. Lane Bryant LaserQuest Lavande Lazarus -Macy's Le Optical Boutique Left Bank Legoland LensCrafters Levi's/Dockers by Most Liberty Bell Lids LifeSpa Limited Stores (The) Limited Too Linens N Things Little Treasures L'Occitane L' OCCITANE Loehmann's Lola Rouge Love Sac Lowe's Home Improvement Lucille's Lucky Brand Lucky Brand Jeans Lucy Zahran & Co M!Panada M&M's M. Fredric - Active M. Fredric - Inactive M. Fredric - Kids M. Fredric - Women's Macaroni Grill Macy's Macy's Home Store Macy's Women's Store Maggiano's Maggie Moo's Magic City Maison d' Optique Maki Maki Malee's Thai & Sushi Restaurant Manga House Marble Slab Creamery Mario Tricoci Salon & Day Spa Market Broiler Marmalade Cafe Marshalls Marshall's Mega Store Martin Lawrence Galleries Mastro's Steakhouse Maui Beach Cafe Maui Divers Jewelry Max & Erma's Max Nugus Haute Couture MaxMara MAXSTUDIO Maytag Store McCormick & Schmick's McDonald's Medieval Times Collection Store Men's Wearhouse Mervyn's Metallic Resurrection Mi Piace Mi Piachi Michaels Stores, Inc. Mikasa 7/12/2004 Attachment No. 13 — Page 6 Preapproved Users 18405:6395663.3 Millennium Jewelers Miller's Outpost (Anchor Blue) Mimi Maternity Mimi's Cafe Mishmash Miss Sixty Moda Model & Talent Company Modern Nails Modern Romance Mom & Me Mondeo Moonlight Graham Morton's of Chicago Motherhood Maternity Mother's Market Motown Cafe Mrs. Field's Cookies Mureeza Salon and Spa Musicland Group Myron's Extreme Machines Nara Nara NASCAR Cafe Nathan's Hot Dogs Natural Wonders Nature Company NBA City Nese Gallery Nestle Tollhouse Cafe Nevada Bob's New Balance New Wave Sports New York & Company New York Cargo Newport Tobacco Nextel Nike, Inc. NIKEgoddess Niketown Nine West No Fear Noah's Ark Nordstrom Nordstroms Rack NorthFace NoteWorthy Oakley "0" Store Off 5TH Saks Fifth Avenue Outlet Office Depot Office Max Ogden Entertainment "Food Court Operator" Old Farmers Almanac Store Old Navy Oliviers & Co. O'My Sole Optical Fashion Center Optical Shop of Aspen Orchard Supply Hardware Oreck Organized Living Origins Orvis OSA Sun Oscar's Oshkosh Oshkosh B'Gosh Outback Steakhouse Ozumo P.F. Chang's China Bistro Pacific Sunwear Pain Du Monde Bakery Palazzetti Palomino Restaurant Pampolina Panda Express Panera Bread Papyrus Paradise Bakery & Cafe Paragon Watch Company Parallel Parsow' s Party America Party City Past Tense Pasta Bravo Pasta Pomodoro Pat O'Brien's Bar Patagonia Paul Frank Paul Lee's Paulaner Brauhaus Payless Shoe Source PCS Smart Mart 7/12/2004 Attachment No. 13 — Page 7 Preapproved Users 18405:6395663.3 Pearl Artist & Craft Supply Corp. Peet's Coffee & Tea Pei Wei Asian Diner Pepsi Store Performance Bicycle Perfumania Perla Hair Studio Pet Club Petco Petite Sophisticate Petsmart Philadelphia Grill Pick Up Stix Picture People Pier 1 Imports Pink Ice Pizza Hut Planet Beauty Planet Subs Polacheck's Jewelers Polar Ice Polo Jeans Co. Pottery Barn Pottery Barn Kids POWERSTATION Games Pretzel Maker Priorities Puccini's Pizza & Pasta Puiforcat Puma Pure Beauty Qdoba Quiksilver Quiksilver Boardriders Club Quiksilver Youth Quizno's Ra Sushi Race Rock RadioShack Rampage Rand McNally Rave Rebel Recreational Equipment Inc. Red Brick Pizza Red Robin Red Rock Chili Co. Regal Cinema Relax the Back RePlay Restaurant Hama Restoration Hardware Richie's Neighborhood Pizzeria Ripley Aquariums, Inc. Ritz Camera Robbins Bros Inc Robeks Juice Robert Wayne Footwear Robinsons May Rock Bottom Brewery & Restaurant Rock N' Photo Rockfish ROCKFISH Seafood Grill Rocky Mountain Chocolate Factory Roger Dunn Golf Shops Rollerz Romano's Macaroni Grill Ron Jon Surf Shop Ross Dress for Less Rosti Rosticceria Toscana Rouge Bistro & Bar Roxy Roy's Hawaiian Fusion Cuisine Rubio's Baja Grill Ruby's Diner Russo's Pet Experience Rustic Hutch RVL Saks 5th Avenue Salt Grass Steakhouse Salute Italian Ristorante Samsonite Company Stores Samsonite Travel Expo Samsonite World of Travel Sanrio Sci-Fi Cafe Seattle's Best Coffee SEE Optical See's Candy Sega GameWorks Selvaggio Sephora 7/12/2004 Attachment No. 13 — Page 8 Preapproved Users 18405:6395663.3 Sfuzzi, Inc. Sgt. Leisure Shabby Chic Shadowbox Cabaret Sharky's Sharper Image Shemoni Sterling Silver Shine Shoe Pavilion Siany — The Accessory Co. Silverado Sing Sing Sirens Skechers Skin Market Smith & Wollensky Steakhouse Smith and Hawken Soho Sound Republic Sounds Like Music Spaghatinni Spencer Gifts Sportmart Sports Chalet Sports Nutz Sprint St. Croix Stage Stores Staples Star Photo Starbuck's Coffee Stein Mart Steve Madden Shoes Stila Stitch by Stitch StoneCreek Cafe StoneCreek Sushi Storeables Stride Rite Stroud's Stuart Moore Subway Suede Sun Optics Sun's Up Sunglass Hut/Watch Station Sun's Up Supercuts Sur La Table Surf City Squeeze Susie's Deals Swagat Swatch Sweets From Heaven Syms Corp T Mobile Wireless T.G.I.Friday's Taco Bell Tacone Wraps Talbots Target Tea Station Ted's Montana Grill Telemania Tempo Boutique Ten Thousand Villages Teuscher Chocolates & Cafe TGI Fridays Thaifoon - Taste of Asia The Added Touch The Body Shop The Buckle The Cheesecake Factory The Children's Place The Closet The Container Store The Diamond Cellar The Discovery Channel Store The Funny Bone Comedy Club The Good Guys The Leather Cottage The Limited The Look, Inc. The Majestic Theatres The Ocean Club The Power House The Rib Crib The Sharper Image The Shoe Lab The Sports Authority The Sports Club Company Theodore's 7/12/2004 Attachment No. 13 — Page 9 Preapproved Users 18405:6395663.3 This Little Piggy Wears Cotton Tilly's TJ Maxx TJ Maxx & More T -Mobile Tokyo Kitchen Tommy Bahama's Toni & Guy Hair Salon Topps Toy Street Toys R US Tracy Allen Fine Jewelry Trade Secret Trader Joe's Traditional Jewelers Tutto Mare Twin Dragon Twisted Spoon Ulla Eyewear Ulta Cosmetics Ultimate Electronics Ultra Diamond & Gold Outlet Under Armour UPS Store Urban Leather Urban Outfitters Valentino Chocolatier Vans Shoes Vans SkatePark Verizon Wireless V -Generation Via Brazil Victoria's Secret Villa Keyus Playcare Village Gallery Virgin Entertainment Virgin Megastore Vitamin Shoppe Vitamin World Von Dutch VS Beauty Regional Wahoo's Fish Taco Walking Company Warner Bros. Studio Store Wasabi Watch Works Wendy's Wentworth Gallery West Marine Wet Seal Wetzel's Pretzels Wexner Center ARTSHOP White Barn Candle Co. White House Black Market Whole Foods Wild Pair Williams Sonoma Wilsons Leather Windsor Fashions Wireless Retail Wizards of the Coast Wolfgang Puck Grand Cafe World Caravan World Noodles World Of Flags XI Clothing Yankee Candle Yard House Yves Delorme Z Gallerie Z Pizza Z'Tejas Grill Zales Diamond Outlet Zara USA Zov's Bistro Zumiez Zutopia 7/12/2004 Attachment No. 13 — Page 10 Preapproved Users 18405:6395663.3 ATTACHMENT NO. 13 PREAPPROVED USERS Vestar DDA Attachment No. 13 Preapproved Users 07/12/04 18405:6391127.7 ATTACHMENT NO. 14 CONTRACTS Leases LIFOC (as defined in the DDA) Other Contracts Maintenance Contract between the City and JHTM which will be modified prior to Close of Escrow to delete the Developer Parcel Flood Control Agreement in favor of the Orange County Flood Control District (D02-1191-1), as amended. Vestar DDA Attachment No. 14 — Page 1 Contracts 07/12/04 18405:6391127.7 ATTACHMENT NO. 15 CERTIFICATE OF COMPLIANCE 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: Assistant City Manager The City of Tustin 300 Centennial Way Tustin, CA 92780 SPACE ABOVE THIS LINE FOR RECORDER'S USE [PARTIAL/FINAL] CERTIFICATE OF COMPLIANCE FOR [INSERT APPLICABLE DEVELOPER PARCEL(S)] This [PARTIAL/FINAL] CERTIFICATE OF COMPLIANCE ("Certificate of Compliance") is made as of , 20_ by the CITY OF TUSTIN, a municipal corporation of the State of California ("City"), in favor of VESTAR/KIMCO TUSTIN, L.P., a California limited partnership (the "Developer"), with reference to the following matters: A. The City and the Developer have entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development), dated as of , 2004 (the "DDA"), which is incorporated herein by reference, as evidenced by that certain Memorandum of Tustin Legacy Disposition and Development Agreement (Retail Development) ("Memorandum of DDA" Y, dated for reference as of , 2004, and recorded in the official records of Orange.County, California as Instrument No. . All initially capitalized terms not otherwise defined herein shall have the meanings assigned to them in the DDA. B. Pursuant to the DDA, the Developer agreed to develop and construct certain Improvements comprising the Project on the "Project Site" which consists of (i) that certain real property defined in the DDA as (x) the "Developer Parcels", more particularly described on Exhibit "A" attached hereto and incorporated herein by this reference and (y) the "Right -of -Way Parcels" and "City Dedication Parcels" and (z) certain additional property owned by the City upon which off-site infrastructure and Tustin Legacy Backbone Infrastructure Improvements are to be constructed by Developer. 07/12/04 Attachment No. 15 — Page 1 Certificate of Compliance 18405:6391257.7 C. Pursuant to Article 9 of the DDA, after Completion of all Improvements to be Completed by the Developer upon the Project Site, or, subject to the conditions of Section 9.5 of the DDA, the Improvements to be Completed by Developer on one or more individual Parcel(s) thereof, in compliance with the terms of DDA and subject to compliance by the Developer with all other provisions of the DDA including the Conditions Precedent set forth in Section 9.5.2 of the DDA, the City agreed to furnish to the Developer, as applicable, upon request therefor by the Developer, (a) a Final Certificate of Compliance for the Project Site or (b) a Partial Certificate of Compliance for such Parcel(s); provided that a Partial Certificate of Compliance for the Minimum Project shall be issued only upon completion of Minimum Project together with the completion of Developer's Backbone Infrastructure Work and all Required Horizontal Improvements, and provided, further, that no Certificate of Compliance shall be issued for any Parcels unless and until a Partial Certificate of Compliance has been issued by the City for the Minimum Project. D. The City has determined that the Developer has satisfied the Conditions Precedent set forth in Section 9.5 of the DDA for the City's issuance of a [Partial/Final] Certificate of Compliance [If Partial: with respect to [the Minimum Project/the portion of the Project] located upon the Parcel(s) depicted on the map attached to this Certificate as Exhibit `B"]. NOW, THEREFORE, the City certifies as follows: 1. This Certificate of Compliance covers and applies to [that portion of the Improvements and Project referred to as [Minimum Project] [Parcel(s), as more particularly depicted or described on Exhibit "B" attached hereto and incorporated herein by this reference] [the entirety of the Improvements and Project on the Project Site as defined above], (the "Certified Improvements"). 2. This Certificate of Compliance shall be deemed conclusive evidence of the City's determination of Completion of the Certified Improvements as required by this Agreement to be developed and constructed [with respect to the Project] [upon Parcel(s) 1 and performance of all of the Developer's obligations set forth in Section 9.5 of the DDA for issuance of this Certificate. 3. [APPLICABLE TO FINAL CERTIFICATE OF COMPLIANCE ONLY: Upon Recording of a Final Certificate of Compliance, the DDA shall terminate as to the Developer Parcels and shall be of no further force and effect and any Person then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Certified Parcel(s) shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under the DDA with respect to the Certified Improvements, except that the following matters shall survive the termination of the DDA each in accordance with its terms (except that general references to compliance with the DDA shall not affect the termination of the DDA) as to the Certified Improvements, the Certified Parcel(s) and all Persons owning, leasing or occupying the Certified Parcel(s) and/or the Certified Improvements shall continue be bound by the following matters, which shall survive the termination of the DDA, shall not merge with any deed on any transfer of any portion of the Developer Parcel, and shall survive the issuance of this Certificate of Compliance and 07/12/04 Attachment No. 15 — Page 2 Certificate of Compliance 18405:6391257.7 all future Certificates of Compliance in perpetuity unless otherwise indicated in the referenced sections: (a) the Quitclaim Deeds, (b) the Special Restrictions, (c) the provisions of the Memorandum of DDA which expressly survive the termination of the DDA; (d) the Ground Lease (if then in effect); (e) the CC&Rs, and (f) any and all obligations contained in the Federal Deed and in each quitclaim deed from the Federal Government conveying fee title to a LIFOC Parcel to the City and in the LIFOC, unless such obligations are released by the Federal Government or the LIFOC is terminated.] [APPLICABLE TO PARTIAL CERTIFICATE OF COMPLIANCE ONLY: A Partial Certificate of Compliance shall have the effects set forth in Article 9 of the DDA and in other applicable provisions of the DDA, and the City shall have no further proprietary right of review of design pursuant to Section 8.6 of the DDA as to any Parcel for which a Partial Certificate of Compliance shall have been issued.] 4. Issuance of this Certificate of Compliance shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or deed of trust or any insurer of a mortgage, or deed of trust securing money loaned to finance the Improvements or any part thereof. 5. Issuance of this Certificate of Compliance shall not waive any rights or claim that the City may have against any party for latent or patent defects in design, construction or similar matters under any applicable law, nor shall it be evidence of satisfaction of any of the Developer's obligations to others, not a party to the DDA. 6. This Certificate of Compliance is not a Notice of Completion as referred to in California Civil Code Section 3093. 7. Except as stated herein, nothing contained in this instrument shall modify in any way any other provisions of the DDA or any other provisions of the documents incorporated herein. [signature page follows] 07/12/04 Attachment No. 15 — Page 3 Certificate of Compliance 18405:6391257.7 IN WITNESS WHEREOF, the parties hereto have, on the respective dates set forth below, duly executed this contract. ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation LI -A City of Tustin, California Dated: William A. Huston City Manager 07/12/04 Attachment No. 15 — Page 4 Certificate of Compliance 18405:6391257.7 STATE OF CALIFORNIA COUNTY OF ORANGE On ss. before me, a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) 07/12/04 Attachment No. 15 — Page 5 Certificate of Compliance 18405:6391257.7 EXHIBIT "A" Description of Developer Parcel [To Be Attached] 07/12/04 A- 1 18405:6391257.7 EXHIBIT "B" Certified Improvements Description and Map [To Be Attached to Partial Certificate of Compliance] 07/12/04 B - 1 18405:6391257.7 ATTACHMENT NO. 16 PROHIBITED USERS Apparel 3 Day Suit Broker Burlington Coat Factory Department Stores Big Lots K -Mart (including successors regardless of name) Sam's Club (including successors regardless of name) Wal-Mart (including successors regardless of name) Furniture and Interior Furnishings Big Lot Furniture Variety 99 Cent Store Factory 2-U Family Bargain Center Pic `n Save Play -it -Again Sports Walgreen's Rite-Aid Restaurants & Dining & Food Subway (prohibited as freestanding Minor Pad use only, permitted as in-line Retail Space Tenant) Smart and Final Vestar DDA Attachment No. 16 — Page 1 Prohibited Users 07/12/04 18405:6391127.7 Miscellaneous Anything that is not an approved use on Attachment No. 13 with the following as part of the name: "Bargain", "Discount", "Less" (excluding the term "less" in the word "wireless"), ""99", "98", "Save", or "Sav" and "Second" or "Seconds". Anything that is not an approved use on Attachment No. 13 that indicates "factory outlet", or has "factory" or "outlet" as part of the name. Any End User that would not be permitted by the Specific Plan or the Prohibited Uses Identified on Attachment No. 17. Vestar DDA Attachment No. 16 — Page 2 Prohibited Users 07/12/04 18405:6391127.7 ATTACHMENT NO. 17 PROHIBITED USES 1. adult cabarets, massage parlors (but not including massage services offered by a doctor, nurse or chiropractor, or massage services offered by a hair salon, nail salon, barbershop or day spa which have obtained authorized permits from the City as required by City Code), or nude or partially nude entertainment 2. adult motels, thrift or budget motels, or transient occupancy residences 3. animal boarding, but not including overnight boarding of animals in connection with the rendering of veterinarian services by an approved End User 4. animal, grooming, or veterinary offices or animal hospital, unless part of an operation being conducted by an approved End User 5. auctions, unless pursuant to court order and as may be permitted under the Specific Plan or City Code 6. auditoriums (other than a motion picture theatre) or other similar places of general assembly, except as used by the theatre when not used to show motion pictures in down time and, except for activities in common areas by means of tables, chairs and the like without charge and for promotional events in the common areas as may be permitted under the Specific Plan or City Code 7. automotive sales, rentals, inspection or repair, or tire sales, except for a location approved on the Preliminary Plan for operations by Costco, unless included in the retail sale of automotive -related consumer products by an approved End User of greater than 100,000 square feet of rentable area on the Developer Parcels 8. bingo parlors, bingo halls, or other establishments conducting games of chance 9. boat sales or rentals 10. businesses engaged in pest control, taxidermy, tattooing, appliance repair (but not including repair services offered by an approved End User of greater than 20,000 square feet of rentable area on the Developer Parcels as a component of its business) or other repair shops (except for jewelry repair, shoe repair, tailoring, camera repair, watch repair or computer/electronic equipment repair or other repair incidental to another business) 11. car wash 12. churches, temples or other houses of religious worship, except that religious use of the movie theater auditoriums in down time as may be permitted under the Specific Plan and City Code 13. "drive-through" uses except those at approved locations as shown on the Preliminary Vestar DDA Attachment No. 17 — Page 1 Prohibited Uses 07/12/04 18405:6391127.7 Plan or the Entitlements or as may be approved by the City in its Governmental Capacity. 14. dumping or disposing of garbage or refuse, except in approved on-site trash enclosure or disposal areas. 15. funeral homes or funeral parlors. 16. grocery stores, supermarkets, mini -markets or mini -marts, convenience stores or similar food retail operations, except for specific specialty or gourmet markets identified as Pre - Approved Users on Attachment No. 13; provided, however, that the foregoing restriction does not pertain to the sale of groceries by Target, Costco, Cost Plus, or other Tenants or Pad Transferees where such sale of groceries is accessory to its primary business. 17. "head shops" (so-called) or facilities for the sale of drug paraphernalia. 18. offices (except as incidental to an approved End User or commercial business or except for retail service offices, for a project management and operation office, and/or a security office). Incidental shall be considered to be no more than ten percent (10%) of space; provided, however, that such prohibition shall not preclude the use of ten percent (10%) of the Target space for back-office business. 19. off-track betting parlors. 20. recreational vehicle ("RV") sales, rentals or repairs unless occasional or promotional display of boats is authorized under the Specific Plan or the City Code in common areas. 21. residential dwellings of any kind. 22. second hand stores, thrift stores, pawn shops, or indoor or outdoor flea markets. This prohibition does not extend to Preapproved Users (Attachment No. 13) which sell previously owned merchandise and, or refurbished merchandise together with new merchandise. 23. self-service laundry facilities. 24. sexually oriented businesses as defined in Section 3911 of the City Code and subject to applicable law, provided that the foregoing is not intended to generally prohibit sale or rental of products by full line bookstores, full line video stores, or theatres showing movies in general release, provided that nothing set forth herein is intended to affect governmental rights of the City of Tustin with respect to applicable obscenity or similar laws. 25. traveling carnivals or fairs, except as may be approved for promotional events under the Specific Plan or City Code. 26. uses involving Hazardous Materials except for the types and in the amounts as may be customary in Class A Shopping Centers. 27. uses prohibited on the Project Site under provisions of the Specific Plan unless a Specific Plan amendment or other entitlement for such use is approved by the Cit (e.g., Vestar DDA Attachment No. 17 — Page 2 Prohibited Uses 07/12/04 18405:6391127.7 temporary use permits, conditional use permits, etc.). 28. uses which creates strong, unusual or offensive odors, fumes, dust or vapors, are a public or private nuisance, emit noise or sounds which are objectionable due to the intermittence, beat, frequency, shrillness or loudness, or which create an excessive quantity of dust or dirt, or create a hazardous condition. 29. uses which materially increase fire, explosion, or radioactive hazards on the premises, including the storage, display, or sale of explosives, fireworks or firearms, but not including the sale of firearms and ammunitions by sporting good stores which are approved End Users subject to any specific additional requirements of the City Code. Vestar DDA Attachment No. 17 — Page 3 Prohibited Uses 07/12/04 18405:6391127.7 ATTACHMENT NO. 18 ASSIGNMENT AND ASSUMPTION AGREEMENT Vestar DDA Attachment No. 18 Assignment and Assumption Agreement 07/12/04 18405:6391127.7 ATTACHMENT NO. 18 FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT 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: Assistant City Manager The City of Tustin 300 Centennial Way Tustin, CA 92780 SPACE ABOVE THIS LINE FOR RECORDER'S USE ASSIGNMENT AND ASSUMPTION AGREEMENT This ASSIGNMENT AND ASSUMPTION AGREEMENT ("Assignment") is made as of , 20_ (the "Assignment Effective Date") by and between VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("Developer"), and a ("Assignee"), with the consent of the CITY OF TUSTIN, a municipal corporation of the State of California ("City"), with reference to the following matters: A. The City and the Developer have entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of [ , 2004] (the "DDA"), which is incorporated herein by reference, as evidenced by that certain Memorandum of Tustin Legacy Disposition and Development Agreement (Retail Development) ("Memorandum of DDA"), dated for reference as of July , 20041, and recorded in the official records of Orange County, California ("Official Records") as Instrument No. on , 200_. All initially capitalized terms not otherwise defined herein shall have the meanings assigned to them in the DDA. B. Pursuant to the DDA, the Developer agreed to develop and construct certain Improvements comprising the Project on the Project Site. The Project Site is comprised of: (i) that certain real property described in the DDA as the "Developer Parcels", (ii) the Right -of - Way Parcels and City Dedication Parcels and (iii) certain additional property owned by the City upon which off-site infrastructure and Tustin Legacy Backbone Infrastructure Programs are to be constructed by Developer. 7/12/2004 Attachment No. 18 Page 1 Assignment and Assumption Agreement 18405:6391365.6 C. Each of the DDA, that certain Declaration of Special Restrictions dated as of , 200_ (the "Special Restrictions"), that certain instrument containing Covenants, Conditions and Restrictions ("CC&Rs") and the Infrastructure Construction and Payment Agreement (the "ICPA", and, together with the Special Restrictions and the CC&Rs, collectively, the "DDA Documents") impose certain covenants, conditions, payment obligations and restrictions on the Developer Parcels. The Special Restrictions were recorded in the Official Records as Instrument No. on , 200_ and the CC&Rs were recorded in the Official Records as Instrument No. on , 200_. D. The DDA restricts Developer's ability to transfer ownership and/or control of the Property and Developer's obligations with respect to the Project until the filing of a Final Certificate of Completion. E. Developer desires to assign its interest in the DDA Documents and its obligations thereunder to Assignee. Pursuant to Article 2 of the DDA, a Transfer must include, among other things, the execution and delivery of an Assignment and Assumption Agreement. Developer and Assignee are entering into this Assignment in order to fulfill the obligations of Developer and Transferee under Article 2 of the DDA. F. Simultaneously with this Transfer, Developer is [conveying in fee/leasing] to Assignee by [grant deed /ground lease] the Developer Parcels [or such portion thereof as has not been previously Transferred by Developer in accordance with the DDA] [or such portion thereof as Developer is conveying NOTE: if less than the entirety then held by Developer, the Developer release for prospective matters arising under the DDA and Ground Lease shall not be applicable unless and to the extent approved by the City in its sole discretion]. as more particularly described on Exhibit "A" (the "Real Property"'). The Real Property and the Assigned Property (as defined below) are collectively referred to herein as the "Property". NOW, THEREFORE, for good and valuable consideration, the parties agree as follows: ARTICLE 1. Assignment. 1.1 As of the Assignment Effective Date, the Developer hereby assigns, conveys, transfers, bargains, grants, sells and sets over to Assignee, as and to the extent owned or leased by Developer, the following (collectively, the "Assigned Property"): (a) all right, title, interest and obligation of the Developer as "Developer" under the DDA Documents arising from and after the Assignment Effective Date, including all benefits provided to and burdens imposed upon Developer pursuant to the DDA, and all right, title, interest and obligation of the Developer in and to the Real Property and all improvements thereon and all personal property associated therewith provided, however, that Developer shall retain any rights to payment under the ICPA; 7/12/2004 Attachment No. 18 — Page 2 Assignment and Assumption Agreement 18405:6391365.6 (b) all right, title, interest and obligation of the Developer as "Tenant" under the Ground Lease, including all benefits provided to and burdens imposed upon Developer pursuant to the Ground Lease, and all right, title, interest and obligation of the Developer to the Lease Parcels [(or such portion thereof as has not been previously transferred by Developer in accordance with the DDA)] and all improvements thereon and all personal property associated therewith; (c) all right, title, interest and obligation of the Developer under the [list all other contracts relating to the Property, e.g., Pad Transfer agreements, Pad Transfer development agreements, Leases, assignment of maintenance obligations under the CC&Rs and Section 12.2 of the DDA, etc.]; (d) all Entitlements, subdivision agreements, and other agreements relating to the development of the Real Property; (e) all plans, specifications, maps, drawings, and other renderings owned by Developer and relating to the Project or such portion thereof as is subject to this Assignment. (f) all warranties, claims, and any similar rights relating to and benefiting the Real Property or the assets transferred hereby, including, without limitation, all warranties related to the grading of the Real Property; (g) all intangible rights, goodwill, and similar rights relating to the Project and/or the Real Property; (h) all development rights relating to the Real Property and the Improvements thereon; and (i) all other rights, claims, or awards relating to the Project and/or Real Property for any period subsequent to the sale of the Project and/or Real Property. 1.2 A condition of the assignment is that the Assignee be added as an additional named insured on the policy of environmental insurance obtained by Developer in satisfaction of Section 11. 1.4 of the DDA; provided that with respect to the City's Environmental Insurance Policy, the limit of liability applicable to Assignor and Assignee shall not collectively exceed Five Million Dollars ($5,000,000.00). ARTICLE 2. Assumption. 2.1 The Assignee, on behalf of itself and its successors and assigns, from and after the date of this Agreement hereby assumes and receives the Assigned Property and agrees for the benefit of the City that (a) it is expressly assuming and shall be subject to all the conditions and restrictions to which the Developer is subject by reason of the DDA Documents and Ground Lease including, without limitation the provisions of the release set forth in Section 4.4.3 and the indemnities set forth in Article 10 of the DDA, (b) that it shall pay and perform all obligations of Developer set forth in the DDA Documents and the Ground Lease, including without limitation, (i) the obligation to construct the Improvements and Developer's Backbone Infrastructure Work in accordance with the Scope of Development and within the time period specified in the 7/12/2004 Attachment No. 18 — Page 3 Assignment and Assumption Agreement 18405:6391365.6 Schedule of Performance as the same may have been modified, (ii) to comply with the obligations with respect to the Subsequent Participation, and (iii) to pay all sums required to be paid by Developer thereunder to the extent such amounts have not previously been paid and (c) the assignment by Developer hereunder and the Assignee's assumption of the right, title, interest and obligations of "Developer" under the DDA Documents and of "Tenant'.' under the Ground Lease is made subject to all restrictions and conditions set forth in the DDA Documents and the Ground Lease. 2.2 Assignee agrees that it will be fully obligated to perform the obligations of "Developer" under the DDA Documents and "Tenant" under the Ground Lease regardless of: (a) the value of the Property or the income to be derived from the Property; (b) the existence or nonexistence of any liens, easements, covenants, conditions, restrictions, claims or encumbrances affecting the Property; (c) the suitability of the Property and/or the Project Site for any and all future development, uses and activities which the Developer may conduct thereon, including the development of the Project described in this Agreement; (d) the habitability, merchantability or fitness for a particular purpose of the Property and/or the Project Site; (e) the manner, quality, state of repair or lack of repair of the Property and/or the Project Site; (f) the nature, quality or condition of the Property and/or the Project Site including water, soil and geology; (g) the compliance of or by the Property and/or the Project Site or its operation with any Governmental Requirement, including the National Environmental Policy Act, CEQA and the Americans with Disabilities Act of 1990; (h) the manner or quality of the construction or materials, if any, incorporated into the Property and/or the Project Site; (i) the presence or absence of Hazardous Materials, at, on, under, or adjacent to the Property and/or the Project Site; 0) the content, completeness or accuracy of the information, documentation, studies, reports, surveys and other materials, delivered to the Developer in connection with the review of the Property and/or the Project Site and the transactions contemplated in this Agreement; (k) the conformity of the existing improvements on the Real Property, if any, to any plans or specifications for the Project and/or the Project Site; 7/12/2004 Attachment No. 18 — Page 4 Assignment and Assumption Agreement 18405:6391365.6 (1) compliance of the Property with past, current or future statutes, laws, codes, ordinances, regulations or Governmental Requirements relating to zoning, subdivision, planning, building, fire, safety, health or environmental matters and/or covenants, conditions, restrictions or deed restrictions; (m) the deficiency of any undershoring or of any drainage; (n) the fact that all or a portion of the Property may be located on or near an earthquake fault line or falls within an earthquake fault zone established under the Alquist-Priolo Earthquake Zone Act, California Public Resources Code Sections 262 1-2630 or within a seismic hazard zone established under the Seismic Hazards Mapping Act, California Public Resources Code, Sections 2690-2699.6 and Sections 3720-3725; (o) the existence or lack of vested land use, zoning or building entitlement affecting the Property; (p) the construction or lack of construction of Tustin Legacy or if constructed, the construction of Tustin Legacy in accordance with design guidelines, plans and specifications previously or to be prepared therefor; (q) the contents of the Conveyance Agreement, the Federal Deed, the LIFOC, the Base Closure Law, the FOST, and the FOSL; (r) the conditions, covenants and restrictions imposed upon the Property under the DDA Documents and the Ground Lease; and (s) with respect to any other matters. ARTICLE 3. Continuing Liabilitv. Notwithstanding the assignment in Article 1 of this Assignment and the assumption in Article 2 of this Assignment, the Developer is not released from, and remains fully liable for all obligations and liabilities that have accrued under the DDA Documents and the Ground Lease prior to the Assignment Effective Date, including without limitation pursuant to any indemnity or release [; provided that, for conveyance of less than the entirety of the Developer Parcels then held by Developer, Developer shall not be released from and shall remain fully liable for all obligations and liabilities accruing under the DDA Documents and the Ground Lease following the Assignment Effective Date, except to the extent specifically set forth herein and approved by the City in its sole discretion]. ARTICLE 4. No Waiver Or Modification. The City's consent to this Assignment shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer under the DDA Documents or the Ground Lease, or any other agreement with Developer to which the City is a party. Nothing contained in this instrument shall modify in any way any other provisions of the DDA Documents or the Ground Lease. Assignee acknowledges that it is assuming the Assigned Property subject to, inter alia, the rights of the City and other parties as described in the DDA. 7/12/2004 Attachment No. 18 — Page 5 Assignment and Assumption Agreement 18405:6391365.6 ARTICLE 5. Additional Documents. The parties hereto each agree to execute and deliver to the other party, upon demand, such further documents, instruments and conveyances, and shall take such further actions as are necessary or desirable to effectuate the intent and purposes of this Assignment. In addition to the foregoing, the Developer agrees to reasonably cooperate, at the expense of the Assignee in submitting and processing any warranty claim under any warranty in which a beneficial interest was granted under Section 1 of this Assignment. ARTICLE 6. Miscellaneous. 6.1 Modification. No amendment, change, modification or supplement to this Assignment shall be valid and binding on the Parties unless it is represented in writing and signed by each of the Parties. 6.2 Applicable Law. This Assignment 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. 6.3 Binding Effect. This Assignment and the terms, provisions, promises, covenants and conditions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors and assigns. 6.4 Counterparts. This Assignment 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 Assignment 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 Assignment by facsimile signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States, postage prepaid or is hand delivered, and such manually signed page is actually received by the other Party within five (5) days of its execution. The Parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Assignment. 6.5 City as Third Party Beneficiary. Assignor and Assignee hereby acknowledge and agree that until the Final Certificate of Compliance is recorded in the Official Records, the City shall be an intended third party beneficiary under this Assignment and shall have all related enforcement rights. Other than the City, there shall be no third party beneficiaries of this Agreement. 7/12/2004 Attachment No. 18 — Page 6 Assignment and Assumption Agreement 18405:6391365.6 6.6 Notices. The contact information for Assignee for purposes of Section 16.7 of the DDA is: Attn: [signature page follows] 7/12/2004 Attachment No. 18 - Page 7 Assignment and Assumption Agreement 18405:6391365.6 IN WITNESS WHEREOF, the Developer and Assignee each has caused this Assignment to be duly executed by its officer duly authorized as of the date first above written. DEVELOPER: Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: Name: Title: ASSIGNEE: a By: Name: Its: By: Name: Its: 7/12/2004 Attachment No. 18 — Page 8 Assignment and Assumption Agreement 18405:6391365.6 ACKNOWLEDGMENT AND CONSENT BY CITY OF TUSTIN By executing in the space set forth below, the City of Tustin hereby: (a) acknowledges receipt of the Assignment and Assumption Agreement (the "Assignment") to which this execution page is attached; (b) consents to the making of the Assignment by Developer, subject to the terms and conditions set forth in the Assignment, the DDA Documents and the Ground Lease, which consent is provided in satisfaction of Section 2.2.2 of the DDA; (c) agrees that ("Assignee") shall be deemed by the City to be the "Developer" for all purposes under the DDA and "Tenant" under the Ground Lease from and after the Assignment Effective Date; and (d) [with respect to Transfer by Developer of the entirety of its interest in the Property to Assignee only, otherwise modify to retain appropriate Developer liability] acknowledges that effective upon the Assignment Effective Date set forth on the first page of the Assignment, the Developer shall be released for matters first arising under the DDA Documents and the Ground Lease, provided however, that notwithstanding the foregoing, in no event shall the Developer be released from any obligation of Developer under the DDA Documents or the Ground Lease, including without limitation pursuant to any indemnity or release accruing during the period in which Developer was a party to such agreements. ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation L -on City of Tustin, California Dated: William A. Huston City Manager 7/12/2004 Attachment No. 18 — Page 9 Assignment and Assumption Agreement 18405:6391365.6 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On , before me, in and for said state, personally appeared a Notary Public , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) 7/12/2004 Attachment No. 18 — Page 10 Assignment and Assumption Agreement 18405:6391365.6 EXHIBIT "A" REAL PROPERTY 7/12/2004 Attachment No. 18 — Page 1 Assignment and Assumption Agreement 18405:6391365.6 ATTACHMENT NO. 19 SUBORDINATION Vestar DDA Attachment No. 19 Subordination 07/12/04 18405:6391127.7 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: Assistant City Manager The City of Tustin 300 Centennial Way Tustin, CA 92780 ATTACHMENT NO. 19 SUBORDINATION SPACE ABOVE THIS LINE FOR RECORDER'S USE SUBORDINATION THIS SUBORDINATION ("Subordination"), dated [ ], 200[_], is made by a ("Lender") in favor of the City of Tustin, California (the "City") with reference to the following: A. The City and Vestar/Kimco Tustin, L.P., a California limited partnership ("Developer"), have entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of [ , 2004] (the "DDA") with respect to the Property described therein, which includes the "Developer Parcels" (legally described on Exhibit "A" attached to and forming a part of this Subordination) and the existing improvements thereon. Immediately prior to the recordation of this Subordination, the City and the Developer have caused to be recorded in the official records of Orange County, California (the "Official Records") against the Developer Parcels: (i) that certain Memorandum of DDA dated as of , 2004, ("Memorandum") executed by Developer and the City, (ii) that certain Declaration of Special Restrictions, dated as of , 2004 (the "Special Restrictions") executed by Developer and the City and (iii) that certain set of CC&Rs executed by Developer. Initially capitalized terms set forth in this Subordination and not defined herein shall have the meanings set forth therefor in the DDA. 7/12/2004 Attachment No. 19 — Page 1 Subordination 18405:6391366.7 B. Pursuant to the DDA, the City agreed to sell, lease and/or sublease, as applicable, the Property and the Developer agreed to purchase, lease and/or sublease, as applicable, the Property, and the Developer agreed to complete construction of certain improvements on the Project Site, including on the Developer Parcels, within the time periods and subject to the additional terms and conditions set forth in the DDA. C. Lender intends to make a $ loan to the Developer (the "Loan") to be secured by the Property, which loan shall be secured by that certain Construction Deed of Trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of , 2004 made by the Developer in favor as "Trustee" for the benefit of Lender ("Deed of Trust"), to be recorded in the Official Records. The Deed of Trust and any and all additional instruments executed by the Developer and/or Lender to secure the Loan and/or to add or remove collateral security therefrom, in each case as the same may be modified or amended from time to time, are referred to herein collectively as the "Security Documents". D. The Deed of Trust, as the same may be modified or amended from time to time, is a "Mortgage" as such term is utilized in the DDA. E. The DDA provides the Developer with the right to encumber the fee title to the Developer Parcels owned by it with a Permitted Mortgage made by a Permitted Mortgagee subject to compliance with the terms, conditions and limitations set forth in Section 2.2 and Article 15 of the DDA; provided, however, that all Mortgages are required by the terms of the DDA to be subject and subordinate to the DDA, including the City's Right of Reversion as set forth therein, the Ground Lease, the Special Restrictions and the CC&Rs. F. Pursuant to the DDA, Mortgages complying with the terms of Article 15 of the DDA and entered into by the Developer with Permitted Mortgagees are deemed to be "Permitted Mortgages" and Lender is seeking the City's agreement that Lender is a "Permitted Mortgagee" and that the Deed of Trust is a "Permitted Mortgage". AGREEMENT NOW THEREFORE, in consideration of the foregoing and the consent of the City to recognize the Deed of Trust as a Permitted Mortgage and to recognize Lender as a Permitted Mortgagee as set forth in the City acknowledgement and consent attached hereto, Lender hereby agrees as follows: 1. Recitals. The Recitals set forth above are hereby agreed and acknowledged by Lender to be true and correct and are incorporated into this Subordination as though fully set forth in this Section 1. 2. Subordination of Security Documents to DDA. Lender hereby subordinates the lien of the Security Documents, including, without limitation, the Deed of Trust, on the Developer Parcels to (a) the DDA and the lien thereof, including to the Right of Purchase and the Right of Reversion contained in Sections 13.4 and 13.5 of the DDA respectively, (b) the Ground Lease, (c) the Special Restrictions and (d) the CC&Rs. 712/2004 Attachment No. 19 — Page 2 Subordination 18405:6391366.7 3. Exercise of Remedies by the City. Lender hereby acknowledges and agrees that upon a Material Default by the Developer under the DDA, the City shall have the right to exercise (a) all remedies provided to it pursuant to the DDA, including without limitation, the Right of Purchase, subject only to the cure rights of Lender as set forth in Section 15.11 of the DDA and (b) all remedies provided to it pursuant to the Ground Lease, the Special Restrictions and/or the CC&Rs to the extent applicable to the nature of the Material Default. In addition, the City shall have the Right of Reversion set forth in Section 13.5 of the DDA as set forth verbatim (in italics) below, subject to (i) the cure rights of Lender as set forth in Section 15.11 of the DDA and (ii) the rights of Lender set forth in Sections 13.5.2, 13.5.3 and 13.5.4 of the DDA. [INSERT DDA SECTION 13.5 VERBATIM] Lender agrees to the foregoing with full knowledge that the exercise by the City of the Right of Purchase and/or the Right of Reversion may affect the lien of the Security Documents as to the Developer Parcels or any portion thereof or any interest of Lender therein as further described in and subject to the cure rights in favor of Lender set forth in Sections 13.4, 13.5 and Article 15 of the DDA. 4. Foreclosure or Deed in Lieu of Foreclosure. If the Property or any portion thereof is sold at a foreclosure sale under the Security Documents or if the Property or any portion thereof is conveyed by deed -in -lieu of foreclosure, Lender, on behalf of itself and its successors and assigns, including, without limitation, any designee of Lender owned in whole or in part by Lender, hereby agrees that Lender and its successors and assigns shall comply with the provisions of the DDA applicable thereto, including, without limitation, Sections 15.7 and 15.8 thereof, with respect to the affected portion of the Property. 5. New Agreement. 5.1 Terms of DDA re ag rding New DDA. Lender hereby acknowledges and agrees to the following provisions of the DDA relating to New Agreements (i.e. New DDAs), which are set forth below (in italics) verbatim: [INSERT DDA SECTION 15.20 VERBATIM] 5.2 Priority of New Agreement. Lender hereby agrees that any New Agreement, whether entered into at the request of Lender or the City or any other Permitted Mortgagee with respect to the Property or any portion thereof, shall be prior to the Security Documents and any other lien, charge, or encumbrance on the Property to which the lien of the DDA was previously senior in priority and Lender hereby agrees that it shall execute such additional consents and/or subordination agreements as may reasonably requested by the City or the new developer thereunder to evidence the priority of the New Agreement to the Security Documents, whether recorded prior or subsequent to execution of the New Agreement. 6. Rights and Obligations of Permitted Mortgagees. Lender makes the foregoing agreements with the full understanding that the provisions of Article 15 of the DDA shall apply to Lender, including, without limitation, the provisions of Sections 15.8 and 15.11 of the DDA relating to the rights and obligations of Permitted Mortgagees which are set forth below (in italics) verbatim: 7/12/2004 Attachment No. 19 — Page 3 Subordination 18405:6391366.7 [INSERT DDA SECTIONS 15.7,15.8,15.9 AND 15.11 VERBATIM] 7. Release of the City Dedication Parcels. Lender hereby agrees for the benefit of the City that upon recordation of each Final Tract Map it shall release from the lien of the Security Documents and reconvey, without cost or expense to the City, the City Dedication Parcels affected by each such map, provided that the parcels remaining subject to the lien of the Security Documents after such release and reconveyance shall constitute legal parcels in compliance with the Subdivision Map Act. 8. Defaults; Notification of Defaults. 8.1 Notice of Mortgage Default. Lender hereby agrees that it shall provide notice to the City concurrently with the provision of any notice to the Developer of each event which has occurred which is a default under any Security Document or which would trigger the commencement of any cure periods under any Security Document and Lender agrees that the City shall have the right to cure any such default up to one week prior to the conduct of any foreclosure sale under the Security Documents. 8.2 Notice of City Loan Default. City hereby agrees that it shall provide notice to the Lender concurrently with the provision of any notice to the Developer of each event which has occurred which is a default under or which would trigger the commencement of any cure periods under the City Deed of Trust and City agrees that the Lender shall have the right to cure any such default up to one week prior to the conduct of any foreclosure sale under the City Deed of Trust; provided, however, that any foreclosure by the City of the City Deed of Trust shall not affect the lien of the Lender on Developer Fee Parcel B in the event that the lien of the Lender is superior to the lien of the City per the terms of the DDA and so long as the lien of the Lender is not cross - collateralized with the lien on any other Parcel as provided in Section 15.2(g) of the DDA. 8.3 Notices, Demands and Communications. In accordance with the requirement of the DDA that Lender provide in writing to the City an address or addresses to which notice shall be provided by the City, Lender hereby provides the addresses set forth below to which notice to Lender under the DDA shall be provided and acknowledges receipt of the addresses at which notice to the City under the DDA shall be provided. Either Lender or the City may by written notice to the other in the manner specified in the DDA change the address to which notices to it shall be delivered. Unless otherwise provided in writing, all notices shall be addressed as follows: If to the City: Tustin City Hall 300 Centennial Way Tustin, CA 92780 Attention: City Manager and Attention: Assistant City Manager With a copy to: City Attorney City of Tustin Woodruff Spradlin & Smart 7/12/2004 Attachment No. 19 — Page 4 Subordination 18405:6391366.7 701 S. Parker Street, Suite 8000 Orange, CA 92868-4760 Attention: Lois E. Jeffrey, Esq. With a copy to: Steefel, Levitt & Weiss A Professional Corporation 550 South Hope Street, Suite 1665 Los Angeles, CA 90071 Attention: Amy E. Freilich, Esq. If to the Lender: With a copy to: 8.4 Notice to Lenders. Nothing set forth in this Subordination shall modify the provisions of Section 15.11(a) of the DDA, or of any other provision of the DDA pertaining to notice. 9. Miscellaneous. 9.1 Modification. No amendment, change, modification or supplement to this Subordination shall be valid and binding on the Parties unless it is represented in writing and signed by each of the Parties. 9.2 Applicable Law. This Subordination 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. 9.3 Bindin Ems. This Subordination and the terms, provisions, promises, covenants and conditions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors and assigns. 9.4 Counterparts. This Subordination 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 Subordination 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 Subordination by facsimile signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States, postage prepaid or 7/12/2004 Attachment No. 19 — Page 5 Subordination 18405:6391366.7 is hand delivered, and such manually signed page is actually received by the other Party within five (5) days of its execution. The Parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Subordination. 9.5 Notice by the City. Lender hereby agrees that the consent of the City to Lender as a Permitted Mortgagee set forth immediately below constitutes notice as required by Section 15.5 of the DDA. IN WITNESS WHEREOF, Lender has caused this Subordination to be duly executed as of the day and year first above written. LENDER By: _ Name: Its: 7/12/2004 Attachment No. 19 — Page 6 Subordination 18405:6391366.7 ACKNOWLEDGMENT AND CONSENT BY CITY OF TUSTIN By executing in the space set forth below, the City of Tustin hereby: (a) acknowledges receipt of the Deed of Trust and of the Subordination to which this execution page is attached; (b) agrees that ("Lender") shall be deemed by the City to be a "Permitted Mortgagee" as such term is defined in the DDA and, upon execution and recordation of the Deed of Trust to have all rights of a "Permitted Mortgagee" under the DDA; (c) agrees that the Deed of Trust shall be deemed by the City to be a "Permitted Mortgage" as ,such term is defined in the DDA; and (d) consents to the making of the Loan by Lender, which consent is provided in satisfaction of Section 15.2(a) of the DDA. ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM Special Counsel for the City Steefel, Levitt & Weiss A Professional Corporation City of Tustin, California By: William A. Huston City Manager Dated: 7/12/2004 Attachment No. 19 — Page 7 Subordination 18405:6391366.7 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) 7/12/2004 Attachment No. 19 — Page 8 Subordination 18405:6391366.7 STATE OF ) ss. COUNTY OF On , before me, , a Notary Public of the State of , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. NOTARY PUBLIC SEAL 7/12/2004 Attachment No. 19 — Page 9 Subordination 18405:6391366.7 EXHIBIT "A" LEGAL DESCRIPTION OF THE DEVELOPER PARCELS 7/12/2004 A-1 Form of Subordination 18405:6391366.7 ATTACHMENT NO. 20 CITY ESTOPPEL Vestar DDA Attachment No. 20 City Estoppel 07/12/04 18405:6391127.7 ATTACHMENT NO. 20 CITY ESTOPPEL ,20 [LENDER/TENANT/PURCHASER] Re: Tustin Legacy Project [$ Loan made by ("Lender") to ("Borrower")] [Lease (the "Lease") by and between , as landlord, and , as tenant] [Sale (the "Sale") by and between , as seller, and as buyer] Ladies and Gentlemen: The undersigned is writing regarding that certain project to be constructed on the land that is legally described in Exhibit A attached hereto (the "Project"). The Project is subject to that certain Tustin Legacy Disposition and Development Agreement (Retail Development), dated as of July _, 2004 (the "DDA") entered into by and between the undersigned and Vestar/Kimco Tustin, L.P., a California limited partnership (the "Developer"), as evidenced by that certain Memorandum of Tustin Legacy Disposition and Development Agreement (Retail Development) ("Memorandum of DDA"), dated for reference as of July , 2004, and recorded , 2004 in the official records of Orange County, California ("Official Records"), as Instrument No. , together with that certain Declaration of Special Restrictions (the "Special Restrictions", and, together with the DDA and the Memorandum of DDA, collectively, the "Property Documents"), dated as of July , 2004 and recorded , 2004 as Instrument No. of the Official Records. All initially capitalized terms not otherwise defined herein shall have the meanings assigned to them in the DDA. By its execution of this letter, the undersigned confirms that: (i) [except as set forth in this letter] the Property Documents are in full force and effect and have not been modified or amended, (ii) to the best of the undersigned's knowledge [except as set forth in this letter] there are no Material Defaults under any of the Property Documents nor any facts which now, or after giving of notice or the passage of time, or both, would constitute a Material Default 7/12/2004 Attachment No. 20 — Page 1 City Estoppel 18405:6391514.5 under any of the Property Documents or which would entitle the City to then exercise its Right of Reversion or Right of Purchase under the DDA and (iii) to the best of the undersigned's knowledge, [except as set forth in this letter] the City has no claim of breach, counterclaim, lien or offset presently existing under any of the Property Documents. As used in this letter, the phrase "to the best of the undersigned's knowledge" or words of like import, means that the facts in question are actually known (as opposed to imputed, inquiry or constructive knowledge) to the representative of the City signing below based upon such individuals' own knowledge without any additional due diligence or duty of inquiry. This letter is written for the sole reliance of the parties to which it is issued [and with respect to lenders only, together with their successors and assigns] as to the matters addressed herein and only with respect to the transactions [to be secured by the encumbrances] which are approved by the undersigned as set forth above, and may not be relied upon by any other party or for any other purpose without the express written consent of the undersigned. The provisions of this letter shall be binding upon the successors and assigns of the undersigned. The undersigned acknowledges that the parties to which this letter is addressed may rely upon this letter in [making certain financing available to the Borrower] [entering into the Lease][entering into the Sale]. : City of Tustin, California Christine Shingleton Assistant City Manager 7/12/2004 Attachment No. 20 — Page 2 City Estoppel 18405:6391514.5 ATTACHMENT NO. 21A CITY NONDISTURBANCE AND ATTORNMENT AGREEMENT FOR MAJOR PAD TRANSFEREES Vestar DDA Attachment No. 2 1 A City NDA 07/12/04 Major Pad 18405:6391127.7 ATTACHMENT NO. 21A CITY NON -DISTURBANCE AND ATTORNMENT AGREEMENT FOR MAJOR PAD TRANSFEREES 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: Space Above This Line Reserved for Recorder's Use RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT (Major Pad Transferee) THIS RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT (Major Pad Transferee) ("Agreement") is entered into this day of , by and among , a ("Major Pad Transferee"), VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("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"). WITNESSETH: A. The City and Developer have entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of July _, 2004 (the "DDA") with respect to the property described therein, which includes the parcel described on Exhibit A attached hereto (the "Major Pad"). A Memorandum of DDA dated as of July , 2004 ("Memorandum") and executed by the City and Developer has been recorded as Instrument No. of the official records of Orange County, California (the "Official Records"). City has also recorded against the Developer Parcels that certain Declaration of Special Restrictions, dated as of July , 2004 and recorded as Instrument No. of the Official Records (the "Special Restrictions"). Initially capitalized terms set forth in this Agreement and not defined herein shall have the meanings set forth therefor in the DDA. 7/12/2004 Attachment No. 21 A — Page 1 City NDA 18405:6391399.9 Major Pad B. Pursuant to the DDA, the City agreed to sell to Developer and Developer agreed to purchase the Major Pad, and Developer agreed to complete or cause to be completed construction of certain improvements on the Project Site, including on the Major Pad, within the time periods and subject to the additional terms and conditions set forth in the DDA. C. Developer intends to [lease/sell] the Major Pad to Major Pad Transferee pursuant to that certain transfer document [recorded agreement surviving closing (in the case of a purchase)/Lease] entered into by Developer and Major Pad Transferee dated (the "Conveyance Agreement" or, if a lease, "Lease"). Under the terms and provisions of the DDA, Major Pad Transferee is an End User and a Class A User and is not a Prohibited User or does not intend to engage in a Prohibited Use upon the Major Pad. D. The DDA provides that, unless specifically released by the City pursuant to the terms and conditions of the DDA, each Major Pad Transferee shall be deemed to have assumed the obligations of Developer under the DDA and to take subject to the Special Restrictions and the CC&Rs with respect to the Major Pad acquired by such Major Pad Transferee, including without limitation, the obligation to construct the Improvements within the time period set forth for Completion of such Improvements by Developer as set forth in the DDA and the Schedule of Performance, the environmental indemnities set forth in the DDA, and the Right of Purchase and the Right of Reversion, as applicable, in the event of a Material Default; provided, however, that the DDA provides that in the event that Developer and a Major Pad Transferee which is also an End User enter into certain agreements, including the [Conveyance Agreement/Lease] (the "Conveyance Documents"), which incorporate for the benefit of the City the provisions required by Section 2.2 of the DDA and provided that the Transfer is otherwise in accordance with the requirements of Section 2.2 of the DDA, including consent by the City if applicable, the City shall (a) waive for the benefit of Major Pad Transferee only: (i) the Right of Reversion with respect to the interests of Major Pad Transferee in and to the Major Pad pursuant to Section 2.2.2(d) of the DDA, (ii) the obligation of Major Pad Transferee to assume the obligations of Developer under the DDA and (iii) the environmental indemnity contained in Section 10.2.1 of the DDA, with respect only to the obligations of Major Pad Transferee and its successors and assigns (the "Waived Obligations") and (b) modify certain provisions of the Right of Purchase and modify the Completion date for the Vertical Improvements to the applicable Pad Completion Trigger Date. E. The DDA also provides the City with a consent right with respect to all Major Pad Transfers. The parties desire to confirm that the City has reviewed and approved the Major Pad Transfer and Major Pad Transferee and the Conveyance Documents as meeting the requirements of Section 2.2 of the DDA. F. The parties desire to enter into to this Agreement in order to (i) set forth the consent of the City to the Major Pad Transfer, Major Pad Transferee (if required) and the Conveyance Documents as meeting the requirements of Section 2.2 of the DDA, (ii) to provide certain rights and remedies in favor of the City with respect to the development of the Major Pad by Major Pad Transferee, (iii) to provide for the waiver by the City of the Waived Obligations and the modification of the Completion date for the Vertical Improvements on the Major Pad to the applicable Pad Completion Trigger Date on the terms and conditions specified in this 7/12/2004 Attachment No. 2 1 A — Page 2 City NDA 18405:6391399.9 Major Pad Agreement and subject to execution by Developer and Major Pad Transferee of the Conveyance Documents in the form approved by the City. 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: 1. City's Waiver and Completion Date Modification. The City hereby (a) waives solely as it may relate to the interests of Major Pad Transferee in and to the Major Pad (i) the Right of Reversion, (ii) the obligation of Major Pad Transferee to assume the obligations of Developer under the DDA and (iii) the obligations of Major Pad Transferee under the environmental indemnity contained in Section 10.2.1 of the DDA, (b) modifies and amends the Completion date for the Vertical Improvements such that the Completion date shall be the applicable Pad Completion Trigger Date, subject to Force Majeure Delay and (c) agrees to the modifications to the Right of Purchase set forth in Section 2.5 of this Agreement. 2. City Rights. 2.1 The City has reviewed and approved the terms and conditions set forth in the Conveyance Documents granting Developer [in the case of a lease, the right to terminate the Lease or to buy out Major Pad Transferee's leasehold interest in the Major Pad and the Improvements thereon (provided that the Lease may include one or both of the foregoing remedies, in Developer's discretion)] [in the case of a sale of the fee interest in the Major Pad to Major Pad Transferee, a written option or other legally enforceable right to purchase the fee interest in and all Improvements on the Major Pad], in each case for a purchase price not to exceed the Book Value of the End User's interest in the Retail Pad and the Improvements thereon (the "Developer Rights") upon the occurrence of (a) Material Default (as defined in the Special Restrictions) of the Special Restrictions by Major Pad Transferee, its Successor Owner or any End User of such Major Pad or (b) failure of Major Pad Transferee or its Successor Owner on or before [specify applicable Pad Completion Trigger Date] to Complete the Vertical Improvements on its Retail Pad and stock and open for a minimum of one (1) calendar day a retail establishment operated by an End User approved in accordance with Section 12.2 of the DDA ("Major Pad Obligations"). 2.2 With respect to the Conveyance Documents, the Developer Rights and the Major Pad Obligations, Developer and Major Pad Transferee hereby covenant and agree for the benefit of the City that (a) Developer and Major Pad Transferee shall execute the Conveyance Documents setting forth the Developer Rights in the form approved by the City without alteration, amendment or modification thereof, (b) without the prior written consent of the City, which City may grant or withhold in its sole discretion, neither Developer nor Major Pad Owner shall materially amend, modify or terminate the Conveyance Documents and/or amend or modify the Conveyance Documents in a manner adversely affecting the City's rights pursuant to the DDA, the Special Restrictions and/or this Agreement; any such purported amendment, modification or termination shall be wholly ineffective as to City (such that City shall have a continued right to enforce as third party beneficiary the provisions of the agreement to which it consented); and (c) Major Pad Transferee or its Successor Owner shall, on or before [specify applicable Pad Completion Trigger Date] satisfy the Major Pad Obligations. 7/12/2004 Attachment No. 2 1 A — Page 3 City NDA 18405:6391399.9 Major Pad 2.3 The parties hereto agree that in the event that Developer and/or Major Pad Transferee shall be in default in the performance of its obligations under the terms of this Agreement, or in Material Default of the DDA or the Special Restrictions, as the case may be, the City shall have available to it all remedies set forth in this Agreement, the DDA and/or the Special Restrictions, provided, however, that from and after the Transfer of the Major Pad to the Major Pad Transferee and with respect to the Major Pad and Major Pad Transferee only (a) the City's Right of Purchase shall be subject to the modifications set forth in Section 2.5 of this Agreement and (b) the City shall not have the right to exercise the Right of Reversion. 2.4 Developer and Major Pad Transferee hereby grant to the City the explicit right to enforce the Developer's Rights described in Section 2.1 in the name of the City or, at the City's election, in the name of Developer for the City's account, and the City is specifically intended as a third -party beneficiary under and pursuant to the terms and conditions in the [recordable instrument] [lease] setting forth such Developer Rights (it being understood and agreed that the City's status as a third -party beneficiary shall be a right coupled with an interest and cannot be revoked). In addition, Developer and Major Pad Transferee hereby acknowledge and agree that the City shall have the express right to seek specific performance (a) against Developer requiring Developer to exercise its rights and remedies under any and all agreements between it and Major Pad Transferee and/or (b) against Major Pad Transferee or its successor in interest directly in the event that Developer fails to enforce its rights and remedies. 2.5 The Right of Purchase in favor of the City contained in the DDA shall continue in full force and effect with respect to the Major Pad as a right separate from and in addition to Developer's rights described in Section 2.1 of this Agreement and from City's right to enforce and implement such rights pursuant to Section 2.2 of this Agreement, provided that (a) the City's right to exercise the Right of Purchase with respect to the Major Pad shall only commence if, by the Pad Completion Trigger Date, Major Pad Transferee shall not have satisfied the Major Pad Obligations and (b) the price to [purchase such leasehold interest] [purchase the fee interest] shall not exceed the Book Value of the End User's interest in the Retail Pad and the Improvements thereon. 2.6 Nothing set forth in this Agreement shall impair or modify the City's Right of Purchase or Right of Reversion contained in the DDA with respect to property not Transferred to Major Pad Transferee. 3. Restrictions. Notwithstanding anything to the contrary contained herein or in the Conveyance Documents: (a) Developer, its successors and assigns and Major Pad Transferee, its successors and assigns and the Major Pad are and shall remain subject to this Agreement, the, DDA (except as expressly modified herein as to the Major Pad Transferee), the Special Restrictions and the CC&Rs; and (b) Developer hereby acknowledges and agrees that it retains all the obligations under the DDA relating to such Major Pad, including construction of the Horizontal Improvements and Developer's Backbone Infrastructure Work, payment of the Project Fair Share Contribution and the performance of Developer's maintenance obligations, [ADD IF APPLICABLE: subject, however, to Developer's assignment to Major Pad Transferee of the obligation to carry out construction of the Vertical Improvements on the Major Pad and the maintenance obligations under and in accordance with Section 12.3 of the DDA.] 7/12/2004 Attachment No. 21 A — Page 4 City NDA 18405:6391399.9 Major Pad 4. [USE IF MAJOR PAD TRANSFEREE IS A TENANT UNDER A GROUND LEASE] [City as Successor to Developer. In the event that, through or in lieu of the exercise by City of any of its rights and/or remedies pursuant to this Agreement, the DDA, the Ground Lease, the Special Restrictions and the CC&Rs or otherwise (the "Remedies"), City shall become a successor in interest to Developer under the Lease, City and Major Pad Transferee agree that: 4.1 City shall not disturb Major Pad Transferee's use or occupancy of the Major Pad as long as Major Pad Transferee is not in default of its obligations under this Agreement or the Lease beyond any applicable grace or cure period set forth herein or therein or in Material Default in the performance or observance of any term, covenant or condition of the DDA or the Special Restrictions. 4.2 The occupancy and possession of the Major Pad by Major Pad Transferee and the rights of Major Pad Transferee under the Lease shall remain in full force and effect and shall not be terminated or disturbed except in accordance with the terms of this Agreement or the Lease. 4.3 Major Pad Transferee agrees that it shall attorn to the City, and any other successor in interest to Developer, and their successors and assigns and recognizes City as "landlord" under the Lease. Major Pad Transferee shall perform, and be bound under, all of the terms, covenants and conditions of the Lease for the balance of the term thereof remaining, including any renewal options which are exercised in accordance with the terms of the Lease, and shall recognize City and any such successor as landlord under the Lease. Major Pad Transferee agrees to execute and deliver to City and such successor such further assurance and other documents, including a new lease upon the same terms and conditions as the Lease, confirming the foregoing, as City or such successor may reasonably request. Notwithstanding the foregoing and except as specifically set forth in Section 1 of this Agreement, nothing contained herein shall be interpreted to release Developer, the Major Pad and/or Major Pad Transferee from the obligations imposed under the DDA and/or the Special Restrictions. 4.4 The interests so acquired by City shall not merge with any other interests of City in the Major Pad if such merger would result in the termination of the Lease. 4.5 In no event shall City, or any other person who may become a successor in interest to Developer under the Lease, through or in lieu of an exercise of any of the Remedies be (i) liable for or bound by any act or omission of Developer or any predecessor in interest to City or any successor; (ii) liable for payment of any sums due from Developer to Major Pad Transferee including, without limitation, any (x) security deposit (unless City shall have actually received and failed to refund such deposit in accordance with the terms of the Lease), or (y) payment of rent or additional rent made by Major Pad Transferee to Developer or any predecessor in interest thereof for more than (1) month in advance of the due date thereunder or (z) payments of any kind owing from Developer to Major Pad Transferee under the Lease or otherwise, including, without limitation, any refunds or damages owed from Developer to Major Pad Transferee, (iii) subject to any offsets, counterclaims or defenses which Major Pad Transferee may have against 7/12/2004 Attachment No. 21 A — Page 5 City NDA 18405:6391399.9 Major Pad Developer or any predecessor in interest thereof (including, without limitation, any offset, abatement or right of deduction provided for under the terms of the Lease); provided, however, that nothing herein shall be deemed to relieve City or such successor from performing its obligations as landlord under the Lease from and after the date City succeeds to the position of Developer under the Ground Lease unless specifically set forth herein; (iv) bound by any agreement purporting to cancel, surrender, amend or modify the Lease, without the express written consent of City or its successor in interest; (v) required to rebuild, repair or restore any damage to the Major Pad or any portion thereof caused by the occurrence of an uninsured casualty or following a condemnation of all or any portion of the Major Pad for which there are insufficient condemnation proceeds to pay the cost of such rebuilding, repair or restoration; (vi) liable with respect to any obligation to build out any improvements for the Major Pad including, without limitation, the Horizontal Improvements, the Developer's Backbone Infrastructure Work, the Tustin Legacy Backbone Infrastructure Program Improvements, the Vertical Improvements, any tenant improvements or any other improvements to be built upon the Project Site and/or any obligation to pay any tenant improvement allowance in connection with the Lease; (vii) liable for any payments made in, under or pursuant to the Lease for any period prior to the City, or any other person becoming a successor in interest to Developer pursuant to the exercise of the Remedies; or (viii) 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 (as defined under any applicable laws, "Hazardous Materials"), or for any indemnities under the Lease concerning the presence, release or discharge of any Hazardous Materials on, under or about the Major Pad, or for any permits and waste discharge requirements issued to and/or required of Major Pad Transferee or Developer by any governmental body or City, or any claims made or threatened by any person or governmental body or City against Major Pad Transferee or Developer or the Major Pad relating to damage, contribution, cost recovery compensation, loss or injury resulting from the presence, release or discharge of any Hazardous Materials on, under or about the Major Pad. City shall also be relieved of any obligation of Developer under the Lease accruing after an assignment by City of its interest in the Major Pad. 4.6 From and after the date City succeeds to the position of Developer under the Lease, all claims, demands or causes of action which Major Pad Transferee may have or may have had against Developer with respect to the Lease as of the date of such succession, under any provisions of, or with respect to the Lease, or on account of any matter, condition or circumstance arising out of the relationship of Developer and Major Pad Transferee under the Lease, Major Pad Transferee's occupancy of the Major Pad or Developer's prior ownership thereof, shall be enforceable solely against Developer personally to the extent provided in the Lease, and neither City or its successors and assigns, nor the Major Pad shall be subject to any such claim, demand or cause of action.] 5. [USE IF MAJOR PAD TRANSFEREE IS A TENANT UNDER A GROUND LEASE] [Additional Maior Pad Transferee Agreements. If Major Pad Transferee holds a leasehold interest in the Major Pad, Major Pad Transferee further agrees that: 7/12/2004 Attachment No. 21 A — Page 6 City NDA 18405:6391399.9 Major Pad 5.1 Except for the payment of the first month's rent, Major Pad Transferee shall not pay, and Developer shall not accept, any rent or additional rent more than thirty (30) days in advance of the applicable due date under the Lease. 5.2 Major Pad Transferee shall send a copy of any notice or statement under the Lease pertaining to Developer's default thereunder to City at the same time such default notice or statement is sent to Developer, and Major Pad Transferee agrees that, in the event Developer shall have failed to cure such default within the time period provided for in the Lease, Major Pad Transferee shall not exercise any remedies available by virtue of such default unless (x) Major Pad Transferee shall have notified City in writing of Developer's failure to cure such default and (y) Major Pad Transferee shall have afforded City or its successors or assigns an additional sixty (60) days from the receipt of such notice to cure such default or if such default cannot be cured within sixty (60) days, then such additional time as may be necessary if, within such sixty (60) day period, City or its successors and/or assigns commences and thereafter diligently pursues the cure of such . default (including, without limitation, commencement of possessory proceedings, if necessary to effect such cure) and, in any such event, the Lease shall remain in full force and effect while such cure is being diligently pursued, provided that exercise of such cure rights by the City shall be a right and not an obligation of City and, in the event that City does seek to cure such default, the City shall be entitled to reimbursement by Developer of all direct and actual costs and expenses incurred by the City in curing such default. 5.3 Major Pad Transferee shall, upon the execution of this Agreement and thereafter upon the request of City, provide City or its successors and assigns with a tenant estoppel certificate, in form and substance attached to the Lease or otherwise reasonably acceptable to the City, stating, among other things, (i) that a complete, true and correct copy of the Lease is attached thereto and is unmodified and in full force and effect (or, if there have been modifications, that such Lease is in full force and effect, as modified and stating the modifications or if such Lease is not in full force and effect, so stating), (ii) the dates, if any, to which any rent and other sums payable thereunder have been paid, and (iii) that Major Pad Transferee is not aware of any default which has not been cured, except as to defaults specified in said certificate. Upon request of Major Pad Transferee, City shall furnish a City Estoppel to it in accordance with the DDA]. 6. Termination of Agreement. This Agreement shall automatically terminate and expire without the necessity of further action by any party upon the Recordation of a Final Certificate of Compliance for the Project, provided that following such Recordation and termination of this Agreement (a) nothing contained in this Agreement shall modify or affect the obligations of Developer and/or Major Pad Transferee under the Special Restrictions and/or the CC&Rs, including, without limitation, with respect to the release contained in Section 4.4.3 of the DDA and the environmental indemnity provisions contained in Section 10.2.2 of the DDA and (b) the waiver by the City of the environmental indemnity provisions contained in Section 10.2.1 of the DDA as to Major Pad Transferee shall survive the termination of this Agreement. 7. Acknowledgment and Aereement by Developer and Major Pad Transferee. 7/17/2004 Attachment No. 21 A — Page 7 City NDA 18405:6391399.9 Major Pad 7.1 Developer, as [Developer under the DDA and][landlord] under the [Conveyance Agreement /]Lease], and Major Pad Transferee, as [purchaser][tenant] under the [Conveyance Agreement/Lease], represent, warrant, acknowledge and agree for themselves and their heirs, successors and assigns, that: 7.1.1 Except as expressly set forth herein, this Agreement does not constitute a waiver by City of any of its rights under the DDA, the CC&Rs and/or the Special Restrictions; and/or in any way release Developer and/or Major Pad Transferee from their respective obligations to comply with the terms, provisions, conditions, covenants, agreements and clauses of the DDA, the CC&Rs and/or the Special Restrictions, including, without limitation, the release set forth in Section 4.4.3 of the DDA and the environmental indemnity set forth in Section 10.2.2 of the DDA. 7.1.2 The provisions of this Agreement do not impair or modify the City's Right of Purchase or Right of Reversion contained in the DDA with respect to property other than the Major Pad. 7.1.3 City has no obligation nor shall it incur any liability with respect to any warranties of any nature whatsoever, whether pursuant to the [Conveyance Agreement/Lease] or otherwise, including, but not limited to, any warranties respecting use, compliance with zoning, Developer's title, Developer's authority, habitability, fitness for purpose or possession. 7.1.4 Major Pad Transferee is an End User and a Class A User and is not a Prohibited User. Major Pad Transferee has not and will not engage in a Prohibited Use upon the Major Pad. 7.2 Developer, as Developer under the DDA and [landlord/seller] under the [Conveyance Agreement/Lease] hereby represents, warrants, acknowledges and agrees for itself and Successor Owners that an environmental insurance policy [specify policy number, date of issuance and issuing company] meeting the requirements of Section 11. 1.4 of the DDA and with a term of not less than ten (10) years from the date of the Initial Closing has been acquired by Developer and remains in full force and effect without modification. 7.3 City hereby acknowledges that the policy of environmental insurance described in Section 7.2 above has been reviewed by the City and confirms that such policy meets the requirements set forth in Section 11. 1.4 [(a) or (b)] of the DDA. 8. Notice. 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 United States mail 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 a national overnight delivery service reasonably approved by the Parties (Federal 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 7/12/2004 Attachment No. 2 1 A — Page 8 City NDA 18405:6391399.9 Major Pad received by the recipient party when sent by facsimile transmission or email at the number or email address set forth below (provided, however, that notices given by facsimile or email shall not be effective unless either (i) a duplicate copy of such notice is promptly sent by any method permitted under this Section 8 other than by facsimile or email; 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: If to Major Pad Transferee: To the address set forth in the [Conveyance Agreement/Lease] If to the City: Tustin City Hall 300 Centennial Way Tustin, CA 92780 Attention: City Manager and Attention: Assistant City Manager Facsimile: (714) 838-1602 With a copy to: City Attorney, City of Tustin Woodruff Spradlin & Smart 701 S. Parker Street, Suite 8000 Orange, CA 92868-4760 Attention: Lois E. Jeffrey, Esq. Facsimile: (714) 835-7787 With a copy to: Steefel, Levitt & Weiss A Professional Corporation 550 South Hope Street, Suite 1665 Los Angeles, CA 90071 Attention: Amy E. Freilich, Esq. Facsimile: 310-599-3450 If to Developer: Vestar/KIMCO Tustin, L.P., 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Richard Kuhle Facsimile: 602-955-2298 With a copy to: Vestar Development Company 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Allan J. Kasen, Esq. Facsimile: 602-955-2298 7/12/2004 Attachment No. 2 1 A — Page 9 City NDA 18405:6391399.9 Major Pad With a copy to (for legal notices): Capitol Corporate Services, Inc. 455 Capitol Mall Complex, Suite 217 Sacramento, CA 95814 Telephone: 800-327-4842 Facsimile: 800-770-1332 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. Preparation Costs. Developer shall pay to the City the City's reasonable out-of-pocket fees and expenses, including legal fees, incurred with respect to the preparation and delivery of this Agreement; provided, however, that if Developer presents a completed Recognition, Non - Disturbance and Attornment Agreement in the form and substance of this Agreement with no changes, there shall be no charge for the first Non -Disturbance Agreement for a first Retail Space in a given calendar year. 10. Miscellaneous. 10.1 Agreement Supersedes. This Agreement supersedes any inconsistent provision of the Conveyance Documents. 10.2 Modification. No amendment, change, modification or supplement to this Agreement shall be valid and binding on the Parties unless in writing and signed by each of the parties. 10.3 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. 10.4 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 signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States mail, postage prepaid or is hand delivered, and such manually signed page is actually received by the other party within five (5) days of its execution. The parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Agreement. 10.5 Successors and Assigns. This Agreement and the covenants, conditions, restrictions, obligations, rights and benefits contained herein are hereby agreed by Developer, Major Pad Transferee and the City to be covenants running with the land and enforceable as equitable servitudes against the Major Pad, and are hereby declared to be and shall be binding upon the Major Pad, Developer, Major Pad Transferee and the successors and assigns of 7/12/2004 Attachment No. 2 1 A — Page 10 City NDA 18405:6391399.9 Major Pad Developer and/or Major Pad Transferee owning all or any portion of the Major Pad for the benefit of the City and the successors and assigns of the City and for the benefit of the Major Pad, Developer and Major Pad Transferee and any successor or assign of Developer and/or Major Pad Transferee approved by the City as required by and otherwise in accordance with the Transfer provisions of the DDA (set forth in Section 2.2 thereof). 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 in the City's sole discretion, except as otherwise set forth in the DDA. [signatures on following page] 7/12/2004 Attachment No. 21 A — Page 11 City NDA 18405:6391399.9 Major Pad IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above set forth. Dated: ATTEST: APPROVED AS TO FORM Special Counsel for the City MAJOR PAD TRANSFEREE: By: _ Name: Title: DEVELOPER: Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: Name: Title: CITY: City of Tustin, California By: Name: Title: 7/12/2004 Attachment No. 2 1 A — Page 12 City NDA 18405:6391399.9 Major Pad STATE OF CALIFORNIA ss. COUNTY OF On , 2004 before me, a Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public 7/12/2004 Attachment No. 21 A — Page 13 City NDA 18405:6391399.9 Major Pad STATE OF CALIFORNIA ss. COUNTY OF On , 2004 before me, a Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public 7/12/2004 Attachment No. 21 A — Page 14 City NDA 18405:6391399.9 Major Pad Exhibit A Legal Description 7/12/2004 A —Page 1 Legal Description 18405:6391399.9 ATTACHMENT NO. 21B CITY NONDISTURBANCE AND ATTORNMENT AGREEMENT FOR MINOR PAD TRANSFEREES Vestar DDA Attachment No. 2 1 B City NDA 07/12/04 Minor Pad 18405:6391127.7 ATTACHMENT NO. 21B CITY NON -DISTURBANCE AND ATTORNMENT AGREEMENT FOR MINOR PAD TRANSFEREES 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: Space Above This Line Reserved for Recorder's Use RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT (Minor Pad Transferee) THIS RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT (Minor Pad Transferee) ("Agreement") is entered into this day of , by and among , a ("Minor Pad Transferee"), VESTARIKIMCO TUSTIN, L.P., a California limited partnership ("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"). WITNESSETH: A. The City and Developer have entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of July _, 2004 (the "DDA") with respect to the property described therein, which includes the parcel described on Exhibit A attached hereto (the "Minor Pad"). A Memorandum of DDA dated as of July , 2004 ("Memorandum") and executed by the City and Developer has been recorded as Instrument No. of the official records of Orange County, California (the "Official Records"). City has also recorded against the Developer Parcels that certain Declaration of Special Restrictions, dated as of July , 2004 and recorded as Instrument No. of the Official Records (the "Special Restrictions"). Initially capitalized terms set forth in this Agreement and not defined herein shall have the meanings set forth therefor in the DDA. 7/12/2004 Attachment No. 21B — Page 1 City NDA Minor Pad 18045:6395915.4 B. Pursuant to the DDA, the City agreed to sell to Developer and Developer agreed to purchase the Minor Pad, and Developer agreed to complete or cause to be completed construction of certain improvements on the Project Site, including on the Minor Pad, within the time periods and subject to the additional terms and conditions set forth in the DDA. C. Developer intends to [lease/sell] the Minor Pad to Minor Pad Transferee pursuant to [specify written agreement] dated as of ("Conveyance Agreement" or, if lease, "Lease"). Under the terms and provisions of the DDA, Minor Pad Transferee is an End User and a Class A User and is not a Prohibited User or does not intend to engage in a Prohibited Use upon the Minor Pad. D. The DDA provides that each Minor Pad Transferee shall be "subject to" the DDA, the Special Restrictions and the CC&Rs, including without limitation the obligations of Developer under the DDA with respect to the Minor Pad acquired by such Minor Pad Transferee, the obligation to construct the Improvements within the time period set forth for Completion of such Improvements by Developer as set forth in DDA and the Schedule of Performance and the Right of Purchase and Right of Reversion in the event of a Material Default; provided, however, that the DDA provides that in the event that a Minor Pad Transferee which is also an End User enters into a non -disturbance and attornment agreement with the City satisfying the provisions of Section 2.2.4 of the DDA, the City shall (a) waive for the benefit of Minor Pad Transferee only the terms of the Right of Reversion with respect to the interests of Minor Pad Transferee in and to the Minor Pad and (b) modify certain provisions of the Right of Purchase and the Completion date for the Vertical Improvements on the Minor Pad to the applicable Pad Completion Trigger Date [specify]. E. The parties desire to enter into to this Agreement in order to (i) provide certain rights and remedies in favor of the City with respect to the development of the Minor Pad by Minor Pad Transferee, (iii) provide for the waiver by the City of the Waived Obligations and the modification of the Completion date for the Vertical Improvements on the Minor Pad to the applicable Pad Completion Trigger Date on the terms and conditions specified in this 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: 1. City's Waiver and Completion Date Modification. The City hereby (a) waives the Right of Reversion solely as it may relate to the interests of Minor Pad Transferee in and to the Minor Pad, (b) modifies and amends the Completion date for the Improvements such that the Completion date for the Vertical Improvements on the Minor Pad shall be the applicable Pad Completion Trigger Date [specify] and (c) agrees to the modifications to the Right of Purchase set forth in Section 2.1 of this Agreement. 2. City Rights. 2.1 The parties hereto agree that in the event that Developer and/or Minor Pad Transferee shall be in default in the performance of its obligations under the terms of this 7/12/2004 Attachment No. 21B — Page 2 City NDA Minor Pad 18045:6395915.4 Agreement, or in Material Default of the DDA or the Special Restrictions, the City shall have available to it all remedies set forth in this Agreement, the DDA and/or the Special Restrictions, as the case may be, provided, however, that from and after the Transfer of the Minor Pad to the Minor Pad Transferee and with respect to the Minor Pad and Minor Pad Transferee only: (a) the City shall not have the right to exercise the Right of Reversion and (b) the Right of Purchase in favor of the City contained in the DDA shall continue in full force and effect with respect to the Minor Pad, provided that (i) the City's right to exercise the Right of Purchase with respect to the Minor Pad shall only commence if Minor Pad Transferee shall not have Completed the Vertical Improvements on the Minor Pad on or before the applicable Pad Completion Trigger Date, subject to Force Majeure Delay and (ii) the purchase price with respect to the Right to Purchase [such leasehold interest] [the fee interest] shall not exceed the End User's Book Value for the End User's interest in the Retail Pad and the Improvements thereon. 2.2 Nothing set forth in this Agreement shall impair or modify the City's Right of Purchase or Right of Reversion contained in the DDA with respect to property not Transferred to Minor Pad Transferee. 3. Restrictions. Notwithstanding anything to the contrary contained herein or in the [Conveyance Agreement/Lease]: (a) Developer, its successors and assigns and Minor Pad Transferee, its successors and assigns and the Minor Pad are and shall remain subject to this Agreement, the DDA (except as expressly modified herein as to the Minor Pad Transferee), the Special Restrictions and the CC&Rs; and (b) Developer hereby acknowledges and agrees that it retains all the obligations under the DDA. relating to such Minor Pad, including construction of the Horizontal Improvements and Developer's Backbone Infrastructure Work, payment of the Project Fair Share Contribution and the performance of Developer's maintenance obligations, [ADD IF APPLICABLE: subject, to Developer's assignment to Minor Pad Transferee of the obligation to carry out construction of the Vertical Improvements on the Minor Pad and to any assignment of the maintenance obligations under and in accordance with Section 12.3 of the DDA]. 4. [USE IF MINOR PAD TRANSFEREE IS A TENANT UNDER A GROUND LEASE] [City as Successor to.Develoyer. In the event that, through or in lieu of the exercise by City of any of its rights and/or remedies pursuant to this Agreement, the DDA, the Ground Lease, the Special Restrictions and the CC&Rs or otherwise (the "Remedies"), City shall become a successor in interest to Developer under the Lease, City and Minor Pad Transferee agree that: 4.1 City shall not disturb Minor Pad Transferee's use or occupancy of the Minor Pad as long as Minor Pad Transferee is not in default of its payment or performance obligations under this Agreement or the Lease beyond any applicable grace or cure period set forth herein or therein or in Material Default in the performance or observance of any term, covenant or condition of the DDA or the Special Restrictions. 4.2 The occupancy and possession of the Minor Pad by Minor Pad Transferee and the rights of Minor Pad Transferee under the Lease shall remain in full force and effect and shall not be terminated or disturbed except in accordance with the terms of this Agreement or the Lease. 7/12/2004 Attachment No. 21B — Page 3 City NDA Minor Pad 18045:6395915.4 4.3 Minor Pad Transferee agrees that it shall attorn to the City, and any other successor in interest to Developer, and their successors and assigns and recognizes City as "landlord" under the Lease. Minor Pad Transferee shall perform, and be bound under, all of the terms, covenants and conditions of the Lease for the balance of the term thereof remaining, including any renewal options which are exercised in accordance with the terms of the Lease, and shall recognize City and any such successor as landlord under the Lease. Minor Pad Transferee agrees to execute and deliver to City and such successor such further assurance and other documents, including a new lease upon the same terms and conditions as the Lease, confirming the foregoing, as City or such successor may reasonably request. Notwithstanding the foregoing and except as specifically set forth in Section 1 of this Agreement, nothing contained herein shall be interpreted to release Developer, the Minor Pad and/or Minor Pad Transferee from the obligations imposed under the DDA and/or the Special Restrictions. 4.4 The interests so acquired by City shall not merge with any other interests of City in the Minor Pad if such merger would result in the termination of the Lease. 4.5 In no event shall City, or any other person who may become a successor in interest to Developer under the Lease, through or in lieu of an exercise of any of the Remedies be (i) liable for or bound by any act or omission of Developer or any predecessor in interest to City or any successor; (ii) liable for payment of any sums due from Developer to Minor Pad Transferee including, without limitation, any (x) security deposit (unless City shall have actually received and failed to refund such deposit in accordance with the terms of the Lease), or (y) payment of rent or additional rent made by Minor Pad Transferee to Developer or any predecessor in interest thereof for more than (1) month in advance of the due date thereunder or (z) payments of any kind owing from Developer to Minor Pad Transferee under the Lease or otherwise, including, without limitation, any refunds or damages owed from Developer to Minor Pad Transferee, (iii) subject to any offsets, counterclaims or defenses which Minor Pad Transferee may have against Developer or any predecessor in interest thereof (including, without limitation, any offset, abatement or right of deduction provided for under the terms of the Lease); provided, however, that nothing herein shall be deemed to relieve City or such successor from performing its obligations as landlord under the Lease from and after the date City succeeds to the position of Developer under the Lease unless specifically set forth herein; (iv) bound by any agreement purporting to cancel, surrender, amend or modify the Lease, without the express written consent of City or its successor in interest; (v) required to rebuild, repair or restore any damage to the Minor Pad or any portion thereof caused by the occurrence of an uninsured casualty or following a condemnation of all or any portion of the Minor Pad for which there are insufficient condemnation proceeds to pay the cost of such rebuilding, repair or restoration; (vi) liable with respect to any obligation to build out any improvements for the Minor Pad including, without limitation, the Horizontal Improvements, the Developer's Backbone Infrastructure Work, the Tustin Legacy Backbone Infrastructure Program Improvements, the Vertical Improvements, any tenant improvements or any other improvements to be built upon the Project Site and/or any obligation to pay any tenant improvement allowance in connection with the Lease; (vii) liable for any payments made in, under or pursuant to the Lease for any period prior to the City, or any other person becoming a successor in interest to Developer pursuant to the exercise of the Remedies; or 7/12/2004 Attachment No. 21B — Page 4 City NDA Minor Pad 18045:6395915.4 (viii) 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 (as defined under any applicable laws, "Hazardous Materials"), or for any indemnities under the Lease concerning the presence, release or discharge of any Hazardous Materials on, under or about the Minor Pad, or for any permits and waste discharge requirements issued to and/or required of Minor Pad Transferee or Developer by any governmental body or City, or any claims made or threatened by any person or governmental body or City against Minor Pad Transferee or Developer or the Minor Pad relating to damage, contribution, cost recovery compensation, loss or injury resulting from the presence, release or discharge of any Hazardous Materials on, under or about the Minor Pad. City shall also be relieved of any obligation of Developer under the Lease accruing after an assignment by City of its interest in the Minor Pad. 4.6 From and after the date City succeeds to the position of Developer under the Lease, all claims, demands or causes of action which Minor Pad Transferee may have or may have had against Developer with respect to the Lease as of the date of such succession, under any provisions of, or with respect to the Lease, or on account of any matter, condition or circumstance arising out of the relationship of Developer and Minor Pad Transferee under the Lease, Minor Pad Transferee's occupancy of the Minor Pad or Developer's prior ownership thereof, shall be enforceable solely against Developer personally to the extent provided in the Lease, and neither City or its successors and assigns nor the Minor Pad shall be subject to any such claim, demand or cause of action.] 5. [USE IF MINOR PAD TRANSFEREE IS A TENANT UNDER A GROUND LEASEI [Additional Minor Pad Transferee Agreements. If Minor Pad Transferee holds a leasehold interest in the Minor Pad, Minor Pad Transferee further agrees that: 5.1 Except for the payment of the first month's rent, Minor Pad Transferee shall not pay, and Developer shall not accept, any rent or additional rent more than thirty (30) days in advance of the applicable due date under the Lease. 5.2 Minor Pad Transferee shall send a copy of any notice or statement under the Lease pertaining to Developer's default thereunder to City at the same time such default notice or statement is sent to Developer, and Minor Pad Transferee agrees that, in the event Developer shall have failed to cure such default within the time period provided for in the Lease, Minor Pad Transferee shall not exercise any remedies available by virtue of such default unless (x) Minor Pad Transferee shall have notified City in writing of Developer's failure to cure such default and (y) Minor Pad Transferee shall have afforded City or its successors or assigns an additional sixty (60) days from the receipt of such notice to cure such default or if such default cannot be cured within sixty (60) days, then such additional time as may be necessary if, within such sixty (60) day period, City or its successors and/or assigns commences and thereafter diligently pursues the cure of such default (including, without limitation, commencement of possessory proceedings, if necessary to effect such cure) and, in any such event, the Lease shall remain in full force and effect while such cure is being diligently pursued, provided that exercise of such cure 7/12/2004 Attachment No. 21B —Page 5 City NDA Minor Pad 18045:6395915.4 rights by the City shall be a right and not an obligation of City and, in the event that City does seek to cure such default, the City shall be entitled to reimbursement by Developer of all direct and actual costs and expenses incurred by the City in curing such default. 5.3 Minor Pad Transferee shall, upon the execution of this Agreement and thereafter upon the request of City, provide City or its successors and assigns with a tenant estoppel certificate, in form and substance attached to the Lease or otherwise reasonably acceptable to the City, stating, among other things, (i) that a complete, true and correct copy of the Lease is attached thereto and is unmodified and in full force and effect (or, if there have been modifications, that such Lease is in full force and effect, as modified and stating the modifications or if such Lease is not in full force and effect, so stating), (ii) the dates, if any, to which any rent and other sums payable thereunder have been paid, and (iii) that Minor Pad Transferee is not aware of any default which has not been cured, except as to defaults specified in said certificate. Upon request of Minor Pad Transferee, City shall furnish a City Estoppel to it in accordance with the DDA]. 6. Termination of Agreement. This Agreement shall automatically terminate and expire without the necessity of further action by any party upon the Recordation of a Final Certificate of Compliance for the Project, provided that following such Recordation and termination of this Agreement, nothing contained in this Agreement shall modify or affect the obligations of Developer and/or Minor Pad Transferee under the Special Restrictions and/or the CC&Rs, including, without limitation, with respect to the release contained in Section 4.4.3 of the DDA and the environmental indemnity provisions contained in Section 10.2.2 of the DDA. 7. Acknowledgment and Agreement by Developer and Minor Pad Transferee. Developer, as [Developer under the DDA and][landlord] under the [Conveyance Agreement/Lease], and Minor Pad Transferee, as [purchaser][tenant] under the Conveyance Agreement, represent, warrant, acknowledge and agree for themselves and their heirs, successors and assigns, 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, the CC&Rs and/or the Special Restrictions; and/or in any way release Developer and/or Minor Pad Transferee from their respective obligations to comply with the terms, provisions, conditions, covenants, agreements and clauses of the DDA, the CC&Rs and/or the Special Restrictions, including, without limitation, the release set forth in Section 4.4.3 of the DDA and the environmental indemnity set forth in Section 10.2.2 of the DDA. 7.2 The provisions of this Agreement do not impair or modify the City's Right of Purchase or Right of Reversion contained in the DDA with respect to property other than the Minor Pad. 7.3 City has no obligation nor shall it incur any liability with respect to any warranties of any nature whatsoever, whether pursuant to the [Conveyance Agreement/Lease] or otherwise, including, but not limited to, any warranties respecting use, compliance with zoning, Developer's title, Developer's authority, habitability, fitness for purpose or possession. 7/12/2004 Attachment No. 21B — Page 6 City NDA Minor Pad 18045:6395915.4 7.4 Minor Pad Transferee is an End User and a Class A User and is not a Prohibited User. Minor Pad Transferee has not and will not engage in a Prohibited Use upon the Minor Pad. 8. Notice. 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 United States mail 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 a national overnight delivery service reasonably approved by the Parties (Federal 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 received by the recipient party when sent by facsimile transmission or email at the number or email address set forth below; provided, however, that notices given by facsimile or email shall not be effective unless either (i) a duplicate copy of such notice is promptly sent by any method permitted under this Section 8 other than by facsimile or email; 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: 7/12/2004 18045:6395915.4 If to Minor Pad Transferee: To the address set forth in the Conveyance Agreement/Lease If to the City: Tustin City Hall 300 Centennial Way Tustin, CA 92780 Attention: City Manager and Attention: Assistant City Manager Facsimile: (714) 838-1602 Attachment No. 21B — Page 7 City NDA Minor Pad With a copy to: City Attorney, City of Tustin Woodruff Spradlin & Smart 701 S. Parker Street, Suite 8000 Orange, CA 92868-4760 Attention: Lois E. Jeffrey, Esq. Facsimile: (714) 835-7787 With a copy to: Steefel, Levitt & Weiss A Professional Corporation 550 South Hope Street, Suite 1665 Los Angeles, CA 90071 Attention: Amy E. Freilich, Esq. Facsimile: 310-599-3450 If to Developer: Vestar/KIMCO Tustin, L.P., 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Richard Kuhle Facsimile: 602-955-2298 With a copy to: Vestar Development Company 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Allan J. Kasen, Esq. Facsimile: 602-955-2298 With a copy to (for legal Capitol Corporate Services, Inc. notices): 455 Capitol Mall Complex, Suite 217 Sacramento, CA 95814 Telephone: 800-327-4842 Facsimile: 800-770-1332 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. Preparation Costs. Developer shall pay to the City the City's reasonable out-of-pocket fees and expenses, including legal fees, incurred with respect to the preparation and delivery of this Agreement; provided, however, that if Developer presents a completed Recognition, Non - Disturbance and Attomment Agreement in the form and substance of this Agreement with no changes, there shall be no charge for the first Non -Disturbance Agreement for a first Retail Space in a given calendar year. 7/12/2004 18045:6395915.4 Attachment No. 21B —Page 8 City NDA Minor Pad 10. Miscellaneous. 10.1 Agreement Supersedes. This Agreement supersedes any inconsistent provision of the [Conveyance Agreement/Lease]. 10.2 Modification. No amendment, change, modification or supplement to this Agreement shall be valid and binding on the Parties unless in writing and signed by all of the parties. 10.3 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. 10.4 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 signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States mail, postage prepaid or is hand delivered, and such manually signed page is actually received by the other party within five (5) days of its execution. The parties hereby authorize each other to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Agreement. 10.5 Successors and Assigns. This Agreement and the covenants, conditions, restrictions, obligations, rights and benefits contained herein are hereby agreed by Developer, Minor Pad Transferee and the City to be covenants running with the land and enforceable as equitable servitudes against the Minor Pad, and are hereby declared to be and shall be binding upon the Minor Pad, Developer, Minor Pad Transferee and the successors and assigns of Developer and/or Minor Pad Transferee owning all or any portion of the Minor Pad for the benefit of the City and the successors and assigns of the City and for the benefit of the Minor Pad, Developer and Minor Pad Transferee and any successor or assign of Developer and/or Minor Pad Transferee to which a Transfer is made in accordance with the Transfer provisions of the DDA (set forth in Section 2.2 thereof). 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 in the City's sole discretion, except as otherwise set forth in the DDA. [signatures on following page] 7/12/2004 Attachment No. 21B — Page 9 City NDA Minor Pad 18045:6395915.4 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above set forth. Dated: ATTEST: APPROVED AS TO FORM Special Counsel for the City MINOR PAD TRANSFEREE: By: _ Name: Title: DEVELOPER: Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: Name: Title: CITY: City of Tustin, California By: Name: Title: 7/12/2004 Attachment No. 21B — Page 10 City NDA Minor Pad 18045:6395915.4 -T- _ ..._ STATE OF CALIFORNIA ) SS. COUNTY OF ) On , 2004 before me, , a Notary Public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public 7/12/2004 Attachment No. 21B —Page 11 City NDA Minor Pad 18045:6395915.4 r STATE OF CALIFORNIA ss. COUNTY OF On , 2004 before me, , a Notary Public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public 7/12/2004 Attachment No. 2 1 B — Page 12 City NDA Minor Pad 18045:6395915.4 Exhibit A Legal Description 7/12/2004 Attachment No. 21B —Page 1 City NDA Minor Pad 18045:6395915.4 ATTACHMENT NO. 21C CITY NON -DISTURBANCE AND ATTORNMENT AGREEMENT FOR TENANTS 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: Space Above This Line Reserved for Recorder's Use RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT (Tenant) THIS RECOGNITION, NON -DISTURBANCE AND ATTORNMENT AGREEMENT (Tenant) ("Agreement") is entered into this day of , 'by and among , a ("Tenant"), VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("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"). WITNESSETH: A. The City and Developer have entered into that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated July , 2004 (the "DDA"), pursuant to which the City granted to Developer the right to develop certain real property located in the City of Tustin, County of Orange, California as a retail shopping center, which real property is more particularly described in Exhibit "A" attached hereto (the "Shopping Center"). Initially capitalized terms set forth in this Agreement and not defined herein shall have the meanings set forth therefor in the DDA. B. The DDA provides that except as set forth in Section 12.2 with respect to approval of certain Retail Space Leases prior to the Initial Lease -Up Date, a Transfer pursuant to a Retail Space Lease shall not be subject to Section 2.2.2 or require the approval of the City; provided, however, that all Retail Space Leases and all Retail Space Tenants shall comply with 7/12/2004 Attachment No. 2 1 C —Page 1 City NDA 18405:6391399.9 Retail Space and be "subject to" the terms and conditions of this Agreement (including the use restrictions set forth in Section 12. 1), the Special Restrictions and the CC&Rs. B. Developer and Tenant have entered into a Retail Space Lease (the "Lease") pursuant to which Developer has leased to Tenant a Retail Space consisting of the portion of the Shopping Center more particularly described in Exhibit `B" attached hereto (the "Leased Premises"). C. In order to confirm the obligations of Tenant with respect to the DDA, the CC&Rs and the Special Restrictions and in order to provide for certain agreements by City not to disturb the tenancy created by the Lease and for Tenant to attorn in the event Developer defaults under the DDA and the City reacquires all or any portion of the Shopping Center whether pursuant to its rights of reversion or otherwise, the parties agree as follows. AGREEMENT 1. City Rights; Waiver of Certain Remedies. The parties agree that in the event that Tenant shall be in default in the performance of its obligations under the terms of this Agreement, or in Material Default of the DDA or the Special Restrictions, the City shall have available to it all remedies set forth in this Agreement, the DDA and/or the Special Restrictions, as the case may be, provided, however, that from and after the lease of the Leased Premises to the Tenant and with respect to the Leased Premises and Tenant only the City shall not have the right to exercise the Right of Reversion or the Right of Purchase. Nothing set forth in this Agreement shall impair or modify the City's Right of Purchase or Right of Reversion contained in the DDA with respect to property not Transferred to Tenant. 2. Restrictions. Notwithstanding anything to the contrary contained herein or in the Lease: (a) Developer, its successors and assigns and Tenant, its successors and assigns and the Leased Premises are and shall remain subject to this Agreement, the DDA (except as expressly modified herein as to the Tenant), the Special Restrictions and the CC&Rs; and (b) Developer hereby acknowledges and agrees that it retains all the obligations under the DDA relating to the Leased Premises, including construction of the Horizontal Improvements, the Vertical Improvements and Developer's Backbone Infrastructure Work, payment of the Project Fair Share Contribution and the performance of Developer's maintenance obligations. 3. Non -Disturbance and Attornment. In the event that, through or in lieu of the exercise by City of any of its rights and/or remedies pursuant to this Agreement, the DDA, the Ground Lease, the Special Restrictions and the CC&Rs or otherwise (the "Remedies"), City shall become a successor in interest to Developer under the Lease, City and Tenant agree that: 3.1 City shall not disturb Tenant's use or occupancy of the Leased Premises as long as Tenant is not in default of its obligations under this Agreement or the Lease beyond any applicable grace or cure period set forth herein or therein or in Material Default in the performance or observance of any term, covenant or condition of the DDA or the Special Restrictions. 7/12/2004 Attachment No. 21C — Page 2 City NDA 18405:6391399.9 Retail Space . -.T __._ 3.2 The occupancy and possession of the Leased Premises by Tenant and the rights of Tenant under the Lease shall remain in full force and effect and shall not be terminated or disturbed except in accordance with the terms of this Agreement or the Lease. 3.3 Tenant agrees that it shall attorn to the City, and any other successor in interest to Developer, and their successors and assigns and recognizes City as "landlord" under the Lease. Tenant shall perform, and be bound under, all of the terms, covenants and conditions of the Lease for the balance of the term thereof remaining, including any renewal options which are exercised in accordance with the terms of the Lease, and shall recognize City and any such successor as landlord under the Lease. Tenant agrees to execute and deliver to City and such successor such further assurance and other documents, including a new lease upon the same terms and conditions as the Lease, confirming the foregoing, as City or such successor may reasonably request. Notwithstanding the foregoing and except as specifically set forth in Section 1 of this Agreement, nothing contained herein shall be interpreted to release Developer, the Leased Premises and/or Tenant from the obligations imposed under the DDA and/or the Special Restrictions. 3.4 The interests so acquired by City shall not merge with any other interests of City in the Leased Premises if such merger would result in the termination of the Lease. 3.5 In no event shall City, or any other person who may become a successor in interest to Developer under the Lease, through or in lieu of an exercise of any of the Remedies be (i) liable for or bound by any act or omission of Developer or any predecessor in interest to City or any successor; (ii) liable for payment of any sums due from Developer to Tenant including, without limitation, any (x) security deposit (unless City shall have actually received and failed to refund such deposit in accordance with the terms of the Lease), or (y) payment of rent or additional rent made by Tenant to Developer or any predecessor in interest thereof for more than (1) month in advance of the due date thereunder or (z) payments of any kind owing from Developer to Tenant under the Lease or otherwise, including, without limitation, any refunds or damages owed from Developer to Tenant, (iii) subject to any offsets, counterclaims or defenses which Tenant may have against Developer or any predecessor in interest thereof (including, without limitation, any offset, abatement or right of deduction provided for under the terms of the Lease); provided, however, that nothing herein shall be deemed to relieve City or such successor from performing its obligations as landlord under the Lease from and after the date City succeeds to the position of Developer under the Ground Lease unless specifically set forth herein; (iv) bound by any agreement purporting to cancel, surrender, amend or modify the Lease, without the express written consent of City or its successor in interest; (v) required to rebuild, repair or restore any damage to the Leased Premises or any portion thereof caused by the occurrence of an uninsured casualty or following a condemnation of all or any portion of the Leased Premises for which there are insufficient condemnation proceeds to pay the cost of such rebuilding, repair or restoration; (vi) liable with respect to any obligation to build out any improvements for the Leased Premises including, without limitation, the Horizontal Improvements, the Developer's Backbone Infrastructure Work, the Tustin Legacy Backbone Infrastructure Program Improvements, the Vertical Improvements, any tenant improvements or any other improvements to be built upon the Project Site and/or any obligation to pay any tenant improvement allowance in connection with the Lease; (vii) liable for any payments made in, under or pursuant to the Lease for any period prior to the City, or any other person becoming a 7/12/2004 Attachment No. 2 1 C — Page 3 City NDA 18405:6391399.9 Retail Space successor in interest to Developer pursuant to the exercise of the Remedies; or (viii) 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 (as defined under any applicable laws, "Hazardous Materials"), or for any indemnities under the Lease concerning the presence, release or discharge of any Hazardous Materials on, under or about the Leased Premises, or for any permits and waste discharge requirements issued to and/or required of Tenant or Developer by any governmental body or City, or any claims made or threatened by any person or governmental body or City against Tenant or Developer or the Leased Premises relating to damage, contribution, cost recovery compensation, loss or injury resulting from the presence, release or discharge of any Hazardous Materials on, under or about the Leased Premises. City shall also be relieved of any obligation of Developer under the Lease accruing after an assignment by City of its interest in the Leased Premises. 3.6 From and after the date City succeeds to the position of Developer under the Lease, all claims, demands or causes of action which Tenant may have or may have had against Developer with respect to the Lease as of the date of such succession, under any provisions of, or with respect to the Lease, or on account of any matter, condition or circumstance arising out of the relationship of Developer and Tenant under the Lease, Tenant's occupancy of the Leased Premises or Developer's prior ownership thereof, shall be enforceable solely against Developer personally to the extent provided in the Lease, and neither City or such successor, or their respective successors and assigns, nor the Leased Premises shall be subject to any such claim, demand or cause of action. 3.7 Except for the payment of the first month's rent, Tenant shall not pay, and Developer shall not accept, any rent or additional rent more than thirty, (30) days in advance of the applicable due date under the Lease. 3.8 Tenant shall send a copy of any notice or statement under the Lease pertaining to Developer's default thereunder to City at the same time such default notice or statement is sent to Developer, and Tenant agrees that, in the event Developer shall have failed to cure such default within the time period provided for in the Lease, Tenant shall not exercise any remedies available by virtue of such default unless (x) Tenant shall have notified City in writing of Developer's failure to cure such default and (y) Tenant shall have afforded City or its successors or assigns an additional sixty (60) days from the receipt of such notice to cure such default or if such default cannot be cured within sixty (60) days, then such additional time as may be necessary if, within such sixty (60) day period, City or its successors and/or assigns commences and thereafter diligently pursues the cure of such default (including, without limitation, commencement of possessory proceedings, if necessary to effect such cure) and, in any such event, the Lease shall remain in full force and effect while such cure is being diligently pursued, provided that exercise of such cure rights by the City shall be a right and not an obligation of City and, in the event that City does seek to cure such default, the City shall be entitled to reimbursement by Developer of all direct and actual costs and expenses incurred by the City in curing such default. 3.9 Tenant shall, upon the execution of this Agreement and thereafter upon the request of City, provide City or its successors and assigns with a tenant estoppel certificate, in 7/12/2004 Attachment No. 2 1 C — Page 4 City NDA 18405:6391399.9 Retail Space form and substance attached to the Lease or otherwise reasonably acceptable to the City, stating, among other things, (i) that a complete, true and correct copy of the Lease is attached thereto and is unmodified and in full force and effect (or, if there have been modifications, that such Lease is in full force and effect, as modified and stating the modifications or if such Lease is not in full force and effect, so stating), (ii) the dates, if any, to which any rent and other sums payable thereunder have been paid, and (iii) that Tenant is not aware of any default which has not been cured, except as to defaults specified in said certificate. Upon request of Tenant, City shall furnish a City Estoppel to it in accordance with the DDA. 4. Termination of Agreement. This Agreement shall automatically terminate and expire without the necessity of further action by any party upon the Recordation of a Final Certificate of Compliance for the Project, provided that following such Recordation and termination of this Agreement, nothing contained in this Agreement shall modify or affect the obligations of Developer and/or Tenant under the Special Restrictions and/or the CC&Rs, including, without limitation, with respect to the release contained in Section 4.4.3 of the DDA and the environmental indemnity provisions contained in Section 10.2.2 of the DDA. Acknowledgment and Agreement by Developer and Tenant. 5.1 Developer, as Developer under the DDA and landlord under the Lease, and Tenant, as tenant under the Lease represent, warrant, acknowledge and agree for themselves and their heirs, successors and assigns, that: 5.1.1 Except as expressly set forth herein, this Agreement does not constitute a waiver by City of any of its rights under the DDA, the CC&Rs and/or the Special Restrictions; and/or in any way release Developer and/or Tenant from their respective obligations to comply with the terms, provisions, conditions, covenants, agreements and clauses of the DDA, the CC&Rs and/or the Special Restrictions, including, without limitation, the release set forth in Section 4.4.3 of the DDA and the environmental indemnity set forth in Section 10.2.2 of the DDA. 5.1.2 The provisions of this Agreement do not impair or modify the City's Right of Purchase or Right of Reversion contained in the DDA with respect to property other than the Leased Premises. 5.1.3 City has no obligation nor shall it incur any liability with respect to any warranties of any nature whatsoever, whether pursuant to the Lease or otherwise, including, but not limited to, any warranties respecting use, compliance with zoning, Developer's title, Developer's authority, habitability, fitness for purpose or possession. 5.1.4 Tenant is an End User and a Class A User and is not a Prohibited User. Tenant has not and will not engage in a Prohibited Use upon the Leased Premises. 6. Notice. 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 United States mail via certified mail, return receipt requested, postage prepaid, and addressed to the other party as set forth below; (c) the next Business Day 7/12/2004 Attachment No. 2 1 C —Page 5 City NDA 18405:6391399.9 Retail Space after such notice has been deposited with a national overnight delivery service reasonably approved by the Parties (Federal 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 received by the recipient party when sent by facsimile transmission or email at the number or email address set forth below; provided, however, that notices given by facsimile or email shall not be effective unless either (i) a duplicate copy of such notice is promptly sent by any method permitted under this Section 6 other than by facsimile or email; 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: If to Tenant: To the address set forth in the Lease If to the City: Tustin City Hall 300 Centennial Way Tustin, CA 92780 Attention: City Manager and Attention: Assistant City Manager Facsimile: (714) 838-1602 With a copy to: City Attorney, City of Tustin Woodruff Spradlin & Smart 701 S. Parker Street, Suite 8000 Orange, CA 92868-4760 Attention: Lois E. Jeffrey, Esq. Facsimile: (714) 835-7787 With a copy to: Steefel, Levitt & Weiss A Professional Corporation 550 South Hope Street, Suite 1665 Los Angeles, CA 90071 Attention: Amy E. Freilich, Esq. Facsimile: 310-599-3450 If to Developer: Vestar/KIMCO Tustin, L.P., 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Richard Kuhle Facsimile: 602-955-2298 7/12/2004 Attachment No. 21 C — Page 6 City NDA 18405:6391399.9 Retail Space -r-- _ _-- With a copy to: Vestar Development Company 2425 East Camelback Road, Suite 750 Phoenix, AZ 85016 Attention: Allan J. Kasen, Esq. Facsimile: 602-955-2298 With a copy to (for legal Capitol Corporate Services, Inc. notices): 455 Capitol Mall Complex, Suite 217 Sacramento, CA 95814 Telephone: 800-327-4842 Facsimile: 800-770-1332 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. 7. Preparation Costs. Developer shall pay to the City the City's reasonable out-of-pocket fees and expenses, including legal fees, incurred with respect to the preparation and delivery of this Agreement; provided, however, that if Developer presents a completed Recognition, Non - Disturbance and Attornment Agreement in the form and substance of this Agreement with no changes, there shall be no charge for the first Non -Disturbance Agreement for a first Retail Space in a given calendar year. 8. Miscellaneous. 8.1 Agreement Supersedes. This Agreement supersedes any inconsistent provision of the Lease. 8.2 Modification. No amendment, change, modification or supplement to this Agreement shall be valid and binding on the Parties unless in writing and signed by all of the parties. 8.3 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. 8.4 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 signatures; provided, however, that such execution by facsimile shall not be effective unless a manually executed copy of the signature page is promptly sent by United States mail, postage prepaid or is hand delivered, and such manually signed page is actually received by the other party within five (5) days of its execution. The parties hereby authorize each other to detach and 7/12/2004 Attachment No. 2 1 C — Page 7 City NDA 18405:6391399.9 Retail Space combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Agreement. 8.5 Successors and Assigns. This Agreement and the covenants, conditions, restrictions, obligations, rights and benefits contained herein are hereby agreed by Developer, Tenant and the City to be covenants running with the land and enforceable as equitable servitudes against the Leased Premises, and are hereby declared to be and shall be binding upon the Leased Premises, Developer, Tenant and the successors and assigns of Developer and/or Tenant owning all or any portion of the Leased Premises for the benefit of the City and the successors and assigns of the City and for the benefit of the Leased Premises, Developer and Tenant and any successor or assign of Developer and/or Tenant to which a Transfer is made in accordance with the Transfer provisions of the DDA (set forth in Section 2.2 thereof). 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 in the City's sole discretion, except as otherwise set forth in the DDA. [signatures on following page] 7/12/2004 Attachment No. 2 1 C — Page 8 City NDA 18405:6391399.9 Retail Space IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above set forth. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above set forth. Dated: ATTEST: APPROVED AS TO FORM Special Counsel for the City TENANT: By: _ Name: Title: DEVELOPER: Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member By: _ Name: Title: CITY: City of Tustin, California By: Name: Title: 7/12/2004 Attachment No. 2 1 C — Page 9 City NDA 18405:6391399.9 Retail Space STATE OF CALIFORNIA ss. COUNTY OF On , 2004 before me, , a Notary Public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public STATE OF CALIFORNIA ss. COUNTY OF On , 2004 before me, , a Notary Public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public 7/12/2004 Attachment No. 21 C —Page 10 City NDA 18405:6391399.9 Retail Space EXHIBITS Exhibit A Shopping Center Exhibit B Lease Premises 18405:6395889.1 -1- ATTACHMENT NO. 22 PRELIMINARY TITLE REPORTS Vestar DDA Attachment No. 22 Preliminary Title Reports 07/12/04 18405:6391127.7 Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1151731 Page Number: 1 FIRST AMERICAN TITLE INSURANCE COMPANY INFORMATION The Title Insurance Commitment is a legal contract between you and the company. It is issued to show the basis on which we will issue a Title Insurance Policy to you. The Policy will insure you against certain risks to the land title, subject to the limitations shown in the policy. The Company will give you a sample of the Policy form, if you ask. The Commitment is based on the land title as of the Commitment Date. Any changes in the land title or the transaction may affect the Commitment and -the Policy. The Commitment is subject to its Requirements, Exceptions and Conditions. This information is not part of the title insurance commitment. TABLE OF CONTENTS Agreement to Issue Policy Schedule A Page 3 1. Commitment Date 4 2. Policies to be Issued, Amounts and Proposed Insured 4 3. Interest in the Land and Owner 4 4. Description of the Land 4 Schedule B-1- Requirements Schedule B-2 - Exceptions Conditions YOU SHOULD READ THE COMMITMENT VERY CAREFULLY. If you have any questions about the Commitment, please contact the issuing office. first American Title Form No. 1068-2 ALTA Plain Language Commitment COMMITMENT FOR TITLE INSURANCE Issued by First American Title Company Agreement to Issue Policy We agree to issue a policy to you according to the terms of this Commitment. Commitment No.: O -SA -1151731 Page Number: 2 When we show the policy amount and your name as the proposed insured in Schedule A, this Commitment becomes effective as of the Commitment Date shown in Schedule A. If the Requirements shown in this Commitment have not been met within six months after the Commitment Date, our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy. Our obligation under this Commitment is limited by the following: The Provisions in Schedule A. The Requirements in Schedule B-1. The Exceptions in Schedule B-2. The Conditions. This Commitment is not valid without Schedule A and Sections 1 and 2 of Schedule B. FirstAmerican Title Form No. 1068-2 ALTA Plain Language Commitment 1. 2. 4 SCHEDULE A Commitment Date: March 8, 2004 at 7:30 A.M. Policy or Policies to be issued: (A) ALTA Standard Policy ALTA Owners Extended 1970 Proposed Insured: (To Be Determined) Commitment No.: O -SA -1151731 Page Number: 3 Amount $(To Be Determined) (A) The estate or interest in the land described in this Commitment is: A fee. (B) Title to said estate or interest at the date hereof is vested in: The City of Tustin, California, as to Parcel I -C-1; and The United States of America, as to Parcels III -C-3 and III -C-5. The land referred to in this Commitment is described as follows: First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1151731 Page Number: 4 Real property in the City of Tustin, County of Orange, State of California, described as follows: PARCEL I -C-1 IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING THOSE PORTIONS OF BLOCKS 46 AND 47 OF IRVINE'S SUBDIVISION AS SHOWN ON THE MAP FILED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORD MAPS, AND AS SHOWN ON A MAP FILED IN BOOK 165, PAGES 31 THROUGH 39 INCLUSIVE OF RECORDS OF SURVEY, ALL OF THE RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: FOR THE PURPOSE OF THIS DESCRIPTION THE FOLLOWING CONTROL LINES ARE HEREBY ESTABLISHED: CONTROL LINE "F" BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF VON KARMAN AVENUE WITH THE CENTERLINE OF BARRANCA PARKWAY AS SHOWN ON SAID RECORD OF SURVEY, THE CENTERLINE OF BARRANCA PARKWAY BETWEEN VON KARMAN AVENUE AND JAMBOREE ROAD BEARS NORTH 49019'54" WEST; THENCE NORTH 40040'06" EAST 302.71 FEET TO THE BEGINNING OF A CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 1800.05 FEET; THENCE NORTHEASTERLY AND EASTERLY 1295.77 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 41014'40" TO A POINT HEREINAFTER REFERRED TO AS POINT "S"; THENCE CONTINUING EASTERLY ALONG SAID CURVE 529.24 FEET THROUGH A CENTRAL ANGLE OF 16150'45 THENCE SOUTH 81114'29" EAST 725.95 FEET TO THE BEGINNING OF A CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1400.04 FEET; THENCE EASTERLY AND NORTHEASTERLY 881.48 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 36004'26" TO A POINT HEREINAFTER REFERRED TO AS POINT "T'. CONTROL LINE "G" BEGINNING AT THE HEREINABOVE DESCRIBED POINT "S", THENCE SOUTH 21°16'16" EAST 89.72 FEET TO THE BEGINNING OF A CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1400.04 FEET; THENCE SOUTHERLY, SOUTHEASTERLY AND EASTERLY ALONG SAID CURVE 1945.22 FEET THROUGH A CENTRAL ANGLE OF 79036'25" TO A POINT HEREINAFTER REFERRED TO AS POINT "U"; THENCE CONTINUING ALONG SAID CURVE EASTERLY AND NORTHEASTERLY 712.08 FEET THROUGH A CENTRAL ANGLE OF 29008'29" TO A POINT HEREINAFTER REFERRED TO AS POINT "V", A RADIAL LINE TO SAID POINT BEARS SOUTH 40101'10" EAST; THENCE CONTINUING ALONG SAID CURVE NORTHEASTERLY 229.05 FEET THROUGH A CENTRAL ANGLE OF 09022'25"; THENCE NORTH 40036'25" EAST 91.79 FEET TO THE TERMINUS OF THE HEREIN DESCRIBED CONTROL LINE "G". CONTROL LINE "H" BEGINNING AT THE HEREINABOVE DESCRIBED POINT "T" SAID POINT BEING THE BEGINNING OF A CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 1400.04 FEET, A RADIAL LINE TO SAID BEGINNING BEARS SOUTH 61008'34" WEST; THENCE SOUTHEASTERLY ALONG SAID CURVE 364.03 FEET THROUGH A CENTRAL ANGLE OF 141153'51"; THENCE SOUTH 43045117" EAST 208.89 FEET TO THE TERMINUS OF THE HEREINABOVE DESCRIBED CONTROL LINE "G". PARCEL I -C-1 First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1151731 Page Number: 5 BEGINNING AT SAID INTERSECTION OF THE CENTERLINE OF VON KARMAN AVENUE WITH THE CENTERLINE OF BARRANCA PARKWAY AS SHOWN ON SAID RECORD OF SURVEY; THENCE NORTH 40040'06" EAST 110.00 FEET ALONG SAID CONTROL LINE "F"; THENCE LEAVING SAID CONTROL LINE "F" NORTH 49019'54" WEST 60.00 FEET TO A POINT ON A LINE PARALLEL WITH AND DISTANT NORTHWESTERLY 60.00 FEET, MEASURED AT RIGHT ANGLES, FROM SAID CONTROL LINE "F", SAID POINT BEING ALSO THE TRUE POINT OF BEGINNING; THENCE PARALLEL WITH SAID CONTROL LINE "F" NORTH 40040'06" EAST 192.71 FEET TO THE BEGINNING OF A CURVE CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 1860.05 FEET, BEING CONCENTRIC WITH AND DISTANT NORTHWESTERLY 60.00 FEET FROM SAID CONTROL LINE 7% THENCE NORTHEASTERLY 1015.06 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 31016'02"; THENCE LEAVING SAID CONCENTRIC CURVE NORTH 10057'40" WEST 12.09 FEET TO A POINT ON A NON -TANGENT CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 1872.05 FEET, BEING CONCENTRIC WITH AND DISTANT NORTHWESTERLY 72.00 FEET FROM SAID CONTROL LINE "F", A RADIAL LINE TO BEGINNING OF CURVE BEARS NORTH 18101'07" WEST; THENCE EASTERLY 180.58 FEET ALONG SAID CONCENTRIC CURVE THROUGH A CENTRAL ANGLE OF 05131'37"; THENCE LEAVING SAID CONCENTRIC CURVE SOUTH 1005739" EAST 12.00 FEET TO A POINT ON A NON -TANGENT CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 1860.05 FEET BEING CONCENTRIC WITH AND DISTANT 60.00 FEET FROM SAID CONTROL LINE "F", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 12130'06" WEST; THENCE EASTERLY 50.00 FEET ALONG SAID CONCENTRIC CURVE THROUGH A CENTRAL ANGLE OF 01032'25";.THENCE LEAVING SAID CURVE NORTH 2904711" EAST 40.70 FEET; THENCE NORTH 88014'04" EAST 97.60 FEET; THENCE SOUTH 21018'52" EAST 179.45 FEET TO THE BEGINNING OF A NON -TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1354.04, BEING CONCENTRIC WITH AND DISTANT NORTHEASTERLY 46.00 FEET FROM SAID CONTROL LINE "G", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 67054'42" EAST; THENCE SOUTHERLY, SOUTHEASTERLY AND EASTERLY 2553.81 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 108003'49"; THENCE LEAVING SAID CONCENTRIC CURVE NORTH 49013'07" WEST 12.15 FEET TO A POINT ON A NON -TANGENT CURVE HAVING A RADIUS OF 1342.04 FEET BEING CONCENTRIC WITH AND DISTANT 58.00 FEET NORTHWESTERLY FROM SAID CONTROL LINE "G", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 40004'12" WEST; THENCE NORTHEASTERLY 180.91 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 07043'25"; THENCE LEAVING SAID CONCENTRIC CURVE SOUTH 49013'07" EAST 12.00 FEET TO THE BEGINNING OF A NON -TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1354.04 FEET, BEING CONCENTRIC WITH AND DISTANT 46.00 FEET FROM SAID CONTROL LINE "F", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 47048'23" EAST; THENCE NORTHEASTERLY 50.05 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 02007'05", THENCE NORTH 02040'56" WEST 35.57 FEET; THENCE NORTH 38011'28" EAST 121.20 FEET TO A LINE PARALLEL WITH AND DISTANT 60.00 FEET NORTHEASTERLY, MEASURED AT RIGHT ANGLES, FROM SAID CONTROL LINE "H"; THENCE ALONG SAID PARALLEL LINE SOUTH 43045'17" EAST 132.20 FEET TO THE SOUTHEASTERLY LINE OF LOT 90 IN SAID BLOCK 46 OF IRVINE'S SUBDIVISION BEING THE BOUNDARY LINE BETWEEN THE CITY OF TUSTIN AND THE CITY OF IRVINE AS SHOWN ON THE RECORD OF SURVEY FILED IN BOOK 165, PAGES 31 THROUGH 39 INCLUSIVE OF RECORDS OF SURVEYS, RECORDS OF SAID COUNTY; THENCE ALONG SAID SOUTHEASTERLY LINE SOUTH 40036'26" WEST 159.34 FEET TO THE MOST EASTERLY CORNER OF LOT 101 IN SAID BLOCK 47 OF IRVINE'S SUBDIVISION; THENCE SOUTH 40°38'05" WEST 637.46 FEET ALONG THE SOUTHEASTERLY LINE OF SAID LOT 101 TO THE NORTHEASTERLY PROLONGATION OF THAT CERTAIN COURSE CITED AS "NORTH 63016'06" EAST 95.10 FEET" AS DESCRIBED IN PARCEL 1 OF THE DEED RECORDED SEPTEMBER 12, 1988 AS INSTRUMENT NO. 88-456310 OF OFFICIAL RECORDS, RECORDS OF SAID COUNTY; THENCE LEAVING SAID SOUTHEASTERLY LINE AND ALONG SAID PROLONGATION AND SAID CITED COURSE IN THE NORTHWESTERLY LINE OF SAID PARCEL 1 THE FOLLOWING EIGHT (8) COURSES: First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1151731 Page Number: 6 1) SOUTH 63°16'09" WEST 123.68 FEET; 2) SOUTH 55°40'03" WEST 211.16 FEET; 3) SOUTH 51°44'51 WEST 105.40 FEET; 4) SOUTH 47033'33" WEST 101.16 FEET; 5) SOUTH 43°55'56" WEST 107.41 FEET; 6) SOUTH 41°15'21" WEST 86.78 FEET; 7) SOUTH 40°44'08" WEST 1,138.11 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE NORTHWEST HAVING A RADIUS OF 120.00 FEET; 8) SOUTHWESTERLY 74.60 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 35°373" TO A LINE PARALLEL WITH AND DISTANT 110.00 FEET, MEASURED AT RIGHT ANGLES, FROM SAID CENTERLINE OF BARRANCA PARKWAY; THENCE ALONG SAID PARALLEL LINE NORTH 49019'54" WEST 1190.84 FEET TO THE SOUTHWEST LINE OF THE LAND SHOWN ON THE RECORD OF SURVEY FILED IN BOOK 115, PAGE 90, OF RECORDS OF SURVEY, RECORDS OF SAID COUNTY; THENCE ALONG THE SOUTHEAST, NORTHEAST AND NORTHWEST LINES OF SAID LAND THE FOLLOWING FOUR (4) COURSES: 1) NORTH 40°40'06" EAST 530.00 FEET; 2) NORTH 49019'54" WEST 1164.98 FEET TO THE BEGINNING OF A NON -TANGENT CURVE CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 1714.00 FEET, A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS NORTH 37058'56" WEST; 3) SOUTHWESTERLY 339.52 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 11°20'58", 4) SOUTH 40°40'06" WEST 192.70 FEET TO SAID LINE PARALLEL WITH BARRANCA PARKWAY; THENCE ALONG SAID PARALLEL LINE NORTH 49019'54" WEST 146.00 FEET TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION DESCRIBED AS FOLLOWS: EXCEPTION PARCEL NO 1 BEGINNING AT THE HEREINBEFORE DESCRIBED POINT "U"; THENCE SOUTH 49°26'44" EAST 80.34 FEET; THENCE SOUTH 4D°09'45" WEST 262.03 FEET; THENCE SOUTH 08°34'09" EAST 182.46 FEET TO THE NORTHWESTERLY LINE OF PARCEL 1 AS DESCRIBED IN THE DEED RECORDED SEPTEMBER 12, 1988 AS INSTRUMENT NO. 88-456310 OF OFFICIAL RECORDS, RECORDS OF SAID COUNTY; THENCE ALONG SAID NORTHWESTERLY LINE OF SAID PARCEL 1 THE FOLLOWING THREE (3) COURSES: 1) SOUTH 43°55'56" WEST 26.33 FEET; 2) SOUTH 41015'21" WEST 86.78 FEET; 3) SOUTH 40044'08" WEST 83.58 FEET; THENCE LEAVING SAID NORTHWESTERLY LINE NORTH 08031'36" WEST 277.52 FEET; THENCE NORTH 49016'45" WEST 324.58 FEET; THENCE NORTH 40036'05" EAST 20.74 FEET; THENCE NORTH 49015'06" WEST 147.84 FEET; THENCE SOUTH 41044'34" WEST 21.78 FEET; THENCE NORTH 49020'08" WEST 98.22 FEET; THENCE NORTH 40043'22" EAST 23.03 FEET TO A POINT ON A CURVE CONCENTRIC WITH AND DISTANT 46.00 FEET NORTHERLY FROM THE HEREINABOVE DESCRIBED CONTROL LINE "G", SAID POINT BEING THE BEGINNING OF A NON - TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1354.04 FEET, A RADIAL LINE TO SAID POINT BEARS SOUTH 17027'29" WEST; THENCE EASTERLY ALONG SAID CONCENTRIC CURVE 632.56 FEET THROUGH A CENTRAL ANGLE OF 26°46'00"; THENCE SOUTH 49026'44" EAST 59.48 FEET TO THE POINT OF BEGINNING, SAID POINT BEING THE HEREINBEFORE First American Title Form No. 1068-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 7 DESCRIBED POINT "U". EXCEPTING THEREFROM THAT PORTION DESCRIBED AS FOLLOWS: EXCEPTION PARCEL NO. 2 BEGINNING AT THE HEREINBEFORE DESCRIBED POINT "V"; THENCE SOUTH 22035'49" EAST 58.46 FEET; THENCE SOUTH 40045'08" WEST 164.45 FEET; THENCE NORTH 24024'11" WEST 140.84 FEET TO THE BEGINNING OF A NON -TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 1354.04 FEET, BEING CONCENTRIC WITH AND DISTANT 46.00 FEET NORTHWESTERLY FROM THE HEREINABOVE DESCRIBED CONTROL LINE "G", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 33059'38" EAST; THENCE NORTHEASTERLY 145.52 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 06°09'28'; THENCE NORTH 49013'07" WEST 12.15 FEET TO THE BEGINNING OF A NON -TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 1342.04 FEET, BEING CONCENTRIC WITH AND DISTANT NORTHWESTERLY 58.00 FEET FROM THE HEREINABOVE MENTIONED CONTROL LINE "G", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 40°04'13" EAST; THENCE NORTHEASTERLY 16.84 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00043'08" TO A LINE THAT BEARS NORTH 22035'49" WEST FROM THE POINT OF BEGINNING; THENCE ALONG SAID LINE SOUTH 22035'49" EAST 60.92 FEET TO THE POINT OF BEGINNING. PARCEL III -C-3: IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING A PORTION OF LOT 102 IN BLOCK 47 OF IRVINE'S SUBDIVISION AS SHOWN ON THE MAP FILED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORD MAPS, AND AS SHOWN ON A MAP FILED IN BOOK 165, PAGES 31 THROUGH 39 INCLUSIVE OF RECORDS OF SURVEY, ALL OF RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: FOR THE PURPOSE OF THIS DESCRIPTION THE FOLLOWING CONTROL LINES ARE HEREBY ESTABLISHED: CONTROL LINE "F" BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF VON KARMAN AVENUE WITH THE CENTERLINE OF BARRANCA PARKWAY AS SHOWN ON SAID RECORD OF SURVEY, THE CENTERLINE OF BARRANCA PARKWAY HAVING A BEARING OF NORTH 49019'54" WEST BETWEEN THE CENTERLINES OF ARMSTRONG AVENUE AND VON KARMAN; THENCE LEAVING SAID INTERSECTION NORTH 40040'06" EAST 302.71 FEET TO THE BEGINNING OF A CURVE CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 1800.05 FEET; THENCE NORTHEASTERLY 1295.77 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 41014'40" TO A POINT HEREINAFTER REFERRED TO AS POINT "S". CONTROL LINE "G" BEGINNING AT THE HEREINBEFORE DESCRIBED POINT "S"; THENCE SOUTH 21016'16" EAST 89.72 FEET TO THE BEGINNING OF A CURVE CONCAVE NORTHEASTERLY HAVING A RADUIS OF 1400.04 FEET; THENCE SOUTHERLY, SOUTHEASTERLY AND EASTERLY ALONG SAID CURVE 1945.22 FEET THROUGH A CENTRAL ANGLE OF 79036'25" TO A POINT HEREINAFTER REFERRED TO AS POINT "U", SAID POINT BEING THE TERMINUS OF THE HEREIN DESCRIBED CONTROL LINE. First American Title Form No. 1068-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 8 PARCEL III -C-3 BEGINNING AT THE HEREINBEFORE DESCRIBED POINT "U"; THENCE SOUTH 49026'44" EAST 80.34 FEET; THENCE SOUTH 40°09'45" WEST 262.03 FEET; THENCE SOUTH 08134'09" EAST 182.46 FEET TO THE NORTHWESTERLY LINE OF PARCEL 1 AS DESCRIBED IN THE DEED RECORDED SEPTEMBER 12, 1988 AS INSTRUMENT NO. 88-456310 OF OFFICIAL RECORDS, RECORDS OF SAID COUNTY; THENCE ALONG SAID NORTHWESTERLY LINE OF SAID PARCEL 1 THE FOLLOWING THREE (3) COURSES: 1) SOUTH 43°55'56" WEST 26.33 FEET; 2) SOUTH 41°15'21" WEST 86.78 FEET; 3) SOUTH 40°44'08" WEST 83.58 FEET; THENCE LEAVING SAID NORTHWESTERLY LINE NORTH 08031'36" WEST 277.52 FEET; THENCE NORTH 49016'45" WEST 324.58 FEET; THENCE NORTH 40°36'05" EAST 20.74 FEET; THENCE NORTH 49015'06" WEST 147.84 FEET; THENCE SOUTH 41044'34" WEST 21.78 FEET; THENCE NORTH 49020'08" WEST 98.22 FEET; THENCE NORTH 40043'22" EAST 23.03 FEET TO A POINT ON A CURVE CONCENTRIC WITH AND DISTANT 46.00 FEET NORTHERLY FROM THE HEREINABOVE DESCRIBED CONTROL LINE "G", SAID POINT BEING THE BEGINNING OF A NON - TANGENT CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 1354.04 FEET, A RADIAL LINE TO SAID POINT BEARS SOUTH 17027'29" WEST; THENCE EASTERLY ALONG SAID CONCENTRIC CURVE 632.56 FEET THROUGH A CENTRAL ANGLE OF 26146'00"; THENCE SOUTH 49026'44" EAST 59.48 FEET TO THE POINT OF BEGINNING, SAID POINT BEING THE HEREINBEFORE DESCRIBED POINT "B". PARCEL III -C-5: IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING THAT PORTION OF BLOCK 47 OF IRVINE'S SUBDIVISION AS SHOWN ON THE MAP FILED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORD MAPS, AND AS SHOWN ON A MAP FILED IN BOOK 165, PAGES 31 THROUGH 39 INCLUSIVE OF RECORDS OF SURVEY, BOTH OF RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: FOR THE PURPOSE OF THIS DESCRIPTION THE FOLLOWING CONTROL LINES ARE HEREBY ESTABLISHED: CONTROL LINE "F" BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF VON KARMAN AVENUE WITH THE CENTERLINE OF BARRANCA PARKWAY AS SHOWN ON SAID RECORD OF SURVEY, THE CENTERLINE OF BARRANCA PARKWAY HAVING A BEARING OF NORTH 49019'54" WEST BETWEEN THE CENTERLINES OF ARMSTRONG AVENUE AND VON KARMAN AVENUE; THENCE NORTH 40040'06" EAST 302.71 FEET TO THE BEGINNING OF A CURVE CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 1800.05 FEET; THENCE NORTHEASTERLY AND EASTERLY 1295.77 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 41014'40" TO A POINT HEREINAFTER REFERRED TO AS POINT "S", A RADIAL LINE TO SAID POINT BEARS NORTH 08005'14" WEST. CONTROL LINE "G" BEGINNING AT THE HEREINABOVE DESCRIBED POINT "S"; THENCE SOUTH 21016'16" EAST 89.72 FEET TO THE BEGINNING OF A CURVE CONCAVE NORTHERLY HAVING A RADUIS OF First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1151731 Page Number: 9 1400.04 FEET; THENCE EASTERLY AND NORTHEASTERLY ALONG SAID CURVE 2657.30 FEET THROUGH A CENTRAL ANGLE OF 108044'54" TO A POINT HEREINAFTER REFERRED TO AS POINT "V", A RADIAL LINE TO SAID POINT BEARS SOUTH 40001'10" EAST. PARCEL III -C-5 BEGINNING AT THE HEREINBEFORE DESCRIBED POINT "V"; THENCE SOUTH 22035'49" EAST 58.46 FEET; THENCE SOUTH 40045'08" WEST 164.45 FEET; THENCE NORTH 24024'11" WEST 140.84 FEET TO THE BEGINNING OF A NON -TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 1354.04 FEET, BEING CONCENTRIC WITH AND DISTANT 46.00 FEET NORTHWESTERLY FROM THE HEREINABOVE DESCRIBED CONTROL LINE "G", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 33°59'38" EAST; THENCE NORTHEASTERLY 145.52 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 06009'28"; THENCE NORTH 49013'07" WEST 12.15 FEET TO THE BEGINNING OF A NON -TANGENT CURVE CONCAVE NORTHWESTERLY HAVING A RADIUS OF 1342.04 FEET, BEING CONCENTRIC WITH AND DISTANT NORTHWESTERLY 58.00 FEET FROM THE HEREINABOVE MENTIONED CONTROL LINE "G", A RADIAL LINE TO SAID BEGINNING OF CURVE BEARS SOUTH 40004'13" EAST; THENCE NORTHEASTERLY 16.84 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 00043'08" TO A LINE THAT BEARS NORTH 22035'49" WEST FROM THE POINT OF BEGINNING; THENCE ALONG SAID LINE SOUTH 22035'49" EAST 60.92 FEET TO THE POINT OF BEGINNING. First American Title Form No. 1068-2 ALTA Plain Language Commitment SCHEDULE B SECTION ONE REQUIREMENTS Commitment No.: O -SA ILS1731 Page Number: 10 The following requirements must be met: (A) Pay the agreed amounts for the interest in the land and/or the mortgage to be insured. (B) Pay us the premiums, fees and charges for the policy. (C) Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured must be signed, delivered and recorded. (D) You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions. (E) Releases(s) or Reconveyance(s) of Item(s): (F) Other: (G) You must give us the following information: 1. Any off record leases, surveys, etc. 2. Statement(s) of Identity, all parties. 3. Other: First American Title Form No. 1068-2 ALTA Plain Language Commitment SCHEDULE B SECTION TWO EXCEPTIONS Commitment No.: O -SA -1151731 Page Number: 11 Any policy we issue will have the following exceptions unless they are taken care of to our satisfaction. The printed exceptions and exclusions from the coverage of the policy or policies are set forth in Exhibit A attached. Copies of the policy forms should be read. They are available from the office which issued this Commitment. 1. The effect of maps purporting to show the herein described and other land recorded in Book 12, page 43; in Book 78, page 21; in Book 88, page 27; in Book 94, page 8; in Book 97, pages 8 to 10; in Book 109, page 50; in Book 111, page 5; in Book 117, page 48; in Book 123, page 44; in Book 135, page 10; in Book 137, page 20; in Book 139, page 1; and in Book 147, page 41, all of Record of Surveys. 2. The effect of a map purporting to show the land and other property, filed in Book 114, pages 1, 2 and 3 of Record of Surveys. A document entitled "Record of Survey Certificate of Correction" recorded September 8, 1989 as Instrument No. 89-481820 of Official Records. 3. The effect of a map purporting to show the land and other property, filed in Book 165, pages 31 through 39 of Record of Surveys. 4. The terms and provisions contained in the document entitled "Short Form Notice of Agreement" recorded May 14, 2002 as Instrument No. 20020404589 of Official Records. 5. An unrecorded lease dated May 13, 2002, executed by The United States of America as lessor and The City of Tustin, California as lessee, as disclosed by a Short Form Notice of Lease in Furtherance of Conveyance recorded May 14, 2002 as Instrument No. 20020404590 of Official Records. (Affects Parcels III -C-3 and III -C-5 only.) 6. Easements, covenants and conditions contained in the deed from the United States of America, as grantor, to the City of Tustin, California, as grantee, recorded May 14, 2002 as Instrument No. 20020404593 of Official Records. Reference being made to said document for full particulars. (Affects Parcel I -C-1 only.) 7. The effect of a map purporting to show the land and other property, filed in Book 194, pages 19 through 27 of Record of Surveys. First American Title Form No. 1068-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 12 B. The fact that the land lies within the boundaries of the MCAS Tustin Redevelopment Project Area, as disclosed by the document recorded June 18, 2003 as Instrument No. 2003000710836 of Official Records. 9. The following matters disclosed by an A.L.T.A. Survey by Development Resource Consultants, signed by Warren Williams, PLS #7038, dated October 24, 2003 and Revised , Project No. 02-315: a. The fact that a concrete tarmac extends across the Northwesterly portion of the land and land adjoining on the Northeast and Northwest. b. Any hazardous waste spillage or condition as evidenced the existence of a concrete tarmac located on the Northwesterly portion of the land. c. The fact that a dirt road, asphalt roads and concrete roads extends across the land and land adjoining on the Northeast, Northwest and Southwest. d. The fact that buildings are located partially on the Northeasterly portion of the land and partially on the land adjoining on the Northeast. e. An unrecorded easement or lesser right for a gas pull box located on the Northeasterly portion of the land, together with any underground lines appurtenant thereto. f. The fact that curbs and gutters extend across the Northeasterly portion of the land and land adjoining on the Northeast. g. The fact that chain link fences extend across the land and the land adjoining on the Northwest, Northeast and Southwest. h. The fact that chain link fences extend onto and encroach into the street right of way of Barranca Parkway adjoining on the Southwest and Jamboree Road adjoining on the Southeast. i. The fact that concrete slabs are located partially on the land and partially on land adjoining on the Northeast. j. Additional matters that may be disclosed by a revised ALTA Survey, if any. First American Title Form No. 1068-2 ALTA Plain Language Commitment INFORMATIONAL NOTES 1. Taxes for proration purposes only for the fiscal year 2003-2004. First Installment: NO TAXES DUE Commitment No.: O -SA -1151731 Page Number: 13 Second Installment: NO TAXES DUE Tax Rate Area: 13-043 and 13-045 APN: 434-021-14, 434-021-15, 434-021-17, 434-021-21, and 434- 061-44 The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. First American Title Form No. 1068-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 14 WIRE INSTRUCTIONS First American Title Company, Demand/ Draft Sub -Escrow Deposits Orange County, California First American Trust, FSB Santa Ana Branch 421 North Main Street Santa Ana, California 92701 ABA 122241255 Credit to First American Title Company Account No. 15030 Reference Title Order Number O -SA -1151731, and Title Officer David Noble Please wire the day before recording. Also, notify the Title Officer of your intent to wire. First American Title Form No. 106E-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 15 CONDITIONS 1. DEFINITIONS (a)"Mortgage" means mortgage, deed of trust or other security instrument. (b)"Public Records" means title records that give constructive notice of matters affecting the title according to the state law where the land is located. 2. LATER DEFECTS The Exceptions in Schedule B - Section Two may be amended to show any defects, liens or encumbrances that appear for the first time in the public records or are created or attached between the Commitment Date and the date on which all of the Requirements (a) and (c) of Schedule B - Section One are met. We shall have no liability to you because of this amendment. 3. EXISTING DEFECTS If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances, we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing. 4. LIMITATION OF OUR LIABILITY Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an error in this Commitment, our liability will be limited to your actual loss caused by your relying on this Commitment when you acted in good faith to: comply with the Requirements shown in Schedule B - Section One or eliminate with our written consent any Exceptions shown in Schedule B - Section Two. We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you. 5. CLAIMS MUST BE BASED ON THIS COMMITMENT Any claim, whether or not based on negligence, which you may have against us concerning the title to the land must be based on this commitment and is subject to its terms. First American Title Form No. 1068-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 16 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) 1. CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY - 1990 SCHEDULE B EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: I . Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any fads, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other fads which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Ads authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: I. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (il) the character, dimensions or location o any improvement now or hereafter erected on the land; (Iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable "doing business" laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by their policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. 2. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B -1970 SCHEDULE OF EXCLUSIONS FROM COVERAGE I. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions of area of the land, or the effect of any violation of any such law, ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder; (c) resulting in no loss or damage to the insured claimant; (d) attaching or First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1151731 Page Number: 17 created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 3. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B - 1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 2 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One I. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests; or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Ads authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records. 4. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1970 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE SCHEDULE OF EXCLUSIONS FROM COVERAGE 1. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions or area of the land, or the effect of any violation of any such law ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant, (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy or acquired the insured mortgage and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder, (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent insurance is afforded herein as to any statutory lien for labor or material or to the extent insurance is afforded herein as to assessments for street improvements under construction or completed at Date of Policy). 4. Unenforceability of the lien of the insured mortgage because of failure of the insured at Date of Policy or of any subsequent owner of the indebtedness to comply with applicable "doing business" laws of the state in which the land is situated. S. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association Lenders Policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy, the exclusions set forth in paragraph 4 above are used and the following exceptions to coverage appear in the policy. SCHEDULES This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to, a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. First American Title Form No. 1068-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 18 6. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (1) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy; (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Polity. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent that this policy insures the priority of the lien of the insured mortgage over any statutory lien for services, labor or material or the extent insurance is afforded herein as to assessments for street improvements under construction or completed at date of policy); or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable "doing business" laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any statutory lien for services, labor or materials (or the claim of priority of any statutory lien for services, labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which is contracted for and commenced subsequent to Date of Policy and is not financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance. 7. Any claim, which arises out of the transaction creating the interest of the mortgagee insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine of equitable subordination; or (iii) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 7. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 6 above are used and the following exceptions to coverage appear in the policy. SCHEDULES This policy does not insure against loss or damage (and the Company will not pay costs, attomeys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Ads authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. S. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 1992 First American Title Form No. 1068-2 ALTA Plain Language Commitment EXCLUSIONS FROM COVERAGE Commitment No.: O -SA -1151731 Page Number: 19 The following matters are expressly excluded from the coverage of this polity and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land. has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 4. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the estate or interest insured by this policy being deemed a fraudulent conveyance or fraudulent transfer; or (li) the transaction creating the estate or interest insured by this policy being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 9. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 8 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: Part One: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 10. AMERICAN LAND TITLE ASSOCIATION RESIDENTIAL TITLE INSURANCE POLICY - 1.987 EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees and expenses resulting from: Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning, ordinances and also laws and regulations concerning: * land use * improvements on the land * land division * environmental protection This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. This exclusion does not limit the zoning coverage described in items 12 and 13 of Covered Title Risks. First American Title Form No. 1068-2 ALTA Plain Language Commitment 2. The right to take the land by condemning it, unless: Commitment No.: O -SA -1151731 Page Number: 20 * a notice of exercising the right appears in the public records on the Policy Date * the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking. 3. Title Risks: * that are created, allowed, or agreed to by you * that are known to you, but not to us, on the Policy Date - unless they appeared in the public records * that result in no loss to you * that first affect your title after the Policy Date this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks 4. Failure to pay value for your title. S. Lack of a right: * to any land outside the area specifically described and referred to in Item 3 of Schedule A, or * in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks. 11. EAGLE PROTECTION OWNER'S POLICY CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 1998 ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 1998 Covered Risks 14 (Subdivision Law Violation). 15 (Building Permit). 16 (Zoning) and 18 (Encroachment of boundary walls or fences) are subject to Deductible Amounts and Maximum Dollar Limits of Liability EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes ordinances, laws and regulations concerning: a. building b. zoning c. land use d. improvements on the land e. land division f. environmental protection This exclusion does not apply to violations or the enforcement of these matters if notice of the violation or enforcement appears in the Public Records at the Policy Date. This exclusion does not limit the coverage described in Covered Risk 14, 15, 16, 17 or 24. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not apply to violations of building codes if notice of the violation appears in the Public Records at the Policy Date. 3. The right to take the Land by condemning it, unless: a. a notice of exercising the right appears in the Public Records at the Policy Date; or b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking. 4. Risks: a. that are created, allowed, or agreed to by You, whether or not they appear in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they appear in the Public Records at the Policy Date; c. that result in no loss to You; or d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25. 5. Failure to pay value for Your Title. 6. Lack of a right: a. to any Land outside the area specifically described and referred to in paragraph 3 of Schedule A; and b. in streets, alleys, or waterways that touch the Land. This exclusion does not limit the coverage described in Covered Risk 11 or 18. 12. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (10/13/01) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the Land; (iii) a separation in ownership or a change in the dimensions or area of the Land or any parcel of which the Land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the Land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under Covered Risks 12, 13, 14 and 16 of this policy. First American Title Form No. 1068-2 Commitment No.: O -SA -1151731 ALTA Plain Language Commitment Page Number: 21 (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under Covered Risks 12, 13, 14 and 16 of this policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the Public Records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without Knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (this paragraph does not limit the coverage provided under Covered Risks 8, 16, 18, 19, 20, 21, 22, 23, 24, 25 and 26); or (e) resulting in loss or damage which would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of the Insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable doing business laws of the state in which the Land is situated. 5. Invalidity or unenforceability of the lien of the Insured Mortgage, or claim thereof, which arises out of the transaction evidenced by the Insured Mortgage and is based upon usury, except as provided in Covered Risk 27, or any consumer credit protection or truth in lending law. 6. Real property taxes or assessments of any governmental authority which become a lien on the Land subsequent to Date of Policy. This exclusion does not limit the coverage provided under Covered Risks 7, 8 (e) and 26. 7. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This exclusion does not limit the coverage provided in Covered Risk B. 8. lack of priority of the lien of the Insured Mortgage as to each and every advance made after Date of Policy, and all interest charged thereon, over liens, encumbrances and other matters affecting title, the existence of which are Known to the Insured at: (a) The time of the advance; or (b) The time a modification is made to the terms of the Insured Mortgage which changes the rate of interest charged, if the rate of interest is greater as a result of the modification than it would have been before the modification. This exclusion does not limit the coverage provided in Covered Risk 8. 9. The failure of the residential structure, or any portion thereof to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This exclusion does not apply to violations of building codes if notice of the violation appears in the Public Records at Date of Policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. The following existing statutes, reference to which are made part of the ALTA 8.1 Environmental Protection Lien Endorsement incorporated into this Policy following item 28 of Covered Risks: NONE. 13. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (10/13/01) WITH REGIONAL EXCEPTIONS When the American Land Title Association loan policy with EAGLE Protection Added is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 12 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attomeys' fees or expenses) which arise by reason of: Part One: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, daims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other fads which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. Part Two: 1. The following existing statutes, reference to which are made part of the ALTA 8.1 Environmental Protection Lien Endorsement incorporated into this Policy following item 28 of Covered Risks: None. First American Title Form No. 1066-2 ALTA Plain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 22 The Company hereby insures the insured against loss or damage which the insured shall sustain by reason of the failure of the land to abut upon a physically open street known as Barranca Parkway. This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof. CLTA Form 103.7 (Rev. 6-14-96) ALTA or CLTA - Owner or Lender First American Title Form No. 1068-2 ALTA Plain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 23 The Company hereby insures the insured against loss or damage which the insured shall sustain by reason of the failure of the land to be the same as that delineated on the plat of a survey made by (Pro - forma) on (Pro -forma), designated Job No. (Pro -forma) . This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof. CLTA Form 116.1 (Modified) (Revised 6-14-96) ALTA or CLTA - Owner First American Title Form No. 1068-2 ALTA Plain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 24 The Company hereby insures against loss or damage sustained or incurred by the Insured by reason of: 1. The existence of present violations on the land of any enforceable covenants, conditions or restrictions; 2. Except as shown in Schedule B, the presence of existing encroachments of buildings, structures, or improvements located on the land onto adjoining lands, nor any encroachments onto the land of buildings, structures or improvements located on adjoining lands. 3. Unmarketability of the title to the estate or interest by reason of any violations on the land, occurring prior to acquisition of title to the estate or interest by the Insured, of any covenants, conditions or restrictions. 4. Damage to existing building improvements: a. Which are located or encroach upon the portion of the land subject to any easement shown in Schedule B, which damage results from the exercise of the right to use or maintain the easement for the purposes for which the same was granted or reserved; b. Resulting from the exercise of any right to use the surface of the land for the extraction or development of the minerals excepted from the description of the land or shown as a reservation in Schedule B. 5. Any final court order or judgment requiring removal from any land adjoining the land of any encroachment shown in Schedule B. Wherever in this endorsement any or all the words "covenants, conditions or restrictions" appear, they shall not be deemed to refer to or include the terms, covenants, conditions or restrictions contained in any lease. No coverage is provided under this endorsement as to any covenant, condition, restriction or other provision relating to environmental protection. This endorsement is made a part of the policy and is subject to all the terms and provisions thereof and of any prior endorsements. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the Policy and any prior endorsements, nor does it extend the effective date of the Policy and any prior endorsements, nor does it increase the face amount thereof. F.A. Form 31.1 (Revised 3/99) ALTA Extended Owner First American rtle Form No. 1068-2 ALTA Plain Language Commitment (Improved Land) Restrictions, Encroachments & Minerals First American Title Commitment No.: O -SA -1151731 Page Number: 25 Form No. 1068-2 ALTA Plain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 26 The Company hereby insures the Insured against loss or damage sustained or incurred by the Insured by reason of the land referred to in Schedule A not consisting of separate tax lot(s) or said lot(s) including any property not included within said land. This endorsement is made a part of the Policy and is subject to all the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the Policy and prior endorsements, if any; nor does it extend the effective date of the Policy and prior endorsements or increase the face amount thereof. F.A. Form 64 (Revised 3/99) Separate Tax Lot First American Title Form No. 1068-2 ALTA Piain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 27 The Company insures the owner of the indebtedness secured by the insured mortgage against loss or damage sustained by reason of: any assessments for street improvements under construction or completed at Date of Policy not excepted in Schedule B which now have gained or hereafter may gain priority over the lien of the insured mortgage. This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof. ALTA Form 1 (Street Assessments), (revised 9/27/86, effective 6/1/87) First American Title Form No. 1068-2 ALTA Plain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 28 The Company hereby insures the insured against loss or damage which the insured shall sustain by reason of the failure of the land described in Schedule (Pro -forma) to be contiguous to (Pro -forma). This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof. CLTA Form 116.4 (Revised 6-14-96) ALTA or CLTA - Owner or Lender First American Title Form No. 1068.2 ALTA Plain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 29 The insurance afforded by this endorsement is only effective if the land is used or is to be used primarily for residential purposes. The Company insures the insured against loss or damage sustained by reason of lack of priority of the lien of the insured mortgage over: (a) any environmental protection lien which, at Date of Policy, is recorded in those records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without knowledge, or filed in the records of the clerk of the United States district court for the district in which the land is located, except as set forth in Schedule B; or (b) any environmental protection lien provided for by any state statute in effect at Date of Policy, except environmental protection liens provided for by the following state statutes: NONE This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof. F.A. Form 35 CLIA Form 110.9 (3-13-87) ALTA Form 8.1 (3-27-87) Environmental Protection Lien FirstAmerican Title Form No. 1068-2 ALTA Plain Language Commitment ENDORSEMENT Attached to Policy No. O -SA -1151731 Issued By First American Title Insurance Company Commitment No.: O -SA -1151731 Page Number: 30 The Company agrees with the Insured that, notwithstanding paragraph 9 of the Conditions and Stipulations and provided the Insured has not released or substituted the personal liability of any debtor or guarantor, or extended or otherwise modified the terms of payment, or released any portion of the land from the lien of the insured mortgage, until such time as the indebtedness secured by the insured mortgage is paid down to an amount equal to the amount of insurance shown in Schedule A of the policy, there shall not be any reduction in the amount of insurance pro tanto by reason of a partial payment by any party of the indebtedness secured by the insured mortgage. Payment in part by any party of the principal of the indebtedness, or any other obligation secured by the insured mortgage which reduces the indebtedness secured by the insured mortgage to an amount less than the amount of insurance stated in Schedule A of the Policy, or any voluntary partial satisfaction or release of the insured mortgage, shall to the extent of the payment, satisfaction or release reduce the amount of insurance pro tanto. The amount of insurance may thereafter be increased by accruing interest and advances made to protect the lien of the insured mortgage and secured thereby, with interest thereon, provided in no event shall the amount of insurance be greater than the amount of insurance stated in Schedule A of the Policy. This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof. [Note: When this endorsement is attached to a 1970 form policy, the reference to paragraph 9 must be changed to paragraph 8.] F.A. Form 51.1 (Revised 3/99) Last Dollar Endorsement ALTA Loan Policy First American Title Form No. 1068-2 Commitment No.: O -SA -1248434 ALTA Plain Language Commitment Page Number: 1 FIRST AMERICAN TITLE INSURANCE COMPANY INFORMATION The Title Insurance Commitment is a legal contract between you and the company. It is issued to show the basis on which we will issue a Title Insurance Policy to you. The Policy will insure you against certain risks to the land title, subject to the limitations shown in the policy. The Company will give you a sample of the Policy form, if you ask. The Commitment is based on the land title as of the Commitment Date. Any changes in the land title or the transaction may affect the Commitment and the Policy. The Commitment is subject to its Requirements, Exceptions and Conditions. This information is not part of the title insurance commitment. TABLE OF CONTENTS Agreement to Issue Policy Schedule A Page 3 1. Commitment Date 4 2. Policies to be Issued, Amounts and Proposed Insured 4 3. Interest in the Land and Owner 4 4. Description of the Land 4 Schedule B-1 - Requirements Schedule B-2 - Exceptions Conditions YOU SHOULD READ THE COMMITMENT VERY CAREFULLY. If you have any questions about the Commitment, please contact the issuing office. First American Title Form No. 1068-2 ALTA Plain Language Commitment COMMITMENT FOR TITLE INSURANCE Issued by First American Title Company Agreement to Issue Policy We agree to issue a policy to you according to the terms of this Commitment. Commitment No.: O -SA -1248434 Page Number: 2 When we show the policy amount and your name as the proposed insured in Schedule A, this Commitment becomes effective as of the Commitment Date shown in Schedule A. If the Requirements shown in this Commitment have not been met within six months after the Commitment Date, our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy. Our obligation under this Commitment is limited by the following: The Provisions in Schedule A. The Requirements in Schedule B-1. The Exceptions in Schedule B-2. The Conditions. This Commitment is not valid without Schedule A and Sections 1 and 2 of Schedule B. First American Title Form No. 1068-2 ALTA Plain Language Commitment 1 01 3. 4 SCHEDULE A Commitment Date: March 8, 2004 at 7:30 A.M. Policy or Policies to be issued: (A) ALTA Extended Owners Policy, Form B-1970 Proposed Insured: Vestar Development II, L.L.C., an Arizona limited liability company Commitment No.: O -SA -1248434 Page Number: 3 (A) The estate or interest in the land described in this Commitment is: A fee. (B) Title to said estate or interest at the date hereof is vested in: Amount $(To Be Determined) The Tustin Public Financing Authority, a joint powers authority, organized and existing under the laws of the State of California, as to Parcel 1; and the United States of America, as to Parcels 2, 3 and 4. The land referred to in this Commitment is described as follows: first American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1248434 Page Number: 4 Real property in the City of Tustin, County of Orange, State of California, described as follows: PARCEL 1: Parcel I -D-4, in the City of Tustin, County of Orange, State of California, as described in the "Quitclaim Deed D and Environmental Restriction Pursuant to Civil Code Section 1471" recorded May 14, 2002 as Instrument No. 20020404594 of Official Records in the Office of the County Recorder of said County, excepting therefrom that portion lying northerly and northwesterly of the following described line: Beginning at the westerly terminus of that certain course in the generally southerly line of said Parcel I -D-4 described as "North 88014'04" East 97.60 feet"; thence North 74044'39" East 728.07 feet to the generally easterly line of said Parcel I -D-4. PARCEL 2: (PARCEL II -D-10) In the City of Tustin, County of Orange, State of California, being that portion of Lot 102 in Block 47 of Irvine's Subdivision as shown on the map filed in Book 1, Page 88 of Miscellaneous Record Maps, and as shown on a map filed in Book 165, Pages 31 through 39 inclusive of Records of Survey, all of records of said County, described as follows: For the purpose of this description the following Control Lines are hereby established: Control Line "F" Beginning at the intersection of the centerline of Von Karman Avenue with the centerline of Barranca Parkway as shown on said Record of Survey, the centerline of Barranca Parkway having a bearing of North 49119'54" West between Armstrong Avenue and Von Karman Avenue; thence leaving said intersection North 40040'06" East 302.71 feet to the beginning of a curve concave southeasterly having a radius of 1800.05 feet; thence northeasterly and easterly 1295.77 feet along said curve through a central angle of 41014'40" to a point hereinafter referred to as Point VIS11 Control Line "G" Beginning at the hereinabove described Point "S"; thence South 21016'16" East 89.72 feet to the beginning of a curve concave northwesterly having a radius of 1400.04 feet; thence easterly along said curve 1945.22 feet through a central angle of 79136'25" to a point hereinafter referred to as Point "LI". Parcel II -D-10 Beginning at said Point "U" in the hereinabove described Control Line "G"; thence North 49026'44" West 59.48 feet to a point on a curve concentric with and distant 46.00 feet northerly from the hereinabove described Control Line "G", concave northerly having a radius of 1354.04 feet, a radial line to said point bears South 09018'31" East, said point being the true point of beginning; thence leaving said concentric curve North 4901737" West 18.16 feet; thence North 49027'26" West 238.84 feet; thence South 40041'52" West 96.62 feet; thence North 49028'30" West 20.39 feet; thence North 41017'05" East 27.28 feet; thence North 49008'59" West 56.19 FirstAmerican Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1248434 Page Number: 5 feet; thence South 40043'02" West 80.48 feet; thence North 46005'16" West 111.74 feet; thence North 40038'24" East 721.58 feet; thence South 53018'24" East 187.10 feet; thence North 40°00'59" East 95.64 feet; thence South 49101'42" East 150.99 feet; thence South 41017'09" West 417.54 feet; thence South 49057'37" East 94.04 feet; thence South 08007'48" East 24.75 feet; thence South 39123'40" West 247.69 feet to a point on said concentric curve, a radial line to said point bears South 09035'20" East; thence westerly along said concentric curve 6.62 feet through a central angle of 00016'49" to the true point of beginning. PARCEL 3: (PARCEL III -D-9) In the City of Tustin, County of Orange, State of California, being a portion of Lot 102 in Block 47 of Irvine's Subdivision as shown on the map filed in Book 1, Page 88 of Miscellaneous Record Maps, and as shown on a map filed in Book 165, Pages 31 through 39 inclusive of Records of Survey, both of records of said County, described as follows: For the purpose of this description the following Control Lines are hereby established: Control Line "F" Beginning at the intersection of the centerline of Von Karman Avenue with the centerline of Barranca Parkway as shown on said Record of Survey, the centerline of Barranca Parkway having a bearing of North 49119'54" West between the centerline of Armstrong Avenue and Von Karman Avenue; thence leaving said intersection North 40040'06" East 302.71 feet to the beginning of a curve concave southeasterly having a radius of 1800.05 feet; thence northeasterly 1295.77 feet along said curve through a central angle of 41014'40" to a point hereinafter referred to as Point 1151 Control Line "G" Beginning at the hereinabove described Point "S"; thence South 21016'16" East 89.72 feet to the beginning of a curve concave northwesterly having a radius of 1400.04 feet; thence southerly, southeasterly and easterly along said curve 1945.22 feet through a central angle of 79036'25" to a point hereinafter referred to as Point "U". Parcel III -D-9 Beginning at the hereinabove described Point "U"; thence North 49026'44" West 59.48 feet to a point on a curve concentric with and distant 46.00 feet northerly from the hereinabove described Control Line "G", said point being the true point of beginning; thence leaving said concentric curve North 49017'37" West 18.16 feet; thence North 4912726" West 238.84 feet; thence South 40°41'52" West 96.62 feet; thence North 49028'30" West 20.39 feet; thence North 41017'05" East 27.28 feet; thence North 49008'59" West 56.19 feet; thence South 40043'02" West 80.48 feet; thence North 46005'16" West 111.74 feet; thence North 46013'08" West 58.17 feet; thence South 40°43'22" West 232.95 feet to a point on said concentric curve, said point being the beginning of a non -tangent curve concave northerly having a radius of 1354.04 feet, a radial line to said point bears South 1702729" West; thence easterly along said concentric curve 632.56 feet through a central angle of 2614600" to the true point of beginning. PARCEL 4: (PARCEL III -D-11) In the City of Tustin, County of Orange, State of California, being that portion of Block 47 of Irvine's Subdivision as shown on the map filed in Book 1, Page 88 of Miscellaneous Record Maps, FirstAmerican Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1248434 Page Number: 6 and as shown on a map filed in Book 165, Pages 31 through 39 inclusive of Records of Survey, both of records of said County, described as follows: For the purpose of this description the following Control Lines are hereby established: Control Line "F" Beginning at the intersection of the centerline of Von Karman Avenue with the centerline of Barranca Parkway as shown on said Record of Survey, the centerline of Barranca Parkway having a bearing of North 49019'54" West between the centerline of Armstrong Avenue and Von Karman Avenue; thence North 40040'06" East 302.71 feet to the beginning of a curve concave southeasterly having a radius of 1800.05 feet; thence northeasterly and easterly 1295.77 feet along said curve through a central angle of 41°14'40" to a point hereinafter referred to as Point "S", a radial line to said point bears North 08005'14" West. Control Line "G" Beginning at the hereinabove described Point "S"; thence South 21016'16" East 89.72 feet to the beginning of a curve concave northerly having a radius of 1400.04 feet; thence easterly and northeasterly along said curve 2657.30 feet through a central angle of 108044'54" to a point hereinafter referred to as Point "V", a radial line to said point bears South 40101'10" East. Parcel III -D-11 Beginning at the hereinabove described Point "V"; thence North 22035'49" West 60.92 feet to a point on a curve that is concentric with and distant 58.00 feet northwesterly of the hereinabove described Control Line "G", said point being the true point of beginning; thence continuing North 22135'49" West 239.34 feet; thence South 67135'09" West 160.64 feet; thence South 24024'11" East 292.38 feet to the beginning of a non -tangent curve concave northwesterly and having a radius of 1354.04 feet, a radial line to said beginning of curve bears South 33059'38" East, said curve being concentric with and distant 46.00 feet northwesterly of the hereinabove described Control Line "G"; thence northeasterly 145.52 feet along said concentric curve through a central angle of 06009'28"; thence North 49013'07" West 12.15 feet to a point of non -tangency on first said concentric curve concave northwesterly and having a radius of 1342.04 feet, a radial line to said point bears South 40004'13" East, thence northeasterly 16.84 feet along said concentric curve through a central angle of 00043'08" to the true point of beginning. First American Title Form No. 1068-2 ALTA Plain Language Commitment SCHEDULE B SECTION ONE REQUIREMENTS Commitment No.: O -SA -1248434 Page Number: 7 The following requirements must be met: (A) Pay the agreed amounts for the interest in the land and/or the mortgage to be insured. (B) Pay us the premiums, fees and charges for the policy. (C) Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured must be signed, delivered and recorded. (D) You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions. (E) Releases(s) or Reconveyance(s) of Item(s): 11 (F) Other: (G) You must give us the following information: 1. Any off record leases, surveys, etc. - 2. Statement(s) of Identity, all parties. 3. Other: First American Title Form No. 1068-2 ALTA Plain Language Commitment SCHEDULE B SECTION TWO EXCEPTIONS Commitment No.: O -SA -1248434 Page Number: 8 Any polity we issue will have the following exceptions unless they are taken care of to our satisfaction. The printed exceptions and exclusions from the coverage of the policy or policies are set forth in Exhibit A attached. Copies of the policy forms should be read. They are available from the office which issued this Commitment. 1. General and special taxes and assessments for the fiscal year 2003-2004. First Installment: NO TAXES DUE Penalty: Second Installment: NO TAXES DUE Penalty: Tax Rate Area: 13-039, 13-043 and 13-045 A. P. No.: 434-021-09, 434-021-11, 434-021-12, 434-021-13, and 434- 061-43 2. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code. Although the above supplemental taxes may be a lien, the installments thereof are not yet due or payable. The effect of maps purporting to show the herein described and other land recorded in Book 12, page 43; in Book 78, page 21; in Book 88, page 27; in Book 94, page 8; in Book 97, pages 8 to 10; in Book 109, page 50; in Book 111, page 5; in Book 117, page 48; in Book 123, page 44; in Book 135, page 10; in Book 137, page 20; in Book 139, page 1; and in Book 147, page 41, all of Record of Surveys. 4. The effect of a map purporting to show the land and other property, filed in Book 114, pages 1 to 3 of Record of Surveys. A document entitled "Record of Survey Certificate of Correction" recorded September 8, 1989 as Instrument No. 89-481820 of Official Records. 5. The effect of a map purporting to show the land and other property, filed in Book 165, pages 31 through 39 of Record of Surveys. 6. The terms and provisions contained in the document entitled "Short Form Notice of Agreement" recorded May 14, 2002 as Instrument No. 20020404589 of Official Records. 7. An unrecorded lease dated May 13, 2002, executed by The United States of America, acting by and through the Department of the Navy as lessor and The City of Tustin, California as lessee, as First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1248434 Page Number: 9 disclosed by a Short Form Notice of Lease in Furtherance of Conveyance recorded May 14, 2002 as Instrument No. 20020404590 of Official Records, and re-recorded May 19, 2003 as Instrument No. 2003000570797 of Official Records. (Affects Parcels 2, 3 and 4 only.) 8. Easements, covenants and conditions contained in the deed from the United States of America, as grantor, to the City of Tustin, California, as grantee, recorded May 14, 2002 as Instrument No. 20020404594 of Official Records, and re-recorded April 9, 2003 as Instrument No. 2003000392129 of Official Records. Reference being made to said document for full particulars. (Affects Parcel 1 only.) 9. This item has been intentionally deleted. 10. Easements, Covenants and Conditions contained in the deed from The City of Tustin, California, as Grantor, to The Tustin Public Financing Authority, a joint powers authority, organized and existing under the laws of the State of California, as Grantee, recorded December 18, 2002 as Instrument No. 2002001156609 of Official Records. Reference being made to the document for full particulars. (Affects Parcel 1 only.) 11. A deed of trust to secure an original indebtedness of $60,000,000.00 recorded December 27, 2002 as Instrument No. 2002001190014 of Official Records. Dated: December 27, 2002 Trustor: Tustin Public Financing Authority - Trustee: First American Title Beneficiary: Salomon Smith Barney, Inc. (Affects Parcel 1, and other property.) 12. The effect of a map purporting to show the land and other property, filed in Book 194, pages 19 through 27 of Record of Surveys. 13. The fact that the land lies within the boundaries of the MCAS Tustin Redevelopment Project Area, as disclosed by the document recorded June 18, 2003 as Instrument No. 2003000710836 of Official Records. 14. The following matters disclosed by an A.L.T.A. survey by Development Resource Consultants, signed by Warren Williams Jr., L.S. 7038, dated January 29, 2004 and revised , Project No. 02-315: A. The fact that buildings along the Southeasterly portion of the land are situated partially on the land and partially on land adjoining on the Southeast. B. The fact that concrete slabs along the Southeasterly portion of the land are situated partially on the land and partially on land adjoining on the Southeast. C. The fact that buildings along the Northwesterly portion of the land are situated partially on First American Tit/e Form No. 1068-2 Commitment No.: O -SA -1248434 ALTA Plain Language Commitment Page Number: 10 the land and partially on the land adjoining on the Northwest D. Any reciprocal ingress, egress and rights between the land and surrounding lands, as evidenced by asphalt roads, asphalt pavement, dirt paths, walls, fences, concrete tarmac, concrete pavement, parking and curbing extending throughout the land and surrounding lands. E. Any reciprocal drainage with the land and land adjoining on the Southeast and Northwest as evidenced by the fact that drainage ditches and concrete gutters are located partially on the land and partially on land adjoining on the Southeast and Northwest. F. Additional matters that may be disclosed by a revised ALTA survey, if any First American Title Form No. 1068-2 ALTA Plain Language Commitment INFORMATIONAL NOTES Commitment No.: O -SA -1248434 Page Number: 11 The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. First American Tit/e Form No. 1068-2 Commitment No.: O -SA -1248434 ALTA Plain Language Commitment Page Number: 12 WIRE INSTRUCTIONS First American Title Company, Demand/ Draft Sub -Escrow Deposits Orange County, California First American Trust, FSB Santa Ana Branch 421 North Main Street Santa Ana, California 92701 ABA 122241255 Credit to First American Title Company Account No. 15030 Reference Title Order Number O -SA -1248434, and Title Officer David Noble Please wire the day before recording. Also, notify the Title Officer of your intent to wire. First American Title Form No. 1068-2 Commitment No.: O -SA -1248434 ALTA Plain Language Commitment Page Number: 13 CONDITIONS 1. DEFINITIONS (a)"Mortgage" means mortgage, deed of trust or other security instrument. (b)"Public Records" means title records that give constructive notice of matters affecting the title according to the state law where the land is located. 2. LATER DEFECTS The Exceptions in Schedule B - Section Two may be amended to show any defects, liens or encumbrances that appear for the first time in the public records or are created or attached between the Commitment Date and the date on which all of the Requirements (a) and (c) of Schedule B - Section One are met. We shall have no liability to you because of this amendment. 3. EXISTING DEFECTS If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances, we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing. 4. LIMITATION OF OUR LIABILITY Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an error in this Commitment, our liability will be limited to your actual loss caused by your relying on this Commitment when you acted in good faith to: comply with the Requirements shown in Schedule B - Section One or eliminate with our written consent any Exceptions shown in Schedule B - Section Two. We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you. 5. CLAIMS MUST BE BASED ON THIS COMMITMENT Any claim, whether or not based on negligence, which you may have against us concerning the title to the land must be based on this commitment and is subject to its terms. FirstAmerican Title Form No. 1068-2 Commitment No.: O -SA -1248434 ALTA Plain Language Commitment Page Number: 14 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) 1. CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY - 1990 SCHEDULE B EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable "doing business" laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by their policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. 2. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B - 1970 SCHEDULE OF EXCLUSIONS FROM COVERAGE 1. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions of area of the land, or the effect of any violation of any such law, ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder; (c) resulting in no loss or damage to the insured claimant; (d) attaching or First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1248434 Page Number: 15 created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest Insured by this policy. 3. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B - 1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 2 above are used and the following exceptions to coverage appear in the policy. SCHEDULES This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records, 4. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1970 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE SCHEDULE OF EXCLUSIONS FROM COVERAGE 1. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions or area of the land, or the effect of any violation of any such law ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant, (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy or acquired the insured mortgage and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder, (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent insurance is afforded herein as to any statutory lien for labor or material or to the extent insurance is afforded herein as to assessments for street improvements under construction or completed at Date of Policy). 4. Unenforceability of the lien of the insured mortgage because of failure of the insured at Date of Policy or of any subsequent owner of the indebtedness to comply with applicable "doing business" laws of the state in which the land is situated. S. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association Lenders Policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy, the exclusions set forth in paragraph 4 above are used and the following exceptions to coverage appear in the policy. SCHEDULES This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. First American Title Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1248434 Page Number: 16 6. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this polity and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (1) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy; (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent that this policy insures the priority of the lien of the insured mortgage over any statutory lien for services, labor or material or the extent insurance is afforded herein as to assessments for street improvements under construction or completed at date of policy); or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable "doing business" laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any statutory lien for services, labor or materials (or the claim of priority of any statutory lien for services, labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which is contracted for and commenced subsequent to Date of Policy and is not financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance. 7. Any claim, which arises out of the transaction creating the interest of the mortgagee insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine of equitable subordination; or (iii) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 7. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 6 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. S. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. S. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 1992 First American Title Form No. 1068-2 ALTA Plain Language Commitment EXCLUSIONS FROM COVERAGE Commitment No.: O -SA -1248434 Page Number: 17 The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (1) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Polity; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 4. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (1) the transaction creating the estate or interest insured by this policy being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the transaction creating the estate or interest insured by this policy being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 9. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 8 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attomeys' fees or expenses) which arise by reason of: Part One: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 10. AMERICAN LAND TITLE ASSOCIATION RESIDENTIAL TITLE INSURANCE POLICY - 1987 EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees and expenses resulting from: Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning: * land use * improvements on the land * land division * environmental protection This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. This exclusion does not limit the zoning coverage described in items 12 and 13 of Covered Title Risks. First American Title Form No. 1068-2 ALTA Plain Language Commitment 2. The right to take the land by condemning it, unless: Commitment No.: O -SA -1248434 Page Number: 18 * a notice of exercising the right appears in the public records on the Policy Date * the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking. 3. Title Risks: ' * that are created, allowed, or agreed to by you * that are known to you, but not to us, on the Policy Date - unless they appeared in the public records * that result in no loss to you * that first affect your title after the Policy Date - this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks 4. Failure to pay value for your title. 5. Lack of a right: * to any land outside the area specifically described and referred to in Item 3 of Schedule A, or * in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks. 11. EAGLE PROTECTION OWNER'S POLICY CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 1998 ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE - 1998 Covered Risks 14 (Subdivision Law Violation). 15 (Building Permit). 16 (Zoning) and 18 (Encroachment of boundary walls or fences) are subject to Deductible Amounts and Maximum Dollar Limits of Liability EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes ordinances, laws and regulations concerning: a. building c. land use e. land division b. zoning d. improvements on the land f. environmental protection This exclusion does not apply to violations or the enforcement of these matters if notice of the violation or enforcement appears in the Public Records at the Policy Date. This exclusion does not limit the coverage described in Covered Risk 14, 15, 16, 17 or 24. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not apply to violations of building codes if notice of the violation appears in the Public Records at the Policy Date. 3. The right to take the Land by condemning it, unless: a. a notice of exercising the right appears in the Public Records at the Policy Date; or b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking. 4. Risks: a. that are created, allowed, or agreed to by You, whether or not they appear in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they appear in the Public Records at the Policy Date; c. that result in no loss to You; or d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25. 5. Failure to pay value for Your Title. 6. Lack of a right: a. to any Land outside the area specifically described and referred to in paragraph 3 of Schedule A; and b. in streets, alleys, or waterways that touch the Land. This exclusion does not limit the coverage described in Covered Risk 11 or 18. 12. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (10/13/01) EXCLUSIONS FROM COVERAGE The following matters are expressly exciuded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: First American Title Form No. 1068-2 Commitment No.: O -SA -1248434 ALTA Plain Language Commitment Page Number: 19 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the Land; (iii) a separation in ownership or a change in the dimensions or area of the Land or any parcel of which the Land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the Land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under Covered Risks 12, 13, 14 and 16 of this policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under Covered Risks 12, 13, 14 and 16 of this policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the Public Records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without Knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (this paragraph does not limit the coverage provided under Covered Risks 8, 16, 18, 19, 20, 21, 22, 23, 24, 25 and 26); or (e) resulting in loss or damage which would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of the Insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable doing business laws of the state in which the Land is situated. 5. Invalidity or unenforceability of the lien of the Insured Mortgage, or claim thereof, which arises out of the transaction evidenced by the Insured Mortgage and is based upon usury, except as provided in Covered Risk 27, or any consumer credit protection or truth in lending law, 6. Real property taxes or assessments of any governmental authority which become a lien on the Land subsequent to Date of Policy. This exclusion does not limit the coverage provided under Covered Risks 7, 8 (e) and 26. 7. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This exclusion does not limit the coverage provided in Covered Risk 8. 8. Lack of priority of the lien of the Insured Mortgage as to each and every advance made after Date of Policy, and all interest charged thereon, over liens, encumbrances and other matters affecting title, the existence of which are Known to the Insured at: (a) The time of the advance; or (b) The time a modification is made to the terms of the Insured Mortgage which changes the rate of interest charged, if the rate of interest is greater as a result of the modification than it would have been before the modification. This exclusion does not limit the coverage provided in Covered Risk 8. 9. The failure of the residential structure, or any portion thereof to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This exclusion does not apply to violations of building codes if notice of the violation appears in the Public Records at Date of Policy. SCHEDULE 8 This policy does not insure against loss or damage (and the Company will not pay costs, attomeys' fees or expenses) which arise by reason of: The following existing statutes, reference to which are made part of the ALTA 8.1 Environmental Protection Lien Endorsement incorporated into this Policy following item 28 of Covered Risks: NONE. 13. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (10/13/01) WITH REGIONAL EXCEPTIONS When the American Land Title Association loan policy with EAGLE Protection Added is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 12 above are used and the following exceptions to coverage appear in the policy. SCHEDULE 8 This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: Part One: I. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. First American Tit/e Form No. 1068-2 ALTA Plain Language Commitment Commitment No.: O -SA -1248434 Page Number: 20 5. Unpatented mining claims; reservations or exceptions in patents or in acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. PartTwo: 1. The following existing statutes, reference to which are made part of the ALTA 8.1 Environmental Protection Lien Endorsement incorporated into this Policy following item 28 of Covered Risks: None. First American Title ATTACHMENT NO. 23 CITY NOTE Vestar DDA Attachment No. 23 City Note 07/12/04 18405:6391127.7 ATTACHMENT NO. 23 CITY NOTE 1'1 FOR VALUE RECEIVED, the undersigned, VESTAR/KIMCO TUSTIN, L.P., a California limited partnership ("Developer"), having a principal address at 2425 East Camelback Road, Suite 750, Phoenix, Arizona 85016, Attn: Richard Kuhle, PROMISES TO PAY TO THE ORDER OF THE CITY OF TUSTIN, a principal municipal corporation of the State of California, ("City") having an address of 300 Centennial Way, Tustin California 92780, Attention: Assistant City Manager, or at such place as City may from time to time designate, the principal sum of DOLLARS ($ ) (the "Loan"), together with interest thereon from the date of first disbursement of Loan proceeds hereunder through the date paid in full at a rate per annum equal to the Interest Rate. 1. Definitions. For the purpose of this Promissory Note (this "Note"), the following terms shall have the meanings set forth below. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in that certain Tustin Legacy Disposition and Development Agreement (Retail Development), dated as of July _, 2004 by and between Developer and City (the "DDA"). (a) "Deed of Trust" means that certain Deed of Trust, Security Agreement and Fixture Filing with Assignment of Rents of even date herewith executed by Developer as "Trustor" to the benefit of City as "Beneficiary" as security for repayment of this Note. (b) "Interest Rate" means a rate of interest per annum of six and thirty-six one hundredth percent (6.36%). (c) "Secured Property" means the Secured Property as defined in the Deed of Trust, together with all real and/or personal property securing, in whole or in part, this Note or the Loan. (d) "Principal Balance" means the principal balance of this Note from time to time outstanding. 2. Payments. The entire unpaid principal amount of this Note, together with any and all accrued and unpaid interest and any other amounts then due under the Deed of Trust, shall be due and payable on the earlier of: (a) the last Subsequent Closing for the Reuse Plan Disposal Parcel 12 Remainder Parcels; (b) the closing of Developer's refinancing of its first permanent loan with respect to any portion of the Project following the replacement of its construction loan with such first permanent loan; (c) the Transfer by Developer of the entirety of the balance of the Project owned by Developer excluding Minor Pads; or (d) the fifteenth (15`h) anniversary of the date first set forth above (collectively, the "Maturity Date"), unless such amounts become due 7/12/2004 Attachment No. 23 — Page 1 City Note 18405:6392218.5 and payable sooner because of acceleration, in which case they shall be due and payable in full on the date of such acceleration. 3. Treatment of Payments. For the purposes of calculating interest under this Note, a year of 365 days shall be employed regardless of the actual time elapsed. For any partial month, interest shall be due in an amount equal to (i) the Interest Rate divided by 365 multiplied by (ii) the number of days any amount is outstanding under this Note through and including the date of payment. All payments due under this Note and/or the Deed of Trust shall be paid by Developer in lawful money of the United States of America on the date such payment is due. All such payments shall be made without deduction for any present or future taxes, levies, deductions, charges or withholdings (including U.S., state or local income taxes), which amounts shall be paid by Developer. 4. Event of Default. The occurrence of an Event of Default (as defined in the Deed of Trust) and/or a Material Default (as defined in the DDA) shall constitute an Event of Default under this Note. Upon the occurrence of any of an Event of Default under the Deed of Trust, a Material Default under the DDA and/or an Event of Default under this Note, City, at its option, may cause the Principal Balance together with all unpaid accrued interest, and any other sums evidenced or secured by this Note, to be immediately due and payable, without further presentment, demand, protest or notice of any kind, by so notifying Developer in writing. 5. Prepayment. Developer shall have the right voluntarily to prepay all or any portion of the Principal Balance, together with accrued interest thereon, at any time. 6. Security. This Note is secured, among other security, by the Deed of Trust which contains provisions for the acceleration of the maturity of this Note upon the occurrence of certain described events. 7. City's Rights; No Waiver by City. The rights, powers and remedies of City under this Note shall be in addition to all rights, powers and remedies given to City under the DDA and the Deed of Trust and any other agreement or document securing or evidencing the Loan or by virtue of any statute or rule of law, including, but not limited to, the California Uniform Commercial Code. All such rights, powers and remedies shall be cumulative and may be exercised successively or concurrently in City's sole discretion without impairing City's security interest, rights or available remedies. Any forbearance, failure or delay by City in exercising any right, power or remedy shall not preclude further exercise thereof, and every right, power or remedy of City shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed by City. Developer waives any right to require the City to proceed against any Person or to exhaust all or any part of the Secured Property or to pursue any remedy in City's power. 8. Developer's Waivers. Developer and any endorsers of this Note, and each of them, hereby waive diligence, demand, presentment for payment, notice of non-payment, protest and notice of protest, and specifically consent to and waive notice of any renewals or extensions of this Note, whether made to or in favor of Developer or any other person or persons. Developer and any endorsers of this Note expressly waive all right to the benefit of any statute of limitations and any moratorium, reinstatement, marshaling, forbearance, extension, or 7/12/2004 Attachment No. 23 — Page 2 City Note 18405:6392218.5 appraisement now or hereafter provided by the Constitution and the laws of the United States and of any state thereof, as a defense to any demand against Developer or any such endorsers, to the fullest extent permitted by law. 9. Amendments/Counterparts. This Note may be amended or modified only by an instrument in writing which by its express terms refers to this Note and which is duly executed by the party sought to be bound thereby. This Note may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original and all of which together shall constitute but one and the same Note. 10. Successors and Assigns. This Note shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal representatives, successors and assigns. 11. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California. 12. Time. Time is of the essence with respect to each and every term and provision of this Note. 13. Usury. Notwithstanding any provision herein, the total liability for payments in the nature of interest shall not exceed the applicable limits imposed by any applicable state or federal interest rate laws. If any payments in the nature of interest, additional interest, and other charges made hereunder are held to be in excess of the applicable limits imposed by any applicable state or federal laws, it is agreed that any such amount held to be in excess shall be considered payment of principal and the Principal Balance shall be reduced by such amount in the inverse order of maturity so that the total liability for payments in the nature of interest, additional interest and other charges shall not exceed the applicable limits imposed by any applicable state or federal interest rate laws in compliance with the desires of City and Developer. 14. Notices. All notices, consents and other communications required or permitted by this Note shall be in writing and shall be given in the manner set forth in the Deed of Trust. 15. Attorneys' Fees. The undersigned agrees to pay all attorneys' fees, costs and expenses, including, without limitation, court costs, expert witness fees, document reproduction expenses, costs of exhibit preparation, courier charges, postage and communication expenses, incurred by City in enforcing payment or collection of this Note or the terms of the Deed of Trust, whether or not suit is filed. [signature page follows] 7/12/2004 Attachment No. 23 — Page 3 City Note 18405:6392218.5 IN WITNESS WHEREOF, Developer has caused this Note to be executed and delivered effective as of the date first written above. DEVELOPER: Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member LN Name: Title: 7/12/2004 Attachment No. 23 — Page 4 City Note 18405:6392218.5 ATTACHMENT NO. 24 CITY DEED OF TRUST Vestar DDA Attachment No.24 City Deed of Trust 07/12/04 18405:6391127.7 ATTACHMENT NO. 24 CITY DEED OF TRUST Recording requested by and when recorded mail to: Assistant City Manager The City of Tustin 300 Centennial Way Tustin, CA 92780 Space Above This Line Reserved for Recorder's Use DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING WITH ASSIGNMENT OF RENTS THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING WITH ASSIGNMENT OF RENTS (THIS "DEED OF TRUST"), MADE THIS _ DAY OF ,200 , BETWEEN VESTAR/KIMCO TUSTIN, L.P., A CALIFORNIA LIMITED PARTNERSHIP (HEREIN CALLED "TRUSTOR"), WHOSE ADDRESS IS 2425 EAST CAMELBACK ROAD, SUITE 750, PHOENIX, ARIZONA 85016, ATTN: RICHARD KUHLE, AND FIRST AMERICAN TITLE INSURANCE COMPANY (HEREIN CALLED "TRUSTEE") IN FAVOR OF THE CITY OF TUSTIN, A CALIFORNIA MUNICIPAL CORPORATION (HEREIN CALLED "BENEFICIARY"). RECITALS: A. Beneficiary and Trustor are parties to that certain Tustin Legacy Disposition and Development Agreement (Retail Development) dated as of July _ 2004 (the "DDA"). Pursuant to Section 4.2.3(b) of the DDA, Developer has executed that certain Purchase Money Promissory Note of even date herewith (the "Note"). B. Beneficiary desires to secure the performance of Trustor's obligations under the Note. ARTICLE 1 TRUSTOR HEREBY IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE, IN TRUST, WITH POWER OF SALE, the following property, rights, interests and estates now owned, or hereafter acquired, by Trustor (the following, collectively, the "Secured Property"): (i) that certain real property (the "Land") located in the County of Orange, State of 7/122004 Attachment No. 24 — Page 1 City Deed of Trust 90307:6391888.7 California, and more particularly described in Exhibit A attached hereto and incorporated herein by this reference ("Developer Fee Property B"); (ii) the Improvements now or hereafter erected or located on Developer Fee Property B (the "Secured Improvements"); (iii) all easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to Developer Fee Property B and the Secured Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining Developer Fee Property B, with the appurtenances thereto; (iv) all contracts, agreements, documents (including plans, specifications, studies, drawings, surveys, tests, operating and other reports, bonds and governmental approvals) and leases (including Retail Leases) associated with any of the foregoing; (v) the rents, issues and profits of each of the foregoing, including the proceeds of the sale of any Retail Pads in accordance with the DDA, subject, however, to the right, power and authority hereinafter given to and conferred upon Trustor to collect and apply such rents, issues and profits in the absence of an Event of Default (as defined below) by Trustor; (vi) all personal property associated with any of the foregoing belonging to Trustor; and (vii) all other revenue, income and other benefits from any of the foregoing. ARTICLE 2 This Deed of Trust and the grants, assignments and transfers made in Article 1 are given for the purpose of securing, in such order of priority as Beneficiary may determine, the following obligations (collectively, the "Obligations"): (1) payment of the indebtedness evidenced by the Note and all other amounts due from Trustor to Beneficiary evidenced or secured by the Note, plus interest on all such amounts as provided in the Note and (2) payment of all amounts payable by Trustor to Beneficiary pursuant to the DDA with respect to Developer Fee Property B. A To protect the security of this Deed of Trust, Trustor hereby covenants and agrees: (1) To keep the Secured Property in good condition and repair, not to remove or demolish any Secured Improvement thereon except in accordance with the DDA; to complete or restore promptly and in good and workmanlike manner any Secured Improvement which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting such Secured Property or requiring any alterations or improvements to be made thereon, not to commit or permit waste thereof; not to commit, suffer or permit any act upon such Secured Property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of such Secured Property may be reasonably necessary, in each case as may be more fully set forth in the DDA. 7/12/2004 Attachment No. 24 — Page 2 City Deed of Trust 90307:6391888.7 (2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any Event of Default hereunder or invalidate any act done pursuant to such notice. (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including, without limitation, cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust. (4) To pay, prior to delinquency, all taxes and assessments affecting the Secured Property, including, without limitation, assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on the Secured Property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Deed of Trust. In the event that Trustor fails to make any payment or to do any act as herein provided, then Beneficiary or Trustee after seven (7) days notice and failure to cure but without obligation so to do and without releasing Trustor from any Obligation, may, make or do the same in such manner or to such extent as either may deem necessary to protect the security thereof, Beneficiary or Trustee being authorized to enter upon the Secured Property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his or her fees and costs. (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the maximum amount allowed by law in effect at the date hereof; and to pay for any statement provided for by law in effect at the date hereof regarding the Obligation any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when such statement is demanded. B It is mutually agreed: (1) That any award of damages in connection with any condemnation for public use of or injury to the Secured Property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare an Event of Default for failure so to pay. 7/12/2004 Attachment No. 24 — Page 3 City Deed of Trust 90307:6391888.7 (3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust, or a copy thereof; and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of such Secured Property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. (4) That upon written request of Beneficiary stating that all Obligations have been paid or otherwise performed by Trustor, Trustee shall reconvey, without warranty, the Secured Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." (5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of this Deed of Trust, to collect the rents, issues and profits of such Secured Property, provided that prior to any Event of Default by Trustor in payment or performance of any Obligation, Trustor may collect and retain such rents, issues and profits as they become due and payable. Upon any such Event of Default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of such Secured Property or any part thereof; in its own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including attorney's fees and costs, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of such Secured Property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any Event of Default, or notice thereof, hereunder, or invalidate any act done pursuant to such notice. (6) That upon the occurrence of an Event of Default by Trustor in payment of any indebtedness secured hereby or in performance of any covenant or agreement hereunder and/or a Material Default under the DDA, Beneficiary may declare all sums secured hereby immediately due and payable. Beneficiary may instruct the Trustee to record a notice of default and notice of election to cause the Secured Property to be sold. After the lapse of such time as may then be required by law following the recordation of such notice of default and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell such Secured Property at the time and place affixed by it in such notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of such Secured Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the Secured Property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary, may purchase at such sale. 7/12/2004 Attachment No. 24 — Page 4 City Deed of Trust 90307:6391888.7 After deducting all costs, fees and expenses of Trustee and of this Deed of Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale in the following order to payment of: (i) all sums expended under the terms hereof not then repaid, with accrued interest at the default rate; (ii) all other Obligations then secured hereby; and (iii) the remainder, if any, to the person or persons legally entitled thereto. For purposes of this Deed of Trust, it shall constitute an "Event of Default" hereunder if any of the following events shall occur and Beneficiary, by written notice delivered to Trustor, declares an Event of Default: (i) Trustor shall fail to pay within ten (10) days of the date when due any part of the Obligations and/or any other sum due under the DDA that relates to Developer Fee Property B, or (ii) Trustor shall fail to timely observe, perform or discharge any obligation under this Deed of Trust, and any such failure shall remain unremedied for thirty (30) days or such lesser period as may be otherwise specified herein (the "Grace Period") after notice to Trustor of the occurrence of such failure; provided, however, that Beneficiary may extend the Grace Period up to ninety (90) days if (a) Beneficiary determines in that (1) such default cannot be cured within the Grace Period but can be cured within ninety (90) days, (2) no lien or security interest created by the Loan Documents shall be impaired prior to the completion of such cure, and (3) Beneficiary's immediate exercise of any remedies provided hereunder or by law is not necessary for the protection or preservation of the Secured Property or Beneficiary's security interest therein, and (b) Trustor shall immediately commence and diligently pursue the cure of such default, or (iii) the occurrence of a Material Default under the DDA and/or under the Special Restrictions. (7) That Beneficiary, or any successor in interest to any Obligation, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and Recorded shall be conclusive proof of proper substitution of such successor Trustee or Trustees, which successor(s) shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Such instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the instrument number and/or book and page where this Deed of Trust is recorded and the name and address of the new Trustee. (8) That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assign. (9) This Security Instrument is both a real property mortgage and a "security agreement" within the meaning of the Uniform Commercial Code. The Secured Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Trustor in the Secured Property. By executing and delivering this Deed of Trust, Trustor hereby grants to Beneficiary and Trustee, as security for the Obligations, a security interest in the personal property to the full extent that the personal property may be subject to the Uniform Commercial Code. 7/12/2004 Attachment No. 24 — Page 5 City Deed of Trust 90307:6391888.7 (10) That Trustee accepts this Deed of Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. (11) This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California without regard to the choice of law provisions thereof. (12) This Deed of Trust has been made and entered into solely for the benefit of the parties to this Deed of Trust and their respective successors and permitted assigns. Nothing in this Deed of Trust confers any rights or remedies on any persons other person. Nothing in this Deed of Trust relieves or discharges the obligation or liability of any third persons to any parties to this Deed of Trust. (13) No appointed or elected official or employee of the City shall have any personal interest, direct or indirect, in this Deed of Trust nor shall any official or employee participate in any decision relating to the Deed of Trust which affects his or her interests or the interests of any corporation, partnership, or association in which he is directly or indirectly interested. The Developer warrants that it has not paid or given and will not pay or give any third person any money or other consideration for obtaining this Deed of Trust. (14) Each of the parties hereto shall execute and deliver at their own cost and expense, any and all additional papers, documents, or instruments, and shall do any and all acts and things.reasonably necessary or appropriate in connection with the performance of their respective obligations hereunder in order to carry out the intent and purposes of this Agreement. (15) The parties hereto agree that all actions or proceedings arising in connection with this Agreement and/or the Secured Property shall be tried and litigated exclusively in the Superior Court of the County of Orange, State of California, in any other appropriate court of that county, or in the United States District Court for the Central District of California. This choice of venue is intended by the parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between or among the parties with respect to or arising out of this Agreement in any jurisdiction other than that specified in this Section. Each party hereby waives any right that it may have to assert forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this Section, and stipulates that the state and federal courts located in the County of Orange, State of California, shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy or proceeding arising out of this Agreement. Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by Section 15 by means of registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices as set forth in the DDA pertaining to notice. Any final judgment rendered against a party in any action or proceeding shall be conclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law. 7/12/2004 Attachment No. 24 — Page 6 City Deed of Trust 90307:6391888.7 (16) Beneficiary, upon request by Trustor and satisfaction of the conditions precedent thereto set forth in Section 2.2.3 of the DDA, shall enter into a non -disturbance and attornment. agreement with Trustor's tenant (Target) in the form and substance of the City Non - Disturbance and Attornment Agreement attached to the DDA as Attachment No. 21A. IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date set forth above. TRUSTOR: Vestar/Kimco Tustin, L.P. By: Vestar California XXX, L.L.C., its Managing Member 0 Name: Title: 7/12/2004 Attachment No. 24 — Page 7 City Deed of Trust 90307:6391888.7 STATE OF CALIFORNIA ss. COUNTY OF On , 2004 before me, , a Notary Public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public 7/12/2004 Attachment No. 24 — Page 8 City Deed of Trust 90307:6391888.7 EXHIBIT "A" Developer Fee Property B A-1 90307:6391888.7 DO NOT RECORD TO , TRUSTEE: REQUEST FOR FULL RECONVEYANCE The undersigned is entitled to the indebtedness secured by the foregoing Deed of Trust. Such indebtedness secured by such Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of such Deed of Trust, to cancel any evidences of indebtedness secured by such Deed of Trust delivered to you herewith, together with the such Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of such Deed of Trust, all the estate now held by you under the same. Dated: [COMPANY] By: [NAME] [TITLE] Please mail Deed of Trust and Reconveyance to: Do not lose or destroy this Deed of Trust or the evidences of indebtedness its secures. They must be delivered to the Trustee for cancellation before reconveyance will be made. 7/12/2004 Attachment No. 24 - Page 9 City Deed of Trust 90307:6391888.7