HomeMy WebLinkAbout04 THIRD AMENDMENT TO THE TUSTIN LEGACY DDA WITH FLIGHT DocuSign Envelope ID:201EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Agenda Item 4t�5!0
" Reviewed:
AGENDA REPORT City Manager ^^DS
1W Finance Director Ja
MEETING DATE: DECEMBER 1 , 2020
TO: MATTHEW S. WEST, CITY MANAGER
FROM: ECONOMIC DEVELOPMENT DEPARTMENT
SUBJECT: THIRD AMENDMENT TO THE TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT CORNERSTONE I (DDA) WITH FLIGHT
PHASE I OWNER LLC
SUMMARY:
Request for authorization to approve the Third Amendment to the Disposition and
Development Agreement Cornerstone I (DDA) with Flight Phase I Owner LLC, successor
in interest to Flight Venture LLC (formed by the affiliates of Lincoln Property Company
Commercial, Inc. (LPCC) and Alcion Capital Strategic III, LLC (Alcion) (Developer)for the
FLIGHT office development at Tustin Legacy. This amendment would reduce the
remaining Option term and facilitate conveyance of the FLIGHT Phase 2 property by
December 30, 2022, in compliance with the State Surplus Land Act (SLA). The purchase
price schedule for Phase 2 will remain unchanged.
RECOMMENDATION:
Authorize the City Manager to execute the Third Amendment to the DDA between Flight
Phase I Owner LLC and the City, and any related implementing documents, subject to
non-substantive modifications as may be deemed necessary and/or recommended by the
City's special real estate counsel or the City Attorney.
FISCAL IMPACT:
Under the terms of the existing DDA, the Developer holds an option, not an obligation, to
acquire the Phase 2 property for ten years commencing on the disposition of the Phase
1 property, which occurred on June 29, 2017. The Third Amendment to the DDA would
shorten the option term to approximately six years and require the Developer to purchase
the property by December 30, 2022. This recommended Third Amendment to the DDA
does not change the negotiated base purchase price for the Phase 2 property which
increases annually per the DDA depending in which year the close of escrow occurs. The
Developer would close escrow on the Phase 2 property by the end of 2022 and pay the
base purchase price for the corresponding year of closing. An additional supplemental
purchase price has been negotiated in the proposed Third Amendment. The
supplemental purchase price would be applicable after the close of escrow should
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Agenda Report—Third Amendment to the Cornerstone I DDA
December 1, 2020
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construction of the Phase 2 project not commence by June 29, 2024, per the schedule
contemplated in the DDA. Further, a profit participation agreement has been instituted in
the proposed Third Amendment. Upon close of escrow and prior to payment of the first
supplemental purchase price (2024) and then again after June 30, 2026, if the Developer
has not started construction and proposes to transfer the property then the City would
participate in a 50% profit share of certain transfers.
CORRELATION TO THE STRATEGIC PLAN:
This action correlates to the City's Strategic Plan for Economic and Neighborhood
Development (Goal A).
BACKGROUND:
On November 15, 2016, the City Council authorized the City Manager to execute the DDA
for the FLIGHT development (Cornerstone 1) at Tustin Legacy. The DDA has since been
amended twice with the First and Second Amendments being approved by the City
Council on June 20, 2017, and October 1 , 2019, respectively. Amendments to the SLA
enacted under Assembly Bill No. 1486 (Ting, 2019) impose a condition upon the City to
dispose of the property by December 31 , 2022, even with a previous DDA in effect with
a developer that allows for an option term to purchase that extends beyond 2022. Absent
a revised DDA agreement to respond to this requirement, the Phase 2 property would
become subject to the most recent amendments of the SLA which would essentially nullify
the ability of the City to convey the Phase 2 property to the Developer under the terms of
the existing DDA.
The property described by the DDA is divided into two phases for development purposes.
The two phases of the FLIGHT office campus consist of up to 870,000 square feet of
creative office use with a food hall and conference center on approximately 39 acres at
Tustin Legacy. The Phase 1 property comprised of approximately 18 acres was conveyed
to the Developer in 2017 and construction of the 385,973 square foot FLIGHT Phase 1
project is complete with a Certificate of Compliance issued for the Phase 1 project on
March 26, 2020. Tenant improvements are ongoing within the project and the Mess Hall
(food hall) is completely leased.
The second phase of the property is to be constructed on the remaining approximately
21 acres. If the Developer exercises the option to purchase Phase 2, the Developer will
be required to build not less than 400,000 gross building area (GBA), not to exceed
479,560 GBA. At buildout of both phases, the total project will consist of not more than
870,000 GBA. Currently, the Developer holds a 10-year option to purchase the Phase 2
property which commenced with the disposition of Phase 1 (2017) and is required to be
renewed annually. The Developer has made timely payments and the option has been
extended. As a condition to the Phase 1 build out, the Developer has constructed
significant infrastructure improvements on the Phase 2 property in preparation for future
vertical improvements.
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December 1, 2020
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DISCUSSION:
This is the first office project undertaken at Tustin Legacy. It is one of the largest ground
-up office projects to be built in Orange County within the last ten years. It will be a
significant employment center with approximately 1 ,500 to 1 ,700 employees in Phase 1.
At the buildout of Phase 2 a total of 3,100 to 3,400 employees will be at the FLIGHT
project. The proposed Third Amendment to the DDA responds to the constraints imposed
under the amended SLA by accelerating conveyance of the Phase 2 property earlier than
anticipated by the Developer or the City. Some of the key changes to the DDA under the
Third Amendment are described in the following:
Third Amendment to the DDA Summary
Option Term
Currently the Developer is in Year 4 of the Option to purchase the Phase 2 property and
would otherwise have a total of ten years to exercise the Option to purchase under the
existing DDA, through 2027. The SLA requires the property to be conveyed by December
31 , 2022. The Developer has agreed to reduce the Option term to approximately five and
a half years, necessitating exercise of the Option in Option Year 5 (2021) or Option Year
6 (2022) with the Close of Escrow to occur on or prior to December 30, 2022. The
purchase price remains the same as the existing DDA, which is $35,330,445 in Year 5 or
$37,450,272 in Year 6. It is anticipated that conveyance will occur in Year 6.
Adjustment to Option Exercise Thresholds
Prior to exercise of the Option the Developer would have been required to execute leases
for a minimum of 232,050 GBA within the Phase 1 project or have a binding contract with
a build-to-suit user for at least 100,000 GBA within the Phase 2 project. While either of
these thresholds could still be met prior to December 30, 2022, they could prove to be
prohibitive to disposition of the Phase 2 property. Therefore, these thresholds have been
removed under the proposed Third Amendment. However, the Developer will still be
required to build not less than 400,000 GBA, not to exceed 479,560 GBA for Phase 2.
Phase 2 Non-Compete Period
A non-compete covenant was afforded to the Developer in the DDA recognizing the
requirement of the Developer by the City to make a significant upfront speculative
investment in a large-scale office campus and provides the Developer an opportunity to
stabilize their tenant base.
Under the existing DDA the Phase 2 non-compete period is scheduled to commence
when the Developer exercises the Option to purchase the Phase 2 property; however,
the Third Amendment would allow the Phase 2 non-compete period to commence on the
effective date. The Developer has experienced significant impacts to their ability to lease
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December 1, 2020
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the Phase 1 project as a result of the COVID-19 pandemic and this earlier initiation of the
Phase 2 non-compete period will provide reasonable accommodations for the Developer
in the continued pursuit to lease up the Phase 1 project under the current pandemic
circumstances. The Phase 2 non-compete will remain active until the earlier of (a.) Phase
2 project stabilization, (b.)three years after commencement of construction or (c.) by June
29, 2028, if construction has not commenced. The covenant is not applicable beyond the
boundaries of Tustin Legacy and it impacts only properties currently owned or controlled
by the City. Nothing in this covenant restricts the City from entering into binding
agreements such as DDAs with respect to sale or lease for office development at Tustin
Legacy; however, it restricts the amount of office space constructed and the type of
project in which the office space is located. The covenant does not restrict the City's ability
to enter into separate agreements with entities that may have interest in Tustin Legacy
for large office development of square footage that cannot be accommodated at FLIGHT.
Closing Conditions and Performance
The Schedule of Performance specifies outside dates, that is, dates by which an item
must be commenced or completed. Since the Developer would be purchasing the
property in an expedited timeframe, many of the closing conditions and performance
standards associated with construction of the Phase 2 project will be deferred under the
Third Amendment. Currently, the Developer is required to obtain a number of permit
ready plans, builder's risk insurance and other construction related items prior to the close
of escrow and to commence construction activities promptly thereafter in accordance with
the DDA Schedule of Performance. Under the proposed Third Amendment, the
construction related closing conditions will be deferred to a future date after the close of
escrow as conditions to be satisfied prior to commencement of construction. In addition,
the Schedule of Performance will be adjusted to correspond to the commencement of
construction activities. All predevelopment conditions and financial commitments to
ensure completion of the Phase 2 project will also be required at the time of construction.
The outside date for the buildout timeframe for the Developer to complete construction of
the minimum Phase 2 improvements remains unchanged from the original DDA and allow
the Developer up to 13 years from the effective date of the DDA should commencement
of construction be deferred to December 15, 2029.
Supplemental Purchase Price
In order to incentivize the Developer to commence construction in a timely manner there
are a number of financial increases that are triggered in the form of a supplemental
purchase price that the Developer would be required to pay under the Third Amendment.
The Developer must purchase the property by the end of 2022. If construction has not
started by June 29, 2024, the Developer is required to pay to the City the difference
between $42,079,125 (prior Year 8 purchase price) and the Phase 2 purchase price paid.
This difference would be a gain to the City of approximately $4.63M or$6.75M depending
on the year Phase 2 closed. Should the Developer still not commence construction in the
following year by, June 29, 2025, then an additional sum of $800,000 will be due to the
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December 1, 2020
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City. In the event the Developer has not started construction in the subsequent year by,
June 29, 2026, then an additional sum of $900,000 will be due to the City. The
supplemental purchase price will be secured by a deed of trust on the Phase 2 property
to the benefit of the City which shall remain until the commencement of construction
conditions have been satisfied by the Developer pursuant to the DDA.
Transfer Provisions and Profit Participation Agreement
A new transfer provision under the Third Amendment would allow for a permitted transfer
to a third-party Qualified Transferee meeting certain criteria in the DDA, and approved by
the City, to occur if the Developer fails to commence construction by June 29, 2026. To
discourage land speculation, a profit participation agreement will be in place and
applicable to a transfer to a Qualified Transferee along with any other applicable transfers
of the Phase 2 property occurring after the close of escrow. The City would receive fifty
percent (50%) of the net profits, if any, received in applicable transfers of the Phase 2
property. The profit participation agreement is secured by the same deed of trust as the
supplemental purchase price.
Reversion and Repurchase Rights Reserved by City
One of the City's goals for Tustin Legacy is that development occur in an orderly manner;
thus, the City does not sell property to private parties to hold land in order to prevent land
speculation. This is addressed in the DDA and remains in place by preserving the City's
rights through the Right of Repurchase and the Right of Reversion. These rights can only
be exercised by the City if the there is a Material Default by the Developer and the
Developer fails to cure the default.
F/IDocuSigned by:: II DocuSigned by:
U V tSf b u,t,r 6sft V Fnav, s "
ChrlstopKer°foster Ryan°Won er
Economic Development Director Manager of Development Services
Economic Development Department
Attachment: Third Amendment to the DDA between the City of Tustin and Flight Phase I Owner LLC
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
THIRD AMENDMENT TO TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT CORNERSTONE I
This THIRD AMENDMENT TO TUSTIN LEGACY DISPOSITION AND DEVELOPMENT
AGREEMENT CORNERSTONE I (this "Third Amendment") is entered into as of
December 1, 2020 (the "Third Amendment Effective Date") by and between the CITY OF
TUSTIN, a municipal corporation of the State of California(as more fully defined in the Amended
DDA (defined below), the "City") and FLIGHT PHASE I OWNER LLC, a Delaware limited
liability company (as more fully defined in the Amended DDA, the "Developer"), successor-in-
interest to FLIGHT VENTURE LLC, a Delaware limited liability company (the "Original
Developer"). The City and Developer and their respective permitted successors and assigns are
sometimes referred to in this Third Amendment individually as a "Party" and collectively as the
"Parties."
RECITALS
A. The City and Original Developer entered into that certain Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of November 15, 2016
("Original DDA"), as amended by (1)that certain First Amendment to Tustin Legacy Disposition
and Development Agreement Cornerstone I dated as of June 20, 2017 ("First Amendment") and
(2)that certain Second Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of October 1, 2019 ("Second Amendment"; the Original DDA, First
Amendment and Second Amendment referred to collectively in this Third Amendment as the
"Amended DDA"). The Amended DDA as amended by this Third Amendment is referred to
herein as the"Agreement." A memorandum of the Original DDA and the First Amendment was
recorded in the Official Records of Orange County, California ("Official Records") on
June 29, 2017 as Instrument Number 2017-000270814. Initially capitalized terms not defined
herein shall have the respective meanings assigned to such terms in the Amended DDA.
& The Property described by the Amended DDA is divided into two phases for
development purposes. Concurrently with the Phase 1 Property Close of Escrow, Original
Developer assigned to Developer all of Original Developer's right, title and interest in and to,
among other things, the Original DDA, as amended by the First Amendment, and all of Original
Developer's rights and interests as "Developer" thereunder.
C. The Phase 1 Property was conveyed to Developer on June 29, 2017, construction
of the Phase 1 Project and the Minimum Horizontal Improvements comprising a portion of Phase 1
have been Completed, and the Recorded Phase 1 Certificate of Compliance (defined below) has
been recorded. In addition, all improvements required to be delivered to the City by Developer and
accepted by the City pursuant to the Reimbursement Agreement have been delivered by Developer
and accepted by the City.
D. Developer holds an Option to acquire the Phase 2 Property. As required by the
Amended DDA, the Operating Rights and Responsibilities for development, construction, leasing
and operation of Phase 2 continue to be held by an Affiliate of LPCC. As of the Third Amendment
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Effective Date, there has been no Transfer of Control of Developer, Developer was and continues
to be Controlled by an Alcion Entity, and Developer's rights and interests have not been
Transferred to an Initial Phase 2 Developer or any other Person.
E. In order to expedite the Phase 2 Pre-Development Activities, secure equity
commitments and financing for the Phase 2 Project and comply with Governmental Requirements,
the Parties desire to shorten the Option term and to defer the requirement for satisfaction of certain
City Phase 2 Property Closing Conditions to a date prior to issuance by the City of the grading and
building permits for the Phase 2 Project and incorporate a series of Phase 2 Construction
Commencement Conditions that must be satisfied by Phase 2 Developer prior to Phase 2
Commencement of Construction.
F. In connection with these modifications, the Parties desire to provide for a
Supplemental Purchase Price (as further defined below); to modify certain of the remedies,
financing, Guaranty and Transfer provisions of the Agreement; and to incorporate various other
agreed upon terms and conditions as further set forth herein.
G. Concurrently with the execution and delivery of this Third Amendment, the Parties
shall execute in Recordable form and cause to be recorded in the Official Records the Phase 1
Second and Third Amendment Memorandum against the Phase 1 Parcel and the Phase 2 Second
and Third Amendment Memorandum against the Phase 2 Parcel.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing Recitals, which are hereby
incorporated into the operative provisions of this Third Amendment by this reference, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties further agree as follows:
1. Modifications to Article 1 of the Amended DDA—Introduction.
a. Section 1.2.5. A new Section 1.2.5 is hereby added to the Amended DDA, as follows:
"Pursuant to that certain Certificate of Compliance for the Phase 1 Project dated
March 26, 2020 that was Recorded in the Official Records on that date as
Instrument No. 2020000137939 ("Recorded Phase 1 Certificate of
Compliance"), this Agreement has terminated as to the Phase 1 Parcel and is of no
further force and effect with respect to Phase 1 or the Phase 1 Parcel, and any and
all Persons owning or purchasing, leasing, or otherwise acquiring any interest in
the Certified Parcel on or after March 26, 2020 shall not (because of such
ownership, purchase, lease, or acquisition) incur any obligation or liability under
this Agreement with respect to the Certified Parcel, except with respect to the
documents specified in the Recorded Phase 1 Certificate of Compliance to the
extent provided for in such documents or in the documents referred to therein;
provided that the provisions of Section 9.7 of this Agreement, which as set forth in
the Memorandum of DDA expressly survive the termination of this Agreement,
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continue to bind the Phase 1 Developer and the City. Developer and City
acknowledge and agree that the indemnities made by the City in respect of Phase 1
and the Phase 1 Parcel in Sections 8.9 and 18.11.2 of this Agreement are of no
further force and effect except as to Claims arising out of inspections or activities
prior to March 26, 2020. Developer (being both the Phase 1 Developer and the
Phase 2 Developer under this Agreement as of the Third Amendment Effective
Date and thereby authorized to bind Phase 1 Developer and its successors and
assigns), hereby agrees that from and after a Transfer of all or any portion of
Phase 2 or the Phase 2 Transferable Interests under this Agreement (whether as a
Permitted Transfer pursuant to Section 2.2.2 or otherwise):
(i) except to the extent of rights and obligations in favor of Working
Developer and the City set forth in Section 4.3.3(g), 4.3.3(h), and 15.41 and the
rights of Phase 1 Developer to enforce the terms and provisions of Section 9.7 and
the Sections of this Agreement referenced therein to the extent permitted by this
Agreement, Phase 1 Developer shall have no further rights under this Agreement,
(ii) notwithstanding that Phase 1 Developer remains bound by the terms
of Section 9.7, neither the approval nor signature of the owner of Phase 1 or any
Phase 1 Developer shall be required to execute an amendment of this Agreement,
and
(iii) Phase 1 Developer shall remain obligated to perform all obligations
of Phase 1 Developer remaining effective pursuant to the Recorded Phase 1
Certificate of Compliance, and in the documents specified in the Recorded Phase 1
Certificate of Compliance to the extent provided therein and in Section 9.7,
provided that Phase 1 Developer shall not be bound by any modification to
Sections 4.3.3(�u), 4.3.3(h), 9.7 (or the Sections of this Agreement referenced
therein), or Section 15.4 to which it does not provide its written consent."
b. Section 1.8.2. Section 1.8.2 of the Amended DDA is hereby amended by deleting the
fifth sentence of Section 1.8.2 and replacing it with the following:
"Unless this Agreement is earlier terminated, until the Satisfaction Date, if at any
time the amount of funds in the City Costs Deposit account (including interest
accrued thereon) is depleted below Fifty Thousand Dollars ($50,000), Developer
shall be required to pay to the City each time an additional Fifty Thousand Dollars
($50,000) which shall be credited to the City Costs Deposit. Following the
Satisfaction Date, the Phase 2 Commencement of Construction and the payment in
full of all outstanding City Transaction Expenses incurred by the City through the
date of the Phase 2 Commencement of Construction until the earlier to occur of
(x)the Recording of the Phase 2 Certificate of Compliance or (y)the termination
of this Agreement, if at any time the amount of funds in the City Costs Deposit
account (including interest accrued thereon) is depleted below Ten Thousand
Dollars ($10,000), Developer shall be required to pay to the City an additional Ten
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Thousand Dollars ($10,000) which shall be credited to the City Costs Deposit.
When received, such sums shall be deposited by the City into the City Costs Deposit
account to be applied to City Transaction Expenses in accordance with the
provisions of Section 1.8.3."
c. Section 1.8.3. Section 1.8.3 of the Amended DDA is hereby amended by deleting the
fourth and fifth sentences thereof and replacing them with the following:
"In addition, to the extent then unpaid, at each Close of Escrow, prior to issuance
of grading and building permits and at the termination of this Agreement, the City
shall be entitled to deduct from the City Costs Deposit the payment of all City
Transaction Expenses then unpaid and Developer shall, as a condition to each Close
of Escrow and as a Phase 2 Construction Commencement Condition, in each case
subject to Section 1.8.4, pay the full amount of City Transaction Expenses incurred
by the City through and including such date. Within sixty (60) calendar days
following the occurrence of the satisfaction of the Phase 2 Construction
Commencement Conditions, the Phase 2 Commencement of Construction, and the
payment in full of all outstanding City Transaction Expenses incurred by the City
through the date of the Phase 2 Commencement of Construction to the extent the
amount of funds in the City Cost Deposit Account (including interest thereon)
exceeds Ten Thousand Dollars($10,000), City shall cause such excess amount over
Ten Thousand Dollars ($10,000)to be promptly returned by the City to Developer,
provided that the return of such funds shall not terminate the obligations of
Developer to pay in accordance with Section 1.8.4 all City Transaction Expenses
arising or incurred prior to issuance of the Certificate of Compliance for its
respective portion of the Project. Within thirty (30) calendar days following the
earliest of(x)Recording of the Phase 2 Certificate of Compliance, (y) expiration of
the Option without it being exercised, or (z)termination of this Agreement, the
remaining amount of the City Costs Deposit then held by the City, if any, shall be
promptly returned by the City to Developer, provided that the return of such funds
shall not terminate the obligations of Developer to pay in accordance with
Section 1.8.4 all City Transaction Expenses arising or incurred prior to issuance of
the Certificate of Compliance for its respective portion of the Project."
2. Modifications to Article 2 of the Amended DDA— Transfers.
a. Section 2.2.2(h). The introductory paragraph of Section 2.2.2(h) of the Amended
DDA (before clause i thereof), is hereby modified by deleting the phrase: "provided
that, unless assigned in accordance with this Agreement, the Option shall be part of the
Phase 1 Foreclosed Collateral; provided further that" and replacing it with "provided
that".
b. Section 2.2.2(1). A new Section 2.2.2(1) is hereby added to the Amended DDA as
follows:
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"(j) Following the Phase 2 Property Close of Escrow, if the Phase 2 Developer
fails to Commence Construction of the Phase 2 Project on or before June 29, 2026,
then at any time from and after June 29, 2026 until the Phase 2 Commencement of
Construction, upon satisfaction of each of the conditions precedent set forth in this
Section, the Phase 2 Developer shall have the right to Transfer all of its right, title
and interest in and to the Phase 2 Transferable Interests (but such right shall not
include a right to Transfer partial interests in the Phase 2 Transferable Interests)to
a third party that is a Qualified Transferee that would take title to the Phase 2
Transferable Interests pursuant to a bona-fide, arms-length transaction for
development of a Permitted Use subject to the terms of this Agreement. No
Transfer to a Qualified Transferee shall take place unless Transferor and Transferee
shall have complied with the following, with such compliance and all other
determinations and/or approvals under this Section 2.2.2(1) in each case delegated
to the City Manager or the City Manager's designee and the determination as to
such compliance by Transferor and Transferee with determinations as to each of
the listed items in this Section 2.2.2(1) made in the sole discretion of City Manager
or the City Manager's designee:
(i) Developer shall not then be in Potential Default or Material Default
under the terms of this Agreement or any of the Other Agreements at the time of
the Transfer;
(ii) Not less than forty-five (45) calendar days prior to the proposed
Transfer, Transferor shall submit or cause Transferee to submit to the City the
following:
(A) The purchase and sale agreement, the assignment agreement
in substantially the form and substance of the Assignment Agreement attached as
Attachment 16D, and all other agreements and instruments and all other documents
proposed to effect the Transfer, which information shall include such information
as is reasonably necessary to determine the Total All-In Land Value Amount to be
paid by Transferee to Transferor for Transfer of the Phase 2 Transferable Interests.
(B) The biographies of the principals of the proposed Qualified
Transferee and any proposed QT Equity Investor and Phase 2 Guarantor.
(C) (1) All information required by Sections 2.2.3(a)(ii)(A)
through(G) which are in incorporated into this Section by this reference, with
respect to the proposed Qualified Transferee as to the Transfer or Transfer of
Control, as applicable,including evidence of insurance as required by Section 4.6.5
for the Phase 2 Project, and (2) a copy of Qualified Transferee's fully executed
Phase 2 Joint Venture Agreement and other documents meeting the requirements
of Section 4.6.2(d)(ii), (iii) and (iv) executed by a development partner and a
Phase 2 Equity Investor meeting the requirements of this Agreement, which Joint
Venture Agreement shall be consistent with and permit Qualified Transferee to
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perform all of the obligations of Developer under this Agreement and the Other
Agreements and shall not contain terms that preclude, contradict or limit the ability
or the financial capacity of Qualified Transferee to perform such obligations,which
agreement shall have an effective date prior to or concurrently with the date of the
Qualified Transfer and which shall remain effective for the term of this Agreement
and the Other Agreements, and (3)in order to provide the City with information
necessary to inform its rights with respect to a proposed Transfer to a Qualified
Transferee pursuant to this Section, Transferor shall cause Transferee to provide to
the City such other relevant information as the City may request in its sole
discretion in connection with its review rights under this Agreement (including
information analogous to the information described in Sections 4.6.1 through 4.6.6
and Sections 8.5.1 and 8.5.2 of this Agreement), which may include evidence that
the proposed Qualified Transferee or proposed new Controlling Person has
sufficient financial capacity to perform the obligations of Developer under this
Agreement.
(D) the following additional items: (1) a declaration certified by
the chief financial officer or other appropriate authorized officer of each of the
Qualified Transferee and of any entity constituting a "joint venture" between
Persons that are proposing to satisfy different aspects of the requirements necessary
for the Transferee to be deemed a Qualified Transferee (e.g., one Person satisfying
the experience test,which shall have the Operating Rights and Responsibilities, and
a second Person(the"QT Equity Investor") satisfying the financial tests)who are
authorized to execute documents on behalf of the Qualified Transferee and joint
venture entity, as applicable, that the following documentation submitted by each
such entity to the City is true and correct and attaching copies of(aa) a certificate
of formation, California foreign entity registration (if registration is required by
applicable law) and a fully executed limited liability company or limited
partnership agreement or bylaws (including any amendments thereto) or other
formation documents as applicable, (bb) copies of all resolutions or other necessary
actions taken by such entity to authorize the execution of documents or instruments
required by this Agreement, including without limitation the required Assignment
Agreement; (cc) certificates of good standing and tax good standing issued by the
Secretary of State and the applicable taxing authority in the state in which such
entity is formed or incorporated and by the California Secretary of State (if
registration is required by applicable law) and qualification to do business in
California (if applicable), each dated within thirty (30) calendar days prior to the
date of submittal to the City; (dd) evidence of the authority of the individual(s)
executing the joint venture agreement to bind QT Equity Investor and execute the
joint venture or other agreement; and (ee) a copy of any Fictitious Business Name
Statement, as published and filed with the Clerk of Orange County; (2) a certificate
from the QT Equity Investor in substantially the form of Attachment 13B (modified
as appropriate to refer to such certifying party(ies), as applicable) certified by the
chief financial officer or other appropriate authorized officer of the QT Equity
Investor; and (3)the designation of the Person(s) that will have the Operating
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Rights and Responsibilities from and after the Transfer to the Qualified Transferee;
(E) a Financing Plan for Phase 2 containing substantially the
same level of detail of the "Financing Plan" described in Section 4.6.1, including
equity and debt financing contemplated for such purposes (the "QT Updated
Financing Plan');
(F) evidence that at the time of the Transfer a Person with assets
meeting the Net Worth and Liquidity requirements under Section 4.7.4 as the Net
Worth requirements may have been modified by the Net Worth Side Letter, shall
enter into a Guaranty in the form and substance of the Guaranty attached to this
Agreement as Attachment 14 or otherwise in a form acceptable to the City in its
sole discretion and meeting the requirements of Section 4.6.3 to secure the
obligations of the Qualified Transferee as the Phase 2 Developer under this
Agreement;
(G) a written certification for the benefit of the City, executed by
the chief financial officer or other appropriate authorized officer of the Qualified
Transferee that Qualified Transferee meets each of the criteria required for, and
therefore is, a Qualified Transferee upon which the City shall be entitled to rely,
but in the event the certification is not true and correct, the City will not be bound
by the certification and the Qualified Transferee will not be treated as a Qualified
Transferee; and
(H) evidence of binding contractual commitment by the QT
Equity Investor to invest equity and fund the then-remaining costs to complete the
applicable portions of the Project on the Phase acquired, including the applicable
Development Costs, as described in Section 4.6.2(d)for the Phase 2 Project.
(iii) As a condition to Transfer to the Qualified Transferee for the benefit
of the City, each of the following shall be satisfied prior to or concurrently with
such Transfer:
(A) If not previously paid, the Supplemental Purchase Price then
due and owing under the terms of the Supplemental Purchase Price and Profit
Participation Agreement shall be paid in full to the City.
(B) The Transferor and Qualified Transferee shall certify as to
the Total All-In Land Value Amount subject to Profit Participation pursuant to the
Supplemental Purchase Price and Profit Participation Agreement, and Transferor
shall pay to the City any and all amounts due under the Supplemental Purchase
Price and Profit Participation Agreement with respect to the Profit Participation.
(C) The Qualified Transferee at the time of the Transfer shall
have expressly assumed for itself and its successors and assigns, and for the benefit
of the City, by an acknowledged and Recorded instrument substantially in the form
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and substance of the instrument attached hereto as Attachment 16D or otherwise in
a form acceptable to the City in its sole discretion, all the rights and obligations of
Developer under this Agreement and the Other Agreements with respect to the
Phase 2 Transferable Interests arising from and after the date of such Transfer, and
the proposed Transferee shall agree to be subject to all the conditions and
restrictions to which Developer is subject by reason of this Agreement and the
Other Agreements with respect to the assigned interests in the Project, including
the obligation to develop, design, construct and maintain the Phase 2 Project in
accordance with the terms of this Agreement and the Other Agreements, and shall
certify in writing for the benefit of the City as to the truth and correctness, as of the
effective date of the assignment, of the representations and warranties set forth
therein to the knowledge of its specified Developer Knowledge Parties,with a copy
concurrently provided to the City.
(D) The Qualified Transferee shall provide or caused to be
provided to the City each of the following:
(1) A fully executed replacement Guaranty made by a
made by a Person with assets meeting the minimum the Net Worth and Liquidity
requirements under Section 4.7.4 as the same may have been modified by the Net
Worth Side Letter,to secure the obligations of Developer as set forth therein,which
shall be in the form and substance of the instrument attached to this Agreement as
Attachment 14 or otherwise in a form acceptable to the City in its sole discretion
and meeting the requirements of Section 4.6.3;
(2) A declaration certified by the chief financial officer
or other appropriate authorized officer of the applicable Guarantor (the
"Guarantor Certificate") certifying as to the authority of such Guarantor's
authorized officer to bind Guarantor and authorization to execute the Guaranty and
to the accuracy and correctness of and attaching the following for the applicable
Phase and Guaranty and attaching copies of the following: (w) a certificate of
formation and California foreign entity registration (if required by applicable law)
for Guarantor; (x) evidence of authority of the individual(s)executing the Guaranty
to bind Guarantor and to execute the Guaranty, (y) copies of resolutions or other
necessary actions taken by Guarantor to authorize the execution of the Guaranty, if
any; and (z) certificates of good standing and tax good standing issued by the
Secretary of State of the state in which Guarantor is formed and by the California
Secretary of State (if required by applicable law), within thirty (30) calendar days
of the applicable Close of Escrow; and
(3) To the extent not previously delivered,fully executed
copies of the instruments listed in Section 2.2.2(i)(ii).
(iv) In no event shall a Transfer to a Qualified Transfer be effective
unless and until the City, in its sole discretion, shall have with respect to each of
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the following:
(A) confirmed that the Phase Transferor and the Qualified
Transferee have met all requirements of this Agreement with respect to such
Transfer, including execution of the Assignment Agreement attached as
Attachment 16D or as otherwise approved by the City in its sole discretion;
(B) confirmed that the Transferee meets all of the requirements
of a Qualified Transferee set forth in this Agreement;
(C) confirmed the financial capacity of the QT Equity Investor
and the Phase 2 Guarantor to meet the requirements of this Agreement;
(D) received and approved the QT Updated Financing Plan and
confirmed that the Phase 2 Joint Venture Agreement and all information provided
by the proposed Qualified Transferee pursuant to the applicable provisions of
Section 2.2.2(1) and Section 4.6 meet the requirements of this Agreement;
(E) confirmed that the Phase 2 Guarantor(s) and the Phase 2
Guaranty provided pursuant to Section 4.6.3 meet the requirements of this
Agreement; and
(F) approved the amount of the Profit Participation due under
the Supplemental Purchase Price and Profit Participation Agreement in accordance
with the terms and subject to the audit rights set forth therein and shall have
received the conveyance agreements, the fully executed Assignment and
Assumption Agreement in the form and substance of Attachment 16D to this
Agreement or as otherwise approved by the City in its sole discretion and all
documents executed in connection with the proposed Transfer in order to ensure
that the same are consistent with the Financing Plan submitted to the City in
accordance with Section 2.2.2(j)(ii)(E) and approved by the City in accordance
with Section 4.6.1.
Upon (1)the Transfer of all of Transferor's interests in the Phase 2 Transferable
Interests to a Qualified Transferee, (2)the execution and delivery of the Assignment
and Assumption Agreement in the form and substance of Attachment 16D to this
Agreement or as otherwise approved by the City in its sole discretion, including an
assumption in writing by the Qualified Transferee of all of the obligations of
Developer with respect to Phase 2 as set forth in such assignment instrument,
(3)provision of an executed Phase 2 Joint Venture Agreement by which the
Qualified Transferee is governed for Phase 2, (4) compliance with the requirements
of this Section 2.2.2(1) and Section 4.6, and (5) delivery of an executed Phase 2
Guaranty by the Phase 2 Guarantor, and (6) payment in full of all City Liens and
sums due under the Supplemental Purchase Price and Profit Participation
Agreement and certification by Transferor that all outstanding sums pertaining to
the Phase 2 Project then due and payable, that is secured by or could result in a lien
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against the Phase 2 Property, then, except as set forth below, the Transferor shall
automatically be released from the obligations of Developer under this Agreement
and the Other Agreements with respect to construction and Completion of the
Improvements on Phase 2 and with respect to all other obligations expressly
assumed by the Qualified Transferee under the assignment instrument; provided
that, notwithstanding the foregoing or the assumption of obligations by the
Qualified Transferee, the Transferor shall not be relieved of any of its obligations
under this Agreement and the Other Agreements that have not been so expressly
assumed by Qualified Transferee, and specifically, and without limitation shall not
be relieved or released from the Ongoing Matters. Nothing in this Section 2.2.2(1)
shall limit or release a Transferor's liability during any applicable Additional
Liability Period.
Further, concurrently with the execution and delivery of the Assignment and
Assumption Agreement in the form and substance of Attachment 16D as set forth
above, the City shall provide a written acknowledgement in the form of
Attachment 34 or in such other form as the Parties may agree, each in its sole
discretion, confirming that the conditions to the Transfer to the Qualified
Transferee over which the City has review rights as set forth in Section 2.2.2(1)
have been satisfied. The issuance of the acknowledgement by the City will provide
conclusive evidence that the release set forth in the immediately preceding
paragraph of this Section 2.2.2(j)(iv)is in effect."
c. Section 2.2.3(b). Section 2.2.3(b) of the Amended DDA is hereby amended by
deleting the introductory paragraph thereto and replacing it with the following:
"(b) Transfer of a Phase. Except as may be expressly permitted by
Section 2.2.3(d) (which addresses Special Phase 2 Transfers which are not deemed
to be Phase Transfers), notwithstanding anything in this Agreement to the contrary,
until Recording of the Certificate of Compliance for the Phase of the Project
proposed to be Transferred, any Transfer resulting in a division of ownership
between Phase 1 and Phase 2, including (i) Transfer by a Developer of its interest
and/or ownership in Phase 1, the Phase 1 Project, the Phase 1 Provisions and, if
then acquired by the Transferor, the Phase 1 Property including the Improvements
constructed or to be constructed thereon, (ii) any Transfer by a Developer of its
interest and/or ownership in Phase 2, the Phase 2 Project, the Phase 2 Provisions,
including the Option if applicable, the Phase 2 Transferable Interests and/or the
Phase 2 Property and Improvements thereon if then acquired by the Transferor,
including without limitation a Transfer to a Qualified Transferee, and/or
(iii) Transfer of Control of Developer or any Developer Affiliate
("Phase Transfer", and the Property, interests and obligations so Transferred
pursuant to this Section 2.2.3(b), the "Transferred Phase") shall (A)meet the
requirements of Section 2.2.2 as determined by the City in its sole discretion or
(B)require the prior written consent of the City, which may be granted or denied
by the City in its sole discretion. Until issuance of a Certificate of Compliance for
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the affected Property and interests, unless expressly permitted by this
Section 2.2.3(b) or Sections 2.2.2, 2.2.3(c), 2.2.4, 2.2.5 or 2.2.8 or Article 17, no
Transfer of less than the entirety of Developer's interest in and to a Phase shall be
permitted by this Agreement. Any Phase Transfer carried out in accordance with
the requirements of this Section 2.2.3(b) (a"Phase Assignment"), shall be carried
out(x)in the case of a Transfer,by execution by the Phase Transferor and the Phase
Transferee of an agreement in substantially the form and substance of the
Assignment and Assumption Agreement attached hereto as Attachment 16B or as
otherwise approved by the City in its sole discretion, pursuant to which the Phase
Transferee shall assume all of the Phase Transferor's right, title and interest in and
to the Transferred Phase or(y)in the case of a Transfer of Control, by execution by
the applicable parties of documents for which the forms shall be approved by the
City in its sole discretion, and in each case pursuant to which the Phase Transferee
shall agree to comply with the terms of this Agreement and the Other Agreements
with respect to and perform all obligations of Developer thereunder with respect to
the Transferred Phase including construction of the Improvements thereon,use and
maintenance of the Project,the Property and the Improvements located thereon and
all matters related thereto or (z)in the case of a Transfer to a Qualified Transferee
pursuant to Section 2.2.2(1)by execution by the Phase Transferor and the Qualified
Transferee of an agreement in substantially the form and substance of the
Assignment and Assumption Agreement attached hereto as Attachment 16D or as
otherwise approved by the City in its sole discretion, pursuant to which the
Qualified Transferee shall assume all of the Phase Transferor's right, title and
interest in and to Phase 2. In the case of each Phase Transfer and Transfer to a
Qualified Transferee for which Profit Participation is due to the City under the
terms of this Agreement, Transferor shall as a condition to such Transfer make
payment in full to the City of all Profit Participation then due and payable pursuant
to the terms of the Supplemental Purchase Price and Profit Participation
Agreement. Except as otherwise permitted in accordance with Section 2.2.2(f) or
otherwise approved by the City in its sole discretion, in no event shall Developer
carry out a Phase Transfer at any time prior to occurrence of each of the following:
(x)the Phase 1 Property Close of Escrow, (y)the Completion of the Minimum
Horizontal Improvements and (z) exercise of the Option. Except as otherwise
expressly permitted by Section 2.2.3(d), any Phase Transfer shall be made only in
accordance with the following requirements:"
d. Section 2.2.3(c). The introductory paragraph of Section 2.2.3(c)of the Amended DDA
is hereby deleted in its entirety and replaced with the following:
"(c) With respect to Transfers of Building Pads to Pad Transferees that are End
Users (whether by sale or Ground Lease) occurring following the Phase 2
Commencement of Construction and prior to the issuance of a Certificate of
Compliance for Phase 2 or for such Building Pad (but specifically excluding a
Transfer of the entirety of the Property or any Phase, pursuant to Sections 2.2.2(1),
2.2.3(a), (b), or(d))the following covenants and restrictions shall apply and further
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provided that no Transfer of one or more Building Pads comprising less than the
entirety of a Phase shall be made prior to the Phase 2 Commencement of
Construction and no Transfer shall be made to a Pad Transferee that is not an End
User prior to issuance of a Certificate of Compliance for the applicable Building
Pad (other than Permitted Transfers described in Section 2.2.2(a) through i) ;
provided, however, that if at the time of Transfer to an End User the End User
intends to obtain a Construction Loan then, in order to address lien priority issues
that could otherwise arise, the City Manager or his or her designee is hereby
authorized in his or her sole discretion to permit a Transfer to an End User following
the issuance of the Satisfaction Date Notice, Recording of the Permitted Mortgage
for the Construction Loan and issuance of Grading Permits for the Grading Work,
but prior to the Phase 2 Commencement of Construction. Any such authorization
shall not be effective unless delivered in advance in writing."
e. Section 2.2.8. To clarify the timing of Construction Loan and restriction on
encumbrance of Option, Section 2.2.8 of the Amended DDA is hereby deleted in its
entirety and replaced with the following:
"Prior to the Recordation of a Certificate of Compliance for the Phase 2 Property,
Developer shall not encumber the Option or any portion of the Phase 2 Property or
the Phase 2 Project with a Mortgage, except in compliance with the requirements
of this Agreement, including Article 17. Developer shall not obtain or utilize
Mezzanine Financing with respect to Phase 2 without the prior consent of the City
in its sole discretion. For avoidance of doubt,the foregoing restrictions in all events
prohibit encumbrance or use of the Option as collateral at any time and except with
respect to the City Deed of Trust, and preclude encumbrance of the Phase 2
Property and/or the Phase 2 Project as collateral until or concurrently with the
Satisfaction Date; it being agreed by the Parties that notwithstanding any other
provision of this Agreement or the Other Agreements, unless otherwise agreed by
the City in its sole discretion,no Mortgage,including any Permitted Mortgage shall
be Recorded against the Phase 2 Property or any portion thereof until issuance by
the City of the Satisfaction Date Notice."
3. Modification to Article 4 of the Amended DDA - Conveyance of Property from City
to Developer.
a. Section 4.2.2. Section 4.2.2 of the Amended DDA is hereby deleted in its entirety and
replaced with the following:
"4.2.2 Phase 2 Property Purchase Price.
(a) Phase 2 Property Base Purchase Price. As consideration for the sale
of the Phase 2 Property to Developer by the City, at the Phase 2 Property Close of
Escrow, Developer shall pay to the City in immediately available funds the amount
indicated on Attachment 28, which shall be in the amount of Thirty-One Million,
Three Hundred Ninety Thousand, Six Hundred Forty Three and No/100 Dollars
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($31,390,643.00) if the Phase 2 Property Close of Escrow takes place within the
twelve (12) month period following the Phase 1 Property Close of Escrow (the
"First Option Year"), and shall be increased in each subsequent Option Year to
the amount indicated for such year on Attachment 28 (the"Phase 2 Property Base
Purchase Price"). The maximum development envelope which may be constructed
on the Phase 2 Property as a result of this conveyance shall be 479,560 GBA;
provided that this conveyance grants no right to development except as permitted
by the Applicable Approvals and such development shall be permitted only upon
approval of all Entitlements and Development Permits required by the City in its
Governmental Capacity for such development and in accordance with the
requirements of this Agreement and the Other Agreements.
(b) Phase 2 Property Supplemental Purchase Price. As consideration
for the rights granted to Developer under the Third Amendment to delay the Phase 2
Commencement of Construction following the Phase 2 Property Close of Escrow
and the City's agreement that it would not require Phase 2 Commencement of
Construction to take place within sixty (60) calendar days following the Phase 2
Property Close of Escrow, Developer hereby agrees to make the following
additional payments to the City, which payment obligations shall be further
memorialized in the Supplemental Purchase Price and Profit Participation
Agreement executed by the Parties in the form and substance of the agreement
attached to this Agreement as Attachment 31 or as may otherwise be agreed by the
Parties each in its sole discretion ("Supplemental Purchase Price and Profit
Participation Agreement") and shall be secured by the City Deed of Trust which
shall be in the form and substance of the deed of trust attached to this Agreement
as Attachment 32 or in such other form and substance as may be approved by the
Parties each in its sole discretion ("City Deed of Trust"):
(A) If the Phase 2 Construction Commencement Conditions
have not been met and Phase 2 Commencement of Construction has not
commenced by June 29, 2024, then on June 30, 2024 Phase 2 Developer shall pay
to the City an amount equal to the difference between $42,079,125 (which is the
original Year 8 Phase 2 Property Purchase Price as described in the Original DDA)
and the Phase 2 Property Base Purchase Price actually paid at the Phase 2 Close of
Escrow.
(B) If the Phase 2 Construction Commencement Conditions
have not been met and Phase 2 Commencement of Construction has not
commenced by June 29, 2025, then on June 30, 2025 Phase 2 Developer shall pay
to the City the additional sum of Eight Hundred Thousand Dollars ($800,000).
(C) If the Phase 2 Construction Commencement Conditions
have not been met and Phase 2 Commencement of Construction has not occurred
by June 29, 2026,then on June 30, 2026 the Phase 2 Developer shall pay to the City
the additional sum of Nine Hundred Thousand Dollars ($900,000).
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(c) In addition to the payment of the Phase 2 Property Base Purchase
Price and, if applicable, the Supplemental Purchase Price, the Supplemental
Purchase Price and Profit Participation Agreement shall provide for payment to the
City in accordance with its terms upon each and every Transfer of the Phase 2
Transferable Interests or Transfer of Control of Developer (i)to a Qualified
Transferee if the Phase 2 Construction Commencement Conditions have not been
satisfied and Phase 2 Commencement of Construction has not occurred on or before
June 29, 2026 or (ii) occurring after the Phase 2 Close of Escrow and before the
Phase 2 Commencement of Construction if(1) construction has not commenced as
of the date of the Transfer and (2) the Transfer occurs prior to the payment of the
first Supplemental Purchase Price payment or after June 30, 2026, but shall
specifically not be applicable to the following Transfers or Transfers of Control:
(i) a Permitted Transfer pursuant to Sections 2.2.2(a), (b), (c),
(d), (e), (fl, (h) and O (but expressly excluding a Permitted Transfer pursuant to
Section 2.2.2(1)),
(ii) a Space Lease per Section 2.2.4,
(iii) a Pad Transfer to an End User,
(iv) a removal of LPCC (or an Affiliate of LPCC) as the entity
having the Operating Rights and Responsibilities but only to the extent such
removal is permitted by Section 2.2.7
(v) a Construction Loan to a Permitted Mortgagee pursuant to
Section 2.2.8 (provided that except as set forth in this Agreement with respect to
the City Deed of Trust, nothing in this Section shall imply a right of Developer or
permit Developer to encumber the Phase 2 Property or any portion thereof prior to
the issuance by the City of the Satisfaction Date Notice, without the consent of the
City in its sole discretion), or
(vi) a Special Phase 2 Transfer per Section 2.2.3(d)."
b. Section 4.3.3. Section 4.3.3 of the Amended DDA is hereby amended as follows:
(i) Section 4.3.3(a). To change the maximum period of the Option Term,
Section 4.3.3(a) of the Amended DDA is hereby amended by deleting the
first sentence of clause a thereof and replacing it with the following:
"(a) Optionee shall have an option to acquire the Phase 2
Property (the "Option'), which Option shall remain in effect for the
First Option Year as the same may be extended as described in
Section 4.3.3(b), for a maximum period commencing on the date of the
Phase 1 Property Close of Escrow until the earliest of(i)the expiration
of the Option, (ii)the exercise of the Option by Developer or
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(iii) September 30, 2022,which shall be the outside date for exercise by
Phase 2 Developer of the Option ("Option Term"), and which may be
exercised by Optionee only upon satisfaction of the conditions set forth
in Section 4.3.3(d)."
(ii) Section 4.3.3(b). To change the length of the Option Term, Section 4.3.3(b)
of the Amended DDA is hereby deleted in its entirety and replaced with the
following:
"Provided that the Option has not then been exercised and remains in
effect, (x) at the expiration of each Option Year until June 29, 2021,
Optionee shall have the right to extend the Option Term for an
additional one-year period and(y)prior to June 29,2022, Optionee shall
have the right to extend the Option Term for an additional period until
September 30, 2022 (which shall be the outside date for exercise by
Phase 2 Developer of the Option) by (i)providing written notice to the
City of its intent to so extend delivered not more than sixty (60)calendar
days nor less than thirty (30) calendar days prior to the expiration of the
then-effective Option Term and (ii) providing a concurrent Option
Payment to the City in the amount required to extend the Option Term
for that period, which Option Payment varies year by year and shall be
in the amount set forth in Attachment 28 for the applicable year;
provided that, Optionee shall not have the right to extend the Option for
any additional Option Year if at the time such exercise is required
hereunder in order to be effective, Optionee is then in Material Default
under this Agreement or in default past all applicable notice and cure
periods under the Other Agreements."
(iii) Section 4.3.3(c). To change the maximum period of the Option Term, the
second and third sentences of Section 4.3.3(c) are hereby deleted and
replaced with the following:
"In no event shall Optionee have a right to prepay any required Option
Payment or to accelerate the extension of the Option Term by
application of Option Credit (even if the amount of the Option Credit
Remainder otherwise would be sufficient to permit such acceleration)
or to extend either of the fourth (4th) or fifth (5th) Option Terms by
more than one twelve (12) month period at any time or to extend the
sixth(6th)Option Year beyond December 30,2022. The aggregate sum
of each Cash Option Payment paid to the City (excluding from such
calculation any Option Payment deemed paid by application of Option
Credit) shall collectively be referred to herein as the "Total Cash
Option Payments."
(iv) Section 4.3.3(d)(ii). To remove certain threshold conditions to exercise of
the Option, Section 4.3.3(d)(ii)is hereby deleted in its entirety and replaced
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with the following:
"(ii) Intentionally Omitted."
(v) Section 4.3.3(e). The following sentence is hereby added to the Amended
DDA at the end of Section 4.3.3(e).
"Notwithstanding the foregoing, as of the Third Amendment Effective
Date, all Phase 2 Reimbursable Improvements have been completed,
approved and accepted; no further Option Credit may be requested or
issued. Upon completion, approval and acceptance of all Phase 2
Reimbursable Improvements, costs were reconciled and a total Final
Approved Option Credit Amount (as such term is defined in the
Reimbursement Agreement) for all Phase 2 Reimbursable
Improvements of One Million Eight Hundred Forty Four Thousand Five
Hundred and Eleven Dollars($1,844,511)was confirmed by the City as
available to Developer and was confirmed by Developer as correct and
complete. Accordingly, the Parties agree that (i) as shown on
Attachment 28, the original Total Option Credit under this Agreement
(prior to reduction as described in Section 4.3.3(f)) is the same as the
Final Approved Option Credit Amount of One Million Eight Hundred
Forty Four Thousand Five Hundred and Eleven Dollars ($1,844,511)
and (ii) all Phase 2 Reimbursable Improvements have been completed,
approved and accepted and that no additional Option Credit may be
requested or issued; it being understood that existing Option Credits
may continue to be used as set forth in Section 4.3.3."
(vi) Section 4.3.3(f). Section 4.3.3(f) of the Amended DDA is hereby deleted
in its entirety and replaced with the following:
"(f) For so long as the Working Developer is the Optionee, the
following shall apply: With respect to each timely extension of the
Option requested by Optionee in writing, the City and Optionee shall
first apply any available Total Option Credit to "pay" the Option
Payment then due. The Total Option Credit shall be reduced in each
year in which the Option is extended by Optionee by the amount of the
Option Payment otherwise due from Optionee to City to extend the
Option Term in that year as shown on Attachment 28 (each, an"Option
Credit") and the remaining amount of the Total Option Credit, after
taking into account such cumulative reductions, is referred to as the
"Option Credit Remainder." Option Credit shall not be applicable to
or reduce the Phase 2 Property Base Purchase Price nor shall it be
applicable to nor reduce any amount payable pursuant to the
Supplemental Purchase Price and Profit Participation Agreement. In
order to extend the Option Term for Year 2, Optionee made a cash
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Option Payment of $100,000 and the Total Option Credit remained
unchanged. In order to extend the Option Term for years 3 and 4 of the
Option Term, Optionee applied the Option Credits described in
Attachment 28, and the Option Credit Remainder was accordingly
reduced to One Million Three Hundred and Forty-Four Thousand Five
Hundred and Eleven Dollars ($1,344,511). In each additional year
through Option Year 6 that the Developer timely applies the Option
Credit to extend the Option Term, the Option Credit Remainder shall be
further reduced as indicated in Attachment 28."
(vii) Section 4.3.3(h). The final paragraph of Section 4.3.3(h) (commencing
with `By way of example only") is hereby deleted in its entirety and
replaced with the following:
"As of the Third Amendment Effective Date, both the Year 1 and Year
2 Option Payments were satisfied utilizing a cash payment and both the
Year 3 and Year 4 Option Payments were satisfied utilizing available
Option Credit. Therefore, the Option Credit Remainder as of the Third
Amendment Effective Date is One Million Three Hundred and Forty-
Four Thousand Five Hundred and Eleven Dollars($1,344,511). By way
of example, in Year 5, if the Working Developer is the same as the
Optionee, upon request for extension of the Option Term by Optionee,
the Option Credit Remainder($1,344,511) shall again be reduced by the
amount of the Option Payment (then $400,000) due to the City, which
shall be deemed paid by application of an Option Credit in the amount
of $400,000, and the Option Credit Remainder shall be $944,511. In
Year 6,if Working Developer is the same as Optionee, upon request for
extension of the Option Term by Optionee the Option Credit Remainder
($944,511) shall again be reduced by the amount of the Option Payment
(then $500,000) due to the City, which shall be deemed paid by
application of an Option Credit in the amount of $500,000, and the
Option Credit Remainder shall be $444,511.
By way of further example, if, prior to the date upon which the Option
Payment is due for Option Year 5, a Phase Transfer or Special Phase 2
Transfer takes place,then upon request for extension of the Option Term
by the Optionee, the Optionee shall pay to the City the Option Payment
of Four Hundred Thousand Dollars ($400,000) in cash, and within
sixty (60) calendar days following City receipt thereof, the City shall
pay such funds to the Working Developer, which shall reduce the
amount of the Option Credit Remainder(from the prior $1,344,511)by
the amount of the Four Hundred Thousand Dollars ($400,000) Cash
Option Payment to Nine Hundred Forty Four Thousand Five Hundred
and Eleven Dollars ($944,511) and the Option Credit Remainder shall
be Nine Hundred Forty Four Thousand Five Hundred and Eleven
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Dollars. If, at that point, the Option shall terminate, or if, following
exercise of the Option, the Phase 2 Property Close of Escrow shall fail
to occur for any reason other than Default by the City,the Optionee shall
not be entitled to a repayment of its Cash Option Payment. If the failure
to close Escrow with respect to the Phase 2 Property is as a result of a
Default by the City under Section 15.4.1, then the Phase 2 Developer
shall be entitled to a repayment of its Cash Option Payment in the
amount of Four Hundred Thousand Dollars ($400,000). In either case,
if any reimbursement on account of the Phase 2 Reimbursable
Improvements is then due to the Working Developer pursuant to this
Section 4.3.3(h), the amount of reimbursement to the Working
Developer shall be equal to the Option Credit Remainder of Nine
Hundred Forty Four Thousand Five Hundred and Eleven Dollars
($944,511), which shall be paid in accordance with Section 4.3.3(1).
As a separate example (and assuming that no Cash Option Payment was
made for Option Year 5), if prior to the date upon which the Option
Payment is due for Option Year 6, a Phase Transfer or Special Phase 2
Transfer takes place,then upon request for extension of the Option Term
by the Optionee, the Optionee shall pay to the City the Option Payment
of$500,000 in cash, and within sixty (60) calendar days following City
receipt thereof, the City shall pay such funds to the Working Developer,
which shall reduce the amount of the Option Credit Remainder (from
the prior $944,511) by the amount of the Five Hundred Thousand
Dollars ($500,000) Cash Option Payment to Four Hundred Forty Four
Thousand Five Hundred and Eleven Dollars ($444,511) and the Option
Credit Remainder shall be Four Hundred Forty Four Thousand Five
Hundred and Eleven Dollars ($444,511). If, at that point, the Option
shall terminate, or if, following exercise of the Option, the Phase 2
Property Close of Escrow shall fail to occur for any reason other than
Default by the City, the Optionee shall not be entitled to a repayment of
its Cash Option Payment. If the failure to close Escrow with respect to
the Phase 2 Property is as a result of a Default by the City under
Section 15.4.1, then the Phase 2 Developer shall be entitled to a
repayment of its Cash Option Payment in the amount of Five Hundred
Thousand Dollars ($500,000). (For the avoidance of doubt, if a Phase
Transfer or a Special Phase 2 Transfer occurs prior to the date on which
the Option Payment is due for Option Year 5, and the Option is also
extended for Option Year 6, in each case by Phase 2 Developer making
a Cash Option Payment for Option Year 5, and then another Cash
Option Payment for Option Year 6, then the Phase 2 Developer would
be entitled to a repayment of its Cash Option Payments in the
cumulative amount of Nine Hundred Thousand Dollars ($900,000).) In
either case, if any reimbursement on account of the Phase 2
Reimbursable Improvements is then due to the Working Developer
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pursuant to this Section 4.3.3(h), the amount of reimbursement to the
Working Developer shall be equal to the Option Credit Remainder of
Four Hundred Forty Four Thousand Five Hundred and Eleven Dollars
($444,511), which shall be paid in accordance with Section 4.3.3(1)."
(viii) Section 4.3.3(j). Section 4.3.3(j) of the Amended DDA is hereby amended
by deleting the phrase "Phase 2 Property Purchase Price" each of the two
times it occurs and replacing it with the phrase "Phase 2 Property Base
Purchase Price."
c. Section 4.3.4(b). Section 4.3.4(b) of the Amended DDA is hereby amended by
deleting_the phrase "Phase 2 Property Purchase Price" each of the times (two times)it
occurs and replacing it with the phrase "Phase 2 Property Base Purchase Price."
d. Section 4.6.1. Section 4.6.1 of the Amended DDA is hereby deleted in its entirety and
replaced with the following:
"4.6.1 Developer Financing Plan. As of the Effective Date, Developer has
provided the City with a Financing Plan (the "Financing Plan") containing: (a) a
financial pro forma and development budget for the Project setting forth a cash flow
projection for operation of the Project and sources and uses of funds and evidencing
the Developer's plan to obtain the debt and equity required to construct and operate
the Project and to meet its other obligations under this Agreement; and (b) a cost
breakdown for all Development Costs anticipated to be incurred for the
development of the Project based upon government permits and approvals and any
design documents and plans approved to such date. Developer shall deliver the
following updates to the Financing Plans.
Developer shall, or where applicable below, shall cause the relevant Transferee to,
provide at each and every one of the time periods provided below an update to the
Financing Plan for Phase 2 (the "Phase 2 Financing Plan") to achieve the
Minimum Phase 2 Improvements, in each case identifying revisions to the
information previously provided and providing actual sources and uses of funds,
and shall, as to each financing plan, certify to the City either that the original
Financing Plan remains true and correct or, as modified to reflect Developer's
expectation as to available funding and costs, remains sufficient to pay through
issuance of the Certificate of Compliance for Phase 2, all Development Costs of
Phase 2 of the Project (excluding the costs of the Minimum Horizontal
Improvements, which are complete) and all other costs for the construction,
marketing and lease of the Improvements as described in the Scope of Development
for Phase 2:
(i) No later than November 10, 2020;
(ii) Within forty-five (45)Business Days prior to exercise by Developer
of the Option for Phase 2;
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(iii) Within forty-five (45) Business Days prior and as a condition
precedent for the benefit of the City to the Phase 2 Property Close
of Escrow;
(iv) Within forty-five (45) Business Days prior and as a condition
precedent for the benefit of the City to the satisfaction of the Phase 2
Construction Commencement Conditions; and
(v) Within forty-five (45) Business Days prior or within such shorter
period as may be provided in the relevant Section of Article 2 and
as a condition precedent for the benefit of the City to the City's
consideration by the City of a Transfer to a Qualified Transferee
pursuant to Section 2.2.2(1) and as a condition precedent to City
approval of each Transfer pursuant to Sections 2.2.3(a), (b) or(d),
the Transferee shall provide an updated Financing Plan to the City
for the portions of the Project to be acquired by the Transferee,
which shall be subject to review and approval by the City in its sole
discretion.
The City shall have the right in its sole discretion to approve or disapprove each
updated Phase 2 Financing Plan and each and every Financing Plan, in each case
provided pursuant to this Section 4.6.1. The Parties acknowledge that the Phase 2
Financing Plan provided by Developer as of the Third Amendment Effective Date
may change, with any such change subject to approval by the City as a condition
precedent for the benefit of the City to each of the Phase 2 Property Close of Escrow
and to the satisfaction of the Phase 2 Construction Commencement Conditions,
provided that if Developer provides written notice to the City prior to the Phase 2
Close of Escrow that there is no change in the Phase 2 Financing Plan previously
delivered to and approved by the City or specifying any changes to such documents
and information (and providing the revised documents and information), then the
City's approval rights with respect to this Section 4.6.1 shall be limited to the City's
approval of (x)the new documents and information provided, (y) any additional
documents and information required to be delivered in order to continue to satisfy
the requirements of this Section 4.6.1 or otherwise required as a condition
precedent to the Phase 2 Close of Escrow (but except as set forth in subclause
W below, without requirement to resubmit for approval unchanged documents or
information that have been previously approved by the City); and (z) any
previously reviewed and approved documents and information if the documents or
information provided pursuant to subclauses (x) or y)impacts the efficacy of the
previously approved documents or results in or evidences changes to the documents
and/or information previously approved by the City."
e. Section 4.6.2(c).
(i) Section 4.6.2(c). The first sentence of Section 4.6.2(c) is hereby amended
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by deleting the following phrase "Phase 2. Notwithstanding any other
provision of this Agreement, prior and as a condition precedent for the
benefit of the City to each of(A) the exercise by Optionee of the Option and
(B)the Phase 2 Property Close of Escrow, Developer shall cause each of
the following conditions to be satisfied" and replacing it with the following:
"Phase 2. Notwithstanding any other provision of this Agreement,prior
and as a condition precedent for the benefit of the City to each of(aa)the
exercise by Optionee of the Option, (bb)the Phase 2 Property Close of
Escrow, and (cc)the satisfaction of the Phase 2 Construction
Commencement Conditions, Developer shall cause each of the
following conditions to be satisfied;"
(ii) Section 4.6.2(c)(i)(B)(2). A new subclause (w) is hereby added prior to
subclause (x) in Section 4.6.2(c)(i)(B)(2) of the Amended DDA and shall
read as follows:
"(w) a Qualified Transferee if a Transfer to such Qualified
Transferee has occurred and all conditions to such Qualified Transfer
set forth in this Agreement have been met;"
(iii) Section 4.6.2(c)(ii). Section 4.6.2(c)(ii)is hereby deleted in its entirety and
replaced with the following:
"Unless otherwise approved by the City in accordance with
Section 2.2.3(a) or b) or Section 2.2.7 or a Transfer to a Qualified
Transferee has occurred meeting the conditions to such Qualified
Transfer set forth in this Agreement, LPCC (or an Affiliate of LPCC)
shall have the Operating Rights and Responsibilities;"
(iv) Section 4.6.2(d)(iii). Section 4.6.2(d)(iii) is hereby deleted in its entirety
and replaced with the following:
"(iii) all costs of development of the applicable Phase of the
Project and the financing (including interest), construction, marketing
and sale or Lease of all Improvements in such Phase as further described
in the Scope of Development through issuance of a Certificate of
Compliance, including brokerage fees incurred in the leasing, sale and
financing of the Project; provided, however,that during the period prior
to the issuance of the Satisfaction Date Notice by the City, this
clause (iii) shall refer only to Phase 2 Pre-Development Costs, but as a
condition to City's issuance of the Satisfaction Date Notice, such
limitation to Phase 2 Pre-Development Costs shall be deemed
removed."
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(v) Section 4.6.3(a)(i).
1. Section 4.6.3(a)(i)(A)is hereby deleted in its entirety and replaced with
the following:
"Upon (x) each of (1)the Close of Escrow for Phase 1 and
(2) concurrently with and as a condition to satisfaction of the
Phase 2 Construction Commencement Conditions, payment of all
Development Costs for the Completion of the Improvements for
such Phase, including, for avoidance of doubt, (aa)with respect to
the Phase 1 Parcel, Completion of the Phase 1 Horizontal
Improvements and the Minimum Phase 1 Vertical Improvements on
the Phase 1 Parcel, including the Minimum Horizontal
Improvements to be constructed or caused to be constructed by
Developer upon the Phase 1 Parcel, the Phase 2 Parcel and off-sites,
and (bb) with respect to the Phase 2 Parcel, Completion of the
Minimum Phase 2 Improvements for such Phase, and (y)the Close
of Escrow for Phase 2, payment of all Phase 2 Pre-Development
Costs;"
2. Section 4.6.3(a)(i)is hereby further amended by adding new clauses F 11,
(G) and H)at the end thereof:
"(F) The obligations of the Developer of Phase 2 under the
Supplemental Purchase Price and Profit Participation Agreement;
and
(G) The amounts secured by the City Liens; and
(H) Payment of all costs and obligations of the Phase 2
Developer under this Agreement and the Other Agreements."
(vi) Section 4.6.3(b). The second sentence of Section 4.6.3(b)is hereby deleted
in its entirety and replaced with the following:
"Upon each subsequent Transfer to a Developer prior to the issuance of
a Certificate of Compliance for which Developer desires to replace its
existing Guaranty as permitted by Section 2.2.2(1),
Section 2.2.3(a)(iv)(B) or Section 2.2.3(b)(iv)(C), and as a condition to
the City's review and approval, in its sole discretion, of the proposed
guarantors and proposed Guaranty, Developer shall cause the proposed
guarantors to deliver evidence of the financial capacity of the proposed
guarantors, authority of the proposed guarantors to provide the
Guaranty, and copies of all documents evidencing formation, good
standing and authority requested by the City."
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(vii) Section 4.6.3(d). A new Section 4.6.3(d) is hereby added to the Amended
DDA, as follows:
"As a condition to satisfaction of the Phase 2 Construction
Commencement Conditions, Developer shall cause Guarantor to
provide a reaffirmation of its previously executed and delivered
Guaranty in the form set forth as Attachment 13D. If Developer shall
desire to replace its existing Guarantors and/or Guaranty as permitted
by this Agreement and as a condition to the City's review and approval,
in its sole discretion, of the proposed guarantors and proposed Guaranty,
Developer shall cause the proposed guarantors to deliver evidence of
the financial capacity of the proposed guarantors, authority of the
proposed guarantors to provide the Guaranty, and copies of all
documents evidencing formation,good standing and authority requested
by the City. If the City is not satisfied with the financial status of the
proposed guarantors, then 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) and such other financial information as the City may request
to demonstrate such guarantor's and Developer's financial capacity and
capability to perform its obligations under this Agreement. In addition,
the City shall have the right to review and approve,in its sole discretion,
the proposed Phase 2 Guarantor and proposed Phase 2 Guaranty and the
then-current Net Worth and Liquidity and the Net Worth and Liquidity
anticipated at the time at which the Phase 2 Guaranty would be given to
assure that the proposed Phase 2 Guarantor meets or continues to meet
the Minimum Liquidity Standards."
(viii) Section 4.6.4. Section 4.6.4 of the Amended DDA is hereby deleted in its
entirety and replaced with the following:
"4.6.4 Entitlements; Phase 2 Applicable Approvals. Developer
or Phase 2 Developer(as applicable) shall have applied for and obtained
the Phase 2 Applicable Approvals prior and as a condition to its exercise
of the Option. Developer's or Phase 2 Developer's (as applicable)
application for the Phase 2 Applicable Approvals shall be consistent
with the Scope of Development and the terms and conditions of this
Agreement. Nothing contained in this Agreement shall relieve
Developer or Phase 2 Developer from any obligations imposed by the
City on Developer in connection with the Entitlements, the Applicable
Approvals and, if applicable, the Phase 2 Applicable Approvals, the
recording of the phased final Subdivision Map, including any bonding
requirements related thereto (as required in the conditions of approval
or, if applicable, set forth in the subdivision improvement agreement
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between Phase 1 Developer or Phase 2 Developer and the City in its
Governmental Capacity), and the Development Permits."
(ix) Section 4.6.6(b). Section 4.6.6(b) of the Amended DDA is hereby deleted
in its entirety and replaced with the following:
"(b) except in the case of a Permitted Transfer pursuant to
Sections 2.2.2(a) through (u) or 2.2.2(i), a certification by such entity
that the Phase 1 Financing Plan or the Phase 2 Financing Plan, as
applicable, as the same may have been updated in accordance with the
requirements of Section 4.6.1, remains true and correct in all material
respects. For avoidance of doubt, a certificate shall be required for each
Permitted Transfer carried out pursuant to Sections 2.2.2(h) or(j)."
(x) Section 4.6.7. A new Section 4.6.7 is hereby added to the Amended DDA
as follows:
'Notwithstanding any other provision of this Agreement, wherever the
term "Net Worth" is used in this Agreement(and regardless of whether
it is there specified as Two Hundred Fifty Million Dollars
($250,000,000) or One Hundred Million Dollars ($100,000,000) or not
otherwise specified), the minimum Net Worth requirement applicable
to each Transfer, to each Equity Investor and to each Guarantor with
respect to Phase 2 shall be in the greater of that amount specified or the
minimum Net Worth amount for each such scenario as the same may be
modified by the Net Worth Side Letter based on the then-required equity
contribution and peak equity requirements described in the updated
Phase 2 Financing Plan approved by the City immediately prior to the
Phase 2 Property Close of Escrow; provided that during the term of any
Permitted Mortgage for which Liquidity Covenants are included, the
foregoing shall not otherwise be deemed to amend or modify the
provisions of Section 4.7.4."
f. Section 4.7. Section 4.7 of the Amended DDA is hereby amended as follows:
(i) Section 4.7.1. Section 4.7.1 is hereby amended by deleting the last sentence
thereof and replacing it with the following:
"The Liquidity Covenants shall be incorporated into the Guaranty prior
to the applicable Close of Escrow and shall be reaffirmed at the time of
satisfaction of the Phase 2 Construction Commencement Conditions."
(ii) Section 4.7.4. Section 4.7.4 of the Amended DDA is hereby deleted in its
entirety and replaced with the following:
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"4.7.4 No Permitted Mortme Liguidity Covenants. At all
times during the period from the Phase 2 Property Close of Escrow to
the satisfaction of the Phase 2 Construction Commencement Conditions
and additionally until the issuance of the Certificate of Compliance for
Phase 2, to the extent that (a) any Permitted Mortgage or if not in the
Permitted Mortgage, any guaranty of any Mortgage proposed to be
entered into does not contain the Liquidity Covenants or is to be entered
into by guarantors other than Guarantor or (b)the Liquidity Covenants
in such Permitted Mortgage or guaranty of Permitted Mortgage are
amended by the parties thereto in a manner that (x) eliminates the
Liquidity Covenants, (y)reduces such covenants below the minimum
liquidity standards set forth in the final loan documents originally
approved by City pursuant to Section 17.2 (or the first sentence of
Section 17.3), or (z) modifies the guarantor under the loan documents,
such that the Guarantor of a Phase is not the same Person as the
guarantor under the Permitted Mortgage for such Phase, whether
initially or due to a change in the loan documents; then, if such
Mortgage is proposed at Close of Escrow, as a condition to Close of
Escrow for the benefit of the City, and if such Mortgage is proposed to
be entered into subsequent to Close of Escrow for a Phase or Building
Pad for which a Certificate of Compliance has not been Recorded, as a
condition to City's approval of such Mortgage as a Permitted Mortgage:
(i) Developer shall cause Guarantor to agree, in writing, to the
following alternative Net Worth and Liquidity standards for the benefit
of the City: Guarantor shall meet, at the time the Permitted Mortgage is
made, and maintain until issuance of the Certificate of Compliance for
the Phase it guarantees, a Net Worth of not less than One Hundred
Million Dollars ($100,000,000.00) or such greater Net Worth as is
required pursuant to Section 4.6.7, and Liquidity of not less than Twenty
Five Million Dollars ($25,000,000.00) ("Minimum Liquidity
Standards"), and
(ii) Developer, Guarantor and City shall enter into a written
agreement upon terms approved by each in its sole discretion,
establishing the procedures by which (A) Guarantor shall furnish
specified financial reports to the City on a regular basis to assure that
the Minimum Liquidity Standards are met and that none of the events
or actions described in Section 2.2.5 with respect to the Guarantor have
occurred (the failure of any such standard being, a "City Guarantor
Illiquidity Event"); (B)in the event of a City Guarantor Illiquidity
Event,within sixty (60) calendar days following the notice from City of
a City Guarantor Illiquidity Event, Guarantor shall supplement its Net
Worth and Liquidity to meet the Minimum Liquidity Standards or
Developer shall be required to provide the City with additional security
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satisfactory to the City by (1)providing the City with a Guaranty in the
form and substance of the Guaranty, or otherwise acceptable to the City
in its sole discretion, from a replacement or supplemental guarantor or
guarantors acceptable to the City in its sole discretion, or(2)furnishing
the City with another form of security such as a pledge of specified
assets or completion bond, in each case in a manner meeting the
requirements of the City in its sole discretion. The City shall have the
right,but not the obligation,to provide written notice to Developer(with
a copy to any Permitted Mortgagee whose address is on file in the
Official Records as described in Section 18.6) of the occurrence of a
City Guarantor Illiquidity Event and the provision of such notice shall
constitute a declaration by the City of a Potential Default by Developer.
The failure of Developer to provide substitute security for the Guaranty
within the required time frame shall constitute a Material Default under
this Agreement."
4. Modifications to Article 7 of the Amended DDA— Close of Escrow.
a. Section 7.1. Section 7.1 of the Amended DDA is hereby amended as follows:
(i) Section 7.1.2. Section 7.1.2 of the Amended DDA is hereby deleted in its
entirety and replaced with the following:
"7.1.2 Phase 2 Property Close of Escrow. Upon the exercise of the
Option by Developer, which shall be subject to the conditions to such
exercise set forth in Section 4.3.3(d), the Phase 2 Property Close of
Escrow shall take place on that date which is (a) no less than sixty (60)
calendar days following the exercise by Developer of the Option and
(b)twenty (20) Business Days following the last to occur of the
satisfaction(or waiver by Developer)of the Developer Phase 2 Property
Closing Conditions set forth in Sections 7.3.1(c), (d), (e), (g), and (h)
hereof and the satisfaction (or waiver by the City) of the City Phase 2
Property Closing Conditions set forth in Section 7.3.2(c), (d), (g), (h),
and hereof(the "Phase 2 Property Closing Date") but in no event
later the date that is the earlier of(A) sixty (60) calendar days after the
last day of the Option Term in which the Option was exercised (without
giving effect to any further extensions),but which shall be subj ect to the
extensions contemplated by Sections 7.3.1(j) and 7.3.20) or
(B)December 30, 2022, which date shall be not be subject to extension
for Force Majeure Delay (the "Phase 2 Property Outside Closing
Date"). The Phase 2 Property Close of Escrow shall be subject to the
satisfaction (or waiver by the Party benefited by such condition) of all
of the conditions set forth in Section 7.3, and shall take place at the
offices of Escrow Holder, or at such other place as the City selects."
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(ii) Section 7.1.3. The second sentence of Section 7.1.3 of the Amended DDA
is hereby deleted and replaced with the following:
"In the event that the Phase 2 Property Close of Escrow does not occur
on or prior to the Phase 2 Property Outside Closing Date, then, subject
to the provisions of Article 15, this Agreement shall automatically
terminate as of the Phase 2 Property Outside Closing Date."
b. Section 7.3.1. Section 7.3.1 of the Amended DDA is hereby amended as follows:
(i) Section 7.3.1(a)(viii). Section 7.3.1(a)(viii)of the Amended DDA is hereby
deleted in its entirety and replaced with the following:
"(viii) the Supplemental Purchase Price and Profit Participation
Agreement executed by the City."
(ii) Section 7.3.1(b). In Section 7.3.1(b) of the Amended DDA, the phrase
"Phase 2 Property Purchase Price" is hereby deleted and replaced with the
phrase "Phase 2 Property Base Purchase Price."
(iii) Section 7.3.1(f). Section 7.3.1(f) of the Amended DDA is hereby deleted
in its entirety and replaced with the following:
"(f) Intentionally Omitted_"
(iv) Section 7.3.1(1). Section 7.3.LW of the Amended DDA is hereby deleted in
its entirety and replaced with the following:
"o) Default. The City shall not be in Default of any covenant or
agreement to be performed by the City under this Agreement, or, if the
City is in Default on the expected Phase 2 Property Closing Date,
Developer shall have provided the City with written notice and the City
shall have cured such Default within ten (10) Business Days of such
notice, and, for one such extension only, the Phase 2 Property Closing
Date shall be extended to allow such cure within such ten(10)Business
Day period, or such later period as Developer may elect pursuant to
Section 15.4.1(d); provided, that the Phase 2 Property Outside Closing
Date shall not be extended."
c. Section 7.3.2. Section 7.3.2 of the Amended DDA is hereby amended as follows:
(i) Sections 7.3.2(b)(v), (ix)and(xii). Sections 7.3.1(b)(v), (ix)and(xii)of the
Amended DDA are hereby deleted in their entirety and replaced with the
following, respectively:
"(v) a reaffirmation of Developer's representations and
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warranties made for the benefit of the City set forth in the assignment
and assumption agreement pursuant to which Developer acquired the
Phase 2 Property, and an affirmation of the representations, warranties,
and releases set forth in Section 4.5.2(f), in the form attached hereto as
Attachment 18, which reaffirmation and affirmation shall identify any
representation or warranty which is not, or no longer is,true and correct
and explain the state of facts giving rise to the change. In no event shall
Developer be liable to the City for, or be deemed to be in Default under
this Agreement by reason of, any breach of representation or warranty
which results from any change that (A) occurs between the Effective
Date and the date of the Phase 2 Close of Escrow, and (B) is expressly
permitted under the terms of this Agreement or is beyond the reasonable
control of Developer to prevent. The occurrence of a change in a
representation and warranty shall, if materially adverse to the City, as
determined by the City in the City's reasonable business judgment,
constitute the non-fulfillment of a City Phase 2 Property Closing
Condition, unless such matter is cured at least three (3) Business Days
prior to the Phase 2 Property Close of Escrow (as such period may be
extended pursuant to Section 7.3.20)). If, despite changes or other
matters described in Developer's reaffirmation certificate, the Phase 2
Property Close of Escrow occurs, Developer's representations and
warranties set forth in the assignment and assumption agreement
referred to in this Section 7.3.2(b)(v) shall be deemed to have been
modified by all statements made in such certificate and shall remain in
full force and effect and shall not merge into the Quitclaim Deed;"
"(ix) the Supplemental Purchase Price and Profit Participation
Agreement executed by Developer."
"(xii) the City Deed of Trust executed by Developer,
acknowledged and in Recordable form."
(ii) Section 7.3.2(c). Section 7.3.2(c) of the Amended DDA is hereby deleted
in its entirety and replaced with the following:
"(c) Subdivision Map. The final tract map covering the Phase 2
Parcel shall have been Recorded."
(iii) Section 7.3.2(e). Section 7.3.2(e), (f) and amu) of the Amended DDA are
hereby deleted in their entirety and replaced with the following:
"(e) Net Worth. The City, taking into account the updated Phase
2 Financing Plan received from Developer, shall have evaluated and
established a Net Worth requirement for the Guarantor of One Hundred
Million Dollars ($100,000,000) or such greater amount as the City shall
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reasonably determine based upon the provisions of Section 4.6.7 and
City Manager, Developer, the Phase 2 Equity Investor and the Phase 2
Guarantor(s) shall have approved the revised minimum Net Worth
requirement in writing ("Net Worth Side Letter").
(f) Intentionally Omitted.
(g) Insurance. Developer shall have provided to the City evidence
of all insurance other than builder's risk insurance as and to the extent
required by Article I V'
(iv) Section 7.3.2(h). Section 7.3.2(h) of the Amended DDA is hereby deleted
in its entirety and replaced with the following:
"(h) Financial Capability, Etc. Developer shall have caused the
conditions precedent to the Phase 2 Property Close of Escrow set forth
in Section 4.6 to be satisfied and shall be in compliance with the
requirements of Section 8.5.2, and there shall have been (i) no material
adverse changes (as determined by the City in accordance with
Section 4.6) in the financial condition of any of the Developer or the
Phase 2 Guarantor since the City approved the same; (ii) no change in
ownership of Developer, the Phase 2 Equity Investor or the Phase 2
Guarantor since the City approved the same, or if there are changes,then
except as permitted by Section 2.2.21 such changes shall have been
approved by the City in accordance with Section 2.2.3 and (iii) no
change to the form and substance of any Transfer Agreements and/or
Ground Lease previously approved by the City and applicable to
Phase 2, as applicable, without the prior written consent of the City
thereto."
(v) Section 7.3.2(1). Section 7.3.2(1) is hereby deleted in its entirety and
replaced with the following:
"(i) Intentionally Omitted."
(vi) Section 7.3.2(1). Section 7.3.2(1) is hereby deleted in its entirety and
replaced with the following:
,,0) Default. Phase 2 Developer shall not be in Default of any
covenant or agreement to be performed by Phase 2 Developer under this
Agreement and if as a result of any Default by Phase 2 Developer on the
Phase 2 Property Closing Date, this condition is not satisfied, City shall
have provided Phase 2 Developer with written notice and the Default
shall be cured within ten (10)Business Days of such notice, and,for one
such extension only, the Phase 2 Property Closing Date shall be
extended to allow such cure within such ten (10) Business Day period,
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provided that the Phase 2 Property Outside Closing Date shall not be
extended."
d. Section 7.5.5(b)(B). Section 7.5.5(b)(B) of the Amended DDA is hereby deleted in its
entirety and replaced with the following:
"(13) at the Phase 2 Property Close of Escrow, the Phase 2 Special
Restrictions, the Phase 2 Property Quitclaim Deed, the City Deed of Trust, the
Supplemental Declaration or similar document including the Phase 2 Parcel in the
CC&Rs, and, in each case, thereafter, any other documents that Developer and the
City may mutually direct, or that may be required by the terms of this Agreement
to be Recorded, obtain conformed copies thereof and distribute same to Developer
and the City."
5. Modifications to Article 8 of the Amended DDA— Development of the Property and
Additional Covenants of Developer and City.
a. Section 8.1.6. A new Section 8.1.6 is hereby added to the Amended DDA as follows:
"8.1.6 Phase 2 Commencement of Construction Conditions. The City's
obligation to consent to Phase 2 Commencement of Construction and to delivery
of any of the grading, foundation or building permits for the Phase 2 Project are
hereby made expressly contingent upon the satisfaction, determined in the sole
discretion of the City, or waiver by the City of the following conditions precedent
for the benefit of the City on or before the outside date for Phase 2 Commencement
of Construction set forth in the Schedule of Performance, which satisfaction or
waiver shall be evidenced by provision by the City to Developer of a written
Satisfaction Date Notice. The date of the Satisfaction Date Notice shall be referred
to in this Agreement as the "Satisfaction Date." Further it shall be a Material
Default for Developer to commence grading or construction on the Phase 2
Property (other than for the Minimum Horizontal Improvements located on the
Phase 2 Property, which are complete) until all Phase 2 Construction
Commencement Conditions for the benefit of the City set forth in this Section 8.1.6
are either determined by the City,in its sole discretion,to be satisfied or are waived
by the City, and until, if there is a Construction Loan, the Permitted Mortgage has
been Recorded against the Phase 2 Parcel. The Parties shall open an Escrow with
Escrow Holder in connection with satisfaction of the Phase 2 Construction
Commencement Conditions.
(a) Payments. Developer shall deliver to Escrow:
(i) If not previously paid, payment in full to the City of
all amounts due under the Supplemental Purchase Price and Profit Participation
Agreement; and
(ii) any other costs explicitly set forth in this Agreement
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as costs to be paid by Developer at the Phase 2 Property Close of Escrow.
(b) Guaranty Documents. Developer shall cause the Guarantor
approved by the City in accordance with the requirements of this Agreement to
provide the following documentation to Escrow, as applicable:
(i) Reaffirmation of Guaranty. Assuming no change in
the Guaranty or Guarantor, a reaffirmation of guaranty and a date down of the
declaration certified by the chief financial officer or other appropriate authorized
officer of Phase 2 Guarantor in the form and substance of the Reaffirmation of
Phase 2 Guarantor Certificate attached to this Agreement as Attachment 13D
which shall include reaffirmation of Guarantor's Net Worth and Liquidity, each in
the amount required by this Agreement and if applicable,the Net Worth Side Letter,
or
(ii) New Guaranty and New Guarantor Certificate. If a
new Guarantor will provide a replacement Guaranty, a Phase 2 Guaranty executed
by the Phase 2 Guarantor(s) approved by the City pursuant to this Agreement in
substantially the form and substance of that attached hereto as Attachment 14 or as
otherwise agreed by the City, Developer and the Phase 2 Guarantor(s), each in its
sole discretion and a legal opinion as to due authorization and enforceability from
counsel for Guarantor acceptable to the City in substantially the form and substance
of that attached hereto as Attachment 30 together with a declaration certified by the
chief financial officer or other appropriate authorized officer of the City approved
Phase 2 Guarantor in the form of the Phase 2 Guarantor Certificate in the form
attached hereto as Attachment 13A and confirming Guarantor's Net Worth and
Liquidity are sufficient to satisfy the requirements of this Agreement.
(c) Representations and Warranties. Developer shall execute and
deliver to Escrow a reaffirmation of Developer's representations and warranties
made for the benefit of the City set forth in the assignment and assumption
agreement pursuant to which Developer acquired the Phase 2 Property, and an
affirmation or reaffirmation, as applicable, of the representations and warranties,
set forth in Section 4.5.2(f), in the form of the date down certificate attached hereto
as Attachment 18A, which certificate shall identify any representation or warranty
which is not, or no longer is,true and correct and explaining the state of facts giving
rise to the change. Such certificate shall be in the form and substance of the date
down certificate attached to this Agreement as Attachment 18A, provided that the
representation and warranty contained in the Assignment and Assumption
Agreement delivered by Developer that is substantially similar to that contained in
Section 2.1 is being reaffirmed solely with respect to Developer's representation
and agreement that its undertakings pursuant to this Agreement are for the purpose
of development of the Phase 2 Project and not for speculation in land holding.
(d) Developer Date Down Certificate. Developer shall provide
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to Escrow a declaration certified by an officer of Developer in the form attached as
Attachment 18A that the documentation previously submitted by Phase 2
Developer to the City in certificates provided pursuant to this Agreement including
Section 4.6.6 is true and correct in all material respects as of the date the Phase 2
Construction Commencement Conditions are satisfied,together with certificates of
good standing of Developer, issued by the California Secretary of State within
thirty (30) calendar days of the Satisfaction Date.
(e) Original Equity Investor Certificate. Developer shall
provide to Escrow an Original Equity Investor Certificate certified by the chief
financial officer or other appropriate authorized officer of the Phase 2 Equity
Investor in the form and substance of Attachment 13B, or if such declaration has
previously been delivered by Phase 2 Equity Investor pursuant to this Agreement
including Section 4.6.2, a certification in the form of Attachment 13C certifying as
to the truth and correctness of in all material respects of the Original Equity Investor
Certificate.
(f) Subordination Agreement. Developer shall cause delivery
to Escrow of a Subordination Agreement executed and acknowledged in
Recordable form by the Permitted Mortgagee with respect to a Construction Loan
that is secured by a Permitted Mortgage with such Permitted Mortgagee together
with irrevocable authorization by the Construction Loan Permitted Mortgagee and
Developer for Recording of the Construction Loan deed of trust and Subordination
Agreement promptly following the Recording of the Release of City Deed of Trust.
(g) Authority. Developer shall provide to Escrow such proof of
Developer's authority and authorization to 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
Developer to act for and/or bind Developer as may be reasonably required by the
City.
(h) Escrow Requests. Developer shall provide to Escrow such
other documents or instruments as Escrow Holder may reasonably request to
consummate the transaction contemplated in this Agreement.
(i) Construction Bond. Developer shall deliver to the City
(outside of Escrow) a Construction Bond with respect to the Phase 2 Horizontal
Improvements (other than the Minimum Horizontal Improvements, which are
complete) ensuring the Completion of such Phase 2 Horizontal Improvements.
0) Grading and Building Permits. Developer shall have
submitted to the City (outside of Escrow) complete applications (i.e., meeting all
City requirements for issuance) for (a)rough and precise grading permits in
accordance with the Approved Plans for Phase 2 and(b) all building permits for the
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Minimum Phase 2 Improvements, and City shall be prepared to issue such permits,
subject only to the payment of applicable fees and provision of all Construction
Bonds for the Phase 2 Horizontal Improvements (other than the Minimum
Horizontal Improvements, which are complete) or as otherwise required by this
Agreement the Entitlements, any conditions of approval or by law.
(k) Insurance. Developer shall have provided to the City
(outside of Escrow) evidence of builder's risk insurance as required by
Section 11.1.3 and any renewals of environmental insurance as required by
Section 11.1.4.
(1) Financial Capability,Etc.Developer shall demonstrate to the
City that the requirements set forth in Section 4.6 pertaining to the Phase 2
Construction Commencement Conditions are satisfied and shall be in compliance
with the requirements of Sections 8.5.1 and 8.5.2, and there shall have been (i) no
material adverse changes (as determined by the City in accordance with
Section 4.6) in the financial condition of any of the Developer or the Phase 2
Guarantor since the City approved the same; (ii) no change in ownership of
Developer, the Phase 2 Equity Investor or the Phase 2 Guarantor since the City
approved the same, or if there are changes, then except as permitted by
Section 2.2.2, such changes shall have been approved by the City, and (iii) no
change to the form and substance of any Transfer Agreements and/or Ground Lease
previously approved by the City and applicable to Phase 2, as applicable, without
the prior written consent of the City thereto.
(m) Construction Loan Closing. As the final condition to
satisfaction of the Phase 2 Construction Commencement Conditions, the Permitted
Mortgagee shall have prepared and Permitted Mortgagee and Developer shall each
have delivered to Escrow executed and acknowledged final forms of the
Construction Loan deed of trust, Subordination Agreement (if requested by the
Permitted Mortgagee) in Recordable form and other construction loan documents
together with irrevocable authorization by the Construction Loan Permitted
Mortgagee and Developer for Recording of the Construction Loan deed of trust and
the Subordination Agreement promptly following the Recording of the Release of
City Deed of Trust and (i)there shall be no default under the contracts and
agreements applicable thereto, (ii)the loan documents shall satisfy the
requirements of Sections 17.1.2(a) and 17.3, (iii)the City shall have caused the
trustee to provide to Escrow a City Deed of Trust Release, and(iv)Developer shall
have provided to the City written verification from Escrow confirming that the deed
of trust(s)to be Recorded in conjunction with the closing of the Construction Loan,
if any, has/have been fully executed and acknowledged and in Recordable form and
deposited into Escrow by the Permitted Mortgagee(s) for the Construction Loan
substantially in the amount set forth in the Phase 2 Financing Plan approved by the
City pursuant to Section 4.6.1.
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(n) Default. Phase 2 Developer shall not be in Default of any
covenant or agreement to be performed by Phase 2 Developer under this Agreement
or the Other Agreements, including without limitation the Supplemental Purchase
Price and Profit Participation Agreement and the City Deed of Trust.
(o) Phase 2 Property Close of Escrow. The Phase 2 Property
Close of Escrow shall have occurred."
b. Section 8.1.7. A new Section 8.1.7 is hereby added to the Amended DDA as follows:
"8.1.7 Subordination to Permitted Mortme and City Deed of Trust Release.
Concurrently with issuance by the City of the Satisfaction Date Notice (a)the City
shall execute and deliver to Escrow a Subordination Agreement meeting the
requirements of this Agreement, including Sections 1.2.4 and 17.1.2, which shall
be in the form and substance of the Subordination Agreement attached to this
Agreement as Attachment 14 and (b)the City shall cause the trustee to prepare,
execute and deliver to Escrow a release of the City Deed of Trust(the "City Deed
of Trust Release"). The delivery and Recording of the City Deed of Trust Release
and the Subordination Agreement are hereby authorized by the City only upon
satisfaction of each of the following: (i) receipt by Escrow Holder from the
Permitted Mortgagee with respect to the Construction Loan deed of trust and from
Phase 2 Developer of confirmation of satisfaction of all conditions precedent to and
written authorization to concurrently Record the Construction Loan deed of trust,
and (ii) written (email) confirmation from the City authorizing Recording of such
documents."
c. Section 8.2.1. Section 8.2.1 of the Amended DDA is hereby deleted in its entirety and
replaced with the following:
"8.2.1 Schedule of Performance. The Schedule of Performance attached as
Attachment 7 sets forth the schedule for submissions, approvals and actions,
including the design and development of the Project and construction of the
Improvements. The Parties acknowledge and agree that, subject to Section 18.7,
time is of the essence with respect to the dates set forth in the Schedule of
Performance. Accordingly, subj ect to Force Maj eure Delay, following conveyance
of any portion of the Property by the City, Developer shall promptly begin and
thereafter diligently prosecute to completion within the time specified in the
Schedule of Performance all steps required by the Schedule of Performance;
provided that with respect to Phase 2 only, Developer shall have no obligation to
Commence Construction of the Phase 2 Project prior to the satisfaction of the
Phase 2 Construction Commencement Conditions and provided further that
Developer shall have no right to Commence Construction of the Phase 2 Project
following the outside date for Phase 2 Commencement of Construction set forth in
the Schedule of Performance."
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d. Section 8.8.1. Section 8.8.1 of the Amended DDA is hereby deleted in its entirety and
replaced with the following:
"Commencing upon and as a condition to satisfaction of the Phase 2 Construction
Commencement Conditions, Developer shall thereafter maintain throughout the
term of this Agreement, sufficient equity, capital and firm binding commitments
for financing necessary to meet the following requirements:
(a) 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 to be built on any Parcel acquired by
Developer; and
(b) enable Developer to perform and satisfy all the covenants of
Developer contained in this Agreement,the Quitclaim Deed(s),the CC&Rs and the
Special Restrictions;
Prior to the Satisfaction Date,Developer shall maintain sufficient equity and capital
to fund Phase 2 Pre-Development Costs."
e. Section 8.13(d). Section 8.13(d)of the Amended DDA is hereby amended by deleting
the last sentence thereof and replacing it with the following:
"As used herein, the term "Phase 2 Project Stabilization" shall mean that Leases
or Pad Transfer purchase and sale agreements have been executed with End Users
for not less than 360,000 GBA within Phase 2, and the "Phase 2 Non-Compete
Period" shall mean the period of time commencing on the Third Amendment
Effective Date and ending on the date that is the earlier to occur of(a) the Phase 2
Project Stabilization Date, (b)the date that is three (3)years from the date upon
which Phase 2 Commencement of Construction takes place, or (c) June 29, 2028,
if physical construction has not by such date then commenced, provided that if at
the expiration of the Phase 2 Non-Compete Period the Phase 2 Developer is then or
has been in Bankruptcy, the Phase 2 Non-Compete Period shall be extended to the
applicable date described in Section 8.13(b)(iii)(B)."
6. Modifications to Article 11 of the Amended DDA—Insurance.
a. Section 11.1.4. Section 11.1.4 is hereby deleted in its entirety and replaced with the
following:
"11.1.4 Environmental Insurance.
(a) From and after the Phase 1 Property Close of Escrow, Developer
shall obtain and shall thereafter maintain environmental insurance coverage for the
Property, including coverage for loss, remediation expense and legal defense
expenses, and naming "the City of Tustin and the Successor Agency to the Tustin
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Community Redevelopment Agency, and their respective elected and appointed
officials, agents, representatives and employees" as additional insureds to address
pollution risks at the Property. Such policy shall include coverage relating to
unknown pre-existing conditions and/or conditions that are first discovered during
development after the Effective Date on the Development Parcels.
(b) From and after the Phase 2 Property Close of Escrow, Developer
shall (i) obtain an extension of the term of such aforementioned policy, in
Section 11.1.4(a), for an additional period of five (5)years from the date of such
Close of Escrow for the Phase 2 Property, or (ii) obtain a new policy of
environmental and pollution legal liability insurance coverage for the Phase 2
Property for five (5) years from the date of such Close of Escrow of the Phase 2
Property meeting the requirements of this Section, or(iii) add the Phase 2 Property
to an existing master environmental insurance policy for a period of five (5) years
from the date of such Close of Escrow and meeting the requirements of this Section.
(c) From and after the date on which Developer satisfies the Phase 2
Construction Commencement Conditions, Developer shall (i) obtain an extension
of the term of the policy described in subsections (b)(i) or (b)(ii) above, such that
such policy applies to the construction phase on the Phase 2 Property and expires
no sooner than five (5)years from the date of satisfaction of the Phase 2
Construction Commencement Conditions, or (ii) obtain a new policy of
environmental and pollution legal liability insurance coverage for the construction
phase on the Phase 2 Property for five (5) years from the date of such satisfaction
of the Phase 2 Construction Commencement Conditions and meeting the
requirements of this Section, or(iii) add the Phase 2 Property to an existing master
environmental insurance policy for a period of five (5)years from the date of such
satisfaction of the Phase 2 Construction Commencement Conditions and meeting
the requirements of this Section.
(d) Any environmental and pollution legal liability insurance policy
provided pursuant to this Section shall comply with the following minimum
requirements:
(i) The policy shall be written by the insurance company
selected by Developer and approved by the City, which approval shall not be
unreasonably withheld, and which insurer(s) shall have a Best's rating of A-/VII or
better. Indian Harbor Insurance (a Subsidiary of XL Capital) and Beazley
Insurance Company are hereby approved by the City and deemed to meet this
condition;
(ii) The policy shall provide at least Five Million Dollars
($5,000,000.00) in total coverage and with at least Five Million Dollars
($5,000,000.00) per claim, subject to a maximum One Million Dollar
($1,000,000.00) deductible per claim, to protect against Claims and loss from
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liability relating to unknown conditions for a 5-year term with an extended
reporting period of at least 24 months; and
(iii) The policy shall be paid for in full at the time of issuance and
shall be endorsed as non-cancelable without the written consent of each of
Developer and the City in its sole discretion to such cancellation and, to the extent
available, shall contain a waiver of subrogation for the benefit of the City
Indemnified Parties. The unwillingness of an insurance company to provide a
waiver of subrogation for the benefit of the City Indemnified Parties shall be a
reasonable basis for the City to withhold approval of the insurance company under
Section 11.1.4(d)(i)unless such unwillingness is the common position of insurance
carriers in the market (defined to mean that Developer cannot find an insurance
carrier willing to waive such subrogation or cannot find an insurance carrier willing
to waive such subrogation without charging a material increase in the premium for
such insurance, over the premium that would be charged absent such waiver. A
"material" increase for purposes of this clause (iii) shall mean an increase of 20%
or more.). Developer's obligation to maintain environmental insurance pursuant to
this Section 11.1.4 shall survive the termination of this Agreement following the
Phase 1 Property Close of Escrow for the term required for such insurance policy
pursuant to Section 11.1.4(d)(ii)."
7. Modifications to Article 14 of the Amended DDA — Potential Defaults and Material
Defaults.
a. Section 14.2.3. To correct duplication,the phrase"Notwithstanding the foregoing, any
Transfer" at the beginning of Section 14.2.3 of the Amended DDA is hereby deleted
and replaced with the phrase"Any Transfer."
8. Modifications to Article 15 of the Amended DDA — Potential Defaults and Material
Defaults.
a. Section 15.4.1. Section 15.4.1 of the Amended DDA is hereby deleted in its entirety
and replaced with the following:
"15.4.1 If any Close of Escrow does not occur on or before 5:00 p.m., Pacific
Time, on or before the applicable Closing Date, solely as a result of a Default by
the City in the performance of its obligations under this Agreement with respect to
such Close of Escrow, then, as the sole remedy of Developer with respect to such
Default by the City, and available to Developer only so long as Developer is not in
Default, Developer shall have the right, by providing notice to the City, within
twenty (20) Business Days after the Closing Date (except that if the Closing Date
is later than December 1, 2022, Developer shall make its election no later than
December 5, 2022), of its election to do so, either: (a) to purchase the relevant
Property pursuant to this Agreement notwithstanding such Default by the City and
to waive all of Developer's rights with respect to such Default, other than those
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Defaults described in Section 6.5(a) and Section 8.15, for which Developer's
remedies shall be limited as set forth in Sections 18.5.3(b) and 18.5.4, (b)with
respect to the Phase 1 Property Close of Escrow only, to terminate this Agreement
and cancel the Escrow, in which case the provisions of Section 15.4.3(a), (b), and
Lc) shall apply; (c)with respect to the Phase 2 Property Close of Escrow only (and
provided Optionee has properly exercised the Option only), to terminate (i)its
obligation to acquire the Property to be conveyed at the Phase 2 Property Close of
Escrow and (ii)the Phase 2 Provisions, in which case the provisions of
Section 15.4.3(b) and c) shall apply; or (d)with respect to any such Close of
Escrow,to elect to extend the applicable Closing Date for an additional period(over
and above the time period set forth in Section 7.2.1(i) or Section 7.3.1(i), as
applicable) of fifty (50) calendar days (except that if the original Closing Date is
later than October 1, 2022, the extension of the Closing Date shall be to
December 30, 2022) in order to provide the City with time to cure such Default
(and in such event the City shall use commercially reasonable efforts to cure the
same during such extension period). Notwithstanding the foregoing, in the event
that all applicable City Closing Conditions have been waived by the City in writing
or satisfied (except with respect to any applicable City Closing Condition which is
not satisfied as a result of a Default by the City), and the City fails to deliver any of
the materials described in Section 7.2.1(a) or Section 7.3.1(a) or otherwise fails to
proceed with either Close of Escrow in breach of this Agreement within ten (10)
Business Days after Developer has delivered into Escrow a written notice that
Developer is prepared to consummate the transaction and proceed to Close of
Escrow, Developer shall have the right to bring an action in equity against the City
or subsequent owners, lessors or sub-lessors of the Property for specific
performance of this Agreement, including Article 7, provided, that, except as
specifically set forth in this Section 15.4.1, Developer specifically waives any right
to receive any monetary award as a result of the City's Default; and provided further
that Developer acknowledges that the failure of the City to convey the Phase 2
Property following December 30, 2022 shall not be a Default under this
Agreement."
b. Section 15.4.3(b). Section 15.4.3(b) of the Amended DDA is hereby deleted in its
entirety and replaced with the following:
"(b) In the event the City is in Default of this Agreement with respect to the Phase
2 Property Close of Escrow and receives timely notice of Optionee's election not
to proceed to Close of Escrow as to the Phase 2 Property pursuant to Section 15.4.1
and to terminate the Phase 2 Provisions: (i) the Phase 2 Provisions of this
Agreement shall terminate as to all portions of the Phase 2 Property (provided that
for so long as the Phase 1 Provisions remain in effect and the City shall remain the
owner of the Phase 2 Property, the termination of the Phase 2 Provisions shall not
affect the obligations of the City under this Agreement, if any, to the Phase 1
Developer with respect to the Phase 2 Property), (ii) City shall pay the full amount
of Escrow Holder's charges, and (iii) Optionee shall be entitled to a full refund of
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the aggregate of all Cash Option Payments(other than the amount of$100,002)that
has been previously paid directly to the City, if any, and applicable to the pending
Phase 2 Property Close of Escrow, which refund shall be Optionee's sole and
exclusive remedy hereunder for the failure of the Phase 2 Property Close of Escrow.
The Parties further agree that the City shall have the right to retain the amount of
$100,002 that it has received and shall not be obligated to refund such amount to
either the Optionee,the Working Developer, or any prior Developer. The City may
satisfy its obligation to refund Cash Option Payments by interpleader of Cash
Option Payments received by it in accordance with Section 4.3.3(k)."
9. Modifications to Article 16 of the Amended DDA—Post-Closing Remedies.
a. Section 16.4.1. Section 16.4.1 of the Amended DDA is hereby modified by adding the
following at the end thereof:
"(1) Failure of Developer to Commence Construction of the Phase 2 Project on
or before December 15, 2029 which date shall not be subject to Force Majeure
Delay."
10. Modifications to Article 17 of the Amended DDA — Mortgages and Mortgagee
Protection.
a. Section 17.1.1(e). Section 17.1.1(e)is hereby deleted in its entirety and replaced with
the following:
"(e) Prior to the Recording of a Certificate of Compliance with respect to a
Phase, Developer shall not encumber any Parcel or any portion thereof or any
Improvements thereon with any Mortgage, unless such Mortgage is a Permitted
Mortgage made by a Permitted Mortgagee that secures a Construction Loan (and
no other loan or obligation)that has been approved by the City in its sole discretion
as complying with the requirements of this Agreement and in all particulars
satisfying each and every requirement of this Article 17. In addition, unless
approved by the City in its sole discretion, in no event shall Developer encumber
the Phase 2 Parcel or any portion thereof or any Improvements thereon with any
Mortgage other than the City Deed of Trust prior to the Satisfaction Date. The City
Deed of Trust shall be a first priority lien against the Phase 2 Property until released
in accordance with the terms of this Agreement."
b. Section 17.3. The last sentence of Section 17.3 of the Amended DDA is hereby deleted
in its entirety and replaced with the following sentences:
"Substantially concurrently with the execution and delivery of the Third
Amendment, the Parties shall execute and cause to be Recorded: (a) the Phase 1
Second and Third Amendment Memorandum against the Phase 1 Parcel and(b)the
Phase 2 Second and Third Amendment Memorandum against the Phase 2 Parcel.
The Phase 2 Second and Third Amendment Memorandum shall include verbatim
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the provisions of Section 17.3 of the Second Amendment relating to notice of
transfer of Permitted Mortgage or other loan documents by the Permitted
Mortgagee,incorporating references to the Supplemental Purchase Price and Profit
Participation Agreement and modifications to the Option Term described in the
Third Amendment, acknowledged and in Recordable form. Any and all Mortgages
with respect to Phase 2 shall be subject and subordinate to the terms of this
Agreement and the Phase 2 Second and Third Amendment Memorandum in
addition to the other matters set forth in Section 12.7."
c. Section 17.6.3(b). In Section 17.6.3(b), the phrase "Approved Foreclosure
Transferee" is hereby deleted each time it appears (three times) and replaced with the
phrase "Qualified Foreclosure Purchaser."
d. Section 17.6.6. The number"(d)" at the beginning of this Section is hereby deleted.
e. Section 17.14. A new Section 17.14 is hereby added to the Amended DDA as follows:
"17.14 City Deed of Trust. Notwithstanding any other provision of this Agreement
regarding recording of Mortgages, as a condition to the Phase 2 Property Close of
Escrow, Phase 2 Developer shall execute and cause to be delivered to the City a
deed of trust in the form and substance of the City Deed of Trust. The City Deed
of Trust shall secure the obligations of Developer under the Supplemental Purchase
Price and Profit Participation Agreement. The City Deed of Trust shall be a first
priority Deed of Trust on the Phase 2 Property listing the City as the beneficiary.
Unless otherwise agreed by the City in its sole discretion,Developer shall not cause
or permit the Recording of any other Mortgage during the period in which the City
Deed of Trust remains effective; provided that nothing set forth in this
Section 17.14 shall preclude Recording of a Permitted Mortgage securing a
Construction Loan meeting the requirements of this Agreement following delivery
of the City Deed of Trust Release as set forth in Section 8.1.7. Developer hereby
consents to recording of the City Deed of Trust, acknowledges that the City shall
be a Mortgagee but not a Permitted Mortgagee (and therefore not subject to the
restrictions and obligations imposed on a Permitted Mortgagee—but with the
enumerated rights set forth below) and, further, that the City Deed of Trust shall be
a Mortgage but not a Permitted Mortgage:
(a) If the City is the Foreclosure Transferee, then none of the
provisions of this Agreement relating to Foreclosure Transferee shall apply, there
shall be no requirement that the City be a Qualified Transferee or perform any of
the duties of the Developer or Foreclosure Transferee (or of a Permitted Mortgagee
or Permitted Mortgagee Affiliate) and the City shall have the automatic and
immediate right,without provisions of notice,to terminate this Agreement as to the
portion of the Phase 2 Property acquired.
(b) If a Person other than the City is the Foreclosure Transferee,
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then that Person shall be obligated to comply with all requirements under this
Agreement imposed on a Foreclosure Transferee, including the requirements set
forth in Section 2.2.20, Section 2.2.2(h)(i) inclusive and 2.2.2.(h)(iii) inclusive
which are hereby incorporated into this Section as though fully set forth herein;
provided that the provisions of Section 2.2.2(h)(ii) shall not apply to such Transfer.
With respect to any such Foreclosure Transfer: (i)the Foreclosure Transferee shall
not be released from and shall be required, to assume the rights and obligations of
Developer and to keep and perform all covenants, conditions and provisions of this
Agreement, the Other Agreements and the conveyance instruments which are
applicable to the rights acquired, and the Foreclosure Transferee and all other
Transferees acquiring from and after a Foreclosure of the City Deed of Trust shall
for such Transferee's period of ownership of the Foreclosed Collateral and for the
Additional Liability Period applicable to such Transferee, hold such Foreclosed
Collateral subject to, assume and be obligated to comply with all requirements of
this Agreement and the Other Agreements,including the obligation to construct the
Minimum Phase 2 Improvements and the payment to the City of City Lien amounts
that have not been discharged prior to the date of acquisition of the Foreclosed
Collateral by Transferee; (ii)the provisions of Section 4.3.3 and Section 15.3
relating to the forfeiture of all Cash Option Payments (excluding Cash Option
Payments that have been paid to Working Developer pursuant to Section 4.3.3(g))
to the City, the obligations of the Optionee and Working Developer to deliver a bill
of sale to the City for the Reimbursable Phase 2 Improvements in accordance with
this Agreement, and the potential forfeiture of payment of the Option Credit
Remainder to the Working Developer in accordance with Section 4.3.3(h) shall
continue to apply; and (iii)the obligations of Developer arising from and after the
date of Foreclosure Transferee's acquisition of the Foreclosed Collateral,including
without limitation, restrictions on Transfers and Transfers of Control otherwise
contained in this Agreement shall remain in full force and effect. Notwithstanding
any other provision of this Agreement, if the Foreclosure Transferee is the
Developer, an Affiliate of Developer, or a Related Party to Developer, the
Foreclosure Transferee shall be subject to all obligations imposed on Developer
under the terms of this Agreement and the Other Agreements and shall not as a
result of the Foreclosure be released from any of its pre-Foreclosure obligations as
Developer under the terms of this Agreement or the Other Agreements. Such an
assumption shall be by a writing first approved by the City's legal counsel as to
form and content and shall be in Recordable form.
(c) The City Deed of Trust shall be subordinate to this
Agreement; the Development Agreement; the Memorandum of DDA; the Phase 2
Second and Third Amendment Memorandum (provided that such subordination
shall not be deemed to subordinate the City Deed of Trust to any other document
referenced therein unless such subordination is specifically specified in the City
Deed of Trust); the Quitclaim Deed for Tustin Legacy Cornerstone I-Phase 2 and
Covenants, Conditions and Restrictions, Including Environmental Restriction
Pursuant to Civil Code Section 1471; the Landscape Installation and Maintenance
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Agreement; the Declaration of Special Restrictions for Cornerstone I (Phase 2
Parcel); the CC&Rs; and the Roadway, Landscape and Utility Easement
Agreement."
11. Modification to Article 18 of the Amended DDA— General Provisions.
a. Section 18.7.2(1). Section 18.7.2(1) of the Amended DDA is hereby deleted in its
entirety and replaced with the following:
"(i) All other matters not caused by the Second Party and not listed in
Section 18.7.1."
12. Modifications to Attachment 1 to the Amended DDA — Definitions. The following
defined terms in Attachment 1 shall be modified as set forth below:
a. The term "Construction Period Commencement Date" is hereby deleted in its
entirety and replaced with the following:
""Construction Period Commencement Date" shall mean with respect to
Phase 1, the date that is ninety (90) calendar days following the Close of Escrow
for such Phase and with respect to Phase 2,the date that is ninety (90)calendar days
following the Satisfaction Date."
b. The term "First Option Payment" is hereby deleted in its entirety.
c. The term "Foreclosure" is hereby deleted in its entirety and replaced with the
following:
""Foreclosure" shall mean the completion of the following action: (a) a judicial
or non judicial foreclosure under a Permitted Mortgage or pursuant to the City
Deed of Trust that encumbers Developer's interest in all or a portion of the
Property, (b) if Mezzanine Financing is approved by the City, a UCC foreclosure
(or other applicable foreclosure procedure) under a security instrument approved
by the City in its sole discretion that encumbers the direct and/or indirect ownership
interest in Developer, and/or (c) any transfer or conveyance of all or a portion of
the Property or the direct and/or indirect ownership interest in Developer to a
Permitted Mortgagee or a Permitted Mortgagee Affiliate (whether such Permitted
Mortgagee Affiliate is the holder of the applicable Permitted Mortgage or the
Permitted Mortgagee Affiliate is a designee to take title in order to keep the lien of
the Permitted Mortgage in effect) in lieu of a foreclosure described in such clauses
(a)or(b)(but without limiting the ability of the Permitted Mortgagee or a Permitted
Mortgagee Affiliate to subsequently complete an actual foreclosure of the type
described in clauses (a) or(b)thereafter)."
d. The term"Foreclosure Transferee" is hereby deleted in its entirety and replaced with
the following:
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""Foreclosure Transferee" shall mean (a) a Permitted Mortgagee or its Permitted
Mortgagee Affiliate acquiring Foreclosed Collateral (i) as the successful bidder at
a trustee's sale or a sale conducted to foreclose its Permitted Mortgage pursuant to
a judicial foreclosure or(ii) as result of a deed in lieu of such foreclosure proceeding
or (b) any other Person that is a successful bidder acquiring Foreclosed Collateral
at a trustee's sale or a sale conducted pursuant to a judicial foreclosure, including
without limitation with respect to the City Deed of Trust."
e. To clarify that the term Net Worth is used in the Agreement for purposes other than to
determine the net worth of Guarantor, the term "Net Worth" is hereby deleted in its
entirety and replaced with the following:
""Net Worth" shall mean the net worth of any Person required to demonstrate
minimum Net Worth under this Agreement and shall be based on(x)the fair market
value of the assets of each such Persons (including the aggregate amount of
uncalled capital commitments from such Person's direct and/or indirect limited
partners, and intangible assets including goodwill, intellectual property, licenses,
organizational costs, deferred amounts, covenants not to compete, unearned
income, restricted funds, investments in subsidiaries or other Affiliates,
intercompany receivables and accumulated depreciation), less (y) all liabilities of
such Person (as determined in accordance with GAAP)."
f. The term "Non-Permitted Foreclosure Event" is hereby modified to delete the word
"that" from the first line of the definition.
g. The term "Ongoing Matters" is hereby amended as follows:
i. by deleting the introductory paragraph thereof and replacing with the
following:
""Ongoing Matters" shall mean the following matters for which a
Transferor shall remain responsible following any Transfer (including, as
to a Phase Transfer, with respect to the Transferred Phase, and as to a
Special Phase 2 Transfer, with respect to Phase 2, the Phase 2 Project,
Phase 2 Provisions and with respect to a Qualified Transferee, the Phase 2
Transferable Interests):"
ii. by adding a new clause (e) at the end thereof as follows:
"(e) the obligations of a Transferor Phase 2 Developer under the
Supplemental Purchase Price and Profit Participation Agreement to pay
Supplemental Purchase Price and Profit Participation amounts not paid as
of the date of the Transfer, and to comply with any and all other provisions
of the Supplemental Purchase Price and Profit Participation Agreement that
relate to the determination and payment of such Supplemental Purchase
Price and Profit Participation, provided that the obligations of the
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Transferor Phase 2 Developer described in this clause e shall terminate
upon the payment in full by Phase 2 Developer(Transferor) of all amounts
agreed by Phase 2 Developer(Transferor) and the City to be due under such
agreement or to be determined to be amounts due as a result of audit or other
adjudication pursuant to the terms of the Supplemental Purchase Price and
Profit Participation Agreement."
h. The term "Option Year" is hereby deleted in its entirety and replaced with the
following:
""Option Year" shall mean the First Option Year and each succeeding twelve
month period following the First Option Year through the fifth (5th) Option Year
for which Developer obtains an extension of the Option pursuant to Section 4.3.3(b)
and with respect to the sixth (6th) Option Year shall mean the period from
June 29, 2022 to December 30, 2022. In no event shall there be more than six (6)
Option Years under this Agreement."
i. The term "Other Agreements" is hereby amended to add the Supplemental Purchase
Price and Profit Participation Agreement and City Deed of Trust to the list of Other
Agreements.
j. The term"Phase 1 Financing Plan' is hereby deleted in its entirety and replaced with
the following:
""Phase 1 Financing Plan' shall mean an update to the Financing Plan for Phase
1 to achieve the Minimum Phase 1 Improvements."
k. The term "Phase 2 Joint Venture Agreement" is hereby deleted in its entirety and
replaced with the following:
""Phase 2 Joint Venture Agreement" shall mean the Original Joint Venture
Agreement or such other agreement approved by the City in its sole discretion(such
as a limited partnership, limited liability company or similar agreement) pursuant
to which the Phase 2 Developer is governed, which shall establish the rights and
obligations of the Persons executing such agreement with respect to Operating
Rights and Responsibilities of the Phase 2 Developer and provision of equity
funding meeting the requirements of the Financing Plan and, as applicable, the
Phase 2 Financing Plan; provided that unless otherwise agreed by the City in its
sole discretion pursuant to Sections 2.2.3, 2.2.7 or 4.6.2, or unless otherwise
provided pursuant to Section 2.2.2(1), an Affiliate of LPCC shall have the Operating
Rights and Responsibilities under the Phase 2 Joint Venture Agreement."
1. The term "Phase 2 Property Purchase Price" is hereby deleted in its entirety.
m. The term "Purchase Price" is hereby deleted in its entirety and replaced with the
following:
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""Purchase Price" shall mean with respect to Phase 1, the Phase 1
Property Purchase Price and with respect to Phase 2, the Phase 2 Property
Base Purchase Price."
n. The term "Repurchase Price" is hereby amended as follows:
i. Clause i thereof is hereby deleted in its entirety and replaced with the
following:
"(i) if a Foreclosure has not occurred, an amount equal to (x) the
greater of: (a)the Purchase Price paid by Developer to the City for the
Phase comprising the Reacquired Property (which, for avoidance of doubt
with respect to Phase 2 only, shall be comprised of the Phase 2 Base
Purchase Price and the Supplemental Purchase Price then paid, if any), less
the amount of $8.53 per square foot of land comprising the Reacquired
Property (which is equal to the per square foot component of the Purchase
Price for each Parcel attributable to the Project Fair Share Contribution,
which the Parties agree shall not be repayable as part of the Repurchase
Price) plus the hard and soft costs incurred by the then-current Developer
in construction of the Vertical Improvements on the Reacquired Property,
provided that if the portion of the land comprising the Reacquired Property
is less than all of the Parcel of which it is a component,the Repurchase Price
for the land that is included in the Reacquired Property shall be determined
on a per square foot basis based on the original Purchase Price per square
foot of land for the Phase containing the Reacquired Property and the
Repurchase Price for the Vertical Improvements shall be based on the actual
hard and soft costs incurred by Developer in construction of the Vertical
Improvements located on the land included in the Reacquired Property or
(b)the Permitted Mortgage Unpaid Balance and reasonable costs (if any)
incurred after delivery of the Repurchase Notice for the preservation and
protection of the Reacquired Property, and(y)in each case less(A)the Lien
Release Amounts (provided, however in the event that any Lien Release
Amounts in excess of unpaid property taxes are to be deducted from the
Repurchase Price, then, at Permitted Mortgagee's request, the City shall
extend the close of escrow with respect to the Reacquired Property for a
period of one hundred eighty (180)days(which period shall be tolled during
any period in which Permitted Mortgagee is prohibited from completing a
Foreclosure by any applicable bankruptcy stay or other legal impediment)
or such lesser time as it takes to permit Permitted Mortgage to complete a
Foreclosure with respect to the Reacquired Property (and in the event the
applicable Permitted Mortgagee is comprised of more than one Person and
the City receives conflicting instructions from such Persons as to whether
to proceed to close or extend the closing as provided above, the Permitted
Mortgagee shall be deemed to have elected to require that the City extend
such close of escrow as provided above notwithstanding such conflicting
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instructions),in which event the Liens that are foreclosed and no longer due
and payable shall be excluded from the Lien Release Amounts deducted
from the Repurchase Price) (it being agreed that upon the completion of
such Foreclosure, this clause i and not clause (ii) below shall apply with
respect to the determination of the Repurchase Price), and less (B)the
amount of the City Lien (in each case other than amounts constituting
payment by the City of principal of or interest on any Permitted Mortgage
that were actually applied to reduce the principal of and/or interest on the
Construction Loan secured by the applicable Permitted Mortgage, if any
such payment has been made at the option and in the sole discretion of the
City and has been added to the City Lien), if any;"
ii. by deleting in clause (iii)LB) the phrase "Foreclosure Purchaser" and
replacing it with the phrase "Foreclosure Transferee."
o. The terms"Record," "Recording" and"Recorded" are hereby deleted in their entirety
and replaced with the following:
—,Record," "Recordation," "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."
p. The term "Second Amendment Memorandum" is hereby deleted in its entirety.
q. The term"Transferor"is hereby deleted in its entirety and replaced with the following:
""Transferor" shall mean any Person that is a Developer under this
Agreement which Transfers all or any portion of its interest in and to this
Agreement, the Project, the Property and or the Improvements thereon,
including by Transfer to a Successor Owner, Developer Affiliate or
Mortgagee, any Phase Transferee or Special Phase 2 Transferee and any
Pad Transferee or Tenant under a Ground Lease."
13. New Terms Added to Attachment 1 to the Amended DDA. The following new
definitions are hereby added to Attachment 1 to the Amended DDA.
a. The term "City Deed of Trust" shall have the meaning set forth in Section 4.2.2(b).
b. The term "City Deed of Trust Release" shall have the meaning set forth in
Section 8.1.7.
c. The terms "Commence Construction" and "Phase 2 Commencement of
Construction" shall each mean the date upon which all of the following have been
satisfied: (i) the Satisfaction Date Notice has been issued by the by the City, (ii)the
required grading permit(s) for Phase 2 have been issued, (iii)Developer's contractor
has mobilized for construction of Phase 2, and (iv)physical rough grading activity on
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the Phase 2 Parcel has commenced.
d. The term "Initial Phase 2 Developer" shall mean for Phase 2 an entity for which an
Affiliate of LPCC will hold the Operating Rights and Responsibilities and for which
an Alcion Entity will be the Controlling Person.
e. The term"Net Worth Side Letter" shall have the meaning set forth in Section 7.3.2(e).
f. The term "Phase 1 Second and Third Amendment Memorandum" shall mean the
Memorandum of Second and Third Amendments to Tustin Legacy Disposition and
Development Agreement Cornerstone I(Phase 1) attached to the Third Amendment as
Schedule IA.
g. The term "Phase 1 Subordination Agreement" shall mean that certain Subordination
Agreement dated as of June 29,2017 and Recorded as Instrument No. 2017000270826.
h. The term"Phase 2 Commencement of Construction' shall have the meaning set forth
in the definition of"Commence Construction" above.
i. The term "Phase 2 Construction Commencement Conditions" shall have the
meaning set forth in Section 8.1.6.
j. The term "Phase 2 Pre-Development Activities" shall mean preparation of
architectural and engineering plans and specifications for Phase 2 and securing of
Applicable Approvals for Phase 2.
k. The term"Phase 2 Pre-Development Costs" shall mean all pre-development costs and
expenses needed to complete the Phase 2 Pre-Development Activities prior to the
Satisfaction Date.
1. The term "Phase 2 Property Base Purchase Price" shall have the meaning set forth
in Section 4.2.2(a).
m. The term "Phase 2 Second and Third Amendment Memorandum" shall mean the
Memorandum of Second and Third Amendments to Tustin Legacy Disposition and
Development Agreement Cornerstone I(Phase 2) attached to the Third Amendment as
Schedule 113.
n. The term "Phase 2 Transferable Interests" shall mean the interests Transferred
pursuant to a Phase Transfer of Phase 2 or a Transfer of Control of Phase 2 Developer
and for avoidance of doubt shall include a Transfer to a Qualified Transferee, and shall
include all right, title and interest of Phase 2 Developer in and to Phase 2, the Phase 2
Project, the Phase 2 Provisions, the Phase 2 Property and Improvements thereon this
Agreement, the Other Agreements and all other documents and agreements related
thereto to the extent the same related to Phase 2.
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o. The term "Profit Participation' shall have the meaning set forth in the Supplemental
Purchase Price and Profit Participation Agreement attached to this Agreement as
Attachment 31, as the same may be modified from time to time with the approval of
the Parties, each in its sole discretion.
p. The term "QT Equity Investor" shall have the meaning set forth in Section 2.2.2(1).
q. The term "QT Updated Financing Plan' shall mean the Financing Plan meeting the
requirements of Sections 2.2.2(j) and 4.6.1 to be provided at the time of a Transfer to a
Qualified Transferee.
r. The term "Qualified Transferee" shall mean any Person that satisfies all of the
requirements set forth in Section 2.2.2(1) and,unless otherwise approved by the City in
its sole discretion satisfies all of the following criteria:
(i) is licensed to do business in the State of California (if applicable);
(ii) is Controlled by, Controls or has as its Controlling Person: (1) a
Designated Developer or (2) any other developer of office buildings for which the
Person (individually or with respect to any one of its Controlling Persons, key
employees,principals, and/or management)has at least ten (10)years of experience
in developing or owning commercial office buildings or campuses containing at
least five hundred thousand (500,000) aggregate square feet of net rentable space;
(iii) together with its Affiliates, within the preceding eighteen (18)
months prior to the date of the Transfer, has not been the subj ect of any of the events
or actions described in Section 2.2.5 (excluding any insolvency that is not
accompanied by another event or action described in Section 2.2.5) affecting more
than ten percent(10%) of the aggregate assets, or assets under management, as
applicable, of such Person and its Affiliates;
(iv) has not, nor has its Controlling Person or any key employee thereof:
(1)been indicted or convicted for any felony or crime involving moral turpitude,
(2)been debarred by any public entity in California, or (3)been engaged in
litigation with the City or any other governmental entity within the preceding
five (5)years (other than tax contests or litigation unrelated to development)where
such party was not the successful litigant; and
(v) has, when determined in the aggregate for such Person and its
Controlling Persons and Affiliates, a Net Worth of not less than Two Hundred Fifty
Million Dollars ($250,000,000.00), as the same may be adjusted by the City prior
to the Phase 2 Property Close of Escrow pursuant to the Net Worth Side Letter and
(2)Liquidity of not less than Twenty-Five Million Dollars ($25,000,000.00)
(provided that for the purposes of determining the foregoing Net Worth or
Liquidity, any assets which are the subject of any of the events or actions described
in Section 2.2.5 and any accompanying liabilities shall be excluded), or shall have
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its obligations under this Agreement guaranteed by a Person that has Net Worth or
Liquidity meeting the foregoing requirements."
s. The term "Recorded Phase 1 Certificate of Compliance" shall have the meaning set
forth in Section 1.2.5.
t. The term "Satisfaction Date" shall have the meaning set forth in Section 8.1.6.
u. The term "Satisfaction Date Notice" shall mean the written confirmation provided by
the City (in the form of Attachment 33 to this Agreement or as the same may be
modified by agreement of the Parties, each in its sole discretion)that the City is satisfied
in its sole discretion or has waived each and every one of the Phase 2 Construction
Commencement Conditions.
v. The term"Supplemental Purchase Price" shall mean the amounts required to be paid
by Developer pursuant to Section 4.2.2(b)(A), (B) and (C).
w. The term"Supplemental Purchase Price and Profit Participation Agreement" shall
have the meaning set forth in Section 4.2.2(b).
x. The term "Third Amendment" shall mean the Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I entered into by Developer and
the City.
y. The term "Third Amendment Effective Date" shall have the meaning set forth in the
preamble to the Third Amendment.
z. The term "Total All-In Land Value Amount" shall have the meaning set forth in the
Supplemental Purchase Price and Profit Participation Agreement attached to this
Agreement as Attachment 31, as the same may be modified from time to time with the
approval of the Parties, each in its sole discretion.
14. Modifications to Attachments to the Amended DDA.
a. Attachment 7 (Schedule of Performance). Attachment 7 to the Amended DDA is
hereby deleted in its entirety and replaced with "Attachment 7 (Revised)" in the form
attached to the Third Amendment as Schedule 2. With respect to Phase 2, any
reference in the Agreement to Attachment 7 shall be deemed to refer to Attachment 7
(Revised).
b. Attachments13A, 13B and 13C (Form of Guarantor Certificate,Form of Original
Eguity Investor Certificate and Form of Eguity Investor Date Down Certificate).
Attachment 13A, 13B and 13C to the Amended DDA are hereby deleted in its entirety
and replaced with "Attachment 13A (Revised)", "Attachment 13B (Revised)" and
"Attachment 13C" (Revised)" each in the form attached to the Third Amendment as
Schedule 3A, 3B and 3C. With respect to Phase 2, any reference in the Agreement to
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Attachments 13A, 13B or 13C shall be deemed to refer, respectively, to
Attachments 13A (Revised), 13B (Revised) and 13C (Revised).
c. Attachment 14 (Form of Guaranty). Attachment 14 to the Amended DDA is hereby
deleted in its entirety and replaced with"Attachment 14(Revised"in the form attached
to the Third Amendment as Schedule 4. With respect to the Phase 2, any reference in
the Agreement to Attachment 14 shall be deemed to refer to Attachment 14 (Revised).
d. Attachment 17 (Form of City Date Down Certificate Re2ardin2 Representations
and Warranties). Attachment 17 to the Amended DDA is hereby deleted in its
entirety and replaced with"Attachment 17 (Revised)"in the form attached to the Third
Amendment as Schedule 5. With respect to Phase 2, any reference in the Agreement to
Attachment 17 shall be deemed to refer to Attachment 17 (Revised).
e. Attachment 18 (Form of Developer Date Down Certificate Re2ardin2
Representations and Warranties (Phase 2 Property Close of Escrow).
Attachment 18 to the Amended DDA is hereby deleted in its entirety and replaced with
"Attachment 18 (Revised" in the form attached to the Third Amendment as
Schedule 6. With respect to Phase 2, any reference in the Agreement to Attachment 18
shall be deemed to refer to Attachment 18 (Revised).
f. Attachment 24 (Form of Subordination Agreement). Attachment 24 to the
Amended DDA is hereby deleted in its entirety and replaced with "Attachment 24
(Revised)" in the form attached to the Third Amendment as Schedule 7. With respect
to Phase 2, any reference in the Agreement to Attachment 24 shall be deemed to refer
to Attachment 24 (Revised).
g. Attachment 28 (Phase 2 Property Purchase Price and Option Payment Schedule).
Attachment 28 to the Amended DDA is hereby deleted in its entirety and replaced with
"Attachment 28 (Revised" in the form attached to the Third Amendment as
Schedule 8. With respect to Phase 2, any reference in the Agreement to Attachment 28
shall be deemed to refer to Attachment 28 (Revised).
15. New Attachments Added to the Amended DDA. The following new attachments are
hereby added to the Amended DDA.
a. Attachment 13D (Form of Reaffirmation of Guaranty by Approved Guarantor).
The Amended DDA shall be amended by adding the form of Reaffirmation of Guaranty
attached to this Third Amendment as Schedule 9 as Attachment 13D to the Agreement.
b. Attachment 16D (Form of Qualified Transferee Assignment and Assumption
Agreement Pursuant to Section 2.2.2(1)). The Amended DDA shall be amended by
adding the form of Qualified Transferee Assignment and Assumption Agreement
attached to this Third Amendment as Schedule 10 as Attachment 16D to the
Agreement.
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c. Attachment 18A (Form of Developer Date Down Certificate Re2ardin2
Representations and Warranties (Satisfaction of Phase 2 Construction
Commencement Conditions)). The Amended DDA shall be amended by adding a
new Form of Phase 2 Developer Date Down Certificate Regarding Representations and
Warranties(Satisfaction of Phase 2 Construction Commencement Conditions)attached
to this Third Amendment as Schedule 11 as Attachment 18A to the Agreement.
d. Attachment 31 (Form of Supplemental Purchase Price and Profit Participation
Agreement). The Amended DDA shall be amended by adding the Supplemental
Purchase Price and Profit Participation Agreement attached to this Third Amendment
as Schedule 12 as Attachment 31 to the Agreement.
e. Attachment 32 (City Deed of Trust). The Amended DDA shall be amended by
adding the City Deed of Trust attached to this Third Amendment as Schedule 13 as
Attachment 32 to the Agreement.
f. Attachment 33 (Form of Satisfaction Date Notice). The Amended DDA shall be
amended by adding the Form of Satisfaction Date Notice attached to this Third
Amendment as Schedule 14 as Attachment 33 to the Agreement.
g. Attachment 34 (Acknowledgment of Transfer to Qualified Transferee). The
Amended DDA shall be amended by adding the Form of Acknowledgment of Transfer
to Qualified Transferee attached to this Third Amendment as Schedule 15 as
Attachment 34 to the Agreement.
16. Developer Representations and Warranties.
As of the Third Amendment Effective Date, Developer represents and warrants to the City
as follows:
a. The Financing Plan concerning Phase 2 as updated in accordance with the requirements
of Section 4.6.1 of the Amended DDA, is true and correct as of the Third Amendment
Effective Date, and reflects Developer's current plan as of the Third Amendment
Effective Date to available funding and costs, and at the time it is delivered is expected
to be sufficient to pay through issuance of the Certificate of Compliance for Phase 2,
all Development Costs for Phase 2 and all other costs for the construction, marketing
and lease of the Improvements as described in the Scope of Development for Phase 2,
and the Project budget for the Minimum Phase 2 Improvements, as updated and
amended, remains a reasonable budget.
b. The "Loan" described in the Phase 1 Subordination Agreement has been paid in full,
the City has issued a Certificate of Compliance with respect to all portions of the Parcel
secured by the Security Instrument (as defined in the Phase 1 Subordination
Agreement), and the Phase 1 Subordination Agreement has terminated in accordance
with Section 5(i)thereof.
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c. The existing Mortgage on Phase 1 does not encumber this Agreement, the DA or the
Option. There is no Mortgage encumbering the Option.
d. Except as have been terminated or released as to Phase 1 by the terms of the Recorded
Phase 1 Certificate of Compliance, this Agreement and the Other Agreements which
have been executed and delivered prior to the Third Amendment Effective Date are in
full force and effect and have not been modified, supplemented or amended, whether
orally or in writing, and have not been assigned or otherwise transferred by Developer
to any other Person.
e. To Developer's Knowledge, (i)there are no Defaults of the City under this Agreement,
and no defaults of the City under the Other Agreements which have been executed and
delivered prior to the Third Amendment Effective Date, nor any facts which now, or
after the giving of notice or the passage of time, or both, would constitute a Default
under this Agreement or a default under such Other Agreements or which would entitle
Developer to then exercise any of its rights or remedies under this Agreement or such
Other Agreements which have been executed and delivered prior to the Third
Amendment Effective Date, or any of them, and(ii)Developer has no claim of breach,
counterclaim, lien or other offset presently existing against the City.
17. Termination of Transfer Pursuant to Section 2.2.3(a) of Amended DDA.
For avoidance of doubt, it is hereby agreed by the Parties that the provisions of
Section 2.2.3(a) of the Amended DDA are no longer operable because a Certificate of
Compliance has been issued for Phase 1 of the Project.
18. Miscellaneous.
a. Recitals. The Recitals set forth in the Third Amendment to DDA are affirmed by the
Parties to be true and correct and are incorporated into the Agreement by this reference.
b. Agreement Ratified. Except as specifically amended or modified herein, each and
every term, covenant, and condition of the Amended DDA as amended is hereby
ratified and shall remain in full force and effect. Each and every reference to the
"Agreement" in the Amended DDA (including, without limitation, the attachments
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thereto) shall be deemed to refer to the Amended DDA as amended by this Third
Amendment.
c. Governing Law. This instrument shall be interpreted and construed in accordance with
the laws of the State of California.
d. Binding Agreement. This Third Amendment shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted assigns.
e. Counterparts. This Third Amendment may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute
one and the same document.
[SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, City and Developer have signed this Third Amendment as of the
Third Amendment Effective Date.
Dated: "CITY"
By:
Matthew S. West,
City Manager
ATTEST:
By:
Erica N. Yasuda, City Clerk
APPROVED AS TO FORM
By:
David Kendig, City Attorney
Armbruster Goldsmith& Delvac LLP,
Special Real Estate Counsel to the City
By:
Amy E. Freilich
{signatures continued on following page}
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"DEVELOPER"
FLIGHT PHASE 1 OWNER LLC,
a Delaware limited liability company
�yDlOCUSigned by:
yy
By: /4
I; po-
36C7297239824FE...
Name: Mark Potter
Title: Authorized signatory
Dated: 11/20/20
Tustin Cornerstone I Third Amendment to DDA S-2 City of Tustin/Cornerstone I
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Schedule 1A
MEMORANDUM OF SECOND AND THIRD AMENDMENTS TO DISPOSITION AND
DEVELOPMENT AGREEMENT (PHASE 1)
{attached}
Tustin Cornerstone I Third Amendment to DDA Schedule IA City of Tustin/Cornerstone I
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Amendment Memorandum
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SCHEDULE IA
MEMORANDUM OF SECOND AND THIRD AMENDMENTS TO DISPOSITION AND
DEVELOPMENT AGREEMENT (PHASE 1)
CITY OF TUSTIN OFFICIAL
BUSINESS REQUEST
DOCUMENT TO BE
RECORDED AND TO BE
EXEMPT FROM RECORDING
FEES PER GOVERNMENT
CODE §6103 AND §27383.
Recording requested by and
when recorded mail to:
City Manager
The City of Tustin
300 Centennial Way
Tustin, CA 92780
MEMORANDUM OF
SECOND AND THIRD AMENDMENTS TO TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT
CORNERSTONE I
(NOTICE TO PHASE 1 OWNER ONLY)
This MEMORANDUM OF SECOND AND THIRD AMENDMENTS TO TUSTIN
LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT CORNERSTONE I(NOTICE
TO PHASE 1 OWNER ONLY) (this"Second and Third Amendment Memorandum")is made
as of[•] (the"Second and Third Amendment Memorandum Effective Date"), by and between
the CITY OF TUSTIN, a municipal corporation of the State of California ("City") and FLIGHT
PHASE I OWNER LLC, a Delaware limited liability company ("Developer"), with reference to
the following facts:
A. Developer is the owner of that certain real property described on Exhibit A attached
hereto and incorporated herein by reference (the "Phase 1 Parcel").
B. The City and the Developer have entered into that certain Tustin Legacy
Disposition and Development Agreement Cornerstone I, dated as of November 15, 2016
("Original DDA"), as amended by (1) that certain First Amendment to Tustin Legacy Disposition
and Development Agreement Cornerstone I dated as of June 20, 2017 ("First Amendment"),
(2)that certain Second Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of October 1, 2019 ("Second Amendment"), and (3)that certain Third
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
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December [•], 2020 ("Third Amendment"; the Original DDA, as amended by the First
Amendment, Second Amendment, and Third Amendment, collectively, the "DDA"). The City
and the Developer are sometimes referred to herein individually as a "Party" and collectively as
the "Parties." Initially capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the DDA.
C. A memorandum of the Original DDA and the First Amendment was recorded in
the Office of the Clerk-Recorder, Orange County, California (the "Official Records") on
June 29, 2017 as Instrument Number 2017000270814 (the "Original Memorandum"; the
Original Memorandum and this Second and Third Amendment Memorandum, collectively, the
"Memorandum of DDA").
D. A Certificate of Compliance for the Phase 1 Project dated March 26, 2020 was
Recorded in the Official Records on that date as Instrument No. 2020000137939 (the "Recorded
Phase 1 Certificate of Compliance").
This Second and Third Amendment Memorandum has been executed as of the Second and
Third Amendment Memorandum Effective Date and Recorded in the Official Records to provide
record notice to the current and future owners of the Phase 1 Parcel of the execution of the Second
Amendment and Third Amendment by the Parties and of the terms and provisions of Section 1.2.5
of the DDA contained therein, as further set forth below:
1. Phase 1 Certificate of Compliance. For ease of reference only, the following
italicized Section 1.2.5 (as added by the Third Amendment)is copied verbatim from the DDA:
"1.2.5 Pursuant to that certain Certificate of Compliance for the Phase I Project
dated March 26, 2020 that was Recorded in the Oficial Records on that date as
Instrument No. 2020000137939("Recorded Phase I Certificate of Compliance'),
this Agreement has terminated as to the Phase I Parcel and is of no further force
and effect with respect to Phase I or the Phase I Parcel, and any and all Persons
owning or purchasing, leasing, or otherwise acquiring any interest in the Certified
Parcel on or after March 26, 2020 shall not(because ofsuch ownership,purchase,
lease, or acquisition) incur any obligation or liability under this Agreement with
respect to the Certified Parcel, except with respect to the documents specified in
the Recorded Phase I Certificate of Compliance to the extent provided for in such
documents or in the documents referred to therein;provided that the provisions of
Section 9.7 of this Agreement, which as set forth in the Memorandum of DDA
expressly survive the termination of this Agreement, continue to bind the Phase I
Developer and the City. Developer and City acknowledge and agree that the
indemnities made by the City in respect of Phase I and the Phase I Parcel in
Sections 8.9 and 18.11.2 of this Agreement are of no further force and effect except
as to Claims arising out of inspections or activities prior to March 26, 2020.
Developer (being both the Phase I Developer and the Phase 2 Developer under
this Agreement as of the Third Amendment Effective Date and thereby authorized
to bind Phase I Developer and its successors and assigns), hereby agrees that from
and after a Transfer of all or any portion of Phase 2 or the Phase 2 Transferable
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Interests under this Agreement (whether as a Permitted Transfer pursuant to
Section 2.2.2 or otherwise):
(i) except to the extent of rights and obligations in favor of Working Developer
and the City set forth in Section 4.3.3(g). 4.3.3(h), and 15.4, and the rights ofPhase
I Developer to enforce the terms and provisions of Section 9.7 and the Sections of
this Agreement referenced therein to the extent permitted by this Agreement, Phase
I Developer shall have no further rights under this Agreement,
(ii) notwithstanding that Phase I Developer remains bound by the terms of
Section 9.7, neither the approval nor signature of the owner of Phase I or any
Phase I Developer shall be required to execute an amendment of this Agreement,
and
(iii) Phase I Developer shall remain obligated to perform all obligations of
Phase I Developer remaining effective pursuant to the Recorded Phase I
Certificate of Compliance, and in the documents specified in the Recorded Phase I
Certificate of Compliance to the extent provided therein and in Section 9.7,
provided that Phase I Developer shall not be bound by any modification to Sections
4.3.3(8), 4.3.3(h). 9.7 (or the Sections of this Agreement referenced therein), or
Section 15.4 to which it does not provide its written consent. "
2. Covenants Run with the Land. The provisions of the DDA recited and set forth
above are hereby agreed to by the Developer and by the City to be covenants running with the land
and enforceable as equitable servitudes against the Phase 1 Parcel and are hereby declared to be
and shall be binding upon the Phase 1 Parcel and Developer and its successors and assigns (who
may own all or any portion of the Phase 1 Parcel)for the benefit of the City and its successors and
assigns.
3. Effect on Memorandum of DDA. Except to the extent that provisions thereof are
specifically modified by this Second and Third Amendment Memorandum, the Original
Memorandum is not modified by this Second and Third Amendment Memorandum and remains
in full force and effect.
4. Public Documents. The documents constituting the DDA are public documents
and may be reviewed at the official offices of the City.
5. Interpretation; Notice. This Second and Third Amendment Memorandum is
prepared for Recording and notice purposes only and in no way modifies or expands the terms,
conditions, provisions, and covenants of the DDA. In the event of any inconsistency between the
terms, conditions, provisions, and covenants of this Second and Third Amendment Memorandum
and the DDA, the terms, conditions, provisions, and covenants of the DDA shall prevail.
6. Exhibit Incorporated by Reference. Exhibit A attached to this Second and Third
Amendment Memorandum is hereby incorporated by this reference into this Second and Third
Amendment Memorandum as though fully set forth in this Section 6.
[signature page follows]
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IN WITNESS WHEREOF, the City and Developer have executed this Second and Third
Amendment Memorandum as of the Second and Third Amendment Memorandum Effective
Date.
Date: "CITY"
CITY OF TUSTIN
ATTEST: By:
Matthew S. West,
City Manager
By:
Erica N. Yasuda, City Clerk
APPROVED AS TO FORM
By:
David Kendig, City Attorney
Armbruster Goldsmith& Delvac LLP
Special Real Estate Counsel to the City
By:
Amy E. Freilich
{signatures continue on following page)
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Date: "DEVELOPER"
FLIGHT PHASE I OWNER LLC,
a Delaware limited liability company
By:
Name:
Title:
Dated:
Tustin Cornerstone 1 DDA Memo of Second and SCHEDULE IA City of Tustin/Comerstone I
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
State of California )
County of Orange )
On before me, Notary Public,
personally appeared who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
State of California )
County of Orange )
On before me, Notary Public,
personally appeared who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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EXHIBIT A
PHASE 1 PARCEL
LEGAL DESCRIPTON
Real property in the City of Tustin, County of Orange, State of California, described as follows:
LOTS 1 THROUGH 10, INCLUSIVE, OF TRACT NO. 18082, AS SHOWN BY TRACT MAP
ON FILE IN BOOK 969, PAGES 12 THROUGH 16, INCLUSIVE, OF TRACT MAPS,
RECORDS OF ORANGE COUNTY, CALIFORNIA.
EXCEPTING THEREFROM ANY AND ALL OIL, OIL RIGHTS, MINERALS, MINERAL
RIGHTS, NATURAL GAS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM AND ALL PRODUCTS
DERIVED FROM ANY OF THE FOREGOING THAT MAY BE WITHIN OR UNDER THE
LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING,
EXPLORING FOR AND STORING IN AND REMOVING THE SAME FROM THE LAND OR
ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY
DRILL AND MINE FROM LANDS OTHER THAN THE LAND, OIL OR GAS WELLS,
TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE
LAND 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 ENTER UPON OR USE THE SURFACE OF THE LAND IN THE EXERCISE
OF SUCH RIGHTS OR OTHERWISE ADVERSELY AFFECT THE USE OR OPERATION OF
THE LAND OR THE STRUCTURAL INTEGRITY OF ANY IMPROVEMENTS ON THE
LAND.
ALSO EXCEPTING THEREFROM ANY AND ALL WATER, WATER RIGHTS OR
INTERESTS THEREIN APPURTENANT OR RELATING TO THE LAND OR OWNED OR
USED BY THE GRANTOR IN CONNECTION WITH OR WITH RESPECT TO THE LAND
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 LAND, TO STORE THE SAME BENEATH THE SURFACE
OF THE LAND AND TO DIVERT OR OTHERWISE UTILIZE SUCH WATER, RIGHTS OR
INTERESTS ON ANY OTHER PROPERTY OWNED OR LEASED BY GRANTOR; BUT
WITHOUT, HOWEVER, THE RIGHT TO ENTER UPON OR USE THE SURFACE OF THE
LAND IN THE EXERCISE OF SUCH RIGHTS OR OTHERWISE ADVERSELY AFFECT THE
USE OR OPERATION OF THE LAND OR THE STRUCTURAL INTEGRITY OF ANY
IMPROVEMENTS ON THE LAND.
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Schedule 1B
MEMORANDUM OF SECOND AND THIRD AMENDMENTS TO DISPOSITION AND
DEVELOPMENT AGREEMENT (PHASE 2)
{attached}
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Amendment Memorandum
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SCHEDULE 1B
MEMORANDUM OF SECOND AND THIRD AMENDMENTS TO DISPOSITION AND
DEVELOPMENT AGREEMENT (PHASE 2)
CITY OF TUSTIN OFFICIAL
BUSINESS REQUEST
DOCUMENT TO BE
RECORDED AND TO BE
EXEMPT FROM RECORDING
FEES PER GOVERNMENT
CODE §6103 AND §27383.
Recording requested by and
when recorded mail to:
City Manager
The City of Tustin
300 Centennial Way
Tustin, CA 92780
MEMORANDUM OF
SECOND AND THIRD AMENDMENTS TO TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT
CORNERSTONE I
This MEMORANDUM OF SECOND AND THIRD AMENDMENTS TO TUSTIN
LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT CORNERSTONE I (this
"Second and Third Amendment Memorandum") is made as of [•] (the "Second and Third
Amendment Memorandum Effective Date"), by and between the CITY OF TUSTIN, a
municipal corporation of the State of California ("City"), and FLIGHT PHASE I OWNER LLC,
a Delaware limited liability company ("Developer"), with reference to the following facts:
A. The City and the Developer have entered into that certain Tustin Legacy
Disposition and Development Agreement Cornerstone I, dated as of November 15, 2016
("Original DDA"), as amended by (1) that certain First Amendment to Tustin Legacy Disposition
and Development Agreement Cornerstone I dated as of June 20, 2017 ("First Amendment"),
(2)that certain Second Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of October 1, 2019 ("Second Amendment"), and (3)that certain Third
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
December [•], 2020 ("Third Amendment"; the Original DDA, as amended by the First
Amendment, Second Amendment, and Third Amendment, collectively, the "DDA"). The City
and the Developer are sometimes referred to herein individually as a "Party" and collectively as
the "Parties." Initially capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the DDA.
Tustin Cornerstone 1 DDA Memo of Second and SCHEDULE IB City of Tustin/Comerstone I
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B. A memorandum of the Original DDA and the First Amendment was recorded in
the Office of the Clerk-Recorder, Orange County, California (the "Official Records") on
June 29, 2017 as Instrument Number 2017000270814 (the "Original Memorandum"; the
Original Memorandum and this Second and Third Amendment Memorandum, collectively, the
"Memorandum of DDA").
This Second and Third Amendment Memorandum has been executed as of the Second and
Third Amendment Memorandum Effective Date and Recorded in the Official Records to provide
record notice of the execution of the Second Amendment and Third Amendment by the Parties
and various of the terms and provisions contained therein, as further set forth below:
1. Real Property Affected by the DDA.
1.1. Development Parcels. The property currently affected by the DDA consists
of the real property defined in the DDA as the Phase 2 Parcel, as legally described on Exhibit A
attached hereto and incorporated herein by reference,but excepting therefrom the matters set forth
in Section 2 of the Quitclaim Deeds(as defined in the Original Memorandum),together with(a) all
existing improvements, if any, presently located thereon, and (b) all appurtenances pertaining to
the Phase 2 Parcel or such improvements, and (c) all permits, licenses, approvals and
authorizations issued by any Governmental Authority in connection with the Phase 2 Parcel
(collectively, the "Phase 2 Property").
1.2. [Intentionally Deleted].
2. Option; Outside Closing Date. The DDA provides an Option in favor of Developer
to acquire the Phase 2 Property. The Third Amendment amends certain of the Option provisions,
including modifying the Option Term and, assuming timely extension prior to the expiration of
each Option Year pursuant to the DDA, establishing September 30, 2022 as the outside date for
the Option Term and December 30, 2022 as the last day of Option Year 6 and the Phase 2 Property
Outside Closing Date. The Option shall automatically terminate upon the termination of the DDA
without requirement for further action by the Parties. Further provisions relating to exercise and/or
termination of the Option are set forth in the DDA.
3. Effect of the Second Amendment and Third Amendment. The Second Amendment
and Third Amendment amend certain obligations, agreements, covenants, conditions and
restrictions that the DDA imposes with respect to the Phase 2 Property and with respect to
Developer's and its Successor Owner's acquisition, development, use, operation and ultimate
disposition thereof, that continue to run with the Phase 2 Property, unless and until terminated in
accordance with their respective terms, as further set forth in the DDA. Among these amended
obligations are the following:
(a) The obligation of Developer to satisfy certain Phase 2 Construction
Commencement Conditions for the benefit of the City. The date on which the City provides
written notice to Developer of satisfaction or waiver of the Phase 2 Construction Commencement
Conditions is referred to in the DDA as the"Satisfaction Date";
(b) Certain restrictions on Transfer (including without limitation, conveyance,
lease and/or assignment) of Developer's interests under the DDA and/or in the Phase 2 Property
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(and the Improvements located thereon) or any portion thereof or interest therein, whether
voluntary or involuntary, certain restrictions on the Transfer of Control of Developer or
Developer's Controlling Person, and certain Special Phase 2 Transfer provisions contained in
Article 2 of the DDA, and certain restrictions on Transfer to a Foreclosure Transferee that will
terminate as to the Phase 2 Property subject thereto upon execution and Recording by the City of
a Certificate of Compliance;
(c) Certain restrictions, including amended restrictions, on Mortgages
contained in, among other sections of the DDA, Sections 1.2.4, 2.2.2, 2.2.7, 2.2.8, 4.7.2 and 17 of
the DDA, including without limitation, restrictions on encumbrance of the Phase 2 Property with
a Mortgage prior to the Satisfaction Date and certain obligations imposed upon Mortgagees in the
event of a Foreclosure, which limitations will terminate as to the Phase 2 Property upon execution
and Recording by the City of a Certificate of Compliance for Phase 2;
(d) The obligation of Developer, following the Phase 2 Property Close of
Escrow, to pay a Supplemental Purchase Price to the City upon occurrence of certain conditions
set forth in Section 4.2.2(b) of the DDA;
(e) The obligation of Developer, following the Phase 2 Property Close of
Escrow, to pay Profit Participation to the City pursuant to the Supplemental Purchase Price and
Profit Participation Agreement in connection with specified Transfers of Phase 2 and/or the Phase
2 Property, as set forth in Section 4.2.2 of the DDA. The Profit Participation will be secured at
the Phase 2 Property Close of Escrow by the City Deed of Trust; and
(f) The Right of Reversion in favor of the City contained in Section 16.4 of the
DDA(the amended subsections of which are copied verbatim in Section 4 below), which has been
amended in the Third Amendment to provide that failure of the Phase 2 Commencement of
Construction to occur on or before December 15, 2029 (which date shall not be subject to Force
Majeure Delay) shall be a reversion action trigger.
4. Right of Reversion. For ease of reference only, the following italicized Section
16.4.1 (as amended by the Third Amendment)is copied verbatim from the DDA:
"16.4.1 Certain Defaults Triwering the Ri,-ht of Reversion. Except with
respect to a Non-Permitted Foreclosure Event (as described in Section 16.4.1(k)),
for which the Right of Reversion shall remain in effect with respect to each Phase
from the Close of Escrow with respect to such Phase until the issuance by the City
of a Certificate of Compliance for such Phase, the Right of Reversion shall remain
in effect with respect to each Phase from the Close of Escrow with respect to such
Phase until the Equity Completion Date applicable to such Phase. Further, prior
to the Phase 2 Property Close of Escrow, if the Optionee and Phase I Developer
are Related Parties, then upon the exercise by the City of the Right of Reversion
with respect to Phase I or any portion thereof the Option and the Phase 2
Provisions shall be suspended and upon the occurrence of the Reversion Event, the
Option and the Phase 2 Provisions shall be deemed to have terminated and to be
of no further force or effect (provided that for so long as the Phase I Provisions
remain in effect and the City shall remain the owner of the Phase 2 Property, the
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termination of the Phase 2 Provisions shall not affect the obligations of the City
under this Agreement, if any, to the Phase I Developer with respect to the Phase 2
Property), and the provisions of Section 15.3 shall apply. In all other cases,
exercise by the City of the Right ofReversion with respect to a Phase shall not apply
with respect to or affect the rights of the Developer of the other Phase unless the
City specifically exercised the Right ofReversion with respect to such other Phase
or portion thereoffollowing a Reversion Action Trigger with respect to such other
Phase. The City may exercise the Right ofReversion if it elects to do so with respect
to only the Parcel affected by the Material Default and any Improvements thereon
and all applicable Entitlements and other development rights, consents,
authorizations, variances, waivers, licenses, permits, certificates and approvals
from any Governmental Authority or quasi-Governmental Authority, and all other
appurtenant rights applicable thereto upon the occurrence of any of the following
(each, a "Reversion Action Trigger,"and the date on which the Reversion Action
Trigger occurs shall be referred to herein, as the "Reversion Action Trigger
Date').
(a) Developer fails to (i) commence construction of the Minimum
Horizontal Improvements within six (6) months after the Construction Period
Commencement Date for the Phase I Parcel, or (ii) to Complete the Minimum
Horizontal Improvements (other than the final cap/pave for the roadways on the
Property) within twenty-four (24) months after the Construction Period
Commencement Date for the Phase I Parcel, as each such date may be extended
for Force Majeure Delay;
(b) Developer fails to commence construction of the Minimum Phase I
Vertical Improvements within twelve (12) months after the Construction Period
Commencement Date for the Phase I Parcel, as such date may be extended for
Force Majeure Delay;
(c) Developer fails to commence construction of the Phase 2 Horizontal
Improvements within six (6) months after the Construction Period Commencement
Date for the Phase 2 Parcel as such date may be extended for Force Majeure Delay.
(d) Developer fails to commence construction of the Minimum Phase 2
Vertical Improvements within twelve (12) months after the Construction Period
Commencement Date for the Phase 2 Parcel, as such date may be extended for
Force Majeure Delay;
(e) Developer fails to Complete construction (i) of the Minimum Phase
I Vertical Improvements within forty-eight (48) months after the Construction
Period Commencement Date for the Phase I Parcel as such date may be extended
for Force Majeure Delay or (ii) of the Minimum Phase 2 Vertical Improvements
within forty-eight(48) months after the Construction Period Commencement Date
for the Phase 2 Parcel as such date may be extended for Force Majeure Delay;
provided that in each case,such Completion date shall not under any circumstances
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be later than the date that is sixty (60) months after the Close of Escrow for such
Parcel(which date shall not be extended for Force Majeure Delay);
(f) Developer commits physical waste on the Property or any portion
thereof and such becomes a Material Default in accordance with the notice and
cure provisions of Section 14.2, subject to extension for Force Majeure Delay;
(g) Developer abandons or substantially suspends (except for
suspensions resulting from Force Majeure Delay) construction of the Phase I
Project or the Phase 2 Project, as applicable,for a period of one hundred eighty
(180) consecutive calendar days, and such becomes a Material Default in
accordance with the notice and cure provisions of Section 14.2. Nothing in this
Section 16.4.10) shall extend the terms of Section 16.4.](a), (b). (c) or() above;
(h) The occurrence of a Developer Insolvency Event; or
(i) With respect to any Guarantor which has provided a Guaranty to
the City, the occurrence of a Guarantor Illiquidity Event or a City Guarantor
Illiquidity Event, unless Developer shall, within the time period required thereby,
provide substitute security meeting the requirements of Section 4.7;
(j) Material Default arises because of as to any Phase, (i) a voluntary
or involuntary Transfer prior to the Equity Completion Date for such Phase, or(ii)
after the Equity Completion Date for such Phase, a Non-Permitted Foreclosure
Event with respect to such Phase; or
(k) a Material Default arises because of the occurrence of a Non-
Permitted Foreclosure Event with respect to a Phase at any time prior to the
issuance of a Certificate of Compliance for such Phase.
(1) Failure of Developer to Commence Construction of the Phase 2
Project on or before December 15, 2029 which date shall not be subject to Force
Majeure Delay. "
5. Change in Loan Documents. For ease of reference only, the following italicized
Section 17.3 (as amended by the Second Amendment and Third Amendment) is copied verbatim
from the DDA:
"17.3 Chante in Loan Documents. Following approval by the City of loan
documents in connection with its approval of a Permitted Mortgage, but prior to
closing of the Construction Loan evidenced by such loan documents, Developer
shall not modify or agree to modify those loan documents without the prior written
approval of the City, in its sole discretion. In addition, as to each Mortgage,
Developer shall, within five(5)Business Days following execution ofsame,provide
written notice to the City, in accordance with Section 18.6, of each and every
instrument which effects or purports to effect a transfer, sale, assignment,
disposition, gift, hypothecation, mortgage, pledge, encumbrance or other similar
conveyance or any amendment, modification, waiver, postponement, extension,
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replacement, renewal or termination of any of the loan documents associated with
such Mortgage or other terms and conditions of the loan, in each case to the extent
that Developer has actual knowledge ofsame, which notice shall include a full and
complete copy of each such instrument to the extent that Developer has actually
received a copy of same. Except as set forth in this Section 17.3, or in any
Subordination Agreement executed by the City and any Permitted Mortgagee,
nothing in this Agreement shall obligate Developer to seek City's consent nor City
to grant such consent to any transfer, sale, assignment, disposition, gift,
hypothecation, mortgage,pledge, encumbrance or other similar conveyance or any
amendment, modification, waiver,postponement, extension, replacement, renewal
or termination of any Permitted Mortgage or the Subordination Agreement or loan
documents associated with such Permitted Mortgage;provided, however, that any
transfer, sale, assignment, disposition, gift, hypothecation, mortgage, pledge,
encumbrance or other similar conveyance by a Permitted Mortgagee of any of the
loan documents with respect to the Phase 2 Property shall, notwithstanding any
assignment language contained in the form of the Subordination Agreement, which
may appear to be self-operative, include an express assignment to the assignee of
the Permitted Mortgage or any portion thereof or loan document in connection
therewith, of all of the rights and obligations of such Permitted Mortgagee under
the Subordination Agreement with respect to the loan documents and Permitted
Mortgage, or portion thereof, so transferred, sold, assigned, disposed of, gifted,
hypothecated, mortgaged, pledged, encumbered or otherwise conveyed, and any
Construction Loan proceeds distributed by Developer to its equity owners for
purposes other than the payment ofDevelopment Costs which distribution has been
authorized by the express terms of an amendment of the applicable loan documents
made without the prior written approval of the City shall be excluded from the
calculation of Permitted Mortgage Unpaid Balance. Substantially concurrently
with the execution and delivery of the Third Amendment, the Parties shall execute
and cause to be Recorded: (a) the Phase I Second and Third Amendment
Memorandum against the Phase I Parcel and (b) the Phase 2 Second and Third
Amendment Memorandum against the Phase 2 Parcel. The Phase 2 Second and
Third Amendment Memorandum shall include verbatim the provisions of Section
17.3 of the Second Amendment relating to notice of transfer of Permitted Mortgage
or other loan documents by the Permitted Mortgagee, incorporating references to
the Supplemental Purchase Price and Profit Participation Agreement and
modifications to the Option Term described in the Third Amendment,
acknowledged and in Recordable form. Any and all Mortgages with respect to
Phase 2 shall be subject and subordinate to the terms of this Agreement and the
Phase 2 Second and Third Amendment Memorandum in addition to the other
matters set forth in Section 12.7. "
6. DDA and Memorandum of DDA Run with the Land. The DDA and the
Memorandum of DDA, including, without limitation, the provisions of the DDA recited and set
forth above, and all other obligations, agreements, covenants, conditions and restrictions set forth
in the DDA and the Memorandum of DDA are hereby agreed to by the Developer and by the City
to be covenants running with the land and enforceable as equitable servitudes against the Phase 2
Property and are hereby declared to be and shall be binding upon the Phase 2 Property and
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Developer and its successors and assigns(who may own all or any portion of the Phase 2 Property)
for the benefit of the City and its successors and assigns, subject to the effects of Recordation of a
Certificate of Compliance.
7. Acknowledgment and Assumption by Developer. By Recording of the
Memorandum of DDA and this Second and Third Amendment Memorandum, Developer hereby
acknowledges and assumes all responsibilities placed upon Developer under the terms of the DDA.
8. Effect on Memorandum of DDA. Except to the extent that provisions thereof are
specifically modified by this Second and Third Amendment Memorandum, the Original
Memorandum is not modified by this Second and Third Amendment Memorandum and remains
in full force and effect.
9. Public Documents. The documents constituting the DDA are public documents
and may be reviewed at the official offices of the City.
10. Interpretation; Notice. This Second and Third Amendment Memorandum is
prepared for Recording and notice purposes only and in no way modifies or expands the terms,
conditions, provisions and covenants of the DDA. In the event of any inconsistency between
terms, conditions, provisions and covenants of this Second and Third Amendment Memorandum
and the DDA, the terms, conditions, provisions and covenants of the DDA shall prevail.
11. Attachments. The Attachments attached to this Second and Third Amendment
Memorandum are hereby incorporated by this reference into this Second and Third Amendment
Memorandum as though fully set forth in this Section.
[signature page follows]
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IN WITNESS WHEREOF, the City and Developer have executed this Second and Third
Amendment Memorandum as of the Second and Third Amendment Memorandum Effective
Date.
Date: "CITY"
CITY OF TUSTIN
ATTEST: By:
Matthew S. West,
City Manager
By:
Erica N. Yasuda, City Clerk
APPROVED AS TO FORM
By:
David Kendig, City Attorney
Armbruster Goldsmith& Delvac LLP
Special Real Estate Counsel to the City
By:
Amy E. Freilich
{signatures continue on following page)
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Date: "DEVELOPER"
FLIGHT PHASE I OWNER LLC,
a Delaware limited liability company
By:
Name:
Title:
Dated:
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
State of California )
County of Orange )
On before me, Notary Public,
personally appeared who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document.
State of California )
County of Orange )
On before me, Notary Public,
personally appeared who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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EXHIBIT A
PHASE 2 PROPERTY
LEGAL DESCRIPTION
Real property in the City of Tustin, County of Orange, State of California, described as follows:
PARCEL 2 OF PARCEL MAP NO. 2015-168, AS SHOWN ON A MAP FILED IN BOOK 388,
PAGES 26 AND 27 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA;
EXCEPTING THEREFROM ANY AND ALL OIL, OIL RIGHTS, MINERALS, MINERAL
RIGHTS, NATURAL GAS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM AND ALL PRODUCTS
DERIVED FROM ANY OF THE FOREGOING THAT MAY BE WITHIN OR UNDER THE
LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING,
EXPLORING FOR AND STORING IN AND REMOVING THE SAME FROM THE LAND
OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR
DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THE LAND, OIL OR
GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE
SUBSURFACE OF THE LAND 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 ENTER UPON OR USE THE SURFACE OF
THE LAND IN THE EXERCISE OF SUCH RIGHTS OR OTHERWISE ADVERSELY
AFFECT THE USE OR OPERATION OF THE LAND OR THE STRUCTURAL INTEGRITY
OF ANY IMPROVEMENTS ON THE LAND.
ALSO EXCEPTING THEREFROM ANY AND ALL WATER, WATER RIGHTS OR
INTERESTS THEREIN APPURTENANT OR RELATING TO THE LAND OR OWNED OR
USED BY THE GRANTOR IN CONNECTION WITH OR WITH RESPECT TO THE LAND
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 LAND, TO STORE THE SAME BENEATH THE
SURFACE OF THE LAND AND TO DIVERT OR OTHERWISE UTILIZE SUCH WATER,
RIGHTS OR INTERESTS ON ANY OTHER PROPERTY OWNED OR LEASED BY
GRANTOR; BUT WITHOUT, HOWEVER, THE RIGHT TO ENTER UPON OR USE THE
SURFACE OF THE LAND IN THE EXERCISE OF SUCH RIGHTS OR OTHERWISE
ADVERSELY AFFECT THE USE OR OPERATION OF THE LAND OR THE
STRUCTURAL INTEGRITY OF ANY IMPROVEMENTS ON THE LAND.
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Schedule 2
ATTACHMENT 7 (REVISED)
SCHEDULE OF PERFORMANCE
{attached}
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ATTACHMENT 7 (REVISED)
SCHEDULE OF PERFORMANCE
Note: References herein made to "DDA" shall mean the Tustin Legacy Disposition and
Development Agreement (Cornerstone I) of which this Attachment is a part. Except as
otherwise noted, all capitalized terms within the DDA and the Attachments shall retain
their meanings as defined in the DDA. Any dates identified in this attachment are intended
to reflect the provisions of the DDA. For purposes of determining any Potential Default
or Material Default, Section 14 of the DDA shall apply. In addition, to the extent any of
the terms and provisions of this Attachment are inconsistent with or otherwise are in
conflict with the terms and provisions of the DDA or the Other Agreements, the DDA or
Other Agreements, as applicable, shall control.
A. Phase 1
ACTION DATE
Project Design & Permitting
1. Phase 1 Property Close of Escrow (Section Subject to the terms and conditions set
7.1.1) forth in the DDA, not later than
August 31, 2017, subject to the
extensions contemplated by Sections
7.2.10), 7.2.20) and the last sentence
of Section 7.1.1, if applicable, and
further subject to the provisions of
Section 15.1.2(c)); provided, however,
in the event the Phase 1 Property
Close of Escrow takes place prior to
the Phase 1 Property Outside Closing
Date, all events described in this
Schedule of Performance, the DDA
and the Other Agreements triggered
from the Phase 1 Property Close of
Escrow shall be triggered from the
actual Phase 1 Property Close of
Escrow date.
2. Developer submittal of grading plans, and Prior and as a condition to the Phase 1
required documents sufficient to allow the Property Close of Escrow(and in all
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City to issue a rough grading permit for events, not less than two (2)Business
Phase 1 and infrastructure plans, utility plans, Days prior to the Phase 1 Property
landscape plans for the Minimum Horizontal Close of Escrow).
Improvements on Phase 2 and adjacent City
owned Property (Section 7.2.2(e))
3. Developer submittal of infrastructure plans, No later than ninety (90) calendar days
utility plans, landscape plans, first phase final following the Construction Period
map, and related documents for the Phase 1 Commencement Date for Phase 1, as
Horizontal Improvements other than the such date may be extended for Force
Minimum Horizontal Improvements (which Majeure Delay.
are addressed in item 2 above)to allow the
City, Irvine Ranch Water District, Orange
County Fire Authority and utility companies
to issue permits for the aforementioned Phase
1 Horizontal Improvements (Section 8.1.1)
4. Developer submittal of construction plans and No later than thirty (30) calendar days
related documents to the City for the after the Construction Period
Minimum Phase 1 Vertical Improvements Commencement Date for Phase 1.
(Section 8.1.1)
Construction
5. Developer commences rough grading On or before the Construction Period
Commencement Date for Phase 1.
6. Developer commences construction of Phase Within sixty (60) calendar days after
1 Horizontal Improvements, including, for the Construction Period
avoidance of doubt, the Minimum Horizontal Commencement Date for Phase 1, as
Improvements) (Section 8.1.5(a)) such date may be extended for Force
Majeure Delay.
7. Developer Completes construction of the Within twenty one (21) months after
Minimum Horizontal Improvements (other the Construction Period
than the final cap/pave for the roadways on Commencement Date for Phase 1, as
the Property) such date may be extended for Force
Majeure Delay.
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8. Developer commences construction of the Within six (6) months after the
Minimum Phase 1 Vertical Construction Period Commencement
Improvements (Section 8.1.5(b)) Date for Phase 1, as such date may be
extended for Force Majeure Delay.
9. Developer Completes construction of Phase 1 Within thirty six (36) months from the
Horizontal Improvements and Minimum Construction Period Commencement
Phase 1 Vertical Improvements Date for Phase 1, which period may be
extended by Force Majeure Delay to a
maximum of forty eight(48) months.
Certificate of Compliance
10. Developer submittal of request for issuance of Within thirty (30)Business Days after
the Phase 1 Parcel Certificate of Compliance completion of the Minimum Phase 1
(Section 9.2) Improvements, and satisfaction of the
other conditions precedent set forth in
Section 9.2.
11. City approves the Phase 1 Parcel Certificate Within ten (10)Business Days of the
of Compliance or provides notice to request.
Developer of any deficiencies that exist
(Section 9.6)
12. City causes Recording of the Phase 1 Parcel Within five (5) Business Days
Certificate of Compliance (Section 9.7) following City issuance of the
Certificate of Compliance.
B. Phase 2
ACTION DATE
Project Design & Permitting
1. Phase 2 Property Close of Escrow Subject to the terms and conditions set
(Section 7.1.2) forth in the DDA, (a) no less than sixty
(60) calendar days following the
exercise by Developer of the Option
and (b) twenty (20)Business Days
following the last to occur of the
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satisfaction (or waiver by Developer)
of the Developer Phase 2 Property
Closing Conditions set forth in
Sections 7.3.1(c), (d), (e), (g) and (h) of
the DDA and the satisfaction (or
waiver by the City) of the City Phase 2
Property Closing Conditions set forth
in Section 7.3.2(c), (d), (g), (h) and 0)
of the DDA, but in no event later than
the date that is the earlier of(A) sixty
(60) calendar days after the last day of
the Option Term in which the Option
was exercised (without giving effect to
any further extensions), which date
shall be not be subject to extension for
Force Majeure Delay (but shall be
subject to the extensions contemplated
by Sections 7.3.10) and 7.3.2(1) of the
DDA, if applicable) or(B)December
30, 2022, which date shall not be
subject to extension for Force Maj eure
Delay; provided, however, in the event
the Phase 2 Property Close of Escrow
takes place prior to the Phase 2
Property Outside Closing Date, all
events described in this Schedule of
Performance, the DDA and the Other
Agreements triggered from the Phase 2
Property Close of Escrow shall be
triggered from the actual Phase 2
Property Close of Escrow date.
2. Developer submittal of(a)rough and precise Prior and as a condition to satisfaction
grading plans, and required documents of the Phase 2 Construction
sufficient to allow the City to issue a rough Commencement Conditions.
grading permit for Phase 2 and (b) all
building permits for the Minimum Phase 2
Improvements, and City shall be prepared to
issue such permits, subject only to the
payment of applicable fees required in
connection with the issuance of such permits
and to Developer acquiring title to the Phase
2 Property. (Section 8.1.60))
Tustin Cornerstone I DDA Art 7 Revised ATTACHMENT 7 City of Tustin/Cornerstone I
Schedule of Performance 11-12-2020(agd) (REVISED)
(2)FINAL 4
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
3. Developer submittal of infrastructure plans, (a)with respect to permits from the
utility plans, landscape plans, and related City, Irvine Ranch Water District, and
documents for the Phase 2 Horizontal Orange County Fire Authority, prior
Improvements to allow the City, Irvine and as a condition to satisfaction of the
Ranch Water District, Orange County Fire Phase 2 Construction Commencement
Authority and utility companies, to issue Conditions; (b)with respect to utility
permits for the aforementioned Phase 2 companies, no later than ninety (90)
Horizontal Improvements (Section 8.1.1) calendar days following the
Construction Period Commencement
Date for Phase 2, as the date in this
clause (b) may be extended for Force
Majeure Delay.
Construction
4. Developer to cause Phase 2 Commencement On or before the Construction Period
of Construction to occur. Commencement Date for Phase 2, but
no later than December 15,2029(which
date shall not be extended for Force
Majeure Delay).
5. Developer commences construction of Phase Within sixty (60) calendar days after
2 Horizontal Improvements (it being the Construction Period
acknowledged that the Minimum Horizontal Commencement Date for Phase 2, as
Improvements have already been completed) such date may be extended for Force
(Section 8.1.5(a)) Majeure Delay.
6. Developer commences construction of the Within six (6) months after the
Minimum Phase 2 Vertical Improvements Construction Period Commencement
(Section 8.1.5(b)) Date for Phase 2, as such date may be
extended for Force Majeure Delay.
7. Developer Completes construction of Phase Within thirty six (36) months from the
2 Horizontal Improvements and Minimum Construction Period Commencement
Phase 2 Vertical Improvements Date for Phase 2, which period may be
extended by Force Majeure Delay to a
maximum of forty eight(48) months.
Certificate of Compliance
Tustin Cornerstone I DDA Art 7 Revised ATTACHMENT 7 City of Tustin/Cornerstone I
Schedule of Performance 11-12-2020(agd) (REVISED)
(2)FINAL 5
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
8. Developer submittal of request for issuance Within thirty (30)Business Days after
of the Phase 2 Parcel Certificate of completion of the Minimum Phase 2
Compliance (Section 9.3) Improvements, and satisfaction of the
other conditions precedent set forth in
Section 9.3.
9. City approves the Phase 2 Parcel Certificate Within ten (10)Business Days of the
of Compliance or provides notice to request.
Developer of any deficiencies that exist
(Section 9.6)
10. City causes Recording of the Phase 2 Parcel Within five (5) Business Days
Certificate of Compliance (Section 9.7) following City issuance of the
Certificate of Compliance.
Tustin Cornerstone I DDA Art 7 Revised ATTACHMENT 7 City of Tustin/Cornerstone I
Schedule of Performance 11-12-2020(agd) (REVISED)
(2)FINAL 6
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 3A
ATTACHMENT 13A (REVISED)
FORM OF GUARANTOR CERTIFICATE
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 3A City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 13A
(REVISED)
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 13A (REVISED)
FORM OF GUARANTOR CERTIFICATE (PHASE 2)
This Certificate is being delivered pursuant to that certain Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of November 15, 2016 ("Original DDA"), as
amended by (1)that certain First Amendment to Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of June 20, 2017 ("First Amendment"), (2)that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1, 2019("Second Amendment"), and(3)that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of December [•], 2020 ("Third
Amendment");the Original DDA,First Amendment, Second Amendment, and Third Amendment
referred to collectively in this Certificate as the "DDA"), by and between Flight Phase I Owner
LLC, as successor-by-assignment to Flight Venture LLC, each a Delaware limited liability
company ("Developer"), and the City of Tustin, a municipal corporation of the State of California
(the "City"). [Add additional DDA Amendments and further assignments if applicable above.}
Capitalized terms used herein that are not defined herein shall have the meanings specified in the
DDA.
The undersigned, on behalf of[•], a [•] ("Company"), does hereby certify to the City, as
of the date hereof:
1. [Modify to reflect organizational structure of Company]Company is the [•] of[•]
a [•], which is the [•] of[•], a [•], which is the [•] of[•], a [•], which is the [•] of[•], a [•], which
is the [•] of Developer and owns a [•]% interest in Developer. [•] is a "Guarantor" with
respect to Phase 2.
2. [Add if more than one Guarantor; modify as required to reflect organizational
structure] [[•] is also the sole owner of [•], a [•], which is the [•] of [•], a [•], which is the sole
owner of[•] a [•], which owns a [•]%interest in Developer. [•] is a"Guarantor" with respect to
Phase 2. [•] and [•], are referred to collectively as the "Guarantors."] [If only one Guarantor
this paragraph shall be deleted. If two or more Guarantors, the terms shall be accordingly
revised throughout.}
3. The undersigned member of the [insert applicable governing entity of Company:
Manager, Board of Managers etc.} of Company has the authority from Company to execute and
deliver this Certificate on behalf of Company as evidenced by the information attached as
Exhibit A.
4. Attached hereto as Exhibit B is a true and correct copy of the Certificate of
Formation of Company [insert applicable formation documents of Company] and any and all
amendments thereto in effect on the date hereof.
5. Attached hereto as Exhibit C is a true and correct copy of the [insert applicable
governing documents of Company: Operating Agreement, By-Laws etc.} of Company and any
and all amendments thereto in effect on the date hereof.
Tustin Cornerstone I DDA Art 13A ATTACHMENT 13A City of Tustin/Cornerstone I
Revised Phase 2 Guarantor Cert 11-11- (REVISED)
2020(agd)FINAL I
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
6. Attached hereto as Exhibit D is a true and correct copy of the certificate of good
standing for Company from the [•] Secretary of State, dated not earlier than thirty (30) days prior
to the date of this Certificate and if Company is a foreign entity, is a true and correct copy of the
certificate of status or good standing for Company from the California Secretary of State, dated
not earlier than thirty (30) days prior to the date of this Certificate.
7. {If more than one Guarantor, add words in brackets in Sections 7 and 8 and
paragraph immediately following paragraph 8.) {Neither} Guarantor has {not} taken any action
looking toward its dissolution, no event, whether voluntary or involuntary, has occurred that has
caused the dissolution of{either}Guarantor, and there are no proceedings pending or contemplated
for the merger, consolidation, conversion, dissolution, liquidation or termination of {either}
Guarantor.
8. {Neither} Guarantor's ability to meet its obligations under the Guaranty is
contingent on third -party financing, provided that nothing herein shall prohibit[either] Guarantor
from drawing funds under a subscription secured line of credit secured by the uncalled capital
commitments of its [{insert applicable approving parties of Company if applicable, e.g.:limited
partners}in order to meet its obligations under the Guaranty. {Each}Guarantor has a combination
of(a) unencumbered cash, cash equivalents, uncalled capital commitments of its {insert correct
terms, e.g., limited partners) and marketable securities (that have not been pledged as collateral
for any debt or other obligation) (the"Liquid Assets"), and (b) cash flow from income producing
assets (the "Cash Flow") that, in the aggregate, are sufficient to allow Guarantors] to meet
{its/their} obligations as and when required under the Guaranty.
This Certificate is being furnished to the City solely to assist it in conducting its
investigation of {each) Guarantor's financial resources in connection with {each) Guarantor's
ability to meet its obligations under the Guaranty. Company and {each) Guarantor acknowledge
and agree that the City intends to rely on the information in this Certificate, and this Certificate
may be relied upon by the City for these purposes.
Without the written consent of the Company no Person other than the City may rely on this
Certificate for any purpose.
In no event shall the individual executing this Certificate on behalf of the Company have
any personal liability hereunder.
[Signature page follows]
Tustin Cornerstone I DDA Art 13A ATTACHMENT 13A City of Tustin/Cornerstone I
Revised Phase 2 Guarantor Cert 11-11- (REVISED)
2020(agd)FINAL 2
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
{Modify signature blocks as required)
Dated: 20 [•],
a [•]
By:
Name:
Authorized Signatory
ACCEPTED AND AGREED:
a [•]
By: [•]
By:
Name:
Authorized Signatory
a [•]
By: [•]
By:
Name:
Authorized Signatory
Tustin Cornerstone I DDA Art 13A ATTACHMENT 13A City of Tustin/Cornerstone I
Revised Phase 2 Guarantor Cert 11-11- (REVISED)
2020(agd)FINAL S-1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 3B
ATTACHMENT 13B (REVISED)
FORM OF ORIGINAL EQUITY INVESTOR CERTIFICATE
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 3B City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 13B
(REVISED)
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 13B (REVISED)
FORM OF EQUITY INVESTOR CERTIFICATE
This Certificate is being delivered pursuant to that certain Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of November 15,2016("Original DDA"),
as amended by (1)that certain First Amendment to Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of June 20, 2017 ("First Amendment"),
(2)that certain Second Amendment to Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of October 1, 2019 ("Second Amendment"), and
(3)that certain Third Amendment to Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of December [•], 2020 ("Third Amendment"); the
Original DDA, First Amendment, Second Amendment, and Third Amendment referred to
collectively in this Certificate as the"DDA"), by and between Flight Phase I Owner LLC,
as successor-by-assignment to Flight Venture LLC, each a Delaware limited liability
company ("Developer"), and the City of Tustin, a municipal corporation of the State of
California (the "City"). {Add additional DDA Amendments and further assignments if
applicable above.) Capitalized terms used herein that are not defined herein shall have the
meanings specified in the DDA.
The undersigned, on behalf of [•], a [•] ("Company"), does hereby certify to the
City, as of the date hereof:
L [Modify to reflect organizational structure of Company] Company is the
[•] of[•], a [•], which is the [•] of[•], a [•], which is the [•] of[•], a [•], which is the [•]
of[•], a [•], which is the [•] of Developer and owns a [•]%interest in Developer. [•] is
an "Equity Investor" with respect to Phase 2.
2. [If multiple Equity Investors, modify to reflect organizational structure of
second investor] [[•] is also the [•] of[•], a [•], which is the [•] of[•], a [•], which is the [•]
of [•], a [•], which owns a [•]% interest in Developer. [•] is an "Equity Investor" with
respect to Phase 2. [•] and [•] are referred to collectively as the "Equity Investors." All
of the foregoing entities with the word "[•]" in their name are sometimes referred to
collectively herein as the"[•]Entities."] {Ifonly one Equity Investor,this paragraph shall
be deleted If two or more Equity Investors, the terms shall be accordingly revised
throughout.}
3. The undersigned member of the {insert applicable governing entity of
Company: Manager, Board of Managers etc.}[-]] of Company has the authority from
Company to execute and deliver this Certificate on behalf of Company as evidenced by the
information attached as Exhibit A.
Tustin Cornerstone I DDA Art 13B ATTACHMENT 13B City of Tustin/Cornerstone I
Revised Equity Investor Certificate 11- (REVISED)
11-2020(agd)(2)FINAL I
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
4. Attached hereto as Exhibit B is a true and correct copy of the Certificate of
Formation of Company{insert applicable formation documents of Company)and any and
all amendments thereto in effect on the date hereof.
5. Attached hereto as Exhibit C is a true and correct copy of the {insert
applicable governing documents of Company: Operating Agreement, By-Laws etc.} of
Company and any and all amendments thereto in effect on the date hereof.
6. Attached hereto as Exhibit D is a true and correct copy of the certificate of
good standing for Company from the [•] Secretary of State, dated not earlier than thirty
(30) days prior to the date of this Certificate and, if Company is a foreign entity, a true and
correct copy of the certificate of status or good standing for Company from the California
Secretary of State, dated not earlier than thirty (30) days prior to the date of this Certificate.
7. {Modify to reflect JV structure, as applicable} [•] [and [•]], subsidiaries of
Equity Investors, have entered into that certain [Limited Liability Company Agreement]
with [•] dated as of [•] (the "Venture Agreement"), pursuant to which [each] Equity
Investor has agreed to make certain ["Contributions"] (as defined in the Venture
Agreement) to Developer as equity capital to pay ["Project Costs"] (as defined in the
Venture Agreement) incurred by Developer, all as more particularly set forth and in and
subject to the terms of the Venture Agreement. {Each} Equity Investor's commitment to
fund [Contributions] (as defined in the Venture Agreement) up to that Equity Investor's
[Contribution Cap] (as defined in the Venture Agreement) is confirmed in the letter from
the Equity Investors to [•], dated [•], to which City is a third party beneficiary, which is
attached hereto as Exhibit E and which letter authorizes [•] to provide the letter to the City.
Such letter is in full force and effect and has not been modified, and will not be modified,
amended, or terminated without the prior consent of the City, in its sole discretion. All
required approvals of or from all of the [•] Entities required prior to execution of the letter
have been properly obtained.
8. The Venture Agreement was duly executed and delivered by [•], an
authorized signatory of [•] [and [•]], who had the authority to do so, and the Venture
Agreement is a valid and binding obligation of [•] [and [•]], and fully enforceable in
accordance with its terms. Such Venture Agreement is in full force and effect and has not
been modified.
9. {If more than one Equity Investor, add words in brackets in Sections 9
and 10 and paragraph immediately following paragraph 10.) {Neither} Equity Investor
has {not} taken any action looking toward its dissolution; no event, whether voluntary or
involuntary, has occurred that has caused the dissolution of{either} Equity Investor; and
there are no proceedings pending or contemplated for the merger, consolidation,
conversion, dissolution, liquidation or termination of{either}Equity Investor.
Tustin Cornerstone I DDA Art 13B ATTACHMENT 13B City of Tustin/Cornerstone I
Revised Equity Investor Certificate 11- (REVISED)
11-2020(agd)(2)FINAL 2
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
10. {Neither} Equity Investor's ability to meet its obligations or to make
{Contributions} as and when required under the Venture Agreement is {not} contingent on
third -party financing, provided that nothing herein shall prohibit {either} Equity Investor
from drawing funds under a subscription secured line of credit secured by the uncalled
capital commitments of its{insert applicable approving parties of Company if applicable,
e.g., limited partners} in order to meet its obligations and make {Contributions} required
under the Venture Agreement. {Each} Equity Investor has a combination of
(a)unencumbered cash, cash equivalents, uncalled capital commitments of its {insert
correct terms, e.g., limited partners}and marketable securities(that have not been pledged
as collateral for any debt or other obligation)(the"Liquid Assets"), and(b)cash flow from
income producing assets (the "Cash Flow") that, in the aggregate, are sufficient to allow
Equity Investor{s} to meet {its/their} obligations and to make the {Contributions} as and
when required under the Venture Agreement.
This Certificate is being furnished to the City solely to assist it in conducting its
investigation of {each} Equity Investor's financial resources in connection with {each)
Equity Investor's obligation to meet its obligations under and make {Contributions} in
accordance with the terms of the Venture Agreement. Company and {each} Equity
Investor acknowledge and agree that the City intends to rely on the information in this
Certificate, and this Certificate may be relied upon by the City for these purposes.
Without the written consent of the Company no Person other than the City may rely
on this Certificate for any purpose.
In no event shall the individual executing this Certificate on behalf of the Company
have any personal liability hereunder.
[Signature page follows]
Tustin Cornerstone I DDA Art 13B ATTACHMENT 13B City of Tustin/Cornerstone I
Revised Equity Investor Certificate 11- (REVISED)
11-2020(agd)(2)FINAL 3
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Dated: 20 [•],
a [•]
By:
Name:
Title:
ACCEPTED AND AGREED: [•],
a [•]
By:
Name:
Title:
Tustin Cornerstone I DDA Art 13B ATTACHMENT 13B City of Tustin/Cornerstone I
Revised Equity Investor Certificate 11- (REVISED)
11-2020(agd)(2)FINAL S-1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 3C
ATTACHMENT 13C (REVISED)
FORM OF EQUITY INVESTOR DATE DOWN CERTIFICATE
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 3C City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 13C
(REVISED)
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 13C (REVISED)
FORM OF EQUITY INVESTOR DATE DOWN CERTIFICATE
Reference is hereby made to that certain Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of November 15, 2016 ("Original DDA"), as amended by
(1)that certain First Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of June 20, 2017 ("First Amendment"), (2)that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1, 2019("Second Amendment"), and(3)that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of [•], 2020
("Third Amendment"); the Original DDA, First Amendment, Second Amendment, and Third
Amendment referred to collectively in this Certificate as the"DDA"),by and between Flight Phase
I Owner LLC, as successor-by-assignment to Flight Venture LLC, each a Delaware limited
liability company ("Developer"), and the City of Tustin, a municipal corporation of the State of
California (the "City"). {Add additional DDA Amendments and further assignments if
applicable above.} Capitalized terms used herein that are not defined herein shall have the
meanings specified in the DDA.
This Equity Investor Date Down Certificate(this"Certificate")is being delivered by[insert name
of entity that delivered Original Equity Investor Certificate I("Company") to satisfy the Phase
2 Construction Commencement Conditions.
The undersigned does hereby certify to the City, in his or her capacity as an officer of the
Company and for and on behalf of the Company, as follows:
1. [Except as set forth on Exhibit I attached hereto, a11/A11j of the matters set forth
in the Original Equity Investor Certificate dated [ J 20[/ attached hereto as
Exhibit A are true and correct in all material respects as of the date hereof. {If any previously
delivered instruments have been amended they shall be attached and new certification made as
to the revised instruments. If any certifications are amended, new certifications shall be added.)
2. Attached to this Certificate as Exhibit B is a true and correct copy of the certificate
of good standing for the Company from the [•] Secretary of State, dated not earlier than thirty (3 0)
days prior to the date of this Certificate and,if Company is a foreign entity, a true and correct copy
of the certificate of status or good standing for Company from the California Secretary of State,
dated not earlier than thirty (30) days prior to the date of this Certificate.
Without the written consent of the Company: (i) no Person other than the City may rely on this
Certificate for any purpose; and (ii) copies of this Certificate may not be furnished to anyone for
purposes of encouraging such reliance.
In no event shall the individual executing this Certificate on behalf of the Company have any
personal liability hereunder.
[signature on next page}
Tustin Cornerstone I DDA Att 13C ATTACHMENT 13C City of Tustin/Cornerstone I
Revised Equity Investor Date Down (REVISED)
Cert 11-11-2020(agd)FINAL I
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Dated:
a [•]
By:
Name:
Title:
Tustin Cornerstone I DDA Att 13C ATTACHMENT 13C City of Tustin/Cornerstone I
Revised Equity Investor Date Down (REVISED)
Cert 11-11-2020(agd)FINAL S-1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT 1
{If none—enter None)
Tustin Cornerstone I DDA Att 13C ATTACHMENT 13C City of Tustin/Comerstone I
Revised Equity Investor Date Down (REVISED)
Cert 11-11-2020(agd)FINAL EXHIBIT 1
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT A
Original Equity Investor Certificate
{to be attached}
Tustin Cornerstone I DDA Att 13C ATTACHMENT 13C City of Tustin/Comerstone I
Revised Equity Investor Date Down (REVISED)
Cert 11-11-2020(agd)FINAL EXHIBIT A
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT B
Certificates of Good Standing
{to be attached}
Tustin Cornerstone I DDA Att 13C ATTACHMENT 13C City of Tustin/Comerstone I
Revised Equity Investor Date Down (REVISED)
Cert 11-11-2020(agd)FINAL EXHIBIT B
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 4
ATTACHMENT 14 (REVISED)
FORM OF GUARANTY
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 4 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 14
(REVISED)
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 14 (REVISED)
FORM OF GUARANTY
GUARANTY AGREEMENT
(PHASE 2 PARCEL)
This GUARANTY AGREEMENT (PHASE 2 PARCEL) (this "Guaranty")is made as
of the day of 20 (the "Effective Date"), by
a formed under the laws of the State of
_{Add if additional guarantors: [and by , a
formed under the laws of the State ofI] ({Add if more than
one guarantor: [each, individually, a "Guarantor," and collectively, the]} "Guarantor"), in
favor of the CITY OF TUSTIN, a public body, corporate and politic ("City").
Recitals
A. Flight Venture LLC, a Delaware limited liability company ("Flight Venture"),
entered into that certain Tustin Legacy Disposition and Development Agreement Cornerstone 1,
dated as of November 15, 2016 (including all Attachments thereto), as amended by that certain
First Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated
as of June 20, 2017, that certain Second Amendment to Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of October 1, 2019, and that certain Third
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
December ,2020, and as affected by Flight Venture's assignment of its interest therein to Flight
Phase I Owner LLC, Delaware limited liability company ("Developer"), on June 29, 2017 (which
as it may be further assigned, amended, updated or modified from time to time are referred to
collectively as "DDA"), under which Developer acquired the Phase 1 Property (as defined in the
DDA). On March 26, 2020 the City issued a Certificate of Compliance for the Phase 1 Property
to Developer. Initially capitalized terms used and not defined herein shall have the meanings set
forth in the DDA.
B. Pursuant to Section 2.2.3(d) of the DDA, on Developer assigned its
interests in Phase 2, the Phase 2 Project, and the Phase 2 Provisions of the DDA to Initial Phase 2
Developer, {and on Initial Phase 2 Developer assigned such interests to
, a I ("Phase 2 Developer"). On
Phase 2 Developer exercised the Option.
C. Concurrently with the delivery of this Guaranty,Phase 2 Developer is acquiring the
Phase 2 Property under the DDA. Under the terms of the DDA, following the Satisfaction Date,
Phase 2 Developer will be required to perform certain design work and construct certain
Improvements including, among other items, Completion of. (1) the Phase 2 Horizontal
Improvements required for construction and operation of the Minimum Phase 2 Vertical
Improvements and (2)the Minimum Phase 2 Vertical Improvements.
Tustin Cornerstone I DDA Art 14 Revised Phase ATTACHMENT 14 City of Tustin/Cornerstone I
2 Guaranty 11-12-2020(agd)(2)FINAL (REVISED)
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
C. [Guarantor[directly/indirectly] owns %of which in turn owns
[100%] of Phase 2 Developer]', and thus Guarantor has a substantial interest in Phase 2 Developer
and will derive benefit from the acquisition of the Phase 2 Property and the potential development
and sale or lease of the Phase 2 Project.
Agreements
For good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and in order to induce City to convey the Phase 2 Parcel to Phase 2 Developer,
City has required that the Guarantor execute and deliver this Guaranty to City. To the extent there
is more than one Guarantor, Guarantor hereby jointly and severally makes the guaranties,
obligations, covenants and agreements set forth below in this Guaranty.
Section 1. Guaranty.
1.1 Guaranteed Obligations at Phase 2 Close of Escrow. On and after the date
of this Guaranty and until a Certificate of Compliance is recorded by the City with respect to the
entirety of the Phase 2 Parcel, unless earlier discharged in accordance with Section 2.3 hereof,
Guarantor absolutely and unconditionally guarantees and agrees to pay any and all costs required
and cause any and all work to be performed as may be required to carry out the items set forth in
Sections 1.1.1 through 1.1.7 below, in each case, if Phase 2 Developer shall fail to timely pay or
perform its obligations with respect thereto (collectively, the obligations set forth in such sections
are hereinafter referred to as the "Close of Escrow Guaranteed Obligations").
1.1.1 Phase 2 Pre-Development Costs. All Phase 2 Pre-Development
Costs.
11,2 Supplemental Purchase Price and Profit Participation. The
obligations of Phase 2 Developer under the Supplemental Purchase Price and Profit Participation
Agreement.
1,1.3 Amounts Secured by City Lien. The amounts secured by the City
Liens.
1.1.4 Other Costs and Obligations Under DDA and Other Agreements.
All costs and other obligations of the Phase 2 Developer under the DDA and the Other Agreements,
following the Phase 2 Property Close of Escrow.
1,1.5 Ongoing Matters. Phase 2 Developer's obligations with respect to
Ongoing Matters, including amounts due under the Supplemental Purchase Price and Profit
Participation Agreement as to the Phase 2 Developer/Transferor(as defined therein).
1.1.6 Indemnification and Additional Obligations. The indemnities and
other obligations of Phase 2 Developer pursuant to Sections 4.3.3(e) and(i), 4.5.2(f), 5.5, 8.8, 8.9,
1 NTD: to be modified prior to execution/delivery to reflect actual ownership structure
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8.11, 8.12, 10.1, 10.2, 11.1 (including payment of all deductible amounts)and 18.11.1 of the DDA,
including, to the extent applicable, during the Additional Liability Period.
1.I.7 Payment of Enforcement Costs. All costs and expenses incurred by
City, including reasonable attorneys' fees and costs, court costs and all other litigation expenses
(including reasonable expert witness fees, costs of depositions and other discovery, travel
expenses, exhibit preparation, and courier, postage, communication and document copying
expenses), in enforcing this Guaranty. The provisions of this Section 1.1.7 shall survive the
termination of this Guaranty.
1.2 Completion Obligations. From and after the Satisfaction Date, Guarantor
absolutely and unconditionally guarantees the items set forth in Sections 1.2.1 and 1.2.2 below:
1.2.1 Guarantor shall pay any and all costs, including all Development
Costs(as such term is defined in the DDA for the period following the Satisfaction Date),required,
and cause any and all work to be performed as may be required, to carry out and Complete (as
such term is defined in the DDA) each of the following elements of the Project if Phase 2
Developer shall fail to timely perform such obligations under the DDA (collectively, the
"Completion Guaranteed Obligations"): Design, construction and Completion of the Minimum
Phase 2 Improvements, including, for avoidance of doubt, Completion of the Phase 2 Horizontal
Improvements (other than the Minimum Horizontal Improvements, which are complete) as more
particularly described in the DDA in accordance with all Governmental Requirements,
Entitlements and the requirements of the DDA, including the Scope of Development attached
thereto as Attachment 8.
1.2.2 The guarantee of the Completion of the work described in
Section 1.2.1 hereof and the performance of the obligations set forth in such Section shall be an
absolute obligation of Guarantor in the event that Phase 2 Developer fails to Commence
Construction of the Phase 2 Project or Complete,in a lien-free condition(as required by the DDA),
construction of the work described in such Section 1.2.1 within the time period set forth in the
Schedule of Performance (subject to any extension permitted by the DDA for Force Majeure
Delay).
1.3 Additional Payment Obligations. On and after the date hereof,
Guarantor also absolutely and unconditionally guarantees that Guarantor shall pay any and all
costs required and cause any and all work to be performed as may be required to carry out the
following obligations with respect to the Close of Escrow Guaranteed Obligations if Phase 2
Developer shall fail to timely perform its obligations with respect thereto (the "Close of Escrow
Payment Obligations") and from and after the Satisfaction Date, Guarantor also absolutely and
unconditionally guarantees that Guarantor shall pay any and all costs required and cause any and
all work to be performed as may be required to carry out the following obligations with respect to
the Completion Guaranteed Obligations if Phase 2 Developer shall fail to timely perform its
obligations with respect thereto (the "Completion Payment Obligations"), including the
following:
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(a) Payment of all of the costs and expenses incurred by the City
arising in connection with the exercise by the City of any or all of its remedies under the DDA and
the Other Agreements with respect to Phase 2 Developer, the work covered by Section 1.1 hereof,
the work covered by Section 1.2 hereof if the Satisfaction Date has occurred, the work covered by
this Section 1.3,the Phase 2 Parcel or any Improvements thereon. The foregoing shall specifically
include any costs and expenses incurred by the City arising from its exercise of the Right of
Repurchase or Right of Reversion with respect to the Phase 2 Parcel as provided in Sections 16.3
and 16.4 of the DDA, respectively, including without limitation any amount paid by City to a
Permitted Mortgagee pursuant to Section 16.4.3(c) of the DDA. Without limiting the foregoing,
such amounts shall specifically include any amount paid by City to obtain the release of any and
all Construction Liens and/or Mortgages, including Permitted Mortgages, as well as any amounts
paid to obtain the release of any other liens that came into existence as a result of Phase 2
Developer's actions or inactions and any outstanding taxes and assessments; but excluding the
Repurchase Price applicable to any Reacquired Property actually acquired by the City pursuant to
the Right of Repurchase; provided that the City shall be entitled to retain the Reacquired Property
so acquired in its entirety, notwithstanding any contribution or payment made by Phase 2
Developer, or by Guarantor pursuant to this Guaranty. Guarantor acknowledges and agrees that
the foregoing obligation of Guarantor to pay costs and expenses incurred by the City arising from
its exercise of its rights under Sections 16.3 and 16.4 of the DDA shall continue notwithstanding
the partial release of liability of Phase 2 Developer under Sections 16.3.4 and 16.4.5 of the DDA;
(b) Payment of all of the costs and expenses incurred by the
City, if any, in enforcement by the City of its remedies under the DDA and the Other Agreements
with respect to Phase 2 Developer, the work covered by Section 1.1 hereof, the work covered by
Section 1.2 hereof if the Satisfaction Date has occurred, the work covered by this Section 1.3, the
Phase 2 Parcel, and/or any Improvements on the Phase 2 Parcel; and
(c) If the Satisfaction Date has occurred, payment of all of the
Development Costs incurred to cause the timely Completion of the work referred to in Section 1.2
hereof, such that the Phase 2 Parcel shall be in a lien-free condition as required by the DDA.
1.4 Performance of Work. If the Satisfaction Date occurs, the work required
for Guarantor to satisfy its Completion Payment Obligations and Completion Guaranteed
Obligations: (a) shall be performed in accordance with the Scope of Development and within the
time periods set forth in the Schedule of Performance all as and to the extent set forth in the DDA;
provided, however, that if the time periods set forth in the Schedule of Performance have expired,
the City and Guarantor shall meet and confer in good faith to revise the Schedule of Performance
as reasonably necessary to provide adequate time to Guarantor to satisfy its obligations hereunder;
(b) shall be performed in accordance with the other requirements for construction of the Project
set forth in the DDA; and (c) shall be diligently pursued by the Guarantor to Completion of the
Project and issuance of a Certificate of Compliance for the Phase 2 Parcel.
1.5 Guaranteed Obligations. "Guaranteed Obligations" means,
collectively, the Close of Escrow Payment Obligations, the Completion Payment Obligations, the
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Close of Escrow Guaranteed Obligations and the Completion Guaranteed Obligations, provided
that it is expressly acknowledged by the City that the Completion Guaranteed Obligations and the
Completion Payment Obligations shall not become effective unless and until the Satisfaction Date
occurs, and the City further acknowledges that Phase 2 Developer has no obligation to cause the
Satisfaction Date to occur. For the avoidance of doubt, notwithstanding that the definition of
"Development Costs" at Section 8.1.3 of the DDA includes "financing fees and costs, including
principal payments and interest payments (whether or not paid through loan proceeds)," this
Guaranty shall not be construed as a guaranty in favor of any Mortgagee of any obligations of the
Borrower under or in connection with any Mortgage. Nothing in this Section 1.5 shall abrogate
any obligations of Guarantor pursuant to this Guaranty to pay to City any amounts paid by City to
any Mortgagee pursuant to the DDA or any of the Other Agreements, including, but not limited
to, any amounts referred to in Section 1.3 hereof.
Section 2. Performance of Guaranteed Obligations upon Default by Phase 2 Developer.
2.1 Default by Phase 2 Developer. If Phase 2 Developer is in Material Default
under the DDA with respect to any of the Guaranteed Obligations, then City may, but shall not be
obligated to, deliver written notice to the Guarantor (a "Guaranty Notice"), that is designed to
provide notice to Guarantor of such default. The Guarantor,promptly after receipt of the Guaranty
Notice shall perform the Guaranteed Obligations, provided that the Guarantor does not need to
commence any such performance obligations until receipt of a Guaranty Notice. The Guarantor
will take whatever actions may be necessary to perform the Guaranteed Obligations, including the
following:
2.1.1 Fully pay and discharge all Phase 2 Pre-Development Costs;
2.1.2 Fully pay and discharge all obligations of Phase 2 Developer under
the Supplemental Purchase Price and Profit Participation Agreement;
2.1.3 Fully pay and discharge all amounts secured by the City Lien;
2.1.4 Fully pay and discharge all costs and other obligations of the Phase
2 Developer under the DDA and the Other Agreements;
2.1.5 From and after the Satisfaction Date, diligently and expeditiously
proceed to ensure the Completion of the Project at the Guarantor's sole cost and expense, at the
times (subject to Section 1.4 hereof) set forth in the DDA and subject to the other terms and
conditions set forth in the DDA;
2.1.6 From and after the Satisfaction Date fully pay and discharge all
Development Costs incurred or required to be incurred in connection with the Completion of the
Project; and
2.1.7 Pay any amounts necessary to release and discharge any mechanics',
material providers' or other liens that may exist or come into existence in connection with the
Phase 2 Parcel, or in the alternative contest the same subject to the terms and conditions set forth
in the DDA.
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2.2 Difficulty or Expense of Completion of the Project Does Not Excuse
Guarantor or Guaranty. Guarantor's obligations under this Guaranty will remain in full force and
effect until the Guaranteed Obligations are fully and finally performed, regardless of whether, if
the Satisfaction Date occurs, the Guarantor or any other Person determines that Completion of the
Project is difficult, more expensive than originally intended, or involves "Unanticipated Expense
or Delay" (defined below). "Unanticipated Expense or Delay" includes any event or
circumstance that would make the Completion of the Project more costly or would delay the
Completion of the Project, such events and circumstances specifically including the following
matters: (a) a casualty that affects the Phase 2 Parcel or any Phase 2 Improvements that may have
been constructed; (b)the discovery of unanticipated soils conditions or Hazardous Materials in,
on, or under the Phase 2 Parcel (provided that the foregoing shall not waive the City's obligation
to pursue environmental insurance under Section 10.2.1 of the DDA); (c) Governmental
Requirements or court orders applicable to the Project; (d) any lack of debt or equity financing for
Development Costs; (e) any change in market conditions and (f) other events or circumstances
beyond the control of Phase 2 Developer or the Guarantor relating to the Project other than the
City's non-performance of its obligations under the DDA.
2.3 Discharge. It is the intent of the Guarantor and City that the obligations
and liabilities of the Guarantor hereunder are absolute, irrevocable and unconditional under any
and all circumstances and that until the Guaranteed Obligations are fully and finally performed,
the obligations and liabilities of Guarantor hereunder shall not be discharged or released, in whole
or in part, by any act or occurrence that might, but for the provisions of this Guaranty, be deemed
a legal or equitable discharge or release of a guarantor. The Guaranteed Obligations shall be
deemed to be fully and finally performed for purposes of this Guaranty and this Guaranty shall
terminate on the date on which the Certificate of Compliance is recorded by the City with respect
to the entirety of the Phase 2 Parcel. In addition, if a Transfer to a Phase 2 Developer occurs prior
to the issuance of such a Certificate of Compliance for which Phase 2 Developer desires to replace
this Guaranty as permitted by Section 2.2.20) or Section 2.2.3(b)(iv)(C) of the DDA, and City
approves such replacement guarantor and guaranty as set forth in the DDA in connection with such
Transfer, then the Guaranteed Obligations of Guarantor hereunder shall be reduced and limited to
only those obligations set forth in Sections 1.1.5, 1.1.6, and 1.1.7 hereof, and all costs and
obligations of Phase 2 Developer arising prior to such Transfer or incurred by Phase 2 Developer
during Phase 2 Developer's period of ownership of the Phase 2 Property (i.e., prior to such
Transfer).
Section 3. Absolute, Irrevocable and Unconditional Guaranty.
3.1 Irrevocable Guaranty. This Guaranty is an absolute, irrevocable and
unconditional guaranty of performance. To the extent permitted by applicable law, this Guaranty
shall be effective as a waiver of, and Guarantor hereby expressly waives, any right to which the
Guarantor may otherwise have been entitled, whether now existing under statute, at law or in
equity, or arising under any statute enacted after the date hereof or arising under any doctrine of
law or equity promulgated after the date hereof to require City to take prior recourse or proceedings
against any collateral, security or Person. It shall not be necessary for City, in order to enforce
such payment or performance by the Guarantor,first to institute suit or pursue or exhaust any rights
or remedies against Phase 2 Developer, Guarantor or any other Person liable on such indebtedness
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or for such performance, or to enforce any rights against any security given to secure such
indebtedness or performance, or to join Phase 2 Developer or any other Person liable for the
performance of the Guaranteed Obligations or any part thereof in any action to enforce this
Guaranty, or to resort to any other means of obtaining performance of the Guaranteed Obligations.
3.2 Demand Against the Guarantor. City may bring suit or make a demand
against Phase 2 Developer or against Guarantor or any other parties who have signed this Guaranty
or any other guaranty covering all or any part of the Guaranteed Obligations, or against any one or
more of them, separately or together, without impairing the rights of City against Guarantor.
3.3 Independent Guaranty. The obligations of the Guarantor under this
Guaranty are independent of and in addition to the obligations and liabilities of Phase 2 Developer
under the DDA and under the Other Agreements. This Guaranty is independent of(and shall not
be limited by)any other guaranty now existing or hereafter given by Guarantor, or any other Person
under or in connection with the Property, the Improvements, the DDA or the Other Agreements.
The liability of Guarantor under this Guaranty is in addition to any and all other liability the
Guarantor may have in any other capacity with respect to Phase 2 Developer, including, if
applicable, any direct or indirect ownership or control of any debt and/or equity securities of Phase
2 Developer or any Controlling Person of the Phase 2 Developer.
Section 4. Certain Agreements and Waivers by the Guarantor.
4.1 Waivers. Guarantor agrees that, except in the event of full performance of
the Guaranteed Obligations, (a) neither City's rights or remedies nor the Guarantor's obligations
under the terms of this Guaranty shall be released, diminished, impaired, reduced or affected by
any one or more of the following events, actions,facts, or circumstances, (b)to the extent permitted
by applicable law, Guarantor waives any rights, claims or defenses arising from any such events,
actions, facts, or circumstances, and (c)the liability of Guarantor under this Guaranty shall be
absolute, unconditional and irrevocable irrespective of:
(a) any limitation on the liability of, or recourse against, any
other Person,including City,in the DDA or any of the Other Agreements or arising under any law;
(b) any claim or defense that this Guaranty was made without
consideration or is not supported by adequate consideration or that the obligations of the Guarantor
hereunder exceed or are more burdensome than those of Phase 2 Developer under the DDA;
(c) the taking or accepting of any other security or guaranty for,
or right of recourse with respect to, any or all of the Guaranteed Obligations;
(d) any release, surrender, abandonment, exchange, alteration,
sale or other disposition, subordination, deterioration, waste, failure to protect or preserve,
impairment, or loss of, or any failure to create or perfect any lien or security interest with respect
to, or any other dealings with, any collateral or security at any time existing or purported, believed
or expected to exist in connection with any or all of the Guaranteed Obligations, or any impairment
of Guarantor's recourse against any Person or collateral;
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(e) whether express or by operation of law, any partial release
of the liability of Guarantor hereunder (except to the extent expressly so released by City with
respect to this Guaranty) or any complete or partial release of Phase 2 Developer or any other
Person liable, directly or indirectly, for the performance of any or all of the Guaranteed
Obligations;
(f) the death, insolvency, bankruptcy, disability, dissolution,
liquidation, termination, receivership, reorganization, merger, consolidation, change of form,
structure or ownership, sale of all assets, or lack of corporate, partnership or other power of Phase
2 Developer or any other Person at any time liable for the performance of any or all of the
Guaranteed Obligations;
(g) the death, insolvency, bankruptcy, disability, dissolution,
liquidation, termination, receivership, reorganization, merger, consolidation, change of form,
structure or ownership, sale of all assets, or lack of corporate, partnership or other power of
Guarantor or its respective successors or assigns;
(h) either with or without notice to or consent of Guarantor, any
renewal, extension, modification, supplement, subordination or rearrangement of the terms of any
or all of the Guaranteed Obligations and/or the DDA or any of the Other Agreements or any other
agreements that may have been executed by Phase 2 Developer, City or any third party affecting
the obligations of Phase 2 Developer or City under the DDA, or performance (including changes
with respect to the construction of the Improvements) or any other terms thereof, or any waiver,
termination, or release of, or consent to departure from, any of the DDA, the Other Agreements,
any other agreements that may have been executed by Phase 2 Developer, City or any third party
affecting the obligations of Phase 2 Developer or City under the DDA or any other guaranty of
any or all of the Guaranteed Obligations, or any adjustment, indulgence, forbearance, or
compromise that may be granted from time to time by City to Phase 2 Developer or to any other
Person at any time liable for the performance of any or all of the Guaranteed Obligations;
(i) any neglect, lack of diligence, delay, omission, failure, or
refusal of City to take or prosecute (or in taking or prosecuting) any action for the collection or
enforcement of any of the Guaranteed Obligations, or to foreclose or take or prosecute any action
to foreclose (or in foreclosing or taking or prosecuting any action to foreclose) upon any security
therefor, or to exercise (or in exercising) any other right or power with respect to any security
therefor, or to take or prosecute (or in taking or prosecuting), or any failure to sell or otherwise
dispose of in a commercially reasonable manner any collateral securing any or all of the
Guaranteed Obligations;
0) any failure of City to notify Guarantor of any creation,
renewal, extension, rearrangement, modification, supplement, subordination, or assignment of the
DDA or any of the Other Agreements or any of the Guaranteed Obligations or any part thereof, or
of any release of or change in any security, or of the occurrence or existence of any Material
Default, or of any other action taken or refrained from being taken by City against Phase 2
Developer or any security or other recourse, or of any new agreement between City and Phase 2
Developer, it being understood that except as expressly set forth in this Guaranty, City shall not
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be required to give Guarantor any notice of any kind under any circumstances with respect to or
in connection with the Guaranteed Obligations, any and all rights to other notice Guarantor may
have otherwise had being hereby waived by the Guarantor, and except for notices(s) expressly
required to be delivered to Guarantor under this Guaranty, Guarantor shall be responsible for
obtaining for itself information regarding Phase 2 Developer and any collateral, including any
changes in the business or financial condition of Phase 2 Developer or any collateral, and
Guarantor acknowledges and agrees that City shall have no duty to notify Guarantor of any
information which City may have concerning Phase 2 Developer or any collateral;
(k) the existence of any claim, counterclaim, set-off or other
right that Guarantor may at any time have against Phase 2 Developer, City, or any other Person,
whether or not arising in connection with this Guaranty, the DDA, or any Other Agreements;
(1) the unenforceability of all or any part of the Guaranteed
Obligations against Phase 2 Developer, whether because the Guaranteed Obligations exceed the
amount permitted by law or violate any usury or other law(subject to the provisions of Section 12
hereof), or because the Persons creating the Guaranteed Obligations acted in excess of their
authority, or because of a lack of validity or enforceability of or defect or deficiency in the DDA
or the Other Agreements, or because Phase 2 Developer has any valid defense, claim or offset with
respect thereto, or because Phase 2 Developer's obligation ceases to exist by operation of law, or
because of any other reason or circumstance, it being agreed that Guarantor shall remain liable
hereon regardless of whether Phase 2 Developer or any other Person be found not liable on the
Guaranteed Obligations, or any part thereof,for any reason(and regardless of any joinder of Phase
2 Developer or any other party in any action to obtain payment or performance of any or all of the
Guaranteed Obligations);
(m) any order, ruling or plan of reorganization emanating from
proceedings under Title 11 of the United States Code with respect to Phase 2 Developer or any
other Person, including any extension, reduction, composition, or other alteration of the
Guaranteed Obligations, whether or not consented to by City, or any action taken or omitted by
City in any such proceedings,including any election to have City's claim allowed as being secured,
partially secured or unsecured, any extension of credit by City in any such proceedings or the
taking and holding by City of any security for any such extension of credit;
(n) any other condition, event, omission, action that would in the
absence of the provisions of this Section 4 result in the release or discharge of Guarantor from the
performance or observance of any obligation, covenant or agreement contained in this Guaranty
or any other agreement;
(o) any notice to Guarantor of the existence of or the extending
to Phase 2 Developer of any grace or cure period for the performance of any of the Guaranteed
Obligations or any failure to provide notice thereof,
(p) any defense of waiver, release, discharge in res judicata,
statute of frauds, fraud, or ultra vires acts that may be available to Phase 2 Developer in respect of
the DDA or any of the Other Documents;
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(c) to the fullest extent permitted by law: (A) any defense
arising as a result of City's election, in any proceeding instituted under the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code; and (B)without limiting the
generality of any other provision hereof, all rights and benefits that might otherwise be available
to Guarantor under California Civil Code Sections 2787 through 2855, inclusive, including
without limitation any rights of subrogation,reimbursement,indemnification, and contribution and
any other rights and defenses that are or may become available to the Guarantor by reason of such
provisions of the California Civil Code;
(r) the benefit of any statute of limitations affecting the liability
of Guarantor under this Guaranty or the enforcement of this Guaranty, including any rights arising
under Section 359.5 of the California Code of Civil Procedure;
(s) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Phase 2 Developer in respect of the Guaranteed Obligations
or Guarantor in respect of this Guaranty; and/or
(t) any early termination of any of the Guaranteed Obligations,
except as expressly agreed to in writing by City, it being agreed that, among other things, the
partial release of liability of Phase 2 Developer under Section 16.3.4 and Section 16.4.5 of the
DDA shall not relieve Guarantor from its obligation to pay all costs and expenses incurred by the
City in its exercise of its rights under Section 16.3 and Section 16.4 of the DDA.
Notwithstanding Guarantor's foregoing waivers, Guarantor shall be entitled to
credit against the Guaranteed Obligations any of Phase 2 Developer's actual payment or
performance of such obligations, but without exoneration of Guarantor in the event that the City
accepts something other than prompt and full performance of any of the Guaranteed Obligations
by Phase 2 Developer.
4.2 Additional Waivers.
4.2.1 Without limiting any of the waivers contained in Section 4.1 hereof,
to the extent permitted by applicable law, the Guarantor waives all rights and defenses that the
Guarantor may have because some or all of Phase 2 Developer's obligations may be, or may be
deemed to be, secured by real property. This means, among other things:
(a) The City may collect from Guarantor without first
foreclosing on any real or personal property collateral pledged by Phase 2 Developer.
(b) If the City forecloses on any real property collateral pledged
by Phase 2 Developer: (i)the amount of the obligation owed to the City may be reduced only by
the net price for which that collateral is sold at the foreclosure sale or proceedings, even if the
collateral is worth more than the sale price and(ii)the City may collect from Guarantor even if the
City,by foreclosing on the real property collateral,has destroyed any right the Guarantor may have
to collect from the Phase 2 Developer.
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This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have
because the Phase 2 Developer's obligations may be, or may be deemed to be, secured by real
property. These rights and defenses include, but are not limited to, any rights or defenses based
upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.
4.2.2 Without limiting any of the waivers contained in Section 4.1 hereof,
Guarantor hereby waives any rights or defenses the Guarantor may have in respect of his or her
obligations as a guarantor by reason of any election of remedies by the creditor.
4.2.3 Without limiting the generality of any other waiver or provision of
this Guaranty, Guarantor waives any and all benefits or defenses under California Civil Code
Sections 2899 and 3433, Chapter 2 of Title 14 of the California Civil Code and California
Commercial Code Section 3605.
4.3 Preferences. In the event any payment by Phase 2 Developer or any other
Person to City is held to constitute a preference, fraudulent transfer or other voidable payment
under any bankruptcy, insolvency or similar law, or if for any other reason City is required to
refund such payment or pay the amount thereof to any other party, such payment by Phase 2
Developer or any other party to City shall not constitute a release of Guarantor from any liability
hereunder, and this Guaranty shall continue to be effective or shall be reinstated (notwithstanding
any prior release, surrender or discharge by City of this Guaranty or of the Guarantor or the prior
expiration of this Guaranty), as the case may be, with respect to, and this Guaranty shall apply to,
any and all amounts so refunded by City or paid by City to another Person which amounts shall
constitute part of the Guaranteed Obligations), and any interest paid by City and any attorneys'
fees, costs and expenses paid or incurred by City in connection with any such event.
4.4 Defenses. Guarantor waives, to the extent permitted by applicable law,
all rights and defenses arising out of an election of remedies by City, including exercise by the
City of its Right of Reversion upon occurrence of a Reversion Event or a repurchase of the Property
pursuant to City's Right of Repurchase, even though such election of remedies may have destroyed
such Guarantor's rights of subrogation and reimbursement against Phase 2 Developer by operation
of California Code of Civil Procedure Section 580d or otherwise.
4.5 Anti-Deficiency Waivers. Guarantor waives, to the extent permitted by
applicable law, (a) any defenses the Guarantor may have by reason of an election of remedies by
City, and (b) any rights or defenses the Guarantor may have by reason of protection afforded to
Phase 2 Developer with respect to the Guaranteed Obligations pursuant to the anti-deficiency or
other laws of California limiting or discharging Phase 2 Developer's obligations, including
California Code of Civil Procedure Sections 580a, 580b, 580d or 726.
4.6 Waiver of Notice of Acceptance. Guarantor waives notice of acceptance
of this Guaranty.
4.7 No Limitation on Waivers. No provision or waiver in this Guaranty shall
be construed as limiting the generality of any other provision or waiver contained in this Guaranty.
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All of the waivers contained herein are irrevocable and unconditional and are intentionally and
freely made by the Guarantor.
Section 5. Subordination.
If, for any reason whatsoever, Phase 2 Developer is now or hereafter becomes indebted,
directly or indirectly to Guarantor including, without limitation, by operation of California Civil
Code Sections 2847 and 2848, or any successor statutes or similar law (any such indebtedness
being referred to as the"Subordinated Debt"):
(a) The Subordinated Debt and all interest thereon and all liens,
security interests and rights now or hereafter existing with respect to property of Phase 2 Developer
securing the Subordinated Debt shall, at all times, be subordinate in all respects to the Guaranteed
Obligations and to all liens, security interests and rights now or hereafter existing to secure the
Guaranteed Obligations, until the Guaranteed Obligations have been paid or performed in full;
(b) Guarantor shall be entitled to enforce or receive payment,
directly or indirectly, of any of the Subordinated Debt until the Guaranteed Obligations have been
fully and finally performed; provided, however,that so long as no Material Default under the DDA
or the Other Agreements shall have occurred and be continuing, Guarantor shall not be prohibited
from receiving such, (i)reasonable management fees or reasonable salary from Phase 2 Developer,
and (ii) distributions from Phase 2 Developer in an amount equal to any income taxes imposed on
such Guarantor which are attributable to Phase 2 Developer's income from the Property;
(c) In the event of receivership, bankruptcy, reorganization,
arrangement or other debtor relief or insolvency proceedings involving Phase 2 Developer as
debtor, City shall have the right to prove its claim in any such proceeding so as to establish its
rights hereunder and shall have the right to receive directly from the receiver, trustee or other
custodian, dividends and payments that are payable upon any obligation of Phase 2 Developer to
the Guarantor now existing or hereafter arising, and to have all benefits of any security therefor,
until the Guaranteed Obligations have been fully and finally performed. If, notwithstanding the
foregoing provisions, Guarantor should receive any payment, claim or distribution that is
prohibited as provided above in this Section 5, the Guarantor shall pay the same to City
immediately, the Guarantor hereby agreeing that it shall receive the payment, claim or distribution
in trust for City and shall have absolutely no dominion over the same except to pay it immediately
to City; and
(d) Guarantor shall promptly upon request of City from time to
time execute such documents and perform such acts as City may require to evidence and perfect
its interest and to permit or facilitate exercise of its rights under this Section 5,including execution
and delivery of proofs of claim, further assignments and security agreements, and delivery to City
of any promissory notes or other instruments evidencing indebtedness of Phase 2 Developer to the
Guarantor. All promissory notes, accounts receivable ledgers or other evidences, now or hereafter
held by Guarantor, of obligations of Phase 2 Developer to Guarantor shall contain a specific written
notice thereon that the indebtedness evidenced thereby is subordinated under and is subject to the
terms of this Guaranty.
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Section 6. Other Liability of the Guarantor or Phase 2 Developer.
6.1 If Guarantor is or becomes liable, by endorsement or otherwise, for any
indebtedness owing by Phase 2 Developer to City other than under this Guaranty, such liability
shall not be in any manner impaired or affected hereby, and the rights of City hereunder shall be
cumulative of any and all other rights that City may have against the Guarantor. If Phase 2
Developer is or becomes obligated to City for any liabilities or indebtedness other than or in excess
of the Guaranteed Obligations, any payment received or recovery realized upon such other
liabilities or indebtedness of Phase 2 Developer to City may be applied by City to such other
liabilities or indebtedness.
6.2 Net Worth and Liquidity Covenants.
(a) As used in this Guaranty, the term "Net Worth" shall mean
the net worth of Guarantor which shall be determined based on (x) the fair market value of the
assets of each of the Persons comprising Guarantor (including the aggregate amount of uncalled
capital commitments from such Persons' direct and/or indirect limited partners, and intangible
assets including goodwill, intellectual property, licenses, organizational costs, deferred amounts,
covenants not to compete, unearned income, restricted funds, investments in subsidiaries or other
Affiliates, intercompany receivables and accumulated depreciation), less (y) all liabilities of the
Persons comprising Guarantor (as determined in accordance with GAAP), and the term
"Liquidity" shall mean cash, marketable securities and other cash equivalents and the aggregate
amount of uncalled capital commitments of such Guarantor's direct and/or indirect limited
partners.
(b) As of the Effective Date, Guarantor has, and during the term
of this Guaranty until a Permitted Mortgage is entered into by Phase 2 Developer, shall maintain,
a Net Worth of not less than [One Hundred Million Dollars ($100,000,000)] and Liquidity of not
less than Twenty-Five Million Dollars ($25,000,000) (collectively, the "Minimum Liquidity
Standards"). Per Section 4.7.4 of the DDA, unless a Permitted Mortgage has been entered into,
Section 6.2(c) hereof is operative, and the conditions in Section 6.2(d) hereof have not occurred,
Guarantor shall furnish specified financial reports to the City on a quarterly basis to assure that the
Minimum Liquidity Standards are met and that none of the events or actions described in
Section 2.2.5 of the DDA with respect to the Guarantor have occurred (the failure of any such
standard being, a "City Guarantor Illiquidity Event"). In the event of a City Guarantor
Illiquidity Event, within sixty (60) calendar days following the notice from City of a City
Guarantor Illiquidity Event, Guarantor shall supplement its Net Worth and Liquidity to meet the
Minimum Liquidity Standards or Phase 2 Developer shall be required to provide the City with
additional security satisfactory to the City by (A) providing the City with a Guaranty in the form
and substance of the Guaranty, or otherwise acceptable to the City in its sole discretion, from a
replacement or supplemental guarantor or guarantors acceptable to the City in its sole discretion,
or (B) furnishing the City with another form of security such as a pledge of specified assets or
completion bond, in each case in a manner meeting the requirements of the City in its sole
discretion. Failure of Guarantor to provide such substitute security within the required time frame
2 NTD: adjust if required by Net Worth Side Letter.
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shall constitute a default by Guarantor under this Guaranty.
(c) If at any time after the date hereof Phase 2 Developer enters
into a Permitted Mortgage, and if the Permitted Mortgage and/or other Construction Loan
documents executed and delivered in connection with such Permitted Mortgage contain Net Worth
and Liquidity Covenants and/or financial reporting requirements meeting the requirements of
Section 4.7.1 of the DDA, Guarantor and the City agree to enter into an amendment of this
Guaranty to provide that the Net Worth and Liquidity Covenants and/or financial reporting
requirements required under such Construction Loan documents shall be inserted into this
Guaranty as the applicable requirements. Such amendment to this Guaranty shall provide that
(x) Guarantor shall make available to the City such financial reports as it furnishes to the Permitted
Mortgagees under the Permitted Mortgages at the same time as they are required to be furnished
to each Permitted Mortgagee under the applicable Permitted Mortgage and (y) in the event that
Guarantor fail to satisfy a Liquidity Covenant or any Guarantor is the subject of any of the events
or actions described in Section 2.2.5 of the DDA (each, a "Guarantor Illiquidity Event"),
Guarantor shall notify the City in writing within five (5) Business Days from its receipt of notice
from any Permitted Mortgagee of a Guarantor Illiquidity Event or at such earlier date as Phase 2
Developer or any Guarantor has knowledge that a Guarantor Illiquidity Event has occurred.Within
one hundred and eighty(180)calendar days following the date of commencement of the Guarantor
Illiquidity Event, Guarantor shall, for the benefit of the City and whether or not required by the
Permitted Mortgagee, (i) cause the Guarantor to supplement the security furnished by it in a
manner meeting the requirements of Section 6.2(b) hereof or (ii) provide the City with additional
security satisfactory to the City by(A)providing the City with a guaranty in the form and substance
of this Guaranty, or otherwise acceptable to the City in its sole discretion, from a replacement or
supplemental guarantor or guarantors acceptable to the City in its sole discretion, or(B)furnishing
the City with another form of security such as a pledge of specified assets or completion bond, in
each case in a manner meeting the requirements of the City in its sole discretion. Failure of
Guarantor to provide substitution of security to the City within such one hundred eighty (180)
calendar day period shall be a default under this Guaranty.
(d) At all times during the period from the Phase 2 Property
Close of Escrow to the satisfaction of the Phase 2 Construction Commencement Conditions and
additionally until the issuance of the Certificate of Compliance for Phase 2 to the extent that(a) any
Permitted Mortgage or if not in the Permitted Mortgage, any guaranty of any Mortgage proposed
to be entered into does not contain the Liquidity Covenants or is to be entered into by guarantors
other than Guarantor or (b) the Liquidity Covenants in such Permitted Mortgage or guaranty of
Permitted Mortgage are amended by the parties thereto in a manner that (x) eliminates the
Liquidity Covenants, (y)reduces such covenants below the minimum liquidity standards set forth
in the final loan documents originally approved by City pursuant to Section 17.2 of the DDA (or
the first sentence of Section 17.3 of the DDA), or (z) modifies the guarantor under the loan
documents, such that the Guarantor of a Phase is not the same Person as the guarantor under the
Permitted Mortgage for such Phase, whether initially or due to a change in the loan documents,
then, from and after the date on which a Permitted Mortgage is entered into by Phase 2 Developer,
Guarantor shall be required to maintain the Minimum Liquidity Standards set forth in
Section 6.2(b) hereof and Section 4.7.4 of the DDA until the City issues a Certificate of
Compliance for the Phase 2 Parcel or until a new Permitted Mortgage containing the Liquidity
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Covenants and consistent with the other requirements of Section 4.7.1 of the DDA is entered into,
in which event the provisions of Section 6.2(c) hereof shall again apply.
Section 7. City Assigns, Disclosure of Information.
This Guaranty is for the benefit of City and City's successors and assigns, and in the event
of an assignment of the Guaranteed Obligations, or any part thereof, the rights and benefits
hereunder, to the extent applicable to the Guaranteed Obligations so assigned, may be transferred
with such Guaranteed Obligations. Guarantor waives notice of any transfer or assignment of the
Guaranteed Obligations or any part thereof.
Section 8. Binding Effect; Successor and Assigns, Joint and Several Obligations.
This Guaranty is binding not only on Guarantor, but also on the Guarantor's successors
and assigns. To the extent there is more than one Guarantor, all obligations of Guarantor hereunder
are joint and several obligations.
Section 9. Governing Law.
The validity, enforcement, and interpretation of this Guaranty, shall for all purposes be
governed by and construed in accordance with the laws of the State of California (without regard
to its conflicts of law principles) and applicable United States federal law, and is intended to be
performed in accordance with, and only to the extent permitted by, such laws. Guarantor and City
agree that any disputes arising between them in connection with this Guaranty or in connection
with or under any instrument, agreement or document provided for or contemplated by this
Guaranty,including in connection with the execution of this Guaranty,the Guaranteed Obligations
or any other matter arising under, related to or in connection with this Guaranty (including a
determination of any and all issues in such dispute, whether of fact or of law) 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 Guarantor and City to be mandatory and not
permissive in nature, thereby precluding the possibility of litigation between or among the
Guarantor and City with respect to or arising out of this Guaranty in any jurisdiction other than
that specified in this Section 9. 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 9, 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 Guaranty.
Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction in
any action against it as contemplated by this Section 9 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
Guaranty, or in the manner set forth below for notices. 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.
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Section I0.Invalidi1y of Certain Provisions.
If any provision of this Guaranty or the application thereof to any Person or circumstance
shall, for any reason and to any extent, be declared to be invalid or unenforceable, neither the
remaining provisions of this Guaranty nor the application of such provision to any other Person or
circumstance shall be affected thereby, and the remaining provisions of this Guaranty, or the
applicability of such provision to other Persons or circumstances, as applicable, shall remain in
effect and be enforceable to the maximum extent permitted by applicable law.
Section 11.Costs and Expenses of Enforcement.
Guarantor agrees to pay to City within fifteen (15) calendar days after written demand all
costs and expenses incurred by City in seeking to enforce City's rights and remedies under this
Guaranty, including court costs, costs of alternative dispute resolution and reasonable attorneys'
fees, whether or not suit is filed or other proceedings are initiated hereon. All such costs and
expenses incurred by City shall constitute a portion of the Guaranteed Obligations hereunder, shall
be subject to the provisions hereof with respect to the Guaranteed Obligations and shall be payable
by the Guarantor within fifteen (15) calendar days after written demand by City. In the event of
any suit or proceeding to adjudicate or resolve any dispute in connection with this Guaranty, the
prevailing party shall be entitled to recover its reasonable attorneys' fees which shall be payable
at the actual contractual hourly rate for City's litigation counsel at the time the fees were incurred,
but in no event more than $200 per hour and costs, court costs and all other litigation expenses
(including reasonable expert witness fees, costs of depositions and other discovery, travel
expenses, exhibit preparation, and courier, postage, communication and document copying
expenses).
Section 12.No Usury.
It is not the intention of City or the Guarantor to obligate the Guarantor to pay interest in
excess of that lawfully permitted to be paid by the Guarantor under applicable law. Should it be
determined that any portion of the Guaranteed Obligations or any other amount payable by the
Guarantor under this Guaranty constitutes interest in excess of the maximum amount of interest
that the Guarantor, in its capacity as guarantor, may lawfully be required to pay under applicable
law, the obligation of the Guarantor to pay such interest shall automatically be limited to the
payment thereof in the maximum amount so permitted under applicable law. The provisions of
this Section shall override and control all other provisions of this Guaranty and of any other
agreement between the Guarantor and City.
Section 13.Representations, Warranties, and Covenants of the Guarantor.
Guarantor hereby represents, warrants, and covenants that: (a)the Guarantor has a
financial interest in Phase 2 Developer and will derive a material and substantial benefit, directly
or indirectly, from the developing the Project and from the making of this Guaranty by the
Guarantor; (b) this Guaranty is duly authorized and valid, and is binding upon and enforceable
against the Guarantor subject to the effect of bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and limitations imposed by
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general principles of equity and applicable law; (c)the Guarantor is not, and the execution,
delivery and performance by the Guarantor of this Guaranty will not cause the Guarantor to be, in
violation of or in default with respect to any law or in default (or at risk of acceleration of
indebtedness) under any agreement or restriction by which the Guarantor is bound or affected;
(d)the Guarantor is duly organized, validly existing, and in good standing under the laws of the
state of its organization and has full power and authority to enter into and perform this Guaranty;
(e) except as may have been previously disclosed to City in writing, there is no litigation pending
or,to the knowledge of the Guarantor,threatened by or before any tribunal against or affecting the
Guarantor; (f) all financial statements and information heretofore furnished to City by the
Guarantor do, and all financial statements and information hereafter furnished to City by the
Guarantor will, fully and accurately present the condition (financial or otherwise) of Guarantor as
of their dates and the results of the Guarantor's operations for the periods therein specified, and,
since the date of the most recent financial statements of the Guarantor heretofore furnished to City,
no material adverse change has occurred in the financial condition of the Guarantor, nor, except
as heretofore disclosed in writing to City, has the Guarantor incurred any material liability, direct
or indirect, fixed or contingent that would materially adversely affect Guarantor's ability to
perform obligations hereunder; (g) after giving effect to this Guaranty, the Guarantor is solvent, is
not engaged or about to engage in business or a transaction for which the property of the Guarantor
is an unreasonably small capital, and does not intend to incur or believe that it will incur debts that
will be beyond its ability to pay as such debts mature; (h)the Guarantor has read and fully
understands the provisions contained in the DDA and the Other Agreements. The Guarantor's
representations,warranties and covenants are a material inducement to City to convey the Property
and enter into the Other Agreements and shall survive the execution hereof and any bankruptcy,
foreclosure, transfer of security or other event affecting Phase 2 Developer, any Person, or any
security for all or any part of the Guaranteed Obligations.
Section 14.Notices.
All notices, requests, consents, demands and other communications required or which any
party desires to give hereunder or under the DDA shall be in writing and, unless otherwise
specifically provided in the DDA, shall be deemed sufficiently given or furnished if delivered by
personal delivery, by nationally recognized overnight courier service, or by certified United States
mail, postage prepaid, addressed to the party to whom directed at the addresses specified in this
Guaranty or in the DDA(unless changed by similar notice in writing given by the particular party
whose address is to be changed) or by facsimile. Any such notice or communication shall be
deemed to have been given either at the time of personal delivery or, in the case of courier or mail,
as of the date of first attempted delivery at the address and in the manner provided herein, or, in
the case of facsimile, upon receipt; provided that service of a notice required by any applicable
statute shall be considered complete when the requirements of that statute are met.
Notwithstanding the foregoing,no notice of change of address shall be effective except upon actual
receipt. This Section shall not be construed in any way to affect or impair any waiver of notice or
demand provided in this Guaranty,the DDA or the Other Agreements or to require giving of notice
or demand to or upon any Person in any situation or for any reason.
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Section 15.Cumulative Rights.
All of the rights and remedies of City under this Guaranty, the DDA and the Other
Agreements are cumulative of each other and of any and all other rights at law or in equity, and
the exercise by City of any one or more of such rights and remedies shall not preclude the
simultaneous or later exercise by City of any or all such other rights and remedies. No single or
partial exercise of any right or remedy shall exhaust it or preclude any other or further exercise
thereof, and every right and remedy may be exercised at any time and from time to time. No
failure by City to exercise, or delay in exercising, any right or remedy shall operate as a waiver of
such right or remedy or as a waiver of any Material Default. No notice to or demand on either or
both of the Guarantor in any case shall of itself entitle Guarantor to any other or further notice or
demand in similar or other circumstances. No provision of this Guaranty or any right or remedy
of City with respect hereto, or any default or breach, can be waived, nor can this Guaranty or
Guarantor be released or discharged in any way or to any extent, except specifically in each case
by a writing intended for that purpose (and which refers specifically to this Guaranty) executed
and delivered by City to the Guarantor.
Section 16.Subrogation.
Guarantor shall have any right of subrogation under the DDA or the Other Agreements or
any right to participate in any security for the Guaranteed Obligations or any right to
reimbursement, exoneration, contribution, indemnification or any similar rights, until the
Guaranteed Obligations have been fully and finally discharged in accordance with Section 2.3
hereof, and Guarantor hereby waives all of such rights. Guarantor shall exercise any rights that it
may acquire by way of subrogation under this Guaranty,by virtue of any payment made hereunder
or otherwise, until all the Guaranteed Obligations have been paid or performed in full. If any
amount is paid to Guarantor on account of such subrogation rights before the Guaranteed
Obligations have been paid or performed in full, the amount will be held in trust for the benefit of
City and will immediately be paid to City to be credited and applied upon the Guaranteed
Obligations, whether matured or unmatured, in such order as City, in its sole and absolute
discretion, determines. Until the Guaranteed Obligations are paid or performed in full, any
indebtedness of Phase 2 Developer to Guarantor is hereby subordinated to all obligations and
liabilities of Phase 2 Developer to City arising out of or related to the DDA.
Section 17.Time of Essence.
Time shall be of the essence in this Guaranty with respect to all of Guarantor's obligations
hereunder.
Section 18.Bankruptcy of Phase 2 Developer.
The obligations of Guarantor under this Guaranty will continue to be effective, or be
automatically reinstated: (a) if the performance or the payment, in whole or in part, of any of the
Guaranteed Obligations is rescinded or must otherwise be restored or returned by City (as a
preference, fraudulent conveyance or otherwise) upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of City, the Guarantor, Phase 2 Developer or any other Person, or
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(b)upon or as a result of the appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to Phase 2 Developer, Guarantor, or any other Person, or any
substantial part of its property, or otherwise, all as though such payments had not been made. If a
Default has occurred and continues or exists under or with respect to the DDA or if any default
occurs under this Guaranty or with respect to any of the Guaranteed Obligations at such time as
City is prevented by reason of the pendency against either of the Guarantor, Phase 2 Developer or
any other Person of a case or proceeding under a bankruptcy or insolvency law, Guarantor agrees
that this Guaranty and the Guaranteed Obligations will be deemed to have been declared in default
or accelerated with the same effect as if this Guaranty and the Guaranteed Obligations had been
declared in default and accelerated in accordance with their respective terms. Guarantor will
immediately perform or pay the Guaranteed Obligations as required under this Guaranty without
further notice or demand.
Section 19.Entire Agreement, Counterparts; Construction.
This Guaranty embodies the entire agreement between City and the Guarantor with respect
to the guaranty by the Guarantor of the Guaranteed Obligations. This Guaranty supersedes all
prior agreements and understandings, if any, with respect to the guaranty by the Guarantor of the
Guaranteed Obligations. This Guaranty shall be effective upon execution by the Guarantor and
delivery to City. This Guaranty may not be modified, amended or superseded except in a writing
signed by City and the Guarantor referencing this Guaranty by its date and specifically identifying
the portions hereof that are to be modified, amended or superseded. This Guaranty has been
executed in a number of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement. As used herein, the words
"include" and "including" shall be interpreted as if followed by the words "without limitation."
Section 20.Reaffirmation of Guaranty.
As a Phase 2 Construction Commencement Condition, assuming no change in the Guaranty
or Guarantor, Guarantor shall deliver a reaffirmation of guaranty and a date down of the declaration
certified by the chief financial officer or other appropriate authorized officer of Guarantor in the
form of the Reaffirmation of Phase 2 Guarantor Certificate in the form and substance of the
reaffirmation certificate attached to the DDA as Attachment 13D, which shall include
reaffirmation of Guarantor's Net Worth and Liquidity, each in the amount required by the DDA
and if applicable, the Net Worth Side Letter.
[Signatures appear on the following page]
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IN WITNESS WHEREOF, the Guarantor has duly executed this Guaranty as of
the date first written above.
Address of Guarantor: [GUARANTOR ENTITYNAME{S}AND
SIGNATURE BLOCK{S} TO BE ADDED]
By:
Name:
Attention: Authorized Signatory
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Schedule 5
ATTACHMENT 17 (REVISED)
FORM OF CITY DATE DOWN CERTIFICATE REGARDING REPRESENTATIONS
AND WARRANTIES
{attached}
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ATTACHMENT 17 (REVISED)
FORM OF CITY DATE DOWN CERTIFICATE
REGARDING REPRESENTATIONS AND WARRANTIES
Reference is hereby made to that certain Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of November 15, 2016 ("Original DDA"), as amended by
(1)that certain First Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of June 20, 2017 ("First Amendment"), (2) that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1, 2019("Second Amendment"), and(3)that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of [•], 2020
("Third Amendment"); the Original DDA, First Amendment, Second Amendment, and Third
Amendment referred to collectively in this Certificate as the"DDA"),by and between Flight Phase
I Owner LLC, as successor-by-assignment to Flight Venture LLC, each a Delaware limited
liability company ("Developer"), and the City of Tustin, a municipal corporation of the State of
California (the "City"). {Add additional DDA Amendments and further assignments if
applicable above.} Capitalized terms used herein that are not defined herein shall have the
meanings specified in the DDA.
This Date Down Certificate is being delivered by the City pursuant to Section 7.3.1(a)(v) of the
DDA. The undersigned does hereby certify to Developer, in the name and on behalf of the City,
that all of the representations and warranties made by the City in Section 3.3 and in Section 18.11.2
of the DDA are true and correct as of the date hereof, except as set forth on Exhibit"A" attached
hereto.
Without the written consent of the City: (i) no Person other than Developer may rely on this Date
Down Certificate for any purpose; and (ii) copies of this Date Down Certificate may not be
furnished to anyone for purposes of encouraging such reliance.
In no event shall the individual executing this Date Down Certificate on behalf of the City have
any personal liability hereunder.
{remainder ofpage is blank—signature on next page)
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Dated:
CITY:
CITY OF TUSTIN
By:
Matthew S. West,
City Manager
APPROVED AS TO FORM
By:
David Kendig, City Attorney
Tustin Cornerstone 1 DDA Att 17 Revised City ATTACHMENT 17 City of Tustin/Cornerstone I
Date Down Cert 11-11-2020(agd)FINAL (REVISED)
S-1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT "A"
{If none—enter None}
Tustin Cornerstone I DDA Att 17 Revised City ATTACHMENT 17 City of Tustin/Cornerstone I
Date Down Cert 11-11-2020(agd)FINAL (REVISED)
EXHIBIT A
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 6
ATTACHMENT 18 (REVISED)
FORM OF PHASE 2 DEVELOPER DATE DOWN CERTIFICATE REGARDING
REPRESENTATIONS AND WARRANTIES
(PHASE 2 PROPERTY CLOSE OF ESCROW)
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 6 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 18
(REVISED)
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 18 (REVISED)
FORM OF PHASE 2 DEVELOPER DATE DOWN CERTIFICATE
REGARDING REPRESENTATIONS AND WARRANTIES
Reference is hereby made to that certain Tustin Legacy Disposition and Development
Agreement Cornerstone 1 dated as of November 15, 2016 ("Original DDA"), as amended by
(1)that certain First Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of June 20, 2017 ("First Amendment"), (2)that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1, 2019("Second Amendment"), and(3)that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of December [•], 2020 ("Third
Amendment");the Original DDA,First Amendment, Second Amendment, and Third Amendment
referred to collectively in this Date Down Certificate as the "DDA"), by and between [•], a [•]
("Phase 2 Developer"), [as successor-by-assignment to Flight Phase I Owner LLC, a Delaware
limited liability company,} as successor-by-assignment to Flight Venture LLC, a Delaware limited
liability company, and the City of Tustin, a municipal corporation of the State of California (the
"City"). [Add additional DDA Amendments and further assignments if applicable above.)
Capitalized terms used herein that are not defined herein shall have the meanings specified in the
DDA.
This Date Down Certificate is being delivered by Phase 2 Developer pursuant to
Section 7.3.2(b)(y) of the DDA concurrently with the Phase 2 Property Close of Escrow.
I, the undersigned, am the duly elected and qualified [state office held] of Phase 2
Developer, a [•] duly organized and existing under the laws of the State of[•], and am authorized
by Phase 2 Developer to make the certifications contained in this Date Down Certificate. I further
certify to the City for and on behalf of Phase 2 Developer as follows:
1. Representations and Warranties. All of the representations and warranties made by
Phase 2 Developer for the benefit of the City in that certain [Assignment and Assumption
Agreement (Cornerstone I[ Phase 21)) by and between [•], as "Transferor", and Phase 2
Developer, as "Transferee," dated [•] ("Assignment and Assumption Agreement") are true and
correct as of the date of delivery of this Date Down Certificate [, except as otherwise specifically
set forth on Schedule I attached hereto). In addition, Phase 2 Developer hereby makes the
representations and warranties set forth in Section 4.5.2(f) of the DDA for the benefit of the City
as of the Phase 2 Property Close of Escrow.
2. Original Certificate. All information and statements made by Phase 2 Developer
pursuant to Section 4.6.6(a) of the DDA and, if applicable, Section 4.6.6(b) of the DDA and
contained in the declaration and certificate delivered by Phase 2 Developer at the time of the
Transfer to Phase 2 Developer (together with the other information and statements in such
declaration and certificate, the "Original Certificate") remains true and correct as of the date of
this Date Down Certificate[, except as otherwise specifically set forth on Schedule I attached
hereto).
3. Financial and Other Information. The Phase 2 Financing Plan and all financial and
other information submitted by Phase 2 Developer to the City pursuant to Section 4.6 of the DDA
Tustin Cornerstone I DDA Art 18 Revised ATTACHMENT 18 City of Tustin/Cornerstone I
Form Phase 2 Developer COE Date Down (REVISED)
Certificate 11-20-2020(agd)FINAL I
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
prior to or concurrently with the Transfer of Phase 2, as the same may have been updated prior to
the Phase 2 Property Close of Escrow in accordance with the requirements of Section 4.6.1 or 4.6.2
of the DDA, remains true and correct as of the date of this Date Down Certificate and all financial
and other information submitted to the City on or since the effective date of the Transfer remains
true and correct as of the date of this Date Down Certificate[, except as otherwise specifically set
forth on Schedule I attached hereto). The updated Phase 2 Financing Plan submitted to the City
as a condition to the Phase 2 Property Close of Escrow, which has been modified to reflect Phase 2
Developer's expectation as to available funding and costs, remains sufficient to pay through
issuance of the Certificate of Compliance for Phase 2, all Development Costs of Phase 2 of the
Project(excluding the costs of the Minimum Horizontal Improvements, which are complete) and
all other costs for the construction, marketing and lease of the Improvements as described in the
Scope of Development for Phase 2, and the Project budget for Phase 2 and the Minimum Phase 2
Improvements remains a reasonable budget.
4. Certificate of Formation, Operating Agreement. As of the date of this Date Down
Certificate, each of the organizational documents of Phase 2 Developer and all consents and
approvals referred to in Section of the Original Certificate remain in full force and effect and
[except as otherwise specifically set forth on Schedule I attached hereto)have not been modified,
revoked or otherwise amended or terminated. {If any previously delivered instruments have been
amended they shall be attached and new certification made.}
5. Good Standing. Phase 2 Developer remains in good standing in the States of
I and California as of the date of this Date Down Certificate. Attached to this Date Down
Certificate as Exhibit A are true and correct copies of the certificate of good standing for Phase 2
Developer from the{ Secretary of State and the) California Secretary of State, and each
attached certificate of good standing is dated not earlier than thirty (30) days prior to the date of
this Date Down Certificate.
6. Authority of Si ng atM. [Insert name of person signing], is a[insert office held]
of Phase 2 Developer and is in such capacity, duly authorized by Phase 2 Developer to execute
any and all instruments, documents and other agreements required in connection with the Phase 2
Property Close of Escrow and the DDA in accordance with the proceedings showing authority
attached to the Original Certificate.
Phase 2 Developer acknowledges and agrees that the City intends to rely on the information
in this Date Down Certificate, and this Date Down Certificate may be relied upon by the City.
Without the written consent of Phase 2 Developer no Person other than the City may rely on this
Date Down Certificate for any purpose.
In no event shall the individual executing this Date Down Certificate on behalf of Phase 2
Developer have any personal liability hereunder.
[remainder ofpage is blank—signature on next page)
Tustin Cornerstone I DDA Art 18 Revised ATTACHMENT 18 City of Tustin/Cornerstone I
Form Phase 2 Developer COE Date Down (REVISED)
Certificate 11-20-2020(agd)FINAL 2
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
"PHASE 2 DEVELOPER"
Dated:
a [•]
By:
Name:
Title:
Tustin Cornerstone I DDA Art 18 Revised ATTACHMENT 18 City of Tustin/Cornerstone I
Form Phase 2 Developer COE Date Down (REVISED)
Certificate 11-20-2020(agd)FINAL S-1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT "A"
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Tustin Cornerstone I DDA Art 18 Revised ATTACHMENT 18 City of Tustin/Cornerstone I
Form Phase 2 Developer COE Date Down (REVISED)
Certificate 11-20-2020(agd)FINAL Exhibit"A"
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 1
{If none—enter None}
Tustin Cornerstone I DDA Art 18 Revised ATTACHMENT 18 City of Tustin/Cornerstone I
Form Phase 2 Developer COE Date Down (REVISED)
Certificate 11-20-2020(agd)FINAL Schedule 1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 7
ATTACHMENT 24 (REVISED)
FORM OF SUBORDINATION AGREEMENT
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 7 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 24
(REVISED)
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 24 (REVISED)
FORM OF SUBORDINATION 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:
The City of Tustin
300 Centennial Way
Tustin, CA 92708
Attn: City Manager
SPACE ABOVE THIS LINE FOR
RECORDER'S USE
TUSTIN CORNERSTONE I SUBORDINATION AGREEMENT
(PHASE 2)
THIS TUSTIN CORNERSTONE I SUBORDINATION AGREEMENT (PHASE 2) (this
"Agreement") is entered into as of the day of , 20 (the "Effective Date"),by and
between , a ("Lender"), and THE CITY OF TUSTIN,
CALIFORNIA, a municipal corporation duly organized and existing under the laws of the State
of California (as further defined in Section I below, the "City"). {NTD: If more than one entity
comprises "Lender"make any necessary changes by conforming the text below to the text in the
Phase I Parcel Subordination Agreement regarding two lender scenario.)
RECITALS
A. City and , a ("Phase 2 Developer"), as successor-by-
assignment to Flight Phase I Owner LLC and Flight Venture LLC,each a Delaware limited liability
company ("Flight Venture"), entered into that certain Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of November 15, 2016 ("Original DDA"), as
amended by (1) that certain First Amendment to Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of June 20,2017("First Amendment"),(2)that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1,2019("Second Amendment"),and(3) that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of December [•], 2020 ("Third
Amendment");the Original DDA,First Amendment,Second Amendment,and Third Amendment
referred to collectively in this Certificate as the"DDA"), {Add additional DDA Amendments and
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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further assignments if applicable above} with respect to certain real property referred to therein
as the"Development Parcels."Capitalized terms used herein and not defined herein shall have the
meanings set forth in the DDA. A Memorandum of the Original DDA and First Amendment to
Tustin Legacy Disposition and Development Agreement Cornerstone I dated November 15, 2016,
was recorded in the Office of the Clerk-Recorder, Orange County,California("Official Records")
on June 29, 2017, as Instrument No. 2020000137939, and a Memorandum of Second and Third
Amendments to Tustin Legacy Disposition and Development Agreement Cornerstone I dated
December ,2020 has been recorded in the Official Records on as Instrument No.
(collectively,the "Memorandum").
B. City and Flight Venture LLC entered into that certain Tustin Legacy Cornerstone I
Development Agreement dated as of December 15, 2016 and recorded in the Official Records on
March 30, 2017 as Instrument No. 2017000128365 [as amended by that certain First Amendment
to Development Agreement by and between City and Flight Phase I Owner LLC dated as of
and recorded in the Oficial Records on as Instrument No.
(collectively, the][(J"DA").
C. Pursuant to the DDA, the City has conveyed to Borrower a portion of the
Development Parcels referred to in the DDA as the "Phase 2 Parcel," comprised of the real
property legally described on Exhibit A attached hereto (the "Parcel"), together with certain
Improvements thereon and appurtenances thereto as further described in the DDA ("Phase 2
Property"). In accordance with the DDA,the Parcel is or will be improved with Office Uses and
ancillary retail uses, including development of, at a minimum, the Minimum Phase 2
Improvements (the "Improvements"). The Parcel, the Improvements and related personal and
other property described in the Security Instrument (defined herein) and the other Security
Documents (defined herein) constitute the "Mortgaged Property." The City and Borrower have
also executed the following documents of even date herewith (collectively with the DDA,the DA,
and the Memorandum, as the same may be amended from time to time, the "Property
Documents"), each of which has been recorded against the Phase 2 Parcel in the Official Records
concurrently with the recording of this Agreement:
(1) Declaration of Special Restrictions for Cornerstone I (Phase 2 Parcel) (the
"Special Restrictions") (recorded prior to the Quitclaim Deed and to which Borrower's fee title
to the Parcel is subject);
(2) Quitclaim Deed for Tustin Legacy Cornerstone I — Phase 2 Parcel and
Covenants, Conditions and Restrictions, Including Environmental Restriction Pursuant to Civil
Code Section 1471 (the "Quitclaim Deed");
(3) Landscape Installation and Maintenance Agreement;
(4) Roadway, Landscape and Utility Easement Agreement;
(5) Master Declaration Establishing Maintenance and Cost Sharing Obligations
for Tustin Legacy Cornerstone I; and
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
Subordination Agrat Phase 2 11-17-2020(agd) (REVISED)
FINAL 2
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(6) Declaration of Covenants, Conditions and Restrictions and Establishment
of Easements for The Flight at Tustin Legacy made by Borrower; together with {add re
Supplemental Declaration or Annexation document, annexing Parcel into the CC&Rs}.
D. In connection with the conveyance of the Parcel to Borrower,
(individually and collectively as the context may require "Guarantor"), {each of} which is an
indirect owner of an interest in Borrower, {has/have) executed and delivered a Phase 2 Guaranty
to the City dated as of the date herewith ("Guaranty").
E. Lender has agreed to make a loan to Borrower in the maximum principal amount
of Dollars ($ ) (the "Load') for the construction,
development, equipping and/or operation of the Project on the Parcel, which Loan is initially
evidenced by that certain Promissory Note dated as of as of the date hereof,made
by Borrower payable to the order of Lender("Note") and that certain Loan Agreement dated as of
the date hereof between Borrower and Lender(the"Loan Agreement"). {Revise as applicable if
multiple Notes.}
F. The Loan is secured by, among other things, that certain [Construction Deed of
Trust,Assignment ofLeases And Rents,Security Agreement, and Fixture Filing]dated as of the
date hereof executed by Borrower for the benefit of Lender(the"Security Instrument");together
with that certain [Assignment of Leases and Rents] dated as of the date hereof executed by
Borrower for the benefit of Lender, and any UCC-1 financing statement naming Borrower as
debtor and Lender as secured party (collectively, with the Security Instrument, the "Security
Documents"); together with the Note, the Loan Agreement, and all other documents executed in
connection with the Loan, including,without limitation, any guaranty or guaranties relating to the
Loan made by a Loan Guarantor, all of which documents are sometimes referred to collectively as
the "Loan Documents"), which Security Instrument encumbers the Mortgaged Property and was
recorded in the Official Records concurrently herewith. All references herein to the Loan
Documents,the Security Instrument or the Security Documents, as the case may be, or any thereof
shall mean the Loan Documents, the Security Instrument or the Security Documents, as the case
may be,or any thereof,as the same may be amended,restated,replaced,supplemented or otherwise
modified from time to time.
As a condition to the making of the Loan, Lender requires and Borrower requests
that the City and Lender execute and deliver this Agreement.
NOW,THEREFORE,for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged,the parties hereto agree as follows:
1. DEFINITIONS.
The following terms, when used in this Agreement (including, as appropriate, when used in the
above recitals), shall have the following meanings.
(a) "Action"has the meaning set forth in Section 5(h) of this Agreement.
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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(b) "Agreement" has the meaning set forth in the first paragraph of this
Agreement.
(c) "Borrower" means all Persons identified as "Borrower" in the Recitals of
this Agreement, together with its successors and assigns, and any other Person who acquires title
to the Mortgaged Property after the date of this Agreement during the period that the Mortgaged
Property is encumbered by the Security Instrument; provided that, except as set forth in Section
4c of this Agreement, the term `Borrower" shall not include any Lender or Lender Affiliate in
the event that any Lender or Lender Affiliate may acquire title to the Mortgaged Property.
(d) "Casualty"means the occurrence of damage to or loss of all or any portion
of the Mortgaged Property by fire or other casualty.
(e) "City" means the Person named as such in the first paragraph of this
Agreement.
(f) "City Lien" shall have the meaning set forth in Section 16.2 of the DDA as
set forth verbatim in the Memorandum.
(g) "City Notice" means a written notice from the City to the Borrower or
Guarantor of any Default under the DDA or any "default" under any of the other Property
Documents or the Guaranty(including,without limitation,any notice that Guarantor fails to satisfy
a Liquidity Covenant or the Minimum Liquidity Standard or that any Guarantor Illiquidity Event
or City Guarantor Illiquidity Event has occurred, as applicable).
(h) "Costs"has the meaning set forth in Section 5(h) of this Agreement.
(i) "DA" has the meaning set forth in Recital B of this Agreement.
0) "DDA"has the meaning set forth in Recital A of this Agreement.
(k) "Decision"has the meaning set forth in Section 5(h) of this Agreement.
(1) "Effective Date" has the meaning set forth in the first paragraph of this
Agreement.
(m) "Enforcement Action" means any of the following actions taken by or at
the direction of the City: the exercise of the City's Right of Reversion under Section 16.4 of the
DDA,the exercise of the City's Right of Repurchase under Section 16.3 of the DDA,the obtaining
of or seeking of the appointment of a receiver,the seeking of default interest or charges,the taking
of possession or control of any of the Mortgaged Property,the commencement of any suit or other
legal,administrative,or arbitration proceeding based upon the Property Documents,or the exercise
of any other remedy against the Borrower or the Mortgaged Property, excepting, however, any
rights or actions taken by the City in the exercise of its police powers.
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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(n) "First Amendment" has the meaning set forth in Recital A to this
Agreement.
(o) "Flight Venture"has the meaning set forth in Recital A to this Agreement.
(p) "Guaranty"has the meaning set forth in Recital D to this Agreement.
(q) "Guarantor"has the meaning set forth in Recital D to this Agreement.
(r) "Improvements"has the meaning set forth in Recital C to this Agreement.
(s) "Indebtedness" means the"Debt" as defined in the Loan Agreement.
(t) "Lender" means, individually and collectively, the entity or entities (as
applicable) named as such in the first paragraph of this Agreement which is/are initially the
holder(s) of the Note, and any other Person which subsequently becomes the holder of a Note. For
purposes of any matters with respect to and/or following a Foreclosure, "Lender" shall mean
Lender or any Lender Affiliate thereof designated by Lender to take title to the Mortgaged
Property.
(u) "Lender Affiliate" shall mean any Person Controlling or Controlled by a
Lender or having the same Controlling Person as does a Lender.
(v) "Lender Statement" has the meaning set forth in Section 3(i) of this
Agreement.
(w) "Load'has the meaning set forth in Recital E to this Agreement.
(x) "Loan Agreement" has the meaning set forth in Recital E to this
Agreement.
(y) "Loan Default" means (i) any act, failure to act, event, condition, or
occurrence which constitutes, or which with the giving of notice or the passage of time, or both,
would constitute, an "Event of Default" {or insert comparable term from Security Instrument)
under(and as defined in)the Security Instrument and other Loan Documents, or(ii) any"Event of
Default" {or insert comparable term from Security Instrument) under (and as defined in) the
Security Instrument and other Loan Documents.
(z) "Loan Documents" has the meaning set forth in Recital E to this
Agreement.
(aa) "Loan Guarantor" shall initially mean the Guarantor. If other entities
guarantee to Lender any obligations of Borrower under any of the Loan Documents, such entity
shall also be a Loan Guarantor.
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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(bb) "Loss Proceeds" means all monies received or to be received under any
insurance policy, from any condemning authority, or from any other source, as a result or any
Condemnation or Casualty.
(cc) "Memorandum"has the meaning set forth in Recital A to this Agreement.
(dd) "Mortgaged Property" has the meaning set forth in Recital C to this
Agreement.
(ee) "Note" has the meaning set forth in Recital E to this Agreement.
(ff) "Official Records" has the meaning set forth in Recital A to this
Agreement.
(gg) "Parcel"has the meaning set forth in Recital C to this Agreement.
(hh) "Person' means 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.
(ii) "Phase 2 Developer" has the meaning set forth in Recital A to this
Agreement.
6j) "Prevailing Party" has the meaning set forth in Section 5(h) of this
Agreement.
(kk) "Property Documents" has the meaning set forth in Recital C to this
Agreement.
(11) "Property Document Breach" means any act, failure to act, event,
condition, or occurrence that allows (but for any contrary provision of this Agreement), or which
with the giving of notice or the passage of time, or both, would allow (but for any contrary
provision of this Agreement), the City to take an Enforcement Action.
(mm) "Quitclaim Deed"has the meaning set forth in Recital C to this Agreement.
(nn) "Rents"has the meaning given to the term in the Security Instrument.
(oo) "Second Amendment" has the meaning set forth in Recital A to this
Agreement.
(pp) "Security Documents" has the meaning set forth in Recital F to this
Agreement.
(qq) "Security Instrument" has the meaning set forth in Recital F to this
Agreement.
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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(rr) "Special Restrictions" has the meaning set forth in Recital C to this
Agreement.
(ss) "Third Amendment" has the meaning set forth in Recital A to this
Agreement.
2. PERMITTED MORTGAGEE.
(a) In accordance with the Section 17.2 of the DDA, the City hereby:
(i) consents to Borrower entering into the Loan;
(ii) acknowledges receipt of the documents listed on Exhibit B attached
hereto, comprising the"Loan Documents"under this Agreement;
(iii) confirms that:
(A) Lender is approved as a Permitted Mortgagee and is
accordingly entitled to, and a beneficiary of, all rights of a Permitted Mortgagee under the DDA
and subject to all obligations imposed upon a Permitted Mortgagee under the DDA;
(B) the Loan Documents delivered to the City on or before the
date hereof comply with the requirements of the DDA applicable thereto, including without
limitation, Sections 17.1 and 17.3 of the DDA, and are accordingly approved by the City for all
purposes of the DDA, to the extent such approval is required by the terms of the DDA;
(C) the Security Instrument, as a deed of trust creating a security
interest in a portion of the Property made in favor of a Permitted Mortgagee and comprising a
Construction Loan, is a Permitted Mortgage;
(D) the stated principal amount of the Loan conforms with the
loan to cost ratio required to qualify as a Construction Loan under the test established by Section
17.1.1 of the DDA;
(E) the Loan is approved by the City as a Construction Loan;
(F) Loan proceeds may be used for the purposes set forth in the
Loan Documents delivered to the City on or before the date hereof,
(G) the Phase 2 Financing Plan most-recently delivered by
Borrower to the City pursuant to Section 4.6.1 of the DDA,together with any amendments thereto,
delivered to the City on or before the Phase 2 Property Close of Escrow,has been approved by the
City;
(H) to the extent required by the DDA,the Loan as described in
the Loan Documents delivered to the City on or before the date hereof is consistent with the Phase
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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2 Financing Plan approved by the City or the City has approved or waived any such noncompliance
with the Phase 2 Financing Plan as described in clause G above; [and]
(I) the City Manager or his/her designee is authorized to execute
and deliver each City Statement required hereunder and that such City Statement shall bind the
City[.][; and]
(J) f{if applicable:} as of the Effective Date,
satisfies the minimum requirements of a Qualified Receiver.]
(iv) acknowledges and agrees that (A) Borrower is entitled to share all
information concerning the Project, the Mortgaged Property and the Property Documents with
Lender notwithstanding any provisions set forth in the DDA or any other Property Document to
the contrary, (B) City is not relying on the Lender for any purposes, except for compliance with
the Lender's obligations expressly set forth in this Agreement, the DDA and/or the Property
Documents, including, without limitation, obligations imposed on Lender in its capacity as a
Permitted Mortgagee,(C)notwithstanding anything to the contrary in the DDA or this Agreement,
the Lender shall have no obligation or liability to the City or under the DDA or this Agreement in
the event that Borrower uses any proceeds of the Loan in violation of the Loan Documents or the
DDA, (D)the Lender does not have, and shall not have, any fiduciary duties to the City (including
any fiduciary duties relating to Lender's or its agents' servicing, administration, and enforcement
of the Loan), and (E) the Lender does not have, and shall not have, any express or implied duties
to the City other than Lender's duties and obligations expressly set forth in this Agreement, the
DDA and/or the Property Documents. In addition,the City agrees that(x)it will deliver to Lender,
at the times specified in Section 30), the City Statement in the form of the document attached as
Exhibit C to this Agreement, executed by the City and approved by the City's counsel ("City
Statement"), (y)the provisions of Sections 17.6.1, and 17.6.3 of the DDA and Section 5(c) of this
Agreement will apply with respect to delivery by the City of notice to Lender of any default by
Borrower or any other party under the DDA and (z) subject to the provisions of Section 5(c) of
this Agreement governing the Permitted Mortgagee to which City shall be obligated to deliver
notice, Lender shall be entitled to the "Notice to Mortgagee" as provided in Section 17.6.3 of the
DDA in accordance with the terms thereof.
(b) Lender enters into this Agreement with the understanding that Lender's
rights as a Permitted Mortgagee under the DDA are subject to the terms and conditions set forth
in the DDA and this Agreement, including without limitation the following: (i) the City's right to
the City Lien as referred to in Section 16.2 of the DDA; (ii)the City's Right of Repurchase referred
to in Section 16.3 of the DDA; (iii)the City's Right of Reversion referred to in Section 16.4 of the
DDA; and(iv) the prohibition of Mezzanine Financing by Lender without the prior written consent
of the City in its sole discretion. Except as set forth in Section 17.3 of the DDA or in Section 3(1)
of this Agreement, nothing in this Agreement shall obligate Developer to seek City's consent nor
City to grant such consent to any transfer, sale, assignment, disposition, gift, hypothecation,
mortgage, pledge, encumbrance or other similar conveyance or any amendment, modification,
waiver,postponement, extension,replacement,renewal or termination of any Permitted Mortgage
or the Subordination Agreement or loan documents associated with such Permitted Mortgage.
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(c) Lender acknowledges and agrees (1)to be bound by and comply with those
provisions of Section 16.3 of the DDA that apply Permitted Mortgagees, and (2) in accordance
with Section 16.3.5 of the DDA, upon the exercise by the City of the Right of Repurchase in
accordance with the requirements of the DDA,payment to Lender by City of the Repurchase Price
for the Reacquired Property at the close of escrow for such Reacquired Property, if any, Lender
will reconvey from Lender's Security Documents the portion of the Mortgaged Property
reacquired by the City,and(3)subject to Lender having received payment of the Repurchase Price
due, if any, in the event of such exercise of the Right of Repurchase by the City, to execute
acknowledge and deliver all documents reasonably necessary or appropriate to release Lender's
Security Documents in the Mortgaged Property reacquired by the City, at no additional cost or
charge to City.
(d) Lender further acknowledges and agrees: (1) to be bound by and comply
with those provisions of Section 16.4 of the DDA applicable to Permitted Mortgagees; (2) in
accordance with Section 16.4.6 of the DDA, in the event of the exercise by the City of the Right
of Reversion and payment to Lender in accordance with Section 16.4.3(c) of the DDA, that the
portion of the Mortgaged Property reacquired by the City will be free and clear of Lender's
Security Documents, (3) in the event of such exercise of the Right of Reversion by the City in
accordance with the requirements of the DDA,to execute acknowledge and deliver all documents
reasonably necessary or appropriate to release Lender's Security Documents, all at no additional
cost or charge to City, (4) Lender is not relying on City for any purposes, except for compliance
with City's obligations expressly set forth in this Agreement, the DDA and/or the Property
Documents, including without limitation,the City's obligations to the Lender set forth or referred
to in this Agreement, or to Lender as Permitted Mortgagee under the DDA and/or the Property
Documents, (5) the City does not have, and shall not have, any fiduciary duties to the Lender
(including any fiduciary duties relating to the City's administration and enforcement of the DDA
and/or the Property Documents), and (6) the City does not have, and shall not have, any express
or implied duties to the Lender other than the City's duties and obligations expressly set forth in
this Agreement,the DDA, and/or the Property Documents.
(e) The City shall deliver to the Lender as specified in Section 5(c) of this
Agreement, a copy of each City Notice, in each case within five (5)business days after the City's
delivery of such notice to Borrower or Guarantor, as applicable; provided that the provisions of
Sections 17.6.1, and 17.6.3 of the DDA shall apply with respect to such notice and each such notice
to Lender shall be delivered in accordance with the provisions of this Agreement, including the
provisions of Section 5(c) regarding the Lender to which such notice shall be delivered.
Notwithstanding any other provision of this Agreement,the City shall not pursuant to the Property
Documents, by any Enforcement Action or by entering into this Agreement, assume any
obligations of the Borrower under the Loan Documents or be obligated to comply with any of the
terms of any of the Loan Documents. The City shall have the right,but not the obligation, to cure
any Loan Defaults pursuant to and in accordance with Article 4 below.
(f) The Loan Documents require that the Equity Completion Date (as
confirmed by the City in a City Statement containing Section 2 from the form attached as Exhibit
C) shall have occurred before Lender disburses any funds to Borrower (other than any nominal
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amount(i.e.,less than$25,000)funded by Lender at closing and except for any protective advances
made by Lender to protect its security under the Loan Documents, and any interest accruing on
the foregoing that is paid for by the proceeds of the Loan) and Lender agrees for the benefit of the
City: (i)to be bound by and comply with that requirement and(ii)that any such nominal amounts
or protective advances funded by Lender shall not advance the occurrence of the Equity
Completion Date or modify in any manner the rights of the City set forth in the DDA and the
Property Documents that arise prior to the Equity Completion Date (as confirmed by the City in a
City Statement containing Section 2 from the form attached as Exhibit C), including without
limitation the right of the City to exercise the Right of Repurchase and/or the Right of Reversion
under the DDA.
(g) Lender hereby acknowledges and agrees that the provisions of
Section 16.4.3(a) through U) of the DDA shall apply regardless of the amount or timing of
disbursements made by Lender under the Loan or the total amount of Indebtedness then
outstanding.
(h) WITH RESPECT TO THE AMOUNTS PAYABLE TO LENDER AS SET
FORTH IN SECTIONS 2(c)AND 2fd)ABOVE, LENDER ACKNOWLEDGES AND AGREES
THAT SUCH AMOUNT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES
WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY THE CITY, WHICH
DAMAGES WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO QUANTIFY,
THAT SUCH AMOUNT CONSTITUTES A REASONABLE ESTIMATE OF THE CITY'S
DAMAGES IN SUCH EVENT, AND THAT THE REMEDY PROVIDED FOR IN THE DDA
AND THIS AGREEMENT IS NOT A PENALTY OR FORFEITURE AND IS A REASONABLE
LIMITATION ON POTENTIAL LIABILITY. LENDER AGREES THAT THE FOREGOING
STATEMENTS ARE TRUE. LENDER FURTHER AGREES THAT THE PAYMENT BY THE
CITY TO LENDER OF THE AMOUNTS SPECIFIED IN SECTION 2(c) ABOVE WILL, ON
PAYMENT TO LENDER IN ACCORDANCE WITH SECTION 16.3 OF THE DDA,
CONSTITUTE FULL SATISFACTION OF ALL AMOUNTS DUE FROM CITY TO LENDER
(WITHOUT LIMITING LENDER'S RIGHTS AGAINST ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, BORROWER AND ANY GUARANTOR UNDER
THE LOAN DOCUMENTS),AND THAT UPON PAYMENT OF SUCH SUMS TO LENDER,
LENDER SHALL COOPERATE WITH CITY, AND TAKE ALL ACTIONS, TO RELEASE
THE SECURITY INSTRUMENT AND THE LIEN OF THE PERMITTED MORTGAGE FROM
THE PROPERTY REACQUIRED BY THE CITY PURSUANT TO SECTION 16.3 OF THE
DDA. NOTWITHSTANDING THE PROVISIONS OF SECTION 16.4.3(d) AND SECTION
16.4.3(e)OF THE DDA,THE CITY HEREBY AGREES THAT IT SHALL NOT INTERPLEAD
SUMS PAYABLE BY THE CITY IN CONNECTION WITH THE CITY'S EXERCISE OF ITS
RIGHT OF REVERSION EXCEPT IN THE EVENT THAT LENDER (COLLECTIVELY IF
MORE THAN ONE PERSON COMPRISES LENDER)SUBMITS ONE OR MORE DEMANDS
FOR PAYMENT FROM THE AMOUNT PAYABLE BY THE CITY FOR A PERMITTED
MORTGAGE UNPAID BALANCE IN EXCESS OF TWO MILLION DOLLARS ($2,000,000)
IN THE AGGREGATE.LENDER FURTHER AGREES THAT THE PAYMENT BY THE CITY
TO LENDER OF THE AMOUNTS SPECIFIED IN SECTION 2(d) ABOVE OR
INTERPLEADER BY THE CITY IN ACCORDANCE WITH THIS SECTION 2(h) OF ANY
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SUMS TO A COURT OF LAW WILL CONSTITUTE FULL SATISFACTION OF ALL
AMOUNTS DUE FROM CITY TO LENDER (WITHOUT LIMITING LENDER'S RIGHTS
AGAINST ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, BORROWER
AND ANY GUARANTOR UNDER THE LOAN DOCUMENTS), AND THAT UPON
PAYMENT OF SUCH SUMS TO LENDER, LENDER SHALL COOPERATE WITH CITY,
AND TAKE ALL ACTIONS,TO RELEASE THE SECURITY INSTRUMENT AND THE LIEN
OF THE PERMITTED MORTGAGE FROM THE PROPERTY REACQUIRED BY THE CITY
PURSUANT TO SECTION 16.4 OF THE DDA.
3. SUBORDINATION AND OTHER AGREEMENTS.
(a) Lender hereby agrees, acknowledges and confirms that the Security
Instrument is subordinate to the terms, covenants, conditions, operations, and effects of each of
the Property Documents.
(b) Lender expressly acknowledges and specifically confirms that the Security
Instrument is subordinate to the DDA, including, but not limited to, all of the following specific
provisions of the DDA, in each case subject to the terms of this Agreement and Lender's rights
under the DDA as a Permitted Mortgagee:
(i) The rights of the City under the DDA with respect to the City Lien
as set forth in Section 16.2 of the DDA, the Right of Repurchase in favor of the City as set forth
in Section 16.3 of the DDA(provided that with respect to closing under such Right of Repurchase,
any payment due to Lender as Repurchase Price is so paid to Lender at the close of escrow), and
the Right of Reversion in favor of the City, as set forth in Section 16.4 of the DDA (provided that
with respect to closing under such Right of Reversion, any payment due to Lender under
Section 16.4.3(c) of the DDA is paid to Lender at the close of escrow for the Reversion Event);
(ii) The rights of the City in Articles 2, 8, 16 and 17 and Section 4.6 of
the DDA; and
(iii) Any other provisions of the DDA or any of the attachments to the
DDA required to interpret Articles 2, 8, 16 or 17 or Section 4.6 of the DDA.
The Lender shall have the authority to act under the DDA as the Permitted
Mortgagee under the DDA and the City shall be entitled to rely on the authority of the Lender for
all such purposes. The foregoing shall be true even if the Lender is acting as agent or lead lender
pursuant to a participation agreement, agency agreement, intercreditor agreement or comparable
arrangement. Without limiting any of the City's rights under the DDA, where the Lender under
this Agreement is comprised of more than one Person and if the Lender has not, either in the
Security Instrument or by written notice to the City, authorized an agent to act on behalf of the
Lender parties for matters relating to the DDA„then in no event shall the City have any obligation
to take any act as a result of a demand by Lender unless such demand shall be executed by Lender
under this Agreement (whether in the same instrument or in counterparts), and until such time as
the City receives a demand executed by Lender under this Agreement (whether in the same
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instrument or in counterparts), the City shall have the absolute right to take no action with respect
to or as a result of such demand and such inaction with respect to or as a result of such demand
shall not be a breach or default by City of its obligations under this Agreement, the DDA, the
Property Documents or any other agreement binding on City and Borrower or Lender or any
Affiliate thereof.
(c) The foregoing subordinations in Sections 3(a) and 3Lb) shall apply and
continue notwithstanding (i)the actual date and time of execution, delivery, recording, filing or
perfection of each of the Loan Documents and each of the Property Documents, and (ii)the
respective rights of the Lender and the City to obtain a security interest in any collateral,including
any collateral other than the Mortgaged Property.
(d) [Intentionally Omitted.]
(e) Notwithstanding the foregoing, so long as the City has not acquired the
Parcel pursuant to its Right of Reversion or the Right of Repurchase,the Rents, issues and profits
from the Mortgaged Property, and the Loss Proceeds payable with respect thereto, are expressly
subject to the rights and claims of the Lender under the Loan Documents and may be used by
Borrower (subject to the terms of the Loan Documents), or by Lender. From and after the
acquisition of a portion of the Parcel and any Improvements thereon by the City pursuant to a Right
of Repurchase or Right of Reversion, all Rents,issues and profits from such Reacquired Property,
and Loss Proceeds,thereafter payable with respect thereto shall be owned by the City and Lender
hereby relinquishes all rights and claims thereto, if any.
(f) The City represents and warrants to the Lender as follows as of the date of
this Agreement: (i) to the actual knowledge of the City Manager, after consultation by the City
Manager with the City Director of Finance or such other individual employed by the City that the
City Manager in good faith believes to be best informed as to such matter (and without any other
duty of inquiry), the Property Documents are in full force and effect; (ii)the Property Documents
have not been modified or amended from the executed copies of the Property Documents delivered
by the City to Escrow concurrently with the Phase 2 Property Close of Escrow; (iii)the City has
not delivered to Borrower or Guarantor any City Notice.
(g) Lender represents and warrants to the City as follows as of the date of this
Agreement: (i)the list of Loan Documents attached hereto as Exhibit B is a true, correct and
complete list of all Loan Documents and that such documents have not been modified or amended
in any manner from the Loan Documents provided to and approved by the City, except in the
manner provided by Section 17.3 of the DDA and approved by the City as and if required thereby;
(ii)to the actual knowledge of on behalf of Lender, after consultation with
such other individual employed by such Person comprising Lender that the above-named Persons
in good faith believe to be best informed as to such matter(and without any other duty of inquiry),
the Loan Documents are in full force and effect; and (iv)that the Lender has not delivered to
Borrower any written notice of the existence of a Loan Default. Lender further represents and
warrants to the City as follows as of the date of this Agreement: such Lender, either directly or
through its Affiliates, regularly engages in the business of making, owning or investing in
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commercial real estate construction loans similar in size and nature to the Loan (including
mezzanine construction loans) or owning, developing and/or operating commercial properties
similar in size and nature to the Project or applicable Phase thereof, and such Lender has total
assets (inclusive of unfunded capital commitments), individually or with its parent entities and
Affiliates, in excess of Six Hundred Fifty Million Dollars ($650,000,000.00).
(h) Lender shall, within five (5) Business Days after the earlier of delivery of
such notice to Borrower or any Loan Guarantor, including the Guarantor, deliver to the City (A) a
copy of each notice of a Loan Default delivered to the Borrower by the Lender, and (B) a copy of
each notice to Borrower or Guarantor that Guarantor fails to satisfy a Liquidity Covenant set forth
in the Mortgage or that a Guarantor Illiquidity Event has occurred. For the avoidance of doubt,
email correspondence shall not constitute notice required to be delivered to the City unless the
Loan Documents provide that email correspondence constitutes valid notice to Borrower or
Guarantor for the purposes of the Loan Documents. Notices pursuant to this Section 3(h) shall be
given in the manner required in Section 5(c) of this Agreement. Borrower agrees that Lender is
authorized to deliver such notices to the City. Neither giving nor failing to give a notice to the
Lender or City pursuant to this Section 3(h) shall affect the validity of any notice given by the
Lender or City to the Borrower or Guarantor, as between the Borrower or Guarantor, and the
Lender or the City, as applicable.
(i) Within ten (10) Business Days after request by the City, but not more often
than (i) twice during any twelve (12) month period, or (ii) not more than once in any sixty (60)
day period during the existence of a Loan Default and/or a Property Document Breach, Lender
shall furnish the City with a statement, in the form of the document attached as Exhibit D to this
Agreement ("Lender Statement"), duly executed by such Person(s) confirming the matters
described therein,together with such modifications as are necessary in the Lender's sole discretion
to ensure the accuracy of the statements made therein.
0) Upon payment to the City by Borrower of the Three Thousand Dollar
($3,000) payment due for the requested City Statement pursuant to Section 2.2.6(c) of the DDA
with respect to such request and of any amounts due to City for the prior preparation of any City
Statements that remain unpaid at the time such request is made(whether such amounts are paid by
deduction from the City Costs Deposit or by direct payment), the City shall, at the times set forth
in the following sentence, furnish the Lender with a City Statement, duly certified, confirming the
matters specified in Exhibit C,together with such modifications as are necessary in the City's sole
discretion to ensure the accuracy of the statements made therein. The City shall provide Lender
with the City Statement, concurrently with the Phase 2 Property Close of Escrow, and thereafter
within ten (10) Business Days after request by Lender,but as to such requests not more often than
(i)prior to the first funding of the Loan that occurs on or after the Equity Completion Date, (ii)not
more than once in any ninety (90) day period, and (iii) in connection with a transfer of all or any
portion of the Property by Lender or any Lender Affiliate. In addition, the City shall have no
obligation to issue any City Statement unless and until it has been paid in full for amounts
outstanding due from prior preparation of City Statements that remain unpaid at the time the
request for City Statement is made.
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(k) Lender agrees that it shall not enter into any written amendment,
modification, waiver, extension, replacement or renewal of any of the Loan Documents that
(a)would allow Borrower,prior to the Equity Completion Date(as confirmed by the City in a City
Statement containing Section 2 from the form attached as Exhibit C), to obtain disbursements of
Loan proceeds (other than any nominal amount (i.e., less than $25,000) funded by the Lender at
closing and other than any protective advances made by Lender to protect its security under the
Loan Documents, and any interest accruing on the foregoing that is paid for by the proceeds of the
Loan), or (b) would authorize Borrower to use Loan proceeds for purposes other than those
permitted in the Loan Documents delivered to the City on or before the Effective Date unless the
Loan proceeds will be used solely to finance the acquisition of the Property and/or construction of
the Improvements and for associated costs and expenses that directly relate to the Project
(including financing costs), in each case, without first obtaining the City's prior written consent
thereto, which may be granted or withheld in the City's sole discretion. Lender acknowledges and
agrees that in the event that Lender and Borrower enter into any amendment to the Loan
Documents that reduces or eliminates the Liquidity Covenants set forth in the final Loan
Documents originally approved by City pursuant to Section 2 of this Agreement or in the event
that the Person(s) comprising the Loan Guarantor do not include the Guarantor, then City shall
have the right to impose the "Minimum Liquidity Standards" defined in Section 4.7.4 of the
DDA upon the Guarantor and Borrower and to exercise its other rights and remedies with respect
thereto in accordance with the terms set forth therein. Notwithstanding the foregoing or anything
to the contrary contained in the DDA (including, without limitation, Section 17.3 thereof), City
and Lender agree that no amendment, modification, waiver, postponement, extension,
replacement,renewal or termination of or to any of the Loan Documents shall, or shall be deemed
or construed to, modify or limit the rights of City or Lender pursuant to the DDA and this
Agreement(but without limiting the City's rights or remedies against the Lender in the event of a
breach of this Agreement by Lender and without limiting the Lender's rights or remedies against
the City in the event of a breach of this Agreement by the City).
(1) Lender agrees that any transfer, sale, assignment, disposition, gift,
hypothecation, mortgage, pledge, encumbrance or other similar conveyance by a Permitted
Mortgagee of any of the loan documents with respect to the Phase 2 Property shall,notwithstanding
any assignment language contained in this Agreement, which may appear to be self-operative,
include an express assignment to the assignee of the Permitted Mortgage or any portion thereof or
loan document in connection therewith, of all of the rights and obligations of such Permitted
Mortgagee under this Agreement with respect to the loan documents and Permitted Mortgage, or
portion thereof, so transferred, sold, assigned, disposed of, gifted, hypothecated, mortgaged,
pledged, encumbered or otherwise conveyed, and any Construction Loan proceeds distributed by
Developer to its equity owners for purposes other than the payment of Development Costs which
distribution has been authorized by the express terms of an amendment of the applicable loan
documents made without the prior written approval of the City shall be excluded from the
calculation of Permitted Mortgage Unpaid Balance in the DDA and this Agreement.
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4. DEFAULT UNDER PROPERTY DOCUMENTS AND LOAN DOCUMENTS.
(a) In the event of a Property Document Breach,Lender: (i)shall have the right
to cure such Property Document Breach in the manner and to the extent provided for in Section 17
of the DDA and as may be provided under or in connection with any of the other Property
Documents,as applicable,providing a Permitted Mortgagee with the right to so cure,and the City's
ability to commence any Enforcement Action shall be limited as and to the extent provided for in
Sections 17.6 and 17.7 of the DDA, (ii) shall not have any obligation to cure any Property
Document Breach and (iii) as between Lender and the City only, Lender shall not be subrogated
to the rights of the City under the Property Documents by reason of the Lender having cured any
Property Document Breach, but as between Lender and any Person other than City, Lender shall
be subrogated to the rights of the City under the Property Documents by reason of Lender having
cured any Property Document Breach. The City acknowledges that all amounts advanced or
expended by the Lender in accordance with the Loan Documents or to cure a Property Document
Breach shall be added to and become a part of the Indebtedness under the Security Instrument and
Loan Documents and shall be secured by the lien of the Security Instrument and other applicable
Loan Documents; provided that the foregoing shall not limit the City's rights in Section 2(c), 2fdd),
and 2(g) of this Agreement and Sections 16.3 and 16.4 (including without limitation
Section 16.4.3(c))of the DDA.
(b) Failure of the Lender to send notice to the City required by Section 3(h)
shall not prevent the exercise of the Lender's rights and remedies under the Loan Documents,this
Agreement, or the DDA;provided,however,that the Lender shall not complete a Foreclosure with
respect to the Mortgaged Property until such time as it shall have provided the City with, as to any
monetary Loan Default, the right, but not the obligation, to cure any monetary Loan Default for a
period of thirty (30) calendar days following the date such notice is delivered to City by Lender
and, as to any non-monetary default, the right, but not the obligation, to cure such non-monetary
Loan Default for a period of ninety (90) calendar days following the date such notice is delivered
to City by Lender; provided, however, that the Lender shall be entitled during such 30-day or 90-
day (as applicable) period to continue to pursue its remedies under the Loan Documents short of
completing a Foreclosure;provided further,however,that nothing in this Agreement shall prohibit
Lender from completing a Foreclosure of the type described in clause c of the definition thereof.
The City shall not be subrogated to the rights of the Lender under the Loan Documents by reason
of the City having cured any Loan Default However, the Lender acknowledges that all amounts
paid by the City to the Lender to cure a Loan Default shall be deemed to have been advanced by
the City pursuant to, and, subject to the limitation set forth in Section 2.2.2(h)(ii) of the DDA with
respect to obligations of a Foreclosure Transferee to reimburse the City for certain attorneys' fees
incurred by the City, shall be secured by the City Lien and shall be prior to the lien of the Security
Instrument and shall be applied by Lender to reduce the amount of principal and/or interest(as the
case may be) so paid by the City to cure such Loan Default under the Permitted Mortgage;
provided, that in no event shall Lender be required to cure, as a condition to protecting any of its
rights under this Agreement, the DDA or the Loan Documents, the Default that arises under the
DDA as a result of the City having funded such amounts.
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(c) Lender shall not be obligated to perform any of the Borrower's obligations
under the DDA to construct or complete any Improvements or to guarantee such construction or
completion thereof. Notwithstanding the foregoing, if any Person acquires title to any part of the
Mortgaged Property or the Improvements as a result of a Foreclosure or from Lender(or a Lender
Affiliate thereof) after a Foreclosure, then such Person or entity shall be subject to all of the
Property Documents. If the Lender elects to construct any Improvements on the Mortgaged
Property, the Lender (or a Lender Affiliate thereof) must first acquire title to the Mortgaged
Property and assume all of the obligations of Borrower under all of the Property Documents as
and to the extent provided in Sections 2.2.2(h) and 2.2.26) of the DDA if the Transfer is made
pursuant to one of such Sections, or in the event Lender elects a Transfer pursuant to Section 2.2.3
of the DDA, the Transfer as shall be governed by the applicable provisions of Section 2.2.3 of the
DDA, and the Improvements may only be those Improvements that Borrower would be permitted
to construct under the DDA and shall be subject to the terms and conditions of the DDA,
specifically including but not limited to Article 8 of the DDA; provided, however, nothing in the
foregoing shall prevent the continuation of any construction work by a Qualified Receiver
appointed with respect to the Mortgaged Property during any applicable period of such
receivership. In all events, Lender (or a Lender Affiliate thereof) shall only be liable to the City
under the DDA after the date of a Foreclosure to the extent of Lender's (or Lender Affiliate's)
interest (whether fee or leasehold) in the portion of Mortgaged Property and the Improvements
thereon owned by Lender (or Lender Affiliate thereof); provided that such limitation shall not
apply to any other Foreclosure Transferee or other Person who acquires title to any part of the
Mortgaged Property or the Improvements from Lender after a Foreclosure. Notwithstanding
anything to the contrary contained herein or in the DDA, in no event shall the Lender (or any
Lender Affiliate thereof) be required to post any replacement Guaranty upon acquiring title to the
Mortgaged Property, nor during any period when a Qualified Receiver has been appointed for the
Mortgaged Property,regardless of Lender's, such Lender Affiliate's or such Qualified Receiver's
election to construct or cause the construction of any Improvements on the Mortgaged Property,
and in no event shall any default under or in connection with the Guaranty in place at the time of
Foreclosure result in a default under the DDA during the period of Lender's or its Lender
Affiliate's ownership of the Mortgaged Property (nor after any sale of the Mortgage Property by
Lender or its Lender Affiliate to a Qualified Foreclosure Purchaser that is made in compliance
with the requirements of the DDA). The provisions of this Section 4(c) shall survive the
termination of this Agreement and, for avoidance of doubt, shall survive any Foreclosure.
(d) [Intentionally Omitted.]
(e) Lender may under all circumstances pursue all rights and remedies against
Borrower, any Loan Guarantor, and any other Person available to it under the Loan Documents, at
law, or in equity, regardless of any City Notice or Enforcement Action by the City; provided that,
subject to Lender's rights under the DDA and this Agreement, the foregoing shall not limit the
rights of the City set forth in the DDA or this Agreement with respect to such City Notice or
Enforcement Action or otherwise during the pendency of Lender's pursuit of its rights and
remedies.No action or failure to act on the part of the Lender in the event of a Property Document
Breach or commencement of an Enforcement Action shall constitute a waiver on the part of the
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Lender vis-a-vis Borrower, any Loan Guarantor, and any other Person of any provision of the Loan
Documents or this Agreement.
(f) Notwithstanding anything to the contrary in the Loan Documents, this
Agreement or in the DDA, if the City consummates its Right of Reversion or its Right of
Repurchase and the Security Documents are not released as required by (and on and subject to)
the terms and conditions of this Agreement,then Lender shall not,without the prior written consent
of the City in its sole discretion, consummate any Foreclosure.
5. NIISCELLANEOUS PROVISIONS.
(a) In the event of any direct conflict or inconsistency between the terms of the
Property Documents and the terms of this Agreement, the terms of this Agreement shall control.
In the event of any direct conflict or inconsistency between the terms of the DDA and this
Agreement, the terms of this Agreement shall prevail,provided however all terms and conditions
of the DDA not specifically and explicitly modified herein shall continue to apply and to be of full
force and effect without modification.
(b) This Agreement shall be binding upon and shall inure to the benefit of the
respective legal successors and assigns of the parties hereto.No other party shall be entitled to any
benefits hereunder,whether as a third-party beneficiary or otherwise.
(c) Each notice, request, demand, consent, approval or other communication
(collectively,"notices,"and singly,a"notice")which is required or permitted to be given pursuant
to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given
if(i)personally delivered with proof of delivery thereof(any notice so delivered shall be deemed
to have been received at the time so delivered), or (ii) sent by a national overnight courier service
(such as FedEx) designating earliest available delivery (any notice so delivered shall be deemed
to have been received on the next business day following receipt by the courier), or (iii) sent by
United States registered or certified mail,return receipt requested,postage prepaid,at a post office
regularly maintained by the United States Postal Service (any notice so sent shall be deemed to
have been received on the date of delivery as confirmed by the return receipt), addressed to the
respective parties as follows:
Notices intended for the Lender shall be addressed to:
If to Lender:
With a copy to:
Notices intended for the City shall be addressed to:
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If to the City: Tustin City Hall
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Facsimile: (714) 838-1602
With a copy to: City of Tustin City Attorney
Woodruff Spradlin& Smart
555 Anton Boulevard, Suite 1200
Costa Mesa, California 92626
Attn: David E. Kendig
Facsimile: (714) 835-7787
Email: dkendig@wss-law.com
Any party,by written notice given pursuant to this Section 5(c),may change the person or persons
and/or address or addresses, or designate an additional person or persons or an additional address
or addresses, for its notices,but notice of a change of address shall only be effective upon receipt.
Notwithstanding any other provision of this Agreement to the contrary, City shall be entitled to
deliver the Notice to Mortgagee and any other notice required to be delivered by City to any
Permitted Mortgagee under this Agreement, the DDA and/or the Property Documents to the
address for such Permitted Mortgagee contained in the Permitted Mortgage (as amended) last
Recorded, and no change to the name or address of any Permitted Mortgagee shall be deemed
effective or binding on the City unless it is contained in a Recorded Permitted Mortgage (as
amended) or Recorded assignment thereof or other document Recorded against the Parcel
encumbered by the Permitted Mortgage,with a copy delivered to the City Clerk and to the City in
accordance with Section 5(c) of this Agreement. Neither party shall refuse or reject delivery of
any notice given in accordance with this Section 5(c).
(d) Nothing herein or in any of the Loan Documents or Property Documents
shall be deemed to constitute the Lender as a joint venturer or partner of the City.
(e) This Agreement shall be governed by the laws of the State of California,
irrespective of California's choice-of-law principles.
(f) The parties agree to submit to personal jurisdiction in the State of California
in any action or proceeding arising out of this Agreement. The parties hereby agree and consent
that without limiting other methods of obtaining jurisdiction,personal jurisdiction over the parties
in any such action or proceeding may be obtained within or without the jurisdiction of any court
located in California and that any process or notice of motion or other application to any such court
in connection with any such action or proceeding may be served upon the parties by registered or
certified mail to or by personal service at the last known address of the parties, whether such
address be within or without the jurisdiction of any such court. Any legal suit, action or other
proceeding by one Party to this Agreement against the other arising out of or relating to this
Agreement shall be instituted only in the courts of the State of California, County of Orange or the
United States District Court for the Central District of California, and each Party hereby waives
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any objections which it may now or hereafter have based on venue and/or forum non-conveniens
of any such suit, action or proceeding and submits to the jurisdiction of such courts.
(g) To the extent permitted by law, each of Borrower, Lender and the City
waives its respective rights to a trial by jury of any claim or cause of action based on, arising from,
or related to or arising out of this Agreement, in any action, proceeding, or other litigation of any
type brought by either party against the other, whether with respect to any cause of action in law
or equity. Borrower,Lender and the City agree that any such claim or cause of action shall be tried
by a court trial without a jury. Without limiting the foregoing, the parties further agree that their
respective right to a trial by jury is waived by operation of this section as to any action, claim,
counter-claim, or other proceeding that seeks, in whole or in part, to challenge the validity or
enforceability of this Agreement. This waiver shall apply to any future amendments, renewals,
supplements, or modifications to this Agreement.
(h) If any Parry to this Agreement institutes any action, suit, counterclaim or
other proceeding for any relief against another Party, declaratory or otherwise (collectively an
"Action"), to enforce the terms hereof or to declare rights hereunder or with respect to any
inaccuracies or material omissions in connection with any of the covenants, representations,
warranties or obligations on the part of the other Party to this Agreement,then the Prevailing Party
in such Action shall be entitled to have and recover of and from the non-Prevailing Party all costs
and expenses of the Action, including (a)the Prevailing Party's reasonable attorneys' fees which,
regardless of which Party is the Prevailing Party, shall be payable at the actual contractual hourly
rate for City's litigation counsel at the time the fees were incurred, but in no event more than
$200.00 per hour and (b) costs actually incurred in bringing and prosecuting such Action and/or
enforcing any judgment, order,ruling or award (collectively, a"Decision") granted therein, all of
which shall be deemed to have accrued on the commencement of such Action and shall be paid
whether or not such Action is prosecuted to a Decision.Any Decision entered in any final judgment
shall contain a specific provision providing for the recovery of all costs and expenses of suit,
including reasonable attorneys' fees and expert fees and costs (collectively "Costs") incurred in
enforcing,perfecting and executing such judgment. For the purposes of this paragraph, Costs shall
include in addition to Costs incurred in prosecution or defense of the underlying action,reasonable
attorneys' fees, costs, expenses and expert fees and costs incurred in the following: (a)post
judgment motions and collection actions; (b)contempt proceedings; (c) garnishment,levy, debtor
and third party examinations; (d) discovery; (e) any bankruptcy, reorganization, insolvency,
composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of
creditors, or custodianship action or proceeding under any federal or state law with respect to the
Borrower, any Loan Guarantor of any of the Indebtedness, any of their respective properties, or
any of their respective partners, members, officers, directors, or shareholders; and (f) appeals of
any order or judgment. "Prevailing Party" within the meaning of this Section 5(h) 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. The provisions of this Section 5(h) shall survive the expiration or
termination of this Agreement.
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(i) If any one or more of the provisions contained in this Agreement, or any
application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein, and any other application thereof,
shall not in any way be affected or impaired thereby.
0) The term of this Agreement shall commence on the date hereof, and shall
terminate(except for provisions that expressly state that they survive any expiration or termination
of this Agreement, which shall remain in effect) only upon the earliest to occur of the following
events: (i) the payment of all of the Indebtedness and the release of the Security Instrument (it
being agreed that in no event shall the Indebtedness be deemed to have been repaid in connection
with the completion of a Foreclosure, regardless as to the amount bid by Lender, unless Lender
receives payment in cash in full of the Indebtedness from a third party,not including any Affiliate
of Lender, in connection with such Foreclosure); (ii)the completion of a Foreclosure, (iii) Lender
receipt following the close of escrow of the amounts to which it is entitled following exercise of
the Right of Repurchase by the City as provided in Section 16.3 of the DDA or the amounts to
which Lender is entitled following exercise of the Right of Reversion by the City as provided in
Section 16.4 of the DDA; (iv) issuance by the City of a Certificate of Compliance in accordance
with Section 9 of the DDA with respect to all portions of the Parcel secured by the Security
Instrument,or(v)the termination of the DDA;provided that(1)in the event of a termination under
clause i above, then following such termination if any payment on account of the Indebtedness
is avoided, set aside, rescinded or repaid by the Lender due to order of any bankruptcy court or
any other applicable court(and provided that none of the events described in clauses (iii), (iv), or
U has then occurred),this Agreement shall be reinstated and shall remain in effect until the earlier
of(A) the satisfaction of clause i above with respect to such reinstated Indebtedness or (B) the
termination of this Agreement as a result of the occurrence of any one of the events in clauses (iii),
(iv), or (v) above, and (2) no termination of this Agreement shall terminate any party's rights or
liability with respect to breaches or defaults under this Agreement occurring prior to such
termination.
(k) No failure or delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof,nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise thereof or the exercise
of any other right,power or remedy hereunder.
(1) Except for any limitations expressly provided in this Agreement, the DDA
or the other Property Documents, each party hereto acknowledges that in the event any party fails
to comply with its obligations hereunder,the other parties shall have all rights available at law and
in equity, including the right to obtain specific performance of the obligations of such defaulting
party and injunctive relief.
(m) Nothing in this Agreement is intended, nor shall it be construed, to in any
way limit the exercise by the City of its governmental powers (including but not limited to police,
regulatory and taxing powers)with respect to the Borrower or the Mortgaged Property to the same
extent as if it were not a party to this Agreement or the transactions contemplated hereby.
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(n) This Agreement may be amended, changed,modified, altered or terminated
only by a written instrument or written instruments signed by the parties of this Agreement.
(o) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.
[Signature and Acknowledgement Pages to Follow]
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
INSERT LENDER
By:
Name:
Dated: Title:
CITY:
CITY OF TUSTIN:
Dated: By:
Matthew S. West, City Manager
ATTEST:
Erica N. Yasuda, City Clerk
APPROVED AS TO FORM:
By:
David Kendig, City Attorney
Armbruster Goldsmith& Delvac LLP
Tustin Special Real Estate Counsel
By:
Amy E. Freilich
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CONSENT OF BORROWER
The Borrower, ,a ,hereby acknowledges receipt of a copy
of this Tustin Cornerstone I Subordination Agreement(Phase 2 Parcel), dated as of ,
by and between ("Lender") and the City of Tustin, California, a
municipal corporation duly organized and existing under the laws of the State of California, and
consents to the agreement of the parties set forth herein and further consents to the waiver of jury
trial provisions set forth in Section 5(g) of this Agreement. Borrower agrees that Lender is
authorized to deliver to the City all notices and other information required or permitted to be
delivered by Lender under this Agreement or any of the Property Documents. Notwithstanding
Borrower's execution of this Consent of Borrower (and notwithstanding any provisions of this
Agreement to the contrary), Borrower is not a third party beneficiary of this Agreement,
Borrower's consent shall not be required for any amendment of this Agreement by and between
Lender and the City, and as between Borrower and Lender, nothing contained in this Agreement
shall modify, amend or limit Lender's rights and remedies under the Loan Documents.
PHASE 2 DEVELOPER/BORROWER
, a
By:
Name:
Authorized Signatory
Date:
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
State of California )
County of )
On ,before me, ,
(insert name of notary)
Notary Public, personally appeared
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
State of California )
County of )
On ,before me, ,
(insert name of notary)
Notary Public, personally appeared
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Comerstone I
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
State of California )
County of )
On ,before me, ,
(insert name of notary)
Notary Public, personally appeared
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Comerstone I
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EXHIBIT A
LEGAL DESCRIPTION OF PARCEL
Real property in the City of Tustin, County of Orange, State of California, described as follows:
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Comerstone I
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EXHIBIT B
LIST OF LOAN DOCUMENTS
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EXHIBIT C
FORM OF CITY STATEMENT
20
[Transferee/Permitted Mortgagee]
Attn:
Re: Tustin Legacy Cornerstone I
Ladies and Gentlemen:
The undersigned is writing this letter to you ("Permitted Mortgagee") regarding that
certain office project ("Project") that [has been] [may be] constructed pursuant to the terms of
that certain Tustin Cornerstone I Subordination Agreement (Phase 2) by and between the City of
Tustin, a municipal corporation of the State of California (the "City"), and
, the [predecessor in interest to] Permitted Mortgagee dated
20 and recorded against the Parcel in the Official Records
("Subordination Agreement") on the Parcel. All initially capitalized terms used and not defined
herein shall have the meanings set forth in the Subordination Agreement.
The City and , a ("Developer" or "Borrower") as successor-by-
assignment to Flight Venture LLC, a Delaware limited liability company ("Original Developer")
and Flight Phase I Owner LLC ("Phase 1 Developer") entered into that certain Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of November 15, 2016 as
amended by (1) that certain First Amendment to Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of June 20,2017("First Amendment"),(2)that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1,2019("Second Amendment"),and(3) that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of December [•], 2020
("Third Amendment"); the Original DDA, First Amendment, Second Amendment, and Third
Amendment referred to collectively in this City Statemen as the"DDA),relating to the conveyance
from the City to Original Developer or its successor of among other things, the Parcel.
The City has executed that certain Declaration of Special Restrictions for {insert
appropriate document for the Phase covered by this Statement: Phase 2 Parcel [Add correct
title] dated recorded in the Oficial Records against title to the Development
Parcels on as Instrument No. or for a City Statement covering
Phase 2 Parcel: that certain Declaration of Special Restrictions for Phase 2 Parcel[Add correct
title], dated , recorded in the Oficial Records against title to the Development
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Parcels on as Instrument No. } (the "Special Restrictions"), which
include,among other matters,certain requirements regarding the use and maintenance of the Parcel
and set forth those provisions of the DDA that survive the issuance of a Certificate of Compliance
with respect to the Project.
The City has executed that certain {insert appropriate document for Phase 2: Quitclaim
Deed for Cornerstone I and Covenants, Conditions and Restrictions, Including Environmental
Restriction Pursuant to Civil Code Section 1471 dated , recorded in the Oficial
Records against title to the Development Parcels on as Instrument No.
or that certain Quitclaim Deed for Cornerstone I and Covenants, Conditions and
Restrictions (Phase 2), Including Environmental Restriction Pursuant to Civil Code Section 1471,
dated , which was recorded in the Oficial Records against title to the Parcel on
as Instrument No. } (the "Quitclaim Deed") which Quitclaim Deed
conveyed to Developer the fee title to the Parcel, subject to certain restrictions and limitations set
forth in the Quitclaim Deed.
City and Original Developer entered into that certain Tustin Legacy Cornerstone I
Development Agreement dated as of December 15, 2016 and recorded in the Official Records on
March 30, 2017 as Instrument No. 2017000128365 [as amended by that certain First Amendment
to Development Agreement by and between City and Phase I Developer dated as of
and recorded in the Oficial Records on as Instrument No.
(collectively, the][(]"DA").
City and Phase 1 Developer executed that certain Landscape Installation and Maintenance
Agreement dated and recorded on June 29, 2017 in the Official Records against title to the
Development Parcels as Instrument No. 2017000270817 (the "Landscape Agreement"), and that
certain Roadway and Utility Easement dated and recorded on June 29,2017 in the Official Records
against title to the Development Parcels as Instrument No. 2017000270818 (the "Roadway and
Utility Easement").
The DDA,the Memorandum of DDA,the Special Restrictions,the DA,the Quitclaim Deed
the Landscape Agreement, the Roadway and Utility Easement, and any other agreements or
instruments included within the definition of "Property Documents" in the Subordination
Agreement, are collectively referred to herein as the"Property Documents."
By its execution of this letter,the City hereby confirms to you that:
I. As of the date of this letter, to the actual knowledge of the City Manager, after
consultation by the City Manager with, as to each such confirmation, the City Director of Finance
or such other individual employed by the City that the City Manager in good faith believes to be
best informed as to such matter(and without any other duty of inquiry):
(i) except as set forth on Attachment I to this letter, the Property Documents
are in full force and effect and have not been modified or amended [since
the previous Lender Statement dated , 20 /from the
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executed copies of the Property Documents delivered by the City to escrow
concurrently with the date of delivery of the Subordination Agreement];
(ii) except as set forth on Attachment 2 to this letter, the City has not delivered
to Borrower or Guarantor any City Notice, and Attachment 2 indicates
whether the matters set forth in any such City Notice have been waived by
City or cured to the City's satisfaction;
(iii) [TO BE INCLUDED ONL YIN THE CITY STA TEMENT DELI VERED
IN CONNECTION WITH THE PHASE 2 PROPERTY CLOSE OF
ESCROW.• except as set forth on Attachment 2 to this letter, the entire
Phase 2 Property Base Purchase Price has been paid to the City and
Borrower does not owe any other sums to the City under the Property
Documents;J
(iv) [TO BE INCLUDED ONLYIN THE CITYSTATEMENT DELIVERED
IN CONNECTION WITH THE PHASE 2 PROPERTY CLOSE OF
ESCROW.•except as set forth on Attachment 2 to this letter, all conditions
of Section 4.6 of the DDA have been satisfied (other than any conditions
that apply solely to the Phase I Parcel),-]
(v) [TO BE INCLUDED ONL YIN THE CITYSTATEMENT DELIVERED
IN CONNECTION WITH THE FIRST LOAN FUNDING
FOLLOWING THE BORROWER CERTIFICATION TO CITY OF
THE OCCURRENCE OF THE EQUITY COMPLETION DATE: to the
extent required by the DDA, all plans and specifications for the
Improvements to the Mortgaged Property that as of the date hereof require
the City's approval have been approved.]
2. [TO BE INCLUDED ONLY IN THE CITY STATEMENT DELIVERED IN
CONNECTION WITH THE FIRST LOAN FUNDING FOLLOWING THE BORROWER
CERTIFICATION TO CITY OF THE OCCURRENCE OF THE EQUITY COMPLETION
DA TE.]The City has received from Borrower the certification and other information required to
be delivered to the City pursuant to Section 16.4.8 of the DDA, and the City confirms that the
Equity Completion Date has occurred and the City no longer has the right to exercise the Right of
Reversion (except as expressly provided in Section 16.4.8 of the DDA upon a Non-Permitted
Foreclosure Event);provided that such confirmation by the City is subject to the City's rights
against Developer pursuant to Section 16.4.8 of the DDA if such information provided by the
Developer to the City is not true and correct.]
3. Based upon invoices received by the City and amounts expended by the City as of
the date that is the last month end that is at least 15 days prior to the date hereof,the amount of the
City Lien due and owing to the City from Developer pursuant to the DDA and the Property
Documents (after application of any amount then available in the account holding the City Cost
Deposit available to pay for such amount owing to the City) does not exceed[insert amount].
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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[Remainder ofpage left blank]
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The undersigned acknowledges that Lender and its successors and assigns may rely upon this
letter. This letter may not be relied upon by any other party or for any other purpose without the
express written consent of the City. This certificate shall be binding upon the City and its
successors and assigns. In no event shall the person signing this letter have any personal liability
hereunder.
CITY OF TUSTIN
Dated: , 20 By:
Name:
Its City Manager
APPROVED AS TO FORM
By:
David Kendig, City Attorney
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
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Attachment 1
Modifications, Supplements or Amendments to Property Documents
1. [enter "None"if there are no qualifications]
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
Subordination Agrat Phase 2 11-17-2020(agd) (REVISED)
FINAL EXHIBIT C
Attachment 1
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Attachment 2
Qualifications to Matters Confirmed in Statement
1. [enter "None"if there are no qualifications]
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
Subordination Agrat Phase 2 11-17-2020(agd) (REVISED)
FINAL EXHIBIT C
Attachment 2
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT D
FORM OF LENDER STATEMENT
20
City of Tustin
Attn:
Re: Tustin Legacy Cornerstone I
Ladies and Gentlemen:
The undersigned, on behalf of ("Lender") is writing this letter to you
("City") regarding that certain office project ("Project") that [has been] [may be] constructed
pursuant to the terms of that certain Subordination Agreement by and between the City of Tustin,
a municipal corporation of the State of California (the "City") and , the
[predecessor in interest to] Permitted Mortgagee dated , 20 and recorded
against the Parcel in the Official Records ("Subordination Agreement") on the Parcel. We are a
Lender under the Subordination Agreement.Initially capitalized terms used and not defined herein
shall have the meanings set forth in the Subordination Agreement.
The City and , a ("Developer" or "Borrower") as successor-by-
assignment to Flight Venture LLC, a Delaware limited liability company ("Original Developer")
and Flight Phase I Owner LLC ("Phase 1 Developer"), a Delaware limited liability company,
entered into that certain Tustin Legacy Disposition and Development Agreement Cornerstone I
dated as of November 15,2016 as amended by (1) that certain First Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of June 20, 2017
("First Amendment"), (2)that certain Second Amendment to Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of October 1,2019 ("Second Amendment"),and
(3)that certain Third Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of December [•], 2020 ("Third Amendment"); the Original DDA, First
Amendment, Second Amendment, and Third Amendment referred to collectively in this City
Statemen as the "DDA), relating to the conveyance from the City to Original Developer or its
successor of among other things, the Parcel. , a ("Phase 2 Developer"
or "Borrower") is the successor-in-interest to the Original Developer with respect to the Parcel
under the DDA. Lender and Developer, as the borrower thereunder, subsequently executed the
Loan Documents listed on Exhibit B to the Subordination Agreement at the time of the Phase 2
Property Close of Escrow.
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
Subordination Agrat Phase 2 11-17-2020(agd) (REVISED)
FINAL EXHIBIT D
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
As of the date of this letter,to the actual knowledge of[insert as applicable:Loan Officer
or Asset Manager]of Lender for the Loan, after consultation with, as to each such confirmation,
such other individual employed by the Lender that such[Loan Officer or Asset Manager]in good
faith believes to be best informed as to such matter(and without any other duty of inquiry):
1. Except as shown on Attachment I to this letter,the Loan Documents have not been
modified or amended[since the previous Lender Statement dated , 20 /from the
executed copies of the Loan Documents delivered by Lender and Borrower to escrow concurrently
with the execution of the Subordination Agreement].
2. Except as listed on Attachment 2 to this letter,Lender has not delivered to Borrower
or recorded against the Parcel any written notice of the existence of a Loan Default(in each case
to the extent not previously sent to the City), and Attachment 2 indicates whether any such Loan
Default has been waived by Lender or cured to Lender's satisfaction in accordance with the Loan
Documents;provided that the foregoing shall not apply to email correspondence except in the case
that the Loan Documents specifically provide that email correspondence constitutes valid notice
of default for the purposes of the Loan Documents.
3. As of , 20 [insert date as close as possible to Statement date]the
outstanding principal amount advanced by the Lender pursuant to the Loan Documents (after
deducting therefrom payments of principal received by Lender from all sources, including if
applicable, Borrower, Loan Guarantors, City and/or other Persons) is $
4. As of , 20 [insert date as close as possible to Statement date]the
amount of accrued and unpaid interest owed to the Lender is $
The undersigned acknowledges that City and only City may rely upon this letter.This letter
may not be relied upon by any other party or for any other purpose without the express written
consent of the Lender. This certificate shall be binding upon the Lender and its successors and
assigns. In no event shall the person signing this letter have any personal liability hereunder.
LENDER
Dated: , 20 By:
Name:
Its [INSERT TITLE]
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
Subordination Agrat Phase 2 11-17-2020(agd) (REVISED)
FINAL EXHIBIT D
2
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Attachment 1
Modifications or Amendments to Loan Documents
1. [enter "None"if there are no qualifications]
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
Subordination Agrat Phase 2 11-17-2020(agd) (REVISED)
FINAL EXHIBIT D
Attachment 1
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Attachment 2
Qualifications to Matters Confirmed in Statement
1. [enter "None"if there are no qualifications]
Tustin Cornerstone I DDA Att 24 Revised ATTACHMENT 24 City of Tustin/Cornerstone I
Subordination Agrat Phase 2 11-17-2020(agd) (REVISED)
FINAL EXHIBIT D
Attachment 2
1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 8
ATTACHMENT 28 (REVISED)
PHASE 2 PROPERTY PURCHASE PRICE
AND OPTION PAYMENT SCHEDULE
Tustin Cornerstone 1 Third Amendment to DDA Schedule 8 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 28
(REVISED)
DocuSign Envelope ID:201EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 28(REVISED)
PHASE 2 PROPERTY BASE PURCHASE PRICE AND OPTION PAYMENT SCHEDULE
ATTACHMENT28—TABLE 1
Phase 2 Property Base Purchase Price and Option Payments
1 2 3 4
Yrs. Commencement Date Phase 2 Property Option Payments
Base Purchase Price
1 06/29/2017 $ 31,390,643 $ 2
2 06/30/2018 $ 32,332,362 $ 100,000
3 06/30/2019 $ 33,302,333 $ 200,000
4 06/30/2020 $ 34,301,403 $ 300,000
5 06/30/2021 $ 35,330,445 $ 400,000
6 06/30/2022 $ 37,450,272 $ 500,000
TOTAL $ 1,500,002
NOTE:Table 1
OPTION YEARS:Year 1 referred to(in column 1 above)corresponds to the"First Option Year'which commences on the date of the Phase 1 Property Close of Escrow
(Commencement Date in column 2 above)and continues until the date that is the first anniversary of the Phase 1 Property Close of Escrow.Each following Option Year
(Years 2 through 6 as shown in column 1)commences on the day following the anniversary of the Phase 1 Property Close of Escrow(shown column 2 above)and
continues until the succeeding anniversary date of the Phase 1 Property Close of Escrow,except that the Option period Year 6 terminates on December 30,2022.Thus,
Year 2 commences on the day following the first anniversary of the Phase 1 Property Close of Escrow and continues until the second anniversary date of the Phase 1
Property Close of Escrow,Year 3 commences on the day following the second anniversary of the Phase 1 Property Close of Escrow and continues until the third
anniversary date of the Phase 1 Property Close of Escrow,and so forth.
OPTION PAYMENT:The Option Payment for Year 1($2)is due upon the Phase 1 Property Close of Escrow(June 29,2017). To extend the Option for each of years 2
through 6,Developer shall pay the Option Payment shown in column 4 for that year on the date that is no earlier than 60 calendar days and no later than 30 calendar
days prior to the expiration of the prior Option Year.Therefore,payment to extend the Option for Year 2 in the amount of$100,000 shall be paid no earlier than 60
calendar days and no later than 30 calendar days prior to the expiration of First Option Year(Year 1)and,if the Option then remains in effect,payment to extend the
Option for year 6,in the amount of$500,000,shall be paid no earlier than 60 calendar days and no later than 30 calendar days prior to the fifth anniversary of the Phase 1
Property Close of Escrow(June 29,2022).
PHASE 2 PROPERTY BASE PURCHASE PRICE:If the Option is exercised in any Option Year,the amount of the Phase 2 Property Base Purchase Price shall be determined
based on the Option Year in which the Phase 2 Property Close of Escrow takes place. Therefore,provided that the Option has been properly extended,the Phase 2
Property Base Purchase Price shall increase on the succeeding Option Year Commencement Date shown in column 2 to the Phase 2 Property Base Purchase Price shown
in column 3 regardless of whether the Option was exercised in the preceding Year.Therefore,if the Option to Purchase is exercised in Year 5 and the Close of Escrow
occurs in Year 5(i.e.,in the period between June 30,2021 and June 29,2022),then the Phase 2 Property Base Purchase Price due shall be in the amount shown in
column 3 for Year 5($35,330,445),but if the Phase 2 Property Close of Escrow pursuant to that exercise to purchase does not occur until Year 6(i.e.,in the period
between June 30,2022 and December 30,2022)the applicable Purchase Price due shall be for Year 6 in the amount shown in column 3 for Year 6($37,450,272). .
Tustin Cornerstone I DDA Art 28 Revised Phase 2 Price ATTACHMENT 28(REVISED) City of Tustin/Cornerstone I
and Option Payment Schedule 11-12-2020(agd) I
DocuSign Envelope ID:201EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Phase 2 Property Option Payment and Option Credit Summary
ATTACHMENT 28—TABLE 2
Phase 2 Property Option Payment Summary
1 2 3 4 5
Option Year Option Amount Commencement Date Option Payment Option Credit
Cash Payment Option Credit Utilized Option Credit Available Option Credit Remainder
1 $2 06/29/2017 $2 $0 $0 $0
2 $100,000 06/30/2018 $100,000 $0 $0 $0
3 $200,000 06/30/2019 $0 $200,000 $263,845 $63,845
4 $300,000 06/30/2020 $0 $300,000 $1,644,511 $1,344,511
5 $400,000 06/30/2021 *$0 *$400,000 $1,344,511 *$944,511
6 $500,000 06/30/2022 1 *$0 *$500,000 *$944,511 *$444,511
The Final Approved Option Credit Amount for all of the Phase 2 Reimbursable Improvements has been agreed by the Parties to be equal to$1,844,511.00(Total Option Credit).
Option Credit was issued at various periods as Phase 2 Reimbursable Facilities were completed,approved and accepted. Upon completion,approval and acceptance of all Phase
2 Reimbursable Improvements,costs were reconciled and Total Option Credit of$1,844,511.00 was confirmed as available to Developer. All Phase 2 Reimbursable
Improvements have been completed,approved and accepted;no further Option Credit may be requested or issued.
Both the Year 1 and Year 2 Option Payments were satisfied utilizing a Cash Option Payment. Both the Year 3 and Year 4 Option Payments were satisfied utilizing available Option
Credit. Projected future Option Payments utilizing available Option Credit and the resulting Option Credit Remainder have been identified in Table 2 in bold italics.
*Projected values based on payment of year 5 and year 6 Option Payments utilizing available Option Credits
Tustin Cornerstone I DDA Att 28 Revised Phase 2 Price ATTACHMENT 28(REVISED) City of Tustin/Cornerstone I
and Option Payment Schedule 11-12-2020(agd) 2
DocuSign Envelope ID:201EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 28-TABLE 3,EXAMPLE
Reimbursable Phase 2 Improvements-Option Credit and Payment Example In the Event of Option Transfer
1 2 3 4 5 6 7 8 9
Yrs. Phase 2 Property Base Option Payments Option Credit- Cash Option Cumulative Credit Net Phase 2 City Payment to Option Credit
Purchase Price Working Developer Payment toward Phase 2 Property Base Working Remainder
Property Base Purchase Price Developer (reimbursable
Purchase Phase 2)
1 $ 31,390,643 $ 2 $ $ 2 $ 2 $ 31,390,641 $ $ 1,844,511
2 $ 32,332,362 $ 100,000 $ $ 100,000 $ 100,002 $ 32,232,360 $ $ 1,844,511
3 $ 33,302,333 $ 200,000 $ 200,000 $ - $ 100,002 $ 33,202,331 $ $ 1,644,511
4 $ 34,301,403 $ 300,000 $ 300,000 $ - $ 100,002 $ 34,201,401 $ $ 1,344,511
5 $ 35,330,445 $ 400,000 $ - $ 400,000 $ 100,002 $ 35,230,443 $ 400,000 $ 944,511
6 $ 37,450,272 $ 500,000 $ - $ 500,000 $ 100,002 $ 37,350,270 $ 500,000 $ 444,511
TOTAL $ 500,000 $ 1,000,002
NOTE:Table 3-Example
In this example,the Total Option Credit is$1,844,511 as approved by the City for the Reimbursable Phase 2 Improvements.When there is an assignment of the Option
to an Optionee that is not the Working Developer,the Phase 2 Developer/Optionee will be required to make Cash Option Payments(column 5).This example assumes
that the"Working Developer"assigns the Option to the"Optionee"during Year 4,prior to extending the Option in Year 5.In this example:
(1) To extend the Year 1 Option(which has occurred),a Cash Option Payment of$2 was paid to the City by Working Developer. Such Cash Option Payment is
credited against the Phase 2 Property Base Purchase Price(column 7).To extend the Year 2 Option(which has occurred),a Cash Option Payment of$100,000
was paid to the City by Working Developer. Such Cash Option Payment is credited against the Phase 2 Property Base Purchase Price(column 7).
(2) To extend the Year 3 Option(which has occurred),an Option Credit of$200,000 was applied and the Option Credit Remainder in that year(in the amount of
$1,644,511)is shown in column 9. Such Option Credit is not credited against the Phase 2 Property Base Purchase Price(column7).To extend the Year 4 Option
(which has occurred),an Option Credit of$300,000 was applied and the Option Credit Remainder in that year(in the amount of$1,344,511)is shown in column
9. Such Option Credit is not credited against the Phase 2 Property Base Purchase Price(column7).
(3) Assuming a Transfer of Phase 2 that includes the Option occurs in Year 4 prior to an extension of the Option for Year 5,to extend the Option for Year 5 the
Optionee is required to make a Cash Option Payment to the City prior to the commencement of Option Year 5 in the amount shown for Year 5 in column 5(i.e.,
$400,000),and if so paid,the City shall then pay to the Working Developer the amount of the Cash Option Payment it received(column 8).The Cash Option
Payments paid by Optionee in these years are not credited against the Phase 2 Property Base Purchase Price(column7)but do reduce the Option Credit
Remainder(column 9).
If in each of Year 5 and Year 6 no Transfer of Phase 2 and the Option has previously taken place,then in each of Years 5 and 6,the Optionee may continue to apply
Option Credit in the amount shown in column 3 and the Option Credit Remainder shall be the amount indicated for that year in column 9(i.e.,$944,511 remaining in
Year 5 and$444,511 remaining in Year 6),which amounts shall not be credited against the Phase 2 Property Base Purchase Price(column 7).
Tustin Cornerstone I DDA Art 28 Revised Phase 2 Price ATTACHMENT 28(REVISED) City of Tustin/Cornerstone I
and Option Payment Schedule 11-12-2020(agd) 3
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 9
ATTACHMENT 13D (NEW)
FORM OF REAFFIRMATION OF GUARANTY BY APPROVED GUARANTOR
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 9 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 13D
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 13D
FORM OF GUARANTOR REAFFIRMATION CERTIFICATE (PHASE 2)
This Certificate is being delivered pursuant to that certain Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of November 15, 2016 ("Original DDA"), as
amended by (1)that certain First Amendment to Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of June 20, 2017 ("First Amendment"), (2)that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1, 2019("Second Amendment"), and(3)that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of December [•], 2020
("Third Amendment"; the Original DDA, First Amendment, Second Amendment, and Third
Amendment referred to collectively in this Certificate as the "DDA"), by and between Flight
Phase I Owner LLC, as successor-by-assignment to Flight Venture LLC, each a Delaware limited
liability company ("Developer"), and the City of Tustin, a municipal corporation of the State of
California (the "City"). [Add additional DDA Amendments and further assignments if
applicable above.] Capitalized terms used herein that are not defined herein shall have the
meanings specified in the DDA.
This Certificate is being delivered by Developer pursuant to Section 4.6.3(d)of the DDA to satisfy
the Phase 2 Construction Commencement Conditions.
[Modify this paragraph if more than one Guarantor]I, the undersigned, am the duly elected and
qualified[state office held]of[•], a [•] duly organized and existing under the laws of the State of
[•] ("Guarantor"), and am authorized by Guarantor to make the certifications contained in this
Certificate. I further certify to the City, in my capacity as an officer of Guarantor and for and on
behalf of Guarantor, as follows:
1. Reaffirmation of Guaranty. Guarantor (a) reaffirms the Guaranty and
(b) acknowledges and agrees that upon the City's delivery of the Satisfaction Date Notice all of
those Guaranteed Obligations (as defined in the Guaranty) that become effective upon the
Satisfaction Date shall be in full force and effect and binding on Guarantor.
2. Original Certificate. All information and statements contained in the Guarantor
Certificate (Phase 2) dated [•], 20[•] ("Original Certificate") attached hereto as Exhibit A remain
true and correct as of the date of this Certificate [, except as otherwise specifically set forth on
Schedule I attached hereto).[If any previously delivered instruments have been amended, they
shall be attached, and if any previously delivered information has been amended, updated
information shall be provided to the City and new certification made]
3. Financial and Other Information. All financial and other information submitted by
or on behalf of Guarantor to the City pursuant to the DDA prior to or concurrent with the Phase 2
Close of Escrow remains true and correct as of the date of this Certificate, and all financial and
other information submitted by or on behalf of Guarantor to the City on or since the Effective Date
of the DDA remain true and correct as of the date of this Certificate{, except as otherwise
specifically set forth on Schedule I attached hereto). [If any previously delivered instruments or
information has been amended they shall be attached and new certification made]
Tustin Cornerstone I DDA Art 13D Guarantor ATTACHMENT 13D City of Tustin/Cornerstone I
Reaffirmation 11-12-2020(agd)(4)FINAL I
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
4. Organizational Documents. As of the date of this Certificate, each of the {insert
applicable formation documents of Company: [Certificate of Formation]) of Guarantor, the
{insert applicable governing documents of Company:[Operating Agreement,By-Laws, etc.]} of
Guarantor, and all consents and approvals referred to in the Original Certificate remain in full force
and effect and [except as otherwise specifically set forth on Schedule I attached hereto) have not
been modified, revoked, or otherwise amended or terminated. [If any previously delivered
instruments have been amended they shall be attached and new certification made]
5. Good Standing. Guarantor remains in good standing in [•] and California as of the
date of this Certificate. Attached to this Certificate as Exhibit B is a true and correct copy of the
certificate of good standing for the Company from the [•] Secretary of State, dated not earlier than
thirty (30) days prior to the date of this Certificate and, if Company is a foreign entity, a true and
correct copy of the certificate of status or good standing for Company from the California Secretary
of State, dated not earlier than thirty (30) days prior to the date of this Certificate.
6. Authority of Signatory. [Insert name of person signing]is a[insert office held]
of Guarantor and is in such capacity duly authorized by Guarantor to execute any and all
instruments, documents and other agreements required to be executed by Guarantor pursuant to
the terms and conditions of the DDA in accordance with the proceedings showing authority
attached to the Original Certificate.
7. Reliance. Guarantor acknowledges and agree that the City intends to rely on the
information in this Certificate, and this Certificate may be relied upon by the City. Without the
written consent of Guarantor no Person other than the City may rely on this Certificate for any
purpose.
8. No Personal Liability. In no event shall the individual executing this Certificate on
behalf of Guarantor have any personal liability hereunder.
[Remainder ofpage is blank—signature on next page.)
Tustin Cornerstone 1 DDA Art 13D Guarantor ATTACHMENT 13D City of Tustin/Cornerstone I
Reaffirmation 11-12-2020(agd)(4)FINAL 2
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
{Modify signature blocks as required)
Dated: 20 [•],
a [•]
By:
Name:
Authorized Signatory
[ACCEPTED AND AGREED:
[•] a [•]
By: [•]
By:
Name:
Authorized Signatory
[•] a [•]
By: [•]
By:
Name:
Authorized Signatory]
Tustin Cornerstone 1 DDA Art 13D Guarantor ATTACHMENT 13D City of Tustin/Cornerstone I
Reaffirmation 11-12-2020(agd)(4)FINAL S-1
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 10
ATTACHMENT 16D (NEW)
FORM OF QUALIFIED TRANSFEREE ASSIGNMENT AND ASSUMPTION
AGREEMENT PURSUANT TO SECTION 2.2.20)
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 10 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 16D
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 16D
FORM OF QUALIFIED TRANSFEREE ASSIGNMENT AND ASSUMPTION
AGREEMENT PURSUANT TO SECTION 2.2.20)
CITY OF TUSTIN OFFICIAL BUSINESS
REQUEST DOCUMENT TO BE
RECORDED AND TO BE EXEMPT FROM
RECORDING FEES PER
GOVERNMENT CODE 6103 AND 27383.
Recording requested by and
when recorded mail to:
City Manager
The City of Tustin
300 Centennial Way
Tustin, CA 92780
SPACE ABOVE THIS LINE FOR RECORDER'S USE
ASSIGNMENT AND ASSUMPTION AGREEMENT
(Cornerstone I—Phase 2)
This ASSIGNMENT AND ASSUMPTION AGREEMENT (Cornerstone I—Phase 2)
("Assignment")is made as of[e], 20[e] (the"Assignment Effective Date"),by and between [e],
a [e] ("Transferor") and [e], a [e] ("Transferee"), with reference to the following matters:
A. The City and Flight Venture LLC, a Delaware limited liability company, the
predecessor-in-interest to Transferor, entered into that certain Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of November 15, 2016, as amended by that certain
First Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated
as of June 20, 2017, that certain Second Amendment to Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of October 1, 2019, and that certain Third
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
December [*], 2020 (collectively, the"DDA"). {Add additional DDA Amendments if applicable
above.) All initially capitalized terms not otherwise defined in this Assignment shall have the
meanings ascribed to such terms in the DDA.
B. The DDA, among other things, provides for the conveyance from the City to
"Developer" (as that term is defined in the DDA) of certain real property legally described in the
DDA as the Development Parcels including the Phase 2 Parcel legally described on Exhibit"A"
attached hereto ("Phase 2 Parcel"), and the subsequent development of the Minimum Phase 2
Improvements by Developer on the Phase 2 Parcel and surrounding land as more fully described
in the DDA.
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- 1
13-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
C. Pursuant to the DDA,the City has previously conveyed the Phase 1 Parcel to Flight
Phase 1 Owner, LLC, a Delaware limited liability company, and the Phase 1 Project,including the
Minimum Horizontal Improvements, has been Completed and the City has issued a Certificate of
Compliance for the Phase 1 Project dated March 26, 2020 and recorded in the Official Records on
March 26, 2020 as Instrument No. 2020000137939.
D. Prior to conveyance by the City of the Phase 2 Property, Developer assigned the
Phase 2 Parcel and the Phase 2 Interests to [{If same as Transferor:} Transferor]/[if different
from Transferor:} {insert any further assignments and documentation
prior to Phase 2 Property Close ofEscrow and define the final owner prior to Phase 2 Property
Close ofEscrow as} ("Phase 2 Developer')]pursuant to that certain Assignment and Assumption
Agreement dated [e] and Recorded in the Official Records on [0].
E. The City conveyed the Phase 2 Property to [{If same as Transferor:} Transferor]
/ [if different from Transferor:} Phase 2 Developer pursuant to the Phase 2 Quitclaim Deed
(defined below). {Insert any further assignments and documentation following the Phase 2
Property Close ofEscrow to get to point where ownership of Phase 2 Property is in Transferor:}
F. Transferor and Transferee agree that Transferee meets the requirements of a
Qualified Transferee, and Transferor now desires to Transfer to Transferee the Phase 2
Transferable Interests pursuant to the provisions of Section 2.2.20) of the DDA which permit
Transfer to a Qualified Transferee under specified circumstances and upon satisfaction of certain
conditions precedent, all of which have occurred.
G. City and Developer have also previously entered into: {Add additional
amendments to all subsections below, if applicable.}
a. that certain Memorandum of Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of November 15, 2016 and recorded in the Official Records
against title to the Development Parcels on June 29, 2017 as Instrument No. 2017000270814
("Initial Memorandum");
b. that certain Memorandum of Second Amendment and Third Amendment to Tustin
Legacy Disposition and Development Agreement Cornerstone I recorded in the Official Records
against title to the Phase 2 Parcel on [e] as Instrument No. [e] ("Additional Memorandum", and
together with the Initial Memorandum, the "DDA Memoranda");
C. that certain Development Agreement by and between the City and Developer with
an effective date of December 15, 2016 and recorded in the Official Records against title to the
Development Parcels on March 30, 2017 as Instrument No.2017000128365, [as amended by that
certain First Amendment to Development Agreement dated as of[*], 2020 and recorded in the
Oficial Records against title to the Development Parcels on [*], 2020 as Instrument No. [�J
(collectively, the) [(}"DA");
d. that certain Quitclaim Deed for Tustin Cornerstone I — Phase 2 and Covenants,
Conditions and Restrictions, Including Environmental Restriction Pursuant to Civil Code Section
1471 made by the City in favor of Transferor on [e], 20[*]—and recorded in the Official Records
against title to the Phase 2 Parcel as Instrument No. [e] ("Phase 2 Quitclaim Deed");
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- 2
13-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
e. that certain Declaration of Special Restrictions for Cornerstone I (Phase 2 Parcel)
by and between the City and Transferor dated as of[e], 20[e] and recorded in the Official Records
against the Phase 2 Parcel as Instrument No. [e] ("Phase 2 Special Restrictions");
f. that certain Roadway, Landscape and Utility Easement Agreement by and between
the City and Flight Phase 1 Owner LLC dated as of June 29, 2017 and recorded in the Official
Records against title to the Phase 1 Parcel and the Phase 2 Parcel on June 29, 2017 as Instrument
No. 2017000270817 ("Roadway and Utility Easement Agreement");
g. that certain Landscape Installation and Maintenance Agreement by and between
the City and Flight Phase 1 Owner LLC dated as of June 29, 2017 and recorded in the Official
Records against title to the Phase 1 Parcel and the Phase 2 Parcel on June 29, 2017 as Instrument
No. 2017000270818 ("Landscape Installation and Maintenance Agreement");
h. that certain Declaration of Covenants, Conditions and Restrictions and
Establishment of Easements for The Flight at Tustin Legacy made by Flight Phase 1 Owner LLC
as Declarant and dated as of June 29, 2017 and recorded in the Official Records on June 29, 2017
against title to the Phase 1 Parcel and Instrument No. 201700027820 (the"Original CC&Rs"), as
supplemented by that certain [Supplemental Declaration of Covenants, Conditions and
Restrictions for The Flight at Tustin Legacy]' dated as of[*], 20[*]and recorded in the Oficial
Records on[*], 20[*]against title to the Phase 2 Parcel as Instrument No. [*]] ("Supplemental
Declaration;" and together with the Original CC&Rs, the "CC&Rs");
i. that certain Supplemental Purchase Price and Profit Participation Agreement by and
between City and Transferor dated as of [e], 20[e] (the "Supplemental Purchase Price and
Profit Participation Agreement"); and
j. that certain City Deed of Trust made by Transferor for the benefit of the City dated
as of [e], 20[e] and recorded in the Official Records against title to the Phase 2 Parcel as
Instrument No. [e] (the"City Deed of Trust").
The DDA, the DDA Memoranda, the DA, the Phase 2 Quitclaim Deed, the Phase 2 Special
Restrictions, the Roadway and Utility Easement Agreement, the Landscape Installation and
Maintenance Agreement, the CC&Rs, the Supplemental Purchase Price and Profit Participation
Agreement, and the City Deed of Trust are hereinafter referred to herein collectively as the
"Documents".
H. Transferor owns, and now desires to convey, its right, title, and interest in and to
the Phase 2 Transferable Interests to Transferee, and Transferee desires to assume the foregoing
as further set forth herein. Pursuant to this Assignment, Transferor is also assigning to Transferee
all of Transferor's right, title, and interest in and to the Documents and all other documents and
agreements related thereto as and to the extent relating to the Phase 2 Transferable Interests as
described herein, and Transferee is assuming the foregoing, all as described herein.
I. Pursuant to Section 2.2.20) of the DDA, a Transfer must include, among other
things,the execution and delivery of an assignment and assumption agreement. The DDA requires
1 Note to Draft: Conform to title of actual CC&Rs annexation document.
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that the City confirm satisfaction of certain requirements in the DDA prior to a Transfer pursuant
to Section 2.2.20)of the DDA in order for the Transfer to be effective and for Transferee to become
a"Developer" under the DDA and DA with respect to the portions of the Project so Transferred.
J. Transferor and Transferee are entering into this Assignment in order to fulfill the
obligations of Transferor, as Developer, and Transferee under Section 2.2.20) of the DDA and to
confirm for the benefit of the City that if Transferee acquires the Phase 2 Property, Transferee will
develop and use the Phase 2 Property in accordance with the requirements of the DDA, including,
without limitation, the Scope of Development and the Schedule of Performance, and the
Documents.
K. The DDA imposes certain covenants, conditions, payment obligations, and
restrictions on the Development Parcels and, prior to the filing of a Certificate of Completion, the
DDA restricts Developer's ability to transfer ownership and/or control of the Development Parcels,
the Project, the Improvements, and/or Developer's obligations with respect to the Project
(including, without limitation, Developer's obligations with respect to the off-site infrastructure
improvements), all as set forth in the DDA.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Transferor and Transferee agree as follows:
1. Assignment.
1.1 As of the Assignment Effective Date, Transferor hereby assigns, conveys,transfers,
bargains,grants, sells, and sets over to Transferee, as and to the extent owned or held by Transferor,
the following (collectively, the"Assigned Interests"):
(a) All of Transferor's right, title, and interest in and to Phase 2, the Phase 2
Project, and the Phase 2 Provisions as set forth in the Documents (it being understood that
the Phase 2 Property (including the Improvements thereon) is being conveyed by
Transferor to Transferee by deed reviewed by the City in accordance with Section
2.2.20)(ii)(A) of the DDA and executed and delivered concurrently herewith);
(b) All rights and obligations of Transferor under the Documents with respect
to Phase 2, the Phase 2 Project, the Phase 2 Provisions, the Phase 2 Property and
Improvements thereon and all of the documents and agreements related thereto to the extent
the same relate to Phase 2, other than the Excluded Matters (as defined in Section 2.2 of
this Assignment); and
(c) All plans, specifications, maps, drawings, and other renderings owned by
Transferor and relating to Phase 2, the Phase 2 Property and Improvements thereon, the
Phase 2 Project and the Entitlements pertaining thereto.
2. Assumption.
2.1 Transferee, on behalf of itself and its successors and assigns, from and after the
Assignment Effective Date, hereby expressly assumes and receives the Assigned Interests and
each of the obligations set forth below to which it hereby expressly agrees it is subject, and
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Transferee agrees with Transferor (and such agreement is expressly also made for the benefit of
the City and may be directly enforced by the City) as follows, in each case, to the extent relating
to the period from and after the Assignment Effective Date:
(a) All of the Assigned Interests and all of the obligations, conditions,
limitations, and restrictions imposed upon the Assigned Interests and/or the Transferor
under the Documents with respect to the Phase 2 Transferable Interests and all of the
documents and agreements related thereto to the extent the same relate to Phase 2, other
than the Excluded Matters; and
(b) All rights and obligations of the Transferor as"Developer" under the DDA,
the DA, and the Phase 2 Special Restrictions; as "Phase 2 Developer" under the DDA and
the Supplemental Purchase Price and Profit Participation Agreement; as "Successor
Owner"under the Phase 2 Quitclaim Deed and the Landscape Installation and Maintenance
Agreement; as "Phase 2 Owner" under the Roadway and Utility Easement Agreement; as
an "Owner" under the CC&Rs; and as "Trustor" under the City Deed of Trust; and as any
other title referring to the developer or owner of the Phase 2 Parcel under any other
documents and agreements related to the Documents,in each case with respect to the Phase
2 Transferable Interests, other than the Excluded Matters;
(c) Upon and subject to the terms and provisions of the Documents, Transferee
shall pay and perform all obligations of "Developer" under the DDA, the DA and the
Phase 2 Special Restrictions; as"Phase 2 Developer"under the DDA and the Supplemental
Purchase Price and Profit Participation Agreement, as "Successor Owner" under the
Phase 2 Quitclaim Deed and the Landscape Installation and Maintenance Agreement; as
"Phase 2 Owner" under the Roadway and Utility Easement Agreement; as an "Owner"
under the CC&Rs; and as "Trustor" under the City Deed of Trust; and as any other title
referring to the developer or owner of the Phase 2 Parcel under any other documents and
agreements related to the Documents,in each case,with respect to the Phase 2 Transferable
Interests, including, without limitation, the following obligations: (i)the obligation to
construct and Complete the Minimum Phase 2 Improvements on the Phase 2 Property in
accordance with the Scope of Development and within the time periods specified in the
Schedule of Performance and the obligation to maintain the Improvements located on the
Phase 2 Property in accordance with the requirements of the Documents and under any
other documents and agreements applying to or affecting the Phase 2 Transferable
Interests; (ii)the obligation to pay all sums required to be paid by "Developer" as set forth
in the DDA,the DA and/or the Phase 2 Special Restrictions, as"Phase 2 Developer"under
the DDA and the Supplemental Purchase Price and Profit Participation Agreement, as
"Successor Owner' under the Phase 2 Quitclaim Deed and the Landscape Installation and
Maintenance Agreement; as "Phase 2 Owner" under the Roadway and Utility Easement
Agreement; as an "Owner" under the CC&Rs; and as "Trustor" under the City Deed of
Trust; and as any other title referring to the developer or owner of the Phase 2 Parcel under
any other documents and agreements related to the Documents, in each case, in connection
with the ownership and/or development of the Assigned Interests; (iii)the obligation to
develop the Phase 2 Property in full compliance with the DDA, the DA and the Other
Agreements and all then-existing Entitlements and the Approved Plans; and (iv) as a
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condition precedent to this Assignment,the obligation to deliver to the City a fully executed
Guaranty in accordance with Section 2.2.20)(iii)(D)(1) of the DDA_
For avoidance of doubt, and without limiting the generality of the foregoing, Transferee hereby
agrees that Transferee has hereby assumed, shall be subject to, and obligated to perform in
accordance with, or otherwise comply with,the requirements of the Documents with respect to the
Assigned Interests, including without limitation, the Right of Repurchase and Right of Reversion
with respect to Phase 2 set forth in the DDA, but specifically excluding the Excluded Matters.
2.2 "Excluded Matters" shall mean the matters set forth in Section 3 of this
Assignment.
2.3 Transferee hereby acknowledges and agrees, for the benefit of Transferor and City,
that it shall remain fully responsible to perform and satisfy all of the obligations and liabilities
assumed by Transferee pursuant to Section 2.1 and 2.2 of this Assignment regardless of any of the
following:
(a) the value of the Assigned Interests, Phase 2, the Phase 2 Project, and/or the
Phase 2 Property or the income to be derived from the Assigned Interests, Phase 2, the
Phase 2 Project and/or the Phase 2 Property;
(b) the existence or non-existence of any liens, easements, covenants,
conditions, restrictions, claims, or encumbrances affecting the Assigned Interests, Phase 2,
the Phase 2 Project and/or the Phase 2 Property (including without limitation any of the
foregoing arising from or related to the Entitlements or any of the Documents);
(c) the suitability of the Assigned Interests, Phase 2, the Phase 2 Project and/or
the Phase 2 Property for any and all future development, uses, and activities which
Transferee may conduct or Transferor or any prior Developer under the DDA or the
Documents may have conducted thereon, including, without limitation, the development
of the Project as described in the Documents and this Assignment;
(d) the ability of the City or any third party to complete, or likelihood of the
completion of, any of the improvements and infrastructure described by the General Plan,
the Reuse Plan, the Specific Plan, the Tustin Legacy Backbone Infrastructure Program, or
any other plan or policy of the City or any other Governmental Authority;
(e) the compliance with or enforcement by the City or any third party with
respect to the Reuse Plan, the General Plan, the Specific Plan, the Special Restrictions, the
CC&Rs, the Tustin Legacy Backbone Infrastructure Program, or any other agreement or
governmental restriction or plan affecting Tustin Legacy by the City or any third party;
(f) the habitability, merchantability, or fitness for a particular purpose of the
Assigned Interests, Phase 2, the Phase 2 Project, and/or the Phase 2 Property;
(g) the manner, quality, state of repair, or lack of repair of the Assigned
Interests, Phase 2, the Phase 2 Project, and/or the Phase 2 Property;
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(h) the nature, quality, or condition of the Assigned Interests,Phase 2,the Phase
2 Project, and/or the Phase 2 Property, including, without limitation, water, soil and
geology;
(i) the compliance of or by the Assigned Interests,Phase 2,the Phase 2 Project,
and/or the Phase 2 Property and/or their respective operation in accordance with any of the
Entitlements or any Governmental Requirements, including, without limitation, the
National Environmental Policy Act, CEQA, and the Americans with Disabilities Act of
1990;
(j} the manner or quality of the construction or materials, if any, incorporated
into any part of the Phase 2 Property or the Improvements;
(k) the presence or absence of Hazardous Materials, including without
limitation, asbestos or lead paint at, on, under, or adjacent to the Phase 2 Property or any
other portion of the Development Parcels or Tustin Legacy;
(1) the content, completeness, or accuracy of the information, documentation,
studies, reports, surveys, and other materials delivered to Transferee by Transferor or
others in connection with Transferee's review of the Assigned Interests, Phase 2, the Phase
2 Project, and/or the Phase 2 Property and the transactions contemplated in the Documents
and/or this Assignment;
(m) the conformity of the existing improvements on the Phase 2 Property, the
Development Parcels, and/or at Tustin Legacy, if any, to any plans or specifications
therefor;
(n) compliance of the Assigned Interests, Phase 2, the Phase 2 Project, and/or
the Phase 2 Property with past, current, or future Governmental Requirements relating to
zoning, subdivision, planning, building, fire, safety, health, or environmental matters
and/or covenants, conditions, restrictions, or deed restrictions;
(o) the deficiency of any undershoring or of any drainage to, on, or from the
and/or the Phase 2 Property or any other portion of Tustin Legacy;
(p) the condition of any adjoining or nearby land owned by the City, including,
without limitation, the property covered by the Landscape Installation and Maintenance
Agreement and the City Park and any improvements thereon;
(q) the fact that all or a portion of the Phase 2 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 2621-
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;
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(r) the existence or lack of vested land use, zoning, or building entitlements
affecting the Assigned Interests, Phase 2, the Phase 2 Project, and/or the Phase 2 Property;
(s) 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;
(t) the conditions, covenants, and restrictions imposed or to be imposed upon
the Assigned Interests, Phase 2, the Phase 2 Project, and/or the Phase 2 Property or any
portion thereof under the Documents or the Entitlements;
(u) the contents of the DDA Memoranda, the Federal Deeds, the Base Closure
Law, and the FOST; and
(v) any other matters.
3. Continuing Liability under the DDA.
Notwithstanding anything to the contrary set forth herein, Transferor shall not be released
from obligations under the DDA arising prior to the Assignment Effective Date (including
Ongoing Matters arising prior to the Assignment Effective Date).
4. Indemnity.
Transferee shall indemnify, protect, defend, assume all responsibility for, and hold
harmless Transferor and its members, officers, agents, affiliates, employees, contractors,
consultants, and representatives (collectively referred to as the "Transferor Indemnified
Parties") with counsel reasonably acceptable to Transferor, from and against any and all Claims
arising from or relating to Transferee's failure to perform its obligations under, or otherwise
comply with, this Assignment.
5. No Waiver or Modification.
Nothing contained in this Assignment shall modify in any way any other provisions of the
Documents and/or the Entitlements. Transferee acknowledges that it is taking title to and is
assuming the Assigned Interests subject to, among other things, the rights of the City as described
in the Documents.
6. Additional Documents.
Transferor and Transferee shall each execute and deliver to the other party, upon demand,
such further documents, instruments, and conveyances, and shall take such further actions as are
reasonably necessary or desirable, to effectuate the intent and purposes of this Assignment.
7. Representations and Warranties of Transferee.
Transferee represents and warrants to the City as follows:
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7.1 Transferee has the necessary experience and qualifications to perform as Transferee
pursuant to this Assignment and the Documents to construct and complete the Phase 2 Project,
and, without limiting the foregoing, Transferee is experienced in the development, management,
and leasing of commercial projects of the size and type described in this Assignment and the
Documents and understands the process and requirements associated with projects such as the
Phase 2 Project described herein.
7.2 Transferee's acquisition of the Assigned Interests, planned development of the
Phase 2 Project, and its other undertakings pursuant to this Assignment and the Documents are for
the purpose of developing the Phase 2 Parcel in accordance with the Schedule of Performance
attached to the DDA and is not for speculation or land holding.
7.3 Transferee is a [e], duly organized,validly existing, and in good standing under the
laws of the State of[e], and is duly qualified to do business and in good standing in the State of
California and each other jurisdiction where the operation of its business or its ownership of
property or the performance of Transferee's obligations under this Assignment and the Documents
make such qualification necessary.
7.4 Transferee has (or will have prior to the date by which a particular step is required
to be taken or performance of a particular obligation is required to be commenced pursuant to this
Assignment or any of the Documents) all requisite power and authority required to enter into this
Assignment and the instruments referenced in this Assignment and the Documents, to assume and
perform all obligations of "Developer" under the DDA, the DA and the Phase 2 Special
Restrictions; as "Phase 2 Developer" under the DDA and the Supplemental Purchase Price and
Profit Participation Agreement, as "Successor Owner" under the Phase 2 Quitclaim Deed and the
Landscape Installation and Maintenance Agreement; as "Phase 2 Owner" under the Roadway and
Utility Easement Agreement; as an "Owner" under the CC&Rs; and as "Trustor" under the City
Deed of Trust, and as any other title referring to the developer or owner of the Phase 2 Parcel under
any other documents and agreements related to the Documents, in each case with respect to the
Phase 2 Transferable Interests, other than the Excluded Matters, to consummate the transaction
contemplated by this Assignment and the Documents, to take any steps contemplated by this
Assignment and the Documents, and to perform its obligations under this Assignment and the
Documents.
7.5 Transferee has obtained (or will have obtained prior to the date by which a
particular step is required to be taken or performance of a particular obligation is required to be
commenced pursuant to this Assignment or any Documents) all required consents in connection
with entering into this Assignment and the instruments and documents referenced in this
Assignment and the Documents, assuming and performing the obligations of"Developer" under
the DDA, the DA and the Phase 2 Special Restrictions; as "Phase 2 Developer" under the DDA
and the Supplemental Purchase Price and Profit Participation Agreement, as "Successor Owner"
under the Phase 2 Quitclaim Deed and the Landscape Installation and Maintenance Agreement; as
"Phase 2 Owner" under the Roadway and Utility Easement Agreement; as an "Owner" under the
CC&Rs; and as "Trustor" under the City Deed of Trust, and as any other title referring to the
developer or owner of the Phase 2 Parcel under any other documents and agreements related to the
Documents,in each case with respect to the Phase 2 Transferable Interests, other than the Excluded
Matters, to consummate the transaction contemplated by this Assignment and the Documents, to
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take any steps contemplated by this Assignment and the Documents, and to perform its obligations
under this Assignment and the Documents.
7.6 The individuals executing this Assignment and the individuals that will execute the
instruments referenced in this Assignment and the Documents on behalf of Transferee have, or
will have upon execution thereof, the legal power, right, and actual authority to bind Transferee to
the terms and conditions hereof and thereof.
7.7 This Assignment has been duly authorized, executed, and delivered by Transferee
and all documents required in this Assignment and/or the Documents shall be, at such time as they
are required to be executed by Transferee, duly authorized, executed, and delivered by Transferee
and are or shall be, at such time as the same are required to be executed hereunder,valid and legally
binding obligations of and enforceable against Transferee in accordance with their terms, except
as enforceability may be limited by bankruptcy laws or other similar laws of general application
affecting creditors' rights.
7.8 None of (a) the execution or delivery by Transferee of this Assignment or the
assumption of the Documents with respect to Phase 2; (b)the incurring of the obligations set forth
in this Assignment or the Documents and the certificates, declarations, and other documents
referenced in this Assignment and the Documents which are, or are to be, incurred by Transferee;
(c) the consummation by Transferee of the transactions contemplated in this Assignment or the
Documents which are, or are to be, consummated by Transferee; and(d)compliance by Transferee
with the terms of this Assignment and the documents referenced in this Assignment or the
Documents with which Transferee is obligated to comply will violate any provision of law or any
order of any court or Governmental Authority to which Transferee is subject 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 Transferee or any
of its members are a party and which affect the Assigned Interests or the transactions contemplated
by this Assignment or the Documents.
7.9 No attachments, execution proceedings, assignments of benefit to creditors,
bankruptcy, reorganization, or other proceedings are pending or, to the best of Transferee's
knowledge, threatened against Transferee or its members.
7.10 Transferee is relying solely upon its own inspections and investigations in
proceeding with this Assignment and the assumption of the Documents set forth herein and the
transactions contemplated hereby and thereby, 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
those representations and warranties of the City as of the Effective Date (as such term is defined
in the DDA) expressly set forth in Sections 3.3 and 18.11.2 of the DDA) 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 Assignment
or the Documents. In making such investigation and assessment, Transferee has been provided
with access to any persons, records, or other sources of information which it deems appropriate to
review and has completed such investigation and assessment prior to the Assignment Effective
Date. Without limiting the generality of the foregoing provisions, Transferee acknowledges that,
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except as set forth in Section 3.3.8 of the DDA, the City has not made and will not make any
representations or warranties concerning the condition of the Assigned Interests,Phase 2,the Phase
2 Project, and/or the Phase 2 Property, the compliance or non-compliance of the Phase 2 Property
or any portion thereof with Environmental Laws or the existence or non-existence of Hazardous
Materials in relation to the Phase 2 Property or any portion thereof or otherwise.
7.11 To Transferee's knowledge, there are no adverse conditions, circumstances,
pending or threatened litigation, governmental actions, or other conditions which could prevent or
materially impair Transferee's ability to develop the Phase 2 Parcel and the Phase 2 Project as
contemplated by the terms of this Assignment and the Documents.
7.12 Except as set forth in this Assignment and the Documents, Transferee has not paid
or given, and will not pay or give, any third Person any money or other consideration for obtaining
this Assignment, other than the normal cost of conducting business and cost of professional
services such as architects, engineers, and attorneys.
7.13 All reports, documents, instruments, information, and forms of evidence delivered
by Transferee to the City concerning or related to this Assignment and the Documents and the
transactions contemplated hereby and thereby are, to the best of Transferee's knowledge, accurate
and 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.
7.14 Prior to the Assignment Effective Date, Transferee has satisfied all applicable
requirements of Section 2.2.20) of the DDA and has provided to the City all information required
by Section 2.2.20) of the DDA to be submitted to the City as a condition to the Transfer described
in this Assignment including without limitation by delivering to the City evidence of equity capital
and financial capacity to comply with the obligations of Transferee under this Assignment and the
Documents and all other items required to be satisfied under the DDA in the form of the
information specified in Section 2.2.20) of the DDA and including a binding contractual
commitment to fund from the Equity Investor if required by the DDA("Financial Information').
The Financial Information and all delivered information remains true and correct as of the
Assignment Effective Date and has not been amended or modified. Based on the Financial
Information, Transferee has, as of the Assignment Effective Date, the equity capital and financial
capacity to comply with the obligations of Transferee under this Assignment and the Documents
and as required by the DDA.
7.15 Prior to the Assignment Effective Date, and as a condition to satisfaction of the
requirements set forth in Section 2.2.20) of the DDA and to the Assignment, Transferee has
executed and delivered that certain [operating agreement {or fill in other instrument as
appropriate to circumstance.]] of Transferee dated , 20 and [{add if
applicable.) that certain [contribution/assignment] agreement by and between ,
dated , 20_J (the "Transfer Document[s]"), a true and correct copy of[each of]
which has been delivered by Transferor to the City and approved by the City pursuant to the rights
granted to the City in the DDA. The Transfer Document[s]: [is/are] in full force and effect and
[has/have]not been amended, modified or terminated. Transferee shall provide notice to the City
of all amendments, modifications, or proposed terminations by Transferor or Transferee of the
Transfer Document[s or any one thereof) and shall not materially modify or amend or terminate
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[the/anyJ Transfer Document, without the prior consent of City in its sole discretion where
required by this Assignment or the DDA. Nothing in this Assignment or in the Acknowledgement
of Transfer to Qualified Transferee executed by the City in connection with this Assignment
releases Transferee or the Phase 2 Developer from (a)the obligation to satisfy each and every
requirement of Section 8.1.6 of the DDA as a condition precedent for the benefit of the City to the
Phase 2 Commencement of Construction, or (b) shall be deemed a waiver by the City of its right
to approve, in its sole discretion, each of the matters described in Section 8.1.6 of the DDA.
Delivery of the foregoing documents by Transferee shall be subject to the provisions of Section
18.23 of the DDA.
7.16 Transferee does not have any contingent obligations or any other contracts the
performance or nonperformance of which could affect the ability of Transferee to carry out its
obligations hereunder. Transferee 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 the preceding sentence.
7.17 [Except as set forth in Exhibit[*], there/There] are no legal proceedings either
pending or, to the best of Transferee's knowledge, threatened, to which Transferee is or may be
made a party, or to which any of Transferee's property, or the Phase 2 Property, is or may become
subject, which could materially affect the ability of Transferee to carry out its obligations
hereunder.
7.18 As of the Assignment Effective Date, Transferor and Transferee are not Related
Parties as defined in the DDA.
Transferee's representations and warranties set forth in this Section 7 shall survive until the
termination of the DDA with respect to the Assigned Interests, Phase 2, the Phase 2 Project, and
the Phase 2 Property and shall not be merged with any deed. The phrase "to Transferee's
knowledge" and similar phrases means those Persons Transferee represents as having knowledge
of the transactions and Transferee and accepted by the City, comprised of [add names] in each
case without any duty of inquiry (collectively, the "Transferee Knowledge Parties").
Notwithstanding anything to the contrary contained herein, none of the Transferee Knowledge
Parties shall be personally liable for any inaccuracy or breach by Transferee of the representations
and warranties contained in this Section 7 or elsewhere in this Assignment or the Documents.
Transferee shall promptly advise the City in writing if any of the Transferee Knowledge Parties
becomes aware (without any duty of inquiry) that any representation or warranty made by
Transferee in or pursuant to this Assignment is or becomes untrue in any material respect.
8. No Real Estate Commissions.
Transferor and Transferee each represents for the benefit of the City that it has engaged no
broker, agent, or finder in connection with this Assignment or the transactions identified in this
Assignment or the Documents, other than disclosed to City in writing prior to the Assignment
Effective Date. Each of Transferor and Transferee 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 Transferor and/or Transferee as applicable regarding this Assignment, the Documents
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- 12
13-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
or development of the Phase 2 Project or the transactions identified in this Assignment and the
Documents.
9. Miscellaneous.
9.1 Modification. No amendment, change, modification, or supplement to this
Assignment shall be valid and binding on Transferor or Transferee unless it is in writing and signed
by both Transferor and Transferee and approved by the City. No amendment, change,
modification, or supplement to this Assignment shall be deemed to be approved by the City,unless
the City executes a separate written acknowledgement of such amendment, change, modification,
or supplement.
9.2 Applicable Law. This Assignment shall be governed by, interpreted under, and
construed and enforced in accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
9.3 BindingEffect.ffect. This Assignment and the terms, provisions, promises, covenants,
and conditions hereof shall be binding upon and inure to the benefit of Transferor and Transferee
and their respective heirs, legal representatives, successors, and assigns.
9A 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 Transferor and Transferee of at least one
set of counterparts. A counterpart of this Assignment that is executed and delivered electronically
(by facsimile machine or e-mail) shall not be effective unless an ink-signed original executed copy
of the signature page of this Assignment is also promptly delivered to the other party, and such
ink-signed original executed page is actually received by the other party. Transferor and
Transferee hereby authorize each other to detach and combine original signature pages and notarial
acknowledgements and consolidate them into a single identical original. Any one of such
completely executed counterparts shall be sufficient proof of this Assignment as a duly and validly
executed agreement.
9.5 City as Third Party Beneficiary. Transferor and Transferee hereby acknowledge
and agree that until the Certificate of Compliance is recorded in the Official Records with respect
to the Phase 2 Property,the City shall be an intended third-party beneficiary under this Assignment
and the City shall have the right to enforce the terms and provisions of this Assignment applicable
to the City. Other than the City, there shall be no third-party beneficiaries of this Assignment.
9.6 Notices. From and after the Amendment Effective Date, all notices that the City
delivers to the"Developer"under the Documents and/or the Entitlements with respect to the Phase
2 Property shall also concurrently be delivered to Transferee pursuant to Section 18.6 of the DDA,
shall be delivered to Transferee only at the following addresses:
Transferee:
101
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- 13
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DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
with a copy to:
[legal counsel]
[signature page follows]
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- 14
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DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Each of Transferor and Transferee has caused this Assignment to be duly executed by its
duly authorized officer as of the Assignment Effective Date.
"TRANSFEROR"
[ ]1
a
By:
Name:
Title:
Dated:
"TRANSFEREE"
[ ]1
a
By:
Name:
Title:
By:
Name:
Title:
Dated:
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- S-1
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DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
County of )
On before me,
(insert name of notary)
Notary Public, personally appeared
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- S_2
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DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
County of )
On before me,
(insert name of notary)
Notary Public, personally appeared
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- S-3
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DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California )
County of )
On before me,
(insert name of notary)
Notary Public, personally appeared
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- S-4
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EXHIBIT "A"
Legal Description of the Phase 2 Parcel
[Insert Legal Description]
Tustin Cornerstone 1 DDA Art 16D QT ATTACHMENT 16D City of Tustin/Cornerstone I
Assignment and Assumption Agreement 11- EXHIBIT A
13-2020(agd)FINAL I
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 11
ATTACHMENT 18A (NEW)
FORM OF PHASE 2 DEVELOPER DATE DOWN CERTIFICATE REGARDING
REPRESENTATIONS AND WARRANTIES
(SATISFACTION OF PHASE 2 CONSTRUCTION COMMENCEMENT CONDITIONS)
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule I I City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 18A
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 18A
FORM OF PHASE 2 DEVELOPER DATE DOWN CERTIFICATE
REGARDING REPRESENTATIONS AND WARRANTIES
Reference is hereby made to that certain Tustin Legacy Disposition and Development
Agreement Cornerstone 1 dated as of November 15, 2016 ("Original DDA"), as amended by
(1)that certain First Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of June 20, 2017 ("First Amendment"), (2)that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
October 1, 2019("Second Amendment"), and(3)that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of December [•], 2020 ("Third
Amendment");the Original DDA,First Amendment, Second Amendment, and Third Amendment
referred to collectively in this Date Down Certificate as the "DDA"), by and between [•], a [•]
("Phase 2 Developer"), as successor-by-assignment to Flight Phase I Owner LLC, a Delaware
limited liability company,} as successor-by-assignment to Flight Venture LLC, a Delaware limited
liability company, and the City of Tustin, a municipal corporation of the State of California (the
"City"). {Add additional DDA Amendments and further assignments if applicable above.)
Capitalized terms used herein that are not defined herein shall have the meanings specified in the
DDA.
This Date Down Certificate is being delivered by Phase 2 Developer pursuant to
Section 8.1.6(c) and d) of the DDA as a Phase 2 Construction Commencement Condition.
I, the undersigned, am the duly elected and qualified [state office held] of Phase 2
Developer, a [•] duly organized and existing under the laws of the State of[•], and am authorized
by Phase 2 Developer to make the certifications contained in this Date Down Certificate. I further
certify to the City for and on behalf of Phase 2 Developer as follows:
1. Representations and Warranties. All of the representations and warranties made by
Phase 2 Developer for the benefit of the City in that certain [Assignment and Assumption
Agreement (Cornerstone I[ Phase 21)) by and between [•], as "Transferor", and Phase 2
Developer, as "Transferee," dated [•] ("Assignment and Assumption Agreement") are true and
correct as of the date of delivery of this Date Down Certificate [, except as otherwise specifically
set forth on Schedule I attached hereto). In addition, Phase 2 Developer hereby makes the
representations and warranties set forth in Section 4.5.2(f) of the DDA for the benefit of the City
as of the date of issuance of the Satisfaction Date Notice by the City.
2. Original Certificate. All information and statements made by Phase 2 Developer
pursuant to Section 4.6.6(a) of the DDA and, if applicable, Section 4.6.6(b) of the DDA and
contained in the declaration and certificate delivered by Phase 2 Developer at the time of the
Transfer to Phase 2 Developer (together with the other information and statements in such
declaration and certificate, the "Original Certificate") remains true and correct as of the date of
this Date Down Certificate[, except as otherwise specifically set forth on Schedule I attached
hereto).
Tustin Cornerstone I DDA Art 18A Form ATTACHMENT 18A City of Tustin/Cornerstone I
of Phase 2 Developer Satisfaction Date 1
Down Certificate 11-20-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
3. Financial and Other Information. The Phase 2 Financing Plan and all financial and
other information submitted by Phase 2 Developer to the City pursuant to Section 4.6 of the DDA
prior to or concurrently with the Transfer of Phase 2, as the same may have been updated prior to
the delivery of this Date Down Certificate in accordance with the requirements of Section 4.6.1 or
4.6.2 of the DDA, remains true and correct as of the date of this Date Down Certificate and all
financial and other information submitted to the City on or since the effective date of the Transfer
remains true and correct as of the date of this Date Down Certificate[, except as otherwise
specifically set forth on Schedule I attached hereto). The updated Phase 2 Financing Plan
submitted to the City as a condition to the satisfaction of the Phase 2 Construction Commencement
Conditions, which has been modified to reflect Developer's expectation as to available funding
and costs, remains sufficient to pay through issuance of the Certificate of Compliance for Phase 2,
all Development Costs of Phase 2 of the Project(excluding the costs of the Minimum Horizontal
Improvements, which are complete) and all other costs for the construction, marketing and lease
of the Improvements as described in the Scope of Development for Phase 2, and the Project budget
for Phase 2 and the Minimum Phase 2 Improvements remains a reasonable budget.
4. Certificate of Formation, Operating Agreement. As of the date of this Date Down
Certificate, each of the organizational documents of Phase 2 Developer and all consents and
approvals referred to in Section of the Original Certificate remain in full force and effect and
[except as otherwise specifically set forth on Schedule I attached hereto)have not been modified,
revoked or otherwise amended or terminated. [If any previously delivered instruments have been
amended they shall be attached and new certification made.]
5. Good Standing. Phase 2 Developer remains in good standing in the States of
and California as of the date of this Date Down Certificate. Attached to this Date Down
Certificate as Exhibit A are true and correct copies of the certificate of good standing for Phase 2
Developer from the{ Secretary of State and the) California Secretary of State, and each
attached certificate of good standing is dated not earlier than thirty (30) days prior to the date of
this Date Down Certificate.
6. Authority of Si ng atM. [Insert name of person signing], is a[insert office held]
of Phase 2 Developer and is in such capacity, duly authorized by Phase 2 Developer to execute
any and all instruments, documents and other agreements required in connection with the Phase 2
Property Close of Escrow and the DDA in accordance with the proceedings showing authority
attached to the Original Certificate.
Phase 2 Developer acknowledges and agrees that the City intends to rely on the information
in this Date Down Certificate, and this Date Down Certificate may be relied upon by the City.
Without the written consent of Phase 2 Developer no Person other than the City may rely on this
Date Down Certificate for any purpose.
In no event shall the individual executing this Date Down Certificate on behalf of Phase 2
Developer have any personal liability hereunder.
[remainder ofpage is blank—signature on next page)
Tustin Cornerstone I DDA Art 18A Form ATTACHMENT 18A City of Tustin/Cornerstone I
of Phase 2 Developer Satisfaction Date 2
Down Certificate 11-20-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
"PHASE 2 DEVELOPER"
Dated:
a [•]
By:
Name:
Title:
Tustin Cornerstone I DDA Art 18A Form ATTACHMENT 18A City of Tustin/Cornerstone I
of Phase 2 Developer Satisfaction Date S-1
Down Certificate 11-20-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT "A"
{If none—enter None}
Tustin Cornerstone I DDA Art 18A Form ATTACHMENT 18A City of Tustin/Cornerstone I
of Phase 2 Developer Satisfaction Date Exhibit"A"
Down Certificate 11-20-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 1
{If none—enter None}
Tustin Cornerstone 1 DDA Art 18A Form ATTACHMENT 18A City of Tustin/Cornerstone I
of Phase 2 Developer Satisfaction Date Schedule I
Down Certificate 11-20-2020(agd)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 12
ATTACHMENT 31 (NEW)
FORM OF SUPPLEMENTAL PURCHASE PRICE AND PROFIT PARTICIPATION
AGREEMENT
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 12 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 31
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 31
FORM OF SUPPLEMENTAL PURCHASE PRICE
AND PROFIT PARTICIPATION AGREEMENT
SUPPLEMENTAL PURCHASE PRICE AND
PROFIT PARTICIPATION AGREEMENT
THIS SUPPLEMENTAL PURCHASE PRICE AND PROFIT PARTICIPATION
AGREEMENT("Agreement'')is made as of ,20 ,by and between the City of
Tustin ("City"), and a (as further defined
below, "Phase 2 Developer") (collectively,the"Parties" and individually, a"Party").
RECITALS:
A. Pursuant to that certain Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of November 15, 2016, as amended by that certain First Amendment to
Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of June 20, 2017,
that certain Second Amendment to Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of October 1, 2019, and that certain Third Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of December [e], 2020, as the
same may be further amended (collectively, the "DDA"), Phase 2 Developer has acquired from
City certain real property located in the City of Tustin, County of Orange, State of California,
comprising the Phase 2 Parcel more particularly described in Exhibit"A" attached hereto
("Phase 2 Parcel"). Initially capitalized terms used and not defined in this Agreement shall have
the meaning set forth in the DDA.
B. Concurrently with the execution and delivery of this Agreement by the Parties, the
Phase 2 Developer shall acquire the Phase 2 Parcel and certain additional improvements defined
in the DDA as the "Phase 2 Property."
C. As additional consideration for the purchase of the Phase 2 Property,and in addition
to the Phase 2 Property Base Purchase Price payable for the Phase 2 Property under the DDA,
Phase 2 Developer has agreed to pay to City a Supplemental Purchase Price and certain portions
of the profits, if any, that will be received by a Phase 2 Developer from each Transfer or sale of
the Phase 2 Property or portions thereof by a Phase 2 Developer in accordance with the terms and
conditions set forth below and in the DDA.
D. As security for the obligations of Phase 2 Developer to pay the Supplemental
Purchase Price and the Profit Participation as set forth in this Agreement and the DDA, Phase 2
Developer shall execute and acknowledge a City Deed of Trust in recordable form and cause the
City Deed of Trust to be Recorded in the Official Records at the Phase 2 Property Close of Escrow.
Tustin Cornerstone I DDA Att 31 Supplemental ATTACHMENT 31 City of Tustin/Comerstone I
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AGREEMENT:
NOW, THEREFORE, in consideration of the above and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:
1. Definitions.
13 "Action" is defined in Section 7.5 of this Agreement.
1.2 "Additional Allowable Deductions" is defined in Section 3.7 of this
Agreement.
1.3 "Agreement" is defined in the preamble to this Agreement.
1.4 "Allowable Deductions" is defined in Section 3.6 of this Agreement.
1.5 "Audit"is defined in Section 5.1 of this Agreement.
1.6 "City" is defined in the preamble to this Agreement.
1.7 "City Deed of Trust" is defined in Section 6.3 of this Agreement.
1,8 "Common Area" shall have the meaning set forth in the DDA.
1,9 "Costs" is defined in Section 7.5 of this Agreement.
1,10 "Court" is defined in Section 7.8 of this Agreement.
1.11 "DDA" is defined in Recital A of this Agreement.
1.12 "Decision" is defined in Section 7.5 of this Agreement.
1,13 "Default" is defined in Section 6.1 of this Agreement.
1,14 "Delivery"shall mean delivery made in accordance with Section 7.1 of this
Agreement.
1.15 "Developer Profitability Report(s)" shall mean individually or
collectively as the context may require, the draft Preliminary Developer Profitability Report, the
Preliminary Developer Profitability Report, and the Final Developer Profitability Report.
1.16 "Final Accounting"is defined in the introductory paragraph of Section 4.3
of this Agreement.
1.17 "Final Developer Profitability Report" is defined in the introductory
paragraph of Section 4.3 of this Agreement.
1.19 "Land Acquisition Costs" is defined in Section 3.4 of this Agreement.
Tustin Cornerstone I DDA Att 31 Supplemental ATTACHMENT 31 City of Tustin/Comerstone I
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1.19 "Net Profits"is defined in Section 3.2 of this Agreement.
1.20 "Participation Transfer" is defined in the introductory paragraph of
Section 3 of this Agreement.
1.21 "Party" and"Parties" are each defined in the preamble to this Agreement.
1.22 "Phase 1 Developer"shall mean each Developer under the DDA preceding
the Phase 2 Developer executing this Agreement.
1.23 "Phase 2 Developer"shall mean the Person acquiring the Phase 2 Property
at the Phase 2 Property Close of Escrow and executing this Agreement as Phase 2 Developer and
each and every Person acquiring all or any portion of the Phase 2 Property during the term of this
Agreement.
1.24 "Phase 2 Developer/Transferor" is defined in the introductory paragraph
of Section 3 of this Agreement.
1.25 "Phase 2 Parcel" is defined in Recital A of this Agreement.
1.26 "Phase 2 Project" shall mean all components of the Phase 2 Project as
defined in the DDA but specifically excluding any and all construction work or activity(other than
bonding and pre-construction planning)with respect to the Phase 2 Improvements.
1.27 "Phase 2 Property" is defined in Recital B of this Agreement.
1.28 "Pre-Approved Costs" is defined in Section 3.3 of this Agreement.
1.29 "Pre-Approved Costs Cut-Off Date" shall mean November 13, 2020.
1.30 "Preliminary Developer Profitability Report"is defined in Section 4.1(a)
of this Agreement.
1.31 "Prevailing Party" is defined in Section 7.5 of this Agreement.
1.32 "Profit Participation' is defined in the introductory paragraph of
Section 3.1 of this Agreement.
1.33 "Relevant Records"is defined in Section 5.1 of this Agreement.
1.34 "Report Components" shall mean the costs submitted by Developer as
Allowable Deductions, Total All-In Land Value Amount and the Profit Participation calculation
and the components of each of the foregoing, including the categories,line-items and amounts for
each, as set forth in the draft Preliminary Developer Profitability Report, the Final Developer
Profitability Report, the Final Accounting and/or in negotiations regarding the foregoing, as
applicable.
1,35 "Resolution Notice"is defined in Section 4.3(d) of this Agreement.
Tustin Cornerstone I DDA Att 31 Supplemental ATTACHMENT 31 City of Tustin/Comerstone I
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1.36 "Review Period" is defined in Section 4.3(a) of this Agreement.
1.37 "Subsequent Transfer Allowable Deductions" is defined in the
introductory paragraph of Section 3.9 of this Agreement.
1.38 "Total All-In Land Value Amount" is defined in Section 3.5 of this
Agreement.
1.39 "Transfer Date" is defined in the introductory paragraph of Section 3.9 of
this Agreement.
1.40 "Transferee" shall mean any Person to which a Phase Transfer is made
following the Phase 2 Property Close of Escrow and shall include without limitation any Successor
Owner, Developer Affiliate or Mortgagee, any Phase Transferee, Qualified Transferee,
Foreclosure Transferee,Pad Transferee or Tenant under a Ground Lease which acquires all or any
portion of the Phase 2, the Phase 2 Project, the Phase 2 Provisions, the Phase 2 Transferable
Interests and/or the Phase 2 Property and Improvements thereon.
1.41 "Year 1 & 2 Cash Option Payments" is defined in Section 3.3 of this
Agreement.
2. Phase 2 Property Supplemental Purchase Price. As consideration for the rights
granted to Phase 2 Developer under the DDA to delay the Phase 2 Commencement of Construction
following the Phase 2 Property Close of Escrow and the City's agreement that it would not require
Phase 2 Commencement of Construction to take place within sixty (60) calendar days following
the Phase 2 Property Close of Escrow, Phase 2 Developer has agreed in the DDA to make the
following additional payments to the City, which payment obligations are hereby agreed by the
Parties to be secured by the City Deed of Trust:
(a) On June 30, 2024, if the Phase 2 Construction Commencement
Conditions have not been met and Phase 2 Commencement of Construction has not commenced
by June 29, 2024, Phase 2 Developer shall pay to the City an amount equal to the difference
between $42,079,125 (which is the original Year 8 Phase 2 Property Purchase Price as described
in the Original DDA) and the Phase 2 Property Base Purchase Price actually paid at the Phase 2
Property Close of Escrow.
(b) On June 30, 2025, if the Phase 2 Construction Commencement
Conditions have not been met and Phase 2 Commencement of Construction has not commenced
by June 29, 2025, Phase 2 Developer shall pay to the City the additional sum of Eight Hundred
Thousand Dollars ($800,000).
(c) On June 30, 2026, if the Phase 2 Construction Commencement
Conditions have not been met and Phase 2 Commencement of Construction has not commenced
by June 29, 2026, Phase 2 Developer shall pay to the City the additional sum of Nine Hundred
Thousand Dollars ($900,000).
3. Profit Participation. With respect and as a condition to each Transfer for which
Profit Participation is due and payable to the City pursuant to the terms of Section 4.2.2(c) of the
Tustin Cornerstone I DDA Att 31 Supplemental ATTACHMENT 31 City of Tustin/Comerstone I
PP and Profit Participation Agreement 11-18- 4
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DDA ("Participation Transfer"), the Phase 2 Developer that Transfers to a Transferee ("Phase
2 Developer/Transferor") agrees to pay to City, at the time and in the manner specified below,
the amount of the"Profit Participation."
3,1 Calculation of Profit Participation. "Profit Participation' shall mean fifty
percent (50%) of the total Net Profits received by Phase 2 Developer/Transferor at each
Participation Transfer.
3,2 Net Profits. "Net Profits" for purposes of this Agreement shall be defined
to be the Total All-in Land Value Amount less the Allowable Deductions determined for each
Participation Transfer.
3.3 Pre-Approved Costs. "Pre-Approved Costs"shall mean the costs incurred
prior to the Pre-Approved Costs Cut-Off Date in the amount of Two Million Six Hundred and Six
Thousand Forty Three and 01/100 Dollars ($2,606,043.01),which includes (a) One Million Eight
Hundred Forty-Four Thousand Five Hundred Eleven Dollars ($1,844,511.00) for the
Reimbursable Phase 2 Improvements, and (b) Seven Hundred Sixty One Thousand Five Hundred
Thirty Two and 01/100 Dollars ($761,532.01)for costs incurred and paid by Phase 2 Developer to
Phase 1 Developer or directly to obligees prior to the Pre-Approved Costs Cut-Off Date and for
costs accrued prior to the Pre-Approved Costs Cut-Off Date (whether or not fully invoiced)
remaining unpaid as of the Pre-Approved Costs Cut-Off Date. The Pre-Approved Costs include
the entirety of the amounts the City will recognize as Allowable Deductions under this Agreement
for sums that any Phase 2 Developer has paid or shall pay to Phase 1 Developer in connection with
expenditures by Phase 1 Developer in advancing the Phase 2 Project and shall be the sole amount
comprising an Allowable Deduction for the period prior to and including the Pre-Approved Costs
Cut-Off Date. For avoidance of doubt, the Pre-Approved Costs excludes the $100,002 in Cash
Option Payment for Option Year 1 and Option Year 2 ("Year 1 & 2 Cash Option Payments")
previously made by Phase 1 Developer to the City because they are included in the Land
Acquisition Costs described in Section 3.6(b).
3.4 Land Acquisition Costs."Land Acquisition Costs"shall have the meaning
set forth in Section 3.7(a) or Section 3.9(a), as applicable.
15 Total All-In Land Value Amount. "Total All-In Land Value Amount"
shall mean for each Participation Transfer the aggregate amount of cash, assumption of and/or
relief from indebtedness and the fair market value of all other consideration received by a Phase 2
Developer/Transferor in exchange for the Transfer of Phase 2, the Phase 2 Project, the Phase 2
Provisions, the Phase 2 Transferable Interests and/or the Phase 2 Property and Improvements
thereon.
3.6 Allowable Deductions. "Allowable Deductions" shall mean (a) only with
respect to the first Participation Transfer, the sum of (1) the Pre-Approved Costs and (2)the
Additional Allowable Deductions and (b) for all subsequent Participation Transfers, the
Subsequent Transfer Allowable Deductions only.
3.7 Additional Allowable Deductions. "Additional Allowable Deductions"
shall mean the following expenses associated with and attributable to the acquisition,development,
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maintenance,marketing,pre-leasing,management,operation,and Transfer of the Phase 2 Property
and the Phase 2 Project incurred by Phase 2 Developer/Transferor following the Pre-Approved
Costs Cut-Off Date. Notwithstanding that certain categories below are overlapping,there shall be
no double-counting of expenses nor shall there be inclusion of any costs incurred or paid by Phase
1 Developer or Phase 2 Developer prior to the Pre-Approved Costs Cut-Off Date each of which
has already been included, among other things, in the calculation of the Pre-Approved Costs:
(a) Land Acquisition Cost. The amount of the Phase 2 Property Base
Purchase Price (which for avoidance of doubt includes the Year 1 & 2 Cash Option Payments
totaling One Hundred Thousand and Two Dollars ($100,002)which was deducted from the Phase
2 Property Base Purchase Price to determine the Phase 2 Property Closing Payment made at the
Phase 2 Property Close of Escrow) and the amount of the Supplemental Purchase Price, if any,
paid to the City.
(b) Due Diligence. All actual, out-of-pocket due diligence fees and
costs and expenses of third party reports and studies incurred by or on behalf of Phase 2
Developer/Transferor to evaluate the Phase 2 Property and/or the Phase 2 Project and reasonable
travel costs related to the Phase 2 Developer/Transferor's due diligence.
(c) Phase 2 Pre-Development Activities and Permit Fees. All actual,
out-of-pocket costs and expenses incurred by or on behalf of Phase 2 Developer/Transferor for
payment of (1) Phase 2 Pre-Development Costs (2) asset management fees paid to LPCC or an
Affiliate of LPCC for management of the Phase 2 Pre-Development Activities, and(3)regulatory
and development permit fees required to be paid to process and pull City or third-party agency
permits for the Phase 2 Project and potential construction of the Phase 2 Improvements or to
Record the Final Map for Phase 2.
(d) Land Acquisition Transaction Costs. All actual, out-of-pocket
transaction costs paid by or on behalf of Phase 2 Developer/Transferor in connection with
acquisition of the Phase 2 Property from the City, including, without limitation, escrow fees and
charges, search costs and premiums for title insurance and endorsements, legal fees, brokerage
commissions and fees,marketing fees,real property transfer taxes, appraisal costs,easement costs,
survey costs, and consultant fees (including, without limitation, the expenses of any reliance
letters).
(e) City Transaction Expenses. The amount of City Costs Deposits paid
by Phase 2 Developer/Transferor to the City from and after the Pre-Approved Costs Cut-Off Date
less the amount of any remaining City Costs Deposit funds returned by the City to Phase 2
Developer/Transferor.
(f) Costs of Phase 2 Joint Venture Agreement and Other Transaction
Documents. All actual, out-of-pocket legal fees and associated costs to prepare (1)the
organizational documents for the joint venture entity occurring prior to the Phase 2 Property Close
of Escrow with the City(including without limitation any newly-formed direct or indirect members
or subsidiaries thereof created for purposes of the subject transaction), (2) the Third Amendment
to Disposition and Development Agreement with the City, (3)the First Amendment to
Development Agreement with the City, (4) all documents required to be delivered at the Phase 2
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Property Close of Escrow for the acquisition of the Phase 2 Property, as a condition to issuance by
the City of the Satisfaction Date Notice or as otherwise required by the DDA, (5) a development
agreement between Phase 2 Developer/Transferor and LPCC or an Affiliate of LPCC, (6) a
Supplemental Declaration annexing the Phase 2 Property into the jurisdiction of the Flight at
Tustin Legacy Owner's Association, and (7) all other agreements entered into by and between
Phase 2 Developer/Transferor or any Affiliate thereof in connection with the development of the
Phase 2 Property.
(g) Insurance. All actual,out-of-pocket costs of insurance related to the
Phase 2 Property including, but not limited to, general liability, workmen's compensation and
environmental insurance, but specifically excluding builder's risk insurance.
(h) Property Taxes. All actual, out-of-pocket costs of property taxes
and assessments on the Property acquired by Phase 2 Developer/Transferor, and all other
assessments paid in connection with community facilities districts,landscape maintenance districts
and any other public financing districts charged with respect to the Phase 2 Property.
(i) Marketing. All actual, out-of-pocket costs, expenses, and
commissions related to the marketing of the Phase 2 Property for development purposes, securing
construction financing,pre-leasing, and project promotion,together with,but not limited to, costs,
expenses, and commission associated with the marketing of the Phase 2 Property for the purposes
of a sale(including without limitation,costs of responding to due diligence matters,updated survey
costs,updated title search costs, legal fees,brokerage commissions, and marketing fees).
0) Maintenance. All actual, out-of-pocket costs and expenses incurred
by or on behalf of Phase 2 Developer/Transferor from and after the Phase 2 Property Close of
Escrow to pay Phase 2 Developer/Transferor's fair share of costs for maintenance of the Phase 2
Property and any improvements located thereon(prior to Phase 2 Commencement of Construction)
and the Project and all off-site Improvements that the Responsible Party (as defined in the
Landscape Installation and Maintenance Agreement or the Roadway and Utility Easement
Agreement) an obligation to maintain pursuant to the Landscape Installation and Maintenance
Agreement and/or the Roadway and Utility Easement Agreement and for which Phase 2 Developer
has a responsibility to share in costs, including but not limited to security, landscaping and weed
abatement, and association dues and assessments, but specifically excluding general overhead for
the purposes of paying Phase 2 Developer/Transferor's employees' salaries, bonuses or other
forms of compensation for performance of such work if Phase 2 Developer/Transferor is not the
Responsible Party and if Phase 2 Developer/Transferor is the Responsible Party, specifically
limiting the payment of general overhead as above described to performance of the Responsible
Party's required work under the Landscape Installation and Maintenance Agreement and/or the
Roadway and Utility Easement Agreement.
(k) Soft Costs Related to Pre-Development Construction Activities. All
actual, out-of-pocket soft costs in connection with predevelopment activities related to the
potential construction of the Phase 2 Project.
(1) Additional Developer Compensation. Actual, out-of-pocket
transaction costs paid by the Phase 2 Developer/Transferor to the Initial Phase 2 Developer and
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received in connection with the Transfer of Phase 2 from Initial Phase 2 Developer to the Special
Phase 2 Transferee in order to reimburse Initial Phase 2 Developer for carrying costs for Allowable
Deductions incurred by Initial Phase 2 Developer prior to the Transfer to the Special Phase 2
Transferee (which carry costs shall apply to reimbursable amounts only and shall not include any
additional consideration, payment or compensation in exchange for the Transfer of the Option,
Phase 2, the Phase 2 Project, or the Phase 2 Provisions.
(m) Pre-Financing. All actual, out of pocket costs and expenses
incurred by Phase 2 Developer/Transferor for cost deposits, commitment fees, and similar pre-
financing costs associated with financing for the Phase 2 Project, including the potential
construction of the Phase 2 Improvements.
3.$ Exclusions from Additional Allowable Deductions. Additional Allowable
Deductions shall specifically exclude the following:
(a) any and all costs of any Transferee associated with the sale,
assignment or transfer of the Property or any portion thereof by Phase 2 Developer/Transferor to
any Transferee;
(b) any and all costs of any Transferee in connection with due diligence,
entitlement or conveyance, including without limitation, any consideration paid by any Transferee
to acquire the Property or any portion thereof,
(c) any and all hard construction costs in connection with potential
construction of the Phase 2 Project;
(d) any and all internal financing or costs of funds rate on investments
in the Phase 2 Property (except as allowed by Section 3.7(1));
(e) general overhead for the purposes of paying Phase 2
Developer/Transferor's employees' salaries, bonuses or other forms of compensation except as
specifically authorized by Section 3.70);
(f) any and all Option Credit Remainder, Option Credits and Option
Cash Payments regardless of when arising or made (which are excluded because they have been
taken into account in the calculation of the Phase 2 Property Base Purchase Price and/or the Pre-
Approved Costs); and
(g) any and all payments to Phase 1 Developer (all such payments
comprising Allowable Deductions having been included in Pre-Approved Costs).
Where used in the definition of Additional Allowable Deductions, the term "by or on behalf of
Phase 2 Developer" shall mean payments made by Phase 2 Developer/Transferor or by any
member or by any Affiliate of any member of Phase 2 Developer/Transferor and to be reimbursed
by the Phase 2 Developer/Transferor.
3.9 Subsequent Transfer Allowable Deductions. "Subsequent Transfer
Allowable Deductions" shall apply only with respect to each Transfer following the first Transfer
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subject to Payment of Profit Participation and shall mean the following expenses associated with
and attributable to the acquisition, development, maintenance, marketing, pre-leasing,
management, operation, and Transfer of the Phase 2 Property and the Phase 2 Project incurred by
Phase 2 Developer/Transferor from and after, for each Participation Transfer,the effective date of
the Transfer to Transferee ("Transfer Date"). Notwithstanding that certain categories below are
overlapping,there shall be no double-counting of expenses nor shall there be inclusion of any costs
incurred by Phase 1 Developer or Phase 2 Developer prior to the Transfer Date:
(a) Land Acquisition Cost. If Profit Participation was paid by the prior
Phase 2 Developer/Transferor at the time of the prior Transfer to the Phase 2 Developer/Transferor,
the amount of the Total All-In Land Value Amount determined in accordance with this Agreement
upon which the paid Profit Participation was based and if Profit Participation was not due from the
prior Phase 2 Developer/Transferor at the time of the prior Transfer to the Phase 2
Developer/Transferor,the amount that would have been the Total All-In Land Value Amount had
Profit Participation been due with respect to such transaction.
(b) Due Diligence. All actual, out-of-pocket due diligence fees and
costs and expenses of third party reports and studies incurred by or on behalf of Phase 2
Developer/Transferor to evaluate the Phase 2 Property and/or the Phase 2 Project and reasonable
travel costs related to the Phase 2 Developer/Transferor's due diligence.
(c) Phase 2 Pre-Development Activities and Permit Fees. All actual,
out-of-pocket costs and expenses incurred by or on behalf of Phase 2 Developer/Transferor for
payment of Phase 2 Pre-Development Costs and regulatory and development permit fees required
to be paid to process and pull City or third-party agency permits for the Phase 2 Project and
potential construction of the Phase 2 Improvements or to Record the Final Map for Phase 2.
(d) Land Acquisition Transaction Costs. All actual, out-of-pocket
transaction costs paid by or on behalf of Phase 2 Developer/Transferor in connection with
acquisition of the Phase 2 Property from the Transferor from which such entity acquired the Phase
2 Property, including,without limitation, escrow fees and charges, search costs and premiums for
title insurance and endorsements, legal fees,brokerage commissions and fees,marketing fees,real
property transfer taxes, appraisal costs, easement costs, survey costs, and consultant fees
(including,without limitation, the expenses of any reliance letters).
(e) City Transaction Expenses. The amount of City Costs Deposits paid
by Phase 2 Developer/Transferor to the City during the period of such Phase 2
Developer/Transferor's ownership of the Phase 2 Property,less the amount of any remaining City
Costs Deposit funds returned by the City to such Phase 2 Developer/Transferor at the time of the
Transfer to which the Profit Participation is applicable.
(f) Costs of Phase 2 Joint Venture Agreement and Other Transaction
Documents. All actual, out-of-pocket legal fees and associated costs to prepare (1)the
organizational documents for the joint venture entity of the Phase 2 Developer/Transferor, (2) all
documents required to be delivered as a condition to issuance by the City of the Satisfaction Date
Notice or as otherwise required by the DDA, and (3) all other agreements entered into by and
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between Phase 2 Developer/Transferor or any Affiliate of Phase 2 Developer/Transferor in
connection with the development of the Phase 2 Property.
(g) Insurance. All actual,out-of-pocket costs of insurance related to the
Phase 2 Property including, but not limited to, general liability, workmen's compensation and
environmental insurance, but specifically excluding builder's risk insurance.
(h) Property Taxes. All actual, out-of-pocket costs of property taxes
and assessments on the Property acquired by Phase 2 Developer/Transferor, and all other
assessments paid in connection with community facilities districts,landscape maintenance districts
and any other public financing districts charged with respect to the Phase 2 Property.
(i) Marketing. All actual, out-of-pocket costs, expenses, and
commissions related to the marketing of the Phase 2 Property for development purposes, securing
construction financing,pre-leasing, and project promotion,together with,but not limited to,costs,
expenses, and commission associated with the marketing of the Phase 2 Property for the purposes
of a sale(including without limitation,costs of responding to due diligence matters,updated survey
costs, updated title search costs, legal fees,brokerage commissions, and marketing fees).
0) Maintenance. All actual, out-of-pocket costs and expenses incurred
by or on behalf of Phase 2 Developer/Transferor from and after the Transfer Date to pay Phase 2
Developer/Transferor's fair share of costs for maintenance of the Phase 2 Property and any
improvements located thereon (prior to Phase 2 Commencement of Construction) and the Project
and all off-site Improvements that the Responsible Party (as defined in the Landscape Installation
and Maintenance Agreement or the Roadway and Utility Easement Agreement) has an obligation
to maintain pursuant to the Landscape Installation and Maintenance Agreement and/or the
Roadway and Utility Easement Agreement and for which Phase 2 Developer has a responsibility
to share in costs, including but not limited to security, landscaping and weed abatement, and
association dues and assessments,but specifically excluding general overhead for the purposes of
paying Phase 2 Developer/Transferor's employees' salaries, bonuses or other forms of
compensation for performance of such work if Phase 2 Developer/Transferor is not the
Responsible Party and if Phase 2 Developer/Transferor is the Responsible Party, specifically
limiting the payment of general overhead as above described to performance of the Responsible
Party's required work under the Landscape Installation and Maintenance Agreement and/or the
Roadway and Utility Easement Agreement.
(k) Soft Costs Related to Pre-Development Construction Activities. All
actual, out-of-pocket soft costs in connection with predevelopment activities related to the
potential construction of the Phase 2 Project.
(1) Pre-Financing Costs. All actual, out of pocket costs and expenses
incurred by Phase 2 Developer/Transferor for cost deposits, commitment fees, and similar pre-
financing costs associated with financing for the Phase 2 Project, including the potential
construction of the Phase 2 Improvements.
3.10 Exclusions from Subsequent Transfer Allowable Deductions. Additional
Allowable Deductions shall specifically exclude the following:
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(a) any and all costs of any Transferee associated with the sale,
assignment or transfer of the Property or any portion thereof by Phase 2 Developer/Transferor to
any Transferee;
(b) any and all costs of any Transferee in connection with due diligence,
entitlement or conveyance,including without limitation, any consideration paid by any Transferee
to acquire the Property or any portion thereof,
(c) any and all hard construction costs in connection with potential
construction of the Phase 2 Project;
(d) any and all internal financing or costs of funds rate on investments
in the Phase 2 Property;
(e) general overhead for the purposes of paying Phase 2
Developer/Transferor's employees' salaries, bonuses or other forms of compensation except as
specifically authorized by Section 3.9 ' ;
(f) any and all Option Credit Remainder, Option Credits and Option
Cash Payments regardless of when arising or made; and
(g) any and all payments to Phase 1 Developer.
Where used in the definition of Subsequent Transfer Allowable Deductions, the term "by or on
behalf of Phase 2 Developer/Transferor" shall mean payments made by Phase 2
Developer/Transferor or by any member or by any Affiliate of any member of Phase 2
Developer/Transferor and to be reimbursed by the Phase 2 Developer/Transferor.
4. Pavment of Profit Participation.
4.1 Developer Profitability Report.
(a) With respect to each Participation Transfer, no later than forty-five
(45) calendar days prior to the anticipated effective date of such Transfer, Phase 2
Developer/Transferor shall complete and submit to City a draft report ("Preliminary Developer
Profitability Report"), certified as to accuracy and completeness by an authorized officer of
Phase 2 Developer/Transferor, setting forth the following items as determined in good faith by
Phase 2 Developer/Transferor: (1) calculation of Profit Participation estimated as of the date of the
Transfer, including the Total All-In Land Value Amount, and all Allowable Deductions by
category and specifying the estimated amounts in each category; and (2) the estimated amount of
the Profit Participation that is payable to the City if any, based on the foregoing. The draft
Preliminary Developer Profitability Report shall calculate the Profit Participation based upon the
knowledge of Developer with respect to information available at such time, and may include
estimated reserves for any undetermined or future Allowable Deductions anticipated to be incurred
prior to the date of the Transfer.
(b) The City shall have twenty five(25)calendar days from Delivery of
the draft Preliminary Developer Profitability Report to review such report in good faith and to
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respond in writing with its approval or disapproval of any Report Components set forth in the draft
Preliminary Developer Profitability Report or to request further information relevant, as
determined by the City in its reasonable discretion, to allow the City to analyze the draft
Preliminary Developer Profitability Report and the Report Components. If the City disapproves
any Report Components, the City shall provide Developer with a reasonably detailed explanation
of the reason for its disapproval. If the City requests further information,Developer shall use good
faith efforts to provide any additional information requested by the City within five (5) calendar
days from the date of request by the City and the City shall have the longer of the period of an
additional seven(7)calendar days from Delivery by Phase 2 Developer/Transferor of the requested
information or the conclusion of the twenty-five (25) calendar day period described above to
review and respond following its receipt of such information. If the City disapproves the
Preliminary Developer Profitability Report or any portion or Report Component thereof, the City
and Developer shall promptly meet and confer in good faith to resolve any objections and to seek
to reach agreement on the disputed portions of the Developer Profitability Report and/or Report
Components.
(c) Not less than ten (10) calendar days prior to the anticipated date of
the Transfer and as a condition precedent to such Transfer, Phase 2 Developer/Transferor shall
submit to the City a revised Preliminary Developer Profitability Report, which shall reflect any
changes mutually agreed upon by the Parties pursuant to Section 4.1(b) of this Agreement and
otherwise be subject to the provisions related to Final Accounting set forth in Section 4.3 of this
Agreement.
(d) If the Parties continue to have disagreement, then the Transfer may
proceed upon payment as set forth in Section 4.2 but the City shall retain all rights to challenge
the entire contents of the Preliminary Developer Profitability Report and the Report Components
as set forth in Section 4.5 and to Audit as set forth in Section 5 of this Agreement.
4.2 Interim Pam. Subject to the reserved rights of the City set forth in
Sections 4.5 and 5 of this Agreement, at and as a condition to each Participation Transfer, Phase 2
Developer/Transferor shall pay to the City the Profit Participation calculated in the revised
Preliminary Developer Profitability Report described in Section 4.1(c) of this Agreement.
4.3 Final Accounting and Payment Based on Final Developer Profitability
Report. By the date that is thirty (30) calendar days after the Participation Transfer, Phase 2
Developer/Transferor shall perform a final accounting and true-up of the Profit Participation
reconciling any additional items of revenue, Total All-In Land Value Amount components and/or
Allowable Deductions which were not included in the Preliminary Developer Profitability Report
and, if applicable,reflect any changes mutually agreed upon by the Parties subsequent to Delivery
of the Preliminary Developer Profitability Report described in Section 4.1(c) (or if no
modifications were made, Section 4.1(a)) of this Agreement (the "Final Accounting") and
providing a final version of the Developer Profitability Report reflecting the Final Accounting,
certified as to accuracy and completeness by an authorized officer of Phase 2 Developer/Transferor
("Final Developer Profitability Report").
(a) The City shall have sixty (60)calendar days after Delivery by Phase
2 Developer/Transferor of the Final Developer Profitability Report and the Final Accounting (the
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"Review Period")to(i) review the Final Accounting and the Final Developer Profitability Report,
(ii) request further information relevant, as determined by the City in its reasonable discretion, to
allow the City to analyze the Preliminary Developer Profitability Report, the Final Accounting,
the Final Developer Profitability Report and the Report Components delivered with each,
(iii) object to any of the provisions of the Preliminary Developer Profitability Report(which may
include but shall not be limited to the matters raised by the City prior to the Participation Transfer),
Final Accounting and Final Developer Profitability Report (in which event Phase 2
Developer/Transferor and the City shall promptly meet and shall confer in good faith to resolve
any objections and to seek to reach agreement on the Report Components), and (iv) determine
whether or not the City has objections to the Preliminary Developer Profitability Report,the Final
Accounting or the Final Developer Profitability Report or any Report Component. Within five(5)
calendar days after the end of the Review Period, the City shall deliver notice to Phase 2
Developer/Transferor as to its determination of whether or not to proceed with the Audit pursuant
to Section 5.
(b) If the City requests further information, Phase 2
Developer/Transferor shall use good faith efforts to provide any additional information requested
by the City within five (5) calendar days from the date of request by the City and the City shall
have the longer of the period of an additional five (5) calendar days from Delivery by Phase 2
Developer/Transferor of the requested information or the conclusion of the Review Period to
review and respond following its receipt of such information. If the City disapproves the Final
Accounting the Final Developer Profitability Report or any portion or Report Component thereof,
the City shall provide Developer with a reasonably detailed explanation of the reason for its
disapproval, and the City and Phase 2 Developer/Transferor shall negotiate in good faith for a
period of thirty (30) days after the Delivery by the City of its written notice of disapproval to seek
to resolve the City's concerns and to reach agreement on the disputed portions of the Developer
Profitability Reports and/or Report Components.
(c) Within ten (10) calendar days following the resolution of any open
items identified by the City during the Review Period, Phase 2 Developer/Transferor shall submit
to the City a revised Final Accounting and revised Final Developer Profitability Report, which
shall reflect any changes mutually agreed upon by the Parties pursuant to Section 4.3(b) of this
Agreement.
(d) If the City determines at any time during the Review Period that its
objections are resolved to its satisfaction and that the City shall not pursue the Audit,the City shall
provide prompt written notice to the Phase 2 Developer/Transferor of that determination
("Resolution Notice").
(e) If the City provides a Resolution Notice and the Final Developer
Profitability Report and Final Accounting (as amended, if applicable,by agreement of the Parties
pursuant to Section 4.3(a)) show that Phase 2 Developer/Transferor has overpaid the Profit
Participation due, the City shall refund such overpayment within sixty (60) calendar days of
completion of the Final Accounting, and if Phase 2 Developer/Transferor has underpaid the Profit
Participation due, Developer shall deliver such additional Profit Participation to City within sixty
(60) calendar days of completion of the Final Accounting.
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4.4 Financial Records and Statements of Developer. Each Phase 2 Developer
shall keep and maintain, or cause to be kept and maintained, accurate financial books and records
with respect to the development of the Property as reasonably necessary to evaluate the Developer
Profitability Reports and the Report Components. Such records shall be kept in accordance with
each Phase 2 Developer's standard accounting principles and practices These financial books and
records shall include all supporting documentation relative to Allowable Deductions, and shall be
maintained by each Phase 2 Developer until the date that Phase 2 Developer/Transferor shall have
paid the City in full for all Profit Participation amounts agreed by the City to be due from such
Phase 2 Developer/Transferor to the City pursuant to this Agreement. Phase 2 Developer shall not
be required to keep paper copies of invoices, charges and evidence of Allowable Deductions
incurred, or payments related thereto, but shall only be required to retain evidence of such records
as are customarily maintained in accordance with its normal accounting records in the ordinary
course of business. From and after the date on which a Preliminary Developer Profitability Report
is submitted to the City, Phase 2 Developer/Transferor shall make such books and records as are
determined by the City in its reasonable discretion to be relevant to the calculation of the costs
submitted as Allowable Deductions, the Total All-In Land Value Amount and the Profit
Participation calculation and the components of each of the foregoing available to City, or its
representatives, at any time upon five (5) calendar days' prior written notice for City's inspection
at Phase 2 Developer/Transferor's designated place set forth below. Records may be copied
subject to the confidentiality provisions set forth in Section 7.15. Such inspection and examination
shall be made at such time and place as the Phase 2 Developer/Transferor may reasonably
designate provided that the designated place must be at an office located in Orange County,
California. Developer shall cooperate fully with City in making the inspection.
4.5 Dispute and Audit Rights of City.
(a) Right of City Audit and Dispute. Whether or not the City
disapproved or questioned the Preliminary Developer Profitability Report or the Final Developer
Profitability Report or any Report Component or other portion thereof and whether any such
dispute remains ongoing as of the date of the Transfer, the City reserves the right to Audit the
Preliminary Developer Profitability Report and the Final Developer Profitability Report and the
Report Components pursuant to Section 5 of this Agreement. In addition, if the City conducts an
Audit, the City reserves the right to challenge the Preliminary Developer Profitability Report and
the Final Developer Profitability Report and the Report Components pursuant to Section 7.5 of
this Agreement based upon the results of any Audit, regardless of whether or not the City has
previously objected to a matter during the Review Period or at any prior time.
(b) Notwithstanding any Transfer, Phase 2 Developer/Transferor shall
not be released from its obligations to pay and perform under this Agreement until all amounts in
dispute are either resolved by agreement of the City as evidenced by a Resolution Notice,resolved
by agreement of the City and the Phase 2 Developer/Transferor following the Review Period or
any Audit or resolved by final, non-appealable judgement in any adjudication. Until finally
resolved and any amounts due paid in full, all amounts determined to be due under this Agreement
(whether or not determined at the time of Transfer) shall remain Ongoing Obligations of the Phase
2 Developer/Transferor and shall be secured by the Phase 2 Guaranty delivered by the Phase 2
Developer/Transferor.
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(c) Phase 2 Developer/Transferor shall not be entitled to damages or
compensation (other than receipt of Costs pursuant to Section 7.5 of this Agreement if Phase 2
Developer/Transferor is the Prevailing Party) as a result of the City's disapproval, conditional
approval, or failure to approve or disapprove the Preliminary Developer Profitability Report,Final
Accounting or the Final Developer Profitability Report or any Report Component thereof.
5. Audit.
53 Generally. At the option of City, regardless of whether or not there was
agreement or disagreement as to the Preliminary Developer Profitability Report, Final Accounting
and/or the Final Developer Profitability Report or any Report Component thereof and regardless
of whether resolution of any open items were resolved prior to the Participation Transfer or during
the Review Period, and, except as set forth below, at City's cost, exercised by Delivery to the
Phase 2 Developer/Transferor of written notice within five (5) calendar days of the end of the
Review Period, City may cause those components of Phase 2 Developer/Transferor's books and
records determined by the City or its Auditor, each in its reasonable discretion, to be relevant to
the calculation of the costs submitted as Allowable Deductions, the Total All-In Land Value
Amount and the Profit Participation calculation and the components of each of the foregoing (the
"Relevant Records") to be audited by an independent third-party certified public accountant
licensed in the State of California and that is not compensated based upon the results of the Audit
or a percentage of collections (an "Auditor") that is mutually agreed upon by the Parties, for the
purpose of verifying the calculation of Net Profit, Allowable Deductions and the components
thereof used to determine Profit Participation due to the City (the "Audit"). If the Parties cannot
mutually agree upon an Auditor within fifteen (15) calendar days of the City's Delivery of the
notice of Audit referenced herein, then the City shall be required to select such Auditor from one
of the "Big 4" accounting firms (Deloitte, PricewaterhouseCoopers (PwC), Ernst& Young (EY),
and Klynveld Peat Marwick Goerdeler (KPMG)) (collectively, the "Pre-Approved Auditors").
If the Parties cannot mutually agree upon an Auditor and none of the Pre-Approved Auditors are
available to perform the Audit within the timeframe specified herein, then the City shall promptly
select the Auditor. Any Auditor selected for the Audit pursuant to the process set forth in this
Section 5.1 (whether mutually agreed upon, a Pre-Approved Auditor, or an Auditor selected by
the City) shall provide each Party with reasonably satisfactory evidence that it has the relevant
experience to perform such Audit. Phase 2 Developer/Transferor shall make the Relevant Records
available to the Auditor at Phase 2 Developer/Transferor's business office in Orange County,
California, within ten (10) calendar days after notice of Audit. Subject to the resolution of any
dispute regarding the Audit, if it is properly determined by the Audit that there was a deficiency
in the amount of Profit Participation paid to the City hereunder, or any overpayment of Profit
Participation to the City by the Phase 2 Developer/Transferor, the Phase 2 Developer/Transferor
shall pay to City the amount of the underpayment, or City shall pay to Developer the amount of
the overpayment, as applicable, within thirty (30) days after receipt of the results of the Audit. If
the Audit properly determines that the amount of the Profit Participation was underpaid by more
than five percent (5%) of the aggregate Profit Participation, then Phase 2 Developer/Transferor
shall pay the actual costs and expenses incurred by the City to the third party Auditor in connection
with the performance of the Audit. Any dispute regarding the Audit or the result thereof shall be
resolved pursuant to Section 7.8. The results of the Audit shall be provided to Phase 2
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Developer/Transferor no later than one hundred twenty (120) calendar days following execution
of a contract with the Auditor in accordance with this Section 5.
6. Default.
6.1 Default. In the event that any Party hereto believes the other Party is in
breach of its obligations under this Agreement, such Party shall deliver written notice of such
alleged breach and the actions necessary to cure such breach to the other Party. Such Party shall
be in default under this Agreement if it has not cured the breach within thirty (30) days from the
receipt of such notice, or in the event that the breach is not reasonably susceptible or cure within
such thirty (30) day period, then if it has not commenced the cure of such breach within the thirty
(30) day period and diligently prosecuted the cure to completion, but in no event to exceed ninety
(90) days ("Default").
6.2 Remedies. In the event of a Default by either Party hereunder, either Party
shall have all rights and remedies available to it at law or in equity. To the maximum extent
permitted by law, all rights, options and remedies contained in this Agreement, or under law, shall
be cumulative, and no one remedy shall be exclusive of any other remedy. Notwithstanding the
foregoing, each Party hereby waives the right to recover consequential, special or punitive
damages.
6.3 Recordation of Deed of Trust. Concurrently with the acquisition of the
Phase 2 Property by Phase 2 Developer,Phase 2 Developer shall execute, acknowledge and permit
to be recorded against the Phase 2 Parcel a first lien Deed of Trust in the form attached to the DDA
as Attachment 32 ("City Deed of Trust")to secure payment of the Profit Participation. City shall
execute, acknowledge and deliver to Phase 2 Developer a full reconveyance of the City Deed of
Trust in recordable form and such other documentation as may be reasonably required in order to
release the City Deed of Trust in accordance with the provisions of the DDA.
7. Miscellaneous.
7.1 Notices. All notices, demands, consents, requests and other
communications required or permitted to be given under this Agreement shall be in writing and
shall be deemed conclusively to have been duly given: (a)when hand delivered to the other Party;
(b) three (3) Business Days after such notice has been sent by U.S. Postal Service via certified
mail,return receipt requested,postage prepaid, and addressed to the other Party as set forth below;
(c) the next Business Day after such notice has been deposited with an overnight delivery service
reasonably approved by the Parties (Federal Express,Overnite Express,United Parcel Service and
U.S. Postal Service are deemed approved by the Parties), postage prepaid, addressed to the Party
to whom notice is being sent as set forth below with next-business-day delivery guaranteed,
provided that the sending Party receives a confirmation of delivery from the delivery service
provider; or (d) when transmitted if sent by email to the email address set forth below; provided
that notices sent by email shall not be effective unless either(i) a duplicate copy of such notice is
promptly sent by any method permitted under this Section other than by email (provided that the
recipient Party need not receive such duplicate copy prior to any deadline set forth herein); or
(ii)the receiving Party delivers a written confirmation of receipt for such notice either by email or
any other method permitted under this Section. Any notice given by email shall be deemed
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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 City: City of Tustin
300 Centennial Way
Tustin, CA 92780
Attn: Matthew S. West, City Manager
Telephone: 714-573-3010
Email: mwest@tustinca.org
with a copy to: Woodruff Spradlin& Smart,APC
555 Anton Boulevard, 91200
Costa Mesa, CA 92626
Attn: David Kendig, Esq., City Attorney
Telephone: 714-415-1083
Email: dkendig@wss-law.com
with a copy to: Armbruster Goldsmith& Delvac LLP
Attn: Amy E. Freilich, Esq., Special Counsel
12100 Wilshire Boulevard, Suite 1600
Los Angeles, CA 90025
Email: amy@agd-landuse.com
If to Phase 2 Developer:
with a copy to:
Either Party may change the address to which notices are to be given to it by giving notice of such
change of address in the manner set forth above for giving notice.
7.2 Interpretation. This Agreement shall be construed as if prepared by both
Parties. Accordingly, any rule of law (including California Civil Code Section 1654) or legal
decision that would require interpretation of any ambiguities in this Agreement against the Party
that has drafted it is not applicable and is waived.
7.3 Severability. If any provision of this Agreement, or the application thereof,
shall for any reason and to any extent be invalid or unenforceable,the remainder of this Agreement
and application of such provision to other circumstances, shall be interpreted so as best to
reasonably effect the intent of the Parties hereto.
7.4 Performance of Acts on Business Days. Unless specifically stated to the
contrary, all references to days herein shall be deemed to refer to calendar days. In the event that
the final date for payment of any amount or performance of any act hereunder falls on a Saturday,
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Sunday or holiday, such payment may be made or act performed on the next succeeding business
day.
7.5 Attorneys' Fees. If any Party to this Agreement institutes any action, suit,
proceeding, counterclaim or other proceeding for any relief against another Party, declaratory or
otherwise (collectively an "Action"), to enforce the terms hereof or to declare rights hereunder or
with respect to any inaccuracies or material omissions in connection with any of the covenants,
representations,warranties or obligations on the part of the other Party to this Agreement,then the
Prevailing Party in such Action shall be entitled to have and recover of and from the other Party
all costs and expenses of the Action, including (a) reasonable attorneys' fees which shall be
payable at the contractual hourly rate for City's litigation counsel at the time the fees were incurred,
but in no event more than $200 per hour with such hourly rate being used to calculate the amount
of attorney's fees recoverable regardless of whether City or Phase 2 Developer is the prevailing
party and(b)costs actually incurred in bringing and prosecuting such Action and/or enforcing any
judgment, order,ruling or award(collectively, a"Decision")granted therein, all of which shall be
deemed to have accrued on the commencement of such Action and shall be paid whether or not
such Action is prosecuted to a Decision. Any Decision entered in any final judgment shall contain
a specific provision providing for the recovery of all costs and expenses of suit, including
reasonable attorneys' fees and expert fees and costs (collectively "Costs") incurred in enforcing,
perfecting and executing such judgment. For the purposes of this paragraph, Costs shall include
in addition to Costs incurred in prosecution or defense of the underlying action, reasonable
attorneys' fees, costs, expenses and expert fees and costs incurred in the following: post judgment
motions and collection actions, contempt proceedings, garnishment, levy, debtor and third party
examinations, discovery, bankruptcy litigation and appeals of any order or judgment.
"Prevailing Party"within the meaning of this Section 7.5 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.
7.6 Entire Agreement; Amendments. This Agreement, together with the other
written agreements referred to herein, is intended by the Parties to be the final expression of their
agreement with respect to the subject matter hereof, and is intended as the complete and exclusive
statement of the terms of the agreement between the Parties. As such, this Agreement supersedes
any prior understandings between the Parties, whether oral or written. Any amendments to this
Agreement shall be in writing and shall be signed by all Parties hereto.
7.7 Governing Law. This Agreement and the documents in the forms attached
as exhibits hereto shall be governed by and construed under the internal laws of the State of
California.
7.$ Jurisdiction. The Parties hereto agree that the State Courts located in
Orange County, California ("Court") shall have exclusive jurisdiction over any Action and the
Parties hereby consent to the exercise of personal jurisdiction over them by the Court for purposes
of resolving the Action. Any Party may file a complaint with the Court, and in no other court.
79 No Waiver. No delay on the part of any Party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
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any Party hereto of any right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor shall any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
7.10 Assi ng ment. In the event that the Phase 2 Transferable Interests or any
other interest in Phase 2 is conveyed by a Phase 2 Developer/Transferor to any successor owner
prior to the termination of this Agreement, Phase 2 Developer/Transferor shall assign its right and
obligations under this Agreement to such successor owner of the Phase 2 Transferable Interests;
provided, however, upon such assignment of Phase 2 Developer/Transferor's rights and
obligations hereunder to a successor owner of the Phase 2 Transferable Interests, Phase 2
Developer/Transferor shall not be released from the obligations arising under this Agreement with
respect to any Transfer until payment in full by the Transferor to the City of all Supplemental
Purchase Price payments and all Profit Participation due to the City with respect to the Transfer,
as determined in accordance pursuant to a Final Accounting pursuant to Section 4 or Audit
pursuant to Section 5. Nothing in this Agreement shall modify the obligation of Phase 2
Developer/Transferor to obtain the consent of the City to any Transfer to the extent required by
the DDA.
7.11 Term. This Agreement shall remain in effect until the later of the date upon
which (a)the Phase 2 Commencement of Construction takes place, (b) if applicable, Profit
Participation owed under this Agreement (whether determined by agreement of the Parties, as a
result of Audit or determined by final non-appealable judgement in any adjudication) and
(c) payment in full is made to the City of all Supplement Purchase Price amounts and all Profit
Participation due to the City with respect to the Transfer(s) carried out during the term of this
Agreement, as determined in accordance pursuant to a Final Accounting pursuant to Section 4 or
Audit pursuant to Section 5.
7.12 BindingEffect.ffect. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, representatives, successors and permitted
assigns.
7.13 Headings, Cross-References, Exhibits. The headings and captions used in
this Agreement are for convenience and ease of reference only and shall not be used to construe,
interpret, expand or limit the terms of this Agreement.
7.14 No Partnership. No agency, partnership,joint venture or other relationship
is intended hereby, and neither Party shall be deemed the agent,servant, employee,partner or joint
venturer of the other Party. Neither City nor any Phase 2 Developer shall, in any way or for any
reason be deemed to have become a partner of the other in the conduct of its business or otherwise,
or a joint venturer. In addition, no merger or joint enterprise between any Phase 2 Developer and
City shall be deemed to exist by virtue of this Agreement.
7.15 Confidentiality. The information provided by Phase 2
Developer/Transferor pursuant to Section 3 of this Agreement, the information described in
Sections 4.1, 4.3, and 4.4 of this Agreement, and the information provided in connection with any
Audit pursuant to Section 5 of this Agreement may be submitted to the City and/or the Auditor
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conducting the Audit as confidential information as provided by Sections 18.23.2 of the DDA and
if so submitted shall be subject to and its treatment shall be governed by the provisions of
Sections 18.23.2 and 18.23.3 of the DDA.
[signatures on next page)
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
Dated: "CITY"
By:
Matthew S. West,
City Manager
ATTEST:
By:
Erica N. Yasuda, City Cleric
APPROVED AS TO FORM
By:
David Kendig, City Attorney
Armbruster Goldsmith& Delvac LLP,
Special Real Estate Counsel to the City
By:
Amy E. Freilich
{signatures continued on following page}
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"PHASE 2 DEVELOPER"
a
By:
Name:
Title:
Dated:
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EXHIBIT "A"
LEGAL DESCRIPTION OF PHASE 2 PARCEL
Real property in the City of Tustin, County of Orange, State of California, described as follows:
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Schedule 13
ATTACHMENT 32 (NEW)
FORM OF CITY DEED OF TRUST
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 13 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 32
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ATTACHMENT 32
FORM OF CITY DEED OF TRUST
CITY OF TUSTIN OFFICIAL BUSINESS
REQUEST DOCUMENT TO BE
RECORDED AND TO BE EXEMPT FROM
RECORDING FEES PER GOVERNMENT
CODE §6103 AND §27383.
Recording requested by and when recorded
mail to:
City Manager
The City of Tustin
300 Centennial Way
Tustin, CA 92780
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST WITH ASSIGNMENT OF RENTS
(SHORT FORM)
This DEED OF TRUST WITH ASSIGNMENT OF RENTS (this "Deed of Trust") is made as
of 1 20 between a
herein called "Trustor," whose address is
FIRST AMERICAN TITLE INSURANCE COMPANY, herein called "Trustee," and the CITY
OF TUSTIN, a municipal corporation of the State of California, herein called `Beneficiary."
WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that certain
property in the County of Orange, State of California, more particularly described on Exhibit"A"
attached hereto and made a part hereof (the "Phase 2 Parcel"), together with all existing
improvements, if any, presently located thereon, all appurtenances pertaining thereto and all
permits, licenses, approvals and authorizations issued by any Governmental Authority (as such
term is defined in the DDA) in connection therewith, but excluding therefrom the reserved rights
and interests of the City as specified in that certain Quitclaim Deed for Tustin Legacy Cornerstone
I—Phase 2 and Covenants, Conditions and Restrictions, Including Environmental Restriction
Pursuant to Civil Code Section 1471 ("Quitclaim Deed") made by Beneficiary in favor of Trustor
and recorded in the Office of the Orange County Clerk-Recorder("Official Records") against title
to the Phase 2 Parcel immediately prior to recording of this Deed of Trust ("Phase 2 Property")
and the rents, issues and profits thereof, subject, however, to the right, power and authority
hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and
profits for the purpose of securing (1) Trustor's payment of the "Supplemental Purchase Price"
and the "Profit Participation" each as defined and calculated in accordance with the terms of that
certain unrecorded Supplemental Purchase Price and Profit Participation Agreement of even date
herewith between Trustor and Beneficiary, as may be amended or modified from time to time in
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accordance with its terms (the "PPA"); and (2) the performance of each covenant of Trustor
contained in this Deed of Trust(collectively with the PPA, the "Secured Obligations").
To protect the security of this Deed of Trust, and with respect to the Phase 2 Property, Trustor
expressly makes each and all of the agreements, and adopts and agrees to perform and be bound
by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed
that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust
recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the
book and at the page of official records in the office of the county recorder of the county where
the Phase 2 Parcel is located, noted below opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585
Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160
Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964,Page 149774
shall inure to and bind the parties hereto, with respect to the Phase 2 Property. Said agreements,
terms and provisions contained in said subdivisions A and B (identical in all counties) are by the
within reference thereto,incorporated herein and made a part of this Deed of Trust for all purposes
as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the
obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by
law.
Trustor and Beneficiary are parties to that certain Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of November 15, 2016, as amended by that certain First
Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated as of
June 20, 2017, that certain Second Amendment to Tustin Legacy Disposition and Development
Agreement Cornerstone I dated as of October 1, 2019 and that certain Third Amendment to Tustin
Legacy Disposition and Development Agreement Cornerstone I dated as of December [•], 2020,
and as the same may be amended from time to time(collectively,the"DDA"). The DDA is further
described and record notice thereof is provided in that certain Memorandum of Tustin Legacy
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Disposition and Development Agreement Cornerstone I recorded in the Official Records on June
29, 2017 as Instrument Number 2017000270814 and that certain Memorandum of Second and
Third Amendments to Tustin Legacy Disposition and Development Agreement Cornerstone I
dated and recorded against the Phase 2 Parcel in the Official Records on
20 as Instrument No. (collectively, the"Memoranda").
This Deed of Trust grants to Beneficiary a first priority continuing lien and security interest in the
Phase 2 Property. Without the prior written consent of Trustor in its sole discretion, this Deed of
Trust is and shall be subordinate only to the following documents and instruments related to
Trustor's development of the Phase 2 Property (collectively, the "Development Documents"):
(i) the DDA;
(ii) that certain Tustin Legacy Cornerstone I Development Agreement by and between
Flight Venture LLC and Beneficiary and recorded in the Official Records as
Instrument No. 2017000270813, as amended by that certain First Amendment to
Tustin Legacy Cornerstone I Development Agreement recorded in the Official
Records as Instrument No. [ ] {add information regarding
additional DA amendments};
(iii) the Memoranda;
(iv) the Quitclaim Deed;
(v) the Declaration of Special Restrictions for Cornerstone I (Phase 2 Parcel) to be
entered into by Trustor and Beneficiary and recorded in the Official Records
substantially concurrently with the execution and recordation of this Deed of Trust;
(vi) the Roadway, Landscape and Utility Easement Agreement entered into by
Beneficiary and Flight Phase 1 Owner,LLC("Phase 1 Owner")and recorded in the
Official Records on June 29, 2017 as Instrument No. 2017000270817;
(vii) the Landscape Installation and Maintenance Agreement entered into by Beneficiary
and Phase I Owner and recorded in the Official Records on June 29, 2017 as
Instrument No. 2017000270818;
(viii) that certain the Declaration of Covenants, Conditions and Restrictions and
Establishment of Easements for The Flight at Tustin Legacy made by Phase 1
Owner and recorded in the Official Records on June 29, 2017 as Instrument
No. 2017000270820 ("CC&Rs"); and
(ix) {add information regarding Supplement or Annexation to CC&Rs};
provided, however, that this Deed of Trust shall not be subordinate to any monetary liens (other
than those generally provided in the CC&Rs). Foreclosure of this Deed of Trust or exercise of any
other remedies hereunder shall in no way abrogate or extinguish any of the Development
Documents.
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Trustor shall not permit any lien, including without limitation, any Mortgage (as defined in the
DDA)to be recorded against the Phase 2 Property or any portion thereof, without the express prior
written consent of Beneficiary in its sole discretion.
The undersigned Trustor requests that a copy of any notice of default and any notice of sale
hereunder be mailed to Trustor at its address hereinbefore set forth.
Trustor hereby agrees to submit to personal jurisdiction in the State of California in any action or
proceeding arising out of this Deed of Trust. Trustor hereby agrees and consents that without
limiting other methods of obtaining jurisdiction, personal jurisdiction over Trustor in any such
action or proceeding may be obtained within or without the jurisdiction of any court located in
California and that any process or notice of motion or other application to any such court in
connection with any such action or proceeding may be served upon the parties by registered or
certified mail to or by personal service at the last known address of Trustor, whether such address
be within or without the jurisdiction of any such court. Without limiting the generality of the
foregoing, any legal suit, action or other proceeding by Beneficiary against Trustor arising out of
or relating to this Deed of Trust may be instituted in the courts of the State of California, County
of Orange, or the United States District Court for the Central District of California, and Trustor
hereby waives any objections which it may now or hereafter have based on venue and/or forum
non conveniens of any such suit, action or proceeding and submits to the jurisdiction of such courts.
This Deed of Trust does not secure the obligation of any guarantor under the DDA, the PPA or the
other Development Documents notwithstanding anything to the contrary contained in this Deed of
Trust or in any such guaranty. The foregoing, however, shall not limit the provisions of this Deed
of Trust providing that this Deed of Trust is given as security for the obligations of Trustor with
respect to the Secured Obligations.
Trustor shall not cause or suffer to occur a Transfer of the Phase 2 Property or any interest therein,
or any direct or indirect interest in Trustor, other than as may be permitted pursuant to the DDA.
The failure of Beneficiary to insist upon strict performance of any term hereof shall not be deemed
to be a waiver of any term of this Deed of Trust or any of the Development Documents, and Trustor
shall not be relieved of Trustor's obligations hereunder by reason of(i) the failure of Beneficiary
to comply with any request of Trustor or any guarantor with respect to the Secured Obligations to
take any action to foreclose this Deed of Trust or otherwise enforce any of the provisions hereof
or of the PPA or DDA or the other Development Documents, (ii)the release from the lien of this
Deed of Trust, regardless of consideration, of the whole or any part of the Phase 2 Property, or of
any person or entity liable for the Secured Obligations or any portion thereof, or(iii)any agreement
or stipulation by Beneficiary extending the time of payment or otherwise modifying or
supplementing the terms of the DDA or the PPA or the other Development Documents.
{signatures on following page}
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Signature of Trustor
{insert Trustor Signature Block}
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CALIFORNIA ALL PURPOSE ACKNOWLEDGEMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of
On before me,
Date (Insert Name and Title of the Officer)
personally appeared
Name(s)of Signer(s)
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal and/or Stamp above Signature:
Signature of Notary Public
Tustin Cornerstone I DDA Art 32 City Deed ATTACHMENT 32 City of Tustin/Cornerstone I
of Trust 11-16-2020(agd)FINAL S-2
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CALIFORNIA ALL PURPOSE ACKNOWLEDGEMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of
On before me,
Date (Insert Name and Title of the Officer)
personally appeared
Name(s)of Signer(s)
who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Place Notary Seal and/or Stamp above Signature:
Signature of Notary Public
Tustin Cornerstone I DDA Art 32 City Deed ATTACHMENT 32 City of Tustin/Cornerstone I
of Trust 11-16-2020(agd)FINAL S-3
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
EXHIBIT "A"
To Deed of Trust With Assignment of Rents
LEGAL DESCRIPTION OF PHASE 2 PARCEL
Real property in the City of Tustin, County of Orange, State of California, described as follows:
{insert legal description of Phase 2 Parcel)
Tustin Cornerstone 1 DDA Art 32 City Deed ATTACHMENT 32 City of Tustin/Cornerstone I
of Trust 11-16-2020(agd)FINAL EXHIBIT A
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DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each
county in California as stated in the foregoing Deed of Trust and incorporated by reference in said
Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any
building thereon; to complete or restore promptly and in a good and workmanlike manner any
building 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 said
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 said property in violation of law; to
cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use
of said property may be reasonably necessary, the specific enumerations herein not excluding the
general.
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 the 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 default or
notice 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 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.
4) To pay: at least ten days before delinquency all taxes and assessments affecting said
property,including assessments on appurtenant water stock; when due, all encumbrances, charges
and liens, with interest, on said property or any part thereof, which appear to be prior or superior
hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then
Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof, may: make or do the same is
such manner and to such extent as either may deem necessary to protect the security hereof,
Beneficiary or Trustee being authorized to enter upon said 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 reasonable fees.
Tustin Cornerstone 1 DDA Art 32 City Deed ATTACHMENT 32 City of Tustin/Cornerstone I
of Trust 11-16-2020(agd)FINAL DO NOT RECORD
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5) To pay immediately and without demand all sums so expended by Beneficiary or
Trustee, with interest from date of expenditure at the 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 secured hereby any amount demanded by the Beneficiary not to exceed the maximum
allowed by law at the time when said statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said
property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or
release such moneys received by him 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 his right either to require prompt payment when due of all other sums so secured
or to declare default for failure so to pay.
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 and said note for endorsement, and
without affecting the personal liability of any person for payment of the indebtedness secured
hereby, Trustee may: reconvey any part of said 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 sums secured hereby have been
paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or
other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee
shall reconvey, without warranty, the 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 these Trusts, to collect the rents, issues and
profits of said property,reserving unto Trustor the right, prior to any default by Trustor in payment
of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect
and retain such rents, issues and profits as they become due and payable. Upon any such default,
Beneficiary may at any time without notice, either in person, by agent, or be 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 said property or any part thereof, in his 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
reasonable attorney's fees,upon any indebtedness secured hereby, and in such order as Beneficiary
may determine. The entering upon and taking possession of said property, the collecting of such
rents,issues and profits and the application thereof as aforesaid, shall not cure or waive any default
or notice of default hereunder or invalidate any act done pursuant to such notice.
Tustin Cornerstone 1 DDA Art 32 City Deed ATTACHMENT 32 City of Tustin/Cornerstone I
of Trust 11-16-2020(agd)FINAL DO NOT RECORD
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6) That upon default by Trustor in payment of any indebtedness secured hereby or in the
performance of any agreement hereunder, Beneficiary may declare all sums secured hereby
immediately due and payable by delivery to Trustee of written declaration of default and demand
for sale and of written notice of default and of election to cause to be sold said property, which
notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this
Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of
said notice of default, and notice of sale having been given as then required by law, Trustee,
without demand on Trustor, shall sell said property at the time and place fixed by it in said 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 said 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 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 as hereinafter defined,
may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of
evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of:
all sums expended under the terms hereof, not then repaid, with accrued interest at the amount
allowed by law in effect at the date hereof, all other sums then secured hereby; and the remainder,
if any, to the person or persons legally entitled thereto.
7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, 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 in the office of the recorder of the county or counties where said
property is situated shall be conclusive proof of proper substitution of such successor Trustee or
Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, rights, powers and duties. Said instrument must contain the name of the original Trustor,
Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name
and address of the new Trustee.
8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their
heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary
shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not
named as Beneficiary herein. In this Deed,whenever the context so requires,the masculine gender
includes the feminine and/or neuter, and the singular number includes the plural.
9) That Trustee accepts this Trust when this Deed, 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.
Tustin Cornerstone 1 DDA Art 32 City Deed ATTACHMENT 32 City of Tustin/Cornerstone I
of Trust 11-16-2020(agd)FINAL DO NOT RECORD
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Schedule 14
ATTACHMENT 33 (NEW)
FORM OF SATISFACTION DATE NOTICE
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 14 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 33
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 33
FORM OF SATISFACTION DATE NOTICE
{To be formatted on City letterhead}
, 20
{Insert notice information for Phase 2 Developer per then-current notice provision of DDA}
RE: Satisfaction Date Notice
To Whom It May Concern:
Reference is hereby made to that certain Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of November 15, 2016 ("Original DDA"), as amended by (1) that certain
First Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated
as of June 20, 2017 ("First Amendment"), (2)that certain Second Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of October 1, 2019 ("Second
Amendment"), and (3) that certain Third Amendment to Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of December [•], 2020 ("Third Amendment";
the Original DDA, First Amendment, Second Amendment, and Third Amendment referred to
collectively in this notice as the "DDA"), by and between [•], a [•] {insert Phase 2 Developer
entity}, as successor-by-assignment to Flight Phase I Owner LLC, a Delaware limited liability
company ("Developer"), and the City of Tustin, a municipal corporation of the State of California
(the "City"). {Add additional DDA Amendments and further assignments if applicable above.)
Capitalized terms used herein that are not defined herein shall have the meanings specified in the
DDA.
This notice is being delivered by the City pursuant to Section 8.1.6 of the DDA as a condition to
Phase 2 Commencement of Construction and delivery of any of the grading,foundation or building
permits for the Phase 2 Project. This notice constitutes the "Satisfaction Date Notice," as such
term is defined in the DDA, and the date of this notice first set forth above shall be the"Satisfaction
Date," as such term is defined in the DDA. This Satisfaction Date Notice hereby confirms that the
City is satisfied in its sole discretion or has waived each and every one of the Phase 2 Construction
Commencement Conditions, as such term is defined in the DDA.
{Insert City signatory}
CC: {Insert copy parties per then-current notice provision of DDA}
Tustin Cornerstone 1 DDA Att 33 ATTACHMENT 33 CIty of Tustin/Cornerstone I
Satisfaction Date Notice I
11-13-2020(agd)(2)FINAL
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
Schedule 15
ATTACHMENT 34 (NEW)
FORM OF ACKNOWLEDGMENT OF TRANSFER TO QUALIFIED TRANSFEREE
{attached}
Tustin Cornerstone 1 Third Amendment to DDA Schedule 15 City of Tustin/Cornerstone I
11-20-2020(agd)FINAL ATTACHMENT 34
DocuSign Envelope ID:201 EFC35-3A9C-4EA8-B2E9-78B05FF2CFF7
ATTACHMENT 34
FORM OF ACKNOWLEDGMENT OF TRANSFER TO QUALIFIED TRANSFEREE
{To be formatted on City letterhead}
, 20
{Insert notice information for Phase 2 Developer per then-current notice provision of DDA}
RE: Acknowledgment of Transfer to Qualified Transferee
To Whom It May Concern:
Reference is hereby made to that certain Tustin Legacy Disposition and Development Agreement
Cornerstone I dated as of November 15, 2016 ("Original DDA"), as amended by (1) that certain
First Amendment to Tustin Legacy Disposition and Development Agreement Cornerstone I dated
as of June 20, 2017 ("First Amendment"), (2)that certain Second Amendment to Tustin Legacy
Disposition and Development Agreement Cornerstone I dated as of October 1, 2019 ("Second
Amendment"), and (3) that certain Third Amendment to Tustin Legacy Disposition and
Development Agreement Cornerstone I dated as of December [•], 2020 ("Third Amendment";
the Original DDA, First Amendment, Second Amendment, and Third Amendment referred to
collectively in this notice as the "DDA"), by and between [•], a [•] ("[•]"){insert Phase 2
Developer entity}, as successor-by-assignment to Flight Phase I Owner LLC, a Delaware limited
liability company ("Developer"), and the City of Tustin, a municipal corporation of the State of
California (the "City"). {Add additional DDA Amendments and further assignments if
applicable above.) Capitalized terms used herein that are not defined herein shall have the
meanings specified in the DDA.
This notice is being requested pursuant to the last paragraph of Section 2.2.20) of the DDA by [•]
as [Transferor], and [•], a [•], as [Transferee], with respect to that certain Assignment and
Assumption Agreement (Cornerstone I—Phase 2) dated [•] (the "Assignment and Assumption
Agreement") that Transferor and Transferee propose to execute to cause a Transfer pursuant to
Section 2.2.20)to a Qualified Transferee. The City acknowledges and agrees as follows:
(a) with respect to the proposed Transfer by [•], as [Transferor], and [•], a [•], as
[Transferee], the City has been provided with information relevant to this inquiry and to the
determination of whether Transferee is a Qualified Transferee and
(b) the conditions to the Transfer to such Qualified Transferee over which the City has
review rights as set forth in Section 2.2.20) of the DDA have been satisfied.
{Insert City signatory}
CC: {Insert copy parties per then-current notice provision ofDDA}
Tustin Cornerstone 1 DDA Art 34 ATTACHMENT 34 City of Tustin/Comerstone I
Acknowledgment of Transfer to Qualified I
Transferee 11-13-2020(agd)(2)FINAL