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HomeMy WebLinkAbout2004-06-25 - Unspecified REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH py ' RECORDING REQUESItu nT FIRST AMERICAN TITLE COMP Tom Daly, Clerk- rder I lAWIERCI1A1ANTONALlM E GOIM6RCONOUbrDRIV NO FEE ' 2004000580586 11:33am 06/25/04 OFFICIAL BUSINESS 113 73 Al2 29 - Document entitled to free 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 . `recording per Government.Code Sections 6103 and 27383 RECORDING REQUESTED BY J< AND WHEN RECORDED MAIL TO: Matthew C. Fragner, Esq. Fragner Law Corporation 1100 Glendon Ave.,Suite 1400 Los Angeles, CA 90024 1�r 5 -Lf o)3,7- M + u-znt. 0//►') 7 Sn AGREEMENT CONTAINING'COVENANTS AFFECTING REAL PROPERTY This AGREEMENT CONTAINING COVENANTS AFFECTING.REAL PROPERTY (this."Covenant Agreement") is made and entered into by and between the REDEVELOPMENT AGENCY OF THE CITY `OF HUNTINGTON . BEACH (the "Agency") and CE% UNTINGTON, LLC, a California limited liability company ("Owner") with reference to the following: A. Owner holds fee. title to that certain real property described in the legal description attached hereto as-Exhibit A and incorporated her by this reference, and shown on the Property Map as attached hereto as Exhibit B and incorporated herein by this reference ("Agency Property"). Owner has a leasehold interest in that certain real property described in 'the legal*description attached hereto as Exhibit A, and shown on the Property Map as attached hereto as Exhibit B ("Leased Premises"). The Agency Property and.the Leased Premises are collectively referred to herein as the"Property". B. The Property is, subject to the Redevelopment Plan for the Main-Pier Redevelopment Project, which was approved and adopted by Ordinance No. 2578 of the City Council of the City of Huntington Beach, amended by Ordinance No. 2634, and merged with certain other redevelopment projects-in ,the City by the adoption of Ordinance No. 3343 on December 16, 1996 to -form the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project"). C._ This Covenant Agreement is made pursuant to that certain Disposition and Development Agreement by and between the Agency and Owner dated June 17, 1999, which Disposition and Development Agreement was supplemented 'by that'. certain [First] Implementation Agreement entered into between the Agency and CIM Group, LLC dated April 6, 2000; that certain Second Implementation Agreement entered into between the Agency and CIM Group, LLC dated March 5, 2001, that certain Third Implementation Agreement entered into between the Agency and CIM/Huntington, LLC dated October 30, 2002, and that certain K:\CG\HB\C1M\Closing\Execution copies\Covenant.exe6bon copy(Final)(6-23-04).doc Page 1 of 23 Fourth Implementation Agreement entered into between the Agency and CIM/Huntington, LLC dated_as of September 15, 2003,(collectively, the"DDA'), all of which are public records on file at the offices of the Agency. The Property is referred to *in the DDA as the "Site." All capitalized-terms in this Covenant Agreement shall have the meanings ascribed to them in the DDA unless indicated to the contrary herein. Agency and Owner agree as follows: 1. Construction Covenants. Owner hereby covenants and agrees on behalf of itself and any successors and assigns in the Property or any portion thereof or any improvements thereon or any interest therein that Owner, such successors and assigns shall comply with and be. bound by the following covenants (hereinafter referred to as the "Construction Covenants"): • a. Develop and construct improvements on the Property solely in accordance with the Redevelopment P1an;,the�Grant Deed, this Agreement Containing Covenants Affecting. Real Property, the DDA (including but not limited to the Revisedl Scope of Development, Revised Attachment No. 4), and'.plans approved by the City of Huntington Beach, with at least { 145,and approximately 160 hotel rooms, and at least 100,000 and approximately 110,000 square. feet of gross leasable area of retail, restaurant and office.uses, and a public parking facility' conforming with City approved plans. In addition to .all-of the other requirements under this Covenant Agreement,the hotel to be developed on the Property shall be of first quality and have . an overall standard of quality equal to or better than a limited service:hotel,such as-a Marriott Courtyard Hotel or Marriott Residence Inn, and the retail and restaurant uses to be developed`on the Property shall be first quality nationally or regionally recognizable and reputable retailers'or restaurants of the nature and quality customarily included in retail/restaurant centers meeting the requirements:and restrictions of the Revised Scope of Development (Revised Attachment No. 4). b: Comply and be bound by all of the Surviving Covenants: 2. Surviving Covenants. Owner hereby covenants and agrees on behalf of itself and any successors and assigns in the Property or any portion- thereof or any improvements thereon or.any interest therein that Owner, such successors and assigns shall'comply with and be bound by the-following covenants (hereinafter referred to as the"Surviving Covenants"): a.; Devote the Property, or cause the Property to be devoted,to uses solely in accordance with the Redevelopment Plan,the Grant Deed, this Agreement Containing Covenants Affecting Real Property, and plans approved by the City of Huntington Beach for hotel, retail, restaurant, office and,parking uses, with at least 145 and approximately 160.hotel rooms, and at least 100,000 and approximately 110,000 square feet of gross leasable area of retail, restaurant and office uses.- and a public parking facility conforming with City approved plans. In addition to all of the'other requirements under this Covenant Agreement,.the hotel to be maintained on the Property shall be of first quality and have an overall standard of quality equal to or better than a limited service hotel such as a Marriott Courtyard Hotel or Marriott Residence Inn, and the retail and restaurant uses to.be maintained on the Property shall be first quality nationally or regionally - KACG\HB\CIM\Closing\Execution copies\Covenant.execution copffinal)(6-23-04).doc Page 2 of 23 recognizable and reputable retailers'or restaurants of the nature and quality customarily included in retail/restaurant centers, and meeting the following requirements and restrictions: Restaurants and retail establishments on the Property shall be of a quality and nature consistent with the City's specific plan for the area, and shall,first be approved in writing by Agency. No fast food.restaurants which typically include ``drive through" features shall be permitted. No increase.in the number of liquor stores on the Property shall be permitted. No tattoo'parlors, massage parlors, or-adult entertainment uses shall be.permitted, nor`shall the sale or exhibition of obscene or pornographic items be permitted. No Bar Establishments shall be permitted. "Bar Establishment" means a place of business providing the on premises service of alcoholic beverages, beer or wine, without bona fide hot food"service and with less than 75% of the customers served aftables. f b. Owner shall use its.reasonable best efforts to operate or cause the hotel, restaurants, retail stores,.office space, parking-facility and all other improvements to be constructed on the Property to be operated and continuously open ,for business to the general pubic'in accordance.with the standards set forth in the Grant Deed and this Covenant Agreement, including without limitation the existence.at all times of a binding-and effective hotel franchise agreement and hotel management agreement, both of which shall be first.approved in writing by the Agency. The hotel franchise agreement shall be with a hotel meeting the size, level of quality and other requirements and restrictions referred- to in this Covenant Agreement. The hotel management agreement shall be with.a hotel operator or manager:who has.at least eight(8) , years experience demonstrating the capable, competent and experienced operation of hotels . 1. similar in quality, size and type as required to be maintained on the Property pursuant to this Covenant Agreement. P. Pay when due all real estate taxes, and the special taxes or assessments of the bond financing issued by the Agency,or.City to finance a portion of the Agency's obligations in connection with the redevelopment of the Property, assessed and levied on the Property or any portion thereof or any improvements thereon or any interest therein and refrain from appealing, challenging or contesting in any-manner the validity or amount of any ad valorem property tax assessment, encumbrance or lien, or the special tax or lien of such bonds; provided, however, that Owner may appeal, challenge or contest(i) the initial assessment of the assessed value of the, Property following the issuance of the Release of Construction. Covenants by Agency to the extent that such initial assessment is more than ten percent (10%) higher,than the Project Cost approved by the Agency pursuant to Paragraph 3 of this Covenant Agreement; and (ii),any increase in assessment of the Property improperly assessed because of a purported change of ownership where no such change took place; and (iii) any increase in assessment of the Property occurring-by reason of a bona fide arms-length sate to the extent such increase in assessment results in an .assessment in`excess of the purchase-price of such bona.fide arms-length sale, provided; however, .that no such appeal, challenge or contest shall .be permitted to attempt to obtain or result in an assessment which is lower than that existing prior to such sale. d. Not.discriminate upon the basis.of race, color, creed, religion, sex, age, marital status, national origin,or ance.stry'in the sale, lease, sublease, transfer, use, occupancy,' KACG\HB\CIM\Closing\Execution c6pies\Covenant.execution,copy(Final)(6 23-04).doc j Page 3 of 23 " tenure or:enjoyment of the Property, or any,improvements erected or to be erected thereon, or any part thereof. e. Refrain from making any Transfer of all or any portion of the Property, or any improvements. thereon, or� any interest therein, and refrain from any subdivision or resubdivision of the Property or any portion thereof, without the prior written approval of the Agency, to.the extent.required by the provisions of Paragraph 4 below. Pay when due the Agency Participation Payment in accordance with the provisions of Paragraph 5 below. g: Solely at Owner's expense, maintain;and repair or cause to be maintained and repaired the Property and all improvements thereon (including but. riot limited to landscaping, lighting and signage), in:a.first,quality condition, free of debris,'waste and graffiti, and in compliance with theterms of the Redevelopment Plan, the City of'Huntington Beach Municipal Code, and the following: (l) All improvements on the Property shall be maintained_in good condition in accordancewith the custom and practice generally applicable -to comparable first quality hotel, restaurant, retail and, parking areas, as applicable, in Orange County, and in conformance and compliance with all plans, drawings.and related documents approved'by the City, all conditions of approval of land use entitlements adopted by the City or.the Planning Commission, including painting and cleaning of all exterior surfaces of all private improvements and public improvements to the curbline. • ;Owner shall assume responsibility for the operation and maintenance (including repair, restoration, and reconstruction) of all of the improvements constructed on the'Property,and the costs thereof, and Agency and the City shall have no liability for costs of such operation and maintenance by-Owner or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction)of such improvements.. Without limiting the generality of the foregoing, Owner,-in the maintenance 'of the improvements, shall observe -the following standards: Maintain the surface of all.automobile and pedestrian- areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute ' thereof as shall be in all respects equal thereto or better in quality,appearance and durability; Maintain such appropriate entrance, exit and directional signs; markers and lights as shall be reasonably required and in'accordance with the'practices prevailing in the operation of similar developments; Clean lighting fixtures and relamp and/or reballast as needed; ; Repaint striping, markers, directional signs,etc., as necessary to maintain in first- class condition; KACG\HR\CiM\Closing\Execution copies\Comantexecution copy(Final)(6-23-04).doc Page 4 of 23. . Provide reasonable amounts of security personnel and security measures. Owner shall'seek-the-advice of the police department in planning appropriate security measures; Maintain public right-of-way items between.the property and the street,including sidewalks, curbs, gutters, driveways, signs and poles,•curb painting and markings; Maintain all surface and-storm lateral drainage systems; and Maintain all sanitary sewer lateral;connections. (2) Landscape maintenance shall' include, without 'limitation, watering/irigation; fertilization;.mowing; edging;' trimming of grass; tree .and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, "and irrigation coverage; replacement, as needed, of all plant "materials; control of weeds in'all.planters, shrubs, lawns, ground covers, or other planted" areas; and staking for support of trees. (3) Clean-up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed-free"condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements.and.landscaping; clearance and cleaning of al_areas maintained prior to the end of each day on.which maintenance operations are performed to ensure that all cuttings, weeds; leaves and other debris are properly -disposed of by maintenance workers If the Agency ,gives written notice to Owner that the maintenance or condition.,of the Property or any portion thereof or any improvements"thereon.does not comply with this Covenant Agreement and,such notice describes the deficiencies, Owner shall correct, remedy or cure the deficiency within thirty (30) days following the submission.of such-notice, unless the notice states that the deficiency is an urgent matter relating to public health and safety in which case Owner shall cure the deficiency with all due,diligence and shall complete the cure at the earliest.possible time, In the event Owner fails to maintain the Property or any portion thereof or any improvements thereon in accordance with this Covenant Agreement and fails to cure any deficiencies within the applicable period described above, the Agency shall have, in addition to any other rights and remedies hereunder, the right to-maintain the Property and the improvements thereon, or portion thereof, or to contract.for the correction of any deficiencies, and Owner shall be responsible for payment of all such reasonable costs incurred by the'Agency. h. There shall be no discrimination against or segregation of any'person, or group of,persons, on account of sex, marital status, race, color, creed, religion, age, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Owner itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, K:\CG\HB\C1M\Closing\Execution copies\Covenant.execution copy(Final)(6-23-04).doc Page.5 of 23 { location, number, use or occupancy of tenants; lessees, subtenants, sublessee, or vendees of the Property.. is Owner,shall refrain from restricting the rental, sale or lease of the Property on the basis of sex, marital status, race; color, creed, religion, age, ancestry,or national origin of any person. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (1) In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them,that there shall be no discrimination against or segregation of, any person or group.of persons on account of sex, marital status,race, color, creed, religion, age, national origin or ancestry in the sale, lease, sublease,transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person "claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to,the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (2) In leases: ."The lessee herein covenants by-and for itself,,its successors and assigns, and all persons claiming under or,through them, and this lease is made and accepted' upon and subject to the following conditions:. That there shall be no discrimination againstor segregation of any person or group of persons, on account of sex, marital status-, race, color, creed, religion, age, national origin or ancestry,in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein Teased, nor shall lessee itself, or any person-claiming under,or through it, establish or permit such, practice or practices of discrimination or segregation with reference to the selection, location, number,use or occupancy of tenants, lessees, sublessee, subtenants,or vendees in the land herein leased." (3) In contracts: `.`There shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status,race, color, religion, age, creed, national origin or ancestry in the sale, lease, sublease, transfer, use; occupancy, tenure or enjoyment of the land, nor shall the transferee itself or.any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or'occupancy of tenants, lessees, subtenants, sublessee, or .vendees of the land." Advance to the Agency all Acquisition Costs required .by Paragraph 6 below. k. Provide the Hazardous Substance indemnity, waiver and release required by Paragraph 7 below_ KACG\HB\C1M\C1osing\Execution copies\Covenantexecution copy(Final)(6-23-04):doc Page 6 of 23 1. Provide the general indemnity and insurance required by Paragraph 8 below. . in. Perform all of Agency's and Owner's,obligations .in that certain Fourth Amendment to Owner Participation Agreement dated February 3, 2003 by and.between the Agency - and Abdelmuti Development Company ("Fourth Amendment") . (which Fourth. Amendment amends that certain Owner Participation Agreement dated May 28;- 1991 by and between the Agency and Abdelmuti Development Company) relative to the operation and/or use of the public parking facility, including, without limitation, the obligation to prepare a.parking management plan for the public parking facility. n. Include appropriate} provisions in any and all operating and/or use agreements pertaining to the public parking facility in. order to effectuate the terms and conditions of the Fourth Amendment. 3. Project Costs. (a) "Project Costs" as used herein means the following actual costs and expenses of the development work performed or to be performed by or on behalf of Owner for or in connection with the development of the improvements required or contemplated by this Covenant Agreement and plans approved therefor by the City on or with respect to the Property (the "Improvements"), to the extent that such costs and expenses are incurred and paid for by Owner to third parties in connection with the initial construction and are either included in the Agency-approved Project Budget or approved in writing by the Agency pursuant to paragraph 3 (b)below: W Land development work, including demolition and excavation, asbestos .abatement, soils compaction and remediation, utility relocation and abandonment and off--site ,improvements. (ii) Construction of the Improvements and installation of the required fixtures, furniture, machinery "and equipment, and repair of any damage caused and arising during construction from a casualty not coveredby insurance proceeds. (iii) Building permits and entitlement fees not paid for or reimbursed by Agency. (iv) Premiums for casualty, public ,liability and property damage and other similar insurance during construction and on bonds securing work against liens for labor and materials. (v) Real estate taxes and assessments upon the Premises or the Improvements during the period of construction. K:\CQHMCIM\Closing�Execution copiesTovenant.execution copy(Final)(6-23-04).doc Page 7 of 23 (vi). Interest on construction loans and an imputed cost of equity.funds at 10% per annum prior to the issuance by Agency of the Release of Construction Covenants. (vii) Fees for (A)' architects, engineers, accountants; and (B) 'real estate and financial advisors and attorneys previously identified to Agency. Saybrook Capital, LLC; and Matthew C. Fragner,Esq. (and law firms with which he is or has been affiliated) have:previously .been so identified to Agency. (viii) Purchasing fees paid to third parties not affiliated with Owner in connection with the purchase of furniture, fixtures and equipment. (ix) Development fees paid to government agencies, including traffic mitigation costs and fees and other governmental exactions. (x) Charges and premiums for searching-and insuring title. (xi) Out-of-pocket costs incurred by Owner in connection with.construction financing, including, without limitation, commitment fees, mortgage broker fees, standby fees and fees of a like nature, printing and duplicating expenses, documentary transfer tax stamps; . mortgage taxes,recording charges. (xii) Customary and reasonable pre-opening expenses. (xiii) Costs of required studies, reports and inspections. (xiv) Broker''s commissions or finders�fees for'land assembly and leasing., (xv) The. cost of initial tenant improvements paid for.by Owner to be reimbursed to Owner,in the form of rental payments, but excluding any such.costs to the extent reimbursed or paid for in-any other form by any third party, and the cosh of the.lease buy-out of an existing tenant within.the Property improvements developed by Owner where necessary to obtain the initial occupancyof another tenant therein. (xvi) A Developer's Fee of three percent(3%)of Project Costs, excluding the•public parking facility costs'and tenant improvements, but not in any;event to exceed a Developer's Fee of Five Hundred Thousand Dollars,($500,000). Any item previously.included as an Acquisition Cost to-be reimbursed Owner by Agency shall not also be included as a Project Cost. (b) Except~ for Approved Post-Construction Capital Expenditures provided for in Paragraph (d)`below, a. cost or expense which is not included in the Project Cost Budget approved by the Agency shall not be a Project Cost for purposes of this Covenant Agreement (including the Agency Participation Payments) unless Owner submits evidence satisfactory to the Agency, at the earliest possible date and before the cost is incurred, demonstrating that such KACG\HB\C1M\C1osing%xecution copies\Covenant.execution copffinal)(6-23-04).doc` Page 8 of 23 cost or expense (i) will be actually incurred or paid for by or on behalf of Owner for or in connection with the development 'of the improvements in connection with the initial construction; and (ii) cannot reasonably be or have been avoided or reduced; and (Ili)-was not . foreseeable on the date of this Covenant Agreement.. (c) Within ninety (90) days after the recording of the Release of Construction Covenants to be issued by the Agency, Owner shall submit to Agency, for the review and written approval.or disapproval of the Agency's Executive Director, a statement (the "Certified-Project Cost Statement") setting forth the total amount of Project Costs, a separate amount for each. category (i through xvi) in the definition of Project Costs, in paragraph 3 (a) above, and a reasonable description or itemization..of the costs-incurred in each such category, together with a certificate of an independent certified public accountant reasonably,acceptable to Agency (the "Accountant"). The Accountant's certificate shall be addressed to Agency, and shall state that- the Accountant is:familiar with the definition of Project Costs in this.Covenant Agreement and attest to the accuracy of the'Certified`Project Cost Statement, subject to usual and customary qualifications. The Accountant shall be selected by Owner,but shall be-one of the following: i) Deloitte&Touche,LLP; ii) Ernst&Young, LLP; iii) KMPG Peat Marwick, LLP iv) Price Waterhouse Coopers, LLP; v) Any national accounting firm, first approved in writing by the Agency, having at the time of delivery of the Certified Project Cost Statement reputation and . stature in the accounting community comparable to the foregoing firms as of the date of this Covenant Agreement.. (d) The parties acknowledge that additional significant capital expenditures involving items included as Project Costs under Paragraph 3 (a)`(i), (ii),(iii), (vii), (ix)', and (xiii) above, and related tenant improvements and lease-buyouts as described. for initial tenancies' under . Paragraph •3 (a).(xv),.above, may be made by Owner after the recordation of the Release of Construction Covenants, which exp'enditures' are not a normal re-tenanting expense, are not a maintenance or.operational expenditure typical for the normal-maintenance or operation of a development similar-to the subject development,and are not made in connection with the initial tenanting of commercial space within•the improvements developed on the Property; but are instead made in order to materially augment Gross Revenues. Such expenditures meeting the description of the immediately preceding sentence (referred to in this Covenant Agreement as "Proposed Post-Construction Capital Expenditures"), however, shall not be included in Project Costs for any.purpose under thi's Covenant Agreement, unless first submitted- to the Agency's Executive Director prior to such expenditure and approved as a Project Cost (referred to in this Covenant Agreement as "Approved Post-Construction Capital Expenditures"). The Agency's Executive Director shall reasonably consider each submitted.Proposed Post-Construction Capital K:\CG\HB\CIM\Closing\Execution-copies\Covenant.execution copy(Final)(6-23-04).doc Page 9 of 23 Expenditure-for approval or disapproval, provided such expenditure is not a normal re-tenanting expense, is not made in connection with the.initial tenanting of commercial space_within the improvements developed on the Property, is not,a maintenance or operational expenditure typical for the normal maintenance or operation of a development similar to the subject development,, and provided such approval will not have any adverse .economic impact. on the Agency's economic interests, including without limitation the Agency Participation Payments. (e) Except for items 'included in the express definition of Project Cost above, no payment of any'monies by Owner or CIM/Huntington, Inc:under or pursuant to the Lease shall be included in the calculation of Project Costs by virtue of the [First].Implementation Agreement to the DDA. By way of example, if the Commencement-Date under the Lease has occurred and CIM/Huntington, Inc: or Owner has paid real property taxes for the Leased.Premises pursuant to the Lease during the period of construction of the Improvements, then the amount of such taxes maybe included in Project Costs. 4. Transfer Restrictions. Owner recognizes that: Development of the. Property is important. to the general welfare .of the community; and Substantial financing and other public aids have been made available by law.and,. by the government for the purpose of making redevelopment possible;and The qualifications and identity of Owner are of;particular concern to the- community and Agency. Accordingly, Owner agrees to comply.with.the.provisions of this Covenant'Agreement relating to Transfer. (a): For'the reasons set forth above in this Paragraph 4, Owner shall not assign this. .Covenant Agreement nor sell the Property or any portion thereof,nor lease nor make any total or partial conveyance or transfer in any mode or form of all or any part of the Property or the improvements thereon; or any interest therein, nor shall there be any change in the'identity of Owner-or change in the' ownership of Owner .or in the relative proportions thereof,,,or with respect to the identity of.the parties in control of Owner or the degree thereof, by.any method or means (other than such changes occasioned by the death or incapacity of any individual), (collectively,"Transfer"),without the prior written approval of Agency, which approval shall not be unreasonably.withheld or delayed if the proposed Transferee (as defined hereinbelow)'is ; determined by the Agency to have,qualifications equal to or better than the original Owner as of. ` the date of this Covenant-Agreement in all material respects, including but not limited to (a) financial strength, (b) experience in the successful development,- operation, management and marketing of hotels, restaurants; and retail improvements, (c) character and reputation, and (d) the ability to perform',all of the agreements, undertakings, and. covenants of this-Covenant Agreement, the Grant Deed, and.all other agreements entered into by Owner which relate to the development, management, operation, maintenance, and restoration of the Property and of the K:\CG\HB\CIM\Closing\Ezecution copies\Covenant.execudon copy(Final)(6=23-04)Aoc Page 10 of 23 improvements thereon. Owner shall promptly notify Agency of any and all changes whatsoever in the identity of the parties in ownership or control of Owner or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. Any entity formation agreements and documents (or changes therein) related to a Transfer, as well as the agreements and documents effectuating any.Transfer, shall be subject to. the approval of Agency's.Executive Director in connection with its approval of the Transfer. (b) To assist Agency in determining whether or not the proposed.Transferee is so qualified, Owner shall furnish to Agency at no expense to Agency,prior'to that Transfer,detailed : and complete financial statements of the proposed Transferee, audited by a certified public accountant reasonably.satisfactory, to Agency, together with detailed and.complete information about the business of the,proposed Transferee,. including its experience in developing,•and operating improvements of the,type to be constructed on,the.Property,,the use to be made.of the Property and the improvements thereon by the proposed Transferee, projections by the proposed Transferee.of the sources of funds to be used to pay any indebtedness that the proposed ` Transferee will assume or take subject,to, or agree to pay, in connection with the Transfer, and other claims om and requirements.for those funds, together with any other information Agency may reasonably require to assist Agency in determining whether or not the proposed Transferee, is so qualified. To the greatest.extent permitted by law, if Owner or such Transferee provides Agency with any proprietary financial information relating to a proposed Transferee, Agency shall not,without Owner's prior written consent, disclose or make any such financial information available to the public. (c) Approval by Agency of any Transfer shall be conditioned upon such assignee, conveyee or'transferee (collectively"Transferee") agreeing, in,writing, to assume-the rights, and _ obligations thereby transferred and to keep and perform all, covenants, conditions and provisions of this Covenant Agreement and the Grant Deed which are applicable to the rights acquired. (d) The limitations on Transfer contained in this Paragraph 4 shall not be deemed to apply to or prevent, nor shall Agency's approval be required under this Paragraph 4 in connection with, .the granting of any security interest expresslypermitted under this Covenant Agreement; nor the exercise by any mortgagee of its right to foreclose its mortgage by power of sale or judicial' foreclosure; nor any Transfer,of an interest by a mortgagee having acquired Owner's interest in the Property as.a result of its rights under the mortgage, or by'any successor to the mortgagee whose interest shall have been acquired by, through or under any mortgage.or shall have been derived immediately from any holder-thereof.. Notwithstanding-the foregoing provisions of this paragraph (d), the limitations on Transfer contained in this Paragraph 4 shall. . apply to any mortgagee which acquires its interest in the Property or the improvements thereon other than by the exercise of its rights pursuant to the mortgage or deed in lieu of foreclosure. (e) Any purported Transfer shall be null and void unless it complies with the terms of this Paragraph. (f) Subject to Owner's right to lease space within the Improvements for occupancy,as expressly provided in subparagraph (i) of this Paragraph 4, and subject to Owner's right to Ki\CG\RB\CIM\Closing\Execution copies\Covenant.execution copy(FinalX6-23-04).doc Page I I of 23 Transfer the Hotel Parcel pursuant to the provisions of subparagraph (i) of this Paragraph 4, Owner shall only Transfer Owner's entire interest in the Property and the Improvements thereon as, a whole and shall not re-subdivide the Property or the improvements. thereon 'beyond the ` Subdivision contained in the initial Tract Map approved by the City for the development of the Property by Owner without*.the prior written approval of Agency, which Agency may grant or. ` withhold in -its discretion. Without limiting the foregoing or Agency's right to approve all Transfers pursuant to the provisions of this Covenant Agreement, Owner shall apply to the City for approval of a subdivision tract map so as to parcelize the Property consistent with applicable City codes and with tle.development of the Property contemplated by this Covenant Agreement. (g) All costs incurred by Agency to review anyTransfer proposed by Owner as reasonably necessary to close any Transfer shall be paid by Owner. With respect to each Transfer, Owner shall deliver a retainer to-Agency in the sum of Five Thousand Dollars($5,000), . to be applied to-the payment of Agency's costs. The administrative. costs of Agency shall be charged at the actual cost thereof not to exceed an hourly rate of.Fifty Dollars ($50:00). The costs 'of Agency for'consultants or legal services required for providing.such assistance shall be the actual sums billed to Agency for such consulting or legal services All:such costs in excess of Five Thousand Dollars ($5,000) shall be paid within ten (10) days after written request therefor by Agency. If such costs incurred by Agency for aTransfer equal- less than Five Thousand Dollars($5,000),the.balance shall-be refunded promptly following the closing. (h) With respect to the leasing of space for occupancy, Owner shall not be required to submit the documentation otherwise required for a Transfer by subparagraph (b); nor the assignment and assumption agreement otherwise required by subparagraph(c),,nor pay the costs referred to in subparagraph (g); provided, however, that such lease shall contain appropriate provisions conforming the use and operation of the premises to the covenants of the Grant Deed and this Agreement Containing Covenants, and further provided,that such tenant is a first quality nationally or regionally recognizable and reputable retailer or restaurant of the nature and quality customarily included in retail/restaurant centers meeting the requirements-and restrictions of this Covenant Agreement. :. (i) The Owner may,"subject-to all of the requirements of this Covenant Agreement and Paragraph 4 other than the prohibition on subdivision or resubdivision of the Property, separately convey a,portion of the Property as maybe demonstrated to the reasonable satisfaction ofahe Agency to.be necessary for the development and operation of the Agency approved hotel to be developed on-the Property. . 5. Aeency Participation Payment. (a) As an additional consideration for the conveyance of.the Property from Agency to Owner and for the performance by Agency of its obligations.hereunder, Owner shall pay the Agency -Participation Payment to the Agency each Operating Year commencing with the Operating Commencement Date. Subject to the Buyout Provisions of Paragraph 5 (b) below, the obligation of the. Owner to make the Agency Participation. Payments shall continue for a period of forty (40) Operating Years after the Operating Commencement Date, and shall; during K:\CG\14B\CIM\Closing\Execution copies\Covenant.execution copy(Final)(6-23-04).doc Page 12 of 23 such 40 year term,`survive the sale, Transfer or refinance of the Property and the Improvements or any portion-thereof, and not be affected or reduced in any way,.by reason of any such sale, :Transfer or refinance. The Agency Participation Payment shall be paid to Agency by Owner for each Operating Year within ninety(9.0)days of the end of such Operating Year,together with an annual certified . statement submitted for Agency's approval or disapproval documenting in detail the basis for the . calculation of the Agency- Participation Payment due Agency. - Each Agency Participation Payment shall be made in an amount consistent with the Agency approved certified statement for the subject Operating Year. Owner shall provide' Agency's Executive Director reasonably satisfactory-evidence that all data included in the certified statement submitted to Agency for approval is the same as the corresponding data submitted to all,equity partners and to'all lenders participating in .financing for the Property. In connection with Agency's approval of each Operating Year's certified statement, Agency shall be provided by Owner with the same audited and unaudited financial statements provided. by Owner to its lenders and equity partners, including.PERS/SIRS. For purposes: of calculation. and payment of the Agency Participation Payment, the following terms shall have the meanings set forth in the DDA,,as implemented from time to time by written Implementation Agreements entered into and signed by both parties: "Operating Commencement Date" "Operating Year" "Agency Participation Payment" "Gross Revenues" "Adjusted Gross Revenues "Owner's Annual Return" "Adjusted Project Costs" "Approved Post-Construction Capital Expenditures" "Annual Return Shortfall" "Hotel Sale Proceeds" The Additional Spaces Costs shall not be included in the Project Costs used to calculate the"Adjusted Project Costs"or the"Developer's Annual Return." KACG\HB\C1M\C1osing\Execu1ion copies\Covenant:execution copy(Final)(6-23-04).doc Page 13 of 23 (b) Buyout Provisions "Buyout,Amount"means an amount equal to: (a) for 'a Buyout 'with;an Effective Date occurring on or prior., to the twentieth anniversary of the Operating Commencement Date, the quotient obtained by dividing the amount of Agency Participation Payment payable with respect to Gross Revenues.for the twelve month ` time period prior to the Effective Date by .095; or (b) for a Buyout with an Effective Date occurring after the twentieth anniversary of the Operating Commencement Date, the net present value of the remaining Agency Participation Payments until the fortieth anniversary of the Operating Commencement Date (the "End,Date"), assuming Gross. Revenues will, be equal to Gross Revenues for the, twelve month period preceding the, Effective Date, and increasing such projected, Gross Revenues by 9% on each fourth anniversary of the Effective.Date: The discount rate used to calculate the net present -:value shall be-equal to the annual rate equal to the sum of(i) the interest.rate on U.S. Treasury bills or notes having:a maturity date closest to and no later than the End.Date as reported in the Wall.Street Journal on the Effective Date (or if the Wall Street Journal is not published on the-, :Calculation Date, the first publication date thereafter) and (ii) three°percent (3%). If the Wall Street Journal is,no longer published at least weekly, the calculation'shall be, made using, a financial reporting service proposed by Owner and reasonably acceptable to Agency. "Buyout"means the termination of the Owner's obligation to continue paying any further Agency Participation Payments beyond the Effective Date by payingthe.Buyout Amount to the Agency. "Effective Date"means the date on which the Buyout, if any, shall occur, Prior to the tenth (1Oth) anniversary of the Operating Commencement Date, Owner may Buyout the Agency Participation Payments and terminate any obligation to continue paying any further Agency Participation Payment by paying the greater of(i) the sum of Two Million Four. ` Hundred Thousand Dollars ($2,400,000) and (ii) the Buyout Amount.to the Agency within sixty (60) days of the Effective Date,provided that either of the following two:events has occurred:(a) he Agency has approved a sale of the entire Property from the Owner to an approved Transferee or (b) after the third (3rd) anniversary of the Operating Commencement Date, Agency has disapproved one or more Proposed Post-Construction Capital Expenditures with a total aggregate amount in'any three year period of One Million Two Hundred Thousand Dollars ($1,200,000) or more. For purposes.of such Buyout the Effective Date shall be the date of the sale or the date of the Proposed Post-Construction Capital Expenditure. Commencing with the tenth(loth) anniversary of the Operating Commencement Date, Owner may at anytime Buyout.the Agency Participation Payments and terminate any obligation to:continue paying any further Agency Participation Payment by paying the :Buyout Amount to . the Agency within sixty.(60) days of the Effective Date, provided Owner shall have given Agency written notice of its intent to effect such Buyout, and shall have identified in such : K:\CG\HB\CIM\Closing\Execution copies\Covenant.execution copy(Final)(6-23-04).dce Page 14 of.23 written,notice the,Effective Date of such Buyout, and further provided such identified Effective Date shall be a date which is on or after.the date the Agency receives such written notice. 6: Acquisition.Costs (a)� 'Acquisition Costs" shall mean the costs of acquisition of.the Property (including, without limitation, .any interest in-real property (including, without limitation, any public or private easement) necessary to convey title to,the Property to the Owner in accordance with this Covenant Agreement after the approval of the DDA by the Agency (a) incurred by the Owner in the form of purchase.price payments to third party owners and related closing costs (including brokers',fees paid-by Owner)in an,amount first approved in writing by the Agency Executive Director, and (b) incurred by the Agency by negotiation or, eminent domain including, but not- .; limited to, the purchase price,just compensation for the taking-or threatened taking of property interests (land, building, fixtures; equipment, loss of goodwill and- improvements); costs for payment of goodwill as, provided under California law in eminent domain actions; fees and actual expenses.of acquisition agents; escrow fees; costs of drawing the deeds for each property acquired;.recording,fees; notary fees and premiums for title insurance,policies; any state; county or city documentary,stamps or transfer tax; court costs; witness fees; expert witness fees; prorated taxes; appraisal fees; reasonable attorney fees; deposits. to obtain an' order of prejudgment possession, if incurred; amounts to satisfy judgments of condemnation; costs necessary to permit early acquisition of property interests where delays would create a hardship for the owner; abandonment costs and/or damages which the Agency may be-ordered.to pay in any, eminent domain proceeding; and any additional costs incurred, to settle 'or'pay claims of inverse condemnation, or judgments in inverse condemnation. The Acquisition Costs related to the Leased Premises shall be the sum of(i) $1,680,000 plus (ii) relocation costs and expenses approved by-the Agency Executive Director or designee related to Owner's use of the Leased Premises under the Lease plus.(iii) reimbursable-costs, if any; as set forth in Section 201.2(a) of the DDA; provided; however, if the DDA is terminated prior to, Owner paying at least $1,680,000 in total Rent (as defined,in the Lease), then the difference between $1,680000 and 1he'actual total Rent paid-and shall be credited as an off-set by the Agency against amounts owed to'Owner by the Agency under the DDA, including, without limitation, the Agency. Obligation.'. "Lease" herein refers to that certain Ground Lease and.Option to Purchase Fee.by and-between Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979 and Salvator W. and Barbara F..Cracchiolo. and CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach: "Acquisition Costs" shall also mean any and all costs, fees, expenses, payments or judgments incurred or paid by the Agency pursuant to, in accordance with or under that certain agreement entitled "Indemnity Agreement III (Off-Record Matters)".by and between the Agency and First American Title Company'(the"Indemnification Agreement"). (b} Within fifteen (15) days after the Agency provides written notice to Owner that the Agency has incurred expenses or costs that constitute Acquisition Costs, Owner shall deliver, to the Agency cash or a letter(s) of credit, first approved in writing by the Agency as to form, content and issuer (each referred to herein as an "AC Letter of Credit"), in such amounts as are requested by the'Agency. The Agency may provide such notice at anytime and from time to time:. K:\CG\H$\CIM\Closing\Execution copies\Covenant.execution copy(Final)(6-23-04).doc Page.15 of 23 (c) If Owner posts an.AC Letter of Credit, commencing with the Agency's first draw on the AC Letter of Credit, Owner shall be responsible to pay to the issuer of the letter of credit all interest incurred in respect to each draw on the AC Letter of Credit: (d) The Agency shall have the right to'draw on any AC Letter of Credit from time to time.to pay any and all Acquisition Costs, as defined in Paragraph 6 (a) of this Covenant` Agreement.. The only condition for any draw on the AC Letter of Credit shall be a certification by the Agency Executive Director or designee that the draw is permitted under the terms of this Covenant Agreement. Within thirty (30) days following each draw,on the AC Letter of Credit, the Agency shall provide the Owner with a written report showing the specific nature and amount of each such draw. (e) The term of the AC Letter of Credit shall be not less than two (2) years, and such term shall be subject to extension if:Acquisition Costs will or might be incurred ,following the scheduled expiration.of the AC Letter of Credit:. If the term of the AC Letter of Credit is not so extended within fifteen (15) days following a request by the Agency for such an extension, the Agency shall have the right to draw on the AC Letter of Credit in an amount deemed sufficient, by the Agency in its discretion to cover any Acquisition Costs that may be incurred after the expiration of the AC.Letter of Credit. If the AC Letter of Credit has.expired and the Agency gives notice to Owner that Acquisition Costs-will or may be incurred following such expiration, : Owner shall-immediately cause the issuance of a new letter of credit first approved in writing by. the Agency as to form, content and issuer,in the amount requested by the Agency, for a term consistent with the contemplated timing of the Agency's need to make additional Acquisition ' Costs expenditures (f) On or before October 15; 2004, based on the current, actual knowledge of the Agency, the Agency shall provide written notice to Owner, of any Acquisition Costs incurred or paid by the Agency as of the date of such'written notice. Thereafter, within fifteen (15) days following the Agency's receipt of any alleged of purported claim for Acquisition Costs from any #hird party,the Agency shall provide written notice to Owner of such claim. . 7. Hazardous Substances (a) 'Hazardous Substance," as used in this Covenant Agreement means any" substance, material or waste which is or becomes regulated-by the United States government,the State''of California, or any local or other governmental authority, including, without limitation, any material, substance or waste which is (i) defined as a "hazardous waste," "acutely.hazardous waste;" "restricted.hazardous waste," or "extremely hazardous waste" under Sections 25115, '25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code; (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (iii) defined as a 'hazardous material," "hazardous substance," or "hazardous waste" under-Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of,the California Health and Safety Code; (v) petroleum; -(vi) asbestos; (vii) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" K:\CG\HB\C1M\C1osing\Execution copies\Covenantexecution copy(Final)(6-23-04).doc Page 16 of 23 or `.`extremely hazardous" pursuant to Article 11 of Title 22 of the :California Code of , Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean'Water Act (33 U.S.C. Section 1317); (k) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation. and Recovery Act (42 U.S.C.-Section 6903); (xi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or(xii) any other substance,,whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to public health and safety. (b) Owner hereby represents and warrants that the .development, construction and uses of the Property permitted under this Covenant Agreement do not require the presence of any .Hazardous.Substance.on the Property. (c) That portion of the Property which was conveyed from Agency to Owner was conveyed and delivered in an "as is"physical condition, with no warranty, express or implied by Agency as,,to the presence of Hazardous Substances, or the condition of the soil, its geology or the presence of known or unknown faults. If the condition of the-.Property is not in all respects entirely suitable'for. the use or uses: to which the Property will. be;put,: then it is the.sole responsibility and obligation of Owner to place the Property in all respects"in a condition entirely suitable for the development thereof at the sole cost, risk and expense of the Owner. (d) By this Covenant Agreement, Owner provides to the Agency, effective upon the date- of this Covenant Agreement, an indemnification of the Agency and the City and their respective members; officers, employees, agents, contractors and consultants relating to the environmental condition of the Property and the presence of Hazardous Substances.thereon. Therefore, except to the extent caused by the intentional misconduct of the Agency, its employees, officers 'or agents, Owner hereby agrees to indemnify, defend and hold harmless Agency and City and their.respective members, officers, agents,, employees,,contractors and consultants, from any claims, actions; suits; legal and' administrative proceedings, liability, injury, deficiency,`damages, fines, penalties,•punitive damages, costs,and expenses (including, without limitation, the cost of any cleanup,, remediation, removal, mitigation, monitoring"or . testing'of Hazardous Substances, and reasonable attorneys' fees) resulting from, arising'out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal �of any Hazardous Substances on, under, in or about, or the transportation of any Hazardous Substances to or. from, the Property; or (ii) the violation, or alleged violation, of any statute, ordinance,, order, rule, -regulation, permit, judgment or license relating to the use, generation, .release, discharge, storage, disposal or transportation or Hazardous Substances on, under, in or about, to or from,the Property. (e). From the date of this Covenant Agreement, Owner hereby waives, releases and discharges the Agency, the City and their respective members, 'officers, employees; agents, contractors and.consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings,and from all liability for damages, losses, costs; liabilities, fees and K:\CG\HB\CIM\Closing\Execution copies\Covenant xecution copff inal)(6-23-04).doc : Page 17 of23 expenses (including, without limitation; attorneys' fees) arising out of or in any way connected with the Agency's or Owner's-use, maintenance, ownership or operation of the Property, any Hazardous Substances on the Property,,or the existence of Hazardous Substances contamination in any state on the Property, however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of the Agency or its employees, officers or agents. Owner acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which'the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. As such relates to this Paragraph 7, Owner.hereby waives and relinquishes all rights and benefits which they may have under Section 1542-of the California Civil Code: 8. Indemnity and Insurance (a) During the period commencing with,.the undertaking by Owner of any entry or: work on the Property or any portion thereof, Owner agrees to and shall defend, indemnify and hold harmless Agency,the City and their officers,employees, agents, contractors and consultants from and against.all claims, liability, loss; damage,. costs or expenses (including reasonable, attorneys' fees and court costs) arising from or as a result of the Indemnification Agreement and/or the death of any person or any accident, injury, loss or damage whatsoever caused to any person or, to the property of any,person which shall occur on or adjacent to 'the Property and which shall be =directly or. indirectly caused by..or based on the Owner's :rehabilitation, development, construction, :use or operation of the Property or any portion thereof or ,any improvements,thereon or any of Owner's activities•under this Covenant Agreement, whether such actions or inactions'thereof be by Owner or anyone directly or indirectly employed or contracted with by Owner and whether such damage or injury shall accrue 'or be discovered before or after the termination of this Covenant Agreement. Owner shall not be responsible for (and such indemnity shall not apply to)"property damage or bodily injury to the extent caused by the negligence of the Agency or its designated employees or agents. (b) Prior to the undertaking.of-any work on the Property or any portion thereof, Owner shall furnish, or cause to be furnished, to Agency duplicate,originals or appropriate certificates of personal injury and property damage insurance policies in an amount not less than Five,Million Dollars r($5,000;000) combined single limit, naming Agency, the City and their. officers, employees, agents, contractors and consultants as additional insureds, or a combination of functionally equivalent policies; including umbrella coverage,.subject to the prior approval of Agency legal counsel. Any such policy shall be primary and not contributing to policies carried -by Agency, or the City and shall be maintained in full force and effect at all times. 9. Successors and Assigns. All obligations of "Owner" under this Covenant Agreement (and all of the terms, covenants and conditions of this Covenant Agreement) shall be binding upon Owner, its successors and assigns and every successor in interest of the Property or KACG\11B\C1M\C1osing\Execution copies\Covenant.execution copy(Final)(6-23-04).doc Page 18 of 23 any portion thereof,or any interest therein,jointly and severally, for the benefit and in favor.of the Agency, its-successors and assigns, and the City of Huntington Beach. All rights of"Owner" under this Covenant Agreement, shalt inure inure to the benefit of Owner and its'permitted successors and assigns. 10. No Merger. This Covenant Agreement shall not merge into any other agreement between Agency and Owner. I.I. Mortgagee Protection. Breach of any of the covenants, conditions, restrictions, or reservations contained in this Covenant Agreement shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Property, whether or not.said mortgage or deed of trust is subordinated to this Covenant Agreement, but unless otherwise.herein provided,.the terms; conditions, covenants, restrictions and reservations of this Covenant,Agreement shall be binding and effective against the holder of such mortgage or deed of trust and any owner of the Property, or any part thereof, whose title thereto is acquired by foreclosure, trustee's`sale, or otherwise: 12. Release of Construction Covenants. The Construction Covenants shall _remain in effect until the recording of the Release of Construction Covenants to be issued by theAgency with respect to all improvements to be constructed pursuant to the DDA. The covenants against discrimination shall remain in effect in perpetuity. The Surviving Covenants shall remain in effect until a date which is thirty (30)'years after the.date this Covenant Agreement is.recorded, unless,and until they expire earlier in accordance with the express.terms thereof, except for the covenant-set forth in Paragraph 2.f hereinabove to pay the Agency Participation Payment, which shall remain if effect for forty (40) years from. the Operating Commencement Date unless and until terminated in accordance with the Buyout provisions of Paragraph 5 of this Covenant Agreement: Upon the issuance and recordation of the Release of Construction Covenants by the Agency pursuant-to the DDA, Owner shall have the right to have this Covenant Agreement restated and re-recorded with the deletion of the Construction Covenants, and the Agency agrees to enter into documents as may be reasonably required, subject to the approval of Agency legal counsel as to form, so.as to effectuate the.provisions of this paragraph. 13. Estoppel Certificates. Upon written request,Agency shall execute, acknowledge and deliver an estoppel certificate upon which Owner,and any Transferee or mortgagee of all or a portion of Owner's interest in the Property can rely, stating whether Agency has knowledge of any default by Owner or,any successor or assign under the terms of this Covenant Agreement. 14., Approvals. Except as expressly provided otherwise in this Covenant Agreement, approvals required of Agency or Owner shall not be unreasonably withheld or delayed. If this Covenant Agreement requires Owner to submit plans, drawings or other documents or information to Agency for approval, which shall be deemed approved if not acted on by Agency within the specified time, said plans, drawings or other documents shall be accompanied by a. letter stating that they are being submitted and will be deemed approved unless disapproved by Agency within the stated time. If Owner fails to include such a letter with its submission, said KACG\HB\CDA\Closing\Execution copies\Covenant.execution copffinal)(6-23-04).doc. Page 19 of 23 plans, drawings or other documents'shalt not be deemed approved based on the Agency's failure to act within the specified time. 15.. Limitation on Liability. No member, official or employee of City or Agency shall be personally liable to Owner, or any successor in interest, in the event of any default or breach by..Agency or for any amount which may become due to Owner or successor or on any obligations under the terms of this Covenant Agreement: Owner hereby waives and releases any ' claim it may have against any member,'official or :employee of.the Agency or the City with respect to.any.default or breach by the Agency (or. the City) or for any, amount which may become due to Owner or its successors,or on any obligations, under the terms of this Covenant Agreement or,any Conveyance Instrument. Owner makes such release with full knowledge of Civil"Code Section 1542 and hereby waives any_nd all rights thereunder to the extent of this release;if such Section 1542 is applicable. Section 1542 of the Civil Code provides as follows: ..`A general release does not extend to claims which the creditor does not know.or suspect to exist in his favor at the time of executing the release, which if known by hire must have materially affected his settlement with the debtor." 16. No Partnership. Nothing contained in this Covenant Agreement shall be deemed or construed as creating a partnership,joint venture, or any,other relationship between the parties hereto other than as specified in the provisions contained'herein, or' cause the Agency to be responsible in anyway for the debts or obligations of Owner or any other party: 17. Waiver. The waiver by Agency of any term, covenant, or condition herein contained shall riot be a waiver of such term,covenant, or condition on any subsequent breach. .18. -Time of Essence. Time is of the essence of this Covenant Agreement and each and all of its provisions in which performance is a factor: 19. Attorneys' Fees. If any action orvproceeding is brought by either party°against the other under this Covenant Agreement, whether for interpretation,.enforcement or otherwise; the prevailing party shall be 'entitled to recover all costs and expenses, including the:fees of its attorney and any expert witnesses in such action or proceeding:, This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. 20.. Severability. Any provision of this Covenant Agreement which shall prove to be invalid, void, or illegal,shall in rio way.affect, impair, or invalidate any-other provision hereof and such other provisions shall remain in full force,and effect. 2L 'Remedies Cumulative. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible,be cumulative with all other remedies'at law or in equity,, 22. Interpretation. When the context•so requires when used in this Covenant Agreement,the masculine gender shall be deemed to include the feminine and neuter gender and K:\CG\HB\CM\Closing\Euecution copies\Covenant.execution copffinal)(6-23-04).doc Page 20 of23 the neuter gender shall.:be. deemed to include the masculine and feminine gender. When the context to requires when used in this Covenant Agreement, the singular shall be deemed to include the plural. The paragraph and section headings have been used for convenience only, and shall not be used in the interpretation hereof. 23. Amendment. No amendment, change, or addition to,or waiver of termination of, this Covenant Agreement or any part hereof shall be valid unless in writing and signed by both* Agency and Owner. 24-1 No Third Party Benefit. The parties to this Covenant Agreement acknowledge and agree that the provisions of this Covenant Agreement are for the sole benefit of Agency and Owner,'and not for the benefit,'directly or indirectly;"of any other person or entity,' except as otherwise expressly provided herein: [signatures on following pages] [remainder of page left intentionally blank] KACG\HB\CIM\Closing\Execution copies\Covenant execution copy(Final)(6-23-04).doc � Page 21 of 23 r IN WITNESS WHEREOF, the Agency and Owner have caused this instrument to be executed on their behalf by their,respective officers thereunto duly authorized, as of the 23`d day of June,.2004. (Agency) REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH xecutiv Director ATTEST: e y Clerk REVIEWED AND APPROVED: . G David Biggs Deputy Executive Director APPROVED AS TO FORM: ency General Courts APPROVED AS TO FORM: Kane, B mer& Agency ecial Counse KACG\HB\CIM\Closing\Execution copies\Covenant.execution copy(Final)(6-23-64).doc .Page 22 of 23 (Owner) .CIMVHUNTINGTON, LLC, a California limited liability-company By: CIM URBAN REAL ESTATE FUND, L.P. (the "Fund"), a Delaware limited partnership, its manager By: CIM URBAN FUND GP, LLC, a California limited liability company, its general partner By: CIM GROUP, LLC, a California limited"liability company, its manager By; ORCHARD CAPITAL CORPORATION, a California corporation, its manager By: Richard S. Ressler, its Pre ' t K:\CG\HB\CIM\Closing\Execution copies\CovenanLexecufign copy(Final)(6-23-04).doc Page 23 of.23` STATE OF CALIFORNIA ) r )ss. COUNTY.OF Lot An t(�S ) On 31M& ZW 14014 before me, 4nig LoU ISM PUbl1 personally appeared Ki card S. Ressler , personally known to me ( ) to be the person(-&) whose name(, is/ar-e- subscribed to the within instrument and acknowledged to me that he/&he4hey executed the same in his/her authorized capacity(ie4, and that .by his/hcr it signature(s) on the instrument the person(o), or the entity.upon behalf of which the person{$] acted, executed the instrument. WRVESS my hand and official seal. ,j.JL_. )gna e. Mom Ef EELOtN1E BECK Convnbdon#►1470266 Plo4ory Punic-Calromb Los H,q W Cou* My Comm.Bj* t Erb 1I.2= STATE.OF CALIFORNIA } )ss. COUNTY OF } On before me, Ajah-16 A) , personally appeared Pr personally known to e) to be the person whose nameo is/apet subscribed to the within instrument and acknowledged to me that 4ie/she/they executed the same in his/her/their authorized capacityfa< and that by his/her/te� signature on the instrument the person, or the entity;upon behalf of which the person(93 acted, executed the instrument. WITNESS my-hand and official seal. KA7 HLEEN NELSON Corrunlss w#126V58 -� KotOrY PL014-Ca3 01 orarve C Signat e' Mrc°"n'E'�+e`25`=x GOVERNMENT CODE 27361.7 I CERTIFY UNDER THE PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: NAME.OF NOTARY: RENEE LOUISE BECK COMMISSION NUMBER: 1470268 DATE COMMISSION EXPIRES: FEB 14, 2008 COUNTY WHERE BOND IS FILED: LOS ANGELES VENDOR NUMBER: NNA1 PLACE OF EXECUTION: ORANGE COUNTY, CALIFORNIA DATE: June 25,2004 :SIGNED: �kz j4a;a_ Nb�CK(T/TH0MA9,,IlI FIRST AMERICAN TITLE INSURANCE CO. I- CERTIFY UNDER THE PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: NAME OF NOTARY: KATHLEEN NELSON COMMISSION NUMBER: 1268758 DATE COMMISSION EXPIRES: JUN 25,2604 COUNTY.WHERE BOND IS FILED: ORANGE VENDOR NUMBER: NNA1 PLACE OF EXECUTION: ORANGE COUNTY DATE: June 25,2004 SIGNED: K CtHOMAS, II FIRST AMERICAN TITLE INSURANCE CO. EXHIBIT A LEGAL DESCRIPTION OF PROPERTY [behind this page] K:\CG\HB\CIM\Closing\Execution copies\Deed.execudon copy(623-04)(final).doc LEGAL DESCRIPTION Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: . Parcel A: Lots 9, 10, 12; 14, 16, 18, 20;22,24, 26, and 28 in Block 104 of Huntington Beach as shown on a Map recorded in Book 3, Page 36 of Miscellaneous Maps, records of Orange County, California. Excepting therefrom the Southeasterly 2 and 5/81h inches of said Lot 9. Also excepting therefrom all that portion of said land lying below a depth of 500 feet measured vertically from the present surface of the ground. Parcel B: Lots 1,2,3, 6 through 21 inclusive, 23, 25 and 27 in Block 105 of Huntington Beach as shown on a,Map recorded in Book 3,Page 36 of Miscellaneous Maps, records of Orange. County, California: Also excepting therefrom all that portion of said land lying below a depth_ of 500 feet -.measured vertically from the present.surface of the.ground. Parcel C: Lots 4 and 5 in-Block 105 of Huntington Beach as shown on a Map recorded in Book 3, Page 36 of Miscellaneous Maps,records of Orange County, California. Also excepting therefrom all that portion of said land lying below a depth of 500 feet measured vertically from the present surface of the ground. APN: 024-152702 and 024-152-03 and 024-152-04 and 024-152-05 and 024-152-10 and 024-152-11 and 024-152-12 and 024-152-13 and 024-152-14 and 024-153-01 and 024- 153-02 and 024-153-03 and 024-153-10 and 024-153-16 K:\cg\HB\CIM\Closing\Legal Description Parcel A-C . J EXHIBIT B MAP OF PROPERTY [behind this page] V K:\CG\HB\CIM\Closing*xecution copies\Deed.execution copy(6-23-04)(final).doc WALNUT r z .mow f x. n. 117 5 ri ti7.S' » 75• Ti7.5 e c 28 24 24 -77 22 6 _ 22 T to � , �21 17; nTs• � � Lod 2 n - 0 110, Ito•. tB , 9 ��► 1 17- 7 25 '44.50, 6 r 15,_ 26 yb ' 20 U 11 13 P.M.' 275-1 12 11TS rr 1 10 ) 9) 8 i 7 6 5 i 4( 3I _2 .= I I B4 K. - � . 106 i go, 12 8.1 25 61 51 4 p�. I 28 27 - _ 22 OL 110# 23 i i I I- 1 I. 74 1 • , cul , �< t w PACIFIC (Acvv ) COAST C� t a s= AX. 8-2; - P.M '8-3p