DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM
DISPOSITION AND DEVELOPMENT AGREEMENTby and amongCITY OF HERCULESandREDEVELOPMENT AGENCY OF CITY OF HERCULES,on the one hand,andHERCULES NEW TOWN CENTER, LLC,a California limited liability company,on the other hand Dated as of April 7, 2005
Disposition and Development AgreementPage iiDDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM CONTENTSARTICLE I: DEFINITIONSARTICLE II: ACQUISITION AND DISPOSITION OF THE SITES 2.1. General.............................................................................................................11 2.2. Agency acquisition of parcels...........................................................................11 2.2.1. C-1 Parcel..................................................................................................11 2.2.2. PNR Site....................................................................................................11 2.2.3. Additional Town Center Parcels................................................................11 2.3. Determination of parcels subject to disposition and/or development.................12 2.3.1. Determination of Primary Parcel and BART Residual Parcel.....................12 2.3.2. Disposition and development of Primary Parcel.........................................12 2.3.3. Development of BART Residual Parcel.....................................................12 2.3.4. Development of Additional Town Center Parcels.......................................12 2.3.5. First Right of Refusal.................................................................................12 2.3.5.1. Notice of Offer..................................................................................13 2.3.5.2. Developer election to purchase..........................................................13 2.3.5.3. Closing of Developer purchase..........................................................13 2.3.5.4. Circumstances of reinstatement..........................................................13 2.3.5.5. Termination.......................................................................................13 2.4. Terms and conditions of disposition of Primary Parcel......................................13 2.4.1. Purchase agreement and Purchase Price.....................................................14 2.4.2. Escrow.......................................................................................................14 2.4.2.1. Escrow opened..................................................................................14 2.4.2.2. Closing..............................................................................................14 2.4.3. Title...........................................................................................................15 2.4.4. Conditions precedent.................................................................................15 2.4.4.1. Agency’s conditions precedent..........................................................15 2.4.4.1.1. No Default.................................................................................15 2.4.4.1.2. Execution of documents.............................................................15 2.4.4.2. Developer’s conditions precedent......................................................15 2.4.4.2.1. Title Policy................................................................................16 2.4.4.2.2. No Default.................................................................................16 2.4.4.2.3. Execution of documents.............................................................16 2.4.4.2.4. Land use approvals....................................................................16 2.4.4.2.5. CEQA review............................................................................16 2.4.4.2.6. Hazardous Materials..................................................................16 Disposition and Development AgreementPage iiiDDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM
2.4.4.2.7. No material adverse change.......................................................17 2.4.4.2.8. No adverse action......................................................................17 2.4.5. Deliveries to Escrow Agent.......................................................................17 2.4.5.1. Developer’s deliveries to Escrow Agent............................................17 2.4.5.2. Agency’s deliveries to Escrow Agent.................................................17 2.4.6. Closing provisions.....................................................................................18 2.4.6.1. Prorations..........................................................................................18 2.4.6.2. Costs and expenses............................................................................18 2.4.6.3. Closing procedure..............................................................................18 2.4.7. Termination...............................................................................................19 2.4.7.1. Allocation of costs and expenses........................................................19 2.4.7.2. Return of funds and documents..........................................................19 2.5. Right of Entry...................................................................................................19 2.5.1. Permitted purposes....................................................................................19 2.5.2. Indemnity..................................................................................................19 2.5.3. Required permits.......................................................................................20 2.5.4. PNR Parcel limitations...............................................................................20 2.5.5. Termination...............................................................................................20 2.5.6. Restoration................................................................................................20ARTICLE III: DEVELOPMENT OF A PROJECT 3.1. Development plans...........................................................................................20 3.1.1. Specific Scope of Development.................................................................20 3.1.2. Consistency with Central Hercules Plan.....................................................21 3.1.3. Affordable housing....................................................................................21 3.2. Development schedule......................................................................................21 3.3. Project Approvals.............................................................................................21 3.3.1. Land use approval process.........................................................................21 3.3.2. Biological mitigation.................................................................................24 3.4. Construction.....................................................................................................24 3.4.1. Diligent prosecution...................................................................................24 3.4.2. Progress reports.........................................................................................24 3.4.3. Insurance...................................................................................................24 3.4.3.1. Liability insurance.............................................................................24 3.4.3.2. Endorsements....................................................................................25 3.4.3.3. Workers’ compensation insurance.....................................................25 3.4.4. Rights of access.........................................................................................26 3.4.5. Compliance with Agreement, Governing Ordinances, and Laws................26 Disposition and Development AgreementPage ivDDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM
3.4.6. Antidiscrimination.....................................................................................26 3.4.7. Project sign................................................................................................26 3.5. Transfers and liens............................................................................................26 3.5.1. Transfers....................................................................................................26 3.5.2. Agency consideration of requested transfer prior to issuance ofCertificate of Completion...........................................................................27 3.5.3. Holder not obligated to construct Project Improvements............................28 3.5.4. Holder’s right to cure.................................................................................28 3.5.5. Estoppel certificates...................................................................................29 3.5.6. Taxes and assessments...............................................................................29 3.5.7. Right of Agency to satisfy liens on Primary Parcel.....................................29 3.6. Completion.......................................................................................................29 3.6.1. Certificate of Completion...........................................................................29 3.6.2. Failure to issue Certificate of Completion..................................................30ARTICLE IV: PROJECT COSTS AND FINANCING 4.1. Developer’s costs..............................................................................................30 4.2. Project Financial Assistance.............................................................................30 4.2.1. Primary Parcel...........................................................................................30 4.2.1.1. Payment into Primary Project Fund....................................................30 4.2.1.2. Tax Increment Assistance option.......................................................31 4.2.1.3. Initial Parcel Pledge Agreement.........................................................31 4.2.2. BART Residual Parcel...............................................................................31 4.2.3. Additional Parcels......................................................................................31 4.2.4. Zero assistance option................................................................................31 4.3. Tax Increment Assistance.................................................................................32 4.3.1. Deposit of funds into Project Fund.............................................................32 4.3.1.1. Subordination to Agency Bonds.........................................................32 4.3.1.2. Project Bond Proceeds.......................................................................32 4.3.2. Project Fund account statements................................................................32 4.3.3. Periodic accountings of Unreimbursed Eligible Costs................................32 4.3.4. Payments during Project............................................................................33 4.3.5. Final accounting of Unreimbursed Eligible Costs.......................................33 4.3.6. Payments after Certificate of Completion...................................................33 4.3.7. Discontinuation of payments......................................................................33 4.3.8. Dispute of accountings...............................................................................33 4.3.9. Project Pledge Agreement..........................................................................34 4.3.10. Maximizing Project Fund...........................................................................34 4.4. Agency revenue participation............................................................................34 Disposition and Development AgreementPage vDDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM
4.4.1. Baseline Residential Price..........................................................................34 4.4.2. Primary Parcel Project...............................................................................35 4.4.3. Other Projects............................................................................................35 4.4.4. Participation conditioned Project Financial Assistance...............................35ARTICLE V: USE OF THE PROJECT PARCELS 5.1. Nondiscrimination............................................................................................35 5.2. Effect and duration of covenants.......................................................................36 5.2.1. Effect of violation of the terms and provisions of this Agreement aftercompletion of construction.........................................................................36 5.2.2. Agency as beneficiary................................................................................36 5.3. Right of access to public improvements and facilities.......................................37ARTICLE VI: DEFAULTS AND REMEDIES 6.1. Defaults............................................................................................................37 6.2. Notice and cure.................................................................................................37 6.3. Legal actions....................................................................................................37 6.4. Resolution of Schedule Defaults.......................................................................38 6.4.1. Meet and confer.........................................................................................38 6.4.2. Mediation..................................................................................................38 6.4.3. Arbitration.................................................................................................38 6.5. Rights and remedies cumulative........................................................................38 6.6. No cross-default...............................................................................................39 6.7. Remedies..........................................................................................................39 6.8. Additional remedies for Schedule Defaults.......................................................39ARTICLE VII: GENERAL PROVISIONS 7.1. Notices.............................................................................................................40 7.2. Attorneys’ fees.................................................................................................41 7.3. Representations and warranties.........................................................................41 7.3.1. Agency’s representations and warranties....................................................41 7.3.2. City’s representations and warranties.........................................................42 7.3.3. Developer’s representations and warranties................................................43 7.4. Memorandum of Agreement.............................................................................43 7.5. Time.................................................................................................................43 7.5.1. Time of the essence...................................................................................43 7.5.2. Computation of time..................................................................................44 7.5.3. Force majeure............................................................................................44 7.6. Parties...............................................................................................................44 7.6.1. Relationship between Agency and Developer............................................44 Disposition and Development AgreementPage viDDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM
7.6.2. Successors and assigns...............................................................................44 7.6.3. No liability of officials and employees of City and Agency........................44 7.6.4. Conflicts of interest....................................................................................45 7.6.5. Brokers......................................................................................................45 7.7. Interpretation....................................................................................................45 7.7.1. Rules of construction.................................................................................45 7.7.2. Legal advice..............................................................................................45 7.7.3. Entire agreement........................................................................................45 7.7.4. Severability...............................................................................................46 7.7.5. Approvals..................................................................................................46 7.7.6. Agency and City approvals and actions......................................................46 7.7.7. City legislative discretion...........................................................................46 7.8. Waivers and amendments.................................................................................46 7.8.1. Minor Amendments...................................................................................46 7.8.2. Major Amendments...................................................................................47 7.9. Counterparts.....................................................................................................47 Disposition and Development AgreementPage viiDDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM EXHIBITSA. Site MapB. Legal DescriptionsB-1. PNR ParcelB-2. C-1 ParcelB-3. Additional Town Center ParcelsC. Governing Ordinances Title PagesD. Memorandum of AgreementE. Schedules of PerformanceE-1. General Schedule of PerformanceE-2. PNR Parcel as the Primary ParcelE-3. C-1 Parcel as the Primary ParcelE-4. BART Residual Parcel and Additional Town Center ParcelsF. Scopes of DevelopmentF-1. PNR ParcelF-2. C-1 ParcelG. Eligible Project CostsH. Forms of Pledge AgreementH-1. Initial Parcel Pledge AgreementH-2. Project Pledge AgreementI. Form of Grant DeedJ. Approved Exceptions to TitleJ-1. PNR ParcelJ-2. C-1 ParcelK. Certificate of Completion Disposition and Development AgreementPage 1DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM DISPOSITION AND DEVELOPMENT AGREEMENTTHIS DISPOSITION AND DEVELOPMENT AGREEMENT (this “Agreement”) ismade and entered into as of this 7th day of April, 2005 (the “Effective Date”) by and among theCity of Hercules, California (“City”) and the Redevelopment Agency of the City (“Agency”), onthe one hand (City and Agency may be referred to collectively as the “City/Agency”), and Her-cules New Town Center, LLC, a California limited liability company (“Developer”), on the otherhand, with reference to the following:RECITALS: A. In June 2000, through a series of design sessions involving the community and ateam of design professionals, City specified its desired form of land use for the then-remainingundeveloped, centrally located parcels. This central portion of the City covered an area generallycoextensive with the Dynamite Redevelopment Project Area (the “Redevelopment ProjectArea”). The critical need for a town center for the City of Hercules (the “Town Center”) and thedesired land use forms for the creation of the Town Center were described in a narrative admin-istrative document entitled, “The Plan for Central Hercules” (the “Central Hercules Plan”). OnJuly 16, 2001, City codified the Central Hercules Plan by amending the text and graphics of theZoning Ordinance to include a new Chapter 28 of the Zoning Ordinance entitled, “Central Her-cules Plan Regulating Code” (the “Regulating Code”). The Regulating Code designates fourseparate districts within the City, one of which is the Civic Center/Hospitality Corridor (the“Corridor.”) B. Two parcels within the Corridor that are key to the creation of the Town Center arethe “PNR Parcel,” consisting of approximately 6.62 acres owned by Bay Area Rapid TransitDistrict (“BARTD”), and the “C-1 Parcel,” consisting of approximately 8.69 acres owned byAgency. These parcels are shown on Exhibit “A” and are further described on Exhibits “B-1”and “B-2,” respectively. The PNR Parcel is an existing BARTD “Park and Ride” lot, and the C-1Parcel is currently vacant. The PNR Parcel and the C-1 Parcel may be referred to collectively asthe “Initial Parcels.” C. The City has identified those parcels identified on Exhibit “A” as “Additional TownCenter Parcels” certain additional parcels that are important to the creation of the Town Center.The Additional Town Center Parcels are further described on Exhibit “B-3.” The Initial Parcelsand the Additional Town Center Parcels may be referred to collectively as the “Subject Parcels.” D. The Subject Parcels all lie within the Redevelopment Project Area. The Redevel-opment Project Area is governed by that certain Amended and Restated Redevelopment Plan,which was adopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City(the “Redevelopment Plan”). The Redevelopment Plan constitutes a merger of the redevelopmentplans for the Dynamite Redevelopment Project Area and Project Area No. 2. E. On August 25, 2000, City, Agency, and BARTD entered into a Memorandum ofUnderstanding (the “BART MOU”) for purposes of exploring the feasibility of an exchange ofthe PNR Parcel and the C-1 Parcel. The PNR Parcel is of interest to City/Agency as a “gateway”to central Hercules because of its high visibility location, and the C-1 Parcel is of interest to Disposition and Development AgreementPage 2DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM BARTD because it is located across Willow Avenue from a privately owned interstate railroadline that has been identified as a possible future route for a passenger service extension to theBART regional transit system. Agency and BARTD entered into an agreement with an effectivedate of March 1, 2006 whereby Agency was granted the option (the “Exchange Option”), underspecified conditions, to initiate the exchange of the C-1 Parcel to BARTD for the PNR Parcelwithin a period of two years (the “Exchange Option Agreement”). F. The land parcels in the Corridor, which include the Subject Parcels, have develop-ment hurdles such as fractured ownerships, wetland and streambed mitigation requirements, andlack of infrastructure. Consequently, no private-sector development has occurred or has evenbeen proposed in the Corridor that would contribute to creating the Town Center or otherwisefurther the objectives of the Central Hercules Plan. G. City/Agency recognize that bringing the vision of the Town Center in the Corridorto practical reality will require close coordination with a private sector developer that under-stands and shares the City’s vision for the Town Center and accepts the challenges associatedwith such a project. City/Agency further recognize that the economics of creating a mixed-use,urbanized Town Center in a largely suburban location will require financial assistance fromAgency because: (i) such a project must compete with other suburban developments that do nothave the development costs associated with structured parking and mixed-use buildings; (ii) re-tail tenants typically require financial concessions to locate in an urbanized project in a suburbanlocation; and (iii) the cost of capital for such a project is higher than usual because of the pro-ject’s complexity. With this understanding, Agency issued a request for proposals in April 2003to seek a specialized master developer to work with the City/Agency to develop a transit-orientedtown center, with re-engineered and re-positioned transit facilities, and buildings with successfulcommercial businesses integrated with buildings hosting other uses such as multifamily residen-tial, hospitality, and office. Through this process, and after Agency evaluated several proposals,Agency selected Developer as the party with whom it would pursue the development of theTown Center. H. Developer entered into an Exclusive Right to Negotiate with City/Agency dated asof April 13, 2004 pursuant to which Developer was given a period of exclusive negotiation toattempt to negotiate a Disposition and Development Agreement with City/Agency that wouldfurther the City and Agency objective of creating a Town Center in the Corridor. This Agreementis the product of that effort. I. Agency is authorized and empowered under Health and Safety Code Sections33000, et seq., (the “Redevelopment Law”) to enter into agreements for the acquisition, disposi-tion, and development of real property and otherwise to assist in the redevelopment of real prop-erty within a redevelopment project area in conformity with a redevelopment plan adopted forsuch area, to acquire real and personal property in redevelopment project areas, to receive con-sideration for the provision by Agency of redevelopment assistance, to make and execute con-tracts and other instruments necessary or convenient to the exercise of its powers, and to incurindebtedness to finance or refinance redevelopment projects. J. City/Agency finds that the redevelopment of one or more of the Subject Parcels asprovided in this Agreement is in the vital and best interests of the City, including the Agency, Disposition and Development AgreementPage 3DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM and its residents, and in accord with the public purposes and provisions of applicable State andlocal laws. K. City/Agency and Developer desire to enter into this Agreement for the redevelop-ment of one or more of the Subject Parcels in order to (i) effectuate the Redevelopment Plan, (ii)eliminate blight in the Redevelopment Project Area; and (iii) implement the Central HerculesPlan by creating the Town Center in the Corridor. L. On March 8, 2005, Agency held a duly noticed public hearing and adopted a reso-lution approving this Agreement. According to law, the resolution takes effect thirty (30) daysafter adoption.NOW, THEREFORE, in consideration of the foregoing, the covenants and obligationshereinafter set forth, and other good and valuable consideration, the receipt and adequacy ofwhich is hereby acknowledged, the parties hereby agree as follows:ARTICLE I: DEFINITIONS“Acquired Parcel” is defined in Section 2.3.5 below.“Additional Town Center Parcels” means those certain parcels located within the Corri-dor that are identified as the “Additional Town Center Parcels” on Exhibit “A” and further de-scribed on Exhibit “B-3.”“Affordable Housing Obligation” means, with respect to a Project Parcel, the obligationthat fifteen percent (15%) of new housing units on such Project Parcel be provided at prices af-fordable to very-low- to moderate-income households and that at least forty percent (40%) ofsuch affordable housing units shall be affordable to very-low-income households. For purposesof this definition, affordability at the various income levels shall be as defined in the Redevel-opment Law.“Affordable Housing Set-Aside” means, with respect to a Project Parcel, the twenty per-cent (20%) set-aside of tax increment for low and moderate income housing required by Sections33334.2 and 33487 of the Redevelopment Law.“Agency” means the Redevelopment Agency of the City of Hercules, a public body, cor-porate and politic, exercising governmental functions and powers and organized and existing un-der Chapter 2 of the Redevelopment Law, and any assignee of or successor to its rights, powersand responsibilities.“Agency Board” means the board of directors for the Agency.“Agency Bonds” means any bonds issued by the Agency under the Agency Indenture, in-cluding, but not limited to, the Hercules Redevelopment Agency Hercules Merged Project AreaTax Allocation Bonds, Series 2005, and any bonds issued on a parity therewith.“Agency Direc-tor” means the Executive Director for the Agency.
Disposition and Development AgreementPage 4DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM “Agency Indenture” means that certain Indenture, dated as of August 1, 2005 (the "In-denture"), by and between the Agency and The Bank of New York Trust Company, N.A., astrustee, as amended and supplemented from time to time in accordance with its terms. “Agency Parity Debt” is defined in Section 4.3.1.1 below.“Agency’s Prevailing Wage Policy” means that certain “Prevailing Wage Policy of theHercules Redevelopment Agency,” adopted October 26, 1999.“Agreement” means this Disposition and Development Agreement by and betweenAgency and City, on the one hand, and Developer, on the other hand.“BART” means the Bay Area Rapid Transit regional transit system.“BART MOU” means that certain Memorandum of Understanding dated as of August 25,2000 by and between City, Agency, and BARTD entered into for purposes of exploring the feasi-bility of and exchange of the PNR Parcel and the C-1 Parcel.“BART Residual Parcel” means either the PNR Parcel or the C-1 Parcel, as determinedin accordance with Section 2.3.1 below. The BART Residual Parcel may be developed in accor-dance with this Agreement upon certain conditions which are specified in this Agreement. Theother of the two parcels shall be the Primary Parcel.“BARTD” means Bay Area Rapid Transit District.“Base Year Assessed Valuation” means, with respect to a particular Project, the assessedvalue of the Project Parcel as shown on the assessment roll used in connection with the taxationof the Project Parcel by the County, last equalized prior to the effective date of the ordinance ap-proving the Redevelopment Plan.“Baseline Residential Price” is defined in Section 4.4.1 below.“C-1 Parcel” means that certain parcel currently owned by Agency consisting of ap-proximately 8.69 acres as shown on Exhibit “A” as the “C-1 Parcel” and further described onExhibit “B-2.”“CEQA” means the California Environmental Quality Act, Public Resources Code Sec-tions 21000, et seq.“Central Hercules Plan” means a narrative administrative document entitled, “The Planfor Central Hercules,” which was developed through a series of design sessions sponsored by theCity in June 2000 and which describes the desired land use forms for central Hercules.“Certificate of Completion” means a certificate in the form attached hereto as Ex-hibit “K.”“City” means the City of Hercules, a California municipal corporation.“City/Agency” means the City and the Agency, collectively.
Disposition and Development AgreementPage 5DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM “City Council” means the City Council for the City.“City Manager” means the City Manager of the City.“Closing” is defined in Section 2.4.2.2 below.“Closing Date” is defined in Section 2.4.2.2 below.“Conceptual PDP” means a conceptual planned development plan, as defined in Section48.400 of the Zoning Ordinance. See also “Initial PDP” and “Final PDP.”“Corridor” means the area referred to in the Central Hercules Plan and the RegulatingCode as the “Civic Center/Hospitality Corridor.”“County” means the County of Contra Costa, California.“Default” is defined in Section 6.1 below.“Design Submittal Documents” means, with respect to a particular Project, the followingproposed documents: (i) a Final PDP and (ii) a design review plan pursuant to Chapter 42 of theZoning Ordinance that is consistent with the proposed Final PDP. See also “Primary SubmittalDocuments” and “Submittal Documents.”“Developer” means Hercules New Town Center, LLC.“Development Costs” means, with respect to any Project, all of Developer’s costs in con-nection with the acquisition of the Project Parcel and the construction and development of theProject Improvements. Development Costs shall include: (i) Developer’s purchase price andother land acquisition costs paid by Developer to the owners or existing occupants of all or anypart of the Project Parcel, including closing costs, title insurance, and transfer taxes; (ii) costsincurred by Developer in connection with the Project Approvals, including, community relations;(iii) all so-called “hard” construction costs for the Project Improvements, including both on-siteand off-site improvements; (iv) all so-called “soft” construction costs for the Project Improve-ments, including planning, design, engineering, pre-construction services, plats, surveys, permitfees, bonds, legal and filing fees, and insurance and development fees.“Effective Date” means April 7, 2005.“Eligible Project Costs” means, with respect to a particular Project, Development Costswith respect to such Project that fall into one of the categories described on Exhibit “G” hereto.Interest on such Development Costs shall not be an Eligible Project Cost.“Escrow” is defined in Section 2.4.2.1 below.“Escrow Agent” is defined in Section 2.4.2.1 below.“Exchange Option” means Agency’s two-year conditional option, granted in the Ex-change Option Agreement, to initiate the exchange of the C-1 Parcel to BARTD for the PNRParcel.
Disposition and Development AgreementPage 6DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM “Exchange Option Agreement” means that certain agreement for the exchange of thePNR Parcel and the C-1 Parcel contemplated by the BART MOU and entered into betweenBARTD and Agency with an effective date of March 1, 2006.“Final PDP” means a final planned development plan, as defined in Section 48.500 ofthe Zoning Ordinance. See also “Conceptual PDP” and “Initial PDP.”“FIRPTA Certificate” is defined in Section 2.4.5.2 below.“First Right of Refusal” is defined in Section 2.3.5 below.“Governing Ordinances” means the ordinances, resolutions, official policies, fees, rules,and regulations of the City and the Agency governing the permitted uses of land, intensity of de-velopment, improvement and construction standards and requirements, specifications, and con-ditions of approval applicable to the development of the Project, including, but not limited to, theEnacting Ordinance, Ordinance No. 363 approving the Redevelopment Plan, the City’s GeneralPlan, Zoning Ordinance, the Regulating Code, Subdivision Ordinance, Municipal Code, Resolu-tion 93-59, and construction codes, title pages from which are attached hereto for ease of futurereference as Exhibit C.”“Grant Deed” is defined in Section 2.4.2.2 below.“Hazardous Materials” means any substance, material, or waste which is or becomesregulated by any local governmental authority, the State of California, or the United States gov-ernment, including, but not limited to, any material or substance which is (i) defined as a “haz-ardous waste,” “extremely hazardous waste,” or “restricted hazardous waste” under Section25115, 25117, or 25122.7, or listed pursuant to Section 25140, of the California Health andSafety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a “haz-ardous substance” under Section 25316 of the California Health and Safety Code, Division 20,Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a“hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of theCalifornia Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Re-sponse Plans and Inventory), (iv) defined as a “hazardous substance” under Section 25281 of theCalifornia Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of HazardousSubstances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) listed un-der Article 9 or defined as “hazardous” or “extremely hazardous” pursuant to Article 11 of Title22 of the California Administrative Code, Division 4, Chapter 20, (ix) designated as “hazardoussubstances” pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (x) defined as a“hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42U.S.C. §6901 et seq. (42 U.S.C. §6903), (xi) Methyl-tert-Butyl Ether, or (xii) defined as “hazard-ous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Com-pensation, and Liability Act, 42 U.S.C. §9601, et seq.“High Target Intensity” means a total square footage of building area, excluding thesquare footage of any structured parking, of 300,000 square feet, which square footage shall in-clude either (i) in the event that the PNR Parcel is the Primary Parcel, a minimum of 50,000square feet of commercial space or (ii) in the event that the C-1 Parcel is the Primary Parcel, aminimum of 40,000 square feet of commercial space. See also “Low Target Intensity.” Disposition and Development AgreementPage 7DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM “Initial Parcel Pledge Agreement” is defined in Section 4.2.1.3 below.“Initial Parcels” means the PNR Parcel and the C-1 Parcel, collectively.“Initial PDP” means an initial planned development plan, as defined in Section 48.400 ofthe Zoning Ordinance. See also “Conceptual PDP” and “Final PDP.”“Initiation Date” means the date that the Primary Parcel is conclusively identified in ac-cordance with Section 2.3.1 below.“JAMS” means the San Francisco Office of the Judicial Arbitration and Mediation Serv-ice.“Laws” means all State and federal laws, including, without limitation, the constitutionand laws of the State, the United States of America, and any political subdivision within theState, along with any codes, statutes, ordinances, regulations, official policies, or rules of any ofthem, and any applicable state or federal court decisions thereunder, together with all applicablefederal and state labor standards. The definition of Laws specifically excludes the Governing Or-dinances.“Low Target Intensity” means a total square footage of building area, excluding thesquare footage of any structured parking, of 200,000 square feet, which square footage shall in-clude either (i) in the event that the PNR Parcel is the Primary Parcel, a minimum of 37,500square feet of commercial space or (ii) in the event that the C-1 Parcel is the Primary Parcel, aminimum of 30,000 square feet of commercial space. See also “High Target Intensity.”“Major Amendment” means any amendment to this Agreement which relates to the term,identification of Subject Parcels, increases in City or Agency financial obligations beyond thosecontemplated in this Agreement, reservation or dedication of land for public improvements, orwhich will cause a significant new or significantly worse unmitigated adverse environmental im-pact and thus requires a Subsequent or Supplemental Environmental Impact Report underCEQA. See also “Minor Amendment.”“Memorandum of Agreement” means a memorandum of agreement in substantially theform attached hereto as Exhibit “D,” executed and acknowledged by Agency and City.“Minor Amendment” means an amendment to this Agreement that is not a MajorAmendment. See also “Major Amendment.”“Notice” is defined in Section 7.1 below.“Offer” is defined in Section 2.3.5.1 below.“Party” means a party to this Agreement, and “Parties” means more than one of the par-ties to this Agreement, as the context indicates.“Permitted Exceptions” is defined in Section 2.4.3 below.“Permitted Transfer” is defined in Section 3.5.1 below.
Disposition and Development AgreementPage 8DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM “Planning Commission” means the Planning Commission for the City.“PNR Parcel” means that certain parcel currently owned by BARTD consisting of ap-proximately 6.62 acres as shown on Exhibit “A” as the “PNR Parcel” and further described onExhibit “B-1.”“Primary Parcel” means either the PNR Parcel or the C-1 Parcel, as determined in ac-cordance with Section 2.3.1 below. The Primary Parcel shall be conveyed to Developer in accor-dance with this Agreement. The other of the two parcels shall be the BART Residual Parcel.“Primary Project Fund” means an escrow or other depository agreed upon by Agencyand Developer into which the funds described in Section 4.2.1.1 are to be deposited by Agencyand may be withdrawn by Developer. Instructions to the escrow agent or other holder of the Pri-mary Project Fund shall provide that (i) the funds deposited therein shall be invested by theholder at the discretion of Developer in such liquid investments as Developer shall direct; (ii)such funds may be drawn only by Developer; and (iii) Developer’s ability to draw on such fundsshall be subject to Developer’s submission to the holder of reasonable evidence of having in-curred costs related to the Project on the Primary Parcel for design, engineering, fees, or con-struction in at least the amount of the requested draw (which costs had not been previously reim-bursed from the Primary Project Fund). Draws from the Primary Project Fund by Developer shallnot be limited to Eligible Project Costs.“Primary Submittal Documents” means, with respect to a particular Project, the follow-ing proposed documents: (i) an Initial PDP; (ii) a zone change or specific plan (if required toprovide underlying zoning for the proposed Initial PDP), (iii) a general plan amendment (if re-quired to cause the City’s general plan to be consistent with the proposed specific plan or otherunderlying zoning), (iv) a site development plan that is consistent with the proposed Initial PDP,and (v) a subdivision plan that is consistent with the proposed site development plan. See also“Design Submittal Documents” and “Submittal Documents.”“Project” means, with respect to a particular Subject Parcel, both the Subject Parcel andthe improvements constructed thereon pursuant to the Project Approvals in accordance with Ar-ticles III, IV, and V hereof. The development of any Subject Parcel outside of Articles III, IV, andV hereof shall not be considered a Project hereunder. Also see the definitions of “Project Parcel”and “Project Improvements.”“Project Approvals” means, with respect to a particular Project, approval of PrimarySubmittal Documents and Design Submittal Documents, along with any other discretionary ap-provals required by City in connection with the construction and use of the Project Improve-ments.“Project Bond Proceeds” means, with respect to a particular Project, that share of pro-ceeds received by Agency from tax increment bonds, including any bond reserves distributed toAgency, that are attributable to any pledge of Project Tax Increment.“Project Commencement Date” means, with respect to any Project, sixty (60) days afterthe date that all Project Approvals have been obtained for such Project or, in the case thatAgency holds title to the subject parcel as of the date that all Project Approvals are obtained for Disposition and Development AgreementPage 9DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM the Project, the later of (i) the date of the conveyance of the Subject Parcel to Developer or (ii)the final vacancy of the Subject Parcel by its prior owner.“Project Financial Assistance” is defined in Section 4.2 below.“Project Fund” means, with respect to a particular Project, a segregated account ofAgency into which Project Tax Increment and Project Bond Proceeds are accumulated and fromwhich financial assistance is provided to Developer in accordance with Section 4.3 below. Un-less otherwise agreed between Agency and Developer, each Project shall have a separate ProjectFund that is not commingled with any other Project Funds or any other funds of Agency.“Project Improvements” means, with respect to a particular Project, the improvementsconstructed on the Project Parcel in accordance with this Agreement.“Project Parcel” means, with respect to a particular Project, the Subject Parcel that is thesubject of the Project.“Project Pledge Agreement” is defined in Section 4.3.9 below.“Project Tax Increment” means, with respect to a particular Project, that portion of advalorem property taxes resulting from the increase in the assessed valuation of such Project Par-cel, including any improvements on such Project Parcel, over the Base Year Assessed Valuation,that is allocated to and received by the Agency pursuant to Health and Safety Code Section33670(b) or any successor provisions of law in accordance with the Redevelopment Plan (in-cluding any extension or modification thereof, or any new redevelopment plan which encom-passes the Project Parcel) less one percent (1.00%) of such amounts received to cover Agencyadministrative costs. Project Tax Increment shall include the Affordable Housing Set-Aside at-tributable to the Project Parcel except to the extent that Developer is relieved of the AffordableHousing Obligation with respect to the Project Parcel. Except by the agreement of the Agency inits absolute discretion, Project Tax Increment shall not include (i) any property tax revenue thatresults from an increase in the assessed valuation of such Project Parcel after the occurrence ofthe first reassessment of such Project Parcel following the issuance of a Certificate of Occupancyfor such Project by the City or (ii) any property tax revenue that results from an annual reassess-ment of such Project Parcel that is allowed under California Constitution Article XIII.“Purchase Price” is defined in Section 2.4.1 below.“Redevelopment Law” means the California Community Redevelopment Law, Healthand Safety Code Sections 33000, et seq., as the same now exists or may hereafter be amended.“Redevelopment Plan” means that certain Amended and Restated Redevelopment Planadopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City. The Rede-velopment Plan constitutes a merger of the redevelopment plans for the Dynamite Redevelop-ment Project Area and Project Area No. 2.“Redevelopment Project” means the Dynamite Redevelopment Project, adopted by theCity Council pursuant to the Redevelopment Plan.
Disposition and Development AgreementPage 10DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM “Redevelopment Project Area” means the area contained within the boundaries of theRedevelopment Project.“Regulating Code” means the Central Hercules Plan Regulating Code adopted by theCity Council on July 16, 2001 and incorporated into the City of Hercules Zoning Ordinance asChapter 28 thereof, as it exists on the Effective Date.“Right of Entry” is defined in Section 2.5 below.“Schedule Default” is a Default with respect to the provisions of Section 3.2 or Section3.4.1 of this Agreement.“Schedule of Performance” means, with respect to a particular Project, the applicableschedule of performance set forth on Exhibit “E,” setting out the dates and/or time periods bywhich certain obligations set forth in this Agreement shall be accomplished with respect to suchProject. The schedule of performance entitled, “General Schedule of Performance,” set forth onExhibit “E-1,” relates to the Agreement as a whole and therefore applies to each Project as stepsthat are to occur prior to the specific schedule of performance applicable to a Project. TheSchedule of Performance is subject to revision from time to time as mutually agreed upon inwriting between Developer and the Agency Director, and the Agency Director is hereby author-ized to make such revisions as he/she deems reasonably necessary to further the purposes of thisAgreement.“Scope of Development” means, with respect to either of the Initial Parcels, that certainscope of development set for such parcel set forth on Exhibit “F.”“State” means the State of California.“Subject Parcels” means the Initial Parcels and the Additional Town Center Parcels,collectively.“Submittal Documents” means the Primary Submittal Documents and the Design Sub-mittal Documents.“Tax Increment Assistance” is defined in Section 4.3 below.“Title Company” is defined in Section 2.4.4.2.1 below.“Title Policy” is defined in Section 2.4.4.2.1 below.“Town Center” means an implementation of the town center concept described in theCentral Hercules Plan to be located within the Corridor.“Transfer” means any total or partial sale, transfer, conveyance, assignment or lease ofthe whole or any part of one or more parcels of real property; provided, however, that the defini-tion of Transfer shall exclude conveyances for financing purposes or conveyances to entities inwhich Developer has and maintains full or partial ownership.“Unreimbursed Eligible Costs” means, with respect to a particular Project on a particulardate, the excess, if any, of Eligible Project Costs incurred by Developer since the inception of the Disposition and Development AgreementPage 11DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM Project over cumulative Project Financial Assistance received by Developer since the inceptionof the Project.“Zoning Ordinance” means the City of Hercules Zoning Ordinance approved by the CityCouncil on October 13, 1998, as revised by action of the City Council on April 23, 2003 and onJanuary 5, 2004.ARTICLE II: ACQUISITION AND DISPOSITION OF THE SITES 2.1. General. Agency shall acquire and convey to Developer one or more of the Subject Par-cels in accordance with this Article II. 2.2. Agency acquisition of parcels. Agency has acquired or may acquire certain parcels ofland for purposes of disposition to Developer as provided in this Section 2.2. 2.2.1. C-1 Parcel. Agency has acquired and holds the C-1 Parcel with the intentto exchange it for the PNR Parcel currently owned by BARTD. In the eventthat said exchange does not occur in accordance with Section 2.2.2 below,then the C-1 Parcel shall be subject to disposition to Developer in accor-dance with Sections 2.3.1 and 2.3.2 below. 2.2.2. PNR Parcel. It is Agency’s intent to effect an exchange with BARTD pur-suant to the Exchange Option Agreement whereby Agency would conveyto BARTD the C-1 Parcel, and BARTD would convey to Agency the PNRParcel. Accordingly, Agency shall exercise the Exchange Option only uponthe satisfaction of the following conditions: (i) all conditions to Agency’sexercise of the Exchange Option, as set forth in the Exchange OptionAgreement, are timely satisfied or waived such that Agency may effec-tively exercise the Exchange Option; and (ii) Agency has determined, andDeveloper has reasonably concurred with Agency’s determination, thatnone of the closing conditions for the Primary Parcel set forth in Sections2.4.4.2.1, 2.4.4.2.6, or 2.4.4.2.8 below would fail with respect to the PNRParcel as of the date of the exercise of the Exchange Option. Upon the sat-isfaction of the foregoing conditions, Agency shall, at its sole cost and ex-pense, exercise the Exchange Option without delay in accordance with theExchange Option Agreement and take all other actions necessary to com-plete the exchange of the C-1 Parcel for the PNR Parcel in accordance withthe Exchange Option Agreement. 2.2.3. Additional Town Center Parcels. Agency may, but shall not be requiredby this Agreement to, acquire any one or more of the Additional TownCenter Parcels that it does not currently own. Any Additional Town CenterParcels that are either currently owned by Agency or are acquired byAgency or City during the term of this Agreement shall be subject to theprovisions of Sections 2.3.4 and 2.3.5 below.
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2.3. Determination of parcels subject to disposition and/or development. Which of theSubject Parcels shall be subject to disposition and development pursuant to this Agree-ment shall be determined in accordance with this Section 2.3. 2.3.1. Determination of Primary Parcel and BART Residual Parcel. In theevent that the Exchange Option is exercised and Agency completes the ac-quisition of the PNR Parcel in accordance with Section 2.2.2 above, thenthe PNR Parcel shall be the Primary Parcel and the C-1 Parcel shall be theBART Residual Parcel; otherwise, the C-1 Parcel shall be the Primary Par-cel and the PNR Parcel shall be the BART Residual Parcel. 2.3.2. Disposition and development of Primary Parcel. Commencing from theInitiation Date, the Primary Parcel shall be conveyed to Developer on theterms and conditions set forth in Section 2.4 below. Provided that the dis-position of the Primary Parcel to Developer is consummated in accordancewith Section 2.4 below, Developer shall develop the Primary Parcel in ac-cordance with Article III below, and the resulting Project shall be financedin accordance with Article IV below and shall be subject to the use provi-sions of Article V below. 2.3.3. Development of BART Residual Parcel. Provided that either (i) Devel-oper acquires the BART Residual Parcel or (ii) BARTD retains ownershipof the BART Residual Parcel and enters into an agreement with Developerwhereby Developer is to have a management role in the development of theBART Residual Parcel, then, at Developer’s option, the BART ResidualParcel may be developed in accordance with Article III below, in whichevent the resulting Project shall be financed in accordance with Article IVbelow and shall be subject to the use provisions of Article V below. 2.3.4. Development of Additional Town Center Parcels. With respect to any ofthe Additional Town Center Parcels, in the event that either (i) Developeracquires such parcel or (ii) the owner of such parcel enters into an agree-ment with Developer whereby Developer is to have a management role inthe development of such parcel, then, at Developer’s option, such parcelmay be developed in accordance with Article III below, in which event theresulting Project shall be financed in accordance with Article IV below(which provides for Agency’s discretion as to Project Financial Assistancefor the Project) and shall be subject to the use provisions of Article V be-low. 2.3.5. First Right of Refusal. From time to time after the Effective Date, Agencyor City may own or elect to acquire the BART Residual Parcel or one ormore of the Additional Town Center Parcels (an “Acquired Parcel”).City/Agency hereby grants Developer a first right of refusal with respect toeach such Acquired Parcel as provided in this Section 2.3.5 (the “FirstRight of Refusal”) as follows:
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2.3.5.1. Notice of Offer. Prior to or concurrent with theCity/Agency’s giving or receiving a bona fide written offerfor the Transfer of an Acquired Parcel from the City/Agencyto a third-party purchaser, which such offer is either made byor acceptable to the City/Agency (an “Offer”), theCity/Agency shall provide written Notice to Developer,which Notice shall include a copy of the Offer. 2.3.5.2. Developer election to purchase. Developer shall have thirty(30) days after the City/Agency delivers its Notice of an Of-fer to elect to purchase the Acquired Property pursuant to thespecific terms, conditions, and restrictions set forth in the Of-fer by notifying the City/Agency of its election in writing. 2.3.5.3. Closing of Developer purchase. In the event Developer soelects to purchase the Acquired Parcel, the closing of the pur-chase of the Acquired Parcel by Developer, in accordancewith the terms set forth in the Offer, shall take place on thedate set forth in the Offer, but in no event less than thirty (30)days after Developer delivers Notice to the City/Agency ofits election to purchase. 2.3.5.4. Circumstances of reinstatement. In the event that (i)City/Agency desires to sell the Acquired Parcel on termsmore favorable to the third-party purchaser, or (ii) the closingof the sale to the third-party purchaser does not occur withinthirty days after the date of closing specified in the Offer,then the First Right of Refusal as to such Offer shall auto-matically reinstate and the sale of the Acquired Parcel to suchthird-party purchaser shall again be subject to the First Rightof Refusal. 2.3.5.5. Termination. Developer’s First Right of Refusal shall termi-nate with respect to a particular Acquired Parcel upon either(i) the mutual agreement of the parties hereto, (ii) the sale ofsuch Acquired Parcel to a third-party purchaser in compli-ance with the terms and provisions of this Section 2.3.5, (iii)the default by Developer in its obligation to purchase suchAcquired Parcel after Developer’s delivery of its Notice ofelection to purchase the Acquired Parcel, (iv) the passage often (10) years after the Effective Date, or (v) the terminationof this Agreement. 2.4. Terms and conditions of disposition of Primary Parcel. Agency shall convey to De-veloper, and Developer shall acquire from Agency, the Primary Parcel on the followingterms and conditions:
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2.4.1. Purchase agreement and Purchase Price. Subject to the terms and condi-tions contained in this Section 2.4, Agency hereby agrees to sell and con-vey to Developer, and Developer hereby agrees to purchase from Agency,the Primary Parcel. The total purchase price to be paid to Agency by De-veloper for the Primary Parcel shall be Five Million and no/100th Dollars($5,000,000.00), subject to reduction as provided below in this Section2.4.1 (the “Purchase Price”). The Purchase Price shall be payable in cash atClosing. The Purchase Price shall be subject to reduction as follows: If theProject Approvals meet or exceed the High Target Intensity, then the Pur-chase Price shall be reduced to Zero and no/100th Dollars ($0.00); if theProject Approvals meet or exceed the Low Target Intensity, but not theHigh Target Intensity, then the Purchase Price shall be reduced to Two Mil-lion Five Hundred Thousand and no/100th Dollars ($2,500,000.00). In theevent that the Purchase Price is reduced in accordance with this Section2.4.1, Developer shall be required to construct Project Improvements on thePrimary Parcel that actually meet the intensity requirements that justifiedthe reduction in Purchase Price. 2.4.2. Escrow. 2.4.2.1. Escrow opened. An escrow (the “Escrow”) has been openedwith William Perry, First American Title Company, 1737North First Street, San Jose, California 95117 (the “EscrowAgent”), for the conveyance of the Primary Parcel to Devel-oper. Agency and Developer shall execute Escrow Agent’sstandard form of escrow instructions as such instructions mayhave been modified by mutual agreement of Agency, Devel-oper, and Escrow Agent. This Section 2.4 shall constitute ad-ditional joint escrow instructions of Developer and Agency,and Escrow Agent is hereby empowered to act under thisSection 2.4. Agency and Developer shall execute and depositsuch additional instructions as shall be reasonably requiredby Escrow Agent to consummate the transactions contem-plated hereunder. 2.4.2.2. Closing. “Closing” means filing for record a grant deed inthe form attached hereto as Exhibit “I” conveying the Pri-mary Parcel from Agency to Developer (the “Grant Deed”)and such other documents as may be necessary to deliver titleto Developer in the condition described in Section 2.4.3 be-low. “Closing Date” means the date on which Close of Es-crow occurs. In the event that land use approvals satisfyingthe condition to close set forth in Section 2.4.4.2.4 below areobtained prior to the opening of Escrow, the scheduled Clos-ing Date shall be sixty (60) days following the InitiationDate; otherwise, the scheduled Closing Date shall be sixty(60) days following the date that land use approvals satisfy- Disposition and Development AgreementPage 15DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM ing the condition set forth in Section 2.4.4.2.4 below are ob-tained. Escrow Agent shall cause Closing to occur when andonly when (i) each of the conditions set forth in Section 2.4.4below has been, or upon Closing will be, satisfied or waivedand (ii) all funds and documents required by Section 2.4.5below have been delivered to Escrow Agent. 2.4.3. Title. Developer has received from First American Title Company anALTA preliminary title report on the Primary Parcel, together with copiesof all documents referred to therein as exceptions. Agency agrees to deliverto Developer fee simple title vested in Developer subject only to the fol-lowing, which shall constitute the “Permitted Exceptions”:(a)The Redevelopment Plan;(b)The Memorandum of Agreement;(c)Current real property taxes a lien not yet delinquent and all unpaidgeneral and special bonds and assessments;(d)Those other exceptions that are listed on Exhibit “J” hereto as “ap-proved exceptions” for the Primary Parcel; and(e)All other matters approved in writing by Developer. 2.4.4. Conditions precedent. Closing is conditioned upon the satisfaction of thefollowing terms and conditions within the times designated below: 2.4.4.1. Agency’s conditions precedent. Agency’s obligation to pro-ceed to Closing is subject to the fulfillment or waiver byAgency of each and all of the conditions precedent describedin Sections 2.4.4.1.1 through 2.4.4.1.2 below, which aresolely for the benefit of Agency, and which shall be fulfilledor waived by the time periods provided for herein: 2.4.4.1.1. No Default. Prior to Closing, Developer shallnot be in Default of any of its obligations un-der the terms of this Agreement, and all repre-sentations and warranties of Developer con-tained herein shall be true and correct in allmaterial respects. 2.4.4.1.2. Execution of documents. Developer shallhave executed and acknowledged any docu-ments required hereunder and delivered suchdocuments into Escrow. 2.4.4.2. Developer’s conditions precedent. Developer’s obligationto proceed to Closing is subject to the fulfillment or waiver Disposition and Development AgreementPage 16DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM by Developer of each and all of the conditions precedent de-scribed in Sections 2.4.4.2.1 through 2.4.4.2.8 below, whichare solely for the benefit of Developer, and which shall befulfilled or waived by the time periods provided for herein: 2.4.4.2.1. Title Policy. First American Title Company(the “Title Company”) shall be uncondition-ally prepared and committed to issue an ALTAOwner’s Form Policy of Extended CoverageTitle Insurance in the amount of the PurchasePrice as of the Closing Date, together withsuch endorsements as are requested by Devel-oper, showing fee title vested in Developer,subject only to the Permitted Exceptions (the“Title Policy”). 2.4.4.2.2. No Default. Prior to Closing, City/Agencyshall not be in Default of any of its obligationsunder the terms of this Agreement, and all rep-resentations and warranties of City or Agencycontained herein shall be true and correct inall material respects. 2.4.4.2.3. Execution of documents. City/Agency (orCity or Agency, as appropriate) shall haveexecuted and acknowledged the Grant Deed,the Memorandum of Agreement, and anyother documents required hereunder, and de-livered such documents into Escrow. 2.4.4.2.4. Land use approvals. Developer shall haveobtained each of the Project Approvals, andthe period for administrative and legal chal-lenge to such Project Approvals shall have ex-pired. 2.4.4.2.5. CEQA review. The City, Agency, and Devel-oper shall have complied with the require-ments of CEQA for the Project and the timefor appeal from such action shall have ex-pired. 2.4.4.2.6. Hazardous Materials. There shall be no Haz-ardous Materials on the Primary Parcel that asof the Closing Date materially and adverselyaffect all or any part of the Primary Parcel orthe prospective operation, use, value, income, Disposition and Development AgreementPage 17DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM expenses or occupancy thereof, or its suitabil-ity for the development of the Project. 2.4.4.2.7. No material adverse change. No event shallhave occurred nor shall any condition havearisen after the Initiation Date that as of theClosing Date materially and adversely affectsall or any part of the Primary Parcel or thecurrent or prospective operation, use, value,income, expense, or occupancy thereof or itssuitability for development of the Project andmaterially changes a contingency that hasbeen approved by or waived by Developer. 2.4.4.2.8. No adverse action. There shall exist no ac-tions, suits, arbitrations, claims, attachments,proceedings, assignments for the benefits ofcreditors, insolvency, bankruptcy, reorganiza-tion, or other proceedings pending or threat-ened against Agency, BARTD, or an occupantof, or respecting the Primary Parcel that wouldmaterially and adversely affect Agency’s abil-ity to perform its obligation under this Agree-ment or Developer’s title to the Primary Par-cel, and there shall exist no pending or threat-ened action, suit, or proceeding with respect toAgency before or by any court or administra-tive agency which seeks to restrain or prohibitor obtain damages or discovery order with re-spect to this Agreement or the consummationof the transaction contemplated hereby. 2.4.5. Deliveries to Escrow Agent. 2.4.5.1. Developer’s deliveries to Escrow Agent. Prior to 3:00 p.m.on the last business day before the scheduled Closing Date,Developer shall deliver to Escrow Agent (i) the PurchasePrice and (ii) the amount, if any, required of Developer underSection 2.4.6.2 below. 2.4.5.2. Agency’s deliveries to Escrow Agent. Prior to 3:00 p.m. onthe last business day before the scheduled Closing Date,Agency shall deliver to Escrow Agent (i) the Grant Deed,duly executed and acknowledged by Agency; (ii) a certifica-tion satisfying the requirements of Internal Revenue CodeSection 1445 to the effect that Agency is not a “foreign per-son,” executed by Agency (the “FIRPTA Certificate”); and Disposition and Development AgreementPage 18DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM (iii) the amounts, if any, required of Agency under Sections2.4.6.2 and 2.4.6.3(a) below. 2.4.6. Closing provisions. 2.4.6.1. Prorations. Real property taxes and current installments ofassessments applicable to the Primary Parcel and other ex-penses applicable to the Primary Parcel and all income fromthe Primary Parcel (if any) shall be prorated as of the ClosingDate with income and expenses allocable to the period onand after the Closing Date to be for Developer’s account andincome and expenses allocable to the period before theClosing Date to be to Agency’s account. Any property taxesassessed against the Primary Parcel after the Closing Datewith respect to any period of time before the Closing Dateshall be paid by Agency on demand. 2.4.6.2. Costs and expenses. Agency shall pay any city and countyreal property transfer taxes on the transaction. Developershall pay the cost of the Title Policy. All other usual fees,charges, and costs which arise from Escrow shall be paid byDeveloper. 2.4.6.3. Closing procedure. Escrow Agent shall close Escrow for thePrimary Parcel as follows:(a)Pay from funds deposited by Developer with EscrowAgent (or by Agency to the extent that the funds de-posited by Developer are insufficient), to the obligeesthereof, all liens and encumbrances dischargeable bythe payment of money other than those permittedhereby to be shown in the Title Policy, if any;(b)Pay from funds deposited by Developer with EscrowAgent the balance of the Purchase Price after deduct-ing (i) the amounts that Agency is obligated to pay un-der Section 2.4.6.2 above and (ii) the amount neces-sary to pay the obligations described in item (a) above,if any;(c)Record the Grant Deed for the Primary Parcel withinstructions for the Recorder of Contra Costa County,California to deliver the Grant Deed to Developer;(d)Instruct the Title Company to deliver the Title Policyto Developer; Disposition and Development AgreementPage 19DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM (e)File any informational reports required by InternalRevenue Code Section 6045(e), as amended, and anyother applicable requirements;(f)Deliver the FIRPTA Certificate to Developer; and(g)Forward to both Developer and Agency a separate ac-counting of all funds received from and disbursed toeach Party and conformed copies of all executed andrecorded or filed documents deposited into Escrow,with such recording and filing date and informationendorsed thereon. 2.4.7. Termination. 2.4.7.1. Allocation of costs and expenses. In the event of a termina-tion of Escrow, each Party shall forthwith pay to EscrowAgent one-half (1/2) of Escrow Agent’s reasonable escrowtermination charges. Notwithstanding the foregoing, EscrowAgent may deduct from any cash or other funds held by it, asum sufficient to pay its escrow termination charges in full. 2.4.7.2. Return of funds and documents. In the event of any termi-nation of Escrow, Escrow Agent shall forthwith terminate theescrow and return all funds, documents, and other items heldby it to the Party depositing same, except that Escrow Agentmay retain such documents and other items usually retainedby escrow agents in accordance with standard escrow termi-nation procedures and practices. If the Escrow is terminatedfor any reason other than a Default by Agency, then forthwithupon such termination, Developer shall deliver to Agencyany documents and materials related to the Primary Parcelpreviously delivered by Agency to Developer. 2.5. Right of Entry. Developer and its representatives, agents, and independent contractorsshall have the right and license to enter onto the Initial Parcels in accordance with thefollowing terms and conditions (the “Right of Entry”): 2.5.1. Permitted purposes. Developer’s entry may be for the purpose of obtain-ing any and all information regarding the Initial Parcels that Buyer deemsappropriate, including, without limitation, by performing engineeringstudies, surveys, and soil tests. 2.5.2. Indemnity. Developer hereby agrees to indemnify and hold harmlessAgency from and against any loss, liability, or damage, including reason-able attorneys’ fees and costs (collectively, “Losses”), resulting from theactivities of Developer, or Developer’s representatives, agents, and inde-pendent contractors, or anyone acting pursuant to authorization from De- Disposition and Development AgreementPage 20DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM veloper, in relation to the Initial Parcels, and from and against any me-chanics’ liens or claims of lien resulting therefrom. Notwithstanding theforegoing, the provisions of the foregoing sentence shall not be applicableto the extent any such Losses arise out of or in connection with either (i)the mere discovery of any pre-existing condition at an Initial Parcel, or (ii)the negligence or willful misconduct of City/Agency or any party under itsdirection or control. 2.5.3. Required permits. Before undertaking any activity on an Initial Parcelwhich requires a permit from any governmental agency, Developer shallobtain (and, except for permits issued by City or Agency, Agency shall co-operate at no cost to Agency to assist Developer in obtaining) such permitand pay any fee, cost, charge, or expense required to obtain or carry out itsterms. 2.5.4. PNR Parcel limitations. So long as the PNR Parcel is not under Agency’sor City’s ownership or effective control, the Right of Entry shall be limitedto the extent of Agency’s or City’s right of entry, if any, that it receivesfrom the owner or controller of the PNR Parcel. 2.5.5. Termination. The Right of Entry shall terminate as to the BART ResidualParcel upon the Initiation Date and as to the Primary Parcel at such time itis determined under the terms of this Agreement, if at all, that the PrimaryParcel will not be conveyed to Developer under this Agreement. 2.5.6. Restoration. Upon the termination of the Right of Entry as to an InitialParcel under Section 2.5.5 above, Developer shall forthwith, at its sole costand expense, return such Initial Property to its physical condition as of thedate of this Agreement or as close thereto as reasonably possible.ARTICLE III: DEVELOPMENT OF A PROJECT 3.1. Development plans. For any Project Improvements developed under this Article III,Developer shall submit development plans to the City for approval that conform to thefollowing: 3.1.1. Specific Scope of Development. In the case of Project Improvements onone of the Initial Parcels, all Submittal Documents shall be in substantialconformance with the Scope of Development for the Project Parcel andwith applicable Laws and Governing Ordinances. If at any time the Citystaff, Planning Commission, or City Council indicates, either formally orinformally, that any element of the Project Approvals is likely to be deniedif the Submittal Documents conform with such Scope of Development,then the Submittal Documents shall no longer be required to be in confor-mance with such Scope of Development and shall be required instead to beconsistent with the Central Hercules Plan as provided in Section 3.1.2 be-low.
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3.1.2. Consistency with Central Hercules Plan. In the case of Project Improve-ments on one of the Additional Town Center Parcels, or Project Improve-ments on one of the Initial Parcels for which Submittal Documents are nolonger required to conform to a specific Scope of Development under Sec-tion 3.1.1 above, the Submittal Documents shall be in substantial confor-mance with the provisions of the Regulating Code as it relates to the Corri-dor and with applicable Laws and Governing Ordinances. 3.1.3. Affordable housing. The Affordable Housing Obligation shall be met atDeveloper’s expense with respect to each Project Parcel that is to includeresidential units. One hundred percent (100%) of the Affordable HousingSet-Aside attributable to the Project Parcel shall be provided to Developerto assist in meeting the obligations of this Section 3.1.3. Notwithstandingthe foregoing, Agency may, in its discretion and with the consent of Devel-oper, do one or more of the following in order to help meet the objectivesof Agency with respect to a Project: (i) provide financial assistance to De-veloper in addition to the Affordable Housing Set-Aside to further assistDeveloper in meeting the Affordable Housing Obligation, (ii) permit De-veloper to meet the Affordable Housing Obligation off-site, either in wholeor in part; or (iii) satisfy the Affordable Housing Obligation off-site on be-half of Developer, either in whole or in part. 3.2. Development schedule. The Project shall proceed in conformance with the Schedule ofPerformance. A Party shall be in default of this Agreement in the event that such Partyfails to do its part to comply with an item on the Schedule of Performance for which it isa responsible Party, as listed on the Schedule of Performance. 3.3. Project Approvals. Before commencement of construction of any Project Improve-ments, Developer shall cause to be secured any and all Project Approvals which may berequired for the Project by the City or any other governmental agency affected by orhaving jurisdiction over such construction or work. The Project Improvements shall beconstructed in accordance with this Agreement and the Project Approvals, except as tochanges which may be mutually agreed upon between Developer and Agency and ap-proved by the City. The Project Improvements also shall be constructed in accordancewith all applicable Laws and the Governing Ordinances, as the Governing Ordinancesmay be modified by Project Approvals that amend the Governing Ordinances. 3.3.1. Land use approval process. Project Approvals shall be processed usingthe Planned Development Plan process set forth in Chapter 48 of the Zon-ing Ordinance, with concurrent processing of (i) any required zone change,(ii) any required general plan amendment, and (iii) other actions required tocomply with all other applicable Governing Ordinances and all applicableLaws, in accordance with the following specific steps: (a) Developer meets with City staff informally to establish general di-rection and strategy for the Project; (b) Developer prepares and submits a draft Conceptual PDP; Disposition and Development AgreementPage 22DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM (c) Developer meets with City staff to obtain informal feedback on thedraft Conceptual PDP; (d) Developer submits a revised Conceptual PDP; (e) The Planning Commission holds one or more workshops, in its dis-cretion, to review and discuss the Conceptual PDP (no formal actionto be taken; more than one such workshop may be held if PlanningCommission staff so advises and Developer agrees); (f) The City Council holds one or more workshops, in its discretion, toreview and discuss the Conceptual PDP; (g) Developer prepares and submits draft Primary Submittal Docu-ments for the Project; (h) Developer and City staff hold one or more pre-application confer-ences for staff to provide feedback on draft Primary SubmittalDocuments; (i) Developer prepares and submits applications for the approval of thePrimary Submittal Documents, and pays required fees; (j) City staff reviews the applications for the approval of the PrimarySubmittal Documents and accepts them as complete or notifies De-veloper of any lack of completeness; if staff determines that one ormore of the applications are incomplete, Developer revises and re-submits such applications until they are accepted as complete byCity staff; (k) City prepares an initial study under CEQA for consideration of thePrimary Submittal Documents; (l) Developer submits revised Primary Submittal Documents in con-sultation with City staff; (m) During the foregoing two steps, Developer prepares a strategy forcompliance with all Governing Ordinances and all Laws that areapplicable to the Project; (n) During the foregoing three steps, City prepares and circulates stud-ies and documentation as required by CEQA to support findings bythe City under CEQA with respect to the Primary Submittal Docu-ments; (o) The Planning Commission holds one or more public hearings andvotes to recommend, recommend with changes, or not recommendCity Council approval of the Primary Submittal Documents; Disposition and Development AgreementPage 23DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM (p) City Council holds one or more public hearings and (i) votes to ap-prove or not approve the proposed Primary Submittal Documentsand, (ii) as required under CEQA, makes findings and/or certifies ordeclines to certify environmental documentation in support of itsdecision; (q) Developer prepares and submits draft Design Submittal Documentsfor the Project; (r) Developer and City staff hold one or more pre-application confer-ences for staff to provide feedback on draft Design SubmittalDocuments; (s) Developer prepares and submits applications for the approval of theDesign Submittal Documents, and pays required fees; (t) City staff reviews the applications for the approval of the DesignSubmittal Documents and accepts them as complete or notifies De-veloper of any lack of completeness; if staff determines that one ormore of the applications are incomplete, Developer revises and re-submits such applications until they are accepted as complete byCity staff; (u) City prepares an initial study under CEQA for consideration of theDesign Submittal Documents; (v) Developer submits revised Design Submittal Documents in consul-tation with City staff; (w) During the foregoing two steps, Developer prepares to demonstratecompliance with this Agreement and with all Governing Ordinancesand all Laws that are applicable to the Project; (x) During the foregoing three steps, City prepares and circulates stud-ies and documentation as required by CEQA to support findings bythe City under CEQA with respect to the Design Submittal Docu-ments; (y) The Planning Commission holds one or more public hearings andvotes to recommend or not recommend approval of the DesignSubmittal Documents; (z) City Council holds one or more public hearings and (i) votes to ap-prove or not approve the proposed Design Submittal Documentsand, (ii) as required under CEQA, makes findings and/or certifies ordeclines to certify environmental documentation in support of itsdecision.
Disposition and Development AgreementPage 24DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM The steps listed in (a)–(z) above may be collapsed, with the mutual agree-ment of Developer and City, such that the Primary Submittal Documentsand the Design Submittal Documents are processed together as one sub-mittal. Developer may, at its option, elect to have City contract with a pro-ject planner acceptable to City and Developer to process the SubmittalDocuments on behalf of City at Developer’s expense.This Agreement does not, and shall not be construed to, vest Developerwith any right or entitlement to build or develop any Project on the SubjectParcels or on any other property in the City. Any rights or entitlements De-veloper may obtain to build or develop any Project on the Subject Parcelsor on any other property in the City shall vest only after a project success-fully completes all of the steps listed in (a)–(z) above. City and Agency re-tain their discretion to approve, disapprove, or condition any Project or theapplication for any Project on the Subject Parcels. Nothing in this Agree-ment shall be construed to limit or actually limit the exercise of that discre-tion in any respect. 3.3.2. Biological mitigation. Agency may take steps, in its sole and absolute dis-cretion, to obtain clearance under the State and federal endangered speciesacts and under State and federal regulations governing wetland habitat andstreambed alteration permitting for one or more of the Subject Parcels to bedeveloped without any on-site constraints due to any such regulations. Inthe event that Agency obtains such clearance, Developer shall reimburseAgency a share of all of Agency’s reasonable third-party costs of planning,obtaining federal and state approvals for, establishing, and maintainingsuch mitigation areas. Developer’s share of such costs for any Subject Par-cel shall be (i) prorated based on the relative impact of the Subject Parcel incomparison to all covered parcels, determined in a manner to be establishedby Agency, (ii) payable only if the Subject Parcel is developed by Devel-oper under this Agreement, and (iii) payable at the time that a permit isobtained for the grading of the Subject Parcel. 3.4. Construction. 3.4.1. Diligent prosecution. Development of the Project Improvements shallcommence on the Project Commencement Date, and Developer shall dili-gently prosecute the development of the Project Improvements so as tocomply with the Schedule of Performance. 3.4.2. Progress reports. Prior to Agency’s issuance of its Certificate of Comple-tion for the Project, Developer shall provide quarterly reports to Agency onthe progress of the Project Improvements. 3.4.3. Insurance. 3.4.3.1. Liability insurance. During construction of the Project Im-provements, Developer shall: (i) obtain and maintain a policy Disposition and Development AgreementPage 25DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM of commercial general liability insurance, including blanketcontractual coverage with limits of not less than One MillionDollars ($1,000,000.00) per occurrence, general aggregate ofFive Million Dollars ($5,000,000.00) and builder’s all riskinsurance in an amount not less than the full insurable valueof the Project Improvements on a replacement cost basis,which policies shall be issued by an "A:VIII" or better ratedinsurance carrier as rated by A.M. Best Company and shallprovide all coverages on an occurrence basis; and (ii) obtainand maintain a policy of comprehensive automobile liabilityinsurance with limits of not less than One Million Dollars($1,000,000.00) per occurrence. 3.4.3.2. Endorsements. Developer shall furnish an endorsement(s) ofinsurance countersigned by an authorized agent of the insur-ance carrier on a form of the insurance carrier evidencingand/or affecting the requirements herein and/or the changesto Developer’s policy to effect such conformity and settingforth the general provisions of the insurance coverage and anendorsement that shall name the City and Agency and theirrespective officers, boards, agents, and employees as addi-tional insureds under the policy with respect to the Projectand this Agreement. The endorsement by the insurance car-rier shall contain a statement of obligation on the part of theissuing agent or carrier to notify the City and Agency of anymaterial reduction, cancellation, or non-renewal of the cover-age at least thirty (30) days in advance of the effective date ofany such material change or non-renewal. Coverage providedhereunder by Developer shall be primary insurance and notbe contributing with any insurance or self-insurance main-tained by Agency or City, and the policy shall contain suchan endorsement. Not less than fifteen (15) days prior to theexpiration date of any policy of insurance required by thisSection 3.4.3, Developer shall cause to be delivered toAgency a binder or certificate of insurance with respect toeach renewal or new policy, bearing a notation evidencingpayment of the premium therefor, or other proof of paymentreasonably satisfactory to Agency. 3.4.3.3. Workers’ compensation insurance. Developer shall alsofurnish or cause to be furnished to Agency evidence satis-factory to Agency that any contractor with whom it has con-tracted for the performance of work on the Project or other-wise pursuant to this Agreement carries workers’ compensa-tion insurance as required by law.
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3.4.4. Rights of access. At any time prior to issuance of a Certificate of Comple-tion for the Project Improvements, for the purpose of assuring compliancewith this Agreement, representatives of Agency and the City shall have theright of access to all portions of the Project Parcel without charges or fees,at normal construction hours during the period of construction. 3.4.5. Compliance with Agreement, Governing Ordinances, and Laws. De-veloper shall carry out the construction of the Project Improvements in con-formity with this Agreement and all applicable Governing Ordinances andLaws. Developer hereby agrees to pay “prevailing wage” for the initialconstruction of the Project Improvements in accordance with the terms ofAgency’s Prevailing Wage Policy with respect thereto. 3.4.6. Antidiscrimination. Developer, for itself and its successors and assigns,agrees that in the construction of the Project Improvements, Developer willnot discriminate against any employee or applicant for employment be-cause of race, color, creed, religion, sex, marital status, ancestry, or nationalorigin. 3.4.7. Project sign. Developer and Agency agree to cooperate in placing andmaintaining on the Project Parcel one sign indicating the respective roles ofDeveloper and Agency in the Project. The cost of the sign shall be borne byDeveloper. 3.5. Transfers and liens. 3.5.1. Transfers. The qualifications and identity of Developer are of particularconcern to the City and Agency. It is because of those qualifications thatAgency has entered into this Agreement with Developer. Except as pro-vided in this Section 3.5.1, no Transfer of a Project Parcel or of the ProjectImprovements thereon shall be permitted prior to the issuance of the Cer-tificate of Completion for a Project without the prior written approval ofAgency, which approval Agency may grant or withhold in its reasonablediscretion. Notwithstanding the foregoing, Agency approval of a change inthe ownership, management, or control of Developer, an assignment of thisAgreement, or a conveyance of the Project Parcel or the Project Improve-ments, or any part thereof, shall not be required in connection with any ofthe following (each, a “Permitted Transfer”): (a) The Transfer of the Project Parcel or the Project Improvements orassignment of this Agreement as it relates to the Project Parcel to anaffiliate of Developer so long as Developer submits to Agency asigned assumption agreement that complies with the description inSection 3.5.2 below. For purposes of this provision, “affiliate of De-veloper” means an entity with which Developer may merge or con-solidate, an entity to which Developer sells all or substantially all ofits assets, the entity resulting from a reorganization of Developer, aparent or subsidiary of Developer or subsidiary of any parent of De- Disposition and Development AgreementPage 27DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM veloper, and any entity in which Developer owns a beneficial eco-nomic interest and in which, either directly or indirectly, Developerretains effective management and control, subject only to majorevents requiring the consent or approval of the other owners of suchentity. (b) The conveyance or dedication of any portion of the Project Parcel tothe City or other appropriate governmental agency, or the granting ofeasements or permits to facilitate construction of the Project Im-provements. (c) Any requested assignment for financing purposes, including thegrant of a deed of trust, or a sale-leaseback, a so-called “syntheticlease,” or any such similar financing device the purpose of which isto secure the funds necessary for construction and permanent fi-nancing of the Project Improvements.In the event of a Permitted Transfer, Developer agrees that it shall give atleast fifteen (15) days prior written Notice to Agency of such assignment orTransfer. 3.5.2. Agency consideration of requested Transfer prior to issuance of Cer-tificate of Completion. Prior to the issuance of a Certificate of Comple-tion, Agency agrees that it will not unreasonably withhold approval of a re-quest made pursuant to Section 3.5.1 above, provided Developer deliverswritten Notice to Agency requesting such approval. Such Notice shall beaccompanied by evidence regarding the proposed assignee’s or purchaser’sdevelopment qualifications and experience and its financial commitmentsand resources sufficient to enable Agency to evaluate the proposed assigneeor purchaser pursuant to the criteria set forth in this Section 3.5.2 and othercriteria as reasonably determined by Agency. Before any proposed Transferrequiring the approval of Agency is considered for approval, Developershall deliver to the Agency Director the form of a proposed written assign-ment and assumption agreement in which the assignee would expresslyagree to assume all rights and obligations of Developer under this Agree-ment which arise after the effective date of the assignment, and in whichthe assignee would agree to assume all performance of Developer whicharose prior to the effective date of the assignment, or in the alternative, De-veloper would remain liable to Agency for the performance of Developer’sobligations which arose prior to the effective date of any assignment. Theassignment and assumption agreement shall be in form and content rea-sonably acceptable to Agency’s legal counsel. No later than the date the as-signment becomes effective, Developer and the assignee shall deliver toAgency a fully executed copy of the assignment and assumption agree-ment.
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3.5.3. Holder not obligated to construct Project Improvements. The holder ofany mortgage or deed of trust authorized by this Agreement shall not beobligated by the provisions of this Agreement to construct or complete theProject Improvements or to guarantee such construction or completion; nor,with respect to the Primary Parcel, shall any covenant or any other provi-sion in the Grant Deed be construed to so obligate such holder. Nothing inthis Agreement shall be deemed to construe, permit, or authorize any suchholder to devote the Project Parcel to any uses or to construct any im-provements thereon, other than those uses or improvements provided for orauthorized by this Agreement. Further, the holder of any permanent mort-gage or deed of trust authorized by this Agreement shall not be deemed tobe the successor in interest to Developer hereunder for purposes of any in-demnity granted by Developer hereunder or for purposes of any affirmativeobligation to be performed by Developer hereunder. 3.5.4. Holder’s right to cure. With respect to any mortgage or deed of trustgranted by Developer as provided herein, whenever Agency shall deliverany Notice or demand to Developer with respect to any breach or Defaultby Developer in connection with construction of the Project Improvements,Agency shall at the same time deliver a copy of such Notice or demand toeach holder of record of any mortgage or deed of trust authorized by thisAgreement. Each such holder shall (insofar as the rights of Agency areconcerned) have the right, at its option, within sixty (60) days after the re-ceipt of the Notice, to cure or remedy such Default or, with respect to anitem of Default that reasonably requires a greater time to cure or remedy,commence to cure or remedy any such Default within such period of timeand proceed with all reasonable diligence to cure or remedy such Defaultwithin such greater time as may be reasonably necessary to cure, correct, orremedy to completion given the nature of the Default. With respect to anySchedule Default, such holder shall have the right, at its option, to partici-pate in the process set forth in Section 6.4 below and to take any steps re-quired of Developer as a result of such process. Such holder shall have theright to add the reasonable cost of actions it takes to cure or remedy De-faults pursuant to this Section 3.5.4 to the mortgage debt and the lien of itsmortgage. Nothing contained in this Agreement shall be deemed to permitor authorize such holder to undertake or continue the construction or devel-opment of the Project Improvements (beyond the extent necessary to con-serve or protect the Project Improvements or construction already made)without first having expressly assumed Developer’s obligations to Agencyby written agreement in a form acceptable to Agency in its sole discretion.The holder, in that event, must agree to complete, in the manner providedin this Agreement, the Project Improvements to which the lien or title ofsuch holder relates and submit evidence satisfactory to Agency that it hasthe qualifications and financial responsibility necessary to perform suchobligations. Any such holder properly completing the Project Improve-ments shall be entitled to a Certificate of Completion.
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3.5.5. Estoppel certificates. At the request of Developer or any holder of a mort-gage or deed of trust, Agency and City shall, from time to time and uponthe request of Developer or such holder, timely execute and deliver to De-veloper or such holder a written statement of Agency and City that no De-fault or breach exists (or would exist with the passage of time, or giving ofNotice, or both) by Developer under this Agreement, if such be the case,and certifying as to whether or not Developer has at the date of such certi-fication complied with any obligation of Developer hereunder as to whichsuch holder may inquire. The form of any estoppel certificate shall be pre-pared by the holder or Developer and shall be at no cost to Agency. 3.5.6. Taxes and assessments. Developer shall pay prior to delinquency all advalorem taxes and assessments levied on the Project Parcel with respect toany period subsequent to the Developer’s acquisition of the Project Parcel,subject to Developer’s right to contest in good faith any such taxes. 3.5.7. Right of Agency to satisfy liens on Primary Parcel. If a mortgage or deedof trust default or breach by Developer prior to the completion of the con-struction of the Project Improvements occurs with respect to the PrimaryParcel, and the holder of any mortgage or deed of trust has not exercised itsoption to construct, Agency may cure the default, without acceleration ofthe subject loan, following prior Notice thereof to Developer. In such event,Developer shall be liable for and Agency shall be entitled to reimbursementfrom Developer of all costs and expenses associated with and attributableto the curing of the mortgage or deed of trust default or breach of thisAgreement by Developer and incurred by Agency in curing such default.Agency shall also be entitled to record a lien upon the Primary Parcel to theextent of such incurred costs and disbursements. Any such lien shall besubject to prior encumbrances and deeds of trust. Agency shall have nocure rights described herein from and after the issuance of a Certificate ofCompletion on the Primary Parcel. 3.6. Completion. 3.6.1. Certificate of Completion. Within thirty (30) days after Developer’s re-quest following completion of construction of the Project Improvementsupon the Project Parcel in accordance with this Agreement, Agency shallfurnish Developer with a Certificate of Completion upon written requesttherefor by Developer. Agency shall not unreasonably withhold any suchCertificate of Completion. The Certificate of Completion shall be a conclu-sive determination of satisfactory completion of the construction of theProject Improvements upon the Project Parcel, and the Certificate of Com-pletion shall so state. After recordation of such Certificate of Completion,any Party then owning or thereafter purchasing, leasing, or otherwise ac-quiring any interest therein shall not, because of such ownership, purchase,lease or acquisition, incur any obligation or liability under this Agreement,except that such Party shall be bound by the covenants contained in the Disposition and Development AgreementPage 30DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM Grant Deed and any other documents establishing covenants on the ProjectParcel in accordance with this Agreement, which shall be applicable ac-cording to their terms. 3.6.2. Failure to issue Certificate of Completion. If Agency refuses or fails tofurnish a Certificate of Completion for the Project Improvements afterwritten request from Developer, Agency shall, within thirty (30) days ofwritten request therefor, provide Developer with a written statement of thereasons Agency refused or failed to furnish a Certificate of Completion.The statement shall also contain Agency’s opinion of the actions Developermust take to obtain a Certificate of Completion. If Agency shall have failedto provide such written statement within said thirty (30) day period, theCertificate of Completion shall be deemed to have been approved. IfAgency fails to issue a Certificate of Completion, the issuance of a tempo-rary certificate of occupancy by the City for the Project shall be deemed tobe equivalent to the issuance of a Certificate of Completion.ARTICLE IV: PROJECT COSTS AND FINANCING 4.1. Developer’s costs. Except as specifically set forth herein, Developer shall be responsiblefor all Development Costs with respect to each Project. 4.2. Project Financial Assistance. In consideration of Developer’s agreement to plan, seekProject Approvals for, and construct the Project Improvements as provided in thisAgreement with respect to a Project, Agency agrees to make payments of financial as-sistance to Developer with respect to each Project (“Project Financial Assistance”) asfollows: 4.2.1. Primary Parcel. Agency shall provide Project Financial Assistance withrespect to the Project on the Primary Parcel as follows: 4.2.1.1. Payment into Primary Project Fund. Agency shall depositinto the Primary Project Fund in cash upon the Closing of thepurchase of the Primary Parcel by Developer the sum equalto the lesser of (i) Agency’s reasonable estimate, as of thedate of Project Approvals, of the Project Tax Increment thatwill be generated from the Primary Parcel over the life of theAgency, discounted to present value at the bond rate avail-able to Agency at such time, as reasonably determined byAgency; or (ii) Agency’s reasonable estimate, based uponestimates provided to Agency by Developer of the totalamount of Eligible Project Costs that Developer is expectedto incur in the development of the Project; or (iii) TwelveMillion and no/100 Dollars ($12,000,000.00). Developer maydraw funds from the Primary Project Fund as permitted bythe instructions to the holder of the fund (see the definition ofPrimary Project Fund in Article I above).
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4.2.1.2. Tax Increment Assistance option. Upon the mutual agree-ment of Agency and Developer, Agency may provide theProject Financial Assistance for the Project on the PrimaryParcel by providing to Developer Tax Increment Assistance(defined in Section 4.3 below) rather than providing the sin-gle payment as provided in Section 4.2.1.1 above. 4.2.1.3. Initial Parcel Pledge Agreement. In order to secureAgency’s obligations under this Section 4.2.1, Agency shallmake and deliver to Developer within ten (10) days after theEffective Date a pledge agreement in the form attachedhereto as Exhibit “H-1,” duly authorized and acknowledgedby Agency, that pledges the Project Tax Increment to theProject with respect to the two Initial Parcels (the “InitialParcel Pledge Agreement”). The Initial Parcel PledgeAgreement shall be released upon either (i) Agency’s deliv-ery into the Primary Project Fund the sum defined in Section4.2.1.1 above or (ii) Agency’s deliver to Developer of a Pro-ject Pledge Agreement for the Project on the Primary Parcelas provided in Section 4.3.9 below. 4.2.2. BART Residual Parcel. With respect to the Project on the BART ResidualParcel, Agency shall provide to Developer Tax Increment Assistance (de-fined in Section 4.3 below). 4.2.3. Additional Parcels. With respect to any Project on an Additional Parcel,Agency shall, in its discretion, make an assessment of the amount and formof Project Financial Assistance that Agency believes, in its sole discretion,may be appropriate for the Project and may provide to Developer suchProject Financial Assistance as it determines is appropriate, if any. SuchProject Financial Assistance, if any, may be in the form of a lump cashsum, Tax Increment Assistance, a limited form of Tax Increment Assis-tance, or any other form of financial assistance determined appropriate byAgency in its sole and absolute discretion. 4.2.4. Zero assistance option. With respect to any Project, City and Agency mayelect on or before the date that the City Council holds its first workshop toreview and discuss the Conceptual PDP for the Project pursuant to Section3.3.1(f) above, the “zero assistance option” under this Section 4.2.4. Uponsuch election, (i) Agency shall have no obligation to provide Project Finan-cial Assistance under this Section 4.2 for the Project; (ii) the provisions ofArticle III above shall not apply to the Project; (iii) the revenue sharingprovisions of Section 4.4 below shall not apply to the Project; and (iv) Citythereby agrees not to require, with respect to the Project, structured park-ing, a mix of uses on the Project, or civic spaces in excess of what Citytypically requires for conventional developments in the City. If the Cityand/or Agency elect the “zero assistance option” they nevertheless retain Disposition and Development AgreementPage 32DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM discretion to approve, disapprove or condition any Project or the applica-tion for any Project on the Subject Parcels. 4.3. Tax Increment Assistance. “Tax Increment Assistance” is defined as financial assis-tance provided by Agency to Developer on the following terms and conditions: 4.3.1. Deposit of funds into Project Fund. Subject to Sections 4.3.1.1 and4.3.1.2, Agency shall deposit all Project Tax Increment into the ProjectFund as such funds are received by Agency. 4.3.1.1. Subordination to Agency Bonds. Notwithstanding anythingcontained herein to the contrary, the obligation of the Agencyto deposit Project Tax Increment into the Project Fund pursu-ant to Section 4.3.1 shall be subordinate to the payment ofdebt service on Agency Bonds issued pursuant to the AgencyIndenture; provided, that at the time of issuance of suchAgency Bonds, the Agency certifies that, based on theamount of tax increment revenue pledged to pay debt serviceon such Agency Bonds and all other Agency Bonds then out-standing (collectively, the “Agency Parity Debt”), and basedon the annual debt service payable with respect to AgencyParity Debt, there will be sufficient tax increment revenue ineach fiscal year after payment of such Agency Parity Debt tomake the deposits required pursuant to Section 4.3.1. 4.3.1.2. Project Bond Proceeds. The Agency may, in its sole discre-tion, elect to deposit Project Bond Proceeds into the ProjectFund. In the event such deposit is made, the amount of Pro-ject Tax Increment required to be deposited to the ProjectFund pursuant to Section 4.3.1.1 shall be reduced in eachyear by an amount equal to the product of (i) the annual debtservice on the Agency Bonds times (ii) a fraction, the nu-merator of which is the amount of Project Tax Increment andthe denominator of which is the total tax increment revenuepledged to the payment of such Agency Bonds, in each casebased on the most recent equalized assessment roll of theCounty of Contra Costa as of the date of issuance of theAgency Bonds. 4.3.2. Project Fund account statements. By each January 31, Agency shall pro-vide Developer with an account statement for the Project Fund showing ac-count activity over the prior calendar year. Agency shall provide Developerwith interim account statements upon request of Developer. 4.3.3. Periodic accountings of Unreimbursed Eligible Costs. At any time andfrom time to time following the Project Commencement Date, Developermay provide to Agency an accounting of Unreimbursed Eligible Costs, in-cluding a listing of cumulative Eligible Project Costs incurred by Devel- Disposition and Development AgreementPage 33DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM oper and cumulative Project Financial Assistance received by Developer;provided, however, that each such accounting may not be given fewer thanninety (90) days following the previous such accounting. The first time thatan item of Eligible Project Costs is listed on such an accounting, such ac-counting shall be accompanied by such back up materials as may be rea-sonably required by Agency to verify Developer’s incursion of such itemand the nature and amount of such item. 4.3.4. Payments during Project. Within thirty (30) days following Agency’s re-ceipt of an accounting from Developer in accordance with Section 4.3.3above, and subject to Sections 4.3.7 and 4.3.8 below, Agency shall make apayment of Project Financial Assistance to Developer in an amount equalto the lesser of (i) the Unreimbursed Eligible Costs reported on such ac-counting; or (ii) the amount in the Project Fund. 4.3.5. Final accounting of Unreimbursed Eligible Costs. Immediately follow-ing the issuance of a Certificate of Completion, Developer shall submit afinal accounting of Unreimbursed Eligible Costs. 4.3.6. Payments after Certificate of Completion. On each February 1 after issu-ance of a Certificate of Completion, and subject to Sections 4.3.7 and 4.3.8below, Agency shall make a payment of Project Financial Assistance toDeveloper in the amount of all available amounts in the Project Fund untilthe Unreimbursed Eligible Costs have been reduced to zero. 4.3.7. Discontinuation of payments. Agency shall continue to make payments ofProject Financial Assistance to Developer as provided in Sections 4.3.4 and4.3.6 above until Agency no longer receives and does not reasonably ex-pect to receive Project Tax Increment that Agency is required to depositinto the Project Fund under Section 4.3.1 above or Project Bond Proceedswith respect to the Project Parcel. Thereafter, Agency may close the ProjectFund account, Agency shall have no further obligation to Developer withrespect to Project Tax Increment or Project Bond Proceeds, and the ProjectPledge Agreement made in accordance with Section 4.3.9 below shall bereleased. Nothing in this Section 4.3 or in this Agreement obligates Agencyto make payments of Project Financial Assistance after the expiry of thelife of the Agency and the final depletion of the Project Fund to zero. 4.3.8. Dispute of accountings. If Agency disputes any amount reported in an ac-counting given by Developer pursuant to Section 4.3.3 above or Section4.3.5 above, Agency shall provide Notice to Developer of such disputeditem, along with Agency’s reasons for disputing such item. Agency mayadjust its next payment under Section 4.3.4 above or under Section 4.3.6above accordingly, provided that Agency shall timely pay all undisputedamounts. Agency and Developer shall meet within ten (10) business daysof Agency’s Notice to Developer under this Section 4.3.8 to attempt to re-solve the disputed item. If the matter is not resolved as provided above, Disposition and Development AgreementPage 34DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM then Developer may appeal the matter to the Agency Board and shall re-ceive a hearing of the Agency Board within thirty (30) days of request. Ifthe matter is not resolved at such hearing of the Agency Board, then De-veloper may bring an action in a court of law in accordance with Article VIbelow. Upon resolution of the disputed item in accordance with this Section4.3.8, Agency shall immediately make any adjusting payment required toeffect such resolution. 4.3.9. Project Pledge Agreement. In order to secure Agency’s obligations underthis Section 4.3 with respect to each Project that is to receive Tax IncrementAssistance, Agency shall make and deliver to Developer prior to the Pro-ject Commencement Date a pledge agreement in the form attached heretoas Exhibit “H-2,” duly authorized and acknowledged by Agency, thatpledges the Project Tax Increment to the Project (a “Project Pledge Agree-ment”). 4.3.10. Maximizing Project Fund. Agency hereby agrees to use reasonable effortsto maximize the amounts available in the Project Fund for all Projects bydoing, without limitation, the following: (i) use reasonable efforts to rene-gotiate the existing tax increment cap with County; (ii) consider, in its dis-cretion, whether to issue tax increment bonds that include the Subject Par-cels (and may include other parcels) and would result in Project Bond Pro-ceeds for Projects on the Subject Parcels; (iii) refrain from renegotiatingany tax increment agreements in a manner that would reduce the ProjectTax Increment or the Project Bond Proceeds for Projects on the SubjectParcels; and (iv) refrain from pledging or allocating to any other project orpurpose tax increment that could become Project Tax Increment for Pro-jects on the Subject Parcels. Developer shall not object to Agency issuingtax increment bonds that include any of the Subject Parcels and that resultin Project Bond Proceeds for Projects on the Subject Parcels so long assuch bond issuance would not be in violation of any other provision of thisAgreement, the Initial Pledge Agreement, or any Project Pledge Agree-ment. Developer agrees that it shall not challenge the assessed value of anyProject Parcel so long as such Project Parcel is generating Project Tax In-crement. 4.4. Agency revenue participation. Developer shall share with Agency in the project reve-nues of each Project developed by Developer under this DDA as follows: 4.4.1. Baseline Residential Price. The average market price per square foot forfor-sale residential units to be built on the Project Parcel (the “BaselineResidential Price”) shall be established between Developer and Agency asof the completion of the Project Approvals based upon then-current marketsales data.
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4.4.2. Primary Parcel Project. As to the Project on the Primary Parcel:(a)For every for-sale residential unit on the Project that sells for 125%or more of the Baseline Residential Price per square foot, Developershall pay to Agency, upon the close of escrow for the sale of suchunit, the sum of $10,000, subject to item (b) below.(b)The maximum aggregate amount that Developer shall be required topay to Agency with respect to any Project under this Section 4.4.2shall be equal to 100% of the dollar amount of Project Financial As-sistance that Agency actually provided to Developer for the Project. 4.4.3. Other Projects. As to any Project on the BART Residual Parcel or any ofthe Additional Parcels:(a)For every for-sale residential unit on the Project that sells for 110%or more of the Baseline Residential Price per square foot, Developershall pay to Agency, upon the close of escrow for the sale of suchunit, the sum of $10,000, subject to item (b) below.(b)The maximum aggregate amount that Developer shall be required topay to Agency with respect to any Project under this Section 4.4.3shall be equal to 100% of the dollar amount of Project Financial As-sistance that Agency actually provided to Developer for the Project. 4.4.4. Participation conditioned on Project Financial Assistance. By defini-tion, Agency shall receive no revenue participation on Projects for whichAgency does not provide Developer with Project Financial Assistance.ARTICLE V: USE OF THE PROJECT PARCELS 5.1. Nondiscrimination. Developer by and for itself and any successors in interest covenantsthat there shall be no discrimination against or segregation of any person or group ofpersons on account of race, color, creed, religion, sex, marital status, national origin orancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of theany Project Parcel, nor shall Developer itself or any person claiming under or through itestablish or permit any such practice or practices of discrimination or segregation withreference to the selection, location, number, use or occupancy of tenants, lessees, subten-ants, sublessees or vendees of any Project Parcel. The foregoing covenants shall run withthe land. All such deeds, leases or contracts shall contain or be subject to substantiallythe following nondiscrimination or nonsegregation clauses: (a) In deeds: “The grantee herein covenants by and for himself or herself, his or herheirs, executors, administrators and assigns, and all persons claiming under orthrough them, that there shall be no discrimination against or segregation of,any person or group of persons on account of race, color, creed, religion, sex,marital status, national origin or ancestry in the sale, lease, sublease, transfer,use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Disposition and Development AgreementPage 36DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM grantee himself or herself or any person claiming under or through him or her,establish or permit any such practice or practices of discrimination or segrega-tion with reference to the selection, location, number, use or occupancy of ten-ants, lessees, subtenants, sublessees or vendees in the land herein conveyed. Theforegoing covenants shall run with the land.” (b) In leases: “The lessee herein covenants by and for himself or herself, his or herheirs, executors, administrators and assigns, and all persons claiming under orthrough him or her, and this lease is made and accepted upon and subject to thefollowing conditions: There shall be no discrimination against or segregation ofany person or group of persons on account of race, color, creed, religion, sex,marital status, ancestry or national origin in the leasing, subleasing, transferring,use, occupancy, tenure or enjoyment of the premises herein leased nor shall thelessee himself or herself, or any person claiming under or through him or her,establish or permit any such practice or practices of discrimination or segrega-tion with reference to the selection, location, number, use or occupancy of ten-ants, lessees, sublessees, subtenants or vendees in the premises herein leased.” (c) In contracts: “There shall be no discrimination against or segregation of, anyperson, or group of persons on account of race, color, creed, religion, sex,marital status, ancestry or national origin, in the sale, lease, sublease, transfer,use, occupancy, tenure or enjoyment of the premises, nor shall the transfereehimself or herself or any person claiming under or through him or her, establishor permit any such practice or practices of discrimination or segregation withreference to the selection, location, number, use or occupancy of tenants, les-sees, subtenants, sublessees or vendees of the premises.” 5.2. Effect and duration of covenants. 5.2.1. Effect of violation of the terms and provisions of this Agreement aftercompletion of construction. The covenants established in this Agreementshall, without regard to technical classification and designation, be bindingfor the benefit and in favor of Agency, its successors, and assigns. Thecovenants contained in this Agreement shall remain in effect for the periodsof time specified herein. The covenants against discrimination shall remainin effect in perpetuity. 5.2.2. Agency as beneficiary. Agency is deemed Beneficiary of the terms andprovisions of this Agreement and of the covenants running with the land,for and in its own right and for the purposes of protecting the interests ofthe community and other parties, public or private, in whose favor and forwhose benefit this Agreement and the covenants running with the land havebeen provided. The Agreement and the covenants shall run in favor ofAgency, without regard to whether Agency has been, remains, or is anOwner of any land or interest therein in the Site or in the RedevelopmentProject. Agency shall have the right, if the Agreement or covenants arebreached, to exercise all rights and remedies, and to maintain any actions or Disposition and Development AgreementPage 37DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM suits at law or in equity or other proper proceedings to enforce the curing ofsuch breaches to which it or any other beneficiaries of this Agreement andcovenants may be entitled. After issuance of a Certificate of Completionwith respect to a Project, all of the terms, covenants, agreements, and con-ditions set forth in this Agreement relating to the construction and devel-opment of the Project Improvements on the associated Project Parcel shallcease and terminate. 5.3. Right of access to public improvements and facilities. The Agency, for itself and forthe City and other public agencies, at their sole risk and expense, reserves the right toenter each Project Parcel or any part thereof at all reasonable times and with as little in-terference as possible for the purposes of construction, reconstruction, maintenance, re-pair, or service of any public improvements or public facilities located on such ProjectParcel. Any such entry shall be made only after reasonable Notice to Developer, andAgency shall indemnify and hold Developer harmless from any claims or liabilities per-taining to any entry. Any damage or injury to a Project Parcel resulting from such entryshall be promptly repaired at the sole expense of the Agency.ARTICLE VI: DEFAULTS AND REMEDIES 6.1. Defaults. Failure or delay by either Party to perform any term or provision of thisAgreement constitutes a “Default” under this Agreement, unless the time to perform theobligation in question is extended pursuant to the provisions of Section 7.5.3 below. 6.2. Notice and cure. The non-defaulting Party shall give written Notice of Default to theParty in Default, specifying the Default complained of by the non-defaulting Party. SuchNotice shall include a list of specific items to be cured or remedied and, for each suchitem, a description of a method and timing of cure or remedy that would be acceptable tothe non-defaulting Party. The Party in Default may protest such list but shall be obligatednonetheless to cure or remedy any actual Default as provided in this Section 6.2. Thenon-defaulting Party may not institute proceedings against the Party in Default untilthirty (30) days after giving such Notice or, provided that the Party is proceeding with allreasonable diligence to cure, such greater time as may be reasonably necessary to cure,correct, or remedy to completion given the nature of the Default. Failure or delay ingiving such Notice shall not constitute a waiver of any Default, nor shall it change thetime of Default. Notwithstanding the foregoing provisions of this Section 6.2, Section6.4 below, and not this Section 6.2, shall apply to Schedule Defaults. 6.3. Legal actions. Subject to the alternative procedure for remedying Schedule Defaults un-der Section 6.4 below and the limitations on remedies set forth in Section 6.7 below,upon the occurrence of a Default and the expiration of any applicable cure period pro-vided herein, including under Section 6.2 above, the non-defaulting Party may institutelegal action to cure, correct, or remedy any Default. Legal actions must be instituted inthe Superior Court of the County of Contra Costa or in the Federal District Court in theNorthern District of California.
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6.4. Resolution of Schedule Defaults. The following procedure shall apply in lieu of Sec-tions 6.2 and 6.3 above in the event of any claim of a Schedule Default: 6.4.1. Meet and confer. The non-defaulting Party shall give written Notice ofDefault to the Party in Default, specifying the Default complained of by thenon-defaulting Party and advising the other Party that it desires to meet andconfer. Within fifteen (15) days after provision of that written notice by theParty desiring to meet and confer, the primary contacts for each Party shallmeet in person and attempt to amicably resolve their dispute. Each primarycontact, or the duly authorized person acting in their absence, shall attendthe meeting, shall have full authority to resolve the dispute, and shall beprepared to devote an entire day thereto. If any dispute remains unresolvedat the end of the meeting, any Party to this Agreement shall have the rightto invoke the mediation process provided for in Section 6.4.2 below. 6.4.2. Mediation. Any dispute that remains unresolved after the meet and conferdescribed in Section 6.4.1 above shall immediately be submitted to non-binding, neutral mediation before a mutually acceptable, neutral retiredjudge or justice at JAMS. If within five (5) days after the meet and conferthe Parties are unable to agree upon the selection of a neutral mediator, thenthe first available retired judge or justice at JAMS shall serve as the neutralmediator. The Parties agree to dedicate at least one full day to the media-tion process. Each primary contact, or the duly authorized person acting intheir absence, shall attend the mediation and shall have full authority to re-solve the dispute. Additionally, to expedite the resolution of any disputethat is not resolved by mediation, the Parties agree to each bring to theneutral mediation a list of at least five (5) neutral arbitrators, including theirresumes, whose availability for an arbitration hearing within fifteen (15)days after the mediation has been confirmed. 6.4.3. Arbitration. If mediation is unsuccessful, then before the mediation con-cludes, the Parties shall mediate the selection of a neutral arbitrator to assistin the resolution of their dispute. If the Parties are unable to agree on an ar-bitrator, the Parties agree to submit selection of an arbitrator to the media-tor, whose decision shall be binding on the Parties. In that case, the media-tor shall select one neutral arbitrator from the then active list of retiredjudges or justices at JAMS. The arbitration shall be conducted pursuant tothe provisions of the California Arbitration Act, Sections 1280-1294.2 ofthe California Code of Civil Procedure. In such case, the provisions ofCode of Civil Procedure Section 1283.05 and 1283.1 shall not apply, andno discovery shall be permitted except upon leave of the assigned arbitra-tor. 6.5. Rights and remedies cumulative. Except as otherwise expressly stated in this Agree-ment, the rights and remedies of the Parties are cumulative, and the exercise by eitherParty of one or more of such rights or remedies shall not preclude the exercise by it, at Disposition and Development AgreementPage 39DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM the same or different times, of any other rights or remedies for the same Default or anyother Default by the other Party. 6.6. No cross-default. No Default by Agency or Developer with respect to a particular Pro-ject or Subject Parcel under this Agreement shall result in a general Default under thisAgreement or any cross-default with respect to any other Project or Subject Parcel underthis Agreement. Accordingly, such a default shall give the non-defaulting Party remedieswith respect to the Project or Subject Parcel affected by such Default only and shall notaffect the rights of obligations of the Parties under this Agreement with respect to otherProjects or other Subject Parcels. 6.7. Remedies. Subject to the provisions of Section 6.4 above with respect to Schedule De-faults, in the event of any Default by either Developer or Agency hereunder, either Partymay institute legal action to cure, correct, or remedy any Default, enforce any covenantor agreement herein, enjoin any threatened or attempted violation, or enforce by specificperformance the obligations and rights of the Parties hereto. Except as set forth in thisSection 6.7, in no event shall either Party or its officers, agents, or employees be liable inmonetary damages for any breach, violation, or Default of this Agreement, it being ex-pressly understood and agreed that the sole legal or equitable remedy available to eitherParty for breach, violation, or Default of this Agreement by the other Party shall be anaction in mandamus, specific performance, injunctive or declaratory relief to enforce theprovisions of this Agreement. Notwithstanding the foregoing, in the event of any termi-nation of this Agreement as a result of Agency’s default hereunder, Agency shall reim-burse Developer for all Development Costs, including costs of acquisition paid by De-veloper to Agency. In no event shall a Party be entitled to recover consequential or puni-tive damages in connection with a Default, and any monetary damages payable to thenon-defaulting Party shall be limited to those actual damages specifically provided for inthis Section 6.7. 6.8. Additional remedies for Schedule Defaults. In addition to the remedies described inSection 6.7 above, in the event of a Schedule Default, a mediator may suggest or an ar-bitrator may impose any of the following additional remedies that such mediator or arbi-trator determines would be fair and equitable under the circumstances: (i) set deadlinesfor performance by any or all Parties; (ii) establish specific remedies that will automati-cally take effect if performance deadlines are missed by the defaulting Party; (iii) in thecase of a Developer Default with respect to a Subject Parcel that was acquired by Devel-oper pursuant to this Agreement, give Agency the option to repurchase such SubjectParcel at a specified price and upon specified terms; (iv) cause the defaulting Party tolose the benefits of the DDA with respect to the Subject Parcel in question; or (v) in thecase of an Agency or City Default, require Agency to reimburse Developer for all or aportion of the Development Costs incurred by Developer with respect to the Subject Par-cel in question. In the event that an arbitrator determines that Developer has abandonedthe Project with respect to the Primary Parcel prior to Project Approvals for that parcel,then Agency’s and City’s sole and exclusive remedy for the resulting Schedule Defaultshall be that Developer shall be required to deliver to Agency possession and ownershipof all development plans, construction drawings, and third-party analyses and studiesthat Developer has in its possession or control with respect to such Project.
Disposition and Development AgreementPage 40DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM ARTICLE VII: GENERAL PROVISIONS 7.1. Notices. Any written notice, demand, or communication between Agency or City andDeveloper (“Notice”) shall be sufficiently given if delivered by hand (and a receipttherefor is obtained or is refused to be given) or dispatched by first-class, registered orcertified mail, postage prepaid, or delivered by facsimile (with confirmation of delivery)or overnight delivery service as follow:If to Agency:Redevelopment Agency of the City of Hercules111 Civic Center DriveHercules, CA 94547Attn: Agency DirectoryFax: (510) 799-2521with copy to:Pelletreau, Alderson & CabralPlaza Two, Hilltop Office Park3260 Blume Drive, Suite 410Richmond, CA 94806Attn: Alfred Cabral, Esq.If to City:City of Hercules111 Civic Center DriveHercules, CA 94547Attn: City ManagerFax: (510) 799-2521with copy to:Pelletreau, Alderson & CabralPlaza Two, Hilltop Office Park3260 Blume Drive, Suite 410Richmond, CA 94806Attn: Alfred Cabral, Esq.If to Developer:Hercules New Town Center, LLCc/o The Surland Companies390 Railroad Avenue, Suite 201Danville, CA 94526Attn: Les SerpaFax: (925) 242-7050 Disposition and Development AgreementPage 41DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM and:Hercules New Town Center, LLCc/o The Red Barn Co.2901 W. Coast Hwy, Suite 200Newport Beach, CA 92663Attn: Thomas J. WeigelFax: (949) 767-5646with copy to:Miller Starr & Regalia1331 North Carolina Blvd., Fifth FloorWalnut Creek, CA 94596Attn: Wilson F. Wendt. Esq.Fax: (925) 933-4126and with copy to:Saltarelli Law Corporation4695 MacArthur Court, Suite 310Newport Beach, CA 92660Attn: Tom Saltarelli. Esq.Fax: (949) 833-9486Notices may be sent in the same manner to such other address as a Party may fromtime to time designate by Notice as provided herein. Any Notice shall be deemed re-ceived immediately if delivered by hand or facsimile, shall be deemed received on thethird (3rd) day from the date it is postmarked if delivered by first-class, registered orcertified mail and shall be deemed received on the next weekday which is not a federalor state holiday after the date it is sent by overnight delivery service. 7.2. Attorneys’ fees. In the event of any dispute between the Parties hereto arising out of thesubject matter of this Agreement, the prevailing Party shall be entitled to recover reason-able expenses, attorneys’ fees, and costs from the other Party, including fees and costs onappeal and fees and costs incurred in enforcing any judgment awarded to the prevailingParty. 7.3. Representations and warranties. 7.3.1. Agency’s representations and warranties. Agency represents and war-rants to Developer as follows: (a) Authority. Agency is a public body, corporate and politic, existingpursuant to the Redevelopment Law, which has been authorized totransact business pursuant to action of the City. Agency has fullright, power and lawful authority to perform its obligationshereunder and the execution, performance and delivery of this Disposition and Development AgreementPage 42DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM Agreement by Agency has been fully authorized by all requisite ac-tions on the part of Agency. (b) No conflict. Agency’s execution, delivery, and performance of itsobligations under this Agreement will not constitute a default or abreach under any contract, agreement, or order to which Agency isa party or by which it is bound. (c) No litigation or other proceeding. To the best of Agency’s knowl-edge, no litigation or other proceeding (whether administrative orotherwise) is outstanding or has been threatened which would pre-vent, hinder, or delay the ability of Agency to perform its obliga-tions under this Agreement.Until the expiration or earlier termination of this Agreement, Agency shall,upon learning of any fact or condition which would cause any of the war-ranties and representations in this Section 7.3.1 not to be true, immediatelygive written Notice of such fact or condition to Developer. Any such fact orcondition shall constitute a Default if not cured within the time period pro-vided following Notice and opportunity to cure set forth in Section 6.2above. 7.3.2. City’s representations and warranties. City represents and warrants toDeveloper as follows: (a) Authority. City is a municipal corporation, corporate and politic,existing pursuant to the laws of the State. It derives its legal exis-tence and primary legal authority from California Constitution Arti-cle XI; California Government Code Title 4, Division 1, commenc-ing with Section 34000; and California Government Code Title 5,Division 3, Part 1, commencing with Section 56000. City has fullright, power, and lawful authority to perform its obligationshereunder and the execution, performance, and delivery of thisAgreement by City has been fully authorized by all requisite actionson the part of City. (b) No conflict. City’s execution, delivery, and performance of its obli-gations under this Agreement will not constitute a default or abreach under any contract, agreement, or order to which City is aparty or by which it is bound. (c) No litigation or other proceeding. To the best of City’s knowl-edge, no litigation or other proceeding (whether administrative orotherwise) is outstanding or has been threatened which would pre-vent, hinder, or delay the ability of City to perform its obligationsunder this Agreement.
Disposition and Development AgreementPage 43DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM Until the expiration or earlier termination of this Agreement, City shall,upon learning of any fact or condition which would cause any of the war-ranties and representations in this Section 7.3.2 not to be true, immediatelygive written Notice of such fact or condition to Developer. Any such fact orcondition shall constitute a Default if not cured within the time period pro-vided following Notice and opportunity to cure set forth in Section 6.2above. 7.3.3. Developer’s representations and warranties. Developer represents andwarrants to Agency and City as follows: (a) Authority. Developer is a limited liability company, duly organizedwithin and in good standing under the laws of the State. Developerhas full right, power and lawful authority to undertake all obliga-tions as provided herein and the execution, performance, and deliv-ery of this Agreement by Developer has been fully authorized by allrequisite actions on the part of Developer. (b) No conflict. Developer’s execution, delivery, and performance ofits obligations under this Agreement will not constitute a default ora breach under any contract, agreement, or order to which Devel-oper is a party or by which it is bound. (c) No Developer bankruptcy. Developer is not the subject of a bank-ruptcy proceeding.Until the expiration or earlier termination of this Agreement, Developershall, upon learning of any fact or condition which would cause any of thewarranties and representations in this Section 7.3.3 not to be true, immedi-ately give written Notice of such fact or condition to Agency and City. Anysuch fact or condition shall constitute a Default if not cured within the timeperiod provided following Notice and opportunity to cure set forth in Sec-tion 6.2 above. 7.4. Memorandum of Agreement. Agency shall cause the Memorandum of Agreement, insubstantially the form attached hereto as Exhibit “D,” to be recorded against each of theSubject Parcels within ten (10) days after the Effective Date. The Memorandum ofAgreement shall be senior to any and all mortgages and deeds of trust to be recordedagainst the Subject Parcels, including any deeds of trust or mortgages securing repay-ment of Developer’s land acquisition/construction loans. 7.5. Time. 7.5.1. Time of the essence. It is understood and expressly agreed that time is ofthe essence for the performance of each and every covenant, condition, andobligation of this Agreement.
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7.5.2. Computation of time. The time in which any act is to be done under thisAgreement is computed by excluding the first day, and including the lastday, unless the last day is a holiday or Saturday or Sunday, and then thatday shall be deemed to be the next business day. The term “holiday” shallmean all holidays as specified in Sections 6700 and 6701 of the CaliforniaGovernment Code. If any act is to be done by a particular time during aday, that time shall be Pacific Time Zone time. 7.5.3. Force majeure. In addition to specific provisions of this Agreement, per-formance by either Party hereunder shall not be deemed to be in Default,and all performance and other dates specified in this Agreement shall beextended, where delays or Defaults are due to: war; insurrection; terrorism;strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God;acts of the public enemy; epidemics; quarantine restrictions; freight embar-goes; unusually severe weather; or acts or failures to act of a public or gov-ernmental agency or entity (other than Agency or City). In no event shallfinancial inability excuse performance hereunder. Notwithstanding any-thing to the contrary in this Agreement, an extension of time for any suchcause shall be for the period of the enforced delay and shall commence torun from the time of the commencement of the cause, if Notice by the Partyclaiming such extension is sent to the other Party within thirty (30) days ofthe commencement of the cause. Any requests for extension shall be inwriting. Times of performance under this Agreement may also be extendedin writing by the mutual agreement of Agency and Developer. 7.6. Parties. 7.6.1. Relationship between Agency and Developer. It is hereby acknowledgedthat the relationship between Agency and Developer is not that of a part-nership or joint venture and that Agency and Developer shall not bedeemed or construed for any purpose to be the agent of the other. Accord-ingly, except as expressly provided herein or in the exhibits hereto, Agencyshall have no rights, powers, duties, or obligations with respect to the de-velopment, operation, maintenance, or management of any Project. 7.6.2. Successors and assigns. The terms, covenants, conditions, and restrictionsof this Agreement shall extend to and shall be binding upon and inure tothe benefit of the heirs, executors, administrators, successors, and assignsof Agency and Developer. 7.6.3. No liability of officials and employees of City and Agency. No member,official, or employee of Agency or the City shall be personally liable toDeveloper, or any successor in interest, in the event of any Default orbreach by Agency or the City or for any amount which may become due toDeveloper, or its successors, or on any obligations under the terms of thisAgreement. No officer, director, contractor, or employee of Developer shallbe personally liable to the City or Agency in the event of any Default or Disposition and Development AgreementPage 45DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM breach by Developer or for any amount which may become due to City orAgency or on any obligations under the terms of this Agreement. 7.6.4. Conflicts of interest. No member, official, or employee of Agency or Cityshall have any personal interest, direct or indirect, in this Agreement, norshall any member, official, or employee participate in any decision relatingto the Agreement which affects his personal interests or the interests of anycorporation, partnership, or association in which he is directly or indirectlyinterested. 7.6.5. Brokers. Agency and Developer each agrees to hold harmless the otherParty from any real estate commissions or fees as are alleged to be due byreason of the actions of the other Party. 7.7. Interpretation. 7.7.1. Rules of construction. Masculine, feminine, or neuter gender and the sin-gular and plural number shall each be considered to include the otherwhenever the context so requires. The captions and headings included atthe beginning of the various sections of this Agreement are inserted forconvenience of reference only, are not part of this Agreement, and do notlimit, expand, or otherwise define the contents of the respective sectionsand subsections. The word “including” shall be construed as if followed bythe words “without limitation.” The word “shall” is mandatory, and “may”is permissive. This Agreement shall be interpreted as though preparedjointly by both Parties. Any reference to any section of this Agreementcited without a decimal includes all sections following the cited section.For example, a reference to Section 2.4 includes 2.4.1, 2.4.2, 2.4.2.1, et seq. 7.7.2. Legal advice. Each Party represents and warrants to the other the follow-ing: they have carefully read this Agreement, and in signing this Agree-ment, they do so with full knowledge of any right which they may have;they have received independent legal advice from their respective legalcounsel as to the matters set forth in this Agreement, or have knowinglychosen not to consult legal counsel as to the matters set forth in thisAgreement; and, they have freely signed this Agreement without any reli-ance upon any agreement, promise, statement or representation by or onbehalf of the other Party, or their respective agents, employees, or attor-neys, except as specifically set forth in this Agreement, and without duressor coercion, whether economic or otherwise. 7.7.3. Entire agreement. This Agreement includes pages 1 through 48 and Ex-hibits “A” through “K,” which constitute the entire understanding andagreement of the Parties. This Agreement integrates all of the terms andconditions mentioned herein or incidental hereto, and supersedes all nego-tiations or previous agreements between the Parties or their predecessors ininterest with respect to all or any part of the subject matter hereof.
Disposition and Development AgreementPage 46DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM
7.7.4. Severability. If any term, provision, condition, or covenant of this Agree-ment or its application to any Party or circumstances shall be held, to anyextent, invalid or unenforceable, the remainder of this Agreement, or theapplication of the term, provision, condition, or covenant to persons or cir-cumstances other than those as to whom or which it is held invalid or unen-forceable, shall not be affected, and shall be valid and enforceable to thefullest extent permitted by law. 7.7.5. Approvals. Unless otherwise provided in this Agreement, whenever ap-proval, consent, or satisfaction (collectively, an “approval”) is required of aParty pursuant to this Agreement (or any Attachment hereto), it shall not beunreasonably withheld or delayed. Unless provision is made for a specifictime period, approval shall be given within thirty (30) days after receipt ofwritten request for approval. If a Party neither approves nor disapproveswithin such 30-day period, or other time period for approval as may bespecified in this Agreement or Attachment hereto, that Party shall bedeemed to have given its approval. All approvals (including conditionalapprovals) and disapprovals shall be given or made in writing. If a Partydisapproves, the reasons therefor shall be stated in reasonable detail inwriting. The provisions of this Section 7.7.5 shall not apply to discretionarylegislative approvals, such as the approval of Submittal Documents. 7.7.6. Agency and City approvals and actions. Whenever a reference is madeherein to an action or approval to be undertaken by Agency, the Agency Di-rector is authorized to act on behalf of Agency, unless specifically providedotherwise or the context requires otherwise. Whenever a reference is madeherein to an action or approval to be undertaken by City, the City Manageris authorized to act on behalf of City, unless specifically provided otherwiseor the context requires otherwise. All approvals under this Section 7.7.6must be in accordance with all applicable Governing Ordinances and Laws. 7.7.7. City legislative discretion. Nothing in this Agreement shall be construedso as to deny City its discretion over future land use decisions under theGoverning Ordinances. Accordingly, phrases such as “Developer shall de-velop…” shall be construed to mean that Developer’s ability to developshall be subject to obtaining the requisite approvals under the GoverningOrdinances. 7.8. Waivers and amendments. Any waivers of the provisions of this Agreement must be inwriting by the appropriate authorities of Agency, City, and Developer, and all amend-ments hereto must be in writing by the appropriate authorities of Agency, City, and De-veloper. Each amendment shall be processed by City and Agency based on whether it isa Minor Amendment or a Major Amendment, as follows: 7.8.1. Minor Amendments. The City Manager or his designee, along with theAgency Director or his designee, shall have the authority to review and ap-prove Minor Amendments to this Agreement requested by Developer. De- Disposition and Development AgreementPage 47DDA-Surland Body R12.docPrinted: 3/2/06; 10:10 AM veloper shall have the right to appeal the rejection of any such request byDeveloper to the Planning Commission, the City Council, and the AgencyBoard pursuant to the process set forth in Section 7.8.2 below for MajorAmendments; provided that the scope of any such amendment proceedingshall be limited to the provisions of the proposed amendment. 7.8.2. Major Amendments. Major Amendments shall require giving of noticeand shall require a public hearing before the Planning Commission, theCity Council, and the Agency Board; provided that the scope of any suchhearing and amendment proceeding shall be limited to those provisions ofthe proposed amendment that constitute a Major Amendment; MinorAmendments, if any, shall be subject only to the requirements of Section7.8.1 above. 7.9. Counterparts. This Agreement may be signed in counterparts, and is executed in three(3) duplicate originals, each of which is deemed to be an original.
Exhibit “A”—Site Map Page A-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “A”Site Map
The Subject Parcels consist of the Initial Parcels and the Additional Town Center Parcels listedbelow and depicted above:KeyNameAcresAPNInitial Parcels:1.PNR Parcel6.62404 040 0402.C-1 Parcel8.69406 070 043Additional Town Center Parcels:3.“Loop”6.25406 070 0424.“Ramp”3.23CalTrans R.O.W.5.“CalTrans”6.35406 070 0256.“Carone 1”2.04406 160 0027.“Carone 2”1.77406 160 006 Exhibit “B”—Legal DescriptionsPage B-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “B”Legal Descriptions
Exhibit “B”—Legal DescriptionsPage B-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “B-1”Legal Description—PNR Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:Parcel 1, as shown on Parcel Map No. 1019, recorded March 2, 1979, in the Official Records forContra Costa County, in Book 74 of Parcel Maps, Page 37.EXCEPTING THEREFROM:A. That portion described as Parcel 1 in the Deed to State of California, recorded March 13,1981, in Book 10237, Page 84, Official Records.B. That portion described in the Deed to the City of Hercules, recorded October 13, 1982, inBook 10970 Official Records of Contra Costa County, Page 528, Series No. 82-143385.
Exhibit “B”—Legal DescriptionsPage B-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “B-2”Legal Description—C-1 Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:PARCEL 1:Being a portion of Parcel 1 as shown on Parcel Map 478-84, filed December 31, 1984, map re-corded in Book 114 of Parcel Maps at Page 1, Contra Costa County Records.EXCEPTING THEREFROM: Beginning at the Northwesterly corner of said Parcel 1; thencefrom said point of beginning, along the Northerly line of said Parcel 1, S. 68º 50' 51" E., 132.15feet, thence leaving said Northerly line from a tangent which bears S. 73º 41' 02" W., along acurve to the left with a radius of 260.00 feet, through an angle of 42º 31' 59", and arc length of193.01 feet to a point of compound curvature; thence along a tangent curve to the left with a ra-dius of 30.00 feet, through an angle of 21º 17' 03", an arc length of 11.14 feet to the Westerlyline of said Parcel 1; thence along last said line N. 9º 52' 00" E., 175.70 feet to the Point of Be-ginning.ALSO EXCEPTING THEREFROM:Beginning at the Southwesterly corner of said Parcel 1; thence from said Point of Beginningalong the Westerly line of said Parcel 1, N. 9º 52' 00" E., 35.00 feet; thence leaving said West-erly line S. 38º 22' 00" E., 45.27 feet to a curve concentric with and distant 1 foot radially fromthe Southerly line of said Parcel 1; thence from a tangent which bears S. 85º 49' 28" E., along acurve to the right with radius of 1225.92 feet, through an angle of 02º 16' 56", an arc length of48.83 feet; thence S. 6º 27' 28" E., 1.00 feet to the Southerly line of said Parcel 1; thence alonglast said line from a tangent which bears N. 83º 32' 32" W., along a curve to the left with a radiusof 1224.92 feet, through an angle of 03º 52' 36", an arc length of 82.88 feet to the Point of Be-ginning.
Exhibit “B”—Legal DescriptionsPage B-4DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “B-3”Legal Descriptions—Additional Town Center Parcels
3. LoopThat certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:That certain real property shown on Parcel Map No. 1007, filed August 2, 1977, in the OfficialRecords for Contra Costa County, in Book 56 of Parcel Maps at pages 42 and 43.EXCEPTING THEREFROM: That portion of said land as described in the Grant Deed to theState of California, recorded June 11, 1993, in Book 18645 Official Records, Page 685, SeriesNo. 93-1550954. RampThat certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, bounded on the West by Parcel Three identified herein, bounded on the East by ParcelTwo identified herein, bounded on the South by Willow Avenue, and generally bounded on theNorth by State Highway 4. The exact configuration of Parcel Four shall be determined in the fu-ture by the California Department of Transportation in the event that the Interstate 80 off-rampthat is partially included with Parcel Four is abandoned by the California Department of Trans-portation.5. CalTransThat certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:A portion of that parcel of land described in that deed to Hercules Powder Company, a corpora-tion, recorded June 7, 1913 in Volume 207 of Deeds, at Page 1, Contra Costa County Recordsand being more particularly described as follows:Commencing at the easterly corner of that parcel of land described in that deed to Pacific Gasand Electric Company, a California corporation, recorded February 28, 1955, in Volume 2484 atPage 130, Official Records of Contra Costa County; thence perpendicular to that course withlength of 1603.58 feet described in deed to State of California recorded March 22, 1957 in Vol-ume 2952 at Page 116, Official Records of Contra Costa County N 21° 09’ 09” E, 228.25 feet tosaid course; thence along said course and along that course with length of 481.63 feet describedin said deed to the State of California, S 68° 50’ 51” E, 429.20 feet and S 52° 52’ 03” E, 481.63feet to a line parallel with and distant 40.00 feet, northerly, from those courses with distances of1008.45 feet and 100.19 feet in the center line described in Parcel III of that deed to State ofCalifornia recorded February 26, 1930 in Volume 212 at Page 297, Official Records of ContraCosta County; thence along said parallel line from a tangent that bears S 75° 37’ 12” W, along acurve of 31° 35’ 44”, an arc length of 970.48 feet and N 72° 47’ 04” W, 23.23 feet to the south- Exhibit “B”—Legal DescriptionsPage B-5DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM easterly line of said parcel to Pacific Gas and Electric Company; thence along last said line N29° 18’ 36” E, 231.84 feet to the point of commencement.6. Carone 1That certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:Being all that real property shown on Parcel Map 1004, filed August 2, 1977, in Book 56 of Par-cel Maps, at Page 40, Contra Costa County Records.7. Carone 2That certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:Portion of the Atchison, Topeka and Santa Fe Railway Company’s 400 foot wide property assaid property is described in the deed recorded in Book 78 of Deeds, Page 545, records of saidcounty, in Lot B, Division 10 of the Ranch El Pinole, Described as follows:Beginning at the intersection of the northeasterly boundary of said 400 feet wide property with aline parallel with and distant northerly 65.00 feet measured at right angles from the centerline ofsaid railway company’s main track; thence westerly along said parallel line 420.27 feet; thencewesterly along the arc of a curve tangent to the preceding course, concave northerly and having aradius of 931.87 feet, through a central angle of 12° 48’ 00” a distance of 208.18 feet to a pointin the westerly boundary of said 400 foot wide property; thence northerly along said westerlyboundary, 135.23 feet to a point in the northerly boundary of said 400 foot wide property; thenceeasterly along said northerly boundary, 505.78 feet to a point in said northeasterly boundary ofsaid 400 foot wide property; thence southeasterly along said northeasterly boundary, 164.24 feetto the point of beginning.
Exhibit “C”—Governing Ordinances Title PagesPage C-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “C”Governing Ordinances Title Pages
Exhibit “D”—Memorandum of AgreementPage D-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “D”Memorandum of AgreementRECORDING REQUESTED BYAND WHEN RECORDED MAIL TO:Pelletreau, Alderson & Cabral3260 Blume Drive, Suite 410Richmond, CA 94806-5277Attention: Alfred A. Cabral, Esq.(Above space for Recorder's use only)A.P.N. 404-040-040; 406-070-025, 042, 043; 406-160-002, 006; Parcel 4 described herein,which has not been assigned an A.P.N.MEMORANDUM OF DISPOSITION AND DEVELOPMENT AGREEMENTPLEASE TAKE NOTICE that on April 7, 2005, the City of Hercules, a public body cor-porate and politic (the “City”), and the Redevelopment Agency of the City, a public body corpo-rate and politic (the “Agency”), on the one hand, and Hercules New Town Center, LLC, a Cali-fornia limited liability company ( “Developer”), on the other hand, entered into a Disposition andDevelopment Agreement (the “Agreement”) pertaining to the following described real propertyand improvements thereon (the “Real Property”), and the disposition and development thereof:REAL PROPERTY in the City of Hercules, County of Contra Costa, State of California,described as follows:PARCEL ONE:That certain real property situated in the County of Contra Costa, City of Hercules, Stateof California, described as follows:Parcel 1, as shown on Parcel Map No. 1019, recorded March 2, 1979, in the Official Re-cords for Contra Costa County, in Book 74 of Parcel Maps, Page 37.EXCEPTING THEREFROM:A. That portion described as Parcel 1 in the Deed to State of California, recorded March13, 1981, in Book 10237, Page 84, Official Records.B. That portion described in the Deed to the City of Hercules, recorded October 13, 1982,in Book 10970 Official Records of Contra Costa County, Page 528, Series No. 82-143385.PARCEL TWO:
Exhibit “D”—Memorandum of AgreementPage D-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM That certain real property situated in the County of Contra Costa, City of Hercules, Stateof California, described as follows:PARCEL 1:Being a portion of Parcel 1 as shown on Parcel Map 478-84, filed December 31, 1984,map recorded in Book 114 of Parcel Maps at Page 1, Contra Costa County Records.EXCEPTING THEREFROM: Beginning at the Northwesterly corner of said Parcel 1;thence from said point of beginning, along the Northerly line of said Parcel 1, S. 68º 50'51" E., 132.15 feet, thence leaving said Northerly line from a tangent which bears S. 73º41' 02" W., along a curve to the left with a radius of 260.00 feet, through an angle of 42º31' 59", and arc length of 193.01 feet to a point of compound curvature; thence along atangent curve to the left with a radius of 30.00 feet, through an angle of 21º 17' 03", anarc length of 11.14 feet to the Westerly line of said Parcel 1; thence along last said line N.9º 52' 00" E., 175.70 feet to the Point of Beginning.ALSO EXCEPTING THEREFROM:Beginning at the Southwesterly corner of said Parcel 1; thence from said Point of Begin-ning along the Westerly line of said Parcel 1, N. 9º 52' 00" E., 35.00 feet; thence leavingsaid Westerly line S. 38º 22' 00" E., 45.27 feet to a curve concentric with and distant 1foot radially from the Southerly line of said Parcel 1; thence from a tangent which bearsS. 85º 49' 28" E., along a curve to the right with radius of 1225.92 feet, through an angleof 02º 16' 56", an arc length of 48.83 feet; thence S. 6º 27' 28" E., 1.00 feet to the South-erly line of said Parcel 1; thence along last said line from a tangent which bears N. 83º 32'32" W., along a curve to the left with a radius of 1224.92 feet, through an angle of 03º 52'36", an arc length of 82.88 feet to the Point of Beginning.PARCEL THREE:That certain real property situated in the County of Contra Costa, City of Hercules, Stateof California, described as follows:That certain real property shown on Parcel Map No. 1007, filed August 2, 1977, in theOfficial Records for Contra Costa County, in Book 56 of Parcel Maps at pages 42 and 43.EXCEPTING THEREFROM: That portion of said land as described in the Grant Deedto the State of California, recorded June 11, 1993, in Book 18645 Official Records, Page685, Series No. 93-155095A.P. No.: 406-070-042 Exhibit “D”—Memorandum of AgreementPage D-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM PARCEL FOUR:That certain real property situated in the County of Contra Costa, City of Hercules, Stateof California, bounded on the West by Parcel Three identified herein, bounded on theEast by Parcel Two identified herein, bounded on the South by Willow Avenue, and gen-erally bounded on the North by State Highway 4. The exact configuration of Parcel Fourshall be determined in the future by the California Department of Transportation in theevent that the Interstate 80 off-ramp that is partially included with Parcel Four is aban-doned by the California Department of Transportation.PARCEL FIVE:That certain real property situated in the County of Contra Costa, City of Hercules, Stateof California, described as follows:A portion of that parcel of land described in that deed to Hercules Powder Company, acorporation, recorded June 7, 1913 in Volume 207 of Deeds, at Page 1, Contra CostaCounty Records and being more particularly described as follows:Commencing at the easterly corner of that parcel of land described in that deed to PacificGas and Electric Company, a California corporation, recorded February 28, 1955, in Vol-ume 2484 at Page 130, Official Records of Contra Costa County; thence perpendicular tothat course with length of 1603.58 feet described in deed to State of California recordedMarch 22, 1957 in Volume 2952 at Page 116, Official Records of Contra Costa County N21° 09’ 09” E, 228.25 feet to said course; thence along said course and along that coursewith length of 481.63 feet described in said deed to the State of California, S 68° 50’ 51”E, 429.20 feet and S 52° 52’ 03” E, 481.63 feet to a line parallel with and distant 40.00feet, northerly, from those courses with distances of 1008.45 feet and 100.19 feet in thecenter line described in Parcel III of that deed to State of California recorded February26, 1930 in Volume 212 at Page 297, Official Records of Contra Costa County; thencealong said parallel line from a tangent that bears S 75° 37’ 12” W, along a curve of 31°35’ 44”, an arc length of 970.48 feet and N 72° 47’ 04” W, 23.23 feet to the southeasterlyline of said parcel to Pacific Gas and Electric Company; thence along last said line N 29°18’ 36” E, 231.84 feet to the point of commencement.A.P. No.: 406-070-025PARCEL SIX:That certain real property situated in the County of Contra Costa, City of Hercules, Stateof California, described as follows:Being all that real property shown on Parcel Map 1004, filed August 2, 1977, in Book 56of Parcel Maps, at Page 40, Contra Costa County Records.A.P. No.: 406-160-002 Exhibit “D”—Memorandum of AgreementPage D-4DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM PARCEL SEVEN:That certain real property situated in the County of Contra Costa, City of Hercules, Stateof California, described as follows:Portion of the Atchison, Topeka and Santa Fe Railway Company’s 400 foot wide prop-erty as said property is described in the deed recorded in Book 78 of Deeds, Page 545, re-cords of said county, in Lot B, Division 10 of the Ranch El Pinole, Described as follows:Beginning at the intersection of the northeasterly boundary of said 400 feet wide propertywith a line parallel with and distant northerly 65.00 feet measured at right angles from thecenterline of said railway company’s main track; thence westerly along said parallel line420.27 feet; thence westerly along the arc of a curve tangent to the preceding course,concave northerly and having a radius of 931.87 feet, through a central angle of 12° 48’00” a distance of 208.18 feet to a point in the westerly boundary of said 400 foot wideproperty; thence northerly along said westerly boundary, 135.23 feet to a point in thenortherly boundary of said 400 foot wide property; thence easterly along said northerlyboundary, 505.78 feet to a point in said northeasterly boundary of said 400 foot wideproperty; thence southeasterly along said northeasterly boundary, 164.24 feet to the pointof beginning.A.P. No.: 406-160-006Parcel One of the Real Property shall be referred to as the “PNR Parcel”; Parcel Two ofthe Real Property shall be referred to as the “C-1 Parcel”; Parcels Three through Seven of theReal Property shall be referred to collectively as the “Additional Town Center Parcels.”The Agreement provides, among other things, that Agency will attempt to acquire thePNR Parcel from the Bay Area Rapid Transit District, by means of an exchange for the C-1 Par-cel, and sell the PNR Parcel to Developer. If the exchange does not proceed as provided, Agencywill instead sell the C-1 Parcel to Developer. Whichever of the two aforementioned parcels isthus sold to developer shall be referred to as the “Primary Parcel,” and the other such parcel shallbe referred to as the “BART Residual Parcel.” Developer shall construct a mixed-use develop-ment pursuant to the terms and on the conditions specified in the Agreement on the Primary Par-cel. Under circumstances specified in the Agreement, Developer may acquire and/or develop theBART Residual Parcel and/or any or all of the Additional Town Center Parcels pursuant to theterms and on the conditions specified in the Agreement, but only with respect to such parcels asto which Developer either acquires an ownership interest or obtains an agreement with the ownerto act as the developer or assist in the development of the parcel. The Agreement also gives De-veloper a first right of refusal on the BART Residual Parcel and/or any or all of the AdditionalTown Center Parcels pursuant to the terms and on the conditions specified in the Agreement, butonly with respect to such parcels as to which Agency or City from time to time either acquires orarranges for the acquisition. The Agreement also permits or requires Agency, under certain con-ditions, to pledge to Developer the tax increment generated by parcels developed under the DDAto secure certain obligations of Agency under the DDA. The Agreement further requires Agency Exhibit “D”—Memorandum of AgreementPage D-5DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM to initially pledge to Developer the tax increment generated by PNR Parcel and the C-1 Parceluntil it is determined which shall be the Primary Parcel, at which time the parcel that is not iden-tified as the Primary Parcel shall be released from such initial pledge. All of the terms and con-ditions of the Agreement are hereby referred to and incorporated by reference as though fully setforth herein.Executed on ___________________, 2005, at Hercules, Contra Costa County, California.ATTEST:
_______________________________SecretaryAPPROVED AS TO FORM:
_______________________________Pelletreau, Alderson & CabralAgency Counsel REDEVELOPMENT AGENCY OF THECITY OF HERCULES, a public body corpo-rate and politic By:____________________________________Chairman
STATE OF CALIFORNIA))ss.COUNTY OF CONTRA COSTA)On this ___ day of _____________________, 200__, before me,_____________________, the undersigned Notary Public, personally appeared_____________________, personally known to me (or proved to me on the basis of satisfactoryevidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and ac-knowledged 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 ofwhich the person(s) acted, executed the instrument.WITNESS my hand and official seal. ________________________________________Notary Public
Exhibit “E”—Schedules of PerformancePage E-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “E”Schedules of Performance
Exhibit “E”—Schedules of PerformancePage E-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “E-1”General Schedule of PerformanceAction Date1 Resp. Party (a) Execution and delivery of Agreementby Agency and CityThirty (30) days after approval (i.e., aftersecond reading) by Agency and CityAgency/City (b) Effective Date (Preamble)April 7, 2005 (c) Memorandum of Agreement recorded(§7.4)Within ten (10) days after the EffectiveDate Agency (d) Initial Parcel Pledge Agreement de-livered to Developer (§4.2.9)Within ten (10) days after the EffectiveDate Agency 1 Assumes no legal challenge under CEQA, by initiative or referendum, or by other legal action. All dates are sub-ject to extension due to force majeure as provided in Section 7.5.3 and any resulting legal challenges. Certain datesare also subject to being extended by waiver, if permitted by the Agreement, or by other operation of the terms ofthe Agreement.
Exhibit “E”—Schedules of PerformancePage E-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “E-2”Schedule of Performance—PNR Parcel as the Primary ParcelAction Date2 Resp. Party (a) Approval process through City Coun-cil workshop(s) on Conceptual PDP(§3.3.1(a)–(f))Within fifteen (15) weeks after EffectiveDate plus four (4) weeks for each work-shop held by City Council or PlanningCommission in excess of one (1) eachCity & De-veloper (b) Approval process through Submittaland acceptance of Primary SubmittalDocuments as complete(§3.3.1(g)–(j))Within thirteen (13) weeks after final CityCouncil workshop on Conceptual PDP((a) above)City &Developer (c) Approval process through preparationfor public hearings on Primary Sub-mittal Documents (§3.3.1(k)–(n))Within thirteen (13) weeks after accep-tance of Primary Submittal Documents((b) above)City &Developer (d) Approval process through City Coun-cil vote on Primary Submittal Docu-ments (§3.3.1(o)–(p))Within six (6) weeks after preparation forpublic hearings on Primary SubmittalDocuments ((c) above) plus four (4)weeks for each public hearing held byCity Council or Planning Commission inexcess of one (1) each City
(e) Approval process through Submittaland acceptance of Design SubmittalDocuments as complete(§3.3.1(q)–(t))Within thirteen (13) weeks after CityCouncil vote on Primary SubmittalDocuments ((d) above)City &Developer (f) Approval process through preparationfor public hearings on Design Sub-mittal Documents (§3.3.1(u)–(x))Within ten (10) weeks after acceptance ofDesign Submittal Documents ((e) above)City &Developer (g) Approval process through vote onDesign Submittal Documents(§3.3.1(y)–(z))Within six (6) weeks after acceptance ofDesign Submittal Documents ((f) above)plus four (4) weeks for each public hear-ing held by City Council or PlanningCommission in excess of one (1) each City
(h) Project Approvals (§3.3)Upon approval of Design SubmittalDocuments by City Council ((g) above) (i) Exercise of Exchange Option (§2.2.2)Within the option period under the Ex-change Option AgreementAgency(conditional) (j) Initiation Date (the date that the Pri-mary Parcel is conclusively identi-fied) (Art. 1, “Initiation Date”;§2.3.1)Upon the timely exercise of the ExchangeOption ((h) above) 2 Assumes no challenge to any Project Approvals under CEQA, by initiative or referendum, or by other legal action.All dates are subject to extension due to force majeure as provided in Section 7.5.3 and any resulting legal chal-lenges. Certain dates are also subject to being extended by waiver, if permitted by the Agreement, or by other op-eration of the terms of the Agreement.
Exhibit “E”—Schedules of PerformancePage E-4DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Action Date2 Resp. Party (k) Conveyance of Primary Par-cel/Closing Date (§2.4.2.2)Within sixty (60) days after the InitiationDate ((i) above)Developer &Agency (l) Construction of parking on the C-1Parcel to replace the BARTD parkingon the PNR ParcelAs required under the terms of the Ex-change Option AgreementDeveloper (m) BARTD vacancy of the PNR ParcelAs required under the terms of the Ex-change Option Agreement (n) Project Pledge Agreement deliveredby Agency (§4.2.8)Prior to Project Commencement Date ((o)below) Agency (o) Developer's insurance obtained(§3.4.3)Prior to commencement of constructionDeveloper (p) Project Commencement Date (Art. 1,“Project Commencement Date”;§3.4.1)Sixty (60) days following BARTD’s va-cancy of the PNR Parcel ((m) above) (q) Completion of construction of firstphase of Project ImprovementsWithin thirty-six (36) months after theProject Commencement Date ((o) above)Developer (r) Completion of construction of allphases of Project ImprovementsWithin a reasonable time after the com-pletion of the first phase of Project Im-provements ((p) above), given market andproject conditions (the Project may, inDeveloper’s discretion, be completed inone phase, thereby eliminating this step) Developer
(s) Certificate of Completion (§3.6.1)Within thirty (30) days of Developer’srequest following completion of con-struction of all Project Improvements ((r)above) Agency Exhibit “E”—Schedules of PerformancePage E-5DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “E-3”Schedule of Performance—C-1 Parcel as the Primary ParcelAction Date3 Resp. Party (a) Initiation Date (the date that the Pri-mary Parcel is conclusively identi-fied) (Art. 1, “Initiation Date”;§2.3.1)Upon the failure of Agency to timely ex-ercise the Exchange Option (b) Approval process through City Coun-cil workshop(s) on Conceptual PDP(§3.3.1(a)–(f))Within fifteen (15) weeks after InitiationDate ((a) above) plus four (4) weeks foreach workshop held by City Council orPlanning Commission in excess of one (1)each City & De-veloper
(c) Approval process through Submittaland acceptance of Primary SubmittalDocuments as complete(§3.3.1(g)–(j))Within thirteen (13) weeks after final CityCouncil workshop on Conceptual PDP((b) above)City &Developer (d) Approval process through preparationfor public hearings on Primary Sub-mittal Documents (§3.3.1(k)–(n))Within thirteen weeks after acceptance ofPrimary Submittal Documents ((c) above)City &Developer (e) Approval process through City Coun-cil vote on Primary Submittal Docu-ments (§3.3.1(o)–(p))Within six (6) weeks after preparation forpublic hearings on Primary SubmittalDocuments ((d) above) plus four (4)weeks for each public hearing held byCity Council or Planning Commission inexcess of one (1) each City
(f) Approval process through Submittaland acceptance of Design SubmittalDocuments as complete(§3.3.1(q)–(t))Within thirteen (13) weeks after CityCouncil vote on Primary SubmittalDocuments ((e) above)City &Developer (g) Approval process through preparationfor public hearings on Design Sub-mittal Documents (§3.3.1(u)–(x))Within ten (10) weeks after acceptance ofDesign Submittal Documents ((f) above)City &Developer (h) Approval process through vote onDesign Submittal Documents(§3.3.1(y)–(z))Within six (6) weeks after acceptance ofDesign Submittal Documents ((g) above)plus four (4) weeks for each public hear-ing held by City Council or PlanningCommission in excess of one (1) each City
(i) Project Approvals (§3.3)Upon approval of Design SubmittalDocuments by City Council ((h) above) 3 Assumes no challenge to any Project Approvals under CEQA, by initiative or referendum, or by other legal action.All dates are subject to extension due to force majeure as provided in Section 7.5.3 and any resulting legal chal-lenges. Certain dates are also subject to being extended by waiver, if permitted by the Agreement, or by other op-eration of the terms of the Agreement.
Exhibit “E”—Schedules of PerformancePage E-6DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Action Date3 Resp. Party (j) Conveyance of Primary Par-cel/Closing Date (§2.4.2.2)Within sixty (60) days after the InitiationDate ((a) above) if Project Approvalswere obtained before opening of Escrow;otherwise, sixty (60) days after ProjectApprovals ((i) above) Developer &Agency
(k) Project Pledge Agreement delivered(§4.2.8)Prior to Project Commencement Date((m) below)Agency (l) Developer's insurance obtained(§3.4.3)Prior to commencement of constructionDeveloper (m) Project Commencement Date (Art. 1,“Project Commencement Date”;§3.4.1)Sixty (60) days following the ClosingDate ((j) above) (n) Completion of construction of firstphase of Project ImprovementsWithin thirty-six (36) months after theProject Commencement Date ((m) above)Developer (o) Completion of construction of allphases of Project ImprovementsWithin a reasonable time after the com-pletion of the first phase of Project Im-provements ((n) above), given market andproject conditions (the Project may, inDeveloper’s discretion, be completed inone phase, thereby eliminating this step) Developer
(p) Certificate of Completion (§3.6.1)Within thirty (30) days of Developer’srequest following completion of con-struction of all Project Improvements ((o)above) Agency Exhibit “E”—Schedules of PerformancePage E-7DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “E-4”Schedule of Performance—BART Residual Parcel and Additional Town Center ParcelsAction Date4 Resp. Party (a) Developer acquires title to the ProjectParcel or obtains an agreement withthe owner of the Project Parcel tohave a management role in the devel-opment of the Project Parcel (§§2.3.3,2.3.4) After the Effective Date and prior to theexpiration or earlier termination of theAgreementDeveloper(not manda-tory) (b) Approval process through City Coun-cil workshop(s) on Conceptual PDP(§3.3.1(a)–(f))Within fifteen (15) weeks after acquisi-tion of title or development managementagreement ((a) above) plus four (4) weeksfor each workshop held by City Councilor Planning Commission in excess of one(1) each City & De-veloper
(c) Approval process through Submittaland acceptance of Primary SubmittalDocuments as complete(§3.3.1(g)–(j))Within thirteen (13) weeks after final CityCouncil workshop on Conceptual PDP((b) above)City &Developer (d) Approval process through preparationfor public hearings on Primary Sub-mittal Documents (§3.3.1(k)–(n))Within thirteen (13) weeks after accep-tance of Primary Submittal Documents((c) above)City &Developer (e) Approval process through City Coun-cil vote on Primary Submittal Docu-ments (§3.3.1(o)–(p))Within six (6) weeks after preparation forpublic hearings on Primary SubmittalDocuments ((d) above) plus four (4)weeks for each public hearing held byCity Council or Planning Commission inexcess of one (1) each City
(f) Approval process through Submittaland acceptance of Design SubmittalDocuments as complete(§3.3.1(q)–(t))Within thirteen (13) weeks after CityCouncil vote on Primary SubmittalDocuments ((e above)City &Developer (g) Approval process through preparationfor public hearings on Design Sub-mittal Documents (§3.3.1(u)–(x))Within ten (10) weeks after acceptance ofDesign Submittal Documents ((f) above)City &Developer (h) Approval process through vote onDesign Submittal Documents(§3.3.1(y)–(z))Within six (6) weeks after acceptance ofDesign Submittal Documents ((g) above)plus four (4) weeks for each public hear-ing held by City Council or PlanningCommission in excess of one (1) each City
(i) Project Approvals (§3.3)Upon approval of Design SubmittalDocuments by City Council ((h) above) 4 Assumes no challenge to any Project Approvals under CEQA, by initiative or referendum, or by other legal action.All dates are subject to extension due to force majeure as provided in Section 7.5.3 and any resulting legal chal-lenges. Certain dates are also subject to being extended by waiver, if permitted by the Agreement, or by other op-eration of the terms of the Agreement.
Exhibit “E”—Schedules of PerformancePage E-8DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Action Date4 Resp. Party (j) Project Pledge Agreement deliveredby Agency (§4.2.8)Prior to Project Commencement Date ((l)below) Agency (k) Developer's insurance obtained(§3.4.3)Prior to commencement of constructionDeveloper (l) Project Commencement Date (Art. 1,“Project Commencement Date”;§3.4.1)Sixty (60) days after the date that all Pro-ject Approvals have been obtained for theProject ((i) above) or, in the case thatAgency holds title to the subject parcel asof the date that all Project Approvals areobtained for the Project, the date of theconveyance of the Subject Parcel to De-veloper (m) Completion of construction of firstphase of Project ImprovementsWithin thirty-six (36) months after theProject Commencement Date ((l) above)Developer (n) Completion of construction of allphases of Project ImprovementsWithin a reasonable time after the com-pletion of the first phase of Project Im-provements ((m) above), given marketand project conditions (the Project may,in Developer’s discretion, be completedin one phase, thereby eliminating thisstep) Developer
(o) Certificate of Completion (§3.6.1)Within thirty (30) days of Developer’srequest following completion of con-struction of all Project Improvements ((n)above) Agency Exhibit “F”—Scopes of DevelopmentPage F-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “F”Scope of Development
Exhibit “F”—Scopes of DevelopmentPage F-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “F-1”Scope of Development—PNR ParcelThe Scope of Development for the PNR Parcel has both a qualitative and a quantitative compo-nent, as follows:Qualitative:• The parcel shall be developed with a mix of uses, including any type of commercial (suchas retail, restaurant, entertainment, and/or office) or residential uses, and optionally in-cluding cultural and other quasi-public uses.• The development shall provide clearly-defined civic spaces such as pedestrian walkwaysand public gathering places, such as plazas.• The project shall consist of one or more multi-story buildings up to six stories.• Viewed from San Pablo Avenue, the project shall have a predominantly urban rather thansuburban appearance.• The majority of the parking for the project shall not be perceptible from San Pablo Ave-nue.Quantitative:• The project shall include at least 25,000 square feet of commercial space (as definedabove).• If the PNR Parcel is the Primary Parcel, Developer will receive Purchase Price reductionincentives under Section 2.4.1 of the Agreement for meeting target building sizes as fol-lows (in the event of any conflict between this bulleted point and Section 2.4.1, Section2.4.1 shall control):Minimum Building SizeMinimum Commercial1Purchase Price ReductionNONE25,000 sq. ft.0%200,000 sq. ft.37,500 sq. ft.50%300,000 sq. ft.50,000 sq. ft.100%• If the PNR Parcel is the Primary Parcel, the project shall include, at Developer’s expense,the construction of replacement Park and Ride facilities on the C-1 Parcel in accordancewith the requirements of the Exchange Option Agreement. 1 Included within minimum building size; both the Minimum Building Size and MinimumCommercial conditions must be met for Developer to obtain the indicated reductions in PurchasePrice.
Exhibit “F”—Scopes of DevelopmentPage F-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “F-2”Scope of Development—C-1 ParcelThe Scope of Development for the C-1 Parcel has both a qualitative and a quantitative compo-nent, as follows:Qualitative:• The parcel shall be developed with a mix of uses, including any type of commercial (suchas retail, restaurant, entertainment, and/or office) or residential uses, and optionally in-cluding cultural and other quasi-public uses.• The development shall provide clearly-defined civic spaces such as pedestrian walkwaysand public gathering places, such as plazas.• The project shall consist of one or more multi-story buildings up to six stories.• Viewed from Willow Avenue, the project shall have a predominantly urban rather thansuburban appearance.• The majority of the parking for the project shall not be perceptible from Willow Avenue.Quantitative:• The project shall include at least 20,000 square feet of commercial space (as definedabove).• If the C-1 Parcel is the Primary Parcel, Developer will receive Purchase Price reductionincentives under Section 2.4.1 of the Agreement for meeting target building sizes as fol-lows (in the event of any conflict between this bulleted point and Section 2.4.1, Section2.4.1 shall control):Minimum Building SizeMinimum Commercial2Purchase Price ReductionNONE20,000 sq. ft.0%200,000 sq. ft.30,000 sq. ft.50%300,000 sq. ft.40,000 sq. ft.100% 2 Included within minimum building size; both the Minimum Building Size and MinimumCommercial conditions must be met for Developer to obtain the indicated reductions in PurchasePrice.
Exhibit “G”—Eligible Project CostsPage G-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “G”Eligible Project CostsSections 4.2 and 4.3 of the Agreement provide the only means for Developer to receive financialassistance based on tax increment (called “Tax Increment Assistance” in the Agreement). TaxIncrement Assistance is only available to Developer (i) based on tax increment generated by aProject, (ii) as a reimbursement for “Eligible Project Costs” that Developer has actually paid inadvance and can provide evidence of having had incurred, (iii) without any interest. Agency re-tains all tax increment generated by a Project that is not used to reimburse Eligible Project Costs,and, with respect to every Project except the Project on the BART Residual Parcel, Tax Incre-ment Assistance is subject to Agency’s discretion. This exhibit defines categories of EligibleProject Costs. In the event of any conflict between this paragraph and the provisions in the bodyof the Agreement that are summarized in this paragraph, the body of the Agreement shall con-trol.Eligible Project Costs are the costs of construction labor, materials, and direct services (“hard”)and indirect services, overhead, and financing (“soft”) directly attributable to the specific struc-tures or purposes identified in the following categories:Category 1: Transit and Related Automobile Parking Facilities1.1Replacement of the BART Park and Ride facilities as required by the Exchange Op-tion Agreement (note that Developer’s obligation with respect to such replacementfacilities is as set forth in the Scope of Development for the PNR Parcel (Exhibit “F-1”))1.2Structured or surface parking designed or initially dedicated for the use of the gen-eral public to access public facilities including transit facilitiesCategory 2: Site Mitigation MeasuresCosts related to the following categories, with the aggregate of costs under 2.1 and 2.2 belownot to exceed $500,000.00 for the Project (any amount under this Category 2 in excess of$500,000 for the Project shall not be Eligible Project Costs):2.1Habitat and streambed mitigation required to provide maximum developable area2.2Other mitigation measures, required by CEQA or NEPA, to the extent such measuresexceed those which would reasonably be imposed upon a conventional, surface-parked, single-story retail center (a “Conventional Shopping Center”1) in this loca-tion 1 On or before the date that Developer submits Primary Submittal Documents for a Project, De-veloper shall submit to the Agency Director estimates of the baseline costs that would be associ-ated with constructing a Conventional Shopping Center of the same square footage as the Pro-ject, as proposed by Developer in the Submittal Documents. Such estimates shall include sub-categories of cost that corresponds to each specific item of baseline cost to which this Exhibit“G” refers. As the Project goes through the Project Approval process, Developer shall updatesuch estimates as necessary to reflect any significant changes in the proposed scope of the Pro- Exhibit “G”—Eligible Project CostsPage G-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Category 3: Complex Development Allowances3.1Automobile parking structures designed or initially dedicated for the use of any pri-vate property owners or tenants, or guests or customers thereof3.2Off- and on-site improvements of public roads and public utilities, to the extent suchimprovements exceed in cost those which would reasonably be imposed upon aConventional Shopping Center in this location3.3Landscaping and pedestrian amenities on public rights-of-way off the project site, inexcess of those which would reasonably be provided in connection with a Conven-tional Shopping Center in this location3.4Any costs resulting from constructing the commercial portion of buildings in amixed-use format in excess of those which would reasonably be incurred to con-struct a Conventional Shopping Center in this location; provided, however, that thereshall be no reimbursement for excess costs associated with the residential portions ofmixed-use buildings3.5Any other planning, design, or construction requirements imposed by City under theProject Approvals to the extent such requirements exceed in cost those which wouldreasonably be imposed upon a Conventional Shopping Center in this locationCategory 4: Civic Facility Reimbursement4.1Identifiable exterior civic facilities such as plazas, amphitheatres, and pedestrian ar-eas with enhanced landscaping requirements adjacent to public streets4.2Interior space provided for civic uses to the extent that such space is subject to re-duced rent by agreement among Developer, Agency, and the tenantCategory 5: Development Fee ConcessionCosts of the following fees only to the extent that they relate to components of the Projectthat will generate sales tax revenue:5.1Community Development fees (Planning Department)5.2Development impact fees (Planning Department)5.3Building inspection permit fees (Inspection Department)5.4Grading permit issuance fees (Engineering Department)5.5Improvement permit issuance fees (Engineering Department)5.6Encroachment permit issuance fees (Engineering Department) ject or other new information that would significantly affect such estimates. Prior to Project Ap-provals for the Project, the Agency Director and Developer shall agree upon the baseline coststhat will be used for purposes of this Exhibit “G.” Exhibit “G”—Eligible Project CostsPage G-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Category 6: Affordable Housing Tax Increment Set-Aside6.1Construction and delivery of units, on-site or off-site, fulfilling the AffordableHousing Obligation with respect to the Project Parcel; provided, however, that thisitem shall not apply to the extent that Developer is relieved of the Affordable Hous-ing Obligation with respect to the Project Parcel Exhibit “H”—Forms of Pledge AgreementPage H-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “H”Forms of Pledge Agreement
Exhibit “H”—Forms of Pledge AgreementPage H-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “H-1”Initial Parcel Pledge Agreement
Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM
INITIAL PARCEL PLEDGE AGREEMENTbetweenREDEVELOPMENT AGENCY OF CITY OF HERCULES,andHERCULES NEW TOWN CENTER, LLC,a Delaware limited liability company, Dated as of ____________________
Hercules, California
Initial Parcel Pledge AgreementPage 1Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM INITIAL PARCEL PLEDGE AGREEMENTTHIS INITIAL PARCEL PLEDGE AGREEMENT (this “Pledge Agreement”) is madeand entered into as of this __________ (the “Effective Date”) by and between the Redevelop-ment Agency of the City of Hercules (“Agency”) and Hercules New Town Center, LLC, a Dela-ware limited liability company (“Developer”), with reference to the following:RECITALS: A. The City of Hercules (“City”), Agency, and Developer entered into that certain Dis-position and Development Agreement dated as of April 7, 2005 (the “DDA”) which establishesprocedures and conditions under which Developer may develop one or more specified parcels ofland within the Dynamite Redevelopment Project Area (the “Redevelopment Project Area”) andobtain the right to receive and utilize financial assistance from Agency, as hereinafter defined, toassist Developer in meeting special requirements of the City and Agency with respect to suchdevelopment. B. The DDA identifies that certain real property described on Exhibit “A-1” hereto andidentified as the “PNR Parcel” certain real property described on Exhibit “A-2” hereto and iden-tified as the “C-1 Parcel” as the “Initial Parcels” and provides a process and conditions for de-termining which of the Initial Parcels may be conveyed to Developer as the “Primary Parcel.” C. In order to secure Agency’s obligations under the DDA to provide Developer withfinancial assistance with respect to the Primary Parcel, the DDA requires Agency to make anddeliver to Developer within ten (10) after the effective date of the DDA a pledge agreement thatpledges the Project Tax Increment, hereinafter defined, with respect to the two Initial Parcels tothe project to be constructed on the Primary Parcel. D. Agency and Developer desire to enter into this Pledge Agreement in order to meetthe requirement of the DDA that Agency and Developer enter into a pledge agreement with re-spect to the Initial Parcels.NOW, THEREFORE, in consideration of the foregoing, the covenants and obligationshereinafter set forth, and other good and valuable consideration, the receipt and adequacy ofwhich is hereby acknowledged, Agency and Developer agree as follows:ARTICLE I: DEFINITIONS“Affordable Housing Set-Aside” means, with respect to the Initial Parcels, the twentypercent (20%) set-aside of tax increment for low and moderate income housing required by Sec-tions 33334.2 and 33487 of the Redevelopment Law.“Agency” means the Redevelopment Agency of the City of Hercules, a public body, cor-porate and politic, exercising governmental functions and powers and organized and existing un-der Chapter 2 of the Redevelopment Law, and any assignee of or successor to its rights, powersand responsibilities.
Initial Parcel Pledge AgreementPage 2Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM “Base Year Assessed Valuation” means the assessed value of the Initial Parcels as shownon the assessment roll used in connection with the taxation of the Initial Parcels by the County,last equalized prior to the effective date of the ordinance approving the Redevelopment Plan.“City” means the City of Hercules, a California municipal corporation.“County” means the County of Contra Costa, California.“DDA” means that certain Disposition and Development Agreement dated as of April 7,2005 entered into between Agency and City, on the one hand, and Developer, on the other hand.“Developer” means Hercules New Town Center, LLC.“Developer’s Share of Project Tax Revenues” means all Project Tax Increment and Pro-ject Bond Proceeds.“Effective Date” means __________.“Event of Default” is defined in Section 4.1 below.“Initial Parcels” means those certain parcels referenced on Exhibit “A” to the DDA asparcel numbers 1 and 2 and described on Exhibit “A” attached hereto.“Notice” is defined in Section 5.1 below.“Party” means a party to this Pledge Agreement, and “Parties” means more than one ofthe parties to this Pledge Agreement, as the context indicates.“Pass-Through Agreement” means each of those certain agreements with respect to theallocation and transfer of certain Tax Revenues pursuant to section 33401(b) (since repealed) ofthe Redevelopment Law and in effect as of the Effective Date.“Pledge Agreement” means this Pledge Agreement by and between Agency and Devel-oper.“Project” means, with respect to the Initial Parcels, both the Initial Parcels and the im-provements to be constructed thereon in accordance with Articles III, IV, and V of the DDA.“Project Bond Proceeds” means that share of proceeds received by Agency from tax in-crement bonds that are attributable to any pledge of Project Tax Increment.“Project Tax Increment” means that portion of ad valorem property taxes resulting fromthe increase in the assessed valuation of the Initial Parcels, including any improvements thereon,over the Base Year Assessed Valuation, that is allocated to and received by the Agency pursuantto Health and Safety Code Section 33670(b) or any successor provisions of law in accordancewith the Redevelopment Plan (including any extension or modification thereof, or any new rede-velopment plan which encompasses the Initial Parcels) less one percent (1.00%) of such amountsreceived to cover Agency administrative costs. Project Tax Increment shall include the Afford-able Housing Set-Aside attributable to the Initial Parcels. Unless Agency has agreed to the con-trary in its absolute discretion, Project Tax Increment shall not include (i) any property tax reve- Initial Parcel Pledge AgreementPage 3Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM nue that results from an increase in the assessed valuation of such Project Parcel after the occur-rence of the first reassessment of such Project Parcel following the issuance of a Certificate ofOccupancy for such Project by the City or (ii) any property tax revenue that results from an an-nual reassessment of such Project Parcel that is allowed under California Constitution ArticleXIII.“Redevelopment Law” means the California Community Redevelopment Law, Healthand Safety Code Sections 33000, et seq., as the same now exists or may hereafter be amended.“Redevelopment Plan” means that certain Amended and Restated Redevelopment Planadopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City. The Rede-velopment Plan constitutes a merger of the redevelopment plans for the Dynamite Redevelop-ment Project Area and Project Area No. 2.“Redevelopment Project” means the Dynamite Redevelopment Project, adopted by theCity Council pursuant to the Redevelopment Plan.“Redevelopment Project Area” means the area contained within the boundaries of theRedevelopment Project.“Senior Lien Debt” means any and all obligations of Agency existing on and as of theEffective Date that are payable, in whole or in part, from Tax Revenues.“State” means the State of California.“Tax Increment Assistance” means financial assistance to be provided by Agency to De-veloper for the Project under Section 4.3 of the DDA.“Tax Revenues” means all taxes levied upon real property located within the Redevel-opment Project Area and annually allocated to Agency pursuant to Article 6 of Chapter 6 of theRedevelopment Law and Section 16 of Article XVI of the Constitution of the State.ARTICLE II: PLEDGE OF PROJECT TAX INCREMENT 2.1. Pledge. Agency hereby irrevocably pledges to Developer, for the purpose of securingAgency’s obligation to provide Project Financial Assistance to Developer in accor-dance with Section 4.2.1 of the DDA, Developer’s Share of Project Tax Revenues tothe maximum extent permitted by law, including, without limitation, Section 33671 ofthe Redevelopment Law. This pledge is for the exclusive benefit of Developer and anysuccessors or assigns of Developer in and to the DDA or this pledge and shall be validand binding from and after the Effective Date as between Agency and Developer andagainst all parties having claims of any kind in tort, contract, or otherwise against theAgency, irrespective of whether such parties have notice of this pledge. This pledgeshall constitute a lien and security interest which shall immediately attach to Devel-oper’s Share of Project Tax Revenues and shall be binding and enforceable againstAgency, its successors, creditors, and all others asserting any rights therein, irrespec-tive of whether any of those parties have notice of this pledge and without the need forany physical delivery, recordation, filing, or further act.
Initial Parcel Pledge AgreementPage 4Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM
2.2. Limits on Issuance of Other Obligations. Except as permitted by Section 2.3 below,Agency shall not issue any obligations, payable as to principal or interest from ProjectTax Increment, which have any lien upon Project Tax Increment that is senior to or ona parity with this Pledge Agreement or the DDA. 2.3. Permitted Parity or Superior Pledges. Notwithstanding the provisions of Sections2.1 and 2.2 above, Agency may make one or more pledges of Project Tax Incrementthat are on parity with or superior to this pledge as security for bonds that result inProject Bond Proceeds so long as Agency sets aside the resulting Project Bond Pro-ceeds for the benefit of Developer. Such permitted pledges may be as security for anentire bond issue and not only for that portion of the bond issue that results in ProjectBond Proceeds so long as the Project Tax Increment is placed at no greater risk of be-ing called upon to meet the bond obligations than any other Tax Revenues or other as-sets that are pledged for such bond issue. 2.4. Release of Pledge. Upon the identification of the Primary Parcel as provided in theDDA, this pledge shall be released with respect to that Initial Parcel that is not identi-fied as the Primary Parcel. Thereupon, Developer agrees to execute and deliver toAgency a partial release in a form reasonably acceptable to Agency in order to effectsuch release. Thereafter, upon Developer’s meeting the conditions of the DDA re-quired for Developer to receive Project Financial Assistance with respect to the Pri-mary Parcel, and upon Agency either (i) delivering the sum established in Section4.2.1.1 of the DDA into the “Primary Project Fund,” as defined in the DDA or (ii) exe-cuting and delivering to Developer a “Project Pledge Agreement” in accordance withthe DDA, this Pledge Agreement shall be released in its entirety. Thereupon, Devel-oper agrees to execute and deliver to Agency a full release in a form reasonably ac-ceptable to Agency in order to effect such release.ARTICLE III: COVENANTS OF AGENCY 3.1. Amendments to Pass-Through Agreements. Agency covenants and agrees that itshall not amend or modify any of the existing Pass-Through Agreements in a mannerthat treats Project Tax Increment any less favorably than other Tax Revenues ad-dressed by such Pass-Through Agreements. 3.2. Protection of Security and Rights of Developer. Agency covenants and agrees topreserve and protect the security of Developer’s Share of Project Tax Revenues andthe DDA and the rights of Developer. From and after the execution and delivery of thisPledge Agreement or the DDA, Agency shall not take any action to impair the securityor priority of Developer’s Share of Project Tax Revenues. Agency shall comply withall requirements of the Redevelopment Law to assure the proper and timely collection,allocation, and payment to it of Tax Revenues that constitute Project Tax Increment.Agency shall at all times, to the extent permitted by law, defend, preserve, and protectthe pledge of Developer’s Share of Project Tax Revenues and all the rights createdhereunder against all claims and demands of all persons whomsoever.
Initial Parcel Pledge AgreementPage 5Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM
3.3. Payment of Senior Lien Debt. With respect to each issue of Senior Lien Debt that issecured by Tax Revenues, Agency covenants and agrees that it shall use all availableTax Revenues that would not otherwise constitute Project Tax Increment to makepayments with respect to such issue of Senior Lien Debt prior to using any Project TaxIncrement to pay such issue of Senior Lien Debt. 3.4. Further Assurances. Agency covenants and agrees to adopt, make, execute, and de-liver any and all such further resolutions, instruments, and assurances as may be rea-sonably necessary or proper to carry out the intention or to facilitate the performanceof this Pledge Agreement, and for the better assuring and confirming of the rights andbenefits provided herein.ARTICLE IV: DEFAULT AND REMEDIES 4.1. Events of Default. Each of the following events is hereby declared an “Event of De-fault” under this Pledge Agreement: (a) Agency fails to pay when due any amounts payable in accordance with theDDA; (b) Agency fails to perform or observe any other covenant, agreement, or conditioncontained in this Pledge Agreement, other than the covenant and agreement topay when due amounts payable under the DDA, and such failure shall continuefor a period of thirty (30) days after written Notice thereof to Agency by Devel-oper; or (c) Any of the following has occurred and is continuing with respect to Agency: (i)Agency shall commence a voluntary case or other proceeding in seeking liqui-dation, reorganization, arrangement, readjustment of its debts, or for any otherrelief under the federal bankruptcy laws, as amended, including the UnitedStates Bankruptcy Code, or under any other insolvency act or law, State or fed-eral, now or hereafter existing, or shall take any other action indicating its con-sent to, approval of, or acquiescence in, any such petition or proceedings; (ii)Agency shall apply for, or consent to or acquiesce in, the appointment of a re-ceiver, liquidator, custodian, sequestrator, or trustee for all or a substantial partof its property; (iii) Agency shall make an assignment for the benefit or itscreditors; (iv) Agency shall be unable, or shall admit in writing its inability, topay its debts when due; (v) a petition in bankruptcy shall be filed againstAgency under any applicable bankruptcy, insolvency or similar law as now orehereafter in effect and shall not be discharged by a court of competent jurisdic-tion with sixty (60) days after the date of such filing; or (vi) a receiver, liquida-tor, custodian, sequestrator, or trustee shall be appointed for all or a substantialpart of the property of Agency and such appointment shall not be discharged ordismissed by a court of competent jurisdiction within sixty (60) days. 4.2. Developer Remedies. Following the occurrence of an Event of Default, Developermay pursue any remedy available to it at law or in equity. No waiver of any default or Initial Parcel Pledge AgreementPage 6Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM breach of any duty or contract by Developer shall affect any subsequent default orbreach of any duty or contract or shall impair any rights or remedies on the subsequentdefault or breach. No delay or omission of developer to exercise any right or poweraccruing upon any default shall impair any such right or power or shall be construed asa waiver of any default or acquiescence therein.ARTICLE V: GENERAL PROVISIONS 5.1. Notices. Any written notice, demand, or communication between Agency and Devel-oper (“Notice”) shall be sufficiently given if delivered by hand (and a receipt thereforis obtained or is refused to be given) or dispatched by first-class, registered or certifiedmail, postage prepaid, or delivered by facsimile (with confirmation of delivery) orovernight delivery service as follow:If to Agency:Redevelopment Agency of the City of Hercules111 Civic Center DriveHercules, CA 94547Attn: Agency DirectoryFax: (510) 799-2521with copy to:Pelletreau, Alderson & CabralPlaza Two, Hilltop Office Park3260 Blume Drive, Suite 410Richmond, CA 94806Attn: Alfred Cabral, Esq.If to Developer:Hercules New Town Center, LLCc/o The Surland Companies390 Railroad Avenue, Suite 201Danville, CA 94526Attn: Les SerpaFax: (925) 242-7050and:Hercules New Town Center, LLCc/o The Red Barn Co.2901 W. Coast Hwy, Suite 200Newport Beach, CA 92663Attn: Thomas J. WeigelFax: (949) 767-5646with copy to:
Initial Parcel Pledge AgreementPage 7Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM Miller Starr & Regalia1331 North Carolina Blvd., Fifth FloorWalnut Creek, CA 94596Attn: Wilson F. Wendt. Esq.Fax: (925) 933-4126Notices may be sent in the same manner to such other address as a Party may fromtime to time designate by Notice as provided herein. Any Notice shall be deemed re-ceived immediately if delivered by hand or facsimile, shall be deemed received on thethird (3rd) day from the date it is postmarked if delivered by first-class, registered orcertified mail and shall be deemed received on the next weekday which is not a federalor State holiday after the date it is sent by overnight delivery service. 5.2. Attorneys’ fees. In the event of any dispute between the Parties hereto arising out ofthe subject matter of this Pledge Agreement, the prevailing Party shall be entitled torecover reasonable expenses, attorneys' fees, and costs from the other Party, includingfees and costs on appeal and fees and costs incurred in enforcing any judgmentawarded to the prevailing Party. 5.3. Governing law. This Pledge Agreement shall be construed and enforced in accor-dance with the laws of the State of California, without reference to application of con-flicts of laws principles. 5.4. Construction. The Parties acknowledge that each Party and its counsel have reviewedand revised this Pledge Agreement and that the rule of construction to the effect thatambiguities are to be resolved against the drafting Party shall not be employed in theinterpretation of this Pledge Agreement or any document executed and delivered byeither Party in connection with the transactions contemplated by this Pledge Agree-ment. The captions in this Pledge Agreement are for convenience of reference onlyand shall not be used to interpret this Pledge Agreement. 5.5. Terms generally. The defined terms in this Pledge Agreement shall apply equally toboth the singular and the plural forms of the terms defined. Whenever the context mayrequire, any pronoun shall include the corresponding masculine, feminine and neuterforms. The term “person” includes individuals, corporations, partnerships, trusts, otherlegal entities, organizations, and associations, and any government or governmentalagency or authority. The words “include,” “includes” and “including” shall be deemedto be followed by the phrase “without limitation.” The words “approval” and “con-sent” shall be deemed to be preceded by the word “written.” 5.6. Partial invalidity. If any provision of this Pledge Agreement is determined by aproper court to be invalid, illegal, or unenforceable, such invalidity, illegality, or unen-forceability shall not affect the other provisions of this Pledge Agreement and thisPledge Agreement shall remain in full force and effect without such invalid, illegal, orunenforceable provision. 5.7. Waivers. No waiver of any provision of this Pledge Agreement or of any breach ofthis Pledge Agreement shall be effective unless such waiver is in writing and signed by Initial Parcel Pledge AgreementPage 8Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM the waiving Party and any such waiver shall not be deemed a waiver of any other pro-vision of this Pledge Agreement or of any other or subsequent breach of this PledgeAgreement. 5.8. Assignment. This Pledge Agreement shall benefit and bind the Parties and their re-spective personal representatives, heirs, successors, and assigns. 5.9. Miscellaneous. The exhibit attached to this Pledge Agreement is made a part of thisPledge Agreement. Time is of the essence of this Pledge Agreement. This PledgeAgreement may not be amended or modified except by a written agreement signed byAgency and Developer. This Pledge Agreement, along with the DDA, constitutes theentire and integrated agreement between the Parties relating to the subject matterhereof and supersedes all prior agreements, understandings, offers, and negotiations,oral or written, with respect thereto. 5.10. Recordation and Filing. Developer may, in its discretion, record and/or file thisPledge Agreement as it deems appropriate to provide notice of this Pledge Agreementto third parties. Agency shall cooperate with Developer to provide this Pledge Agree-ment in suitable form for such recordation and/or filing. 5.11. Counterparts. This Pledge Agreement may be signed in counterparts, each of whichis deemed to be an original.
Initial Parcel Pledge AgreementPage 9Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement as ofthe Effective Date.“Agency”:CITY OF HERCULES REDEVELOPMENT AGENCY By:___________________________Michael A. Sakamoto, Executive Director “Developer”:HERCULES NEW TOWN CENTER, LLC,a Delaware limited liability companyBy:RED BARN COMMUNITIES COMPANY,a California corporation,its Manager By:___________________________Thomas J. Weigel, President Exhibit “A”—Description of Initial ParcelsPage A-1Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM Exhibit “A”Description of Initial Parcels
Exhibit “A”—Description of Initial ParcelsPage A-2Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM Exhibit “A-1”Legal Description—PNR Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:Parcel 1, as shown on Parcel Map No. 1019, recorded March 2, 1979, in the Official Records forContra Costa County, in Book 74 of Parcel Maps, Page 37.EXCEPTING THEREFROM:A. That portion described as Parcel 1 in the Deed to State of California, recorded March 13,1981, in Book 10237, Page 84, Official Records.B. That portion described in the Deed to the City of Hercules, recorded October 13, 1982, inBook 10970 Official Records of Contra Costa County, Page 528, Series No. 82-143385.
Exhibit “A”—Description of Initial ParcelsPage A-3Initial Pledge Agmt 03.docPrinted: 10/31/05; 9:11 AM Exhibit “A-2”Legal Description—C-1 Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of Cali-fornia, described as follows:PARCEL 1:Being a portion of Parcel 1 as shown on Parcel Map 478-84, filed December 31, 1984, map re-corded in Book 114 of Parcel Maps at Page 1, Contra Costa County Records.EXCEPTING THEREFROM: Beginning at the Northwesterly corner of said Parcel 1; thencefrom said point of beginning, along the Northerly line of said Parcel 1, S. 68º 50' 51" E., 132.15feet, thence leaving said Northerly line from a tangent which bears S. 73º 41' 02" W., along acurve to the left with a radius of 260.00 feet, through an angle of 42º 31' 59", and arc length of193.01 feet to a point of compound curvature; thence along a tangent curve to the left with a ra-dius of 30.00 feet, through an angle of 21º 17' 03", an arc length of 11.14 feet to the Westerly lineof said Parcel 1; thence along last said line N. 9º 52' 00" E., 175.70 feet to the Point of Begin-ning.ALSO EXCEPTING THEREFROM:Beginning at the Southwesterly corner of said Parcel 1; thence from said Point of Beginningalong the Westerly line of said Parcel 1, N. 9º 52' 00" E., 35.00 feet; thence leaving said Westerlyline S. 38º 22' 00" E., 45.27 feet to a curve concentric with and distant 1 foot radially from theSoutherly line of said Parcel 1; thence from a tangent which bears S. 85º 49' 28" E., along acurve to the right with radius of 1225.92 feet, through an angle of 02º 16' 56", an arc length of48.83 feet; thence S. 6º 27' 28" E., 1.00 feet to the Southerly line of said Parcel 1; thence alonglast said line from a tangent which bears N. 83º 32' 32" W., along a curve to the left with a radiusof 1224.92 feet, through an angle of 03º 52' 36", an arc length of 82.88 feet to the Point of Be-ginning.
Exhibit “H”—Forms of Pledge AgreementPage H-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “H-2”Project Pledge Agreement
Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM
PROJECT PLEDGE AGREEMENTbetweenREDEVELOPMENT AGENCY OF CITY OF HERCULES,andHERCULES NEW TOWN CENTER, LLC,a Delaware limited liability company, Dated as of ____________________
Hercules, California
Pledge Agreement Page 1Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM PROJECT PLEDGE AGREEMENTTHIS PROJECT PLEDGE AGREEMENT (this “Pledge Agreement”) is made and en-tered into as of this __________ (the “Effective Date”) by and between the RedevelopmentAgency of the City of Hercules (“Agency”) and Hercules New Town Center, LLC, a Delawarelimited liability company (“Developer”), with reference to the following:RECITALS: A. The City of Hercules (“City”), Agency, and Developer entered into that certain Dis-position and Development Agreement dated as of April 7, 2005 (the “DDA”) which establishesprocedures and conditions under which Developer may develop one or more specified parcels ofland (the “Subject Parcels”) within the Dynamite Redevelopment Project Area (the “Redevelop-ment Project Area”) and obtain the right to receive and utilize Tax Incement Assistance, ashereinafter defined, to assist Developer in meeting special requirements of the City and Agency-with respect to such development. B. In order to secure Agency’s obligation or agreement under the DDA to utilize Pro-ject Tax Increment, hereinafter defined, to provide Developer with Tax Increment Assistancewith respect to certain Subject Parcels that are developed in accordance with the DDA, the DDArequires Agency to make and deliver to Developer prior to commencement of project construc-tion a pledge agreement that pledges the Project Tax Increment, hereinafter defined, to the pro-ject constructed on such Subject Parcel. C. Developer has met the conditions of the DDA required for Developer to receive TaxIncrement Assistance and, if required by the DDA, Agency has agreed to provide such Tax In-crement Assistance with respect to that certain parcel referenced on Exhibit “A” to the DDA asparcel number ___ and described on Exhibit “A” attached hereto (the “Project Parcel”). D. Agency and Developer desire to enter into this Pledge Agreement in order to meetthe requirement of the DDA that Agency and Developer enter into a pledge agreement with re-spect to the Project Parcel.NOW, THEREFORE, in consideration of the foregoing, the covenants and obligationshereinafter set forth, and other good and valuable consideration, the receipt and adequacy ofwhich is hereby acknowledged, Agency and Developer agree as follows:ARTICLE I: DEFINITIONS“Affordable Housing Set-Aside” means, with respect to the Project Parcel, the twentypercent (20%) set-aside of tax increment for low and moderate income housing required by Sec-tions 33334.2 and 33487 of the Redevelopment Law.“Affordable Housing Obligation” means the obligation pursuant to Section 3.1.3 of theDDA that fifteen percent (15%) of new housing units on the Project Parcel be provided at pricesaffordable to very-low- to moderate-income households and that at least forty percent (40%) ofsuch affordable housing units shall be affordable to very-low-income households. For purposes Pledge Agreement Page 2Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM of this definition, affordability at the various income levels shall be as defined in the Redevel-opment Law.“Agency” means the Redevelopment Agency of the City of Hercules, a public body, cor-porate and politic, exercising governmental functions and powers and organized and existing un-der Chapter 2 of the Redevelopment Law, and any assignee of or successor to its rights, powersand responsibilities.“Base Year Assessed Valuation” means the assessed value of the Project Parcel as shownon the assessment roll used in connection with the taxation of the Project Parcel by the County,last equalized prior to the effective date of the ordinance approving the Redevelopment Plan.“City” means the City of Hercules, a California municipal corporation.“County” means the County of Contra Costa, California.“DDA” means that certain Disposition and Development Agreement dated as of April 7,2005 entered into between Agency and City, on the one hand, and Developer, on the other hand.“Developer” means Hercules New Town Center, LLC.“Developer’s Share of Project Tax Revenues” means all Project Tax Increment and Pro-ject Bond Proceeds that Agency is required to deposit into the Project Fund in accordance withSection 4.3.1 of the DDA or by agreement of Agency; provided, however, that once Agency hasdischarged all of its obligations to make payments of Tax Increment Assistance to Developer un-der Section 4.3 of the DDA or by agreement of Agency, any funds remaining in the Project Fundshall no longer be regarded as part of Developer’s Share of Project Tax Revenues.“Effective Date” means __________.“Event of Default” is defined in Section 4.1 below.“Notice” is defined in Section 5.1 below.“Party” means a party to this Pledge Agreement, and “Parties” means more than one ofthe parties to this Pledge Agreement, as the context indicates.“Pass-Through Agreement” means each of those certain agreements with respect to theallocation and transfer of certain Tax Revenues pursuant to section 33401(b) (since repealed) ofthe Redevelopment Law and in effect as of the Effective Date.“Pledge Agreement” means this Pledge Agreement by and between Agency and Devel-oper.“Project” means, with respect to the Project Parcel, both the Project Parcel and the im-provements constructed thereon in accordance with Articles III, IV, and V of the DDA.“Project Bond Proceeds” means that share of proceeds received by Agency from tax in-crement bonds that are attributable to any pledge of Project Tax Increment.
Pledge Agreement Page 3Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM “Project Fund” means a segregated account of Agency into which Project Tax Incrementand Project Bond Proceeds are to be accumulated and from which financial assistance is to beprovided to Developer in accordance with Section 4.3 of the DDA.“Project Parcel” means that certain parcel referenced on Exhibit “A” to the DDA as par-cel number ___ and described on Exhibit “A” attached hereto.“Project Tax Increment” means that portion of ad valorem property taxes resulting fromthe increase in the assessed valuation of the Project Parcel, including any improvements thereon,over the Base Year Assessed Valuation, that is allocated to and received by the Agency pursuantto Health and Safety Code Section 33670(b) or any successor provisions of law in accordancewith the Redevelopment Plan (including any extension or modification thereof, or any new rede-velopment plan which encompasses the Project Parcel) less one percent (1.00%) of such amountsreceived to cover Agency administrative costs. Project Tax Increment shall include the Afford-able Housing Set-Aside attributable to the Project Parcel except to the extent that Developer isrelieved of the Affordable Housing Obligation with respect to the Project Parcel pursuant to Sec-tion 3.1.3 of the DDA. Unless Agency has agreed to the contrary in its absolute discretion, Pro-ject Tax Increment shall not include (i) any property tax revenue that results from an increase inthe assessed valuation of such Project Parcel after the occurrence of the first reassessment ofsuch Project Parcel following the issuance of a Certificate of Occupancy for such Project by theCity or (ii) any property tax revenue that results from an annual reassessment of such ProjectParcel that is allowed under California Constitution Article XIII.“Redevelopment Law” means the California Community Redevelopment Law, Healthand Safety Code Sections 33000, et seq., as the same now exists or may hereafter be amended.“Redevelopment Plan” means that certain Amended and Restated Redevelopment Planadopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City. The Rede-velopment Plan constitutes a merger of the redevelopment plans for the Dynamite Redevelop-ment Project Area and Project Area No. 2.“Redevelopment Project” means the Dynamite Redevelopment Project, adopted by theCity Council pursuant to the Redevelopment Plan.“Redevelopment Project Area” means the area contained within the boundaries of theRedevelopment Project.“Senior Lien Debt” means any and all obligations of Agency existing on and as of theEffective Date that are payable, in whole or in part, from Tax Revenues.“State” means the State of California.“Subject Parcels” means those parcels for which the DDA establishes procedures andconditions under which Developer may develop a project under the terms of the DDA.“Tax Increment Assistance” means financial assistance to be provided by Agency to De-veloper for the Project under Section 4.3 of the DDA.
Pledge Agreement Page 4Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM “Tax Revenues” means all taxes levied upon real property located within the Redevel-opment Project Area and annually allocated to Agency pursuant to Article 6 of Chapter 6 of theRedevelopment Law and Section 16 of Article XVI of the Constitution of the State.ARTICLE II: PLEDGE OF PROJECT TAX INCREMENT 2.1. Pledge. Agency hereby irrevocably pledges to Developer, for the purpose of securingAgency’s obligation to make payments of Tax Increment Assistance to Developer inaccordance with Section 4.3 of the DDA, Developer’s Share of Project Tax Revenuesto the maximum extent permitted by law, including, without limitation, Section 33671of the Redevelopment Law. This pledge is for the exclusive benefit of Developer andany successors or assigns of Developer in and to the DDA or this pledge and shall bevalid and binding from and after the Effective Date as between Agency and Developerand against all parties having claims of any kind in tort, contract, or otherwise againstthe Agency, irrespective of whether such parties have notice of this pledge. Thispledge shall constitute a lien and security interest which shall immediately attach toDeveloper’s Share of Project Tax Revenues and shall be binding and enforceableagainst Agency, its successors, creditors, and all others asserting any rights therein, ir-respective of whether any of those parties have notice of this pledge and without theneed for any physical delivery, recordation, filing, or further act. 2.2. Limits on Issuance of Other Obligations. Except as permitted by Section 2.3 below,Agency shall not issue any obligations, payable as to principal or interest from ProjectTax Increment, which have any lien upon Project Tax Increment that is senior to or ona parity with this Pledge Agreement or the DDA. 2.3. Permitted Parity or Superior Pledges. Notwithstanding the provisions of Sections2.1 and 2.2 above, Agency may make one or more pledges of Project Tax Incrementthat are on parity with or superior to this pledge as security for bonds that result inProject Bond Proceeds so long as Agency deposits the resulting Project Bond Proceedsinto the Project Fund in accordance with the DDA. Such permitted pledges may be assecurity for an entire bond issue and not only for that portion of the bond issue that re-sults in Project Bond Proceeds so long as the Project Tax Increment is placed at nogreater risk of being called upon to meet the bond obligations than any other TaxRevenues or other assets that are pledged for such bond issue. 2.4. Release of Pledge. Upon Agency’s final payment into the Project Fund required by theDDA or by Agency’s agreement to provide Tax Increment Assistance with respect tothe Project, this pledge shall be released. Thereupon, Developer agrees to execute anddeliver to Agency a release in a form reasonably acceptable to Agency in order to ef-fect such release.ARTICLE III: COVENANTS OF AGENCY 3.1. Amendments to Pass-Through Agreements. Agency covenants and agrees that itshall not amend or modify any of the existing Pass-Through Agreements in a manner Pledge Agreement Page 5Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM that treats Project Tax Increment any less favorably than other Tax Revenues ad-dressed by such Pass-Through Agreements. 3.2. Protection of Security and Rights of Developer. Agency covenants and agrees topreserve and protect the security of Developer’s Share of Project Tax Revenues andthe DDA and the rights of Developer. From and after the execution and delivery of thisPledge Agreement or the DDA, Agency shall not take any action to impair the securityor priority of Developer’s Share of Project Tax Revenues. Agency shall comply withall requirements of the Redevelopment Law to assure the proper and timely collection,allocation, and payment to it of Tax Revenues that constitute Project Tax Increment.Agency shall at all times, to the extent permitted by law, defend, preserve, and protectthe pledge of Developer’s Share of Project Tax Revenues and all the rights createdhereunder against all claims and demands of all persons whomsoever. 3.3. Payment of Senior Lien Debt. With respect to each issue of Senior Lien Debt that issecured by Tax Revenues, Agency covenants and agrees that it shall use all availableTax Revenues that would not otherwise constitute Project Tax Increment to makepayments with respect to such issue of Senior Lien Debt prior to using any Project TaxIncrement to pay such issue of Senior Lien Debt. 3.4. Further Assurances. Agency covenants and agrees to adopt, make, execute, and de-liver any and all such further resolutions, instruments, and assurances as may be rea-sonably necessary or proper to carry out the intention or to facilitate the performanceof this Pledge Agreement, and for the better assuring and confirming of the rights andbenefits provided herein.ARTICLE IV: DEFAULT AND REMEDIES 4.1. Events of Default. Each of the following events is hereby declared an “Event of De-fault” under this Pledge Agreement: (a) Agency fails to pay when due any amounts payable in accordance with theDDA; (b) Agency fails to perform or observe any other covenant, agreement, or conditioncontained in this Pledge Agreement, other than the covenant and agreement topay when due amounts payable under the DDA, and such failure shall continuefor a period of thirty (30) days after written Notice thereof to Agency by Devel-oper; or (c) Any of the following has occurred and is continuing with respect to Agency: (i)Agency shall commence a voluntary case or other proceeding in seeking liqui-dation, reorganization, arrangement, readjustment of its debts, or for any otherrelief under the federal bankruptcy laws, as amended, including the UnitedStates Bankruptcy Code, or under any other insolvency act or law, State or fed-eral, now or hereafter existing, or shall take any other action indicating its con-sent to, approval of, or acquiescence in, any such petition or proceedings; (ii)Agency shall apply for, or consent to or acquiesce in, the appointment of a re- Pledge Agreement Page 6Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM ceiver, liquidator, custodian, sequestrator, or trustee for all or a substantial partof its property; (iii) Agency shall make an assignment for the benefit or itscreditors; (iv) Agency shall be unable, or shall admit in writing its inability, topay its debts when due; (v) a petition in bankruptcy shall be filed againstAgency under any applicable bankruptcy, insolvency or similar law as now orehereafter in effect and shall not be discharged by a court of competent jurisdic-tion with sixty (60) days after the date of such filing; or (vi) a receiver, liquida-tor, custodian, sequestrator, or trustee shall be appointed for all or a substantialpart of the property of Agency and such appointment shall not be discharged ordismissed by a court of competent jurisdiction within sixty (60) days. 4.2. Developer Remedies. Following the occurrence of an Event of Default, Developermay pursue any remedy available to it at law or in equity. No waiver of any default orbreach of any duty or contract by Developer shall affect any subsequent default orbreach of any duty or contract or shall impair any rights or remedies on the subsequentdefault or breach. No delay or omission of developer to exercise any right or poweraccruing upon any default shall impair any such right or power or shall be construed asa waiver of any default or acquiescence therein.ARTICLE V: GENERAL PROVISIONS 5.1. Notices. Any written notice, demand, or communication between Agency and Devel-oper (“Notice”) shall be sufficiently given if delivered by hand (and a receipt thereforis obtained or is refused to be given) or dispatched by first-class, registered or certifiedmail, postage prepaid, or delivered by facsimile (with confirmation of delivery) orovernight delivery service as follow:If to Agency:Redevelopment Agency of the City of Hercules111 Civic Center DriveHercules, CA 94547Attn: Agency DirectoryFax: (510) 799-2521with copy to:Pelletreau, Alderson & CabralPlaza Two, Hilltop Office Park3260 Blume Drive, Suite 410Richmond, CA 94806Attn: Alfred Cabral, Esq.If to Developer:
Pledge Agreement Page 7Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM Hercules New Town Center, LLCc/o The Surland Companies390 Railroad Avenue, Suite 201Danville, CA 94526Attn: Les SerpaFax: (925) 242-7050and:Hercules New Town Center, LLCc/o The Red Barn Co.2901 W. Coast Hwy, Suite 200Newport Beach, CA 92663Attn: Thomas J. WeigelFax: (949) 767-5646with copy to:Miller Starr & Regalia1331 North Carolina Blvd., Fifth FloorWalnut Creek, CA 94596Attn: Wilson F. Wendt. Esq.Fax: (925) 933-4126Notices may be sent in the same manner to such other address as a Party may fromtime to time designate by Notice as provided herein. Any Notice shall be deemed re-ceived immediately if delivered by hand or facsimile, shall be deemed received on thethird (3rd) day from the date it is postmarked if delivered by first-class, registered orcertified mail and shall be deemed received on the next weekday which is not a federalor State holiday after the date it is sent by overnight delivery service. 5.2. Attorneys’ fees. In the event of any dispute between the Parties hereto arising out ofthe subject matter of this Pledge Agreement, the prevailing Party shall be entitled torecover reasonable expenses, attorneys' fees, and costs from the other Party, includingfees and costs on appeal and fees and costs incurred in enforcing any judgmentawarded to the prevailing Party. 5.3. Governing law. This Pledge Agreement shall be construed and enforced in accor-dance with the laws of the State of California, without reference to application of con-flicts of laws principles. 5.4. Construction. The Parties acknowledge that each Party and its counsel have reviewedand revised this Pledge Agreement and that the rule of construction to the effect thatambiguities are to be resolved against the drafting Party shall not be employed in theinterpretation of this Pledge Agreement or any document executed and delivered byeither Party in connection with the transactions contemplated by this Pledge Agree-ment. The captions in this Pledge Agreement are for convenience of reference onlyand shall not be used to interpret this Pledge Agreement.
Pledge Agreement Page 8Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM
5.5. Terms generally. The defined terms in this Pledge Agreement shall apply equally toboth the singular and the plural forms of the terms defined. Whenever the context mayrequire, any pronoun shall include the corresponding masculine, feminine and neuterforms. The term “person” includes individuals, corporations, partnerships, trusts, otherlegal entities, organizations, and associations, and any government or governmentalagency or authority. The words “include,” “includes” and “including” shall be deemedto be followed by the phrase “without limitation.” The words “approval” and “con-sent” shall be deemed to be preceded by the word “written.” 5.6. Partial invalidity. If any provision of this Pledge Agreement is determined by aproper court to be invalid, illegal, or unenforceable, such invalidity, illegality, or unen-forceability shall not affect the other provisions of this Pledge Agreement and thisPledge Agreement shall remain in full force and effect without such invalid, illegal, orunenforceable provision. 5.7. Waivers. No waiver of any provision of this Pledge Agreement or of any breach ofthis Pledge Agreement shall be effective unless such waiver is in writing and signed bythe waiving Party and any such waiver shall not be deemed a waiver of any other pro-vision of this Pledge Agreement or of any other or subsequent breach of this PledgeAgreement. 5.8. Assignment. This Pledge Agreement shall benefit and bind the Parties and their re-spective personal representatives, heirs, successors, and assigns. 5.9. Miscellaneous. The exhibit attached to this Pledge Agreement is made a part of thisPledge Agreement. Time is of the essence of this Pledge Agreement. This PledgeAgreement may not be amended or modified except by a written agreement signed byAgency and Developer. This Pledge Agreement, along with the DDA, constitutes theentire and integrated agreement between the Parties relating to the subject matterhereof and supersedes all prior agreements, understandings, offers, and negotiations,oral or written, with respect thereto. 5.10. Recordation and Filing. Developer may, in its discretion, record and/or file thisPledge Agreement as it deems appropriate to provide notice of this Pledge Agreementto third parties. Agency shall cooperate with Developer to provide this Pledge Agree-ment in suitable form for such recordation and/or filing. 5.11. Counterparts. This Pledge Agreement may be signed in counterparts, each of whichis deemed to be an original.
Pledge Agreement Page 9Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement as ofthe Effective Date.“Agency”:CITY OF HERCULES REDEVELOPMENT AGENCY By:___________________________Michael A. Sakamoto, Executive Director “Developer”:HERCULES NEW TOWN CENTER, LLC,a Delaware limited liability companyBy:RED BARN COMMUNITIES COMPANY,a California corporation,its Manager By:___________________________Thomas J. Weigel, President Exhibit “A”—Description of Project ParcelPage A-1Project Pledge Agmt 03.docPrinted: 10/31/05; 9:10 AM Exhibit “A”Description of Project Parcel
Exhibit “I”—Form of Grant DeedPage I-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “I”Form of Grant DeedRECORDING REQUESTED BYAND WHEN RECORDED MAIL TO:Hercules New Town Center, LLCc/o The Red Barn Co.2901 W. Coast Hwy, Suite 200Newport Beach, CA 92663Attn: Thomas J. WeigelMAIL TAX STATEMENTS TO:SAME AS ABOVE(Above space for Recorder's use only) GRANT DEEDThe undersigned grantor declares:Documentary Transfer Tax not shown pursuantto Section 11932 of the Revenue andTaxation Code, as amendedCity of HerculesFOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, RE-DEVELOPMENT AGENCY OF THE CITY OF HERCULES, a public body corporate andpolitic (“Grantor”), hereby grants to HERCULES NEW TOWN CENTER, LLC, a Californialimited liability company (“Grantee”), that certain real property in the City of Hercules, Countyof Contra Costa, State of California, more particularly described in Exhibit "A" attached heretoand incorporated herein by this reference.This conveyance is made subject to those covenants, restrictions and agreements con-tained in that certain Disposition and Development Agreement by and between Grantee and theCity of Hercules on the one hand, and Grantee on the other hand, entered into as of __________,2005, which covenants, restrictions and agreements are more particularly referred to in Exhibit"B" attached hereto and by this reference incorporated herein.
Exhibit “I”—Form of Grant DeedPage I-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM DATED: ________________, 20____ATTEST:
_______________________________SecretaryAPPROVED AS TO FORM:
_______________________________Pelletreau, Alderson & CabralAgency Counsel REDEVELOPMENT AGENCY OF THECITY OF HERCULES, a public body corpo-rate and politic By:____________________________________Chairman
STATE OF CALIFORNIA))ss.COUNTY OF CONTRA COSTA)On this ___ day of _____________________, 200__, before me,_____________________, the undersigned Notary Public, personally appeared_____________________, personally known to me (or proved to me on the basis of satisfactoryevidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and ac-knowledged 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 ofwhich the person(s) acted, executed the instrument.WITNESS my hand and official seal. ________________________________________Notary Public
Exhibit “I”—Form of Grant DeedPage I-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM EXHIBIT "A"
That certain real Property in the City of Hercules, County of Contra Costa, State of California,described as follows:[Insert legal description of Primary Parcel] Exhibit “I”—Form of Grant DeedPage I-4DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM EXHIBIT "B"This conveyance is made subject to the following covenants, restrictions and agreements:The Grantee herein covenants by and for himself or herself, his or her heirs, executors,administrators and assigns, and all persons claiming under or through them, that there shall be nodiscrimination against or segregation of, any person or group of persons on account of race,color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease,transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the granteehimself or herself or any person claiming under or through him or her, establish or permit anysuch practice or practices of discrimination or segregation with reference to the selection, loca-tion, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the landherein conveyed. The foregoing covenants shall run with the land.
Exhibit “J”—Approved Exceptions to TitlePage J-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “J”Approved Exceptions to Title
Exhibit “J”—Approved Exceptions to TitlePage J-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “J-1”Approved Exceptions to Title—PNR ParcelWith reference to that certain preliminary title report on the PNR Parcel issued to Essex PropertyTrust, Inc. dated as of December 15, 2005, the following exceptions to coverage, numbered incorrespondence with the numbering in said report, are approved by Developer:#4An easement in favor of East Bay Municipal Utility District for water pipe line, ingressand egress and incidental purposes.#7A waiver of any claims for damages by reason of the location, construction, landscaptingor maintenance of a contiguous freeway, highway, roadway or transit facility.#11An easement in favor of the State of California for pipe lines and appurtenance theretoand incidental purposes.#12An easement in favor of the State of California for drainage and incidental purposes.#13Relinquishment of abutter’s rights of ingress and egress to or from the freeway.#14An easement in favor of East Bay Municipal Utility District for water pipe lines and inci-dental purposes.#15An easement in favor of the City of Hercules for installation and maintenance of stormdrain facilities and incidental purposes.
Exhibit “J”—Approved Exceptions to TitlePage J-3DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “J-2”Approved Exceptions to Title—C-1 ParcelWith reference to that certain preliminary title report on the C-1 Parcel issued to Essex PropertyTrust, Inc. dated as of January 24, 2006, the following exceptions to coverage, numbered in cor-respondence with the numbering in said report, are approved by Developer:#4An easement in favor of Pacific Gas and Electric Company for poles and wires togetherwith appliances and fixtures in connection therewith for electricity, telephone and tele-graph and incidental purposes.#5An easement in favor of Pacific Gas and Electric Company for poles lines and wires to-gether with appliances and fixtures in connection therewith, for the transmission of elec-tric energy and for communication and incidental purposes.#6Relinquishment of abutter’s rights of ingress and egress to or from freeway.#7A waiver of any claims for damages by reason of the location, construction, landscapingor maintenance of a contiguous freeway, highway, roadway or transit facility.#8An easement in favor of Pacific Gas and Electric Company for poles and wires togetherwith appliances and fixtures in connection therewith, for the transmission and distributionof electric energy and incidental purposes.#9An easement in favor of Pacific Gas and Electric Company for poles and wires togetherwith appliances and fixtures in connection therewith, for the transmission of electric en-ergy and for communication and incidental purposes.#10An easement for sanitary sewer and incidental purposes.#11Relinquishment of abutter’s rights of ingress and egress to or from State Highway.
Exhibit “K”—Certificate of CompletionPage K-1DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM Exhibit “K”Certificate of CompletionRECORDING REQUESTED BYAND WHEN RECORDED MAIL TO:Hercules New Town Center, LLCc/o The Red Barn Co.2901 W. Coast Hwy, Suite 200Newport Beach, CA 92663Attn: Thomas J. Weigel (Above space for Recorder's use only)CERTIFICATE OF COMPLETIONWHEREAS, on April 7, 2005, the City of Hercules, a public body corporate and politic(the “City”), and the Redevelopment Agency of the City, a public body corporate and politic (the“Agency”), on the one hand, and Hercules New Town Center, LLC, a California limited liabilitycompany ( “Developer”), on the other hand, entered into a Disposition and Development Agree-ment (the “DDA”) pertaining to certain real property situated in the City of Hercules, County ofContra Costa, State of California, including that particular real property that is described in Ex-hibit “A” attached hereto and made a part hereof (such particular real property to be referred toas the “Property”);WHEREAS, with respect to the Property, Agency has conclusively determined that theconstruction obligations of Developer as specified in the DDA have been fully performed and theProject Improvements (as defined in the DDA) that Developer is required to construct have beencompleted in accordance therewith; andWHEREAS, as stated in the DDA, Agency's determination regarding the constructionobligations is not directed to, and thus Agency assumes no responsibility for, engineering orstructural matters or compliance with building codes and regulations or applicable state or fed-eral law relating to construction standards.NOW, THEREFORE, as provided in the DDA, with respect to the above-described Prop-erty, and subject to the foregoing provisions hereof, Agency does hereby certify that the con-struction obligations have been performed fully and that the Project Improvements that Devel-oper is required to construct have been completed as aforesaid. Nothing contained in this instru-ment shall modify in any other way any other provision of the DDA.
Exhibit “K”—Certificate of CompletionPage K-2DDA-Surland Exh R12.docPrinted: 3/2/06; 10:12 AM IN WITNESS WHEREOF, Agency has executed this instrument this ____ day of______________, 200___.Authorized by Agency ResolutionNo. ______________ adopted ___________ APPROVED AS TO FORM:
_______________________________Agency Counsel
REDEVELOPMENT AGENCY OF THECITY OF HERCULES, a public body corpo-rate and politic By:____________________________________Executive Director STATE OF CALIFORNIA))ss.COUNTY OF CONTRA COSTA)On this ___ day of _____________________, 200__, before me,_____________________, the undersigned Notary Public, personally appeared_____________________, personally known to me (or proved to me on the basis of satisfactoryevidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and ac-knowledged 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 ofwhich the person(s) acted, executed the instrument.WITNESS my hand and official seal. ________________________________________