MEETING DATE: OCTOBER 6, 2026
TO: ALDO E. SCHINDLER, CITY MANAGER
FROM: BRIAN MONCRIEF, DEPUTY CITY MANAGER – REAL PROPERTY SUBJECT: DISPOSITION AND DEVELOPMENT AGREEMENT WITH CD-CW (TUSTIN) LLC (CONFLUENT DEVELOPMENT, LLC) FOR A
PORTION OF DISPOSITION AREA 8 AT TUSTIN LEGACY
SUMMARY:
Request for authorization to approve the Disposition and Development Agreement (DDA) between CD-CW (Tustin) LLC (Confluent Development, LLC) and the City for the development of an active adult senior living residential development consisting of 172 rental units and a senior congregate care facility consisting of assisted living and memory care comprised of up 147,500 square feet inclusive of 75 assisted living rooms and 28 memory care rooms on approximately 6.14 acres with a total of 15% of the active adult senior living residential rental units affordable to lower income households. The DDA specifies the terms and conditions under which the City owned property, known as portions of Disposition Area 8, and bounded by Warner Avenue, Armstrong Avenue, John Johnson Way and Veterans Way in Planning Areas 13 and 14 of Tustin Legacy, will be conveyed to and developed by CD-CW (Tustin) LLC.
RECOMMENDATION:
1. Authorize the City Manager to execute the DDA between CD-CW (Tustin) LLC and the City in the form attached hereto subject to any non-substantive modifications as may be recommended by the City’s special real estate counsel or the City Attorney; and
2. Authorize the City Manager to take all actions and execute all other agreements necessary or appropriate to implement the DDA.
FISCAL IMPACT:
CD-CW (Tustin) LLC will pay the City a fair market value purchase price of $15,054,243.00 for the land and pay a Project Fair Share Contribution of $3,029,764.58 to fund backbone infrastructure improvements at Tustin Legacy.
AGENDA REPORT
Agenda Item _______
Reviewed:
City Manager _______
Finance Director _______
8 Docusign Envelope ID: 6670D880-03AB-88DD-83F0-3333E98D7E57 Docusign Envelope ID: 40611C0B-CF7B-8829-8114-135A84598472 Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A City Council Agenda Report
Confluent Development DDA
October 6, 2026
CORRELATION TO THE STRATEGIC PLAN:
Execution of the DDA contributes to the fulfillment of the City’s Strategic Plan Goal A:
Economic and Neighborhood Development. Specifically, this item implements Strategy 1, which is to develop critical phases of Tustin Legacy.
BACKGROUND AND DISCUSSION:
Confluent Development, LLC is a proven developer of senior living and congregate care facilities throughout the United States and in California under its subsidiary Confluent Senior Living. Clearwater Senior Living (Clearwater) will serve as the operating partner as well as an equity partner for the project. Clearwater is a local senior living operator headquartered in Newport Beach with six existing senior living facilities under management in Southern California and additional senior living facilities throughout the western and southern United States.
The project will provide senior housing and care options for the City and region across various income levels. In compliance with the Surplus Land Act, the project will provide 15% of the active adult senior living residential units as affordable to lower income households and utilize a density bonus under state law. The active adult units provided by the project will contribute towards meeting the housing goals identified within the City’s Housing Element and Regional Housing Needs Allocation requirements.
On September 19, 2023, the City Council authorized the City Manager to enter into an Exclusive Negotiating Agreement (ENA) with CD-MS (Tustin) LLC (now CD-CW (Tustin) LLC and referred to hereinafter as Developer) to negotiate the disposition and development of a portion of Disposition Area 8 at Tustin Legacy for a senior congregate care facility project.
On March 4, 2025, the City Council amended the ENA and approved a 270-day extension, as requested by the Developer, to allow time to process a new entitlement submittal for a revisioned project and negotiate a DDA. At the same time, the City Council formally approved Clearwater as the new operator.
On December 2, 2025, the City Council approved another amendment and extension of the ENA, at the request of the Developer, to allow for a 120-day extension until April 11, 2026, in order to select an equity partner for the project and complete negotiations.
On April 21, 2026, the City Council authorized the City Manager to execute a reinstatement and amendment of the ENA with the Developer subject to a milestone schedule of performance and the provision of extension deposits. The Developer has met the applicable milestones such as securing an equity partner for the project, completing entitlement submittal, completing construction drawings, negotiating the DDA and other items.
On August 11, 2026, the Planning Commission reviewed the entitlement application for the proposed project and recommended that the City Council approve the project. On September 1, 2026, the City Council reviewed the subject project considering the Planning Commission’s Docusign Envelope ID: 6670D880-03AB-88DD-83F0-3333E98D7E57 Docusign Envelope ID: 40611C0B-CF7B-8829-8114-135A84598472 Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A City Council Agenda Report
Confluent Development DDA
October 6, 2026
recommendation and approved the project. An Addendum to the Tustin Legacy Specific Plan (TLSP) 2025 Supplemental Environmental Impact Report (SEIR) was prepared pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15164, 15162, and 15168.
Schedule of Performance
The Schedule of Performance establishes outside dates by which all steps required including design, construction and development of the project must commence or have been completed during the term of the DDA. The project schedule anticipates completing these items prior to the outside dates allowing for any unanticipated events or issues. In the event of non-performance, a DDA default is triggered. The project will be acquired and built in a single phase with the active adult building anticipated to start first due to a slightly longer construction period. The following are some of the major milestone dates contained within the Schedule of Performance:
Close of Escrow (COE) December 23, 2026
Construction Commencement (Grading) 60 days following COE Vertical Construction Commencement 180 days following COE Project Completion 36 months following COE
___________________________ __________________________
Brian Moncrief Ryan Swiontek
Deputy City Manager – Real Property Deputy Director of Real Property Attachments: 1. Location Map
2. DDA between City of Tustin and CD-CW (Tustin) LLC
Docusign Envelope ID: 6670D880-03AB-88DD-83F0-3333E98D7E57 Docusign Envelope ID: 40611C0B-CF7B-8829-8114-135A84598472 Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A
PROPERTY LINE
& RIGHT OF WAY
PROPERTY LINE
& RIGHT OF WAY
PROPERTY LINE
& RIGHT OF WAY
PROPERTY LINE
& RIGHT OF WAY
JOHN JOHNSON WAY WARNER AVENUE ℄ ARMSTRONG AVENUE ℄ ℄ ℄ VETERANS WAY DESIGNED BY: DRAWN BY: PROJECT NO. DATE: REVIEWED BY: CK BY DATE NO. REVISION FIRST SUBMITTAL DATE: SHEET NO. Save Date: Plot Date: 7/8/2026 3:00 PM 7/8/2026 3:20 PM By: Juta P:\C\CONFCDMS0012\0400CAD\EXHIBITS\2026-07-07 Tustin Development Agreement Exhibits For Confluent\Reference\EXHIBIT B-CONFCDMS0012 - Copy.dwg Justin Tat By: File:
CHECKED BY: ® 17542 E. 17th Street Suite 150 Tustin, CA 92780 714.665.4500 SCALE
( FEET )
1 INCH = 100 FT.
100 100 200 50 0
SITE . 5
55 DYER RD BARRANCA PKWY RED HILL AVE
EDINGER AVE EDINGER AVE TUSTIN RANCH RD VON KARMA AVE WARNER AVE ARMSTRONG AVE VETERANS WAY 261 405 WARNER AVE SAN DIEGO FRWY JAMBOREE RD COSTA MESA FRWY SANTA ANA FRWY EASTERN TRANSPORTATION CORRIDOR
VICINITY MAP
N.T.S.
EXHIBIT B - PROPERTY MAP & VICINITY MAP
07/08/2026 CONFCDMS-0012 1 ATTACHMENT OF 1 1
LOCATION MAP
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A
TUSTIN LEGACY
DISPOSITION AND DEVELOPMENT AGREEMENT
FOR PORTION OF DISPOSITION AREA 8
BY AND BETWEEN
THE CITY OF TUSTIN
AND
CD-CW (TUSTIN) LLC,
A COLORADO LIMITED LIABILITY COMPANY
DATED: October __, 2026
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx i City of Tustin/Confluent Development Portion of Disposition Area 8
TABLE OF CONTENTS
1. Subject and Purpose of Agreement; Parties; Applicable Requirements. ............................ 1
1.1 Background Regarding MCAS Tustin. ................................................................... 1
1.2 Description of Development Parcel, and Real Property. ........................................ 3
1.3 Description of the Project. ...................................................................................... 4
1.4 Parties to the Agreement. ........................................................................................ 6
1.5 Federal Requirements Applicable to Tustin Legacy. .............................................. 7
1.6 Other Governmental Requirements Applicable to Tustin Legacy. ......................... 7
1.7 Not a Development Agreement. ............................................................................. 8
1.8 DDA Transaction Expenses and Independent Contract Consideration. ................. 8
1.9 Definitions; Attachments. ..................................................................................... 10
2. Prohibition Against Transfers and Transfer of Control. ................................................... 11
2.1 Importance of Developer Qualifications. .............................................................. 11
2.2 Restrictions on Transfers and Transfers of Control and Releases Following Transfer. ................................................................................................................ 11
2.3 Effect of Transfer; Release of Transferor. ............................................................ 17
2.4 City Costs. ............................................................................................................. 18
2.5 City Estoppel. ........................................................................................................ 18
2.6 Restrictions on Sale of Units or Condominium Development; Rental of Residential Units and Rooms. ............................................................................... 18
2.7 Effect of and Remedies for Improper Transfers or Transfers of Control. ............ 18
2.8 Changes. ................................................................................................................ 19
3. Representations and Warranties. ....................................................................................... 19
3.1 Developer’s Representations and Warranties. ...................................................... 19
3.2 Developer Covenants Regarding Representations and Warranties. ..................... 22
3.3 City Representations and Warranties. ................................................................... 22
3.4 City Covenants Regarding Representations and Warranties. ............................... 24
4. Conveyance of Property from City to Developer. ............................................................ 24
4.1 Conveyance of Property. ....................................................................................... 24
4.2 Purchase Price and Project Fair Share Contribution. ............................................ 25
4.3 Payment of Purchase Price.................................................................................... 26
4.4 Escrow and Joint Escrow Instructions. ................................................................. 26
4.5 Property Conveyed “As-Is”. ................................................................................. 27
4.6 Developer Covenants; Preconditions to Close of Escrow. ................................... 34
5. Developer’s License, Access to Records and Communications. ...................................... 38
5.1 Limited License. ................................................................................................... 38
5.2 Indemnity. ............................................................................................................. 38 Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx ii City of Tustin/Confluent Development Portion of Disposition Area 8
5.3 Communications with City and Third Parties. ...................................................... 39
6. Title; Survey...................................................................................................................... 40
6.1 Survey by Developer............................................................................................. 40
6.2 Permitted Exceptions. ........................................................................................... 40
6.3 Supplemental Title Reports................................................................................... 40
6.4 ALTA Policy; Endorsements; Close of Escrow. .................................................. 41
6.5 City Title Policy. ................................................................................................... 42
7. Closing. ............................................................................................................................. 42
7.1 Time and Place of Closing. ................................................................................... 42
7.2 Conditions Precedent to Close of Escrow. ............................................................ 43
7.3 Additional Close of Escrow Conditions. .............................................................. 49
7.4 Procedures for Conveyance. ................................................................................. 49
8. Development of the Real Property and Additional Covenants of Developer and City. ................................................................................................................................... 52
8.1 Scope of Development. ......................................................................................... 52
8.2 Development Costs. .............................................................................................. 53
8.3 Schedule of Performance; Completion of Project. ............................................... 54
8.4 Land Use Matters. ................................................................................................. 54
8.5 Design Approval. .................................................................................................. 56
8.6 Financial Capability and Budget Statement. ......................................................... 58
8.7 Fees and Exactions. ............................................................................................... 59
8.8 Grading Work; Design and Construction of Improvements. ................................ 62
8.9 Guaranty and Guarantor. ....................................................................................... 62
8.10 Replacement of Equity Investor ............................................................................ 64
8.11 Development Covenants. ...................................................................................... 64
8.12 City Rights of Access............................................................................................ 66
8.13 Disclaimer of Responsibility by City and Exculpation......................................... 66
8.14 Local, State and Federal Laws. ............................................................................. 67
8.15 Liens, Taxes and Assessments. ............................................................................. 68
8.16 Duration of Article 8 Indemnities; Post-Certificate of Compliance Affiliate Responsibilities. .................................................................................................... 69
9. Certificate of Compliance. ................................................................................................ 69
9.1 Completion; Schedule of Performance. ................................................................ 69
9.2 Certificate of Compliance Defined. ...................................................................... 69
9.3 Certificate of Compliance Conditions Precedent. ................................................. 70
9.4 Conclusive Presumption ....................................................................................... 72
9.5 Not Evidence. ........................................................................................................ 72
9.6 City Obligations. ................................................................................................... 72
9.7 Effect of Certificate of Compliance; Termination of Agreement. ........................ 72 Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx iii City of Tustin/Confluent Development Portion of Disposition Area 8
10. Indemnification and Environmental Provisions................................................................ 74
10.1 Developer’s Indemnification for Non-Environmental Matters. ............................ 74
10.2 Environmental Indemnity. .................................................................................... 76
10.3 Effect of Recording of Special Restrictions.......................................................... 77
10.4 Claim Response. ................................................................................................... 77
10.5 Release Notification and Remedial Actions. ........................................................ 78
10.6 Conflict with Section 330 and Other Federal Government Obligations. .............. 79
10.7 Insurance and Indemnification. ............................................................................. 79
10.8 Selection of Counsel and Defense Obligations. .................................................... 80
10.9 Settlement Procedures. .......................................................................................... 80
11. Insurance. .......................................................................................................................... 80
11.1 Required Insurance. .............................................................................................. 80
11.2 General Insurance Requirements. ......................................................................... 83
12. Covenants and Restrictions. .............................................................................................. 84
12.1 Covenants Run With the Land. ............................................................................. 84
12.2 Obligation to Refrain from Discrimination........................................................... 85
12.3 Use Covenant. ....................................................................................................... 85
12.4 Access Easement Agreement and Bioswale Easement. ........................................ 85
12.5 Management and Operation of Project; Operating Agreement. ........................... 85
13. Housing Requirements. ..................................................................................................... 86
14. Potential Defaults and Material Defaults. ......................................................................... 87
14.1 Potential Defaults. ................................................................................................. 87
14.2 Material Defaults. ................................................................................................. 87
14.3 Due Diligence Information; Products. .................................................................. 88
15. Remedies Prior to Close of Escrow. ................................................................................. 89
15.1 Failure of a Condition Absent a Default. .............................................................. 90
15.2 Failure of Close of Escrow; Developer Default. ................................................... 91
15.3 Failure to Close; Default of City. .......................................................................... 92
15.4 Remedies Exclusive. ............................................................................................. 94
15.5 Survival. ................................................................................................................ 94
16. Remedies for Defaults After the Close of Escrow. ........................................................... 94
16.1 General Remedies. ................................................................................................ 94
16.2 Lien Rights. ........................................................................................................... 95
16.3 Right of Repurchase. ............................................................................................. 95
16.4 The Right of Reversion. ........................................................................................ 98
16.5 Access and Inspection. ........................................................................................ 102 Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx iv City of Tustin/Confluent Development Portion of Disposition Area 8
16.6 Obligations and Release Following Repurchase or Reversion. .......................... 103
16.7 Cooperation. ........................................................................................................ 103
17. Mortgages and Mortgagee Protection for Project. .......................................................... 103
17.1 Restrictions on Mortgages. ................................................................................. 103
17.2 Restrictions on Transfer to Mortgagee. .............................................................. 104
17.3 Subordination of Permitted Mortgage. ............................................................... 105
17.4 Loan Documents. ................................................................................................ 105
17.5 Acknowledgment by City of Permitted Mortgagee. ........................................... 106
17.6 Change in Loan Documents, Special Restrictions and/or Landscape Installation and Maintenance Agreement. .......................................................... 106
17.7 Effect of a Mortgage. .......................................................................................... 107
17.8 Constructive Notice and Acceptance. ................................................................. 107
17.9 Bankruptcy Affecting Developer. ....................................................................... 107
17.10 Mortgagee Protections. ....................................................................................... 107
18. General Provisions. ......................................................................................................... 108
18.1 Applicable Law; Consent to Jurisdiction; Service of Process. ........................... 108
18.2 Counsel for Indemnified Obligations; Legal Fees and Costs. ............................ 109
18.3 Memorandum of DDA; Modifications or Amendments. .................................... 109
18.4 Further Assurances.............................................................................................. 110
18.5 Rights and Remedies Are Cumulative; Limitation on Damages. ....................... 110
18.6 Notices, Demands and Communications between the Parties. ........................... 111
18.7 Delay. .................................................................................................................. 113
18.8 Conflict of Interest. ............................................................................................. 115
18.9 Non-liability of City Officials and City or Developer Employees. .................... 116
18.10 Inspection of Books and Records. ...................................................................... 116
18.11 Consents and Approvals. .................................................................................... 116
18.12 Real Estate Commissions. ................................................................................... 117
18.13 Date and Delivery of Agreement; Term of Agreement. ..................................... 117
18.14 Constructive Notice and Acceptance. ................................................................. 118
18.15 Survival of Covenants, Representation and Warranties. .................................... 118
18.16 Construction and Interpretation of Agreement. .................................................. 118
18.17 Time of Essence. ................................................................................................. 119
18.18 Fees and Other Expenses. ................................................................................... 119
18.19 No Partnership; Binding Effect. .......................................................................... 120
18.20 Compliance with Law. ........................................................................................ 120
18.21 No Third-Party Beneficiaries. ............................................................................. 120
18.22 Counterparts. ....................................................................................................... 120
18.23 Duplicate Originals, Entire Agreement and Waivers. ........................................ 120
18.24 Confidentiality. ................................................................................................... 121
18.25 Proprietary and Governmental Roles; Actions by Parties. ................................. 122
18.26 Performance of Acts on Business Days. ............................................................. 123 Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 1 City of Tustin/Confluent Development Portion of Disposition Area 8
TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT
FOR PORTION OF DISPOSITION AREA 8
This TUSTIN LEGACY DISPOSITION AND DEVELOPMENT AGREEMENT FOR PORTION OF DISPOSITION AREA 8 (“Agreement”) is entered into as of October __, 2026 (“Effective Date”) by and between the CITY OF TUSTIN (as more fully defined in Section 1.4.1, “City”) and CD-CW (TUSTIN) LLC, a Colorado limited liability company (as more fully defined in Attachment 1, “Developer”). The City and Developer are sometimes referred to in this Agreement individually as a “Party” and collectively as the “Parties”. The Parties agree as follows:
1. Subject and Purpose of Agreement; Parties; Applicable Requirements.
1.1 Background Regarding MCAS Tustin.
1.1.1 Pursuant to the Defense Base Closure and Realignment Act of 1990 (Part A of Title XXIX of Public Law 101-510; 10 U.S.C. Section 2687 Note), as amended (“Base Closure Law”), the Federal Government (see Section 1.9 and Attachment 1 for definitions of initially capitalized terms in this Agreement) determined to close the Marine Corps Air Station-Tustin (“MCAS Tustin”) located substantially in the City of Tustin, California. In 1992, the City was designated as the Lead Agency or Local Redevelopment Authority for preparation of a reuse plan for MCAS Tustin to facilitate the closure of MCAS Tustin and its reuse in furtherance of the economic development of the City and surrounding region. The MCAS Tustin Reuse Plan developed in accordance with this procedure was adopted by the City Council of the City of Tustin (“City Council”) on October 17, 1996 and amended in September 1998 (“Reuse Plan”).
1.1.2 A Final Joint Environmental Impact Statement/Environmental Impact Report for the Disposal and Reuse of MCAS Tustin and Mitigation Monitoring and Reporting Program for the Final EIS/EIR were adopted by the City on January 16, 2001. In March 2001, a record of decision was issued by the Department of the Navy (hereinafter, “Navy”) approving the Final EIS/EIR and the Reuse Plan with several subsequent supplements and addenda approved by the City (the original EIS/EIR, as so amended, “Final EIS/EIR”).
1.1.3 In May 2002, the Navy approved an “Economic Development Conveyance of Property at MCAS Tustin” and agreed to convey approximately 1,153 acres of MCAS Tustin to the City. On May 13, 2002, a total of approximately 977 acres, including the Development Parcel which are the subject of this Agreement were conveyed by the Navy to the City by quitclaim deed, as further described below, in accordance with the provisions of that certain Memorandum of Agreement by and between The United States of America (through the Secretary of the Army or designee) and the City dated May 13, 2002 (“Memorandum of Agreement”). The additional approximately 177 acres were made subject to a ground lease by the City from the Navy and portions thereof have subsequently been conveyed by the Navy to the City pursuant to subsequent quitclaim deeds. The approximately 1,153 acres of MCAS Tustin located within the City of Tustin and either conveyed by the Navy to the City or subject to ground lease between the Navy and the City are referred to in this Agreement as “Tustin Legacy”.
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 2 City of Tustin/Confluent Development Portion of Disposition Area 8
1.1.4 On February 3, 2003, the City adopted an ordinance approving the MCAS Tustin Specific Plan/Reuse Plan setting forth the zoning and entitlement framework for future development of Tustin Legacy. Since its initial adoption, the City has approved numerous Specific Plan amendments. All references in this Agreement to the “Specific Plan” shall be deemed to refer to the MCAS Tustin Specific Plan/Reuse Plan, as the same may have been previously or may be subsequently amended. The Specific Plan conforms to and implements the Reuse Plan and the City’s General Plan.
1.1.5 The City desires to effectuate development of Tustin Legacy through the sale and development of property in accordance with applicable federal and local requirements.
Tustin Legacy shall be developed in accordance with all applicable City requirements, including the Specific Plan.
1.1.6 Consistent with the requirements of California Government Code Sections 54220-54234 (“Surplus Land Act”) and the California Department of Housing and Community Development (“HCD”), issued Surplus Land Act Guidelines (collectively with the Surplus Land Act, the “SLA Regulations”), on June 15, 2021, the City declared the Development Parcel and certain other property at Tustin Legacy to be surplus and sent a notice of availability to all required housing entities on June 17, 2021. No affordable housing entity expressed interest in the identified properties during the required 60-day notice period following issuance of such notice. To ensure compliance with the SLA Regulations, prior to approval of this Agreement, the City submitted to HCD: (i) a list of the entities that were sent the Notice of Availability and (ii) Resolution 21-49 adopted by the City Council on June 15, 2021, declaring the Development Parcel to be surplus land; and HCD, by letter dated September 15, 2022, confirmed that the City followed the notice of availability process and is permitted to proceed with the sale or lease of the Development Parcel so long as a covenant is recorded against the Development Parcel that requires that if ten (10) or more residential units are developed thereon, then not less than fifteen percent (15%) of the total number of residential units developed on the Development Parcel shall be for Lower Income Households.
1.1.7 The City initiated a competitive Request for Proposals (“RFP”) process for development of senior congregate care comprised of assisted living and memory care facilities on the Development Parcel. Developer submitted a proposal pursuant to the RFP for purchase and development of the Development Parcel and was selected for further negotiations.
1.1.8 Following selection of Developer, the City and Developer entered into that certain Exclusive Negotiating Agreement (Tustin Legacy Portion of Disposition Area 8) (as amended, “ENA”) contemplating the sale of the Property, and development thereon of age restricted (55 years or older) active adult and independent living facilities and senior congregate care comprised of assisted living and memory care facilities, together with required on-site infrastructure and a complete accompanying set of high quality amenities to be constructed by Developer, including rooftop amenities and private open space.
1.1.9 Following the review of new competitive senior housing options in the market area, Developer adopted a revised design providing (i) a residential active adult residential development with 172 Residential Units, including one manager unit (which may, at the discretion of Developer, be a Lower Income Unit) (comprised of 124 base units and 48 density bonus units), Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 3 City of Tustin/Confluent Development Portion of Disposition Area 8
including approximately 26 Lower Income Units, with the final number of such Residential Units to be shown on the Approved Plans, provided that in no event shall the number of Lower Income Units be less than fifteen percent (15%) of the total Residential Units constructed on the Active Adult Real Property, and (ii) an assisted living and memory care (“AL/MC”) facility comprised of up to 147,500 square feet of development and including 103 Rooms, comprised of 106 assisted living beds in 75 Rooms and 28 memory care Rooms and proposed a plan for development consistent with that approach. The Project is designed to comply with the SLA Regulations requiring that fifteen percent (15%) of the total number of Residential Units on the Development Parcel shall be Lower Income Units.
1.2 Description of Development Parcel, and Real Property.
1.2.1 Definition of Development Parcel. The City is the owner of approximately
6.14 acres of land located in the City of Tustin, County of Orange, California, legally described on Attachment 2A and depicted on Attachment 2B (“Development Parcel”). The Development Parcel is within a portion of Disposition Area 8 bounded by Warner Avenue, future Veterans Way, future John Johnson Way and Armstrong Avenue. The Development Parcel comprises a portion of the land conveyed by the Navy to the City in Navy Quitclaim Deed D dated May 13, 2002 and recorded in the Orange County Clerk Recorder Office on May 14, 2002 as Instrument No. 20020404594 (“Federal Deed”). The Development Parcel is located in Specific Plan Neighborhood D, within Planning Areas 13 and 14 and is referred to in the Navy Reuse Plan as a portion of Parcel 14 and in the Federal Deed as a portion of Parcel I-D-3 and as a portion of Parcel I-D-4. The approximately 2.79 acre parcel identified on the Tentative Parcel Map as proposed to be developed with the Active Adult Project is referred to herein as “Active Adult Real Property” and the approximately 3.35 acre parcel proposed to be developed with the assisted living and memory care Project is referred to in this Agreement as the “AL/MC Real Property”, each as depicted on the Site Plan attached to this Agreement as Attachment 3 (“Site Plan”) and in each case excluding the rights and interests in the City reserved in the Quitclaim Deed as further described in Section 1.2.2.
1.2.2 Definition of Real Property. The term “Real Property” as used in this Agreement shall mean the Development Parcel (and if the Final Parcel Map is Recorded, shall mean Parcel 1 and Parcel 2 as depicted thereon) to be conveyed to Developer pursuant to this Agreement and is comprised of the Development Parcel excluding the following rights and interests of the City which shall be reserved to the City in the Quitclaim Deed:
1.2.2.1 Any and all oil, oil rights, minerals, mineral rights, natural gas, natural gas rights and other hydrocarbons by whatsoever name known, geothermal steam and all products derived from any of the foregoing, that may be within or under the Development Parcel together with the perpetual right of drilling, mining, exploring for and storing in and removing the same from the Development Parcel or any other land, including the right to whipstock or directionally drill and mine from lands other than the Development Parcel, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Development Parcel and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to re-drill, re-tunnel, equip, maintain, repair, deepen and operate any such well or mines; but without, however, the right to enter upon or use the surface of the Development Parcel in the exercise of such rights or otherwise adversely affect the use or operation Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 4 City of Tustin/Confluent Development Portion of Disposition Area 8
of the Development Parcel as anticipated by this Agreement or the structural integrity of any improvements on the Development Parcel; and
1.2.2.2 Any and all water, water rights or interests therein appurtenant or relating to the Development Parcel or owned or used by the City in connection with or with respect to the Development Parcel no matter how acquired by the City, whether such water rights shall be riparian, overlying, appropriative, littoral, percolating, prescriptive, adjudicated, statutory or contractual, together with the perpetual right and power to explore, drill, re-drill and remove the same from or in the Development Parcel, to store the same beneath the surface of the Development Parcel and to divert or otherwise utilize such water, rights or interests on any other property owned or leased by the City; but without, however, the right to enter upon or use the surface of the Development Parcel in the exercise of such rights or otherwise adversely affect the use or operation of the Development Parcel as anticipated by this Agreement or the structural integrity of any improvements on the Development Parcel.
1.2.2.3 Those excess development rights reserved to the City as set forth in Section 4.1.2.
Reservation by the City of the rights and interests in Sections 1.2.2.1 and 1.2.2.2 shall not be deemed to limit Developer’s right to construct foundations, utilities and other subsurface improvements for the purpose of constructing the Project and otherwise engage in subsurface construction activity in order to construct the Project.
1.2.3 Mapping. The City has approved Tentative Parcel Map No. 2025-151 (as approved by the City Council as part of the Pre-Closing Entitlements, “Tentative Parcel Map”) pursuant to the Subdivision Map Act and the City Code. The City shall, when submitted by the Developer, process in its Governmental Capacity and upon approval by it and the Orange County Surveyor’s office cause the Recording of the final parcel map based upon the Tentative Parcel Map (“Final Parcel Map”). The determination of whether to submit the final parcel map for approval by the City and Orange County is at the election of the Developer. Upon Recording, the Final Parcel Map would subdivide the Development Parcel into Parcel 1 and Parcel 2, generally as shown on the Tentative Parcel Map. If Recorded, Parcel 1 of the Final Parcel Map shall comprise the Active Adult Real Property and Parcel 2 shall comprise the AL/MC Real Property. Developer shall enter into the Subdivision Improvement Agreement with the City prior and as a condition to Recording of the Final Parcel Map. Developer shall cause the Final Parcel Map to be Recorded no later than when required by the Schedule of Performance.
1.3 Description of the Project.
1.3.1 Purpose and Approach. The purpose of this Agreement is to (i) effectuate the Specific Plan (including the Reuse Plan incorporated therein), in accordance with the terms and conditions set forth therein and in the Memorandum of Agreement and the Federal Deed, through disposition and development of portions of Tustin Legacy as further described in this Agreement and (ii) to provide for the sale and conveyance of the Property, for the maintenance and use of the Property and certain related improvements by Developer and for the construction of the Project by Developer in accordance with the terms and conditions of this Agreement. The Project shall be designed and constructed to Completion in a manner consistent with the Site Plan.
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Developer intends on assigning this Agreement prior to Close of Escrow to a newly formed entity (“PropCo”) that is wholly owned by a joint venture entity (“JV Entity”), which in turn is owned by (a) certain principals and employees of Confluent Development, LLC (“Confluent”), (b) Clearwater, and (c) an entity owned and Controlled by the Initial Equity Investor. Developer intends that PropCo acquire the Property and become “Developer” at Close of Escrow and develop the Project, provided that in no event shall the Close of Escrow with respect to the Property take place unless and until all of the Closing Conditions in this Agreement have been satisfied.
Developer acknowledges that the qualifications and identity of Manager are of particular concern to the City and accordingly that unless otherwise agreed by the City in its sole discretion, a Person Controlled by Marshall Burton shall be the Manager of Developer.
1.3.2 Active Adult Project Improvements Definitions. This Agreement provides for development by Developer of the Active Adult Real Property with the Active Adult Project Horizontal Improvements, all required on-site infrastructure, the Active Adult Project Vertical Improvements including a complete accompanying set of high-quality tenant amenities (e.g., outdoor pool, fitness center, activity room, rooftop lounge and pickleball), on identified common open space, and 211 parking spaces to be developed at grade and in a parking structure, which shall be designed and constructed as further set forth in Article 8 and the Scope of Development attached to this Agreement as Attachment 8 (“Scope of Development”). The Active Adult Project Horizontal Improvements and the Active Adult Project Vertical Improvements, comprised of approximately 172 Residential Units (comprised of 124 base units and 48 density bonus units), of which not less than 15% (currently estimated as 26 Residential Units) shall be Lower Income Units, are referred to in this Agreement as the “Active Adult Project Improvements” and the development, construction, maintenance, leasing and use of the Active Adult Project Improvements within the boundaries of and/or relating to the Active Adult Real Property is referred to in this Agreement as the “Active Adult Project”. Notwithstanding any provision in this Agreement to the contrary, (i) the final number of Residential Units on the Active Adult Real Property shall be as set forth in the Approved Plans and the number of Residential Units actually constructed on the Active Adult Real Property Parcel shall be established in the Active Adult Project Certificate of Compliance if the Final Parcel Map is Recorded prior to the Recording of the first Certificate of Compliance or in the Final Certificate of Compliance if not, and (ii) the Residential Units may be opened and leased to tenants at any time from and after the issuance by the City of a final certificate of occupancy or temporary certificate of occupancy (if issued in the City’s Governmental Capacity). The Active Adult Project Improvements shall be constructed in a manner consistent with the requirements of the Specific Plan, the Approved Plans, the Entitlements and the Development Permits.
1.3.3 AL/MC Project Improvements Definitions. This Agreement further provides for development by Developer of the AL/MC Real Property with the AL/MC Project Horizontal Improvements, all required on-site infrastructure, the AL/MC Project Vertical Improvements, including a complete accompanying set of high-quality amenities (e.g., fitness center, dining spaces, theater, salon, activity rooms, and club room), and 66 parking spaces to be developed at grade and in a parking structure, which shall be designed and constructed as further set forth in Article 8 and the Scope of Development. The AL/MC Project Horizontal Improvements and the AL/MC Project Vertical Improvements are collectively referred to in this Agreement as the “AL/MC Project Improvements” and the development, construction, maintenance, leasing and use of the AL/MC Project Improvements on the AL/MC Real Property is referred to in this Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 6 City of Tustin/Confluent Development Portion of Disposition Area 8
Agreement as the “AL/MC Project”. Notwithstanding any provision in this Agreement to the contrary, (i) the final number of Rooms in the AL/MC Project shall be as set forth in the Approved Plans and the number of Rooms actually constructed on the AL/MC Real Property shall be established in the AL/MC Project Certificate of Compliance if the Final Parcel Map is Recorded prior to the Recording of the first Certificate of Compliance or in the Final Certificate of Compliance if not, and (ii) the Rooms may be opened and leased to occupants at any time from and after the issuance by the City of a final certificate of occupancy or temporary certificate of occupancy (if issued in the City’s Governmental Capacity). The AL/MC Project Improvements shall be constructed in a manner consistent with the requirements of the Specific Plan, the Approved Plans, the Entitlements and the Development Permits.
1.3.4 Other Agreements. At the Close of Escrow, the City intends to convey the Property to Developer, in accordance with the terms and conditions of this Agreement. As further set forth in this Agreement, at or prior to the Close of Escrow the City intends to establish Special Restrictions, an SLA Covenant and an Affordable Housing Declaration and to record certain additional covenants, conditions and restrictions with respect to the Property as further described in this Agreement and the Attachments.
1.4 Parties to the Agreement.
1.4.1 City. The City is a municipal corporation of the State. The City has been recognized as the Local Redevelopment Authority by the Office of the Secretary of Defense for the former Marine Corps Air Station, Tustin, for purposes of the Base Closure Law. The term “City” as used in this Agreement shall mean the City of Tustin and each assignee or successor to the City’s rights, powers and responsibilities, provided that when in this Agreement the term “City and its Governmental Successors” is used, the term “City” shall be deemed to mean solely the City of Tustin. The City Council shall have the right, in its sole discretion, to assign its rights and obligations to any agency or instrumentality of the City. The principal office of the City and mailing address is 300 Centennial Way, Tustin, California 92780.
1.4.2 Developer; Initial Developer. The Developer as of the Effective Date is CD-CW (TUSTIN) LLC, a Colorado limited liability company, and, as of the Effective Date, CDCW (TUSTIN) LLC is also referred to in this Agreement as the “Initial Developer”. The principal office of Initial Developer is located at and its mailing address is c/o Confluent Development, 2215 Market Street, Denver, Colorado 80205. Developer shall have the right, solely in accordance with the provisions of Article 2 and the other terms and conditions set forth in this Agreement, to assign its rights and obligations under this Agreement and the Other Agreements and in such event, Initial Developer and each Transferee that is a Successor Owner with respect to all of a Transferor’s interest in the Transferable Interests shall thereafter (and may concurrently with the Transferor) be “Developer” under the terms of this Agreement.
1.4.3 Responsibilities of Developer. Developer shall be responsible to cause the design, development, construction and Completion of the Project (and to cause the operation of the same) as required by this Agreement and the Landscape Installation and Maintenance Agreement and to comply with the requirements of the Other Agreements with respect to the Project.
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1.4.4 Relationship of City and Developer. The Parties acknowledge and agree that the relationship of the City and Developer is neither that of a partnership nor that of a joint venture. Notwithstanding any other provision of this Agreement, Developer is not, and shall not be deemed to be, the agent of the City for any purpose, and shall not have the power or the authority to bind the City to any contractual or other obligation. Prior to the Close of Escrow, Developer may only characterize itself to third parties as the prospective purchaser and/or developer of the Property. Developer shall not at any time hold itself out to the City or to any other third party as an agent of the City, and shall not, by any act or omission, mislead any third party into believing, or allow any third party to continue in the mistaken belief that Developer is an agent of the City or has the power or authority to bind the City to any contractual or other obligation.
1.5 Federal Requirements Applicable to Tustin Legacy.
1.5.1 Federal Economic Development Conveyance. The Parties acknowledge and agree that this Agreement is entered into as part of an economic development conveyance of Tustin Legacy to the City pursuant to the Base Closure Law, the Memorandum of Agreement and the terms and conditions of the Federal Deed, including the environmental restriction pursuant to California Civil Code Section 1471 contained therein.
1.5.2 Memorandum of Agreement and Federal Deed. This Agreement is and shall be subject to the terms and conditions of the Memorandum of Agreement and the Federal Deed and the rights, obligations and remedies of the Federal Government under the Federal Deed, and nothing contained in this Agreement shall be construed in a manner that is inconsistent with the rights, obligations and remedies of the Federal Government under the Federal Deed.
Accordingly, if any provision of this Agreement contradicts, modifies or in any way changes the terms of the Memorandum of Agreement or the Federal Deed, the terms of the Memorandum of Agreement and Federal Deed shall prevail and govern.
1.6 Other Governmental Requirements Applicable to Tustin Legacy.
1.6.1 Compliance with SLA Regulations. The City is required by law to comply with the SLA Regulations with respect to the development of the Real Property. Developer acknowledges that for the benefit of the City as a condition to the Close of Escrow, the City shall Record an SLA Covenant in substantially in the form and substance of the instrument attached as Attachment 25 to this Agreement (“SLA Covenant”) against the Development Parcel at the Close of Escrow, that requires that if ten (10) or more residential units are developed thereon, not less than fifteen percent (15%) of the total number of residential units developed on the property shall be sold or rented at affordable housing cost, as defined in Section 50052.5 of the California Health and Safety Code, or affordable rent, as defined in Section 50053 of the California Health and Safety Code, to lower income households, as defined in Section 50079.5 of the California Health and Safety Code. Any such rental units shall remain affordable to, and occupied by, lower income households for a period of 55 years for rental housing and 45 years for ownership housing. The initial occupants of all ownership units shall be lower income households, and the units shall be subject to an equity sharing agreement consistent with the provisions of paragraph (2) of subdivision (c) of 65915 of the California Government Code. Developer acknowledges that these requirements shall be restrictions running with the land and shall be enforceable against any owner who violates such restrictions and each successor-in-interest who continues the violation by any Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 8 City of Tustin/Confluent Development Portion of Disposition Area 8
of the entities described in subdivisions (a) to (f), inclusive, of Section 54222.5 of the California Government Code. Application of these provisions to the Project is described in Article 13.
1.6.2 Compliance with Other Governmental Requirements. This Agreement is subject to all Governmental Requirements (including the General Plan, the Specific Plan, the City Code and the SLA Regulations) applicable to the Real Property and the Project or any portion thereof, provided, however, that the City acknowledges and agrees that, substantially concurrently with the execution of this Agreement, the City and Developer are entering into a statutory development agreement pursuant to California Government Code Section 65864 et seq. (“Development Agreement”) relating to the Property and the Project and that any provisions of this Agreement with respect to the rights and obligations of Developer under any Governmental Requirements imposed by the City relating to entitlements or development of the Real Property shall be subject to the provisions of the Development Agreement and in the event of any inconsistency between such provisions under this Agreement and the Development Agreement, the Governmental Requirements required to be imposed pursuant to the Development Agreement shall control.
1.7 Not a Development Agreement.
This Agreement is not a development agreement as provided in California Government Code Section 65864 and, as further set forth in Section 8.4.4, is not a grant of any entitlement, permit, land use approval, or vested right in favor of Developer, the Project or the Property; however, the Parties will separately enter into the Development Agreement as provided in Section 1.6.2. The City shall use good faith efforts, within applicable legal constraints and consistent with applicable City policies, to take such actions as may be necessary or appropriate to effectuate and carry out this Agreement in a timely and commercially reasonable manner.
1.8 DDA Transaction Expenses and Independent Contract Consideration.
1.8.1 ENA Expenses Deposit and Transaction Expenses. Pursuant to Section 4.3 of the ENA, Developer has paid Four Hundred Thirty Thousand Six Hundred NinetyTwo Dollars ($430,692.00)2 to the City as ENA Deposits (“ENA Expenses Deposit”) to be used by the City to pay “City Transaction Expenses” as defined in the ENA. Developer has also paid to the City the ENA Extension Deposits which amounts are not ENA Expenses Deposits.
1.8.2 City Costs Deposit; Independent Consideration. Upon the execution of this Agreement by the Parties, the funds remaining in the ENA Expenses Deposit shall be the “City Costs Deposit”, provided that, if the ENA Expenses Deposit is less than $50,000.00, Developer shall, not later than three (3) Business Days following the Effective Date, deliver to the City additional funds sufficient to bring the City Costs Deposit to $50,000.00 (“City Costs Deposit”).
The City Costs Deposit shall be deposited by the City in an account in a bank or trust company selected by the City. If any interest is paid on such account, such interest shall accrue to any balances in the account for the benefit of Developer and as additional security for Developer obligations under this Section 1.8. One Hundred Dollars ($100.00) of the City Costs Deposit shall be retained by the City as “Independent Contract Consideration”. The City Costs Deposit may 2 NTD: To be confirmed by City.
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be used by the City to pay the City’s DDA Transaction Expenses and the City Costs Deposit will be depleted accordingly. Until the earlier to occur of (i) Recording by the City of the Final Certificate of Compliance, or (ii) termination of this Agreement, if at any time the amount of funds in the City Costs Deposit account (including interest accrued thereon) is depleted below Twenty Five Thousand Dollars ($25,000), Developer shall be required to pay to the City each time an additional amount, as specified by the City in writing, to replenish the City Costs Deposit to Fifty Thousand Dollars ($50,000). Each such payment shall be deposited by the City into the City Costs Deposit account to be applied to DDA Transaction Expenses in accordance with the provisions of Section 1.8.3.
1.8.3 Payment of DDA Transaction Expenses. Developer shall pay all DDA Transaction Expenses incurred by the City during the Term of this Agreement, whether arising with respect to matters or incurred by the City prior to or following the Close of Escrow until the Recording by the City of the Final Certificate of Compliance. The City Costs Deposit has been established to fund the DDA Transaction Expenses and may be used by the City for such purpose and shall be depleted accordingly. Immediately upon incurring any DDA Transaction Expenses or receipt of an invoice from third parties for same, subject to complying with the requirements of Section 1.8.4, the City shall have the right to deduct the amounts due it on account thereof from the City Costs Deposit. In addition, at the Close of Escrow, the City shall be entitled to deduct from the City Costs Deposit the payment of all DDA Transaction Expenses then unpaid and if such amounts are insufficient to cover all DDA Transaction Expenses incurred by the City to the Close of Escrow, Developer shall, as a condition to the Close of Escrow, pay the full amount of DDA Transaction Expenses incurred by the City to and including the Closing Date and then remaining unpaid and such additional amount as is required to maintain a City Costs Deposit held by the City of Fifty Thousand Dollars ($50,000.00). If following Recording by the City of Certificates of Compliance for both the Active Adult Project and the AL/MC Project, there is any City Costs Deposit amount held by the City after application of such funds by the City to reduce the DDA Transaction Expenses arising or incurred by the City to such date, the City shall refund such amount to Developer. If the amount of the City Costs Deposit is not sufficient to fund all DDA Transaction Expenses arising or incurred prior to such date, Developer shall pay the outstanding amounts due with respect to DDA Transaction Expenses to the City within thirty (30) calendar days following receipt of an invoice from the City therefore, provided that the City shall first apply the amount of the City Costs Deposit, if any, then held by it in satisfaction of such invoice, and shall reflect the amount of such credit on the invoice.
1.8.4 Standards Applicable to DDA Transaction Expense Payments. Absent manifest error, the determination of costs, expenses, and fees constituting DDA Transaction Expenses shall be made by the City in its sole discretion and City shall provide to Developer, on a quarterly basis during the Term, summary written notices, including non-confidential summary invoices of third party consultants from the City setting forth the identity of the provider or cost and the amounts attributable and/or paid to each that constitute DDA Transaction Expenses and related non-confidential documents evidencing such expenses. Developer shall have the right to reasonably object to any DDA Transaction Expenses upon written notice thereof delivered to the City within fifteen (15) calendar days following Developer’s receipt of such notice specifying the grounds for such objection and to request in writing to the City reasonable further non-confidential information supporting any DDA Transaction Expenses, provided that in no event shall Developer Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 10 City of Tustin/Confluent Development Portion of Disposition Area 8
have the right to challenge the hourly rates of City staff nor those of the City’s third party attorneys or consultants.
1.8.5 Exclusions from DDA Transaction Expenses. The City and Developer hereby acknowledge and agree that the DDA Transaction Expenses do not include: (i) any fees or deposits required of Developer for processing Entitlements applications; (ii) any fees or costs for complying with provisions of CEQA or its State CEQA implementing regulations or other matters identified in Section 8.4; (iii) any costs to review or approve any applications or submittals by Developer to the City in connection with the Project; (iv) the Development Costs, Project Fair Share Contribution or any other development impact fees, exactions or other costs imposed as conditions of approval or pursuant to the Development Agreement or mitigation measures with respect to the Entitlements or pursuant to the Other Agreements; (v) the marketing fees set forth in Section 8.7.4; or (vi) any other matters in this Agreement that expressly require Developer to pay, at its sole cost, for expenses incurred in connection with this Agreement that are not otherwise duplicative of other fees to be paid to the City in connection with the Project. The obligation of Developer to pay for the DDA Transaction Expenses pursuant to this Section 1.8 shall not diminish or limit Developer’s obligation to pay for any of the costs in the preceding sentence.
1.8.6 The provisions of this Section 1.8 shall survive the termination of this Agreement until all DDA Transaction Expenses due are paid.
1.9 Definitions; Attachments.
1.9.1 Definitions. Capitalized terms used in this Agreement, including in the Attachments attached hereto, unless otherwise defined in this Agreement, shall have the respective meanings specified in the Glossary of Defined Terms attached hereto as Attachment 1. Unless otherwise indicated, references in this Agreement to articles, sections, paragraphs, subsections, clauses, exhibits, attachments and schedules are to the same contained in or attached to this Agreement and all attachments and schedules referenced in this Agreement are incorporated in this Agreement by this reference as though fully set forth in this Section.
1.9.2 “Substantially in the Form and Substance.” Wherever used in this Agreement, the term “substantially in the form and substance” shall mean that the referenced document, when compared to the applicable Attachment or previously approved form of document, (i) is consistent in all material respects, and none of the modifications in the referenced document materially diminish a Party’s rights or materially increase such Party’s obligations under this Agreement, as determined by the Party for whose benefit the condition is written, in its sole discretion or (ii) is otherwise in such form and substance mutually agreed upon by the Parties in their sole discretion. In the event the Parties disagree whether or not a particular document is substantially in the form and substance of the applicable Attachment or previously approved form of document, the Parties shall promptly meet and confer in good faith to seek to resolve such disagreement.
1.9.3 “Includes”, “Included” and “Including”. As used in this Agreement the words “include”, “includes”, “included” and “including” mean, respectively, “include, without limitation” “includes, without limitation”, “included, without limitation” and “including, without limitation”.
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1.9.4 “Shall”; “Shall Not”; “May”. When stated in connection with performance by a Party, the word “shall” imposes a mandatory requirement on that Party to perform the stated act or requirement (and shall be synonymous with “must”) and the term “shall not” imposes a mandatory requirement on that Party not to perform the stated act or requirement (and shall be synonymous with “must not”). The word “may” is permissive and does not impose any mandatory requirement on a Party to perform the stated act.
1.9.5 “Sole”. When stated in connection with the discretion of any Party (i.e., in the “sole discretion” of such Party, the word “sole” means “sole and absolute”.
1.9.6 “Binding Upon Each and Every Person Claiming By, Through or Under Developer or any Successor Owner”. When stated in this Agreement, the term “binding upon each and every Person claiming by, through or under Developer or any Successor Owner” shall mean and include each Person with a possessory or ownership interest in any portion of the Property or the Project but shall specifically exclude End Users.
2. Prohibition Against Transfers and Transfer of Control.
2.1 Importance of Developer Qualifications.
2.1.1 Developer Acknowledgement of City Concerns. Developer represents and agrees that its undertakings pursuant to this Agreement are for the purpose of development of the Project and not for speculation in land holding. Developer recognizes and agrees that the qualifications and identity of Initial Developer and its Key Employees and the fact that Confluent is the managing member of Initial Developer, as well as the intended Transfer to PropCo, the Control by the Initial Equity Investor of Propco, and restrictions on Mortgages set forth in this Agreement, are all of particular concern to the City and community. Developer further acknowledges the importance of the development of the Property and Tustin Legacy to the general welfare of the community and to provide affordable housing in the City and that a Transfer of Control is for practical purposes a transfer of rights and obligations under this Agreement or the Property and for the foregoing reasons, agrees to the following restrictions on Transfer and Transfer of Control during the Term. Transfers and Transfers of Control.
2.1.2 Survival of Provisions. The provisions of this Article 2 shall survive the termination of this Agreement at the Close of Escrow until the Recording by the City of the Final Certificate of Compliance.
2.2 Restrictions on Transfers and Transfers of Control and Releases Following Transfer.
2.2.1 For the reasons set forth in Section 2.1, Developer, on behalf of itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner (but specifically excluding any End Users), acknowledges and agrees that the restrictions on Transfer and Transfer of Control set forth in this Article 2 and Article 17 shall apply to Developer, the Real Property, the Project Improvements, the Property, and the Project and any portion thereof or interest therein or in this Agreement or the Other Agreements (“Transferable Interests”) until Recording by the City of the Final Certificate of Compliance, provided that if the Final Parcel Map is Recorded prior to Recording by the City of the first Certificate of Compliance, Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 12 City of Tustin/Confluent Development Portion of Disposition Area 8
then these provisions shall apply as to the Active Adult Project and Active Adult Real Property, until Recording by the City of the Active Adult Project Certificate of Compliance, and as to the AL/MC Project and AL/MC Real Property, until Recording by the City of the AL/MC Project Certificate of Compliance. Further, during the Term of this Agreement, Developer shall not Transfer less than the entirety of the Transferable Interests and any Transfer resulting in a division of ownership with respect to the Transferable Interests shall be void and of no force or effect except that the following Transfers of less than all of the Transferable Interests shall be authorized and shall proceed only if in accordance with the requirements of this Article 2: (i) any Permitted Transfer described in Sections 2.2.2.2 through 2.2.2.4, (ii) any Transfer to a Permitted Mortgagee to secure a Construction Loan for the construction of the Project Improvements authorized pursuant to Section 2.2.5 and Article 17, and (iii) the foregoing restrictions shall not apply to any portion of the Real Property for which a Certificate of Compliance has been Recorded by the City.
No Person shall acquire any rights or powers under this Agreement or the Other Agreements or any interest in all or any portion of the Property, the Project Improvements thereon or any portions thereof except with the written consent of the City, as set forth in this Article 2, or with respect to any Mortgage, Article 17, including through a Non- Foreclosure Event.
2.2.2 Permitted Transfer. Notwithstanding anything to the contrary contained in this Agreement, the following Transfers are each a “Permitted Transfer” and shall not be subject to the City’s prior written consent or otherwise subject to the requirements of Section 2.2.3 or 2.4, or except as set forth immediately below, Section 2.2.4, provided that Developer shall provide not less than thirty (30) calendar days’ prior written notice to the City of such Transfer and the Person(s) to which Transfer is made and in the event of Transfer pursuant to Section 2.2.2.1, shall provide, prior to or concurrently with the Transfer, the Transfer Date deliverables as required in Section 2.2.4:
2.2.2.1 A Transfer by Responsible Developer to a Developer Affiliate of the entirety of Developer’s interest in the Transferable Interests; provided that:
(i) unless and until Responsible Developer is released from such obligations pursuant to Article 9 or Section 16.6, the City shall be entitled to look to both the Transferee and the Responsible Developer notwithstanding such Transfer, and the Responsible Developer shall remain fully liable under and shall not be released from this Agreement and shall cause its Developer Affiliate to fully comply with this Agreement as though there had not been a Transfer;
(ii) there shall be no Transfer of Control, the Controlling Person of the Responsible Developer shall be, directly or indirectly, the Controlling Person of the Developer Affiliate that is the Transferee shall be the Manager; (iii) neither Transferor nor the then Responsible Developer shall be in Potential Default or Material Default under this Agreement at the Transfer Date; (iv) the Responsible Developer or the Responsible Developer’s Controlling Person shall provide the City with written notice of such transaction not less than thirty (30) Business Days prior to the proposed Transfer; and Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 13 City of Tustin/Confluent Development Portion of Disposition Area 8
(v) no later than the Transfer Date, all of the applicable conditions set forth in Sections 2.2.4, 2.4, 4.6, 8.9 and 8.10 shall have been satisfied.
2.2.2.2 Any Transfer by Developer of portions of the Property to the City and/or grants of easements affecting the Real Property to the City, to any public or quasi-public entity or to any utility, or to any Successor Owner for the benefit of any portion of the Property, as necessary or desirable for the development or operation thereof.
2.2.2.3 Any temporary license or other temporary grant of access rights by Developer to any portion of the Real Property to the City and/or to any other third party, as necessary or desirable for the development of the Real Property.
2.2.2.4 Any lease to an End User as described in clause (ii) of that definition for a Residential Unit within the Active Adult Project or for a Room in the AL/MC Project.
So long as Confluent or another Person Controlled by Confluent or Marshall Burton (or another Person approved in writing by the City in the exercise of the City’s sole discretion after execution of this Agreement and prior to the proposed Permitted Transfer) is, directly or indirectly, the Manager of Initial Developer, Initial Developer shall have the right to transfer or permit the transfer of ownership interests in the Initial Developer entity and in the members and Manager of Initial Developer in connection with the admission of new members and/or the loss of members in Initial Developer or Initial Developer’s members, as applicable, in the ordinary course of business.
2.2.3 Provisions Applicable to Transfer and Transfer of Control Other than Permitted Transfer. Except as set forth in Section 2.2.2 or Article 17, Developer shall comply with the requirements of this Section 2.2.3 and Sections 2.2.1, 2.2.4, 2.2.5, 2.4, 4.6, 8.9 and 8.10 as a condition to each Transfer or Transfer of Control of the Property and shall obtain the prior written consent of the City thereto, which consent, except as set forth in Section 2.7, shall be granted or denied in the City’s sole discretion; provided that the foregoing restrictions shall not apply to any portion of the Real Property for which the City has executed and Recorded a Certificate of Compliance. The City’s right of consent shall include the right of the City to approve the Transferee, the Controlling Person of Transferee and the proposed Manager of Transferee with respect to a Transfer, and the Controlling Person of Developer and the Manager of Developer, in the case of a Transfer of Control of Developer, and the right to approve the proposed Guarantor or replacement Guarantor and proposed Equity Investor or replacement Equity Investor, if any, described in Sections 8.9 and 8.10. In order to provide the City with information necessary to inform its right to consent as described in this Section 2.2.3, Developer shall provide to the City at least thirty (30) Business Days prior to the date of any proposed Transfer or Transfer of Control:
2.2.3.1 the name(s) of the proposed Transferee and its Key Employees and principals and the new Controlling Person, if applicable; the biographies of the principals and Key Employees of the proposed Transferee and the names and biographies of any proposed equity investor or guarantor;
2.2.3.2 all of the material proposed terms of the Transfer or Transfer of Control and draft documents in substantially the form and substance of the final forms of the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 14 City of Tustin/Confluent Development Portion of Disposition Area 8
documents described in Section 2.2.4 and, if applicable, red-lined to show changes from any prior drafts reviewed by the City;
2.2.3.3 provide evidence to the City satisfactory to it in its sole discretion other than a previously approved Permitted Mortgage or Mortgage meeting the requirements of this Agreement will be required with respect to the Property or the Project and (i) either (a) each previously approved Evidence of Equity, Equity Commitment and Guaranty remains in full force and effect (in which case the City’s rights of review shall be as set forth in Section 4.6.1.4), (1) there are no defaults thereunder, (2) there have been no modifications thereto other than modifications that have been consented to by the City in its sole discretion, or if modified that the modifications have been reviewed and approved by the City in accordance with Section 4.6.1.4, and (3) the same will remain in full force and effect following such Transfer or Transfer of Control, or (b) if the Evidence of Equity or Equity Commitment will be replaced, if the Equity Investor is proposed to be replaced, information required for the City to approve the Evidence of Equity, Equity Commitment Equity Investor as set forth in Sections 4.6 and 8.10, and (ii) if the Guarantor has not previously been approved or is proposed to be replaced, the information required for the City to approve the proposed Guarantor as set forth in Section 8.9.1 and, if applicable, Section 8.9.2 and in each case, together with such modifications to the form of the Equity Commitment and/or Evidence of Equity and Guaranty as may be required by the City in its sole discretion;
2.2.3.4 a certificate of the proposed Transferee and new Controlling Person for each Transfer and of the new Controlling Person for each Transfer of Control describing other similar senior living real estate projects developed and leased by, or sold by the proposed Transferee over the preceding five (5) year period, the dates of involvement by the proposed Transferee and new Controlling Person with such projects and the success of the projects, such certificate to be made by the manager, president or other Person with appropriate authority from the proposed Transferee and/or Controlling Person, as applicable, to do so;
2.2.3.5 with respect to each Transfer, an Updated Financing Plan, in each case meeting the requirements of Section 4.6.1 prepared by Transferee and with respect to each Transfer of Control, either (i) certification by Developer that the most recent Financing Plan approved by the City remains accurate, true and complete, or (ii) an Updated Financing Plan meeting the requirements of Section 4.6.1.12 prepared by Developer and with certification as required by Section 4.6.1.3 (and such City approval rights shall not negate the rights of the City to review and approve an Updated Financing Plan as a condition to Close of Escrow).
2.2.3.6 In addition, with respect to each Transfer of Control, Developer shall also provide evidence to the City that there is no change to the identity of Developer and such other relevant information as the City may request in its sole discretion in connection with its consent rights under this Agreement.
2.2.4 Transfer Date Deliverables. No later than the Transfer Date:
2.2.4.1 With respect to each Transfer, Transferor and Transferee shall execute and deliver to each other and the City and shall have acknowledged and Recorded, an Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 15 City of Tustin/Confluent Development Portion of Disposition Area 8
assignment and assumption agreement in substantially the form and substance of the instrument attached to this Agreement as Attachment 17A (“Assignment Agreement”).
2.2.4.2 Developer shall deliver to the City a certificate executed by the chief financial officer or other appropriate authorized officer of (i) if a Transfer or Control, in substantially the form and substance of the Developer Date Down and Reaffirmation Certificate attached as Attachment 19B (“Developer Date Down and Reaffirmation Certificate”) or (ii) if a Transfer, substantially in the form and substance of the certificate attached as Attachment 17B to this Agreement (“Transferee Certificate”), in either case dated as of the Transfer Date;
2.2.4.3 If the Equity Commitment will remain in effect and Transferee is utilizing an Approved Equity Investor that has previously delivered an Equity Investor Original Certificate, a certificate in substantially the form and substance of the Equity Investor Date Down Certificate attached to this Agreement as Attachment 15B (“Equity Investor Date Down Certificate”) otherwise, an Equity Investor Original Certificate by an Approved Equity Investor (provided that the Equity Investor is approved by the City prior to the Transfer pursuant to Section 8.10), in each case certified by the chief financial officer or other appropriate authorized officer of such Approved Equity Investor, and, if revised, Evidence of Equity and/or Equity Commitment, in either case dated as of the Closing Date;
2.2.4.4 For a Transfer following the Close of Escrow, if the existing Guaranty remains in effect, Developer shall cause delivery from the Guarantor of executed originals of a Reaffirmation of Guaranty, a Guarantor Date Down Certificate in substantially the form and substance of the Guarantor Date Down Certificate attached to this Agreement as Attachment 14C (“Guarantor Date Down Certificate”) and a Reaffirmation Legal Opinion or, if a new Guarantor is proposed, Developer shall cause such new Guarantor (provided that the proposed Guarantor and form of Guaranty is approved by the City prior to the Transfer pursuant to Section 8.9.1 and, if applicable, Section 8.9.2) to deliver to the City a Guaranty executed by Guarantor, a declaration certified by the chief financial officer or other appropriate authorized officer of Guarantor substantially in the form and substance of the certificate attached to this Agreement as Attachment 14B (“Guarantor Original Certificate”); and a legal opinion substantially in the form and substance of the Guaranty Legal Opinion attached to this Agreement as Attachment 14D, or other form required by Guarantor’s legal counsel and approved by the City in its sole discretion, executed by legal counsel to the Guarantor as the same may be required to be modified to reflect the state of formation of Guarantor (“Guaranty Legal Opinion”); and
2.2.4.5 all of the applicable conditions set forth in Sections 2.2.2 or 2.2.3 shall have been satisfied.
2.2.5 Restrictions on Mortgages, Sale Leasebacks and Mezzanine Financing.
No Transfer to a Mortgagee shall be valid or enforceable with respect to the Property or the Project Improvements unless the Mortgage is a Permitted Mortgage entered into with a Permitted Mortgagee in compliance with the requirements and conditions of Article 17, including the restrictions on Mortgages and consent of the City as required therein and the execution and delivery by Permitted Mortgagee and the City of a Subordination Agreement in substantially the form and substance as that attached to this Agreement as Attachment 24 or as otherwise approved by the City in its sole discretion (“Subordination Agreement”). Except as set forth in Article 17, Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 16 City of Tustin/Confluent Development Portion of Disposition Area 8
Developer shall not encumber the Property with any Mortgage, In addition, Developer shall not enter into or convey or otherwise assign the Property or any portion thereof to a third party for purposes of a sale-leaseback transaction or utilize Mezzanine Financing. The foregoing restrictions shall not apply and the City shall have no right to approve or disapprove a Mortgage as to any portion of the Real Property or Project for which the City has Recorded a Certificate of Compliance.
2.2.6 Bankruptcy. The following shall be considered Transfers or Transfers of Control which are prohibited without consent from the City, which may be granted or withheld in the City’s sole discretion (herein, a “Developer Insolvency Event”):
2.2.6.1 If Developer is or becomes bankrupt or insolvent or if any involuntary proceeding is brought against Developer (unless, in the case of a petition filed against Developer, the same is dismissed within ninety (90) calendar days), or Developer makes an assignment for the benefit of creditors, or institutes a proceeding under or otherwise seeks the protection of federal or State bankruptcy or insolvency laws, including the filing of a petition for voluntary bankruptcy or instituting a proceeding for reorganization or arrangement;
2.2.6.2 If a writ of attachment or execution is levied on this Agreement or on any portion of the Property, where such writ is not discharged within ninety (90) calendar days; or
2.2.6.3 If, in any proceeding or action in which Developer is a party, a receiver is appointed with authority to take possession of all or any portion of the Property, where possession is not restored to Developer within ninety (90) calendar days.
2.2.7 Foreclosure Transfers.
2.2.7.1 Foreclosure Transfer to Permitted Mortgage Transferee.
Notwithstanding the provisions of this Article 2, a Transfer to a Permitted Mortgage Transferee that acquires an interest in the Property by reason of a Foreclosure shall not require the consent of the City or Developer or constitute a Potential Default or Material Default under this Agreement.
2.2.7.2 Transferee Other than to a Permitted Mortgage Transferee.
With respect to a Transfer to any Person other than a Permitted Mortgage Transferee at or following a Foreclosure, the provisions of Section 2.2.3 shall apply and upon provision of such information, a Guaranty and Evidence of Equity or an Equity Commitment, the City shall not withhold its consent to such Transfer so long as the Transferee provides information that the City determines to be sufficient that the Transferee is a Qualified Foreclosure Purchaser, and if the Transfer occurs at a Foreclosure sale, the information required by Section 2.2.3, including evidence that the Transferee is a Qualified Foreclosure Purchaser shall be provided as soon as practicable, and in no event more than thirty (30) calendar days following the Transfer.
2.2.7.3 Effect of Foreclosure. If a Permitted Mortgagee acquires all of the Foreclosed Collateral in a Foreclosure, the provisions of this Section 2.2.7 and the Subordination Agreement shall govern such acquisition and the rights and obligations of such Permitted Mortgagee. If a Person that is not a Permitted Mortgage Transferee acquires Foreclosed Collateral, or if a Permitted Mortgage Transferee acquires Foreclosed Collateral but then subsequently Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 17 City of Tustin/Confluent Development Portion of Disposition Area 8
Transfers the Foreclosed Collateral with the effect that the Transferee acquires the Real Property and the Project Improvements, then upon such Foreclosure or subsequent Transfer, as applicable:
(i) all of the provisions contained in this Agreement and the Other Agreements shall be binding upon the Transferee acquiring the Foreclosed Collateral (such Transferee is referred to as “Foreclosure Transferee”), and (ii) upon the satisfaction of the requirements of Sections 2.2.4 and 2.2.7.2, the City shall recognize such Foreclosure Transferee as the Developer under this Agreement upon execution by the Foreclosure Transferee of an Assignment Agreement by which it shall expressly assume for itself and its successors and assigns, and for the benefit of the City all the rights and obligations of Developer under this Agreement and the Other Agreements arising from and after the date of such Foreclosure or subsequent Transfer, as applicable; and (iii) Foreclosure Transferee shall agree in a writing reasonably satisfactory to the City to be subject to all the conditions and restrictions to which Developer is subject by reason of this Agreement and the Other Agreements. Any failure of a Permitted Mortgagee to satisfy the requirements of Section 2.2.4 or this Section 2.2.7 or of a Foreclosure Transferee to satisfy the requirements of clause (iii) of the immediately preceding sentence shall constitute a Material Default by Developer which shall not be subject to extension for Force Majeure Delay.
2.2.8 Initial Transfer to Subsidiary of Joint Venture. The City acknowledges the intention of the Developer to Transfer the entirety of the Transferable Interests to PropCo as of the Closing Date, and Developer acknowledges that the Transfer so effected would not be a Permitted Transfer. Upon compliance by Developer and PropCo with all of the requirements of Sections 2.2.3 and 2.2.4, the City Manager, acting alone, shall have authority to approve a Transfer of all of the Transferrable Interests to PropCo as of the Closing Date.
2.3 Effect of Transfer; Release of Transferor.
2.3.1 Notwithstanding any Transfer or Transfer of Control, unless specifically released by the City in writing as set forth in Section 2.3.2 or otherwise released by the City (in its sole discretion) in writing, Initial Developer and each subsequent Developer shall remain fully liable for the obligations of Developer under this Agreement and the Other Agreements following a Transfer, subject to the effects of Recording by the City of a Certificate of Compliance as to any portion of the Project against which the same is Recorded, as provided in Article 9.
2.3.2 Upon a Transfer (other than a Permitted Transfer) of all of the Transferable Interests to a Transferee approved by the City pursuant to Section 2.2.3 and with the satisfaction of all of the conditions to such Transfer set forth in Sections 2.2.3 and 2.2.4 and the assumption in writing by Transferee of all obligations under this Agreement and the Other Agreements pursuant to an Assignment Agreement executed and acknowledged by Transferor and Transferee, the City shall execute a consent to assignment and release of Transferor substantially in the form and substance of the consent attached to the Assignment Agreement and, thereupon, Transferor shall be released from the obligations of Developer under this Agreement and the Other Agreements arising after the date of such Transfer; provided, however, that Transferor shall not be released with respect to (i) matters or circumstances (including any payment obligations) which relate to or Accrued during the period that such Transferor was the Developer hereunder (or during such longer period for which such Transferor is liable hereunder), (ii) the releases set forth in Section 4.5.3 or in the Other Agreements, and (iii) Developer’s indemnity obligations under this Agreement or the Other Agreements as and to the extent set forth in this Agreement. Upon a Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 18 City of Tustin/Confluent Development Portion of Disposition Area 8
Foreclosure or when otherwise agreed by the City in its sole discretion, Developer shall be released from its obligations under this Agreement and the Other Agreements arising from and after the date of such Transfer or Foreclosure if and only if the Transfer is of all of the Transferable Interests to a Transferee approved by the City in its sole discretion or to Qualified Foreclosure Purchaser approved by the City in its reasonable discretion.
2.3.3 Following Transfer, the Property and Improvements thereon, if any, shall continue to be subject to this Agreement and, if then in effect, the Other Agreements, and each Transferee, Successor Owner, and all Persons claiming by, through or under Developer or any Successor Owner, shall be deemed to have assumed and shall be obligated to comply with all covenants, conditions, restrictions, and obligations of Developer under the terms of this Agreement and the Other Agreements then in effect unless otherwise set forth herein or in the Assignment Agreement consented to by the City.
2.4 City Costs.
Developer shall promptly pay to the City all of the City’s actual out of pocket third party expenses, including legal fees, and staff costs incurred with respect to the review, consideration, analysis and response to any of the matters required to be reviewed or consented to by the City pursuant to Articles 2 and 17 and Sections 4.6, 8.9 and 8.10 including with respect to (i) any request for consent or approval of a Guarantor, Equity Investor, Permitted Mortgagee or Permitted Mortgage, Transferee, Transfer or Transfer of Control, and (ii) review, consideration, preparation and delivery of each City Estoppel.
2.5 City Estoppel.
From time to time (but in no event more often than four times annually) within twenty (20) calendar days of the City’s receipt of a written request therefor, the City shall execute and deliver to Developer and any Transferee, a City Estoppel, substantially in the form and substance of the City Estoppel attached hereto as Attachment 5 (“City Estoppel”) but with such modifications as are necessary in the City’s sole discretion to ensure the accuracy of the statements made therein.
2.6 Restrictions on Sale of Units or Condominium Development; Rental of Residential Units and Rooms.
The Real Property shall not be made subject to condominium laws (whether residential or commercial) and shall be developed solely for rental of Residential Units and Rooms and not with the intent to sell individual Residential Units or Rooms, and the general prohibition against Transfer outlined in this Agreement shall be applicable to the sale of individual Residential Units in the Active Adult Project and Rooms in the AL/MC Project.
2.7 Effect of and Remedies for Improper Transfers or Transfers of Control.
Without limiting the generality of the foregoing, a failure (i) by Developer to comply with the requirements of this Article 2 or Article 17 with respect to any Transfer or Transfer of Control or (ii) by any Transferee to execute the Assignment Agreement required by Section 2.2.4.1 or to execute and deliver, or cause a Transferee, its Approved Equity Investors, if applicable, and its Guarantor to execute and deliver each of the certificates and other documents required in Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 19 City of Tustin/Confluent Development Portion of Disposition Area 8
connection with such Transfer, shall in each case be a Material Default under this Agreement, subject to the provisions of Section 14.2.3, but with no extension on account of Force Majeure Delay and, in such event, the City shall have all remedies available to it at law and in equity, including those specified in this Agreement and specifically including the right to terminate this Agreement or following Close of Escrow, to exercise the Right of Repurchase and/or the Right of Reversion, as applicable, in accordance with Article 16.
2.8 Changes.
Developer shall promptly notify the City in the event that any of the following Persons cease to be involved with the development of the Project: (i) any of the Key Employees, (ii) HPI, formerly The Hill Partnership, Inc., (iii) Urban Arena, Inc. or (iv) David Evans and Associates, Inc., the engineer for the Project. Following any Transfer or Transfer of Control, Transferee shall provide the City with a list of its Key Employees. For Transfers or Transfer of Control, other than a Permitted Transfer, and the City shall have the right to notify Developer if it considers any of such individuals unsatisfactory, in which event such individual(s) shall be removed as Key Employees. In addition, Developer shall provide a then-current organizational chart for Developer on a quarterly basis in the event of any Permitted Transfer(s) under the final paragraph of Section 2.2.2 above occur during the preceding calendar quarter.
3. Representations and Warranties.
3.1 Developer’s Representations and Warranties.
As an inducement to the City to enter into and perform its obligations under this Agreement, Developer represents and warrants to the City as follows as of the Effective Date:
3.1.1 Developer has the necessary expertise, experience, financial experience, financial capacity, qualifications and legal status necessary to perform as Developer pursuant to this Agreement and to construct and Complete the Project, and, without limiting the foregoing, Developer is experienced in the development, management, and leasing of projects of the size and type described in this Agreement and understands the process and requirements associated with projects such as the Project described in this Agreement.
3.1.2 The acquisition of the Property and other undertakings of Developer pursuant to this Agreement are for the purpose of timely development of the Project upon the Real Property in accordance with the Schedule of Performance attached to this Agreement and not for speculation or land holding.
3.1.3 Developer is a limited liability company duly organized, and validly existing and in good standing under the laws of the State of Colorado, is duly qualified to do business and in good standing in California and in each other jurisdiction where the operation of its business or its ownership of property or the performance of Developer’s obligations under this Agreement make such qualification necessary. The Manager of Developer is Confluent and Marshall Burton is the Chief Executive Officer of Confluent.
3.1.4 Subject to all of the conditions set forth in this Agreement for the benefit of Developer, Developer has (or will have prior to the date by which a particular step is required to be taken or performance of a particular obligation is required to be commenced pursuant to this Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 20 City of Tustin/Confluent Development Portion of Disposition Area 8
Agreement or any Other Agreements) all requisite power and authority required to enter into this Agreement and the instruments referenced in this Agreement, to consummate the transaction contemplated hereby and to take any steps contemplated thereby or hereby, and to perform its obligations under this Agreement or the other instruments referenced in this Agreement. to which Developer is or shall be a party and the consummation of the transactions contemplated in this Agreement.
3.1.5 Developer has obtained (or will have obtained prior to the date by which a particular step is required to be taken or performance of a particular obligation is required to be commenced pursuant to this Agreement or any Other Agreements) all required consents in connection with entering into this Agreement and the instruments and documents referenced in this Agreement to which Developer is or shall be a party and the consummation of the transactions contemplated hereby.
3.1.6 The individuals executing this Agreement and the individuals that will execute the instruments referenced in this Agreement on behalf of Developer have, or will have upon execution thereof, the legal power, right and actual authority to bind Developer to the terms and conditions hereof and thereof.
3.1.7 This Agreement has been duly authorized, executed and delivered by Developer and all documents required in this Agreement to be executed by Developer pursuant to this Agreement shall be, at such time as they are required to be executed by Developer, duly authorized, executed and delivered by Developer and are or shall be, at such time as the same are required to be executed pursuant to this Agreement, valid, legally binding obligations of and enforceable against Developer in accordance with their terms, except as enforceability may be limited by bankruptcy laws or other similar laws affecting creditors’ rights.
3.1.8 Neither the execution nor delivery of this Agreement or the documents referenced in this Agreement, nor the incurring of the obligations set forth in this Agreement and the certificates, declarations and other documents referenced in this Agreement, nor the consummation of the transactions contemplated in this Agreement, nor compliance with the terms of this Agreement and the documents referenced in this Agreement, will violate any provision of law or any order of any court or Governmental Authority to which Developer is subject or conflict with or result in the breach of any terms, conditions, or provisions of, or constitute a default under any bond, note, or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreements or instruments to which Developer, one of its owners, members or partners are a party and which affect the Property or the transactions contemplated by this Agreement.
3.1.9 No attachments, execution proceedings, assignments of benefit to creditors, Bankruptcy Proceedings are pending or, to the best of Developer’s Knowledge, threatened against Developer, any Developer Affiliate or any of their respective owners, members or partner or their Controlling Person.
3.1.10 Except for those representations and warranties of the City expressly set forth in Sections 3.3 and 18.12.2, Developer is relying solely upon its own inspections and investigations in proceeding with this Agreement and the transactions contemplated in this Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 21 City of Tustin/Confluent Development Portion of Disposition Area 8
Agreement, and is not relying on the accuracy or reliability of any information provided to it by the City, on any oral or written representation or on any facts or conclusions of law made by the City, or any of its elected and appointed officials, officials, employees, agents, attorneys or representatives made in connection with this Agreement. In making such investigation and assessment, Developer has been provided access to any persons, records or other sources of information which it has deemed appropriate to review and it has thereafter completed such investigation and assessment. Without limiting the generality of the foregoing, Developer acknowledges that the City has not made and will not make any representations or warranties concerning the condition of the Development Parcel, the compliance or non-compliance of the Development Parcel or any portion thereof with Environmental Laws or the existence or nonexistence of Hazardous Materials in relation to the Development Parcel or any portion thereof or otherwise, except for those representations and warranties of the City set forth in Sections 3.3 and 18.12.2.
3.1.11 Except as described on Attachment 4, there are no adverse conditions or circumstances existing and no litigation or governmental action either pending or, to the knowledge of any of the Developer Representatives, threatened, to which Developer or any Controlling Person of Developer is or may be a party or to which the Development Parcel is or may become subject, which would reasonably be expected to prevent or materially impair Developer’s ability to carry out its obligations under this Agreement or to develop the Real Property and the Project or carry out its other obligations under this Agreement, and upon Close of Escrow, the Other Agreements as contemplated by the terms of this Agreement.
3.1.12 Except as set forth in this Agreement, the Development Agreement and the ENA, Developer has not paid or given, and will not pay or give, any third Person any money or other consideration for obtaining this Agreement, other than the normal cost of conducting business and cost of professional services such as architects, engineers and attorneys.
3.1.13 All reports, documents, instruments, information and forms of evidence delivered by Developer to the City concerning or related to this Agreement and the transactions contemplated hereby are, to Developer’s Knowledge, accurate and correct and sufficiently complete at the time of submission to give the City true and accurate knowledge of the subject matter, and do not contain any material misrepresentation or omission.
3.1.14 As of the Close of Escrow, Developer will have the equity capital and bonding capacity required for Completion of the Project and, as of the Close of Escrow, Developer shall have delivered to the City evidence of financing as required by Section 4.6.1 and Section 4.6.2, including evidence of a Construction Loan made by a Permitted Mortgagee meeting the requirements of Article 17 approved by the City sufficient, together with evidence of equity as required by Sections 4.6.2.3 and 8.10, (i) to pay through Completion, all costs of development of the Project and the construction, marketing and sale of the Project Improvements as further described in the Scope of Development; and (ii) to enable Developer to perform and satisfy all the covenants of Developer contained in this Agreement.
3.1.15 Developer does not have any contingent obligations or any other contracts the performance or nonperformance of which could adversely affect the ability of Developer to fund the Project or to carry out its obligations under this Agreement. Developer has not and shall Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 22 City of Tustin/Confluent Development Portion of Disposition Area 8
not undertake such additional projects as could reasonably be expected to jeopardize the sufficiency of such equity, capital and firm and binding commitments for the purposes expressed in the preceding sentence.
3.1.16 There are no legal proceedings either pending or, to the best of Developer’s knowledge, threatened, to which Developer is or may be made a party, or to which any of Developer’s property, or the Development Parcel, is or may become subject, which has not been fully disclosed in the documents submitted to the City and which could materially affect the ability of Developer to carry out its obligations hereunder (if the same were determined to be the case).
Developer’s representations and warranties set forth in this Section 3.1 as the same may be updated in any Assignment Agreement, shall be deemed to be restated at the Close of Escrow and shall survive the Close of Escrow until the termination of this Agreement and shall not be merged with the Quitclaim Deed; provided that the foregoing shall not apply as to any portion of the Real Property for which a Certificate of Compliance has been executed and Recorded by the City. As used in Sections 3.1 and 3.2, “Developer’s Knowledge” and similar phrases means the actual present knowledge of the Developer Knowledge Parties as of the Effective Date, in each case without any duty of inquiry; provided, however, that in the event any of the Developer Knowledge Parties are unavailable at the time these representations and warranties set forth in this Section 3.1 are restated at the Close of Escrow, Developer shall specifically identify different Developer’s Knowledge Parties, subject to the City’s reasonable approval. Notwithstanding anything to the contrary contained in this Agreement, (i) none of the Developer Knowledge Parties shall be personally liable for any inaccuracy or breach by Developer of the representations and warranties contained in this Section 3.1 or elsewhere in this Agreement and/or any of the Other Agreements, and (ii) the City shall not be entitled to make a claim for a breach of Developer’s representations and warranties if Developer had provided written notice to the City indicating that the applicable representation and warranty was incorrect prior to the Close of Escrow and the City proceeded to Closing in spite of such inaccuracy.
3.2 Developer Covenants Regarding Representations and Warranties.
Developer shall promptly advise the City in writing if any of the Developer Knowledge Parties becomes aware (without any duty of inquiry) that any representation or warranty made by Developer in Section 3.1 or in any Assignment Agreement is or becomes untrue in any material respect prior to the Close of Escrow.
3.3 City Representations and Warranties.
As an inducement to Developer to enter into and perform its obligations under this Agreement, the City represents and warrants to Developer as follows:
3.3.1 The City is a municipal corporation incorporated within and existing pursuant to the laws of the State.
3.3.2 Subject to all of the conditions set forth in this Agreement for the benefit of the City, the City has (or will have prior to the date by which a particular step is required to be taken or performance of a particular obligation is required to be commenced pursuant to this Agreement or any Other Agreements) all requisite power and authority required to enter into this Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 23 City of Tustin/Confluent Development Portion of Disposition Area 8
Agreement and the instruments referenced in this Agreement, to consummate the transaction contemplated hereby and to take any steps contemplated thereby or hereby, and to perform its obligations under this Agreement and the instruments referenced in this Agreement.
3.3.3 The City has obtained (or will have obtained prior to the date by which a particular step is required to be taken or performance of a particular obligation is required to be commenced pursuant to this Agreement or any Other Agreements) all required consents in connection with entering into this Agreement and the instruments and documents referenced in this Agreement to which the City is or shall be a party and the consummation of the transactions contemplated in this Agreement.
3.3.4 The individuals executing this Agreement and the individuals that will execute the instruments referenced in this Agreement on behalf of the City have, or will have upon execution thereof, the legal power, right and actual authority to bind the City to the terms and conditions hereof and thereof.
3.3.5 This Agreement has been duly authorized, executed and delivered by the City and all documents required in this Agreement to be executed by the City pursuant to this Agreement shall be, at such time as they are required to be executed by the City, duly authorized, executed and delivered by the City and are or shall be, at such time as the same are required to be executed under this Agreement, valid, legally binding obligations of and enforceable against the City in accordance with their terms, except as enforceability may be limited by bankruptcy laws or other similar laws affecting creditors’ rights.
3.3.6 Neither the execution or delivery of this Agreement or the documents referenced in this Agreement, nor the incurring of the obligations set forth in this Agreement, and the certificates, declarations and other documents referenced in this Agreement, nor the consummation of the transactions contemplated in this Agreement, nor compliance with the terms of this Agreement and the documents referenced in this Agreement, will violate any provision of law, any order of any court or Governmental Authority to which the City is subject or conflict with or result in the breach of any terms, conditions, or provisions of, or constitute a default under any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreements or instruments to which the City is a party and which affect the Property, the ability of Developer to develop the Real Property, the Project or to carry out the transactions contemplated by this Agreement. Notwithstanding the foregoing, development of the Property is subject to and may be limited based upon the encumbrances listed on Attachment 4.
3.3.7 Except as described in Attachment 4, there is no litigation or governmental action either pending or, to the knowledge of the City Representatives, threatened, to which the City is or may be made a party, or to which the Development Parcel is or may become subject, which has not been disclosed in the documents submitted to Developer and which would reasonably be expected to prevent or materially impair Developer’s ability to develop the Real Property, the Project, or to carry out its obligations under this Agreement or, and upon the Close of Escrow, the Other Agreements, as contemplated by the terms of this Agreement.
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The City’s representations and warranties set forth in this Section 3.3 shall be deemed to be restated at the Close of Escrow and shall survive the Close of Escrow until the termination of this Agreement and shall not be merged with the Quitclaim Deed; provided that the foregoing shall not apply as to any portion of the Real Property for which a Certificate of Compliance has been Recorded by the City. As used in Sections 3.3 and 3.4, “City’s Knowledge” and similar phrases means the actual present knowledge of Aldo E. Schindler (or, if he is not then City Manager, the then-current City Manager), David Kendig (or, if he is not then City Attorney, the then-current City Attorney) and Brian Moncrief, (or if he is not then Deputy City Manager – Real Property the Person then in that role), and if then working on the Project for the City, Ryan Swiontek (the “City Representatives”) without any duty of inquiry. Notwithstanding anything to the contrary contained in this Agreement, (i) none of the City Representatives shall be personally liable for any inaccuracy or breach by the City of the representations and warranties contained in Section 3.3 or elsewhere in this Agreement or in any of the Other Agreements, and (ii) neither Developer nor any other Person shall be entitled to make a claim for a breach of the City’s representations and warranties if the City had disclosed in writing facts to Developer indicating that the applicable representation and warranty was incorrect prior to the Close of Escrow and Developer proceeded with the Close of Escrow, in either case in spite of such inaccuracy.
3.4 City Covenants Regarding Representations and Warranties.
City shall promptly advise Developer in writing if any of the City Representatives becomes aware (without any duty of inquiry) that any representation or warranty made by the City in Section 3.3 is or becomes untrue in any material respect prior to the Close of Escrow.
4. Conveyance of Property from City to Developer.
4.1 Conveyance of Property.
4.1.1 Definition of Property. Subject to the terms and conditions set forth in this Agreement, including the satisfaction of the Closing Conditions set forth in Article 7 in this Agreement, the City agrees to sell to Developer and Developer agrees to purchase the Real Property from the City, together with (i) all existing improvements, if any, located on the Real Property as of the Effective Date; (ii) all appurtenances pertaining to the Real Property or such improvements; (iii) all permits, licenses, approvals and authorizations issued prior to the Close of Escrow by any Governmental Authority for development of the Project; (iv) the right to construct for the Active Adult Project a maximum of 172 Residential Units (comprised of 124 base units and 48 density bonus units), including approximately 26 Lower Income Units) on the Real Property and for AL/MC Project 103 Rooms in up to 147,500 square feet of building on the Real Property (of which 75 shall be assisted living Rooms and 28 shall be memory care Rooms and (v) all of City’s right, title and interest in, to and arising out of the Intangible Property (excluding the matters described in Section 4.1.2, collectively, “Property”), subject to all Permitted Exceptions and the reservations identified in Sections 1.2.2 and 4.1.2; provided, however that City’s assignment of its rights to enforce the Navy Responsibilities against the Navy shall be made to Developer on a nonexclusive basis and the City and Developer may each enforce the Navy Responsibilities as their interests may appear. Notwithstanding the foregoing, nothing set forth in this Agreement shall preclude the City or any insurer, on a non-exclusive basis, from enforcing the Navy Responsibilities against the Navy with respect to Tustin Legacy other than the Property or, with Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 25 City of Tustin/Confluent Development Portion of Disposition Area 8
respect to the Property for matters Accruing prior to Close of Escrow. At the Close of Escrow, the City shall convey to Developer by Quitclaim Deed, in substantially the form and substance of the instrument attached to this Agreement as Attachment 11 (“Quitclaim Deed”) all of its right, title and interest in and to the Property.
4.1.2 Reservation of Development Rights by City. The City hereby reserves from the definition of Property and shall reserve from the conveyance of the Property in the Quitclaim Deed all those excess development rights remaining within Specific Plan Neighborhood D, Planning Areas 13 and 14 after deducting (i) from the number of Residential Units authorized by the Specific Plan the lesser of (a) 172 Residential Units (comprised of 124 base units and 48 density bonus units) or (b) the number of Residential Units authorized by the Approved Plans and actually constructed by Developer on the Active Adult Real Property prior to Recording by the City of the Final Certificate of Compliance, provided that the total number of Lower Income Units constructed on the Active Adult Real Property shall not be less than fifteen percent (15%) of the total number of Residential Units constructed on the Active Adult Real Property so long as the Affordable Housing Declaration remains in effect and (ii) from the number of Rooms and gross square footage authorized by the Specific Plan for commercial purposes, the lesser of (a) 75 assisted living/memory care Rooms in up to 147,500 gross square feet (excluding parking) or (b) the number of Rooms and gross square footage of the building authorized by the Approved Plans and actually constructed by Developer on the AL/MC Real Property prior to Recording by the City of the Final Certificate of Compliance, provided that if the Final Parcel Map is Recorded prior to the Recording of the first such Certificate of Compliance, then these provisions shall apply as to the Active Adult Project and Active Adult Real Property, with respect to the Active Adult Project Certificate of Compliance, and as to the AL/MC Project and AL/MC Real Property, with respect to the AL/MC Project Certificate of Compliance. For avoidance of doubt, except to the extent any of such rights were conveyed by the City to third parties prior to the Quitclaim Deed Effective Date, the City shall retain all development rights in Specific Plan Neighborhood D, Planning Areas 13 and 14 in excess of the Residential Units, commercial square footage and other development rights specified above. All Residential Units, Rooms, commercial square footage and other development rights retained by the City shall be freely transferable by the City throughout Tustin Legacy.
4.2 Purchase Price and Project Fair Share Contribution.
4.2.1 Purchase Price and Project Fair Share Contribution. As consideration for the sale of the Property by the City to Developer, Developer shall pay to the City a total purchase price in the sum of Fifteen Million Fifty-Four Thousand Two Hundred Forty-Three Dollars ($15,054,243.00) (“Purchase Price”). The City and Developer acknowledge that the Purchase Price is equal to or greater than the fair market value of the Property taking into account the various factors affecting the same, including the Project Fair Share Contribution, and those items described in Sections 6.2, 8.7.3 and 8.7.5.
4.2.2 Project Fair Share Contribution. In addition to and separate from the Purchase Price, at the Close of Escrow Developer shall pay to the City the Project’s fair share of the costs of the Tustin Legacy Backbone Infrastructure Program in effect at the Closing Date (“Project Fair Share Contribution”) The Project Fair Share Contribution to be paid by Developer shall be in the total amount of Three Million Twenty Nine Thousand Seven Hundred Sixty Four Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 26 City of Tustin/Confluent Development Portion of Disposition Area 8
and 58/100 Dollars ($3,029,764.58) which is equal to a rate of Four Hundred Ninety Three Thousand Four Hundred Forty Seven Dollars ($493,447.00) per acre of the Real Property.
4.3 Payment of Purchase Price.
4.3.1 Intentionally Omitted.
4.3.2 Treatment of ENA Extension Deposits. The ENA Extension Deposits have vested in the City prior the Effective Date and shall be retained by the City in all events. The ENA Extension Deposits shall be applied to the Purchase Price as set forth in Section 4.3.3.
4.3.3 Payment of the Balance of the Purchase Price and Other Amounts Due at the Close of Escrow. No later than one (1) Business Day prior to the Close of Escrow, Developer shall deposit with Escrow Holder an amount (“Developer Closing Payment”) which shall, be equal to: (i) the Purchase Price for the Property less the ENA Extension Deposits, plus (ii) such additional amount as is necessary to cover all outstanding DDA Transaction Expenses incurred by the City through the Close of Escrow, and all closing costs and/or prorations to be paid by Developer pursuant to Sections 7.4.1 and 7.4.4 as adjusted for any net credits or debits to the City for closing costs and/or prorations in accordance with Sections 7.4.1 and 7.4.4.
4.3.4 Payments in Immediately Available Funds. Funds delivered to the City or Escrow Holder under this Agreement shall be in the form of cash or wire transfer (to such account of the City or Escrow Holder as Escrow Holder notifies Developer in writing).
4.4 Escrow and Joint Escrow Instructions.
Developer shall have delivered to the City, prior to the City Council hearing at which this Agreement is considered for adoption, three (3) fully executed counterparts of this Agreement. If not previously delivered, within five (5) Business Days following City Council approval of this Agreement, Developer shall: deliver to the City (i) the declarations and information from Developer and Equity Investor(s) required by Section 4.6.2 and such other information as City may reasonably request as further described in Section 4.6, (ii) the City Costs Deposit and (iii) the insurance binder(s) required by Section 11.2.3 with respect to coverage required by Sections 11.1.1 and 11.1.2. Upon delivery by Developer of the items described in clauses (i) through (iii) of this Section 4.4, the City shall deliver to Escrow Holder three (3) originals of this Agreement which have been executed in counterparts by the City and Developer and the “Opening of Escrow” shall be the date that Escrow Holder receives such executed originals from the City.
Escrow Holder shall promptly sign the joinders and transmit one (1) original of this Agreement to City and one (1) original to Developer. Upon the written acceptance of the executed Agreement by Escrow Holder, this Agreement shall constitute the joint escrow instructions of Developer and the City to Escrow Holder to open an escrow (“Escrow”) and Escrow Holder is thereafter authorized to act in accordance with the terms of this Agreement. Developer and the City shall execute Escrow Holder’s general escrow instructions upon request, with such modifications thereto as Developer and the City may reasonably require; provided, however, if there is any conflict or inconsistency between such general escrow instructions and this Agreement, this Agreement shall control. Escrow Holder shall not prepare any further escrow instruction restating or amending this Agreement unless specifically so instructed by the City and Developer in writing.
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Any supplemental escrow instructions must be in writing and signed by the City and Developer and accepted by the Escrow Holder to be effective.
4.5 Property Conveyed “As-Is”.
4.5.1 Investigation.
4.5.1.1 Prior Due Diligence Review. Developer acknowledges that it had the right during the term of the ENA to conduct its own investigation of the Development Parcel and that Developer has satisfied itself prior to entering into this Agreement that all matters related to the Development Parcel, the Property, the Project and construction of the Project Improvements, are acceptable to Developer, including the state of title (subject only to the Permitted Exceptions), the physical condition thereof, the physical condition of structures, if any, located upon the Development Parcel and, as applicable, the accessibility and location of utilities, and all mechanical, plumbing, sewage, and electrical systems located therein, suitability of soils, environmental and other investigations regarding the Development Parcel and Developer that it is willing to consummate the transactions described by this Agreement.
4.5.1.2 Opportunity to Evaluate. Developer acknowledges and agrees that, as of the Close of Escrow:
(i) its determination to enter into this Agreement constitutes Developer’s agreement that Developer, in consummating the transactions described in this Agreement: (i) has been given the opportunity to inspect the Development Parcel and to review the information and documentation provided by the City to Developer and affecting the Development Parcel, including the environmental condition of the Development Parcel, or otherwise obtained by Developer in connection with its due diligence of the Development Parcel and the Property, and is relying solely on its own investigation of the Development Parcel, including such investigation prior to execution of this Agreement, and review of such information and documentation in determining the physical, environmental, economic and legal condition of the Development Parcel and except as provided in Sections 3.3 and 18.12.2, not on any information, representation or warranty provided by the City or any agents or representatives of the City; (ii) It has performed its own assessment of the Development Parcel, including the physical and environmental condition of the Development Parcel, the presence of Hazardous Materials on the Development Parcel, the suitability of the soil for improvements to be constructed, the implications of land use restrictions on the development plan for the Project and the Development Parcel and the consequences of any subsequently discovered contamination on or adjacent to the Development Parcel, and (iii) has been provided with access to all information in the possession of the City which it has requested. Information provided to Developer by or on behalf of the City with respect to the Development Parcel was obtained from a variety of sources and that the City has not made any independent investigation or verification of such information and makes no representations as to the accuracy or completeness of such information; and Developer is satisfied with the nature and extent of its permissible investigation of the physical and Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 28 City of Tustin/Confluent Development Portion of Disposition Area 8
environmental condition and other matters relating to the Development Parcel and is willing to consummate the transactions described by this Agreement; and (iii) without limiting the generality of the foregoing, Developer acknowledges and agrees that:
(a) in addition to use, Investigation and Remediation of the Development Parcel by the Navy, there has been grading, other uses, Investigation and Remediation of the Development Parcel subsequent to the date of the Federal Deed, and that the AS-IS conveyance of the Property and the waivers, releases, and indemnities provided by Developer in this Agreement with respect to the Development Parcel apply to the current condition of the Property, the Development Parcel taking into account the grading, other uses, Investigation and Remediation at Tustin Legacy, including at the Development Parcel, whether occurring before or following conveyance to the City pursuant to the Federal Deed;
(b) Developer has been provided with access to all
environmental reports and statements listed on Attachment 10 and all reports either attached to or referenced in the Memorandum of Agreement and Federal Deed;
(c) it shall perform its own assessment of the
environmental condition of the Development Parcel, the presence of Hazardous Materials on the Development Parcel, the suitability of the soil for improvements to be constructed, the implications of the land use restrictions on the development plan for the Project and the Development Parcel and the consequences of any subsequently discovered contamination on the Development Parcel; and
(d) it shall review the City and Navy produced or
identified documentation, including that listed on Attachment 10, reflecting the Navy’s and the City’s knowledge of the environmental condition of the Development Parcel.
4.5.2 AS-IS; WHERE-IS.
4.5.2.1 No Representations or Warranties. Developer recognizes that the City would not sell the Property except on an “AS, IS, WHERE IS, WITH ALL FAULTS” basis, and Developer acknowledges that the City has made no representations or warranties of any kind whatsoever (excepting only those representations and warranties of the City expressly set forth in Sections 3.3 and 18.12.2), either express or implied in connection with any matters with respect to the Development Parcel or any portion thereof.
4.5.2.2 Acknowledgement. Developer’s determination to enter into this Agreement constitutes Developer’s agreement that Developer, in consummating the transactions described in this Agreement is buying the Property in an “AS IS, WHERE IS, WITH ALL FAULTS” condition, in its present state and condition and with all faults, if any. Without limiting Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 29 City of Tustin/Confluent Development Portion of Disposition Area 8
the generality of the foregoing, Developer further acknowledges and agrees that, except as otherwise specifically provided in Sections 3.3 and 18.12.2, the City makes no representations, warranties, assurances or guaranties of any kind or character in connection with the transaction contemplated by this Agreement, or the Development Parcel or the Property, whether express or implied, oral or written, past, present or future, whether by the City or any of its agents, elected or appointed officials, representatives or employees, of, concerning or with respect to:
(i) the value of the Property or the income to be derived from the Property;
(ii) the existence or non-existence of any liens, easements, covenants, conditions, restrictions, claims or encumbrances affecting the Development Parcel or the Property (including any of the foregoing arising from or related to the Entitlements or any of the Other Agreements);
(iii) the suitability of the Development Parcel for any and all future development of the Project Improvements and the other uses and activities which Developer may conduct upon the Real Property, including the development of the Project and use of the Property as described in this Agreement and the Other Agreements; (iv) the ability of the City or any third party to complete, or likelihood of the completion of, any of the improvements and infrastructure described by the General Plan, the Specific Plan, the Tustin Legacy Backbone Infrastructure Program or any other plan or policy of the City or any other Governmental Authority; (v) the compliance with or enforcement by the City or any third party of the General Plan, the Specific Plan, the Special Restrictions applicable to the Development Parcel or the special restrictions or other covenants and agreements applicable to other property at Tustin Legacy, any covenants, conditions and restrictions, the Tustin Legacy Backbone Infrastructure Program or any other agreement or governmental restriction or plan affecting Tustin Legacy; (vi) the habitability, merchantability or fitness for a particular purpose of the Development Parcel;
(vii) the manner, quality, state of repair or lack of repair of the Development Parcel and of the improvements thereon, if any; (viii) the nature, quality or condition of the Development Parcel including water, soil and geology;
(ix) the compliance of or by the Development Parcel and/or its operation in accordance with any of the Entitlements or any Governmental Requirements, including the National Environmental Policy Act, CEQA and the Americans with Disabilities Act of 1990;
(x) the manner or quality of the construction or materials, if any, incorporated into the Development Parcel;
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(xi) the presence or absence of Hazardous Materials, including asbestos or lead paint at, on, under, or adjacent to the Development Parcel or in other locations at Tustin Legacy;
(xii) the content, completeness or accuracy of the information, documentation, studies, reports, surveys and other materials delivered to Developer in connection with the review of the Development Parcel and the transactions contemplated in this Agreement and the Other Agreements;
(xiii) the conformity of the existing improvements on the Development Parcel and/or at Tustin Legacy, if any, to any plans or specifications therefor; (xiv) compliance of the Development Parcel with past, current or future Governmental Requirements relating to zoning, subdivision, planning, building, fire, safety, health or Environmental Matters and/or covenants, conditions, restrictions or deed restrictions;
(xv) the deficiency of any undershoring or of any drainage to on or from the Development Parcel or any other portion of Tustin Legacy; (xvi) the condition of any adjoining land owned by the City, including any property and improvements covered by the Landscape Installation and Maintenance Agreement;
(xvii) the fact that all or a portion of the Development Parcel may be located on or near an earthquake fault line or falls within an earthquake fault zone established under the Alquist-Priolo Earthquake Zone Act, California Public Resources Code Sections 2621-2630 or within a seismic hazard zone established under the Seismic Hazards Mapping Act, California Public Resources Code Sections 2690-2699.6 and Sections 3720-3725 of Title 14 of the California Code of Regulations; (xviii) the existence or lack of vested land use, zoning or building entitlements, permits or approvals affecting the Development Parcel; (xix) the construction or lack of construction of Tustin Legacy or if constructed, the construction of Tustin Legacy in accordance with design guidelines, plans and specifications previously or to be prepared therefor; (xx) the conditions, covenants and restrictions imposed or to be imposed upon the Development Parcel or any portion thereof under this Agreement, the Other Agreements or the Entitlements;
(xxi) the contents of the Memorandum of Agreement, the Federal Deed, the Base Closure Law and the FOST; and
(xxii) any other matters.
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4.5.2.3 Environmental Condition of the Development Parcel; Restrictions. Without limiting the generality of the foregoing, the City makes no representation or warranty as to the environmental condition of the Development Parcel or any portion thereof, the Navy’s obligations with respect to the environmental condition of the Development Parcel or the adequacy or accuracy of any environmental report that has been rendered. Developer acknowledges and agrees that (i) there may be some residual contamination on the Development Parcel as a result of Navy historic activities; (ii) the Navy has agreed to accept certain limited responsibility for any contamination it caused, including any contamination discovered after transfer from the Navy, in accordance with existing Governmental Requirements including the National Defense Authorization Act For Fiscal Year 1993 as amended (Public Law No. 102-434) Section 330 and Section 120(h) of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9620(h) (“Navy Responsibilities”); and (iii) the deed restrictions contained in the Federal Deed are binding upon the City and its successor and assigns (and therefore, shall be binding upon Developer with respect to the Property upon its acquisition of the Property).
4.5.2.4 Federal Deed and Memorandum of Agreement. Developer acknowledges and agrees that the purchase of the Property is subject to the terms and conditions expressly set forth in the Memorandum of Agreement, the Federal Deed and the Permitted Exceptions. From and after the Close of Escrow, Developer agrees to assume and faithfully perform any covenants running with the land acquired and all obligations set forth in the Federal Deed as obligations to be performed by “Grantee or its successors or assigns” with respect to the Property acquired by Developer.
4.5.2.5 No Unauthorized Representations. No Person acting on behalf of the City is authorized to make, and by execution hereof, Developer acknowledges that no Person has made, any representation, agreement, statement, warranty, guarantee or promise regarding the Development Parcel, the Project or the transactions contemplated in this Agreement or the past, present or future zoning, land use entitlements or approvals, including the Entitlements or the Development Permits, construction, physical condition, presence or extent of Hazardous Materials or other status of the Development Parcel except as may be expressly set forth in this Agreement or in any of the Other Agreements. No representation, warranty, agreement, statement, guarantee or promise, if any, made by any Person acting on behalf of the City that is not contained in this Agreement or in any of the Other Agreements will be valid or binding on the City. Nothing in this Section 4.5.2 is intended to limit or affect in any manner (i) the validity or provisions of the Entitlements and Development Permits obtained by Developer with respect to the Development Parcel or (ii) any provisions of this Agreement or the Other Agreements when this Agreement and the Other Agreements are approved by the City Council and executed by the City.
The provisions of this Section 4.5.2 shall be included in the Special Restrictions, shall run with the land, shall remain in effect in perpetuity and shall survive termination of this Agreement, the Close of Escrow, and shall not merge with any deed and shall be binding upon Developer, its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner including all End Users, for the benefit of the City and its Governmental Successors, and from and after the Close of Escrow, shall be binding upon and burden the Real Property.
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4.5.3 Release. Developer, on behalf of itself, and its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner and including each End User (each, including Developer, a “Developer Releasing Party”), hereby waives, as of the Effective Date, and agrees to waive, as of the Close of Escrow, the right of each Developer Releasing Party to recover from, and fully and irrevocably releases, the City Released Parties from any and all Claims that any Developer Releasing Party may now have or hereafter have, suffer, acquire or incur arising from or related to: (i) any Due Diligence Information, (ii) any condition of the Development Parcel or any current or future improvement thereon or of the Property, known or unknown by any Developer Releasing Party or any City Released Party, including the extent or effect of any grading of the Development Parcel whether or not there is or has been any restriction on access to the Real Property for pre-acquisition inspection; (iii) the extent or effect of any of the matters identified in Section 4.5.2; (iv) any construction defects, errors, omissions or other conditions, latent or otherwise; (v) economic and legal conditions on or affecting the Development Parcel or any improvements thereon or the Property; (vi) Environmental Matters, including the existence, Release, threatened Release, presence, storage, treatment, transportation or disposal of any Hazardous Materials at any time on, in, under, or from, the Development Parcel or any current or future improvement thereon or any portion thereof; (vii) Claims of or acts or omissions to act of any Governmental Authority or any other third party arising from or related to any actual, threatened, or suspected Release of a Hazardous Material on, in, under, or from about, or adjacent to the Development Parcel or any current or future improvement thereon, including any Investigation or Remediation at or about the Development Parcel or any current or future improvement thereon; and/or (viii) arising from the Tustin Legacy Backbone Infrastructure Program, any community facilities district, service district or assessment district the cost or extent thereof, or the amount of the Project Fair Share Contribution or any community facilities district, service district or assessment district assessment against the Development Parcel described in this Agreement or the Development Agreement; (ix) the actions or inaction of the Navy with respect to any agreements between the City and the Navy; (x) the ability of the City or any third party to complete, or the likelihood of the completion or actual completion of, any of the improvements and infrastructure related to the Project described by the General Plan, the Specific Plan, the Tustin Legacy Backbone Infrastructure Program, the agreements, environmental reports and statements listed on Attachment 10 or any other plan or policy of the City or any other governmental entity; (xi) the compliance or non-compliance by the City or any third party, including the Navy, with the City’s General Plan, the Specific Plan, the Federal Deed and the Environmental Documents, or any special restrictions or other covenants and agreements applicable to other property at Tustin Legacy, or any other agreement or governmental restriction or plan affecting Tustin Legacy; (xii) any disputes, claims, actions, causes of action, demands or orders arising between Initial Developer, Clearwater, any future Developer or Manager or between them or any other third party; (xiii) a potential or declared violation of or other requirements or proceedings under the SLA Regulations affecting or prohibiting the disposition of the Development Parcel or a determination by the City not to proceed with the transaction based on the foregoing; and/or (xiv) any action or inaction of the City or the City Parties in connection with any of the foregoing (including the exercise by the City of its discretion, decision or judgment with respect to the foregoing); provided that the foregoing release by the Developer Releasing Parties shall not extend to the extent of (a) any uncured Material Default by the City provided that the Material Default is directly related to the Claim or (b) any Claim that is the result of the gross negligence or willful misconduct or fraud of the City Released Parties Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 33 City of Tustin/Confluent Development Portion of Disposition Area 8
(collectively, “Excluded Claims”). This release includes Claims of which Developer is presently unaware or which Developer does not presently suspect to exist which, if known by Developer, would materially affect Developer’s release of the City Released Parties. Developer specifically waives the provision of California Civil Code Section 1542, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE, AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
In this connection and to the extent permitted by law, Developer on behalf of itself, and the other Developer Releasing Parties hereby agrees that (1) it realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to Claims or controversies which are presently unknown, unanticipated and unsuspected; (2) the waivers and releases in this Section 4.5.3 have been negotiated and agreed upon in light of that realization and (3) Developer, on behalf of itself and the other Developer Releasing Parties, nevertheless hereby intends to release, discharge and acquit the City Released Parties from any such unknown Claims and controversies (other than Excluded Claims) to the extent set forth above.
BY INITIALING BELOW, DEVELOPER ACKNOWLEDGES
THAT (A) IT HAS READ AND FULLY UNDERSTANDS THE
PROVISIONS OF THIS SECTION, (B) IT HAS HAD THE
CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS
MEANING AND SIGNIFICANCE, AND (C) IT HAS
ACCEPTED AND AGREED TO THE TERMS SET FORTH IN
THIS SECTION.
DEVELOPER’S INITIALS
From and after the acquisition of the Property by Developer, the provisions of this Section 4.5.3 and the release set forth herein shall be an equitable servitude and a covenant running with the land for the benefit of the City and its Governmental Successors and burdening the Real Property and Developer, its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner including all End Users, shall remain in effect in perpetuity and shall survive termination of this Agreement, the Close of Escrow, and Recording by the City of each Certificate of Compliance and shall not merge with any deed. To further evidence its effectiveness with respect to each such Person, this release shall be included in its entirety in the Special Restrictions; provided that nothing in this Agreement limits or releases Claims by Developer against the Federal Government, including the Department of the Navy, regarding the environmental condition of the Real Property.
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to the Development Parcel within which to undertake such physical inspections and other investigations of, and inquiries concerning, the Development Parcel as may be necessary to allow Developer to evaluate the environmental and physical characteristics of the Development Parcel, as well as such other matters as may be deemed by Developer to be reasonably necessary to generally evaluate the Development Parcel and determine the feasibility and advisability of Developer’s purchase of the Property and development of Real Property with the Project, including performance of the Grading Work and construction of the Project Improvements and acknowledges that, Developer shall have the right to conduct additional due diligence prior to Close of Escrow pursuant to Section 5.1. Nothing in this Section 4.5.4 shall or shall be deemed to limit or modify Developer’s Closing Conditions pursuant to Section 7.2.1 or Developer’s termination rights and other rights and remedies under Section 15.3.
4.6 Developer Covenants; Preconditions to Close of Escrow.
The provisions of this Section 4.6 are covenants of Developer for the benefit of the City, are conditions precedent to Transfers, Transfers of Control and to the Close of Escrow as further described in this Section 4.6 and Sections 2.2 and 7.2.2 and shall, for the benefit of the City, be satisfied by Developer not later than the times specified for such conditions below.
4.6.1 Financing Plans.
4.6.1.1 Financing Plan. As of the Effective Date, Developer has provided the City with, and City has approved, the pro forma financing plan and Budget Statement for development of the Project (“Financing Plan”), demonstrating the financial feasibility of the Project.
4.6.1.2 Developer Closing, Transfer and Transfer of Control Requirements; Updates to Financing Plan. At least thirty (30) calendar days prior to the Close of Escrow, and as a condition precedent for the benefit of the City to the Close of Escrow and any Transfer and Transfer of Control, Developer shall provide (i) an update to the previously approved Project Financing Plan for the Project including the same categories of information contained therein and identifying revisions to the information previously provided (“Updated Financing Plan”) for the purposes of confirming that Developer has the financial capacity and capability to perform its obligations under this Agreement and (ii) certification in writing for the benefit of the City as to the matters set forth in Section 4.6.1.3. If Developer determines at any of the dates upon which an updated Financing Plan is due to the City that there is no required change to the Financing Plan then in effect, Developer shall provide written notice to the City of the same and shall certify as to the accuracy, truth and completeness of the previously delivered Financing Plan and the matters set forth in Section 4.6.1.3 and shall submit to the City such documents as may be reasonably requested by the City to allow the City to confirm, in its sole discretion, that the previously delivered Financing Plan or Updated Financing Plan and the documents delivered in connection therewith remain sufficient to satisfy all applicable requirements hereunder.
4.6.1.3 Certificate Requirements. The certificate to be provided by Developer or Transferee with respect to each Updated Financing Plan shall include Developer or Transferee’s certification as to: (i) the accuracy, truth and completeness of the Updated Financing Plan and (ii) the truth and completeness of each of the following (and shall deliver to the City Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 35 City of Tustin/Confluent Development Portion of Disposition Area 8
reasonable evidence demonstrating that): (a) either the most recent Financing Plan approved by the City remains in full force and effect and, or as modified by the most recent Updated Financing Plan, demonstrates funding is sufficient to pay through Recording by the City of the later of the Active Adult Project Certificate of Compliance and the AL/MC Project Certificate of Compliance, all Development Costs for the Project and provides sufficient capital to design, construct and Complete the Project Improvements and to bring the Project to stabilization, (b) there has been no material adverse change in the financial capacity or condition of Developer or its financial or organizational relationships from that described in the most recent Financing Plan approved by the City; (c) the Budget Statement for the Project Improvements set forth in the Project Budget Statement for the Project is a reasonable budget for such Project and the funding of all Development Costs through the Final Certificate of Compliance, (d) that the proposed Guarantor (which shall be named) for the Project satisfies the Minimum Asset Standards; (e) that the Evidence of Equity and Equity Commitment, as applicable, previously provided to the City remain in full force and effect and sufficient, when combined with the other sources and uses set forth in the Financing Plan (including the Evidence of Equity), to fund the Development Costs specified in the Financing Plan and (f) Developer has available funds, with third-party financing or Mortgage only as authorized by this Agreement, sufficient to pay all Development Costs, including sufficient equity capital to design and construct the Project to stabilization consistent with the terms of this Agreement. If revisions are required to permit Developer to make the certifications required by this Section 4.6.1 which shall be subject to review by the City in accordance with Section 4.6.1.4.
Developer shall deliver to the City such other documents as the City reasonably determines will assist in the evaluation of whether Developer is able to acquire the Real Property, construct the Project Improvements and perform in a timely manner all of its other obligations and commitments set forth in this Agreement, including the documentation described in Section 8.5.
4.6.1.4 City Review of Updated Financing Plan. The City shall have the right to reasonably approve or disapprove any immaterial modifications between a Financing Plan previously approved by the City and a proposed updated Financing Plan and to approve in its sole discretion any material modifications between a Financing Plan previously approved by the City and a proposed updated Financing Plan. In addition, the City shall have the right to review and approve the Guarantor and Guaranty in accordance with Sections 8.9.1 and 8.9.2 and to review and approve the Approved Equity Investor(s) and each instrument evidencing Evidence of Equity and Equity Commitment as further described in Sections 4.6.2 and 8.10. The City’s review of modifications set forth in each updated Financing Plan and of each instrument evidencing Evidence of Equity and Equity Commitment (and the documentation for any Construction Loan) shall be for the purposes of determining (i) the availability of the contemplated financing pursuant to the Construction Loan and whether the contemplated financing will be reasonably available, without any condition precedent the satisfaction of which is unlikely or speculative, (ii) if the funds available to Developer including equity capital and a Construction Loan from sources approved by the City in accordance with this Agreement are consistent with the Financing Plan and will provide sufficient funds to timely pay all Development Costs and to satisfy all requirements of Developer set forth in this Agreement, (iii) that the contemplated funding meets the budget requirements for the Project as set forth in the Budget Statement; (iv) that the contemplated funding is being provided on commercially reasonable terms and consistent with the terms and conditions of this Agreement and (v) that there has been no material adverse change in the financial capacity or condition of Developer or its financial or organizational relationships from that presented to the City as of the Effective Date or in any subsequently approved Updated Financing Plan. Except to Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 36 City of Tustin/Confluent Development Portion of Disposition Area 8
the extent already approved in the last sentence of Section 4.6.1.2, if there are modifications to any previously approved Financing Plan, the City shall have the right, in its sole discretion, to approve or disapprove such modifications including any modifications to the Evidence of Equity, Equity Commitment, and/or Construction Loan documentation and evidence that the Equity Investor has the Net Worth and Liquid Assets, as determined by the City in its sole discretion, required to fund the Development Costs for the Project as described in the Updated Financing Plan and Guarantor meets the Minimum Asset Standards. If the City is not satisfied with the financial status of Developer, the Equity Investor, the Guarantor, the financial feasibility of the Project or any portion thereof or any of the other contents of the Financing Plan or the Updated Financing Plan following review of the certification and the above materials, the City shall be entitled to obtain such other information and assurances from Developer and such other financial information as the City may request of Developer, the JV Entity, PropCo and any proposed Transferee and their respective members, owners and/or partners, if any. Such information shall be subject to the confidentiality provisions of Section 18.24.
4.6.2 Additional Assurances.
4.6.2.1 Declaration of Ownership; Documentation at Effective Date.
Prior to or concurrently with the Effective Date, Developer shall deliver to the City a declaration, dated as of or prior to the Effective Date, certified by the chief financial officer or other appropriate authorized officer of Initial Developer, substantially in the form and substance of the Developer Original Certificate attached to this Agreement as Attachment 19A (“Developer Original Certificate”).
4.6.2.2 Evidence of Equity. If Developer or any Transferee intends to fund the Development Costs in whole or in part without an Equity Investor, Developer or Transferee, as applicable, shall, prior to or concurrently with the Effective Date and when required by Sections 2.2.2 through 2.2.4, Section 7.2 or Section 8.10, provide evidence and written assurances satisfactory to the City in its sole discretion that Developer or such Transferee has the financial capacity, Liquid Assets and Net Worth, to provide sufficient equity, when combined with the other sources and uses set forth in the Financing Plans to fund the Development Costs, including by provision to the City of resolutions or other documentation to evidence the availability and authorizing the expenditure of such funds (“Evidence of Equity”). The Evidence of Equity shall be subject to the approval of the City in its sole discretion.
4.6.2.3 Equity Commitments. Prior to mutual execution and delivery of this Agreement, Developer has caused to be executed and delivered to City a contractual commitment in substantially the form and substance of the agreement attached to this Agreement as Attachment 15C (“Initial Equity Commitment”) of PRISA II LP, a Delaware limited partnership (the “Initial Equity Investor”), under the terms of which, if the Close of Escrow occurs and if the other conditions specified in the Initial Equity Commitment as requirements to its effectiveness as of the Close of Escrow shall have been satisfied, the Initial Equity Investor has agreed to fund (under the other terms and conditions specified in the Initial Equity Commitment), as capital contributions to Developer, such amounts as may be necessary for Developer to satisfy the “DDA Obligations” (as that term is defined in the Initial Equity Commitment). If as of the Closing Date, the amounts committed to be funded by the Initial Equity Investor are insufficient to provide the equity funds required by the then Updated Financing Plan, the Developer will cause Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 37 City of Tustin/Confluent Development Portion of Disposition Area 8
to be executed and delivered to City as of the Closing Date additional contractual commitments (each an “Additional Equity Commitment”) from one or more entities Controlling Developer and one or more entities Controlling Clearwater (with the financial capacity of each such entity being subject to the approval of the City Manager in his or her sole discretion and, when so approved, being referred to as an “Additional Equity Investor”), in substantially the form and substance of the agreement attached to this Agreement as Attachment 15E. The Initial Equity Commitment, any Additional Equity Commitments, and any other similar contractual commitment approved by City in accordance with this Section 4.6.2.3 are each referred to as an “Equity Commitment”. In connection with any Transfer, if Developer or Transferee has identified an Equity Investor approved by the City which has the financial capacity, Liquid Assets and Net Worth, as determined by the City in its sole discretion, sufficient when combined with the other sources and uses set forth in the Financing Plan to fund the Development Costs as described in the Financing Plan (the Initial Equity Investor, each Additional Equity Investor, and each other Equity Investor approved by the City in connection with any Transfer being referred to in this Agreement as an “Approved Equity Investor”), Developer or Transferee, as applicable, shall deliver to the City when required by Sections 2.2.2 through 2.2.4 or Section 8.10:
(i) evidence of an executed, binding and effective contractual commitment made by Approved Equity Investor in favor of Developer or Transferee, as applicable, dated on or before each Transfer Date to fund the required equity for the Project substantially in the form and substance of the Equity Commitment; and (ii) a declaration in favor of the City at each of the Effective Date and each Transfer Date, certified by the chief financial officer or other appropriate authorized officer of the Approved Equity Investor in substantially the form and substance of the Equity Investor Original Certificate attached to this Agreement as Attachment 15A (“Equity Investor Original Certificate”) and dated as of the Effective Date and each Transfer Date. Developer shall from time to time demand from the Equity Investor under the Equity Commitment, as capital contributions to Developer, such amounts as may be necessary for Developer to satisfy the “DDA Obligations” (as that term is defined in the Equity Commitment). Developer’s obligations under this Agreement are not conditioned on the Equity Investor’s performance of its obligations under the Equity Commitment.
4.6.2.4 Survival. Each document providing Evidence of Equity or an Equity Commitment shall be and remain in full force and effect through the Recording by the City of the later of the Active Adult Project Certificate of Compliance and the AL/MC Project Certificate of Compliance unless replaced by a Transferee with Evidence of Equity and/or Equity Commitment(s) made by an Approved Equity Investor and approved by the City in its sole discretion as part of a Transfer; provided that the foregoing restrictions shall not apply to any portion of the Real Property for which a Certificate of Compliance has been Recorded by the City.
The Construction Loan commitment or term sheet shall be subject to the approval of the City in its sole discretion and shall remain in full force and effect unless replaced by a Transferee with a loan commitment or term sheet approved by the City in its sole discretion or a Construction Loan with loan documents meeting the requirements of Article 17.
4.6.2.5 No Distributions to Equity Investor Prior to Certificate of Occupancy. Until satisfaction of the requirements in all of Sections 9.3.1.3, 9.3.1.5, 9.3.2.3 and Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 38 City of Tustin/Confluent Development Portion of Disposition Area 8
9.3.2.5 below, Developer shall not, directly or indirectly, make any distributions of cash or property to the holders of equity interests in Developer or other Developer Affiliates, whether by dividend, loan, investment or any other means.
5. Developer’s License, Access to Records and Communications.
5.1 Limited License.
The City grants to Developer for use by Developer and its officers, directors, employees, agents, representatives, consultants, contractors, and other Persons accessing the Development Parcel by, through or with the permission or under the direction or auspices of Developer (“Developer Representatives”) a limited and revocable license to enter upon the Development Parcel at any time prior to Close of Escrow for purposes of obtaining data and making surveys and tests necessary to carry out this Agreement, provided that, prior to the effectiveness of such license, Developer shall: (i) prior to entry on the Development Parcel, deliver to the City written evidence that Developer has procured and then maintains the insurance required under Sections 11.1 and
11.2; (ii) give the City twenty-four (24) hours telephonic, electronic mail or written notice of any intended access which involves work on the Development Parcel or may result in any impairment of the use of the Development Parcel or any portion thereof, or any adjacent property by any thencurrent owners, occupants, or contractors; (iii) access the Development Parcel in a safe manner; (iv) conduct no environmental testing, sampling, invasive testing, or boring without the written consent of the City (and, in all cases, Developer shall not carry out any environmental testing, sampling, invasive testing, or boring on the Development Parcel prior to the effective date of the environmental insurance policy required by Section 1.1.3 of Exhibit B to the ENA) as required by Section 11.1.4; (v) allow no dangerous or hazardous condition to be created or caused on the Development Parcel to continue beyond the completion) of such access, (vi) comply with all Governmental Requirements and obtain all permits required in connection with such access; (vii) conduct inspections and testing, subject to the rights of any existing tenants or contractors doing work on the Development Parcel, if any (which inspections and testing, if conducted at times other than normal business hours, shall be conducted only after obtaining the City’s consent, which shall not be unreasonably withheld); (viii) keep the Development Parcel free and clear of any and all liens of any kind caused by Developer or the Developer Parties, including mechanics’ liens or materialmen’s liens related to Developer’s or any Developer Parties’ access to or inspection of the Development Parcel; (ix) cause the portion of the Development Parcel subject to such inspection to be restored to the condition existing immediately prior to such inspection promptly upon completion of each inspection; and (x) provide City, at no additional charge, with copies of the results of each inspection made by or for Developer after Developer’s receipt of such results. The City shall have the right to have a City representative present on the Development Parcel during any testing under clause (iv) of this Section 5.1. This limited license shall commence on the Effective Date, may be revoked by the City during the continuation of any Default by Developer, or upon termination of this Agreement by any Party, and shall be automatically revoked and terminated upon occurrence of the Close of Escrow.
5.2 Indemnity.
Prior to the Close of Escrow, Developer, on behalf of itself and its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 39 City of Tustin/Confluent Development Portion of Disposition Area 8
Successor Owner but excluding End Users, hereby agrees to protect, indemnify, defend and hold harmless the City Indemnified Parties from and against any and all Claims arising in connection with or resulting from or related to Developer’s or the Developer Representatives’: (i) exercise of the license provided in Section 5.1, including entry onto or access to the Development Parcel, or breach by Developer or any Developer Parties of the terms and conditions of the grant of license; (ii) exercise of any rights under such license, including, any inspections, surveys, tests or studies performed by Developer or the Developer Representatives with respect to the Development Parcel, the Property or the Project; (iii) presence, activities or work on or related to use of the Development Parcel by Developer or the Developer Representatives and any Construction Liens or mechanics’ or materialmen’s liens arising with respect thereto; (iv) bodily injury to or death of any person (including any of the City Indemnified Parties or any employee or contractor of the City Indemnified Parties) or damage to or loss of use of property resulting from any of the foregoing, (v) a Release of Hazardous Materials on the Development Parcel caused by the acts of Developer or any Developer Representatives and (vi) Recording of any Construction Liens related to Developer’s inspection and/or Investigation of the Development Parcel, in each case whether occurring prior to or following the Effective Date; save and except to the extent such Claims result from (i) the gross negligence, willful misconduct or fraud of City or any City Indemnified Party or any other Excluded Claims, or (ii) Hazardous Materials existing on the Development Parcel prior to Close of Escrow unless such Hazardous Materials condition is exacerbated by, or any Release caused by, acts of Developer or any of the Developer Representatives. Developer shall keep the Development Parcel free and clear of any and all Construction Liens related to Developer’s inspection and/or Investigation of the Development Parcel. The indemnification by Developer set forth in this Section 5.2 shall survive termination of this Agreement, Close of Escrow, shall not merge with any deed and shall be binding upon Developer, its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner of the Property or portion thereof including all End Users, for the benefit of the City and its Governmental Successors, but only with respect to Claims Accrued prior to the earlier of Close of Escrow or the earlier termination of this Agreement.
5.3 Communications with City and Third Parties.
From and after the Effective Date, communications with the City by Developer and the Developer Representatives shall be directly with the City Manager or designee, that shall be the administrator of this Agreement on behalf of the City (and, subject to Section 18.11, shall have the authority, power and right to grant all approvals and consents on behalf of the City as required hereunder), and such other employees, consultants, and attorneys of the City from time to time as the City Manager may designate. In addition, Developer shall have the right to communicate with staff of other public agencies; and with third parties to all agreements affecting the Real Property and its development in connection with Developer’s proposed purchase of the Property and development of the Project. The City staff shall have the right, but not the obligation, to attend and participate in any and all meetings with other public agencies, with regard to the Project and/or the Property. Upon request of the City, Developer shall promptly provide the City with a copy of each material item of correspondence (including emails, letters, facsimiles, and any enclosures and attachments) sent to or received by Developer from third parties in connection with entitlements or approval required for the Project, or with respect to community or governmental approval of the Project, provided, however, that Developer shall not be obligated to deliver any such materials Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 40 City of Tustin/Confluent Development Portion of Disposition Area 8
that based upon advice of counsel are determined to be subject to attorney-client or other privilege or exception from disclosure.
6. Title; Survey.
6.1 Survey by Developer.
During the term of the ENA, Developer obtained and provided to the City at Developer’s sole cost and expense the ALTA/NSPS Land Title Survey for the Real Property prepared by CL Surveying & Mapping (such surveyor or other licensed surveyor subsequently designated by Developer during the Term being referred to in this Agreement as “Surveyor”), dated October 3, 2023, certified by the Surveyor to the City and the Title Company and acceptable to each (“Survey”). Developer shall provide an updated certification of the Survey at closing.
6.2 Permitted Exceptions.
Developer, at Developer’s sole cost and expense, has caused the Title Company to prepare and deliver to Developer and the City with respect to the Property the Title Commitment attached as Attachment 4 (the “Title Commitment”) based upon which the Title Company may issue an extended American Land Title Association Owner’s Policy for the Property (collectively “ALTA Policy”). An ALTA Policy shall be issued at the Close of Escrow to Developer with respect to the Real Property in the amount of the Purchase Price, and such additional amounts as Developer may request of Title Company. Prior to the Effective Date, Developer has reviewed the Title Commitment and the other relevant documents referenced below and has approved the matters set forth in the Title Commitment with respect to the Real Property. “Permitted Exceptions” to title shall mean the following: (i) all matters set forth on the Title Commitment attached as Attachment 4, or set forth on the Survey (provided that if the Real Property is annexed to the District as CFD 18-01 Zone 5 is required hereunder, CFD 13-01 shall not be a Permitted Exception); (ii) the lien of special taxes related to CFD 18-01 Zone 5 and other governmental assessments and taxes; (ii) the Other Agreements that are to be executed, and if applicable, Recorded pursuant to Article 7; (iii) the Federal Deed; (v) the Memorandum of Agreement; and (vi) all covenants, restrictions and encumbrances, liens, exceptions, leases, restrictions, deed restrictions and qualifications expressly set forth in or permitted or contemplated by this Agreement or the Other Agreements.
Notwithstanding anything to the contrary in this Agreement, the City shall deliver the Property to Developer free and clear of all monetary liens other than (a) liens for real property taxes that are not yet delinquent, and (b) Construction Liens and/or other liens or costs caused by or arising from or in connection with (1) the limited license granted pursuant to Section 5.1; and/or (2) the acts or omissions to act of Developer or the Developer Representatives with respect to work on or use of the Real Property or adjoining property owned by the City pursuant to the license granted pursuant to Section 5.1.
6.3 Supplemental Title Reports.
If prior to the Close of Escrow the Title Company discloses additional matters that affect title to the Property not disclosed on the Title Commitment, then within ten (10) Business Days after Developer’s receipt of any report issued by the Title Company concerning the Real Property that discloses any such additional matters (a “Supplemental Title Report”), Developer shall cause Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 41 City of Tustin/Confluent Development Portion of Disposition Area 8
to be provided to the City a copy of such Supplemental Title Report and shall specify in writing Developer’s disapproval of any item or exception shown on such Supplemental Title Report not previously included in the Title Commitment and that is not acceptable to Developer (each a “Disapproved Exception”) together with Developer’s suggested cure thereof (to the extent capable of being cured); provided, however, that Developer shall not have the right to disapprove any item or exception specifically consented to by Developer, including all exceptions arising pursuant to this Agreement and all Permitted Exceptions approved or deemed approved pursuant to Section 6.2. Failure of Developer to disapprove any item or exception shown on any such Supplemental Title Report on or before the expiration of such ten (10) calendar day period shall be deemed to be an approval of the matters set forth in such Supplemental Title Report. If Developer designates a Disapproved Exception, Developer shall specify in writing its reason for such disapproval, and the City shall have the right, but not the obligation, to (i) remove or cure the Disapproved Exception to the reasonable satisfaction of Developer, or (ii) subject to the last sentence of Section 6.2, elect not to cure such Disapproved Exception. If the City fails to notify Developer of the City’s election to remove or cure such Disapproved Exception within ten (10) Business Days after the City’s receipt of Developer’s notice of disapproval, the City shall be deemed to have elected not to cure such Disapproved Exception. If the City elects or is deemed to have elected not to cure any such Disapproved Exception then Developer’s exclusive remedy shall be: (a) to accept such Disapproved Exception and proceed to take title to the Real Property in the manner set forth in this Agreement and without either deduction or offset to the Purchase Price, and waive such Disapproved Exception without cause of action under this Agreement against the City, or (b) to provide written notice to the City of Developer’s election to terminate the Escrow, within five (5) Business Days after the City’s election or deemed election, provided that Developer’s failure to provide the City within said five (5) Business Days period with written notice of either Developer’s acceptance of such Disapproved Exception or Developer’s election to terminate shall constitute Developer’s election to terminate Escrow. If Developer elects (or is deemed to have elected) to terminate Escrow prior to the Close of Escrow as set forth in this Section 6.3, then the provisions of the third sentence of Section 15.1.3 shall apply. In the event Developer shall not have terminated or been deemed to have terminated this Agreement as set forth in this Section 6.3, then all matters and exclusions or exceptions from title insurance coverage shown in such Supplemental Title Report which Developer shall have accepted pursuant to this Section 6.3 (other than those which the City has agreed to cure as provided in this Section 6.3), together with all Permitted Exceptions described in Section 6.2 shall be deemed “Permitted Exceptions”.
6.4 ALTA Policy; Endorsements; Close of Escrow.
It shall be a condition precedent to Developer’s obligation to close Escrow that the Title Company issue the ALTA Policy with a policy amount equal to the Purchase Price (plus the Project Fair Share Contribution, at Developer’s election) and subject only to the Permitted Exceptions (“Original ALTA Coverage”). The City shall only be obligated to deliver to the Title Company an owner’s affidavit regarding title in a form acceptable to the City in its reasonable discretion.
Developer shall have the right, at its sole expense, to request and obtain additional ALTA coverage for the value of the development cost for the Project (“Additional ALTA Coverage”) and any title endorsements as Developer deems necessary (“Developer Title Endorsements”); provided that the issuance of such Additional ALTA Coverage and the Developer Title Endorsements shall not delay the Close of Escrow and shall not be a condition precedent to the Close of Escrow. At Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 42 City of Tustin/Confluent Development Portion of Disposition Area 8
the Close of Escrow, the City shall pay the City Premium and Developer shall pay all other costs associated with issuance of the ALTA Policy, including costs of the ALTA Policy and Developer Title Endorsements.
6.5 City Title Policy.
The City shall have the right to request that the Title Company agree to issue at Close of Escrow an ALTA owner’s extended coverage policy in the amount of One Million Dollars ($1,000,000.00) insuring the City’s ownership interest in the easements made and insurance interests contained in the Landscape Installation and Maintenance Agreement, the Access Easement Agreement and the Bioswale Easement (i) subject only to the Permitted Exceptions and (ii) including the following endorsements in favor of the City: ALTA 17-06 (Access and Entry), ALTA 17.1-06 (Indirect Access and Entry), ALTA 22.1-06 (Location and Map), and ALTA 25.1- 06 (Same as Portion of Survey) (collectively, “City Title Policy”). Provided that the Title Company consents, then at the Close of Escrow, Developer shall be obligated to deliver to the Title Company an owner’s affidavit regarding title in a form acceptable to Developer in its reasonable discretion and sufficient to allow issuance of the City Title Policy and shall pay the premium for the City Title Policy including the stated endorsements.
7. Closing.
7.1 Time and Place of Closing.
7.1.1 Close of Escrow. The Close of Escrow shall take place on that date which is twenty (20) Business Days (or such shorter period as the Parties may agree) following the last to occur of the satisfaction, or the waiver thereof by the Party for whose benefit the condition applies, of the Developer Closing Conditions and the City Closing Conditions provided that (i) in no event shall either City or Developer be obligated to close Escrow unless each has received at least five (5) Business Days’ (or such shorter period as the Parties may agree) advance written notice from the other party of the anticipated date for satisfaction of their respective City Closing Conditions and Developer Closing Conditions, and (ii) the Close of Escrow shall in no event be later than the Outside Closing Date set forth in the Schedule of Performance, which date shall be not be subject to or extended by extension for Force Majeure Delay but shall be subject to and extended by the extensions contemplated by Sections 7.1.2 and 7.1.3 (“Outside Closing Date”).
The Close of Escrow shall be subject to the satisfaction (or waiver by the Party benefited by such condition) of all of the conditions set forth in Sections 7.2 through 7.4. and shall take place at the offices of Escrow Holder in Orange County or Riverside County, California or such other location as the City and Developer may mutually select. In the event that the Close of Escrow does not occur on or prior to the Outside Closing Date, then, subject to the provisions of Article 15 or any agreement by the Parties (each in its sole and absolute discretion) to extend the Outside Closing Date, this Agreement shall terminate at 5 p.m. Pacific Time on the Outside Closing Date. In no event shall the Closing Date be extended beyond the Outside Closing Date without approval of the City Council in its sole discretion.
7.1.2 Extension of Outside Closing Date. The City shall have the right to extend the Outside Closing Date to January 26, 2027 at no cost to the City upon provision of written notice to Developer on or before October 30, 2026 if on or before October 23, 2026 the City has not Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 43 City of Tustin/Confluent Development Portion of Disposition Area 8
formed a new improvement area of the District (to be denominated CFD 18-01 Zone 5 and referred to as “CFD 18-01 Zone 5”) with respect to the Real Property, adopted a rate and method of apportionment for CFD 18-01 Zone 5 (“RMA”) and/or de-annexed the Real Property from City of Tustin Community Facilities District No. 13-01.
7.1.3 Other Closing Date Extensions By Mutual Agreement. In addition to the extension periods provided in Section 7.1.2 and additional extensions, if any, contemplated by Article 15, each Closing Date and each Outside Closing Date may be extended upon mutual written agreement of the Parties.
7.2 Conditions Precedent to Close of Escrow.
7.2.1 Developer Closing Conditions. Developer’s obligation to purchase the Property and to complete all requirements for the Close of Escrow is subject to and conditioned upon the satisfaction of, or Developer’s express written waiver of, each of the following conditions to the Close of Escrow (“Developer Closing Conditions”):
7.2.1.1 Document Deliveries. Not later than two (2) Business Days prior to the Close of Escrow, the City shall have executed and delivered to Escrow Holder the following documents, in each case substantially in the form and substance of the instruments attached as Attachments to this Agreement:
(i) if not previously executed and Recorded, the Memorandum of DDA, acknowledged and in Recordable form;
(ii) if not previously executed and Recorded, the Development Agreement (and provided it is then effective as a matter of law), acknowledged and in Recordable form;
(iii) the SLA Covenant acknowledged and in Recordable form; (iv) the Affordable Housing Declaration, substantially in the form and substance of the instrument attached to this Agreement as Attachment 26 (“Affordable Housing Declaration”), executed by the City and the Tustin Housing Authority, acknowledged and in Recordable form;
(v) the Special Restrictions, acknowledged and in Recordable form;
(vi) the Quitclaim Deed, acknowledged and in Recordable form; (vii) the Access Easement Agreement, acknowledged and in Recordable form;
(viii) the Bioswale Easement, acknowledged and in Recordable form;
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 44 City of Tustin/Confluent Development Portion of Disposition Area 8
(ix) the Landscape Installation and Maintenance Agreement in substantially the form and substance of the Landscape Installation and Maintenance Agreement attached as Attachment 21 to this Agreement (“Landscape Installation and Maintenance Agreement”), acknowledged and in Recordable form; (x) federal FIRPTA Affidavit;
(xi) California’s Real Estate Withholding Exemption Certificate Form 593-C;
(xii) a bill of sale and assignment by the City to Developer of Intangible Property substantially in the form and substance of the instrument attached to this Agreement as Attachment 22 (“Bill of Sale”), acknowledged and in Recordable form; (xiii) if a Construction Loan is proposed, City consent, as evidenced by execution by the City of a Subordination Agreement, to the proposed Mortgage being a Permitted Mortgage with the proposed Mortgagee being a Permitted Mortgagee for such Construction Loan;
(xiv) Intentionally Omitted;
(xv) a reaffirmation of the City’s representations and warranties set forth in Sections 3.3 and 18.12.2 (as the same may be modified pursuant to Section 3.4) in substantially the form and substance of the certificate attached to this Agreement as Attachment 18;
(xvi) such proof of the City’s authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of the City to act for and/or bind the City as may be reasonably required by Title Company and/or Developer (usually in the form of City Council meeting minutes); and
(xvii) such other documents or instruments as Escrow Holder may reasonably request to consummate the transaction contemplated in this Agreement (provided that no such other documents or instruments shall (a) require the City to make any payments or incur any liabilities not otherwise required by this Agreement in favor of any Person or (b) modify any provision of this Agreement);
7.2.1.2 Title Policy. The Title Company shall be in a position to issue the ALTA Policy to Developer for the Property in the amount of the Purchase Price plus the Project Fair Share Contribution (at Developer’s election) and subject only to the Permitted Exceptions.
7.2.1.3 Pre-Existing Obligations; CFD 18-01 Zone 5. Except as approved by Developer in writing or constituting a Permitted Exception, there shall exist no leases, contracts or rights of occupancy or other agreements or contracts with respect to the Property that shall survive the Close of Escrow. The City shall have annexed the Real Property to the District a new CFD 18-01 Zone 5, approved the RMA and de-annexed the Real Property from City of Tustin Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 45 City of Tustin/Confluent Development Portion of Disposition Area 8
Community Facilities District No. 13-01 as required by and in accordance with Sections 7.1.2,
7.2.2.9 and 8.7.3.
7.2.1.4 Pre-Closing Entitlements. Developer shall have timely applied for all Pre-Closing Entitlements required for development of the Project and all such Pre-Closing Entitlements shall have been Finally Approved.
7.2.1.5 Basic Concept Plan. If Developer seeks any modification to the previously approved Basic Concept Plan for the Project prior to the Close of Escrow, Developer shall have timely applied for and the City shall have approved any modifications to the same in accordance with Sections 8.5.5 and 8.5.6.
7.2.1.6 No Casualty or Condemnation. There shall not have occurred any material casualty or condemnation with respect to the Property and no material condemnation shall be threatened with respect to the Property.
7.2.1.7 No Litigation. No litigation shall be threatened or pending which seeks to prevent the development or operation of the Project or any part thereof according to the terms of this Agreement and the Other Agreements.
7.2.1.8 Construction Loan. Developer shall have obtained a Construction Loan for the Project in accordance with the Updated Financing Plan on terms and conditions acceptable to Developer in its sole discretion.
7.2.1.9 Default. The City shall not be in Default of any covenant or agreement to be performed by the City under this Agreement.
7.2.1.10 Representations and Warranties. The City’s representations and warranties set forth in in Sections 3.3 and 18.12.2 shall be true and correct as of the Close of Escrow, provided, in no event shall the City be liable to Developer for, or be deemed to be in Default under this Agreement by reason of, breach of any such representation or warranty which results from a change that (i) occurs between the Effective Date and the date of the Close of Escrow, and (ii) is expressly permitted under the terms of this Agreement or is beyond the reasonable control of the City to prevent. The occurrence of a change in a representation and warranty shall, if materially adverse to Developer or the Property, as determined by Developer in Developer’s reasonable business judgment, constitute the non-fulfillment of the condition set forth in this Section 7.2.1.10, unless such matter is cured at least one (1) Business Day prior to the Close of Escrow. If, despite changes or other matters described in the City’s reaffirmation certificate, the Close of Escrow occurs, the City’s representations and warranties set forth in Sections 3.3 and
18.12.2 shall be deemed to have been modified by all statements made in such certificate.
7.2.2 City Closing Conditions. The City’s obligation to deliver the Quitclaim Deed(s) and to complete all requirements for the Close of Escrow is subject to and conditioned upon the satisfaction of, or the City’s express written waiver of, each of the following conditions to the Close of Escrow (“City Closing Conditions”) on or before the Closing Date:
7.2.2.1 Developer Closing Payment. Not later than one (1) Business Day prior to the Close of Escrow, Developer shall deliver to Escrow (i) the Developer Closing Payment Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 46 City of Tustin/Confluent Development Portion of Disposition Area 8
and (ii) any other costs explicitly set forth in this Agreement as costs to be paid by Developer at the Close of Escrow, including the City Costs Deposit amounts described in Section 1.8.3 and the master marketing program fee described in Section 8.7.4.
7.2.2.2 Document Deliveries. Not later than two (2) Business Days prior to the Close of Escrow, Developer shall have executed and delivered to Escrow Holder, in each case (including consents where applicable) substantially in the form and substance of the instruments attached as Attachments to this Agreement, the following documents:
(i) if not previously executed and Recorded, the Memorandum of DDA, executed by Developer, acknowledged and in Recordable form; (ii) if not previously executed and Recorded, the Development Agreement (and provided it is then effective as a matter of law) executed by Developer, acknowledged and in Recordable form;
(iii) a consent and agreement to the terms of the SLA Covenant executed by Developer acknowledged and in Recordable form; (iv) a consent and agreement to the terms of the Affordable Housing Declaration executed by Developer, acknowledged and in Recordable form; (v) a consent and agreement to the terms of the Special Restrictions, executed by Developer, acknowledged and in Recordable form; (vi) a consent and agreement to the terms of the Quitclaim Deed executed by Developer for the deed affecting the Property to be acquired by Developer, acknowledged and in Recordable form;
(vii) the Access Easement Agreement, acknowledged and in Recordable form;
(viii) the Bioswale Easement, acknowledged and in Recordable form;
(ix) the Landscape Installation and Maintenance Agreement, executed by Developer, acknowledged and in Recordable form; (x) a Bill of Sale executed by Developer as to the Property to be acquired by Developer, acknowledged and in Recordable form; (xi) with respect to a Construction Loan in favor of Developer secured by a Permitted Mortgage with a Permitted Mortgagee and approved by the City pursuant to Article 17, the following documentation approved by the City:
(a) Permitted Mortgagee shall have delivered to Escrow
(1) the Subordination Agreement executed by Permitted Mortgagee acknowledged and in Recordable form;
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(b) as to the Construction Loan, Developer and
Permitted Mortgagee (as determined by City) of such Permitted Mortgage shall each have confirmed in writing to Escrow Holder for the benefit of the City that all conditions to close of such Construction Loan have been met or waived and each is prepared to close the Construction Loan concurrently with the Close of Escrow, and Developer shall have provided to the City written verification from Escrow confirming that the deed of trust to be recorded in conjunction with the closing of the Construction Loan has been fully executed and acknowledged and in Recordable form and deposited into Escrow by the Construction Loan Permitted Mortgagee; and (c) written consent to the Subordination Agreement
executed by Developer for the agreement affecting the Property to be acquired by Developer, acknowledged and in Recordable form; (xii) Agreement with Conditions of Approval in form and substance of the agreement approved by the City in its Governmental Capacity executed by Developer, acknowledged and in Recordable form;
(xiii) O&M Agreement for the Property in form and substance of the agreement approved by the City in its Governmental Capacity executed by Developer, acknowledged and in Recordable form;
(xiv) a Guaranty executed by the chief financial officer or other appropriate authorized officer of Guarantor;
(xv) a Guarantor Original Certificate executed by the chief financial officer or other appropriate authorized officer of Guarantor; and (xvi) a Guaranty Legal Opinion executed by legal counsel to Guarantor;
(xvii) a Developer Date Down and Reaffirmation Certificate with such certificate certified for the benefit of the City by the chief financial officer or other appropriate authorized officer of Developer dated as of the Closing Date; (xviii) If Developer is utilizing an Approved Equity Investor that has previously delivered an Equity Investor Original Certificate, an Equity Investor Date Down Certificate executed by each Approved Equity Investor, otherwise, an Equity Investor Original Certificate by each Approved Equity Investor, in each case certified by the chief financial officer or other appropriate authorized officer of the Approved Equity Investor, and, if not previously delivered by each Approved Equity Investor, Evidence of Equity and/or Equity Commitment, in each case dated as of the Closing Date and stating, without limitation, that the “Pre-Closing Conditions” (as that term is defined in the Equity Commitment) have been satisfied as of the Closing Date; (xix) the “Satisfaction Notice” as such term is defined in Attachment 15C, Section 1, executed by Initial Equity Investor; Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 48 City of Tustin/Confluent Development Portion of Disposition Area 8
(xx) if required under the provisions of Section 4.6.2.3, Additional Equity Commitments from the Additional Equity Investors in the amounts required by Section 4.6.2.3 and in the form of Attachment 15E; (xxi) such proof of Developer’s authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Developer to act for and/or bind each as may be reasonably required by Title Company and/or the City; and (xxii) such other documents or instruments as Escrow Holder may reasonably request to consummate the transaction contemplated in this Agreement (provided that no such other documents or instruments shall (a) require the City to make any payments or incur any liabilities not otherwise required by this Agreement in favor of any Person or (b) modify any provision of this Agreement).
7.2.2.3 Pre-Closing Entitlements. Developer shall have timely applied for all Pre-Closing Entitlements required for development of the Project and all such Pre-Closing Entitlements shall have been Finally Approved.
7.2.2.4 Basic Concept Plan. If Developer seeks any modification to the previously approved Basic Concept Plan, Developer shall have timely applied for and the City shall have approved any modifications to the same in accordance with Sections 8.5.5 and 8.5.6.
7.2.2.5 Horizontal Improvements. The City shall be prepared to issue the grading permit for the Grading Work and Horizontal Improvements on the Real Property and plans for the Vertical Improvements shall have been submitted to the City for building permit review.
7.2.2.6 Bonds to Secure Certain Construction Work. Developer shall have provided to the City those labor and material bonds and payment bonds in favor of the City as obligee securing Developer’s obligations to perform and construct the Grading Work and for necessary encroachments into City-owned property, if any.
7.2.2.7 Insurance. Developer shall have provided to the City evidence of insurance as and to the extent required by Article 11.
7.2.2.8 Financial Capability; Guaranty. Developer shall have satisfied the conditions precedent to the Close of Escrow set forth in Sections 4.6.1, 4.6.2, 8.9.1 and, if applicable, Sections 8.9.2 and 8.10.
7.2.2.9 Formation of Improvement Area, Adoption of RMA and Annexation of Property into District. The City shall have formed the new CFD 18-01 Zone 5, approved the RMA and caused the Property to be annexed into the District and de-annexed the Real Property from City of Tustin Community Facilities District No. 13-01 in accordance with Section 8.7.3, and such formation, annexation, adoption and de-annexation shall each be Finally Approved.
7.2.2.10 Developer’s Affidavit. When required by Section 6.5, Developer shall have provided the Title Company with the affidavit described in Section 6.5.
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7.2.2.11 Default. Developer shall not be in Default of any covenant or agreement to be performed by Developer under this Agreement.
7.2.2.12 Representations and Warranties. Developer’s
representations and warranties set forth in Sections 3.1 and 18.12.1 shall be true and correct as of the Close of Escrow (or in the case where any Transfer occurs prior to the Close of Escrow, the representations and warranties made by the Transferee in an Assignment Agreement, as applicable), shall be true and correct as of the Close of Escrow, provided, in no event shall Developer be liable to the City for, or be deemed to be in Default under this Agreement by reason of, breach of any such representation or warranty which results from a change that (i) occurs between the Effective Date and the date of the Close of Escrow, and (ii) is expressly permitted under the terms of this Agreement or is beyond the reasonable control of Developer to prevent.
The occurrence of a change in a representation and warranty shall, if materially adverse to City, as determined by the City in City’s reasonable business judgment, constitute the non-fulfillment of the condition set forth in this Section 7.2.2.12, unless such matter is cured at least one (1) Business Day prior to the Close of Escrow. If, despite changes or other matters described in Developer’s reaffirmation certificate, the Close of Escrow occurs, Developer’s representations and warranties set forth in Sections 3.1 and 18.12.1 (or in the case where a Transfer occurs prior to the Close of Escrow, the representations and warranties made by the Transferee in the Assignment Agreement) shall be deemed to have been modified by all statements made in such certificate.
7.3 Additional Close of Escrow Conditions.
7.3.1 Closing Statements. In addition to the provisions of Section 7.2, the Close of Escrow shall be conditioned upon the following Closing Conditions, which shall be for the benefit of each Party: (i) Escrow Holder shall have delivered at least seven (7) Business Days prior to the Close of Escrow a statement of costs to each Party and at least two (2) Business Days prior to the Close of Escrow each of the Parties shall have approved such statement as being consistent with the provisions of Section 7.4 and (ii) each Party shall confirm in writing to Escrow Holder that all Closing Conditions for its benefit have been satisfied or waived.
7.3.2 Supplementary Escrow Instructions Related to Construction Loan. The Parties shall have prepared and approved any supplemental Escrow instructions which Escrow instructions shall state that the Quitclaim Deed may be recorded only if it is recorded concurrently with the closing of the Construction Loan, which closing shall be evidenced by the Recording of the deed of trust securing the Construction Loan and such additional supplemental Escrow instructions as may be needed.
7.4 Procedures for Conveyance.
7.4.1 Costs and Expenses. The costs and expenses of the Close of Escrow shall be allocated as follows:
7.4.1.1 City’s Costs. The City shall pay (i) the City Premium; (ii) one-half (1/2) of all Escrow fees and costs; (iii) all documentary transfer taxes, if any; and (iv) the City’s share of prorations, if any, and such costs, fees and taxes shall not be DDA Transaction Expenses.
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7.4.1.2 Developer’s Costs. Developer shall pay (i) the entire cost of the ALTA Policy, along with the cost of any other title insurance coverage, in excess of the City Premium and shall be responsible for obtaining, any lender’s or other title policy or endorsements in excess of the City Premium and all other costs associated with issuance of such title policy and any associated Developer Title Endorsements or other endorsements requested by lenders, (ii) the cost of the City Title Policy; (iii) the entire cost of the Survey and any additional land surveys obtained by Developer in connection with the foregoing; (iv) document recording charges for the documents to be Recorded per Section 7.4.6(ii); (v) one-half (1/2) of all Escrow fees and costs; (vi) Developer’s share of prorations and (vii) the cost of any outstanding DDA Transaction Expenses as described in Section 1.8.3. Developer shall pay the fees of all consultants and employees (including legal fees and fees of environmental, engineering and land use consultants) engaged by it.
7.4.1.3 Other Costs. All costs and expenses related to the Close of Escrow and the transfer of the Property to Developer not otherwise allocated in this Agreement shall be allocated between the Parties in accordance with the customary practice in Orange County, California.
7.4.2 Possession. The City shall deliver exclusive possession of the Property at the Close of Escrow subject to any Permitted Exceptions and to any other matters disclosed on the ALTA Policy.
7.4.3 Deliveries to Developer Upon Close of Escrow. The City agrees to deliver to Developer, on or prior to the Close of Escrow, outside of Escrow, the following items with respect to the Property:
7.4.3.1 Records and Plans. To the extent in the City’s possession, originals or copies of records and plans that will affect the Property after the Close of Escrow.
7.4.3.2 Licenses and Permits. To the extent in the City’s possession, originals or copies of all licenses and permits affecting the Property (other than Development Permits).
7.4.4 Prorations.
7.4.4.1 General. Rentals, revenues and other income, if any, from the Property conveyed shall be prorated on a cash basis as of 11:59 P.M. Pacific Time on the day preceding the Close of Escrow. Tax payments shall be prorated in accordance with Section 7.4.4.2.
7.4.4.2 Taxes. Developer shall be responsible for all taxes, assessments, fees and charges imposed by any Governmental Authority with respect to the Property and all existing and future improvements thereon accruing from and after the Close of Escrow. If, after the Close of Escrow, any real estate taxes or possessory interest taxes are assessed against any portion of the Real Property pertaining to the period prior to the Close of Escrow, the City agrees to contact the applicable taxing authority and seek recognition and enforcement of its tax exemption. The provisions of this Section 7.4.4.2 shall survive the termination of this Agreement and the Close of Escrow and shall not be merged with the Quitclaim Deed.
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7.4.5 Method of Proration. All prorations shall be made in accordance with customary practice in Orange County, except as otherwise expressly provided in this Agreement.
Developer and the City agree to cause a schedule of prorations to be prepared prior to the Close of Escrow. Such prorations, if and to the extent known and agreed upon as of the Close of Escrow, shall be paid by Developer to the City (if the prorations result in a net credit to the City) or by the City to Developer (if the prorations result in a net credit to Developer) by increasing or reducing the cash to be paid by Developer at the Close of Escrow. Any such prorations not determined or not agreed upon as of the Close of Escrow shall be paid by Developer to the City, or by the City to Developer, as the case may be, in cash as soon as practicable following the Close of Escrow, but in no event later than sixty (60) calendar days after the Close of Escrow. A copy of the schedule of prorations as agreed upon by Developer and the City shall be delivered to Escrow Holder at least three (3) Business Days prior to the Close of Escrow. All prorations provided for in Section 7.4.4 and this Section 7.4.5 shall be on an “actual day” basis and a three hundred sixty-five (365) day year.
7.4.6 Disbursements and Other Actions by Escrow Holder. At the Close of Escrow, and subject to the satisfaction or waiver by the benefited party of the conditions to the Close of Escrow described in Section 7.2, Escrow Holder shall promptly undertake all of the following in the manner indicated below:
(i) Funds. Debit or credit all matters addressed in Section 7.4.1 and prorate all matters addressed in Section 7.4.4 and disburse to the City the Purchase Price (as adjusted by the foregoing debits, credits and prorations) and the Project Fair Share Contribution.
(ii) Recording. At the Close of Escrow, cause the following instruments to be Recorded against the Real Property in the following order: (1) if not previously Recorded, the Memorandum of DDA and the Development Agreement, (2) the SLA Covenant, (3) the Affordable Housing Declaration, (4) the Special Restrictions, (5) the Quitclaim Deed; (6) the Access Easement Agreement; (7) the Bioswale Easement; (8) the Landscape Installation and Maintenance Agreement and (9) the Subordination Agreement, and thereafter, such other documents that Developer and the City may mutually direct, or that may be required by the terms of this Agreement to be Recorded, obtain conformed copies thereof and distribute same to Developer and the City. (iii) Title Policies. At the Close of Escrow direct the Title Company to issue (a) the ALTA Policy to Developer for the Real Property in the amounts described in Section 6.4 and (b) if issuance is previously agreed to by the Title Company, the City Title Policy; provided, however issuance of the City Title Policy shall, if available, be provided by the Title Company to the City concurrently with, but shall not be a condition precedent to the City’s obligations for Closing. Concurrently with the issuance of the ALTA Policy, the Title Company shall provide the Developer Title Endorsements, provided that the issuance of such Developer Title Endorsements shall not be a condition to the Close of Escrow, except for those endorsements that the City agreed to obtain in order to cure any disapproved title exceptions or survey matters. Concurrently with the issuance of the City Title Policy, the Title Company shall provide to the City the endorsements listed in Section 6.5.
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(iv) Delivery of Documents to the City and Developer. Deliver to the City and to Developer executing each of the following original counterparts (and conformed copies if applicable) of the Development Agreement (if not previously Recorded), the Memorandum of DDA (if not previously Recorded), the SLA Covenant, the Affordable Housing Declaration, the Special Restrictions, the Quitclaim Deed, the Bioswale Easement, the Landscape Installation and Maintenance Agreement, the Bill of Sale, the FIRPTA Affidavit, the California Form 593-W, and any other documents (or copies thereof) deposited into Escrow by Developer or the City at the Close of Escrow pursuant hereto, including conformed copies of the Recorded instruments and deliver to the Parties a certified copy of their respective Escrow closing statements. Deliver to the City original fully executed (a) Equity Commitment(s) for the Project, (b) Guaranty with Guaranty Legal Opinion, (c) certificates delivered by Developer, and Guarantor and each Equity Investor, and (d) Subordination Agreement, and evidence that the Construction Loan conditions have been satisfied and the Construction Loan has issued for the Project. (v) Other Actions. Take such other actions as the Parties direct pursuant to mutually executed supplemental Escrow instructions.
7.4.7 Notice. All communications from the Escrow Holder shall be directed to the addresses and in the manner established in Section 18.6 for notices, demands and communications between the Parties.
8. Development of the Real Property and Additional Covenants of Developer and City.
8.1 Scope of Development.
8.1.1 Requirement to Develop the Project. The Scope of Development sets forth the overall conceptual plan for the Project and development of the Real Property, including design, development, and construction of the Project Improvements as may be required by the Entitlements and Development Permits. The Project shall be designed and constructed to Completion in a manner consistent with the Site Plan and in compliance with the Scope of Development, the Approved Plans, the Design Guidelines, the Entitlements and Entitlements conditions, Development Permits and any other Governmental Requirements as well as all requirements of private utility purveyors.
8.1.2 Control of Site Development. Developer shall have control over the design and layout of the Project Improvements (including height, shape and location of the Vertical Improvements and special landscaping and art features) and over the special uses to be incorporated therein, subject to (i) the Approved Plans, the Design Guidelines, Development Permits, Entitlements and Governmental Requirements including any conditional use permit necessitated by particular proposed uses or design features and (ii) the design approval provisions set forth in Sections 8.5.3, 8.5.5 and 8.5.6 for the benefit of the City, which are undertaken by the City in its Proprietary Capacity. Except as excepted by Article 17, no Person (including any Permitted Mortgagee) shall be permitted or authorized to undertake the construction of any improvements on the Real Property unless such Person: (x) is the Initial Developer, (y) is a Transferee pursuant to a Permitted Transfer and has met the requirements of Section 2.2.2, or (z) (A) has been approved by the City as a Transferee pursuant to Section 2.2.3 and has met the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 53 City of Tustin/Confluent Development Portion of Disposition Area 8
requirements of Section 2.2.3 or (B) is a Foreclosure Transferee recognized as the Developer by the City pursuant to Section 2.2.7.3 and in the case of clauses (x) and (z) of this Section 8.12, such Person has first assumed in writing all obligations of Developer under this Agreement by written assignment and assumption agreement in substantially the form and substance of the Assignment Agreement; provided that the foregoing restrictions shall not apply to any portion of the Real Property for which a Certificate of Compliance has been Recorded by the City.
8.1.3 Compliance with Governmental Requirements and Other Requirements. Developer shall develop the Real Property with the Project in the manner described in and consistent with the Scope of Development, the Site Plan, and in accordance with the Schedule of Performance, the Approved Plans and all Governmental Requirements, including the Specific Plan, the Entitlements, the Development Permits, the Memorandum of Agreement and the Federal Deed.
8.2 Development Costs.
Within the time set forth in the Schedule of Performance, Developer shall design and construct the Project at Developer’s sole cost and expense and without public subsidy of any kind, unless otherwise agreed in writing by the City in its sole discretion. Nothing in this Agreement or in any Other Agreement shall in any way limit the ability of Developer from applying for and/or obtaining a property tax abatement for the Active Adult Project. Without limiting the generality of the foregoing, Developer hereby agrees that the following costs and expenses (collectively “Development Costs”) incurred by Developer during the Term and until (i) termination of this Agreement or (ii) Recording by the City of the later of the Active Adult Project Certificate of Compliance and the AL/MC Project Certificate of Compliance, shall be the responsibility of Developer without any cost or liability to the City:
(i) all costs and expenses to perform and satisfy all the covenants of Developer with respect to the Real Property contained in this Agreement and the Other Agreements;
(ii) all costs and expenses associated with planning, designing, developing and constructing the Project, preparing the Real Property and constructing all Project Improvements (whether on-site or off-site) required in connection with the Project, including all hard costs, soft costs, the cost of services, fees, exactions, dedications, cost overruns, profit, overhead, Entitlements costs (including costs to perform conditions of approval and mitigation measures thereunder), warranties, consultants’ fees, legal fees; (iii) all costs and expenses of marketing and rental of Residential Units as further described in the Scope of Development, including marketing fees, sales incentives, insurance, overhead, and brokerage fees incurred in the rental of Residential Units;
(iv) all costs and expenses costs and expenses necessary to obtain the Entitlements and Development Permits and to comply with the other obligations of Developer under this Agreement required to be satisfied prior to the Close of Escrow; Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 54 City of Tustin/Confluent Development Portion of Disposition Area 8
(v) subject to Sections 7.4.1, 7.4.4 and 18.12.1, all costs and expenses associated with acquisition of the Property, payment of the Purchase Price and brokerage fees incurred in the acquisition of the Property and, if applicable, sale of the Property, the Project, and/or the Project Improvements by Developer; (vi) all costs and expenses comprising DDA Transaction
Expenses of the City;
(vii) all wages and benefits required to be paid to any person employed by Developer, and by persons employed by the Developer Representatives; (viii) the costs of the Project Fair Share Contribution; and (ix) the CFD 18-01 Zone 5 Special Tax (it being acknowledged and agreed by Developer that the CFD 18-01 Zone 5 Special Tax shall be perpetual and shall continue to be the obligation of the Owner of the Real Property notwithstanding Recording of a Certificate of Compliance thereto).
8.3 Schedule of Performance; Completion of Project.
The Schedule of Performance sets forth the schedule for closings under this Agreement and for submissions, approvals and actions related to design and development of each of the Project and construction and Completion of the Project Improvements during the Term. Following the Closing, Developer shall promptly begin and thereafter diligently prosecute to Completion the construction of the Project Improvements within the time period provided by the Schedule of Performance. Where time periods for performance are specified in the Schedule of Performance or in this Agreement, Developer shall perform such matters no later than the time specified in the Schedule of Performance or in this Agreement, as applicable, provided that the dates set forth in the Schedule of Performance and this Agreement may be extended by Force Majeure Delay in accordance with Section 18.7, subject to the limitations set forth in Section 18.7.5 and 18.7.6 or may be otherwise extended by the City in accordance with Section 18.3. To be effective, any extensions pursuant to this Section or Section 18.3 shall be requested in writing by Developer and approved by and evidenced by written notice from the City Manager or designee and any requested Force Majeure Delay extension shall be requested pursuant to Section 18.7.
8.4 Land Use Matters.
8.4.1 CEQA Requirements. The Parties acknowledge and agree that CEQA is applicable to discretionary actions associated with the development of the Project. Developer acknowledges that the City shall prepare any supplemental environmental information, if any, as may need to be completed in order to effect compliance with CEQA, as determined by the City in its sole discretion, and Developer shall be responsible to pay all costs incurred by the City to prepare or to cause to its consultants to prepare such environmental documents and shall enter into such agreements to pay such costs as the City shall require. Developer agrees to cooperate with the City in obtaining information to determine the environmental impact of the Project, if any.
8.4.2 Required Entitlements. Developer shall, at its sole cost and expense, process, obtain, and maintain all Entitlements to assure that the design, construction, use, Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 55 City of Tustin/Confluent Development Portion of Disposition Area 8
operation, maintenance, repair and replacement of the Project Improvements is carried out in accordance with the provisions of this Agreement, and is permitted by the Entitlements and all other Governmental Requirements. Development of the Project shall be subject to the following Entitlements and review processes of the City: (i) Design Review approval (Design Review application 2025-0008); (ii) Tentative Parcel Map approval (Subdivision Application 2025-0003); (iii) Conditional Use Permit approval (CUP 2025-0012); (iv) Development Agreement approval (DA 2025-0001) and (v) the density bonus application, density bonus exception and related concessions and incentives authorized under Tustin City Code Section 9123 related to the provision of affordable housing units in compliance with California Government Code Sections 54220-54234 and 65915, and any other approvals to the extent required by the City Code to permit the uses contemplated in the Site Plan or Approved Plans. Without limiting the foregoing, in developing and constructing the Project, Developer shall ensure that the Project complies with all applicable development standards in the Specific Plan, the City Code and with all building codes, landscaping, signage and parking requirements, except as may be permitted through variances and modifications or the Development Agreement.
8.4.3 Development Permits. Developer, at its sole cost and expense shall process, obtain, and maintain all Development Permits required for the construction, use, operation, maintenance, repair and replacement of the Project Improvements.
8.4.4 Agreement Does Not Grant Entitlements. Nothing in this Agreement shall be construed or interpreted as committing the City to approve or undertake any action or review process or activities that require the independent exercise of discretion by the City in its Governmental Capacity, including any approval of any of the Entitlements or Development Permits for which Developer applies whether prior to or following the Effective Date. This Agreement does not (i) grant any land use entitlement or approval to Developer, (ii) supersede, nullify or amend any condition which may be imposed by the City in its Governmental Capacity in connection with approval of the Project, (iii) guarantee to Developer or any other party any profits from the development of the Property, or (iv) amend any Governmental Requirements of the City. The issuance or approval of any of the Entitlements or any Development Permit described in this Agreement shall be done by the City in its Governmental Capacity and the failure of the City to issue or approve any such matters shall not be a Default. Nothing contained in this Agreement shall be deemed to waive the right of the City to act in its Governmental Capacity with respect to the consideration and approval of the Entitlements, Development Permits and all other permits, licenses and approvals requested by Developer from time to time in connection with the Project nor shall it entitle Developer to any of the Entitlements, Development Permits or other City approvals necessary for the development of the Project, or to the waiver of any applicable City requirements relating thereto, and the failure of the City to issue or approve any of the Entitlements described in this Agreement, including to certify or approve any CEQA document, to approve any tentative (or vesting tentative) tract map, design review, conditional use permit or other entitlements or approvals, including the Entitlements or Development Permits, shall not be a Default of the City under this Agreement.
8.4.5 Cooperation of City. Consistent with this Agreement, the City agrees, without cost or other liability to the City or any commitment of the City to approve or conditionally approve any Entitlements required for the full implementation of the Project or this Agreement, to assist and cooperate with Developer in its efforts to process the Entitlements and Development Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 56 City of Tustin/Confluent Development Portion of Disposition Area 8
Permits. The City will use good faith efforts to expedite review of applications for the Entitlements and the Development Permits that are to be issued by the City and other submissions made by Developer where reasonably appropriate in order that Developer is able to meet the deadlines set forth in the Schedule of Performance and will assist and cooperate with Developer in its efforts to process such Development Permits, Entitlements and other submissions. At no cost to the City, the City shall also assist and cooperate with Developer to obtain from other Persons (including IRWD, Environmental Agencies and the City of Irvine) any licenses or entry permits necessary or reasonably desirable in connection with development of the Project Improvements.
8.4.6 Entitlements Conditions. Developer acknowledges and agrees that the City in its Governmental Capacity may require satisfaction of certain conditions and dedication of certain property in connection with approval of any Entitlements.
8.4.7 Payment of Processing Fees. The Development Agreement provides for payment by Developer of City Processing Fees and Plan Check and Inspection Fees (as each is defined in the Development Agreement). If the Development Agreement shall terminate during the Term of this Agreement, then Developer shall, commencing upon termination of the Development Agreement, pay to the City pursuant to this Agreement all charges imposed by the City under the then-current regulations for processing applications and requests for permits and entitlement approvals, including (i) all fees, costs and deposits normally charged by the City or other Governmental Authority in connection with application for and review and approval of Entitlements and Development Permits, (ii) any fees or costs incurred by the City or any other Governmental Authority in complying with CEQA or the CEQA implementing regulations; (iii) any costs to review or approve any of the Entitlements or Development Permits applications or submittals by Developer to the City or any other Governmental Authority in connection with the Project, provided that in no event shall Developer be obligated to pay again any fee previously paid pursuant to the Development Agreement.
8.5 Design Approval.
8.5.1 Design Review. It is understood and agreed to by Developer that the quality, character and uses proposed for the Project are of particular importance to the City. In furtherance of the development of the Project and the foregoing, Design Review approval is required as part of the Entitlements. In addition, the City will require review and approval of any modifications to the Basic Concept Plan for the Project and the Project Improvements and Landscape Improvements upon the Boundary Landscape Area as further set forth in this Section 8.5.
8.5.2 Plan Development and Cost. All plans and specifications for the Project shall be prepared by Developer at Developer’s sole cost and expense and subject to the requirements set forth in this Article 8.
8.5.3 Process for Governmental Review. The Parties acknowledge that the City shall have the right to review all plans, specifications and submissions, including any changes therein, through its normal plan review and Entitlements process and that the City may exercise its governmental discretion in review of any of the plans, specifications and submissions.
Developer has previously submitted to the City, and the City has previously reviewed and approved the Entitlements in its Governmental Capacity. Within the timeframe shown in the Schedule of Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 57 City of Tustin/Confluent Development Portion of Disposition Area 8
Performance, Developer shall submit for approval by the City in its Governmental Capacity, final construction design drawings and related documents conforming to the requirements of the City Code, the Specific Plan and all other Entitlements and conditions of approval and mitigation measures within the time period set forth in the Schedule of Performance. The Community Development Department is authorized pursuant to City Code to approve minor changes to building plans after approval by the City provided such changes do not significantly reduce the character or quality of the development concept or the design and materials to be used in enhancing the architecture and aesthetics of the Project Improvements. Nothing in this Agreement shall relieve Developer from the obligation to submit modified final design drawings and related documents conforming to the requirements of the City Code, the Specific Plan and all other Entitlements for further review and approval by the City, if any modification to the previously approved plan or Entitlements is required.
8.5.4 Coordination. Developer and the architect for the Project, shall meet with representatives of the City to review and come to a clear understanding of the applicable planning and design criteria required by the City. During the preparation of all plans and specifications for the Project, staff of the City and Developer shall hold regular progress meetings to coordinate the preparation, submission and review of such plans. The staff of the City and Developer shall communicate and consult as frequently as necessary to facilitate prompt and speedy consideration of Developer’s submittals.
8.5.5 Real Property Division Review. Review of any modifications to the previously approved Basic Concept Plan for the Project shall also be carried out by the City’s Real Property Division as further described in this Section and Section 8.5.6. Prior to the Effective Date, Developer has caused the Basic Concept Plan to be prepared and submitted to the City for approval and the City has previously reviewed and approved the Basic Concept Plan. Developer acknowledges and agrees that the City’s Community Development Department is responsible for reviewing the working drawings and issuing recommendations with respect to the appropriate Entitlements. In addition to its submittal of same to the Community Development Department, Developer shall submit any modifications to the previously approved Basic Concept Plan to the Deputy City Manager – Real Property for its approval in accordance with this Section and Section 8.5.6. The exercise by the Deputy City Manager – Real Property of the right to inspect or review the concept plans, drawings and related documents for development of the Project are actions in the Proprietary Capacity of the City and: (i) shall not constitute an approval by the City of any Entitlements; (ii) shall not constitute a determination by the City of the engineering or structural design, sufficiency or integrity of the improvements contemplated by such plans, drawings and related documents, and (iii) shall not constitute a determination by the City of the compliance of such plans, drawings and related documents with any applicable building codes, safety features and standards. Any inspection or approval of plans and drawings made or granted pursuant to this Agreement shall not constitute an inspection or approval of the quality, adequacy or suitability of such plans, specifications or drawings, nor of the labor, materials, services or equipment to be furnished or supplied in connection therewith. The Parties acknowledge and agree that the City’s approval in its Proprietary Capacity of modifications to the Basic Concept Plan shall be carried out only in accordance with the provisions of this Section 8.5. Developer shall not be entitled to damages or compensation as a result of the City’s disapproval, conditional approval, or failure to approve or disapprove any modification to the Basic Concept Plan in accordance with Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 58 City of Tustin/Confluent Development Portion of Disposition Area 8
the provisions of this Section 8.5.1. Field modifications are not subject to review by the Deputy City Manager – Real Property.
8.5.6 Process for Real Property Division Review. If Developer desires to modify the previously approved Basic Concept Plan, Developer shall submit to the City two sets of the modifications to the Basic Concept Plan for the proposed revised Improvements with proposed revisions marked for review and approval by the City (and in such case the City’s review period shall be fifteen (15) Business Days after City’s receipt of the requested modification). Sets of the Basic Concept Plan shall be submitted in writing over the signature of Developer or a representative duly authorized by Developer in writing. Approval by the Deputy City Manager – Real Property shall not be unreasonably withheld, conditioned or delayed if such modifications are Minor Modifications but shall be in the sole discretion of the Deputy City Manager – Real Property if he or she determines they are Major Modifications. If approved, the Deputy City Manager –Real Property or designee shall endorse its approval on one set of such modified Basic Concept Plan and return it to Developer. Subject to the preceding provisions of this Section 8.5.6, Developer shall make changes in response to the City’s notice of disapproval and resubmit such Basic Concept Plan to the City for review and approval in accordance with the provisions of this Section 8.5.6 (and in such case the City’s review period shall be ten (10) Business Days). Provided the documents are submitted substantially concurrently to the Real Property Department and the Community Development Department, such reviews shall take place substantially concurrently.
8.5.7 Approved Plans. Upon approval by the City of each of the matters described in the definition of Approved Plans, the Approved Plans shall govern development of the Project Improvements. In addition to any other rights to approve or disapprove the construction level drawings in its Governmental Capacity, the City may, in its Proprietary Capacity and without limiting the rights of the City in its Governmental Capacity, disapprove any construction level drawings that represent Major Modifications to the Entitlements or previously approved Basic Concept Plan. Developer shall not construct any Project Improvements on the Real Property unless the same are shown in the Approved Plans or unless the prior written consent of the City is obtained to any modification thereof. To the extent of any inconsistencies between the plans identified in the Scope of Development or the Site Plan and the Approved Plans, the Approved Plans shall govern and control as to the development of the Real Property.
8.6 Financial Capability and Budget Statement.
8.6.1 Financial Capability. Developer understands and agrees that following the Close of Escrow, the City reserves the right to request in writing from Developer reasonable additional financial information which shall be comprised of current audited financial statements to the extent then available without any additional cost to Developer, including information, data and commitments, to ascertain the depth of the financial capability of Developer or other equity participants, to meet the financial obligations required by this Agreement. After the Close of Escrow, and thereafter until the later of Recording by the City of the Active Adult Project Certificate of Compliance and the AL/MC Project Certificate of Compliance, Developer shall maintain adequate financial capacity to perform its obligations under this Agreement and the Other Agreements with respect to the Property and the Project and shall assure that each Equity Investor has the Liquid Assets to fund the required equity for the Project, as determined by the City in its sole discretion, and each Guarantor, for the term of the Guaranty, continues to satisfy the Minimum Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 59 City of Tustin/Confluent Development Portion of Disposition Area 8
Asset Standards as the same may be modified by the City pursuant to Section 8.9.5. In addition, if the City is not reasonably satisfied with any written financial information provided by Developer or any Equity Investor, the City shall be entitled to obtain further information from Developer with respect thereto (excluding audited financial statements except to the extent then available without any additional cost to Developer) as may be necessary to establish that the financial resource available to Developer are sufficient, as determined by the City in its sole discretion, when combined with the other sources and uses set forth in the Financing Plans to fund the Development Costs.
8.6.2 Budget Statement. From the Close of Escrow until the later of Recording by the City of the Active Adult Project Certificate of Compliance and the AL/MC Project Certificate of Compliance, if requested by the City, Developer shall provide a Budget Statement for the Project in the format required by the applicable Financing Plan. The Budget Statement shall be delivered to the City by Developer within thirty (30) calendar days following the later of receipt by Developer of the City’s written request therefor and the expiration of the applicable quarter; provided that the City shall make such request no more than once annually. Notwithstanding the foregoing, the delivery of such Budget Statement shall be for informational purposes only and in no event shall the City be entitled to declare a Potential Default or Material Default, or exercise any of its remedies pursuant to this Agreement, based on the contents of such Budget Statement absent an actual Potential Default or Material Default under one of the other covenants or obligations of Developer set forth in this Agreement. All Budget Statements submitted in response to request by the City shall be subject to the confidentiality provisions set forth in Sections 4.6.1 and 18.24.
8.7 Fees and Exactions.
8.7.1 Developer Acknowledgements. Developer acknowledges and agrees that:
(i) the development of the Project, together with the development of the remainder of Tustin Legacy, will contribute to the need for Tustin Legacy backbone infrastructure located off of the Development Parcel, including Tustin Legacy roadway improvements; traffic and circulation mitigation to support the Tustin Legacy project; domestic and reclaimed water; sewer; telemetry; storm drains and flood control channels; utilities backbone (electricity, gas, telephone, cable, telecommunications, etc.) based on the allocations to the Development Parcel in the City’s Tustin Legacy Backbone Infrastructure Financing Program-2024 Update adopted January 21, 2025 as the same may be amended from time to time (“Tustin Legacy Backbone Infrastructure Program”); (ii) Developer has had an opportunity to review the budgets, plans and projections developed by the City in connection with the Tustin Legacy Backbone Infrastructure Program and the studies prepared by the City in connection therewith; (iii) there is an essential nexus between the imposition on the Project of the Project Fair Share Contribution and a legitimate governmental interest; and (iv) the Project Fair Share Contribution is roughly proportional to and reasonably and rationally related to the impacts that will be caused by development of the Project.
8.7.2 Project Fair Share Contribution. Developer is responsible to pay the Project Fair Share Contribution which shall be in addition to the Purchase Price and paid by Developer at Close of Escrow pursuant to Section 4.2.2. Developer waives its right to fund all or any portion of such contribution pursuant to a community facilities district, including pursuant to any special tax for the development of facilities within the Tustin Legacy Backbone Infrastructure Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 60 City of Tustin/Confluent Development Portion of Disposition Area 8
Program or pursuant to other community facilities district. For avoidance of doubt, the City acknowledges and agrees that, notwithstanding the provisions of Section 8.7.1, the preceding provisions of this Section 8.7.2 or any provision elsewhere in this Agreement to the contrary, the amount of the Project Fair Share Contribution payable by Developer at the Close of Escrow represents and constitutes the full amount of costs of the Tustin Legacy backbone infrastructure allocated to the Real Property as described in Section 8.7.1 pursuant to the Tustin Legacy Backbone Infrastructure Program and such payment of the Project Fair Share Contribution by Developer constitutes full, complete and final satisfaction of the Project Fair Share Contribution under the Tustin Legacy Backbone Infrastructure Program with respect to the Property and the Project and no further payment shall be owed or payable thereunder with respect thereto.
8.7.3 Community Facilities District.
8.7.3.1 The City has previously established Community Facilities District No. 18-01 (“District”). The City, by action of the City Council, intends to annex the Real Property into the District as CFD 18-01 Zone 5 prior and as a condition to the Close of Escrow and to adopt an RMA for CFD 18-01 Zone 5 imposing assessments upon each Room located on the AL/MC Real Property and upon the Residential Units in the Active Adult Real Property, provided that for the period in which any Units are designated as Lower Income Units, such Units shall be excluded from any obligation under the RMA. When CFD 18-01 Zone 5 is created, the District shall impose a special tax and lien upon the Real Property in accordance with the terms of the instruments governing CFD 18-01 Zone 5, the RMA and the requirements of this Agreement. At the time of annexation into the District, the Real Property will be de-annexed from City of Tustin Community Facilities District No. 13-01.
8.7.3.2 Subject to the annexation documents and RMA for CFD 1801 Zone 5 being consistent with the Maximum Tax Burden Schedule attached to this Agreement as Attachment 23 and the other terms of this Agreement related to CFD 18-01 Zone 5, including all of the terms in this Section 8.7.3, Developer, on behalf of itself and its Successor Owners, agrees to the imposition of the special tax lien of CFD 18-01 Zone 5, as described in Section 8.7.3.1, the RMA and the new CFD 18-01 Zone 5 Special Tax, the proceeds of which shall be used by the City to fund a portion of City essential services, including but not limited to police protection services, fire protection services, ambulance and paramedic services, recreation program services, maintenance of City-owned parks, parkways and open space, flood and storm protection and street and sidewalk maintenance at Tustin Legacy. Unless otherwise agreed by the City and Developer, each in its sole discretion, the following shall apply to CFD 18-01 Zone 5 formed by the City:
8.7.3.3 The term of the CFD 18-01 Zone 5 Special Tax component imposed upon the Real Property shall not be time limited in any manner unless determined by the City in its sole discretion.
8.7.3.4 At the Closing Date, the RMA shall establish the annual tax on the Real Property that shall not exceed the amount shown on Attachment 23. Thereafter, the special taxes in the RMA for CFD 18-01 Zone 5 may escalate annually at a rate equal to the greater of (i) the change in the Consumer Price Index during the twelve (12) months prior to December of the previous Fiscal Year and (ii) two percent (2.00%), subject to and as further described in the RMA.
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8.7.3.5 The CFD 18-01 Zone 5 Special Tax shall be levied only against Developed Property (i.e., property that has received a building permit for new construction, as defined in the RMA).
8.7.3.6 The City has provided Developer with the opportunity to review and provide input on all documents and budgets relating to the formation of CFD 18-01 Zone 5, annexation of the Real Property into CFD 18-01 Zone 5 and adoption of the RMA and the RMA documents expected to be submitted for the agenda package related to the annexation of the Real Property to CFD 18-01 Zone 5 and adoption of the RMA by the City Council and Developer has approved the same prior to the Effective Date.
8.7.3.7 Developer acknowledges and agrees that its development plan for the Project will not require the formation of any community facilities district for the financing of public facilities and that neither assessment district nor community facilities district proceeds will be used to reimburse Developer for its Development Costs, including the Project Fair Share Contribution or specific infrastructure costs for the Project. Developer, on behalf of itself, each Successor Owner and each Successor Ground Lessee, waives its right to fund all or any portion of the development of the Project pursuant to a community facilities district. Developer will not oppose a determination by the City to annex the Real Property into CFD 18-01 Zone 5, provided that the City, the District and the special taxes levied by CFD 18-01 Zone 5 comply with this Agreement. If due to a Default by the City, the Close of Escrow takes place pursuant to Section 15.3.2 prior to annexation of the Real Property into CFD 18-01 Zone 5 by the City or prior to Final District Approval, then the City shall nonetheless have the right to annex the Real Property into the CFD 18-01 Zone 5 (or, if challenged to form a new district) and Developer hereby agrees that it shall support the annexation of the Real Property into such CFD 18-01 Zone 5 or new district provided the same comports with the terms of this Section 8.7.3.
8.7.3.8 The City shall not be prohibited by the terms of this Agreement from subjecting the Real Property and/or the Project Improvements thereon, to any increase in ad valorem real property tax pursuant to a City of Tustin-wide election, provided that nothing in this Agreement shall be construed to constitute a waiver by Developer of its right or ability to dispute or oppose passage of a City of Tustin-wide bond, the proposed formation of any special district or taxing authority in connection therewith, or the imposition of any such tax, or its right to dispute any portion of the Real Property’s assessed value.
8.7.3.9 With respect to the Real Property, the CFD 18-01 Zone 5 Special Tax shall be levied only against Developed Property (as referenced in Attachment 23), i.e., the Real Property that has received a building permit for new construction.
8.7.4 Master Marketing Program Fees. Developer acknowledges that the City (in its Proprietary Capacity) requires that all builders within Tustin Legacy contribute a master marketing program fee towards the marketing of Tustin Legacy by the City. In complete satisfaction of such obligation by Developer, Developer shall pay to the City through Escrow Holder at the Close of Escrow a one-time master marketing program fee of Fifty Thousand Dollars ($50,000.00). The City acknowledges and agrees that this payment shall satisfy all obligations of Developer to contribute to the master marketing program or any future master marketing program for the Project and that Developer shall have no additional obligations on account thereof after the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 62 City of Tustin/Confluent Development Portion of Disposition Area 8
payment of such fee at the Close of Escrow. The provisions of this Section shall survive the Close of Escrow.
8.7.5 Other Fees and Assessments. Developer acknowledges and agrees that in addition to City fees, fees may be imposed by other Governmental Authorities with jurisdiction over the Project and/or the Property and payment of any such fees and assessments shall be at Developer’s sole cost, including (a) the Foothill/Eastern Corridor Fee, (b) state-mandated school impact fees and assessments by the Santa Ana Unified School District, (c) Orange County School Facility Bonds, if any, and (d) utility meter and connection fees from the Irvine Ranch Water District and other utilities and districts as applicable.
8.7.6 No Quimby Act Fees or Park Fees. Except as set forth in the Development Agreement, all fees and/or dedications required in connection with the Project pursuant to the Quimby Act, California Government Code Section 66477, are included within the Project Fair Share Contribution and Developer shall not have any additional liability on account thereof.
8.8 Grading Work; Design and Construction of Improvements.
8.8.1 Grading Work. Following the Close of Escrow, Developer shall cause the Grading Work to be performed. Grading Work shall be performed in accordance with the Approved Plans and the requirements of this Agreement within the time period set forth in the Schedule of Performance.
8.8.2 Horizontal Improvements. Developer shall (i) submit plans for Horizontal Improvements (other than Landscape Improvements) for approval by the City within the time periods set forth in the Schedule of Performance, (ii) promptly obtain permits for the Horizontal Improvements following City approval of the Approved Plans and (iii) when authorized by this Agreement or the Other Agreements, to commence construction of and diligently prosecute construction of the Horizontal Improvements in accordance with and subject to this Agreement promptly after the Close of Escrow.
8.8.3 Vertical Improvements. Developer shall promptly obtain permits for the Vertical Improvements following City approval of the Approved Plans and shall commence construction of and diligently prosecute construction of the Vertical Improvements to Completion in accordance with the Schedule of Performance. Upon satisfaction of the requirements to achieve the Vertical Improvements Commencement Date, Developer shall notify the City in writing by submitting an executed original of the Vertical Improvements Commencement Date Certificate in substantially the form and substance of the certificate attached to this Agreement as Attachment
13. Upon confirmation by the City that the Vertical Improvements Commencement Date has occurred and provided that there is then no Default under this Agreement or the Other Agreements, the City shall countersign and cause Recording of the Vertical Improvements Commencement Date Certificate.
8.9 Guaranty and Guarantor.
8.9.1 Approval of Guarantor. The City shall have the right to review and approve, in its sole discretion, the proposed Guarantor and each and every replacement Guarantor for the Project. Guarantor shall throughout the Term of this Agreement, meet the Minimum Asset Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 63 City of Tustin/Confluent Development Portion of Disposition Area 8
Standards. Developer shall cause the proposed Guarantor to deliver evidence of the financial capacity of the proposed Guarantor, authority of the proposed Guarantor to provide the Guaranty, and copies of all documents evidencing formation, good standing and authority requested by the City, including providing information to assure that the proposed Guarantor meets the Minimum Asset Standards (provided that if any Transfer is proposed to take place following the Close of Escrow, Developer or Transferee shall provide information regarding the Liquid Assets and Net Worth of the proposed guarantor anticipated at the time at which the Guaranty would be given, and the City’s review of such information shall not be deemed to be City’s approval of Guarantor, which shall be provided if at all, as a condition for the benefit of the City at the Close of Escrow and Transfer). Following Close of Escrow, Developer shall cause Guarantor to deliver, in accordance with the terms of the Guaranty, periodic current financial statements of Guarantor to assure that Guarantor continues to meet the Minimum Asset Standards. Following Close of Escrow, if Developer or any Transferee desires to replace its existing Guaranty or the approved Guarantor, then in addition to satisfaction of the above requirements, the replacement Guarantor shall provide a guaranty in the form and substance of the Guaranty with such modifications from the form of Attachment 14A as the City may require or agree to in its sole discretion.
8.9.2 Deliverables at Close of Escrow. At the Close of Escrow, Developer shall deliver a Guaranty from a Guarantor approved by the City in its sole discretion (subject to the following sentence). As of the Effective Date, the City has reviewed and confirmed that as of the date of review the Rebecca P. Samberg 2018 Revocable Trust, created under a trust instrument dated March 26, 2018, satisfies the financial requirements to serve as the Guarantor for the Project.
Developer shall cause Guarantor to provide to the City (i) evidence and written assurances that Guarantor has financial capacity that meets the Minimum Asset Standards, (ii) a Guarantor Original Certificate and (iii) a Guaranty Legal Opinion. If Developer or any Transferee desires to replace its existing Guaranty or the approved Guarantor, then in addition to satisfaction of the above requirements, replacement Guarantor shall provide a guaranty in the form and substance of the Guaranty with such modifications from the form of Attachment 14A as the City may require or agree to in its sole discretion.
8.9.3 Guarantor Illiquidity Event; Developer Default. The Guaranty requires Guarantor to maintain the Minimum Asset Standards and to comply with certain related covenants, and the failure of Guarantor to do so is referred to in the Guaranty as a Guarantor Illiquidity Event.
Until termination of the obligations of Guarantor under the Guaranty, Developer shall cause Guarantor to meet the Minimum Asset Standards and to provide replacement financial assurances in the event Guarantor fails to meet the Minimum Asset Standards. Prior to the Close of Escrow and, if applicable, provision by Developer of any replacement Guaranty, Guarantor and the City shall enter into a written agreement upon terms approved by City, in its reasonable discretion, establishing the procedures by which Guarantor shall furnish specified financial reports to the City on a regular basis, but not more often than quarterly, to assure that the Minimum Asset Standards are met and that no Insolvency Event has occurred with respect to the Guarantor (the failure of any such standard being, a “Guarantor Illiquidity Event”). The failure of Developer to deliver or cause others to deliver when due the financial reporting information to the City as required by this Section 8.9.3 and any subsequently adopted procedures shall be a Material Default of Developer under this Agreement subject to the cure period provisions set forth in Sections 14.2.1 and 8.9.4 for a Guarantor Illiquidity Event.
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8.9.4 Developer Cure of Guarantor Illiquidity Event. If a Guarantor Illiquidity Event occurs, the City’s notice to Developer of the existence of the Guarantor Illiquidity Event shall constitute a declaration by the City of a Material Default by Developer pursuant to Section 14.2.1. To cure such Material Default, Developer shall be required to provide the City with additional security satisfactory to the City by, at Developer’s election (i) providing the City with a Guaranty from a replacement or supplemental guarantor or guarantors acceptable to the City in its sole discretion (and with such modifications from the form of Attachment 14A as the City may require or agree to in its sole discretion), or (ii) furnishing the City with another form of security such as a pledge of specified assets or completion bond, in each case in a manner meeting the requirements of the City in its sole discretion.
8.9.5 Intentionally Omitted.
8.9.6 Guaranty Effectiveness. Developer, on behalf of itself and each Successor Owner, and the City on behalf of itself and its successors and assigns, hereby agree that notwithstanding any other term of this Agreement, Guaranty provided at the Close of Escrow (or, if applicable, any replacement Guaranty provided to and approved by the City pursuant to this Agreement) as the same may be reaffirmed by any Reaffirmation of Guaranty provided to the City, shall remain in effect as to the Project and the Property until the later of the Recording by the City of the Active Adult Project Certificate of Compliance and the AL/MC Project Certificate of Compliance, or for such longer period specified in the applicable Guaranty or any reaffirmation thereof, and the Guarantor shall not be released therefrom, except as otherwise expressly provided in the Guaranty unless the Guaranty is replaced by an executed new Guaranty from a Guarantor approved by the City in accordance with Section 8.9.1 and, if applicable, Section 8.9.2.
8.10 Replacement of Equity Investor.
If as a result of a Transfer or for any other reason Developer has identified a new Equity Investor that has not previously delivered an Equity Investor Original Certificate or entered into an Equity Commitment, Developer shall identify a new Equity Investor that, in the determination of the City in its sole discretion (i) is a Qualified Equity Investor and (ii) has sufficient Liquid Assets and Net Worth to fund all Development Costs for the Project as described in the Financing Plan or Updated Financing Plan for the Project, and in connection with such approval Developer shall cause the Equity Investor to deliver to the City those items set forth in Section 4.6.2.3 and the form of Equity Commitment, each of which shall be subject to approval of the City in its sole discretion (and only upon City approval in its sole discretion of each of the foregoing shall the proposed Equity Investor be deemed an Approved Equity Investor). Notwithstanding the foregoing, the City hereby approves the Initial Equity Investor as an Approved Equity Investor.
8.11 Development Covenants.
With respect to construction of the Project and the Project Improvements, Developer, on behalf of itself and each Successor Owner, hereby covenants and agrees as follows:
8.11.1 Developer shall maintain throughout the Term sufficient equity, capital and firm binding commitments for financing necessary to (i) pay through Completion, all costs of development, construction, marketing, sale and/or leasing, operation and management of all the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 65 City of Tustin/Confluent Development Portion of Disposition Area 8
Project and the Project Improvements as defined in the Scope of Development and the Approved Plans; and (ii) enable Developer to perform and satisfy all the covenants of Developer contained in this Agreement and the Other Agreements. Developer shall not undertake any additional project if it could reasonably be expected to jeopardize the sufficiency of any equity, capital and firm and binding commitments for the purposes expressed in the preceding sentence.
8.11.2 The development of the Project shall be done in a professional and competent manner. Developer shall, and shall cause all other Persons carrying out work on the Real Property to perform all work required to construct and Complete the Project, the Project Improvements and related work as a High Quality Project in accordance with the Approved Plans, the Entitlements, the Development Permits, the Design Guidelines and all Governmental Requirements and at the level of quality set forth in the Scope of Development.
8.11.3 Developer shall be responsible for the timeliness and quality of all work performed and materials and equipment furnished in connection with the Project, whether the work, materials and equipment are performed and furnished by Developer or through contractors, subcontractors (of all tiers) and suppliers.
8.11.4 Developer shall not place, or allow to be placed, on its interests in the Property, the Project Improvements or the Project, or any portion thereof, any Mortgage, except as provided in this Agreement with respect to the Project.
8.11.5 Developer shall not place, or allow to be placed, on its interests in the Property or the Project Improvements or any portion thereof any encumbrance or lien, including any Construction Lien.
8.11.6 Developer shall, within thirty (30) Business Days following receipt of notice thereof, cause to be removed or bonded against (such bonding to be by the provision of bonds satisfying California statutory requirements) any and all mechanic’s liens, stop notices and/or bonded stop notices that are Recorded and/or served by contractors, subcontractors (of all tiers) and suppliers in connection with the Project, including construction of the Project Improvements on the Development Parcel or performance of other work by Developer or any of the Developer Representatives in connection therewith, including conducting investigations or causing the foregoing to be carried out (“Construction Liens”). Notwithstanding the foregoing, Developer may contest the amount, validity or application, in whole or in part, of any Construction Liens; subject, however, to the further requirement that neither the Property nor any Project Improvements nor any part or interest in either thereof would be in any danger of being sold, forfeited, attached or lost pending the outcome of such proceedings. If any such contest is finally resolved against Developer, then Developer shall promptly pay the amount required to be paid, together with all interest and penalties accrued thereon. Developer on behalf of itself, and each Successor Owner, hereby agrees to indemnify, defend and hold the City Indemnified Parties free and harmless from and against any and all Claims arising from or related to failure to pay for construction of the Project Improvements or other work related thereto, including costs to remove or bond any Construction Liens, including costs to remove or bond any Construction Liens for work performed on the Real Property to the extent (i) Accrued during its respective period of ownership thereof, and (ii) with respect to Developer only, Accrued during such longer period between the Effective Date and the date of Recording by the City of a Certificate of Compliance Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 66 City of Tustin/Confluent Development Portion of Disposition Area 8
as to the Real Property if Developer is not released pursuant to Article 2; provided, however, that neither Developer nor any Successor Owner shall have liability or responsibility for such Claims for work performed by the City or any contractor of the City that is claiming a right to a Construction Lien on any portion of the Real Property and provided further that the foregoing shall not apply as to any portion of the Real Property for which a Certificate of Compliance has been Recorded by the City. For the avoidance of doubt, “any contractor of the City” does not mean Developer, each Successor Owner or any Person claiming by, through or under Developer or any Successor Owner.
8.12 City Rights of Access.
In addition to any rights it may have in its Governmental Capacity, representatives of the City shall have the reasonable right of access to all portions of the Development Parcel and the Project Improvements, upon not less than two (2) Business Days prior written notice to Developer (except in the event of an emergency, in which case no such prior notice shall be required), without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including the inspection of the work being performed in constructing the Project Improvements.
8.13 Disclaimer of Responsibility by City and Exculpation.
8.13.1 Disclaimer of Responsibility. The City neither undertakes nor assumes nor will have any responsibility or duty to Developer or any Successor Owner, nor any Developer Representatives, any End User or any other Person to review, inspect, supervise, pass judgment upon or inform Developer, any Successor Owner, any End User or any other Person of any matter in connection with the development or construction of the Project Improvements or the approval of any maps, including the Horizontal Improvements, the Vertical Improvements or the Approved Plans, any Basic Concept Plan or component thereof and grading plans with respect to the foregoing, whether regarding the quality, adequacy or suitability of the plans, any labor, service, equipment or material furnished for development of the Project or other work related to the Project Improvements, any Person furnishing same, or otherwise. Developer, any Successor Owner, any End User and all other Persons shall each rely upon its or their own judgment regarding such matters, and any review, inspection, supervision, exercise of judgment or information supplied to it by the City in connection with such matter is for the public purpose of developing the Project, and none of the foregoing is entitled to rely upon information supplied by the City.
8.13.2 Exculpation. The City shall not be liable in damages to Developer or to any Successor Owner, any Developer Representatives, any End User or any other Person, on account of (i) any approval or disapproval by the City, including by the City Manager or designee, made in the Governmental Capacity and/or Proprietary Capacity of the City of any Entitlements, Development Permits, design documents or maps, in connection with the Project, the Horizontal Improvements, the Vertical Improvements, the Approved Plans, any Basic Concept Plan or component thereof and grading plans with respect to the foregoing, whether or not defective or whether or not in compliance with applicable laws or ordinances; (ii) any construction, performance or nonperformance by Developer, or any Successor Owner, lessee, licensee or other Person of any work on the Real Property, the Project Improvements, whether or not pursuant to Approved Plans or whether or not in compliance with applicable laws or ordinances; (iii) any Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 67 City of Tustin/Confluent Development Portion of Disposition Area 8
mistake in judgment, negligence, action or omission in exercising its rights, powers and responsibilities under this Agreement or any other agreement between City and Developer in connection with Sections 8.13.1 and 8.13.2(i) and (ii); and/or (iv) the enforcement or failure to enforce any of the provisions of this Agreement. Each and every Person who makes design submittals for approval agrees by reason of such submittal, and Developer, on behalf of itself, each Successor Owner and all Persons claiming by, through or under Developer or each Successor Owner agrees by acquiring an interest in the Property, the Project the Project Improvements or any portion thereof or interest therein, not to bring any suit or action against the City seeking to recover any such damages and expressly waives any such claim or cause of action for such damages which it would otherwise be entitled to assert. The review of any design submittals shall not constitute the assumption of any responsibility by, or impose any liability upon, the City as to the accuracy, efficacy, sufficiency or legality thereof nor decrease or diminish any liability, duties, responsibilities, or obligations of Developer or any Successor Owner under this Agreement or otherwise.
8.13.3 City Responsibility. Nothing in this Section 8.13 shall limit or be deemed to limit the City’s express representations, warranties, covenants and obligations set forth in this Agreement and the Other Agreements.
8.13.4 No Supervision or Control. The City (whether acting in the Governmental Capacity and/or Proprietary Capacity of the City) does not have any right, and hereby expressly disclaims any right, of supervision or control over the architects, designers, engineers or persons responsible for drafting or formulating of the plans, drawings and related documents of Developer.
8.13.5 Graded Condition of the Development Parcel. The City has previously caused its contractor to rough grade the Development Parcel and such Development Parcel have been certified by David Hoopfer, civil engineer for Michael Baker International, as to bridge mounds on October 21, 2024 and January 27, 2026 and Jeremy Beck for Landmark Surveying on January 16, 2026. Developer acknowledges that the City is delivering the Property as-is and does not certify in any manner the grading or condition of the Development Parcel or any portion thereof. Developer and each Successor Owner shall look solely to the engineers, consultants and contractors and their respective certifications and not to the City for all purposes related to the Grading Work performed, including the adequacy of the work and the certification(s).
8.13.6 Survival. The provisions of this Section 8.13 shall be included in the Special Restrictions, shall run with the land, shall remain in effect in perpetuity and shall survive termination of this Agreement, the Close of Escrow, and the Recording by the City of both Certificates of Compliance (or, if only one Certificate of Compliance, the Final Certificate of Compliance) and shall not merge with any deed and shall be binding upon Developer, its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer, including all End Users, for the benefit of the City and its Governmental Successors, and from and after the Close of Escrow, and shall be binding upon and burden the Real Property.
8.14 Local, State and Federal Laws.
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Developer shall carry out the construction of the Project including all Project Improvements subject to Section 8.1.3 and in conformity with all Governmental Requirements including all applicable federal and State labor laws and regulations and shall, if and to the extent required by applicable federal or State labor laws or regulations, pay prevailing wages meeting the requirements of such laws and regulations; provided that Developer on behalf of itself, and each Successor Owner reserves the right to reasonably contest such laws and regulations. Developer and each Successor Owner shall carry out construction of the Project Improvements in compliance with the requirements of this Section and each shall be fully responsible for determining whether the foregoing wage requirements are applicable to the Project. Developer hereby agrees on behalf of itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, but excluding End Users, to indemnify, defend and hold the City and the City Indemnified Parties free and harmless from and against any and all Claims arising from or related to applicability of the prevailing wage requirements imposed by any federal and State labor laws and/or the compliance by Developer or Developer’s officers, directors, employees, agents, representatives, consultants and/or contractors (at every tier) in construction of the Project Improvements with the prevailing wage requirements imposed by any applicable federal and State labor laws. For avoidance of doubt, Developer and each Successor Owner shall be liable pursuant to this Section only with respect to work performed on a portion of the Real Property, (i) during its respective period of ownership of such portion of the Real Property, and (ii) with respect to Developer only, during such longer period between the Effective Date and the date of Recording by the City of a Certificate of Compliance as to such portion of the Real Property until it is released pursuant to Article 2 provided, however, that neither Developer nor any Successor Owner shall have liability or responsibility for prevailing wage requirements for public improvements performed by the City or any contractor of the City on any portion of the Property, and provided further that the foregoing shall not relieve Developer or any Successor Owner of liability should the City work trigger a determination that the Project or any Project Improvement is subject to prevailing wage requirements. The City makes no representations nor warranties regarding the applicability of prevailing wage laws. For the avoidance of doubt, “any contractor of the City” does not mean Developer, each Successor Owner or any Person claiming by, through or under Developer or any Successor Owner.
8.15 Liens, Taxes and Assessments.
Developer and each Successor Owner shall pay prior to delinquency all real estate taxes and assessments assessed and levied on or against all portions of the Property and/or the Project Improvements, during the period of ownership thereof by such Developer or Successor Owner provided that the foregoing shall not prohibit application by Developer or any Successor Owner for a property tax welfare exemption with respect to the Active Adult Project. Developer shall not place, or allow to be placed, on its interests in the Property, or any Parcel, Improvement or any portion thereof, any Mortgage or encumbrance or lien not authorized by this Agreement.
Developer shall remove, or shall have removed, any levy or attachment made on its interests in the Property, the Project Improvements (or any portion thereof) or shall assure the satisfaction thereof within thirty (30) Business Days following receipt of notice thereof. Subject to Section 8.11.6 and except as set forth in Sections 8.7.2 and 8.7.3, nothing contained in this Agreement shall be deemed to prohibit Developer or any Successor Owner from contesting the validity or amount of any tax or assessment or to limit the remedies available to Developer or such Successor Owner in respect thereto. Developer on behalf of itself and each Successor Owner hereby agrees to indemnify, Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 69 City of Tustin/Confluent Development Portion of Disposition Area 8
defend and hold the City Indemnified Parties free and harmless from and against any and all Claims arising from or related to failure to pay liens, taxes and assessments assessed, levied to the extent (i) Accrued during its respective period of ownership of the Real Property or any portion thereof, and (ii) with respect to Developer only, Accrued during such longer period between the Effective Date and the date of Recording by the City of the later of the Active Adult Project Certificate of Compliance and the AL/MC Project Certificate of Compliance until it is released pursuant to Article 2; provided that the foregoing shall not apply as to any portion of the Real Property for which a Certificate of Compliance has been Recorded by the City.
8.16 Duration of Article 8 Indemnities; Post-Certificate of Compliance Affiliate Responsibilities.
The provisions, including the indemnities, set forth in Sections 8.11.6, 8.14 and 8.15 shall survive the termination of this Agreement, the Close of Escrow and Recording by the City of both Certificates of Compliance (or, if only one Certificate of Compliance, the Final Certificate of Compliance), shall not merge with any deed and shall remain in effect for the Term of this Agreement and, upon Recording of the Special Restrictions each shall run with the land for the term of the Special Restrictions in accordance with the specific terms of Sections 8.11.6, 8.14 and
8.15, provided that following Recording by the City of a Certificate of Compliance for any portion of the Real Property and notwithstanding the limitations set forth in Sections 8.11.6, 8.14 and 8.15 on the liability of each Owner during its respective period of ownership of a portion of the Real Property, if any Owner (Transferor) Transfers all or any portion of its interest in the Real Property to an Owner Affiliate (Transferee), the Transferee shall be deemed to have assumed and be liable for the obligations of the Transferor and each consecutive prior Owner Affiliate Transferee as though such Transferee had held joint ownership with Transferor and each consecutive prior Owner Affiliate Transferee during their respective prior consecutive periods of ownership of the Real Property or any portion thereof.
9. Certificate of Compliance.
9.1 Completion; Schedule of Performance.
Subject to Section 18.7, following the Close of Escrow, Developer shall construct or cause to be constructed the Project Improvements upon the Real Property and shall satisfy all Conditions Precedent when and as required by this Agreement in accordance with the Schedule of Performance.
9.2 Certificate of Compliance Defined.
After Completion of all construction and development required to be undertaken by Developer in conformity with this Agreement and in accordance with the Schedule of Performance and the satisfaction by Developer of the Conditions Precedent set forth Sections 9.3.1 and 9.3.2, the City shall execute and Record a Final Certificate of Compliance for the Real Property and the Project; provided that if the Final Parcel Map is Recorded by the City prior to the Recording by the City of the Final Certificate of Compliance, then upon Completion of the Active Adult Project Improvements and satisfaction by Developer of the Conditions Precedent set forth in Section 9.3.1, the City shall execute and Record a Certificate of Compliance as to the Active Adult Project Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 70 City of Tustin/Confluent Development Portion of Disposition Area 8
(“Active Adult Project Certificate of Compliance”) and upon Completion of the AL/MC Project Improvements and satisfaction by Developer of the Conditions Precedent set forth in Section 9.3.2, the City shall execute and Record a Certificate of Compliance for the AL/MC Project (“AL/MC Project Certificate of Compliance”) as the case may be and the later Recorded of the two Certificates of Compliance shall be referred to as the Final Certificate of Compliance. The City shall have no obligation to execute and Record any Certificate of Compliance unless and until all Conditions Precedent thereto are satisfied. Each Certificate of Compliance shall be substantially in the form and substance of the Certificate of Compliance attached to this Agreement as Attachment 16 (each, a “Certificate of Compliance” and collectively, “Certificates of Compliance”). Developer, on behalf of itself, each Successor Owner, and each and every Person claiming by, through or under Developer or any Successor Owner, including each End User, hereby consents to Recording by the City of each Certificate of Compliance as to the portion of the Project and Real Property to which it applies, and to have the Final Certificate of Compliance Recorded against the entirety of the Development Parcel if requested by the City, and confirms that no further acknowledgement or consent by the then-Owners of the Real Property shall be required in connection with such Recording(s). The Final Certificate of Compliance (or the Active Adult Project Certificate of Compliance, if applicable) shall state the actual number of Residential Units constructed on the Active Adult Real Property and the number of that total that are Lower Income Units as of the date of execution thereof by the City, and the Final Certificate of Compliance (or the AL/MC Project Certificate of Compliance, if applicable) shall state the total number of Rooms constructed on the AL/MC Real Property as of the date of execution thereof by the City and each shall establish the actual number of Residential Units or Rooms, as applicable, allocated to Developer by the City pursuant to Section 4.1.2 and the Quitclaim Deed. The provisions of this Section with respect to Recording by the City of the Certificates of Compliance shall terminate if this Agreement terminates prior to Close of Escrow but shall survive any subsequent termination of this Agreement, to preserve the right of the City and each subsequent Developer to cause Recording by the City of the Certificates of Compliance as stated in this Section. Except as specifically set forth in the Affordable Housing Declaration, the Recording by the City of a Certificate of Compliance as to a portion of the Real Property and Project shall not relieve Developer of its obligations under this Agreement and the Other Agreements as to portions of the Property for which no Certificate of Compliance has been issued.
9.3 Certificate of Compliance Conditions Precedent.
9.3.1 Active Adult Project Conditions Precedent. If the Final Parcel Map is Recorded prior to execution and Recording by the City of the first Certificate of Compliance, then the following shall comprise the Conditions Precedent to the execution and Recording of the Active Adult Certificate of Compliance, provided that if the Final Parcel Map is not Recorded prior to Recording of the first Certificate of Compliance then as an additional Condition Precedent for the Active Adult Project, all of the Conditions Precedent to execution and Recording by the City of the AL/MC Project Certificate of Compliance shall also be satisfied and the certificate to be issued shall be the Final Certificate of Compliance:
9.3.1.1 Completion of (i) the Active Adult Project Improvements with the number of Residential Units and the minimum number of Lower Income Units to be constructed as depicted on the Approved Plans and all accompanying amenities, (ii) all Public Benefits Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 71 City of Tustin/Confluent Development Portion of Disposition Area 8
Improvements (as defined in the Development Agreement) and (iii) all Landscape Improvements shall have occurred;
9.3.1.2 Final inspection by or on behalf of the City of the Active Adult Real Property and the Active Adult Project Improvements constructed thereon and determination by the City that all Active Adult Project Improvements have been Completed in conformance with this Agreement, the Approved Plans and all Governmental Requirements;
9.3.1.3 Issuance of a final certificate of occupancy by the City for the Active Adult Project containing the number of Residential Units and Lower Income Units constructed thereon as depicted on the Approved Plans;
9.3.1.4 Written release or bonding for the Real Property in accordance with California law of all Construction Liens or rights to record liens from the general contractor and all subcontractors (at all tiers) having served valid preliminary 20-day notices, or, if none are filed, the statutory period for filing liens having expired without any Construction Liens being filed against or with respect to the Real Property;
9.3.1.5 Payment by Developer to the City of all funds then owing to the City under this Agreement and the Other Agreements with respect to the Project; and
9.3.1.6 No Potential Default or Material Default by Developer under this Agreement or default under the Other Agreements or default by Guarantor under the Guaranty shall have occurred and be continuing.
9.3.2 AL/MC Project Conditions Precedent. If the Final Parcel Map is Recorded prior to execution and Recording by the City of the first Certificate of Compliance, then the following shall comprise the Conditions Precedent to the execution and Recording of the AL/MC Project Certificate of Compliance, provided that if the Final Parcel Map is not Recorded prior to Recording of the first Certificate of Compliance then as an additional Condition Precedent for the AL/MC Project, all of the Conditions Precedent to execution and Recording by the City of the Active Adult Certificate of Compliance shall also be satisfied:
9.3.2.1 Completion of (i) the AL/MC Project Improvements with the number of Rooms to be constructed as depicted on the Approved Plans, and all accompanying amenities, (ii) all Public Benefits Improvements (as defined in the Development Agreement) and (iii) all Landscape Improvements shall have occurred;
9.3.2.2 Final inspection by or on behalf of the City of the AL/MC Real Property and the AL/MC Project Improvements constructed thereon and determination by the City that all AL/MC Project Improvements have been Completed in conformance with this Agreement, the Approved Plans and all Governmental Requirements;
9.3.2.3 Issuance of a final certificate of occupancy by the City for the AL/MC Project containing the square footage of buildings within the AL/MC Project and the number of Rooms constructed as depicted on the Approved Plans; Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 72 City of Tustin/Confluent Development Portion of Disposition Area 8
9.3.2.4 Written release or bonding in accordance with California law of all Construction Liens or rights to record liens from the general contractor and all subcontractors (at all tiers) having served valid preliminary 20-day notices, or if none are filed, the statutory period for filing liens having expired without any Construction Liens being filed against or with respect to the Real Property;
9.3.2.5 Payment to the City of all funds then owing to the City under this Agreement and the Other Agreements with respect to the Project; and
9.3.2.6 No Potential Default or Material Default by Developer under this Agreement or default under the Other Agreements or default by Guarantor under the Guaranty shall have occurred and be continuing.
9.4 Conclusive Presumption.
Each Certificate of Compliance shall be, and shall so state, conclusive determination of satisfactory completion of the obligations of Developer pursuant to this Agreement with respect to the portion of the Project and Real Property to which it is applicable and shall be evidence of termination of this Agreement, subject only to the provisions referenced in Section 9.7 and the Other Agreements affecting the applicable Property, each of which shall survive in accordance with its respective terms.
9.5 Not Evidence.
Neither execution nor Recording by the City of any Certificate of Compliance is a notice of completion as referred to in Section 8182 of the California Civil Code.
9.6 City Obligations.
The City shall not unreasonably withhold, condition, or delay execution or Recording of a Certificate of Compliance when all the Conditions Precedent thereto are satisfied. Developer shall provide evidence of satisfaction of the foregoing conditions. If the City refuses or fails to execute and Record a Certificate of Compliance after written certification from Developer which shall include evidence of satisfaction of each of the applicable Conditions Precedent to such execution and Recording set forth in this Article 9, and provided each of the applicable conditions established in Section 9.3 have been satisfied, the City shall, within fifteen (15) Business Days of the written request, provide a written statement which details the reasons the City refused or failed to execute and Record such Certificate of Compliance. The statement shall also contain a statement of the actions that Developer must take to obtain the Certificate of Compliance. The City shall cause each Certificate of Compliance to be Recorded within five (5) Business Days after execution thereof.
9.7 Effect of Certificate of Compliance; Termination of Agreement.
9.7.1 Termination of Portions of Agreement Upon Recording. Each Certificate of Compliance shall be in such form as to permit it to be Recorded. After Recording by the City of a Certificate of Compliance this Agreement shall terminate as to the portion of the Real Property against which it is Recorded; provided, however, such termination of this Agreement with respect Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 73 City of Tustin/Confluent Development Portion of Disposition Area 8
to such portion of the Property shall not affect the continued applicability of any provisions in this Agreement or in the Other Agreements that survive Recording of such Certificate of Compliance.
9.7.2 Survival of Certain Provisions. In addition to the matters set forth in the Special Restrictions, the following shall as to each portion of the Real Property and Project to which the Recorded Certificate of Compliance applies survive the Recording of the Certificate of Compliance and remain in full force and effect for the period set forth in each, and shall be binding upon Developer, its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner of the Property or portion thereof including all End Users, for the benefit of the City and its Governmental Successors, and from and after the Close of Escrow, and shall be binding upon and burden the Real Property, provided that upon sale or transfer to an End User, the obligations set forth in Sections 9.7.2.1 and 9.7.2.3 shall not survive with respect to or bind any End User or any of their respective successors and assigns:
9.7.2.1 The provisions of Section 11.1.4 of this Agreement shall survive until the expiration of the time period for provision of the environmental insurance policy described thereby; and the obligation to provide such insurance policy shall remain in effect as to the Real Property for the applicable period specified in Section 11.1.4 and no Developer, nor any successor or assign, nor any Successor Owner shall modify or terminate any prepaid environmental insurance policy in effect as of the execution and Recording by the City of any Certificate of Compliance;
9.7.2.2 Any and all obligations contained in the Federal Deed shall survive in perpetuity or for such lesser time period as may be expressly set forth therein, unless such obligations are released by the Federal Government; and
9.7.2.3 The provisions of Section 11.1.1 requiring liability insurance shall be maintained in full force and effect until the Recording by the City of a Certificate of Compliance to the portion of the Real Property against which it is Recorded; and, subject to the provisions of Section 11.1.1, so long thereafter as necessary to cover any Claims of damages suffered by persons or property prior to Recording by the City of a Certificate of Compliance, resulting from any acts or omissions of Developer, Developer’s employees, agents, contractors, suppliers, consultants or other related parties.
9.7.3 Effect of Recording. Upon Recording by the City of a Certificate of Compliance, any Person then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Real Property released by the applicable Certificate of Compliance shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement with respect to such interests, except as set forth in the Quitclaim Deed, Special Restrictions, the Affordable Housing Declaration, the SLA Covenant, the Access Easement Agreement, the Bioswale Easement, the Landscape Installation and Maintenance Agreement and the Development Agreement which shall each remain in effect for the term specified therein.
Neither execution or Recording by the City of a Certificate of Compliance shall waive any rights or claims that the City may have against any Person for latent or patent defects in design, construction or similar matters under any applicable law, nor shall it be evidence of satisfaction of any of Developer’s obligations to others not a party to this Agreement.
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9.7.4 Effect on Guaranty. The Guaranty, as the same may be reaffirmed at each Transfer by a Reaffirmation of Guaranty, or, if applicable, any alternative security provided by Developer and approved by the City in its sole discretion, shall remain in full force and effect for the period specified in Section 8.9.6.
9.7.5 Survival. Notwithstanding anything to the contrary set forth in this Agreement, the provisions of this Section 9.7 shall survive as to each portion of the Property and the Project the termination of this Agreement until the Recording by the City of a Certificate of Compliance as to such portion of the Real Property and Project and for such longer period as set forth in the Certificate of Compliance.
10. Indemnification and Environmental Provisions.
10.1 Developer’s Indemnification for Non-Environmental Matters.
As a material part of the consideration for this Agreement and to the maximum extent permitted by law, Developer on behalf of itself and its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, but excluding any End Users, hereby agrees to indemnify, protect, defend, assume all responsibility for and hold harmless the City Indemnified Parties from and against any and all Non-Environmental Claims, to the extent (a) caused by the following, or (b) resulting or arising from the following during the period set forth below, provided, however, that this Section 10.1 shall not during the period prior to Close of Escrow apply to the matters addressed by Section 5.2:
(i) Developer’s marketing, sale or use of the Property or construction on the Real Property;
(ii) all acts and omissions of Developer in connection with the Property, the Project, the Project Improvements, and/or any portion of any of the foregoing; (iii) any plans or designs for the Project Improvements s, prepared by or on behalf of Developer, including any errors or omissions with respect to such plans or designs;
(iv) any loss or damage to the City resulting from any inaccuracy in or breach of any representation or warranty of Developer, or resulting from any Potential Default or Material Default by Developer, under this Agreement, including any such loss or damage resulting from the exercise or breach of the license provided in Section 5.1 or the breach of the obligations of Developer under Section 8.11; (v) the non-performance or breach by Developer or the
Developer Representatives, of any term or condition of this Agreement or the Other Agreements;
(vi) any development or construction of the Project
Improvements and/or other structures or facilities by Developer, any Developer Affiliate or the Developer Representatives, whether regarding the quality, adequacy or suitability of Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 75 City of Tustin/Confluent Development Portion of Disposition Area 8
any labor, service, equipment or material furnished to the Real Property, any Person furnishing the same, or otherwise; or
(vii) Any Claims in any lawsuits and writ proceedings seeking to make records public that Developer requests the City to protect as confidential pursuant to Section 18.24.3.
(viii) Any Claim for penalties or other remedies for violation of the SLA Regulations.
Notwithstanding the foregoing, Developer shall not be obligated to indemnify any of the City Indemnified Parties to the extent caused by or arising or resulting directly or indirectly from (a) the gross negligence or willful misconduct or fraud of the City Indemnified Parties, (b) any uncured Material Default by the City with respect to any of the representations or warranties of the City set forth in Sections 3.3 or 18.12.2 or any of the covenants or obligations set forth in this Agreement, in either case provided that the Material Default is directly related to the Claim, or (c) any uncured material default by the City with respect to any of the covenants or obligations set forth in any Other Agreement that is directly related to the Claim. Nothing in this Section shall limit or negate the terms of the indemnity provided in Section 5.2. The indemnification provisions in this Section 10.1 shall not apply to Environmental Claims. Developer’s indemnification obligations to the City regarding any Environmental Claims are exclusively addressed in Section
10.2. Developer’s obligations under clauses (i), (iii), (iv), (v) and (viii) of this Section 10.1 shall apply from and after the Effective Date, and Developer’s obligations under clauses (ii), (vi) and (vii) of this Section 10.1, shall apply from and after the Close of Escrow. The indemnity obligations in this Section 10.1 shall remain in effect and shall be binding upon the Real Property and each Developer and each Successor Owner during the period of each such Person’s ownership of any portion of the Real Property to the extent of such Person’s ownership therein and for Claims Accruing during such period, provided that upon any Transfer, if the Transferor is not released pursuant to Section 2.3, it shall be jointly and severally liable with the Transferee and each Successor Owner thereafter until it is released by the City. Notwithstanding the foregoing, (1) upon Recording by the City of a Certificate of Compliance as to a portion of the Real Property, the indemnity obligations set forth in this Section 10.1 shall terminate as to any prior unreleased Person that has Transferred the Property other than for matters Accruing during the period in which it was jointly and severally liable pursuant to the preceding sentence and (2) any Person acquiring an interest in the Real Property after such Recording of a Certificate of Compliance shall be liable under this Section 10.1 for Non-Environmental Claims Accruing during its period of ownership of the Real Property or portion thereof. Notwithstanding the foregoing or any other provision of this Agreement, such Recording of the City of the Certificate of Compliance (a) the indemnity, defense and hold harmless provisions of Section 10.1(viii) shall remain in full force and effect until termination of the Special Restrictions as to the Real Property, but shall not run with the land and shall instead continue as a personal and ongoing obligation of the Person that is the Developer under this Agreement at the time of Recording of the Certificate of Compliance and (b) shall be Guaranteed by the Guarantor under the Guaranty until termination of the Special Restrictions as to the whole of the Real Property.
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 76 City of Tustin/Confluent Development Portion of Disposition Area 8
The provisions of this Section 10.1 and Sections 10.3 through 10.9 as they pertain to nonEnvironmental Claims shall be included in the Special Restrictions, shall run with the land as set forth in this Agreement and the Special Restrictions in accordance with their terms, and shall survive termination of this Agreement, the Close of Escrow, and the execution and Recording by the City of each Certificate of Compliance shall not merge with any deed and shall be binding upon Developer, each Successor Owner of the Property or portion thereof, for the benefit of the City and its Governmental Successors, and from and after the Close of Escrow, and shall be binding upon and burden the Real Property provided, however, that upon sale or transfer of the fee interest in the Real Property or any portion thereof to an End User, the provisions of such Section terminate automatically as to such End User and shall cease to run with the land acquired in fee by such End User or any of its respective successors and assigns.
10.2 Environmental Indemnity.
As a material part of the consideration for this Agreement, and effective upon the Close of Escrow, Developer on behalf of itself and its successors and assigns and its Successor Owners and each and every Person claiming by, through or under Developer or any Successor Owner, but excluding any End Users, hereby agrees that Developer and each Successor Owner shall, to the maximum extent permitted by law, indemnify, protect, defend, and hold harmless the City Indemnified Parties from and against any and all Claims resulting or arising directly or indirectly from or in any way connected with the existence, Release, threatened Release, presence, storage, treatment, transportation and/or disposal of any Hazardous Materials on, in, under, from, or migrating from, any portion or portions of the Development Parcel or migrating from the Real Property or the Development Parcel to adjacent properties regardless of whether any such condition is known or unknown now or upon acquisition and regardless of whether any such condition pre-exists acquisition or is subsequently caused, created or occurring (“Environmental Claims”); provided, however, that neither Developer nor any Successor Owner shall be responsible for and such indemnity shall not apply to the extent caused by or arising or resulting directly or indirectly from (a) any uncured Material Default by the City with respect to any of the representations or warranties of the City set forth in Sections 3.3 or 18.12.2 or any of the covenants or obligations set forth in this Agreement, in either case provided that the Material Default is directly related to the Claim, or (b) the Active Negligence, gross negligence, willful misconduct or fraud of the City Indemnified Parties with respect to Hazardous Materials Releases occurring prior to the Close of Escrow with respect to work performed by such Persons on the Development Parcel. This indemnity shall not be deemed to limit in any manner the rights and/or remedies that City, Developer or Successor Owners may have against the Federal Government, including as described in Section 4.1 or against other non-City Indemnified Parties, provided that under no circumstances may such Claims be pursued (and all such Claims are waived and released) against any City Indemnified Parties, and each of them.
Subject to the limitations set forth below in this Section, the indemnity set forth in this Section 10.2 and the requirements of Sections 10.4 through 10.9 as they pertain to Environmental Claims shall be included in the Special Restrictions in accordance with its terms and shall run with the land as set forth in this Agreement and in the Special Restrictions and shall survive termination of this Agreement, the Close of Escrow, and the execution and Recording by the City of a Certificate of Compliance, shall not merge with any deed and shall, for the benefit of the City and its Governmental Successors, be binding upon the Real Property and each Developer and each Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 77 City of Tustin/Confluent Development Portion of Disposition Area 8
Successor Owner unless such Person is released by the City in writing pursuant to Section 2.3 or is released pursuant to the terms set forth below in this Section 10.2. Developer and each of its Successor Owners shall be jointly and severally liable with respect to Environmental Claims affecting the Development Parcel notwithstanding any Transfer thereof or Recording of a Certificate of Compliance with respect thereto, except that each shall be released for Environmental Matters related to a portion of the Property arising subsequent to its ownership of such portion of the Property under the following circumstances:
(x) if prior to Recording by the City of a Certificate of Compliance as to such portion of the Real Property, Developer or Successor Owner is released pursuant to Section 2.3.2 (and for avoidance of doubt, if not so released, remains jointly and severally liable with each Successor Owner of such portion of the Real Property; or
(y) following Recording by the City of a Certificate of Compliance as to such portion of the Real Property, other than for Environmental Claims related to Releases caused by its own acts or omissions for which each shall remain liable.
Notwithstanding the foregoing, upon Transfer of the fee interest in the Real Property or any portion thereof to an End User, such indemnities shall terminate automatically as to such End User and shall cease to run with the land acquired in fee by such End User or any of its respective successors and assigns.
10.3 Effect of Recording of Special Restrictions.
The provisions of Sections 10.1 through 10.9 shall be included in the Special Restrictions and shall remain in effect in accordance with their terms; provided, however, that following Recording of the Special Restrictions, the provisions in each such Section of this Agreement shall not be interpreted more broadly than, nor be applied in addition to, nor be deemed to increase the obligations of Developer in the counterpart provisions in the Special Restrictions. Without limiting the foregoing, in the event any conflict arises during the Term of this Agreement between the provisions in each such Section of this Agreement and the counterpart provisions in the Special Restrictions, the provisions in each such Section of this Agreement shall control.
10.4 Claim Response.
In the event that following the Close of Escrow, any Environmental Agency or other third party brings, makes, alleges, or asserts a Claim, arising from or resulting directly or indirectly from or related to any actual, threatened, or suspected presence or Release of Hazardous Materials on or about the Development Parcel, including any Claim for Investigation or Remediation on the Development Parcel, or such Environmental Agency or other third party orders, demands, or otherwise requires that any Investigation or Remediation be conducted on the Development Parcel, Developer (or Successor Owner at the time such Claim is asserted) shall promptly upon its receipt of notice thereof, notify the City in writing and thereafter shall promptly and responsibly evaluate and respond to such Claim as provided in Section 10.5. Further, upon receipt of such Claim, order, demand or requirement, Developer (or Successor Owner at the time such Claim is asserted) shall Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 78 City of Tustin/Confluent Development Portion of Disposition Area 8
take such reasonable measures, as necessary or appropriate, to reasonably attempt to dissuade such Environmental Agency or other third party from bringing, making, alleging, or asserting any Claim against the City arising from or resulting directly or indirectly from or related to the presence or any actual, threatened, or suspected Release of Hazardous Material on or about the Development Parcel, including any Claim for Investigation or Remediation on or with respect to the Development Parcel, the Active Adult Project Improvements or the AL/MC Project Improvements, provided, however, that Developer (or Successor Owner at the time such Claim is asserted) shall have no obligation pursuant to this sentence with respect to any Claim, order, demand or requirement arising from or resulting directly or indirectly from or related to any actual, threatened or suspected Release of Hazardous Material to the extent caused by the Active Negligence, willful misconduct or fraud of the City Indemnified Parties. For avoidance of doubt, the obligations under this Section 10.4 apply only to the extent an obligation arises under either Section 10.1 or Section 10.2.
10.5 Release Notification and Remedial Actions.
If, after Close of Escrow, any Release of a Hazardous Material is discovered on the Development Parcel, Developer (or Successor Owner at the time of discovery of such Release) shall promptly provide written notice (or in the event of emergency, telephonic notice, followed by written notice) of any such Release to the City. To the extent that any Environmental Agency (other than the City) is requiring that the City Remediate such Release and Developer or Successor Owner (as applicable) acknowledges that it is obligated to assume responsibility or indemnify the City with respect to such Release pursuant to Section 10.2 or there is a good faith dispute between the City and Developer or Successor Owner (as applicable) as to whether Developer or Successor Owner (as applicable) is obligated to assume responsibility or indemnify the City with respect to such Release pursuant to Section 10.2, then Developer or Successor Owner (as applicable) shall (i) Remediate the Release in compliance with and to the extent required by Environmental Laws and such Environmental Agency, or if such removal is prohibited by any Environmental Laws, take whatever action is required by any Environmental Law and such Environmental Agency; provided, however, that any environmental response action approved by the applicable Environmental Agency or Environmental Agencies with jurisdiction shall be deemed acceptable and binding upon Developer (or Successor Owner at the time such Claim is asserted) and the City without modification or amendment, and such Environmental Agency or Environmental Agencies shall be the sole and exclusive Government Authority with jurisdiction over the Investigation and Remediation of any such Release and any Hazardous Material involved therewith; (ii) take such other reasonable action as is necessary to have the full use and benefit of the Development Parcel as contemplated by this Agreement; and (iii) provide the City with satisfactory evidence of the actions taken as required in this Section 10.5. To the extent that any Environmental Agency (other than the City) is requiring that the City Remediate such Release and the City acknowledges that Developer or any Successor Owner is not obligated to assume responsibility or indemnify the City with respect to such Release pursuant to Section 10.2 or no Environmental Agency (other than the City) is requiring that the City Remediate such Release, then (as between Developer or such Successor Owner (as applicable), and the City under this Agreement) Developer or Successor Owner (as applicable) may elect in its sole discretion whether to Remediate such Release and/or pursue any rights that it has against any Person with respect to such Release. The foregoing shall be without prejudice to Developer’s (or any Successor Owner’s, as applicable) or the City’s rights against any responsible party or against the Federal Government pursuant to the Navy Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 79 City of Tustin/Confluent Development Portion of Disposition Area 8
Responsibilities and without compromising the applicability of any insurance coverage in regard to such Release. The City and Developer (or any Successor Owner, as applicable) will coordinate any action required under this Section 10.5 with appropriate environmental insurance carriers so as not to compromise coverage for the costs of such actions. Nothing set forth in this Agreement requires Developer or any Successor Owner to perform any obligation of the Federal Government or shall be deemed to limit or impair (or require any action that might limit or impair) in any manner the rights and/or remedies that Developer (or any Successor Owner, as applicable) or the City may have against the Federal Government or any other third party. The provisions of Sections
10.4 and 10.5 shall not apply to any Repurchase Property after the close of escrow pursuant to Section 16.3 or to any Reversion Property following a Reversion Event. For avoidance of doubt, the obligations under this Section 10.5 apply to the Person (i.e., Developer or Successor Owner) that is the Owner of the Real Property when the Release occurs and only to the extent an obligation arises under either Section 10.1 or Section 10.2.
10.6 Conflict with Section 330 and Other Federal Government Obligations.
Notwithstanding anything to the contrary contained in this Article 10, in the event that any actions required to be taken by Developer pursuant to this Article 10 could potentially result in Developer losing rights, or are contrary to any rights, which it otherwise would have pursuant to the Navy Responsibilities or otherwise against the Federal Government, then the City and Developer shall meet in order to determine the proper course of action to be taken by Developer.
The course of action to be agreed upon shall protect the City’s interest in the Project and Tustin Legacy, while retaining for Developer its rights pursuant to the Navy Responsibilities or otherwise against the Federal Government to the extent reasonable under the circumstances. Notwithstanding the foregoing, nothing set forth in this Section 10.6 relieves Developer or any Successor Owner with respect to the environmental responsibilities and obligations to, and/or environmental indemnification of the City in this Agreement.
10.7 Insurance and Indemnification.
Notwithstanding anything contained in and without limiting or relieving Developer or any Successor Owner of its obligations under this Agreement, the City agrees that with respect to any Claims tendered by any one or more of the City Indemnified Parties under this Agreement for which Developer or any Successor Owner has the obligation to indemnify the City pursuant to the terms of this Agreement, the City Indemnified Parties shall seek recourse for such Claims under Developer’s or such Successor Owner’s, if applicable, insurance coverage required by Article 11, in each case only to the extent such insurance could reasonably be determined to be applicable to the type, extent, value and location of the Claim being made. The City shall thereafter use reasonable commercial efforts to prosecute its Claim for coverage with such insurer(s) and shall notify Developer of the City’s tender of its Claim to such insurer(s). Developer or Successor Owner, if applicable, shall reimburse the City for its reasonable costs incurred in complying with this Section 10.7, including reasonable out-of-pocket consultant costs and reasonable attorney fees.
To the extent that insurance is determined by the City not to be applicable to the Claim or, if after six (6) months from tender of the Claim to the insurer, despite such efforts, insurance proceeds are not available to cover all or a portion of the Claim or if such Claim is earlier denied by the insurance carrier, then Developer or Successor Owner, if applicable, shall defend and indemnify the City Indemnified Parties for the full amount of the Claim not covered by the insurance, including but Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 80 City of Tustin/Confluent Development Portion of Disposition Area 8
not limited to sums theretofore expended by the City Indemnified Parties defending such Claim, but only to the extent Developer has such obligations in this Agreement. If an insurer(s) to which a Claim is tendered declines to defend, or fails to timely defend, the Claim within the six (6) month period described above, then Developer shall defend and indemnify the City Indemnified Parties for the full amount of the Claim not covered by the insurance, including but not limited to sums theretofore expended by the City Indemnified Parties defending such Claim, but only to the extent Developer has such obligations in this Agreement. At any time after six (6) months have passed since the original tender of a Claim to an insurer by the City as described in this Article 10, if the insurer has not paid out on all or part of the insurance claim, Developer in its sole discretion may decide to pay for the legal fees and expenses associated with filing and prosecuting litigation against such insurance carrier. If Developer decides to pay such legal fees and expenses, the City shall proceed with such litigation at Developer’s expense as further set forth below. Developer may recommend counsel to represent the City in connection with the prosecution of such Claim in litigation but the determination of counsel shall be made by the City in accordance with Section
10.8. Any fees and expenses of such litigation will be borne by Developer. For avoidance of doubt, the obligations under this Section 10.7 apply only to the extent an obligation arises under either Section 10.1 or Section 10.2.
10.8 Selection of Counsel and Defense Obligations.
A Person being defended pursuant to this Article 10 (“Defended Party”) shall select legal counsel of its choice and reasonably acceptable to the Person with the obligation to defend (“Defending Party”) and shall cooperate in the defense of any such action. Failure of the Defended Party to notify the Defending Party promptly of the filing of any Claim or Action shall offset the indemnification obligations of the Defending Party only to the extent of any prejudice to the Defended Party caused by such failure to notify.
10.9 Settlement Procedures.
No Defending Party or Defended Party shall settle any Claim or Action that is the subject of an indemnity or obligation to defend under this Agreement without the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned or delayed.
11. Insurance.
11.1 Required Insurance.
Without limiting the City’s rights to indemnification, Developer shall procure and maintain, at its own cost and expense, and furnish or cause to be furnished to the City, evidence of the following policies of insurance (complying with the requirements set forth below) naming Developer as insured and, with respect to the general liability and environmental liability insurance required pursuant to Sections 11.1.1 and 11.1.4 only, including as additional insureds the City and the City’s additional insureds specified below. Unless otherwise specified below, all insurance required below shall be in place or obtained by Developer upon the date specified below and shall be kept in force with respect to each portion of the Development Parcel, the Project, the Project Improvements, until the Recording by the City of a Certificate of Compliance with respect to thereto or for such longer period to the extent described below. Subject to the provisions of this Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 81 City of Tustin/Confluent Development Portion of Disposition Area 8
Article 11, the insurance obligations under this Agreement shall be: (i) all the insurance coverage and/or limits carried by or available to Developer; or (ii) the minimum insurance coverage requirements and/or limits shown in this Agreement; whichever is greater. Any insurance proceeds in excess of or broader than the minimum required coverage and/or minimum required limits, which are applicable to a given loss, shall be available to the City. No representation is made that the minimum insurance requirements of this Agreement are sufficient to cover the obligations of Developer under this Agreement. Prior to or concurrently with the execution of this Agreement by Developer, Developer shall have obtained and delivered to the City a binder or certificate evidencing the insurance required below to be effective upon the Effective Date.
11.1.1 Liability Insurance. Commencing upon the Effective Date, Developer shall maintain or cause to be maintained commercial general liability insurance and automobile liability insurance, to protect against insurable loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any Person or Persons whomsoever on or about the Real Property, the Active Adult Project, the AL/MC Project, Active Adult Project Improvements and/or the AL/MC Project Improvements and the business of Developer on the Real Property, or in connection with the operation thereof, resulting directly or indirectly from any acts or activities of Developer or anyone directly or indirectly employed or contracted with or acting for Developer, or under its respective control or direction, and also to protect against loss from liability imposed by law for damages to any property of any Person occurring on or about the Real Property, Project, and/or the Project Improvements, or related to the Project and/or the business of Developer on the Real Property, or in connection with the operation thereof, caused directly or indirectly by or from acts or activities of Developer or any Person acting for Developer, or under its control or direction. Such insurance shall also provide for and protect the City against incurring any legal costs in defending Claims for alleged loss. Such insurance shall be maintained in full force and effect with respect to each portion of the Project and the Project Improvements until Recording by the City of a Certificate of Compliance therefor, and for so long thereafter as necessary to cover any claims of damages suffered by persons or property prior to Recording by the City of such Certificate of Compliance, resulting from any acts or omissions of Developer, Developer’s employees, agents, contractors, suppliers, consultants or other related parties, as further set forth in Section 9.7 and Article 10. The amount of insurance required shall include comprehensive general liability and personal injury with limits of at least Ten Million Dollars ($10,000,000.00) each occurrence and annual policy aggregate and automobile liability with limits of at least Five Million Dollars ($5,000,000.00) combined single limit per occurrence. The insurance shall be issued by a company authorized by the Insurance Department of the state of California to do business in California and rated A-/VII or better (if an admitted carrier) or A-/X (if offered by a surplus line broker), by the latest edition of Best’s Key Rating Guide (“Best’s”). Such insurance may be provided in part by an umbrella or excess insurance policy meeting the requirements of this Article 11, including the endorsements set forth in the following paragraph.
ACORD certificates and endorsements signed by authorized representative(s) of the underwriter (or copies of the applicable pages from the policy if the applicable endorsement coverage is part of the policy rather than provided by separate endorsement) and reasonably approved by the City shall be delivered as soon as reasonably possible but in no event later than within thirty (30) calendar days following the Effective Date and in all events prior to access by Developer or Developer Representatives upon the Real Property pursuant to Section 5.1 and Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 82 City of Tustin/Confluent Development Portion of Disposition Area 8
annually thereafter evidencing renewals of each policy until the Recording by the City of the Final Certificate of Compliance. The endorsements shall provide as follows: (i) designate “the City of Tustin and the Successor Agency to the Tustin Community Redevelopment Agency and their respective elected and appointed officials, agents, representatives and employees”, as additional insureds on the commercial general liability policies and automobile liability policies; (ii) the commercial general liability and automobile liability insurance coverages shall be primary, and not contribute with any insurance maintained by the City; and (iii) a waiver of subrogation for the benefit of “the City of Tustin and the Successor Agency to the Tustin Community Redevelopment Agency and their respective elected and appointed officials, agents, representatives and employees”. “Blanket” endorsements (or coverage within the policy itself) providing the same protection as required by written contract shall be acceptable to the City. The procuring of such insurance and the delivery of policies, certificates or endorsements evidencing the same shall not be construed as a limitation of Developer’s obligation to indemnify the City Indemnified Parties as set forth in this Agreement.
11.1.2 Workers’ Compensation Insurance. Commencing upon the Effective Date, in the event the Developer entity has employees, Developer shall obtain, and thereafter maintain or cause to be maintained, workers’ compensation insurance issued by a responsible carrier authorized under the laws of California to insure employers against liability for compensation under the workers’ compensation laws now in force in California, or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such workers’ compensation insurance shall cover all Persons employed by Developer in connection with the Project and shall cover liability within statutory limits for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any employee of Developer incurring or suffering injury or death in connection with the Project or the construction and operation thereof by Developer. Notwithstanding the foregoing, Developer may, in compliance with the laws of California and in lieu of maintaining such insurance, self-insure for workers’ compensation in which event Developer shall deliver to the City evidence that such self-insurance has been approved by the appropriate State authorities. Developer shall also furnish (or cause to be furnished) to the City evidence satisfactory to the City that any contractor with whom it has contracted for performance of work on the Real Property or otherwise pursuant to this Agreement carries workers’ compensation insurance required by law. Policies or an ACORD certificate of insurance may be provided as evidence of the existence of insurance policies and their limits, but actual endorsements (or copies of the applicable pages from the policy if the coverage is part of the policy) are required to be provided to the City to evidence that each endorsement requirement has been satisfied. The insurance policy(ies), by endorsement signed by an authorized representative of the underwriter(s), shall contain a waiver of subrogation for the benefit of the following additional insureds: “the City of Tustin and the Successor Agency to the Tustin Community Redevelopment Agency, and their respective elected and appointed officials, agents, representatives and employees”. A “blanket” endorsement providing the same protection as required by written contract shall be acceptable to the City. The insurance provided for under this Section 11.1.2 shall be issued by a company rated B-/VIII or better by Best’s or from the state of California Compensation Fund.
11.1.3 Builder’s Risk Insurance. Commencing upon the commencement of construction of Vertical Improvements by Developer and continuing until the issuance by the City of a final certificate of occupancy for and for such longer period as work on the Project Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 83 City of Tustin/Confluent Development Portion of Disposition Area 8
Improvements is continuing on the Real Property, Developer shall obtain, or shall cause its contractor to obtain, and thereafter maintain a builder’s risk policy with respect to Vertical Improvements constructed or to be constructed on the Real Property, or maintain comparable coverage through a property policy. Such insurance shall be maintained in an amount not less than one hundred percent (100%) of the full insurable value of the Project Improvements to be constructed on the Real Property. The insurance provided for under this Section 11.1.3 shall be provided by insurer(s) authorized to do business in California and with a Best’s rating of A-/VII or better.
11.1.4 Contractors Pollution Liability Insurance. Developer shall require each Contractor and subcontractor performing grading, excavation, demolition, remediation or other construction activities that could reasonably result in a pollution condition to maintain Contractors Pollution Liability (“CPL”) insurance covering on-site and off-site operations and completed operations. Coverage shall include bodily injury, property damage, cleanup and remediation costs, defense costs, transportation pollution, including loading and unloading, and non-owned disposal site liability. The CPL insurance shall cover sudden and accidental and gradual pollution conditions, including pollution conditions arising from the disturbance, exacerbation, migration, release or discovery of pre-existing Hazardous Materials or other pollution conditions at, on, in, under or migrating to and from the Development Parcel, whether known or unknown when the CPL policy is issued. Each CPL policy shall not exclude any Hazardous Materials or pollution conditions reasonably anticipated to be encountered in connection with the Project. The combination of CPL coverage carried by the Contractor and each subcontractor shall, at all times during the performance of Contractor’s operations be not less than Ten Million Dollars ($10,000,000) for each pollution incident and Ten Million Dollars ($10,000,000) in the aggregate.
For purposes of clarity, and by way of example only, if Contractor maintains $6 million in CPL coverage, then each subcontractor shall maintain not less than $4 million in CPL coverage at all times during the performance of such subcontractor’s operations. If written on a claims-made basis, the retroactive date for each policy shall be no later than commencement of the Contractor’s operations and coverage shall be maintained, through renewal or an extended reporting period, for not less than ten (10) years following Completion of the Contractor’s work. The City of Tustin and the Successor Agency to the Tustin Community Redevelopment Agency, and their respective elected and appointed officials, officers, employees, agents and representatives, shall be additional insureds, and the policy shall include a waiver of subrogation in their favor and otherwise comply with Section 11.2.
11.2 General Insurance Requirements.
11.2.1 For all policies or certificates, the insurer endorsements (or a copy of the policy binder, if applicable) shall specifically identify the Project address and shall provide evidence that Developer has paid its premium in full for each required policy that is currently in place. Each insurance company shall endorse its policy to provide that the City will receive thirty (30) calendar days’ written notice from the insurance company in the event of termination or expiration of the policy, or 7 days written notice in the event of termination for failure to pay premiums; provided that if Developer is unable to procure that endorsement from its insurance company, then Developer shall provide evidence that each policy has been fully prepaid for the period of time required to be covered thereby. In addition, Developer’s insurance broker shall Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 84 City of Tustin/Confluent Development Portion of Disposition Area 8
confirm in writing that premium payments are in compliance with the insurance policy(ies) payment terms.
11.2.2 The term “full insurable value” as used in this Article 11 shall mean the cost determined by Developer (excluding the cost of excavation, foundation, underground utilities, and footings below the lowest floor and without deduction for depreciation) of providing similar Project Improvements of equal size and providing the same habitability as the Project Improvements immediately before such casualty or other loss, but using readily-available contemporary components, including the cost of construction, architectural and engineering fees, and inspection and supervision, but in no event less than the value set forth in the Updated Financing Plan for the Project.
11.2.3 All insurance provided under this Article 11 shall be for the benefit of the Parties. Developer shall, and shall cause each Insured Party, (a) to timely pay all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance, and (B) with respect to coverage required by Sections 11.1.1 and 11.1.2, to submit certificates evidencing such insurance to the City on an ACORD form following City Council approval of this Agreement or, with respect to coverage required by Section 11.1.4, upon the Close of Escrow and with respect to coverage required by Section 11.1.3, upon commencement of construction. Within seven (7) Business Days, if practicable, after expiration of any such policy, certificates evidencing renewal policies (and all required endorsements) shall be submitted to the City, together with evidence of compliance with insurance policy(ies) premium payment terms.
11.2.4 Subject to Section 11.2.5, if Developer fails to procure or to cause any Insured Party to procure and maintain insurance as required by this Agreement, the City shall have the right, at the City’s election, and upon ten (10) calendar days’ prior written notice to Developer, to procure and maintain such insurance. The premiums paid by the City shall be treated as a loan, due from Developer, to be paid on the first calendar day of the month following the date on which the premiums were paid and such cost, until paid, shall constitute a City Lien on the Real Property and improvements thereon. The City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s).
11.2.5 In the event the CPL Policy or any other policy of insurance required hereunder is not then commercially available, the Parties shall promptly meet and confer in good faith to seek to resolve such issue and to facilitate the securing by Developer of a mutually acceptable policy.
12. Covenants and Restrictions.
12.1 Covenants Run With the Land.
This Agreement and all other obligations, agreements, covenants, representations, warranties, and indemnities set forth in this Agreement shall run with the land and shall be binding upon each Developer, its successors and assigns, each Successor Owner and each Person claiming by, through or under Developer or such Successor Owner, but excluding any End Users, to which such obligations, agreements, covenants, representations, warranties, and indemnities apply to the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 85 City of Tustin/Confluent Development Portion of Disposition Area 8
extent set forth in this Agreement and shall be enforceable as equitable servitudes against each portion of the Real Property and the Project for the benefit of the City and its successors and assigns until Recording by the City of a Certificate of Compliance as to such portion of the Real Property and the Project, subject to the effects of the execution and Recording by the City of a Certificate of Compliance as provided in Article 9 and subject to any other limitations set forth in this Agreement or in any of the Other Agreements.
12.2 Obligation to Refrain from Discrimination.
Developer covenants and agrees on behalf of itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, including each End User, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, race, color, creed, religion, ancestry, national origin, disability, medical condition, marital status, or sexual orientation in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, the Project Improvements or in development of the Project, nor shall Developer or any Person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property or the Project Improvements or in development of the Project or any part thereof.
12.3 Use Covenant.
Developer shall cause the Real Property and the Project to be developed only as a High Quality Project containing as to the Active Adult Project, the number of Residential Units, including Lower Income Units, described on the Approved Plans for such portion of the Project and for the AL/MC Project, the number of Rooms described on the Approved Plans for such portion of the Project and ancillary uses for each set forth on the Approved Plans and neither Developer nor any Successor Owner, nor any Person claiming by, through or under Developer or any Successor Owner, including any Manager shall use the Property or any portion thereof for any unlawful use and shall not permit any activity on the Property that would violate this Agreement, the Special Restrictions, the Approved Plans, the SLA Covenant, the Affordable Housing Declaration or any applicable Governmental Restrictions.
12.4 Access Easement Agreement and Bioswale Easement.
At the Close of Escrow there shall be Recorded against the Property (i) a non-exclusive perpetual easement in gross for common access and emergency vehicular access in substantially the form and substance of the Access Easement Agreement attached to the Development Agreement as Exhibit F and (ii) a non-exclusive perpetual easement in favor of the City for access to and installation, maintenance and repair of a bioswale in substantially the form and substance of the Bioswale Easement Agreement attached to the Development Agreement as Exhibit G.
12.5 Management and Operation of Project; Operating Agreement.
12.5.1 Appointment of Class “A” Operator. Developer shall be responsible for securing a Class “A” Operator for the Project. Developer has identified and the City has approved Clearwater Senior Living, or its affiliates Controlled by or under common Control with Clearwater Senior Living, including Clearwater Living, LLC (any of such entities referred to as Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 86 City of Tustin/Confluent Development Portion of Disposition Area 8
“Clearwater”) as the Class “A” Operator and operator of the Project. Developer acknowledges that the design of the Project, the identity, stability and financial capacity of Developer and any proposed operator of the Project and the ability of Developer to deliver the Project, including by causing Clearwater or another Class “A” Operator to operate the Project, will be of material concern to the City. Developer shall have the right to contract with or delegate to Clearwater or other Class “A” Operator approved by the City for the management and operation of the Project (but retaining the right and duty to enforce such assigned or delegated duties). The right of the City to approve any operator for the Project shall terminate as to each portion of the Real Property and Project upon Recording of the Certificate of Compliance as to such portion, but the requirement that Developer retain a Class “A” Operator shall remain in effect for the term of the Special Restrictions.
12.5.2 At least fifteen (15) Business Days prior to execution of any operating agreement or property management agreement with an entity other than Clearwater for any portion of the Real Property and/or Project for which a Certificate of Compliance has not then been Recorded by the City, Developer shall provide the City with written notice of the identity of each operator, evidence that such operator is a Class “A” Operator, the intended operational location of such operator and allow the City to view a copy of the final form of the proposed operating agreement, property management agreement, lease or other agreement for operation and management of the Project or any portion thereof in order to permit the City to confirm that the proposed operator is a Class “A” Operator and that the agreement is in conformance with the requirements of this Agreement and the Other Agreements and the use covenants set forth in this Agreement, including this Section 12.5, and the Other Agreements have not been breached. The City shall have the right in its sole discretion to determine whether any proposed operator or manager is a Class “A” Operator. If the City determines that the proposed operator is not a Class “A” Operator or would violate the use covenants and the City provides Developer with written notice of its determination on or before the date which is ten (10) Business Days following its receipt of such notice, Developer shall be prohibited from entering into an operating agreement, lease or other agreement with such proposed operator unless such operator and the terms of such agreement are approved by the City in its sole discretion.
12.5.3 Nothing in this Agreement shall (i) prohibit the City, in its sole discretion from approving an operator which is not a Class “A” Operator or (ii) obligate the City to exercise its approval or enforcement rights with respect to the use covenants set forth in this Agreement, for the benefit of the City or any third parties.
13. Housing Requirements.
The Project shall be constructed consistent with the Affordable Housing Declaration and upon Completion of the Project Improvements, not less than fifteen percent (15%) of the Residential Units constructed as part of the Project Improvements shall be Lower Income Units and shall be made available for rental only to Lower Income Households, for the term set forth in, and otherwise in accordance with, the Affordable Housing Declaration. Development of the Project as described in this Agreement is and shall be structured to comply with the Affordable Housing Declaration. The Affordable Housing Declaration shall be enforceable in accordance with its terms by the City against Developer and as those terms are defined therein any “Owner”, which includes a “Successor Owner” as defined therein. The SLA Covenant shall remain in effect with Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 87 City of Tustin/Confluent Development Portion of Disposition Area 8
respect to the Real Property in accordance with its terms. Nothing in this Agreement or in the Affordable Housing Declaration shall relieve the Parties from third party liability under the SLA Regulations or the SLA Covenant.
14. Potential Defaults and Material Defaults.
14.1 Potential Defaults.
Except as otherwise provided in this Agreement, in the event either Party (“Defaulting Party”) fails to perform, or delays in the performance of, any obligation, in whole or in part, required to be performed by the Defaulting Party as provided in this Agreement (a “Potential Default”), the other Party (“Injured Party”) may give written notice of such Potential Default to the Defaulting Party (“Default Notice”), which Default Notice shall state the particulars of the Potential Default. For avoidance of doubt, and notwithstanding any provision in this Agreement to the contrary, no Potential Default shall be deemed to exist hereunder unless and until the Injured Party shall have provided to the Defaulting Party a Default Notice. In the event the Defaulting Party contests in writing to the Injured Party the Potential Default subject of a Default Notice, or in the event of any other disagreement between the Parties regarding this Agreement or the implementation thereof, the Parties shall promptly meet and confer in good faith to seek to resolve such Potential Default or other disagreement, provided that in no event shall the obligation to meet and confer or the discussions of the Parties pursuant to this Section 14.1 modify the time periods for cure set forth in Section 14.2, Article 15 or Article 16.
14.2 Material Defaults.
14.2.1 Monetary Defaults; Guarantor Illiquidity Event Defaults.
Notwithstanding any other provision of this Agreement, if a Party fails to pay the other Party any sum as and when required to be paid pursuant to this Agreement or to make any deposit as and when required pursuant to this Agreement, the Defaulting Party shall have a period of fifteen (15) Business Days after the date a Default Notice is received, or deemed to have been received, within which to cure the Potential Default by making the required payment. Potential Defaults described in Section 8.9.3 or 8.9.4, shall also be covered by this Section provided that the period for cure of any such Potential Default shall be thirty (30) calendar days. The period to cure any Potential Default described in Sections 8.9.3, 8.9.4, 11.2.4, 14.2.3, 14.2.4 or this Section 14.2.1 shall not be extended by Force Majeure Delay. In the event a Potential Default for nonpayment or failure to make a deposit is not cured within the applicable time period, the Potential Default shall become a “Material Default” that shall be deemed to have occurred upon the expiration of the cure period.
14.2.2 Non-Monetary Defaults. With respect to non-monetary defaults under this Agreement, a Potential Default shall become a “Material Default” in the event the Potential Default is not cured, at the Defaulting Party’s expense, (i) within thirty (30) Business Days after the date the Default Notice is received, or deemed to have been received by the Defaulting Party; (ii) if such cure cannot be reasonably accomplished within such thirty (30) Business Day period, within ninety (90) Business Days after the date the Default Notice is received, or deemed to have been received by the Defaulting Party, but only if the Defaulting Party has commenced such cure within such thirty (30) Business Day period and diligently pursues such cure to completion; or (iii) within such longer period of time as may be expressly provided in this Agreement or as mutually Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 88 City of Tustin/Confluent Development Portion of Disposition Area 8
agreed to in writing between the Parties with respect to the Potential Default. Following written notice and failure to cure within the time periods set forth above, each Potential Default shall become a Material Default that shall be deemed to have occurred upon the expiration of the applicable cure period. A Defaulting Party may cure a Material Default at any time prior to the date the Injured Party exercises its remedy for the Material Default. Notwithstanding anything in the foregoing to the contrary, the default cure periods in this Section 14.2.2 shall not apply with respect to matters governed by Sections 6.3, 8.9.3, 8.9.4, 11.2.4, 14.2.1, 14.2.3 or 14.2.4.
14.2.3 Transfer Defaults. Any Transfer or any Transfer of Control in violation of the provisions of Article 2 shall be null and void and shall be a Material Default under this Agreement as of the date of the Transfer or Transfer of Control without notice or cure period, and shall not be subject to extension for Force Majeure Delay, except that (a) with respect to involuntary Construction Liens the notice and cure periods set forth in Section 14.2.2 shall apply, in order to enable Developer to comply with the provisions of Section 8.11.5.6 and (b) with respect to any Transfer of which City has received prior written notice from Developer as required by Article 2 and for which the requirements in Article 2 are not fully met but are satisfied in all material respects, or which constitutes an easement in favor of a utility or a conveyance of an immaterial portion of the property to any governmental entity, such violation shall not constitute a Material Default unless the violation has not been cured within five (5) Business Days following City’s written demand to Developer for cure.
14.2.4 Right to Cure Closing Default. Notwithstanding the foregoing, if either Party is in Potential Default on the expected Closing Date or the Outside Closing Date or shall have failed to deliver the documents required to be delivered to Escrow, and the Non-Defaulting Party has provided written notice to the Defaulting Party, the Defaulting Party shall be provided ten (10) Business Days from the expected Closing Date or Outside Closing Date, as applicable, and, for one such extension only, the Closing Date and the Outside Closing Date shall be extended to allow such cure within such ten (10) Business Day period. Failure to cure such Potential Default within the foregoing ten (10) Business Day period shall be deemed a Material Default.
14.2.5 Interest. If a monetary Material Default occurs under this Agreement, then in addition to any other remedies conferred upon the Injured Party pursuant to this Agreement, the Defaulting Party shall pay to the Injured Party, in addition to all principal amounts due, interest on such principal amounts at the Default Rate, for the period from the date such payment or part thereof was due until the date the same is paid.
14.2.6 No Waiver. Failure or delay by an Injured Party to deliver a Default Notice shall not constitute a waiver of any Default, nor shall it change the time of Default. Except as otherwise expressly provided in this Agreement, any failure or delay by either Party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies. Delays by either Party in asserting any of its rights and remedies shall not deprive either Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.
14.3 Due Diligence Information; Products.
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14.3.1 Return of Due Diligence Information. Within five (5) Business Days following a termination of this Agreement occurring prior to the Close of Escrow, Developer shall use commercially reasonable efforts to return to the City all written Due Diligence Information in Developer’s possession. Developer’s obligation to return Due Diligence Information to the City is without representation or warranty of any kind by Developer.
14.3.2 Surrender of Transferable Products. In connection with the proposed Project, Developer has prepared during the term of the ENA and shall during the term of this Agreement, be preparing or causing to be prepared the Survey, a Phase I environmental site assessment, a geotechnical report and architectural and other products with respect to Horizontal Improvements with respect to the Property and the proposed Project (collectively, “Transferable Products”). For the avoidance of doubt, the Transferable Products shall not include any plans or specifications with respect to the Vertical Improvements. Developer shall cause each of the Transferable Products to be certified in favor of the City by the engineering and architecture firms preparing them in the form and substance of the instrument attached to this Agreement as Attachment 27. All Transferable Products shall be prepared at Developer’s sole cost and expense.
If this Agreement is terminated for any reason other than a Material Default by the City prior to or following the Close of Escrow or if the Right of Repurchase or Right of Reversion is exercised, then, with respect to all Transferable Products, the City may request that Developer transfer Developer’s rights to any or all of the Transferable Products identified by the City but in no event shall the cost to the City for all of the Transferable Products transferred to the City exceed the lesser of the actual cost of the Transferable Products requested by the City or One Hundred Thousand Dollars ($100,000). If any of the Transferable Products requested by the City to be transferred to it are not certified in favor of the City by the applicable engineering or architecture firm, then the total cost to the City of such uncertified Transferable Products shall not exceed Five Thousand Dollars ($5,000). Upon such request and payment of such consideration, Developer shall deliver to the City copies of all Transferable Products together with a bill of sale therefor, provided that such transfer is made AS-IS and Developer makes no representation, warranty or guaranty regarding the completeness or accuracy or any other aspect of the Transferable Products, and Developer does not covenant to convey the copyright or other ownership rights of third parties thereto. Such Transferable Products shall thereupon be free of all claims or interests of Developer or any liens or encumbrances. Upon the City’s acquiring Developer’s rights to any or all of the Transferable Products, the City shall be permitted to use, grant, license or otherwise dispose of such Transferable Products to any Person for development of the Project or any other purpose; provided, however, that Developer shall have no liability whatsoever to the City or any transferee of title to the Transferable Products in connection with the use of the Transferable Products.
Notwithstanding anything to the contrary in this Section 14.3.2, Developer shall only be obligated to transfer any Transferable Products to the extent that Developer owns the rights to the same pursuant to its contract with the preparer thereof.
14.3.3 Survival. The provisions of this Section 14.3 shall survive the termination of this Agreement except that the same shall terminate with respect to the applicable portions of the Real Property and Project upon Recording by the City of a Certificate of Compliance applicable thereto.
15. Remedies Prior to Close of Escrow.
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15.1 Failure of a Condition Absent a Default.
15.1.1 If the Close of Escrow does not occur by reason of the failure of any of the Closing Conditions (other than by reason of a Default by either Party) or any of the following conditions, each of which shall be an additional Closing Condition for the benefit of each Party, either Party shall have the right to terminate this Agreement as provided below:
15.1.1.1 If a final non-appealable decision in any litigation brought by a third party or approval of a referendum or initiative results in the inability of the City to convey all or any portion of the Property to Developer, or prohibits Developer from performing any of its material obligations under this Agreement that are not waived by the City, either Party shall have the right, upon ten (10) Business Days’ prior written notice to the other Party and the Escrow Holder, to terminate this Agreement.
15.1.1.2 If any litigation, referendum, or initiative brought by a third party remains pending on the Outside Closing Date and (i) such ongoing challenge prevents the City from conveying all or any portion of the Property to Developer, or (ii) such ongoing challenge prohibits Developer from performing any of its material obligations under this Agreement that are not waived by the City, either Party shall have the right, upon ten (10) Business Days’ written notice to the other Party and the Escrow Holder, to terminate this Agreement.
15.1.1.3 If, prior to the Close of Escrow, HCD notifies the City that the disposition of all or any portion of the Property violates the SLA Regulations or any of them or HCD issues a notice of potential violation, enforcement or non-compliance with respect to the Project or the sale of the Real Property and the same remains pending on the Outside Closing Date, then upon written notice to the other Party and the Escrow Holder delivered not later than ten (10) Business Days’ prior to the Outside Closing Date (as the same may be extended by this Section or Section 7.1) either Party shall have the right to terminate this Agreement on or after the Outside Closing Date.
If any of the matters described in Sections 15.1.1.2 or 15.1.1.3 has occurred and is continuing as of the Outside Closing Date, the Parties may agree on or before the Outside Closing Date, each in its sole discretion, to extend the Outside Closing Date for a period not to exceed sixty (60) calendar days (and the City Manager shall have the right to approve such extension on behalf of the City).
15.1.2 If the circumstances creating the right of termination in Sections 15.1.1.1 or
15.1.1.2 have been cured during the thirty (30) Business Day period described in each such section, the right to terminate with respect to such circumstances shall likewise be extinguished.
15.1.3 If the Close of Escrow does not occur on or before 5:00 p.m., Pacific Time, on or before the Outside Closing Date because of the failure to occur of a Closing Condition for reasons other than a Default by either Party, then the Party for whose benefit the applicable Closing Condition was intended may, by delivery of written notice to the other Party and to the Escrow Holder, terminate this Agreement. In the event either Developer or the City is in Default as of the Closing Date, the Party in Default shall not have the right to terminate this Agreement pursuant to this Section 15.1.3 until and unless the Default is cured. Upon termination of this Agreement prior to the Close of Escrow in accordance with Section 15.1.1 or this Section 15.1.3, each Party shall Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 91 City of Tustin/Confluent Development Portion of Disposition Area 8
pay one-half (1/2) of Escrow Holder’s normal cancellation charges, the ENA Extension Deposits then held by the City shall retained in full by the City and Developer shall pay to the City the amounts due pursuant to Section 1.8. The termination of this Agreement pursuant to Section 15.1.1 or this Section 15.1.3 prior to the Close of Escrow shall constitute a waiver of any rights or Claims either Party may have against the other or against the Property or with respect to the Project and the Project Improvements or any portion thereof, but shall not terminate or release any liability or obligations of either Party to comply with any obligations under this Article 15 or any provisions of this Agreement which are expressly stated to survive a termination of this Agreement. In the event of a termination as provided in Section 15.1.1 or this Section 15.1.3, under no circumstances shall Developer have any right or claim to, or against, the Project, the Development Parcel or the Property or any portion thereof.
15.1.4 For purposes of clarity, the failure of a Closing Condition for the benefit of either Party to be satisfied at or prior to the Close of Escrow shall not, on its own, constitute a Default by either Party hereunto absent a Default under a separate covenant, obligation, representation or warranty set forth in this Agreement or any Other Agreement.
15.2 Failure of Close of Escrow; Developer Default.
15.2.1 CLOSE OF ESCROW. IF THE CLOSE OF ESCROW DOES NOT TAKE PLACE ON OR BEFORE 5:00 P.M., PACIFIC TIME, ON THE OUTSIDE CLOSING DATE AS
A RESULT OF A DEFAULT BY DEVELOPER IN THE PERFORMANCE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND DEVELOPER THEREAFTER FAILS TO
CURE THE SAME WITHIN THE APPLICABLE NOTICE AND CURE PERIOD SET FORTH IN ARTICLE 14, THEN THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS AGREEMENT IN THE SPACE PROVIDED BELOW THAT:
15.2.1.1 THE CITY SHALL HAVE THE RIGHT TO TERMINATE
THIS AGREEMENT AND THE ESCROW BY DELIVERING WRITTEN NOTICE TO
DEVELOPER AND TO ESCROW HOLDER, WHEREUPON THIS AGREEMENT SHALL
TERMINATE AND DEVELOPER AND CITY SHALL BE RELEASED FROM THEIR OBLIGATIONS UNDER THIS AGREEMENT, INCLUDING THE CITY’S OBLIGATION TO
SELL THE PROPERTY TO DEVELOPER, BUT EXCLUDING THEREFROM ANY
OBLIGATIONS WHICH EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT. IN SUCH EVENT, DEVELOPER SHALL PAY TO THE CITY THE AMOUNT OF TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) AND THE CITY SHALL RETAIN THE ENA EXTENSION DEPOSITS (“Liquidated Damages”) AS LIQUIDATED DAMAGES, WHICH DAMAGES SHALL BE THE CITY’S SOLE AND EXCLUSIVE REMEDY FOR DEVELOPER’S FAILURE TO CLOSE ESCROW, EXCEPT FOR THE CITY’S OTHER
RIGHTS AND REMEDIES WITH RESPECT TO ANY OBLIGATIONS OF DEVELOPER
THAT EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE
RIGHT OF THE CITY TO RETAIN THE ENA EXTENSION DEPOSITS AND TO BE PAID IN FULL FOR THE DDA TRANSACTION EXPENSES. THE CITY’S RIGHTS AND REMEDIES
DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT.
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15.2.1.2 THE LIQUIDATED DAMAGES BEAR A REASONABLE
RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY THE CITY AS THE RESULT OF DEVELOPER’S FAILURE TO CLOSE
ESCROW UNDER THIS AGREEMENT, WHICH DAMAGES WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO QUANTIFY. THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE ESTIMATE OF THE CITY’S DAMAGES IN SUCH EVENT.
THE REMEDY PROVIDED FOR IN THIS SECTION 15.2.1 IS NOT A PENALTY OR FORFEITURE AND IS A REASONABLE LIMITATION ON DEVELOPER’S POTENTIAL LIABILITY AS A RESULT OF THE FAILURE TO CLOSE ESCROW. NOTHING IN THIS
AGREEMENT SHALL PRECLUDE THE CITY FROM (A) RETAINING THE ENA
EXTENSION DEPOSITS, ALL REIMBURSEMENTS IT HAS PREVIOUSLY RECEIVED
FROM DEVELOPER PURSUANT TO THE ENA (FROM ENA EXPENSES DEPOSITS) OR
FOR THE DDA TRANSACTION EXPENSES AND RETAINING AND COLLECTING FROM
DEVELOPER ANY ADDITIONAL AMOUNTS THEN DUE TO THE CITY ON ACCOUNT OF
DDA TRANSACTION EXPENSES INCURRED BY THE CITY TO THE DATE OF
TERMINATION OF THIS AGREEMENT OR (B) PURSUING ITS RIGHTS AND REMEDIES
FOR A SEPARATE BREACH, IF ANY, OF THE RELEASE PROVISIONS SET FORTH IN SECTION 4.5.3, THE CONFIDENTIALITY PROVISIONS SET FORTH IN SECTION 18.24 AND/OR INDEMNIFICATION PROVISIONS SET FORTH IN SECTION 5.2 AND/OR THE PROVISIONS OF SECTION 14.3.
15.2.1.3 DEVELOPER SHALL PAY THE FULL AMOUNT OF
ESCROW HOLDER’S CHARGES AS A RESULT OF SUCH DEFAULT AND TERMINATION.
15.2.1.4 DEVELOPER SHALL COMPLY WITH THE
REQUIREMENTS OF SECTION 14.3 AND SHALL INDEMNIFY THE CITY AS PROVIDED IN SECTION 5.2 AND COMPLY WITH ALL OTHER PROVISIONS OF THIS AGREEMENT THAT EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT.
Initials of City Initials of Developer
15.3 Failure to Close; Default of City.
15.3.1 Developer Remedies. If the Close of Escrow does not occur on or before 5:00 p.m., Pacific Time, on or before the Outside Closing Date, solely as a result of a Default by the City in the performance of its obligations under this Agreement with respect to the Close of Escrow, and the City thereafter fails to cure the same within the applicable notice and cure period set forth in Section 14.2 (the “City Cure Period”), then, as the sole remedy of Developer with respect to such Default by the City, and provided that Developer is not then in Default under this Agreement, Developer shall have the right, by providing written notice to the City, within twenty (20) Business Days after the last day of the City Cure Period, to elect one of the following remedies, it being agreed by the Parties that in the event Developer fails to deliver such notice within such twenty (20) Business Day period, Developer shall be deemed to have elected to terminate this Agreement in accordance with clause (iii) below:
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(i) to purchase the Property pursuant to this Agreement notwithstanding such Default by the City and subject to its agreement to waive all of Developer’s rights with respect to any such City Default, whereupon such Default (other than Defaults with respect to City’s failure to deliver the documents and instruments required under Section 7.2.1.1) shall be deemed waived as against the City; (ii) to elect to extend the Closing Date for a period of up to ninety (90) Business Days in order to provide the City with additional time to cure such Default (and in such event the City shall use commercially reasonable efforts to cure the same during such extension period) and, if despite such efforts the City is not able to cure the same by such extended Closing Date, Developer shall have the right by providing written notice to the City within twenty (20) Business Days after the extended Closing Date to elect the remedies set forth in clauses (i), (iii) or (iv) of this Section 15.3.1, in each case only if then applicable;
(iii) to terminate this Agreement and cancel the Escrow as more particularly set forth in Section 15.3.3; or
(iv) if all City Closing Conditions have been waived by the City in writing or satisfied (except with respect to any City Closing Condition which is not satisfied as a result of a Default by the City), and the City fails to deliver any of the materials described in Section 7.2.1.1 or otherwise fails to proceed with the Close of Escrow in breach of this Agreement after Developer has delivered into Escrow all of its required deliveries pursuant to Section 7.2.2 other than the Developer Closing Payment, and Developer has provided the notice and City has failed to cure pursuant to Section 14.2 or Section 15.3.1(ii), Developer shall have the right to (a) bring an action in mandamus or at equity or otherwise against the City or subsequent owners, lessors or sublessors of the Property for specific performance of the City’s obligation to close Escrow in accordance with Article 7, but Developer shall not be entitled to a refund of the ENA Extension Deposits nor shall it be entitled to any other monetary award or damages.
15.3.2 Closing Pursuant to Section 15.3.1. In the event the City receives timely notice of Developer’s election to purchase the Property pursuant to Section 15.3.1 notwithstanding the Default by the City, Developer shall deliver the Developer Closing Payment and all other deliverables required by Section 7.2.2.2 and otherwise required to satisfy the City Closing Conditions into Escrow no later than ten (10) Business Days after the City’s receipt of said notice, and, provided that the City Closing Conditions have been satisfied, (i) the Close of Escrow shall occur on that date which is eleven (11) Business Days after the City’s receipt of such notice and (ii) Developer shall be deemed to have waived the Default as of the Close of Escrow.
15.3.3 Developer Termination of Agreement Pursuant to Section 15.3.1.
15.3.3.1 In the event that the Developer elects or is deemed to have elected to terminate this Agreement pursuant to Section 15.3.1, then Developer’s election (or deemed election) shall terminate the entirety of this Agreement, the City shall pay the full amount of Escrow Holder’s charges and Developer shall be entitled, as its exclusive remedy, to a refund of amounts paid by it then held by Escrow Holder, which refund and payment shall be Developer’s Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 94 City of Tustin/Confluent Development Portion of Disposition Area 8
sole and exclusive remedy under this Agreement for the failure of the Close of Escrow due to the City’s Default.
15.3.3.2 City Right to Terminate Agreement. In the event Developer has elected to purchase the Property pursuant to Section 15.3.1 but fails to deliver the Developer Closing Payment into Escrow and to satisfy the other City Closing Conditions no later than ten (10) Business Days after the City’s receipt of said notice in accordance with Section
15.3.2, then the City shall have the right to terminate this Agreement by providing written notice of its election to terminate to Developer, such termination to be in accordance with the provisions of Section 15.3.3.1.
15.3.4 In the event that Developer does not elect a remedy within the time period set forth in Section 15.3, Developer shall have no further right or claim to or against such Property or any portion thereof following the termination of this Agreement. The termination of this Agreement pursuant to this Section 15.3 shall constitute a waiver of any and all rights and Claims either Party may have against the other, except as expressly provided in this Section 15.3.
15.4 Remedies Exclusive.
The remedies provided in Sections 15.1 through 15.3 (and Section 18.2 as applicable) for the failure of a Closing to occur are the exclusive remedies of the Parties for such failure. Without limiting the generality of the immediately preceding sentence, (i) neither Party shall have any remedy in monetary damages against the other (other than the liquidated damages specifically provided for in Section 15.2) for the failure of the Close of Escrow to occur, whether or not the failure of the Closing to occur is due to the Default or other fault of the other Party, and (ii) following the Close of Escrow, no Default on the part of the City shall entitle Developer to a claim for the recovery of any portion of the Purchase Price or the Project Fair Share Contribution.
15.5 Survival.
The provisions of this Article 15 shall survive the termination of this Agreement pursuant to this Article 15 but shall terminate and be of no force and effect following the Close of Escrow.
16. Remedies for Defaults After the Close of Escrow.
16.1 General Remedies.
In the event Developer is in Material Default following the Close of Escrow, in addition to whatever other rights the City may have in law or at equity, or as otherwise provided in this Agreement, the City may do any one or more of the following (in such order, at such time or times, and in such combinations as the City may determine in its discretion):
(i) Record a lien against the Property, in accordance with Section 16.2;
(ii) subject to Section 18.5.1, sue for damages it may have incurred;
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(iii) seek to enjoin actions by or specifically enforce the obligations of Developer.
(iv) exercise its Right of Repurchase with respect to the Property pursuant to Section 16.3;
(v) in the event of a Reversion Action Trigger only, exercise its Right of Reversion with respect to the Property pursuant to Section 16.4. (vi) terminate this Agreement and/or the Other Agreements, or any of them, with respect to all or any portion of the Property.
16.2 Lien Rights.
Developer, on behalf of itself, its successors and assigns and each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner (but specifically excluding any End Users) for the benefit of the City and its successors and assigns hereby agrees that the delinquent amount of any payments due under this Agreement, including any liquidated damages under this Agreement, together with any late charges or interest due on any such delinquent payment, reasonable attorneys’ fees, experts’ fees and consultants’ fees and collection costs and the cost of in-house staff time (including City overhead and administrative costs) related to such delinquent payment shall, to the greatest extent permitted by applicable law, be a continuing lien upon the Property in favor of the City (“City Lien”) relating back to the Recording of the Memorandum of DDA, which City Lien shall be paramount to the lien and charge of each and every Mortgage, Construction Lien and/or other lien upon or affecting the Real Property or any Improvements thereon, and, subject to the terms of any then effective Subordination Agreement, the City shall have the right to foreclose the City Lien with respect to any property so encumbered by the City Lien. Upon conveyance of any portion of the Real Property to an End User unless otherwise provided in the Landscape Installation and Maintenance Agreement, the City Lien shall automatically terminate as to such conveyed portions, provided however, that the termination of such City Lien shall not terminate the obligations of Developer and its successors and assigns to City with respect to amounts due and secured by such lien, which shall remain an ongoing obligation of Developer. Following Recording by the City of a Certificate of Compliance for a portion of the Real Property, the City Lien shall apply to the portion of the Real Property for which such Certificate of Compliance has been Recorded only if the default arises from or is related to such portion of the Property or if the City Lien is imposed in connection with default by the Owner thereof.
16.3 Right of Repurchase.
16.3.1 Property Subject to Repurchase. Following the Close of Escrow and until the Vertical Improvements Commencement Date, the City shall have the right (“Right of Repurchase”) on the terms and subject to the conditions set forth in this Section 16.3 to purchase the applicable portion of the Real Property as set forth in Section 16.3.10, and all applicable Entitlements, Development Permits and other development rights, consents, authorizations, variances, waivers, licenses, permits, certificates and approvals from any Governmental Authority, Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 96 City of Tustin/Confluent Development Portion of Disposition Area 8
the Transferable Products, the Intangible Property and all other appurtenant rights applicable thereto (“Repurchase Property”).
16.3.2 Repurchase Default. In the event of a Default by Developer, the City shall have the right from time to time at any time prior to the Vertical Improvements Commencement Date to give notice to Developer of its intent to acquire the Repurchase Property in accordance with this Section 16.3. provided that the City shall not have the right to repurchase the Property if, as to such Default(s), the Developer proceeds to cure the Default(s) within the time periods for cure provided in this Agreement.
16.3.3 Exercise of Right of Repurchase. The City may exercise its Right of Repurchase by delivering written notice to Developer stating that the City is exercising its Right of Repurchase and specifying the Repurchase Property; provided that such notice is delivered at least ninety (90) Business Days prior to the date on which the City requires Developer to convey the Repurchase Property to the City pursuant to the Right of Repurchase and otherwise in accordance with this Section 16.3. Prior to the Vertical Improvements Commencement Date, the City’s Right of Repurchase shall constitute a lien and encumbrance on the portions of the Real Property and the Project Improvements then subject to the Right of Repurchase which lien shall have priority over the lien and charge of any Mortgage, Construction Lien and/or other lien upon or affecting Real Property or any Project Improvements thereon; provided, however, such lien shall be deemed to be automatically released and discharged for portions of the Property and Project for which it has not been exercised upon the Vertical Improvements Commencement Date. The Parties agree that the discount reflected in the definition of Repurchase Price as compared with the Purchase Price is justified in that it bears a reasonable relationship to the damages which the Parties estimate may be suffered by the City as the result of Developer’s Material Default in the performance of its obligations under this Agreement, which damages would be impractical or extremely difficult to quantify, and that the computation of the Repurchase Price reflecting that discount is not a penalty or forfeiture, and is a reasonable limitation on Developer’s potential liability as a result of Developer’s default.
16.3.4 Access, Inspection, Further Obligations. The provisions of Section 16.5 shall apply with respect to access to and inspection of the Repurchase Property. The provisions of Section 16.6 shall apply in accordance with their terms upon close of escrow with respect to any Repurchase Property.
16.3.5 Process. If the City is entitled to and elects to repurchase the Repurchase Property: (i) the Parties shall, within five (5) Business Days after the date of the City’s notice of election to exercise the Right of Repurchase, open an escrow with an escrow agent designated by the City for the purchase and sale, and shall execute an escrow agreement that shall provide that Developer shall pay all costs of the escrow and shall include such usual and ordinary terms as are reasonably required by the escrow agent and by the transaction; (ii) Developer shall, no later than fifteen (15) Business Days after the opening of escrow, place into the escrow the appropriate quitclaim deed and bill of sale conveying fee title to the Repurchase Property; and (iii) the City shall, no later than eighty-five (85) calendar days after the opening of the escrow, deposit into the escrow an amount equal to (a) the Repurchase Price minus (b) the Lien Release Amounts, if any, minus (c) any other amounts then owed to the City by Developer and/or any Successor Owner arising or resulting directly or indirectly from or related to this Agreement with respect to the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 97 City of Tustin/Confluent Development Portion of Disposition Area 8
Repurchase Property, and minus (d) the actual costs incurred by the City to acquire environmental and pollution legal liability insurance coverage for the Repurchase Property, including coverage for loss, remediation expense and legal defense expenses. The escrow shall close, and title to the Repurchase Property shall be conveyed to the City, and the Repurchase Price paid to Developer no later than five (5) Business Days after the City has deposited into escrow the Repurchase Price.
Concurrently with the close of escrow for the Repurchase Property, Developer shall comply with its obligations under Section 14.3 with respect to the Repurchase Property. Nothing in this Section
16.3 shall restrict the right of the City to terminate its exercise of the Right of Repurchase at any time prior to the close of escrow and such termination shall not be a Default by the City. At the close of escrow, real property taxes and assessments with respect to the Repurchase Property shall be prorated between Developer and the City as of the date of the close of escrow. All prorations shall be based upon a 365-day year and actual days elapsed. All closing costs, including the cost of an ALTA policy of title insurance in favor of the City with respect to the Repurchase Property shall be borne by Developer and deducted from the Repurchase Price.
16.3.6 Cooperation and Grant of Easements. The Parties shall cooperate with respect to and concurrently with the close of escrow for the Repurchase Property, shall each reserve and/or grant to the other such roadway, utility, access and other easement rights as may be required by the other Party and its successors in interest to develop the Real Property as contemplated by Entitlements, this Agreement and the Other Agreements.
16.3.7 Termination of Right of Repurchase. In the event that prior to delivery by the City of written notice to Developer of its exercise of the Right of Repurchase pursuant to Section 16.3.2, Developer or any Person on behalf of Developer cures the Default which is the basis for the City’s exercise of its Right of Repurchase, such Right of Repurchase shall cease and terminate with respect to such Repurchase Property only; provided that the provisions of this sentence shall not be applicable to any subsequent notice by the City of its election to exercise the Right of Repurchase with respect to a subsequent Default or to Transfer or Transfer of Control defaults. In the event the City has declared a Default, Developer shall not have the right to apply for permits for Horizontal Improvements or Vertical Improvements or to commence construction thereof in a manner that affects or thwarts the ability of the City to exercise its Right of Repurchase.
16.3.8 Effect of Repurchase. The provisions of Section 16.6 shall apply with respect to the Repurchase Property following close of escrow for the repurchase. Following close of escrow for the conveyance of the Repurchase Property to the City, under no circumstances shall Developer or any lienholder have any right or claim to, or against, the Repurchase Property.
Notwithstanding the acquisition of the Repurchase Property by the City as provided in this Section
16.3, this Agreement shall remain in full force and effect with respect to the portions of the Property and Project Improvements not acquired by the City.
16.3.9 Rights of Third Parties. The Right of Repurchase shall not defeat or render invalid or limit any rights or interests provided in easements, covenants, conditions or restrictions in favor of third parties (i.e., Persons other than Developer or its Developer Affiliates) granted pursuant to Transfers approved by the City (or constituting a Permitted Transfer) and Recorded on the portion of the Real Property for which the City exercises its rights under this Section 16.3. The Repurchase Property acquired by the City shall be delivered to the City at close of escrow free and clear of all liens, including Construction Liens (other than Lien Release Amounts that are actually Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 98 City of Tustin/Confluent Development Portion of Disposition Area 8
deducted from the Repurchase Price paid by the City) and Mortgages and (v) the Permitted Exceptions in effect at the time of the original Close of Escrow for such Property, (w) the Final Parcel Map, if then Recorded, (x) utility easements and/or roadway easements, (y) other matters affecting title consented to or requested by any Governmental Authority with respect to the Repurchase Property in connection with development or operation of the Repurchase Property, or consented to or requested by the City, and any covenants to comply with the Entitlements, and (z) the Other Agreements then in effect.
16.3.10 Additional Terms Applicable To Right of Repurchase. From the Close of Escrow until the Vertical Improvements Commencement Date, the City shall have the right, but not the obligation, upon the terms and conditions provided herein, to exercise the Right of Repurchase with respect to all or any portion of the Real Property. Following the Vertical Improvements Commencement Date, the City shall not have the right to exercise the Right of Repurchase.
16.3.11 No Release of Liability. Conveyance of the Repurchase Property to the City shall not terminate or release any liability or obligation of the Developer Property to comply with the provisions of this Agreement that survive the termination of this Agreement, except for those liabilities and obligations that relate to the ownership and development of the Repurchase Property. In the event the City purchases any portion of the Property, under no circumstances shall the Developer have any right or claim to, or against, the Repurchase Property.
16.3.12 Survival of Provisions. The provisions of this Section 16.3 shall survive the termination of this Agreement.
16.4 The Right of Reversion.
Following Close of Escrow and prior to the Vertical Improvements Commencement Date, in the event of the occurrence of any Reversion Action Trigger (defined in Section 16.4.1), and in addition to its other rights or remedies as a result of the occurrence of any such Reversion Action Trigger, the City shall have the right on the terms and subject to the conditions set forth in this Section 16.4 to re-enter and take possession of the Reversion Property and to revest title thereto in the City (“Right of Reversion”) notwithstanding that the Reversion Property may be encumbered by liens, including Construction Liens and Mortgages. The revesting of title to any Reversion Property by the City is referred to in this Agreement as a “Reversion Event”, whether based on voluntary action of Developer or otherwise after notice by the City of its intent to exercise the Right of Reversion. The City shall be entitled to exercise the Right of Reversion at any time on or after the occurrence of any one or more of the Reversion Action Triggers and prior to the Vertical Improvements Commencement Date; provided that the City has complied with the conditions to exercise of the Right of Reversion set forth in Section 16.4.2. The Right of Reversion shall constitute a lien and encumbrance on the Real Property and Project Improvements thereon then subject to the Right of Reversion, which lien and encumbrance shall have priority over the lien and charge of any Mortgage, Construction Lien and/or other lien upon the Real Property and any improvements thereon; provided, however, such lien shall be deemed to be automatically released and discharged for portions of the Property and Project for which it has not been exercised upon termination of the Right of Reversion.
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16.4.1 Certain Defaults Triggering the Right of Reversion. Following the Close of Escrow and prior to the Vertical Improvements Commencement Date, the City may exercise the Right of Reversion if it elects to do so with respect to the applicable portions of the Real Property as set forth in Section 16.4.7, and all applicable Entitlements, Development Permits and other development rights, consents, authorizations, variances, waivers, licenses, permits, certificates and approvals from any Governmental Authority, the Transferable Products, the Intangible Property and all other appurtenant rights applicable thereto (collectively, “Reversion Property”) upon the occurrence of any one of the following (each, a “Reversion Action Trigger”, and the date on which the Reversion Action Trigger occurs is referred to in this Agreement as the “Reversion Action Trigger Date”). The occurrence of any of the following shall be a Reversion Action Trigger:
16.4.1.1 Developer fails to commence construction in accordance with the Approved Plans and all Governmental Requirements of either of the Active Adult Project Horizontal Improvements or the AL/MC Project Horizontal Improvements within the time period for commencement of such construction set forth in the Schedule of Performance, as the date for such commencement of construction in the Schedule of Performance may be extended for Force Majeure Delay pursuant to this Agreement;
16.4.1.2 Developer fails to commence construction of the Active Adult Project Vertical Improvements or the AL/MC Project Vertical Improvements accordance with the Approved Plans and all Governmental Requirements within the applicable time period for commencement of such construction set forth in the Schedule of Performance, as the date for such commencement of construction in the Schedule of Performance may be extended for Force Majeure Delay pursuant to this Agreement;
16.4.1.3 Developer fails to Complete construction of the Project on the Development Parcel in accordance with the Approved Plans and all Governmental Requirements within the applicable time period for Completion of such construction set forth in the Schedule of Performance as the date for Completion of construction in the Schedule of Performance may be extended for Force Majeure Delay pursuant to this Agreement;
16.4.1.4 Developer abandons or, substantially suspends or a period of six (6) consecutive months, construction of the Active Adult Project or the AL/MC Project following commencement of such construction for reasons other than for Force Majeure Delay;
16.4.1.5 The occurrence of a Developer Insolvency Event or a Material Default with respect to Transfer or Transfer of Control; and/or
16.4.1.6 With respect to any Guarantor which has provided a Guaranty to the City, the occurrence of a Guarantor Illiquidity Event, unless Developer shall, within the time period required thereby and in Section 14.2.1, provide substitute security meeting the requirements of Section 8.9.3.
16.4.2 Conditions to Exercise of the Right of Reversion. The City shall be entitled to exercise the Right of Reversion at any time after the Reversion Action Trigger has occurred and prior to the Vertical Improvements Commencement Date without regard to any notice Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 100 City of Tustin/Confluent Development Portion of Disposition Area 8
and cure periods except as expressly provided in Section 16.4.1; provided that the City has provided written notice to Developer that the City elects to exercise its Right of Reversion and such notice states the date for the Reversion Event. The provisions of Section 16.5 shall be applicable to exercise of the Right of Reversion. The date for the Reversion Event shall not occur before the later of (i) the date that is ninety (90) Business Days after the date of such notice of exercise; and (ii) the date that is five (5) Business Days after Developer has had the opportunity to address the City Council at a public meeting regarding the Reversion Action Trigger. In the event that, following the first notice by the City of its election to exercise the Right of Reversion and prior to the Reversion Event, Developer or any Person on behalf of Developer cures, within the time period provided for such cure in this Agreement, the Reversion Action Trigger which is the basis for the City’s exercise of its Right of Reversion, such Right of Reversion shall cease and terminate as to such event of Default; provided that the provisions of this sentence shall not be applicable to any subsequent notice by the City of its election to exercise the Right of Reversion with respect to a subsequent Reversion Event.
16.4.3 Exercise and Effect of Right of Reversion.
16.4.3.1 Cooperation. If the City exercises its Right of Reversion in accordance with the provisions of this Agreement, Developer shall, and shall cause each Mortgagee (if any) to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable law to consummate the revesting of title to the Reversion Property in the name of the City, including the execution and delivery of such other documents, certificates, agreements, deeds and other writings and the taking of such other actions as may be reasonably necessary to consummate such revesting and the other provisions of this Section 16.4.
16.4.3.2 Effect on Mortgages. Subject to the provisions of any Subordination Agreement then in effect entered into by the City and a Permitted Mortgagee with respect to an existing Construction Loan, a Reversion Event shall foreclose, defeat and render invalid each and every Construction Lien and Mortgage.
16.4.4 Sale of Reversion Property. Upon the revesting in the City of title to the Reversion Property, the City shall use reasonable efforts to resell the Reversion Property as soon and in such manner as the City shall find feasible, in accordance with applicable law and consistent with the objectives of this Agreement, to a qualified and responsible Person or Persons as determined by the City in its sole discretion that will assume the obligation of making or completing the Project Improvements upon the Reversion Property. Concurrently with such resale of the Reversion Property, and each part thereof, the proceeds thereof shall be applied in the following order and amounts to the extent of funds available and the City shall have no liability to Developer or any Person to the extent the balance is insufficient to pay any or all of the following amounts nor shall the City have any obligation to make payments to any Person except in accordance with the priorities and obligations set forth below:
16.4.4.1 Delinquencies. First, to repayment in full of all delinquent tax and delinquent assessment liens with respect to the portion of the Reversion Property sold.
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16.4.4.2 Reimbursement to the City. Second, to payment in full of City Liens and to reimburse the City on its own behalf for all costs and expenses incurred by the City, in connection with the recapture, management, maintenance, repair, and resale of the Reversion Property, or any part thereof and the enforcement of City’s rights under this Agreement and the Other Agreements including City’s exercise of the Right of Reversion, taxes, assessments, and other delinquent liens, if any, whether arising before or after the acquisition by the City of: a pro-rata share of the salaries of personnel engaged in such action (based on the amount of time spent by such personnel on such matters relating to the Reversion Property as compared to the aggregate amount of time worked by such personnel; all taxes, assessments and utility charges with respect to the Reversion Property; any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, Defaults or acts of Developer or any Successor Owner or each and every Person claiming by, through or under Developer or any Successor Owner (but specifically excluding any End Users); any expenditures made or obligations incurred with respect to the making or completion of the agreed improvements or any part thereof on the Reversion Property; all costs of sale and marketing, including reasonable brokers’ fees and costs incurred in the marketing and sale of the Reversion Property; all legal fees and expenses; all escrow and title fees and costs; all survey and due diligence fees and costs; all the Lien Release Amounts, if any, paid by the City to third parties; and any amounts otherwise owing to the City by Developer and/or any Successor Owner under this Agreement or the Other Agreements, including any City Liens and the actual cost incurred by the City to acquire environmental and pollution legal liability insurance coverage for the Reversion Property, including coverage for loss, remediation expense and legal defense expenses.
16.4.4.3 Release of Claims. Third, at the election of the City in its sole discretion, (i) to release any Claims affecting the Reversion Property in such amounts as may be determined by the City in its sole discretion to be required to satisfy such Claims or to reinstate service or work on the Reversion Property or to pay utility charges with respect to the Reversion Property; (ii) to make any payments necessary to be made to discharge or prevent from attaching or being made any subsequent Claims, encumbrances or liens due to obligations, Defaults or acts of Developer or any Successor Owner or each and every Person claiming by, through or under Developer or any Successor Owner; (iii) to make any expenditures or incur any obligations with respect to completion of the agreed improvements or any part thereof on the Reversion Property, including the construction to Completion of the Project Improvements, and (iv) to pay all costs of sale and marketing, including reasonable brokers’ fees and costs incurred in the marketing and sale of the Reversion Property; and (v) to pay all legal fees and expenses, escrow and title fees and costs, survey and due diligence fees and costs; and any amounts otherwise owing to any other Person whether by Developer, Ground Lessee and/or any Successor Owner or otherwise with respect to the Project or any of the foregoing, in each case whether arising prior to or following the acquisition by the City of the Reversion Property and only to the extent that any Claim is not fully foreclosed or otherwise terminated by or as a result of the exercise by the City of the Right of Reversion.
16.4.4.4 Reimbursement to Developer. Fourth, to reimburse Developer up to the amount equal to the Repurchase Price attributable to the portion of the Reversion Property sold.
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16.4.4.5 Balance Retained by the City. Any balance remaining after such reimbursements shall be retained by the City as its property.
16.4.5 Effect of Exercise of Right of Reversion. The provisions of Section 16.6 shall apply with respect to the Reversion Property following the revesting of title thereto in the City. Following the revesting of title pursuant to this Section 16.4, under no circumstances shall Developer or any lienholder have any right or claim to, or against, the Reversion Property.
Notwithstanding the acquisition of the Reversion Property by the City as provided in this Section
16.4, this Agreement shall remain in full force and effect with respect to the portions of the Property and Project Improvements not acquired by the City. The City’s Right of Reversion shall not defeat or render invalid or limit any rights or interests provided in easements, covenants, conditions or restrictions in favor of third parties who are not Developer Affiliates that are approved by the City (or constituting a Permitted Transfer) and Recorded on the portion of the Property for which the City exercises its rights under this Section 16.4.
16.4.6 Cooperation and Grant of Easements. Concurrently with close of escrow for the Reversion Property, the Parties shall each reserve and/or grant to the other such roadway, utility, access and other easement rights as may be required by the other Party and its successors in interest to develop the Property as a unified development and as contemplated by the Entitlements, this Agreement and the Other Agreements. In the event the City has declared a Default, Developer shall have the right to apply for building permits for Horizontal Improvements or Vertical Improvements or to commence construction thereof in a manner that affects or thwarts the ability of the City to exercise its Right of Reversion.
16.4.7 Additional Terms Applicable To Right of Reversion. Following the Vertical Improvements Commencement Date, the City shall not have the right to exercise the Right of Reversion.
16.4.8 Survival of Provisions. The provisions of this Section 16.4 shall survive the termination of this Agreement.
16.5 Access and Inspection.
From and after the occurrence of any Default for which the City has the right to exercise the Right of Reversion or any Reversion Action Trigger occurring prior to the Vertical Improvements Commencement Date, the City and its appointed and elected officials, agents, attorneys, employees, contractors, consultants and representatives shall have the non-exclusive right, exercising such right in the Proprietary Capacity of the City, to enter upon at any reasonable time, at its own cost and expense entirely and upon not less than forty-eight (48) hours prior telephonic or email notice to Developer, the Potential Returned Property for the purpose of making such feasibility and other studies, inspections, appraisals, audits, tests, evaluations, investigations, surveys and reports of the Potential Returned Property (including engineering and environmental audits, evaluations and tests relative to the presence of any Hazardous Material within, under or upon the Potential Returned Property) (collectively, “City Inspections”) as City may elect to make or obtain in connection with its exercise of its Right of Repurchase or Right of Reversion; provided that during such City Inspections, the City shall use commercially reasonable efforts to minimize its interference with Developer’s activities on the Property. The City shall indemnify, protect and Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 103 City of Tustin/Confluent Development Portion of Disposition Area 8
defend Developer against any and all Claims which Developer may incur or suffer by reason of any acts or omissions to act of the City or its appointed and elected officials, agents, attorneys, employees, contractors, consultants and representatives in the conduct of any City Inspections on the Potential Returned Property, provided that the foregoing indemnity shall not apply to the extent of (i) the gross negligence, willful misconduct or fraud of Developer or any of the Developer Representatives, or (ii) Hazardous Materials conditions unless such condition is exacerbated by, or any Release caused by, negligent acts of City or its employees, consultants or contractors, or (iii) the acts or the negligence, gross negligence, or willful misconduct of Developer or any of the Developer Representatives in performance of work on the Development Parcel Accruing prior to the close of escrow pursuant to this Article 16; provided that in no event shall the foregoing apply with respect to inspections conducted by the City in its Governmental Capacity.
16.6 Obligations and Release Following Repurchase or Reversion.
Except as set forth in Sections 16.3 and 16.4, if the City exercises the Right of Repurchase or the Right of Reversion, the obligations of Developer under this Agreement and the Other Agreements, and Guarantor under the Guaranty and the Equity Investor under the Equity Commitment and the obligations of the City under this Agreement and the Other Agreements shall be released and terminated as to the Returned Property as of the close of escrow associated with such repurchase or as of the Reversion Event, as applicable, provided that the foregoing does not release Developer, Equity Investor, Guarantor or the Guaranty or the City with respect to matters Accruing prior to the date of such termination.
16.7 Cooperation.
If the City exercises its Right of Repurchase or Right of Reversion in accordance with the provisions of this Agreement, Developer shall use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or desirable under applicable law to consummate the repurchase of the Repurchase Property or revesting of the Reversion Property, as the case may be, including the execution and delivery of such other documents, certificates, agreements, deeds and other writings and the taking of such other actions as may be reasonably necessary to consummate such transactions.
17. Mortgages and Mortgagee Protection for Project.
17.1 Restrictions on Mortgages.
17.1.1 Generally. Developer shall not encumber any portion of the Property or the Project Improvements, or the Boundary Landscape Area associated with the Real Property with any Mortgage except in accordance with the terms of this Agreement; provided that the foregoing restrictions shall not apply to any portion of the Real Property for which a Certificate of Compliance has been Recorded by the City. The Developer of the Project shall have the right during the Term to enter into a Construction Loan secured by a Permitted Mortgage encumbering the fee interest of Developer in the Real Property consistent with the requirements set forth in this Article 17. Any Mortgage or other encumbrance of any portion of the Real Property in violation of this Article 17 prior to Recording by the City of a Certificate of Compliance as to such portion of the Real Property shall be a prohibited Transfer and a Material Default by Developer.
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17.1.2 Permitted Mortgage and Permitted Mortgagee Definitions. A Mortgage shall be a Permitted Mortgage and a Mortgagee shall be a Permitted Mortgagee if: (i) such Mortgagee is a Qualified Institutional Lender or other lender identified in the most recent Financing Plan approved by the City in accordance with Section 4.6; (ii) the terms of its Mortgage and all of the loan documents executed in connection with the corresponding Construction Loan are materially consistent with the portion of such Financing Plan and the requirements of Section
4.6 and this Article 17; (iii) complete copies of the loan documents have been provided to the City in accordance with Section 17.2.3 and the City has not identified that such loan documents fail to materially comply with the requirements of Sections 17.1 through 17.3; (iv) the loan proceeds will be used to finance the entitlement, development and the construction of the Project Improvements for the Project for which they are intended and lease up through stabilization costs and for associated costs and expenses (including financing costs) and for no other purpose.
17.2 Restrictions on Transfer to Mortgagee.
In addition to the other restrictions on Mortgages set forth in this Agreement, the following requirements shall apply to the Real Property and portion thereof and all Project Improvements thereon:
17.2.1 Neither this Agreement, nor the Property, nor any portion thereof or all or any portion of the Project Improvements shall be cross collateralized with any other contract or real or personal property, nor shall this Agreement or the Property (or any portion thereof) or all or any portion of the Project Improvements serve as additional security for any other loan by a Mortgagee, nor any debt other than a Construction Loan. In addition, no Mortgage shall serve as additional security for any loan other than a Construction Loan, or any other debt of Developer and shall not be cross collateralized or cross defaulted with any other indenture of mortgage or deed of trust, hypothecation, pledge, assignment for security purposes, bond, grant of taxable or tax-exempt funds from a governmental agency or other security interest.
17.2.2 Developer shall not transfer the Property or any portion thereof or any interest therein or all or any portion of the Project Improvements or any interest therein to a third party for purposes of a sale-leaseback transaction.
17.2.3 Developer shall deliver to the City loan documents for the proposed Permitted Mortgage, including all documents and guaranties securing the interest of the proposed Permitted Mortgagee, with drafts of the core documents (i.e., the Loan Agreement, Deed of Trust, Assignment of Rent (if applicable), Environmental Indemnity and any Guaranty Agreement) to be delivered at least twenty-five (25) Business Days prior to the proposed date of entry into the Mortgage, and substantially final versions, which shall be red-lined to show changes from the drafts reviewed by the City, to be delivered at least five (5) Business Days prior to the date of entry into the Mortgage, and executed copies to be delivered within three (3) Business Days after the date of entry into the Mortgage, and either indicating no change in the previously submitted forms or providing documents red-lined to show changes from the versions previously delivered to the City), and such other information as may be reasonably requested by the City to confirm the matters that require the City’s determinations described in Section 17.1 and this Section 17.2, provided that all drafts of the documents related to any Mortgage that are not loan agreements, trust indentures, deeds of trust, indemnities and guaranties (or documents performing similar Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 105 City of Tustin/Confluent Development Portion of Disposition Area 8
functions) may be provided thereafter, but in any event no later than the earlier of one (1) Business Day after receipt by Developer and ten (10) calendar days prior to entering into the Mortgage. The City shall determine, in its reasonable discretion, whether the loan documents for the proposed Permitted Mortgage comply with the requirements of this Agreement, including:
17.2.3.1 With respect to any Permitted Mortgage, whether the proposed Permitted Mortgagee is a Qualified Institutional Lender or, if the proposed Permitted Mortgagee is not a Qualified Institutional Lender, whether the proposed Permitted Mortgagee was identified in the most recent Financing Plan or Updated Financing Plan for the Project approved by the City.
17.2.3.2 The loan documents shall include a Subordination Agreement or if there are modifications proposed thereto, in such other form and substance as shall be approved by the City, Developer and the Permitted Mortgagee, each in its reasonable discretion, provided that it shall not be unreasonable for the City to withhold its approval to any form of Subordination Agreement that differs in any substantive respect from the form of Attachment 24, or would have the effect, among other things, when compared to the terms reflected in Attachment 24, of (i) imposing on the City any additional cost, liability, or obligation that is more than administrative or transactional in nature, (ii) altering the extent or priority of the interests described in Attachment 24, or (iii) creating a conflict with an express requirement of this Agreement or the Other Agreements. The Subordination Agreement shall be Recorded at the Closing, immediately after the Mortgage to which it relates is Recorded.
17.2.3.3 Developer shall not obtain or utilize Mezzanine Financing without the prior consent of the City in its sole discretion.
17.2.3.4 Developer shall not encumber any City owned property within the Boundary Landscape Area with any Mortgage under any circumstances.
17.2.3.5 The City shall have reasonably determined that the amount of the financing provided for in the Construction Loan, together with the equity to be committed by the Developer for the construction of the Project, is sufficient to pay for the costs of constructing the Project in accordance with the construction budget, including appropriate construction contingencies and the costs of Developer’s performance under this Agreement and the Other Agreements.
17.3 Subordination of Permitted Mortgage. Subject to the foregoing and the terms, conditions, and limitations of this Article 17, the Developer shall have the right to encumber its fee interest in the Property with one Construction Loan that is secured by a Permitted Mortgage.
All Mortgages shall be subject to and subordinate to the SLA Covenant, this Agreement, including the City Lien, the Right of Repurchase and the Right of Reversion contained herein and therein, and the additional Other Agreements shall be superior in priority to all Mortgages and the foregoing rights and agreements shall not be subordinated to any Mortgage or other instrument without the express written consent of the City in its sole discretion.
17.4 Loan Documents.
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17.4.1 Loan Documents Negotiation. Developer, at the Developer’s sole cost and expense, shall obtain and negotiate the terms of the Construction Loan. The City shall have the right to review and approve or disapprove any Permitted Mortgagee, Permitted Mortgage, and the Construction Loan documents as set forth in Section 17.2.3. The costs incurred by the City to review and approve the foregoing and/or negotiate any agreements between the City and any Mortgagee, including, third party fees and costs incurred for legal counsel, financial consultants and other consultants, shall be DDA Transaction Expenses reimbursed to the City pursuant to Section 1.8 and 2.4.
17.5 Acknowledgment by City of Permitted Mortgagee.
Within fifteen (15) Business Days following Developer’s delivery of the first set of loan documents and information required under Section 17.2.3 and within ten (10) Business Days following delivery of a set of modified documents and information that are substantively responsive to City’s initial comments to the same, (i) the City shall acknowledge receipt of the same and (ii) in its response, if not previously addressed, the City shall confirm in writing to Developer whether the proposed Mortgagee is a Permitted Mortgagee or explain why the City reasonably considers the proposed Mortgagee not to be a Permitted Mortgagee, and (iii) the City shall confirm in writing to Developer whether it has determined, in its reasonable discretion, if the loan documents comply with the requirements of Sections 17.1 and 17.2, or explain why the City reasonably considers the loan documents not to comply. If the loan documents are determined by the City, in its reasonable discretion, not to comply, then Developer shall promptly cause revisions in the loan documents and resubmit the same to the City for further consideration pursuant to this Section 17.5 and, if requested by Developer, the City shall agree to meet and confer with Developer and such other Persons as Developer may request with respect to open issues pertaining to the loan documents.
17.6 Change in Loan Documents, Special Restrictions and/or Landscape Installation and Maintenance Agreement.
17.6.1 Following approval by the City of the loan documents and Subordination Agreement pursuant to Section 17.3 (and subject to the terms and conditions of any then effective Subordination Agreement), Developer shall not, without the prior written approval of the City in its sole discretion, modify or agree to modify the loan documents in a manner that would effect any of the following (each or any combination of which is referred to as a “Material Loan Modification”): (a) an increase in the financial obligations of Developer for interest or fees, whether absolute or contingent, or (b) a change in the amount or timing of required principal payments, (c) an increase in the release price for any partial release of collateral, (d) a change unfavorable to the Developer in the conditions to any advance of funds under the loan documents, or (e) the modification of any event of default under the loan documents in a manner unfavorable to the Developer. If such approval is not obtained for such loan modification, then, notwithstanding any other provision of this Agreement or the Subordination or any subsequent correspondence from the City specifying that the Mortgagee is a Permitted Mortgagee, from and after the date of the loan modification, such Mortgagee shall be deemed to have lost its status as a Permitted Mortgagee.
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17.7 Effect of a Mortgage.City and Developer hereby agree that neither City nor Developer shall unreasonably withhold its consent to approval of any requested modifications to either the Special Restrictions or the Landscape Installation and Maintenance Agreement made by any Permitted Mortgagee in connection with and prior to the funding of the related financing associated with a Construction Loan; provided that it shall not be unreasonable for the City to withhold its approval of any proposed modification that would have the effect, among other things, when compared to the terms of the particular instrument then in effect (or if not then in effect, in the form attached to this Agreement) of (i) removing or reducing the extent of an obligation of Developer under such agreement, (ii) removing or reducing the extent of an obligation of any Owner to the City thereunder, (iii) imposing on the City any additional cost, liability, or obligation that is more than administrative in nature, (iv) altering the priority of the interests described in such instrument or the obligations of any Mortgagee to comply with the terms of such instruments or to cure prior defaults in accordance with the terms as currently stated, or (v) creating a conflict with an express requirement of this Agreement.
17.8 Constructive Notice and Acceptance.
Subject to the provisions of Article 2 or this Article 17 and the terms of any then effective Subordination Agreement, all of the provisions contained in this Agreement shall be binding upon and benefit any Person who acquires a portion of the Property; provided that the foregoing shall not apply to any Property for which a Certificate of Compliance has been Recorded by the City unless otherwise set forth in the Recorded Certificate of Compliance.
17.9 Bankruptcy Affecting Developer.
Developer and City hereby agree that this Agreement (including the Right of Repurchase and Right of Reversion), the Quitclaim Deed and the Other Agreements shall contain and consist of covenants running with the land and that neither this Agreement, the Quitclaim Deed or the Other Agreements shall be subject to rejection in any Bankruptcy Proceeding and Developer hereby waives its rights to reject this Agreement, Quitclaim Deed and the Other Agreements in any Bankruptcy Proceeding.
17.10 Mortgagee Protections.A Permitted Mortgagee shall be entitled to the Permitted Mortgagee protections provided for under this Section 17.10 from and after such time as the Developer and such Permitted Mortgagee have provided the City notice, in accordance with the provisions of Section 18.6, of the name and address of such Permitted Mortgagee, accompanied by a copy of the executed loan documents for the Permitted Mortgage. The Permitted Mortgagee of a then-existing Permitted Mortgage affecting a portion of the Property which has provided notice to the City as required herein shall, until its Permitted Mortgage is satisfied of record or until written notice of satisfaction is given by Permitted Mortgagee to the City or it ceases to be a Permitted Mortgagee, be entitled to the following:
(a) Provision of concurrent notice of any default by any Party hereunder; provided, however, that a failure of a Party to deliver a concurrent copy of such notice of default to Permitted Mortgagee shall not affect in any way the validity of the notice of default as it relates to the defaulting Party, but in any subsequent proceedings arising from the notice of default with respect to which there was a failure to provide the requested concurrent notice to Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 108 City of Tustin/Confluent Development Portion of Disposition Area 8
Permitted Mortgagee, the interest of Permitted Mortgagee and its lien upon the Real Property shall not be affected in any way until such time as it has received proper notice and all cure periods with respect thereto have expired, and provided, further, the giving of any notice of default or the failure to deliver a copy to any Permitted Mortgagee shall in no event create any liability on the part of the Person so declaring a default.
(b) The right, but not the obligation, at any time prior to the earlier to occur of exercise of the Right of Repurchase and/or Right of Reversion, or the termination of this Agreement and without payment of any additional penalty or assumption of the obligations of Developer under this Agreement, to cure or remedy such Potential Default or Material Default, to effect any insurance, to pay any amounts due to the City, to make any repairs or improvements, to do any other act or thing required of Developer under this Agreement and to do any act or thing which may be necessary and proper to be done in the performance and observance of this Agreement to prevent termination of this Agreement. To carry out the foregoing, the Developer hereby agrees that such Permitted Mortgagee and its agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by such Permitted Mortgagee shall be as effective to prevent a termination of this Agreement or the exercise by the City of the Right of Repurchase or the Right of Reversion as the same would have been if done by Developer.
18. General Provisions.
18.1 Applicable Law; Consent to Jurisdiction; Service of Process.
This Agreement shall be governed by, interpreted under, construed and enforced in accordance with the laws of the State, irrespective of California’s choice-of-law principles.
Developer and the City agree that any disputes arising between them in connection with this Agreement or in connection with or under any instrument, agreement or document provided for or contemplated by this Agreement, including in connection with the execution of this Agreement, the Close of Escrow or any other matter arising under, related to or in connection with this Agreement (including a determination of any and all issues in such dispute, whether of fact or of law) shall be tried and litigated exclusively in the Superior Court of the County of Orange in the State, in any other appropriate court of that county, or in the United States District Court for the Central District of California. This choice of venue is intended by Developer and the City to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between or among Developer and the City with respect to or arising out of or related to this Agreement in any jurisdiction other than that specified in this Section 18.1. Each Party hereby waives any right that it may have to assert forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this Section 18.1 and stipulates that the state of California and federal courts located in the County of Orange, in the State, shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy or proceeding arising out of or related to this Agreement. Each Party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any Action against it as contemplated by this Section 18.1 by means of registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices as set forth in this Agreement, or in the manner set forth in Section 18.6(i) or (iii) of this Agreement pertaining to notice. Any final judgment rendered against Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 109 City of Tustin/Confluent Development Portion of Disposition Area 8
a Party in any Action shall be conclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law.
18.2 Counsel for Indemnified Obligations; Legal Fees and Costs. Wherever Developer has an obligation to defend the City under this Agreement, Developer shall, prior to selection of counsel, consult in good faith with the City to ensure that the City is satisfied, in its sole discretion that the proposed legal counsel has the professional expertise and experience to demonstrate they are well-qualified to defend the City against the Claim(s). If any Party to this Agreement institutes any action, suit, proceeding, counterclaim or other proceeding for any relief against another Party, declaratory or otherwise (collectively an “Action”), to enforce the terms hereof or to declare rights under this Agreement or with respect to any inaccuracies or material omissions in connection with any of the covenants, representations, warranties or obligations on the part of the other Party to this Agreement, then the Prevailing Party in such Action shall be entitled to have and recover of and from the other Party all costs and expenses of the Action, including (i) the Prevailing Party’s reasonable attorneys’ fees (which shall be payable at the contractual hourly rate for City’s litigation counsel at the time the fees were incurred, but in no event more than Four Hundred Dollars ($400.00) per hour with this rate being used to calculate the attorneys’ fees to be recovered by the Prevailing Party regardless of whether the City or another Person is the Prevailing Party), and (ii) costs actually incurred in bringing and prosecuting such Action and/or enforcing any judgment, order, ruling or award (collectively, a “Decision”) granted therein, all of which shall be deemed to have accrued on the commencement of such Action and shall be paid whether or not such Action is prosecuted to a Decision. Any Decision entered in any final judgment shall contain a specific provision providing for the recovery of all costs and expenses of suit, including reasonable attorneys’ fees and expert fees and costs (collectively “Costs”) incurred in enforcing, perfecting and executing such judgment. For the purposes of this paragraph, Costs shall include in addition to Costs incurred in prosecution or defense of the underlying Action, reasonable attorneys’ fees, costs, expenses and expert fees and costs incurred in the following: (a) post judgment motions and collection actions; (b) contempt proceedings; (c) garnishment, levy, debtor and third-party examinations; (d) discovery; (e) bankruptcy litigation; and (f) appeals of any order or judgment. “Prevailing Party” within the meaning of this Section
18.2 includes a Party who agrees to dismiss an Action in consideration for the other Party’s payment of the amounts allegedly due or performance of the covenants allegedly breached or obtains from a court of competent jurisdiction substantially the relief sought by such Party.
18.3 Memorandum of DDA; Modifications or Amendments.
The Parties shall cause the Memorandum of DDA to be Recorded concurrently with the Close of Escrow. No amendment, change, modification or supplement to this Agreement shall be valid and binding on any of the Parties unless it is represented in writing and signed by each of the Parties hereto. Except with respect to changes to Attachments 1, 2A and 2B and 13, and/or changes to Attachment 7 that extend the date of Completion of the Active Adult Project Improvements or the AL/MC Project Improvements, as applicable, by more than six (6) months (exclusive of any extensions resulting from any Force Majeure Delay which shall be subject to the limitations set forth in Section 18.7), each of which shall require consent of the City Council, the Parties (with the City Manager or his or her designee having delegated authority to act on behalf of the City) may by mutual written agreement (in the Parties’ respective sole discretion) update and substitute any updated Attachment for the Attachment attached hereto as of the Effective Date, and such Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 110 City of Tustin/Confluent Development Portion of Disposition Area 8
substitution shall be deemed an administrative amendment of this Agreement and shall not require Recording of an amendment of the Memorandum of DDA. In addition, the City Manager is authorized, without further approval of the City, to waive or modify any City Closing Conditions or to make them conditions subsequent to the close of escrow under this Agreement. The provisions of this Section do not modify or supersede the retention of authority set forth in Section
18.11.3. 18.4 Further Assurances.
Each of the Parties hereto shall execute and deliver at their own cost and expense, any and all additional papers, documents, or instruments, and shall do any and all acts and things reasonably necessary or appropriate in connection with the performance of its obligations under this Agreement in order to carry out the intent and purposes of this Agreement.
18.5 Rights and Remedies Are Cumulative; Limitation on Damages.
18.5.1 Cumulative Remedies. Except with respect to the rights and remedies expressly declared to be exclusive in this Agreement or the Other Agreements, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Material Default or any other Material Default by the other Party. Except as otherwise specifically set forth in this Agreement, and subject to Section 18.5.2, wherever a Party has a right to damages for the Material Default of another Party (i) such damages shall be limited to direct (actual) damages for the Material Default of the other Party, and (ii) each of the Parties, on behalf of itself and its successors and assigns, hereby expressly waives, releases and relinquishes any and all right to any lost profits, incidental, special, collateral, expectation, anticipation, indirect, consequential, exemplary or punitive damages or losses.
18.5.2 Limitation on Damages Payable by the City. Developer acknowledges that the City would not have entered into this Agreement if the City could become liable for significant damages under or with respect to this Agreement, the Other Agreements and/or any estoppels or other certificates executed by Developer in connection with the transaction described in this Agreement. Consequently, and notwithstanding any other provision of this Agreement, except for (i) the monetary damages that may arise from the City’s obligations referenced in Section 18.5.3, and (ii) the payment of attorneys’ fees and Costs in accordance with Section 18.2, the City shall not be liable in damages under this Agreement, the Other Agreements and/or any estoppels or other certificates executed by Developer in connection with the transaction described in this or any Other Agreement to Developer or to any Successor Owner and Developer, on behalf of itself, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner hereby waives any and all rights to claim damages of any kind or nature from the City except as set forth in Section 18.5.3.
18.5.3 Special Circumstances Where Damages may be Payable by the City.
Subject to Section 18.5.1, the limitations on damages set forth in Section 18.5.2 shall not preclude Developer from seeking (i) payment of amounts, if any, which the City is obligated to pay to Developer or Escrow Holder pursuant to Sections 1.8.3, 7.4.1, 7.4.4, 14.2.5, 14.3.2 or 18.2, or Article 15 provided that (a) the provisions of Section 18.5.1 shall apply to such claims and Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 111 City of Tustin/Confluent Development Portion of Disposition Area 8
payments, and (b) Developer shall not be entitled to any damages in addition to the actual amounts owed by the City to Developer pursuant to this Agreement or the Other Agreements, or (ii) damages which arise out of a breach of the City’s representations and warranties contained in Sections 3.3 or 18.12.2, provided that the amount of any damages payable pursuant to this clause (ii) shall be the lesser of (x) actual damages, or (y) Five Hundred Thousand Dollars ($500,000.00) or (z) the value of any of the rights reserved to the City pursuant to Section 1.2.2.1 through Section
1.2.2.3 and as the same shall be included in the Quitclaim Deed.
18.5.4 Right to Specific Performance. Developer’s right to seek specific performance prior to the Close of Escrow shall be limited to the circumstance set forth in Section
15.3. In the event the City is in Material Default following the Close of Escrow, Developer shall be entitled to seek mandamus or special writs, specific performance, or injunctive relief in order to enforce the rights expressly granted to Developer pursuant to this Agreement. For purposes of clarity, in the event that the City is obligated to pay any amounts to Developer pursuant to this Agreement, and the City fails to pay such amounts to Developer as and when required by this Agreement, Developer shall be entitled to seek specific performance of such obligation, notwithstanding the other provisions of this Section 18.5.
18.6 Notices, Demands and Communications between the Parties.
All notices, demands, consents, requests and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed conclusively to have been duly given (i) when hand delivered to the other Party; (ii) three (3) Business Days after such notice has been sent by U.S. Postal Service via certified mail, return receipt requested, postage prepaid, and addressed to the other Party as set forth below; (iii) the next Business Day after such notice has been deposited for overnight delivery with an overnight delivery service reasonably approved by the Parties (Federal Express, Overnite Express, United Parcel Service and U.S. Postal Service are deemed approved by the Parties), postage prepaid, addressed to the Party to whom notice is being sent as set forth below with next-business-day delivery guaranteed, provided that the sending Party receives a confirmation of delivery from the delivery service provider; or (iv) when transmitted if sent by email (referencing “TUSTIN LEGACY DDA” in the subject matter line) to the email address set forth below; provided that notices given by email shall not be effective unless either (a) a duplicate copy of such notice is promptly sent by any method permitted under this Section 18.6 other than by email (provided that the recipient Party need not receive such duplicate copy prior to any deadline set forth in this Section); or (b) the receiving Party delivers a written confirmation of receipt for such notice either by email or any other method permitted under this Section. Any notice given by email shall be deemed received on the next Business Day if such notice is received after 5:00 p.m. Pacific Time or on a non-Business Day. Unless otherwise provided in writing, all notices with respect to this Agreement shall be addressed as follows:
City: City Manager
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: Aldo E. Schindler
Email: [email protected]
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With a copy to: Deputy City Manager – Real Property
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: Brian Moncrief
Email: [email protected]
And with a copy to: City Attorney
Woodruff & Smart
555 Anton Blvd., Suite 1200
Costa Mesa, CA 92626
Attention: David Kendig, Esq.
Email: [email protected]
And with a copy to: Hepner & Myers LLP
1241 Johnson Avenue, Suite 360
San Luis Obispo, CA 93401
Attention: Amy E. Freilich. Esq.
Email: [email protected]
Developer: CD-CW (Tustin) LLC
c/o Confluent Development, LLC
2215 Market Street
Denver, CO 80205
Attention: H McNeish and Steve Strom
Email: [email protected] and
[email protected]
And with a copy to: CD-CW (Tustin) LLC
c/o Confluent Development, LLC
2215 Market Street
Denver, CO 80205
Attention: Legal Department
Email: [email protected]
And with a copy to:
And for notices of Default only with a
copy to:
Polsinelli
1401 Lawrence Street, Suite 2300
Denver, CO 80202
Attention: Nick McGrath
Email: [email protected]
The Rebecca P. Samberg 2018 Revocable Trust
Dated March 26, 2018
77 Bedford Road
Katonah, NY 10536
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Attention: Aryeh Davis
Email: [email protected]
Any Party may by written notice to the other Party in the manner specified in this Agreement, add additional parties in the United States to receive notice hereunder and/or change the address to which notices to such Party shall be delivered.
18.7 Delay.
18.7.1 Definition of Force Majeure Delay. “Force Majeure Delay” shall mean the occurrence of any of the following events when such event is beyond the control of the First Party and such Party’s officers, directors, employees, contractors, consultants, agents and representatives and is not due to an act or omission of such Party or its officers, directors, employees, contractors, consultants, agents or representatives or other Person for whom such Party may be contractually or legally responsible, which directly, materially and adversely affects the ability of the First Party to meet its non-monetary obligations under this Agreement, including the deadlines imposed by the Schedule of Performance, or the ability of Developer to Complete the Project and which events (or the effect of which events) could not have been avoided by use of commercially reasonable efforts by the Party claiming Force Majeure Delay:
18.7.1.1 Civil Unrest. An epidemic, pandemic, shut-down, widespread disease, blockade, quarantine, rebellion, war, insurrection, act of terrorism, strike or lock-out, riot, act of sabotage, civil commotion, act of a public enemy, freight embargo, or lack of transportation;
18.7.1.2 Unforeseeable Conditions. Reasonably unforeseeable physical condition of the Real Property including the presence of Hazardous Materials;
18.7.1.3 Casualty. Fire, earthquake or other casualty, including liquefaction resulting from an earthquake, in each case only if causing material physical destruction or damage on the Real Property;
18.7.1.4 Litigation. Any lawsuit seeking to restrain, enjoin, challenge or delay any issuance of any of the Entitlements or seeking to restrain, enjoin, challenge, or delay construction of the Project which is diligently defended by the First Party;
18.7.1.5 Change of Law. The passage of a referendum or initiative or any change in law by Governmental Authorities other than the City that results in the inability of such Party to perform its material obligations under this Agreement; provided that the foregoing shall not apply to a Party’s performance regarding the Close of Escrow, which are governed by Articles 7 and 15;
18.7.1.6 Weather. Unusually severe weather conditions not reasonably anticipatable for the City of Tustin, based upon U.S. Weather Bureau climatological reports for the months included plus a report indicating average precipitation, temperature, etc. for the last ten (10) years from the nearest reporting station; Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 114 City of Tustin/Confluent Development Portion of Disposition Area 8
18.7.1.7 Materials Shortage. Inability to secure adequate supplies or types of materials necessary to prosecute construction of the Project hereunder (but not an increase in material costs); and/or
18.7.1.8 Delays Caused by Governmental Authorities other than City. Delay in time to obtain, and comply with, any permits issued or to be issued by any state or federal governmental entities and which are required for construction of the Project.
18.7.2 Limitation. The term “Force Majeure Delay” shall be limited to the matters listed in Section 18.7.1 and specifically excludes from its definition the following matters which might otherwise be considered Force Majeure Delay:
18.7.2.1 Entitlements. The suspension, termination, interruption, denial or failure to obtain or nonrenewal of any of the Entitlements, permits, including Development Permits, license, consent, authorization or approval which is necessary for the development of the Project except for any such matter resulting from a lawsuit or referendum as described in Section 18.7.1.4 or 18.7.1.5;
(a) Foreseeable Changes in Governmental Requirements. Any change in Governmental Requirements by the City or any such change by any Governmental Authority other than the City which was formally proposed or was otherwise reasonably foreseeable at the Close of Escrow;
18.7.2.2 Failure to Perform Obligations. Failure of Developer or any Successor Owner or other Person to perform any obligation to be performed by Developer or any Successor Owner or such other Person under this Agreement as the result of adverse changes in the financial condition of Developer or such Successor Owner or other Person, as applicable;
18.7.2.3 Failure to Provide Financial Security. Failure of Developer or any Successor Owner to provide financial security required by this Agreement when due or to submit evidence of financing of the Project or failure to perform any obligation to be performed by Developer or any Successor Owner or other Person under this Agreement as the result of adverse changes in market conditions;
18.7.2.4 Failure to Submit Required Documentation. Failure of the First Party to submit documentation as and when required by this Agreement;
18.7.2.5 Failure to Submit Basic Concept Plan or Other Plans and Entitlements. Failure of Developer, or a Successor Owner, as applicable, to submit a modification of the Basic Concept Plan, and/or applications for Entitlements or Development Permits required for construction of the Project Improvements, and/or development of the Project.
18.7.2.6 Failure to Maintain Required Insurance. Failure to acquire, maintain and submit evidence of insurance policies as required by Article 11;
18.7.2.7 Failure to Execute Documents. Failure of the First Party to execute documents; and
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18.7.2.8 Other Matters. All other matters not caused by the Second Party and not listed in Section 18.7.1.1 through 18.7.1.8.
18.7.3 Procedure. If any Party (“First Party”) believes that it is entitled to an extension of time due to Force Majeure Delay, it shall notify the other Party (“Second Party”) in writing within ninety (90) calendar days from the date upon which the First Party becomes aware of such Force Majeure Delay, generally describing the Force Majeure Delay and its date of commencement. Upon written request from the Second Party, the First Party shall promptly provide the following information with respect to such Force Majeure Delay: a more detailed description of the Force Majeure Delay, when and how the First Party obtained knowledge thereof, the date the First Party understands the event commenced, the steps the First Party anticipates taking to respond to such Force Majeure Delay, and the estimated delay resulting from such Force Majeure Delay and such other information as the Second Party may reasonably request. The extension for Force Majeure Delay shall be granted or denied in writing by the Second Party in its reasonable discretion in compliance with this Section 18.7. If the First Party fails to notify the Second Party in writing of its request for a given Force Majeure Delay within the ninety (90) calendar days specified above, there shall be no extension for such Force Majeure Delay.
18.7.4 Extension of Time Periods. Except as otherwise specifically set forth in Section 18.7.5, the time periods under this Agreement, including the Schedule of Performance shall be extended for Force Majeure Delay in accordance with this Section 18.7, such that the First Party shall not be in default for an excused Force Majeure Delay; provided that the limitations set forth on the maximum period for Force Majeure Delay in this Agreement shall in all cases apply.
18.7.5 Force Majeure Not Applicable to Certain Matters. The Closing Date and Outside Closing Date shall not be extended by Force Majeure Delay and, except as specifically provided in Section 16.4, the Reversion Action Trigger Dates shall not be extended for Force Majeure Delay. In addition, matters related to Close of Escrow in Articles 7 and 15 and the provisions of Sections 2.2.7.3, 2.7, 6.3, 8.9.3, 8.9.4, 11.2.4, 14.2.1, 14.2.3 or 14.2.4 shall not be subject to extension for Force Majeure Delay.
18.7.6 Limitations on Force Majeure Delay. The outside dates in the Schedule of Performance for commencement and/or Completion of the Active Adult Project Improvements and the AL/MC Project Improvements may be extended individually, provided as to each of the Active Adult Project and the AL/MC Project the aggregate of Force Majeure Delay with respect to such commencement and/or Completion dates shall not exceed twelve (12) months.
18.8 Conflict of Interest.
No appointed or elected official or employee of the City shall have any personal interest, direct or indirect, in this Agreement nor shall any official or employee participate in any decision relating to this Agreement which affects his interests or the interests of any corporation, partnership, or association in which he is directly or indirectly interested. Developer warrants that it has not paid or given and will not pay or give any third person any money or other consideration for obtaining this Agreement, and the City warrants that no City official, officer or employee has a financial interest in this Agreement in violation of California Government Code Section 1090.
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18.9 Non-liability of City Officials and City or Developer Employees.
No natural person serving as an elected or appointed official, representative, employee, agent, consultant, legal counsel or employee of the City shall be personally liable to Developer, any successor or assign of Developer, or any Successor Owner in the event of any Default or breach by the City for any amount which may become due to Developer or Successor Owners on any obligation under the terms of this Agreement or any direct agreement between the City and Developer. No natural person serving as an officer, director, member, shareholder, partner in, representative, agent, consultant, legal counsel or employee of Developer shall be personally liable to the City or any Successor Owner of the City in the event of any Default or breach by Developer for any amount which may become due to the City or any Successor Owner of the City or on any obligation under the terms of this Agreement.
18.10 Inspection of Books and Records.
The City shall have the right at all reasonable times, upon ten (10) Business Days prior written notice but, unless Developer is then in Default, not more than one time per twelve (12) month period during the Term, to inspect the books and records of Developer pertaining to the Project, the Property, the Project Improvements and the areas subject to any encroachment permit, only as pertinent to the purposes of this Agreement.
18.11 Consents and Approvals.
18.11.1 Consent. In any instance in which a Party’s has a right to approve or disapprove of any matter with respect to which such Party’s approval is required by any of the provisions of this Agreement, such approval shall only be effective if given in writing and except as otherwise provided in this Agreement (e.g., where reasonable discretion review and approval is expressly indicated) shall be in the sole discretion of the Party whose approval is required and shall not be unreasonably delayed; provided that nothing in this Agreement shall modify the City’s regulatory authority.
18.11.2 Deemed Submitted. Any matter required by this Agreement to be submitted by Developer to the City shall be deemed submitted upon the submittal to the Deputy City Manager – Real Property or designee, provided that the provisions of this Section shall not amend or modify the requirement to deliver notice pursuant to Section 18.6 whenever notice is provided for in this Agreement.
18.11.3 Action Taken. Following its approval by the City, this Agreement shall be administered by the Deputy City Manager – Real Property or any designee. Except where the terms of this Agreement expressly require the approval of a matter or the taking of any action by the City Council, any matter to be approved by the City shall be deemed approved, and any action to be taken by the City shall be deemed taken, upon the written approval by the City Manager (or designee). The City Manager or designee shall have the authority to issue interpretations with respect to this Agreement and to determine whether any action requires the approval of the City Council. All amendments or modifications of this Agreement shall require the approval of the City Council. All waivers and extensions of time for performance under this Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 117 City of Tustin/Confluent Development Portion of Disposition Area 8
Agreement shall be approved by the City Manager (or designee) unless in the City Attorney’s opinion such action requires a waiver to be approved by the City Council under applicable law.
18.12 Real Estate Commissions.
18.12.1 Developer Representation and Indemnity. The City shall not be liable for any real estate commissions, brokerage fees or finder’s fees which may arise from this Agreement unless due to a broker or other party (other than CBRE) retained by the City. The City has retained CBRE pursuant to a separate agreement which provides that Developer will be responsible for payment of a brokerage commission to CBRE thereunder in connection with the conveyance of the Property by the City to Developer in an amount equal to one (1) percent (1%) of the Purchase Price (“Developer Commission Payment”). For avoidance of doubt, the Developer Commission Payment is not based upon nor does it include any commission payment with respect to all or any portion of the Project Fair Share Contribution. Developer agrees to indemnify and hold the City and the City Parties harmless from any and all Claims arising from or in any way related to any claim by CBRE for the Developer Commission Payment or by any other broker, agent, or finder retained by Developer regarding this Agreement or the sale, lease or development of the Property or any portion thereof. The City represents that it has not engaged any broker, agent, or finder in connection with this Agreement other than CBRE. Developer represents that it has engaged no broker, agent or finder in connection with this Agreement or the transactions identified in this Agreement or the Other Agreements. Developer, on behalf of itself, and its successors and assigns, each Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner (but only with respect to such Person’s acquisition or disposition of the Property owned by such Person or a leasehold interest in such Property) but excluding End Users hereby agrees to indemnify and hold the City and the City Parties harmless from any and all Claims arising from or in any way related to any claim by CBRE for the Developer Commission Payment or by any other broker, agent, or finder retained by Developer regarding this Agreement or the Other Agreements or for the sale or lease of the Real Property or any portion thereof or development of the Project or the transactions identified in this Agreement or the Other Agreements. The provisions of this Section 18.12.1 shall survive the termination of this Agreement.
18.12.2 City Representation. The City represents that except as disclosed in Section 18.12.1, it has engaged no broker, agent, or finder in connection with this Agreement or the transactions identified in this Agreement or the Other Agreements.
18.12.3 Survival. The indemnity set forth in Section 18.12.1 shall survive the termination of this Agreement.
18.13 Date and Delivery of Agreement; Term of Agreement.
Notwithstanding anything to the contrary contained in this Agreement, the Parties intend that this Agreement shall be deemed effective, executed and delivered for all purposes under this Agreement and for the calculation of any statutory time periods based on the date an agreement between the Parties is effective, executed and/or delivered, as of the Effective Date. Subject to the foregoing and the provisions of Article 9, the term of this Agreement (“Term”) shall commence as of the Effective Date and shall terminate as to each portion of the Project and the Real Property Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 118 City of Tustin/Confluent Development Portion of Disposition Area 8
upon the Recording by the City of a Certificate of Compliance as to such portion of the Project and Real Property unless earlier terminated as provided in this Agreement.
18.14 Constructive Notice and Acceptance.
Every Successor Owner and each and every Person claiming by, through or under Developer or any Successor Owner, is and shall be conclusively deemed to have consented and agreed to every provision contained in this Agreement, whether or not any reference to this Agreement is contained in the instrument by which such Person acquired an interest in the Project or the Property.
18.15 Survival of Covenants, Representation and Warranties.
18.15.1 Runs with the Land. The covenants, representations, warranties, and indemnities specified in this Agreement shall survive any investigation made by any Party hereto and the closing of the transactions contemplated hereby for the Term and for such additional period as is set forth in this Agreement. This Agreement and the covenants, representations, warranties, releases and indemnities specified in this shall run with the Real Property and any interest therein, and except as provided in this Agreement, be binding upon Developer, each Successor Owner, unless and until terminated in accordance with the terms of this Agreement, any Recorded Certificate of Compliance or the remaining Other Agreements. Notwithstanding anything contained in this Agreement to the contrary, except for the express provisions contained in the Affordable Housing Declaration, the Quitclaim Deed, the Access Easement Agreement, the Bioswale Easement, the Memorandum of DDA, the Special Restrictions, and the Landscape Installation and Maintenance Agreement and other matters Recorded against the Property or any portion thereof, the obligations, covenants, conditions and restrictions set forth in this Agreement shall not run with that portion of the Real Property Transferred to an End User, and each End User shall take title to that portion of the Real Property conveyed to it free and clear of the lien or charge of this Agreement or any of the obligations, covenants, conditions and restrictions set forth set forth in this Agreement.
18.15.2 Rights of the City to Enforce. The City is the beneficiary of the terms and provisions of this Agreement and of the covenants running with the Property and any interest therein for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided, without regard to whether the City has been, remains or is an owner of any land or interest in the Property, the Development Parcel, the Project. Subject to the terms and conditions of this Agreement and the Other Agreements, the City shall have the right, if this Agreement or any covenants set forth in this Agreement are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and any covenants may be entitled.
18.16 Construction and Interpretation of Agreement.
18.16.1 Construction. The language in all parts of this Agreement shall in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 119 City of Tustin/Confluent Development Portion of Disposition Area 8
for or against any Party. The Parties hereto acknowledge and agree that this Agreement has been prepared jointly by the Parties and has been the subject of arm’s length and careful negotiation over a considerable period of time, that each Party has been given the opportunity to independently review this Agreement with legal counsel, and that each Party has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement shall not be interpreted or construed against the Party preparing it. The provisions of California Civil Code Section 1654 are specifically waived by each Party hereto.
18.16.2 Effect of Invalidity or Unenforceability. If any term or provision of this Agreement, the deletion of which would not modify or affect the receipt of any material benefit by any Party under this Agreement, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby and each other term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. It is the intention of the Parties hereto that in lieu of each clause or provision of this Agreement that is illegal, invalid, or unenforceable, there be added as a part of this Agreement an enforceable clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible.
18.16.3 Conclusivity of Certain Matters. Any matters or facts included in Article 1 shall be conclusively deemed true.
18.16.4 Captions. The captions of the articles, sections and clauses in this Agreement are inserted solely for convenience and under no circumstances are they or any of them to be treated or construed as part of this instrument.
18.16.5 Gender, Singular and Plural. As used in this Agreement and as the context may require, the singular includes the plural and vice versa and the masculine gender includes the feminine and vice versa.
18.16.6 No Merger. Any provision of this Agreement stated to survive the Close of Escrow (or with respect to the Returned Property, the close of escrow) shall be interpreted to mean that such provision shall not merge with any deed conveying the Property or any portion thereof, including the Quitclaim Deed.
18.17 Time of Essence.
Time is of the essence with respect to all provisions of this Agreement in which a definite time for performance is specified; provided that the foregoing shall not be construed to limit or deprive a Party of the benefits of any cure period or Force Majeure Delay expressly provided for in this Agreement.
18.18 Fees and Other Expenses.
Except as otherwise provided in this Agreement, each of the Parties hereto shall pay its own fees and expenses, including attorneys’ fees, experts’ fees and consultants’ fees and costs, in connection with negotiation and preparation of this Agreement and compliance with its terms.
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18.19 No Partnership; Binding Effect.
Nothing contained in this Agreement shall be deemed or construed to create a partnership, joint venture or any other relationship between the Parties hereto other than purchaser/developer and seller/municipality according to the provisions contained in this Agreement or cause the City to be responsible in any way for the debts or obligations of Developer. This Agreement and terms, provisions, promises, covenants, conditions and restrictions contained herein shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors and assigns.
18.20 Compliance with Law. Developer agrees to comply with all laws and requirements now in force, or which may thereafter be in force, of all municipal, county, State and federal authorities, applicable to Developer or pertaining to the Property and the Project Improvements as well as operations conducted thereon.
18.21 No Third-Party Beneficiaries.
This Agreement has been made and entered into solely for the benefit of the Parties to this Agreement and their respective successors and permitted assigns. Nothing in this Agreement confers any rights or remedies on any other Person. Nothing in this Agreement relieves or discharges the obligation or liability of any third Persons to any Parties to this Agreement.
18.22 Counterparts.
This Agreement may be executed in two or more separate counterparts, each of which, when so executed, shall be deemed to be an original. Such counterparts shall, together, constitute and shall be one and the same instrument. This Agreement shall not be effective until the execution and delivery by the Parties of at least one set of counterparts. The Parties agree to recognize execution of this Agreement by email or other electronically transmitted signatures; provided that such execution by email or other electronic transmission shall not be effective unless a manually executed copy of the signature page is promptly sent by U.S. Postal Service, postage prepaid or overnight delivery service or is hand delivered to the Parties or Escrow Holder, as applicable, pursuant to Section 4.4. The Parties hereby authorize each other (and Escrow Holder) to detach and combine original signature pages and consolidate them into a single identical original. Any one of such completely executed counterparts shall be sufficient proof of this Agreement.
18.23 Duplicate Originals, Entire Agreement and Waivers.
18.23.1 Duplicate Originals. This Agreement is executed in three (3) duplicate originals, each of which is deemed to be an original.
18.23.2 Entire Agreement. This Agreement, including the Attachments hereto, together with the Other Agreements, constitute the entire agreement between the Parties with respect to the subject matter hereof. Except as set forth in the last sentence of this Section
18.23.2, this Agreement and the Other Agreements supersede and replace any and all prior agreements, proposed agreements, negotiations and communications, oral or written, relating to the subject matter hereof and contain the entire agreement between the Parties as to the subject matter hereof and any and all prior agreements, understandings or representations between the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 121 City of Tustin/Confluent Development Portion of Disposition Area 8
Parties and/or any Developer Affiliate are hereby terminated and canceled in their entirety. Each Party hereby acknowledges that no other Party hereto, nor its agents or attorneys, have made any promises, representations or warranties whatsoever, expressed or implied, not contained in this Agreement or the Other Agreements, to induce such Party to execute this Agreement, and each Party acknowledges that it has not executed this Agreement in reliance on any such promise, representation or warranty not contained in this Agreement or any Other Agreements. For the avoidance of doubt, this Agreement shall terminate and supersede the ENA, except that this Agreement does not supersede Sections 3.5, 3.6, 4.3, 4.4.3, 4.4.5, 4.4.6, 4.4.7, 4.5.2, 4.5.3, 4.5.4,
6.3.2, 6.9.3, 11.1, 11.10 and Exhibit B, including Section 1.1.3 thereof, which shall remain in effect with respect to claims arising during or related to the term of the ENA and the provisions of 4.5.2,
4.5.3 and Exhibit B thereof (including Section 1.1.3 of Exhibit B) which shall remain in effect and shall not merge with any deed.
18.23.3 No Waiver. No waiver of any provision or consent to any action under this Agreement shall constitute a waiver of any other provision or consent to any other action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a Party to provide a waiver in the future except to the extent specifically set forth in writing. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities for the City and Developer and all amendments hereto must be in writing and signed by the appropriate authorities of the City and Developer.
18.24 Confidentiality.
18.24.1 Public Records Act; Confidentiality Exceptions. Subject to the provisions of the Public Records Act, which governs the City’s use and disclosure of its agreements and records, the City and Developer hereby agree that each shall keep confidential information provided by the other and denominated as confidential and will not disclose any such information to any Person without obtaining the prior written consent of the other Party, except that (i) the City shall have the right to disclose any information contained in any third party reports produced or obtained by Developer and required to be disclosed by it pursuant to law, (ii) Developer shall have the right to disclose any Developer Excluded Information, (iii) the City shall have the right to disclose any City Excluded Information, (iv) Developer shall have the right to disclose to its consultants, employees, professional advisors, existing and prospective investors and lenders, members, and their respective consultants, employees, professional advisors and members, any information to the extent necessary or desirable in connection with Developer’s due diligence on the Development Parcel and performance of its obligations under this Agreement and the Other Agreements, (v) City shall have the right to disclose to its officials, employees and the City retained consultants, attorneys and representatives all information received by it from Developer as required to perform its obligations under this Agreement and the Other Agreements and (vi) either Party shall have the right to disclose any information to the extent that it is legally required or compelled to do so provided that (to the extent permitted) it provides the other Party with prior notice of such disclosure obligation and cooperates with such other Party (at no cost or liability to the cooperating Party) in any attempts to obtain confidential treatment of such disclosed information. The Parties’ obligations pursuant to this Section 18.24 shall terminate as to each portion of the Project and the Real Property upon the Recording by the City of a Certificate of Compliance as to such portion of the Project and Real Property or upon the earlier of the termination of this Agreement.
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18.24.2 Financial Information. Developer shall identify with specificity any submitted financial documents (including equity financing documents and Guarantor information) which Developer wants the City to maintain as confidential documents and a statement as to why the request is consistent and complies with specific provisions of the Public Records Act. The City’s staff, agents, negotiators and consultants may review the statements as necessary as long as such parties agree to maintain the confidentiality of such statements.
Developer acknowledges that documents or other “records” (as that term is defined in the Public Records Act) related to the Project may be required to be made public upon request. California Government Code Section 7922.525 provides that “[p]ublic records are open to inspection at all times during the office hours” of the City. If Developer believes that any documents or other records provided to the City are exempt from the Public Records Act, Developer shall state in writing at the time of submittal of the documents or records the legal basis for Developer’s belief that such documents or other records are exempt from the Public Records Act, Developer and City shall meet and confer about exemption of such documents or other records, and City shall evaluate the asserted basis for the exemption(s) in good faith. If City determines that the requested documents or other records qualify for an exemption, the City shall conspicuously mark the documents and other records “Confidential”, and the City will not make the records public except as required by law or by court order. The City’s failure to correctly determine the applicability or inapplicability of an exemption to the Public Records Act shall not constitute a breach of this Agreement.
18.24.3 Cooperation; Indemnity. In the event that the City obtains a request pursuant to the provisions of the Public Records Act to disclose any of Developer’s information which the City is required to keep confidential pursuant to the terms of this Agreement, the City shall provide Developer with prompt written notice thereof and the City and Developer shall cooperate at Developer’s sole cost and expense to seek to avoid disclosure of such matters to the extent legally permissible pursuant to the provisions of the Public Records Act. Developer agrees to defend, indemnify and hold harmless the City and the City Parties from any claims for damages, costs, court costs, awards of attorney fees, or related claims in all lawsuits and writ proceedings seeking to make records public that Developer has marked “Confidential” hereunder and requests the City to protect as confidential. The City shall promptly notify Developer of any claim made against City of an alleged violation of the Public Records Act resulting from document(s) that Developer elected to mark as “Confidential” so that Developer may evaluate such claim and its determination of the confidentiality of such document(s). In no event shall the City be required to maintain as confidential any materials required by law to be disclosed by the City, or by Developer, or otherwise disclosed by Developer as part of its public filings.
18.25 Proprietary and Governmental Roles; Actions by Parties.
Except where expressly provided otherwise in this Agreement, the capacity of the City in this Agreement shall be as owner, lessor, assembler, redeveloper and/or seller of property only (“Proprietary Capacity”), and any obligations or restrictions imposed by this Agreement on the City, shall be limited to that capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect the exercise by the City of its governmental authority with respect to any matter related to this Agreement which shall include the regulation and entitlement of the Development Parcel and/or Project Improvements pursuant to the Entitlements, Development Permits and/or Governmental Requirements, including enacting laws, inspecting structures, Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx 123 City of Tustin/Confluent Development Portion of Disposition Area 8
reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions of each pursuant to federal, State or local law (“Governmental Capacity”). In addition, nothing in this Agreement shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City in its Governmental Capacity under applicable Governmental Requirements.
18.26 Performance of Acts on Business Days.
In the event that the final date for payment of any amount or performance of any act under this Agreement falls on a day other than a Business Day, such payment may be made or act performed on the next succeeding Business Day.
[signatures commence on following page]
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IN WITNESS WHEREOF, the City and Developer have signed this Agreement as of the date first set forth above.
Dated: CITY OF TUSTIN:
By:
Aldo E. Schindler
City Manager
ATTEST:
By:
Erica N. Yasuda
City Clerk
APPROVED AS TO FORM
By:
David Kendig
City Attorney
Hepner & Myers LLP
Special Real Estate Counsel to the City
By:
Amy E. Freilich
DEVELOPER:
CD-CW (TUSTIN) LLC,
a Colorado limited liability company
By:
Name: Marshall Burton
Title: Chief Executive Officer
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JOINDER OF ESCROW HOLDER
The undersigned is joining this Agreement to evidence its agreement to receive, hold and disburse the funds in accordance with the terms of this Agreement and otherwise to comply with the escrow instructions set forth in this Agreement.
FIRST AMERICAN TITLE INSURANCE
COMPANY
By:
Name:
Title:
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LIST OF ATTACHMENTS
ATTACHMENT 1 GLOSSARY OF DEFINED TERMS
ATTACHMENT 2A LEGAL DESCRIPTION OF DEVELOPMENT PARCEL
ATTACHMENT 2B DEPICTION OF DEVELOPMENT PARCEL AND LOCATION ATTACHMENT 3 SITE PLAN
ATTACHMENT 4 TITLE COMMITMENT
ATTACHMENT 5 FORM OF CITY ESTOPPEL FOR TRANSFERS, TRANSFERS
OF CONTROL
ATTACHMENT 6 INTENTIONALLY OMITTED
ATTACHMENT 7 SCHEDULE OF PERFORMANCE
ATTACHMENT 8 SCOPE OF DEVELOPMENT
ATTACHMENT 9 INTENTIONALLY OMITTED
ATTACHMENT 10 LIST OF ENVIRONMENTAL REPORTS AND STATEMENTS ATTACHMENT 11 FORM OF QUITCLAIM DEED
ATTACHMENT 12 FORM OF MEMORANDUM OF DDA
ATTACHMENT 13 FORM OF VERTICAL IMPROVEMENTS COMMENCEMENT
DATE CERTIFICATE
ATTACHMENT 14A FORM OF GUARANTY
ATTACHMENT 14B FORM OF GUARANTOR ORIGINAL CERTIFICATE
ATTACHMENT 14C FORM OF GUARANTOR DATE DOWN CERTIFICATE
ATTACHMENT 14D FORM OF GUARANTY LEGAL OPINION
ATTACHMENT 14E FORM OF REAFFIRMATION OF GUARANTY
ATTACHMENT 14F FORM OF REAFFIRMATION OF LEGAL OPINION
ATTACHMENT 15A FORM OF EQUITY INVESTOR ORIGINAL CERTIFICATE ATTACHMENT 15B FORM OF EQUITY INVESTOR DATE DOWN CERTIFICATE ATTACHMENT 15C FORM OF INITIAL EQUITY INVESTOR EQUITY
COMMITMENT
ATTACHMENT 15D INTENTIONALLY OMITTED
ATTACHMENT 15E FORM OF CONFLUENT ADDITIONAL EQUITY
COMMITMENT
ATTACHMENT 16 FORM OF CERTIFICATE OF COMPLIANCE
ATTACHMENT 17A FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT ATTACHMENT 17B FORM OF TRANSFEREE CERTIFICATE
ATTACHMENT 18 FORM OF CITY REAFFIRMATION CERTIFICATE
ATTACHMENT 19A FORM OF DEVELOPER ORIGINAL CERTIFICATE
ATTACHMENT 19B FORM OF DEVELOPER DATE DOWN AND
REAFFIRMATION CERTIFICATE
ATTACHMENT 20 FORM OF DECLARATION OF SPECIAL RESTRICTIONS ATTACHMENT 21 FORM OF LANDSCAPE INSTALLATION AND
MAINTENANCE AGREEMENT
ATTACHMENT 22 FORM OF BILL OF SALE
ATTACHMENT 23 MAXIMUM TAX BURDEN SCHEDULE
ATTACHMENT 24 FORM OF SUBORDINATION AGREEMENT
ATTACHMENT 25 FORM OF SLA COVENANT
ATTACHMENT 26 FORM OF AFFORDABLE HOUSING DECLARATION
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ATTACHMENT 27 FORM OF TRANSFERABLE PRODUCTS CERTIFICATION Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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ATTACHMENT 1
GLOSSARY OF DEFINED TERMS
For purposes of this Agreement, the following capitalized terms shall have the following meanings:
“Access Easement Agreement” shall mean that certain Access Easement Agreement to be executed and delivered by the City and Developer and Recorded against the Real Property at the Close of Escrow, in substantially the form and substance of the Access Easement Agreement attached to the Development Agreement as Exhibit F.
“Accrue”, “Accrued” or “Accruing” shall mean, with respect to any Claim, the date and time at which such Claim arises as a matter of law and could then or thereafter be asserted by any Person.
“Action” shall have the meaning set forth in Section 18.2. “Active Adult Project Certificate of Compliance” shall have the meaning set forth in Section 9.2.
“Active Adult Project” shall have the meaning set forth in Section 1.3.2. “Active Adult Project Improvements” shall have the meaning set forth in Section 1.3.2. “Active Adult Project Horizontal Improvements” shall mean the Grading Work and below grade infrastructure improvements and utilities and utility systems required to be constructed or installed on or in connection with the development of the Active Adult Project on the Active Adult Real Property as required by the Approved Plans which may include (i) all public and private streets, roadways, drives, bike paths, alleyways, sidewalks, medians, including the Private Drives and Sidewalks, landscaping, including Landscape Improvements, courtyards, hardscaping, fountains and parking structures and parking lots within the Real Property and all traffic and circulation mitigation to support the Project; (ii) all utilities and utility systems required for the Project from the mainline utility systems constructed in adjoining streets to each building, structure and other improvement requiring such utilities, including domestic and reclaimed water; sewer, telemetry, utilities (electricity, gas, telephone, cable, telecommunications, etc.), and other infrastructure normally required to service a new High Quality Project; and (iii) all improvements required as “Public Benefit Improvements” in the Development Agreement and all sidewalks within the Boundary Landscape Area; and shall include all improvements required by the Tentative Parcel Map, the Entitlements, Development Permits conditions and all other Governmental Requirements as a condition to development of the Project, all as generally described in Attachment 8 and depicted on Attachment 3.
“Active Adult Project Vertical Improvements” shall mean all buildings, structures and other improvements other than the Horizontal Improvements to be constructed or installed on the Active Adult Real Property as part of the Active Adult Project, as described in Section 1.3.2 and the Scope of Development and as further depicted on the Site Plan.
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“Active Adult Real Property” shall have the meaning set forth in Sections 1.2.1 and 1.2.3. “Active Negligence” shall mean an affirmative act performed negligently and not a failure to act.
“Additional ALTA Coverage” shall have the meaning set forth in Section 6.4. “Additional Equity Commitment” shall have the meaning set forth in Section 4.6.2.3. “Additional Equity Investor” shall have the meaning set forth in Section 4.6.2.3. “Affordable Housing Declaration” shall have the meaning set forth in Section 7.2.1.1(iv). “Agreement” shall mean this Tustin Legacy Disposition and Development Agreement including all Attachments attached hereto.
“AL/MC” shall have the meaning set forth in Section 1.1.9. “AL/MC Project” shall have the meaning set forth in Section 1.3.3. “AL/MC Project Certificate of Compliance” shall have the meaning set forth in Section
9.2. “AL/MC Project Improvements” shall have the meaning set forth in Section 1.3.3. “AL/MC Project Horizontal Improvements” shall mean the Grading Work and below grade infrastructure improvements and utilities and utility systems required to be constructed or installed on or in connection with the development of the AL/MC Project on the AL/MC Real Property as required by the Approved Plans which may include (i) all public and private streets, roadways, drives, bike paths, alleyways, sidewalks, medians, including the Private Drives and Sidewalks, landscaping, including Landscape Improvements, courtyards, hardscaping, fountains and parking structures and parking lots within the Real Property and all traffic and circulation mitigation to support the Project; (ii) all utilities and utility systems required for the Project from the mainline utility systems constructed in adjoining streets to each building, structure and other improvement requiring such utilities, including domestic and reclaimed water, sewer, telemetry, utilities (electricity, gas, telephone, cable, telecommunications, etc.), and other infrastructure normally required to service a new High Quality Project; and (iii) all improvements required as “Public Benefit Improvements” in the Development Agreement and all sidewalks within the Boundary Landscape Area; and shall include all improvements required by the Tentative Parcel Map, the Entitlements, Development Permits conditions and all other Governmental Requirements as a condition to development of the Project, all as generally described in Attachment 8 and depicted on Attachment 3.
“AL/MC Project Vertical Improvements” shall mean all buildings, structures and other improvements other than the Horizontal Improvements to be constructed or installed on the AL/MC Real Property as part of the AL/MC Project, as described in Section 1.3.3 and the Scope of Development and as further depicted on the Site Plan.
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“AL/MC Real Property” shall have the meaning set forth in Sections 1.2.1 and 1.2.3. “ALTA Policy” shall mean an ALTA extended coverage owner’s policy of insurance for the Property as such term is used in Section 6.2.
“Approved Equity Investor” shall have the meaning set forth in Section 4.6.2.3. “Approved Plans” shall mean, collectively: (i) the Entitlements which govern development of the Project Improvements on the Real Property and Development Permits, including encroachment permits, necessary for development of the Project, including approval of plans by the City pursuant to the Design Review process; (ii) the Basic Concept Plan and any modification thereto approved by the City pursuant to Section 8.5; and (c) construction level drawings approved by the City as required to obtain the Development Permits. “Area Median Income” shall mean the area median income, as adjusted for household size, for Orange County, established periodically by HUD and published in the Federal Register.
In the event HUD ceases to publish an established Area Median Income as aforesaid, AMI shall mean the then current area median income as determined by HCD. If such income standards are no longer in existence, the City will designate another reasonably comparable method of computing Area Median Income.
“Assignment Agreement” shall have the meaning set forth in Section 2.2.4.1. “Attachment” shall mean all Attachments to this Agreement, including any and all exhibits and attachments thereto as required thereby.
“Bankruptcy Proceeding” shall mean any proceeding involving Developer under the United States Bankruptcy Code or any similar state or federal statute for the relief of debtors. “Base Closure Law” shall have the meaning set forth in Section 1.1.1. “Basic Concept Plan” shall mean the design, phasing, product mix and other related submittals by Developer to the City on or before the Effective Date for purposes of obtaining Entitlements approvals and to satisfy the City’s design approval rights as set forth in Section 8.5 and shall include the phasing and proposed product mix as set forth in the Phasing and Implementation Plan, Site Plan and the Scope of Development. “Best’s” shall have the meaning set forth in Section 11.1.1. “Bill of Sale” shall have the meaning set forth in Section 7.2.1.1(xii). “Bioswale Easement” shall mean that certain Bioswale Easement to be executed and delivered by Developer and Recorded against the Real Property at the Close of Escrow, in substantially the form and substance of the Bioswale Easement Agreement attached to the Development Agreement as Exhibit G.
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“Boundary Landscape Area” shall mean that portion of the Real Property and the City Property (as defined in the Landscape Installation and Maintenance Agreement), in each case generally between the back of curb on each public street adjoining the Real Property and the buildings on the Real Property, as more particularly depicted on Exhibit C to the Landscape Installation and Maintenance Agreement.
“Budget Statement” shall mean a document delivered by Developer to the City in the format approved by the City for the Financial Plan, and which shows, as of the end of the immediately preceding quarter, (i) the fees paid through the end of such prior quarter and estimated fees to be paid prior to Completion of the Project in connection with the development and construction of the Project and (ii) out-of-pocket costs spent through the end of such prior quarter and estimated out-of-pocket costs to be paid prior to Completion of the Project, as applicable for each of the major categories of hard and soft costs for the development and construction of the Project.
“Business Day(s)” shall mean any day other than Saturday, Sunday and each City observed legal holiday.
“CEQA” shall mean the California Environmental Quality Act and implementing regulations and guidelines, contained in California Public Resources Code Section 21000 et seq., and California Code of Regulations, title 14, Section 15000 et seq., respectively. “Certificate of Compliance” and “Certificates of Compliance” shall have the meaning set forth in Section 9.2.
“CFD 18-01 Zone 5” shall mean a new zone associated with CFD 18-01 with respect to and affecting the Property to be formed by the City prior and as a condition to Close of Escrow. “CFD 18-01 Zone 5 Special Tax” shall mean a special tax levied by the City for CFD 1801 Zone 5 of the District, the proceeds of which shall be used by the City to fund a portion of City essential services, including but not limited to police protection services, fire protection services, ambulance and paramedic services, recreation program services, street sweeping, traffic signal maintenance and the maintenance of City-owned parks, parkways and open spaces, lighting, flood control and storm drain services and other City services and facilities at Tustin Legacy. “City” shall mean the City of Tustin and each assignee or successor to the City’s rights, powers and responsibilities as described in Section 1.4.1; provided that when in this Agreement the term “City and its Governmental Successors” is used, the term “City” shall be deemed to mean solely the City of Tustin.
“City Attorney” shall mean the individual appointed by the City Council as “City Attorney.”
“City Closing Conditions” shall have the meaning set forth in Section 7.2.2. “City Code” shall mean the Tustin City Code for the City of Tustin, California, as the same may be amended from time to time.
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“City Costs Deposit” shall have the meaning set forth in Section 1.8.2. “City Council” shall mean the City Council of the City of Tustin which serves as the City’s legislative body.
“City Cure Period” shall have the meaning set forth in Section 15.3.1. “City Estoppel” shall have the meaning set forth in Section 2.5. “City Excluded Information” shall mean information that is (i) known by the City prior to the disclosure thereof by Developer or its officers, employees, agents, attorneys, affiliates, representatives, contractors, successors or assigns; (ii) developed by or on behalf of the City without the use of any confidential information provided by Developer or its officers, employees, agents, attorneys, affiliates, representatives, contractors, successors or assigns; (iii) disclosed to the City by a third party other than Developer or any of its officers, employees, agents, attorneys, affiliates, representatives or contractors; or (iv) known to the public through no act or fault of the City in violation of this Agreement.
“City Hall” shall mean the seat of government for the City of Tustin, presently located at 300 Centennial Way, Tustin, California.
“City Indemnified Parties” shall mean the City, the Successor Agency to the Tustin Community Redevelopment Agency, the Tustin Housing Authority, the Tustin Finance Authority, and their respective elected and appointed officials, employees, agents, representatives, attorneys, affiliates, consultants, contractors, successors and assigns. “City Inspections” shall have the meaning set forth in Section 16.5. “City Lien” shall have the meaning set forth in Section 16.2. “City Manager” shall mean Mr. Aldo E. Schindler or his successor in such capacity, or other designee as identified in writing by the City Manager. “City Premium” shall mean the premium attributed to the so-called standard coverage or CLTA coverage portion of the ALTA Policy in the face amount of the Purchase Price. “City Released Parties” shall mean the City, the Successor Agency to the Tustin Community Redevelopment Agency, the Tustin Housing Authority, the Tustin Finance Authority, and their respective elected and appointed officials, employees, agents, representatives, attorneys, affiliates, consultants, contractors, successors and assigns. “City Representatives” shall have the meaning set forth in Section 3.3.7. “City Title Policy” shall have the meaning set forth in Section 6.5. “City’s Knowledge” shall have the meaning set forth in Section 3.3.7.
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“Claim” or “Claims” shall mean any and all claims, actions, causes of action, demands, orders, or other means of seeking or recovering losses, damages, liabilities, costs, expenses (including attorneys’ fees, fees of expert witnesses, consultants’ fees and court and litigation costs), costs and expenses attributable to compliance with judicial and regulatory orders and requirements, fines, penalties, liens, taxes, monetary payment or reimbursements or any other type of compensation of any kind whatsoever, direct or indirect, known or unknown, foreseen or unforeseen.
“Class “A” Operator” shall mean a nationwide or regional operator that shall operate the Active Adult Project and/or AL/MC Project upon completion thereof and that: (i) has at least ten (10) years’ experience in the operation and management of comparable high-quality senior housing projects, including active adult and/or independent living, assisted living, memory care of similar quality, scale and complexity to the applicable Project and having amenities and services comparable to those contemplated for the Project; and (ii) has demonstrated experience in the operation and management of rental housing projects containing below-market-rate or incomerestricted units, and has maintained a satisfactory record of compliance with all applicable federal, state and local fair housing, nondiscrimination, affordability and other regulatory requirements applicable to such projects; and (iii) possesses, and shall maintain throughout its operation of the applicable Project, all licenses, permits, certifications and other governmental approvals required by applicable law to operate the applicable Project, and is in good standing with all applicable federal, state and local governmental and regulatory authorities; and (iv) has demonstrated sufficient financial strength, organizational capacity, management expertise and staffing to operate a project of the size, quality and complexity contemplated hereby. “Close of Escrow” or “Closing” shall mean the close of escrow for the Property and the transfer of fee title to the Property by the City to Developer pursuant to the Quitclaim Deed, and execution and, where applicable, Recording of the Other Agreements and additional documents associated therewith, as more fully set forth in Article 7, which shall take place on the Closing Date.
“Closing Conditions” shall mean the Developer Closing Conditions and the City Closing Conditions.
“Community Development Department” shall mean the Community Development Department of the City of Tustin.
“Complete”, “Completed” and “Completion” shall mean the point in time when all of the following shall have occurred with respect to the Active Adult Project or the AL/MC Project: (i) the Active Adult Project Improvements and/or the AL/MC Project Improvements, as applicable, have been completed in accordance with this Agreement in a good and workmanlike manner and substantially in accordance with the Approved Plans and specifications for each; (ii) the issuance of a final certificate of occupancy by the City for the applicable Project Improvements, or, to the extent a certificate of occupancy is not required by the City for such Project Improvements, as applicable, the equivalent final inspection, signoff or other permit activity with respect to such improvements has been issued by the City and/or any other Governmental Authority with jurisdiction over such Project Improvement, (iii) Recording of a Notice of Completion pursuant to Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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California Civil Code Section 8182 in each case by an “owner” as defined in Section 8182(e) with respect to both: (x) private improvements and (y) public improvements constructed by Developer any Successor Owner, or any such Person’s contractor, but not with respect to other public improvements, (iv) a certification by the Project Architect that such Project Improvements (with the exception of minor “punch list” items) have been completed in a good and workmanlike manner and substantially in accordance with the Approved Plans and specifications; and (v) all contractors, subcontractors, laborers, suppliers, architects, and engineers who performed work on the Active Adult Project and/or AL/MC Project, as applicable, either (x) shall paid in full and shall have executed final unconditional lien waivers or (y) any Construction Liens that have been Recorded or stop notices that have Recorded or delivered in connection with the Active Adult Project or the AL/MC Project, as applicable, have been paid, settled or otherwise extinguished, discharged, released, waived, bonded around or insured against, or (z) the statutory period for filing liens or stop notices with respect to the applicable Project Improvements shall have expired without any liens or stope notices being filed.
“Conditions Precedent” shall mean the conditions precedent to execution and Recording by the City of each Certificate of Compliance which are, as to the Active Adult Project, set forth in Section 9.3.1 and as to the AL/MC Project are set forth in Section 9.3.2. “Confluent” shall have the meaning set forth in Section 1.3.1. “Construction Liens” shall have the meaning set forth in Section 8.11.6. “Construction Loan” shall mean, with respect to the Project a loan made by a Permitted Mortgagee and that will be secured by a Permitted Mortgage on the Property, the proceeds of which are required to be used by Developer only to entitle, develop, and construct all or a portion of the Project Improvements and to pay other Development Costs for Project. “Control”, “Controlled” or “Controlling”, as used with respect to any Person, shall mean the possession, directly or indirectly (including through one or more intermediaries), of the current power to direct or cause the direction of the management and policies of such Person, including through the ownership or control of voting securities, partnership interests, membership interests, or other equity interests. Notwithstanding the foregoing, (i) the right of a Person to participate directly or indirectly (including through one or more intermediaries) in significant management decisions of another Person, without more, does not constitute “Control” if such Person with the right to participate in decisions does not also possess, directly or indirectly (including through one or more intermediaries), the current ability to direct or cause the direction of the management and policies of such other Person and (ii) the fact that a Person acts as the Manager does not without more constitute “Control”. Without limiting the generality of the foregoing, it shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights granted to all equity holders in the corporation or limited liability company. It shall be a presumption that control with respect to other types of entities such as a partnership, trust, other entity or association, is the possession by a Person, indirectly or directly, of the power to direct or cause (by such Person’s sole action) the direction of the management or policies of the controlled entity.
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“Controlling Person” shall mean, as to any Person, any other Person who Controls the Person in question. Notwithstanding the foregoing, if a Person has the right to participate directly or indirectly (including through one or more intermediaries) in significant management decisions of Developer, such Person shall not be deemed to be a Controlling Person of Developer unless such Person also possesses, directly or indirectly (including through one or more intermediaries), the power to direct or cause the direction of the management and policies of Developer. “Costs” shall have the meaning set forth in Section 18.2. “CPL Policy” shall have the meaning set forth in Section 11.1.4. “DDA Transaction Expenses” shall mean the City’s predevelopment, negotiation and implementation costs incurred in connection with this Agreement, the Other Agreements, the Active Adult Project and the AL/MC Project and all related instruments and documents prepared in connection with the transaction, (i) the City’s staff costs attributable to the Project, (ii) fees, expenses and costs of third-party consultants, legal counsel (including, without, limitation, fees, expenses and costs of the City Attorney and outside legal counsel), financial advisors, engineers, appraisers and environmental and other consultants incurred by the City, and (iii) any other expenditures incurred by the City in connection with the implementation of the transaction described in this Agreement and the Other Agreements, the implementation and termination of the ENA and the Project, the drafting, negotiation, execution, implementation and, if applicable, amendment or termination of this Agreement and the Other Agreements (including any requested modification to thereto or to the attachments thereto; the preparation of City Estoppels); the review and approval of requested Transfers, Transferees, Mortgages and Mortgagees, Subordination Agreement and documentation submitted by Developer or any proposed Transferee or Mortgagee in connection therewith), and other acts carried out in connection with Project, this Agreement or the Other Agreements whether Accrued prior to or following the Effective Date and continuing for the period described in Section 1.8, provided that the same shall not include fees or deposits required of Developer for processing entitlement applications or complying with the provisions of CEQA or its State CEQA implementing regulations which shall be separately payable by Developer pursuant to the Development Agreement, or if the Development Agreement is not then in effect, pursuant to Sections 1.8.5 and 8.4.7.
“Decision” shall have the meaning set forth in Section 18.2. “Default” shall mean a Potential Default and/or Material Default. “Default Notice” shall have the meaning set forth in Section 14.1. “Default Rate” shall mean an interest rate of ten percent (10%) per annum, compounded annually, but in no event in excess of the maximum legal rate. “Defaulting Party” shall have the meaning set forth in Section 14.1. “Defended Party” shall have the meaning set forth in Section 10.8. “Defending Party” shall have the meaning set forth in Section 10.8.
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“Design Guidelines” shall mean the design guidelines for the City contained in the Neighborhood D South Design Guidelines, the City Code and the Specific Plan. “Design Review” shall mean the site plan and design review approvals as required by the City Code and the Specific Plan, which shall be part of the Entitlements. “Developer” shall mean Initial Developer and following any Transfer pursuant to a Permitted Transfer or any other Transfer authorized by this Agreement and approved by the City pursuant to Article 2 each Transferee that is a Successor Owner with respect to all of a Developer’s interest in the Transferable Interests.
“Developer Affiliate” shall mean (a) with respect to Initial Developer, any Person that Controls, is under common Control with, or is Controlled by Confluent and for which Confluent or another Person Controlled by Confluent or Marshall Burton is Manager and (b) with respect to any Responsible Developer, any Person that directly or indirectly Controls, is Controlled by or is under common Control with the Controlling Person of the Responsible Developer. “Developer Closing Conditions” shall have the meaning set forth in Section 7.2.1. “Developer Closing Payment” shall have the meaning set forth in Section 4.3.3. “Developer Commission Payment” shall have the meaning set forth in Section 18.12.1. “Developer Date Down and Reaffirmation Certificate” shall have the meaning set forth in Section 2.2.4.2.
“Developer Excluded Information” shall mean information that is (i) known by Developer prior to the disclosure thereof by the City or its elected and appointed officials, employees, agents, attorneys, affiliates, representatives, contractors, successors or assigns; (ii) developed by or on behalf of Developer without the use of any confidential information provided by the City or its officers, employees, agents, attorneys, affiliates, representatives, contractors, successors or assigns; (iii) disclosed to Developer by a third party other than the City or any of its elected and appointed officials, employees, agents, attorneys, affiliates, representatives or contractors; or (iv) known to the public through no act or fault of Developer in violation of this Agreement.
“Developer Insolvency Event” shall have the meaning set forth in Section 2.2.6. “Developer Knowledge Parties” shall mean with respect to the Initial Developer, the Key Employees of Initial Developer, and following any Transfer, shall mean individuals in positions of responsibility and involvement in the Project at the time any representations and warranties are to be made who hold positions of authority commensurate with the positions held by the Developer Knowledge Parties of the Initial Developer as of the Effective Date. “Developer Original Certificate” shall have the meaning set forth in Section 4.6.2.1. “Developer Releasing Party” shall have the meaning set forth in Section 4.5.3.
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“Developer Representatives” shall have the meaning set forth in Section 5.1. “Developer Title Endorsements” shall have the meaning set forth in Section 6.4. “Developer’s Knowledge” shall have the meaning set forth in the last paragraph of Section
3.1 (following Section 3.1.16).
“Development Agreement” shall have the meaning set forth in Section 1.6.2. “Development Costs” shall have the meaning set forth in Section 8.2. “Development Parcel” shall have the meanings set forth in Section 1.2.1. “Development Permits” shall mean all ministerial permits, certificates and approvals which may be required by the City or any other Governmental Authority for the development and construction of the Project Improvements, including any engineering permits, grading permits, parking structure permits, construction permits, encroachment permits, demolition permits, building permits or other permits as may be necessary pursuant to Chapter 4 of the Specific Plan and/or the City Code and which shall be obtained and maintained in each case in accordance with this Agreement, the Development Agreement, the Entitlements and any required environmental mitigation.
“Disapproved Exception” shall have the meaning set forth in Section 6.3. “District” shall have the meaning set forth in Section 8.7.3.1. “DTSC” shall mean the California Department of Toxic Substances Control. “Due Diligence Information” shall mean any and all information or documentation relating to the Development Parcel furnished to Developer by the City, or its elected and appointed officials, employees, agents, attorneys, affiliates, representatives, contractors or consultants or obtained by Developer with respect to the Property or the Project prior to the Close of Escrow. “Effective Date” shall have the meaning set forth in the first paragraph of this Agreement and if no date is set forth in that location shall be the date of City Council approval of this Agreement (even if executed subsequent to such date).
“ENA” shall have the meaning set forth in Section 1.1.8. “ENA Extension Deposits” shall mean the amount of Nine Hundred and Fifty Thousand Dollars ($950,000.00) paid to the City by Developer as Extension Deposits pursuant to the ENA.
The ENA Extension Deposits are nonrefundable under all circumstances, but shall in all cases be applicable to the Purchase Price.
“ENA Expenses Deposit” shall have the meaning set forth in Section 1.8.1.
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“End User” shall mean any (i) utility or Governmental Authority with respect to any transfer of portions of the Real Property or grants of easements affecting the Real Property desirable for the development of the Real Property, including the City or any lighting or landscaping district and (ii) for the term in which such contract is in effect, any natural person that has a contractual right to inhabit and does inhabit a Residential Unit or Room. “Entitlements” shall mean the Development Agreement and all discretionary land use approvals and entitlements legally required by the City or any other Governmental Authority as a condition of subdivision of the Real Property or any portion thereof, development of the Real Property and/or construction of the Project Improvements and shall include those specific Entitlements described in Section 8.4.2, but specifically excluding Development Permits. “Environmental Agency” shall mean any federal, State, or regional agency with applicable jurisdiction over the environmental conditions of the Real Property. “Environmental Claims” shall have the meaning set forth in Section 10.2. “Environmental Laws” shall mean any federal, State, regional or local laws, ordinances, rules, regulations, requirements, orders, directives, guidelines, or permit conditions, in existence as of the Effective Date or as later enacted, promulgated, issued, modified or adopted, regulating or relating to Hazardous Materials, and all applicable judicial, administrative and regulatory decrees, judgments and orders and common law, including those relating to industrial hygiene, public safety, human health, or protection of the environment, or the reporting, licensing, permitting, use, presence, transfer, treatment, analysis, generation, manufacture, storage, discharge, Release, disposal, transportation, Investigation or Remediation of Hazardous Materials.
Environmental Laws shall include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.) (“CERCLA”); the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901 et seq.) (“RCRA”); the federal Water Pollution Control Act, as amended, (33 U.S.C. Section 1251 et seq.); the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et seq.); the Hazardous Substances Account Act (Part 2 commencing with Section 78000 of Division 45 of the California Health and Safety Code); Chapter 6.5 commencing with Section 25100 (Hazardous Waste Control) and Chapter 6.7 commencing with Section 25280 (Underground Storage of Hazardous Substances) of the California Health and Safety Code; and the California Water Code, Sections 13000 et seq. “Environmental Matters” shall mean (i) the environmental condition of the Development Parcel; (ii) the compliance of the Development Parcel with Environmental Laws; (iii) the existence, Release, threatened Release, presence, storage, treatment, transportation or disposal of any Hazardous Materials at any time on, in, under, or from, the Development Parcel or any current or future improvement thereon or any portion thereof, and/or (iv) Claims of or acts or omission to act of any Governmental Authority or any other third party arising or resulting directly or indirectly from or related to any actual, threatened, or suspected Release of a Hazardous Material on, in, under, from, about, or adjacent to the Development Parcel or any current or future improvement thereon, including any Investigation or Remediation at or about the Development Parcel or any current or future improvement thereon; provided that if the property in question is Returned Property, the foregoing shall apply as to the Returned Property only.
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“Equity Commitment” shall have the meaning set forth in Section 4.6.2.3. “Equity Investor” shall mean one or more other Persons selected by Developer and approved by the City in its sole discretion, to provide equity funding for the Project and which has Net Worth and Liquid Assets, as determined by the City in its sole discretion, to fund all Development Costs for the Project as described in the last Financing Plan approved by the City for the Project.
“Equity Investor Date Down Certificate” shall have the meaning set forth in Section
2.2.4.3. “Equity Investor Original Certificate” shall have the meaning set forth in Section
4.6.2.3. “Escrow” shall have the meaning set forth in Section 4.4. “Escrow Holder” shall mean First American Title Insurance Company. “Evidence of Equity” shall have the meaning set forth in Section 4.6.2.2. “Federal Deed” shall have the meaning set forth in Section 1.2.1. “Federal Government” shall mean the United States of America (including the Navy), by and through the Secretary of the Navy, or designee.
“Final Certificate of Compliance” shall mean the Certificate of Compliance executed and Recorded by the City for entirety of the Project upon satisfaction of all Conditions Precedent therefor set forth in Sections 9.3.1 and 9.3.2, provided that if the Final Parcel Map is Recorded prior to execution and Recording by the City of the first Certificate of Compliance, then the second Certificate of Compliance executed and Recorded by the City shall be the Final Certificate of Compliance.
“Final EIS/EIR” shall have the meaning set forth in Section 1.1.2. “Final Parcel Map” shall have the meaning set forth in Section 1.2.3. “Finally Approved” shall mean, with (i) respect to CFD 18-01 Zone 5 described by this Agreement, that the City Council has approved annexation of the Property into the District and the creation of CFD 18-01 Zone 5 and the RMA, that the property owners having a vote shall have voted to approve such formation and annexation, all applicable appeal and statute of limitations periods relating thereto shall have expired without the filing of any appeal or legal challenge or any such appeal or legal challenge shall have been resolved in a manner that permits formation and annexation in a manner acceptable to the City in its sole discretion and (ii) with respect to Entitlements, that all applicable appeal and statute of limitations periods relating thereto shall have expired without the filing of any appeal or legal challenge or any such appeal or legal challenge shall have been resolved in a manner that permits development of Project in a manner acceptable to each of the City and Developer in their respective sole discretion.
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“Financing Plan” shall mean the Financing Plan or Updated Financing Plan for the Project, in satisfaction of the requirements in Sections 2.2.3.5, 4.6.1, and 8.6 and last approved by the City in satisfaction of such requirements.
“FIRPTA Affidavit” shall mean an affidavit in form reasonably satisfactory to Developer certifying that the City is not a “foreign person” under the federal Foreign Investment in Real Property Tax Act of 1980.
“First Party” shall have the meaning set forth in Section 18.7.3. “Force Majeure Delay” shall have the meaning set forth in Section 18.7.1 as limited by Section 18.7.2.
“Foreclosed Collateral” shall mean the Property, the Project Improvements and/or this Agreement, the Other Agreements and all other documents and agreements with respect to the Project acquired by a Foreclosure Transferee pursuant to a Foreclosure. “Foreclosure” shall mean the foreclosure of any Permitted Mortgage (or any sale thereunder), whether by judicial proceedings, by virtue of any power of sale under the Permitted Mortgage, by acceptance of a deed-in-lieu of foreclosure, or by any other conveyance of all or any portion of the Property, the Project Improvements by other appropriate proceedings in the nature of a foreclosure, resulting in the Transfer of all or any portion of the Property and/or the Project Improvements to (i) any Permitted Mortgagee, (ii) any entity that Controls Permitted Mortgagee, is Controlled by Permitted Mortgagee, or is Controlled by an entity that also Controls Permitted Mortgagee, (iii) any participating lender in the Construction Loan (excluding Developer or any Developer Affiliate) secured by a Permitted Mortgage, and/or (iv) any agent or nominee for one or more of the lenders in clauses (i) through (iii) of this definition under the Permitted Mortgage that secures the Construction Loan.
“Foreclosure Transferee” shall have the meaning set forth in Section 2.2.7.3. “FOST” shall mean the Department of Navy findings and determinations that the Development Parcel was suitable for transfer to the City, pursuant to Finding of Suitability for Transfer for Southern Parcels 4-8, 10-12, 14, and 42 and Parcels 25, 26, 30-33, 37, and Portions of 40 and 41 dated September 28, 2001 (FOST #2).
“Full Insurable Value” shall have the meaning set forth in Section 11.2.2. “GAAP” shall mean generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (FASB).
“General Plan” shall mean the most current general plan for the City of Tustin. “Governmental Authority” and “Governmental Authorities” shall mean, respectively, each and all federal, State, county, municipal and local governmental and quasi-governmental Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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bodies and authorities (including the United States of America, California and any political subdivision, public corporation, district, joint powers authority or other political or public entity) or departments thereof having or exercising jurisdiction over either or any of the Parties, the Project, the Development Parcel, the Property or over any property owned by the City upon which work is conducted by or on behalf of Developer in connection with construction of the Project or such portions of the foregoing as the context indicates. “Governmental Capacity” shall have the meaning set forth in Section 18.25. “Governmental Requirements” shall mean all laws, statutes, codes, ordinances, rules, regulations, standards, guidelines, conditions, instructions, and other requirements issued by any Governmental Authority having jurisdiction over, governing, applying to or otherwise affecting any or all of the Parties, the Project, the Project Improvements, the Development Parcel or any portion thereof or over any property owned by the City upon which work is conducted by or on behalf of Developer in connection with construction of the Project, and including the California Surplus Land Act and Guidelines as the same may be amended from time to time, Environmental Laws, the City Code, the Specific Plan, the Entitlements, the Development Permits and the Approved Plans.
“Governmental Successors” shall mean each and every Person that is a successor or an assignee of the City and that is a governmental entity or agency. “Grading Work” shall mean all of the grading work required to be completed by Developer on the Real Property pursuant to the Approved Plans, which shall include rough and precise grading of the Real Property and the portions of the Boundary Landscape Area owned by the City depicted on Exhibit C to the Landscape Installation and Maintenance Agreement, including internal drives and access points.
“Guarantor” shall mean each and every Person(s) approved by the City in its sole discretion as Guarantor.
“Guarantor Date Down Certificate” shall have the meaning set forth in Section 2.2.4.4. “Guarantor Illiquidity Event” shall have the meaning set forth in the Guaranty. “Guarantor Original Certificate” shall have the meaning set forth in Section 2.2.4.4. “Guaranty” shall mean a guaranty made by a Guarantor and to which the City is a named beneficiary, which shall be in substantially the form and substance of the guaranty attached to this Agreement as Attachment 14A, as the same shall be reaffirmed, amended, or replaced in accordance with this Agreement.
“Guaranty Legal Opinion” shall have the meaning set forth in Section 2.2.4.4. “Hazardous Materials” shall mean and include the following:
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(i) “Hazardous Substance”, “Hazardous Material”, “Hazardous Waste”, or “Toxic Substance” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., or the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.;
(ii) An “Extremely Hazardous Waste”, a “Hazardous Waste”, or a “Restricted Hazardous Waste”, under Sections 25115, 25117, or 25122.7 of the California Health and Safety Code, or is listed or identified pursuant to Section 25140 or 44321 of the California Health and Safety Code; (iii)“Hazardous Material”, “Hazardous Substance”, “Hazardous Waste”, “Toxic Air Contaminant”, or “Medical Waste” under Sections 25281, 78075(a), 25501, 117690 or 39655 of the California Health and Safety Code;
(iv)“Oil” or a “Hazardous Substance” listed or identified pursuant to Section 311 of the Federal Water Pollution Control Act, 33 U.S.C. Section 1321, as well as any other hydro carbonic substance or by-product; (v) Listed or defined as a “Hazardous Waste”, “Extremely Hazardous Waste”, or an “Acutely Hazardous Waste” pursuant to Chapter 11 of Title 22 of the California Code of Regulations;
(vi)Listed by California as a chemical known by California to cause cancer or reproductive toxicity pursuant to Section 25249.8 of the California Health and Safety Code;
(vii) A material which due to its characteristics or interaction with one or more other substances, chemical compounds, or mixtures damages or threatens to damage, health, safety, or the environment, or is required by any law or public agency to be remediated, including remediation which such law or public agency requires in order for the property to be put to any lawful purpose;
(viii) Any material whose presence would require remediation pursuant to the guidelines set forth in the California Leaking Underground Fuel Tank Field Manual, whether or not the presence of such material resulted from a leaking underground fuel tank;
(ix)Pesticides regulated under the Feral Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136 et seq.;
(x) Asbestos, PCBs and other substances regulated under the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
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(xi)Any radioactive material including any “source material”, “special nuclear material”, “by-product material”, “low-level wastes”, “high-level radioactive waste”, “spent nuclear fuel” or “transuranic waste”, and any other radioactive materials or radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C. Section 2011 et seq., the Nuclear Waste Policy Act, 42 U.S.C. Section 10101 et seq., or pursuant to the California Radiation Control Law, California Health and Safety Code Section 114960 et seq.;
(xii) Regulated under the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq., or the California Occupational Safety and Health Act, California Labor Code Section 6300 et seq.;
(xiii) Regulated under the Clean Air Act, 42 U.S.C. Section 7401 et seq. or pursuant to Division 26 of the California Health and Safety Code; and/or (xiv) Any substance or compound regarding which a federal or State agency has established a health advisory, including but not limited to, Perfluorooctanoic Acid (PFOA) and Perfluorooctane Sulfonate (PFOS) or any associated additives or degradation byproducts thereof. “HCD” shall have the meaning set forth in Section 1.1.6. “High Quality Project” shall mean an age restricted (55 years or older) and/or senior congregate care development that represents the highest quality in design and construction in the market area and very well maintained and professionally managed to the highest industry standards.
“Horizontal Improvements” shall mean the Active Adult Project Horizontal Improvements and/or the AL/MC Project Horizontal Improvements or any portion thereof, collectively or, if the context so indicates, individually. “HUD” shall mean the U.S. Department of Housing and Urban Development. “Includes”, “Included” and “Including” shall have the meanings set forth in Section
1.9.3. “Independent Contract Consideration” shall have the meaning set forth in Section 1.8.2. “Information” shall mean any and all information or documentation relating to the Development Parcel, the Property or the Project Improvements or any portion thereof furnished to Developer by the City, or its elected and appointed officials, employees, agents, attorneys, affiliates, representatives, contractors or consultants whether occurring prior to or following the Effective Date.
“Initial Developer” shall have the meaning set forth in Section 1.4.2.
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“Initial Equity Commitment” shall have the meaning set forth in Section 4.6.2.3. “Initial Equity Investor” shall have the meaning set forth in Section 4.6.2.3. “Injured Party” shall have the meaning set forth in Section 14.1. “Intangible Property” shall mean all rights, claims (other than claims under insurance policies maintained by or for the benefit of the City) and all permits, licenses, approvals, authorizations, issued by any Governmental Authorities in connection with the Real Property; but with respect to the Navy Responsibilities shall be a non-exclusive assignment of rights and shall not be deemed an assignment or release by the City of its rights against any responsible party or against the Federal Government or any third party with respect to the Navy Responsibilities. “Investigation(s)” shall mean any observation, inquiry, examination, sampling, monitoring, analysis, exploration, research, inspection, canvassing, questioning, and/or surveying of or concerning the Development Parcel, or any other property upon which Developer is required to construct the Project Improvements, including the air, soil, surface water, and groundwater, and the surrounding population or properties, or any of them, to characterize or evaluate the nature, extent or impact of Hazardous Materials.
“IRWD” shall mean the Irvine Ranch Water District.
“JV Entity” shall have the meaning set forth in Section 1.3.1. “Key Employees” shall mean the following employees of Initial Developer: Marshall Burton, Steve Strom and H. McNeish, provided that following any Transfer or Transfer of Control, the Transferee shall specify its Key Employees.
“Landscape Improvements” shall mean any and all landscaping, irrigation, lighting (other than City street lighting) and related utilities, street furniture, structures, and/or hardscape improvements required by the Approved Plans, the Entitlements, the Development Permits, this Agreement, the Development Agreement, and the Landscape Installation and Maintenance Agreement to be constructed in connection with the Project upon the Boundary Landscape Area. “Landscape Installation and Maintenance Agreement” shall have the meaning set forth in Section 7.2.1.1(ix).
“Lien Release Amounts” shall mean the amounts, if any, (i) of any City Lien and (ii) required to be paid to third parties by the City to clear all monetary liens (including all Construction Liens) and which, with respect to taxes and assessments, are then due and payable. “Liquid Assets” shall mean assets held in the form of cash, marketable securities, unconditional unfunded capital commitments reviewed and confirmed in writing by City, credit facility commitments from Qualified Institutional Lenders with respect to which and to the extent to which all conditions for drawing have been satisfied, and other cash equivalents, and, in the case of each of the foregoing, that have not been pledged as collateral for any debt or other obligations.
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“Liquidated Damages” shall have the meaning set forth in Section 15.2.1.1. “Lower Income Households” shall mean persons and families whose income does not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937. The limits shall be published by the Department of Housing and Community Development in the California Code of Regulations as soon as possible after adoption by the Secretary of Housing and Urban Development. In the event the federal standards are discontinued, the Department of Housing and Community Development shall, by regulation, establish income limits for lower income households for all geographic areas of the state at eighty percent (80%) of Area Median Income, adjusted for family size and revised annually. “Lower Income Households” includes Very Low Income Households. “Lower Income Units” shall mean Residential Units that are constructed and rented to, occupied by, or held available for Lower Income Households. “Major Modifications” shall mean, with respect to Basic Concept Plan or any component thereof (i.e., the Site Plan, the Scope of Development, or the Phasing and Implementation Plan), any modification, revision, or change that is not a Minor Modification. “Manager” shall mean the Person vested by Developer with the authority and responsibility for day-to-day management of the development and construction of the Project on behalf of Developer.
“Material Default” shall have the meaning set forth in Sections 14.2.1 and 14.2.2. “MCAS Tustin” shall have the meaning set forth in Section 1.1.1. “Memorandum of Agreement” shall have the meaning set forth in Section 1.1.3. “Memorandum of DDA” shall mean a memorandum of record of this Agreement to be Recorded against the Property in substantially the form and substance of the memorandum attached to this Agreement as Attachment 12.
“Mezzanine Financing” shall mean, with respect to any Person, a loan that is secured by a pledge of the equity interests in such Person or any entity in the chain of ownership of such Person. For the avoidance of doubt, Mezzanine Financing does not include a senior/subordinate note structure in which a single deed of trust or other security interest secures both a senior and subordinate loan obligation held by Qualified Institutional Lenders, and for which a single Qualified Institutional Lender acts as agent for the holders of both the senior and subordinate loan obligations.
“Minimum Asset Standards” shall mean, (a) as to the Guarantor approved by the City as of the Closing Date, “Guarantor Net Worth” and “Guarantor Liquid Assets” as those terms are defined in, and in the minimum amounts required by, the Guaranty to be delivered by Guarantor at Close of Escrow (and any “Approved Substitute Guaranty” as that term is defined in the Guaranty required to be delivered by Guarantor at Close of Escrow), (b) as to Initial Equity Investor, Liquid Assets in at least the amount specified as the “Funding Limit” in the form of Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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Equity Commitment attached to this Agreement as Attachment 15C, and, (c) as to the Additional Equity Investors, Liquid Assets in at least the respective amounts specified as the “Funding Limit” in the form of Equity Commitment attached to this Agreement as Attachment 15E. As to any other Guarantor and any other Equity Investor, the term “Minimum Asset Standards” shall mean the minimum amounts of Net Worth and Liquid Assets required by the City in its sole discretion. “Minor Modifications” shall mean, with respect to the review by the City in its Proprietary Capacity of the Basic Concept Plan or any component thereof (i.e., the Site Plan, the Scope of Development, or the Phasing and Implementation Plan), any modification, revision, or change that (i) as to the Site Plan, the Scope of Development and the Basic Concept Plan, is substantially consistent with the most recent such documents approved by the City, does not increase or reduce by more than five percent (5%) the overall gross square footage of any building containing Residential Units or Rooms, and does not result in any modification to or reduction in (unless offset within the Project) the character of the development concept or the design and materials to be used in enhancing the architecture and aesthetics of the Project Improvements, or (ii) as to the Basic Concept Plan conforms to or represents a logical or commercially reasonable implementation of the previously approved Basic Concept Plan. “Mortgage” shall mean any indenture of mortgage or deed of trust, hypothecation, pledge, assignment for security purposes, bond, grant of taxable or tax exempt funds from a governmental agency or other security interest affecting the Real Property or any portion thereof or any documents constituting or relating to a sale-leaseback transaction, in each case together with all loan documents related thereto, but excluding any community facilities districts, service districts, assessment districts, landscape and lighting districts, or other assessments created or imposed by any Governmental Authority.
“Mortgagee” shall mean any mortgagee, beneficiary, secured party (or any agent for one or more lenders acting in any of the foregoing capacities) or other provider of funds or grantee of title under any Mortgage.
“Navy” shall have the meaning set forth in Section 1.1.2. “Navy Responsibilities” shall have the meaning set forth in Section 4.5.2.3. “Net Worth” shall mean, in the case of the Guarantor approved by the City as of the Closing Date, the “Guarantor Net Worth” as that term is defined in the Guaranty to be delivered by Guarantor at Close of Escrow (and any “Approved Substitute Guaranty” as that term is defined in the Guaranty required to be delivered by Guarantor at Close of Escrow), and otherwise shall mean the net worth of Guarantor or Equity Investor which shall be determined based on (i) the fair market value of the assets of each of the Persons comprising Guarantor or Equity Investor, as applicable (including the aggregate amount of uncalled capital commitments from such Persons’ creditworthy direct and/or indirect limited partners (but excluding all intangible assets such as goodwill, intellectual property, licenses, organizational costs, deferred amounts, accumulated depreciation, intercompany receivables, covenants not to compete, unearned income, restricted funds and like matters), investments in subsidiaries or other Persons Controlled by, or is under common Control with Guarantor or Equity Investor, as applicable, less (ii) all liabilities of the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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Persons comprising Guarantor or Equity Investor, as applicable (as determined in accordance with GAAP).
“Non-Environmental Claims” shall mean all Claims brought by third parties that are not Environmental Claims.
“Non-Permitted Foreclosure Event” shall mean a Transfer as a result of which the Transferee acquires any portion of the Property through or following a Foreclosure and is not a Permitted Mortgage Transferee or Qualified Foreclosure Purchaser. “Non-Qualified Foreclosure Transferee” shall mean a Transferee that acquires any portion of the Property through a Non-Permitted Foreclosure Event. “Notice of Completion” shall mean the notice of completion filed pursuant to California Civil Code Section 8182 after Completion in each case by an “owner” as defined in Section 8182(e) with respect to both: (i) private Project Improvements and (ii) public Project Improvements performed by Developer, any Successor Owner, or such Person’s contractor. “Opening of Escrow” shall have the meaning set forth in Section 4.4. “Original ALTA Coverage” shall have the meaning set forth in Section 6.4. “Other Agreements” shall mean the Development Agreement, the Memorandum of DDA, the Affordable Housing Declaration, the SLA Covenant, the Special Restrictions, the Quitclaim Deed, the Landscape Installation and Maintenance Agreement, the Access Easement Agreement, and the Bioswale Easement.
“Outside Closing Date” shall have the meaning set forth in Section 7.1.1. “Owner” shall mean Developer, provided that following Recording by the City of a Certificate of Compliance as to any portion of the Real Property, as to such Real Property and the portion of the Project thereon shall have the meaning set forth in the Special Restrictions. “Owner Affiliate” shall mean with respect to any Owner, any entity that directly or indirectly Controls, is Controlled by or is under common Control with that Owner. “Parties” shall mean the City and Developer, collectively. “Party” shall mean either of the City or Developer, individually, as parties to this Agreement.
“Permitted Exceptions” shall have the meaning set forth in Section 6.2 as may be modified by Section 6.3.
“Permitted Mortgage” shall mean any indenture of mortgage or deed of trust, bonds, or other conveyance of a security interest in the Property or any portion thereof, to a Permitted Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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Mortgagee for the purpose of development and construction of all or a portion of the Project. There shall not be more than one (1) Permitted Mortgage for the Property. “Permitted Mortgagee” shall mean a Mortgagee meeting the criteria set forth in Article 17 and accordingly entitled to the Permitted Mortgagee protections provided by this Agreement. For purposes of any acts under a Permitted Mortgage with respect to and/or following a Foreclosure thereunder, “Permitted Mortgagee” shall mean such Permitted Mortgagee or any wholly-owned subsidiary thereof designated by Permitted Mortgagee to take title to the foreclosed property. The participation, securitization or assignment of a loan (or any portion thereof) by a Permitted Mortgagee (acting in an individual capacity or as agent for other lenders) shall not give rise to any requirement that each lender participating in such participation, securitization or assignment itself be a Permitted Mortgagee (acting in an individual capacity or as agent for other lenders), so long as (i) at the inception of the loan, the originating and agent lender is a Permitted Mortgagee, and (ii) at the time of any subsequent assignment of the loan, the successor owner and agent lender is a Permitted Mortgagee.
“Permitted Mortgage Transferee” shall mean any Transferee of all or any Portion of the Property through Foreclosure that is one (or any combination of) the following: (i) any Permitted Mortgagee, (ii) any entity that Controls Permitted Mortgagee, is Controlled by Permitted Mortgagee, or is Controlled by an entity that also Controls Permitted Mortgagee, (iii) any participating lender in the Construction Loan (excluding Developer or any Developer Affiliate), and/or (iv) any agent for one or more of the lenders in clauses (i) through (iii) above under the Permitted Mortgage that secures the Construction Loan.
“Permitted Transfer” shall have the meaning set forth in Section 2.2.2. “Person” shall mean an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, joint venture, firm, joint stock company, unincorporated association, Governmental Authority, governmental agency or other entity, domestic or foreign.
“Potential Default” shall have the meaning set forth in Section 14.1. “Potential Returned Property” shall mean those portions of the Property which are eligible for repurchase pursuant and subject to Section 16.3 or revesting pursuant to Section 16.4, together with all Project Improvements constructed thereon by or on behalf of Developer. “Pre-Closing Entitlements” shall mean the Entitlements listed in clauses (i) through (v) of Section 8.4.2 as the same may be modified from time to time with the approval of the City. “Prevailing Party” shall have the meaning set forth in Section 18.2. “Private Drives and Sidewalks” shall mean those private streets, roadways, sidewalks, pedestrian pathways, and bike ways to be constructed by Developer on the Real Property. “Products” shall have the meaning set forth in Section 14.3.2.
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“Project” shall mean the Active Adult Project and the AL/MC Project, collectively. “Project Architect” shall mean HPI (formerly The Hill Partnership, Inc.) “Project Fair Share Contribution” shall have the meaning set forth in Section 4.2.2. “Project Improvements” shall mean the Active Adult Project Improvements and the AL/MC Project Improvements, collectively or, if the context so indicates, individually. “PropCo” shall have the meaning set forth in Section 1.3.1. “Property” shall have the meaning set forth in Section 4.1.1. “Proprietary Capacity” shall have the meaning set forth in Section 18.25. “Public Records Act” shall mean the Public Records Act of the State of California, California Government Code Sections 7920.000-7931.000). “Purchase Price” shall have the meaning set forth in Section 4.2.1. “Qualified Equity Investor” shall mean any Person proposed by Developer and that:
(i) has as its Controlling Person a Person having at least ten (10) years of experience in investing in projects similar to the Project and of equivalent or larger size. (ii) together with its Affiliates, within the preceding eighteen (18) months prior to the date of determination, has not been the subject of any Insolvency Event; (iii) has not, nor has its Controlling Person or any key employee thereof: (a) been indicted or convicted for any felony or crime involving moral turpitude, (b) been debarred by any public entity in California, or (c) been engaged in litigation with the City or any other governmental entity within the preceding five (5) years (other than tax contests or litigation unrelated to development) where such party was not the successful litigant; and (iv) has, when determined in the aggregate for such Person and its Controlling Persons and Affiliates, met the Minimum Asset Standards specified in Attachment 15C; or any other Person that is approved as a Qualified Equity Investor by the City in its sole discretion.
“Qualified Foreclosure Purchaser” shall mean any Person, other than a Permitted Mortgagee Transferee, that through Foreclosure or as a result of a Transfer from a Permitted Mortgagee or Permitted Mortgagee Transferee following a Foreclosure, acquires Foreclosed Collateral comprising all of the Real Property and Improvements previously owned by Developer and that:
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(ii) has as its Controlling Person a Person having at least ten (10) years of experience in developing or owning projects similar to the Project and of equivalent or larger size. (iii) together with its Affiliates, within the preceding eighteen (18) months prior to the date of the Foreclosure, has not been the subject of any Insolvency Event; (iv) has not, nor has its Controlling Person or any key employee thereof: (a) been indicted or convicted for any felony or crime involving moral turpitude, (b) been debarred by any public entity in California, or (c) been engaged in litigation with the City or any other governmental entity within the preceding five (5) years (other than tax contests or litigation unrelated to development) where such party was not the successful litigant; and (v) has, when determined in the aggregate for such Person and its Controlling Persons and Affiliates, Liquid Assets in an amount not less than the amount then required to complete the Project in accordance with the provisions of this Agreement, after taking into account debt financing committed to such Person for the purpose of completing the Project; or (vi) any other Person that is approved as a Qualified Foreclosure Purchaser by the City in its sole discretion.
“Qualified Institutional Lender” shall mean a nationally chartered bank, national association, federal association bank, savings and loan association, investment bank, state chartered bank, lending institution, pension fund, insurance company or other institutional lender which is duly established and in the business of financing the size and type of development contemplated hereunder and which, in the reasonable opinion of the City, has a sufficient net worth and liquidity position to meet the contemplated financing commitment. An institutional lender shall be rebuttably presumed to be acceptable to the City if it has received a “Best’s Rating of “aa” or higher from A.M. Best Company, a “Safe & Sound” rating of four (4) stars or higher from Bank Rate, Inc., or a similar rating from a rating service reasonably acceptable to the City and is not included on any State, county or municipal list of banned or restricted vendors and has a net worth of Five Billion Dollars ($5,000,000,000) or more, and such term shall include but not be limited to Fannie Mae, Freddie Mac, FHA, CapitalOne, Citibank, Wells Fargo, Union Bank, US Bank, and Bank of America, East West Bank, Bank of America, Citi Community Capital, JP Morgan Chase, Merchants Capital, Berkadia, U.S. Bank, JLL, Lument, Greystone, Deutsche Bank, Walker & Dunlop, CBRE, Bellwether Enterprise, PNC, RBC, or California Bank & Trust, and Banner Bank.
“Quitclaim Deed” shall mean the quitclaim deed to be executed and delivered by the City at the Close of Escrow to quitclaim all of the City’s interests in the Property (subject to all Permitted Exceptions, the reservations identified in Sections 1.2.2 and 4.1.2 and the terms of this Agreement) to Developer. The Quitclaim Deed shall be in substantially the form and substance of the deed attached hereto as Attachment 11, acknowledged and in Recordable form. “Reaffirmation Legal Opinion” shall mean a legal opinion in the form and substance of the legal opinion attached to this Agreement as Attachment 14F, or other form required by Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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Guarantor’s legal counsel and approved by the City in its sole discretion, executed by legal counsel to Guarantor when required by this Agreement.
“Reaffirmation of Guaranty” shall mean a reaffirmation of the Guaranty executed by Guarantor at each Transfer which shall be in substantially the form and substance of the Reaffirmation of Guaranty attached to this Agreement as Attachment 14E. “Real Property” shall have the meaning set forth in Section 1.2.2. “Record”, “Recording” and “Recorded” shall mean to record the specified instrument, or the current or past recording of the specified instrument, in the office of the Clerk Recorder for Orange County, California.
“Recordable” shall mean with respect to any document, that such document has been acknowledged and is otherwise in a form that would permit Recording thereof. “Release” (with respect to Hazardous Materials) shall mean any releasing, or threat of releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing, or dumping into the environment. “Remediate” or “Remediation” shall mean any response or remedial action as defined under Section 101(23) through (25) of CERCLA, and similar actions with respect to Hazardous Materials as defined under comparable state and local laws, and any other cleanup, removal, containment, abatement, recycling, transfer, monitoring, storage, treatment, disposal, closure, restoration or other mitigation or remediation of Hazardous Materials or Releases required by any Environmental Agency or within the purview of any Environmental Laws. “Repurchase Price” shall mean the lesser of (i) fair market value of the Returned Property or (ii) seventy five percent (75%) of the Purchase Price for the Property, provided that if the Returned Property is less than the entirety of the Property, the Purchase Price shall be allocated pro rata on a land square foot basis to the Returned Property. “Repurchase Property” shall have the meaning set forth in Section 16.3.1. “Residential Unit” or “Residential Units” shall mean the age restricted (55 years or older) active adult and independent living facilities to be developed on the Active Adult Real Property. “Responsible Developer” shall mean the Initial Developer or if Initial Developer has been previously released pursuant to Section 2.3.2 shall mean any Transferee approved by the City in accordance with Section 2.2.3.
“Returned Property” shall mean those portions of the Property repurchased by the City pursuant to Section 16.3 or revested by the City pursuant to Section 16.4. “Reuse Plan” shall have the meaning set forth in Section 1.1.1. “Reversion Action Trigger” shall have the meaning set forth in Section 16.4.1.
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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“Reversion Action Trigger Date” shall have the meaning set forth in Section 16.4.1. “Reversion Event” shall have the meaning set forth in Section 16.4. “Reversion Property” shall have the meaning set forth in Section 16.4.1. “RFP” shall mean request for proposal.
“Right of Repurchase” shall have the meaning set forth in Section 16.3.1. “Right of Reversion” shall have the meaning set forth in Section 16.4. “RMA” shall have the meaning set forth in Section 7.1.2. “Rooms” shall mean the assisted living and memory care rooms within each building to be developed on the AL/MC Real Property.
“Schedule of Performance” shall mean the document attached as Attachment 7 to this Agreement, as the same may be revised or extended from time to time in accordance with this Agreement, setting forth the dates and time periods for submissions, approvals and actions for the Term of this Agreement, including the construction and Completion of the Project Improvements. “Scope of Development” shall have the meaning set forth in Section 1.3.2. “Second Party” shall have the meaning set forth in Section 18.7.3. “Shall”; “Shall Not” shall have the meanings set forth in Section 1.9.4. “Site Plan” shall have the meaning set forth in Section 1.2.1. “SLA Covenant” shall have the meaning set forth in Section 1.6.1. “SLA Regulations” shall have the meaning set forth in Section 1.1.6. “Sole” shall have the meaning set forth in Section 1.9.5. “Special Restrictions” shall mean the Declaration of Special Restrictions for a Portion of Disposition Area 8, in substantially the form and substance of the document attached hereto as Attachment 20 to be executed by the City and accepted by Developer and acknowledged in Recordable form and Recorded at the Close of Escrow immediately prior to Recording of the Quitclaim Deed.
“Specific Plan” shall mean the Tustin Legacy Specific Plan as the same has been or shall be amended from time to time.
“Subdivision Map” shall mean any Recorded Final Parcel Map or parcel map (or exemption therefrom or waiver thereof) subdividing the Development Parcel pursuant to the Subdivision Map Act substantially consistent with the Tentative Parcel Map or such other tentative Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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or vesting tentative map or tentative or vesting tentative parcel map as may be approved by the City with respect to the Real Property or any portion thereof. “Subdivision Map Act” shall mean the California Subdivision Map Act as codified in California Government Code Section 66410 et seq.
“Subordination Agreement” shall have the meaning set forth in Section 2.2.5. “Substantially in the Form and Substance” shall have the meaning set forth in Section
1.9.2. “Successor Agency” shall mean the Successor Agency to the Tustin Community Redevelopment Agency.
“Successor Owner” shall mean each and every Person owning or acquiring fee title to all or any portion of the Real Property from and after the conveyance of such Real Property to Developer by the City, but excluding each and every End User; provided that any such Transfer shall be subject to the applicable limitations set forth in Article 2. “Supplemental Title Report” shall have the meaning set forth in Section 6.3. “Surplus Land Act” shall have the meaning set forth in Section 1.1.6. “Survey” shall have the meaning set forth in Section 6.1. “Surveyor” shall have the meaning set forth in Section 6.1. “Tentative Parcel Map” shall have the meaning set forth in Section 1.2.3. “Term” shall have the meaning set forth in Section 18.13. “Title Commitment” shall have the meaning set forth in Section 6.2. “Title Company” shall mean First American Title Insurance Company. “Transfer” shall mean (i) the transfer, sale, assignment, lease, sublease, license, gift, hypothecation, mortgage, pledge or encumbrance, merger or other similar conveyance by Developer of its interest in this Agreement, the Other Agreements, the Project, the Property, the Project Improvements or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, or any agreement to do so; (ii) the granting by Developer of any Mortgage, easement, license, lien or other encumbrance and/or the execution of any installment land sale contract or similar instrument affecting all or a portion of the Project, the Property, the Project Improvements, or any portion thereof or interest of Developer therein; (iii) any merger or similar term as such term is defined by the law of the state in which the transferor entity is formed and that has the same effect as any of the circumstances described in clauses (i) or (ii) of this definition, and (iv) shall also include any conversion of Developer to an entity form other than that of Developer at the time of execution of this Agreement, provided that a lease by Developer of the Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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Property to an operating entity that directly or indirectly Controls, is Controlled by or is under common Control with Developer for the purpose of operating the Project upon occupancy and with an effective or commencement date on or after the date on which a final or temporary certificate of occupancy is obtained for the Property shall not constitute a “Transfer” within the meaning of this definition.
“Transfer Date” shall mean the effective date of any Transfer or Transfer of Control by or affecting Developer and with respect to a Transfer, shall be the date upon which the Assignment Agreement becomes effective.
“Transfer of Control” shall mean, with respect to Developer or Developer’s Controlling Person, the occurrence, directly or indirectly, in a single transaction or a series of transactions, of any of the following:
(i) the conveyance, sale, assignment, transfer or disposition of all or substantially all of that Person’s (or its Controlling Person’s) assets, stock, membership or partnership interests or other equity interests;
(ii) the dissolution, merger, reorganization, share exchange, recapitalization, restructuring or consolidation of that Person (or its Controlling Person), other than a transaction that would result in all of the voting securities of that Person (or its Controlling Person) outstanding immediately prior thereto to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50.01% of the combined voting power of all of the voting securities of that Person (or its Controlling Person) or such surviving entity outstanding immediately after such transaction; and (iii) the acquisition by any “Person” or “Group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) of an aggregate of 50.01% or more of the beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of the issued and outstanding voting securities or other equity interests of that Person (or its Controlling Person), where such acquiring “Person” or “Group” did not directly or indirectly (or through an affiliate) already Control or own at least 50.01% of the voting securities or other equity interests of such Person (or its Controlling Person).
“Transferable Interests” shall have the meaning set forth in Section 2.2. “Transferable Products” shall have the meaning set forth in Section 14.3.2. “Transferee” shall mean any Person to which a Transfer or Transfer of Control is made, of the Transferable Interests or any portion thereof or interest therein, including by Transfer to a Successor Owner or Developer Affiliate.
“Transferee Certificate” shall have the meaning set forth in Section 2.2.4.2. “Transferor” shall mean any Person that is a Developer under this Agreement which Transfers all of the Transferable Interests, including by Transfer to a Successor Owner or Developer Affiliate or Mortgagee.
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 1
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“Tustin Legacy” shall have the meaning set forth in Section 1.1.3. “Tustin Legacy Backbone Infrastructure Program” shall have the meaning set forth in Section 8.7.1.
“Updated Financing Plan” shall have the meaning set forth in Section 4.6.1.2. “Vertical Improvements” shall mean the Active Adult Project Vertical Improvements and the AL/MC Project Vertical Improvements or any portion thereof, collectively or, if the context so indicates, individually.
“Vertical Improvements Commencement Date” shall mean the date on which the inspection of the reinforcing steel for the walls and/or columns of the ground-level parking structure for the Active Adult Project or AL/MC Project has been undertaken and passed, and the passing of such inspection shall constitute commencement of vertical construction.
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 09.08.26 (HM)(3).docx Attachment 2A City of Tustin/Confluent Development Portion of Disposition Area 8
ATTACHMENT 2A
LEGAL DESCRIPTION OF DEVELOPMENT PARCEL
The Land referred to herein below is situated in the City of Tustin, County of Orange, State of California, and is described as follows:
LOT 14, INCLUSIVE OF TRACT NO. 18197 AS SHOWN ON A MAP FILED IN BOOK 990, PAGES 25 THROUGH 33, INCLUSIVE OF TRACT MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA.
For conveyancing purposes only: APN 430-481-12
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Tustin Confluent DDA 10.01.26 (HM).docx Attachment 2B City of Tustin/Confluent Development Portion of Disposition Area 8
ATTACHMENT 2B
DEPICTION OF DEVELOPMENT PARCEL AND LOCATION
{see attached}
Docusign Envelope ID: 5FFBA527-D2FE-839A-80B6-01932AA2861A Attachment 2B