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HomeMy WebLinkAboutStaff Report 340-07City of Palo Alto City Manager’s Report 17 TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER/DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT DATE:AUGUST 6, 2007 CMR: 340:07 SUBJECT:SUPPLEMENTAL INFORMATION REGARDING ACQUISITION AND DEVELOPMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO, EDEN HOUSING, INC. AND COMMLFNITY HOUSING ALLIANCE, INC. FOR THE PROPOSED ALMA STREET AFFORDABLE MULTI-FAMILY RENTAL HOUSING PROJECT. RECOMMENDATION Staff recommends that the City Council approve the Alma Street Affordable Multi-Family Rental Housing Project Acquisition and Development Agreement (ADA) between the City, Eden Housing and the Community Housing Alliance (CHA) as amended. The agreement provides for the conveyance of the Alma Substation parcel to Eden Housing and CHA, a City loan of $3 million for acquisition of the adjacent Ole’s Automotive Repair Shop parcel and general parameters for future development of the combined site. BACKGROUND On July 30, 2007 the Council discussed the proposed Acquisition and Development Agreement that allows the City of Palo Alto, Eden Housing and CHA to solidify their joint efforts to develop affordable housing on the combined parcels of the Alma Substation property and Ole’s parcel. The Council continued the item to August 6, 2007 and directed staff to provide additiona! information regarding the agreement. DISCUSSION Staff has prepared this supplemental report to address the issues raised by the Council at the July 30 meeting. These include the term of affordability, closing costs, environmental indemnity provisions and option to repurchase. Term of Affordability The Acquisition and Development Agreement has been modified slightly to address the issue of preserving the affordability of the residential units beyond the initial fifty-five years stipulated in the draft agreement and includes the language read into the record at the meeting on July 30. The Agreement reflects that a variety of mechanisms including financing structures and the City’s zoning process will provide for an extended term of affordability beyond the initial fifty- five years. CMR: 340:07 Page 1 of 4 Closing Costs Escrow costs are normally nominal compared to the value of the property involved, and they are particularly insignificant in this case because the City is exempt from paying the County transfer tax as well as its own City transfer tax. As negotiated in the ADA, escrow costs would be paid as customary in Santa Clara County with the seller paying the standard portion of the owner’s policy and the escrow fee and the buyer paying the extended portion of the owner’s policy and the recording fees. The only deviation made from this formula under the ADA was to agree to split the escrow costs 50/50, thereby saving the City about $500. There was an error in the ADA [Section 4.6.1(b)] where it was stated in one place that the City would pay all the escrow fees and in another place it was stated that the fees would be split. The ADA has been corrected to reflect only the 50/50 split. Given the breakdown described above, it is estimated that the City will pay $4,674.50 in escrow costs under the terms of the ADA. In addition, the City will also pay $534 for the City’s lender policy on the loan made on Ole’s parcel with total escrow costs around $5,200. Environmental Indemnity The "environmental indemnity" provisions in the Acquisition and Development Agreement are negotiated terms that are consistent with City assurances that it would convey the City parcel in a developable condition. Based on Council concerns, staff has explored the possibility of removing the environmental indemnity provisions from the agreement with the Developer. The Developer has informed us that they are unwilling to proceed with the project absent these provisions. However, the Developer has agreed to include language that clarifies the City’s obligations under these provisions. The environmental indemnity provisions have been modified to clarify that the City is not responsible for cleanup costs arising from any contamination on the Ole’s parcel. This is consistent with section 5.10(b) of the agreement, which requires the developer to indemnify the City for any liability related to the Ole’s parcel. Section 5.10(b) whereby the Developer indemnifies the City regarding Ole’s parcel is a mirror of Section 4.5.3(a) whereby the City indemnifies the Developer regarding the City Site. An additional provision has been added to the environmental indemnity section that ensures that the City will not be responsible for the ordinary costs of excavation and disposal of soils or materials from the City parcel to the extent that work is done as a part of the project construction. Phase 1 and Phase 2 environmental assessments have been completed for the Ole’s Site and a Phase 1 and partial Phase 2 have been completed for the City Site. The Phase 2 assessment can only be completed for this site when the substation equipment is removed. All investigations to date indicate only small minor amounts of contamination that will be addressed by removal of the soil when the parking garage excavation takes place. The investigations show no groundwater has been affected. The risk to both the City and the Developer from the environmental indemnity provisions is minimal. CMR: 340:07 Page 2 of 4 Option to Repurchase The ADA has a City "option to repurchase" instead of a "right of reverter" should the Developer fail to complete the Development or comply with its affordability requirements. The ADA provides for an option to repurchase the entire "Site" (i.e., the City Parcel and the Ole’s Parcel, as those terms are defined in the ADA), with the Option Purchase Price being the amount then due on the City Loan (i.e., the cancellation of the City Loan). Both an option and a fight of reverter were among the security alternatives contemplated by the September 18, 2006 Three Party Agreement, which was approved by the Council and provides the basis for the ADA. It states that "... the DDA shall provide that title to the Housing Site shall revert to the City (whether by right of termination as to the City Parcel, exercise of an option as the entire Housing Site and/or other appropriate means)" (see Section 5.h). In general, there is little functional difference between the two devices in terms of the City’s ultimate rights to enforce its remedies, but the option alternative was recommended by the City’s outside counsel for two reasons: First, the concept of a right of reverter is not well defined outside of the redevelopment law context (where it is a creature of statute) and therefore is not well understood by lenders and title companies. As a result, any contract provision effecting reverter would have to be complex, which can be a deterrent to lenders and burden the parties with the task of interpreting novel language in their implementation of the agreement. Conversely, an option is a very commonly used and well understood instrument, which can rely on a well developed body of case law when there is an interpretation issue. Secondly, the option requires the City to make a conscious decision to accept the "Site" as opposed to simply becoming owner by the occurrence of events beyond its control as may occur with an automatic reverter. This protects the City from acquiring property with significant liabilities, such as contamination, debts, liens or an incomplete and/or dangerous structure. In addition, the date of the acquisition would be accurately established by the City’s exercise of its option, which would prevent the City from being subject to potential liability for the condition of property that it may not have been aware that it owned. In other words, the option is ultimately more advantageous for the City because it provides an efficient security instrument while insulating the City from some liability that would be present with a right of reverter. PREPARED BY: Official DEPARTMENT HEAD: CITY MANAGER APPROVAL: Steve Directohof Planning and Community Environment Emit --iI son Assistant City Manager CMR: 340:07 Page 3 of 4 CITY ATTORNEY APPROVAL: Donald Larkin Assistant City Attorney ATTACHMENTS Attachment A: Amended Agreement between City of Palo Alto, Eden Housing and the Community Housing Alliance CC:Community Housing Alliance. Eden Housing Corporation Ole’s Automotive Repair Shop Palo Alto Hardware Store Alma Property LLC Sandy Sloan CMR:Page 4 of 4 Attachment A ALMA STREET AFFORDABLE MULTI-FAMILY RENTAL HOUSING PROJECT ACQUISITION AND DEVELOPMENT AGREEMENT By and Among CITY OF PALO ALTO, a chartered city, and COMMUNITY HOUSING ALLIANCE, INC., a California non-profit public benefit corporation and EDEN HOUSING, INC., a California non-profit public benefit corporation ! 067%0013\933044v~7~doc DRAFT 0-7-08/4--301/l;q-07 ALMA STREET AFFORDABLE, MULTI-FAMILY RENTAL HOUSING PROJECT THIS ACQUISITION AND DEVELOPMENT AGREEMENT ("Agreement"), dated as of the __ day of ,2007, is entered into by and among the CITY OF PALO ALTO, a chartered city ("City"), and COMMUNITY HOUSING ALLIANCE, INC., a California non-profit public benefit corporation ("CHA") and EDEN HOUSING, INC., a California non-profit public benefit corporation ("Eden") (CHA and Eden, together, shall be referred to herein as "Developer"). City and Developer agree as follows: RECITALS A. City owns certain real property, known as 841 Alma Street, Palo Alto, California and described more particularly on Attachment No. l-A, attached hereto and incorporated herein ("City Parcel"). The City Parcel is currently occupied by the Alma Street Electrical Substation (the "Substation"), which the City will relocate in order to make the City Parcel available for the development of affordable multi-family rental housing. B. CHA entered into that certain Standard Offer, Agreement and Escrow Instruction for Purchase of Real Estate dated February 17, 2006 ("Ole’s Purchase Agreement") to obtain the fights to purchase the real property commonly known as the site of "Ole’s Car Shop" and located at 801 and 809 Alma Street, Palo Alto, California and described more particularly on Attachment No. l-B, attached hereto and incorporated herein ("Ole’s Parcel"). The Ole’s Parcel is adjacent to the City Parcel. C. City, pursuant to an agreement dated September 18, 2006 among CHA, Eden and City (the "Initia! Project Agreement"), previously deposited $980,000 into the escrow established under the Ole’s Purchase Agreement. The $980,000 consists of (1) an unsecured loan to CHA and (ii) an advance of funds to be provided under this Agreement. D. Under the Initial Project Agreement, CHA and Eden have agreed to, among other things, cause the formation of a California non-profit public benefit corporation or limited liability company (the "Nonprofit") for the purpose of acquiring the Ole’s Parcel and the City Parcel (together and as legally defined on Attachment No. 2-A and as shown on Attachment No. 2-B, the "Site"). The Nonprofit shall cause the formation of a limited partnership (the "Partnership") in which the Nonprofit is the general partner and Eden is the initial limited partner for the purpose of developing the Site. Upon Closing of the transaction contemplated by this Agreement, all rights and obligations of Developer hereunder shall be assigned to, and assumed by, the Partnership. E. City has also agreed to provide an additional $3,000,000 in funding to support the acquisition of the Ole’s Parcel. After acquisition, the Developer is planning to develop the site as either (i) a mixed-use project that will provide ground floor commercial/retail and thirty-five (35) to fifty-five (55) units of affordable multi-family rental housing, or (ii) fifty (50) to fifty-five (55) units of affordable multi-family rental housing (the "Development"). F. The City has agreed to provide the funding and to sell the City Parcel to Developer for the purpose of developing !ong:term, affordable multi-famil rental housin on the Site. and the Developer has agreed to develop the Site in accordance with this Agreement, 10677-0013\933044v6:.7_.doc - 1 -DRAb-T g7-0~8/-1--301/0-70~7 which also requires the Site to be subject to a recorded City regulatory agreement that limits the occupancy and rents of residential units developed on the Site to certain levels of very low income households for a period of no less than an initial fifty-five (55) years. Additional regulatory provisions may be put into place to extend the period to the extent Developer’s other financing permits the term to be so extended. NOW, THEREFORE, in consideration of the foregoing, and of the covenants, conditions and agreements as hereinafter set forth, the parties agree as follows: ARTICLE 1 DEFINITIONS 1.1 Definitions As used in this A~eement, including the attachments hereto, these terms shall be defined as follows: 1.1.1 Affordable Rents shall mean that the gross rent charged shall not exceed thirty percent (30%) of fifty percent (50%) of the Area Median Income as adjusted for assumed household size, or as otherwise may be set forth in the California Tax Credit Allocation Committee (TCAC) guidelines. 1.1.2 Affordable Units is defined in Section 6.2.1. 1.1.3 Approved Title Exceptions shall have the meaning set forth in Section 4.3.2. 1.1.4 Area Median Income means the median household income (adjusted for household size) for Santa Clara County as annually published by the United States Department of Housing and Urban Development ("HUD"). If HUD ceases to publish median incomes on an annual basis, the Parties will agee to use Area Median Income limits as may be published by the California Department of Housing and Community Development. 1.1.5 CEOA means the California Environmental Quality Act. 1.1.6 Cits~ shall have the meaning set forth in Section 2.2. 1.1.7 City Advance is defined in Section 7.2.1. 1.1.8 City Deed of Trust means the deed of trust securing Developer’s repayment of the City Loan and its performance hereunder in the form attached as Attachment No. 9. 1.1.9 City Loan shall have the meaning set forth in Section 7.2. 1.1.10 City Manager means the City Manager of the City or his or her designee. 1.1.11 City Note means the promissory note evidencing the City Loan in the form attached as Attachment No. 7. 1.1.12 City Parcel means the real property located at 841 Alma Street, Palo Alto, and described more particularly on Attachment No. 1-A. 10677-0013\933044v6=7~doc - 2 -DRAFT 1g?-08/4-30 t/1)-707 1.1.13 City Representatives means and include all of the respective predecessors, successors, assigns, agents, officials, employees, members, independent contractors, affiliates, principals, officers, attorneys, accountants, representatives, staff, council members, board members, and planning commissioners of City, and of each of them. 1.1.14 City Title Policy is defined in Section 4.4.2. 1.1.15 Close of Escrow is defined in Section 4.6.3. 1.1.16 Closing Date shall be August 1, 2008, unless both Parties agree in writing to another date. 1.1.17 Construction Contract is defined in Section 3.3. 1.1.18 Control means, for purposes of Section 2.6 of this Agreement, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a corporation, partnership, joint venture, trust, or other association. 1.1.19 Developer shall have the meaning set forth in Section 2.3. 1.1.20 Developer Title Policy shall have the meaning set forth in Section 4.4.1. 1.1.21 Development means the sale of the City Parcel by City to Developer, the purchase of the Ole’s Parcel by Developer, Developer’s obtaining of the Entitlements, and Developer’s construction of the Improvements on the Site. 1.1.22 Development Plans means and include such preliminary and final construction drawings and specifications, grading plans, landscape plans, site development plans, plot plans, off-site improvement plans, architectural renderings and elevations, material specifications, parking plans, and other plans and documents as are required to be submitted to City pursuant to this Agreement or any applicable Law. Agreement. 1.1.23 Effective Date means the date in the introductory paragraph of this 1.1.24 Encumbrance means any mortgage, trust deed, encumbrance, lien or other mode of financing real estate construction, and development and ownership, including a sale and leaseback. 1.1.25 Entitlements means comprehensive plan amendments,zone changes, zoning code amendments, development permits, approvals of Development Plans submitted pursuant to Section 5.2, CEQA compliance, NEPA compliance, and any and all other permits, licenses and entitlements of every kind required by the City in order to complete construction of the Improvements on the Site. 1.1.26 Environmental Condition means any Hazardous Material that exists prior to or after the Closing Date, with respect to the air, land, soil, surface, subsurface strata, surface water, ground water, storm water or sediments, on under or above the Site. 1.1.27 Environmental Laws means all federal, California and local Laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability or standards of conduct concerning any Hazardous Material (as later defined), or pertaining to occupational health or industrial hygiene (but only to the extent that the occupational health or industrial hygiene Laws, ordinances, or 10677-0013\933044v6,.7~doc - 3 -DRAFT 0g08/4-30110-707 regulations relate to Hazardous Materials on, under, or about the Site), or Environmental Conditions on, under, or about the Site, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601 et seq.; the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. §{} 6901 et seq.; the Clean Water Act, also known as the Federal Water Pollution Control Act ~WPCA), 33 U.S.C. §{} 1251 et seq.; the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq.; the Hazardous Materials Transportation Act (HMTA), 49 U.S.C. §§ 1801 et seq.; the Insecticide, Fungicide, Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Superfund Amendments and Reauthorization Act, 42 U.S.C. §§ 6901 et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Solid Waste Disposal Act, 42 U.S.C. §§ 6901 et seq.; the Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201 et seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. §§ 11001 et seq.; the Occupational Safety and Health Act, 29 U.S.C. {}§ 655 and 657; the California Underground Storage of Hazardous Substances Act, Cal. Health & Safety Code §{} 25280 et seq.; the California Hazardous Substances Account Act, Cal. Health & Safety Code §§ 25300 et seq.; the California Hazardous Waste Control Act, Cal. Health & Safety Code §{} 25100 et seq.; the California Safe Drinking Water and Toxic Enforcement Act, Cal. Health & Safety Code §§ 24249.5 et seq.; the Porter-Cologne Water Quality Act, Cal. Water Code §§ 13000 et seq., together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local Law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene Laws, ordinances, or regulations relate to Hazardous Materials on, under, or about the Site), or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use. 1.1.28 Escrow shall have the meaning set forth in Section 4.6. 1.1.29 Escrow Agent shall have the meaning set forth in Section 4.6. 1.1.30 covenants, conditions, affecting the Site, and for the Site. Exceptions means all reservations, liens, Encumbrances, qualifications, restrictions, leases, easements, fights of way, or other like matters all matters reflected on or arising out of any tentative or final parcel map 1.1.31 Extremely Low Income Affordable Units shall have the meaning set forth in Section 6.22. 1.1.32 Final Approval means the obtaining of approval of all Entitlements, the expiration without an appeal of the period for any administrative appeal of such approval or if any referendum petition is filed or any administrative appeal has been taken, such referendum or appeal has been resolved to permit the Entitlements, and that the applicable period for commencement of any court challenge under CEQA or other applicable Law, not to exceed ninety (90) days thereafter, has expired and either no action has been filed, or if any action has been filed, it has been finally resolved upon terms acceptable to City in its reasonable discretion. 1.1.33 General Contractor is defined in Section 3.3. 1.1.34 Grant Deed means the grant deed by which the City shall convey the City Parcel to Developer in the form attached hereto as Attachment No. 4. 1.1.35 Hazardous Materials means and include the following, including mixtures thereof: any hazardous substance, pollutant, contaminant, waste, by-product or constituent regulated under CERCLA; oil and petroleum products and natural gas, natural gas liquids, liquefied natural gas and synthetic gas usable for fuel; pesticides regulated under the Federal 10677-0013\933044v6:7~doc - 4 -DRAFT O708/-1-301/W-07 Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §8 136 et seq.; asbestos and asbestos- containing materials, PCBs and other substances regulated under TSCA; source material, special nuclear material, by-product material and any other radioactive materials or radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C. 8§ 2201 et seq. or the Nuclear Waste Policy Act of 1982, 42 U.S.C. 88 10141 et seq.; chemicals subject to the OSItA Hazard Communication Standard, 29 C.F.R. 8§ 1910.1200 et seq.; industrial process and pollution control wastes, whether or not hazardous within the meaning of RCRA; any substance defined as a "hazardous substance" in California Civil Code Section 2929.5(e)(2) or California Code of Civil Procedure Section 736(f)(3); and any other substance or material regulated by any Environmental Laws. I. 1.36 Holder(s) means the mortgagor of record of any mortgage, beneficiary of a deed of trust or other security interest, the lessor under a financing leaseback, or grantee under any form of financing conveyance on or affecting the Site or any portion of the Site. 1.1.37 HUD means the United States Department of Housing and Urban Development. 1.1.38 Improvements means all grading to be done on the Site, as well as all buildings, structures, fixtures, excavation, parking, landscaping, and other work, construction, rehabilitation, alterations and improvements of whatever character to be done by Developer on, around, under or over the Site pursuant to this Agreement, as more particularly described in the Scope of Development, together with an off-site improvements required by the Municipal Code. 1.1.39 Indemnitees is defined in Section 5.10. 1.1.40 Initial Proiect Agreement is defined in Recital C. 1.1.41 Law means any statute, code, rule, regulation, ordinance, writ, injunction, order, decree, ruling, court decision, condition of approval or authorization, or other legally binding condition or requirement of any governmental authority (including but not limited to federal, California and City authorities) or quasi-governmental body having or exercising jurisdiction or control over Developer, City, or the Site or any portion thereof. 1.1.42 Losses and Liabilities means all claims, demands, causes of action, liabilities, losses, damages, judgments, injuries, expenses (including, without limitation, reasonable attorneys’ fees and costs incurred by the indemnified party for legal counsel reasonably acceptable to it) charges, penalties or costs of whatever character, nature and kind, whether to property or to person, and whether by direct or derivative action, known or unknown, suspected or unsuspected, latent or patent, existing or contingent. 1.1.43 Memorandum of Agreement means the recorded instrument recorded on the Site providing notice of the terms and conditions of this Agreement in the form Attached as Attachment No. 11. 1.1.44 Memorandum of Option means the instrument documenting the City’s option to purchase the Site from Developer under certain conditions in the form attached as Attachment No. 10. 1.1.45 Mortgage means any and all security instruments used in California, such as, without limitation, deeds of trust, security deeds, and conditional deeds, as well as financing statements, security agreements and other documentation required pursuant to the Uniform Commercial Code. The term "Mortgage," whenever used herein, shall also include any instruments required in connection with a sale-leaseback transaction. 10677-0013\933044v6=7.doc - 5 -DRAFT 0g08/-I-301/0-707 1.1.46 Municipal Code means the City of Palo Alto Municipal Code, as it presently exists or may subsequently be amended. 1.1.47 NEPA means the National Environmental Policy Act. 1.1.48 Ole’s Parcel means the real property located at 801/809 Alma, Palo Alto, and described more particularly on Attachment No. 1-B. 1.1.49 Ole’s Purchase Agreement is defined in Recital B. 1.1.50 _Option shall mean the right of the City to purchase the Site upon the occurrence of certain Developer defaults, as defined more particularly in Sections 8.5.4 and Attachment No. 10. 1.1.51 Ownership Transfer/Transferee means and includes any voluntary or involuntary transfer, sale, assignment, lease, sublease, license, franchise, concession, operating agreement, gift, hypothecation, mortgage, pledge or encumbrance, or the like to any person or entity ("Transferee"), or any change in Control of Developer. 1.1.52 Party, Parties means one or both of City and Developer, as applicable. Agreement. 1.1.53 Permitted Encumbrances means any Encumbrance permitted by this 1.1.54 Person means an individual, corporation, partnership, limited liability company, joint venture, association, firm, joint stock company, trust, unincorporated association or other entity. 1.1.55 Qualified Financial Institution shall mean a bank, savings and loan, pension fund, insurance company or other institutional entity 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 City, has a sufficient net worth and liquidity position to meet the contemplated financing commitment. 1.1.56 Regulatory Agreement means the regulatory agreement required by the City to be recorded on the Site in the form attached hereto as Attachment No. 9. 1.1.57 Relocation Costs means: (i) the cost of retaining a relocation consultant or consultants for the Development; (ii) all payments made for relocation benefits required by the Relocation Law; (iii) all liability, loss, damage, costs, or expenses of Developer and City arising from or as a result of the claim of any person for relocation benefits alleged to arise as a result of this Agreement or the Development; (iv) attorneys’ fees and court costs of Developer or City for any third party litigation (including for appeals, if any) relating to relocation, including but not limited to litigation regarding any claim for relocation benefits pursuant to the Relocation Law, and (v) attorneys’ fees and costs of Developer and City, including costs of a hearing officer(s) (if any), relating to exercise of the grievance procedures established by City pursuant to 25 California Code of Regulations Section 6150, et seq. 1.1.58 Relocation Law means Law applying to relocation of displaced Persons, including but not limited to the State Relocation Assistance Act, Cal. Gov’t. Code §§ 7260 et seq., the regulations contained in Title 25, California Code of Regulations, Chapter 6, Subchapter 1; the City Relocation Assistance and Real Property Guidelines; the Uniform Relocation Assistance andReal Property Acquisition Policies Act of 1970, 42 U.S.C. §§ 4601 et seq., HUD Handbook 1378; and the City’s Relocation Guidelines. 10677-0013\933044v6=7.doc - 6 -DRAFT lgT0814-30110-707 1.1.59 Remediation and Remediate means actions taken to correct or remediate any Environmental Condition on the Site, including, but not limited, to the removal and disposal of any Hazardous Material, and the implementation of the terms of any remediation plan and any amendments thereto. 1.1.60 Remediation Costs means the amounts expended for Remediation or response to an Environmental Condition, and amounts expended to determine the extent of the Environmental Condition and to determine the appropriate means of Remediation or response, including any investigation, testing, sampling, monitoring or assessment expenses, attorney’s or environmental professional’s fees, and the costs of surveys, plans, audits or analyses. "Remediation Costs" also includes the premium for environmental cost containment and environmental liability insurance, if such insurance is obtained, in form and with coverage limits acceptable to both Parties. 1.1.61 Restriction Termination Date is defined in Section 6.2.4. 1.1.62 Schedule of Performance means the Schedule of Performance attached hereto as Attachment No. 3 and incorporated herein by reference, setting out the dates and time periods by which certain obligations set forth in this Agreement must be met. 1.1.63 Scope of Development means the Scope of Development attached hereto as Attachment No. 5 and incorporated by reference herein, which describes the Improvements to be constructed by Developer pursuant to the terms and conditions of this Agreement. 1.1.64 Site means the City Parcel together with the Ole’s Parcel, as described more particularly on Attachment No. 2-A. The Site is generally depicted on the "Site Map" which is attached hereto as Attachment No. 2-B. 1.1.65 Sources and Uses Budget means the City-approved budget for the acquisition, construction and operation of the Development attached as Attachment No. 6 1.1.66 Substation is defined in Recital A. 1.1.67 Title Company means First American Title Insurance Company, 1737 North First St. Suite 100, San Jose, CA 95112, or another mutually acceptable title company agreed to by the Parties. 1.1.68 Title Documents shall have the meaning set forth in Section 4.6.1. 1.1.69 Very Low Income Households means Households with adjusted household incomes that do not exceed fifty percent (50%) of the Area Median Income, or the very low income qualifying limits established in accordance with Health and Safety Code Section 50079.5, as it may subsequently be amended. ARTICLE 2 PURPOSE OF AGREEMENT; PARTIES; REPRESENTATIONS AND WARRANTIES 2.1 Purpose of the A~eement The purpose of this Agreement is to provide for the development of the Site as either (i) a mixed-use project that includes affordable multi-family rental housing or (ii) affordable multi- family rental housing, in which the residential units are occupied (or reserved for occupancy) by certain levels of Very Low Income Households. Pursuant to, in accordance with, and upon 10677-0013\933044v6=7.doc - 7 -DRAFT 13-7-08/4-3_01/l)-707 satisfaction of the conditions of this Agreement: (a) City will convey the City Parcel to Developer; (b) City will provide the City Loan to assist Developer with the cost of acquiring the Ole’s Parcel; (c) Developer will acquire the Ole’s Parcel; (d) Developer will obtain Final Approval of all Entitlements necessary for the Development; (e) Developer will construct on the Site (i) ground level commercial retail and thirty-five (35) to fifty-five (55) residential apartment units, or (ii) fifty (50) to fifty-five (55) units of residential apartment units, or (iii) such other project approved in writing by the City; (f) if the mixed-use project is developed, Developer will subdivide the Site to create commercial condominiums in accordance with state law for the ground level commercial/retail portions of the Site; and (g) Developer will operate the Development (or cause it to be operated) thereafter in accordance with the Regulatory Agreement. The development of the Site pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety and welfare of its residents and in accord with the public purposes and provisions of applicable federal, California and local Laws, and within the jurisdiction and powers of City. This Agreement is entered into for the purpose of developing the Site with a development that increases the City’s supply of affordable multi-family housing for Very Low Income Households, and not for speculation in landholding. 2.2 ~ City is a chartered city of the State of California. The principal address of City is 250 Hamilton Avenue, Palo Alto, California 94301. The term "City" includes any assignee or successor to City’s rights, powers and responsibilities under this Agreement. 2.3 Developer 2.3.1 Developer consists of Community Housing Alliance, Inc., a California non-profit public benefit corporation, having its principal office at 948 Ramona Street, Palo Alto, California 94301 and Eden Housing Inc., a California non-profit public benefit corporation, having its principal office at 409 Jackson Street, Hayward, California 94544. CHA and Eden contemplate forming a California non-profit public benefit corporation or limited liability company, which in turn will be the general partner of a California limited partnership (the "Partnership"). The Partnership will be assigned and will assume the role of Developer in accordance with Section 2.6.3 of this Agreement on or before the Closing Date. The term "Developer" includes any legally and contractually permissible nominee, assignee or successor to Developer’s rights, powers and responsibilities hereunder. All of the terms, covenants, and conditions of this Agreement shall be binding on such successors and assigns of Developer. 2.4 City Representations City, acknowledging that each provision in this Section 2.4 is material and is being relied on by Developer, hereby represents and warrants the following to Developer for the purpose of inducing Developer to enter into this Agreement and to consummate the transactions contemplated hereby, all of which shall be true as of the date hereof and as of the Close of Escrow: (a) City has the legal power, right and authority to enter into this Agreement and the instruments and documents referenced herein to which City is a party, to consummate the transactions contemplated hereby, to take any steps or actions contemplated hereby, and to perform its obligations hereunder. 10677-0013\933044v~7~doc - 8 -DRAFT 0-7081-!-301/10-707 (b) All requisite action has been taken by City and all requisite consents have been obtained in connection with entering into this Agreement and the instruments and documents referenced herein to which City is a party, and the consummation of the transaction contemplated hereby, and, to the best knowledge of City, the same comply with all applicable Laws. There are no writs, injunctions, orders or decrees of any court or governmental body that would be violated by the City entering into or performing its obligations under this Agreement. (c) This Agreement is duly executed by City, and all agreements, instruments and documents to be executed by City pursuant to this Agreement shall, at such time as they are required to be executed hereunder, be duly executed by City, and each such agreement is, or shall be at such time as it is required to be executed hereunder, valid and legally binding upon City and enforceable in accordance with its terms, and the execution and delivery thereof shall not, with due notice or the passage of time, constitute a default under or violate.the terms of any indenture, agreement or other instrument to which City is a party. 2.5 Developer Representations Developer, acknowledging that each provision in this Section 2.5 is material and is being relied upon by City, represents and warrants the following to City for the purpose of inducing City to enter into this Agreement and to consummate the transactions contemplated hereby, all of which shall be true as of the date hereof and as of the Close of Escrow: (a) Developer has the legal power, right and authority to enter into this Agreement and the instruments and documents referenced herein, to consummate the transactions contemplated hereby, to take any steps or actions contemplated hereby, and to perform its obligations hereunder. (b) All requisite action has been taken by Developer and all requisite consents have been obtained by Developer in connection with entering into this Agreement and the instruments and documents referenced herein, and the consummation of the transactions contemplated hereby. (c) To the best knowledge of Developer, the execution, delivery and performance by Developer of this Agreement will not violate any provision of Law, or any indenture, agreement or other instrument to which Developer is a party or by which Developer or any of its properties is bound. (d) This Agreement is, and all agreements, instruments and documents to be executed by Developer pursuant to this Agreement shall be, duly executed by and are, or shall be, valid and legally binding upon Developer and enforceable in accordance with their respective terms, and the execution and delivery thereof shall not, with due notice or the passage of time, constitute a default under or violate the terms of any indenture, agreement or other instrument to which Developer is a party. 2.6 Prohibition A~ainst Transfer of Site 2.6.1 Developer represents that its undertakings pursuant to this Agreement are for the purpose of development of the Site as a mixed-use project that includes affordable multi- family rental housing for Very Low Income Households, and not for speculation in landholding. Developer further recognizes that, in view of: (a) welfare of the community; the importance of the development of the Site to the general 10677-0013\933044v6:.7~doc - 9 -DRAFT 0-708/4-301/1~707 (b) the public assistance that has been made available by Law and by City for the purpose of making such development possible; and (c) the fact that a change in ownership or control of Developer or of a substantial part thereof, or any other act or transaction involving or resulting in a significant change in ownership or control of Developer, is for practical purposes a transfer or disposition of the City Parcel being conveyed to Developer; The qualifications and identity of Developer and its principals are of particular concern to City. It is because of those qualifications and identity that City has entered into this Agreement with Developer. No voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. Unless an Ownership Transfer is specifically permitted by this Agreement, Developer shall not assign all or any part of this Agreement or any interest in the Site without the prior written approval of City. 2.6.2 Developer shall not, except as permitted by this Agreement, effect any change in Control of Developer, or of the general partner of Developer; assign or attempt to assign this Agreement or any rights herein; or make any total or partial sale, transfer, or conveyance of the whole or any part of the Site or the buildings or structures now existing or to be constructed thereon without prior written approval of City which approval shall not be unreasonably delayed, withheld or conditioned. Any such approval shall not constitute a release of Developer of its obligations hereunder, except to the extent agreed to in writing by City. prohibit: 2.6.3 Notwithstanding the foregoing, this Section 2.6 shall not prevent or (a)any change in personnel of Developer; (b)any Ownership Transfer to an entity that is Controlled by a California nonprofit public benefit corporation or limited liability company formed by Developer or in the case of a limited partnership, where the general partner is controlled by Developer; (c) any sale of a commercial condominium for ground level commercial/retail space in the Development that has been subdivided in accordance with state law; and (d)any sale or transfer approved in writing by City. 2.6.4 (a)Any proposed Transferee of Developer who must be approved by City, shall have the financial and development qualifications, as may be reasonably determined by City, to fulfill the obligations undertaken in this Agreement by the transferor. (b) Any proposed Transferee, by instrument in writing satisfactory to City and in form recordable among the land records of Santa Clara County, for itself and its successors and assigns, and for the benefit of City, shall expressly assume all of the obligations of Developer under this Agreement and shall agree to be subject to all the conditions and restrictions to which Developer is subject. All relevant instruments and other legal documents proposed to affect any such transfer shall be submitted to City, and if the Transferee is approved by City, its approval shall be presented to Developer in writing. (c) The provisions of this subsection 2.6.4 shall not apply to any Transferee authorized by subsection 2.6.3. 10677-0013\933044v6,.7.doc - 10 -DRAFT 1~708/4-30110707 2.6.5 If there is any Ownership Transfer of Developer not approved by City or otherwise permitted as set forth in this Agreement, City may take such action as City may deem appropriate to assure City that the Improvements will be completed, including without limiting the generality of the foregoing, terminating this Agreement and exercising any rights set forth in this Agreement; provided, however, that City shall not terminate this Agreement without first providing Developer written notice and opportunity to cure pursuant to the provisions of Section 8.1. In the absence of specific written agreement by City, no such sale, transfer, conveyance or assignment of the Site shall be deemed to relieve Developer from any obligations under this Agreement. ARTICLE 3 GENERAL PERFORMANCE OBLIGATIONS 3.1 Schedule of Performance Subject to the provisions of Section 9.3 (Force Majeure), Developer and City shall perform their obligations hereunder by the deadlines specified in the Schedule of Performance attached hereto as Attachment No. 3 and incorporated herein by this reference, or such reasonable extension of those dates as may be granted by each Party to the other in writing. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing by Developer and City. 3.2 Delegation to City Manager 3.2.1 The City Manager is hereby authorized to take any and all steps necessary to complete the sale of the City Parcel and to implement the provisions of this Agreement applicable to the City. 3.2.2 The City Manager is further authorized, on behalf of City, to: (a) approve extensions of time hereunder, so long as the cumulative total of such extensions does not exceed three hundred and sixty five (365) days; (b) approve, waive or make comments in connection with Developer’s submittals described in Article 5; and (c) waive any of City’s conditions or requirements to the Close of Escrow (except the condition that all applicable requirements of CEQA and/or NEPA be complied with, which condition may not be waived). Any such modifications or extensions shall be incorporated into the Schedule of Performance and this Agreement without need for an amendment of this Agreement. No action of the City Manager pursuant to this Section shall be effective unless it is express and in writing. 3.2.3 The City Manager may grant, in writing, any approval requested by Developer pursuant to subsection 3.2.2, or, in the exercise of his or her reasonable discretion, refer such matters to the City Council for its approval or disapproval. In addition, notwithstanding the time periods (if any) for such approvals set forth in this Agreement, if the City Manager deems it appropriate or necessary to hold a public meeting before the action specified is to be taken, the period for such action by City shall be extended by a reasonable amount of time, not to exceed thirty (30) days in each case, for the holding of such public meeting. In that event, the period of delay attributable to the public meeting shall extend the time(s) for Developer’s performance by a commensurate period. 3.3 Construction Contract Within the time established therefor in the Schedule of Performance, Developer shall submit to the City a list of proposed general contractors that it is considering retaining to construct the Project. City shall have ten (10) days to object to any contractor on the list and state the reasons for the objection, in which case Developer shall not retain the contractor 10677-0013\933044vr=7.doc - 11 -DRAFF 0-708/4-301/g707 objected to by City. If City does not respond in writing within ten (10) days of receiving the list, City shall be deemed to have no objections to any of the proposed contractors. Within ten (10) days of entering into a contract (the "Construction Contract") with its selected general contractor (the "General Contractor"), Developer shall submit a copy of the Construction Contract to the City. The Construction Contract shall obligate the General Contractor to construct the Improvements on the Site for a fixed price (subject to adjustment pursuant to the Construction Contract) that is within the amount of available budget approved by City. The Construction Contract shall provide for completion of the Improvements on a schedule consistent with the Schedule of Performance. 3.4 Relocation The City shall comply with the Relocation Law in preparing the City Parcel for conveyance to Developer, and the City shall bear all Relocation Costs arising from its conveyance of the City Parcel. To the extent the Developer’s acquisition of the Ole’s Parcel requires compliance with the Relocation Law, Developer shall be solely responsible for payment of the Relocation Costs attributable to the Ole’s Parcel. 3.5 Submission of Evidence of Financin~ 3.5.1 Developer has previously submitted to City the Sources and Uses Budget for the Development attached hereto as Attachment No. 6. Developer shall complete the construction of the Improvements in accordance with the Sources and Uses Budget. Notwithstanding the foregoing, the parties anticipate that the Development will be funded in part by Low Income Housing Tax Credit Proceeds (the "Tax Credit") and other state and local government housing loan programs, and the parties agree to make such changes to the Sources and Uses Budget as may be reasonably necessary to utilize the Tax Credit and other government loan programs. Developer agees to make continuing full disclosure to City as to its proposed financing methods. City agrees to reasonably cooperate with the Developer, without cost to the City, in its applications for the Tax Credit, bond financing, state loans or other similar types of financing for the Development. 3.5.2 Within the time established therefor in the Schedule of Performance, Developer shall submit to the City Manager evidence that Developer has obtained, or will obtain prior to the date set forth in the Schedule of Performance for the commencement of construction, sufficient commitments for financing to finance the completion of the Improvements, such that the City Manager is reasonably satisfied that the Improvements can be constructed. ARTICLE 4 CITY PARCEL DISPOSITION 4.1 Conveyance of Cit7 Parcel Developer and City agree that, within the times provided therefor in the Schedule of Performance (subject to Force Majeure and any other mutually agreed upon extension of time), and subject to the conditions, provisions and terms of this Agreement, City shall convey fee simple title to the City Parcel to Developer. The City Parcel shall be conveyed via grant deed, in the form attached hereto as Attachment No. 4 and incorporated herein by this reference (the "Grant Deed"). City and Developer shall perform all acts reasonably necessary for possession and title to the City Parcel to be conveyed in accordance with this Agreement. 4.2 Conditions Precedent to Conveyance 10677-0013\933044v6=7=doc - 12 -DRAFF 1;~708/4-30110-707 4.2.1 City Conditions Precedent The obligation of City to convey the City Parcel to Developer is subject to the following conditions precedent: (a) Developer shall have timely.performed those obligations that Developer is required by the terms of this Agreement to perform prior to the conveyance of the City Parcel; (b) Developer shall have delivered into Escrow the executed and acknowledged City Deed of Trust; (c) Developer shall have submitted and the City Manager shall have approved the proof of insurance required by Section 5.11; (d) Developer shall have delivered to City a construction budget demonstrating to the satisfaction of the City Manager the availability of sufficient funds to construct the Improvements; (e) The City Manager, in his or her reasonable discretion, is satisfied that the operation of Development will be financially feasible; (f) Escrow Agent shall have notified the City Manager in writing that it is prepared to close escrow under the Ole’s Purchase Agreement simultaneously with the Closing hereunder;. (g) All representations and warranties made by Developer to City in this Agreement shall be true and correct as of the Close of Escrow; and (h) Developer shall not be in default of this Agreement. 4.2.2 Developer Conditions Precedent The obligation of Developer to accept title to the City Parcel is subject to the following conditions precedent: (a) The Title Company has committed to issue the Developer Title Policy in accordance with Section 4.4~ (b) The Substation shall have been closed and removed from the City Parcel and the City Parcel shall have been remediated in accordance with Section 4.5.2 below; (c) City shall have delivered into Escrow the executed and acknowledged Grant Deed; (d) City shall have timely performed all of the obligations required by the terms of this Agreement to be performed by City prior to the conveyance of the City Parcel; (e) Escrow Agent shall have notified Developer in writing that it is prepared to close escrow under the Ole’s Purchase Agreement simultaneously with the Closing hereunder; and (f) City shall not be in default of this Agreement. 10677-0013\933044v6,7_.doc - 13 -DRAFr 67-0814-301/0707 4.3 Condition of Title 4.3.1 Title Documents Upon the opening of escrow, City shall order from Title Company a preliminary title report (the "Preliminary Title Report") for the City Parcel. The Title Company shall also provide two legible copies of each instrument identified as exceptions on the Preliminary Title Report. The Preliminary Title Report and the copies of the instruments noted as exceptions therein, are referred to herein as the "Title Documents." City shall cause the Title Company to deliver the Title Documents to Developer, with copies to City, within ten (10) days after the opening of Escrow. 4.3.2 Condition of Title It shall be a condition to the close of escrow and a covenant of City that City shall convey to Developer fee simple title to the City Parcel, free and clear of all recorded or unrecorded liens, Encumbrances, covenants, conditions, restrictions, assessments, easements, leases and taxes, subject only to the following title exceptions ("Approved Title Exceptions"): (a)A lien to secure payment of real estate taxes, not delinquent; (b)The lien of supplemental taxes assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code ("Code"), but only to the extent that such supplemental taxes are attributable to the transaction contemplated by this Agreement. City shall be responsible for, and hereby indemnifies Developer against, any supplemental taxes assessed pursuant to the Code, to the extent that such taxes relate to events (including, without limitation, any changes in ownership and/or new construction) occurring prior to the Close of Escrow; (c) Non-monetary matters affecting the title created by or with the written consent of Developer; (d) affecting the City Parcel; The applicable zoning, building and development regulations (e) Any Permitted Encumbrance or the security instruments required by the funding sources listed in the Sources and Uses Budget. 4.3.3 Developer shall have sixty (60) days from receipt of all of the Title Documents ("Title Approval Date") to give City and Escrow Agent written notice ("Developer’s Title Notice") of Developer’s disapproval or conditional approval of the legal description or any matters shown in the Title Documents. The failure to timely deliver Developer’s Title Notice shall constitute both a waiver of Developer’s right to object and an irrevocable determination that Developer has approved the Title Documents in all respects, including but not limited to any exceptions contained in the Title Documents and not listed above. If Developer disapproves or conditionally approves the legal description and/or any non-monetary matters of title shown in the Title Documents, City may, within thirty (30) days after its receipt of Developer’s Title Notice, elect to eliminate or ameliorate to Developer’s satisfaction the disapproved or conditionally approved title matters. City shall give Developer written notice ("City’s Title Notice") of those disapproved or conditionally approved title matters, if any, which City covenants and agrees to either eliminate from the Title Policy as exceptions to title, or to ameliorate to Developer’s satisfaction by the Closing Date. 10677-0013\933044v6,.7~doc - t 4 -DRAFT !3-708/4-301/0-707 If City does not elect to eliminate or ameliorate to Developer’s satisfaction any disapproved or conditionally approved title matters, or if, despite its reasonable efforts, City is unable to eliminate or ameliorate to Developer’s satisfaction all such disapproved matters prior to the Closing Date, then Developer shall have the fight, by a writing delivered to City and Escrow Agent within ten (10) days receipt of City’s Title Notice, to: (1) waive its prior disapproval, in which event the disapproved matters shall be deemed approved; or (2) terminate this Agreement and the Escrow created pursuant hereto (such termination does not require compliance with the notice and cure provisions of Section 8.1). 4.4 Title Insurance 4.4.1 As a condition to the Close of Escrow, Escrow Agent shall cause the Title Company to issue and deliver to Developer, a CLTA standard coverage policy of title insurance (or at Developer’s option, an ALTA policy) in the amount of the fair market value of the City Parcel insuring that fee simple title to the City Parcel is vested in Developer in the condition required by Section 4.3.2 of this Agreement ("Developer Title Policy"). 4.4.2 As a condition to the Close of Escrow, Escrow Agent shall cause the Title Company to issue and deliver to City, a CLTA standard coverage policy of title insurance (or at City’s option, an ALTA policy) in the amount of the City Loan insuring that the City Deed of Trust is a valid lien in first position on the Ole’s Parcel as of the Closing Date ("City Title Policy"). 4.4.3 As a condition to the Close of Escrow, Escrow Agent shall cause the Title Company to issue and deliver to Developer, the title insurance policies required by the Ole’s Purchase Agreement. 4.4.4 City shall pay the title insurance premium for the City Title Policy and the Developer Title Policy attributable to a CLTA standard form; Developer shall be solely responsible to pay any additional costs associated with an ALTA title policy, including the costs of survey, and for all additional or other premiums for extended coverage or other special endorsements. Payment for premiums for policies under the Ole’s Purchase Agreement shall be made as required by the Ole’s Purchase Agreement. 4.5 Condition of City Parcel 4.5.1 Inspection and Survey Representatives of Developer shall have the fight of access to and entry at all reasonable times, for the purpose of inspecting the condition of the City Parcel and obtaining data and making surveys and tests necessary to carry out this Agreement. Entry of Developer onto the City Parcel pursuant to this subsection shall be subject to the provisions of Sections 5.10 and 5.11 (Insurance and Indemnification) (except that Builder’s Risk Insurance and the coverages applicable solely to the General Contractor shall not be required prior to the Close of Escrow and commencement of construction), and to the other provisions of a standard City access permit, on a form to be supplied by City. Developer shall defend, indemnify and hold City harmless from any costs, claims, damages or liabilities pertaining to or arising from the performance of any such tests and inspections by Developer or any such activities of Developer on the City Parcel. In the event Developer fails to accept title to the City Parcel, Developer shall immediately repair all damage to the City Parcel caused by entry of Developer onto the City Parcel and tests performed thereon by Developer. 10677-0013\933044 v~7.doc - 15 -DRAFT g7-08/4-301/g707 4.5.2 Physical Condition of the City Parcel (a) City shall, at its own expense, cause the demolition of the Substation and other improvements currently on the City Parcel prior to January 1, 2008. To the extent, Remediation is required by a state or federal agency, City shall complete such Remediation by July 1, 2008 and provide Developer a copy of documentation showing that the Remediation has been completed in accordance with the applicable state or federal agency requirements. 4.5.3 Environmental Indemnity - City Parcel (a) To the fullest extent permitted by law, City shall indemnify, defend and hold harmless Developer and its successors and assigns and any and all of their respective employees, officials, representatives, attorneys, and agents (collectively, the "Developer Indemnitees") from and against any known or unknown claim, loss, damages, liability, obligation (including, without limitation, any obligation to monitor, test, sample, report to governmental authorities, remediate or clean up, or any obligation under a permit or order), expense, contribution or indemnity obligation (whether under any Environmental Law or any other statute, common law or in equity), Remediation Costs for the City Parcel or any other claims, demands, causes of action, suits, judgments, debts, costs, losses, penalties, fines, encumbrances, rights, obligations, indemnities, liens, expenses (including but not limited to any claims for attorneys’ fees and costs), settlements, professionals’ fees, tax claims, claims for payment, claims for contribution or indemnity (whether statutory, contractual or equitable), of any and every kind or nature whatsoever that relate to the City Parcel, and (i) whether based on strict liability, active or passive negligence, gross negligence, contractual or statutory liability, or otherwise; or (ii) whether seeking judicial, arbitral, administrative, or equitable relief or otherwise, costs and expenses of investigation, analysis, Remediation, and defense of any claim, and whether or not any such claim is ultimately defeated; or (iii) whether seeking a fine or penalty; or (iv) whether incurred by a Party hereto or claimed by any third party (including, without limitation, any governmental entity), arising out of or relating to any actual, alleged or threatened discharge, release, emission, spill or migration into the environment, or any such discharge, release, disposal, emission, spill, migration, or Remediation of any Hazardous Material on or under the City Parcel or emanating from the City Parcel, or any other Environmental Condition at the City Parcel (collectively, "City Parcel Environmental Claims"). The City’s obligations under this paragraph shall not include any clean up. remediation or related costs arisin~ from the Ole’s Parcel. (b) Notwithstanding the foregoing, the City Parcel Environmental Claims shall not include the ordinary costs of excavation and disposal of soils or materials from the City Parcel to the extent such work is done as part of the construction of the Development and not as a part of Remediation required by a state or federal agency. (c) (4~)-Failure of Developer Indemnitees to monitor compliance with these requirements imposes no additional obligations on Developer Indemnitees and will in no way act as a waiver of any rights hereunder. This obligation to indemnify and defend Developer Indemnitees as set forth herein is binding on the successors and assigns of City and shall survive the expiration or termination of this Agreement. (d) (-e-)-----City will also defend the Developer Indemnitees from any such Property Environmental Claims described herein, provided, however, that the Developer Indemnitees shall have the right to select attorneys of its own choice to represent it at City’s expense, but with City’s consent, which shall not be unreasonably withheld. 10677-0013\933044v6=7_.doc - 16 -DRAFT 0-70814-301/0-707 4.6 Disposition Escrow City and Developer shall open an escrow ("Escrow") for the City Parcel with First American Title Insurance Company, 1737 North First St., Suite 100, San Jose, CA 95112, Attention: Gail A. Deaver ("Escrow Holder"), or another mutually acceptable escrow company agreed to by the Parties ("Escrow Agent") by the time established therefor in the Schedule of Performance. This Agreement constitutes the joint basic escrow instructions of City and Developer for City’s conveyance of the City Parcel and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon the opening of the Escrow. City and Developer shall provide such additional or revised escrow instructions as shall be necessary for and consistent with this Agreement. In the event of any conflict between the provisions of this Agreement and the "standard form" escrow instructions of Escrow Agent, the provisions of this Agreement shall control. Escrow Agent is empowered to and shall carry out its duties as Escrow Agent under this Agreement. 4.6.1 Deposits into Escrow (a) Developer shall pay in escrow to the Escrow Agent the following fees, charges and costs promptly after the Escrow Agent has notified Developer of the amount of such fees, charges and costs, but not earlier than five (5) days prior to the scheduled date for closing the escrow: (i)The portion(s) of the premium for the Developer Title Policy attributable to the extended coverage (including the costs of the ALTA survey, if any) or other special endorsements, if any; (ii) One-half of the escrow fees and any and all other fees, including but not limited to recording fee and notary fees, necessary to close the escrow. (b) City shall pay in escrow to the Escrow Agent the City Loan less the City Advance (pursuant to Section 7.2.1 below), and the following fees, charges and costs promptly after the Escrow Agent has notified City of the amount of such fees, charges and costs, but not earlier than five (5) days prior to the scheduled date for closing the Escrow: (i)6i-)-Ad valorem taxes, if any, upon the City Parcel; (ii) 04i-)-The premium for the City Title Policy and portion of the premium for the Developer Title Policy attributable to the CLTA standard form; such transfer; 0-v)-Any documentary stamps or transfer tax imposed for (iv) (-@One-half of the escrow fees and any and all other fees, including but not limited to recording and notary fees, necessary to close the Escro;vescrow. (c) City and Developer shall timely and properly execute, acknowledge and deliver into Escrow, the Regulatory Agreement, the Memorandum of Option and the Memorandum of Agreement, along with the instruments required to be delivered to Escrow by the respective parties by Section 4.2. 10677-0013k933044 v~7_.doc - 17 -DRAFT 0708/-t-30_ 1/070_~7 (d) It shall be an express condition to the Close of Escrow that the Escrow Holder shall be prepared to close simultaneously the sale of the Ole’s Parcel to Developer pursuant to the Ole’s Purchase Agreement. (e)Subject to Section 4.6.1 (d), the Escrow Agent is authorized to: (i) Pay, and charge Developer and City for any fees, charges and costs payable under this subsection. Before such payments or charges are made, the Escrow Agent shall notify City and Developer in writing of the fees, charges and costs necessary to reconvey monetary liens in order to close the Escrow. (ii) Disburse the City Loan into the escrow under the Ole’s Parcel Purchase Agreement, as well as the other funds hereunder to the respective Party due the same and deliver any documents to the parties entitled thereto when the conditions of this Escrow have been fulfilled by City and Developer. (iii) Record the Grant Deed, the City Deed of Trust, the deed to the Ole’s Parcel, the Regulatory Agreement, the Memorandum of Option and the Memorandum of Agreement, in accordance with the terms and provisions of this A~eement. (f)All funds received in the Escrow shall be deposited by the Escrow Agent in a separate interest-earning account or accounts with any state or national bank doing business in the State of California and reasonably approved by Developer; interest so earned shall be payable to Developer. All disbursements shall be made by check of the Escrow Agent.. All adjustments are to be made on the basis of a thirty (30) day month. (g) If Escrow cannot be closed on the Closing Date, because a Party has failed to perform its obligations under this Agreement, then the Party who then shall have fully performed the acts to be performed before the conveyance of title may, in writing, demand from the Escrow Agent the return of its money, papers or documents deposited with the Escrow Agent. No demand for return shall be recognized until ten (10) days after the Escrow Agent (or the demanding Party) shall have mailed copies of such demand to the other Party or Parties at the address of its or their principal place or places of business. Objections, if any, shall be raised by written notice to the Escrow Agent and to the other Party within the ten (10) day period, in which event the Escrow Agent is authorized to hold all money, papers and documents until instructed by a mutual agreement of the Parties or by a court of competent jurisdiction. If no such demands are made, the Escrow shall be closed as soon as possible. (h) If objections are raised as set forth above, the Escrow Agent shall not be obligated to return any such money, papers or documents except upon the written instructions of City and Developer or until the Party entitled thereto has been determined by a final decision of a court of competent jurisdiction. If no such objections are made within the ten (10) day period, the Escrow Agent shall immediately return the demanded money, papers and documents; and the escrow cancellation fees shall be paid by the non-demanding Party. (i)All communications from the Escrow Agent, City, or Developer shall be directed to the addresses and in the manner established in Section 9.1 of this Agreement for notices, demands and communications between City and Developer. (j) The liability of the Escrow Agent under this Agreement is limited to performance of the obligations imposed upon it pursuant to this Article 4. 4.6.2 Conveyance of Title and Delivery of Possession 10677-0013\933044v~7=.doc - 18 -DRAFT 070814301/f0-707 Subject to any extensions of time mutually agreed upon in writing between the Parties, the conveyance to Developer shall be completed on or before the Closing Date. The Parties agree to perform all acts necessary for conveyance of title and possession in sufficient time for title and possession of the City Parcel to be conveyed in accordance with the foregoing provisions. 4.6.3 Close of Escrow For purposes of this Agreement, "Close of Escrow" shall be defined as the date that the Grant Deed, the City Deed of Trust, the Regulatory Agreement, the Memorandum of Option, the Memorandum of Agreement and the deed of the Ole’s Parcel pursuant to the Ole’s Purchase Agreement are recorded among the land records in the Office of the County Recorder for Santa Clara County. The Close of Escrow shall occur no later than the Closing Date. 4.6.4 Taxes and Assessments Ad valorem taxes and assessments, if any, on the City Parcel levied, assessed or imposed for any period commencing prior to the Closing Date shall be prorated as of the Closing Date. Such taxes and assessments shall be prorated based on a 30-day month and a 360-day year. Those taxes and assessments levied or imposed for any period commencing prior to the Close of Escrow on the City Parcel, prorated up to and including the Closing Date, shall be paid by City. Developer shall pay those taxes and assessments levied or imposed for any period commencing after the Closing Date, as well as Developer’s prorated share of those taxes and assessments levied or imposed prior to the Close of Escrow. Nothing herein shall limit the fight of Developer or City to contest in good faith or pursue all remedies in challenging any such assessments or taxes. 4.6.5 Possession City shall convey the City Parcel to Developer free of any possession or fight of possession, except the possession of parties consented to by Developer in writing, in its sole and absolute discretion. 4.6.6 Recordation (a) Upon the Close of Escrow, the Escrow Agent shall cause the Grant Deed, the City Deed of Trust, the deed to the Ole’s Parcel, the Regulatory Agreement, the Memorandum of Option, and the Memorandum of Agreement to be recorded among the land records in the Official Records of Santa Clara County. The Grant Deed shall be recorded on the City Parcel, subject only to the Approved Title Exceptions in Section 4.3.2. All other instruments shall be recorded on the Site (i.e., on both the City Parcel and the Ole’s Parcel). (b) Escrow Agent shall provide both City and Developer with conformed copies of all documents recorded in connection with this Agreement. ARTICLE 5 DEVELOPMENT OF THE SITE 5.1 Scope of Development Upon the Close of Escrow, Developer shall promptly begin and thereafter diligently prosecute to completion the improvement of the Site as provided in the Scope of Development and Schedule of Performance. Subject to Section 9.3 hereof, Developer shall begin and complete all construction and development within the times specified in the Schedule 10677-0013\933044v6=7~doc - 19 -DRAFT t~-08/4-30111)707 of Performance or such reasonable extension of those dates as may be granted by each Party to the other in writing. 5.2 Developer’s Submittals of Design and Construction Documents Developer shall submit Development Plans for the Development in accordance with applicable Municipal Code requirements. 5.3 City Review and Approval of Plans, Drawings, and Related Documents 5.3.1 City shall have approval rights over plans, drawings and related documents described in Section 5.2, including any changes proposed to such documents or drawings in accordance with the Municipal Code. 5.3.2 Except as expressly provided in this Agreement, City neither undertakes nor assumes nor will have any responsibility or duty to Developer, or to any third party to review, inspect, supervise, pass .judgment upon or inform Developer or any third party of any matter in connection with the Development, whether regarding the quality, adequacy or suitability or the plans, any labor, service, equipment or material furnished to the Development, any person furnishing the same or otherwise. Developer, and all third parties shall rely upon their own judgment regarding such matters. Any review, inspection, supervision, exercise of judgment or information supplied to Developer or to any third party by City in connection with such matter is for the public purpose of completing the proposed Development in accordance with the Municipal Code, and neither Developer (except for the purposes set forth in this Agreement), nor any third party is entitled to rely thereon. 5.3.3 Developer shall undertake reasonable community outreach and neighborhood liaison efforts through the design and construction phases of the Development, including but not limited to organizing and/or attending public information meetings as reasonably necessary. 5.4 Cost of Construction The cost of developing the Site, together with all on- and off-site improvements set forth in the Scope of Development or otherwise required by the City Building Official or the City Engineer shall be borne by Developer. The Parties hereby acknowledge and agree that any increase in costs above the amounts projected or assumed by Developer, or decreases in revenues below the amounts projected or assumed by Developer, shall be at the sole financial risk of Developer. 5.5 Prevailin~ Wages. Developer shall comply with all applicable requirements of the Prevailing Wage Laws. The Parties hereby acknowledge and agree that any increase in costs as a result of such requirements shall be at the sole financial risk of Developer. 5.6 City and Other Governmental City Permits Before commencement of construction or development of any buildings, structures or other work of improvement upon the Site, Developer shall, at its own expense, secure or cause to be secured any and all permits which may be required by City or any other governmental agency having jurisdiction over such construction or development. 5.7 Zoning and Land Use Requirements: Environmental Review 10677-0013\933044v~7~doc - 20 -DRAFT ~-0814--30110-7-07 5.7.1 Developer acknowledges and agrees that this Agreement is not a statutory development agreement pursuant to California Government Code Section 65864 et seq; and as such provides no Entitlements for the Site. Developer shall prepare and submit applications for the Entitlements for the Site in accordance with the dates listed therefor in the Schedule of Performance and thereafter diligently pursue Final Approval of the Entitlements. 5.7.2 No later than thirty (30) days after the Closing, Developer shall prepare and submit a complete application for a certificate of compliance, merger, map or other action which, in accordance with the Subdivision Map Act, will result in the combination of the Ole’s Parcel and the City Parcel into one legal parcel. Prior to the sale or leasing of any residential or commercial units in the Development, Developer shall have established a commercial condominium that separates the ground floor commercial/retail portions of the Development from the residential portions in accordance with the Subdivision Map Act. The CC&Rs and owner association by-laws for such commercial condominiums shall be subject to the review and approval by the City, which shall not be unreasonably withheld, delayed or conditioned. 5.7.3 City shall cooperate with Developer in all proceedings which may be necessary so that the development of the Site and the construction, use, operation, and maintenance of the improvements thereon in accordance with the provisions of this Agreement shall be in conformity with applicable zoning and General Plan requirements. City shall use its best efforts to expedite all necessary approvals. The costs of all environmental studies required by any governmental agency or court shall be borne by Developer. 5.7.4 Developer shall take all necessary steps so that the development of the Site and the construction, use, operation, and maintenance of the improvements thereon in accordance with the provisions of this Agreement shall be in conformity with applicable zoning and General Plan requirements, including the conditions of approval of any required land use entitlements. Pursuant to CEQA, an environmental document for the South of Forest Coordinated Area Plan, which contemplated the Development, has been prepared and certified prior to approval of this Agreement. Developer shall comply with all mitigation measures imposed on the Development pursuant to such environmental document. Additional environmental studies will be prepared before approval of the Entitlements and the costs of such studies shall be borne by Developer. 5.7.5 If any revisions or modifications to this Agreement, including the Scope of Development, shall be required to comply with any requirement of a governmental official, City, department or bureau having jurisdiction over the development of the Site, City and Developer shall cooperate in making such reasonable changes, consistent with the public purposes of this Agreement, as may be necessary. 5.8 City Rights of Access Durin~ Construction Without limiting any rights of access which City may have irrespective of this Agreement, representatives of City shall have a reasonable right of access to the Site during normal construction hours during construction, including, but not limited to, inspecting the work being performed to construct the Improvements. City representatives shall comply with all safety rules and other rules imposed by Developer, including requirements that such representatives be escorted. Such representatives of City shall be those designated in writing by the City Manager. Any such entry shall be made only after reasonable notice to Developer, and City shall defend, indemnify and hold Developer harmless from any costs, claims, damages or liabilities pertaining to or arising from any such entry by a City representative. Prior to the Restriction Termination Date, City, at its sole risk and expense, reserves the right to enter the Site or any part thereof at all reasonable times during ordinary 10677-0013\933044v~7.doc - 21 -DRAFI" 1~t-7-0814-301/t3-707 business hours and with as little interference as possible for the purpose of construction, reconstruction, maintenance, repair or service of any public improvements or public facilities located on the Site. Any such entry shall be made only after reasonable notice to Developer, except in case of emergency repairs, and City shall defend, indemnify and hold Developer harmless from any costs, claims, damages or liabilities pertaining to or arising from any such entry or the activities of City on the Site. Any damage or injury to the Site or any improvement thereon resulting from any such entry shall be promptly repaired or restored at City’s expense. 5.9 Local, State and Federal Laws Developer shall carry out the construction of the Improvements in conformity with all applicable Laws, including but not limited to all requirements of Laws related to accessibility for persons with disabilities. 5.10 Indemnification (a) Developer shall indemnify, defend and hold the City and its elected and appointed officials, officers, employees, agents and successors and assigns (collectively, the "Indemnitees" in this Section 5.10) harmless from and against any and all Losses and Liabilities arising from or in connection with, or caused by (i) any act, omission or negligence of Developer or any of Developer’s respective contractors, licensees, invitees, agents, servants or employees, wherever the same may occur; (ii) any use of the Site, or any accident, injury, death or damage to any person or property occurring in, on or about the Site or any part thereof, or from the construction or use by Developer of the Site or the Development, or from any activity, work or thing done, permitted or suffered by Developer or its contractors, employees, servants, agents or invitees, in or about the Site or elsewhere to the extent not caused by the acts or omissions of Indemnitees; and (iii) any breach or default in the performance of any obligations on Developer’s part to be performed under the terms of this Agreement, or arising from any negligence of Developer, or any such claim or any action or proceeding brought thereon, but excluding those arising solely out of the City’s negligence or intentional misconduct; and in case any action or proceeding is brought against Indemnitees by reason of any such claim, Developer upon notice from Indemnitees shall defend the same at Developer’s expense with counsel satisfactory to Indemnitees. Notwithstanding the foregoing, in the event of any litigation or claims arising under CEQA or NEPA in which Indemnitees control or are responsible for the preparation and/or review of CEQA or NEPA documentation, the indemnification provided for in this Section 5.10 shall be limited to fifty percent (50%) of such fees, costs and damages. Developer, as a material part of the consideration to City, hereby assumes all risk of damage to property or injury to persons in, upon or about the Site arising from any cause whatsoever, except as provided in Section 4.5.3. These provisions are in addition to, and not in lieu of, the insurance required to be provided by Section 5.11 below. Without affecting the rights of Indemnitees under any provision of this Agreement, Developer shall not be required to indemnify and hold harmless Indemnitees for liability attributable to the gross negligence or willful misconduct of Indemnitees, provided such gross negligence or willful misconduct is determined by agreement between the parties or by the findings of a court of competent jurisdiction. In instances where Indemnitees are shown to have been grossly negligent and where Indemnitees’ gross negligence accounts for only a percentage of the liability involved, the obligation of Developer will be for that entire portion or percentage of liability not attributable to the gross negligence of Indemnitees. Failure of Indemnitees to monitor compliance with these requirements imposes no additional obligations on Indemnitees and will in no way act as a waiver of any rights hereunder. This obligation to indemnify and defend Indemnitees as set forth here is binding on the 10677-0013\933044v6:.7.doc - 22 -DRAFF g7-0814-3011 ~13-707 successors, assigns or heirs of Developer and shall survive the termination of this Agreement or this section. (b) To the fullest extent permitted by law, Developer shall indemnify, defend and hold harmless the Indemnitees from and against any known or unknown claim, loss, damages, liability, obligation (including, without limitation, any obligation to monitor, test, sample, report to governmental authorities, remediate or clean up, or any obligation under a permit or order), expense, contribution or indemnity obligation (whether under any Environmental Law or any other statute, common law or in equity), Remediation Costs for the Ole’s Parcel or any other claims, demands, causes of action, suits, judgments, debts, costs, losses, penalties, fines, encumbrances, rights, obligations, indemnities, liens, expenses (including but not limited to any claims for attorneys’ fees and costs), settlements, professionals’ fees, tax claims, claims for payment, claims for contribution or indemnity (whether statutory, contractual or equitable), of any and every kind or nature whatsoever that relate to the Ole’s Parcel, and (i) whether based on strict liability, active or passive negligence, gross negligence, contractual or statutory liability, or otherwise; or (ii) whether seeking judicial, arbitral, administrative, or equitable relief or otherwise, costs and expenses of investigation, analysis, Remediation, and defense of any claim, and whether or not any such claim is ultimately defeated; or (iii) whether seeking a fine or penalty; or (iv) whether incurred by a Party hereto or claimed by any third party (including, without limitation, any governmental entity), arising out of or relating to any actual, alleged or threatened discharge, release, emission, spill or migration into the environment, or any such discharge, release, disposal, emission, spill, migration, or Remediation of any Hazardous Material on or under the Ole’s Parcel or emanating from the Ole’s Parcel, or any other Environmental Condition at the Ole’ s Parcel. 5.11 Bodily Injury, Property Damage and Worker’s Compensation Insurance 5.11.1 Developer shall procure at its sole cost and expense (or shall require of General Contractor as specified) and shall keep in effect from the date of this Agreement and at all times until the end of the term or as otherwise specified, the following insurance: (a) Commercial General Liability Insurance provided on Insurance Services Office form CG 00 01 or equivalent coverage. Policy limits shall be no less than one million dollars ($1,000,000) per occurrence for all coverages and two million dollars ($2,000,000) general aggregate. During construction, this insurance shall be maintained by both Developer and Developer’s general contractor. City and its employees and agents shall be added as additional insureds to Developer’s and General Contractor’s policies. On the General Contractor’s policy, the insurer shall use ISO Form CG 20 10 11 85 or equivalent (including CG 20 10 forms with later publishing dates if accompanied by form CG 20 37 providing completed operations coverage), not limiting coverage for the additional insured to "ongoing operations" or in any way excluding coveragd for completed operations. All coverage shall apply on a primary non-contributing basis in relation to any other insurance or self-insurance, primary or excess, available to City or any employee or agent of City. Coverage shall not be limited to the vicarious liability or supervisory role of any additional insured. The General Contractor’s coverage shall contain no contractors’ limitation or other endorsement that reduces coverage from that provided by the basic ISO policy or equivalent. See Section 5.11.2(d) below. (b)Umbrella (or excess) Liability Insurance (over primary) for Developer and the General Contractor shall apply to bodily injury/property damage, personal injury/advertising injury, at a minimum. Coverage shall be at least as broad as, any underlying coverage. Coverage shall be provided on a "pay on behalf’’ basis (rather than reimbursement), with defense costs payable in addition to policy limits. There shall be no cross liability exclusion and no contractor’s limitation endorsement that would conflict with or provide less that coverage provided in the underlying policy. Policy limits shall be not less than two million dollars 10677-0013\933044v6,.7_.doc - 23 -DRAFT 10g08/4-301/O707 ($2,000,000) per occurrence and in the aggregate for a total of three million dollars ($3,000,000) when added to the underling policy. The policies shall have starting and ending dates concurrent with the underlying coverages. The Named Insured may determine the layering of primary and excess liability insurance provided that if such layering differs from that described here, the actual coverage progam meets the minimum total required limits and complies with all other requirements listed here. Policies shall be endorsed to provide a separate aggregate for this project. (c)Business Auto Coverage for The General Contractor shall be written on ISO Business Auto Coverage Form CA 00 01 or the equivalent, including coverage for owned, nonowned and hired autos. If the General Contractor does not own any vehicles, this requirement may be satisfied by a nonowned vehicle endorsement to the general and umbrella liability policies. Limits shall be no less than two million dollars ($2,000,000) per accident. (d)Workers’ Compensation/Employer’s Liability for Developer and the General Contractor shall provide workers’ compensation statutory benefits as required by law. Employer’s liability limits shall be no less than one million dollars ($1,000,000) per accident or disease. (e)During construction, Builder’s Risk Insurance covering all real and personal property for "all risks" of loss or "comprehensive perils" coverage for all buildings, structures, fixtures, materials, supplies, machinery and equipment to be used in or incidental to the construction at the Site, off site, or in transit, for the full replacement value of such properties. Coverage is not intended to cover equipment or other property of any contractor or subcontractor but shall not exclude property of others in the care, custody or control of the insured for which any insured may be liable. After completion of construction, Developer shall maintain Commercial Property Insurance covering the premises, fixtures, equipment, building, all property situated in, on, or constituting a part of the premises and any improvements. Coverage shall be at least as broad as the Insurance Services Offices broad causes of loss form CP 10 20. Coverage shall be sufficient to insure 100% of the replacement value and there shall be no coinsurance provisions. The policy shall include an inflation guard endorsement, 100% rents coverage, contents coverage, coverage for personal property of others, ordinance or law and increased cost of construction coverage. insurance: 5.11.2 Conditions applicable to Developer and General Contractor provision of (a) All insurance coverage and limits provided pursuant to this Agreement shall apply to the full extent of the policies involved, available or applicable. Nothing contained in this Agreement or any other agreement relating to City or its operations limits the application of such insurance coverage. (b) Requirements of specific coverage features or limits contained in this Section 5.11 are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only and is not intended by any Party to be all inclusive, or to the exclusion of other coverage, or a waiver of any ~ype. (c) All general or auto liability insurance coverage provided pursuant to this Agreement, or any other agreements pertaining to the performance of this Agreement, shall not prohibit Developer or General Contractor, and Developer’s or General Contractor’s employees, or agents, from waiving the right of recovery prior to a loss. Developer waives its right of recovery against City. Developer shall require a similar waiver in favor of City from Contractor in the contract between Developer and Contractor. 10677-0013\933044v~7.doc - 24 -DRAFT 0-7081-1-30110707 (d) Any endorsements added to the basic policies required by this section that reduce coverage or limits available to City must be first submitted to City and approved in writing by the City Manager. Any policy that contains such limiting endorsements that have not been reviewed by City shall not be in compliance with these requirements. (e) Unless otherwise approved by City, Developer’s insurance and insurance provided by any General Contractor or subcontractor shall be written by insurers authorized to do business in the State of California and with a minimum "Best’s Insurance Guide" rating of "A-:VI." Self-insurance will not be considered to comply with these insurance specifications. (f)In the event any policy of insurance required under this Agreement does not comply with these requirements or is canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Developer. (g) Developer agrees to provide evidence of the insurance required herein, satisfactory to City, consisting of certificate(s) of insurance evidencing all of the coverages required and an additional insured endorsement to Developer’s general liability and umbrella liability policies as specified in the description of insurance requirements above. Certificate(s) are to reflect that the insurer will provide thirty (30) days’ notice of any cancellation of coverage; the insurer may, however, reserve the right of only a ten (10) day notification in the case of nonpayment of premium. Developer agrees to provide copies of any endorsements modifying coverage in any way upon request from City. (h) Developer shall provide proof that policies of insurance required herein expiring during the term of this Agreement have been renewed or replaced with other policies providing at least the same coverage. Such proof will be furnished within 72 hours of the expiration of the coverages. (i)Any actual or alleged failure on the part of City or any other additional insured under these requirements to obtain proof of insurance required under this Agreement in no way waives any right or remedy of City or any additional insured, in this or any other regard. (j)Developer agees to require (through its General Contractor) all subcontractors or other parties (but not including General Contractor) hired for this project to purchase and maintain insurance for general liability (minimum limit $1,000,000 per occurrence), automobile liability $($1,000,000 per accident) and workers’ compensation (statutory benefits). (k) Developer a~ees to ensure or to require General Contractor to ensure that such coverage is provided as required here from all subcontractors and other parties brought onto the Development by Developer or General Contractor. Developer agrees that upon request, all agreements with subcontractors or others with whom Developer or General Contractor contracts with for the Development, and all certificates of insurance obtained in compliance with this paragraph will be submitted to City for review. Failure of City to request copies of such documents will not impose any liability on City, or its employees. (1)Developer agrees to require that no contract used by any General Contractor or subcontractor, or contracts Developer enters into on behalf of City, will reserve the right to charge back to City the cost of insurance required by this Agreement. (m) Developer agrees to require in its contract with General Contractor that the General Contractor will assure that the Project site and all sites connected with the project in any 10677-0013\933044v6:.7~doc - 25 -DRAFT 0g0814-301/g707 way are covered under the insurance policies, including those of subcontractors and other parties, that provide coverage as required by this Agreement. (n) Developer agrees to provide immediate notice to City of any claim or loss against Developer that includes City as a defendant. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City. (o) Developer agrees not to attempt to avoid its defense and indemnity obligations to City and its employees, agents, officials and servants by using as a defense Developer’s statutory immunity under workers’ compensation and similar statutes. Developer will obtain the same agreement from General Contractor. (p) Developer shall require General Contractor to maintain commercial general liability, and if necessary, commercial umbrella liability insurance with a limit of not less than three million dollars ($3,000,000) each occurrence for at least three years following substantial completion of the work. (q) Developer agrees to assure that any agreements with design professionals (including agreements between the General Contractor and other parties) will specify that the design professional shall provide evidence of professional liability coverage. The limit of liability required is subject to City approval. 5.12 Non-discrimination During Construction Developer for itself and its successors and assigns agrees that in the construction of the Improvements on the Site provided for in this Agreement: (a) Developer will not discriminate against any employee or applicant for employment because of race, color, religion, creed, national origin, ancestry, disability, age, marital status, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition. Developer will take reasonable action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, creed, national origin, ancestry, disability, age, marital status, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising, layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. Developer agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. (b) Developer will, in all solicitations or advertisements for employees placed by or on behalf of Developer, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, creed, national origin, ancestry, disability, age, marital status, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition. (c) Developer will cause the foregoing provisions to be inserted in all contracts for any work covered by this Agreement so that such provisions will be binding upon each contractor and subcontractor, provided that the foregoing provisions shall not apply to contracts or subcontracts for standard commercial supplies or raw materials. t 0677-0013L033044v6..7~doc - 26 -DRAFI’ 0g08/4-301/g7-07 5.13 Security Financing, Rights of Holders 5.13.1 No Encumbrances Except as Mortgages or Other Financing for Development Notwithstanding Section 2.6, Mortgages are permitted to be recorded against the Site and/or the Improvements, or any portion thereof, except that prior to the Restriction Termination Date, such Mortgages may be obtained by Developer only for the purpose of securing funds to be used for financing the acquisition of the Site and/or the construction of the Improvements and/or any take-out financing related to the development of the Site in an amount equal to or less than the total costs related to the development of the Site and any other expenditures necessary or appropriate to develop the Site under this Agreement, including without limitation real and personal property taxes, related off-site improvements, insurance premiums, closing costs, attorneys’ fees, loan carrying costs and costs of financing. Developer shall notify City in advance of any Mortgage if Developer proposes to enter into the same before the Restriction Termination Date. Developer shall not enter into any such Mortgage without the prior written approval of City, which approval City agrees to give if any such Mortgage is to a Qualified Financial Institution and which must in any event be acted upon by City within ten (10) days of City receiving evidence of the financing. In any event, Developer shall promptly notify City of any Mortgage that has been created or attached thereto prior to Restriction Termination Date, whether by voluntary act of Developer or otherwise. The City Manager may, in his or her discretion, enter into commercially reasonable subordination agreements requested by Qualified Financial Institutions that provide Mortgages for the Development. Such subordination agreements shall provide, in the judgment of the City Manager, appropriate City rights to notice of, and cure rights for, any Developer defaults under the Mortgage. 5.13.2 Holder Not Obligated to Construct Improvements A Holder shall in no way be obligated by the provisions of this Agreement to construct or complete the Improvements or to guarantee such construction or completion. Nothing in this Agreement shall be deemed or construed to permit or authorize any Holder to devote the Site to any uses, or to construct any improvements thereon, other than those uses or Improvements provided for or authorized by this Agreement. 5.13.3 Notice of Default to Mortgage Holders; Right to Cure If Developer shall Mortgage the Site and/or Improvements, or any part or parts thereof, City agrees that so long as any such Mortgage(s) shall remain unsatisfied of record or until written notice of satisfaction is given by the Holder(s) to City, whenever City shall deliver any notice or demand to Developer regarding any breach or default by Developer in completion of construction of the Improvements, or any other alleged default, City shall at the same time deliver to each Holder of record authorized by this Agreement a copy of such notice or demand, but only if: (i) the Mortgage(s) is authorized by Section 5.13.1, (ii) the Holder(s) of such Mortgage(s) shall have delivered to City a true copy thereof, together with written notice specifying the name and address of the Holder(s) and the pertinent recording data with respect to such Mortgage(s), and (iii) such Mortgage(s) delivered by such Holder(s) contain(s) provisions permitting City’s right to cure in accordance with Section 5.13.5 hereof: Each such Holder shall (insofar as the rights of City are concerned) have the right at its option, within ninety (90) days after the expiration of any and all cure periods available to Developer, to cure or remedy such default and to add the cost thereof to the security interest debt and to the lien on its security interest or the obligations of Developer under any sale lease-back 10677-0013\933044v~7_,doc - 27 -DRAFT 8708/4401/0g07 or of the grantor under any other conveyance for financing. If such default shall be a default which can only be remedied or cured by such Holder upon obtaining possession of the Site and such Holder seeks to obtain possession with diligence through a receiver or otherwise, such Holder shall have until ninety (90) days after obtaining possession to cure such default. Notwithstanding anything to the contrary contained herein, in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced, within ninety (90) days, such Holder shall have such additional time as reasonably necessary to remedy or cure such default with diligence; provided, further, such Holder shall not be required to remedy or cure any non-curable default of Developer. Nothing contained in this Agreement shall be deemed to permit or authorize such Holder to undertake the construction of the Improvements (beyond the extent necessary to conserve or protect the Improvements or construction already made, including, without limitation, the ability to continue the construction or completion of Improvements already begun) without first having expressly assumed the obligations of Developer for the portion of the Site in which the Holder has an interest, by written agreement reasonably satisfactory to City. The Holder in that event shall only be liable or bound by Developer’s obligations hereunder for such period as the Holder was in possession of the portion of the Site in which the Holder has an interest and, notwithstanding anything to the contrary contained in this Agreement, shall only be liable to the extent of its interest in the portion of the Site and the Improvements owned by it thereon. The Holder in that event must agree to complete, in the manner provided in this Agreement, the Improvements to which the lien or title of such Holder relates. Breach of any of the covenants, conditions, restrictions, or reservations contained in this Agreement shall not defeat or render invalid the lien of any Mortgage made in good faith and for value as to the Site or any portion of the Site or interest therein, whether or not the Mortgage is subordinated to this Agreement. Unless otherwise herein provided, the terms, conditions, covenants, restrictions and reservations of this Agreement shall be binding and effective against the Holder and any owner of the Site, or any portion of the Site, whose title thereto is acquired by foreclosure, trustee’s sale, or otherwise. No purported rule, regulation, modification, amendment and/or termination of this Agreement affecting the rights of a Holder shall be binding upon any Holder holding a Mortgage from and after the date of recordation of such Mortgage unless and until the written consent of such Holder is obtained. This Section 5.13.3 shall not be applicable to HERD. 5.13.4 Failure of Holder to Complete Improvements If in any case, within ninety (90) days after all cure periods have expired after default by Developer in completion of construction of the Improvements on the Site under this Agreement, and the notice required by Section 8.1 was properly given, and a Holder has not exercised the option afforded in Section 5.13.3 hereof to construct the Improvements, City may, upon thirty (30) days’ written notice: (i) purchase the Mortgage by payment to the Holder of the amount of the unpaid debt plus accrued but unpaid interest and other advances and amounts secured by the security interest, or in the case of a lessor or grantee by payment to such lessor or grantee of the purchase price paid for its interest in the Site and the Improvements and any unpaid rent and other charges and sums payable to it under its applicable agreements with its lessee or grantor; (ii) assume such Mortgage in accordance with the terms of such Mortgage upon the prior written consent of such Holder, and/or (iii) terminate this Agreement by notice to Developer. 10677-0013\933044v6=7=.doc - 28 -DRAFT g708/-1-30110707 5.13.5 Right of City to Cure Mortgage Default In the event of an uncured default or breach by Developer of a Mortgage for financing for the Site or the Improvements prior to the Restriction Termination Date (unless Developer is contesting such default in good faith), and the Holder has not exercised its option to complete the Improvements, City may, pursuant to the terms of this Agreement, cure the default no sooner than immediately prior to completion of any imminent foreclosure. In such event, City shall be entitled to reimbursement of all direct and actual costs and expenses incurred by City in curing the default which reimbursement shall be a nonrecourse obligation of Developer. Such reimbursement amount may be secured at City’s option by a lien against the Site. Any such lien shall be subordinate and subject to existing mortgages, deeds of trust or other security instruments and grantees under other conveyances for financing permitted pursuant to this Agreement. ARTICLE 6 USES OF THE SITE 6.1 Uses 6.1.1 Developer shall develop on the Site either a mixed-use project or a residential project as described more particularly in the Scope of Development, Attachment No. 5, in which all of the residential units are occupied (or reserved for occupancy) by Very Low Income Households in accordance with Section 6.2.1. Developer covenants and a~ees for itself and its successors and assigns, and every successor in interest to the Site, or any portion thereof, that during construction and thereafter, Developer and such successors and assigns shall use the Site exclusively for the purposes herein stated or as otherwise approved in writing by the City and shall not devote the Site to any uses which are inconsistent with this Agreement and applicable City land use entitlements. 6.1.2 Until the Restriction Termination Date, Developer shall not make or permit to be made any substantial structural additions or modifications to the exterior of any of the Improvements required to be constructed on the Site pursuant to this Ageement, or permit a use other than as set forth herein, without the prior written consent of City. 6.2 Affordable Housing 6.2.1 Developer shall operate the Development in accordance with the Regulatory Agreement and ensure that the dwelling units to be constructed on the Site shall be rented exclusively to, or if vacant, available for occupancy by, Very Low Income Households (the "Affordable Units"), at Affordable Rents and in accordance with the Regulatory Agreement. In addition, at least thirty percent (30%) of the Affordable Units shall be occupied by extremely low income households whose incomes do not exceed thirty percent (30%) of the Area Median Income (the "Extremely Low Income Affordable Units"). Developer also shall grant a preference in its selection of tenants to persons who live or work in Palo Alto, to the fullest extent permitted by law. 6.2.2 The Extremely Low Income Affordable Units are not specifically assigned; they may change as units become vacant and others are occupied. Once a household has been determined to be eligible for an Affordable Unit, it may remain in occupancy thereof so long as its household income does not exceed one hundred forty percent (140%) of the current maximum allowable income for the applicable income category. 6.2.3 Developer shall submit an annual report (the "Annual Report") to City, which contains (i) for each Affordable Unit, the rental rate and the income and household size of 10677-0013\933044v6=7.doc - 29 -DRAFT 0-7-08/4-30 I/0-707 the occupants of the Affordable Units, and (ii) information demonstrating the Developer’s implementation of a preference in tenant selection for persons who reside or work in Palo Alto to the fullest extent permitted by law. The income information shall be supplied by the tenant in a certified statement on a form provided by City or on forms required for annual tenant certification by HUD or TCAC as applicable. Developer shall submit the Annual Report on or before the first April 30 that is at least twelve (12) months after the date of the certificate of occupancy, and each April 30 thereafter, for the period ending on December 31 of the previous year. 6.2.4 The restrictions imposed by this section and by the Regulatory Agreement shall continue for aan initial period of fifty-five (55) years from the date on which the Development is issued its Form 8609 by the California Tax Credit Allocation Advisory Committee ("TCAC") unless it is extended pursuant to this Section (the "Restriction Termination Date"). For the purposes of the commercial condominium created for the ground floor commercial/retail space, the Restriction Termination Date shall be the date upon which the subdivision of the ground floor condominiums is completed and recorded in accordance with state law. It is the intent of the parties to maintain affordabilitv of the Affordable Units for the lon,oest time feasible. Accordingly, the parties a~ree to negotiate one or more extensions of the Restriction Termination Date to the extent permitted by TCAC and other applicable public financin~ requirements, and to execute and record one or more appropriate amendments to the Regulatory Agreement to effect such extension(s). 6.3 Management Plan 6.3.1 Not later than the time specified therefor in the Schedule of Performance, Developer shall submit to the City Manager a Management Plan for the Development in a form reasonable acceptable to the City Manager. As part of the Management Plan, Developer shall submit the qualifications of the designated management agent, Eden Housing Management, Inc. 6.3.2 If at any time during the term of the Regulatory Agreement the City Manager reasonably determines that the Development is not being managed or maintained in a manner consistent with well-managed affordable housing developments, City may send written notice thereof to Developer, describing the manner in which management of the Development is not being satisfactoril.y maintained. If Developer fails to cure the failure within the cure periods set forth in Section 8.1, City may require Developer to change management practices or to terminate the management contract and retain a different management agent approved by City. The management contract shall include a provision that it shall be subject to termination by Developer without penalty, upon not less than sixty (60) days prior written notice, if City shall request Developer (i) to exercise such right of termination, and (ii) to make immediate arrangements satisfactory to City for continuing management of the Development. Developer may change the management agent at any time, with the prior written approval of the City Manager. Such approval or denial shall be provided within ten (10) business days of receipt of Developer’s written request and shall be based on the proposed management agent’s experience and qualifications in managing rental housing affordable to Very Low Income Households, as well as market rate housing. 6.4 Maintenance of the Site Developer covenants and agrees for itself and its successors and assigns, and every successor in interest to the Site, or any portion thereof, that from and after Developer’s acquisition of title, Developer and its successors and assigns: (a) shall maintain the Improvements on the Site and shall keep the Site free from any accumulation of debris or waste materials prior to and after construction; and (b) shall maintain the Site and the Improvements 10677-0013\933044v6..7~doc - 30 -DRAFT 0-7-0814-301/0-7-07 thereon in the same aesthetic and sound condition (or better) as to the condition of the Site at the time City issues a certificate of occupancy, reasonable wear and tear excepted. The parties acknowledge that over the period of time during which these covenants will be effective, various Improvements are likely to become obsolete and will need to be rehabilitated or replaced, and agree that the standard of "reasonable" wear and tear includes and incorporates this understanding. Subject to the foregoing, this standard for the quality of maintenance shall be met whether or not a specific item of maintenance is listed below. Representative items of maintenance shall include, but not be limited to, frequent and regular inspection for graffiti or damage or deterioration or failure, and repainting or repair or replacement of all surfaces, fencing, walls, equipment, etc., as necessary; emptying of trash receptacles and removal of litter; sweeping of public sidewalks adjacent to the Site, on-site walks and paved areas and washing-down as necessary to maintain clean surfaces; maintenance of all landscaping in a healthy and attractive condition, including trimming, fertilizing and replacing vegetation as necessary; cleaning windows on a regular basis; painting the Improvements on a regular program and prior to the deterioration of the painted surfaces; and maintaining security devices in good working order. In the event Developer, its successors or assigns fail to maintain the Site or the Improvements thereon in accordance with these standards for the quality of maintenance, City or its designee shall have the right but not the obligation to enter the Site upon reasonable notice to the then record owner of the Site, correct any violation, and hold the then record owner of the Site responsible for the cost thereof. Such cost, until paid, shall constitute a lien on the Site. Developer and each successor and assign shall be liable for maintenance of the Site pursuant to this Section only for the respective period of time during which such entity holds an ownership interest in the Site. 6.5 Limitation on Alterations Except for Permitted Alterations (as hereinafter defined), Developer shall not make or suffer to be made any alterations, additions, or improvements to or on the Site or any building or structure thereon or any part thereof without the prior written consent of City, which consent will not be unreasonably withheld, conditioned or delayed. Any request for consent shall be accompanied by plans and specifications for the proposed work in reasonable detail (including component materials and finish items) to enable City to consider whether or not to grant approval. City may condition its approval in any way reasonably deemed necessary by City to protect its interest in the Site. The term "Permitted Alterations" shall mean and Developer shall not be required to obtain the consent of City for, unless otherwise required by the Municipal Code, the following, to the extent they comply with all applicable City procedures and requirements: (i) any alterations, additions, improvements, exterior painting or landscaping (which alterations, additions, improvements, exterior painting or landscaping undertaken during a twelve (12) month period cost less than twenty percent (20%) of the value of the Site after issuance of the certificate of occupancy); and (ii) any tenant improvements within the residential units. All alterations, additions, or improvements by Developer shall be made without cost or expense to City, by responsible and licensed contractors. All improvements and equipment shall be designed, built, and installed in accordance with all applicable building codes and regulations, and Developer shall obtain all necessary building permits. Notwithstanding any provision of this Section, prior to the Restriction Termination Date, construction or rehabilitation of the Improvements shall be governed by the applicable provisions of this Agreement. 10677-0013\933044v6:7.doc - 31 -DRAFT 0g08/4-301/0707 6.6 Obligation to Refrain from Discrimination; Form of Non-discrimination Clauses 6.6.1 Developer covenants by and for itself and any successors in interest that there shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, marital status, religion, national origin or ancestry, disability, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition, in the enjoyment of the Site or any portion or component thereof, nor shall Developer itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segegation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land. 6.6.2 Developer shall refrain from restricting the rental, sale, or lease of the Site or any portion or component thereof on the basis of race, color, creed, marital status, religion, national origin or ancestry, disability, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, marital status, ancestry or national origin, disability, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee, or any persons claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, disability, marital status, ancestry or national origin, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him or her, 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, sublessees, Subtenants or vendees in the land herein leased." (c) In contracts: "There shall be no discrimination against or segregation of any persons or group of persons on account of race, color, creed, religion, disability, marital status, ancestry or national origin, sex and/or sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition, in the sale, lease, transfer, use, occupancy, tenure or enjoyment of land, nor shall the transferee, or any person claiming under or through him or her, 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 premises." 10677 -0013\933044v"6..7~doc - 32 -DRAFT 0g0814-301/0-707 6.6.3 The provisions of Sections 6.6.1 and 6.6.2 above shall not be interpreted to prohibit the Developer from designating units for occupancy by persons with disabilities in accordance with applicable law. 6.7 Effect and Duration of Covenants The covenants established in Section 6.6 of this Agreement and in the Regulatory Agreement shall, without regard to technical classification and designation, be binding on Developer and any successor in interest to the Site or any part thereof, for the benefit of and in favor of City, its successors and assigns, without regard to whether City has been, remains or is an owner of any land or interest therein in the Site. City is deemed the beneficiary of the terms and provisions of these covenants running with the land, both for and in its own right and for the purposes of protecting the interests of the community, as well as the interests of other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. ARTICLE 7 CITY FINANCIAL ASSISTANCE 7.1 Method of Financing Development City and Developer anticipate that the Development will be financed through a combination of sources described more particularly in the Sources and Uses Budget attached hereto as Attachment No. 6. 7.2 City Loan 7.2.1 In accordance with and subject to the terms and conditions of this Agreement, the City agrees to lend to Developer, and Developer agrees to borrow from the City, loan funds in an amount not to exceed the sum of Three Million Five Hundred Thousand Dollars ($3,500,000; the "City Loan"), $500,000 of which (the "City Advance") has previously been disbursed in accordance with the Initial Project Agreement. In accordance with and subject to the terms and conditions of this Agreement, the proceeds of the City Loan shall be disbursed at Close of Escrow. The City Loan shall be used only for the acquisition of the Ole’s Parcel, and for no other purposes whatsoever. The City Loan shall be evidenced by the City Note and City Deed of Trust, in accordance with the following: 7.2.2 The outstanding balance of the City Loan shall accrue interest at the rate of three percent (3%) per annum, simple interest, on the amount disbursed from the date of disbursement as described more particularly in the City Note in the form attached hereto as Attachment No.8. be deferred. 7.2.3 Subject to Section 7.5.2 below, all payments of principal and interest shall 7.2.4 Subject to the provisions of Section 7.2.5 hereof, the principal of and all interest accruing on the City Loan shall be payable on the Restriction Termination Date. 7.2.5 Notwithstanding anything to the contrary contained herein, if no Default hereunder shall have occurred and then be continuing, the City Loan shall be forgiven in its entirety on the Restriction Termination Date if: (i) Developer has complied with its obligations to construct the Development hereunder; and (ii) the Site shall have been operated continuously as workforce housing in accordance with the Regulatory Agreement. 10677-0013\933044v6..7~doc - 33 -DRAFT 0-708/4-301/0-707 7.2.6 Developer’s performance under the City Note shall be secured by the City Deed of Trust in the form of Attachment No. 9 recorded against the Site. 7.2.7 The City and the Developer intend that the relationship between them shall be solely that of creditor and debtor. Nothing contained in this Agreement or in any other document or instrument made in connection with this Agreement shall be deemed or construed to create a partnership, tenancy in common, joint tenancy, joint venture or co-ownership by or between the City and the Developer. The City shall not be in any way responsible or liable for the debts, losses, obligations or duties of the Developer with respect to the Site or otherwise. 7.2.8 If the Closing does not occur and Developer does not acquire the City Parcel for any reason, the City Advance shall be refunded to City within ten (10) business days of written notice to the Escrow Agent that the Closing will not occur. 7.2.9 Nothing in this Section 7.2 shall be deemed to preclude the City from granting or lending Developer funds in addition to the City Loan; provided however, that the City shall have no obligation to do so and shall consider any request for additional funds in its sole and absolute discretion. 7.3 Disbursement of City Loan City shall not be obligated to disburse the City Loan proceeds unless all of the City Conditions Precedent set forth in Section 4.2.1 are satisfied at the time of disbursement. The City Manager shall have the authority to waive any condition of disbursement set forth herein; however, any waiver must be made in writing. The decision to waive any condition of disbursement shall be in the sole discretion of the City Manager, and the decision to waive any requirement may be conditioned upon its satisfaction at a later date and/or upon the substitution of another condition. The disbursement of any portion of the City Loan prior to fulfillment of one or more of the foregoing conditions shall not be construed as a waiver of such conditions, and City reserves the right to require their fulfillment prior to making any subsequent disbursements. The City Loan shall be disbursed on or before the Closing Date directly into the escrow under the Ole’s Parcel Purchase Agreement. 7.4 Repayment of City Loan 7.4.1 The City Loan shall be due and payable immediately if the Site, or any portion thereof or interest therein, is sold, transferred, assigned or refinanced without the prior written consent of the City, subject to Section 2.6.3 above. 7.4.2 In the event of any default by Developer hereunder or under the Regulatory Agreement, all principal and interest on the City Loan shall be due and payable upon the expiration of any applicable cure period under Article 8 below. 7.5 Preliminary Notices; Stop Notices. 7.5.1 Developer agrees that copies of all preliminary notices delivered pursuant to Section 3097 of the California Civil Code (a) to Developer or (b) to the Site, addressed to Developer, City of Palo Alto, "Lender," or "Construction Lender," shall be promptly delivered to City. Developer further agrees that City shall have the right at all times to enter upon the Site and post such notices and other written or printed material thereon as it may deem necessary or desirable for its protection. 7.5.2 In the event of the filing with City of a bonded stop notice or the recording of a mechanic’s lien pursuant to Title 15, Part 4, Division 3 of the Civil Code of the State of 10677-0013\933044v~7_~doc - 34 -DRAFF g708/4-301/g7-07 California relating to works of improvement upon real property, City may summarily refuse to honor any orders for payment pursuant to this Agreement until such notice or lien is released (by bond or otherwise), or a payment bond recorded, and in the event Developer fails to furnish City with a bond causing such notice or lien to be released, within forty-five (45) calendar days of Developer’s or City’s receipt of same, such failure shall, at the option of City, constitute a default. ARTICLE 8 EVENTS OF DEFAULT AND RIGHTS OF TERMINATION AND OTHER REMEDIES 8.1 Defaults - General 8.1.1 Subject to any extensions of time pursuant to Section 9.3, failure or delay by either Party to perform any term or provision of this Agreement constitutes a default under this Agreement. The Party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence and during any cure period shall not be in default under this Agreement. 8.1.2 The non-defaulting Party shall give written notice of default to the Party alleged to be in default, specifying the default complained of by the non-defaulting Party. Delay in giving such notice shall not constitute a waiver of any default. 8.1.3 Neither Party may exercise any rights or remedies upon a default by the other Party, unless and until such default continues for a period of thirty (30) days after written notice thereof from the non-defaulting Party unless otherwise provided. If the nature of the default is such that more than thirty (30) days are reasonably required for its cure, then the defaulting Party shall not be deemed to be in default if it has commenced a cure within the thirty (30) day period and thereafter diligently prosecutes such cure to completion. 8.1.4 Any failures or delays by any 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, or deprive any Party of its right to institute and maintain any actions or proceedings that it may deem necessary to protect, assert or enforce any such rights or remedies. 8.2 Rights and Remedies are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by any other Party. Upon the occurrence of a default, except as to rights and remedies expressly declared to be exclusive in this Agreement, the injured Party shall have all rights and remedies against the defaulting Party as may be available at Law or in equity to cure, correct or remedy any event of default, to obtain specific performance, to recover damages, or to obtain any other remedy consistent with the purpose of this Agreement. 8.3 Right of Termination by City Prior to Conveyance 8.3.1 Prior to the Close of Escrow, City, at its option, may terminate this Agreement provided that (i) any of the events described in (a), (b), or (c) below occurs, (ii) any pertinent cure period applicable thereto has expired and such default remains uncured, and (iii) City delivers a written termination notice to Developer that this Agreement is terminated pursuant to this Section 8.3. 10677-0013\933044vg.7_~.doc - 35 -DRAlaT 0-708/4-301/0-707 (a) Developer assigns or attempts to assign this Agreement or any rights therein relating to the Site except as authorized in this Agreement; (b) Developer fails to perform a material obligation hereunder, which failure constitutes an event of default under this Agreement; or (c) Any condition precedent to City’s obligation to convey the City Parcel to Developer has not been satisfied in accordance with the deadlines set forth in this Agreement. 8.3.2 (a) Upon such termination by City in accordance with this Section, any remaining rights of Developer regarding the City Parcel or arising from this Agreement shall be deemed terminated. Upon such termination, except for the obligations in Section 5.10, neither Developer nor City shall have any further fights against or liability to the other under this Agreement regarding the City Parcel or any portion thereof. (b) Upon such termination of this Agreement by City, Developer shall, to the extent allowed by any third-party contracts, assign to City all of Developer’s rights to all design concept and engineering drawings for the Improvements. (c) In the event of termination pursuant to this Section 8.3, Developer shall pay all attendant escrow cancellation costs. (d) City within ten (10) days. Upon such termination, the City Advance shall be returned to the 8.4 Right of Termination by Developer Prior to Conveyance 8.4.1 Prior to the Close of Escrow, Developer, at its option, may terminate this Agreement provided that (1) any of the events described in (a) or (b) below occurs, (2) any pertinent cure period applicable thereto has expired and such default remains uncured and (3) Developer delivers a written termination notice to City: (a) City fails to perform a material obligation hereunder, which failure constitutes an event of default under this Agreement; or (b) Any condition precedent to Developer’s obligation to accept title to the Site has not been satisfied as and at the times provided in this Agreement. 8.4.2 Upon such termination, except for the obligations in Section 5.10, neither City nor Developer shall have any further rights against or liability to the other related to or arising under this Agreement and any remaining rights of City arising from this Agreement shall be deemed terminated. 8.4.3 In the event of termination pursuant to this Section 8.4, City shall pay all escrow cancellation costs for the Escrow. In addition, upon such termination, the City Advance shall be returned by the Developer to the City within ten (10) days and all monies or documents deposited by any Party into the unclosed Escrow shall be returned to the Party making such deposit. 8.5 Remedies and Rights of Termination by City after Conveyance 8.5.1 After the Close of Escrow, but prior to the issuance of a certificate of occupancy, City, at its option, may terminate this Agreement if, (1) any of the events described 10677-0013\933044v6:7.doc - 36 -DRANF 0-7-08/4~01/0-707 in (a) or (b) below occurs, (2) any pertinent cure period applicable thereto has expired and such default remains uncured, and (3) City delivers a written termination notice to Developer that this Agreement is terminated pursuant to this Section 8.5. (a) Developer assigns or attempts to assign this Agreement or any fights therein relating to the Site except as authorized in this Agreement; or (b) Developer fails to perform a material obligation hereunder, which failure constitutes an event of default under this Agreement. 8.5.2 Upon such termination by City in accordance with this Section, any remaining rights of Developer regarding the Site or arising from this Agreement shall be deemed terminated. Upon such termination, neither Developer nor City shall have any further fights against or liability to the other under this Agreement regarding the Site or any portion thereof, except as provided in Section 5.10 and this Section 8.5. Upon such termination, the outstanding balance of the City Loan, principal and interest, shall be due and payable. 8.5.3 Upon such termination of this Agreement by City, Developer shall, to the extent allowed by any third-party contracts, assign to City all of Developer’s rights to all design concept and engineering drawings for the Improvements. 8.5.4 Upon such termination or upon a default under the Regulatory Agreement after the issuance of a certificate of occupancy, in addition to the other rights of City under this Section 8.5, City shall also have the option, subject to the rights of Holders set forth in Section 5.13, to purchase the Site (the "Option"); provided that, City must exercise the Option by written notice to Developer prior to the date, if any, on which the default is cured. The rights of City to repurchase pursuant to this Section 8.5.4 shall be set forth in the Grant Deed for City Parcel and in the Memorandum of Option in the form attached hereto as Attachment No. 11, which shall encumber the entire Site; provided, however that the commercial condominiums for the ground floor commercial/retail space shall be released from the encumbrance of the Option when those condominiums are created in accordance with the Subdivision Map Act. (a) The Option shall be exercised, if at all, by City’s delivery of written notice of its election to exercise the Option to Developer within one year after expiration of the last of the cure periods granted to Developer and/or the Holders, and the Developer shall execute, acknowledge and deliver a grant deed for the Site to the City within fifteen (15) business days after the City’s election, subject only to the title exceptions described in Section 8.5.4(c) below. (b) The purchase price for the Site under the Option (the "Option Purchase Price") shall be the balance then due under the City Loan. (c) City shall credit the Option Purchase Price to Developer through escrow. Developer shall convey title subject only to exceptions that (i) existed at the time of Developer’s acquisition of the Site, or (ii) were created with the written consent of City or approved in writing by City or expressly contemplated or permitted by this Agreement, including but not limited to the deed of trust or other lien securing construction or permanent financing. (d) Upon the City’s election to exercise the Option, the City and the Developer shall promptly open an escrow with Escrow Agent and shall execute and deliver all documents necessary or appropriate to complete the purchase and sale transaction in accordance with this Section 8.5.4 (including, without limitation, escrow instructions, a settlement statement, a FIRPTA affidavit, and a California Form 593). Developer shall pay all escrow costs and the 10677-0013\933044v6..7.doc - 37 -DRAFF 0-7-08/-1-301/0-707 costs of an ALTA owner’s title insurance policy in favor of City, which is consistent with clause (c) above. performance. (e)City shall have the fight to enforce this Section 8.5.4 by specific 8.6 Institution of Legal Actions In addition to any other rights or remedies, either Party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain specific performance or any other remedy consistent with the purpose of this Agreement, except that there shall be no right to terminate this Agreement except as set forth in Sections 8.3, 8.4, and 8.5 of this A~eement. Such legal actions must be instituted in the Superior Court of the County of Santa Clara, State of California, in any other appropriate court in that County, or in the United States District Court for the Northern District of California. 8.7 Applicable Law and Attorneys’ Fees The Laws of the State of California shall govern the interpretation and enforcement of this Agreement. Should legal action be brought by either Party for breach of this Agreement to enforce any provision, the prevailing Party in such action shall be entitled to its reasonable attorneys’ fees, court costs, and other litigation expenses including, without limitation, expenses incurred for preparation and discovery, and on appeal. The right to recover such fees, costs and expenses shall accrue upon the commencement of the action regardless of whether the action is prosecuted to final judgment. q.8 Acceptance of Service of Process In the event that any legal action is commenced against City, service of process on City shall be made by personal service upon the City Manager or in such other manner as is authorized by Law. In the event that any legal action is commenced by City against Developer, service of process on such Party shall be made by personal service upon an officer of Developer, or in such other manner as may be provided by Law, and shall be valid whether made within or without the State of California. ARTICLE 9 GENERAL PROVISIONS. 9.1 Notices, Demands and Communications Between the Parties All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered or sent by registered or certified mail, postage pre-paid, return receipt requested, or by a nationally recognized courier service that provides a written receipt of delivery, or facsimile, to the addresses set forth in this Section, with a copy to designated legal counsel. The notices or other communications shall be deemed received and effective upon: (i) if personally delivered, the date of delivery to the address of the person to receive such notice; (ii) if mailed, the date of delivery or refusal to accept delivery indicated in the certified or registered mail receipt; or (iii) if given by courier service, the date of delivery evidenced by the receipt for delivery provided by the courier service; or (iv) if faxed, the date of dispatch. Any notice, request, demand, direction or other communication sent by facsimile must be confirmed within forty-eight (48) hours by letter mailed or delivered in accordance with the foregoing. 10677-0013\933044v~7~doc - 38 -DRAFI’ 0-708/4-301/0-74)7 For City: with a copy to: with a copy to: For Developer: With a copy to: For Escrow Agent: City of Palo Alto P.O. Box 10250 Palo Alto, California 94303 Attention: City Manager Tel: (650) 329-2533 Fax: (650) 325-5025 Office of City Attorney City of Palo Alto P.O. Box 10250 Palo Alto, CA 94303 Attn: Donald Larkin Tel: (650) 329-2171 Fax: (650) 329-2646 Department of Planning and Development City of Palo Alto P.O. Box 10250 Palo Alto, CA 94303 Attn: Director of Planning and Development Tel: (650) 329-2354 Fax: (650) 329-2154 Eden Housing, Inc. 409 Jackson St. Hayward, CA 94544 Attn: Linda Mandolini Tel: (510) 582-1460 Fax: (510) 582-6523 Community Housing Alliance, Inc. 948 Ramona Street Palo Alto, CA 94301 Attn: Donald A. Barr Tel: (650) 906-6943 Fax: (650) 725 5451 Jorgenson, Siegel, McClure & Flegel, LLP 1100 Alma St., Ste. 210 Menlo Park, CA 94025-3392 Attn: Sandy Sloan Tel: (650) 324-9300 Fax: (650) 324-0227 First American Title Insurance Company 1737 North First Street, Suite 100 San Jose, CA 95112 Attention: Ms. Gail A. Deaver Tel: (408) 451-7800 Fax: (408) 451-7836 10677-0013\933044v6=7.doc - 39 -DRAFT 07081-!-301/0-707 Such written notices, demands, correspondence and communications may be sent in the same manner to such other persons and addresses as either Party may from time to time designate in writing as provided in this Section. Notice shall be effective upon the date of personal delivery or, in the case of mailing, on the date of delivery or attempted delivery as shown on the U.S. Postal Service certified mail return receipt. 9.2 Nonliability and City Officials and Employees No member, official or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by City or for any amount that may become due to Developer or its successors, or on any obligations under the terms of this Agreement. 9.3 Enforced Delay; Extension of Times of Performance In addition to specific provisions of this Agreement, performance by any Party hereunder shall not be deemed to be in default, where delays or defaults are due to acts of God, or the elements, accident, casualty, unavailability or delays in delivery of any product, labor, fuel, service or materials, failure or break-down of equipment, strikes, lockouts, or other labor disturbances, acts of the public enemy, orders or inaction of any kind from the government of the United States, the State of California, or any other governmental, military or civil authority (other than City, to the extent that such orders or inaction affect City’s obligations, performance or fights under this Agreement), war, acts of terrorism, insurrections, riots, epidemics, quarantine restrictions, floods, fires, earthquakes, civil disturbances, explosions, freight embargoes, lack of transportation, breakage or accidents to vehicles, litigation, including litigation challenging the validity of this transaction or any part thereof, or any other inability of any Party, whether similar or dissimilar to those enumerated or othexwise, which are not within the control of the Party claiming such inability or disability, which such Party could not have avoided by exercising due diligence and care and regarding which such Party shall use all reasonable efforts that are practically available to it in order to correct such condition. However, Developer shall not be entitled to any extension of time pursuant to this Section due to any event or condition caused by Developer’s inherent financial condition or financial inability to pay its monetary obligations when due (as distinguished from Developer’s inability to make a payment by reason of a bank’s failure or some other external cause not associated with Developer’s financial condition). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of time reasonable in light of the enforced delay. The extension of time shall commence to run from the time of the commencement of the cause, so long as the Party claiming the extension has notified the other Party in writing of the nature of the matter constituting the enforced delay within fifteen (15) days after the occurrence of the enforced delay. 9.4 Plans and Data If this Agreement is terminated for any reason other than City’s default, Developer shall deliver to City copies of any and all plans and data concerning the Site which are in the possession of Developer, and shall assign to City all rights held by Developer to use such plans and data. In doing so, Developer shall not be considered to be making any representation regarding the content of such plans and data or expressly or impliedly warranting the accuracy thereof. 10677-0013\933044v~7___.doc - 40 -DRAFT 1~-08/-!-301/0-707 9.5 No Real Estate Commission If any claim for brokers’ or finders’ fees for the consummation of this Agreement arises, then Developer hereby agrees to indemnify, hold harmless and defend City from and against such claim(s) if it (they) shall be based upon any statement or representation or agreement made by Developer. 9.6 Successors and Assigns This Agreement shall bind and inure to the benefit of the Parties to this Agreement and their respective successors and assigns, provided, however, that this provision shall not authorize the assignment or transfer of any interest that is prohibited specifically by the other terms of this Agreement. 9.7 Relationship of the Parties The terms and provisions of this Agreement shall not cause the Parties hereto to be construed in any manner whatsoever as partners, joint venturers or agents of each other in the performance of their respective duties and obligations under this Agreement, or subject either Party to this Agreement to any obligations, loss, charge or expense of the other Party unless the Party to be held responsible has independently contracted with the claimant so as to make it directly responsible for the performance and/or payment, as appropriate, of the pertinent obligation, loss, charge or expense. 9.8 Text to Control; Interpretation 9.8.1 The headings in this Agreement are included solely for convenience, and if there shall be any conflict between such headings and the text of this Agreement, the text shall control. 9.8.2 Should any provisions of this Agreement require interpretation, it is agreed that the person or persons interpreting or construing the same shall not apply a presumption that the terms of this Agreement shall be more strictly construed against one Party by reason of the rule of construction that a document is to be construed more strictly against the Party thereto who itself or through its agent or counsel prepared the same or caused the same to be prepared; it being agreed that the agents and counsel of both of the Parties hereto have participated equally in the negotiation and preparation of this Agreement. 9.9 Severability To the best knowledge and belief of the Parties to this Agreement, this Agreement contains no provision that is contrary to any federal, state or local Law or to any regulatory requirement or other ruling or regulation of a federal, state or local agency or that would be in breach of the obligations of either or both of the Parties hereto under the terms and provision of any legally binding agreement. However, if any provision of this Agreement, or any part thereof, shall at any time be held to be invalid, in whole or in part, under any applicable federal, state or local Law by a court of competent jurisdiction, or by arbitrators or an administrative agency of the federal, state or local government with proper jurisdiction, then such provision or a portion thereof, as appropriate, shall be curtailed and limited only to the extent necessary to bring it within the requirements of the Law and the validity and enforceability of the remaining provisions of this Agreement shall remain in effect and shall in no way be affected, impaired or invalidated, unless the invalidated provision(s) shall uniquely, materially and adversely affect the rights and obligations of a Party to this Agreement. 10677-0013\933044v6=7.doc - 41 -DRAFT l?g08/4-301/g707 9.10 Approvals Approvals required of City or Developer shall not be unreasonably withheld, conditioned or delayed, and approval or disapproval shall be given within the time set forth in the Schedule of Performance or this Agreement, or, if no time is given, within a reasonable time. 9.11 Time of the Essence Time is of the essence of this Agreement. 9.12 Computation of Time Unless otherwise required by a specific provision of this Agreement, time hereunder is to be computed by excluding the first day and including the last day. If the date for performance falls on a Saturday, Sunday, or California or City legal holiday, the date for performance shall be extended to the next business day. 9.13 Calendar Days All references in this Agreement to a number of days in which either Party shall have to consent, approve or perform shall mean calendar days unless specifically stated to be business days. 9.14 Police Power Nothing contained herein shall be deemed to limit, restrict, amend or modify, nor to constitute a waiver or release of, any Laws of City, its departments, commissions, agencies, and boards and the officers thereof and City, including, without limitation, any redevelopment or general plan or any zoning ordinances, or any of City’s duties, obligations, rights or remedies thereunder or pursuant thereto or the general police powers, rights, privileges and discretion of City in the furtherance of the public health, welfare, and safety of the inhabitants of the City of Palo Alto, including, without limitation, the right under law to make and implement independent judgments, decisions, and acts regarding planning, development, and redevelopment matters (including, without limitation, approval or disapproval of plans and issuance or withholding of building permits) whether or not consistent with the provisions of this Agreement, or any other documents contemplated hereby (collectively, "City Rules and Powers"). In the event of any conflict, inconsistency or contradiction between any terms, conditions, or provisions of this Agreement or such other documents, on the one hand, and any such City Rules and Powers, on the other hand, the latter shall prevail and govern in each case. This Section shall be interpreted for the benefit of City. 9.15 Estoppel Certificates Any Party hereunder may, from time to time, request the other Party to execute and acknowledge an estoppel certificate or agreement verifying that this Agreement, including any Attachments hereto, is in full force and effect and that no default or defaults have occurred and are continuing as of the date of such certificate or agreement (nor any event which, with the passage of time and the giving of notice would result in a default or breach under this Agreement), or stating the nature of the default or breach or event, if any. In the event the estoppel certificate discloses such a default, breach or event, it shall also state the manner in which such default, breach and!or event may be cured. The Party requesting such certificate or agreement shall provide the form thereof and, provided such certificate or agreement is in form and substance commercially reasonable, the requested Party shall execute and return the same within fifteen (15) business days after receipt of the final form thereof, and the requesting Party 10677 -0013\933044v6,.7.doc - 42 -DRAFT g7-081-I-301/13-707 (and, in the case of Developer, its lenders and successors-in-interest as permitted under this Agreement) shall be entitled to rely thereon. 9.16 Further Assurances Each of the Parties hereto shall execute and deliver any and all additional papers, documents, instruments and other assurances and shall to do any and all other acts and things reasonably necessary to carry out the purposes of this Agreement and the intent of the Parties hereto. 9.17 No Merger No provision of this Agreement shall merge with any transfer of any portion of the Site, until such time as a certificate of occupancy is recorded for all of the Improvements to be constructed on the Site pursuant to this Agreement. 9.18 Waivers and Amendments All modifications, additions or amendments to this Agreement shall be in writing and signed by the Parties hereto. Developer and City agree to mutually consider reasonable requests for amendments to this Agreement that may be made by lending parties or institutions, provided the requests are consistent with this Agreement and would not substantially alter the basic business terms included herein. 9.19 Reasonable Reimbursement Where either Party is entitled to incur costs and expenses under this Agreement that the other Party is required to pay or reimburse, such costs and expenses shall in all events be reasonable in light of the fact and circumstances. For purposes of this Section 9.19, any costs or expenses approved by both Parties, or included in a budget that is approved by both Parties, are hereby deemed to be reasonable. 9.20 Entire Agreement This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto and supersedes all negotiations or previous agreements between the Parties regarding all or any part of the subject matter hereof, including but not limited to the Original Agreement. As of the date of this Agreement, the Initial Agreement is of no further force or effect. This Agreement is executed in three (3) duplicate originals, each of which is deemed to be an original. This Agreement includes 44 pages of text and thirteen (13) Attachments, each of which is incorporated herein by reference, as follows: Attachment No. 1-A Attachment No. 1-B Attachment No. 2-A Attachment No. 2-B Attachment No. 3 Attachment No. 4 Attachment No. 5 Attachment No. 6 Attachment No. 7 Attachment No. 8 City Parcel Legal Description Ole’s Parcel Legal Description Site Legal Description Site Map Schedule of Performance Grant Deed Scope of Development Sources & Uses Budget City Note City Deed of Trust 10677-0013\933044v6,7.doc - 43 -DRAFr 07-08/-1-301/0N)7 Attachment No. 9 Attachment No. 10 Attachment No. 11 Regulatory Agreement Memorandum of Option Memorandum of Agreement 9.21 Counterparts This Agreement may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement. 10677 -0013\933044v~7.doc - 44 -DRAFT 1~-0814-301/0-707 IN WITNESS WHEREOF, the parties have executed this Agremnen’, as of the date first CITY OF PALO T(’" .AL, _}. a charioted city (’i~.’, C!crk Mayor APPRO\E!-) AS TO FOR:M: ’DEVE!,OPER’" COMMUNITY tlOL SING ALLIANCE. tN _.. a Ca!ifornia .-:]on-pro-:’it public Title: FEIRv: . \’ Titic: FEIR~: and EDEN HOUSING. INC. a Caiiibn~ia nora pro~ii pub]ic beneiit Name: ATTACHMENT NO. 1-A CITY PARCEL LEGAL DESCRIPTION 10677-0013\933044v6=7=.doc Attachment No. 1 -A DRAFT 070814-301/0-707 ATTACHMENT NO. 1-B OLE’S PARCEL LEGAL DESCRIPTION 10677-0013\933044v6=7_.doc Attachment No. 1-B DRAFT 0-7-08/-1-301/~7-07 ATTACHMENT NO. 2-A SITE LEGAL DESCRIPTION 10677-0013\933044v6:.7=doc Attachment No. 2-A DRAFT O708/4-301/0-707 ATTACHMENT NO. 2-B SITE MAP 10677-0013\933044v6=7~doc Attachment No. 2-B DRAFI" 1~7438/4-301107-07 ATTACHMENT NO. 3 SCHEDULE OF PERFORMANCE (All dates set forth below are preliminary and are subject to change as the planning and entitlement process moves forward. Estimated Target Dates are conditioned upon prior Target Dates being met in a timely manner.) Abbreviations: ADA -Acquisition and Development Agreement ARB -Architectural Review Board (City) CDLAC -California Debt Limit Allocation Committee (allocates tax-exempt bonds) CEQA, NEPA - California Environmental Quality Act, National Environmental Policy Act CHA -Community Housing Alliance, Inc. DRC -Development Review Committee (City) PC -Planned Community Zoning TCAC -California Tax Credit Allocation Committee (allocates tax credits) PREDEVELOPMENT AND CONVEYANCE PHASE: Project Milestone 1. City Council Study Session for Alma Affordable Family Housing 2. City Council Approval of Tri-Party Agreement (City, Eden & CHA) and Funding for Purchase of Ole’s Parcel by CHA 3. City makes Initial Deposit for Purchase of OIe’ s Parcel 4. City Council Approval of ADA with Eden and CHA (Developer) 5. Developer continues desig+~Proiect Desi.~ and conducts neighborhood outreach Estimated Target Date July 10, 2006 [Completed] Sept. 18, 2006 [Completed] Sept. 21, 2006 !Completed] July 16, 2007 Septem~erOctober 2007 6. CHA repays $480,000 loan Sept 18, 2007 Notes City makes $980,000 deposit of which $480,000 is unsecured loan to CHA. t0677-0013\933044v6=.7_=doc Attachment No. 3 (Page 1) DRAFT WO~8/4-301107 to City 7. Developer submits Plans for Staff Review, DP.C a-rig-Preliminary ARB review 8. Developer forms Owner Entities (Corporate General Partner and Limited Partnership) 9. City begins preparation of any CEQA & NEPA Clearance Documents, as required 10. Developer submits PC Zone Application to City 11. Developer to Submit List of Possible General Contractors for City Manager Review 12. City completes relocation, removal of Substation ~ from City Parcel 13. City completes City ~ Rem~:......remedmt~on, if required 14. Fund Raising and applications for City and other s,absidies_Subsidies 15. Planning Commission Initial Review of PC Application 16. ARB Review of PC Application 17. Planning Commission Final Review of PC Application (deadline) October 2007 August 2007 - July 2008 October 2007 ~December 2007 berDecember 2007 19-y-January 1, 2008 gy-July 1, 2008 January 2008 - Mar-~Ma,z 2009 February.May 2008 ¯ glar~Julv-August 2008 City Manager to respond within 10 days 10677-0013\933044v6,7~doc Attachment No. 3 (Page 2) DRAFF 0-7081-!-301/07 _-24-~. 18~. Escrow to be Opened for City Parcel 2--t=.19__~. City makes Final Deposit for Purchase of Ole’ s Parcel, which is conveyed to CHA _-9-2=_.20. City conveys City P-ar-~~ to Developer 23. Parcel ),lap ~n ...... ~ ....... Ce,:np!cte~ to Merge Parce!~ into "Site" 21. Developer applies for Merger of Ole’ s Parcel and ~ Parce! 2-&22. Ole’s Property vacated by Seller July 15, 2008 August 1,2008 Augustl, 2008 September~ 2008 September30,2008 City makes $3,000,000 deposit 2-~5,.26. Developer Receives Tax c .......~,-, "~nn~a,,, 9nno Credit Preliminary Reservation 10677-0013\933044v~7___.doc Attachment No. 3 (Page 3) DRAFF 0-~08/-t-301/07 Letter _z~.27~ Developer to Apply for Building Permit _o-7=.28~. Developer Obtains All Financing Commitments 2-8,.29~. Developer to recei Building Permit, Close on Construction Loan(s) for Affordable Family Housing and begin Construction: (A) With TCAC Financing (B) With CDLAC Bond Financing _-2-9=.30. Developer to Submit Property Management Plan to City g~.31. Substantial Completion of Im[: r,vvemenEresidential portion of Development_ (TCAC or CDLAC) _a-I=.32_~. Developer Completes Lease-up and Occupancy ~June 2009 Within 4 weeks of Receipt of Preliminary Tax Credit Reservation Fegrtrar-yOctober 2009 (A) Within 150 days of receipt of Preliminary Reservation (B) Within 90 days of CDLAC Allocation Within 90 days after start of construction Augu,~t "~ ’ ~a,,r;1 2011 Within 18 months of start of construction. 2011 Within 4 months of completion of construction Developer submits proof of financing commitments to City Manager (A ) Within the time frame required by the TCA C Program (B) Within the time frame required by the CDLAC Program. 10677-0013\933044v6,7_.doc Attachment No. 3 (Page 4) DRAFT 1~-08/4--301/07 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Palo Alto P.O. Box 10250 Palo Alto, CA 94303 Attn: City Manager WITH A COPY TO: ATTACHMENT NO. 4 FORM OF GRANT DEED Attention: FREE RECORDING REQUESTED (Govt. Code Section 6103) [Space above for Recorder’s use pursuant to California Government Code Section 27383] GRANT DEED For a valuable consideration, receipt of which is hereby acknowledged, The CITY OF PALO ALTO, a chartered city of the State of California (hereinafter referred to as "Grantor" or "City"), acting to carry out the public purposes of that certain Acquisition and Development Ageement (herein called "ADA") dated as of , 2007 and entered into by and among Grantor and COMMUNITY HOUSING ALLIANCE, INC., a California non-profit public benefit corporation and EDEN HOUSING, a California non-profit public benefit corporation (together, "Developer"), hereby grants to , L.P., a California limited partnership ("Grantee") the real property (hereinafter referred to as the "Property"), described in Exhibit "A", attached hereto and incorporated herein by this reference. Further, Title to the Property is conveyed pursuant hereto subject to all recorded liens, encumbrances, covenants, encroachments, assessments, easements, leases and taxes. The Property is conveyed in accordance with and subject to the ADA, which document is a public record on file in the offices of the Grantor and incorporated herein by this reference. 10677-0013\933044v~7_.doc Attachment No. 4 (Page 1) DRAFI" 19-7-08/4-301/07 o Grantee covenants and agrees (for itself, its successors, assigns, and every successor in interest to the Property or any part thereof) as follows: ao Grantee, its successors and assigns, shall use the Property and the improvements now or hereafter constructed only for the development permitted and the uses specified in the ADA, namely, a mixed use development that includes affordable multi-family rental housing. bo Grantee and its successors and assigns shall maintain the Property and the improvements thereon in the same aesthetic and sound condition (or better) as to the condition of the Property at the time City issues a certificate of occupancy for the Improvements constructed pursuant to the ADA, reasonable wear and tear excepted. In the event Grantee, its successors or assigns fail to maintain the Improvements in accordance with the standard for the quality of maintenance, Grantor or its designee shall have the right but not the obligation to enter the Property upon reasonable notice to the then record owner of the Property, correct any violation, and hold Grantee, or its successors or assigns responsible for the cost thereof, and such cost, until paid, shall constitute a lien on the Property. The Grantee and each successor and assign shall be liable for maintenance of the Property pursuant to this paragraph only for the respective period of time during which such entity holds an ownership interest in the Property. Except for Permitted Alterations (as hereinafter defined), Grantee shall not make or suffer to be made any alterations, additions, or improvements to or on the Property or any building or structure thereon or any part thereof without the prior written consent of Grantor, which consent will not be unreasonably withheld, conditioned or delayed. Any request for consent shall be accompanied by plans and specifications for the proposed work in reasonable detail (including component materials and finish items) to enable Grantor to consider whether or not to grant approval. Grantor may condition its approval in any way reasonably deemed necessary by Grantor to protect its interest in the Property. The term "Permitted Alterations" shall mean (and Grantee shall not be required to obtain the consent of Grantor for) either of the following, to the extent they comply with all applicable City procedures and requirements: (aa) any alterations, additions, improvements, exterior painting or landscaping (which alterations, additions, improvements, exterior painting or landscaping undertaken during a twelve (12) month period, which cost less than 20% of the value of the Property after issuance of the certificate of occupancy); or (bb) any tenant improvements within tenant or subtenant spaces or signs for any tenants or subtenants. All alterations, additions, or improvements by Grantee shall be made without cost or expense to Grantor, by responsible and licensed contractors. All improvements and equipment shall be designed, built, and installed in accordance with all applicable building codes and regulations, and Grantee shall obtain all 10677-0013\933044v6,.7=.doc Attachment No. 4 (Page 2) DRAFT 0-708/4-301__/07 necessary building permits. Notwithstanding any provision of this paragraph "c," prior to the recordation of the certificate of occupancy for the Improvements, construction or rehabilitation of the initial Improvements shall be governed by the applicable provisions of the ADA. o Grantee herein covenants by and for itself and its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, marital status, national origin, ancestry, sex, sexual orientation, political affiliation or opinion, disability or pregnancy or pregnancy- related condition, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the Grantee 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. Grantee further covenants by and for itself and its successors and assigns, and all persons claiming under or through them, that it shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure, or enjoyment of the Property (or any part thereof) on the basis of race, color, religion, creed, national origin, ancestry, disability, marital status, sex, sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition of any person. All such deeds, leases, or contracts pertaining thereto shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: ao In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, religion, creed, national origin, ancestry, disability, age, marital status, sex, sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land."- In leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, religion, creed, national origin, ancestry, disability, medical condition, age, marital status, sex, sexual orientation, political affiliation or opinion, or pregnancy or 10677-0013\933044v6,7_.doc Attachment No. 4 (Page 3) DRAFT 0-7081-t-301107 o pregnancy-related condition, in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, or occupancy of tenants, lessees, sublessees, tenants, or vendees in the land herein leased." Co In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of race, color, religion, creed, national origin, ancestry, disability, medical condition, age, marital status, sex, sexual orientation, political affiliation or opinion, or pregnancy or pregnancy-related condition in the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land." In amplification and not in restriction of the provisions set forth herein above, it is intended and agreed that Grantor shall be deemed a beneficiary of the covenants and agreements provided herein above both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of Grantor and the Property, and such covenants shall run in favor of Grantor for the entire period during which such covenants shall be in force and effect, without regard to whether Grantor is or remains an owner of any land or interest therein to which such covenants relate. Grantor shall have the right, in the event of any breach of any such covenant or agreement, after delivery of notice and expiration of the cure period discussed in Section 8.5 of the ADA, to exercise all the fights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach of covenant or agreement. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed or in any of the documents referred to above shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other security instrument permitted by the ADA and made in good faith and for value; provided, however, that any subsequent owner of the Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such owner’s title was acquired by foreclosure, trustee’s sale or otherwise, and shall be entitled to all the benefits granted to Grantee and its assigns hereunder. All covenants contained in this Grant Deed shall be construed as covenants running with the land and not as conditions that might result in forfeiture of title, except as set forth in Paragraph 9 below. 10677-0013\933044v6:7_.doc Attachment No. 4 (Page 4) DRAFT 0-708/4-301/07 10. 11. 12. Upon the occurrence of certain defaults described in Section 8.5.4 of the ADA, and subject to and in accordance with the procedures and provisions therein, the Grantor shall have the fight, at its option, to repurchase and take possession of the Property hereby conveyed, or such portion thereof, with all improvements thereon (the "Option") prior to the fifty-fifth (55th) anniversary of the date on which the Development is issued its Form 8609 by the California Tax Credit Allocation Committee (TCAC) unless that date is extended by agreement of the parties in accordance with Section 6.2.4 of the A~reement (the "Restriction Termination Date"). The Grantor shall have the right to institute such actions or proceedings as it may deem desirable for effectuating the purposes of the Option and this Section, including, but not limited to specific performance. Any delay by the Grantor in instituting or prosecuting any such actions or proceedings or otherwise asserting its fights under this Section shall not operate as a waiver of such fights or to deprive it of or limit such fights in any way (it being the intent of this provision that Grantor should not be constrained so as to avoid the risk of being deprived of or limited to the exercise of the remedy provided in this Section because of concepts of waiver, laches, or others), nor shall any waiver in fact made by the Grantor with respect to any specific default by the Grantee, its successors and assigns, be considered or treated as a waiver of the fights of the Grantor with respect to any other defaults by the Grantee, its successors and assigns, or with respect to the particular default except to the extent specifically waived. None of the terms, covenants, agreements, or conditions heretofore ageed upon in writing in other instruments between the parties to this Grant Deed regarding obligations to be performed, kept or observed as to the Property after this conveyance of the Property shall be deemed to be merged with this Grant Deed until the Restriction Termination Date pursuant to the ADA. Until the Restriction Termination Date, only the Grantor, its successor, and assigns, and Grantee and the successor and assigns of Grantee in and to the fee title to the Property shall have the fight to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, easements, or other restrictions contained in this Grant Deed or to subject the Property to additional covenants, easements, or other restrictions without the consent of any tenant, lessee, easement holder, licensee, mortgage, trustee, beneficiary under a deed of trust or any other person or entity having an interest less than a fee in the Property. The covenants contained in this Grant Deed without regard to technical classification or designation shall not benefit, burden, or be enforceable by any person, or firm, or corporation, public or private, except Grantor, Grantee, and their respective successors and assigns. The covenants contained herein shall remain in effect until the Restriction Termination Date, except for the covenants against discrimination (contained in paragraphs 4 and 5), which shall remain in perpetuity. 10677-0013\933044v6..7~doc Attachment No. 4 (Page 5) DRAFF 0-7-0814-301/07 13.The terms "Improvements," "Development," "Purchase Price" and "Holders," as used in this Grant Deed, shall have the meanings ascribed to them in the ADA. 10677-0013\933044v6:.7__.doc Attachment No. 4 (Page 6) DRAFT 0~08/-1-301/07 IN WITNESS WHEREOF, the Grantor and the Grantee have caused this instrument to be executed on their behalf by their respective officers thereunder duly authorized, as of this day of ,200__. "GRANTOR""GRANTEE" CITY OF PALO ALTO, a chartered city The Grantee hereby accepts and approves each of the covenants, conditions and restrictions set forth in this Grant Deed. By: Name: Title:a California limited partnership By: Name: Title: ATFEST: By: Name: Title: By: City Clerk APPROVED AS TO FORM: City Attorney 10677-0013\933044v6=7.doc Attachment No. 4 (Page 7) DRAFF 10g08/4-301/07 STATE OF CALWORNIA ) ) SS. COUNTY OF SANTA CLARA ) On ., before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) STATE OF CALIFORNIA ) ) SS. COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared ., personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State 10677-0013\933044v6:.7.doc Attachment No. 4 (Page 8) DRAFT 0-7-0814401107 STATE OF CALWORNIA ) ) SS. COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) STATE OF CALI2FORNIA COUNTY OF SANTA CLARA On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State 10677-0013\933044v~7~doc Attachment No. 4 (Page 9) -DRAFT 0-70814-301/07 EXHIBIT "A" LEGAL DESCRIPTION PROPERTY THE LAND REFERRED TO HEREIN IS SITUATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: 10677-0013\933044v6:.7.doc Attachment No. 4 (Page i0) DRAFF 1~7-08/4~01/07 ATTACHMENT NO. 5 SCOPE OF DEVELOPMENT 10677-0013\933044v6..7.doc Attachment No. 5 (Page 1) DRAFT 0-7-08/4-301107 ATTACHMENT NO. 6 SOURCES & USES BUDGET 10677-0013\933044v6:.7.doc Attachment No. 6 (Page 1) DRAFT g7-08/-t-301/07 ATTACHMENT NO. 7 FORM OF CITY NOTE US$3,500,000.00 Palo Alto, California ., 200__ FOR VALUE RECEIVED,., a California limited partnership (the "Borrower"), hereby promises to pay to the order of the CITY OF PALO ALTO, a municipal corporation ("Lender"), without deduction or offset, the sum of THREE MILLION, FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($3,500,000.00), or such lesser amount as may be advanced by the City pursuant to the Agreement (defined below), together with simple interest on funds as drawn at the rate of three percent (3%) per annum. This Promissory Note (the "Note") is entered into and arises pursuant to that certain Acquisition and Development Agreement dated as of ,2007 by and between Borrower’s predecessors-in-interest and Lender (the "Agreement"). All capitalized terms used herein without definition shall have the meanings set forth in the Agreement. Except in the case of a default under the Agreement, no payments of principal or interest shall be due under this Note until the fifty-fifth (55th) anniversary of the date on which the Development is issued its Form 8609 by the California Tax Credit Allocation Committee (TCAC). unless that time is extended by agreement of the parties in accordance with Section 6.2.4 of the A~reement (herein, the "Maturity Date," and otherwise referred to in the Agreement as the "Restriction Termination Date") ). Subject to the conditional forgiveness provisions below, all outstanding principal and all accrued interest under this Note shall be paid by the Borrower on the Maturity Date, or in the case of a default under the A~eement, on the date set forth in accordance with Section 7.2.4 of the Agreement. All sums paid under this Note shall be applied first against interest, and the balance against unpaid principal, and interest shall thereupon cease upon principal so paid. Should any sum due hereunder not be paid on its due date, then all sums of principal and accrued interest shall thereafter bear interest until paid at the lesser of the rate of ten percent (10%) per annum or the maximum rate permitted by law. Notwithstanding anything to the contrary contained in this Note, the City Loan shall be forgiven in its entirety on the Maturity Date subject to and in accordance with Section 7.2.5 of the Agreement. Borrower acknowledges and agrees that any principal or interest under this Note which is forgiven by Lender as herein provided might be deemed taxable income to Borrower under the United States Internal Revenue Code and may be treated and reported as such by the Lender to the Internal Revenue Service in accordance with applicable law. Neither the failure of Lender to exercise its right to accelerate, nor reinstatement of this Note after such exercise, shall constitute a waiver of the right to exercise such fights at any other time. 10677-0013\933044vf=7.doc Attachment No. 7 (Page 1) DRAFT 0g08/42~.1/07 Should default be made by Borrower in the payment of any interest, principal, or any other sums due hereunder, or if Borrower shall default on performance of any of the covenants, agreements, terms or provisions of the Agreement (including, without limitation, Section 2 of the Agreement, which prohibits sales, transfers and assignments of the Development on the Site and Borrower’s interest in the Site except to certain affiliates of Borrower, then, at Lender’s option, all sums owing hereunder shall, at once, become immediately due and payable. Thereafter, interest shall accrue at the maximum legal rate permitted to be charged under the usury laws of the State of California. Borrower together with all sureties, endorsers and guarantors of this Note, jointly and severally, promise to pay: (a) all costs and expenses of collection, including without limitation attorneys’ fees, in the event this Note or any portion of this Note is placed in the hands of attorneys for collection and such collection is effected without suit; (b) attorneys’ fees, as determined by the judge of the court, and all other costs, expenses and fees incurred by Lender in the event suit is instituted to collect this Note or any portion of this Note; (c) all costs and expenses provided for in the Agreement and/or incurred by or on behalf of Lender in connection with collecting or otherwise enforcing any fight of Lender under this Note; and (d) all costs and expenses, including, without limitation, attorneys’ fees incurred by Lender in connection with any bankruptcy, insolvency or reorganization proceeding or receivership in which Borrower is involved, including, without limitation, attorneys’ fees incurred in making any appearance in any such proceeding or in seeking relief from any stay or injunction issued in or arising out of any such proceeding. This Note is to be construed so as to give effect to the intent of the parties to conform strictly to the law, and all interest payable on account of this Note shall be reduced, if necessary, to the highest amount allowable under the usury laws or other laws governing this transaction, should this transaction not be exempt from the same. This Note shall be governed by and construed in accordance with the laws of the State of California. All parties who are obligated to pay any portion of the indebtedness represented by this Note, whether as principal, surety, guarantor or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor, and all other notices to which they might otherwise be entitled, and further waive all defenses based on release of security, extension of time or other indulgence given in respect to payment of this Note, to whomsoever given. The terms of this Note shall be binding upon and inure to the benefit of the respective heirs, successors in interest and assigns of Borrower and Lender. All notices and demands shall be given in writing by certified mail, postage prepaid, and return receipt requested, by personal delivery or by overnight courier. Notices shall be considered given upon the earlier of (a) personal delivery; (b) two (2) business days following deposit in the United States mail, postage prepaid, certified or registered, return receipt requested; or (c) one (1) business day following deposit with an overnight courier. Notices shall be addressed as provided below for the respective party; provided that if any party gives notice in writing of a change of name or address, notices to such party shall thereafter be given as demanded in that notice: 10677-0013k933044v6:7.doc Attachment No. 7 (Page 2) DRAFT 07-08/-!40 ! 107 Lender: Bo~ower: City of Palo Alto P.O. Box 10250 Palo Alto, California 94303 Attn: City Manager Time is of the essence with respect to each and every provision hereof. If any provision hereof is found to be invalid or unenforceable by a court of competent jurisdiction, the invalidity thereof shall not affect the enforceability of the remaining provisions of this Note. Borrower’s performance under this Note shall be secured by a deed of trust in favor of Lender encumbering the Site. "Bo~ower": a California limited partnership By: Name: Title: 10677-0013\933044v6,7=.doc Attachment No. 7 (Page 3) DRAFY 0-708/4-301/07 ATTACHMENT NO. 8 FORM OF CITY DEED OF TRUST RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Palo Alto P.O. Box 10250 Palo Alto, California 94303 Attn: City Manager Exempt from recording fees pursuant to Gov. Code Sec. 6103 SPACE ABOVE THIS LINE FOR RECORDER’S USE DEED OF TRUST AND ASSIGNM£NT OF RENTS A.P.N. THIS DEED OF TRUST (this "Deed of Trust") is made as of , 2007, between , L.P., a California limited partnership ("Trustor"), FIRST AMERICAN TITLE INSURANCE COMPANY as "Trustee," and the CITY OF PALO ALTO, a chartered city ("Beneficiary"). Trustor is the fee owner of the Property described below. This Deed of Trust witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN TRUST, WITH POWER OF SALE, that certain real property in Santa Clara County, California, described as: See Exhibit A, attached hereto and incorporated herein by this reference. TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right, power, and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues, and profits; and together with all buildings and improvements of every kind and description now or hereafter erected or placed thereon, and all fixtures, including but not limited to all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry equipment, steam and hot water boilers, stoves, ranges, elevators and motors, bath tubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantels, cabinets, refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and Together with all building materials and equipment now or hereafter delivered to the premises and intended to be installed therein; and 10677-0013\933044v6=7.doc Attachment No. 8 (Page 1) DRAlaT 6708/4401/07 Together with all articles of personal property owned by the Trustor now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the lands described which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the building or buildings in any manner. All of the foregoing, together with the real property, is herein referred to as the "Property." To have and to hold the Property, together with appurtenances to the Trustee, its or its successors and assigns forever. For the Purpose of Securing: (a) Performance of each agreement of Trustor herein contained. (b) Payment of the indebtedness evidenced by that certain promissory note (the "Note") of even date herewith, and any extension or renewal thereof, in the stated principal sum of $3,500,000.00, executed by Trustor in favor of Beneficiary or order. (c) Payment of such further sums as the then record owner of the Property hereafter may borrow from Beneficiary, when evidenced by another note (or notes) reciting it is so secured. (d) Performance by Trustor of all of Trustor’s obligations arising under that certain Regulatory Agreement (the "Regulatory Agreement") dated and recorded concurrently herewith between Trustor and Beneficiary. (e) Performance of each obligation of Trustor set forth in that certain Acquisition and Development Agreement (the "Agreement") dated as of ,2007 entered into by and between Trustor’s predecessors-in-interest and Beneficiary. To Protect the Security of This Deed of Trust, Trustor Agrees: (1) That it shall faithfully perform each and every covenant contained in the Note, Regulatory Agreement, and the Agreement. (2) That it will not permit or suffer the use of any of the Property for any purpose other than the use described in the Regulatory Agreement and the Agreement as they may be amended from time to time. (3) To keep the Property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting the Property, or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon the Property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use 10677-0013\93 o044v6:.7__.doc Attachment No. 8 (Page 2) DRAFF 1)-708/4-301/07 of the Property may be reasonably necessary, the specific enumerations herein not excluding the general. (4) To provide, maintain and deliver to Beneficiary fire and extended coverage insurance with endorsements for vandalism, malicious mischief, and special extended perils, in the full replacement value of the improvements (excluding footings and foundations with no co- insurance penalty provision), and with endorsements for increases in costs due to changes in code and inflation, and any other insurance requested by Beneficiary, and with loss payable to Beneficiary, and any other insurance required by the Agreement. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby an~t in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Beneficiary shall have the right to pay any insurance premiums when due should Trustor fail to make them, and all such payments made by the Beneficiary shall be added to the principal sum secured hereby. Beneficiary shall release all insurance or condemnation proceeds to Trustor to be used to reconstruct the Project on the Property provided that such Beneficiary determines that such restoration, repair or rebuilding is economically feasible. (5) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorneys’ fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust. (6) To pay: at least ten (10) calendar days before delinquency all taxes and assessments affecting the Property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on the Property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. (7) Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes with written notice to Trustor; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay its reasonable fees. (8) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby, any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time the statement is made. 10677-0013\933044v~7~doc Attachment No. 8 (Page 3) DRAFF 67-0814401/07 (9) The Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the Property any lien or liens except as authorized by Beneficiary and further that it will keep and maintain the Property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on the Property, or will cause the release of or will provide a bond against any such liens within ten (10) days of Trustor’s receipt of notice of the lien or liens. (10) That any award of damages in connection with any condemnation for public use of or injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys it receives in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (11) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (12) That at any time or from time to time, without liability ~therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of the Property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof. (13) -What upon written request of Beneficiary stating that all sums secured hereby have been paid or forgiven by Beneficiary, and upon surrender of this Deed of Trust and the Note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." In addition, upon Beneficiary’s satisfaction that the subdivision process for the creation of commercial condominiums for the ground level commercial/retail spaces on the Property in accordance with state law has been completed, Beneficiary shall make written request to Trustee for the partial reconveyance of the portion of the Property consisting of those condominiums, and the encumbrance of this Deed of Trust shall be reconveyed without warranty as to that portion of the Property only. (14) That Trustor hereby absolutely and unconditionally assigns and transfers to Beneficiary all the rents, income and profits of the property encumbered hereby, and hereby give to and confer upon Beneficiary the right, power and authority to collect such rent, income, and profits, and Trustor irrevocably appoints Beneficiary Trustor’s true and lawful attorney at the option of Beneficiary, at any time, to give receipts, releases and satisfactions and to sue, either in the name of Trustor or in the name of Beneficiary, for all income, and apply the same to the indebtedness secured hereby; provided, however, so long as no default by Trustor in the payment of any indebtedness secured hereby shall exist and be continuing, Trustor shall have the right to collect all rent, income and profits from the Property and to retain, use and enjoy the same. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the 10677-0013\933044v6,.7~doc Attachment No. 8 (Page 4) DRAFF t~70814-301/07 indebtedness hereby secured, enter upon and take possession of the Property or any part thereof, in its own name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney’s fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of the Property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (15) That upon default by Trustor in payment of any indebtedness secured hereby, or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and election to cause to be sold the Property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of the notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at the sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. (16) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title estate, rights, powers and duties. The instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded and the name and address of the new Trustee. (17) That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the Note, whether or not 10677-0013\933044v6:.7~doc Attachment No. 8 (Page 5) DRAFT 0g08/-1401/07 named as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. (18) That Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any Deed of Trust or of any action or proceeding in which either Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. (19) If Trustor shall die or sell, convey, hypothecate, transfer, encumber or alienate the Property, or any part thereof, or any interest therein, or shall be divested of title or any interest therein in any manner or way, whether voluntarily or involuntarily, without the written consent of the Beneficiary being first had and obtained, or if Trustor shall fail to make any payments due under the Note, or fail to perform any other obligation under this Deed of Trust, the Note, the Regulatory Agreement, or the A~eement, or any other deed of trust encumbering the Property or the promissory note or other agreement secured thereby, then Beneficiary shall have the right, at its option, to declare any indebtedness or obligations secured hereby, irrespective of the maturity date specified in any note evidencing the same, immediately due and payable. (20) That Trustor shall promptly pay when due the payments of interest, principal, and all other charges accruing under any superior or prior trust deed, mortgage, or other instrument encumbering the Property. Upon any breach of the Agreement, Beneficiary shall have the right to declare all sums secured hereby immediately due and payable. Beneficiary shall have the right, but not the obligation, to cure any defaults on any superior or prior deed of trust or promissory note secured thereby and upon curing such default Trustor shall immediately reimburse Beneficiary for all costs and expenses incurred thereby, together with interest thereon at the maximum legal rate permitted to be charged by non-exempt lenders under the State of California, and Trustor’s failure to pay such amount on demand shall be a breach hereof. Trustor’s breach or default of any covenant or condition of any superior or prior trust deed, mortgage or other instrument encumbering the Property shall be a default under this Deed of Trust. (21) That the improvements now existing or to be constructed upon the Property, and all plans and specifications, comply with all municipal ordinances and regulations and all other regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office. The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to it at the following address: Signature of Trustor a California limited partnership By: Name: Title: 10677-0013\933044v6=.7~doc Attachment No. 8 (Page 6) DRAFT 13-70814-301/07 STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,2007, before me,, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,2007, before me,, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public 10677-0013\933044v6=7__.doc Attachment No. 8 (Page 7) DRAFT 0708/-1-~01107 STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,2007, before me,, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,2007, before me,, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public 10677-0013\933044v6,7_:.doc Attachment No. 8 (Page 8) DRAFT !9-7-08/4-301/07 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY 10677-O013\933044v6,7~doc Attachment No. 8 (Page 9) DRAFT 10-7-081-1-301107 ATTACHMENT NO. 9 FORM OF REGULATORY AGREEMENT Recording Requested By and When Recorded Return to: City of Palo Alto P.O. Box 10250 Palo Alto, California 94303 Attn: City Manager Exempt from recording fees pursuant to Gov. Code Sec. 6103 SPACE ABOVE THIS LINE FOR RECORDER’S USE REGULATORY AGREEMENT THIS REGULATORY AGREEMENT (this "Agreement") is made and entered into as of ,200__ by and between the CITY OF PALO ALTO, a chartered city (hereinafter referred to as "City") and the , L.P., a California limited partnership ("Owner"), with reference to the following: RECITALS A. Owner is the owner of real property located in the City of Palo Alto, California (hereinafter referred to as the "Property") and legally described on Exhibit "A," attached hereto and incorporated herein by this reference. B. Owner’s predecessors-in-interest and City entered into that certain Acquisition and Development Agreement dated as of ,2007 (hereinafter referred to as the "ADA"), which is incorporated herein by this reference. All capitalized terms not defined when first used in this Agreement shall have the meanings ascribed to them in the ADA. Under the ADA, the City is providing financial assistance to Owner for the purpose of acquiring and making improvements to the Property for use as residential development including affordable multi-family rental housing (the "Development"). C. As a condition of providing such financial assistance, the Owner desires to record this Agreement to impose certain income and rent restrictions on the Development described below to satisfy the requirements under Section 6.2 of the ADA. 10677-0013\933044v6=7_.doc Attachment No. 9 (Page 1) DRAFT 1~708/4-301/07 NOW, THEREFORE, City and Owner agree as follows: AGREEMENT 1. Except for the covenants contained in Section 4 below, the covenants contained in this Agreement shall remain in full force and effect until fifty-five (55) years after the date on which the Development is issued its Form 8609 by the California Tax Credit Allocation Committee ("TCAC") _unless the parties agree to extend that time in accordance with Section 6.2.4 of the ADA (the "Restriction Termination Date"), unless sooner terminated by written agreement of the Owner and the City. The covenants contained in Section 4 below shall remain in effect in perpetuity. 2. Owner hereby covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property that the Owner, and such successors and such assigns, shall: a.Develop and use the Property only for the Development permitted and specified in the ADA; b. Keep the Property free from any accumulation of debris or waste materials, and keep the landscaping in a healthy condition; c. Maintain the Property and all improvements on the Property, including landscaping, in good condition, and to the reasonable satisfaction of the City. Maintenance shall be in conformance and in compliance with City’s normal maintenance standards, as defined by City’s codes relating to property maintenance and in accordance with the following: i.Owner’s execution of this Agreement shall constitute an irrevocable license to the City (or its designee) of full and complete access to the Property to perform such maintenance in the event of the failure of Owner to timely perform such maintenance. ii. Owner shall reimburse the City for any and all costs incurred by the City in maintenance of the Property or the improvements. 3. Owner hereby further covenants and agrees for itself, its successors, its assigns, and every successor in interest to the Property that the Owner, and such successors and such assigns, that: a. Owner shall operate a residential project consisting of thirty-five (35) to fifty-five (55) residential units (the "Project"). b. All of the residential units in the Project (the "Affordable Units") shall be both rent- restricted and occupied, or if vacant, available for occupancy, by Very Low Income Households whose incomes do not exceed fifty percent (50%) of the Area Median Income for Santa Clara County, as adjusted by household size, or such other qualifying limits for Very Low Income Households as may be established in accordance with California Tax Credit Allocation Committee (TCAC) guidelines, as they subsequently may be amended. In addition, at least thirty percent (30%) of the Affordable Units shall be occupied (or available for occupancy) by Extremely Low Income households whose incomes do not exceed thirty percent (30%) of the Area Median Income. The Affordable Units shall contain the number of bedrooms that may be 10677-0013\933044v6=7.doc Attachment No. 9 (Page 2) DRAFT 0¥08/4-301/07 required by the financing approved by the City. c. Rents shall be restricted on Affordable Units to thirty percent (30%) of the income limitation above, or as otherwise may be set forth in the TCAC guidelines ("Affordable Rents"). d. In determining the household size appropriate for the Affordable Unit, it shall be assumed one person occupies a studio unit, one and one-half persons occupy a one-bedroom unit, three persons occupy a two-bedroom unit, four and one-half persons occupy a three-bedroom unit, and six persons occupy a four-bedroom unit or as otherwise may be required by TCAC. e. The income and household size of all households occupying Affordable Units shall be certified by the Owner prior to occupancy and re-certified annually thereafter. Each annual re- certification shall also include the initial occupancy date of the household occupying the Unit, the monthly Affordable Rent paid for the Affordable Unit during the prior year, the utility allowance attributable to the Affordable Unit, and the percentage of household income used to pay rent. The Owner shall maintain all certifications and make them available to the City upon request. 4. Subject to any restrictions on transfer or assignment set forth in the Agreement, Owner covenants and agrees for itself, its successors, and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, medical condition, sex, sexual orientation, marital status, ancestry, national origin, political affiliation or opinion, pregnancy or pregnancy related condition, age, or disability, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Owner or any person claiming under or through Owner 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. The foregoing shall not be interpreted to prohibit Owner from designating units for occupancy by persons with disabilities in accordance with applicable law. 5. All conditions, covenants and restrictions contained in this Agreement shall be covenants running with the land, and shall burden the Property and run for the benefit of City. 6. All covenants in this Agreement, without regard to technical classification or designation, legal or otherwise, shall, in any event, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor of, and enforceable by City, its successors and assigns, against Owner, its successors and assigns, to or of the Property or any portion thereof or any interest therein, and any party in possession or occupancy of the Property and such covenants shall run in favor of City for the entire period during which such covenants shall be in force and effect, without regard to City is or remains an owner of any land or interest therein to which such covenants relate. City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any actions at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 7. In the event Owner ceases to operate the Property in accordance with this Agreement or ceases to operate the Project, and fails to cure such breach upon sixty (60) days’ written notice 10677-0013\933044v6=7.doc Attachment No. 9 (Page 3) DRAFT 13-708/4-301/07 from City, in addition to the other rights of City under this Agreement, City shall also have the option to purchase the Property (the "Option") in accordance with the following: a. The Option shall be exercised, if at all, by City’s delivery of written notice of its election to exercise the Option to Owner within one year after expiration of the last of the cure periods granted to Owner, and the Owner shall execute, acknowledge and deliver a grant deed for the Property to the City within fifteen (15) business days after the City’s election, subject only to the title exceptions described in clause (c) below. In the event Owner fails to do so, City shall have, in addition to any and all of its other rights and remedies at law, in equity and under this Agreement, the right to an order for specific performance. b. The purchase price for the Property under the Option (the "Option Purchase Price") shall be the balance then due to the City under the City Loan described more particularly in the ADA. c. City shall credit the Option Purchase Price to Owner through escrow. Owner shall convey title subject only to exceptions that (i) existed at the time of Owner’s acquisition of the Property, or (ii) were created with the written consent of City or approved in writing by City or expressly contemplated or permitted by this Agreement, including but not limited to the deed of trust or other lien securing construction or permanent financing. d. Upon the City’s election to exercise the Option, the City and the Owner shall promptly open an escrow with Escrow Agent and shall execute and deliver all documents necessary or appropriate to complete the purchase and sale transaction in accordance with this Section 7 (including, without limitation, escrow instructions, a settlement statement, a FIRPTA affidavit, and a California Form 593). Owner shall pay all escrow costs and the costs of an ALTA owner’s title insurance policy in favor of City, which is consistent with clause (c) above. 8. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest permitted by this Agreement; provided, however, that any subsequent owner of the Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such owner’s title was acquired by foreclosure, deed in lieu of foreclosure, trustee’s sale or otherwise. 9. Within thirty (30) days after the Restriction Termination Date, the City and Owner shall record a notice of the termination of this Agreement and the Option. 10. Notwithstanding any other provision of this Agreement, the upon the creation of commercial condominiums for the ground level commercial/retail spaces on the Property in accordance with state law, the portion of the Property consisting of those condominiums shall be released from the encumbrance of this Agreement. City and Owner shall record an addendum to this Agreement documenting the release of the commercial condominium portion of the Property when the subdivision process is completed. 10677-0013~933044v6,7.doc Attachment No. 9 (Page 4) DRAFT 17-7081-!-301/07 1N WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. ATTEST:CITY OF PALO ALTO, a chartered city City Clerk Mayor "DEVELOPER" APPROVED AS TO FORM:COMMIYNITY HOUSING ALLIANCE, INC., a California non-profit public benefit corporation. Assistant City Attorney By: Name: Title: FEIR#: APPROVED: Assistant City Manager By: Name: Title: FEIR#: Director of Administrative Services Director of Planning and Community Environment EDEN HOUSING, INC., a California non- profit public benefit corporation. By: Name: Title: FEIR#: Insurance Review By: Name: Title: FEIR#: 1067%0013\933044v6,.7~_doc Attachment No. 9 (Page 5) DRAFT g7-08/-t-301/07 STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,200__, before me,., Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,200__, before me,, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public 10677-0013\933044v~7_.doc Attachment No. 9 (Page 6) DRAFt 0-7-08/4=301/07 STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,200__, before me .....Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public STATE OF CALIFORNIA ) ) COUNTY OF SANTA CLARA ) SS. On ,200__, before me,., Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Notary Public 10677-0013\933044v6:.7_z_.doc Attachment No. 9 (Page 7) DRAFT 07-0814-301/07 ATTACHMENT NO. 10 FORM OF MEMORANDUM OF OPTION RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Palo Alto P.O. Box 10250 Palo Alto, CA 94303 Attn: City Manager WITH A COPY TO AND MAIL TAX STATEMENTS TO: Attention: FREE RECORDING REQUESTED (Govt. Code Section 6103) [Space above for Recorder’s use pursuant to California Government Code Section 27383] [ADD STATEMENT RE: TRANSFER TAX] MEMORANDUM OF OPTION TO PURCHASE REAL PROPERTY In connection with the recordation of this instrument, the CITY OF PALO ALTO, a chartered city of the State of California (hereinafter referred to as "City"), has granted to ., L.P., a California limited partnership ("Developer") certain real property pursuant to that certain Acquisition and Development Agreement dated as of , 2007 by and between City and Developer’s predecessors-in-interest (the "ADA"), which is a public record on file in the office of the City Clerk. Terms used in this instrument and not defined herein shall have the meanings given in the ADA. Under the ADA, the Developer is obligated to construct a residential or mixed use development on the real property described more particularly in Exhibit "A" hereto, incorporated herein by this reference (the "Property"). In consideration of the grant of a portion of the Property by City to Developer and the provision of certain financing by City to Developer, City shall have the option to purchase the Property (herein, the "Option") as follows: 10677-0013\933044v6=7.doc Attachment No. 10 (Page 1) DRAFI" W-08/4401/07 (a) (b) (c) (d) If Developer defaults on the ADA at any time prior to the completion of construction of the Project pursuant to the ADA, and such default is not cured within the time periods set forth in Section 8.1 of the ADA, and subject to the fights of Holders set forth in Section 5.13 of the ADA, City may purchase the Property and all improvements thereon, at any time. If Developer defaults on the Regulatory Agreement at any time after completion of construction but prior to the Restriction Termination Date (as defined in the Regulatory Agreement), and such default is not cured within sixty (60) days of written notice from City, City may purchase the Property and all improvements thereon at any time. The Option shall be exercised, if at all, by City’s delivery of written notice of its election to exercise the option to Developer within one year after expiration of the last of the cure periods granted to Developer. The purchase price (the "Option Purchase Price") shall be all amounts, if any~ then owed by Developer to City pursuant to the City Loan, as that term is defined in the ADA. (e) (f) (g) The purchase and sale shall occur within thirty (30) business days after City’s exercise of the Option through an escrow company selected by City. City and Developer shall promptly execute, acknowledge and deliver any and all documents necessary or appropriate to conduct the purchase and sale transaction (including, without limitation, escrow instructions, a settlement statement, a FIRPTA affidavit, and a California Form 593) and the Developer (i.e., Seller) shall pay all escrow costs and the cost of an ALTA title policy in favor of City that is consistent with clause (f) below. City shall credit the Option Purchase Price to Developer concurrently with delivery of title to City. Developer shall convey title subject only to exceptions that (i) existed at the time of Developer’s acquisition of the Property, or (ii) were created with the written consent of City or approved in writing by City. City shall be entitled to specific performance to enforce the terms of this instrument. (h)Within thirty (30) days after the Restriction Termination Date, the City and Developer shall record a notice of termination of this Option. (i)Notwithstanding any other provision of the ADA or this Memorandum, upon the creation of any commercial condominiums for the ground level commercial/retail spaces on the Property in accordance with state law, the portion of the Property consisting of those condominiums shall be released from the encumbrance of the City’s Option, and thereafter the City’s Option to purchase shall cover only the remaining portions of the Property. City and Owner shall record an addendum to this Memorandum documenting the 10677-O013~33044v~7.doc Attachment No. 10 (Page 2) DRAFT 0-708/4-301107 release of the commercial condominium portion of the Property when the subdivision process is completed. IN WITNESS WHEREOF, the City and the Developer have caused this instrument to be executed on their behalf by their respective officers thereunder duly authorized, as of this day of ,200__. ATTEST:CITY OF PALO ALTO, a chartered city City Clerk APPROVED AS TO FORM: Assistant City Attorney Mayor "DEVELOPER" COMMUNITY HOUSING ALLIANCE, INC., a California non-profit public benefit corporation. By: Name: Title: FEIR#: APPROVED: Assistant City Manager By: Name: Title: FEIR#: Director of Administrative Services Director of Planning and Community Environment EDEN HOUSING, INC., a California non- profit public benefit corporation. By: Name: Title: FEIR#: Insurance Review By: Name: Title: FEIR#: 10677-0013\933044v6=7.doc Attachment No. 10 (Page 3) DRAFT 0-70814-301/07 STATE OF CALIFORNIA ) ) SS. COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) STATE OF CALIFORNIA ) ) SS. COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State 10677-0013\933044v6,.7.doc Attachment No. 10 (Page 4) DRAFF 10-708/4~01107 STATE OF CALIFORNIA ) COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) STATE GF CALIFORNIA ) ) SS. COUNTY OF SANTA CLARA ) On ..... before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State 10677-0013~933044v~7.doc Attachment No. 10 (Page 5) DRAFF O708/4-301/07 EXHIBIT "A" LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS SITUATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: 10677-0013\933044v6=7_.doc Attachment No. 10 (Page 6) DRAFT g7-08/-1-301/07 ATTACHMENT NO. 11 FORM OF MEMORANDUM OF AGREEMENT RECORD~G REQUESTED BY AND WI-~N RECORDED MAIL TO: City of Palo Alto P.O. Box 10250 Palo Alto, CA 94303 Attn: City Manager WITH A COPY TO: Attention: FREE RECORDING REQUESTED (Govt. Code Section 6103) (Space Above For Recorder’s Use) MEMORANDUM OF ACQUISITION AND DEVELOPMENT AGREEMENT THIS MEMORANDUM OF ACQUISITION AND DEVELOPMENT AGREEMENT (this "Memorandum") is made as of this __ day of ., 2008, by and between the CITY OF PALO ALTO, a chartered city ("City") and L.P., a California limited partnership (hereinafter referred to as "Grantee" or "Developer"), with reference to the following matters: 1. City and Developer’s predecessors-in-interest entered into that certain Acquisition and Development Agreement dated as of ,2007 (the "ADA"), which is incorporated herein by reference. All capitalized terms not otherwise defined herein shall have the meanings assigned to them in the ADA. The ADA is a public record on file in the offices of City. 2. Pursuant to the ADA, City shall convey to Developer certain real property described as the City Parcel and more particularly described on Exhibit "A-l", attached hereto and incorporated herein by reference. 3. Pursuant to the ADA, Developer acquired certain real property described more particularly on Exhibit "A-2", attached hereto and incorporated by reference (the "Ole’s Parcel"). In the ADA and herein, the City Parcel and the Ole’s Parcel are referred to collectively as the "Site", which is described more particularly on Exhibit "B", attached hereto and incorporated by reference. 10677-0013\933044v6=7_.doc Attachment No. tl (Page 1) DRAFF 07-08/4~01/07 4. Pursuant to the ADA, Developer agrees to construct certain improvements defined therein as Improvements on the Site including affordable multi-family rental housing and parking or such other project as may be approved in writing by the City (collectively, the "Development"). If Developer fails to construct the Improvements in the manner and within the time set forth in the ADA, City shall have the right to repurchase the Site within the time periocls set forth in the ADA. 5. City has provided certain financial assistance to Developer to assist in the completion of Development, as is more particularly described in Article 7 of the ADA. 6. Developer is also required to limit occupancy of the residential units in the Development for an initial period of fifty-five (55) years to households of certain levels of Very Low Income, as is more particularly described in Article 6 of the ADA. 7. Except as stated herein, nothing contained in this instrument shall modify in any way any other provisions of the ADA or any other provisions of the documents incorporated herein. /// 10677-0013\933044v6=7_.doc Attachment No. 11 (Page 2) DRAFT 0-708/-I-301/07 IN WITNESS WHEREOF, City and Developer have executed this Memorandum as of the day and year first above written. ATTEST:CITY OF PALO ALTO, a chartered city City Clerk Mayor APPROVED AS TO FORM: "DEVELOPER" COMMUNITY HOUSING ALLIANCE, INC., a California non-profit public benefit Assistant City Attorney APPROVED: Assistant City Manager By: Name: Title: FEIR#: Director of Administrative Services EDEN HOUSING, INC., a California non- profit public benefit corporation. Director of Planning and Community Environment Insurance Review By: Name: Title: FEIR#: By: Name: Title: FEIR#: 10677-0013\933044v7.doc Attachment No. 11 (Page 3) DRAFT 08/01/07 STATE OF CALWORNIA ) ) SS. COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) WITNESS my hand and official STATE OF CALWORNIA ) ) SS. COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State 10677-0013\933044v6,.7.doc Attachment No. 11 (Page 4) DRAFT 6708/4-301/07 STATE OF CALWORNIA ) ) SS. COUNTY OF SANTA CLARA ) On , before me, ., a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (SEAL) WITNESS my hand and official STATE OF CALIFORNIA ) COUNTY OF SANTA CLARA ) On , before me, , a Notary Public in and for said state, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State 10677-0013\933044v~7.doc Attachment No. 11 (Page 5) DRAFT 07-08/4-301107 EXHIBIT "A-I" LEGAL DESCRIPTION OF CITY PARCEL THE LAND REFERRED TO HEREIN IS SITUATED IN THE COUNTY OF SANTA CLARA, STATE OF CALWORNIA, AND IS DESCRIBED AS FOLLOWS: 10677-0013\933044v~7.doc Attachment No. 11 (Page 6) DRAbT 07-08/4-301/07 EXHIBIT "A-2" LEGAL DESCRIPTION OF OLE’S PARCEL TI-~ LAND REFERRED TO HEREIN IS SITUATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: 10677-0013\933044v6=7.doc Attachment No. 11 (Page 7) DRAFT 1~1-708/4--301/07 EXHIBIT "B" LEGAL DESCRIPTION OF THE SITE THE LAND REFERRED TO HEREIN IS SITUATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: 10677-0013k933044v6=7.doc Attachment No. 11 (Page 8) DRAFT 19-7-08/4-301/07 TABLE OF CONTENTS ARTICLE 1.1 DEFINITIONS ....................................................................................................2 Definitions ...............................................................................................................2 ARTICLE 2.1 2.2 2.3 2.4 2.5 2.6 2 PURPOSE OF AGREEMENT; PARTIES; REPRESENTATIONS AND WARRANTIES ........................................................................................7 Purpose of the Agreement .......................................................................................7 City ..........................................................................................................................8 Developer ................................................................................................................8 City Representations ...............................................................................................8 Developer Representations .....................................................................................9 Prohibition Against Transfer of Site .......................................................................9 ARTICLE 3.1 3.2 3.3 3.4 3.5 GENERAL PERFORMANCE OBLIGATIONS .............................................11 Schedule of Performance ......................................................................................11 Delegation to City Manager ..................................................................................11 Construction Contract ...........................................................................................11 Relocation .............................................................................................................12 Submission of Evidence of Financing ..................................................................12 ART]CLE 4.1 4.2 4.3 4.4 4.5 4.6 CITY PARCEL DISPOSITION .......................................................................12 Conveyance of City Parcel ....................................................................................12 Conditions Precedent to Conveyance ...................................................................12 Condition of Title ..................................................................................................14 Title Insurance ......................................................................................................15 Condition of City Parcel .......................................................................................15 Disposition Escrow ...........................................................................................461"7 ARTICLE 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 DEVELOPMENT OF THE SITE .....................................................................19 Scope of Development ..........................................................................................19 Developer’s Submittals of Design and Construction Documents ....................4920 City Review and Approval of Plans, Drawings, and Related Documents ......: .....20 Cost of Construction .............................................................................................20 Prevailing Wages ..................................................................................................20 City and Other Governmental City Permits ..........................................................20 Zoning and Land Use Requirements; Environmental Review .............................20 City Rights of Access During Construction ..........................................................21 Local, State and Federal Laws ..............................................................................22 Indemnification .....................................................................................................22 Bodily Injury, Property Damage and Worker’s Compensation Insurance ...........23 Non-discrimination During Construction .............................................................26 Security Financing, Rights of Holders .............................................................._-2-627 ARTICLE 6 USES OF THE SITE ........................................................................................29 6.1 Uses .......................................................................................................................29 10677-0013\933044v6=7__=doc Page i DR A_b-T 1~708/4-301/0-7-07 TABLE OF CONTENTS 9.19 9.20 9.21 Reasonable Reimbursement ..................................................- ................................43 Entire Agreement ..................................................................................................43 Counterparts ......................................................................................................~-P344 ATI’ACHMENT NO. 1-A ATTACHMENT NO. 1-B ATTACHMENT NO. 2-A ATTACHMENT NO. 2-B ATTACHMENT NO. 3 ATTACHMENT NO. 4 ATTACHMENT NO. 5 ATTACHMENT NO. 6 ATTACHMENT NO. 7 ATTACHMENT NO. 8 ATTACHMENT NO. 9 ATTACttM~NT NO. 10 ATTACHMENT NO. 11 CITY PARCEL LEGAL DESCRIPTION OLE’S PARCEL LEGAL DESCRIPTION SITE LEGAL DESCRIPTION SITE MAP SCHEDULE OF PERFORMANCE GRANT DEED SCOPE OF DEVELOPMENT SOURCES & USES BUDGET FORM OF CITY NOTE CITY DEED OF TRUST FORM OF REGULATORY AGREEMENT MEMORANDUM OF OPTION FORM OF MEMORANDUM OF AGREEMENT 10677-0013\933044v6..7~doc Page iii DRAFF 0-7-08/4-301/0-7-07