2010-022-Dittos Lane First Amended And Restated Amended Exclusive Right To Neg. Agr.RESOLUTION 2010-022
RESOLUTION OF' THE BOARD OF DIRECTORS
OF THE REDEVELOPMENT AGENCY
OF THE TOWN OF LOS GATOS APPROVING
A FIRST AMENDED AND RESTATED
EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
FOR THE 20 DITTOS LANE PROPERTY (APN 529-29-034)
WHEREAS, on September 21, 2009, the Redevelopment Agency of the Town of Los
Gatos (the "Agency") and Dittos Lane Family Housing, L.P. ("DLFH"), an affiliate of Roem
Development Corporation, entered into an Exclusive Right To Negotiate Agreement (the
"ERNA") setting forth terms for negotiation of a disposition and development (a "DDA") for
potential development of an affordable housing development on an approximately 1.58 acre
parcel at 20 Dittos Lane (APN 529-29-034) (the "Property") in the Central Los Gatos
Redevelopment Project Area that is currently owned by the Agency; and
WHEREAS, the Agency and DLFH have made progress in negotiations pursuant to the
ERNA, and have determined that two modifications to the ERNA would be appropriate to
facilitate further negotiation of a DDA, as follows:
(1) an extension to December 20, 2010 of the negotiating period under the
ERNA to seek to achieve a mutually acceptable DDA; and
(2) provision by the Agency of apre-development loan to the DLHF in an
amount not to exceed $94,655 to enable DHLF to complete a more detailed level of project
design prior to DDA consideration than had been contemplated when the ERNA was approved;
and
WHEREAS, the proposed modifications to the ERNA are incorporated in a proposed
First Amended and Restated Exclusive Right To Negotiate Agreement (the "Amended ERNA"),
the form of which is attached to this Resolution as Exhibit "A"; and
WHEREAS, the staff report accompanying this Resolution provides further information
about the purpose and effect of the proposed Amended ERNA.
RESOLVED, by the Board of Directors of the Redevelopment Agency of the Town of
Los Gatos, that the Amended ERNA is hereby approved and the Executive Director is hereby
authorized to execute the Amended ERNA in substantially the form of the Exhibit "A".
PASSED AND ADOPTED at a regular meeting of the Town Council/Board of Directors of the
Redevelopment Agency of the Town of Los Gatos, California held on the 16t~' day of
February, 2010 by the following vote:
DIRECTORS
AYES: Joe Pirzynslci, Steve Rice, Barbara Spector, Mlce Wasserman, Mayor Diane McNutt
NAYS: None
ABSENT:
ABSTAIN:
SIGNED:
J%GhitG l~clU~Gff
CHAIR OF THE REDEVELOPMENT AGENCY
TOWN OF LOS GATOS
TEST:
S C TARY OF THE REDEVELOPMENT AGENCY
TOWN OF LOS GATOS
U+ X>~CUTION
FIRST AMENDED AND RESTATED
EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
(20 DTITOS LANE DEVELOPMENT)
This First Amended and Restated Exclusive Right To Negotiate Agreement (this
"Agreement"), initially executed as of September 21, 2009 (the "Effective Date"), as fully
amended and restated as of February 16, 2010 (the "Amendment Date"), is entered veto by and
between the Redevelopment Agency of the Town of Los Gatos, a public body, corporate and
politic -(the "Agency"), and Dittos Lane Family Housing, L,P,, a Califonua limited partnership
(the "Developer"). The Agency and the Developer (somethnes collectively referred to as the
"parties") have entered into this Agreement on the basis of the following facts: •
RECITALS
A. The Town Council (the "Town Council") of the Tawn of Los Gatos (the "Town")
has adopted and the Agency is responsible for implementation of the Redevelopment Plan for the
Central Los Gatos Redevelopment Project (the Redevelopment Plan") to redevelop the Central
Los Gatos Redevelopment Project Area (the "Project Area"), consistent with the policies and
standards of the Redevelopment Planand the General Plau of the Town (the "General Plan").
The goals for the Redevelopment Plan include alleviation of blighting conditions and the
provision of affordable housing in the Project Area.
B, Roem Development Corporation ("ROEM") has entered into a purchase and sale
agreement (the "Purchase Agreement") for the acquisition of an approximately 1.58-acre
property located at 20 Dittos Lane (APN 529-29-034) within the Project Area, and more
particularly described in the attached Exhibit A (the "Property").
C. In turn, ROEM and the Agency have entered into an assignment and assumption
agreement (the "Assigmnent Agreement"), dated as of September 21, 2009, whereby the
Developer has assigned and the Agency has assumed the rights of the "Buyer" under the
Purchase Agteernent, giving the Agency the right and obligation to purchase the Property in
accordance with the Purchase Agreement. As of the Amendment Date, the Agency has
purchased the Property.
D, The Agency desires to cause development on the Property of a residential
development, including an appropriate mix of affordable housing units, consistent with the
requirements of the Redevelopment Plan, the General Plan, and the California Cotmnuruty
Redevelopment Law (the "Project").
E. The development of the Project in the Project Area will further the Agency's goals
of providing affordable housing and will assist in ameliorating blighting influences in the Project
Area.
n rsr~on~oo~~a.z
EX1<IIBIT A
F. The purposes of this Agreementare to: (1) establish procedures and standards for
the negotiation by the Agency and the Developer of a disposition and development agreement (a
"DDA") pursuant to which the Agoncy would convey the Property to the Developer and the
Developer would develop, own and operate the Project on the Property; and (2) set forth terms
for disbursementand repayment of a predevelopment loan by the Agency to the Developer (the
'BRNAPredevelopment Loan") to fund certain costs incurred by the Developer ui implementing
this Agreement. As more Billy set forth in Section 4.1, the Developer acknowledges and agrees
that ties Agreement in itself does not grant the Developer: the.right to develop the Project, nor
does it obligate the Developer to any activities or costs to develop the Project, except for the
actions and negotiations contemplated by tlvs Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and for other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties mutually agree as follows:
ARTICLE 1.
EXCLUSIVE NEGOTIATIONS RIGHT
Section 1.1 Good Faith Ne~,otiations, The Agency and the Developer shall negotiate
diligently and in good faith, during the Negotiating Period described in Section 1.2, the terms of
a DDA for the development of the Project on the Property. During the Negotiating Period; the
parties shall use good faith efforts to accomplish the respective tasks outlined in AI•ticle 2 to
facilitate the negotiation of a mutually satisfactory DDA.
Among the issues to be addressed in the negotiations are the purchase price for the
Property, approptiate number of affordable units and affordability levels, design, parking and
aesthetic considerations of the Project (including appropriate means of access), the development
schedule for the Project, responsibilities for relocation of existing occupants of the Property,
financing of the Project, marketing and management of theProject, and the provision of public
improvements related to the Project. The amount, timing, method, source and other terms of any
Agency financial assistance toward development of theProject shall be determined tlnough the
negotiating process for the DDA.
Soction 1.2 Negotiatin Pg eriod. Subject to earlier termination pursuant to speciftc
provisions of this Agrooment, the negotiating period (the "Negotiating Period") under this
Agreement coimnenced on the Effective Date (as set forth in the Opening Paragraph of this
Agreement) and shall expire at midnight Pacific Standard Time on December 20, 2010. The
Negotiating Period maybe extended or modified by foi7nal amendment of this Agreement
approved by the Agency Board and executedby the Executive Director on behalf of the Agency
and by the Developer.
If, despite their respective diligent good faith efforts, the parties are unable to reach
agreement and execute and deliver a DDA by the expiration of the Negotiating Period, then this
iisi~oi~~~o~~a:z
Agreement shall terminate and neither party shall have any further rights or obligations under
this Agreement, except that the provisions of Sections 1,4, 3.7(b), 4.3 and 4.S shall survive any
termination. If a DDA is executed by the Agency and the Developer then, upon such execution
and effectiveness of the DDA in accordance with its terms, this Agreement shall terminate, and
all rights and obligations of the parties shall be as set forth in the executed DDA.
Section 1.3 Exclusive Negotiations. During the Negotiating Period, the Agency shall
not negotiate with any entity, other than the Developer, regarding development of the Property,
or solicit or entertain bids or proposals to do so.
Section 1,4 Good Faith Deposit. In consideration for this Agreement, the Developer
has provided to the Agency a cash deposit of Twenty-Five Thousand Dollars ($25,000) (the
"Deposit"). Durhlgthe term of this Agreement, .the Agency shall invest the Deposit for purposes
of earning interest thereon.
IF this Agreement is terminated without execution of a DDA other than as the result of the
occurrence of an Agency Event of Default or a Developer Event of Default pursuant to Section
4.6, the Deposit and any interest earned thereon shall be retained by the Agency and credited
toward repayment of the amount owed by the Developer to the Agency in connection with the
ERNA Predevelopment Loan pursuant to Section 3.7(b) and theBRNA Promissory Note,
If this Agreement is terminated by the Developer as the result of the occw-rence of an
Agency Event of Default pursuant to Section 4.6, the Deposit and any interest earned thereon
shall be refunded promptly to the Developer as more fully provided in Section 4.6
If this Agreement is terminated by the Agency as a result of the occurrence of a
Developer Event of Default pursuant to Section 4.6, the Deposit and any interest earned thereon
shall be retained by the Agency as more fully provided in Section 4,6, and shall not be credited
toward repayment of the amount awed'by the Developer to the Agency in connection with the
ERNA Predevelopment Loan pursuant to Section 3.7(b) and the ERNA Promissory Note.
If performance of this Agreement results in execution of a DDA, the disposition of the
Deposit and. any interest earned thereon shall be as set forth in the DDA.
Section 1.5 ,Identification of Developer Representatives and Development Teatn.
{a) Ne~otiatiug Representatives. The Developer's representatives to negotiate
the DDA with the Agency are 7onathan Emami and Marcus Griffin. The Developer's negotiating
representatives maybe changed by written notice to the Ageney.
(b) Development Team. The parties' acknowledge that the ideality and
quality of the Developer's team for the Project is important to the completion of the tasks set
forth in Article 2 below, and in seeking to negotiate a mutually acceptable DDA. The following
shall constitute initial members of the Developer's team for the Project.
L 1 S l\0l\790674.2
Architect I{TGY
Legal Counsel Cox, Castle & Nicholson LLP
Civil Engineer Ruth and Going Engineer7ng
The architect, legal counsel, and civil engineer identified above shall comprise the
"Development Team" for the Project. The Developer may replace one oi• more members of the
Development Team upon receipt of Agency approval, which approval shall not be unreasonably
withheld, conditioned or delayed.
Section 1.6 Identification of Agency Representatiaes. The Agency's representatives to
negotiate the DDA with the Developer are Bud Lortz and Greg Larson. Greg Larson, as Agency
Executive Director, has ultimate Agency staff authority to make decisions related to this
Agreement thatcan be made at the staff level, and to make staff recommendations to the Agency
Board in connection with decisions related to this Agreement to be made at the Agency Board
level. The Agency's negotiating representatives may be changed by written notice to the
Developer.
ARTICLE 2.
NEGOTIATION TASI{S AND DDA PROVISIONS
Section 2.1 Overview: ERNA Schedule. To facilitate negotiation of the DDA, the
parties shall use reasonable goad faith efforts to accomplish the tasks set forth in this Aaticle 2
within the specific times set forth in the milestone schedule set forth in the attached Exhibit B
(the "E1ZNA Scheduls"), and within au overall tituefi'ame that will support negotiation and
execution of a mutually acceptable DDA prior to the expiration of the Negotiating Period. The
ERNA Schedule may be modified from time to time {including modification of dates for
completion of specified actions and/or addition oFfurther actions) without formal amendment of
this Agreement by written document executed by the Developer and the Agency Executive
Director or the Executive hnector's designee; provided, however, in no event shall the overall
duration of the Negotiating Period by modified other than by formal amendment of this
Agreement approved by the Agency Board in accordance with Section 1.2.
In addition, Section 2.2 sets forth certain general terms that the parties intend to
incorporate in any mutually acceptable DDA.
Section 2.2 Certain DDA Provisions. The parties acknowledge and agree that any
muhially acceptable DDA shall contain provisions to the following effect:
(a) Ph• sy ical Condition. The physical condition Ln which the Agency conveys
the Property to the Developer (provided the Developer is otherwise entitled to such conveyance
under the terms of the DDA) will be the same physical condition in which the Agency receives
the Property pursuant to the Purchase Agreement, namely "AS IS, WITH ALL FAULTS", as
further described in Sections A.2.3 and 4.3 of the Purchase Agreement; provided, however, that
the Agency may, in its sole discretion after obtaining the prior written consent of Developer,
which consent shall not be umeasonably withheld, conditioned or delayed, remove any physical
improvements curtently located on the Property,
l l51\01\790674.2
(b) .Title Condition. The condition of title (including liens, easements,
encumbrances, covenants, conditions, and restrictions) in which the Agency conveys the
Property to the Developer will be the same condition in which the Agency receives the Property
pursuant to the Purchase Agreement.
(c) Reports. At the time of conveyance of the Property by the Agency to the
Developer, the Agency shall assign, 6y instrument reasonably acceptable to the Developer, the
Agency's rights, title and interest in and to the Reports (as defined in the Purchase Agreement),
which rights, title and interest have previously been assigned by ROEM to the Agency pursuant
to the Assignment Agreement.
Section 2.3 Preliminary Proposal. Within the time set forth in the ERNA Schedule,
the Developet• shall prepare and submit to the Agency a preliminary proposal (the "Preliminary
Proposal") that containsahe elements set forth in the attached Exhibit C. As of the Amendment
Date, the Developer has performed this obligation.
Within the time set forth in the ERNA Schedule, Agency staff shall provide the
Developer with fennel comments regarding the Preliminary Proposal, .taking into account the
input received at the Initial Community Meeting (as defined in Section 2.7) and fiorn the Agency
Board, as well as the tecluucal input fromtheAgency's consultants for the Project. As of the
Amendment Date, the Agency has performed this obligation.
Section 2.4 Proposed Term Sheet. Within the time set forth in the ERNA Schedule,
the Agency shall provide the Developer with a proposed non-binding term sheet (the "Proposed
Term Sheet") containing proposed business and financial terms as a starting point for negotiation
of the DDA. Within the time set forth in the ERNA Schedule, the Developer shall provide the
Agency with any written comments regarding the Proposed Term Sheet. Thereafter, the parties
shall conduct negotiation of the DDA taking into account the Proposed Term Sheet and any
Developer comments.
Section 2S Refined Proposal. Within the time set forth ur the ERNA Schedule, the
Developer shall submit a refined proposal for the Project (the "Refined Proposal"). The Refined
Proposal shall: (a) be a focused refinement of Prelinnary Proposal; (b) contain the elements set
forth in the attached Exhibit D; and (c) take into account the results of the Initial Community
Workshop and any Agency Board comments regarding the Preliminary Proposal, the comments
of. Agency staff and consultants regarding the Preliminary Proposal, the Proposed Tcrm Sheet
and any Developer's comments, and the negotiations to date. The design elements of the Refined
Proposal shall serve as the basis for the Second Community Workshop (as defined in Section 2.7
below). •
During the course of preparation of the Refined Proposal, the Developer and the
applicable members of the IDevelopment Team shall confer with and consider in good faith the
input of Agency staff regarding the scope and content of the Refined Proposal, 'To facilitate
preparation of the Refined Proposal, the Agency shall convene a meeting ar meetings between
the Developer and knowledgeable representatives of the Town departments that would review
any formal development application for the Project, to obtain input from such representatives of
illustrative types of general Town development standards and conditions that would typically
apply to projects of a scope and nature similar to .the proposed Project. To further facilitate
5
l l51\Ol\790G74.2
preparation of the Refined Proposal, the Agency will schedule a discussion item regarding the
proposed Project during an appropriate Agency Board/Town Council meeting.
Within the time set forth in the ERNA Schedule, Agency staff shall provide the
Developer with formal comments regarding the Refined Proposal, taking into account the input
received at the Second Community Workshop and-from the Agency Board/Town Council, as
well as the teclmical input from the Agency's consultants for the Project.
The Refined Proposal and the Agency's comments thereon shall serve as the basis for
further negotiations of the DDA.
Section 2,6 Town band Use Entitlements. Within the time set forth in the ERNA
Schedule, the Developer shall submit to the Town a complete application fol• the PD zoning
approval and any other land use and development entitlements required from the Town to
develop the Project (other than building permits) (collectively, the "Town Land Use
Entitlements"). The Developer's application for the Town Land-Use Entitlements shall be
materially consistent with the Refined Proposal and the Agency's comments thereon. Following
submittal, the Developershall use diligent good faith efforts to seek Town approval of the Town
Land Use Entitlements in accordance with all applicable legal requirements and procedures and
within the limo set forth in the ERNA Schedule.
Section 2.7 Community Enna eg ment. The Agency and Developershall confer and
seek agreement on an appropriate strategy to obtain input fiom conununlty members regarding
both thePrelirninaryPrcposal and the Refined Proposal. At a minimum, the Developershall
take the lead in noticing and conducting an initial public workshop (the "Initial Community
Workshop") to solicit community input following submittal of the Preliminary Proposal in
accordance with Section 2.3 and' witlun the time set forth in the ERNA Schedule, and a second
public workshop (the "Second Community Workshop") to solicit community input following
subnuttal ofthe Refined Proposal in accordance with Section 2.4 and within the time set forth in
the ERNA Schedule. The Initial Community Workshop and the Second Commuluty Workshop
shall be noticed to all property owners and occupants in the vicinity of the Property. As cf the
Amendment Date, the Developer has satisfied its obligation with respect to the Initial
Community Workshop.
Section 2.$ Purchase Price for the Property Agency Financial Contribution. The
Agency and the Developer shall seek to agree upon the purchase price for the Property, and the
nature, timing and amount of any Agency fmancial contlbution to the Project. The Agency and
the Developer shall seek to agree upon a purchase price and any Agency financial contribution
based on an "open book" pro forma financial analysis of the Project, using the fmancial
information contained in thePrelirninary Proposal and the Refined Proposal, as well as analysis
of such financial information by Agency staff and consultants, and other relevant information. It
is the parties' intent that any mutually acceptable Agency financial contribution to be included in
a DDA shall be in a form or forms authorized fot• filnding by the Agency pursuant to the
Califor7ria Community Redevelopment Law. The proposed purchase price shall be subject to
confirmation and refinement pursuant to the formal reuse valuation and tho noticed hearing and
Town Council fording process to be conducted in accordance with Health and Safety Code
Section 33433, as .further described in Section 2,11 below.
1151\01\790674.2
Section 2.9 Reports; Treatment of Documents Upon Termination.
(a) Renorts. Unless otherwise waived by the Agency, the Developer shall
provide the Agency with copies of all reports, studies, analyses, plans, correspondence and
similar documents, Uut excluding financial or confidential or proprietary information, prepared
or commissioned by the Developer with respect to this Agreement and the Project, promptly
upon thew completion,
While desiring to preserve its t7ghts with respect to treatment of certain
information on a confidential or proprietary basis, the Developer acknowledges that the Agency
will need sufficient, detailed information about the proposed Project (including, without
limitation the financial information to be contained in the Preliminary Proposal (as further
provided in Exhibit C) and the Refined Proposal (as further provided hr Exhibit D)) to make
informed decisions about the content and approval of the DDA. The Agency will work with the
Developet• to maintain the confidentiality of proprietary uiformation subject to the requirements
imposed on the Agency by the Public Recordg Act (Government Code Section 6253 et sec .).
The Developer acknowledges that the Agency may share information provided by the Developer
of a financial and potential proprietary nature with third party consultants and Agency
Boardmembers as part of the negotiation and decision making process, it being understood that
such third party consultants and Agency Boardmembers shall be under the same requirements
and standards as set forth above in this subsection (a).
(b) Treatment of Documents Upon Termination. If this Agreement is
terminated without the execution of a DDA, the Agency's rights with respectto the information
submitted by the Developer under this Agreement shall he as set forth in the Assignment of
Documents (as described and defined in Section 3.5(a)).
Section 2.10 CEQA Review Within the time set forth in rho ERNA Schedule, the
Agency (in consultation with the Town) shall determine the type of documentation requh•ed
pursuant to CEQA for the processing of the. DDA and the Town Land Use Entitlements for the
Project, and shall specify in writing the type and scope of any such CEQA documentation (the
"CEQA Document"), the identity of the proposed preparer of the CEQA Document (consultant
or staff), and the not-to-exceed budget for preparation of the CEQA Document (the "Budget").
The Developershall reasonably assist the Agency in its determination by providing information
about the Project, as requested. The Agency shall seek and consider in good faith the
Developer's input regarding the need for and scope of any CEQA Document, and the proposed
preparer of and Budget for any such CEQA Document. As of the Amendment Date, the Agency
has satisfied its obligation set forth in this paragraph.
The Agency may, from time to time, make reasonable modifications to the Budget upon
prior consultation with the Developer and good faith considet•ation of the Developer's input
regarding such Budget modifications.
The Agoncy (in cooperation with the Town) shall cause preparation of the CEQA
Document as promptly as possible consistent with satisfaction of state and local CEQA
guidelines for the preparation of the CEQA Document. So long as the Developer and the
Agency staff have otherwise concurred upon the terms of a proposed DDA for presentation to
1151101\790674.2
the Agency Board and the Town Council, the parties shall cooperate in good faith to establish
any reasonably necessary modifications to the ERNA Schedule and any reasonably necessary
extension to the Negotiating Period in accordance with Section 1.2 to accommodate the time
necessary to complete the-CEQA Document for consideration by the Agency Board and the
Town Council in connection with theh• consideration of approval of a DDA.
• The Developer shall pay the Agency's reasonable costs of preparation of the CEQA
Document. consistent with the Budget, and may use EltNA Predevelopment Loan Funds (as
defined in Section 3.2) for thatpurpose to the extent authorized by Section 3.4.
Section 2.11 Section 33433 Report. If the Developer and Agency staff concur upon the
terms of a proposed DDA for presentation to the Agency Board and the Town Council, the
Agency shall prepare the necessary documentation pursuant to Section 33433(a)(2)(B) of the
California I3ealth and Safety Code (the "Section 33433 Report") to be submitted to the Agency
Board and the Town Council in conjunction with the Agency's and the Town Council's
consideration of any DDA that results from negotiations pursuant to this Agreement. The
Section 33433 report shall contain the estimated value of the Property determined at its highest
and best use under the RedevelopmentPlan and the estimated value of the Property determined
at the use and with the conditions, covenants and development casts requited pursuant to the
proposed DDA•
Section 2.12 Realacement Housing Plan, The Agency shall be responsible for
preparing and presenting for consideration of approval by the Agency Board a replacement
housing plan (the "Replacement Housing Plan") withrespect to any low and moderate income
residential units on the Property that may be removed fi•om the community's affordable housing
stock as a result of the Project if the DDA is approved and implemented. The Replacement
Housing Plan shall be prepared and presented for consideration of approval in the manner and
within the time set forth in I-Iealth and Safety Code Section 33413.5. The patties contemplate
that the Replacement Ilousing Plan will designate affordable residential units in the Project (if
the DDA is approved) to serve as the replacement housing units for any low and moderate
income residential units cutxently on the Property that are removed. Nothing in this Agreement
shall constitute a representation, warranty, or covenant by the Agency that it will approve any
particular form of Replacement Housing Plan.
Section 2.13 Ptoeress Regorts. From time to time as reasonably agreed upon by the
patties, each patty shall make oral or written progress reports advising the other party on studies
being made and matters being evaluated by the repotting patty with respect to this Agreement
and the Project.
ARTICLE 3.
ERNA PREDEVELOPMENT LOAN
Section 3.1 ERNA Predevelopment Loan Activities. The attached Exhibit E sets forth
a list of certain predevelopment activities to be undertaken by the Developer in connection with
performance of its obligations pursuant to this Agreement (the "ERNA Predevelopment Loan-
Eligible Activities") and a corresponding budget estimate for the various ERNA Predevelopment
.Loan-Eligible Activities. Amounts expended by the Developer to pay costs incurred for the
1151101\7906742
ERNA Predevelopment Loan-Eligible Activities are referred to in this Agreement as fhe "ERNA
Predevelopment Loan-Eligible Expenditures,"
Section 3.2 ERNA Predevelopment Loan. Subject to satisfaction of the conditions set
forth in Section 3.6, the Agency shall lend to the Developer the ERNA Predevelopment Loan in
a principal amount equal to fifty liercent (50%) of the Developer's documented ERNA
Predevelopment Laan-Eligible Expenditures, but in no event to exceed a rnaxitnum cumulative
principal amount to be disbursed by the Agency ofNinety-Four Thousand Six Hundred ~Sixty-
Five Dollars ($94,665). The ERNA Predevelopment Loan funds disbursed by the Agency
pursuant to this Agreement are referred to as the "ERNA Predevelopment Loan Funds,"
The ERNA PredevelopmentLoanshall be evidenced by a promissory note (the "ERNA
Promissory Note"), substantially in the form set forth in the attached Exhibi F, which shall be
executed by the Developer prior to and as a condition ofthe initial disbursement of ERNA
Predevelopment Loan Funds.
Section 3.3 Interest.
(a) Subject to the provisions of Section 3.3(b) belgw, the outstanding
principal balance of the ERNA Predevelopment Loan shall bear simplc.interest at the Late of
three percent (3%) per annum commencing with the date of first disbursement of ERNA
Predevelopment Loan Funds,
(b) In the event of a Developer Event of Default pursuant to Section 4.6,
interest on the ERNA Predevelopment Loan shall begin to accrue, as of the date of the Event of
Default and continue until such time as the ERNA Predevelopment Loan funds are repaid in full
or the Developer Event of Default is cured, at the default rate of the lesser of ten percent (IO%),
compounded annually, or the lighest rate permitted by law.
• Section 3.4 Use of ERNA Predevelopment Loan Funds; Other Developer Funds, The
Developer shall use the ERNA Predevelopment Loan Funds exclusively to pay or reimburse
itself for previously paid ERNA.Predevelopment Loan-Eligible Expenditures consistent with the
Draw Requests submitted to the Agency pursuant to Section 3.6(e). The Developer shall pay
fiom funds other than Predevelopment Loan Funds: (1) not less than fifty percent (50%) all
ERNA Predevelopment Loan-Eligible Expenditures; and (2) all other costs and expenses
incurred by the Developer in fulfilling its obligations under this Agreement and the ERNA
Predevelopment Loan Documents (as defined in Section 3.5). Any disbursed ERNA
Predevelopment Loan Funds held by the Developer after the Developer has paid all ERNA
Predevelopment Loan-Eligible Expenditures shall be promptly returned to the Agency.
Section 3.5 Secut7 As security for repayment of the ERNA Predevelopment Loan,
and as part of the consideration for entering into this Agreement, the Developer hereby:
(a) Assigns to the Agency its rights and obligations with iespect to certain
agreements, plans, specifications, other documents, and approvals, pursuant to an Assigiument of
Agreements, Plans and Specifications, and Approvals (the "Assiglmlent of Documents"),
substantially in the form set forth in the attached Exhibit G, which shall be executed by the
Developer prior to and as a condition of the initial disbursement of ERNA Predevelopment Loan
'1151\Ol\790674.2
Funds. T.he assignments set forth in the Assignment of Documents shall became effective
immediately upon the occurrence of a Repayment Event (as defined in Section 3.7(b))• Tho
Agency shall not have any obligation under any contracts or agreements assigned pursuant to the
Assignment of Documents until it expressly agrees in writing to be bound'by such contracts or
agreements, Upon the occutrrence of a Repayment Event, the Agency may use any of the
foregoing assigned documents pursuant to the Assignment of Documents for any purpose far
which the Developer could have used them for develapment of the Project, and the Developer
shall cooperate with the Agency to implement the Assignment of Documonts and shall
immediately deposit with the Agency for the Agency's use all the agreements; plans and
specifications, approvals and other documents that are the subject of the Assignment of
Documents.
(b) Agrees to cause ROEM to execute a payment guaranty guaranteeing the
Developer's repayment of the ERNA Predevelopment Loan pursuant to this Agreement and the
ERNA Promissory Note (the "ROEM Payment Guaranty"); substantially in the form set forth in
the attached Exhibit H, such execution to occur prior to and as a condition of the initial
disbutsement of ERNA Predevelopment Loan Funds.
The ERNA PrornissoryNote, the Assignment of Documents, and the ROEM
Payment Guaranty are collectively referred to in this Agreement as the "ERNA Predevelopment
Loan Documents"
Section 3.6 Conditions to Fundine. The Agency shall disburse ERNA
Predevelopment Loan Funds upon. satisfaction of the following conditions:
(a) There exists no Developer Event of Default (or uncured ROEM default
with respect to the ROEM Payment Guaranty) nor any act, failure, onussion or condition that
would constitute a Developer Event of Default under this Agreement or the ERNA
Predevelopment Loan Documents (or a ROEM default with respect to the ROEM Guaranty);
(b) The Developer and ROEM have executed and delivered to the Agency the
ERNA Predevelopment Loan Documents and the ERNA Predevelopment Loan Documents are
in full effect;
(c) The Developer has delivered to the Agency a copy of the Developer's
organizational documents and a partnership authorizing resolution, inform reasonably
satisfactory to the Agency, authorizing the Developer's' execution of this Agreement, the ERNA
Pronssory Note, the Assigmnent of Documents, and the transactions contemplated by the
Predevelopment Loan Documents;
(d) The Developer has delivered to the Agency a copy of ROEM's
organizational documents and a corporate authorizing resolution, in form reasonably satisfactory
to the Agency, authorizing ROEM's execution of the ROEM Payment Guaranty; and
(e) The Developer has delivered to the Agency a written request (each a
"Draw Request") setting forth one or more ERNA Predevelopment Loan-Eligible Expenditures
10
I I51\Ol\790674.2
incurred or to be incurred by the Developer, and attaching a copy of the bill or invoice covering
the ERNA Predevelopment Loan-Eligible Expenditures incurred or to be incurred;
Draw Requests maybe submitted on a monthly basis and shall be generally consistent
with the budget fot• ERNA Predevelopment Loan-Eligible Activities shown in the attached
Exhibit E. If the Agency disputes any Draw Request, it shall notify the Developer of such
.dispute within ten (10) calendar days after receipt of the Draw Request, and thereafterthe parties
shall confer in good faith to resolve such dispute. Subject to satisfaction of the above funding
conditions, within teu (10) days after receipt of a Draw Request in form and substance
reasonably acceptable to the Agency, the Agency shall disburse ERNA Predevelopment Loan
Funds to the Developer in an amount .equal to fifty percent (50%) of the total amount of ERNA
Predevelopment Loan-Eligible Expenditures shown on such approved Draw Request; provided
however, that the total cumulative amount of ERNA Predevelopment Loan Funds required to be
disbursed by the Agency to the Developer pursuant to this Agreement shall not exceed a
maximum amount of Ninety-Four Thousand Six Hundred Sixty-Five Dollars ($94,665).
Notwithstanding any other provisions of this Agreement, the Agcucy shall have no
further obligation to disburse any portion of the ERNA Predevelopment Loan Funds to the
Developer following: (1) termination of this Agreement; or (2) notification by the Agency to the
Developer of a Developer default which, if not cured within. the cure period set forth in Section
4.6 would become a Developer Event of Default under the terms, of this Agreement or the ERNA
Predevelopment Loan Documents; provided, however, that once a Developer default has been
cured, the Agency's obligation to disburse ERNA Predevelopment Loan Funds in accordance
with this Agreement shall be reinstated..
Section 3.7 Repayment of ERNA Predevelopment Loan.
(a) No Payment During Neg_otiatin Pg eriod. Prior to the expiration of the
Negotiathng Period or othertertnination of this Agreement, no payments of principal orinterest
shall be owed by the Developer with respect to the ERNA Predevelopment Loan.
(b) Payment in Full Upon Repayment Event. As used in this Agreement, the
term "Repayment Event" means either: (1) expiration of the Negotiating Period without
execution of a DDA by the parties and without the existence of an Agency Event of Default
pursuant to Section 4.6; or (2) a ternunatlon of this Agreement prior to the expiration of the
Negotiating Period for any reason other than as a result of an Agency Event of Default pursuant
to Section 4.6. Upon occurrence of a Repayment Event, the principal amount and all unpaid
interest on the ERNA Predevelopment Loan shall become due and payable within thhty (30)
days after the Repayment Event ("Maturity Date") by the Developer to the Agency. If the
Developer fails to repay the ERNA Predevelopment Loan by the Maturity Date, the Agoncy shall
thereupon have all rights and comedies set forth in this Agreement and the ERNA
Predevelopment Loan Documents. Ili addition, if all principal and interest due in cornnection
with the ERNA Predevelopment Loan is not paid by the Developer to the Agency by the
Maturity Date, then all principal and interest amounts remaining due with respect to the ERNA
Predevelopment Loan shall begin to bear interest commencing on such date and continuing until
paid in full at the default rate of the lesser often percent (10%), compounded annually, or the
highest rate permitted by law.
11
1151\Ol\790G74.2
(c) If DDA Becomes Effective. If the DDA is executed by the parties and
becomes effective, then as will be fully specified in such DDA: (1) this Agreement shall be
terminated; (2) the ERNA Promissory Note shall be repaid by funding of a subsequent loan
provided by the Agency pursuant to the DDA for purposes of repayment (the "DDA Loan"); (4).
a new promissory note and assignment of documents with respect to the DDA Loan shall be
executed by the developer under the DDA; (5) the ROEM Guaranty shall be cancelled and a new
repayment guaranty with respect to the DDA Loan shall be executed by ROEM; and (6)
thereupon all obligations with respect to repayment of the DDA Loan shall be as set forth in the
DDA and the accompanying documents executed in connection with the DDA.
(d) Upon Agency Event of Default. If this Agreement is terminated as a result
of an Agency Event of Default pursuant to Section X1.6, the Developer shall have no obligation to
repay any principal or interest with respect to the ERNA Peedevelopment Loan, and the Agency
shall cancel the ERNA Promissory Nate.
ARTICLE 4.
GENEIZAI, PROVISIONS
Section 4.1 Limitation on Effect of Agreement. This Agreement shall not obligate
either the Agency or the Developer to enter into a DDA or to enter into any particular DDA. By
execution of this Agreement, the Agency is not committing itself to or agreeing to undertake any
conveyance, disposition, or use of the Property. Execution of this Agreement by the Agency is
merely an agreement to conduct a period of exclusive negotiations in accordance with the terms
hereof, reserving for subsequent Agency and Town•Council action the fmal discretion and
approval regarding the execution of a DDA and all proceedings and decisions in connection
therewith. Any DDA resulting from negotiations pursuant to this Agreement shall become
effective only if and after such DDA has been considered and approved by the Agency Board
and, if requh•ed by law, the Town Council; following conduct of all legally required procedures,
and executed by.duly authorized representatives of the Agency and the Developer, ilntil and
unless a DDA is signed by the Developer, approved by the Agency Board, and executed by the
Agency, no agreement drafts, actions, deliverables or communications arising from the
performance of this Agreement shall impose any legally binding obligation on either party to
enter into or support entering into a DDA or be used as evidence of any oral. or implied
agreement by either party to enter into any other legally binding document.
Section 4.2 Notices. Formal notices, demands and communications between the
Agency and the Developer shall Ue sufficiently given if, and shall not be deemed given uriless,
dispatched by certified mail, postage prepaid, reh~rn receipt requested, or sent by express
delivery or overnight courier service, to the office ofthe parties shown as follows, or such other
address as the parties may designate in writing from time to time:
Agency: Redevelopment Agency of the
Town of Los Gatos
Town Hall
101 E. Main Street
Los Gatos, CA 95030
Phone: (408) 354-6867
12
r rsnon~so~~a,z
Attention: Bud Lol•tz
Developer: Dittos Lane Family Housing, L.P.
ROEM Development Corporation
1650 Lafayette Street
Santa Clara, CA 95050
Phone; (408) 984-5600,
Attention: 7onathan Emami
With a copy to: Cox, Castle & Nicholson LLP
SSS Califoltua Street, 10a' Floor
San Francisco, CA 94104-1513
Phone:(41S)262-S17S
Attention: Stephen Ryan & Lisa Weil
Such written notices, demands and communications shall be effective on the date shown
on the delivery receipt as the date delivered or the date on which delivery was refused.
Section 4.3 Waiver of Lis Pendens. It is expressly understood and agreed by the
parties that no lis pendens shall be filed against any portion of the Property with respect to this
Agreement or any dispute or act arising from it.
Section 4.4 Costs and Ex enses. Except with respect to use by the Developer of
ERNA Predevelopment Loan Funds as authorized .pursuant to Section 3.4, each party shall be
responsible for its owns costs and expenses in connection with any activities and negotiations
undertaken hi comnection with this. Agreement, and the performance of each party's obligations
under this Agreement. As further provided in Section 2.10, the Developer shall pay the costs of
preparation of the CEQA Document.
Section 4.5 No Commissions. The Agency shall not be liable far any real estate
commissions or brokerage fees that may arise fiom this Agreement or any DDA that may result
fiom this Agreement, The Agency represents that it has engaged no broker, agent or finder in
connection with this transaction, and the Developer shall defend and hold the Agency harmless
from any claims by any broker, agent or fmder retained by the Developer.
Section 4.6 Defaults and Remedies.
(a) Default. Failure by a party to negotiate in good faith as provided in this
Agreement, failure by a party to meet a deadline for performance of an action as set forth in this
Agreement (with particular reference to Exhibit B, the ERNA Schedule), or failure by a party or
ROEM to observe any other material provision of this Agreement or the ERNAPredevelopment
Loan Documents shall constitute a default hereunder. Failure of a party to approve or execute a
DDA after negotiating in good faith shall not eonstihite a default hereunder.
The non-defaulting party shall give written notice of a default to the
defaulting party, specifying the nature of the default and the renuired action to cure the default.
If a default remains uncured ten (10) days after receipt by the defaulting party of such notice,
13
1151\0 l\790674.2
such defaultshall be deemed to constitute an "Event of Default" by the defaulting patty, and the
non-defaulting patty may exercise the remedies set forth in subsection (b).
(b) Remedies. Upon occurrence of an Agency Event of Default, the
Developer's sole remedy shall be to terminate this Agreement, upon whichtermination the
Developer shall be entitled to the return of the Deposit and any interest earned thereon and
cancellation of the ERNA Predevelopment Loan as provided in Section 3.7(d). Following such
tenniriation and the rehun of the Deposit and any interest earned thereon and cancellation of the
ERNA Predevelopment Loan, neither party shall have any further tight, remedy or obligation
under this Agreement; provided, however, that the Developer's obligations pursuant to Sections
4.3 and 4.5 shall survive such termination.
Upon occurrence of a Developer Event of Default, the'Agency's sole
remedies shall be to: (1) terminate this Agreement and retain the Deposit and any interest earned
thereon: and (2) exercise any rights and remedies set forth in Section 3.7(b) and the ERNA
Predevelopment.Loan Documents. Following such termination, neither patty shall have any
righk, remedy or obligation under this Agreement; provided, however, that the Developer's
obligation pursuant to Sections 3.7(b), 4.3 and 4.5 shall survive such termination.
Except as expressly.provided above, neither party shall have any liability
to the other for damages or otherwise for any default, nor shall either party have any other claims
with respect to performance under this Agreement. Each party specifically waives and releases
any such rights or claims they may otherwise have at law or in equity.
The parties agree that, based upon the circumstances now existing, both
known and unknown, it would be impractical or extremely difficult to establish the damages to
the non-defaulting party by reason of an Event of Default by the defaulting party. Therefore, it
would be reasonable at the termination of this Agreement pursuant to this subsection (b) tc
award the non-defaulting party "liquidated damages" equal to the Deposit (or, where the
Developer is the non-defaulting party, return of the Deposit) plus all accrued interest, and to
allow the Agency to exercise any rights and remedies set forth in Section 3.7(b) and the ERNA
Predevelopment Loan Documents in connection with a Developer Event of Default, as the sole
and exclusive remedy or remedies of the non-defaulting party.
Section 4.7 Attorneys' Fees. The prevailing party in any action to enforcethis
Agreement andlor the ERNA Predevelopment Loan Documents shall be entitled to recover
attorneys' fees and costs from the other party.
Section 4.8 Governing Law. This Agreement and the ERNA Predevelopment Loan
Documents shall be governed •by and construed in accordance with the laws of the State of
California.
Section 4.9 Entire Agreement. This Agreement and the ERNA Predevelopment Loan
Documents constitute the entire agreement of the parties regarding the subject n1atters of this
Agreement.
Section 4.10 Assi ng ment. The Developer may not transferor assign any of all of its
rights or obligations under this Agreement or the ERNA Predevelopment Loan Documents
r rst~or~7~o~~a,z
14
without the Agency's prior written approval. Any such attempted transfer orassigmncnt in
violation of the preceding sentence shall be void.
Section 4.11 No Third Patty Beneficiaries. This Agreement and the ERNA
Predevelopment Loan Documents made and .entered into solely for the benefit of the Agency and
the Developer and no other person shall have any right of action under or by reason of this
Agreement or'the ERNA Predevelopment Loan Documents.
Section 4.12 Counterparts. This Agreement may be executed in counterparts, eacli of
which shall be deemed an original but all of which together shall constitute one and the same
agreement.
Section 4.13 Actions By The Agency. Except with respect to the ultimate approval of
the DDA and the malting of any statutorily required findings in connection with DDA approval
(which ultimate approval and statutory fmdings may be made exclusively by the Agency Board
and the Town Council), whenever this Agreement or any of the ERNA Predevelopment Loan
Documents calls for or permits the approval, consent, authorization or waiver of the Agency, the
approval,. consent, authorization, or waiver of the Agency Executive Director or the Executive
Director's designee shall constitute the approval, consent, authorization or waiver of the Agency
without further action of the Agency Board.
Section 4.14 Authority. Each party represents and warrants to the other that the
signatory below has full authority to execute this Agreement on behalf of such party, and that
this Agreement constitutes the valid and binding obligation of such party.
Section 4.15 Exhibits. The following exhibits as attached to and incorporated in this
Agreement by reference.
Exhibit A Legal Description of the Property
Exhibit B ERNA Schedule
Exhibit C Preliminary Proposal Contents
Exhibit D Refined Proposal Contents
Exhibit E ERNA Predevelopment Loan-Eligible Activities and Budget
Exhibit F Form of ERNA Protnissoly Note
Exhibit G Form of Assigmnent of Documents
Exhibit H Form of ROEM Payment Guaranty
15
i151\O1\790674.2
IN WITNESS WHEREOF, this Agreement lias been executed, in triplicate, by the parties
on the date iirstabove written,
DEVELOPER:
DITTOS LANE FAMII,Y HOUSING, L.P., a
California limited pa1•hiership
By; Roem Development Corporation, a California
corporation, its General Partner
By;
Jonathan Emarni, Vice President
AGENCY:
REDEVELOPMENT AGENCY OF THE TOWN
APPROVED A5 TO FORM: OF LOS GATOS, a public body corporate and politic
IIy; By.
Michael Martello, Agency Counsel
Greg Larson, Executive Director
16
1151\D1\790674,2
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The Propel•ty referred to in the Agreement to which this Exhibit A is attached is situated in the
State of California, County of Santa Clara, Town of Los Gatos and is described as follows:
BEGINNING at a point In the Easterly line of W(Ieox Street (formerly Swain's Lane), distant thereon 3 chains
and 4 Ilnks Southerly from the Southerly line of Maln Street; running thence Southerly along said Easterly line
of Wilcox Street, 120 feet to the Nortll line of a road; thence along the Northerly Ilne of sold Road, S. 80 1/2°
W. 27 links; thence 5.2.1/4° E. 15 links; thence along the Southerly line of College Avenue (also called Jones
Road) S. 75° 5' W. 3 chains and 36 i/2' links; S. 141/2° E. 42 Ilnks and S. 771/2° W, 2 chains and 84links to
a stake marked "C30", standing in the Westerly fence line of said College Avenue (or Jones Road); thence
along said Westerly fence line S. 25 1/2° W. 2 chains and 56 links to astakemarked "D.1".and "L.M.C.1",
thence along said Westerly line of said College Avenue orJones Road (also known as Wilcox Lane or Road), S.
34° 30' W. 1 chain and 4 links to a 4" x 4" post marked "W.C.C.12; standing in the Northeasterly Ilna of the 2
acre tract of land. conveyed by Francis S. Spencer, Trustee, to Edward Ditto by Deed dated March 21,1882
and recorded in Book 69 of Deeds, page 491; thence along said last named line S. 31° 4S' E. 30 feet, more or
less, to the intersection with the most Easterly line of said Wilcox Lane or Roatl (or.College Avenue or Jones
Road); thence Southwesterly along said line of said Wilcox Lane or Road to its intersection with the line
between said above mentioned 2 acre tract formerly ofEdward Ditto and the 6,20 acre tract of land conveyed
by said Francis E. Spencer, Trustee to James L. Woodard, by Dead dated November22,1881 and recorded in
Book 62 of Deeds, page 143; thence along and beyond said last ment(oned line N. 34° 15' W. 260 feet, more
or less, to a 4" x 4" fence post marked "D10", standing in the fence In the Northerly Ilne of the Old Flume
reservation ofthe Los Gatos Manufacturing Company, thence along said fence line N. 84° 40' E. 1 chains and
33 links to a 4" x 4"fence post marked "D9", N. 76° 20' E. 241/Z links to a 9" x 4" fence post marked "D8", N.
68° 20' E. 49 1/2 Unks to a 4" x 4" fence post marked "D7", N. 61° f. 49 links to a 4" x 4"' fence post marked
"D6", N. 57° E. 73 (inks to a 4" x 4" fence post marked "D5", and N. 69° E. 24 (inks to a 4" x 4" fence post
marked "D4"; thence along the Northerly Iina of Bald old flume reservation, N. 74° E. 23 links to a stake
marked "D3" standing in the Northerly line of said old flume reservation; thence 5.31° 45' E. 8 feet to a 4'.' x
4" stake standing in the Southerly Ilne of said old flume reservation of the Los Gatos Manufacturing Company
and at the Northernmosk corner of said 2 acre tract of land formerly of Edward Ditto,. thence along said
Southerly line of said old fium reservation N. 43° 45' E, 97 1/2 links to a stake marked "D2" and "L.M,C,2",
standing in the said Southerly Ilne of said old flume reservation; thence N. 43 3/4° E. 3 chains 72 1/2 links to a
stake in a mound marked "Ci4",standing in the NortheCly line of Dltto'sLane; thence alangthe Northerly Ilne
of said Lane N. 60 i/2° E. 8411nks, N. 76 1J2°f. 1 chains and 45 links and N. 73 1/4° E. 3 chains and 98 Ilnks
to a point in the said Easterly lino of Wilcox5treet; and thence Southerly along said Easterly line of Wilcox
Street, 35 Ifnksto the point of beginning, being a portion of the Rancho Rlnconada de Los Gatos.
Exceptint therefrom all that portion thereof which Iles an the Southerly side of Bald Southerly Ifne of sold Wilcox
Lane ar Road, (or College Avenue or Jones Road).
AL50 EXCEPRING THEREFROM that portion described in the Deed from Grace M. Crim to Town of Los Gatos, A
Municipal Corporation, dated June 17, 1938, Recorded June 23, 1938 in Book 878 of gfFiclal Records, Page
5Z4, as follows:
Beginning at a point In the Westerly line of Wilcox Street, from which the Northeasterly corner of that certain
tract deeded to Grace M. Crim by Sarah c. Crim by Deed dated August 8, 1928 and Recorded in Boak 414
Official Records, Page 462, bears North 4° 47' West 69.80 feet along the. Westerly lino of Wilcox Street and
running thence along a curve to the right having a radius of 69.30 feet through an arc, the course and
distance of the chord being South 35° 09' Wost 88.96 feet to a pointon the Northerly line of College Avenue
(or Jones Road); and running thence along the Northerly Ina of College Avenue, North 75° 05' East 39,80 feet;
thence Nortit 2° 15' West 9.90 feet and North 80° 30' East 17.82 feet to a point on the Westerly line of Wilcox
Street, and running thence along the Westerly line.of Wilcox Street, North 4° 4T West 50.20 feet to tha point
of begeinning, being a portion of the above mentioned tract deeded to Grace M. Crim.
EXCEPTING THEREFROM l'hat portion.thereof conveyed by Sophia C. Skendzel to State of California, by Deed
dated Juno 7, 1954 and recorded August 9, 1954 in Book 2933 of Offlclal Records, page 648, Recorder's File
No. 997130, described as follows, to wit:
• A-1.
1151\Ol\790674.2
EXHIBIT "A"(continued) Title No. D9-99200.756-B-MC
Locate No. CAC-"I7743-7743-2962-0090204754
COMMENCING at the most Westerly corner of that certain parcel of land described In the Deed to Sophia C,
Skendzel, recorded September 12, 1952 in Book 2486, at page 15, Official .Records of Santa Clara County,
being on the property Une common to the lands now.or formerly of Sophia C. Skendzel and of San lose Water
Works, a corporation; thence along said common property Ilne S. 33° 20' 15" E. 21.12 feet to the propertyline
common to the lands now or formerly of Sophia C, Skendzel and of Louis Casalegno; thence along last said
common property Ilne S. 33° 20' 15" E. 14.15 feet; thence N, 52° 50' 45" E. 57.09 feet to the property Ilne
common to the lands now or formerly of Sophia C. Skendzel and of Lino SpediBcci, et al; thence along lastsald
common properly line S. 85° 34' 45" W. 65.08 feet to the point of commencement.
ALSO EXCEPTING THEREFROM that portion thereof, described as follows:
BEGINNING at a point in tho Easterly Ilne of Wllcox.Street (formerly Swain's lane) distant hereon 3 chains and
4 links Southerly from the Southerlyllne of Main Street; thence along said Easterly line of Wilcox Street, S. 3°
11' E. 120.00 feet to the North line of a road; thence along the Northerly Ilse of said road, S, 80° 30' W,
17.82 feet; thence S. 2° 15' E. 9,90 feet; thence along the Southerly line of College Avenue (also formedyy
called Jones Road); S, 75° 05' W. 222.09 feet; thence running S. 14° 30' E, 27.72 feet; thence S. 77° 30' W.
147.48 feet; thence running N, 35° 4T 05" W, 126.41 feet to a point In the Northerly Ilne of Ditto's Lane;
thence along i<he Northerly line of said Lane;and the Easterly rrolvngatian thereof N. 43° 45' E. 60.67 feet; N.
60° 30' E. 55,f14 feet, N. 76° 30' E. 95.70 feet and N. 73° 15 E. 262.68 feat to a point In the Easterly Bne of
Wilcox Street; thence along said Easterly Ilne S, 3° 11' E. 23.10 feet t0 the point of beginning, being a portion
of the Rancho Rinconada de Los Gatos.
ALSO EXCEPTING THEREFROM that portion thereof conveyed by Heman D. Childs, et ux,to John Siracusa, et
ux, by Deed dated December 30, 1963 and recorded April 24, 1964 in Book 6476 of Official Records, at page
281, described as follows, to wit:
BEGINNING at the most Westerly corner of that certain parcel of land described in the Deed from Heman D,
Childs et ux, to First Baptist Church of Los Gatos, Inc., a California corporation, dated June 12, 1961. and
recorded June 30, 1961 in Book 5216 of Official Records, at page 42, Santa Clara County Records; running
thence along the Southwesterly line of said parcel of land, S, 36° 38' OB", E, 79.95 feet fio the point of
intersection thereof with the existing Northwesterly INte of College Avenue; running thence along said
Northwesterly Tine of College Avenue S, 69° 00' 22" W. 11.27 feet to an angle point therein; Chence running
still along the Northerly Ilne of said College Avenue, 5.24° 38' S7" W. 175.00 feet; thence leaving said Ilse
and running N, 18° 39' 14" W. 143.51 feet to a paint in the Southeasterly line of that.certain 1.329 acre parcel
of land conveyed by Edward C. Bocci, et ux, to State of California, by Deed dated June 10,194 and recorded
September 21, 1954 in Book. 2963 of Official Records, at page 416, Santa Clara County Records; thence
running along said lasl• named line, N. 41° 50' E. 122.50 feet to the point of beginning and being a portion of
the Rancho Rinconada de Los Gatos,
APN:529-29-034.
A-2
t 151\Ol\790674.2
EXHIBIT ]3
ERNA SCHEDULE
This ERNA Schedule surnlnarizes the schedule far various activities under the Exclusive Right ko
Negotiate Agreement (the "Agreement") to which this exhibit is attached, The description of items in
this ERNA Schedule is meant.to be descriptive only, and shall not be deemed to modify in any way the
provisions of the Agreement to which such items relate. Section references herein to the Agreement
are intended merely as an aid in relating this ERNA Schedule to other provisions of the Agreement and
shall not be deemed to have any substantive effect. •
Whenever this ERNA Schedule requires the submfssion of plans or other documents at a specific time,
such plans or• other documents, as submitted, shall be complete and adequate for review by the Agency
within the time set forth herein. Prior to the time set forth for each particular submission, the
Developer shall consult with Agency staff informally as necessary concerning such submission in order
to assure that such submission will be complete and in a proper form within the time for submission set
forth herein.
Time periods expressed iu days in this ERNA Schedule refer to calendar days,
This ERNA Schedule maybe modified as provided in Section 2.1 of the Agreement,
DATE ACTION
Within 30 days after the The Developer shall submit the Preliminary Proposal to the
Effective Date [Completed] Agency. (Section 2,3)
Within 14 days after submittal The Developer shall conduct the Initial Commurr{ty
of the Preliminary Proposal Workshop, (Section 2.7)
[Completed]
Within 30 days after submittal The Agency shall provide the Developer with written
of the Preliminary Proposal comments on the Preliminary Proposal, (Section 2.3)
[Completed] ,
Witlvn 14 days after the The Agency shall provide the Developer with the Proposed
Amendment Date Term Shoet (Section 2.4)
(March 1, 2010)
Within 14 days after the The Developer shall provide the Agency with any written
Agency provides the Proposed comments on the Proposed Term Sheet. (Section 2.4)
Term Sheet (March 15, 2010)
B,1
1151\01\790674.2
DATE ACTION
Within 45 days after the The Developer shall submit the Refined Proposal to the
.Agency provides the Proposed Agency. (Section 2.5)
Term Sheet (April 15, 2010}
Within 7 days following The Developer shall conduct the Second Community
submittal of the Refined Workshop. (Sections 2.5 and 2.7)
Proposal (April 22,.2010)
Within 30 days after receipt of The Agency shall provide the Developerwith written
the Refined Proposal comments on the Refined Proposal. (Section 2.5)
.(May 15, 2010)
Concurrently with submittal of The Developer shall submit to the Town a complete
Refined Proposal application for the Town band Use Entitlements. (Section 2.6)
(April 15, 2010)
By the date the Agency Board The Developer shall obtain iiom the Town the Town Land Use
approves the DDA Entitlements. (Section 2.6)
(December 20, 2010)
At the time tl~e Agency The Agency shall advise the Developer regarding the
provides written comments on preparation of any CEQA Document and the )3udget for such
the Preliminary Proposal CEQA Document. The Agency shall commence preparation
[Completed; subject to of any required CEQA Document. (Section 2.10)
modification prior to March
1, zoxo~
December 20,.2010 Expiration of the Negotiating Period, unless extended in
accordance with Section 1.2. Deadline for approval and
execution of DDA.
1151\01\790674.2
B2
EXHIBIT C
PRELIMINARY PROPOSAL CONTENTS
The Preliminary Proposal refereed to in Section 2.3 of this Agreement shall include the following
elements:
1, Conceptual Site Pian. A conceptual site plan including building footprints with
square footages, designation of uses, location/number of parking spaces (including handicapped
spaces), points of ingress and egress, physical connections to adjacent areas, etc.
2. Photo Montage of Design Concepts. A photo montage of developments of a
similar design character and quality to that envisioned for the Project, showing illustrative
examples of: building types; massing; building articulation; exterior and interior design features,
materials and quality; parking and public space features and quality; and othel• physical
characteristics that are envisioned for the Project. The photo montage shall be sufficiently
detailed and shall be an accurate representation of the proposed physical development quality of
the Project in relation. to the estimated total development oast amounts shown in the conceptual
development pro-forma described in Item 5 below.
3. Written Project Description. A narrative description of the preliminary
building/developmentprogrem including: a) the type, scale (building height), size, uses, and
quality level (including preliminary outline specifications, sample materials for fagade treatment,
etc.) of the proposed development; b) amount/allocation ofon-site parking; c) proposed project
amenities and features; and d) the proposed role requested of the Agency, if any.
A. Affordable Horsing Units, A description of the number, income affordability
levels, and unit types (e.g., number of bedrooms) for the proposed affordable residential units in
the Project.
5. Conceptual Project Pro-forma. A development pro-forma that includes
estimated land, relocation, predevelopment, du•ect construction (building, on-site and off site
improvements), indirect and fmancing casts, projected revenues, and estimated operation costs,
based onthe physical design features and quality described in F.lelnents 1-3 above,
6. Financing Plan. A preliminary financing plan, consistent with the Conceptual
Pro-forma described in Element 5 above, that identifies proposed sources/uses of funds includug
estimated debt, equity, and Agency assistance if required (nature, amount, and justifications) for
the Project, and that describes investor's proposed rate of return. The proposed sources o£ debt
and equity need not identify specific lenders or equity sources, but shall instead include a
discussion of the types of debt and equity that the Developer believes may be accessed for the
Project, as well as-the Developer's approach and tuning for obtaining such debt and equity.
7. .Proposed Schedule of Performance. A preliminary schedule that reflects a
reasonable timeline for development of the Project once a DDA has .been approved, including
C-1
1 l5l\01\790674.2
predevelopment activities (e.g., procurement of entitlements and pe>~nits, financing, constntetion
plans and conh~act, etc,), commencement of construction, and completion of construction.
8. Development Team Member. The identity and professional information about
the civil engineer proposed to join the Development Team, as further discussed iu Section 1.5.
C-2
1151\Ol\790674.2
EXHIBIT D
REFINED PROPOSAL CONTENTS
The Refined Proposal referred to in Section 2,4 of this Agreemenk shall include the following
elements as a refinement of the Preliminary Proposal, and taking into account the t•esults of the
Initial Community Workshop and any Agency Board comments regarding the Preliminary
Proposal, the comments of Agency staff and consultants regatding the Pxelimhrary Proposal, and
the negotiations to date.
1. Engineered Sltc Plan. An engineered site plan including building footprints with
square footages, designation of uses, location/number of parking spaces {including handicapped
spaces), footprints for streets, and open spaces, points of ingress and egress, physical connections
to adjacent areas, etc.
2, Conceptual Elevations. llhrstrative examples of building exterior elevations with
details of building features, qualities and articulations.
3. Written Project Description. As a refinement to Element 3 of the Preliminary
Proposal, a revised and updated narrative description of the building/development program
inchrdhtg: a) the type, scale (builduig height), size, uses, and quality level (including preliminary
outline specifications, sample materials for fagade treatment, etc.) of the proposed development; b)
amount/allocation of on-site parking; and c) proposed project amenities and features.
a. Affordable Rousing Units. As a refinement to Element 4 of the Preliminary
Proposal, a revised and updated description of the overall proposed affordable residential unit
strategy for the proposed Project includug: a) the number, affordability levels, and unit types
(e.g., number of bedrooms) for the proposed affordable rental units; and b) the proposed approach
that would be used to attract/secure qualified residenthouseholds for the affordable units.
5. Detailed Project Pro-forma. As a refinement to Element S of the Preliminary
Proposal, a refined and updated development pro-forma that takes into account the information
from Elements 1-4 above, and includes estimated land, relocation, predevelopment, duect
construction (building, tenant improvements, on-site and off-site improvements), induect and
financing costs; projected revenues and estimated operation costs.
6. • Financing Plan. As a refinement to Element b of the Preliminary Proposal, a
refined and updated financing plan, consistent with the Detailed Pro-forma described in Element S
above, that identifies proposed sourceshises of funds including estimated debt, equity, and Agency
assistance if required (nature, amount, and justifications) for the Project, describes investor's
proposed rate ofreturn, and includes letters of interest fi•orn qualified prospective debt and equity
providers that the Developer has done business with before and who have expressed niterest, or
who are likely to have interest, in the providing capital for the Project.
7. Proposed Schedule of Performance. As a refinement to Element 7 of the
Preliminary Proposal, a refined and updated schedule that reflects a reasonable timeline for
developmont of the Project once a DDA has been approved, including predevelopment activities,
commencement of construction, and completion of construction.
pormatted: Normal, Centered
D-1 ~ '.
1151\01\790674.2
EXHIBIT E
ERNA PREDEVELOPMENT LOAN-ELIGIBLE ACTIVITIES AND BUDGET
~` `ACTIVI`l: ti ..
..
.. >F'XI'~NllIT~Ii~L+'';
_
GENERAL PREDEVELOPMENT
ACTIVITIES
Architecture PD Submittal $40,000
Envu•onmental Phase I Report $4,000
Environmental Phase II Report $8,825
Geateeh Report $9,600
Landscape PD submittal $7,500
Civil Engineering (Including Access) $53,00
CEQA ACTIVITIES
Mitigated Negative Declaration $15,000
Traffic $15,000
Noise $5,000
Biology $8,000
Arborist $5,000
Geology $10,000
Historic $8,000
TOTAL ~ $1
E-1
I I51\01\790674;3
EXHIBIT F
FORM OF ERNA PROMISSORY NOTE
PROMISSORY NOTE
(ERNA Predevelopment Loan)
$94,665
Los Gatos, California
2010
FOR VALUED RECEIVED, Dittos Lane Family Housing, L,P•, a California limited
partnership (the "Borrower"), promises to pay to the Redevelopment Agency of the Town of Los
Gatos (the "Agency"), or order, the principal sum of Nhiety-Four Thousand Six Hundred Sixty-
Five Dollars ($94,665), or so much thereof as is advanced to Borrower pursuant to Article 3 of the
ERNA (as defined below), as provided below,
1. ERNA. This promissory note (the "Note") is made pursuant to the terms of the
First Amended and Restated Exclusive Right To Negotiate Agreement, initially executed as of
September 21, 2009, as fully amended and restated as of February 16, 2010, entered into between
the Borrower and the Agency (the "ERNA"). All capitalized terms used but not defined in this
Note shall have the meanings set forth in the ERNA.
2. RepavmeutTerms; Interest. The indebtedness evidenced by this Note shall be due
and payable at the times .and in the manner set forth in Section 3.7 of the ERNA, and shall bear
interest at the rate or rates set forth in Section 3.3 or 3.7(b) of the ERNA, as applicable,
3. Securit As the security for this Note, Borrower has executed and delivered to the
Agency the Assignment of Documents, and has caused ROEM to execute and deliver to the
Agency the ROEM Payment Guaranty, as fully provided in Section 3.5 of the ERNA.
4. Acceleration Pursuant to Default; Application of Payments; No Waiver. The
Agency's rights to require full repayment of principal and unpaid interest under this Note upon an
Event of Default by Borrower under the ERNA are as set forth in Section 3.7(b) of the ERNA. All
payments received from the Borrower shall be applied first to the accrued interest and second to
the principal outstanding under this Note. Neither acceptance by the Agency of the payments
provided for herein nor any failure by the Agency to pursue its legal and equitable remedies upon
a Borrower Event of Default under the ERNA shall constitute a waiver of the Agency's right to
require prompt payments when due of all disbursed principal and interest owing or to declare a
default and exercise all of its riglrts under this Note, the ERNA, and the other ERNA
Predevelopment Loan Documents.
5. No Offset. The Borrower hereby waives any rights of offset it now has or may
hereafter have against the Agency, its successors and assigns, and atn•ees to make the payment
called for herein in accordance with the terms of this Note.
G, Waiver; Attorney's Fees. The Borrower, for itself, its heirs, legal 1•epresentatives,
successors and assigns, waives diligent presentment, protest and demand, and notice of protest,
dishonor and non-payment of this Note, and expressly waives any rights to be released by reason
F-1
LIST \01\79067~l2
of any extension of time or change in terms of payment, or change, alteration or release of any
security given for the payments hereof, and expressly waives t$e right to plead any and all statutes
of limitations as a defense to any demand on this Note or agreement to pay the same, and agrees to
pay all costs of collection when incurred, includhig reasonable attorneys' fees. If an action is
instituted on this Note, the undersigned promises to pay, in addition to the costs and disbursements
allowed bylaw, such sum as a court may adjudge reasonable as attorneys' fees in such action.
7. Manner and Place of Payment.. All payments of principal and htterest shall be
payable in lawfal money of the United States of America at the office of the Agency as set forth in
Section 4.2 of the ERNA or at such other address as the Agency may provide to the Borrower by
notice in accordance with Section 4.2 of the ERNA.
&. Full Recourse Note. This Note shall be fully recourse against the Borrower and
any judgment or execution thereof entered in any action, legal or equitable, on this Note maybe
enforced personally against the Borrower.
9. Assi ~t~ Went. The Agency's rights under this Note maybe assigned by the Agency
to the Town of Los Gatos in its discretion. No other assigtunent of the Agency's rights under this
Note may be made without the prior written approval of the Borrower in its discretion.
10. Conflict. If any terrn or provision of this Note conflicts with any.term or provision
of the ERNA, the term of provision of the ERNA shall control to the extent of such conflict.
DITTOS LANE FAMILY HOUSING, L.P., a
California limited partnership
By; Roem Development Corporation, a California
corporation, its General Partner
By:
Jonathan Emami, Vice President
F-2
~ tsno~~~~ob~~ z
EXHIBIT G
FORM OF ASSIGNMENT OF DOCUMENTS
ASSIGNMENT OF AGREEMENTS, PLANS AND SPECIFICATIONS, AND APPROVALS
(ERNA Predevelopment Loan)
FOR VALUE RECEIVED, the undersigned, Dittos Lane Family I-Iousing, L.P., a
California limited partnership (the "Developer"), hereby assigns and transfers to the
Redevelopment Agency of the Town of Los Gatos, a public body corporate (the "Agency"), all
of its right, title and interest in and to:
(1) All architectural, design, engineering, and construction contracts and
development agreements, and. any and. all amendments, modifications, supplements, addenda and
general conditions thereto (collectively "Agreements"), heretofore or hereafter entered into by
any Contractor (as defined below);
(2) All written reports, studies, investigations, analyses, plans and
specifications, shop drawings,. worlting drawings, amendments, modifications, changes,
supplements, general conditions, other documents, and addenda thereto (collectively "Plans and
Specifications") heretofore or hereafter prepared by any Contractor (as defined below); and
(3) All land use approvals, building permits, and other govenunental
approvals of any nature obtained for the Project (collectively, the "Land Use Approvals").
This Assignment is made pursuant to the terms of the First Amended and Restated
Exclusive Right To Negotiate Agreement, initially executed as of September 21, 2009, as fully
amended and restated as of Febtuarq 16, 20 Y0, entered into between the Developer and the
Agency (the "ERNA"). Capitalized terms used but not defined in this Assignment shall have the
meanings set forth in the ERNA. The Property with respect to which the Agency has made the
ERNA Predevelopment Loan to the Developer under the ERNA is described in Exhibit A
attached to this Assignment.
For purposes of tlvs Assignment, the term "Contractor" means any architect, construction
contractor, engineer; consultant or other person or entity entering into Agreements with the
:Developer and/or preparingPlans and Specifications for the Developer with respect to the
Pt•oject.
The Developer hereby hrevocably appoints the Agency as its attorney-in-fact (which
agency is coupled with an interest) to, upon the accurrenee of a Repayment Event under and as
defined in Section 3.7(b) of the ERNA, demand, receive, and enforce any and all of the
Developer's rights with respect to the Plans and Specifications, Agreements .and Land Use
Approvals, and petfotm any and all acts in the name of the Developer or in the name of the
Agency with the same force and effect as if performed by the Developer in the absence of this
Assignment.
G-1
I I51\OI\790G74.2
As further provided in Section 3.5(a) of the ERNA, the Agency shall not have any
obligation under any of the Agreements unless and until it expressly agrees in writing to be
bound by such Agreement(s), Upon the occurrence of a Repayment Event, the Ageney may use
any of the Agreements assumed by the Agency and any of the Plans and Specifications and Land
Use Approvals for any purpose for which the Developer could have used them for development
of the Project. Upon the occurrence of a Repayment Event, the Developer shall cooperate with
the Agency to implement this Assignment.and shall immediately deposit with the Agency for the
Agency's use all the Agreements, Plans and Specifications, and Land Use Approvals.
The Developer represents and warrants to the Agency that no previous assigrunent(s) of
its rights or interest in or to the Plans and Specifications, Agreements, and/or Land Use
Approvals has or have been made, and the Developer ngr•ees not to assign, sell, pledge, transfer,
mortgage, or hypothecate its rights or interest therein (without prior written approval of the
Agency Executive Dhector) so long as the Agency holds or retains any security interest under
the ERNA.
This Assignment is made to secure: (1) payment to the Agency of all sums now or
hereafter owing under the ERNA Promissory Note dated as of the data hereof made by the
Developer to the order of the Agency, and any and all additional advances, modifications,
extensions, renewals and amendments thereof; and (2) payment and performance by the
Developer of all its obligations under the ERNA.
This Assigmnent shall terminate upon the earliest to occur of: (1) repayment in full of the
ERNA Predevelopment Loan; (2) terrninatian of the ERNA as a result of'an uncured Agency
Event of Default pursuant to Section 4.6 of the ERNA; or (3) execution of a DDA.
This Assignment shall be governed by the laws of the State of California, except to the
extentthat Federal laws preempt the laws of the State of California, and the Developer consents
to the jurisdiction of any federal or State Court within the State of California having proper
venue for the filing and maintenance of any action arising hereunder and agrees that the
prevailing party in any such action shall be entitled, in addition to any other recovery, to
reasonable attorneys' fees and costs.
This Assigrmient shall be binding upon and inure to the benefit of the heirs, legal
representatives, assigns, and successors-in-interest of the Developer and the Agency; provided,
however, this shall not be construed and is not intended to waive the restrictions on assigmnent,
sale, transfer, mortgage, pledge, hypothecation or encumbrance by the Developer contained in
the ERNA.
Exhibit.A, the Architect's Consent, and the Engineer's Consent are attached hereto and
incorporated herein by reference.
G-2
risi~oi~7~oe~a,z
Executed by the Developer on , 2010.
DEVELOPER
DITTOS LANE FAMILY IIOUSING, L.P,, a
California limited partnership
By: Roem Development Colporation, a California .
corporation, its General Partner
By;
JonathanEmami, VieePresident
G-~
115\01\790G7Q,2
EXI~BTT A
PROPERTY DESCRIPTION
G-4
1151\Ol\790G7A.2
ARCHITECT'S CONSENT
The undersigned architect ("Architect") hereby consents to the foregoing Assignment of
Agreements, Plans and Specifications, and Approvals ("Assignment"), of which this Architect's
Consent ("Consent") is a part, and acknowledges that there presently exists no unpaid claims
presently due to the Architect except as disclosed to the Agency arising out of the preparation and
delivery of the Plans and Specification to the Developer and/or the performance of the Architect's
obligations raider the Agreements, as the term "Agreements" is defined in the Assignment,
Architect agrees that if, at any time, the Agency elects to undertake or cause the
completion of construction of the Project on any of the Property, in accordance with the Plans and
Specifications,end gives Architect written notice of such .election; then so long as the Architect
has received, receives or continues to receivethe compensations called for under the Agreements,
the Agency may, at its option, use and rely on the Plans and Specifications far the purposes far
which they were prepared, and Architect will continue to perform its obligations under the
Agreements for the benefit and account of the Agency in'the same manner as if performed for the
benefit or account of the Developer in the absence ofthis Assignment. The Agency may assign its
rights pursuant to this paragraph to another devc]opment entity in its discretion,
Architect further agrees that, in the event of a breach by the Developer of the Agreements,
or any agreement entered into with Architect in connection with the Plans and Specifications, sa
long as the Developer's interest in the Agreements and Plans and Specifications is assigned to the
Agency, Architect will give written notice to the Agency at the address shown .below of such
breach, The Agency shall have thhty (30) days from the receipt of such written notice of Default
to remedy or clue said Default; provided, however, nothing herein shall renuire the Agency to cute
said Default or to undertake completion of construction of the improvements,
Architect warrants and represents that it/he/she has no knowledge of any prior
assignment(s) of any .interest in either the Plans and Specifications and/or the Agn•eements• Except
as otherwise defined herein, the terms used herein shall have the meanings given them in the
Assignment or the ERNA, as applicable.
G-5
(.151101\790G7d;?
Executed by the Architect ou , 2010,
Address of Agency: Address of Architect:
Redevelopment Agency of the
Town of Los Gatos
Town Hall
101 E. Main Street
Los Gatos, CA 95030
Phone: (408) 354-6867
Attention: Bud Lortz
I 1 S 1101\790674.2
KTGY
Architect; KTGY
By:
Its:
G-6
ENGINEER'S CONSENT
The undersigned engineer ("Engineer") hereby consents to the foregoing Assignment of
Agreements, Plans and Specifications, and Approvals ("Assignment"), of which this Engineer's
Consent ("Consent") is a part, and acknowledges that there presently exists no unpaid claims
presently due to the Engineer except as disclosed to the Agency arishig out of the preparation and
delivery of the Plans and Specification to the Developer and/or tho performance of the Engineer's
obligations under the Agreements, as the term "Agreements" is defined in the Assignment,
.Engineer agrees that if, at any time, the Agency elects to undertake or causethe completion
of construction of the Project on any of the Property, in accordance with the Plans and
Specifications, and gives Engineer written notice of such election; then so long as the Engineer has
received, receives or continues to rcceivethe compensations called for tinder the Agreements, the
Agency may, at its option, use and rely on the Plans and Specifications for the purposes for which
they were prepared, and Engineer will continue to perform its obligations under the Agreements
for the benefit and account of the Agency in the same manner as if performed for the benefit or
account of the Developer in the absence of this Assignment, The Agency may assign its rights
pursuant to this paragraph to another development entity hi its discretion,
Engineer .further agrees that, in the event of a broach by the Developer of the Agt•eetnents,
or any agreement entered into with Engineer in connection with the Plans and Specifications, so
long as the Developer's interest •in the Agreements and Plans and Specifications is assigned to the
Agency, Enginoer will give written notice to the Agency at the address shown below of such •
breach. The Agency shall have thirty (30) days from the receipt of such written notice of Default
to remedy or cure said Default; provided, .however, noH~ing herein shall require the Agency to cure
said Default or to undertake completion of construction of khe Improvements.
Engineer warrants and represents that it/he/sb.e has no knowledge of any prior
assignment(s) of any interest in either the Plans and Speeiftcations and/or the Agreements. Except
as otherwise defined herein, the tetras used het•ein shall have the meanings given them in the
Assignment or the ERNA, as applicable:
G-7
I I51\01\790674?
Executed by the Engineer on , 2010.
Address of Agency: Address of Enguicer:
Redevelopment Agency of the
Town of Los Gatos
Town Hall
101 E. Main Street
Los Gatos, CA 95030
Phone: (408) 354-6867 •
Attention: Bud Lortz
t151\Ol\790674.2
Engineer; Ruth and Gohig: Engineers
By;
Its:
G-8
EXHIBIT H
FORM OF ROEM PAYMENT GUARANTY
PAYMENT GUARANTY
This Payment Guaranty (the "Guaranty") is made this day of 2010, by ROEM
Development Corporation, a California corporation (the "Guarantor") in favor of the
Redevelopment Agency of the Town of Los Gatos, a public body, cotporate and politic (the
"Agency")
RECITALS
A. The Guarantor is executing this Guaranty in comnection with a loan by the Agency
to Dittos Lano Family Housing, L.P,, a California limited partnership (the "Borrower"), in the
principal amount of Ninety-Four Thousand Six Hundt•ed Sixty-Five Dollars ($94,665) (the
"Loan"), The Loan is made pursuant to the First Amended and Restated Exclusive Right T o
Negotiate Agreement, initially executed as of September ~21, 2009, as fully amended and restated
as of February 16, 2010, entered into between the Borrower and the Agency (the "ERNA").
B. In connection with the Loan, Borrower will execute and deliver to the Agency a .
Promissory Note (the "Promissory Note") made payable to the Agency in the prutcipal amount of
the Loan. The Promissory Nate and all other documents executed by Borrower in connection with
the Loan shall be co]lectively referred to as the "Loan Documents."
C. It is a condition to the Agency providing the Loan that the Guarantor execute and
deliver this Guaranty.
D. Capitalized terms used but not defined herein shall have the meanings ascribed to
them in the ERNA.
AGREEMENT
Guarautkof Obli atg ions.
a. The Guarantor hereby unconditionally, absahttely and irrevocably
.guarantees to the Agency the due and punctual payment in fitll (and not merely the collectability)
of all sums due under the Promissory Note and other Loan Doettments (including, but not limited
to principal, interest (including accrual of interest after the filing of any petition under applicable
bankruptcy laws), late charges, prepayment fees, reasonable costs and expenses), (collectively the
"Guaranteed Obligations"), hi each case when due and payable, whether on any installment
payment date or at the stated or accelerated maturity, all according to the terms of the ERNA, the
Promissory Note and the other Loan Documents.
b. Guarantor hereby covenants and agrees with the Agency that, if an Event of
Default (as defined in the ERNA) shall have occurred and be conthnting in the payment of the
Guaranteed Obligations, Guarantor will promptly after receipt of notice fiom the Agency of such
Event of Default pay such Gttat•anteed Obligations to the Agency, and will pay to the Agency any
H-1
i isiaon~~or>>~a,z
and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by
the Agency in enforcing, or collecting under, this Guaranty.
2. Independent Obligation. Guarantor's obligations under Yhis Guaranty are
independent of and in addition to its• obligations under any other existing or fitture guaranties or
indemnities, each of which shall remain in full force and effect until it is expressly modified or
expressly released in a writing signed by the Agency. Guarantor's obligations under this Guaranty
are hndependent of those of Borrower under .the ERNA and the Loan Documents. The Agency
may brhrg a separate action, or commence a separate referenceproceeding against Guarantor •
without first proceeding against Borrower, any other person or any security that the ~geucy may
hold, and without pursuing any other remedy. The Agency's rights under this Guaranty shall not
be exhausted by any action by the Agency until the Guaranteed Obligations have beenperformed
in full.
3. Guaranty Absolute. Guarantor expressly agrees that, until the Guaranteed
Obligations have been performed in full and each and every term, covenant and condition of this
Guaranty is fully performed, Guarantor shall not be released by or because of:
a. Any act or event which might otherwise discharge, reduce, limit or modify
any of Guarantor's obligations under this Guaranty;
b. Any waiver, extension, modification, forbearance, delay or other act or
omission of the Agency, or its faihu•e ko proceed promptly or otherwise as against Borrower,
Guarantor ar any security;
c. Any action, omission or circumstance which might increase the likelihood
that Guarantor may be called upon to perform under this Guaranty or which might affect the rights
or remedies of Guarantor as against Borrower;
d. Any business interactions occurz'h~g at auy three between Borrower and the
Agency, whether relating to rho ERNA or otherwise; or
Any action of the Agency described in Section 4 below.
Guarantor hereby expressly waives and surrenders any defonse to its liability under this
Guaranty based upon any of the foregoing acts, omissions, agreements, waivers or matters. It is
the purpose and intent of this Guaranty that the obligations of Guarantor hereunder shall be
absolute and unconditional under any and all circumstances except as expressly set forth in this
Guaranty.
4. Permitted Actions ofthe Agency. The Agency may from time to time, in its sole
discretion and without notice to the Guarantor, take any or all of the following actions:
a. The Agency and Borrower may alter or amend any terms of the ERNA and
the Loan Documents or any part thereof, including renewing, compromising ot• extending, or
otherwise changing the time and manner of perforrnanee of any of the Borl•ower's or the Agency's
obligations thereunder.
b. The Agency may talee and hold security for the Bon•ower's obligations
under the ERNA and the Loan Documents, accept additional or substihtted security for• either, and
H-2
l l51\01\790G74.2
subordinate, exchange, enforce, waive, release, compromise, fail to perfect and sell or otherwise
dispose of any such security.
c. The Agency may direct the order and matmer of auy~sale of all or any part
of any security now or later held as security for the Borrower's obligations ender the ERNA and
the Loan Documents or for Guarantor's obligations under this Guaranty.
d. The Agency may apply any payments or recoveries received from the
Borrower, Guarantor or any other source, and any proceeds of any security bald by the
Beneficiary, to the Loan in such manner, order and priority as the Agwicy may elect.
e. The Agency may release Borrower from its liability under the ERNA and
the Loan Documents or any part thereof.
£ The Agency may substitute, add or release any ono or more Guarantors or
endorsers.
g. The Agency may extend credit to the Borrower, and may take and hold
security for the credit so extended, all without affecthig Guarantor's liability under this Guaranty.
5. Guarantor's Waivers. Without limiting the generality of any other provision of this
Guaranty, the Guarantor hereby expressly waives:
a. All. statutes of limitations as a defense to any action or proceeding brought
against Guarantor by the Agency, to the fullest extent permitted by law;
b, Any right it may have to require the Agency to proceed against the
Borrower, proceed against or exhaust any security held from the Borrower, or pursue any other
remedy in the Agency's power to pursue;
c. Any defense based on any claim that Guarantor's obligations exceed or are
more burdensome than those of the Borrower;
d. Any defense based on: (i) any legal disability of the Borrower, (ii) any
.release, discharge, modification, impairment or limitation ofthe liability of the Borrower to the
Agency from .any cause, whether consented to by the Agency or arising by operation of.law or
from any banluuptcy or other voluntary or involuntary proceeding, in or out of court, for the
adjustment of debtor-creditor relationships ("Insolvency Proceeduig"), and (iii). any rejection or
disaffirmance of the ERNA, or anypart of it, or ahy security held for it, in any such Insolvency
Proceeding;
e. Any defense based on any action taken or omitted by the Agency in any
Insolvency Proceeding involving the Borrower, including any election to have the Agency's claim
allowed as being secured, partially secured or unsecured, any extension of credit by the Agency to
Bo>rower in any Insolvency Proceeding, and the taking and holding by the Agency of any security
for any such extension of credit;
f, All presentments, demands far performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of acceptance of this Guaranty and of the
existence, creation, or incurringof new or additional indebtedness, and demands and notices of
every kind except as expressly set forth. in the Guaranty;
H-3
I I51\0l\790G74,?
g. Airy defense based on or at•ising out of any defense that the Borrower may
have to the payment or performance of any of its obligations under the Loan Agreement; and
h• Any defense based on or arising out of any action of the Agency described
in Section 3 or Section 4 above.
6. Stahltoi;y Waiver of Rights and Defenses Regarding Election of Remedies. The
Guarantor has been made aware of the.provisions of California Civil Code Section 2856 (as
amended) a copy of which is attached to this Guaranty, has read and understands the provisions of
that statute, has been advised by its counsel as to the scope, purpose and effect of that statute, and
based thereon, and without liiniting the foregoing waivers, the Guarantor agrees to waive all
suretyship rights and defenses described in California Civil Code Section 2856(a). Without
limiting any other waivers herein, the Guarantor hereby gives the following waivers pursuant to
Sections 2856(c) and 2856(d) of the Califoi~iia Civil Code:
a. The Guarantor waives all rights and defenses that the Guarantor may have
because the Borrower's debt is (or may in the firture be) secured by real property, This means,
among other things: (1) the Agency may collect from the Guarantor without fast foreclosing ou
any real or personal property collateral pledged by the Borrower; (2) the amount of the debt may
be reduced only by the price for which that collateral is sold at the foreclosure sale, oven if the
collateral is worth anore than the saleprice; and (3) the Agency may collect from the Guarantor
even if the Agency, by foreclosing on the real property collateral, has destroyed any right the
Guarantor may have to collect from the Borrower, Tltis is an unconditional and irrevocable
waiver of any rights and defenses the Guarantor may have because the Bonower's debt is {or may
in the future be) secured by real property. These rights and defonses include, but are not limited
to, any rights or defenses based upon Section S80a, S80b, 580d, or 726 of the Califonua Code of
Civil Procedure.
b. The Guarantor waives all. rights and defenses arising out of an election of
a•emedies by the Agency, even though that election of remedies, sneh as a nonjudicial foreclosure
with respect to security for a guaranteed obligation, has desh•oyed the Guarantor's rights of
subrogation and reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise.
Waiver of Subrogation and Certain Other Rights.,
a. Upon a default by Borrower, the Agency in its sole discretion, without prior
notice to or consent of Guarantor, may elect to: (i) foreclose either judicially or nonjudicially (as
allowed by applicable law) against any real or personal property security it may hold for the
Guaranteed Obligations (ii) accept a h'ansfer of any such security in lieu of foreclosure,
(iii) compromise or adjust the Guaranteed Obligations or any part of it or make any other
accommodation with Borrower or Guarantor, or (iv) exorcise any other remedy against Borrower
or any security, No such action by the Agency shall release or limit the liability of Guarantor,
who shall remain liable under this Guaranty after the action, even the action, even if the effect of
the action is to deprive Guarantor of any subrogation rights, rights of indemnity, or other rights to
collect reimbursement from Borrower for any sums paid to tlreAgency, whether contractual or
arising by operation of law or otherwise. Guarantor expressly agrees that under no circumstances
shall it be deemed to have any right, title, interest or claim in or to any real person or property to
beheld by the Agency or any third party after any foreclosure or transfer in lion offoreclosure of
any security for the Guaranteed Obligations,
H-4
I I51\01\790G7~'!
b. Regardless of whether Guarantor may have made any payments to the
Agency, Guarantor hereby waives: (i) all rights of subrogation, indemnification, contribution and
any other rights to collect reimbursement fi•omBatrower or any other patty for any sums paid to
the Agency, whether contractual or arising by operation of law (including, without limitation,
under any provisions of the Bankruptcy Code, or any successor or similar statutes) or otherwise,
(ii) all rights to enforce any remedy that the Agency may have against Borrower, and (iii) all rights
to participate hi any security now or later to be held by the Agency for the Guaranteed
Obligations. Guarantor further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement, contribution and indemnification Guarantor may have
against Borrower or against any collateral or security, shall be junior and subordinate to any rights
the Agency may have agahist Borrower,. and to all .right, title and interest the Agency may have in
any such collateral or security. Tf any amount shall be paid to Guarantor on account of any such
subrogation, reimbursement, contribution or iuderrmification rights at any time when obligations
under the Guaranteed Obligations have not been paid in full, such amount shall beheld in trust for
.the Agency and shall forthwith be paid over to the Agency to be credited and applied against the
Guaranteed Obligations, whether matured or unmahu•ed, in accordance with the terms ofthe Loan
bocumeuts• The covenants and waivers of Guarantor contained in this Section 7 shall be effective
until the Guaranteed Obligations have been paid and performed in full and ate made for the benefit
of Agency,_Borrower, and any other person against whom Guarantor shall at any time have any
rights of subrogation, reimbursement, contribution, or indemnification with respect to Guarantor's
obligation under this Guaranty,
c. Guarantor understands and acluiowledges that if the Agency forecloses
judicially or nonjudicially against any real property security for the Guaranteed Obligations, that
foreclosure could impair or destroy any ability that Guarantor may have to seek reimbursement,
contribution or indemnification froth Borrower others based on any right Guarantor may have.af
subrogation, reimbursement, contribution or indemnification for any amounts paid by Guarantor
under this Guaranty. Guarantor further understands and acknowledges that in the absence of this
Section 7, such potential hnpairnent or destnlction of Guarantor's rights, if any, may entitle
Guarantor to assert a defense to this Guaranty based on Section 580d of the California Code of
Civil Procedure as interpreted in Union Bank v. Gradsky, 265 Cal.App.2d 40 (1968). By
executing this Guaranty, Guarantor freely, irrevocably and unconditionally; (i) waives and
relinquishes that defense and agrees that Guarantor shall be fully liable under this Guaranty even
though Agency may foreclose judicially or nonjudicially against any real property security for the
Guaranteed Obligations; (ii) agrees that Guarantor shall not assert that defense in any action or
proceeding which Agency may commence to enforce this Guaranty; (iii) acknowledges and agrees
that the rights. and defenses waived by Guarantor under this Guaranty include any right or defense
that Guarantor may have or be entitled to assert based upon or arising out of any one-notion, anti-
deficiency, reimbursement.or othet•borrower or guarantor protective statute (including, without
limitation, any defense that any exercise by Agency of any right a• remedy hereunder or under the
Loan Documents violates, or would, in combination with the previous or subsequent exercise by
Guarantor of any rights of subrogation, reimbursement, contribution or hldemnification against
Borrower or any other person, directly or indirectly result in, or be deemed to be, a violation of
any of such statutot•y provisions), including but limited to any one or more of Sections 580a, 580b,
S80d or 726 of the California Code of Civil Procedute or Section 2848 of the California Civil
Coda; and (iv} acknowledges and agrees that the Agency is relying on this waiver in providing the
Loan and that this waiver is a material part of the consideration which Agency is receiving for
providing the L• oan.
H-5
l 151\011790674.?
$, Subordination. Any rights of Guarantor, whether, now existing or later arising, to
receive payment on account of any sums owed to it by the Bat•t•ower; ot• to withdraw capital
invested by it in the Borrower, or to receive distributions from the Borrower, shall at all times be
subordinate in all respects (including the time of payment) to the full and prior performance of the
Guaranteed Obligations. Guarantor shall not be entitled to enforce or receive payment of any
sums hereby subordinated until the Guaranteed Obligations of the Borrower under the BRNA and
the Loan Documents have been performed in full and any such sums received in violation of this
Guaranty shall not be a default hereunder but shall be received by Guarantor in trust for the
Agency.
9. Revival and Reinstatement. If the Agency is requh•ed to pay, rehun or restore to
the Borrower or any other person any amounts previously received from the Borrower because of
any Insolvency Proceeding of the Borrower, any stop notice or any other reason, the obligations of
Guarantor shall be reinstated and revived and the rights of the Agency shall conthnie with regard
to such amounts, all as though they had never been paid. .
10. Financial Condition of the Borrower. The Guarantor represents and warrants that it
is fully aware of the financial condition of the Borrower, and the Guarantor delivers this Guaranty
based solely upon its own independent investigation of the Borrower's financial condition and in
no part upon any representation or statement of the Agency with respect thereto. The Guarantor
fiuther represents and warrants that it is in a position to and hereby does assume ful I responsibility
for obtaining such additional information concerning the Borrower's financial condition as the
Guarantor may deem material to its Guaranteed Obligations hereunder, and the Guarantor is not
relying upon, nor expectingthe Agency to furnish it any information in the Agency's possession
concernhig the Borrower's fmancial condition or concerning any circumstances bearing on the
existence or creation or the risk of nonpayment or nonperformance of the Loan. The Guarantor
hereby waives any duty on the part of the Agency to disclose to the Guarantor any facts it may
now or hereafter know about the Borrower, regardless of whether the Agency has reason to
believe that any such facts materially increase the risk beyond that which the Guarantor intends to
assume or has reason to believe that such facts are unknown to the Guarantor,
11. Guarantor Financial Information. The Guarantor will provide the Agency in
writing such financial and other information with respect to the Guarantor's assets and liabilities as
the Agency shall reasonably request fi•onl time to time, inform satisfactory to the Agency.
12. Representations and Warranties. The Guarantor represents and warrants to the
Agency that each of the Following statements is accurate and complete as of the date of this
Guaranty:
a. Organization. Guarantor is a corporation duly organized, validly existing
and in good standing under, the laws of the State of California, with full power and authority to
conduct its business as presently conducted and to execute, deliver and perform its obligations
under this Guaranty.
b. Authorization. Guarantor has taken all necessary action to authorize its
execution, delivery and performance of its obligations raider this Guaranty, This Guaranty
constitutor a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms,
c. No Conflict. The execution, delivery and performance of this Guaranty by
Guarantor does not and will not conflict with, or constitute a violation or breach of, or a default
undor, (a) the charter orincorporation-documents of Guarantor, (b) any applicable law, rule or
H-6
1151\01\790674.2
regulation binding upon or applicable to Guarantor, or (c) any material agreements to which
Guarantor is a party.
d• No Liti ag lion. Exaept as otherwise disclosed in writing to the Agency prior
to the date hereof, there is no existing or, to Guarantor's knowledge, pending or threatened
litigation, suit, action or proceeding before any court or administrative agency affecting Guarantor
that would, if adversely determined, materially. adversely affect Guarantor, or Guarantor's ability
to perform its obligations hereunder.
e. Financial Information. All .financial statements and other financial
information previously or hereafter shown to the Agency or its representatives regarding
Guarantor are or will be true and correct in all material respects as of the dates thereof and do or
will fairly represent the financial condition of Guarantor (including, in the case of annual audited
financial statements, all contingent liabilities), All such financial statements. were or will be,
prepared in accordance with generally accepted accounting principles consistently applied and
there has been no material adverse change in Guarantor's financial condition since the dates of the
statements most recently shown to the Agency.
13. Events of Default. The Agency may declare Guarantor to be in default under this
Guarantyupon the occurrence of any of the following events ('Events of Default");
Guarantor fails to perform any of its obligations under this Guaranty; or
any reason; or
b. Guarantor revokes this Guaranty or this Guaranty becomes ineffective for
c. Any representation or warranty made or given by Guarantor to the Agency
proves to be false or misleading in any material respect; or
d. Guarantor becomes insolvent or the subject of any Insolvency Proceeding
which, in the case of an involuntary proceeding against Guarantor, is not completely dismissed
within sixty (60) days of its filing; or
Guarantor is dissolved or becomes incapacitated,
14. Notices, Demands and Communications between the Parties,. Formal notices,
demands, and communications between the Agency, the Agency and the Guarantor shall be
sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt
requested, to the addresses set forth below,. in which case they shall be deemed delivered three (3)
Business Days after deposit in the United States mail. Such written notices, demands and
communications maybe sent in the same mgimer to other addresses as either party may from limo
to time designate by mail as provided in this Paragraph 13 • Any party to his Guaranty may change
is address or the came and address of its attorneys by giving notice iri compliance with this
Paragraph 13.
To the Agency;
Redevelopment Agency of the Town of Los Gatos
Town Hall
101 $• Main Street
Los Gatos,. CA 95030
Attention; Bud Lortz
H-7
1 i51\01\790671.2
To the Guarantor:
ROEM Development Corporation
1650 Lafayotte Street
Santa Clara, CA 95050
Attn:.Ionathan Emami
15. Governing Law. This Guaranty shall be governed by and construed iu accordance
with the laws of the State of California without reference to choice or conflicts of law.
16. Consideration. Guarantor acknowledges that it expects to benefit from the
Agency's execution of the ERNA and participation in the hansactions contemplated thereby, and
that it is executing this Guaranty in consideration of that anticipated benefit.
17. Severability. If any term, provision, waiver, covenant or restriction of tlus
Guaranty is held by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, waivers, covenants and restrictions of this Guaranty shall
remain in full force and effect and shall in no way be affected, impaired or invalidated to the
extent the essential purposes of the parties hereto can Ue satisfied.
18. Interpretation. Tlvs Agr•eernent shall be interpreted in accordance with this fair
meaning and shall not be interpreted in favor of Dither the Agency or the Guarantor.
19. No Waiver: Consents; Cumulative Remedies. Any waiver by the Agency must be
in writing, and no waiver shall be construed as a continuing waiver. No waiver shall be implied
from the Agency's delay in exercising ar failure to exercise any right or remedy against the
Borrower, Guarantor or any security. Consent by the Agency to any act or omission by-the
Borrower or the Guarantor shall not be construed as a consent to any other or subsequent act or
omission, or as a waiver of the requirement for the Agency's consent to be obtained in any fiihrre
or other instance. All remedies of the Agency against the Borrower and Guarantor are cumulative.
20. Construction. In this Guaranty, the word "Borrower" includes both the named
Borrower and any other person who at any time assumes or otherwise becomes primarily liable for
all or any part o£tlte obligations of the named Borrower under the ERNA. In this Guaranty, the
word "Agency" includes The Redevelopment Agency of the Town of Los Gatos, and any assignee
of all or any of its rights hereunder. The word "person" includes any individual, company, trust or
other legal entity of any kind. The word "include(s)" means "include(s), without limitation," and
the word "htcluding" .means "hrcluding, but not limited to." When the context and construction so
require, all words used in the singular shall be deemed to have been used in the plural and vice
vorsa. No listing of specific instances, items or matters in any way limits the scope or generality
of any language of this Guaranty. All headings appearing in this Guaranty are for convenience
only and shall be disregarded in construing this Guaranty.
21. Entire Agreement; .Modification. This Guaranty constitutes the entire
understanding and agreement of the parties as to the subject matters of this Guaranty. This
Guaranty integrates all of theterms and conditions mentioned herein or incidental hereto, and
supersedes. all negotiations or previous agreements between the Agency, and the Guarantor with
respect to all or any part of the subject manor hereof This Guaranty may not be modified except
in writing signed by both the Agency and the Guarantor.
22. Heirs Successors and Assigns• Participations. `The terms of this Guaranty shall
bind artd benefit the heirs, legal representatives, successors and assigns of the Agency and
Guarantor; provided, however, that Guarantor may not assign this Guaranty, or assign or delegate
H-8
1151101\79067~F.2
any of its rights or obligations tinder this Guaranty, without the prior written consent of the
Agency in each instance. The Agency in its sole discretion may assign all or anypart of its rights
under this Guaranty to the Town of Los Gatos, without notice to or the consent of Guarantor and
without affecting any Guarantor's obligations wider this Guaranty. No other assignment of the
Agency's rights under this Guaranty may be made without the prior written consent of Guarantor
in its solo discretion. Also, with the prior written consent of Guarantor (which consent shall not be
unreasonably withheld or delayed), the Agency may disclose any and all .information ui its
possession concerning Guarantor, this Guaranty and any security for this Guaranty to any actual or
prospective purchaser of any securities issued or to be issued by the Agency or its designee or
assignee.
23. Costs and Expenses. Without limiting the generality of the obligation of the
Guarantor to pay the fees and expenses of the Agency as provided in Section 1 of this Guaranty, if
any lawsuit or reference proceeding is commenced which arises out of, or which relates to this
Guaranty, the prevailing party shall be entitled to recover from each other party such sums as the
court or referee may adjudge to be reasonable attorneys' fees (including, without limitation, Dither
the attorneys' fees and expenses of outside counsel or the allocated costs for services of in-house
counsel as reasonably determined by the Agency) in the action or proceeding, in addition to costs
and expenses otherwise allowed by law. In all other situations, htcluding any Insolvency
Proceeding, Guarantor agrees to pay all of the Agency's costs and expanses, including attorneys'
fees (including, without limitation, either the attorneys' fees and expenses of outside counsel or the
allocated costs for services of the Agency's in-house counsel as reasonably determined by
Beneficiary) which may be incurred in any effort to enforce any term of this Gual arty.
24. Miscellaneous. The death or legal incapacity of any Guarantor shall not telminate
the obligations of such Guarantor or any other Guarantor under this Guaranty. The liability of all
persons who era in any manner obligated under this Guaranty shall be joint and several. The
illegality or unenforceability of one or more provisions of this Guaranty shall,not affect any other
provision. Time is of the essence in the performance of this Guaranty by the Guarantor.
25. Advice of Counsel. Guarantor acknowledges that guarantor has obtained the
advice of counsel in connection with the•terms and provisions of this guaranty.
26. This Guaranty shall terminate upon the earliest to occur o£ (1) repayment in full of
the ERNA Predevelopment Loan; (2) termination of the ERNA as a result of an uncured Agency
Event of Default pursuant to Section 4,6 of the ERNA; or (3) execution of a DDA
1N WITNESS WHEREOF, the Guarantor has executed this Guaranty this day of
2010.
"Guarantor"
Room Development Corporation
Jonathan Ematni, Vice President
By:
[Attach Copy of California Civil Code Section 2856]
• H-9
] I51\Ol\790674.2