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Resolution - 3319
STATE OF CALIFORNIA ) RESOLUTION NO. 3319 COUNTY OF RIVERSIDE )ss CITY OF SAN JACINTO ) A RESOLUTION OF THE SAN JACINTO REDEVELOPMENT AGENCY OF THE CITY OF SAN JACINTO, CALIFORNIA APPROVING THE OPERATING COVENANT AGREEMENT WITH V2NRG, LLC FOR THE ACQUISTION OF COVENANTS RUNNING WITH THE LAND FOR THE PROPERTY LOCATED AT 341 E. MAIN STREET, SAN JACINTO, CALIFORNIA WHEREAS, pursuant to the California Community Redevelopment Law (Health & Safety Code Sections 33000, et seq.) ("CRL"), the City Council of the City of San Jacintio ("City") approved and adopted a redevelopment plan ("Redevelopment Plan") for the redevelopment project area known as the San Jacinto Redevelopment Project Area ("Project Area"); and WHEREAS, the Governing Board ("Board") of the San Jacinto Redevelopment Agency of the City of San Jacinto ("Agency") is engaged in activities to implement the Redevelopment Plan for the Project Area pursuant to the provisions of the CRL; and WHEREAS, V2NRG, LLC, a California limited liability company, is the fee owner of certain real property generally located at 341 E. Main Street ("Owner') within the Project Area ("Property'), and further described in the Operating Covenant Agreement attached hereto as Exhibit "A" and incorporated herein by reference; and WHEREAS, the Owner has acquired the Property to facilitate and operate a medical clinic and the Owner now desires to sell interests in the Property to the Agency consisting of covenants running with the land for the Property, which are more fully set forth in the Operating Covenant Agreement (the "Covenants") attached hereto as Exhibit "A;" and WHEREAS, the Agency is authorized under the CRL Section 33391 to acquire real property or an interest in real property for purposes of redevelopment; and WHEREAS, the Agency desires to purchase, for consideration in the not to exceed amount of One Hundred Fifty Thousand Dollars ($150,000) of non-housing set- aside Agency funds, the Covenants from the Owner in accordance with the terms and conditions set forth in the Operating Covenant Agreement; WHEREAS, the Agency has determined that the purchase of the Covenants will further the Agency's activities in redeveloping the Project Area by: Assisting with business development in the Project Area; and Creating and maintaining job opportunities for City residents; and ONT ARIOaTI LFORM304324.1 Generating tax revenue to the Agency that will assist the Agency in providing additional redevelopment in the Project Area; and Preserving and redeveloping property within the Project Area Eliminating blight; and Providing for future improvements within the Project Area. NOW, THEREFORE, BE IT RESOLVED, determined and ordered by the Governing Board of the San Jacinto Redevelopment Agency of the City of San Jacinto as follows: Section 1. Recitals. The above recitals are true and correct. Section 2. Approval of Agreement. The Agency hereby authorizes the purchase of the Covenants and approves the Operating Covenant Agreement in the form attached hereto. Section 3. Authorization. The Agency hereby authorizes the Agency's Executive Director (with the concurrence of Agency Counsel) to execute and deliver on behalf of the Agency the Operating Covenant Agreement and such other documents and instruments as may be necessary or convenient in the furtherance of the actions authorized in this Resolution. Section 4. FEM. The Agency Secretary is hereby directed to file a copy of the executed Operating Covenant Agreement with the City Clerk at City Hall. Section 5. Direction; Transfer of Funds. The Agency staff is hereby directed to do all that is necessary to effectuate the intent of the Operating Covenant Agreement and consummate the acquisition of the Covenants, including the transfer of funds required for the purchase of the Covenants. Section 6. CEQA Compliance. The Agency has determined that it can be seen with certainty that there is no possibility that the conveyance the Covenants will have a significant adverse effect on the environment. Thus, the adoption of this Resolution is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Section 15061(b)(3) of the CEQA Guidelines. In addition, pursuant to Section 21090 of the CEQA and State CEQA Guidelines, the Final Program Environmental Impact Report ("EIR") prepared and certified for the San Jacinto Redevelopment Project Area Redevelopment Plan adequately included and considered the impacts of redevelopment in the project area. As such, Agency has determined that no supplemental EIR, negative declaration, mitigated negative declaration, EIR addendum or other subsequent report is required to be prepared and filed for this conveyance. The Agency hereby directs staff to file a Notice of Exemption with the County Clerk of Riverside County within five (5) working days following approval of this Resolution. ONTARIOIRTI LFORM309329.I Section 7. Certification. The Agency Secretary shall certify the adoption of this Resolution. �- Section 8. Effective Date. This Resolution shall become effective upon its adoption. PASSED, APPROVED AND ADOPTED this 20th day of May, 2010. - Dale Stubblefield, hai an San Jacinto Redevelopment Agency ATTEST`: Aft A Ric and frAiller,Ageney'S6cretary APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER LLP Jeffre-y walling Agency General Counsel ONTARJU RTl LFOREM S329.1 CERTIFICATION I, Richard Miller, Secretary of the San Jacinto Redevelopment Agency of the City of San Jacinto, do hereby certify that the foregoing Resolution No.3319 was introduced and adopted by the San Jacinto Redevelopment Agency of the City of San Jacinto at a regular meeting thereof, held on the 201h day of May, 2010, by the following vote: AYES: Ayres, Mansperger, Potts, Stubblefield NAYS: None ABSTAINED: None ABSENT: Di Memmo IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the San Jacinto Redevelopment Agency of the City of San Jacinto this the 20"' day of May, 2010. Richard Miller, Agency Secretary San Jacinto Redevelopment Agency (SEAL) � = ONTARIO\RTILFORD`309329.1 Exhibit "A" Operating Covenant Agreement [SEE ATTACHED BEHIND THIS PAGE] ONTARIO\RTI LFORD3 09329.1 WHEN RECORDED RETURN TO: DOC # 20 10-0260440 06/07/2010 08:00A Fee:NC CITY OF SAN JACINTO page t of 19 ATTN: City Clerk Recorded in Official Records County of Riverside 595 S San Jacinto Ave Larry W. Ward San JaCIRbD, Ca 92583 �1,111111111111111111111111111111111111111111111111111111 ���I��������'���County Clerk 8 Recorder RECORDING REQUESTED BY: Ii}t 11111111111111111111111 em��om�ordl�feeoer�vernm�ntPer�vernment S R U PAGE SIZE DA MISC LONG RFD COPY Code 8ec4�ron 61Sec� r�on 6103 CITY OF SAN JACINTO CALIFORNIA El AM �. M A L 465 426 1 PCOR NCOR SMF INC BY Economic Development Manager -Operating Covenant Agreement 7C16 (ftl(e ofDoc+mleno PAGE 1 of 1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Jacinto Redevelopment Agency 595 S. San Jacinto Avenue San Jacinto, CA 92583 ATTN: Executive Director m SPACE ABOVE THIS LINE FOR RECORDER'S USE EXEMPT FROM RECORDING FEES PURSUANT TO GOV.CODE y 27383 w¢, mmw �o OPERATING COVENANT AGREEMENT i i by and between the SAN JACINTO REDEVELOPMENT AGENCY, a public body, corporate and politic, and V2NRG, LLC, C a California limited liability company [Dated May 6,2010 for reference purposes only] ONTARI0\RTILFORD\309312.4 OPERATING COVENANT AGREEMENT THIS OPERATING COVENANT AGREEMENT (this "Agreement") is dated as of May 6, 2010, for reference purposes only, and is entered into by and between the SAN JACINTO REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and V2NRG, LLC, a California limited liability company("Owner"). The Agency and Owner enter into this Agreement with reference to the following recited facts(each a"Recital"): RECITALS A. The Agency is engaged in activities necessary to execute and implement the redevelopment plan ("Redevelopment Plan") for the Agency's San?acinto Redevelopment Project Area ("Project Area")pursuant to the provisions of the California Community Redevelopment Law(Health& Safety Code Sections 33000 et seq.) ("CRL")and the Redevelopment Plan; a� 6 B. Owner owns and operates a permanent medical clinic and parking known as the Ramona 0, Medical Clinic ("Project") constructed on real property located in the City, which is depicted and n described in Exhibit A attached hereto and incorporated herein by this reference("Property"); and v© C. The Agency and Owner now desire to provide for the long-term operation and maintenance of the Project by the Owner in this Agreement; and r D. The Agency desires to purchase and the Owner desires to sell interests in the Property to the Agency consisting of covenants running with the land for the Property, which are more fully set forth below for the purpose of ensuring both the long term operation and maintenance of the Project on the Property; and E. The Agency has determined that this Agreement will further the Agency's activities in redeveloping the Project Area by: 1. Assisting with business development in the Project Area; and 2. Creating and maintaining job opportunities for City residents; and C 3. Generating tax revenue to the Agency that will assist the Agency in providing additional redevelopment in the Project Area; and 4. Preserving and redeveloping property within the Project Area 5. Eliminating blight; and 6. Providing for future improvements within the Project Area. TERMS NOW, THEREFORE, in consideration of the above recitals and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 164.1 1. Definitions. All initially capitalized terms used in this Agreement shall have the meanings set forth in this Section 1 or, if not defined in this Section 1,where such term first appears in this Agreement, unless the context of usage clearly requires another meaning. ONTARIO\RTILFO RD130 4312.4 L 1.1 Agency. The San Jacinto Redevelopment Agency, a public body, corporate and politic. 1.2 Agency Operating Period. The time period beginning on the Effective Date and ending on the twentieth (20th) anniversary of the Effective Date, or the expiration date of the Redevelopment Plan,whichever is earlier. 1.3 Agency Parties. Collectively, the Agency, its elected officials, employees, attorneys and other agents. 1A Agency Party. Tndividually, the Agency, its elected officials, employees, attorneys or other agents. 0 a mm 1.5 Affiliate. In reference to any Person means any other Person Controlling or Controlled Z by or under common Control with the specified Person. "Affiliated" shall have the correlative meaning. U m 1.6 Approval. Any license, permit, approval, consent, certificate, ruling, variance, authorization, conditional use permit, or amendment to any of the foregoing, as shall be necessary or appropriate under any Law to develop or operate the Project. 1.7 City. The City of San Jacinto, a California municipal corporation and general law city. 1.8 City Attorney. The city attorney for the City of San Jacinto, California. 1.9 City Parties. Collectively, the City, its elected officials, employees, attorneys and other agents. 1.10 City Party. Individually, the City, its elected officials, employees, attorneys or other agents. 1.11 Claim. Any claim, loss, cost, damage, expense, liability, lien, action, cause of action (whether in tort, contract, under statute, at law, in equity or otherwise), charge, award, assessment, fine or penalty of any kind (including consultant and expert fees and expenses and investigation costs of whatever kind or nature, challenge to the Agency's authority to enter into or perform this Agreement or approval of this Agreement in any form, if an Indemnitor improperly fails to provide a defense for an Indemnitee, then Legal Costs of counsel retained by the Indemnitee), and any judgment. 1.12 Covenant Payment. The not to exceed total amount of One Hundred Fifty Thousand Dollars ($150,000). 1.13 Default. Defined in Section 9. 1.14 Default Interest. Interest at an annual rate equal to the lesser of (a) eight percent (81/6) per annum; or(b)the Usury Limit. 1.15 Downtown Sign Guidelines. Article 10A of the Zoning Ordinance of the City of San Jacinto. 1.16 Effective Date. Defined in Section 2.1. -3- ONTARIO%RTTLFORD\3D93]2A 1.17 Executive Director. The Executive Director of the Agency or his or her designee or successor in function. 1.18 Government. Each and every governmental agency, authority, bureau, department, quasi-governmental body, or other entity or instrumentality having or claiming jurisdiction over the Property (or any activity this Agreement allows), including the government of the United States of America, the State, the County of Riverside and their subdivisions and municipalities, including the City and the Agency, and all other applicable governmental agencies, authorities, and subdivisions thereof. "Government"shall also include any planning commission, board of standards and appeals, department of buildings, city council, zoning board of appeals, design review board or committee or similar body having z or claiming jurisdiction over the Property or any activities on or at the Property. Qm 1.19 Indemnify. Where this Agreement states that any Indemnitor shall "indemnify" any ° Indemnitee from, against, or for a particular matter, that the Indemnitor shall indemnify the Indemnitee m¢, and defend and hold the Indenmitee harmless from and against any and all Claims: (a) from, as a result of, or on account of the particular matter, or(b) in enforcing the Indemnitor's indemnity obligation. 1.20 Law. Every law, ordinance, requirement, order, proclamation, directive, rule, and regulation of any Government applicable to the Property or the Project, in any way, including any development, use, maintenance, taxation, operation, or occupancy of, or environmental conditions affecting the Property or the Project, or relating to any taxes, or otherwise relating to this Agreement or any Party's rights, obligations or remedies under this Agreement, or any transfer of any of the foregoing, whether in force on the Effective Date or passed, enacted, modified, amended or unposed at some later time, subject in all cases, however, to any applicable waiver, variance, or exemption. i 1.21 Legal Costs. All reasonable costs and expenses such Person incurs in any legal proceeding (or other matter for which such Person is entitled to be reimbursed for its Legal Costs), including reasonable attorneys' fees, court costs and expenses and consultant and expert witness fees and expenses. L22 Maintenance Deficiency. Means and refers to an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described in Section 3.L 1.23 Notice. Any approval, consent, demand, designation, election, notice, or request relating to this Agreement, including any Notice of Default or termination of this Agreement. Notices shall be delivered, and shall become effective, only in accordance with Section IS. 1.24 Notify. Give a Notice. 1.25 Outside Effective Date. June 30, 2010. 1.26 Owner. V2NRG, LLC, a California limited liability company, and its successors and assigns. 1.27 Owner Parties. Collectively, Owner, its Affiliates, shareholders, members, partners, directors, officers, employees, attorneys or other agents. -4- ONTARIOIRTI Lt:ORM309312.4 L 1.28 Owner Party. Individually, Owner, its Affiliates, shareholders, members, partners, directors,officers, employees,attorneys or other agents. 1.29 Parties. Collectively, Owner and the Agency. 1.30 Party. Individually, Owner or the Agency, as applicable. 1.31 Person. Any association, corporation, governmental entity or agency, individual, joint venture,joint-stock company, limited liability company,partnership, trust, unincorporated organization or other entity of any kind. s 1.32 Property. That certain real property specifically described in Exhibit A attached to this Agreement. vmw m m c m!vim 1.33 Sign Regulations. Article 16 of the Zoning Ordinance of the City of San Jacinto. 6 1.34 Unavoidable Delay. Delay in either Party performing any obligation under this Agreement, except payment of money except when due to one of the causes described below that prevents or materially limits the ability to transfer funds by or between financial institutions, arising from or on account of any cause whatsoever beyond the Party's reasonable control, including strikes, labor troubles or other union activities, casualty, war, acts of terrorism, riots, litigation, Government action or inaction, regional natural disasters, or inability to obtain materials. Unavoidable Delay shall not include Lg delay caused by a Party's financial condition, illiquidity, or insolvency. Mon 1.35 Usury Limit. The highest rate of interest, if any, that Law allows under the circumstances. 2. Effective Date. 2.1 Definition. This Agreement shall not become binding on either Party, unless and until the first date on which all of the following occur, if at all (the"Effective Date"): (a) Signature and Delivery of Agreement by Owner. Three (3) originals of this Agreement are signed by the authorized representative(s) of Owner and delivered to the Agency; and (b) Approval of Agreement by Agency Board. This Agreement is approved by the Agency Board at a public meeting of the Agency Board, following all legally required notices and hearings; and (c) .Signature and Delivery of Agreement by agency. One (1) original of this Agreement is signed by the authorized representative(s)of the Agency and delivered to Owner. 2.2 Failure of Conditions. If the Effective Date does not occur on or before the Outside Effective Date, then no part of this Agreement shall become binding on or enforceable against either Party and any prior signatures or approvals of this Agreement by either the Agency or Owner shall be void and of no further force or effect. -5- ONTARI0\RT1LF0 RD%309312.4 3. Operating Covenants. 3.1 Operating and Use Covenant. Owner covenants to the Agency to continuously operate (no period of inoperation of more than forty-five (45) consecutive days) the Project on the Property throughout the entirety of the Agency Operating Period. Owner shall, for the entirety of the Agency Operating Period, at Owner's sole cost and expense, obtain and maintain all franchises, permits, contractual arrangements, licenses, and registrations necessary for the continuous operation of the Project in a manner consistent with other similar medical facilities in the surrounding community. Owner shall operate the Project in the City throughout the entirety of the Agency Operating Period in a commercially reasonable and prudent manner, in accordance with reasonable and customary medical facility practices in the surrounding community and Owner's obligations pursuant to this Section 3.1 shall include, without limitation, the obligation to advertise, market and promote the Project in a manner consistent with other z similar medical facilities in the surrounding community. For the entirety of the Agency Operating Period, m° Owner may only use the Property for the purposes of operating the Project in accordance with this Agreement,together with such other uses as may be incidental or ancillary thereto. Q,a r•. w 3.2 Covenant to Maintain Property. e (a) The Owner, for itself, its successors and assigns, hereby covenants to the Agency that it shall maintain areas of the Property that are subject to public view (including all existing improvements, paving, walkways, landscaping, exterior signage and ornamentation) in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. In the event that at any time during the term of the Agency Operating Period, there is a Maintenance Deficiency then the City shall notify the Owner in writing of the Maintenance Deficiency and give the Owner thirty (30) days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. In the event the Owner fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the City may thereafter �- conduct a public hearing following transmittal of written notice thereof to the Owner ten(10) days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Owner has failed to comply with the provision of this Section 3.2. If, upon the conclusion of a public hearing, the City makes a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with the general maintenance standard, as described above, thereafter ` the City shall have the right to enter the Property (exterior areas only) and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity the City may then have to accomplish the abatement of the Maintenance Deficiency. (b) Graffiti, as this term is defined in California Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property, shall be removed by Owner by either painting over the evidence of such vandalism with a paint that has been color-matched to the surface on which the paint is appIied, or graffiti may be removed with solvents, detergents or water, as appropriate. If any such graffiti is not removed within three (3) business days following the time of the discovery of the graffiti, the City shall have the right to enter the Property and remove the graffiti, without notice. (c) The Owner, for itself, its successors and assigns, shall hereby comply with the requirements, prohibitions and guidelines of Article 10A (4Downtown Design Guidelines and FaVade Rehabilitation Concepts") and Article 16 ("Sign Regulations") of the San Jacinto Zoning Code, as amended from time to time. Nothing within this Section 3.2(c) shall be deemed to limit the City's ability to enforce the Downtown Design Guidelines and Fagade Rehabilitation -6- ONTARI Y RI ILFORD\309312.4 Concepts or Sign Regulations nor shall this section be interpreted to preclude the Owner's compliance with the same. (d) The parties hereto further mutually understand and agree that the rights conferred upon the Agency and City under this Section 3.2 expressly includes the City's power to establish and enforce a lien or other encumbrance against the Property in the manner provided under Civil Code Sections 2924, 2924b and 2924c in the amount as reasonably necessary to restore the Property to the maintenance standard required under this Section 3.2, including attorneys' fees and costs of the City associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the City in connection with such action. For the purposes of the preceding sentence the words "reasonable attorneys' fees and costs of the City"mean and refer to the salaries, benefits and costs of the City Attorney and the lawyers employed in the office of the City Attorney. Nothing in this Section 3.2 W^ shall be deemed to preclude Owner from making any alteration, addition, or other cbange to any structure n or improvement or landscaping on the Property, provided that such changes are in compliance with the a City's zoning and development regulations and other applicable laws. (e) The provisions of this Section 3.2, shall be a covenant running with the land for entirety of the Agency Operating Period and shall be enforceable by the City in its discretion, cumulative with any other rights or powers granted by the City under applicable law. 3.3 Property Taxes. Owner covenants to pay, prior to delinquency, all ad valorem real estate taxes and assessments assessed by the Riverside County Treasurer-Tax Collector for the Project. i 3.4 Covenant to Maintain Property on Tax Rolls. Owner shall assure that the entire �• Property shall remain on the County of Riverside, California secured real property tax rolls so long as the Agency is authorized to receive property taxes from the Project Area pursuant to CRL Section 33670(b). 4. Oblieation to Refrain from Discrimination. The Owner covenants and agrees for itself, its successors, its assigns and every successor-in-interest to the Property or any portion thereof, that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Owner, itself or any person claiming '^ under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub- lessees or vendees of the Property. Owner acknowledges and agrees for itself, its successors, its assigns and every successor-in-interest to the Property or any portion thereof that Community Redevelopment Law (Cal. Health and Safety Code §§ 33000 et. seq.) establishes certain policies, covenants, provisions and obligations related to the redevelopment of property and the inclusion of certain non-discrimination and non-segregation covenants, provisions and obligations within deeds, leases, and contracts ("Non- discrimination Covenants"). To the extent that these Non-discrimination Covenants, as may be amended from time to time, are applicable to this Property as a result of this Agreement, Owner covenants and agrees for itself, its successors, its assigns and every successor-in-interest to the Property or any portion thereof that these Non-discrimination Covenants shall be complied with to the full extent of the law. The covenant of this Section 4 shall run with the land of the Property in perpetuity. 5. Owner Option to Defend this Agreement. The Owner acknowledges that the Agency is a"public entity" and/or a"public agency" as defined under applicable California law. Therefore, the Agency must satisfy the requirements of certain California statutes relating to the actions of public entities and redevelopment agencies, including, without limitation, CEQA. Also, as a public body, the Agency's -7- ONTARI0IRTILFORDl3093 L2.4 action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. The Owner assumes the risk of delays and damages that may result to the Owner from any third-party legal actions related to the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event that an error, omission or abuse of discretion by the Agency is determined to have occurred. If a third-party files a legal action regarding the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, the Agency may terminate this Agreement on thirty (30) days written notice to the Owner of the Agency's intent to terminate this Agreement, referencing this Section 5, without any further obligation to perform the terms of this Agreement and without any liability to the Owner resulting from such temunation, unless the Owner, at its discretion without any obligation to do so, unconditionally agrees to indemnify and defend the Agency, with legal counsel acceptable to the Agency, against such third-party legal action, as 4 d @Q- provided in the next sentence. Within thirty (30) days of receipt of the Agency's notice of intent to m®o terminate this Agreement, as provided in the preceding sentence, the Owner may, at its discretion without h" any obligation to do so, offer to defend the Agency, with legal counsel acceptable to the Agency, in the third-party legal action and pay all of the court costs, attorneys' fees, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Any such offer from the Owner must be in writing and reasonably acceptable to the Agency in both form and substance. Nothing contained in this Section 5 shall be deemed or construed to be an express or implied admission that the Agency is liable to the Owner or any other person or entity for damages alleged from any alleged r-- or established failure of the Agency to comply with any statute, including, without limitation, CEQA. The defense of such third party actions as described in this Section 5 shall constitute an Unavoidable �.,. Delay. 6. Survival and Enforcement of Covenants. 6.1 Survival. Each covenant set forth in Section 3 and 4 shall be a covenant running with the land of the Property and binding on Owner and all successors-in-interest to the Property for the Agency Operating Period, except as otherwise provided herein. Further, each covenant set forth in Section 3 and 4 shall survive the execution, recordation or issuance of each and every document (i.e., certificate of completion, certificate of occupancy, etc.) related to the Property or the Project for the Agency Operating — Period. 6.2 Enforcement. The covenants sct forth in Section 3 and 4 may be enforced by the Agency regardless of whether or not the Agency currently owns or continues to own an interest in any property benefited by any such covenants. Owner agrees that breach of any of the covenants set forth in Section 3 and 4 will result in great and irreparable injury to the Agency, will violate the public policy and the purposes of this Agreement and will result in injury to the Agency that is not compensable by monetary damages. Accordingly, upon the breach of any of the covenants set forth in Section 3 and 4 in addition to the provisions regarding Remedies, the Agency may institute an action for injunctive relief regarding and/or specific performance of any such covenant. 7. Covenant Payment. In consideration for Owner's performance of its covenants and other obligations pursuant to this Agreement, the Agency shall pay the Covenant Payment to Owner as follows: 7.1 Agency shall pay Owner the not to execcd amount of One Hundred Fifty Thousand Dollars($150,000) within fourteen(14)days of recordation of this Agreement. -8- ONTARIO�f'rILFORD009312.4 8. Adequate Consideration. 8.1 Exchange of Consideration. The Parties determine and agree that: (i) the Covenant Payment represents fair consideration to Owner for entering into and performing its covenants and other obligations under this Agreement; and (ii) Owner's performance of its covenants and other obligations under this Agreement represent fair consideration to the Agency for the Covenant Payment and performance of the Agency's other obligations under this Agreement. 8.2 No Unstated Consideration. Owner acknowledges and agrees that Owner will receive no compensation under this Agreement other than the Covenant Payment. Owner shall not be entitled to © any reimbursement or other compensation from the Agency for any costs incurred by Owner in m performing or preparing to perform its covenants or other obligations under this Agreement. �0 p 9 Defaults. Subject to any extensions of time provided for in this Agreement for Unavoidable Delay, and in addition to the terms and timeframes provided for in Section 3.2, the occurrence of any of the following events shall constitute a"Default": 9.1 Monetary Default. The failure by any Party to perform any obligation of such Party under this Agreement for the payment of money, if such failure is not cured within fifteen (15) days after the non-performing Party's receipt of Notice from the injured Party that such obligation was not performed, as and when due; or 9.2 Non-Monetary Default. Except as otherwise provided for in Section 3.2, the failure by any Party to perform any of its obligations set forth in this Agreement, other than obligations subject to Section 9.1, if such failure is not cured within thirty(30) days after the non-performing Party's receipt of C Notice from the injured Party that such obligation was not performed, as and when due, or, if such failure is of a nature that cannot reasonably he cured within thirty (30) days, the failure by such Party to commence such cure within thirty (30) days after receipt of such Notice and to, thereafter, diligently prosecute such cure to completion. 10. Agency's Remedies. 10.1 For any Default, pursue any available legal or equitable action or remedy to (i) recover damages to the Agency arising from such Default, including, without limitation, to collect any amount of money due to the Agency from Owner, or (ii) preclude a breach of this Agreement or compel Owner to perform in accordance with the requirements of this Agreement, following the notice and opportunity to cure provided herein; and 10.2 For any Default, off set any amount of money due to the Agency from Owner, following the notice and opportunity to cure provided herein, as applicable, against any Covenant Payment(s)due or becoming due to Owner; and 10.3 For any Default of an obligation arising under any of Section 3, suspend any Covenant Payments due hereunder during any period during which such a Default exists. Additionally, Agency may, at its option, elect to immediately terminate this Agreement and all of its obligations hereunder, including any obligations concerning unacerued and suspended Covenant Payments, without cost, �.� expense or liability; and -9- ONTARIOIRTI LFO RD13093 l 7 A 10.4 For any Default of an obligation arising under Section 3 that remains uncured as provided herein, if Agency terminates this Agreement Agency shall be entitled to recover the prorated amount of the Covenant Payment for the remaining term of the Agency Operating Period. If the Agency does not terminate the Agreement, Agency shall be entitled to recover the prorated rate amount of the Covenant Payment for the period of the uncured Default; and 10.5 For any Default which consists of the failure by Owner to complete all material elements of the Project, immediately terminate this Agreement and all of the Agency's obligations hereunder, including any obligations concerning unaccrued and suspended Covenant Payments, without cost, expense or liability. � m vm� 10.6 Legal Actions. In addition to any other rights or remedies, any Party may institute legal action to cure, correct or remedy any default, to recover compensatory damages for any Default, or to s obtain any other remedy available to that Party under this Agreement or at law or in equity. ,y e 11. Owner's Remedy. 11.1 Payment of Any Unpaid Covenant Payment Amount. Subject to the Notice and opportunity to cure requirements herein and notwithstanding any other provision of this Agreement to the contrary, Owner's sole and exclusive remedy regarding a Default by the Agency shall be to seek the payment of any amount of the Covenant Payment remaining to be paid by Agency to Owner. 12. Indemnification. 12.1 Owner Indemnity Obligations. In addition to any other specific indemnification or defense obligations of the Owner set forth in this Agreement, the Owner agrees to indemnify, defend MMe (upon written request by the Agency and with counsel reasonably acceptable to the Agency) and hold harmless the Agency and the City, their legislative bodies, commissions, agents, officers, employees and attorneys from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, C judgments, costs and expenses, including, but not limited to reasonable attorneys' fees of counsel retained by the Agency or City, expert fees, costs of staff time, and investigation costs, of whatever kind or nature, that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through the negligence or willful misconduct of the Owner or the Owner's officers, agents, employees, relating in any manner to this Agreement, or any authority or obligation exercised or undertaken by the Owner under this Agreement. 12.2 Independent of Insurance Obligations. Owner's indemnification obligations under this Agreement shall not be construed or interpreted as in any way being restricted, limited or modified by any insurance coverage carried by Owner. 12.3 Survival of Indemnification and Defense Obligations. The indemnity and defense obligations of Owner under this Agreement shall survive the expiration or earlier termination of this Agreement, until any and all actual or prospective Claims regarding any matter subject to an indemnity obligation under this Agreement are fully, finally, absolutely and completely barred by applicable statutes of limitations. 12.4 Indemnification Procedures. The Owner shall promptly Notify the Agnecy of any Claim. Owner shall select counsel reasonably acceptable to Agency and/or City. Counsel to Owner's insurance carrier that is responding to such Claim shall be deemed satisfactory, except in the event of an -10- ONTARIOIRTI LFOR9609312.4 actual or potential conflict of interest for such counsel regarding the representation of any Owner Party, Agency Party or City Party or where such counsel proves to be incompetent regarding the representation. Even though Owner shall defend the action, Agency and/or City may engage separate counsel to advise each individually regarding the Claim and their separate defense, at Owner's expense. Such counsel may attend all proceedings and meetings. Owner's counsel shall actively consult with Agency and/or City counsel. Agency and City shall reasonably cooperate with the Owner's defense of them. Owner may only settle a Claim with Agency and/or City consent,not to be unreasonably withheld. 13. Agency Contract Administration. The Executive Director shall administer this Agreement on 6 ,m behalf of the Agency. The Executive Director may designate any member or members of the Agency c staff to carry out such responsibilities. Except as otherwise expressly provided in this Agreement, the 94 W° Executive Director has the authority to approve or consent to those matters in this Agreement requiring the Agency's approval or consent and to make all other decisions on behalf of the Agency, subject to the w Executive Director's retained and reserved sole and absolute discretion to seek Agency Board approval of any such matter. 14. Governing Law, Jurisdiction, Venue. This Agreement shall be deemed to have been made in the State of California, and the validity of this Agreement, its construction, interpretation, and enforcement, and the Parties' rights hereunder and concerning the Property, shall be decided under, governed by, and construed in accordance with the laws of the State of California. The Parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the state courts located in the County of Riverside, State of California, or the United States District Court with jurisdiction in the County of Riverside, State of California. Owner waives any right Owner may have to assert the doctrine of forum non conveniens or to object to such venue. is. Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties under this Agreement are cumulative and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different .� times, of any other rights or remedies for the same default or any other default by another Party. 16. No Effect on Agency's Authority. Nothing in this Agreement shall limit or restrict the authority of the Agency Board to take any other actions with respect to the Project or Property or Owner without notice to or consent from Owner, except as may otherwise be expressly provided by applicable Law. The approval of this Agreement by the Agency shall not be binding on the Agency Board, or any other commission, committee, board or body of the Agency regarding any Approvals regarding the Property or Project required by such bodies. No action by the Agency with reference to this Agreement or any related documents shall be deemed to constitute issuance or waiver of any required Agency Approval regarding the Property or Project. 17. Non-liability of Agency Officials and_Employees. No elected official, officer, contractor, consultant, attorney, employee or agent of the Agency shall be personally liable to Owner, any voluntary or involuntary successor or assign of Owner, or any lender or other Person holding an interest in Owner, in the event of any Default or breach of this Agreement by the Agency, or for any amount that may be or become due to Owner or its successors or assigns under this Agreement, or on any obligations arising under this Agreement. No shareholder, member, partner, principal, officer, attorney, employee or agent of Owner shall be personally liable to the Agency, any voluntary or involuntary successor or assign of the Agency, in the event of any Default or breach of this Agreement by Owner, or for any amount that may be or become due to the Agency or its successors or assigns under this Agreement, or on any obligations arising under this Agreement. -11- ONTARIOWFILFOP M309312 A 18. Notices. 18.1 Delivery. Any and all Notices submitted by either Party to the other Party pursuant to or as required by this Agreement shall be in writing and addressed to the Agency or Owner (and their designated copy recipients) as set forth in Section 18.2. Notices (including any required copies) shall be delivered personally, by Federal Express, United Parcel Service or other nationally recognized overnight (one-night) courier service or by registered or certified United States mail, return receipt requested and postage prepaid, to the addresses set forth in Section 18.2, in which case they shall be deemed delivered on the date of delivery (or when delivery has been attempted twice, as evidenced by the written report of the courier service) to such address(es) or on the fourth(4`h) day following deposit with the United States Postal Service for delivery. Either Party may change its address for delivery of Notices by Notice in s" compliance with this Agreement. Notice of a change of address shall be effective only upon receipt. Any m Part giving a Notice may request that the recipient acknowledge receipt of such Notice. The recipient Y 8i g Y q P g p p� shall promptly comply with any such request, but failure to do so shall not limit the effectiveness of any Notice. Any attorney may give any Notice on behalf of its client. 18.2 Addresses. The following are the authorized addresses for the submission of Notices, demands or communications to the Parties, under this Agreement, as of the Effective Date: To Agency: San Jacinto Redevelopment Agency 595 W. San Jacinto Avenue San Jacinto, CA 92583 Attention: Executive Director With a copy to: Best Best&Krieger LLP 3500 Porsche Way Suite 200 Ontario, CA 91764 Attention: Jeff Ballinger, Esq. To Owner: V2NRG, LLC 341 E. Main Street San Jacinto, CA 92583 Attention: Rakesh Gupta 19. Tax Consequences. Owner acknowledges that it may experience tax consequences as a result of its receipt of the Covenant Payment provided for in this Agreement and agrees that it shall bear any and all responsibility, liability, costs, and expenses connected in any way therewith. 20. incorporation,of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement, in their entirety, by this reference. 21. Principles of lnt2Mretation. No inference in favor of or against any Party shall be drawn from the fact that such Party has drafted any part of this Agreement. The Parties have both participated substantially in the negotiation, drafting, and revision of this Agreement, with advice from legal counsel and other advisers of their own selection. A term defined in the singular in this Agreement may be used -12- ONTARIO\RTILFOR M09312.4 in the plural, and vice versa, all in accordance with ordinary principles of English grammar, which also govern all other language in this Agreement. The words "include" and "including" shall be construed to be followed by the words: `without limitation." Each collective noun shall be interpreted as if followed by the words "(or any part of it),"except where the context clearly requires otherwise. Every reference to any document, including this Agreement, refers to such document as modified from time to time (excepting any modification that violates this Agreement), and includes all exhibits, schedules, addenda and riders to such document. The word"or"includes the word"and." 22. Counterpart Original% Integration. This Agreement may be executed in multiple counterpart originals, each of which is deemed to be an original, but all of which taken together shall constitute one and the same instrument. This Agreement and the exhibits attached to this Agreement represent the entire understanding of the Parties and supersede all previous negotiations, letters of intent, memoranda of ©" understanding or agreements between the Parties with respect to all or any part of the subject matter of J©° this Agreement. 9� 23. Severabilitv. If any term or provision of this Agreement or its application to any Person or s' circumstance shall to any extent be invalid or unenforceable, then the remainder of this Agreement or the application of such term or provision to Persons or circumstances, except those as to which it is invalid or unenforceable, shall not be affected by such invalidity. All remaining provisions of this Agreement shall be valid and be enforced to the fullest extent Law allows. 24. No Waiver. failure by a Party to insist on any one occasion upon strict compliance with any of the terms, covenants or conditions of this Agreement shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any rights or powers under this Agreement at any one time or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 25. Time is of the Essence. Time is of the essence in the performance of the Parties' obligations under this Agreement. 26. Unavoidable Delav: Extension of Time of Performance. 26.1 Notice. Performance by either Party under this Agreement shall not be deemed, or considered to be in Default, where any such Default is due to an Unavoidable Delay. Any Party claiming Unavoidable Delay shall Notify the other Party: (a) within ten (10) days after such Party knows of any such Unavoidable Delay; and(b)within five(5) days after such Unavoidable Delay ceases to exist. To be effective, any Notice of an Unavoidable Delay must describe the Unavoidable Delay in reasonable detail. The extension of time for an Unavoidable Delay shall commence on the date of the occurrence of the Unavoidable Delay and shall continue until the end of the condition causing the Unavoidable Delay. The Party seeking to be excused from performance shall exercise its best efforts to cure the condition causing the Unavoidable Delay, within a reasonable time. 26.2 Assumption of Economic Risks. ANYTHING IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, THE PARTIES EXPRESSLY ASSUME THE RISK OF UNFORESEEABLE CHANGES IN ECONOMIC CIRCUMSTANCES OR MARKET DEMAND/CONDITIONS AND WAIVE, TO THE GREATEST LEGAL EXTENT, ANY DEFENSE, CLAIM, OR CAUSE OF ACTION BASED IN WHOLE OR IN PART ON ECONOMIC NECESSITY, IMPRACTICABILITY, CHANGED ECONOMIC CIRCUMSTANCES, FRUSTRATION OF PURPOSE, OR SIMILAR THEORIES. EACH PARTY AGREES THAT ADVERSE CHANGES IN -13- ONTAR IO\RTILFO RD1309312.4 ECONOMIC CONDITIONS, EITHER OF SUCH PARTY SPECIFICALLY OR THE ECONOMY GENERALLY, OR CHANGES IN MARKET CONDITIONS OR DEMANDS, SHALL NOT OPERATE TO EXCUSE OR DELAY THE STRICT OBSERVANCE OF EACH AND EVERY OF THE OBLIGATIONS, COVENANTS, CONDITIONS AND REQUIREMENTS OF THIS AGREEMENT. THE PARTIES EXPRESSLY ASSUME THE RISK OF SUCH ADVERSE ECONOMIC OR MARKET CHANGES, WHETHER OR NOT FORESEEABLE AS OF THE REFERENCE DATE. INITIALS OF AUTHORIZED AGENCY INITIALS OF AUTHORIZED OWNER REPRESENTATIVE(S) REPRESENTATIVE(S) z �zm o s G ° 27. Third Party Beneficiaries. The City shall be a third party beneficiary to this Agreement and shall a;r N have full right and power to enforce any provision of this Agreement on behalf of the Agency. Except for "' ¢. ' the City, there are no other third party beneficiaries of this Agreement, and no other party shall have the right to compel the City to enforce any provision of this Agreement against the Owner. 28. No Other Representations or Warranties. Except as expressly set forth in this Agreement, no Party makes any representation or warranty material to this Agreement to any other Party. 29. Warranty Against Payment of Consideration for Agreement. Owner represents and warrants to the Agency that: (a) it has not employed or retained any Person to solicit or secure this Agreement upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees of Owner and Third Persons to whom fees are paid for professional services related to documentation of this Agreement; and (b) no gratuities, in the form of entertainment, gifts or otherwise have been or will be given by Owner or any of its agents, employees or representatives to any elected or .� appointed official or employee of the Agency in an attempt to secure this Agreement or favorable terms or conditions for this Agreement. Breach of the representations or warranties of this Section 29 shall entitle the Agency to terminate this Agreement upon seven(7) days Notice to the Owner. Upon any such termination of this Agreement, Owner shall immediately refund any payments made to or on behalf of Owner by the Agency pursuant to this Agreement or otherwise related to the Property or the Project, prior to the date of any such termination. 30. Relationship of Parties. The Parties agree and intend that the Agency and Owner are independent contracting entities and do not intend by this Agreement to create any partnership,joint venture, or sin-filar business arrangement, relationship or association between them. 31. Survival of Agreement. All of the provisions of this Agreement shall be applicable to any dispute between the Parties arising from this Agreement, whether prior to or following expiration or termination of this Agreement, until any such dispute is finally and completely resolved between the Parties, either by written settlement, entry of a non-appealable judgment or expiration of all applicable limitations periods and all terms and conditions of this Agreement relating to dispute resolution and limitations on damages or remedies shall survive any expiration or termination of this Agreement. [SIGNATURE ON FOLLOWING PAGE] -14- ONTARIO\RT ILFO RD\3a 9312.4 SIGNATURE PAGE TO OPERATING COVENANT AGREEMENT VZNRG,LLC, a California limited liability SAN JACINTO REDEVELOPMENT company AGENCY,a public body,corporate and politic, By: By: Neelam Gupta,M.D. Interim Executive Director 0 nn// ^ m Dated: 0 � Dated: qN� Q,r hJ 0 By: ATTEST: p Rakesh C. upta,M.D. r Dated: f By: IJ� °Tt Agency Secretary APPROVED AS TO LEGAL FORM: BEST BEST&KRIEGER LLP By: J L ,�, s� -'Jeff Aaninger,Age�r cy Counsel -15- ONT ARIDIRTI LFOR M309312.4 Exhibit"A" Legal Description of Property Beginning at intersection of Jordan Avenue and Main Street in the City of San Jacinto; Thence, north 0.00 degrees north for a distance of 40' (feet); Thence, east 90.00 degrees east from north for a distance of 25' (feet) to the point of beginning. Thence, north 0.00 degrees north for a distance of 265' (feet); Thence, east 90 degrees east from north for a distance of 170' (feet); Thence, south 180.00 degrees from north for a distance of 264.50' (feet); m e Thence,west 90.00 degrees west of north for a distance of 170' (feet)to the point of beginning. w 0 t1 a' w S -16- ONTARI OWILFOR M309312.4 ALL-PURPOSE ACKNOWLEDGMENT FOR CALIFORNIA STATE OF C,ALIFORNIA COUNTY OF ale On /tA , before me, M`► C.kgA A _ �nn-o kw 4V b o 'u;` Dale t Name And Title Of Officer(e.g.'Jane Dee,N bIIC) personally appeared�a)< e s h 4 1`f ee1 1 o-m Gil A 0o 0, Name(s)of S' er(s) who proved to me on the basis of satisfactory evidence to be the perso whose nams is/ re subscribed to the within instrument and acknowledged to me that he/sh s executed the same in hislher heir authorized capacit ies' and that by his/her/6irlsignaturcs-y on the instrument the persons or the entity upon behaff of which the perso s) cted, executed the instrument. mw 1 certify under penalty of perjury under the laws of the State of California that the foregoing _ - palwaLU10 Zod ciarcect mw a ° 1111CHELLE A.SMIABY m= coffmisslon 0 1NIM ywwlc.ca�omia WITNESS my hand and official seal. a Hiveriii Courtly My Comm.=a mar 7,2014 r Place Notary seal Above ignature ot Nutary Public OPTIONAL UNIONS Though the information below is not required by law, it may prove valuable to persons relying on the document .�.+ and could prevent fraudulent removal and reattachment of this form to another document. Iwaiw CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ZZ ❑ Individual ❑ Corporate Officer Title(s) Title or Type of Document MENNEN ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney-In-Fact Number Of Pages ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Date Of Document Signer is representing: Name Of Person(s)Or Enfity(ies) Signer(s)Other Than Named Above ONTAffi0',RTI LFORD\304312.4 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of il,t'arsrrLCJC- n On a(O at7f before me, _y r.�GCP�e �1 Q�l blltil , /U 0 (^'G1/(� Y [{� �it G Date I ,�. . Here erl Nam and Tale of the Off r personally appeared — l LA M o4 "'M amels)of Signer(s) S who proved to me on the basis of satisfactory evidence to be the personoo whose name(O is/a�e subscribed to the o©� within instrument and acknowledged to me that m° he/s4&At)Ey executed the same in his/W/tlKir authorized m N� capacity(io), and that by his/h�%r signatureTA on the instrument the person(p'}, or the entity upon behalf of MARCEE MAUPIN which the person*acted, executed the instrument. Commission# 1806403 Notary Public-California I certify under PENALTY OF PERJURY under the laws Riverside County of the State of California that the foregoing paragraph is M Comm.Expires Ju013.2012 true and correct. WITNESS my hand and official seal. Signature Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons retying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: ©���aIN�t U eY1 CC►L* _ �.f e C rYt e11 'E Document Date: 64 ' LOI Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual rJ Individual r_1 Corporate Officer—Title(s): ❑Corporate Officer—Title(s): __1 Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General Attorney in Fact ❑Attorney in Fact wwwom ❑ Trustee Top of thumb here ❑Trustee Top of thumb here ❑ Guardian or Conservator ❑Guardian or Conservator U Other: ❑Other: Signer Is Representing: Signer Is Representing: 02007Natwal Notary Assooialion-9350 De Soto Ave..RO.Bm2402'Chalsworer,CA 91 31 3-2402-w .Natiore)Notary.org Item#5907 Perder:Cal Toll-Free 1-808-8766627