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Ordinance 2003-04 ORDINANCE NO. 2003-04 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GILROY APPROVING A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF GILROY AND NEWMAN DEVELOPMENT GROUP OF GILROY, LLC, FOR A REGIONAL SHOPPING CENTER PROJECT THE CITY COUNCIL OF THE CITY OF GILROY DOES HEREBY ORDAIN AS FOLLOWS: SECTION I. RECITALS A. Pursuant to the City of Gilroy's Resolution No. 2002-61 which sets forth the procedures and sets fees for the processing of a development agreement pursuant to California Government Code sections 65864 through 65869.5 ("State Law"), Newman Development Group of Gilroy, LLC, a California limited liability company ("Developer"), has requested a development agreement to govern construction of a multi-phase project consisting of the commercial and retail development of a regional shopping center known as the Pacheco Pass Center (the "Project"). B. A development agreement (the "Development Agreement") between the City of Gilroy and the Developer has been presented to and reviewed by the City Council. C. Pursuant to the California Environmental Quality Act ("CEQA"), a Mitigated Negative Declaration for the Project was adopted by the City Council in conjunction with tentative map application TM 01-02 on October 15, 2001, and a mitigation/monitoring program was adopted for TM 01-02 which covers the Project on November 5,2001, as set forth in Resolution No. 2001- 74. \NVH\584149.2 01-040103-04706076 -1- Ordinance No. 2003-04 D. A public hearing on the proposed Development Agreement was held before the Planning Commission on March 13, 2003, for which public notice was given as provided by law and at which all persons desiring to be heard were given an opportunity to be heard, and following the hearing, the Planning Commission recommended approval of it. E. A public hearing on the proposed Development Agreement was held before the City Council on March 17,2003, for which public notice was given as provided by law, and at which all persons desiring to be heard were given an opportunity to be heard. The City Council has duly considered all testimony received, both oral and written. SECTION ll. FINDINGS AND DETERMINATIONS Therefore, on the basis of the foregoing Recitals and the specific conclusions set forth below, the City Council finds and determines that: 1. The Development Agreement is consistent with the objectives, policies, general land uses and programs specified and contained in the City's General Plan. 2. The City has taken all steps required by State Law and by CEQA in order to approve the Development Agreement. SECTION III. APPROVAL The City Council hereby approves entering into the Development Agreement and authorizes the Mayor to execute the Development Agreement between the City of Gilroy and Newman Development Group of Gilroy LLC, a copy of which is attached hereto as Exhibit "A." \NVH\584149.2 01-040103-04706076 -2- Ordinance No. 2003-04 SECTION N. RECORDATION Within ten (10) days after the Development Agreement takes effect, the City Clerk shall submit the Agreement to the County Recorder for recordation. SECTION V. EFFECTNE DATE This ordinance shall take effect and be in full force thirty (30) days from and after its adoption, and on that same date, the Development Agreement shall take effect. PASSED AND ADOPTED this 21st day of April, 2003 by the following vote: AYES: COUNCILMEMBERS: DILLON, GARTMAN, VELASCO and SPRINGER PINHEIRO, NOES: COUNCILMEMBERS: ARELLANO, MORALES ABSENT: COUNCILMEMBERS: NONE APPROVED: Thomas W. Springer, Mayor ATIEST: J '\ ../ . I, . .' . /. ' l1,~/ ,~?' . \-,_--rV/~Z, t/..---L-e~UA'- , Rhonda Pellin, City Clerk \NVH\584149.2 OH40103,04706076 -3- Ordinance No. 2003-04 RECORDING REQUESTED BY AND WHEN RECORDED, RETURN TO: City of Gilroy 7351 Rosanna Street Gilroy, California 95020-6190 Attention: City Administrator DEVELOPMENT AGREEMENT BETWEEN CITY OF GILROY AND NEWMAN DEVELOPMENT GROUP OF GILROY, LLC Dated: April ,2003 13958:6316445.17 EXHIBIT A CITY OF GILROY DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT (the Agreement is made and entered into as of this __ day of April, 2003, by and between CITY OF GILROY, a California municipal corporation (City ), and NEWMAN DEVELOPMENT GROUP OF GILROY, LLC, a California limited liability company (NDG ). RECITALS: This Agreement is entered into on the basis of the following facts, understandings and intentions of the Parties: A. These Recitals refer to and utilize terms which are defined in this Agreement; and the Parties refer to those definitions in conjunction with their use in these Recitals. B. The Development Agreement Legislation authorizes City to enter into development agreements in connection with the development of real property within its jurisdiction. The Development Agreement Ordinance establishes the authority and procedure for review and approval of proposed development agreements by City. C. NDG owns or has rights to acquire the Property, and therefore has a sufficient legal interest to enter into a development agreement with City pursuant to the Development Agreement Legislation and Development Agreement Ordinance. D. NDG applied for approval of this Agreement in order to (i) vest the land use policies established in the General Plan and other Existing City Regulations as of the Adoption Date, and (ii) memorialize certain agreements made between City and NDG with respect to the City Financial Contribution. City and NDG acknowledge that development and 13958:6316445.17 construction of the Project is a large-scale undertaking involving major investments by NDG; Thus, certainty that the Project can be developed and used in accordance with the General Plan and other Existing City Regulations will benefit City and NDG and will provide the Parties certainty with respect to implementation of the policies set forth in the General Plan and the Project Approvals. E. City is willing to enter into this Agreement to (i) eliminate uncertainty in the comprehensive development and planning of the Project and the timing of the construction and occupancy of the Project; (ii) secure orderly development and progressive fiscal benefits for public services, improvements and facilities planning in City; (iii) meet the goals and objectives of the General Plan and the Project Approvals; and (iv) provide significant new retail uses in City which will add to the existing retail base within City and significantly enhance retail uses within City because of the types of Occupants which will lease and/or own space within the Project. F. Development of the Project in City will locate in City major retailers with a high profile in the shopping center industry and enhance both the image and stature of City. Furthermore, development of the Project will increase employment opportunities in City, leading to the production of increased revenues for City both through taxes paid by Occupants of the Project, as well as other fiscal benefits to City, such as sales taxes generated through retail sales at the Project, and property taxes that result from the enhancing effect that the Project has on real estate values in City. G. NDG has informed City that, however, in order for NDG to construct, develop, lease and/or sell space in the Project, NDG will require a financial contribution from City in order to make the Project financially feasible. Specifically, NDG has informed City that the cost and expense required of NDG 13958:6316445.17 -2- in order to design, install and construct the Public Improvements required by the Project Approvals that are not otherwise reimbursed by City would, if City does not make the City Financial Contribution, make the Project financially infeasible. In connection with NDGs request for the City Financial Contribution, NDG has informed City that the Occupants of the Project will generate substantial sales tax revenues to City and has supplied to City a Fiscal Revenue Analysis of the Project prepared by Sedway Group, dated July 25, 2002. Such Fiscal Revenue Analysis supports the conclusion that the Occupants of the Project will generate substantial sales tax revenues to City. In consideration of this sales tax revenue generation, City has agreed to make the City Financial Contribution, but on terms and conditions which will ensure that Occupants will occupy space in the Project and generate sales tax revenue. H. NDG has provided to City for review and approval by City the estimate of NDGs engineer of the projected cost of the Public Improvements. The City Engineer has reviewed such estimates and has determined that they are reasonable and that the City Financial Contribution will not exceed the cost to design, construct and install the Public Improvements. I. On March 13, 2003, after due review of and report on NDGs application for this Agreement by City staff, and consideration of all other evidence heard and submitted at a duly noticed public hearing held on March 13, 2003, pursuant to the Development Agreement Legislation and the Development Agreement Ordinance, the Planning Commission duly adopted its Resolution No. 2003-04, and (i) found and determined that consideration of this Agreement complies with the Final Mitigated Negative Declaration, and that this Agreement is consistent with the objectives, policies, land uses and programs specified in the General Plan and in the other Existing City Regulations pertaining thereto, and (ii) recommended that the City Council approve this Agreement based on the foregoing findings. 13958:6316445.17 -3- J. On March 17, 2003, the City Council held a duly noticed public hearing on this Agreement pursuant to the requirements of the Development Agreement Legislation and the Development Agreement Ordinance. After due review of and report on NDGs application for this Agreement by City staff, and consideration of the Planning Commissions recommendations thereon, and of all other evidence heard and submitted at such public hearing, the City Council introduced the Enacting Ordinance approving this Agreement, finding and determining in connection therewith that this Agreement is consistent with the objectives, policies, land uses and programs specified in the General Plan, and in the other Existing City Regulations pertaining thereto. On April 21, 2003, the City Council adopted the Enacting Ordinance enacting this Agreement. NOW, THEREFORE, pursuant to the authority contained in the Development Agreement Legislation and the Development Agreement Ordinance, and in consideration of the foregoing Recitals and the mutual covenants and promises of the Parties herein contained, the Parties agree as follows: ARTICLE I DEFINITIONS 1.1. Defined Terms. Each reference in this Agreement to any of the following terms shall have the meaning set forth below for each such term. Additional Conditions: Collectively, those Additional Conditions specified in Schedule I to this Agreement. Adoption Date: The date the City Council adopted the Enacting Ordinance enacting this Agreement. Affiliate: Any Person directly or indirectly controlled by, controlling, or under common control of, another Person; any Person resulting from the merger or consolidation of 13958:6316445.17 -4- a Person with another Person; any Person which acquires the controlling interest in the assets of another Person as a going concern; or any parent of a Person, any subsidiary of a Person, or any subsidiary of a parent of a Person, including, for purposes of the foregoing, any parent or subsidiary through one or more parents or subsidiaries owned or controlled by such parent or subsidiary. Applicable City Requlations: The Existing City Regulations and such other City Regulations otherwise applicable to development of the Project pursuant to the provisions of Section 3.2. Buildinq Group: Each Building Group designated as such on the Site Plan. CEQA: The California Environmental Quality Act (Public Resources Code Section 21000, et seq.) and the Guidelines thereunder (14 California Code of Regulations Section 15000, et. seq.) . Certificate of Occupancy: A certificate of occupancy issued by City pursuant to the Construction Codes upon due application by NDG following completion of the shell and core of each Building Group, sufficient to allow any relevant Occupant of any such Building Group pursuant to an Occupant Trans~er to occupy such Building Group for the purposes of completing its improvements in the interior of such space and stocking its store with merchandise, or sufficient to allow NDG or its Affiliates or contractors to construct improvements in the interior of such space on behalf of any Occupant. For purposes hereof, a Certificate of Occupancy shall include one or more such certificates of occupancy which may be required for occupancy of a Building Group for such purposes. City Application Fee: A fee levied or assessed by City to cover the reasonable cost of Citys performance of any discretionary, ministerial, clerical or other action, or required 13958:6316445.17 -5- by City for reviewing and processing applications for City Approvals, including City Application Fees for the Project Approvals and compliance with CEQA. City Approvals: The permits or approvals required under Applicable City Regulations in order to develop, use and operate the Project, or any portion thereof. City Development Fee: A fee or assessment, other than a City Application Fee, charged or required by City in connection with any City Approval to defray the cost of public services or facilities or imposed for a public purpose. City Fee: A City Application Fee and/or City Development Fee. City Financial Contribution: The waiver by City of City Development Fees, or a Qualified Portion of such City Development Fees pursuant to the provisions of Section 4.3 of this Agreement. The City Development Fees which are applicable to space in each Building Group and the amount of the City Development Fees payable for each such space are set forth in Exhibit A. City Requlations: The General Plan of City, and ordinances, resolutions, codes, rules, regulations and official policies of City, in effect as of the time in question, determined in accordance with the provisions of this Agreement. City Standards: The standards for the design, installation and construction of the Public Improvements under Existing City Regulations, including the Construction Codes under Existing City Regulations, as specified in Exhibit B. Construction Codes: The City Regulations pertaining to or imposing life safety, fire protection, mechanical, electrical and/or building integrity requirements with respect to the design and construction of buildings and improvements. 13958:6316445.17 -6- Dedicate: An irrevocable offer to make a dedication of land and/or improvements to City. Dedication: An Exaction comprised of land and/or improvements required to be Dedicated to City. Development Aqreement Leqislation: Government Code ~~65864-65859.5, authorizing City to enter into development agreements as therein set forth. Development Aqreement Ordinance: Resolution No. 2002-61, adopted by Citys City Council on August 5, 2002, establishing the authority and procedure for review and approval of proposed development agreements. Effective Date: The date that is thirty (30) days after the date the Enacting Ordinance was adopted by City Council. The Effective Date shall be extended, as necessary, by any referendum challenging this Agreement, the response of the City Council thereto, litigation filed challenging this Agreement, or similar events warranting such extension as City and NDG may so determine. Enactinq Ordinance: Ordinance No. 2003- , enacted by City Council on April 21, 2003, enacting this Agreement as an ordinance of City pursuant to Section 65867.5(a) of the Development Agreement Legislation. Exaction: An exaction (other than City Fees) , Dedication or reservation requirement, an obligation for on- or off-site improvements or construction of public improvements, or an obligation to provide services, in connection with the development of the Project. For purposes hereof, Exactions include mitigation measures imposed or adopted pursuant to CEQA. Existinq City Requlations: The City Regulations in effect as of the Adoption Date, including the Project Approvals. 13958:6316445.17 -7- Final Mitiqated Neqative Declaration: The final Mitigated Negative Declaration covering the Project, as described in Exhibit C. Force Maieure: A delay in the Project Development Schedule or the opening for business of an Occupant caused by reason of events beyond the reasonable control of a Party, including acts of God or civil commotion; riots, strikes, picketing, or other labor disputes; shortage of materials or supplies; damage to work in process by reason of fire, floods, earthquake, or other casualties; restrictions or delays imposed or mandated by Responsible Agencies; enactment of Laws which prevent or preclude compliance by a Party with any material provision of this Agreement; litigation brought by Persons other than a Party, or an Affiliate of a Party; acts (or failure to act when action is required) or neglect of another Party. Indemnify: An obligation of a Party to indemnify, defend, protect and hold the other Party, its officials, officers, employees, agents, stockholders, constituent partners and members of its boards and commissions, harmless from and against Losses. Laws: The Constitution and laws of the State, the Constitution of the United States, and any codes, statutes, regulations, or executive mandates thereunder, and any court decision, State or federal, thereunder. Losses: Claims, damages, liabilities, penalties, fines, causes of action, lawsuits and other proceedings, and costs and expenses in connection therewith, including reasonable attorneys fees. Mortqaqe: A mortgage or deed of trust, or other transaction, in which NDG or any Transferee conveys or pledges as security its interest in the Project, or a portion thereof, or interest therein, or any improvements thereon; or a sale and 13958:6316445.17 -8- leaseback arrangement, in which NDG or any Transferee sells and leases back concurrently therewith its interest in the Project, or a portion thereof, or interest therein, or improvements thereon. Mortqaqee: The holder of the beneficial interest under a Mortgage, or the owner of the Project, or interest therein, under a Mortgage, or any entity nominated by any such holder of a Mortgagee interest for the purposes of holding title to the Project or any portion thereof after a foreclosure, transfer in lieu of foreclosure, or termination of any sale leaseback arrangement after a default thereunder. Non-Tax Generatinq Entities: A Person which, due to the nature of its business or its status as a tax-exempt organization, would not generate substantial retail sales taxes or sold to City if space in the Project were leasedAto such Person. Examples of such Persons include religious facilities, public agencies, non-profit organizations, and medical or dental offices without significant accompanying retail sales. Occupants: Persons from time to time entitled to the use and occupancy of space within the Building Groups in the Project pursuant to Occupant Transfers. Reference to an Occupant shall refer to any or all of the Occupants of the Project, as the context may require. Occupant Transfer: Any transaction by which an Occupant becomes entitled to occupy and use space within a Building Group, including a lease agreement, or a transaction through which NDG transfers to an Occupant the fee title interest in a Building Group, or portion thereof, and/or a portion of the Property upon which a Building Group is, or will be, located. Any Occupant Transfer made by a lease agreement shall have a lease term of not less than five (5) years. Any transaction by which a Non-Tax Generating Entity or a Relocation Entity becomes an Occupant 13958:6316445.17 -9- shall not constitute an Occupant Transfer for any purpose under this Agreement. Party: City, and/or NDG, and NDGs Transferees, determined as of the time in question. Person: An individual, partnership, firm, association, corporation, trust, governmental agency, administrative tribunal or other form of business or legal entity. Phase IA: The Building Groups identified as numbers 1- 4 on the attached Site Plan. Phase IB: The Building Groups identified as numbers 5- 7 on the attached Site Plan. Phase II: The Building Groups identified as numbers 8- 15 on the attached Site Plan. proiect: The development, use and occupancy of buildings and other improvements on the Property pursuant to the Project Approvals. proiect Approvals: The City Approvals governing the Project in existence as of the date of this Agreement or enacted or obtained after the date of this Agreement, all as set forth in Exhibit C hereto, as the same may be amended from time to time during the Term. Reference in this Agreement to a particular Project Approval shall have the meaning ascribed to such Project Approval set forth in Exhibit C. proiect Development Schedule: The schedule for development of the Project prepared by NDG and approved by City as part of this Agreement attached hereto as Exhibit D. Property: The real property more particularly described in Exhibit E hereto, either currently owned or to be acquired by NDG. 13958:6316445.17 -10- Public Improvements: The off-site public improvements required to be designed, installed and constructed by NDG pursuant to the Project Approvals, which Public Improvements are listed in Exhibit F hereto, some of which are subject to reimbursement of the cost thereof by City, as shown on Exhibit F. Relocation Entity: A Person which, if space were or sold leased^to such Person in the Project, would result in the relocation of the business of such Person from an existing location in City and the closure by such Person of such existing business location. Responsible Aqencies: All governmental or quasi- governmental agencies (such as public utilities) having jurisdiction over, or the authority to regulate development of, the Project. Responsible Aqency Requlations: The Laws, ordinances, resolutions, codes, rules, regulations and official policies of Responsible Agencies in effect as of the time in question. Site Plan: The site plan for the shopping center comprised in the Project attached hereto as Exhibit G, as amended from time to time to reflect Project Approvals obtained after the date of this Agreement. State: The State of California and any department or agency acting on behalf of the State. Term: The term of this Agreement, determined as of the time in question pursuant to Article II below, unless sooner Terminated as provided in this Agreement. Terminate: The expiration of the Term of this Agreement, whether by the passage of time or by any earlier occurrence pursuant to any provision of this Agreement. 13958:6316445.17 -11- Transfer: The sale, assignment, lease, sublease, or other transfer by NDG of this Agreement, or any right, duty or obligation of NDG under this Agreement, made pursuant to the terms, standards and conditions of Article X of this Agreement, including by foreclosure, trustee sale, or deed in lieu of foreclosure, under a Mortgage, but excluding (i) a Dedication and (ii) a Mortgage, including a transfer or assignment of this Agreement to a Mortgagee as additional security under a Mortgage. Transferee: The Person to whom a Transfer is effected. 1.2. Certain Other Terms. Certain other terms shall have the meaning set forth for each such term in this Agreement. ARTICLE II EFFECTIVE DATE: TERM 2.1. Effective Date; Term Commencement. This Agreement shall be dated as of the Adoption Date; the rights, duties and obligations of the Parties hereunder shall be effective, and the Term shall commence, as of the Effective Date. NDG has previously executed and acknowledged this Agreement before adoption by the City Council of the Enacting Ordinance. Not later than thirty (30) days after the Effective Date, City, by and through its Mayor, shall execute and acknowledge this Agreement; and not later than ten (10) days after City's execution and acknowledgment of this Agreement, the City Clerk shall cause this Agreement to be recorded in the Official Records of the County of Santa Clara. 2.2. Expiration of Term. Unless sooner Terminated pursuant to the applicable provisions of this Agreement, the Term of this Agreement shall commence on the Adoption Date and shall continue for a period of five (5) full calendar years after the issuance of the last Certificate of Occupancy covering a Building Group in connection with the initial development of the Project, 13958:6316445.17 -12- unless sooner terminated as provided in this Development Agreement. 2.3. Subsequent Amendments or Termination. If the Parties amend, modify or Terminate this Agreement as herein provided or as otherwise provided in the Development Agreement Ordinance or if this Agreement is modified or Terminated pursuant to any provision hereof, then City Clerk shall, within ten (10) days after such action takes effect, cause an appropriate notice of such action to be recorded in the Official Records of the County of Santa Clara. 2.4. Extension by Aqreement. The term of this Agreement may be extended at any time before its Termination date by the mutual agreement of City and NDG by following the procedures for the extension of the term of the statutory development or the amendment of the terms of statutory development agreements which are provided for by the resolutions or ordinances of the City Council and by the Development Agreement Legislation. 2.5. Expiration of Term. Except for accrued obligations of a Party, upon expiration of the Term, this Agreement and all of the rights, duties and obligations of the Parties hereunder shall Terminate and be of no further force or effect. Expiration of the Term (including by Termination of this Agreement) shall not affect any right vested under Laws (absent this Agreement), or other rights arising from City Approvals granted by City for development of all or any portion of the Project. ARTICLE III GENERAL REGULATION OF DEVELOPMENT OF PROJECT 3.1. proiect Development; Control of Development. NDG shall have the right to develop the Project in accordance with the terms and conditions of this Agreement; and City shall 13958:6316445.17 -13- have the right to control development of the Project in accordance with the provisions of this Agreement. The Applicable City Regulations and this Agreement shall control the overall design, development and construction of the Project, and all on- and off-site improvements and appurtenances in connection therewith, in the manner specified in this Agreement. In the event of any inconsistency between the Applicable City Regulations and this Agreement, this Agreement shall control, except that if the inconsistency cannot be reconciled by application of this rule of construction, the provision which best gives effect to the purposes of this Agreement shall control. 3.2. Applicable City Requlations. Except as specifically provided in this Section 3.2 and Section 3.3, the Existing City Regulations shall govern the development of the Project and all subsequent City Approvals with respect to the Project. City shall have the right, in connection with any further City Approvals, to apply City Regulations as Applicable City Regulations only in accordance with the following terms, conditions and standards: 3.2.1. Future City Requlations. City shall have the right to apply City Regulations adopted by City or Agency after the Adoption Date only if such City Regulations (i) are not in any manner inconsistent or in conflict with the intent, purposes, terms, standards or conditions of this Agreement; (ii) do not in any manner change or modify the uses, height, density and intensity of development specified in the Existing City Regulations or this Agreement with respect to the Project, or do not change or modify, or interfere with, the timing, phasing, or rate of development of the Project; (iii) do not require any additional on-site or off-site public improvements to be constructed or paid for by NDG or any Transferee, subject, however, to the last sentence of this paragraph; and (iv) do not interfere with or diminish the ability of a Party to perform its obligations hereunder or expand, enlarge or accelerate NDGs 13958:6316445.17 -14- obligations hereunder. Notwithstanding the foregoing, in the event that the traffic study to assess the impact of any development that is the subject of a specific Architectural and Site approval application, proposed to be located in Phase II of the of the Project, shall conclude that due to the nature of the project described in such application, additional measures may be necessary in connection with the traffic impacts associated with such project, the foregoing will not preclude the City from requiring such measures. 3.2.2. Requlation for Health and Safety. Notwithstanding any other provisions of this Agreement, City shall have the right to apply City Regulations adopted by City after the Adoption Date, if such application (i) is otherwise permissible pursuant to Laws (other than the Development Agreement Legislation); (ii) is required to protect against a demonstrated threat to the physical health and safety of existing or future Occupants, or users of the Project, or any portion thereof or any lands immediately adjacent thereto; and (iii) is made in a manner that does not discriminate against NDG or the Project. 3.2.3. Construction Codes. Except for the Public Improvements governed by the City Standards and the standards of any Responsible Agency applicable to the Project pursuant to Section 4.2 below, City shall have the right to apply to the Project, as a ministerial act, the Construction Codes in effect at the time of the approval of any City Approval thereunder. All permits required under Construction Codes shall be issued by City after Citys review and approval of NDGs or an Occupants applications therefor, except that Citys review of the applications shall be limited to determining whether (i) the application is complete, and (ii) the application complies with the Construction Codes then in effect, the City Approvals and this Agreement. 13958:6316445.17 -15- 3.3. Review and processinq of City Approvals. City shall accept for processing, review and action, all applications for City Approvals with respect to the Project when and if the same are complete, as determined pursuant to Government Code Section 65940, et seq. Upon acceptance by City, such applications shall be reviewed and processed to completion in a reasonable time, with the overall goal of the Parties being to maintain the Project Development Schedule and allow Occupants to open for business in the Project including scheduling of all required public hearings, and processing and checking of all maps, plans, permits, building plans and specifications and other plans relating to development of the Project filed by NDG or an Occupant. In connection with any City Approval, City shall exercise its discretion or take action only in a manner which complies and is consistent with the standards, terms and conditions contained in this Agreement. 3.4. Effect of Aqreement. This Agreement constitutes a City Approval adopted pursuant to the Applicable City Regulations. 3.5. Other Governmental Approvals. NDG (or an Occupant) shall be responsible for complying with all Responsible Agency Regulations and Laws in connection with the development, use and operation of, or provision of services to, the Project. NDG (or an Occupant) shall be responsible for applying for and obtaining all approvals required from Responsible Agencies necessary for the development, use and operation of, or provision of services to, the Project. NDG (or an Occupant) shall undertake reasonable, diligent and good faith efforts to obtain all Responsible Agency Approvals in a timely fashion. City shall cooperate with NDG and any Occupant in such endeavors upon request made for such cooperation but without cost to City. 3.6. Effect of Termination. Upon Termination of this Agreement pursuant to Article VI, City shall retain any and all benefits, including money or land, previously received by 13958:6316445.17 -16- City as of the date of Termination under or in connection with this Agreement. No Termination of this Agreement shall prevent NDG or an Occupant from completing and occupying buildings or other improvements authorized pursuant to valid building permits previously approved by City or under construction at the time of Termination, but City may take any action permitted by Laws or City Regulations to prevent, stop or correct any violation of Laws or City Regulations occurring during and after construction. No Termination of this Agreement shall affect any accrued obligation of either Party under this Agreement to payor refund money to the other Party. 3.7. Operatinq Memoranda. The provisions of this Agreement require a close degree of cooperation between City and NDG, and refinements and further development of the Project may demonstrate that clarifications with respect to the details of performance of City and NDG or minor revisions to the Project are appropriate. If and when, from time to time, during the term of this Agreement, City and NDG agree that such clarifications or minor modifications are necessary or appropriate, they shall effectuate such clarifications through operating memoranda approved by City and NDG, which, after execution, shall be attached to and become a part of this Agreement. No such operating memoranda shall constitute an amendment to this Agreement requiring public notice or hearing. The City Attorney shall be authorized to make the determination whether a requested clarification may be effectuated pursuant to this Section 3.7 or whether the requested clarification is of such a character to require an amendment hereof pursuant to Article XI below. The Parties acknowledge that modifications which would be categorized as exempt under CEQA, or which, after an initial study made pursuant to CEQA, City determines do not require any further environmental review, or do not increase the density or intensity of use or the maximum height, bulk, size or architectural style of proposed buildings within the Property, may be effectuated through operating memoranda pursuant to this Section 3.7. The 13958:6316445.17 -17- City Manager may execute any operating memoranda hereunder without City Council action. ARTICLE IV SPECIFIC CRITERIA AND OBLIGATIONS APPLICABLE TO DEVELOPMENT OF PROJECT 4.1. Riqht to Develop; Requirement to Develop proiect in Accordance with proiect Development Schedule. City acknowledges that, subject to receiving any further required City Approvals subject to the standards and provisions of this Agreement, NDG may proceed with the development, construction, use and occupancy of the Project as a matter of right under this Agreement. NDG shall develop the Project (including the Public Improvements) in accordance with the Project Development Schedule such that, subject to Force Majeure, Occupants begin to generate sales tax revenues in appropriate and reasonable relationship to the timing and making of the City Financial Contribution pursuant to Section 4.3 below. Any date specified in the Project Development Schedule shall, however, be extended by any Force Majeure delay for the duration of any such Force Majeure delay. Without limiting the foregoing, the parties acknowledge that the Santa Clara Valley Transportation Authority (VTA ) will make certain improvements to Highway 152 that are more fully described in the Project Approvals, and which are necessary for the development of the Project (the VTA Improvements ). Failure of the VTA to complete the VTA Improvements may delay the completion of Phase II. The Parties anticipate that the VTA Improvements will be completed by April, 2004 (the VTA Completion Date ). City and NDG will meet and revise the Project Schedule and make an amendment thereto that shall take into account any reasonable delay in completion of Phase II resulting from the failure of VTA to complete the VTA Improvements by the VTA Completion Date. 4.2. Construction of Public Improvements. NDG shall be solely responsible to design, install and construct the Public 13958:6316445.17 -18- Improvements at NDGs sole cost and expense, provided City has agreed to reimburse NDG for the cost of those Public Improvements listed on Exhibit F as being subject to reimbursement by City in accordance with City policies regarding such reimbursements. NDG shall design, install and construct the Public Improvements in accordance with the City Standards. Prior to commencing construction of the Public Improvements, NDG shall enter into one or more improvement agreements with performance and payment security in accordance with the requirements of the City Approvals and Applicable City Regulations. Unless otherwise required by Responsible Agencies under Responsible Agency Regulations, which requirements become part of the City Approvals, City shall impose no requirements in addition to, or more stringent than, the strictest among any standards specified by (a) the City Standards, (b) the standards of any Responsible Agency applicable to the Project, or the (c) Additional Conditions. Promptly upon completion of any of the Public Improvements, NDG shall Dedicate such Public Improvements to City or the Responsible Agency having jurisdiction. City and NDG acknowledge that in each case where Exhibit F designates Public Improvements that are to be reimbursed to NDG by City, City has agreed to reimburse NDG only for those Public Improvements that are of the nature that would normally be paid by the public or City and not NDG in connection with the development of a project such as the Project. 4.2.1. Additional Conditions. Notwithstanding anything contained in the City Approvals, NDG agrees to comply with the Additional Conditions in connection with the construction of the Project. 4.3. Terms of City Financial Contribution. The City Financial Contribution shall be made by City in accordance with the terms and conditions of this Section 4.3. 13958:6316445.17 -19- 4.3.1. Deferral of Payment of City Development Fees. Notwithstanding anything to the contrary contained in the Applicable City Regulations, no City Development Fee comprised in the City Financial Contribution shall be due or payable by NDG for space contained in any Building Group developed by NDG in the Project unless and until NDG has applied for and City is prepared to issue, a Certificate of Occupancy for such Building Group. Concurrently with making an application for a Certificat~ of Occupancy for a Building Group or any space therein, NDG shall supply to City evidence of any Occupant Transfers in effect for the space in such Building Group to be occupied by Occupants. S~ch application shall be accompanied by a writing that shall set forth the total gross leaseable or useable area in any such Building Group intended to be occupied by Occupants, and the leaseable or useable area of any such Building Group covered by Occupant Transfers, and the party to whom all or any portion of any City Development Fees paid by City pursuant to this Section 4.3 shall be paid, which party shall be either NDG or any Transferee who has assumed NDGs obligations under Section 10.2 hereof. If NDG submits evidence of one (1) or more Occupant Transfers covering all of the leaseable or useablespace in any relevant Building Group, then NDG shall have no obligation to pay City Development Fees applicable to such space, and City shall forever waive and relinquish its right to collect such City Development Fees. Alternatively, if the party otherwise obligated to pay such City Development Fees shall be an Occupant pursuant to an Occupant Transfer, NDG may elect to cause such fees to be paid by such Occupant upon issuance of the relevant Certificate of Occupancy, and may request that the City refund the relevant City Development Fees to NDG, or to such party as NDG may designate, upon satisfaction of the foregoing condition. If, at the time NDG or its successor Occupant makes application fora Certificate of Occupancy for a Building Group or space therein, NDG does not so provide evidence of an Occupant Transfer covering the space in such Building Group, then NDG or any other party obligated to pay such City Development Fees shall pay to 13958:6316445.17 -20- City the City Development Fees, based on the proportion that the amount of useable or leaseable area in such Building Group that is not covered by Occupant Transfers bears, at the time of such application, to the total leaseable or useable area in such Building Group, concurrently with issuance by City of the Certificate of Occupancy for the affected space in such Building Group. In the event that NDG, after making such payment provides to City evidence of one (1) or more Occupant Transfers for any leaseable or useable areas in such Building Group for which NDG or any Occupant pursuant to an Occupant Transfer has paid City Development Fees hereunder, that are completed within one hundred eighty (180) days after issuance by City of such Certificate of Occupancy and within two-hundred-forty (240) days after the issuance by City of such Certificate of Occupancy, the Occupant to which the Occupant Transfer has been effected opens for business in its space in the affected Building Group, then within thirty (30) days after the date such Occupant first opens for business in such space, City shall pay to NDG or the party designated by NDG any City Development Fees previously paid and attributable to the relevant space covered by such subsequent Occupant Transfers, in such Building Group, and such City Development Fees shall be deemed waived and relinquished by City with respect to the relevant space covered by such Occupant Transfers, pursuant to this Section 4.3.1. To the extent that NDG fails to meet the requirements for Occupant Transfers covering all of the useable or leaseable space in a Building Group under this Section 4.3.1, then City shall thereupon have no obligation to waive and relinquish City Development Fees with respect to any useable or leaseable space in such Building Group that remains not subject to Occupant Transfers that qualify for a refund of City Development Fees hereunder, and neither NDG nor any Occupant of the relevant Building Group shall thereupon have any further right for the City Financial Contribution with respect to any such space that does not become subject to qualifying Occupant Transfers or otherwise satisfy the conditions 13958:6316445.17 -21- for a return of any portion of the City Development Fees in the relevant period. 4.3.2. Non-Tax Generatinq Entity and Relocation Entity Transfers. If NDG effectuates an Occupant Transfer to a Non-Tax Generating Entity and/or a Relocation Entity, NDG shall not be entitled to any City Financial Contribution on account of such Occupant Transfer, and any City Development Fees payable by NDG with respect to the space to be occupied by such Non-Tax Generating Entity or Relocation Entity shall be fully due and owing by NDG upon issuance of the Certificate of Occupancy covering the relevant Building Group. 4.3.3. City Development Fees. The City Development Fees payable by NDG with respect to space in Building Groups and the Project are listed on Exhibit A, which City Development Fees have been calculated based on the square footage of space in each Building Group and the Project shown on the Site Plan. If the square footage of space in a Building Group is, when constructed, greater or lesser than the s.quare footage of space shown on the Site Plan for such Building Group, then the amount of City Development Fees payable by NDG with respect to space in such Building Group shall be adjusted on a per square foot basis to reflect the actual square footage of space contained in such Building Group. No other City Development Fees shall be imposed by City, other than those specified in Exhibit A. City shall not increase the amount of the City Development Fees as specified in Exhibit A, and NDGs obligation for City Development Fees to the extent payable by NDG pursuant to this Section 4.3 shall not be increased above the amount for each City Development Fee specified in Exhibit A hereto. 4.3.4. No Effect on Obliqation to Desiqn, Install and Construct Public Improvements. Notwithstanding that NDG may pay City Development Fees with respect to space in one or more Building Groups pursuant to Section 4.3.1 above, NDG shall remain 13958:6316445.17 -22- fully obligated to design, install and-construct the Public Improvements at its sole cost and expense pursuant to Section 4.2 above. Nothing in this Section 4.3 shall otherwise relieve NDG of such obligation under Section 4.2. 4.3.5. prevailinq Waqe Requirement. NDG understands that the payment by City of the City Financial Contribution under this Section 4.3 may require that the design, installation, and construction of the Public Improvements be accomplished by payment of prevailing wage in accordance with applicable requirements of State Laws. NDG further understands that City has no responsibility to ensure compliance with such Laws and that NDG is solely responsible to ensure that such Laws have been complied with. In addition, NDG understands that City, by providing the City Financial Contribution under this Agreement, has assumed no responsibility whatsoever (direct, indirect, implied or express) for paying any cost or expense in connection with the design, installation or construction of the Public Improvements, other than any reimbursement obligation previously agreed by City and listed on Exhibit F, and that the responsibility for payment thereof is solely the responsibility of NDG. Subject to the foregoing provisions, the Parties acknowledge that they have concluded, based on NDG's estimate of NDG's engineer of the projected cost of the Public Improvements, that the City Financial Contribution will not exceed the cost to design, construct and install the Public Improvements. 4.4. Reasonable Efforts to Lease to Tax Generatinq Occupants. NDG understands and acknowledges that Citys willingness to provide the City Financial Contribution pursuant to Section 4.3 above is based on Citys expectation that NDGs Project will generate substantial retail sales tax revenues. To this end, NDG shall use commercially reasonable, good faith efforts to effectuate Occupant Transfers to Occupants which will generate high taxable sales, taking into account customary and usual standards for leasing and/or selling space and/or property 13958:6316445.17 -23- in similar shopping centers, such as appropriate tenant mix and balance, mix of retail and other uses and categories, return on investment, and similar criteria. City acknowledges that NDG cannot, and does not, guarantee that the Project will in fact generate the highest sales tax revenues, but the Parties mutual expectation is that substantial sales tax revenues will be generated by the Project. 4.5. Vacation of a Portion of Renz Lane. City acknowledges that the Project and the Public Improvements require that a portion of the existing Renz Lane be vacated and abandoned by City (the Vacated Portion ), with title to the Vacated Portion reverting to the owner of the underlying Property. Concurrently with processing of a final parcel map covering the affected area, the City shall commence and conduct proceedings to vacate the Vacated Portion in accordance with its policies and procedures. Nothing in this Section 4.5 is intended, however, to iimit the discretion of City to take appropriate legislative action pursuant to the proceedings to vacate the Vacated Portion under California Streets and Highways Code Section 8320, et ~ It is contemplated that the City Councils approval of the final parcel map, consideration of the vacation, and approval of the Phase IA improvements would all occur at the same City Council meeting. Citys vacation of the Vacated Portion may be subject to such exceptions, Dedications, reservations and easements and/or other reserved rights as may be customary in connection with such proceedings, or contained in any resolution of vacation, or otherwise consistent with the Project Approvals (including the above-referenced final parcel map) that may be in place at the time of such vacation, including, without limitation, one or more irrevocable offers of Dedication covering Citys rights in and to any and all public utility improvements or facilities currently located under or on the Vacated Portion, together with rights of entry, as well as reasonable reserved rights in favor of the City for the purposes of the construction of certain frontage improvements along Highway 152. 13958:6316445.17 -24- ARTICLE V INDEMNITY 5.1. NDG Indemnity. 5.1.1. NDGs Indemnity. NDG shall Indemnify City from any Losses arising out of or in connection with any litigation or other proceeding initiated by a third Person challenging any City Approval (including this Agreement). NDG's obligation to Indemnify City under this Section 5.1 shall include the obligation to Indemnify for any claim that any work performed by NDG is subject to prevailing wage requirements under Laws and the obligation to Indemnify City for costs incurred by City Staff and the City Attorney in connection with any such litigation or other proceeding. The Parties shall cooperate in defending any such litigation or other proceeding. City shall have the right to employ its own counsel in such litigation or other proceeding and NDG's obligation to Indemnify City under this Section 5.1 shall include all fees and costs incurred by City for City'S counsel. In no event shall City be required to bear the fees or costs of NDGls counsel in any such litigation or other proceeding. The Parties acknowledge that this Section 5.1 constitutes a separate agreement entered into concurrently with this Agreement, and that if any other provision of this Agreement or the Agreement as a whole is invalidated, rendered null or set aside by a court of competent jurisdiction as a result of any such litigation or other proceeding, the Parties shall nevertheless be bound by the terms of this Section 5.1, which shall survive such invalidation, nullification or setting aside by such court 5.1.2. Defense of Leqal Action. In furtherance of the foregoing, in the event of a legal action by a third party challenging the validity, interpretation, or effectiveness of all or any part of this Agreement or contesting any alleged actions or omissions of the City relating to, or forming part of, the 13958:6316445.17 -25- enactment of the ordinance adopting this Agreement, if City elects to defend such action, or if NDG requests that the City defend such action within five (5) days after City notifies NDG of such legal action, City will exert reasonable efforts to defend such action. Upon becoming aware of such legal action, City shall have the right to submit a demand for a deposit, in an amount to be determined by City, toward costs to be incurred by City in connection with such action, including, without limitation, staff time and all court costs, litigation expenses, and attorneys fees (hereinafter Litigation Costs ). Said deposit, as well as reimbursement for all Litigation Costs incurred by City in connection with such action, shall be paid by NDG within ten (10) days after written demand. If the City seeks reimbursement of any Litigation Costs, City shall provide reasonably detailed invoices of such Litigation Costs promptly after written request by NDG. City shall have the right from time to time to reasonably estimate the amount it expects to incur in connection with such action, and to demand from NDG an additional deposit for such amounts, which additional deposit shall be paid to the City within ten (10) days after written demand. Upon the final conclusion of such action, any unused deposit provided by NDG shall be returned to NDG. Nothing contained herein shall be construed to limit the discretion of City, in the interest of the public welfare, to settle, defend or appeal, or to decline settlement or to terminate or forego defense or appeal of, such legal action. In no event shall City be required to continue litigation, although City shall have the right to do so, in the event NDG fails to pay any amounts owing to the City pursuant to this Section within the time required by this Section. In no event shall City have any obligation or liability to NDG in connection with Citys defense of such action, including without limitation the outcome thereof, or in the event the City elects not to defend such action or terminates said defense. 13958:6316445.17 -26- 5.2. Insurance. Until full and final completion of the Public Improvements pursuant to Article IV above, NDG shall maintain in effect (i) a policy of commercial general liability insurance with a combined single limit of not less than $5,000,000.00 per occurrence and general aggregate, and (ii) Workers' Compensation Insurance covering all individuals employed by NDG for work at the Project site or on the Public Improvements, with coverage in the minimum amount required by Laws. NDG shall also cause each general contractor and subcontractor performing work at the Project site or on the Pubic Improvements to carry Workers' Compensation Insurance with coverage of at least the minimum amount required by Laws. NDG's commercial general liability insurance under clause (i) above shall name City, its elected and appointed boards, commissions: officers, agents and employees, as additional insureds, and shall include either a severability of interest clause or cross- liability endorsement. NDG shall furnish City certificates of insurance evidencing that NDG's insurance required to be carried under clauses (i) and (ii) above is in effect and providing that City shall receive at least thirty (30) days prior written notice of the cancellation or reduction in coverage of any insurance policy issued pursuant to clauses (i) or (ii) above. ARTICLE VI ANNUAL REVIEW OF COMPLIANCE 6.1. Annual Review. City and NDG may annually review this Agreement, and all actions taken pursuant to the terms of this Agreement with respect to the Project, in accordance with the provisions of Section 65865.1 of the Development Agreement Legislation, Section 6 of the Development Agreement Ordinance, and this Article VI. 6.2. NDGs Submittal. Promptly after receipt from City of any decision to undertake an annual review under this Article VI, NDG shall submit a report to the City Administrator 13958:6316445.17 -27- describing NDGs good faith substantial compliance with the terms of this Agreement during the preceding year. Such report shall include a statement that the report is submitted to City pursuant to the requirements of Section 65865.1 of the Development Agreement Legislation and Section 6 of the Development Agreement Ordinance. 6.3. Findinq of Compliance. Within thirty (30) days after NDG submits its report hereunder, the City Administrator shall review NDGs submission to ascertain whether NDG has demonstrated good faith substantial compliance with the terms of this Agreement. If the City Administrator finds and determines that NDG has in good faith substantially complied with the terms of this Agreement or does not determine otherwise within thirty (30) days after delivery of NDGs report under Section 6.2 above, the annual review shall be deemed concluded. If the City Administrator initially determines that such report is inadequate in any respect, he or she shall provide written notice to that effect to NDG, and NDG may supply such additional information or evidence as may be necessary to demonstrate good faith substantial compliance with the terms of this Agreement. If the City Administrator concludes that NDG has not demonstrated good faith substantial compliance with the terms of this Agreement, he or she shall so notify NDG prior to the expiration of the 30-day period herein specified and prepare a staff report to the City Council with respect to the City Administrators conclusions and the contentions of NDG with respect thereto. 6.4. Hearinq Before City Council to Determine Compliance. After submission of the City Administrators staff report, the City Council shall conduct a noticed public hearing pursuant to Section 6 of the Development Agreement Ordinance to determine the good faith substantial compliance by NDG with the terms of this Agreement. At least five (5) business days prior to such hearing, the City Administrator shall provide to the City Council, NDG and to all other interested Persons requesting the same, copies of all staff reports and other information 13958:6316445.17 -28- concerning NDGs good faith, substantial compliance with the terms of this Agreement and the conclusions and recommendations of the City Administrator. At such hearing, NDG and any other interested Person shall be entitled to submit evidence, orally or in writing, and address all the issues raised in the staff report on, or with respect or germane to the issue of, NDGs good faith substantial compliance with this Agreement. If, after receipt of any written or oral response of NDG, and after considering all of the evidence at such public hearing, the City Council finds and determines, on the basis of substantial evidence, that NDG has not substantially complied in good faith with the terms and conditions of this Agreement, then the City Council shall specify to NDG the respects in which NDG has failed to comply, and shall also specify a reasonable time for NDG to meet the terms of compliance, which time shall be not less than thirty (30) days and shall be reasonably related to the time necessary adequately to bring NDGs performance into good faith substantial compliance with the terms of this Agreement. If the areas of noncompliance specified by the City Council are not corrected within the time limits prescribed by the City Council hereunder, then the City Council may by subsequent action extend the time for compliance for such period as the City Council may determine (with conditions, if deemed appropriate), Terminate or modify this Agreement, or take such other actions as may be specified in the Development Agreement Legislation and the Development Agreement Ordinance. Any notice to NDG of a determination of noncompliance by NDG hereunder, or of a failure by NDG to perfect the areas of noncompliance hereunder, shall specify in reasonable detail, the grounds therefor, and a summary of the facts demonstrating such noncompliance or failure, so that NDG may address the issues raised in the notice of noncompliance or failure on a point-by- point basis in any hearing held by the City Council hereunder. 6.5. Certificate of Compliance. If the City Administrator (or the City Council, if applicable) finds good faith substantial compliance by NDG with the terms of this 13958:6316445.17 -29- Agreement, the City Administrator shall promptly after written request by NDG issue a certificate of compliance within ten (10) days thereafter, certifying NDGs good faith compliance with the terms of this Agreement through the period of the applicable annual review. Such certificate of compliance shall be in recordable form and shall contain such information as may be necessary in order to impart constructive record notice of the finding of good faith compliance hereunder. NDG shall have the right to record the certificate of compliance in the Official Records of the County of Santa Clara. ARTICLE VII PERMITTED DELAYS; SUPERSEDURE BY SUBSEQUENT LAWS 7.1. Permitted Delays. Performance by a Party of its obligations hereunder shall be excused during, and extended for a period of time equal to, any period of Force Majeure delay. Performance by a Party of its obligations under this Agreement shall be excused during, and extended on account of, a Force ~..~ Majeure delay under this Section 7.1 for the period for which the cause of such permitted delay is in effect. 7.2. Supersedure by SubseQUent Laws. 7.2.1. Effect of Conflictinq Law. If any Law made or enacted after the Effective Date prevents or precludes compliance with one or more provisions of this Agreement, or any provision or condition of approval contained in any other City Approval, or requires changes in any of the plans, maps or permits encompassed within the City Approvals, then upon request of either Party after enactment of any such new Law, the Parties shall meet and confer in good faith in a reasonable attempt to modify or suspend this Agreement to comply with such Law. Any such modification or suspension of this Agreement shall be effective only if approved by the City Council. If such modification or suspension is deemed infeasible in NDG's reasonable business judgment, then NDG may elect either (i) to 13958:6316445.17 -30- Terminate this Agreement by written notice to City, or (ii) to contest such Law pursuant to Section 7.2.2 below. The effect of any Termination pursuant to clause (i) above shall be governed by the provisions of Section 3.6 above. 7.2.2. Contest of New Law. Either Party shall have the right to contest the Law preventing compliance with the terms of this Agreement, any City Approval, or any plans, maps or permits thereunder and, in the event such challenge is successful, this Agreement shall remain unmodified and in full force and effect. ARTICLE VIII EVENTS OF DEFAULT; REMEDIES; ATTORNEYS' FEES; CERTIFICATES 8.1. Events of Default. Subject to the provisions of Articles VI and VII, any failure by a Party to perform any material term or provision of this Agreement shall constitute an Event of Default (i) if such defaulting Party does not cure such failure within thirty (30) days following notice of default from the other Party, where such failure is of a nature that it can be cured within such 3D-day period, or (ii) if such failure is not of a nature which can be cured within such 30-day period, the defaulting Party does not within such 3D-day period commence substantial efforts to cure such failure, or thereafter does not within a reasonable time prosecute to completion with diligence and continuity the curing of such failure. Any notice of an Event of Default given hereunder shall specify in reasonable detail the nature of the failures in performance which the noticing party claims constitute the Event of Default and the manner in which such Event of Default may be satisfactorily cured in accordance with the terms and conditions of this Agreement. Proceedings under Article VI or VII shall be governed exclusively by the provisions of those Articles and not by the provisions of this Article VIII. 8.2. Remedies. 13958:6316445.17 -31- 8.2.1. Specific Performance. Except as otherwise specifically provided in this Section 8.2, upon the occurrence of an Event of Default, each Party shall have the right, in addition to all other rights and remedies available under this Agreement, to (i) bring any proceeding in the nature of specific performance, injunctive relief or mandamus, and/or (ii) bring any action at law or in equity as may be permitted by Laws or this Agreement. Notwithstanding the foregoing, neither Party shall have the right to any monetary damages (whether direct, consequential or otherwise) on account of any Event of Default of a Party under this Agreement, claims of breach of contract related to this Agreement, or claims in the nature of tort related to this Agreement (such as fraud in the inducement), except that a Party shall have the right to bring an action at law against the other Party for the breach by such other Party of an obligation of such other Party for the payment of money under this Agreement. The Parties intend, by the provisions of this Section 8.2, that neither Party shall have any liability for damages arising out of an Event of Default under this Agreement, except for the right to bring an action to enforce an obligation of a Party to pay monies due under this Agreement as specifically provided in this Section 8.2. Accordingly, except for the right to enforce such monetary obligations, each Party hereby waives, releases and relinquishes, after full and complete advice by counsel chosen by each Party, such Party's right to any claim or right to damages on account of an Event of Default of a Party under this Agreement. The Parties acknowledge that monetary damages and remedies at law generally are inadequate upon the occurrence of an Event of Default. Therefore, specific performance or other extraordinary equitable relief (such as injunction) is an appropriate remedy for the enforcement of this Agreement, other remedies at law being inadequate under all the circumstances pertaining as of the date of this Agreement and any such equitable remedy shall be available to the Parties. The Parties acknowledge that neither Party would have entered into 13958:6316445.17 -32- this Agreement but for the limitations on monetary damages and the acknowledgments and waivers contained in this Section 8.2. 8.2.2. Limitation on Remedv. Notwithstanding the foregoing, the Parties do not intend that the equitable relief contemplated hereby shall include, nor shall City be entitled to bring an action that shall purport to require NDG or any owner of any portion of the Project constituting Phase II to complete development of the Project, or require NDG to acquire any portion of the property containing the Project that is not owned by NDG on the date of this Agreement, if NDG shall reasonably determine that such continued development of the Project is economically infeasible or if NDG determines not to acquire such property. If an Event of Default occurs under this Agreement as a result of NDGs or such owners refusal to develop the Project according to the Project Development Schedule for the foregoing reasons, the City may Terminate this Development Agreement under Article 6, with respect to any portions of the Project that have not been constructed as of the date such Event of Default occurs, subject, however, to Section 10.5 hereof, if any portion of the Project has been the subject of a Transfer. 8.3. Waiver; Remedies Cumulative. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party, irrespective of the length of time for which such failure continues, shall not constitute a waiver of such partys right to demand strict compliance by such other Party in the future. No waiver by a Party of an Event of Default shall be effective or binding upon such Party unless made in writing by such Party, and no such waiver shall be implied from any omission by a Party to take any action with respect to such Event of Default. No express written waiver of any Event of Default shall affect any other Event of Default, or cover any other period of time, other than any Event of Default and/or period of time specified in such express waiver. One or more written waivers of an Event of Default under any provision of this Agreement shall not be deemed to be a 13958:6316445.17 -33- waiver of any subsequent Event of Default, and the performance of the same or any other term or provision contained in this Agreement. 8.4. Litiqation Expenses. If a Party brings an action or proceeding (including any cross-complaint, counterclaim, or third-party claim) against the other Party by reason of an Event of Default, the prevailing Party in such action or proceeding shall be entitled to its costs and expenses, including reasonable attorneys fees and attorneys fees on any appeal. 8.5. Limitations on Actions. Unless otherwise provided by Laws, any action by any third Person to attack, review, set aside, void or annul any action or decision taken by a Party under this Agreement shall not be maintained by such Person unless such action or proceeding is commenced within ninety (90) days after the date such decision or action is made or taken hereunder. 8.6. Estoppel Certificate. Either Party may, at any time, and from time to time, deliver written notice to the other Party requesting such other Party to certify in writing that (i) this Agreement is in full force and effect and a binding obligation of the Parties, (ii) this Agreement has not been amended or modified either orally or in writing, and if so amended, identifying the amendments, and (iii) to the knowledge of such other Party, no Party has committed an Event of Default under this Agreement, or if an Event of Default has to such other partys knowledge occurred, to describe the nature of any such Event of Default. A Party receiving a request hereunder shall execute and return such certificate within twenty (20) days following the receipt thereof. The City Administrator, as to City, shall execute certificates requested by NDG hereunder. Each Party acknowledges that a certificate hereunder may be relied upon by Transferees and Mortgagees. No Party shall, however, be liable to the requesting Party, or third Person 13958:6316445.17 -34- requesting or receiving a certificate hereunder, on account of any information therein contained, notwithstanding the omission for any reason to disclose correct and/or relevant information, but such Party shall be estopped with respect to the requesting Party, or such third Person, from asserting any right or obligation, or utilizing any defense, which contravenes or is contrary to any such information. 8.7. Nonliability of Officials and Employees of City. No member, official or employee of City shall be personally liable to NDG in the event of any Event of Default by City or for any amount which may become due to NDG, or for any obligations under the terms of this Agreement, or for any claims of breach of contract related to this Agreement, or for any claims in the nature of tort related to this Agreement (such as fraud in the inducement). NDG hereby waives and releases any claim it may have against the members, officials or employees of City with respect to any Event of Default by City or for any amount which may become due to NDG, or on any obligations under the terms of this Agreement 8.8. Nonliability of Members and Other Individuals Affiliated with NDG. No member or employee of NDG shall be personally liable to City in the event of any Event of Default by NDG or for any amount which may become due to City, or for any obligations under the terms of this Agreement, or for any claims of breach of contract related to this Agreement, or for any claims in the nature of tort related to this Agreement (such as fraud in the inducement). City hereby waives and releases any claim it may have against the members or employees of NDG with respect to any Event of Default by NDG or for any amount which may become due to City, or for any obligations of NDG under the terms of this Agreement. 13958:6316445.17 -35- ARTICLE IX MORTGAGEE PROTECTION; CERTAIN RIGHTS OF CURE 9.1. Mortqaqee Protection. This Agreement shall be superior and senior to the lien of any Mortgage encumbering any interest in the Project. Notwithstanding the foregoing, no Event of Default shall defeat, render invalid, diminish or impair the lien of any Mortgage made for value, but, subject to the provisions of Section 9.2 below, all of the terms and conditions contained in this Agreement shall be binding upon and effective against any Person (including any Mortgagee) who acquires title to the Project, or any portion thereof or interest therein or improvement thereon, by foreclosure, trustees sale, deed in lieu of foreclosure, or termination of the Mortgage. 9.2. Mortqaqee Not Obliqated; Mortqaqee as Transferee. No Mortgagee shall have any obligation or duty under this Agreement, except that nothing contained in this Agreement shall be deemed to permit or authorize any Mortgagee to undertake any new construction or improvement project, or to otherwise have the benefit of any rights of NDG, or to enforce any obligation of City under this Agreement, unless and until such Mortgagee has become a Transferee in the manner specified in Article X below. In the event a Mortgagee takes possession of the Property but elects not to become a Transferee and complete the Project in accordance with the applicable provisions of this Agreement, then NDG or any Occupant which has received a City Financial Contribution shall be obligated to reimburse City, but only to the extent of the benefit received by any of them, for any portion of the City Financial Contribution, if any, paid to NDG relating to the Building Groups acquired or possessed by such Mortgagee pursuant to Section 4.3, as of the date such Mortgagee so elects by written notice to City, if the conditions to payment of such City Financial Contribution are never satisfied. 13958:6316445.17 -36- 9.3. Notice of Default to Mortqaqee; Riqht of Mortqaqee to Cure. If City receives notice from a Mortgagee r~questing a copy of any notice of an Event of Default given NDG hereunder and specifying the address for service thereof, then City shall deliver to such Mortgagee, concurrently with service thereon to NDG, any notice given to NDG with respect to any claim by City that NDG has committed an Event of Default. If City makes a determination of noncompliance under Article VI above, City shall likewise serve notice of such noncompliance on such Mortgagee concurrently with service thereof on NDG. Such Mortgagee shall have the right (but not the obligation) to cure or remedy, or to commence to cure or remedy, the Event of Default claimed or the areas of noncompliance set forth in Citys notice within the applicable time periods for cure specified in this Agreement. If, however, the Event of Default or such noncompliance is of a nature which can only be remedied or cured by such Mortgagee upon obtaining possession of the Project, or portion thereof, if such Mortgagee shall elect to cure such Event of Default, such Mortgagee shall seek to obtain possession with diligence and continuity through a receiver or otherwise, and shall thereafter remedy or cure the Event of Default or noncompliance as soon as reasonably possible after obtaining possession. So long as such Mortgagee is pursuing cure of the Event of Default or noncompliance in conformance with the requirements of this Section 9.3 and/or diligently pursuing an action to obtain possession of the Project by receiver or otherwise, City shall not exercise any right or remedy under this Agreement on account of such Event of Default or noncompliance. ARTICLE X TRANSFERS AND ASSIGNMENTS 10.1. Riqht to Transfer. NDG shall have the right to Transfer any right or interest under this Agreement in accordance with the provisions of this Article X. 13958:6316445.17 -37- 10.2. Conditions on NDG Riqht to Transfer. Except as otherwise provided in this Article X, NDG shall have the right to effect a Transfer, subject to and upon fulfillment of the following terms and conditions: 10.2.1. No Event of Default. No Event of Default by NDG shall be outstanding and uncured as of the effective date of the proposed Transfer, unless City has received adequate assurances reasonably satisfactory to City that such Event of Default shall be cured in a timely manner either by NDG or the Transferee under the Transfer. 10.2.2. Assumption Aqreement. NDG or the proposed Transferee has delivered to City an executed and acknowledged assumption agreement in recordable form, reasonably acceptable to City. Such assumption agreement shall include provisions regarding (i) the portion or portions or interest in the Project proposed to be Transferred and the concomitant rights of NDG that the proposed Transferee is to assume, (ii) the obligations of NDG under this Agreement that the proposed Transferee will assume, and (iii) the proposed Transferees acknowledgment that such Transferee has reviewed and agrees to be bound by this Agreement and all Applicable City Regulations and City Approvals. The assumption agreement shall also include the name, form of entity, and address of the proposed Transferee, and may provide that the Transferee assumes certain obligations of NDG to be assumed by the Transferee in connection with the proposed Transfer. Without limiting the provisions of Section 10.1, City acknowledges that NDG may assign or delegate to any such assuming Transferee only a portion of its obligations and rights in connection with any Building Group and may retain, among other things (a) the obligation to make any and all Public Improvements associated with the Project, including the Public Improvements allocated or allocable to any relevant Building Group, and (b) the right to receive any City Financial Contribution in connection with the development of the Building Group that is the subject of any transfer. Any assumption agreement shall designate the party to 13958:6316445.17 -38- whom the City Financial Contribution is to be paid. The assumption agreement shall be recorded in the Official Records of the County of Santa Clara concurrently with the consummation of the Transfer, and a copy thereof, certified by the County Recorder as a duplicate copy of the approved assumption agreement with recording information, shall be delivered to City within three (3) days after consummation of the Transfer. 10.2.3. Riqht of NDG to Cure. In the event of a partial assignment of this Agreement, pursuant to an assumption agreement, City will not declare an Event of Default hereunder, without giving NDG notice of such Event of Default, which shall be given concurrently with the transmittal of notice to such Transferee, and a reasonable opportunity to cure the relevant default. City acknowledges that in connection with the curing of any relevant default, NDG may be required to bring a legal action for specific performance and/or other legal action to remedy the relevant default. Therefore, notwithstanding Section 8.1 of this Agreement, NDG shall be granted a commercially reasonable period in addition to the cure period specified in Section 8.1, which shall not exceed one hundred eighty (180) days, in order to cure any relevant default of any Transferee who may assume the obligations of NDG under this Agreement. 10.3. Limitations and Exceptions on NDG Riqht to Transfer. NDGs right to Transfer any right or interest under this Agreement shall be subject to the following limitations and exceptions. 10.3.1. Transfer to Affiliate. NDG shall have the right to Transfer any right or interest under this Agreement to an Affiliate, as to which Transfer the condition specified in Section 10.2.1 shall not apply. Such Affiliate shall become a Transferee upon (i) the acquisition by such Affiliate of the interest Transferred, and (ii) delivery to City of an assumption agreement pursuant to Section 10.2.2 above assuming, from and after the date such Affiliate so acquires its interest, all of 13958:6316445.17 -39- the rights, duties and obligations pertaining to such interest under this Agreement. Unless approved by City, and except as provided in Section 10.3.3 below for Occupants, NDG shall not have the right to effect a Transfer of any right or interest under this Agreement except to an Affiliate prior to the issuance by City of the first (1st) Certificate of Occupancy for a Building Group in the Project. 10.3.2. Transfer to Non-Affiliate. NDG shall have the right to Transfer any right or interest under this Agreement concurrently with, or after issuance by City of, the first Certificate of Occupancy for a Building Group if the condition specified in Section 10.2.1 above is fulfilled. Such third Person shall become a Transferee upon (i) the acquisition by such third Person of the interest Transferred, and (ii) delivery to City of an assumption agreement pursuant to Section 10.2.2 above assuming, from and after the date such third Person so acquires its interest, all of the rights, duties and obligations pertaining to such interest under this Agreement. 10.3.3. Transfers to Occupants; Occupants not Obliqated Under Aqreement. Notwithstanding anything to the contrary contained in this Article X, NDG shall have the right to Transfer portions of the Project (including space in Building Group) to Occupants pursuant to Occupant Transfers. No Occupant to whom a Transfer is made pursuant to this Section 10.3.3 shall have any obligation or liability under this Agreement and the conditions specified in Section 10.2 above shall not apply to any such Occupant Transfer, unless such Occupant expressly assumes the obligations of NDG under this Agreement as provided in Section 10.2, above. 10.4. Mortqaqee as Transferee. No Mortgage (including the execution and delivery thereof to the Mortgagee) shall constitute a Transfer. A Mortgagee shall be a Transferee when such Mortgagee has complied with the provisions of Section 10.2.2 above. 13958:6316445.17 -40- 10.5. Effect of Transfer. Except as otherwise provided in Section 10.3.3 for an Occupant Transfer thereunder, the Transferee shall become a Party to this Agreement only with respect to the interest Transferred to it under the Transfer to the extent set forth in the assumption agreement delivered under section 10.2.2 above. Each Transferee, to the extent set forth in such assumption agreement, shall observe and fully perform all of the duties and obligations of NDG contained in this Agreement, but only with respect to the relevant Building Group covered by such Occupant Transfer. No such Transfer shall release NDG from its obligations under this Agreement, including, without limitation its obligations to complete any improvements required by the Additional Conditions, subject, however to any limitations on NDGs obligations or liability contained in this Agreement. However, in the case of any Occupant Transfer occurring after completion of the Public Improvements, if any Transferee shall default on any obligations to complete the portion of the Project covered by such Occupant Transfer in accordance with the Project Development Schedule, such failure to comply shall not affect any ability of NDG or any other Transferee pursuant to an Occupant Transfer to realize the benefits of this Agreement, so long as NDG or such Occupant shall comply with all other obligations under this Agreement. ARTICLE XI AMENDMENT AND TERMINATION 11.1. Amendment or Cancellation. Except as provided in Articles VI and VIII above, this Agreement may be Terminated, modified or amended only by mutual consent of the Parties in writing, and then only in the manner provided for in Section 65868 of the Development Agreement Legislation. Notwithstanding that this Agreement is a legislative act of City, the provisions of this Section 11.1, and Article VI, prescribe the sole and only means pursuant to which this Agreement may be Terminated, modified, or amended and neither this Agreement nor any term, 13958:6316445.17 -41- covenant, condition or provision herein contained shall be subject to initiative after the Effective Date. ARTICLE XII NOTICES 12.1. Procedure. All formal notices to a Party shall be in writing and given by delivering the same to such Party in person or by sending the same by registered or certified mail, or Express Mail, return receipt requested, with postage prepaid, or by overnight courier delivery, to such partys mailing address. The respective mailing addresses of the Parties are, until changed as hereinafter provided, the following: City: 7351 Rosanna Street Gilroy, California 95020-6190 Attention: City Administrator NDG: Newman Development Group of Gilroy, LLC 2255 Van Ness Avenue, Suite 102 San Francisco, CA 94109 With a copy to: Newman Development Group of Gilroy, LLC P.O. Box 678 Vestal, NY 13851 Notices and communications with respect to technical matters in the routine performance and administration of this Agreement shall be given by or to the appropriate representative of a Party by such means as may be appropriate to ensure adequate communication of the information, including written confirmation of such communication where necessary or appropriate. All formal notices under this Agreement shall be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed or sent by courier, on the delivery date or attempted delivery date shown on the return receipt or courier records. 13958:6316445.17 -42- 12.2. Chanqe of Notice Address. A Party may change its mailing address at any time by giving formal written notice of such change to the other Party in the manner provided in Section 12.1 at least ten {10} days prior to the date such change is effected. ARTICLE XIII COVENANTS RUNNING WITH THE LAND 13.1. Covenants Runninq With The Land. Except as specifically provided in Section 10.3.3 above with respect to an Occupant Transfer thereunder, all of the provisions, agreements, rights, powers, standards, terms, covenants and obligations contained in this Agreement shall be binding upon the Parties and their respective heirs, successors (by merger, consolidation, or otherwise) and assigns, devisees, administrators, representatives, lessees, and all other Persons acquiring NDGs interest in the Project, or any portion thereof, or any interest therein, or any improvement thereon, whether by operation of Laws or in any manner whatsoever, and shall inure to the benefit of the Parties and their respective heirs, successors (by merger, consolidation or otherwise) and permitted assigns as Transferees, as covenants running with the land pursuant to Section 65868.5 of the Development Agreement Legislation. This Agreement and the covenants shall run in favor of City, without regard to whether either City has been, remains or is an owner of any land or interest in the Property, any parcel or subparcel thereof. 13.2. Interests of Other Owners. If any Property covered by this Agreement shall not be owned by NDG as of the date this Agreement shall be recorded, NDG shall obtain a consent of the owner of such portion of the Property to the recording of this Agreement against such owners property, which shall be in recordable form (an Owner Consent ), on or before the date this Agreement is recorded, and such Owners Consent shall be recorded concurrently with the recordation of this Agreement. 13958:6316445.17 -43- ARTICLE XIV MISCELLANEOUS 14.1. Neqation of Partnership. The Parties specifically acknowledge that the Project is a private development, that no Party is acting as the agent of the others in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. None of the terms or provisions of this Agreement shall be deemed to create a partnership between or among the Parties in the businesses of NDG, or the affairs of City, or otherwise, or cause them to be considered joint venturers or members of any joint enterprise. This Agreement is not intended and shall not be construed to create any third Party beneficiary rights in any Person who is not a Party; and nothing in this Agreement shall limit or waive any rights NDG may have or acquire against any third Person with respect to the terms, covenants or conditions of this Agreement. 14.2. Approvals. Unless otherwise provided in this Agreement, whenever approval, consent or satisfaction (herein collectively referred to as an approval ) is required of a Party pursuant to this Agreement, it shall not be unreasonably withheld or delayed. If a Party shall disapprove, the reasons therefor shall be stated in reasonable detail in writing. Approval by a Party to or of any act or request by the other Party shall not be deemed to waive or render unnecessary approval to or of any similar or subsequent acts or requests. Whenever, under this Agreement, the term approve (or any grammatical variant thereof, such as approved or approval is used in connection with the right, power or duty of City, or any representative board, commission, committee or official of City, to act in connection with any City Approval, such approval shall be made in accordance with the applicable terms, standards and conditions of this Agreement. 13958:6316445.17 -44- 14.3. Not A Public Dedication; NDG Acknowledqements. Except for Exactions made in accordance with this Agreement and the Project Approvals, and then only when made to the extent so required, nothing herein contained shall be deemed to be a gift or dedication of the Project, or portion thereof, to the general public, for the general public, or for any public use or purpose whatsoever, it bung the intention and understanding of the Parties that this Agreement be strictly limited to and for the purposes herein expressed for the development of the Project as private property. Notwithstanding the foregoing provisions, NDG acknowledges that (i) a reasonable relationship exists between all Dedications and Exactions imposed by the City Approvals listed on Exhibit C and the impact of the Project upon City, and (ii) the direct and indirect impacts of the Project warrant and require the terms and conditions of this Agreement, and but for the acknowledgements of NDG contained in the foregoing clauses (i) and (ii), City would not have entered into this Agreement. 14.4. Severability. Invalidation of any of the provisions contained in this Agreement, or of the application thereof to any Person, by judgment or court order shall in no way affect any of the other provisions hereof or the application thereof to any other Person or circumstance and the same shall remain in full force and effect, unless enforcement of this Agreement as so invalidated would be unreasonable or grossly inequitable under all the circumstances or would frustrate the purposes of this Agreement. 14.5. Exhibits. The Exhibits listed below, to which reference is made herein, are deemed incorporated into this Agreement in their entirety by reference thereto: Exhibit A - City Development Fees Schedule Exhibit B - City Standards Exhibit C - City Approvals Exhibit D - Project Development Schedule 13958:6316445.17 -45- Exhibit E - Description of Property Exhibit F - List of Public Improvements Exhibit G - Site Plan Exhibit H - [Intentionally Deleted] Schedule I- Additional Conditions 14.6. Entire Aqreement. This written Agreement and the Exhibits hereto, and any administrative implementation memoranda entered into pursuant to Section 3.7, contain all the representations and the entire agreement between the Parties with respect to the subject matter hereof. Except as otherwise specified in this Agreement, any prior correspondence, memoranda, agreements, warranties or representations are superseded in total by this Agreement and Exhibits hereto, and such administrative implementation memoranda. Neither the conduct or actions of the Parties, nor the course of dealing or other custom or practice between the Parties, shall constitute a waiver or modification of any term or provision of this Agreement; and this Agreement may be modified or amended only in the manner specified in this Agreement. 14.7. Construction of Aqreement. All of the provisions of this Agreement have been negotiated at arms-length between the Parties and after advice by counsel and other representatives chosen by each Party, and the Parties are fully informed with respect thereto. Therefore, this Agreement shall not be construed for or against either Party by reason of the authorship or alleged authorship of any provisions hereof, or by reason of the status of either Party. The provisions of this Agreement and the Exhibits hereto shall be construed as a whole according to their common meaning and not strictly for or against any Party and consistent with the provisions hereof, in order to achieve the objectives and purpose of the Parties hereunder. The captions preceding the text of each Article, Section and the Table of Contents hereof are included only for convenience of 13958:6316445.17 -46- reference and shall be disregarded in the construction and interpretation of this Agreement. 14.8. Mitiqation of Damaqes. In all situations arising out of this Agreement, each Party shall use commercially reasonable efforts to mitigate the damages resulting from the conduct of the other Party. Each Party shall take all reasonably necessary measures to effectuate the provisions of this Agreement. 14.9. Further Assurances; Covenant to Siqn Documents. Each Party shall take all actions and do all things, and execute, with acknowledgment or affidavit if required, any and all documents and writings, which may be necessary or proper to achieve the purposes and objectives of this Agreement. 14.10. Covenant of Good Faith and Fair Dealinq. No Party shall do anything which shall have the effect of harming or injuring the right of the other Party to receive the benefits of this Agreement; each Party shall refrain from doing anything which would render its performance under this Agreement impossible; and each Party shall do everything which this Agreement contemplates that such Party shall do in order to accomplish the objectives and purposes of this Agreement. The Parties intend by this Agreement to set forth their entire understanding with respect to the terms, covenants, conditions and standards for the development, use and occupancy of the Project and by which the performance of the rights, duties and obligations of the Parties hereunder shall be measured or judged. 14.11. Governinq Law. This Agreement, and the rights and obligations of the Parties, shall be governed by and interpreted in accordance with the Laws of the State. 14.12. References; Terminoloqy. Unless otherwise specified, whenever in this Agreement, reference is made to the Table of Contents, any Article or Section, or any defined term, such reference shall be deemed to refer to the Table of Contents , 13958:6316445.17 -47- Article or Section or defined term of this Agreement. The use in this Agreement of the words including such as or words of similar import, when following any general term, statement or matter, shall not be construed to limit such statement, term or matter to specific items or matters, whether or not language of nonlimitation, such as without limitation or but not limited to , or words of similar import, are used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such statement, term or matter. 14.13. Irreqularitv in Proceedinq. No action, inaction or recommendation by a Party pursuant to this Agreement, or of City in connection with a City Approval, shall be held void or invalid, or be set aside by a court on the grounds of improper admission or rejection of evidence, or by reason of any error, irregularity, informality, neglect or omission (collectively, an error ), as to any matter pertaining to petition, application, notice, finding, record, hearing, report, recommendation or any matters of procedure whatsoever, unless after an examination of the entire record with respect to such error, including the evidence, the court finds that the error complained of was prejudicial, and that by reason of the error, the complaining Party, or third Person, sustained and suffered substantial injury, and that a different result would have been probable if the error had not occurred or existed. No presumption shall arise that an error is prejudicial, or that injury resulted from an error, solely as a result of a showing that error occurred. 14.14. Judicial Proceedinq To Challenqe Termination. Any challenge made by NDG to Citys Termination of this Agreement pursuant to a right so to do granted by this Agreement, shall be subject to review in the Superior Court of the County of Santa Clara pursuant to California Code of Civil Procedure Section 1094.5 as a case in which a vested right is affected. 13958:6316445.17 -48- 14.15. Siqnature Paqes. For convenience, the signatures of the Parties to this Agreement may be executed and acknowledged on separate pages which, when attached to this shall constitute this as one complete Agreement. 14.16. Time. Time is of the essence of this Agreement and of each and every term and condition hereof. IN WITNESS WHEREOF, the as of the day and year first Signatures attached hereto. Parties have executed this Agreement above written by the Authorized 13958:6316445.17 -49- AUTHORIZED SIGNATURE OF CITY TO AGREEMENT City of Gilroy, a California By Its City Mayor Approved as to form: By Its City Attorney STATE OF CALIFORNIA ss. COUNTY OF SANTA CLARA On before me, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public (Seal) 13958:6316445.17 -50- AUTHORIZED SIGNATURE OF NDG TO AGREEMENT NEWMAN DEVELOPMENT GROUP OF GILROY, LLC, a California limited liability company By: Managing Member STATE OF CALIFORNIA ss. COUNTY OF SANTA CLARA On before me, Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public (Seal) 13958:6316445.17 -51- <( I- - OJ - I >< W I- Z w 2 w w 0:: C> <( I- Z UJ 2 a. o ....J W > UJ o Z <( 2 S UJ Z e('" NCO w~ ~u xl! Q.~ '" Gl Gl u. _~E8 ~ 8 :;Q).CO ~Nt"). '0 co EN~ .N.....fW:!N ...J'ie....."O'NCOOJ.......... o::.S!CO _ co g! Gl o . - '" lidl ~ It i~o c w~",iil~C!o>:llIll!::",C! Ulfj 'o~ ~;g~II)."':.....'":;g ~......J~~&I).....U)lt)U)cU) Q.~ s- o 1& ~o ii'i i~ 100. 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If) 'E CD E Q) If) 5 .l:l E 'a; 0:: ~ .t: o iii 0; o I- M o o '" M ~ N E" :)' F' I y' S' m- ~= ;~ p< f-~.. : J ,p ===- J::;; ~ :j:., ';. tJ E1l Public improvements shall be constructed in accordance with the City of Gilroy Community Development Department Standard Specifications (cover sheet attached). The improvements are to be constructed in accordance with the standards that are in place at the time of the approval of the public improvement plans. The City of Gilroy agrees to cooperate in the distribution of the Standard Specifications prior to commencement of the work. CITY OF GILROY COMMUNITY DEVELOPMENT DEPARTMENT STANDARD SPECIFICATIONS The standard details and provisions contained in this manual have been prepared for the purpose of establishing the minimum and uniform requirements to be used by engineers, contractors and developers for the preparation of plans and the construction of public improvements under the jurisdiction of the City of Gilroy. These standards shall be used in conjunction with the latest revision of the State of California Department of Transportation (Caltrans) Standard Specifications. In case of conflict between Caltrans Specifications and the City of Gilroy Standard Details and Provisions, the City of Gilroy Standard Details and Provisions shall apply. Any deviation from the Standard Details or the Standard Specifications must be approved in writing by the City Engineer of the City of Gilro California. Rick Smelser City Engineer Exhibit C City Approvals A. Existinq Entitlements. The land use entitlements and approvals which have heretofore be granted by City for the Project on the Adoption Date are as follows: (i) By Resolution No. 93-12, dated March 15, 1993, the Gilroy City Council adopted the Gilroy General Plan General Services Commercial land use designation for the Property. (ii) By Resolution No. 2001-74, dated November 5, 2001, the Gilroy City Council approved a tentative parcel map for the Property pursuant to Application TM 01-02 (the "Tentative Map") . (iii}The Gilroy City Council approved a Final Mitigated Negative Declaration and Mitigation Monitoring Plan covering the Project and certain other property on October 15, 2001 in compliance with Application TM 01-02. (iv) By the Enacting Ordinance, the Gilroy City Council authorized City to enter this Development Agreement with NDG. B. Subsequent Approvals. The land use entitlements and approvals which have yet to be granted by City for the Project on the Adoption Date, including, without limitation: (i) All approvals, other than those specified in Paragraph A, above, required by the Zoning Ordinance of the City of Gilroy, the Subdivision Ordinance of the City of Gilroy, the Existing Entitlements, as enumerated in subparagraph A, above, or the provisions of this Development Agreement for any future development of the Project. Project. (ii) Design review of any future development of the 13958:6316445.17 -1- -~ ---,~' ------~~-I -----------~----- ~ I~ I ! I I: ~ t; I :gj~.: N ... ag. , <0 o "' it) 0 o 'CJ '" ~ ~' .., '0 '" :; 'C'" "'- ~.c u .. lIll- ~ In C In '" '" E .. c.c. o '" _W '" ., i; ~ c .- ~> .!. ~ 0.. !tel , '" c .: ~:; ;€o ~ '" w II . 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" " '" '" o <Jl " :; ^ ~ '" .E " 0 ~: g ~ ~ ',3 1; ] u: rT;"'-""= t{~:."., f.J-=D h L f'"j ==:":;-.0;:-. l.~ H f!.::::::':" L--- .., "~ GILROY CROSSINGS DESCRIPTION ALL THAT CERTAIN REAL PROPERTY situated in the City of Gilroy, County of Santa Clara, State of California, more particularly described as follows: APN 841-70-018 - PARCEL ONE All of Parcell, as shown upon that certain map entitled "Parcel Map a portion of Lot 6, per Map of the Subdivision of the Elizabeth H. Martin Tract, filed in Book "F" of Maps Page 31, Santa Clara County Records", which map was filed for record in the office of the Recorder of the County of Santa Clara, State of California, on July 2, 1971 in Book 285 of Maps, at Page 45. APN 841-70-019 - PARCEL TWO All of Parcel 1 as shown upon that certain map entitled "Parcel Map being a portion of re-subdivision of Parcel 2 as shown on Parcel Map filed in Book 285 of Maps at Page 45, Santa Clara County Records", which map was filed for record in the office of the Recorder of the County of Santa Clara, State of California, on May 10,1972 in Book 300 of Maps, at Page 53. APN 841-70-021 - PARCEL THREE Parcel 2, as shown on that certain parcel map filed for record in the office of the Recorder of Santa Clara County in the State of California on May 10th, 1972, in Book 300 of Maps, at Page 53. APN 841-67-020 - PARCEL FOUR Beginning at a point in the Northeastern line of Lot 44, a distant thereon North 320 05" West, 1 89.98 feet from an iron pipe at the Eastern corner common to Lots 44 and 47, as said lots are shown on Map NO.7 accompanying the report of the referees in the Las Animas Rancho Partition Suit, Superior Court Case No. 5536 in and for the County of Santa Clara, and running thence along the Northeastern boundary of said Lot 44 and Lot 43, as said lots are shown upon the aforementioned map, North 320 05' West, l783.46 feet more or less to a point on the Southeastern boundary of that land conveyed to the State of California in the Final Order of Condemnation recorded in Book 8098 at Page 543, Santa Clara County Official Records; thence leaving the said Northeastern boundary of Lot 43 and running along the boundary of said lands of the State of California, South 400 39' 29" West, 659.52 feet; thence along a tangent curve to the left with a radius of 392.00 feet, through a central angle of 360 45' 32" and an arc length of 251.49 feet; thence South 30 53' 57" West, 729.25 feet to the most Northwestern corner of that land conveyed to Gilroy Corporation in Book H 45 at Page 680, Santa Clara County Official Records; thence leaving said boundary of the lands of the State of California and running along the Northern boundary of said lands of Gilroy Corporation, South 86044' 08" East, 14.00 feet; thence along a curve to the left whose tangent bears South 30 15' 52" West, with a radius of 40.00 feet, through a central angle of 930 03' 58" and an arc length of 64.97 feet; thence South 89048' 06" East, 1450.77 feet to the point of beginning. APN 841-67-022 - PARCEL FIVE Beginning at .the point of intersection of the most Westerly boundary of those lands conveyed to the Gilroy Corporation in Book G310 at Page 506, Santa Clara County Official Records, with the line common to Lot 44 and Lot 47, as said lots are shown upon Map NO.7 accompanying the report of the Referees in the Las Animas Rancho Partition Suit, Superior Court Case No. 5536 in and for the County of Santa Clara; thence from said point of beginning and running along the said Western boundary of the lands of Gilroy Corporation, North 00 16' East, 96.72 feet to a point that is 54.00 feet distant from the Northwestern corner of said lands; thence leaving said Western boundary and running along a boundary of that land conveyed to said Gilroy Corporation, September 27, 1982 in Book H45 at Page 680, Santa Clara County Official Records, North 890 48' 06" West, 175.64 feet; thence along a tangent curve to the left with a radius of 40.00 feet, through a central angle of 860 48' 21" and arc length of60.60 feet; thence along a tangent curve to the right with a radius of 5060.00 feet, through a central angle of 000 40' 40" and an arc length of 58.97 feet to a point on said common line of Lots 44 and 47; thence leaving said boundary of those lands conveyed to Gilroy Corporation and running along said common lot line, South 890 47' 40" East, 219.15 feet more or less to the point of beginning and being a portion of said Lot 44. APN 841-70-017 - PARCEL SIX All of that 30 foot wide strip of land described on the deed from Hirasaki Farms, Inc. to Hisashi Hirasaki, et aI, recorded January 3, 1979 in Book E203 of Official Records at Page 123, Santa Clara County Records. APN 841-17-088 - PARCEL SEVEN A portion of Parcel 2 as shown on that map filed for record December 4, 1989 in Book 607 of Maps at Page 48, Santa Clara County Records, more particularly described as follows: Beginning at the most Westerly corner of said Parcel 2; thence along the Southwesterly line of said Parcel 2, South 320 05' 00" East, 1734.21 feet; thence leaving said Southwesterly line, North 570 55' 00" East, 30.00 feet to an angle point in the generally Northeasterly line of said Parcel 2; thence along the Northeasterly and Northwesterly line of said Parcel 2 the following two courses: 1.) North 320 05' 00" West, 1737.76 feet. 2.) South 5 I 009' 08" West, 30.21 feet to the true point of beginning. E'><-I I BIT F February 5, 2003 PACHECO PASS RETAIL CENTER GILROY, CALIFORNIA Engineers Opinion of Probable Construction Cost Phase I Includes Camino Arroyo, Renz Lane West of Camino Arroyo, and the Storm Drain system for the entire site. Item Quantity 6,017 4,481 17,249 258,340 352,080 2,689 587 12 1,202 607 61 1,173 1,157 2,306 87 18 4 25 1 3,092 11 14 10 14 27 3,320 1 1 13,200 14 Unit LF LF SF SF SF LF LF EA LF LF LF LF LF LF LF EA EA EA EA LF EA EA EA EA EA LF EA EA LF EA C&G Vertical Curb Sidewalk Street Paving Street Grading 10" SS 6" SS Lat. SSMH 15" SO 18" SO 21" SO 24" SO 36" SO 48" SD 54" SO Curb Inlet Flate Grate Inlet SOMH SO Outfall 12" DIP (Water) Domestic Service Fire Service Fire Hydrant Irrigation Service Electrolier Joint Trench Traffic Signal (Camino & Renz) PG&E Transmission Line Relocation Striping Handicap Ramps 2 of 5 Phase I (Cant.) Item PCC Bus Pad Lanscaping Median Landscaping Underground Electrical Lines Across Highway 152 (Phase 1 B) Phase /1 Includes Renz Lane East of Camino Arroyo Item Curb & Gutter Sidewalk Street Paving Street Grading Striping 10" VCP 6" SS Lat SSMH 15" SO Curb Inlet Flate Grate Inlet 12" DIP (Water) Fire Service Domestic Service Irrigation Service Fire Hydrant Electrolier Joint Trench Traffic Signal Landscaping Underground Communication Lines Across Highway 152 Quantity 4 45,000 14,930 1 Unit EA SF SF LS Quantity 2,541 11 ,434 76,240 111,750 5,552 1,158 288 5 466 10 1 1,241 5 4 6 5 8 1,300 2 15,250 1 Unit LF SF SF SF LF LF LF EA LF EA EA LF EA EA EA EA EA LF EA SF LS 3 of 5 HWY152 Includes HWY 152 Frontage Improvements Item Curb & Gutter Vertical Curb Sidewalk - Project Frontage Sidewalk - Extension to Bridge Curb Inlet Street Paving Street Grading Striping Lanscaping Quantity 969 161 3,375 2,790 2 8,260 18,905 1,130 4,920 Unit LF LF EA EA EA SF SF LF SF Reimbursable Improvements Includes the center two lanes (one in each direction), left turn pockets, and median area on Camino Arroyo. Item Quantity Unit Vertical Median Curb 3,300 LF 5" AC on 10"AB wi Lime Treatment 75,500 SF Sidewalk - Extension to Bridge 2,790 EA Median Landscaping 14,930 SF Summary of Costs PHASE I PHASE II HIGHWAY 152 REIMBURSABLE IMPROVEMENTS 4 of 5 1// 1//# 1//# 1//# 1//# 1//# 1//# # 0( N tIIN 11I- ..,0 .:-1 0.. Cl - U N tIICQ :'0 .l:-I 0.. It) ... - tIM(I"~.u8lMJO_1ll-D" tIIJlI:I'IC~o.1r.1lSnu ~1U_:~ .C ,wu ItDOl'- _ fi~ '..u (,) ..i ..i i a i3 ,!!Oo ~ '0 ~~:~i t U'o.C\C E ~ ~t'5~~! ~ ~ ~.n~t lc n~~l ~~~;; C-..I! > if"" ~ ...'" ~ Ii is ~ J 0:: w t- Z W o ...J ('I) - 0 ~o WN o::-.:i en~ en co <C ::J 0...0 o Q) OLL Wi I<C 00 <C ~ 0.>- e 0== wC> en o a. o 0:: a. ;5l'i.. 9... ;I: G.~% z ",l!!Zi!i"'~W': zaiilliu....l;/ ~lio~..iC~.. ...:t~1J~158 . ~~~iS~~:d~~~ tu:lI:!!i~U::\ ~~il~:I~:I fi~~:g!f~sl w ~~~~g~~U :;! ~~~;6~~~i ~ ~~g~~UU ~ ;;~i~2~~~ b ~!ie~fe=~ z l~ciiJ!!~CU gw~~!i;~ UlCR:A:zIIDO :;; t:..!l!.....1I ~ ~!!...!i~ Schedule I Additional Conditions 1.0 Additional Traffic Conditions. 1.0.1. 1.0.2. 1.0.3. 13958:6316445.17 Supplemental Traffic Study. NDG shall pay for the preparation of a supplemental traffic study, for review and approval by the City Engineer, which shall be completed during the month of September, 2003 and shall identify the phased implementation of improvements required for future build-out of the Project based on current knowledge of future projections of traffic impacts generated by the Project. Yearly Monitorinq Proqram. NDG shall pay for or establish a fund to pay for the implementation of a yearly monitoring program (the Yearly Monitoring Program), and shall implement the improvements according to the phasing plan when such Yearly Monitoring Program indicates improvements will be required within the next year and/or prior to the issuance of the building permit for the square foot area that causes the impact, whichever occurs first. The improvements referenced in the subparagraph are only those that have already been identified, and the purpose of the Yearly Monitoring Program with respect to such improvements is to determine the timing of implementation of the improvements. Possible Additional Improvements. The Yearly Monitoring Program may yield interim or partial improvements that were not in the original traffic study. These alternative improvements may be implemented if they are acceptable to the City Engineer and only if these improvements continue to substantially mitigate the relevant significant impact and do not create any new significant environmental effects. Notwithstanding the foregoing, in no event will any such recommended improvements include, nor shall NDG be required to construct a bridge on the north side of the Project over Ronan Channel, pursuant to this paragraph. However, in the case that full build- out of the improvements in the supplemental traffic study no longer mitigates the impact, additional improvements shall be required. The parties acknowledge that such improvements may be -1- required not because of any inadequacy of analysis of the Project as originally proposed, but rather because delays in implementation of the Project may mean that traffic conditions in the area have changed from those originally analyzed. Thus, additional improvements may be required to ensure orderly development of the area. The City shall provide notice to NDG of any additional improvements that may be required under this paragraph, together with a reasonable basis for its requirement of any such improvements. NDG and the City will use good faith efforts to agree on the scope of any such improvements. City agrees to meet with NDG to discuss the need for any such improvements, or their potential scope, if NDG disputes the need for such additional improvements. 1.1 Specific Phasinq of Improvements. 1.1.1. 1.1.2. 13958:6316445.17 Phase IA. Prior to the occupancy of the first building in Phase lA, the following shall be completed: CalTrans acceptance of improvements along Highway 152. Grading and on-site and off-site improvements certified as completed by Developers Civil Engineer. Emergency Vehicle Preemption Transponders installed in CHP units or approval letter from CHP. City acceptance of Public Improvements related to Phase lA, with full bonding for pavement restoration, if necessary. Phase lB. Prior to occupancy of the first building in Phase IB the following shall be completed. Construct sidewalk along Highway 152 at frontage to the bridge structure atop of overpass on Highway 101. Provide additional right-of-way dedication along Highway 152 for ultimate build-out of Highway 152 from Camino Arroyo to and through, if needed, APN 841-10-047. -2- 1 . 1 .3. Construct fence along Highway 152 from Camino Arroyo to CalTrans right-of-way. Complete parcel map covering area designated as Phase lB. Complete Renz abandonment, subject to terms and conditions of this Agreement. Construct PG&E utilities underground and bond for communications undergrounding. Complete emergency vehicle access. Complete pavement restoration to the Citys satisfaction, Camino Arroyo from Highway 152 north to the Ronan Channel and Renz Lane west to the conform with existing pavement, provided, however compliance with the foregoing will be required before the issuance of a building permit for any portions of the construction, other than foundation or grading in connection with the first Building in Phase lB. Additional considerations may be added at the time of architectural site review, new mapping, etc., in accordance with City Standards and this Agreement. Phase II. Prior to occupancy of the first building in Phase II the following shall be completed: Complete construction of all utilities underground, including communications. Construct fence along the Ronan Channel along frontage of Phase 2 with Ronan Channel and at the right-of-way terminus of Camino Arroyo with the Ronan Channel. Additional considerations may be added at the time of architectural site review, new mapping, Phase II improvement plan submittals, etc., in accordance with City Standards and this Agreement. 1.2 Fire Protection Considerations. 1.2.1. 13958:6316445.17 Radio Infrastructure. In order to ensure proper Public Safety radio communication, expansion of the Citys Public Safety Radio System will be necessary. Newman shall pay the incremental cost associated with the City of Gilroy Fire Department integration of the Fire Radio System into the -3- 1.2.2. 13958:6316445.17 Police Simulcast Radio System infrastructure. The cost shall be as specified by the Fire Department, but shall not exceed $ 52,000.00 and shall be due and payable prior to a certificate of occupancy for the first building for which such improvements are necessary in the reasonable determination of the Fire Department. Aerial Apparatus. NDG shall pay specified incremental cost, subject to the reasonable determination of the Fire Department, for the accelerated purchase by the City of Gilroy Fire Department of additional specialized tools and equipment for the aerial truck apparatus. Such costs shall be as specified by the Fire Department, but shall not exceed $ 55,000 and shall be due and payable prior to a certificate of occupancy for the first building for which such improvements are necessary in the reasonable determination of the Fire Department. -4 - I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance No. 2003-04 is an original ordinance, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 21 st day of April, 2003, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 22nd day of April, 2003. ')0'- 0.0 ~o.... .. . . .' . ~) ~_. / . Jmd/'--. . '~-<'.--f'-(~ City Clerk of the City of Gilroy (Seal)