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HomeMy WebLinkAbout2006 CON CDC Home Depot and Pacific Steel - Negotiating AgreementEXCLUSIVE NEGOTIATION AGREEMENT By and Between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY And HOME DEPOT U.S.A., INC. And PACIFIC STEEL, INC. THIS EXCLUSIVE NEGOTIATION AGREEMENT (hereafter referred to as "AGREEMENT") is entered into this 21st day of November, 2006, by and between the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic (hereafter referred to as "CDC"), and HOME DEPOT U.S.A., INC., a Delaware Corporation and PACIFIC STEEL, INC., a California corporation (hereafter collectively referred to as "DEVELOPERS"), on the terms and provisions set forth below. RECITALS WIIEREAS, the DEVELOPERS own or have a Letter of Intent to mutually plan and develop certain real properties owned by PACIFIC STEEL, INC. (Assessor Parcel Numbers 559- 051-09, 11, 12. 559-056-03, 559-071-04, 559-076-01, 02, 09, 10, 559-076-06, 559-076-03) located on the west side of Cleveland Avenue north of 18`h Street (hereafter referred to as "PSI SITE"); and WHEREAS, on June 14, 2005, the Community Development Commission ("CDC") adopted a Resolution of Necessity to acquire real property by eminent domain for redevelopment purposes (Assessor Parcel Numbers 559-040-46.47, 48, 52) owned by BNSF railroad adjacent to the PSI SITE (hereafter referred to as "BNSF SITE"); and WHEREAS, the DEVELOPERS are interested in purchasing the BNSF SITE from the CDC and combining it with the PSI SITE and to assemble parcels (Assessor Parcel Numbers 559-010-04, 559-051-04, 08. 10 owned by the Patricia H. Rhodes Trust, 559-040-47, 48 owned by BNSF railroad. 559-076-11 owned by Anthony L. Bedford Trust and Leif Trust, 559-076-04, 05 owned by Alamo Drive Limited Partners (hereafter referred to as "OTHER PROPERTIES") to develop a mixed -use commercial - industrial development upon it, anchored by The 1-Iome Depot retail store with the continued operation of PSI (hereafter referred to as "PROJECT"); and WHEREAS, the CDC and the DEVELOPERS desire to enter into this AGREEMENT to initiate exclusive negotiations for up to one hundred and eighty (180) days (hereafter referred to as "EXCLUSIVE NEGOTIATION PERIOD") to allow the DEVELOPERS to (i) undertake due diligence activities regarding the PROJECT; (ii) design the PROJECT; (iii) establish the ENA Home Depot and PSI 10/31/2006 SD\558383.5 responsibilities, schedule, and financial parameters for developing the PROJECT; (iv) negotiate the purchase price of the BNSF SITE; (v) assemble OTHER PROPERTIES; and (vi) negotiate a Disposition and Development Agreement (hereafter referred to as "DDA"). NOW, THEREFORE, in consideration of the recitals and mutual covenants and conditions contained herein, the parties hereto agree as follows: 1. SITE The BNSF SITE, PSI SITE. and OTHER PROPERTIES are collectively referred to hereafter as the "SITE" and constitute the real property that is the subject of this AGREEMENT. The SITE is Assessor Parcel Numbers 559-051-09, 11, 12, 559-056-03, 559-071-04, 559-076-01, 02, 09, 10, 559-076-06, 559-076-03, 559-040-46, 47, 48, 52, 559-010-04, 559-051-04, 08, 10, 559-076-11, 559-076-04, 05, consisting of approximately 15 acres in National City, California, located on the west side of Cleveland Avenue from Civic Center Drive to 18`h Street, bordered on the west side by the BNSF railroad tracks. The exact square footage of the SITE will be determined during the SITE planning activities outlined below. II. EXCLUSIVE NEGOTIATION PERIOD A. Exclusive Negotiation Period The EXCLUSIVE NEGOTIATION PERIOD begins when the CDC executes this AGREEMENT (hereafter referred to as "COMMENCEMENT DATE") and shall last for one hundred and eighty (180) days thereafter. B. First Negotiation Period During the first ninety (90) days of the EXCLUSIVE NEGOTIATION PERIOD (hereafter referred to as "FIRST NEGOTIATION PERIOD"), the DEVELOPERS and CDC shall meet regularly, in good faith, and jointly formulate a plan to develop the PROJECT (hereafter referred to as "DEVELOPMENT PROGRAM"). The Development Program shall include and delineate the following elements: 1. 1'hc type and scope of the PROJECT; 2. The interface of a phased development with the complete build out of the SITE: 3. Required on and off -site infrastructure improvements; 4. Project, infrastructure, and state and local regulatory requirement Costs; 5. Funding responsibilities and sources for the PROJECT; 2 ENA FOR THE HOME DEPOT/PST 10/31 /2006 SD\558383.5 6. The parties/entities responsible for the various Project development activities; and 7. A detailed PROJECT development schedule. C. Due Diligence Also, during the FIRST NEGOTIATION PERIOD, the CDC and DEVELOPERS, as applicable, shall conduct their respective due diligence activities, including but not limited to: 1. DEVELOPERS' timely delivery and submission to the CDC of sufficient evidence that the DEVELOPERS are financially viable and have the required equity and financing to complete SITE development. 2. DEVELOPERS' timely review of preliminary title report information prepared for the SITE. 3. DEVELOPERS' timely investigation of the SITE. In conjunction therewith, and subject to the DEVELOPERS receiving all prior governmental approvals and agreeing to all conditions of such approvals, DEVELOPERS and their consultants and agents shall have the right to enter upon the SITE to conduct tests, studies, and investigations pursuant to an Early Entry Agreement, the form of which is attached hereto and incorporated herein as Exhibit 1; and 4. DEVELOPERS' timely submission of the DEVELOPMENT PROGRAM to the CDC for review and comment. D. Design Concept Plan Submission/Entitlements/Environmental Review By the end of the FIRST NEGOTIATION PERIOD, DEVELOPERS shall submit their Design Concept Plan for the PROJECT, including a Site Plan, Floor Plans, Exterior Elevations and Project Description and elevations, for review and consideration of acceptance by the Board of Directors of the CDC (hereafter referred to as "CDC BOARD"). Upon the acceptance of the Design Concept Plan by the CDC BOARD, the DEVELOPERS shall prepare and process with the City any necessary land use entitlements, environmental studies and reports. E. DDA Following Design Concept Plan acceptance by the CDC BOARD, and the close of the FIRST NEGOTIATION PERIOD, the CDC agrees to negotiate exclusively with the DEVELOPERS for the remaining ninety (90) days of the EXCLUSIVE. NEGOTIATION PERIOD (hereafter referred to as "SECOND NEGOTIATION PERIOD") in order to negotiate and attempt to finalize the DDA. 3 ENA FOR THE HOME DEPOT/PSI 10/ 31 /2006 SD\558383.5 If, at the close of the SECOND NEGOTIATION PERIOD, the CDC and DEVELOPERS have not agreed to the terms of the DDA, this AGREEMENT shall automatically terminate. Notwithstanding the above, the DEVELOPERS or the CDC's Executive Director in his sole discretion, may extend the Negotiation Period for up to an additional one hundred and eighty (180) days to complete DDA negotiations, the land use entitlements and the environmental studies, if the CDC's Executive Director determines additional time is reasonably required. F. Execution of DDA After the DEVELOPERS and the CDC agree upon the DDA, the EXCLUSIVE NEGOTIATION PERIOD may be extended for up to an additional ninety (90) days at the discretion of the CDC's Executive Director, or its acting Director (hereafter referred to as "THIRD NEGOTIATION PERIOD") in order to enable the CI)C and the City to: 1. Notice and conduct a public hearing pursuant to Section 33433 of the California Health and Safety Code on the DDA; and 2. Process Site development, environmental and entitlement applications through the City's Planning Commission and City Council. The CDC agrees that during the EXCLUSIVE NEGOTIATION PERIOD, and during all of its extensions, the CDC shall not negotiate or enter into an agreement with any other person or entity regarding development of the SITE with the exception of continuing negotiations with BNSF related to SITE acquisition and the California Department of Toxic Substances Control related to hazardous materials conditions at the SITE unless it is with the expressed consent of DEVELOPERS. The obligation to negotiate in good faith requires the respective parties to communicate with each other with respect to those issues for which agreement has not been reached, and in such communication to follow reasonable negotiation procedures, including meetings, telephone conversations. and correspondence. The parties understand that final accord on all issues may not be reached. It is also understood that. (1) neither party is under any obligation to reach agreement on the SITE purchase price and/or DDA, and (2) the CDC reserves the right to approve or reject a DDA, the PROJECT. or any disposition of the SITE, in its sole discretion, as more particularly set forth in Part IV of this AGREEMENT. G. CDC and DEVELOPERS Obligations During the EXCLUSIVE NEGOTIATION PERIOD, the CDC and DEVELOPERS obligations shall include, but not be limited to. the following: 1. CDC Obligations a. Provide the DEVELOPERS with documents in the CDC's possession that would assist the DEVELOPERS with the 4 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 due diligence activities described in this AGREEMENT; and b. Upon acceptance of the DEVELOPMENT PROGRAM and verification of DEVELOPERS financial commitments to both purchase and develop the PROJECT, prepare a first draft of a DDA. 2. DEVELOPERS' Obligations a. Use its best efforts to investigate the SITE; b. Submit site plans, elevations, schematic drawings, detailed PROJECT development costs, PROJECT pro formas for SITE improvements, as well as a pro forma summarizing the total PROJECT and respective returns and other documents necessary for CDC and City review; and c. Submit proof of adequate funding or funding commitments for the PROJECT. 111. DEVELOPERS' DEPOSIT Upon the approval of this AGREEMENT by the CDC BOARD, the DEVELOPERS shall deposit with the CDC "Twenty Five Thousand Dollars ($25,000) (hereafter referred to as "DEVELOPERS' DEPOSIT"), in the form of a cashier's or certified check, or wire transfer, payable to the CDC. The CDC agrees to hold the DEVELOPERS' DEPOSIT in the CDC's account and make disbursements therefrom only pursuant to the terms and provisions of this AGREEMENT. DEVELOPERS agrees that the CDC may use the DEVELOPERS' DEPOSIT to reimburse itself for reasonable and actual attorneys' ices, consultant fees, appraisal fees, title reports, and any other related fees (excluding CDC staff costs) and costs (hereafter referred to as "DDA NEGOTIATION COSTS") incurred by the CDC in (i) negotiating and preparing this AGREEMENT, (ii) reviewing any documents submitted in furtherance of this AGREEMENT and/or DEVELOPERS' proposal to develop the PROJECT, (iii) any negotiations relating to the DDA and any related documents, and (iv) drafting the DDA or any othcr related documents. CDC shall submit to DEVELOPERS invoices reasonably detailing DDA NEGOTIATION COSTS CDC has incurred at the time it submits a reimbursement notice to the DEVELOPERS. CDC shall be free to withdraw funds from the DEVELOPERS' DEPOSIT, as needed, provided that it has submitted such invoices to the DEVELOPERS. The full $25,000 DEVELOPERS' DEPOSIT, without deduction of the DDA NEGOTIATION COSTS, shall be refundable to DEVELOPERS if there is a material default by the CDC of its obligations pursuant to this AGREEMENT. The $25,000 DEVELOPERS' DEPOSIT, less the DDA NEGOTIATION COSTS incurred to date (hereafter referred to as "BALANCE OF 5 ENA FOR THE HOME DEPOT/PSI 10/31 /2006 SD\558383.5 DEVELOPERS' DEPOSIT"), if any, shall be refundable to DEVELOPERS in the event this AGREEMENT is terminated prior to or at the conclusion of the EXCLUSIVE NEGOTIATION PERIOD and prior to the execution of the DDA. In the event the DDA is fully executed and approved by all requisite action, the BALANCE OF DEVELOPERS' DEPOSIT, if any, shall be applied to the DEVELOPERS' purchase price for the SITE if the parties consummate the proposed transaction. IV. RETENTION OF DISCRETION TO APPROVE THE PROJECT AND DDA: NO PRE -COMMITMENT It is anticipated that the PROJECT and the DDA providing for its implementation will be presented to the CDC BOARD for approval. The parties understand that the CDC is reserving the right to exercise its discretion as to all matters which it is, by law, entitled or required to exercise its discretion, including, but not limited to the following: A. Approval by the CDC of the Final PROJECT as Contained in the DDA The parties understand that the CDC has the complete and unfettered discretion to reject the DDA without explanation or cause. The risk of loss of all processing, design and developmental costs incurred by the DEVELOPERS prior to DDA approval and execution shall be absorbed entirely by DEVELOPERS. B. Review and Approval by the CDC of all Discretionary Findings and Conclusions The duty of the CDC to dispose of the parcel comprising the SITE shall be conditioned upon the successful review and approval of all necessary findings and conclusions which the CDC BOARD is required to make, including all necessary findings and determinations required under CEQA, state and local land use provisions, and the California Community Redevelopment Law. As to any matter which the CDC may be required to exercise its unfettered discretion in advancing the PROJECT to completion, neither anything contained herein, nor to be contained in the DDA shall obligate the CDC to exercise its discretion in any particular manner, and any exercise of discretion reserved hereunder or required by law, shall not be deemed to constitute a breach of CDC duties under this AGREEMENT. C. No Pre -Commitment by the CDC By its execution of this AGREEMENT, the CDC is not committing itself to or agreeing to undertake any activity requiring the subsequent exercise of discretion by the CDC, or any department thereof including, but not limited to, the approval and execution of a DDA; the proposal, amendment, or approval of any land use regulation governing the SITE; the provision of any financial assistance for the development of any public or private interest in real property; the acquisition of real property or other property interest; or any other such activity. 6 ENA FOR THE HOME DEPOT/PSI 10/31 /2006 SD\558383.5 This AGREEMENT does not constitute a disposition of property or exercise of control over property by the CDC and does not require a public hearing. CDC execution of this AGREEMENT is merely an agreement to enter into a period of exclusive negotiations according to the terms hereof, reserving final discretion and approval by the CDC as to any proposed DDA and all proceedings and decisions in connection therewith. V. THE DEVELOPERS A. Developers' Experience As a condition precedent to the CDC's execution of this AGREEMENT, DEVELOPERS shall have submitted to the CDC a detailed description of the development experience of the DEVELOPERS and its principals, associates, employees, partners, and joint ventures. B. Offices of the Developers The principal offices of HOME DEPOT are located at: 2455 Paces Ferry Road Atlanta, GA 30339 The principal offices of PACIFIC STEEL, INC. are located at: 1700 Cleveland Ave. National City, CA 91950 The Project Manager for the DEVELOPERS will be: John Ziebarth of LIEBARTH AND ASSOCIATES on behalf of HOME DEPOT and Marisela Martinez of PACIFIC STEEL, INC. Other prime developers, employees, consultants, or representatives who are proposed to be directly involved in the Project will be determined by DEVELOPERS and submitted to the CDC upon any such determination. C. Full Disclosure 7 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SI)\558383.5 The DEVELOPERS shall maintain full disclosure to the CDC of its principals, officers, stockholders, partners, joint ventures, and all other pertinent information concerning the DEVELOPERS that is related to the PROJECT. D. Assignment The DEVELOPERS, without prior written approval of the CDC, may not assign this AGREEMENT. The CDC agrees that, notwithstanding the foregoing, the DEVELOPERS may assign their rights under this AGREEMENT to a corporation, trust, or partnership of which the DEVELOPERS own the majority beneficial interest and operational control. E. Progress Reports The DEVELOPERS agree to provide written reports advising the CDC on progress and/or problems with the proposed development of the PROJECT every thirty (30) days during the term of the AGREEMENT. VI. ENVIRONMENTAL REQUIREMENTS The DEVELOPERS shall prepare all necessary environmental documents as required by the California Environmental Quality Act (Public Resources Code Section 21,000 et seq.) and local regulations, for certification by the City. "I he DEVELOPERS agree to cooperate with the City and the CDC, as requested, to help determine the environmental impact of the proposed development and to prepare any other additional documents as may be needed to complete environmental review for the development of the PROJECT on the SITE; provided, however, that the CDC and the City shall not incur costs or expenses in connection therewith nor will CDC or City reimburse the DEVELOPERS for costs incurred related to preparing these materials. VII. REAL ESTATE COMMISSIONS The CDC has not engaged a broker, agent, or finder in connection with this transaction. As such, the CDC will not be responsible for any claims by a broker, agent or finder, and the DEVELOPERS agree to defend, indemnify, protect and hold the CDC harmless from any claim by any broker, agent, or finder retained by the DEVELOPERS. VIII. GENERAL PROVISIONS A. Le2,a1 Actions 1. Institution of Legal Actions In addition to any other rights or remedies. either party may institute legal action to cure, correct or reined), any default, to recover actual damages for any default, or to obtain any other remedy consistent with the purposes of this AGREEMENT; provided, however, that Paragraph C of this Part VIII shall supersede any conflicting provisions of this Paragraph A.1. Such legal actions 8 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 must be instituted and maintained in the Superior Court of the County of San Diego, State of California, or in any other appropriate court in that county. 2. Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this AGREEMENT. 3. Acceptance of Service of Process In the event that any legal action is commenced by the DEVELOPERS against the CDC, service of process on the CDC shall be made by personal service upon the Executive Director or Secretary of the CDC, or in such other manner as may be provided by law. In the event that any legal action is commenced by the CDC against the DEVELOPERS, service of process on the DEVELOPERS shall be made by personal service upon any corporate officer or designated agent for service of process of the Developers, or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. B. Rights and Remedies are Cumulative Except as otherwise expressly stated in this AGREEMENT, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. C. Specific Performance as Developers' Exclusive Remedy Subject to the DEVELOPERS' right to terminate this AGREEMENT in accordance with the terms of Paragraph E of this Part VIII, the DEVELOPERS' exclusive remedy for an uncured CDC default under this AGREEMENT is to institute an action for specific performance of the terms of this AGREEMENT, and in no event shall the DEVELOPERS have the right, and the DEVELOPERS expressly waive the right, to seek monetary damages of any kind (including but not limited to actual damages, economic damages. consequential damages, or lost profits) from the CDC in the event of a default by the CDC under this AGREEMENT or any action related to this AGREEMENT. Notwithstanding the foregoing, the DEVELOPERS shall retain the right to seek a writ of mandate in the event of any final denial by the CDC of any CDC permit or approval pertaining to the PROJECT. D. Attorney's Fees If either party to this AGREEMENT is required to initiate or defend litigation in any way connected with this AGREEMENT, the prevailing party in such litigation in addition to any other relief which may he granted, whether legal or equitable, shall be 9 ENA FOR THE HOME DEPOT/PSI l 0/31 /2006 SD\558383.5 entitled to its actual and reasonable attorney's fees. if either party to this AGREEMENT is required to initiate or defend litigation with a third party because of the violation of any teens or provision of this AGREEMENT by the other party, then the party so litigating shall be entitled to its actual and reasonable attorney's fees from the other party to this AGREEMENT. As used herein, the term "attorney's fees" shall include attorney's fees incurred related to the foregoing described litigation and for any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, retaining expert witnesses, taking depositions and discovery, and all other necessary costs incurred in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. The parties hereto acknowledge and agree that each such party shall hear its own legal costs incurred in connection with the negotiation, approval, and execution of this ACiREEMENT. E. Termination Rights Notwithstanding the nominal EXCLUSIVE NEGOTIATION PERIOD hereinabove set forth, either party may terminate this AGREEMENT if the other party has materially defaulted in its obligations herein set forth, and the terminating party has provided the defaulting party with written notification of such determination, and the defaulting party has refused to cure same. The written notification shall set forth the nature of the actions required to cure such default if curable. The defaulting party shall have thirty (30) days from the date of the written notification to cure such default. If such default is not cured within the thirty (30) days, the termination shall be deemed effective. For purposes of this paragraph, the parties hereby acknowledge that time is of the essence. Each party shall also have the right to terminate this AGREEMENT in the event that (a) the CDC or the DEVELOPERS determine that the PROJECT is infeasible, based on financial or environmental impact considerations, or not in the public interest; or (b) the parties reach an impasse in their negotiation of the DDA which cannot be resolved after good faith efforts; or (c) the DEVELOPERS terminate the Letter of Intent between them related to development of this PROJECT for any reason. Upon such a termination, the CDC shall return the BALANCE OF DEVELOPER'S DEPOSIT, if any, to the DEVELOPERS'. in care of their Managing Partner. F. Indemnity 1'he DEVELOPERS shall indemnify, protect defend and hold harmless the CDC and the City and the CDC's and the City's respective elected officials, officers, employees, representatives, members, and agents from and against any and all challenges to this AGREEMENT, or any and all losses, liabilities, damages, claims or costs (including attorneys' fees) arising from DEVELOPERS' negligent acts. errors, or omissions with respect to its obligations hereunder or the SITE, excluding any such losses arising from the sole negligence or sole willful misconduct of the CDC or the conduct of third parties outside the control of the DEVELOPERS. This indemnity obligation shall survive the termination of this AGREEMENT. Notwithstanding the foregoing, in the event of a third party challenge to the validity of this AGREEMENT. 10 ENA FOR THE HOME DEPOT/PSI 10/31/2006 Sl)\558383.5 DEVELOPERS shall have the option to terminate this AGREEMENT in lieu of its indemnity obligation. G. Notices Demand and Communications Between the Parties Formal notices, demands, and communications between CDC and DEVELOPERS shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) or by mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to: To CDC: With copy to: To Developer: To Developer: With copy to: 11 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 Community Development Commission 1243 National City Boulevard National City, CA 91950 Attn: Brad Raulston Foley & I,ardner LLP 402 West Broadway, Suite 2300 San Diego, CA 92101 Attn: Richard L. Moskitis, Esq. Home Depot USA Inc. 3800 West Chapman Avenue Orange, CA 92868 Attn: Ann Jerhoff, Director -Legal The I -Lome Depot USA Inc. 3800 West Chapman Avenue Orange. CA 92868 Attn: George Ray, Real Estate Division Pacific Steel, Inc. 1700 Cleveland Avenue National City, CA 91950 Attn: Marisela Martinez Latham and Watkins 600 West Broadway Suite 1800 San Diego, CA 92101 Attn: Allen I laynie Attn: Clifton Williams With copy to: With copy to: The Nagle Law Group 4530 East Shea Boulevard, Suite 140 Phoenix, AZ 85028 Attn: Veena Beglinger Law Firm of Richard D. McDonald 4350 La Jolla Village Drive, Suite 150 San Diego, CA 92122 Attn: Richard McDonald Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed in the manner provided above shall be deemed effective on the second business day following deposit in the United States mail. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as either party may from time to time designate by mail. H. Nonliability of City and CDC Officials and Employees No member, official, employee, or contractor of the City or the CDC shall be personally liable to the DEVELOPERS in the event of any default or breach by the CDC or for any amount, which may become due to the DEVELOPERS or on any obligations under the terms of the AGREEMENT. I. Interpretation The terms of this AGREEMENT shall be construed in accordance with the meaning of the language used and shall not he construed for or against either party by reason of the authorship of this AGREEMENT or any other rule of construction which might otherwise apply. The Part and Paragraph headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this AGREEMENT. J. Entire Agreement, Waivers, and Amendments This AGREEMENT integrates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotia.tions or previous agreements between the parties with respect to all or any part of the subject matter hereof All waivers of the provisions of this AGREEMENT must be in writing and signed by the appropriate authorities of the party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of CDC and DEVELOPERS. K. Counterparts 12 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558 383.5 This AGREEMENT may be executed in counterparts, each of which, after all the parties hereto have signed this AGREEMENT, shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. L. Successors This AGREEMENT shall be binding upon and shall inure to the benefit of the permitted successors of each of the parties hereto. M. Further Assurances The parties hereto each agree, without further consideration, to execute such other and further documents, and to perform such other and further acts, as may be necessary or proper in order to consummate the transaction set forth in and contemplated by this AGREEMENT. N. Severability In the event any section or portion of this AGREEMENT shall be held, found, or determined to be unenforceable or invalid for any reason whatsoever, the remaining provisions shall remain in effect, and the parties hereto shall take further actions as may be reasonably necessary and available to them to effectuate the intent of the parties as to all provisions set forth in this AGREEMENT. O. Time is of the Essence Time is of the essence for each of the DEVELOPERS' obligations under this AGREEMENT. P. Confidentiality The DEVELOPERS acknowledge and agree that the CDC is a public entity with a responsibility and, in many cases, legal obligation to conduct its business in a manner open and available to the public. Accordingly, any information provided by the DEVELOPERS to the CDC with respect to the SITE, the PROJECT or the DEVELOPERS may he disclosed to the public either purposely, inadvertently, or as a result of a public demand or order. With respect to any information provided that the DEVELOPERS reasonably deem and identify in writing as proprietary and confidential in nature, the CDC agrees to exercise its best efforts to keep such information confidential. 13 ENA FOR THE HOME DEPOT/PSI 10/31/2006 Sl.)\558383.5 IN WITNESS WHEREOF, the CDC and the DEVELOPER have signed this AGREEMENT on the respective dates set forth below. COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATION AI, CITY HOME DEPOT USA., INC. By: Dated: 11/21/0_6 Dated: ATTEST: By: �¢ George Eiser, III CDC Counsel Dated: - 2 7-04 ENA FOR THE HOME DEPOT/PSI 10/30/2006 SD\558383.5 Bv: Dated: PACIFIC STEEL, INC. Solor o, President Dated: 4(i) 'b; Z4)6 14 IN WITNESS WHEREOF, the CDC and the DEVELOPER have signed this AGREEMENT on the respective dates set forth below. COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By: Nicfc Inzunz;"Oh irman Dated: 11/21/06 ATTEST: IIOME DEPOT U.S.A., INC. By: Ann off Direc. • - Legal Dated: /(Z- ey By: Dated: PACIFIC STEEL, INC. Chris Zapata, S$c etary Dated: / / z�' �• By: APPROV ;D S 'I'O FORM: Fernando Solorzano, President Dated: By: �-'q"_ �r By George Eiser, III CDC Counsel Dated: 11" 27-CWG Dated: 14 ENA FOR THE HOME DEPOT/PSI 10/27/2006 SD\558383.5 tl�Morris Campbell November 3, 2006 Patricia Beard Redevelopment Manager City of National City 1243 National City Blvd. National City, CA 91950 Re: Property bounded by Civic Center (North) Cleveland Avenue (East) 18th Street (South) BNSF Rail Line (West) National City, CA Dear Ms. Beard: Commercial Real Estate brokerage 9255 Towie Cirre Drr n.. Suite 380 San Diego Cal ilor nia 92171 858.452.0077 Fax 858.558.1717 ww.morrisanllcampbell.com I am a real estate broker working with Home Depot in San Diego County. Home Depot is evaluating the cost to construct and operate a store between the above -referenced streets and the BNSF rail line. You requested that I describe my progress to date. As of this date I have discussed acquisition of certain properties, within the above -referenced boundaries, with the property owner(s) or its representative as follows: Assessor Parcel No. Owner 559-010-04 559-051-04 559-051-08 559-051-10 Patricia Rhodes 559-076-11 Suzanne Leif of the Anthony L. Bedford/Leif Trust 559-040-46 BNSF Railroad 559-040-47 Laurie Jardine with Staubach Co. under 559-040-48 contract with the railroad 559-040-52 I have tried to discuss acquisition of the property and have left a voicemail with William Thornton Jr. of Alamo Drive Limited Partnership for APN No's 559-076-04 and 559-076-05. I will continue to attempt to contact William Thornton Jr. in the days ahead. Best regards, Morris and Campbell ichae .. orris MJM:/ NOY-03-2006 10:04 FROM- T-918 P 002/003 F-954 INCUMBENCY/SECRETARIAL CERTIFICATE The undersigned Assistant Secretary of Home Depot U.S.R., Inc.. a Delaware corporation (the "Corporation"), hereby certifies: 1. That the resolutions below constitute a true and correct copy of the resolutions contained in the Home Depot U.S.A.. Inc.. Unanimous Written Consent of the Board of Directors in Lieu of A Special Meeting, effective July 1, 2003, and that these resolutions have not been amended, annulled. rescinded or revoked and remain in full force and effect as of the date hereof. RESOLVED, that the Executive Vice President, Secretary and General Counsel, the Senior Vice President•Rea1 Estate, the Vicc President - RCM Estate, the Vice President -Real Estate Law, each of the Senior Directors -Real Estate Law, each of the Directors -Real Estate Law, each of the Corporate Counsel -Real Estate Law, and each of them acting alone or together, or their duly delegated designee, are hereby authorized and directed. in the name of the Corporation, to take such steps as are necessary or desirable to effect the Corporation's policy of expansion and maintenance of its properties including, but not limited to, the acquisition, disposition or financing of real estate, the execution of Leases, Reciprocal Easement Agreement, Development Agreements, Easements, Servitudes, Right of Way. Assignments and any amendments or modifications to the foregoing, or any other instrument required to accomplish the. aforesaid Corporate putposcs; and FURTHER RESOLVED, that the Executive Vice President, Secretary and General Counsel, the Senior Vice President -Real Estate, the Vicc President - Real Estate, the Vice President -Real Estate Law, each of the Senior Directors -Real Estate Law, each of the Directors -Real Estate Law, each of the Corporate Counsel -Real Estate Law and each of them acting either alone or together, or their duly delegated designee, are hereby authorized and directed. in the name of the Corporation. to take, or cause to be taken, any and all actions and to execute and deliver arty and all such other contracts. assignments. casements, conveyances, deeds, leases, subleases, agreements, certificates. instruments or any other documents as such individual or delegated designee may consider necessary or desirable to carry out the foregoing resolution and the transactions contemplated thereby; and FURTHER RESOLVED, that these resolutions hereby revoke and supersede any other resolutions that heretofore granted the dele ation of corporate authority to execute and deliver real estate documents by and on behalf of the Corporation. OrtREALEST,FORMStCorporate,Incumbency Sxretarial Celt March 2006.doc NOV-03-2006 10:04 FROM- T-910 P 003/003 F-954 The persons named below were on the date hereof the duly designated and qualified sienatotics of the Corporation, as set opposite his or her respective name, and that the signature appearing opposite his or her name. ih the genuine facsimile signature of said signatory; Name Michael C. LaFerle Michael T. McGuire James J. Scott Jeff A_ Israel Ann K. Jcrhoff Jacob R. Pritcher. Jr. Cynthia L. Warren Title Si^nature Vice President Real Estate Vice President Real Estate Law Senior Director Real Estate Law Senior Director Real Estate Law % _r Director Real Estate Law (�{- Director 1 4 Real Estate Law Director Real Estatt Law Brett D. Soloway Director Real Estate Law Erika M. Strewn Corporate Counsel - Real Estate Law Thomas K. Anderson Corporate Counsel - Real Estate Law lotleka4z.fh_ jv IN WITNESS WHEREOF. the undersigned has hereunto affixed the seal of the Corporation and set his'her signature, on this. the / day of {r j$ r ?QOsQ. (CORPORATE SEAL) C: Title: 3 _7.9.20ti6 Mar/ Bech Lamo•ee As stant Secretary EARLY ENTRY AGREEMENT THIS EARLY ENTRY AGREEMENT (the "Agreement") is made and entered into effective as of the day of , 2006, by and between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("The CDC"), and IIOME DEPOT U.S.A., INC. a Delaware Corporation and PACIFIC STEEL, INC., a California corporation (hereafter collectively referred to as "DEVELOPER"). RECITALS A. The CDC and the Developer have entered into an Exclusive Right to Negotiate Agreement, dated as of , 2006, for the negotiation of a disposition and development agreement with respect to certain real property in the City of National City know as Assessor Parcels No. (the "Property"). B. The Developer desires to perform certain predevelopment work consisting of certain tests, studies, and analyses necessary to evaluate the condition of the Property (the "Predevelopment Work"). C. The CDC wishes to accommodate the Developer's desire to commence the Predevelopment Work on the Property by granting a right of entry to Developer upon certain terms and conditions. NOW, THEREFORE. for good and valuable consideration, Developer and CDC hereby agree as follows: AGREEMENT 1. Right of Entry. Provided that all of the terms and conditions of this Agreement are fully satisfied, the CI)C hereby grants to Developer and its employees, agents and contractors the nonexclusive right to enter upon the Property to perform the Predevelopment Work, and for no other purposes without the prior written approval of the CDC's Executive Director or his designee. This agreement shall automatically terminate and expire one hundred and twenty (120) days from the date of this Agreement. The term of this Agreement may be extended at the sole and absolute discretion of the CDC Executive Director or his designee for an additional period not to exceed thirty (30) days. It is expressly understood that this Agreement does not in any way whatsoever grant or convey any rights of possession, easement or other interest in the Property to the Developer. 2. Agreement. By execution of this Agreement, Developer agrees for itself and on the behalf of its employees, agents, consultants and contractors as follows: the Property. a. The Developer will not permit any dangerous condition to be created on Exhibit 1 - 4 h. That all acts and things done by Developer on the Property will be done in a careful and reasonable manner. in accordance with all federal, state and local laws. c. That Developer enters the Property entirely at its own cost, risk and expense. d. That prior to the Developer's entry upon the Property and during the period of this Agreement, there shall be in effect and shall provide satisfactory evidence to the CDC of the following: a. Workers' Compensation insurance as required by law. b. Commercial general liability insurance written on an occurrence basis, with a combined single limit of at least One Million dollars ($1,000,000) consisting of both bodily injury and property damage coverage; and c. Automobile liability insurance, including liability for all owned, hired and non -owned vehicles, with minimum limits of One Million Dollars($1,000,000) for bodily injury per person, One Million Dollars ($1,000.000) property damage and One Million Dollars ($1,000,000) combined single limit per occurrence. d. CDC of National City shall be named as an additional insured under the commercial general liability policy e. That Developer shall not permit any mechanics', material men's or other liens of any kind or nature(" I,iens") to be filed or enforced against the Property in connection with the Predevelopment Work. Developer shall indemnify, defend and hold harmless CDC from all liability for any and all liens, claims and demands, together with costs of defense and reasonable attorneys' fees, arising from any Liens. CDC reserves the right, at its sole cost and expense, at any time and from time to time, to post and maintain on the Property, or any portion thereof, or on the improvements on the Property, any notices of non -responsibility or other notice as may be desirable to protect CDC against liability. In addition to, and not a s a limitation of CDC's other rights and remedies under this Agreement, should the Developer fail, within ten (10) days of written request from CDC. either to discharge any Lien or to bond for any Lien, or defend, indemnify, and hold harmless CDC from and against any loss, damage, injury, liability or claim arising out of a Lien, then CDC at its option, may elect to pay such Lien, or settle or discharge such Lien and any action or judgment related thereto and all costs, expenses and attorneys' fees incurred in doing so shall be paid to CDC by the Developer upon written demand. f. That Developer shall not have any interest in the Property or be entitled to any reimbursement or repayment for any work performed upon the Property pursuant to this Agreement. Developer shall. at the written request of the CDC, leave the Property in a condition that does not create an unreasonable risk of harm to the public. Exhibit 2 - 4 g. The Developer shall take all necessary precautions to prevent the import and/or release into the environment of any hazardous materials, which are imported to, in, on or under the Property during the performance of the Predevelopment Work. If hazardous materials are imported onto the Property as a result of the performance of the Predevelopment Work, the Developer shall be solely responsible for removing such imported hazardous materials in conformance with all Governmental Requirements. The Developer shall report to the CDC, as soon as possible after each incident, any unusual or potentially important incidents with respect to the environmental condition of the Property. 3. Indemnity. Developer hereby agrees to defend, indemnify and hold the CDC and its officers, officials, members, employees, agents and representatives, harmless from and against any and all loss, damage, injury, liability, claim, cost or expense (including, without limitation, reasonable attorneys' fees, expert witness fees, court costs, and expenses) arising from or attributable to the activities of Developer or any of its employees, agents consultants or contractors upon the Property pursuant to this Agreement. All use of and entry upon Property shall be at the sole cost, risk and expense of the Developer. 4. Miscellaneous. (a) Choice of Law. This Agreement is to be governed hy, and construed in accordance with, the laws of the State of California. (b) Remedies. Either party shall, in addition to all other rights provided herein or as may be provided by law. he entitled to the remedies of specific performance and injunction to enforce its rights hereunder, except to the extent expressly provided to the contrary in this Agreement. All rights and remedies under this Agreement are cumulative and not one of them shall he exclusive of any other, and each party shall have the right to pursue any one or all of such rights and remedies or any other remedy which may be provided by law, whether or not stated in this Agreement, except to the extent expressly provided to the contrary in this Agreement. (c) Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (d) Non -Liability of Public Officials. No officer, employee, member, agent or representative of the CDC shall he personally liable to Developer, or any successor in interest, in the event of any default or breach by the CDC, or for any amount which may become due to Developer or its successor, or for any breach of any obligation of the terms of this Agreement. Exhibit 3 - 4 IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first set forth above. CDC: COMMUITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: , Chairman DEVELOPER: HOME DEPOT U.S.A., INC., a Delaware Corporation and PACIFIC STEEL, INC, a California Corporation By: HOME DEPOT U.S.A., INC., a Delaware Corporation By: Its: By: PACIFIC STEEL, INC., a California Corporation By: Its: Exhibit 4 - 4 Passed and adopted by the Community Development Commission of National City, California, on November 21, 2006, by the following vote, to -wit: Ayes: Councilmembers Inzunza, Morrison, Natividad, Parra. Nays: None. Absent: Zarate. Abstain: None. AUTHENTICATED BY: NICK INZUNZA Chairman Communi Devel ent Commission Secretary ent Commission By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2006-244 of the Community Development Commission of the City of National City, California, passed and adopted on November 21, 2006. Secretary Community Development Commission By: Deputy City of National City, California COMMUNITY DEVELOPMENT COMMISSION AGENDA STATEMENT MEETING DATE November 21, 2006- AGENDA ITEM NO. 42 ITEM TITLE Approving an Exclusive Negotiation Agreement with Home Depot USA, Inc. and Pacific Steel, Inc. and authorizing the Chairman to execute the Agreement. PREPARED BY DEPARTMENT Patricia Beard Community Development Commission Redevelopment Manager EXPLANATION Home Depot USA, Inc. ("Home Depot") and Pacific Steel, Inc. ("PSI") have signed a Letter of Intent and have approached the Community Development Commission ("CDC") requesting to explore a joint redevelopment project on properties owned by PSI, BNSF Railway Company, Patricia H. Rhodes Trust, Anthony L. Bedford and Leif Trust, and Alamo Drive Limited Partners on the west side of Cleveland Avenue between Civic Center Drive and 18th Street. The attached Exclusive Negotiation Agreement ("ENA") would provide a period of six months (180 days) in which to study the feasibility and desirability of such a project. All affected property owners have been contacted and been made aware of this proposal prior to the ENA being brought for consideration. (Please see attached Background Report for further information.) Environmental Review The ENA is exempt from the California Environmental Quality Act ("CEQA"). Financial Statement The developers will deposit $25,000 to pay for costs associated with the ENA. Account No STAFF RECOMMENDATION Approve the ENA. BOARD / COMMISSION RECOMMENDATION Not applicable. ATTACHMENTS 1. Background Report 2. Aerial photo of development site 3. Proposed BIN A 4. Letter of Intent between llome Depot and PSI Resolution No. ao D G - 5. Property owner contact letter C aoa(, - `--to , A-200 (9/80) RESOLUTION NO. 2006 — RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AUTHORIZING THE CHAIRMAN TO EXECUTE AN EXCLUSIVE NEGOTIATING AGREEMENT WITH HOME DEPOT U.S.A., INC. AND PACIFIC STEEL, INC. FOR PARCELS CONSISTING OF APPROXIMATELY 15 ACRES ON CLEVELAND AVENUE IN NATIONAL CITY'S REDEVELOPMENT PROJECT AREA WHEREAS, the Home Depot U.S.A., Inc. and Pacific Steel, Inc. have signed a Letter of Intent to cooperatively work on plans for a redevelopment project on properties owned and leased by Pacific Steel, Inc. as well as other adjacent properties; and WHEREAS, the Home Depot U.S.A., Inc. and Pacific Steel, Inc. have requested an Exclusive Negotiation Agreement with the Community Development Commission to set aside a 180 day period in which to attempt to plan such a project; and WHEREAS, if feasible the proposed redevelopment project will benefit the Redevelopment Project Area and help to increase the fiscal sustainability of both the Community Development Commission and the City of National City. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby authorizes the Chairman to execute an Exclusive Negotiation Agreement with Home Depot U.S.A.., Inc. and Pacific Steel, Inc. for Parcels on Cleveland Avenue (APN 559-051-09, 11, 12, 559-056-03, 559-071-04, 559-076-01, 02, 09, 10, 559-076-06, 559-076-03, 559-040-46, 47, 48, 52, 559-010-04, 559-051-04, 08, 10, 559-076-11, 559-076-04, and 05) in the National City Redevelopment Project area. PASSED AND ADOPTED this 21st day of November, 2006. Nick Inzunza, Chairman ATTEST: Brad Raulston, Secretary APPROVED AS TO FORM: George H. Eiser, Ill Legal Counsel ATTACHMENT 1 BACKGROUND REPORT The Home Depot and PSI jointly approached CDC staff with a request to redevelop properties on the west side of Cleveland Avenue between Civic Center Drive and 186" Street. The assessors parcel numbers included in the proposed development footprint include 559-051-09, 11, 12, 559- 056-03, 559-071-04, 559-076-01, 02, 09, 10, 559-076-06, 559-076-03, 559-040-46, 47, 48, 52, 559- 010-04, 559-051-04, 08, 10, 559-076-11, 559-076-04, and 05 consisting of approximately 15 acres in National City's redevelopment project area. The conceptual project includes a Home Depot retail outlet larger than 100,000 square feet plus a 35,000 square foot garden center, a separate detached retail outlet of about 5,000 square feet at the corner of Civic Center Drive and Cleveland Avenue, a separate detached mixed use office building at the comer of 18th Street and Cleveland Avenue and the redevelopment of PSI on about 2.6 acres off of 18th Street, abutting the BNSF railroad tracks. Staff is bringing the request for consideration due to the following likely benefits of such a project to the National City community: ✓ Environmental remediation of a property long contaminated with hazardous materials ✓ City sales tax revenue estimated at $1.1 million annually ✓ Estimated tax increment revenue of $99,810 annually ($19,362 set aside for development of low and moderate income housing). ✓ Creation of approximately 234 jobs paying an average of $15.35 per hour including medical, dental and retirement benefits ✓ Beautification of the Harbor District area of the National City redevelopment project area This proposal came to staff as a result of a Letter of Intent (attached) signed between PSI and Home Depot. PSI owns or leases most of the property under consideration for the project. The CDC adopted a Resolution of Necessity to acquire certain parcels (APN#s 559-040-46, 47, 48, 52) from the BNSF Railway and leased by PSI on June 14, 2005 and has been cooperatively negotiating to acquire these parcels from the railroad ever since. Also on June 14, 2005, the CDC approved an Agreement Concerning Date of Valuation with PSI, preserving a purchase price on the PSI parcels in anticipation of a possible future acquisition. Now PSI and Home Depot are requesting the CDC to consider their proposal instead of acquiring the property for redevelopment by the CDC or another private entity. Properties not under the control of PSI and requested to be included in this ENA include parcels owned by Patricia H. Rhodes Trust, BNSF Railway, Anthony L. Bedford and Leif Trust, and Alamo Drive Limited Partnership. These parties have been contacted either by the CDC or Home Depot prior to the ENA being brought for consideration. If approved the ENA would allow six months (180 days) for due diligence and project discussions, which might lead to an Owner Participation Agreemcnt with PSI and a Development and Disposition Agreement with Home Depot. Approval of the ENA does not pre -commit the CDC to a specific project, project footprint, or to any future arrangement with the developers. However it does commit the CDC to exclusive discussions about redevelopment of these properties for the next six months. Note: This ENA will not preclude analysis in the Requcst for Proposals related to an Industrial Park for relocation of potential non -conforming uses within the Westside Specific Planning area. The RFP is non -site specific and is limited to consultant analysis. 1 Attachment 3 EXCLUSIVE NEGOTIATION AGREEMENT By and Between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY And HOME DEPOT U.S.A., INC. And PACIFIC STEEL, INC. THIS EXCLUSIVE NEGOTIATION AGREEMENT (hereafter referred to as "AGREEMENT') is entered into this 21st day of November, 2006, by and between the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic (hereafter referred to as "CDC"), and HOME DEPOT U.S.A., INC., a Delaware Corporation and PACIFIC STEEL, INC., a California corporation (hereafter collectively referred to as "DEVELOPERS"), on the terms and provisions set forth below. RECITALS WHEREAS, the DEVELOPERS own or have a Letter of Intent to mutually plan and develop certain real properties owned by PACIFIC STEEL, INC. (Assessor Parcel Numbers 559- 051-09, 11, 12, 559-056-03, 559-071-04, 559-076-01, 02, 09, 10, 559-076-06, 559-076-03) located on the west side of Cleveland Avenue north of 18th Street (hereafter referred to as "PSI SITE"); and WHEREAS, on June 14, 2005, the Community Development Commission ("CDC") adopted a Resolution of Necessity to acquire real property by eminent domain for redevelopment purposes (Assessor Parcel Numbers 559-040-46, 47, 48, 52) owned by BNSF railroad adjacent to the PSI SITE (hereafter referred to as "BNSF SITE"); and WHEREAS, the DEVELOPERS are interested in purchasing the BNSF SITE from the CDC and combining it with the PSI SITE and to assemble parcels (Assessor Parcel Numbers 559-010-04, 559-051-04, 08, 10 owned by the Patricia H. Rhodes Trust, 559-040-47, 48 owned by BNSF railroad, 559-076-11 owned by Anthony L. Bedford Trust and Leif Trust, 559-076-04, 05 owned by Alamo Drive Limited Partners (hereafter referred to as "OTIIER PROPERTIES") to develop a mixed -use commercial - industrial development upon it, anchored by The home Depot retail store with the continued operation of PSI (hereafter referred to as "PROJECT"); and WHEREAS, the CDC and the DEVELOPERS desire to enter into this AGREEMENT to initiate exclusive negotiations for up to one hundred and eighty (180) days (hereafter referred to as "EXCLUSIVE NEGOTIATION PERIOD") to allow the DEVELOPERS to (i) undertake due diligence activities regarding the PROJECT; (ii) design the PROJECT; (iii) establish the ENA Home Depot and PSI 10/31/2006 SD\558383.5 3 responsibilities, schedule, and financial parameters for developing the PROJECT; (iv) negotiate the purchase price of the BNSF SITE; (v) assemble OTHER PROPERTIES; and (vi) negotiate a Disposition and Development Agreement (hereafter referred to as "DDA"). NOW, THEREFORE, in consideration of the recitals and mutual covenants and conditions contained herein, the parties hereto agree as follows: 1. SITE The BNSF SITE, PSI SITE, and OTHER PROPERTIES are collectively referred to hereafter as the "SITE" and constitute the real property that is the subject of this AGREEMENT. The SITE is Assessor Parcel Numbers 559-051-09, 11, 12, 559-056-03, 559-071-04, 559-076-01, 02, 09, 10, 559-076-06, 559-076-03, 559-040-46, 47, 48, 52, 559-010-04, 559-051-04, 08, 10, 559-076-11, 559-076-04, 05, consisting of approximately 15 acres in National City, California, located on the west side of Cleveland Avenue from Civic Center Drive to 18t Street, bordered on the west side by the BNSF railroad tracks. The exact square footage of the SITE will be determined during the SITE planning activities outlined below. 11. EXCLUSIVE NEGOTIATION PERIOD A. Exclusive Negotiation Period The EXCLUSIVE NEGOTIATION PERIOD begins when the CDC executes this AGREEMENT (hereafter referred to as "COMMENCEMENT DATE") and shall last for one hundred and eighty (180) days thereafter. B. First Negotiation Period During the first ninety (90) days of the EXCLUSIVE NEGOTIATION PERIOD (hereafter referred to as "FIRST NEGOTIATION PERIOD"), the DEVELOPERS and CDC shall meet regularly, in good faith, and jointly formulate a plan to develop the PROJECT (hereafter referred to as "DEVELOPMENT PROGRAM"). The Development Program shall include and delineate the following elements: 1. The type and scope of the PROJECT; 2. The interface of a phased development with the complete build out of the SITE; 3. Required on and off -site infrastructure improvements; 4. Project. infrastructure, and state and local regulatory requirement costs; 5. Funding responsibilities and sources for the PROJECT; 2 ENA FOR THE HOME DEPOT/PSI 10/ 31 /2006 SD\558383.5 6. The parties/entities responsible for the various Project development activities; and 7. A detailed PROJECT development schedule. C. Due Diligence Also, during the FIRST NEGOTIATION PERIOD, the CDC and DEVELOPERS, as applicable, shall conduct their respective due diligence activities, including but not limited to: 1. DEVELOPERS' timely delivery and submission to the CDC of sufficient evidence that the DEVELOPERS are financially viable and have the required equity and financing to complete SITE development. 2. DEVELOPERS' timely review of preliminary title report information prepared for the SITE. 3. DEVELOPERS' timely investigation of the SITE. In conjunction therewith, and subject to the DEVELOPERS receiving all prior governmental approvals and agreeing to all conditions of such approvals, DEVELOPERS and their consultants and agents shall have the right to enter upon the SITE to conduct tests, studies, and investigations pursuant to an Early Entry Agreement, the form of which is attached hereto and incorporated herein as Exhibit 1; and 4. DEVELOPERS' timely submission of the DEVELOPMENT PROGRAM to the CDC for review and comment. D. Design Concept Plan Submission/Entitlements/Environmental Review By the end of the FIRST NEGOTIATION PERIOD, DEVELOPERS shall submit their Design Concept Plan for the PROJECT, including a Site Plan, Floor Plans, Exterior Elevations and Project Description and elevations, for review and consideration of acceptance by the Board of Directors of the CDC (hereafter referred to as "CDC BOARD"). Upon the acceptance of the Design Concept Plan by the CDC BOARD, the DEVELOPERS shall prepare and process with the City any necessary land use entitlements, environmental studies and reports. E. DDA Following Design Concept Plan acceptance by the CDC BOARD, and the close of the FIRST NEGOTIATION PERIOD, the CDC agrees to negotiate exclusively with the DEVELOPERS for the remaining ninety (90) days of the EXCLUSIVE NEGOTIATION PERIOD (hereafter referred to as "SECOND NEGOTIATION PERIOD") in order to negotiate and attempt to finalize the DDA. 3 ENA FOR THE HOME DEPOT/PSI 10/31/2006 Sll\558383.5 S If, at the close of the SECOND NEGOTIATION PERIOD, the CDC and DEVELOPERS have not agreed to the terms of the DDA, this AGREEMENT shall automatically terminate. Notwithstanding the above, the DEVELOPERS or the CDC's Executive Director in his sole discretion, may extend the Negotiation Period for up to an additional one hundred and eighty (180) days to complete DDA negotiations, the land use entitlements and the environmental studies, if the CDC's Executive Director determines additional time is reasonably required. F. Execution of DDA After the DEVELOPERS and the CDC agree upon the DDA, the EXCLUSIVE NEGOTIATION PERIOD may be extended for up to an additional ninety (90) days at the discretion of the CDC's Executive Director, or its acting Director (hereafter referred to as "THIRD NEGOTIATION PERIOD") in order to enable the CDC and the City to: 1. Notice and conduct a public hearing pursuant to Section 33433 of the California Health and Safety Code on the DDA; and 2. Process Site development, environmental and entitlement applications through the City's Planning Commission and City Council. The CDC agrees that during the EXCLUSIVE NEGOTIATION PERIOD, and during all of its extensions, the CDC shall not negotiate or enter into an agreement with any other person or entity regarding development of the SITE with the exception of continuing negotiations with BNSF related to SITE acquisition and the California Department of Toxic Substances Control related to hazardous materials conditions at the SITE unless it is with the expressed consent of DEVELOPERS. The obligation to negotiate in good faith requires the respective parties to communicate with each other with respect to those issues for which agreement has not been reached, and in such communication to follow reasonable negotiation procedures, including meetings, telephone conversations, and correspondence. The parties understand that final accord on all issues may not be reached. It is also understood that, (1) neither party is under any obligation to reach agreement on the SITE purchase price and/or DDA, and (2) the CDC reserves the right to approve or reject a DDA, the PROJECT, or any disposition of the SITE, in its sole discretion. as more particularly set forth in Part IV of this AGREEMENT. G. CDC and DEVELOPERS Obligations During the EXCLUSIVE NEGOTIATION PERIOD, the CDC and DEVELOPERS obligations shall include, but not be limited to, the following: 1. CDC Obligations a. Provide the DEVELOPERS with documents in the CDC's possession that would assist the DEVELOPERS with the 4 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 due diligence activities described in this AGREEMENT; and b. Upon acceptance of the DEVELOPMENT PROGRAM and verification of DEVELOPERS financial commitments to both purchase and develop the PROJECT, prepare a first draft of a DDA. 2. DEVELOPERS' Obligations a. Use its best efforts to investigate the SITE; b. Submit site plans, elevations, schematic drawings, detailed PROJECT development costs, PROJECT pro formas for SITE improvements, as well as a pro forma summarizing the total PROJECT and respective returns and other documents necessary for CDC and City review; and c. Submit proof of adequate funding or funding commitments for the PROJECT. III. DEVELOPERS' DEPOSIT Upon the approval of this AGREEMENT by the CDC BOARD, the DEVELOPERS shall deposit with the CDC Twenty Five Thousand Dollars ($25,000) (hereafter referred to as "DEVELOPERS' DEPOSIT"), in the form of a cashier's or certified check, or wire transfer, payable to the CDC. The CDC agrees to hold the DEVELOPERS' DEPOSIT in the CDC's account and make disbursements therefrom only pursuant to the terms and provisions of this AGREEMENT. DEVELOPERS agrees that the CDC may use the DEVELOPERS' DEPOSIT to reimburse itself for reasonable and actual attorneys' fees, consultant fees, appraisal fees, title reports, and any other related fees (excluding CDC staff costs) and costs (hereafter referred to as "DDA NEGOTIATION COSTS") incurred by the CDC in (i) negotiating and preparing this AGREEMENT, (ii) reviewing any documents submitted in furtherance of this AGREEMENT and/or DEVELOPERS' proposal to develop the PROJECT, (iii) any negotiations relating to the DDA and any related documents, and (iv) drafting the DDA or any other related documents. CDC shall submit to DEVELOPERS invoices reasonably detailing DDA NEGOTIATION COSTS CDC has incurred at the time it submits a reimbursement notice to the DEVELOPERS. CDC shall be free to withdraw funds from the DEVELOPERS' DEPOSIT, as needed, provided that it has submitted such invoices to the DEVELOPERS. The full $25,000 DEVELOPERS' DEPOSIT, without deduction of the DDA NEGOTIATION COSTS, shall be refundable to DFVEI..OPERS if there is a material default by the CDC of its obligations pursuant to this AGREEMENT. The $25.000 DEVELOPERS' DEPOSIT, less the DDA NEGOTIATION COSTS incurred to date (hereafter referred to as "BALANCE OF 5 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 7 DEVELOPERS' DEPOSIT"), if any, shall be refundable to DEVELOPERS in the event this AGREEMENT is terminated prior to or at the conclusion of the EXCLUSIVE NEGOTIATION PERIOD and prior to the execution of the DDA. In the event the DDA is fully executed and approved by all requisite action, the BALANCE OF DEVELOPERS' DEPOSIT, if any, shall be applied to the DEVELOPERS' purchase price for the SITE if the parties consummate the proposed transaction. IV. RETENTION OF DISCRETION TO APPROVE THE PROJECT AND DDA; NO PRE -COMMITMENT It is anticipated that the PROJECT and the DDA providing for its implementation will be presented to the CDC BOARD for approval. The parties understand that the CDC is reserving the right to exercise its discretion as to all matters which it is, by law, entitled or required to exercise its discretion, including, but not limited to the following: A. Approval by the CDC of the Final PROJECT as Contained in the DDA The parties understand that the CDC has the complete and unfettered discretion to reject the DDA without explanation or cause. The risk of loss of all processing, design and developmental costs incurred by the DEVELOPERS prior to DDA approval and execution shall be absorbed entirely by DEVELOPERS. B. Review and Approval by the CDC of all Discretionary Findings and Conclusions The duty of the CDC to dispose of the parcel comprising the SITE shall be conditioned upon the successful review and approval of all necessary findings and conclusions which the CDC BOARD is required to make, including all necessary findings and determinations required under CEQA, state and local land use provisions, and the California Community Redevelopment Law. As to any matter which the CDC may be required to exercise its unfettered discretion in advancing the PROJECT to completion, neither anything contained herein, nor to be contained in the DDA shall obligate the CDC to exercise its discretion in any particular manner, and any exercise of discretion reserved hereunder or required by law, shall not be deemed to constitute a breach of CDC duties under this AGREEMENT. C. No Pre -Commitment by the CDC By its execution of this AGREEMENT, the CDC is not committing itself to or agreeing to undertake any activity requiring the subsequent exercise of discretion by the CDC, or any department thereof including, but not limited to, the approval and execution of a DDA; the proposal, amendment, or approval of any land use regulation governing the SITE; the provision of any financial assistance for the development of any public or private interest in real property; the acquisition of real property or other property interest; or any other such activity. 6 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 must be instituted and maintained in the Superior Court of the County of San Diego, State of California, or in any other appropriate court in that county. 2. Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this AGREEMENT. 3. Acceptance of Service of Process In the event that any legal action is commenced by the DEVELOPERS against the CDC, service of process on the CDC shall be made by personal service upon the Executive Director or Secretary of the CDC, or in such other manner as may be provided by law. In the event that any legal action is commenced by the CDC against the DEVELOPERS, service of process on the DEVELOPERS shall be made by personal service upon any corporate officer or designated agent for service of process of the Developers, or in such other manner as may be provided by law, and shall be valid whether made within or without the State of California. B. Rights and Remedies are Cumulative Except as otherwise expressly stated in this AGREEMENT, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. C. Specific Performance as Developers' Exclusive Remedy Subject to the DEVELOPERS' right to terminate this AGREEMENT in accordance with the terms of Paragraph E of this Part VIIl, the DEVELOPERS' exclusive remedy for an uncured CDC default under this AGREEMENT is to institute an action for specific performance of the terms of this AGREEMENT, and in no event shall the DEVELOPERS have the right, and the DEVELOPERS expressly waive the right, to seek monetary damages of any kind (including but not limited to actual damages, economic damages. consequential damages, or lost profits) from the CDC in the event of a default by the CDC under this AGREEMENT or any action related to this AGREEMENT. Notwithstanding the foregoing, the DEVELOPERS shall retain the right to seek a writ of mandate in the event of any final denial by the CDC of any CDC permit or approval pertaining to the PROJECT. D. Attorney's Fees if either party to this AGREEMENT is required to initiate or defend litigation in any way connected with this AGREEMENT, the prevailing party in such litigation in addition to any other relief which may be granted. whether legal or equitable, shall he 9 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 entitled to its actual and reasonable attorney's fees. If either party to this AGREEMENT is required to initiate or defend litigation with a third party because of the violation of any terms or provision of this AGREEMENT by the other party, then the party so litigating shall be entitled to its actual and reasonable attorney's fees from the other party to this AGREEMENT. As used herein, the term "attorney's fees" shall include attorney's fees incurred related to the foregoing described litigation and for any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, retaining expert witnesses, taking depositions and discovery, and all other necessary costs incurred in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. The parties hereto acknowledge and agree that each such party shall bear its own legal costs incurred in connection with the negotiation, approval, and execution of this AGREEMENT. E. Termination Rights Notwithstanding the nominal EXCLUSIVE NEGOTIATION PERIOD hereinabove set forth, either party may terminate this AGREEMENT if the other party has materially defaulted in its obligations herein set forth, and thc terminating party has provided the defaulting party with written notification of such determination, and the defaulting party has refused to cure same. The written notification shall set forth the nature of the actions required to cure such default if curable. The defaulting party shall have thirty (30) days from the date of the written notification to cure such default. If such default is not cured within the thirty (30) days, the termination shall be deemed effective. For purposes of this paragraph, the parties hereby acknowledge that time is of the essence. Each party shall also have the right to terminate this AGREEMENT in thc event that (a) the CDC or the DEVELOPERS determine that the PROJECT is infeasible, based on financial or environmental impact considerations, or not in the public interest; or (b) the parties reach an impasse in their negotiation of the DDA which cannot be resolved after good faith efforts; or (c) the DEVELOPERS terminate the Letter of Intent between them related to development of this PROJECT for any reason. Upon such a termination, the CDC shall return the BALANCE OF DEVELOPER'S DEPOSIT, if any, to the DEVELOPERS', in care of their Managing Partner. F. Indemnity The DEVELOPERS shall indemnify, protect defend and hold harmless the CI)C and the City and the CDC's and the City's respective elected officials, officers, employees, representatives, members, and agents from and against any and all challenges to this AGREEMENT, or any and all losses, liabilities, damages, claims or costs (including attorneys' fees) arising from DEVELOPERS' negligent acts, errors, or omissions with respect to its obligations hereunder or the SITE, excluding any such losses arising from the sole negligence or sole willful misconduct of the CDC or the conduct of third parties outside the control of the DEVELOPERS. This indemnity obligation shall survive the termination of this AGREEMENT. Notwithstanding the foregoing, in the event of a third party challenge to the validity of this AGREEMENT, I0 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 i9- DEVELOPERS shall have the option to terminate this AGREEMENT in lieu of its indemnity obligation. G. Notices Demand and Communications Between the Parties Formal notices, demands, and communications between CDC and DEVELOPERS shall be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) or by mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to: To CDC: With copy to: To Developer: To Developer: With copy to: ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 Community Development Commission 1243 National City Boulevard National City, CA 91950 Attn: Brad Raulston Foley & Lardner LLP 402 West Broadway, Suite 2300 San Diego, CA 92101 Attn: Richard L. Moskitis, Esq. 11 Home Depot USA Inc. 3800 West Chapman Avenue Orange, CA 92868 Attn: Ann Jerhoff, Director -Legal The Home Depot USA Inc. 3800 West Chapman Avenue Orange, CA 92868 Attn: George Ray, Real Estate Division Pacific Steel, Inc. 1700 Cleveland Avenue National City, CA 91950 Attn: Marisela Martinez Latham and Watkins 600 West Broadway Suite 1800 San Diego, CA 92101 Attn: Allen Ilaynie Attn: Clifton Williams /3 With copy to: With copy to: The Nagle Law Group 4530 East Shea Boulevard, Suite 140 Phoenix, AZ 85028 Attn: Veena Beglinger Law Firm of Richard D. McDonald 4350 La Jolla Village Drive, Suite 150 San Diego, CA 92122 Attn: Richard McDonald Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed in the manner provided above shall be deemed effective on the second business day following deposit in the United States mail. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as either party may from time to time designate by mail. H. Nonliability of City and CDC Officials and Employees No member, official, employee, or contractor of the City or the CDC shall be personally liable to the DEVELOPERS in the event of any default or breach by the CDC or for any amount, which may become due to the DEVELOPERS or on any obligations under the terms of the AGREEMENT. I. Interpretation The terms of this AGREEMENT shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this AGREEMENT or any other rule of construction which might otherwise apply. The Part and Paragraph headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this AGREEMENT. J. Entire Agreement. Waivers, and Amendments This AGREEMENT integrates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the subject matter hereof. All waivers of the provisions of this AGREEMENT must be in writing and signed by the appropriate authorities of the party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of CDC and DEVELOPERS. K. Counterparts 12 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SI)\558383.5 This AGREEMENT may be executed in counterparts, each of which, after all the parties hereto have signed this AGREEMENT, shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. L. Successors This AGREEMENT shall be binding upon and shall inure to the benefit of the permitted successors of each of the parties hereto. M. Further Assurances The parties hereto each agree, without further consideration, to execute such other and further documents, and to perform such other and further acts, as may be necessary or proper in order to consummate the transaction set forth in and contemplated by this AGREEMENT. N. Severability In the event any section or portion of this AGREEMENT shall be held, found, or determined to be unenforceable or invalid for any reason whatsoever, the remaining provisions shall remain in effect, and the parties hereto shall take further actions as may be reasonably necessary and available to them to effectuate the intent of the parties as to all provisions set forth in this AGREEMENT. O. Time is of the Essence Time is of the essence for each of the DEVELOPERS' obligations under this AGREEMENT. P. Confidentiality The DEVELOPERS acknowledge and agree that the CDC is a public entity with a responsibility and. in many cases, legal obligation to conduct its business in a manner open and available to the public. Accordingly, any information provided by the DEVELOPERS to the CDC with respect to the SITE, the PROJECT or the DEVELOPERS may be disclosed to the public either purposely, inadvertently, or as a result of a public demand or order. With respect to any information provided that thc DEVELOPERS reasonably deem and identify in writing as proprietary and confidential in nature, the CDC agrees to exercise its best efforts to keep such information confidential. 13 ENA FOR THE HOME DEPOT/PSI 10/31/2006 SD\558383.5 /S EARLY ENTRY AGREEMENT THIS EARLY ENTRY AGREEMENT (the "Agreement") is made and entered into effective as of the day of , 2006, by and between COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic ("The CDC"), and HOME DEPOT U.S.A., INC. a Delaware Corporation and PACIFIC STEEL, INC., a California corporation (hereafter collectively referred to as "DEVELOPER"). RECITALS A. The CDC and the Developer have entered into an Exclusive Right to Negotiate Agreement, dated as of . 2006, for the negotiation of a disposition and development agreement with respect to certain real property in the City of National City know as Assessor Parcels No. (the "Property"). B. The Developer desires to perform certain predevelopment work consisting of certain tests, studies, and analyses necessary to evaluate the condition of the Property (the "Predevelopment Work"). C. The CDC wishes to accommodate the Developer's desire to commence the Predevelopment Work on the Property by granting a right of entry to Developer upon certain terms and conditions. NOW, THEREFORE, for good and valuable consideration, Developer and CDC hereby agree as follows: AGREEMENT 1. Right of Entry. Provided that all of the terms and conditions of this Agreement arc fully satisfied, the CDC hereby grants to Developer and its employees, agents and contractors the nonexclusive right to entcr upon the Property to perform the Predevelopment Work, and for no other purposes without the prior written approval of the CDC's Executive Director or his designee. This agreement shall automatically terminate and expire one hundred and twenty (120) days from the date of this Agreement. The term of this Agreement may be extended at the sole and absolute discretion of the CDC Executive Director or his designee for an additional period not to exceed thirty (30) days. It is expressly understood that this Agreement does not in any way whatsoever grant or convey any rights of possession, easement or other interest in the Property to the Developer. 2. Agreement. By execution of this Agreement, Developer agrees for itself and on the behalf of its employees, agents, consultants and contractors as follows: the Property. a. The Developer will not permit any dangerous condition to be created on Exhibit 1 - 4 /6 b. That all acts and things done by Developer on the Property will be done in a careful and reasonable manner, in accordance with all federal, state and local laws. c. That Developer enters the Property entirely at its own cost, risk and expense. d. That prior to the Developer's entry upon the Property and during the period of this Agreement, there shall be in effect and shall provide satisfactory evidence to the CDC of the following: a. Workers' Compensation insurance as required by law. b. Commercial general liability insurance written on an occurrence basis, with a combined single limit of at least One Million dollars ($1,000,000) consisting of both bodily injury and property damage coverage; and c. Automobile liability insurance, including liability for all owned, hired and non -owned vehicles, with minimum limits of One Million Dollars($1,000,000) for bodily injury per person, One Million Dollars ($1,000,000) property damage and One Million Dollars ($1,000,000) combined single limit per occurrence. d. CDC of National City shall be named as an additional insured under the commercial general liability policy c. That Developer shall not permit any mechanics', material men's or other liens of any kind or nature("Liens") to be filed or enforced against the Property in connection with the Predevelopment Work. Developer shall indemnify, defend and hold harmless CDC from all liability for any and all liens, claims and demands, together with costs of defense and reasonable attorneys' fees, arising from any Liens. CDC reserves the right, at its sole cost and expense, at any time and from time to time, to post and maintain on the Property, or any portion thereof, or on the improvements on the Property, any notices of non -responsibility or other notice as may be desirable to protect CDC against liability. In addition to, and not a s a limitation of CDC's other rights and remedies under this Agreement, should the Developer fail, within ten (10) days of written request from CDC. either to discharge any Lien or to bond for any Lien, or defend, indemnify, and hold harmless CDC from and against any loss, damage, injury, liability or claim arising out of a Lien, then CDC at its option, may elect to pay such Lien, or settle or discharge such Lien and any action or judgment related thereto and all costs, expenses and attorneys' fees incurred in doing so shall be paid to CDC by the Developer upon written demand. f. That Developer shall not have any interest in the Property or be entitled to any reimbursement or repayment for any work performed upon the Property pursuant to this Agreement. Developer shall. at the written request of the CDC, leave the Property in a condition that does not create an unreasonable risk of harm to the public. Exhibit 2 - 4 g. The Developer shall take all necessary precautions to prevent the import and/or release into the environment of any hazardous materials, which are imported to, in, on or under the Property during the performance of the Predevelopment Work. If hazardous materials are imported onto the Property as a result of the performance of the Predevelopment Work, the Developer shall be solely responsible for removing such imported hazardous materials in conformance with all Governmental Requirements. The Developer shall report to the CDC, as soon as possible after each incident, any unusual or potentially important incidents with respect to the environmental condition of the Property. 3. Indemnity. Developer hereby agrees to defend, indemnify and hold the CDC and its officers, officials, members, employees, agents and representatives, harmless from and against any and all loss, damage, injury, liability, claim, cost or expense (including, without limitation, reasonable attorneys' fees, expert witness fees, court costs, and expenses) arising from or attributable to the activities of Developer or any of its employees, agents consultants or contractors upon the Property pursuant to this Agreement. All use of and entry upon Property shall be at the sole cost, risk and expense of the Developer. 4. Miscellaneous. (a) Choice of Law. This Agreement is to be governed by, and construed in accordance with, the laws of the State of California. (b) Remedies. Either party shall, in addition to all other rights provided herein or as may be provided by law, he entitled to the remedies of specific performance and injunction to enforce its rights hereunder, except to the extent expressly provided to the contrary in this Agreement. All rights and remedies under this Agreement are cumulative and not one of them shall be exclusive of any other, and each party shall have the right to pursue any one or all of such rights and remedies or any other remedy which may be provided by law, whether or not stated in this Agreement, except to the extent expressly provided to the contrary in this Agreement. (c) Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (d) Non -Liability of Public Officials. No officer, employee, member, agent or representative of the CDC shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by the CDC, or for any amount which may become due to Developer or its successor, or for any breach of any obligation of the terms of this Agreement. Exhibit 3 - 4 /2 IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first set forth above. CDC: COMMUITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate and politic By: Chairman DEVELOPER: HOME DEPOT U.S.A., INC., a Delaware Corporation and PACIFIC STEEL, INC, a California Corporation By: HOME DEPOT U.S.A., INC., a Delaware Corporation By: Its: By: PACIFIC STEEL, INC., a California Corporation By: Its: Exhibit 4 - 4 i1 IN WITNESS WIIEREOF, the CDC and the DEVELOPER have signed this AGREEMENT on the respective dates set forth below. COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY By: Nick Inzunza, Chairman Dated: ATTEST: By: Chris Zapata, Secretary HOME DEPOT U.S.A., INC. B y: Dated: Ann e'"off Direc - Legal By: Dated: PACIFIC STEEL, INC. Dated: By: APPROVED AS 'l'O FORM: Fernando Solorzano, President By: George Eiser, III CDC Counsel Dated: ENA FOR THE HOME DEPOT/PSI 10/27/2006 SD\558383.5 Dated: By Dated: 14 NOV-03-2006 10:04 FROM- INCUMBENCY/SECRETARIAL CERTIFICATE T-916 P.002/003 F-954 The undersigned Assistant Secretary of Home Depot U.S.A., Inc., a Delaware corporation (the "Corporation"), hereby certifies: That the resolutions below constitute a true and correct copy of the resolutions contained in the Home Depot U.S.A.. Inc.. Unanimous Written Consent of the Hoard of Directors in Lieu of A Special Meeting, effective July 1, 2003, and that these resolutions have not been amended, annulled, rescinded or revoked and remain in full force and effect as of the date hereof. RESOLVED, that the Executive Vice President, Secretary and General Counsel, the Senior Vice President -Real Estate, the Vice President - Real Estate, the Vice President -Real Estate Law, each of the Senior Directors -Real Estate Law, each of the Directors -Real Estate Law, each of the Corporate Counsel -Real Estate Law, and each of them acting alone or together, or their duly delegated designee, are hereby authorized and directed, in the name of the Corporation, to take such steps as are necessary or desirable to effect the Corporation's policy of expansion and maintenance of its properties including, but not limited to, the acquisition, disposition or financing of real estate. the execution of Leases. Reciprocal Easement Agreement, Development Agreements, Easements, Servitudes, Right of Way, Assignments and any amendments or modifications to the foregoing, or any other instrument required to accomplish the, aforesaid Corporate purposes; and FURTHER RESOLVED, that the Executive Vice President, Secretary and General Counsel, the Senior Vice President -Real Estate, the Vice President - Real Estate, the Vice President -Real Estate Law, each of the Senior Directors -Real Estate Law, each of the Directors -Real Estate Law, each of the Corporate Counsel -Real Estate Law and each of them acting either alone or together, or their duly delegated designee, are hereby authorized and directed, in the name of the Corporation, to take, or cause to be taken, any and all actions and to execute and deliver any and all such other contracts. assignments. casements, conveyances, deeds, leases. sublca..ses, agreements. certificates, instruments or any other documents as such individual or delegated designee may consider necessary or desirable to carry out the foregoing resolution and the transactions contemplated thereby; and FURTHER RESOLVED, that these resolutions hereby revoke and supersede any other resolutions that heretofore granted the delegation of corporate authority to execute and deliver real state documents by and on behalf of the Corporation. O:tREALEST,FORMS+ComotateUncumhency Secrnariat Ceti March 2006.doc NOV-03-2006 10:04 FRO* T-916 P.003/003 F-054 The persons named below were on the date hereof the duly designated and qualified signatories or the Corporation, as set opposite his or her respective name. and that the signature appearing opposite his or her name. is the genuine facsimile signature of said signatory; Namc Michael C. LaFerlc Michael T. McGuire James J. SCott Jeff A Lsrael Ann K. Jcrhoff Jacob R. Pritcher, Jr. Cynthia L. Warren Brett D. Soiovvay Erika M. Strawn Title Sienaturc Vice President Real Estate Vicc President Real Estate Law Senior Director Real Estate Law Senior Director Real Estate Law Director Real Estate Law Director Real Estate Law Director Real Estate Law Director Real Estate Lava Corporate Counsel - Real Estate Law Thomas K. Anderson Corporate Counsel - Real Estate Law A '/ IN WITNESS WHEREOF, the undersigned has hereunto affixed the seal of the Corporation and sct his'her signature, on this the % day of Oarit F` ?UOQ. (CORPORATE SEAL] Title: '-9.20Uh Mar Bech Lamo•ce As static Secretary Q_ IN WITNESS WHEREOF, the CDC and the DEVELOPER have signed this AGREEMENT on the respective dates set forth below. COMMUNITY DEVELOPMENT COMMISSION OF TIIE CITY OF NATIONAL CITY By: Nick Inzunza. Chairman Dated: ATTEST: By: Chris Zapata, Secretary Dated: APPROVED AS TO FORM: By: George Eiser, I11 CDC Counsel HOME DEPOT USA., INC. By: Dated: By: Dated: PACIFIC STEEL. INC. By: FernaPdo So orzano, President Dated: G c i /3o/Zc.e /' /7645(' map-`t71z, CC0 Dated:__. Dated: ad d7 /.,00' 14 ENA FOR THE HOME DEPOT/PSI 10/30/2006 SD\558383.5 Attachment 4 3800 West Chapman Avenue, 5th Floor • Orange, CA 92868 October 20, 2006 Fernando Solorzano President Pacific Steel Inc. (PSI) 1700 Cleveland Ave National City, CA 91950 Direct Dial: 714 940-3604 Fax: 714 940-3579 e-mail: george_ray@homedepot.com Re: Home Depot U.S.A., Inc. - Letter of Intent to Acquire Approximately 14.05 Acres of Real Property Located on Cleveland Avenue, National City, San Diego County, California. Dear Mr. Solorzano: I am willing to recommend a transaction to our management on the general terms described herein. Upon receipt of this Letter of Intent executed by you, I will have our attorney prepare and distribute a draft of a definitive agreement (the "Agreement"), which will provide further details on the following terms (as well as certain additional terms). 1. Recitals. Home Depot U.S.A., Inc. ("Home Depot") desires to acquire from the Redevelopment Agency of the City of National City ("NCRA"), approximately 14.05 acres of real property located on Cleveland Avenue, National City, San Diego County, California (the "Property"), which property is identified on the attached plat map (the "Site Plan"), upon the following general terms and conditions to be more particularly set forth in definitive -agreements to be jointly negotiated by Home Depot, PSI (as herein after defined) and NCRA. The Property includes a portion of the real property owned by Pacific Steel, Inc. ("PSI") and located at 1700 Cleveland Avenue, National City, California (the "PSI Property"), as well as other parcels of real property located adjacent to the PSI Property. The portion of the PSI Property not to be included in the Property to be acquired by Home Depot consists of approximately 2.67 acres and is to be identified in the Agreement (the "PSI Retained Property"). It is the intent of Home Depot and PSI to enter into an exclusive negotiating agreement ("ENA") with NCRA providing a one hundred eighty (180) day period during which NCRA, Home Depot and PSI shall, on an exclusive basis, negotiate in good faith a disposition and development agreement ("DDA") pursuant to which NCRA shall purchase or otherwise acquire the Property, as well as the PSI Retained Property, and thereafter convey the Property to Home Depot and the PSI Retained Property to PSI. Mr. Fernando Solorzano October 20, 2006 Page 2 of 5 2. Terms of DDA. The DDA may contain the following general terms, as well as other terms and provisions, acceptable to the parties (including other terms and conditions related to the PSI Retained Property acceptable to PSI: A. Purchase Price and Earnest Money. The purchase price ("Purchase Price") shall be negotiated, based upon the actual net usable square footage of the Property and the PSI Retained Property, as shown on a survey to be obtained by Horne Depot. "Net usable square foot" shall be determined by excluding from the property any rights of way, easements, or other topographical features which are impractical for Home Depot's and PSI's intended use. Within five (5) business days after the effective date of the DDA Agreement. (the "DDA Effective Date"), Home Depot will deposit in escrow with the Title Company (hereinafter defined) an earnest money deposit of $50,000.00 (the "Earnest Money"). The Earnest Money shall remain refundable to Home Depot in the event Home Depot terminates the DDA Agreement during the Inspection or Approval Period (hereinafter defined), including any extensions thereof, and will be applicable to the Purchase Price if Closing occurs and otherwise disbursed in accordance with the terms of the Agreement. B. Inspection Period, Approval Period and Title Review Period. (a) Inspection Period. Horne Depot shall have one hundred twenty (120) days after the Effective Date (the "Inspection Period") to conduct such examinations, tests, studies and investigations as Home Depot shall deem necessary or desirable with respect to the Property, including, without limitation, boundary, wetland and topographical surveys, soil tests, borings, environmental investigations (including testing for asbestos and other hazardous substances in any improvements on the Property), economic feasibility studies and any other examinations, tests, studies and investigations as Home Depot shall elect to perform. NCRA shall deliver to Home Depot within five (5) days after the DDA Effective Date copies of all due diligence materials in its possession, including without limitation, copies of all title, survey, ad valorem, environmental, geotechnical, permitting and approval and development materials, studies and information. Home Depot shall have the right, at its election, to extend the Inspection Period for two (2) periods of sixty (60) days each by notice to NCRA on or before the last day of the Inspection Period or the then current extension thereof, as the case may be, and depositing with the Title Company within five (5) business days after each extension an additional Eamest Money deposit of $50,000.00 per extension, which additional Earnest Money deposit(s) shall he applicable to the Purchase Price if Closing occurs and refundable to Home Depot if Home Depot terminates the Agreement prior to the end of the Inspection/Approval Period. Home Depot shall have the right, in its sole and absolute discretion, to terminate the Agreement for any reason on or before the expiration of the Inspection Period, whereupon all Earnest Money shall be refunded to Horne Depot. (b) Approval Period. Home Depot shall have two hundred forty (240) days after the expiration of the Inspection Period (the "Approval Period") within which to pursue all "Approvals" necessary or desirable to construct, occupy and operate a prototypical Home Depot Home Improvement Store (the "Project") upon terms and conditions acceptable to Home Depot, in its sole and absolute discretion. The "Approvals" shall include, without Mr. Fernando Solorzano October 20, 2006 Page 3 of 5 limitation: (i) rezoning and variances necessary to permit the construction and operation of the Project at Horne Depot's sole cost and expense, (ii) platting of the Property, if necessary, at Home Depot's sole cost and expense; (iii) all permits (including, without limitation, building permits), licenses, variances, easements, land plan or land use amendments and approvals necessary for the construction and operation of the Project. All Approvals shall be validly and irrevocably granted without qualification, except such qualification as shall be acceptable to Home Depot in its sole discretion, and no longer subject to appeal. NCRA will at all times fully cooperate with Home Depot's efforts to obtain the Approvals and shall execute all such documentation and take all such action as is reasonably necessary to procure the same. Home Depot may elect to extend the Approval Period for two (2) periods of sixty (60) days each by notice to NCRA on or before the last day of the Approval Period or the then current extension thereof, as the case may be, and depositing with the Title Company within five (5) business days after each extension an additional Earnest Money deposit in the amount of $50,000.00 per extension, which additional Earnest Money deposit(s) shall he applicable to the Purchase Price if Closing occurs and refundable if Home Depot terminates the Agreement prior to the end of the Approval Period. Home Depot shall have the right to terminate the Agreement at any time during the Approval Period if the Approvals have not been obtained upon the terms and conditions described herein, whereupon all Earnest Money shall be refunded to Home Dcpot. (c) Title and Survey Review. A commitment for title insurance shall be ordered through and underwritten by a national title insurance company selected by Home Depot (the "Title Company"). The Title Company will be instructed to issue to Home Depot a commitment for title insurance (the "Title Commitment") for the issuance of an owner's policy of title insurance (the "Title Policy"). Home Depot shall have until the close of the Inspection Period to examine a survey of and title to the Property and to notify NCRA of any objectionable matters. NCRA shall have until ten (10) days following receipt of Home Depot's objections to cure the same to the satisfaction of Home Depot or to agree in writing to do so at Closing. In the event NCRA is unable to cure any objections to the satisfaction of Home Depot, Horne Depot shall have the right to (i) take title to the Property despite the existence of such matter or (ii) terminate the Agreement in which event all Earnest Money shall be refunded to Home Depot. (d). Closing. (i) Closing. The Closing shall be held within thirty (30) days after the earlier to occur of: (i) the expiration of the Approval Period or (ii) the date Home Depot notifies NCRA in writing that Home Depot desires to waive the remainder of the Approval Period and close. At Closing, NCRA and the City of National City shall convey fee simple title to the Property by general warranty deed, subject only to those exceptions to title accepted by Home Depot. NCRA shall cause possession of the Property to be delivered to Home Depot at Closing unoccupied, free of any right of possession or claim to right of possession by any party other than Home Depot and in debris -free condition (including the removal of any construction debris, construction material or supplies, vehicles, dirt piles, equipment, used drums or tanks, and domestic debris), with all environmental conditions remedied and/or mitigated, if and as required by the terms of the Agreement. Mr. Fernando Solorzano October 20, 2006 Page4of5 (ii) Closing Costs. The City of National City and NCRA shall he responsible for: (i) NCRA's attorneys' fees; (ii) all recording and transfer taxes and tax collection fees; (iii) all recording fees on recordable documents; (iv) the basic premium for the Title Policy and the additional premium for the standard survey exception for the Property; and (v) all "greenbelt", "roll -back" and other deferred taxes. Home Depot shall be responsible for: (i) Home Depot's attorneys' fees; (ii) any endorsements to the Title Policy (except for any endorsements relating to the standard survey exception); and (iii) the cost of any examinations, test, studies and investigations of the Property performed by or on behalf of Home Depot. 3. Non -binding. NOTWITHSTANDING THAT EITHER PARTY, OR BOTH, MAY EXPEND SUBSTANTIAL EFFORTS AND SUMS AND MAY CHANGE ITS FINANCIAL POSITION AND PROSPECTS TO ITS DETRIMENT IN ANTICIPATION OF ENTERING INTO THE AGREEMENT IN THE FUTURE, HOME DEPOT AND PSI ACKNOWLEDGE, FOLLOWING CUSTOMARY TRADITION AND PRACTICE WITH RESPECT TO NON -BINDING "LETTERS OF INTENT", THAT IN NO EVENT WILL THE MATTERS ADDRESSED IN THIS LETTER OF INTENT, OR THE MATERIALS PROVIDED BY HOME DEPOT OR PSI IN CONNECTION WITH IT, EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 4 HEREOF, BE CONSTRUED AS AN ENFORCEABLE CONTRACT EITHER TO PURCHASE AND SELL THE PROPERTY OR TO NEGOTIATE FOR THE SAME, AND EACH PARTY ACCEPTS THE RISK THAT NEITHER THE AGREEMENT NOR ANY OTHER BINDING CONTRACT MAY BE EXECUTED OR MAY OTHERWISE ARISE. 4. Binding Understandings. Only the provisions of this Section 4 of this Letter of Intent will constitute the legally binding and enforceable agreement of Home Depot and PSI. A. Confidentiality/Exclusive Negotiations. This Letter of Intent and all discussions and negotiations related thereto shall be held in confidence by Horne Depot and PSI and will not, without the approval of the other party, be discussed or communicated in any manner with third parties except on an "as needed" basis (e.g., attorneys, architects, consultants, joint venture partners, and lenders, which third parties will be required to comply with these confidentiality requirements). Hotne Depot and PSI agree that they will not, without the prior approval of the other party enter into independent negotiations with NCRA relative to the Property and that they shall not advertise, promote, or offer any press releases without the other parties prior written approval. B. Early Entry Agreement. In the event the Agreement is fully executed by PSI and Home Depot, Ilome Depot and its employees, agents, representatives, engineers and consultants shall have the right and license, subject to the terms of a separate license agreement (the `License Agreement") to be executed by the parties within seven (7) days of the full execution and delivery of this letter of understanding, to enter the Property for purposes of performing such due diligence tests, studies and investigations as Horne Depot shall deem necessary or desirable in accordance with the provisions hereof, The right of entry and license granted by PSI hereunder shall commence on the date the License Agreement is fully executed by Home Depot and PSI and terminate on the date either party receives written notice of the ;-n 11/01/2006 09:50 6194771222 PSI PAGE 02/02 Mr. Fernando Solorzano October 20, 2006 Page 5 of 5 other's party intent to terminate the negotiations and discussions relating to the Property (as provided herein), in which event this right of entry and license shall be deemed terminated and of no fiwther force or effect. If the proposal set forth in this Letter of Intent is acceptable to PSI, please have an authorized representative of PSI sign the enclosed duplicate copy of this Letter of Intent to evidence PSI's Agreement to the provisions hereof and return a fully executed copy to the undersigned on or before 5:00 p.m. on the October 25, 2006. In the event the undersigned does not receive a fully executed copy of this Letter of Intent on or before 5:00 p.m. on October 25, 2006, the provisions of this Letter of Intent shall immediately become null and void and any and all negotiations and discussions between the parties with respect to the Property shall be deemed terminated, unless otherwise agreed in writing signed by Home Depot and PSL Additionally if Horne Depot and PSI have not fully executed the Agreement by November 30, 2006, a ENA with NCRA by November 30, 2006 and a DDA with NCRA by May 24, 2007, then this Letter of Intent shall become null and void and of no Anther force or e Very truly For Home Depot U.S.A., George T. Ray Real Estate Manager Western Region cc: Michael Moms Robert Nagle Allen Haynie Richard D. McDonald Agreed to and accepted October 2 3 , 2006. Pacific Steel Inc. By Name: F Title: ?*resident ae Attachment 5 Morris 'Campbell November 3, 2006 Patricia Beard Redevelopment Manager City of National City 1243 National City Blvd. National City, CA 91950 Re: Property bounded by Civic Center (North) Cleveland Avenue (East) 181" Street (South) BNSF Rail Line (West) National City, CA Dear Ms. Beard: Commercial Real Estate Brokerage 5255 la..vrce Centre Urrn. Suite 380 San De)o Caldomia 52121 858452.oen rax 858.558.1717 sww.morrisa odcampbetl.cos I am a real estate broker working with Home Depot in San Diego County. Home Depot is evaluating the cost to construct and operate a store between the above -referenced streets and the BNSF rail line. You requested that I describe my progress to date. As of this date I have discussed acquisition of certain properties, within the above -referenced boundaries, with the property owner(s) or its representative as follows: Assessor Parcel No. Owner 559-010-04 559-051-04 559-051-08 559-051-10 559-076-11 Patricia Rhodes Suzanne Leif of the Anthony L. Bedford/Leif Trust 559-040-46 BNSF Railroad 559-040-47 Laurie Jardine with Staubach Co. under 559-040-48 contract with the railroad 559-040-52 I have tried to discuss acquisition of the property and have left a voicemail with William Thomton Jr. of Alamo Drive Limited Partnership for APN No's 559-076-04 and 559-076-05. I will continue to attempt to contact William Thomton Jr. in the days ahead. Best regards, Morris and Campbell Z "1 ichaeL4'N'lorris MJM:i November 6, 2006 Patricia Beard Redevelopment Manager City of National City 1243 National City Blvd. National City, CA 91950 Re: Property bounded by Civic Center (North) Cleveland Avenue (East) 18m Street (South) BNSF Rail Line (West) National City, CA Dear Ms. Beard: I am writing this letter as a follow-up to my letter to you on November 3, 2006. As of this date I have discussed acquisition of properties, within the above -referenced boundaries, with the property owner(s) or its representative as follows: Assessor Parcel No. Owner, 559-010-04 559-051-04 559-051-08 559-051-10 Patricia Rhodes 559-076-11 Suzanne Leif of the Anthony L. Bedford/Leif Trust 559-040-46 BNSF Railroad 559-040-47 Laurie Jardine with Staubach Co. under 559-040-48 contract with the railroad 559-040-52 559-076-04 559-076-05 Best regards, Morris and Campbell Michael J. Morris MJM:jp Alamo Drive Limited Partnership William Thomton, Jr. 3c Robert C. Leif, Ph.D. 5648 Toyon Road San Diego, CA 92113 (619) 582-0437 rleif@rleif.com Naval Station a &E G\`I` 1720 Cleveland 6 m Cr Ave National City, CA S 91950 S\ ?-� w.�8tt,c 2 N o Neww Buildingkli. 2220 Mc+aaey Ave ^' Neamal City, CA ?4 91950 0 Offer to Chris Zapata • Delivered on Nov. 14, 2006 • Exchange 1720 Cleveland Ave for • Old Ace Metal site and the vacation of 23rd street between Cleveland Ave and McKinley Ave. • We own adjoining 2220 McKinley Ave. Win Win • Expedite the Construction of the new Home Depot • New building to house the businesses displaced by the Home Depot • Peace and harmony 1 Robert C. Leif, Ph.D. 5648 Toyon Road San Diego, CA 92115-1022 Tel. (619)582-0437 E-mail: rleif(a?rleif.com Fax. (619)501-1953 November 14, 2006 Mr. Chris Zapata City Manager National City, CA Dear Mr. Zapata, We are the owners of 1720 Cleveland Ave. A real estate agent has inquired whether we would sell our property for a redevelopment project that involved the creation of a Home Depot. Instead of selling our property, we propose to trade it to the City of National City for the vacant lot located at the old Ace Metal site, the vacation of 23`i street between Cleveland Ave and McKinley Ave.. and the rezoning of the lot to match our property located at 2220 McKinley Ave. Since we are scheduled to be out of town after December 10w, 2006, we would appreciate your response before that time. i hank you. Yours truly, Anthony L. Bedford, S uzanne B. Leif, Robert C. Leif,'Ph.D. CA70<.,,KA, 1,70,,w4o,n1- N•toonal S' 14 3' City of National City Office of the City Clerk 1243 National City Boulevard, National City, CA 91950-4397 Michael R. Delia, CMC - City Clerk (619) 336-4228 Fax: (619) 336-4229 December 6, 2006 Ann Jerhoff, Director -Legal Home Depot USA INC 3800 West Chapman Avenue Orange, CA 92868 Project: National City — Exclusive Negotiation Agreement — Cleveland Avenue Resolution 2006-244 Dear Ms. Jerhoff: On November 21st, 2006, the Community Development Commission of National City passed and adopted Resolution No. 2006 - 244, executing an exclusive negotiating agreement with Home Depot and Pacific Steel. We are pleased to enclose one original agreement and a certified copy of the Resolution for your records. Should you have any questions, please contact Mr. Brad Raulston, Executive Director, Community Development Commission at (619) 336-4250. Michael R. Dalla City Clerk MRD Enclosure cc: CDC File No. C2006-70 George Ray, Real Estate Division — Home Depot ® Recycled Paper