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GUARANTY AGREEMENT THIS AGREEMENT is executed as of this I O'~Sday of ~/3(2 ! l _- , 1997, by and between MAIN STREET, LTD., a California limited partnership ("Main Street") and the REDEVELOPMENT AGENCY OF THE CITY OF RIVERSIDE, a public agency (the "Agency") and is made with reference to the following facts: RECITALS A. Main Street owns real property located within the Downtown/Airport Industrial Redevelopment Project Area, consisting of the Old Main Emporium building located at 3599 Main Street, Riverside, California (the "Property"). Main Street is obtaining a loan from The Bank of Hemet (the "Bank") in the amount (including interest reserve) of Ninety Thousand Dollars ($90,000.00) -- (the "Loan"), the proceeds of which will be used to complete seismic rehabilitation of a portion of the Property, allowing it to be leased and operated for business purposes. This rehabilitation will allow utilization of the Property for business purposes, resulting in the creation of jobs and additional tax increment. B. As a condition to funding the Loan, the Bank has required that the Agency provide certain credit enhancement, in the form of the assignment of deposit accounts, in the full initial principal amount of the Loan. The Agency has agreed to provide such credit enhancement, in the form of the collateral assignment of a deposit account (Certificate of Deposit) maintained by the Agency at the Bank. C. The credit enhancement to be provided by the Agency will be made available through the Agency's Downtown/Airport Capital Project Fund. As consideration to the Agency for the providing of such credit enhancement in favor of Main Street, the parties desire by this Agreement to provide assurances to the Agency regarding the use of the proceeds of the Loan and its repayment by Main Street. The parties therefore agree as follows: 1. Use of Proceeds. Main Street acknowledges and agrees that the proceeds of the Loan will be used solely for purposes related to seismic rehabilitation of the Property and for no other purpose and with respect to no other business location, if any, which might be maintained by Main Street. 2. Loan Repayment. Main Street agrees that it will fully repay the Loan to the Bank in a timely manner. Main Street acknowledges and agrees. that in the event of a default under the Loan by Main Street, and in the further event that the security which has been provided by the Agency is ufdized by the Bank to repay the Loan, the Agency shall be subrogated to the rights of the Bank and may thereafter pursue all rights and remedies available to it against Main Street in order to enforce repayment of the Loan.