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SR 10-11-2011 8BID Wm City Council Report Santa Monica City Council Meeting: October 11, 2011 Agenda Item: $ B To: Mayor and City Council From: Andy Agle, Director of Housing and Economic Development Subject: Civic Center Village Recommended Actions Staff recommends that the City Council: 1. Conduct a public hearing regarding proposed changes to the Civic Center Village Parcel Ground Leases and the proposed Second Amendment to the Disposition and Development Agreement (DDA) and its attachments, and adopt a Resolution approving the amendments; and 2. Approve a Second Amendment to the DDA and its attachments, which include updated project budgets and methods of financing, revisions to the Parcel Ground Leases, the addition of a Joint Development Agreement and Grant of Easements (JDA), a revised Reciprocal Easement Agreement (REA), new Covenants, Conditions and Restrictions (CC &Rs) and a revised Right -of -Entry Agreement (ROE); and 3. Authorize the City Manager to take all necessary actions to implement the Second Amendment to the DDA, including negotiating and executing all documents in substantial compliance with the approved DDA and its attachments; and 4. Adopt a Resolution dedicating the Olympic Drive extension for public use as a public right -of -way; and 5. Adopt a Resolution authorizing the City Manager to execute a grant of easement on City -owned property for the construction and maintenance of electrical utilities that will provide service to the Civic Center Village and neighboring properties; and 6. Authorize the City Manager to negotiate and execute a first modification to Contract 8556.1 (CCS) in the amount of $15,000 with Keyser Marston Associates, Inc., a California -based company, to provide real estate economics services associated with this development. This modification will result in a new contract amount of $155,000 for services provided over an eight -year term. 1 Executive Summary Related /Santa Monica Village, LLC (Developer) has made significant progress toward obtaining the necessary financing and building permits that would enable construction of the Civic Center Village to commence by the end of this year. However, the Developer's construction lender has requested modification to certain terms included in the existing Parcel Ground Lease agreements to enhance the marketability of the market -rate condominiums on Parcels A and C. To resolve these issues, and to provide more clarity regarding the future Home Owners' Association's (HOA) responsibilities, amendments to the Parcel Ground Leases, and new Covenants, Conditions and Restrictions (CC &Rs) are proposed. In particular, the proposed amendment to the Parcel A and C Ground Leases would provide an option to the future HOAs to extend the 99 -year leases for Parcels A and C for a period of 50 years. Additionally, as a result of minor amendments to the Parcel Map, Parcels A and B are now proposed to share common podium infrastructure and access routes through the subterranean garage. This modification requires the future owners of Parcel A (the HOA) and Parcel B (the Affordable Housing Owner) to have clearly defined shared use, shared costs and shared liabilities both during construction and after. The Joint Development Agreement will address the sharing of construction period costs and liabilities between the Parcel A owner and the Parcel B owner, while the revised Reciprocal Easement Agreement will address shared post- construction operations of the Parcel A owner and the Parcel B owner. Finally, in an effort to expedite construction and avoid any potential rain delays, the Developer has requested permission to begin both on -site and off -site utility relocation and shoring. To allow for this early scope of work, staff recommends that the DDA and Right of Entry Agreement be amended and that the City dedicate the Olympic Drive extension as a public right -of -way. Background The City currently owns the Village property, which is divided into Parcels A, B and C as shown in Attachment A. The property comprises approximately 3.7 acres and is intended to enhance the Civic Center area with 324 residences (including 160 affordable rental residences), public open space, an extension of Olympic Drive, public art, sustainable design, and financial contributions towards transportation management and the Civic Center Early Childhood Development Center. The design, public benefits and conditions for the development of the Village component of the Civic Center Specific Plan were approved on May 13, 2008. A Disposition and Development Agreement (DDA) with the Developer outlining the business terms and conditions for the long -term ground lease and development of the property was approved on June 10. 2 2008. On July 13, 2010, a First Amendment to the DDA regarding financing and construction extensions, and modifications to the condominium sales participation formula, was approved. On February 22, 2011, Council authorized the City Manager to execute a Second Implementing Agreement No. 9340, providing the City with the option to purchase real properties owned by the Redevelopment Agency (Agency), including the Village property, to secure performance of Agency obligations required under Cooperation Agreement No. 9267 (CCS /RAS) and Implementing Agreement No. 9318 (CCS /RAS). On March 8, 2011, following Council's authorizing of the City Manager to exercise this option, the City executed the Assignment and Assumption Agreement of the DDA from the Agency to the City and on March 9, 2011, the Agency transferred the Village property to the City. The Developer has received approval for $10 million for the construction of 1.60 affordable rental residences in the Village in competitively awarded Multifamily Housing Program (MHP) funding from the California Housing and Community Development Department (HCD). Tax - exempt multifamily bonds have been allocated by the California Debt Limit Allocation Committee (CDLAC) and the California Tax Credit Allocation Committee CTCAC will review the tax credit application this month. However, several discrete matters require resolution before construction may proceed. Discussion Parcel Ground Leases The Developer's negotiations with a construction lender and equity investor for construction of the market -rate condominiums are in their final stages. To ensure that the condominiums maintain their value and that future homeowners are able to secure mortgages, the construction lender and investor have required that the existing Ground Leases for Parcels A and C be amended to include an option allowing the future Home Owners' Associations of the market -rate condominiums to extend the 99 -year lease for a period of 50 years, at then - current market value when the lease option is exercised. The proposed revisions would allow the HOAs to exercise the 50 -year lease extension at three defined points during the last 25 years of the initial 99 -year term. The proposed terms of the options require each HOA to make a lump sum payment to the City or its 3 assignee immediately following the exercise of the lease extension option, based on the then - current market value of the property. As required by Section 33433 of the Health and Safety Code, KMA prepared a Summary Report that analyzed the economic effects of the ground lease options and determined that the City is being fairly compensated. The Summary Report is provided as Attachment B and KMA's pro forma comparison is provided as Attachment C. Additionally, technical changes to existing Parcels A and C Ground Leases are recommended to ensure conformity with requirements of the State of California Department of Real Estate. The proposed revisions are provided in Attachment E, Exhibits D and F. Staff recommends approval of the Parcel Ground Leases revisions in order to create housing stability for future residents and to allow future residents to secure mortgages, while ensuring that the City is appropriately compensated for use of its property. A Resolution approving the Second Amendment to the DDA and making certain findings with respect to such Second Amendment is provided as Attachment D. Second Amendment to the DDA Staff recommends that Council approve a Second Amendment to the DDA and its attachments, provided as Attachment E, which includes updated project budgets and methods of financing, revisions to the Parcel Ground Leases, a revised Reciprocal Easement Agreement (REA), the addition of a Joint Development Agreement and Grant of Easements (JDA), new Covenants, Conditions and Restrictions (CC &Rs), and a modified Right -of -Entry Agreement (ROE). These actions are detailed below. Reciprocal Easement / Joint Development and Grant of Easements Agreements Recent changes to the development's tract map necessitate changes to the Reciprocal Easement Agreement and approval of a Joint Development and Grant of Easements Agreement (JDA), both of which are applicable to Parcels A and B, since they share a common garage and other areas. In the initial tract map for the parcels, an airspace lot was included as part of the map for Site B, however, title insurance could not be obtained for leasehold of an airspace lot. As a result, the title company ensuring the leasehold for all three parcels requested that the Developer revise the tract map to 9 include two separate ground lots for Parcels A and B. This new lot configuration requires joint use of the subterranean garage and other common areas by the two parcels, since both sites will own a portion of the garage and access areas. The Joint Development Agreement and Grant of Easements establishes the shared easements, defines the scope of joint work, and allocates costs. The JDA addresses issues during construction, will terminate upon construction completion and is provided as Attachment E, Exhibit N. After project completion, uses and maintenance of the subterranean garage and common areas will be governed by the Reciprocal Easement Agreement (REA). The REA, with amendments included as Attachment E, Exhibit K, is a contract that identifies the common areas, apportions cost and maintenance responsibilities, and provides for the Parcel A Homeowners' Association and the Parcel B owner to share use of the parking and common areas. Covenants. Conditions and Restrictions Covenants, Conditions and Restrictions (CC &Rs) are an HOA's governing documents. CC &Rs are proposed in order to conform to California Department of Real Estate guidelines and to address the Ground Lease modifications, shared construction costs and joint use among parcels. The proposed CC &Rs are included as Attachment E, Exhibit M. Right of Entry Agreement, Street Dedication and Utility Easements The Developer has achieved key milestones toward obtaining building permits, recording tract maps and closing financing. In an effort to expedite construction and avoid any potential rain delays, the Developer has requested permission to begin both on -site and off -site utility relocation and shoring work, excluding any excavation for construction of the subterranean parking structure. However, the DDA requires that all permits and financing be obtained prior to commencing any construction activities on the Village site. The proposed Right of Entry Agreement, Attachment E, Exhibit J, describes the scope of work on City -owned property, sets forth additional liability requirements, and requires a construction performance and payment bond for the 5 completion of the proposed work. Staff recommends approval of the revised agreement to enable the development to move forward immediately. For off -site utility work in public rights -of -ways, the Developer will obtain all applicable permits and bonds as required by the Public Works Department. The proposed utility relocation and shoring work will occur in existing public rights -of- ways, in the Olympic Drive Extension and on City -owned property at the corner of First Court Alley and Olympic Drive. Dedicating the Olympic Drive Extension as a public right -of -way simplifies the utility installation process by negating the need for multiple easements on City -owned property. Utility relocation on City -owned property is allowed by easements recorded on title, which require Council approval. In order to allow the utility work to occur, staff recommends that the Council dedicate the Olympic Drive Extension as a public right -of -way and authorize the City Manager to execute a grant of easement on City -owned property for the construction and maintenance of electrical utilities serving the Village and neighboring properties. Public Hearing Regarding DDA Business Terms As the property was initially purchased with redevelopment tax increment funds, and the proposed 50 -year option reflects a material change in the terms of the DDA, a public hearing is required pursuant to Section 33433 of the Health and Safety Code. Notice of the time and place of the public hearing was published in the Santa Monica Daily Press on September 26, 2011 and on October 3, 2011. Consultant Contract Amendment Keyser Marston Associates (KMA) continues to provide real estate consulting services associated with the Civic Center Village development. The City's current contract with KMA limits total compensation to $140,000. Staff recommends that the amount of the contract be increased by $15,000, for a total contract amount of $155,000. The scope n. of work includes additional analysis associated with closing financing by various affordable housing lenders and investors. Financial Impacts & Budget Actions The contract modification to be awarded to KMA is $15,000, for a new total contract amount not to exceed $155,000. Funds for this amended contract amount are available in account number H15004911.589000 subledger 17000. There are no further financial impacts associated with the recommended actions. Prepared by: Lisa Luboff, Senior Development Analyst Elsa Trujillo, Senior Development Analyst Andy Agle, Dire64r Housing and Economic Development Forwarded to Council: Rod Gould City Manager ATTACHMENTS Attachment A: Map of Civic Center Village Parcels A, B and C Attachment B: Summary Report Pursuant to California Health and Safety 7 Code 33433 Attachment C: Pro Forma Analysis Comparison Prepared by KMA Attachment D: Resolution Approving the Second Amendment to the DDA and Other Findings Attachment E: Second Amendment to the DDA with the following Exhibits: Exhibits A, B & C First Revised Project Budgets for Parcels A, B & C Exhibits D, E & F Ground Leases for Parcels A, B & C Exhibits G, H & I Method of Financing for Parcels A, B & C Exhibit J Right of Entry Agreement Exhibit K Reciprocal Easement Agreement Exhibit L Participation Payment Agreement Exhibit M Declaration of CC &Rs Exhibit N Joint Development Agreement Attachment F: Resolution Dedicating Olympic Drive Extension as a Public- Right- of -Way with associated legal description Attachment G: Resolution Granting Utility Easements on City -Owned Property and form of Southern California Edison Easement 7 Attachment A Map of Civic Center Village Parcels A, B and C p r Site A a Attachment B SUMMARY REPORT PURSUANT TO CALIFORNIA HEALTH AND SAFETY CODE SECTION 33433 DNA DISPOSITION AND DEVELOPMENT AGREEMENT, FIRST AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT, SECOND AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT, AND AMENDED LEASE AGREEMENTS BY AND BETWEEN THE CITY OF SANTA MONICA, THE CITY OF SANTA MONICA AS THE SUCCESSOR TO THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA AND RELATED /SANTA MONICA VILLAGE, LLC SEPTEMBER 26, 2011 BACKGROUND STATEMENT As a part of the Redevelopment Plan for the Earthquake Recovery Redevelopment Project (Redevelopment Plan), the Redevelopment Agency of the City of Santa Monica (Agency), assembled a 3.77 -acre property in the Village Special Use District (Site) for the subsequent development of a retail and residential mixed -use development (Village at Santa Monica aka Civic Center Village). In 2008 and 2010, the Agency entered into the following agreements with Related /Santa Monica Village, LLC (Developer) to effect the proposed development: 1. The Village at Santa Monica Disposition and Development Agreement (DDA) was executed on June 10, 2008. 2. The Site will be subdivided into three parcels, individually referred to as Parcels A, B and C. The form of the Ground Leases for these parcels (Lease Agreements) was approved on June 10, 2008. 3. The First Amendment to the DDA, which extended the Schedule of Performance for two years, was executed on Julyl3, 2010 The Agency used redevelopment tax increment revenue to assemble the Site. Due to the use of this funding source, any conveyance of the Site is subject to the reporting requirements imposed by California Health and Safety Code Section 33433 (Section 33433). Specifically, Section 33433 requires the Agency to prepare a report that summarizes the financial terms associated with the disposition transaction for the Site. A Section 33433 Summary Report was prepared for the DDA and Lease Agreements on May 22, 2008 (2008 Summary Report). 1108015.SM:KHH:gbd 19305.001.00919126111 Subsequent to the DDA and the First Amendment to the DDA, on March 9, 2011, the Agency transferred ownership of the Site, in fee title, to the City of Santa Monica (City). At the same time, the Agency assigned its rights and obligations, under the DDA and the First Amendment to the DDA, to the City pursuant to that certain Assignment and Assumption Agreement, dated March 8, 2011. In June 2011, the Developer represented to the City that it would be unable to obtain financing for the condominium components of the Village at Santa Monica unless certain terms included in the Lease Agreements were modified. To resolve the problem, the City has prepared the Second Amendment to the Disposition and Development Agreement and the Amended Lease Agreements (collectively referred to as the 2011 Agreements). The 2011 Agreements materially alter the financial terms of the transaction, and thus, the City is required by Section 33433 to prepare a new Summary Report for the transaction (2011 Summary Report). SECTION 33433 REPORT MODIFICATIONS Section 33433 identifies the following specific components of a property disposition transaction that must be summarized and provided for public review: 1. Salient Points of the DDA and Lease Agreements: This section summarizes the major responsibilities imposed on the Agency, and the City as the Agency's Successor in Interest, and the Developer by the DDA and the Lease Agreements. Cost of the DDA and Lease Agreements to the Agency and the City as the Agency's Successor in Interest: This section details the total cost to the Agency, and /or the City as the Agency's Successor in Interest, associated with implementing the DDA and the Lease Agreements. III. Estimated Value of the Interests to be Conveyed or Leased Determined at the Highest Use Permitted under the Redevelopment Plan: This section estimates the value of the interests to be leased determined at the highest and best uses permitted under the Redevelopment Plan, the Site's existing zoning, the Civic Center Specific Plan and the Village Special Use District. IV. Estimated Reuse Value of the Interests to be Conveyed or Leased: This section summarizes the valuation estimate for the Site based on the required scope of development, and the other conditions and covenants required by the DDA and Lease Agreements. V. Consideration Received and Comparison with the Established Value: This section describes the compensation to be received by the Agency, and the City as the Agency's successor in interest, and explains any difference between the compensation to be received and the established value of the Site. 1108015.SM;KHH:gb0 19305.001.00919126/11 VI. Blight Elimination: This section describes the existing blighting conditions on the Site, and explains how the DDA and Lease Agreements will assist in alleviating the blighting influence. VII. Conformance with the AB1290 Implementation Plan: This section describes how the DDA and Lease Agreements are in conformance with the Agency's adopted AB1290 Implementation Plan. The 2011 Summary Report focuses solely on the sections of the 2008 Summary Report that are impacted by the 2011 Agreements. The 2011 Summary Report, the 2008 Summary Report, the Second Amendment to the DDA and the Amended Lease Agreements will be made available for public inspection, and will be presented at a public hearing prior to the consideration of the 2011 Agreements. 2008 Summary Report Sections that do not Require Modifications The sections of the 2008 Summary Report that do not require modification are: Section III: The Estimated Value of the Interests to be Conveyed or Leased at the Highest Use Permitted under the Redevelopment Plan; Section VI: Blight Elimination; and Section VII: Conformance with the AB1290 Implementation Plan. 2008 Summary Report Sections that are Modified in the 2011 Summary Report The sections of the 2008 Summary Report that are being re- evaluated in this 2011 Summary Report are: Section I: The Salient Points of the 2011 Agreements; Section II: The Cost of the DDA, the First Amendment to the DDA and the 2011 Agreements to the Agency and/or the City as the Agency's Successor in Interest; Section IV: Estimated Reuse Value of the Interests to be Conveyed or Leased; and Section V: The Consideration to be Received, and Comparison with the Established Value. 1106015.SM:KHH:gbd 19305.001 M919/26111 SECTION I: SALIENT POINTS OF THE 2011 AGREEMENTS Project Description The 2008 Summary Report was based on the scope of development proposed by the Developer. During the intervening period, the City and the Developer have entered into a Development Agreement that spells out the specific requirements that will be imposed on the Village at Santa Monica. The key differences between the scopes of development analyzed as part of the 2008 agreements and the Development Agreement are presented in the following table: Developer Responsibilities The 2011 Agreements do not modify the responsibilities that will be imposed on the Developer. City Responsibilities The 2011 Agreements require the City to accept the following terms that were not included in the executed DDA and approved Lease Agreements: ' GBA = Gross Building Area. 1108015.SM:KHH:gbd 19305.001.009/9 /26111 2011 2008 Difference Parcel A Number of Units 65 66 (1) SF GBA' 147,664 132,422 15,242 Avg Unit Size /SF GBA 2,270 2,010 260 Parcel B Number of Units 160 160 0 SF GBA 186,773 184,018 2,745 Avg Unit Size /SF GBA 1,170 1,150 20 Parcel C Number of Units 93 98 (5) SF Gross Building Area 249,602 173,597 76,005 Avg Unit Size /SF GBA 2,680 1,770 910 Retail 21,411 19,203: 2,208 Total GBA 605,450 509,250 96,200 Developer Responsibilities The 2011 Agreements do not modify the responsibilities that will be imposed on the Developer. City Responsibilities The 2011 Agreements require the City to accept the following terms that were not included in the executed DDA and approved Lease Agreements: ' GBA = Gross Building Area. 1108015.SM:KHH:gbd 19305.001.009/9 /26111 If required by the construction lender, the Amended Lease Agreements allow the Developer to rent some or all of the market -rate condominiums on an interim basis if market conditions do not warrant the sale of the units upon the completion of construction. The Participation Payments Agreement terms will be triggered when the condominium units are ultimately sold. 2. The approved Lease Agreements require the Agency to lease Parcels A, B and C to the lessee for a base term of 99 years.2 The Amended Lease Agreements require the City to provide the two Home Owners Associations (HOAs) for Parcels A and C with an option to extend the lease for a period of 50 years. Each HOA must be provided with the opportunity to exercise the lease extension option at three defined points during the last 25 years of the base 99 -year term. If the lease extension option is exercised, the HOA must make a lump sum payment to the City immediately following the exercise of the lease extension option. The rent lump sum payment will be based on the then current value of the property. The value will be set under the following conditions: a. The City and the HOA will be required to mutually cooperate to generate a list of five independent appraisers that meet the qualification standards defined in the Amended Lease Agreements. The HOA must select an appraiser from this group of five appraisers. b. The selected appraiser must determine the value of the property as of the first day following the exercise of the lease extension option. The valuation shall reflect the following: The value of the ground rent for the period between the exercise of the extension option and the end of the base 99 -year term; ii. Any value enhancement created as a result of the extension; and iii. The fair market value of the ground and building rent for the 50 -year period commencing at the end of the base 99 -year lease term. C. If agreement on the property's value is not reached after the completion of the first appraisal, each party has the right to appeal the results of the appraisal. In that case: The appealing party must select a second appraiser from the group of five to appraise the property. 2 The lease terms for Parcels A and B will commence at the "Close of Escrow. The lease term for Parcel C may begin up to 18 months following the Close of Escrow. 1108015SM:KHH:9bd 19305.001.00910?26111 ii. If the value derived by the second appraiser is within 10% of the first appraisal, the requesting party must pay for the second appraisal. If the difference is greater than 10 %, the two parties will split the cost of the appraisal. d. If agreement on the property's value is not reached after the second appraisal is completed, both parties have the right to appeal the results. In that case: The appealing party must select a third appraiser from the group of five approved appraisers. The third appraiser must base the valuation on information and documentation provided by the first and second appraiser. iii. . The extension rent shall be based on the results of the third appraisal. iv. If the value derived from the third appraisal is within 10% of the average value established by the first and second appraisals, the appealing party must pay for the third appraisal. If the difference is greater than 10 %, each party will each pay 50% of the costs. 4. The executed DDA required the Agency to provide the Developer with up to a $23.82 million "Agency Loan" to fill the financial gap associated with the affordable housing component to be developed on Parcel B. 3 The DDA obligation to make a loan to the Village at Civic Center was transferred to the City when the Site was transferred to the City (City Loan). Under the terms of the executed DDA, and based on the current financial analysis, the City Loan will be set at $19.4 million. The loan repayment terms remain unchanged. The key terms are: a. The City Loan will not bear interest; b. The debt service payments on the City Loan will be set at 35% of the net cash flow generated by Parcel B each year; and C. Any outstanding balance on the loan will be due and payable at the end of the loan term defined in the executed DDA. 3 The amount of the approved Agency Loan was determined to be in compliance with Housing Trust Fund Guidelines adopted by the Agency and City Council. 1108D15.SM:KHH:gbd 19305.001.00919 125/11 SECTION II: COST OF THE 2011 AGREEMENTS TO THE AGENCY AND THE CITY AS THE AGENCY'S SUCCESSOR IN INTEREST The 2008 Summary Report estimated the Agency costs to implement the Village at Santa Monica as follows: Property Acquisition Cost and Bond Interest Payments" $25,111,000 Agency Loan to Parcel B e 23,823,000 Total Agency Cost $48,934,000 The property acquisition costs and bond interest payments were established in the 2008 Summary Report, and they remain unchanged. The executed DDA describes a methodology for setting the amount of the City Loan .6 Using this methodology, and the current financial analysis of the Village at Civic Center, the City Loan is set at $19,400,000. The currently estimated costs are presented in the following table: Property Acquisition Cost and Bond Interest Payments $25,111,000 City Loan to Parcel B' 19,400,000 Total Agency & City Cost $44,511,000 The City will receive Base Rent for Parcels A and C, and debt service payments on the City Loan to Parcel B. In addition, the City may receive Participation Payments if the market rate condominium components on Parcels A and C outperform current expectations. The assumptions used in the revenue projections are: The Base Rent payments for Parcels A and C total $19.4 million. The debt service payments on the City Loan will be dependent on the cash flow generated by the Parcel B affordable housing development over time. Keyser Marston Associates, Inc. (KMA), the City's financial consultant, prepared a 55 -year cash flow projection for.the Parcel B development to estimate the repayment amount in nominal and present value terms. The present value projections are based on a 10% discount rate. 3. Participation Payments will only be received if the threshold sales revenues defined in the Participation Payment Agreement are achieved. Given the speculative nature of these payments, no revenue is included in this analysis. 4 The cost represents the Site's pro rata share of the Agency's payments to RAND. 5 This amount is capped at the sum of the Base Rent and Additional Rent payments made by Developer. 6 The DDA referred to the loan as the Agency Loan. The City is the successor in interest to the Agency. ' This amount is capped at the sum of the Base Rent payments made by Developer. 1108015.SM:KHH:gbd 19305.001.00919126111 The results of the revenue projections are presented in the following table: Base Rent Parcels A and C Debt Service - City Loan Participation Payments Total City Revenue Nominal Dollars $19,400,000 19,400,000 N.A. $38,800,000 Present Value $19,400,000 501,000 N.A. The resulting net cost to the Agency and the City is summarized in the following table: Nominal Dollars Present Value Total City Revenue $38,800,000 $19,901,000 Total Agency & City Cost $44,511,000 $44,511,000 Net Agency & City Cost $5,711,000 $24,610,000 SECTION IV: ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED OR LEASED The fair reuse value of the Site is defined as the value of the interest to be leased, determined based on the proposed use and with the conditions, covenants and development costs being imposed by the City. The fair reuse value of the Site was estimated by KMA in the 2008 Summary Report based on the specific conditions imposed on the Village at Santa Monica by the executed DDA and the approved Lease Agreements. KMA estimates that the fair reuse value of the Site has changed in the following ways: The Amended Lease Agreements provide the HOA's for both Parcels A and C with an option to extend the ground lease terms for 50 years, which is anticipated to enhance the marketability of the condominium units. However, the decline in the real estate market between 2008 and 2011 has resulted in a significant decrease in the sales price projected to be achievable for the condominiums. Based on these factors, KMA estimates the current fair reuse value for Parcels A and C at $20 million. 2. The 2008 KMA financial analysis concluded that the Parcel B income restricted apartment component exhibited a $23.42 million financial gap. During the intervening period, the estimated construction costs increased by approximately $7.31 million, while the available funding sources increased by $10.87 million. The net decrease in the financial gap is estimated at $3.56 million. As a result, KMA currently estimates the financial gap at $19.86 million. 1106015.SM:KHH:gbd 19305.001.00919126 /11 3. The approved Lease Agreements required the Developer to make an Additional Rent payment of up to $4.42 million to defray the financial gap associated with Parcel B in excess of the Base Rent Payments for Parcels A and C. Based on the results of the KMA 2011 financial analysis, the Base Rent Payments for Parcels A and C are approximately equal to the estimated financial gap for the income restricted apartment component on Parcel B. Thus, it has been determined that no Additional Rent payment is required. The 2008 Summary Report established the fair reuse value of the entire Site at negative $4.42 million. Comparatively, the KMA reuse analysis estimates that changes to the Village at Santa Monica project economics between 2008 and 2011 resulted in a current fair reuse value of the entire Site at $138,000. SECTION V: CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED VALUE The estimated value of the Site at the highest use permitted by the Redevelopment Plan has been established at $16.0 million. It is not necessary to update this valuation as part of this 2011 Summary Report. In the 2008 Summary Report, the fair reuse value of the Site was established at negative $4.42 million. Based on current financial conditions, KMA estimates the fair reuse value of the Site at . $138,000. The Developer has submitted a financial analysis for the Village at Santa Monica that includes the following findings: The Base Rent payments for Parcels A and C are estimated at $19.4 million. 2. The financial gap for the income restricted apartment project proposed to be developed on Parcel B is estimated at $19.4 million. 3. The resulting reuse value for Parcels A, B and C is estimated at zero. The $138,000 difference between the KMA and Developer reuse value estimates can be considered inconsequential. As such, the Developer estimates have been used as the basis for the financial structure included in the 2011 Agreements. Based on these assumptions, the net compensation to be received by the City under the terms of the 2011 Agreements is comprised of the following components: The Base Rent payment for Parcel A is set at $8.6 million, and the Base Rent Payment for Parcel C is set at $10.8 million. The Base Rent payments for Parcels A and C total $19.4 million. 1108015.SM:KHH:9bd 19305.001.00019126111 The DDA requires the City to make a $19.4 million loan to the Developer to fill the financial gap associated with the Parcel B income restricted apartment component. The 2011 Agreements require the Developer to absorb any financial gap in excess of $19.4 million. 3. The Base Rent payments required to be made by the Developer are equal to the City Loan that must be provided to the Parcel B income restricted apartment component. Thus, the net compensation to the City is zero. The September 2011 KMA financial analysis sets the fair reuse value of Parcels A, B and C at $138,000. Comparatively, the net compensation being received by the City is set at zero. Given the insignificant difference between the two estimates, it is the KMA conclusion that the 2011 Agreements provide the City with fair compensation for the interests being conveyed to Developer. 10 1108015.SM:KHH:gba 19305.001.00919126111 DEVELOPER COMPARISON TABLE THE VILLAGE AT CIVIC CENTER SANTA MONICA, CALIFORNIA Attachment C - Pro Forma Comparison C. SITE C: CONDOMINIUM /RETAIL COMPONENT Number of Units Developer Developer (5) Total Gross Building Area (SF) , 2011 2008 Difference Average Unit Size /SF Gross Building Area (GBA) 2,680 - 1,770 I. Scope of Development Retail Space 11,228 8,111 A. SITE A: CONDOMINIUM/ RETAIL COMPONENT Number of Units 65 66 (1) Total Gross Building Area (SF) 147,664 132,422 15,242 Average Unit Size /SF Gross Building Area (GBA) 2,270 2,010 260 Retail Space 10,183 10,900 (717) B. SITE B: AFFORDABLE APARTMENT COMPONENT Number of Units 160 160 0 Total Gross Building Area (SF) 186,773 184,028 2,745 Average Unit Size /SF•Gross Building Area (GBA) 1,170 1,150 20 C. SITE C: CONDOMINIUM /RETAIL COMPONENT Number of Units 93 98 (5) Total Gross Building Area (SF) , 249,602 173,597 76,005 Average Unit Size /SF Gross Building Area (GBA) 2,680 - 1,770 910 Retail Space 11,228 8,111 3,117 Total Project GBA (SF) 584,039 490,047 93,992 Prepared by: Keyser Marston Associates, Inc. File name: SM Village-9 27 11; Dev 2008_2011 DEVELOPER COMPARISON TABLE THE VILLAGE AT CIVIC CENTER SANTA MONICA, CALIFORNIA Attachment C - Pro Forma Comparison II. Construction Costs A. SITE A: CONDOMINIUM/ RETAIL COMPONENT Direct Costs Indirect Costs Financing Costs Closing Costs /Cost of Sales Total Construction Costs Total Construction Costs /SF GBA B. SITE B: AFFORDABLE APARTMENT COMPONENT Direct Costs Indirect Costs Financing Costs Total Construction Costs Total Construction Costs /SF GBA C. SITE C: CONDOMINIUM / RETAIL COMPONENT Direct Costs Indirect Costs Financing Costs Closing Costs /Cost of Sales Total Construction Costs Total Construction Costs /SF GBA Developer 2011 $49,311,000 19,708,000 8,211,000 7,520,000 $84,750,000 $574 Developer 2008 Difference $50,987,000 16,268,000 9,826,000 6,473,000 $83,554,000 $631 ($1,676,000) 3,440,000 (1,615,000) 1,047,000 $1,196,000 ($57) $51,764,000 $48,567,000 $3,197,000 12,207,000 9,893,000 2,314,000 5,989,000 4,090,000. 1,899,000 $69,960,000 $62,550,000 $7,410,000 $375 $340 $35 $71,200,000 $72,449,000 ($1,249,000) 28,558,000 21,688,000 6,870,000 11,609,000 14,164,000 10,893,000 9,068,000 1,825,000 $122,260,000 $117,369,000 $7,446,000 $490 $676 ($186) Grand Total Construction Costs x$276,970,000 $263,473,000 $16,052,000 Total Construction Costs /SF GBA $474 $538 ($63) Prepared by: Keyser Marston Associates, Inc. File name: SM Village_9 27 11; Dev 2008_2011 DEVELOPER COMPARISON TABLE Attachment C - Pro Forma Comparison THE VILLAGE AT CIVIC CENTER SANTA MONICA. CALIFORNIA Developer Developer 2011 2008 Difference III. NOI /Sales Revenue A. SITE A: CONDOMINIUM/ RETAIL COMPONENT $112,343,000 $109,237,000 $3,106,000 Sales Revenue /SF GBA $761 $825 ($64) B. SITE B: AFFORDABLE APARTMENT COMPONENT Effective Gross Income $1,557,900 $1,333,500 $224,400 Operating Expenses (878,600) - (840,500) (38,100) Net Operating Income Net Operating Income /SF GBA C. SITE C: CONDOMINIUM/ RETAIL COMPONENT Sales Revenue /SF GBA IV. Threshold Profit A. SITE A: CONDOMINIUM/ RETAIL COMPONENT Profit as % of Sales Revenue B. SITE C: CONDOMINIUM/ RETAIL COMPONENT Profit as % of Sales Revenue Total Threshold Profit $679,300 $493,000 $186,300 $3.64 $2.68 $0.96 $159,748,000 $152,130,000 $7,618,000 $640 $876 ($236) $18,994,000 $17,146,000 $1,848,000 16.9% 15.7% 26,687,000 23,889,000 2,798,000 16.7% 15.7% $45,681,000 $41,035,000 $4,646,000 V. Supportable Land Value COMPONENT " SITE A: CONDOMINIUM / RETAIL COMPONENT $8,599,000 $8,537,000 $62,000 SITE C: CONDOMINIUM / RETAIL COMPONENT 10,801,000 10,872,000 (71,000) Total Supportable Land Value $19,400,000 $19,409,000 $9,000 VI. Financial Gap: SITE B: AFFORDABLE APARTMENT COMPONENT TOTAL AVAILABLE FUNDING SOURCES $50,560,000 $38,728,000 $11,832,000 (LESS) TOTAL CONSTRUCTION COSTS (69,960,000) (62,550,000) (7,410,000) Site B Financial Gap ($19,400,000) ($23,822,000) $4,422,000 VII. I Net Agency Land Payment $0 $4,413,000 $4,413,000 Prepared by: Keyser Marston Associates, Inc. File name: SM Village-9 27 11; Dev 2008_2011 SECOND AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT This SECOND AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT ( "Second Amendment ") is dated as of 2011, and is entered into by and between the CITY OF SANTA MONICA ( "City ") and RELATED /SANTA MONICA VILLAGE, LLC, a California limited liability company ( "Developer "). RECITALS A. City is the owner of certain real property (the "Site ") located within the Village Special Use District (the "District ") in the City of Santa Monica, California (the "City "). The District is located west of Main Street, east of Ocean Avenue, north of Pico Boulevard, and south of the future extension of Olympic Drive from Main Street to Ocean Avenue. The District includes the newly built RAND Corporation headquarters, the Viceroy Hotel, a private office building at 1733 Ocean Boulevard and the Site. B. The Redevelopment Agency of the City of Santa Monica ( "Agency ") and Developer entered into that certain Disposition and Development Agreement dated as of June 10, 2008, as amended by that First Amendment to Disposition and Development Agreement dated as of July 1, 2010 (collectively referenced herein as "the DDA "), pertaining to the redevelopment of the Site with a mixed retail and residential housing development (the "Improvements "), in accordance with the terms and conditions of the DDA. DDA as used herein shall mean, refer to and include the DDA, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the DDA. Any capitalized term not otherwise defined herein shall have the meaning ascribed to it in the DDA. C. The Site was transferred by the City to the City on March 9, 2011, and the City's rights under the DDA were assigned to the City, in accordance with that certain Assignment and Assumption Agreement, dated March 8, 2011, which assignment was consented to by Developer. D. Due to Developer's assertion of changed financing conditions, anticipated requirements of the California Department of Real Estate ( "DRE "), and desire to begin utility relocation on and off the Site before construction financing is obtained for the Improvements, Developer has requested certain amendments to the DDA, which Developer asserts will be necessary for the Developer to obtain construction financing and enhance the marketability of the Improvements. Consequently, Developer is now seeking, and City has agreed, to make certain changes to the DDA, as set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged, the parties agree as follows: Page 1 of 9 1. Recitals. The Recitals and attachments referenced above are hereby incorporated by reference into this Second Amendment and adopted by the parties to this Second amendment as true and correct. 2. Defined Terms. Capitalized terms used in this Second Amendment shall have the meaning given them in the DDA unless specifically provided otherwise herein. 3. Changes to text of DDA. a. Section 102 (Definitions) shall be modified, as follows: "Permitted Transfer" means any of the following: a. An assignment of this Agreement and all of Developer's interests in any Parcel to a limited liability company or another entity in which Developer's principal owners, as of the date hereof, or any Affiliate, owns a majority interest and has control over management, or a sale back from such entity to Developer; b. An assignment of the Parcel B Ground Lease to a tax credit limited partnership ( "the Parcel B Limited Partnership ") for the purpose of receiving low income housing tax credits; C. The addition of Community Corporation of Santa Monica as a general partner of the Parcel B Limited Partnership for development of the Affordable Units on Parcel B; d. Concurrently with or after the Closing, either before or after Completion, transfers to a Permitted Mortgagee, or its designee, pursuant to foreclosure, deed -in -lieu of foreclosure, or any similar action or proceeding, under a Permitted Mortgage; e. The inclusion of equity participation in Developer, by the sale, transfer, syndication or addition of ownership interests, including but not limited to stock, limited partnership shares or limited liability company shares, or similar mechanism, so long as Developer or its principal owners as of the date of execution of this Agreement continue to own a majority interest and have control over management; f. The assignment of the Ground Leases to the Homeowners Associations for Parcels A and C, in accordance with the assignment provisions in the respective Ground Lease for each Parcel. g. The pre -sale or pre- leasing of individual Market Rate Units or Retail Space. The documentation evidencing any such Permitted Transfer shall be subject to the reasonable approval of the City Manager or designee in accordance with the standards set forth in the respective provisions of this Agreement. Page 2 of 9 b. Section 111(d) shall be modified as follows: The City Loan shall be an amount not to exceed NINETEEN MILLION FOUR HUNDRED THOUSAND DOLLARS AND NO CENTS ($19,400,000.00), and shall be equal to the sum of (1) the Base Rent for Parcel A Ground Lease and (2) the Base Rent for Parcel C Ground Lease. The City Loan shall be evidenced by the City Note, in substantially the form attached to this Agreement as Attachment No. 7, and secured by the City Deed of Trust and UCC -1 Financing Statement, in substantially the form attached to this Agreement as Attachment Nos. 6 and 20, respectively. The City Loan shall be in consideration for the Developer's compliance with the requirements set forth in this Agreement and the Regulatory Agreement. The City Loan shall be disbursed in accordance with the Method of Financing for Parcel B (Attachment No. 13B). C. Section 203(a)(5) shall be modified as follows: 5. Developer's deposit into Escrow of the amount equal to EIGHT MILLION SIX HUNDRED THOUSAND DOLLARS AND NO CENTS ($8,600,000.00) as pre- payment of the Base Rent for the Parcel A Ground Lease and TEN MILLION EIGHT HUNDRED THOUSAND DOLLARS AND NO CENTS ($10,800,000.00) for the Parcel C Ground Lease. The Base Rent for the Parcel B Ground Lease shall be ZERO DOLLARS AND NO CENTS ($0.00). d. Section 402(b) shall be modified as follows: b. Any agreements which purport to regulate, restrict, manage, maintain, limit, apply to, or otherwise affect the use of Parcel B and /or the use of any common areas between Parcel A and Parcel B shall be substantially in the form attached hereto as Attachment No. 17 and Attachment No. 22. Any changes to these forms shall be subject to the City's written approval prior to their effective date, which said approval shall not be unreasonably withheld. Developer shall ensure that such agreements are subject to the conditions of the Parcel B Ground Lease, and shall terminate upon expiration of the Parcel B Ground Lease. e. Section 505.2 shall be modified as follows: [§ 505.2] Termination by City a. Subject to the enforced delay provisions of Section 604, and the rights of any Permitted Mortgagee to cure under Section 509(b), City may terminate this Agreement at its option if (1) any of the following events occurs, (2) City delivers a Default Notice pursuant to Section 503; and (3) any pertinent Cure Period applicable pursuant to Section 502 with respect thereto has expired: 1. Developer (or any successor or assign of Developer) makes or purports to make any Transfer, contrary to the provisions of this Agreement; or Page 3 of 9 2. Developer fails to post, maintain, and record a notice of lion- responsibility on behalf of the City for mechanics liens; or 3. Developer fails to satisfy all conditions precedent to Close of Escrow as set forth in Section 203(a) of this Agreement and in accordance with the Schedule of Performance; or 4. Developer fails to perform any of its material obligations under this Agreement and /or the Ground Lease for any Parcel, including failing to diligently pursue development of any Parcel. b. For the purposes of this Agreement, "failing to diligently pursue development' shall mean: 1. Developer shall have failed to commence construction of the Improvements on any Parcel, as required by this Agreement for a period of three (3) months after the date set forth in the Schedule of Performance; and 2. Developer shall have abandoned or substantially suspended construction of the Improvements on any Parcel for a continuous period of three (3) months after written notice of such abandonment or suspension from City. C. In the event of termination under this Section, in addition to any remedies authorized herein, City shall have the right, its option, to exercise its rights under the Assignment of Agreements, incorporated herein and attached hereto as Attachment No. 613, and reenter and take immediate possession of the Site and any Improvements thereon, in accordance with subsection (d) of this Section and subject to Section 505.3 herein. d. Right of Reentry Subject to Section 505.3, the City shall have the right, at its option, to reenter and take possession of the Site with all Improvements thereon, and to terminate and revest in the City the leasehold estate theretofore conveyed to the Developer, if after conveyance of title and prior to the Release of Construction Covenants pertaining to the Site (or portion thereof), the Developer (or its successors in interest) shall: 1. fail to commence construction of the Improvements on the Site (or portion thereof) as required by this Agreement for a period of three (3) months after the date set forth in the Schedule of Performance, provided that the Developer shall not have obtained an extension or postponement to which the Developer may be entitled pursuant to Section 604 hereof; or 2. abandon or substantially suspend construction of the Improvements on the Site (or portion thereof) for a continuous period of three (3) months after written notice of such abandonment or suspension from the City, provided that the Developer shall not have obtained an extension or postponement to which the Developer may be entitled to pursuant to Section 604 hereof; or Page 4 of 9 3. assign or attempt to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer of the Site, or any part thereof, in violation of this Agreement, and such violation shall not be cured within thirty (30) days after the date of receipt of written notice thereof by the City to the Developer. Such right to reenter, repossess, terminate, and revest, shall be subject to and be limited by and shall not defeat, render invalid, or limit any right of a Permitted Mortgagee to cure under Section 509(b). The rights established in this subsection (d) shall not apply to the Site if the Improvements to be constructed thereon have been completed in accordance with the Agreement and a Release of Construction Covenants has been issued as provided in Section 314. The Ground Lease for each Parcel shall contain appropriate reference and provision to give effect to the City's right, as set forth in this subsection (d), under specified circumstances prior to the issuance of the Release of Construction Covenants for any Parcel, to re -enter and take possession of the Site, or any part thereof, with all Improvements thereon, and to terminate and revert in the City the leasehold estate conveyed to the Developer. Upon the revesting in the City of title to the Site, or any part thereof, as provided in this subsection (d), the City shall, pursuant to its responsibilities under state law, use its diligent and good faith efforts to resell its interest in the Site, or any part thereof, as soon and in such manner as the City shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the City), who will assume the obligation of making or completing the Improvements, or such other Improvements in their stead, as shall be satisfactory to the City and in accordance with the uses specified for the Site, or any part thereof, in the Redevelopment Plan. Upon such resale of the leasehold interests in the Site, or any part thereof, the proceeds thereof shall be applied: 1. first, to reimburse the City on its own behalf or on behalf of the City of all costs and expenses incurred by the City, including but not limited to salaries of personnel engaged in such action, in connection with the recapture, management, and resale of its interests in a Parcel (but less any income derived by the City from the Parcel, in connection with such management); all taxes, assessments and water and sewer charges with respect to a Parcel (or, in the event the Parcel is exempt from taxation or assessment or such charges during the period of ownership, then such taxes, assessments, or charges, as would have been payable if the Parcel were not so exempt); any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults, or acts of the Lessee, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the agreed Improvements or any part thereof on the Parcel; and any amounts otherwise owing to the City by the Lessee and its successor or transferee; 2. second, to each Permitted Mortgagee, in order of priority, in an amount up to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and /or any interest accrued thereon, all as of the date on which such payment is made; Page 5 of 9 provided, however, that nothing herein shall be deemed as a guaranty or warranty by the City to such Permitted Mortgagee that the resale of the City's interests and payment to Permitted Mortgagee shall be sufficient to pay, in total, unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and /or any interest accrued thereon, if any; 3. third, to reimburse the Lessee, its successor or transferee, up to the amount equal to (1) the sum of the Base Rent paid to the City by the Lessee for the Parcel being reverted in the City; and (2) the costs incurred for the development of the Parcel or for the construction of the agreed Improvements thereon, if such costs were incurred in accordance with the applicable Method of Financing and Project Budget for the Parcel, less (3) any gain or income withdrawn or made by the Lessee therefrom or from the Improvements thereon. For purposes of this paragraph the term "cost incurred" shall include direct, out -of- pocket expenses of development, but shall exclude Lessee's all overhead expenses, developer fees, and profit; and 4. fourth, any balance remaining after such reimbursements shall be retained by the City as its property. The City shall also be entitled to exercise all of its rights under the Assignment of Agreements (Attachment No. 6B to the Agreement). e. To the extent that the right established in this Section 505.2 involves forfeiture, it must be strictly interpreted against the City, the party for whose benefit it is created. The rights established in this Section 505.2 are to be interpreted in light of the fact that the City will convey the Parcels to the Lessee for development and not for speculation in undeveloped land. f. All references to "Agency Loan ," "Agency Loan Documents," and any of the documents comprising the Agency Loan Documents in the DDA shall mean, respectively, "City Loan," "City Loan Documents," and documents comprising the City Loan Documents. Subject to the conditions and limitations of the Assignment and Assumption Agreement referenced herein, all rights and obligations within the DDA that are currently designated as Agency rights and obligations, and which are not amended by any specific provisions of this Second Amendment, shall be interpreted to mean City rights and obligations. 4. Chances to attachments to the DDA a. The Schedule of Performance (Attachment No. 3) shall be interpreted to automatically extend milestone dates to the extent required by any applicable notice and cure or force majeure periods of the DDA. This provision shall be for the benefit of City, Developer and any Permitted Mortgagee. b. The Project Budget for Parcel A (Attachment No. 5A) shall be replaced in its entirety with the attached Exhibit A, First Revised Project Budget for Parcel A. C. The Project Budget for Parcel B (Attachment No. 5B) shall be replaced in its entirety with the attached Exhibit B, First Revised Project Budget for Parcel B. Page 6 of 9 d. The Project Budget for Parcel C (Attachment No. 5C) shall be replaced in its entirety with the attached Exhibit C, First Revised Project Budget for Parcel C. e. Any and all references to the amount "TWENTY -THREE MILLION EIGHT HUNDRED AND TWENTY -THREE THOUSAND DOLLARS AND NO CENTS ($23,823,000) in the City Deed of Trust, Parcel B (Attachment No. 6) shall be replaced with the amount "NINETEEN MILLION FOUR HUNDRED THOUSAND DOLLARS AND NO CENTS ($19,400,000.00). f. Any and all references to the amount "TWENTY -THREE MILLION EIGHT HUNDRED AND TWENTY -THREE THOUSAND DOLLARS AND NO CENTS ($23,823,000) in the Residual Receipts Promissory Note (Attachment No. 7) shall be replaced with the amount "NINETEEN MILLION FOUR HUNDRED THOUSAND DOLLARS AND NO CENTS ($19,400,000.00). g. The form of the Parcel A Ground Lease (Attachment No. 11A) shall be replaced in its entirety with the attached Exhibit D. h. The form of the Parcel B Ground Lease (Attachment No. I IB) shall be replaced in its entirety with the attached Exhibit E. i. The form of the Parcel C Ground Lease (Attachment No. I I C) shall be replaced in its entirety with the attached Exhibit F. j. The Method of Financing for Parcel A (Attachment No. 13A) shall be replaced in its entirety with the attached Exhibit G. k. The Method of Financing for Parcel B (Attachment No. 13B) shall be replaced in its entirety with the attached Exhibit H. 1. The Method of Financing for Parcel C (Attachment No. 13C) shall be replaced in its entirety with the attached Exhibit 1. m. The Right of Entry Agreement (Attachment No. 16) shall be amended and restated in its entirety with the attached Exhibit J. n. The form of Reciprocal Easement Agreement (Attachment No. 17) shall be replaced in its entirety with the attached Exhibit K. o. The Participation Payment Agreement (Attachment No. 19) shall be replaced in its entirety with the attached Exhibit L. P. The form of Declaration of Covenants, Conditions, and Restrictions ( "Declaration ") (Attachment No. 21) shall be replaced in its entirety with the attached Exhibit M. The Declaration shall be recorded concurrently with the Reciprocal Easement Agreement, in the order of recordation provided in Section 205. Page 7 of 9 q. The Joint Development Agreement, attached hereto as Exhibit N, shall be added as Attachment No. 22 to the DDA. The Joint Development Agreement shall be recorded concurrently with the Reciprocal Easement Agreement and Declaration, in the order of recordation provided in Section 205. 5. Binding on Successors and Assigns. This Second Amendment and all of the terms and conditions herein shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of the parties. 6. DDA in Full Force and Effect. Except as otherwise expressly modified herein, the terms and conditions of the DDA shall remain unmodified and in full force and effect. 7. Further Assurances. The parties agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Second Amendment. 8. Third Party Beneficiaries. Except as otherwise expressly set forth herein, the parties to this Second Amendment acknowledge and agree that the provisions of the DDA are for the sole benefit of City and Developer, and not for the benefit, directly or indirectly, of any other person or entity. 9. Effectiveness of this Second Amendment. This Second Amendment shall not be effective unless and until it has been executed by Developer and City. The Effective Date of this Second Amendment shall be deemed to be the date this Second Amendment is executed by City. SIGNATURES ON NEXT PAGE Page 8 of 9 CITY OF SANTA MONICA (City) Date: ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Special Counsel C Susan Y. Cola C Rod Gould City Manager DEVELOPER: RELATED /SANTA MONICA VILLAGE, LLC, a California limited liability company, By: The Nicholas Company, Inc., a Delaware corporation, Its Non - Member Manager By: Name: Title: Page 9 of 9 EXHIBITS A - C PROJECT BUDGETS FOR PARCELS A - C [BEHIND THIS PAGE] 2011 BUDGET THE VILLAGE AT CIVIC CENTER SANTA MONICA. CALIFORNIA I. Scope of Development A. SITE A: MARKET RATE CONDOMINIUMS /RETAIL Condominiums Number of Units 65 Total Gross Building Area (SF) 147,664 Average Unit Size /SF Gross Building Area (GBA) 2,270 Retail 10,183 B. SITE B: INCOME RESTRICTED APARTMENT UNITS Number of Units 160 Total Gross Building Area (SF) 186,773 Average Unit Size /SF Gross Building Area (GBA) 1,170 C. SITE C: MARKET RATE CONDOMINIUMS /RETAIL Condominiums Number of Units 93 Total Gross Building Area (SF) 249,602 Average Unit Size /SF Gross Building Area,(GBA) 2,680 Retail - 11,228 Total Project GBA (SF) 605,450 Prepared by: Keyser Marston Associates, Inc. File name: SM Village_9 23 11; 2011 Budget 2011 BUDGET THE VILLAGE AT CIVIC CENTER SANTA MONICA, CALIFORNIA IL Construction Costs A. SITE A: MARKET RATE CONDOMINIUMS /RETAIL Direct Costs Indirect Costs Financing /Closing Costs Cost of Sales Total Construction Costs. Total Construction Costs /SF GBA $49,311,000 19,708,000 8,210,000 7,520,000 $84,749,000 $574 B. SITE B: INCOME RESTRICTED APARTMENT UNITS Direct Costs $51,764,000 Indirect Costs 12,207,000 Financing Costs 5,989,000 Total Construction Costs $69,960,000 Total Construction Costs /SF GBA - $375 C. SITE C: MARKET RATE CONDOMINIUMS /RETAIL Direct Costs - $71,200,000 Indirect Costs 28,558,000 Financing /Closing Costs 11,610,000 Cost of Sales 10,893,000 Total Construction Costs $122,261,000 Total Construction Costs /SF GBA $490 Grand Total Construction Costs $276,970,000 Total Construction Costs /SF GBA $457 Prepared by: Keyser Marston Associates, Inc. File name: SM Village-9 23 11; 2011 Budget 2011 BUDGET THE VILLAGE AT CIVIC CENTER SANTA MONICA, CALIFORNIA III. Sales Revenue /Net Operating Income A. SITE A: MARKET RATE CONDOMINIUMS /RETAIL $112,343,000 B. SITE B: INCOME RESTRICTED APARTMENT UNITS Effective Gross Income $1,557,900 Operating Expenses (878,600) Net Operating Income $679,300 C. SITE C: MARKET RATE CONDOMINIUMS /RETAIL $159,748,000 IV. Threshold Profit A. SITE A: MARKET RATE CONDOMINIUMS /RETAIL $18,994,000 Profit as % of Sales Revenue 16.9% B. SITE C: MARKET RATE CONDOMINIUMS /RETAIL 26,687,000 Profit as % of Sales Revenue 16.7% Total Threshold Profit $45,681,000 V. Supportable Land Value SITE A: MARKET RATE CONDOMINIUMS /RETAIL $8,600,000 SITE C: MARKET RATE CONDOMINIUMS /RETAIL 10,800,000 Total Supportable Land Value $19,400,000 VI. Financial Gap: SITE B: INCOME RESTRICTED APARTMENT UNITS TOTAL AVAILABLE FUNDING SOURCES $50,560,000 _ (LESS) TOTAL CONSTRUCTION COSTS (69,960,000) Site B Financial Gap - ($19,400,000) VII. I Net Land Payment $0 Prepared by: Keyser Marston Associates, Inc. File name: SM Village-9 23 11; 2011 Budget EXHIBIT D PARCEL A GROUND LEASE [BEHIND THIS PAGE] Contract Number 8935 (RAS) ATTACHMENT NO. 11 A FORM OF PARCEL A GROUND LEASE PARCEL A GROUND LEASE By and Between THE CITY OF SANTA MONICA, CITY, and SANTA MONICA URBAN HOUSING A, LLC, a Delaware limited liability company, LESSEE TABLE OF CONTENTS [§ 100] SUBJECT OF GROUND LEASE . ............................... Contract Number 8935 (RAS) PAGE ........................... 1 [§ 101] Purpose of the Lease ....................................... ............................... [§ 102] The Redevelopment Plan ................................ ............................... [§ 103] The Redevelopment Project Area ................... ............................... [§ 104] Parcel A ........................................................... ............................... [§ 105] The Improvements .......................................... ............................... [§ 106] Condition of Parcel A ..................................... ............................... [§ 106.1] Hazardous Substances .................................. ............................... [§ 106.2] Suitability of Parcel A .................:................ ............................... [§ 107] Parties to the Lease ......................................... ............................... [§ 1081 City .................................................................. ............................... [§ 1091 Lessee .............................................................. ............................... .................... 1 .................... 1 .................... 2 .................... 2 .................... 3 .................... 3 .................... 3 .................... 4 .................... 5 .................... 5 .................... 5 [§ 200] LEASE OF PARCEL A ...................................................................... ............................... 5 [§ 201] Lease ................................................................................... ............................... 5 [§ 202] Term of the Lease ............................................................... ............................... 6 [§ 300] RENT .................................................................................................. ............................... 6 [§ 3011 Definitions ........................................................................... ............................... 6 [§ 302] Ground Rent ........................................................................ ............................... 7 [ §303] Base Rent ............................................................................. ..............................7 [§ 304] Additional Rent ................................................................... ............................... 7 [§ 305] Net Lease ............................................................................ ............................... 7 [§ 3061 Non Subordination .............................................................. ............................... 7 [§ 307] Delinquency in Rental Payment .......................................... ............................... 7 [§ 400] DEVELOPMENT OF PARCEL A ..........................................:.......... ............................... 7 [§ 4011 Scope of Development, Plans, Drawings and Specifications ............................ 7 [§ 402] No Construction Before Notice .......................................... ............................... 7 [§ 403] Notice of Non Responsibility .............................................. ............................... 8 [§ 404] Mechanic's, Materialman's, Contractor's or Subcontractor's Liens ................. 8 [§ 405] Rights of Access ................................................................. ............................... 9 [§ 4061 Local, State and Federal Laws ............................................ ............................... 9 [§ 407] Nondiscrimination During Construction ........................... ............................... 10 [§ 5001 USE OF PARCEL A AND IMPROVEMENTS .............................. ............................... 10 L§5011 Use of Parcel A and Improvements .................................. ............................... 10 30601.0002 \405060.1 Attachment No. I IA Page iofiv Contract Number 8935 (RAS) [§ 502] Limitations on Use of Site ................................................ ............................... 11 [§ 5031 Maintenance ...................................................................... ............................... 12 [§ 504] Management of Parcel A and Improvements .................... ............................... 13 [§ 505] Obligation to Refrain from Discrimination ....................... ............................... 15 [§ 506] Form of Nondiscrimination and Nonsegregation Clauses ............................... 15 [§ 507] Quiet Enjoyment ............................................................... ............................... 16 [§ 6001 TAXES, ASSESSMENTS AND OTHER CHARGES .................... ............................... 16 [§ 601] [§ 602] [§ 602.1] [§ 602.2] [§ 603] [§ 604] [§ 605] [§ 606] [§ 607] [§ 608] Utilities.......................................................................... ............................... Impositions (Including Taxes and Assessments) .......... ............................... PaymentGenerally ...................................................... ............................... Payment of Impositions in Installments ..................... ............................... CityRight to Cure ......................................................... ............................... TaxReceipts .................................................................. ............................... TaxLiability .................................................................. ............................... Contests......................................................................... ............................... Notice of Possessory Interest; Payment of Taxes and Assessments on Valueof Entire Property ............................................... ............................... OtherLiens .................................................................... ............................... .. 16 .. 16 .. 16 .. 17 .. 17 .. 17 .. 18 .. 18 .... 19 .... 19 [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS ........................ 19 [§ 701] Ownership During Term and at Expiration and Termination ................ [§ 702] Removal of Fixtures and Furnishings at Expiration or Termination..... [§ 703] Maintenance and Repair of Improvements ............. ............................... [§ 704] Waste ....................................................................... ............................... [§ 705] Alteration of Improvements .................................... ............................... [§ 706] Damage to or Destruction of Improvements ........... ............................... [§ 707] Lessee to Give Notice ............................................. ............................... [§ 708] Restoration .............................................................. ............................... [§ 709] Application of Insurance Proceeds ......................... ............................... [§ 711] Faithful Performance and Labor and Material (Payment) Bonds; Indemnification; Non Responsibility Notices ........ ............................... 19 .......... 20 .......... 20 .......... 21 .......... 21 .......... 21 .......... 21 .......... 21 .......... 22 24 [§ 800]ASSIGNMENT, SUBLETTING, TRANSFER ................................. ............................... 24 [§ 801] Warranty Against Speculation .......................................... ............................... 24 [§ 802] Prohibition Against Transfer ............................................. ............................... 25 [§ 803] Investigation of Proposed Transferee; Costs .................... ............................... 27 [§ 804] Sale of Condominium Units .............................................. ............................... 29 [§ 8051 Release of Construction Covenants .................................. ............................... 29 30601.0002 \405060.1 Attachment No. 11A Page ii of iv Contract Number 8935 (RAS) [§ 900] MORTGAGES .................................................................................. ............................... 29 [§ 901] Leasehold Mortgages ........................................................ ............................... 29 [§ 9021 Rights and Obligations of Leasehold Permitted Mortgagees .......................... 31 [§ 903] City's Forbearance and Right to Cure Defaults on Leasehold Permitted Mortgages.......................................................................... ............................... 34 [§ 904] Notice ................................................................................ ............................... 34 [§ 905] Forbearance by City .............................................................. ............................... 34 [§905.1] Conditions Precedent to Permitted Mortgagee Rights and CityForbearance ............................................................. ............................... 35 [§ 906] Performance on Behalf of Lessee ..................................... ............................... 36 [§ 907] Nonmerger ........................................................................ ............................... 36 [§ 908] City Cooperation ............................................................... ............................... 36 [§ 909] Enforceability .................................................................... ............................... 37 [§ 910] No Subordination of City's Interests ................................ ............................... 37 [§ 911] Obligations of Mortgagee Upon Acquisition of Leasehold or Subleasehold Estate ...................................................... ............................... 37 [§ 912] City's Rights Against Prior Lessees ................................. ............................... 37 [§ 1000] INDEMNIFICATION AND INSURANCE.......... ............................. 38 [§ 1001] Indemnifrcation .................................................................. ............................... 38 [§ 10021 Required Insurance ............................................................ ............................... 38 [§ 1003] Definition of "Full Insurable Value" ................................. ............................... 39 [§ 1004] General Insurance Provisions ............................................ ............................... 39 [§ 1005] Failure to Maintain Insurance ............................................ ............................... 40 [§ 10061 Disposition of Insurance Proceeds Resulting from Loss or Damage to Improvements.................................................................... ............................... 40 [§ 1100] EMINENT DOMAIN ...................................................................... .............................41 [§1101] Lessee to Give Notice ........................................................ ............................... 41 [§ 1102] Total Taking ....................................................................... ............................... 41 [§ 1103] Partial Taking ..................................................................... ............................... 41 [§ 1104] Application of Awards and Other Payments ..................... ............................... 41 [§ 12001 DEFAULTS, REMEDIES AND TERMINATION ....................... ............................... 42 [§ 1201] Defaults General ................................................................ ............................... 42 [§ 1202] Legal Actions ..................................................................... ............................... 43 [§ 1203] Institution of Legal Actions ............................................... ............................... 43 [§ 1204] Applicable Law .................................................................. ............................... 43 [§ 1205] Acceptance of Service of Process ...................................... ............................... 43 [§ 1206] Attorneys' Fees and Court Costs ....................................... ............................... 43 [§ 1207] Rights and Remedies are Cumulative ................................ ............................... 43 30601.0002 \405060.1 AttachmentNo. 11A Page iii of iv ContractNumber 8935 (RAS) [§ 1208] Damages ....... :.................................................................................................... 44 [§ 1209] Specific Performance ......................................................... ............................... 44 [§ 1210] Additional Remedies of City ............................................. ............................... 44 [§ 1211] Rights of Termination ........................................................ ............................... 45 [§ 1212] Cross- Default —Among Parcels ......................................... ............................... 47 [§1212.11 Cross - Default —Among Parcels —Concurrent Financing of Parcels Aand B only ................................................................... ............................... 47 [§ 1212.2] Cross - Default — Among Parcels — Concurrent Financing of Parcels A, B and C ...................................................................... ............................... 48 [§ 1301] Notices, Demands and Communications between the Parties .......................... 48 [§ 1302] Time of Essence ................................................................... .............................48 [§ 1303] Conflict of Interests ............................................................ ............................... 48 [§ 1304] Nonliability of City Officials and Employees ................... ............................... 48 [§ 1305] Inspection of Books and Records ...................................... ............................... 49 [§ 1306] No Partnership ................................................................... ............................... 49 [§ 13071 Compliance with Law ........................................................ ............................... 49 [§ 1308] Surrender of Property ......................................................... ............................... 49 [§ 1309] Severability .......................................................................... .............................49 [§ 1310] Binding Effect .................................................................... ............................... 49 [§ 1311] Assignment or Sublease ..................................................... ............................... 50 [§ 1312] Captions ..... :...................................................................................................... 50 [§ 1313] No Recording of this Lease ................................................ ............................... 50 [§ 1314] Enforced Delay in Performance for Causes Beyond Control of Party ............. 50 [§ 1315] Entire Agreement, Waivers and Amendments ................... ............................... 51 [§ 1316] Off -Set Statement, Attornment and Subordination ............. ............................... 51 [§ 13171 Association Option to Extend Lease Term ........................ ............................... 52 [§ 1318] Appr ovals ........:.................................................................. ............................... 56 EXHIBITS EXHIBIT A - MAP OF PARCEL A EXHIBIT B - LEGAL DESCRIPTION OF PARCEL A EXHIBIT C - FORM OF ASSIGNMENT OF LEASE 30601.0002 \405060.1 Attachment No. 1 1 Page iv of iv Contract Number 8935 (RAS) ATTACHMENT IIA GROUND LEASE This Ground Lease (this "Lease ") dated as of 20 ( "Effective Date ") is entered into by and between the CITY OF SANTA MONICA ( "City "), as assignee to the REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA ( "Agency ") pursuant to that certain Assignment and Assumption Agreement, dated March 8, 2011, and SANTA MONICA URBAN HOUSING A, LLC, a Delaware limited liability company ( "Lessee "). [§ 100] SUBJECT OF GROUND LEASE [§ 101] Purpose of the Lease The City is the owner of certain real property (the "Site ") located within the Village Special Use District ( "District ") in the City of Santa Monica, California. The District is located west of Main Street, east of Ocean Avenue, north of Pico Boulevard and south of the future extension of Olympic Drive from Main Street to Ocean Avenue. The District includes the newly built RAND Corporation headquarters, the Viceroy Hotel, a private office building at 1733 Ocean Boulevard, and the proposed "Site," which is comprised of approximately three acres. The Site has been subdivided into three parcels,, individually referenced herein as "Parcel A" (Lot 1 of Tract 69828); "Parcel B" (Lot 2 of Tract 69828); and "Parcel C" (Lot 1 of Tract 66228). The purpose of this Lease is to effectuate the Redevelopment Plan for the Earthquake Recovery Redevelopment Project ( "Redevelopment Plan ") by providing for the redevelopment of the Site with a mixed retail commercial and residential housing development on the hereinafter defined Site ( "Improvements" or "Project ") in accordance with the terms and conditions of this Lease. The lease of Parcel A and the development and operation of the Improvements, and the fulfillment generally of this Lease, are in the vital and best interests of the City of Santa Monica ( "City ") and the health, safety, morals, and welfare of its residents, and in accord with the public put-poses and provisions of applicable federal, state and local laws and requirements. [§ 102] The Redevelopment Plan This Lease is made in accordance with and subject to (a) the Redevelopment Plan, which was approved and adopted by Ordinance No. 1747 (CCS), as amended from time to time by the City Council of the City, and (b) the Disposition and Development Agreement entered into by and between Agency and Related /Santa Monica Village, LLC ( "Developer ") on June 10, 2008, as amended by that First Amendment to Disposition and Development Agreement dated as of July 1, 2008„ and that Second Amendment to Disposition and Development Agreement dated as of [insert date], 2011 (collectively referenced herein as "the Agreement "), which governs the terms and conditions for development and use of the Site. The Site was transferred by the Agency to the City on March 9, 2011, and the Agency's rights under the Agreement were assigned to the City, in accordance with that certain Assignment and Assumption Agreement, dated March 8, 2011, which assignment was consented to by Developer. Except as specifically provided for in the Agreement, nothing in this Lease shall be deemed to modify or limit the rights of either the City or Lessee under the provisions of the Agreement. The Agreement is incorporated herein by this reference as though fully set forth 30601.0002 \405060.1 1 Contract Number 8935 (RAS) herein. The term "Agreement" as used herein shall mean, refer to and include the Agreement, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the Agreement. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. Any amendments hereafter to the Redevelopment Plan (as so approved and amended) which change the uses or development permitted on Parcel A, as provided in this Lease, or otherwise change the restrictions or controls that apply to Parcel A, shall not apply to Lessee, any Master Permitted Mortgagee who has registered its name and address in writing with City (or any party that acquires an interest therefrom), or Parcel A without the prior written consent of Lessee and any existing Master Permitted Mortgagee who has registered its name and address in writing with City. No other amendments to the Redevelopment Plan shall require the consent of Lessee. Developer has also entered into that certain Development Agreement by and between the City of Santa Monica and Related/Santa Monica Village, LLC for the Village at Santa Monica, dated , 2008 for reference purposes (the "Development Agreement "), which, among other things, provides for the development of Parcel A by Lessee in conformity with the City's General Plan and Specific Plan. The development of Parcel A in accordance with the Development Agreement conforms to the Redevelopment Plan. Nothing in this Lease shall modify or limit the rights of either the City or Lessee under the provisions of the Development Agreement. [§ 1031 The Redevelopment Project Area The Earthquake Recovery Redevelopment Project Area is located in the City. The exact boundaries of such Project Area are specifically and legally described in the Redevelopment Plan. [§ 1041 Parcel A Parcel A is that certain real property within the Earthquake Recovery Redevelopment Project Area illustrated and designated as such on the "Map of Parcel A" (which is attached hereto and incorporated herein as Exhibit A) and having the legal description set forth in the "Legal Description of Parcel A" (which is attached hereto and incorporated herein as Exhibit B). City reserves to itself, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following: a. Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from Parcel A or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of Parcel A, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, 30601.0002 \405060.1 2 ConhactNumber 8935 (RAS) drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of Parcel A; and b. Subject to use by Lessee on Parcel A and in connection with the Improvements and subject to any use in connection with ownership, development and operation of the Improvements, any and all water, water rights or interests therein, no matter how acquired by City, together with the right and power to explore, drill, redrill, remove and store the same from Parcel A or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by City, whether such water rights shall be riparian, overlying, appropriative, percolating, littoral, prescriptive, adjudicated, statutory or contractual; but without, however, any right to enter on or through the surface or upper 500 feet of the subsurface of Parcel A in the exercise of such rights and, provided further, that the exercise of any such rights by City shall not result in any damage or injury to the Improvements constructed on Parcel A by Lessee, including without limitation any subsidence of all or any part of such Improvements. [§ 105] The Improvements The term "Improvements" as used in this Lease shall mean the Improvements described in the Scope of Development, attached to the Agreement as Attachment No. 4, as well as any improvements made or instructed in accordance with terms of this Lease. [§ 106] Condition of Parcel A [§ 106.1] Hazardous Substances a. "Hazardous Substance," as used in this Lease means any substance, material or waste which is or becomes regulated by the United States government, the State of California, or any local or other governmental authority, including, without limitation, any material, substance or waste which is (i) defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste," or "extremely hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code; (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code; (v) petroleum; (vi) asbestos; (vii) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903); (xi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to public health and safety. "Hazardous Substances" do not include materials customarily used in the construction, development, 30601.0002 \405060.1 3 Contract Number 8935 (RAS) operation or maintenance of real estate, provided such substances are used in accordance with all laws. b. Lessee hereby represents and warrants that the development, construction and uses of Parcel A permitted under this Lease (i) will comply with all applicable environmental laws; and (ii) do not require the presence of any Hazardous Substance on Parcel A in violation of any environmental law. [§ 106.2] Suitability of Parcel A a. Prior to the Close of Escrow for conveyance of the leasehold interest in Parcel A, Lessee shall have the right, at its sole cost and expense, to engage its own environmental consultant ( "Lessee's Environmental Consultant "), to make such investigations as Lessee deems necessary, including without limitation any "Phase 1" and /or "Phase 2" investigations of Parcel A or any portion thereof, and the City shall promptly be provided a copy of all reports and test results provided by Lessee's Environmental Consultant (the "Environmental Reports "). b. Parcel A shall be delivered from City to Lessee in an "as is" physical condition, with no warranty, express or implied by City as to the presence of Hazardous Substances, or.the condition of the soil, its geology or the presence of known or unknown faults. If the condition of Parcel A is not in all respects entirely suitable for the use or uses to which Parcel A will be put, then it is the sole responsibility and obligation of Lessee to place Parcel A in all respects in a condition entirely suitable for the development thereof, solely at Lessee's expense. C. Lessee agrees to indemnify, defend and hold harmless Agency and City and their respective members, officers, agents, employees, contractors and consultants, in accordance with the Environmental Indemnity Agreement (Attachment No. 15 to the Agreement); provided, however, that except as to Developer Lessee and any Affiliate of Developer Lessee, the Environmental Indemnity Agreement shall not apply to or bind the "Association" or any "Condominium Unit Owner" as such terms are defined below after issuance of the Release of Construction Covenants. d. Upon assignment of this Lease to the Association, the Association shall indemnify, protect, and hold the City harmless from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, attorneys' and experts' fees and disbursements) of any kind or of any nature whatsoever (collectively, the "Obligations ") which may at any time be imposed upon, incurred by or asserted or awarded against the City and arising from or out of: (i) The presence of any Hazardous Substances on, in, under, or affecting all or any portion of Parcel A or any surrounding areas, in violation of any environmental law, except to the extent such Hazardous Materials were present on, in, under, or affecting all or any portion of Parcel A or any surrounding areas prior to the effective date of the Assignment of Lease (attached hereto as Exhibit "C "). (ii) The enforcement by the City of any of the provisions of subsection (a) or the assertion by Lessee of any defense to its obligations hereunder. 30601.0002 \405060.1 4 Contract Number 8935 (RAS) e. Lessee hereby waives, releases and discharges the Agency, the City, and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys' fees) arising out of or in any way connected with the Agency's, City's, or Lessee's use, maintenance, ownership or operation of Parcel A, any Hazardous Substances on Parcel A, or the existence of Hazardous Substances contamination in any state on Parcel A, however the Hazardous Substances came to be placed there, except that arising out of the gross negligence or willful misconduct of the City or its employees, officers or agents. Lessee acknowledges that it is aware of and familiar with the provisions of.Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." To the extent of the release set forth in this Section 106.2, Lessee hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. [§ 107] Parties to the Lease [§ 108] City "City" means the City of Santa Monica, a municipal corporation, and its assignees and/or successors to its rights, powers and responsibilities. The principal office of City is located at 1685 Main Street, Room 212, Santa Monica, CA 90401. Developer acknowledges and agrees that the City intends to fulfill its financial obligations under the Agreement and this Lease through certain funds received by the City from the Agency pursuant to certain Cooperation Agreements and Implementing Agreements entered into by and between the City and Agency, and not from any other sources, including, without limitation, the City's general funds, or any of the City's real or tangible assets (collectively, "City Funds "). Accordingly, nothing in the Agreement or this Lease shall require the City to expend or promise to expend monies from City Funds, to satisfy all or any portion of the obligations set forth in the Agreement or this Lease. [§ 109] Lessee "Lessee" means SANTA MONICA URBAN HOUSING A, LLC, a Delaware limited liability company and/or any assignee and/or successor in interest allowed under this Lease, including the Association. SANTA MONICA URBAN HOUSING A, LLC, and its assignees, other than the Association, are referred to herein as "Developer Lessee ". The principal office of Lessee is located at [§ 2001 LEASE OF PARCEL A [§ 2011 Lease For and in consideration of the rents, conditions, covenants and agreements set forth herein, City hereby leases Parcel A to Lessee and Lessee does hereby take and lease Parcel A from City. 30601.0002 \405060.1 Contract Number 8935 (RAS) [§ 202] Term of the Lease The City shall convey to Developer Lessee a leasehold interest in Parcel A for a period of ninety -nine (99) years, commencing on Close of Escrow ( "Lease Term "). Subject. to Section 1317, at the expiration or earlier termination of the Lease Term, Lessee shall execute, acknowledge and deliver to City, within thirty (30) days after written demand by City, a valid and recordable quitclaim deed as to Lessee's leasehold interest in Parcel A, free and clear of all liens and encumbrances. [§ 3001 RENT [§ 3011 Definitions For the purposes of this Lease, the following terms shall have the following respective meanings: "Association," as used herein, means the owners' association which operates and manages the condominium development developed on Parcel A. "CC &Rs," as used herein, means the Declaration of Covenants, Conditions and Restrictions for the condominiums on Parcel A, as amended from time to time. "Condominium Plan," as used herein, means the Condominium Plan or Plans depicting the Condominium Units and other aspects of the condominium project contained on Parcel A, as amended from time to time. "Condominium Unit," as used herein, means a condominium unit within Parcel A, as defined and described in the CC &Rs and the Condominium Plan. "Condominium Unit Owner," as used herein, means an owner of a Sublease of a Condominium Unit and its successors and assigns. "Consumer Price Index," as used herein, means the Consumer Price Index - All Urban Consumers, [Los Angeles -Long Beach - Anaheim], published by the Bureau of Labor Statistics or, if such index ceases to be published, the most closely analogous substitute index. "Master Permitted Mortgage" shall mean any mortgage, pledge, deed of trust, or other encumbrance, in whole or in part, of any of Developer Lessee's and/or Lessee's leasehold interest created by this Lease and /or Developer Lessee's and /or Lessee's interests or rights appurtenant to this Lease, each as security for any debt. "Master Permitted Mortgagee" shall mean the holder of any Master Permitted Mortgage. "Parking Structure" shall mean the podium parking garage on Parcels A and B with approximately 377 parking spaces, of which 197 parking spaces shall be designated for the use of the tenants and occupants of the Affordable Units on Parcel B, in accordance with the Reciprocal Easement Agreement. "Permitted Mortgage" shall have the meaning given to such term in Section 901. "Permitted Mortgagee" shall have the meaning given to such term in Section 901. "Reciprocal Easement Agreement," as used herein, means the Reciprocal Easement Agreement entered into between the Lessee of Parcel A and the Lessee of Parcel B, as amended from time to time, attached to the Agreement as Attachment No. 17. 30601.0002\4050601 6 Contract Number 8935 (RAS) "Sublease" shall mean the individual sublease of a Condominium Unit executed by Developer Lessee in favor of a Condominium Unit Owner. All references in this Lease to the sale of Condominium Units shall mean the sublease of Condominium Units to Condominium Unit Owners. [§ 3021 Ground Rent "Ground Rent," as used herein, shall mean rent paid by Lessee to City for Parcel A. Ground Rent consists of Base Rent (as described in Section 303) plus Additional Rent (as described in Section 304). [§ 3031 Base Rent Lessee shall pay "Base Rent" for the leasehold interest in Parcel A under this Lease. Base Rent, as used herein, shall mean the amount of EIGHT MILLION SIX HUNDRED THOUSAND DOLLARS AND NO CENTS ($8,600,000.00). Lessee shall make one lump sum pre - payment of the Base Rent at least three (3) days prior to Close of Escrow, as provided in Section 203(a) of the Agreement. The payment shall be made in the form of certified check, cashier's check, wire transfer or money order. [§ 304] Additional Rent Lessee shall also pay as Additional Rent any expenses incurred by the City resulting from Lessee's failure to pay or cause to be paid any amounts owed to the City under this Lease or any person or entity, including, but not limited to, unpaid utilities, unpaid maintenance, unpaid Impositions, or unpaid liens or encumbrances. [§ 305] Net Lease This is an absolute net lease. City shall not be required to provide any services or pay any expense or cost or do any act or thing with respect to Parcel A and Improvements or the appurtenances thereto. [§ 306] Non Subordination It is expressly understood and agreed that there shall be no subordination or encumbrance of any kind under this Lease or otherwise of the City's fee title ownership of the Parcel A. [§ 307] Delinquency in Rental Payment Subject to applicable notice and cure provisions of this Lease, Lessee's failure to pay the Ground Rent when due shall constitute a default of this Lease. [§ 4001 DEVELOPMENT OF PARCEL A [§ 401] Scope of Development, Plans, Drawings and Specifications Lessee shall construct the Improvements upon Parcel A in accordance with the Agreement and this Lease. [§ 402] No Construction Before Notice From and after issuance of the Release of Construction Covenants by the City pursuant to the Agreement, except for the Excepted Improvements (as defined in Section 705), no work of any kind shall be commenced on Parcel A and no building or other materials shall be delivered to Parcel A for construction of any Improvements, nor shall any other building or land 30601.0002 \405060.1 7 ContractNumber 8935 (RAS) development work be commenced on or building materials be delivered to Parcel A at any time during the term of the Lease, which work and /or materials exceed in the aggregate Seven Hundred and Fifty Thousand Dollars ($750,000), escalated from the date of this Lease in accordance with the Consumer Price Index ( "CPI "), unless at least ten (10) days written notice is provided by Lessee to City of the intended commencement of such work or the delivery of such materials. The work for which said ten (10) days written notice is required shall include, in addition to actual construction work, any site preparation work, installation of utilities, street construction or improvement, or any grading or filling of Parcel A. [§ 403] Notice of Non Responsibility City shall, at any and all times during the term of this Lease, have the right to post and maintain on Parcel A and to record as required by law any notice or notices of non responsibility provided for by the mechanics' lien laws of the State of California; provided, however, that Lessee shall, on behalf of the City, post and maintain on Parcel A, and record against Parcel A, all notices of non responsibility provided for by the mechanics' lien laws of the State of California. [§ 404] Mechanic's; Materialman's, Contractor's or Subcontractor's Liens Subject to Lessee's right to contest as hereinafter provided, at all times during the term of the Lease, Lessee shall keep Parcel A, including all buildings and Improvements now or hereafter located on Parcel A, but excluding any individual Condominium Units after Transfer from the Developer Lessee to any Condo Unit Owner other than Developer Lessee, free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to Parcel A. Lessee shall promptly (i) pay and discharge, or cause Parcel A to be released from, any such lien or claim of lien, or (ii) contest such lien and furnish City such bond as may be required by law to free Parcel A from the effect of such lien and to secure City against payment of such lien and against any and all loss or damage whatsoever in any way arising from Lessee's failure to pay or discharge such lien. In the event Lessee provides a bond in lieu of paying or discharging a lien as set forth herein, Lessee shall, at Lessee's sole cost and expense, within thirty (30) days of City's written request therefor, provide the City with an endorsement to any existing title policy in favor of City insuring City's interest in Parcel A free and clear of any such liens that have not been paid or discharged. Should Lessee fail to pay and discharge, or cause Parcel A to be released from, any such lien or claim of lien or to provide a bond as permitted hereunder within thirty (30) days after service on Lessee by City of a written request to do so, City may pay, adjust, compromise and discharge any such lien or claim of lien on such terms and in such manner as City may reasonably deem appropriate. In such event, Lessee shall, on or before the first day of the next calendar month following any such payment by City, reimburse City for the full amount so paid by City, including any actual and reasonable attorneys' fees or other costs expended by City, together with interest thereon at the annual rate of interest equal to three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California as of the close of business on the date of payment by the City, or the highest lawful rate, whichever is less, from the date of payment by City to the date of Lessee's reimbursement of City. On substantial completion of any work of improvement (other than the Excepted Improvements) during the term of the Lease, Lessee shall record or cause to be recorded in the Official Records of Los Angeles County a notice of completion, to the extent required by law. 30601.0002 \405060.1 8 Contract Number 8935 (RAS) Lessee hereby appoints City as Lessee's attorney in fact to record the notice of completion, which appointment shall only become effective on ten (10) days' notice upon Lessee's failure to record such a notice of completion after the work of improvement has been substantially completed; provided, that City shall not be obligated to record such a notice of completion and the failure of City to record said notice shall not excuse the failure of Lessee to discharge its obligation to record said notice of completion. [§ 4051 Rights of Access Representatives of City shall have the reasonable right of access to Parcel A without charges or fees, at normal construction hours during the period of construction for the purposes of this Lease, including, but not limited to, the inspection of the work being performed in constructing the Improvements (other than the Excepted Improvements). The City shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of Parcel A and Improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. City shall indemnify, defend, and hold harmless Lessee from and against any claim, liability, losses and damages caused by City during any such inspections, and shall be responsible for the prompt repair and /or restoration of any such damage caused by City during any such inspection. [§ 406] Local, State and Federal Laws a. Lessee hereby agrees to carry out development, construction (as defined by applicable law) and operation of the Improvements on Parcel A, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any requirement to pay state prevailing wages). b. Lessee hereby expressly acknowledges and agrees that neither the City nor Agency has ever previously affirmatively represented to Lessee or its contractor(s) for the Improvements in writing or otherwise, in a call for bids or otherwise, that the work to be covered by the bid or contract is not a "public work," as defined in Section 1720 of the Labor Code. Lessee hereby agrees that Lessee shall have the obligation to provide any and all disclosures, representations, statements, rebidding, and /or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee hereby agrees that Lessee shall have the obligation to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee hereby agrees that Lessee shall have the obligation, at Lessee's sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee shall indemnify, protect, defend and hold harmless the Agency and City and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to Agency and City, from and against any and all loss, liability, damage, claim, cost, expense, and /or "increased costs" (including labor costs, penalties, reasonable attorneys' fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and /or operation of the Improvements, including, without limitation, any and all public works (as defined by applicable 30601.0002 \405060.1 9 Contract Number 8935 (RAS) law), results or arises in any way from any of the following: (1) the noncompliance by Lessee of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure by Lessee to provide any required disclosure, representation, statement, rebidding and /or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Lessee to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and /or (5) failure by Lessee to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. C. It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Improvements, including, without limitation, any public work (as defined by applicable law), Lessee shall bear all risks of payment or nonpayment of state prevailing wages and /or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. "Increased costs" as used in this Section shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. d. The foregoing indemnity shall survive termination of the Agreement and shall continue after recordation of the Release of Construction Covenants. [§ 4071 Nondiscrimination During Construction Lessee for itself and its successors and assigns agrees that in the construction of the Improvements on Parcel A provided for in this Lease, Lessee will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, creed, religion, national origin, or ancestry. [§ 5001 USE OF PARCEL A AND IMPROVEMENTS [§ 5011 Use of Parcel A and Improvements Lessee covenants and agrees for itself, its successors, its assigns and every successor in interest to Parcel A or any part thereof, that: a. Lessee, its successors and assignees shall devote Parcel A to the uses specified in the Redevelopment Plan, the Specific Plan, and any conditions of approval and /or plans required and /or approved by the City and this Agreement, including but not limited to the Development Agreement. Without limiting the generality of the foregoing, Developer Lessee shall cause to be constructed on Parcel A: (1) approximately sixty -six (66) Condominium Units and approximately 9,910 square feet of Retail Space on Parcel A with approximately one hundred eighty (180) parking spaces designated for Parcel A in the Parking Structure. No less than fifty percent (50 %) of the Retail Space on Parcel A shall be allocated for uses such as neighborhood market, restaurant, dry cleaning, small scale bank and other convenience services, drug store (each of the foregoing uses shall hereby be deemed approved without need for any further approval or consent), or such other uses (subject to the approval of the City Director of the 30601.0002W05060.1 10 Contract Number 8935 (RAS) Department of Planning and Community Development) that provide residents or employees of the immediate area with access to convenience goods and services, and uses that cater to the daily needs of nearby residents or employees within walking distance of their home or work. The type and quality of tenants allowed in the Retail Space shall be in harmony with the balance of the Project as a high -class development and shall specifically exclude any offensive or incongruent uses including, but not limited to, the following: 1. Any public or private nuisance (as defined in California Civil Code Section 3479) connected with business operations conducted on the Property; 2. Any noise or sound that is objectionable due to intermittence, beat, . frequency, shrillness or loudness; 3. Any obnoxious odor; 4. Any noxious materials, and any toxic or caustic, or corrosive fuel or gas in violation of applicable law; 5. Any dust, dirt or particulate matter in excessive quantities; 6. Any unusual fire, explosion, or other damaging or dangerous hazard; 7. Any warehouse, other than that which is incidental to the primary commercial use or business operation, and any assembly, manufacturing, distillation, refining, smelting, agriculture, or mining operation; 8. Any pawn shop or retail sales operation involving second -hand merchandise; 9. Any adult business or facility as defined and regulated in the City's Municipal Code. Such uses include, without limitation, massage establishments (to the extent defined and regulated in such Code as an adult business or facility), adult news racks, adult bookstores, adult motion picture theaters, and paraphernalia businesses; 10. Any gun shop or retail sales operation for which the main commercial use or business operation is the sale of guns; 11. Any retail sales operation for which the average price of merchandise is $5.00 or less, except that this prohibition shall not apply to any retail sales operation for which the main commercial use or business operation is the sale of food and /or beverages, and provided that such $5.00 amount shall be escalated over time in proportion to the increase in the published Consumer Price Index; b. Developer Lessee shall cause Parcel A to be developed in accordance with the Agreement, including but not limited to the Scope of Development (Attachment No. 4 to the Agreement) and Schedule of Performance (Attachment No. 3 to the Agreement). C. Lessee shall pay the property taxes levied against Parcel A during the term of this Lease, in accordance with Sections 210 and 210.1 of the Agreement. [§ 502] Limitations on Use of Site a. The CC &Rs or like agreements for the Condominium Units on Parcel A shall be substantially in the form attached to the Agreement as Attachment No. 21. Any changes to this form shall be subject to the City's written approval prior to the date of recordation of same, 30601.00021405060.1 11 Contract Number 8935 (RAS) which said approval shall be timely considered in accordance with the Schedule of Performance and shall not be unreasonably withheld. The CC &Rs or like agreements for the Condominium Units shall provide that they terminate upon expiration or earlier termination of this Lease. The City will execute the CC &Rs as the owner of Parcel A solely as an accommodation to the recordation of same. Neither the City nor Agency will be the "Declarant" or developer under the CC &RS and shall have no liability of any kind in connection therewith. b. Any agreements which purport to regulate, restrict, manage, maintain, limit, apply to, or otherwise affect the use of Parcel B and /or the use of any common areas between Parcel A and Parcel B shall be substantially in the form of the Reciprocal Easement Agreement (Attachment No. 17) and Joint Development Agreement (Attachment No. 22). Any changes to this form shall be subject to the City's written approval prior to recordation of same, which said approval shall not be unreasonably withheld. Lessee shall ensure that such agreements are subject to the conditions of this Lease, and shall terminate upon expiration of this Lease. C. The City agrees to make modifications to this Lease that do not adversely and materially affect or subordinate the City's fee and leasehold interests in Parcel A, if required by the California Department of Real Estate and /or to comply with any national lender standards or regulations, including FNMA and FHLMC in order for the Lessee to obtain the issuance of a final subdivision public report(s) allowing for the sale of the Condominium Units and to finance the sale of Condominium Units. [§ 503] Maintenance a. Lessee shall maintain, repair and operate Parcel A and all Improvements constructed or to be constructed thereon (including landscaping, lighting and signage), or cause Parcel A and all such Improvements to be maintained, repaired and operated in a first quality condition, free of debris, waste and graffiti, and in compliance with the terms of the Redevelopment Plan, the City of Santa Monica Municipal Code, and the following: 1. All Improvements on Parcel A shall be maintained, repaired, and operated in good condition in accordance with the custom and practice generally applicable to comparable mixed -use retail, commercial and residential housing development projects, as applicable, within the City, and in conformance and compliance with all plans, drawings and related documents approved by the City pursuant to the Agreement, all conditions of approval of land use entitlements adopted by the City or the Planning Commission of the City, including painting and cleaning of all exterior surfaces of all private Improvements and public Improvements to the curbline. 2. Landscape maintenance shall include, without limitation, watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 3. Clean -up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from Improvements and landscaping; clearance and cleaning 30601.0002\405060.1 12 ContractNumber 8935 (RAS) of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. b. If the City gives written notice to Lessee that the maintenance, repair, operation, or condition of Parcel A or any portion thereof or any Improvements thereon does not comply with this Lease and such notice describes the deficiencies, Lessee shall correct, remedy or cure the deficiency within thirty (30) days following the submission of such notice, unless (1) such deficiency cannot be reasonably corrected within such thirty (30) day period in which case such deficiency shall be deemed cured if Lessee commences such cure within such thirty (30) day period and thereafter diligently completes such cure within ninety (90) days following the submission of such notice or (2) the notice states that the deficiency is an urgent matter relating to public health and safety in which case Lessee shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time but in no event more than forty -eight (48) hours following the submission of the notice. In the event Lessee fails to maintain Parcel A or any portion thereof or any Improvements thereon in accordance with this Lease and fails to cure any deficiencies within the applicable period described above, the City shall have, in addition to any other rights and remedies hereunder the right to maintain Parcel A and the Improvements thereon, or portion thereof, or to contract for the correction of any deficiencies, and Lessee shall be responsible for payment of all costs reasonably incurred by the City. [§ 504] Management of Parcel A and Improvements At least thirty (30) days prior to requesting the Release of Construction Covenants for the Improvements on Parcel A, in accordance with Section 314 of the Agreement, Lessee shall obtain the City's written approval of the proposed property manager ( "Initial Property Manager ") and associated agreement ( "Property Management Agreement ") for management and operation of the Improvements on Parcel A. The Initial Property Manager shall have not less than ten (10) years of experience in the successful management of properties that are like in kind to the Improvements on Parcel A. Approvals required of the City under this Section 504 shall follow and be limited by the following procedures: Within thirty (30) days after receipt of Lessee's request for approval, City shall respond in writing by stating what further information, if any, City reasonably requires in order to determine whether or not to approve the Initial Property Manager and Property Management Agreement. Lessee shall promptly famish to City such further information as may be reasonably requested. Developer Lessee's request for approval shall be deemed complete thirty (30) days after City's receipt thereof, if no timely response requesting further information is delivered to Lessee, or, if such a timely response requesting further information is received, on the date that Lessee delivers such additional information to City, provided that Lessee's additional information is responsive to City's request. City shall approve or disapprove the matter within forty -five (45) days after Lessee's request for such approval is accepted as complete or is deemed complete. Any disapproval shall include reasonably detailed reasons for such disapproval. The City's failure to provide written notice of approval or disapproval to Lessee within such forty -five (45) day period shall be deemed approval by City. Approval will not be unreasonably withheld if Lessee demonstrates that the proposed Initial Property Manager and Property Management Agreement will provide capable, competent and experienced operation of a condominium project with retail commercial space similar in quality, size and type as required to be maintained on Parcel A and Improvements pursuant to this Lease. If City shall disapprove 30601.0002\405060A 13 ContractNumber 8935 (RAS) of the Initial Property Manager and /or Property Management Agreement, City shall do so by written notice to Lessee stating the reasons for such disapproval. Related Management Co., L.P. is hereby pre- approved by City as an Initial Property Manager for the Improvements on Parcel A, so long as there is no material change in the ability of the same to provide capable, competent and experienced quality operation of Parcel A and Improvements from that evident upon the execution of this Lease. At all times during the term of this Lease, Parcel A and Improvements shall be managed or caused to be managed by Lessee in a prudent and businesslike manner as necessary to maintain Parcel A and Improvements in a first class condition. Lessee shall assume responsibility, subject to the provisions of this Lease, for the operation and maintenance (including repair, restoration and reconstruction) of all of the Improvements constructed on Parcel A and the costs thereof, and City shall have no liability for costs of such operation and maintenance by Lessee or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such Improvements. Without limiting the generality of the foregoing, Lessee, in the maintenance of the Improvements, shall observe the following standards: 1. Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better in quality, appearance and durability. 2. Remove all papers, debris, filth and refuse, and sweep, wash down and /or clean all hard surfaces, including brick, metal, concrete, glass, wood and other permanent poles, walls or structural members as required. 3. Maintain such appropriate entrance, exit and directional signs, markers and lights as shall be reasonably required and in accordance with the practices prevailing in the operation of similar developments. 4. Clean lighting fixtures and relamp and/or reballast as needed. 5. Repaint striping, markers, directional signs, etc., as necessary to maintain in first class condition. condition. required. 6. Maintain landscaping as necessary to keep it in a first class, thriving 7. Maintain signs, including relamping and /or reballasting and/or repairing as 8. Provide security measures to the extent reasonably necessary. 9. Maintain and keep in good condition and repair all benches, shelters, planters, mall coverings, banners, kiosks and other furniture, trash containers, sculptures, play areas, platforms and stages. 10. Clean, repair and maintain all common utility systems to the extent that the same are not cleaned, repaired and maintained by public utilities. - 11. Maintain all fountains and associated structures, drinking fountains, pumps and associated plumbing. 12. Maintain all lights, light fixtures and associated wiring systems. 30601.0002 \405060.1 14 Contract Number 8935 (RAS) 13. Maintain public right of way items between the property and the street, including sidewalks, curbs, gutters, driveways, signs and poles, curb painting and markings. 14. Maintain all surface and storm lateral drainage systems. 15. Maintain all sanitary sewer lateral connections. [§ 505] Obligation to Refrain from Discrimination Lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this Lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the Lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Notwithstanding the above paragraph, with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the above paragraph. [§ 5061 Form of Nondiscrimination and Nonsegregation Clauses Lessee shall refrain from restricting the rental, sale or sublease of Lessee's interest in Parcel A on the basis of race, color, religion, ancestry, national origin, sex, or marital status of any person. Therefore the sublease and grant of undivided interest in improvements used to convey the Condominium Units shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: "Sublessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or 30601.0002 \405060.1 15 ContractNumber 8935 (RAS) enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Notwithstanding the above paragraph, with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the above paragraph. [§ 5071 Quiet Enjoyment The parties hereto mutually covenant and agree that Lessee, by keeping and performing the covenants herein contained, shall at all times during the term of this Lease, peaceably and quietly have, hold and enjoy Parcel A and Improvements. [§ 6001 TAXES, ASSESSMENTS AND OTHER CHARGES [§ 6011 Utilities Lessee agrees to pay or cause to be paid, as and when they become due and payable, all charges for water, gas, light, heat, telephone, electricity and other utility and communication services rendered or used on or about Parcel A and Improvements at all times during the term of this Lease. [§ 602] Impositions (Including Taxes and Assessments) [§ 602.11 Payment Generally Lessee and /or its successors or other party(ies) in whom the possessory interest is vested shall pay the real property taxes levied against Parcel A in accordance with Section 609 of this Lease. Such real property taxes shall be paid as and when they become due and payable, and before any fine, penalty, interest or cost may be added thereto, or become due or be imposed by operation of law for the nonpayment thereof, all taxes, assessments, franchises, excises, license and permit fees, and other governmental levies and charges, general and special, ordinary and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which at any time during the term of this Lease may be assessed, levied, confirmed, imposed upon, or grow or become due and payable out of or in respect of, or become a lien on: (1) Parcel A and Improvements or any part thereof or any appurtenance thereto; (2) the rent and income received by Lessee from subtenants, guests or others for the use or occupation of Parcel A and the Improvements thereon; or (3) this transaction or any document to which Lessee is a party, creating or transferring an interest or estate in Parcel A and Improvements. All such taxes, franchises, excises, license and permit fees, and other governmental levies and charges levied against Parcel A shall hereinafter be referred to as "Impositions ", and any of the same shall hereinafter be referred to as an "Imposition ". Any Imposition relating to a fiscal period of the taxing authority, a part of which period is included within the term of this Lease, and a part of which is included in a period of time after the expiration of the term of this Lease, shall (whether 30601.0002 \405060.1 16 Contract Number 8935 (RAS) or not such Imposition shall be assessed, levied, confirmed, imposed upon, become a lien upon Parcel A and Improvements, or shall become payable, during the term of this Lease) be adjusted between City and Lessee as of the expiration of the term of this Lease, so that Lessee shall pay that portion of such Imposition which that part of such fiscal period included in the period of time before the expiration of the term of this Lease bears to such fiscal period, and City shall pay the remainder thereof; Lessee shall not be entitled to receive any apportionment, if Lessee shall be in default (subject to applicable notice and cure rights) in the performance of any of Lessee's covenants and agreements as provided in this Lease. The failure of Lessee to pay an Imposition that cannot under any circumstances give rise to a lien against Parcel A and Improvements shall not be a breach of the first paragraph of this Section 603. Lessee hereby agrees to defend, indemnify and hold harmless Agency and City and their respective officers, employees and consultants from and against all claims, liability, loss, damage, costs, or expenses (including reasonable attorney's fees and court costs) arising from or as a result of Lessee's failure to pay any Imposition to the extent that such Imposition relates to a fiscal period included within the term of this Lease. [§ 602.2] Payment of Impositions in Installments If, by law, any Imposition may at the option of the payer be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments as may become due during the term of this Lease as the same respectively become due and before any fine, penalty, further interest or cost may be added thereto; provided, however, that the amount of all installments of any such Imposition which will be the responsibility of Lessee pursuant to Section 603 herein above, and which are to become due and payable after the expiration of the term of this Lease, shall be deposited with City for such payment on the date which shall be one (1) year immediately prior to the date of such expiration. [§ 603] City Right to Cure If Lessee, in violation of the provisions of this Lease, shall fail to pay and to discharge any Imposition, City may (but shall not be obligated to) pay or discharge it, and the amount paid by City and the amount of all costs, expenses, interest and penalties connected therewith, including attorneys' fees, together with interest at the rate of three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California on the date payment is made by City, shall be deemed to be and shall be payable by Lessee as Additional Rent and shall be reimbursed to City by Lessee on demand, provided that Lessee, the holder of any Master Permitted Mortgage that has registered its name and address in writing with City, and/or any Permitted Mortgagee that has registered its name and address in writing with City, shall have failed to pay such Imposition within ten (10) business days after written notice from City to Lessee and such holder of City's intention to pay. [§ 6041 Tax Receipts Lessee shall furnish to City, within forty -five (45) days after the date when any Imposition which could have any effect on City's title would become delinquent, official receipts of the appropriate taxing authority or other evidence satisfactory to City evidencing payment thereof. 30601.0002 \405060.1 17 Contract Number 8935 (RAS) [§ 6051 Tax Liability Lessee shall pay all Impositions by virtue of any operation by Lessee conducted on or out of Parcel A and Improvements. It is agreed that in the event the State of California or any taxing authority thereunder changes or modifies the system of taxing real estate so as to tax the rental income from real estate in lieu of or in substitution (in whole or in part) for the real estate taxes and so as to impose a liability upon City for the amount of such tax, then Lessee shall be liable under this Lease for the payment of the taxes so imposed during the term of this Lease, or any renewal thereof, to the same extent as though the alternative tax was a tax upon the value of Parcel A and Improvements. In order to determine the amount of such alternative tax for which Lessee shall be liable, Parcel A and Improvements shall be considered as if it was the only asset of City, and the rent paid hereunder and under the Agreement shall be considered as if it were the only income of City. [§ 606] Contests a. Lessee shall refrain from appealing, challenging or contesting in any manner the validity or amount of any Imposition on Parcel A; provided, however, that such prohibition shall not apply to an appeal, challenge or contesting of the erroneous initial assessment for property tax purposes of Parcel A in the fiscal year of the completion of the Improvements to be constructed pursuant to the Agreement and this Lease, and further provided that in the absence of transfer of ownership or new construction Lessee shall not be prohibited from appealing, challenging or contesting any increases in assessment of Parcel A for property tax purposes over and above the current two percent (2 %) per annum permitted amount. b. Lessee agrees that any such proceedings shall be begun without undue delay after any contested Imposition is imposed and shall be prosecuted to final adjudication with reasonable dispatch. Lessee shall give City prompt notice in writing of any such contest at least ten (10) days before any delinquency occurs. Lessee may only exercise its right to contest an Imposition hereunder if the subject legal proceedings shall operate to prevent the collection of the Imposition so contested, or the sale of Parcel A and Improvements, or any part thereof, to satisfy the same, and only if Lessee shall, prior to the date such Imposition is due and payable, have given such reasonable security as may be required by City from time to time in order to insure the payment of such Imposition to prevent any sale, foreclosure or forfeiture of Parcel A and Improvements or any part thereof, by reason of such nonpayment. In the event of any such contest and the final determination thereof adversely to Lessee, Lessee shall, before any fine, interest, penalty or cost may be added thereto for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such contest, together with any penalties, fines, interest, costs and expenses that may have accrued thereon or that may result from any such contest by Lessee and, after such payment and discharge by Lessee, City will promptly return to Lessee such security as City shall have received in connection with such contest. C. City shall cooperate reasonably in any such contest, and shall execute any documents or pleadings reasonably required for such purpose. Any such proceedings to contest the validity or amount of Imposition or to recover back any Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense; and Lessee shall indemnify and save harmless City against any and all loss, cost or expense of any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be imposed upon or incurred by City in connection therewith. 30601.0002 \405060.1 18 Contract Number 8935 (RAS) d. This Section 608 shall not be applicable to Impositions levied against Condominium Unit Owners after sale of the Condominium Units as described in Section 804. [§ 607]Nofrce of Possessory Interest; Payment of Taxes and Assessments on Value of Entire Property In accordance with California Revenue and Taxation Code Section 107.6(a), City states that by entering into this Lease, a possessory interest subject to property taxes shall be created. Lessee or Condominium Unit Owners, as applicable, shall be subject to the payment of property taxes levied on such interest. Lessee acknowledges and agrees that Parcel A and /or the Improvements thereon, and any possessory interest therein, shall at all times after the commencement of this Lease, be subject to ad valorem taxes levied, assessed or imposed on such property, and that Lessee or Condominium Unit Owners, as applicable, shall pay taxes upon the assessed value of the entire property, and not merely upon the assessed value of its leasehold interest. [§ 6081 Other Liens Except as otherwise permitted in the Agreement and /or Development Agreement, Lessee shall not, directly or indirectly, create or permit to be created or to remain, and will promptly discharge, at its expense, any mortgage, lien, encumbrance or charge on or pledge of Parcel A or the Improvements, or fixtures and furnishings, or any part thereof, or Lessee's interest therein, or the Base Rent, Additional Rent or other sums payable by Lessee under this Lease, other than (i) such Master Permitted Mortgages and/or Permitted Mortgages, (ii) as necessary in connection with the financing of furniture, fixtures and equipment for the Improvements. Lessee shall notify City promptly of any lien or encumbrance which has been created on or attached to Parcel A and Improvements, or to Lessee's leasehold estate therein, whether by act of Lessee or otherwise; provided, however, the foregoing shall not apply to liens or encumbrances created by Condominium Unit Owners after sale of the Condominium Units as described in Section 804. The existence of any mechanic's, laborer's, materialmen's, supplier's or vendor's lien, or any right in respect thereof, shall not constitute a violation of this Section if payment is not yet due upon the contract or for the goods or services in respect of which any such lien has arisen, or if such lien has been discharged by the posting of bonds or other lien - release security as is provided for such discharge by law. [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS [§ 701] Ownership During Term and at Expiration and Termination All at grade, above grade, and below grade structures, buildings, improvements, additions, alterations, and betterments of whatever nature or description, including without limitation concrete foundations, pilings, walkways, and pavement now existing, including the Improvements constructed on Parcel A in accordance with this Lease and/or the Agreement (all collectively referenced hereinafter as "Improvements "), shall, during the term of this Lease, be and remain the property of Lessee, until the sale of the first Condominium Unit and thereafter be owned in undivided interest by all Condominium Unit Owners. All Improvements located on Parcel A, whether existing thereon at the commencement of the term of this Lease, or constructed or installed thereon by Lessee as permitted or required by this Lease, shall, at the expiration or sooner termination of the term of this Lease, become and thereafter remain the property of City. Subject to Lessee's rights and obligations set forth in this Lease relating to 30601.0002\405060.1 19 ContractNumber 8935 (RAS) alterations and additions, Lessee shall have no right at any time to waste, destroy, demolish or remove any of the Improvements. The rights and powers of Lessee and Condominium Unit Owners with respect to the Improvements are subject to the terms and limitations of this Lease. City and Lessee covenant for themselves, and all persons claiming under or through them, that the Improvements are real property. [§ 702] Removal of Fixtures and Furnishings at Expiration or Termination If this Lease terminates prior to the Release of Construction Covenants, City may, at City's election, demand the removal from Parcel A, at Lessee's sole cost and expense, of all fixtures and furnishings, or of certain fixtures and/or furnishings, as specified in the notice provided for below. A demand to take effect at the normal expiration of the term shall be effected by notice given not less than sixty (60) days prior to the expiration date. A demand to take effect on any other termination of the Lease shall be effectuated by notice given in or concurrently with notice of such termination or within ten (10) days after such termination. At the expiration or sooner termination of the term of this Lease, Lessee may, at Lessee's sole cost and expense, remove from Parcel A and Improvements any and all furnishings. Any furnishings not removed by Lessee within thirty (30) days of the expiration or sooner termination of the Lease shall be deemed to be abandoned by Lessee and shall, without compensation to Lessee, then become City's property, free and clear of all claims to or against them by Lessee or any third person, subject to security interests therein to the extent permitted by this Lease. Lessee shall defend, indemnify and hold harmless Agency and City against all liability and loss arising from any such claims or from City's exercise of the rights conferred by this Section 702. This Section 702 shall not apply in the event of a termination and reissuance of a New Lease (as defined below) to a Master Permitted Mortgagee pursuant to Section 900 et. seq. [§ 703] Maintenance and Repair of Improvements Lessee agrees to assume full responsibility for the operation and maintenance of Parcel A and the Improvements and all fixtures and furnishings thereon or therein, and all sidewalks and to the extent required by the Development Agreement, landscaping within the public right of way adjacent to Parcel A, throughout the term hereof without expense to City unless otherwise specified herein, and to perform all repairs and replacements necessary to maintain and preserve said Site and the Improvements and fixtures and furnishings and sidewalks and landscaping in a decent, safe and sanitary condition in a manner satisfactory to City and in compliance with all applicable laws. Lessee agrees that City shall not be required to perform any maintenance, repairs, or services or to assume any expense not specifically assumed herein in connection with Parcel A and the Improvements, fixtures and furnishings, and sidewalks and landscaping. Notwithstanding the foregoing or any other provisions of this Lease to the contrary and subject to any insurance maintained by Lessee, all maintenance, repair and replacement obligations of Lease under this Lease shall, except as otherwise provided in the CC &Rs, not apply to the interior fixtures and improvements of Condominium Units and personal property of Condominium Unit Owners. The condition of the Improvements required to be maintained hereunder upon completion of the maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. 30601.0002 \405060.1 20 ContiactNumber 8935 (RAS) [§ 7041 Waste Lessee shall not commit or suffer to be committed any waste or impairment of Parcel A or the Improvements, or any part thereof. Lessee agrees to keep Parcel A and the Improvements clean and clear of refuse and obstructions, and to lawfully dispose of all garbage, trash and rubbish. [§ 705] Alteration of Improvements Following construction of the initial improvements on Parcel A in accordance with the Agreement, Lessee shall not make or permit to be made any alteration of, addition to or change in the Improvements without the prior written consent of City, other than the following improvements (collectively, the "Excepted Improvements "): (a) routine maintenance, repairs, interior decoration and alterations or interior improvements to the Condominium Units by Condominium Unit Owners, or (b) cosmetic improvements to the exterior of the Condominium Units, or (c) alterations, additions or changes which cost in the aggregate less than an amount equal to Seven Hundred and Fifty Thousand Dollars ($750,000) escalated from the date of this Lease in accordance with the applicable Consumer Price Index. In the event the consent of City is so required, then in requesting such consent, Lessee shall submit to City detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. Notwithstanding the prohibition in this Section 705, Lessee may make such changes, repairs, alterations, Improvements, renewals or replacements to the Improvements as are required by reason of any safety law, ordinance, regulation or order of a competent government authority or to satisfy the maintenance obligations of this Lease. [§ 706] Damage to or Destruction of Improvements [§ 7071 Lessee to Give Notice In case of any damage to or destruction of the Improvements, or any part thereof, in excess of an amount equal to Two Hundred and Fifty Thousand Dollars ($250,000) escalated on a yearly basis from the date of this Lease in accordance with the applicable Consumer Price Index, Lessee shall within ten (10) days after Lessee becomes aware of such damage or destruction give written notice thereof to City generally describing the nature and extent of such damage or destruction. [§ 7081 Restoration a. Lessee shall be responsible for the restoration of the Improvements on Parcel A (including without limitation the Parking Structure but excluding any fixtures, improvements and personal property within Condominium Units which are the responsibility of the Condominium Unit Owners under the CC &Rs) in accordance with the damage and destruction clauses of this Lease. b. Subject to Section 708(a) directly above and except as otherwise provided in the CC &Rs after the sale of a Condominium Unit, in case of any damage to or destruction of the Improvements, or any part thereof (other than damage to Condominium Units which is the responsibility of Condominium Unit Owners under the CC &Rs), Lessee shall commence the restoration, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by the City (such restoration, replacement, rebuilding alterations and additions, together with any temporary repairs and property protection pending completion of the work 30601.0002\405060A 21 ContractNumber 8935 (RAS) being herein called "Restoration ") within thirty (30) days of such damage or destruction or such longer time as may be reasonably required (i) to obtain City approvals of construction; (ii) under the CC &Rs; (iii) to enable the Association, if it is Lessee, to obtain funds from Condominium Unit Owners, if required under the CC &RS, sufficient to perform such work; (iv) as otherwise approved, in writing, by the City, to enable the Association to obtain any Net Insurance Proceeds, as hereinafter defined, to be used to pay all or a portion of the cost of such Restoration, and shall complete such Restoration within a reasonable period of time thereafter. Notwithstanding anything to the contrary in this Lease, including Section 1211, Lessee's failure to restore the Improvements shall constitute grounds for City's termination of the Lease. C. As used herein, the term "Net Insurance Proceeds" means the gross insurance proceeds paid by an insurer to Lessee for loss or damage to Parcel A and Improvements, less any and all costs and expenses (including, but not limited to reasonable attorneys' fees) incurred to recover said proceeds. Lessee agrees to promptly commence and prosecute to completion the settlement of insurance proceeds with respect to any event of damage or destruction of the Improvements on Parcel A. d. Lessee agrees that, notwithstanding any other provision of this Lease, upon any event of damage or destruction to the Improvements, Lessee shall at its sole cost and expense (whether or not Lessee terminates or intends to terminate this Lease pursuant to Section 710 below) immediately take or cause to be taken such actions and complete such work as is necessary to assure the safe condition of the damaged Improvements pending the ultimate disposition of the Improvements. In any instance where Lessee may elect to terminate this Lease rather than restore the Improvements pursuant to Section 710 below, if Lessee does not terminate this Lease, Lessee shall restore the Improvements. e. In the event of damage or destruction of the Improvements, or any part thereof, no City approval shall be required hereunder to restore the Improvements to a safe condition or remedy any emergency condition on Parcel A arising in connection with such damage or destruction. [§ 7091 Application of Insurance Proceeds Insurance proceeds which are received on account of any damage to or destruction of Parcel A or the Improvements thereon, or any portion thereof, shall be used, at Master Permitted Mortgagee's election, to repay the loan secured by such Master Permitted Mortgagee's Master Permitted Mortgage; provided, however, that the Master Permitted Mortgagee's election to repay the loan in lieu of restoration of Parcel A or the Improvements thereon, or any portion thereof, shall constitute grounds for the City's termination of this Lease. Insurance proceeds which are received on account of any damage to or destruction of Parcel A or the Improvements thereon, or any portion thereof (less the costs, fees and expenses incurred in the collection thereof, including without limitation attorneys' fees and expenses) fthe "Net Insurance Proceeds ") shall be held by Lessee, unless otherwise provided by any Master Permitted Mortgage, and shall be subject to the conditions and applied (or paid) as follows: a. If this Lease is not terminated subject to (i) Master Permitted Mortgagee's election permitted in the immediately preceding paragraph above, or (ii) Lessee's election permitted in Section 710 below, then,_within a reasonable time and in any event within one hundred eighty (18 0) days after the damage to or destruction of the Improvements, Lessee shall furnish, or cause to be furnished to City, any Master Permitted Mortgagee, and any Permitted 30601.0002405060.1 22 ContiactNumber 8935 (RAS) Mortgagee evidence satisfactory to each of the foregoing (a) of the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section 708, and (b) that the total amount of money available will, when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section 709, be sufficient to pay the cost of such Restoration. 1. First, to the costs of Restoration. 2. Second, upon receipt by City, any Master Permitted Mortgagee and any Permitted Mortgagee, as applicable, of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic's or similar liens for labor or materials supplied in connection therewith which have not been adequately provided for, (a) to any Master Permitted Mortgagees in order of priority an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made, and then (b) after the sale of any Condominium Unit, to any Permitted Mortgagees, as applicable, in accordance with the CC &RS. 3. Third, to Lessee. b. If this Lease is terminated subject to (i) Master Permitted Mortgagee's election permitted in the immediately preceding paragraph above, or (ii) Lessee's election permitted in Section 710 below, then: 1. First, to the expenses of clearing and removing all debris from Parcel A (including without limitation the Parking Structure) and restoring Parcel A to a safe and neat condition 2. Second, (a) to any Master Permitted Mortgagees in order of priority an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made, and then (b) after the sale of any Condominium Unit, to any Permitted Mortgagees, as applicable, in accordance with the CC &RS. 3. Third, to Lessee. [§ 7101 Damage or Destruction During Final Years of Term Notwithstanding Sections 708 and 709 to the contrary, in the event of major damage or destruction to the Improvements on Parcel A (including the Parking Structure) during the last ten (10) years of the term of this Lease, City shall agree to terminate this Lease if Lessee, with the prior written approval of any Master Permitted Mortgagee, requests that this Lease be terminated provided Lessee first complies with all of the following conditions: 1. Lessee shall give City notice of the damage or destruction within ten (10) days after the event causing such damage and destruction. 2. Lessee shall give City notice requesting that this Lease be terminated as a result of such damage or destruction within forty -five (45) days after settlement of insurance proceeds, but in any event within one hundred eighty (180) days after the event causing such damage or destruction. 30601.0002 \405060.1 23 Contract Number 8935 (RAS) 3. Lessee shall clear and remove all debris from Parcel A (including without limitation the Parking Structure), restore Parcel A to a safe and neat condition, deliver possession of Parcel A to City, and shall quitclaim all right, title and interest in Parcel A to City. 4. After the satisfaction in full of any debt secured by a Master Permitted Mortgage, including all interest accrued thereon and secured thereby, Lessee shall transfer to City the remainder of Net Insurance Proceeds to be retained by City without limitation as to use. Major damage or destruction to the Improvements as used in this Section means such damage or destruction that the cost of restoration will exceed fifty percent (50 %) of the cost to replace the Improvements on Parcel A in their entirety. [§ 711] Faithful Performance and Labor and Material (Payment) Bonds; Indemnification; Non Responsibility Notices a. Lessee agrees to hold harmless City and City, and to indemnify City and City against all claims, liabilities, costs and expenses, for labor and materials in connection with all construction, repairs or alterations on Parcel A and the Improvements, and the cost of defending against such claims, including reasonable attorneys' fees. b. Lessee agrees to procure, or cause the procurement of, contractor's bonds covering labor, materials and faithful performance for construction on Parcel A and Improvements in accordance with the following requirements: 1. As to the initial construction of the Improvements required by the Agreement and this Lease, such bonds as required by Civil Code Section 3110.5. 2. Following Release of the Construction Covenants, for any work involving repair or alteration of the Improvements in excess of One Million Dollars ($1,000,000), such bonds as required by Civil Code Section 3110.5. Said bonds and the general construction contract must first be approved in writing as to content and form by City. Lessee shall, prior to commencement of construction, deliver to City a certificate or certificates from the bonding company or companies issuing the aforesaid bonds, naming City and City as co- obligees under said bonds. C. The provisions of paragraphs (a) and (b) of this Section shall be applicable to construction, repairs or alterations to Parcel A and the Improvements at all times during the Lease Term. d. City shall have the right to post and maintain on Parcel A and the Improvements any notices of non responsibility provided for under applicable law. [§ 800]ASSIGNMENT, SUBLETTING, TRANSFER [§ 8011 Warranty Against Speculation a. Developer Lessee hereby represents and warrants that this Lease, the construction of the buildings, and its other undertakings pursuant hereto, are, and will be used for the purpose of redevelopment of Parcel A and not for speculation in land holding. Lessee further recognizes that: The importance of the redevelopment of Parcel A to the general welfare of the community; and 30601.0002 \405060.1 24 Contract Number 8935 (RAS) 2. The substantial financing and other public aids that have been made available by law and by the City for the purpose of malting such redevelopment possible; and 3. The fact that a change in ownership or control of the Developer Lessee or of a part thereof, or any other act or transaction involving or resulting in a change in ownership or with respect to the identity of the parties in control of Developer Lessee or the degrees thereof, is for practical purposes a transfer or disposition of Parcel A and Improvements; and 4. Parcel A is not to be acquired or used for speculation, but only for development by Lessee in accordance with this Lease. b. The qualifications and identity of Developer Lessee, and its principals, are of particular concern to the community and City. Developer Lessee further recognizes that it is because of such qualifications and identity that City is entering into this Lease with Developer Lessee. [§ 8021 Prohibition Against Transfer a. Lessee shall comply with Section 108 of the Agreement until the recordation of a Release of Construction Covenants pursuant to Section 805 of this Lease. Upon the recordation of a Release of Construction Covenants, the provisions of Section 108 of the Agreement shall no longer apply to Lessee or this Lease and the provisions of Sections 800 to 804, inclusive, shall become effective. b. Lessee shall not, except as permitted by this Lease, make any Transfer to any person or entity (a "Transferee "), without the prior written consent of the City and, if applicable, any Permitted Mortgagee. Any purported Transfer not permitted by this Section or Section 901 shall be ipso facto null and void, and no voluntary or involuntary successor to any interest of Lessee under such a Transfer shall acquire any rights pursuant to this Lease. Except for "Permitted Transfers" defined below, these restrictions shall be binding on any successors, heirs or Permitted Transferee of Lessee. "Transfer," as used herein, shall mean any assignment or attempt to assign this Lease or any right herein, any total or partial transfer, sale, assignment, lease, sublease, license, franchise, gift, hypothecation, mortgage, pledge, encumbrance or the like, excluding, however, each of the following ( "Permitted Transfers "): (a) the creation of a Master Permitted Mortgage, or a Permitted Mortgage; (b) the foreclosure of a Master Permitted Mortgage or a Permitted Mortgage or the acceptance of a deed in lieu of foreclosure by a Master Permitted Mortgagee (or its designee)—or a Permitted Mortgagee (or its designee); (c) the subsequent Transfer by a Master Permitted Mortgagee (or its designee) or a Permitted Mortgagee (or its designee) of an interest acquired pursuant to its Master Permitted Mortgage or Permitted Mortgage, respectively; (d) acquisition by a third party of any interest under this Lease or a Sublease pursuant to a foreclosure of a Master Permitted Mortgage or a Permitted Mortgage, as applicable; and (e) the subleasing of Condominium Units to a Condominium Unit Owner. Permitted Transfers shall not require the approval of the City or be restricted by this Lease. Persons or entities who are Transferees in Permitted Transfers shall by acceptance of such Transfer be deemed to have accepted and agreed to be bound by all of the applicable provisions of this Lease. C. In addition, the following shall not be subject to the restrictions of (b) immediately above: (i) the granting of easements or permits for the development, improvement and or repair of Parcel A or the Improvements as reasonably approved by City, (ii) Lessee's 30601.0002\405060.1 25 Contract Number 8935 (RAS) recording against Parcel A leasehold the CC &Rs, Condominium Plan and other documents required to implement and operate the condominium project, (iii) Lessee recording the Reciprocal Easement Agreement against the Parcels A and B leaseholds, (iv) the renting or subleasing or licensing of Retail Space, (v) the renting or subleasing of Condominium Units by individual Condominium Unit Owners for occupancy consistent with the customary uses and practices, (vi) granting any security interests expressly permitted under this Lease in accordance with the provisions of this Lease including without limitation Permitted Mortgages on Condominium Units, (vii) transfers of interests by any members of Developer Lessee, (viii) the removal of any manager of Developer Lessee by Developer Lessee's members, provided that if such manager is replaced, the replacement manager shall be subject to the City's reasonable approval, or (ix) the assignment of this Lease to any affiliate of Developer Lessee or joint venture, provided Developer Lessee submits evidence satisfactory to City that one or more members of Developer Lessee will maintain a majority controlling interest after consummation of such transaction and will have the ability to maintain a majority controlling interest until assignment of this Lease to the Association. d. Lessee may Transfer its leasehold interests in Parcel A and Improvements after recordation of a Release of Construction Covenants pursuant to Section 805 as follows: (i) Parcel A and Improvements and its rights therein as a whole, with the prior written consent of the City subject to the rights of any Master Permitted Mortgagee, which consent shall not be unreasonably withheld, conditioned, or delayed in the event that all conditions of this Section 802 are met, and provided that Lessee is not in default hereunder, or (ii) as described in Section 804 which shall not require the approval of City. e. Such approval required under Section 802(d)(i) shall be given by City if: 1. At the time of such assignment, this Lease shall be in full force and effect and either no default then exists (subject to applicable notice and cure) or no default will exist upon consummation of the Transfer; 2. City determines in its sole discretion that the following Transfer requirements are met: (i) such assignment is made to a responsible third party who will undertake Lessee's responsibilities under this Lease to use Parcel A in accordance with this Lease; (ii) such third party shall demonstrate qualifications and experience with respect to the type of development proposed herein and in the Agreement to assure the operation of the Improvements equal to or greater than the qualifications and experience of Lessee; and (iii) such third party shall demonstrate sufficient financial resources or commitments to assure operation of Parcel A in accordance with this Lease; 3. The Transferee shall have executed an express assumption, in form and substance first approved in writing by City, of the obligations and liabilities of Lessee under this Lease arising on and after the effective date of the Transfer; and 4. The Transferee shall have experience in the operation and management of a development of similar size, scope, type, and character to that located on Parcel A. f No voluntary or involuntary successor in interest of Lessee shall acquire any rights or powers under this Lease except foreclosure of a Master Permitted Mortgage, Permitted Mortgage or as otherwise permitted in this Lease. Except as specifically provided herein, including without limitation Section 804, this Lease may not be assigned, nor may a Transfer 30601.0002\405060.1 26 Contract Number 8935 (RAS) take place without the express, prior written consent of City and, to the extent required by the applicable Master Permitted Mortgage loan documents, and /or Permitted Mortgage loan documents, the holder of a Master Permitted Mortgage and /or a Permitted Mortgage. g. Prior to the assignment of this Lease to the Association as provided in Section 804, Lessee shall promptly notify City of any and all changes whatsoever in the identity of the members of Developer Lessee of which it or any of its officers have been notified or otherwise have knowledge or information. h. In the absence of specific express written provision to the contrary by City, except as provided herein, a Transfer of Parcel A and Improvements, or portion thereof, or approval thereof by City, shall not be deemed to relieve Lessee from any obligations under this Lease arising on or after the effective date of the Transfer; provided, however, that any Master Permitted Mortgagee and /or Permitted Mortgagee shall be deemed to be released from all obligations under this Lease and after the date of a Transfer from such Master Permitted Mortgagee and /or Mortgagee, as applicable, and Developer Lessee shall be deemed released from all obligations under this Lease from and after the date Developer Lessee assigns this Lease to the Association as provided in Section 804, except to the extent of Developer Lessee's subleasing of any Condominium Units from the Association. i. Except as otherwise provided in this Lease, including, without limitation the recordation of the Condominium Plan and sales of Condominium Units, Parcel A and Improvements thereon shall not be further subdivided without the prior written approval of City. k. No provision hereof authorizing encumbrance of Lessee's interest herein shall be construed to authorize encumbrance of City's fee title to Parcel A or City's interest under this Lease, and Lessee shall not by any act or deed cloud City's fee title or City's interest under this Lease. Notwithstanding any other provision of this Lease to the contrary, City approval of a Transfer of this Lease or any interest herein shall not be required in connection with the following : Any Transfer to any entity or entities in which Lessee retains a minimum of fifty - one percent (51 %) ownership or beneficial ownership of the transferee entity or entities. [§ 8031 Investigation of Proposed Transferee; Costs a. The provisions of this Section 803 apply only to Transfers that specifically require the approval of City under this Lease and to confirm the existence of a Permitted Transfer. If this Lease specifically requires City's written consent to a Transfer or City's confirmation of a Permitted Transfer, Lessee agrees to provide City with such information, including financial statements as City may reasonably require in order to evaluate the solvency, financial responsibility and relevant business acumen and experience of any proposed Transferee Information as to any proposed Transferee shall include, without limitation, a balance sheet of the proposed Transferee as of a date within ninety (90) days of the request for City's consent and statements of income or profit and loss of the proposed subtenant or assignee for the two (2).year period preceding the request for City's consent, if the same be available (or such other similar information as shall be available at the time the request for approval of the Transfer is made), and a written statement in reasonable detail as to the business and experience of the proposed Transferee during the five (5) years preceding the request for City's consent. Information as to 30601.0002 \405060.1 27 Contract Number 8935 (RAS) any Permitted Transfer shall be limited to documentary evidence to confirm the existence of a Permitted Transfer. Within fifteen (15) days after the receipt of Lessee's written notice requesting City approval of a Transfer or confirmation of a Permitted Transfer, City shall respond in writing by stating what further information, if any, City reasonably requires in order to determine whether or not to approve the requested Transfer or confirm the Permitted Transfer. Upon receipt of such a timely response, Lessee shall promptly furnish to City such further information as may be reasonably requested. Lessee's request for approval of a Transfer or confirmation of a Permitted Transfer and delivery of necessary information shall be deemed complete fifteen (15) days after City's receipt thereof if City does not deny approval and if no timely response is made by City requesting further information regarding the proposed assignee, or, if such a timely response requesting further information is made, on the date which is fifteen (15) days after the date that Lessee delivers such additional information to City. None of the foregoing shall restrict City's rights to deny approval of any Transfer not found acceptable by City pursuant to this Lease. Any Transfer requiring City's consent shall only be effective upon City's written consent to such Transfer. None of the foregoing shall waive Developer's rights to a Permitted Transfer without the City's approval. City shall approve or disapprove any requested Transfer requiring City approval within fifteen (15) days after Lessee's request therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing and shall specify the reasons for the disapproval and, if applicable, the conditions required to be satisfied by Lessee in order to obtain approval. If Lessee's initial notice requesting approval of an Transfer (but not any other type of Transfer) states that the Transfer will be deemed approved unless rejected within the time required in this Lease, City's failure to timely disapprove the Transfer shall be conclusively deemed to constitute an approval. b. If City consents to any Transfer such consent shall not be effective unless and until Lessee gives City notice of the Transfer and a copy of any documents effecting and /or evidencing such Transfer, and unless and until any such Transferee (other than a sublessee) assumes all of the obligations and liabilities of Lessee under this Lease. C. It is acknowledged and agreed that this Lease is a lease of real property within the meaning of Subsection 365(b) (3) of the Bankruptcy Code, 11, U.S.C. To the extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq., including Section 365(f)(1) thereof, Lessee on.behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541(c) and 365(e) of the Bankruptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of the bankrupt meets City's standards for consent. City has entered into this Lease with Lessee in order to obtain for the benefit of Parcel A the unique types of facilities, businesses, services and goods which Lessee can bring to Parcel A; the foregoing prohibition on Transfer or subletting is expressly agreed to by Lessee in consideration of such fact. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deemed to have assumed all of the obligations arising under this Lease on and after the date of such Transfer. Any such assignee shall upon demand execute and deliver to City an instrument confirming such assumption. 30601.0002\405060.1 28 Contract Number 8935 (RAS) d. Lessee agrees to reimburse City for City's reasonable costs and attorneys' fees incurred in connection with the processing and documentation of any requested Transfer, subletting, transfer, change of ownership or hypothecation of this Lease or Lessee's interest in and at Parcel A, or any party thereof, which required City's approval hereunder. ' C. The acceptance by City of any payment due hereunder from any other person shall not be deemed to be a waiver by City of any provision of this Lease or to be a consent to any Transfer or subletting. Consent by City to one or more Transfers of this Lease or to one or more sublets of Parcel A shall not operate as a waiver or estoppel to the future enforcement by City of its rights pursuant to the provisions of this Lease. f. This Section 803 shall not apply to the Transfers described in Section 804. [§ 804] Sale of Condominium Units After issuance of Release of Construction Covenants by City, Developer Lessee shall have the right to undertake the following in order to effectuate the condominium structure on Parcel A: (i) Transfer this Lease to the Association in accordance with the Assignment of Lease substantially in the form attached hereto as Exhibit C, subject to the Sublease by the Association of all Condominium Units to Developer Lessee; and (ii) take all actions required by the California Department of Real Estate to allow the sale of Condominium Units. Thereafter, Developer Lessee shall have the right to convey Condominium Units to Condominium Unit Owners, as follows: Developer Lessee shall (i) assign to a Condominium Unit Owner the Sublease in a Condominium Unit and any Exclusive Use Areas described in the CC &RS which are appurtenant to such Condominium Unit as reflected by an individual Sublease, which form shall be subject to the approval of the City's authorized representative, which shall not be unreasonably or untimely withheld; (ii) convey to the Condominium Unit Owner an undivided fee interest in the Improvements; and (iii) transfer to the Condominium Unit Owner a membership in the Association. It is the express intent of City and Lessee that Condominium Unit Owners shall have the right to freely Transfer Condominium Units, without City's consent. Nothing herein shall be deemed by Lessee to waive, modify, reduce, alter, or void City's rights under Section 701 of the Agreement and the Participation Agreement (Attachment No. 19 to the Agreement). [§ 805] Release of Construction Covenants Lessee and City shall comply with the terms of the Agreement pertaining to the Release of Construction Covenants. [§ 900] MORTGAGES [ §901] Leasehold Mortgages a. From time to time during the term of this Lease, Lessee and Condominium Unit Owners shall have the right to mortgage, pledge, deed of trust, assign rents, issues and profits (for purposes of security if required by any lender), enter into capitalized leases or other financing mechanisms in connection with the acquisition of furniture, fixtures and equipment for the Improvements in furtherance of the uses permitted under this Lease, or otherwise encumber their respective leasehold interests in whole or in part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust with 30601.0002 \405060.1 29 ContractNumber 8935 (RAS) respect to individual Condominium Units, being hereafter referred to as "Permitted Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as "Permitted Mortgage ") b. The terms and conditions in 1 through 10 immediately below shall apply in connection with any Master Permitted Mortgage: 1. Lessee's rights and the rights of any Master Permitted Mortgagee under this Section 901 shall be subject to the City's rights under and the terms and conditions of the Agreement. 2. Intentionally omitted. 3. The Master Permitted Mortgage shall cover no interest in any real property other than Lessee's leasehold interest in Parcel A and the Improvements or some portion thereof. The Master Permitted Mortgage shall state on its face that it does not encumber in any way City's fee interest in Parcel A and City's interest under this Lease. Notwithstanding the foregoing, nothing contained in this Section or this Lease shall prohibit any Master Permitted Mortgage from being cross - collateralized or cross defaulted. 4. Prior to the. Release of Construction Covenants, the Master Permitted Mortgage may be made only for the purposes of financing necessary and appropriate to pay Development Costs. "Development Costs" shall mean those Project Costs described in the Method of Financing, attached to the Agreement as Attachment No. 13A. 5. The aggregate amount of all loans secured by the Permitted Mortgage prior to the issuance of a Release of Construction Covenants shall not exceed the Project Budget, attached to the Agreement as Attachment No. 5A, as it may be amended from time to time in accordance with the Method of Financing. 6. Any Master Permitted Mortgage is to be given only to a bona fide institutional lender. For the purposes hereof, the term "institutional lender" shall mean any bank, savings and loan association, thrift and loan association, savings bank, pension fund, insurance company, real estate investment trust or any other comparable or similar entity authorized to make loans in the State of California. 7. All rights acquired by said Master Permitted Mortgagee under said Master Permitted Mortgage shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of City thereunder, none of which covenants, conditions and restrictions is or shall be waived by City by reason of the giving of such Master Permitted Mortgage. Notwithstanding the foreclosure, or deed in lieu of foreclosure, of any Master Permitted Mortgage, Developer Lessee shall remain liable for the payment of the accrued but unpaid rent reserved in this Lease. 8. Promptly upon the recording of a Master Permitted Mortgage, Developer Lessee shall, at its own expense, cause to be recorded in the Official Records of Los Angeles County a written request executed and acknowledged by City for a copy of all notices of default and all notices of sale under the Master Permitted Mortgage as provided by applicable law. Inclusion of a request for notice having the effect described above in the body of the recorded Master Permitted Mortgage shall constitute compliance with this provision. 30601.0002 \405060.1 30 Contract Number 8935 (RAS) 9. So long as there exists a Master Permitted Mortgage, and except as otherwise permitted in this Lease, the City agrees not to amend, modify, restate, terminate or accept the surrender of this Lease or the Agreement without the prior written consent of Master Permitted Mortgagee. C. Developer Lessee may refinance its leasehold interest in Parcel A after the issuance of a Release of Construction Covenants by City, but prior to the sale of Condominium Units, provided that (i) such financing is fully subordinate to the City's fee title and any liens recorded against the Parcel A leasehold for the benefit of the City in accordance with the Agreement, (ii) Lessee obtains the prior written consent of City to the refinancing, which consent shall be granted provided that the Mortgage is given to an institutional lender, and provided further that no additional consent shall be required if the refinancing is provided by a Master Permitted Mortgagee previously approved by City, and (iii) any Master Permitted Mortgage recorded against the Lessee's leasehold interest in Parcel A and /or the Improvements as security for the refinancing shall, by its express terms, have a final maturity date prior to expiration of the Lease Term. d. Condominium Unit Owners, excluding the Developer Lessee, may refinance their respective subleasehold interests in the individual Condominium Units without notice to or approval by the City, provided that such financing is fully subordinate to the City's fee title and all of the City's rights under this Lease and the Agreement. [§ 9021 Rights and Obligations of Leasehold Permitted Mortgagees The following shall apply to Master Permitted Mortgages and Permitted Mortgages a. If the holder of any Master Permitted Mortgage and /or Permitted Mortgage provides written notice to the City with its name and address, City shall give any notice of default under this Lease to any such Master Permitted Mortgage and /or Permitted Mortgage by registered or certified mail at the address registered with City concurrently with any notice of default to Lessee. b. In the event Lessee shall be in default hereunder, any Master Permitted Mortgagee and /or Permitted Mortgagee shall, at any time prior to the termination of this Lease in accordance with Section 1211 (which termination can occur only in accordance with Section 1211) and only after notice to any such Master Permitted Mortgagee and/or Permitted Mortgagee and an opportunity to cure in accordance with Sections 900 et seq. (subject to the rights of any higher priority Master Permitted Mortgagee and/or Permitted Mortgagee and without payment of any penalty), have the right, but not the obligation, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments (subject to City's right to cure under Section 605 of this Lease), to make any repairs and to do any other thing which may be necessary and proper to be done in the performance and observation of the agreements, covenants and conditions hereof to cure the default of this Lease. If Lessee fails to cure a default within any applicable cure period and, in accordance with Section 1211, the City may, but shall not be required to, elect to treat all or some Subleases as direct leases. All payments so made and all things so done and performed by any Master Permitted Mortgagee (or its designee) and /or Permitted. Mortgagee (or its designee) shall be accepted by City and shall be effective to cure the default of this Lease or Sublease, as applicable, as the same would have been if made, done and performed by Lessee or Condominium Unit Owner instead of such Master Permitted Mortgagee (or its designee) and /or Permitted Mortgagee (or its designee), as applicable. Lessee and each 30601.0002 \405060.1 31 Contract Number 8935 (RAS) Condominium Unit Owner hereby constitute and appoint each Master Permitted Mortgagee and its Permitted Mortgagee as Lessee's or Condominium Unit Owner's agent and attorney in fact with full power coupled with an interest, in Lessee's or Condominium Unit Owner's name, place and stead, and at Lessee's or Condominium Unit Owner's cost and expense, to enter upon Parcel A and Improvements, and perform all acts required to be performed herein. No Permitted Mortgagee shall have the right to take or perform any action hereunder, under its Permitted Mortgage or otherwise which might result in any detriment to the rights of a prior Master Permitted Mortgagee and /or Permitted Mortgagee with respect to this Lease, Parcel A or any Condominium Unit. C. If a Master Permitted Mortgagee (or its designee) or Permitted Mortgagee (or its designee) acquires the leasehold estate under this Lease or a Condominium Unit Sublease, as applicable, City will look to such holder to perform the obligations of Lessee or the Condominium Unit Owner, as applicable, only from and after the date of foreclosure or possession and will not hold such Master Permitted Mortgagee (or its designee) or Permitted Mortgagee (or its designee) responsible for the past actions or inactions of Lessee or the Condominium Unit Owner. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, such Master Permitted Mortgagee (or its designee) or Permitted Mortgagee (or its designee) shall be required to perform and abide by each and all of the obligations of Lessee under this Lease or the Condominium Unit Owner under the applicable Sublease and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease or Sublease (if the Sublease has become a direct lease), as applicable, against such holder. d. The foreclosure of any Master Permitted Mortgage and /or Permitted Mortgage or any sale thereunder, whether by judicial proceedings or by virtue of any power of sale contained in any such Master Permitted Mortgage and /or Permitted Mortgage, or any conveyance of the leasehold estate under this Lease or a Condominium Unit Sublease encumbered by any such Master Permitted Mortgage and/or Permitted Mortgage through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof shall not require the consent or approval of City or constitute a default under this Lease, and upon such foreclosure, sale or conveyance City shall recognize any such Master Permitted Mortgagee (or its designee) and/or Permitted Mortgagee (or its designee), or any other Transferee at foreclosure or other Transfer from Master Permitted Mortgagee (or its designee) and /or Permitted Mortgagee (or its designee), as the new Lessee or Condominium Unit Owner, as applicable. In the event that such Master Permitted Mortgagee (or its designee) and/or Permitted Mortgagee (or its designee) becomes the Lessee hereunder or a Condominium Unit Owner under a Sublease, or in the event that the leasehold estate created hereunder or under a Sublease is purchased by any other party at a foreclosure sale or by any other lawful means, such Master Permitted Mortgagee (or its designee) and /or Permitted Mortgagee (or its designee), or such other foreclosure sale purchaser, shall be responsible for the performance of the obligations of Lessee under this Lease or the Condominium Unit Owner under the Sublease only for the period of time that the Master Permitted Mortgagee (or its designee), Permitted Mortgagee (or its designee), or such other foreclosure sale purchaser remains Lessee hereunder or the Condominium Unit Owner under a Sublease, and such Master Permitted Mortgagee (or its designee), Permitted Mortgagee (or its designee), or foreclosure sale purchaser shall thereafter have the right to assign this Lease or Sublease without need to obtain the approval of City. Notwithstanding anything to the contrary 30601.0002 \405060.1 32 Contract Number 8935 (RAS) herein: (A) if a Master. Permitted Mortgagee (or its designee), Permitted Mortgagee (or its designee), foreclosure sale purchaser, or other person obtains the rights of Lessee hereunder or the rights of a Condominium Unit Owner under a Sublease, such person shall be deemed, as a result of such acquisition, to have assumed each and all of the obligations of Lessee under this Lease or the Condominium Unit Owner under the Sublease, as applicable; (B) if the new Lessee has acquired the interest of the Developer Lessee and has not been previously approved by City as a Master Permitted Mortgagee, such new Lessee shall have no right to construct any Improvements on Parcel A (other than Excepted Improvements) unless and until such new Lessee has submitted evidence satisfactory to City that such new Lessee has the financial capability and overall competence to perform the obligations of Lessee hereunder, provided that this clause (B) shall not require submission of such evidence if such new Lessee is a Master Permitted Mortgagee or successor of such a Master Permitted Mortgagee in which event such new Lessee shall have the same rights to construct Improvements on Parcel A as Developer Lessee (subject to the modifications of such rights provided above); and (C) City shall have the right of prior written approval over any prospective Property Manager of Parcel A and Improvements in accordance with Section 504 of this Lease. e. In the event that any Master Permitted Mortgagee forecloses on its Master Permitted Mortgage encumbering Parcel A, Lessee rejects this Lease pursuant to Section 365 of the Bankruptcy Code of 1978, as amended, or otherwise succeeds to the interest of Lessee under this Lease, the City shall promptly execute and deliver to such Master Permitted Mortgagee, a new lease of Parcel A (naming such Master Permitted Mortgagee, its designee, or its successor as Lessee) (the "New Lease ") subject to the following terms and conditions: 1. The New Lease shall have a term equal to the remainder of the term of this Lease with the same agreements, covenants and conditions (except for any requirements which have been fulfilled prior to execution of this Lease) as are contained herein and with priority equal to that hereof; provided, however, that if more than one Master Permitted Mortgagee requests such a New Lease, the Master Permitted Mortgagee holding the most senior Master Permitted Mortgage shall prevail; and provided, further, that City shall not be required to execute such New Lease earlier than concurrently with the execution of such New Lease by such Master Permitted Mortgagee; 2. City shall prepare such New Lease at the expense of such Master Permitted Mortgagee, and all costs incurred by City in preparing such New Lease (including reasonable attorneys' fees actually incurred) shall be paid to City by such Master Permitted Mortgagee concurrently with or immediately following the execution by City of such New Lease; 3. The execution of a New Lease by City pursuant to this Section 902(e) shall automatically and immediately terminate this Lease; provided however that such New Lease shall recognize the existence and all unconflicting terms and provisions of all Condominium Unit Subleases (which shall continue to be Subleases under the New Lease unchanged in their terms and provisions by the New Lease), all Permitted Mortgages encumbering Condominium Units in accordance with this Lease, the Condominium Plan, the CC &RS, and the Reciprocal Easement Agreement shall continue to be in full force and effect; 4. Such New Lease shall have the same lien priority as this Lease with respect to any mortgage or other lien, charge or encumbrance on Parcel A; 30601.0002 \405060.1 33 Contract Number 8935 (RAS) 5. Although not necessary to effect the termination of this Lease, the former Lessee shall, upon City's execution of such New Lease, execute any documents and perform any acts which may be reasonably necessary to evidence the termination of this Lease; 6. Upon City's execution and delivery of such New Lease, City, at the expense of the New Lessee, shall take such action as shall be necessary to remove the former Lessee from Parcel A and Improvements; provided that if the previous Lessee is the Association, such removal shall not affect the rights of Condominium Unit Owners under Subleases which shall remain in full force and effect; and Notwithstanding any provision herein, City shall not be required to forbear from terminating this Lease except to the extent required by Section 905 hereof and City shall not be required to execute a new lease after the termination of this Lease in accordance with the provisions hereof. f. The provisions of this Section 902 shall inure only to the benefit of Master Permitted Mortgagee (and its designee) and Permitted Mortgagee (and its designee), or foreclosure sale purchaser and, with respect to Section 902(e) only, other persons that acquire the leasehold interest created hereunder pursuant to a foreclosure, sale or conveyance of the type described in Section 902(e). [§ 903] City's Forbearance and Right to Cure Defaults on Leasehold Permitted Mortgages [§ 904] Notice City will simultaneously give all Master Permitted Mortgagees and Permitted Mortgagees of Lessee and of Condominium Unit Owners at such address as is specified by such Master Permitted Mortgagees and Permitted Mortgagees in accordance with Section 902 hereof, a copy of each notice of default from City to Lessee hereunder at the time of giving such notice or communication to Lessee. [§ 905] Forbearance by City During the continuance of any Master Permitted Mortgage and /or Permitted Mortgage encumbering this Lease or any Sublease and until such time as the debt secured by such Master Permitted Mortgage and /or Permitted Mortgage has been paid in full, or the lien of such Master Permitted Mortgage and/or Permitted Mortgage has been foreclosed or released: a. In the event of a default under this Lease by Developer Lessee or Lessee, any Master Permitted Mortgagee shall have one hundred eighty (180) days after receipt of written notice from City setting forth the nature of such event of default, and, if the default is such that possession of Parcel A is reasonably necessary to remedy the default, a reasonable time not to exceed one hundred eighty (18 0) days after the expiration of the initial one hundred eighty (180) day period, within which to remedy such default; provided, however, that City shall not be required to forbear beyond such initial one hundred eighty (180) day period unless (a) the Master Permitted Mortgagee shall have fully cured any default in the payment of any monetary obligations of Developer Lessee or Lessee under this Lease within such one hundred eighty (180) day period and shall continue to pay currently such monetary obligations as and when the same are due, and (b) such Master Permitted Mortgagee shall have acquired Lessee's leasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such one hundred eighty (180) day period, or prior thereto, and shall be diligently 30601.0002 \405060.1 34 Contract Number 8935 (RAS) prosecuting any such proceeding. City agrees that all payments so made and all things so done and performed by such Master Permitted Mortgagee shall be accepted by City and shall be effective to prevent a termination of this Lease, as applicable, as the same would have been if made, done and performed by Developer Lessee or Lessee. b. Any event of default under this Lease which in the nature thereof cannot be remedied by Master Permitted Mortgagee shall be deemed to be remedied if the Master Permitted Mortgagee does all of the following: (a) within one hundred eighty (180) days after receiving written notice from City setting forth the nature of an event of default, or prior thereto, the Master Permitted Mortgagee shall have acquired Lessee's leasehold estate created hereby or shall have commenced foreclosure or other appropriate proceedings, (b) Master Permitted Mortgagee shall diligently prosecute any such proceedings to completion, (c) within the one hundred eighty (180) day period referred to in (a) above, Master Permitted Mortgagee shall have fully cured any default in the payment of all monetary obligations of Lessee hereunder and any non - monetary obligations which do not require possession of Parcel A and Improvements and are not personal to the Lessee, and (d) after gaining possession of Parcel A, Master Permitted Mortgagee shall perform and abide by each and all of the obligations of Lessee under this Lease as and when the same are due; provided, however, notwithstanding subclauses (c) and (d) of this clause (b) above, that Master Permitted Mortgagee shall not be required.to cure any default which occurs prior to the date on which Master Permitted Mortgagee obtains possession of Parcel A which by its nature cannot be cured by such Master Permitted Mortgagee. C. In the event that Master Permitted Mortgagee and/or Permitted Mortgagee is prohibited by any process or injunction issued by any court of competent jurisdiction or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee or a Condominium Unit Owner from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified in this Section 905 for commencing and prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition. Notwithstanding anything to the contrary herein, City shall in no event be required to forbear hereunder unless Master Permitted Mortgagee and /or Permitted Mortgagee shall within ninety (90) days after the giving of notice by City pay all moneys due and in respect of which there exists a monetary event of default under this Lease or the applicable Sublease. [§ 905.11 Conditions Precedent to Permitted Mortgagee Rights and City Forbearance City shall not be required to comply with Sections 902 through 905 of this Lease with respect to any Permitted Mortgage, unless and until a true copy of the original thereof bearing the date and book and page of recordation thereof, and a certified copy of the original note secured by such Permitted Mortgage has been delivered to City together with written notice of the address of the Permitted Mortgagee to which notices may be sent; and in the event of an assignment of such Permitted Mortgage, such assignment shall not be binding upon City unless and until a certified copy thereof bearing the date and book and page of recordation together with written notice of the address of the assignee thereof to which notices may be sent, have been delivered to City. 30601.0002\405060.1 35 ContractNumber 8935 (RAS) [§ 906] Performance on Behalf of Lessee In the event that Lessee or a Condominium Unit Owner shall fail to make any payment or perform any act required hereunder or under a Sublease to be made or performed by Lessee or the Condominium Unit Owner, as applicable, then City, Master Permitted Mortgagee or Permitted Mortgagee may, but shall be under no obligation to, after such notice to Lessee or such Condominium Unit Owner, if any, as may be reasonable under the circumstances, make such payment or perform such act with the same effect as if made or performed by Lessee or Condominium Unit Owner. Nothing herein shall limit the right of Master Permitted Mortgagee and /or Permitted Mortgagee to take action or make a payment if permitted under its Master Permitted Mortgage or Permitted Mortgage, as applicable. Entry by City, Master Permitted Mortgagee or Permitted Mortgagee upon Parcel A, the Improvements, and/or Condominium Unit for such purpose shall not waive or release Lessee or a Condominium Unit Owner from any obligation or default hereunder (except in the case of any obligation or default which shall have been fully performed or cured by Master Permitted Mortgage and /or Permitted Mortgagee). Lessee or such Condominium Unit Owner shall reimburse City (with interest at the annual rate of three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California), Master Permitted Mortgagee (with interest as provided in the Master Permitted Mortgage), and/or Permitted Mortgagee (with interest as provided in the Permitted Mortgage) for all sums so paid by City, Master Permitted Mortgagee, and /or Permitted Mortgagee and all direct third party costs and expenses incurred by City, Master Permitted Mortgagee, and Permitted Mortgagee in connection with the performance of any such act. All references to Condominium Units, Condominium Unit Owners and Subleases in this Section apply only to the extent that City has elected to make Subleases direct leases in accordance with Section 1211. [§ 9071 Nonmerger There shall be no merger of this Lease, or of the leasehold estate created thereby, with the fee estate in and to Parcel A and Improvements by reason of the fact that this Lease, or the leasehold estate created thereby, or any interest in either thereof, may be held directly or indirectly by or for the account of any person who shall own the fee estate in and to Parcel A and Improvements, or any portion thereof A [§ 908] City Cooperation City covenants and agrees that it will act and cooperate with Lessee in connection with Lessee's right to grant Master Permitted Mortgages and /or Condominium Unit Owner's right to grant Permitted Mortgages to the extent that City has elected to make Subleases direct leases in accordance with Section 1211, as herein above provided. At the request of Lessee, a Condominium Unit Owner or any proposed or existing Master Permitted Mortgagee or Permitted Mortgagee, City shall within a reasonable time execute and deliver (i) any documents or instruments reasonably requested to evidence, acknowledge and /or perfect the rights of Master Permitted Mortgagees and/or Permitted Mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Lessee's interest herein and such matters as are reasonably requested by Developer Lessee, Lessee or such Master Permitted Mortgagees or Permitted Mortgagees. Such estoppel certificate shall include, but not be limited to, certification if true by City that (a) this Lease is unmodified and in full force and effect (or, if modified, state the nature of such modification and certify that this Lease, as so modified, is in full force and 30601.0002k405060.1 36 Contract Number 8935 (RAS) effect), (b) all rents currently due under the Lease have been paid, (c) there are not, to City's knowledge, any uncured defaults on the part of Lessee under the Lease or facts, acts or omissions which with the giving of notice or passing of time, or both, would constitute a default. Any such estoppel certificate may be conclusively relied upon by any Permitted Mortgagee or assignee of Lessee's interest in this Lease. [§ 909] Enforceability The rights granted herein to a Master Permitted Mortgagee or Permitted Mortgagee shall be enforceable only by such Master Permitted Mortgagee or Permitted Mortgagee, respectively. [§ 9101 No Subordination of City's Interests City's interest in Parcel A under this Lease is a vested landlord's reversionary interest and not just a contractual obligation of Lessee. Notwithstanding anything which is or appears to be to the contrary in this Lease, Lessee shall not encumber City's interest under this Lease or City's fee interest in Parcel A by any mortgage, deed of trust, lien, security instrument or financing conveyance of any kind whatsoever. [§ 911] Obligations of Mortgagee Upon Acquisition of Leasehold Or Subleasehold Estate a. If a Master Permitted Mortgagee acquires the leasehold created hereunder, the Master Permitted Mortgagee shall perform the obligations of Developer Lessee or Lessee, as applicable, only from and after the date of foreclosure or possession and the Master Permitted Mortgagee shall not be responsible for the past actions or inactions of the prior Developer Lessee or Lessee. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, the Master Permitted Mortgagee shall be required to perform and abide by each and all of the obligations of Lessee under this Lease, and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease, including without limitation the cure of any continuing default, as applicable against the Master Permitted Mortgagee. b. If a Permitted Mortgagee acquires the leasehold created hereunder or the subleasehold estate under a Condominium Unit Sublease, the Permitted Mortgagee shall perform the obligations of Lessee or the Condominium Unit Owner under the Sublease, as applicable, only from and after the date of foreclosure or possession and the Permitted Mortgagee shall not be responsible for the past actions or inactions of the prior Lessee or Condominium Unit Owner. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, the Permitted Mortgagee shall be required to perform and abide by each and all of the obligations of Lessee under this Lease or the Condominium Unit Owner under the Sublease, and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease or Sublease, including without limitation the cure of any continuing default as applicable against the Permitted Mortgagee. [§ 9121 City's Rights Against Prior Lessees Nothing herein is intended or shall be construed to limit or restrict City's rights and remedies against any prior Lessee, provided that City's pursuit of such remedies shall not affect the rights of any Condominium Unit Owner and/or the holder of any Master Permitted Mortgage, or Permitted Mortgage obtained in accordance with Section 901 of this Lease to the use, 30601.0002 \405060.1 37 Contract Number 8935 (RAS) enjoyment or operation of Parcel A and Improvements or a Condominium Unit encumbered, as applicable. [§ 1000] INDEMNIFICATION AND INSURANCE [§ 1001] Indemnification Throughout the term of this Lease, Lessee agrees to and shall defend, indemnify and hold harmless Agency, the City, and their respective officers, employees, agents, contractors and consultants (the "Indemnitees ") from and against all claims, liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person which shall occur on Parcel A and which shall be directly or indirectly caused by or based on Lessee's leasehold interest in Parcel A or any portion thereof or any Improvements thereon or the condition of Parcel A or any portion thereof or any Improvements thereon or Lessee's rehabilitation, development, construction, use or operation of Parcel A or any portion thereof or any Improvements thereon or any of Lessee's activities under this Lease, whether such actions or inactions thereof by Lessee or anyone directly or indirectly employed or contracted with by Lessee and whether such damage or injury shall accrue or be discovered before or after the termination of this Lease. Lessee shall not be responsible for (and such indemnity shall not apply to) property damage or bodily injury caused by entry onto Parcel A and Improvements by the City pursuant to various provisions of this Lease, and/or to the extent caused by the gross negligence or willful misconduct of the Indemnitees. [§ 1002] Required Insurance Effective from Completion of the Improvements through the term of this Lease, Lessee at its sole cost and expense shall: 1. Keep or cause to be kept a policy or policies of insurance against loss or damage to the Improvements on Parcel A. Such insurance shall be maintained in an amount not less than one hundred percent (100 %) of the full insurable value of the Improvements as defined herein in Section 1003 with no co- insurance penalty (such value to include amounts spent for construction of the Improvements, architectural and engineering fees, and inspection and supervision). Agency and City shall be named as an additional insureds as their interests may appear. 2. Maintain or cause to be maintained Commercial General Liability insurance, to protect against claims for injuries to persons, including death or damages to property which may arise from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or indirectly from any act or activities of Lessee or under Lessee's control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person caused directly or indirectly by or from the acts or activities in connection with Parcel A and Improvements of Lessee or its invitees and sublessees, or any person acting for Lessee, or under its control or direction. Any such property damage and personal injury insurance maintained by Lessee at any time during the term of this Lease shall name Agency and City, and their respective officers, employees and consultants, as additional insureds and shall also provide for and protect Agency and City against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall 30601.0002 \405060.1 38 Contract Number 8935 (RAS) be maintained in fall force and effect during the entire term of this Lease in an amount not less than Five Million Dollars ($5,000,000) combined single limit as of the Effective Date of Lease, and, every five (5) years following the close of escrow for the sale of the first Condominium Unit, Lessee shall review such coverage to insure that it is reasonably consistent with similar coverage for similar type projects in Los Angeles County and if not, Lessee shall m make adjustments in such coverage. Lessee agrees that provisions of this paragraph 2 respecting maintenance of insurance shall not be construed as limiting in any way the extent to which Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities, or activities of its invitees and sublessees or the activities of any other person or persons for which Lessee is otherwise responsible. 3. Maintain or cause to be maintained worker's compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such worker's compensation insurance shall cover all persons employed by Lessee in connection with Parcel A and Improvements, and shall cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with Parcel A and Improvements, or the operation thereof by Lessee. 4. In the event that the holder of a Permitted Mortgage which has registered its name and address with City acquires the leasehold interest created by this Lease, such Permitted Mortgagee shall have the right to self - insure with respect to the risks specified in this Section 1002 if such Permitted Mortgagee is an institutional lender. [§ 10031 Definition of "Full Insurable Value" The term "full insurable value" as used in Section 1002 shall mean the actual replacement cost (excluding the cost of excavation, foundation and footings below the ground level and without deduction for depreciation) of the Improvements, including the cost of construction of the Improvements, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Lessee shall cause the full insurable value to be determined from time to time by the insurer or by a qualified expert mutually acceptable to City and Lessee, not less often than once every three years. [§ 10041 General Insurance Provisions All insurance provided under Section 1002 of this Lease shall be primary insurance for the benefit of Lessee, Agency and City. Said insurance shall also be for the benefit of the Permitted Mortgagee, if any. All insurance provided under Section 1002 shall be periodically reviewed by the parties for the purpose of mutually increasing or decreasing the minimum limits of such insurance, from time to time, to amounts which may be reasonable and customary for similar facilities of like size and operation. The insurance to be provided by Lessee may provide for a deductible or self - insured retention of not more than Twenty -Five Thousand Dollars ($25,000.00), with such amount to increase at such times as City may require increases in the policy limits as set forth above; provided that the percentage increase in the deductible or self - insured retention shall not exceed the percentage increase in the Consumer Price Index since the last requested adjustment; 30601.0002 \405060.1 39 Contract Number 8935 (RAS) and further provided that Lessee may maintain such higher deductibles or self - insured retention as may be approved in writing by the City's Risk Manager. In the event such insurance does provide for deductibles or self - insured retention, Lessee agrees that it will fully protect Agency and City, their respective boards, officers, and employees in the same manner as these interests would have been protected had the policy or policies not contained the deductible or retention provisions. All insurance herein provided for under Section 1002 shall be effected under policies issued by insurers of recognized responsibility licensed or a non admitted insurer with an A.M. Best rating of no less than A -:8, subject to the reasonable approval of the City's Risk Manager. Any insurance required to be maintained by Lessee pursuant to Section 1002 may be taken out under a blanket insurance policy or policies covering other premises or properties, and other insureds in addition to the parties hereto; provided, however, that any such policy or policies of blanket insurance shall specify therein, or supplemental written certification from the insurers under such policies shall specify, the amount of insurance irrevocably allocated to the coverage to be provided under Section 1002 and provided further, that in all other respects, any such blanket policy shall comply with the other provisions of Section 1002. All policies or certificates of insurance shall provide that such policies or certificates shall not be canceled or materially changed without at least thirty (30) days prior written notice to City except for ten (10) days for nonpayment of premium. Copies of certificates and appropriate endorsements thereof, subject to the reasonable approval of City legal counsel, shall be deposited with City together with appropriate evidence of payment of the premiums therefor; and, at least ten (10) days prior to expiration of any such policy. Upon written request of the City, copies of policies shall be deposited with the City. [§ 1005] Failure to Maintain Insurance If Lessee fails or refuses to procure or maintain insurance as required by this Lease, City shall have the right, at City's election, to provide Lessee with written notice of such failure and if Lessee does not obtain the required insurance and provide written evidence thereof reasonably acceptable to the City within fifteen (15) days following receipt of such written notice form the City, the City shall be entitled to procure and maintain such insurance until Lessee obtains the required insurance. The premiums paid by City shall be treated as additional rent due from Lessee, to be paid on the first day of the month following the date on which the premiums were paid. City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). [§ 10061 Disposition of Insurance Proceeds Resulting from Loss or Damage to Improvements a. Subject to the provisions of paragraph (b) below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Lessee during the term of this Lease shall be payable, under the provisions of the policy of insurance, to Lessee, or, if such loss or damage involves the need for Lessee to obtain any governmental approvals or permits, jointly to Lessee and City, and said proceeds shall constitute a trust fund to be used for the repair, restoration or reconstruction of the Improvements in accordance with plans and specifications approved in writing by City. 30601.0002 \405060.1 40 Contract Number 8935 (RAS) b. Notwithstanding the foregoing paragraph, within the period during which there is an outstanding Master Permitted Mortgage and /or a Permitted Mortgage obtained in accordance with Section 901 of this Lease said proceeds shall be made payable as set forth in Sections 708 and 709 of this Lease. C. Lessee hereby waives any claim against Agency and City for any loss covered by insurance of the type specified in Section 1002; and Lessee, shall obtain from its insurance company or companies a waiver of any right of subrogation that it may have against Agency and City. [§ 1100] EMINENT DOMAIN [§ 1101] Lessee to Give Notice In case of a taking of all or any part of Parcel A and Improvements, or the commencement of any proceedings or negotiations which might result in such taking, Lessee shall promptly give written notice thereof to City generally describing the nature and extent of such taking or the nature of such proceedings or negotiations and the nature and extent of the taking which might result therefrom, as the case may be. [§ 1102] Total Taking In case of a taking of the fee of Parcel A and Improvements, or in case of the taking of only a part of Parcel A and Improvements, leaving the remainder of Parcel A and Improvements in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder, this Lease shall terminate as of the date title vests in the condemning authority or the date the condemning authority is entitled to possession, whichever first occurs (the "Date of Taking "). Any taking of Parcel A and Improvements of the character referred to in this Section 1102 which results in the termination of this Lease is referred to herein as a "Total Taking." [§ 11031 Partial Taking In case of a taking of Parcel A and Improvements other than a Total Taking (a "Partial Taking "), (i) this Lease shall remain in full force and effect as to the portion of Parcel A and Improvements remaining immediately after such taking, without any abatement or reduction of any sum payable hereunder, and (ii) Lessee, to the extent the awards or payments, if any, on account of such taking shall be sufficient for the purpose, at its expense, but first subject to Section 1104(a), shall within a reasonable period of time commence and complete, or cause to be commenced and completed, Restoration of Parcel A and Improvements as nearly as possible to its value, condition, and character immediately prior to such taking, with such alterations and additions as may be made at Lessee's election pursuant to and subject to the terms of Section 705, except for any reduction in area caused thereby; provided, however, that in case of a taking for temporary use Lessee shall not be required to effect Restoration until such taking is terminated. [§ 1104] Application of Awards and Other Payments Awards and other payments on account of a taking, less costs; fees and expenses incurred in the collection thereof ( "Net Awards and Payments ") shall be applied as follows: 30601.0002 \405060.1 41 Contract Number 8935 (RAS) a. In case of a taking other than a Total Taking or a taking for temporary use, Lessee shall furnish to City, all Master Permitted Mortgagees, and all Permitted Mortgagees evidence satisfactory to each of the foregoing of the total cost of the Restoration required by Section 1103. b. Net Awards and Payments awarded to Lessee on account of a taking other than a Total Taking or a taking for temporary use shall be held and applied as provided with respect to proceeds of insurance in Section 709. C. Net Awards and Payments awarded to Lessee on account of a taking for temporary use shall initially be received by Lessee, unless provided otherwise by any Master Permitted Mortgage. d. Net Awards and Payments awarded to Lessee on account of a Total Taking shall be allocated as follows: First: There shall be paid to each Master Permitted Mortgagee (it being understood that each Master Permitted Mortgagee shall be paid in order of seniority) an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Master Permitted Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the taking. Second: There shall be paid to each Permitted Mortgagee an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Permitted Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the taking. Third: To the Lessee and the City as their respective interests may appear in Parcel A and the Improvements; provided, that any payment to a Master Permitted Mortgagee or a Permitted Mortgage pursuant to the preceding paragraphs shall be charged against Lessee's interest. [§ 1200] DEFAULTS, REMEDIES AND TERMINATION [§ 12011 Defaults General a. Subject to the extensions of time set forth in Section 1314 of this Lease, failure or delay by either party to perform any term or provision of this Lease after expiration of the applicable cure period specified in the following sentence (unless another provision of this Lease includes a different period of time for the cure of any specific default which other specific period shall control), constitutes an event of default under this Lease. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with reasonable diligence and, in any event, for monetary defaults within thirty (30) days following receipt of written notice of such failure or delay, and for non - monetary defaults within the time reasonably required for cure with reasonable diligence, not to exceed one hundred and eighty (180) days following receipt of written notice plus any period or periods of enforced delay required by Section 1314 of this Lease (with any other cure periods specified in this Lease and as applicable, the "Cure Period "). b. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against 30601.00021405060.1 42 Contract Number 8935 (RAS) further damages, the injured party may not institute proceedings against the party in default until the expiration of the applicable Cure Period. City's exercise of its remedies under Sections 1200 et seq. shall be subject to the provisions of Sections 900 et seq. of this Lease. Failure or delay in giving such notice shall not constitute a waiver of any default. C. Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any of its remedies or rights as to any default shall not operate as a waiver of any default or of any such rights or remedies or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. [§ 1202] Legal Actions [§ 1203] Institution of Legal Actions Subject to Section 1211, in addition to any other rights or remedies, either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in the Superior Court of the County of Los Angeles, State of California, in any other appropriate court in that county, or in the Federal District Court in the Central District of California. Lease. [§ 1204] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this [§ 1205] Acceptance of Service of Process In the event that any legal action is commenced by Lessee against City, service of process on City shall be made by personal service upon the City Manager of City, or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Lessee, service of process on Lessee shall be made by personal service upon an officer of the Manager of Lessee or after assignment of the this Lease to the Association, an officer of the Association, and shall be valid whether made within or without the State of California, or in such manner as may be provided by law. [§ 1206] Attorneys' Fees and Court Costs In the event that either City or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under or violation of this Lease, then each party shall bear and pay the cost of its own costs and attorneys' fees. [§ 1207] Rights and Remedies are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Lease, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 30601.0002\405060.1 43 Contract Number 8935 (RAS) [§ 1208] Damages If either party defaults with regard to any of the provisions of this Lease and the default is not cured prior to the expiration of the applicable Cure Period, the defaulting party shall be liable to the non - defaulting party for any damages caused by such default, and the non - defaulting party may thereafter (but not before) commence an action for damages against the defaulting party with respect to such default. [§ 1209] Specific Performance If either party defaults with regard to any of the provisions of this Lease and the defaulting party fails to cure such default prior to the expiration of the applicable Cure Period, the non - defaulting party, at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Lease pertaining to such default. [§ 12101 Additional Remedies of City a. If Lessee defaults with regard to any of the provisions of this Lease, City shall serve written notice of such default upon Lessee and Master Permitted Mortgagees who have registered their names and addresses in writing with City. Subject to the provisions of Sections 900 et seq. of this Lease running in favor of Master Permitted Mortgagees and Permitted Mortgagees, if the default is not commenced and cured prior to the expiration of the applicable Cure Period, City, at its option, may thereafter (but not before): 1. Correct or cause to be corrected said default and charge the direct third party costs therefor to the account of Lessee; 2. Correct or cause to be corrected said default and pay the costs thereof from the proceeds of any insurance; 3. Continue this Lease and Lessee's right to possession in effect and enforce its rights and remedies under the Lease, including the right to recover rent as it becomes due, as provided in Section 1951.4 of the California Civil Code; provided, however, after the Release of Construction Covenants and the execution of the Assignment of Lease (Exhibit C), City's exercise of this remedy shall be personal to the Association and shall not in any manner modify or affect the Subleases of Condominium Unit Owners or their Permitted Mortgagees, which shall remain in full force and effect. 4. Have a receiver appointed to take possession of Lessee's leasehold interest in Parcel A and Improvements, with power in said receiver to administer Lessee's interest therein, to collect all funds available to Lessee in connection with its operation and maintenance thereof; and to perform all other acts consistent with Lessee's obligations under this Lease as a court deems proper; provided, however, after the Release of Construction Covenants and the execution of the Assignment of Lease (Exhibit C), City's exercise of this remedy shall apply only to the Association and in particular the obligations assumed by the Association under the Assignment of Lease, and shall not in any manner modify or affect the Subleases of Condominium Unit Owners or their Permitted Mortgagees, which shall remain in full force and effect. 5. Maintain and operate Parcel A and Improvements without terminating this Lease; provided, however, after the Release of Construction Covenants and the execution of the Assignment of Lease (Exhibit C), City's exercise of this remedy shall apply only to the 30601.0002k405060.1 44 Contract Number 8935 (RAS) Association and in particular the obligations assumed by the Association under the Assignment of Lease, and shall not in any manner modify or affect the Subleases of Condominium Unit Owners or their Permitted Mortgagees, which shall remain in full force and effect. b. City reserves and shall have the right at all reasonable times to enter Parcel A and the Improvements for the purpose of viewing and ascertaining the condition of the same, or to protect its interests in Parcel A and the Improvements or to inspect the operations conducted thereon, subject to the limitations and requirements for City rights of access set forth in Section 405 of this Lease. Any such entry shall be made only after reasonable notice to Lessee. In the event that such entry or inspection by City discloses that Parcel A or the Improvements are not in a decent, safe, and sanitary condition, are damaged, or in disrepair, City shall have the right, if Lessee fails to cure the problem within the applicable Cure Period, to have any necessary maintenance or repair work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all direct costs reasonably incurred by City in having such necessary maintenance or repair work done in order to keep Parcel A and the Improvements in a decent, safe and sanitary condition. C. The rights reserved in this Section 1210 shall not create any obligations on City or increase obligations imposed on City elsewhere in this Lease, and shall not defeat, render invalid or limit the rights or interests expressly provided in this Lease for the protection of Condominium Unit Owner and/or Permitted Mortgagees. [§ 12111 Rights of Termination Once the Release of Construction Covenants has been issued, as provided in Section 314 of the Agreement, the provisions of this Section 1211 shall terminate and cease to be effective or enforceable and City shall have no right under Section 1211 or any other provision of this Lease to terminate this Lease, except as to any right of termination under Sections 708 and 709. a. Subject to the enforced delay provisions of Section 1314, the preceding paragraph, and the rights of any Master Permitted Mortgagee to cure under Sections 900 et seq., City may terminate this Lease at its option if Developer Lessee or any Master Permitted Mortgagee fails to perform any of its material obligations under the Agreement and /or this Lease for Parcel A, including Developer Lessee's or the Master Permitted Mortgagee's failure to diligently pursue development of Parcel A, and such failure is not cured within the applicable Cure Period. b. For the purposes of this Lease, "failing to diligently pursue development" shall mean: I. the failure to commence construction of the Improvements on Parcel A, as required by the Agreement for a period of three (3) months after the date set forth in the Schedule of Performance (Attachment No. 3 to the Agreement); and 2. the abandonment or substantially suspended construction of the Improvements on Parcel A for a continuous period of three (3) months after written notice of such abandonment or suspension from City. C. In the event of termination under this Section, in addition to any remedies authorized herein, City shall have the right, its option, to exercise its rights under the Assignment of Agreements, attached to the Agreement as Attachment No. 613, and reenter and take 30601.0002 \405060.1 45 Contract Number 8935 (RAS) immediate possession of Parcel A and any Improvements thereon, in accordance with subsection (d) of this Section and subject to Section 1212 herein. d. Subject to Section 1212, the City shall have the right, at its option, to reenter and take possession of Parcel A with all Improvements thereon, and to terminate and revest in the City the leasehold estate theretofore conveyed to the Developer Lessee, if after conveyance of title and prior to the Release of Construction Covenants pertaining to Parcel A (or portion thereof), the Developer Lessee (or its successors in interest) shall: 1. fail to commence construction of the Improvements on Parcel A (or portion thereof) as required by the Agreement for a period of three (3) months after the date set forth in the Schedule of Performance (Attachment No. 3 to the Agreement), provided that the Lessee shall not have obtained an extension or postponement to which the Lessee may be entitled pursuant to Section 1314 hereof; or 2. abandon or substantially suspend construction of the Improvements on Parcel A (or portion thereol) for a continuous period of three (3) months after written notice of such abandonment or suspension from the City, provided that the Lessee shall not have obtained an extension or postponement to which the Lessee may be entitled to pursuant to Section 1314 hereof; or 3. assign or attempt to assign this Lease, or any rights herein, or transfer, or suffer any involuntary transfer of Parcel A in violation of this Lease, and such violation shall not be cured within thirty (30) days after the date of receipt of written notice thereof by the City to the Lessee. Such right to reenter, repossess, terminate and revest, shall be subject to and be limited by and shall not defeat, render invalid, or limit any rights by any Master Permitted Mortgagee to cure under Sections 900 et seq. Upon the revesting in the City of title to Parcel A, as provided in this subsection (d), the City shall, pursuant to its responsibilities under state law, use its diligent and good faith efforts to resell its interests in the Parcel A, as soon and in such manner as the City shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the City), who will assume the obligation of malting or completing the Improvements, or such other Improvements in their stead, as shall be satisfactory to the City and in accordance with the uses specified for the Parcel A in the Redevelopment Plan. Upon such resale of the interests in the Parcel A, the proceeds thereof shall be applied: 1. first, to reimburse the City on its own behalf or on behalf of the City of all costs and expenses incurred by the City, including but not limited to salaries of personnel engaged in such action, in connection with the recapture, management, and resale of its interests in Parcel A (but less any income derived by the City from Parcel A, in connection with such management); all taxes, assessments and water and sewer charges with respect to Parcel A (or, in the event Parcel A.is exempt from taxation or assessment or such charges during the period of ownership, then such taxes, assessments, or charges, as would have been payable if Parcel A were not so exempt); any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults, or acts of the Lessee, its successors or transferees; any expenditures made or obligations incurred 30601.0002 \405060.1 46 ContractNlunber 8935 ") with respect to the making or completion of the agreed Improvements or any part thereof on Parcel A; and any amounts otherwise owing to the City by the Lessee and its successor or transferee; 2. second, to each Master Permitted Mortgagee, in order of priority, in an amount up to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and/or any interest accrued thereon, all as of the date on which such payment is made; provided, however, that nothing herein shall be deemed as a guaranty or warranty by the City to such Master Permitted Mortgagee that the resale of the City's interests and payment to Master Permitted Mortgagee shall be sufficient to pay, in total, unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and/or any interest accrued thereon, if any; 3. third, to reimburse the Developer Lessee, its successor or transferee, up to the amount equal to (1) the sum of the Base Rent paid to the City by the Lessee for Parcel A being revested in the City; and (2) the costs incurred for the development of Parcel A or for the construction of the agreed Improvements thereon, if such costs were incurred in accordance with the Method of Financing (Attachment No. 13A) and Project Budget (Attachment No. 5A), less (3) any gain or income withdrawn or made by the Lessee therefrom or from the Improvements thereon. For purposes of this paragraph the term "cost incurred" shall include direct, out -of- pocket expenses of development, but shall exclude Developer Lessee's all overhead expenses, Lessee fees, and profit; and 4. fourth, any balance remaining after such reimbursements shall be retained by the City as its property. The City shall also be entitled to exercise all of its rights under the Assignment of Agreements (Attachment No. 6B to the Agreement). e. To the extent that the right established in this Section 1211 involves forfeiture, it must be strictly interpreted against the City, the party for whose benefit it is created. The rights established in this Section 1211 are to be interpreted in light of the fact that the City will convey Parcel A to the Lessee for development and not for speculation in undeveloped land. [§ 1212] Cross - Default — Among Parcels [ §1212.1] Cross- Default — Among Parcels — Concurrent Financing of Parcels A and B only. Notwithstanding any provision to the contrary in this Lease, in the event that close of construction financing for Parcels A and B is not concurrent with close of construction financing for Parcel C, Lessee understands and agrees that the occurrence of a material breach of the Parcel B Ground Lease and/or the Parcel C Ground Lease shall constitute a material breach of this Lease unless all of the following conditions are satisfied: (i) Close of Escrow has occurred for all of the Parcels; (ii) the Construction Financing Event has occurred for Parcels A and B; (iii) Lessee has completed the first floor of structural framing of the above - ground vertical buildings on Parcels A and B, in accordance with the Development Agreement and approved Permits for development of the Site ( "Construction Framing Event "); and (iv) Developer has not made a Transfer contrary to the Agreement or this Lease, which shall be determined at the time of the Construction Framing Event. Upon the satisfaction of clauses (i) to (iv ), above, the 30601.00021405060.1 47 Contract Number 8935 (RAS) occurrence of a breach or default with respect to a Parcel shall not subject the other Parcels to any remedies for such breach of default. [§ 1212.2] Cross - Default — Among Parcels — Concurrent Financing of Parcels A, B and C. Notwithstanding any provision to the contrary in this Agreement, in the event that close of construction financing for Parcels A and B is concurrent with close of construction financing for Parcel C, Developer understands and agrees that the occurrence of a material breach of the Parcel B Ground Lease and/or Parcel C Ground Lease shall constitute a material breach of this Lease unless all of the following conditions are satisfied: (i) Close of Escrow has occurred for all of the Parcels; (ii) the Construction Financing Event has occurred for Parcels A, B, and C; (iii) Developer has issued a notice to proceed to its Contractor for construction of the Development on Parcel A and the Development on Parcel B, in accordance with the Development Agreement and approved Permits for development of the Site ( "Notice to Proceed Event "); and (iv) Developer has not made a Transfer contrary to this Agreement, which shall be determined at the time of the Notice to Proceed Event. Upon the satisfaction of clauses (i) to (iv), above, the occurrence of a breach or default with respect to a Parcel shall not subject the other Parcels to any remedies for such breach of default. [§ 1300] GENERAL PROVISIONS [§ 13011 Notices, Demands and Communications between the Parties Formal notices, . demands and communications between City and Lessee shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the City and of Lessee as designated in Section 108 and Section 109 hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section. Sufficient notice may also be given by personal delivery or reputable overnight delivery service in lieu of mail if reasonably adequate records are maintained of such service in the ordinary course of business by the person or entity effecting such service. [§ 1302] Time of Essence Time is of the essence with respect to the performance of each of the covenants and agreements contained in this Lease. [§ 1303] Conflict of Interests a. No member, official or employee of City shall have any personal interest, direct or indirect, in this Lease, nor shall any such member, official or employee participate in any decision relating to the Lease which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. b. Lessee warrants that it has not paid or given, and will not pay or give, any officer or employee of City or City any money or other consideration for obtaining this Lease. [§ 1304] Nonliability of City Officials and Employees No member, official or employee of Agency or City shall be personally liable to Lessee, or any successor in interest, in the event of any default or breach by City or any for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. 30601.0002 \405060.1 48 Contract Number 8935 (RAS) [§ 1305] Inspection of Books and Records a. City has the right at all reasonable times to inspect the books and records of Lessee pertaining to Parcel A and Improvements as pertinent to the purposes of this Lease. Lessee also has the right at all reasonable times to inspect the books and records of City pertaining to Parcel A and Improvements as pertinent to the purposes of this Lease. b. In the event that the holder of a Master Permitted Mortgage and /or a Permitted Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created by this Lease, then, in such an event, City acknowledges and agrees that City shall be entitled to examine and /or audit all of the books and records of said Master Permitted Mortgagee and/or Permitted Mortgage solely to the extent that they relate to Parcel A and Improvements. [§ 1306] No Partnership Neither anything in this Lease contained, nor any acts of City or Lessee shall be deemed or construed by any person to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association between City and Lessee. [§ 1307] Compliance with Law Except as otherwise expressly provided in the Development Agreement and /or the Agreement, Lessee agrees, at its sole cost and expense, to comply and secure compliance with all the applicable and valid requirements now in force, or which may hereafter be in force, of all municipal, county, State and federal authorities, pertaining to Parcel A and Improvements, as well as operations conducted thereon, and to faithfully observe and secure compliance with, in the use of Parcel A and Improvements, all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, including all laws prohibiting discrimination or segregation in the use, sale, lease or occupancy of the property. [§ 1308] Surrender of Property Except as otherwise expressly provided in this Lease, upon the expiration or sooner termination of this Lease pursuant to the terms hereof, it shall be lawful for City to reenter and repossess Parcel A and Improvements without process of law, and Lessee, in such event, does hereby waive any demand for possession thereof, and agrees to surrender and deliver Parcel A and Improvements peaceably to City immediately upon such expiration or sooner termination of this Lease in good order, condition and repair, except for reasonable wear and tear. [§ 13091 Severability If any provision of this Lease shall be adjudged invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. [§ 1310] Binding Effect This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. 30601.0002 \405060.1 49 Contract Number 8935 (RAS) [§ 1311] Assignment or Sublease a. City shall at all times have the right to encumber, sell, convey, transfer, or otherwise dispose of all or any portion of any fee or reversionary interest in Parcel A and /or in this Lease to any third person or entity. In the event of any assignment of all or a part of City's interest in either Parcel A or this Lease to a third person or entity, the Lessee shall attom to the third person or entity and recognize third person or entity as the landlord under this Lease, and the third person or entity shall provide Lessee with a reasonably appropriate non - disturbance agreement. b. So long as Lessee is not in default (subject to applicable notice and cure rights) of the Agreement or this Lease, City shall not encumber, sell, convey, transfer, or otherwise dispose of all or any portion of or any fee or reversionary interest in Parcel A to any third person or entity until four (4) years after commencement of the term of this Lease. Any transfer of the fee or reversionary interest in Parcel A shall be subject to all terms and provisions of this Lease which shall be unaffected by such encumbrance, sale, conveyance, transfer or disposal. Also, if the successive owner of fee title to Parcel A or any portion thereof wishes to encumber Parcel A or any portion thereof with a mortgage, deed of trust or other encumbrance of any kind that could result in the holder thereof ( "Encumbrance Holder ") acquiring fee title to Parcel A or any portion thereof, such encumbrance shall be fully subordinate to this Lease, the CC &RS, Condominium Plan, Reciprocal Easement Agreement and all other documents recorded to implement the condominium development (collectively, "Lease Documents ") and should Encumbrance Holder acquire title to Parcel A or any portion thereof it shall take title subject to all terms and provisions of the Lease Documents. [§ 1312] Captions The captions contained in this Lease are merely a reference and are not to be used to construe or limit the text. [§ 13131 No Recording of this Lease This Lease shall not be recorded. Pursuant to the Agreement, a memorandum of this Lease which expressly contemplates and includes any and all amendments, modifications, restatements and replacements hereof, will be recorded in the Official Records of Los Angeles County. [§ 1314] Enforced Delay in Performance for Causes Beyond Control of Party Subject to Section 604 of the Agreement, in addition to specific provisions of this Lease, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond the control and without the fault of the party claiming an extension of time to perform, including war; insurrection; strikes; lockouts; riots; floods; earthquakes' fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts or failure to act of the City or any other public or governmental agency or entity (other than any act or failure to act of City, which shall not excuse performance by City). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty 30601.0002 \405060.1 50 Contract Number 8935 (RAS) (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Lease may also be extended in writing by City and Lessee. [§ 1315] Entire Agreement, Waivers and Amendments a. This Lease is executed in U duplicate originals, each of which is deemed to be an original. This Lease includes fifty -six (56) pages and three (3) exhibits. b. All waivers of the provisions of this Lease must be in writing and signed by the appropriate authorities of City or Lessee and all amendments hereto must be in writing and signed by the appropriate authorities of the City and Lessee. During the term of any Permitted Mortgage obtained in accordance with Section 901 of this Lease, any amendment to this Lease shall require the written approval of the Permitted Mortgagee, which approval shall not unreasonably be withheld. C. The City Manager shall have the authority to approve, execute, and deliver any Lease Riders to Parcel A reasonably required by any Master Permitted Mortgagee and /or Permitted Mortgagee; provided, however, that such Lease Riders do not subordinate the City's fee interest in any Parcel. The City understands and agrees that the authority to approve such Lease Riders shall not be untimely or unreasonably withheld. [§ 13161 Off -Set Statement, Attornment and Subordination a. Off -Set Statement. City and Lessee shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from the other party, execute, acknowledge and deliver to such requesting party a statement in writing (i) certifying that this Lease is unmodified and in full force and effect, or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect,) and the dates to which the rent and other charges are paid in advance, if any, without any offset or defense thereto (if such be the case) and (ii) acknowledging that there are not, to such certifying party's knowledge, any uncured defaults on the part of the requesting party hereunder or specifying the defaults if any are claimed. Any such statement may be relied upon by any prospective purchaser or encumbrance of the Improvements, Parcel A or of all or any portion of the real property of which Parcel A is a party. Lessee's requesting party shall bear all costs with respect to any statement requested of City. b. Subordination. Lessee agrees that this Lease shall, at the request of the City, be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of Parcel A by City and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof, provided the mortgagees or beneficiaries named in said mortgages or trust deeds shall agree in a written recorded document to recognize the interest of Lessee, Master Permitted Mortgagee and any other Permitted Mortgagee under this Lease and any applicable Master Permitted Mortgagee and Permitted Mortgage loan documents in the event of foreclosure and shall not disturb the interest of Lessee, Master Permitted Mortgagee or any other Permitted Mortgagee, in accordance with the terms of this Lease. Lessee also agrees that in the event City and any mortgagee or beneficiary elect to have this Lease prior to such mortgage or deed of trust, and upon notification by City or such mortgagee or beneficiary to Lessee to that effect, this Lease shall be deemed prior in lien to such mortgage or deed of trust, whether this Lease is dated prior to or subsequent to the date of said 30601.0002 \405060.1 51 Contract Number 8935 (RAS) mortgage or deed of trust. Lessee agrees that upon the request of City, or any mortgagee or beneficiary, Lessee shall execute whatever instruments may be required to carry out the intent of this section. [§ 1317] Association Option to Extend Lease Term a. Grant of Extension Option. Provided that Lessee has not committed a default under this Lease that has not been cured, waived or forgiven, notwithstanding any other provision of this Lease to the contrary, the Association shall have the option to extend the term of the Lease for a period of fifty (50) years beyond the original 99 -year Lease Term ( "Extension Term ") as provided in this Section ( "Extension Option"), subject to the conditions set forth below. The Association's rights and obligations under this Section shall not be transferable or assignable, in whole or part, to any third parties, including, without limitation, a Master Permitted Mortgagee or its transferee, Permitted Mortgagee or its transferee, or any Condominium Unit Owner. b. Term of Extension Option. The term of the Extension Option ( "Option Term ") shall commence on the date which is twenty five (25) years prior to the date on which the original Lease Term expires and shall expire on the date that is one (1) year prior to expiration of the original Lease Term. The Association shall have the opportunity to "exercise" (as used herein "exercise" has the meaning given in e. below) the Extension Option (referenced hereinafter as the First Option Period, Second Option Period and Third Option Period), as follows: i. Once during Years 75 - 83 of the Lease Term ( "First Option Period "), beginning on the 751h anniversary of the commencement of the Lease Term and ending on the day prior to the 83rd anniversary. ii. Once during Years 83- 91 of the Lease Term ( "Second Option Period "), beginning on the 83rd anniversary of the commencement of the Lease Term and ending on the day prior to the 92nd anniversary. iii. Once during Years 91 — 98 of the Lease Term ( "Third Option Period "), beginning on the 92nd anniversary of the commencement of the Lease Term and ending on the day prior to the 98th anniversary. iv. If the Association does not exercise the Extension Option during the First Option Period, then the Association shall have the right to exercise the Extension Option during the Second Option Period. If the Association exercises the Extension Option during the First Option Period, then the Association shall have no further rights to exercise the Extension Option. V. If the Association does not exercise the Extension Option during the First Option Period or the Second Option Period, then the Association shall have an opportunity to exercise the Extension Option during the Third Option Period. If the Association exercises the Extension Option during the First Option Period or Second Option Period, then the Association shall have no further rights to exercise the Extension Option. C. Election Consideration Notice. The Association shall initiate the process to exercise the Extension Option by providing Lessor with written notice ( "Election 30601.0002 \405060.1 52 ContractNumber 8935 (RAS) Consideration Notice ") that it may wish to exercise the Extension Option. The Election Consideration Notice shall not constitute the exercise of the Extension Option d. Determination of Extension Rent. Association shall pay additional rent ( "Extension Rent ") to Lessor determined and commencing in accordance with subsection (e) below. Within thirty(30) days following Lessor's receipt of the Election Consideration Notice, Lessor shall deliver to the Association a list of five (5) third party independent appraisers ( "Appraiser List ") who are members of the American Institute of Real Estate Appraisers or an equivalent organization, with at least ten (10) years' experience in the appraisal of ground lease rent for residential sale or leasing of condominium projects (to the extent available) within an equivalent coastal area within California. Association shall then have thirty (30) days from its receipt of the Appraiser List to select one appraiser from the Appraiser List and provide Lessor with written notice of Association's selection from the Appraiser List ( "First Appraiser "), which notice shall include the name and address of such First Appraiser. Within ten (10) days following Lessor's receipt of the Association's selection notice Lessor shall commission the First Appraiser to provide a written appraisal and supporting documentation of the fair market value of the Extension Rent (collectively, "First Appraisal ") to the Association and Lessor within forty -five (45) days following the First Appraiser's acceptance of the commission, based upon the assumption that the Extension Rent shall be paid as provided in subsection e, below, and taking into consideration the following factors: (i) fair market value of the ground rent for the period commencing with the first day following the exercise of the Extension Option through the end of the initial 99 -year Lease Term (this value should reflect any value enhancement to the Condominium Units achieved by virtue of the lease extension). and (ii) fair market value of the ground and building rent for the fifty (50) year period commencing at the end of the initial 99- year Lease Term. Association shall pay for the First Appraisal. Lessor or Association shall each have ten (10) days following receipt of the First Appraisal to appeal ( "First Appeal Period ") the First Appraisal by delivering a written notice of the appeal to the other party including the specific grounds therefore for the appeal. Association and Lessee shall meet and confer at least once within thirty (30) following delivery of such appeal notice to negotiate in good faith to resolve the appeal, but if the Association and Lessor cannot agree upon the First Appraisal after this negotiation period, then within ten (10) days following the expiration of such thirty (30) day negotiation period either party may submit a request ( "Second Appraiser Request") in writing to select a second appraiser from the Appraiser List ( "Second Appraiser ") to provide a second appraisal ( "Second Appraisal ") with a copy of such notice to the other party. If neither party appeals the First Appraisal, then the First Appraisal shall constitute the Extension Rent if the Association exercises the Extension Option. Within ten (10) days following delivery of the Second Appraiser Request. the requesting party shall commission the Second Appraiser to provide a written appraisal and supporting documentation of the fair market value of the Extension Rent (collectively, "Second Appraisal ") within thirty (30) days of the Second Appraiser's acceptance of the commission, based upon the same appraisal instructions as were provided to the First Appraiser. If the Second Appraisal is less than fifteen percent (15 %) above or below the First Appraisal, the requesting party shall pay 30601.0002 \405060.1 53 Contract Number 8935 (RAS) the cost of the Second Appraisal. If the Second Appraisal is more than fifteen percent (15 %) above or below the First Appraisal, the parties shall split the Second Appraisal costs. Lessor or Association shall each have ten (10) days following receipt of the Second Appraisal to appeal ( "Second Appeal Period ") the Second Appraisal by delivering a written notice to the other party of the appeal and including the specific grounds for the appeal. Association and Lessee shall meet and confer at least once within thirty (30) days following the delivery of such appeal notice to negotiate in good faith to resolve the appeal, but if the Association and Lessor cannot agree upon the Second Appraisal after this negotiation period, then within ten (10) days following the expiration of such thirty (30) day negotiation period either party may submit a request in writing ( "Third Appraiser Request" to select a third appraiser from the Appraiser List ( "Third Appraiser ") to provide a third appraisal ( "Third Appraisal "). If neither party appeals the Second Appraisal, then the Second Appraisal shall constitute the Extension Rent if the Association exercises the Extension Option. Within ten (10) days following delivery of the Third Appraiser Request the requesting party shall commission the Third Appraiser to provide a written appraisal and supporting documentation of the fair market value of the Extension Rent (collectively, "Third Appraisal ") within thirty (30) days of the Second Appraiser's acceptance of the commission, based upon the same appraisal instructions as were provided to the First Appraiser; provided, however, that the Third Appraiser shall only rely upon the information and documentation provided by the First Appraiser and Second Appraiser. The Third Appraisal shall constitute the Extension Rent if the Association exercises the Extension Option. If the Third Appraisal is less than fifteen percent (15 %) above or below the Second Appraisal, then the party requesting the Third Appraisal shall pay the cost of the Third Appraisal. If the Third Appraisal is greater than fifteen percent (15 %) the Second Appraisal, then the parties shall split the costs of the Third Appraisal. The parties shall make available to the Appraisers information concerning Parcel A and such other financial data and information as deemed appropriate by the Appraiser(s). The above appraisal process shall be a final determination of the Extension Rent. If the Association exercises the Extension Option, the determination of the Extension Rent under this subsection shall be binding on the parties hereto, shall be entitled to the dignity of an award of binding arbitration, and a binding judgment thereon may be entered in a court of competent jurisdiction. e. Exercise of Extension Option. If Association, in its sole discretion, wishes to exercise the Extension Option, then within one hundred twenty (120) days following the determination of the Extension Rent in accordance with d. above, Association shall deliver to Lessor written notice of such election ( "Option Exercise Notice "). ") along with the total amount of the Extension Rent, in funds immediately payable to the Lessor. The Option Exercise Notice shall include a certification by the Association that it has obtained due authorization of its members in accordance with its CC &Rs to exercise the Extension Option. Within twenty (20) days following receipt by Lessor of the Option Exercise Notice the parties shall execute and record an amendment to this Lease reflecting the terms of the extension in accordance with this Section, including the Extension Rent and the Extension Term (which would extend the term of the Lease to the date which is 149 years after the date on which this Lease originally commenced) ( "Extension Amendment "). If Association does not deliver an Option Exercise 30601.0002 \405060.1 54 Contract Number 8935 (RAS) Notice to Lessor within the foregoing 120 day period, then the provisions of subsection f. below shall apply. f Failure to Exercise Extension Option. If after providing Lessor with an Election Consideration Notice and the determination of the Extension Rent in accordance with subsection d. above, Association fails to exercise the Extension Option in accordance with subsection e. above, then the Lease shall continue unmodified, and Association shall be entitled to provide Lessor with one or more subsequent Election Consideration Notices as provided under subsection b. of this Section; Association's failure to pay any appraisal costs that are the obligation of the Association under this Section shall constitute a default by Lessee under this Lease. g. Lessor's Termination Rights. In the event that Association exercises the Extension Option but fails to make any timely payment to Lessor of the Extension Rent after written notice by the Lessor with thirty (30) days to cure, and notwithstanding any other provisions of the Lease to the contrary that would prevent Lessor from terminating the Lease, such failure of Association to pay Lessor the Extension Rent shall entitle Lessor to terminate the Lease. h. Conflicts. If there is any conflict between this Section and any other provision of this Lease, this Section shall control. 30601.0002 \405060.1 55 Contract Number 8935 (RAS) [§ 1318] Approvals Except as expressly provided otherwise in this Lease, approvals required of City or Lessee shall not be unreasonably withheld, conditioned or delayed. CITY OF SANTA MONICA (City) Rod Gould City Manager ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney C Marsha J. Moutrie APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Special Counsel Susan Y. Cola 30601.0002 \405060.1 56 Date: Contract Number 8935 (RAS) SANTA MONICA URBAN HOUSING A, LLC, a Delaware limited liability company By: Name Title By: Name Title 30601.0002 \405060.1 - 57 EXHIBIT A MAP OF PARCEL A JRS\30601.0002 \405060.1 1 `.85 TRACT NO. 69828 SHEET 1 OF 3 SHEETS 2 2 50. FT. OT IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. BEING A SUBDIVISION OF A PORTION OF LOT NO. 41 OF TIE DRAWN RAN MUTES Y SANTA MONICA AS PER MAP REWRRED IN BOOK 3 PAGES 30 AND 31 OF PATENTS, AND A PORTION OF LOT 8 ALONG WER LOTS 9 FORMER 13 OF SCOFFS ADDITION TO SANTA MONICA AS PER MAP RECORDED IN BOO( J PAGES 58 ANN 59 OF MISCELLANEOUS RECORDS. RECORDS BE LOS ANGELES COUNTY. FOR CONDOMINIUM PURPOSES AS HEREBY STATE MAT WE ARE THE OWNERS OF OR ARE INTERESTED IN SHE LANDS INCWOEO WITHIN ME SUBDMSION SHOWN ON THIS MAP WITHIN THE DISRNCTVE BORDER ONES, AND WE CONSENT TO ME PREPARATION AND FILING OF SAID MAP AND AWDIMCGO. WE HEREBY DEDICATE TO ME PUBLIC USE ALL STREETS. HIGHWAYS, ME OMER PUBLIC WAYS BOOM ON SAID MAP NTMIN SAID SUBOIVAPON_ ME CITY Of SANTA MONICA. A MUNICIPAL CORPORATOR, OWNER NAME TTIE NOTARY ACKNOWLEDGMENP SIAIE CF CAUFORNIA ) SPIFFY CF YE. A NOTARY PUNUA. ttRSABALEY APPELAEO AND FROM➢10 NE CN IME CARS Of SAFSF NAl EVINGNE TO BE BIF PFRNGA A XHME NANE(N) B /ARE NAAR BEO TO ME FOUR UIHFIBIIT NN ALIVIUMFM£0 TO YE THAT NE/5NE /THEY EMENTW ENE SANE W NIS /BEN /TNDR AURNMF CMAOEY(ICS). AND MAT BY HGAM /MDR S URRAIE(S) 011 THE INSIRUMONT. THE PERSIAN) IA ME ENmY FORT DEHAIF OF RM01 ME PERSQ4(S) ... EFECURO ME INS FEACD. I FLOPPY VRAM PENALTY OF PENJJRY UNDER THE TAWS BE T2 STATE BE CALIFORNIA MAT RTE PAREGRIM PoTAGRAAT IS RAE AND FACKOL XUBUSS MT RAN.. 9RTATURE NUM. NAME YY PRWOPN PLME BE DV911ESS IS W YY CONYISAGT N0. YY SIRGIGTO AXPAN CONDOMINIUM NOTE; THIS TRACT IS APPROVED AS A COTUOMIIIIUM PROJECT FOR 65 RESIDENTIAL UNITS AND 3 COMMERCIAL UNITS NOBODY WE OWNERS BE ME UNITS OF AIR SPACE WILL HOLD AN UNONOEO INTEREST IN ME COMMON AREAS MAT RILL, IN RAN, PROVIDE ME NECESSARY ACCESS AND UPCTY EASEMENTS FOR THE TONS. I HEREBY CERTIFY MAT ALL CERTIFICATES HAVE BEEN FILED AND OEPOSTS HAVE BEEN MADE MAT ARE REQUIRED UNDER ME PROVSIONS OF SECTIONS 66492 AND 66493 OF ME SUBDMSION MAP ACT. EXECUTIVE OFFICER, BOARD OF SVPERMONG OF ME COUNTY BE LOS ANGELES, STATE OF CALIFORNIA BY DATE I HEREBY CHATTY MAT SECURITY IN ME AMOUNT OF f HAS BEEN FILED VON ME EXECUTVE OFFICER, BOARD OF SVPERNSORS OF ME MONTY OF LOS ANGELES AS SECURITY FOR ME PAYMENT OF TAXES AND SPECIAL ASSESSMENTS COLLECTED AS TAXES ON THE LAND SHOW ON MAP OF TRACT NO. 69828 AS REWIRED BY LAW. EXECUTIVE OFFICER, BOARD OF SUPERVISORS OF ME COUNTY OF LOS ANGELES, STATE O CALIFORNIA OR'S STATEME THIS MAP WAS PREPARED BY ME ON UNDER MY DIRECTION AND IS BASED UPON A FIELD SURVEY IN CONFgNMANCE WLTH THE REQUIREMENTS OF THE WBDINSION MAP ACT ANT LOCAL ORDINANCE AT THE FEWEST OF ME REDEVELOPMENT AGENCY OF ME CITY OF SANTA MONICA IN FEBRUARY 2007. 1 HEREBY STATE MAT THIS MAP REPRESENTS A TRUE AND COMPLETE SURVEY MADE BY ME OR UNDER MY DIRECl10N IN FEBRUARY 2007; MAT MIS FINAL MAP SUBSTANTIALLY CONFORMS TO ME CONDITIONALLY APPROVED TENTATIVE MAP; MAT ALL MONUMENTS ARE OF ME CHARACTER AND LOCATIONS SHORN HEREON ME IN PLACE; THAT SAID MUMBLING ME SUFFICIENT TO ENABLE ME SURVEY TO BE RETRACED; MAT BOUNDARY MONUMENTS SHOWN AS "SET" ARE IN PEACE. AND MAT BE NOTES TO ALL CENTERLINE MONUMENTS SHOWN AS 'SET' ARE M FILE IN ME OFFICE OF ME CITY ENGINEER. Olv!JERRY L, USELTON. L.£ 5347 LOSTRE EXPIRES I2 /3I /ll nHT pA FN GMLp4 BASIS OF BEARINGS: ME BEARINGS SHOWN HEREON ARE BASED DO ME BEARING OF NORM 44'I B'56' M£SY ON ME CENTERLINE OF MAIN STREET AS SHOWN ON RECORD OF SURVEY, FILED IN BOGY( 112, PAW 45, OF RECORDS M SURVEY RECORDS OF SAT SNUFFY. I HEREBY CERTIFY MAT I HAVE EXAMINED ME MAP; THE WBDINSION AS SHORN IS SUBSTANTIALLY ME SAME AS IT APPEARED ON ME TENTATIVE MAP AND ANY APPROVED ALTERATIONS THEREOF AND ALL PROVISIONS OF CHAPTER 2 OF ME STATE SUBDIVISION MAP ACT AND ME CITY OF SANTA MONICA'S SUBDIVISION ORDINANCE APPLICABLE AT ME TIME OF APPROVAL OF ME TENTATIVE MAP HAVE BEEN COMPDFO MR. eqz! CITY ENGINEER. CITY M $WNTA MONICA OAIE LEON SWAIN. RI NO. 043030 FUSES 3 1_2012 CITY CLERK'S CERTIFICATE I HEREBY CERTIFY MAT ME CITY COUNCIL OF ME CITY OF SANTA MONICA, BY RESOLUTION NO. C.C.S. AT A MEETING HELD ON 200_. MONOMER ME ATTACHED SUEDUARCT MAP, BAR ACCEPTED INN BEHALF OF ME PUBLIC. THE STREETS. HIGHWAYS, AND EWER PUBLIC WAYS DEDICATED ON SAID MAP. SUBJECT TO ME CONDITION MAT ALL LAWS LEGALLY APPLICABLE TO NAT SUBOMSION MAPS ARE TO BE COMPLIED MHL DATE CITY CLERK OF ME CITY CP SANTA MONICA I HEREBY CERTIFY MAT ALL SPECIAL ASSESSMENTS LENED UNDER ME JURISDICTION BE FLY TY OF SAMA MONICA, 10 WHICH ME LAND INCLUDED IN WE WHIN SUBDIBSICW ON ANY PART THEREOF IS SUBJECT AND WHICH MAY BE PAID IN FULL, HAVE BEEN PAR IN FUN_ DATE CITY TREASURER OF ME .1 CE SANTA MONICA REVENUE CITY BUSINESS & CITY OF SANTA MONICA. A MUNICIPAL CORPORATOR, IS A LIEN CLAIMANT UNDER AGREEMENT RECORDED A3 INSTRUMENT NO. . OF OFEIOAL RECORDS, RECORDS OF LOS ANGELES COUNTY. DATE BUSINESS & REVENUE OPERATIONS MANAGER DUSNESS & REVENUE OPERATIONS DRAWN CITY OF SANTA MONICA COUNTY ENGINEER'S CERTIFICATE I HEREBY CERTIFY MAT 1 HAVE EXAMINED MIS MAP; MAT IT COMPLIES WHO ALL PROVISIONS OF STATE LAW APPLICABLE AT ME TIME CF APPROVAL OF ME NNTATVE MAP: AND MAT I AM S UISREO MAT MIS MAP IS TECHNICALLY CORRECT IN ALL RESPECTS NOT CERGEDO BY ME CITY ENGINEER. COUNTY ENGINEER BY DATE DENNIS F. HUNTER, DEPUTY L NR NO. 8539 EXPIRES 12/31/2012 ABANDONMENT NOTE: I HEREBY CERTIFY PURSUANT TO SECOND 66434 G OF ME SUBDIVSION LEAP ACT, JUL RUNG OF MIS TRACT MAP CONSUMES ABAND N ENT OF THOSE EASEMENTS ACQUIRED BY ME Cltt Of SANTA MONICA AS FOLLOWS FIRST COURT ON SCOTTS ADDITION TO SANTA MONICA AS PER MAP RECORDED IN BOOK 7 PAGES 56 AND 59. MISCELLANEOUS RECORDS. AN EASEMENT RECORDED MAY 6, 1940, AS INSTRUMENT NO. 1344 IN BOON 17489 PAGE 151 IN OFFICIAL RECORDS. NOT SHORN ON MIS MAP DATE CITY CLERK OF ME CITY OF SANTA MONICA SCALE 1' = 100' SURVEYOR'S PAS - III. wCE. MAP �s - wolum RECwG a sua6EV Boon DI., xlarF OUl REWRDs � M - INGIGiS STY ON. A. S. TO I. ` INGIGRS PLBUC WpNS NN U. OR - IMIIGIES SFO G.,'El. NDMMG. BOUNDARY NOTE: T.A RIS, Ld:LWSIYE REPFF9.'A N ME NRTBRIru SO PEARFS Gr CYC LDIS Wniw SSW, WpnW TO SANTA MENI4 AN ] /MB-5S AND TAG, NO LSn, uR te/0915 I. 21x/45 TO BE LOCATED IN ALMOST IDENTICAL INTONE AS WANN W RESS I WAS. ON ,SGI MR, TO... I,,E REMAINING MOPYINSEPTA"ON INS BOB BUSHMMi OE MS WIS'MTIIN SAD WAER INS NAPE ON MIS WP HOUSING RECOED SIBUNLES AM 1. TWA£ tFGEND . - INOIPAIES THE BOENO.UY 6 ME LAND SEINE NBEIMPEO BY THIS MAP. MONUMENT NOTE: Oi ET z' P. SOMENi PLUG TO. k TnI'LS SMr. O SET .1 TAIX k TAO 1 SMr. O SET GAME d WASHER STAMINGEL S SJaY. TRACT NO. 69828 IN THE CITY OF SANTA MONICA. COUNTY OF LOS ANGELES STATE OF CALIFORNIA SHEET 2 OF 3 SHEETS FOR CONDOMINIUM PURPOSES `_ - - - -_P _ ____r snI, xo TAC. BOUNDARY SHEET p. ER N. 11M. I s SEE SHEET 1 FOR BASIS OF BEARINGS. Fl�lxs saDUiT TIIER CDUFr 1ptMG1.11 NNE Or Y SEE SHEET 3 FOR DETAILS AND EASEMENTS 4 G, 1R ]/5 ro RN, A.INNI5NTILN erw __ `Pm am,5wa5._ LOT dxB)ar SFN r-- - - - - - - - - - - - - - - - - u.G CFNT �.- v NN'16Y'W 1136.86' B DFTAII L_ _07 ttl SLAIE MAIN a wTe16,M, STREET ami) s B'S8'W .0l IT. . Lnr W/TAG Ls vo4 MI 114,11 Awso i ar''DSURVOErsr. "B AZ S vU4gsu'w 3 0. -- -sa'n' Wm I inizeL° REMAINDER p'G = CA Ep PARCEL I ° r LAG GEG US G'14.. REF, ACS' xn m P.1 CGLRT AND j1Y' F� Of ME A"' UN' Wi 5 Z 1D' U l a�go AD7II OX N SANiA EASY, MR ]/SB -Sp. .S PD x r Ol TAE Is Ol A, xG RP. AGENT M2 Itii. Gr ME a or nRSr coLRT n LU I = b' Wy+ PRp1pxCOnON DP ME xwLr uN5 LOT s e,+ AODInGN TO SANTA I. Q ]`° D . / pEF AM NO TAG. 3 /a5 SIE (9b14 W ,� GO p 40 C AAA J 9 ] O I SiN ` NMTBIOD'W 0.00' OCC $ OCEAN 55�r �(cn'A. BUGDETAIL HT, i CT65a TIESA AR s f4 /S5B' EST BY mIE ,IN, RTS RELEAD GI9r. (577111 ACCEP. As Ch Ixr. m. EE INr, WLONIOO uto 6EW PEB RSH Nx/45. sEr 54W SrAtaEG LS .1 1G.Ox tG.Po' BB.BB -- k - 1.50 AD NO TAG, PW@H. 112144 e$iNSO e$ ALBEPRU As ME LIT. Gr ME EL Gr $e m LZI,TPULE sOUM AXO MElY UxE GIOTTO ' GmDETAIL 8 SCALE f = RO SCALE I' x 0ou IS SANTA, vowwe -sMB. DETAIL C IN _________ ______________! ' I � -------- L_____ STAmt }is as FN T I YR ni Nx NS .I )Pa 't O -D NAIL W/WASHER uE`s m sm¢T. Fn. Prc NM1L x TAC. _ Tr oP sANTA M PR NAIL XD iPG. I MGM. NAM. T6CV vWiB 1 III, NO N T/'iB'E 0.08' t \, 0 LCCG PWFEI 111V Nt. ON ___ -_ Ax PTrn ASOS. )).t0' S5.)I' 1 AS., 0? ° CE IEPUNE PICG BGJ4EVAR0. 1 aC190p W 1BBa95 °ALA B e OCEANN AVENUE Ftc/, ]° MAIN STREET b 1 DETAIL A _: 1 U ID. Lk) W/ TAG'L£ SAW 1 "A\ m NOT TO sGLE o PEB 1. Pms tlonwoal,l 11 •_________________________ 1� .. Y, ACOPTED AS CENTEROME IMi a P1rA/NUN. ab N. SSW sl',MPEP'IS s5er PER u GO D 1PH• A6 PTED AS.1. FD A, D TAIL D I I - / ODITEwJNE MAIN SWF£T. r I $GELS I' 10' B- S85Tt6' k.x00 p�a� N)TA PART OF THIS SUBDIVISION FAST 1 ONE Lr PAMEL GESGRIGE) IN mI.N. Atl4 AS LET. 14 W- 055)416 ESIA6USRED RR "IS DFE 1ptMG1.11 NNE Or Y 4 G, 1R ]/5 ro RN, A.INNI5NTILN SCIANGo OIGAIiw LOT 16 /A 6EE e°: 0 ]1! ON B.F. BE£SiEEfO NOT ]B a• PoH DEfNIB FIRST C URT 2GS58� . A Saay TME IAT` DP TIM zzTas' W qOr FIR5$i fgUBY AND THE '�'° ' aoLOUGnhON GS ME SSix �romq+m uxu flu NOTA PART OF^"T-e' o�I oi,GMUA, TTa'uuu�$� AS SSa.BO' RG T m GE Z 1 S)Ilx /45. i AM As M sty GER' sGT MS ANIM A.,— UNLu NR ]/SB -59 SUBDIVISION . " TIE SElY TO n_ BLALML, AN 'A' B i0 n .RG GOT. I®lIC /15. 1 I MANY UNE LOT NOT APART ua le/BS OF THIS S AVENUE O 0: I¢Iw O �II] A' BENAGS Dsr. tul.s11. a INT. Ed...�PPXEI ii`STIDW: S-.7A %ON.. SCALE 1" . 50' LEGEND INDICATES THE BOUNDARY OF l E LANG BEING SUBOROM BY WIS MAP Rr Q aMAIN x.nes3 w ...me^n PL° TRACT NO. 69828 IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. FOR CONDOMINIUM PURPOSES Q REST SHEET 3 OF 3 SHEETS DETAIL AND EASEMENT SHEET SEE SHEET 1 FOR BASIS OF BEARINGS. SEE SHEET 2 FOR BOUNDARY, MONUMENTS AND SURVEYOR'S NOTES. MONUMENT NOTE 6ET Y I.P. CDKExi xua. m .AC'LS mn•. O SET LEM. iPLN C 7A4'L& 3 N7'. �f]� O DO, SMNE k .'5 . GTA -DC 'l5 3 %]'. `\ EASEMENT NOTE: b0 Q zmCC...T. GF.. wavosc `� = I D OF LOT C OT1 40.566 S.F. °n OCEAN DETAILOF LOT 2 78.266 S.F. GROSS D 11]28S.F.NET 1u1e3] w+a3S]Y 36.16" 2 W '° p 'IR I Y1 +g + 36.16' 11W + -------- �iswss.m� -- AVENUE R xuie�oow eeau�_____ I LI � � 1 I Q ' I � W J J C e m n Ss O Z' sv EXHIBIT B LEGAL DESCRIPTION OF PARCEL A TRACT NO, 69822 IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. BEING A SUBDIVISION OF A PORTION OF LOT NO. 41 OF THE RANCHO SAN VICENTE Y SANTA MONICA AS PER MAP RECORDED IN BOOK 3 PAGES 30 AND 31 OF PATENTS, A PORTION OF LOT 18 OF SCOTT S ADDITION TO SANTA MONICA AS PER MAP RECORDED IN BOOK 7 PAGES 58 AND 59 OF MISCELLANEOUS RECORDS, AND LOT 7 AND A PORTION OF LOT 13 OF TRACT NO. 1347 AS PER MAP RECORDED IN BOOK 18 PAGE 89 OF MAPS, IN TFIE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. TRS\30601.0002 \405060. l EXHIBIT C FORM OF ASSIGNMENT OF LEASE JRS \30e01.0002\4050e0.1 ASSIGNMENT OF LEASE TO HOA THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment ") is made as of 20_ by and between [RELATED ENTITY] ( "Assignor"), and [INSERT NAME OF HOMEOWNER'S ASSOCIATION] ( "Assignee "). RECITALS A. Assignor is the "Lessee" under that certain Parcel [] Ground Lease by and between ( "Parcel [J Lease ") entered into by and between the City of Santa Monica (the "City") and the Assignor on 120 which document is a record on file in the offices of the City Clerk of the City of Santa Monica. A Memorandum of the Parcel [I Lease was filed on [insert date], in the Office of Los Angeles County Registrar- Recorder /County Clerk as Document No. .The Parcel [] Lease is incorporated herein by this reference as though fully set forth herein. Parcel [] Lease as used herein shall mean, refer to and include the Parcel [] Lease, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the Parcel [] Lease, including but not limited to the Disposition and Development Agreement ("DDA ") entered into by and between the Redevelopment Agency of the City of Santa Monica ( "Agency ") and Related/Santa Monica Village, LLC ( "Related/Santa Monica ") dated June 10, 2008, as amended by that Fast Amendment to Disposition and Development Agreement dated July 1, 2010, as amended by that Second Amendment to Disposition and Development Agreement, dated 1 2011 (collectively referenced herein as "the DDA" ), which documents are public records on file in the offices of the City Clerk of the City of Santa Monica, and that certain Assignment and Assumption Agreement, dated , whereby Related/Santa Monica assigned certain rights and obligations to Assignor. Any capitalized term not otherwise defined herein shall have the meaning ascribed to it in the Parcel [] Lease. B. Pursuant to the Parcel [] Lease, Assignor has the right and desires to assign certain rights and obligations as "Lessee" under the Parcel H Lease (the "Assigned Rights and Obligations ") to Assignee, and Assignee desires to assume the Assigned Rights and Obligations, upon and subject to the conditions stated herein. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Assignor and Assignee hereby agree as follows 1. Assi ent. Effective as of the date of this Assignment, which shall occur concurrently with the full execution of this Assignment by the Assignor, Assignee, and Agency, but no sooner than the Release of Construction Covenants is issued from the Agency, Assignor hereby assigns all of the Assigned Rights and Obligations to Assignee. The foregoing assignment shall not affect Assignor's obligations under (collectively, "Ongoing Obligations ") (i) the Environmental Indemnity Agreement (attached to the DDA as Attachment No. 15), (ii) the Participation Agreement (attached to the DDA as Attachment Nos. 19 and 19A), (iii) Completion of the Development on the Site, in accordance with the DDA, including all obligations set forth under Sections 300 — 314 of the DDA, excepting therefrom any obligation to operate Parcel A after the date of this Assignment. 2. Acceptance and Assumption. Assignee hereby accepts the assignment of the Assigned Rights and Obligations from Assignor and assumes all of the Assigned Rights and Obligations arising from Exhibit C - EXecuton Final Exhibit C Page 1 of 3 and after the date of this Assignment. Assignee agrees to perform all of the Assignee's Obligations in accordance with the Parcel [] Lease. 3. Reservation of Subleases. Assignor reserves the right to assign or convey the Subleases, subject to and in accordance with the Parcel [] Lease. 4. Assignee Address. The principal address of Assignee for purposes of the Parcel [] Lease is as follows: 5. Miscellaneous. (a) This Assignment shall be determined in accordance with and governed by the laws of the State of California. (b) This Assignment may be executed in counterparts, each of which shall be deemed an original and which, when taken together, shall constitute a complete instrument. (c) Each party agrees to perform any further acts, and to execute and deliver any further documents that may be reasonably necessary or required to carry out the intent and provisions of this Assignment and the transactions contemplated hereby. (d) This Assignment shall bind and inure to the benefit of the respective heirs, personal representatives, grantees, successors and assigns of the parties hereto. IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be signed by their duly authorized officers as of the day and year first written above. ASSIGNOR: ASSIGNEE: a California limited liability company By: By: Name: Title: C Exhibit C - Execution Final Exhibit C Page 2 of 3 Name: Title: CONSENT TO ASSIGNMENT AND ASSUMPTION In reliance upon the assumption by , as Assignee, of all Rights and Obligations pursuant to the foregoing Assignment and Assumption Agreement, the CITY OF SANTA MONICA, as successor in interest to the Agency, does hereby consent to and approve of the assignment of the Assigned Rights and Obligations by [RELATED entity] to Assignee. Approval thereof by the Agency shall release Assignor as to the Assigned Rights and Obligations, but shall not be construed to relieve or release [RELATED entity] with regard to the Ongoing Obligations. Dated: TIM CITY OF SANTA MONICA C Gould, City Manager ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney C Marsha J. Mouaie APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Special Counsel Susan Y. Cola DMit C - Execution Final - Exhibit C Page 3 of 3 EXHIBIT E PARCEL B GROUND LEASE [BEHIND THIS PAGE] TABLE OF CONTENTS Contract Number 8936 (RAS) Page [§ 100] SUBJECT OF GROUND LEASE ...................................................... ............................... 1 [§ 101] Purpose of the Lease .......................................................... ............................... 1 [§ 102] The Redevelopment Plan ................................................... ............................... 1 [§ 103] The Redevelopment Project Area ...................................... ............................... 2 [§ 104] Parcel B .............................................................................. ............................... 2 [§ 105] The Improvements ............................................................. ............................... 3 [§ 106] Condition of Parcel B ......................................................... ............................... 3 [§ 106.11 Hazardous Substances ............................................ .......................... .I.... 3 [§ 106.2] Suitability of Parcel B ............................................ ............................... 4 [§ 107] Parties to the Lease ............................................................ ............................... 5 [§ 108] City ..................................................................................... ............................... 5 [§ 109] Lessee ................................................................................. ............................... 5 [§ 200] LEASE OF PARCEL B ...................................................................... ............................... 6 [ §201] Lease ................................................................................... ..............................6 [§ 202] Term of the Lease .............................................................. ............................... 6 [§ 300] RENT .................................................................................................. ............................... 6 [§ 3011 Definitions .......................................................................... ............................... 6 [§ 302] Ground Rent ....................................................................... ............................... 7 [§ 303] Base Rent ........................................................................... ............................... 7 [§ 3041 Additional Rent .................................................................. ............................... 7 [§ 305] Net Lease ............................:.............................................. ............................... 7 [§ 306] Non Subordination ............................................................. ............................... 7 [§ 307] Delinquency In Rental Payment ........................................ ............................... 7 [§ 400] DEVELOPMENT OF PARCEL B ..................................................... ............................... 8 [§ 401] Scope of Development, Plans, Drawings and Specifications ........................... 8 [§ 402] No Construction Before Notice ......................................... ............................... 8 403 Notice of Non Responsibility 8 [§ 404] Mechanic's, Materialman's, Contractor's or Subcontractor's Liens ................ 8 [§ 405] Rights of Access ................................................................ ............................... 9 [§ 4061 Local, State and Federal Laws ........................................... ............................... 9 [§ 407] Nondiscrimination During Construction .......................... ............................... 11 [§ 500] USE OF PARCEL B AND IMPROVEMENTS ............................... ............................... 11 [§ 501] Use of Parcel B and Improvements ................................. ............................... 11 [§ 502] Limitations on Use of Parcel B ........................................ ............................... 12 [§ 5031 Maintenance ..................................................................... ............................... 13 [§ 504] Management of Parcel B and Improvements ................... ............................... 14 [§ 505] Obligation to Refrain from Discrimination ...................... ............................... 16 SantaMonica\rhe village\ Attachment No. 11B DDA documents \Parcel B Lease At. 1113. Execution v. Final Page 1 of iv Contract Number 8936 (RAS) [§ 506] Form of Nondiscrimination and Nonsegregation Clauses .............................. 16 [§ 5071 Quiet Enjoyment .............................................................. .....................:......... 17 [§ 600] TAXES, ASSESSMENTS AND OTHER CHARGES ..... ............................... [§ 6011 Utilities .............................................................. ............................... [§ 602] Impositions (Including Taxes and Assessments ) ............................. [§ 603] Payment Generally ............................................ ............................... [§ 604] Payment of Impositions in Installments ............ ............................... [§ 6051 City Right to Cure ............................................. ............................... [§ 606] Tax Receipts ...................................................... ............................... [§ 607] Tax Liability ...................................................... ............................... [§ 608] Contests ............................................................. ............................... [§ 6091 Notice of Possessory Interest; Payment of Taxes and Assessments 23 on Value of Entire Property .............................. ............................... 10 "+L L' .............. 17 .............. 17 ............... 18 I .............. 18 ............... 18 ............... 19 ............... 19 .I ............. 19 ............... 20 [§ 6 ] t er rens ............................................................. ............................... ....... 20 ....... 21 [§ 7001 OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS ........................ 21 [§ 701] Ownership During Term and at Termination ................... ............................... 21 [§ 7021 Removal of Fixtures and Furnishings at Termination ..... ............................... 22 [§ 703] Maintenance and Repair of Improvements ...................... ............................... 22 [§ 704] Waste ................................................................................ ............................... 23 [§ 7051 Alteration of Improvements ............................................. ............................... 23 [§ 7061 Damage to or Destruction of Improvements .................... ............................... 23 1. [§ 707] Lessee to Give Notice ........................................ ............................... 23 2. [§ 708] Restoration ......................................................... ............................... 23 [§ 709] Application of Insurance Proceeds .................................. ............................... 24 [§ 710] Damage or Destruction During Final Years of Term ...... ............................... 26 [§ 711] Faithful Performance and Labor and Material (Payment) Bonds; Indemnification; Nomesponsibility Notices .................... ............................... 26 [§ 800] ASSIGNMENT, SUBLETTING, TRANSFER .............................. ............................... 27 [§ 801] Warranty Against Speculation ......................................... ............................... 27 [§ 802] Prohibition Against Transfer ............................................ ............................... 27 [§ 803] Investigation of Proposed Transferee; Costs ................... ............................... 30 [§ 8041 Release of Construction Covenants ................................. ............................... 32 [§ 900] MORTGAGES .................................................................................. ............................... 32 [§ 9011 Leasehold Permitted Mortgages ...................................... ............................... 32 [§ 902] Rights and Obligations of Leasehold Permitted Mortgagees ......................... 34 [§ 903] City's Forbearance and Right to Cure Defaults on Leasehold Permitted Mortgages........................................................................ ................:.............. 36 [§ 904] Notice .............................................................................. ............................... 36 [§ 905] Forbearance by City ......................................................... ............................... 37 Santa MonicaWhe Village\ DDA documents \Parcel B Lease At. 11 B. Attachment No. I IB Execution v. Final Page ii of iv Contract Number 8936 (RAS) [§ 1200] DEFAULTS, REMEDIES AND TERMINATION ...... ............................... [§ 1201] Defaults General .............................................. ............................... [§ 1202] Legal Actions ................................................... ............................... 1. [§ 1203] Institution of Legal Actions ............. ............................... 2. [§ 1204] Applicable Law ............................... ............................... 3. [§ 1205] Acceptance of Service of Process ... ............................... 4. [§ 12061 Attorneys' Fees and Court Costs ..... ............................... [§ 1207] Rights and Remedies are Cumulative .............. ............................... [§ 1208] Damages .......................................................... ............................... [§ 1209] Specific Performance ....................................... ............................... [§ 1210] Additional Remedies of City ........................... ............................... [§ 12111 Rights of Termination ..................................... ............................... [§ 1212] Cross- Default —Among Parcels ...................... ............................... [§1212.1] Cross-Default— Among Parcels — Concurrent Financing of Parcels A and B only .................. ............................... [§ 1212.2] Cross- Default — Among Parcels — Concurrent Financing of Parcels A, B and C ....................... ............................... Santa Monica \The Village\ DDA documents \Parcel B Lease At, 1113. Attachment No. 11 B Execution v. Final Page 111 of iv ................ 46 ................ 46 ................ 47 ................ 47 ................ 47 ................ 47 ................ 47 ................ 47 ................ 48 ................ 48 ................ 48 ................ 49 ................ 52 ................ 52 ................. 52 [§905.1] Conditions Precedent to Permitted Mortgagee Rights and City Forbearance ...................................... .............................38 [§ 906] Performance on Behalf of Lessee .................................... ............................... 38 [§ 907] Nonmerger ......................................................................... .............................38 [§ 908] City Cooperation .............................................................. ............................... 39 [§ 909] Enforceabil ity ................................................................... ............................... 39 [§ 9101 No Subordination of City's Interests ............................... ............................... 39 [§ 911] Obligations of Mortgagee Upon Acquisition of Leasehold Estate ................. 39 [§ 912] City's Rights Against Prior Lessees ...................................... ............................... 40 [§ 913] Reserved ........................................................................... ............................... 40 [§1000] INDEMNIFICATION AND INSURANCE ................................. ............................... 40 [§ 1001] Indemnification .................................................................. .............................40 [§ 1002] Required Insurance .......................................................... ............................... 41 [§ 1003] Definition of "Full Insurable Value" ............................... ............................... 42 [§ 10041 General Insurance Provisions .......................................... ............................... 42 [§ 1005] Failure to Maintain Insurance .......................................... ............................... 43 [§ 1006] Disposition of Insurance Proceeds Resulting from Loss or Damage to Improvements.................................................................. ............................... 43 [§ 1100] EMINENT DOMAIN ................................................................... ............................... 44 [§1101] Lessee to Give Notice ...................................................... ............................... 44 [§ 1102] Total Taking ..................................................................... ............................... 44 [§1103] Partial Taking ................................................................... ............................... 45 [§1104] Application of Awards and Other Payments ................... ............................... 45 [§ 1200] DEFAULTS, REMEDIES AND TERMINATION ...... ............................... [§ 1201] Defaults General .............................................. ............................... [§ 1202] Legal Actions ................................................... ............................... 1. [§ 1203] Institution of Legal Actions ............. ............................... 2. [§ 1204] Applicable Law ............................... ............................... 3. [§ 1205] Acceptance of Service of Process ... ............................... 4. [§ 12061 Attorneys' Fees and Court Costs ..... ............................... [§ 1207] Rights and Remedies are Cumulative .............. ............................... [§ 1208] Damages .......................................................... ............................... [§ 1209] Specific Performance ....................................... ............................... [§ 1210] Additional Remedies of City ........................... ............................... [§ 12111 Rights of Termination ..................................... ............................... [§ 1212] Cross- Default —Among Parcels ...................... ............................... [§1212.1] Cross-Default— Among Parcels — Concurrent Financing of Parcels A and B only .................. ............................... [§ 1212.2] Cross- Default — Among Parcels — Concurrent Financing of Parcels A, B and C ....................... ............................... Santa Monica \The Village\ DDA documents \Parcel B Lease At, 1113. Attachment No. 11 B Execution v. Final Page 111 of iv ................ 46 ................ 46 ................ 47 ................ 47 ................ 47 ................ 47 ................ 47 ................ 47 ................ 48 ................ 48 ................ 48 ................ 49 ................ 52 ................ 52 ................. 52 Contract Number 8936 (RAS) [§ 1300] GENERAL PROVISIONS ............................................................ ............................... 53 [§ 1301] Notices, Demands and Communications between the Parties ........................ 53 [§ 1302] Time of Essence ............................................................... ............................... 53 [§ 13031 Conflict of Interests .......................................................... ............................... 53 [§ 1304] Nonliability of City Officials and Employees ................. ............................... 53 [§ 1305] Inspection of Books and Records .................................... ............................... 53 [§ 1306] No Partnership ................................................................. ............................... 54 [§ 13071 Compliance with Law ...................................................... ............................... 54 [§ 1308] Surrender of Property ....................................................... ............................... 54 1309 Severabilit 54 [§ 1310] Binding Effect .................................................................. ............................... 54 1311 Assignment or Sublease to City 54 [§ 1312] Captions ........................................................................... ............................... 55 [§ 1313] No Recording of this Lease ........................................... :................................. 55 [§ 13141 Enforced Delay in Performance for Causes Beyond Control of Party ........... 55 [§ 1315] Entire Agreement, Waivers and Amendments ................. ............................... 55 [§ 1316] Off -Set Statement, Attornment and Subordination .......... ............................... 56 [§ 1317] Notice to Partnership and Limited Partner ....................... ............................... 57 [§ 1318] Approvals ......................................................................... ............................... 57 EXHIBITS EXHIBIT A - MAP OF PARCEL B EXHIBIT B - LEGAL DESCRIPTION OF PARCEL B Santa Monica \The Village\ Attachment No. 11 B DDA documents \Parcel B Lease At. 11B. Execution v. Final Page iv of iv Contract Number 8936 (RAS) ATTACHMENT 11 B GROUND LEASE This Ground Lease (this "Lease ") dated as of 2008 ( "Effective Date ") is entered into by and between the CITY OF SANTA MONICA ( "City "), as assignee to the REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA ( "Agency ") pursuant to that certain Assignment and Assumption Agreement, dated March 8, 2011, and SANTA MONICA HOUSING PARTNERS, L.P., a California limited partnership ( "Lessee "). [§ 100] SUBJECT OF GROUND LEASE [§ 101] Purpose of the Lease The City is the owner of certain real property (the "Site ") located within the Village Special Use District ( "District ") in the City of Santa Monica, California. The District is located west of Main Street, east of Ocean Avenue, north of Pico Boulevard and south of the future extension of Olympic Drive from Main Street to Ocean Avenue. The District includes the newly built RAND Corporation headquarters, the Viceroy Hotel, a private office building at 1733 Ocean Boulevard, and the proposed "Site," which is comprised of approximately three acres. The Site has been subdivided into three parcels, individually referenced herein as "Parcel A" (Lot 1 of Tract 69828); "Parcel B" (Lot 2 of Tract 69828); and "Parcel C" (Lot 1 of Tract 66228). The purpose of this Lease is to effectuate the Redevelopment Plan for the Earthquake Recovery Redevelopment Project ("Redevelopment Plan ") by providing for the redevelopment of the Site with a mixed retail commercial and residential housing development on the hereinafter defined Site ( "Improvements" or "Project") in accordance with the terms and conditions of this Lease. The lease of Parcel B and the development and operation of the Improvements, and the fulfillment generally of this Lease, are in the vital and best interests of the City of Santa Monica ( "City ") and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. [§ 102] The Redevelopment Plan This Lease is made in accordance with and subject to (a) the Redevelopment Plan, which was approved and adopted by Ordinance No. 1747 (CCS), as amended from time to time by the City Council of the City, and (b) the Disposition and Development Agreement entered into by and between Agency and Related/Santa Monica Village, LLC ( "Developer ") on June 10, 2008, as amended by that First Amendment to Disposition and Development Agreement dated as of July 1, 2008, and that Second Amendment to Disposition and Development Agreement dated as of [insert date], 2011 (collectively referenced herein as "the Agreement "), which governs the terms and conditions for development and use of the Site. The Site was transferred by the Santa Monica \The Village\ Attachment No. 1113 DDA documents) Parcel B Lease At. 1113 Page 1 of 58 .Execution v.Pinal g Contract Number 8936 (RAS) Agency to the City on March 9, 2011, and the Agency's rights under the Agreement were assigned to the City, in accordance with that certain Assignment and Assumption Agreement, dated March 8, 2011, which assignment was consented to by Developer. Except as specifically provided for in the Agreement, nothing in this Lease shall be deemed to modify or limit the rights of either the City or Lessee under the provisions of the Agreement. The Agreement is incorporated herein by this reference as though fully set forth herein. The term "Agreement' as used herein shall mean, refer to and include the Agreement, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the Agreement. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. Any amendments hereafter to the Redevelopment Plan (as so approved and amended) which change the uses or development permitted on Parcel B as provided in this Lease, or otherwise change the restrictions or controls that apply to Parcel B, shall not apply to Lessee, or any Permitted Mortgagee who has registered its name and address in writing with City (or any party that acquires an interest therefrom), without the prior written consent of Lessee and any existing Permitted Mortgagee who has registered its name and address in writing with City. No other amendments to the Redevelopment Plan shall require the consent of Lessee or Permitted Mortgagee. Developer has also entered into that certain Development Agreement by and between the City of Santa Monica and Related /Santa Monica Village, LLC for the Village at Santa Monica, dated , 2008 for reference proposes (the "Development Agreement "), which, among other things, provides for the development of Parcel B by Lessee in conformity with the City's General Plan and Specific Plan. The development of Parcel B in accordance with the Development Agreement conforms to the Redevelopment Plan. Nothing in this Lease shall modify or limit the rights of either the City or Lessee under the provisions of the Development Agreement. [§ 103] The Redevelopment Project Area The Earthquake Recovery Redevelopment Project Area is located in the City. The exact boundaries of such Project Area are specifically and legally described in the Redevelopment Plan. [§ 104] Parcel B Parcel B is that certain real property within the Earthquake Recovery Redevelopment Project Area illustrated and designated as such on the "Map of Parcel B" (which is attached hereto and incorporated herein as Exhibit A) and having the legal description set forth in the "Legal Description of Parcel B" (which is attached hereto and incorporated herein as Exhibit B). City reserves to itself, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following: Santa Mmiica \The Village\ Attachment No. 11 B DDA documents\ Parcel B Lease At. 11B .Frecution v.Final Page 2 of $8 Contract Number 8936 (RAS) (a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from Parcel B or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of Parcel B, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of Parcel B in the exercise of such rights and, provided further, that the exercise of any such rights by City shall not result in any damage or injury to the Improvements constructed on Parcel B by Lessee, including without limitation any subsidence of all or any part of such Improvements; and (b) Subject to use by Lessee on Parcel B and in connection with the Improvements and subject to any use in connection with ownership, development and operation of the Improvements, any and all water, water rights or interests therein, no matter how acquired by City, together with the right and power to explore, drill, redrill, remove and store the same from Parcel B or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by City , whether such water rights shall be riparian, overlying, appropriative, percolating, littoral, prescriptive, adjudicated, statutory or contractual; but without, however, any right to enter on or through the surface or upper 500 feet of the subsurface of Parcel B in the exercise of such rights and, provided further, that the exercise of any such rights by City shall not result in any damage or injury to the Improvements constructed on Parcel B by Lessee, including without limitation any subsidence of all or any pail of such Improvements. [§ 105] The Improvements The term "Improvements" as used in this Lease shall mean the Improvements described in the Scope of Development, attached to the Agreement as Attachment No. 4, as well as any Improvements made or instructed in accordance with terms of this Lease. [§ 1061 . Condition of Parcel B [§ 106.11 Hazardous Substances a. "Hazardous Substance," as used in this Lease means any substance, material or waste which is or becomes regulated by the United States government, the State of California, or any local or other governmental authority, including, without limitation, any Santa Monica \The village\ Attachment No. 11 B DDA docuinents\ Panel u Lease At. r tE Page 3 of 58 .Execution v.Finat g Contract Number 8936 (RAS) material, substance or waste which is (i) defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste," or "extremely hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code; (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; rrr defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code; (v) petroleum; (vi) asbestos; (vii) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903); (xi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to public health and safety. "Hazardous Substances" do not include materials customarily used in the construction, development, operation or maintenance of real estate, provided such substances are used in accordance with all laws. b. Lessee hereby represents and warrants that the development, construction and uses of Parcel B permitted under this Lease (i) will comply with all applicable environmental laws; and (ii) do not require the presence of any Hazardous Substance on Parcel B in violation of any environmental law. [§ 106.2] Suitability of Parcel B a. Prior to the Close of Escrow for conveyance of the leasehold interest in Parcel B, Lessee shall have the right, at its sole cost and expense, to engage its own environmental consultant ( "Lessee's Environmental Consultant"), to make such investigations as Lessee deems necessary, including without limitation any "Phase 1" and/or "Phase 2" investigations of Parcel B or any portion thereof, and the City shall promptly be provided a copy of all reports and test results provided by Lessee's Environmental Consultant (the "Environmental Reports "). b. Parcel B shall be delivered from City to Lessee in an "as is" physical condition, with no warranty, express or implied by City as to the presence of Hazardous Substances, or the condition of the soil, its geology or the presence of known or unknown faults. If the condition of Parcel B is not in all respects entirely suitable for the use or uses to which Parcel B will be put, then it is the sole responsibility and obligation of Lessee to place Parcel B in all respects in a condition entirely suitable for the development thereof, solely at Lessee's expense. Santa Monica \The Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. 1 tB Page 4 of 58 .Execution v.Final g Contract Number 8936 (RAS) C. Lessee agrees to indemnify, defend and hold harmless Agency and City and their respective members, officers, agents, employees, contractors and consultants, in accordance with the Environmental Indemnity Agreement (Attachment No. 15 to the, Agreement). d. Lessee hereby waives, releases and discharges the Agency, the City, and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys' fees) arising out of or in any way connected with the City's or Lessee's use, maintenance, ownership or operation of Parcel B, any Hazardous Substances on Parcel B, or the existence of Hazardous Substances contamination in any state on Parcel B, however the Hazardous Substances came to be placed there, except that arising out of the gross negligence or willful misconduct of the City or its employees, officers or agents. Lessee acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." To the extent of the release set forth in this Section 106.2, Lessee hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. [§ 1071 Parties to the Lease [§ 1081 City "City" means the City of Santa Monica, a municipal corporation, and its assignees and/or successors to its rights, powers and responsibilities. The principal office of City is located at 1685 Main Street, Room 212, Santa Monica, CA 90401. Developer acknowledges and agrees that the City intends to fulfill its financial obligations under the Agreement and this Lease through certain funds received by the City from the Agency pursuant to certain Cooperation Agreements and Implementing Agreements entered into by and between the Agency and City, and not from any other sources, including, without limitation, the City's general funds, or any of the City's real or tangible assets (collectively, "City Funds "). Accordingly, nothing in the Agreement or this Lease shall require the City to expend or promise to expend monies from City Funds to satisfy all or any portion of the obligations set forth in the Agreement or this Lease. [§ 1091 Lessee Santa Monieffhe village\ Attachment No. 11B DDA documents\ Parcel B Lease At. 11B Page 5 of 58 .Execution v.Final g Contract Number 8936 (RAS) Lessee is: Santa Monica Housing Partners, L.P., a California limited partnership The principal office of Lessee is located at c/o The Related Companies of California, 18201 Von Karman Avenue, Suite 900, Irvine, CA 92612, Attention: Frank Cardone. Wherever the term "Lessee" is used herein, such term shall also include any permitted nominee or assignee of Related /Santa Monica Development Co, LLC. [§ 2001 LEASE OF PARCEL B [§ 2011 Lease For and in consideration of the rents, conditions, covenants and agreements set forth herein, City hereby leases Parcel B to Lessee and Lessee does hereby take and lease Parcel B from City. [§ 202] Term of the Lease The City shall convey Lessee a leasehold interest in Parcel B for a period of ninety -nine (99) years, commencing on Close of Escrow ( "Lease Term "). At the expiration or earlier termination of the Lease Term, Lessee shall execute, acknowledge and deliver to City, within thirty (30) days after written demand by City, a valid and recordable quitclaim deed as to Lessee's leasehold interest in Parcel B, free and clear of all liens and encumbrances. [§ 3001 RENT [§ 3011 Definitions For the purposes of this Lease, the following terms shall have the following respective meanings: "Consumer Price Index," as used herein, means the Consumer Price Index - All Urban Consumers, [Los Angeles -Long Beach - Anaheim], published by the Bureau of Labor Statistics or, if such index ceases to be published, the most closely analogous substitute index. "Investor Limited Partner" shall mean, collectively or individually, as the context may suggest or require, any limited partner pursuant to the Partnership Agreement. "Parking Structure" shall mean the podium parking garage on Parcels A and B with approximately 377 parking spaces, of which 199 parking spaces shall be designated for the use of the tenants and occupants of the Affordable Units on Parcel B, in accordance with the Reciprocal Easement Agreement. Santa Moniefflie village\ Attachment No. 1113 DDA documents\ Parcel B Lease At. 116 Page 6 of 5 8 Bxeculion v.Final g Contract Number 8936 (RAS) "Partnership Agreement" shall mean that certain Limited Partnership Agreement of Lessee, as modified or amended from time to time. "Permitted Mortgage" shall have the meaning given to such term in Section 901. "Permitted Mortgagee" shall have the meaning given to such term in Section 901. [§ 302] Ground Rent "Ground Rent," as used herein, shall mean rent paid by Lessee to City for Parcel B. Ground Rent consists of Base Rent (as described in Section 303) plus Additional Rent (as described in Section 304). [§ 3031 Base Rent Lessee shall pay "Base Rent" for the leasehold interest in Parcel B under this Lease. Base Rent, as used herein, shall mean the amount of ZERO DOLLARS AND NO CENTS ($0.00). [§ 304] Additional Rent Lessee shall pay as "Additional Rent" any expenses incurred by the City resulting from Lessee's failure to pay or cause to be paid any amounts owed to the City under this Lease or any person or entity, including, but not limited to, unpaid utilities, unpaid maintenance, unpaid Impositions, or unpaid liens or encumbrances. [§ 305] Net Lease This is an absolute net lease. City shall not be required to provide any services or pay any expense or cost or do any act or thing with respect to Parcel B and Improvements or the appurtenances thereto. [§ 3061 Non Subordination It is expressly understood and agreed that there shall be no subordination or encumbrance of any kind under this Lease or otherwise of the City's fee title ownership of the Parcel B. [§ 3071 Delinquency In Rental Payment Subject to applicable notice and cure provisions of this Lease, Lessee's failure to pay the Ground Rent or Additional Rent when due shall constitute a default of this Lease. Santa MearicaUlle Village\ Attachment No. I I DDA documents\ Parcel B Lease At. I In Page7Of 58 Execution v.Final Contract Number 8936 (RAS) [§ 4001 DEVELOPMENT OF PARCEL B [§ 4011 Scope of Development Plans Drawings and Specifications Lessee shall construct the Improvements upon Parcel B in accordance with the Agreement and this Lease. [§ 4021 No Construction Before Notice From and after issuance of the Release of Construction Covenants by the City pursuant to the Agreement, no work of any kind shall be commenced on Parcel B and no building or other materials shall be delivered to Parcel B for construction of any Improvements, nor shall any other building or land development work be commenced on or building materials be delivered to Parcel B at any time during the term of the Lease, which work and/or materials exceed in the aggregate Seven Hundred and Fifty Thousand Dollars ($750,000), escalated from the date of this Lease in accordance with the Consumer Price Index ( "CPI "), unless at least ten (10) days written notice is provided by Lessee to City of the intended commencement of such work or the delivery of such materials. The work for which said ten (10) days written notice is required shall include, in addition to actual construction work, any site preparation work, installation of utilities, street construction or improvement, or any grading or filling of Parcel B. [§ 4031 Notice of Non Responsibility City shall, at any and all times during the term of this Lease, have the right to post and maintain on Parcel B and to record as required by law any notice or notices of non responsibility provided for by the mechanics' lien laws of the State of California; provided, however, that Lessee shall, on behalf of the City, post and maintain on Parcel B, and record against Parcel B, all notices of non responsibility provided for by the mechanics' lien laws of the State of California. [§ 4041 Mechanic's Materialman's Contractor's or Subcontractor's Liens Subject to Lessee's right to contest as hereinafter provided, at all times during the tern of the Lease, Lessee shall keep Parcel B, including all buildings and Improvements. now or hereafter located on Parcel B, free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to Parcel B. Lessee shall promptly (i) pay and discharge, or cause Parcel B to be released from, any such lien or claim of lien, or (ii) contest such lien and furnish City such bond as may be, required by law to free Parcel B from the effect of such lien and to secure City against payment of such lien and against any and all loss or damage whatsoever in any way arising from Lessee's failure to pay or discharge such lien. In the event Lessee provides a bond in lieu of paying or discharging a lien as set forth herein, Lessee shall, at Lessee's sole cost and expense, within thirty (30) days of City's written request therefor, provide the City with an endorsement to any existing title policy in favor of City insuring City's interest in Parcel B free and clear of any such liens that have not been paid or santa Monica\rhe village\ Attachment No. I I DDA documents\ Parcel B Lease At. 1 I page 8 of 58 .Execution v.Final Contract Number 8936 (RAS) discharged. Should Lessee fail to pay and discharge, or cause Parcel B to be released from, any such lien or claim of lien or to provide a bond as permitted hereunder within thirty (30) days after service on Lessee by City of a written request to do so, City may pay, adjust, compromise and discharge any such lien or claim of lien on such terms and in such manner as City may reasonably deem appropriate. In such event, Lessee shall, on or before the first day of the next calendar month following any such payment by City, reimburse City for the full amount so paid by City, including any actual and reasonable attorneys' fees or other costs expended by City, together with interest thereon at the annual rate of interest equal to three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California as of the close of business on the date of payment by the City, or the highest lawful rate, whichever is less, from the date of payment by City to the date of Lessee's reimbursement of City. On substantial completion of any work of improvement during the term of the Lease, Lessee shall record or cause to be recorded in the Official Records of Los Angeles County a notice of completion, to the extent required by law. Lessee hereby appoints City as Lessee's attorney in fact to record the notice of completion, which appointment shall only become effective on ten (10) days' notice upon Lessee's failure to record such a notice of completion after the work of improvement has been substantially completed; provided, that City shall not be obligated to record such a notice of completion and the failure of City to record said notice shall not excuse the failure of Lessee to discharge its obligation to record said notice of completion. [§ 4051 Rights of Access Representatives of City shall have the reasonable right of access to Parcel B without charges or fees, at normal construction hours during the period of construction for the purposes of this Lease, including, but not limited to, the inspection of the work being performed in constructing the Improvements. Such representatives of City shall be those who are so identified in writing by the City Manager. The City shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of Parcel B and Improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. City shall indemnify, defend, and hold harmless Lessee from and against any claim, liability, losses and damages caused by City during any such inspections, and shall be responsible for the prompt repair and/or restoration of any such damage caused by City during any such inspection. [§ 406] Local State and Federal Laws (a) Lessee hereby agrees to carry out development, construction (as defined by applicable law) and operation of the Improvements on Parcel B, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any requirement to pay state prevailing wages). Santa Monica\•rhe Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. 1 lu Page9Of 58 .Execution vFinal Contract Number 8936 (RAS) (b) Lessee hereby expressly acknowledges and agrees that neither City nor Agency has ever previously affirmatively represented to Lessee or its contractor(s) for the Improvements in writing or otherwise, in a call for bids or otherwise, that the work to be covered by the bid or contract is not a "public work," as defined in Section 1720 of the Labor Code. Lessee hereby agrees that Lessee shall have the obligation to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee hereby agrees that Lessee shall have the obligation to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee hereby agrees that Lessee shall have the obligation, at Lessee's sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee shall indemnify, protect, defend and hold harmless the Agency, City and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to Agency and City, from and against any and all loss, liability, damage, claim, cost, expense, and /or "increased costs" (including labor costs, penalties, reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and /or operation of the Improvements, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Lessee of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure by Lessee to provide any required disclosure, representation, statement, rebidding and /or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Lessee to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by Lessee to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. (c) It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Improvements, including, without limitation, any public work (as defined by applicable law), Lessee shall bear all risks of payment or non payment of state prevailing wages and /or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and /or any other provision of law. "Increased costs" as used in this Section shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. Santa Monica \The Village\ Attachment No. I I B DDA documents\ Parcel B Lease At. 1113 page 10 of 58 .Execution v.Final Contract Number 8936 (RAS) (d) The foregoing indemnity shall survive termination of the Agreement and shall continue after recordation of the Release of Construction Covenants. [§ 4071 Nondiscrimination During Construction Lessee for itself and its successors and assigns agrees that in the construction of the Improvements on Parcel B provided for in this Lease, Lessee will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, creed, religion, national origin, or ancestry. [§ 5001 USE OF PARCEL B AND IMPROVEMENTS [§ 5011 Use of Parcel B and Improvements Lessee covenants and agrees for itself, its successors, its assigns and every successor in interest to Parcel B or any part thereof, that: a. Lessee, its successors and assignees shall devote Parcel B to the uses specified in the Redevelopment Plan, the Specific Plan, and any conditions of approval and /or plans required and /or approved by the City and this Lease, including but not limited to the Development Agreement. Without limiting the generality of the foregoing, Lessee shall cause to be constructed on Parcel B: one hundred and sixty (160) Affordable Units, including ten (10) Affordable Live /Work Units on the ground floor of the Parcel B building containing the Affordable Units, a community room, and 197 parking spaces designated for Parcel B in the Parking Structure, to be used by Parcel B residents, occupants and visitors i. The type and quality of tenants allowed in Affordable Live /Work Units shall be in harmony with the balance of the Project as a high -class development and shall specifically exclude any offensive or incongruent uses including, but not limited to, the following: (1) Any public or private nuisance (as defined in California Civil Code Section 3479) connected with business operations conducted on the Property; (2) Any noise or sound that is objectionable due to intermittence, beat, frequency, shrillness or loudness; (3) Any obnoxious odor; (4) Any noxious materials, and any toxic or caustic, or corrosive fuel or gas in violation of applicable law; (5) (6) hazard. Santa Monica \The Village\ DDA documents\ Parcel B Lease At. 1113 .Execution v.Final Any dust, dirt or particulate matter in excessive quantities; and Any unusual fire, explosion, or other damaging or dangerous Attachment No. I I Page 11 of 58 Contract Number 8936 (RAS) b. Developer shall cause Parcel B to be developed in accordance with the Agreement, including but not limited to the Scope of Development (Attachment No. 4 to the Agreement) and the Schedule of Performance (Attachment No. 3 to the Agreement). C. Developer and /or its successors or other party(ies) in whom the possessory interest is vested shall pay the property taxes levied during the term of the Parcel B Ground Lease, in accordance with Sections 210 and 210.1 of the Agreement. d. Developer and /or its successors shall restrict the Affordable Units for rental to and occupancy by 30% AMI, 50% AMI, and 60% AMI Households at Affordable Rent for a period of ninety -nine (99) years, to run concurrently with this Lease, in accordance with the terms and conditions of the Regulatory Agreement (Attachment No. 8 to the Agreement). The Affordable Rent for each Affordable Unit shall include at least one non -tandem designated parking space plus any ancillary parking facilities in the Parking Structure, as required by the Development Agreement, at no extra charge to the occupants or tenants of the Affordable Units. e. Prior to occupancy of any of the Affordable Units, Developer shall submit to the City a written plan describing the proposed tenant selection policies and criteria for the Affordable Units. The tenant selection plan shall be subject to the Executive Director's approval or disapproval thereof in writing, in accordance with the Schedule of Performance (Attachment No. 3). The tenant selection policies and criteria for the Affordable Live /Work Units shall require that, subject to applicable federal and state fair housing, Tax Credit Allocation Committee, Internal Revenue Service and HCD requirements, preference be given to applicants in the following order: first to Artists who live or work in the City, second to Artists, and third to persons who live or work in the City. In addition, the tenant selection policies and criteria shall: (i) Be consistent with the purpose of providing housing for 30% AMI, 50% AMI, and 60 % AMI Households; (ii) Be reasonably related to program eligibility and the applicants' ability to perform the obligations of the lease; (iii) Provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and (iv) Give prompt written notification to any rejected applicant of the grounds for any rejection. [§ 502] Limitations on Use of Parcel B Any agreements which purport to regulate, restrict, manage, maintain, limit, apply to, or otherwise affect the use of Parcel B and/or the use of any common areas between Parcel A and Parcel B shall be substantially in the form of the Reciprocal Easement Agreement (Attachment No. 17), Declaration of Covenants, Conditions and Restrictions (Attachment No. 21), and Joint Santa Mrarica\uie village\ Attachment No. 11B DDA documents \Parcel B Lease At. I In Page 12 Of 58 .Execution v.Final Contract Number 8936 (RAS) Development Agreement (Attachment No. 22). Any changes to this form shall be subject to the City's written approval prior to recordation of same, which said approval shall not be unreasonably withheld. Developer shall ensure that such agreements are subject to the conditions of this Lease, and shall terminate upon expiration of this Lease. [§ 503] Maintenance (a) Lessee shall maintain, repair and operate Parcel B and all Improvements constructed or to be constructed thereon (including landscaping, lighting and signage), or cause Parcel B and all such Improvements to be maintained, repaired and operated in a first quality condition, free of debris, waste and graffiti, and in compliance with the terms of the Redevelopment Plan, the City of Santa Monica Municipal Code, and the following: 1. All Improvements on Parcel B shall be maintained, repaired, and operated in good condition in accordance with the custom and practice generally applicable to comparable residential areas, as applicable, within the City, and in conformance and compliance with all plans, drawings and related documents approved by the City pursuant to the Agreement, all conditions of approval of land use entitlements adopted by the City or the Planning Commission of the City, including painting and cleaning of all exterior surfaces of all private Improvements and public Improvements to the curbline. 2. Landscape maintenance shall include, without limitation, watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 3. Clean -up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed -flee condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from Improvements and landscaping; clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. (b) If the City gives written notice to Lessee that the maintenance, repair, operation, or condition of Parcel B or any portion thereof or any Improvements thereon does not comply with this Lease and such notice describes the deficiencies, Lessee shall correct, remedy or cure the deficiency within thirty (30) days following the submission of such notice, unless (1) such deficiency cannot be reasonably corrected within such thirty (30) day period in which case such deficiency shall be deemed cured if Lessee commences such cure within such thirty (30) day period and thereafter diligently completes such cure within ninety (90) days following the submission of such notice or (2) the notice states that the deficiency is an urgent matter relating santa Monica\Tlre village\ Attachment No. I I B DDA documents\ Parcel n Lease At. I In Page 13 Of 58 .Execution v.Final Contract Number 8936 (RAS) to public health and safety in which case Lessee shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time but in no event more than forty -eight (48) hours following the submission of the notice. In the event Lessee fails to maintain Parcel B or any portion thereof or any Improvements thereon in accordance with this Lease and fails to cure any deficiencies within the applicable period described above, the City shall have, in addition to any other rights and remedies hereunder, the right to maintain Parcel B and the Improvements thereon, or portion thereof, or to contract for the correction of any deficiencies, and Lessee shall be responsible for payment of all costs reasonably incurred by the City. [§ 5041 Management of Parcel B and Improvements At least thirty (30) days prior to requesting the Release of Construction Covenants for the Improvements on Parcel B, in accordance with Section 314 of the Agreement, Lessee shall obtain the City's written approval of the proposed property manager ("Property Manager ") and associated agreement ("Property Management Agreement ") for management and operation of the Improvements on Parcel B. The Property Manager shall have not less than ten (10) years of experience in the successful management of properties that are like in kind to the Improvements on Parcel B. Approvals required of the City under this Section 504 shall follow and be limited by the following procedures: Within thirty (30) days after receipt of Lessee's request for approval, City shall respond in writing by stating what further information, if any, City reasonably requires in order to determine whether or not to approve the Property Manager and Property Management Agreement. Lessee shall promptly furnish to City such further information as may be reasonably requested. Lessee's request for approval shall be deemed complete thirty (30) days after City's receipt thereof, if no timely response requesting further information is delivered to Lessee, or, if such a timely response requesting further information is received, on the date that Lessee delivers such additional information to City, provided that Lessee's additional information is responsive to City's request. City shall approve or disapprove the matter within forty -five (45) days after Lessee's request for such approval is accepted as complete or is deemed complete. Any disapproval shall include reasonably detailed reasons for such disapproval. The City's failure to provide written notice of approval or disapproval to Lessee within such forty -five (45) day period shall be deemed approval by City. Approval will not be unreasonably withheld if Lessee demonstrates that the proposed Property Manager and Property Management Agreement will provide capable, competent and experienced operation of Affordable Units similar in quality, size and type as required to be maintained on Parcel B and Improvements pursuant to this Lease. If City shall disapprove of the Property Manager and/or Property Management Agreement, City shall do so by written notice to Lessee stating the reasons for such disapproval. Related Management Co., L.P., is hereby pre - approved by City as a Property Manager for the Improvements on Parcel B, so long as there is no material change in the ability of the same to provide capable, competent and experienced quality operation of Parcel B and Improvements from that evident upon the execution of this Lease. Santa MonicaUlle village\ Attachment No. 1111 DDA documents\ Parcel B [.ease At. t 1B Page 14 of 58 .Execution v.Final Contract Number 8936 (RAS) At all times during the term of this Lease, Parcel B and Improvements shall be managed or caused to be managed by Lessee in a prudent and business like manner as necessary to maintain Parcel B and Improvements in a first class condition. Lessee shall assume responsibility, subject to the provisions of this Lease, for the operation and maintenance (including repair, restoration and reconstruction) of all of the Improvements constructed on Parcel B and the costs thereof, and City shall have no liability for costs of such operation and maintenance by Lessee or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such Improvements. Without limiting the generality of the foregoing, Lessee, in the maintenance of the Improvements, shall observe the following standards: 1. Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better in quality, appearance and durability. 2. Remove all papers, debris, filth and refuse, and sweep, wash down and/or clean all hard surfaces, including brick, metal, concrete, glass, wood and other permanent poles, walls or structural members as required. 3. Maintain such appropriate entrance, exit and directional signs, markers and lights as shall be reasonably required and in accordance with the practices prevailing in the operation of similar developments. 4. Clean lighting fixtures and relamp and /or reballast as needed. 5. Repaint striping, markers, directional signs, etc., as necessary to maintain in first class condition. condition. required. 6. Maintain landscaping as necessary to keep it in a first class, thriving 7. Maintain signs, including relamping and/or reballasting and /or repairing as 8. Provide security measures to the extent reasonably necessary. 9. Maintain and keep in good condition and repair all benches, shelters, planters, mall coverings, banners, kiosks and other furniture, trash containers, sculptures, play areas, platforms and stages. 10. Clean, repair and maintain all common utility systems to the extent that the same are not cleaned, repaired and maintained by public utilities. Santa MonicaUlie village\ Attachment No. 11B DDA documents\ Parcel B Lease At. i IB Page 15 Of 58 .Execution v.Final Contract Number 8936 (RAS) 11. Maintain all fountains and associated structures, drinking fountains, pumps and associated plumbing. 12. Maintain all lights, light fixtures and associated wiring systems. 13. Maintain public right of way items between the property and the street, including sidewalks, curbs, gutters, driveways, signs and poles, curb painting and markings. 14. Maintain all surface and storm lateral drainage systems. 15. Maintain all sanitary sewer lateral connections. [§ 5051 Obligation to Refrain from Discrimination Lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Notwithstanding the above paragraph, with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the above paragraph. [§ 5061 Form of Nondiscrimination and Nonsegregation Clauses Lessee shall refrain from restricting the rental, sale or lease of Lessee's interest in Parcel B on the basis of race, color, religion, ancestry, national origin, sex, or marital status of any Santa Moniefflre village\ Attachment No. 11B DDA documents\ Parcel B Lease At. 11 B page 16 of 58 .Execution v.Final Contract Number 8936 (RAS) person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: Lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Notwithstanding the above paragraph, with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the above paragraph. [ §507] Quiet Enjoyment The parties hereto mutually covenant and agree that Lessee, by keeping and performing the covenants herein contained, shall at all times during the term of this Lease, peaceably and quietly have, hold and enjoy Parcel B and Improvements. [§ 6001 TAXES, ASSESSMENTS AND OTHER CHARGES [§ 6011 Utilities Lessee agrees to pay or cause to be paid, as and when they become due and payable, all charges for water, gas, light, heat, telephone, electricity and other utility and communication services rendered or used on or about Parcel B and Improvements at all times during the term of this Lease. Santa Monica\Tlte Village\ Attachment No. I III DDA documents\ Parcel B Lease At. 11B Page 17 of 58 .Execution v.Final Contract Number 8936 (RAS) [§ 602] Impositions (Including Taxes and Assessments) [§ 6031 Payment Generally Lessee and /or its successors or other party(ies) in whom the possessory interest is vested shall pay the property taxes levied against Parcel B during the term of the Lease, in accordance with Section 609 of this Lease, unless exempted therefrom. Lessee agrees to pay or cause to be paid, as and when they become due and payable, and before any fine, penalty, interest or cost may be added thereto, or become due or be imposed by operation of law for the nonpayment thereof, all taxes, assessments, franchises, excises, license and permit fees, and other governmental levies and charges, general and special, ordinary and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which at any time during the term of this Lease may be assessed, levied, confirmed, imposed upon, or grow or become due and payable out of or in respect of, or become a lien on: (1) Parcel B and Improvements or any part thereof or any appurtenance thereto; (2) the rent and income received by Lessee from subtenants, guests or others for the use or occupation of Parcel B and the Improvements thereon; or (3) this transaction or any document to which Lessee is a party, creating or transferring an interest or estate in Parcel B and Improvements. All such taxes, franchises, excises, license and permit fees, and other governmental levies and charges shall hereinafter be referred to as "Impositions ", and any of the same shall hereinafter be referred to as an "Imposition". Any Imposition relating to a fiscal period of the taxing authority, a part of which period is included within the term of this Lease and a part of which is included in a period of time after the expiration of the term of this Lease, shall (whether or not such Imposition shall be assessed, levied, confirmed, imposed upon, become a lien upon Parcel B and Improvements, or shall become payable, during the term of this Lease) be adjusted between City and Lessee as of the expiration of the term of this Lease, so that Lessee shall pay that portion of such Imposition which that part of such fiscal period included in the period of time before the expiration of the term of this Lease bears to such fiscal period, and City shall pay the remainder thereof; Lessee shall not be entitled to receive any apportionment, if Lessee shall be in default (subject to applicable notice and cure rights) in the performance of any of Lessee's covenants and agreements as provided in this Lease. The failure of Lessee to pay an Imposition that cannot under any circumstances give rise to a lien against Parcel B and Improvements shall not be a breach of the first paragraph of this Section 603. Lessee hereby agrees to defend, indemnify and hold harmless Agency and City and their respective officers, employees and consultants from and against all claims, liability, loss, damage, costs, or expenses (including reasonable attorney's fees and court costs) arising from or as a result of Lessee's failure to pay any Imposition to the extent that such Imposition relates to a fiscal period included within the term of this Lease. [§ 6041 pUment of Impositions in Installments If, by law, any Imposition may at the option of the payer be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in SantaMonica \Tlre Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. I In Page 18 of 58 .Execution v.Final Contract Number 8936 (RAS) installments and, in such event, shall pay such installments as may become due during the term of this Lease as the same respectively become due and before any fine, penalty, further interest or cost may be added thereto; provided, however, that the amount of all installments of any such Imposition which will be the responsibility of Lessee pursuant to Section 603 herein above, and which are to become due and payable after the expiration of the term of this Lease, shall be deposited with City for such payment on the date which shall be one (1) year immediately prior to the date of such expiration. [§ 6051 City Right to Cure If Lessee, in violation of the provisions of this Lease, shall fail to pay and to discharge any Imposition, City may (but shall not be obligated to) pay or discharge it, and the amount paid by City and the amount of all costs, expenses, interest and penalties connected therewith, including attorney fees, together with interest at the rate of three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California on the date payment is made by City, shall be deemed to be and shall be payable by Lessee as additional rent and shall be reimbursed to City by Lessee on demand, provided that Lessee and the holder of any Permitted Mortgagee that has registered its name and address in writing with City shall have failed to pay such Imposition within ten (10) business days after written notice from City to Lessee and such holder of City's intention to pay. [§ 606] Tax Receipts Unless exempt from payment of property taxes for Parcel B, Lessee shall furnish to City, within forty five (45) days after the date when any real property taxes, assessments or any other Imposition which could have any effect on City's title would become delinquent, official receipts of the appropriate taxing authority or other evidence satisfactory to City evidencing payment thereof. [§ 6071 Tax Liability Lessee shall pay all taxes assessed by any governmental authority by virtue of any operation by Lessee conducted on or out of Parcel B and Improvements. It is agreed that in the event the State of California or any taxing authority thereunder changes or modifies the system of taxing real estate so as to tax the rental income from real estate in lieu of or in substitution (in whole or in part) for the real estate taxes and so as to impose a liability upon City for the amount of such tax, then Lessee shall be liable under this Lease for the payment of the taxes so imposed during the term of this Lease, or any renewal thereof, to the same extent as though the alternative tax was a tax upon the value of Parcel B and Improvements. In order to determine the amount of such alternative tax for which Lessee shall be liable, Parcel B and Improvements shall be considered as if it was the only asset of City. Santa Monica \'rhe Village\ Attachment No. I I DDA documents\ Parcel B Lease At. 1113 Page 19 Of 58 .Execution v.Pinal Contract Number 8936 (RAS) [§ 6081 Contests (a) Unless exempt from payment of property taxes, Lessee shall refrain from appealing, challenging or contesting in any manner the validity or amount of any tax assessment, encumbrance or lien on Parcel B; provided, however, that such prohibition shall not apply to an appeal, challenge or contesting of the erroneous initial assessment for property tax purposes of Parcel B in the fiscal year of the completion of the Improvements to be constructed pursuant to the Agreement and this Lease, and further provided that in the absence of transfer of ownership or new construction Lessee shall not be prohibited from appealing, challenging or contesting any increases in assessment of Parcel B for property tax purposes over and above the current two percent (2%) per annum permitted amount. (b) Lessee agrees that any such proceedings shall be begun without undue delay after any contested item is imposed and shall be prosecuted to final adjudication with reasonable dispatch. Lessee shall give City prompt notice in writing of any such contest at least ten (10) days before any delinquency occurs. Lessee may only exercise its right to contest an Imposition hereunder if the subject legal proceedings shall operate to prevent the collection of the Imposition so contested, or the sale of Parcel B and Improvements, or any part thereof, to satisfy the same, and only if Lessee shall, prior to the date such Imposition is due and payable, have given such reasonable security as may be required by City from time to time in order to insure the payment of such Imposition to prevent any sale, foreclosure or forfeiture of Parcel B and Improvements or any part thereof, by reason of such nonpayment. In the event of any such contest and the final determination thereof adversely to Lessee, Lessee shall, before any fine, interest, penalty or cost may be added thereto for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such contest, together with any penalties, fines, interest, costs and expenses that may have accrued thereon or that may result from any such contest by Lessee and, after such payment and discharge by Lessee, City will promptly return to Lessee such security as City shall have received in connection with such contest. (c) City shall cooperate reasonably in any such contest, and shall execute any documents or pleadings reasonably required for such purpose. Any such proceedings to contest the validity or amount of Imposition or to recover back any Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense; and Lessee shall indemnify and save harmless City against any and all loss, cost or expense of any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be imposed upon or incurred by City in connection therewith. [§ 6091 Notice of Possessor Interest payment of Taxes and Assessments on Value of Entire Property In accordance with California Revenue and Taxation Code Section 107.6(a), City states that by entering into this Lease, a possessory interest subject to property taxes shall be created. Lessee and/or its successors or other party(ies) in whom the possessory interest is vested shall be Santa MonicaUlle Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. 1I13 Page 20 of 58 .Execution v.Final Contract Number 8936 (RAS) subject to the payment of property taxes levied on such interest, unless an exemption is otherwise available. Unless an exemption is available, Lessee acknowledges and agrees that Parcel B and/or the Improvements thereon, and any possessory interest therein, shall at all times after the commencement of this Lease, be subject to ad valorem taxes levied, assessed or imposed on such property unless exempt, and that Lessee shall pay taxes upon the assessed value of the entire property, and not merely upon the assessed value of its leasehold interest. [§ 6101 Other Liens Except as otherwise permitted in the Agreement and/or Development Agreement, Lessee shall not, directly or indirectly, create or permit to be created or to remain, and will promptly discharge, at its expense, any mortgage, lien, encumbrance or charge on or pledge of Parcel B or the Improvements, or fixtures and furnishings, or any part thereof, or Lessee's interest therein, or the rent, additional rent or other sums payable by Lessee under this Lease, other than (i) such Permitted Mortgages as are permitted pursuant to Section 901 (ii) as necessary in connection with the financing of furniture, fixtures and equipment for the Improvements. Lessee shall notify City promptly of any lien or encumbrance which has been created on or attached to Parcel B and Improvements, or to Lessee's leasehold estate therein, whether by act of Lessee or otherwise. The existence of any mechanic's, laborer's, materialmen's, supplier's or vendor's lien, or any right in respect thereof, shall not constitute a violation of this Section if payment is not yet due upon the contract or for the goods or services in respect of which any such lien has arisen, or if such lien has been discharged by the posting of bonds or other lien - release security as is provided for such discharge by law. [§ 7001 OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS [§ 7011 Ownership During Term and at Termination All at grade, above grade, and below grade structures, buildings, improvements, additions, alterations, and betterments of whatever nature or description, including without limitation concrete foundations, pilings, walkways, and pavement now existing, including the Improvements constructed on Parcel B in accordance with this Lease and /or the Agreement (all collectively referenced hereinafter as "Improvements "), shall, during the term of this Lease, be and remain the property of Lessee. All Improvements located on Parcel B, whether existing thereon at the commencement of the term of this Lease, or constructed or installed thereon by Lessee as permitted or required by this Lease, shall, at the expiration or sooner termination of the term of this Lease, be and remain the property of City. Subject to Lessee's rights and obligations set forth in this Lease relating to alterations and additions, Lessee shall have no right at any time to waste, destroy, demolish or remove any of the Improvements. Lessee's rights and powers with respect to the Improvements are subject to the terms and limitations of this Lease. City and Lessee covenant for themselves, and all persons claiming under or through them, that the Improvements are real property. Santa Monica \The Village\ Attachment No. 11 B DDA documents\ Parcel B Lease At. 1113 Page 21 Of 58 .Execution v.Final Contract Number 8936 (RAS) [§ 702] Removal of Fixtures and Furnishings at Termination At the expiration or sooner termination of the term of this Lease, City may, at City's election, demand the removal from Parcel B and Improvements, at Lessee's sole cost and expense, of all fixtures and furnishings, or of certain fixtures and/or furnishings, as specified in the notice provided for below. A demand to take effect at the normal expiration of the term shall be effected by notice given not less than sixty (60) days prior to the expiration date. A demand to take effect on any other termination of the Lease shall be effectuated by notice given in or concurrently with notice of such termination or within ten (10) days after such termination. At the expiration or sooner termination of the term of this Lease, Lessee may, at Lessee's sole cost and expense, remove from Parcel B and Improvements any and all fixtures and furnishings. Any fixtures and/or furnishings not removed by Lessee within thirty (30) days of the termination of the Lease shall be deemed to be abandoned by Lessee and shall, without compensation to Lessee, then become City's property, free and clear of all claims to or against them by Lessee or any third person, subject to security interests therein to the extent permitted by this Lease. Lessee shall defend, indemnify and hold harmless Agency and City against all liability and loss arising from any such claims or from City's exercise of the rights conferred by this Section 702. This Section 702 shall not apply in the event of a termination and reissuance of a New Lease (as defined below) to a Permitted Mortgagee pursuant to Section 900 et. seq. [§ 7031 Maintenance and Repair of Improvements Lessee agrees to assume full responsibility for the operation and maintenance of Parcel B and the Improvements and all fixtures and furnishings thereon or therein, and all sidewalks and to the extent required by the Development Agreement, landscaping within the public right of way adjacent to Parcel B, throughout the term hereof without expense to City unless otherwise specified herein, and to perform all repairs and replacements necessary to maintain and preserve said Site and the Improvements and fixtures and furnishings and sidewalks and landscaping in a decent, safe and sanitary condition in a manner satisfactory to City and in compliance with all applicable laws. Lessee agrees that City shall not be required to perform any maintenance, repairs, or services or to assume any expense not specifically assumed herein in connection with Parcel B and the Improvements, fixtures and furnishings, and sidewalks and landscaping. The condition of the Improvements required to be maintained hereunder upon completion of the maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. Santa Monica \The Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. ] t B Page 22 of 5 8 .Execution v.Final _ Contract Number 8936 (RAS) [§ 7041 Waste Lessee shall not commit or suffer to be committed any waste or impairment of Parcel B or the Improvements, or any part thereof. Lessee agrees to keep Parcel B and the Improvements clean and clear of refuse and obstructions, and to lawfully dispose of all garbage, trash and rubbish. [§ 705] Alteration of Improvements Following construction of the initial improvements on Parcel B in accordance with the Agreement, Lessee shall not make or permit to be made any alteration of, addition to or change in the Improvements, other than (a) routine maintenance, repairs, interior decoration and interior alterations or (b) alterations, additions or changes which cost in the aggregate less than an amount equal to Seven Hundred and Fifty Thousand Dollars ($750,000) escalated from the date of this Lease in accordance with the applicable Consumer Price Index, nor demolish all or any part of the Improvements, without the prior written consent of City. In requesting such consent, Lessee shall submit to City detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. Notwithstanding the prohibition in this Section 705, Lessee may make such changes, repairs, alterations, Improvements, renewals or replacements to the Improvements as are required by reason of any law, ordinance, regulation or order of a competent government authority or to satisfy 'the maintenance obligations of this Lease. [§ 7061 Damage to or Destruction of Improvements [§ 707] Lessee to Give Notice In case of any damage to or destruction of the Improvements, or any pat thereof, in excess of an amount equal to Two Hundred and Fifty Thousand Dollars ($250,000) escalated on a yearly basis from the date of this Lease in accordance with the applicable Consumer Price Index, Lessee shall within ten (10) days after Lessee becomes aware of such damage or destruction give written notice thereof to City generally describing the nature and extent of such damage or destruction. 2. [§ 7081 Restoration (a) Lessee shall be responsible for the restoration of the Improvements on Parcel B (including without limitation the Parking Structure) in accordance with the damage and destruction clauses of this Lease. (b) Subject to Section 708(a) directly above, in case of any damage to or destruction of the Improvements, or any part thereof, Lessee shall commence the restoration, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by the Santa MonicaMe Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. t 1B Page 23 of 58 .Execution v.Final Contract Number 8936 (RAS) City (such restoration, replacement, rebuilding alterations and additions, together with any temporary repairs and property protection pending completion of the work being herein called "Restoration ") within thirty (30) days of such damage or destruction or such longer time as may be reasonably required to obtain City approvals of construction and for Lessee to collect any Net Insurance Proceeds which shall be used to pay a portion of the cost of such Restoration. Notwithstanding anything to the contrary in this Lease, including Section 1211, Lessee's failure to restore the Improvements in accordance with the terms of this Lease shall constitute grounds for City's termination of the Lease. (c) As used herein, the term "Net Insurance Proceeds" means the gross insurance proceeds paid by an insurer to Lessee for loss or damage to Parcel B and Improvements, less any and all costs and expenses (including, but not limited to reasonable attorneys' fees) incurred to recover said proceeds. Lessee agrees to promptly commence and prosecute to completion the settlement of insurance proceeds with respect to any event of damage or destruction of the Improvements on Parcel B. (d) Lessee agrees that, notwithstanding any other provision of this Lease, upon any event of damage or destruction to the Improvements, Lessee shall at its sole cost and expense (whether or not Lessee terminates or intends to terminate this Lease pursuant to Section 710 below) immediately take or cause to be taken such actions and complete such work as is necessary to assure the safe condition of the damaged Improvements pending the ultimate disposition of the Improvements. In any instance where Lessee may elect to terminate this Lease rather than restore the Improvements pursuant to Section 710 below, if Lessee does not terminate this Lease, Lessee shall restore the Improvements. (e) In the event of damage or destruction of the Improvements, or any part thereof, no City approval shall be required hereunder to restore the Improvements to a safe condition or remedy any emergency condition on Parcel B arising in connection with such damage or destruction. [§ 7091 Application of Insurance Proceeds Insurance proceeds which are received on account of any damage to or destruction of Parcel B or the Improvements thereon, or any portion thereof, shall be used, in accordance with the documents evidencing and governing the Permitted Mortgagee's loan, to repay the loan secured by such Permitted Mortgagee's Permitted Mortgage or to rebuild or repair the Improvements; provided, however, that the Permitted Mortgagee's failure to authorize use of Net Insurance Proceeds for restoration of Parcel B or the Improvements thereon, or any portion thereof, shall constitute grounds for the City's termination of this Lease unless Lessee is able to provide other funds sufficient to rebuild the Improvements in accordance with the terms of this Lease. Insurance proceeds which are received on account of any damage to or destruction of Parcel B or the Improvements thereon, or any portion thereof (less the costs, fees and expenses incurred in the collection thereof, including without limitation attorneys' fees and expenses) as defined in Section 708(c) (the "Net Insurance Proceeds ") shall be held by Lessee, unless Santa Monica \The village\ Attachment No. 11B DDA documents\ Parcel B Lease At 1113 Page 24 of 58 .Execution v.Pinal Contract Number 8936 (RAS) otherwise provided by any Permitted Mortgage, and shall be subject to the conditions and applied (or paid) as follows: a. If this Lease is not terminated subject to (i) Permitted Mortgagee's failure to authorize use of Net Proceeds to rebuild in accordance with the terms documents evidencing and governing of the Permitted Mortgagee's loan, or (ii) Lessee's election permitted in Section 710 below, then, within a reasonable time and in any event within one hundred eighty (180) days after the damage to or destruction of the Improvements, Lessee shall furnish, or cause to be furnished to City and any Permitted Mortgagee evidence satisfactory to each of the foregoing (a) of the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section 708 and (b) that the total amount of money available will, when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section 709, be sufficient to pay the cost of such Restoration. In accordance with this Section 708(a) the Net Insurance Proceeds shall be disbursed as follows: First, to the costs of Restoration. 2. Second, upon receipt by City or any Permitted Mortgagee of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic's or similar liens for labor or materials supplied in connection therewith which have not been adequately provided for, to any Permitted Mortgagees to the extent required under the documents evidencing and governing the Permitted Mortgagee's loan in order of priority an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made. Thud, to Lessee. b. If this Lease is terminated subject to (i) Permitted Mortgagee's election permitted in the immediately preceding paragraph above, or (ii) Lessee's election permitted in Section 710 below, then the Net Insurance Proceeds shall be disbursed as follows: 1. First, to the expenses of clearing and removing all debris from Parcel B (including without limitation the Parking Structure) and restoring Parcel B to a safe and neat condition. 2. Second, to any Permitted Mortgagees in order of priority an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made. 3. Third, to Lessee. Santa Monica\The village\ Attachment No. 11B DDA documents\ Parcel B Lease At. I IB Page 25 Of 5g .Execution v.Final Contract Number 8936 (RAS) [§ 7101 Damage or Destruction During Final Years of Term Notwithstanding Sections 708 and 709 to the contrary, in the event of major damage or destruction to the Improvements on Parcel B (including the Parking Structure) during the last ten (10) years of the term of this Lease, City shall agree to terminate this Lease if Lessee, with the prior written approval of any Permitted Mortgagee to the extent required under the documents evidencing and governing the Permitted Mortgagee's loan, requests that this Lease be terminated provided Lessee first complies with all of the following conditions: 1. Lessee shall give City notice of the damage or destruction within ten (10) days after the event causing such damage and destruction. 2. Lessee shall give City notice requesting that this Lease be terminated as a result of such damage or destruction within forty five (45) days after settlement of insurance proceeds, but in any event within one hundred eighty (180) days after the event causing such damage or destruction. 3. Lessee shall clear and remove all debris from Parcel B (including without limitation the Parldng Structure), restore Parcel B to a safe and neat condition, deliver possession of Parcel B to City, and shall quitclaim all right, title and interest in Parcel B to City. 4. After the satisfaction in full of any debt secured by a Permitted Mortgage, including all interest accrued thereon and secured thereby, Lessee shall transfer to City the remainder of Net Insurance Proceeds to be retained by City without limitation as to use. Major damage or destruction to the Improvements as used in this Section means such damage or destruction that the cost of restoration will exceed fifty percent (50 %) of the cost to replace the Improvements on Parcel B in their entirety. [§ 711] Faithful Performance and Labor and Material (Payment) Bonds; Indemnification• Nonresponsibility Notices (a) Lessee agrees to hold harmless Agency and City, and to indemnify Agency and City against all claims, liabilities, costs and expenses, for labor and materials in connection with all construction, repairs or alterations on Parcel B and Improvements and the Improvements, and the cost of defending against such claims, including reasonable attorney's fees. (b) Lessee agrees to procure, or cause the procurement of, contractor's bonds covering labor, materials and faithful performance for construction on Parcel B and Improvements in accordance with the following requirements: 1. As to the initial construction of the Improvements required by the Agreement and this Lease, such bonds as required by Civil Code Section 3110.5. 2. Following Release of the Construction Covenants, for any work involving Santa MonicaUlre village\ Attachment No. 11B DDA documents \Parcel B Lease At. 11B page 26 of 58 .Execution v.Final Contract Number 8936 (RAS) repair or alteration of the Improvements in excess of One Million Dollars ($1,000,000), such bonds as required by Civil Code Section 3110.5. Said bonds and the general construction contract must first be approved in writing as to content and form by City. Lessee shall, prior to commencement of construction, deliver to City a certificate or certificates from the bonding company or companies issuing the aforesaid bonds, naming Agency and City as co- obligees under said bonds. (c) The provisions of paragraphs (a) and (b) of this Section shall be applicable to construction, repairs or alterations to Parcel B and the Improvements at all times during the Lease Term. (d) City shall have the right to post and maintain on Parcel B and the Improvements any notices of non - responsibility provided for under applicable law. [§ 8001 ASSIGNMENT, SUBLETTING, TRANSFER [§ 8011 Warrant Against Speculation (a) Lessee hereby represents and warrants that this Lease, the construction of the buildings, and its other undertakings pursuant hereto, are, and will be used for the purpose of redevelopment of Parcel B and not for speculation in land holding. Lessee further recognizes that: 1. The importance of the redevelopment of Parcel B to the general welfare of the community; and 2. The substantial financing and other public aids that have been made available by law and by the City for the purpose of making such redevelopment possible; and 3. The fact that a change in ownership or control of Lessee or of a part thereof, or any other act or transaction involving or resulting in a change in ownership or with respect to the identity of the parties in control of Lessee or the degrees thereof, is for practical purposes a transfer or disposition of Parcel B and Improvements; and 4. Parcel B is not to be acquired or used for speculation, but only for development by Lessee in accordance with this Lease. (b) The qualifications and identity of Lessee, and its principals, are of particular concern to the community and City. Lessee further recognizes that it is because of such qualifications and identity that City is entering into this Lease with Lessee. [§ 802] Prohibition Against Transfer Santa Monica \The Village\ Attachment No. 11B DDA documents\ Parcel E Lease At. 11E page 27 of 58 .Execution v.Final Contract Number 8936 (RAS) (a) Lessee shall comply with Section 108 of the Agreement until the recordation of a Release of Construction Covenants pursuant to Section 805 of this Lease. Upon the recordation of a Release of Construction Covenants, the provisions of Section 108 of the Agreement shall no longer apply to Lessee or this Lease and the provisions of Sections 800 to 803, inclusive, shall become effective. (b) Lessee shall not, except as permitted by this Lease, make any Transfer to any person or entity (a "Transferee "), without the prior written consent of the City and, if applicable, any Permitted Mortgagee. Any purported Transfer not permitted by this Section or Section 901 shall be ipso facto null and void, and no voluntary or involuntary successor to any interest of Lessee under such a Transfer shall acquire any rights pursuant to this Lease. Except for "Permitted Transfers" defined below, these restrictions shall be binding on any successors, heirs or Permitted Transferee of Lessee. "Transfer," as used herein, shall mean any assignment or attempt to assign this Lease or any right herein, any total or partial transfer, sale, assigmment, lease, sublease, license, franchise, gift, hypothecation, mortgage, pledge, encumbrance or the like, excluding, however, each of the following ("Permitted Transfers "): (a) the creation of a Permitted Mortgage; (b) the foreclosure of a Permitted Mortgage or the acceptance of a deed in lieu of foreclosure by a Permitted Mortgagee (or its designee); (c) the subsequent Transfer by a Permitted Mortgagee (or its designee) of an interest acquired pursuant to its Permitted Mortgage; and (d) acquisition at a foreclosure sale in connection with a Permitted Mortgage by a third party of any interest under this Lease pursuant to a foreclosure of a Permitted Mortgage. Permitted Transfers shall not require the approval of the City or be restricted by this Lease. Persons or entities who are Transferees in Permitted Transfers shall by acceptance of such Transfer be deemed to have accepted and agreed to be bound by all of the applicable provisions of this Lease. (c) In addition, the following shall not be subject to the restrictions of (b) immediately above: (i) the granting of easements or permits for the development, improvement and or repair of Parcel B or the Improvements as reasonably approved by City, (ii) the renting or subleasing or licensing of space for occupancy consistent with customary uses and practices, (iii) the removal of any general partner of Lessee by Lessee's limited partner, provided that if such general partner is replaced, the replacement general partner shall be subject to the Agency's reasonable approval, (iii) Lessee recording the Reciprocal Easement Agreement against the Parcels A and B leaseholds, (iv) granting any security interests expressly permitted under this Lease in accordance with the provisions of this Lease including without limitation Permitted Mortgages, (iv) the removal of any manager of Lessee by Lessee's members, provided that if such manager is replaced, the replacement manager shall be subject to the City's reasonable approval, or (v) the assignment of this Lease to any affiliate of Lessee or joint venture, provided Lessee submits evidence satisfactory to City that one or more members of Lessee will maintain a majority controlling interest after consummation of such transaction and will have the ability to maintain a majority controlling interest throughout the term of this Lease. (d) Lessee may Transfer its leasehold interests in Parcel B and Improvements after recordation of a Release of Construction Covenants pursuant to Section 804 as follows: (i) Santa MonicaUlle village\ Attachment No. 11 B DDA documents\ Parcel B Lease At. 1 t B Page 28 of 58 .Execution v.Final Contract Number 8936 (RAS) Parcel B and Improvements and its rights therein as a whole, with the prior written consent of the City subject to the rights of any Permitted Mortgagee, which consent shall not be unreasonably withheld, conditioned, or delayed in the event that all conditions of this Section 802 are met, and provided that Lessee is not in default hereunder. (e) Such approval required under Section 802(d)(i) shall be given by City if: 1. At the time of such assignment, this Lease shall be in full force and effect and either no default then exists (subject to applicable notice and cure) or no default will exist upon consummation of the Transfer; 2. City determines in its sole discretion that the following Transfer requirements are met: (i) such assignment is made to a responsible third party who will undertake Lessee's responsibilities under this Lease to use Parcel B in accordance with this respect to the Lease; (ii) such third party shall demonstrate qualifications and experience with type of development proposed herein and in the Agreement to assure the operation of the ...) Improvements equal to or greater than the qualifications and experience of Lessee; and (iii) such third party shall demonstrate sufficient financial resources or commitments to assure operation (and, if the assignment occurs prior to the issuance of a Release of Construction Covenants pursuant to Section 804 of the Lease, development ) of Parcel B in accordance with this Lease; 3. The Transferee shall have executed an express assumption, in form and substance first approved in writing by City, of the obligations and liabilities of Lessee under this Lease arising on and after the effective date of the Transfer; and 4. The Transferee shall have experience in the operation and management of a development of similar size, scope, type, and character to that located on Parcel B. (f) No voluntary or involuntary successor in interest of Lessee shall acquire any rights or powers under this Lease except as otherwise permitted in this Lease. Except as specifically provided herein, this Lease may not be assigned, nor may a Transfer take place without the express, prior written consent of City and, to the extent required by the applicable Permitted Mortgage loan documents, the holder of a Permitted Mortgage. (g) Prior to the assignment of this Lease, Lessee shall promptly notify City of any and all changes whatsoever in the identity of the members of Lessee, of which it or any of its officers have been notified or otherwise have knowledge or information. (h) In the absence of specific express written provision to the contrary by City, except as provided herein, a Transfer of Parcel B and Improvements, or portion thereof, or approval thereof by City, shall not be deemed to relieve Lessee from any obligations under this Lease arising on or after the effective date of the Transfer; provided, however, that any Permitted Mortgagee shall be deemed to be released from all obligations under this Lease and after the date of a Transfer from such Permitted Mortgagee. Santa MonieaUt,e village\ Attachment No. 11B DDAdocmnents\ Parcel B Lease At, IIn Page 29 of 58 .Execution v.Final Contract Number 8936 (RAS) (i) Lessee shall only Transfer Parcel B and Improvements thereon and Lessee's rights therein as a whole and is not permitted to subdivide Parcel B and Improvements and its rights for the duration of the Lease without the prior written approval of City. 0) No provision hereof authorizing encumbrance of Lessee's interest herein shall be construed to authorize encumbrance of City's fee title to Parcel B or City's interest under this Lease, and Lessee shall not by any act or deed cloud City's fee title or City's interest under this Lease. Notwithstanding any other provision of this Lease to the contrary, City approval of a Transfer of this Lease or any interest herein shall not be required in connection with any of the following: i) Any Transfer to any entity or entities in which Lessee retains a minimum of fifty -one percent (51 %) ownership or beneficial ownership of the transferee entity or entities. [§ 8031 Investigation of Proposed Transferee; Costs (a) The provisions of this Section 803 apply only to Transfers that specifically require the approval of City under this Lease and to confirm the existence of a Permitted Transfer. If this Lease specifically requires City's written consent to a Transfer or City's confirmation of a Permitted Transfer, Lessee agrees to provide City with such information, including financial statements as City may reasonably require in order to evaluate the solvency, financial responsibility and relevant business acumen and experience of any proposed Transferee Information as to any proposed Transferee shall include, without limitation, a balance sheet of the proposed Transferee as of a date within ninety (90) days of the request for City's consent and statements of income or profit and loss of the proposed subtenant or assignee for the two -year period preceding the request for City's consent, if the same be available (or such other similar information as shall be available at the time the request for approval of the Transfer is made), and a written statement in reasonable detail as to the business and experience of the proposed Transferee during the five (5) years preceding the request for City's consent. Information as to any Permitted Transfer shall be limited to documentary evidence to confirm the existence of a Permitted Transfer. Within fifteen (15) days after the receipt of Lessee's written notice requesting City approval of a Transfer or confirmation of a Permitted Transfer, City shall respond in writing by stating what further information, if any, City reasonably requires in order to determine whether or not to approve the requested Transfer or confirm the Permitted Transfer. Upon receipt of such a timely response, Lessee shall promptly furnish to City such further information as may be reasonably requested. Lessee's request for approval of a Transfer or confirmation of a Permitted Transfer and delivery of necessary information shall be deemed complete fifteen (15) days after City's receipt Santa Monica \The Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. t to Page 30 of 58 .Execution v.Final Contract Number 8936 (RAS) thereof if City does not deny approval and if no timely response is made by City requesting further information regarding the proposed assignee, or, if such a timely response requesting further information is made, on the date which is fifteen (15) days after the date that Lessee delivers such additional information to City. None of the foregoing shall restrict City's rights to deny approval of any Transfer not found acceptable by City pursuant to this Lease. Any Transfer requiring City's consent shall only be effective upon City's written consent to such Transfer. None of the foregoing shall waive Developer's rights to a Permitted Transfer without the City's approval. City shall approve or disapprove any requested Transfer requiring City approval within fifteen (15) days after Lessee's request therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing and shall specify the reasons for the disapproval and, if applicable, the conditions required to be satisfied by Lessee in order to obtain approval. If Lessee's initial notice requesting approval of an Transfer (but not any other type of Transfer) states that the Transfer will be deemed approved unless rejected within the time required in this Lease, City's failure to timely disapprove the Transfer shall be conclusively deemed to constitute an approval. (b) If City consents to any Transfer such consent shall not be effective unless and until Lessee gives City notice of the Transfer and a copy of any documents effecting and /or evidencing such Transfer, and unless and until any such Transferee (other than a sublessee) assumes all of the obligations and liabilities of Lessee under this Lease. (c) It is acknowledged and agreed that this Lease is a lease of real property within the meaning of Subsection 365(b) (3) of the Bankruptcy Code, 11, U.S.C. To the extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq., including Section 365(f)(1) thereof, Lessee on behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541(c) and 365(e) of the Banlauptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of the bankrupt meets City's standards for consent. City has entered into this Lease with Lessee in order to obtain for the benefit of Parcel B the unique types of facilities, businesses, services and goods which Lessee can bring to Parcel B; the foregoing prohibition on Transfer or subletting is expressly agreed to by Lessee in consideration of such fact. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deem to have assumed all of the obligations arising under this Lease on and after the date of such Transfer. Any such assignee shall upon demand execute and deliver to City an instrument confirming such assumption. (d) Lessee agrees to reimburse City for City's reasonable costs and attorneys' fees incurred in connection with the processing and documentation of any requested Transfer, subletting, transfer, change of ownership or hypothecation of this Lease or Lessee's interest in and at Parcel B, or any party thereof, which required City's approval hereunder. (e) The acceptance by City of any payment due hereunder from any other person shall Santa Monica\The Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. 1113 page 31 of 58 .Execution v.Final Contract Number 8936 (RAS) not be deemed to be a waiver by City of any provision of this Lease or to be a consent to any Transfer or subletting. Consent by City to one or more Transfers of this Lease or to one or more sublets of Parcel B shall not operate as a waiver or estoppel to the future enforcement by City of its rights pursuant to the provisions of this Lease. [§ 8041 Release of Construction Covenants Lessee and City shall comply with Section 314 of the Agreement pertaining to the Release of Construction Covenants. [§ 9001 MORTGAGES [§ 9011 Leasehold Permitted Mortgages From time to time during the term of this Lease, Lessee shall have the right to mortgage, pledge, deed of trust, assign rents, issues and profits (for purposes of security if required by any lender), enter into capitalized leases or other financing mechanisms in connection with the acquisition of furniture, fixtures and equipment for the Improvements in furtherance of the uses permitted under this Lease, or otherwise encumber the leasehold interest of Lessee under this Lease, in whole or in part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust being hereafter referred to as "Permitted Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as "Permitted Mortgage," provided, however, the term Permitted Mortgagee shall exclude the City in its capacity as the maker of the City Loan"), upon and subject to each and all of the following terms and conditions: 1. Lessee's rights and the rights of any Permitted Mortgagee under this Section 901 shall be subject to the City's rights under and the terms and conditions of the Agreement and City Loan Documents. 2. Intentionally omitted. 3. The Permitted Mortgage shall cover no interest in any real property other than Lessee's leasehold interest in Parcel B and the Improvements or some portion thereof. The Permitted Mortgage shall state on its face that it does not encumber in any way City's fee interest in Parcel B and City's interest under this Lease. Notwithstanding the foregoing, nothing contained in this Section or this Lease shall prohibit any Permitted Mortgage from being cross - collateralized or cross defaulted. 4. Prior to the Release of Construction Covenants, Permitted Mortgages may be made only for the purposes of financing necessary and appropriate to pay Development Costs. Santa Mon cafflhe village\ Attachment No. 1113 DDA documents\ Parcel B Tease At 1113 Page 32 of 58 .Execution v.Final Contract Number 8936 (RAS) "Development Costs" shall mean those Project Costs described in the Method of Financing, attached to the Agreement as Attachment No. 13B. 5. The aggregate amount of all loans secured by a Permitted Mortgage prior to the issuance of a Release of Construction Covenants shall not exceed the Project Budget, attached to the Agreement as Attachment No. 513, as it may be amended from time to time in accordance with the Method of Financing. 6. Lessee may refinance the property after the issuance of a Release of Construction Covenants by City, provided that (a) such financing is in accordance with the Method of Financing, (b) Lessee submits evidence satisfactory to the City demonstrating that any portion of the loan refinanced is fully subordinate to the City's fee title and all of the City's rights under this Lease, the City Loan Documents, except as expressly allowed otherwise therein, and the Regulatory Agreement, attached to the Agreement as Attachment No. 8, (c) Lessee obtains the prior written consent of City to the refinancing, which consent shall be granted provided that the Permitted Mortgage is given to a responsible bona fide institutional lender, and (d) any encumbrances recorded against the Lessee's leasehold interest in Parcel B and /or the Improvements as security for the financing shall, by its express terms, be released and reconveyed prior to expiration or sooner termination of the Lease. 7. Any Permitted Mortgage is to be given only to a bona fide institutional lender. For the purposes hereof the term "institutional lender" shall mean any bank, savings and loan association, thrift and loan association, savings bank, pension fund, insurance company, real estate investment trust or any other comparable or similar entity authorized to make loans in the State of California. 8. All rights acquired by said Permitted Mortgagee under said Permitted Mortgage shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of City thereunder, none of which covenants, conditions and restrictions is or shall be waived by City by reason of the giving of such Permitted Mortgage. Notwithstanding any foreclosure of any such Permitted Mortgage, Lessee shall remain liable for the payment of the accrued but unpaid rent reserved in this Lease while Lessee remains in possession of Parcel B and Improvements. 9. Promptly upon the recording of a Permitted Mortgage, Lessee shall, at its own expense, cause to be recorded in the official Records of Los Angeles County a written request executed and acknowledged by City for a copy of all notices of default and all notices of sale under the Permitted Mortgage as provided by applicable law. Inclusion of a request for notice having the effect described above in the body of the recorded Permitted Mortgage shall constitute compliance with this provision. 10. So long as there exists a Permitted Mortgage, and except as otherwise permitted in this Lease, the City agrees not to amend, modify, restate, terminate or accept the Santa Monica\nie village\ Attachment No. 11B DDA documents\ Parcel B Lease At. 11B Page 33 of 58 .Bxccution v.Final Contract Number 8936 (RAS) surrender of this Lease or the Agreement without the prior written consent of Permitted Mortgagee. [§ 9021 Rights and Obligations of Leasehold Permitted Mortgagees The following shall apply to Permitted Mortgages: a. If the holder of any Permitted Mortgage provides written notice to the City with its name and address, City shall give any notice of default under this Lease to any such Permitted Mortgage by registered or certified mail at the address registered with City concur7ently with any notice of default to Lessee. b. In the event Lessee shall be in default hereunder, any Permitted Mortgagee shall, at any time prior to the termination of this Lease in accordance with Section 1211 (which termination can occur only in accordance with Section 1211) and only after notice to any such Permitted Mortgagee and an opportunity to cure in accordance with Sections 900 et seq. (subject to the rights of any higher priority Permitted Mortgagee and without payment of any penalty), have the right, but not the obligation, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments (subject to City's right to cure under Section 605 of this Lease), to make any repairs and to do any other thing which may be necessary and proper to be done in the performance and observation of the agreements, covenants and conditions hereof to cure the default of this Lease. In the event Lessee fails to cure a default within any applicable cure period and, in accordance with Section 1211, the City may, but shall not be required to, elect to treat all or some Subleases as direct leases. All payments so made and all things so done and performed by any Permitted Mortgagee (or its designee) shall be accepted by City and shall be effective to cure the default of this Lease or Sublease, as applicable, as the same would have been if made, done and performed by Lessee instead of such Permitted Mortgagee (or its designee). Lessee hereby constitutes and appoints each Permitted Mortgagee as Lessee's attorney in fact with full power coupled with an interest, in Lessee's name, place and stead, and at Lessee's cost and expense, to enter upon Parcel B and Improvements, and perform all acts required to be performed herein. No Permitted Mortgagee shall have the right to take or perform any action hereunder, under its Permitted Mortgage or otherwise which might result in any detriment to the rights of a prior Permitted Mortgagee with respect to this Lease, or Parcel B. C. If a Permitted Mortgagee (or its designee) acquires the leasehold estate under this Lease, City will look to such holder to perform the obligations of Lessee, as applicable, only from and after the date of foreclosure or possession and will not hold such Permitted Mortgagee (or its designee) responsible for the past actions or inactions of Lessee. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, such Permitted Mortgagee (or its designee) shall be required to perform and abide by each and all of the obligations of Lessee under this Lease under the applicable Sublease and (B) on and after the Santa MonicaUl,e village\ Attachment No. I IB DDA documents\ Parcel B Lease At. 11B Page 34 of 58 .Execution v.Final Contract Number 8936 (RAS) date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease, as applicable, against such holder. d. The foreclosure of any Permitted Mortgage or any sale thereunder, whether by judicial proceedings or by virtue of any power of sale contained in any such Permitted Mortgage, or any conveyance of the leasehold estate trader this Lease encumbered by any such Permitted Mortgage through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof shall not require the consent or approval of City or constitute a default under this Lease, and upon such foreclosure, sale or conveyance City shall recognize any such Permitted Mortgagee (or its designee), or any other Transferee at foreclosure or other Transfer from Permitted Mortgagee (or its designee), as the new Lessee. In the event that such Permitted Mortgagee (or its designee) and/or Permitted Mortgagee (or its designee) becomes the Lessee hereunder, or in the event that the leasehold estate created hereunder is purchased by any other party at a foreclosure sale or by any other lawful means, such Permitted Mortgagee (or its designee), or such other foreclosure sale purchaser, shall be responsible for the performance of the obligations of Lessee under this Lease only for the period of time that the Permitted Mortgagee (or its designee), Permitted Mortgagee (or its designee), or such other foreclosure sale purchaser remains Lessee hereunder, and such Permitted Mortgagee (or its designee), or foreclosure sale purchaser shall thereafter have the right to assign this Lease without need to obtain the approval of City. Notwithstanding anything to the contrary herein: (A) if a Permitted Mortgagee (or its designee), foreclosure sale purchaser, or other person obtains the rights of Lessee hereunder, such person shall be deemed, as a result of such acquisition, to have assumed each and all of the obligations of Lessee under this Lease; (B) if the new Lessee has not been previously approved by City as a Permitted Mortgagee, such new Lessee shall have no right to construct any Improvements on Parcel B unless and until such new Lessee has submitted evidence satisfactory to City that such new Lessee has the financial capability and overall competence to perform the obligations of Lessee hereunder, provided that this clause (B) shall not require submission of such evidence if such new Lessee is a Permitted Mortgagee or successor of such a Permitted Mortgagee in which event such new Lessee shall have the same rights to construct Improvements on Parcel B as Developer (subject to the modifications of such rights provided above); and (C) City shall have the right of prior written approval over any prospective Property Manager of Parcel B and Improvements in accordance with Section 504 of this Lease. e. In the event that any Permitted Mortgagee forecloses on its Permitted Mortgage encumbering Parcel B, and Lessee rejects this Lease pursuant to Section 365 of the Bankruptcy Code of 1978, as amended, or otherwise succeeds to the interest of Lessee under this Lease, the City shall promptly execute and deliver to such Permitted Mortgagee, a new lease of Parcel B (naming such Permitted Mortgagee, its designee, or its successor as Lessee) (the "New Lease ") subject to the following terms and conditions: 1. The New Lease shall have a term equal to the remainder of the term of this Lease with the same agreements, covenants and conditions (except for any requirements which have been fulfilled prior to execution of this Lease) as are contained herein and Santa MonicaUlie village\ Attachment No. I IB DDA documents\ Parcel B Lease At. i 1B Page 35 of 58 .Execution v.Final Contract Number 8936 (RAS) with priority equal to that hereof; provided, however, that if more than one Permitted Mortgagee requests such a New Lease, the Permitted Mortgagee holding the most senior Permitted Mortgage shall prevail; and provided, further, that City shall not be required to execute such New Lease earlier than concurrently with the execution of such New Lease by such Permitted Mortgagee; 2. City shall prepare such New Lease at the expense of such Permitted Mortgagee, and all costs incurred by City in preparing such New Lease (including reasonable attorneys' fees actually incurred) shall be paid to City by such Permitted Mortgagee concurrently with or immediately following the execution by City of such New Lease; 3. Such New Lease shall have the same lien priority as this Lease with respect to any mortgage or other lien, charge or encumbrance on Parcel B; 4. Although not necessary to effect the termination of this Lease, the former Lessee shall, upon City's execution of such New Lease, execute any documents and perform any acts which may be reasonably necessary to evidence the termination of this Lease; 5. Upon City's execution and delivery of such New Lease, City, at the expense of the New Lessee, shall take such action as shall be necessary to remove the former Lessee from Parcel B and Improvements; and Notwithstanding any provision herein, City shall not be required to forbear from terminating this Lease except to the extent required by Section 905 hereof and City shall not be required to execute a new lease after the termination of this Lease in accordance with the provisions hereof. f. The provisions of this Section 902 shall inure only to the benefit of Permitted Mortgagee (and its designee), or foreclosure sale purchaser and, with respect to Section 902(e) only, other persons that acquire the leasehold interest created hereunder pursuant to a foreclosure, sale or conveyance of the type described in Section 902(e). [§ 9031 City's Forbearance and Right to Cure Defaults on Leasehold Permitted Mortgages [§ 904] Notice City will simultaneously give all Permitted Mortgagees at such address as is specified by such Permitted Mortgagees in accordance with Section 902 hereof, a copy of each notice of default from City to Lessee hereunder at the time of giving such notice or communication to Lessee. Santa MonicaUl,e village\ Attachment No. 11 B DDA documents\ Parcel B Lease At. IIn Page 36 of 58 .Execution v.Final Contract Number 8936 (RAS) [§ 9051 Forbearance by City During the continuance of any Permitted Mortgage encumbering this Lease and until such time as the debt secured by such Permitted Mortgage has been paid in full, or the lien of such Permitted Mortgage has been foreclosed or released: a. In the event of a default under this Lease by Lessee or Lessee, any Permitted Mortgagee shall have one hundred eighty (180) days after receipt of written notice from City setting forth the nature of such event of default, and, if the default is such that possession of Parcel B is reasonably necessary to remedy the default, a reasonable time not to exceed one hundred eighty (180) days after the expiration of the initial one hundred eighty (180) day period, within which to remedy such default; provided, however, that City shall not be required to forbear beyond such initial one hundred eighty (180) day period unless (a) the Permitted Mortgagee shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease within such one hundred eighty (180) day period and shall continue to pay currently such monetary obligations as and when the same are due, and (b) such Permitted Mortgagee shall have acquired Lessee's leasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such one hundred eighty (180) day period, or prior thereto, and shall be diligently prosecuting any such proceeding. City agrees that all payments so made and all things so done and performed by such Permitted Mortgagee shall be accepted by City and shall be effective to prevent a termination of this Lease, as applicable, as the same would have been if made, done and performed by Lessee. b. Any event of default under this Lease which in the nature thereof cannot be remedied by Permitted Mortgagee shall be deemed to be remedied if the Permitted Mortgagee does all of the following: (a) within one hundred eighty (180) days after receiving written notice from City setting forth the nature of an event of default, or prior thereto, the Permitted Mortgagee shall have acquired Lessee's leasehold estate created hereby or shall have commenced foreclosure or other appropriate proceedings, (b) Permitted Mortgagee shall diligently prosecute any such proceedings to completion, (c) within the one hundred eighty (180) day period referred to in (a) above, Permitted Mortgagee shall have fully cured any default in the payment of all monetary obligations of Lessee hereunder and any non - monetary obligations which do not require possession of Parcel B and Improvements and are not personal to the Lessee, and (d) after gaining possession of Parcel B, Permitted Mortgagee shall perform and abide by each and all of the obligations of Lessee under this Lease as and when the same are due; provided, however, notwithstanding subclauses (c) and (d) of this clause (b) above, that Permitted Mortgagee shall not be required to cure any default which occurs prior to the date on which Permitted Mortgagee obtains possession of Parcel B which by its nature cannot be cured by such Permitted Mortgagee. C. In the event that Permitted Mortgagee is prohibited by any process or injunction issued by any court of competent jurisdiction or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times Santa MonicaUlle village\ Attachment No. I IB DDA documents\ Parcel D Lease At. l rn Page 37 of 58 .Execution v.Final Contract Number 8936 (RAS) specified in this Section 905 for commencing and prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition. Notwithstanding anything to the contrary herein, City shall in no event be required to forbear hereunder rmless Permitted Mortgagee shall within ninety (90) days after the giving of notice by City pay all moneys due and in respect of which there exists a monetary event of default under this Lease or the applicable Sublease. [§ 905.11 Conditions Precedent to Permitted Mortgagee Rights and City Forbearance City shall not be required to comply with Sections 902 through 905 of this Lease with respect to any Permitted Mortgage, unless and until a true copy of the original thereof bearing the date and book and page of recordation thereof, and a certified copy of the original note secured by such Permitted Mortgage has been delivered to City together with written notice of the address of the Permitted Mortgagee to which notices may be sent; and in the event of an assignment of such Permitted Mortgage, such assignment shall not be binding upon City unless and until a certified copy thereof bearing the date and book and page of recordation together with written notice of the address of the assignee thereof to which notices may be sent, have been delivered to City. [§ 906] Performance on Behalf of Lessee In the event that Lessee shall fail to make any payment or perform any act required hereunder to be made or performed by Lessee, then City, Permitted Mortgagee or Permitted Mortgagee may, but shall be under no obligation to, after such notice to Lessee, if any, as may be reasonable under the circumstances, make such payment or perform such act with the same effect as if made or performed by Lessee. Nothing herein shall limit the right of Permitted Mortgagee to take action or make a payment if permitted under its Permitted Mortgage or Permitted Mortgage, as applicable. Entry by City, Permitted Mortgagee or Permitted Mortgagee upon Parcel B and Improvements for such purpose shall not waive or release Lessee from any obligation or default hereunder (except in the case of any obligation or default which shall have been fully performed or cured by Permitted Mortgagee). Lessee shall reimburse City (with interest at the annual rate of three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California) or Permitted Mortgagee (with interest as provided in the Permitted Mortgage) for all sums so paid by City or Permitted Mortgagee and all costs and expenses incurred by City and Permitted Mortgagee in connection with the performance of any such act. [§ 9071 Nonmerger There shall be no merger of this Lease, or of the leasehold estate created thereby, with the fee estate in and to Parcel B and Improvements by reason of the fact that this Lease, or the leasehold estate created thereby, or any interest in either thereof, may be held directly or Santa MonicaUlle Village\ Attachment No. I I B DDA documents\ Parcel B Lease At. I1n Page 38 of 58 .Execution v.Final Contract Number 8936 (RAS) indirectly by or for the account of any person who shall own the fee estate in and to Parcel B and Improvements, or any portion thereof. [§ 9081 City Cooperation City covenants and agrees that it will act and cooperate with Lessee in connection with Lessee's right to grant Permitted Mortgages as herein above provided. At the request of Lessee or any proposed or existing Permitted Mortgagee, City shall within a reasonable time execute and deliver (i) any documents or instruments reasonably requested to evidence, acknowledge and /or perfect the rights of Permitted Mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Lessee's interest herein and such matters as are reasonably requested by Lessee or such Permitted Mortgagees. Such estoppel certificate shall include, but not be limited to, certification if true by City that (a) this Lease is unmodified and in full force and effect (or, if modified, state the nature of such modification and certify that this Lease, as so modified, is in full force and effect), (b) all rents currently due under the Lease have been paid, (c) there are not, to City's knowledge, any uncured defaults on the part of Lessee under the Lease or facts, acts or omissions which with the giving of notice or passing of time, or both, would constitute a default. Any such estoppel certificate may be conclusively relied upon by any Permitted Mortgagee or assignee of Lessee's interest in this Lease. [§ 909] Enforceability The rights granted herein to a Permitted Mortgagee shall be enforceable only by such Permitted Mortgagee. [§ 910] No Subordination of City's Interests City's interest in Parcel B under this Lease is a vested landlord's reversionary interest and not just a contractual obligation of Lessee. Notwithstanding anything which is or appears to be to the contrary in this Lease, Lessee shall not encumber City's interest under this Lease or City's fee interest in Parcel B by any mortgage, deed of trust, lien, security instrument or financing conveyance of any kind whatsoever. [§ 911] Obligations of Mortgagee Upon Acquisition of Leasehold Estate If the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created hereunder, City will look to such holder to perform the obligations of Lessee hereunder only from and after the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Lessee. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, such holder shall be required to perform and abide by each and all of the obligations of Lessee under this Lease and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease against the Permitted Mortgagee. Santa MonieaUlle village\ Attachment No. 11B DDA documents\ Parcel B Lease At. t lB page 39 of 58 .Execution v.Final Contract Number 8936 (RAS) a. If a Permitted Mortgagee acquires the leasehold created hereunder, the Permitted Mortgagee shall perform the obligations of Lessee only from and after the date of foreclosure or possession and the Permitted Mortgagee shall not be responsible for the past actions or inactions of the prior Lessee. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, the Permitted Mortgagee shall be required to perform and abide by each and all of the obligations of Lessee under this Lease, and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease or Sublease, including without limitation the cure of any continuing default, as applicable against the Permitted Mortgagee. [§ 9121 Cm's Rights Against Prior Lessees Nothing herein is intended or shall be construed to limit or restrict City's rights and remedies against any prior Lessee, provided that City's pursuit of such remedies shall not affect the rights of the holder of any Mortgage obtained in accordance with Section 901 of this Lease to the use, enjoyment or operation of Parcel B and Improvements. [§ 9131 Reserved [§ 10001 INDEMNIFICATION AND INSURANCE [§ 10011 Indemnification Throughout the term of this Lease, Lessee agrees to and shall defend, indemnify and hold harmless Agency, the City, and their respective officers, employees, agents, contractors and consultants (the "Indemnitees ") from and against all claims, liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person which shall occur on Parcel B and which shall be directly or indirectly caused by or based on the Lessee's leasehold interest in Parcel B or any portion thereof or any Improvements thereon or the condition of Parcel B or any portion thereof or any Improvements thereon or Lessee's rehabilitation, development, construction, use or operation of Parcel B or any portion thereof or any Improvements thereon or any of Lessee's activities under this Lease, whether such actions or inactions thereof be by Lessee or anyone directly or indirectly employed or contracted with by Lessee and whether such damage or injury shall accrue or be discovered before or after the termination of this Lease. Lessee shall not be responsible for (and such indemnity shall not apply to) property damage or bodily injury caused by entry onto Parcel B and Improvements by the City pursuant to various provisions of this Lease, and/or to the extent caused by the gross negligence or willful misconduct of the Indemnitees. Santa MonicaMe village\ Attachment No. 11 B DDA docu nents\ Parcel s Lease At. 1113 Page 40 of 58 .Execution vFinal Contract Number 8936 (RAS) [§ 10021 Required Insurance Effective from Completion of the Improvements through the term of this Lease, Lessee at its sole cost and expense shall: 1. Keep or cause to be kept a policy or policies of insurance against loss or damage to the Improvements on Parcel B. Such insurance shall be maintained in an amount not less than one hundred percent (100 %) of the fall insurable value of the Improvements as defined herein in Section 1003 with no co- insurance penalty (such value to include amounts spent for construction of the Improvements, architectural and engineering fees, and inspection and supervision). Such policy shall be endorsed to provide Rental Income coverage equal to twelve months fixed operating expenses of Lessee. City shall be named as an additional insured as its interests may appear. 2. Maintain or cause to be maintained Commercial General Liability insurance, to protect against claims for injuries to persons, including death or damages to property which may arise from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or indirectly from any act or activities of Lessee or under Lessee's control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person caused directly or indirectly by or from the acts or activities in connection with Parcel B and Improvements of Lessee or its invitees and sublessees, or any person acting for Lessee, or under its control or direction. Any such property damage and personal injury insurance maintained by Lessee at any time during the term of this Lease shall name Agency, City, and their respective officers, employees and consultants, as additional insureds and shall also provide for and protect Agency and City against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall be maintained in full force and effect during the entire term of this Lease in an amount not less than Twenty Million Dollars ($20,000,000) combined single limit as of the Effective Date of Lease, which minimum amount of coverage shall escalate on the fifth anniversary of the Effective Date of Lease and once every five years thereafter in proportion to the escalation, if any, during such period in the Consumer Price Index. In the event that Lessee determines that it cannot procure the limits of liability insurance required or determines that the procurement of said amount is cost prohibitive then lessee may request a reduction in required limits, in writing, to the City and the City shall not unreasonably deny such a request. Lessee agrees that provisions of this paragraph 2. as to maintenance of insurance shall not be construed as limiting in any way the extent to which Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities, or activities of its invitees and sublessees or the activities of any other person or persons for which Lessee is otherwise responsible. Commercial General Liability (CGL) insurance shall be written on Insurance Services Office form CG 00 01 (or a substitute form Approved by City providing equivalent coverage) and shall cover liability arising from premises, operations, independent contractors, products - completed operations, personal injury and advertising injury assumed under an insured contract (including tort liability of another assumed in a business contract). Santa Monica \The Village\ Attachment No. 1 I B DDA documents\ Parcel B lease At. r tB Page 41 of 58 .Execution v.rinal g Contract Number 8936 (RAS) 3. Maintain or cause to be maintained worker's compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such worker's compensation insurance shall cover all persons employed by Lessee in connection with Parcel B and Improvements, and shall cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with Parcel B and Improvements, or the operation thereof by Lessee. Employer's Liability Insurance in the amount of $1,000,000 per accident for bodily injury and disease. 4. In the event that the holder of a Permitted Mortgage obtained in accordance with Section 901 of this Lease which has registered its name and address with City acquires the leasehold interest created by this Lease, such Permitted Mortgagee shall have the right to self - insure with respect to the risks specified in this Section 1002 if such Permitted Mortgagee is an institutional lender. [§ 10031 Definition of "Full Insurable Value" The term "full insurable value" as used in Section 1002 shall mean the actual replacement cost (excluding the cost of excavation, foundation and footings below the ground level and without deduction for depreciation) of the Improvements, including the cost of construction of the Improvements, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Lessee shall cause the full insurable value to be determined from time to time by the insurer or by a qualified expert mutually acceptable to City and Lessee, not less often than once every three years. [§ 10041 General Insurance Provisions All insurance provided under Section 1002 of this Lease shall be primary insurance for the benefit of Lessee, Agency, and City. Said insurance shall also be for the benefit of the Permitted Mortgagee, if any. All insurance provided under Section 1002 shall be periodically reviewed by the parties for the purpose of mutually increasing or decreasing the minimum limits of such insurance, from time to time, to amounts which may be reasonable and customary for similar facilities of like size and operation. The insurance to be provided by Lessee may provide for a deductible or self - insured retention of not more than Twenty -Five Thousand Dollars ($25,000.00), with such amount to increase at such times as City may require increases in the policy limits as set forth above; provided that the percentage increase in the deductible or self - insured retention shall not exceed the percentage increase in the Consumer Price Index since the last requested adjustment; and further provided that Lessee may maintain such higher deductibles or self - insured retention as Santa Monica\ule Village\ Attachment No. 11 B DDA documents\ Parcel B Lease At. 1113 page 42 of 58 .riXCCntiOn v.Final Contract Number 8936 (RAS) may be approved in writing by the City's Risk Manager. In the event such insurance does provide for deductibles or self - insured retention, Lessee agrees that it will fully protect Agency and City, their respective boards, officers, and employees in the same manner as these interests would have been protected had the policy or policies not contained the deductible or retention provisions. All insurance herein provided for under Section 1002 shall be affected under policies issued by insurers of recognized responsibility licensed or a non admitted insurer with an A.M. Best rating of no less than A -:8, subject to the reasonable approval of the City's Risk Manager. Any insurance required to be maintained by Lessee pursuant to Section 1002 may be taken out under a blanket insurance policy or policies covering other premises or properties, and other insureds in addition to the parties hereto; provided, however, that any such policy or policies of blanket insurance shall specify therein, or supplemental written certification from the insurers under such policies shall specify, the amount of insurance irrevocably allocated to the coverage to be provided under Section 1002 and provided further, that in all other respects, any such blanket policy shall comply with the other provisions of Section 1002. All policies or certificates of insurance shall provide that such policies or certificates shall not be canceled or materially changed without at least thirty (30) days prior written notice to City except for ten (10) days for non payment of premium. Copies of certificates and appropriate endorsements thereof subject to the reasonable approval of City legal counsel, shall be deposited with City together with appropriate evidence of payment of the premiums therefor; and, at least ten (10) days prior to expiration of any such policy. Upon written request of the City, copies of policies shall be deposited with the City. [§ 10051 Failure to Maintain Insurance If Lessee fails or refuses to procure or maintain insurance as required by this Lease, City shall have the right, at City's election, and without notice, to procure and maintain such insurance. The premiums paid by City shall be treated as additional rent due from Lessee, to be paid on the first day of the month following the date on which the premiums were paid. City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). [§ 10061 Disposition of Insurance Proceeds Resulting from Loss or Damage to Improvements (a) Subject to the provisions of paragraph (b) below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Lessee during the term of this Lease shall be payable, under the provisions of the policy of insurance, to Lessee, or, if such loss or damage involves the need for Lessee to obtain any governmental approvals or Santa Monica \The Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. I Ill Page 43 Of 58 .Execution v.Final Contract Number 8936 (RAS) permits, jointly to Lessee and City, and said proceeds shall constitute a trust fund to be used for the repair, restoration or reconstruction of the Improvements in accordance with plans and specifications approved in writing by City. (b) Notwithstanding the foregoing paragraph, within the period during which there is an outstanding Permitted Mortgage obtained in accordance with Section 901 of this Lease on all or part of Parcel B and Improvements, said proceeds shall be made payable as set forth in Sections 708 and 709 of this Lease. (c) In the event this Lease is terminated by mutual agreement of City and Lessee, and the Improvements are not repaired, restored or reconstructed, the insurance proceeds shall be applied first to any payments due under this Lease from Lessee to the City, second to restore Parcel B to a neat and clean condition, and finally any excess shall be paid to Lessee. Provided, however, that within any period when there is an outstanding mortgage or deed of trust upon the Improvements, such proceeds shall be applied first to discharge the debt secured by the mortgage and then for the purposes and in the order set forth above in this paragraph. (d) Lessee hereby waives any claim against City and City for any loss covered by insurance of the type specified in Section 1002; and Lessee, shall obtain from its insurance company or companies a waiver of any right of subrogation that it may have against City and City. [§ 1100] EMINENT DOMAIN [§ 1101] Lessee to Give Notice In case of a taking of all or any part of Parcel B and Improvements, or the commencement of any proceedings or negotiations which might result in such taking, Lessee shall promptly give written notice thereof to City generally describing the nature and extent of such taking or the nature of such proceedings or negotiations and the nature and extent of the taking which might result therefrom, as the case may be. [§ 11021 Total Taking In case of a taking of the fee of Parcel B and Improvements, or in case of the taking of only a part of Parcel B and Improvements, leaving the remainder of Parcel B and Improvements in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder, this Lease shall terminate as of the date title vests in the condemning authority or the date the condemning authority is entitled to possession, whichever first occurs (the "Date of Taking "). Any taking of Parcel B and Improvements of the character referred to in this Section 1102 which results in the termination of this Lease is referred to herein as a "Total Taking." Santa Monica\'nte Village\ Attachment No. 1 I B nnA documents\ Parcel a Lease At. t In Page 44 of S 8 .Execution v.Final g Contract Number 8936 (RAS) [§ 11031 Partial Taking In case of a taking of Parcel B and Improvements other than a Total Taking (a "Partial Taking "), (i) this Lease shall remain in full force and effect as to the portion of Parcel B and Improvements remaining immediately after such taking, without any abatement or reduction of any sum payable hereunder, and (ii) Lessee, to the extent the awards or payments, if any, on account of such taking shall be sufficient for the purpose, at its expense, but first subject to Section 1104(a), shall within a reasonable period of time commence and complete, or cause to be commenced and completed, Restoration of Parcel B and Improvements as nearly as possible to its value, condition, and character immediately prior to such taking, with such alterations and additions as may be made at Lessee's election pursuant to and subject to the terms of Section 705, except for any reduction in area caused thereby; provided, however, that in case of a taking for temporary use Lessee shall not be required to effect Restoration until such taking is terminated. [§ 1104] Application of Awards and Other Pants Awards and other payments on account of a taking, less costs, fees and expenses incurred in the collection thereof ("Net Awards and Payments ") shall be applied as follows: (a) In case of a taking other than a Total Taking or a taking for temporary use, Lessee shall furnish to City and any Permitted Mortgagee evidence satisfactory to City and the Permitted Mortgagee of the total cost of the Restoration required by Section 1103. (b) Net Awards and Payments received on account of a taking other than a Total Taking or a taking for temporary use shall be held and applied as provided with respect to proceeds of insurance in Section 1006. The balance, if any, shall be paid to Lessee and City as their respective interests may appear in Parcel B and the Improvements. (c) Net Awards and Payments received on account of a taking for temporary use shall initially be received by Lessee. (d) Net Awards and Payments received on account of a Total Taking shall be allocated as follows: First: There shall be paid to each Permitted Mortgagee an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Permitted Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the taking. Second: To the Lessee and the City as their respective interests may appear in Parcel B and the Improvements; provided, that any payment to a Permitted Mortgagee or pursuant to the preceding paragraph shall be charged against Lessee's interest. Santa Monica\rfle village\ Attachment No. I IB DDA documents\ Parcel B Lease At. 118 Page 45 of 58 .Execution vFinal g Contract Number 8936 (RAS) [§ 12001 DEFAULTS, REMEDIES AND TERMINATION [§ 12011 Defaults General (a) Subject to the extensions of time set forth in Section 1314 of this Lease, failure or delay by either party to perform any term or provision of this Lease after expiration of the applicable cure period specified in the following sentence (unless another provision of this Lease includes a different period of time for the care of any specific default which other specific period shall control), constitutes an event of default under this Lease. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with reasonable diligence and, in any event, for monetary defaults within thirty (30) days following receipt of written notice of such failure or delay, and for non - monetary defaults within the time reasonably required for cure with reasonable diligence, not to exceed one hundred and eighty (180) days of receipt of written notice plus any period or periods of enforced delay required by Section 1314 of this Lease (with any other cure periods specified in this Lease and as applicable, the "Cure Period"). (b) The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, the injured party may not institute proceedings against the party in default until the expiration of the applicable Cure Period. City's exercise of its remedies under Sections 1200 et seq. shall be subject to the provisions of Sections 900 et seq. of this Lease. Failure or delay in giving such notice shall not constitute a waiver of any default. (c) Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any of its remedies or rights as to any default shall not operate as a waiver of any default or of any such rights or remedies or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. (d) Whenever the City delivers any notice or demand to the Lessee with respect to any breach or default by Lessee in completion of construction, failure to diligently pursue completion of construction, or any other default under this Agreement, the City shall at the same time deliver a copy of such notice or demand to any Investor Limited Partner as provided in Section 1317. Each such Investor Limited Partner shall (insofar as the rights granted by the City are concerned) have the right, at its option, within one hundred eighty (180) days after the receipt of such written notice from the Agency, to cure or remedy, or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default; provided, however, that such Investor Limited Partner shall not be required to cure any default which by its nature is personal to Lessee to effectuate a cure hereunder. Provided that such Investor Limited Partner has received notice as require by this clause (d) above, the cure period provided in this clause (d) shall run concurrently with, and shall not be in addition to, the cure period set forth in Section 905 for Permitted Mortgagees. Santa Monica \The Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. I In Page 46 of 58 .Execution v.Final - Contract Number 8936 (RAS) (e) The City agrees that all payments so made and all things so done and performed by any Investor Limited Partner shall be accepted by the City and shall be effective to remedy a Lessee default and prevent termination of hereof, as if the same would have been if made, done and /or performed by the Lessee. [§ 1202] Legal Actions [§ 1203] Institution of Legal Actions Subject to Section 1211, in addition to any other rights or remedies, either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in the Superior Court of the County of Los Angeles, State of California, in any other appropriate court in that county, or in the Federal District Court in the Central District of California. Lease. 2. [§ 1204] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this [§ 12051 Acceptance of Service of Process In the event that any legal action is commenced by Lessee against City, service of process on City shall be made by personal service upon the City Manager of City, or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Lessee, service of process on Lessee shall be made by personal service upon an officer of the general partner of Lessee and shall be valid whether made within or without the State of California, or in such manner as may be provided by law. 4. [§ 1206] Attorneys' Fees and Court Costs In the event that either City or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under or violation of this Lease, then each party shall bear and pay the cost of its own costs and attorneys fees. [§ 12071 Rights and Remedies are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Lease, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or Santa Monica \The village\ Attachment No. 11B DDAdocuments\ Parcel B Lease At. lis Page 470f$8 .Execution v.Final Contract Number 8936 (RAS) different times, of any other rights or remedies for the same default or any other default by the other party. [§ 12081 Damages If either party defaults with regard to any of the provisions of this Lease, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty (30) days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period, the defaulting party shall be liable to the nondefaulting party for any damages caused by such default, and the nondefaulting party may thereafter (but not before) commence an action for damages against the defaulting party with respect to such default. [§ 12091 Specific Performance If either party defaults with regard to any of the provisions of this Lease, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty (30) days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period, the nondefaulting party, at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Lease pertaining to such default. [§ 12101 Additional Remedies of City (a) If Lessee defaults with regard to any of the provisions of this Lease, City shall serve written notice of such default upon Lessee. Subject to the provisions of Sections 900 et seq. of this Lease running in favor of Permitted Mortgagee, if the default is not commenced to be cured promptly after service of the notice of default and /or if the cure is not prosecuted to completion with all due diligence and in any event prior to the expiration of the applicable Cure Period, City, at its option, may thereafter (but not before): 1. Correct or cause to be corrected said default and charge the costs therefor to the account of Lessee; 2. Correct or cause to be corrected said default and pay the costs thereof from the proceeds of any insurance; 3. Continue this Lease and Lessee's right to possession in effect and enforce its rights and remedies under the Lease, including the right to recover rent as it becomes due, as provided in Section 1951.4 of the California Civil Code. 4. Have a receiver appointed to take possession of Lessee's leasehold interest in Parcel B and Improvements, with power in said receiver to administer Lessee's interest therein, to collect all funds available to Lessee in connection with its operation and maintenance SantaMon,eafflhe village Attachment No. 11B DDAdocu»ents \ Parcel sLeaseA At. lls Page 48of58 .Execution v.Final Contract Number 8936 (RAS) thereof; and to perform all other acts consistent with Lessee's obligations under this Lease as the court deems proper; Lease. 5. Maintain and operate Parcel B and Improvements without terminating this Terminate this Lease pursuant to Section 1211 hereof, by written notice to Lessee of its intention to do so. (b) City reserves and shall have the right at all reasonable times to enter Parcel B and the Improvements for the purpose of viewing and ascertaining the condition of the same, or to protect its interests in Parcel B and the Improvements or to inspect the operations conducted thereon, subject to the limitations and requirements for City rights of access set forth in Section 405 of this Lease. Any such entry shall be made only after reasonable notice to Lessee. In the event that such entry or inspection by City discloses that Parcel B or the Improvements are not in a decent, safe, and sanitary condition, are damaged, or in disrepair, City shall have the right, after thirty (30) days written notice to Lessee and Lessee's failure to cure the problem within the Cure Period, to have any necessary maintenance or repair work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by City in having such necessary maintenance or repair work done in order to keep Parcel B and the Improvements in a decent, safe and sanitary condition. (c) The rights reserved in this Section 1210 shall not create any obligations on City or increase obligations imposed on City elsewhere in this Lease, and shall not defeat, render invalid or limit the rights or interests expressly provided in this Lease for the protection of Permitted Mortgagees. [§ 12111 Rights of Termination Once the Release of Construction Covenants has been issued, as provided in Section 314 of the Agreement, the provisions of this Section 1211 shall terminate and cease to be effective or enforceable and City shall have no right under Section 1211 or any other provision of this Lease to terminate this Lease, except as to any right of termination under Sections 708 and 709. (a) Subject to the enforced delay provisions of Section 1314, the preceding paragraph, and the rights of any Permitted Mortgagee to cure under Sections 900 et seq., City may terminate this Lease at its option if Lessee or any Permitted Mortgagee fails to perform any of its material obligations under the Agreement and/or this Lease for Parcel B, including Lessee's or the Permitted Mortgagee's failure to diligently pursue development of Parcel B, and such failure is not cured within the applicable Cure Period. (b) For the purposes of this Lease, "failing to diligently pursue development" shall mean: santa MonicaMic villager Attachment No. 11B DvA documents\ Parcel n Lease At. t to Page 49 of 58 .Execution v.Pinal g Contract Number 8936 (RAS) 1. the failure to commence construction of the Improvements on Parcel B, as required by the Agreement for a period of three (3) months after the date set forth in the Schedule of Performance (Attachment No. 3 to the Agreement); and 2. the abandonment or substantially suspended construction of the Improvements on Parcel B for a continuous period of three (3) months after written notice of such abandonment or suspension from City. (c) In the event of termination under this Section, in addition to any remedies authorized herein, City shall have the right, its option, to exercise its rights under the Assignment of Agreements, attached to the Agreement as Attachment No. 613, and reenter and take immediate possession of Parcel B and any Improvements thereon, in accordance with subsection (d) of this Section and subject to Section 1212 herein. (d) Subject to Section 1212, the City shall have the right, at its option, to reenter and take possession of Parcel B with all Improvements thereon, and to terminate and revest in the City the leasehold estate theretofore conveyed to the Lessee, if after conveyance of title and prior to the Release of Construction Covenants pertaining to Parcel B (or portion thereof), the Lessee (or its successors in interest) shall: 1. fail to commence construction of the Improvements on Parcel B (or portion thereof) as required by the Agreement for a period of three (3) months after the date set forth in the Schedule of Performance (Attachment No. 3 to the Agreement), provided that the Lessee shall not have obtained an extension or postponement to which the Lessee may be entitled pursuant to Section 1314 hereof; or 2. abandon or substantially suspend construction of the Improvements on Parcel B (or portion thereof) for a continuous period of three (3) months after written notice of such abandonment or suspension from the City, provided that the Lessee shall not have obtained an extension or postponement to which the Lessee may be entitled to pursuant to Section 1314 hereof; or 3. assign or attempt to assign this Lease, or any rights herein, or transfer, or suffer any involuntary transfer of Parcel B in violation of this Lease, and such violation shall not be cured within thirty (30) days after the date of receipt of written notice thereof by the City to the Lessee. Such right to reenter, repossess, terminate and revest, shall be subject to and be limited by and shall not defeat, render invalid, or limit any rights by any Permitted Mortgagee to cure under Sections 900 et seq. Upon the revesting in the City of title to Parcel B, as provided in this subsection (d), the City shall, pursuant to its responsibilities under state law, use its diligent and good faith efforts to resell its interests in the Parcel B, as soon and in such manner as the City shall find feasible and Santa Monica \The Village\ Attachment No. 11B DDA documents\ Parcel B Lease At. I In Page 50 Of 58 .Execution v.Final g Contract Number 8936 (RAS) consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the City), who will assume the obligation of making or completing the Improvements, or such other Improvements in their stead, as shall be satisfactory to the City and in accordance with the uses specified for the Parcel B in the Redevelopment Plan. Upon such resale of the interests in the Parcel B, the proceeds thereof shall be applied: 1. first, to reimburse the City on its own behalf or on behalf of the City of all costs and expenses incurred by the City, including but not limited to salaries of personnel engaged in such action, in connection with the recapture, management, and resale of its interests in Parcel B (but less any income derived by the City from Parcel B, in connection with such management); all taxes, assessments and water and sewer charges with respect to Parcel B (or, in the event Parcel B is exempt from taxation or assessment or such charges during the period of ownership, then such taxes, assessments, or charges, as would have been payable if Parcel B were not so exempt); any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults, or acts of the Lessee, its successors or transferees; any expenditures made or obligations incurred with respect to the making or completion of the agreed Improvements or any part thereof on Parcel B; and any amounts otherwise owing to the City by the Lessee and its successor or transferee; 2. second to the extent permitted or required by the terms of the documents evidencing and securing Permitted Mortgagee's loan, to each Permitted Mortgagee, in order of priority, in an amount up to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and/or any interest accrued thereon, all as of the date on which such payment is made; provided, however, that nothing herein shall be deemed as a guaranty or warranty by the City to such Permitted Mortgagee that the resale of the City's interests and payment to Permitted Mortgagee shall be sufficient to pay, in total, unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and /or any interest accrued thereon, if any; 3. third, to reimburse the Lessee, its successor or transferee, up to the amount equal to (1) the sum of the Base Rent paid to the City by the Lessee for Parcel B being revested in the City; and (2) the costs incurred for the development of Parcel B or for the construction of the agreed Improvements thereon, if such costs were incurred in accordance with the Method of Financing (Attachment No. 13B) and Project Budget (Attachment No. 513), less (3) any gain or income withdrawn or made by the Lessee therefrom or from the Improvements thereon. For purposes of this paragraph the term "cost incurred" shall include direct, out -of- pocket expenses of development, but shall exclude Lessee's all overhead expenses, Lessee fees, and profit; and 4. fourth, any balance remaining after such reimbursements shall be retained by the City as its property. Santa MonicaMe Village\ Attachment No. 11B DDA documents \Parcel B Lease At. 1113 Page S I Of 58 .Execution v.Final Contract Number 8936 (RAS) The City shall also be entitled to exercise all of its rights under the Assignment of Agreements (Attachment No. 6B to the Agreement). (e) To the extent that the right established in this Section 1211 involves forfeiture, it must be strictly interpreted against the City, the party for whose benefit it is created. The rights established in this Section 1211 are to be interpreted in light of the fact that the City will convey Parcel B to the Lessee for development and not for speculation in undeveloped land. [§ 12121 Cross- Default —Among Parcels [§ 1212.1] Cross Default Among Parcels — Concurrent Financing of Parcels A and B only Notwithstanding any provision to the contrary in this Lease, in the event that close of construction financing for Parcels A and B is not concurrent with close of construction financing for Parcel C, Lessee understands and agrees that the occurrence of a material breach of the Parcel B Ground Lease and /or the Parcel C Ground Lease shall constitute a material breach of this Lease unless all of the following conditions are satisfied: (i) Close of Escrow has occurred for all () (...) of the Parcels; a the Construction Financing Event has occurred for Parcels A and B; m Lessee has completed the first floor of structural framing of the above - ground vertical buildings on Parcels A and B, in accordance with the Development Agreement and approved Permits for development of the Site ( "Construction Framing Event'); and (iv) Developer has not made a Transfer contrary to the Agreement or this Lease, which shall be determined at the time of the Construction Framing Event. Upon the satisfaction of clauses (i) to (iv ), above, the occurrence of a breach or default with respect to a Parcel shall not subject the other Parcels to any remedies for such breach of default. [§ 1212.2] Cross Default Among Parcels — Concurrent Financing of Parcels A B and C Notwithstanding any provision to the contrary in this Agreement, in the event that close of construction financing for Parcels A and B is concurrent with close of construction financing for Parcel C, Developer understands and agrees that the occurrence of a material breach of the Parcel A Ground Lease and /or Parcel C Ground Lease shall constitute a material breach of this Lease unless all of the following conditions are satisfied: (i) Close of Escrow has occurred for all of the Parcels; (ii) the Construction Financing Event has occurred for Parcels A, B, and C; (iii) Developer has issued a notice to proceed to its Contractor for construction of the Development on Parcel B and the Development on Parcel B, in accordance with the Development Agreement and approved Permits for development of the Site ("Notice to Proceed Event'); and (iv) Developer has not made a Transfer contrary to this Agreement, which shall be determined at the time of the Notice to Proceed Event. Upon the satisfaction of clauses (i) to (iv), above, the occurrence of a breach or default with respect to a Parcel shall not subject the other Parcels to any remedies for such breach of default. Santa Monica \The Village\ Attachment No. 1113 DDA documents\ Parcel E Lease At. t iE Page 52 of 58 .Execution v.Final Contract Number 8936 (RAS) [§ 13001 GENERAL PROVISIONS [§ 13011 Notices Demands and Communications between the Parties Formal notices, demands and communications between City and Lessee shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the City and of Lessee as designated in Section 108 and Section 109 hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section. Sufficient notice may also be given by personal delivery or reputable overnight delivery service in lieu of mail if reasonably adequate records are maintained of such service in the ordinary course of business by the person or entity effecting such service. [§ 13021 Time of Essence Time is of the essence with respect to the performance of each of the covenants and agreements contained in this Lease. [§ 13031 Conflict of Interests (a) No member, official or employee of City shall have any personal interest, direct or indirect, in this Lease, nor shall any such member, official or employee participate in any decision relating to the Lease which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. (b) Lessee warrants that it has not paid or given, and will not pay or give, any officer or employee of City or City any money or other consideration for obtaining this Lease. [§ 13041 Nonliabilit of f City Officials and Employees No member, official or employee of City shall be personally liable to Lessee, or any successor in interest, in the event of any default or breach by City or any for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. [§ 13051 Inspection of Books and Records (a) City has the right at all reasonable times to inspect the books and records of Lessee pertaining to Parcel B and Improvements as pertinent to the purposes of this Lease. Lessee also has the right at all reasonable times to inspect the books and records of City pertaining to Parcel B and Improvements as pertinent to the purposes of this Lease. (b) In the event that the holder of a Permitted Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created by this Lease, then, in such an event, City acknowledges and agrees that City shall not be entitled to examine and/or audit all of the books and.records of said Permitted Mortgagee, but shall only be entitled to examine such Santa MonicaJ lie Village\ Attachment No. I I DDA documents\ Parcel B Lease At. 1113 Page 53 of 58 .Execution v.Final Contract Number 8936 (RAS) books, records and tax returns of the Permitted Mortgagee or portions thereof solely to the extent that they relate to Parcel B and Improvements and the Permitted Mortgagee's operation thereof. [§ 1306] No Partnership Neither anything in this Lease contained, nor any acts of City or Lessee shall be deemed or construed by any person to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association between City and Lessee. [§ 1307] Compliance with Law Except as otherwise expressly provided in the Development Agreement and /or the Agreement, Lessee agrees, at its sole cost and expense, to comply and secure compliance with all the applicable and valid requirements now in force, or which may hereafter be in force, of all municipal, county, State and federal authorities, pertaining to Parcel B and Improvements, as well as operations conducted thereon, and to faithfully observe and secure compliance with, in the use of Parcel B and Improvements, all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, including all laws prohibiting discrimination or segregation in the use, sale, lease or occupancy of the property. [§ 13081 Surrender of Property Except as otherwise expressly provided in this Lease, upon the expiration or termination of this Lease pursuant to the terms hereof, it shall be lawful for City to reenter and repossess Parcel B and Improvements without process of law, and Lessee, in such event, does hereby waive any demand for possession thereof, and agrees to surrender and deliver Parcel B and Improvements peaceably to City immediately upon such expiration or termination in good order, condition and repair, except for reasonable wear and tear. [§ 13091 Severability If any provision of this Lease shall be adjudged invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. [§ 13101 Binding Effect This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. [§ 13111 Assignment or Sublease to City City shall at all times have the right to encumber, sell, convey, transfer, or otherwise dispose of all or any portion of any fee or reversionary interest in Parcel B and /or in this Lease to Santa Monica\The village\ Attachment No. I I DDA documents\ Parcel B Lease At. r In Page 54 of 58 .Execution v.Pinal Contract Number 8936 (RAS) any other person or entity. In the event of any assignment of all or a part of City's interest in either Parcel B or this Lease to a person or entity, the Lessee shall attorn to such person or entity and recognize such person or entity as the landlord under this Lease, and such other person or entity shall provide Lessee with a reasonably appropriate non - disturbance agreement. So long as Lessee is not in default of the Agreement or this Lease, City shall not encumber, sell, convey, transfer, or otherwise dispose of all or any portion of any fee or reversionary interest in Parcel B to any third person or entity until the earlier occurrence of: (i) the recordation of the permanent loan against the affordable housing components of the Project (i.e. the Affordable Apartment Units and the Affordable Live/Work Units), or (ii) four (4) years after the commencement of the term of this Lease. [§ 13121 Captions The captions contained in this Lease are merely a reference and are not to be used to construe or limit the text. [§ 1313] No Recording of this Lease This Lease shall not be recorded. Pursuant to the Agreement, a memorandum of this Lease will be recorded in the Official Records of Los Angeles County. [§ 13141 Enforced Delay in Performance for Causes Beyond Control of Party Subject to Section 604 of the Agreement, in addition to specific provisions of this Lease, performance by either patty hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond the control and without the fault of the party claiming an extension of time to perform, including war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts or failure to act of the City or any other public or governmental City or entity (other than any act or failure to act of City, which shall not excuse performance by City). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Lease may also be extended in writing by City and Lessee. [§ 13151 Entire Agreement, Waivers and Amendments (a) This Lease is executed in (_) duplicate originals, each of which is deemed to be an original. This Lease includes fifty -eight (58) pages and two (2) exhibits. Santa Monica \The village\ Attachment No. I IB DDAdocunients\ Parcel B Lease At, flit Page 55 of 58 .Execution v.Pinal Contract Number 8936 (RAS) (b) All waivers of the provisions of this Lease must be in writing and signed by the appropriate authorities of City or Lessee and all amendments hereto must be in writing and signed by the appropriate authorities of the City and Lessee. During the term of any Permitted Mortgage obtained in accordance with Section 901 of this Lease, any amendment to this Lease shall require the written approval of the Permitted Mortgagee, which approval shall not unreasonably be withheld. (c) The City's City Manager shall have the authority to approve, execute, and deliver any Lease Riders to Parcel B reasonably required by any Permitted Mortgagee; provided, however, that such Lease Riders do not subordinate (i) the affordability covenants contained in the Regulatory Agreement (Attachment No. 8 to the Agreement) and /or (ii) the City's fee interest in any Parcel. The City understands and agrees that the authority to approve such Lease Riders shall not be untimely or unreasonably withheld [§ 1316] Off -Set Statement Attornment and Subordination 1. Off -Set Statement. City and Lessee shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from the other party, execute, acknowledge and deliver to such requesting party a statement in writing (a) certifying that this Lease is unmodified and in full force and effect, or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect, and the dates to which the rent and other charges are paid in advance, if any, without any offset or defense thereto (if such be the case) and (b) acknowledging that there are not, to such certifying party's knowledge, any uncured defaults on the part of the requesting party hereunder or specifying the defaults if any are claimed. 2. Attornment. In the event any proceedings are brought for the foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure, or in the event of exercise of the power of sale under, any mortgage and /or deed of trust made by City covering Parcel B, or, subject to Section 1311.2 of this Lease, in the event City sells, conveys or otherwise transfers its interest in Parcel B, Lessee hereby attorns to, and covenants and agrees to execute an instrument in writing reasonably satisfactory to the new owner whereby Lessee attorns to the successor in interest and recognizes the successor as the City under this Lease, provided that the successor to City agrees not to disturb Lessee's leasehold interest. 3. Subordination. Lessee agrees that this Lease shall, at the request of the City, be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of Parcel B by City and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof, provided the mortgagees or beneficiaries named in said mortgages or trust deeds shall agree to recognize the interest of Lessee under this Lease in the event of foreclosure and shall not disturb Lessee' interest, in accordance with the terms of this Lease. Lessee also agrees that in the event City and any mortgagee or beneficiary elect to have this Lease prior to such mortgage or deed of trust, and upon notification by City or such mortgagee or beneficiary to Lessee to that effect, this Lease shall be deemed prior in lien to Santa MonicaMle village\ Attachment No. I IB DDA documents\ Parcel B Lease At. 11 B Page 56 of 58 xxecution v.Final Contract Number 8936 (RAS) such mortgage or deed of trust, whether this Lease is dated prior to or subsequent to the date o f said mortgage or deed of trust. Lessee agrees that upon the request of City, or any mortgagee or beneficiary, Lessee shall execute whatever instruments may be required to carry out the intent of this section. [§ 1317] Notice to Partnership and Limited Partner. The Lessee and the City each agree that provide copies of any notice sent or received hereunder shall be sent to the following parties at the same time and in the same manner as set forth in this Agreement: To the Investor Limited Partner: Wells Fargo Bank, National Association Winston -Salem Loan Center One West Fourth Street, 3rd Floor Winston - Salem, North Carolina 27101 Attention: Disbursement Administrator Wells Fargo Bank, National Association Community Lending and Investment 375 Park Avenue, 9th Floor New York, New York 10152 MAC J0127 -092 Attention: Timothy Edwards Wells Fargo Bank, National Association Community Lending and Investment 123 South Broad Street, 3rd Floor Philadelphia, Pennsylvania 19109 MAC Y1379 -031 Attention: Loan Administration Manager [§ 13181 Approvals Except as expressly provided otherwise in this Lease, approvals required of City or Lessee shall not be unreasonably withheld, conditioned or delayed. Santa MonicAThe Village\ DDA documents\ Parcel B Lease At. r IB .Execution v.Final CITY OF SANTA MONICA (City) By: Rod Gould City Manager Attachment No. 11B Page 57 of 58 ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney Marsha J. Moutrie APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Special Counsel Susan Y. Cola Contract Number 8936 (RAS) SANTA MONICA HOUSING PARTNERS, L.P., a California limited partnership C Name Title Name Title Santa MonicaMe village\ Attachment No. I IB DDA documents\ Parcel B Lease At. 1I13 Page 58 Of 58 .Execution v.Final - g EXHIBIT A MAP OF PARCEL B 1 LOT SHEET TRACT NO. 69828 5 "EFT' OF 3 SHEETS 2 `OT2 50. FT. IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. BEING A 41001N90N OF A PORTION OF LOT N0, 41 OF ME RANCHO SAN VICEMM T SANTA MONICA AS PER MAP RECORDED IN SOON 3 PAGES SO AND 31 OF PATENTS, ME A PORTION OF LOT 8 ALONG 4511N LOTS 9 THROUGH 13 OF SWTTS ADDTION TO SANTA MONICA AS PER MAP RECDOOLD IN BOOK ] PAGES DB AND 59 OF MISCELLANEOUS RECORDS, RECORDS OF LOS ANGELES COUNTY. FOR CONDOMINIUM PURPOSES NE HEREBY STATE THAT WE ARE ME OWNERS OF OR ARE INTERESTED IN ME WVOS INCLUDED WITHIN ME SUBDMSION SHOWN ON THIS MAP MMIN THE MSRNCBW BORDER UNES, AND ME CONSENT TO ME PREPARATION AND FANG OF SAID MAP AND SUBDIVISION. M HEREBY DEDICATE TO THE PUBLIC USE ALL SMEETS, HIGHWAYS, AND OTHER PUBLIC WAYS SHOWN ON SAID MAP WITHIN SAID SUBDIVISION. ME CITY OF SANTA MONICA, A MUNICIPAL CORPORATION, OWNER NAME MILE NOTARY ACKNOM MOMENT, STALE OF ...A ) CPINT(OF BEFFEE NE. A ADRAR ARM. PFRSCNALLY APPEA4E0 ALB PROVED TB ME M IRE BA4s GE 5'ALG AIART ENBEREE TB BE .1 PEAMX(S) .. NAME(s) IS /AAE EMMY. iB HE ... NSIRBUDIT AMB AIXN.IX.EO To NE NAT M /41E/RSY EIINRII TIE .1 III MIS/NG/MflN AU MFR) CMAPTHIES), AND THAT BY LIS/NFFCCHSR 4GNANFE(S) W ME HSTRUNDi T, HE PEASCM(S) M 144E AFTY UPAR RMAIf OF WHICH THE PWCS S) ACTED, EMEMP THE INSIRUNENT. I CFAIFY UNBER MALTY CE MUYAY UHOER HE UM OF . STALE OF ..A HAT THE IORE.NG P RACK A B HUE I'D CAHXY Tl .THE% NT NANO: SYSIANRE .1. 11.1 MY FOOPAL PuEE OF BIGNESS I$ IN NY COMMI59ON ND. MY CGNWSYDN NX BUG CONDOMINIUM NOTE: THIS MACY IS APPROVED AS A CONDOMINIUM PROJECT FOR 55 RESIDENTIAL UNITS AND 3 COMMERCIAL UNITS WHERRY ME OMENS OF ME UNITS OF MR SPACE WILL HOUR AN UNOINOED NNEREST IN ME COMMON AREAS THAT MILL IN TURN, PROVIDE ME NECESSARY ALI AND NULL EASEMENTS FOR ME UNITS. i HEREBY CERRFY THAT ALL CERTIFICATES HAVE BEEN FILED ME DEPOSITS HAVE BEEN MADE MAY ARE REWIRED UNDER ME PROVISIONS OF SECTORS 66492 AND 66493 OF ME SUBDIVISION MAP ACT EXECUBW OFFICER, BOARD CF SUPERVISORS OF ME COUNTY OF LOS ANGELES, STATE OF CAIJFORNIA BY DATE I HEREBY CERTIFY THAT SECURITY IN ME AMOUNT OF i HAS OEM THEN WITH ME EXECUTIVE OFFICER, BOARD OF SUPERVISORS BE ME COUNTY W LOS ANGELES AS SECURITY FOR ME PAYMENT OF TAXES .0 SPECIAL ASSESSMENTS COLLECTED AS TAXES ON ME LAND SHOWN ON MAP OF TRACT NO. 69628 AS REWIRED BY LAW. EXECUBW OFFICER, BOARD OF SUPFRNSIX6 OF ME COUNTY BE LDS ANGELES, STATE OF CALIFORNIA BY —DATE 9: ♦L..L THIS MAP WAS PREPARED BY ME OR UNDER MY DIRECRON AND IS BASED UPON A FIELD 5URKY IN CONFORMANCE YAM ME REQUIREMENTS OF ME SUBDIVISION MAP ACT AND LOCAL ORDINANCE AT ME REQUEST OF ME REMWMPMENT AGENCY OF ME CITY OF SANTA MONICA IN FEBRUARY 2002.1 HEREBY STATE THAT THIS MAP REPRESENTS A TRUE AND COMPLETE SURVEY MADE BY ME ON UNDER MY DIRECTOR IN FEBRUARY 2002: THAT THIS FINAL LAPP SUBSTPN RALLY CONFORMS TO ME CGNNIGNALLY APPROVED TENTAHW MAP; THAT ALL MONUMENTS ARE OF ME CHARACTER AND LOCATIONS FLOWN HEREON ARE IN PLACE; MAT SAID MGN MENTS ME SUFFICIENT TO ENABLE ME SURKY N BE RETRACED; THAT BWNDARY MONUMENTS SHOWN AS ARE IN PLACE, ME MAY BE NOTES TO ALL CENFERUNE MONUMENTS SHOWN AS "SET" ARE ON FILE IN ME OFFICE OF ME OFF ENGINEER. 07-!l JERRY L UEELIOC LS. 5]42 LICENSE EXPIRES 12/31/44 BASIS OF BEARINGS, ME BEARINGS SHOWN HEREON ARE BASED ON ME BEARING OF NORTH 44'18'56' WEST ON ME CENTERLINE OF MAIN STREET AS SHOWN ON RECORD OF SHOWY, FILED IN SOOK 112, PACE 45 OF RECORDS OF SURKY, RECORDS OF SAID COUNTY. I HEREBY CERTIFY MAY i HAVE EXAMINED ME MAIN ME SUBDMSON AS SHOWN IS SUBSTANTIALLY ME SAME AS IT APPEARED OR ME TENTARK MAP AND MY APPROVED ALIERA IONS THEREOF; AND ALL PROVISIONS M CHARIER 2 OF ME STATE SUBDIVISION MAP ACT AND ME CITY OF SANTA M0MCA'S SUBDMSION ORDINANCE APPLICABLE AT ME 'ME OF APPROVAL OF ME TENTATIVE MAP HAW BEEN COAPUFD MM. �0{[S61pWk `oN 59yJ, fN CITY ENGINEER, CITY OF SANTA MONICA GATE G LEON SWAIN. AO L4pp .v R.C.E. 440. 09]0]0 E%PIRES 3_3L -2W2 f W. OS /11/12 � CITY CLERK'S CERTIFICATE: yF a uW {°'�� I HEREBY CERTIFY THAT ME CITY COUNCIL OF ME CITY OF SANTA MOTION BY RESOLUTION 00. C.C.S., AT A MEERNG HELD ON 200_, APPROVED ME ATTACHED SUBOIV190N MAP. AND ACCEPTED ON BEHALF OF ME PUBUC. WE STREETS. HIGHWAYS, AND OTHER PUBLIC WAYS DEDICATED ON SAID MAP. SUBJECT TO ME CONDITION MAT ALL LAWS LEGALLY APPLICABLE TO FINAL SUMMSON MAPS ARE N BE COMPILED ON DATE CITY OFFER OF ME CITY OF SANTA MONICA LvEmlaw1wm am :I I HEREBY CERTIFY THAT ALL SPECIAL ASSESSMENTS FEWER UNDER ME JURISDICTION OF ME CITY OF SANTA NONICA, TO MACH ME LAND INCLUDED IN ME AMPS SUBDIVISION ON ANY PART THEREOF IS SUBJECT, AND MACH MAY BE PAD IN ML, HAW BEEN PAR) IN TILL. DATE CITY TREASURER CF ME CITY OF SANTA MONICA MANAGERS CITY BUSINESS & REVENUE OPERATIONS CITY OF SANTA MONICA, A MUNICIPAL CORPORATOR, 15 ALIEN CLAIMANT UNDER AGREEMENT RECORDED AS INSTRUMENT NO. . OF OFFICIAL RECORDS. RECORDS OF LOS ANGELES COUNTY. DATE BUSINESS & REVENUE OPERATORS MANAGER BUSINESS A, REVENUE OPERATIONS DIVISION CITY CF SANTA MONICA COUNTY ENGINEER'S CERTIFICATE' 1 HEREBY NMUFY MAT I HAVE EXAMINED THIS MAP; THAT IT COMPLIES MM ALL PROVISIONS OF STATE LAW APPLICABLE AT ME TIME OF APPROVAL OF ME TENTATIVE MAP AND THAT I MI SATISIFEO MAT MIS MAP IS TECHNICALLY CORRECT IN ALL RESPECTS NOT CERTIFIED BY ME CITY ENGINEER. COUNTY ENGINEER BT _. DAIS DENNIS E HUNTER, DEPUTY L.S. Mo. 8539 EXPIRES 12/31/2012 ABANDONMENT NOTE: I HEREBY CERTIFY PURSUANT N SECtOR 6643TRO OF THE SUBDIVISION MAP ACT, ME IN NO OF THIS TRACT MAP CONSTITUTES ABANDONMENT OF THOSE EASEMENTS ACQUIRED By ME Cltt OF SANTA MONICA AS FOULOWS FIRST COUNT ON SCOTTS ADDITION TO SANTA MDNIGA AS PER MAP RECORDED IN BOOK ,7 PAGES 55 AND 59. MISCELLANEOUS RECORDS. AN EASEMENT RECORDED MAY 8. 1940. AS INSTRUMENT NO. 1344 IN BODH 12489 PAGE 151 IN OFFICIAL BECOROS, NOT SHOWN ON THIS MAP. DATE CITY CLERK OF ME CITY OF SANTA MONICA SCALE IF = 100' CEI - 1CI.TFS LOODO OOFOUS Maws MB - wDIUTLS aCDAD a suresEr an0x ® a e lx - INC. alr DGNEFB ME+D WCA TIE NO., ` ®` ns F000C.1. F. WDX sx - INDICATED SE"... .,NO NDmINC. BOUNDARY NOTE: THE A. SONCWENE REPREANTAnON Cl IR XRrpnCAL PCNNNA25 W ME AND MnUN SECTTM S ADDITION TD SANTA NOG. Ill 1/5159 AND TAASr N0. .] <x. NR 1B /. IS I. 1. AU I'V s TO CE IO�CAT�E� IN AWCSTSIDFxPMA, IODINE ASI NO. W "II "Ev". FOUR MM SS ACCU u25TPOF FE LOTS NTNw SMD TRACTS AID MADE ON INS MAP HpIDNC FCD. - INCIUES ME BOUNDARY OF TIff LAND SLWC PUB01ADW B! MS WP. MONUMENT NOTE: Q SET z' I.P. CUNT PWG TACO H TAC'LS SN]'. O3 SET LEAD. TACM a FAD 12 SNY, Oe SET SPIRE t WA91ER ..I. 1 SNr. N. TRACT NO. 69828 IN THE CITY' OF SANTA MONICA, COUNTY OF LOS ANGELES STATE OF CALIFORNIA. SHEET 2 OF 3 SHEETS FOR CONDOMINIUM PURPOSES ___ ____- r_________________________ FD. - xD TAD, \ e- ]B�oip' Pq Rsa 1u /as BOUNDARY SHEET sR+ I SEE SHEET 1 FOR BASIS OF BEARINGS g FIRSTCOURT pIR$rcouRT W 8 r D .B W „wl SEE SHEET 3 FOR DETAILS AND EASEMENTS � 1 q AsB,5rzwa1 FW R xaaTB'/9m'w FAND IwE OF IARm xsslazn Ix �¢ sqP, ss xn. xo. _ 20x8)' SON r -m a1 AS lI o uanB'xw IN R' 1D20BT el•IZ Rpp.,MS v R•EaOOOa. I I DETAIL E I Nor TO swLE MAIN _ IT STREET a '.. - -�rO mi7 ' « IADO' 1D.00' b9.ea' - xi.w I a 21 8 _______________IVY $« er osPN1.x al='S �asiieo is °mi11iT: of ce'u BF CLINIC PUCE 111AR AND WUI LI °� u9rrs e90mw ID SANTA Irorw/sB =se ? . °- `l -ID, -n OF TDE AIL 9 DETAIL C I t I I 1 SCALE Y = RO' I � SLAL +- = Ro' � I : n !L _JI____ _._I NBM"l"].. PW1 u1 O E _________ r S: sPI FGA ) FSp. 6B -B NAIL W/WAAER Mw+ s1AEEt. FD. IN PRI I+D° Ri'i' M'9i/v w I AAPU clIT of SAM, FINTS UAL ND LAD. HDx NC.' PER UCC D. ' N 0]LB'E c.06' NO REF., mr tttJ %100. FIR n n6 PER x >raOY 0.06 \MZ]P m ' IACO PIfiB nls/ SN. sn a's n 1oss.n'____I S/. .o m_ axTwlTEDa+EAVICOIe`mlGievANC. i m m w lava ss Fes, FRI. MAIN STREET CCAP ° +k OCEAN AVENUE -- R - ' ¢� ` NOT TTD 0 5 ALE PEIAC�C PS CU, 11LI3 /]e]D -3w,1 4' !✓ amOMAIx. rzfluxE lxr. t \ f0. S AR STAND. 5N]' PER LA - ' - - - - - y cPre En +- 3I9w FIRE DETAIL D A UTED AB P. FDR 1 -- i_ CFNIERUNE MAN SnhEi. I ( SCALE 1 >< 10' .c,II'FOUND 16.00' 9n Pq Q "x�\ _ wu }tT- I \ e- ]B�oip' PART R'zp,'oD "' "^' �N EZAD DF 91RYLY. /I III p :AO.i6' i NOTION .B0 OF THIS SUBDIVISION Ds`w W „wl E� REMAINDER PARCEL FAND IwE OF IARm xsslazn Ix �¢ sqP, ss xn. xo. I Q �9 iCFACCN IS ] 1) NO REF. ACCEPTED AS Do- BEC APRV, mD . YA} >nA ESIABUSxEO PER BVS D6➢. ¢N ) I 4 W G ICI ML 1NNCTMCF FlUl FOUNT -I FRO B E RALY IqE LOT 5 ROOr6 pF WIFFAREALT Uf2 R zWR2 A0°InDX 0 SARA NOME". Mp "A"". FEr. FRW W •! a0' 7r\ Q sly 'C j ADDIONA7. SANTA NN°CA NR ]/5 .. o A. X RTHRE r 1. MCORD �d +y mAx¢ moY ucsr svr cDR. Lo» ,O ST /],I" Z U L� [ M.. W4T TACfaD LE ]I]A NO R6p ACCEPTED AS E INr. M N£ CL OF ilRSi COURT IXE N LOT i LOT psc.m) 2 rRACr N0. 1N). NR +0/0A RR RFB 113/95. mn \S bUS'J r W I w3 PnOgCNAnON OF ME NWlT I➢xE LOT s SCORT R x PIN a 11.,UC F NEi s P„ lJAD ` m m' 2 ee ADO TD DAN, uUCC` uR ] /1'.. ry j,+ A A °JP. papEnpDAEgnprl OF JA a3S. \F C'L' r Nie_ 0 SEE DETAIL � R. wI, B SEE CANALS 5FE DETAIL C ImowE pIDNp NA "f LT LNf Y zcDGS APAMOU r0 CAN Q I / t / . B,'o (ABOxERICRT) PER MB. 112 /u FEE i Pofl DEFPIL6 FIRST C RT za.sT M x/5B -ae /R mE YT ] y 1 05' I x..Ta'Srw FIRST _ 2Dx3B� D65.# COUR1•raxed' r'- C, xwFV uv i OF ur s DF m xD I,N. Mn AxcLF Vwai¢ °T: uo''� miN1e P BA.Sw �. PAID �. D 015(. (100.01)' C A+ Up W'� IO.W D'ag 999. YOSI'0 3B SM. A� IxL OF ME *AND 23x.05' NMLY LK LOr6 [[ Z + y„ «gig nY wmrA a ID v8 Sg Fu9myi OMw u vii r I.NDF ra PRaw+o nox DFrasCLr ry W I;+ „NOTA PA SUBDIVISION IpARr w Iv], NOT A PART xp la /80. IA r_l ao'ry p aD'I F/� _ Q,r _ u,w _ °m i/SF56 uxE O�q mr lu5 usmrts ADDInO T u 6A. p,_s loa Fv uxE OF LOT n. -gl el$ ORZ AW ION N SANTA: - �-XX1r IME 5 ME OELr xr U OF THIS SUBDIVISION '$ -] % L - - _ MR ]pe -a9 n C. zv� cA, up ]no-u. LDUrp Ysc°mz.cDlnou r0 AT BECDRD OIOrAX[E PER DNICA. NR ]/SB DR. UPS. p SIR DO a29.61' 590.09' -59, FSI. NOR NVI, Ar IEC010 DSr. PW RB 112/95 1ln.AY ISBU ER. iW LRD AERRpm IXSA N0. OA N xt 215.21' _ 22x.96' 26)B9' - - OD -INM1f& 515 EB' IR Q'I� - NROAD, �77.1B q P.-8.T112 %52(eAA P4LL5f /A 1010.60' Sq xaq'alC'DOi UPS 7'. �_ j r9 WA'W CCE'. AS YOS, AvT CmNW OCEAN "' US u scOTrs A, _ 351.55' _V/ / -��� ---"` of ASCII s uo" XR x/SB-s9 '" sFU% AVENUE li SEE DETAIL A s[ N. SW STAYPEO'IS e/ CO IFFB +113- SSBhSa. ( 01E RICXT) CnortD A5..I Itr COIN. SFX, ACID. 13 OF MDSr 5LY C.P.R. SCOtYS AOB r RECMD Dln. Usl.ss) ipM EPBICO/P'tAN n wr. nR s TIES Pq SPC FA FzT. 01 INRASECnOx, {15 MCDAD OISt (52x.1 B) iAOY CU Cnd/.N 2 OF SCDTTS ADDIMN 'ON rp 5A N. NOM.. NR '/S .-RD DU DUST. "D, Cl. IAI0 A1PL IN 20D0. A. ACCFPTF➢ As c/L wr. AND CO. PR RS011V ACCEPTED AS .1 Ixt CF CLINIC 1.6WM lC OU N AwNL N AA1RA AOxIG, NR ) /N -55 ECOflCEO SET $hW STOPPED -L& 5347. D N2'. SCA`E 1 " =50' TRACT NO. 69828 1 ECBEND IN THE CITY OF SANTA MONICA, IN61GiE5 WE BOUNDARY OF THE LAND BEING SOBOINOE6 BY 1X15 MAP COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, FOR CONDOMINIUM PURPOSES b ` p O C v MAIN uurW,r• �19.a lewL S T R E E T Q MONUMENT NOTE: O ICI z' I.I. E.T PWa TA. 41M 1S 1.1 p SET uEAO. TAG( t uo Ls 5%r. O SET 5Pl4 h W ER STMMPE➢ %S EUAr. EASEMENT NOTE: C r RED .s .T m aswu wnvosz SHEET 3 OF 3 SHEETS DETAIL AND EASEMENT SHEET SEE SHEET 1 FOR BASIS OF BEARINGS. SEE SHEET 2 FOR BOUNDARY, MONUMENTS AND SURVEYOR'S NOTES. b\ I - yAy�oy 46 av <e I OETAILOF OF J3 LOT LOTI 40,566 S.F. .W $$ OE7IAILOP B LOT ]B.C.. S.F. GR055 ]t,] 285.F. NET ° P w h FIRST COURT _ NNt<'a9'W a.OY XNtCS]410.5SR' 1 a i NutCSTW TB 3Y 3 FIRST ¢ _ LOURr'o.00• - fl T ��N'.6'* �� m Y LOUN, �. G _ _ _ _ 219Ax' _ _ TB' N.,BYYw SEA. ' _ - �- 0.pp' ¢00 _ y xw'lYarv, I _ $ -� �•" II - ta'mwff.zs' � I^ I I W 1 w J a 1 'mA 36d6' I _0.16_ - O x xaiaop 3M11 ________ uutCSYW a43E0� - - - - -- — . w N OCEAN AVENUE B•8 0 d �. _ -- — _ 10.55.]1' _________ M19'pp�w IBB4iB' EXHIBIT B LEGAL DESCRIPTION OF PARCEL B TRACT NO. 69822 IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. BEING A SUBDIVISION OF A PORTION OF LOT NO. 41 OF THE RANCHO SAN VICENTE Y SANTA MONICA AS PER MAP RECORDED IN BOOK 3 PAGES 30 AND 31 OF PATENTS, A PORTION OF LOT 18 OF SCOTT'S ADDITION TO SANTA MONICA AS PER MAP RECORDED IN BOOK 7 PAGES 58 AND 59 OF MISCELLANEOUS RECORDS, AND LOT 7 AND A PORTION OF LOT 13 OF TRACT NO. 1347 AS PER MAP RECORDED IN BOOK 18 PAGE 89 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXHIBIT F PARCEL C GROUND LEASE [BEHIND THIS PAGE] Contract Number 8935 (RAS) ATTACHMENT NO. 11 C FORM OF PARCEL C GROUND LEASE PARCEL C GROUND LEASE By and Between THE CITY OF SANTA MONICA, CITY, "IT4I SANTA MONICA URBAN HOUSING C, LLC, a Delaware limited liability company, LESSEE Contract Number 8935 (RAS) IMMIy [§ 1001 SUBJECT OF GROUND LEASE ................................................. ............................... I [§ 101] Purpose of the Lease ......................................................................................... ..............................1 [§ 102] The Redevelopment Plan ................................................................................ ..............................1 [§ 103] The Redevelopment Project Area .................................................................. ..............................2 [§ 104] Parcel C .............................................................................................................. ..............................2 [§ 105] The Improvements ............................................................................................ ..............................3 [§ 106] Condition of Parcel C ....................................................................................... ..............................3 [§ 106.1] Hazardous Substances .................................................................................. ..............................3 [§ 106.2] Suitability of Parcel C ................................................................................... ..............................4 [§ 107] Parties to the Lease ........................................................................................... ............................... 5 [§ 1081 City ...................................................................................................................... ..............................5 [§ 1091 Lessee ................................................................................................................ ............................... 5 [§ 200] LEASE OF PARCEL C ................................................................. ............................... 5 [ §201] Lease ................................................................................................................... ..............................5 [§ 202] Term of the Lease .................................................................:........................... ..............................6 [§ 300] RENT ............................................................................................. ............................... 6 [§ 301] Definitions .......................................................................................................... ..............................6 [ §302] Ground Rent ...................................................................................................... ..............................7 [ §303] Base Rent ........................................................................................................... ..............................7 [ §304] Additional Rent ................................................................................................. ..............................7 [§ 305] Net L ease ............................................................................................................ ..............................7 [§ 306] Non Subordination ...............................................................................:........... ............................... 7 [§ 307] Delinquency in Rental Payment ..................................................................... ..............................7 [§ 400] DEVELOPMENT OF PARCEL C ................................................ ............................... 7 [§ 401] Scope ofDevelopment, Plans, Drawings and Specifications .................... ..............................7 [ §402] No Construction Before Notice ...................................................................... ..............................7 [§ 403] Notice ofNon Responsibility ......................................................................... ............................... 8 [§ 404] Mechanic's, Materialman's, Contractor's or Subcontractor's Liens ....... ............................... 8 [§ 405] Rights of Access ................................................................................................ ..............................9 [§ 406] Local, State and Federal Laws ....................................................................... ............................... 9 [§ 407] Nondiscrimination During Construction ...................................................... .............................10 [§ 500] USE OF PARCEL C AND IMPROVEMENTS .......................... ............................... 10 [§ 501] Use of Parcel C and Improvements .............................................................. .............................10 [§ 502] Limitations on Use of Site .............................................................................. .............................11 [ §503] Maintenance ..................................................................................................... .............................12 [§ 504] Management of Parcel C and Improvements .............................................. .............................13 [§ 505] Obligation to Refrain from Discrimination .................................................. .............................15 [§ 506] Form ofNondiscrimination and Nonsegregation Clauses ........................ .............................15 30601.0002\405061.1 Attachment No. 11C Page i ofv Contract Number 8935 (RAS) [§ 507] Quiet Enjoyment ......:....................................................................................... .............................16 [§ 600] TAXES, ASSESSMENTS AND OTHER CHARGES ............... ............................... 16 [§ 601] Utilities ............................................................................................................... .............................16 [§ 6021 Impositions (Including Taxes and Assessments) ........................................ .............................16 [§ 603] Payment Generally .......................................................................................... .............................16 [§ 604] Payment of Impositions in Installments ....................................................... .............................17 [ §605] City Right to Cure ............................................................................................ .............................17 [ §606] Tax Receipts ..................................................................................................... .............................17 [§ 607] Tax Liability ...................................................................................................... .............................18 [ §608] Contests ............................................................................................................. .............................18 [§ 609] Notice ofPossessory Interest; Payment of Taxes and Assessments on Value ofEntire Property............................................................................................................. .............................19 [§ 610] Other Liens ........................................................................................................ .............................19 [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS ................... 19 [§ 701] Ownership During Term and at Expiration and Termination ................... .............................19 [§ 702] Removal of Fixtures and Furnishings at Expiration or Termination ....... .............................20 [§ 703] Maintenance and Repair of Improvements .................................................. .............................20 [§ 704] Waste ................................................................................................................. .............................21 [§ 705] Alteration of Improvements ........................................................................... .............................21 [§ 706] Damage to or Destruction of Improvements ............................................... .............................21 [§ 707] Lessee to Give Notice ..................................................................................... .............................21 [§ 708] Restoration ........................................................................................................ .............................21 [§ 7091 Application of Insurance Proceeds ................................................................ .............................22 [§ 710] Damage or Destruction During Final Years of Tern ................................. .............................23 [§ 711] Faithful Performance and Labor and Material (Payment) Bonds; Indemnification; NonResponsibility Notices ............................................................................ .............................24 [§ 8001 ASSIGNMENT, SUBLETTING, TRANSFER ........................... ............................... 24 [§ 801] Warranty Against Speculation ....................................................................... .............................24 [§ 802] Prohibition Against Transfer .......................................................................... .............................25 [§ 803] Investigation of Proposed Transferee; Costs ................................................ .............................27 [§ 804] Sale of Condominium Units ........................................................................... ...............:.............29 [§ 805] Release of Construction Covenants .............................................................. .............................29 [§ 900] MORTGAGES ............................................................................. ............................... 29 [§ 9011 Leasehold Mortgages ...................................................................................... .............................29 [§ 902] Rights and Obligations of Leasehold Permitted Mortgagees .................... .............................31 [§ 903] City's Forbearance and Right to Cure Defaults on Leasehold Pemlitted Mortgages ........34 [§ 904] Notice ................................................................................................................. .............................34 [§ 905] Forbearance by City ........................................................................................ .............................34 [§ 905.11 Conditions Precedent to Permitted Mortgagee Rights and City Forbearance .................35 [ §906] Performance on Behalf of Lessee .................................................................. .............................36 30601.0002 \405061.1 _ Attachment No. I IC Page ii ofv Contract Number 8935 (RAS) [§ 907] Nonmerger ........................................................................................................ .............................36 [§ 908] City Cooperation .............................................................................................. .............................36 Legal Actions ..................................................................................................... .............................43 [§ 909] Enforceability ................................................................................................... .............................37 Institution of Legal Actions ............................................................................. .............................43 [§ 910] No Subordination of City's Interests ............................................................. .............................37 Applicable Law ................................................................................................. .............................43 [§ 911] Obligations of Mortgagee Upon Acquisition of Leasehold Or Subleasehold Estate ......... 37 [§ 912] City's Rights Against Prior Lessees .............................................................. .............................37 Attorneys' Fees and Court Costs .................................................................... .............................43 [§1000] INDEMNIFICATION AND INSURANCE ................................ ............................... 38 [§ 1001] Indemnification ................................................................................................. .............................38 [§ 1002] Required Insurance ........................................................................................... .............................38 [ §1003] Definition of "Full Insurable Value" .............................................................. .............................39 [§ 1004] General Insurance Provisions .......................................................................... .............................39 [§ 1005] Failure to Maintain Insurance ........................................:................................. .............................40 [§ 1006] Disposition of Insurance Proceeds Resulting from Loss or Damage to Improvements .....40 [§1100] EMINENT DOMAIN .................................................................. ............................... 41 [§1101] Lessee to Give Notice ...................................................................................... .............................41 [§ 1102] Total Taking ....................................................................................................... .............................41 [§ 1103] Partial Taking ..................................................................................................... .............................41 [§1104] Application of Awards and Other Payments ................................................ .............................41 [§ 1200] DEFAULTS, REMEDIES AND TERMINATION ..................... ............................... 42 [§ 1201] Defaults General ................................................................................................ .............................42 [§ 1202] Legal Actions ..................................................................................................... .............................43 [§ 12031 Institution of Legal Actions ............................................................................. .............................43 [§ 1204] Applicable Law ................................................................................................. .............................43 [§ 1205] Acceptance of Service of Process ................................................................... .............................43 [§ 1206] Attorneys' Fees and Court Costs .................................................................... .............................43 [§ 1207] Rights and Remedies are Cumulative ............................................................ .............................43 [§ 12081 Damages ............................................................................................................. .............................44 [§ 1209] Specific Performance ....................................................................................... .............................44 [§ 1210] Additional Remedies of City ........................................................................... .............................44 [§ 1211] Rights of Termination ...................................................................................... .............................45 [§ 1212] Cross-Default — Among Parcels ..................................................................... .............................47 [§ 1212.11 Cross- Default — Among Parcels — Concurrent Financing of Parcels A and B only . ...... 47 [§ 1212.2] Cross - Default —Among Parcels — Concurrent Financing of Parcels A, B and C...........48 [§ 1300] GENERAL PROVISIONS .......................................................... ............................... 48 [§ 1301] Notices, Demands and Communications between the Parties ................... .............................48 [§ 1302] Time of Essence ................................................................................................ .............................48 [§ 1303] Conflict of Interests ........................................................................................... .............................48 [§ 1304] Nonliability of City Officials and Employees .............................................. .............................48 [§ 1305] Inspection of Books and Records ................................................................... .............................49 [§ 1306] NoParinership ................................................................................................... .............................49 30601.0002r405061.t Attachment No. I IC Page iii ofv [§ 1307] [§ 1308] [§ 1309] [§ 1310] [§ 1311] [§ 1312] [§ 1313] [§ 1314] [§ 1315] [§ 1316] [§ 1317] 30601.0002 \405061.1 Contract Number 8935 (RAS) Compliancewith Law ...................................................................................... .............................49 Surrenderof Property ....................................................................................... .............................49 Severability........................................................................................................ .............................49 BindingEffect .....................................:............................................................. .............................49 Assignment or Sublease ................................................................................... .............................50 Captions............................................................................................................ ............................... 50 NoRecording of Us L ease ............................................................................. .............................50 Enforced Delay in Performance for Causes Beyond Control of Party ..... .............................50 Entire Agreement, Waivers and Amendments ....... Off-Set Statement, Attomment and Subordination 51 51 Association Option to Extend Lease Term ................................................... .............................52 AttachmentNo. 11 C Page iv of Contract Number 8935 (RAS) � IIC EXHIBIT A - MAP OF PARCEL C EXHIBIT B - LEGAL DESCRIPTION OF PARCEL C EXHIBIT C - FORM OF ASSIGNMENT OF LEASE 30601.0002\405061.1 Attachment No. 11 C Page v of v Contract Number 8935 (RAS) ATTACHMENT 11 C 30011W H " This Ground Lease (this "Lea d se ") date as of 20 ( "Effective Date ") is entered into by and between the CITY OF SANTA MONICA ( "City "), as assignee to the REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA ( "Agency ") pursuant to that certain Assignment and Assumption Agreement, dated March 8, 2011, and SANTA MONICA URBAN HOUSING A, LLC, a Delaware limited liability company ( "Lessee "). [§ 100] SUBJECT OF GROUND LEASE [§ 101] Purpose of the Lease The City is the owner of certain real property (the "Site ") located within the Village Special Use District ( "District ") in the City of Santa Monica, California. The District is located west of Main Street, east of Ocean Avenue, north of Pico Boulevard and south of the future extension of Olympic Drive from Main Street to Ocean Avenue. The District includes the newly built RAND Corporation headquarters, the Viceroy Hotel, a private office building at 1733 Ocean Boulevard, and the proposed "Site," which is comprised of approximately three acres. The Site has been subdivided into three parcels, individually referenced herein as "Parcel A" (Lot 1 of Tract 69828); "Parcel B" (Lot 2 of Tract 69828); and "Parcel C" (Lot 1 of Tract 66228). The purpose of this Lease is to effectuate the Redevelopment Plan for the Earthquake Recovery Redevelopment Project ( "Redevelopment Plan ") by providing for the redevelopment of the Site with a mixed retail commercial and residential housing development on the hereinafter defined Site ( "Improvements" or "Project ") in accordance with the terms and conditions of this Lease. The lease of Parcel C and the development and operation of the Improvements, and the fulfillment generally of this Lease, are in the vital and best interests of the City of Santa Monica ( "City ") and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. [§ 102] The Redevelopment Plan This Lease is made in accordance with and subject to (a) the Redevelopment Plan, which was approved and adopted by Ordinance No. 1747 (CCS), as amended from time to time by the City Council of the City, and (b) the Disposition and Development Agreement entered into by and between Agency and Related/Santa Monica Village, LLC ( "Developer ") on June 10, 2008, as amended by that First Amendment to Disposition and Development Agreement dated as of July 1, 2008, and that Second Amendment to Disposition and Development Agreement dated as of [insert date], 2011 (collectively referenced herein as "the Agreement "), which governs the terms and conditions for development and use of the Site. The Site was transferred by the Agency to the City on March 9, 2011, and the Agency's rights under the Agreement were assigned to the City, in accordance with that certain Assignment and Assumption Agreement, dated March 8, 2011, which assignment was consented to by Developer. Except as specifically provided for in the Agreement, nothing in this Lease shall be deemed to modify or limit the rights of either the City or Lessee under the provisions of the Agreement. The Agreement is incorporated herein by this reference as though fully set forth Jxsu0601.0002\405061.1 1 Contract Number 8935 (RAS) herein. The term "Agreement" as used herein shall mean, refer to and include the Agreement, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the Agreement. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. Any amendments hereafter to the Redevelopment Plan (as so approved and amended) which change the uses or development permitted on Parcel C, as provided in this Lease, or otherwise change the restrictions or controls that apply to Parcel C, shall not apply to Lessee, any Master Permitted Mortgagee who has registered its name and address in writing with City (or any party that acquires an interest therefrom), or Parcel C without the prior written consent of Lessee and any existing Master Permitted Mortgagee who has registered its name and address in writing with City. No other amendments to the Redevelopment Plan shall require the consent of Lessee. Developer has also entered into that certain Development Agreement by and between the City of Santa Monica and Related /Santa Monica Village, LLC for the Village at Santa Monica, dated , 2008 for reference purposes (the "Development Agreement "), which, among other things, provides for the development of Parcel C by Lessee in conformity with the City's General Plan and Specific Plan. The development of Parcel C in accordance with the Development Agreement conforms to the Redevelopment Plan. Nothing in this Lease shall modify or limit the rights of either the City or Lessee under the provisions of the Development Agreement. [§ 103] The Redevelopment Project Area The Earthquake Recovery Redevelopment Project Area is located in the City. The exact boundaries of such Project Area are specifically and legally described in the Redevelopment Plan. [§ 104] Parcel C Parcel C is that certain real property within the Earthquake Recovery Redevelopment Project Area illustrated and designated as such on the "Map of Parcel C" (which is attached hereto and incorporated herein as Exhibit A) and having the legal description set forth in the "Legal Description of Parcel C" (which is attached hereto and incorporated herein as Exhibit B). City reserves to itself, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following: a. Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from Parcel C or any other land,.including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of Parcel C, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, JRS\3 0601.0002\40506 1.1 2 Contract Number 8935 (RAS) drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of Parcel C; and b. Subject to use by Lessee on Parcel C and in connection with the Improvements and subject to any use in connection with ownership, development and operation of the Improvements, any and all water, water rights or interests therein, no matter how acquired by City, together with the right and power to explore, drill, redrill, remove and store the same from Parcel C or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by City, whether such water rights shall be riparian, overlying, appropriative, percolating, littoral, prescriptive, adjudicated, statutory or contractual; but without, however, any right to enter on or through the surface or upper 500 feet of the subsurface of Parcel C in the exercise of such rights and, provided further, that the exercise of any such rights by City shall not result in any damage or injury to the Improvements constructed on Parcel C by Lessee, including without limitation any subsidence of all or any part of such Improvements. [§ 1051 The Improvements The term "Improvements" as used in this Lease shall mean the Improvements described in the Scope of Development, attached to the Agreement as Attachment No. 4, as well as any improvements made or instructed in accordance with terms of this Lease. [§ 1061 Condition of Parcel C [§ 106.11 Hazardous Substances a. "Hazardous Substance," as used in this Lease means any substance, material or waste which is or becomes regulated by the United States government, the State of California, or any local or other governmental authority, including, without limitation, any material, substance or waste which is (i) defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste," or "extremely hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code; (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code; (v) petroleum; (vi) asbestos; (vii) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903); (xi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection; storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to public health and safety. "Hazardous Substances" do not include materials customarily used in the construction, development, JRS\3 0601.0002\40506 1.1 3 Contract Number 8935 (RAS) operation or maintenance of real estate, provided such substances are used in accordance with all laws. b. Lessee hereby represents and warrants that the development, construction and uses of Parcel C permitted under this Lease (i) will comply with all applicable environmental laws; and (ii) do not require the presence of any Hazardous Substance on Parcel C in violation of any environmental law. [§ 106.2] Suitability of Parcel C a. Prior to the Close of Escrow for conveyance of the leasehold interest in Parcel C, Lessee shall have the right, at its sole cost and expense, to engage its own environmental consultant ( "Lessee's Environmental Consultant "), to make such investigations as Lessee deems necessary, including without limitation any "Phase 1" and /or "Phase 2" investigations of Parcel C or any portion thereof, and the City shall promptly be provided a copy of all reports and test results provided by Lessee's Environmental Consultant (the "Environmental Reports "). b. Parcel C shall be delivered from City to Lessee in an "as is" physical condition, with no warranty, express or implied by City as to the presence of Hazardous Substances, or the condition of the soil, its geology or the presence of known or unknown faults. If the condition of Parcel C is not in all respects entirely suitable for the use or uses to which Parcel C will be put, then it is the sole responsibility and obligation of Lessee to place Parcel C in all respects in a condition entirely suitable for the development thereof, solely at Lessee's expense. C. Lessee agrees to indemnify, defend and hold harmless Agency and City and their respective members, officers, agents, employees, contractors and consultants, in accordance with the Environmental Indemnity Agreement (Attachment No. 15 to the Agreement); provided, however, that except as to Developer Lessee and any Affiliate of Developer Lessee, the Environmental Indemnity Agreement shall not apply to or bind the "Association" or any "Condominium Unit Owner" as such terms are defined below after issuance of the Release of Construction Covenants. d. Upon assignment of this Lease to the Association, the Association shall indemnify, protect, and hold the City harmless from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, attorneys' and experts' fees and disbursements) of any kind or of any nature whatsoever (collectively, the "Obligations ") which may at any time be imposed upon, incurred by or asserted or awarded against the City and arising from or out of: (i) The presence of any Hazardous Substances on, in, under, or affecting all or any portion of Parcel C or any surrounding areas, in violation of any environmental law, except to the extent such Hazardous Materials were present on, in, under, or affecting all or any portion of Parcel C or any surrounding areas prior to the effective date of the Assignment of Lease (attached hereto as Exhibit «C,). (ii) The enforcement by the City of any of the provisions of subsection (a) or the assertion by Lessee of any defense to its obligations hereunder. JRS\3 0601.0002\40506 1.1 4 Contract Number 8935 (RAS) e. Lessee hereby waives, releases and discharges the Agency, the City, and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys' fees) arising out of or in any way connected with the Agency's, City's, or Lessee's use, maintenance, ownership or operation of Parcel C, any Hazardous Substances on Parcel C, or the existence of Hazardous Substances contamination in any state on Parcel C, however the Hazardous Substances came to be placed there, except that arising out of the gross negligence or willful misconduct of the City or its employees, officers or agents. Lessee acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." To the extent of the release set forth in this Section 106.2, Lessee hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. [§ 1071 Parties to the Lease [§ 1081 City "City" means the City of Santa Monica, a municipal corporation, and its assignees and/or successors to its rights, powers and responsibilities. The principal office of City is located at 1685 Main Street, Room 212, Santa Monica, CA 90401. Developer acknowledges and agrees that the City intends to fulfill its financial obligations under the Agreement and this Lease through certain funds received by the City from the Agency pursuant to certain Cooperation Agreements and Implementing Agreements entered into by and between the City and Agency, and not from any other sources, including, without limitation, the City's general funds, or any of the City's real or tangible assets (collectively, "City Funds "). Accordingly, nothing in the Agreement or this Lease shall require the City to expend or promise to expend monies from City Funds to satisfy all or any portion of the obligations set forth in the Agreement or this Lease. [§ 109] Lessee "Lessee" means SANTA MONICA URBAN HOUSING A, LLC, a Delaware limited liability company and/or any assignee and /or successor in interest allowed under this Lease, including the Association. SANTA MONICA URBAN HOUSING A, LLC, and its assignees, other than the Association, are referred to herein as "Developer Lessee ". The principal office of Lessee is located at [§ 200] LEASE OF PARCEL C [§ 201] Lease For and in consideration of the rents, conditions, covenants and agreements set forth herein, City hereby leases Parcel C to Lessee and Lessee does hereby take and lease Parcel C from City. iasv0601.0002405061.1 5 Contract Number 8935 (RAS) [§ 202] Term of the Lease The City shall convey to Developer Lessee a leasehold interest in Parcel C for a period of ninety -nine (99) years, commencing on Close of Escrow ( "Lease Term "). Subject to Section 1317, at the expiration or earlier termination of the Lease Term, Lessee shall execute, acknowledge and deliver to City, within thirty (30) days after written demand by City, a valid and recordable quitclaim deed as to Lessee's leasehold interest in Parcel C, free and clear of all liens and encumbrances. [§ 300] RENT [§ 301] Definitions For the purposes of this Lease, the following terms shall have the following respective meanings: "Association," as used herein, means the owners' association which operates and manages the condominium development developed on Parcel C. "CC &Rs," as used herein, means the Declaration of Covenants, Conditions and Restrictions for the condominiums on Parcel C, as amended from time to time. "Condominium Plan," as used herein, means the Condominium Plan or Plans depicting the Condominium Units and other aspects of the condominium project contained on Parcel C, as amended from time to time. "Condominium Unit," as used herein, means a condominium unit within Parcel C, as defined and described in the CC &Rs and the Condominium Plan. "Condominium Unit Owner," as used herein, means an owner of a Sublease of a Condominium Unit and its successors and assigns. "Consumer Price Index," as used herein, means the Consumer Price Index - All Urban Consumers, [Los Angeles -Long Beach - Anaheim], published by the Bureau of Labor Statistics or, if such index ceases to be published, the most closely analogous substitute index. "Master Permitted Mortgage" shall mean any mortgage, pledge, deed of trust, or other encumbrance, in whole or in part, of any of Developer Lessee's and/or Lessee's leasehold interest created by this Lease and /or Developer Lessee's and /or Lessee's interests or rights appurtenant to this Lease, each as security for any debt. "Master Permitted Mortgagee" shall mean the holder of any Master Permitted Mortgage. "Parking Structure" shall mean the podium parking garage on Parcels A and B with approximately 377 parking spaces, of which 197 parking spaces shall be designated for the use of the tenants and occupants of the Affordable Units on Parcel B, in accordance with the Reciprocal Easement Agreement. "Permitted Mortgage" shall have the meaning given to such term in Section 901. "Permitted Mortgagee" shall have the meaning given to such term in Section 901. "Reciprocal Easement Agreement," as used herein, means the Reciprocal Easement Agreement entered into between the Lessee of Parcel C and the Lessee of Parcel B, as amended from time to time, attached to the Agreement as Attachment No. 17. JRS\30601.0002 \405061.1 6 Contract Number 8935 (RAS) "Sublease" shall mean the individual sublease of a Condominium Unit executed by Developer Lessee in favor of a Condominium Unit Owner. All references in this Lease to the sale of Condominium Units shall mean the sublease of Condominium Units to Condominium Unit Owners. [§ 302] Ground Rent "Ground Rent," as used herein, shall mean rent paid by Lessee to City for Parcel C. Ground Rent consists of Base Rent (as described in Section 303) plus Additional Rent (as described in Section 304). [§ 3031 Base Rent Lessee shall pay "Base Rent" for the leasehold interest in Parcel C under this Lease. Base Rent, as used herein, shall mean the amount of TEN MILLION EIGHT HUNDRED THOUSAND DOLLARS AND NO CENTS ($10,800,000.00). Lessee shall make one lump sum pre - payment of the Base Rent at least three (3) days prior to Close of Escrow, as provided in Section 203(a) of the Agreement. The payment shall be made in the form of certified check, cashier's check, wire transfer or money order. [§ 3041 Additional Rent Lessee shall also pay as Additional Rent any expenses incurred by the City resulting from Lessee's failure to pay or cause to be paid any amounts owed to the City under this Lease or any person or entity, including, but not limited to, unpaid utilities, unpaid maintenance, unpaid Impositions, or unpaid liens or encumbrances. [§ 3051 Net Lease This is an absolute net lease. City shall not be required to provide any services or pay any expense or cost or do any act or thing with respect to Parcel C and Improvements or the appurtenances thereto. [§ 306] Non Subordination It is expressly understood and agreed that there shall be no subordination or encumbrance of any kind under this Lease or otherwise of the City's fee title ownership of the Parcel C. [§ 3071 Delinquency in Rental Payment Subject to applicable notice and cure provisions of this Lease, Lessee's failure to pay the Ground Rent when due shall constitute a default of this Lease. [§ 400] DEVELOPMENT OF PARCEL C [§ 401] Scope of Development, Plans, Drawings and Specifications Lessee shall construct the Improvements upon Parcel C in accordance with the Agreement and this Lease. [§ 4021 No Construction Before Notice From and after issuance of the Release of Construction Covenants by the City pursuant to the Agreement, except for the Excepted Improvements (as defined in Section 705), no work of any kind shall be commenced on Parcel C and no building or other materials shall be delivered to Parcel C for construction of any Improvements, nor shall any other building or land development JRSU0601.0002\405061.1 7 Contract Number 8935 (RAS) work be commenced on or building materials be delivered to Parcel C at any time during the term of the Lease, which work and /or materials exceed in the aggregate Seven Hundred and Fifty Thousand Dollars ($750,000), escalated from the date of this Lease in accordance with the Consumer Price Index ( "CPI "), unless at least ten (10) days written notice is provided by Lessee to City of the intended commencement of such work or the delivery of such materials. The work for which said ten (10) days written notice is required shall include, in addition to actual construction work, any site preparation work, installation of utilities, street construction or improvement, or any grading or filling of Parcel C. [§ 403] Notice of Non Responsibility City shall, at any and all times during the term of this Lease, have the right to post and maintain on Parcel C and to record as required by law any notice or notices of non responsibility provided for by the mechanics' lien laws of the State of California; provided, however, that Lessee shall, on behalf of the City, post and maintain on Parcel C, and record against Parcel C, all notices of non responsibility provided for by the mechanics' lien laws of the State of California. [§ 404] Mechanic's, Materialman's, Contractor's or Subcontractor's Liens Subject to Lessee's right to contest as hereinafter provided, at all times during the term of the Lease, Lessee shall keep Parcel C, including all buildings and Improvements now or hereafter located on Parcel C, but excluding any individual Condominium Units after Transfer from the Developer Lessee to any Condo Unit Owner other than Developer Lessee, free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to Parcel C. Lessee shall promptly (i) pay and discharge, or cause Parcel C to be released from, any such lien or claim of lien, or (ii) contest such lien and furnish City such bond as may be required by law to free Parcel C from the effect of such lien and to secure City against payment of such lien and against any and all loss or damage whatsoever in any way arising from Lessee's failure to pay or discharge such lien. In the event Lessee provides a bond in lieu of paying or discharging a lien as set forth herein, Lessee shall, at Lessee's sole cost and expense, within thirty (30) days of City's written request therefor, provide the City with an endorsement to any existing title policy in favor of City insuring City's interest in Parcel C free and clear of any such liens that have not been paid or discharged. Should Lessee fail to pay and discharge, or cause Parcel C to be released from, any such lien or claim of lien or to provide a bond as permitted hereunder within thirty (30) days after service on Lessee by City of a written request to do so, City may pay, adjust, compromise and discharge any such lien or claim of lien on such terms and in such manner as City may reasonably deem appropriate. In such event, Lessee shall, on or before the first day of the next calendar month following any such payment by City, reimburse City for the full amount so paid by City, including any actual and reasonable attorneys' fees or other costs expended by City, together with interest thereon at the annual rate of interest equal to three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California as of the close of business on the date of payment by the City, or the highest lawful rate, whichever is less, from the date of payment by City to the date of Lessee's reimbursement of City. On substantial completion of any work of improvement (other than the Excepted Improvements) during the term of the Lease, Lessee shall record or cause to be recorded in the Official Records of Los Angeles County a notice of completion, to the extent required by law. JRS\30601.0002 \405061.1 8 Contract Number 8935 (RAS) Lessee hereby appoints City as Lessee's attorney in fact to record the notice of completion, which appointment shall only become effective on ten (10) days' notice upon Lessee's failure to record such a notice of completion after the work of improvement has been substantially completed; provided, that City shall not be obligated to record such a notice of completion and the failure of City to record said notice shall not excuse the failure of Lessee to discharge its obligation to record said notice of completion. ` [§ 405] Rights of Access Representatives of City shall have the reasonable right of access to Parcel C without charges or fees, at normal construction hours during the period of construction for the purposes of this Lease, including, but not limited to, the inspection of the work being performed in constructing the Improvements (other than the Excepted Improvements). The City shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of Parcel C and Improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. City shall indemnify, defend, and hold harmless Lessee from and against any claim, liability, losses and damages caused by City during any such inspections, and shall be responsible for the prompt repair and /or restoration of any such damage caused by City during any such inspection. [§ 406] Local, State and Federal Laws a. Lessee hereby agrees to carry out development, construction (as defined by applicable law) and operation of the Improvements on Parcel C, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any requirement to pay state prevailing wages). b. Lessee hereby expressly acknowledges and agrees that neither the City nor Agency has ever previously affirmatively represented to Lessee or its contractor(s) for the Improvements in writing or otherwise, in a call for bids or otherwise, that the work to be covered by the bid or contract is not a "public work," as defined in Section 1720 of the Labor Code. Lessee hereby agrees that Lessee shall have the obligation to provide any and all disclosures, representations, statements, rebidding, and /or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee hereby agrees that Lessee shall have the obligation to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee hereby agrees that Lessee shall have the obligation, at Lessee's sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Lessee shall indemnify, protect, defend and hold harmless the Agency and City and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to Agency and City, from and against any and all loss, liability, damage, claim, cost, expense, and/or "increased costs" (including labor costs, penalties, reasonable attorneys' fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and /or operation of the Improvements, including, without limitation, any and all public works (as defined by applicable JRS\30601.0002 \405061.1 9 Contract Number 8935 (RAS) law), results or arises in any way from any of the following: (1) the noncompliance by Lessee of any applicable local, state and /or federal law, including, without limitation, any applicable federal and /or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure by Lessee to provide any required disclosure, representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Lessee to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by Lessee to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. C. It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Improvements, including, without limitation, any public work (as defined by applicable law), Lessee shall bear all risks of payment or nonpayment of state prevailing wages and/or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. "Increased costs" as used in this Section shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. d. The foregoing indemnity shall survive termination of the Agreement and shall continue after recordation of the Release of Construction Covenants. [§ 4071 Nondiscrimination During Construction Lessee for itself and its successors and assigns agrees that in the construction of the Improvements on Parcel C provided for in this Lease, Lessee will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, creed, religion, national origin, or ancestry. [§ 500] USE OF PARCEL C AND IMPROVEMENTS [§ 501] Use of Parcel C and Improvements Lessee covenants and agrees for itself, its successors, its assigns and every successor in interest to Parcel C or any part thereof, that: a. Lessee, its successors and assignees shall devote Parcel C to the uses specified in the Redevelopment Plan, the Specific Plan, and any conditions of approval and/or plans required and/or approved by the City and this Agreement, including but not limited to the Development Agreement. Without limiting the generality of the foregoing, Developer Lessee shall cause to be constructed on Parcel C: (1) approximately ninety -eight (98) Market Rate Units and approximately 7,374 square feet of Retail Space on Parcel C with approximately 241 parking spaces designated for Parcel C. No less than fifty percent (50 %) of the Retail Space on Parcel C shall be allocated for uses such as neighborhood market, restaurant, dry cleaning, small scale bank and other convenience services, drug store (each of the foregoing uses shall hereby be deemed approved without need for any further approval or consent), or such other uses (subject to the approval of the City Director of the Department of Planning and Community JRS\30601.0002 \405061.1 10 Contract Number 8935 (RAS) Development) that provide residents or employees of the immediate area with access to convenience goods and services, and uses that cater to the daily needs of nearby residents or employees within walking distance of their home or work. The type and quality of tenants allowed in the Retail Space shall be in harmony with the balance of the Project as a high -class development and shall specifically exclude any offensive or incongruent uses including, but not limited to, the following: 1. Any public or private nuisance (as defined in California Civil Code Section 3479) connected with business operations conducted on the Property; 2. Any noise or sound that is objectionable due to intermittence, beat, frequency, shrillness or loudness; 3. Any obnoxious odor; 4. Any noxious materials, and any toxic or caustic, or corrosive fuel or gas in violation of applicable law; 5. Any dust, dirt or particulate matter in excessive quantities; 6. Any unusual fire, explosion, or other damaging or dangerous hazard; 7. Any warehouse, other than that which is incidental to the primary commercial use or business operation, and any assembly, manufacturing, distillation, refining, smelting, agriculture, or mining operation; 8. Any pawn shop or retail sales operation involving second -hand merchandise; 9. Any adult business or facility as defined and regulated in the City's Municipal Code. Such uses include, without limitation, massage establishments (to the extent defined and regulated in such Code as an adult business or facility), adult news racks, adult bookstores, adult motion picture theaters, and paraphernalia businesses; 10. Any gun shop or retail sales operation for which the main commercial use or business operation is the sale of guns; 11. Any retail sales operation for which the average price of merchandise is $5.00 or less, except that this prohibition shall not apply to any retail sales operation for which the main commercial use or business operation is the sale of food and /or beverages, and provided that such $5.00 amount shall be escalated over time in proportion to the increase in the published Consumer Price Index; b. Developer Lessee shall cause Parcel C to be developed in accordance with the Agreement, including but not limited to the Scope of Development (Attachment No. 4 to the Agreement) and Schedule of Performance (Attachment No. 3 to the Agreement). C. Lessee shall pay the property taxes levied against Parcel C during the term of this Lease, in accordance with Sections 210 and 210.1 of the Agreement. [§ 502] Limitations on Use of Site a. The CC &Rs or like agreements for the Condominium Units on Parcel C shall be substantially in the form attached to the Agreement as Attachment No. 21. Any changes to this form shall be subject to the City's written approval prior to the date of recordation of same, JRS\30601.0002\405061.1 11 Contract Number 8935 (RAS) which said approval shall be timely considered in accordance with the Schedule of Performance and shall not be unreasonably withheld. The CC &Rs or like agreements for the Condominium Units shall provide that they terminate upon expiration or earlier termination of this Lease. The City will execute the CC &Rs as the owner of Parcel C solely as an accommodation to the recordation of same. Neither the City nor Agency will be the "Declarant" or developer under the CC &RS and shall have no liability of any kind in connection therewith. b. The City agrees to make modifications to this Lease that do not adversely and materially affect or subordinate the City's fee and leasehold interests in Parcel C, if required by the California Department of Real Estate and/or to comply with any national lender standards or regulations, including FNMA and FHLMC in order for the Lessee to obtain the issuance of a final subdivision public report(s) allowing for the sale of the Condominium Units and to finance the sale of Condominium Units. [§ 503]Maintenance a. Lessee shall maintain, repair and operate Parcel C and all Improvements constructed or to be constructed thereon (including landscaping, lighting and signage), or cause Parcel C and all such Improvements to be maintained, repaired and operated in a first quality condition, free of debris, waste and graffiti, and in compliance with the terms of the Redevelopment Plan, the City of Santa Monica Municipal Code, and the following: 1. All Improvements on Parcel C shall be maintained, repaired, and operated in good condition in accordance with the custom and practice generally applicable to comparable mixed -use retail, commercial and residential housing development projects, as applicable, within the City, and in conformance and compliance with all plans, drawings and related documents approved by the City pursuant to the Agreement, all conditions of approval of land use entitlements adopted by the City or the Planning Commission of the City, including painting and cleaning of all exterior surfaces of all private Improvements and public Improvements to the curbline. 2. Landscape maintenance shall include, without limitation, watering /irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 3. Clean -up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from Improvements and landscaping; clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. b. If the City gives written notice to Lessee that the maintenance, repair, operation, or condition of Parcel C or any portion thereof or any Improvements thereon does not comply with this Lease and such notice describes the deficiencies, Lessee shall correct, remedy or cure the deficiency within thirty (30) days following the submission of such notice, unless (1) such SRS\30601.0002 \405061.1 12 Contract Number 8935 (RAS) deficiency cannot be reasonably corrected within such thirty (30) day period in which case such deficiency shall be deemed cured if Lessee commences such cure within such thirty (30) day period and thereafter diligently completes such cure within ninety (90) days following the submission of such notice or (2) the notice states that the deficiency is an urgent matter relating to public health and safety in which case Lessee shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time but in no event more than forty -eight (48) hours following the submission of the notice. In the event Lessee fails to maintain Parcel C or any portion thereof or any Improvements thereon in accordance with this Lease and fails to cure any deficiencies within the applicable period described above, the City shall have, in addition to any other rights and remedies hereunder the right to maintain Parcel C and the Improvements thereon, or portion thereof, or to contract for the correction of any deficiencies, and Lessee shall be responsible for payment of all costs reasonably incurred by the City. [§ 504] Management of Parcel C and Improvements At least thirty (30) days prior to requesting the Release of Construction Covenants for the Improvements on Parcel C, in accordance with Section 314 of the Agreement, Lessee shall obtain the City's written approval of the proposed property manager ( "Initial Property Manager ") and associated agreement ( "Property Management Agreement ") for management and operation of the Improvements on Parcel C. The Initial Property Manager shall have not less than ten (10) years of experience in the successful management of properties that are like in kind to the. Improvements on Parcel C. Approvals required of the City under this Section 504 shall follow and be limited by the following procedures: Within thirty (30) days after receipt of Lessee's request for approval, City shall respond in writing by stating what further information, if any, City reasonably requires in order to determine whether or not to approve the Initial Property Manager and Property Management Agreement. Lessee shall promptly furnish to City such further information as may be reasonably requested. Developer Lessee's request for approval shall be deemed complete thirty (30) days after City's receipt thereof, if no timely response requesting further information is delivered to Lessee, or, if such a timely response requesting further information is received, on the date that Lessee delivers such additional information to City, provided that Lessee's additional information is responsive to City's request. City shall approve or disapprove the matter within forty -five (45) days after Lessee's request for such approval is accepted as complete or is deemed complete. Any disapproval shall include reasonably detailed reasons for such disapproval. The City's failure to provide written notice of approval or disapproval to Lessee within such forty -five (45) day period shall be deemed approval by City. Approval will not be unreasonably withheld if Lessee demonstrates that the proposed Initial Property Manager and Property Management Agreement will provide capable, competent and experienced operation of a condominium project with retail commercial space similar in quality, size and type as required to be maintained on Parcel C and Improvements pursuant to this Lease. If City shall disapprove of the Initial Property Manager and/or Property Management Agreement, City shall do so by written notice to Lessee stating the reasons for such disapproval. Related Management Co., L.P. is hereby pre- approved by City as an Initial Property Manager for the Improvements on Parcel C, so long as there is no material change in the ability of the same to provide capable, competent and experienced quality operation of Parcel C and Improvements from that evident upon the execution of this Lease. At all times during the term of this Lease, Parcel C and Improvements Jxs \30601.0002\405061.1 13 Contract Number 8935 (RAS) shall be managed or caused to be managed by Lessee in a prudent and businesslike manner as necessary to maintain Parcel C and Improvements in a first class condition. Lessee shall assume responsibility, subject to the provisions of this Lease, for the operation and maintenance (including repair, restoration and reconstruction) of all of the Improvements constructed on Parcel C and the costs thereof, and City shall have no liability for costs of such operation and maintenance by Lessee or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such Improvements. Without limiting the generality of the foregoing, Lessee, in the maintenance of the Improvements, shall observe the following standards: 1. Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better in quality, appearance and durability. 2. Remove all papers, debris, filth and refuse, and sweep, wash down and/or clean all hard surfaces, including brick, metal, concrete, glass, wood and other permanent poles, walls or structural members as required. 3. Maintain such appropriate entrance, exit and directional signs, markers and lights as shall be reasonably required and in accordance with the practices prevailing in the operation of similar developments. 4. Clean lighting fixtures and relamp and /or reballast as needed. 5. Repaint striping, markers, directional signs, etc., as necessary to maintain in first class condition. condition. required. 6. Maintain landscaping as necessary to keep it in a first class, thriving 7. Maintain signs, including relamping and/or reballasting and /or repairing as S. Provide security measures to the extent reasonably necessary. 9. Maintain and keep in good condition and repair all benches, shelters, planters, mall coverings, banners, kiosks and other furniture, trash containers, sculptures, play areas, platforms and stages. 10. Clean, repair and maintain all common utility systems to the extent that the same are not cleaned, repaired and maintained by public utilities. 11. Maintain all fountains and associated structures, drinking fountains, pumps and associated plumbing. 12. Maintain all lights, light fixtures and associated wiring systems. 13. Maintain public right of way items between the property and the street, including sidewalks, curbs, gutters, driveways, signs and poles, curb painting and markings. 14. Maintain all surface and storm lateral drainage systems. 15. Maintain all sanitary sewer lateral connections. R2s\30 W l.00o2\4oso61.1 14 Contract Number 8935 (RAS) . [§ 505] Obligation to Refrain from Discrimination Lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this Lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the Lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Notwithstanding the above paragraph, with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the above paragraph. [§ 506] Form of Nondiscrimination and Nonsegregation Clauses Lessee shall refrain from restricting the rental, sale or sublease of Lessee's interest in Parcel C on the basis of race, color, religion, ancestry, national origin, sex, or marital status of any person. Therefore the sublease and grant of undivided interest in improvements used to convey the Condominium Units shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: "Sublessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with rasv0601.0002\405061.1 15 Contract Number 8935 (RAS) reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Notwithstanding the above paragraph, with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the above paragraph. [§ 5071 Quiet Enjoyment The parties hereto mutually covenant and agree that Lessee, by keeping and performing the covenants herein contained, shall at all times during the term of this Lease, peaceably and quietly have, hold and enjoy Parcel C and Improvements. [§ 6001 TAXES, ASSESSMENTS AND OTHER CHARGES [§ 6011 Utilities Lessee agrees to pay or cause to be paid, as and when they become due and payable, all charges for water, gas, light, heat, telephone, electricity and other utility and communication services rendered or used on or about Parcel C and Improvements at all times during the term of this Lease. [§ 602] Impositions (Including Taxes and Assessments) [§ 603] Payment Generally Lessee and /or its successors or other party(ies) in whom the possessory interest is vested shall pay the real property taxes levied against Parcel C in accordance with Section 609 of this Lease. Such real property taxes shall be paid as and when they become due and payable, and before any fine, penalty, interest or cost may be added thereto, or become due or be imposed by operation of law for the nonpayment thereof, all taxes, assessments, franchises, excises, license and permit fees, and other governmental levies and charges, general and special, ordinary and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which at any time during the term of this Lease may be assessed, levied, confirmed, imposed upon, or grow or become due and payable out of or in respect of, or become a lien on: (1) Parcel C and Improvements or any part thereof or any appurtenance thereto; (2) the rent and income received by Lessee from subtenants, guests or others for the use or occupation of Parcel C and the Improvements thereon; or (3) this transaction or any document to which Lessee is a party, creating or transferring an interest or estate in Parcel C and Improvements. All such taxes, franchises, excises, license and permit fees, and other governmental levies and charges levied against Parcel C shall hereinafter be referred to as "Impositions ", and any of the same shall hereinafter be referred to as an "Imposition ". Any Imposition relating to a fiscal period of the taxing authority, a part of which period is included within the term of this Lease, and a part of which is included in a period of time after the expiration of the term of this Lease, shall (whether or not such Imposition shall be assessed, levied, confirmed, imposed upon, become a lien upon Parcel C and Improvements, or shall become payable, during the term of this Lease) be adjusted between City and Lessee as of the expiration of the term of this Lease, so that Lessee shall pay IRS\30601.0002 \405061.1 16 Contract Number 8935 (RAS) that portion of such Imposition which that part of such fiscal period included in the period of time before the expiration of the term of this Lease bears to such fiscal period, and City shall pay the remainder thereof, Lessee shall not be entitled to receive any apportionment, if Lessee shall be in default (subject to applicable notice and cure rights) in the performance of any of Lessee's covenants and agreements as provided in this Lease. The failure of Lessee to pay an Imposition that cannot under any circumstances give rise to a lien against Parcel C and Improvements shall not be a breach of the first paragraph of this Section 603. Lessee hereby agrees to defend, indemnify and hold harmless Agency and City and their respective officers, employees and consultants from and against all claims, liability, loss, damage, costs, or expenses (including reasonable attorney's fees and court costs) arising from or as a result of Lessee's failure to pay any Imposition to the extent that such Imposition relates to a fiscal period included within the term of this Lease. [§ 6041 Payment of Impositions in Installments If, by law, any Imposition may at the option of the payer be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and; in such event, shall pay such installments as may become due during the term of this Lease as the same respectively become due and before any fine, penalty, further interest or cost may be added thereto; provided, however, that the amount of all installments of any such Imposition which will be the responsibility of Lessee pursuant to Section 603 herein above, and which are to become due and payable after the expiration of the term of this Lease, shall be deposited with City for such payment on the date which shall be one (1) year immediately prior to the date of such expiration. [§ 6051 City Right to Cure If Lessee, in violation of the provisions of this Lease, shall fail to pay and to discharge any Imposition, City may (but shall not be obligated to) pay or discharge it, and the amount paid by City and the amount of all costs, expenses, interest and penalties connected therewith, including attorneys' fees, together with interest at the rate of three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California on the date payment is made by City, shall be deemed to be and shall be payable by Lessee as Additional Rent and shall be reimbursed to City by Lessee on demand, provided that Lessee, the holder of any Master Permitted Mortgage that has registered its name and address in writing with City, and /or any Permitted Mortgagee that has registered its name and address in writing with City, shall have failed to pay such Imposition within ten (10) business days after written notice from City to Lessee and such holder of City's intention to pay. [§ 6061 Tax Receipts Lessee shall furnish to City, within forty -five (45) days after the date when any Imposition which could have any effect on City's title would become delinquent, official receipts of the appropriate taxing authority or other evidence satisfactory to City evidencing payment thereof. iRS\30601.0002 \405061.1 17 Contract Number 8935 (RAS) [§ 607] Tax Liability Lessee shall pay all Impositions by virtue of any operation by Lessee conducted on or out of Parcel C and Improvements. It is agreed that in the event the State of California or any taxing authority thereunder changes or modifies the system of taxing real estate so as to tax the rental income from real estate in lieu of or in substitution (in whole or in part) for the real estate taxes and so as to impose a liability upon City for the amount of such tax, then Lessee shall be liable under this Lease for the payment of the taxes so imposed during the term of this Lease, or any renewal thereof, to the same extent as though the alternative tax was a tax upon the value of Parcel C and Improvements. In order to determine the amount of such alternative tax for which Lessee shall be liable, Parcel C and Improvements shall be considered as if it was the only asset of City, and the rent paid hereunder and under the Agreement shall be considered as if it were the only income of City. [§ 6081 Contests a. Lessee shall refrain from appealing, challenging or contesting in any manner the validity or amount of any Imposition on Parcel C; provided, however, that such prohibition shall not apply to an appeal, challenge or contesting of the erroneous initial assessment for property tax purposes of Parcel C in the fiscal year of the completion of the Improvements to be constructed pursuant to the Agreement and this Lease, and further provided that in the absence of transfer of ownership or new construction Lessee shall not be prohibited from appealing, challenging or contesting any increases in assessment of Parcel C for property tax purposes over and above the current two percent (2 %) per annum permitted amount. b. Lessee agrees that any such proceedings shall be begun without undue delay after any contested Imposition is imposed and shall be prosecuted to final adjudication with reasonable dispatch. Lessee shall give City prompt notice in writing of any such contest at least ten (10) days before any delinquency occurs. Lessee may only exercise its right to contest an Imposition hereunder if the subject legal proceedings shall operate to prevent the collection of the Imposition so contested, or the sale of Parcel C and Improvements, or any part thereof, to satisfy the same, and only if Lessee shall, prior to the date such Imposition is due and payable, have given such reasonable security as may be required by City from time to time in order to insure the payment of such Imposition to prevent any sale, foreclosure or forfeiture of Parcel C and Improvements or any part thereof, by reason of such nonpayment. In the event of any such contest and the final determination thereof adversely to Lessee, Lessee shall, before any fine, interest, penalty or cost may be added thereto for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such contest, together with any penalties, fines, interest, costs and expenses that may have accrued thereon or that may result from any such contest by Lessee and, after such payment and discharge by Lessee, City will promptly return to Lessee such security as City shall have received in connection with such contest. C. City shall cooperate reasonably in any such contest, and shall execute any documents or pleadings reasonably required for such purpose. Any such proceedings to contest the validity or amount of Imposition or to recover back any Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense; and Lessee shall indemnify and save harmless City against any and all loss, cost or expense of any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be imposed upon or incurred by City in connection therewith. JRS\30601.0002 \405061.1 18 Contract Number 8935 (RAS) d. This Section 608 shall not be applicable to Impositions levied against Condominium Unit Owners after sale of the Condominium Units as described in Section 804. [§ 609] Notice of Possessory Interest; Payment of Taxes and Assessments on Value of Entire Property In accordance with California Revenue and Taxation Code Section 107.6(a), City states that by entering into this Lease, a possessory interest subject to property taxes shall be created. Lessee or Condominium Unit Owners, as applicable, shall be subject to the payment of property taxes levied on such interest. Lessee acknowledges and agrees that Parcel C and/or the Improvements thereon, and any possessory interest therein, shall at all times after the commencement of this Lease, be subject to ad valorem taxes levied, assessed or imposed on such property, and that Lessee or Condominium Unit Owners, as applicable, shall pay taxes upon the assessed value of the entire property, and not merely upon the assessed value of its leasehold interest. [§ 6101 Other Liens Except as otherwise permitted in the Agreement and /or Development Agreement, Lessee shall not, directly or indirectly, create or permit to be created or to remain, and will promptly discharge; at its expense, any mortgage, lien, encumbrance or charge on or pledge of Parcel C or the Improvements, or fixtures and furnishings, or any part thereof, or Lessee's interest therein, or the Base Rent, Additional Rent or other sums payable by Lessee under this Lease, other than (i) such Master Permitted Mortgages and /or Permitted Mortgages, (ii) as necessary in connection with the financing of furniture, fixtures and equipment for the Improvements. Lessee shall notify City promptly of any lien or encumbrance which has been created on or attached to Parcel C and Improvements, or to Lessee's leasehold estate therein, whether by act of Lessee or otherwise; provided, however, the foregoing shall not apply to liens or encumbrances created by Condominium Unit Owners after sale of the Condominium Units as described in Section 804. The existence of any mechanic's, laborer's, materialmen's, supplier's or vendor's lien, or any right in respect thereof, shall not constitute a violation of this Section if payment is not yet due upon the contract or for the goods or services in respect of which any such lien has arisen, or if such lien has been discharged by the posting of bonds or other lien - release security as is provided for such discharge by law. [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS [§ 701] Ownership During Term and at Expiration and Termination All at grade, above grade, and below grade structures, buildings, improvements, additions, alterations, and betterments of whatever nature or description, including without limitation concrete foundations, pilings, walkways, and pavement now existing, including the Improvements constructed on Parcel C in accordance with this Lease and/or the Agreement (all collectively referenced hereinafter as "Improvements "), shall, during the term of this Lease, be and remain the property of Lessee, until the sale of the first Condominium Unit and thereafter be owned in undivided interest by all Condominium Unit Owners. All Improvements located on Parcel C, whether existing thereon at the commencement of the term of this Lease, or constructed or installed thereon by Lessee as permitted or required by this Lease, shall, at the expiration or sooner termination of the term of this Lease, become and thereafter remain the property of City. Subject to Lessee's rights and obligations set forth in this Lease relating to JRS\30601.0002 \405061.1 19 Contract Number 8935 (RAS) alterations and additions, Lessee shall have no right at any time to waste, destroy, demolish or remove any of the Improvements. The rights and powers of Lessee and Condominium Unit Owners with respect to the Improvements are subject to the terms and limitations of this Lease. City and Lessee covenant for themselves, and all persons claiming under or through them, that the Improvements are real property. [§ 702] Removal of Fixtures and Furnishings at Expiration or Termination If this Lease terminates prior to the Release of Construction Covenants, City may, at City's election, demand the removal from Parcel C, at Lessee's sole cost and expense, of all fixtures and furnishings, or of certain fixtures and /or furnishings, as specified in the notice provided for below. A demand to take effect at the normal expiration of the term shall be effected by notice given not less than sixty (60) days prior to the expiration date. A demand to take effect on any other termination of the Lease shall be effectuated by notice given in or concurrently with notice of such termination or within ten (10) days after such termination. At the expiration or sooner termination of the term of this Lease, Lessee may, at Lessee's sole cost and expense, remove from Parcel C and Improvements any and all furnishings. Any furnishings not removed by Lessee within thirty (30) days of the expiration or sooner termination of the Lease shall be deemed to be abandoned by Lessee and shall, without compensation to Lessee, then become City's property, free and clear of all claims to or against them by Lessee or any third person, subject to security interests therein to the extent permitted by this Lease. Lessee shall defend, indemnify and hold harmless Agency and City against all liability and loss arising from any such claims or from City's exercise of the rights conferred by this Section 702. This Section 702 shall not apply in the event of a termination and reissuance of a New Lease (as defined below) to a Master Permitted Mortgagee pursuant to Section 900 et. seq. [§ 703] Maintenance and Repair of Improvements Lessee agrees to assume full responsibility for the operation and maintenance of Parcel C and the Improvements and all fixtures and furnishings thereon or therein, and all sidewalks and to the extent required by the Development Agreement, landscaping within the public right of way adjacent to Parcel C, throughout the term hereof without expense to City unless otherwise specified herein, and to perform all repairs and replacements necessary to maintain and preserve said Site and the Improvements and fixtures and furnishings and sidewalks and landscaping in a decent, safe and sanitary condition in a manner satisfactory to City and in compliance with all applicable laws. Lessee agrees that City shall not be required to perform any maintenance, repairs, or services or to assume any expense not specifically assumed herein in connection with Parcel C and the Improvements, fixtures and furnishings, and sidewalks and landscaping. Notwithstanding the foregoing or any other provisions of this Lease to the contrary and subject to any insurance maintained by Lessee, all maintenance, repair and replacement obligations of Lease under this Lease shall, except as otherwise provided in the CC &Rs, not apply to the interior fixtures and improvements of Condominium Units and personal property of Condominium Unit Owners. The condition of the Improvements required to be maintained hereunder upon completion of the maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. JRS\30601.0002 \405061.1 20 Contract Number 8935 (RAS) [§ 704] Waste Lessee shall not commit or suffer to be committed any waste or impairment of Parcel C or the Improvements, or any part thereof. Lessee agrees to keep Parcel C and the Improvements clean and clear of refuse and obstructions, and to lawfully dispose of all garbage, trash and rubbish. [§ 7051 Alteration of Improvements Following construction of the initial improvements on Parcel C in accordance with the Agreement, Lessee shall not make or permit to be made any alteration of, addition to or change in the Improvements without the prior written consent of City, other than the following improvements (collectively, the "Excepted Improvements "): (a) routine maintenance, repairs, interior decoration and alterations or interior improvements to the Condominium Units by Condominium Unit Owners, or (b) cosmetic improvements to the exterior of the Condominium Units, or (c) alterations, additions or changes which cost in the aggregate less than an amount equal to Seven Hundred and Fifty Thousand Dollars ($750,000) escalated from the date of this Lease in accordance with the applicable Consumer Price Index. In the event the consent of City is so required, then in requesting such consent, Lessee shall submit to City detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. Notwithstanding the prohibition in this Section 705, Lessee may make such changes, repairs, alterations, Improvements, renewals or replacements to the Improvements as are required by reason of any safety law, ordinance, regulation or order of a competent government authority or to satisfy the maintenance obligations of this Lease. [§ 7061 Damage to or Destruction of Improvements [§ 707] Lessee to Give Notice In case of any damage to or destruction of the Improvements, or any part thereof, in excess of an amount equal to Two Hundred and Fifty Thousand Dollars ($250,000) escalated on a yearly basis from the date of this Lease in accordance with the applicable Consumer Price Index, Lessee shall within ten (10) days after Lessee becomes aware of such damage or destruction give written notice thereof to City generally describing the nature and extent of such damage or destruction. [§ 7081 Restoration a. Lessee shall be responsible for the restoration of the Improvements on Parcel C (including without limitation the Parking Structure but excluding any fixtures, improvements and personal property within Condominium Units which are the responsibility of the Condominium Unit Owners under the CC &Rs) in accordance with the damage and destruction clauses of this Lease. b. Subject to Section 708(a) directly above and except as otherwise provided in the CC &Rs after the sale of a Condominium Unit, in case of any damage to or destruction of the Improvements, or any part thereof (other than damage to Condominium Units which is the responsibility of Condominium Unit Owners under the CC &Rs), Lessee shall commence the restoration, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by the City (such restoration, replacement, rebuilding alterations and additions, together with any temporary repairs and property protection pending completion of the work JRS\30601.0002\405061.1 21 Contract Number 8935 (RAS) being herein called "Restoration ") within thirty (30) days of such damage or destruction or such longer time as may be reasonably required (i) to obtain City approvals of construction; (ii) under the CC &Rs; (iii) to enable the Association, if it is Lessee, to obtain funds from Condominium Unit Owners, if required under the CC &RS, sufficient to perform such work; (iv) as otherwise approved, in writing, by the City, to enable the Association to obtain any Net Insurance Proceeds, as hereinafter defined, to be used to pay all or a portion of the cost of such Restoration, and shall complete such Restoration within a reasonable period of time thereafter. Notwithstanding anything to the contrary in this Lease, including Section 1211, Lessee's failure to restore the Improvements shall constitute grounds for City's termination of the Lease. C. As used herein, the term `Net Insurance Proceeds" means the gross insurance proceeds paid by an insurer to Lessee for loss or damage to Parcel C and Improvements, less any and all costs and expenses (including, but not limited to reasonable attorneys' fees) incurred to recover said proceeds. Lessee agrees to promptly commence and prosecute to completion the settlement of insurance proceeds with respect to any event of damage or destruction of the Improvements on Parcel C. d. Lessee agrees that, notwithstanding any other provision of this Lease, upon any event of damage or destruction to the Improvements, Lessee shall at its sole cost and expense (whether or not Lessee terminates or intends to terminate this Lease pursuant to Section 710 below) immediately take or cause to be taken such actions and complete such work as is necessary to assure the safe condition of the damaged Improvements pending the ultimate disposition of the Improvements. In any instance where Lessee may elect to terminate this Lease rather than restore the Improvements pursuant to Section 710 below, if Lessee does not terminate this Lease, Lessee shall restore the Improvements. e. In the event of damage or destruction of the Improvements, or any part thereof, no City approval shall be required hereunder to restore the Improvements to a safe condition or remedy any emergency condition on Parcel C arising in connection with such damage or destruction. [§ 7091 Application of Insurance Proceeds Insurance proceeds which are received on account of any damage to or destruction of Parcel C or the Improvements thereon, or any portion thereof, shall be used, at Master Permitted Mortgagee's election, to repay the loan secured by such Master Permitted Mortgagee's Master Permitted Mortgage; provided, however, that the Master Permitted Mortgagee's election to repay the loan in lieu of restoration of Parcel C or the Improvements thereon, or any portion thereof, shall constitute grounds for the City's termination of this Lease. Insurance proceeds which are received on account of any damage to or destruction of Parcel C or the Improvements thereon, or any portion thereof (less the costs, fees and expenses incurred in the collection thereof, including without limitation attorneys' fees and expenses) (the "Net Insurance Proceeds ") shall be held by Lessee, unless otherwise provided by any Master Permitted Mortgage, and shall be subject to the conditions and applied (or paid) as follows: a. If this Lease is not terminated subject to (i) Master Permitted Mortgagee's election permitted in the immediately preceding paragraph above, or (ii) Lessee's election permitted in Section 710 below, then, within a reasonable time and in any event within one hundred eighty (180) days after the damage to or destruction of the Improvements, Lessee shall furnish, or cause to be furnished to City, any Master Permitted Mortgagee, and any Permitted JRSl30601.0002\405061.1 22 Contract Number 8935 (RAS) Mortgagee evidence satisfactory to each of the foregoing (a) of the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section 708, and (b) that the total amount of money available will, when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section 709, be sufficient to pay the cost of such Restoration. 1. First, to the costs of Restoration. 2. Second, upon receipt by City, any Master Permitted Mortgagee and any Permitted Mortgagee, as applicable, of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic's or similar liens for labor or materials supplied in connection therewith which have not been adequately provided for, (a) to any Master Permitted Mortgagees in order of priority an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made, and then (b) after the sale of any Condominium Unit, to any Permitted Mortgagees, as applicable, in accordance with the CC &RS. 3. Third, to Lessee. b. If this Lease is terminated subject to (i) Master Permitted Mortgagee's election permitted in the immediately preceding paragraph above, or (ii) Lessee's election permitted in Section 710 below, then: 1. First, to the expenses of clearing and removing all debris from Parcel C (including without limitation the Parking Structure) and restoring Parcel C to a safe and neat condition 2. Second, (a) to any Master Pennitted Mortgagees in order of priority an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made, and then (b) after the sale of any Condominium Unit, to any Permitted Mortgagees, as applicable, in accordance with the CC &RS. 3. Third, to Lessee. [§ 7101 Damage or Destruction During Final Years of Term Notwithstanding Sections 708 and 709 to the contrary, in the event of major damage or destruction to the Improvements on Parcel C (including the Parking Structure) during the last ten (10) years of the term of this Lease, City shall agree to terminate this Lease if Lessee, with the prior written approval of any Master Permitted Mortgagee, requests that this Lease be terminated provided Lessee first complies with all of the following conditions: 1. Lessee shall give City notice of the damage or destruction within ten (10) days after the event causing such damage and destruction. 2. Lessee shall give City notice requesting that this Lease be terminated as a result of such damage or destruction within forty -five (45) days after settlement of insurance proceeds, but in any event within one hundred eighty (180) days after the event causing such damage or destruction. JRSC3 0601.0002w05061.1 23 Contract Number 8935 (RAS) 3. Lessee shall clear and remove all debris from Parcel C (including without limitation the Parking Structure), restore Parcel C to a safe and neat condition, deliver possession of Parcel C to City, and shall quitclaim all right, title and interest in Parcel C to City. 4. After the satisfaction in full of any debt secured by a Master Permitted Mortgage, including all interest accrued thereon and secured thereby, Lessee shall transfer to City the remainder of Net Insurance Proceeds to be retained by City without limitation as to use. Major damage or destruction to the Improvements as used in this Section means such damage or destruction that the cost of restoration will exceed fifty percent (50 %) of the cost to replace the Improvements on Parcel C in their entirety. [§ 711 ]Faithful Performance and Labor and Material (Payment) Bonds; Indemnification; Non Responsibility Notices a. Lessee agrees to hold harmless City and City, and to indemnify City and City against all claims, liabilities, costs and, expenses, for labor and materials in connection with all construction, repairs or alterations on Parcel C and the Improvements, and the cost of defending against such claims, including reasonable attorneys' fees. b. Lessee agrees to procure, or cause the procurement of, contractor's bonds covering labor, materials and faithful performance for construction on Parcel C and Improvements in accordance with the following requirements: 1. As to the initial construction of the Improvements required by the Agreement and this Lease, such bonds as required by Civil Code Section 3110.5. 2. Following Release of the Construction Covenants, for any work involving repair or alteration of the Improvements in excess of One Million Dollars ($1,000,000), such bonds as required by Civil Code Section 3110.5. Said bonds and the general construction contract must first be approved in writing as to content and form by City. Lessee shall, prior to commencement of construction, deliver to City a certificate or certificates from the bonding company or companies issuing the aforesaid bonds, naming City and City as co- obligees under said bonds. C. The provisions of paragraphs (a) and (b) of this Section shall be applicable to construction, repairs or alterations to Parcel C and the Improvements at all times during the Lease Term. d. City shall have the right to post and maintain on Parcel C and the Improvements any notices of non responsibility provided for under applicable law. [§ 8001ASSIGNMENT, SUBLETTING, TRANSFER [§ 801] Warranty Against Speculation a. Developer Lessee hereby represents and warrants that this Lease, the construction of the buildings, and its other undertakings pursuant hereto, are, and will be used for the purpose of redevelopment of Parcel C and not for speculation in land holding. Lessee further recognizes that: The importance of the redevelopment of Parcel C to the general welfare of the community; and JRS\70601.0002 \405061.1 24 Contract Number 8935 (RAS) 2. The substantial financing and other public aids that have been made available by law and by the City for the purpose of making such redevelopment possible; and 3. The fact that a change in ownership or control of the Developer Lessee or of a part thereof, or any other act or transaction involving or resulting in a change in ownership or with respect to the identity of the parties in control of Developer Lessee or the degrees thereof, is for practical purposes a transfer or disposition of Parcel C and Improvements; and 4. Parcel C is not to be acquired or used for speculation, but only for development by Lessee in accordance with this Lease. b. The qualifications and identity of Developer Lessee, and its principals, are of particular concern to the community and City. Developer Lessee further recognizes that it is because of such qualifications and identity that City is entering into this Lease with Developer Lessee. [§ 802] Prohibition Against Transfer a. Lessee shall comply with Section 108 of the Agreement until the recordation of a Release of Construction Covenants pursuant to Section 805 of this Lease. Upon the recordation of a Release of Construction Covenants, the provisions of Section 108 of the Agreement shall no longer apply to Lessee or this Lease and the provisions of Sections 800 to 804, inclusive, shall become effective. b. Lessee shall not, except as permitted by this Lease, make any Transfer to any person or entity (a "Transferee "), without the prior written consent of the City and, if applicable, any Permitted Mortgagee. Any purported Transfer not permitted by this Section or Section 901 shall be ipso facto null and void, and no voluntary or involuntary successor to any interest of Lessee under such a Transfer shall acquire any rights pursuant to this Lease. Except for "Permitted Transfers" defined below, these restrictions shall be binding on any successors, heirs or Permitted Transferee of Lessee. "Transfer," as used herein, shall mean any assignment or attempt to assign this Lease or any right herein, any total or partial transfer, sale, assignment, lease, sublease, license, franchise, gift, hypothecation, mortgage, pledge, encumbrance or the like, excluding, however, each of the following ( "Permitted Transfers "): (a) the creation of a Master Permitted Mortgage, or a Permitted Mortgage; (b) the foreclosure of a Master Permitted Mortgage or a Permitted Mortgage or the acceptance of a deed in lieu of foreclosure by a Master Permitted Mortgagee (or its designee)—or a Permitted Mortgagee (or its designee); (c) the subsequent Transfer by a Master Permitted Mortgagee (or its designee) or a Permitted Mortgagee (or its designee) of an interest acquired pursuant to its Master Permitted Mortgage or Permitted Mortgage, respectively; (d) acquisition by a third party of any interest under this Lease or a Sublease pursuant to a foreclosure of a Master Permitted Mortgage or a Permitted Mortgage, as applicable; and (e) the subleasing of Condominium Units to a Condominium Unit Owner. Permitted Transfers shall not require the approval of the City or be restricted by this Lease. Persons or entities who are Transferees in Permitted Transfers shall by acceptance of such Transfer be deemed to have accepted and agreed to be bound by all of the applicable provisions of this Lease. C. In addition, the following shall not be subject to the restrictions of (b) immediately above: (i) the granting of easements or permits for the development, improvement and or repair of Parcel C or the Improvements as reasonably approved by City, (ii) Lessee's aasn0601.0002\405061.1 25 Contract Number 8935 (RAS) recording against Parcel C leasehold the CC &Rs, Condominium Plan and other documents required to implement and operate the condominium project, (iii) Lessee recording the Reciprocal Easement Agreement against the Parcels A and B leaseholds, (iv) the renting or subleasing or licensing of Retail Space, (v) the renting or subleasing of Condominium Units by individual Condominium Unit Owners for occupancy consistent with the customary uses and practices, (vi) granting any security interests expressly permitted under this Lease in accordance with the provisions of this Lease including without limitation Permitted Mortgages on Condominium Units, (vii) transfers of interests by any members of Developer Lessee, (viii) the removal of any manager of Developer Lessee by Developer Lessee's members, provided that if such manager is replaced, the replacement manager shall be subject to the City's reasonable approval, or (ix) the assignment of this Lease to any affiliate of Developer Lessee or joint venture, provided Developer Lessee submits evidence satisfactory to City that one or more members of Developer Lessee will maintain a majority controlling interest after consummation of such transaction and will have the ability to maintain a majority controlling interest until assignment of this Lease to the Association. d. Lessee may Transfer its leasehold interests in Parcel C and Improvements after recordation of a Release of Construction Covenants pursuant to Section 805 as follows: (i) Parcel C and Improvements and its rights therein as a whole, with the prior written consent of the City subject to the rights of any Master Permitted Mortgagee, which consent shall not be unreasonably withheld, conditioned, or delayed in the event that all conditions of this Section 802 are met, and provided that Lessee is not in default hereunder, or (ii) as described in Section 804 which shall not require the approval of City. e. Such approval required under Section 802(d)(i) shall be given by City if: 1. At the time of such assignment, this Lease shall be in full force and effect and either no default then exists (subject to applicable notice and cure) or no default will exist upon consummation of the Transfer; 2. City determines in its sole discretion that the following Transfer requirements are met: (i) such assignment is made to a responsible third party who will undertake Lessee's responsibilities under this Lease to use Parcel C in accordance with this Lease; (ii) such third party shall demonstrate qualifications and experience with respect to the type of development proposed herein and in the Agreement to assure the operation of the Improvements equal to or greater than the qualifications and experience of Lessee; and (iii) such third party shall demonstrate sufficient financial resources or commitments to assure operation of Parcel C in accordance with this Lease; 3. The Transferee shall have executed an express assumption, in form and substance first approved in writing by City, of the obligations and liabilities of Lessee under this Lease arising on and after the effective date of the Transfer; and 4. The Transferee shall have experience in the operation and management of a development of similar size, scope, type, and character to that located on Parcel C. f. No voluntary or involuntary successor in interest of Lessee shall acquire any rights or powers under this Lease except foreclosure of a Master Permitted Mortgage, Permitted Mortgage or as otherwise permitted in this Lease. Except as specifically provided herein, including without limitation Section 804, this Lease may not be assigned, nor may a Transfer JRS\10601.0002 \405061.1 26 Contract Number 8935 (RAS) take place without the express, prior written consent of City and, to the extent required by the applicable Master Permitted Mortgage loan documents, and /or Permitted Mortgage loan documents, the holder of a Master Permitted Mortgage and /or a Permitted Mortgage. g. Prior to the assignment of this Lease to the Association as provided in Section 804, Lessee shall promptly notify City of any and all changes whatsoever in the identity of the members of Developer Lessee of which it or any of its officers have been notified or otherwise have knowledge or information. h. In the absence of specific express written provision to the contrary by City, except as provided herein, a Transfer of Parcel C and Improvements, or portion thereof, or approval thereof by City, shall not be deemed to relieve Lessee from any obligations under this Lease arising on or after the effective date of the Transfer; provided, however, that any Master Permitted Mortgagee and /or Permitted Mortgagee shall be deemed to be released from all obligations under this Lease and after the date of a Transfer from such Master Permitted Mortgagee and /or Mortgagee, as applicable, and Developer Lessee shall be deemed released from all obligations under this Lease from and after the date Developer Lessee assigns this Lease to the Association as provided in Section 804, except to the extent of Developer Lessee's subleasing of any Condominium Units from the Association. i. Except as otherwise provided in this Lease, including, without limitation the recordation of the Condominium Plan and sales of Condominium Units, Parcel C and Improvements thereon shall not be further subdivided without the prior written approval of City. j. No provision hereof authorizing encumbrance of Lessee's interest herein shall be construed to authorize encumbrance of City's fee title to Parcel C or City's interest under this Lease, and Lessee shall not by any act or deed cloud City's fee title or City's interest under this Lease. Notwithstanding any other provision of this Lease to the contrary, City approval of a Transfer of this Lease or any interest herein shall not be required in connection with the following : Any Transfer to any entity or entities in which Lessee retains a minimum of fifty- one percent (51 %) ownership or beneficial ownership of the transferee entity or entities. [§ 803] Investigation of Proposed Transferee; Costs a. The provisions of this Section 803 apply only to Transfers that specifically require the approval of City under this Lease and to confirm the existence of a Permitted Transfer. If this Lease specifically requires City's written consent to a Transfer or City's confirmation of a Permitted Transfer, Lessee agrees to provide City with such information, including financial statements as City may reasonably require in order to evaluate the solvency, financial responsibility and relevant business acumen and experience of any proposed Transferee Information as to any proposed Transferee shall include, without limitation, a balance sheet of the proposed Transferee as of a date within ninety (90) days of the request for City's consent and statements of income or profit and loss of the proposed subtenant or assignee for the two (2) year period preceding the request for City's consent, if the same be available (or such other similar information as shall be available at the time the request for approval of the Transfer is made), and a written statement in reasonable detail as to the business and experience of the proposed Transferee during the five (5) years preceding the request for City's consent. Information as to JRS\30601.0002 \405061.1 27 Contract Number 8935 (RAS) any Permitted Transfer shall .be limited to documentary evidence to confirm the existence of a Permitted Transfer. Within fifteen (15) days after the receipt of Lessee's written notice requesting City approval of a Transfer or confirmation of a Permitted Transfer, City shall respond in writing by stating what further information, if any, City reasonably requires in order to determine whether or not to approve the requested Transfer or confirm the Permitted Transfer. Upon receipt of such a timely response, Lessee shall promptly furnish to City such further information as may be reasonably requested. Lessee's request for approval of a Transfer or confirmation of a Permitted Transfer and delivery of necessary information shall be deemed complete fifteen (15) days after City's receipt thereof if City does not deny approval and if no timely response is made by City requesting further information regarding the proposed assignee, or, if such a timely response requesting further information is made, on the date which is fifteen (15) days after the date that Lessee delivers such additional information to City. None of the foregoing shall restrict City's rights to deny approval of any Transfer not found acceptable by City pursuant to this Lease. Any Transfer requiring City's consent shall only be effective upon City's written consent to such Transfer. None of the foregoing shall waive Developer's rights to a Permitted Transfer without the City's approval. City shall approve or disapprove any requested Transfer requiring City approval within fifteen (15) days after Lessee's request therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing and shall specify the reasons for the disapproval and, if applicable, the conditions required to be satisfied by Lessee in order to obtain approval. If Lessee's initial notice requesting approval of an Transfer (but not any other type of Transfer) states that the Transfer will be deemed approved unless rejected within the time required in this Lease, City's failure to timely disapprove the Transfer shall be conclusively deemed to constitute an approval. b. If City consents to any Transfer such consent shall not be effective unless and until Lessee gives City notice of the Transfer and a copy of any documents effecting and /or evidencing such Transfer, and unless and until any such Transferee (other than a sublessee) assumes all of the obligations and liabilities of Lessee under this Lease. C. It is acknowledged and agreed that this Lease is a lease of real property within the meaning of Subsection 365(b) (3) of the Bankruptcy Code, 11, U.S.C. To the extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq., including Section 365(f)(1) thereof, Lessee on behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541(c) and 365(e) of the Bankruptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of the bankrupt meets City's standards for consent. City has entered into this Lease with Lessee in order to obtain for the benefit of Parcel C the unique types of facilities, businesses, services and goods which Lessee can bring to Parcel C; the foregoing prohibition on Transfer or subletting is expressly agreed to by Lessee in consideration of such fact. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deemed to have assumed all of the obligations arising under this Lease on and after the date of such Transfer. Any such assignee shall upon demand execute and deliver to City an instrument confirming such assumption. JRS\30601.0002\405 06 1.1 28 Contract Number 8935 (RAS) d. Lessee agrees to reimburse City for City's reasonable costs and attorneys' fees incurred in connection with the processing and documentation of any requested Transfer, subletting, transfer, change of ownership or hypothecation of this Lease or Lessee's interest in and at Parcel C, or any party thereof, which required City's approval hereunder. e. The acceptance by City of any payment due hereunder from any other person shall not be deemed to be a waiver by City of any provision of this Lease or to be a consent to any Transfer or subletting. Consent by City to one or more Transfers of this Lease or to one or more sublets of Parcel C shall not operate as a waiver or estoppel to the future enforcement by City of its rights pursuant to the provisions of this Lease. f This Section 803 shall not apply to the Transfers described in Section 804. [§ 8041 Sale of Condominium Units After issuance of Release of Construction Covenants by City, Developer Lessee shall have the right to undertake the following in order to effectuate the condominium structure on Parcel C: (i) Transfer this Lease to the Association in accordance with the Assignment of Lease substantially in the form attached hereto as Exhibit C, subject to the Sublease by the Association of all Condominium Units to Developer Lessee; and (ii) take all actions required by the California Department of Real Estate to allow the sale of Condominium Units. Thereafter, Developer Lessee shall have the right to convey Condominium Units to Condominium Unit Owners, as follows: Developer Lessee shall (i) assign to a Condominium Unit Owner the Sublease in a Condominium Unit and any Exclusive Use Areas described in the CC &RS which are appurtenant to such Condominium Unit as reflected by an individual Sublease, which form shall be subject to the approval of the City's authorized representative, which shall not be unreasonably or untimely withheld; (ii) convey to the Condominium Unit Owner an undivided fee interest in the Improvements; and (iii) transfer to the Condominium Unit Owner a membership in the Association. It is the express intent of City and Lessee that Condominium Unit Owners shall have the right to freely Transfer Condominium Units, without City's consent. Nothing herein shall be deemed by Lessee to waive, modify, reduce, alter, or void City's rights under Section 701 of the Agreement and the Participation Agreement (Attachment No. 19 to the Agreement). [§ 8051 Release of Construction Covenants Lessee and City shall comply with the terms of the Agreement pertaining to the Release of Construction Covenants. [§ 900] MORTGAGES [§ 901] Leasehold Mortgages a. From time to time during the term of this Lease, Lessee and Condominium Unit Owners shall have the right to mortgage, pledge, deed of trust, assign rents, issues and profits (for purposes of security if required by any lender), enter into capitalized leases or other financing mechanisms in connection with the acquisition of furniture, fixtures and equipment for the Improvements in furtherance of the uses permitted under this Lease, or otherwise encumber their respective leasehold interests in whole or in part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust with JR5\30601.0002\405061.1 29 Contract Number 8935 (RAS) respect to individual Condominium Units, being hereafter referred to as "Permitted Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as "Permitted Mortgage ") b. The terms and conditions in 1 through 10 immediately below shall apply in connection with any Master Permitted Mortgage: 1. Lessee's rights and the rights of any Master Permitted Mortgagee under this Section 901 shall be subject to the City's rights under and the terms and conditions of the Agreement. 2. Intentionally omitted. 3. The Master Permitted Mortgage shall cover no interest in any real property other than Lessee's leasehold interest in Parcel C and the Improvements or some portion thereof. The Master Permitted Mortgage shall state on its face that it does not encumber in any way City's fee interest in Parcel C and City's interest under this Lease. Notwithstanding the foregoing, nothing contained in this Section or this Lease shall prohibit any Master Permitted Mortgage from being cross - collateralized or cross defaulted. 4. Prior to the Release of Construction Covenants, the Master Permitted Mortgage may be made only for the purposes of financing necessary and appropriate to pay Development Costs. "Development Costs" shall mean those Project Costs described in the Method of Financing, attached to the Agreement as Attachment No. 13A. 5. The aggregate amount of all loans secured by the Permitted Mortgage prior to the issuance of a Release of Construction Covenants shall not exceed the Project Budget, attached to the Agreement as Attachment No. 5A, as it may be amended from time to time in accordance with the Method of Financing. 6. Any Master Permitted Mortgage is to be given only to a bona fide institutional lender. For the purposes hereof, the term "institutional lender" shall mean any bank, savings and loan association, thrift and loan association, savings bank, pension fund, insurance company, real estate investment trust or any other comparable or similar entity authorized to make loans in the State of California. 7. All rights acquired by said Master Permitted Mortgagee under said Master Permitted Mortgage shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of City thereunder, none of which covenants, conditions and restrictions is or shall be waived by City by reason of the giving of such Master Permitted Mortgage. Notwithstanding the foreclosure, or deed in lieu of foreclosure, of any Master Permitted Mortgage, Developer Lessee shall remain liable for the payment of the accrued but unpaid rent reserved in this Lease. 8. Promptly upon the recording of a Master Permitted Mortgage, Developer Lessee shall, at its own expense, cause to be recorded in the Official Records of Los Angeles County a written request executed and acknowledged by City for a copy of all notices of default and all notices of sale under the Master Permitted Mortgage as provided by applicable law. Inclusion of a request for notice having the effect described above in the body of the recorded Master Permitted Mortgage shall constitute compliance with this provision. JRS\30601.0002 \405061.1 30 Contract Number 8935 (RAS) 9. So long as there exists a Master Permitted Mortgage, and except as otherwise permitted in this Lease, the City agrees not to amend, modify, restate, terminate or accept the surrender of this Lease or the Agreement without the prior written consent of Master Permitted Mortgagee. C. Developer Lessee may refinance its leasehold interest in Parcel C after the issuance of a Release of Construction Covenants by City, but prior to the sale of Condominium Units, provided that (i) such financing is fully subordinate to the City's fee title and any liens recorded against the Parcel C leasehold for the benefit of the City in accordance with the Agreement, (ii) Lessee obtains the prior written consent of City to the refinancing, which consent shall be granted provided that the Mortgage is given to an institutional lender, and provided further that no additional consent shall be required if the refinancing is provided by a Master Permitted Mortgagee previously approved by City, and (iii) any Master Permitted Mortgage recorded against the Lessee's leasehold interest in Parcel C and /or the Improvements as security for the refinancing shall, by its express terms, have a final maturity date prior to expiration of the Lease Term. d. Condominium Unit Owners, excluding the Developer Lessee, may refinance their respective subleasehold interests in the individual Condominium Units without notice to or approval by the City, provided that such financing is fully subordinate to the City's fee title and all of the City's rights under this Lease and the Agreement. [§ 902] Rights and Obligations of Leasehold Permitted Mortgagees The following shall apply to Master Permitted Mortgages and Permitted Mortgages: a. If the holder of any Master Permitted Mortgage and /or Permitted Mortgage provides written notice to the City with its name and address, City shall give any notice of default under this Lease to any such Master Permitted Mortgage and/or Permitted Mortgage by registered or certified mail at the address registered with City concurrently with any notice of default to Lessee. b. In the event Lessee shall be in default hereunder, any Master Permitted Mortgagee and/or Permitted Mortgagee shall, at any time prior to the termination of this Lease in accordance with Section 1211 (which termination can occur only in accordance with Section 1211) and only after notice to any such Master Permitted Mortgagee and /or Permitted Mortgagee and an opportunity to cure in accordance with Sections 900 et seq. (subject to the rights of any higher priority Master Permitted Mortgagee and/or Permitted Mortgagee and without payment of any penalty), have the right, but not the obligation, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments (subject to City's right to cure under Section 605 of this Lease), to make any repairs and to do any other thing which may be necessary and proper to be done in the performance and observation of the agreements, covenants and conditions hereof to cure the default of this Lease. If Lessee fails to cure a default within any applicable cure period and, in accordance with Section 1211, the City may, but shall not be required to, elect to treat all or some Subleases as direct leases. All payments so made and all things so done and performed by any Master Permitted Mortgagee (or its designee) and/or Permitted Mortgagee (or its designee) shall be accepted by City and shall be effective to cure the default of this Lease or Sublease, as applicable, as the same would have been if made, done and performed by Lessee or Condominium Unit Owner instead of such Master Permitted Mortgagee (or its designee) and /or Permitted Mortgagee (or its designee), as applicable. Lessee and each JRS\30601.0002 \405061.1 31 Contract Number 8935 (RAS) Condominium Unit Owner hereby constitute and appoint each Master Permitted Mortgagee and its Permitted Mortgagee as Lessee's or Condominium Unit Owner's agent and attorney in fact with full power coupled with an interest, in Lessee's or Condominium Unit Owner's name, place and stead, and at Lessee's or Condominium Unit Owner's cost and expense, to enter upon Parcel C and Improvements, and perform all acts required to be performed herein. No Permitted Mortgagee shall have the right to take or perform any action hereunder, under its Permitted Mortgage or otherwise which might result in any detriment to the rights of a prior Master Permitted Mortgagee and/or Permitted Mortgagee with respect to this Lease, Parcel C or any Condominium Unit. C. If a Master Permitted Mortgagee (or its designee) or Permitted Mortgagee (or its designee) acquires the leasehold estate under this Lease or a Condominium Unit Sublease, as applicable, City will look to such holder to perform the obligations of Lessee or the Condominium Unit Owner, as applicable, only from and after the date of foreclosure or possession and will not hold such Master Permitted Mortgagee (or its designee) or Permitted Mortgagee (or its designee) responsible for the past actions or inactions of Lessee or the Condominium Unit Owner. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, such Master Permitted Mortgagee (or its designee) or Permitted Mortgagee (or its designee) shall be required to perform and abide by each and all of the obligations of Lessee under this Lease or the Condominium Unit Owner under the applicable Sublease and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease or Sublease (if the Sublease has become a direct lease), as applicable, against such holder. d. The foreclosure of any Master Permitted Mortgage and/or Permitted Mortgage or any sale thereunder, whether by judicial proceedings or by virtue of any power of sale contained in any such Master Permitted Mortgage and/or Permitted Mortgage, or any conveyance of the leasehold estate under this Lease or a Condominium Unit Sublease encumbered by any such Master Permitted Mortgage and/or Permitted Mortgage through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof shall not require the consent or approval of City or constitute a default under this Lease, and upon such foreclosure, sale or conveyance City shall recognize any such Master Permitted Mortgagee (or its designee) and /or Permitted Mortgagee (or its designee), or any other Transferee at foreclosure or other Transfer from Master Permitted Mortgagee (or its designee) and/or Permitted Mortgagee (or its designee), as the new Lessee or Condominium Unit Owner, as applicable. In the event that such Master Permitted Mortgagee (or its designee) and /or Permitted Mortgagee (or its designee) becomes the Lessee hereunder or a Condominium Unit Owner under a Sublease, or in the event that the leasehold estate created hereunder or under a Sublease is purchased by any other party at a foreclosure sale or by any other lawful means, such Master Permitted Mortgagee (or its designee) and /or Permitted Mortgagee (or its designee), or such other foreclosure sale purchaser, shall be responsible for the performance of the obligations of Lessee under this Lease or the Condominium Unit Owner under the Sublease only for the period of time that the Master Permitted Mortgagee (or its designee), Permitted Mortgagee (or its designee), or such other foreclosure sale purchaser remains Lessee hereunder or the Condominium Unit Owner under a Sublease, and such Master Permitted Mortgagee (or its designee), Permitted Mortgagee (or its designee), or foreclosure sale purchaser shall thereafter have the right to assign this Lease or Sublease without need to obtain the approval of City. Notwithstanding anything to the contrary ASW601.0002 \405061.1 32 Contract Number 8935 (RAS) herein: (A) if a Master Permitted Mortgagee (or its designee), Permitted Mortgagee (or its designee), foreclosure sale purchaser, or other person obtains the rights of Lessee hereunder or the rights of a Condominium Unit Owner under a Sublease, such person shall be deemed, as a result of such acquisition, to have assumed each and all of the obligations of Lessee under this Lease or the Condominium Unit Owner under the Sublease, as applicable; (B) if the new Lessee has acquired the interest of the Developer Lessee and has not been previously approved by City as a Master Permitted Mortgagee, such new Lessee shall have no right to construct any Improvements on Parcel C (other than Excepted Improvements) unless and until such new Lessee has submitted evidence satisfactory to City that such new Lessee has the financial capability and overall competence to perform the obligations of Lessee hereunder, provided that this clause (B) shall not require submission of such evidence if such new Lessee is a Master Permitted Mortgagee or successor of such a Master Permitted Mortgagee in which event such new Lessee shall have the same rights to construct Improvements on Parcel C as Developer Lessee (subject to the modifications of such rights provided above); and (C) City shall have the right of prior written approval over any prospective Property Manager of Parcel C and Improvements in accordance with Section 504 of this Lease. e. In the event that any Master Permitted Mortgagee forecloses on its Master Permitted Mortgage encumbering Parcel C, Lessee rejects this Lease pursuant to Section 365 of the Bankruptcy Code of 1978, as amended, or otherwise succeeds to the interest of Lessee under this Lease, the City shall promptly execute and deliver to such Master Permitted Mortgagee, a new lease of Parcel C (naming such Master Permitted Mortgagee, its designee, or its successor as Lessee) (the "New Lease ") subject to the following terms and conditions: 1. The New Lease shall have a term equal to the remainder of the term of this Lease with the same agreements, covenants and conditions (except for any requirements which have been fulfilled prior to execution of this Lease) as are contained herein and with priority equal to that hereof; provided, however, that if more than one Master Permitted Mortgagee requests such a New Lease, the Master Permitted Mortgagee holding the most senior Master Permitted Mortgage shall prevail; and provided, further, that City shall not be required to execute such New Lease earlier than concurrently with the execution of such New Lease by such Master Permitted Mortgagee; 2. City shall prepare such New Lease at the expense of such Master Permitted Mortgagee, and all costs incurred by City in preparing such New Lease (including reasonable attorneys' fees actually incurred) shall be paid to City by such Master Permitted Mortgagee concurrently with or immediately following the execution by City of such New Lease; 3. The execution of a New Lease by City pursuant to this Section 902(e) shall automatically and immediately terminate this Lease; provided however that such New Lease shall recognize the existence and all unconflicting terms and provisions of all Condominium Unit Subleases (which shall continue to be Subleases under the New Lease unchanged in their terms and provisions by the New Lease), all Permitted Mortgages encumbering Condominium Units in accordance with this Lease, the Condominium Plan, the CC &RS, and the Reciprocal Easement Agreement shall continue to be in full force and effect; JRS\30601.0002 \405061.1 - 33 Contract Number 8935 (RAS) 4. Such New Lease shall have the same lien priority as this Lease with respect to any mortgage or other lien, charge or encumbrance on Parcel C; 5. Although not necessary to effect the termination of this Lease, the former Lessee shall, upon City's execution of such New Lease, execute any documents and perform any acts which may be reasonably necessary to evidence the termination of this Lease; 6. Upon City's execution and delivery of such New Lease, City, at the expense of the New Lessee, shall take such action as shall be necessary to remove the former Lessee from Parcel C and Improvements; provided that if the previous Lessee is the Association, such removal shall not affect the rights of Condominium Unit Owners under Subleases which shall remain in full force and effect; and Notwithstanding any provision herein, City shall not be required to forbear from terminating this Lease except to the extent required by Section 905 hereof and City shall not be required to execute a new lease after the termination of this Lease in accordance with the provisions hereof. f. The provisions of this Section 902 shall inure only to the benefit of Master Permitted Mortgagee (and its designee) and Permitted Mortgagee (and its designee), or foreclosure sale purchaser and, with respect to Section 902(e) only, other persons that acquire the leasehold interest created hereunder pursuant to a foreclosure, sale or conveyance of the type described in Section 902(e). [§ 903] City's Forbearance and Right to Cure Defaults on Leasehold Permitted Mortgages [§ 904] Notice City will simultaneously give all Master Permitted Mortgagees and Permitted Mortgagees of Lessee and of Condominium Unit. Owners at such address as is specified by such Master Permitted Mortgagees and - Permitted Mortgagees in accordance with Section 902 hereof, a copy of each notice of default from City to Lessee hereunder at the time of giving such notice or communication to Lessee. [§ 905] Forbearance by City During the continuance of any Master Permitted Mortgage and /or Permitted Mortgage encumbering this Lease or any Sublease and until such time as the debt secured by such Master Permitted Mortgage and/or Permitted Mortgage has been paid in full, or the lien of such Master Permitted Mortgage and /or Permitted Mortgage has been foreclosed or released: a. In the event of a default under this Lease by Developer Lessee or Lessee, any Master Permitted Mortgagee shall have one hundred eighty (180) days after receipt of written notice from City setting forth the nature of such event of default, and, if the default is such that possession of Parcel C is reasonably necessary to remedy the default, a reasonable time not to exceed one hundred eighty (18 0) days after the expiration of the initial one hundred eighty (180) day period, within which to remedy such default; provided, however, that City shall not be required to forbear beyond such initial one hundred eighty (180) day period unless (a) the Master Permitted Mortgagee shall have fully cured any default in the payment of any monetary obligations of Developer Lessee or Lessee under this Lease within such one hundred eighty (180) day period and shall continue to pay currently such monetary obligations as and when the JRSl30601.0002w05061.1 34 Contract Number 8935 (RAS) same are due, and (b) such Master Permitted Mortgagee shall have acquired Lessee's leasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such one hundred eighty (180) day period, or prior thereto, and shall be diligently prosecuting any such proceeding. City agrees that all payments so made and all things so done and performed by such Master Permitted Mortgagee shall be accepted by City and shall be effective to prevent a termination of this Lease, as applicable, as the same would have been if made, done and performed by Developer Lessee or Lessee. b. Any event of default under this Lease which in the nature thereof cannot be remedied by Master Permitted Mortgagee shall be deemed to be remedied if the Master Permitted Mortgagee does all of the following: (a) within one hundred eighty (180) days after receiving written notice from City setting forth the nature of an event of default, or prior thereto, the Master Permitted Mortgagee shall have acquired Lessee's leasehold estate created hereby or shall have commenced foreclosure or other appropriate proceedings, (b) Master Permitted Mortgagee shall diligently prosecute any such proceedings to completion, (c) within the one hundred eighty (180) day period referred to in (a) above, Master Permitted Mortgagee shall have fully cured any default in the payment of all monetary obligations of Lessee hereunder and any non - monetary obligations which do not require possession of Parcel C and Improvements and are not personal to the Lessee, and (d) after gaining possession of Parcel C, Master Permitted Mortgagee shall perform and abide by each and all of the obligations of Lessee under this Lease as and when the same are due; provided, however, notwithstanding subclauses (c) and (d) of this clause (b) above, that Master Permitted Mortgagee shall not be required to cure any default which occurs prior to the date on which Master Permitted Mortgagee obtains possession of Parcel C which by its nature cannot be cured by such Master Permitted Mortgagee. d. In the event that Master Permitted Mortgagee and /or Permitted Mortgagee is prohibited by any process or injunction issued by any court of competent jurisdiction or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee or a Condominium Unit Owner from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified in this Section 905 for commencing and prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition. Notwithstanding anything to the contrary herein, City shall in no event be required to forbear hereunder unless Master Permitted Mortgagee and /or Permitted Mortgagee shall within ninety (90) days after the giving of notice by City pay all moneys due and in respect of which there exists a monetary event of default under this Lease or the applicable Sublease. [§ 905.1] Conditions Precedent to Permitted Mortgagee Rights and City Forbearance City shall not be required to comply with Sections 902 through 905 of this Lease with respect to any Permitted Mortgage, unless and until a true copy of the original thereof bearing the date and book and page of recordation thereof, and a certified copy of the original note secured by such Permitted Mortgage has been delivered to City together with written notice of the address of the Permitted Mortgagee to which notices may be sent; and in the event of an assignment of such Permitted Mortgage, such assignment shall not be binding upon City unless and until a certified copy thereof bearing the date and book and page of recordation together with written notice of the address of the assignee thereof to which notices may be sent, have been delivered to City. IRS\30601.0002\405061.1 35 Contract Number 8935 (RAS) [§ 9061 Performance on Behalf of Lessee In the event that Lessee or a Condominium Unit Owner shall fail to make any payment or perform any act required hereunder or. under a Sublease to be made or performed by Lessee or the Condominium Unit Owner, as applicable, then City, Master Permitted Mortgagee or Permitted Mortgagee may, but shall be under no obligation to, after such notice to Lessee or such Condominium Unit Owner, if any, as may be reasonable under the circumstances, make such payment or perform such act with the same effect as if made or performed by Lessee or Condominium Unit Owner. Nothing herein shall limit the right of Master Permitted Mortgagee and /or Permitted Mortgagee to take action or make a payment if permitted under its Master Permitted Mortgage or Permitted Mortgage, as applicable. Entry by City, Master Permitted Mortgagee or Permitted Mortgagee upon Parcel C, the Improvements, and /or Condominium Unit for such purpose shall not waive or release Lessee or a Condominium Unit Owner from any obligation or default hereunder (except in the case of any obligation or default which shall have been fully performed or cured by Master Permitted Mortgage and/or Permitted Mortgagee). Lessee or such Condominium Unit Owner shall reimburse City (with interest at the annual rate of three percent (3 %) over the prime rate of Wells Fargo Bank or comparable institution in the State of California), Master Permitted Mortgagee (with interest as provided in the Master Permitted Mortgage), and /or Permitted Mortgagee (with interest as provided in the Permitted Mortgage) for all sums so paid by City, Master Permitted Mortgagee, and /or Permitted Mortgagee and all direct third parry costs and expenses incurred by City, Master Permitted Mortgagee, and Permitted Mortgagee in connection with the performance of any such act. All references to Condominium Units, Condominium Unit Owners and Subleases in this Section apply only to the extent that City has elected to make Subleases direct leases in accordance with Section 1211. [§ 9071 Nonmerger There shall be no merger of this Lease, or of the leasehold estate created thereby, with the fee estate in and to Parcel C and Improvements by reason of the fact that this Lease, or the leasehold estate created thereby, or any interest in either thereof, may be held directly or indirectly by or for the account of any person who shall own the fee estate in and to Parcel C and Improvements, or any portion thereof A [§ 9081 City Cooperation City covenants and agrees that it will act and cooperate with Lessee in connection with Lessee's right to grant Master Permitted Mortgages and /or Condominium Unit Owner's right to grant Permitted Mortgages to the extent that City has elected to make Subleases direct leases in accordance with Section 1211, as herein above provided. At the request of Lessee, a Condominium Unit Owner or any proposed or existing Master Permitted Mortgagee or Permitted Mortgagee, City shall within a reasonable time execute and deliver (i) any documents or instruments reasonably requested to evidence, acknowledge and /or perfect the rights of Master Permitted Mortgagees and/or Permitted Mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Lessee's interest herein and such matters as are reasonably requested by Developer Lessee, Lessee or such Master Permitted Mortgagees or Permitted Mortgagees. Such estoppel certificate shall include, but not be limited to, certification if true by City that (a) this Lease is unmodified and in full force and effect (or, if modified, state the nature of such modification and certify that this Lease, as so modified, is in full force and - JRS\30601.0002 \405061.1 36 Contract Number 8935 (RAS) effect), (b) all rents currently due under the Lease have been paid, (c) there are not, to City's knowledge, any uncured defaults on the part of Lessee under the Lease or facts, acts or omissions which with the giving of notice or passing of time, or both, would constitute a default. Any such estoppel certificate may be conclusively relied upon by any Permitted Mortgagee or assignee of Lessee's interest in this Lease. [§ 909] Enforceability The rights granted herein to a Master Permitted Mortgagee or Permitted Mortgagee shall be enforceable only by such Master Permitted Mortgagee or Permitted Mortgagee, respectively. [§ 910] No Subordination of City's Interests City's interest in Parcel C under this Lease is a vested landlord's reversionary interest and not just a contractual obligation of Lessee. Notwithstanding anything which is or appears to be to the contrary in this Lease, Lessee shall not encumber City's interest under this Lease or City's fee interest in Parcel C by any mortgage, deed of trust, lien, security instrument or financing conveyance of any kind whatsoever. [§ 911] Obligations of Mortgagee Upon Acquisition of Leasehold Or Subleasehold Estate a. If a Master Permitted Mortgagee acquires the leasehold created hereunder, the Master Permitted Mortgagee shall perform the obligations of Developer Lessee or Lessee, as applicable, only from and after the date of foreclosure or possession and the Master Permitted Mortgagee shall not be responsible for the past actions or inactions of the prior Developer Lessee or Lessee. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, the Master Permitted Mortgagee shall be required to perform and abide by each and all of the obligations of Lessee under this Lease, and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease, including without limitation the cure of any continuing default, as applicable against the Master Permitted Mortgagee. b. If a Permitted Mortgagee acquires the leasehold created hereunder or the subleasehold estate under a Condominium Unit Sublease, the Permitted Mortgagee shall perform the obligations of Lessee or the Condominium Unit Owner under the Sublease, as applicable, only from and after the date of foreclosure or possession and the Permitted Mortgagee shall not be responsible for the past actions or inactions of the prior Lessee or Condominium Unit Owner. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, the Permitted Mortgagee shall be required to perform and abide by each and all of the obligations of Lessee under this Lease or the Condominium Unit Owner under the Sublease, and (B) on and after the date of such foreclosure or possession, City shall have the right to enforce each and all of the provisions of this Lease or Sublease, including without limitation the cure of any continuing default, as applicable, against the Permitted Mortgagee. [§ 912] City's Rights Against Prior Lessees Nothing herein is intended or shall be construed to limit or restrict City's rights and remedies against any prior Lessee, provided that City's pursuit of such remedies shall not affect the rights of any Condominium Unit Owner and/or the holder of any Master Permitted Mortgage, or Permitted Mortgage obtained in accordance with Section 901 of this Lease to the use, JRS130601.0002\405061.1 37 Contract Number 8935 (RAS) enjoyment or operation of Parcel C and Improvements or a Condominium Unit encumbered, as applicable. [§ 1000] INDEMNIFICATION AND INSURANCE [§ 1001] Indemnification Throughout the term of this Lease, Lessee agrees to and shall defend, indemnify and hold harmless Agency, the City, and their respective officers, employees, agents, contractors and consultants (the "Indemnitees ") from and against all claims, liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person which shall occur on Parcel C and which shall be directly or indirectly caused by or based on Lessee's leasehold interest in Parcel C or any portion thereof or any Improvements thereon or the condition of Parcel C or any portion thereof or any Improvements thereon or Lessee's rehabilitation, development, construction, use or operation of Parcel C or any portion thereof or any Improvements thereon or any of Lessee's activities under this Lease, whether such actions or inactions thereof by Lessee or anyone directly or indirectly employed or contracted with by Lessee and whether such damage or injury shall accrue or be discovered before or after the termination of this Lease. Lessee shall not be responsible for (and such indemnity shall not apply to) property damage or bodily injury caused by entry onto Parcel C and Improvements by the City pursuant to various provisions of this Lease, and /or to the extent caused by the gross negligence or willful misconduct of the Indemnitees. [§ 1002] Required Insurance Effective from Completion of the Improvements through the term of this Lease, Lessee at its sole cost and expense shall: 1. Keep or cause to be kept a policy or policies of insurance against loss or damage to the Improvements on Parcel C. Such insurance shall be maintained in an amount not less than one hundred percent (100 %) of the full insurable value of the Improvements as defined herein in Section 1003 with no co- insurance penalty (such value to include amounts spent for construction of the Improvements, architectural and engineering fees, and inspection and supervision). Agency and City shall be named as an additional insureds as their interests may appear. 2. Maintain or cause to be maintained Commercial General Liability insurance, to protect against claims for injuries to persons, including death or damages to property which may arise from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or indirectly from any act or activities of Lessee or under Lessee's control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person caused directly or indirectly by or from the acts or activities in connection with Parcel C and Improvements of Lessee or its invitees and sublessees, or any person acting for Lessee, or under its control or direction. Any such property damage and personal injury insurance maintained by Lessee at any time during the term of this Lease shall name Agency and City, and their respective officers, employees and consultants, as additional insureds and shall also provide for and protect Agency and City against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall JRSl30601.0002 \405061.1 38 Contract Number 8935 (RAS) be maintained in full force and effect during the entire term of this Lease in an amount not less than Five Million Dollars ($5,000,000) combined single limit as of the Effective Date of Lease, and, every five (5) years following the close of escrow for the sale of the first Condominium Unit, Lessee shall review such coverage to insure that it is reasonably consistent with similar coverage for similar type projects in Los Angeles County and if not, Lessee shall in make adjustments in such coverage. Lessee agrees that provisions of this paragraph 2 respecting maintenance of insurance shall not be construed as limiting in any way the extent to which Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities, or activities of its invitees and sublessees or the activities of any other person or persons for which Lessee is otherwise responsible. 3. Maintain or cause to be maintained worker's compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such worker's compensation insurance shall cover all persons employed by Lessee in connection with Parcel C and Improvements, and shall cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with Parcel C and Improvements, or the operation thereof by Lessee. 4. In the event that the holder of a Permitted Mortgage which has registered its name and address with City acquires the leasehold interest created by this Lease, such Permitted Mortgagee shall have the right to self - insure with respect to the risks specified in this Section 1002 if such Permitted Mortgagee is an institutional lender. [§ 1003] Definition of "Full Insurable Value" The term "full insurable value" as used in Section 1002 shall mean the actual replacement cost (excluding the cost of excavation, foundation and footings below the ground level and without deduction for depreciation) of the Improvements, including the cost of construction of the Improvements, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Lessee shall cause the full insurable value to be determined from time to time by the insurer or by a qualified expert mutually acceptable to City and Lessee, not less often than once every three years. [§ 10041 General Insurance Provisions All insurance provided under Section 1002 of this Lease shall be primary insurance for the benefit of Lessee, Agency and City. Said insurance shall also be for the benefit of the Permitted Mortgagee, if any. All insurance provided under Section 1002 shall be periodically reviewed by the parties for the purpose of mutually increasing or decreasing the minimum limits of such insurance, from time to time, to amounts which may be reasonable and customary for similar facilities of like size and operation. The insurance to be provided by Lessee may provide for a deductible or self - insured retention of not more than Twenty -Five Thousand Dollars ($25,000.00), with such amount to increase at such times as City may require increases in the policy limits as set forth above; provided that the percentage increase in the deductible or self - insured retention shall not exceed the percentage increase in the Consumer Price Index since the last requested adjustment; JRS\30601.0002\405061.1 39 Contract Number 8935 (RAS) and further provided that Lessee may maintain such higher deductibles or self - insured retention as may be approved in writing by the City's Risk Manager. In the event such insurance does provide for deductibles or self - insured retention, Lessee agrees that it will fully protect Agency and City, their respective boards, officers, and employees in the same manner as these interests would have been protected had the policy or policies not contained the deductible or retention provisions. All insurance herein provided for under Section 1002 shall be effected under policies issued by insurers of recognized responsibility licensed or a non admitted insurer with an A.M. Best rating of no less than A -:8, subject to the reasonable approval of the City's Risk Manager. Any insurance required to be maintained by Lessee pursuant to Section 1002 may be taken out under a blanket insurance policy or policies covering other premises or properties, and other insureds in addition to the parties hereto; provided, however, that any such policy or policies of blanket insurance shall specify therein, or supplemental written certification from the insurers under such policies shall specify, the amount of insurance irrevocably allocated to the coverage to be provided under Section 1002 and provided further, that in all other respects, any such blanket policy shall comply with the other provisions of Section 1002. All policies or certificates of insurance shall provide that such policies or certificates shall not be canceled or materially changed without at least thirty (30) days prior written notice to City except for ten (10) days for nonpayment of premium. Copies of certificates and appropriate endorsements thereof, subject to the reasonable approval of City legal counsel, shall be deposited with City together with appropriate evidence of payment of the premiums therefor; and, at least ten (10) days prior to expiration of any such policy. Upon written request of the City, copies of policies shall be deposited with the City. [§ 10051 Failure to Maintain Insurance If Lessee fails or refuses to procure or maintain insurance as required by this Lease, City shall have the right, at City's election, to provide Lessee with written notice of such failure and if Lessee does not obtain the required insurance and provide written evidence thereof reasonably acceptable to the City within fifteen (15) days following receipt of such written notice form the City, the City shall be entitled to procure and maintain such insurance until Lessee obtains the required insurance. The premiums paid by City shall be treated as additional rent due from Lessee, to be paid on the first day of the month following the date on which the premiums were paid. City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). [§ 10061 Disposition of Insurance Proceeds Resulting from Loss or Damage to Improvements a. Subject to the provisions of paragraph (b) below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Lessee during the term of this Lease shall be payable, under the provisions of the policy of insurance, to Lessee, or, if such loss or damage involves the need for Lessee to obtain any governmental approvals or permits, jointly to Lessee and City, and said proceeds shall constitute a trust fund to be used for the repair, restoration or reconstruction of the Improvements in accordance with plans and specifications approved in writing by City. JRS\30601.0002\405061.1 40 Contract Number 8935 (RAS) b. Notwithstanding the foregoing paragraph, within the period during which there is an outstanding Master Permitted Mortgage and /or a Permitted Mortgage obtained in accordance with Section 901 of this Lease said proceeds shall be made payable as set forth in Sections 708 and 709 of this Lease. C. Lessee hereby waives any claim against Agency and City for any loss covered by insurance of the type specified in Section 1002; and Lessee, shall obtain from its insurance company or companies a waiver of any right of subrogation that it may have against Agency and City. [§ 11001 EMINENT DOMAIN [§ 1101] Lessee to Give Notice In case of a taking of all or any part of Parcel C and Improvements, or the commencement of any proceedings or negotiations which might result in such taking, Lessee shall promptly give written notice thereof to City generally describing the nature and extent of such taking or the nature of such proceedings or negotiations and the nature and extent of the taking which might result therefrom, as the case may be. [§ 1102] Total Taking In case of a taking of the fee of Parcel C and Improvements, or in case of the taking of only a part of Parcel C and Improvements, leaving the remainder of Parcel C and Improvements in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder, this Lease shall terminate as of the date title vests in the condemning authority or the date the condemning authority is entitled to possession, whichever first occurs (the "Date of Taking "). Any taking of Parcel C and Improvements of the character referred to in this Section 1102 which results in the termination of this Lease is referred to herein as a "Total Taking." [§ 1103] Partial Taking In case of a taking of Parcel C and Improvements other than a Total Taking (a "Partial Taking "), (i) this Lease shall remain in full force and effect as to the portion of Parcel C and Improvements remaining immediately after such taking, without any abatement or reduction of any sum payable hereunder, and (ii) Lessee, to the extent the awards or payments, if any, on account of such taking shall be sufficient for the purpose, at its expense, but first subject to Section 1104(a), shall within a reasonable period of time commence and complete, or cause to be commenced and completed, Restoration of Parcel C and Improvements as nearly as possible to its value, condition, and character immediately prior to such taking, with such alterations and additions as may be made at Lessee's election pursuant to and subject to the terms of Section 705, except for any reduction in area caused thereby; provided, however, that in case of a taking for temporary use Lessee shall not be required to effect Restoration until such taking is terminated. [§ 11041 Application of Awards and Other Payments Awards and other payments on account of a taking, less costs, fees and expenses incurred in the collection thereof ( "Net Awards and Payments ") shall be applied as follows: JRS\30601.0002 \405061.1 41 Contract Number 8935 (RAS) a. In case of a taking other than a Total Taking or a taking for temporary use, Lessee shall furnish to City, all Master Permitted Mortgagees, and all Permitted Mortgagees evidence satisfactory to each of the foregoing of the total cost of the Restoration required by Section 1103. b. Net Awards and Payments awarded to Lessee on account of a taking other than a Total Taking or a taking for temporary use shall be held and applied as provided with respect to proceeds of insurance in Section 709. C. Net Awards and Payments awarded to Lessee on account of a taking for temporary use shall initially be received by Lessee, unless provided otherwise by any Master Permitted Mortgage. d. Net Awards and Payments awarded to Lessee on account of a Total Taking shall be allocated as follows: First: There shall be paid to each Master Permitted Mortgagee (it being understood that each Master Permitted Mortgagee shall be paid in order of seniority) an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Master Permitted Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the taking. Second: There shall be paid to each Permitted Mortgagee an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Permitted Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the taking. Third: To the Lessee and the City as their respective interests may appear in Parcel C and the Improvements; provided, that any payment to a Master Permitted Mortgagee or a Permitted Mortgage pursuant to the preceding paragraphs shall be charged against Lessee's interest. [§ 1200] DEFAULTS, REMEDIES AND TERMINATION [§ 12011 Defaults General a. Subject to the extensions of time set forth in Section 1314 of this Lease, failure or delay by either party to perform any term or provision of this Lease after expiration of the applicable cure period specified in the following sentence (unless another provision of this Lease includes a different period of time for the cure of any specific default which other specific period shall control), constitutes an event of default under this Lease. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with reasonable diligence and, in any event, for monetary defaults within thirty (30) days following receipt of written notice of such failure or delay, and for non - monetary defaults within the time reasonably required for cure with reasonable diligence, not to exceed one hundred and eighty (180) days following receipt of written notice plus any period or periods of enforced delay required by Section 1314 of this Lease (with any other cure periods specified in this Lease and as applicable, the "Cure Period "). b. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against JR3\30601.0002\405061.1 42 Contract Number 8935 (RAS) further damages, the injured party may not institute proceedings against the party in default until the expiration of the applicable Cure Period. City's exercise of its remedies under Sections 1200 et seq. shall be subject to the provisions of Sections 900 et seq. of this Lease. Failure or delay in giving such notice shall not constitute a waiver of any default. C. Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any of its remedies or rights as to any default shall not operate as a waiver of any default or of any such rights or remedies or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. [§ 1202] Legal Actions [§ 12031 Institution of Legal Actions Subject to Section 1211, in addition to any other rights or remedies, either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in the Superior Court of the County of Los Angeles, State of California, in any other appropriate court in that county, or in the Federal District Court in the Central District of California. Lease. [§ 1204] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this [§ 1205] Acceptance of Service of Process In the event that any legal action is commenced by Lessee against City, service of process on City shall be made by personal service upon the City Manager of City, or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Lessee, service of process on Lessee shall be made by personal service upon an officer of the Manager of Lessee or after assignment of the this Lease to the Association, an officer of the Association, and shall be valid whether made within or without the State of California, or in such manner as may be provided by law. [§ 1206] Attorneys' Fees and Court Costs In the event that either City or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under or violation of this Lease, then each party shall bear and pay the cost of its own costs and attorneys' fees. [§ 12071 Rights and Remedies are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Lease, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. rxsv0601.0002\405061.1 43 Contract Number 8935 (RAS) [§ 1208] Damages If either party defaults with regard to any of the provisions of this Lease and the default is not cured prior to the expiration of the applicable Cure Period, the defaulting parry shall be liable to the non - defaulting party for any damages caused by such default, and the non - defaulting party may thereafter (but not before) commence an action for damages against the defaulting party with respect to such default. [§ 1209] Specific Performance If either party defaults with regard to any of the provisions of this Lease and the defaulting party fails to cure such default prior to the expiration of the applicable Cure Period, the non - defaulting party, at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Lease pertaining to such default. [§ 1210] Additional Remedies of City a. If Lessee defaults with regard to any of the provisions of this Lease, City shall serve written notice of such default upon Lessee and Master Permitted Mortgagees who have registered their names and addresses in writing with City. Subject to the provisions of Sections 900 et seq. of this Lease running in favor of Master Permitted Mortgagees and Permitted Mortgagees, if the default is not commenced and cured prior to the expiration of the applicable Cure Period, City, at its option, may thereafter (but not before): 1. Correct or cause to be corrected said default and charge the direct third party costs therefor to the account of Lessee; 2. Correct or cause to be corrected said default and pay the costs thereof from the proceeds of any insurance; 3. Continue this Lease and Lessee's right to possession in effect and enforce its rights and remedies under the Lease, including the right to recover rent as it becomes due, as provided in Section 1951.4 of the California Civil Code; provided, however, after the Release of Construction Covenants and the execution of the Assignment of Lease (Exhibit C), City's exercise of this remedy shall be personal to the Association and shall not in any manner modify or affect the Subleases of Condominium Unit Owners or their Permitted Mortgagees, which shall remain in fall force and effect. 4. Have a receiver appointed to take possession of Lessee's leasehold interest in Parcel C and Improvements, with power in said receiver to administer Lessee's interest therein, to collect all funds available to Lessee in connection with its operation and maintenance thereof; and to perform all other acts consistent with Lessee's obligations under this Lease as a court deems proper; provided, however, after the Release of Construction Covenants and the execution of the Assignment of Lease (Exhibit C), City's exercise of this remedy shall apply only to the Association and in particular the obligations assumed by the Association under the Assignment of Lease, and shall not in any manner modify or affect the Subleases of Condominium Unit Owners or their Permitted Mortgagees, which shall remain in full force and effect. 5. Maintain and operate Parcel C and Improvements without terminating this Lease; provided, however, after the Release of Construction Covenants and the execution of the Assignment ,of Lease (Exhibit C), City's exercise of this remedy shall apply only to the JRS\30601.0002 \405061.1 44 Contract Number 8935 (RAS) Association and in particular the obligations assumed by the Association under the Assignment of Lease, and shall not in any manner modify or affect the Subleases of Condominium Unit Owners or their Permitted Mortgagees, which shall remain in full force and effect. b. City reserves and shall have the right at all reasonable times to enter Parcel C and the Improvements for the purpose of viewing and ascertaining the condition of the same, or to protect its interests in Parcel C and the Improvements or to inspect the operations conducted thereon, subject to the limitations and requirements for City rights of access set forth in Section 405 of this Lease. Any such entry shall be made only after reasonable notice to Lessee. In the event that such entry or inspection by City discloses that Parcel C or the Improvements are not in a decent, safe, and sanitary condition, are damaged, or in disrepair, City shall have the right, if Lessee fails to cure the problem within the applicable Cure Period, to have any necessary maintenance or repair work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all direct costs reasonably incurred by City in having such necessary maintenance or repair work done in order to keep Parcel C and the Improvements in a decent, safe and sanitary condition. C. The rights reserved in this Section 1210 shall not create any obligations on City or increase obligations imposed on City elsewhere in this Lease, and shall not defeat, render invalid or limit the rights or interests expressly provided in this Lease for the protection of Condominium Unit Owner and /or Permitted Mortgagees. [ §1211] Rights of Termination Once the Release of Construction Covenants has been issued, as provided in Section 314 of the Agreement, the provisions of this Section 1211 shall terminate and cease to be effective or enforceable and City shall have no right under Section 1211 or any other provision of this Lease to terminate this Lease, except as to any right of termination under Sections 708 and 709. a. Subject to the enforced delay provisions of Section 1314, the preceding paragraph, and the rights of any Master Permitted Mortgagee to cure under Sections 900 et seq., City may terminate this Lease at its option if Developer Lessee or any Master Permitted Mortgagee fails to perform any of its material obligations under the Agreement and /or this Lease for Parcel C, including Developer Lessee's or the Master Permitted Mortgagee's failure to diligently pursue development of Parcel C, and such failure is not cured within the applicable Cure Period. b. For the purposes of this Lease, "failing to diligently pursue development" shall mean: 1. the failure to commence construction of the Improvements on Parcel C, as required by the Agreement for a period of three (3) months after the date set forth in the Schedule of Performance (Attachment No. 3 to the Agreement); and 2. the abandonment or substantially suspended construction of the Improvements on Parcel C for a continuous period of three (3) months after written notice of such abandonment or suspension from City. C. In the event of termination under this Section, in addition to any remedies authorized herein, City shall have the right, its option, to exercise its rights under the Assignment of Agreements, attached to the Agreement as Attachment No. 613, and reenter and take rRS\30601.0002\405061.1 45 Contract Number 8935 (RAS) immediate possession of Parcel C and any Improvements thereon, in accordance with subsection (d) of this Section and subject to Section 1212 herein. d. Subject to Section 1212, the City shall have the right, at its option, to reenter and take possession of Parcel C with all Improvements thereon, and to terminate and revest in the City the leasehold estate theretofore conveyed to the Developer Lessee, if after conveyance of title and prior to the Release of Construction Covenants pertaining to Parcel C (or portion thereof), the Developer Lessee (or its successors in interest) shall: 1, fail to commence construction of the Improvements on Parcel C (or portion thereof) as required by the Agreement for a period of three (3) months after the date set forth in the Schedule of Performance (Attachment No. 3 to the Agreement), provided that the Lessee shall not have obtained an extension or postponement to which the Lessee may be entitled pursuant to Section 1314 hereof, or 2. abandon or substantially suspend construction of the Improvements on Parcel C (or portion thereof) for a continuous period of three (3) months after written notice of such abandonment or suspension from the City, provided that the Lessee shall not have obtained an extension or postponement to which the Lessee may be entitled to pursuant to Section 1314 hereof; or 3. assign or attempt to assign this Lease, or any rights herein, or transfer, or suffer any involuntary transfer of Parcel C in violation of this Lease, and such violation shall not be cured within thirty (30) days after the date of receipt of written notice thereof by the City to the Lessee. Such right to reenter, repossess, terminate and revest, shall be subject to and be limited by and shall not defeat, render invalid, or limit any rights by any Master Permitted Mortgagee to cure under Sections 900 et seq. Upon the revesting in the City of title to Parcel C, as provided in this subsection (d), the City shall, pursuant to its responsibilities under state law, use its diligent and good faith efforts to resell its interests in the Parcel C, as soon and in such manner as the City shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan to a qualified and responsible party or parties (as determined by the City), who will assume the obligation of malting or completing the Improvements, or such other Improvements in their stead, as shall be satisfactory to the City and in accordance with the uses specified for the Parcel C in the Redevelopment Plan. Upon such resale of the interests in the Parcel C, the proceeds thereof shall be applied: 1. first, to reimburse the City on its own behalf or on behalf of the City of all costs and expenses incurred by the City, including but not limited to salaries of personnel engaged in such action, in connection with the recapture, management, and resale of its interests in Parcel C (but less any income derived by the City from Parcel C, in connection with such management); all taxes, assessments and water and sewer charges with respect to Parcel C (or, in the event Parcel C is exempt from taxation or assessment or such charges during the period of ownership, then such taxes, assessments, or charges, as would have been payable if Parcel C were not so exempt); any payments made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults, or acts of the Lessee, its successors or transferees; any expenditures made or obligations incurred JRS\30601.0002\405061.1 46 Contract Number 8935 (RAS) with respect to the making or completion of the agreed Improvements or any part thereof on Parcel C; and any amounts otherwise owing to the City by the Lessee and its successor or transferee; 2. second, to each Master Permitted Mortgagee, in order of priority, in an amount up to the sum of any unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and /or any interest accrued thereon, all as of the date on which such payment is made; provided, however, that nothing herein shall be deemed as a guaranty or warranty by the City to such Master Permitted Mortgagee that the resale of the City's interests and payment to Master Permitted Mortgagee shall be sufficient to pay, in total, unpaid principal amount of the indebtedness secured by the Master Permitted Mortgage, if any, and/or any interest accrued thereon, if any; 3. third, to reimburse the Developer Lessee, its successor or transferee, up to the amount equal to (1) the sum of the Base Rent paid to the City by the Lessee for Parcel C being revested in the City; and (2) the costs incurred for the development of Parcel C or for the construction of the agreed Improvements thereon, if such costs were incurred in accordance with the Method of Financing (Attachment No. 13A) and Project Budget (Attachment No. 5A), less (3) any gain or income withdrawn or made by the Lessee therefrom or from the Improvements thereon. For purposes of this paragraph the term 'cost incurred" shall include direct, out -of- pocket expenses of development, but shall exclude Developer Lessee's all overhead expenses, Lessee fees, and profit; and 4. fourth, any balance remaining after such reimbursements shall be retained by the City as its property. The City shall also be entitled to exercise all of its rights under the Assignment of Agreements (Attachment No. 6B to the Agreement). e. To the extent that the right established in this Section 1211 involves forfeiture, it must be strictly interpreted against the City, the party for whose benefit it is created. The rights established in this Section 1211 are to be interpreted in light of the fact that the City will convey Parcel C to the Lessee for development and not for speculation in undeveloped land. [§ 12121 Cross - Default — Among Parcels [§ 1212.1] Cross - Default — Among Parcels — Concurrent Financing of Parcels A and B only. Notwithstanding any provision to the contrary in this Lease, in the event that close of construction financing for Parcels A and B is not concurrent with close of construction financing for Parcel C, Lessee understands and agrees that the occurrence of a material breach of the Parcel B Ground Lease and /or the Parcel C Ground Lease shall constitute a material breach of this Lease unless all of the following conditions are satisfied: (i) Close of Escrow has occurred for all of the Parcels; (ii) the Construction Financing Event has occurred for Parcels A and B; (iii) Lessee has completed the first floor of structural framing of the above - ground vertical buildings on Parcels A and B, in accordance with the Development Agreement and approved Permits for development of the Site ( "Construction Framing Event "); and (iv) Developer has not made a Transfer contrary to the Agreement or this Lease, which shall be determined at the time of the Construction Framing Event. Upon the satisfaction of clauses (i) to (iv ), above, the JRS\30601.0002 \405061.1 47 Contract Number 8935 (RAS) occurrence of a breach or default with respect to a Parcel shall not subject the other Parcels to any remedies for such breach of default. [§ 1212.2] Cross - Default — Among Parcels — Concurrent Financing of Parcels A, B and C. Notwithstanding any provision to the contrary in this Agreement, in the event that close of construction financing for Parcels A and B is concurrent with close of construction financing for Parcel C, Developer understands and agrees that the occurrence of a material breach of the Parcel B Ground Lease and /or Parcel C Ground Lease shall constitute a material breach of this Lease unless all of the following conditions are satisfied: (i) Close of Escrow has occurred for all of the Parcels; (ii) the Construction Financing Event has occurred for Parcels A, B, and C; (iii) Developer has issued a notice to proceed to its Contractor for construction of the Development on Parcel C and the Development on Parcel B, in accordance with the Development Agreement and approved Permits for development of the Site ( "Notice to Proceed Event'); and (iv) Developer has not made a Transfer contrary to this Agreement, which shall be determined at the time of the Notice to Proceed Event. Upon the satisfaction of clauses (i) to (iv), above, the occurrence of a breach or default with respect to a Parcel shall not subject the other Parcels to any remedies for such breach of default. [§ 13001 GENERAL PROVISIONS [§ 13011 Notices, Demands and Communications between the Parties Formal notices, demands and communications between City and Lessee shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the City and of Lessee as designated in Section 108 and Section 109 hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section. Sufficient notice may also be given by personal delivery or reputable overnight delivery service in lieu of mail if reasonably adequate records are maintained of such service in the ordinary course of business by the person or entity effecting such service. [§ 13021 Time of Essence Time is of the essence with respect to the performance of each of the covenants and agreements contained in this Lease. [§ 1303] Conflict of Interests a. No member, official or employee of City shall have any personal interest, direct or indirect, in this Lease, nor shall any such member, official or employee participate in any decision relating to the Lease which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. b. Lessee warrants that it has not paid or given, and will not pay or give, any officer or employee of City or City any money or other consideration for obtaining this Lease. [§ 1304] Nonliability of City Officials and Employees No member, official or employee of Agency or City shall be personally liable to Lessee, or any successor in interest, in the event of any default or breach by City or any for any amount JRS\30601.0002 \405061.1 48 Contract Number 8935 (RAS) which may become due to Lessee or successor or on any obligations under the terms of this Lease. [§ 13051 Inspection of Books and Records a. City has the right at all reasonable times to inspect the books and records of Lessee pertaining to Parcel C and Improvements as pertinent to the purposes of this Lease. Lessee also has the right at all reasonable times to inspect the books and records of City pertaining to Parcel C and Improvements as pertinent to the purposes of this Lease. b. In the event that the holder of a Master Permitted Mortgage and/or a Permitted Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created by this Lease, then, in such an event, City acknowledges and agrees that City shall be entitled to examine and /or audit all of the books and records of said Master Permitted Mortgagee and /or Permitted Mortgage solely to the extent that they relate to Parcel C and Improvements. [§ 1306] No Partnership Neither anything in this Lease contained, nor any acts of City or Lessee shall be deemed or construed by any person to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association between City and Lessee. [§ 13071 Compliance with Law Except as otherwise expressly provided in the Development Agreement and /or the Agreement, Lessee agrees, at its sole cost and expense, to comply and secure compliance with all the applicable and valid requirements now in force, or which may hereafter be in force, of all municipal, county, State and federal authorities, pertaining to Parcel C and Improvements, as well as operations conducted thereon, and to faithfully observe and secure compliance with, in the use of Parcel C and Improvements, all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, including all laws prohibiting discrimination or segregation in the use, sale, lease or occupancy of the property. [§ 13081 Surrender of Property Except as otherwise expressly provided in this Lease, upon the expiration or sooner termination of this Lease pursuant to the terms hereof, it shall be lawful for City to reenter and repossess Parcel C and Improvements without process of law, and Lessee, in such event, does hereby waive any demand for possession thereof, and agrees to surrender and deliver Parcel C and Improvements peaceably to City immediately upon such expiration or sooner termination of this Lease in good order, condition and repair, except for reasonable wear and tear. [§ 13091 Severability If any provision of this Lease shall be adjudged invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. [§ 13101 Binding Effect This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. msn0601.0002\405061.1 49 Contract Number 8935 (RAS) [§ 13111 Assignment or Sublease a. City shall at all times have the right to encumber, sell, convey, transfer, or otherwise dispose of all or any portion of any fee or reversionary interest in Parcel C and /or in this Lease to any third person or entity. In the event of any assignment of all or a part of City's interest in either Parcel C or this Lease to a third person or entity, the Lessee shall attorn to the third person or entity and recognize third person or entity as the landlord under this Lease, and the third person or entity shall provide Lessee with a reasonably appropriate non - disturbance agreement. b. So long as Lessee is not in default (subject to applicable notice and cure rights) of the Agreement or this Lease, City shall not encumber, sell, convey, transfer, or otherwise dispose of all or any portion of or any fee or reversionary interest in Parcel C to any third person or entity until four (4) years after commencement of the term of this Lease. Any transfer of the fee or reversionary interest in Parcel C shall be subject to all terms and provisions of this Lease which shall be unaffected by such encumbrance, sale, conveyance, transfer or disposal. Also, if the successive owner of fee title to Parcel C or any portion thereof wishes to encumber Parcel C or any portion thereof with a mortgage, deed of trust or other encumbrance of any kind that could result in the holder thereof ( "Encumbrance Holder ") acquiring fee title to Parcel C or any portion thereof, such encumbrance shall be fully subordinate to this Lease, the CC &RS, Condominium Plan, Reciprocal Easement Agreement and all other documents recorded to implement the condominium development (collectively, "Lease Documents ") and should Encumbrance Holder acquire title to Parcel C or any portion thereof it shall take title subject to all terms and provisions of the Lease Documents. [§ 13121 Captions The captions contained in this Lease are merely a reference and are not to be used to construe or limit the text. [§ 1313] No Recording of this Lease This Lease shall not be recorded. Pursuant to the Agreement, a memorandum of this Lease which expressly contemplates and includes any and all amendments, modifications, restatements and replacements hereof, will be recorded in the Official Records of Los Angeles County. [§ 1314] Enforced Delay in Performance for Causes Beyond Control of Party Subject to Section 604 of the Agreement, in addition to specific provisions of this Lease, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond the control and without the fault of the party claiming an extension of time to perform, including war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts or failure to act of the City or any other public or governmental agency or entity (other than any act or failure to act of City, which shall not excuse performance by City). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty rxsu0601.0002\405061.1 50 Contract Number 8935 (RAS) (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Lease may also be extended in writing by City and Lessee. [§ 1315] Entire Agreement, Waivers and Amendments a. This Lease is executed in (_) duplicate originals, each of which is deemed to be an original. This Lease includes fifty -six (56) pages and three (3) exhibits. b. All waivers of the provisions of this Lease must be in writing and signed by the appropriate authorities of City or Lessee and all amendments hereto must be in writing and signed by the appropriate authorities of the City and Lessee. During the term of any Permitted Mortgage obtained in accordance with Section 901 of this Lease, any amendment to this Lease shall require the written approval of the Permitted Mortgagee, which approval shall not unreasonably be withheld. C. The City Manager shall have the authority to approve, execute, and deliver any Lease Riders to Parcel C reasonably required by any Master Permitted Mortgagee and /or Permitted Mortgagee; provided, however, that such Lease Riders do not subordinate the City's fee interest in any Parcel. The City understands and agrees that the authority to approve such Lease Riders shall not be untimely or unreasonably withheld. [§ 1316] Off -Set Statement, Attornment and Subordination a. Off -Set Statement. City and Lessee shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from the other party, execute, acknowledge and deliver to such requesting party a statement in writing (i) certifying that this Lease is unmodified and in full force and effect, or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect,) and the dates to which the rent and other charges are paid in advance, if any, without any offset or defense thereto (if such be the case) and (ii) acknowledging that there are not, to such certifying party's knowledge, any uncured defaults on the part of the requesting party hereunder or specifying the defaults if any are claimed. Any such statement may be relied upon by any prospective purchaser or encumbrance of the Improvements, Parcel C or of all or any portion of the real property of which Parcel C is a party. Lessee's requesting party shall bear all costs with respect to any statement requested of City. b. Subordination. Lessee agrees that this Lease shall, at the request of the City, be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of Parcel C by City and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof, provided the mortgagees or beneficiaries named in said mortgages or trust deeds shall agree in a written recorded document to recognize the interest of Lessee, Master Permitted Mortgagee and any other Permitted Mortgagee under this Lease and any applicable Master Permitted Mortgagee and Permitted Mortgage loan documents in the event of foreclosure and shall not disturb the interest of Lessee, Master Permitted Mortgagee or any other Permitted Mortgagee, in accordance with the terms of this Lease. Lessee also agrees that in the event City and any mortgagee or beneficiary elect to have this Lease prior to such mortgage or deed of trust, and upon notification by City or such mortgagee or beneficiary to Lessee to that effect, this Lease shall be deemed prior in lien to such mortgage or deed of trust, whether this Lease is dated prior to or subsequent to the date of said JRS\30601.0002\405 06 1.1 51 Contract Number 8935 (RAS) mortgage or deed of trust. Lessee agrees that upon the request of City, or any mortgagee or beneficiary, Lessee shall execute whatever instruments may be required to carry out the intent of this section. [§ 13171 Association Option to Extend Lease Term a. Grant of Extension Option. Provided that Lessee has not committed a default under this Lease that has not been cured, waived or forgiven, notwithstanding any other provision of this Lease to the contrary, the Association shall have the option to extend the term of the Lease for a period of fifty (50) years beyond the original 99 -year Lease Term ( "Extension Term ") as provided in this Section ( "Extension Option "), subject to the conditions set forth below. The Association's rights and obligations under this Section shall not be transferable or assignable, in whole or part, to any third parties, including, without limitation, a Master Permitted Mortgagee or its transferee, Permitted Mortgagee or its transferee, or any Condominium Unit Owner. b. Term of Extension Option. The term of the Extension Option ( "Option Term ") shall commence on the date which is twenty five (25) years prior to the date on which the original Lease Term expires and shall expire on the date that is one (1) year prior to expiration of the original Lease Term. The Association shall have the opportunity to "exercise" (as used herein "exercise" has the meaning given in e. below) the Extension Option (referenced hereinafter as the First Option Period, Second Option Period and Third Option Period), as follows: i. Once during Years 75 - 83 of the Lease Term ( "First Option Period "), beginning on the 75th anniversary of the commencement of the Lease Term and ending on the day prior to the 83rd anniversary. ii. Once during Years 83- 91 of the Lease Term ( "Second Option Period "), beginning on the 83rd anniversary of the commencement of the Lease Term and ending on the day prior to the 92nd anniversary. iii. Once during Years 91 — 98 of the Lease Term ( "Third Option Period "), beginning on the 92nd anniversary of the commencement of the Lease Term and ending on the day prior to the 98th anniversary. iv. If the Association does not exercise the Extension Option during the First Option Period, then the Association shall have the right to exercise the Extension Option during the Second Option Period. If the Association exercises the Extension Option during the First Option Period, then the Association shall have no further rights to exercise the Extension Option. V. If the Association does not exercise the Extension Option during the First Option Period or the Second Option Period, then the Association shall have an opportunity to exercise the Extension Option during the Third Option Period. If the Association exercises the Extension Option during the First Option Period or Second Option Period, then the Association shall have no further rights to exercise the Extension Option. C. Election Consideration Notice. The Association shall initiate the process to exercise the Extension Option by providing Lessor with written notice ( "Election Consideration Notice ") that it may wish to exercise the Extension Option. The Election Consideration Notice shall not constitute the exercise of the Extension Option JRS\30601.0002\405061.1 52 Contract Number 8935 (RAS) d. Determination of Extension Rent. Association shall pay additional rent ( "Extension Rent ") to Lessor determined and commencing in accordance with subsection (e) below. Within thirty(30) days following Lessor's receipt of the Election Consideration Notice, Lessor shall deliver to the Association a list of five (5) third party independent appraisers ( "Appraiser List ") who are members of the American Institute of Real Estate Appraisers or an equivalent organization, with at least ten (10) years' experience in the appraisal of ground lease rent for residential sale or leasing of condominium projects (to the extent available) within an equivalent coastal area within California. Association shall then have thirty (30) days from its receipt of the Appraiser List to select one appraiser from the Appraiser List and provide Lessor with written notice of Association's selection from the Appraiser List ( "First Appraiser "), which notice shall include the name and address of such First Appraiser. Within ten (10) days following Lessor's receipt of the Association's selection notice Lessor shall commission the First Appraiser to provide a written appraisal and supporting documentation of the fair market value of the Extension Rent (collectively, "First Appraisal ") to the Association and Lessor within forty -five (45) days following the First Appraiser's acceptance of the commission, based upon the assumption that the Extension Rent shall be paid as provided in subsection e, below, and taking into consideration the following factors: (i) fair market value of the ground rent for the period commencing with the first day following the exercise of the Extension Option through the end of the initial 99 -year Lease Term (this value should reflect any value enhancement to the Condominium Units achieved by virtue of the lease extension). and (ii) fair market value of the ground and building rent for the fifty (50) year period commencing at the end of the initial 99- year Lease Term. Association shall pay for the First Appraisal. Lessor or Association shall each have ten (10) days following receipt of the First Appraisal to appeal ( "First Appeal Period ") the First Appraisal by delivering a written notice of the appeal to the other party including the specific grounds therefore for the appeal. Association and Lessee shall meet and confer at least once within thirty (30) following delivery of such appeal notice to negotiate in good faith to resolve the appeal, but if the Association and Lessor cannot agree upon the First Appraisal after this negotiation period, then within ten (10) days following the expiration of such thirty (30) day negotiation period either party may submit a request ( "Second Appraiser Request ") in writing to select a second appraiser from the Appraiser List ( "Second Appraiser ") to provide a second appraisal ( "Second Appraisal ") with a copy of such notice to the other party. If neither party appeals the First Appraisal, then the First Appraisal shall constitute the Extension Rent if the Association exercises the Extension Option. Within ten (10) days following delivery of the Second Appraiser Request. the requesting party shall commission the Second Appraiser to provide a written appraisal and supporting documentation of the fair market value of the Extension Rent (collectively, "Second Appraisal ") within thirty (30) days of the Second Appraiser's acceptance of the commission, based upon the same appraisal instructions as were provided to the First Appraiser. If the Second Appraisal is less than fifteen percent (15 %) above or below the First Appraisal, the requesting party shall pay the cost of the Second Appraisal. If the Second Appraisal is more than fifteen percent (15 %) above or below the First Appraisal, the parties shall split the Second Appraisal costs. JRS\30601.0002 \405061.1 53 Contract Number 8935 (RAS) Lessor or Association shall each have ten (10) days following receipt of the Second Appraisal to appeal ( "Second Appeal Period ") the Second Appraisal by delivering a written notice to the other party of the appeal and including the specific grounds for the appeal. Association and Lessee shall meet and confer at least once within thirty (30) days following the delivery of such appeal notice to negotiate in good faith to resolve the appeal, but if the Association and Lessor cannot agree upon the Second Appraisal after this negotiation period, then within ten (10) days following the expiration of such thirty (30) day negotiation period either party may submit a request in writing ( "Third Appraiser Request" to select a third appraiser from the Appraiser List ( "Third Appraiser ") to provide a third appraisal ( "Third Appraisal "). If neither party appeals the Second Appraisal, then the Second Appraisal shall constitute the Extension Rent if the Association exercises the Extension Option. Within ten (10) days following delivery of the Third Appraiser Request the requesting party shall commission the Third Appraiser to provide a written appraisal and supporting documentation of the fair market value of the Extension Rent (collectively, "Third Appraisal ") within thirty (30) days of the Second Appraiser's acceptance of the commission, based upon the same appraisal instructions as were provided to the First Appraiser; provided, however, that the Third Appraiser shall only rely upon the information and documentation provided by the First Appraiser and Second Appraiser. The Third Appraisal shall constitute the Extension Rent if the Association exercises the Extension Option. If the Third Appraisal is less than fifteen percent (15 %) above or below the Second Appraisal, then the party requesting the Third Appraisal shall pay the cost of the Third Appraisal. If the Third Appraisal is greater than fifteen percent (15 %) the Second Appraisal, then the parties shall split the costs of the Third Appraisal. The parties shall make available to the Appraisers information concerning Parcel C and such other financial data and information as deemed appropriate by the Appraiser(s). The above appraisal process shall be a final determination of the Extension Rent. If the Association exercises the Extension Option, the determination of the Extension Rent under this subsection shall be binding on the parties hereto, shall be entitled to the dignity of an award of binding arbitration, and a binding judgment thereon may be entered in a court of competent jurisdiction. e. Exercise of Extension Option. If Association, in its sole discretion, wishes to exercise the Extension Option, then within one hundred twenty (120) days following the determination of the Extension Rent in accordance with d. above, Association shall deliver to Lessor written notice of such election ( "Option Exercise Notice "). ") along with the total amount of the Extension Rent, in funds immediately payable to the Lessor. The Option Exercise Notice shall include a certification by the Association that it has obtained due authorization of its members in accordance with its CC &Rs to exercise the Extension Option. Within twenty (20) days following receipt by Lessor of the Option Exercise Notice the parties shall execute and record an amendment to this Lease reflecting the terms of the extension in accordance with this Section, including the Extension Rent and the Extension Term (which would extend the term of the Lease to the date which is 149 years after the date on which this Lease originally commenced) ( "Extension Amendment "). If Association does not deliver an Option Exercise Notice to Lessor within the foregoing 120 day period, then the provisions of subsection f. below shall apply. 7RS\30601.0002 \405061.1 - 54 Contract Number 8935 (RAS) f Failure to Exercise Extension Option. If after providing Lessor with an Election Consideration Notice and the determination of the Extension Rent in accordance with subsection d. above, Association fails to exercise the Extension Option in accordance with subsection e. above, then the Lease shall continue unmodified, and Association shall be entitled to provide Lessor with one or more subsequent Election Consideration Notices as provided under subsection b. of this Section; Association's failure to pay any appraisal costs that are the obligation of the Association under this Section shall constitute a default by Lessee under this Lease. g. Lessor's Termination Rights. In the event that Association exercises the Extension Option but fails to make any timely payment to Lessor of the Extension Rent after written notice by the Lessor with thirty (30) days to cure, and notwithstanding any other provisions of the Lease to the contrary that would prevent Lessor from terminating the Lease, such failure of Association to pay Lessor the Extension Rent shall entitle Lessor to terminate the Lease. h. Conflicts. If there is any conflict between this Section and any other provision of this Lease, this Section shall control. JRs\30e01.0002\405061.1 55 Contract Number 8935 (RAS) [§ 13181 Approvals Except as expressly provided otherwise in this Lease, approvals required of City or Lessee shall not be unreasonably withheld, conditioned or delayed. CITY OF SANTA MONICA (City) Rod Gould City Manager Date: ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney an Marsha J. Moutrie APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Special Counsel Susan Y. Cola JRS\30601.0002 \405061.1 56 Date: Date: Contract Number 8935 (RAS) SANTA MONICA URBAN HOUSING A, LLC, a Delaware limited liability company By: Name Title By: Name Title aiS\30601.0002\405061.1 57 EXHIBIT A MAP OF PARCEL C M\30601.0002W05061.1 F ' `OT T. TRACT NO. 69822 1 LOT 60. IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. BEING A SUBDIVISION OF A FORMED OF LOT NO. 41 OF ME RANCHO SAN VICENTE Y SANTA MONICA AS PER MAP RECORDED IN BOOK 3 PAGES 30 AND 31 OF PATENT$ A PORTION OF LOT 18 OF SCOTTS WEDGED TO SANTA MONICA AS PER MAP ON IN BOW i PACES 59 AND 59 OF MISCELLANEOUS RECORDS, WHO LOT T ME A RATED OF LOT 13 OF TRACT NO. 1347 AS PER MAP RECORDED IN BOOK 10 PACE 09 OF MAPS M ME OFFICE OF ME COUNTY RECORDED OF SAID COMM FOR CONDOMINIUM PURPOSES OWNER'S STATEMENT: WE HEREBY STATE THAT WE ARE ME OWNERS OF ON ARE INTERESTED IN ME LANG$ INCLUDED WMIN ME SUBDIVISION SHOWN ON MIS MAP WMIN ME DISTNCTVE BORDER ONES, AND WE CONSENT TO ME PREPARATION AND FILING OF SAID MAP AND SUBOVIXON. ME CITY OF SANTA MONICA, A MUNICIPAL CORPORAMDN. OWNER. TILE MME NOTARY ACKNOWLEDGMENT• STALE OF CWnXIRW ) MAY AT SURVEYOR'S STATEMENT: SHEET I OF 3 SHEETS THIS MAP WAS PREPARED BY ME OR UNDER MY DIRECTOR AND IS TAKE UPON A FIELD SURVEY IN CONFORMANCE WM ME REWMEMFNTS OF ME SUBDIVISION MAP ACT AND LOCAL ORDINANCE AT WE REQUEST OF ME REDEVELOPMENT AGENCY OF ME CITY OF SANTA MONICA IN FEBRUARY 2007. 1 HEREBY STATE THAT TARS MAP REPRESENTS A TRUE AND CWPLETE SURVEY MADE BY ME OR UNDER MY DIRECTION IN FEBRUARY 2007; THAT MIS FINAL MAP SUBSTANTIALLY CONFORMS TO ME CONDITIONALLY APPROVED TENTATIVE MAP; THAT ALL MONUMENTS ARE OF THE CHARACTER AND LOCATIONS SHOWN HEREON ME IN PLACE: THAT SAID MONUMENTS ME SUFFICIENT TO ENABLE THE SURVEY TO BE RETRACED; THAT BOUNDARY MONUMENTS SHOWN AS'SEY ME IN PLACE, AND THAT TE NOTES TO ALL CENTERLINE MONUMENTS SHOWN AS 'SET' ME ON FILE IN ME OFFICE OF ME CITY EMINF£R. nol. JERRY L USELTOM LS. 5347 UCENEE EXPIRES 12 /31 /tt GI BFFOIE Mq AADARY PUfiuc, BASIS OF BEARINGS: MEYDRAEY M APP� OR BE BASIS Cf SAIMMID 2Y EWOENCE 10 BE ME PERIMR1) .. xAAMO C(ARDMD THE BEARINGS SHOWN HEREON ARE BASED Co MOPED TO ME MIHW WSTRUMOR AND AMID A RAM i0 ME THAT HE /SITE /IISY FAMED THE SWE THE CENTERLINE OF MAIN SMELT AS SNOYM IN HIS /.R /MEN WMpGND CAFAOIMFI). AND THAT BY HIS/HER /MDR SONANRE(S) OR HT MII.I. . PAGE 45. Of RECORDS OF SURVEY. AECURO$ TIE xllwNS) OR THE rnMl UFDN BFNUV OF .1. HE PECIDRS) ACME. SWULTEO ME OMUNORL CITY ENGINEER'S CERTIFICATE: I ONMFT C HIM PENALTY OF FRIARY TOLD RE wYYS HL RE STATE OF CAMFWxA NAT RE EdiE XG PARANDAM IS TRUE AAD CWi 1 ADDS. HY NMD: .HMME PRWIED 11.1 NY PRMOP41 PLACE Ci FLME5 IS UI MY CGMNIS9LN N0. uY MNIIN. E%ARES I HEREBY CERTIFY THAT ALL CERMOCAME HAVE BEEN FILED ABU DEPOSITS HAVE BEEN MADE THAT ARE REQUIRED UNDER THE PROMSICIYS OF SECTWS 66492 AND 66493 OF ME SUBDIVISION MAP ACT. E%ECURVE OFFICER, BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES. STATE OF CALIFORNIA BY DATE 1 HEREBY CERTIFY THAT SECURITY IN ME AMOUNT OF E DAN BEEN FILED X1M ME ENECUOYE OFFICER. BOMO OF SUPERVISORS OF ME COUNTY O' LDS ANGELES AS SECURITY FOR ME PAYMENT OF TAXES AND SPECIAL ASSESSMENTS COLLECTED AS TAXES ON ME LAND SHOWN ON M1IAP OF TRACT NO. 59822 AS REWIRED BY TAW. E%ECUnVE LETTER, BOARD OF SUPERVISORS OF ME COUNTY OF LOS ANGELES, STATE OF CALIFORNIA BY DAIS DEPUTY CONDOMINIUM NOIEl MIS MALT IS APPROVED AS A CONDOMINIUM PROTECT FOR 95 RESIDENTIAL UNDS AND 2 COMMERCIAL UNITS MERELY ME (ARMS OF ME UNITS OF AT SPACE YALL HOLD AN UNDIVIDED INTEREST IN ME COMMON AREAS MAT X1LL IN TURN. PRO IOE TIE NECESSARY ACCESS AND MUTE EASEMENT$ FOR ME UNITS. l OF 1111145 ON ME BEARING OF NORM 44'1856' WEST ON ON RECORD OF SURWIT FILED IN BOOK 112. OE SID CWNtt. I HEREBY CERTIFY THAT 1 HAVE EXAMINED ME &UP; ME SUBDIVISION AS SHOWN IS SURSTANRALLY ME SAME AS IT APPEARED ON ME TENTATIVE MAP AND MT APPROVED ALTERATONS MEREOF; AND ALL PROMRXIS OF CHAPTER 2 OF TIE STATE SUBDMSION MAP ACT AHD TIE CITY OF SANTA MONICVS SUBDIVISION ORDINANCE APPLICABLE AT ME TIME OF APPROVAL OF ME TENTATIVE MM HAVE BEEN COAPUED MR. LE ENGINEER, CITY OF SANTA MONICA DATE LEON SWAIN, P.C.E. ND. 041030 EXPIRES 3♦� -R012 - CITY CLERK'S CERTIFICATE- 1 HEREBY CERTIFY THAT ME CITY COUNCIL OF DIE CITY OF SANTA MONICA, BY RESELUTON NO. COS., AT A MEETING HELD ON 200_, APPROVED ME ATTACHED WHO R40N MAP, SUBJECT TO ME COMMON THAT ALL LAWS LEGALLY MPUCABLE TO FINAL SUBDIVISION MAPS ME TO BE COMPLIED WM. DAM CITY CLERK GE THE OTT OF SANTA MONICA I HEREBY CORNET THAT ALL SPECIAL AESES NTS LEVIED UNDER ME JURISDICTION OF ME CITY OF SANTA MCH CA, TO WHICH ME L1k0 INCLUDED IN ME WMIN SUBDIWOON ON MT PART TH SPACE IS SUBJECT, AND MMICH MAY BE PAID IN FULL HAVE BEEN PAID IN FULL. DAM CITY TREASURER OF ME CITY OF SANTA MONICA REVENUE CITY OF SANTA MONICA A MUNICIPAL CORPLEARCN. IS ALIEN CLAIMANT UNDER AGREEMENT RECORDED AS INSTRUMENT M. OF OFFICIAL RECORDS. RECORDS OF LOS ANGELES COUNTY. DAM BUSINESS & REVENUE OPERATONi MANAGER BUSINESS & REVENUE OPERATIONS DIVIGON CITY OF SANTA MONICA COUNTY ENGINEER'S CERTIFICATE: I HEREBY CERTIFY THAT I HAW EXAMINED MIS MAP; THAT IT CMPUES WM ALL PROVISIONS OF STATE LAZY APPLCMFE AT ME TIME OF APPROVAL OF THE MNTATNE MAP: AND MAT I NA SATISFIED THAT MIS MAP IS TECHNICALLY CORRECT IN ALL RESPECTS NOT CERTRED BY ME CITY EMWEER. COUNTY ENGINEER BY DAM DENNIS F. HUNTER, DEPUTY I.R. NO. 8539 EXPIRES 12/31/2012 TRACT NO. 69822 SHEET 2 OF 3 SHEETS CESM - ND NOTES, IN THE CITY OF SANTA MONICA, _________________________� S R YOR 1ES F.am N.P COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. FD. E- .SNOi�4, aB INOIUR... OR EUI wOR FOR CONDOMINIUM PURPOSES MEN R - IGIFS NSEEM ECUS STOKE SI IuRG Um UAI Fm SONN,E NOME BOUNDARY SHEET >[a vseDi FAST DDORT- w g M I II i PCB _ SEE SHEET 3' FOR LOT 1 DETAILS, 1 `. N so Wo1u,ES wauc rmRas nm moN N6a.B's w " PER ROS "I I x14-I B'SI' fin °- 36>.BT $FN sx - Wmu,c ue9cxm. FOUND xmxm6 EASEMENT NOTES AND EXISTING EASEMENTS 1 0 lIS.m' ,o.ISO' aaee' -- ; R „„ B$ 'z M BOUNDARY NOTE AFOCC'sazicNO Ai °nii aiEO xsie In /ax W "' ss'N �'oDO ra Ym} c0xCW51FS nEwSSUrPn6x v ra wsioRlcu RD WARES OF ME Lott wmx OLwPIC Pua scUMAUS v[tv a 8O $ e DETAIL OF LOT 1 w g SCG115 MI N SANG NCNIG, YR ]AE -SA AND IRA,, NP LUE NR IB /°B IS BORN sm � - 2 M 1. »y4, ME I. MID. M THIS MM FOUND NO REFFORUP NONUUprtAnpl I scD}YS AppmOx i0 SANTA NGUICA. MR + :'� SEESNEET 3 � w MEN RB 119/05 N W LOCATED IN ALMOST IpFNMAL RESTORE AS MOSMN ON 160112/aS 7/NS-S. t . " > r ME FSVBMSXMNY OF FIN LOfi ..IN SAY MACK WAS NADE M M5 NM HOLDING IG'- 10'- DETAIL g ALE MCAIL DISiANVS 1. RIB WOE. i I I I SCALE 1" = 20' � i SCALE 1" 2D� 15' I cun r N 4W S STAFF. 'LA ADMI PERM cva� G ro PWiB »I5 -31LN] $I fits a nE5 PEF SVO F.B. p INDICATES TAE BOUNDARY OF THE LAND BEING SUBOMOEO BY THIS MAP E MAlei SiREP. !� � > I N. II NAIL MAUI FD. N WJL ADO i4C. AIL NO TAG, ' W/ W STAMPED 'Ott OF SANTA REF., NO RFF., /✓ HONIG EAV PER MAG FWFB ul6M'W,196A5' N FUMINO REF P 5E D.DB' JR J /ISa. FlIS 0 SEE PER MONUMENT NOTE SEE SHEET _ B96ar sz6c' _ ,]I, 0 (��c5 PWFB A K IT O F. ITED E L2B 6➢ / >' SEASa' ` S]]t6IB ISMS -N -= SJ �J /pWO0 [ENTEERRA. PIRG GARM D. °v a.x6D.ISO �kA2! 6 OCEANS D AVENUE RFFr !<e MAIN STREET OFTAII A FO. Lkr w/ ipE 11A SCI M NOT 70 SCALE 0 DER UND Fme m5 /Sw -Ja., U ' 1 a w ACC ANN AS CENIERMNE INi, 1 1 1 �^ PICO/MAW. 1 o ' _ND DETAIL F TO SCALE a L______________________ _____ _1' _ ^$ g r R BER MANPED'l5 I.E. PER IA 1 • ry e B a %Lug CD 1. ,,,J-Ja2 /.W. ` n1I of ae N. CITT ENONEER RA FR a nE5 PFR SAID F.B. 1 I SCALE 1' 10' 4CCEP2p As PJ. FOR CLNIERLCIE ME 112 /O1 1. PW CIE. 5MAIN STREET cc PLAS AS. _ w.__bzs ° -�_ _ _ ETACENIERUNE NNN (ABWE LEFT) FN Lkr W /G0. LE ED. PER NNTB'S6'W 1026.0)up. ns M.A o/E PER •grs5ww A:ipflD.. OF SURFS, IRPO.) - N 5N /a> C." maao NOT PART �'0>' W OF THIS lb LL M IQ pi' SUBDIVISION LL «I �. SM PSCAS}XE .MEII0. MR LOT 13 F W ME EIUM U11 uFA, NWITTINEaF LDrnaF Ip aD, Q AF E� swrcs npmrou ,n 0.a x0. > /So-sI srx a �JI'l & N. EPME NO TAG, PER RSB „2/45. F0. Nk} LAGGED LS FIRST XO REF. ACCEPTED AS ME NGpRIryfpS,ERLYNflNE GF ZCOriS A501mn i0 z /1 #tw ACCF➢1FD AS THE INi. OF IXE CL OF pLwPIC W ,ME EL GF iIRSi COMi u!0 ME MORE �!Q6, S Po ¢ souM Ax5 All LINE Ecom ROL NNI OF ME MANLY ONE LIST 5 GOI nB -5a. m. FN ED. 5 NWLY AxIS aENAD GS,PNRE n55.IS1'1 W N"ry A MINOR T, .,A MONICA, NR )/Se -sB }o snxrn MOxIEA MR J /sB -5a. RW uOST s'Lr 6W. n. TRAIT W. 6W..: ^'^ xi GF MJN" ZN /O' r Z ^I W3_ SEE B DEEYAL B NAIL x5 TAR, NO REE. ACCEPTED AS ME INi. BAa. FEE Rss 119165, _ s nLON f N 0, 0 BEET DETAIL O MR $ °a ( OV [Nl) THE CL OF iWSi CWRi AND ME Pp0.W0An0 SEE DETAIL C ml^ 1NE NFLY LINE Y O a Fp. 5@W, NO iA4 E SALT LP'E OF LOT 5 SCCRS AMIIMN N N (ABOVE ONI SLOTS AWnW N LuTA - Q y�`n�' L _ PER ROD TIE /0.S � "- SANTA MIXJIG NR >/50 -59. Bg 61E£TS G, u0. ] /UR7 E W/ ME i9R DETAILS xWLY UxE ISE LCi60E M. G D w q.w" - FIRST N<ns's7-W 1D55.rz' ' I COURT sm IANeJ, w�Ie /B9, D11 Pw 0.[C IXST. xD. w- DSJJaB, ,BBAB' SB9.9T 23).85' 9.ID ME RECORD 06}.(IBD.Mj PFA IS.vb'.� , 149s9'I AOryMD AS NOSY NOTAPARTOF THIS I w zjzeT 'n1Y Mw wr° NOTA PART R a5' I � ° -n g•• $ „S g6 .w Iw W ANYTIEW GF LOTS wl. 0 = _ kL$ el " =ro.w nxwlu°uR SUBDIVISION of =UP NE z°DFwN syaolnou? azes93s.s;F NOE,ss e$ 1YRRNjTS /BBB 1%]' OF THIS 40 . Jr S °nC"°, nm ] /58-38 SELY YXE OF LOT 13. SCOTS y, VICENTE J ,5, _ _ 11 SANTA WNIG, NR 'vn ]/50- SB�ESiAB. Ai RECpppC ` ORy UNE LISi,B YSTS TERRACE SUBDIVISION 0._I O'Iw GO O ~ 1/58 -59. Di. AT MISS w DISTANCE FOR 1. IIL45. M�OMN }0 L.NTA YOIPG. $I MY WdER WI ], IFPCI W. IN>, M p ` 1C.ro' 0 . PER END IF *- - Il/19 - °A 1". ¢v PEA CEm RU 0, ED a- 11 -2m0, Uxg ^" 4za.61 6. SBEAR, OVE, m.w m.D UP I, OR Q S AS FAIRTY W 'b]+ lo.oD'z_ Q.n-D90a�A00''FE 1°10'°0' sFN "sago 'E RS911R/4°(s _ _ _ G }ANEW i, FRON 4 F0. L PAR" IS R FOR AS NCSi WLY CORI �'II /' U'ER ITS FOR OCEAN OF wi s OF snm PDDm6u 19 °4`5 uc51. uu. PAGES 1m, G,4 MR ]/se-59 sFx AVENUE PT°FOCU u }uT ° -DSR. S SEE DETAIL A ro Gni N GET GAS 6GNPED'LS 556". CABS. EMPR MEN. CG Any GMT stl CWxEA nE TO POET SLY CGR LOT 1. IX0, yJ. NR ED SAW S,A DT Sv - A TED AS 40515'LY WIdER TS AWingl ER TE LA CLOT 1. SAID F.B. IMIDEECn W. 110. RECRO 01St 15)1.16) OF LOT 2 OF SWTYS AppXW N sW TA NAIIG. NR ] 8-59 R, M. AT RESS. E. IAADA MD. CL @GN 4 Ni. Ltl.GRP00 AXIS MGN PER 0.$11 45. N GNTP NWICP. MR ) /58-38 r' INi. PIOJryLGX PW MSL N0. W- 0531416 O.R ACCEPTED AS CA INi. 2/ pSCOR0E0 MAIL », 20,0. AC�IFSYAS E IN, GF 0.wMC PILE SWM k SET CAP STAYPN'IS SORT. SCALE 1" = 20' LEGEND � - INGIWIES WE BOUNDARY OF WE LANG BEING SNBGINDEG BY WIS MAP MONUMENT NOTE: Qi s5, SPN. e wAS1sa sruwm a scar. \II� — FIRST COURT 8 g TRACT NO. 69822 IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. FOR CONDOMINIUM PURPOSES DETAIL SHEET SEE SHEET 2 FOR BOUNDARY, MONUMENTS AND SURVEYOR'S NOTES u7.sr o 0 MR,. " OF MA, MN' :YSFF,Fi Nro r.`uM. W.1,G1 rw 1o. r,.1 . uw 59. 6 RISLNiNEWS e5MN5. RG. N sao muu,Y. OCEAN DETAIL OF LOT 1 42860 S.F. GROSS 37,931 S.F. NET SHEET 3 OF 3 SHEETS 15' 1 W k I$ or yF _ S z 3 1 U VVV O I I Q 15 1 W _ soa zsr.� o WI AVENUE $ a IH.95' EXHIBIT B LEGAL DESCRIPTION OF PARCEL C TRACT NO. 69828 IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA BEING A SUBDIVISION OF A PORTION OF LOT NO. 41 OF THE RANCHO SAN VICENTE Y SANTA MONICA AS PER MAP RECORDED IN BOOK 3 PAGES 30 AND 31 OF PATENTS, AND A PORTION OF LOT 8 ALONG WITH LOTS 9 THROUGH 13 OF SCOTT'S ADDITION TO SANTA MONICA AS PER MAP RECORDED IN BOOK 7 PAGES 58 AND 59 OF MISCELLANEOUS RECORDS, RECORDS OF LOS ANGELES COUNTY. JRS\30601.0002 \405061.1 EXHIBIT C FORM OF ASSIGNMENT OF LEASE JRS\30601.0002 \405061.1 ASSIGNMENT OF LEASE TO HOA THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment") is made as of 20_ by and between [RELATED ENTITY] ( "Assignor"), and [INSERT NAME OF HOMEOWNER'S ASSOCIATION] ('Assignee'). RECITALS A. Assignor is the "Lessee" under that certain Parcel L] Ground Lease by and between ("Parcel U Lease ") entered into by and between the City of Santa Monica (the "City ") and the Assignor on 20_, which document is a record on file in the offices of the City Clerk of the City of Santa Monica. A Memorandum of the Parcel U Lease was filed on [insert date], in the Office of Los Angeles County Registrar - Recorder /County Clerk as Document No. .The Parcel U Lease is incorporated herein by this reference as though fully set forth herein. Parcel L Lease as used herein shall mean, refer to and include the Parcel U Lease, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the Parcel L] Lease, including but not limited to the Disposition and Development Agreement ("DDA") entered into by and between the Redevelopment Agency of the City of Santa Monica ("Agency") and Related/Santa Monica Village, LLC ( "Related/Santa Monica") dated June 10, 2008, as amended by that First Amendment to Disposition and Development Agreement dated July 1, 2010, as amended by that Second Amendment to Disposition and Development Agreement, dated , 2011 (collectively referenced herein as "the DDA" ), which documents are public records on file in the offices of the City Clerk of the City of Santa Monica, and that certain Assignment and Assumption Agreement, dated whereby Related/Santa Monica assigned certain rights and obligations to Assignor. Any capitalized term not otherwise defined herein shall have the meaning ascribed to it in the Parcel L] Lease. B. Pursuant to the Parcel L] Lease, Assignor has the right and desires to assign certain rights and obligations as "Lessee" under the Parcel [] Lease (the "Assigned Rights and Obligations ") to Assignee, and Assignee desires to assume the Assigned Rights and Obligations, upon and subject to the conditions stated herein. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Assignor and Assignee hereby agree as follows 1. Assignment. Effective as of the date of this Assignment, which shall occur concurrently with the full execution of this Assignment by the Assignor, Assignee, and Agency, but no sooner than the Release of Construction Covenants is issued from the Agency, Assignor hereby assigns all of the Assigned Rights and Obligations to Assignee. The foregoing assignment shall not affect Assignor's obligations under (collectively, "Ongoing Obligations ") (i) the Environmental Indemnity Agreement (attached to the DDA as Attachment No. 15), (ii) the Participation Agreement (attached to the DDA as Attachment Nos. 19 and 19A), (iii) Completion of the Development on the Site, in accordance with the DDA, including all obligations set forth under Sections 300 — 314 of the DDA, excepting therefrom any obligation to operate Parcel A after the date of this Assignment. 2. Acceptance and As uum heron. Assignee hereby accepts the assignment of the Assigned Rights and Obligations from Assignor and assumes all of the Assigned Rights and Obligations arising from Exhibit C - Execution Final Exhibit C Page 1 of 3 and after the date of this Assignment. Assignee agrees to perform all of the Assignee's Obligations in accordance with the Parcel [] Lease. 3. Reservation of Subleases. Assignor reserves the right to assign or convey the Subleases, subject to and in accordance with the Parcel [] Lease. 4. Assignee Address. The principal address of Assignee for purposes of the Parcel [] Lease is as follows: 5. Miscellaneous. (a) This Assignment shall be determined in accordance with and governed by the laws of the State of California. (b) This Assignment may be executed in counterparts, each of which shall be deemed an original and which, when taken together, shall constitute a complete instrument. (c) Each parry agrees to perform any fiuther acts, and to execute and deliver any further documents that may be reasonably necessary or required to carry out the intent and provisions of this Assignment and the transactions contemplated hereby. (d) This Assignment shall bind and inure to the benefit of the respective heirs, personal representatives, grantees, successors and assigns of the patties hereto. IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be signed by their duly authorized officers as of the day and year first written above. ASSIGNOR: ASSIGNEE: a California limited liability company C Name: Title: C to Exhibit C - Execution Final Exhibit C Page 2 of 3 Name: Title: CONSENT TO ASSIGNMENT AND ASSUMPTION In reliance upon the assumption by as Assignee, of all Rights and Obligations pursuant to the foregoing Assignment and Assumption Agreement, the CITY OF SANTA MONICA, as successor in interest to the Agency, does hereby consent to and approve of the assignment of the Assigned Rights and Obligations by [RELATED entity] to Assignee. Approval thereof by the Agency shall release Assignor as to the Assigned Rights and Obligations, but shall not be construed to relieve or release [RELATED entity] with regard to the Ongoing Obligations. Dated: THE CITY OF SANTA MONICA LN Jay Gould, City Manager ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney Lo Marsha J. Moutrie APPROVED AS TO FORM: Special Counsel By: Susan Y. Cola ExrubrtC- ExecMonFM Exhibit C Page 3 of 3 EXHIBIT G METHOD OF FINANCING FOR PARCEL A [BEHIND THIS PAGE] ATTACHMENT NO. 13A METHOD OF FINANCING (PARCEL A) This is the Method of Financing attached to the Disposition And Development Agreement ( "DDA ") by and between the Redevelopment Agency of the City of Santa Monica ( "Agency ") and Related /Santa Monica Village, LLC ( "Developer "), dated , pertaining to the development of a mixed retail and residential housing development on the Site, including the development and construction of approximately sixty -six (66) Market Rate Units and 9,155 square feet of retail space on Parcel A (also referenced herein as "the Project "). Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the DDA. In accordance with that certain Assignment and Assumption Agreement, dated 2011, the City of Santa Monica is the assignee to Agency's rights and obligations under the DDA. 1. Total Development Cost. The parties estimate that the cost of the development and construction of the Market Rate Units and retail development on Parcel A will be approximately $85,830,000, to be provided as follows in Section 2 of this Method of Financing. 2. Sources of Financing. The parties anticipate that the costs of the development and construction of the Market Rate Units and retail development on Parcel A (the "Development Costs ") shall be financed with a combination of loans and Developer's equity, as set forth in the following chart: Source of Funds Senior Construction Loan $55,790,000 Investor Equity $27,03 6, 000 Related Equity 3,004,000 TOTAL FINANCING $85,830,000 Project Budget. The parties anticipate that all Development Costs for the Market Rate Units and retail development on Parcel A shall be as set forth in the Project Budget ( "Development Costs ") attached to the DDA as Attachment No. 5A (the "Project Budget "), incorporated herein by this reference. However, Developer shall notify the City, in writing, of any Material Change and the Developer's source of payments for such Material Change. For purposes, herein, a "Material Change" means any change that would (i) increase the total Project Budget or (ii) increase a line item by more than 10 %. Developer shall be solely responsible for any and all Material Changes. 4. Evidence of Financing. The sum of the sources of construction financing described in Section 2.1, above, shall be sufficient at all times to pay all Development Costs as set forth in the Santa Monica \The Village Attachment No. 13A DDA documents At. 13A —MOF. Execution v. Final Page I of 2 most recently approved Project Budget. Within the time provided therefor in the Schedule of Performance, Developer shall submit, for approval by the City's authorized representative, evidence of construction financing. The City's authorized representative shall not unreasonably withhold his or her approval. Developer shall provide written certification to the City that such construction financing documents are correct copies of the actual documents to be executed by Developer on or before the Closing Date. To the extent that the sum of the sources of funds described in Section 2.1, above, is insufficient to pay all Development Costs, Developer shall demonstrate the availability prior to the Closing of increased sources at least equal to the shortfall. 5. Subordination. Any deed of trust recorded against Parcel A to secure construction and/or permanent financing for the Project shall be subordinate to the Parcel A Ground Lease, the Reciprocal Easement Agreement, and the Attornment Agreement. Santa Monica \The Village Attachment No. 13A DDA documents At. 13A —MOF. Execution v. Final Page 2 of 2 EXHIBIT H METHOD OF FINANCING FOR PARCEL B [BEHIND THIS PAGE] ATTACHMENT NO. 13B METHOD OF FINANCING (PARCEL B) This is the Method of Financing attached to the Disposition And Development Agreement (DDA ") by and between the Redevelopment Agency of the City of Santa Monica ( "Agency ") and Related /Santa Monica Village, LLC (`Developer "), dated , 2008, pertaining to the development of a mixed retail and residential housing development on the Site, including the development and construction of 160 Affordable Units on Parcel B. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the DDA. 1. Total Development Cost. The parties estimate that the cost of the development and construction of the Affordable Units on Parcel B will be approximately $69,960,767, to be financed as described in Section 2 of this Method of Financing. 2. Sources of Financin¢. The parties anticipate that the costs of the development and construction of the Affordable Units (the 'Development Costs ") shall be financed with a combination of loans and equity (`Sources of Funds "), as set forth in the following chart and as described below: Projected Sources of Funds Series A Bond Financing Series B Bond Financing Agency Loan MHP Loan Tax Credit Equity Photovoltaic Tax Credits & Rebates Deferred Developer Fee Deferred Reserves TOTAL 2.1 CONSTRUCTION PERIOD FINANCING $7,660,000 $37,474,720 $19,400,000 $0 $0 $3,080,034 $1,900,000 $446,013 $7,660,000 $0 $19,400,000 10,000,000 $30,800,338 $800,428 $1,300,000 $0 $69,960,767 $69,960,767 a. Bond Loan Construction Financing. The bond financing derived from the proceeds of multifamily housing revenue bonds (the "Series A Bonds" and "Series B Bonds ") in the approximate original principal amount of $7,660,000 and Santa MonicaMe Village Attachment No. 13B DDA documents At. l3B— MOF.Execution v. Final Page 1 of 7 $37,474,720, respectively (the 'Bond Construction Financing ") shall be used as part of the construction financing for the development and construction of the Affordable Units on Parcel Band shall be secured by one or more senior priority deeds of trust against the leasehold estate in Parcel B, the beneficiaries of which shall include the Bond Construction financers, any credit enhancer or construction period guaranty facility (referred to herein collectively as the "Senior Construction Lenders" and, together with the Senior Permanent Lenders described below, referred to as the "Senior Lenders "). b. Agency Loan. A construction/permanent loan from the Agency in the original principal amount of NINETEEN MILLION FOUR HUNDRED THOUSAND DOLLARS AND NO CENTS ($19,400,000) which shall be equal to the sum of (1) the Base Rent for Parcel A Ground Lease, and (2) the Base Rent for Parcel C Ground Lease, as those terms are defined in Section 203(a)(5) of the DDA. The Agency Loan shall be evidenced by the Agency Note, in substantially the form attached to the DDA as Attachment No. 7, and secured by the Agency Deed of Trust and UCC -1 Financing Statement, in substantially the form attached to the DDA as Attachment Nos. 6 and 20, respectively. The Agency Loan shall be subject to the following: (1) The term shall commence upon the Close of Escrow; (2) The Agency Loan shall be secured by a deed of trust that is in second priority, subordinate only to the Construction/Permanent Loan; provided that, if the MHP lender requires that the MHP Loan be secured by a second lien deed of trust in accordance with applicable MHP regulations governing the MHP Loan, the Agency Loan shall be secured by a deed of trust that is in third priority; (3) The outstanding balance of the Agency Loan shall bear simple interest at the rate of zero percent (0 %) per annum. (4) The Agency Loan shall be repaid as follows: (A) The payments received by the Agency as Residual Receipts shall be applied as they are received to the outstanding balance of principal and interest; (B) the remaining outstanding balance together with all accrued interest thereon shall be due and payable at the fifty -fifth anniversary of the conversion to permanent financing. Santa Monieffhe Village Attachment No. 13B DDA documents At. 13B— MOF.Esecution v. Final Page 2 of 7 (5) In addition, the Agency Loan shall be subject to prepayment equal to any "Budget Surplus" (defined in paragraph d. of this Section, below). (6) The obligation to repay the Agency Loan shall be evidenced by the Agency Promissory Note substantially in the form attached to the DDA as Attachment No. 7. (7) Gap Assistance. The parties acknowledge that the Agency Loan is intended to be gap assistance for the construction of the Affordable Units, not to exceed the amount needed to bridge the gap between the total Development Costs (as defined herein) and the maximum loans obtainable by Developer plus Tax Credit Equity (as defined herein), but in any event not to exceed the dollar amounts set forth in this Method of Financing. The proceeds of the Agency Loan shall be used exclusively to pay Development Costs of the Affordable Units as identified in the Agency approved Project Budget attached to the DDA as Attachment No. 513, as the same may be amended from time to time in accordance herewith. (A) At Close of Escrow, Developer will update its sources and uses analysis for Parcel B, to reflect the most current projected amounts of sources for Parcel B (including the amounts of the Series A Bond Financing, the Series B Bond Financing, the MHP Loan and the Tax Credit Equity, but excluding the Agency Loan) (the "COE Sources ") and the most current amount of projected Development Costs for Parcel B ( "COE Development Costs "). At the Close of Escrow, the principal amount of the Agency Loan may be reduced, but not increased, to reflect the difference between the COE Development Costs and the COE Sources. Except as otherwise provided by the Agreement, the Agency Loan shall not be subordinated to such increased amount of any permanent financing sources beyond the sources and respective amounts allowed by this Method of Financing, without the prior written approval of the Agency, which approval shall not be unreasonably withheld. (8) The Agency Loan proceeds shall be disbursed to Developer prior to disbursement or application of any other sources of funds for Parcel B obtained by Developer and in accordance with the procedure set forth herein. Not more often than twice per month, Developer may submit a draw request (each, a "Draw Request ") to the Agency requesting disbursement, which Draw Request shall be on a form reasonably acceptable to the Agency and shall describe the amount and proposed use Santa Monica \The Village Attachment No. 13B DDA documents At. 1313— MOF.Execution Y. Final Page 3 of 7 of the funds. The use of the funds requested in a Draw Request shall be limited to costs incurred for the construction or development attributable to Parcel B in accordance with the Agency approved Project Budget attached to the DDA as Attachment No. 5B, as the same may be amended from time to time in accordance herewith, and shall be consistent with a Schedule of Values for Parcel B to be provided by Developer and approved by the Agency prior to submission by Developer of the first Draw Request, as such Schedule of Values for Parcel B maybe modified from time to time upon the consent of both Developer and the Agency. Within ten (10) days of receipt of any Draw Request from Developer, the Agency shall either approve or disapprove such Draw Request in writing, and any disapproval shall state with specificity the reasons for such disapproval. The Agency may only disapprove a Draw Request if (i) the form for such Draw Request is incomplete, (ii) the Draw Request is not consistent with the Project Budget and /or Schedule of Values for Parcel B then in effect, or (iii) the Draw Request is inconsistent with the percentage of a particular line item completed as of the date of such Draw Request. Following any disapproval, Developer may address the reasons for disapproval and immediately resubmit such Draw Request, which resubmittal shall not constitute a separate submission for purposes of applying the two Draw Requests per month limitation. Funds shall be deemed disbursed under the promissory note for the Agency Loan upon release of such funds from the Agency. C. Tax Credit Equity. Equity raised by the sale of tax credits Developer (the "Tax Credit Equity "), consisting of the following: (1) Approximately $30,800,338, to be provided by the Tax Credit Equity Investor, derived from Low Income Housing Tax Credits, which shall include approximately $3,080,034 to be disbursed during the construction period and the balance to be disbursed following Completion; (2) Developer shall be responsible for providing all other funds which may be needed to pay for development costs for the Affordable Units and for cost overruns and contingencies not otherwise funded by the construction financing or the Agency Loan. d. Budget Surplus Upon Completion To the extent final sources for Parcel B (including the amounts of the Series A Bond Financing, the Series B Bond Financing, the MHP Loan, the Agency Loan and the Tax Credit Equity) (the "Final Sources ") exceed the final Development Costs for Parcel B , as determined by a cost certification performed not later than Santa Monica \The Village Attachment No. 13B DDA documents At.t3B- MOF.Executionv.Final Page 4of 7 90 days following Completion, at Developer's expense, by a Certified Public Accountant reasonably acceptable to the Agency ( "Budget Surplus "), the Agency Loan shall be reduced by the amount of such Budget Surplus. 2.2 PERMANENT SOURCES OF FINANCING a. A permanent loan (the "Permanent Loan") derived from the proceeds of the Bonds in the approximate original principal amount of $7,660,000, secured by one or more senior priority deeds of trust (the beneficiaries of which shall include the Permanent Lender, any credit enhancer or permanent financing guaranty facility, referred to herein collectively as the "Senior Permanent Lenders ", and, together with the Senior Construction Lenders, described above, referred to as the "Senior Lenders "). b. The Agency Loan, as described in paragraph b. of Section 2.1, above (subject to adjustment to reflect any Budget Surplus, described in paragraph d. of Section 2. 1, above). C. MHP Loan in the approximate amount of $10,000,000, which shall be subordinate to the Agency Loan. d. Tax Credit Equity, as described in paragraph c. of Section 2.1, above. 3. Project BudlZet. The parties anticipate that all Development Costs for the Affordable Units shall be as set forth in the Project Budget ( "Development Costs ") attached to the DDA as Attachment No. 5B (the "Project Budget "), incorporated herein by this reference. Any Material Change as hereinafter defined shall require the approval of the Executive Director or designee in addition to any approval required by any Senior Lender; provided that the principal. amount of the Agency Loan shall not be increased without the express approval of the governing body of the Agency in its sole and absolute discretion. For the purposes herein, a "Material Change" means any change that would (i) increase the total Project Budget or (ii) increase a line item by more than 10 %. Except as provided in the previous sentence, the Executive Director or designee shall not unreasonably withhold approval of any requested Material Change for which the Senior Lender's approval is not required, under the terms of the Senior Loan documents, or which has been approved by the Senior Lender if, within fifteen (15) working days after receipt of the request, Agency receives such explanation and/or back -up information as was received and relied upon by the Senior Lender in connection with its approval of the Material Change, and if the following conditions are satisfied: a. to the extent the Material Change is limited to a reallocation of budgeted funds Santa Monica \The Village Attachment No. 13B DDA documents At. 13I3— MOF.Execution v. Final Page 5 of 7 among Project Budget line items without any increase in the total Project Budget or the Agency Loan, (i) the funds in the line item(s) to be reduced remain sufficient for completion of the Project, and (ii) the requested increase in one or more line item(s) is to be used to pay approved costs; and b. to the extent the Material Change involves an increase in the total Project Budget, (i) additional funds in an amount equal to the increase in the total Project Budget will be provided by Developer, the Senior Lender or any other source and (ii) the requested increase in the Project Budget is to be used to pay approved costs. C. Upon approval of any Material Change, the Project Budget shall be replaced by the approved revised Project Budget. The Project Budget shall contain a cost breakdown for each component cost for the development of the Affordable Units, which shall be subject to the prior written approval of the Agency's Executive Director or designee. 4. Evidence of FinancinE. The sum of the sources of construction financing described in Section 2.1, above, shall be sufficient at all times to pay all Development Costs as set forth in the most recently approved Project Budget, which are to be incurred during the construction period, and the sum of the sources of permanent financing described in Section 2.2, above, shall be at least equal at all times to the sum of the Construction - period sources of funds plus all other Development Costs. Within the time provided therefor in the Schedule of Performance, Developer shall submit, for approval by the Agency's Executive Director or designee, evidence of such financing, including all documents required by the Construction Lender relating to the Bond Construction Financing and all documents evidencing the availability of permanent financing upon completion of the Project. The Agency's Executive Director or designee shall not unreasonably withhold his or her approval. Upon the request of the Agency, Developer shall provide written certification to the Agency that such financing documents are correct copies of the actual documents to be executed by Developer on or before the Closing Date. To the extent that the sum of the sources of funds described in Section 2.1, above, is insufficient to pay all Development Costs, Developer shall demonstrate the availability prior to the Closing of increased Developer's Equity at least equal to the shortfall. 5. Subordination. The Agency Deed of Trust shall be subordinate to the lien of any deed of trust securing the Bond Construction Financing and any deed of trust in favor of any Senior Lender in connection therewith, and any regulatory agreement to be recorded in connection with the Bonds and /or the Low Income Housing Tax Credit. Prior to the recordation of the Agency Deed of Trust, the Agency's Executive Director or designee shall execute such subordination agreements as may be necessary to subordinate the Agency Deed of Trust to the lien of any Senior Construction Deed of Trust, provided such subordination agreements are reasonably acceptable to the Executive Director or designee and provided that the Agency shall not subordinate the affordability covenants for the Affordable Units to the Senior Lender deeds of trust. Concurrently Santa Monica\The village Attachment No. 13B DDA documents At. 1311— MOF.Execution v. Final Page 6 of 7 with the recordation of any Senior Lender deeds of trust, the Agency's Executive Director or designee shall execute any subordination agreement as may be reasonably necessary to subordinate the Agency Deed of Trust to the lien of any Senior Lender deeds of trust, including but not limited to any Senior Lender deeds of trust in favor of Fannie Mae, if applicable, in the form required by Fannie Mae for publicly assisted projects, if applicable; provided, however, that Agency's agreement to subordinate the Agency Deed of Trust to the Bond Construction Financing and/or Permanent Loan and /or Senior Lender deeds of trust shall.be subject to the applicable lender agreeing to provide written commitments reasonably designed to protect the Agency's investment in the event of default, as provided in California Health and Safety Code Section 33334.14. Upon the reasonable request of the Tax Credit Equity Investor or a Senior Lender, Agency shall execute from time -to -time such estoppel certificates to the extent they are consistent with the terms of this Agreement. Any deed of trust securing the Bond Construction Financing, the Permanent Loan, and any deed of trust in favor of any Senior Lender shall be subordinate to the Parcel B Ground Lease, Regulatory Agreement, Reciprocal Easement Agreement, and Attornment Agreement. Santa Monica \The village Attachment No. 13B DDA documents At. 1313— MOF.Execution v. Final Page 7 of EXHIBIT I METHOD OF FINANCING FOR PARCEL C [BEHIND THIS PAGE] ATTACHMENT NO. 13 C METHOD OF FINANCING (PARCEL C) This is the Method of Financing attached to the Disposition And Development Agreement ( "DDA ") by and between the Redevelopment Agency of the City of Santa Monica ( "Agency ") and Related /Santa Monica Village, LLC ( "Developer "), dated , pertaining to the development of a mixed retail and residential housing development on the Site, including the development and construction of approximately ninety -eight (98) Market Rate Units and 10,226 square feet of retail space on Parcel C (also referenced herein as "the Project "). Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the DDA. 1. Total Development Cost. The parties estimate that the cost of the development and construction of the Market Rate Units and retail development on Parcel C will be approximately $122,167,000, to be provided as follows in Section 2 of this Method of Financing. 2. Sources of Financing. The parties anticipate that the costs of the development and construction of the Market Rate Units on Parcel C (the "Development Costs ") shall be financed with a combination of loans and Developer's equity, as set forth in the following chart: Source of Funds Senior Construction Loan $79,409,000 Investor Equity $ 3 8,483,000 Related Equity $4,275,000 TOTAL FINANCING $122,167,000 3. Project Budget. The parties anticipate that all Development Costs for the Market Rate Units and retail development on Parcel C shall be as set forth in the Project Budget ( "Development Costs ") attached to the DDA as Attachment No. 5C (the "Project Budget "), incorporated herein by this reference. Any Material Change as hereinafter defined shall require the approval of the Executive Director or designee. For the purposes herein, a "Material Change" means any change that would (i) increase the total Project Budget or (ii) increase a line item by more than 10 %. Except as provided in the previous sentence, the Executive Director or designee shall not unreasonably withhold approval of any requested Material Change if, within fifteen (15) working days after receipt of the request, Agency receives such explanation and/or back -up information in connection with its approval of the Material Change, and if the following conditions are satisfied: Santa Monica\The village Attachment No. 13C DDA documents At. 13C— MOF.Execution v. Final Page 1 of 2 a. to the extent the Material Change is limited to a reallocation of budgeted funds among Project Budget line items without any increase in the total Project Budget, (i) the funds in the line item(s) to be reduced remain sufficient for completion of the Project, and (ii) the requested increase in one or more line item(s) is to be used to pay approved costs; and b. to the extent the Material Change involves an increase in the total Project Budget, (i) additional funds in an amount equal to the increase in the total Project Budget will be provided by Developer or other Permitted Mortgagee and (ii) the requested increase in the Project Budget is to be used to pay approved costs. Upon approval of any Material Change, the Project Budget shall be replaced by the approved revised Project Budget. 4. Evidence of Financine. The sum of the sources of construction financing described in Section 2.1, above; shall be sufficient at all times to pay all Development Costs as set forth in the most recently approved Project Budget. Within the time provided therefor in the Schedule of Performance, Developer shall submit, for approval by the Agency's Executive Director or designee, evidence of construction financing. The Agency's Executive Director or designee shall not unreasonably withhold his or her approval. Developer shall provide written certification to the Agency that such construction financing documents are correct copies of the actual documents to be executed by Developer on or before the Closing Date. To the extent that the sum of the sources of funds described in Section 2.1, above, is insufficient to pay all Development Costs, Developer shall demonstrate the availability prior to the Closing of increased sources at least equal to the shortfall. 5. Subordination. Any deed of trust recorded against Parcel C to secure construction and /or permanent financing for the Project shall be subordinate to the Parcel C Ground Lease; the Reciprocal Easement Agreement, and the Attornment Agreement. Santa Monica \The village Attachment No. 13C DDA documents At. l3C— MOF.Executlon v. Final Page 2 of 2 EXHIBIT J RIGHT OF ENTRY AGREEMENT [BEHIND THIS PAGE] ATTACHMENT NO. 16 RIGHT OF ENTRY AGREEMENT This RIGHT OF ENTRY AGREEMENT ( "Agreement') is made as of this day of 2011 (the "Effective Date "), by and between THE CITY OF SANTA MONICA, a municipal corporation (the "City "), and RELATED /SANTA MONICA VILLAGE, LLC, a California limited liability company ( "Licensee "). RECITALS A. The City is the current owner of certain real property located in the City of Santa Monica, Los Angeles County, California, as more particularly shown on the site map attached hereto as Exhibit "A" (the "Site ") and identified as Site A, Site B, Site C, and Off -Site City Property. B. The majority of the Site is the subject of that certain Disposition and Development Agreement dated June 10, 2008 (the "DDA "), by and between the Redevelopment Agency of the City of Santa Monica ( "Agency ") and Licensee, as amended by that First Amendment to Disposition and Development Agreement, dated as of July 1, 2010 (collectively referenced herein as "the DDA "), pertaining to the redevelopment of the Site with a mixed retail and residential housing development (the "Improvements "), in accordance with the terms and conditions of the DDA. DDA as used herein shall mean, refer to and include the DDA, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the DDA. Any capitalized term not otherwise defined herein shall have the meaning ascribed to it in the DDA. C. A small portion of the site identified as Off -Site City Property on Exhibit A attached hereto is not subject to the DDA, but is subject to the terms of this Right of Entry Agreement. D. The Site was transferred by the Agency to the City on March 9, 2011, and the Agency's rights under the DDA were assigned to the City, in accordance with that certain Assignment and Assumption Agreement, dated March 8, 2011, which assignment was consented to by Licensee, as Developer under the DDA. E. Subject to the covenants and conditions set forth below, the parties desire to enter into this Agreement to provide Licensee with access to the Site for the purposes and in accordance with the terms and provisions set forth herein. TERMS Santa Monica \The village Attachment No. 16 DDA documents At. t6— Right ofEntry.Execution v. Final Page I of 8 1. Grant of License. The City hereby grants to Licensee, its employees, contractors, consultants, and agents, a temporary, nonexclusive license and right of entry to perform the following acts on the Site (i) obtain soil samples and make surveys and tests necessary to determine the suitability of the Site for the development of the Project; (ii) conduct reasonable investigations on and beneath the Site to determine the presence of Hazardous Materials; (iii) allow Licensee's engineers and architects to obtain data for drawings, calculations, plans and specifications; (iv) establish a construction office to manage utility relocation with necessary power and portable sanitary services to complete the Utility Relocation (as defined herein); and (v) complete utility relocation scopes of work ( "Utility Relocation ") more specifically described in Exhibit "B" in accordance with the drawings attached hereto as Exhibit "D" (collectively, the "Permitted Purpose "), subject to all licenses, easements, encumbrances and claims of title affecting the Site, during the Term (defined below) of this Agreement (the "License "). As used herein the phrase "Hazardous Materials" means any substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirement is defined as "hazardous" or harmful to the environment. Licensee agrees that the Permitted Purpose shall be completed in accordance with any permits and authorization issued by the City or any other governmental entity having jurisdiction over the Site in connection with the Permitted Purpose. Licensee's or its duly authorized employees', agents', consultants', independent contractors' (collectively, "Licensee's Representatives ") use of the Site shall not interfere with the use and enjoyment of the Site by the City or its directors, officers, members, employees, agents and independent contractors (collectively, "City's Representatives "), or anyone claiming under or through them. Licensee shall not permit any other party associated with Licensee, except Licensee's Representatives, to enter onto the Site during the term of this Agreement without the prior written consent of the City Manager or his designee, which may be withheld in his or her sole and absolute discretion. Licensee and Licensee's Representatives shall not perform any work other than the Permitted Purpose upon the Site. 2. Term. This Agreement shall commence upon the date the City executes this Agreement (the "Effective Date ") and shall automatically expire upon the earliest to occur of. (i) conveyance of the ground leasehold estates in the Site to Licensee or its assignees; (ii) termination of the DDA; or (iii) termination of this Agreement in accordance with Section 15 hereto (the "Term "). 3. No Possessory Interest. Licensee acknowledges and agrees that City's grant of this License to use the Site creates no possessory interest in the Site and therefore Licensee shall abandon the use of the Site without the necessity of a judicial proceeding by the City no later than the expiration of this Agreement, or, in the event of an earlier termination of this Agreement, Licensee shall abandon the use of the Site immediately upon such earlier termination. Licensee further acknowledges and agrees that any failure Santa Monica \The Village Attachment No. 16 DDA documents Page 2 of 8 At. 16— Right ofEntry.Execution v. Final g to abandon the use of the Site upon expiration or termination of this Agreement shall constitute a trespass. This Agreement is intended to be for a short term duration. 4. Purpose of Right of Entry. Subject to the provisions of this Agreement, Licensee and Licensee's Representatives may, during the Term, enter onto the Site at reasonable times to perform the Permitted Purpose in a good, substantial and workmanlike manner. Once undertaken, each act constituting a Permitted Purpose shall be diligently pursued to completion. 5. Permits; Compliance with Laws and Regulations. Any and all work undertaken by Licensee pursuant to this Agreement shall be performed in conformance with all laws, ordinances, codes, and regulations of, or approved by, the applicable federal, state and local governments with respect to Licensee's or Licensee's Representatives use of and activities upon the Site. Licensee, at Licensee's sole cost and expense, shall obtain all required governmental permits and authorizations for Licensee's use of and activities upon the Site pursuant to this Agreement, and Licensee's use of and activities upon the Site shall be in conformance with any such permits and authorizations. City, in its capacity as owner of the Site, shall cooperate with Licensee in applying for such permits and authorizations, subject to the approval of City Manager or designee. 6. Reports and Studies. In consideration of the City's granting of this License, Licensee shall promptly provide the City with a copy of all reports and test results arising from this License, without creating any liability for Licensee or the preparer of such reports. 7. Condition Of The Site. The Site is licensed to Licensee in an "as is" condition, existing as of the Effective Date of this Agreement. Except for the Utility Relocation described in Exhibit `B ", Licensee shall not construct any temporary or permanent improvements or make any material changes to the Site as part of Licensee's use of the Site without City's prior written consent, which may be withheld in its sole and absolute discretion. Such prohibition on construction of improvements or material changes to the Site shall include but shall not be limited to any signs, paving, construction of fencing, retaining walls, buildings or structures, or the removal of any living trees. 8. Maintenance and Condition of the Site. Licensee shall at all times cause its use of and activities upon the Site to be conducted in a safe, neat and orderly fashion. Licensee shall be responsible for clean-up of the Site from any activities undertaken by Licensee or any Licensee Representative on the Site; including any improvements thereon, in compliance with all zoning, building, safety, health, environmental and other laws, codes, ordinances, regulations, orders, requirements, permits or authorizations of any federal, state or local government applicable to the Permitted Purpose. 9. Restoration of Site. Upon the termination or expiration of this Agreement, and provided that the Site has not been conveyed to Licensee, Licensee shall at its sole cost and Santa tblonieaNThe village Attachment No. 16 DDA documents At. 16— Right ofEntry.Execution v. Final Page 3 of 8 expense, cause the Site to be restored from any damage or material change caused by Licensee or any Licensee Representative to substantially the same condition as the Site was in prior to Licensee's entry onto the Site under this Agreement, except that notwithstanding anything to the contrary herein, Licensee shall complete the Utility Relocation more specifically described in the attached Exhibit `B ". To ensure completion of the Utility Relocation, as a condition precedent to the effectiveness of this License, Licensee shall cause its contractor to obtain and submit to the City the following: 1. A "Payment Bond" (Material and Labor Bond) for one hundred percent (100 %) of the contract price, to satisfy claims of material suppliers and of mechanics and laborers employed on the work. The bond shall be maintained by the Licensee's contractor in full force and effect until the work is accepted by the City and until all claims for materials and labor are paid, and shall otherwise comply with the Government Code and Public Contract Code. 2. A "Faithful Performance Bond" for one hundred percent (100 %) of the contract price to guarantee faithful performance of all work, within the time prescribed, in a manner satisfactory to the City, and that all materials and workmanship will be free from original or developed defects. The bonds must remain in effect until completion of the Utility Relocation. Licensee shall be responsible for any damage done to the Site by Licensee or Licensee's Representatives. Licensee shall additionally, at Licensee's sole cost and expense, remove, or cause to be removed, any garbage and debris on the Site caused by Licensee or any Licensee Representative. 10. Liens. Licensee shall not suffer or permit to be enforced against the Site, or any part thereof, any mechanics', materialmen's, contractors' or subcontractors' liens or any claim for damage arising from any work performed by Licensee or Licensee's Representatives or Licensee or Licensee's use of and activities upon the Site pursuant to this Agreement. Subject to any contest undertaken by Licensee in accordance with the requirements of this Paragraph 10 to challenge payment, Licensee shall pay, or cause to be paid, all said liens, claims or demands, or post bonds sufficient to dismiss or remove such liens, before any action is brought to enforce the same against the Site. The City reserves the right at any time and from time to time to post and maintain on the Site, or any portion thereof or improvement thereon, such notices of non - responsibility as may be necessary to protect City against any liability for all such liens, claims or demands. In the event Licensee undertakes a contest of any lien, claim or demand to challenge payment, Licensee shall first deliver to the City bonds or other adequate security in form and amount approved in writing by City Manager or designee. Santa Monica \The Village Attachment No. 16 DDA documents At. 16— Right ofEntry.Execution v. Final Page of 11. Indemnification. Licensee shall indemnify, defend and hold harmless the City of Santa Monica (the "City "), members of the City Council, the City's boards and commissions, the City, City Representatives and their officers, agents, contractors, employees and volunteers from and against any and all loss, liabilities, damages, judgments, actions, costs, claims and expenses arising out of or resulting from (i) any acts or omissions, negligence, fault or violation of law or ordinance by Licensee or its officers, representatives, employees, agents, subcontractors, patrons or invitees, (for this Section only, hereinafter collectively, "Licensee ") or any Licensee Representative entering or using the Site with the permission of Licensee; and (ii) from and against any and all loss, liabilities, damages, judgments, actions, costs, claims and expenses arising in connection with Licensee's use of the Site. Notwithstanding the foregoing, Licensee has no obligations to indemnify the City, City Representatives and their officers, agents, contractors, employees and volunteers against the City's and City Representative's gross negligence or willful misconduct. Licensee shall give to the City prompt and timely written notice of any claim made or suit instituted related to the subject matter of this Agreement to its knowledge which may in any way directly or indirectly, contingently or otherwise affect either party: Approval of insurance policies by the City shall in no way affect or change the terms and conditions of the indemnification obligations of Licensee described herein. 12. Waiver Of Subro ag tion. Licensee hereby waives any and every claim which arises or may arise in its favor and against the City during the term of this Agreement or any extension or renewal hereof for any and all loss or damage to Licensee's property, or property of Licensee's officers, representatives, employees, agents, subcontractors, patrons or invitees covered by valid and collectible property insurance policies to the extent that such loss or damage is covered under such insurance policies. Such waiver shall be in addition to, and not in derogation of, any other waiver or release contained in this Agreement. Licensee also agrees that any insurer providing worker's compensation coverage for Licensee shall agree to waive all rights of subrogation against the City and City Representatives for losses arising from activities and operations of Licensee and the use of the Site pursuant to this Agreement. 13. Liability For Loss, Injury Or Damage. In addition to any other assumption of liability set forth herein, and excluding any loss or damage to the extent resulting from the City's negligence or willful misconduct, Licensee agrees that it assumes the sole risk and responsibility for any damage, destruction or theft of Licensee's equipment, materials or personal Site placed on the Site and for any injury to persons which occurs on the Site as a result of the permitted use licensed pursuant to Section 1, above, of this Agreement. 14. Insurance. Prior to commencing work, Licensee shall procure, maintain, and pay for insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work or services hereunder by Licensee, its agents, representatives, employees or subcontractors for the duration of the Santa Monica \The Village Attachment No. 16 DDA documents At. t6— Right ofEntry.Exeeutionv.Final Page 5of8 License Agreement. The insurance requirements are set forth in the Insurance Requirements and Verifications, which is attached as Exhibit "C ". 15. Termination. In the event that Licensee or Licensee's Representatives violate any of the terms or conditions set forth in this Agreement, the City Manager or designee, after giving Licensee written notice of such violation and a thirty (30) calendar day period within which to cure the same, shall have the right to immediately terminate this Agreement by providing written notice to Licensee of said termination. No termination or expiration of this Agreement shall relieve Licensee of performing any of its obligations required hereunder which were either required prior to or which survive such termination or expiration. 16. Licensee As Independent Contractor. Licensee is, and at all times during the term of this Agreement shall be deemed to be, an independent contractor. City shall not be liable for any acts or omissions of Licensee, or its officers, representatives, employees, agents, subcontractors, patrons or invitees and nothing herein contained shall be-construed as creating the relationship of employee and employer between Licensee and City. Licensee shall be solely responsible for all matters relating to payment of its employees, including payment of Social Security taxes, withholdings and payment of any and all federal, state and local personal income taxes, disability insurance, unemployment, and any other taxes for such employees, including any related assessments or contributions required by law or any other regulations governing such matters. 17. Assignability. This Agreement may not be assigned or transferred without the express written consent of the City Manager (which may be withheld in his or her sole and absolute discretion), whether voluntarily or involuntarily, and Licensee shall not permit the use of the Site, or any part thereof, except in strict compliance with the provisions hereof, and any attempt to do otherwise shall be null and void. Any approved assignee of this Agreement shall enter into an assignment and assumption agreement in a form reasonably approved by the City Manager. No legal title or leasehold interest in the Site is created or vested on Licensee. 18. Governing Law. The laws of the State of California shall govern this Agreement. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. 20. Attorneys' Fees. If any action, proceeding, or arbitration arising out of or relating to this Agreement is commenced by either party to this Agreement, then the prevailing party shall be entitled to receive from the other party, in addition to any other relief that may be granted, the reasonable attorneys' fees, costs and expenses incurred in the action, proceeding or arbitration by the prevailing party. Santa Monica\The village Attachment No. 16 DDA documents At. 16— Right ofEntry.Execution v. Final Page 6 of 8 21. City's Proprietary Capacity. Licensee agrees that City, in making and entering into this Agreement, is acting and shall be deemed to be acting solely in City's proprietary capacity for all purposes and in all respects; and nothing contained in this Agreement shall be deemed directly or indirectly to restrict or impair in any manner or respect whatsoever any of City's governmental powers or rights or the exercise thereof by City, whether with respect to the Site or Licensee's use thereof or otherwise. It is intended that Licensee shall be obligated to fulfill and comply with all such requirements as may be imposed by any governmental City or authority of the City having or exercising jurisdiction over the Site in its governmental capacity. 22. Authority to Sign. Licensee hereby represents that the persons executing this Agreement on behalf of Licensee have full authority to do so and to bind Licensee to perform pursuant to the terms and conditions of this Agreement. 23. Notice. Any notice provided for in this Agreement shall be given by mailing such notice by certified, return receipt mail addressed as follows: If to Licensee: Related /Santa Monica Village, LLC 18201 Von Karman Ave., Suite 900 Irvine, California 92612 Attention: Frank Cardone If to City: The City of the City of Santa Monica 1685 Main Street, Room 212 Santa Monica, CA 90401 24. Time is of the Essence. Time is of the essence as to every term and condition of this Agreement. 25. Recordation. Neither party shall record this Agreement. 26. Severability. In the event that any provisions of this Agreement shall be held to be invalid, the same shall not affect in any respect whatsoever the validity of the remainder of the Agreement. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the Effective Date. Santa Monica \The Village Attachment No. 16 DDA documents At. 16— Right ofEntry.Execution v. Final Page 7 of 8 ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney By: Marcia J. Moutrie KANE, BALLMER & BERKMAN City Special Counsel : Susan Y. Cola Date: Santa Monica \The Village DDA documents At. 16 —Right of Entry.Execution v. Final THE CITY OF SANTA MONICA (City) City Manager RELATED /SANTA MONICA VILLAGE, LLC, a California limited liability company By: The Nicholas Company, Inc., a Delaware corporation its Non - Member Manager : Attachment No. 16 Page 8 of 8 Name: Title: Santa Monica \The village Attachment No. 16 DDA documents At. 16— Right ofEntryExecution v. Final Page 9 of 8 Exhibit "A" SITE MAP [behind this page] ilAA1N —' STREET m J - - - - - -- CENTERLINE — - -- EXISTING PROPERTY LINE OR R/W \ — - -- PROPOSED PROPERTY LINE OR R/W — — — — — EXISTING EASEMENT PROPOSED BUILDING PROPOSED OAS 1RENm \\ —� - -� PROPOSED ELECTRIC TRENCH -- - -.— PROPOSED TELEPHONE TRENCH w\ \ \\ • =r -�T PROPOSED CABLE TV TRENCH PROPOSED JOINT TRENCH \ \' I \\ PROPOSED 10" SEWER MAIN I \\ ® PROPOSED CAW PULLBOX PROPOSED ELECTRICAL VAULT EE PROPOSED ELECTRICAL MANHOLE HANDHDLE PROPOSED TEL /CATV (�o PROPOSED TELEPHONE MANHOLE I \\ EXISTING ELECTRIC LINE EXISTING GAS LINE - -. -- . EXISTING SANITARY SEWER LINE U�0 O C\ \\ \ \ v SITE 'A' i SITE 'S' v I r� IF .. —.. —r ,. A —�.r� _.. _ - - - -_ - .. IL i I J l I srrE •a III J I 1733 OCEAN AVE k v — —r ._ 1 u ` OCEAN AVENUE -- o - - - - -- - -- - -- - - -- -- - - - _ i =. I i - t- FUSCOE Exhibit `B" UTILITY RELOCATION [behind this page] Utility Relocation Scope of Work Utility relocation on the Site associated with the removal of the existing overhead poles and abandonment of the existing gas and sewer lines along First Court Alley between the office building located at 1733 Ocean Avenue and proposed Olympic Drive. • Install electrical facilities to be serviced and maintained by Southern California Edison, gas lines to be serviced and maintained by Southern California Gas, sewer lines to be serviced and maintained by the City of Santa Monica, phones lines to be serviced and maintained by Verizon, and cable and/or fiber lines to be serviced and maintained by Time Warner on Off -site City property shown in Exhibit A. Exhibit "C" INSURANCE REQUIREMENTS AND VERIFICATION A. Minimum Limits of Insurance. Licensee shall maintain limits of no less than: (1) Commercial General Liability. Two Million Dollars ($2,000,000) combined single limit per occurrence for bodily injury and property damage. Licensee shall indicate whether coverage provided is on a "claims made" or "occurrence" basis. (2) Automobile Vehicle Liability Insurance. Two Million Dollars ($2,000,000) combined single limit per accident for bodily injury or property damage. The limit shall include applicable umbrella coverages. The following coverage shall be included: (a) Owned Vehicle (if any). (b) Hired Vehicle. (c) Non -owned Vehicle. (3) Workers' Compensation and Employer's Liability. Workers' Compensation limits as required by the Labor Code of the State of California and Employer's Liability limits of One Million Dollars ($1,000,000) per accident. B. Deductibles and Self- Insured Retentions. Any deductibles or self - insured retentions must be declared to and approved by City. At the option of City, the insurer shall reduce or eliminate deductibles (limited to general and vehicle liability insurance only) or self - insured retentions as respects City, its officials, employees and volunteers or Licensee shall procure a bond guaranteeing payment of losses, related investigation, claim administration, and defense expenses. C. Other Insurance Provisions. (1) General Liability and Automobile Liability Coverage Only. (a) The City of Santa Monica,. members of its City Council, boards and commissions, Agency, City Representatives and their officers, agents, employees and volunteers are to be covered as additional insureds as respects: liability arising out of activities performed by or on behalf of Exhibit B Page 1 of 3 Licensee; premises owned, leased, licensed or used by the Licensee; and premises on which Licensee is performing services, if any, on behalf of the City. (b) Licensee's insurance coverage shall be primary insurance in respect to the City of Santa Monica, members of its City Council, boards and commissions, Agency, City Representatives and their officers, agents, employees and volunteers. Any insurance or self - insurance maintained by the City or Agency, its officials, and employees, shall be in excess of Licensee's insurance and shall not contribute with it. (c) Any failure to comply with the reporting provisions of the policies shall . not affect coverage provided to the City of Santa Monica, members of its City Council, boards and commissions, the City, City Representatives and their officers, agents, employees and volunteers. (d) Coverage shall state that Licensee's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability. (2) Workers' Compensation and Employer's Liability Coverage. The insurer shall agree to waive all rights of subrogation against the City of Santa Monica, members of its City Council, boards and commissions, the Agency, City Representatives and their officers, agents, employees and volunteers for losses arising from work performed by Licensee for the City. (3) All Coverage. (a) Each insurance policy required by this Agreement shall be endorsed to state that coverage shall not be canceled, except after thirty (30) days prior written notice has been given to the City at the following address: 1685 Main Street, Room 212 Santa Monica, CA 90401. Attention: (b) If Licensee, for any reason, fails to maintain insurance coverage which is required pursuant to this Agreement, the failure shall be deemed a material breach of this Agreement. City, at its sole option, may terminate this Agreement and obtain damages from Licensee resulting from the breach. Alternatively, City may purchase the required insurance (but has no special obligation to do so), and without further notice to Licensee, City may deduct from sums due to Licensee any premium costs advanced by City for the insurance. Exhibit B Page 2 of 3 D. Acceptability of Insurers. Insurance is to be placed with insurers rated A: 6 or better by A.M. Best's rating service, unless otherwise approved by the City's Risk Manager. E. Verification of Coverage. Licensee shall furnish City with certificates of insurance affecting coverage required by this Agreement. The certificates for each policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. The certificates are to be on forms provided by City and are to be received and approved by City before work commences. Copies of the Certificate of Insurance and endorsement forms acceptable to City are attached. F. Licensee Contractors. Licensee shall provide to City certificates of insurance evidencing satisfactory compliance by each Licensee contractor with the insurance requirements stated herein. (1) Professional Liability Insurance. Licensee contractors shall maintain professional liability insurance appropriate to the Licensee contractor's profession with a limit of not less than $1,000,000 each occurrence /$1,000,000 in the annual aggregate. Architects' and engineers' coverage is to be endorsed to include contractual liability. Exhibit B Page 3 of 3 Exhibit "D" UTILITY RELOCATION PERMIT DRAWINGS Exhibit B Page 4 of 3 If ll Litt CROSSINGS IS K ELEV /UIUW I E- N/ MLItt CLE o y,s am/o-. ,oPn� sa © G] .wrs srs ao *ia. °a eor /a i mm roan• ms ma /. rz, ,Ere �.* 40 xwwu a mm Es�[sw> x. > o¢a s. a..a.�a sow. auueo [+zw[ o' ow LEGEND _ I � I I ra cm of vu[� Inory ul — 5 '- 7 7 —�� p kl r� pW UO to A'o 0 II I F 9LtC Iil SITE 'A' I vv. vm •Tw v'T rvm •T TM m �uew .mm ®.. �.�♦ v. �IIIee��ti'q�}�+e• �.�'a �uav¢ �smaw.! �.eaze Lm'•4mow Amm vra mxtamin �s�t s�.vam!R + g�x \ STTE'S' \�+� �....m n...a a 1733 OCEAN AVE Aal J M _ El i 74L—"-, ag �$ ���ea a �a zs s� $�3ss i � � �� —§�_•° —. s — — _ --r-- �- I �- ♦ IS 1 s sp sg s- _ A:� •F `[5 �� ��� _ ���°'�ww[ae ` I RETURN RECORDED DOCUMENT TO: RECIPROCAL EASEMENT AGREEMENT WITH COVENANTS, CONDITIONS AND RESTRICTIONS THIS RECIPROCAL EASEMENT AGREEMENT WITH COVENANTS, CONDITIONS AND RESTRICTIONS (the "Agreement') is made and entered into this _day of , 20_, by and between Santa Monica Urban Housing A, LLC, a California limited liability company (the "Condo Parcel Owner"), and Santa Monica Housing Partners, L.P., a California limited partnership (the "Apartment Parcel Owner'). The Condo Parcel Owner and Apartment Parcel Owner are collectively referred to as the "Owners" or individually as an "Owner". RECITALS A. The Condo Parcel Owner is the owner of a ground leasehold estate in and to that certain parcel of real property situated in the City of Santa Monica (the "City "), County of Los Angeles, State of California, more particularly described on Exhibit "A" attached hereto and incorporated herein by this reference (the "Condo Parcel "). The Condo Parcel will be developed with residential and retail condominium units (the "Condo Units ") and related residential improvements (collectively, the "Condo Project'). B. In connection with the development of the Condo Parcel, the Condo Parcel Owner will form a homeowners association (the "Association ") which shall be responsible for the maintenance, repair and replacement of the Common Area (as defined below). C. The Apartment Parcel Owner is the owner of a ground leasehold estate in and to that certain parcel of real property situated in the City of Santa Monica, County of Los Angeles, State of California, more particularly described on Exhibit "B" attached hereto and incorporated herein by this reference (the "Apartment Parcel "). The Apartment Parcel will be developed with approximately one hundred sixty (160) affordable apartment units (the "Apartment Units ") and related residential improvements (collectively, the "Apartment Project'). The Apartment Parcel Owner shall be responsible for the maintenance, repair and replacement of the Apartment Public Area (as defined below). The Condo Parcel and Apartment Parcel are collectively referred to as the "Parcels" and individually as a "Parcel ". D. The Parcels will be built on a single podium over a subterranean garage (the "Parking Structure "). The Parking Structure is located below both Parcels. Page 1 of 30 50029398.8 E. The Owners desire to impose certain easements upon the Parcels and to establish certain covenants, conditions and restrictions with, respect to said Parcels, for the mutual and reciprocal benefit and complement of the Parcels and the present and future owners and occupants thereof, on the terms and conditions hereinafter set forth. NOW, THEREFORE, for valuable consideration, the Owners hereby covenant and agree that the Parcels and all present and future occupants and owners thereof shall be and hereby are subject to the terms, covenants, easements, restrictions and conditions hereinafter set forth in this Agreement, so that the Parcels shall be maintained, kept, leased and used in full compliance with and subject to this Agreement and, in connection therewith, the parties hereto on behalf of themselves and their respective successors and assigns covenant and agree as follows: AGREEMENTS' 1. Definitions. For purposes hereof: 1.1 The term "Agency" shall mean the Redevelopment Agency of the City of Santa Monica. 1.2 The term "Allowed Rate" shall mean the maximum interest rate allowed by law. 1.3 The term "Annual Budget' shall mean an annual budget for the maintenance, insurance and operation of the Joint Use Areas and the Parking Structure (excluding the Apartment Parking Area and the Condo Parking Area) which shall be prepared by the Condo Parcel Owner and delivered to the Apartment Parcel Owner by November 1 of each year for the following year. 1.4 The term "Apartment Access Facilities' shall mean the access gate and appurtenant facilities in the Parking Structure securing exclusive access to the Apartment Parking Area. 1.5 The term "Apartment Parking Area" shall mean that portion of the Parking Structure shown on Exhibit "C" to be used exclusively by Apartment Parcel Permittees. 1.6 The term "Apartment Parcel Ground Lease" shall mean that certain ground lease of the Apartment Parcel between the Apartment Parcel Owner and City dated as of f 1. 1.7 The term "Apartment Pro Rata Share" shall mean (_ %] of the Shared Maintenance Costs, Shared Repair Costs, Capital Improvements or Joint Use Area Security Costs, as applicable, to be paid by the Apartment Parcel Owner to the Condo Parcel Owner. 1.8 The term "Apartment Public Area" shall mean the public areas of the Apartment Parcel that are outside of the exterior walls of buildings or other structures (including, without limitation, those portions which are either unimproved or are improved as, without limitation, parking areas, recreational areas, landscaped areas, driveways, elevators (other than elevators servicing solely the Apartment Project), hallways, lobbies, parking and garage area, roadways, walkways, light standards, curbing, paving, entrances, exits and other similar exterior site Page 2 of 30 5°°2939°.8 improvements), but shall exclude the portion of the Joint Use Areas located on the Apartment Parcel. 1.9 The term "City' shall mean the City of Santa Monica, a municipal corporation of the State of California, its successors and assigns. 1.10 The term "Claims" shall mean all claims, rights, demands, lawsuits, actions, causes of action, suits, penalties, fines, liabilities, damages, costs and expenses (including, without limitation, attomeys' fees and court costs). 1.11 The term "Common Area" shall mean the public areas of the Condo Parcel that are outside of the exterior walls of buildings or other structures (including, without limitation, those portions which are either unimproved or are improved as, without limitation, parking areas, landscaped areas, driveways, elevators (other than elevators servicing solely the Condo Project), hallways, lobbies, parking and garage area, roadways, walkways, light standards, curbing, paving, entrances, exits and other similar exterior site improvements, but shall exclude the portion of the Joint Use Areas located on the Condo Parcel. 1.12 The term "Condo Access Facilities" shall mean the access gate and appurtenant facilities in the Parking Structure securing exclusive access to the Condo Parking Area. 1.13 The term "Condo CC &Rs" shall mean the condominium Declaration of Covenants, Conditions, Restrictions and Reservation of Easements Recorded against the Condo Parcel. 1.14 The term "Condo Parcel Ground Lease" shall mean that certain ground lease of the Condo Parcel between Condo Parcel Owner and the City dated as of [ 1.15 The term "Condo Parcel Owner" shall mean Santa Monica Urban Housing A, LLC, a California limited liability company, and the Association after the close of escrow for the sale of the [first] Condo Unit. 1.16 The term "Condo Parking Area" shall mean that portion of the Parking Structure shown on Exhibit "D" to be used exclusively by Condo Parcel Perrnittees. 1.17 The term "Condo Unit Owner" means the owner of a Condo Unit. 1.18 The term "Covered Improvements" means all improvements to the Joint Use Areas, whether located on the Condo Parcel and /or Apartment Parcel, including, without limitation, all structural elements, utilities, grading, equipment, fixtures, facilities or other improvements of any kind. 1.19 The term "Development Agreement' shall mean that certain Development Agreement, dated as of [ 1, between Related/Santa Monica Village, LLC, and the City, as well as any riders, exhibits addenda, implementation agreements, amendments and attachments thereto or other documents expressly incorporated by reference in the Development Agreement. Page 3 of 30 50029398.8 1.20 The term "Disposition and Development Agreement' shall mean that certain Disposition and Development Agreement, dated as of [ 1, between Related /Santa Monica Village, LLC, and the City, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the Disposition and Development Agreement. 1.21 The term "Easements" shall mean those easements granted in Section 2 of this Agreement. 1.22 The term "Joint Access Facilities" shall mean the entry gate and appurtenant facility that controls access to the Parking Structure. 1.23 The term "Joint Use Access Areas" shall mean those portions of the Parking Structure and driveways shown on Exhibit "F" to be used jointly by the Owners and Permittees for vehicular access, ingress and egress. 1.24 The term "Joint Use Areas" shall mean the Living Street, Olympic Plaza and the Joint Use Access Areas. 1.25 The term "Joint Use Area Rules" shall mean rules and regulations adopted from time to time by the Condo Parcel Owner regarding use of the Joint Use Areas, which rules and regulations shall be subject to the approval of the Apartment Parcel Owner, which approval shall not be unreasonably withheld, conditioned or delayed, and which rules shall not conflict with any of the provisions of this Agreement and shall be adopted and administered by the Condo Parcel Owner in a fair, reasonable and non- discriminatory manner. 1.26 The tern "Living Street' shall mean the pedestrian walkway shown on Exhibit "G" for public use south of the portion of Olympic Drive which connects Main Street with Ocean Avenue located, in part, on both the Condo Parcel and Apartment Parcel. 1.27 The term "Mortgage" shall mean any indenture of mortgage or deed of trust, bonds, grant of taxable or tax exempt funds from a governmental agency and, to the extent applicable, the documents governing a sale- leaseback transaction. 1.28 The term "Mortgagor" shall mean the mortgagor or trustor under a Mortgage (or lessee, in the case of a sale- leaseback transaction). 1.29 The term "Net Insurance Proceeds" shall mean the gross insurance proceeds paid by any insurer or insurers to an Owner (or its designee) for damage to or destruction of the Covered Improvements, less any and all costs, fees and expenses (including, but not limited to, attorneys' fees and expenses) incurred to recover said gross insurance proceeds. 1.30 The term "Olympic Plaza" shall mean those portions of the Condo Parcel and Apartment Parcel open to public access from time to time, generally for public use on the south side of the portion of Olympic Drive which connects Main Street with Ocean Avenue, as more particularly shown on Exhibit "H ". Page 4 of 30 50029398.8 1.31 The term "Permitted Mortgage" shall mean any mortgage, pledge, deed of trust or other instrument encumbering the leasehold interest of either Owner in whole or in part, and any interests or rights appurtenant to such leasehold interest. The term Permitted Mortgage shall not include any mortgage, pledge, deed of trust or other instrument encumbering an individual Condo Unit or securing debt incurred by a Condo Unit owner, other than the Condo Parcel Owner. 1.32 The term "Permitted Mortgagee" shall mean the holder or beneficiary of any Permitted Mortgage. 1.33 The term " Permittees" shall mean the Owners, Condo Unit Owners, tenant(s) or occupant(s) of a Parcel, and their respective officers, agents, employees, agents, contractors, customers, invitees, family and licensees, as applicable. 1.34 The term "Project' shall mean the improvements located on the Condo Parcel and the Apartment Parcel, respectively, including, without limitation (i) the Condo Units, (ii) the Parking Structure, and (iii) the Apartment Units. 1.35 The term "Recorded or Recordation" shall mean recordation in the Office of the Los Angeles County Recorder. 1.36 The term "Restoration" shall mean the repair, restoration, replacement, or rebuilding of damaged or destroyed Improvements, including, without limitation, any temporary repairs or other work necessary to secure the affected Covered Improvements and protect the safety of other property and persons, and including, without limitation, any alterations, additions, or improvements required by applicable building codes and approved by the City. 1.37 The term "Retail and Guest Parking Area" shall mean that portion of the Parking Structure shown on Exhibit "E" to be used by Apartment Parcel Permittees and Condo Parcel Permittees. 1.38 The term "Separate Costs" shall mean costs related to the maintenance of (but excluding costs of structural maintenance), the Condo Access Facilities, Apartment Access Facilities, the Apartment Parking Area and the Condo Parking Area, including, but not limited to, maintenance of the storage cabinets in the Apartment Parking Area and Condo Parking Area, respectively, and numbering of parking spaces in the Apartment Parking Area and the Condo Parking Area, respectively. 1.39 The term "Shared Maintenance Costs" shall mean those maintenance and reserves cost items for the Joint Use Areas (other than the Separate Costs) and costs of maintenance of the structural elements of the Parking Structure (including, but not limited to, the structural elements of the Condo Access Facilities, Apartment Access Facilities, the Apartment Parking Area and the Condo Parking Area) listed on Exhibit "I" in the amounts set forth in the Annual Budget, which costs shall be shared between the Owners as provided in this Agreement. 1.40 The term "Shared Repair Costs" shall mean the cost of repair of and /or capital improvement to the Joint Use Areas and the structural elements of the Parking Structure (including, but not limited to, the structural elements of the Condo Access Facilities, Apartment Page 5 of 30 - %0293W.a Access Facilities, the Apartment Parking Area and the Condo Parking Area), which costs shall be shared between the Owners as provided in this Agreement. 1.41 The teen "Utilities" shall mean water mains, stone drains, sewers, water sprinkler system lines, telephone or electrical conduits or systems, cable, gas mains and other utility facilities necessary for the operation of the Parcels and all improvements located thereon. 1.42 The term 'Water Drainage Facilities" shall mean all lines, conduits, pipes and other apparatus for water drainage, storm water collection, retention, detention and all storage systems necessary in connection therewith, serving one or both Parcels. 2. Easements. 2.1 Grant of Easements. (a) Grant of Reciprocal Access Easements. Subject to any express conditions, limitations and reservations contained in this Agreement, including, without limitation, Section 2.3 hereof, the Owners hereby grant, establish, covenant and agree that the Parcels and all Owners and their respective Permittees shall be benefited and burdened by the following nonexclusive, perpetual and reciprocal easements for the benefit of the Owners, and all Pernittees which are hereby imposed upon the Parcels: (i) An easement of access, ingress and egress over the Joint Use Area for pedestrian and vehicular access, ingress and egress to and from the Parcels, adjacent public areas and the Parking Structure, as applicable (it being acknowledged and agreed that no easement for vehicular access, ingress or egress is granted over the Living Street or Olympic Plaza, except for emergency vehicles) and for parking of vehicles at the Apartment Parcel Area, the Condo Parking Area and the Retail and Guest Parking Area, as applicable, as provided in and limited by this Agreement. (ii) An easement upon, under, over, above and across the Parcels as reasonably necessary (a) for the discharge, drainage and use of storm water runoff, and (b) to maintain, repair and replace Water Drainage Facilities; provided that (1) such easements shall at all times be used in such a manner as not to unreasonably interfere with the normal operation of the burdened Parcel(s), the activities conducted thereon and the businesses conducted therein, (2) except in the event of an emergency, the right of any Owner to enter upon the Parcel of another Owner for the exercise of any right pursuant to such easements shall be conditioned upon providing reasonable prior advance written notice to the other Owner as to the time and manner of entry, and (3) all activities on the Parcels shall be conducted in accordance with applicable laws. The easement granted herein shall include the right of reasonable ingress and egress as may be required to maintain and operate the Water Drainage Facilities. The Water Drainage Facilities shall not be modified, altered, relocated or otherwise changed, without the prior written consent of all Owners, which consent shall not be unreasonably withheld, conditioned or delayed. Except as otherwise provided in this Agreement, each Owner shall operate and maintain, or cause to be operated and maintained, in good order, condition and repair, the Water Drainage Facilities located upon its Parcel and make or cause to be made any and all repairs and replacements that may from time to time be required with respect thereto. Page 6 of 30 50029396.8 (iii) An easement upon, under, over, above and across the Parcels as reasonably necessary for the maintenance, repair and replacement of Utilities provided that (a) such easements shall at all times be exercised in such a manner as not to unreasonably interfere with the normal operation of the burdened Parcel(s), the uses thereof and the businesses conducted therein, (b) except in the event of an emergency, the right of any Owner to enter upon the Parcel of another Owner for the exercise of any right pursuant to such easements shall be conditioned upon providing reasonable prior advance written notice to the other Owner as to the time and manner of entry, and (c) all activities on the Parcels shall be conducted in accordance with applicable laws. The easement granted herein shall include the right of reasonable ingress and egress as may be required to maintain, repair, replace or operate the Utilities. Each Owner shall operate and maintain, or cause to be operated and maintained, in good order, condition and repair, the Utilities serving its Parcel and make, or cause to be made, any and all repairs and replacements that may from time to time be required with respect thereto. (iv) An easement upon, under, over, above and across the Parcels as reasonably necessary to permit the Owners to perform the obligations imposed upon them by this Agreement for maintenance, repair and replacement of the improvements, including, without limitation, the systems and equipment, located on the Parcels. (v) An easement upon, under, over, above and across the Parcels as reasonably necessary to reconstruct, maintain, repair, replace or modify improvements necessary or desirable to provide support, including, without limitation, lateral and subjacent support, to any improvements constructed or to be reconstructed on the Parcels and an easement upon, under, over, above and across the Parcels as reasonably necessary to provide support for the improvements located on the Parcels, including, without limitation, lateral and subjacent support. (vi) An easement upon, under, over, above and across the Parcels for minor encroachments upon, under, over, above and across the Parcels which exist or result from construction of any new, rebuilt, repaired or reconstructed improvements located on the Parcels. (vii) The Condo Parcel Owner shall adopt rules for use of the Retail and Guest Parking Area, which rules and regulations shall be subject to the approval of the Apartment Parcel Owner, which approval shall not be unreasonably withheld, conditioned or delayed (but only to the extent such rules and regulations affect the Apartment Parcel Owner or its Permittees), and which rules shall not conflict with any of the provisions of this Agreement and shall be adopted and administered by the Condo Parcel Owner in a fair, reasonable and non- discriminatory manner. (b) Grant of Easements Benefiting the Condo Parcel. Subject to any express conditions, limitations or reservations contained herein, including, without limitation, Section 2.3 hereof, the Apartment Parcel Owner hereby grants, establishes, covenants and agrees that the Condo Parcel, the Condo Parcel Owner and the Pernittees of the Condo Parcel Owner shall be benefited, and the Apartment Parcel, the Apartment Parcel Owner and the Pernittees of the Apartment Parcel Owner shall be burdened, by (1) a nonexclusive and perpetual easement which is hereby imposed upon the Apartment Parcel and the Apartment Parcel Owner and Perrnittees Page 7 of 30 50029398.8 of the Apartment Parcel Owner over, upon, across and through the Apartment Parcel as reasonably necessary to permit the Condo Parcel Owner and its Permittees to access, maintain, repair and replace the systems and equipment serving in whole or in part the Condo Parcel which are located on the Apartment Parcel, including, but not limited to, electrical transformers, and (ii) a nonexclusive and perpetual easement for reasonable access, ingress and egress over the Apartment Parcel so as to provide for the passage of motor vehicles and pedestrians between all portions of the Apartment Public Area intended for such purposes, and to and from all abutting streets or rights of way furnishing access to the Condo Parcel. (c) Grant of Easements Benefiting the Apartment Parcel. Subject to any express conditions, limitations or reservations contained herein, including, without limitation, Section 2.3 hereof, the Condo Parcel Owner hereby grants, establishes, covenants and agrees that the Apartment Parcel, the Apartment Parcel Owner and the Permittees of the Apartment Parcel Owner shall be benefited, and the Condo Parcel, the Condo Parcel Owner and the Permittees of the Condo Parcel Owner shall be burdened, by (i) a nonexclusive and perpetual easement over, upon, across and through the Condo Parcel as reasonably necessary to permit the Apartment Parcel Owner and its Permittees to access, maintain, repair and replace the systems and equipment serving in whole or in part the Apartment Parcel which are located on the Condo Parcel, and (ii) a nonexclusive and perpetual easement for reasonable access, ingress and egress over the Condo Parcel so as to provide for the passage of motor vehicles and pedestrians between all portions of the Common Area intended for such purposes, and to and from all abutting streets or rights of way furnishing access to the Apartment. Parcel. (d) Grant of Maintenance Easement. Subject to any express conditions, limitations or reservations contained herein, including, without limitation, Section 2.3 hereof, the Apartment Parcel Owner hereby grants, establishes, covenants and agrees that the Condo Parcel Owner and its agents, employees, agents, contractors, invitees and licensees shall have a non - exclusive and perpetual easement of pedestrian and vehicular access, ingress and ingress over the Apartment Parcel as reasonably necessary to maintain, repair and replace the Joint Use Area and the Parking Structure located on the Apartment Parcel in accordance with this Agreement. 2.2 Indemnification. The Condo Parcel Owner and Apartment Parcel Owner shall indemnify, defend, protect and hold each other, the City and the Agency harmless from and against all claims, liabilities and expenses (including, without limitation, reasonable attorneys' fees) relating to accidents, injuries, loss, or damage of or to any person or property related to or arising from the negligent, intentional or willful acts or omissions of such Owner and /or its applicable Permittees pertaining to the use of the Easements. If an Owner ('Responsible Party') or any Permittee of a Responsible Party damages or destroys any portion of the Parcel or improvements of the other Owner, the Responsible Party shall reimburse the other Owner for the full cost of repair of such damage within thirty (30) days after receipt of written demand for payment from the other Owner, which notice shall include (a) a description of the damage, and (b) the circumstance or occurrence giving rise to the damage and an invoice for the cost of the repair from an independent third party. Any reimbursement not paid by the Responsible Party Page 8 of 30 50029396.8 within the foregoing thirty (30) day period shall accrue interest at the Allowable Rate from the date due until paid. 2.3 Use of Easements. (a) Each Owner may permit and allow from time to time its Permittees to use the easements hereinabove granted, provided, however, that no such permission shall authorize a use of such an easement contrary to the use as granted hereinabove and no such unauthorized use shall act to extinguish the easement for the use as granted. No consent of any Permittee shall be required to amend or terminate any such easements. (b) Each Owner and its Permittees shall comply with all applicable laws and governmental regulations and requirements in connection with the use and enjoyment of the foregoing easements. (c) The Easements shall be used and enjoyed by each Owner and its Permittees in such a manner so as not to unreasonably interfere with, obstruct or delay the conduct and operations of the business or intended use of the Parcel of any other Owner or its Permittees, including, without limitation, public access to and from said business or intended use, and the receipt or delivery of deliveries in connection therewith, except to the extent that such use causes a temporary interference that cannot reasonably be avoided despite commercially reasonable efforts and is undertaken in such a manner as to mitigate as much as practicable any interference with the use and enjoyment of the affected Parcel (e.g , reasonable notice to be given of the activity to be undertaken and the activities to be confined to periods of time when the use of the affected Parcel is relatively minimal). (d) No permanent building, structures, trees or other improvements inconsistent with the use and enjoyment of the easements granted pursuant to Sections 2.1(a) (ii) and (iii) for Water Drainage Facilities and utility installations shall be placed over or permitted to encroach upon such Water Drainage Facilities and utility installations. The Owner of the Parcel served by such installations shall not unreasonably withhold its consent to the reasonable relocation of such installations requested by the Owner of a Parcel on which such installations are located, at such requesting Owner's sole cost and expense, so long as water detention and drainage services or utility services, as applicable, to the other Owner's Parcel are not unreasonably interrupted and the remaining provisions of this Section 2.3 are complied with. (e) Once commenced, any maintenance, repair or replacement work undertaken in reliance upon an Easement granted herein shall be diligently prosecuted to completion, so as to minimize any interference with the business or intended use of any other Owner and its Permittees. Except in the event of an emergency, the right of any Owner to enter upon a Parcel of another Owner for the exercise of any right pursuant to the Easements, or to prosecute work on such Owner's own Parcel if the same interferes with Easements in favor of another Owner, shall be undertaken only in such a manner so as to minimize any interference with the business or intended use of the other Owner and its Permittees. In such case, no affirmative monetary obligation shall be imposed upon the other Owner, and the Owner undertaking such work shall with due diligence repair, at its sole cost and expense, any and all damage caused by such work and restore the affected portion of the Parcel upon which such Page 9 of 30 50029396.8 work is performed to a condition which is equal to or better than the condition which existed prior to the commencement of such work. In addition, the Owner undertaking such work shall pay all costs and expenses associated therewith and shall indemnify, defend, protect and hold harmless the other Owner and its Permittees, the City and the Agency from all Claims attributable to the performance of such work; provided, however, that such indemnity shall not apply to the extent such Claims result from the gross negligence or willful misconduct of said indemnitee or such indemnity is prohibited by California law including, without limitation, Section 2782 of the California Civil Code. (f) The Condo Parcel Owner, in its sole discretion, shall have the sole right to establish rules and regulations regarding the use of the Condo Parking Area and to control use of the Condo Parking Area, including, without limitation, the issuance of parking stickers, codes, transponders and other access devices to Condo Unit Owners and their Permittees, numbering of parking spaces, use and assignment of storage cabinets and spaces and control of the Condo Access Facilities and Joint Access Facilities; provided, however, the Joint Access Facilities shall be operated and maintained so as to provide equal non - discriminatory access and use to the Apartment Parcel Owner and its Permittees and the Condo Parcel Owner and its Permittees. The Condo Parcel Owner shall provide to the Apartment Parcel Owner and Apartment Parcel Permittees entry codes, transponders and other access devices providing entry through the Joint Access Facilities in the same manner and cost as provided to Condo Unit Owners. The Apartment Parcel Owner and Apartment Parcel Permittees shall not have access to or use of the Condo Parking Area or Condo Access Facilities. The Condo Parcel Owner shall be permitted to keep the gates comprising the Joint Access Facilities open to the public during such times as the Condo Parcel Owner is engaged in marketing activities with respect to the sale of the Condo Units. The Condo Parking Area shall be used solely for parking by the Condo Parcel Owner and Condo Parcel Permittees, as applicable, and shall not be used by the Apartment Parcel Owner and /or Apartment Parcel Permittees. (g) The Apartment Parcel Owner, in its sole discretion, shall have the right to establish rules and regulations regarding the use of the Apartment Parking Area, to control use of the Apartment Parking Area, including, without limitation, the issuance of parking stickers, codes, transponders and other access devices to Apartment Parcel Permittees, numbering of parking spaces, use and assignment of storage cabinets and spaces, and control of the Apartment Access Facilities. The Condo Parcel Owner and the Condo Parcel Permittees shall not have access to our use of the Apartment Parking Area or Apartment Access Facilities. The Apartment Parking Area shall be used solely by the Apartment Parcel Owner and the Apartment Parcel Permittees, as applicable, and shall not be used by the Condo Parcel Owner and /or Condo Parcel Permittees. 3. Maintenance. 3.1 Buildings and Appurtenances Thereto. Each Owner covenants to keep and maintain, at its sole cost and expense, its Parcel and the improvements located from time to time thereon (excluding the Common Area and Apartment Public Area, as applicable, and that portion of the Joint Use Areas, Retail and Guest Parking Area and Parking Structure located on such Page 10 of 30 50029396.8 Owner's Parcel) in accordance with Sections 503, 504 and 703 of the Apartment Parcel Ground Lease and Condo Parcel Ground Lease, as applicable. 3.2 Common Area and Apartment Public Area. The Condo Parcel Owner covenants at all times during the term hereof to, at its sole cost and expense, operate and maintain, or cause the Common Area to be operated and maintained in good order, condition and repair. The Apartment Parcel Owner covenants at all times during the term hereof to, at its sole cost and expense, operate and maintain, or cause to be operated and maintained the Apartment Public Area in good order, condition and repair. The Common Area and the Apartment Public Area are each a "Shared Residential Area. " Following the construction of improvements thereon, maintenance of the Shared Residential Areas shall include, without limitation, maintaining and repairing all sidewalks and the surface of the parking and roadway areas, removing all papers, debris and other refuse from and periodically sweeping all parking and roadway areas to the extent necessary to maintain the same in a clean, safe and orderly condition, maintaining appropriate lighting fixtures for the parking areas and roadways, maintaining marking, directional signs, lines and striping as needed, maintaining landscaping, maintaining signage in good condition and repair, and performing any and all such other duties as are necessary to maintain such Shared Residential Area in a clean, safe and orderly condition; provided, however, that such Owner shall not be required to maintain improvements owned by another Owner which are for the exclusive use of said Owner, which maintenance obligation shall be performed by the Owner owning such improvements. Subject to Section 6 below, once constructed, in the event of any damage to or destruction of all or a portion of a Shared Residential Area on any Parcel, the Owner of such Parcel shall, at its sole cost and expense, with due diligence repair, restore and rebuild such Shared Residential Area to its condition prior to such damage or destruction (or with such changes as shall not conflict with this Agreement). Each Owner reserves the right to alter, modify, reconfigure, relocate and /or remove the Shared Residential Area or building areas on its Parcel, subject to the following conditions: (i) the reciprocal easements between the Parcels pursuant to Section 2.1(a) shall not be closed or materially impaired; (ii) the ingress and egress to and from the Parcels and adjacent streets and roads, shall not be altered, modified, relocated, blocked and /or removed without the express written consent of the other Owner, which consent shall not be unreasonably withheld, conditioned or delayed; and (iii) the same shall not violate any of the provisions and easements granted in Section 2. 3.3 Failure to Maintain. If either Owner ('Defaulting Party") permits any adverse condition on any portion of the Shared Residential Area located on the Parcel owned by the Defaulting Party or fails to maintain all or any portion of the Shared Residential Area on its Parcel and such condition or failure has or will have a material and adverse impact on the other Owner's ("Noticing Party') ability to finance, develop, maintain, lease, operate, use and /or market all or any portion of the Parcel owned by the Noticing Party, the Noticing Party may provide written notice of such condition or failure to maintain, which notice shall include a reasonably detailed description of the condition or failure to maintain ('Deficiency Notice "). If the Defaulting Party fails to remedy the deficiency within thirty (30) days after receipt of the Deficiency Notice (or with respect to deficiencies that cannot reasonably be remedied within such thirty (30) day period, if the Defaulting Party fails to commence to remedy such deficiency within the thirty (30) day period Page 11 of 30 50029396.8 or fails to diligently pursue such remedy to completion no later than forty -five (45) days following receipt of the Deficiency Notice), the Noticing Party may, without waiving any other legal or equitable remedies it may have, enter the Shared Residential Area of the Parcel owned by the Defaulting Party and remedy such deficiency. Upon remedying of such deficiency, the Noticing Party shall be entitled to provide written demand to the Defaulting Party that it reimburse the Noticing Parry for one hundred ten percent (110 %) of the actual and reasonable costs and expenses it incurred in connection with remedying the deficiency. Any such demand shall include invoices or other reasonable written evidence of such costs and expenses incurred by the Noticing Party. The Defaulting Party shall reimburse such amounts to the Noticing Party within seven (7) days of receipt of such demand. Any amounts not reimbursed within such seven (7) day period shall accrue interest at the Allowed Rate from the date due until paid. The Noticing Party shall not be liable to the Defaulting Party for any loss, damage or liability resulting from or arising in connection with activities of the Noticing Party (or its contractors, representatives and /or agents) on the Shared Residential Area of the Parcel owned by the Defaulting Parry, except to the extent such loss, damage or liability results from the gross negligence or willful misconduct of the Noticing Party (or its contractors, representatives and /or agents). 3.4 Utilities. Each Owner shall at all times during the term hereof operate and maintain, or cause to be operated and maintained, in good order, condition and repair, at its sole cost and expense, any utility or other installations serving the Parcel of such Owner and from time to time existing on the Parcel of another Owner pursuant to an easement described herein. 3.5 Maintenance and Repair of Joint Use Areas Retail and Guest Parking Area and Parking Structure. The Condo Parcel Owner shall be solely responsible for maintenance and repair of the Joint Use Areas, the Retail and Guest Parking Area and the structural elements of the Parking Structure, provided, however, all costs of maintaining and repairing the Joint Use Areas and the Parking Structure, including, but not limited to, all capital costs associated therewith but excluding the Separate Costs, shall be shared by the Owners in accordance with Sections 3.5 and 3.7 of this Agreement. If the Condo Parcel Owner fails to perform its maintenance and repair obligations under this Section, the Apartment Parcel Owner shall be entitled to provide written notice to the Condo Parcel Owner, which notice shall include a detailed description of the maintenance and /or repair deficiency. Condo Parcel Owner shall remedy the deficiency within ten (10) days after receipt of such notice, or in the event of an emergency such shorter period of time as required to reasonably avoid injury to persons or significant damage to property. Notwithstanding the foregoing, a maintenance or repair obligation (other than an emergency maintenance or repair obligation) shall be deemed to have been remedied if the Condo Parcel Owner has begun to remedy such deficiency within the ten (10) day period after receipt of written notice of a deficiency from the Apartment Parcel Owner, and continues diligently to complete such remedy, provided such remedy is completed within twenty (20) days following receipt of the foregoing notice. If the Condo Parcel Owner does not correct a maintenance or repair deficiency within the forgoing time periods, the Apartment Parcel Owner shall be entitled to enter the areas that are subject to the above maintenance or repair deficiency and remedy such deficiency. After completing such maintenance or repair deficiency the Apartment Parcel Owner Page 12 of 30 50029396.8 shall, without waiving any of its other rights or remedies, be entitled at its option (a) to offset its direct third party costs incurred in connection with remedying such deficiency against the next payment(s) of Apartment Pro Rata Share; provided that no such offset shall be allowed until the Apartment Parcel Owner has provided the Condo Parcel Owner with invoices from independent third parties evidencing the costs incurred by the Apartment Parcel Owner, and /or (b) by written notice ( "Deficiency, Notice ") to the Condo Parcel Owner demand reimbursement for all direct third party costs incurred in remedying such deficiency, minus the Apartment Pro Rata Share, which shall be payable to the Apartment Parcel Owner by that date ('Payment Date ") which is ten (10) day following the date on which the Condo Parcel Owner receives the Deficiency Notice and which payment shall include interest at the Allowed Rate on such amount from the Payment Date until paid. 3.6 Shared Maintenance Costs. Notwithstanding anything to the contrary contained in this Agreement, commencing on the date ("Commencement Date ") which is the first day of the first calendar month following the date on which certificates of occupancy have been issued for one or more residences on each of the Parcels and continuing every calendar month thereafter, the Apartment Parcel Owner shall pay to the Condo Parcel Owner the Apartment Pro Rata Share of the Shared Maintenance Costs. The Apartment Parcel Owner shall pay the Apartment Pro Rata Share of the Shared Maintenance Costs to the Condo Parcel Owner on a monthly basis in arrears. 3.7 Shared Repair Costs. If the Condo Parcel Owner determines the need for a repair to the Joint Use Areas, the Retail and Guest Parking Area or the structural elements of the Parking Structure (excluding repairs funded by reserves collected as part of the Shared Maintenance Costs and individual repairs not funded by reserves of less than $5,000), the Condo Parcel Owner shall request the approval of the Apartment Parcel Owner to such repair, which approval shall not be unreasonably withheld, conditioned or delayed, and the Apartment Parcel Owner shall pay to the Condo Parcel Owner the Apartment Pro Rata Share of the cost of any such approved repair. The Apartment Pro Rata Share of the Shared Repair Costs shall be paid to the Condo Parcel Owner by the date ("Repair Delinquent Date ") which is sixty (60) days after the date of the Apartment Parcel Owner's receipt of a written notice of completion by Condo Parcel Owner of the repair approved by the Apartment Parcel Owner. If the Apartment Parcel Owner fails to pay its Apartment Pro Rata Share by the Repair Delinquent Date, interest on the Apartment Pro Rata Share shall accrue at the Allowable Rate and be payable from the Repair Delinquent Date. 3.8 Capital Improvements. If the Condo Parcel Owner determines the need for a capital improvement or other addition to the Covered Improvements, the Retail and Guest Parking Area or the structural elements of the Parking Structure (each, a "Capital Improvement'), including, without limitation, Capital Improvements required due to damage and /or destruction where insurance proceeds available from insurance maintained by the Condo Parcel Owner under this Agreement are not sufficient to repair such damage and /or destruction, the Apartment Parcel Owner shall pay the Apartment Pro Rata Share of the cost of any such Capital Improvement ('Apartment Capital Improvement Share "), unless such Capital Improvement is due to damage and /or destruction and there are insufficient insurance proceeds Page 13 of 30 50029396.8 available for such repair due to the failure of the Condo Parcel Owner to maintain the Covered Improvements or the Parking Structure (excluding the Apartment Parking Area), or to maintain insurance, required under this Agreement, in which case the cost of such repair that should have been covered by insurance proceeds shall be solely the responsibility of the Condo Parcel Owner. The Apartment Capital Improvement Share shall be paid to the Condo Parcel Owner by the date ('Improvement Delinquent Date ") which is sixty (60) days after the date of the Apartment Parcel Owner's receipt of a written notice of completion by Condo Parcel Owner of the Capital Improvement approved by the Apartment Parcel Owner, however, if the cost of the Capital Improvement exceeds five percent (5 %) of the total amount of the then current Annual Budget, such Capital Improvement shall also require the approval of the Apartment Parcel Owner. If the Apartment Parcel Owner fails to pay its Apartment Capital Improvement Share by the Improvement Delinquent Date, interest on the Apartment Capital Improvement Share at the Allowed Rate shall accrue and be payable from the Improvement Delinquent Date. Notwithstanding anything to the contrary contained herein, any increases in the overall Annual Budget of 10% or more from the previous year shall require the consent of the Apartment Parcel Owner, which consent shall not be unreasonably withheld, conditioned or delayed. 3.9 Modification of Covered Improvements, Retail and Guest Parking Area or Parking Structure. Any modification, alteration, reconstruction, repair or improvement of the Covered Improvements, the Retail and Guest Parking Area or structural elements of the Parking Structure that does not comply with the original as -built plans and specifications for such Covered Improvements, Retail and Guest Parking Area or structural elements of the Parking Structure must be approved in writing by the Apartment Parcel Owner. 4. Joint Use Area Rules. The Condo Parcel Owner shall be entitled to adopt, with the written approval of the Apartment Parcel Owner, which approval shall not be unreasonably withheld, conditioned or delayed, Joint Use Area Rules which will be adopted and administered by the Condo Parcel Owner in a fair, reasonable and non - discriminatory manner. The Joint Use Area Rules may include, without limitation, speed limits, load limits, restrictions on allowable vehicles and any other rules or restrictions deemed reasonable and necessary by the Condo Parcel Owner in its reasonable discretion. Joint Use Area Rules shall be posted at a reasonable place within the Joint Use Area or otherwise provided in writing to Apartment Parcel Owner who shall provide same to Condo Parcel Pennittees. To perform maintenance and satisfy its other obligations under this Agreement, the Condo Parcel Owner shall also, from time to time, be entitled to temporarily block access over the Joint Use Area or a portion thereof so long as alternative access is provided to the Owners and Pennittees. 5. Insurance. [Open for further discussion.] 5.1 Required Insurance Policies. The Apartment Parcel Owner and the Condo Parcel Owner shall maintain insurance coverage as set forth in the following provisions except to the extent they are inconsistent with the provisions of the Condo Parcel Ground Lease and the Apartment Parcel Ground Lease.Property Risk Insurance. The Condo Parcel Owner shall procure and throughout the term of this Agreement continuously maintain commercial property insurance coverage through a policy of "all risk" commercial property insurance covering the 'full Page 14 of 30 50029396.8 insurable value" (as defined in the Condo Parcel Ground Lease) of the Covered Improvements and the Parking Structure against direct physical loss or damage caused by fire, windstorm, hail, lightning, smoke, sprinkler leakage, water damage, vandalism, malicious mischief, riot, civil commotion, vehicles, aircraft, smoke, and such other perils as are customarily included in "all risk" commercial property insurance policies. Coverage shall be provided for increases in construction costs due to changes in building codes or similar laws and shall include standard mortgagee clause language in favor of any and all Permitted Mortgagees. All such commercial property insurance policies shall provide waivers of subrogation in favor of the other Parcel Owner, and all Permitted Mortgagees. (b) Commercial General Liability Insurance. The Condo Parcel Owner shall procure, and throughout the term of this Agreement shall continuously maintain, a policy of commercial general liability insurance to protect against liability for damages because of bodily injury (including, without limitation, death therefrom) or property damage arising out of or in connection with the operation, maintenance, and repair of the Covered Improvements and the Parking Structure. Such policy of commercial general liability insurance shall be provided on occurrence type forms equivalent to the current ISO CG 0001 form with per occurrence and annual aggregate limits of not less than $10,000,000 and deductible or self - insured retention of not more than $100,000 per occurrence (such policy limit and retention amounts being escalated, if economically feasible as reasonably determined by the Condo Parcel Owner, as provided in the Condo Parcel Ground Lease). Such policy shall (i) be primary and non- contributing with respect to other insurance, if any, maintained by the insureds thereunder; (ii) provide for the duty to defend (with defense costs outside policy limits if available at a commercially reasonable cost); (iii) provide a separate limit of $10,000,000 for completed operations coverage for at least the duration of all statutory limits on actions for property damage (including without limitation Section 337.15 of the California Code of Civil Procedure); (iv) provide coverage for contractually assumed liability; (v) have a modified cancellation provision prohibiting cancellation by the insurer after the policy has been in effect for thirty (30) days except for nonpayment of premium, fraud or material increase in risk; (vi) not exclude coverage for residential construction; and (vii) if available at commercially reasonable cost, include coverage for soil subsidence or other earth movement. All such policies of insurance shall name as additional insureds the Apartment Owner and the City. The coverage required hereunder may be provided under a combination of primary, excess, master or portfolio policies, provided that all such policies satisfy the requirements of this subparagraph. (c) Workers Compensation and Employers Liability Insurance. The Condo Parcel Owner shall, at its sole cost and expense, procure and throughout the term of this Agreement continuously maintain workers compensation and employee's liability coverage with Coverage A limits as required by statute and Coverage B limits of $1,000,000 each Accident for Bodily Injury by Accident, $1,000,000 for Bodily Injury by Disease, and $1,000,000 each Employee for Bodily Injury by Disease. Each such workers compensation policy shall provide a waiver of subrogation in favor of the Apartment Parcel Owner and, to the extent commercially reasonable, the Apartment Parcel Owner's officers, directors, employees, perrnittees, contractors, subcontractors, and consultants. Page 15 of 30 50029396.8 (d) Insurance Required Pursuant to Ground Leases. The Apartment Parcel Owner and the Condo Parcel Owner shall each comply with the terms of Sections 1002, 1003, 1004, 1005 and 1006 of the Apartment.Parcel Ground Lease and Condo Parcel Ground Lease, as applicable, and maintain such insurance as is required therein. 5.2 General Insurance Requirements. (a) All insurance policies required under this Section 5 shall be written by companies authorized to do business in California which are governed by the rate - setting regulatory agency having jurisdiction in Los Angeles County and which have a "General Policyholders RaUnd' of at least A -VIII as set forth in the most current issue of the Best's Insurance Guide (or have an equivalent rating from another industry- accepted rating agency). (b) Upon the request of the Apartment Parcel Owner, the Condo Parcel Owner shall deliver to the Apartment Parcel Owner (or its designee) a certificate of insurance, signed by a broker or agent having authority to bind coverage, reflecting the maintenance of the required coverages, the issuing insurers, policy types, policy numbers, policy periods, and amounts of coverage, annotated, if commercially reasonable, to reflect a modified cancellation provision prohibiting cancellation by the insurer after the policy has been in effect for thirty (30) days except for nonpayment of premium, fraud or material increase in risk. (c) Upon the request of the Apartment Parcel Owner, the Condo Parcel Owner shall deliver to the Apartment Parcel Owner a complete copy of each policy of insurance (including, without limitation, all forms and endorsements constituting the complete policy) required under Section 5.1 above. (d) Not later than ten (10) days prior to the expiration or renewal of each policy required hereunder, the Condo Parcel Owner shall provide to the Apartment Parcel Owner (or its designee) a binder or certificate of renewal evidencing such insurance. (e) If the Condo Parcel Owner fails to provide evidence of the insurance required hereunder, the Apartment Parcel Owner, after providing five (5) business days' notice to the Condo Parcel Owner, the Apartment Parcel Owner shall have the right to procure the required insurance. Upon the Apartment Parcel Owner's written demand, the Condo Parcel Owner shall immediately reimburse the Apartment Parcel Owner for 9 L %] of the cost thereof, together with interest at the Allowed Rate from the date due until paid in full. 6. Damage to or Destruction of Improvements. The Condo Parcel Owner shall comply with the following damage and destruction provisions except to the extent they are inconsistent with the provisions, of the Condo Parcel Ground Lease and the Apartment Parcel Ground Lease. 6.1 Secure Improvements and Give Notice. (a) Notwithstanding any other provision of this Agreement to the contrary, in the event of damage to or destruction of any of the Covered Improvements or the Parking Structure, the Condo Parcel Owner thereof shall at its sole cost and expense immediately take or cause to be taken such actions as are necessary to secure the damaged or destroyed Covered Improvements or the Parking Structure to prevent further damage thereto and to protect the Page 16 of 30 50029396.8 safety of other property and persons pending the Restoration or other disposition of the Covered Improvements or the Parking Structure. Subject to the provisions of Section 6.2 below, all costs and expenses borne by the Condo Parcel Owner in satisfaction of its obligations under this subsection (a) shall be reimbursed from the Net Insurance Proceeds, if any, applicable to the damaged or destroyed Covered Improvements or the Parking Structure. (b) In the event the Covered Improvements or the Parking Structure sustain any "Minor Damage" (defined as damage to or destruction having an estimated Restoration cost of less than Two Hundred and Fifty Thousand Dollars ($250,000), such amount being escalated in the same percentage as any escalation in coverage required under the Condo Parcel Ground Lease, the Apartment Parcel Ground Lease or otherwise in accordance with the Consumer Price Index), the Condo Parcel Owner shall within ten (10) days after it becomes aware of such Minor Damage give written notice thereof to the Apartment Parcel Owner generally describing the extent and nature of the damage and destruction, and the Condo Parcel Owner shall diligently pursue and within a reasonable period of time complete the Restoration of the Covered Improvements or the Parking Structure; shall diligently pursue such insurance coverage for the Minor Damage as may be available; and shall provide such information to the Apartment Parcel Owner as it may reasonably require. (c) In the event the Covered Improvements or the Parking Structure sustain any "Substantial Damage" (defined as damage to or destruction having an estimated Restoration cost of Two Hundred and Fifty Thousand Dollars ($250,000) or more, such amount being escalated in the same percentage as any escalation in coverage required under the Condo Parcel Ground Lease, the Apartment Parcel Ground Lease or as otherwise in accordance with the Consumer Price Index), the Condo Parcel Owner shall within ten (10) days after the it becomes aware of such Substantial Damage give written notice thereof to the Apartment Parcel Owner generally describing the nature and extent of the damage or destruction. (d) Within a reasonable time, and in any' event within one hundred eighty (180) days after any event causing Substantial Damage to the Covered Improvements or the Parking Structure, the Condo Parcel Owner shall furnish or cause to be furnished to the Apartment Parcel Owner evidence reasonably satisfactory to the Apartment Parcel Owner (i) of the total estimated cost of Restoration of the affected Covered Improvements or the Parking Structure, and (ii) whether the total amount of money available, when added to the Net Insurance Proceeds received and available to pay for the Restoration of the Covered Improvements or the Parking Structure pursuant to the terms of Section 6.2, will be sufficient to pay the cost of Restoration. In the event the total amount of money available, when added to the Net Insurance Proceeds received and available to pay for the Restoration of the Covered Improvements or the Parking Structure is insufficient to pay for such Restoration, the Apartment Parcel Owner shall pay % of such shortfall to the Condo Parcel Owner within sixty (60) days after receipt of the estimated Restoration Costs, with such funds to be used for Restoration Costs, and the Condo Parcel Owner shall pay the remaining balance of the Restoration Costs. (e) The Condo Parcel Owner shall timely furnish or cause to be furnished to any Permitted Mortgagee such notice and information as the applicable Permitted Mortgage may Page 17 of 30 50029398.8 require with respect to any Minor Damage or Substantial Damage to the Covered Improvements or the Parking Structure, and with respect to the cost of Restoration with respect to such Improvements. 6.2 Restoration. (a) The Condo Parcel Owner shall be responsible for the Restoration of the Covered Improvements and the Parking Structure in accordance with this Agreement. (b) In the event of Substantial Damage to the Covered Improvements or the Parking Structure, or to any part thereof, the Condo Parcel Owner thereof shall commence Restoration of same within sixty (60) days after such Substantial Damage, or within such longer period of time as may be reasonably approved in writing by the City, plus any additional period of time which is determined by the City to be required to obtain any Net Insurance Proceeds to be used to pay all or a portion of the cost of such Restoration. Thereafter, the Condo Parcel Owner shall diligently pursue, and within a reasonable period of time complete, the Restoration of the damaged or destroyed Covered Improvements or the Parking Structure. 6.3 Application of Net Insurance Proceeds. Subject to the provisions of Sections 6.4 and 6.5 below, in the event of Substantial Damage to the Covered Improvements or the Parking Structure, the Net Insurance Proceeds shall be applied as follows: (1) Except as otherwise provided in this Section 6.3, all Net Insurance Proceeds shall be paid to the Condo Parcel Owner (or its designee) and applied by the Condo Parcel Owner (or its designee) to the Restoration of the damaged or destroyed Covered Improvements or the Parking Structure, with the consent of the Apartment Parcel Owner to such application. (2) If a Permitted Mortgage encumbers the damaged or destroyed Covered Improvements or the Parking Structure and such Permitted Mortgage requires the insurance proceeds to be paid jointly to the Owner of such Covered Improvements or the Parking Structure and the Permitted Mortgagee, the Net Insurance Proceeds shall be paid jointly to such Owner (or its designee) and the Permitted Mortgagee and applied solely to the Restoration of Covered Improvements or the Parking Structure; provided, that, if the Permitted Mortgage requires the insurance proceeds to be paid exclusively to the Permitted Mortgagee, the Net Insurance Proceeds shall be paid exclusively to the Permitted Mortgagee and applied solely to the Restoration of the Covered Improvements or the Parking Structure. (3) If more than one Permitted Mortgage encumbers the damaged or destroyed Covered Improvements or the Parking Structure and if any of such Permitted Mortgages require the insurance proceeds to be paid jointly to the Owner of the Covered Improvements or the Parking Structure and the Permitted Mortgagees, the Net Insurance Proceeds shall be paid jointly to such Owner (or its designee) and the highest priority Permitted Mortgagee requiring such joint payment and shall be applied solely to the Restoration of the Covered Improvements or the Parking Structure; provided, that, if such Permitted Mortgage requires the insurance proceeds to be paid exclusively to the Permitted Mortgagee, the Net Page 18 of 30 5W29&%.a Insurance Proceeds shall be paid exclusively to the Permitted Mortgagee and applied solely to the Restoration of the Covered Improvements or the Parking Structure. (4) In the event the Net Insurance Proceeds exceed the amount actually required for Restoration of the Covered Improvements or the Parking Structure, [the excess Net Insurance Proceeds shall be paid to or retained by the Condo Parcel Owner and applied solely to future reserves to be collected with respect to the Covered Improvements or the Parking Structure]. In the event of any dispute between the Owners that the Restoration has been completed, the excess Net Insurance Proceeds shall be held in trust for such purposes until the dispute shall have been resolved according to the dispute resolution provisions of this Agreement. (b) Each Owner shall promptly commence and diligently prosecute to completion the resolution of any insurance coverage disputes with respect to the insurance coverage for any damage or destruction of the Improvements located on such Owner's Parcel. The Condo Parcel Owner shall promptly commence and diligently prosecute to completion the resolution of any insurance coverage disputes with respect to insurance coverage for any damage to or destruction of the Covered Improvements or the Parking Structure. 6.4 Damage or Destruction During Final Years of Tenn. (a) As used in this Section 6.4, "Major Damage" means damage to or destruction of the Improvements with an estimated Restoration cost that exceeds fifty percent (50 %) of the cost to replace such Improvements. (b) Notwithstanding anything to the contrary in Sections 6.2 and 6.3, in the event of Major Damage to the Covered Improvements or the Parking Structure during the last three (3) years of the term of the Condo Parcel Ground Lease or Apartment Parcel Ground Lease, as applicable, and as such term may be extended from time to time by means of a written amendment of the applicable lease with the City, the Owner of the unaffected Parcel shall not unreasonably withhold its approval if the Owner of the affected Parcel requests that this Agreement be terminated on thirty (30) days notice, provided the requesting Owner first complies with all of the following conditions: (1) Within thirty (30) days after the event causing such Major Damage, the requesting Owner shall give the other Owner notice of the Major Damage. (2) Within the earlier of (i) 180 days after the event causing the Major Damage; or (ii) forty -five days (45) days after the receipt of all Net Insurance Proceeds, the requesting Owner shall give the other Owner notice requesting that this Agreement be terminated as a result of such Major Damage. (3) The requesting Owner shall transfer to the City, if required by the relevant lease, all Net Insurance Proceeds resulting from the casualty to be retained by the City without limitation as to use, subject to the rights of the Permitted Mortgagees. 6.5 Selection of Restoration Trustee. Page 19 of 30 50029396.8 (a) As used in this Section 6.5, the term "Restoration Trustee" shall mean the trustee or escrow officer selected by the Condo Parcel Owner and the Apartment Parcel Owner, or their respective designees, to disburse Net Insurance Proceeds as allowed under Sections 6.1 through 6.4 above, following any Substantial or Major Damage to the Covered Improvements or the Parking Structure. The term "Restoration Contractor' shall mean general contractors, architects and engineers selected by the Condo Parcel Owner and /or the Apartment Parcel Owner to perform Restoration work pursuant to Sections 6.1 through 6.4 above. (b) To the extent any Owner (or its designee, if other than the Restoration Trustee) shall receive Net Insurance Proceeds for the Restoration of the Covered Improvements or the Parking Structure, after Substantial or Major Damage thereto, such Net Insurance Proceeds shall promptly be paid over to and held in trust by a Restoration Trustee for disbursement as allowed under Sections 6.1 through 6.4 above. (c) In the event of Substantial or Major Damage to the Covered Improvements or the Parking Structure, the Condo Parcel Owner and Apartment Parcel Owner shall jointly select a Restoration Trustee from among Wells Fargo Bank, Citibank, Bank of America, or any successor of them having an office in California. In the event of a dispute between the Owners as to the selection of the Restoration Trustee, each Owner shall, within fifteen (15) business days after a written demand is served by one Owner upon the other Owner, submit its single nominee for Restoration Trustee to a mutually agreeable third party which shall be empowered to make the selection. The decision of such third party shall be binding upon the Owners and all fees and costs charged by the third party for dispute resolution shall be paid by the Owner whose nominee is not selected. (d) The Restoration Trustee shall have authority to perform the following services. (i) Establishment of an escrow and disbursement account for disbursement of Net Insurance Proceeds as allowed under Sections 6.1 through 6.4 above. (ii) Disbursement of Net Insurance Proceeds to Restoration Contractors as allowed under Sections 6.1 through 6.4 above; provided, that, prior to any such disbursement, the Restoration Trustee shall have received (A) from the Restoration Contractor, a written disbursement request and detailed invoice of cost of labor and materials provided; (B) from each Owner, a written authorization to release the requested disbursement; and (C) such other written authorizations as the Owners may agree are required. (iii) Disbursement of Net Insurance Proceeds to itself to reimburse itself for reasonable fees and costs for the services authorized by this Section 6.5; provided, that, upon seventy -two (72) hours' notice and a written request of any Owner, the Restoration Trustee shall provide the Owner with complete access to any and all accounting and other records related to the Restoration Trustee's services that the Owner may reasonably request. 6.6 Default. (a) In the event either Owner shall be in default of its obligations under Sections 6.1 through 6.5 above and shall receive any Net Insurance Proceeds as defined Page 20 of 30 5029396.8 hereinabove, such Net Insurance Proceeds shall be deemed to be held in trust by the defaulting Owner for disbursement and application as provided under Sections 6.1. through 6.4 above. (b) Any distribution and application of Net Insurance Proceeds under Section 6.6(a) above shall be in addition to, and not in lieu of, any and all other remedies that may be available to any party or parties claiming any rights under this Agreement. 6.7 Damage or Destruction of Improvements Located on the Apartment Parcel and the Condo Parcel. Each Owner covenants to restore the improvements located on such Owner's Parcel (excluding the Covered Improvements or Parking Structure) in accordance with Sections 706, 707, 708, 709 and 710 of the Apartment Parcel Ground Lease and Condo Parcel Ground Lease, as applicable. 7. Taxes and Assessments. Subject to any available real property tax exemptions and the segregation of Condo Parcel real property taxes and assessments among the Condo Units, each Owner shall pay all taxes, assessments, or charges of any type levied or made by any governmental body or agency with respect to its Parcel. In the event that, as of the date hereof, each of the Condo Parcel and Apartment Parcel are not separate tax parcels, the Owners shall cause each of the Condo Parcel and the Apartment Parcel to be a separate tax parcel as soon as possible after the date hereof. 8. No Rights in Public; No Implied Easements. Nothing contained in this Agreement, including the grant of easements, shall be deemed to constitute a dedication of any Parcel or any portion or portions thereof to any governmental body, agency or entity, or to the general public, or to be construed to create any rights in or for the benefit of any individual or entity that is not a party to this Agreement. No easements, except those expressly set forth in Section 2 hereto, shall be implied or granted by this Agreement. 9. Securi . Each Owner shall be responsible, to the extent it elects to provide same, for the provision and maintenance of security for its Parcel; provided, however, that in the event an Owner elects to provide security to its Parcel, such security shall be provided in a manner so that it does not unreasonably interfere with any security being provided to the other Parcels. The operation of the Joint Access Facilities, Apartment Access Facilities and Condo Access Facilities is not intended to provide security or safety to persons or property and no representations, warranties or assurances thereof are provided by any Owner. The Condo Parcel Owner shall be responsible for providing security for the Joint Use Areas. The costs associated with providing security for the Joint Use Areas will be included in the Annual Budget (the "Joint Use Area Security Costs "). The Apartment Parcel Owner shall pay the Apartment Pro Rata Share of the Joint Use Area Security Costs to the Condo Parcel Owner on a monthly basis in arrears. 10. Remedies and Enforcement. 10.1 All Legal and Equitable Remedies Available. In the event of a breach or threatened breach by any Owner or its Permittees of any of the terms, covenants, restrictions or conditions hereof, the other Owner shall be entitled forthwith to full and adequate relief by injunction and /or all such other available legal and equitable remedies from the consequences of Page 21 of 30 50029396.8 such breach, including, without limitation, payment of any amounts due and /or specific performance. 10.2 Self -Help. In addition to all other remedies available at law or in equity, upon the failure of the Condo Parcel Owner to cure a breach of this Agreement in connection with any maintenance or other obligation of the Condo Parcel Owner relating to the Joint Use Areas or the Parking Structure within thirty (30) days (or such lesser period of time as may be specified in this Agreement for a particular breach) following written notice thereof by the Apartment Parcel Owner (unless, with respect to any such breach the nature of which cannot reasonably be cured within such 30-day period or such lesser period of time), the Condo Parcel Owner commences such cure within such 30-day period. or such lesser period of time, and thereafter diligently prosecutes such cure to completion), the Apartment Parcel Owner shall have the right to perform such obligation contained in this Agreement on behalf of the Condo Parcel Owner and be reimbursed by the Condo Parcel Owner upon demand for the reasonable costs thereof together with interest at the Allowed Rate. Notwithstanding the foregoing, in the event of (i) an emergency, (ii) blockage or material impairment of the easement rights, and /or (iii) the unauthorized parking of vehicles on the Apartment Parcel (following such notice, if any, as shall be reasonable under the circumstances), the Apartment Parcel Owner may immediately cure the same and be reimbursed by the Condo Parcel Owner who is in breach of its obligations hereunder upon demand for the reasonable cost thereof together with interest at the Allowed Rate, as above described. 10.3 Remedies Cumulative. The remedies specified herein shall be cumulative and in addition to all other remedies permitted at law or in equity. 10.4 No Termination For Breach. Notwithstanding any provision of this Agreement to the contrary, no breach hereunder shall (a) entitle any Owner to cancel, rescind, or otherwise terminate this Agreement, or (b) defeat or render invalid the lien of any Permitted Mortgage, but the easements, covenants, conditions and restrictions hereof shall be binding upon and effective against any Owner of such Parcel covered hereby whose title thereto is acquired by foreclosure, trustee's sale, or otherwise. 10.5 Irreparable Harm. In the event of a violation by the Condo Parcel Owner or threat thereof of any of the provisions of Sections 2 and /or 5 of this Agreement, the Condo Parcel Owner agrees that such violation or threat thereof shall cause the Apartment Owner and /or its Permittees to suffer irreparable harm and the Apartment Owner and its Permittees shall have no adequate remedy at law. As a result, in the event of a violation by the Condo Parcel Owner or threat thereof of any of the provisions of Sections 2 and /or 5 of this Agreement, the Apartment Owner, in addition to all remedies available at law or otherwise under this Agreement, shall be entitled to injunctive or other equitable relief to enjoin a violation or threat thereof of Sections 2 and /or 5 of this Agreement by the Condo Parcel Owner. 11. Term. The easements, covenants, conditions and restrictions contained in this Agreement shall be effective commencing on the date of Recordation of this Agreement and shall remain in full force and effect thereafter until the later to occur of the (i) the termination of the Apartment Parcel Ground Lease or (ii) the termination of the Condo Parcel Ground Lease, Page 22 of 30 50929396.8 unless this Agreement is modified, amended, canceled or terminated by the written consent of all then record Owners of ground leasehold estates in and to the Condo Parcel and the Apartment Parcel in accordance with Section 12.2 hereof. 12. Miscellaneous. 12.1 Attorneys' Fees. In the event an Owner institutes any legal action or proceeding for the enforcement of any right or obligation herein contained, the prevailing party after a final adjudication shall be entitled to recover its costs and reasonable attorneys' fees incurred in the preparation and prosecution of such action or proceeding. 12.2 Amendment. The Owners agree that the provisions of this Agreement may be modified or amended, in whole or in part, or terminated, only by the written consent of the Owners, evidenced by a document that has been fully executed and acknowledged by the Owners and Recorded. No amendment of this Agreement shall be effective unless the same has been approved by the City (or its successor -in- interest), which approval shall not be unreasonably withheld, conditioned or delayed. The City's approval of this Agreement or any amendment thereto shall not be deemed, .interpreted, or construed by any Owner and /or Permittees, as a modification, waiver, and /or amendment to any other document, including, but not limited to, the Disposition and Development Agreement and/or the Development Agreement, the Condo Parcel Ground Lease, Apartment Parcel Ground Lease, City Loan Documents (as such term is defined in the Disposition and Development Agreement), or the Agency Regulatory Agreement (as such term is defined in the Disposition and Development Agreement). 12.3 Consents. Wherever in this Agreement the consent or approval of an Owner is required, unless otherwise expressly provided herein, such consent or approval shall not be unreasonably withheld, conditioned or delayed. Any request for consent or approval shall: (a) be in writing; (b) specify the section hereof which requires that such notice be given or that such consent or approval be obtained; and (c) be accompanied by such background data as is reasonably necessary to make an informed decision thereon. The consent of an Owner under this Agreement, to be effective, must be given, denied or conditioned expressly and in writing. 12.4 No Waiver. No waiver of any default of any obligation by any party hereto shall be implied from any omission by the other party to take any action with respect to such default. 12.5 No Agency. Nothing in this Agreement shall be deemed or construed by either party or by any third person to create the relationship of principal and agent or of limited or general partners or of joint venturers or of any other association between the parties. 12.6 Covenants to Run with Land. It is intended that each of the easements, covenants, conditions, restrictions, rights and obligations set forth herein shall run with the land and create equitable servitudes in favor of the real property benefited thereby, shall bind every person having any interest therein and shall inure to the benefit of the respective parties and their successors, assigns, heirs, and personal representatives. 12.7 Grantee's Acceptance. The grantee, assignee or sublessee of a leasehold estate in any Parcel or any portion thereof, by acceptance of an assignment, deed or sublease conveying leasehold title thereto or the execution of a contract for the purchase thereof, whether Page 23 of 30 50029396.8 from an original party or from a subsequent lessee of such Parcel, shall accept such deed, assignment or contract upon and subject to each and all of the easements, covenants, conditions, restrictions and obligations contained herein. By such acceptance, any such grantee, assignee or sublessee shall for itself and its successors, assigns, heirs, and personal representatives , covenant, consent, and agree to and with the other party, to keep, observe, comply with, and perform the obligations and agreements set forth herein with respect to the property so acquired by such grantee, assignee or sublessee. 12.8 Severabilitv. Each provision of this Agreement and the application thereof to the Condo Parcel and the Apartment Parcel are hereby declared to be independent of and severable from the remainder of this Agreement. If any provision contained herein shall be held to be invalid or to be unenforceable or not to run with the land, such holding shall not affect the validity or enforceability of the remainder of this Agreement. In the event the validity or enforceability of any provision of this Agreement is held to be dependent upon the existence of a speck legal description, the Owners agree to promptly cause such legal description to be prepared. Ownership of all of the Parcels by the same person or entity shall not terminate this Agreement nor in any manner affect or impair the validity or enforceability of this Agreement. 12.9 Conflicts. If there is conflict or inconsistency between the provisions of this Agreement and the Condo CC &Rs or any other documents created in connection with the creation of the Condo Project, this Agreement shall control. If there is a conflict or inconsistency between the provisions of this Agreement and either the Apartment Parcel Ground Lease or the Condo Parcel Ground Lease, the provisions of the Apartment Parcel Ground Lease or the Condo Parcel Ground Lease, as applicable, shall control. The terms of the Development Agreement are hereby incorporated herein. If there is conflict or inconsistency between the provisions of this Agreement and the Conditions of Approval and Requirements contained in the Development Agreement, the Conditions of Approval and Requirements contained in the Development Agreement shall control. 12.10 Time of Essence. Time is of the essence of this Agreement. 12.11 Entire Agreement. This Agreement contains the complete understanding and agreement of the parties hereto with respect to all matters referred to herein, and all prior representations, negotiations, and understandings are superseded hereby. 12.12 Notices. Notices or other communication hereunder shall be in writing and shall be sent certified or registered mail, return receipt requested, or by other national overnight courier company, or personal delivery. Notice shall be deemed given upon receipt or refusal to accept delivery. Each party may change from time to time their respective address for notice hereunder by like notice to the other party. The notice addresses of the Condo Parcel Owner and the Apartment Parcel Owner are as follows: Condo Parcel Owner: Santa Monica Urban Housing A, LLC c% The Related Companies of California, LLC 18201 Von Kannan Avenue, Suite 900 Irvine, California 92612 Attn: William A. Witte Page 24 of 30 5W29&%.e Phone: (949) 660 -7272 Facsimile: (949) 660 -7273 with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 70th Floor Los Angeles, California 90071 Attn: Lance Bocarsly Phone: (213) 239 -8088 Facsimile: (213) 239 -0410 Apartment Parcel Owner: Santa Monica Housing Partners, L.P. c % The Related Companies of California, LLC 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Attn: William A. Witte Phone: (949) 660 -7272 Facsimile: (949) 660 -7273 with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 70th Floor Los Angeles, California 90071 Attn: Lance Bocarsly, Esq. Phone: (213) 239 -8088 Facsimile: (213) 239 -0410 12.13 Governing Law. The laws of the State of California shall govern the interpretation, validity, performance, and enforcement of this Agreement. 12.14 Estoppel Certificates. Each Owner, within twenty (20) days following its receipt of a written request from the other Owner or any Permitted Mortgagee, shall from time to time provide the requesting Owner or Permitted Mortgagee, a certificate binding upon such Owner stating: (a) to the best of such Owner's knowledge, whether any party to this Agreement is in default or violation of this Agreement and if so identifying such default or violation; and (b) that this Agreement is in full force and effect and identifying any amendments to the Agreement as of the date of such certificate. 12.15 Bankruptcy. In the event of any bankruptcy affecting any Owner or occupant of any Parcel, the parties agree that this Agreement shall, to the maximum extent permitted by law, be considered an agreement that runs with the land and that is not rejectable, in whole or in part, by the bankrupt person or entity. 12.16 Permitted Mortgagee Protections. Page 25 of 30 50029396.8 (a) Right to Encumber. Each Owner shall have the right to encumber its interest in its respective Parcel by any Permitted Mortgage; provided, such Permitted Mortgage is subject to and subordinate to this Agreement. (b) Breach Won't Defeat Lien. The breach of any of the provisions of this Agreement shall not defeat or render invalid the lien of any Permitted Mortgage of a Parcel or any portion thereof; provided, that, all provisions of this Agreement shall be binding and effective against any third party who acquires a Parcel or any portion thereof by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. (c) Prior Claims and Obligations. No Permitted Mortgagee shall have any personal liability beyond its interest in a Parcel or a portion thereof acquired by it through enforcement of its Permitted Mortgage for the performance or payment of any covenant, liability, warranty or obligation hereunder and each Owner agrees that it shall look solely to the interests of such Permitted Mortgagee in such Parcel for payment or discharge of any such covenant, liability, warranty or obligation. (d) Notice to Permitted Mortgagees. The Permitted Mortgagee under any Permitted Mortgage affecting a Parcel shall be entitled to receive notice of any default by any Owner hereunder; provided, that, such Permitted Mortgagee shall have delivered a written notice to each Owner specifying the Permitted Mortgagee's name and address and requesting such notices. Failure of an Owner to deliver a copy of such notice of default to the Permitted Mortgagee shall in no way affect the validity of the notice of default as it respects the defaulting Owner, but shall make the same invalid as it respects the interest of the Permitted Mortgagee and its lien upon the affected Parcel. Any such notice to a Permitted Mortgagee shall be given in the same manner as provided in Section 12.12. The giving of any notice of default or the failure to deliver a copy to any Permitted Mortgagee shall in no event create any liability on the part of the Owner so declaring a default. (e) Right to Cure. In the event that any notice shall be given of the default of an Owner and of such defaulting Owner's failure to cure or to commence to cure such default as provided in this Agreement, then and in that event any Permitted Mortgagee under any Permitted Mortgage affecting the Parcel of the defaulting Owner shall be entitled to receive an additional notice given in the manner provided in Section 12.16(d), that the defaulting Owner has failed to cure such default, and such Permitted Mortgagee shall have sixty (60) days after the receipt of said additional notice to cure any such default, or, if such default cannot be cured within sixty (60) days, to diligently commence curing within such time and diligently cure within a reasonable time thereafter. Permitted Mortgagees may jointly or singly pay any sum or take any other action reasonably necessary to cure any default of their mortgagors hereunder with the same effect as cure by the Owner itself. If any such default or.event cannot be cured or remedied by the Permitted Mortgagee without the Permitted Mortgagee obtaining possession of the Parcel by appropriate proceedings and /or title to said Owner's Parcel by judicial or non - judicial foreclosure proceedings or by deed in lieu thereof, then any such default shall be remedied or deemed remedied if the Permitted Mortgagee shall have complied with the following provisions: (i) within thirty (30) days after receiving said notice, the Permitted Mortgagee (or its nominee) shall have Page 26 of 30 50029398.8 acquired Owner's estate or shall have commenced judicial or non - judicial foreclosure proceedings or appropriate proceedings to obtain possession of the Parcel; (ii) the Permitted Mortgagee shall diligently prosecute any such proceedings to completion; and (iii) after gaining possession of the Parcel, the Permitted Mortgagee (or its nominee) shall perform all other obligations of the Owner as and when the same are due in accordance with the terms of this Agreement; provided, however, that the terms and conditions of this sentence shall not prohibit the Apartment Parcel Owner from exercising its self -help remedies under Section 10.2 above. (f) Amendment. This Agreement shall not, without the prior written consent of a Permitted Mortgagee, be amended so as to (i) materially modify the location of any Easements; (ii) materially modify the obligations of the Condo Parcel Owner to restore, rebuild or replace any Covered Improvements or the Parking Structure upon a casualty or condemnation; (iii) terminate this Agreement prior to the ninety -ninth (99th) anniversary of the date hereof; (iv) change the provisions applicable to insurance or condemnation so as to reduce the required coverages or change the interest of any Owner in the allocation, adjustment or distribution of Proceeds; or (v) change any provision of this Section 12.16 or any other provision of this Agreement which, by its terms is specifically for the benefit of Permitted Mortgagees or specifically confers rights on Permitted Mortgagees. No amendment to this Agreement made without the consent of any Permitted Mortgagee shall be binding upon it or its successors in interest should it become an Owner. (g) Condemnation or Insurance Proceeds. Nothing in this Agreement shall impair the rights of any Permitted Mortgagee pursuant to its Permitted Mortgage to receive Proceeds which are otherwise payable to the Owner granting such Permitted Mortgage, except as may be otherwise expressly agreed to by such Permitted Mortgagee in accordance with the provisions of Section 6.3 hereof. (h) Title by Foreclosure. Except as otherwise set forth herein, all of the provisions contained in this Agreement shall be binding on and for the benefit of any person who acquires title to a Parcel by foreclosure, trustee's sale, deed in lieu of foreclosure or other involuntary transfer under a Permitted Mortgage. (i) Modification of Article; Conflicts. Each Owner hereby agrees to cooperate in including in this Agreement by suitable amendment from time to time any provision which may reasonably be requested by any proposed Permitted Mortgagee for the purpose of implementing the Permitted Mortgagee protection provisions contained in this Agreement and allowing such Permitted Mortgagee reasonable means to protect or preserve the lien and security interest of the Permitted Mortgage hereunder as well as such other documents containing terms and provisions customarily required by mortgagees (taking into account the customary requirements of their participants, syndication partners or ratings agencies) in connection with any such financing. The Owners each agree to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effectuate any such amendment; provided, however, that any such amendment shall not in any way materially adversely affect any rights of any Owner under this Agreement. If there is any conflict between this Section 12.16 and any other provision contained in this Agreement, this Section 12.16 shall control. Page 27 of 30 50029396.8 (j) Delegation to Mortgagee. Any Owner may delegate irrevocably to any of its Permitted Mortgagees the non- exclusive authority to exercise any or all of such Owner's rights hereunder, but no such delegation shall be binding upon any other Owner unless and until either the delegating Owner or its Permitted Mortgagee shall give to such other Owner a true copy of a written instrument effecting such delegation. Such delegation of authority may be effected by the terms of the Permitted Mortgage itself, in which case service upon any other Owner of an executed counterpart or conformed copy of said Permitted Mortgage in accordance with this Section 12.16, together with written notice specifying the provisions therein which delegates such authority to said Permitted Mortgagee, shall be sufficient to give such other Owner notice of such delegation. (k) No Obligation to Cure. Nothing herein contained shall require any Permitted Mortgagee to cure any default of an Owner hereunder prior to its acquisition of title to a Parcel pursuant to a foreclosure of its Permitted Mortgage, trustee sale thereunder or deed in lieu foreclosure thereof. Upon acquisition of title to a Parcel, but only during such time as the Permitted Mortgagee holds title to the Parcel, such Permitted Mortgagee or the purchaser or grantee, as applicable shall thereafter be liable and responsible for all continuing defaults existing on its Parcel from and after the date of such acquisition, including defaults and other conditions arising prior to the date of such acquisition. (1) Separate Agreement. The Owners shall, upon request, execute, acknowledge and deliver to each Permitted Mortgagee requesting the same, an agreement prepared at the sole cost and expense of the Owner whose Permitted Mortgagee requested the same, in form reasonably satisfactory to such Permitted Mortgagee, among the Parties and the Permitted Mortgagees, agreeing to all of the provisions hereof. (m) Resolution of Disputes. The following dispute resolution procedure shall govern all disputes arising under or in connection with this Agreement. The following provisions shall be implemented in accordance with the philosophy and intent of the Federal Arbitration Act (9 U.S.C. Sections 1 -16) which is designed to encourage use of alternative methods of dispute resolution that avoid costly and potentially lengthy traditional court proceedings. If an Owner ( "Claimant') commences a lawsuit for a dispute arising under this Agreement or relating to this Agreement ( "Action "), all of the issues in such Action, whether of fact or law, shall be submitted to general judicial reference pursuant to California Code of Civil Procedure Sections 638(1) and 641 -645 or any successor statutes thereto. All parties to the Action ( "Action Parties ") shall cooperate in good faith to ensure that all necessary and appropriate parties are included in the judicial reference proceeding. All fees and costs of the judicial reference proceeding shall be shared and advanced equally by the Action Parties; however, the referee shall have the power to reallocate such shared costs and expenses among the parties in the referee's final ruling. The general referee shall have the authority to try all issues, whether of fact or law, and to report a statement of decision to the court. The parties shall use the procedures adopted by Judicial Arbitration and Mediation Services ( "JAMS ") for judicial reference (or any other entity offering judicial reference dispute resolution procedures as may be mutually acceptable to the Action Parties), provided that the following rules and procedures shall apply in all cases unless the Action Parties agree otherwise: (a) The proceedings shall be heard in the county in which the Page 28 of 30 55070Y. .: Property is located; (b) the referee must be a retired judge or a licensed attorney with substantial experience in relevant real estate matters selected from the JAMS panel; (c) any dispute regarding the selection of the referee shall be resolved by JAMS or the entity providing the reference services, or, if no entity is involved, by the court with appropriate jurisdiction; (d) the referee may require one or more pre - hearing conferences; (e) the Action Parties shall be entitled to discovery, and the referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge; (f) a stenographic record of the trial shall be made, provided that the record shall remain confidential except as may be necessary for post - hearing motions and any appeals; (g) the referee's statement of decision shall contain findings of fact and conclusions of law to the extent applicable; and (h) the referee shall have the authority to rule on all post- hearing motions in the same manner as a trial judge. The statement of decision of the referee upon all of the issues considered by the referee is binding upon the Action Parties, and upon filing of the statement of decision with the clerk of the court, or with the judge where there is no clerk, judgment may be entered thereon. The decision of the referee shall be appealable as if rendered by the court. This provision shall in no way be construed to limit any valid cause of action which may be brought by any of the Action Parties. NOTICE: BY INITIALING IN THE SPACE BELOW, YOU AGREE TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THIS SECTION ENTITLED "RESOLUTION OF DISPUTES" DECIDED BY JUDICIAL REFERENCE. BY INITIALING IN THE SPACE BELOW YOU-ARE GIVING UP YOUR AND THE OTHER PARTY'S JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THIS SECTION ENTITLED "RESOLUTION OF DISPUTES." . IF YOU REFUSE TO SUBMIT TO JUDICIAL REFERENCE AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO DO SO. YOUR AGREEMENT TO THIS SECTION IS VOLUNTARY. BY INITIALING BELOW, THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE FOREGOING AND ACCEPT THAT THEY ARE WAIVING THEIR RIGHT TO A JURY TRIAL. Condo Parcel Owner Initials: Apartment Parcel Owner Initials 12.17 Effective Date of Agreement. Notwithstanding the .date contained in the first paragraph of this Agreement, this Agreement shall take effect upon termination of that certain Joint Development Agreement and Grant of Easements by and between the Condo Parcel Owner and the Residential Parcel Owner, in accordance with Section 13.5 thereto. Page 29 of 30 50029398.8 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. CONDO PARCEL OWNER: SANTA MONICA URBAN HOUSING A, LLC, a California limited liability company OR William A. Witte, President The undersigned hereby approves the foregoing Reciprocal Easement Agreement: CITY OF SANTA MONICA By: Name: Title: ATTEST: 50029396.8 APARTMENT PARCEL OWNER: SANTA MONICA HOUSING PARTNERS, L.P., a California limited partnership By: Related /Santa Monica Development Co., LLC, a California limited liability company, its general partner Page 30 of 30 IN William A. Witte, President STATE OF CALIFORNIA ) COUNTY OF ) On before me, [Name and Title of Officer], personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she/they executed the same in his/her/heir authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA COUNTY OF (Seal) On before me, [Name and Title of Officer], personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature 50029396.8 (Seal) STATE OF CALIFORNIA COUNTY OF On before me, [Name and Title of Officer], personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature 58029398.8 (Seal) SUBORDINATION (For Each Deed of Trust Encumbering Condo Parcel including City Deeds) The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust recorded on , 201_, as Instrument No. , in the Official Records of Los Angeles County, California (the "Deed of Trust'), which Deed of Trust is made by , a as Trustor, for the benefit of a as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Reciprocal Easement Agreement with Covenants, Conditions and Restrictions ( "Agreemenf) and to all other easements, rights and other entitlements created or conveyed under the Agreement. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Condo Parcel (as defined in the Agreement) by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Agreement, which shall remain in full force and effect. Dated: , 201_ a By. Its: By: _ Its: 50029396.8 STATE OF CALIFORNIA COUNTY OF j ss On , 201_, before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) STATE OF CALIFORNIA ss COUNTY OF On , 201_, before me, , Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) 50929396.8 SUBORDINATION (For Deed of Trust Encumbering Apartment Parcel including City Deeds) The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust recorded on , 201, as Instrument No. , in the Official Records of Los Angeles County, California (the "Deed of Trust'), which Deed of Trust is made by a , as Trustor, for the benefit of , a as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Reciprocal Easement Agreement with Covenants, Conditions and Restrictions ('Agreement') and to all other easements, rights and other entitlements created or conveyed under the Agreement. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Apartment Parcel (as defined in the Agreement) by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Agreement, which shall remain in full force and effect. Dated: , 201_ a By: Its: By: — Its: 500293966.8 STATE OF CALIFORNIA ss COUNTY OF On , 201_, before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) STATE OF CALIFORNIA ) ss COUNTY OF On , 201, before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) 5W2esss.a EXHIBIT A LEGAL DESCRIPTION FOR CONDO PARCEL LEASEHOLD INTEREST I_mi! 50029396.8 EXHIBIT B LEGAL DESCRIPTION FOR APARTMENT PARCEL LEASEHOLD INTEREST ICI 50029396.8 l" APARTMENT PARKING AREA C -1 50029396.8 EXHIBIT D CONDO PARKING AREA D -1 50029396.8 EXHIBIT E RETAIL AND GUEST PARKING AREA E -1 50729396.8 EXHIBIT F JOINT USE ACCESS AREAS F -1 50029398.8 EXHIBIT G LIVING STREET G -1 50029396.8 EXHIBIT H OLYMPIC PLAZA H -1 50029396.8 EXHIBIT I SHARED MAINTENANCE COSTS 1 -1 50029398.8 EXHIBIT L PARTICIPATION PAYMENT AGREEMENT [BEHIND THIS PAGE] ATTACHMENT NO.2 PARTICIPATION PAYMENT AGREEMENT This PARTICIPATION AGREEMENT ( "Agreement ") by and between RELATED /SANTA MONICA VILLAGE, LLC, a limited liability company ( "Developer "), and THE CITY OF SANTA MONICA ("City"), a municipal corporation, hereby evidences the Developer's obligation to pay the City the Participation Payment, in accordance with Section 701 of that certain Disposition and Development Agreement, dated as of , between Developer and the City, as amended by that certain First Amendment to the DDA, dated concurrently herewith (collectively, the "DDA ") . DDA as used herein shall mean, refer to and include the DDA, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the DDA. 1. Definitions. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the DDA. In addition, the following terms shall have the following meanings: "City Escrow Account" shall mean the escrow account established for the benefit of the City with First American Title Insurance Company, located at The City Escrow Account shall be an interest bearing account. "Associated Persons" shall mean, to the broadest extent permitted by law, present and former officers, directors, shareholders, partners, employees, agents, representatives, consultants„ spouses, children, relatives, heirs, assigns and predecessors -in- interest and successors -in- interest of the Developer and each of its Associated Entities ( "Status "), which Status shall be determined at the time Developer provides a Notice of Transfer in accordance with the procedure set forth herein. "Associated Entities" shall include parent corporations, sister corporations, subsidiaries, divisions, Affiliates, controlling and controlled entities, partnerships, predecessor partnerships, successor entities and joint ventures involving such Associated Entities. "Bulk Sale" shall mean the sale of ten (10) or more Market Rate Units to a Buyer. "Business Days" shall mean days other than Saturdays, Sundays, and legal holidays and closures observed by the City, and "days" means calendar days. If the time for performance of an obligation under this Agreement falls on other than a working day, the time for performance shall be extended to the next working day. "Buyer" shall mean the purchaser of one or more Market Rate Units. Santa Monica \The Village Attachment No. 2 DDA documents Page 1 Of 12 Rev 1. Participation Agt. g . "Cumulative Gross Revenues for Parcels A and C" shall mean the cumulative total of the Gross Revenues for Parcel A and the Gross Revenues for Parcel C. "Developer" shall mean Related /Santa Monica Village, LLC, a limited liability company, or its assignees and successors in interest as the lessees under the Parcel A Ground Lease and the Parcel C Ground Lease, respectively. "Fair Market Value" shall mean the amount that a willing buyer would pay and a willing seller would accept in the Santa Monica residential market for like and similar residential units without regard to any relationship between the buyer and the seller. "Gross Revenues for Parcel A" shall mean, at any time, the cumulative total of the Sales Prices for each Transfer of a Market Rate Unit on Parcel A, after adding the Net Upgrade Revenues and deducting applicable sales commissions and closing costs that are customary in the Santa Monica real estate market for each Transfer. "Gross Revenues for Parcel C" shall mean, at any time, the cumulative total of the Sales Prices for each Transfer of a Market Rate Unit on Parcel A, after adding the Net Upgrade Revenues and deducting applicable sales commissions and closing costs that are customary in the Santa Monica real estate market for each Transfer. "Last Market Rate Unit" shall mean the last Market Rate Unit sold by Developer on Parcel A and Parcel C combined. "Market Rate Units" shall mean the approximately sixty -five (65) Market Rate Units on Parcel A and the approximately ninety -three (93) Market Rate Units on Parcel C. "Net Upgrade Revenue" shall mean the net revenues from the Transfer of any Upgrades to a Buyer, after deducting Developer's direct costs for the Upgrades, excluding Developer's overhead, fees and profit ( "Hard Costs "). "Participation Payments" shall mean the sum of the Tier 1 Participation Payments and the Tier 2 Participation Payments. "Sale Price" shall mean the sale price of a Market Rate Unit upon a Transfer by Developer, excluding Upgrades, closing costs and sales commissions. "Saleable Square Feet" shall mean the floor area exclusively allocated to a Market Rate Unit excluding balconies, patios, exterior storage units and other similar features as well as common areas such as staircases, lift shafts, lobbies and communal toilets. It shall be the area contained within the enclosing walls of the unit measured up to the exterior face of an external wall or the centerline of a separating wall between adjoining units, as the case may be. Santa Monica \The Village Attachment No. 2 DDA documents Page 2 of 12 Rev t. Participation Agl. g Enclosing walls separating a unit from a light well, a lift shaft or any similar vertical shaft, or a common area (e.g. corridor), shall be deemed an external wall and its full thickness shall be included. All internal partitions and columns within the units shall be included. "Term" shall mean the period of time commencing on the date of the DDA and continuing for a period of time until such time as the Last Market Rate Unit is Transferred to a Buyer by Developer and Developer has satisfied all of Developer's obligations hereunder. "Tier 1 Parcel A Participation Deposit" shall mean each deposit made into the City Escrow Account after the Cumulative Gross Revenues for Parcel A have exceeded the Tier 1 Total Threshold Price for Parcel A. "Tier 2 Parcel A Participation Deposit" shall mean each deposit made into the City Escrow Account after the Cumulative Gross Revenues for Parcel A have exceeded the Tier 2 Total Threshold Price for Parcel A. "Tier 1 Parcel C Participation Deposit" shall mean each deposit made into the City Escrow Account after the Cumulative Gross Revenues for Parcel C have exceeded the Tier 1 Total Threshold Price for Parcel C. "Tier 2 Parcel C Participation Deposit" shall mean each deposit made into the City Escrow Account after the Cumulative Gross Revenues for Parcel C have exceeded the Tier 2 Total Threshold Price for Parcel C. "Tier 1 Participation Payment(s)" shall mean the payment(s) obligated to be paid by Developer to the City once the Cumulative Gross Revenues for Parcels A and C have exceeded the Tier I Total Threshold Price for Parcels A and C. "Tier 2 Participation PUment(s)" shall mean the payment(s) obligated to be paid by Developer to the City once the cumulative Gross Revenues for Parcels A and C have exceeded the Tier 2 Total Threshold Price for Parcels A and C. "Tier 2 Parcel A Participation Payment(s)" shall mean the payment(s) obligated to be paid by Developer to the City once the Gross Revenues for Parcel A have exceeded the Tier 2 Total Threshold Price for Parcel A. "Tier 2 Parcel C Participation Payment(s)" shall mean the payment(s) obligated to be paid by Developer to the City once the Gross Revenues for Parcel C have exceeded the Tier 2 Total Threshold Price for Parcel C. "Tier 1 Total Threshold Price for Parcel A" shall equal $1,069 multiplied by 1.15 multiplied by the total Saleable Square Feet developed on Parcel A. Santa MonicaUlre Village Attachment No. 2 DDA documents Page 3 Of 12 Rev 1. Participation Agt. g "Tier 1 Total Threshold Price for Parcel C" shall equal $1,079 multiplied by 1.15 multiplied by the total Saleable Square Feet developed on Parcel C. "Tier 2 Total Threshold Price for Parcel A" shall equal $1,069 multiplied by 1.3 multiplied by the total Saleable Square Feet developed on Parcel A "Tier 2 Total Threshold Price for Parcel C" shall equal $1,079 multiplied by 1.3 multiplied by the total Saleable Square Feet developed on Parcel C. "Tier I Total Threshold Price for Parcels A and C" shall mean the sum of the Tier 1 Total Threshold Sale Price for Parcel A and the Tier 1 Total Threshold Price for Parcel C, above which the City shall be entitled to receive Tier 1 Participation Payments. "Tier 2 Total Threshold Price for Parcels A and C shall mean the sum of the 'Pier 2 Total Threshold Price for Parcel A and the Tier 2 Total Threshold Price for Parcel C above which the City shall be entitled to receive Tier 2 Participation Payments• "Transfer" means any assignment (other than an assignment of common area to a homeowners association), sale, lease, conveyance or other transfer by Developer to a Buyer of a Market Rate Unit or any portion thereof or interest therein, by any means or method; provided, however, that Developer or any Affiliate of Developer does not retain any reversionary interest in the Marker Rate Unit. "Upgrades' shall mean custom features, enhancements, upgrades, options or the equivalent for a Market Rate Unit that are not (i) offered to any Buyer as standard features of a Market Rate Unit and /or (ii) included within the advertised sales price of a Market Rate Unit. 2. Developer's Obligation. This Agreement evidences Developer's obligation to pay the City the Participation Payment(s), if any. Developer covenants and agrees that during the Term of this Agreement, Developer shall make Participation Payments to the City based upon the provisions of this Agreement. 3. Dispute of Fair Market Value. In the event that (i) the Transfer of a Market Rate Unit is to an Associated Pelson or Associated Entity, and/or the Transfer entails a Bulk Sale and (ii) City believes that the Sale Price disclosed in the Notice of Transfer for the Market Rate Unit is less than its Fair Market Value, the Participation Payment for that Market Rate Unit shall be subject to the dispute process under Section 60)(the "Dispute Process "). The City shall have up to twelve (12) Business Days from receiving the Notice of Transfer, or twelve (12) Business Days from the City's receipt of the Closing Statement, if the Sales Price in the Closing Statement is less than the Sales Price described in the Notice of Transfer, to invoke the Dispute Process by delivering to Developer a written notice of dispute (the "Notice of Dispute "). Santa MonicaUtic village Attachment No. 2 DDA documents Page 4 of 12 Rev 1. Part a icipation Agt. g 4. Payment to City. Subject to the requirement to make deposits into the City Escrow Account as required by this Agreement, the Participation Payment is payable at the principal office of City, 1685 Main Street, Room 212, Santa Monica, California 90401, or at such other place as the City may inform the Developer in writing, in lawful money of the United States. 5. Security. This Agreement shall be secured by the Participation Deed of Trust (Attachment 19A to the DDA). 6. Procedure for Patient. Developer shall make payments to the City as provided in this Section 6. a. Notice of Transfer. Within five (5) days of opening escrow for the purchase and sale of a Market Rate Unit between Developer (as seller) and Buyer, Developer shall provide a Notice of Transfer to the City. The Notice of Transfer shall include the following information: i. the total amount to be paid by the Buyer to Developer as consideration for the Transfer, including (A) the Sales Price for the Market Rate Unit being Transferred; (B) the sales price of any Upgrades to be Transferred in connection with such Market Rate Unit; and (C) the Hard Costs of the Upgrades described in subparagraph (B); ii. the number of Market Rate Units being Transferred with an express, readable (no less than standard 12 font) designation of "BULK SALE" if ten (10) or more units are to be Transferred to the Buyer; iii. the name of the Buyer; iv. if the Buyer is an Associated Person or Associated Entity, a description of the Buyer's Status and association with Developer; V. the legal address of each Market Rate Unit being Transferred; Vi. if the Buyer is an Associated Person or an Associated Entity, an itemization of closing costs, and sales commissions associated with each Market Rate Unit being Transferred. b. Closing Statement. Developer shall provide a copy of the escrow closing statement for each Market Rate Unit to the City ( "Closing Statement") no later than ten (10) business days after the close of escrow for the purchase and sale of the Market Rate Unit. Santa MonicaUlle Village Attachment No. 2 DDA documents Page 5 Of 12 Rev 1. Participation Agt. g C. Participation Deposit for Parcel A. Tier 1. To the extent that the Transfer of a Market Rate Unit on Parcel A causes the Cumulative Gross Revenues for Parcel A to exceed the Tier 1 Total Threshold Price for Parcel A, Developer shall have the escrow officer designated for the purchase and sale of the Market Rate Unit deposit into the City Escrow Account, upon close of escrow for that Market Rate Unit, thirty percent (30 %) of the Gross Revenues for Parcel A in excess of the Tier 1 Total Threshold Price for Parcel A after subtracting any Tier 1 Parcel A Participation Deposit, if any, deposited into the City Escrow Account from the Transfer of other Market Rate Units for Parcel A. Tier 2. To the extent that the Transfer of a Market Rate Unit on Parcel A causes the Cumulative Gross Revenues for Parcel A to exceed the Tier 2 Total Threshold Price for Parcel A, Developer shall have the escrow officer designated for the purchase and sale of the Market Rate Unit deposit into the City Escrow Account, upon close of escrow for that Market Rate Unit, fifty percent (50 %) of the Gross Revenues for Parcel A in excess of the Tier 2 Total Threshold Price for Parcel A after subtracting any Tier 2 Parcel A Participation Deposit, if any, deposited into the City Escrow Account from the Transfer of other Market Rate Units for Parcel A. d. Participation Deposit for Parcel C. Tier 1. To the extent that the sale of a Market Rate Unit on Parcel C causes the Cumulative Gross Revenues for Parcel C to exceed the Tier 1 Total Threshold Price for Parcel C, Developer shall have the escrow officer designated for the purchase and sale of the Market Rate Unit deposit into the City Escrow Account, upon close of escrow for that Market Rate Unit, thirty percent (30 %) of the Gross Revenues for Parcel C in excess of the Tier 1 Total Threshold Price for Parcel C after subtracting any Tier 1 Parcel C Participation Deposit, if any, deposited into the City Escrow Account from the sale of other Market Rate Units for Parcel C. Tier 2. To the extent that the sale of a Market Rate Unit on Parcel C causes the Cumulative Gross Revenues for Parcel C to exceed the Tier 2 Total Threshold Price for Parcel C, Developer shall have the escrow officer designated for the purchase and sale of the Market Rate Unit deposit into the City Escrow Account, upon close of escrow for that Market Rate Unit, fifty percent (50 %) of the Gross Revenues for Parcel C in excess of the Tier 2 Total Threshold Price for Parcel C after subtracting any Tier 2 Parcel C Participation Deposit, if any, deposited into the City Escrow Account from the sale of other Market Rate Units for Parcel C e. Participation Amount. Tier 1. To the extent that the Cumulative Gross Revenues for Parcels A and C exceeds the Tier 1 Total Threshold Price for Parcels A and C, the escrow officer shall disburse Santa Monica \The village Attachment No. 2 DDA documents Page 6 of 12 Rev 1. Participation Agt. g thirty percent (30 %) of the excess amount to the City, first, from any Tier 1 Parcel A Participation Deposits and Tier 1 Parcel C Participation Deposits in the City Escrow Account, then, upon depletion of the City Escrow Account, from the escrow account of each Market Rate Unit generating the excess amount upon the close of escrow for such Market Rate Unit, until the sale of the Last Market Rate Unit ( "Tier 1 Participation Payment(s) "), after subtracting any prior Tier 1 Participation Payment(s) that have been previously disbursed to the City, the objective being that the final Tier 1 Participation Payment is equal to thirty percent (30 %) of the excess of the Cumulative Gross Revenues for Parcels A and C (up to the Tier 2 Total Threshold Price for Parcels A and C) over the Tier 1 Total Threshold Price for Parcels A and C. See Table of Examples, attached hereto as Exhibit `B." Tier 2. To the extent that the Gross Revenues for Parcels A and C exceed the Tier 2 Total Threshold Price for Parcels A and C, the escrow officer shall disburse fifty percent (50 %) of the excess amount to the City, first, first from any Tier 2 Parcel A Participation Deposit and Tier 2 Parcel C Participation Deposit: in the City Escrow Account, then, upon depletion of the City Escrow Account, from the escrow account of each Market Rate Unit generating the excess amount upon the close of escrow for such Market Rate Unit, until the sale of the Last Market Rate Unit ( "Tier 2 Participation Payment(s) "), after subtracting any prior Tier 2 Participation Payment(s) that have been previously disbursed to the City, the objective being that the final Tier 2 Participation Payment is equal to fifty percent (50 %) of the excess of the Gross Revenues for Parcels A and C over the Tier 2 Total Threshold Price for Parcels A and C. See Table of Examples, attached hereto as Exhibit `B." £ Excess Participation Deposits. Tier 1. To the extent that the sum of the Tier 1 Parcel A Participation Deposit plus the Tier 1 Parcel C Participation Deposit exceeds the sum of the Tier 1 Parcel A Participation Payment plus the Tier 1 Parcel C Participation Payment after the sale of the Last Market Rate Unit, the escrow officer shall disburse this excess amount to the Developer upon the sale of the Last Market Rate Unit. Tier 2. To the extent that the sum of the Tier 2 Parcel A Participation Deposit plus the Tier 2 Parcel C Participation Deposit exceeds the sum of the Tier 2 Parcel A Participation Payment plus the Tier 2 Parcel C Participation Payment after the sale of the Last Market Rate Unit, the escrow officer shall disburse this excess amount to the Developer upon the sale of the Last Market Rate Unit. g. No City Participation. In the event that the Cumulative. Gross Revenues for Parcels A and C do not exceed the Tier 1 Total Threshold Price for Parcels A and C after the sale of the Last Market Rate Unit, the escrow officer shall disburse all proceeds, if any, in the City Escrow Account to the Developer upon the sale of the Last Market Rate Unit, and the Participation Payments shall be zero. In the event that the Cumulative Gross Revenues for Santa Monica \The village Attachment No. 2 DDA documents Page % of 12 Rev 1. Participation Agt g Parcels A and C exceed the Tier 1 Total Threshold Price for Parcels A and C after the sale of the Last Market Unit, but do not exceed the Tier 2 Total Threshold Price for Parcels A and C, the Tier 2 Participation Payments shall be zero and the escrow officer shall disburse all proceeds, if any, in the City Escrow Account to Developer after paying all Tier 1 Participation Payments to the City in accordance herewith. h. Escrow Instructions. This Agreement and any supplemental instructions to implement this Agreement, mutually agreed upon in writing by the City and Developer, shall serve as the escrow instructions to the escrow officer for the sale of any Market Rate Unit and to the escrow officer for the City Escrow Account. i. Release of Lien. Upon the sale of each Market Rate Unit, the City shall record or cause to be recorded in the Office of the County Recorder for the County of Los Angeles a "Release of Lien" in the form attached hereto as Exhibit "A" with respect to the applicable Market Rate Unit; provided, however, that (i) the City has not invoked the Dispute Process and (ii) the Developer has not failed (after an opportunity to cure) to deposit any Participation Deposit and /or disburse any Participation Payment, as and when required by this Agreement (referenced hereinafter as a "Material Default "). If the City invokes the Dispute Process and the Developer is not in Material Default of this Agreement, the City shall record a Release of Lien if (i) the Developer credits the City's asserted Fair Market Value for that Market Rate Unit toward the Gross Revenues for Parcel A and /or the Gross Revenues for Parcel C ( "Credit "), as applicable, which Credit shall be subject to adjustment based upon the outcome of the Dispute Process. j. Dispute Process. In accordance with Section 3, herein, the City may, in its sole and absolute discretion, invoke the Dispute Process by providing Developer with a Notice of Dispute. The Notice of Dispute shall identify each Market Rate Unit sold to an Associated Person or an Associated Entity, or subject to a Bulk Sale, that is the subject of the dispute. Developer shall have ten (10) business days to respond to the Notice of Dispute by either (i) using the Fair Market Value asserted by the City for that Market Rate Unit in the calculation of Gross Revenues for Parcel A or Gross Revenues for Parcel C, as applicable or (ii) invoking the appraisal process directly below ( "FMV Appraisal Process "), by written notice to the City ("Notice of Appraisal Process "). Developer shall give written notice of its election of either (i) or (ii) herein. In the event Developer elects the FMV Appraisal Process, Developer shall provide City with documentation evidencing the Developer's basis for asserting that the Market Rate Unit was Transferred at or above Fair Market Value. k. FMV Appraisal Process. In the event that Developer invokes the FMV Appraisal Process, City shall submit to Developer a List of Qualified Appraisers within seven (7) business days of the Developer's Notice of Appraisal Process. Developer shall select a "Qualified Appraiser" from the List of Appraisers provided by City within three (3) Business Days of the City's submittal to Developer of the List of Appraisers. The List of Appraisers shall Santa Monica \The Village Attachment No. 2 DDA documents Page 8 of 12 Rev 1. Participation Agt. g be generated by the City in accordance with Section 6(1). The Qualified Appraiser shall complete and submit a Fair Market Value appraisal of the Market Rate Unit ( "Appraisal "), which shall be no higher than the Fair Market Value asserted by the City and no lower than the Sales Price of the Market Rate Unit. The Appraisal shall be submitted to the City and Developer on or prior to 5:00 p.m. Pacific time on the date that is fifteen (15) Business Days following the Developer's selection of the Qualified Appraiser. The value presented by the Appraisal shall be used in the calculation of Gross Revenues for Parcel A or Gross Revenues for Parcel C, as applicable. However, if the Appraisal is ten percent or more above the Sale Price, then Developer shall pay for the Appraisal. If the Appraisal is less than ten percent above the Sale Price, then City shall pay for the Appraisal. 1. List of Appraisers. The List of Appraisers shall contain no less than three (3) "Qualified Appraisers" selected by the City. The City may provide a new List of Appraisers each time that Developer invokes the FMV Appraisal Process. For purposes hereof, a "Qualified Appraiser" shall mean any MAI designated appraiser with a minimum of five (5) years of experience appraising residential condominiums in Santa Monica. m. Right to Audit. i. Records. The Developer shall make available to City or City's designated agent, at [insert local address of Developer], full and accurate books and accounts, records, cash receipts, invoices, and other pertinent records associated with the Transfer of each Market Rate Unit ( "Records "). Such Records shall be kept by the Developer for a three (3) year period from the Transfer of the Last Market Rate Unit. The City shall be entitled during such period to inspect, examine and to copy at the City's expense, the Developer's Records for the purpose of this Agreement. The Developer shall cooperate fully with the City during any such inspection. ii. Audit. The City shall also be entitled, at its expense, to perform an independent audit of the Developer's Records, by a certified public accountant designated by the City (the "City CPA "). Any such audit shall be conducted during normal business hours. A copy of any such audit shall be provided to Developer, and the Developer shall be provided with an opportunity to address the findings of the audit. Should the City determine that based on the audit there is a deficiency in the Participation Payments due and payable to the City, the deficiency amount shall be immediately due and payable to the City, absent manifest error in the City's determination. If such deficiency exceeds five percent (5 %) of the amount of Participation Payments actually paid to the City, the Developer shall, in addition to paying the deficiency amount to the City, reimburse the City for the cost of the audit plus ten percent (10 %) of the deficiency amount as compensation to the City for administrative costs and loss of interest on the deficiency amount. However, in the event the City audit discloses that such deficiency is less than five percent (5 %) of the actual City Participation Payments paid to the City, only the deficiency amount shall be due and payable to the City. Santa Monica \The Village Attachment No. 2 DDA documents Page 9 of 12 Rev 1. Participation Agt g The Developer shall pay any such deficiency amount and agrees that any administrative or late charges applicable thereto represent a fair and reasonable estimate of the costs that the City would incur from the Developer's late payment. Acceptance of late charges and any portion of the late payment of the deficiency amount by the City shall in no event constitute a waiver of any other default under this Agreement with respect to any other late payments by the Developer nor prevent the City from exercising any of its other rights and remedies granted in this Agreement or under operation of law. n. Rental of Market Rate Unit Developer acknowledges understands and agrees that its intent upon Completion is to sell without any reversionary interest, the Market Rate Units to Buyers for Fair Market Value and that the City has materially relied upon Developer's stated intent as the basis for approval of this Agreement. In the event that Developer elects to lease rather than sell a Market Rate Unit such transaction shall not be counted towards the City's Participation Payment until such time as the Market Rate Unit is Transferred by Developer to a Buyer without any reversionary interest. 7. Non - Recourse Obli ag tion. The obligation to make the Participation Payment to the City is a non - recourse obligation of the Developer. Developer shall not have any personal liability, except as provided in this Section. Provided, however, that the foregoing shall not (a) constitute a waiver of any obligation evidenced by this Agreement, the DDA, or the Participation Deed of Trust; (b) limit the right of the City to name Developer as a party defendant in any action or suit for judicial foreclosure and sale under this Agreement, the DDA, or the Participation Deed of Trust or any action or proceeding hereunder so long as no judgment in the nature of a deficiency judgment shall be asked for or taken against Developer; (c) release or impair this Agreement, the DDA, or the Participation Deed of Trust; (d) prevent or in any way hinder City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any other remedy against the mortgaged property or as prescribed by law or in equity in case of default; (e) prevent or in any way hinder City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of any deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of credit securing this Agreement, the DDA, or the Participation Deed of Trust; (f) relieve Developer of any of its obligations under any indemnity delivered by Developer to City; or (g) affect in any way the validity of any guarantee or indemnity from any person of all or any of the obligations evidenced and secured by this Agreement, the DDA, or the Participation Deed of Trust. Notwithstanding the first sentence of this paragraph, City may recover directly from Developer or from any other party: (a) any damages, costs and expenses incurred by City as a result of fraud or any criminal act or acts of Developer or any partner, shareholder, officer, director or Santa Monica \The village Attachment No. 2 DDA documents Page 1� Of 12 Rev 1. Participation Agt. g employee of Developer, or of any member or general or limited partner of Developer, or of any general or limited partner of such member or general or limited partner; (b) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that City shall pay Developer's reasonable court costs and attorneys' fees if Developer is the prevailing party in any such enforcement or collection action). 8. Developer Waivers. Developer waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this Agreement, in whole or in part, whether before or after maturity and with or without notice. Developer hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be incurred by the holder hereof, in the enforcement of this Agreement or the Participation Deed of Trust, or any term or provision of either thereof. 9. [V Remedies. Upon the failure of Developer to perform or observe any term or provision of this Agreement, or upon the occurrence of any event of default under the terms of this Agreement or the Participation Deed of Trust, the City may exercise its rights or remedies hereunder or thereunder. 10. Rights Held Invalid. If the rights created by this Agreement shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations shall be completely performed and paid. 11. Gender Neutral. In this Agreement the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires. 12. Discrepancies. In the case of any inconsistency between the provisions of this Agreement and the DDA, the provisions of this Agreement shall prevail. IN WITNESS WHEREOF Developer and City have executed this Agreement as of the day and year set forth below. THE CITY OF SANTA MONICA (City) Im Jay Gould, City Manager SIGNATURES CONTINUED ON NEXT PAGE Santa MonicafTtre village Attachment No. 2 DDA doeutnents Page 11 of 12 Rev 1. Participation Agt g ATTEST: City Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney : Marsha J. Moutrie APPROVED AS TO FORM: DANE, BALLMER & BERKMAN Special Counsel HA Susan Y. Cola Date: RELATED /SANTA MONICA VILLAGE, LLC, a California limited liability company By: The Nicholas Company, Inc., a Delaware corporation its Non - Member Manager Lo Name: Title: Santa Monica \The village Attachment No. 2 DDA documents Page 12 of 12 Rev 1. Participation Agt. g EXHIBIT "A" RELEASE OF LIEN [BEHIND THIS PAGE] OFFICIAL BUSINESS Document entitled to free recording per Government Code ' 6103 Recording Requested by and When Recorded Mail to: City of Santa Monica 1685 Main Street, Room 212 P.O. Box 2200 Santa Monica, California 90406 2200 Attention: Housing Administrator SPACE ABOVE THIS LINE FOR RECORDER =S USE RELEASE OF LIEN ON REAL PROPERTY WHEREAS, RELATED /SANTA MONICA VILLAGE, LLC, a limited liability company (the "Developer "), is the owner of a leasehold interest in that certain real property situated in the City of Santa Monica, California described in Exhibit "A" which is attached hereto and made a part hereof (the "Property "); and WHEREAS, the City of Santa Monica (the "City") and the Developer entered into that certain Participation Payment Agreement dated for reference purposes as 20 which evidences certain obligations of the Developer as stated therein ( "Obligations "); and WHEREAS, the Developer's performance of the Obligations are secured by the Participation Deed of Trust recorded in the Recorder's Office of Los Angeles County on as Document No. (the "Lien "); and WHEREAS, in accordance with the Participation Payment Agreement, the City has agreed to furnish the Developer with a Release of Lien upon the satisfaction of the Obligations pertaining to the Property, and the Release of Lien is to be in such form as to permit it to be recorded in the Recorder's Office of Los Angeles County; and WHEREAS, the City has determined that Developer has satisfied the Obligations pertaining to the Property, except as such City rights of dispute are reserved in Section 7.f of the Participation Payment Agreement. Santa MonlcaNThe village Attachment 19A DDA Documents Page 1 Of 2 At 19A— Participation DOT - Execution v. Final g NOW, THEREFORE, the City hereby declares that the Lien pertaining to the Property is hereby released and is of no further force or effect. Dated: IN WITNESS WHEREOF, the City has executed this instrument this day of -200—. THE CITY OF SANTA MONICA In Jay Gould, City Manager Santa Monica \The Village Attachment 19A DDA Documents page 2 of 2 At 19A— Participation DOT - Execution v. Final g EXHIBIT A LEGAL DESCRIPTION [Insert legal description of Market Rate Unit] EXHIBIT `B" TABLE OF EXAMPLES Assumptions for Example 1: Tier 1 Total Threshold Price for Parcel A equals $9.0 million and Tier 1 Total Threshold Price for Parcel C equals $13.0 million. The Tier 1 Total Threshold Price for Parcels A and C equals $22.0 million. Tier 1 Parcel A Participation Deposits will be deposited into the City Escrow Account after Gross Revenues for Parcel A exceed $9.0 million. Tier 1 Parcel C Participation Deposits will be deposited into the City Escrow Account after Gross Revenues for Parcel C exceed $13.0 million. Tier 1 Participation Amount(s) will be drawn first from the City Escrow Account, and then on a unit -by -unit basis once the Tier 1 Total Threshold Price for Parcels A and C is achieved. Tier 2 Total Threshold Price for Parcel A equals $11.0 million and Tier 2 Total Threshold Price for Parcel C equals $15.0 million. Tier 2 Parcel A Participation Deposits will be deposited into the City Escrow Account after Gross Revenues for Parcel A exceed $11.0 million. Tier 2 Parcel C Participation Deposits will be deposited into the City Escrow Account after Gross Revenues for Parcel C exceed $15.0 million. Tier 2 Participation Payment(s) will be drawn first from the City Escrow Account, and then on a unit -by -unit basis. [space left intentionally blank] Example 1: Parcel A — Tier 1 Total Threshold Price for Parcel A - $9 Site A: million, Tier 2 Total Threshold Price for Parcel A - $11 Target Average Price Per Square Foot = $1,069 million Tier 1 Margin above Target = $1,229 per square foot of saleable area (1.15 multiplied times the Target Average Price Per Square Foot) Tier 2 Margin above Target = $1,390 psf (1.3 multiplied times the Target Average Price Per Square Foot) City Participation: 30% of every dollar of Average Sales Revenue between $1,229 and $1,390 per square foot of saleable area 50% of every dollar of Average Sales Revenue above $1,390 per square foot of saleable area Unit Unit Sales Cumulative Participation Participation Deposit @ 50% Above Tier 2 Total Price Sales Deposit @ 30% Threshold Price for Parcel A Revenue Above Tier I Total Threshold Price for Parcel A A-1 $1,000,000 $1,000,000 $0 $0 A -2 $750,000 $1,750,000 $0 $0 A -3 $1,300,000 $3,050,000 $0 $0 A4 $900,000 $3,950,000 $0 $0 A -5 $1,100,000 $5,050,000 $0 $0 A -6 $1,200,000 $6,250,000 $0 $0 A -7 $850,000 $7,100,000 $0 $0 A -8 $1,100,000 $8,200,000 $0 $0 A -9 $1,000,000 $9,200,000 $60,000 $0 A -10 $1,500,000 $10,700,000 $450,000 $0 A -11 $600,000 $1113001000 $90,000 $150,000 Total $600,000 $150,000 $750,000 Parcel C — Tier I Total Threshold Price for Parcel C - $13 Target Average Price Per Square Foot = $1,079 million, Tier 2 Total Threshold Price for Parcel C - $15 Tier 1 Margin above Target = $1,241 per square million. foot of saleable area (1.15 multiplied times the Target Average Price Per Square Foot) Tier 2 Margin above Target = $1,403 psf (1.3 multiplied times the Target Average Price Per Square Foot) City Participation: 30% of every dollar of Average Sales Revenue between $1,241 and $1,403 per square foot of saleable area 50% of every dollar of Average Sales Revenue above $1,403 per square foot of saleable area Unit Unit Sales Cumulative Participation Participation Deposit @ 50% Above Total Price Sales Deposit @ 30% Threshold Price for Parcel C Revenue Above Total Threshold Price for Parcel C C-1 $1,500,000 $1,500,000 $0 C-2 $1,250,000 $2,750,000 $0 C -3 $1,700,000 $4,450,000 $0 C -4 $1,500,000 $5,950,000 $0 C -5 $1,700,000 $7,650,000 $0 C -6 $1,700,000 $9,350,000 $0 C -7 $1,400,000 $10,750,000 $0 C -8 $1,600,000 $12,350,000 $0 - C -9 $1,500,000 $13,850,000 $255,000 C -10 $2,000,000 $15,850,000 $345,000 $425,000 C -11 $1,200,000 $17,050,000 $0 $600,000 Total $600,000 $1,025,000 $1,625,000 Cumulative Gross Revenues for Parcels A and C totals $28,350,000. The Tier I Total Threshold Price for Parcels A and C equals $22 million. Amount available for participation totals $6,350,000. City Participation equals $2,375,000. The Tier 2 Parcel A Participation Payment is $150,000. The Tier 2 Parcel C Participation Payment is $1,025,000. Example 2: Parcel A— Tier 1 Total Threshold Price for Parcel A - $10 Site A: million, Tier 2 Total Threshold Price for Parcel A is $12 Target Average Price Per Square Foot = $1,069 million. Tier I Margin above Target = $1,229 per square foot of saleable area (1.15 multiplied times the Target Average Price Per Square Foot) Tier 2 Margin above Target = $1,390 psf (1.3 multiplied times the Target Average Price Per Square Foot) City Participation: 30% of every dollar of Average Sales Revenue between $1,229 and $1,390 per square foot of saleable area 50% of every dollar of Average Sales Revenue above $1,390 per square foot of saleable area Unit Unit Sales Cumulative Participation Participation Deposit @ 50% Above Total Price Sales Deposit @ 30% Threshold Price for Parcel C Revenue Above Total Threshold Price for Parcel A A -1 $1,000,000 $1,000,000 $0 $0 A -2 $750,000 $1,750,000 $0 $0 A -3 $1,300,000. $3,050,000 $0 $0 A -4 $900,000 $3,950,000 $0 $0 A -5 $1,100,000 $5,050,000 $0 $0 $1,200,000 $6,250,000 $0 $0 $850,000 $7,100,000 $0 $0 $1,100,000 $8,200,000 $0 $0 rA-9 $1,000,000 $9,200,000 $0 $0 $1,500,000 $10,700,000 $210,000 $0 $600,000 $11,300,000 $180,000 $0 Total $390,000 $0 Parcel C — Tier 1 Total Threshold Price for Parcel C - $15 1 Site A: $390,000 million; Tier 2 Total Threshold Price for Parcel C is $17 Target Average Price Per Square Foot = $1,069 million. Tier 1 Margin above Target = $1,229 per square foot of saleable area (1.15 multiplied times the Target Average Price Per Square Foot) Tier 2 Margin above Target = $1,390 psf (1.3 multiplied times the Target Average Price Per Square Foot) City Participation: 30% of every dollar of Average Sales Revenue between $1,229 and $1,390 per square foot of saleable area 50% of every dollar of Average Sales Revenue above $1,390 per square foot of saleable area Unit Participation Cumulative Participation Participation Deposit @ 50% Above Total Deposit @ Sales Deposit @ 30% Threshold Price for Parcel C 50% Above Revenue Above Total Tier 2 Total Threshold Price for Threshold Parcel C Price for Parcel A C -1 $1,200,000 $1,200,000 $0 $0 C -2 $1,150,000 $2,350,000 $0 $0 C -3 $1,000,000 $3,350,000 $0 $0 C -4 $900,000 $4,250,000 $0 $0 C -5 $1,100,000 $5,350,000 $0 $0 C -6 $1,000,000 $6,350,000 $0 $0 C -7 $950,000 $7,300,000 $0 $0 C -8 $800,000 $8,100,000 $0 $0 C -9 $1,200,000 $9,300,000 $0 $0 C -10 $1,400,000 $10,700,000 $0 $0 C -11 $700,000 $11,400,000 $0 $0 Tolal $0 $0 $0 Cumulative Gross Revenues for Parcels A and C totals $22,700,000. The Tier 1 Total Threshold Price for Parcels A and C equals $25 million. No revenue is available for City Participation as the Cumulative Gross Revenues for Parcels A and C do not exceed the Tier 1 Total Threshold Price for Parcels A one C. Developer is repaid $390,000 from the Parcel A escrow account. EXHIBIT M DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS [BEHIND THIS PAGE] RECORDING REQUESTED BY: WHEN RECORDED, MAIL TO: DZIDA, CAREY & STEINMAN (JRS) 3 Park Plaza, Suite 750 Irvine, CA 92614 (Space Above for Recorder's Use) THE VILLAGE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS JR00601.0001k402281.910/32011 TABLE OF CONTENTS FOR THE VILLAGE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS DESCRIPTION ARTICLE I DEFINITIONS AND INTERPRETATION......... 1.1 Definitions .......................... ............................... 1.2 Interpretation ...................... ............................... PAGE ....................... ..............................2 ....................... ..............................2 ...................... .............................13 ARTICLE II RESIDENTIAL CONDOMINIUM USE RIGHTS AND RESTRICTIONS ..........14 2.1 Single Family Use ..................................................................... .............................14 2.2 Business or Commercial Activity ............................................. .............................14 2.3 Nuisances .................................................................................. .............................15 2.4 Signs .......................................................................................... .............................15 2.5 Parking and Vehicular Restrictions .......................................... .............................16 2.6 Animal Regulations .................................................................. .............................18 2.7 Communications Systems ......................................................... .............................19 2.8 Trash ......................................................................................... .............................19 2.9 Installations ............................................................................... .............................20 2.10 Bicycle Storage ......................................................................... .............................21 2.11 Further Subdivision ................................................................... .............................21 2.12 Right to Combine Residential Units ........................:................ .............................21 2.13 Lease of Residential Units .....:.................................................. .............................22 2.14 Drainage .................................................................................... .............................24 2.15 Water Supply System ................:............................................... .............................24 2.16 View Obstruction ...................................................................... .............................24 2.17 Rights of Disabled ..............................:...................................... .............................25 2.18 Use of Exclusive Use Residential Common Area Easement .... .............................25 2.19 Flooring Restrictions ................................................................. .............................25 2.20 Toxic or Noxious Matter; Disposal of Toxic and Hazardous Waste Products; Erosion and Drainage Control .................................. .............................26 2.21 Moving and Deliveries .............................................................. .............................26 2.22 Sound Attenuation .................................................................... .............................27 2.23 Leasing of Exclusive Use Residential Parking Spaces ............. .............................27 ARTICLE III COMMERCIAL USE RIGHTS AND RESTRICTIONS .......... .............................27 3.1 Use of Commercial Condominiums .......................................... .............................27 3.2 Rental ........................................................................................ .............................28 3.3 Signs and Displays .................................................................... .............................28 i DESCRIPTION PAGE 3.4 Communications Systems ......................................................... .............................28 3.5 Right to Combine or Reconfigure Adjoining Commercial Units ..........................29 3.6 Further Subdivision of Commercial Units ................................ .............................30 3.7 Amendments .............................................................................. ............................30 ARTICLEIV DISCLOSURES ........................................................................ .............................31 4.1 No Representations or Warranties ............................................ .............................31 4.2 Access Facilities ........................................................................ .............................31 4.3 Mixed -Use Properties ............................................................... .............................31 4.4 Security and Privacy Disclaimer ............................................... .............................31 4.5 Electric Power Lines and Electromagnetic Fields .................... .............................32 4.6 Airport Influence Area .............................................................. .............................32 4.7 Sound Attenuation .................................................................... .............................32 4.8 • Neighborhood Conditions ......................................................... .............................33 4,9 Additional Development ........................................................... .............................33 4.10 Leasing ...................................................................................... .............................33 4.11 Property Lines ........................................................................... .............................33 4.12 Reciprocal Easement Agreement .............................................. .............................33 4.13 Affordable Housing .................................................................. .............................33 4.14 Joint Use Parking Area ............................................................. .............................34 4.15 Post Tension Concrete Slab ...................................................... .............................34 4.16 No Enhanced Protection Agreement ......................................... .............................34 4.17 Mold .......................................................................................... .......................:.....34 4.18 Square Footage Estimated ......................................................... .............................35 4.19 Additional Provisions ................................................................ .............................35 ARTICLE V THE VILLAGE COMMUNITY ASSOCIATION; REPAIR AND MAINTENANCE OBLIGATIONS .............................35 5.1 General Duties and Powers ....................................................... .............................35 5.2 Specific Duties and Powers ...................................................... .............................36 5.3 Standard of Care, Nonliability .................................................. .............................42 5.4 Membership .............................................................................. .............................44 5.5 Voting ....................................................................................... .............................45 5.6 Board of Directors ..................................................................... .............................47 5.7 Repair and Maintenance ........................................................... .............................48 5.8 Unsegregated Real Property Taxes ........................................... .............................56 ARTICLE VI DESIGN REVIEW COMMITTEE ........................................... .............................57 6.1 Members of Committee ............................................................ .............................57 6.2 Powers and Duties ..................................................................... .............................57 6.3 Review of Plans and Specifications .......................................... .............................57 6.4 Alteration Agreements .............................................................. .............................59 6.5 Meetings and Actions of the Committee .................................. .............................59 6.6 No Waiver of Future Approvals ............................................... .............................60 6.7. Compensation of Members ....................................................... .............................60 . 6.8 Inspection of Work ................................................................... .............................60 6.9 Variances ................................................................................... .............................61 JRS\30601.0001 \402281.9 10/3/2011 ii DESCRIPTION PAGE 6.10 Maintenance and Repairs .......................................................... .............................61 6.11 Pre - approvals ............................................................................ .............................61 6.12 Appeals ..................................................................................... .............................61 6.13 Commercial Condominium Improvements ............................... .............................62 6.14 Podium Alterations ................................................................... .............................62 ARTICLE VII PROPERTY EASEMENTS AND RIGHTS ............................ .............................62 7.1 Easements ................................................................................. .............................62 7.2 The Living Street and Olympic Plaza ....................................... .............................64 7.3 Right to Grant Easements ......................................................... .............................65 7.4 Delegation of Use ..................................................................... .............................65 ARTICLE VIII ASSOCIATION MAINTENANCE FUNDS AND ASSESSMENTS ................65 8.1 Personal Obligation to Pay Assessments .................................. .............................65 8.2 Funds of the Association ........................................................... .............................65 8.3 Purpose of Assessments ............................................................ .............................67 8.4 Waiver of Use ........................................................................... .............................67 8.5 Limits on Annual Assessment Increase .................................... ............................ .. 67 8.6 Commencement and Collection of Annual Assessments ......... .............................69 8.7 Capital Assessments .................................................................. .............................70 8.8 Limits With Respect to Commercial Units ............................... .............................71 ARTICLEIX INSURANCE ............................................................................. .............................72 9.1 Duty to Obtain Insurance; Types .............................................. .............................72 9.2 Waiver of Claim Against Association ...................................... .............................73 9.3 Right and Duty of Owners to Insure ......................................... .............................73 9.4 Commercial Owner Requirements ............................................ .............................73 9.5 Notice of Expiration Requirements .......................................... .............................73 9.6 Insurance Premiums .................................................................. .............................74 9.7 Trustee for Policies ................................................................... .............................74 9.8 Actions as Trustee ..................................................................... .............................74 9.9 Annual Insurance Review ......................................................... .............................74 9.10 Required Waiver ....................................................................... .............................75 ARTICLE X DESTRUCTION OF IMPROVEMENTS .................................. .............................75 10.1 Restoration of the Project .......................................:.................. .............................75 10.2 Sale of Properties and Right to Partition .................................... .............................76 10.3 Interior Damage ........................................................................ .............................76 10.4 Notice to Owners and Listed Mortgagees ................................. .............................77 ARTICLEXI EMINENT DOMAIN ................................................................ .............................77 11.1 Condemnation of Common Area .............................................. .............................77 11.2 Condemnation of Exclusive Use Residential Common Area ... .............................77 11.3 Condemnation of Condominiums ............................................. .............................77 11.4 Condemnation of Portions of Units .......................................... .............................78 11.5 Portions of Awards in Condemnation Not Compensatory For Value of RealProperty ............................................................................ .............................79 .JRS130601 .0001\402281.910 /3/2011 iii C DESCRIPTION PAGE 11.6 Notice to Owners and Mortgagees ............................................ .............................79 ARTICLE XII RIGHTS OF MORTGAGEES ................................................. .............................79 12.1 General Provisions .................................................................... .............................79 12.2 Additional Rights ...................................................................... .............................79 ARTICLEXIII ENFORCEMENT ................................................................... .............................82 13.1 Enforcement of Restrictions ..................................................... .............................82 13.2 Nonpayment of Assessments .................................................... .............................84 13.3 Enforcement of Certain Bonded Obligations ............................ .............................87 13.4 Resolution of Disputes Between Association/Owners and Declarant ...................88 ARTICLE XIV DURATION AND AMENDMENT ....................................... .............................88 14.1 Duration ..................................................................:................. .............................88 14.2 Termination and Amendment ................................................... .............................88 14.3 Extension of Ground Lease Term ............................................. .............................91 14.4 Rights of Agency and City ........................................................ .............................91 ARTICLE XV GENERAL PROVISIONS ....................................................... .............................92 15.1 Mergers or Consolidations ........................................................ .............................92 15.2 No Public Right or Dedication .................................................. .............................92 15.3 Notices ...................................................................................... .............................92 15.4 Constructive Notice and Acceptance ........................................ .............................93 ARTICLE XVI DECLARANT'S RIGHTS AND RESERVATIONS ............. .............................93 16.1 Construction Rights .................................................................. .............................93 16.2 Sales and Marketing Rights ...................................................... .............................93 16.3 Creating Additional Easements ................................................. .............................94 16.4 Architectural Rights .................................................................. .............................94 16.5 Use Restriction Exemption ....................................................... .............................94 16.6 Assignment of Rights ................................................................ .............................94 16.7 Amendments ............................................................................. .............................94 16.8 Exercise of Rights ..................................................................... .............................94 16.9 Use of Properties ....................................................................... .............................94 16.10 Participation in Association ...................................................... .............................95 16.11 Declarant Approval of Actions ................................................. .............................95 16.12 Marketing Name ....................................................................... .............................95 16.13 Power of Attorney ..................................................................... .............................95 JRW0601.0001 \402281.9 10/3/2011 iv EXHIBIT "A" ARTICLES OF INCORPORATION OF THE ASSOCIATION EXHIBIT "B" BYLAWS OF THE ASSOCIATION EXHIBIT "C" COMMERCIAL UNIT SIGN CRITERIA EXHIBIT "D" DRAWINGS DEPICTING AND ASSIGNING EXCLUSIVE USE RESIDENTIAL PARKING SPACES AND DEPICTING RESIDENTIAL GUEST PARKING EXHIBIT "E" DEPICTION OF JOINT USE PARKING AREA EXHIBIT "F" RESIDENTIAL OWNER MAINTENANCE, REPAIR AND REPLACEMENT RESPONSIBILITIES EXHIBIT "G" FLOORING AND SOUND TRANSMISSION RESTRICTIONS EXHIBIT "H" FORM DECORATING AGREEMENT EXHIBIT "I" FORM ALTERATION AGREEMENT EXHIBIT "J" FORM ASSIGNMENT OF SUBLEASE v THE VILLAGE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS is made by SANTA MONICA URBAN HOUSING A, LLC, a California limited liability company ( "Declarant' "Still need to determine if the Agency will have to sign these CC &Rs to be able to get them recorded ". The capitalized terms used in the Preamble are defined in Article I. PREAMBLE: A. Declarant is the owner of a leasehold estate in certain real property located in the City of Santa Monica, County of Los Angeles, State of California, described as follows: Residential Units and Common Area, as shown on the Residential Condominium Plan Recorded on , _, as Instrument No. , of Official Records of Los Angeles County, California, consisting of a portion of Lot 1 of Tract No. 69828, as shown on a Subdivision Map, Filed in Book , at Pages _ to _, inclusive, of Maps, in the Office of the Los Angeles County Recorder. Commercial Units and Common Area, as shown on the Commercial Condominium Plan Recorded on , as Instrument No. , of Official Records of Los Angeles County, California, consisting of a portion of Lot 1 of Tract No. 69828, as shown on a Subdivision Map, Filed in Book _, at Pages _ to _, inclusive, of Maps, in the Office of the Los Angeles County Recorder. Declarant is the owner of the Improvements within the Properties subject to the Ground Lease. Declarant's leasehold estate derives from the Ground Lease between Declarant and the City. B. Declarant intends to create a leasehold "condominium project," as defined in. Section 1351(f) of the California Civil Code, to subdivide the Properties as authorized by Section 66427 of the California Government Code into "condominiums" as defined in Section 783 of the California Civil Code, and to impose mutually beneficial restrictions under a general plan of improvement for the benefit of all the Condominiums created pursuant to the Davis - Stirling Common Interest Development Act. C. The Properties are to be held, conveyed, encumbered, leased, used and improved subject to the limits, restrictions, reservations, rights, easements, conditions and covenants in this Declaration, all of which are in furtherance of a plan for the subdivision, maintenance, JRS\3 0601.0001 \402281.9 10/3/2011 improvement and sale of the Properties. All provisions of this Declaration are imposed as equitable servitudes on the Properties. All limits, restrictions, reservations, rights, easements, conditions and covenants in this Declaration shaltrun with and burden the Properties and shall be binding on and for the benefit of all of the Properties and all Persons having or acquiring any interest in the Properties and their successive owners and assigns. D. Declarant and its successors and assigns covenant that each undivided interest in the Common Area, the appurtenant Membership in the Association, all easements conveyed therewith and the Subleasehold Estate in each Unit conveyed therewith shall not be separated or separately conveyed, and each such undivided interest, Membership and easements shall be deemed to be conveyed or encumbered with the Unit even though the description in the instrument of conveyance or encumbrance may refer only to the Unit. This restriction on severability of the component interests of the Condominiums shall not extend beyond the period for which the right to partition the Properties is suspended in accordance with Section 1359 of the California Civil Code. Any conveyance by an Owner of a Condominium, or any portion thereof, shall be presumed to convey the entire Condominium, together with a Membership in the Association. ARTICLE I DEFINITIONS AND INTERPRETATION Unless otherwise expressly provided, the following words and phrases when used herein shall have the following specified meanings: 1.1 Definitions. As used in this Declaration, the following capitalized words and phrases (including the above Preamble) have the following meanings: 1.1.1 Agency. Agency means the Redevelopment Agency of the City of Santa Monica, and its successors or assignees. 1. 1.2 Annual Assessment. Annual Assessment means a charge levied against the Owners and their Condominiums, representing their share of Common Expenses. The Annual Assessment is an Annual Assessment as described in California Civil Code Section 1366. Annual Assessments are further classified herein as "General Annual Assessments," "Residential Annual Assessments" and "Commercial Annual Assessments." 1.1.3 Apartment Parcel. Apartment Parcel means that certain real property in the City of Santa Monica, County of Los Angeles, State of California, more particularly described as Lot 2 of Tract No. 69828, as shown on a Subdivision Map, Filed in Book at Pages _ to inclusive, of Maps, in the Office of the Los Angeles County Recorder. The Apartment Parcel is adjacent to the Properties. The Apartment Parcel is not subject to or governed by this Declaration or the Restrictions and the Association has no jurisdiction over the Apartment Parcel except as provided in the Reciprocal Easement Agreement. 1.1.4 Apartment Parcel Owner. Apartment Parcel-Owner means the owner of the Apartment Parcel, and its successors and assigns. 7RS\30601.0001 \4022819 10/3/2011 1.1.5 Apartment Parking Area. Apartment Parking Area means the "Apartment Parking Area" as defined in the Reciprocal Easement Agreement. 1.1.6 Apartment Tenant. Apartment Tenant means a tenant or occupant of an apartment located on the Apartment Parcel. 1. 1.7 Architectural Guidelines. Architectural Guidelines means the guidelines and regulations adopted by the Board from time to time regarding Improvements and work on the Properties. 1. 1.8 Articles. Articles means the Articles of Incorporation of the Association initially in the form of Exhibit "A," as amended from time to time. 1. 1.9 Assessment. Assessment means any Annual Assessment, Capital Assessment, Reconstruction Assessment and/or Special Assessment. 1.1.10 Association. Association means The Village Community Association, a California nonprofit corporation (formed pursuant to the California Nonprofit Mutual Benefit Corporation Law) and its successors in interest. The Association is an "association" as defined in Section 1351(a) of the California Civil Code. 1.1.11 Association Maintenance Funds. Association Maintenance Funds means the accounts created for Association receipts and disbursements pursuant to Article VIII. 1.1.12 Association Personnel. Association Personnel means the Building Engineer(s) and all persons employed by the Association to provide, without limitation, and subject to change, general administrative, maintenance, concierge, porter, security, recreational /fitness and other services to the Project. Notwithstanding the foregoing, certain Association Personnel may be employed by third party vendors hired by the Association. 1.1.13 Best Management Practices/BMPs. Best Management Practices or BMPs means the water quality management practices and requirements set forth in, or otherwise required pursuant to the Water Quality Management Plans. The BMPs are designed and intended to control runoff and must be implemented by the Association and the Owners and other residents or occupants within the Properties. The BMPs may be modified from time to time by Declarant or any Governing Authority having jurisdiction regarding water quality for water runoff from the Properties in order to control runoff as the Properties develop and runoff conditions change. Compliance with BMPs by the Association and the Owners and other residents and occupants within the Properties, as they may be modified from time to time, may be monitored and enforced by any Governing Authority having jurisdiction regarding water quality for water runoff from the Properties. 1.1.14 Board or Board of Directors. Board or Board of Directors means the Association's Board of Directors. 1.1.15 Budget. Budget means a written, itemized estimate of the Association's income and Common Expenses prepared from time to time pursuant to the Bylaws. In addition, JRS00601.0001\402281.9 10/3/2011 3 the Budget shall separately show General Common Expenses, Residential Common Expenses and Commercial Common Expenses. 1.1.16 Building Engineer. Building Engineer means the building engineer(s) employed by the Association to oversee the operation, maintenance and repair of the physical and mechanical components of the Properties. 1.1.17 Bylaws. Bylaws means the Bylaws of the Association as adopted by the Board initially in the form of Exhibit `B," as amended from time to time. 1.1.18 Capital Assessment. Capital Assessment means a charge which the Board may from time to time levy against the applicable Owners and their Condominiums, representing their share of the Association's cost for installing or constructing capital Improvements on the General Common Area, Residential Common Area or Commercial Common Area, respectively, or against the Owner and their Condominiums for the payment of "Extension Rent" as defined in the Ground Lease. Capital Assessments shall be levied . in the same proportions as Annual Assessments; provided, however, if the Capital Assessment relates solely to the Residential Common Area or Commercial Common Area it shall be levied only against the Residential Owners or Commercial Owners, as applicable (based on the provisions of Article VIII). Capital Assessments are special assessments as described in California Civil Code Section 1366. 1.1.19 City. City means the City of Santa Monica, California, and its various departments, divisions, employees and representatives. 1. 1.20 Close of Escrow. Close of Escrow means the date on which an assignment of a Sublease is Recorded assigning the Sublease to an Owner pursuant to a transaction requiring the issuance of a Final Subdivision Public Report by the DRE. 1. 1.21 Commercial Common Area. Commercial Common Area means the portion of the Common Area designated as Common Area on the Commercial Condominium Plan. 1. 1.22 Commercial Common Expenses. Commercial Common Expenses means those Common Expenses attributable to the Commercial Common Area and /or the operations, activities, and /or expenditures otherwise performed or incurred by the Association solely for the benefit of the Commercial Owners as designated in the Initial Budget, including without limitation the costs to maintain the unisex shower and locker facility provided for employees of Commercial Units who bicycle or use another active means, powered by human propulsion, of getting to work or who exercise during the work day. Under no circumstances shall (a) the Residential Owners be responsible for, and no Assessment shall be levied against any Residential Owners with respect to any Commercial Common Expenses and (b) the Residential Owner shall not be entitled to the use of the Commercial Common Area. 1.1.23 Commercial Condominium. Commercial Condominium means a Condominium interest in the Project which is owned by a Commercial Owner. JRS\30601.0001 \402281.9 101Y2011 4, 1. 1.24 Commercial Condominium Plan. Commercial Condominium Plan means the Recorded plan, consisting of (a) a description or survey map of the Commercial Units and Commercial Common Area, which shall refer to or show monumentation on the ground, (b) a three- dimensional description of the Commercial Units and Commercial Common Area, one or more dimensions of which may extend for an indefinite distance upwards or downwards in sufficient detail to identify the Commercial Common Area and each Commercial Unit, and (c) a certificate consenting to the Recordation thereof signed and acknowledged by Declarant and, if required for Recordation, by the record owner of fee title to real property on which the Properties are located, and by either the trustee or the Mortgagee of each Recorded Mortgage encumbering the Properties or a portion thereof. The amendment of the Commercial Condominium Plan shall not require the approval of or execution by the Association and /or Residential Owners and shall only require the approval of and execution by the Commercial Owners. 1.1.25 Commercial Owner. Commercial Owner means an Owner of a Commercial Condominium. 1.1.26 Commercial Unit. Commercial Unit means a Unit shown on the Commercial Condominium Plan. 1.1.27 Common Area. Common Area means the real or personal property designated as Common Area on the Residential Condominium Plan and Commercial Condominium Plan. The Common Area shall include common hallways, retaining walls, irrigation systems and controllers, drains, sewers, lighting fixtures, wiring, electrical panels and automatic control systems, entrances, exits, delivery passages, interior pedestrian walkways, stairways, elevators, pedestrian ramps, signs, gating, central identification signs, courtyards, landscaped and planted areas and similar areas and amenities contained in or serving the Properties. Notwithstanding the foregoing, any structural elements within any Unit that support Units or Common Area other than the Unit in which such structural elements are located (e.g., interior columns or beams running between the floor and ceiling of a Unit but located in the middle of a room) (collectively, "Unit Interior Common Structural Elements' shall be deemed part of the Common Area. 1. 1.28 Common Expenses. Common Expenses means those expenses for which the Association is responsible under this Declaration, including the actual and estimated costs of and reserves for maintaining, managing and operating the Common Area, including without limitation, the Parking Structure and Joint Use Area, to the extent set forth in the Reciprocal Easement Agreement; the Podium; lobby areas; the recreational facilities on the Residential Common Area; the controlled access gates for the Properties; the Public Art; Association Personnel, and any clustered mailboxes and address identification signs. Common Expenses also include unpaid Special Assessments, Reconstruction Assessments and Capital Assessments. Common Expenses include the cost of (a) all utilities metered to more than one Condominium (except for any utilities which are sub - metered and billed to individual Owners by third parties or the Association as Sub - Metered Expenses) and other commonly metered charges for the Properties; (b) trash collection and removal (unless provided by the applicable Governing Authorities); (c) managing and administering the Association, including compensation paid by the Association to managers, accountants, attorneys and other employees; (d) gardening and other services benefiting the Common Area; (c) fire, casualty, liability, workers' compensation, rns \30601.0001\402281.9 10/3/2011 errors and omissions and director, officer and agent liability insurance, and other insurance covering the Properties and the Directors, officers and agents of the Association; (f) bonding the members of the Board; (g) taxes paid by the Association, including any tax assessed against the Properties; (h) amounts paid by the Association for discharge of any lien or encumbrance levied against the Properties; and (i) all other expenses incurred by the Association, for any reason whatsoever, in connection with the Properties, for the common benefit of the Owners. The Common Expenses shall be further classified into General Common Expenses, Residential Common Expenses and Commercial Common Expenses. 1. 1.29 Condo Access Facilities. Condo Access Facilities means the "Condo Access Facilities" defined in the Reciprocal Easement Agreement. 1.1.30 Condominium. Condominium means an estate in real property as defined in California Civil Code Section 1351(f). A Condominium consists of a Subleasehold Estate in a Unit, an undivided fee simple interest in the Improvements on the Residential Common Area or Commercial Common Area, as applicable, and all easements and licenses appurtenant thereto. The ownership interest of an Owner in the Residential Common Area shown on the Residential Condominium Plan or Commercial Common Area shown on the Commercial Condominium Plan, as applicable, shall be a fraction having one (1) as its numerator and the number of Residential Units (in the case of ownership of the Residential Common Area) or Commercial Units (in the case of ownership of the Commercial Common Area) as its denominator; and shall be held by the Commercial Owners or Residential Owners, as applicable, as tenants -in- common. 1.1.31 Condominium Plan. Condominium Plan means the Residential Condominium Plan and/or the Commercial Condominium Plan, as applicable. 1. 1.32 Condo Parking Area. Condo Parking Area means the "Condo Parking Area" as defined in the Reciprocal Easement Agreement. 1.1.33 Co- owner. Co -owner means a Person who holds an interest in a Condominium with at least one other Person. 1.1.34 County. County means Los Angeles County, California, and its various departments, divisions, employees and representatives. 1.1.35 Declarant. Declarant means Santa Monica Urban Housing A, LLC, a California limited liability company, its successors, and any Person to which it shall have assigned any of its rights under this Declaration by an express written assignment. As used in this Section, "successor" means a Person who acquires Declarant or substantially all of its assets, or who merges with Declarant, by sale, merger, reverse merger, consolidation, sale of stock or assets, operation of law or otherwise. Unless otherwise expressly provided in the Declaration, all actions that may be taken by Declarant, shall be in Declarant's sole discretion. Declarant is a builder as described in California Civil Code Section 1375. Any assignment by Declarant of its rights under this Declaration shall be subject to the limitations on assignment and transfer of Declarant's rights under the Ground Lease. IRS\30601.0001 \402281.9 10/3/2011 1. 1.36 Declaration. Declaration means this instrument, as it may be amended from time to time. 1.1.37 Design Review Committee or Committee. Design Review Committee or Committee means the Design Review Committee created pursuant to Article VI hereof. 1.1.38 Development Agreement. Development Agreement means that certain Development Agreement, dated October 1, 2008, between Related/Santa Monica Village, LLC, and the Agency, as amended from time to time. 1. 1.39 DRE. DRE means the California Department of Real Estate and any department or agency of the California state government which succeeds to the DRE's functions. 1.1.40 Exclusive Use Residential Common Area. Exclusive Use Residential Common Area means those portions of the Residential Common Area designated in the Residential Condominium Plan and reserved for the exclusive use of one or more, but fewer than all, of the Residential Owners in accordance with Section 1351(1) of the California Civil Code. Exclusive Use Residential Common Area shall include, without limitation, parking, balconies, patios, terraces, storage areas and internal and external telephone wiring designed to serve a single Unit but located outside the boundaries of that Unit, in accordance with California Civil Code Section 1351(i). Exclusive Use Residential Common Area balcony, patio, terrace and storage area are depicted and assigned on the Residential Condominium Plan or Sublease of a Residential Unit, and Exclusive Use Residential Parking Spaces are depicted and assigned on Exhibit "D" attached hereto. 1, 1.41 Exclusive Use Residential Parking Spaces. Exclusive Use Residential Parking Spaces means the parking spaces which are for the exclusive use of the Residential Owners, as designated on Exhibit "D" attached hereto. 1. 1.42 Family. Family means (a) one or more natural individuals related to each other by blood, marriage or adoption, or (b) a group of natural individuals not all so related, but who live as a common household in a Residence. 1. 1.43 FHLMC. FHLMC means the Federal Home Loan Mortgage Corporation created by Title II of the Emergency Home Finance Act of 1970, and its successors. 1. 1.44 Fiscal Year. Fiscal Year means the fiscal accounting and reporting period of the Association selected by the Board. 1.1.45 FNMA. FNMA means the Federal National Mortgage Association, a government- sponsored private corporation established pursuant to Title VIII of the Housing and Urban Development Act of 1968, and its successors. 1. 1.46 General Common Area. General Common Area means all Common Area and Joint Use Area, the cost of maintenance of which is a General Common Expense as specified in the Budget. JRS\30601.0001 \402281.910/32011 1.1.47 General Common Expenses. General Common Expenses means those Common Expenses specified in the Budget attributable solely to the General Common Area and /or the general operations, activities and /or expenditures otherwise performed or incurred by the Association for the benefit of all of the Owners and the Properties (i.e., those Common Expenses not constituting Residential Common Expenses or Commercial Common Expenses). 1. 1.48 GNMA. GNMA means the Government National Mortgage Association administered by the United States Department of Housing and Urban Development, and its successors. 1. 1.49 Governing Authority. Governing Authority means the City, Agency and County and the various departments, divisions, employees and representatives thereof and any other governmental or quasi - governmental authority or agency with jurisdiction over the Properties (e.g., the Coastal Commission). 1. 1.50 Ground Lease. Ground Lease means the Ground Lease of the Properties between Declarant and the City, Recorded on 2011 as Instrument No. Official Records of Los Angeles County California, as amended from time to time. 1. 1.51 Hazardous Materials. Hazardous Materials means any toxic substance, material or waste which is or becomes (i) regulated by any local governmental authority, the State of California or the United States government; or (ii) defined as a "hazardous waste," "extremely hazardous waste," "restricted hazardous waste," "Non -RCRA hazardous waste," "RCRA hazardous waste" or "recyclable material' under any federal, state or local statute or regulation promulgated thereunder. 1.1.52 Improvements. Improvements means all structures and appurtenances thereto, including without limitation the Parking Structure, Podium, Condo Parking Area, Condo Access Facilities, Joint Access Facilities, Joint Use Parking Area and all buildings, walkways, irrigation systems, controlled access facilities, recreational facilities, roads, driveways, fences, all types of walls, awnings, stairs, decks, all types of landscaping and plantings, the Public Art, bicycle storage spaces originally installed by Declarant or the Association, antennae, windbreaks, the exterior surfaces of any visible structure and the paint on such surfaces, poles, signs exterior air conditioning and water softener fixtures or equipment on the Properties. The Design Review Committee may identify additional items that are Improvements. 1. 1.53 Includes, Including. Whether capitalized or not, includes and including mean "includes without limitation" and "including without limitation," respectively. 1.1.54 Increase Election. Increase Election means a meeting or election of the Association in which more than fifty percent (50 %) of the Owners, Residential Owners or Commercial Owners, as applicable, are represented. 1.1.55 Initial Budget. Initial Budget means the Budget reviewed by the DRE and in effect upon the issuance of the most recently issued Final Subdivision Public Report for the Project by the DRE. JRS\30601.000 A402281.9 10/3/2011 1.1.56 Invitees. Invitees means the family, guests, tenants, employees, customers or other invitees, as applicable, of Owners. 1. 1.57 Joint Access Facilities. Joint Access Facilities means the "Joint Access Facilities" as defined in the Reciprocal Easement Agreement. 1.1.58 Joint Use Area. Joint Use Area means the "Joint Use Area" as defined in the Reciprocal Easement Agreement. 1.1.59 Joint Use Area Rules. Joint Use Area Rules means the "Joint Use Area Rules" as defined in the Reciprocal Easement Agreement. 1. 1.60 Joint Use Parking Area. Joint Use Parking Area means the parking area in the Parking Structure designated on Exhibit "E" attached hereto which is for the joint use of (a) Commercial Unit Invitees; (b) Residential Unit Invitees (excluding Owner, family members, tenants and occupants of Units) and (c) guests of the Apartment Tenants. Use of the Joint Use Parking Area shall be subject to this Declaration and the Reciprocal Easement Agreement. 1. 1.61 Living Street. Living Street means the "Living Street' as defined in the Reciprocal Easement Agreement. 1.1.62 Maintain. Whether capitalized or not, maintain means maintain, repair and replace. 1.1.63 Maintenance Guidelines. Maintenance Guidelines means any current written guidelines or manuals setting forth procedures, standards or schedules for inspection, maintenance or operation of Improvements within the Properties which may be provided to the Association or to Owners by Declarant or any applicable Governing Authority. 1.1.64 Manager. Manager means the Person retained by the Association to perform management functions of the Association as limited by the Restrictions and the terms of the agreement between the Association and the Manager. 1.1.65 Member. Member means each Owner of a Condominium. Each Owner is a Member of the Association 1.1.66 Membership. Membership means the voting and other rights and privileges of Members of the Association, as provided in the Restrictions, together with their correlative duties. 1.1.67 Mortgage. Mortgage means any Recorded document, including a deed of trust, encumbering a Condominium or other portion of the Properties to secure the performance of an obligation. 1.1.68 Mortgagee. Mortgagee means a Person to whom a Mortgage is made, unless the Person has assigned his rights under the Mortgage by a Recorded assignment. If the Person has assigned his rights under the Mortgage by a Recorded assignment, then the assignee of the rights is the Mortgagee. Mortgagee shall include the beneficiary under a deed of trust. JRS\30601.0001 \402281.9 10/3/2011 1. 1.69 Mortgagor. Mortgagor means a Person who Mortgages his property to another and shall include the truster under a deed of trust. 1. 1.70 Notice and Hearing. Notice and Hearing means written notice and a hearing before the Board, as provided in the Bylaws. 1. 1.71 Official Act. Official Act means any act or omission performed by a Board member, Association officer, Design Review Committee member or any other Association committee member that is within what such person reasonably believes to be the scope of that person's Association duties. 1.1.72 Olympic Plaza. Olympic Plaza means the "Olympic Plaza" as defined in the Reciprocal Easement Agreement. 1.1.73 Owner. Owner means the Person or Persons, including Declarant, holding a Subleasehold Estate in a Condominium. Each Owner has a Membership in the Association. The term "Owner" includes a seller under an executory contract to assign a Sublease but excludes Mortgagees. An Owner may be either a Residential Owner or a Commercial Owner, as applicable. 1. 1.74 Parking Structure. Parking Structure means the parking structure which provides parking for the Properties and Apartment Parcel and is located below both the Properties and Apartment Parcel. 1. 1.75 Person. Person means a natural individual recognized as such under California law. When the word "person" is not capitalized, the word only refers to natural persons. 1. 1.76 Podium. Podium means engineered post- tension concrete deck above the Parking Structure on which all Units are constructed constituting the base of the Project. 1.1.77 Project. Project means the Properties, together with the Improvements thereon which are divided into Condominiums in accordance with Section 1350 of the California Civil Code, including the Common Areas thereon and the Units therein. The Project is a "condominium project" as defined in Section 1351(f) of the California Civil Code. The Project is a "common interest development" as defined in Section 1351(c) of the California Civil Code. 1.1.78 Properties. Properties means the Subleasehold Estates in the Units and the Common Area. Any references in this Declaration to the Properties are references to the Properties as a whole and to portions thereof. 1. 1.79 Public Art. Public Art means the public art pieces located within the Project pursuant to the requirements of the Private Developer Cultural Arts Ordinance adopted by the City. 1.1.80 Reciprocal Easement Agreement. Reciprocal Easement Agreement means that certain Reciprocal Easement Agreement With Covenants, Conditions and JRS\30601.0001 \402281.910(3/2011 - 10 Restrictions between Declarant and Apartment Parcel Owner, Recorded on as Instrument No. , in the Official Records of the County. 1.1.81 Reconstruction Assessment. Reconstruction Assessment means a charge levied by the Board against all Owners, Residential Owners and /or Commercial Owners, as applicable in accordance with this Declaration, and their Condominiums, representing their share of the Association's cost to reconstruct any Improvements on the General Common Area, Residential Common Area and /or Commercial Common Area, as applicable. Such charge shall be levied among the applicable Owners and their Condominiums in the same proportions as the relative interior Square Footage of such Owner's Units, expressed as percentages, and computed by dividing the interior Square Footage of each applicable Unit by the total interior Square Footage of all of the applicable Units. For example, if the Reconstruction Assessment relates solely to the Residential Common Area, the Reconstruction Assessment shall be assessed against the Residential Owners (based on the above formula), not the Commercial Owners. Reconstruction Assessments are special assessments as described in California Civil Code Section 1366. 1.1.82 Record, File, Recordation. Record, File, or Recordation means, with respect to any document, entry of such document in official records of the County Recorder. 1.1.83 Residence. Residence means a Residential Unit together with any Exclusive Use Residential Common Area reserved for the benefit of such Residential Unit but excluding the Exclusive Use Residential Parking Space(s) and storage areas assigned to the Residential Unit. 1.1.84 Residential Common Area. Residential Common Area means the Common Area designated as Common Area on the Residential Condominium Plan. 1.1.85 Residential Common Expenses. Residential Common Expenses means those Common Expenses attributable only to the Residential Common Area and /or the operations, activities, and /or expenditures otherwise performed or incurred by the Association solely for the benefit of the Residential Owners, including without limitation the costs for maintenance of the recreational facilities on the Residential Common Area, the Condo Parking Area and the Condo Access Facilities, the costs to operate the car share service described in this Declaration (including without limitation providing and maintaining a signage.system for notification of the location and availability of car share vehicles) and the Association's portion of the costs for maintenance of the Joint Access Facilities under the Reciprocal Easement Agreement. Under no circumstances shall the Commercial Owners be responsible for, and no Assessment shall be levied against any Commercial Owner with respect to, any Residential Common Expenses. 1. 1.86 Residential Condominium. Residential Condominium means a Condominium interest in the Project which is owned by a Residential Owner. 1. 1.87 Residential Condominium Plan. Residential Condominium Plan means the Recorded plan consisting of (a) a description or survey map of the Residential Units and Residential Common Area, which shall refer to or show monumentation on the ground, (b) a JRS\30601.00011402281.9 10/3/2011 11 three - dimensional description of the Residential Units and Residential Common Area, one or more dimensions of which may extend for an indefinite distance upwards or downwards in sufficient detail to identify the Residential Common Area and each Residential Unit, and (c) a certificate consenting to the Recordation thereof signed and acknowledged by Declarant, and if required for Recordation, the record owner of fee title to the land on which the Properties are located, and by either the trustee or the Mortgagee of each Recorded Mortgage encumbering the Properties or a portion thereof. The amendment of the Residential Condominium Plan shall not require the approval of or execution by the Commercial Owners and shall only require the approval of and execution by the Residential Owners. 1.1.88 Residential Owner. Residential Owner means an Owner of a Residential Condominium. 1. 1.89 Residential Unit. Residential Unit means a Unit shown on the Residential Condominium Plan. 1.1.90 Restrictions. Restrictions means this Declaration, the Articles, Bylaws and Rules and Regulations. 1. 1.91 Rules and Regulations. Rules and Regulations means the current Mules and regulations for the Properties, as amended from time to time. 1. 1.92 Special Assessment. Special Assessment means either (a) a charge against an Owner reimbursing the Association for costs incurred by the Association in the enforcement of the Restrictions, or (b) a reasonable fine or penalty, plus interest and other charges on such Special Assessment as provided for in this Declaration. 1. 1.93 Square Footage. Square Footage means the number of gross square feet comprising the Unit based on the Unit dimensions shown in the Condominium Plan without regard to whether such dimensions are bounded by the interior or exterior surfaces of boundary walls. Square Footage shall not include Exclusive Use Residential Common Area attributable to such Unit. Notwithstanding anything contained herein to the contrary, Square Footage shall not be determinative or a representation or assurance of the boundaries of the Unit itself. The definition of Square Footage in this Section is solely for the purpose of calculating the allocation of Assessments and such other calculations among the Commercial Units and Residential Units shall be determinative in all such circumstances. 1. 1.94 Sublease. Sublease means the individual sublease of a Unit originally executed by the Association and Declarant and recorded for each Unit as it may be assigned by Declarant to purchasers. 1.1.95 Subleasehold Estate. Subleasehold Estate shall mean the subleasehold interest in a Unit owned by each Owner. All references in this Declaration to ownership or sale of a Condominium shall be deemed to refer to ownership of a Subleasehold Estate or assignment of a Subleasehold Estate. 1.1.96 Sub- Metered Expenses. Sub - Metered Expenses means any utility charges that are separately sub - metered to a Unit. The Sub - Metered Expenses may also include JRS\30601.0001\402281.9 10/3/2011 12 any proportionate charges relating to the operation of the equipment used to deliver and meter the utility and to read the sub - meters and bill the Sub - Metered Expenses. The Sub - Metered Expenses for a particular Condominium shall be billed to each applicable Owner and treated as an additional component of the Annual Assessment for such Owner's Condominium. 1.1.97 Unit. Unit means a separate interest in space as defined in Section 1351(f) of the California Civil Code. Each Unit is a separate Subleasehold Estate, as separately shown, numbered and designated in the Condominium Plan. Each Unit includes the frames and hardware of all entry doors and all glass portions of the windows and doors that are constructed at Unit boundaries. The boundaries of the Unit are approximately depicted in the Condominium Plan. In interpreting deeds, declarations and plans, the existing physical boundaries of the Unit or a Unit constructed or reconstructed in substantial accordance with the Condominium Plan and the original plans thereof, if such plans are available, shall be conclusively presumed to be its boundaries, rather than the description expressed in the deed, Condominium Plan or Declaration, regardless of settling or lateral movement of the building and regardless of minor variances between boundaries, as shown on the Condominium Plan or defined in the deed and Declaration, and the boundaries of a building as constructed or reconstructed. The windows and sliding glass doors are portions of the Unit. A Unit shall be either a Residential Unit or a Commercial Unit. 1. 1.98 Variable Costs. Variable Costs means those certain variable costs listed in the Initial Budget attributable to the cost of insurance, gas, water, paint, exterior and roof maintenance, generator and cooling tower maintenance, electricity, certifications, fire alarm systems, security systems, fire escape stairways, domestic water pumps, water and sewer lines, concierge services, Association Personnel and the Manager and other such costs in the Initial Budget. 1. 1.99 Water Quality Management Plans. Water Quality Management Plans means all water quality management plans that may be prepared for the Properties and applicable to the Properties, in compliance with applicable federal, state and local laws and approved by the applicable Governing Authorities. The Water Quality Management Plans contain, among other things, certain BMPs that must be followed by the Association and the Owners and other residents and occupants within the Properties. The Water Quality Management Plans and the related BMPs may be amended or otherwise modified at any time by Declarant and/or the Governing Authorities having jurisdiction over such matters. 1.2 Interpretation. 1.2.1 General Rules. This Declaration shall be liberally construed to effectuate its purpose of creating a uniform plan for the creation and operation of a mixed -use condominium development and for the maintenance of the Common Area. As used in this Declaration, the singular includes the plural and the plural the singular; and the masculine, feminine and neuter each includes the other, unless the context dictates otherwise. 1.2.2 Articles, Sections and Exhibits. The Article and Section headings have been inserted for convenience only, and may not be considered in resolving questions of interpretation or construction. Unless otherwise indicated, any references in this Declaration to JRS\30601.0001 \402281.9 10/32011 13 articles, sections or exhibits are to Articles, Sections and exhibits of this Declaration. Exhibits attached to this Declaration are incorporated herein by this reference. 1.2.3 Priorities and Inconsistencies. If there are conflicts or inconsistencies between this Declaration and the Articles, Bylaws, Rules and Regulations, or Condominium Plan (collectively, "Project Documents', the provisions of this Declaration shall control. If there is any conflict between the Project Documents and Reciprocal Easement Agreement, except as otherwise provided in (a) the Reciprocal Easement Agreement or (b) Section 5.7.4 of this Declaration, the Reciprocal Easement Agreement shall control. If there is any conflict between (i) the Project Documents (including without limitation this Declaration) and/or Reciprocal Easement Agreement and (ii) the Ground Lease, except as otherwise provided in the Ground Lease, the Ground Lease shall control. If there is any conflict between the Project Documents and/or Reciprocal Easement Agreement and the Development Agreement, the Development Agreement shall control. 1.2.4 Severability. The provisions of this Declaration are independent and severable. A determination of invalidity or partial invalidity or unenforceability of any one provision of this Declaration by a court of competent jurisdiction does not affect the validity or enforceability of any other provisions of this Declaration. 1.2.5 Statutory References. All references made in this Declaration to statutes are to those statutes as currently in effect or to subsequently enacted replacement statutes. ARTICLE II RESIDENTIAL CONDOMINIUM USE RIGHTS AND RESTRICTIONS The Residential Units shall be held, used and enjoyed subject to the following restrictions and exemptions and rights of Declarant in the Restrictions. Except as provided in Article III, this Article II shall not apply in any way to the Commercial Units. All references in this Article to Units shall be to Residential Units. 2.1 Single Family Use. Each Residential Unit shall be used as a dwelling for a single Family and for no other purpose. No Exclusive Use Residential Common Area or vehicle of any kind may be used as a residence in the Properties, either temporarily or permanently. The Residential Common Area, including Exclusive Use Residential Parking Spaces and other amenities contemplated as a part of the Properties, will not be leased by Declarant to the Owners or the Association. Residential Owners may also rent Condominiums to Declarant for use as sales offices, models and parking areas. 2.2 Business or Commercial Activity. No Residential Unit shall ever be used for any business, commercial (including auctions or similar events), manufacturing, mercantile, storage, vending or other nonresidential purposes, including any activity for which the provider is compensated or receives any consideration, regardless of whether the activity is engaged in full- or part-time, generates or does not generate a profit, or requires or does not require a license. This Section does not preclude a Residential Owner from any of the above - described activities provided that: (a) such activities comply with law; (b) the patrons or clientele of such activities do not visit the Residential Unit or park automobiles or other vehicles in the Properties; JRS\30601.000lk402281.9 10/32011 14 (c) the existence or operation of such activities is not apparent or detectable by sight, sound or smell from outside the boundaries of the Residential Unit; (d) no such activity increases the Association's liability or casualty insurance obligation or premium; and (e) such activities are consistent with the character of the Properties and conform with the provisions of this Declaration. 2.3 Nuisances. Noxious and offensive activities are prohibited on the Properties or on any public street abutting or visible from the Properties. All horns, whistles, bells or other sound devices; except security devices used exclusively to protect the security of a Residence and its contents, are also prohibited. No barbecues or other such devices shall be permitted to emit smoke that enters the Units or Exclusive Use Residential Common Areas of others. Noisy, unsightly, unusually painted or smoky vehicles, large power equipment and large power tools (excluding lawn mowers and other equipment used in connection with ordinary landscape maintenance), off -road motor vehicles or items which may unreasonably interfere with television or radio reception to any Condominium and objects which create or emit loud noises or noxious odors may not be located, used or placed in the Properties or on any public street abutting or visible from the Properties, or exposed to the view of other Owners without the Board's written approval. The Board is entitled to determine if any noise, odor or activity producing such noise or odor constitutes a nuisance; provided, however, that any such determination must be consistent with any other specific restrictions or limitations of the Restrictions. The Board may also adopt a policy regarding the enforcement of nuisance claims made by an Owner which claims do not affect the maintenance, repair and replacement of any Common Area or otherwise have a general and material adverse impact on the Properties or a material portion thereof (e.g., barking dog, noise disturbance) ( "Private Nuisance'. Such policy may provide that (a) a complaining Owner must satisfy certain requirements such as reporting first to police or other Governing Authorities with enforcement capabilities before the Board will take action on the Private Nuisance claim, or (b) Private Nuisance claims be handled solely by the complaining Owner filing a complaint with the applicable Governing Authority or bringing a personal claim against the Owner responsible for the Private Nuisance; provided, however, that any such policy shall be enforced by the Board in a consistent manner. The Board may also establish a list of Private Nuisances that will not be enforced by the Board. No Owner may (a) permit or cause anything to be done or kept on the Properties or on any public street abutting or visible from the Properties which may (i) increase the rate of insurance on the Properties, (ii) result in the cancellation of such insurance, or (iii) obstruct or interfere with the rights of other Owners, or (b) commit or permit any nuisance thereon or violate any law. Each Owner shall comply with all requirements of the local or state health authorities and with all other laws regarding occupancy and use of a Condominium. Each Owner is accountable to the Association and other Owners for the conduct of persons residing in or visiting the Owner's Residence. Any damage to the Common Area, personal property of the Association, or property of another Owner caused by such persons shall be repaired at the sole expense of the Owner of the Unit where such persons are residing or visiting. 2.4 Signs. Except as provided in California Civil Code Section 1353.6, no sign, poster, display, billboard or other advertising device of any kind shall be displayed to the public view on any portion of the Properties or on any public street abutting or visible from the Properties, or shown or displayed from any Residential Condominium or Exclusive Use JRS\30601.0001 \402281.9 10/312011 15 Residential Common Area, without the prior written consent of the Design Review Committee; provided, however, the restrictions of this Section shall not apply to any sign or notice of customary and reasonable dimension which states that the Residential Condominium is for rent or sale, so long as it is consistent with the standards promulgated by the Design Review Committee. Such sign or notice may be placed within a Unit, and may also be placed upon the Common Area with the prior written approval of the Design Review Committee in an area specifically established by the Design Review Committee for such purpose. This Section shall not apply to any signs used by Declarant or its agents in connection with the sale of Condominiums or the construction or alteration of the Units or Common Area, traffic and visitor parking signs installed by Declarant. Notwithstanding the foregoing, nothing contained in this Section shall be construed in such manner as to permit the maintenance of any sign which is not in conformance with any ordinance of the City or County, nor prohibit display of signs required to be permitted by applicable law. The rights of Residential Owners to display religious and holiday signs, the United States flag, symbols and decorations within their Residential Units and Exclusive Use Residential Common Area balconies, patios and terraces of the kinds normally displayed in residential condominium developments shall not be abridged, except the Association may adopt time, place and manner restrictions with respect to such displays if they are visible outside of the Residential Unit. 2.5 Parking and Vehicular Restrictions. 2.5.1 Authorized Vehicles. The following vehicles are "Authorized Vehicles ": standard passenger vehicles, including automobiles, passenger vans designed to accommodate ten (10) or fewer people, motorcycles and pickup trucks having a manufacturer's rating or payload capacity of one (1) ton or less. Authorized Vehicles may only be parked in the parking areas depicted on Exhibit "D" and Exhibit "E" attached hereto. The Association has the power to identify additional vehicles as Authorized Vehicles in the Rules and Regulations to adapt this restriction to other types of vehicles. 2.5.2 Prohibited Vehicles. Vehicles that are not Authorized Vehicles shall be considered "Prohibited Vehicles." Prohibited Vehicles include the following without limitation: (a) recreational vehicles (e.g., motor homes, travel trailers, camper vans and boats), (b) commercial -type vehicles (e.g., stakebed trucks, tank trucks, dump trucks, step vans, concrete trucks, and limousines), (c) buses or vans designed to accommodate more than ten (10) people, (d) vehicles having more than two (2) axles, (e) trailers, (f) inoperable vehicles or parts of vehicles, (g) aircraft, and (h) any vehicle or vehicular equipment deemed a nuisance by the Association, including any vehicle that is of a size that cannot safely be driven and /or parked in the Parking Structure. Prohibited Vehicles may not be parked, stored or kept on any public or private street in, adjacent to or visible from the Properties or any other Common Area parking area except, subject to compliance with the Restrictions, for brief periods for loading, unloading, making deliveries or emergency repairs (but subject to Section 2.5.3(e) below). If a vehicle qualifies as both an Authorized Vehicle and a Prohibited Vehicle, then the vehicle is presumed to be a Prohibited Vehicle unless the vehicle is expressly authorized as an Authorized Vehicle in writing by the Association. The Association has the power to identify additional vehicles as Prohibited Vehicles in the Rules and Regulations to adapt this restriction to other types of vehicles. JR9A30601.0001\402281.9 1013 /2011 16 2.5.3 General Restrictions. Subject to the restriction on Prohibited Vehicles, . all vehicles owned or operated by or within the control of a Residential Owner or an occupant of a Residential Owner's Unit shall be parked in such Residential Owner's designated Exclusive Use Residential Parking Space. In addition: (a) No repair, maintenance or restoration of any vehicle shall be conducted on the Properties. (b) No vehicle may be parked or stored in the Properties unless it is operable and in good condition and repair. (c) Non - operable vehicles (including due to flat tires) may be towed at the Owner's expense (assessable as a Special Assessment) after 48 -hours notice. (d) No Owner, nor any Invitee of such Owner shall park or cause to be parked any vehicle in such a manner as to impede or prevent ready access to (i) any entrance or exit, (ii) any of the parking or storage areas for the Project, (iii) any other vehicle or parking space or (iv) any parking space other than such Owner's Exclusive Use Residential Parking Space or any guest parking space. (e) No vehicle may remain in any access driveway of the Project for more than ten (10) minutes. (f) Vehicles may not be washed on the Properties except as provided for by the Board in the Rules and Regulations. (g) No Exclusive Use Residential Parking Space may be severed from any Unit except in accordance with this Declaration. (h) No Exclusive Use Residential Parking Space may be rented to or leased to a non Owner except in connection with the lease of the appurtenant Unit. (i) No explosives, fireworks, or highly flammable material such as gasoline, kerosene, oil, oil -based paints, solvents, etc., may be stored in the Parking Structure or any other area of the Project. 0) Owners shall keep their Exclusive Use Residential Parking Spaces free of oil, brake fluid, power steering fluid or other fluid leaks, at all times. If any Owner fails to perform such maintenance, the Board shall have the right, without obligation, to perform any necessary cleaning or maintenance and /or tow the offending Owner's vehicle which is leaking such fluids, after providing sufficient notice to such Owner to repair such leak, and thereafter assess such Owner the cost of such clean up and /or towing, which Assessment shall be deemed a Special Assessment in accordance with the terms of this Declaration. (k) For any violation of these restrictions, or any other Rules and Regulations related to vehicles or parking as may be adopted by the Board from time to time, the offending vehicle may be towed at the direction of the Association at the offending Owner's JRS \30601.0001 \402281.910 /3/2011 17 expense, the cost of which shall be borne by such Owner and assessed against same as a Special Assessment. (1) Neither the Association nor any of its officers, directors, agents or employees shall be liable to any Owner, or to any member of his or her Invitees, for any theft of, or damage to, any vehicle on the Project. Each Owner shall indemnify, defend, and hold harmless the Association and the Association's officers, directors, agents, employees, and representatives from any injury, damages, claims, liabilities, costs or expenses caused by, arising out of, or related to the provisions of this Section, or any offending vehicle. 2.5.4 Additional Parking Regulations. The Board may (a) establish additional regulations regarding parking areas not assigned to Condominiums, including designating "parking," "guest parking," and "no parking" areas in the Condo Parking Area and Joint Use Parking Area (subject to Section 5.7.4 below), (b) establish reasonable regulations for parking areas assigned to Condominiums, and (c) enforce all parking and vehicle use regulations applicable to the Properties. The parking regulations may include, subject to Section 5.7.4 below, restrictions on the location and timing of the parking of trucks and other vehicles making deliveries to the Properties and the requirement of Association supervision of certain deliveries and move -ins. The Association may issue parking tags, stickers or other identification and access devices or codes that all Owners must affix to their vehicles or use for access to parking areas. Enforcement actions the Association may take to enforce any or all of the parking restrictions in this Declaration and any regulations adopted by the Board include, without limitation, removing violating vehicles from the Properties pursuant to California Vehicle Code Section 22658 or other applicable laws. If the Association fails to enforce any of the parking or vehicle use regulations, the applicable Governing Authority may enforce such regulations. 2.5.5 Use of Joint Use Parking Area. The Joint Use Parking Area shall be used subject to the provisions of Section 5.7.4. 2.6 Animal Regulations. The only animals that may be raised, bred or kept in any Residence are (a) dogs (other than pit bulls, presa canario dogs or rottweilers), cats, fish, birds and other usual household pets ( "Household Pets', provided that they are not kept, bred or raised for commercial purposes, in unreasonable quantities or sizes or in violation of the Restrictions, or (b) subject to the prior approval of the Association, any animal other than a Household Pet (collectively "Authorized Pets'. No Authorized Pet shall be kept on the Project if it constitutes or creates a nuisance. The Association is also entitled to restrict breeds or specific Authorized Pets that may create a danger of personal injury to persons coming on the Properties. As used in the Declaration, "unreasonable quantities" ordinarily means more than two (2) pets per Residence; however, the Association may determine that a reasonable number in any instance may be more or less. The Association may limit the size of Authorized Pets and may prohibit maintenance of any Authorized Pet which, in the Association's opinion, constitutes a nuisance to any other Owner. Authorized Pets must be kept either in an enclosed area or on a leash held by a person capable of controlling the animal. Each Person is liable for any unreasonable noise and for damage to person or property caused by any animals brought or kept on the Properties by such Person. Each Person shall clean up after such Person's animals. Any Person who keeps any animal, including without limitation any insect or reptile, in the Properties shall indemnify, defend and hold harmless the Association, its officers, directors, contractors, JM30601.000IW0228191002011 18 agents and employees from any claim brought by any Person against the Association, its officers, directors, agents and employees for personal injuries or property damage caused by such animals. None of the foregoing shall serve to allow any Owner or the Owner's Invitees to maintain any animal, insect, fish or reptile on the Properties other than an Authorized Pet. 2.7 Communications Systems. 2.7.1 Dishes and Antenna. No radio station or shortwave operators of any kind shall operate from any Unit or any other portion of the Properties unless approved by the Board. With the exception of the "Central System ", as defined below, maintained by the Association, no exterior radio antenna, "C.B." antenna, television antenna, earth receiving station, satellite dish, other antenna, or any exterior wiring, of any type, shall be erected or maintained anywhere in the Properties unless approved by the Board. If approved by the Board, any television antenna, satellite dish or other similar Improvement installed by an Owner shall be installed in accordance with the Architectural Guidelines and only in the specific areas of the Properties designated by Declarant or the Board for installation of such devices. Under no circumstances shall any Residential Owner drill through, or install any Improvements upon, the exterior of the building and /or any Common Area with respect to the installation or maintenance of any antenna or wiring, unless approved by the Board and, for the five (5) year period after the first Close of Escrow, Declarant. Notwithstanding anything herein to the contrary, if a Central System has been installed and is operating in the Project, each Owner that desires to obtain satellite television services shall be required to utilize such Central System and shall be prohibited from installing an individual antenna serving such Owner's Unit. Each Owner acknowledges that such Central System provides adequate access to such satellite services and the airwaves. In any event, any television antenna, satellite dish, or other similar Improvement shall be installed in accordance with the Architectural Guidelines and this Section. This Section is subject to Section 1376 of the California Civil Code and any applicable laws or regulations. 2.7.2 Central System. Notwithstanding anything in this Declaration to the contrary, the Association may maintain in the Project, at a location determined by the Board, a satellite antenna which will provide satellite communication services to all Units ( "Central System ") . Each Owner may elect to receive service from the Central System in accordance with all Rules and Regulations established by the Association and subject to any fees that may be charged by the service provider. All connections to the Central System by Owners shall be in accordance with the requirements of the Association and no Owner shall be entitled to connect to or otherwise use the Central System without complying with all requirements for connection established by the Association. No Owner shall have any right of physical access to the Central System or any equipment serving same except as authorized by the Association in writing in its sole discretion. 2.7.3 Short Wave Transmissions. Notwithstanding the foregoing, no radio station or short-wave operations of any kind may operate from any Residential Unit or Exclusive Use Residential Common Area balcony, patio or terrace unless approved by the Design Review Committee. 2.8 Trash. Trash shall be disposed of in containers and /or trash chutes designated by the Association. The cost of trash collection and removal and trash bin rentals shall be borne by JRS�30601.0001\402281.910/32011 19 the Association and shall constitute a portion of the Common Expenses. Each Residential Owner, by acceptance of a Sublease to a Unit, acknowledges that the trash receptacles and chutes may create odor and noise associated with their use. 2.9 Installations. 2.9.1 Generally. No Residential Owner may cause or permit any mechanic's lien to be filed against the Properties for labor or materials alleged to have been furnished or delivered to the Properties or any Residential Condominium for such Residential Owner, and any Residential Owner who does so shall immediately cause the lien to be discharged within five (5) days after notice to the Residential Owner from the Board. If any Residential Owner fails to remove such mechanic's lien, the Board may discharge the lien and charge the Residential Owner a Special Assessment.for such cost of discharge. 2.9.2 Outside Installations. Under no circumstances shall any Residential Owner alter, impair, modify or penetrate the Podium for any reason whatsoever. Unless approved by the Design Review Committee, the following shall not be allowed: (a) outside installations, including clotheslines, balcony, patio or deck covers, wiring, air conditioning equipment, water softeners, other machines and other Improvements, (b) Improvements protruding through the walls or roofs of buildings and (c) other exterior additions or alterations to any Residential Unit. Outdoor patio or lounge furniture, plants and barbecue equipment may be kept pursuant to the Restrictions. No clothing, fabrics or unsightly articles may be hung, dried or aired on the Properties so that it is visible from other Units or the street. Articles which are unsightly may be defined in the Rules and Regulations. No plants or seeds infected with noxious insects or plant diseases may be brought upon, grown or maintained upon the Properties. No outdoor fires are permitted, except in gas barbeques commercially designed therefor, kept and used in uncovered Exclusive Use Residential Common Area "terraces" designated on the Residential Condominium Plan and other locations approved by the Board and used in such a manner that they do not create a fire hazard. However, notwithstanding the foregoing no barbeque fires are permitted in any Exclusive Use Residential Common Area "balconies" and "patios" designated on the Residential Condominium Plan, and the use of charcoal burning barbeques is prohibited in the Properties. 2.9.3 Inside Installations. All exposed window coverings shall be white in color unless otherwise approved by the Design Review Committee. No paper, cardboard or other temporary window coverings shall be permitted; provided, however, for a period not to exceed thirty (30) days following the Close of Escrow for a Residential Unit, the Residential Owner of such Residential Unit may use clean pressed white sheets, neatly hung, as temporary window coverings. Nothing may be done in any Unit or in, on or to the Common Area which may impair the structural integrity of any building in the Properties or which structurally alters any such building except as otherwise expressly provided in this Declaration. No alteration, repair or replacement of wall coverings in Residential Units which may diminish the effectiveness of the sound control engineering in the buildings in the Properties may be made. Water beds may not be kept or used within the Project. Aquariums in excess of thirty (30) gallons may not be kept or used within the Project without the prior approval of the Design Review Committee. JRSl30601.0001\402281.9 10 /3/2011 20 2.10 Bicycle Storage. Bicycles may not be stored on balconies, terraces or patios. The Association shall maintain a minimum of thirty (30) individual bike racks in the Project each designed to accommodate two (2) bicycles or an alternate design to be approved by the City Planning Director in such locations as required by the Development Agreement. Bicycles and similar devices may only be stored in the designated storage areas located in the Properties, including without limitation bicycle racks or bicycle lockers, an attended cage or a secure parking area. The bicycle storage spaces in the Properties shall be available on a first come, first serve basis. 2.11 Further Subdivision. Except as provided in Sections 2.12, no Owner may physically or legally subdivide a Residential Unit in any manner, including any division of such Owner's Unit into time -share estates or time -share uses. This provision does not limit the right of an Owner to (a) rent or lease all such Owner's Unit in accordance with Section 2.13; (b) sell such Owner's Unit; or (c) transfer or sell any Condominium to more than one Person to be held by them as tenants -in- common, joint tenants, tenants by the entirety or as community property. Except as provided in this Declaration, there shall be no judicial partition of the Common Area, or any part thereof, for the term of this Declaration, nor may Declarant, any Owner or any other Person acquiring any interest in any Condominium in the Properties seek any such judicial partition. No Condominium in the Properties may be partitioned or subdivided without the written approval of the Mortgagee of any first Mortgage on that Condominium. 2.12 Right to Combine Residential Units. A Residential Owner shall have the right to cause two (2) or more adjoining Residential Units owned by such Owner ( "Combined Residential Units ") to be physically combined subject to the provisions of this Section and the provisions of this Declaration regarding Design Review Committee approval; provided, however, to be eligible for physical combination Units must be encumbered by identical Mortgages (and the Mortgagees of such Mortgages must all consent in writing thereto) and, in addition, after completion of the work of construction combining the Units (which may include total or partial removal of party walls, doors and other Common Area improvements), the Owner shall have and possess the total voting rights allocable to the Units to be combined and shall pay all Assessments allocable thereto (i.e., if two (2) Residential Units are combined, the Owner thereof shall have two (2) Class A votes and shall be responsible for the Assessments relating to both Residential Units). Any hallways or other Residential Common Areas that exclusively serve the Combined Residential Units shall be deemed to become Exclusive Use Residential Common Area appurtenant to the Combined Residential Units. The Combined Residential Units shall not be conveyed, sold or hypothecated separate and apart from one another. Combination of the Combined Residential Units shall not, in any event, require amendment of the Residential Condominium Plan. No Residential Owner shall have the right to combine Units until the following have been satisfied: 2.12.1 Design Approval. The Owner shall fully comply with the design review provisions of this Declaration and the Design Review Committee shall have received and approved all plans for such combination and all applicable governmental approvals, including, without limitation building permits shall have been obtained by the Owner. 2.12.2 Structural Support. A certificate stating that any portion of the Combined Residential Units and /or Common Area to be affected by the proposed combination is JRS\30601.0001 \402281.9 10132011 21 not required for the structural support of any Unit or any part of the Project. Said certificate shall be given by a structural engineer licensed in the State of California and approved by the Design Review Committee. 2.12.3 Indemnity. The Owner shall enter into an indemnity agreement in a form required by the Design Review Committee to release, indemnify, defend, and hold the Association harmless as a result of the work to be performed to combine the Units. 2.12.4 Other Documentation. The Owner shall execute and deliver any other documentation which is required by this Declaration or may otherwise required by the Design Review Committee. 2.12.5 Rescission of Approval. Notwithstanding any other provision herein, the Design Review Committee may rescind its approval of the proposed Unit combination if the work therefor is not performed in accordance with the documentation previously submitted to the Design Review Committee, or the Design Review Committee reasonably concludes that the structural integrity of the building has been impaired. In such event, each of the Combined Residential Units shall, at the Owner's sole expense, be made to conform with the documentation submitted to the Design Review Committee, or be restored to its prior condition. Any proposed combination of Units which in any way would result in the removal of any structural support for any Unit or Units or any other portion of the Project is strictly prohibited. Notwithstanding any provision of this Section to the contrary, Declarant shall have the absolute right to combine Units at any time and Declarant shall not be subject to the requirements of this Section or any other provisions of this Declaration regarding Board or Design Review Committee review and /or approval. 2.13 Lease of Residential Units. An Owner of a Residential Unit (other than Declarant who shall not be subject to the restrictions of this Section) may rent his or her Residential Unit, provided that the Unit is rented pursuant to a written lease or rental agreement, for a term of not less than one (1) year, subject to the following: 2.13.1 Lease Addendum. All such leases shall contain an addendum ( "Lease Addendum ") which shall be signed by the lessee and lessor and returned to the Association prior to the lessee's occupancy of the Unit. The Lease Addendum shall contain, at a minimum, the following terms: (i) lessee's acknowledgment and agreement to comply with all provisions of this Declaration and the Rules and Regulations and that any failure to do so shall constitute a default under the lease; (ii) there shall be no right of assignment or sublease; (iii) lessee shall carry "renter's insurance" and shall be required to provide proof thereof to the Association; and (iv) lessee's acknowledgment of the Association's right to initiate an unlawful detainer action against lessee in the event (1) the Owner fails to pay Assessments for the Unit and /or (2) lessee fails to abide by the terms of the lease, this Declaration and /or any Rules and Regulations. 2.13.2 Indemnity. Each Owner who leases a Unit shall indemnify, defend, and hold the (a) Association and its officers, directors, employees, invitees, (b) the other Owners and (c) the City and Agency and their respective members, officers, agents, employees, contractors and consultants harmless from any liability arising from the acts and omissions of his or her JRS\90601.0001 \402281.910/3/2011 22 lessee. Every Owner who chooses to lease his or her Unit agrees that the leasing Owner shall be held liable for all acts, whether negligent or non - negligent, of his or her lessee. 2.13.3 Use of Common Area. Upon the leasing of a Unit, each Owner automatically and exclusively assigns to the lessee the Owner's right to use the Common Area (including any Exclusive Use Residential Common Area appurtenant to such Unit) and any facilities thereon. The Owner may not exercise the right to use the Common Area and /or any facilities thereon until such Owner reassumes occupancy of the Unit. 2.13.4 Unlawful Detainer to Enforce Rules. Any Owner who shall lease a Unit shall be responsible for insuring compliance by such Owner's lessee with the Restrictions. Failure by a lessee to comply with the Section below entitled "Assignment of Rents," or failure of any Owner to take legal action against a lessee who is in violation of the Restrictions within ten (10) days after receipt of written demand to do so from the Board, shall entitle the Association to institute unlawful detainer proceedings on behalf of such Owner against the lessee. Any expense incurred by the Association, including reasonable attorneys' fees and costs, shall become a Special Assessment against the Owner and Unit. 2.13.5 Association Approval. No Owner may lease or rent a Unit without first obtaining the approval of the Association; provided, however, that such approval must not be unreasonably withheld and the Association must comply with all applicable laws and regulations, including, without limitation, the Federal Fair Housing Act (42 U.S.C.A. § §3601 et seq.) and the California Unruh Civil Rights Act (Civil Code § §51 et seq.). The Association shall withhold approval only for a reason or reasons rationally related to the protection, preservation and proper operation of the Project. If any Owner shall attempt to lease or rent to a person or entity without obtaining Association approval as herein provided, such lease shall be null and void. 2.13.6 Leasing Fee. In order to reimburse the Association for the additional expenses and risks that will result from leasing a Unit, the Owner shall be required, prior to lessee's occupancy of the Unit, to pay a non - refundable fee ( "Leasing Fee ") to the Association. If the lease is between one (1) and two (2) years, the Leasing Fee shall be equal to two (2) months of the Annual Assessments for the Unit. For each additional year that lessee leases the Unit, the lessee shall pay an additional one (1) months' Annual Assessment for the Unit to the Association. The Leasing Fee is in addition to the Annual Assessments owing for a Unit and the Owner shall remain liable for all Annual Assessments for the Unit during such time as the Unit is leased to the lessee. 2.13.7 Assignment of Rents. As security for the payment of Assessments, each Owner assigns to the Association all of his or her rights as landlord to: (i) collect the rents, issues and profits (collectively, "Rent') of said Owner's Unit, including Rent due and unpaid; (ii) initiate any unlawful detainer action against the lessee; (iii) enter upon and take possession of the Unit; (iv) re -rent the Unit in the Association's name and collect Rent without liability to the Owner, except for any Rent which may be collected over and above the Assessments owed to the Association by the Owner; and (v) avail itself of any other remedies permitted by law. Notwithstanding the foregoing, each Owner retains the right to collect Rent from his or her Unit for so long as the Owner shall be current in the payment of his or her JRS\30601.0001 \402281.9 10/3/2011 23 Assessments to the Association. Once an Owner becomes delinquent in the payment of his Assessments, such Owner's rights as landlord are extinguished in favor of the Association. Upon any delinquency by the Owner to pay Assessments as they come due, the Association may, upon ten (10) days' written notice to such Owner and to Owner's lessee, direct the lessee to make all Rent payments to the Association until such time as the Owner's delinquency is cured. The Association's right to collect Rent is without regard to the adequacy of any other security for such indebtedness. In the event proceedings are brought by the Association to enforce any of the provisions in this Section, the prevailing party shall be entitled to recover all fees and costs (including reasonable attorneys' fees and costs) incurred by such party in such proceeding. The assignment of Rents and powers described in this Section shall not affect, and shall in all respects be subordinate to, the rights and powers of the holder of any First Mortgage on any Unit. 2.13.8 Transfer of Occupancy. Prior to occupancy of a Unit by a lessee: (i) the Owner of the Unit shall promptly notify the Association in writing of the name and address of the lessee, as well as such other information relative to the lease and the lessee as the Association may reasonably request and (ii) provide the Association with a copy of the signed Lease Addendum prior to the occupancy of the Unit by the lessee. To defray the expense incurred by the Association in facilitating moves into and out of the Project by tenants (including the cost of wear and tear to the Common Areas), the Board may impose and collect a reasonable amount in the form of a Special Assessment from any Owner upon each transfer of occupancy of said Owner's Unit. Each Owner shall indemnify, defend and hold harmless the Association, as well as its officers, directors, and employees from any injury or damage resulting from the transfer of occupancy. 2.14 Drainage. No one may interfere with or alter the established drainage pattern over the Properties unless an adequate alternative provision is made for proper drainage with the Board's written approval. For the purpose of this Section, "established" drainage means the drainage which (a) exists at the time of the first Close of Escrow, or (b) is shown on any plans approved by the Board. 2.15 Water Supply System. No individual water supply, sewage disposal or water softener system is permitted in any Unit unless such system is designed, located, constructed and equipped in accordance with the requirements, standards, and recommendations of any water district having jurisdiction, the applicable Governing Authority, the Design Review Committee and all other governmental authorities with jurisdiction. 2.16 View Obstruction. Each Owner acknowledges that (a) there are no protected views in the Properties and no Unit is assured the existence or unobstructed continuation of any particular view, and (b) any construction, landscaping or other installation of Improvements by Declarant; other Owners or owners of other property in the vicinity of the Properties may impair and/or completely block the view from any Unit, and the Owners consent to such view impairment. Notwithstanding the foregoing, no vegetation or other obstruction may be installed or maintained on any Exclusive Use Residential Common Area balcony, patio or terrace or in a location or of a height that unreasonably obstructs the view from any other Residence in the vicinity thereof. If there is a dispute between Owners concerning the obstruction of a view from an Exclusive Use Residential Common Area balcony, patio or terrace, the dispute shall be JRS\30601.0001 \402281.910 /32011 24 submitted to the Design Review Committee, whose decision in such matters shall be binding. Any such obstruction shall, on request of the Design Review Committee, be removed or otherwise altered to the satisfaction of the Design Review Committee, by the Owner of the Residence on which the obstruction is located. Any obstruction in any Exclusive Use Residential Common Area patio, terrace or balcony which is exposed to the view of any Owner shall be removed or otherwise altered to the satisfaction of the Design Review Committee if it determines that the maintenance of such obstruction in its then - existing state is contrary to this Declaration. If an Owner fails to perform necessary removal or alterations, the Association may, after Notice and Hearing, enter on such Residence to perform such work. 2.17 Rights of Disabled. Subject to the provisions of Article VI, each Owner may modify such Owner's Residence, if reasonably necessary, and the route over the Common Area leading to the front door of such Residence, at such Owner's sole expense, to facilitate access to his Residence by persons who are blind, visually impaired, deaf or physically disabled, or to alter conditions which could be hazardous to such persons in accordance with California Civil Code Section 1360 or any other applicable law. 2.18 Use of Exclusive Use Residential Common Area Easement. Improvements and other items kept or stored on Exclusive Use Residential Common Area balconies, patios and terraces, including without limitation potted plants, other landscaping features and furniture, shall be subject to the Restrictions and require the approval of the Board, except as originally installed by Declarant. Unless installed by Declarant, all plants kept in the Exclusive Use Residential Common Area balconies, patios and terraces shall be kept in pots or planters which do not allow water to drain outside of such pot or planter, and no vegetation shall be permitted to extend beyond the railings, walls and /or other boundaries of the Exclusive Use Residential Common Area, except as approved by the Board. No plantings, vines or other vegetation shall be attached to or allowed to attach to wall, fences or railings that surround Exclusive Use Residential Common Area balconies, patios and terraces. No Owner shall change or alter the surface, fence or wall of any Exclusive Use Residential Common Area without the consent of the Board. No Owner shall modify or improve Exclusive Use Residential Parking Spaces nor shall any personal or other property (other than the Authorized Vehicle parked therein in accordance with this Declaration) be stored or kept in any Exclusive Use Residential Parking Space. No items, materials, substances or other personal property shall be kept in Exclusive Use Residential Common Area storage closets which would create any unsafe or unsanitary condition or result in a nuisance under this Declaration, including without limitation any Hazardous Materials, food, plants or growing materials and any other items which may create unreasonable noise, odor, or vibration. No Owner may rent or lease such Owner's Exclusive Use Residential Common Area storage closet to another Person other than an Owner. 2.19 Flooring Restrictions. Except for floor coverings (including without limitation carpet, carpet pads, stone, wood, tile, vinyl and other hard surface flooring) ( "Flooring's installed by Declarant; no Owner shall install any Flooring in such Owner's Unit except in accordance with the requirements and limitations of the Restrictions including Exhibit "G ". The prior approval of the Design Review Committee shall be required for the installation, repair or replacement of all Flooring to insure such compliance. The foregoing shall apply even if the replacement Flooring is the same as the original Flooring. In connection with any application to the Design Review Committee regarding Flooring, the Owner shall submit to the Board JRS130601.0001 \402281.9 10/3/2011 25 construction specifications clearly indicating the type of Flooring and the method and materials of installation. The specifications must clearly identify all materials, their composition and thickness. 2.20 Toxic or Noxious Matter; Disposal of Toxic and Hazardous Waste Products; Erosion and Drainage Control. Hazardous Materials shall not be stored or used in the Properties except in accordance with all applicable laws, including any applicable Storm Water Pollution Prevention Plan and any program established by the Association with respect thereto. Hazardous Materials such as toxic chemicals or hydrocarbon compounds such as gasoline, motor oil, anti - freeze, solvents, paints, paint thinners, wood preservatives and other such fluids shall not be discharged into any street or any storm drain or storm water conveyance system within the Properties. The use and disposal of Hazardous Materials, including pesticides, fungicides, herbicides, insecticides, fertilizers and other such chemical treatments, shall meet the applicable Governing Authority requirements as prescribed in their respective containers. 2.21 Moving and Deliveries. Vehicular access to the Properties is limited and therefore Residential Owners shall not have any furniture, appliances or personal property of any kind delivered to the Properties unless the Owner has requested in writing and obtained Association written approval of the date, time and duration of any move -in, move -out or delivery (regardless of whether the Residential Owner is using a third party delivery or moving company or service or is doing the move or delivery personally). All moving and delivery trucks, vans and other vehicles shall be parked only in locations designated by the Association, which due to the configuration of the Properties may not be close or easily accessible to the Residential Owner's Unit. Vehicles used for deliveries and /or moving shall not be parked in or Exclusive Use Residential Parking Spaces (unless the moving vehicle is owned by the Residential Owner, the Residential Owner is conducting the moving activities, the vehicle is parked in the Exclusive Use Residential Parking Space of the moving Residential Owner and such vehicle is authorized to be parked in the Exclusive Use Residential Parking Space by this Declaration). Moving vehicles may be parked in the Joint Use Parking Area subject to the Restrictions. The route through the Properties used to transport personal property shall be determined by the Association and followed by the Residential Owner. Due to access limitations, only a limited number of move -ins, move -outs and deliveries will be allowed per day and therefore Residential Owners shall provide the Association with sufficient advance notice of deliveries and move -iris and move -outs to insure access on the dates desired. The Association may also adopt Rules and Regulations (a) limiting days and hours in which Residential Owners may move -in or move -out of Units and for deliveries (in which case, Residential Owners may only move -in or move -out of the Residential Units and deliveries may only take place during those hours specified in the Rules and Regulations), (b) requiring Residential Owners to deliver to the Association a cash deposit as security for such Owner's compliance with this Declaration, and (c) creating monetary and other penalties for failure to comply with this Section and the Rules and Regulations. During the move -in, move -out or delivery, neither the delivery or moving service or the Owner (or the Owner's Invitees) shall play the vehicle radio or other radios, tapes, disc players or other audio media (other than such devices which are owned by the applicable Owner and located within the Owner's Unit and subject to the Rules and Regulations respecting noise). In addition, if an Owner does not comply with the provisions of this Section, a representative of the Association shall be entitled to require that any move -in, move -out or delivery be terminated regardless of the status of completion thereof and the Owner reschedule such move -in, move -out JRS\30601.0001 \402281.9 10/32011 26 or delivery with the Association. The Association shall have no liability of any kind to any Owner in connection with any such termination. The Owner shall indemnify, defend and hold the Association and other Owners and third parties harmless for any loss, damage or liability resulting from or arising in connection with the actions or inactions of the Owner or the Owner's Invitees, the move - in/delivery service and other Owner's Invitees, including without limitation damage to personal property and injuries to persons resulting from any move -ins, move -outs and deliveries and violations of the Restrictions. Owners shall insure that their tenants are aware of the requirements of this Section and shall insure that such tenants comply with same. The Association shall be entitled to create exceptions to certain of the foregoing requirements for deliveries that are of limited duration where the items delivered are small in size and/or limited in number. 2.22 Sound Attenuation. Each Owner agrees to minimize any noise transmission from such Owner's Unit and comply with (a) any of the Rules and Regulations which are designed. to minimize noise transmission and (b) the provisions of Exhibit "G ". 2.23 Leasing of Exclusive Use Residential Parking Spaces. An Owner may rent or lease his or her Exclusive Use Residential Parking Space only to another Residential Owner, provided that the Exclusive Use Residential Parking Space is leased pursuant to a written agreement that is subject to all of the provisions of this Declaration regarding the use and maintenance of Exclusive Use Residential Parking Spaces. No such lease shall release the Owner of such parking space from such Owner's personal obligation to comply with the Restrictions. In addition any lessee of such parking space shall comply with the Restrictions as they apply to such parking space as if the parking space was the Exclusive Use Residential Common Area assigned to such lessee's Unit and the lessor and lessee shall be jointly and severally liable for such compliance notwithstanding anything in such lease to the contrary. ARTICLE III COMMERCIAL USE RIGHTS AND RESTRICTIONS All of the Commercial Units shall be held, used and enjoyed subject to the following restrictions and exemptions and rights of Declarant in the Restrictions. This Article III shall not apply in any way to the Residential Units. All references in this Article to Units shall refer to Commercial Units. 3.1 Use of Commercial Condominiums. Except as otherwise provided in this Article, the Commercial Condominiums may be used for any lawful commercial, retail and/or office purpose so long as such use is consistent with the provisions of this Article; provided, further, that no less than fifty percent (50 %) of the Square Footage of Commercial Condominiums shall be allocated for uses such as neighborhood market, restaurant, dry cleaning, small scale bank and other convenience services, drug store or other uses that, subject to the approval of the City Director of the City Department of Planning and Community Development, provides residents or employees of the areas immediately adjacent to the Project with access to convenience goods and services, and uses that cater to the daily needs of nearby residents or employees within walking distance of their home or work. Each Residential Owner is deemed to have consented to the foregoing use of the Commercial Condominiums. Notwithstanding the above, the Commercial Condominiums shall not be used in all or in part for any business which JRS \30601.0001 \402281.910 /3/2011 27 would create or cause (i) a public or private nuisance (as defined in California Civil Code Section 3479); (ii) any noise or sound that is objectionable due to intermittence, beat, frequency, shrillness or loudness; (iii) any obnoxious odor' (iv) any noxious materials and any toxic or caustic or corrosive fuel or gas in violation of applicable law; (v) any dust, dirt or particulate matter in excessive quantities; (vi) any unusual fire, explosion or other damaging or dangerous hazard; (vii) any warehouse, other than that which is incidental to the primary commercial use or business operation, and any assembly, manufacturing, distillation, refining, smelting agriculture or mining operation; (viii) any pawn shop or retail sales operation involving second -hand merchandise; (ix) any adult business or facility as defined in the City's Municipal Code, including without limitation massage establishments (to the extent defined and regulated in the City's Municipal Code as an adult business or facility), adult news racks, adult bookstores, adult motion picture theaters and paraphernalia businesses; (x) any gun shop or retail sales operation for which the main commercial uses or business operation is the sale of guns; (xi) any retail sales operation for which the average price of merchandise is $5.00 or less, except this prohibition shall not apply to any retail sales operation for which the main commercial use or business operation is the sale of food and /or beverages, and provided that such $5.00 amount shall be escalated over time in proportion to the increase in the published Consumer Price Index applicable to the Los Angeles Metropolitan Area; (xii) nightclub, strip club, cocktail lounge; (xiii) pool or billiard hall; (xiv) gaming casino; (xv) video game parlor; (xv) movie theatre; (xvi) check cashing operation; (xvii) church or place of worship; (xviii) tattoo parlor; (xix) self - storage business; (xx) family planning clinic or other medical clinic; or (xxi) social services agency (e.g. free clinic or legal aid society). In addition, no ATMs may be installed or maintained on any exterior portion of the Properties. 3.2 Rental. .A Commercial Owner may lease or rent all or part of such Owner's Commercial Condominium without the necessity of notice to, or approval of, the Board; provided, however, that Declarant's reasonable approval with respect to the foregoing shall be required until the date on which all Residential Condominiums in the Properties are sold. 3.3 Signs and Displays. A Commercial Owner (and /or tenant(s) thereof) shall have the right to install sidewalk signage on the public sidewalks directly in front of such Owner's Commercial Condominium, provided that such signage is in compliance with all applicable laws. Prior to such time as all Residential Condominiums are sold all such signage and displays must be approved by Declarant. Notwithstanding anything to the contrary contained herein (a) in no event shall the height of any signage or display exceed the maximum height allowable by law; (b) all signs constructed or installed by a Commercial Owner or any tenant of a Commercial Condominium shall be subject to the approval of the City and /or Agency; and (c) all signage shall conform to the "Commercial Unit Sign Criteria" attached as Exhibit "C" hereto. The Association shall have no jurisdiction or approval rights over Commercial Unit signage so long as it complies with the Commercial Unit Sign Criteria. 3.4 Communications Systems. 3.4.1 Dishes and Antenna. Notwithstanding anything herein to the contrary, if a Central System has been installed in the Project, each Commercial Owner that desires to obtain satellite television services may utilize such Central System. Each Commercial Owner acknowledges that such Central System provides adequate access to such satellite services and M\30601.0001W02281.9 10/3/2011 28 the airwaves. This Section is subject to Section 1376 of the California Civil Code and any applicable laws or regulations. However, Commercial Owners shall have the ability to use the Central System, which will be maintained on the Properties by the Association as described in Section 2.7.2. The use of the Central System shall be subject to use fees charged by the provider of service through the Central System and shall further be subject to the provisions of Section 2.7.2. 3.4.2 Short Wave Transmissions Notwithstanding the foregoing, no radio station or short-wave operations of any kind may operate from any Commercial Unit if it will materially and adversely interfere with any television, radio, internet or other communication signals or service to any Units. 3.5 Right to Combine or Reconfigure Adjoining Commercial Units. Subject to the provisions of this Section and the provisions of this Declaration regarding Design Review Committee approval, a Commercial Owner shall have the right to cause (a) two (2) or more adjoining Commercial Units owned by such Owner to be physically combined ( "Combined Commercial Units ") or (b) two (2) or more adjoining Commercial Units owned by such Owner to be reconfigured by relocating the walls separating the adjoining Units ( "Reconfigured Commercial Units', thereby increasing the square footage of one Reconfigured Commercial Unit and correspondingly decreasing the square footage of the other Reconfigured Commercial Unit; provided, however, to be eligible for physical combination or reconfiguration, Units must be encumbered by the identical Mortgages (and the Mortgagees of such Mortgages must all consent in writing thereto) and, in addition, after completion of the work of construction combining or reconfiguring the Units (which may include total or partial removal or relocation of party walls, doors and other Common Area improvements), the Commercial Owner shall have and possess the total voting rights allocable to the Commercial Units to be combined or reconfigured and shall pay all Assessments allocable thereto (i.e., if two (2) Commercial Units are combined or reconfigured, the Owner thereof shall have two (2) Class A votes and shall be responsible for the Assessments relating to both Commercial Units). Any hallways or other applicable Commercial Common Areas that exclusively serve the Combined Commercial Units shall be deemed to become Exclusive Use Commercial Common Area appurtenant to the Combined Commercial Units. The Combined Commercial Units or Reconfigured Commercial Units shall not be conveyed, sold or hypothecated separate and apart from one another. Combination of the Combined Commercial Units or reconfiguration of the Reconfigured Commercial Units shall not, in any event, require amendment of the Commercial Condominium Plan. No Commercial Owner shall have the right to combine or reconfigure Units until the following have been satisfied: 3.5.1 Design Approval. The Owner shall fully comply with the design review provisions of this Declaration and the Design Review Committee shall have received and approved all plans for such combination or reconfiguration and all applicable governmental approvals, including, without limitation building permits shall have been obtained by the Owner 3.5.2 Structural Support. A certificate stating that any portion of the Combined Commercial Units, Reconfigured Commercial Units and/or Common Area (as applicable) to be affected by the proposed combination or reconfiguration is not required for the structural support of any Unit or any part of the Project. Said certificate shall be given by a JRS130601.0001WO2281.9 10/3/2011 29 structural engineer licensed in the State of California and approved by the Design Review Committee. 3.5.3 Indemnity. The Owner shall enter into an indemnity agreement in a form required by the Design Review Committee to release, indemnify, defend, and hold the Association and the City and Agency and their respective members, officers, agents, employees, contractors and consultants harmless as a result of the work to be performed to combine or reconfigure the Units. 3.5.4 Other Documentation. The Owner shall execute and deliver any other documentation which is required by this Declaration or may otherwise required by the Design Review Committee. 3.5.5 Rescission of Approval. Notwithstanding any other provision herein, the Design Review Committee may rescind its approval of the proposed Unit combination or reconfiguration if the work therefor is not performed in accordance with the documentation previously submitted to the Design Review Committee, or the Design Review Committee reasonably concludes that the structural integrity of the building has been impaired. In such event, each of the Combined Commercial Units or Reconfigured Commercial Units shall, at the Owner's sole expense, be made to conform with the documentation submitted to the Design Review Committee, or be restored to its prior condition. Any proposed combination or reconfiguration of Units which in any way would result in the removal of any structural support for any Unit or Units or any other portion of the Project is strictly prohibited. Notwithstanding any provision of this Section to the contrary, Declarant shall have the absolute right to combine or reconfigure Units at any time and Declarant shall notbe subject to the requirements of this Section or any other provisions of this Declaration regarding Board or Design Review Committee review and/or approval. 3.6 Further Subdivision of Commercial Units. If approved by the City and /or Agency, Commercial Units may be further subdivided by the recordation of a further Commercial Condominium Plan or an amendment to the Commercial Condominium Plan. The Association and Residential Owners shall not be required to execute such new or amended Commercial Condominium Plan. Such subdivision shall not require notice to and/or approval of the Association or any committee of the Association; provided that upon Recordation of such new or amended Condominium Plan the Commercial Owners shall deliver a copy of same to the Board. Upon such further subdivision, the percentage of the voting rights and Assessment obligations applicable to the Commercial Units (the sum of which common interests shall equal the voting rights and Assessment obligations applicable to the Commercial Units before such subdivision) shall be reallocated among Commercial Units based on Square Footage. 3.7 Amendments. Under no circumstances shall this Article III be amended nor shall any Rules and Regulations be adopted which are inconsistent with this Article III unless approved by sixty -seven percent (67 %) of the voting power of the Commercial Owners. JRS\30601.0001 \402281.9 10/32011 30 ARTICLE IV DISCLOSURES Much of the information included in this Article (a) has been obtained from third party sources (e.g., governmental and other public agencies and public records) and (b) is subject to change for reasons beyond the control of Declarant and the Association. Therefore, Declarant and the Association do not guarantee the accuracy or completeness of any of the information in this Article. Further, neither Declarant nor the Association undertakes to advise Persons of any changes affecting the disclosures in this Article. 4.1 No Representations or Warranties. No representations or warranties, express or implied, have been given or made by Declarant, the Association or their agents in connection with the Properties, its physical condition, zoning, compliance with laws, fitness for intended use, or in connection with the subdivision, sale, operation, maintenance, cost of maintenance, taxes or regulation thereof as a condominium project, except as provided in this Declaration, filed by Declarant with the DRE, or provided by Declarant to the first Owner of a Condominium. 4.2 Access Facilities. Vehicular and pedestrian access into the Properties may be controlled by entry gates located at the street and lobby entrances into the Properties. There may be controlled access pedestrian gates in the Properties. There are no assurances that any entry gates and doors will be installed or staffed. If staffing is provided, the schedule for commencing staffing operations and the hours of staffing will be subject to change as development progresses and will be affected by the construction and marketing access requirements of Declarant. Interim access gate staffing may be provided by Declarant at its sole cost and sole discretion as a part of development/marketing operations at the Properties. Interim access gate staffing may be modified or eliminated at any time without notice. Declarant has reserved the right to limit the operation of any access gate during the period when Declarant is offering Condominiums for sale. Until the last Close of Escrow occurs in the Properties, (a) the access gates may be open to the general public seven (7) days per week, and (b) Declarant may change the hours of access gate operation in its sole discretion without notice to accommodate construction and marketing activities. 4.3 Mixed -Use Properties. The Properties are a "mixed -use" project, including both residential and commercial elements. Each Owner recognizes and accepts that combining commercial and residential uses may present a number of issues and concerns which may not otherwise be present in a strictly residential project, including, without limitation, additional noise, odors, fumes, smoke, vehicular traffic, pedestrian traffic, diminished security, and other similar issues and/or disturbances associated with any area where commercial activity is present or prevalent. Notwithstanding any other provision in this Declaration, under no circumstances shall any Residential Owners, nor the Association, have any right to object to, nor in any way to interfere with, any use, operation, further subdivision, demising, leasing, subleasing, or any other matter concerning or related to the Commercial Condominiums that is not otherwise specifically provided for in this Declaration. 4.4 Security and Privacy Disclaimer. Access gates and their staffing are not intended to provide security or privacy for persons, personal property or Condominiums within the Properties. Declarant and the Association do not undertake to provide security or privacy for JRS\30601.0001 \402281.9 10/3/2011 31 the Properties or Owners nor do they make any representations or warranties concerning the privacy, security and safety of the Properties or Owners. 4.5 Electric Power Lines and Electromagnetic Fields. Underground or overhead electric transmission and distribution lines and transformers are located in and around the Properties. The lines and transformers are owned, operated and maintained by Southern California Edison Company. Power lines and transformers produce extremely low- frequency electromagnetic fields ( "ELF -EMF ") when operating. For some time, there has been speculation in the scientific community about health risks associated with living near ELF -EMF sources. In 1992, the United States Congress authorized the Electric and Magnetic Fields Research and Public Information Dissemination Program ( "EMF -RAPID Program's to perform research on these issues and to analyze the existing scientific evidence in order to clarify the potential for health risks from exposure to ELF -EMF. In May of 1999, the National Institute of Environmental Health Sciences ( "NIEHS'� issued a report to Congress summarizing its review of scientific data from over three hundred studies on ELF -EMF health risks. The ELF -EMF studies consists of both epidemiological studies (studies of exposure in human populations) and controlled laboratory experiments on animal and cell models. While some epidemiological studies suggested some link between certain health effects and exposure to ELF -EMF, the laboratory experiments did not support such a link. According to the NIEHS report, the scientific evidence shows no clear pattern of health hazards from ELF -EMF exposure, and the NIEHS report did not find evidence of any link sufficient to recommend widespread changes in the design or use of electrical transmission equipment. However, because the evidence does not clearly rule out any effect, NIEHS advocated continuing inexpensive and safe reductions in exposure to ELF -EMF and endorsed current utility practices regarding design and siting of new transmission and distribution lines. Further information on this subject is available from EMF Research and Education Dept., 6090 N. Irwindale Avenue, Irwindale, California 91702, (626) 812 -7545. Additional information on ELF -EMF and copies of the NIEHS report are available from the EMF -RAPID website at http:// www. niehs .nih.gov /emfrapid/home.htm. 4.6 Airport Influence Area. The Properties are presently located in the vicinity of an airport, within what is known as an airport influence area. For that reason, the Properties may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (e.g., noise, vibration or odors). Individual sensitivities to those annoyances can vary from person to person. Owners may wish to consider what airport annoyances, if any, are associated with the Properties before completing the purchase of a Condominium. 4.7 Sound Attenuation. Areas surrounding the Properties are zoned for commercial use with numerous and continuous sources of noise (e.g., truck traffic, street traffic, helicopters, equipment, machinery, filming traffic, etc.). In addition, the buildings in the Properties were not constructed to have the same type of sound transmission insulation normally found in the construction of detached single family residences. Therefore, the sound, vibration and noise heard in Units will be significantly greater than that which may be heard or felt in detached single family residences. Declarant has provided no assurances as to the effect that sound transmission in the Unit and noise from the surrounding streets and community will have on Owner's use and enjoyment of the Unit. Owners should expect to hear and feel sound, vibration and other noise emanating from within, outside, above and below the Units, including without limitation sound and vibration from truck traffic, street traffic, helicopters, equipment and JRS\30601.0001 \402281.9 10/32011 32 machinery, footfall and other movement of people, use of plumbing and fans, the closing and opening of doors and cabinets, televisions, phones, computers, stereos and other electronic equipment and activities conducted in the Units, the Common Area and adjacent properties. 4.8 Neighborhood Conditions. The Properties is located in a commercial, urban area which generates numerous unique conditions and impacts not typically associated with condominium projects. Such impacts and conditions include, without limitation, traffic, homelessness, litter, graffiti, illegal dumping, lighting from billboards (including both static and animated lighting), filming activity, crime and business activity. Many of the foregoing impacts occur at all times of the day and night. Each Owner recognizes that the foregoing "urban" impacts are a major element of the unique characteristics and mixture of uses that attracted such Owner to the Properties and recognizes that Declarant has no obligation to take any action to reduce or eliminate the foregoing impacts. 4.9 Additional Development. There are a number of properties located in the vicinity of the Properties which may be developed or redeveloped in the future. Each Owner recognizes the potential impacts of such development on the community and the Properties (e.g., additional traffic, parking impacts, noise impacts, market impacts, etc.) and acknowledges that he or she is purchasing a Unit with the full understanding of such potential impacts. 4.10 Leasing. Declarant may rent some or all unsold Units in the Properties. 4.11 Property Lines. The boundaries of each Unit within the Properties and the Common Area are delineated on subdivision (tract) maps, lot line adjustments, parcel maps or Condominium Plans that are public records and are available at the office of the County Recorder. 4.12 Reciprocal Easement Agreement, The Joint Use Area is to be used and maintained in accordance with the Reciprocal Easement Agreement. The Joint Use Area includes the Parking Structure and other areas, some of which are located on the Apartment Parcel. Parking for Residential Owners and their, Invitees is only allowed in the Condo Parking Area and Joint Use Parking Area, as applicable. Maintenance of the Joint Use Area is the responsibility of the Association, however the Reciprocal Easement Agreement provides for the sharing of certain maintenance costs (including without limitation maintenance, capital improvement, insurance and real property tax costs) respecting the Joint Use Area between the Association and Apartment Parcel Owner. Subject to Section 4.14 below, the Joint Use Area shall be operated and maintained so as to provide equal non discriminatory access and use to the Apartment Parcel Owner, Apartment Tenants and Apartment Parcel Invitees. 4.13 Affordable Housing. The Apartment Parcel will be developed with approximately one hundred sixty (160) apartments that will provide affordable housing in accordance with local and state requirements. The apartments will be leased to persons and families that satisfy certain income criteria which may result in rental rates that are lower than those offered for comparable apartments in West Los Angeles. Declarant has provided no representations or warranties as to the impact of affordable housing activities on the Apartment Parcel or the value or use of Units in the Project. JRS\30601 .0001 \402281.910 /3/2011 33 4.14 Joint Use Parking Area. The Joint Use Parking Area will be used by the Invitees of Commercial Owners and Residential Owners and the Invitees of the Apartment Tenants. The cost of maintenance of the Joint Use Parking Area shall be shared by the Association and Apartment Parcel Owner in accordance with the Reciprocal Easement Agreement. Use of the Joint Use Parking Area is limited and or restricted by the terms of this Declaration. To ensure that only the proper users are using the Joint Use Parking Area, the Association may maintain a gated entry to the Joint Use Parking Area which may require the Invitees of Commercial Owners and Residential Owners and the Invitees of the Apartment Tenants to obtain entry tickets and to obtain validation for such tickets from the Association without payment of a parldng fee. 4.15 Post Tension Concrete Slab. The concrete slab for the Podium is reinforced with a grid of steel cable installed in the concrete slab and then tightened to create extremely high tension. This type of slab is commonly known as a "Post Tension Slab." Cutting into a Post Tension Slab for any reason (e.g., to install a floor safe, to remodel plumbing, etc.) is very hazardous and may result in serious damage to the Residence, personal injury, or both. All Owners agree that subject to Section 6.14.2: (a) they shall not cut into or otherwise tamper with the Post Tension Slab; (b) they will not permit or allow any other Person to cut into or tamper with the Post Tension Slab so long as Owner owns any interest in the Residence; (c) they shall disclose the existence of the Post Tension Slab to any Person who rents, leases or purchases the Residence from Owner; and (d) they shall indemnify and hold Declarant and the Association and their agents free and harmless from and against any and. all claims, damages, losses or other liability (including attorneys' fees and costs of court) arising from any breach of this covenant by such Owner. 4.16 No Enhanced Protection Agreement. No provision of this Declaration is intended or shall be interpreted, to be an "enhanced protection agreement," as defined in Section 901 of the California Civil Code. 4.17 Mold. There is, and will always be, the presence of certain biological organisms within the Unit. Most typically, this will include the common occurrence of mold. In recent years, mold has received significant attention, as significantly increased levels of mold have accumulated and spread through residential dwellings. It is important to note that mold tends to proliferate in warm, wet areas. High levels of mold in an enclosed setting can lead to mild to significant detrimental health effects. As such, it is each Owner's responsibility to maintain his or her Unit so as to avoid the accumulation of moisture and /or mold within the Unit. Such mitigation matters should include, without limitation, the frequent ventilation of the Unit, removal of standing water on patio, balcony or terrace areas, prompt repair of any leaks which permit water intrusion into the Unit, and prompt repair of plumbing leaks within the Unit(irrespective of who may have caused any such leaks). Each Owner also understands that the presence of indoor plants may also increase mold levels within the Unit. Also, the propping of large pieces of furniture against wall surfaces may lead to mold spore accumulation. It is the responsibility of each Owner to monitor and maintain his or her Unit so as to mitigate and avoid the conditions which are likely to lead to the presence and/or spreading of mold. In the event that mold does appear within the Unit, it is also the Owner's responsibility to promptly and properly treat such mold to minimize the spreading thereof and/or unhealthy conditions likely to JRS\30601.0001 \402281.9 fo/3/2011 34 arise as a result thereof. Such measures frequently include, but are not limited to, cleaning mold affected surfaces. 4.18 Square Footage Estimated. Any dimensions, size and /or square footage calculations or information pertaining to the Units, Residential Exclusive Use Common Areas and/or any other portions of the Project set forth in the Condominium Plan, marketing materials or any other document(s) are not intended to be a precise representation of the actual square footage of such Unit, Residential Exclusive Use Common Area and /or other portion of the Project. All dimensions and square footages are approximate and subject to normal construction variances and tolerances and changes resulting from unforeseen conditions and are not intended to be and shall not be used as a statement of actual usable space contained within any Unit or described in any Condominium Plan. Certain dimensions and square footages used for marketing and other purposes (including Variable Costs) may have been measured to the exterior face of perimeter walls, the interior face of walls shared with certain common area elements (i.e., fire stairs, back of house hallway, electrical rooms), the center line of Unit demising walls (i.e., walls between two adjacent Units) and walls shared with the elevator vestibule and include perimeter and interior walls, windows, shafts, columns and other structural elements which are not a part of the usable space of a Unit. Different measurement techniques may be used for other purposes (e.g., appraisals) or by the County Assessor. Residential Exclusive Use Common Area elements may not be included in Assessor calculations. Declarant reserves the right to make modifications to the floor plans and Unit dimensions at any time. Each Owner (and every potential Owner) should conduct its own investigation to ascertain the exact square footage of any Unit or other portion of the Project and shall not rely on any representations of Declarant with respect to such matters. The purchase price of any Residential Unit within the Project sold by Declarant is not based on square footage. 4.19 Additional Provisions. The Association and the Owners should be aware that there may be provisions of various laws, including the Davis - Stirling Common Interest Development Act codified at Sections 1350 et seq. of the California Civil Code and the Federal Fait Housing Act codified at Title 42 United States Code, Section 3601 et seq., which may supplement or override the Restrictions. Declarant makes no representations or warranties regarding the future enforceability of any portion of the Restrictions. THE VILLAGE 1 :71YURMI/ COMMUNITY ASSOCIATION; REPAIR AND MAINTENANCE OBLIGATIONS 5.1 General Duties and Powers. Subject to the Ground Lease, Development Agreement and Reciprocal Easement Agreement, the Association has the duties and powers listed in the Restrictions and also has the general and implied powers of a nonprofit mutual benefit corporation, generally to do all things that a corporation organized under the laws of the State of California may lawfully do which are necessary or proper in operating for the peace, health, comfort, safety and general welfare of the Owners, subject only to the limits on the exercise of such powers listed in the Restrictions. Unless otherwise indicated in the Articles, Bylaws or this Declaration, the powers of the Association may be exercised by the Board. IRS\30601.0001N402281.9 10 /3/2011 35 5.2 Specific Duties and Powers. In addition to its general powers and duties and subject to the Ground Lease, Development Agreement and Reciprocal Easement Agreement the Association has the following specific powers and duties. 5.2.1 Common Area. The power and duty to accept, maintain and manage the Common Area in accordance with the Restrictions. The authorization to install or remove capital Improvements on the Common Area, to reconstruct, replace or refinish any Improvement on the Common Area, to restrict access to portions of the Common Area not reserved as Exclusive Use Residential Common Areas and make and complete repairs or for safety reasons. 5.2.2 Utilities. The power and duty to obtain, for the benefit of the Project, all commonly metered water, gas and electric services, and the power, but not the duty, to provide for trash collection and cable or master television service. With the exception of Sub - Metered Expenses, costs of commonly metered utilities shall be allocated among the Units as provided in the Initial Budget: 5.2.3 Granting Rights. The power to grant, without the consent of any Owners, exclusive or nonexclusive easements, licenses, rights of way or ownership interests in the Common Area, to the extent any such grant is reasonably required for either (a) utilities and facilities to serve the Common Area and the Units, (b) purposes of conformity with the as -built location of Improvements installed by Declarant, or (c) other purposes consistent with the intended use of the Properties, and which do not materially interfere with (i) a Residential Owner's use of his or her Exclusive Use Residential Common Area, (ii) any Commercial Owner's use of the Commercial Common Area or (iii) access to or use of the Units. Subject to the foregoing, this power includes the right to create and convey exclusive use easements over the Common Area to a Member so long as the Board obtains the approval of Members representing at least a majority of the Association's voting power if such grant requires the approval of a specified percentage of Members under Section 1363.07 of the California Civil Code. 5.2.4 Employ Personnel. The power to employ Association Personnel and other Persons necessary for the effective operation and maintenance of the Common Area, including legal, management and accounting services. 5.2.5 Insurance. The power and duty to maintain insurance for the Common Area in accordance with this Declaration, the Ground Lease and Reciprocal Easement Agreement. The Association shall promptly reimburse Declarant for any insurance premiums or amounts paid by Declarant on behalf of the Association before the first Close of Escrow and /or during the initial stages of development of the Properties. 5.2.6 Sewers and Storm Drains. The power and duty to maintain any private sewer systems, private storm drains, or private drainage facilities within the Common Area in accordance with the Restrictions. 5.2.7 Right of Entry. JRS\3060L0001 \402281.9 10/3/2011 36 (a) Association. The Association has a limited right of entry in and on the Exclusive Use Residential Common Area and all Units to inspect the Project, and may take whatever corrective action it determines to be necessary or proper, consistent with this Declaration. Entry on the interior of a Unit by the Association under this right of entry or by the Board, Declarant, or their representatives pursuant to Civil Code Section 1375(d) may only be made (except in an emergency) after three (3) days advance written notice to the Owner of the Unit. The Association has no duty to maintain any property or Improvements required to be maintained by the Owners. Nothing in this Article limits the right of an Owner to exclusive occupancy and control over the interior of his Unit. However, an Owner shall permit a right of entry to the Association or any Person authorized by the Board to be exercised in any emergency originating in or threatening such Owner's Unit, whether the Owner is present or not. Any damage to a Unit caused by such entry shall be repaired by the Association as a Common Expense (but, notwithstanding any provisions of this Declaration to the contrary, the Owner of the damaged Unit shall not be responsible for any share of such General Common Expense). Furthermore, each Owner shall permit other Owners, or their representatives, to enter such Owner's Unit to perform required installations, alterations or repairs to the mechanical or electrical services to the Unit if (a) such entry is reasonably necessary; (b) requests for entry are made in advance; (c) entry is made at a time reasonably convenient to the Owner whose Unit is to be entered; and (d) the entered Unit is left in substantially the same condition as existed immediately preceding such entry. In an emergency, such right of entry is immediate. Any damage caused to a Unit by such entry by an Owner or its representatives shall be repaired by such Owner. On no less than fifteen (15) days nor more than thirty (30) days notice, each Residential Owner and the occupants of such Owner's Residential Unit shall vacate such Owner's Unit to accommodate Association efforts to perform any other maintenance or repairs pursuant to the Declaration. Each Owner shall bear his own costs of temporary relocation. The Association has the right of entry to the Units and the right to remove Owners from their Units, as necessary, to accomplish its duties as provided in this Declaration. If the Association acts to eradicate any wood - destroying pests or organisms, then the procedure established in Section 5.7.3 controls. Notwithstanding the foregoing or any other provision of this Declaration, if a Commercial Unit must be vacated to allow the Association to perform work authorized or required under this Declaration the Association shall take all reasonable actions necessary to ensure that the time period of such vacation is as limited as possible and such work, including the timing thereof, has as minimal impact as possible on the business conducted in such Commercial Unit. (b) Declarant. Declarant has the right to enter the Common Area and the Units (i) to complete and repair any Improvements as determined necessary or proper by Declarant, in its sole discretion, (ii) to comply with requirements for the recordation of a subdivision map or the grading or construction of the Properties, (iii) perform any warranty work Declarant determines is appropriate, and (iv) to comply with requirements of applicable governmental agencies. Declarant shall provide reasonable notice to Owner prior to entry into the Owner's Unit under this Subsection except for emergency situations, which shall not require notice. Any damage to the Units caused by entry under this Subsection shall be repaired by Declarant. Unless otherwise specified in the initial Sublease of the Condominium from Declarant, this right of entry shall automatically expire eleven (11) years from the last Close of Escrow for a Condominium in the Properties. ms\30601.0001\402281.9 10/3/2011 37 5.2.8 Issuance of Architectural Guidelines. The Board shall issue and regularly update Architectural Guidelines for the construction, installation or alteration of Improvements in the Properties. The Architectural Guidelines shall include rules or guidelines setting forth procedures for the submission of plans for approval, may require a fee to accompany each application for approval, or may identify additional factors which the Design Review Committee shall consider in reviewing submissions. The Board may provide that fees it imposes be uniform, or that fees be determined in any other reasonable manner. The Board may require such detail in plans and specifications submitted for Design Review Committee review as it deems proper, including landscape plans, floor plans, site plans, drainage plans, elevation drawings and descriptions or samples of exterior material and colors. 5.2.9 Rules and Regulations. The power, but not the duty, to establish, amend, restate, delete, and create exceptions to, the Rules and Regulations. (a) Effective Date. The Rules and Regulations and all changes to the Rules and Regulations will become effective as specified in Sections 1357.110 through 1357.140 of the California Civil Code and any amendments or modifications thereof. (b) Areas of Regulation. The Rules and Regulations may concern use of the Properties, the Joint Use Areas signs, parking restrictions, minimum standards of property maintenance, and any other matter within the Association's jurisdiction; however, the Rules and Regulations are enforceable only to the extent they are consistent with this Declaration and the Reciprocal Easement Agreement. Notwithstanding the foregoing, under no circumstances shall any Rules and Regulations affecting solely the Commercial Common Area and /or Commercial Units be implemented, modified or amended without the consent of a majority of the voting power of the Commercial Owners. (c) Limits on Regulation. The Rules and Regulations shall not be created, implemented or applied in an unreasonable manner or for the purpose of circumventing the intention of this Declaration, particularly in the area of the limitations on the ability of the Association to regulate activities and/or use of the Commercial Units and /or Commercial Common Area. No modification to the Rules and Regulations may require an Owner to dispose of personal property that was in a Unit prior to the adoption of such modification if such personal property was in compliance with all Rules and Regulations previously in force; however, this exemption shall apply only during the period of such Owner's ownership of the Condominium and shall not apply to (i) subsequent Owners who take title to the Condominium after the modification is adopted, or (ii) clarifications to the Rules and Regulations. (d) Use of Facilities. The Rules and Regulations may (i) specify a maximum number of guests which a Residential Owner, tenant or other Person may admit to the Residential Common Area recreational facilities at one time, (ii) establish rules for allowing Residential Owners, tenants or other Persons to use Residential Common Area facilities for private functions, or (iii) establish fees, deposit requirements and other fees for the use of any facilities on the Residential Common Area. Except as otherwise provided in this Declaration, the Rules and Regulations may also create fees with respect to the use of the Joint Use Parking Area JRS00601.0001\402281s 10/32011 38 5.2. 10 Borrowings. The power, but not the duty, to borrow money for purposes authorized by the Restrictions, and to use the Common Area as security for the borrowing. 5.2.11 Contracts. The power, but not the duty, to enter into contracts. This includes contracts with (a) Owners or other Persons to provide services or to maintain Improvements in the Properties and elsewhere which the Association is not otherwise required to provide or maintain pursuant to this Declaration and (b) Declarant which are approved by the DRE. 5.2.12 Indemnification. (a) For Association Representatives To the fullest extent authorized by law, the Association has the power and duty to indemnify Board members, Association officers, Design Review Committee members, and all other Association committee members for all damages, pay all expenses incurred, and satisfy any judgment or fine levied as a result of any Official Act. Board members, Association officers, Design Review Committee members, and all other Association committee members are deemed to be agents of the Association when they are performing Official Acts for purposes of obtaining indemnification from the Association pursuant to this Section. The entitlement to indemnification under this Declaration inures to the benefit of the estate, executor, administrator and heirs of any person entitled to such indemnification. (b) For Other Agents of the Association. To the fullest extent authorized by law, the Association has the power, but not the duty, to indemnify any other Person acting as an agent of the Association for damages incurred, pay expenses incurred, and satisfy any judgment or fine levied as a result of any action or threatened action because of an Official Act. (c) Provided by Contract. The Association also has the power, but not the duty, to contract with any Person to provide indemnification in addition to any indemnification authorized by law on such terms and subject to such conditions as the Association may impose. 5.2.13 Vehicle Restrictions. The power granted in Section 2.5 to identify Authorized Vehicles or Prohibited Vehicles and to modify and enforce the restrictions on vehicles. 5.2.14 Staff and Services. The Association may employ Association Personnel or enter into, an agreement with a third party vendor to provide Residential Owners and Commercial Owners and their Invitees with concierge, porter, staff and other services; provided that the fees or amounts charged for such specific services such as deliveries and pick up services may require that certain additions fees be paid separately by Owner using such services. 5.2.15 Telecommunications Contract. Notwithstanding anything in the Restrictions to the contrary, the Board shall have the power to enter into, accept an assignment of, or otherwise cause the Association to comply with the terms and provisions of a telecommunications services contract ( "Telecommunications Contract's with a JRS\30601.0001\402281.9 10/3/2011 39 telecommunications service provider ( "Service Provider', pursuant to which the Service Provider shall serve as the provider of telecommunications services to each Unit in the Properties. The Board shall only enter into, accept an assignment of, or otherwise cause the Association to comply with the terms and provisions of the Telecommunications Contract if the Board determines, in its sole discretion, that such action is in the best interests of the Association. Although not exhaustive, the Board shall consider the following factors in making such a determination: (a) Initial Term and Extensions. The initial term of the Telecommunications Contract shall not exceed five (5) years, and if the Telecommunications Contract provides for automatic extensions, the length of each such extension should also not exceed five (5) years. (b) Termination. The Telecommunications Contract shall provide that: (i) at least six (6) months prior to the expiration of either the initial or any extended term of the Telecommunications Contract, the entire Membership of the Association may, without cause, by a vote of sixty percent (60 %) of the voting power of the Association, prevent any automatic extension that the Telecommunications Contract may provide for and thereby allow the Telecommunications Contract to expire, and (ii) at any time, the Board may terminate the Telecommunications Contract if, in the sole discretion of the Board, the Service Provider fails to provide quality, state -of -the -art telecommunications services. (c) Fees. Whether the monthly fee charged to the Association by the Service Provider for the provision of the telecommunications services to all of the Units represents a discount from the comparable retail fees charged by the Service Provider in the general geographic area in which the Properties are located, and, if so, the amount of such discount. (d) Installation of Telecommunications Facilities. Whether the Service Provider is solely responsible for the installation, and the cost thereof, of all of the telecommunications facilities necessary to provide telecommunications services to each Unit. (e) Removal of Telecommunications Facilities. Whether the Service Provider has the right to remove any telecommunications facilities installed on the Properties or adjacent thereto by the Service Provider upon expiration or termination of the Telecommunications Contract. 5.2.16 Prohibited Functions. (a) Off -site Nuisances. The Association shall not use any Association funds or resources to abate any annoyance or nuisance emanating from outside the physical boundaries of the Properties. (b) Political Activities. The Association shall not (i) participate in federal, state or local political activities or activities intended to influence a governmental action affecting areas outside the boundaries of the Properties (e.g., endorsement or support of (A) legislative or administrative actions by a local governmental authority, (B) candidates for elected JRS\30601.0001 \402281.9 10/312011 40 or appointed office or (C) ballot proposals), or (ii) conduct, sponsor, participate in or expend funds or resources or any activity, campaign or event, including any social or political campaign, event or activity which is not directly and exclusively pertaining to the authorized activities of the Association. There shall be no amendment of this Section so long as Declarant owns the Properties. 5.2.17 Commercial Owners Vote Required. Except as otherwise required by applicable law, notwithstanding any provision to the contrary contained in this Declaration, the Association shall not adopt any of the following (including taking such actions through the amendment of this Declaration and /or Rules and Regulations or the adoption of new Rules and Regulations) without the prior approval of sixty -seven percent (67 %) of the voting power of the Commercial Owners: (a) Changes to the Architectural Guidelines, the Rules and Regulations and /or amendments to the Restrictions as they apply to the Joint Use Parking Area, parking spaces therein allocated to the Commercial Owners or the use thereof, Commercial Units and/or Commercial Common Area, including without limitation the use or operation thereof, (b) Changes to ingress, egress, or access in the Properties or Joint Use Area having a material adverse effect on the Commercial Units and/or Commercial Common Area; (c) Any reduction in the number of or change in size or configuration of Joint Use Parking Area parking spaces allocated to the Commercial Owners; (d) Any restriction on a Commercial Owner's use and /or occupancy of a Commercial Unit, other than those restrictions set forth in this Declaration; (e) Any restriction to signage affecting the exterior of any Commercial Unit or located within the Commercial Common Area, provided that such signage is in compliance with Section 3.3 of this Declaration; (f) Any exterior modifications to the Properties materially altering the structural integrity of any of the Commercial Units or any exterior modification which would materially reduce the visibility of the Commercial Units, except to remedy any defect in the structural design or construction of the Properties or to repair any damage to the Properties; (g) Any Capital Assessment to be levied against Commercial Owners pursuant to Section 8.7 intended to materially upgrade the current level of quality of an existing capital Improvement (but not replacement with the same or similar quality) or installation of a, new capital Improvement which would exceed five percent (5 %) of the General Common Expenses of the Association, except to remedy any defect in the structural design or construction of the Properties or to repair any damage to the Properties; (h) Any modification to the rights of Mortgagee's set forth in Article XII of this Declaration with respect to modifying or terminating this Declaration which would have a material adverse effect on any Commercial Units; JRS\30601 .0001 \402281.910/3/2011 41 - (i) Any modification to any provision relating to the termination or amendment of Article XIV of this Declaration which would have a material adverse effect on any Commercial Units and /or a Commercial Owner; 0) Any modification or addition to the categories of General Common Expenses and /or Commercial Common Expenses specified in the Initial Budget or the manner of allocation of General Annual Assessments and/or Commercial Annual Assessments relating to the Commercial Owners and /or the Commercial Units; (k) Any modification to Sections 6.13 and 6.14.2 or Article III and Article VII of this Declaration; (1) Any modification to this Declaration or the Rules and Regulations which would have a material adverse effect on the use of, or ingress and egress to the Joint Use Parking Area with respect to the Commercial Owners and /or their Invitees; and (m) Any other action that would have a material and adverse impact on any Commercial Condominium and/or Commercial Common Area, including without limitation the use or operation thereof. Notwithstanding anything to the contrary in this Section 5.2.17, the foregoing shall not prohibit any reasonable temporary condition imposed by the Association which is necessary for the repair or maintenance of the Properties authorized in this Declaration. 5.2.18 Joint Use Area Rules. The power, but not the duty, to establish, amend, restate, delete and create exceptions to the Joint Use Area Rules. The Association shall administer any Joint Use Area Rules in a fair, reasonable and non discriminatory manner in accordance with the Reciprocal Easement Agreement. 5.3 Standard of Care, Nonliability. 5.3.1 Scope of Powers and Standard of Care. (a) General Scope of Powers. Rights and powers conferred on the Board, the Design Review Committee or other committees or representatives of the Association by the Restrictions are not duties, obligations or disabilities charged upon those Persons unless the rights and powers are explicitly identified as including duties or obligations in the Restrictions or law. Unless a duty to act is imposed on the Board, Design Review Committee or other committees or representatives of the Association by the Restrictions or law, the Board and the committees have the right to decide to act or not act. Any decision to not act is not a waiver of the right to act in the future. (b) Business Affairs. This Section 5.3.1(b) applies to Board member actions in connection with management, personnel, maintenance and operations, insurance, - contracts and finances and Design Review Committee member actions. Each Board member shall perform the duties of a Board member in good faith, in a manner such Board member believes to be in the best interests of the Association and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. JBS\30601.0001 \402281.9 10/32011 42 When performing Board member duties, a Board member is entitled to rely on information, opinions, reports or statements, including financial data prepared or presented by: (i) One or more officers or employees of the Association whom the Board member believes to be reliable and competent in the matters presented; (ii) Legal counsel, independent accountants or other Persons as to matters which the Board member believes to be within such Person's professional or expert competence; or (iii) A committee of the Board upon which the Board member does not serve, as to matters within such committee's designated authority, where the Board member believes the viewpoint of or information provided by such committee should reasonably be relied on, so long as, in any such case, the Board member acts in good faith, after reasonable inquiry when the need therefor is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted. . This Section 5.3.1(b) is intended to be a restatement of the business judgment rule established in applicable law as it applies to the Association. All modifications and interpretations of the business judgment rule applicable to the Association shall be interpreted to modify and interpret this Section 5.3.1(b). (c) Association Governance. This Section 5.3.1(c) applies to Board actions and Design Review Committee decisions in connection with the interpretation and enforcement of the Restrictions, architectural and landscaping control, regulation of uses within the Properties, rulemaking and oversight of committees. Actions taken or decisions made in connection with these matters shall be reasonable, fair and nondiscriminatory. 5.3.2 Nonliability. (a) General Rule. No Person is liable to any other Person (other than the Association or a party claiming in the name of the Association) for injuries or damage resulting from such Person's Official Acts, except to the extent that such injuries or damage result from the Person's willful or malicious misconduct. No Person is liable to the Association (or to any party claiming in the name of the Association) for injuries or damage resulting from such Person's Official Acts, except to the extent that such injuries or damage result from such Person's negligence or willful or malicious misconduct. The Association is not liable for damage to property in the Properties unless caused by the negligence of the Association, the Board, the Association's officers, the Manager or the Manager's staff. (b) Nonliability of Volunteer Board Members and Officers. A volunteer Board member or volunteer Association officer shall not be personally liable to any Person who suffers injury, including bodily injury, emotional distress, wrongful death or property damage or loss as a result of the tortious act or omission of the volunteer officer or Board member if all applicable conditions specified in Section 1365.7 of the California Civil Code are met. JRS\30601.0001 \402281.9 10/3/2011 43 (c) Nonliability of Owners. Pursuant to California Civil Code Section 1365.9, no Owner shall be liable for any cause of action in tort which can be brought against the Owner solely because of the Owner's undivided interest in the Common Area so long as the Association keeps one or more policies of insurance which include coverage for general liability of the Association in the amount required by California Civil Code Section 1365.9 and that insurance is in effect for the cause of action being brought. 5.4 Membership. 5.4.1 Generally. Every Owner is a Member of the Association and shall remain a Member of the Association until such Owner no longer owns a Condominium, at which time such Owner's Membership shall automatically cease. Ownership of a Condominium is the sole qualification for Membership. Memberships are not assignable except to the Person to whom title to the Condominium is transferred (at which time the Membership shall be automatically transferred to the Person to whom title to the Condominium is transferred), and every Membership is appurtenant to and may not be separated from the Subleasehold Estate in a Condominium. The rights, duties, privileges and obligations of all Owners are as provided in the Restrictions. 5.4.2 Transfer. An Owner's Membership may not be transferred, pledged or alienated in any way, except on the transfer or encumbrance of such Owner's Sublease, and then only to the transferee or Mortgagee of such Sublease. A prohibited transfer is void and will not be reflected in the records of the Association. The assignment of a Sublease includes an assignment of the membership rights appurtenant to such Sublease. The assignment of a Sublease must be substantially in the form of Exhibit "J" attached hereto and must be delivered to the Association before the assignee may vote. The assignor shall remain liable for all charges and Assessments attributable to the Condominium which accrue before the Recordation of the assignment of the Sublease. If an Owner fails or refuses to assign his or her Membership to the assignee of such Member's Sublease on recordation of the assignment of the Sublease, the Association may record the assignment in the Association's records. Until satisfactory evidence of such assignment is presented to the Association, the assignee will not be entitled to vote at Association meetings. The Association may levy a reasonable assignment fee against a new Owner and such Owner's Condominium (which fee shall be paid through escrow or added to the Annual Assessment chargeable to such new Owner) to reimburse the Association for the administrative cost of reflecting the assignment of the Sublease to the new Owner on the Association's records. Such fee may not exceed the Association's actual cost involved in changing its records. 5.4.3 Classes of Membership. The Association classes of voting Membership are as follows: (a) Class A. Class A Members are all Owners except Declarant provided, however, that Declarant shall become a Class A Member as to Condominiums owned by Declarant upon termination of Declarant's Class B Membership as provided below. Class A Members shall be entitled to the following number of votes: JRS\30601.0001 \402281.9 10/3/2011 44 (i) Each Class A Member who owns a Residential Condominium shall be entitled to one (1) vote for each Residential Condominium owned by such Member. (ii) Each Class A Member who owns a Commercial Condominium shall be entitled to a portion of the * *[ (J total Class A votes] ** allocated to all Commercial Condominiums based on the relative Square Footage that such Member's Commercial Unit bears to the total Square Footage of all of the Commercial Units. (b) Class B. The Class B Member is Declarant. The Class B Member is entitled to three (3) times the number of Class A votes that would be allocated to each Residential Condominium and Commercial Condominium owned by Declarant if such Condominiums were owned by a Class A Member. The Class B Membership shall convert to Class A Membership on the first to occur of the following events: (i) When the total outstanding votes held by Class A Members equals the total outstanding votes held by the Class B Member; or (ii) Five (5) years following the first Close of Escrow. Notwithstanding anything to the contrary in this Declaration or in the Bylaws, Declarant is entitled to solely elect a majority of the members of the Board of Directors at the first annual meeting of the Members of the Association. 5.5 Voting. 5.5.1 Limits. All voting rights are subject to the Restrictions. Except as provided in this Declaration and the Bylaws, as long as there exists a Class B Membership, any provision of the Restrictions which expressly requires the vote or written consent of a specified percentage (instead of a majority of a quorum) of the Association's voting power before action may be undertaken shall require the approval of such specified percentage of the voting power of each class of Membership. Except as provided in this Declaration and the Bylaws, on termination of the Class B Membership, any provision of the Restrictions which expressly requires the vote or written consent of Owners representing a specified percentage (instead of a majority of a quorum) of the Association's voting power before action may be undertaken shall then require the vote or written consent of Owners representing such specified percentage of both (a) the Association's total voting power and (b) the Association's voting power represented by Owners other than Declarant. 5.5.2 Joint Ownership. Each Co -owner may attend any Association meeting, but only one (1) such Co -owner shall be entitled to exercise the vote to which the Condominium is entitled. Co- owners owning the majority interests in a Condominium may designate in writing one (1) of their number to vote. Fractional votes shall not be allowed, and the vote(s) allocated to each Condominium in this Article shall be exercised, if at all, as a unit. Where no voting Co- owner is designated or if the designation is revoked, the vote for the Condominium shall be exercised as the Co- owners owning the majority interests in the Condominium agree. Unless the Association receives a written objection in advance from a Co- owner, it shall be conclusively rasn0601.0001\402281.9 10/3/2011 45 presumed that the voting Co -owner is acting with his Co- owners' consent. No vote may be cast for any Condominium if the Co- owners present in person or by proxy owning the majority interests in such Condominium fail to agree to the vote or other action. The nonvoting Co -owner or Co- owners are jointly and severally responsible for all obligations imposed on the jointly - owned Condominium and are entitled to all other benefits of ownership. All agreements and determinations lawfully made by the Association in accordance with the voting percentages established in the Restrictions are binding on all Owners and their successors in interest. 5.5.3 Election and Removal of Board, Cumulative Voting Features. Voting for directors of the of the Board shall be by secret written ballot. Each ballot shall set forth the number of votes allocated for each Condominium and shall identify whether such Condominium is a Commercial Condominium or Residential Condominium. Every Owner entitled to vote at any election of the Board may cumulate such Owner's votes and give one candidate for the Board a number of votes equal to the number of directors to be elected to the Board multiplied by the number of votes to which such Owner's Condominium(s) is (are) entitled, or may distribute such Owner's votes on the same principle among as many candidates as such Owner desires, provided that the procedural requisites to cumulative voting set forth in Section 7615(b) of the California Corporations Code are satisfied. Subject to Section 5.5.4 and 5.5.5 below, the entire Board or any individual director may be removed from the Board with or without cause by vote of the majority of the voting power of the Members. However, subject to Sections 5.5.4 and 5.5.5, unless the entire Board is removed, no individual director shall be removed prior to the expiration of such director's term of office if the number of votes cast against removal, plus those not consenting in writing to such removal, would be sufficient to elect the director if voted cumulatively at an election at which the same total number of votes were cast and the entire number of directors authorized at the time of the most recent election of the director were then being elected. If any or all of the directors are so removed, subject to Sections 5.5.4 and 5.5.5 new directors may be elected to replace such removed directors at the same meeting. Each director on the Board must be an Owner or a representative of Declarant designated by Declarant. 5.5.4 Residential Seat. To assure Residential Owners' representation on the Board, at least one (1) of the directors on the Board shall be elected solely by the vote of the Residential Owners, other than Declarant, for so long as a majority of the voting power of the Association resides in Declarant. A director who has been elected to office solely by the vote of Residential Owners pursuant to this Section may be removed from office prior to the expiration of such director's term of office only by the vote of at least a majority of the voting power residing in Residential Owners other than Declarant. 5.5.5 Commercial Seat. To assure Commercial Owners' representation on the Board, upon termination of the Class B vote, at least one (1) of the directors on the Board shall be a Commercial Owner selected solely by the vote of the Commercial Owners unless no Commercial Owner wishes to serve on the Board. Any vacancy caused by the resignation or death of such Commercial Owner Board member shall be filled by another Commercial Owner and not by the remaining directors on the Board unless no other Commercial Owner wishes to serve on the Board. If the Board is comprised of more than five (5) directors, the Commercial Owners shall be entitled to elect the greater of (a) two (2) directors or (b) twenty percent (20 %) of the number of directors on the Board. A director who has been elected to office solely by the JRS\30601.0001 \402281.910/32011 46 vote of Commercial Owners pursuant to this Section, may be removed from office prior to the expiration of such director's term of office only by the vote of at least a majority of the voting power residing in Commercial Owners. If at any time no Commercial Owner wishes to serve on the Board, the provisions of this Section shall be suspended until a Commercial Owner elects to serve. 5.5.6 Declarant Representation Rights. Notwithstanding the provisions of this Article, until such time Declarant has assigned the Subleases of all Residential Condominiums to purchasers purchasing pursuant to a Final Subdivision Public Report issued by the DRE, Declarant shall have the absolute authority to elect one (1) of the directors on the Board. 5.6 Board of Directors. 5.6.1 Candidacy Requirements for Owners. Only Owners who meet the following criteria are qualified to run for and be elected to the Board of Directors: (a) The Owner must be in compliance with the Restrictions for the three (3) months immediately preceding the date of the election at which the Owner is being considered for election to the Board of Directors. To be in compliance, within five (5) days after receipt of written notice by the Association, the Owner must correct (to the satisfaction of the Board), any violation of the Restrictions for which the Owner has been determined to be responsible under this Declaration; (b) The Owner must be current in the payment of all Assessments for the three (3) months immediately preceding the date of the election at which the Owner is being considered for election to the Board of Directors; and (c) The Owner must not be related by blood or marriage or reside in the same household as any other Board member. 5.6.2. Incumbent Requirements. To remain qualified to serve on the Board of Directors, an Owner who has been elected to the Board of Directors must: (a) Not be absent from more than three (3) consecutive regularly scheduled meetings of the Board; (b) Attend at least seventy -five percent (75 %) of the Board meetings held during the year and attend the entire meeting each time; (c) Comply with every duly approved action of the Board; (d) Subject to Subsection (e) below, within five (5) days after receipt of written notice by the Association, comply with the Restrictions and correct (to the satisfaction of the Board) any violation of the Restrictions for which that director has been determined to be responsible pursuant to this Declaration; IRS\30601.0001 \402281.9 1013/2011 47 (e) Not be delinquent in the payment of any Assessment more than once in any Fiscal Year; (f) Exhibit respect, professionalism and courteous behavior to Owners, committee members, vendors, the Manager and its staff, and any other Persons associated with or retained by the Association; (g) Unless such compensation is first approved by the vote of Members representing at least a majority of the Association's voting power, refuse any type of gain, such as money, services, products, gifts or gratuities of a significant value, as determined by a majority vote of the Board who meet all of the required qualifications to serve as such, which gain is offered in relation to the Owner's service as a director. In addition, the Owner must disclose such offers at an open meeting of the Board. Compensation for services duly approved by the Board and unrelated to duties as a director or officer of the Association, and reimbursement of expenses associated with services to the Association, do not constitute prohibited gain within the meaning of this Subsection; and (h) Not act in a manner determined by a majority vote of the Board to be grossly detrimental to the general safety, health or welfare of the Association and its members. 5.7 Repair and Maintenance. 5.7.1 By Residential Owners. (a) Generally. Each Residential Owner shall, at his sole expense, maintain the Unit, including those areas and Improvements described on Exhibit "F ", in a clean, sanitary and attractive condition as applicable, and in conformance with any applicable Maintenance Guidelines. However, except as provided in Section 6.14.1, no bearing walls, ceilings, floors or other structural or utility bearing portions of the buildings housing the Units may be pierced or otherwise altered or repaired without approval from the Design Review Committee. Each Residential Owner shall pay when due all charges for any utility service which is separately metered to the Unit. (b) Exclusive Use Residential Common Area. Each Residential Owner shall, at his sole expense, keep the Exclusive Use Residential Common Area appurtenant to such Residential Owner's Unit free from debris and reasonably protected against damage, subject to the approval of the Design Review Committee. However, no Residential Owner is responsible for or entitled to perform periodic structural repair, resurfacing, sealing, caulking, replacement or painting of such Exclusive Use Residential Common Area so long as the need for such painting, repair or replacement is not caused by the willful or negligent acts of the Residential Owner or his Family, tenants or guests. Each Residential Owner shall also maintain any internal or external telephone wiring wherever located which is designed to serve only his Unit, and is entitled to reasonable access over the Common Area for such purposes, subject to reasonable limits imposed by the Association. JRS\30601.0001 \402281.9 10/32011 48 (c) Other Responsibilities. Each Owner shall maintain those other areas and Improvements described on Exhibit "F ". If the Association does not adopt an inspection and prevention program with regard to wood - destroying pests and other organisms pursuant to Section 5.7.3, then such a program is the responsibility of each Owner. (d) Residential Unit Water Intrusion. Notwithstanding any other provision herein, if there shall be intrusion of water into any Residential Unit (including, without limitation, as a result of any roof, window, skylight, curtain wall or other leaks (including, without limitation, plumbing leaks), the Owner of the impacted Residential Unit shall be obligated to immediately notify the Association of such event, and such Residential Owner shall take all necessary and appropriate action to repair such condition and stop any such water intrusion. In the event of any water intrusion' into the Residential Common Area and/or upon the Association's receipt of notice from a Residential Owner regarding water intrusion in such Owner's Unit, the Association shall thereafter take all appropriate action including a prompt inspection of the condition, repair of the condition (if such condition impacts the Residential Common Area) and mitigation of mold or mildew. Each Residential Owner shall be obligated to take all reasonable steps to mitigate any possible spread or accumulation of mold or mildew. Failure of a Residential Owner to timely notify the Association of any such water intrusion and the failure of the Association to promptly repair such condition shall be cause to deny future claims against Declarant relating thereto, which claims could have been mitigated had earlier action been taken. 5.7.2 By Commercial Owners. (a) Generally. Each Commercial Owner shall maintain, repair, replace, paint, paper, plaster, tile, finish and restore or cause to be so maintained, repaired, replaced and restored, at such Owner's sole expense, all portions of such Owner's Commercial Unit (with the exception of those areas that are the responsibility of the Association under Section 5.7.3 (b) below) and the Improvements therein, including, without limitation internal' non - structural walls, the plumbing, ITVAC equipment, internal or external telephone, cable television or internet wiring (including without limitation such wiring utilized for DSL, T -1, modem, or other electronic communication) serving such Unit (wherever same may be located), windows, doors, light fixtures actuated from switches controlled from, or separately metered to, such Owner's Commercial Unit, and the interior surfaces of the walls (including the first sheet of drywall enclosing such Unit), ceilings, floors, permanent fixtures and firebox in the fireplace, in a clean, sanitary and attractive condition, in accordance with the Commercial Condominium Plan and the original construction design of the Improvements in the Properties. Each Commercial Owner shall pay when due all charges for any utility service which is separately metered to or a Sub - Metered Expense for such Owner's Unit. (b) Commercial Unit Outdoor Patio Areas. Except as otherwise provided in Section 5.7.3(b) below, the Owner(s) of the Commercial Unit(s) that include outdoor patio areas within the Commercial Unit as shown on the Commercial Condominium Plan ("Commercial Patio Area ") shall be responsible for the installation, maintenance, repair and replacement of all fencing and other equipment and other Improvements installed therein and all costs related thereto. Notwithstanding any other provision in this Declaration to the contrary, any Owner of a Commercial Unit that includes a Commercial Patio Area shall not be obligated to JRS\30601.0001 \402281.9 10/32011 49 obtain Design Review Committee, Board or Association approval in connection with any improvements, fixtures and /or equipment installations a Commercial Patio Area. (c) Commercial Unit Water Intrusion. Notwithstanding any other provision herein, if there shall be intrusion of water into any Commercial Unit (including, without limitation, as a result of any roof, window, skylight, curtain wall or other leaks (including, without limitation, plumbing leaks), the Owner of the impacted Commercial Unit shall be obligated to immediately notify the Association of such event, and such Owner shall take all necessary and appropriate action to repair such condition and stop any such water intrusion. In the event of any water intrusion into the Commercial Common Area and /or upon the Association's receipt of notice from a Commercial Owner regarding water intrusion in such Owner's Unit, the Association shall thereafter take all appropriate action including a prompt inspection of the condition, repair of the condition (if such condition impacts the Commercial Common Area) and mitigation of mold or mildew. Each Commercial Owner shall be obligated to take all reasonable steps to mitigate any possible spread or accumulation of mold or mildew. Failure of a Commercial Owner to timely notify the Association of any such water intrusion and the failure of the Association to promptly repair such condition shall be cause to deny future claims against Declarant relating thereto, which claims could have been mitigated had earlier action been taken. 5.7.3 Association (a) Commencement of Obligations. The Association's obligation to maintain the'Common Area commences immediately (without the need for any acceptance of such obligation by the Association) on the date Annual Assessments commence on Condominiums in the Project. Until commencement of Annual Assessments on Condominiums, Declarant shall maintain the Common Area and all Improvements thereon. (b) Maintenance Standards. Subject to Articles X and XI, the Association shall maintain the Common Area and Improvements thereon or shall contract to assure the Common Area and Improvements thereon are maintained in a clean, sanitary and attractive condition reasonably consistent with the level of maintenance reflected in the Initial Budget, and in conformance with any applicable Maintenance Guidelines, Reciprocal Easement Agreement, Development Agreement and Ground Lease. However, the Association is not responsible for performing those items of maintenance, repair or Improvement of the Units or Exclusive Use Residential Common Areas, the maintenance of which is the responsibility of the Residential Owners pursuant to Section 5.7.2; however such maintenance by the Owners shall be in conformance with the Development Agreement and Ground Lease. In addition, notwithstanding the foregoing, the Association shall be responsible for all exterior surfaces of any building (excluding windows, doors and door hardware) in the Project that are adjacent to any Commercial Patio Area despite the fact that such exterior surfaces of the building are located within the Commercial Unit. Except as otherwise provided in the Ground Lease, the Board shall determine, in its sole discretion, the level and frequency of maintenance of the Common Area; provided, however, that at any time within the ten (10) year period after the first Close of Escrow, the Board may not elect to decrease the level of maintenance below that required by the JR3l30601.0 0 0 114 02 2s1.9 10/32011 50 Maintenance Guidelines without the prior written approval of Declarant; however, notwithstanding the foregoing the Association must comply with the maintenance and other requirements of the Ground Lease. (c) Maintenance Items. Except as otherwise provided in the Reciprocal Easement Agreement, the Association shall be responsible for the maintenance, repair and replacement of the Common Area and Joint Use Area, including without limitation: (i) subject to Section 5.2.7, the right, without obligation to perform all corrective janitorial and repair work within any Unit, if such work is necessary to prevent a material adverse impact on other Owners and /or other portions of the Properties and the applicable Owner fails to repair it (provided, in such event, the Board shall levy a Special Assessment against such Owner and such Owner's Condominium after Notice and Hearing; (ii) the repair and payment for all centrally - metered utilities, water charges, and mechanical and electrical equipment (including, without limitation, elevators and security gates) in the Common Area; payment of all charges for all utilities which serve individual Units but which are subject to a common meter (with the exception of Sub - Metered Expenses); (iii) payment of all Common Expenses and charges for water and utilities serving recreational amenities; (iv) the repair, maintenance and periodic structural repair and replacement of all Common Area Improvements, including without limitation all walls, fences, motorized gates, garage improvements, elevators, security and life safety systems, fountains, lighting fixtures, swimming pools, fitness equipment, walks, private driveways and other means of ingress and egress within the Properties; (v) the periodic maintenance, resurfacing, sealing, striping, caulking, or replacement of the parking spaces (including, without limitation, Exclusive Use Residential Parking Spaces and Joint Use Area parking spaces but excluding the maintenance, resurfacing, sealing and striping of Apartment Parking Area), so long as the need for any of these activities is not caused by the willful or negligent acts of the Owner to whom such parking spaces are assigned or any of such Owner's Family, tenants, invitees, licensees, customers, or guests; (vi) the periodic maintenance, structural repair, resurfacing, sealing, striping, caulking, or replacement (as applicable) of the Condo Parking Area, the Condo Access Facilities, the structural components of the Parking Structure, the Podium and the Joint Use Area (but excluding the maintenance, resurfacing, sealing and striping of Apartment Parking Area); (vii) the periodic maintenance, structural repair, resurfacing, sealing, caulking, or replacement of the Exclusive Use Residential Common Area and the structural repair of those portions of the exterior building walls included within a Commercial Unit which are the maintenance responsibility of the Association under Section 5.7.2(b) so long JRS\30601.0001 \402281.9 10/3/2011 51 as the need for any of these activities is not caused by the willful or negligent acts of the Owner to whom such area is assigned or any of such Owner's Invitees; (viii) if economically feasible, adoption of an inspection and prevention program for the prevention and eradication of infestation by wood - destroying pests and organisms in the Properties; (ix) the maintenance of any air conditioning equipment serving one or more Residential Units located on the Common Area, however, the Association shall add the costs it incurs in maintaining any such air conditioning equipment to the Annual Assessment levied against the Owner of the Condominium served by such air conditioning equipment; and (x) install and maintain the Public Art in a freely accessible location in the Project ( "Public Art Area's pursuant to the requirements of the Private Developer Cultural Arts Ordinance. Upon the commencement of Assessments, the Association shall be responsible for the maintenance of the Public Art in accordance with the requirements of the Private Developer Cultural Arts Ordinance, including without limitation preservation of the Public Art in good condition to the reasonable satisfaction of the City and/or Agency and protection of the Public Art against destruction, distortion, mutilation or other modification. The Public Art shall not be permanently removed from the Public Art Area or the Project without the approval of the City Arts Commission. Prior to the commencement of Assessments the Public Art will be maintained by Declarant. (d) Termite Eradication. If the Association adopts an inspection and preventive program for the prevention and eradication of infestation by wood - destroying pests and organisms, the Association, on no less than fifteen (15) nor more than thirty (30) days' notice, may require each Residential Owner and the occupants of the Owner's Residence to vacate such Residence to accommodate Association efforts to eradicate such infestation. The notice must state the reason for the temporary relocation, the date and time of the beginning of treatment, the anticipated date and time of termination of treatment, and that the occupants will be responsible for their own accommodations during the temporary relocation. Any damage caused to a Residence by such entry by the Association or by any person authorized by the Association shall be repaired by the Association as a Common Expense. All costs involved in operating the inspection and preventive program as well as repairing and replacing the Common Area and Improvements thereon when the need for such maintenance, repair or replacement is the result of wood - destroying pests or organisms are a Common Expense. Notwithstanding the foregoing or any other provision of this Declaration, if a Commercial Unit must be vacated to allow the Association to perform work authorized.or required under this Declaration the Association take all reasonably actions necessary to ensure that the time period of such vacation is as limited as possible and such work, including the timing thereof, has as minimal impact as possible on the business conducted in such Commercial Unit. (e) Additional Items. The Association shall also be responsible for maintaining any Improvements a majority of the voting power of the Association designates for maintenance by the Association. Such property shall be deemed to be Common Area and subject to the Restrictions applicable to the Common Area. JRS\30601.000N02281.9 10/3/2011 52 (f) Charges to Owners. All costs of maintenance, repairs and replacements for the Properties and/or Project shall be paid for as either General Common Expenses, Residential Common Expenses or Commercial Common Expenses out of the Association Maintenance Funds as provided in this Declaration. 5.7.4 Joint Use Parking Area. (a) Parking Restrictions. (i) The Joint Use Parking Area shall be available for use by Invitees of Residential Units and Commercial Units and family, guests, and other invitees of the Apartment Tenants ( "Apartment Parcel Invitees'). (ii) The parking spaces on the Joint Use Parking Area are allocated and restricted for use among Residential Unit Invitees, Commercial Unit Invitees and Apartment Parcel Invitees as provided on Exhibit "E " hereto. Such allocation and restriction shall be reflected by signs or postings in the Joint Use Parking Area and may not be altered or modified by the Association without the written approval of all Commercial Owners (for any change in allocation, size or configuration of parking spaces restricted to Commercial Owners' Invitees) or the Apartment Parcel Owner (for any change in allocation, size or configuration of parking spaces restricted to Apartment Parcel Invitees). The Association shall enforce the parking allocations and restrictions in Exhibit "E ". (iii) The expenses incurred by the Association in connection with the operation of the Joint Use Parking Area shall constitute a General Common Expense and shall be allocated between the Residential Owners and the Commercial Owners in accordance with Section 8.6.2. The Apartment Parcel Owner shall share in such cost as provided in the Reciprocal Easement Agreement. (iv) Unless otherwise specifically provided in this Declaration, or unless otherwise required by a Governing Authority, parking in the Joint Use Parking Area shall be regulated by the Board, which shall be entitled to adopt reasonable Rules and Regulations concerning use so long as they are consistent with this Declaration, the Development Agreement and other requirements of the City and /or Agency. (v) No vehicle shall be permitted to park in a Joint Use Parking Area parking space for more than a continuous twenty -four (24) hour period. (vi) The following types of vehicles shall not be parked in the Joint Use Parking Area: NEED TO CREATE APPLICABLE LIMITATIONS ON TYPES OF VEHICLES. (b) Access Facilities The Association shall maintain a separate controlled access gate to the Joint Use Parking Area which shall be in operation twenty -four (24) hours a day, seven (7) days a week. (c) Parking Fees M\30601.0001W02281.9 10/3/2011 53 The Joint Use Parking Area controlled access gate may require Residential Unit Invitees, Commercial Unit Invitees and Apartment Parcel Invitees to take an entry ticket. The Association will make available to the Commercial Owners, Residential Owners and Apartment Parcel Owner validations to be provided to Residential Unit Invitees, Commercial Unit Invitees and Apartment Parcel Invitees allowing such parties to exit the Joint Use Parking Area without payment of any fee or charge. (d) Towing of Vehicles. Any vehicle parked in a Joint Use Parking Area parking space in violation of this Declaration may be towed at the vehicle - owner's expense pursuant to California Vehicle Code Section 22658.2 or other applicable statute. (e) No Leasing of Joint Use Parking Area Spaces. The Association shall not be permitted to lease any of Joint Use Parking Area parking space or authorize use except as provided in this Declaration. 5.7.5 Carshare Service. The Association shall provide in the Parking Structure two (2) parking spaces reserved for a car sharing service to provide car rentals to Owners and the Apartment Tenants. Any costs assessed which are associated with such service shall be a Residential Common Expense. 5.7.6 Inspection of the Properties. The Board shall require strict compliance with all provisions of this Declaration and the Ground Lease and cause the Properties to be inspected by the Design Review Committee for any violation thereof. The Association shall have the Common Area and all Irnprovements thereon inspected at least once every three (3) years to (a) determine whether the Common Area is being maintained adequately in accordance with the standards of maintenance established in Section 5.7.3, (b) identify the condition of the Common Area and any Improvements thereon, including the existence of any hazards or defects, and the need for performing additional maintenance, refurbishment; replacement, or repair, and (c) recommend preventive actions which may be taken to reduce potential maintenance costs to be incurred in the future. The Board shall keep Declarant fully informed of its inspection activities and shall provide Declarant with copies of all reports as soon as they are prepared. The Association may employ such experts and consultants as are necessary to perform the inspection and make the report required by this Section. The Association shall prepare a report of the results of the inspection required by this Section. The report shall be furnished to Owners and Declarant by the earlier of sixty (60) days after the report is completed or at the time the next Association Budget is sent to the Owners. The report must include at least the following: (a) a description of the condition of the Common Area, including a list of items inspected, and the status of maintenance, repair and need for replacement of all such items; (b) a description of all maintenance, repair and replacement planned for the ensuing Fiscal Year and included in the Budget; (c) if any maintenance, repair or replacement is to be deferred, the reason for such deferral; JRS\30601.0001 \402281.910/32011 54 (d) a summary of all reports of inspections performed by any expert or consultant employed by the Association to perform inspections; (e) a report of the status of compliance with the maintenance, replacement and repair needs identified in the inspection report for preceding years and identified in any applicable Maintenance Guidelines; and (f) such other matters as the Board considers appropriate. For a period of ten (10) years after the date of the last Close of Escrow, the Board shall also furnish to Declarant (a) the report of each condition inspection performed for the Board, whenever such inspection is performed and for whatever portion of the Common Area that is inspected, within thirty (30) days after the completion of such inspection, and (b) the most recent condition inspection report prepared for any portion of the Common Area, within ten (10) days after the Association's receipt of a written request therefore from Declarant. 5.7.7 Maintenance Log. The Association and each Owner shall maintain a comprehensive maintenance log which details all maintenance actions and compliance with the maintenance provisions set forth in this Declaration (including, without limitation, the Maintenance Guidelines). 5.7.8 Damage by Owners. Each Owner is liable to the Association for any damage to the Common Area if the damage is sustained due to the act of an Owner, his guests, tenants or invitees, or any other persons deriving their right to use the Common Area from the Owner, or such Owner's respective family, tenants and guests. The Association may, after Notice and Hearing, (a) determine whether any claim shall be made on the Association's insurance, and (b) levy a Special Assessment equal to the cost of repairing the damage or any deductible paid and the increase, if any, in insurance premiums directly attributable to the damage caused by such Owner or the person for whom such Owner may be liable as described in this Declaration. If a Condominium is jointly owned, the liability of its Owners is joint and several, except to the extent that the Association has previously contracted in writing with the joint owners to the contrary. After Notice and Hearing, the cost of correcting the damage shall be a Special Assessment against such Owner. 5.7.9 NPDES Requirements. The Properties are subject to all federal, state and local requirements of the National Pollutant Discharge Elimination System ( "NPDES'� adopted pursuant to the Federal Clean Water Act. Pursuant to a NPDES General Permit adopted by the state Water Resources Control Board and the County NPDES Storm Water Permit Program, Drainage Area Management Plan ( "DAMP'S, the applicable Governing Authority has adopted the Water Quality Management Plans for the Properties which identify BMPs to reduce the discharge of pollutants to storm water facilities, before, during and after construction on the Properties is completed. The Association and the Owners and other residents and occupants within the Properties shall comply with all non - structural BMPs and structural BMPs, as applicable. The Association shall perform all maintenance imposed by DAMP and the Water Quality Management Plans. The costs of such maintenance, if any, shall be treated as General Common Expenses. Jxs \30601.0001\402281.910r3n011 55 5.7. 10 BMP Guidelines. The Association shall ensure that all landscape irrigation on the Properties is implemented in accordance with the BMPs, including without limitation (a) the provision for water sensors and programmable irrigation times allowing for short cycles, (b) the use of planting material similar to that installed by Declarant and with similar water requirements in order to reduce excess irrigation runoff and to promote surface filtration, and (c) maintenance of all permanent slopes with required landscaping with native or other drought tolerant planting materials. 5.8 Unsegregated Real Pr6perty Taxes. To the extent not assessed to or paid by the Owners, the Association shall pay all real and personal property taxes and Assessments levied on the Properties and/or Project. If all Condominiums are taxed under a tax bill covering all of Project, then each Owner shall pay his share of any installment due under the tax bill to the Association at least ten (10) days before the delinquency date. The Association shall transmit the taxes to the appropriate tax collection agency on or before the delinquency date. Taxes assessed against the Properties as a whole shall be allocated as follows: ' (a) The Commercial Owners shall, collectively, be responsible for the portion of such taxes equal to the same percentage of the General Common Expenses paid by the Commercial Owners. The Residential Owners shall, collectively, be responsible for the remaining portion of such taxes. (b) The portion of such taxes allocated to the Commercial Owners shall thereafter be levied against all of the Commercial Owners and their Commercial Units based upon the ratio of the Square Footage of each such Commercial Unit to the Square Footage of all Commercial Units subject to such tax. (c) The portion of such taxes allocated to the Residential Owners shall thereafter be levied against all of the Residential Owners and their Residential Units based upon the ratio of the Square Footage of each such Residential Unit to the Square Footage of all Residential Units subject to such tax. (d) The foregoing formulas shall be used solely to allocate blanket taxes prior to the date assessed values for the individual Units are determined (which assessed values would actually determine the appropriate amount of taxes owing by each Owner). Payments by each Owner pursuant to such formula shall be adjusted upon the actual assessed value for each Unit when finally determined (i.e., those Owners who pay more than their assessed value indicates is due shall receive a refund of such overpayment, and those Owners who pay less than their assessed value indicates is due shall make a make -up payment for such underpayment). The Association shall, at least forty -five (45) days before the delinquency date of any tax installment, deliver to each Owner a copy of the tax bill, along with a written notice setting forth the Owner's obligation to pay his share of the tax installment and the potential additional charges to the Owner for failure to comply. The Association shall pay the taxes on behalf of any Owner who does not pay his share. The Association shall add to the Annual Assessment of a delinquent Owner the amount of any sum advanced, plus interest at the rate of ten percent (10 %) per annum and any amount necessary to reimburse the Association for any penalty or late charge actually JRS\30601.0001 \402281.910/32011 56 assessed in connection with the tax bill for the Properties, which late charge results from the failure of the delinquent Owner to make timely payment of his share of the taxes. Until the Close of Escrow for ninety percent (90 %) of the Residential Condominiums in the Project and sixty -six percent (66 %) of the Commercial Condominiums in the Project, this Section may not be amended without the written consent of Declarant. ARTICLE VI DESIGN REVIEW COMMITTEE 6.1 Members of Committee. The Design Review Committee shall be composed of three (3) members. The initial members of the Committee shall be representatives of Declarant until one (1) year after the original issuance by the DRE of the Final Subdivision Public Report for the Properties ( "First Anniversary'D. After the First Anniversary, the Board may appoint and remove one (1) member of the Committee, and Declarant may appoint and remove a majority of the members of the Committee and fill any vacancy of such majority, until the earlier to occur of the date ( "Transfer Date'D which is (a) the Close of Escrow for the sale of ninety percent (90 %) of all Residential Condominiums or (b) the fifth (5th) anniversary of the original issuance by the DRE of the Final Subdivision Public Report for the Project, after which the Board may appoint and remove all members of the Committee. Committee members appointed by the Board must be Owners or agents of Owners, but Committee members appointed by Declarant need not be Owners or agents of Owners. Board members may serve as Committee members. Except as otherwise provided in this Section, after the Transfer Date, all vacancies, however caused, on the Design Review Committee of seats held by members appointed by the Board; shall be filled by the Board. A vacancy shall be deemed to exist in case.of the death, resignation or removal of any member of the Design Review Committee. 6.2 Powers and Duties. 6.2.1 General Powers and Duties. The Committee shall consider and act upon all plans and specifications submitted for its approval, including inspection of work in progress to assure conformance with plans approved by the Committee, and shall perform such other duties as the Board assigns to it. 6.2.2 Compliance with Architectural Guidelines. The Committee shall comply with any Architectural Guidelines issued by the Board pursuant to Section 5.2.8. 6.2.3 Retaining Consultants. The Committee has the power, but not the duty, to retain Persons to advise the Committee in connection with decisions; however, the Committee does not have the power to delegate its decision - making power. Notwithstanding the foregoing, under no circumstances shall any Architectural Guidelines governing the Commercial Common Area or the Commercial Units be adopted, modified, or amended without the consent of two - thirds (2 /3rd) of the voting power of the Commercial Owners. 6.3 Review of Plans and Specifications. 6.3.1 Improvements Requiring Approval. Except as provided in Sections 6.13 and 6.14.2, no construction, installation or alteration of an Improvement in the Properties JRS\30601.0001\402281.9 10/3/2011 57 may be commenced until the plans and specifications therefor showing the nature, kind, shape, height, width, color, materials and location thereof have been submitted to and approved in writing by the Committee; however, any Improvement may be repainted without Committee approval so long as the Improvement is repainted the identical color which it was last painted. Without limiting the generality of the foregoing, the provisions of this Article apply to the construction, installation and alteration of solar energy systems, as defined in Section 801.5 of the California Civil Code, subject to the provisions of California Civil Code Section 714, the applicable Governing Authority's Building Code, zoning regulations, and other laws. 6.3.2 Application Procedure. Until changed by the Board, the address for the submission of such plans and specifications is the Association's principal office. The form of application used by the Committee may include spaces allowing owners of "adjacent" Units ( "Adjacent Owners' to sign or initial the application confirming that they have been notified of the application. The Board shall establish a definition of "adjacent" in its Architectural Guidelines. Applications will be complete and may be approved or•disapproved by the Committee even if all of the Adjacent Owners do not initial the applications so long as the Owner submitting plans and specifications ( "Applicant's certifies that the Applicant requested that the Adjacent Owners sign the applications. By submitting plans and specifications, the Applicant (a) represents and warrants to the Committee and to the Association that the plans and specifications submitted by the Applicant do not violate any governing provision of law, including the Fair Employment and Housing Act (California Government Code Sections 12900 et seq.), building codes and other applicable laws governing land use and public safety and (b) agrees to indemnify, defend and hold the Association, its officers, the Board and the Committee harmless from and against all loss, damage or liability or claims or assertions thereof resulting from or arising in connection with the Committee's approval of any plans and specifications submitted by the Applicant. The Committee may reject the application for approval if it determines that the Applicant's plans and specifications are incomplete. The Committee shall transmit its decision and the reasons therefor in writing to the Applicant at the address listed in the application for approval within forty -five (45) days after the Committee receives all required materials. If the Applicant's application is disapproved, the Committee's notice of decision sent to the Applicant shall include a description of the procedure for reconsideration of the decision by the Board. Any application submitted pursuant to this Section shall be deemed approved unless the Committee transmits written disapproval or a request for additional information or materials to the Applicant within forty -five (45) days after the date the Committee receives all required materials. 6.3.3 Standards for Approval. The Committee shall approve plans and specifications submitted for its approval only if it determines that (a) installation, construction or alterations of the Improvements in the locations indicated will not be detrimental to the appearance of the surrounding area of the Properties as a whole, (b) the appearance of any structure affected by the proposed Improvements will be in harmony with the surrounding structures, (c) installation, construction or alteration of the proposed Improvements will not detract from the beauty, wholesomeness and attractiveness of the Properties or the enjoyment thereof by the Owners, (d) maintenance of the proposed Improvements will not become a burden JRS\30601.0001 \402281.9 10/3/2011 58 on the Association, and (e) the proposed Improvements are consistent with the Restrictions. The Committee may condition its approval of proposals or plans and specifications for any Improvement on any of the following: (i) the Applicant's furnishing the Association with security acceptable to the Association against any mechanic's lien or other encumbrance which may be Recorded against the Properties as a result of such work, (ii) such changes therein as it considers appropriate, (iii) the Applicant's agreement to grant appropriate easements to the Association for the maintenance of the Improvements, (iv) the Applicant's agreement to install (at its sole cost) water, gas, electrical or other utility meters to measure any increased consumption, (v) the Applicant's agreement to reimburse the Association for the cost of such maintenance, and /or (vi) the Applicant's agreement to complete the proposed work within a stated period of time, and may require submission of additional plans and specifications or other information before approving or disapproving material submitted. The Committee also has the right to require a reasonable security deposit with each application. The security deposit will be applied to the cost of repairing damage to the Common Area as a result of the Applicant's "Work" (as defined in Section 6.8). The amount of the security deposit shall be specified in the Architectural Guidelines. The security deposit may be increased or decreased from time to time at the discretion of the Committee. The Applicant shall meet any review or permit requirements of the applicable Governing Authority before making any construction, installation or alterations permitted under this Declaration. The Committee's approval or disapproval shall be based solely on the considerations listed in this Article. The Committee is not responsible for reviewing, nor may its approval of any plan or design be deemed approval of, any plan or design from the standpoint of structural safety or conformance with building or other codes. 6.4 Alteration Agreements. 6.4.1 Minor Alterations. Notwithstanding the foregoing, no decorating or cosmetic work for any Unit, which includes alterations that are limited in scope (such as bathroom and kitchen modernization where no changes are being made to plumbing systems) or involve purely decorative work (such as floor scraping, painting and wallpapering), may commence until a "Unit Decorating Agreement," in the form attached hereto as Exhibit "H" has been approved by the Design Review Committee. The form of the Unit Decorating Agreement is subject to modification by the Board at any time. In the event of any conflict between the Unit Decorating Agreement and the Architectural Guidelines, the Unit Decorating Agreement shall prevail. 6.4.2 Major Alterations No alterations of a Unit, other than decorating or cosmetic work as set forth in Section 6.4.1 above, shall commence until an "Alteration and Construction Agreement" ( "Alteration Agreement"), in the form attached hereto as Exhibit "I" has been approved by the Design Review Committee. The form of the Alteration Agreement is subject to modification by the Board at any time. In the event of any conflict between the Alteration Agreement and the Architectural Guidelines, the Alteration Agreement shall prevail. 6.5 Meetings and Actions of the Committee. The Committee shall meet as necessary to perform its duties. The vote or written consent of a majority of the Committee constitutes an act of the Committee. All approvals issued by the Committee must be in writing. Verbal approvals issued by the Committee or any individual Committee member are not valid, are not binding on the Association and may not be relied upon by any Person. If any member of 7RSl30601.0001\402281.9 toisrzot 1 59 the Committee ( "Affected Member's has a personal interest in any application because such application (a) was submitted by or on behalf of the Affected Member or the spouse of the Affected Member and /or (b) the construction activity described in such application will or may have a direct physical impact on the Affected Member's Condominium (e.g., the construction activity is taking place in a Unit which is adjacent to or in the immediate vicinity of the Affected Member's Condominium or has some other direct physical impact on the Affected Member's Condominium) (as applicable an "Affected Application's then the Affected Member shall not participate on the Committee with respect to the Affected Application and the other members of the Committee shall ask the Board to appoint a temporary member to sit on the Committee with respect to the Affected Application. 6.6 No Waiver of Future Approvals. The Committee's approval of any proposals or plans and specifications or drawings for any work done or proposed or in connection with any other matter requiring the Committee's approval does not waive any right to withhold approval of any similar proposals, plans and specifications, drawings or matters subsequently or additionally submitted for approval. 6.7 Compensation of Members. The Committee's members shall receive no compensation for services rendered, other than reimbursement for expenses incurred by them in performing their duties. 6.8 Inspection of Work. The Committee or its duly authorized representative may inspect any work for which approval of plans is required under this Article ( "Work's. The right to inspect includes the right to require any Owner to take such action as may be necessary to remedy any noncompliance with the Committee- approved plans for the Work or with the requirements of this Declaration ( "Noncompliance's. 6.8.1 Time Limit. The Committee's right to inspect the Work and notify the Applicant of any Noncompliance shall terminate sixty (60) days after the later to occur of (a) completion of the Work or (b) receipt by the Committee of written notice of completion from the Applicant. As used in this Article VI, the Work shall only be deemed "complete" or "completed" or in a state of "completion" when all work of any kind has been completed in accordance with this Declaration and all applicable Governing Authorities have completed all applicable inspections of the Work and issued all final approvals, sign offs, certificates and other permits or authorizations. The Committee's rights of inspection shall not terminate if plans for the Work have not previously been submitted to and approved in writing by the Committee. 6.8.2 Noncompliance. If an Improvement that requires the prior approval of the Committee is (a) commenced or completed without prior written approval by the Committee, or (b) an Improvement is not completed within the time limit established by the Committee in its approval, or (c) an Improvement is not completed in substantial conformity with the approved Application, or (d) if no time limit is established by the Committee, the Applicant fails to complete the Work within one (1) year after the date on which the Application was approved, then a Noncompliance is deemed to exist, and then the Committee has the right to deliver a written notice of Noncompliance to the violating Owner, and the Association may, but is not required to, pursue the remedies set forth in this Section, including without limitation the JRS\30601.0001\402281.9 10r3i2011 60 removal of any and all Improvements constructed or installed as a result of such Noncompliance with this Article VI. 6.8.3 Remedy. If an Owner fails to remedy any Noncompliance within sixty (60) days after the date of notice from the Committee, the Committee shall notify the Board in writing of such failure. After Notice and Hearing, the Board shall determine whether there is a Noncompliance and, if so, the nature thereof and the estimated cost of correcting or removing the same. If a Noncompliance exists, the Owner shall remedy or remove the same within a period of not more than forty -five (45) days after the date that notice of the Board ruling is given to the Owner. If the Owner does not comply with the Board ruling within that period, the Association may Record a Notice of Noncompliance (if allowed by law) and commence an action for damages or injunctive relief, as appropriate, to remedy the Noncompliance. 6.9 Variances. The Committee may authorize variances from compliance with any of the architectural provisions of this Declaration including restrictions on height, size, floor area or placement of structures, or similar restrictions, when circumstances such as topography, natural obstructions, hardship, aesthetic or environmental consideration require. Such variances must be evidenced in writing, must be signed by a majority of the Committee, and become effective on Recordation. After Declarant's right to appoint a majority of the Committee's members expires, the Board must approve any variance recommended by the Committee before any such variance becomes effective. If variances are granted, no violation of the covenants, conditions and restrictions in this Declaration shall be deemed to have occurred with respect to the matter for which the variances were granted. The granting of a variance does not waive any of the terms and provisions of this Declaration for any purpose except as to the particular property and particular provision of this Declaration covered by the variance, nor does it affect the Owner's obligation to comply with all laws affecting the use of his Unit. 6.10 Maintenance and Repairs. Each Owner (a) is solely responsible for maintaining, repairing and replacing any Improvement(s) installed or constructed by such Owner unless the Association enters into an agreement with such Owner (which agreement must be Recorded) pursuant to which the Association assumes such responsibility, (b) shall reimburse the Association for any damage or injury resulting from or arising in connection with the construction, installation, use or existence of such Improvement, the amount of which shall be subject to collection as a Special Assessment, and (c) shall indemnify, defend and hold the Association, its officers, the Board and the Committee harmless from and against all loss, damage or liability or claims or assertions thereof (including but not limited to attorneys' fees and costs) resulting from or arising in connection with the construction, installation, use or existence of the Improvement. 6.11 Pre - approvals. The Committee may authorize pre - approval of certain specified types of construction activities if, in the exercise of the Committee's judgment, pre - approval of such types of Improvements is appropriate in carrying out the purposes of the Restrictions. 6.12 Appeals. An Applicant whose application has been disapproved by the Committee may apply to the Board for reconsideration of the Committee's decision, in accordance with procedures for such reconsideration adopted by the Board. The Board's reconsideration of a Committee disapproval shall take place at an open meeting (i.e., not in an JRS130601 .0001 \402281.910/3/2011 61 executive session). This Section does not require reconsideration of a decision that is made by the Board or the Committee, if the Committee has the same membership as the Board. 6.13 Commercial Condominium Improvements. Notwithstanding any other provision of the Restrictions to the contrary, the Committee shall not be concerned with and shall not have jurisdiction and /or review and /or approval rights over (a) Commercial Unit signage (subject to compliance with Exhibit "C'), or (b) with the exception of building exteriors included in the interior of a Commercial Unit as provided in Section 5.7.3(b), any Improvements to be constructed within the interior portion of any Commercial Condominium ( "Tenant Improvements'; provided that such exterior modifications, signage, and /or Tenant Improvements (i) conform to any use restrictions applicable to Commercial Units as set forth in Article III hereof and (ii) if applicable, are approved by the applicable Governing Authorities. Similarly, the Committee shall not be concerned with and shall not have jurisdiction and /or review and /or approval rights over the demising or subdivision of any Commercial Unit into separate tenant spaces or Condominium Units of varying sizes, including, without limitation, the relocation of exterior doors and doorways necessary or appropriate to permit the re- demising and subdivision of Commercial Units. 6.14 Podium Alterations. Notwithstanding any other provision herein, no approval by the Design Review Committee shall be deemed to excuse the Applicant from complying with all restrictions herein, in the Rules and Regulations, or with sound building and safety practices with respect to maintenance of the structural integrity of the Podium. 6.14.1 Residential Condominiums. Notwithstanding any other provision herein, under no circumstances shall any Residential Owner have the right to, nor petition the Design Review Committee for the approval of any plan to, alter, impair, modify, or penetrate the Podium or any other building roof or floor for any reason. 6.14.2 Commercial Condominiums. An Owner of a Commercial Condominium or the occupant thereof shall be entitled to modify, penetrate or otherwise alter the Podium in connection with the installation of any Improvements in the Commercial Unit, provided that such work must be approved by the applicable Governing Authorities. The Association and Design Review Committee shall not have the right to notice of such work or have any right of review or approval of such work by a Commercial Owner or occupant so long as such work is approved by the applicable Governing Authorities. ARTICLE VII PROPERTY EASEMENTS AND RIGHTS 7.1 Easements. 7.1.1 Maintenance and Repair. Declarant reserves for the benefit of the Association and all Association agents, officers and employees, nonexclusive easements over the Common Area and the Exclusive Use Residential Common Areas as necessary to fulfill the obligations and perform the duties of the Association. ias\30601.0001\402281.9 10i3/20t t 62 7.1.2 Utility Easements. Declarant reserves easements for maintaining and utilities (including the reading of sub meters) over the Common Area for the benefit of the Owners. Declarant reserves the right to grant additional easements and rights -of -way over the Project to utility companies and public agencies, as necessary, for the proper development and disposal of the Project. Such right of Declarant shall expire on Close of Escrow for the sale of the last Condominium in the Properties. 7.1.3 Encroachments. Declarant reserves for its benefit and the benefit of the Owners a reciprocal easement appurtenant to each Unit over the other Units and the Common Area to accommodate (a) any existing encroachment of any wall or any other authorized Improvement, (b) authorized construction or repair, and (c) shifting, movement or natural settling of the Units or other Improvements. Declarant reserves for the benefit of the Properties, the Owners and the Association, reciprocal nonexclusive easements for drainage of water over, across and on the Properties. Use of the foregoing easements may not unreasonably interfere with each Owner's use and enjoyment of the burdened Units. 7.1.4 Completion of Improvements. Declarant reserves the right and easement to enter the Properties to complete any Improvement which Declarant considers desirable to implement Declarant's development plan. 7.1.5 Owners' Easements in Common Area. (a) General Common Area. Declarant reserves for the benefit of every Owner and such Owner's Invitees nonexclusive easement for use of and vehicular and pedestrian access over the General Common Area in connection with the use and enjoyment of each Unit in the Properties all in accordance with the Restrictions. This easement is appurtenant to and passes with title to every Condominium in the Properties. This easement is subject to the restrictions, rights and other easements in the Restrictions. hi addition, subject to the provisions of this Declaration, every Commercial Owner shall have a nonexclusive easement over that those portions of the Common Area described on Exhibit" C" for the installation and maintenance of signage in compliance with Section 3.3. (b) Residential Common Area. Declarant reserves for the benefit of every Residential Owner and such Owner's Invitees, a nonexclusive easement for use of and vehicular and pedestrian access over the Residential Common Area in connection with use and enjoyment of each Residential Unit in the Properties. This easement is appurtenant to and passes with title to every Residential Condominium in the Properties. This easement is subject to the restrictions, rights and other easements in the Restrictions. (c) Commercial Common Area. Declarant reserves for the benefit of every Commercial Owner and such Owner's Invitees a nonexclusive easement for use of and vehicular and pedestrian access over the Commercial Common Area in connection with use and enjoyment of each Commercial Unit in the Properties. This easement is appurtenant to and passes with title to every Commercial Unit in the Properties. This easement is subject to the restrictions, rights and other easements in the Restrictions. 7.1.6 Exclusive Use Residential Common Areas. JRS\30601.0001 \402281.910/3/2011 63 (a) Exclusive Use Residential Common Area. Declarant reserves for the benefit of specified Residential Owners exclusive easements over the Properties for use of the Exclusive Use Residential Common Area, including for balcony; patio and terrace purposes as shown and assigned on the Residential Condominium Plan for the Properties, for storage purposes assigned on the Residential Condominium Plan or Sublease of a Unit and for parking purposes as shown and assigned on "Exhibit "D ". Declarant shall, without notifying or obtaining the approval or signature of the Residential Owners and /or Association, be entitled to amend this Declaration to (i) designate additional Exclusive Use Residential Parking Spaces or storage areas not reflected and/or assigned in such documents and assign same to Owners and/or (ii) change the assignment of Exclusive Use Residential Parking Spaces and /or storage areas for any Residential Unit or Units for which the Close of Escrow has not yet occurred. In addition, each Residential Owner (including Declarant) may exchange or transfer Exclusive Use Residential Parking Spaces or storage areas if (a) a deed of conveyance identifying the exchanged or transferred Exclusive Use Residential Parking Space or storage area, the exchanging Residential Owners or transferor and transferee and their respective Residential Condominiums, is executed by the Residential Owners and their first Mortgagees and Recorded; and (b) such exchange or transfer does not reduce the number of parking spaces below that required by the applicable Governing Authority. The Residential Owners shall deliver a copy of the Recorded deed of conveyance to the Association as soon as possible after Recordation. Declarant reserves a special power of attorney coupled with an interest to execute such documents as are reasonably necessary on behalf of Residential Owners and Mortgagees to correct incorrect assignments of Exclusive Use Residential Parking Spaces or storage areas. 7.1.7 Easements under Reciprocal Easement Agreement. The Properties are subject to the Reciprocal Easement Agreement which includes (a) certain easements over the Properties in favor of the Apartment Parcel Owner and the Apartment Tenants and (b) certain easements over the Apartment Parcel for the benefit of Declarant, the Association, Owners and their respective guests, tenants and invitees, as provided for in the Reciprocal Easement Agreement. 7.2 The Living Street and Olympic Plaza. The Living Street and Olympic Plaza shall be accessible to the public between the hours of 6:00 A.M. and 11:00 P.M. Without limiting the generality of the foregoing, emergency vehicles shall have access to the Living Street and Olympic Plaza at all times and no paving or any barriers designed for any portion of the Living Street and Olympic Plaza shall impede access by such emergency vehicles to the Living Street and Olympic Plaza. The public shall have the right to use the Living Street and Olympic Plaza for walking, strolling, reading and other similar activity, without having the obligation to buy any goods or services from the Commercial Units, and to otherwise occupy or use such areas in a manner consistent with the Development Agreement, the Ground Lease and any reasonable Rules and Regulations established by the Association for the Living Street and Olympic Plaza including without limitation Rules and Regulations prohibiting (a) cooking, dispensing or preparing food, (b) sleeping or staying overnight, (c) using sound amplifying equipment and (d) engaging in any illegal, dangerous or other activity inconsistent with other uses in the Project or with the use of the Living Street and Olympic Plaza by other members of the public for their permitted purposes, such as excessive noise, boisterous activity and being intoxicated; provided, however, that such Rules and Regulations must be consistent with the Development Agreement and the Ground Lease and approved by the City Planning Director. JRS\30601.0001 \402281.9 10/32011 64 Subject to approval by the City Planning Director, which approval shall not be unreasonably withheld or delayed, the Association shall have the right to limit public access to the Living Street and Olympic Plaza in a manner which is consistent with the emergency access requirements set forth in Section 2.9(b) of the Development Agreement; provided, however, that except as authorized under Section 2.7 of the Development Agreement, no physical or visual barrier shall be used to limit access to the Living Street and Olympic Plaza at any time. 7.3 Right to Grant Easements. Declarant reserves the right, but not the obligation, to grant easements over the Common Area for the exclusive use by an Owner or Owners of contiguous property as balcony, patio, terrace or storage area. Any such easement may be conveyed by Declarant before the last Close of Escrow of a Condominium in the Properties. The purpose of the easement, the portion of the Common Area affected, the Condominium to which the easement is appurtenant, and any restrictions on use of the easement area shall be identified in a Recorded grant of easement. 7.4 Delegation of Use. Any Residential Owner may delegate his or her right to use the General Common Area or Residential Common Area in writing to his or her tenants who reside in such Owner's Condominium, subject to Section 2.13 and regulation by the Board. A Residential Owner who has delegated his rights may not use the Project recreational facilities on the Residential Common Area so long as such delegation remains in effect. ARTICLE VIII ASSOCIATION MAINTENANCE FUNDS AND ASSESSMENTS 8.1 Personal Obligation to Pay Assessments. Each Owner is deemed to covenant to pay to the Association Assessments which are established and collected pursuant to this Declaration. The Association shall not levy or collect any Assessment that exceeds the amount necessary for the purpose for which it is levied. Except as provided in this Section, all Assessments, together with interest, costs, and reasonable attorneys' fees for the collection thereof, are a charge and a continuing lien on the Condominium against which such Assessment is made; provided, however, that the lien for Special Assessments that are imposed as a fine or penalty cannot be enforced under Section 2924, 2924(b) or 2924(c) of the California Civil Code. Each Assessment, together with interest, costs and reasonable attorneys' fees, is also the personal obligation of the Person who was the Owner of the Condominium when the Assessment accrued. The personal obligation for delinquent Assessments may not pass to any new Owner ( "Purchaser's unless expressly assumed by the Purchaser or unless the Purchaser has actual or constructive knowledge of such Assessments, whether by virtue of the Recordation of a "Notice of Delinquent Assessment" (as defined in Section 13.2.2(c)) or receipt from the Association of a certificate pursuant to Section 1368(a)(4) of the California Civil Code. 8.2 Funds of the Association. Separate Association Maintenance Funds shall be established for (a) deposits and disbursements related to the General Common Area, (b) deposits and disbursements related to the Residential Common Area, and (c) deposits and disbursements related to the Commercial Common Area. 8.2.1 General Common Area. With respect to the General Common Area, the Association shall establish no fewer than two (2) separate Association Maintenance Fund JRS\30601.0001 \402281.9 10/3/2011 65 accounts into which shall be deposited all money paid to the Association for maintenance of the General Common Area, and from which disbursements shall be made, as provided in this Declaration, in the performance of functions by the Association under this Declaration related to the General Common Area. The Association Maintenance Funds for the General Common Area may be established as trust accounts at a banking or savings institution and shall include: (a) an operating fund ( "Operating Fund's for current General Common Expenses, (b) an adequate reserve fund ( "Reserve Fund's for the portion of General Common Expenses which are allocated to (i) reserves for Improvements which the Board does not expect to perform on an annual or more frequent basis, and (ii) payment of deductible amounts for insurance policies which the Association obtains, and (c) any other funds which the Association may establish with respect to the General Common Area to the extent necessary under the provisions of this Declaration. 8.2.2 Residential Common Area. With respect to the Residential Common Area, the Association shall establish no fewer than two (2) separate Association Maintenance Fund accounts into which shall be deposited all money paid to the Association for maintenance of the Residential Common Area, and from which disbursements shall be made, as provided in this Declaration, in the performance of functions by the Association under this Declaration related to the Residential Common Area. The Association Maintenance Funds for the Residential Common Area may be established as trust accounts at a banking or savings institution and shall include: (a) an Operating Fund for current Residential Common Expenses, (b) an adequate Reserve Fund allocated to (i) reserves for Improvements which the Board does not expect to perform on an annual or more frequent basis, and (ii) payment of deductible amounts for insurance policies which the Association obtains, and (c) any other funds which the Association may establish with respect to the Residential Common Area to the extent necessary under the provisions of this Declaration. Nothing contained in Section 8.2.1 above, this Section 8.2.2, or any other provision in this Declaration shall limit, preclude or impair the establishment of additional Association Maintenance Funds, so long as the amounts assessed to, deposited into, and disbursed from any such Association Maintenance Fund are earmarked for specified purposes authorized by this Declaration. 8.2.3 Commercial Common Area. With respect to the Commercial Common Area, the Association shall establish no fewer than two (2) separate Association Maintenance Fund accounts into which shall be deposited all money paid to the Association for maintenance of the Commercial Common Area, and from which disbursements shall be made, as provided in this Declaration, in the performance of functions by the Association under this Declaration related to the Commercial Common Area. The Association Maintenance Funds for the Commercial Common Area may be established as trust accounts at a banking or savings institution and shall include: (a) an Operating Fund for current Commercial Common Expenses, (b) an adequate Reserve Fund for the portion of Commercial Common Expenses which are allocated to (i) reserves for Improvements which the Board does not expect to perform on an annual or more frequent basis, and (ii) payment of deductible amounts for insurance policies which the Association obtains, and (c) any other funds which the Board may establish with respect to the Commercial Common Area to the extent necessary under the provisions of this Declaration. Nothing contained in Section 8.2.1 above, Section 8.2.2, this Section 8.2.3 or any other provision in this Declaration shall limit, preclude or impair the establishment of additional Association Maintenance Funds, so long as the amounts assessed to, deposited into, and JRS\30601.0001 \402281.910/32011 66 disbursed from any such Association Maintenance Fund are earmarked for specified purposes authorized by this Declaration. All reserves shall be determined annually by the Board pursuant to maintenance cost guidelines established in accordance with prudent property management practices generally applied for "common interest developments" (as defined in Section 1351(c) of the California Civil Code) throughout the County. The Association shall not use funds in the General, Residential and Commercial Association Maintenance Funds except as provided in this Declaration. There shall be no changes, modifications or additions to the categories or type of expenses designated as Commercial Common Expenses in the Initial Budget without the approval of sixty -seven percent (671/o) of the voting power of the Commercial Owners. 8.3 Purpose of Assessments. The Assessments shall be used exclusively to (a) promote the Owners' recreation, health, safety and welfare, (b) operate, improve and maintain the Common Area, and (c) discharge any other Association obligations under the Declaration all in accordance with the provisions of this Declaration. All amounts deposited into the Maintenance Funds for the General Common Area must be used solely for the common benefit of all Owners for purposes authorized by this Declaration, all amounts deposited into the Maintenance Funds for the Residential Common Area must be used solely for the common benefit of all of the Residential Owners for purposes authorized by this Declaration and all amounts deposited into the Maintenance Funds for the Commercial Common Area must be used solely for the common benefit of all of the Commercial Owners for purposes authorized by this Declaration. Disbursements from the Operating Fund shall be made by the Board for such purposes as are necessary for the discharge of its responsibilities in this Declaration for the common benefit of applicable Owners other than those purposes for which disbursements from the Reserve Fund are to be used. Disbursements, from the Reserve Fund shall be made by the Board only for the purposes specified in this Article and in Section 1365.5(c) of the California Civil Code. 8.4 Waiver of Use. No Owner may exempt himself or herself from personal liability for Assessments duly levied by the Association, nor release such Owner's Condominium from the liens and charges thereof, by waiving use and enjoyment of the Common Area or by abandoning such Owner's Condominium. 8.5 Limits on Annual Assessment Increase. 8.5.1 Maximum Authorized Annual Assessment For Initial Year of Operations. During the Fiscal Year in which Annual Assessments first commence, the Board shall not increase the General Annual Assessment, Residential Annual Assessment or Commercial Annual Assessment, as applicable, by an amount which exceeds twenty percent (20 %) of the General Annual Assessment, Residential Annual Assessment or Commercial Annual Assessment, as applicable, disclosed for the Project in the Initial Budget unless (a) an increase in the General Annual Assessment is first approved by a majority of the voting power of the Owners at an Increase Election; (b) an increase in the Residential Annual Assessment is approved by a majority of the voting power of the Residential Owners at an Increase Election and (c) an increase in the Commercial Annual Assessment is approved by a majority of the voting power of the Commercial Owners at an Increase Election. This Section does not limit JRS\30601.0001\402281.9 10/3201 67 Annual Assessment increases necessary for addressing an "Emergency Situation" as defined in Section 8.5.4. 8.5.2 Maximum Authorized Annual Assessment For Subsequent Fiscal Years. During the Fiscal Years following the Fiscal Year in which Annual Assessments commence, the Board may levy General, Residential and /or Commercial Annual Assessments which exceed the Annual Assessments for the immediately preceding Fiscal Year only as follows: (a) If the increase in General, Residential and /or Commercial Annual Assessments, as applicable does not exceed twenty percent (20 %) of the General, Residential or Commercial Annual Assessments, as applicable, for the immediately preceding Fiscal Year, then the Board must either (i) have distributed the Budget for the current Fiscal Year in accordance with Section 1365(a) of the California Civil Code, or (ii) obtain the approval of Owners, Residential Owners or Commercial Owners, as applicable, casting a majority of votes in an Increase Election; (b) If the increase in General, Residential and/or Commercial Annual Assessments is greater than twenty percent (20 %) of the General, Residential and/or Commercial Annual Assessments, as applicable, for the immediately preceding Fiscal Year, then the Board must obtain the approval of Owners, Residential Owners and /or Commercial Owners, as applicable, casting a majority of votes in an Increase Election. This Section does not limit Annual Assessment increases necessary for addressing an "Emergency Situation" as defined in Section 8.5.4 8.5.3 Supplemental Annual Assessments. If the Board determines that the Association's essential functions may be properly funded by a General, Residential and/or Commercial Annual Assessment, as applicable, that is less than the maximum authorized General Annual Assessment, Residential Annual Assessment and /or Commercial Annual Assessment, as applicable, described above, it may levy such lesser General Annual Assessment, Residential Annual Assessment and /or Commercial Annual Assessment. If the Board determines that the estimate of total Assessments to be collected by the Association for the current Fiscal Year is or will become inadequate to meet all General Common Expenses, Residential Common Expenses and/or Commercial Common Expenses, as applicable, it shall immediately determine the approximate amount of the inadequacy. Subject to the limits described in Sections 8.5.1 and 8.5.2, the Board may levy a supplemental General Annual Assessment, Residential Annual Assessment and /or Commercial Annual Assessment reflecting a revision of the total charges to be assessed against each Residential and/or Commercial Condominium. 8.5.4 Emergency Situations. For purposes of Sections 8.5.1, 8.5.2 and 8.7, an "Emergency Situation" is any one of the following: (a) An extraordinary expense required by an order of a court; JRS\30601.0001 \402281.9 10/3/2011 68 (b) An extraordinary expense necessary to maintain the portion of the Properties for which the Association is responsible where a threat to personal safety on the Properties or Project is discovered; and (c) An extraordinary expense necessary to maintain the portion of the Properties or Project for which the Association is responsible that could not have been reasonably foreseen by the Board when preparing the Budget. Before imposing or collecting an Assessment pursuant to this Subparagraph (c), the Board shall adopt a resolution containing written findings regarding the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process. The resolution shall be distributed to the applicable Owners with the notice of the Assessment. 8.6 Commencement and Collection of Annual Assessments. 8.6.1 Commencement of Assessments. The Board, by majority vote, shall authorize and levy the amount of the Annual Assessment (a) upon both the Commercial Condominiums and Residential Condominiums for the maintenance of the General Common Area and payment of General Common Expenses ( "General Annual Assessments '�, (b) upon the Residential Condominiums for maintenance of the Residential Common Area and payment of Residential Common Expenses ( "Residential Annual Assessments' and (c) upon the Commercial Condominiums for maintenance of the Commercial Common Area and payment of Commercial Common Expenses ( "Commercial Annual Assessments'). Annual Assessments shall commence on all Condominiums the first day of the first calendar month following the first Close of Escrow for a Condominium in the Project, other than any Unit used by Declarant as a model home. Annual Assessments for fractions of a month shall be prorated. Unless otherwise approved by the DRE, Declarant shall pay its full pro rata share of the Annual Assessments on all unsold Condominiums for which Annual Assessments have commenced. The Board shall fix the amount of the Annual Assessments against each applicable Condominium in accordance with this Declaration, at least thirty (30) days in advance of each Annual Assessment period. Written notice of any change in the amount of any Annual Assessment, Capital Assessment or Reconstruction Assessment shall be sent via first -class mail to every applicable Owner subject thereto not less than thirty (30) nor more than sixty (60) days before the increased Assessment becomes due. The Board may determine that all excess funds in the applicable Operating Fund be retained by the Association and used to reduce the following Fiscal Year's applicable Annual Assessments. 8.6.2 Allocation of Annual Assessments. (a) Residential Annual Assessments. All Residential Annual Assessments are and shall be levied in accordance with the following two (2) components, as set forth in.the Initial Budget: (i) an amount assessed equally against the Residential Owners and their Condominiums based upon the number of Condominiums owned by each Residential Owner and (ii) the Variable Costs. The Variable Costs will be assessed against each Residential Owner and his or her Unit based upon the relative Square Footage of each Residential Unit. Notwithstanding any other provisions of this Declaration to the contrary, the Association may not re- characterize any Variable Costs or modify the proration/allocation formulas and /or assumptions from those set forth in the Initial Budget. rxsn0601.0001\402281.9 10/3/2011 69 (b) Commercial Annual Assessments. All Commercial Annual Assessments shall be assessed against each Commercial Owner and his or her Condominium based upon relative Square Footage of the each Commercial Unit. (c) General Annual Assessments. All General Annual Assessments shall be allocated between the Commercial Owners and the Residential Owners as follows: (i) the Commercial Owners shall collectively be responsible for % of the General Annual Assessments and (ii) the Residential Owners shall collectively be responsible for % of the General Annual Assessments. The portion of the General Annual Assessments allocated to the Residential Owners shall be levied equally against all of the Residential Owners and their Condominiums based upon the number of Condominiums owned by each Residential Owner except for Variable Costs specified in the Initial Budget which shall be assessed against each Residential Owner and his or her Unit based upon the relative Square Footage of each Residential Unit. The portion of the General Annual Assessments allocated to the Commercial Owners shall be levied against each Commercial Owner and his or her Unit based upon the relative Square Footage of each Commercial Unit. 8.6.3 Exemption From Assessment Until Improvement Complete. Despite any other provisions of this Declaration, until the earlier to occur of (i) the Recordation of a notice of completion of an Improvement on the Common Area, or (ii) the placement of such Improvement into use, each Owner (including Declarant) shall be exempt from paying that portion of any Annual Assessment which is allocated to defraying expenses and reserves directly attributable to the existence and use of such Improvement. 8.6.4 Payment in Installments. Each Owner shall pay Annual Assessments in installments at such frequency and in such amounts and by such methods as are established by the Board. If the Association incurs additional expenses because of a payment method selected by an Owner, the Association may charge that expense to the Owner. The Association is not required to apportion the expense among all Owners as a part of Annual Assessments. Each installment of Annual Assessments may be paid to the Association in one check. If any payment of an Annual Assessment installment (a) is less than the amount assessed and (b) does not specify the Association Maintenance Fund(s) into which it should be deposited, then the amount received shall be credited in order of priority first to the applicable Operating Fund(s), until that portion of the Annual Assessment has been satisfied, and second to the applicable Reserve Fund(s). 8.6.5 Maintenance Agreement. Notwithstanding any other provision of this Declaration or the Bylaws regarding the term and termination of contracts with Declarant for providing services to the Association, Declarant may enter into a written maintenance agreement with the Association under which Declarant shall pay all or any portion of the operating Common Expenses and perform all or any portion of the Association's maintenance responsibilities in exchange for a temporary suspension of Annual Assessments. Such maintenance agreement shall extend for a term and shall be on such conditions as are approved by the DRE. 8.7 Capital Assessments. JRS\30601.0001 \402281.910/3/2011 70 8.7.1 General Common Area. From time to time, the Board may levy a Capital Assessment or Reconstruction Assessment applicable to that Fiscal Year only to defray, in whole or in part, the cost of any construction, repair or replacement of a capital Improvement or other such addition to the General Common Area or as otherwise provided under Section 14.3. No Capital Assessments in any Fiscal Year which, if added to the Capital Assessments already levied during such Fiscal Year for such General Common Area, exceed five percent (5 %) of the Association's Budgeted gross General Common Expenses for such Fiscal Year may be levied without the vote or written consent of Residential and Commercial Owners casting a majority of votes at an Increase Election; provided, however, that if the Capital Assessment is for rent payable for extension of the Ground Lease Term, such Capital Assessment must be approved by sixty -six and two- thirds percent (66- 2/3 %) of the voting power of the Members. The Board may levy in any Fiscal Year a Capital Assessment applicable to that Fiscal Year which exceeds five percent (5 %) of the Association's Budgeted gross General Common Expenses for such Fiscal Year if such increase is necessary for addressing an Emergency Situation as defined in Section 8.5.4. 8.7.2 Residential Common Area. From time to time, the Board may levy upon each Residential Owner and such Owner's Condominium, a Capital Assessment or Reconstruction Assessment applicable to that Fiscal Year only to defray, in whole or in part, the cost of any construction, repair or replacement of a capital Improvement or other such addition to the Residential Common Area or as otherwise provided under Section 14.3. No Capital Assessments in any Fiscal Year which, if added to the Capital Assessments already levied during such Fiscal Year for such Residential Common Area, exceed five percent (5 %) of the Association's Budgeted gross Residential Common Expenses for such Fiscal Year may be levied without the vote or written consent of Residential Owners casting a majority of votes at an Increase Election. The Board may levy in any Fiscal Year a Capital Assessment applicable to that Fiscal Year which exceeds five percent (5 %) of the Association's Budgeted gross Residential Common Expenses for such Fiscal Year if such increase is necessary for addressing an Emergency Situation as defined in Section 8.5.4. 8.7.3 Commercial Common Area. From time to time, the Board may levy upon each Commercial Owner and such Owner's Condominium, a Capital Assessment or Reconstruction Assessment applicable to that Fiscal Year only to defray, in whole or in part, the cost of any construction, repair or replacement of a capital Improvement or other such addition to the Commercial Common Area or as otherwise provided under Section 14.3. No Capital Assessments in any Fiscal Year which, if added to the Capital Assessments already levied during such Fiscal Year for such Commercial Common Area, exceed five percent (5 %) of the Association's Budgeted gross Commercial Common Expenses for such Fiscal Year may be levied without the vote or written consent of Commercial Owners casting a majority of votes at an Increase Election. The Board may levy in any Fiscal Year a Capital Assessment applicable to that Fiscal Year which exceeds five percent (5 %) of the Association's Budgeted gross Commercial Common Expenses for such Fiscal Year if such increase is necessary for addressing an Emergency Situation as defined in Section 8.5.4. 8.8 Limits With Respect to Commercial Units. Under no circumstances shall the percentage allocation of General Common Expenses between the Commercial Owners and the Residential Owners as specified in this Declaration be modified without the prior written consent JRS\30601.0001 \402281.9 10/3/2011 71 of sixty -seven percent (67 %) of the voting power of the Commercial Owners. Similarly, under no circumstances shall the Association (a) recharacterize any Residential Common Expenses as General Common Expenses or Residential Common Expenses or General Common Expenses as Commercial Common Expenses or (b) add additional Common Expense categories to the Commercial Common Expenses without the prior written consent of sixty -seven percent (67 %) of the voting power of the Commercial Owners. Under no circumstances shall any Special Assessment, Emergency Assessment, Capital Assessment, Reconstruction Assessment or other Assessment be levied against any Commercial Owner for any matters which relate solely to the Residential Common Area. The purpose of this Section is to ensure that the Association does not attempt to burden the Commercial Owners for expenses or costs which relate to or benefit the Residential Owners and/or the Residential Common Area. This Section 8.8 shall be broadly interpreted to accomplish such purpose. In the event of any conflict between the provisions of this Section 8.8 and any other Section of this Declaration, the provisions of this Section 8.8 control. ARTICLE IX INSURANCE 9.1 Duty to Obtain Insurance; Types. Except as otherwise provided in the Ground Lease, the Association shall obtain and maintain in effect at all times the following insurance coverages: 9. 1.1 Public Liability. Adequate public liability insurance (including coverage for medical payments), with limits acceptable to FNMA and as required by Section 1365.9 of the California Civil Code, insuring against liability for bodily injury, death and property damage arising from the activities of the Association and the Owners, with respect to the Common Area. 9.1.2 Fire and Casualty Insurance. Fire and casualty insurance with extended coverage, without deduction for depreciation, in an amount as near as possible to the full replacement value of the Common Area and those portions of the Units consisting of all fixtures, installations or additions comprising a part of the buildings housing the Units and all built -in or set -in appliances, cabinets and initial basic floor coverings, as initially installed or replacements thereof in accordance with the original plans and specifications for the Properties, or as installed by or at the expense of the Owners. The casualty insurance shall include earthquake coverage unless such coverage is not commercially reasonably available. 9.1.3 Fidelity Insurance. Fidelity insurance coverage for any Person handling funds of the Association, whether or not such persons are compensated for their services, in an amount not less than the estimated maximum of funds, including reserve funds, in the custody of the Person during the term of the insurance. The aggregate amount of the fidelity insurance coverage may not be less than the sum equal to one -fourth (1/4) of the Annual Assessments on all Condominiums in the Properties, plus reserve funds. 9.1.4 Insurance Required by FNMA, GNMA and FHLMC. Casualty, flood, liability and fidelity insurance meeting the insurance requirements for condominium projects established by FNMA, GNMA and FHLMC, so long as any of these entities is a Mortgagee or JRS\30601.0001 \402281.9 10/32011 72 Owner of a Condominium in the Properties, except to the extent such coverage is not reasonably available or has been waived in writing by the entity requiring the insurance coverage. 9.1.5 Other Insurance. Such other insurance insuring other risks customarily insured by associations managing condominium projects similar in construction, location and use. Such additional insurance shall - include, if economically feasible, general liability insurance and director's and officer's errors and omissions insurance in the minimum amounts established in Section 1365.9 of the California Civil Code. The Association shall also obtain and maintain all liability, hazard, and other insurance required to be obtained and maintained by Declarant under the Ground Lease and assumes all of Declarant's obligations in connection therewith. 9.1.6 Beneficiaries. The Association's insurance shall be kept for the benefit of the Association, the Owners, and the Mortgagees, as their interests may appear as named insured, subject, however, to loss payment requirements established in this Declaration. 9.2 Waiver of Claim Against Association. As to all policies of insurance kept by or for the benefit of the Association and the Owners, the Association and the Owners waive and release all claims against one another, the Board and Declarant, to the extent of the insurance proceeds available, whether or not the insurable damage or injury is caused by the negligence of or breach of any agreement by any of the Persons. 9.3 Right and Duty of Owners to Insure. Each Owner is responsible for insuring his personal property and all other property and Improvements in such Owner's Unit for which the Association has not purchased insurance in accordance with Section 9.1. Nothing in this Declaration precludes any Owner from carrying any public liability insurance as he considers desirable; however, Owners' policies may not adversely affect or diminish any coverage under any of the Association's insurance policies. Duplicate copies of Owners' insurance policies shall be deposited with the Association on request. If any loss intended to be covered by the Association's insurance occurs and the proceeds payable are reduced due to insurance carried by any Owner, such Owner shall assign the proceeds of the Owner's insurance to the Association, to the extent of such reduction, for application to the same purposes as the reduced proceeds are to be applied. 9.4 Commercial Owner Requirements. Notwithstanding any other provision in this Declaration, each Commercial Owner shall be obligated to obtain and maintain at all times (or cause tenants leasing all or any part of any Commercial Unit to obtain and maintain) commercial general liability insurance, with liability limits in amounts comparable to those maintained by owners of retail parcels substantially similar to such Commercial Owner's Unit (as reasonably determined by the Board) for liability to Residential Owners, Commercial Owners and Invitees within the Properties, and/or any other parties for claims related to the ownership and /or operation of such Owner's Commercial Unit and the activities thereon of such Owner and/or its Invitees. Such insurance coverage shall name the Association as an additional insured by endorsement to such policy and the Commercial Owners shall deliver to the Association a certificate or other reasonable proof evidencing that such insurance is in place. 9.5. Notice of Expiration Requirements. If available, each of the Association's insurance policies must contain a provision that the policy may not be canceled, terminated, JRS\30601.0001\402281.9 10 /3421 t 73 materially modified or allowed to expire by its terms, without thirty (3 0) days prior written notice to the Board and Declarant, and to each Owner and Mortgagee, insurer and guarantor of a first Mortgage who has filed a written request with the carrier for such notice and every other Person in interest who requests such notice of the insurer. In addition, fidelity insurance shall provide that it may not be canceled or substantially modified without thirty (3 0) days' prior written notice to any insurance trustee named pursuant to Section 9.7 and to each FNMA servicer who has filed a written request with the carrier for such notice. 9.6 Insurance Premiums. Premiums for insurance policies obtained by the Association are Common Expenses. 9.7 Trustee for Policies. The Association is trustee of the interests of all named insureds under the Association's insurance policies. Unless an insurance policy provides for a different procedure for the filing of claims, all claims made under such policy must be sent to the insurance carrier or agent by certified mail and be clearly identified as a claim. The Association shall keep a record of all claims made. All insurance proceeds under any such policies provided for in Section 9.1 must be paid to the Board as trustees. The Board has the authority to negotiate loss settlements with insurance carriers with participation, to the extent they desire, of first Mortgagees who have filed written requests within ten (10) days of receipt of notice of any damage or destruction as provided in Section 10.4. The Board is authorized to make a settlement with any insurer for less than full insurance coverage for any damage so long as the Board acts in accordance with the standard of care established in Section 5.3.1(b). Any two (2) officers of the Association may sign a loss claim form and release form in connection with the settlement of a loss claim, and such signatures are binding on all the named insureds. A representative chosen by the Board may be named as an insured, including a trustee with whom the Association may enter into an insurance trust agreement and any successor to such trustee, who shall have exclusive authority to negotiate losses under any insurance policy and to perform such other functions necessary to accomplish this purpose. 9.8 Actions as Trustee. Except as otherwise specifically provided in this Declaration, the Board has the exclusive right to bind the Association and the Owners in respect to all matters affecting insurance carried by the Association, the settlement of a loss claim, and the surrender, cancellation, and modification of all such insurance, in a manner satisfactory to Mortgagees of seventy -five percent (75 %) of the first Mortgages held by first Mortgagees who have filed requests under Section 10.4. Duplicate originals or certificates of all policies of fire and casualty insurance kept by the Association and of all renewals thereof, together with proof of payment of premiums, shall be delivered by the Association to all Owners and Mortgagees who request them in writing. 9.9 Annual Insurance Review. The Board shall review the Association's insurance policies at least annually to determine the amount of the casualty and fire insurance referred to in Section 9.1. If economically feasible, the Board shall obtain a current appraisal of the full replacement value of the Improvements on the Properties except for foundations and footings, without deduction for depreciation, from a qualified independent insurance appraiser, before each such annual review. JRS\30601.0001 \402281.9 10/3/2011 74 9.10 Required Waiver. All of the Association's insurance policies insuring against physical damage must provide, if reasonably possible, for waiver of: Owners; (a) Subrogation of claims against the Owners and tenants of the (b) Any defense based on coinsurance; (c) Any right of setoff, counterclaim, apportionment, proration or contribution due to other insurance not carried by the Association; (d) 'Any invalidity, other adverse effect or defense due to any breach of warranty or condition caused by the Association, any Owner or any tenant of any Owner, or arising from any act or omission of any named insured or the respective agents, contractors and . employees of any insured; (e) Any right of the insurer to repair, rebuild or replace and, if the Improvement is not repaired, rebuilt or replaced following loss, any right to pay under the insurance an amount less than the replacement value of the Improvements insured; (f) Notice of the assignment of any Owner of his interest in the insurance by virtue of a conveyance of any Condominium; (g) Any right to require any assignment of any Mortgage to the insurer; (h) Any denial of an Owner's claim because of negligent acts by the Association or other Owners; and (i) Prejudice of the insurance by any acts or omissions of Owners that are not under the Association's control. ARTICLE X DESTRUCTION OF IMPROVEMENTS 10.1 Restoration of the Project. Except as otherwise provided in the Ground Lease, (a) if any portion of the Project which the Association is responsible for maintaining is destroyed, the Association shall restore the same to its former condition as promptly as practical and (b) the Association shall use the proceeds of its insurance for reconstruction or repair of the Properties unless otherwise provided in this Declaration. The Board shall prepare or obtain the documents necessary for commencing such reconstruction as promptly as practical. The Properties shall be reconstructed or rebuilt substantially in accordance with the Condominium Plans and the original construction plans if they are available, unless changes recommended by the Design Review Committee have been approved by at least sixty -seven percent (67 %) of the Owners and the City and /or Agency, if required by the Ground Lease. If the insurance proceeds amount to at least ninety -five percent (95 %) of the estimated cost of restoration and repair, the Board shall levy a Reconstruction Assessment to provide the additional funds necessary for such reconstruction. If the insurance proceeds amount to less than ninety -five percent (95 %) of the JRS\30601.0001 \402281.910/32011 - 75 estimated cost of restoration and repair, the Board may levy a Reconstruction Assessment and proceed with the restoration and repair only if both of the following conditions ( "Conditions to Reconstruction's have been satisfied: (a) the levy of a Reconstruction Assessment to pay the costs of restoration and repair of the Properties is approved by the Owners; and (b) within one (1) year after the date on which the destruction occurred, the Board Records a certificate of the resolution authorizing the restoration and repair. If either of the Conditions to Reconstruction does not occur following a destruction for which insurance proceeds available for restoration and repair are less than ninety -five percent (95 %) of the estimated cost of restoration and repair, then the Board shall proceed as provided in Section 10.2. 10.2 Sale of Properties and Right to Partition. No Owner shall have the right to partition such Owner's interest in the Condominium and there shall be no judicial partition of the Project, or any part thereof, except as provided in Section 1359(b) of the California Civil Code. For purposes of Subsection 4 of Section 1359(b), partition may occur only if all of the following conditions are satisfied: (a) either or both of the Conditions to Reconstruction described in Section 10.1 have failed to occur; (b) within six (6) months after the date on which destruction occurred, restoration or repair has not actually commenced; (c) the Owners of at least sixty -seven percent (67 %) of the Condominiums in the Project approve the partition and (d) the Agency and /or City has agreed to such partition. If such conditions are satisfied, subject to the terms of the Ground Lease, the Association shall prepare, execute and Record, as promptly as practical, the certificate stating that a majority of the Board may properly exercise an irrevocable power of attorney to assign the Association's interest in the Ground Lease for the benefit of the Owners and execute such other documents and instruments as may be necessary for the Association to consummate such assignment at the highest and best price obtainable, either in its damaged condition, or after damaged structures have been razed; provided that such assignment shall be subject to all terms and conditions of the Ground Lease. Such certificate shall be conclusive evidence of such authority for any Person relying thereon in good faith. The net proceeds of such sale and the proceeds of any insurance carried by the Association shall be divided as provided in the Ground Lease. Any portion of such proceeds allocated in the Ground Lease to the Owner shall be allocated between the Owners proportionately, such proportions to be determined in accordance with the relative appraised fair market valuation of the Condominiums as of a date immediately before such destruction (or condemnation), expressed as percentages, and computed by dividing such appraised valuation of each Condominium by the total of such appraised valuations of all Condominiums in the Project. The Board is authorized to hire one (1) or more appraisers for such purpose and the cost of such appraisals shall be a Common Expense of the Association. However, the balance then due on any valid Mortgage of Record shall be first paid in order of priority before the distribution of any proceeds to an Owner whose Condominium is so encumbered. Nothing in this Declaration prevents partition of a co- tenancy in any Condominium. Except as provided above, each Owner and the successors of each Owner, whether by deed, gift, devise, or by operation of law, for their own benefit and for the Condominiums and for the benefit of all other Owners, specifically waive and abandon all rights, interests and causes of action for a judicial partition of the tenancy in common ownership of the Project and do further covenant that no action for such judicial partition shall be instituted, prosecuted or reduced to judgment. 10.3 Interior Damage. With the exception of any casualty or damage covered by insurance maintained by the Association, restoration and repair of any damage to the interior of JRS\30601.0001 \402281.9 10/32011 76 any individual Condominium, including all fixtures, cabinets and improvements therein, together with restoration and repair of all interior paint, wall coverings and floor coverings, must be made by and at the individual expense of the Owner of the Condominium so damaged. If a determination to rebuild the Properties after partial or total destruction is made, as provided in this Article, such interior repair and restoration shall be completed as promptly as practical and in a lawful and workmanlike manner, in accordance with plans approved by the Design Review Committee as provided in this Declaration. 10.4 Notice to Owners and Listed Mortgagees. The Board, immediately on having knowledge of any damage or destruction affecting a Unit or a material portion of the Common Area, shall promptly notify all Owners, the City and Agency and shall also notify Mortgagees, insurers and guarantors of first Mortgages on Condominiums in the Properties who have filed a written request for such notice with the Board, Declarant. ARTICLE XI EMINENT DOMAIN The term "taking" as used in this Article means inverse condemnation, condemnation by exercise of the power of eminent domain or by sale under threat of the exercise of the power of eminent domain. The Board shall represent.the Owners in any proceedings, negotiations, settlements, or agreements regarding takings. All takings proceeds that are payable to the Association under the Ground Lease shall be distributed to Owners and Mortgagees as provided in this Article. All provisions of this Article XI shall be subject to the rights of the City and/or Agency and Declarant under the Ground Lease. All references herein to condemnation awards payable to Owners shall refer to awards made by the condemning authority as to such Owner's Subleasehold Estate. 11.1 Condemnation of Common Area. If there is a taking of all or any portion of the Common Area (other than Exclusive Use Residential Common Area), or any interest therein, other than the taking of an undivided interest therein taken as a result of the taking of a Condominium, then any portion of the award in condemnation payable to the Association in accordance with the Ground Lease, shall be paid to the Association and shall be deposited in the applicable Operating Fund. 11.2 Condemnation of Exclusive Use Residential Common Area. If there is a taking of all or any portion of an Exclusive Use Residential Common Area which is not taken in connection with the taking of all or any portion of the Unit to which it is appurtenant, any portion of the award in condemnation payable to the Association under the Ground Lease shall be paid to the Owner of the Unit to which the taken Exclusive Use Residential was appurtenant; provided, however, such award shall first be applied to the balance then due on any Mortgages encumbering such Owner's Condominium, in order of priority. 11.3 Condemnation of Condominiums. If there is a taking of a Condominium, any portion of the award in condemnation payable to the Association under the Ground Lease with respect to such Condominium shall be paid to the Owner of the Condominium; however, such award shall first be applied to the balance then due on any Mortgages encumbering such Owner's Condominium, in order of priority. JRS\30601.0001 \402281.9 10/3/2011 77 11.4 Condemnation of Portions of Units. 11.4.1 Minor Takings Within Limits. If (a) there is a taking of (i) a portion of one or more Residential Units such that the intended use of the Residential Units as residential dwellings is not substantially and adversely affected and /or (ii) a portion of one or more Commercial Units such that the intended use of the Commercial Units is not substantially and adversely affected, and (b) restoration of such Units can be accomplished at a cost less than or equal to the sum of (i) the amount of the condemnation awards for such takings plus (ii) any amounts the Owners of the taken Units wish to contribute to restoration plus (iii) an amount less than or equal to five percent (5 %) of the Budgeted gross expenses of the Association for that Fiscal Year (collectively, the 'Allowable Cost', then the Board shall contract for such restoration and levy a Reconstruction Assessment in an amount equal to the Allowable Cost minus the amount of the condemnation awards and Owners' contributions, and the condemnation awards, Owners' contributions and Reconstruction Assessment shall be applied to such restoration. If the restoration is accomplished at a cost less than the amount of the condemnation awards, then that portion of the condemnation awards which exceeds the restoration costs shall be paid to the Owners of the partially taken Units in proportion to the decreases in the fair market values of their Condominiums; however, such awards shall first be applied to the balance then due on any Mortgages encumbering such Owners' Condominiums, in order of priority. 11.4.2 Minor Takings Exceeding Limits. If (a) there is a taking of (i) a portion of one or more Residential Units such that the intended use of the Residential Units as residential dwellings is not substantially and adversely affected and/or (ii) a portion of one or more Commercial Units such that the intended use of the Commercial Units is not substantially and adversely affected, and (b) restoration cannot be accomplished at a cost less than or equal to the Allowable Cost, then the Board shall call a Special Meeting of the Owners. If more than fifty percent (50 %) of the voting power of the Association is represented at such Special Meeting, either in person or by proxy, and a majority of the votes cast at such Special Meeting are in favor of levying a Reconstruction Assessment in an amount equal to the restoration costs minus the sum of the amount of the condemnation awards and the amounts the Owners of the taken Units wish to contribute to such restoration, then the Board shall contract for such restoration and levy a Reconstruction Assessment, and the condemnation awards, Owners' contributions and Reconstruction Assessment shall be applied to such restoration. 11.4.3 Major Takings. If the requisite approval is not obtained at the Special Meeting referred to in Section 11.4.2, or if there is a taking of a portion of one or more Residential Units and /or Commercial Units such that the Units are not capable of being restored so that the intended use of the Units is not substantially and adversely affected, then any portion of the award in condemnation for such Units payable to the Association under the Ground shall be paid to the Owners of the taken Units; however, such award shall first be applied to the balance then due on any Mortgages encumbering such Owner's Condominium, in order of priority. Subject to the terms of the Ground Lease, the Board shall have the remaining portions of the taken Units razed. The remaining portions of the taken Units and appurtenant Exclusive Use Residential Common Area shall become part of the Common Area, and the Owners of such taken Units, by acceptance of the award allotted to them in taking proceedings, relinquish (a) to the other Owners, on the basis of their relative ownership of the Common Area therein, such Owners' undivided interest in the Common Area, and (b) to the Association, the remaining R2S\30601.0001 \402281.9 10/32011 78 portions of the Units appurtenant Exclusive Use Residential Common Area. Each Owner relinquishing his interest in the Common Area pursuant to this Section shall, at the Board's request and at the Association's expense, execute and acknowledge such deeds and other instruments which the Board and the City and /or Agency consider necessary or convenient to evidence such relinquishment. Each Owner of a taken Unit or Residence is not liable for Assessments under this Declaration which accrue on or after the date such Owner accepts his condemnation award. 11.5 Portions of Awards in Condemnation Not Compensatory For Value of Real Property. Those portions of awards in condemnation which do not directly compensate Owners for takings of real property (e.g., awards for takings of personal property, relocation expenses, moving expenses, or other allowances of a similar nature intended to facilitate relocation) shall be paid to the Owners whose personal property is taken, or whose relocation is intended to be facilitated. 11.6 Notice to Owners and Mortgagees. The Board, on learning of any taking affecting a Unit or a material portion of the Properties, or any threat thereof, shall promptly notify all Owners, the Agency and the City and also those Mortgagees, insurers and guarantors of Mortgages on Condominiums in the Project who have filed a written request for such notice with the Association, Declarant and the City and /or Agency. ARTICLE XII RIGHTS OF MORTGAGEES 12.1 General Provisions. No amendment or violation of this Declaration defeats or renders invalid the rights of the Mortgagee under any Mortgage encumbering one (1) or more Condominiums made in good faith and for value, provided that after the foreclosure of any such Mortgage, such Condominium(s) will remain subject to this Declaration. For purposes of this Declaration, "first Mortgage" means a Mortgage with first priority over other Mortgages or Deeds of Trust on a Condominium, and "first Mortgagee" means the Mortgagee of a first Mortgage. For purposes of any provisions of the Restrictions which require the vote or approval of a specified percentage of first Mortgagees, such vote or approval is determined based on one (1) vote for each Condominium encumbered by each such first Mortgage. 12.2 Additional Rights. To induce FHLMC, GNMA and FNMA to participate in the financing of the sale of Condominiums, the following provisions are added hereto (and to the extent these added provisions conflict with any other provisions of this Declaration or any other of the Restrictions, these added provisions control): 12.2.1 Notices. Each Mortgagee, insurer and guarantor of a Mortgage encumbering one (1) or more Condominiums, on filing a written request for notification with the Board, is entitled to written notice from the Association of: (a) any condemnation or casualty loss which affects either a material portion of the Properties or the Condominium(s) securing the Mortgage; (b) any delinquency of sixty (60) days or more in the performance of any obligation under the Restrictions, including the payment of Assessments or charges owed by the Owner(s) of the Condominium(s) securing the Mortgage, which notice each Owner consents to and authorizes; (c) a lapse, cancellation, or material modification of any insurance policy kept by the Mi 30601.0001\402281.9 to/3/2011 79 Association; and (d) any proposed action of the Association which requires consent by a specified percentage of first Mortgagees who have submitted a written request to the Association for notice of such proposed action. 12.2.2 Right of First Refusal. Each Owner, including each first Mortgagee of a Mortgage encumbering any Condominium who obtains title to such Condominium pursuant to (a) the remedies provided in such Mortgage, (b) foreclosure of the Mortgage, or (c) deed or assignment in lieu of foreclosure, is exempt from any "right of first refusal" created or purported to be created by the Restrictions. 12.2.3 Unpaid Assessments. Each first Mortgagee of a Mortgage encumbering any Condominium who obtains title to such Condominium pursuant to the remedies provided in such Mortgage or by foreclosure of such Mortgage shall take title to such Condominium free of any claims for unpaid Assessments or charges against such Condominium which accrued before the time such Mortgagee acquires title to such Condominium: 12.2.4 Approvals. Unless at least sixty -seven percent (67 %) of the first Mortgagees or sixty -seven percent (67 %) of the Owners have given their prior written approval, the Association may not: (a) by act or omission seek to abandon or terminate the Properties; or (b) change the method of determining the obligations, Assessments, dues or other charges which may be levied against any Owner; or (c) partition or subdivide any Condominium; or (d) by act or omission, seek to abandon, partition, subdivide, encumber, sell or transfer the Common Area. (The granting of easements for public utilities or for other purposes consistent with the intended use of the Common Area under this Declaration, and the granting of exclusive easements to Owners over the Common Area to conform the boundaries of the Common Area to the as -built location of authorized Improvements is not a transfer within the meaning of this clause.); or (e) by act or omission change, waive or abandon any scheme of regulations, or enforcement thereof, pertaining to the architectural design, the exterior appearance or the maintenance of the Units or the Common Area; or (f) fail to keep Fire and Extended Coverage insurance on insurable Common Area as provided in Article IX; or (g) use hazard insurance proceeds for losses to any Condominium property (i.e., Improvements to the Units or Common Area) for other than the repair, replacement or reconstruction of such Condominium property, subject to the provisions of Article X; or (h) change the pro rata interest or obligations of any Condominium to levy Assessments or charges, allocate distributions of hazard insurance proceeds or JRS\30601.0001\402281.9 10/3/2011 80 condemnation awards or determine the pro rata share of ownership of each Condominium in the Common Area. 12.2.5 Association Records. All Mortgagees, insurers and guarantors of first Mortgages, on written request to the Association may: (a) examine current copies of the Association's books, records and financial statements and the Restrictions during normal business hours; (b) require the Association to submit an annual audited financial statement for the preceding Fiscal Year if one is available, or have one prepared at the expense of the requesting entity if such statement is not otherwise prepared by the Association; (c) receive written notice of all meetings of Owners; and (d) designate in writing a representative authorized to attend all meetings of Owners 12.2.6 Material Changes. All Mortgagees, insurers and guarantors of first Mortgages, on written request, shall be given thirty (30) days' written notice before the effective date of (a) any proposed material amendment to the Restrictions or Condominium Plans; (b) any termination of an agreement for professional management of the Properties following any decision of the Owners to assume self - management of the Properties; and (c) any proposed termination of the Properties as a condominium project. 12.2.7 Reserves. The Reserve Fund described in Article VIII must be funded by regular scheduled monthly, quarterly, semiannual or annual payments rather than by large special Assessments. 12.2.8 Fidelity Insurance. The Board shall secure fidelity insurance for any person handling Association funds, including, but not limited to, employees of the professional Manager. 12.2.9 Contracts. The Board may enter into such contracts or agreements on behalf of the Association as are required to satisfy the guidelines of FHLMC, FNMA or GNMA or any similar entity, so as to allow for the purchase, guaranty or insurance, as the case may be, by such entities of first Mortgages encumbering Condominiums. Each Owner agrees that it will benefit the Association and the Owners, as a class of potential Mortgage borrowers and potential sellers of their residential Condominiums, if such agencies approve the Properties as a qualifying subdivision under their respective policies, rules and regulations. Each Owner authorizes his Mortgagees to furnish information to the Board concerning the status of any Mortgage encumbering a Condominium. 12.2.10 Professional Management. When professional management has been required by a Mortgagee, insurer, or guarantor of a first Mortgage, any decision to establish self - management by the Association shall require the approval of at least sixty -seven percent (67 %) of the voting power of the Association and the Mortgagees of at least fifty -one percent (51 %) of the first Mortgages of Condominiums in the Project. 7RS\30601.0001 \402281.9 10/32011 81 12.2.11 Intended Improvements. All intended Improvements must be substantially completed or the completion of such Improvements must be secured by a bond or other arrangement acceptable to DRE before the first Close of Escrow. 12.2.12 Payment of Taxes. First Mortgagees may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against any Common Area and may pay any overdue premiums on hazard insurance policies, or secure new hazard insurance coverage on the lapse of a policy, for Common Area, and the Association shall immediately reimburse first Mortgagees making such payments. 12.2.13 No Priority. No provision in this Declaration shall give an Owner or any other party priority over the rights of the first Mortgagee of the Condominium pursuant to its Mortgage in the case of payment to the Owner of insurance proceeds or condemnation awards for losses to or taking a Condominium and /or common elements. ARTICLE XIII ENFORCEMENT 13.1 Enforcement of Restrictions. All disputes arising under the Restrictions, other than those described in Section 13.4 or regulated by Civil Code Section 1375, shall be resolved as follows: 13. 1.1 Violations Identified by the Association. If the Board determines that there is a violation of the Restrictions, or the Design Review Committee determines that an Improvement which is the maintenance responsibility of an Owner needs installation, maintenance, repair, restoration or painting, then the Board shall give written notice to the responsible Owner identifying (a) the condition or violation complained of, and (b) the length of time the Owner has to remedy the violation including, if appropriate, the length of time the Owner has to submit plans to the Design Review Committee and the length of time the Owner has to complete the work proposed in the plans submitted to the Design Review Committee. If an Owner does not perform such corrective action as is required by the Board and the Design Review Committee within the allotted time, the Board, after Notice and Hearing, may remedy such condition or violation complained of, and the cost thereof shall be charged to the Owner as a Special Assessment. If the violation involves nonpayment of any Assessment, then the Board may collect such delinquent Assessment pursuant to the procedures established in Section 13.2. 13.1.2 Violations Identified by an Owner. If an Owner ( "Complainant ") alleges that another Person ( "Respondent's is violating the Restrictions (other than nonpayment of any Assessment), the Complainant must first submit the matter to the Board for Notice and Hearing before the Complainant may resort to alternative dispute resolution, as required by Sections 1369.510 through 1369.590 of the California Civil Code, or litigation for relief. Notwithstanding the foregoing, the Association has no obligation to pursue enforcement of an alleged violation if the Complainant is not in "good standing." If the Association informs the Complainant that the Complainant is not in good standing, then the Complainant may proceed with alternative dispute resolution, as required under California Civil Code Sections 1369.510 through 1369.590, or litigation for relief against the Respondent with respect to the alleged violation. For purposes of this Section 13.1.2, a Complainant is not in "good standing" if (i) the JRS\30601.0001 \402281.9 10/3/2011 82 Complainant is delinquent in the payment of any type of Assessment or (ii) the Complainant is otherwise in violation of the Restrictions and such violation has not been remedied to the Association's reasonable satisfaction. 13.1.3 Meet and Confer. If a dispute exists (as determined by the Board after Notice and Hearing) between the Association and any Owner involving their rights, duties or liabilities under the Davis - Stirling Common Interest Development Act codified at Sections 1350 et seq. of the California Civil Code, the Nonprofit Mutual Benefit Corporation Law codified at Sections 7110 et seq. of the California Corporations Code, or the Restrictions, then before proceeding to either alternative dispute resolution in accordance with California Civil Code Sections 1369.510 through 1369.590 or litigation, a party shall invoke a dispute resolution procedure either (i) adopted by the Board pursuant to California Civil Code Section 1363.830, or (ii) if the Board fails to adopt a procedure pursuant to California Civil Code Section 1363.830, then in accordance with California Civil Code Section 1363.840. 13.1.4 Legal Proceedings. Failure to comply with any of the terms of the Restrictions by any Person is grounds for relief which may include an action to recover damages, injunctive relief, foreclosure of any lien, or any combination thereof; however, the procedures established in Sections 1369.510 through 1369.590 of the California Civil Code and in Sections 13.1.1, 13.1.2, 13.1.3 and 13.4 must first be followed, if they apply. 13.1.5 Additional Remedies. The Board may adopt a schedule of fines or penalties which, in its reasonable discretion, the Board may assess against a Person for the failure of such Person to comply with the Restrictions. Without limiting the generality of the foregoing, Person shall not include any Apartment Tenants. Such fines or penalties must be reasonable, created and levied in a fair and non discriminatory manner and may only be assessed after Notice and Hearing. After Notice and Hearing, the Board may direct the officers of the Association to Record a notice of noncompliance (if allowed by law) against the Condominium owned by any Owner who has violated any provision of this Declaration. The notice shall include a legal description of the Condominium and shall specify the provision of the Declaration that was violated, the violation committed, and the steps required to remedy the noncompliance. Once the noncompliance is remedied or the noncomplying Owner has taken such other steps as reasonably required by the Board, the Board shall direct the officers of the Association to Record a notice that the noncompliance has been remedied. 13.1.6 No Waiver. Failure to enforce any provision of this Declaration does not waive the right to enforce that provision, or any other provision of this Declaration. 13.1.7 Right to Enforce. The Board, any Owner, the City and /or Agency or Declarant may enforce the Restrictions as described in this Article, subject to Sections 1369.510 through 1369.590 of the California Civil Code. Each Owner has a right of action against the Association for the Association's failure to comply with the Restrictions. Each remedy provided for in this Declaration is cumulative and not exclusive or exhaustive. 13.1.8 Limit on Expenditures. The Association may not incur litigation expenses, including attorneys' fees, or borrow money to fund litigation, where the Association initiates legal proceedings or is joined as a plaintiff in legal proceedings, unless the Association JRS\30601.0001 \402281.9 10/32011 83 first obtains the consent of sixty -seven percent (67 %) of the Association voting power (excluding the voting power of any Owner who would be a defendant in such proceedings), and, if applicable, complies with the requirements of Sections 1369.510 through 1369.590 of the California Civil Code. Such approval is not necessary if the legal proceedings are initiated (a) to enforce the use restrictions contained in Article II and Article III, (b) to enforce the architectural and landscaping control provisions contained in Article VI, (c) to collect any unpaid Assessments levied pursuant to the Restrictions, (d) for a claim, the total value of which is less than five hundred thousand dollars ($500,000), or (e) as a cross - complaint in litigation to which the Association is already a party. If the Association decides to use or transfer reserve funds or borrow funds to pay for any litigation, the Association must notify the Owners of the decision by mail. Such notice shall provide an explanation of why the litigation is being initiated or defended, why operating funds cannot be used, how and when the reserve funds will be replaced or the loan will be repaid, and a proposed budget for the litigation. The notice must state that the Owners have a right to review an accounting for the litigation which will be available at the Association's office. The accounting shall be updated monthly. 13.2 Nonpayment of Assessments. 13.2.1 Delinquency. Assessments are delinquent if not paid within fifteen (15) days after the due date established by the Association. Assessments not paid within thirty (30) days after the due date, plus all reasonable costs of collection (including attorneys' fees) and late charges bear interest at the maximum rate permitted by law commencing thirty (30) days after the due date until paid. The Association may also require the delinquent Owner to pay a late charge in accordance with California Civil Code Section 1366(e)(2). The Association need not accept any tender of a partial payment of an Assessment and all costs and attorneys' fees attributable thereto. Acceptance of any such tender does not waive the Association's right to demand and receive full payment. 13.2.2 Creation and Release of Lien. (a) Priority of Lien. All sums assessed in accordance with this Declaration constitute a lien on the respective Condominium prior and superior to (i) any declaration of homestead Recorded after the Recordation of this Declaration, and (ii) all other liens, except (1) all taxes, bonds, Assessments and other levies which, by law, would be superior thereto, and (2) the lien or charge of any first Mortgage of Record (meaning any Recorded Mortgage with first priority or seniority over other Mortgages) made in good faith and for value and Recorded before the date on which the "Notice of Delinquent Assessment" (described in this Section) against the respective Condominium was Recorded. Any such lien and this Declaration shall be subject and subordinate to the Ground Lease. (b) Prerequisite to Creating Lien. Before the Association may place a lien on an Owner's Condominium to collect a past due Assessment, the Association must comply with (i) the notification requirements of California Civil Code Section 1367.l(a) and (ii) the procedural requirements of California Civil Code Section 1367.1(c). (c) Notice of Delinquent Assessment. The lien becomes effective on Recordation by the Board or its authorized agent of a Notice of Delinquent Assessment ( "Notice JRS\30601.0001 \402281.9 10/3/2011 84 of Delinquent Assessment's securing the payment of any Assessment or installment thereof levied by the Association against any Condominium Owner, as provided in Section 1367 or 1367.1 of the California Civil Code. The Notice of Delinquent Assessment must identify (i) the amount of the Assessment and other authorized charges and interest, including the cost of preparing and Recording the Notice of Delinquent Assessment, (ii) the amount of collection costs incurred, including reasonable attorneys' fees, (iii) a sufficient description of the Condominium that has been assessed, (iv) the Association's name and address, (v) the name of the Owner of the Condominium that has been assessed, and (vi) if the lien is to be enforced by nonjudicial foreclosure, the name and address of the trustee authorized by the Association to enforce the lien by sale. The Notice of Delinquent Assessment must be signed by an authorized Association officer or agent and must be mailed in the manner required by Section 2924b of the California Civil Code to the Owner of record of the Condominium no later than ten (10) calendar days after Recordation. The lien relates only to the individual Condominium against which the Assessment was levied and not to the Properties as a whole. (d) Exceptions. Assessments described in Section 1367(c) of the California Civil Code and Section 2792.26(c) of the California Code of Regulations may not become a lien against an Owner's Unit enforceable by sale of the Unit under Sections 2924, 2924(b) and 2924(c) of the California Civil Code. (e) Application of Payments. Delinquent Assessments paid by an Owner shall be applied first to Assessments owed and then to interest, late charges and collection costs. If requested by an Owner, the Association shall provide the Owner with a receipt for payment of delinquent Assessments which receipt shall include the date of receipt of payment and the name of the individual receiving receipt. The Association shall provide a mailing address for overnight payment of Assessments. (f) Release of Lien. Within twenty -one (21) days following (a) payment of the full amount claimed in the Notice of Delinquent Assessment, or other satisfaction thereof, or (b) discovery by the Board that the lien was recorded in error, the Board shall cause to be Recorded a Notice of Satisfaction and Release of Lien ( "Notice of Release's stating the satisfaction and release of the amount claimed. The Board may require the Owner to pay a reasonable charge for preparing and Recording the Notice of Release unless the lien was recorded in error. Any purchaser or encumbrancer who has acted in good faith and extended value may rely on the Notice of Release as conclusive evidence of the full satisfaction of the sums identified as owed in the Notice of Delinquent Assessment. 13.2.3 Enforcement of Liens. Except as otherwise provided herein and in any applicable provisions of the California Civil Code, the Association may enforce the collection of amounts due under this Declaration as follows: (a) Judicial or Non - Judicial Foreclosure. If (i) the amount of a delinquent Assessment equals or exceeds eighteen hundred dollars ($1,800.00) (excluding accelerated Assessments, late charges, fees and costs of collection, attorneys' fees and interest) or (ii) an Assessment is more than twelve (12) months past due, the Association may enforce collection of the amount due by using judicial or nonjudicial foreclosure, provided that the Association must comply first with the requirements of Section 1367.4(c) of the California Civil JRS\30601.0001n402281.910/3/2011 85 Code. The foreclosure sale shall be conducted in accordance with the provisions of the California Civil Code applicable to the exercise of powers of sale in Mortgages, or in any, manner permitted by law. The Association may sue to foreclose the lien if (a) at least thirty (30) days have elapsed since the date on which the Notice of Delinquent Assessment was Recorded and (b) at least ten (10) days have elapsed since a copy of the Notice of Delinquent Assessment was mailed to the Owner affected thereby. The Association may bid on the Condominium at foreclosure sale, and acquire and hold, lease, mortgage and convey the same. On completion of the foreclosure sale, the Association or the purchaser at the sale may file suit to secure occupancy of the defaulting Owner's Condominium, and the defaulting Owner shall be required to pay the reasonable rental value for the Condominium during any period of continued occupancy by the defaulting Owner or any persons claiming under the defaulting Owner. Notwithstanding the foregoing, a nonjudicial foreclosure by the Association to collect a debt for delinquent Assessments shall be subject to a right of redemption. The redemption period shall expire ninety (90) days after the foreclosure sale. (b) Civil Action in Small Claims Court. If the amount of a delinquent Assessment is less than eighteen hundred dollars ($1,800.00) (excluding accelerated Assessments, late charges, fees and costs of collection, attorneys' fees and interest), the Association may not enforce the collection of the amount due by judicial or nonjudicial foreclosure, but may collect such amount by a civil action in small claims court pursuant to Sections 116.110 et seq. of the California Code of Civil Procedure. The amount of a delinquent Assessment which may be recovered in small claims court may not exceed the jurisdictional limits of the court and shall be the sum of (i) the amount owed as of the date of filing of the complaint in the proceeding and (ii) in the discretion of the court, an additional amount equal to the amount owed for the period from the date the complaint is filed until satisfaction of the judgment, which total amount may include without limitation any reasonable late charges, fees and costs of collection, attorneys' fees and interest. (c) Other Legal Remedies. Subject to the limitations set forth in Section 1367.4 of the California Civil Code, the Association may enforce the collection of amounts due under this Declaration in any other manner provided by law. Any suit to recover a money judgment does not affirm the adequacy of money damages. Any recovery resulting from a suit at law or in equity initiated pursuant to this Section may include reasonable attorneys' fees as fixed by the court. 13.2.4 Priority of Assessment Lien. Mortgages Recorded before a Notice of Delinquent Assessment and the Ground Lease have lien priority over the Notice of Delinquent Assessment. Sale or transfer of any Condominium does not affect the Assessment lien, except that the sale or transfer of any Condominium pursuant to judicial or nonjudicial foreclosure of a first Mortgage extinguishes the lien of such Assessments as to payments which became due before such sale or transfer. No sale or transfer relieves such Condominium from liens for any Assessments thereafter becoming due or any applicable obligations under the Ground Lease. No Person who obtains title to a Condominium pursuant to a judicial or nonjudicial foreclosure of the first Mortgage is liable for the Assessments chargeable to such Condominium which became due before the acquisition of title to the Condominium by such Person. Such Assessments are a Common Expense collectible from all Owners including such Person. The Association may take such action as is necessary to make any Assessment lien subordinate to the interests of the 7RS\30601.0001\402281.9 10/320t 1 86 Department of Veterans Affairs of the State of California under its Cal -Vet loan contracts as if the Cal -Vet loan contracts were first Mortgages of record. 13.2.5 Alternative Dispute Resolution. An Owner may dispute the Assessments imposed by the Association if such Owner pays in full (a) the amount of the Assessment in dispute, (b) any late charges, (c) any interest, and (d) all fees and costs associated with preparing and filing a Notice of Delinquent Assessment (including mailing costs and attorneys' fees not to exceed the maximum amount allowed by law), and states by written notice that such amount is paid under protest, and the written notice is mailed by certified mail not more than thirty (30) days after Recording the Notice of Delinquent Assessment. On receipt of the written notice, the Association shall inform the Owner in writing that the dispute may be resolved through alternative dispute resolution as established in Civil Code Sections 1363.810 and 1369.510 et seq. The right of any Owner to use alternative dispute resolution under this Section may not be exercised more than two (2) times in any single calendar year, and not more than three (3) times within any five (5) calendar years unless the Owner and the Association mutually agree to use alternative dispute resolution when this limit is exceeded. An Owner may request and be awarded through alternative dispute resolution reasonable interest to be paid by the Association in the total amount paid under items (a) through (d) above, if it is determined that the Assessment levied by the Association was not correctly levied. 13.2.6 Receivers. In addition to the foreclosure and other remedies granted the Association in this Declaration, each Owner, by acceptance of a Sublease to such Owner's Condominium, conveys to the Association all of such Owner's right, title and interest in all rents, issues and profits derived from and appurtenant to such Condominium, subject to the right of the Association to collect and apply such rents, issues and profits to any delinquent Assessments owed by such Owner, reserving to the Owner the right, before any default by the Owner in the payment of Assessments, to collect and retain such rents, issues and profits as they may become due and payable. On any such default the Association may, on the expiration of thirty (30) days following delivery to the Owner of the "Notice of Delinquent Assessment" described in this Declaration, either in person, by agent or by receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness secured by the lien described in this Declaration, (a) enter in or on and take possession of the Condominium or any part thereof, (b) in the Association's name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and (c) apply the same, less allowable expenses of operation, to any delinquencies of the Owner, and in such order as the Association may determine: The entering upon and taking possession of the Condominium, the collection of rents, issues and profits and the application thereof, shall not cure or waive any default or notice of default under this Declaration or invalidate any act done pursuant to such notice. 13.3 Enforcement of Certain Bonded Obligations. 13.3.1 Consideration by the Board. If (a) the Common Area Improvements are not completed before the issuance of a Final Subdivision Public Report for the Project by the DRE, and (b) the Association is obligee under a bond or other arrangement (`Bond's required by the DRE to secure performance of Declarant's commitment to complete such Improvements, then the Board shall consider and vote on the question of action by the Association to enforce the obligations under the Bond with respect to any such Improvement for which a Notice of JRS\30601.0001 \402281.9 10/32011 87 Completion has not been filed within sixty (60) days after the completion date specified for that Improvement in the Planned Construction Statement appended to the Bond. If the Association has given an extension in writing for the completion of any Common Area Improvement, then the Board shall be directed to consider and vote on the question if a Notice of Completion has not been filed within thirty (30) days after the expiration of the extension. 13.3.2 Consideration by the Members. A special meeting of Owners for voting to override a decision by the Board not to initiate action to enforce the obligations under the Bond or the Board's failure to consider and vote on the question shall be held no fewer than thirty-five (35) nor more than forty -five (45) days after the Board receives a petition for such a meeting signed by Owners representing five percent (5 %) of the Association's total voting power. A vote of a majority of the Association's voting power residing in Owners other than Declarant to take action to enforce the obligations under the Bond shall be deemed to be the decision of the Association, and the Board shall thereafter implement such decision by initiating and pursuing appropriate action in the Association's name. Neither the Association nor Owners shall make any claim against any Bond or delayed release of any Bond for purposes that are not solely related to Declarant's failure to complete the obligations secured by such Bond. 13.4 Resolution of Disputes Between Association /Owners and Declarant. Notwithstanding any provision(s) of this Declaration to the contrary, (a) all disputes including, without limitation, disputes regarding construction defects, arising between Declarant and any Owner(s) shall be resolved solely in accordance with the Recorded Master Association Homeowner Dispute Declaration between Declarant and each Owner the provisions of which are incorporated herein by this reference and (b) all disputes arising between Declarant and the Association including, without limitation, disputes regarding construction defects, but excluding disputes between the Association and Declarant regarding the payment of Assessments and/or non compliance with and /or enforcement of the Restrictions shall be resolved solely in accordance with the Recorded Association Dispute Agreement between Declarant and the Association, the provisions of which are incorporated herein by this reference. ARTICLE XIV DURATION AND AMENDMENT. 14.1 Duration. This Declaration shall continue in full force for a term of fifty (50) years from the date of Recordation hereof, after which the term shall be automatically extended for successive periods of ten (10) years, unless a declaration of termination satisfying the requirements of an amendment to this Declaration established in Section 14.2 is Recorded. Without limiting the generality of the foregoing, unless this Declaration is terminated earlier in accordance with the requirements set forth in this Article XIV, this Declaration shall terminate concurrently with the expiration or sooner termination of the Ground Lease. 14.2 Termination and Amendment. JRS \30601.0001 \402281.910/3/2011 - 88 14.2.1 Amendment Approval. Except as otherwise provided in this Declaration, including without limitation Sections 5.2.17 and 14.2.3, 14.4 (regarding approval rights of the Agency and City) and Article XVI, (a) notice of the subject matter of a proposed amendment to this Declaration in reasonably detailed form must be included in the notice of any Association meeting or election at which a proposed amendment is to be considered and (b) to be effective, a proposed amendment must be adopted by the vote, in person or by proxy, or written consent of the applicable Owners representing not less than (i) sixty -seven percent (67 %) of the voting power of each Class of the Association and (ii) sixty -seven percent (67 %) of the Association's voting power represented by Owners other than Declarant, provided that the specified percentage of the Association's voting power necessary to amend a specific provision of this Declaration may not be less than the percentage of affirmative votes prescribed for action to be taken under the provision that is the subject of the proposed amendment. 14.2.2 Consent of Commercial Owners and Mortgagees. In addition to the notices and consents required by Section 14.2.1, the following approvals are required to amend this Declaration: (a) Commercial Owners. The prior written approval of sixty -seven percent (67 %) of the voting power of the Commercial Owners shall be required for any amendment to this Declaration which would have no material adverse effect on the Residential Units but which would materially and adversely affect, impair or diminish the rights, duties or obligations of the Commercial Owners or would otherwise materially and adversely affect, impair or diminish the ability of any Commercial Owner to sell, lease or operate the Commercial Unit. (b) Mortgagees. The Mortgagees of fifty -one percent (51%) of the first Mortgages on all the Condominiums in the Project who have requested the Association to notify them of proposed action requiring the consent of a specified percentage of first Mortgagees must approve any amendment to this Declaration which is of a material nature, as follows: (i) Any amendment which affects or purports to affect the validity or priority of Mortgages or the rights or protection granted to Mortgagees, insurers or guarantors of first Mortgages. (ii) Any amendment which would require a Mortgagee after it has acquired a Condominium through foreclosure to pay more than its proportionate share of any unpaid Assessment or Assessments accruing before such foreclosure. (iii) Any amendment which would or could result in a Mortgage being canceled by forfeiture, or in a Condominium not being separately assessed for tax purposes. (iv) Any amendment relating to (A) the insurance provisions in Article IX, (B) the application of insurance proceeds in Article X, or (C) the disposition of any money received in any taking under condemnation proceedings. JRS \30601.0001 \402281.9 10/3/1011 89 (v) Any amendment which would or could result in partition or subdivision of a Condominium in any manner inconsistent with this Declaration. (vi) Any amendment which would subject any Owner to a right of first refusal or other such restriction, if such Condominium is proposed to be transferred. (vii) Any amendment concerning: replacement of the Common Area; rights to its use; into Common Area; (1) Voting rights; (2) Rights to use the Common Area; (3) Reductions in reserves for maintenance, repair and (4) Responsibility for maintenance and repairs; (5) Redefinition of boundaries of any Unit; (6) Reallocation of interests in the Common Area or (7) Convertibility of Common Area into Units or Units (8) Imposition of restrictions on leasing of Units; (9) Establishment of self - management by the Association if professional management has been required by the Restrictions or any Mortgagee of a first Mortgage; (10) Expansion or contraction of the Properties or addition, annexation or deannexation of real property to or from the Properties; (11) Increases in Assessments that raise the previously assessed amount by more than twenty -five percent (25 %), Assessment liens, or the priority of such liens; or (12) Restoration or repair of the Properties (after damage or partial condemnation) in a manner other than that specified in this Declaration. 14.2.3 Termination Approval. Termination of this Declaration requires approval of the Owners as provided in Section 14.2.1 and approval of the Agency and City as provided in Section 14.4. No such termination is effective unless it is also approved in advance either by fifty -one percent (51%) of the Mortgagees of the first Mortgages on all Condominiums in the Project who have submitted a written request to the Association that they be notified of proposed actions requiring the consent of a specified percentage of such Mortgagees (if termination is proposed due to substantial destruction or condemnation of the Properties) or by JRS\30601.000t\402281.9 10r3r2011 90 sixty -seven percent (67 %) of such Mortgagees (if termination is for reasons other than such substantial destruction or condemnation). 14.2.4 Notice to Mortgagees. Each Mortgagee of a first Mortgage on a Condominium in the Properties which receives written notice of a proposed amendment or termination of this Declaration with a return receipt requested is deemed to have approved the amendment or termination if the Mortgagee fails to deliver to the Association written disapproval of such amendment or termination within sixty (60) days after the Mortgagee receives the notice. 14.2.5 Certificate. A copy of each amendment must be certified by at least two (2) Association officers. The amendment becomes effective when a Certificate of Amendment is Recorded. The certificate, signed and sworn to by two (2) Association officers that the Agency and City, as applicable and the requisite number of Owners and Mortgagees have approved the amendment, when Recorded, is conclusive evidence of that fact. The Association shall keep in its files for at least four (4) years the record of all such approvals. The certificate reflecting any termination or amendment which requires the written consent of any of the Mortgagees of first Mortgages must include a certification that the requisite approval of such first Mortgagees was obtained. 14.3 Extension of Ground Lease Term. Pursuant to Section 1317 of the Ground Lease the Association as "Lessee" under the Ground Lease, has an option to extend the ninety - nine (99) year "Lease Term" of the Ground Lease by fifty (50) years ( "Extension Option'.. The term of the Extension Option commences on the date which is twenty -five (25) years prior to the date on which the original ninety -nine (99) year Lease Term expires and terminates on the date that is one (1) year prior to expiration of the original Lease Term. Any such extension will require the payment of new "Extension Rent" as defined in the Ground Lease. Any election by . the Association to exercise the Extension Option must be approved by a vote of sixty -seven percent (67 %) of the voting power of the Association in accordance with this Declaration and the Bylaws of the Association. If the Lease Term is so extended, (a) all references in this Declaration to the Ground Lease shall be to the Ground Lease as extended pursuant to the terms of Section 1317 of the Ground Lease (b) "Extension Rent" as defined in the Ground Lease shall be levied against the Owners as a Capital Assessment and allocated among the Owners in the same manner as General Annual Assessments. Notwithstanding anything to the contrary in this Declaration, an extension of the Lease Term shall not require notice to or approval of the Mortgagees. 14.4 Rights of Agency and City. (a) Enforcement. The City and Agency shall be an intended third party beneficiaries of the terms and conditions of this Declaration and shall have the right and the power (but not the obligation) to enforce independently all such terms and conditions. Declarant understands, acknowledges and agrees that notwithstanding any provision to the contrary in this Declaration, the City's approval of the form of this Declaration shall not be deemed as a waiver by the City or Agency of the City's or Agency's rights under the Disposition and Development Agreement ( "DDA ") entered into by and between the Agency and Related/Santa Monica Village, LLC on June 10, 2008, as amended by the First Amendment to the Disposition and Development JRS\30601.0001 \402281.910132011 91 Agreement dated July 1, 2010, including without limitation the Ground Lease and the "Parcel B Ground Lease" (as such term is defined in the DDA), and any and all other documents of the City and/or Agency executed by Declarant or Related /Santa Monica Village, LLC, a California limited liability company in connection with the Project. The City and Agency shall have no liability for any actions taken by the Association or by any Owner. (b) Amendment and Termination. Any amendment to any provision of this Declaration which (a) deals with the Ground Lease or Development Agreement or (b) was required by the Development Agreement, any conditions to approval of the Project tract map or was otherwise imposed or required by the City and /or Agency, and any termination of this Declaration shall require the written approval of the Agency and City. (c) Dissolution of the Association. The Association shall not be dissolved without the prior written consent of the City and Agency. ARTICLE XV GENERAL PROVISIONS. 15.1 Mergers or Consolidations. In a merger or consolidation of the Association with another association, its properties, rights and obligations may, by operation of law, be transferred to another surviving or consolidated association or, alternatively, the properties, rights and obligations of another association may, by operation of law, be added to the properties, rights and obligations of the Association as a surviving corporation pursuant to a merger. The surviving or consolidated association may administer and enforce the covenants, conditions and restrictions established by this Declaration governing the Properties, together with the covenants and restrictions established on any other property, as one (1) plan. 15.2 No Public Right or Dedication. Nothing in this Declaration is a gift or dedication of all or any part of the Properties to the public, or for any public use. 15.3 Notices. Any notice permitted or required to be delivered under this Declaration must be in writing and may be delivered either personally, by mail or by Federal Express (or similar overnight delivery service). If delivery is made by personal delivery, it shall be deemed to have been delivered upon delivery of such notice if addressed to any Person at the most recent address furnished by such Person to the Association or, if no such address has been furnished, to the street address of such Person's Unit (as applicable, the "Authorized Address'% whether or not the Person to whom such notice is addressed accepts such notice or is at the Authorized Address to which such notice is delivered,. so long as such delivery is certified in writing by the Person making such delivery. Personal delivery of such notice to one (1) or more Co- owners, or any general partner of a partnership owning a Condominium, constitutes delivery to all owners. Personal delivery of such notice to any officer or agent for the service of process on a corporation or limited liability company constitutes delivery to the corporation or limited liability company. Except for notice of a meeting of Owners or of the Board, in which case the notice provisions of the Bylaws control, any notice sent by mail shall be deemed delivered three (3) business days after a copy of the same has been deposited in the. United States mail, certified, postage prepaid, addressed to any Person at such Person's Authorized Address. If delivery is made by Federal Express (or similar overnight delivery service) the notice shall be deemed JRS\30601.0001W02281.9 10/3/2011 92 delivered upon delivery to the Authorized Address, whether or not the Person to whom it is addressed accepts such delivery or is at the Authorized Address to which such notice is delivered, so long as Federal Express or such delivery service certifies that delivery was attempted and in the case where the Person to whom the notice was addressed was not at the Authorized Address, that notice of the attempted delivery was left at the Authorized Address. A Person's Authorized Address may be changed from time to time by notice in writing to the Association; provided that any notice of change of an Authorized Address shall not apply to notices sent, but not necessarily delivered, prior to delivery of the notice of change in the Authorized Address to the Association. In addition, the Association shall not be obligated to accept changes in an Authorized Address if it reasonably believes that such changes are being pursued in whole or in part to avoid or frustrate the delivery of notices. Any notice to be given to the Association may be delivered personally to any member of the Board, or sent by United States mail, certified, postage prepaid, addressed to the Association at such address as may be fixed and circulated to all Owners. 15.4 Constructive Notice and Acceptance. Every Person who owns, occupies or acquires any right, title, estate or interest in or to any Condominium or other portion of the Properties does consent and agree, and shall be conclusively deemed to have consented and agreed, to every limit, restriction, easement, reservation, condition and covenant contained in this Declaration, whether or not any reference to these restrictions is in the instrument by which such person acquired an interest in the Properties. ARTICLE XVI DECLARANT'S RIGHTS AND RESERVATIONS If there is a conflict between any other portion of the Restrictions and this Article, this Article shall control. If there is a conflict between the Ground Lease and this Article, the Ground Lease shall control. 16.1 Construction Rights. Subject to the terms of the Ground. Lease and Development Agreement, Declarant has the right to (a) subdivide the Project, (b) complete or modify Improvements to and on the Common Area or any portion of the Project owned solely or partially by Declarant, (c) alter Improvements and Declarant's construction plans and designs and (d) construct such additional Improvements as Declarant considers advisable in.the course of development until the Close of Escrow for all Condominiums has occurred. 16.2 Sales and Marketing Rights. Subject to the Ground Lease and Development Agreement, Declarant shall be absolutely and unconditionally entitled to install and maintain such structures, displays, signs, billboards, flags and sales offices as may be deemed necessary by Declarant, in its sole discretion, to conduct Declarant's business of completing any and all work on the Properties and disposing of the Condominiums. Each Owner, by accepting a Sublease to a Condominium, hereby acknowledges that the activities of Declarant may temporarily or permanently impair the view of such Owner and may constitute an inconvenience or nuisance to the Owners, and hereby consents to such impairment, inconvenience or nuisance. Declarant may use any Residential Condominiums owned or leased by Declarant in the Properties as model home complexes, real estate sales offices, design centers or leasing offices. M\30601.0001W02281.9 10/32011 93 16.3 Creating Additional Easements. At any time before acquisition of leasehold title to a Condominium in the Properties by a purchaser from Declarant, Declarant reserves the right to establish on that Condominium additional licenses, easements, reservations and rights - of -way to itself, to utility companies, or to others as Declarant determines are reasonably necessary to the Properties' proper development and disposal. 16.4 Architectural Rights. Declarant and any Person to whom Declarant may assign all or a portion of its exemption under this Declaration need not seek or obtain Design Review Committee approval of any Improvements constructed anywhere on the Properties by Declarant or such Person. Declarant may exclude portions of the Properties from jurisdiction of the Design Review Committee in the applicable Notice of Addition or Supplemental Declaration. Declarant may, at its option, establish an additional design review committee for any area exempted from the jurisdiction of the Design Review Committee. 16.5 Use Restriction Exemption. Declarant and any Person to whom Declarant may assign all or a portion of its exemption under this Declaration in accordance with the Ground Lease is exempt from the restrictions established in Article II and Article III. 16.6 Assignment of Rights. Subject to the Ground Lease, Declarant may assign its rights under the Restrictions to any successor -in- interest to any portion of Declarant's interest in the Properties by a written assignment 16.7 Amendments. No amendment may be made to this Article without the prior written approval of Declarant. After the first Close of Escrow in the Properties and for so long as Declarant owns any portion of the Properties, Declarant may unilaterally (except as otherwise provided in Section 14.4) amend this Declaration by Recording a written instrument signed by Declarant to (a) conform this Declaration to the rules, regulations or requirements of DRE, FNMA, GNMA or FHLMC or any governmental authority, (b) amend Article IV, (c) amend any Exhibit to this Declaration to correct any error or inadvertency, (d) comply with local, state or federal laws or regulations, (e) correct any typographical or inadvertent errors, (f) add or change the assignment of Exclusive Use Residential Parking Spaces or storage areas as provided in Section 7.1.6. and/or (g) supplement this Declaration with provisions which pertain to the rights and obligations of Declarant, the Association or Owners arising under Division 2, Part 2, Title 7 (commencing with Section 895) of the California Civil Code. Notwithstanding the foregoing, City and Agency approval shall be required for any amendment of this Declaration requiring City or Agency approval under Section 14.4. 16.8 Exercise of Rights. Each Owner grants an irrevocable, special power of attorney to Declarant to execute and Record all documents and maps necessary to allow Declarant to exercise its rights under this Article. 16.9 Use of Properties. Declarant and its prospective purchasers of Condominiums are entitled to the nonexclusive use of the Common Area and all facilities thereon, without further cost for access, ingress, egress, use or enjoyment, to (a) show the Properties to prospective purchasers and (b) dispose of the Properties as provided in this Declaration. Declarant and prospective purchasers are also entitled to the nonexclusive use of any portions of the Properties which are private streets, drives and walkways for ingress, egress and 7RS\30601 .0001 \402281.910 /3/2011 94 accommodating vehicular and pedestrian traffic to and from the Properties. The use of the Common Area by Declarant may not unreasonably interfere with the use thereof by the other Owners. 16.10 Participation in Association. The Association shall provide Declarant with written notice of the transfer of any Condominium and all notices and other documents to which a Mortgagee is entitled pursuant to this Declaration, provided that Declarant shall be provided such notices and other documents without making written request therefor. Commencing on the date on which Declarant no longer has an elected representative on the Board, and continuing until the later to occur of the date on which Declarant (a) no longer owns a Condominium in the Properties or (b) cannot unilaterally annex property to the Properties, the Association shall provide Declarant with written notice of all meetings of the Board as if Declarant were an Owner and Declarant shall be entitled to have a representative present at all such Board meetings ( "Declarant's Representative'. Declarant's Representative shall be present in an advisory capacity only and shall not be a Board member or have any right to vote on matters coming before the Board. 16.11 Declarant Approval of Actions. 16.11.1 General Rights. Until Declarant no lodger owns a Subleasehold Estate in the Properties, Declarant's prior written approval is required for any amendment to this Article XVI and/or any other portion of the Restrictions which would impair or diminish Declarant's . rights to complete the Properties or sell or lease Units therein. 16.11.2Limit on Actions. Until Declarant no longer owns a Subleasehold Estate in the Properties, the following actions, before being undertaken by the Association, must first be approved in writing by Declarant: (a) Any amendment or action requiring the approval of first Mortgagees; (b) The levy of a Capital Assessment for the construction of new facilities not constructed on the Common Area by Declarant; (c) Any significant reduction of Association maintenance or other services; or (d) Any modification or termination of any provision of the Restrictions benefiting Declarant. 16.12 Marketing Name. Declarant may change the marketing name of the Properties or designate a different marketing name for the Project at any time in Declarant's sole discretion. Declarant shall notify the DRE of any change in or addition to the marketing name or names of the Properties. 16.13 Power of Attorney. Each Owner of a Condominium, by accepting a Sublease, shall be deemed to have agreed to constitute and irrevocably appoint Declarant, for so long as Declarant owns all or any portion of the Properties as such Owner's Attorney -in -Fact, for such 1RS\30601.0001 \402281.9 10/3/2011 95 Owner and each of such Owner's Mortgagees, optionees, grantees, licensees, trustees, receivers, lessees, tenants, judgment creditors, heirs, legatees, devisees, administrators, executors, legal representatives, successors and assigns, whether voluntary or involuntary, and thereby to have conveyed a Power of Attorney coupled with an interest to Declarant as his Attorney -in -Fact in connection with any modification to the development plans for all or any portion of the Properties. Each Owner hereby acknowledges and agrees that this irrevocable Power of Attorney is retained for the benefit of Declarant, and not Owner, and created by Owner's acceptance of a Sublease and as part of the consideration for the purchase of a Condominium. Based on the foregoing, each Owner further acknowledges and agrees that this irrevocable Power of Attorney is "coupled with an interest" and, pursuant to Section 2356 of the California Civil Code, may not be terminated by (i) the Owner's revocation of such Power of Attorney, (ii) Owner's death or (iii) Owner's incapacity.to contract. Subject to the limitations and restrictions set forth herein, Declarant shall have the right and power as a duly authorized Attorney -in -Fact to perform any of the following actions: (a) To prepare, execute, acknowledge and Record any Condominium Plan or amendment to any Condominium Plan for all or any portion of the Properties, including without limitation any amendments necessary to cause such Condominium Plan to conform with the Improvements as actually built, which may be required or permitted by any laws, ordinances or rules and regulations of any Governing Authority having jurisdiction over the Properties, or which may be required or permitted by any title insurer, and, in connection therewith, to (1) perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by any applicable Governing Authorities and (2) execute, acknowledge and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations; (b) To prepare, execute, acknowledge and Record any map or record of survey affecting the Properties required or permitted by the provisions of the California Subdivision Map Act or any other law, ordinances or rules or regulations of any Governing Authority having jurisdiction over the Properties, or which may be required or permitted by any title insurer, and, in connection therewith, to (1) perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by any applicable Governing Authorities, (2) appear before any such Governing Authorities and (3) execute, acknowledge and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations; (c) To prepare, execute, acknowledge and file for approval any application for zoning or setback changes or lot line adjustments, or Condominium Plan amendments, or variance or conditional use permits or any other permits or reports required or permitted by any law, ordinances or rules and regulations of any Governing Authority having jurisdiction over the Properties, or which may be required or permitted by any title insurer, and, in connection therewith, to (1) perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by any applicable Governing Authorities and (2) execute, acknowledge and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations; JRS00601.0001 \402281.9 10/32011 96 (d) To make applications for any property reports or public reports, or amendments thereto, or exemption from the requirements therefor required or permitted by federal and state statutes or rules and regulations relating to the sale, lease, transfer or other disposition of subdivided lands, and, in connection therewith, to (1) perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by any applicable Governing Authorities and (2) execute, acknowledge and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations; (e) To deliver any public reports or property reports, or amendments thereto, obtain receipts and offer and administer rescission rights required by law; (f) To prepare, execute, acknowledge and file for approval any registration or application for any permit, approval, exemption, ruling or entitlement, which registration or application is required or permitted pursuant to any applicable law or regulation in effect as of the date of the recording of this Declaration, and as hereafter enacted or amended by any applicable Governing Authority, and, in connection therewith, to (1) perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by such Governing Authority and by any such laws and regulations, (2) appear before any such Governing Authority, (3) execute and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations and (4) do all other things now or thereafter permitted or required by any such Governing Authority and any such laws and regulations; (g) To prepare, execute, acknowledge and record any deeds, waivers, releases, reconveyances or other documentation which may be permitted or required to clear title to any constructed or unconstructed Units in the Properties; and (h) To do any and all things necessary or desirable under the circumstances to effect and accomplish development of the Properties. The acceptance or creation of any Mortgage or other encumbrance whether or not voluntary, created in good faith, or given for value, shall be deemed to be accepted or created subject to each of the terms and conditions of the Power of Attorney described in this Section. [SIGNATURES ON FOLLOWING PAGE] JRS'30601.00O1W02281.9 10/3/2011 97 This Declaration is dated for identification purposes 201 SANTA MONICA URBAN HOUSING A, LLC, a California limited liability company By: Its: By: Its: "Declarant" JRS\30601.0001 \402281.9 10/3/2011 98 STATE OF CALIFORNIA COUNTY OF On Notary Public, personally appeared ss 201. before me, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his/her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (SEAL) STATE OF CALIFORNIA COUNTY OF On , Notary Public, personally appeared Signature ss 201 , before me, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his/her /their authorized capacity(ies), and that by his/her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) JRS\30601.0001 \402281.9 10/32011 SUBORDINATION The undersigned, as Mortgagee of the beneficial interest in and under that certain Deed of Trust dated , 201_, and Recorded on , 201, as Instrument No. ' in the Official Records of Los Angeles County, California (the "Deed of Trust', which Deed of Trust is by and between as Trustor, and , as Trustee, and as Beneficiary, expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Declaration of Covenants, Conditions and Restrictions and Reservation of Easements, as amended or restated ( "Deelaration'� and to all easements to be conveyed to the Association in accordance with the Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Properties by foreclosure (whether judicial or nonjudicial), deed -in -lieu of foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Declaration, which shall remain in full force and effect. A By: Its: By: Its: JRS\30601.0001 W 02281.9 1013/2011 STATE OF CALIFORNIA ) ss COUNTY OF ) On > Notary Public, personally appeared 201_, before me, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) JRS\30601.0001 \402281.9 10/32011 EXHIBIT "A" ARTICLES OF INCORPORATION OF THE ASSOCIATION M\30601.0001\402281.9 10/32011 ARTICLES OF INCORPORATION OF THE VILLAGE COMMUNITY ASSOCIATION ONE: The name of this corporation ( "Corporation" herein) is THE VILLAGE COMMUNITY ASSOCIATION. TWO: This Corporation is a nonprofit mutual benefit corporation organized under the Nonprofit Mutual Benefit Corporation Law. The purpose of this Corporation is to engage in any lawful act or activity, other than credit union business, for which a corporation may be organized under such law. THREE: The name and address in the state of California of the Corporation's initial agent for service of process is 18201 Von Karman Avenue, Suite 900, Irvine, CA 92612. FOUR: The Corporation shall have and exercise any and all powers, rights and privileges which a corporation organized under the Nonprofit Mutual Benefit Corporation Law may now or hereafter have or exercise, provided that the Corporation shall not, except to an insubstantial degree, engage in any activities or exercise any powers that are not in furtherance of the specific purpose of the Corporation. The Corporation is an association formed to manage a common interest development known as The Village ( "Project ") under the Davis - Stirling Common Interest Development Act. The Corporation is a homeowners association within the meaning of Section 23701t of the California Revenue and Taxation Code and Section 528 of the Internal Revenue Code. The Corporation does not have a corporate office. The common interest development is near the intersection of and Santa Monica, California -0000. FIVE: The classes of Membership and the voting and other rights and privileges of Members shall be as set forth in the Bylaws. So long as there are two classes of Membership, amendment of these Articles of Incorporation shall require the assent (by vote or written consent) of (i) a bare majority of the Board of Directors of the Corporation, and (ii) Members representing a bare majority of the voting power of each class of Members. After conversion of the Class B Membership to Class A Membership, amendment of these Articles of Incorporation shall require the assent (by vote or written consent) of (a) a bare majority of the Board of Directors of the Corporation, (b) a bare majority of the total voting power of the Members, and (c) Members representing a bare majority of the voting power of the Members other than the subdivider of the Project. SIX: The Corporation has no managing agent. The undersigned, who is the incorporator of the Corporation, has executed these Articles of Incorporation on 1201. HL0\40601.0001 \404778.1 9/19/2011 EXHIBIT "B" BYLAWS OF THE ASSOCIATION JRS\30601.0001 W 02281.9 10/3/2011 BYLAWS OF THE VILLAGE COMMUNITY ASSOCIATION JRS\30601.0001 \404351:19/ 19/2011 TABLE OF CONTENTS FOR BYLAWS OF THE VILLAGE COMMUNITY ASSOCIATION DESCRIPTION PAGE ARTICLEI PLAN OF OWNERSHIP .............................................................. ..............................1 1.1. Definitions and Interpretation .................................................... ..............................1 1.2. Name ...............................................:.......................................... ..............................1 1.3. Application ................................................................................. ..............................1 ARTICLE II BOARD OF DIRECTORS ........................................................... ..............................1 2.1. Number ...................................................................................... ..............................1 202. Qualifications for Holding Office .............................................. ..............................1 2.3. Election.. .............. o— ........... 4 ...................... 0 ................................... 0 ......................... 1 2.4. Term of Office ........................................................................... ..............................2 2.5. Vacancies ................................................................................... ..............................2 2.6. Removal of Directors ................................................................. ..............................2 2.7. Compensation ............................................................................ ..............................3 2.8. Powers And Duties .................................................................... ..............................3 209. Special Powers and Duties ......................................................... ..............................3 2.10. Distribution of Information... .... 0 ................................ — 0 ... 0 ........ 0— ............. 0 ............ 5 2.11. Meetings ..................................................................................... ..............................8 2012. Action Without Meeting ........................................................... .............................10 2.134 Quorum and Adjournment ........................................................ .............................10 2.14. Committees ............................................................................... .............................10 ARTICLEIII OFFICERS ................................................................................. .............................10 3.1. Designation ............................................................................... .............................10 3.2. Election of Officers ................................................................... .............................10 303. Removal of Officers .................................................................. .............................11 3.4. Compensation ........................................................................... .............................11 3.5. President ..................................................... ............................... ........40...................11 346. Vice President ........................................................................... .............................11 3.7. Secretary.... ..... 0 ......... 4.0 ................ 00 .................................................. 0 ......... 4 ....... 0 ... 11 3.80 Treasurer ................................................................................... .............................11 ARTICLEIV OWNERS ................................................................................... .............................12 4.1. Voting Rights ............................................................................ .............................12 4.2. Special Procedure ...................................................................... .............................12 4.3. Majority of Quorum .................................................................. .............................12 4.4. Quorum ..................................................................................... .............................13 M\30601.000A404351.1 9/19/2011 -1- DESCRIPTION PAGE 4.5. Proxies ....................................................................................... .............................13 4.6. Place of Meetings of Owners .................................................... .............................13 4.7. Annual Meetings of Owners ..................................................... .............................13 4.8. Special Meetings of Owners ..................................................... .............................13 4.9. Notice ........................................................................................ .............................14 4.10. Record Dates ............................................................................. .............................14 4.11. Adjourned Meetings .................................................................. .............................14 4.12. Order of Business ...................................................................... .............................14 4.13. Action Without Meeting ........................................................... .............................15 4.14. Consent of Absentees ................................................................ .............................15 4.15. Minutes, Presumption of Notice ............................................... .............................15 4.16. Inspector of Election ................................................................. .............................15 ARTICLEV AMENDMENTS ......................................................................... .............................16 ARTICLEVI MISCELLANEOUS .................................................................. .............................16 6.1. Checks, Drafts and Documents ................................................. .............................16 6.2. Conflicts .................................................................................... .............................17 6.3. Execution of Documents ........................................................... .............................17 6.4. Availability of Association Documents .................................... .............................17 6.5. Fiscal Year ................................................................................ .............................18 ARTICLE VII NOTICE AND HEARING PROCEDURE .............................. .............................18 7.1. Initial Complaint ....................................................................... .............................18 7.2. Scheduling Hearings ................................................................. .............................18 7.3. Conduct of Hearing ................................................................... .............................18 7.4. Imposition of Sanctions ............................................................ .............................18 7.5. Limits on Remedies .................................................................. .............................19 JRS\30601.0001W04351.191192011 -11- BYLAWS OF THE VILLAGE COMMUNITY ASSOCIATION ARTICLE I PLAN OF OWNERSHIP 1.1. Definitions and Interpretation. Unless otherwise provided in these Bylaws, the capitalized terms used in these Bylaws have the same meanings as in the Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for The Village ( "Declaration's. These Bylaws shall be interpreted in accordance with Section 1.2 of the Declaration. 12. Name. The name of the corporation is The Village Community Association. The principal office of the Association shall be located in the County of Los Angeles ( "County's. 1.3. Application. These Bylaws apply to the mixed use condominium project known as The Village, located in the County. All Persons who use the facilities of the Properties in any manner are subject to the regulations in these Bylaws and in the Declaration, Ground Lease, Development Agreement and Reciprocal Easement Agreement. The use of any Condominium in the Properties signifies acceptance and ratification of these Bylaws. ARTICLE II BOARD OF DIRECTORS 2.1. Number. The property, business and affairs of the Association shall be governed and managed by a Board of Directors composed of five (5) persons, each of whom, except for those appointed and serving as first Directors, must be either an Owner, agent of an Owner, or an agent of Declarant until Declarant no longer owns a Subleasehold Estate in the Properties. The authorized number of Directors may be changed by a duly adopted amendment to these Bylaws. 2.2. Qualifications for Holding Office. Each Director, except for those initially appointed by Declarant to serve as interim Directors until the first annual meeting, must either be an Owner who meets the qualifications set forth in the Declaration or, as long as Declarant owns a Subleasehold Estate in the Properties, an agent of Declarant. 2.3. Election. 2.3.1 General Procedure. Subject to Section 4.2 below, at the first annual meeting of the Owners, Declarant may, in its discretion, elect a majority of the members of the Board, and at each annual meeting thereafter, the Owners shall elect new Directors to fill vacancies on the Board. If an annual meeting is not held, or all positions on the Board are not filled at the annual meeting, Board members may be elected at a special meeting of the Owners. JRS\30601 .0001 \404351.19/19/2011 -1- 2.3.2 Voting. Voting shall be by secret written ballot: Each ballot shall set forth the number of votes allocated for each Condominium and shall identify whether such Condominium is a Commercial Condominium or Residential Condominium. Every Owner entitled to vote at any election of the Board may cumulate his votes for any candidate for the Board in any election in which more than two (2) Directors are to be elected if (a) the candidate's name has been placed in nomination before the voting, and (b) an Owner has given notice at the meeting before the voting of such Owner's intent to cumulate votes. If an Owner cumulates his votes, such Owner may cast a number of votes equal to the Owner's share of the voting power multiplied by the number of Directors to be elected. 2.4. Term of Office. Each Director shall hold office until the earlier to occur of (a) the end of the Director's term of office after a successor has been elected, or (b) his death, resignation, removal or judicial adjudication of mental incompetence. At the first annual meeting, the term of office of each Director elected shall be three (3) years. The term of office of each Director elected to fill a vacancy created by expiration of a Director's term of office shall be two (2) years. The term of office of each Director elected or appointed to the Board for any other reason shall be the balance of the unserved term. Any person serving as a Director may be reelected. There is no limit on the number of terms which a Director may serve. 2.5. Vacancies. A vacancy on the Board is deemed to exist in case of death, resignation, removal or judicial adjudication of mental incompetence of any Director or if the Owners fail to elect the full number of authorized Directors at any meeting at which a Directors election is to take place. Subject to Section 4.2 below, vacancies on the Board caused by any reason other than the removal of a Director may be filled by either (a) vote of a majority of the remaining Directors, even though they may constitute less than a quorum; or (b) by vote of the Owners at a meeting. A Director may resign at any time by giving notice to the President, the Secretary or the Board. Any Director who ceases to be an Owner, agent of an Owner or an agent of Declarant is deemed to have resigned from the Board. 2.6. Removal of Directors. At any meeting of the Owners, any individual Director or the entire Board may be removed before the expiration of their terms of office with or without cause by the vote of Owners representing a majority of the voting power; provided, however, that (a) any Director elected to office solely by the votes of Declarant may only be removed by Declarant, (b) any Director elected to office solely by the votes of Residential Owners may only be removed by the vote of at least a majority of the voting power residing in Residential Owners other than Declarant and (c) any Director elected to office solely by the votes of Commercial Owners may only be removed by the vote of at least a majority of the voting power residing in Commercial Owners other than Declarant. However, if the entire Board is not removed as a group pursuant to a single vote, no individual Director may be removed if the number of votes cast against removal would be sufficient to elect such Director if voted cumulatively at an election at which the same total number of votes were cast and the entire number of Directors authorized at the time of the Director's most recent election were then being elected. Any Director whose removal has been proposed by the Owners must be given an opportunity to be heard at the meeting. If any Directors are removed, new Directors may be elected at the same meeting. JRS\30601.0001 \404351.19/192011 -2- 2.7. Compensation. Directors may not receive any compensation for their services as Directors unless such compensation is first approved by Owners representing at least a majority of the Association's voting power. However, (a) nothing in these Bylaws precludes any Director from serving the Association in some other capacity and receiving compensation therefor, and (b) any Director may be reimbursed for actual expenses incurred in performance of Association duties, and (c) no officer, employee or Director of Declarant or any affiliate of Declarant may receive any compensation for service as a Director of the Association. 2.8. Powers And Duties. Subject to the Ground Lease, Development Agreement and Reciprocal Easement Agreement, the Board has the powers and duties necessary to administer the Association's affairs in accordance with the Declaration. All the Association's powers shall be exercised by the Board except those powers specifically reserved to the Owners. 2.9. Special Powers and Duties. Without limiting the scope of the Board's general powers and duties, the Board is granted the following powers and duties subject to the Ground Lease, Development Agreement and Reciprocal Easement Agreement: 2.9.1 Officers, Agents and Employees. The power and duty to select, appoint and remove all Association officers, agents and employees, to prescribe such powers and duties for them as may be consistent with law and with the Restrictions, to fix their compensation, to require from them such security for faithful service as the Board considers advisable, and to contract to provide them with such indemnification as the Board determines is appropriate. 2.9.2 Contracts. The power to enter into contracts on behalf of the Association. This includes contracts (a) for maintenance, landscaping, and common utilities services, (b) materials, supplies and other Common Expenses relating to the Condominiums, (c) employing personnel necessary to manage the Properties, including legal and accounting services, and (d) paying for Improvements in the Common Area. The Board may not enter into any contract with a term in excess of one (1) year, without the vote or written consent of Owners representing at least a majority of the Association's voting power (for contracts to be entered into by the Board), Residential Owners' voting power, except for the following: (a) a contract with a public utility company for a term that does not exceed the shortest term for which the public utility company will contract at the regulated rate if the rates charged for the materials or services are regulated by the California Public Utilities Commission; (b) prepaid casualty or liability insurance policies of not more than three (3) years' duration provided that the policies permit short-term cancellation by the Association; (c) agreements for television services and equipment, satellite dish services and equipment, communication services and equipment, and comparable technology, services and equipment with terms not in excess of five (5) years, provided that Declarant does not have a direct or indirect ownership interest in the supplier of such services or equipment equal to or greater than ten percent (10 %); JRS\30601.0001\404351.19/19n011 -3- (d) agreements for sale, lease or installation of burglar alarm and fire alarm equipment and related services with terms not in excess of five (5) years, provided that Declarant does not have a direct or indirect ownership interest in the supplier of such services or equipment equal to or greater than ten percent (10 %); (e) a contract approved by the DRE; (f) . a contract for a term not to exceed three (3) years that is terminable by the Association after no longer than one (1) year without cause or penalty or other obligation on ninety (90) days written notice of termination to the other party; (g) a management contract with a term not to exceed three (3) years; or (h) lease agreements for laundry room fixtures and equipment with terms not in excess of five (5) years, provided that Declarant does not have a direct or indirect ownership interest in the lessor of such fixtures and equipment equal to or greater than ten percent (10 %). 2.9.3 Enforcement. The power to enforce the Restrictions and any agreements entered into by the Association and to impose sanctions against Owners for violating the Restrictions. 2.9.4 Principal Office, Place of Meetings, Seal. The power, but not the duty, to move the Association's principal office to any location selected by the Board; to designate any place in the County for holding any meetings of Owners consistent with the provisions of Section 4.5; and to adopt and use a corporate seal and to alter the form of such seal. 2.9.5 Assessments. The power and duty to fix and levy Assessments and identify the due date for payment of Assessments. The Board may incur Common Expenses. The Association's funds shall be held in trust for the Owners. 2.9.6 Insurance. The power and duty to contract and pay for insurance in accordance with the Declaration, the Ground Lease and Reciprocal Easement Agreement, covering and protecting against such damages or injuries as the Board considers advisable (which coverage may include medical expenses of persons injured in the Common Area). The Board shall review, not less frequently than annually, all insurance policies and bonds obtained by the Board on the Association's behalf. to law. 2.9.7 Delegation. The power, but not the duty; to delegate its powers according 2.9.8 Bylaws. The power and duty to adopt these Bylaws. 2.9.9 Records. The power and duty to keep a complete record of Association acts and corporate affairs. JRS\30601.0001\401351.19/19rz011 -4- 2.9.10 Sale of Personal Property. The power, but not the duty, to sell the personal property of the Association. Approval from Owners representing at least a majority of the Association's voting power must be obtained before the personal property of the Association having an aggregate fair market value greater than five percent (5 %) of the Association's budgeted gross expenses for the Fiscal Year is sold in a single Fiscal Year. 2.9.11 Manager. The power to engage a professional Manager for the Association at a compensation established by the Board to perform such duties and services as the Board authorizes in accordance with the Declaration. 2.9.12 Agreements with Declarant. The power, but not the duty, to negotiate and enter into agreements with Declarant. 2.9.13 Adoption of Election Rules. The power and duty to adopt election rules in accordance with Section 1363.03(a) of the California Civil Code. 2.10. Distribution of Information. The Board shall distribute the following financial information to all Owners (and any Mortgagee, insurer and guarantor of a first Mortgage on request), regardless of the number of Owners or the amount of assets of the Association: 2.10.1 Budget. A pro forma operating budget for each Fiscal Year consisting of at least the following information must be distributed not less than thirty (30) nor more than ninety (90) days before the beginning of the Fiscal Year: (a) Estimated revenue and Common Expenses (broken into General Common Expenses, Residential Common Expenses and Commercial Common Expenses), including without limitation funding for insurance deductibles, computed on an accrual basis. (b) A summary of the Association's reserves based on the most recent review or study conducted pursuant to Section 1365.5 of the California Civil Code based only on assets held in cash or cash equivalents, which must be printed in bold type and include all of the following: (i) The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component of the Common Area for which the Association is responsible. (ii) As of the end of the Fiscal Year for which the study is prepared (A) The current estimate of the amount of cash reserves necessary to restore or maintain the major components of the Common Area for which the Association is responsible ( "Estimated Reserves "). (B) The current amount of accumulated cash reserves actually set aside to restore or maintain the major components of the Common Area for which the Association is responsible ( "Actual Reserves "). JRS\30601.0001W04351.1 9/19/2011 -5- (iii) The percentage that the Actual Reserves is of the Estimated Reserves. (iv) The current deficiency in reserve funding, expressed on a per unit basis and calculated in accordance with Section 1365 of the California Civil Code. (c) A statement of all of the following: (i) Whether the Board has determined to defer or not to undertake repairs or replacement of any major component of the Common Area with a remaining life of thirty (30) years or less for which the Association is responsible, including a justification for the deferral or decision not to undertake the repairs or replacement. (ii) Whether the Board has determined or expects that the levy of one or more Capital Assessments or Reconstruction Assessments will be required to repair, replace, or restore any major component of the Common Area for which the Association is responsible or to provide adequate reserves therefor. If so, the statement shall also set out the estimated amount, commencement date and duration of the Assessment. (iii) The mechanism or mechanisms by which the Board will fund reserves to repair or replace major components, including Assessments, borrowing, use of other assets, deferral of selected replacement or repairs, or alternative mechanisms. (iv) Whether the Association has any outstanding loans with an original term of more than one (1) year. If so, the statement shall also set out the name of the payee, interest rate, amount outstanding, annual payment and when the loan is scheduled to retire. (d) A general statement setting forth the procedures used by the Board in calculating and establishing reserves to defray the costs of repair and replacement of, or additions to, major components of the Common Area and facilities for which the Association is responsible. The report shall include, but need not be limited to, reserve calculations, made using the formula described in California Civil Code Section 1365.2.5(b)(4), and may not assume a rate of return on cash reserves greater than as permitted by California Civil Code Section 1365(a)(4). The Board may distribute a summary of the Budget instead of the Budget itself, so long as the Board complies with the provisions of Section 1365(c) of the California Civil Code. 2.10.2 Financial Report. A report consisting of the following must be distributed within one hundred twenty (120) days after the close of the Fiscal Year. (a) A balance sheet as of the end of the Fiscal Year. (b) An operating (income) statement for the Fiscal Year. (c) A statement of changes in financial position for the Fiscal Year. JRM30601 .0001\404351.19 /19/2011 -6- (d) Any information required to be reported under Section 8322 of the California Corporations Code. (e) For any Fiscal Year in which the Association's gross income exceeds $75,000, a copy of a review of the annual report prepared in accordance with generally accepted accounting principles by a licensee of the California State Board of Accountancy. (f) A statement of the place where the names and addresses of the current Owners are located. If the report referred to in this Section 2.10.2 is not prepared by an independent accountant, it must be accompanied by the certificate of an authorized Association officer stating that the statement was prepared from the Association's books and records without independent audit or review. 2.10.3 Insurance Information. The Association shall distribute to all Owners a summary of the Association's property, general liability, and earthquake and flood insurance policies, if any, not less than thirty (30) nor more than ninety (90) days before the beginning of the Fiscal Year, that includes all of the following information: (a) the name of the insurer, (b) the type of insurance, (c) the limits of coverage, and (d) the amount of the deductibles, if any. (a) The Association shall, as soon as reasonably practical, notify the Owners by first -class mail if any of the policies described above have lapsed, been canceled, and are not immediately renewed, restored, or replaced, or if there is a significant change, such as a reduction in coverage or limits or an increase in the deductible, for any of those policies. If the Association receives any notice of nonrenewal of a policy described above, the Association shall immediately notify the Owners if replacement coverage will not be in effect by the date the existing coverage will lapse. (b) To the extent that any of the information required to be disclosed is specified in the insurance policy declaration page, the Association may meet its obligation to disclose that information by making copies of that page and distributing it to all Owners. (c) The summary distributed above shall contain, in at least 10 -point boldface type, the following statement: "This summary of the Association's policies of insurance provides only certain information, as required by subdivision (e) of Section 1365 of the Civil Code, and should not be considered a substitute for the complete policy terms and conditions in the actual policies of insurance. Any Association member may, on request and provision of reasonable notice, review the Association's insurance policies and, on request and payment of reasonable duplication charges, obtain copies of those policies. Although the Association maintains the policies of insurance specified in this summary, the Association's policies of insurance may not cover your property, including personal property or, real property, improvements to or 7RS\30601.00O1k404351. 19/19/2011 -7- around your dwelling, or personal injuries or other losses that occur in or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association members should consult with their individual insurance broker or agent for appropriate additional coverage." 2.10.4 Enforcement Policies. In addition to financial statements, the Board shall annually distribute not less than thirty (30) nor more than ninety (90) days before the beginning of the Fiscal Year a statement of the Association's policies and practices in enforcing its remedies against Owners for defaults in the payment of Assessments, including the recording and foreclosing of liens against Condominiums. 2.10.5 Accounts. On at least a quarterly basis, the Board shall: (a) cause to be completed and review a current reconciliation of the Association's operating and reserve accounts, (b) review the current Fiscal Year's actual reserve revenues and expenses compared to the Budget for the then current Fiscal Year, (c) review the income and expense statement for the Association's operating and reserve accounts, (d) review the most current account statements prepared by the financial institutions where the Association keeps its operating and reserve accounts, and (e) fulfill any additional duties established by Civil Code Section 1365.5. The signatures of either (i) two (2) Directors, or (ii) one (1) Director and one (1) Association officer (who is not also a Director) are required for the withdrawal of money from the Association's reserve accounts. As used in this Subsection, the term "reserve accounts" means Budgeted funds that the Board has designated for use to defray the future repair and replacement of or additions to, those major components of the Common Area which the Association is obligated to maintain. 2.10.6 Reserve Study. The Board shall cause a study of the reserve account requirements of the Properties to be conducted in accordance with Section 1365.5(e) of the California Civil Code. As used in this Subsection, "reserve account requirements" means the estimated funds which the Board has determined are required to be available at a specified point in time to repair, replace or restore those major components of the Common Area which the Association is obligated to maintain. Concurrently with the distribution of the Budget, the Association shall distribute to Members the information required pursuant to California Civil Code Section 1365.2.5(a). 2.11. Meetings. 2.11.1 Organization Meeting. The first regular ( "organization ") meeting of a newly elected Board must be held within ten (10) days of election of the Board, at such place as is fixed and announced by the Directors at the meeting at which such Directors were elected, to organize, elect officers and transact other business. No notice is necessary to the newly elected Directors to hold such meeting; provided that (a) a majority of the whole Board is present when the time and place are announced at the annual meeting and (b) the meeting is held on the same day and at the same place as the annual meeting of the Owners at which the newly constituted Board was elected. JRS\30601.0001 \404351.19/19/2011 -8- 2.11.2 Regular Meetings. Regular meetings may be held at such time and place in the Properties as is determined by a resolution adopted by a majority of a quorum of the Directors; however, regular meetings must be held no less frequently than quarterly. Notice of the time and place of regular meetings of the Board shall be given to each Director at least four (4) days before the date of the meeting. Notices may be given personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, electronic mail, or other electronic means or posted at a prominent place or places in the Common Area. 2.11.3 Special Meetings. Special meetings may be called by the President or by any two (2) Directors by posting notice at least four (4) days before such meeting at a prominent place or places in the Common Area or on four (4) days' notice by first -class mail or forty -eight (48) hours' notice delivered personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail, or other electronic means. The notice must state the time, place and the purpose of the meeting. 2.11.4 Executive Sessions. The Board may convene in executive session to (a) discuss and vote upon personnel matters, litigation, matters relating to the formation of contracts with third parties, or Owner discipline or (b) meet with an Owner, upon the Owner's request, regarding the Owner's payment of Assessments, as specified in California Civil Code Section 1367 or 1367.1. The nature of business to be considered in executive session must first be announced in an open session and must be generally noted in the minutes of the Board. In any matter relating to the discipline of an Owner, the Board shall meet in executive session if requested by that Owner. The Owner may attend the executive session. 2.11.5 Other Meetings. Any congregation of a majority of the members of the Board at the same time and place to hear, discuss, or deliberate on any item of business scheduled to be heard by the Board, except those matters that may be discussed in executive session, shall constitute a meeting of the Board. All Owners shall have the right to attend any regular, special or other meeting of the Board, except an executive session. Owners who are not Directors may not participate in any deliberation or discussion at such meetings unless authorized by a vote of a majority of a quorum of the Board. However, at each Board meeting, except for executive sessions, the Board must set aside time for Owners to speak, subject to reasonable limits imposed by the Board. 2.11.6 Notice to Owners. Generally, if a meeting of the Board is not a regular or special meeting, Owners shall be given notice of the time and place of the meeting at least four (4) days before the meeting. Notice required by this Section may be given by posting the notice in a prominent place or places in the Common Area, by mail or delivery of the notice to each Condominium in the Property, or by newsletter or other similar means of communication. If there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the Board and which of necessity make it impractical to provide notice to the Owners, then an emergency meeting of the Board may be called by the President or any two (2) other members of the Board without providing notice to the Owners. JRS\30601.0001 \404351.19/192011 -9- 2.11.7 Waiver of Notice. Before or at any meeting of the Board, any Director may, in writing, waive personal notice of such meeting. Attendance by a Director at any Board meeting waives the requirement of personal notice. If all Directors are present at a Board meeting, no notice to Directors is required and any business may be transacted at such meeting. The transactions of any Board meeting, however called and noticed or wherever held, are valid as though had at a meeting duly held after regular call and notice, if (a) a quorum is present, (b) notice to the Owners of such meeting was posted as provided in Sections 2.11.2, 2.11.3 or 2.11.6, and (c) either before or after the meeting, each of the Directors not present signs a written waiver of notice, a consent to holding such meeting, or an approval of the Minutes thereof. The Secretary shall file all such waivers, consents and approvals with the Association's records or make them a part of the Minutes of the meeting. 2.12. Action Without Meeting. The Board may act without a meeting if all Directors consent in writing to such action. Written consents must be filed with the minutes of the Board. Each action by written consent has the same effect as a unanimous vote of such Directors. Within three (3) days after the written consents of all Directors have been obtained, an explanation of any action taken by unanimous written consent without a meeting must be either (a) posted by the Board in a prominent place or places in the Common Area, or (b) communicated to the Owners by other means the Board determines to be appropriate. 2.13. Quorum and Adjournment. Except as otherwise expressly provided in these Bylaws, at all meetings of the Board, a majority of the Directors constitutes a quorum for the transaction of business, and the acts of a majority of the Directors present at a meeting at which a quorum is present are the acts of the Board. At any meeting of the Board when less than a quorum is present, the majority of those present may adjourn the meeting to another time. At any such reconvened meeting, any business which might have been transacted at the meeting as originally called may be transacted without further notice if a quorum is present. 2.14. Committees. The Board may by resolution establish such committees as it desires, and may establish the purposes and powers of each such committee created. The resolution establishing the committee must (a) provide for the appointment of its members and a chairman, (b) state the purposes of the committee, and (c) provide for reports, termination and other administrative matters as the Board considers appropriate. ARTICLE III OFFICERS 3.1, Designation. The Association's principal officers are a President, a Vice President, a Secretary, and a Treasurer, all elected by the Board. The Board may appoint an Assistant Treasurer, an Assistant Secretary and such other officers as it determines to be necessary. Officers other than the President need not be Directors. Any person may hold more than one office. 3.2. Election of Officers. The Board shall annually elect the Association's officers at the new Board's organization meeting. Each officer shall hold his office at the pleasure of the Board; until he resigns or is removed, is otherwise disqualified to serve or a successor is elected and qualified to serve. JRS\30601.0001 \404351.1 9/19/2011 -10- 3.3. Removal of Officers. On an affirmative vote of a majority of the entire Board, any officer may be removed, either with or without cause, and a successor elected at any meeting of the Board. Any officer may resign at any time by giving written notice to the Board or to the President or Secretary. Any such resignation is effective on the date of receipt of such notice or at any later time specified therein. Unless specified in the notice, acceptance of the resignation by the Board is not necessary to make it effective. 3.4. Compensation. No officer may receive any compensation for services performed in the conduct of the Association's business unless such compensation is approved by the vote or written consent of Owners representing at least a majority of the Association's voting power; however (a) nothing in these Bylaws precludes any officer from serving the Association in some other capacity and receiving compensation therefor, and (b) any officer may be reimbursed for actual expenses incurred in the performance of Association duties. Appointment of any officer does not create contractual rights of compensation for services performed by such officer. No officer, employee or Director of Declarant or any affiliate of Declarant may receive any compensation for service as an officer of the Association. 3.5. President. The President is the chief executive officer of the Association and shall (a) preside at all Association and Board meetings, (b) have the general powers and duties which are usually vested in the office of the President of a corporation, including but not limited to the power to appoint committees from among the Owners as the President decides is appropriate to assist in the conduct of the Association's affairs, and (c) subject to the control of the Board, have general supervision, direction and control of the Association's business. The President is ex officio a member of all standing committees and has such other powers and duties as may be prescribed by the Board or these Bylaws. 3.6. Vice President. The Vice President shall take the President's place and perform the President's duties whenever the President is absent, disabled, fails or refuses to act. If neither the President nor the Vice President is available to perform the President's duties, the Board shall appoint another member of the Board to do so on an interim basis. The Vice President has such other powers and duties as may be prescribed by the Board or these Bylaws. 3.7. Secretary. The Secretary shall (a) keep the Minutes of all meetings of the Board and of the Association at the Association's principal office or at such other place as the Board may order, (b) keep the Association's seal in safe custody, (c) have charge of such books and papers as the Board may direct, (d) in general, perform the duties incident to the office of Secretary, (e) give, or cause to be given, notices of meetings of the Owners and of the Board required by these Bylaws or by law to be given, (f) keep a record book of Owners, listing the names, mailing addresses and telephone numbers of Owners, as furnished to the Association ( "Membership Register"), and (g) record in the Membership Register the termination or transfer of ownership by any Owner, together with the date of the transfer. The Secretary has such other powers and duties as may be prescribed by the Board or these Bylaws. 3.8. Treasurer. The Treasurer is the Association's chief financial officer and is responsible for Association funds. The Treasurer shall (a) keep, or cause to be kept, full and accurate accounts and tax and business records of the Association, including accounts of all assets, liabilities, receipts and disbursements, (b) be responsible for the deposit of all funds in the JRS\30601.0001 \404351.1 9/192011 -11' name of the Association in such depositories as the Board designates, (c) disburse the Association's funds as ordered by the Board, and (d) render to the President and Directors, on request, an account of all transactions as Treasurer and of the Association's financial condition. The Treasurer has such other powers and duties as may be prescribed by the Board or these Bylaws. ARTICLE IV OWNERS 4.1. Voting Rights. The Association has those classes of Membership specified in the Declaration. Except as provided in this Article IV or the Declaration, any provision of the Bylaws which requires the vote or written consent of a specified percentage of the Association's voting power before action may be undertaken (i.e., other than actions requiring merely the vote or written consent of a majority of a quorum) requires the approval of such specified percentage of (a) each class of Membership so long as a Class B Membership exists, and (b) both the Association's total voting power and the Association's voting power represented by Owners other than Declarant. 4.2. Special Procedure. 4.2.1 Residential Seat. To assure Residential Owners' representation on the Board, at least one (1) of the Directors on the Board shall be elected solely by the vote of the Residential Owners, other than Declarant, for so long as a majority of the voting power of the Association resides in Declarant. 4.2.2 Commercial Seat. To assure Commercial Owners' representation on the Board, upon termination of the Class B vote, at least one (1) of the Directors on the Board shall be a Commercial Owner selected solely by the vote of the Commercial Owners unless no Commercial Owner wishes to serve on the Board. Any vacancy caused by the resignation or death of such Commercial Owner Board member shall be filled by another Commercial Owner and not by the remaining Directors on the Board unless no other Commercial Owner wishes to serve on the Board. If the Board is comprised of more than five (5) Directors, the Commercial Owners shall be entitled to elect the greater of (a) two (2) directors or (b) twenty percent (20 %) of the number of Directors on the Board. If at any time no Commercial Owner wishes to serve on the Board, the provisions of this Section and Section 2.6 relating to the removal of any Director elected to office solely by the votes of Commercial Owners shall be suspended until a Commercial Owner elects to serve. 4.2.3 Declarant Representation Rights. Notwithstanding anything to the contrary in these Bylaws, such time Declarant has assigned the Subleases of all Residential Condominiums to purchasers purchasing pursuant to a Final Subdivision Public Report issued by the DRE, Declarant shall have the absolute authority to elect one (1) of the directors on the Board. 4.3. Majority of Quorum. Unless otherwise provided in the Restrictions, any action which may be taken by the Association may be taken by a majority of a quorum of the Owners. JRS\30601 .0001 \404351.1 9/19 /2011 -12- 4.4. Quorum. Except as otherwise provided in these Bylaws, the presence in person, by proxy or by ballot pursuant to California Civil Code Section 1363.03(b) of at least twenty -five percent (25 %) of the Association's voting power constitutes a quorum of the Membership. Owners present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, despite the withdrawal of enough Owners to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of a quorum. If a meeting is actually attended, in person, by proxy or by ballot pursuant to California Civil Code Section 1363.03(b), by Owners having less than one -third (1/3) of the Association's voting power, then no matter may be voted on except matters which were generally described in the notice of the meeting. No action by the Owners on any matter is effective if the votes cast in favor are fewer than the minimum number of votes required by the Restrictions to approve the action. 4.5. Proxies. Except as provided below, votes may be cast in person, by proxy or by written ballot pursuant to California Civil Code Section 1363.03. Proxies must be in writing and filed with the Secretary in advance of each meeting. Every proxy is revocable and automatically ceases after completion of the meeting for which the proxy was filed. Any form of proxy or written ballot distributed by any Person to the Owners must afford the opportunity to specify a choice between approval and disapproval of each matter or group of matters to be acted on, except it is not mandatory that a candidate for election to the Board be named in the proxy or written ballot. The proxy or written ballot must provide that, when the Owner specifies a choice, the vote shall be cast in accordance with that choice. The proxy must also identify the person authorized to exercise the proxy and the length of time it will be valid. No proxy is valid with respect to a vote on any matter described in Section 7613(g) of the California Corporations Code unless the general nature of the proposal was described in the proxy. Proxies may not be used in connection with voting in any election regarding those subjects specified in California Civil Code Section 1363.03(b). 4.6. Place of Meetings of Owners. Meetings of the Owners shall be held on the Properties, or such other suitable place as proximate thereto as practical and convenient to the Owners, as designated by the Board. 4.7. Annual Meetings of Owners. The first annual meeting of Owners shall be held within six (6) months after the Close of Escrow for a Residential Condominium. Thereafter, the annual meetings shall be held on or about the anniversary date of the first annual meeting. Each first Mortgagee may designate a representative to attend all annual meetings. 4.8. Special Meetings of Owners. The Board shall call a special meeting of the Owners (a) as directed by resolution of a majority of a quorum of the Board, (b) by request of the President of the Association, or (c) on receipt of a petition signed by Owners representing at least five percent (5 %) of the Association's total voting power. The Secretary shall give notice of any special meeting within twenty (20) days after adoption of such resolution or receipt of such request or petition. The notice must state the date, time and place of the special meeting and the general nature of the business to be transacted. The special meeting must be held not less than thirty -five (3 5) nor more than ninety (90) days after adoption of such resolution or receipt of such request or petition. No business may be transacted at a special meeting except as stated in the notice. Each first Mortgagee may designate a representative to attend all special meetings. JRS\30601.0001 \404351.19/19/2011 -13- 4.9. Notice. The Secretary shall send to each Owner of record, and to each first Mortgagee who has filed a written request for notice with the Secretary, a notice of each annual or special meeting. The notice must be sent by first -class mail, at least ten (10) but not more than thirty (30) days before the meeting. The notice must state the purpose for the meeting as well as the day, hour and place where it is to be held. The notice may establish time limits for speakers and nominating procedures for the meeting. The notice must specify those matters the Board intends to present for action by the Owners, but, except as otherwise provided by law, any proper matter may be presented for action at the meeting. The notice of any meeting at which Directors are to be elected must include the names of all nominees when the notice is given to the Owners. The mailing of a notice, postage prepaid, in the manner provided in this Section, shall be considered notice served, forty -eight (48) hours after the notice has been deposited in a regular depository of the United States mail. Such notice must be posted in a conspicuous place on the Common Area and is deemed served on an Owner on posting if no address for such Owner has been then furnished to the Secretary. Notwithstanding any other provision of these Bylaws, approval by the Owners of any of the following proposals, other than by unanimous approval of those Owners entitled to vote, is not valid unless the general nature of the proposal was stated in the notice or in any written waiver of the notice: (a) removing a Director without cause; (b) filling vacancies on the Board; (c) approving a contract or transaction between the Association and one or more Directors, or between the Association and any entity in which a Director has a material financial interest; (d) amendment of the Articles; or (e) electing to wind up and dissolve the Association. 4.10. Record Dates. The Board may fix a date in the future as a record date for determining which Owners are entitled to notice of any meeting of Owners. The record date so fixed must be not less than ten (10) nor more than sixty (60) days before the date of the meeting. If the Board does not fix a record date for notice to Owners, the record date for notice is the close of business on the business day preceding the day on which notice is given. In addition, the Board may fix a date in the future as a record date for determining the Owners entitled to vote at any meeting of Owners. The record date so fixed must be not less than ten (10) nor more than sixty (60) days before the date of the meeting. If the Board does not fix a record date for determining Owners entitled to vote, Owners on the day of the meeting who are otherwise eligible to vote are entitled to vote at the meeting. 4.11. Adjourned Meetings. If a quorum is not present at the time and place established for a meeting, a majority of the Owners who are present, either in person, by proxy or by ballot pursuant to California Civil Code Section 1363:03(b), may adjourn the meeting to a time not less than five (5) nor more than thirty (30) days from the original meeting date, at which meeting the quorum requirement is the presence in person, by proxy or by ballot pursuant to California Civil Code Section 1363.03(b) of Owners holding at least twenty -five percent (25 %) of the Association's voting power and entitled to vote at such meeting. Such an adjourned meeting may be held without the notice required by these Bylaws if notice thereof is given by announcement at the meeting at which such adjournment is taken. 4.12. Order of Business. Meetings of Owners must be conducted in accordance with a recognized system of parliamentary procedure or such parliamentary procedures as the Association may adopt. The order of business at all meetings of the Owners is as follows: (a) JRS\30601.0001W04351.1 9/19/2011 -14- roll call to determine the voting power represented at the meeting; (b) proof of notice of meeting or waiver of notice; (c) reading of minutes of preceding meeting; (d) reports of officers; (e) reports of committees; (f) election of Directors (at annual meetings or special meetings held for such purpose); (g) unfinished business; and (h) new business. 4.13. Action Without Meeting. Except for election of Directors, any action not subject to California Civil Code Section 1363.03(b) which may be taken at a meeting of the Owners may be taken without a meeting by written ballot of the Owners. Ballots must be solicited in the same manner as provided in these Bylaws for giving of notice of meetings to Owners. Such solicitations must specify (a) the number of responses needed to meet the quorum requirements, (b) the percentage of approvals necessary to approve the action, and (c) the time by which ballots must be received to be counted. The form of written ballot must afford an opportunity to specify a choice between approval and disapproval of each matter and must provide that, where the Owner specifies a choice, the vote shall be cast in accordance therewith. Receipt within the time period specified in the solicitation of (i) ballots which equal or exceed the quorum which would be required if the action were taken at a meeting, and (ii) approvals which equal or exceed the number of votes which would be required for approval if the action were taken at a meeting at which the total number of votes cast was the same as the total number of ballots cast, constitutes approval by written ballot. 4.14. Consent of Absentees. The actions taken at any meeting of Owners, however called and noticed, are valid as though taken at a meeting duly held after regular call and notice, if (a) a quorum is present either in person, by proxy or by ballot pursuant to California Civil Code Section 1363.03(b), and (b) either before or after the meeting, each of the Owners not present in person, by proxy or by ballot pursuant to California Civil Code Section 1363.03(b) signs (i) a written waiver of notice, (ii) a consent to the holding of such meeting, or (iii) an approval of the minutes thereof. The Secretary shall file all such waivers, consents or approvals with the corporate records or make them a part of the minutes of the meeting. 4.15. Minutes, Presumption of Notice. Minutes or a similar record of the proceedings of meetings of Owners, when signed by the President or Secretary, shall be presumed truthfully to evidence the matters described therein. A recitation in the Minutes executed by the Secretary that proper notice of the meeting was given constitutes prima facie evidence that such notice was given. 4.16. Inspector of Election. Prior to any meeting of Owners, the Board shall appoint an inspector of election for that meeting in accordance with California Civil Code Section 1363.03(c). There shall be at least one (1) inspector of election. Any report or certificate of the inspector of election is prima facie evidence of the matters stated therein. An inspector of election does not have to be an Owner. If the Board does not appoint an inspector of election or if an inspector fails to appear at a meeting, the chairman of the meeting of Owners may appoint the inspector of election. If the chairman fails to appoint the inspector of election, then any Owner may request that the inspector of election be appointed. If an Owner makes such a request, then the inspector of election shall be elected by Owners representing a majority of the Owners present. In case of an action to be taken by the Owners by written ballot, the Board shall also appoint an inspector of election to count the ballots in accordance with Section 1363.03 of the California Civil Code. The results of the election shall be promptly reported to the Board, JRS130601 .0001 \404351.19/19/2011 -15- recorded in the minutes of the next meeting of the Board and made available for review by Owners. Within fifteen (15) days, the Board shall publicize the results of the election in a communication directed to all Owners. The inspector of election shall (a) determine the number of Memberships outstanding and the voting power of each, (b) the number of Owners represented at the meeting and the existence of a quorum, (c) the authenticity, validity and effect of proxies, (d) receive votes, ballots or consents, (e) hear and determine all challenges and questions in any way arising in connection with the right to vote, (f) count and tabulate all votes or consents, (g) determine when the polls shall close, (h) determine the results of the election, and (i) do such acts as may be proper to conduct the election or vote, with fairness to all Owners in accordance with Section 1363.03(c) of the California Civil Code. Without limiting the generality of the foregoing, the inspector of election may appoint and oversee independent third parties to verify signatures and to count and tabulate votes as the inspector deems appropriate. The inspector of election shall perform his /her duties impartially, in good faith, to the best of his/her ability and as expeditiously as is practical. ARTICLE V AMENDMENTS These Bylaws may be amended by the vote or written consent of Owners representing at least (a) a majority of the voting power of each class of the Owners, and (b) a majority of the Association's voting power represented by Owners other than Declarant; provided that the specified percentage of each class of Owners necessary to amend a specific provision of these Bylaws may not be less than the percentage of affirmative votes prescribed for action to be taken under that provision. These Bylaws may be amended by a majority of the entire Board, (i) at any time before the Close of Escrow for a Condominium, or (ii) if the amendment is within the Board's power to adopt without Owner approval pursuant to the California Corporations Code and either (a) the proposed amendment conforms the Bylaws to California law or the requirements of DRE, FNMA, GNMA or FHLMC, or (b) the proposed amendment corrects a typographical error in the Bylaws. However no amendment to these Bylaws which will affect only or primarily the Commercial Units, Commercial Owners or Commercial Common Area shall be approved unless approved by a majority of the voting power of the Commercial Owners. Any amendment to these Bylaws which materially affects matters listed in Article XIII or Section 14.2 of the Declaration must be approved by the Beneficiaries of that percentage of first Mortgages on the Condominiums which is specified in the affected provision of Article XIII or Section 14.2 of the Declaration, respectively. If an amendment to these Bylaws materially affects matters listed in both Article XIII or Section 14.2 of the Declaration, the amendment must be approved pursuant to the requirements of both Section Article XIII or Section 14.2. ARTICLE VI MISCELLANEOUS 6.1. Checks, Drafts and Documents. All checks, drafts, orders for payment of money, notes and other evidences of indebtedness issued in the name of or payable to the Association must be signed or endorsed in the manner and by the person or persons the Board designates by resolution, subject to the requirements of Section 2.10.5 for withdrawing money from the Association's reserve accounts. iRS \30601.0001 \404351.19/19/2011 1 -16- 6.2. Conflicts. If any of these Bylaws conflict with any laws of the State of California, such conflicting Bylaws shall be void on final court determination to such effect, but all other Bylaws shall remain in full force. In case of any conflict between the Articles of Incorporation and these Bylaws, the Articles of Incorporation shall control. In case of any conflict between the Declaration and these Bylaws, the Declaration shall control. 6.3. Execution of Documents. The Board may authorize any officer or officers, agent or agents to enter into any contract or execute any instrument in the name and on behalf of the Association. Such authority may be general or confined to specific instances. Unless so authorized by the Board, no officer, agent, committee member or employee may bind the Association by any contract or pledge its credit or render it liable for any purpose in any amount. 6.4. Availability of Association Documents. 6.4.1 Records To Be Maintained. The Association shall keep at its principal office (or at such other place in or near the Properties as the Board may prescribe) (a) the Restrictions and (b) any documents or items (i) defined under Section 1365.2 of the California Civil Code as "association records" and "enhanced association records" or (ii) required to be kept pursuant to any other applicable provision of the California Civil Code and the California Corporations Code (collectively, the "Association Documents "), each of which shall be made available for inspection and copying by any Owner or the Owner's duly appointed representative for a purpose reasonably related to the Owner's interest as an Owner, all in accordance with applicable provisions of the California Civil Code and California Corporations Code. 6.4.2 Limits on Availability. The Board may establish reasonable rules regarding (a) notice to be given to the custodian of the Association Documents by the Owner desiring to make the inspection, (b) hours and days of the week when such an inspection may be made, and (c) payment of the cost of copying any of the Association Documents requested by an Owner; provided that every Director may at any reasonable time inspect all Association Documents and the physical properties owned or controlled by the Association, and make extracts and copies of documents. 6.4.3 Time of Availability. The minutes, minutes that are proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any meeting of the Board (other than an executive session) must be available to Owners within thirty (30) days of the meeting. The minutes, proposed minutes or stmlmary minutes must be distributed to any Owner on request and on reimbursement of the Association's cost in making that distribution. 6.4.4 Distribution to Owners. No later than ten (10) days after the Association receives written request from any Owner, the Association shall provide to that Owner a copy of each of the documents listed in California Civil Code Section 1368(a) that have been requested by the Owner. Owners must be notified in writing when the budget required in Section 2. 10.1 is distributed or at the time of any general mailing to the entire Association Membership of their right to have copies of the minutes of meetings of the Board and how and where those minutes may be obtained. JRS\30601.0001 \404351.1 9/19/2011 -17- 6.5. Fiscal Year. The Board shall select the Association's Fiscal Year. The Fiscal Year is subject to change as the Board determines. ARTICLE VII NOTICE AND HEARING PROCEDURE 7.1. Initial Complaint. Persons who believe a violation of the Restrictions has occurred may file a complaint with a Person designated by the Board on a form approved by the Board. The Board will commence the enforcement process. In its discretion, the Board may issue one or two violation letters to the Person alleged to have committed the violation ( "respondent ") or set a hearing described in Section 7.2 below. The Board may direct the Manager to assist the Board in any of the steps it chooses to take in enforcing the Restrictions except that decisions made at hearings must be made by the Board. 7.2. Scheduling Hearings. A hearing before the Board to determine whether a sanction should be imposed may be initiated by the Board after receipt of at least one complaint. To initiate a hearing, the Board must deliver to the respondent a notice which includes the following: 7.2.1 Complaint. A written statement setting forth in ordinary and concise language the acts or omissions with which the respondent is charged, 7.2.2 Basis for Violation. A reference to the specific provisions of the Restrictions which the respondent is alleged to have violated, 7.2.3 Hearing Schedule. The date, time and place of the scheduled hearing, 7.2.4 Sanctions. A list of sanctions which may be imposed at the hearing. The date for the hearing may be no less than fifteen (15) days after the date the notice of hearing is mailed or delivered to the respondent. The respondent is entitled to attend the hearing, submit a statement of defense to the Board in advance of the hearing, or present a statement of defense and supporting witnesses at the hearing. If the respondent does not attend the hearing, the respondent waives these rights. 7.3. Conduct of Hearing. The Board shall conduct the hearing in executive session, affording the respondent a reasonable opportunity to be heard. Prior to the effectiveness of any sanction hereunder, proof of notice and the invitation to be heard must be placed in the minutes of the meeting. Such proof is adequate if a copy of the notice together with a statement of the date and manner of delivery is entered by the Association officer or Board member who mailed or delivered such notice. The record of the meeting must contain a written statement of the results of the hearing and the sanction, if any, imposed. 7.4. Imposition of Sanctions. After affording the respondent an opportunity for a hearing before the Board, the Board may impose any one or more of the following sanctions: (a) levy a Special Assessment as authorized in the Declaration; (b) suspend or condition the respondent's right to use any Common Area recreational facilities commencing on a date in the future selected by the Board; (c) suspend the respondent's voting privileges established under the JRS\30601.0001 \404351.191192011 -18- Declaration; (d) enter upon a Condominium to perform maintenance which, according to the Declaration, is the responsibility of the respondent; or (e) record a notice of noncompliance if allowed by law. Any suspension of Membership privileges may not be for a period of more than thirty (30) days for any noncontinuing infraction, but in the case of a continuing infraction (including nonpayment of any assessment after the same becomes delinquent) may be imposed for so long as the violation continues. Written notice of any sanctions to be imposed must be delivered to the respondent personally via first class mail within fifteen (15) days following the date of the decision to impose the sanction. No action against the respondent arising from the alleged violation may take effect prior to five (5) days after the hearing. 7.5. Limits on Remedies. The Board's failure to enforce the Restrictions does not waive the right to enforce them. The remedies provided by the Restrictions are cumulative and not exclusive. However, any individual Owner must exhaust all available internal Association remedies prescribed by the Restrictions before that Owner may resort to a court of law for relief with respect to any alleged violation of the Restrictions by another Owner. JRS\30601.0001 \404351.1 9/192011 -19- CERTIFICATE OF SECRETARY I, the undersigned, certify that: 1. I am the duly elected and acting Secretary of THE VILLAGE COMMUNITY ASSOCIATION, a California nonprofit corporation ( "Association "); and 2. The foregoing Bylaws comprising 23 pages including this page constitute the Bylaws of the Association duly adopted by Consent of Directors in Lieu of First Meeting dated .201 IN WITNESS WHEREOF, I have hereunto subscribed my hand and affixed the seal of the Association this day of 201 Secretary (SEAL) JRW0601 .0001 \404351.19 /19/2011 -20- EXHIBIT "C" COMMERCIAL UNIT SIGN CRITERIA JRS\30601.0001 \402281.910/312011 EXHIBIT "D" DRAWINGS DEPICTING AND ASSIGNING EXCLUSIVE USE RESIDENTIAL PARKING SPACES AND DEPICTING RESIDENTIAL GUEST PARKING 1RS\30601.0001 \402281.9 1 0/3/2011 EXHIBIT "E" DEPICTION OF JOINT USE PARKING AREA mS \3060 i.000i\ao228 L9 10/3/201 t EXHIBIT "F" RESIDENTIAL OWNER MAINTENANCE, REPAIR AND REPLACEMENT RESPONSIBILITIES MAINTENANCE ITEM OWNER RESPONSIBILITY General elements of the Unit Maintain all Unit interior doors and their hardware, interior wall surfaces, drywall, cabinets, floor surfaces, floor coverings, ceilings, permanent fixtures, the appliances, electrical outlets and switches, shower pan, toilets, smoke detectors (including periodic testing and replacement of the batteries) and washing machine water hoses. Maintain any firebox in the fireplace, or any intrusion alarm system serving the Owner's Unit. Unit entry door Maintain exterior and interior surfaces. Maintain, repair and replace the handle, locking mechanism and kick plates and perform any touch up painting on the exterior surface if necessary before the Association's periodic exterior painting. Maintenance obligation does not include responsibility to paint, stain, seal or otherwise weatherproof exterior surfaces, or to maintain and repair the structural elements of the door, including the door itself and the sheathing and door frame, all in accordance with Design Review Committee requirements. Glass doors serving the Unit Maintain the locking mechanisms and any glass. Maintenance obligation does not include all other portions of these items, including the weatherproofing, sheathing and frame. Windows in the Unit Maintain and repair interior and exterior glass panes, window and door screens and locking mechanisms. Maintenance and repair obligations do not include all other portions of the windows including the frame, screens, weather stripping, caulking and sheathing. JRS\30601.0001 \402281.9 10/3/2011 MAINTENANCE ITEM Exclusive Use Residential Common Area patios, balconies or terraces Exclusive Use Residential Common Area parking space Exclusive Use Residential Common Area storage closet (as applicable) Unit systems - Water, gas and sewer pipes, water pressure regulator, hot water heater, plumbing outlets and fixtures, fire alarm, furnaces, ducts (HVAC, dryer, stove, oven), built -in appliances (microwave, range, ovens), electrical wiring and circuit breakers internal OWNER RESPONSIBILITY Maintain and repair balcony, patio or terrace membrane surfaces and flooring surface. Maintain and repair balcony, patio and terrace lights, as applicable. Maintain drains and any potted plants. Sweep the patio regularly and keep it free from debris and reasonably protected against damage. Maintain any hose bibs, electrical outlets and switches. Owner responsible for keeping the Exclusive Use Residential Common Area parking space free from debris and reasonably protected against damage. Maintain, repair and repaint, as necessary, the interior of the storage closet and interior surface of appurtenant doors (including exterior hardware). Maintain, repair and replace portions within Unit or which exclusively serve Unit, except as otherwise provided in the Declaration. Communication wiring ....... ............................... Maintain and repair portions within Unit or which exclusively serve Unit, including external telephone wiring (including, without limitation, such wiring utilized for DSL, T -1, modem, or other electronic communication) Utilities Maintain the separately metered utilities that exclusively serve the Owner's Unit and Exclusive Use Residential Common Areas, including all gas lines serving the Unit that are not serviced by the gas company. Electric and water service ... ..........................:.... Owner responsible for obtaining and having serviced unless not sub - metered. ALL MAINTENANCE, REPAIR AND REPLACEMENT TO BE PERFORMED BY OWNERS SHALL BE PERFORMED IN ACCORDANCE WITH THE RESTRICTIONS, Jas \30601.0001\402281.9 10/3/2011 DESIGN REVIEW COMMITTEE REQUIREMENTS, ARCHITECTURAL GUIDELINES AND GOVERNMENTAL AUTHORITIES AND ANY APPLICABLE MAINTENANCE GUIDELINES. UNLESS OTHERWISE SPECIFIED, MAINTENANCE INCLUDES THE OBLIGATION TO KEEP THE SUBJECT ITEM IN A CLEAN, SANITARY AND ATTRACTIVE CONDITION, FREE OF DEBRIS AND REASONABLY PROTECTED FROM DAMAGE SUBJECT TO THE APPROVAL OF THE DESIGN REVIEW COMMITTEE. UNLESS OTHERWISE SPECIFIED, ALL COSTS AND EXPENSES OF MAINTENANCE, REPAIR AND REPLACEMENT SHALL BE BORNE SOLELY BY THE OWNER PERFORMING SUCH MAINTENANCE, REPAIR AND REPLACEMENT. JRS\30601.0001 \402281.9 10/3/2011 EXHIBIT "G" FLOORING AND SOUND TRANSMISSION RESTRICTIONS No modifications shall be made to any Residential Unit which would result in a reduction in the minimum impact insulation class of the Residential Unit, and each Residential Owner agrees to minimize any noise transmission from such Residential Owner's Unit by complying with the following flooring and sound transmission restrictions which restrictions may be modified by the Board from time to time: 1.0 COMMON FLOOR/CEILING SYSTEMS 1.1 Hardwood, simulated hardwood, rigid vinyl, marble, stone, ceramic tile and all other hard surface flooring products are allowed only in the entry area, kitchen, laundry and bathroom areas of the Residential Units as shown on Exhibit "1 " hereto. Flooring in all other areas of the Residential Units including living room, dining room, family room, den and bedrooms shall be limited to carpet (minimum 40 ounce weight) on pad (minimum 30 ounce weight) 1.2 The as -built Unit floors or ceilings shall not be modified in any manner without submission to the Design Review Committee of an accurate written report by a qualified acoustical consultant and acceptable to the Design Review Committee that the resulting modification (1) will produce a Noise Isolation Class rating of 45 or higher and an Impact Insulation Class rating of 45 or higher and (2) will not otherwise increase sound transmission into and /or through any other Units. 1.3 Even if the proposed modification to the Unit floor or ceiling can be shown to meet the required minimum NIC /IIC ratings, the modified assembly may still result in sound transmission levels that are higher than produced by the as -built condition. Conversion from carpeted to hard surface floors is the most common cause of this condition. Therefore, information shall be submitted to the Design Review Committee indicating any change in sound transmission levels expected to occur with the proposed modifications. 1.4 Unit floor or ceilings shall not be modified in any manner that includes the installation of any mechanical or electrical system or device within the floor or ceiling or directly attached to the floor or ceiling. This includes, but is not limited to, recessed lighting fixtures, ceiling fans and aquarium water pumps. 1.5 Sound system components (including but not limited to music systems, televisions, DVD /CD players, radios, tape decks, speakers, home theaters, etc) shall not be attached to, or suspended from, the ceiling of any Unit. 1.6 Sound system components (including but not limited to music systems, televisions, DVD /CD players, radios, tape decks, speakers, home theaters, etc) shall not be placed directly upon any hard floor surface of any Unit. All such systems and components shall be placed on "buffer" materials or fixtures of a type, size and composition approved by the Design Review Committee. 1.7 Sound system components (including but not limited to music systems, televisions, DVD /CD players, radios, tape decks, speakers, home theaters, etc) shall not be placed upon any floor surface using coupling cones or spikes. 1.8 Pianos shall have at least one -half (1/2) inch neoprene pads under the supports to minimize vibration transmission into the structure. 1.9 All furniture shall contain rubber castors or felt pads. 2.0 COMMON WALL AND PARTY WALL SYSTEMS 2.1 Unit walls shall not be modified in any manner without submission to the Design Review Committee of an accurate written report prepared by a qualified acoustical consultant and acceptable to the Design Review Committee that the resulting modification (1) will produce a Noise Isolation Class rating of 45 or higher and (2) will not otherwise increase sound transmission into and/or through any other Units. 2.2 Unit walls shall not be modified in any manner which includes installation of any mechanical or electrical system or device within the common wall or attached to the wall. The only exception is decorative hangings, provided that such hangings contain no sound - generating elements, the mounting method does not compromise the acoustical performance of the as -built common wall assembly, and acoustical sealant shall be packed around the point of penetration of such hangings. 2.3 Sound system components (including but not limited to music systems, televisions, DVD /CD players, radios, tape decks, speakers, home theaters, etc) shall not be attached to, or suspended from any Unit wall and shall be elevated from the floor by a proper acoustic platform approved by the Design Review Committee. 2.4 No holes or other penetrations shall be made in demising walls (party walls) without the permission of the Design Review Committee. 3.0 PLUMBING SYSTEM The plumbing system shall not be modified in any manner without prior review and approval of the Design Review Committee. The Owner must provide written evidence prepared by a qualified acoustical consultant and acceptable to the Design Review Committee that the modifications will not increase the noise levels generated by the as -built plumbing system in any other Unit. Examples of such modifications include, but are not limited to, plumbing fixture change outs, alternate shower heads, added plumbing fixtures or features, and the installation of spa tubs. 4.0 ALLOWED NOISE LEVELS No Unit owner or occupant, or Unit mechanical, plumbing or electrical system shall produce sound levels within or outside of the Unit that exceed the interior noise limits of the local governing jurisdiction in any other Unit. If there is no local noise limit that applies, the applicable limit shall be a maximum level of 50 dBA from 7 a.m. to 10 p.m. and 45 dBA from 10 p.m. to 7 a.m., as measured inside any other Unit with all windows and doors of the affected Unit in a fully closed position. EXHIBIT "1" HARD SURFACE FLOORING AREAS EXHIBIT "H" FORM DECORATING AGREEMENT GUIDELINES FOR MINOR ALTERATIONS 1. Pursuant to The Village Declaration of Covenants, Conditions and Restrictions and Reservation of Easements recorded on 201_, as Instrument No. in the Official Records of Los Angeles County, California ( "Declaration's, no decorating/cosmetic work may proceed at The Village ( "Project's until the attached Unit Decorating Agreement has been approved by the Design Review Committee of the Project ( "Design Review Committee'. Only minor repairs or replacement of appliances are exempted from this requirement! Discuss your plans for decorating/cosmetic work with the "Manager" (as defined in the Declaration) for guidance. 2. Review the Unit Decorating Agreement Application with your prospective contractor /vendor before signing a contract with them. The contractor /vendor must be aware of and agree to the conditions of the Unit Decorating Agreement Application including insurance coverage, indemnification and other requirements of the Design Review Committee. 3. After you have signed the Unit Decorating Agreement Application and provided it to the Manager with certificates of insurance and an indemnification letter from your contractor /vendor, a representative of the Design Review Committee will execute the Agreement. You may then sign your contractor /vendor's contract, obtain a start date from the Manager and schedule your contractor /vendor to begin your work. The start date scheduled by the Manager shall depend on the number of ongoing unit alterations and decorations. i Decorating/cosmetic work would include alterations that are limited in scope (such as bathroom and kitchen modernization where no changes are being made to plumbing systems) or involve purely decorative work (such as floor scraping, painting and wall papering). Alterations affecting structural components of the Project, "Common Area" (as defined in the Declaration) or Project systems will require the Owner to obtain the consent of the Design Review Committee after the Design Review Committee's review of the plans and specifications for said alterations and to enter into an Alteration Agreement with the Design Review Committee, the form of which is available from the Manager. UNIT DECORATING AGREEMENT APPLICATION THE VILLAGE Ocean Blvd. Santa Monica, California Name: Unit Number: Home Phone: Fax Number: Requested Commencement Date for Work: Work Phone: Detailed room -by -room description of proposed decorative work: (Attach additional pages if necessary) This Unit Decorating Agreement is a preliminary request. NO WORK MAY COMMENCE UNLESS AND UNTIL THIS AGREEMENT IS EXECUTED BY THE DESIGN REVIEW COMMITTEE AND YOU. A Certificate of Insurance from the Contractor naming The Village Community Association ( "Association's, the Board of Directors of the Association, the Design Review Committee of the Association, the Manager of the Association and Santa Monica Urban Housing A, LLC, as additional insureds must be on file. Owner's Signature Date UNIT DECORATING AGREEMENT ,201 ( "Effective Date ") TO: The Village c/o Re: Unit ( "Unit's at The Village ( "Project's Ladies and Gentlemen: I hereby request permission to redecorate my Unit as described in the attached document (hereinafter collectively referred to as the "Work" in the above Unit. If such permission is granted: Before Work Begins. I agree, before any Work is begun: (a) To provide you with a complete and conformed copy of every agreement made with contractors and suppliers. (b) To procure from my contractor, or contractors and to deliver to you copies O (i) Commercial general liability and property damage insurance policies, each in the amount of $1,000,000.00, which policies name The Village Community Association ( "Association "), the Board of Directors of the Association ("Board' ), the Design Review Committee of the Association ( "Design Review Committee"), ("Manager"), Santa Monica Urban Housing A, LLC ( "Developer ") and ( "Construction Lender ") (for as long as its construction loan for the Project is in place), as well as myself, as parties insured. All references to Developer shall include "Declarant" as defined in the Declaration. Such policies shall provide that they may not be terminated until at least ten (10) days after written notice to you; and (ii) Workmen's compensation and employees liability insurance policies, covering all employees of the contractor, contractors or subcontractors. (c) To procure from my contractor or contractors and deliver to you a written agreement in the form of Exhibit "I. " (d) If required by the Design Review Committee, to provide you with a security deposit in the amount of $ ` as security for my obligations hereunder. Amount of any security deposit to be determined by the Design Review Committee depending upon the scope of the work. The Design Review Committee shall be the sole arbiter in the determination of charges to be deducted from this deposit. 2. Additional Obligations. I also agree as follows: (a) I assume all risks of damage to the Project and its mechanical systems, and to persons and property which may result from or be attributable to the Work and all responsibility for the maintenance and repair of any alterations and installations after completion. This responsibility covers all Work, whether or not structural, weather tightness of windows, exterior walls or roofs, waterproofing of every part of the Project directly or indirectly affected by the Work, and maintenance of all heating, plumbing, air - conditioning and other equipment installed or altered pursuant hereto. If the operation of the Project, or any of its equipment, is adversely affected by the Work, I shall, when so advised, promptly remove the cause of the problem. (b) I recognize that there will be no change in the operations of the Project's heating and plumbing system to facilitate the functioning of any heating or air - conditioning units I may be installing. (c) The alterations and materials used shall be of the quality and style in keeping with the general character of the Project. (d) I agree to defend, indemnify and hold the Association, the Board, the Design Review Committee, the Manager, Developer and Construction Lender and all condominium owners, tenants or occupants of the Project for damages suffered to person or property as a result of the Work performed hereunder, whether or not caused by negligence, and to reimburse the Design Review Committee and/or Association for any expenses (including, without limitation, attorneys' fees and disbursements) incurred as a result of such Work. 3. Completion of Work. All Work shall be completed within ( ) calendar days from the Effective Date set forth above unless otherwise permitted by the Design Review Committee. 4. Hours of Performance of Work. No Work shall be done, except between the hours of 8:00 A.M. and 6:00 P.M., Monday through Friday. No work shall be done on Saturdays and Sundays or holidays. Any Work which can produce unusual noises, which might be disturbing to Project occupants, shall not be done before 10:00 A.M. or after 4:00 P.M., Monday through Friday. The Design Review Committee shall determine whether the Work is being performed at noise levels that are disturbing. 5. Work Precautions. All reasonable precautions will be taken to prevent dirt, sound transmission and dust from permeating other parts of the Project during the progress of the alteration. Materials and rubbish will be placed in barrels or bags, before being taken out of the Unit. All such barrels or bags, rubbish, rubble, discarded equipment, empty packing cartons and other materials will be taken out of the Project and removed from the premises at my expense. I recognize that only the service elevator may be used for such removal and only at such times as the Manager may direct and that construction personnel shall use only those parking areas authorized by the Manager and such construction personnel may have to pay guest parking fees established by the Association in accordance with the "Declaration ", as defined below. If the convenience of other occupants requires that the service elevators be operated on an 'overtime" basis, I shall reimburse you for any wages or related expenses incurred in connection therewith. I shall cause my contractors and /or workers to use safe work practices and take precautions to prevent the spread of dust and debris which may contain lead. Such practices shall include (1) limiting access to the Work area to only workers, (2) covering the work area with six mil polyethylene plastic or equivalent, (3) protecting the workers, (4) protecting my belongings by covering or removing them from the work area, (5) wetting the painted surfaces before disturbing the paint and (6) wetting the debris before sweeping. My contractors and /or workers may not use unsafe paint removal practices, including (A) open flame burning, (B) power sanding or sandblasting (unless a special vacuum attachment is used to contain dust), and (C) dry scraping more than a de minimis surface area (de minimis means an area of less than one square foot per room). I shall cause my contractors and /or workers to perform specialized cleaning of the Work area using methods designed to safely remove dust and debris which may contain lead. I shall receive assurances acceptable to the Design Review Committee from my contractors and/or workers that they have knowledge of lead -based paint hazards and they will perform the work and clean-up the work in a manner which will avoid creating lead -based paint hazards. 6. No Opinion on Work. I recognize that by granting consent to the Work, you do not profess to express any opinion as to the design, feasibility or efficiency of the Work. 7. Default. My failure to comply with any of the provisions of this Agreement shall be deemed a breach of this Agreement and The Village Declaration of Covenants, Conditions and Restrictions and Reservation of Easements recorded on , 201_, as Instrument No. in the Official Records of Los Angeles County, California ( "Declaration's pursuant to which your consent has been granted, and, in addition to all other rights or remedies you may have, you may also suspend all Work and prevent workmen from entering my Unit for any purpose other than to remove their tools or equipment. 8. No Modification. This Agreement may not be changed orally. This Agreement shall be binding on you, me, and our personal representatives and authorized assigns. This Agreement may be executed in counterparts which when combined shall constitute a single document. Annexed hereto is a rider of pages describing the Work which is made a part of this Agreement. [SIGNATURES ON FOLLOWING PAGE] PERMISSION GRANTED: The Village Design Review Committee C Name: Title: Very truly yours, Owner Owner EXHIBIT "1" Date: The Village Community Association Santa Monica, CA Re: Unit No: (" Unit's The Village Santa Monica, California Owner: ( "Owner") Dear Sir/Madam: This letter will confirm that the undersigned has reviewed and fully understood the terms and provisions of a Unit Decorating Agreement dated , 201_ ( "Agreement's between the Design Review Committee of the "Association" defined below ( "Design Review Committee's and the Owner and agrees to abide by the terms of the Agreement and the rules and regulations of the Design Review Committee from time to time in effect. The undersigned further agrees that it will not make any claim against, or seek to recover from (a) The Village Community Association ( "Association's, (b) the Board of Directors of the Association ( "Board'), (c) the Design Review Committee, (d) the Association's members, (e) ( "Manager's, (f) Santa Monica Urban Housing A, LLC (which shall include "Declarant" as defined in The Village Declaration of Covenants, Conditions and Restrictions and Reservation of Easements), (g) or (h) the Owners or their respective agents, partners, guests, licensees, invitees, tenants, staff members or employees (collectively, "Indemnified Parties") for any damage to persons or property by the perils within the scope of the policies described in the Agreement unless the loss or damage is due to the carelessness or negligence of that Indemnified Party. The undersigned further agrees to defend, indemnify and hold harmless the Indemnified Parties and all other occupants of The Village, against any and all liability, including legal costs and expenses on account of loss of life or injury to any person or damage to property, happening in or arising out of or in any way relating to the performance of the work unless such injury or loss of life or loss or damage to property is caused by the carelessness or negligence of that Indemnified Party. Sincerely, [NAME OF CONTRACTOR] By: Name: Title: VR BIT "P' FORM ALTERATION AGREEMENT ALTERATION AND CONSTRUCTION AGREEMENT THIS ALTERATION AND CONSTRUCTION AGREEMENT ( "Agreement') is hereby made and entered into as of this _ day of , 201 by and between ( "Owner's and The Village Community Association, a California nonprofit mutual benefit corporation ("Association's acting by and through its Design Review Committee ( "Design Review Committee'. WITNESSETH: WHEREAS, pursuant to Section 6.4.2 of The Village Declaration of Covenants, Conditions and Restrictions and Reservation of Easements recorded on 201, as Instrument No. in the Official Records of Los Angeles County, California ( "Declaration's, no alterations shall be made in a residential unit without the consent of the Design Review Committee; WHEREAS, Owner has requested permission to make alterations in Unit ( "Unit's of The Village ( "Project's; and WHEREAS, Owner desires to obtain the Design Review Committee's consent. NOW, THEREFORE, the parties agree as follows: 1. Owner's Submissions. Together with this Agreement, Owner is delivering to the Design Review Committee: (a) a written description, detailed plans, drawings and specifications, schematics, acoustical reports (if applicable), elevations and any other documents or information reasonably requested by the Design Review Committee related to the alterations proposed to be made ( "Alteration Docaments'� which, if so required by the Design Review Committee, have been prepared by a licensed architect or engineer. Such Alteration Documents include a room by room list of the alterations to be made. (b) a check in the sum of $ payable to the Design Review Committee for the security deposit required to be posted by Owner as provided for in Section 13 of this Agreement (and /or such alternate form of security as may be required by the Design Review Committee). (c) a check in the sum of $ payable to managing agent for the Project ( "Manager's, as a processing fee in connection with this Agreement. 2. Review of Plans Drawings and Specification. The Alteration Documents submitted by Owner shall be subject to review and approval by the Design Review Committee, in its sole discretion, and may be subject to review and approval by the Design Review Committee's architect or engineer (collectively, "Designated Engineer's in the sole discretion of the Design Review Committee, and Owner shall make such changes in and to such Alteration Documents as the Design Review Committee or the Designated Engineer shall require to obtain JRS'30601.0001 \402281.9 10/3/2011 their approval, including, without limitation, such changes as may be required to minimize noise or vibrations to surrounding portions of the Project. The term "Plans" as used in this Agreement shall refer to the Alteration Documents as approved in writing by the Design Review Committee and the Designated Engineer and the term "Work" shall refer to the work called for by the Plans and /or any other work performed by or on behalf of Owner. After approval by the Design Review Committee and the Designated Engineer, the Plans shall not be modified without the prior written approval of the Design Review Committee and the Designated Engineer. Notwithstanding any approval of the Plans by the Design Review Committee or the Designated Engineer, Owner shall be solely responsible for the Plans, for insuring compatibility with the systems and facilities of the Project and for compliance with applicable laws and codes. The execution of this Agreement by the Design Review Committee does not constitute consent to the Work called for by the Alteration Documents, and the Design Review Committee retains all of its rights under this Agreement and the Declaration to withhold consent. Only written approval of such Alteration Documents as provided for above shall constitute the Design Review Committee's consent to the Work called for by the Plans, and any such consent shall be subject to the terms of this Agreement. 3. Pre - Conditions to Commencement of Work by Owner. Owner shall not commence the Work unless and until all of the following has occurred: (a) The Design Review Committee and the Designated Engineer, as same may be required, shall have approved in writing the Alteration Documents submitted by Owner, and Owner shall have received a copy of such approvals. (b) Owner shall have submitted to the Design Review Committee (i) a designation of the licensed California general contractor ( "General Contractor's which will be responsible for the Work, which designation shall authorize the General Contractor to submit the information more particularly described on the Contractor's Instructions set forth on Exhibit "I" attached hereto, (ii) complete copies of all agreements entered into with the General Contractor pertaining to the Work, (iii) other than the communications required to be made by the General Contractor in accordance with the terms of the Contractor's Instructions, the name of the party ( "Owner's Representative's (e.g., Owner, General Contractor, Owner's architect) solely authorized to communicate with the Design Review Committee and the Manager and (iv) telephone numbers for the Owner, the General Contractor and the Owner's Representative, if different from the foregoing. Prior to the commencement of the Work, Owner shall provide the Design Review Committee with a list of all contractors (other than the General Contractor), subcontractors and suppliers (collectively, "Subcontractors'. Notwithstanding the foregoing, the Design Review Committee may require that Work relating to the structural electrical, mechanical, plumbing, sprinkler or HVAC systems of the Project (collectively, "Project Systems' be performed by contractors designated or approved by the Design Review Committee, which approval shall not be unreasonably withheld. (c) Owner shall have made all required filings with, and received all required permits, approvals, licenses and consents from, all governmental agencies exercising jurisdiction over the Work (collectively, "GovernmentalAuthorities') including, but not limited to, the City of Los Angeles Department of Building and Safety and the Los Angeles Fire Department, and JRS\30601.0001 \402281.9 10/3/2011 Owner shall have furnished copies of all such filings, permits, approvals, licenses and consents to the Design Review Committee. The determination of the Designated Engineer as to the need for any such filing, permit, approval, license or consent shall be conclusive. As a prerequisite to its approval of the Plans, the Design Review Committee may require Owner to furnish a letter from Owner's licensed architect or engineer, certifying that the electrical loads required as a result of the Work, will not adversely affect the Project's electrical service and certifying to such other matters as the Design Review Committee may require. The Design Review Committee may require that Owner utilize a filing representative or expediter designated by Design Review Committee to file the Plans with the Governmental Authorities. (d) Owner shall have caused its General Contractor and each Subcontractor of every tier and supplier to furnish to the Design Review Committee the insurance policies described on Exhibit "2" attached hereto or certificates thereof. To the extent commercially reasonably available, such policies shall name the Association, the Board of Directors of the Association ( "Board's, the Association's officers, the Design Review Committee, the Designated Engineer, the Manager, Santa Monica Urban Housing A, LLC ( "Developer's and ( "Construction Lender's (for as long as its construction loan for the Project is in place), and Owner, as additional insureds as provided in Exhibit "2." (All references to Developer shall include "Declarant" as defined in the Declaration). The Design Review Committee reserves the right to revise the parameters and scope of the insurance requirements provided in Exhibit "2," from time to time. Owner and the General Contractor shall be advised, in writing, of any such changes. (e) If requested by the Association in its reasonable discretion, Owner's architect or engineer shall have provided to the Design Review Committee evidence of professional liability insurance in amounts reasonably acceptable to the Design Review Committee. (f) Owner's architect or engineer shall have prepared and submitted to the Design Review Committee a schedule of all Work to be performed by the General Contractor and each Subcontractor, setting forth the number of weeks and days the various trades will need to complete their applicable portions of the Work, the anticipated number of workmen involved and affirming that the Work can be completed within the time allotted under Section 5(d) hereof. (g) The General Contractor will be required to attend a start-up meeting approximately two (2) weeks prior to the commencement of the Work. At this meeting the General Contractor will be introduced to appropriate Association staff and other members of the project team. The agenda for the meeting will include a review of the requirements of this Agreement and the General Contractor's construction plan. 4. Owner to Give Notice Prior to Commencement of Work. Prior to commencing the Work, the Owner's Representative shall give at least five (5) days' prior written notice to the Designated Engineer, Manager, and /or any other person the Design Review Committee may authorize of the date on which the Work will commence. 5. Performance of the Work. iR3\30601.0001 \402281.9 10/3/2011 (a) In General. Owner shall cause the General Contractor to perform the Work strictly in accordance with the Plans in a first- class, workmanlike manner in keeping with the standards of the Project and shall not perform any Work not called for by the Plans. All materials shall be new and of high quality. In performing the Work, Owner shall comply with (i) all applicable laws and codes, (ii) the requirements of all insurance policies covering the Work, the Unit or the Project, (iii) this Agreement, (iv) the Declaration, (v) the "Rules and Regulations" (as defined in the Declaration), (vi) the "Architectural Guidelines" (as defined in the Declaration), (vii) the requirements of the Design Review Committee and (viii) any directions given by the Manager, or the Designated Engineer. Except as provided for in the approved Plans, the Work will not compromise the energy efficiency, increase the energy consumption of the Project or change the number of mechanical zones located within the Unit without the consent of the Design Review Committee. (b) Work Hours and Noise. Owner shall perform the Work diligently and in a manner so as not to disturb other residents of the Project. The Work shall be performed only on Mondays through Fridays (excluding holidays) between the hours of 8:00 a.m. and 6:00 p.m.; provided, however, that any "noisy" work which may disturb other residents shall not be performed before 10:00 a.m. or after 4:00 p.m. The Work shall not be performed on weekends or holidays. The Design Review Committee shall determine whether the Work is being performed at noise levels that are disturbing. (c) Licensing and Staging. The General Contractor and the Subcontractors, if any, shall be duly licensed to the extent required by applicable law. Owner, the General Contractor and the Subcontractors, expressly acknowledge that Developer's contractors and subcontractors will be completing construction work on the Project (other than the Unit) ( "Developer Work's and Owner, the General Contractor and the Subcontractors agree (i) that the Developer Work shall have priority over the Work and (ii) Owner, the General Contractor and the Subcontractors must coordinate the Work with Developer so that no disruption of the Developer Work occurs. If such disruption occurs, Developer reserves the right to immediately stop all Work at Owner's job site. During all periods of construction, the General Contractor shall perform the Work in such a manner as to avoid all strikes, picketing and boycotts of, on or about the Project. (d) Required Completion Date. Owner shall cause the Work (other than decorative work such as painting, wallpapering and carpeting) to be completed on or before the date ( "Required Completion Date's which is ( ) days (excluding weekends and holidays) after the commencement of the Work. If the Work (other than decorative work as aforesaid) shall not be completed on or before the Required Completion Date, Owner shall pay to the Design Review Committee, as liquidated damages on account of late completion, the sum of $250 per day (excluding weekends and holidays) until the Work is completed. The determination of whether the Work is completed shall be made by the Design Review Committee, and such determination shall be conclusive. The Work shall diligently proceed to completion in compliance with all plans and specifications and in conformity with all permits and licenses of any governmental authority. All time limitations set forth -in this paragraph shall be subject to extension for delays caused by or attributable to acts of God, unusual weather conditions or strikes not attributable to Owner or Owner's General Contractor or Subcontractors or the bad faith conduct of other third parties, not to exceed forty -five (45) calendar days. If the JRS\30601.0001\402281.9 10/32011 Work prevents Developer from obtaining a certificate of occupancy for the Project, Owner shall be responsible for the cost of any renewal of a temporary certificate of occupancy for the Project. If more than one owner is responsible for such delay, the cost of the renewal of the temporary certificate of occupancy shall be evenly split between such owners. (e) Evidence of Completion. Upon completion of the Work, Owner shall obtain and deliver to the Design Review Committee (i) a certificate from the architect or engineer who prepared the Plans certifying that the Work has been completed in accordance with all applicable laws and codes and the Plans, and (ii) all required final governmental signoffs and approvals, including if the Design Review Committee shall require, an amended certificate of occupancy and a certificate from the Los Angeles Fire Department. The determination of the Design Review Committee, as to whether the Work has been completed and /or the need for an amended certificate of occupancy and /or any other applicable governmental signoffs and approvals shall be conclusive. (f) Security. Any security required for the Unit during the performance of the Work shall be the obligation of Owner. (g) "As- Built" Drawings. Upon completion of the Work, Owner shall provide the Design Review Committee with an "as- built" set of drawings for the Unit. (h) Confidentiality. Any and all knowledge, information, data, materials, trade secrets and work product regarding the Project, obtained, produced, generated or otherwise acquired by Owner or the General Contractor or their agents, employees and Subcontractors shall be confidential and such parties hereby agree not to disclose any confidential information to any third party and not to use any such confidential information for any purpose other than performance pursuant to this Agreement. All such confidential information and trade secrets are and will remain the exclusive property of the disclosing party and no license will be granted or implied with respect to such confidential information or trade secrets by reason of the other party's access to the same in connection with its performance of services or obligations hereunder. The parties' foregoing agreement of non -use and nondisclosure will survive any termination or expiration of this Agreement and will continue in full force and effect for a period of three (3) years from the date of expiration or termination hereof unless the confidential information constitutes a "trade secret" under applicable law, in which case the obligations will survive for as long as provided for under applicable law. Confidential information will not include information in the public domain or information which a party acquires from a third party who provides the same without violating any obligation of confidentiality or nondisclosure. Furthermore, it will not be deemed to be a violation of this section for a party to disclose any confidential information to a judicial or governmental authority compelling such disclosure by appropriate order provided that the party receiving any such order will provide the other party with notice at the earliest practicable moment to permit the other party to seek appropriate protective orders. 6. Inspection and Correction of the Work. The Design Review Committee shall have the right from time to time to inspect or observe the Work and to ensure compliance with the terms of this Agreement, and Owner shall provide access to the Unit to the Designated Engineer, the Manager, and /or any other person the Design Review Committee may authorize. JRS�30601.0001 \402281.9 10/3/2011 The General Contractor shall be required to conduct a walkthrough with the Design Review Committee for the purpose of observing the construction of the demising wall and perimeter wall assemblies, as applicable. After the installation of all framing, insulation and vapor barriers, if applicable, the General Contractor shall notify the Design Review Committee and schedule a walkthrough to observe such portion of the Work. The General Contractor shall not proceed with installation of gypsum board until written approval of the Design Review Committee is received. Owner shall promptly make all corrections required by the Design Review Committee to conform to the Plans, the other requirements of this Agreement and /or the requirements of the Design Review Committee. If the Design Review Committee so requires, such corrections shall include the removal and replacement of non - conforming work. The Design Review Committee's failure to inspect shall not be considered a waiver of Owner's obligation to comply with this Agreement. If Owner or the General Contractor observes or otherwise becomes aware that the Work or any of their contract documents are at variance with each other or applicable laws, statutes, ordinances, building codes and regulations in any respect or otherwise are inconsistent, the General Contractor shall promptly notify the Design Review Committee. If, in the sole judgment of the Design Review Committee, an emergency exists with respect to the Work, which in the Design Review Committee's opinion requires immediate corrective action, then the Design Review Committee may, without notice to Owner or the General Contractor, perform such corrective work or cause it to be performed by others. In such case, any costs (including general conditions and fees) arising from such corrective work will be borne by Owner and/or the General Contractor. 7. Damage or Adverse Effect Caused by the Work. Owner shall be responsible for any damage to or any other adverse effect upon the Unit or the Project (including the structure, shell, systems, equipment, fixtures and finishes of the Project) caused by or resulting from the Work, regardless of when such damage or adverse effect becomes apparent. If any such damage or adverse effect shall occur or arise, the Design Review Committee may (a) require Owner, at its expense, promptly to repair the damage or remedy the condition giving rise to such adverse effect and/or (b) repair such damage or remedy such condition at Owner's expense. Owner acknowledges that the performance of the Work shall in no event cause any environmental hazards in any condominium units in the Project or the "Common Area" (as defined in the Declaration) (including, without limitation, any environmental hazards such as mold or other bacterial contamination) and that the Owner is obligated at all times (both during and after the performance of the Work) to maintain the appropriate temperature and humidity in the Unit in order to avoid causing damage to the Common Area or the other condominium units in the Project. If Owner fails to so comply, Owner may be liable for any damage arising from such failure, including, without limitation, any claims pertaining to environmental hazards such as mold or other bacterial contamination. Without limiting the generality of the foregoing, Owner specifically acknowledges that this Section 7 shall be applicable to any damage to the carpeting, wall coverings or other finishes in the Project's hallways, elevators and other common areas (including without limitation, the cost of cleaning, shampooing, painting or repairing the same if soiled or otherwise damaged). JRS\30601.0001 \402281.9 10/3/2011 If the Manager advises Owner of any damage which, in the Manager's opinion, was caused by the Work, Owner shall promptly submit a claim to Owner's insurance carrier and to Owner's General Contractor for submission to its insurance carrier, and Owner agrees to use all reasonable efforts, and to cause its General Contractor to use all reasonable efforts, to cause such insurance carriers to expeditiously review and settle all such claims for which they are responsible. The provisions of this paragraph shall not limit Owner's liability under this Section 7. 8. Indemnification and Release by Owner. Owner shall indemnify, defend and hold harmless the Association, the Board, the Association's officers, the Design Review Committee, the Designated Engineer, the Manager, Developer and Construction Lender (collectively, `Indemnified Persons' against any loss, cost, claim, liability, demand, damage (including damage to persons or property) and /or expense arising out of or related to the Work or any act or omission of Owner, the General Contractor or any Subcontractors, architects, engineers or consultants, including reasonable attorneys' fees and disbursements incurred by any of the Indemnified Persons in the defense of any such claim or any suit, action or proceeding based thereon. Owner releases the Association, the Board, the Association's officers, the Design Review Committee, the Manager, Developer, Construction Lender and the agents and employees of the foregoing from any liability for damage to the portions of the Unit affected by the Work. Notwithstanding anything to the contrary contained in the Declaration, Owner accepts sole responsibility for the Work and costs in connection with the maintenance, repair, restoration or replacement of any portions of the Unit affected by the Work, and acknowledges that such responsibility shall pass to Owner's successor -in- interest in the Unit. Owner shall also be responsible to deliver to the Design Review Committee a written agreement in the form of Exhibit "2" hereto in which Owner's General Contractor agrees that it will not make claims for damage within the perils of the insurance referred to in this Agreement and will defend, indemnify and hold harmless the Association, the Board, the Association's officers, the Design Review Committee, the Designated Engineer, the Manager, Developer, Construction Lender the Owners, agents, partners, employees, tenants, guests, licensees, invitees and their respective agents, staff members, employees, tenants, guests, licensees, invitees, officers, directors, shareholders and partners (collectively, "Indemnitees'% against any and all liability, including legal costs and expenses on account of loss of life or injury to any person or damage to property, happening in or arising out of or in any way relating to the performance of the Work unless such injury, loss of life, or loss or damage to property was caused by the willful misconduct or gross negligence of the Indenmitee. Owner releases the Association, the Board, the Association's officers, the Design Review Committee, Developer and Construction Lender from any and all obligation to repair or correct (i) any item in the Unit (or elsewhere) that is damaged by the Work, or (ii) any adverse condition or effect in the Unit (or elsewhere) that is caused by, or results from, the Work. The foregoing release shall not apply to items or conditions in the Unit (or elsewhere) that are not impacted or caused by the Work. In furtherance of the release described above, Owner expressly agrees to release and forever discharge the Association, the Board, the Association's officers, the Design Review Committee, Developer and Construction Lender from all manner of actions, causes of action, suits, debts, dues, sums of money, damages, claims and demands whatsoever in law or equity, which Owner, its successors and assigns ever had, now have, or may have, now or hereafter upon or by reason of any matter arising from or out of the Work to the Unit. iRSl30601.000 IN402281.9 10/3/2011 9. Owner to Bear All Costs Associated with Work. The Owner shall be responsible for all actual costs incurred by the Owner and /or the Design Review Committee in connection with the Work and/or this Agreement, including, without limitation, the fees and disbursements of any attorney, architect, engineer, consultant or other personnel retained by the Design Review Committee or the Owner in connection with the Work or this Agreement. Without limiting the generality of the foregoing, Owner specifically agrees to reimburse the Design Review Committee for all charges of the Designated Engineer for the review of the plans, drawings and specifications submitted for inspection of the Work or otherwise related to the Work or this Agreement, the cost for an operator to operate the service elevator, and the cost (if any) associated with the use of the loading dock. If for any reason whatsoever, any lien is filed for work done or material alleged to have been furnished in connection with the Work, Owner shall at its sole expense cause such lien to be bonded or otherwise discharged within twenty (20) days after "learning of the existence of such lien. If Owner fails to do so or otherwise defaults hereunder, the Design Review Committee may pay or bond such lien and otherwise exercise all rights and remedies reserved to it in this Agreement and the Declaration as and for a default thereunder. 10. Additional Requirements. (a) No Change in Project Heating or Air - Conditioning. Except as provided for in the approved Plans, Owner recognizes that there will be no change in the operation of the Project's heating system or air- conditioning system to facilitate the functioning of any heating or air - conditioning units which Owner may be installing other than stoppages approved by the Design Review Committee in order to facilitate and enable Owner to hook -up to the Project's heating and air conditioning systems and or sprinkler system. The General Contractor shall submit to the Design Review Committee a plan and anticipated schedule of any required shut downs, drain downs, etc., of the Project's existing systems prior to the commencement of its work. Failure to submit this plan shall cause the General Contractor to be accountable for all extra costs associated with delays to reschedule shut downs, drain downs, etc., should they occur. No utility interruption will be permitted without written approval from the Design Review Committee. The General Contractor is required to give the Design Review Committee at least seventy -two (72) hours notice before any Project or utility service interruption which affects occupied and unoccupied areas. Each request for such interruption will indicate estimated downtime. The Design Review Committee will schedule the appropriate personnel to perform all drain downs and recharging of building systems. The cost of all services provided by the appropriate personnel shall be paid in advance to the Design Review Committee prior to the commencement of any work. The minimum charge for each and every drain down and recharge will be $500.00. (b) Prohibited Construction Methods. Except as provided for in the approved Plans, Owner shall not interfere with the Project's security, gas, electric, heating, air - conditioning or plumbing system, sprinkler system or any other Project system or service. Owner shall not penetrate any exterior Project wall, attach fasteners in any manner or the exterior JRS\30601.0001 \402281.910/3/2011 building facade or use any pneumatic or power tool such as hammers or other tools which cause excessive vibrations, except with the consent of the Design Review Committee. Flammable materials are not to be stored within the Project. They must be used and removed the same day. (c) Accessibility of Valves. Owner shall insure that all water, steam, gas and other valves remain accessible during the performance of and after the completion of the Work. If any valve is enclosed in violation of this Agreement, then the Design Review Committee may (i) require Owner, at its expense, promptly to remove such enclosure and/or (ii) remove such enclosure at Owner's expense. (d) Use of Public and Common Areas During Work. Owner shall not allow the halls, sidewalks, courtyards and other public areas to be used for the storage of building materials or debris. Electrical and other utility receptacles in the Common Area may not be utilized to perform any work or power any equipment employed in connection with the Work. Owner shall cause its General Contractor to cover with construction paper those floors (as appropriate) to be used in connection with the Work and shall also cause its General Contractor to take all precautions necessary to prevent damage to the carpeting, wall coverings or other finishes in the Project's hallways, elevators and other Common Area. Only the service elevators may be utilized for the delivery of materials or supplies. (e) Parking. Parking in front of the Project or in its driveways is strictly prohibited. All parking for the General Contractor and Subcontractors shall be off -site and subject to any rules, regulations or charges established by the Association. No other means of entry shall be permitted. The General Contractor will be expected to check in at the location to be designated by the Design Review Committee and obtain the required authorization to enter the Project in compliance with the procedures and requirements of the Design Review Committee. In the event that employees, agents or Subcontractors of the General Contractor are in the Project without proper authorization, such individuals will be asked to leave. (f) Safety Precautions. Owner shall maintain functioning fire extinguishers and smoke alarms in the Unit throughout the construction of the Work. Owner shall insure that the Work does not block access to any fire exits in the Project. Owner shall install smoke detectors and window guards pursuant to current Los Angeles Municipal Code and state fire code statutes and regulations. Hard hats must be worn by all construction personnel at all times. Only work shoes or shoes with leather soles will be permitted in the Project. No construction personnel wearing gym shoes or soft rubber shoes will be allowed into the Project. The General Contractor shall abide by all safety policies and directives established by the Design Review Committee. The General Contractor is required to establish a written safety program for its operations, as well as the operations of any of its Subcontractors. Such safety program shall be available at the job site for inspection by the Design Review Committee. Any accidents or injuries that occur on the construction site, no matter how minor, must be reported to the Design Review Committee within twenty four (24) hours of the occurrence. If an accident or injury occurs due to the existence of a dangerous condition, the msv0601.0001\402281.9 10/3/2011 General Contractor shall take immediate steps to secure the area in order to protect others from further injury. (g) Owner to Control Refuse, Dirt, Dust. Owner shall take all precautions to prevent dirt and dust from permeating other parts of the Project during the progress of the Work, and shall place all materials and rubbish in barrels or bags before removing the same from the Unit. All such barrels and bags and all rubbish, rubble, discarded equipment, empty packing cartons and other materials shall be removed from the Unit and taken out of the Project at Owner's expense and removal of trash containers shall be scheduled for after 3:30 p.m. unless otherwise directed by the Design Review Committee, but in no event shall such removal interfere with regularly scheduled building operations. Owner acknowledges and agrees that the trash chute may not be used for such removal and recognizes that only the service elevator may be used for such removal and only at such times as the Association and/or Board may direct. Owner shall not permit any dumpster or garbage container to be left outside of the Unit without the written consent of the Design Review Committee. Notwithstanding the foregoing, the placement of any dumpsters shall comply with all governmental regulations and the General Contractor shall be responsible to obtain any necessary permits. In the event that the Design Review Committee determines that it is reasonably necessary, the Design Review Committee shall have the option to coordinate and perform trash removal from a central location on individual floors and, in that event, the General Contractor and /or Owner will be responsible for its share of the cost thereof, which shall be billed on a regular basis. (h) Installations by Owner. Owner agrees that any air conditioning units, terrace plantings and /or structures, wherever located in the Project, may be removed by the Design Review Committee for the purpose of repairs, upkeep or maintenance of the Project, at the sole expense of Owner. (i) Deliveries to the Properties. Under no circumstances will deliveries be allowed to the Project unless the General Contractor has secured the prior written consent of the Design Review Committee, at such time as the Developer has secured a temporary certificate of occupancy for the Project. In addition, all materials must be delivered through the loading dock. The General Contractor must be at the loading dock at the scheduled time of delivery. The delivery vehicle will be allowed to remain in the loading dock for the time allotted by the prior written consent. No materials will be accepted or unloaded by any person other than those associated with the General Contractor. Under no circumstances can materials be stored for any length of time at the loading dock. Delivery vehicles will not be allowed at any time to park, stand, stage, load or unload on any of the streets or alleys adjoining the Project. If the General Contractor fails to appear at the dock and /or completely unload the delivery within the allotted time, the delivery truck driver will be instructed to leave the loading dock and the General Contractor and/or Owner will be responsible for any re- delivery charges. The Design Review Committee reserves the right to amend and revise the loading dock procedures at any time and from time to time. 0) Use of Service Elevators. Exclusive use of the service elevators for the delivery of supplies and materials must be requested no less than forty -eight (48) hours in JRS\30601.0001 \402281.9 10/3/2011 advance of the time that such access and use is required. The request must indicate the period of time that the service elevators will be "booked." Owner will be responsible for any necessary elevator operator plus all other actual, out -of- pocket costs associated with such exclusive use of the service elevator(s). The allocation of elevator "time" (whether for Owner's exclusive use or non - exclusive use) shall be made by the Manager, in its discretion, subject to the availability of service elevators, but in no event shall such access and use interfere with regularly scheduled building operations. (k) On -Site Supervision. The General Contractor shall maintain supervisory personnel on -site at all times when the General Contractor has work in progress on -site. Such personnel shall be (i) fully empowered to coordinate and direct the work of its forces and subcontractors, (ii) trained as safety officers and (iii) in numbers sufficient to properly supervise all work. (1) Adjacent Premises. The Design Review Committee may require that Owner give not less than fourteen (14) days' written notice, setting forth the date the Owner plans to commence the Work and the duration of the Work, to residents in the Units that are adjacent to, above and below the Unit ( "Adjacent Premises' in the form of * *[Exhibit "'7 ** hereto, a copy of which shall be delivered to the Manager or such other form then adopted by the Design Review Committee. 11. Owner to Comply with Laws, etc. Owner shall not do or permit any act or thing to be done contrary to law, or which will invalidate or be in conflict with any provision of any liability, casualty or other insurance policies carried by Owner or for Owner's benefit. Owner shall comply with all federal, state and local laws, rules and regulations pertaining to the Work, including any such laws, rules and regulations pertaining to lead -based paint, asbestos and other hazardous material. 12. Maintenance and Repair of the Work. Notwithstanding anything to the contrary contained in the Declaration, Owner shall be responsible for the maintenance, repair and replacement of the Work and any portions of the Unit affected by the Work, and for all costs incurred by the Design Review Committee or Owner in connection therewith. Furthermore, Owner releases the Association, the Board, the Association's officers, the Design Review Committee, the Manager, Developer, Construction Lender and such parties' agents and employees, as applicable, from any liability for damage to the Work or any portion of the Unit affected by the Work however arising. 13. Owner's Security Deposit. As security for the faithful performance and observance by Owner of the terms and conditions of this Agreement, Owner has deposited the sum indicated in Section 1(b) with the Design Review Committee and/or provided payment and performance bonds and maintenance bonds in an amount established by the Design Review Committee. Owner agrees that the Design Review Committee may use, apply or retain the whole or any part of the security so deposited and the interest earned thereon, if any, to the extent required for the payment of any sums due to the Design Review Committee under this Agreement as determined in the discretion of the Design Review Committee. If the deposit is diminished by one -half of the original amount, Owner shall replenish it to the full amount within (3) days after written demand. Owner's failure to so replenish the security deposit shall be a M\30601.000 A402281.9 10!32011 material breach of this Agreement and shall entitle the Design Review Committee to stop the Work, and/or exercise any remedies it has hereunder. If Owner shall comply with all of the terms and conditions of this Agreement, the security deposit and interest or remaining balance thereof, if any, shall be returned to Owner after completion of the Work. The Design Review Committee's release of the security deposit shall not constitute acceptance of the Work by the Design Review Committee or a waiver of any of the Design Review Committee's rights under this Agreement. Any sums due to the Design Review Committee under this Agreement and not recovered by application of the security deposit shall be deemed obligations chargeable and collectable as additional common charges to Unit due by Owner to the Design Review Committee pursuant to the Declaration. 14. Security; Construction Locks. It shall be the General Contractor's responsibility to safeguard its own materials, tools and equipment at all times and to bear the risk of loss and /or damage thereto, and the General Contractor hereby waives any claims against any property damage insurance coverage of the Project or the Design Review Committee. To the extent required by the Design Review Committee, construction locks must be provided by the General Contractor. One key to the Unit must be provided to the Design Review Committee for access to the Unit. 15. * *(Assumption by Purchaser. The Owner (a) shall advise the person or persons to whom it transfers the Unit ("Purchaser's of the Work undertaken by the Owner pursuant to this Agreement; (b) shall provide copies of the Plans and this Agreement to the Purchaser; and (c) shall cause the Purchaser to execute and deliver to the Design Review Committee an agreement substantially in the form of Exhibit " " hereto pursuant to which the Purchaser shall assume all of the obligations of Owner under this Agreement, including the obligation under this Section 15 with respect to any transfer of the Unit by the Purchaser. The Owner hereby waives any claim against the Design Review Committee on account of the Design Review Committee advising a potential Purchaser of the provisions of this Agreement, including this Section 15] ** 16. Miscellaneous. This Agreement represents the only agreement between the Design Review Committee and Owner relative to the subject matter hereto. The Design Review Committee reserve the right to update and amend the requirements governing the Work from time to time. Any changes will be provided to Owner and the General Contractor and the General Contractor will be required to acknowledge receipt of such update(s). This Agreement may not be changed orally. None of the Association, the Board, the Association's officers, Design Review Committee, Manager, Developer, or Construction Lender or any of their principals, agents, employees, contractors or subcontractors, will be responsible for failure or inefficient performance of Project Systems to the Unit resulting from the Work. Owner acknowledges that it has not relied upon any representations, warranties, architect's plans or statements of any nature whatsoever, whether written or oral, made by the Association, the Board, the Association's officers, the Design Review Committee, the Manager, Developer, or otherwise, including, without limitation, any representations, warranties, architect's plans, statements or estimates relating to the cost, feasibility, safety or compliance with all legal requirements pertaining to the Work, it being understood that approval of the Plans by the Design Review Committee is not an express or implied warranty as to any such matter. This Agreement shall be binding on legal representatives, successors and authorized assigns. JRS\30601.0001 \402281.9 1013!2011 Captions are for the purposes of convenience of reference only and are not to be considered in interpreting this Agreement. 17. Notices, Assignment. Any notice, request, consent or other communication hereunder shall begin in writing and sent by registered mail or certified mail, to Owner and to the Design Review Committee and /or the Association at , with a copy, in each case to , or to such other address as either party may hereafter designate to the other in writing. The date of mailing shall be deemed to be the date of the giving of notice, except that the date of actual receipt shall be deemed to be the date of the giving of any notice of change of address. If, at any time, Owner shall require the consent or approval of the Design Review Committee to any proposed action hereunder, Owner shall make a written request therefor, requesting such consent or approval. In no event whatsoever may Owner rely on any consents, approvals, communications, statements or notices given by any person who is not a member of the Design Review Committee or which are not in writing. Subject to Section 15 above, this Agreement may not be assigned by Owner. 18. Owner's Breach and Design Review Committee's Remedies. Any breach by Owner of any of the provisions of this Agreement shall constitute a breach of the Declaration and shall entitle the Design Review Committee to exercise all of the rights and remedies therein provided. In addition, the Design Review Committee shall also have the right (a) to suspend the Work and prevent workers from entering the Unit for any purpose other than to remove their tools, (b) to revoke its consent to the Work, (c) to complete or remove all or any part of such Work and restore the Unit to its condition prior to the commencement of the Work at Owner's sole cost and expense, and /or (d) to exercise any of the rights and remedies provided for herein. The remedies provided for herein and in the Declaration shall not be exclusive and the Design Review Committee shall also be entitled to exercise any of the remedies provided by applicable law. (SIGNATURES ON FOLLOWING PAGE] JRS\30601.0001 \402281.9 10/3/2011 IN WITNESS WHEREOF, Owner and the Association have executed this Agreement. THE VILLAGE COMM[_JNITY ASSOCIATION, a California nonprofit mutual benefit corporation Name: Title: OWNER: By: Name: Title: 7RS\30601.0001 \402281.910/32011 EXHIBIT "1" TO ALTERATION AGREEMENT CONTRACTOR'S INSTRUCTIONS 1. Prior to the commencement of the Work, the General Contractor shall have submitted to the Design Review Committee a list containing the names of all contractors, subcontractors and suppliers (collectively, "Subcontractors") which will be performing the Work or providing materials and supplies with respect thereto. Such list ( "Subcontractor's List ") must be updated within forty -eight (48) hours after any additional Subcontractors are engaged or retained. 2. The General Contractor must submit notification to the Manager (each, a "Notice ") containing the name of any Subcontractor requiring access to the Project in furtherance of the Work, no less than forty -eight (48) hours in advance of the time that such access is required. The Notice shall include (a) the list of the individuals employed by the Subcontractor ( "Subcontractor's Employees ") and (b) the period of time that the Subcontractor seeks to "book" the elevators to bring the Subcontractor's Employees and materials and supplies to the Unit. No Subcontractor will be permitted access to the Project unless the name of such Subcontractor is on the Subcontractor's list and a copy of the subcontract for such Subcontractor has been provided to the Design Review Committee. The General Contractor acknowledges that the allocation of elevator "time" shall be made by the Manager, in its discretion, subject to the availability of elevators. 3. Each Subcontractor's Employee identified in the Notice will be given an access pass. Such pass must be worn by the Subcontractor's Employees whenever they are in the Project and must be returned at the end of each work day. All persons gaining access to the work site must wear hard hats and such other safety gear as may be required by the Design Review Committee. 4. The party to whom communications are required to be made under the Alteration and Construction Agreement ( "Agreement ") and these Contractor Instructions, including, without limitation, the submission of the Subcontractor's List and the Notices is of . The Manager reserves the right to change the aforementioned individual upon written notice to the General Contractor and Owner. 5. By execution of the Contractor's Instructions below, the General Contractor hereby acknowledges and agrees to the foregoing and agrees to comply with those provisions of the Agreement which are the obligation of the General Contractor to perform. ACKNOWLEDGED AND AGREED [GENERAL CONTRACTOR] im JRS\30601.0001 \402281.9 10/32011 Name: Title: EXHIBIT "2" TO ALTERATION AGREEMENT As set forth below, Owner shall cause its General Contractor and each Subcontractor of every tier and supplier to procure and continuously maintain insurance of the types and in not less than the limits set forth below at all times until the completion of the Work and as provided herein, thereafter. All references to Santa Monica Urban Housing A, LLC shall include "Declarant" as defined in the Declaration. Construction Lender shall be an additional named insured, as provided for herein, for as long as the construction loan is in place. No diminution of limits of insurance will be permitted. I. WORKERS' COMPENSATION AND EMPLOYER'S LIABILITY INSURANCE. Workers' compensation insurance (statutory limits complying with the laws of the State of California) and employer's liability insurance with limits not less than $1,000,000 bodily injury by accident (each accident), $1,000,000 bodily injury by disease (policy limit), and $1,000,000 bodily injury by disease (each employee). Such policies shall contain a waiver of subrogation in favor of the Association, the Board, the Association's officers, the Design Review Committee, the Designated Engineer, the Manager, Developer, Construction Lender and Owner (collectively, "Developer Parties'% and in favor of each and every architect, engineer, surveyor, Subcontractor of every tier, consultant and supplier performing work or providing materials or services in connection with the Work. Owner agrees to require the General Contractor to maintain such insurance continuously during the term of this Agreement. The General Contractor shall require each of its Subcontractors of every tier and suppliers to purchase and maintain insurance coverage as provided in this paragraph, with the same waiver of subrogation in favor of the Developer Parties. 2. COMMERCIAL GENERAL LIABILITY INSURANCE. Commercial general liability ("CGV insurance, written on an occurrence policy form at least as broad as ISO form CG 00 01 10 01 ( "modified occurrence" and "claims- made" policy forms are not acceptable), providing coverage for bodily injury, property damage, personal injury and advertising injury, including premises- operations coverage (including, without limitation, explosion, collapse and underground coverage), with limits of not less than $1,000,000 bodily injury and property damage per occurrence limit, $2,000,000 general aggregate limit, $1,000,000 personal injury and advertising injury limit, and $2,000,000 products - completed operations aggregate limit, or limits carried, whichever are greater. The CGL policy shall include, without limitation, contractual liability coverage and broad form property damage coverage (including completed operations). Owner agrees to cause the General Contractor to maintain continuous coverage applicable to liability arising out of the Work for the insurance required in this paragraph during the term of this Agreement and until all claims and suits arising out of the Work are barred by the applicable statutes of limitations and repose. The General Contractor shall require each Subcontractor of every tier and supplier to purchase and maintain insurance coverage as provided in this paragraph. 3. AUTOMOBILE LIABILITY INSURANCE. Commercial or business automobile liability insurance, including, without limitation, liability arising out of "any auto" or all owned, non - owned, leased, and hired automobiles, trucks and trailers, or semi - trailers, including any machinery or apparatus attached thereto, with limits of not less than $1,000,000 each accident, or limits carried, whichever are greater, with deductibles or self - insured retentions acceptable to the JRS\30601 .0001\102281.910 /3/2011 Design Review Committee. The commercial automobile liability insurance shall be written on the most recent edition of ISO form CA 00 01 or equivalent acceptable to the Design Review Committee and shall include, without limitation, contractual liability coverage and additional insured status for the Developer Parties. If any contractor transports any hazardous materials, the automobile liability policy shall include ISO endorsement form MCS -90 or equivalent endorsement providing coverage for environmental and pollution claims. Contractors shall waive all rights against the Developer Parties for recovery of loss, injury and /or damages to the extent such loss, injury and /or damages are covered by the commercial automobile liability insurance maintained by contractor. Owner agrees to cause the General Contractor to maintain such insurance continuously during the term of this Agreement. The General Contractor shall require each Subcontractor of every tier and supplier to purchase and maintain insurance coverage (with limits not less than $1,000,000 each accident, or limits carried, whichever are greater) and provide the same waiver of rights, as provided in this paragraph. 4. UMBRELLA OR FOLLOW FORM EXCESS INSURANCE. Umbrella or follow form excess liability insurance, written on an occurrence policy form ( "modified occurrence" and "claims made" forms are not acceptable), at least as broad as the primary CGL insurance, with limits of liability of not less than $5,000,000 per occurrence /annual aggregate, or limits carried, whichever are greater, in excess of the limits of the employer's liability, CGL and auto liability policies required in paragraphs (1), (2) and (3), above. Owner agrees to cause the General Contractor to maintain such coverage continuously and, with respect to the CGL insurance, for the same duration as required in paragraph (2). The General Contractor shall require each Subcontractor of every tier and supplier to purchase and maintain insurance coverage as provided in this paragraph, and for the same duration, except that the limits of liability for such parties shall be not less than $1,000,000 bodily injury and property damage per occurrence limit, $2,000,000 general aggregate limit, $1,000,000 personal injury and advertising injury limits and $2,000,000 products - completed operations aggregate limit, or limits carried, whichever are greater. If umbrellas are written in more than one company, any layers above the first one shall follow the form of the primary umbrella. 5. Owner shall be named as an additional insured under the COL and umbrella/follow form excess insurance required above by issuance of both ISO form CG 20 10 10 01 and CG 20 37 10 01 additional insured endorsements, or equivalents acceptable to the Design Review Committee. The Developer Parties other than the Owner shall be named as additional insureds under the CGL and umbrella/follow form excess liability insurance required above by issuance of ISO form CG 20 26 11 85 additional insured endorsement, or equivalent acceptable to the Design Review Committee. The additional insured endorsements must provide coverage arising out of both ongoing and completed operations. The endorsements must specify the General Contractor, Subcontractor or supplier (as the case may be) as the named insured and must include the policy number and expiration date. The additional insured endorsements shall contain a primary insurance clause stating: "It is further agreed that such insurance as is afforded by this policy for the benefit of the additional insureds shall be primary insurance, and any insurance maintained by or available to the additional insureds shall be excess and non- contributory with the insurance provided hereunder." The coverage provided to the additional insureds must be at least as broad as that provided to the named insured and may not contain any additional exclusionary language or limitations applicable to the additional insureds. The General Contractor shall maintain such additional insured status for the referenced parties on the JRS\30601.0001 \402281.9 10/3/2011 CGL and umbrella/follow form excess liability policies continuously during the term of this Agreement and for period of two (2) years after substantial completion of the Project. The General Contractor shall require each Subcontractor of every tier and each supplier to provide additional insured status to Owners and the other Developer Parties, on the same terms and conditions as set forth in this paragraph. 6. Prior to commencing the Work, Owner shall deliver to the Design Review Committee the endorsements and waivers of subrogation referred to in this Exhibit as well as certificates of insurance (form Acord 25 -5 (7/97 or later)) evidencing the coverages referred to in this Exhibit. Each insurer's NAIC number must be listed on the certificate. Upon request by the Design Review Committee, Owner shall deliver to the Design Review Committee a true and correct copy of all of the insurance policies and other insurance documents required by this Exhibit. All policies, endorsements and certificates are subject to the Design Review Committee's review and approval. In the case of policies expiring while Work is in progress, a renewal certificate with all applicable endorsements must be received at the business office of the Design Review Committee prior to the expiration of the existing policy or policies. Permitting any contractor to start Work or continue Work prior to or without compliance with . any of these requirements shall not constitute a waiver of or estoppel to assert, any such requirement. Each certificate and endorsement must be executed by an authorized agent of the respective insurers. All certificates of insurance must provide (and the policies shall be endorsed to provide) the Design Review Committee with thirty (30) days advance written notice of cancellation (ten (10) days in the event of cancellation for non - payment of premium). The following wording from the cancellation provision of all said certificates must be lined through and initialed by an authorized agent of each insurer: "CANCELLATION: SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES." 7. All insurance referred to in this Exhibit shall be maintained with insurance carriers qualified to do business in California and maintaining a rating of not less than A:IX from A.M. Best & Co., unless the Design Review Committee, in writing, in its sole discretion, accepts a lower Best's rating. 8. Owner shall immediately notify the Design Review Committee in writing upon receipt by Owner or any of its contractors or suppliers, or their insurance brokers or agents, of any notice of cancellation, non - renewal or rescission of any policy required to be maintained pursuant to this Exhibit. 9. If Owner fails to secure or maintain any policy of insurance required hereby, the Design Review Committee at its sole discretion and election, may (i) take out and maintain the said insurance for and in the name of the Association, the Board, the Association's officers, the iRS\30601.0001 \402281.9 10/3/2011 Design Review Committee, the General Contractor or Owner and, in such event, Owner agrees to pay the cost thereof and to furnish the Manager and Developer all information and consents necessary to permit the Design Review Committee to take out and maintain such insurance for and in the name of the Association, the Board, the Association's officers, the Design Review Committee, the General Contractor, the Manager, Developer, Construction Lender or Owner; or (ii) revoke permission to perform the Work and to deny entry into the Project of all workers, except that if such workers are escorted by a member of the Project's staff, they shall be permitted to remove their tools and supplies. 10. All workers' compensation/employer's liability and automobile liability policies maintained by Owner, the. General Contractor, Subcontractors of every tier and suppliers shall be primary coverage, and any coverage maintained by or available to the Association shall be excess and non - contributory. None of the requirements contained herein as to types, limits and acceptability of insurance coverage to be maintained are intended to, and shall not in any manner, limit or qualify the liabilities and obligations assumed by Owner under this Agreement or at law, including, without limitation, Owner's indemnification obligations and liability in excess of the limits of the coverages required herein. Neither receipt of certificates, endorsements or policies showing less or different coverage than requested, nor any other forbearance or omission by Owner, shall be deemed a waiver of, or estoppel to assert, any right or obligation regarding the insurance requirements herein. Nothing in this Exhibit shall constitute a waiver of or limitation of any other rights or remedies the Design Review Committee may have for consequential damages or otherwise. Owner and the General Contractor shall be solely responsible to pay any amount that lies within the deductible(s) or self - insured retention(s) of Owner or the General Contractor's policies, regardless of the amount of the deductible(s) or self - insured retention(s) and regardless of the cause of the loss or damage. 11. The Design Review Committee reserves the right to increase or decrease the required limits of liability and to require additional coverages from Owner, the General Contractor or its Subcontractors of any tier or suppliers, based upon the type and scope of work performed. 12. With respect to any insurance required pursuant to this Agreement, or maintained, for this Work, including, without limitation, that set forth herein, Owner warrants and will cause its General Contractor and Subcontractors to warrant that each has the right to waive any and all rights of subrogation which its insurance carriers might have or claim against the other Developer Parties arising out of the Work. Owner hereby waives and will cause its General Contractor and Subcontractors to waive all such present and fixture rights of subrogation and agrees, to the fullest extent permitted by law, to defend and indemnify the other Developer Parties from all such subrogation claims. Owner, the General Contractor and its Subcontractors' of every tier and suppliers' policies shall provide such waivers by endorsements acceptable to the Design Review Committee. 7RS\30601.0001 \402281.9 10/3/2011 EXHIBIT "J" FORM ASSIGNMENT OF SUBLEASE JRS\30601.0001 \402281.9 10/32011 EXHIBIT N JOINT DEVELOPMENT AGREEMENT IBEHIND THIS PAGE] RECORDING REQUESTED BY: WHEN RECORDED MAIL TO: (SPACE ABOVE FOR RECORDER'S USE ONLY) JOINT DEVELOPMENT AGREEMENT AND GRANT OFEASEMENTS This Joint Development Agreement and Grant of Easements ( "Agreement") is entered into on , 2011 by and between Santa Monica Urban Housing A, LLC, a California limited liability company ( "Condo Parcel Owner"'), and Santa Monica Housing Partners, L.P., a California limited partnership ( "Apartment Parcel Owner "). Condo Parcel Owner and Apartment Parcel Owner are collectively referred to herein as the "Owners" and individually as an "Owner." PREAMBLE A. Condo Parcel Owner is the owner of a ground leasehold estate in and to that certain parcel of real property situated in the City of Santa Monica ( "City "), County of Los Angeles ( "County "), State of California, more fully described in Exhibit "A" attached hereto ( "Condo Parcel'). Condo Parcel Owner intends to develop the Condo Parcel with residential and retail condominium units ("Condo Units ") and related improvements, including, without limitation, grading and construction of streets, utilities and other residential, retail and /or infrastructure improvements (collectively, "Condo Project'). In connection with the development of the Condo Parcel, the Condo Parcel Owner will form a homeowners association ( "Association ") which shall be responsible for the operation, maintenance, repair and replacement of the common area facilities in the Condo Project. B. Apartment Parcel Owner is the owner of a ground leasehold estate in and to that certain parcel of real property adjacent to the Condo Parcel, more fully described in Exhibit "B" attached hereto ( "Apartment Parcer'). The Apartment Parcel will be developed with approximately one hundred sixty (160) affordable apartment units ("Apartment Units ") and related improvements (collectively, "Apartment Project"). The Condo Parcel and Apartment 1 Initial: Trade Contractor Contractor Parcel are collectively referred to as the "Parcels" and individually as a "Parcel". The Condo Project and the Apartment Project are collectively referred to as the "Projects" and individually as a "Project." C. The Projects will be built on a single podium over a single subterranean garage serving both Projects ( "Parking Structure ") and will share other common facilities including, without limitation, streets, driveways, walkways and landscaping. D. The Owners wish to cooperate with each other to insure continuity in the development of the Parcels, which cooperation as provided for in this Agreement shall include, without limitation (i) the granting of certain access, staging, utility, grading, construction and other easements and the dedication of property to public authorities which may be required in connection with the.development of the Condo Project and /or the Apartment Project, and (ii) sharing in certain costs of construction and development. NOW, THEREFORE, for valuable consideration, the receipt of which is acknowledged, the Owners hereby agree as follows: 1. Covenants to Grant Easement. 1.1 Apartment Parcel Owner Easements. Condo Parcel Owner grants to Apartment Parcel Owner for the benefit of Apartment Parcel Owner and its employees, agents, contractors, subcontractors, representatives and future owners of the Apartment Parcel (collectively, the "Apartment Parcel Owner Parties ") nonexclusive (except as otherwise provided herein) easements of access, ingress and egress over those portions of the Condo Parcel reasonably necessary to enable the Apartment Parcel Owner Parties to conduct all of the activities on the Condo Parcel described in this Agreement. Except as otherwise provided below, the provisions of this Section apply to all easements now or hereafter granted to the Apartment Parcel Owner under this Agreement. As used in this Agreement, the term "easement" shall mean easements, licenses and /or rights of way, as applicable. The size, use, location and duration (with respect to temporary easements) of such easements shall be subject to approval by the Condo Parcel Owner in accordance with the terms of Section 2.1 below. The Apartment Parcel Owner Parties shall comply with all applicable laws and governmental regulations and requirements in performing activities on the Condo Parcel, and entry and activities by the Apartment Parcel Owner Parties on the Condo Parcel shall not unreasonably interfere with Condo Parcel Owner's development and other activities thereon. Except as otherwise provided in this Agreement, Apartment Parcel Owner shall indemnify, defend, protect and hold Condo Parcel Owner, the Condo Parcel, the City and the Redevelopment Agency of the City of Santa Monica (the "Agency ")free and harmless from all loss, damage, liability and expense (including, without limitation, reasonable attorneys' fees and costs of litigation) arising from the gross negligence or willful misconduct of the Apartment Parcel Owner Parties and /or from all mechanics', materialmen's and other liens resulting from the Apartment Parcel Owner Parties' use of the easements granted herein. 1.2 Condo Parcel Owner Easements. Apartment Parcel Owner grants to Condo Parcel Owner for the benefit of the Condo Parcel Owner and its employees, agents, contractors, subcontractors, representatives and future owners of the Condo Parcel (collectively, 2 Initial: Trade Contractor Contractor the "Condo Parcel Owner Parties ") nonexclusive (except as otherwise provided herein) easements of access, ingress and egress over those portions of the Apartment Parcel reasonably necessary to enable the Condo Parcel Owner Parties to conduct all the activities on the Apartment Parcel described in this Agreement. Except as otherwise provided below, the provisions of this Section apply to all easements now or hereafter granted to the Condo Parcel Owner under this Agreement. The size, use, location and duration (with respect to temporary easements) of such easements shall be subject to approval by the Apartment Parcel Owner in accordance with the terms of Section 2.1 below. The Condo Parcel Owner Parties shall comply with all applicable laws and governmental regulations and requirements in performing activities on the Apartment Parcel, and entry and activities by the Condo Parcel Owner Parties on the Apartment Parcel shall not unreasonably interfere with Apartment Parcel Owner's development and other activities thereon. Except as otherwise provided in this Agreement, Condo Parcel Owner shall indemnify, defend, protect and hold Apartment Parcel Owner, the Apartment Parcel, the City and the Agency free and harmless from all loss, damage, liability or expense (including, without limitation, reasonable attorneys' fees and costs of litigation) arising from the gross negligence or willful misconduct of the Condo Parcel Owner Parties and /or from all mechanics', materialmen's and other liens resulting from the Condo Parcel Owner Parties' use of the easements granted herein. 2. Approvals. 2.1 Accommodation Approvals. Any Owner malting any request for any approval, easement or cooperation under this Agreement shall be referred to in this Agreement as the "Requesting Party" and the Owner to whom such request is made shall be referred to in this Agreement as the "Other Party ". Any approval, easement or other cooperation that a Requesting Party is entitled to under this Agreement shall be referred to in this Agreement as an "Accommodation ". The Other Party shall approve or disapprove a request for an Accommodation in its reasonable discretion. In exercising its reasonable discretion, the Other Party may deny an Accommodation if the approval thereof would, except as otherwise provided in this Agreement: (i) obligate the Other Party to be responsible for payment of any fees, assessments or other charges in an amount or manner for which the Other Party would not be obligated absent the Accommodation; provided that the Requesting Party may resolve this issue by agreeing to pay such fee, assessment or charge; or (ii) create or impose a lien or encumbrance upon the Other Party's Parcel for payment of any fees, assessments or other charges in an amount or manner for which the Other Party would not be obligated absent the Accommodation (with respect to liens related to work to be done on the Other Party's Parcel, this provision shall be satisfied by the delivery to the Other Party by the Requesting Party of a Notice of Non - Responsibility in favor of the Other Party for such work that may be recorded by the Other Party against its Parcel); or (iii) have a material and adverse impact upon the Other Party's right or ability to own, use, develop, entitle and/or market all or any material portion of its Parcel at the time and in the manner desired by the Other Party. The foregoing shall include the Other Party's right to approve the size, use, location and duration (with respect to temporary easements) of easements in accordance with the foregoing; however, it shall not be reasonable for the Other Party to disapprove the size and/or location of an easement where such size and location is specified by the City, County and /or any other governmental or quasi - governmental authority and/or utilities ( "Public Authority "), and there is no commercially reasonable alternative to such size and location that would be acceptable to the Public Authority. 3 Initial: Trade Contractor Contractor 2.2 Approval Process. Except as otherwise provided in this Agreement, the following shall apply to all circumstances under this Agreement in which any Requesting Party requests an Accommodation from the Other Party. The Requesting Party shall submit to the Other Party a written request specifying the Accommodation required under this Agreement which shall include, as applicable, copies of any and all plans, specifications, budgets, permits, approvals or other documentation or materials which could be reasonably required by the Other Party in making a determination to approve or disapprove such Accommodation ( "Submission "). The Submission shall not be complete, no review period shall commence, and the Other Party shall not be obligated to review same until all materials reasonably required by the Other Party to be included in the Submission are included. Unless another time period is specified in this Agreement, the Other Party shall have thirty (30) days from its receipt of the complete Submission ( "Initial Approval Period") to review and deliver to the Requesting Party written approval or disapproval (with reasons for disapproval) of the Submission ( "Determination Notice "). Subject to the provisions of Section 2.1 above, the Other Party shall not unreasonably withhold, condition or delay approval of any Submission. If the Other Party fails to deliver a Determination Notice to the Requesting Party prior to the expiration of the Initial Approval Period, the Submission shall be deemed approved. If the Other Party disapproves any Submission in a Determination Notice, the Requesting Party shall be entitled to revise the Submission ("Revised Submission ") and resubmit the same to the Other Party for approval. The Other Party shall provide the Requesting Party with a written approval or disapproval (with reasons for disapproval) of the Revised Submission within thirty (30) days (or such other period as may be specified in this Agreement) after the Other Party's receipt of a complete Revised Submission meeting the requirements set forth above ( "Subsequent Approval Period"). If the Other Party fails to deliver a Determination Notice to the Requesting Party for the Revised Submission prior to the expiration of the Subsequent Approval Period, the Revised Submission shall be deemed approved. If the Other Party disapproves the Revised Submission, the revision and resubmission process shall be repeated in the manner described above until the objections of the Other Party have been reasonably addressed. Following the approval or deemed approval by the Other Party of any Submission or Revised Submission, the Requesting Party shall not materially amend such Submission or Revised Submission, or any material forming a material part thereof, without obtaining the approval of the Other Party in the manner set forth herein. Neither the Other Party nor any person acting on behalf of the Other Party shall be liable to the Requesting Party or any third party for any loss, damage or injury resulting or arising in connection with the matters approved or disapproved by the Other Party, and any such approval shall not constitute a representation by the Other Party that the Submission or Revised Submission is satisfactory or acceptable in any technical manner, including, without limitation, from the standpoint of structural safety, or conformity with building codes or other laws or regulations of Public Authorities. 2.3 Approval of Annual Budget. Prior to submission to the California Department of Real Estate (or any other governmental agency), the Condo Parcel Owner shall deliver the proposed Annual Budget to the Apartment Parcel Owner for approval, which approval shall not be unreasonably withheld, conditioned or delayed. "Annual Budget" shall have the meaning given in that certain Reciprocal Easement Agreement with Covenants, Conditions and Restrictions by and between the Owners. 4 Initial: Trade Contractor Contractor 3. Joint Work. 3.1 Joint Work. As used herein, "Joint Work" means all the work necessary for the construction and completion of all structural components, utilities, grading, equipment, fixtures, facilities or other improvements of any kind, to the Parking Structure and those other areas designated on Exhibit "C" attached hereto (collectively, "Joint Areas "). 3.2 Joint Work Contracts. Each Owner shall enter into a construction contract with the same general contractor which will cover (a) construction of the improvements on the Joint Areas ( "Joint Area Improvements ") located on such Owner's Parcel, and (b) construction of all other improvements on such Owner's Parcel (individually, a "Construction Contract' and collectively the "Construction Contracts ". 3.3 Cost of Joint Work. Each Construction Contract shall include the allocable share of the costs, fees and other amounts payable for such Owner's portion of the Joint Area Improvements ("Joint Work Contract Costs "), which allocation shall be as provided in Exhibit "D" hereto. Any development, or similar fees levied by Public Authorities and utility companies in connection with the Joint Work ( "Joint Work Development Fees ") shall be allocated between the Owners as provided on Exhibit "E" hereto. The Joint Work Contract Costs and Joint Work Development Fees are collectively referred to as the "Joint Work Costs." 3.4 Payment of Joint Work Contract Costs. The Joint Work Contract Costs shall be paid in accordance with the Construction Contracts, as applicable. 3.5 Payment of Development Fees. Each Owner shall be responsible for its allocated share of the Joint Work Development Fees ( "Joint Work Development Fee Share ") as set forth on Exhibit "D" and shall timely pay such Joint Work Development Fee Share to the applicable Governmental Authority, utility or third party so as not to delay any portion of the Joint Work or increase the cost thereof. 3.6 Failure to Pay Joint Work Costs. If any Owner ("Delinquent Owner ") does not pay its share of the Joint Work Costs in a timely manner as provided in this Agreement or in the applicable Construction Contract, the other Owner ("Current Owner ") shall be entitled to give the Delinquent Owner written notice of such delinquency ( "Notice of Delinquency "), and if the Delinquent Owner does not cure such delinquency within seven (7) days following receipt of such Notice of Delinquency, the Current Owner shall be entitled to make the delinquent payment on behalf of the Delinquent Owner and the Delinquent Owner shall, within seven (7) days following receipt of written demand from the Current Owner, reimburse the Current Owner for the amount paid by the Current Owner to cure such delinquency. Any reimbursement not paid when due hereunder shall bear interest at the maximum interest rate allowed by law from the date due until paid in full. In addition, any payment made by a Current Owner on behalf of a Delinquent Owner and the reimbursement of same by the Delinquent Owner to the Current Owner shall not waive or release any claims or remedies the Current Owner may have against the Delinquent Owner for damages incurred by the Current Owner as a result of the Delinquent Owner's failure to make such payment of Joint Work Costs on a timely basis. 1 Initial: Trade Contractor Contractor 3.7 Insurance. Prior to commencing any portion of the Joint Work, the Owners shall obtain the insurance specified in Section 11. 4. Offsite Improvements. 4.1 Condo Parcel Offsite Improvements. Infrastructure or other improvements other than the Joint Work may be required to be completed on the Apartment Parcel in order to (a) satisfy governmental conditions which are solely imposed in connection with the development of the Condo Parcel, (b) enable the Condo Parcel Owner to complete other development or construction on the Condo Parcel, or (c) satisfy other conditions related solely to the Condo Parcel ("Condo Parcel Offsite Improvements "). As used herein "governmental conditions" shall mean conditions or requirements for development of property that have been imposed by an applicable Public Authority in connection with any approved development entitlement, zoning request, tentative tract or parcel map, or other subdivision map. If Apartment Parcel Owner's development schedule is ahead of Condo Parcel Owner's schedule and the Condo Parcel Offsite Improvements must be physically completed to make it reasonably possible and /or economically feasible for Apartment Parcel Owner to proceed with development of the Apartment Parcel, subject to the provisions of Sections 1 and 2, the following shall apply: 4.1.1 Notice. Apartment Parcel Owner shall provide Condo Parcel Owner with thirty (30) days' written notice of its requirement that Condo Parcel Owner commence construction of the Condo Parcel Offsite Improvements. Apartment Parcel Owner shall cooperate in all applicable Accommodations to Condo Parcel Owner as provided in this Agreement. If Condo Parcel Owner does not commence construction of the Condo Parcel Offsite Improvements within such thirty (30) day period and thereafter diligently complete same, Apartment Parcel Owner shall be entitled to commence and thereafter diligently complete the Condo Parcel Offsite Improvements. Condo Parcel Owner shall be obligated to reimburse Apartment Parcel Owner, within seven (7) days of request for reimbursement, for any costs incurred by Apartment Parcel Owner in connection with the Condo Parcel Offsite Improvements, including, without limitation, costs of planning, processing, obtaining governmental approval of and/or completing the Condo Parcel Offsite Improvements. Any reimbursement not paid when due hereunder shall bear interest at the maximum interest rate allowed by law from the date due until paid in full. All Condo Parcel Offsite Improvements shall be constructed in accordance with plans and specifications approved by the applicable Public Authorities. 4.1.2 Assignment of Contracts. In the event Apartment Parcel Owner intends to commence construction of the Offlsite Improvements in accordance with Section 4.1.1, Condo Parcel Owner agrees, upon request of the Apartment Parcel Owner, to assign to Apartment Parcel Owner all subcontracts and other agreements (to the extent assignable), if any, previously entered into by Condo Parcel Owner for completion of the Condo Parcel Offsite Improvements and deliver to Apartment Parcel Owner copies of all applicable improvement plans. 4.2 Apartment Parcel Offsite Improvements. Infrastructure or other improvements other than the Joint Work may be required on.the Condo Parcel in order to (a) satisfy governmental conditions which are solely imposed in connection with the development of the Apartment Parcel, (b) enable the Apartment Parcel Owner to complete other development or 2 Initial: Trade Contractor Contractor construction on the Apartment Parcel, or (c) satisfy other conditions related solely to the Apartment Parcel ( "Apartment Parcel Offsite Improvements "). If Condo Parcel Owner's development schedule is ahead of Apartment Parcel Owner's schedule and the Apartment Parcel Offsite Improvements must be physically completed to make it reasonably possible and /or economically feasible for Condo Parcel Owner to proceed with development of the Condo Parcel, subject to the provisions of Sections 1 and 2, the following shall apply: 4.2.1 Notice. Condo Parcel Owner shall provide Apartment Parcel Owner with thirty (30) days' written notice of its requirement that Apartment Parcel Owner commence construction of the Apartment Parcel Offsite Improvements. Condo Parcel Owner shall cooperate in all applicable Accommodations to Apartment Parcel Owner as provided in this Agreement. If Apartment Parcel Owner does not commence construction of the Apartment Parcel Offsite Improvements within such thirty (30) day period and thereafter diligently complete same, Condo Parcel Owner shall be entitled to commence and thereafter diligently complete the Apartment Parcel Offsite Improvements. Apartment Parcel Owner shall be obligated to reimburse Condo Parcel Owner, within seven (7) days of request for reimbursement, for any costs incurred by Condo Parcel Owner in connection with the Apartment Parcel Offsite Improvements, including, without limitation, costs of planning, processing, obtaining governmental approval of and/or completing the Apartment Parcel Offsite Improvements. Any reimbursement not paid when due hereunder shall bear interest at the maximum interest rate allowed by law from the date due until paid in full. All Apartment Parcel Offsite Improvements shall be constructed in accordance with plans and specifications approved by the applicable Public Authorities. 4.2.2 Assignment of Contracts. In the event the Condo Parcel Owner intends to commence construction of the Offsite Improvements in accordance with Section 4.2.11 Apartment Parcel Owner agrees, upon request of the Condo Parcel Owner, to assign to Condo Parcel Owner all subcontracts and other agreements (to the extent assignable), if any, previously entered into by Apartment Parcel Owner for completion of the Apartment Parcel Offsite Improvements and deliver to Condo Parcel Owner copies of all applicable improvement plans. 5. Dedications. As a condition to development of all or a portion of any of the Parcels, one or more Public Authorities may require the dedication of public easements over or fee title to portions of the Parcels, including, without limitation, for utility lines, pump stations, reservoirs, access roads and other purposes ("Dedications "). Subject to Sections 1 and 2, the Owners agree to reasonably cooperate with each other in such Dedications, including, without limitation, the execution and recordation of all instruments, documents and agreements required by the Public Authority or reasonably required by the Owner whose property is to be primarily benefited by such Dedication. If a Requesting Party requests that the Other Party execute any such materials, then, subject to the provisions of Sections 1 and 2 above, within forty five (45) days after the Other Party receives written request for such cooperation from the Requesting Party (which written request shall include copies of all documentation to be executed by the Other Party and /or its lender), the Other Party shall execute and acknowledge same (and shall use commercially reasonable efforts to cause any lender holding a deed of trust encumbering any 3 Initial: Trade Contractor Contractor portion of the Parcel owned by the Other Party to execute such documentation and /or a subordination thereto) and cause such documentation to be returned to the Other Party, or the applicable Public Authority. All costs and expenses of such Dedication shall be the responsibility of the Requesting Party, provided that the Requesting Party shall bear its own attorney's fees and other costs of having any consultants review such Dedication and any documentation required in connection therewith. 6. Utility Easements. As a condition to development of all or a portion of the Parcels, the Public Authorities or either or both Owners may require the granting of easements or other rights -of- way to the other Owner and/or Public Authorities over portions of the Owner's Parcel for the (temporary or permanent) installation, construction and use of water, drainage, electrical, sewer, gas, communications or other utility purposes, pump stations, reservoirs and access roads ("Utility Easements "). Subject to the provisions of Sections 1 and 2 above, the Owners agree to reasonably cooperate with each other in the granting of such Utility Easements, including, without limitation, the execution and recordation of all instruments, documents and agreements required by the Public Authority or reasonably required by the Owner whose property is to be primarily benefited by such Utility Easements. If the Requesting Party requests that the Other Party execute any such materials, then within forty five (45) days after the Other Party receives written request for such cooperation from the Requesting Party (which written request shall include copies of all documentation to be executed by the Other Party and /or its lender), the Other Party shall execute and actmowledge same (and use commercially reasonable efforts to cause any lender holding a deed of trust encumbering any portion of the Parcel owned by the Other Party to execute such documentation and /or a subordination thereto) and cause such documentation to be returned to the Requesting Party, or the applicable Public Authority. All costs and expenses related to the granting of such Utility Easements shall be the responsibility of the Requesting Party; provided, that, the Other Party shall bear its own attorneys' fees and other costs of having any consultants review such Utility Easements and any documentation required in connection therewith. 7. Grading. Subject to Sections I and 2 above, each Owner, as applicable ( "Grantor ") hereby grants to the other Owner ( "Grantee ") nonexclusive easements of access, ingress and egress over those potions of the Parcel owned by the Grantor to the extent necessary to perform all grading which is (a) contemplated by the development entitlements approved for the Grantee Parcel, and (b) in accordance with grading and /or improvement plans approved by the applicable Governmental Authorities for the Grantee Parcel. Grantee shall inform Grantor of the dates and time periods during which such easements will be necessary, and Grantor shall have the option to approve or disapprove of such dates and time periods in its reasonable discretion. 8. Staging. Subject to Sections 1 and 2 above, each Owner hereby grants to the other Owner nonexclusive easements for temporary staging of construction over those portions of the Parcel owned by such grantor (each a "Staging Area "). Such temporary staging shall include, without 4 Initial: Trade Contractor Contractor limitation, the storage of construction equipment and materials, placement of construction trailers and the fencing, security and lighting of all or any portion of the Staging Area (collectively, "Staging Materials and Operations "); provided, however, that all Staging Materials and Operations shall be located and of a nature that they are capable of being removed within the time periods specified below at the sole cost and expense of the grantee Owner. Each Owner using a Staging Area (as applicable, a "Staging Area User ") shall also have the right, at its sole cost and expense, to install and maintain, on any portion of the Parcel owned by the Other Party, temporary utilities to serve the Staging Area and Staging Materials and Operations and the cost of any such utilities shall be the responsibility of the Staging Area User. The Other Party, upon at least thirty (30) days' written notice to the Staging Area User, shall be entitled to terminate the Staging Area User's right to use of the Staging Area if such termination is necessary at that time to allow development of the Staging Area. Within thirty (30) days after the other Owner provides written notice to the Staging Area User of such termination, the Staging Area User shall, at its sole cost and expense, relocate the Staging Materials and Operations to the Staging Area User's Parcel. If the Staging Area User fails to relocate the Staging Materials and Operations within such thirty (30) day period, the other Owner, after providing the Staging Area User with five (5) days' prior written notice, shall be entitled to reasonably and safely relocate same to the Staging Area User's Parcel. The written notice provided by the other Owner to the Staging Area User shall designate two (2) areas on the Staging Area User's Parcel to which the other Owner intends to relocate the Staging Materials and Operations, which area shall be approved by the Staging Area User in writing ( "Approval Notice ") within five (5) days after its receipt of notice from the other Owner. In the event the Staging Area User disapproves of both areas on the Staging Area User's Parcel to which the other Owner intends to relocate the Staging Materials and Operations, the Staging Area User shall identify in a writing delivered to the other Owner within five (5) days after its receipt of notice from the other Owner ( "Relocation Notice "), a location acceptable on Staging Area User's Parcel to which the Staging Materials and Operations may be relocated by the other Owner. The Staging Area User's failure to respond to the other Owner's written notice with an Approval Notice or a Relocation Notice shall be deemed approval of the other Owner's proposed areas on the Staging Area User's Parcel to which the Staging Materials and Operations will be relocated. The Staging Area User shall reimburse the other Owner for the actual and reasonable costs of such relocation of the Staging Materials and Operations. Such reimbursement shall be delivered to the other Owner within seven (7) days after the Staging Area User's receipt of written demand therefor by the other Owner, which demand shall include paid invoices for such costs. Any amount not so reimbursed shall accrue interest at the maximum rate allowed by law from the date due until paid. The Staging Area User shall obtain all applicable governmental permits for its use of the Staging Area and shall not place or release any hazardous materials or substances on the Staging Area in violation of any federal, state or local environmental law. In the event that any spill or placement of any hazardous material or substance occurs on the Staging Area for any reason other than the other Owner's gross negligence, the Staging Area User shall be responsible for the entire clean-up or other remediation of the Staging Area and any other portion of the other Owner's Parcel on which such spill or release occurs, and shall indemnify, defend, protect and hold the other Owner, the City and the Agency harmless from any claim, loss, damage, cause of action or liability of any kind arising from such spill or placement. 9. Failure to Maintain. 5 Initial: Trade Contractor Contractor If any Owner ( "Defaulting Party ") permits any adverse condition on any portion of the Parcel owned by the Defaulting Party or fails to maintain all or any portion of the Parcel it owns and such condition or failure has or will have a material and adverse impact on the other Owner's ( "Noticing Party ") ability to finance, develop, maintain, lease, operate, use and /or market all or any portion of the Parcel owned by the Noticing Party, the Noticing Party may provide written notice of such condition or failure to maintain, which notice shall include a reasonably detailed description of the condition or failure to maintain ( "Deficiency Notice "). If the Defaulting Party fails to remedy the deficiency within thirty (30) days after receipt of the Deficiency Notice (or with respect to deficiencies that cannot reasonably be remedied within such thirty (30) day period, if the Defaulting Party fails to commence to remedy such deficiency within the thirty (30) day period or fails to diligently pursue such remedy to completion no later than forty -five (45) days following receipt of the Deficiency Notice), the Noticing Party may, without waiving any other legal or equitable remedies it may have, enter the portion of the Parcel owned by the Defaulting Party and remedy such deficiency. Upon remedying of such deficiency, the Noticing Party shall be entitled to provide written demand to the Defaulting Party that it reimburse the Noticing Party for one hundred ten percent (110 %) of the actual and reasonable costs and expenses it incurred in connection with remedying the deficiency. Any such demand shall include invoices or other reasonable written evidence of such costs and expenses incurred by the Noticing Party. The Defaulting Party shall reimburse such amounts to the Noticing Party within seven (7) days of receipt of such demand. Any amounts not reimbursed within such seven (7) day period shall accrue interest at the maximum rate allowed by law from the date due until paid. Notwithstanding the provisions of Section 11 the Noticing Party shall not be liable to the Defaulting Party for any loss, damage or liability resulting from or arising in connection with activities of the Noticing Party (or its contractors, representatives and /or agents) on any portion of the Parcel owned by the Defaulting Party, except to the extent such loss, damage or liability results from the gross negligence or willful misconduct of the Noticing Party (or its contractors, representatives and /or agents). 10. Indemnification. To the maximum extent permitted by law, including, without limitation, Section 2782 of the California Civil Code, if applicable, Condo Parcel Owner and Apartment Parcel Owner shall indemnify, defend, protect and hold each other and their successors and assigns, and their respective directors, officers, employees, partners, members, managers, lenders, contractors, agents and consultants, and any of them, the City and the Agency (collectively, "Indemnified Parties "), harmless for, from and against any and all liability, loss, expense (including, without limitation, reasonable attorneys' fees), damage, claims, penalties, fines, suits, actions or causes of action (each, a "Claim ") arising out of or resulting from or in connection with the indemnifying Owner's construction of its improvements on its respective Parcel (but, specifically, excluding Joint Work); provided, however, that such indemnity shall not extend to or apply to any claim or liability to the extent that it results from the gross negligence or willful misconduct of the Owner to be indemnified its Indemnified Parties, the City or the Agency. The liability insurance to be obtained and carried by each Owner pursuant to Section 11 below shall expressly insure the indemnification agreement contained herein; provided, however, the amount of such insurance shall not constitute a limitation on an Owner's liability under this Section. If any legal proceedings shall be instituted or any Claim shall be asserted by any third party with respect to which indemnification may be sought by any Indemnified Party under this Section, the 6 Initial: Trade Contractor Contractor Owner to be indemnified, its Indemnified Parties, the City or the Agency shall endeavor to promptly notify the responsible Owner of such legal proceedings or Claim. Such notice shall specify the nature of and specific basis for such legal proceedings or Claim; provided, however, that the failure of the Owner to be indemnified, any of its Indemnified Parties, the City or the Agency to give prompt notice of such legal proceedings or Claim shall not affect such party's rights under this Section. 11. Insurance. Each Owner shall maintain insurance coverage as set forth in this Section. 11.1 Builders Risk Insurance. Prior to commencement of construction of any improvements on any Parcel, the Owner of such Parcel shall, at its sole cost and expense, procure and throughout the course of construction continuously maintain, or cause to be procured and throughout the course of construction continuously maintained, builder's risk insurance covering risks of direct physical loss of or damage to buildings and to materials, supplies and equipment of the types normally consumed during construction or that are intended for specific installation in such Owner's Parcel, but only while such material, supplies and equipment are located at the construction site. Coverage shall be provided on an "all- risk" policy form and shall include, without limitation, coverage for physical loss or damage due to fire, theft, vandalism, malicious mischief, collapse and windstorm, and shall provide for testing and startup; temporary buildings and debris removal, including, without limitation, demolition occasioned by enforcement of any applicable legal requirements, and reasonable compensation for the Owner's, architect's and contractor's services and expenses required as result of such insured loss. Coverage shall be provided on a completed value form with limits and sublimity as are customary for construction projects in the geographical area. The builder's risk policy shall provide a waiver of subrogation in favor of the other Owner, and, to the extent commercially reasonable, its officers, directors, employees, permittees, contractors, subcontractors and consultants. 11.2 Commercial General Liability Insurance. Prior to the commencement of any improvements on either Parcel, the Condo Parcel Owner shall procure for both Parcels, and throughout the term of this Agreement, shall continuously maintain a single policy of commercial general liability insurance naming both the Condo Parcel Owner and the Apartment Parcel Owner as insured parties, to protect against liability imposed by law for damages because of bodily injury (including death therefrom) or property damage arising out of or in connection with each Owner's ownership of or operations (including without limitation construction, maintenance or repairs) upon each Owner's Parcel. Such policy of commercial general liability insurance shall be provided on occurrence type forms equivalent to the current ISO CG 0001 form with per occurrence and annual aggregate limits of not less than $10,000,000 and deductible or self - insured retention of not more than $100,000 per occurrence (such policy limit, deductible and retention amounts being escalated, if economically feasible, as reasonably determined by the Owners, as provided in their respective Ground Leases). Such policy shall (i) be primary and non - contributing with respect to other insurance, if any, maintained by the insureds thereunder; (ii) provide for the duty to defend (with defense costs outside policy limits if available at a commercially reasonable cost); (iii) provide a separate limit of $10,000,000 for completed operations coverage for at least the duration of all statutory limits on actions for 7 Inifial: Trade Contractor Contractor property damage (including without limitation Section 337.15 of the California Code of Civil Procedure); (iv) provide coverage for contractually assumed liability; (v) have a modified cancellation provision prohibiting cancellation by the insurer after the policy has been in effect for thirty (30) days except for nonpayment of premium, fraud or material increase in risk; (vi) not exclude coverage for residential construction; and (vii) if available at commercially reasonable cost, include coverage for soil subsidence or other earth movement. All such policies of insurance shall name as additional insureds the Agency and the City. The coverage required hereunder may be provided under a combination of primary, excess, master or portfolio policies, provided that all such policies satisfy the requirements of this subparagraph. Apartment Parcel Owner shall be obligated to reimburse Condo Parcel Owner on an [annual] basis, within seven (7) days of request for reimbursement, for [ — %] of the cost of such general liability policy. Any reimbursement not paid when due hereunder shall bear interest at the maximum interest rate allowed by law from the date due until paid in full. 11.3 Workers Compensation and Employer's Liability Insurance. Each Owner shall, at its sole cost and expense, procure and throughout the term of this Agreement continuously maintain workers compensation and employer's liability coverage with Coverage A limits as required by statute and Coverage B limits of $1,000,000 each Accident for Bodily hrjury by Accident, $1,000,000 for Bodily Injury by Disease, and $1,000,000 each Employee for Bodily Injury by Disease. Each such workers compensation policy shall provide a waiver of subrogation in favor of the other Owner and, to the extent commercially reasonable, such other Owner's officers, directors, employees, permittees, contractors, subcontractors, and consultants. 11.4 OCIP. Notwithstanding the requirements of Sections 11.2 and 11.3 above, the Condo Parcel Owner shall procure and throughout the course of construction maintain an Owner Controlled Insurance Program ( "OCIP ') for workers' compensation and employer's liability insurance, commercial general liability insurance and excess liability insurance naming the Condo Parcel Owner and the Apartment Parcel Owner, as well as other designated construction participants, including contractors, subcontractors and other eligible service providers as insured parties. Apartment Parcel Owner shall be obligated to reimburse Condo Parcel Owner on an [annual] basis, within seven (7) days of request for reimbursement, for I %] of the cost of the OCIP. Any reimbursement not paid when due hereunder shall bear interest at the maximum interest rate allowed by law from the date due until paid in full. Each Owner shall cause all construction contracts with its general contractor to include the language contained in Exhibit "F" hereto. Pursuant to the terms of Exhibit F, in the event of a claim under the OCIP General Liability Policy (as defined in Exhibit "F "), the general contractor and/or subcontractors of the affected Owner is responsible for paying the General Liability Obligation (as defined in Exhibit "F ") to such Owner. The Owner entitled to receive such General Liability Obligation shall hereinafter be referred to as the "Responsible Oivnel ". In the event of a claim giving rise to a General Liability Obligation, the Responsible Owner shall be responsible for paying the applicable self - insured retention ( "SIR ") relating to such claim. If the Responsible Owner fails to pay the SIR as required hereunder, the other Owner, after providing five (5) business days' notice to the Responsible Owner, shall have the right to pay the SIR on behalf of the Responsible Owner. Upon the other Owner's written demand, the Responsible Owner shall immediately reimburse the Owner paying the SIR for the amount thereof, together with interest at the maximum interest rate allowed by law from the date due until paid in full. 8 Initial: Trade Contractor Contractor 11.5 General Insurance Requirements. (a) All insurance policies required under this Section shall be written by companies authorized to do business in California which are governed by the rate - setting regulatory agency having jurisdiction in Los Angeles County and which have a "General Policyholders Rating" of at least A -VIII as set forth in the most current issue of the Best's Insurance Guide (or have an equivalent rating from another industry- accepted rating agency). (b) Upon the request of an Owner, the other Owner shall deliver to the requesting Owner a certificate of insurance, signed by a broker or agent having authority to bind coverage, reflecting the maintenance of the required coverages, the issuing insurers, policy types, policy numbers, policy periods, and amounts of coverage, annotated, if commercially reasonable, to reflect that the agent or broker will provide thirty (30) days' (or 10 days' in the event of a failure to pay premiums) written notice prior to cancellation or modification of the policy. (c) Upon the request of an Owner, the other Owner shall deliver to the requesting Owner a complete copy of each policy of insurance (including, without limitation, all forms and endorsements constituting the complete policy) required hereunder. (d) Not later than ten (10) days prior to the expiration or renewal of each policy required hereunder, each Owner shall provide to the other Owner (or its designee) a binder or certificate of renewal evidencing such insurance. (e) If an Owner fails to provide evidence of the insurance required hereunder, the other Owner, after providing five (5) business days' notice to the Owner failing to provide such evidence of insurance, shall have the right to procure the required insurance. Upon the other Owner's written demand, the Owner failing to provide the required insurance shall immediately reimburse the Owner procuring such insurance for the cost thereof, together with interest at the maximum interest rate allowed by law from the date due until paid in full. 12. Binding Effect. Subject to Section 13.2 below, the covenants, conditions, agreements and easements contained in this Agreement constitute covenants running with the land which shall run with the Parcels, shall be binding upon and inure to the benefit of the Parcels and all portions thereof and any interest therein, and which shall be binding upon and shall inure to the benefit of the Owners and their respective successors and assigns. 13. Miscellaneous Provisions. 13.1 Amendment. This Agreement may only be amended, modified or, subject to Section 13.2 below, terminated by a written amendment executed by the Owners and recorded in Official Records of the County. The City's approval of this Agreement or any amendment thereto shall not be deemed, interpreted, or construed by the Condo Parcel Owner, the Condo Parcel Owner Parties, the Apartment Parcel Owner, and/or the Apartment Parcel Owner Parties, as a modification, waiver, and /or amendment to any other document, including, but not limited to, the Disposition and Development Agreement and /or the Development 9 Initial: Trade Contractor Contractor Agreement, the Condo Parcel Ground Lease, Apartment Parcel Ground Lease (as such terms are defined in the REA), City Loan Documents, or the Agency Regulatory Agreement (as such terms are defined in the Disposition and Development Agreement). 13.2 Enforcement. This Agreement is only intended to benefit, bind and be enforced by (a) the original Condo Parcel Owner and any successor in interest to the Condo Parcel that assumes the Condo Parcel Owner's activities as the developer of the Condo Parcel and the seller of condominium units thereon, and (b) the Apartment Parcel Owner and its successors and assigns. The Agreement shall not be binding on, benefit or be enforceable by any individual condominium unit owner or the Association. 13.3 Attorneys' Fees. If an action is commenced to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees and expenses incurred in the action as the referee may award, including, but not limited to, expert witness fees, photocopying and telephone charges, deposition costs, travel expenses and investigation expenses. 13.4 Interpretation. The provisions hereof shall be interpreted to give effect to their fair meaning and shall be construed as though prepared by both parties. The entire agreement of the parties is set forth herein, and all prior negotiations, documents and discussions with respect to the subject matter hereof are superseded. The invalidity of any provision shall not affect the validity of any other provision. Section headings are for convenience only and may not be used in interpretations. All interpretations are to be made in accordance with California law. 13.5 Termination Upon Receipt of Certificate of Occupancy. This Agreement shall terminate upon the later to occur of the Apartment Parcel Owner's receipt of a certificate of occupancy for the Apartment Parcel, or the Condo Parcel Owner's receipt of a certificate of occupancy for the Condo Project (the "Termination Date "); provided, however, the Owners may agree, in their reasonable discretion, to extend the Termination Date but in no event shall the Termination Date extend beyond the termination of the Condo Parcel Ground Lease. Notwithstanding the foregoing, the following provisions of this Agreement shall survive termination under this Section 13.5 and remain binding upon the Owners: any accrued and outstanding obligations remaining on the Termination Date, and the indemnification provisions contained in Sections 1.1, 1_2, 8 and 10 hereof. 13.6 Estoppel Certificates. Each Owner, within twenty (20) days following its receipt of a written request from the other Owner or any Permitted Mortgagee (as such term is defined in Section 13.7 below), shall from time to time provide the requesting Owner or Permitted Mortgagee, a certificate binding upon such Owner stating: (a) to the best of such Owner's knowledge, whether any party to this Agreement is in default or violation of this Agreement and if so identifying such default or violation, (b) that this Agreement is in full force and effect and identifying any amendments to the Agreement as of the date of such certificate, and (c) such other matters as may be reasonably requested by the requesting Owner or any Permitted Mortgagee. 13.7 Permitted Mortgagee Protections. 10 Initial: Trade Contractor Contractor 13.7.1 Definitions. The term "Permitter) Mortgage" as used herein shall mean any indenture of mortgage or deed of trust, bonds, grant of taxable or tax exempt funds from a governmental agency approved by an Owner and, to the extent applicable, the documents governing a sale leaseback transaction approved by an Owner. The term "Permitter) Mortgagee" as used herein shall mean any mortgagee, beneficiary under any deed of trust, trustee of any bonds, governmental agency which is a grantor of funds approved by an Owner, and, with respect to any Parcel which is the subject of a sale leaseback transaction, the person or entity acquiring the ground leasehold estate in and to such Parcel. 13.7.2 Right to Encumber. Each Owner shall have the right to encumber its interest in its respective Parcel by any Permitted Mortgage, provided, such Permitted Mortgage is subject to and subordinate to this Agreement. 13.7.3 Breach Won't Defeat Lien. The breach of any of the provisions of this Agreement shall not defeat or render invalid the lien of any Permitted Mortgage of a Parcel or any portion thereof; provided, that, all provisions of this Agreement shall be binding and effective against any third party who acquires a Parcel or any portion thereof by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. 13.7.4 Prior Claims and Obligations. No Permitted Mortgagee shall have any personal liability beyond its interest in a Parcel or a portion thereof acquired by it through enforcement of its Permitted Mortgage for the performance or payment of any covenant, liability, warranty or obligation hereunder and each Owner agrees that it shall look solely to the interests of such Permitted Mortgagee in such Parcel for payment or discharge of any such covenant, liability, warranty or obligation. 13.7.5 Notice to Permitted Mortgagees. The Permitted Mortgagee under any Permitted Mortgage affecting a Parcel shall be entitled to receive notice of any default by any Owner hereunder; provided, that, such Permitted Mortgagee shall have delivered a written notice to each Owner specifying the Permitted Mortgagee's name and address and requesting such notices. Failure of an Owner to deliver a copy of such notice of default to the Permitted Mortgagee shall in no way affect the validity of the notice of default as it respects the defaulting Owner, but shall make the same invalid as it respects the interest of the Permitted Mortgagee and its lien upon the affected Parcel. Any such notice to a Permitted Mortgagee shall be given in the same manner as provided in Section 13.8 hereto. The giving of any notice of default or the failure to deliver a copy to any Permitted Mortgagee shall in no event create any liability on the part of the Owner so declaring a default. 13.7.6 Right to Cure. In the event that any notice shall be given of the default of an Owner and of such defaulting Owner's failure to cure or to commence to cure such default as provided in this Agreement, then and in that event any Permitted Mortgagee under any Permitted Mortgage affecting the Parcel of the defaulting Owner shall be entitled to receive an additional notice given in the manner provided in Section 13.7.5, that the defaulting Owner has failed to cure such default, and such Permitted Mortgagee shall have sixty (60) days after the receipt of said additional notice to cure any such default, or, if such default cannot be cured within sixty (60) days, to diligently commence curing within such time and diligently cure within a reasonable time thereafter. Permitted Mortgagees may jointly or singly pay any sum or 11 Initial: Trade Contractor Contractor take any other action reasonably necessary to cure any default of their mortgagors hereunder with the same effect as a cure by the Owner itself.. If any such default or event cannot be cured or remedied by the Permitted Mortgagee without the Permitted Mortgagee obtaining possession of the Parcel by appropriate proceedings and /or title to said Owner's Parcel by judicial or non- judicial foreclosure proceedings or by deed in lieu thereof, then any such default shall be remedied or deemed remedied if the Permitted Mortgagee shall have complied with the following provisions: (i) within thirty (30) days after receiving said notice, the Permitted Mortgagee (or its nominee) shall have acquired Owner's estate or shall have commenced judicial or non judicial foreclosure proceedings or appropriate proceedings to obtain possession of the Parcel; (ii) the Permitted Mortgagee shall diligently prosecute any such proceedings to completion; and (iii) after gaining possession of the Parcel, the Permitted Mortgagee (or its nominee) shall perform all other obligations of the Owner as and when the same are due in accordance with the terms of this Agreement. 13.7.7 Amendment. This Agreement shall not, without the prior written consent of a Permitted Mortgagee, be amended so as to (i) materially modify the location of any easements granted hereunder; (ii) terminate this Agreement prior to the Termination Date; (iv) change the provisions applicable to insurance so as to reduce the required coverages; or (v) change any provision of this Section 13.7 or any other provision of this Agreement which, by its terms is specifically for the benefit of Permitted Mortgagees or specifically confers rights on Permitted Mortgagees. No amendment to this Agreement made without the consent of any Permitted Mortgagee shall be binding upon it or its successors in interest should it become an Owner. 13.7.8 Title by Foreclosure. Except as otherwise set forth herein, all of the provisions contained in this Agreement shall be binding on and for the benefit of any person who acquires title to a Parcel by foreclosure, trustee's sale, deed in lieu of foreclosure or other involuntary transfer under a Permitted Mortgage. 13.7.9 Modification of Article; Conflicts. Each Owner hereby agrees to cooperate in including in this Agreement by suitable amendment from time to time any provision which may reasonably be requested by any proposed Permitted Mortgagee for the purpose of implementing the Permitted Mortgagee protection provisions contained in this Agreement and allowing such Permitted Mortgagee reasonable means to protect or preserve the lien and security interest of the Permitted Mortgage hereunder as well as such other documents containing terms and provisions customarily required by mortgagees (taking into account the customary requirements of their participants, syndication partners or ratings agencies) in connection with any such financing. The Owners each agree to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effectuate any such amendment; provided, however, that any such amendment shall not in any way materially adversely affect any rights of any Owner under this Agreement. If there is any conflict between this Section 13.7 and any other provision contained in this Agreement, this Section 13.7 shall control. 13.7.10 Delegation to Mortgagee. Any Owner may delegate irrevocably to any of its Permitted Mortgagees the non - exclusive authority to exercise any or all of such Owner's rights hereunder, but no such delegation shall be binding upon any other Owner 12 Initial: 'Grade Contractor Contractor unless and until either the delegating Owner or its Permitted Mortgagee shall give to such other Owner a true copy of a written instrument effecting such delegation. Such delegation of authority may be effected by the terms of the Permitted Mortgage itself, in which case service upon any other Owner of an executed counterpart or conformed copy of said Permitted Mortgage in accordance with this Section 13.7, together with written notice specifying the provisions therein which delegates such authority to said Permitted Mortgagee, shall be sufficient to give such other Owner notice of such delegation. 13.7.11 No Obligation to Cure. Nothing herein contained shall require any Permitted Mortgagee to cure any default of an Owner hereunder prior to its acquisition of title to a Parcel pursuant to a foreclosure of its Permitted Mortgage, trustee sale thereunder or deed in lieu foreclosure thereof. Upon acquisition of title to a Parcel, but only during such time as the Permitted Mortgagee holds title to the Parcel, such Permitted Mortgagee or the purchaser or grantee, as applicable shall thereafter be liable and responsible for all continuing defaults existing on its Parcel from and after the date of such acquisition, including defaults and other conditions arising prior to the date of such acquisition. 13.7.12 Separate Agreement. The Owners shall, upon request, execute, acknowledge and deliver to each Permitted Mortgagee requesting the same, an agreement prepared at the sole cost and expense of the Owner whose Permitted Mortgagee requested the same, in form reasonably satisfactory to such Permitted Mortgagee, among the Parties and the Permitted Mortgagees, agreeing to all of the provisions hereof. 13.8 Notices. All notices or other communications between the parties required or permitted by this Agreement shall be in writing and personally delivered or sent by certified mail, return receipt requested and prepaid, or sent by reputable overnight courier (such as Federal Express, UPS or DHL) to the addresses set forth below. A notice shall be effective on the date of personal delivery, if personally delivered before 5:00 p.m., otherwise on the day following personal delivery or two (2) business days following the date the notice is postmarked, if mailed, or on the first business day following delivery to the applicable overnight courier, if sent by overnight courier. Either party may change the address to which notices are to be given to it by giving notice of such change of address in the manner set forth above for giving notice. Condo Parcel Owner: Santa Monica Urban Housing A, LLC c/o The Related Companies of California, LLC 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Attn: William A. Witte Phone: (949) 660 -7272 Facsimile: (949) 660 -7273 with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 70th Floor Los Angeles, California 90071 Attn: Lance Bocarsly, Esq. Phone: (213) 239 -8088 Facsimile: (213) 239 -0410 13 Initial: Trade Contractor Contractor Apartment Parcel Owner: Santa Monica Housing Partners, L.P. c/o The Related Companies of California, LLC 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Attn: Frank Cardone Phone: (949) 660 -7272 Facsimile: (949) 660 -7273 with a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. 5th Street, 70th Floor Los Angeles, California 90071 Attn: Lance Bocarsly, Esq. Phone: (213) 239 -8088 Facsimile: (213) 239 -0410 13.9 Time. Time is of the essence of all provisions hereof where time is a factor. Unless specifically stated to the contrary, all references to days herein shall be deemed to refer to calendar days and all references to times of day shall mean California time. In the event that the final date ( "Performance Date ") for payment of any amount or performance of any act hereunder falls on a Saturday, Sunday or holiday on which banks in California are not required to be open for business, such payment may be made or act performed on the next succeeding business day. All time periods for performance shall be deemed to have expired at 5:00 p.m. on the applicable Performance Date, 13.10 Waiver. No right or remedy will be waived unless the waiver is in writing and signed by the party claimed to have made the waiver. One waiver will not be interpreted as a continuing waiver. [SIGNATURES ON FOLLOWING PAGE] 14 Initial: Trade Contractor Contractor [SIGNATURE PAGE TO JOINT DEVELOPMENTAGREEMENTAND GRANT OFEASEMENTS] SANTA MONICA URBAN HOUSING A, LLC, a California limited liability company to William A. Witte Its: President "Condo Parcel Owner" SANTA MONICA HOUSING PARTNERS, L.P., a California limited partnership By: Related /Santa Monica Development Co., LLC, a California limited liability company its general partner LE William A. Witte Its: President "Apartment Parcel Owner" [NO TAR YA CKNO WLED GMENTS ON FOLLOWING PAGE] S -1 Initial: Trade Contractor Contractor STATE OF CALIFORNIA ) ss. COUNTY OF ) On 2011 before me, , a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his/her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (SEAL) STATE OF CALIFORNIA ) ss. COUNTY OF ) On 2011 before me, , a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capaeity(ies), and that by his/her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. S -2 (SEAL) Initial: Trade Contractor Contractor SUBORDINATION (For Each Deed of Trust Encumbering Condo Parcel including City Deeds) The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust recorded on , 201, as Instrument No. in the Official Records of Los Angeles County, California (the "Deed of Trust" ), which Deed of Trust is made by , a , as Trustor, for the benefit of a as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Joint Development Agreement and Grant of Easements ( "Agreement") and to all other easements, rights and other entitlements created or conveyed under the Agreement. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Condo Parcel (as defined in the Agreement) by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Agreement, which shall remain in full force and effect. Dated: , 201 a .0 By: Its: S -3 Initial: Trade Contractor Contractor STATE OF CALIFORNIA ) ss. COUNTY OF ) On 2011 before me, , a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his/her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) STATE OF CALIFORNIA ) ss. COUNTY OF ) On 2011 before me, , a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and aelmowledged to me that he /she /they executed the same in his/her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the persons) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (SEAL) S -4 Initial: Trade Contractor Contractor SUBORDINATION (For Deed of Trust Encumbering Apartment Parcel including City Deeds) The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust recorded on , 201, as Instrument No. , in the Official Records of Los Angeles County, California (the "Deed of Trust"), which Deed of Trust is made by a , as Trustor, for the benefit of a , as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Joint Development Agreement and Grant of Easements (" Agreement") and to all other easements, rights and other entitlements created or conveyed under the Agreement. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Apartment Parcel (as defined in the Agreement) by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Agreement, which shall remain in full force and effect. Dated: , 201_ a C Its: S -5 Initial: Trade Contractor Contractor STATE OF CALIFORNIA ) ) ss. COUNTY OF ) On 2011 before me, a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. . I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (SEAL) STATE OF CALIFORNIA ) ss. COUNTY OF ) On 2011 before me, , a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is hue and correct. WITNESS my hand and official seal. S -6 (SEAL) Initial: Trade Contractor Contractor EXHIBIT "A" LEGAL DESCRIPTION OF CONDO PARCEL LEASEHOLD INTEREST A -1 Initial: Trade Contractor Contractor EXHIBIT `B" LEGAL DESCRIPTION OF APARTMENT PARCEL LEASEHOLD INTEREST B -1 Initial: Trade Contractor Contractor EXHIBIT "C" DEPICTION OF JOINT AREAS C -1 Initial: Trade Contractor Contractor EXHIBIT "D" ALLOCATION OF JOINT WORK CONTRACT COSTS D -1 Initial: Trade Contractor Contractor EXHIBIT "E" DESCRIPTION AND ALLOCATION OF JOINT WORK DEVELOPMENT FEES E -1 Initial: Trade Contractor Contractor EXHIBIT "F" INSURANCE LANGUAGE TO BE INSERTED IN CONSTRUCTION CONTRACTS 1.1 Owner Controlled Insurance Program 1.1.1 Overview: Owner has arranged with Ann Risk Services, Inc., of New York (the "OCIP Administrator ") to be insured under its Owner Controlled Insurance Program ( "OCIP ") and may implement the OCIP for this Project. The OCIP is more fully described in the Insurance Manual for the Owner Controlled Insurance Program, (the "Insurance Manual ") that is incorporated into this Exhibit and the Contract Documents by this reference. Parties performing labor or services at the Project site are eligible to enroll in the OCIP unless they are Excluded Parties (as defined below). The OCIP will provide to Enrolled Parties (as defined below) workers' compensation and employer's liability insurance, commercial general liability insurance, and excess liability insurance as summarily described below, in connection with the performance of the Work ( "OCIP Coverages "). 1.1.2 Enrolled Parties and Their Insurance Obligations: The OCIP Coverages shall cover Enrolled Parties. Enrolled Parties are Owner, the General Contractor, eligible Subcontractors of all tiers that enroll in the OCIP, and such other persons or entities as Owner in its sole discretion may designate (each such party who is insured under the OCIP is collectively referred to as an `Enrolled Party "). Enrolled Parties shall obtain and maintain, and shall require each of their Subcontractors to obtain and maintain, the insurance coverage specified in Article 1.1.8 below and the Insurance Manual. 1.1.3 Excluded Parties and Their Insurance Obligations: The OCIP Coverage does not cover the following "Excluded Parties ": (a) Hazardous materials remediation, removal and/or transport companies and their consultants; (b) Architects, surveyors, engineers, and soil testing engineers, and their consultants; (c) Vendors, suppliers, fabricators, material dealers, truckers, haulers, drivers and others who merely transport, pickup, deliver, or carry materials, personnel, parts or equipment or any other items or persons to or from the Project site; (d) General Contractor and Subcontractors of all tiers who do not perform any actual labor on the Project site (e) Demolition Contractors and all demolition operations. (f) Blasting and all blasting operations — unless specifically included by Owner F -1 Initial: Trade Contractor Contractor (g) EFIS Contractors and all EFIS operations; and (h), Any parties or entities not specifically identified in this Exhibit or excluded by Owner in its sole discretion, even if otherwise eligible. Excluded Parties and parties no longer enrolled or covered by the OCIP shall obtain and maintain, and shall require each of their Subcontractors of all tiers to obtain and maintain, the insurance coverage specified in Article 1.1.8 below and in the Insurance Manual. 1.1.4 OCIP Insurance Policies Establish OCIP Coverages: The OCIP Coverages and exclusions summarized in this Exhibit and the other Contract Documents are set forth in full in their respective insurance policy forms. The summary descriptions of the OCIP Coverages in this Exhibit or the Insurance Manual are not intended to be complete or to alter or amend any provision of the actual OCIP Coverages. In the event any provision of this Exhibit, the Insurance Manual, the Contract Documents, or the summary below conflicts with the OCIP insurance policies, the provisions of the actual OCIP insurance policies shall govern. 1.1.5 Summary of OCIP Coverages: The OCIP Coverages shall apply only to those operations of each Enrolled Party performed at the Project site in connection with the Work and only to Enrolled Parties that are eligible for the OCIP. OCIP coverages shall not apply.to ineligible parties, even if erroneously enrolled in the OCIP. An Enrolled Party's operations away from the Project site, including product manufacturing, assembling, or otherwise, shall only be covered if such "off- site" operations are identified and are dedicated solely to the Project. OCIP Coverages shall not cover "off- site" operations until receipt by General Contractor of written acknowledgment of such coverage from the OCIP Administrator. The OCIP shall provide only the following insurance to eligible and Enrolled Parties: Summary Only (1) Workers' Compensation Insurance Statutory Limit This insurance is primary for all occurrences at the Project site (2) Employer's Liability Insurance Bodily Injury by Accident, each accident $2,000,000 Bodily Injury by Disease, each employee $2,000,000 Bodily Injury by Disease, policy limit $2,000,000 This insurance is primary for all occurrences at the Project site. (3) General Liability Insurance Equivalent to ISO Occurrence Form CG 20 10 1185, or its equivalent Each Occurrence Limit $2,000,000 General Aggregate Limit for all Enrolled Parties $4,000,000 10 yr Products & Completed Operations Extension Personal /Advertising Injury $2,000,000 Products & Completed Operations Aggregate for all Enrolled Parties $4,000,000 F -2 Initial: Trade Contractor Contractor This insurance is primary for all occurrences resulting from the development of: Santa Monica Village. The OCIP General Liability policy shall not provide coverage for any claim that could be covered under a property policy or builder's risk policy. (4) Excess Liability Insurance (over Employer's Liability & General Liability) Combined Single Limit $100,000,000 General Annual Aggregate for all Enrolled Parties $100,000,000 10 yr Products & Completed Operations Extension Products & Completed Operations Aggregate for all Enrolled Parties $100,000,000 1.1.6 Owner's Insurance Obligations: Owner shall pay the costs of premiums for the OCIP Coverages. Owner will receive or pay, as the case may be, all adjustments to such costs, whether by way of dividends, retroactive adjustments, retrun premiums, other moneys due, audits or otherwise. General Contractor, each Subcontractor, and each of their Subcontractors hereby assign to Owner the right to receive all such adjustments. Owner assumes no obligation to provide insurance other than that specified in this Exhibit and the OCIP insurance policies. Owner's furnishing of OCIP Coverages shall in no way relieve or limit, or be construed to relieve or limit, General Contractor, any of their Subcontractors of any tier of any responsibility, liability, or obligation imposed by the Contract Documents, the OCIP insurance policies, or by law, including without limitation any indemnification obligations that General Contractor, or any of their Subcontractors of any tier have to Owner thereunder. Owner reserves the right at its option, without obligation to do so, to furnish other insurance coverage of various types and limits provided that such coverage is not less than that specified in the Contract Documents. 1.1.7 General Contractor's and Subcontractor's OCIP Obligations: General Contractor and Subcontractor shall: (1) Incorporate the terms of this Exhibit into the agreement for subcontractors of every tier. (2) Enroll in the OCIP within five (5) days of execution of the Agreement and maintain enrollment in the OCIP, and assure that their eligible Subcontractors enroll in the OCIP and maintain enrollment in the OCIP within five (5) days of subcontracting and prior to the commencement of Work at the Project site. (3) Comply with all of the administrative, safety, insurance, claims reporting (liability and builders risk), and other requirements outlined in this Exhibit, the hnsurance Manual, the OCIP insurance policies, or elsewhere in the Contract Documents. (4) Provide each of their Subcontractors of all tiers with a copy of the Insurance Manual and assure Subcontractor compliance with the provisions of the OCIP insurance policies, the Insurance Manual, this Exhibit, and the Contract Documents. The failure of the General Contractor or Subcontractor to provide F -3 Initial: Trade Contractor Contractor each of their eligible Subcontractors with a copy of same, shall not relieve General Contractor and subcontractor or any of their Subcontractors from any of the obligations contained therein. (5) Acknowledge, and require all of their Subcontractors of every tier to acknowledge in writing, that Owner and the OCIP Administrator are not agents, partners or guarantors of the insurance companies providing coverage under the OCIP (each such insurer, an "OCIP Insurer ") and that Owner is not responsible for any claims or disputes between or among General Contractor their Subcontractors, and any OCIP Insurer(s) and that neither Owner nor OCIP Administrator guarantees the solvency or availability of limits of any OCIP Insurers. Any type of insurance coverage or limits of liability in addition to the OCIP Coverages that General Contractor or any Subcontractor of any tier requires for its or their own protection, or that is required by applicable laws or regulations, shall be General Contractor, or their Subcontractor's sole responsibility and expense and shall not be billed to Owner. (6) Cooperate fully with the OCIP Administrator and the OCIP Insurers, as applicable, in its or their administration of the OCIP. (7) Provide, within five (5) business days of Owner's or the OCIP Administrator's request, all documents or information as requested of General Contractor, or their Subcontractors of any tier. Such information may include but not be limited to, payroll records, certified copies of insurance coverages, declaration pages of coverages, certificates of insurance, underwriting data, prior loss history information, safety records or history, OSHA citations, or such other data or information as Owner, the OCIP Administrator, or OCIP Insurers may request in the administration of the OCIP, or as required by the Insurance Manual. (8) Pay to Owner, or Owner may withhold from General Contractor or Subcontractor, a sum of up to $10,000 of each occurrence, including court costs, attorneys fees and costs of defense for bodily injury or property damage to the extent losses payable under the OCIP General Liability Policy are attributable to General Contractor or Subcontractor's Work, acts or omissions, or the Work, acts or omissions of any of General Contractor or Subcontractors of any tier, or any other entity or party for whom General Contractor or Subcontractor may be responsible ( "General Liability Obligation "). The General Liability Obligation shall remain uninsured by General Contractor or Subcontractor and will not be covered by the OCIP Coverages. 1.1.8 Additional Insurance Required From Enrolled Parties and Excluded Parties: General Contractor and Subcontractor shall obtain and maintain, and shall require each of their Subcontractors of all tiers to obtain and maintain, the insurance coverage specified in this Article 1.1.8 in a form and from insurance companies reasonably acceptable to Owner. The insurance limits may be provided through a combination of primary and excess policies, including the umbrella form of policy. F -4 Initial.• Trade Contractor Contractor As to eligible and Enrolled Parties, the workers' compensation, employer's liability, and commercial general liability insurance required by this Article shall only be for off -site activities or operations not insured under the OCIP Coverages. Automobile Liability is required for both on and off site activities for Enrolled and Excluded Parties (1) Standard Commercial Automobile Liability Insurance covering all owned, non - owned and hired automobiles, bucks, and trailers with a combined single limit of not less than $1,000,000 for bodily injury, $1,000,000 for property damage, and a $1,000,000 policy limit. (2) Statutory Workers' Compensation Insurance and Employer's Liability insurance with statutory limits as required by law, including Maritime coverage, if appropriate, and Employer's Liability limits of not less than $1,000,000 each accident/$ 1,000,000 each employee /$1,000,000 policy limit. (3) Commercial General Liability Insurance in a form providing coverage not less than the standard ISO Commercial General Liability insurance policy CG 0001 ( "Occurrence Form "). The limits shall apply per project and per location. The limits shall be Enrolled Parties/Excluded Parties Each Occurrence $1,000,000/$2,000,000 General Aggregate $2,000,000/ $4,000,000 Products /Completed Operations Aggregate $2,000,000/ $4,000,000 Personal /Advertising Injury Aggregate $1,000,000/ $2,000,000 10 yr Products & Completed Operations Extension — for Excluded Parties (4) Excess Liability with coverage no less restrictive than required above with a minimum limit per occurrence as set forth below: General Contractor Demolition Contractor Remediation Contractor Excavation Contractor EFIS Contractor Prime Contractors Subcontractors of every tier Vendors Enrolled Parties /Excluded Parties $50,000,000 /$100,000,000 N/A $25,000,000 N/A $20,000,000 $10,000,000120,000,000 N/A $10,000,000 $ 5,000,00010,000,000 $ 5,000,0001$ 5,000,000 N/A $5,000,000 (5) Aviation and /or Watercraft Liability Insurance if required by Owner, in a form and from an insuring entity satisfactory to Owner with minimum limits of $50,000,000 any one occurrence. F -5 Initial: Trade Contractor Contractor (6) Contractor's Pollution Liability Insurance, if required by Owner, in a form and with limits of liability, and from an insuring entity satisfactory to Owner. If transporting hazardous waste /materials from the Site, appropriate MCS -90 Endorsement must be attached and supplied to Contractor on a primary basis with $5,000,000 limits of liability. (7) Professional liability insurance if required by Owner, in a form and from an insuring entity and with limits of liability satisfactory to Owner. (8) Each policy required under this Article, except the workers' compensation policy, shall name Owner and its parent, subsidiary and affiliated companies, the General Contractor, the OCIP Administrator, and their respective officers, agents, shareholders, and employees of each, and any additional entities as Owner may request, as additional insureds. Commercial General Liability insurance additional insured endorsement shall be written on Form CG 20 10 11 85 (Form B) or its equivalent. Furthermore, the additional insured endorsement shall state that the - coverage provided to the additional insured is primary and non- contributing with respect to any other insurance available to the additional insured. Each and every excess liability policy procured in accordance with this Article shall include the Endorsement attached hereto as Schedule A. The insurance required by this Article 1.1.8 shall be written with insurance carriers duly authorized and admitted to transact that class of insurance in each state(s) in which the General Contractor, or Subcontractor performs operations related to the Work. Such insurance shall be in a form and with an insurer with an A.M. Best rating of A, X, or better. All insurance shall conform to any additional Owner's requirements outlined in the Insurance Manual and be acceptable to Owner. General Contractor and Subcontractor shall provide certificates of insurance coverage to Owner as required by the Insurance Manual. In the event General Contractor, or Subcontractors maintains limits greater than set fourth herein, Owner and then currently listed additional insureds shall be included therein as an additional insureds to the fullest extent of all such insurance in accordance with all terms and provisions herein. (9) Each Certificate of Insurance shall contain a thirty (30) day Notice of Cancellation to the Certificate Holder for cancellation or material change in cover and shall remove the words as "if any ", "endeavor to" or 'But failure to mail such notice shall impose no obligation of liability of any kind upon the company, its agents or representatives ". The Certificate of Insurance shall list all insurance carried by the insured for the coverages specified above, all deductibles and /or retentions, all reductions in coverage from the standard policy forms, and shall state the full policy limits, even if the limits exceed the amounts required above. F -6 Initial: Trade Contractor Contractor (10) General Contractor or Subcontractor's failure to procure or maintain the insurance required or fail to comply with all obligations set forth by this Insurance Exhibit and to assure Subcontractors of all tiers maintain the required insurance, terms and conditions and to comply with all obligations during the entire term of the Agreement shall constitute a material breach of this Agreement under which the Owner may invoke all remedies available to Owner including but not limited to immediately suspend or terminate this Agreement or, at its discretion, procure or renew such insurance to protect the Owner's interests and pay any and all premiums in connection therewith, and withhold or recover all monies so paid together with interest thereon from the date paid by Owner until the date paid by General Contractor or Subcontractor's of every tier. Owner reseives the right to request a copy of all policies stated herein. Such copies must be certified by General Contractor's, and Subcontractor's of every tier, insurance broker as true and original copies. NOTE. General Contractor, and their Subcontractors cannot commence work until all of the insurance requirements have been met. 1.1.9 General Contractor and Subcontractor Representations and Warranties to Owner: General Contractor and Subcontractor represent and warrant to Owner or behalf of itself and their Subcontractors: (1) That all information it submits to Owner, or the OCIP Administrator shall be accurate and complete. (2) That they have, on behalf of itself and their Subcontractors, had the opportunity to read and analyze copies of the OCIP binders and specimen policies that are on file in Owner's office and that they understand the OCIP coverages. Any reference or summary in the Contract, this Exhibit, the Insurance Manual, or elsewhere in any other Contract Document as to amount, nature, type or extent of OCIP Coverages and /or potential applicability to any potential claim or loss is for reference only. General Contractor, and its Subcontractors of all tiers have not relied upon said reference but solely upon their own independent review and analysis of the OCIP Coverages in formulating any understanding and /or belief as to amount, nature, type or extent of any OCIP Coverages and/or its potential applicability to any potential claim or loss. (3) That the Costs of OCIP Coverages were not included in their Bid or proposal for the Work, or the Contract Price, and will not be included in any Change Order or any request for payment for the Work or extra work. The "Costs of OCIP Coverages" is defined as the amount of General Contractor's and Subcontractor's and their Subcontractors' reduction in insurance costs due to eligibility for OCIP Coverages as determined by the Owner using Aon Form -1, Aon Form -2, and Aon Folm -3 located in the Insurance Manual, and information available to Owner F -7 Initial: Trade Conn actor Contractor and /or the OCIP Administrator regarding the costs of similar coverages taking into account limits of liability, coverages, and rating of the insurer. (4) That Owner shall not pay or compensate General Contractor, or any Subcontractor, in any manner, for Costs of OCIP Coverages. 1.1.10 Audits: General Contractor and Subcontractor agree that Owner, the OCIP Administrator, and /or any OCIP Insurer may audit General Contractor or Subcontractor's or any of their Subcontractor's payroll records, books and records, insurance coverages, insurance cost information, or any other information that General Contractor or Subcontractor provides to Owner, the OCIP Administrator, or the OCIP Insurers to confirm their accuracy and to assure that Costs of OCIP Coverages are not included in any payment for the Work. 1.1.11 Owner's Election to Modify or Discontinue OCIP: Owner may, for any reason, modify the OCIP Coverages, discontinue the OCIP, or request that General Contractor, or any of their Subcontractors withdraw from the OCIP upon thirty (30) days written notice. Upon such notice General Contractor, Subcontractor and /or one or more of their Subcontractors, as specified by Owner in such notice, shall obtain and thereafter maintain at Owner's expense (not to exceed the applicable cost of Add Alternative Insurance bid by General Contractor or Subcontractor at time of award of Contract or the Costs of OCIP Coverages as identified by General Contractor or Subcontractor in Aon Form la and lb and Aon Form 2, whichever is less) all (or a potion thereof as specified by Owner) of the OCIP Coverages. The form, content, limits of liability, cost, and the insurer issuing such replacement insurance shall be subject to Owner's approval. 1.1.12 Withhold of Payments: Where permitted by law, Owner may withhold from any payment owing to General Contractor or Subcontractor the Costs of OCIP Coverages if included in a request for payment. In the event a Owner audit of General Contactor or Subcontractor's records and information as permitted in the Contract, this Exhibit, or other Contract Documents reveals a discrepancy in the insurance, payroll, safety, or any other information required by the Contract Documents to be provided by General Contractor or Subcontractor to Owner, or to the OCIP Administrator, or reveals the inclusion of Costs of OCIP Coverages in any payment for the Work, Owner shall have the right to full deduction from the Contract Price of all such Costs of OCIP Coverages and all audit costs. Audit costs shall include but not be limited to the fees of the OCIP Administrator, and the fees of attorneys and accountants conducting the audit and review. If the General Contractor, Subcontractor, or their Subcontractors of any tier fail to timely comply with the provisions of this Exhibit or the requirements of the Insurance Manual, Owner may withhold any payments due such party until such time as they have performed the requirements of this Exhibit. Such withholding by Owner shall not be deemed to be a default hereunder. 1.1.13 Waiver of Subrogation: Where permitted by law, General Contractor and Subcontractor hereby waive all rights of recovery under subrogation because of deductible clauses, inadequacy of limits of any insurance policy, limitations or exclusions of coverage, or any other reason against Owner, and its parent, subsidiary and affiliated companies, including without limitation, the OCIP Administrator, its or their officers, agents, shareholders or employees of each, if any, and any other contractor or subcontractor performing Work or rendering set-vices on behalf of Owner in connection with the planning, development and construction of the Project. Where permitted by law, General Contractor and Subcontractor shall also require that all General F -8 Initial: Trade Contractor Contractor Contractor or Subcontractor maintained insurance coverage, with the exception of workers' compensation, related to the Work include clauses providing that each insurer shall waive all of its rights of recovery by subrogation against General Contractor and Subcontractor together with the same parties referenced immediately above in this Article. General Contractor and Subcontractor shall require similar written express waivers and insurance clauses from each of their Subcontractors. A waiver of subrogation shall be effective as to any individual or entity even if such individual or entity (a) would otherwise have a duty of indemnification, contractual or otherwise, (b) did not pay the insurance premium directly or indirectly, and (c) whether or not such individual or entity has an insurable interest in the property damaged. 1.1.14 Duty of Care: Nothing contained in this Exhibit or the Insurance Manual shall relieve General Contractor, Subcontractor or any of their Subcontractors of their respective obligations to exercise due care in the performance of their duties in connection with the Work and to complete the Work in strict compliance with the Contract Documents. 1.1.15 Conflicts: In the event of a conflict between the provisions of this Exhibit and the provisions of the Agreement or other Contract Documents, the provisions of this Exhibit shall govern, then the provisions of the Agreement and its other related Contact Documents, then the provisions of the Insurance Manual. 1.1.16 Safety: General Contractor shall be solely responsible for safety on the Project. General Contractor shall establish a safety program that, at a minimum, complies with all local, state and federal safety standards, and any safety standards established by Owner for the Project, including the Project Safety Standards. 1.2 Builder's Risk Insurance: Owner shall provide Builder's Risk insurance insuring the interests of Owner, General Contractor, and Subcontractors, and other persons or interests as Owner may designate covering "all risk" perils, with limits, (earthquake coverage, and flood coverage, if procured) as determined appropriate by Owner in its sole discretion. The negligent party shall pay to Owner, or Owner may withhold from payments to the negligent party, a maximum of up to $25,000 for each loss payable under the Builder's Risk Policy attributable to the negligent party's, acts or omissions, or the Work, acts or omissions of any of the negligent party's subcontractors, or any other entity or party for whom the negligent party's may be responsible (`Builder's Risk Obligation "), however such Builders Risk Obligation shall not apply to an event caused by earthquake or flood, unless the damaged caused by flood resulted from the improper, inadequate or lack of such protection provided by General Contractor, Subcontractor or any party engaged to provide such necessary protection. The Builder's Risk Obligation shall remain uninsured by General Contractor or Subcontractor and will not be covered by the OCIP Coverages. The builder's risk/property insurance policy includes a waiver of subrogation in favor of the OCIP Coverages. Owner, General Contractor, and Subcontractor waive all rights against each other and against separate contractors, if any, and any of their subcontractors sub - subcontractors, agents and employees, for damages caused by fire or other perils to the extent covered by property or Builder's Risk insurance applicable to the Work, except such rights as they may have to the proceeds of such insurance held by the Owner as fiduciary. This waiver applies only to the extent that proceeds are, in fact, realized as a result of a claim against the policy. General Contractor and Subcontractor shall require similar waivers in favor of the Owner from any of their Subcontractors, Sub - subcontractors, suppliers, etc. F -9 Initial: Trade Contractor Contractor 1.3 Pollution Liability Insurance: Should conditions at the project so require, Owner may provide a Pollution Legal Liability and /or Contractor's Pollution Liability insurance, as applicable to the work to be performed, covering claims from third -party injury and property damage as a result of pollution conditions emanating on -site, under site or off site, arising out of its operations and completed operations. Policy Limits, Coverage, Terms and Conditions shall be determined by and at the sole discretion of Owner. At Owners direction Owner may require Contractor performing such work to provide Pollution Legal Liability and /or Contractor's Pollution Liability insurance in a form and with limits of liability, and from an insuring entity satisfactory to Owner. 1.4 ADD ALTERNATIVE - INSURANCE IN THE EVENT OWNER DOES NOT PROVIDE AN OCIP FOR THIS PROJECT: CONTRACTOR MUST ALSO BID THE COST OF CONTRACTOR PROVIDING THE INSURANCE COVERAGES PROVIDED BY OWNER UNDER THE OCIP. FOR THIS ADD ALTERNATE CONTRACTOR SHALL DISREGARD ARTICLE A— "OWNER CONTROLLED INSURANCE PROGRAM" AND THE OWNER CONTROLLED INSURANCE PROGRAM INSURANCE MANUAL. ARTICLE 1.4 BELOW - "INSURANCE" SETS FORTH THE INSURANCE COVERAGES THAT THE GENERAL CONTRACTOR AND SUCCESSFUL SUBCONTRACTOR AND THEIR SUBCONTRACTORS MUST PROVIDE IF, AND ONLY IF, THE OWNER DECIDES NOT TO INCLUDE THIS PROJECT IN ITS OCIP AT TIME OF AWARD. General Contractor and Subcontractor shall include with their bids a completed Aon Form -I and Aon Form -2 (see Insurance Manual for samples). 1.4.1 Insurance in Absence of OCIP General Contractor and Subcontractor shall obtain and maintain, and shall require each of their Subcontractors to obtain and maintain, the insurance coverage specified in this Article 1.4.1 in a form and from insurance companies reasonably acceptable to Owner. The insurance limits may be provided through a combination of primary and excess policies, including the umbrella form of policy. All insurance shall include on -site and off -site activities or operations (1) Standard Commercial Automobile Liability Insurance covering all owned, non - owned and hired automobiles, trucks, and trailers with a combined single limit of not less than $1,000,000 for bodily injury, $1,000,000 for property damage, and a $1,000,000 policy limit. F -10 Initial: Trade Contractor Contractor (2) Statutory Workers' Compensation Insurance and Employer's Liability insurance with statutory limits as required by law, including Maritime coverage, if appropriate, and Employer's Liability limits of not less than $1,000,000 each accident/$ 1,000,000 each employee /$1,000,000 policy limit. (3) Commercial General Liability Insurance in a form providing coverage not less than the standard ISO Commercial General Liability insurance policy CG 0001 ( "Occurrence Form "). The limits shall apply per project and per location. The limits shall be; Each Occurrence $1,000,000 General Aggregate $2,000,000 Products /Completed Operations Aggregate $2,000,000 Personal /Advertising Injury Aggregate $1,000,000 10 years or the statute of limitations whichever is greater Products & Completed Operations Extension (4) Excess Liability on a Per Project basis with coverage no less restrictive than required above with a minimum limit per occurrence as set forth below: General Contractor $100,000,000 Demolition Contractor $25,000,000 Remediation Contractor $20,000,000 Excavation Contractor $20,000,000 EMS Contractor $10,000,000 Prime Contractors $10,000,000 Subcontractors of every tier $ 5,000,000 Vendors $ 5,000,000 (5) Aviation and/or Watercraft Liability Insurance if required by Owner, in a form and from an insuring entity satisfactory to Owner with minimum limits of $50,000,000 any one occurrence. (6) Contractor's Pollution Liability Insurance, if required by Owner, in a form and with limits of liability, and from an insuring entity satisfactory to Owner. If transporting hazardous waste /materials from the Site, appropriate MCS -90 Endorsement must be attached and supplied to Contractor on a primary basis with $5,000,000 limits of liability. (7) Professional liability insurance if required by Owner, in a form and from an insuring entity and with limits of liability satisfactory to Owner. (8) Each policy required under this Article, except the workers' compensation policy, shall name Owner and its parent, subsidiary and affiliated companies, the General Contractor, the OCIP Administrator, and their respective officers, agents, shareholders, and employees of each, and any additional entities as Owner may F -11 initial: Trade Contractor Contractor request, as additional insureds. Commercial General Liability insurance additional insured endorsement shall be written on Form CG 20 10 11 85 (Form B) or its equivalent. Furthermore, the additional insured endorsement shall state that the coverage provided to the additional insured is primary and non- contributing with respect to any other insurance available to the additional insured. Each and every excess General Liability policy procured in accordance with this Article shall include the Endorsement attached hereto as Schedule A The insurance required by this Article 1.1.8 shall be written with insurance carriers duly authorized and admitted to transact that class of insurance in each state(s) in which the General Contractor, or Subcontractor performs operations related to the Work. Such insurance shall be in a form and with an insurer with an A.M. Best rating of A, X, or better. All insurance shall conform to any additional Owner's requirements outlined in the Insurance Manual and be acceptable to Owner. General Contractor and Subcontractor shall provide certificates of insurance coverage to Owner as required by the Insurance Manual. In the event General Contractor, or Subcontractors of any tier maintains limits greater than set fourth herein, Owner and then currently listed additional insureds shall be included therein as an additional insureds to the fullest extent of all such insurance in accordance with all terms and provisions herein. (9) Each Certificate of Insurance shall contain a thirty (30) day Notice of Cancellation to the Certificate Holder for cancellation or material change in cover and shall remove the words "if any ", "endeavor to" or 'But failure to mail such notice shall impose no obligation of liability of any kind upon the company, its agents or representatives ". The Certificate of Insurance shall list all insurance carried by the insured for the coverages specified above, all deductibles and /or retentions, all reductions in coverage from the standard policy forms, and shall state the full policy limits, even if the limits exceed the amounts required above. Owner reserves the right to request a copy of all policies stated herein. Such copies must be certified by General Contractor's, and Subcontractor's of every tier, insurance broker as true and original copies. General Contractor's or Subcontractor's failure to procure or maintain the insurance required by this Article 1.4 and to assure all their Subcontractors of any tier maintain the required insurance during the entire term of the Agreement shall constitute a material breach of this Agreement under which the Owner may immediately suspend or terminate this Agreement or, at its discretion, procure or renew such insurance to protect the Owner's interests and pay any and all premiums in connection therewith, and withhold or recover all monies so paid together with interest thereon from the date paid by Owner until the date paid by General Contractor , or Subcontractor's of every tier. F -12 Initial: Trade Contractor Contractor NOTE: General Contractor, and their Subcontractors cannot commence work until all of the insurance requirements have been met. M51 D1 pill , Endorsement Umbrella / Excess Coverage Priority of Coverage — Additional Insured Policy No. Ex . Date of Pol. tiff. Date of End. Agency No. Addl Prem Return Prem THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. Named Insured: Address (including ZIP Code): We understands that the Named Insured(s) may, from time to time, enter into contracts which require the furnishing of certain limits of liability insurance to additional insureds on a primary and non - contributory basis, and that such limits may exceed the limits of the insurance listed in the Schedule of Underlying Insurance. In that event, and when such additional insured is also an additional insured on this policy: (1) this insurance shall apply immediately upon exhaustion of the insurance stated in the schedule of underlying insurance as respects the coverage afforded to such additional insured; and (2) this insurance shall apply before any other insurance, whether primary, excess, contingent or on any other basis, available to the additional insured on which the additional insured is a named insured, and we will not seek contribution from such insurance. In the event an additional insured on this policy is also an additional insured on other insurance to which this insurance is excess but which is not immediately available, then this insurance shall provide coverage to the additional insured per its terms, and in so doing shall not waive any of its rights to recover from such other insurance. F -13 Initial: Trade Contractor Contractor Reference Amended Contract No. 8556 (CCS); Amended Agreement No. 8934 (CCS); Amended Lease Nos. 8395 (CCS), 8396 (CCS), and 8937 (CCS); and Resolution Nos. 10621 (CCS) through 10623 (CCS).