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6.3 DublinSeniorLtdPtnrshp
CITY CLERK CITY COUNCIL MEETING DATE: February 3, 2004 SUBJECT: Urgency ordinance and ordinance authorizing Ground Lease by and between the City of Dublin and Dublin Senior Limited Parmership in connection with the construction of a 54-unit affordable senior housing development. Report Prepared by Elizabeth Silver, City Attorney ATTACHMENTS: 1. Urgency Ordinance Making Findings and Authorizing a Ground Lease Between the City of Dublin and Dublin Senior Limited Partnership (with Ground Lease by and between the City of Dublin and Dublin Senior Limited Parmership attached as Exhibit A) 2. Ordinance Authorizing a Ground Lease Between the City of Dublin and Dublin Senior Limited Partnership (with Ground Lease by and between the City of Dublin and Dublin Senior Limited Partnership attached as Exhibit A) RECOMMENDATION: 1. Receive the staff report; 2. Open the public hearing; 3. Receive public testimony; 4. Close the public hearing and deliberate; 5. Waive the reading and ADOPT the urgency ordinance (Attachment 1); and 6. Waive the reading and INTRODUCE the ordinance (Attachment 2). FINANCIAL STATEMENT: . The Ground Lease provides for payment to the City of one dollar per year, payable in advance, for the 99-year term. BACKGROUND: The City is the owner of the site of the former library, located at 7606 Amador Valley BoUlevard ("Property"). Pursuant to a Memorandum of Understanding with the County of Alameda, the City acquired the Property and agreed to use the Property solely for public purposes for fifty (50) years. The City invited several organizations to submit proposals for the development of affordable senior housing on the Property. Following an evaluation of proposals and a public hearing, the City selected Eden Housing, Inc. ("Eden") to construct, own and operate a 54-unit affordable senior housing development on the COPIES TO: In House Distribution ITEM NO. Property ("Project"). Eden is the general partner of the Dublin Senior Limited Partnership ("Partnership"), which was fOrmed to develop, own and operate the Project. In June 2003, the City Council approved the execution of an Option to Lease giving Eden the right to lease the Property, contingent upon Eden receiving construction financing commitments. Eden and the Partnership have since received construction financing commitments and now plan to exercise the option in order to move forward with the construction and operation of the Project. In order to make the Project affordable to very low-income households, low-income housing tax credits will be used to partially finance the Project. In order to ensure the availability of the low-income housing tax credits, financing must close and construction of the Project must commence before the end of February 2004. For that to happen, the City must first lease the Property to the Partnership. Exhibit A to both ordinances (Attachments 1 and 2) is the Ground Lease by and between the City of Dublin and the Partnership, by which the City agrees to lease the Property to the Partnership for development of the Project. The Ground Lease is for a term of 99 years and provides for payment to the City of one dollar per year. The Ground Lease requires that no fewer than 49 percent of the units be affordable to very low-income seniors for a term of not less than 55 years. It sets forth that the Partnership is responsible for the construction, operation and maintenance of the Project. Under Government Code Section 37380, prior to execution of the Ground Lease and conveyance of the Property, the City must first authorize the Ground Lease by ordinance. Attachment 1 is an urgency ordinance authorizing and directing the Mayor or her designee to execute the Ground Lease. The urgency ordinance requires the approval of four-fifths of the members of the Council and will become effective immediately. As described in this report, staff believes there are sufficient grounds to authorize the Ground Lease via an urgency ordinance. Currently, a housing shortage exists in the City for very low-income senior households. It is a public purpose of the City, and a public policy of the State, as mandated by the requirement for a housing element of the City's General Plan, to make available an adequate supply of housing for persons of all economic segments of the community. Execution of the Ground Lease will allow for the construction and operation of affordable senior housing, which will benefit the residents of the City and encourage the immediate preservation of the public peace, health and safety. As discussed above, in order to make the Project affordable to very low-income households, the Project is being financed in part with low-income housing tax credits. If not for these tax credits, additional public funds would be required for construction of the Project. To receive the tax credits, financing must close and construction of the Project must commence before the end of February 2004. In order for that to happen, the City must first convey the Property to the Partnership, pursuant to the attached GrOund Lease. In light of the requirement that the Ground Lease be authorized by ordinance, immediate adoption of this urgency ordinance is necessary so that the Ground Lease may be executed and so that financing may close and construction may commence before the end of February 2004. This will ensure the receipt of the low- income housing tax credits and the Project's affordability. Thus, Staff recommends that the City Council open the public hearing, receive public testimony, close the public hearing, waive the reading and adopt the attached urgency ordinance, thereby authorizing execution of the Ground Lease. Staff recommends that the City Council concurrently proceed with routine ordinance procedure, by receiving public testimony regarding the attached draft ordinance (Attachment 2), which would authorize and direct the Mayor or her designee to execute the identical Ground Lease, waiving the reading and introducing the ordinance. This second ordinance, however, would not take effect until 30 days after adoption. This dual approach (an urgency and a regular) ordinance is recommended in order to assure there can be no questions regarding the validity of the approval of the ground lease~ RECOMMENDATION Staff recommends the City Council receive the staff report, open the public hearing, receive public testimony, deliberate, close the public hearing, waive the reading and ador~t the urgency ordinance (Attachment 1) and waive the reading and introduce the ordinance (Attachment2~). ORDINANCE NO. AN URGENCY ORDINANCE OF THE CITY OF DUBLIN MAKING FINDINGS AND AUTHORIZING A GROUND LEASE BETWEEN THE CITY OF DUBLIN AND DUBLIN SENIOR LIMITED PARTNERSHIP WHEREAS, the citizens of Dublin are experiencing a housing shortage for very low-income senior households; X~I-IElZEAS, a goal of the Housing Element of the City's General Plan is to achieve a balanced community with housing available for households of a range of income levels; WHEREAS, persons with very low incomes who currently live and/or work in the City are increasingly Unable to locate housing at prices they can afford and often become exCluded from living in the City; WHEREAS, it is a public purpose of the City, and a public policy of the State as mandated by the requirement for a housing element of the City's General Plan, to make available an adequate supply of housing for persons of all economic segments of the community; . WHEREAS, the City is the owner of certain real property ("Property") described in the Ground Lease, which is attached hereto as Exhibit A; WHEREAS, pursuant to a Memorandum of Understanding ("MOU') with the County of Alameda, the City acquired the Property and agreed to use the Property solely for public purposes for a minimum of fifty (50) years; WHEREAS, the City invited several non-profit organizations to submit proposals for the development of affordable senior housing on the Property, and following an evaluation of proposals and a public hearing, the City selected Eden Housing, Inc., a California non-profit public benefit corporation ("Eden"), to construct, own and operate a 54-unit affordable senior housing development on the Property (the "Project"); WltEREAS, in 3une 2oo3, the City Council approved the execution of an Option to Lease giving Eden the right to lease the Property, contingent upon Eden obtaining construction financing commitments; WHEREAS, Eden is the general partner of Dublin Senior Limited Partnership, a California Limited Partnership ("Partnership"), which was formed to develop, own and operate low-income housing for seniors; ATTACHMENT 1 WItERF. AS, Eden and the Partnership have received construction financing commitments and now plan ,to exercise the oPtion in order to move forward with the construction of the Project; WHEREAS, in order to make the Project affordable to very low-income households, the Project is also being financed with low-income housing tax credits; INHERF. AS, in order to ensure the availability of the low-income housing tax credits, financing must close and construction of the Project must be commenced before the end of February 2oo4; WItERlqAS, if not for the low-income housing tax credits, additional public funds would be required to make the Project affordable; WHERF. AS, in order for financing to close and construction to commence before the end of February 2004, the City must first lease the Property to the Partnership; WItERF. AS, under California Government Code Section 3738o, the Ground Lease must be authorized by ordinance; I~rI-IERI*.AS, City loan documents and the attached Ground Lease will both impose affordability and occupancy requirements and will require periodic monitoring of such requirements, in accordance with Government Code Section 37380; IArHEREAS, the lease of the Property to the Partnership will further the public purpose of the City and the public policy of the State, and will fulfill the requirements of . · the MOU;: WI-IERlqAS, execution of the Ground Lease will allow for the construction and operation of affordable senior housing for very low-income households, which will benefit the residents of the City and encourage the immediate preservation of the public peace, health and safety; and WHEREAS, immediate adoption of this Ordinance is necessary so that financing may close and construction may commence before the end of February 2004, thereby ensuring the receipt of the low-incOme housing tax credits and the Project's affordability. NOW THEREFORE, THE CITY COUNCIL ORDAINS AS FOLLOWS: 1) Lease Authorized. The City Council of the City of Dublin hereby authorizes and directs the Mayor or her designee to execute the Ground Lease substantially in the form attached hereto as Exhibit A. This Ordinance is adopted as an urgency measure for the immediate preservation of the public peace, health and welfare. The City Council finds that the facts constituting the urgency are these: The City entered into an MOU with the County, by which the City acquired the Property and agreed to use it for public purposes for a minimum of fifty (50) years. The City selected Eden to construct, own and operate the Project on the Property, and Eden has received the financing commitments necessary to exercise the option to lease granted by the City. Eden formed the Partnership to develop, own and operate the Project, and Eden is the Partnership's general partner. In order to fulfill the requirements of the MOU, the City has proposed to lease the Property to the Partnership for the construction and operation of the Project. In order to make the Project affordable to very low-income households, the Project is being financed in part with low-income housing tax credits. If not for the low- income housing tax credits, additional public funds would be required to make the Project affordable. To use the low-income housing tax credits, financing must close and construction of the Project must be commenced before the end of February 2004. In. order to meet these deadlines, the City must first lease the Property to the Partnership. Under Government Code Section 37380, the Ground Lease must be authorized by ordinance. Execution of the Ground Lease will allow for the construction and operation of this affordable senior housing, which will benefit the residents of the City and encourage the immediate preservation of the public peace, health and safety. In light of the requirement that the Ground Lease be authorized by ordinance, immediate adoption of this Ordinance is neceSsary so that the Ground Lease may be executed and so that financing may close and construction may commence before the end of February 9004, This will ensure the receipt of the low-income housing tax Credits and the .,:~ Project's affordability. · , 9) Compliance with California Environmental Quality Act. The City prepared an Initial Study for the Project, which led to a finding that all potential environmental impacts could be reduced to a less-than-significant level. Therefore, the City adopted a Mitigated Negative Declaration for the Project. 3) Severability. In the event any section or portion of this Ordinance shall be determined invalid or unconstitutional, such section or portion shall be deemed severable and all other sections or portions hereof shall remain in full force and effect. 4) Effective Date. This Ordinance is adopted as an urgency ordinance pursuant to Government Code Section 36937(b), to take effect immediately. It is necessary for this Ordinance to take effect immediately to support the development of affordable housing for very low-income seniors in the City. PASSED, APPROVED AND ADOPTED by the City Council of the City of Dublin this day of ., 2oo4, by the following vote: AYES: NOES: ABSTAIN: ABSENT: APPROVED: Mayor ATYEST: City Clerk 674953v2 GROUND LEASE by and between the CITY OF DUBLIN, a municipal corporation as Landlord, and DUBLIN SENIOR LIMITED PARTNERSHIP, a California limited Partnership, as Tenant Dated as of February 1, 2004 EXHIBIT A THIS GROUND LEASE (the "Lease") dated as of February 1, 2004 ("Effective Date") is entered into by and between the City of Dublin, a municipal'corporation (hereafter "City" or "Landlord") and Dublin Senior Limited Parmership, a California limited partnership' ("Tenant"). RECITALS A. City is the owner of fee title to the unimproved'land. 10cated at 7606 Amador Valley Boulevard, Dublin, .California, and more particularly described on Exhibit A attached hereto, including all appurtenances, easements, rights-of-way, and other interests appurtenant thereto .(the "Land"). B. Tenant is a California limited partnership which was formed to develop, own and operate afforda, ble housing for very low- income senior households and to provide related services. C. Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord the Land, upon the terms and provisions set forth in this Lease, for the development by Tenant of a multi-family rental housing project for very low-income seniors and related improvements. AGREEMENT - NOW, THEREFORE, for and in consideration of the covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows. ARTICLE I DEMISE OF PREMISES 1.1. Demise. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Land for the Term (as defined in Section 2.1 below) and on the terms and conditions set forth in this Lease. All oil, gas, geothermal and mineral rights are expressly reserved from this Lease. Landlord shall have no rights of entry or surface rights for the purpose of extraction of oil, gas, mineral, geothermal or similar resources, nor shall Landlord have the right to excavate any oil, gas, geothermal, mineral or similar resources above a depth of 500 feet during the Term of this Lease. 1.2. Condition of Title. Landlord leases the Land to Tenant subject to all easements, covenants, conditions, restrictions and other title matters of record existing as of the Effective Date, and all matters that would be apparent from an inspection of the Land on the Effective Date. 1.3. Condition of Land. Landlord leases the Land to Tenant in its "as-is" condition existing on the Effective Date, and Tenant acknowledges that, except as otherwise expressly set forth in this Lease, Landlord makes no representations or warranties to Tenant with regard to the condition of the' Land or the fitness or suitability thereof for Tenant's purposes, including but not limited to, matters pertaining to topography, utilities, soit, subsoil, presence or absence of fill, 675831 1 presence or absence of hazardous materials, drainage, flood zone designation, access to public roads, or environmental laws, rules, or regulations. Tenant has relied on its investigation and judgment as to all matters relating to the Land. Tenant represents that it has, .prior to the execution of this Lease, made investigations 'of the Land, including without limitation such inquiries of governmental agencies, soils testing, tests and inspections as Tenant has deemed necessary to determine the condition of the Land and that Tenant, by execution hereof, accepts the Land in its current "asXis" condition and state. 1.4 Definitions. 1.4.1 Improvements. For purposes of this Lease, the term "Improvements" shall mean all buildings, structures, fixtures, fences, walls, paving, parking improvements, 'driveways, walkways, plazas, landscaping, permanently affixed utility systems and equipment, and other improvements located on the Land. 1.4.2 Project. For purposes of this Lease, the term "Project" shall mean the Land and all Improvements. ARTICLE II TERM OF LEASE 2.1 Term. The term of this Lease (the "Term") shall commence on the Effective Date; and unless sooner terminated under the provisions hereof, shall expire on the day preceding the ninety-ninth (99th) anniversary of the Effective Date (the "Expiration Date"). The expiration or sooner termination of the Term shall be referred to as "Lease Termination." 2.2 Lease Year. For purposes of this Lease, "Lease Year" shall mean each calendar year, or partial calendar year during the Term. ARTICLE III RENT 3.1 Rent. Tenant shall pay to Landlord, rem for the Land ("Rent") in the amount of One Dollar ($1.00) per Lease Year (or portion thereof for the first and last Lease Year of the Term) prepaid on the date of closing for Tenant's construction financing for the Project to Landlord at the address'shown in Section 17.6.2 or such other place as Landlord may designate in writing. For So long as the Project is subject to the affordability requirements ("Affordability Requirements") set forth in .Section 6.3 as the term of such Affordability Requirements may be extended pursuant to this Section 3.1, there shall be no increase in Rent during the Term.-No later than 90 days prior to the expiration of the term of the Affordability Requirements and no later than 90 days prior to the expiration of each extension of such term, if any, thereafter, Tenant shall provide written notice to Landlord informing Landlord of whether or not Tenant desires to extend the term of the Affordabi!ity Requirements and the desired term of any such extension. The decision to extend the term of the Affordability Requirements, the length of each extension, and the number of extensions shall be made in Te.nant's sole discretion. Tenant shall have the 675831 2 fight to extend the term of the Affordability Requirements. notwithstanding the failure of Tenant to provide written notice to Landlord within any applicable 90-day notice Period and notwithstanding any provision that time is of the essence. If Tenant elects to extend the Affordability Requirements, Tenant and Landlord Shall execute an amendment to this Lease' which shall (i) set forth the term of the Affordability Requirements as extended, (ii) state that the Rent payable hereunder shall remain $1.00 per year through the expiration of the term of such extension, and (iii) state that the Rent has been prepaid for such extended term. If Tenant elects not to extend the Affordability Requirements, Landlord shall have the right to charge additional Rent during-the portion of the Term remaining after the expiration of the Affordability' Requirements. Landlord and Tenant agree to negotiate in good faith to establish the amount of such additional Renf and the terms of payment and shall execute an amendment to this Lease setting forth such terms. In no event shall the additional Rent exceed the rent for leased properties of comparable projects, taking into consideration the age and Condition of the Improvements, the remaining term of the Lease, and the projected cash flow of the Project taking into consideration any applicable restrictions on rent and incorporating reasonable projectiOns regarding vacancy rates and tenant turnover. Provided that the tenant under this Lease is Eden or a Tenant Affiliate (each as defined in Section 15.1), or a nonprofit corporatiOn ("NonprOfit") which is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (or successor provision), or a partnership in which Eden, a Tenant Affiliate, or a Nonprofit is the general parmer, the additional Rent shall not exceed 60% of Surplus Cash (as defined in the Note referenced in the Leasehold Deed of Trust, Assignment of Rents, Security Agreement and - Fixture Filing ("City Deed of Trust") executed by Tenant for the benefit of Landlord and recorded concurrently with the Memorandum of this Lease. 3. i. 1 Non-Recourse. The provisions of this Section 3.1.1 shall apply for so long as the tenant under this Lease is any of the following: Eden or a Tenant Affiliate, or a partnership in which Eden or a Tenant Affiliate is the general parmer; provided hoWever, this Section 3.1.1 shall also apply if Tenant's general parmer is replaced by Tenant's tax credit investor, or by any entity that controls, is controlled by, or is under common control with, Tenant's tax credit invest°r, or by any successor general partner selected by Tenant's tax credit investor after a default by Tenant's general partner. Subject to the preceding paragraph, Tenant's obligation to pay additional Rent and other monetary obligations under this Lease shall be nonrecourse to Tenant as provided in this Section 3.1.1. Except as expressly provided in this Section 3.1.1, neither Tenant nor Tenant's partners, officers, directors, employees or agents shall have any direct or indirect personal liability for payment of additional rent or other monetary obligations under this Lease, and the sole recourse of Landlord with respect to such payment shall be to terminate Tenant's leasehold interest in the Property; provided however, nothing contained in the foregoing limitation of liability shall: (A) impair the right of City to bring an action to terminate this Lease and evict Tenant from the Land; (B) be deemed in any way to impair the right of the City to assert the unpaid additional rent or other sums due as a demand for money within the meaning, of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; (C) constitute a waiver of any right which City may have under any bankruptcy law to file a claim for the full amount of the indebtedness owed to City hereunder or to require that the Project shall continue to secure all of the. indebtedness owed to City hereunder in accordance .with this Lease; or (D) limit or restrict the ability of City to seek or obtain a judgment against Tenant to enforce against Tenant and its general partners to: (a) recover under Sections 4.2, 5.3.1, 5.3.5, 6.9, 6.10.1, 12.1 and Article IX of this Lease (pertaining to Tenant's indemnification obligations), or (b) recover from Tenant and its general partner(s) compensatory damages as well as other costs and expenses 'incurred by City (including without limitation attomey's fees and expenses) arising as a result of the occurrence of any of the. following (subject to the rights of any Senior Leasehold Mortgagee (as defined in Section 16.2.3)): (i) any fraud or material misrepresentation on the part of Tenant, any general partner thereof, or any officer, director or authorized representative of Tenant or of any general panner thereof in connection with making or amendment of this Lease; (ii) any failure to maintain insurance on the Property and the Project as required pursuant to this Lease; (iii) failure to pay taxes, ~assessments or other charges due on the Property or the Project; (iv) the presence of hazardous or toxic material or waste on the Property or other violation of the Tenant's obligations under Section 6.10 of this Lease (pertaining to environmental matters); (v) the occurrence of any act or omission of Tenant that results in waste to or of the Project or the Property and which has a material adverse effect on the value of the Project or the Property; (vi) the removal or disposal-of any personal property or fixtures in violation of this Lease; or (vii) the material misapplication of the proceeds of any insurance policy or award resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Project or the Property. 675831 4 ARTICLE IV TAXES~ ASSESSMENTS AND OTHER CHARGES 4.1 Impositions. Tenant covenantS and agrees to pay prior to delinquency, all real property taxes, possessory interest taxes, license and permit fees, sales, use or occupancy taxes, assessments whether general or special, ordinary or extraordinary, unforeseen, as well as foreseen, of any kind or nature whatsoever, pertaining to the Project, including, but not limited to (i) any assessment, levy, imposition or charge, in lieu of or substitution for real estate taxes, and (ii) any assessment for public improvements or benefits which is assessed, levied, or imposed upon or which becom6s due and payable and a lien upon (a) the Project or any part thereof or any personal property, equipment or other facility used in the operation thereof, (b) the rent or income received by Tenant from subtenants or licensees, (c) any use or occupancy of the Project, or (d) this transaction or, subject to the exclusions specified below, any document to which Tenant is a party creating or transferring an estate or interest in the Project. All of the foregoing are hereinafter referred to as "Impositions." 4.1.1 Exclusions. Impositions specifically shall exclude (i) any income, franchise, gross receipts, estate, inheritance, transfer or gift tax imposed on Landlord, and (ii) any transfer tax or' increase in assessments, Property mx, or possessory interest tax that is attributable to Landlord's sale or other transfer 0fthe Land. 4.1.2 Installments. If, by law, any such Imposition is payable, or may at the option of the taxpayer be paid, in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Tenant may pay the same together with any accrued interest on the unpaid balance of such Imposition in installments as the same respectively become due and before any fine or penalty may be added thereto for the nonpayment of any such installment and interest. Any Impositions relating to tax years that are only partially included in the Term of this Lease shall be prorated between Tenant and Landlord. 4.1.3 Evidence of Pawnent. Upon request by Landlord, Tenant shall furnish, in form satisfactory to Landlord, evidence of payment prior to delinquency of ail Impositions payable by Tenant. 4.2 Tenant Right to Contest. Tenant shall have the right before any delinquency occurs to contest or object to the amount or validity of any such Imposition by appropriate legal proceedings, but such right shall not be deemed or construed in any way as relieving, modifying or extending Tenant's covenant to pay any such Imposition at the time and in the manner required by taw. Any such contest shall be conducted in accordance with and subject to the requirements of Applicable Law (as defined in Section 5.3.1) and otherwise in a manner that does not subject Landlord's title to the Land to foreclosure or forfeiture. Tenant shall indemnify, defend, protect and hold Landlord harmless from and against all claims, damages, losses, liabilities, costs and expenses (including without limitation attorneys' fees) incurred by Landlord as a result of any such contest brought by Tenant. During any contest of an Imposition, Tenant shall (by payment of disputed sums, if necessary) prevent any advertisement of tax sale, foreclosure o£, or any divesting of Lessor's title, reversion or other interest in the Land or the Project. 695831 5 4.3 Tenant Duty to File. Tenant shall have the duty of making or filing any declaration, statement or report which may be necessary or advisable in connection with the determination, equalization, reduction or payment of anylmposition which is or which may become payable by Tenant under the provisions of this Article 4., and Landlord shall not be responsible for the contents of any such declaration, statement or report; provided, however Landlord shall cooperate with Tenant in connection with'the foregoing, including joinder in any application pertaining thereto to the extent required under applicable law, all at no cost to Landlord. 4.4 Utilities. Tenant agrees to pay, or cause to be paid, all Charges which are incurred by Tenant or which are otherwise a charge or lien against the Project during the Term, for gas, water, electricity, light, heat or power, telephone or other communication service use, or other utility use, rendered or suppliedupon or in connection with the Project. Tenant shall also obtain, or cause to be obtained, without cost to Landlord, any and all necessary permits, licenses' or other authoriZations required for the lawful and proper installation and maintenance upon the Land of wires, pipes, conduits and other equipment for the supply of utilities to the Project. In no event shall Landlord have any liability to Tenant, and Tenant hereby releases Landlord, from any and all claims, including but not limited to consequential damages, lost profits and similar, damages that Tenant may incur as a result of any intermpti°n, curtailment or diminishment of such utilities, other than for the active negligence or willful misconduct of Landlord. Notwithstanding the foregoing, Tenant shall have the right to challenge the amount or validity of the foregoing charges, provided that doing so does not result in the Land being subjected to any lien or other encumbrance. Landlord shall cooperate, within reasonable limits, to assist Tenant in securing utility services for the Project. ARTICLE V DEVELOPMENT OF THE LAND 5.1 Construction of Improvements. Tenant agrees to construct on the Land a 54-unit, multi-family residential rental project for seniors, together with related improvements (the "Development"), in accordance with plans and specifications approved by the City of Dublin and any other applicable governmental agency or authority. The Development shall include 53 one-bedroom units and one two-bedroom resident manager's unit, together with a community room and 31 parking spaces. 5.2 Construction Schedule. Tenant agrees to use diligent efforts to complete construction of the Development within twenty-four (24) months after the Commencement Date, subject to Unavoidable Delays incurred by Tenant. ("Unavoidable Delays" means delays due to strikes, acts of'God, acts of the elements, inability to obtain labor, materials or utilities, governmental restrictions or moratoria, enemy action, earthquakes, civil commotion, war, unavoidable Casualty or similar causes beyond the reasonable control of Tenant, but financial inability of Tenant'to perform shall not be an Unavoidable Delay or an excusing cause. 5.3 Construction standards. 5.3.1 General Construction Standards. All work done in connection with construction of Improvements on the Land, including any subsequent improvement, alternation or replacement, shall be Conducted in a first class and wOrkmahlike fashion in accordance with plans and specifications approved by Landlord and in compliance with all applicable local, state and federal statUtes, codes, ordinances, laws and regulations (collectively, "Applicable Laws"). Tenant shall take all reasOnably necessary measures to minimize any damage, disruption or inconvenience caused by such work and make adequate provision for the safety of all persons affected thereby. Tenantl shall have the sole responsibility for obtaining all necessary governmental permits and approvals for the construction of the Improvements, at Tenant's sole cost and expense. Landlord shall cooperate with Tenant in connection with obtaining any such governmental permits and approvals. Tenant shall pay (or cause to be paid) all costs and expenses associated with the Improvements constructed by Tenant on the Land and shall indemnify, defend and hold Landlord harmless from and against all claims, liabilities, losses, costs and expenses (including reasonable attorneys' fees) incurred by or brought against Landlord for-the failure of Tenant to pay for the cost of such work, any mechanics' or other liens filed against the Land in connection therewith, or the failure of Tenant to comply with Applicable Laws including without limitation, California Labor Code Section 1770 et seq. ("Prevailing Wage 'Laws") as and to the extent applicable. 5.3.2 Inspection During Construction. Tenant agrees to allow Landlord's authorized representatives, agents or employees reasonable access, upon 24 hours prior notice to inspect any construction Tenant undertakes on the Land. 5.3.3 Easements. From time to time at Tenant's request, Landlord shall, in its capacity as fee title owner to the Land, join in the grant of easements to public or private utility companies for utility service to and for the benefit of the Project. Landlord agrees to join in granting or dedicating such public or private utility or other easements as may be reasonably required for the development of the Land in accordance with this Lease. Landlord and Tenant acknowledge that it .will be necessary to grant and receive certain reciprocal access, drainage, and other easements to and from the parcel owned by Landlord located adjacent to the Land. The parties agree to cooperate in determining the description, nature and extent of such easements and shall execute and record documents evidencing the same which are reasonably acceptable to both Landlord and Tenant. Without limiting the generality of the foregoing, Landlord and Tenant agree to the following: (i) Landlord shall have a parking easement in Tenant's parking lot in the location and of the dimensions designated as "Parking Easement" on Parcel Map 8144 ("Parcel Map") (attached hereto as Exhibit C) providing Landlord with exclusive rights to use such Parking Easement for senior center 'use; (ii) Landlord shall be entitled to install lighting in the locations designated as "PUE 1" and "PUE 2" on the Parcel Map, provided that Landlord shall be responsible for the installation, maintenance and repair of such lighting and for payment of all utility charges incurred for such lighting; (iii) Landlord shall provide Tenant with an ingress/egress/access easement across Landlord's adjacent property in the location desi.gnated as "pIEE" on the Parcel Map; and (iv) Landlord and Tenant shall provide reciprocal storm drain easements in the locations designated as "PSDE" on the Parcel Map. The Use and maintenance of the easements described in this Section shall be more particularly described in a separate easement agreement executed by the parties. 675831 7 5.3.4 Protection of Landlord. Nothing in this Lease shall beconstrued as constituting the consent of the Landlord, express or implied, to the performance of any labor or services, or the furnishing of any materials or any specific improvements, alterations of or repairs to the Project or any part thereof, by any contractor, subcontractor, laborer or materialman such as to give rise to any right of any such contractor, subcontractor, laborer or materialman to file a mechanic's, lien or other claim against the fee title to the Land. Landlord shall have the right at all reasonable times to post, and keep posted, on the Land any notices which Landlord may deem necessary for the protection of Landlord and the Land from mechanic's liens or Other claims. Tenant shall give Landlord ten (10) days' prior written notice of the commencement of any work to be done on the Project to enable Landlord to post such notice, s. In addition, Tenant shall make, or.cause to be made, timely payment of all monies due and legally owing to all persons doing any work or furnishing any materials or supplies to Tenant.or any of its contractors or subcontractors in connection with the Project. 5.3.5 Mechanic's Liens. Subject to Tenant's right to contest the same prior to payment~ Tenanf shall keep the Land and the Project free and clear of all mechanic's liens and other liens on account of work done by or for Tenant. Tenant agrees to and shall indemnify, defend and hold Landlord harmless from and against liability, loss, damages, costs and expenses (including reasonable attorney's fees) incurred by or brought against Landlord for claims of lien of laborers or materialmen or others for Work performed or materials or supplies furnished to Tenant or persons claiming under it. In the event any lien is recorded, Tenant shall, within thirty (30).~days after written request from Landlord, cause such lien to be removed of record by bonding or otherwise. 5.3.6 Notice of Completion. Upon completion of construction of any Improvement, Tenant shall file or cause to be filed in the Official Records of.Alameda County a Notice'of'Completion (the "Notice of Completion") with respect to .the subject work. Upon request of Landlord, Tenant shall make available to Landlord following the completion of the Improvements a full set of as-built plans for the ImProvements. 5.3.7 Use of Plans. The contracts relating to design and construction of the Project-executed by and between Tenant (or Tenant's general parmer or other Tenant Affiliate as defined in Section 15.1) and any architect, other design profesSional or any general contractor shall provide, in form and substance reasonably satisfactory to Landlord, for the assignment thereof to Landlord as security, to Landlord for Tenant's performance hereunder, and Landlord shall be furnished with any such contract, together with the further agreement of the parties thereto, that if this Lease is terminated due to Tenant's default, Landlord may, at its election, use any plans and specifications to which Tenant is then entitled pursuant to any such contract upon the payment of any sums due to any party thereto. The Landlord's right to elect to use such plans and specifications shall be subordinate to and shall not defeat the rights of the Leasehold Mortgagee, and Landlord shall eXecute such agreements as the Leasehold Mortgagee may reasonably require to confirm such subordination. 5.3.8 Performance and Surety Bonds. Prior to the commencement of construction of any portion of the Improvements~ Tenant shall purchase or cause Tenant's contractor to purchase: (A) in form reasonably satisfactory to Landlord and issued by a corporate surety reasonably acceptable to Landlord both a performance bond in an amount of not 675831 less than 100% of the cost of construction, naming Landlord and Leasehold Mortgagee as additional insureds and a payment bond in an amount of not less than 100% of the costs for labor and materials, naming Landlord and Leasehold Mortgagee as additional insureds; or (B) a letter of'credit in.an amount not.less than 10% of the cost of construction, the form and substance of which shall be subject to Landlord's approval; or (C) such other form of assurance 6fcompletion the form and substance of which shall be subject to Landlord approval. "Leasehold Mortgagee" means the mortgagee or beneficiary of any Leasehold Mortgage, and in the event of a transfer of such Leasehold Mortgage, the successor Leasehold Mortgagee, upon delivery of written notice of the transfer to Landlord, who thereupon shall' be deemed to be the Leasehold Mortgagee. "Leasehold Mortgage" means a mortgage secured by the leasehold estate created by this Lease and held by a Leasehold Mortgagee. ARTICLE VI USE OF THE PROPERTY 6.1 Permitted Uses. Tenant may use the Land for the development and operation of a 54-unit multi-family residential rental project for seniors, and related ancillary facilities consistent .and compatible with a multi-family residential rental project for seniors, and for no other purposes without the prior written consent of Landlord. 6.2 Occupancy Restrictions. For the full Term, no fewer than fifty-three (53) of the dwelling units in the Project shall be restricted for occupancy by households in which at least one member is a person 62 years of age or older. Residency by other persons in such dwelling units shall be in compliance with Section 51.3 of the California Civil Code. 6.3 Affordabilit¥ Requirements. Subject to Tenant's option to extend as set forth in Section 3.1 hereof, for a period of fifty-five (55) years commencing upon the Effective Date, no fewer than twenty-six (26) of the dwelling units in the Project (49% of the total) shall be both rent-restricted and occupied (or if vacant, available for occupancy) by households whose income does not exceed fifty percent (50%) of Area Median Income as adjusted for actual household size. The term "Area Median Income" shall mean the median gross annual income for households in Alameda County, adjusted for household size, as determined by the U.S. Department of Housing and Urban Development. A dwelling unit shall qualify as "rent-restricted" if the gross rent charged for such unit does not exceed thirty percent' (30%) of fifty percent (50%) of Area Median Income as adjusted for assumed household size in accordance with California Tax Credit Allocation Committee ("TCAC") guidelines. As of the Effective Date, such guidelines provide that assumed household size is 1-1/2 persons for a studio apartment and 2 persons for a one-bedroom apartment. 6.3.1 Reporting Requirements. 6.3.1.1 Tenant Certification. Tenant shall obtain from each household prior to initial occupancy of each dwelling unit in the Project and on every anniversary thereafter, a written certificate containing all of the following in such format and with such supporting documentation as reasonably required by Landlord: 675831 9 (a) The identity and age of the resident who is age 62 or older; (b) The identity and age of each other member of the household or such other information reasonably required to demonstrate compliance with Section 6.2 above; and (c) Household income. Tenant. shall retain such certificates for not less than three (3) years, upon request shall make the originals available for inspection by Landlord and by the Dublin Unified School Distrlct, and upon'request, shall provide copies of such certificates to Landlord and the Dublin Unified School District. 6.3.1.2 Annual Report. Tenant shall submit an annual report ("Annual Report") to Landlord, which shall, at a minimum, include the following information for each dwelling unit in the Project: (i) initial occupancy date; (ii) the number of persons residing in the unit; (iii) the information specified in Section 6.3.1.1, and (iv) the monthly rent charged. Upon Landlord's request, Tenant shall include with the Annual Report, an annual income recertification and documentation verifying tenant eligibility, and such additional information as Landlord may reasonably iequest from time to time in order to show compliance with this Agreement. Upon request, Landlord shall provide a copy of the Annual Report to the Dublin Unified School District. 6.4 Manager'.s Unit. One dwelling unit in the Project may be used as a resident manager's unit, and shall be exempt from the occupancy and rent restrictions set forth in Section 6.2 and 6.3 of this Lease. 6.5 No Condominium Conversion. Tenant shall not convert the Project to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Project during the Term~of this Lease. 6.6 Nondiscrimination. There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, creed, sex, sexual orientation, marital status, familial status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure.or enjoyment of the Land or the Project, nor shall Tenant or any person claiming under or through Tenant 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, subtenants, sublessees or vendees in, of, or for the Project. Tenant shall include such provision in all deeds, leases, contracts and other instruments executed by Tenant, and shall enforce the same diligently and in good faith. 6.7 Binding on Successors; No Subordination. The restrictions set forth in this Article VI shall be binding upon Tenant and its successors and assigns for the full Term of this Lease, and shall not be subordinated to any interest, lien, or mortgage; provided however, the affordability restrictions specified in Section 6.2 shall be effective for a term of fifty-five (55) years commencing upon the Effective Date unless extended pursuant to Section 3.1. 675831 10 6.8 Management and Operation of the Proiect; Compliance with Laws. Tenant agrees touse its best efforts to operate, maintain and manage the Project in first-class manner, subject to incidental wear and tear. Tenant, at its Sole cost and expense, shall complY with all Applicable Laws pertaining to the use, operation, occupancy and management of the Project. Tenant shall not itself, and shall not permit any subtenant ~to use the Land or the Improvements for any unlawful purpose and shall not itself, and shall not permit any subtenant to, perform, permit or suffer any act of omission or commission upon or about the Land or the Improvements which would result.in a nuisance or a violation of Applicable Law. Subject to the rights of Leasehold Mortgagees, Landlord shall have the right to review and approve the qualifications of any management .entity proposed .by Tenant for the Project. Landlord hereby approves Eden Management, Inc. as the management entity for the Project. Any contracting of management services by Landlord shall not. relieve Landlord of its primary responsibility for proper performance of management duties. 6.9 Tenant Right to Contest. Tenant shall have the right to contest by appropriate proceedings, in the name of Tenant, and without cost or expense to Landlord, the validity or application of any Applicable Law. If compliance with any Applicable Law may legallY be delayed pending the prosecution of any such proceeding without the incurrence of any lien, charge or liability against the Land or Tenant's interest therein, and without subjecting Tenant or Landlord to any liability, civil or criminal, for failure so to comply therewith, Tenant may delay compliance therewith until the final determination of such proceeding. Tenant shall indemnify, defend, protect and hold Landlord harmless from and against all claims, damages, losses, liabilities, costs and expenses (including without limitation attorneys' fees) incurred by Landlord as a result of any such contest brought by Tenant. 6.10 Hazardous Materials. 6.10.1 Obligations of Tenant. Tenant shall not cause or permit any Hazardous Material (as defined below) other than materials commonly used in the construction, operation and maintenance of the Project, proyided such materials are used and disposed of in compliance with all applicable laws and regulations, to be brought upon, kept or used in or about the Land or the Project in violation of Applicable Law. If Tenant breaches the covenant set forth in the preceding sentence, then Tenant shall indemnify, defend, protect and hold Landlord harmless from and against all claims, demands, liabilities, losses, damages, frees, penalties, remediation orders, costs or expenses (including attorney's fees) incurred by or brought against Landlord as a result of such breach by Tenant. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by. any federal, state or local governmental agency or political subdivision because of the breach by Tenant of the terms and provisions of this Section'6.10.1. Without limiting the foregoing, if the presence of any Hazardous Material at the Pr~ect that was not in existence as of the Effective Date results in any contamination of the Project in violation of Applicable Law, Tenant shall promptly take all actions at its sole expense as are necessary to remediate the Project as required by law; provided that Landlord's apprOval of such actions shall first be obtained, which approval may be withheld in Landlord's sole discretion. During such time that City is the owner of improvements located at 7600 .Amador Valley Boulevard (including without limitation, the senior center under construction, as of the 675831 1 l date hereof), Tenant's obligations under this Section shall not apply to Hazardous Material released from such property, the uses thereof, or the improvements located thereon. 6.10.2 DefinitiOn of Hazardous Material. As used in this Lease, the term "Hazardous Material" means any hazardous, explosive or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California orthe United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is (a) defined as a "hazardous waste," "extremely hazardous waste' or "restricted hazardous waste" under Sections 25115, 25117 or 15122.7, or is listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6. 5 (Hazardous Waste Control Law), (b) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, ChaPter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act),(c) defined as "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Relegse Response Plans and Inventory), (d) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (e) petroleum, (f) asbestos, (g) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 30, (h) designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. § 1317), (i) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 41 U.S.C. § 6901 et seq. (42 U.S.C. § 6903), or (j) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 41 U.S.C. §. 9601 et seq. (42 U.S.C. § 9601). ARTICLE VII SURRENDER AND RIGHT TO REMOVE 7.1 Ownership During Term. 7.1.1 Improvements. During the Term of this Lease, all Improvements constructed on the Land by Tenant'as permitted or required by this Lease shall, subject to the terms of this Lease, be and remain the property of Tenant. 7.1.2 Personal Property. All personal property, furnishings, trade fixtures and equipment installed by Tenant in, on or around the Project which (i) are not attached to.the Land so as to cause substantial damage upon removal, and (ii) are not necessary for the normal operation and occupancy of the Project, shall be the personal property of Tenant (the "Personal Property"). At any time during the Term, Tenant shall have the right to remove the Personal Property provided Tenant shall repair any damage caused by the removal of such Personal Property. Personal Property shall not include any portion' or part of major building components or fixtures necessary for the operation of the basic building systems (such as carpeting, elevators, escalators, chillers, boilers, plumbing, electrical systems, lighting, sanitary fixtures and HVAC systems) which shall be deemed a part of the Improvements. 12 7.2 Ownership at Lease Termination. 7.2.1 Improvements. Upon the expiration or earlier termination of the Lease ("Lease Termination") the Improvements shall unconditionally be and become the property solely of Landlord, and no compensation therefor shall be due or paid by Landlord to Tenant for any part thereof, and this Lease.shall operate as a conveyance and assignment thereof. Upon Lease Termination, Tenant shall surrender t6 Landlord the Land and the Improvements in good order, condition and repair, reasonable wear and tear excepted, free and clear of all liens, claims and encumbrances, subleases, other than those matters existing prior to the Effective Date or matters Subsequently created or consented to by Landlord. Upon Lease Termination, at Landlord's request Tenant .agrees to execute, acknowledge and deliver to Landlord such recordable instruments as are necessary or desirable to confirm the termination of the Lease and all Tenant' s rights hereunder and to perfect Landlord's right, title and interest in and to the Land and the Improvements. 7.2.2 Personal Property. Any Personal Property may be removed prior to Lease Termination by Tenant; provided, however, the removal shall be with due diligence, and without expense to Landlord, and any part of the Land damaged by such removal shall be promptly repaired. Any Personal Property which remains on the Land for thirty (30) days after the Lease Termination may, at the option of Landlord, be deemed to have been abandoned and either may be retained by Landlord as its property or may be disposed of in accordance with Applicable Law. If requested by Landlord within a reasonable time but not less than six months prior to the termination of this Lease, upon Lease Termination Tenant shall, at Tenant's sole cost and expense, remove all Personal Property, or portions thereof designated by Landlord. 7.3 Condition of Improvements at Lease Termination. 'Landlord has entered this Lease in reliance on the fact that, at Lease Termination, Landlord will receive from Tenant the Improvements in good condition and repair, reasonable wear and tear excepted and reflecting the age of the Improvements at such time and Landlord's willingness during the Term of this Lease to consent to the encumbrance of Tenant's interest in the Land and Improvements for rehabilitation or reconstruction financing. At any time during the Term, upon reasonable advance notice and during normal business hours, Landlord may inspect the Development to confirm that it is being properly maintained as required herein. Following its inspection, Landlord may deliver to Tenant written notification of any portions of the Development which Landlord has determined is not being properly maintained and Tenant shall promptly comply with the provisions of this Lease regarding such items; provided, the failUre of Landlord to inspect or to notify Tenant of any default hereunder shall not be a waiver of Landlord's right to enforce Tenant's maintenance and repair obligations hereunder. 7.4 Survival. The provisions of this Article 7 shall survive Lease Termination. ARTICLE VIII INSURANCE 8.1 Insurance. Tenant, at its sole cost and expense, during the Term hereof shall keep and maintain the policies of insurance set forth in Exhibit B, attachedhereto and incorporated herein and shall comply with a11 other requirements set forth in such Exhibit, ARTICLE IX INDEMNIFICATION BY TENANT Tenant shall indemnify, defend, protect and save Landlord and Landlord's elected and appointed officials, employees, officers and agents (collectively hereafter the "Indemnitees") harmless from and against any and'all claims, liabilities, losses, damages, fines, penalties, claims, demands, suits, actions, causes of action, judgments, costs and expenses (including without limitation reasonable attorneys' ~fees and court costs) (collectively "Claims") arising during the Term from Conduct or management of or from any work or thing whatsoever done in or on the Land or Improvements, and will further indemnify and save Indemnitees harmless from and against any and all Claims arising during the Term from any condition of any Improvement constructed by Tenant on the Land, or arising from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or arising from any negligence of Tenant, or any of its agents, contractors, servants, employees, sublessees or licensees, or arising from any accident, injury or damage whatsoever caused to any person occurring during the Term in or on the Land or the Improvements, or from the furnishing of labor or materials by Tenant, and from and against all costs, attorney's fees, expenses and liabilities incurred in or about any such claim or action or proceeding brought thereon. In the event any such action or proceeding isbrought against Landlord by reason of any such claim, Tenant, upon notice from Landlord, covenants to defend such action or proceeding by counsel reasonably satisfactory to Landlord. If an insurer under insurance required to be maintained by Tenant hereunder shall undertake to defend the Landlord under a reservation 0frights with respect to ultimate coverage and Landlord shail reasonably deem it necessary to retain independent counsel with respect to such matter, Tenant shall pay the reasonable fees of such counsel. The obligations of Tenant under this Article 9 shall not apply to any claims or other matters resulting from the breach or default by Landlord under this Lease, or from the gross negligence or willful misconduct of Landlord, its agents, employees or consultants. ARTICLE X DAMAGE AND DESTRUCTION 1 0. ! Dam_aRe or Destruction. _In.the event of any damage to or destruction of the Improvements during the Term, Tenant shall restore and rebuild the Improvements as nearly as possible to theircondition immediately prior to such damage or destructiOn, subject to any restrictions imposed by changes in Applicable Law and the consent of Leasehold Mortgagee, and 14 provided that insurance proceeds are made available for the restoration or rebuilding and the restoration or rebuilding is financially feasible. Tenant shall commence diligently and continuOusly to carry otit such rebuilding to full completion as soon as possible. Unless Lessor agrees otherwise in writing, Tenant shall commence reconstruction of the Improvements within sixty (60) days following the date upon which insurance proceeds are made available for such work. Upon the occurrence of damage or destruction, all insurance proceeds paid in respect of ' such damage or destruction shall be applied to the payment of the costs of the restoration and rebuilding required to be performed by Tenant pursuant to this Lease. The insurance proceeds shall be held in trust by the senior Leasehold Mortgagee or a financial institution agreed upon by Landlord, Leasehold Mortgagee and Tenant (the "Insurance Trustee"), with the costs of such trust to be a first charge against the insurance proceeds. After the completion of the restoration and rebuilding-of the Improvements, any remaining insurance proceeds shall be paid to Tenant and Tenant shall be .entitled to retain the same. 10.2 Rebuilding by Tenant. The funds held by the Insurance Trustee shall be held in trust and shall be applied to the cost of rebuilding. Any funds held by the Insurance Trustee following final completion of rebuilding.and payment of all costs and expenses thereof and removal of any liens related thereto, shall be paid to Tenant, subject to the rights of any Leasehold Mortgagee. 10.3 Disbursement of Funds. The Insurance Trustee shall disburse funds only on a periodic basis approved by Landlord and Tenant and only upon receipt of invoices and other documentation, certified as correct by Tenant's architect, if an architect is required for the repair, evidencing satisfactory completion of the work for which payment is requested (a "Payment Request"). Further, the Insurance Trustee shall not disburse any funds unless-the payment request is accompanied bY (a) an executed Conditional lien release in form.complying with Californi~ laTM relating to all labor and materials described in the Payment. Request and (b) an executed final lien release in form complying with California law releasing all claims for labor and materials described in the immediately preceding Payment Request and such other terms as are reqUired by any Leasehold Mortgagee. 1 0.4 Notice Required. In the event of material damage to or destruction of the Improvements, or any part thereof, Tenant shall promptly give Landlord notice of such occurrence and take all actions reasonably required to protect against hazards caused by such damage or destruction. For purposes of this Article 1 0, damage or destruction shall be deemed to be material if the estimated cost to repair equals or exceeds One Hundred Thousand Dollars ($100,000). 10.5 Removal of Debris. If this Lease shall terminate following the occurrence of damage to or destruction of the Improvements and at a time when Tenant shall not have restored and rebuilt the Improvements, then Tenant shall, at its cost and expense after the use of any insurance proceeds released for 'such purpose, remove the debris and damaged portion of Improvements (including without limitation all foundations) and restore the Land or the applicable portion thereof to a neat, clean and safe condition. 10.6 Tenant's Right to Terminate. Notwithstanding any contrary provision of this Article 10, Tenant shall have the option to terminate this Lease and be relieved of the obligation 675831 1 5 to restore the Improvement's where all or substantially all of the Improvements are substantially damaged or'destroyed and such damage or destruction resulted from a cause not insured against by Tenant nor required to be insured against by Tenant under this Lease (an "Uninsured Loss"), and where all of the following occur: 10.6.1 No more than one hundred tw~enty (120) days following the Uninsured Loss,. Tenant shall notify Landlord of its election to terminate this Lease; to be effective, such notice must include both a copy of Tenant's notification to the Leasehold Mortgagee, if any, of Tenant's intention to exercise the option to terminate set forth in this Section 10.6, and Tenant's certification .under penalty of perjury that Tenant has delivered or mailed such notification to the Leasehold Mortgagee in accordance with this Section 10.6.1. Landlord shall be entitled to rely upon the foregoing notice and certification as conclusive evidence that Tenant has notified the Leasehold 'Mortgagee regarding Tenant's desire to terminate this Lease. 10.6.2 No more than sixty (60) days following the giving of the notice required by Section 10.6.1 or such longer time as may be reasonable under the circumstances, Tenant ~hall, at Tenant's expense after the use of any insurance proceeds released for such purpose, remove all debris and other rubble from the Land, secure the Land against trespassers, and at' Landlord's election, remove all remaining Improvements on the Land. 10.6.3 No more than thirty (30) days following Tenant's termination notice, Tenant shall deliver to Landlord a quitclaim deed to the Land in recordable form, in form and content satisfactory to Landlord and/or with such other documentation as may be reasonably requested by Landlord or any title company on behalf of Landlord, terminating Tenant's interest in the Land. 10.6.4 Within ten (10) days follOwing Landlord' s receipt of the notice referred to Section 10.6.1, Landlord has not received both written notice from the Leasehold Mortgagee, if any, objecting to such termination and an agreement containing an effective assignment of Tenant's interest in this Lease to such Leasehold Mortgagee whereby such Leasehold Mortgagee expressly assumes and agrees to be bound by and perform all of Tenant's obligations under this Lease. ARTICLE XI LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS If Tenant shall at any time fail to pay any Imposition or other charge payable by Tenant to a third party as required by this Lease within the time permitted, or to pay for or maintain any of the insurance policies provided for in Article 8 hereof within the time therein permitted, or To make any other payment or perform any other act on its part to be made or performed hereunder within the time permitted by this Lease, then Landlord, after thirty (30) days' written notice to Tenant and without waiving or releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to): (i) pay such Imposition or other charge payable by Tenant; (ii) pay for ar, d maintain such insurance policies provided for in Article 8 hereof; or (iii) make such other payment or perform such other act on Tenant's part to be made or performed under this 675831 16 Lease; and'Landlord may enter upon the. Land and the Improvements for such purpose and take all such actionthereon as may be reasonably necessary therefor. All' sums paid by Landlord and all costs and expense incurred by Landlord in connection with the performance of any such act (together with interest thereon at the Default Rate from the respective dates of LandlOrd's making of each such payment) shall constitute additional Rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord on demand. The- "Default Rate" shall mean interest calculated at an annual rate equal to the rate of interest most recently announced by the senior Leasehold Mortgagee at its San Francisco office as its "reference rate"' but in no event more than the maximum rate of interest permitted by law. If the senior Leasehold Mortgagee or its successor no longer issues a "reference rate," the most comparable rate of the largest bank with its corporate headquarters in California shall be used. If there is no' such bank or comparable rate, then the Default Rate shall be the highest legal rate of interest that may be charged at that time. ARTICLE XII REPAIRS~ CI-IANGES~ ALTERATIONS AND NEW CONSTRUCTION 12.1 Repairs and Maintenance. Tenant covenants and agrees, throughout the Term, without cost to Landlord, to take good care of the Land and Improvements and to keep the same in good order and condition. Tenant shall promptly, at Tenant's own cost and expense, make all necessary repairs, interior and exterior, structural and nonstructural, ordinary as well as extraordinary, whether contemplated or not contemplated at the time of execution of this Lease, and shall keep the Project in a well maintained, safe, clean and sanitary conditiOn. The term "repairs" shall include replacements or renewals when necessary, and all such repairs made by Tenant shall be at least equal in quality and class to the original work. Tenant shall keep and maintain all portions of the Project and the sidewalks adjoining the same in a clean and orderly condition, free of accumulation of dirt, rubbish, and graffiti. From time to time during the Term, upon not less than three (3) days prior notice from Landlord, Landlord may enter the Project, or portions thereof, to determine if Tenant is properly maintaining the Project. If, following any such inspection by Landlord, Landlord delivers notice of any deficiency to Tenant, Tenant shall promptly prepare and deliver to .Landlord Tenant's proposed plan for remedying the indicated deficiencies. Tenant's failure to deliver a remedial plan and to complete, within a reasonable time, remedial work shall be a default under this Lease. Landlord's failure to deliver, following any Landlord's inspection, any notice of deficiency to Tenant, shall not be a waiver of any default by Tenant under this Article 12. Tenant shall defend, indemnify and hold Landlord harmless .from and against any claim, losS, expense, cost, or liability incurred by Landlord arising out of Tenant's failure to fully and timely fulfill its obligations to maintain and repair the Land and the Improvements as required hereunder. 12.2 Changes and Alterations. Tenant shall not.during the Term make any changes or alterations in, to or of the Improvements, without the prior written consent of Landlord, which Landlord shall not unreasonably withhold, so long as all the following are complied with by Tenant at Tenant's sole cost and expense: 67583 t 1 7 (a) The change or alteration shall be in harmony with neighboring buildings and shall not materially impair the value or structural integrity of the Improvements. (b) The change or alteration shall be for a use which is permitted hereunder. (c) No change, alteration or addition shall b© undertaken until Tenant shall have obtained and paid for, so far as the same may be required from time to time, &ll permits and authorizations of any federal, state:or municipal government or departments or subdivisions of any of them, having jurisdiction. Landlord shall join in the application for such permits or authorizations whenever such action is necessary; provided, however, that Landlord shall incur no liability or expense in connection therewith. (d) Any change, alteration or addition shall be made in a good and workmanlike manner and in accordance with all applicable permits and all Applicable Laws. (e) During the period of initial construction of, or of construction of any change, alteration or addition in, to or of, the Improvements or of any permitted demolition or new construction or of any restoration, Tenant shall maintain or cause to be maintained fire or other applicable insurance provided for in Article 8, which policy or policies by endorsement thereto, if not then covered, shall also insure any change, alteration or addition or new construction, including all materials and equipment incorporated in, on or about the.Project (including excavations, foundations and footings) under a broad form all risks builders' risk form or equivalent thereof. (f) Tenant shall comply with the provisions of Section 5.3. (g) At Landlord's request, Tenant shall provide Landlord with a copy of any as-built drawings for the Improvements within sixty (60) days following the completion of the Improvements. 12.3 Exceptions to Requirement for Consent. The foregoing notwithstanding, Tenant shall not be required to obtain Landlord's prior written consent to any changes, alterations or improvements so long as all the following requirements are met: (a) The change, alteration or improvement is nonstmctural. (b) The change, alteration or improvement is not visible from the exterior of any building on the Land. (c) The change, alteration or improvement has a cost of less than One Hundred Thousand Dollars ($100,000). (d) The provisions of Section 5.3 are satisfied. Notwithstanding the foregoing, Tenant shall deliver to Landlord not later than ten (10) days prior to commencement of any construction, change, alteration or repair, written notice of the proposed work, a general description of the proposed work and sufficient information to permit Landlord to post a notice of nonresponsibility on the Land. 675831 1 8 12.4 No Right to Demolish. Notwithstanding any other provisions of this Article 12, Tenant shall have no right to demolish any Improvement, once built, unless Tenant shall have received the prior written consent of Landlord which shall not be unreasonably withheld if the age and condition of the Improvements makes repair or reconstruction impractical or financially infeasible. ARTICLE XIII EMINENT DOMAIN 13.1 Eminent Domain. 13.1.1 Definitions. The roi. lowing definitions shall apply in construing the provisions of this Article 13: (a) "Award" means all compensation, damages or interest, or any combination thereof, paid or awarded for the taking, whether pursuant to judgment, by agreement, or otherwise. (b) "Notice of intended taking" means any notice or notification on which a reasonably prudent person would rely-and would interpret as expressing an existing intention of taking .as distinguished from a mere preliminary inquiry or proposal. It includes, but is not limited to, the service of a condemnation summons and complaint on a party to this Lease. The notice is considered to have be&n received when a party to this Lease receives from the condemning..agency or entity a written notice of intent tO take. (c) "Partial taking" means any taking that is not a total taking, a substantial taking, or a temporary taking. (d) "Substantial taking" means the taking of so much of the Project that the remaining portion thereof would not be economically and feasibly usable by Tenant for the then existing uses and purposes of the Project, in Tenant's reasonable judgment, but shall exclude a temporary taking. (e) "Taking" means any taking of or damage, including severance damage, to all or any part of the Project or any interest therein by the exercise of the power of eminent domain, or by inverse condemnation, or a voluntary sale, transfer or conveyance under threat of condemnation in avoidance of the exercise of the power of eminent domain or while condemnation proceedings are pending. (f) "Temporary taking" means the taking of any interest in the Project for a period of less than one (1) year. (g) "Total taking" means the taking of all or substantially all of the Project, but shall exclude a temporary taking. 675831 1 9 13.1.2 Notice. The party receiving any notice of the kind specified below shall promptly give the other party written notice of the receipt, contents and date of the notice received: (a) notice of intended taking; (b) service of any legal process relating to condemnation of all or any portion of the Project; (c) notice in connection with any proceedings or negotiations with respect to such a condemnation; or (d) notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation. Landlord and Tenant, and any Leasehold Mortgagee, each shall have the right to- represent its respective interest in each proceeding or negotiation with respect to a taking or intended taking and to make full proof of their r. espective claims. No agreement, settlement, sale or transfer to or with the condemning authority shall be made without the mutual agreement of Landlord and Tenant and any Leasehold Mortgagee. Landlord and Tenant each agree to execute, acknowledge and deliver to the other any instruments that may be reasonably required to effectuate or facilitate the provisions of this Lease relating to condemnation. 13.1.3 Total or Substantial Taking. In the event of a total or substantial taking of fee title to the Land, Tenant's interest in this Lease and all obligations of Tenant subsequently accruing hereunder shall cease as of the date of the vesting of title in the condemning authority; provided, however, that if actual physical possession of all or part of the Proj-ect is taken by the ~condemning authority prior to such date of vesting of title, Tenant's obligations to pay rent and other sums under this Lease shall terminate as of such earlier date. In the event Of a total or substantial taking of an interest in the Project other than fee title, at Tenant's option (exercisable by written notice to Landlord), Tenant's interest in this Lease and all obligations of Tenant subsequently accruing hereunder shall cease as aforesaid. 13.1.4 Award. In the event of a total or substantial taking, the award shall be apportioned as follows, in the following order: (a) If Tenant's interest in this Lease is encumbered by a Leasehold Mortgage, to the Leasehold .Mortgagee as provided in the Leasehold Mortgage. (b) To Tenant's tax credit investor limited partner the mount (if any) required to cover any recapture of low-income housing tax credits that may result from a termination of the Lease as the result of the taking. (c) To Landlord, that portion of the balance of the award equal to the fair market value of the Land taken, in an unimproved condition, but as encumbered by this Lease. 675831 20 (d) To' Tenant, that portion of the balance of the award equal to the fair market value 0fthe leasehold estate created by this Lease and the Improvements (subject to Landlord's reversionary interest). (e) The balance, if any, shall' be allocated between Landlord and Tenant respectively in that proportion in which (i) the fair market value of the Land and Landlord's reversionary interest in the Impro.vements bears to (ii) the fair market value of the leasehold estate created by this Lease and the Improvements, exclusive of Landlord's reversionary interest. 13.1.5 Temporary Taking. In the event of a temporary taking, Tenant shall be entitled to the whole award, and this Lease shall remain in full force and effect. 13.1.6 Partial Taking. In the event of a partial taking, this Lease shall remain in full force and effect, covering the remainder of the Project, and Tenant shall repair and restore any damage to the Improvements caUsed by such pa/rtial taking consistent with and subject to the provisions applicable to a restoration in the event of an insured casualty under Article 10, so that after completion of the restoration the Improvements shall be, as nearly as possible, in a condition as good as the condition immediately preceding the partial taking. The award for any partial taking shall be deposited and disbursed in the same manner as insurance proceeds are disbursed for restoration pursuant to Article 10 (unless the Leasehold Mortgagee elects to apply such proceeds to pay the indebtedness secured by the Leasehold Mortgage), and upon completion of the restoration, any remaining portion of the award shall be allocated as set forth in Section 13.1.6.1. 13.1.6.1 Award on Partial Taking. In.the event of a partial taking, the award shall be apportioned as follows, in the following Order: (a) If Tenant's interest in this Lease is encumbered by a Leasehold Mortgage, to the Leasehold Mortgagee as provided in the Leasehold Mortgage. (b) To Tenant's tax credit investor limited partner the amount (if any) required to cover any recapture of low-income housing tax credits that may result from a termination of the Lease as the resuk of the taking. (c) To Landlord, that portion of the balance of the award attributable to the fair market value of the portion of the Land taken in an unimproved condition, as encumbered by this Lease. (d) To Tenant, that portion of the balance of the award attributable to the fair market value of the leasehold estate created by this Lease and the Improvements, but only to the extent that the proceeds of the award are not used for restoration of the Improvements. (e) The balance, if any, shall be allocated between Landlord and Tenant respectively in that proportion in which (i) the fair market vaiue of the Land as encumbered by this Lease and Landlord's reversionary interest in the Improvements bears to (ii) the fair market value of the leasehold estate created by this Lease and the Improvements exclusive of the reversionary interest of Landlord. (f) Any severance damages awarded or payable because only a portion of the Project is taken by eminent domain shall be (a) paid to Tenant during the first 35 years of this Lease, (b) equally divided between Tenant and Landlord during the next 35 years of this Lease (except to the extent needed to replace any Improvements taken by eminent domain with equivalent Improvements on the remainder of the Land) and (c) paid to Landlord during the remainder of the Term of this Lease. No payments shall be made to Tenant pursuant to this Section if anY default by Tenant hereunder has occurred and is continuing unless and until such defauk is cured. 13.1.6.2 Partial Taking in Last Five Years. If a partial taking occurs during the last five (5) years of Term and the reasonably estimated cost of reconstruction work exceeds twenty-five Percent (25%) of the replacement value of the Improvements, Tenant shall have the right and option to treat the same as a substantial taking by giving written notice thereof to Landlord no later than the earlier of: (a) the date of vesting of title in the condemning authority of the portion of the Project taken, or (b) the date upon which the condemning authority takes physical possession of such portion of the Project. If Tenant does give such notice the partial taking shall be considered as a substantial taking and the taking Shall be subject to the provisions of Section 13.1.3. 13.1.7 Lease Provisions ContrOlling. The provisions of this Lease shall determine the fights and obligations of the parties in connection with any condemnation, but.as between Tenant and any Leasehold Mortgagee the Leasehold Mortgage shall control. ARTICLE XIV MORTGAGES 14.1 Leasehold Mortgages. Tenant shall have the fight, at any time and from time to time during the Term, to encumber its leasehold interest hereunder with a Leasehold Mortgage or Mortgages, provided that (a) no Leasehold Mortgage shall in any way impair (except as otherwise stated herein or as provided by law) the enforcement of Landlord's fight and remedies herein and by law provided, (b) any such Leasehold Mortgage shall at all times be subject ~ind subordinate to, and shall not affect or become a lien upon Landlord's fight, title or estate in the Land or in this Lease, and (c) Tenant shall give Landlord prior written notice of any such Leasehold Mortgage, and shall accompany such notice with a true and correct copy of any such Leasehold Mortgage. An); LeaSehold Mortgage shall be subject to the terms and conditions set forth in this Article 14. 14.2 Rights of Leasehold Mortgagee. 14.2.1 Notices. If Landlord shall have been provided with written notice oft he address of any Leasehold Mortgagee, Landlord shall mail to such Leasehold Mortgagee a copy of any notice under this Lease at the time of giving such notice to Tenant, and no such notice 67s83 ~ 22 shall be effective against such Leasehold Mortgagee, and no termination of this Lease or termination of Tenant's right of possession of the Land or reletting of the Land by Landlord predicated on the giving by Landlord of any notice shall be effective, unless Landlord gives to such Leasehold Mortgagee written notice or a copy of its notice to Tenant of such default or termination, as the case may be. t4.2.2 Right to Cure. (i) In the event of any default by Tenant under the provisions of this Lease, the Leasehold Mortgagee shall have the right to remedy or cause to be remedied such default within the same cure period as afforded Tenant hereunder, extended by an additional ninety (90) days, which cure period shall commence as against the Leasehold Mortgagee upon the receipt by the Leasehold Mortgagee of the notice of default. Landlord shall accept such performance by the Leasehold Mortgagee as if the same had been done by Tenant. (ii) The term "incurable default" as used herein means any default which cannot be reasonably cured by a Leasehold Mortgagee. The term "curable default" means any default under this Lease which is not an incurable default. Any failure to pay monetary sums shall at all times be deemed a curable default. Any failure to comply with the requirements of Section 6.2 and 6..3 hereof shall at all times be deemed a curable default, and as to Senior Leasehold Mortgagees or any entity acquiring the interest of Tenant in the Project and in this Lease as a result of the foreclosure of a Leasehold Mortgage (or an assignment or deed in lieu thereof), Landlord shall not terminate this Lease provided such party is diligently and in good faith proceeding to cure any such default. In the event of any curable default under this Lease, and if prior to the expiration of the applicable grace period specified in Section 14.2.2 (i) the Leasehold Mortgagee-shall give Landlord written notice that it intends to undertake the curing of such default, or to cause the same to be cured, or to exercise its rights to acquire the leasehold interest of Tenant by foreclosure or otherwise, and shall immediately commence and then pro6eed with diligence to do so, whether by performance on behalf of Tenant of its obligations under this Lease, by foreclosure or otherwise, then Landlord will not terminate or take any action to effect a termination of this Lease or re-enter, take possession of or relet the Land or similarly enforce performance of this Lease so long as the Leasehold Mortgagee is diligently and in good faith engaged in the curing of such default or effecting such foreclosure. The foregoing sentence shall not be deemed to extend the time period within which a default in the payment of money must be cured under other applicable Lease provisions. The Leasehold Mortgagee shall not be reqUired to continue such possession or continue such foreclosure proceedings. Nothing herein shall preclude Landlord from terminating this Lease with respect to any additional default which shall occur during any period of forbearance and not be remedied within the cure period, if any, applicable to any such additional default, except that Leasehold Mortgagee shall have the same rights specified in this Article 14 with respect to any additional defaults. (iii) If the default by Tenant pertains to the failure of Tenant to complete the construction of the Development within the time period required under Section 5.2 of this Lease, and if within one hundred twenty (120) days following written notice to Leasehold Mortgagee of such default Leasehold Mortgagee shall give Landlord written notice that it intends to undertake the curing of such default, or to cause the same to be cured, and to exercise its rights to acquire the leasehold interest of Tenant by foreclosure or otherwise in order to effectuate such cure, and 675831 23 shall immediately commence and then proceed with diligence to do so, then Landlord will not terminate or take any action to effect a termination of this Lease or re-enter, take possession of or retet the. Land or similarly enforce performance of this Lease so long as the Leasehold Mortgagee is diligently and in good faith engaged in the completion of the construction of the Development or effecting such foreclosure} provided, however, Landlord shall not be obligated to forebear from a termination or other enforcement of its fights under the Lease in response to such default beyond that date which is thirty (30) months following the date of Landlord's initial default notice to the Leasehold Mortgagee under this Section 14.2.2 (iii), subject to extension due to Unavoidable Delays incurred by Leasehold Mortgagee in the completion of the construction of the Development, and subject to extension for any delay incurred by Leasehold Mortgagee as a result of legal limitations on its ability to foreclose upon the Tenant's leasehold interest. 14.2.3 Execution of New Lease. If this Lease is terminated by Tenant's trustee in bankruptcy, receiver, liquidator or other similar person on account of a default or if Tenant's interest under this Lease shall be sold, assigned or transferred pursuant to the exercise of any remedy ofthe Leasehold Mortgagee, or pursuant to judicial proceedings, and if (i) all monetary defaults of Tenant have been cured, and (ii) the Leasehold Mortgagee shall have arranged to the reasonable satisfaction of Landlord to cure any other curable default of Tenant under this Lease, then Landlord, within thirty (30) days (or such period as may reasonably be necessary to enable Landlord to comply with statutory requirements applicable to Landlord's lease of real property) after receiving a written request therefor, which 'shall be given within sixty (60) days after such termination or transfer and upon payment to it of all expenses, including attorneys' fees, incident thereto, will execute and deliver a new lease of the Land to the Leasehold Mortgagee or its affiliate or other nominee or to the purchaser, assignee or transferee, as the case may be, for the remainder of the Term, containing the same covenants, agreements, terms, provisions and limitations, as are contained herein. (i) Upon the execution and delivery of a new lease, the new tenant, in its own name or in the name of Landlord may take all appropriate steps as shall be necessary to remove Tenant from the Land, but Landlord shall not be subject to any liability for the payment of fees, including attorneYs' fees, costs or expenses in connection therewith, and the new tenant shall pay all such fees, including attorneys' fees, costs and expenses, on demand, and shall make reimbursement to Landlord of all such fees, including attorneys' fees, costs and expenses, incurred by Landlord. The new tenant shall indemnify and hold Landlord harmless from any claim, liability or damage '(including attorney's fees) as a result of the action against Tenant. (ii) Upon execution of any new lease, the new tenant named therein shall cure all uncured breaches hereunder, except thatwith respect to any breach which cannot be cured by the new tenant until it obtains possession, the new tenant shall not have to make such cure before it has a fight to obtain possession. Any nonmonetary cure required of the new tenant shall be commenced within ten (10) days following the date the new tenant executes the new lease or the date the new tenant has a fight to obtain possession, whichever is applicable (the "Starting Date"), and thereafter shall be diligently prosecuted to completion. All monetary defaults shall have been cured prior to the execution of the new lease and any monetary defaults occurring thereafter shall be cured within ten (10) days following the Starting Date. Any failure to comply with any of the foregoing requirements shall constitute a default under the new lease. 675831 24 (iii) Upon the Starting Date, the ownership of all Improvements shall be deemed to have been transferred directly to such transferee of Tenant's interest in this Lease and the provisions of Section 7.2.1 causing such Improvements to become the property of Landlord m the event of a termination of this Lease shall be ineffective as applied to any such termination. Landlord shall execute such quitclaim deed or other instrument of conveYance as may be reasonably requested, provided such instnument shall be expressly without warranty of any kind whatsoever' and Landlord shall have no responsibility with regard to the state of title so conveyed. 14.2.4 Tenant Default Under Leasehold Mortgage. If Tenant defaults under a Leasehold Mortgage, the Leasehold Mortgagee may exercise with respect to the Project'any right, power or remedy under the Leasehold Mortgage which is not in conflict with the provisions of this Lease. 14.2.5 No Merger. There shall be no merger of this Lease or any interest in this Lease, nor of the leasehold estate created hereby, with the fee estate in the Land, by reason of the fact that this Lease or such interest therein, or such leasehold estate may be directly or indirectly held by or for the account of any person who shall hold the fee estate in the Land, or any interest in such fee estate, nor shall there be such a merger by reason of the fact that all or any part of the -leasehold estate created hereby may be conveyed or mortgaged in a Leasehold Mortgage to a Leasehold Mortgagee who shall hold the fee estate in the Land or any interest of the Landlord under this Lease. 14.2.6 Assumption of Obligations. For the purpose of this Article 14, the making ora Leasehold Mortgage shall not be deemed to constitute an assignment or transfer of this Lease or of the leasehold estate hereby created, nor shall any Leasehold Mortgagee, as such, b.e deemed an assignee or transferee of this Lease or of the leasehold estate hereby created so as to require such Leasehold Mortgagee, as such, to assume the performance of any of the terms, covenants or conditions on the part of Tenant to be performed hereunder. The pUrchaser at any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure 0fany Leasehold Mortgage, or the assignee or transferee of this Lease and of the' leasehold estate hereby created under any instrument or assignment or transfer in lieu of the foreclosUre of any Leasehold Mortgage, in order to be deemed to be an assignee or transferee and before the same shall be binding on Landlord, must assume in writing the performance of all of the terms, covenants, and conditions on the part of Tenant to be performed hereunder by an instrument, in recordable form, satisfactory to Landlord; provided however, that nothing contained herein shall be construed to require the purchaser, assignee or transferee as described above to be obligated to cure any default by Tenant. Although a purchaser, assignee or transferee shall not be obligated to cure any default, if any default is not cUred, Landlord may exercise any remedy available under this Lease, including the terminatiOn of this Lease, if the default is not cured after the expiration of any applicable cure period. 14.2.7 Limitation of Leasehold Mortgagee Liability for Tenant Defaults. Notwithstanding any contrary provision hereof: (i) no Leasehold Mortgagee shall be required to pay any liens or charges that are extinguished by the foreclosure of its Leasehold Mortgage; (ii) any incUrable default shall be, and shall be deemed to have been waived by Landlord upon completion of fOieclosure proceedings~ or acquisition of Tenant's interest' in this Lease by any 675831 25 purchaser at a foreclosure sale, or any entity who otherwise acquires Tenant's interest from the Leasehold Mortgagee. Any entity acquiring the 'interest of Tenant in the Project and in this Lease as a result of the foreclosure of a Leasehold Mortgage (or an assignment or deed in lieu thereof) shall be liable to perform the obligations of Tenant under this Lease only during the period such entity retains ownership of the interest of Tenant in the Project andin this Lease. i4.3 Non-Subordination of Fee. Nothing in this Lease shall be Construed as an agreement by Landlord to subordinate its fee interest in the Land or its right to rent payments hereunder or any other right of Landlord herein. Except as expressly set forth in this Article 14, no Leasehold Mortgage shall impair Landlord's ability to enforce its rights and remedies' under this Lease or provided by law. Landlord shall have no obligation to encumber or otherwise subordinate its fee interest in the Land or in this Lease to the interest of any Leasehold Mortgagee in this Lease or in Tenant's leasehold estate. 14.4 Institutional Lender. Leasehold Mortgages are to be originated only by Institutional Lenders. As used in this Lease the term "Institutional Lender" shall mean any one or combination of the following: (a) Citibank; (b) a commercial or savings bank, trust company, insurance company, savings and loan association, building and loan association, pension, retirement or welfare fund, endowment fund or foundation, investment banking firm, or real estate investment trust; (c) any other institutional lender reasonably satisfactory to Landlord, or (d) any federal, state or local government entity or agency. 14.5 Landlord's Rights Under Leasehold Mortgages. 14.5.1 Notice of Tenant's Default. Tenant shall use best efforts to ensure that every Leasehold Mortgage secured by a deed of trust on Tenant's leasehold estate in the Land shall.expressly provide that: '~ (a) the lender shall give Landlord contemporaneous notice of any default by Tenant thereunder, if the failure to cure such default might result in acceleration of the maturity of the debt secured by the Leasehold Mortgage; provided however, that lender's failure to give notice shall not affect the lender's rights or ability to timely pursue all applicable remedies. In addition, within three (3) business days following Tenant's receipt of any notice of default-under any financing document affecting the Property or the Project, Tenant shall provide Landlord with a copy of such notice. (b) Landlord shall have the reasonable right, but not the obligation, to cure any default by Tenant (but without obligation to do so); and (c) If Landlord shall tender payment in full of all sums required to be paid under the Leasehold Mortgage or the note secured thereby (disregarding any acceleration of maturity thereunder, but including any costs or expenses arising as a result of such default) on or before ninety (90) calendar days from the date of such notice of default from the lender to Tenant, then the lender shall accept such payment and rescind the acceleration, if any. Any sums paid by Landlord pursuant to this Section 14.5.1 shall become immediately due and payable from Tenant to Landlord as Rent due under this Lease. 675831 26 14.6' Purchase by Landlord. Landlord shall have the right and option (but not the obligation), during the period described in the last sentence of this Section 14.6, by notice in writing to the lender, to purchase any Leasehold Mortgage, the' note secured thereby, and any other instruments securing or guaranteeing such note or otherwise evidencing any obligation secured by the Leasehold' Mortgage. The purchase price therefor shall be the full mount due and owing to the lender thereunder, including any costs, expenses, and penalties payable in accordance with the terms thereof. The sale and assignment bY the lender shall be without recourse or warranty by the lender, except that such lender has good title to the note (or is authorized to obtain payment or acceptance on behalf of one who has good title) and that the transfer to Landlord vests in Landlord good title to the note or notes and in all security interests securing the same, free and clear of all claims and interests of third parties. The right granted by this Section 14.6 may be exercised by Landlord at any time after the lender has declared the entire sum. secured by any Leasehold Mortgage to be due and payable or has commenced proceedings to foreclose any Leasehold Mortgage or, has requested a new Lease, whichever shall first occur, and such right shall terminate ninety (90) days following receipt by Landlord of a request that Landlord exercise such right given in writing from the lender after the date such right'shall first arise as above provided. 14.7 No Voluntary Surrender/Modification. 14.7.1 No Modification. So long as any Leasehold Mortgage encumbers Tenants' leasel~old interest in the Land, this Lease shall not be modified by Landlord and Tenant without the consent of the holders of such Leasehold Mortgages. 14.7.2 No Voluntary Surrender. So long as Tenant is nOt in default hereunder, Landlord shall not accept a volUntary surrender of the Tenant's leasehold estate.without the. prior written consent of all holders of any Leasehol~l Mortgage then in effect. ARTICLE XV ASSIGNMENT~ TRANSFER~ SUBLETTING 15.1 Restrictions on Transfer or Assignment by Tenant. Except as permitted pursuant to this Article XV, Tenant shall not sell, transfer, assign, or otherwise convey ("Transfer") all or any portion of its interest in the Project or this Lease voluntarily,, involUntarily, by operation of law, or otherwise, without Landlord's prior written consent, which shall not be unreasonably withheld. Each Transfer shall comply with all requirements therefor set forth elsewhere in this Lease, and Tenant shall have no right to hypothecate or encumber its interest in this Lease or sublet all or any portion of the Land and/or the Improvements except as expressly provided under the terms of this Lease. No voluntary or involuntary assignee, sublessee, or successor in interest of Tenant shall acquire any rights or powers under this Lease except as expressly set forth herein. 15.1.1 Exceptions. NOtwithstanding any contrary provision of this Lease, Landlord's consent shall not be required, and the provisions of Section. i 5.2_ a__nd i 5.3. below shall not be applicable, with respect to the following Transfers: (A) the foreclosure of a Leasehold Mortgage or the acquisition of Tenant's interest in this Lease by an assignment or deed in lieu of 675831 27 foreclosure; (B) the first Transfer following any event described in clause (A)of this sentence; . provided, hoWever, that in connection with such a first Transfer following an event described in clause (A) above, the transferee must be experienced in the ownership, operation and management of affordable rental housing projects for seniors without 'a record of material violations of discrimination restrictions or other applicable state or federal laws pertaining thereto, or if such transferee does not have the experience required above, the transferee must retain a property management firm with'such experience; and (C) any Transfer of Tenant's interest in the Land, the Project, or any portion thereof, or any sublease of the Land, or portion thereof, to a Tenant Affiliate. For purposes hereof, a "Tenant Affiliate" shall mean a person or entity that controls, is controlled by, or is under common control with Eden Housing, Inc., a California nonprofit public benefit corporation ("Eden"). For purposes of defining a Tenant Affiliate, "control" shall mean the ownership of fifty percent (50%) or more of the ownership interests in an entity, or in the case of a not-for-profit entity, the right to appoint fifty percent (50%) or more of such entity's board of directors. 15.2 Landlord's First Right to Acquire Leasehold Interest. Prior to any Transfer by Tenant of its interest in the Land, the Project, or any portion thereof (the "Tenant Interest") other than m Eden, Tenant shall notify Landlord in writing of its desire to consider such a Transfer (a "Transfer Notice"). Tenant shall have the right, but not the'obligation, to send a Transfer Notice to Landlord prior to or concurrently with a Transfer Consent Request under Section 15.3. below; provided, however, Tenant shall not be required to have received an offer for the Tenant Interest prior, or as a condition, to sending a Transfer Notice to Landlord. Tenant shall include in the Transfer Notice the purchase price for which Tenant would be willing to sell the Tenant Interest to Landlord. Within thirty (30) days after receipt of a Transfer Notice from Tenant, Landlord shall notify Tenant in writing ("Landlord's ~Response Notice") as to whether (i) Landlord is not interested in acquiring the Tenant Interest described in the Transfer Notice; (ii) Landlord is interested in acquiring the Tenant Interest described in the Transfer Notice, but is willing to do so only on the revised purchase price set forth in Landlord's Response Notice; or (iii) Landlord agrees to acquire the Tenant Interest on the purchase price and other terms and conditions set forth in the Transfer Notice. If Landlord fails to deliver Landlord's Response Notice as required above within such thirty (30) day period, or if Landlord timely delivers Landlord's Response Notice and elects clause (i) described above, then for the twelve (12) month period following the date of delivery of Landlord's Response Notice (or the required delivery date thereof if Landlord fails to deliver Landlord's Response Notice) Tenant shall be free to Transfer the Tenant Interest described in the Transfer Notice On whatever purchase price and other temas and conditions as Tenant thereafter elects in its sole discretion, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to obtaining the Landlord's consent to such Transfer. Any Transfer by Tenant of the Tenant Interest after such twelve (12) month period shall require a new Transfer Notice from Tenant and compliance with the provisions of this Section 15.2. Notwithstanding the 12-month periods set forth in this Section 15.2, each 12-month period shall be subject to three 60-day extensions if such time is necessary to complete the closing under a purchase and sale agreement or other transfer agreement or contract entered into within the initial !2-month period. 675831 28 If Landlord timely delivers Landlord's Response Notice and elects clause (ii) above} then Tenant shall have the right, within twenty (20) days after Tenant's receipt of Landlord's Response Notice, to either accept the revised purchase price set forth in Landlord's Response Notice or decline to accept such revised purchase price. If Tenant fails to respond to Landlord's Response Notice within such twenty (20) day period, then Tenant shall be deemed to have declined to accept the revised purchase price set forth in Landlord's Response Notice. If Tenant -~ declines (or is deemed to have declined) to accept the revised purchase price set forth in Landlord's Response Notice, then Tenant shall thereafter be free, for the twelve (12)month period following the date of delivery of Landlord's Response Notice, to Transfer the Tenant Interest on such purchase price and other terms and conditions as Tenant thereafter elects, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to obtaining the Landlord's consent to such Transfer, except that the purchase price acgepted by Tenant shall not be more than [$50,000] more favorable to the buyer than the purchase price offered by Landlord in Landlord's Response Notice. Any TranSfer by Tenant of the Tenant Interest after such twelve (12) month period shall require a new Transfer Notice from Tenant and compliance with the provisions of this Section 15.2. If Landlord timely accepts the purchase price set forth in the Transfer Notice or Tenant timely accepts the purchase price set forth in Landlord"s Response Notice, then during the thirty (30) day period after such acceptance, the parties shall in good faith negotiate and execute a definitive agreement that incorporates the accepted purchase price and the other terms and conditions set forth in the Transfer Notice. If despite the parties' good faith efforts the parties are unable to complete the negotiation and execution of such def'mitive agreement within such thirty (30) days period, then neither party shall be obligated to proceed with the Transfer of the Tenant Interest to Landlord, and Tenant shall have the right, for the twelve (12) month period thereafter, to Transfer the Tenant Interest to another third party on such purchase' price and other terms and conditions as elected by Tenant, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to the obtaining of Landlord's written consent to such Transfer. If,Tenant and Landlord shall execute a definitive agreement for the Transfer of the Tenant Interest to Landlord and Landlord shall thereafter default in the performance of its obligations under such agreement, then the terms and provisions of this Section 15.2 shall thereafter be of no further force or effect and Tenant shall have the right to consummate Transfers of Tenant Interests without the application of this Section 15.2, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to the obtaining of Landlord's written consent to such Transfer. Upon any Transfer by Tenant to Landlord of its leasehold interest under this Lease, or any portion thereof, pursuant to this Section 1.5.2, Tenant shall be released from any further liability or obligations under this Lease with respect to the transferred leasehold interest, to the extent such. liability or obligations arises after the date of the Transfer, unless the transfer agreement or purchase and sale agreement between Tenant and Landlord provide otherwise. 15.3 Procedure for Obtaining Landlord's Consent. (a) Transfer Request. With respect to each Transfer requiring the Landlord's consent under Section 15.1, Tenant shall send to Landlord written request for Landlord's approval of the Transfer (a "Transfer Consent Request") specifying the name-and address of 675831 29 the proposed transferee and its legal composition (if'applicable). Each Transfer Request shall be accompanied by all of the following: (i) An audited or certified financial' statement of the proposed transferee for the two most recent calendar or fiscal years prepared in. accordance with generally - accepted accounting procedures by a certified public accounting firm sufficiently current and detailed to evaluate the proposed transferee's assets, liabilities and net worth and certified as true and correct by the proposed transferee; (ii) a description of the nature of the interest proposed to be transferred, the portion or portions of the Project affected by the Transfer, and the proposed effective date of such Transfer; (iii) a true and complete copy of the proposed assumption agreement described in Section 15.6: (iv) a complete history of the proposed transferee describing its background, its current real estate projects and location thereof, and the background of the principals or personnel to be involved in the development or operation of the portion of the Project subject to the Transfer and stating whether the proposed transferee ever filed for bankruptcy or had projects that were foreclosed; (v) a description of all projects of the proposed transferee which during the past five (5) years have been the subject of substantial litigation; and (vi) any such other information as reasonably requested by Landlord within fifteen (15) days following the receipt of the above information, in order to make an informed decision whether or not to approve or disapprove the Transfer. (b) Approval of Landlord. Within thirty (30) days following receipt of all the information referred to in Section 15.3 (a), Landlord shall approve or disapprove a proposed transferee with respect to the information supplied. If Landlord fails to give Tenant written notice of its approval or disapproval of the transferee w~thin such thirty (30) day period, it shall be deemed to have approved the transferee. 15.4 Limitati°ns. (a) Non-Transfer Period. In no event shall Tenant request Landlord to approve any Transfer prior to the date that all of the following shall have occurred: (i) construction of the Development and related Improvements shall be complete and a certificate(s)'of occupancy shall be issued with respect to the Development;' and (ii) all costs and expenses with regard to the construction of the Development and related Improvements shall be paid in full, all lien periods shall have expired and there shall be no liens on the Land, the Improvements, the Landlord's fee title or any portion thereof. 675831 30 The provisions of this Section-15.4 (a) shall not be applicable to, or after, the foreclosure of a Leasehold Mortgage or the acquisition of Tenant's interest in this Lease by assignment o'r deed in lieu of foreclosure. (b) No Relief from Liability. No Transfer will limit, diminish or otherwise relieve Tenant of any liability described herein. The prOVisions of this Section 15.4 (b) shall not be applicable to any Transfer following the foreclosure of a Leasehold Mortgage or following the acquisition of Tenants' interest in this Lease by assignment or deed in lieu of foreclosure. (c) No Consent If Bankruptcy. In no event shall Landlord be required to consent or be deemed to consent to a Transfer to a party then subject to any proceedings under any insolvency, bankruptcy or similar laws. (d) Criteria for Transfer. Landlord shall be deemed to be reasonable in withholding its consent to a proposed Transfer unless both of the following shall be the case: (i) Tenant delivers to Landlord an audited financial statement of the proposed transferee for the two most recent calendar or fiscal years prepared in accordance with generally accepted accounting principles by a recognized certified accounting firm demonstrating that the proposed transferee is a viable, going concern with sufficient financial ability to own, operate and manage the Project; and (ii) the proposed transferee shall have comparable reputation and experience operating and managing properties similar to the Development as the reputation and experience of the original Tenant. I5.5 Inv°luntary'and Other Transfers. Without limiting any other restrictions on transfer contained in this Lease, no interest of Tenant in this Lease, the Land or the Improvements shall be assignable in the following manner: (a) under an order of relief filed, or a plan of reorganization confirmed, for or concerning Tenant by a bankruptcy court of competent jurisdiction under the federal bankruptcy act or the laws of the State of California, whereby any interest in this Lease, the Land or the Improvements is assigned to any party which does not qualify as an approved transferee pursuant to this Lease unless such order is filed or such plan is confirmed in connectiOn with an involuntary proceeding brought against Tenant and Tenant reacquires such transferred interest within sixty~ (60) days after the date such order is filed or such plan is confirmed; (b) if Tenant assigns substantially all of its assets for the benefit of its creditors; or (c) if an order of attachment is issued by a court of competent jurisdiction, whereby any interest in this Lease, the Land or the Improvements or substantially all of Tenant's assets are attached by its creditors and such order of attachment is not stayed within sixty (60) days after the date it is issued. The transfers described in this Section 15.5 shall constitute a breach under this Lease by Tenant and Landlord shall have the right to terminate this Lease pursuant to Article 16 as a result of any such transfer taking place, in which case this Lease shall not be treated as an asset of 675831 3 1 Tenant. 15.'6 Assumption Agreement and Release. NO permitted Transfer shall be effective until any curable default hereunder shall have been cured and there shall have be, en delivered to Landlord an assumption agreement, executed by the transferor and the proposed transferee, whereby such transferee expressly assumes such obligations as arise and/or accrue at any time after such Transfer takes place; and whereby such transferee assumes liability for the lease Obligations. The parties agree that as a condition to any Transfer taking place the transferee shall deliver to Landlord representations and warranties confirming the accuracy of the information delivered to Landlord concerning its current financial condition and its outstanding or pending liabilities. 15.7 Chan~e in General Partner of Tenant. In addition to the restrictions on Transfers as set forth in this Article 15, Landlord shall have the fight to approve any change in the identity of the general partner of Tenant, including without limitation, any admission of any new general panner or withdrawal of any existing general partner. Such approval right of Landlord shall also apply to the transfer ora majority of the ownership interest in a general partner of Tenant. Landlord shall not unreasonably withhold, delay or condition its approval under this Section 15.7. Notwithstanding any contrary provision of this Section 15.:7, Landlord's approval shall not be required with respect to (i) any change in the identity or ownership of the general partner of Tenant as long as following such change the general partner of Tenant continues to be an entity which, controls, is controlled by, or is under common control With Eden; or (ii) any change in the general partner of Tenant to Tenant's tax credit investor, any entity that controls, is controlled' by, or is under common control with, Tenant's tax credit investor, or any successor general partner selected by Tenant's tax credit investor after a default by Tenant's general partner. For purposes of this Article 15, "control" shall mean the fight to direct the management and aff~rs, of an 'entity, whether by virtue of the ownership of ownership interests, by contract} by appointment of directors or by common or overlapping boards. 15.8 Sale by Landlord. Nothing contained in this Lease shall be deemed in any way to limit, restrict or otherwise affect the fight of Landlord to sell, transfer, assign or convey all or any portion of the right, title and estate of Landlord in the Land and in this Lease; provided, however, that in each such instance any such sale, transfer, assignment or conveyance shall be subject to this Lease, and Tenant's other rights arising out of this Lease shall not be affected or disturbed in any way by any such sale, transfer, assignment or conveyance. Any other provision of this Lease to the contrary notwithstanding, each covenant, agreement or obligation of Landlord under this Lease relating to the ownership or use of the Project is intended to and shall constitute a covenant running with the title to the Land and shall be binding upon the owner from time to time of the Land. At such time as Landlord shall sell, transfer, assign or convey the entire right, title and estate of Landlord in the Land and in this Lease, all obligations and liability on the part of Landlord arising under this Lease after the effective date of such sale, transfer, assignment or conveyance shall terminate as to Landlord, and thereupon all such liabilities and Obligations shall be binding upon the transferee. Subject to compliance with applicable law, any sale or transfer of Landlord's interest in the Land and this Lease other than to a governmental entity or agency, shall be subject to Tenant's right of first refusal on the same terms and conditions set forth in Section 15.2 above. 32 ARTICLE XVI BREACHES~ REMEDIES AND TERMINATION 16.1 Event of Default. Tenant shall be in default under this Lease upon the occurrence of any of the following ("Events of Default"): (i) Monetary Obligation. Tenant at any time is in default hereunder as to any monetary obligation (inclUding without limitation, Tenant's obligation to pay taxes and assessments due on the Property or the Project, subject to Tenant's rights to contest such charges pursuant to Section 4.2), and such default continues for twenty-five (25) days after Tenant receives Notice of Breach (as defined in Section 16.2.1); (ii) Insurance. Tenant fails to obtain and maintain any policy of insurance required pursuant to this Lease, and Tenant fails to cure such default within twenty- five (25) days following receipt of Notice of Breach; (iii) Abandonment. Tenant abandons the Project; (iv) Bankruptcy. Tenant files a voluntary petition in bankruptcy or files any petition or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, diSsolution or similar relief for itself under any present or future federal, state or other statute, law or regulatiOn relating to bankruptcy, insolvency or other relief for debtors; or seeks or consents to or acquiesces in the appointment of any trustee, receiver or liquidator of Tenant or of all or any substantial parr of its property, or of any or all of the royalties, revenues, rents, issues or profits thereof, or makes any general assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as .they become due; (v) Reorganization. A court of competent jurisdiction enters an order, judgment or decree approving a petition filed against Tenant seeking any reorganization, dissolution or similar relief under any present or future federal, state or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, and such order, judgment or decree remains unvacated and unstayed for an aggregate'of sixty (60) days from the first date of entry thereof, or any trustee receiver or liquidator of Tenant or of all or any substantial part of its property, or of ahy or all of the royalties, revenues, rents, issues or profits thereof is appointed without the consent or acquiescence of Tenant and such appointment remains unvacated and unstayed for an aggregate of sixty (60) days, such sixty (60) day period to be extended in all cases during any period of a bona fide appeal diligently pursued by Tenant; (vi) Attachment. A writ of execution or attachment or any similar process is issued or levied against all or any part of the interest of Tenant in the Project and such execution, attachment or similar process is not released, bonded, satisfied, or vacated or stayed within sixty (60) days after its entry or levy, such Sixty (60) day period to be extended during any period of a bona fide appeal diligently pursued by Tenant; (vii) Transfer. Tenant Transfers all or any portion of Tenant's interest in the Land, the Improvements or in this Lease in violation of the provisions of Article 15 and 33 fails to rescind such Transfer within thirty (30) days after written notice from Landlord or such longer period of time as Landlord may agree; (viii) Nonmonetary Obligations. Tenant is in default in any other of its promises, covenants or agreements contained herein, and such default shall continue for sixty (60) days after Tenant receives Notice of Breach specifying the particulars of such default (or such longer time as Landlord may agree upon in writing), provided that Tenant commences to cure the default within twenty-five (25) days and thereafter prosecutes the curing of such default with due diligence and in good faith. 16.2 Notice and Oppommity to Cure. 16.2.1 Notice of Breach. Unless expressly provided otherwise in this Lease, no breach by a party shall be deemed to have occurred under this Lease unless another party.first delivers to the nonperforming party a written request' to perform or remedy (the "Notice of Breach"), stating clearly the nature of the obligation which such nonperforming party has failed to perform, and stating the applicable period of time, if any, permitted to cure the default. 16.2.2 Failure to Give Notice of Breach. Failure to give, or delay in giving, Notice of Breach shall not constitute a waiver of any obligation, requirement or covenant required to be performed hereunder. Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any rights and remedies as to any breach shall not operate as a waiver of any breach or of any such rights or remedies. Delay by either party in asserting any of its rights and remedies shall not deprive such party of the right to institute and maintain any action or proceeding which it may deem appropriate to protect, assert or enforce any such rights or remedies. 16.2.3 Limited Partners' Right to Cure. Subject to the rights of Leasehold Mortgagees whose liens are senior to the City Deed of Trust ("Senior Leasehold Mortgagees"), the limited partners of Tenant ("Limited Partners") shall have the right to cure any default of Tenant hereunder upon the same terms and conditions afforded to Leasehold Mortgagees pursuant to Section 14.2.2 hereof. Provided Landlord has been given written notice of the address for delivery of notices to the Limited Partners, Landlord shall deliver notice of default to the Limited Partners in accordance with Section 14.2.1. The references to "Leasehold Mortgagee" in Sections 14.2.1, 14.2.2, and 16.3 shall be deemed to include the Limited Partners. Nothing contained in this Section 16.2.3 shall affect the rights and remedies of Senior Leasehold Mortgagees or the timing with respect to the exercise thereof. 16.3 Remedies Upon Default. 16.3.1 Landlord's Remedies. Upon the occurrence of any Event of Default and in addition to any and all other rights or remedies of Landlord hereunder and/or provided by law, but subject in all events to the rights and remedies of Leasehold Mortgagees under Article 14 hereof, Landlord shall have the right to terminate this Lease and/or Tenant's possessory rights hereunder, in accordance with applicable law to re-enter the Land and take possession thereof and of the Improvements, and except as otherwise provided herein, to remove all persons and property therefrom, and to store such property at Tenant's risk and for Tenant's account, and Tenant shall have no further claim thereon or hereunder. In no event shall this Lease be treated · as an asset of Tenant after any final adjudication in bankruptcy except at Landlord's oPtion so to treat the same but no trustee, receiver, or liquidator of Tenant shall have any right to'disaffirm this Lease. 16.3.2 Remedies Upon Abandonment. If Tenant should breach this Lease and abandon the Project, Landlord may, at its option, enforce all of its rights and remedies under this Lease, including the right to recover the rent as itbecomes due hereunder. Additionally, Landlord shall be entitled to recover from Tenant all costs of maintenance and preservation of the Project, and all costs, including attorneys' and receiver's fees incurred in connection with the appointment of and performance by a receiver to protect the Project and Landlord's interest under this Lease. 16.3.3 Landlord Right to Continue Lease. In the event of any default under this Lease by Tenant (and regardless of whether or not Tenant. has abandoned the Project), this Lease shall not terminate (except by an exercise of Landlord's right to terminate under Section 16.3.1) unless Landlord, at Landlord's option, elects to terminate Tenant's right' to possession or, at Landlord's further option, by the giving of any notice (including, without limitation, any notice preliminary or prerequisite to the bringing of legal proceedings in unlawful detainer) to terminate Tenant's right to possession. For so long as this Lease continues in effect, Landlord may enforce all of Landlord's rights and remedies under this Lease, including, without limitation, the right to recover all rent and other monetary payments as they become due hereunder. For the purposes of this Lease, the following shall not constitute termination of Tenant's right to possession: (a) acts of maintenance or preservation or efforts to relet the Project; or (b) the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease. 16.3.4 Right to Iniunction; Specific Performance. In the event, of a default by Tenant under this Lease, Landlord shall have the right to commence an action against Tenant for damages, injunction and/or specific performance. Tenant's failure, for any reason, to comply with a court-ordered injunction or order for specific performanCe shall constitute a breach under this Lease. 16.4 Assignment of Subrents and Other Sums. Subject to the rights of any Leasehold Mortgagee, Tenant irrevocably assigns to Landlord the subrents and other sums due from Project tenants, licensees or concessionaires for the purposes and upon the terms and'conditions set forth below. This assignment shall not impose upon Landlord any duty to produce rents from the Project, or cause Landlord to be (a) a "mortgagee in possession" for any purpose, (b) responsible for performing any of the obligations of the sublessor under any sublease, or (c) responsibl6 for any waste committed by subtenants or any other parties, for any dangerous or defective condition of the Project, or for any negligence in the management, upkeep, repair or control of the Project. This is an absolute assignment (subject to the rights of any and all Leasehold Mortgagees), not an assignment for security only; and Landlord s right to subrents ~s not contingent upon, and may be exercised without possession of, the Project. Tenant hereby authorizes Landlord, at the election of Landlord to file a UCC-1 Financing Statement reflecting this assignment with the California Secretary of State. Landlord shall provide ail Leasehold Mortgagees for which Landlord has been given an address for notice purposes with not less than twenty (20) days' prior written notice preceding any enforcement by Landlord Of its rights to subrents. 675831 3 5 16.4.1 License. Landlord confers upon Tenant a license ("License") to collect and retain the subrents, issues and profits of the Project as they become-due and payable, until the occurrence of an Event of Default. Upon the occurrence of an Event of Default, the License shall be automatically revoked and, subject to any rights of any Leasehold Mortgagee, Landlord Cay collect and retain the subrents, issues and profits without notice and without taking possession of the Project. This right to collect subrents, issues and profits shall not grant to Landlord the right to possession, except as hereinafter provided, and neither said .right, nor termination of the License, shall impose upon Landlord the duty to produce subrents, issues or profits or to maintain all or any part of the Project. 16.4.2 Right to Receiver. Following the occurrence of an Event of Default, if Tenant fails after receipt of a Notice of Breach to cure the default within the time period set forth in this Lease, Landlord, at its option, may have a receiver appointed to take possession of Tenant's interest in the Land, the Improvements and the Project with power in the receiver (a) to administer Tenant's interest in the Land; the Improvements and the~ Project, (b) to collect all funds available in connection with the operation of the Land, the Improvements and the Project, and (c) to perform all other acts consistent with Tenant's obligations under this Lease, as the court deems proper. Landlord's rights under this Section 16.4.3 shall be subject to the rights of all Leasehold Mortgagees. 16.5 Remedies Cumulative. No remedy in this Article 16 shall be considered exclusive of any Other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder Or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease may be exercised from time to time and as often as occasion may arise or as may be deemed expedient, subject to any limitations hereinabove referred to and subject to the nonrecourse provisions set forth in Section 3.1.1. 16.6 No Election of Remedies. The rights given in this Article 16 to receive, collect or sue for any rent or rents, moneys or payments, or to enforce the terms, provisions and conditions of this Lease, or to prevent the breach or nonobservance, thereof, or the exercise of any such right or of any other right or remedy hereunder or otherwise granted or arising, shall not in any way affect or impair or toll the right or power of Landlord upon the conditions and subject to the provisions in this Lease to terminate Tenant's right of possession because of any default in or breach of any of the covenants, provisions or conditions of this Lease beyond the applicable cure period. 16.7 Survival of Obli.~ations. Nothing herein shall be deemed to affect the right of Landlord under Article 9 of this Lease to indemnification for liability arising Prior to the termination of the Lease for personal injuries' or property damage, nor shall anything herein be deemed to affect the right of Landlord to equitable relief where such relief is appropriate. No expiration or termination of the Term by operation of law, or otherwise, and no repossession of the Land or any part thereof shall relieve Tenant of its previously accrued liabilities and obligations hereunder, all of which shall survive such expiration, termination or repossession. i6.8 No Waiver. Except to the extent that Landlord may have agreed in writing, no waiver by Landlord of any breach by Tenant of any of its obligations, agreements or covenants hereunder shall be deemed to be a waiver of any subsequent breach of the same or any other 675831 36 covenant, agreement or obligation, nor shall any forbearance by Landlord to seek a remedy for any breach by Tenant be deem6d a waiver by Landlord of its rights or remedies with respect to such breach. ARTICLE XVII GENERAL PROVISIONS. 17.1 Estoppel Certificates. At any time and from time to time, either party, on at least twenty (20) days' prior-written request by the other party, shall deliver to the party requesting same a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there shall have been modifications that the same is in full force and effect as modified and stating the modifications) and the dates to which the Rent has been paid and stating whether or not, to the best knowledge of the certifying party, the other party is in default in the performance of any covenant, agreement or condition contained in this Lease and, if so, specifying each such default of which the certifying party may have knowledge. A prospective purchaser or mortgagee shall be entitled to rely on a statement delivered hereunder. 17.2 Quiet Enjoyment. Landlord covenants and agrees that Tenant, upon paying the Rent and all other charges herein provided for and observing and keeping all covenants, agreements and conditions of this Lease on its part to be observed and kept, shall quietly have and enjoy the Land during the Term of this Lease without hindrance or molestation by anyone claiming by or through Landlord, subject, however, to the exceptions, reservations and conditions of this Lease. 17.3 Landlord's Right to Enter the Land. Landlord and its agents may enter the Land or the Improvements from time to time with reasonable notice, except for emergencies in which case no notice shall be required, to inspect the same, to post notices ofnonresponsibility and similar notices, and to discharge Tenant's obligations hereunder when Tenant has failed to do so within a reasonable time after written notice from Landlord. 17.4 Representations of Landlord and Tenant. 17.4.1 Tenant hereby represents and warrants that all of the following are tree and correct as of the Effective Date: (a) Tenant is a limited parmership, duly organ/zed, validly existing and in good 'standing under the laws of the State of California; (b) Tenant has taken all requisite action in connection with the execution of this Lease and the undertaking of the obligations set forth herein. This Lease constitutes the legally valid and binding obligation of Tenant, enforceable against Tenant in accordance with its terms, except as it may be affected by bankruptcy, insolvency or similar laws or by legal or equitable principles relating to or 4~ + * limiting the rights o~ contracting partiesgenera~,y,n, and 675831 37 (c) The execution of this Lease and the acceptance of the obligations set forth herein do not ~,iolate any court order or ruling binding upon Tenant or any provision of any indentur&, agreement or other instrument to which Tenant is a party or may be bound. Neither the entry into nor the performance of this Lease will violate, be in conflict with or constitute a default under any charter, bylaw, partnership agreement, trust agreement, mortgage, deed of trust, indenture, contract, judgment, order or other agreement, charge, right or interest applicable to Tenant. 17.4.2 Landlord hereby represents and warrants that all of the following are tree and correct as of the Effective Date: (a) Landlord has taken all requisite action in connection with the execution of this Lease and the undertaking o£the obligations set forth herein. This Lease constitutes the legally valid and binding Obligation of Landlord, enforceable against Landlord in accordance with its terms, except as it may be affected by bankruptcy, insolvency or similar laws or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (b) The execution of this Lease and the acceptance of the obligations set forth herein do not violate any court order or ruling binding upon Landlord or any provision of any indenture, agreement or other instrUment to which Landlord is a party or may be bound. Neither the entry into nor the performance of this Lease will violate, be in conflict with or constitute a default under any charter, bylaw, partnership agreement, trust agreement, mortgage, deed of trust, indenture, contract, judgment, order or other agreement, charge, right or interest applicable to Landlord. 17.5 Miscellaneous. 17.5.1 Severabilit¥. If any term or provision of this Lease or the application thereof to any person or circumstance shall, to any extent, be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. '17.5.2 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Lease shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; 38 (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case notice is effective on delivery if delivery is confirmed by the delivery service; (iv) facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first- class or certified mail or by' overnight delivery, or Co) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next business day if it is received after 5:00 p.m. recipient's time or on a nonbusiness day. Landlord: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attention: Community Development Director Facsimile: (925) 833-6628 Tenant: Dublin Senior Limited Parmership c/o Eden Housing, Inc., general partner 409 Jackson Street Hayward, CA 94544-1567 Attention: Executive Director Facsimile: (510) 582-6523 With copy to: (Investor Limited Partner) Peoples Benefit Life Insurance Company c/o AEGON USA Realty Advisors, Inc. 400 West Market Street Louisville, KY 40202 Attn: Marsha Hicks, Counsel Facsimile: (502) 560-2207 With a copy to: AEGON USA Realty Advisors, Inc. 600 Montgomery Street, 16th Floor San Francisco, CA 94111 Attn: Christoph K. Gabler Facsimile: (415) 983-5558 With a copy to: Carle, Mackie, Power & Ross LLP 100 B Street, Suite 400 Santa Rosa, CA 95401 Attention: Richard W. Power, Esq. Facsimile" (707) 526-4707 675831 39 If to the Special Limited Parmer: c/o Transamerica Aff6rdable HOusing, Inc. c/o AEGON USA Realty Advisors, Inc. 600 Montgomery Street, 16th Floor San Francisco, CA 94111 Attn: David W. Kunhardt, Vice President - Community Investments FaCsimile: (415) 983-5558 With copy to: (Leasehold Mortgagee) Citibank (West), F.S.B - Facsimile: 17.5.3 Captions; Construction. The captions used for the sections and articles of this Lease are inserted for convenience only and shall not be used to construe this Lease. The language in all Parts of this Lease shall be construed as a whole, according to its fair meaning and 'not strictly for or against Landlord or Tenant. 17.5.4 Successors and Assign.s. Subject to the provisions hereof, this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, and wherever a reference in this Lease is made to either of the parties hereto such reference shall be deemed to include, wherever applicable, a reference to the successors and assigns of such party, as if in every case so expressed. 17.5.5 Short Form of Lease. A memorandum of lease referring to this Lease shall be executed by Landlord and Tenant and recorded in the Office of the Alameda County Recorder. 17.5.6 Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of California. 17.5.7- Attorney"s Fees. Should either party hereto commence an action against the other to enforce any obligation Contained herein, the prevailing party shall be entitled ro recover from the other party reasonable counsel fees and costs and necessary disbursements, as determined by the court having jurisdiction over the action. 17.5.8 Indemnity Includes Defense Costs. In any case where either party is obligated under an express provision of this Lease, to indemnify and to save the other party harmless from any damage or liability, the same shall be deemed to include defense of the indemnitee by the indemnitor, such defense to be through legal counsel reasonably acceptable to the indemnitee. 17.5.9 No Brokers; No Third-Party Beneficiaries. Landlord represents that it has not engaged any Broker or agent to represent Landlord in this tranSaction. Tenant represents that it has not engaged any broker or agent to represent Tenant in this transaction. Each party agrees to indemnify and hold the other harmless from and against any and all liabilities or expenses, including .attorneys' fees and costs, arising out of, or in connection with claims made by any broker or indiVidual for commissions or fees as a result of the acts of the indemnifying party. There shall be no third-party beneficiaries to this Lease. 17.5.10 Disclaimer of Partnership, Lender/Borrower Relationship. The relationship of the parties under this Lease is solely that of landlord and tenant, and it is expressly understood and agreed that Landlord does not as a result of this Lease in any way nor for any purpose become a partner of Tenant or a joint venturer with Tenant in the conduct of 'Tenant's business or otherwise. This Lease is not intended to, and shall not be construed to, create the relationship oi'principal and agent, partnership, joint, venture, association, or seller and buyer as between Landlord and Tenant. It is further expressly understood and agreed that this Lease is not intended to, and shall not be construed to create the relationship of lender and borrower, and Landlord does not, solely as a result of this Lease, become a lender to Tenant. .17.5.11 Entire Agreement; Amendments. This Lease contains the entire agreement between the parties relative to the leasing transaction covered hereby. All previous correspondence, communications, discussions, agreements, understandings or proposals and acceptances thereof between the parties or their representativeS, whether oral or written, are deemed to have been integrated into and superseded by this Lease and are of no further force and effect except as expressly provided in this Lease. No amendment or modification hereof shall be effective for any purpose unless in writing signed by Landlord and Tenant. 17.5.12 Time is of the Essence. Time is of the essence of this Lease and of each provision hereof. 17.5.13 Counterparts. This Lease may be executed in one or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 17.5.14 Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City of Dublin in its capacity as Landlord hereunder is required or permitted under this Lease, such action shall be in writing, and such action may be given, made or taken by the City ,Manager or by any person who .shall have been designated by the City Manager, without further approval by the City Council. In any approval, consent, or other determination by Landlord required hereunder, Landlord shall act reasonably and ir[ good faith. SIGNATURES ON FOLL O IJZlNG PA GE 675831 41 IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of the Effective Date. LANDLORD: CITY OF DUBLIN - By: Richard C. Ambrose, City Manager Attest: City Clerk Approved as to form: Elizabeth H. Silver, City Attorney TENANT: DUBLIN SENIOR LIMITED PARTNERSHIP By: Eden Housing, Inc., a California nonprofit public benefit corporation Its: General Partner By: Linda Mandolini, Executive Director 675831 42 Exhibit A LAND (Attach legal description.) 675831 43 ........ ~,~t[acn lnSuranc~ r~qulr~mems, j Exhibit B INSURANCE REQUIREMENTS (Attach insurance requirements.) 44 ORDINANCE NO. AN ORDINANCE OF THE CITY OF DUBLIN AUTHORIZING A GROUND LEASE BETWEEN THE CITY OF DUBLIN AND DUBLIN SENIOR LIMITED PARTNERSHIP · WHEREAS, the citizens of Dublin are experiencing a housing shortage for very low-income senior households; WHEREAS, a goal of the Housing Element of the City's General Plan is to achieve a balanced community with housing available for households of a range of income levels; I/VHERI~.AS, persons with very low incomes who currently live and/or work in the City are increasingly unable to locate housing at prices they can afford and often become excluded from living in the City; WI-IERF. AS, it is a public purpose of the City, and a public policy of the State as mandated by the requirement for a housing element of the City's General Plan, to make available an adequate supply of housing for persons of all economic segments of the community; INItEREAS, the City is the owner of certain real property ("Property") described in the attached Ground Lease, which is attached hereto as Exhibit A; WHEREAS, pursuant to a Memorandum of Understanding CMOU") with the County of Alameda, the'City acquired the Property and agreed to use the Property solely for public purposes for a minimum of fifty (50) years; WHEREAS, the City invited several non-profit organizations to submit proposals for the development of affordable senior housing on the Property, and following an evaluation of proposals and a public hearing, the City selected Eden Housing, Inc., a California non-profit public benefit corporation ("Eden"), to construct, own and operate a 54-unit affordable senior housing development on the Property (the "Project"); WI-IER12.AS, in June 2003, the City Council approved the execution of an Option to Lease giving Eden the right to lease the Property, contingent upon Eden obtaining construction financing commitments; I/VHEREAS, Eden is the general partner of Dublin Senior Limited Partnership, a California limited partnership ("Partnership"), which was formed to develop, own and operate low-income housing for seniors; ATTACHMENT 2 WHERF. AS, Eden and the Partnership have received construction financing commitments and now plan to exercise the option in order to move forward with the construction of the Project; WHEREAS, in order to make the Project affordable to very low-income households, the Project is also being financed with low-income housing tax credits; WHEREAS, in order for financing to close and construction to commence, the City must first lease the Property to the Partnership; WHEREAS, under California Government Code Section 37380, the Ground Lease must be authorized by ordinance; x~rI-IElZEAS, City loan documents and the attached Ground Lease will both impose affordability and occupancy requirements and will require periodic monitoring of such requirements, in accordance with Government Code Section 37380; WHEREAS, the lease of the Property to the Partnership will further the public purpose of the City and the public policy of the State, and will fulfill the requirements of the MOU; and X~-I-IEREAS, execution of the Ground Lease will allow for the construction and operation of affordable senior housing for very low-income households, which will benefit the residents of the City and encourage the preservation of the public peace, health and safety. NOW THEREFORE, THE CITY COUNCIL ORDAINS AS FOLLOWS: 1) Lease Authorized. The City Council of the City of Dublin hereby authorizes and directs the Mayor or her designee to execute the Ground Lease substantially in the form attached hereto as Exhibit A. 2) Compliance with California Environmental Quality Act. The City prepared an Initial Study for the Project, which led to a finding that all potential environmental impacts could be reduced to a less-than-significant level. Therefore, the City adopted a Mitigated Negative Declaration for the Project. 3) Severability. In the event any section or portion of this Ordinance shall be determined invalid or unconstitutional, such section or portion shall be deemed severable and all other sections or portions hereof shall remain in full force and effect. 4) Effective Date and Posting. In accordance with Section 36937 of the Government Code of the State of California, this Ordinance shall take effect and be in force thirty (3o) days from and after the date of its passage. The City Clerk of the City of Dublin shall cause this Ordinance to be posted in at least three (3) public places in the City of Dublin in accordance with Section 36933 of the Government Code of the State of California. PASSED, APPROVED AND ADOPTED by the City Council of the City of Dublin this day of ,2004, by the following vote: AYES: NOES: ABSTAIN: ABSENT: APPROVED: Mayor. ATTEST: City Clerk 674974v2 GROUND LEASE by and between the CITY OF DUBLIN, a municipal corporation as Landlord, and DUBLIN SENIOR LIMITED PARTNERSHIP, a California limited partnership, as Tenant Dated as of February 1, 2004 EXHIBIT A THIS GROUND LEASE (the "Lease") dated as of February 1, 2004 ("Effective Date") is entered into by and between the City of Dublin, a municipal corporation (hereafter "City" or "Landlord") and Dublin Senior Limited Partnership, a California limited partnership ("Tenant"). RECITALS A. City is the owner of fee title to the unimproved land located at 7606 Amador Valley Boulevard, Dublin, California, and more particularly described on Exhibit A attached hereto, including all appurtenances, easements, rights-of-way, and other interests appurtenant thereto (the "Land"). B. Tenant is a Californ'ia limited partnership which was formed to develop, own and operate affordable housing for very low- income senior households and to provide related services. C. Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord the Land, upon the terms and provisions set forth in this Lease, for the development by Tenant of a multi-family rental housing project for very low-income seniors and related improvements. AGREEMENT NOW, THEREFORE, for and in consideration of the covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows. ARTICLE I DEMISE OF PREMISES 1.1. Demise. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Land for the Term (as defined in Section 2.1 below) and on the terms and conditions set forth in this Lease. All oil, gas, geothermal and mineral rights are expressly reserved from this Lease. Landlord shall have no rights of entry or surface rights for the purpose of extraction of oil, gas, mineral, geothermal or similar resources, nor shall Landlord have the right to excavate any oil, gas, geothermal, mineral or similar resources above a depth of 500 feet .during the Term of this Lease. 1.2. Condition of Title. Landlord leases the Land to Tenant subject to all easements, covenants, conditions, restrictions and other title matters of record existing as of the Effective Date, and all matters that would be apparent from an inspection of the Land on the Effective Date. 1.3. Condition of Land. Landlord leases the Land to Tenant in its "as-is" condition existing on the Effective Date, and Tenant acknowledges that, except as otherwise expressly set forth in this Lease, Landlord makes no representations or warranties to Tenant with regard to the condition of the Land or the fitness or suitability thereof for Tenant's purposes, including but not limited to, matters pertaining to topography, utilities, soil, subsoil, presence or absence of fill, 675831 1 presence or absence of hazardous materials, drainage, flood zone designation, access to public roads, or environmental laws, rules, or regulations. Tenant has relied on its investigation and judgment as to all matters relating to the Land. Tenant represents that it has, prior to the execution of this Lease, made investigations of the Land, including without limitation such inquiries of governmental agencies, soils testing, tests and inspections as Tenant has deemed necessary to determine the condition of the Land and that Tenant, by execution hereof, accepts the Land in its current "as-is" condition and state. 1.4 Definitions. 1.4.1 Improvements. For purposes of this Lease, the term "Improvements" shall mean all buildings, structures, fixtures, fences, walls, paving, parking improvements, driveways, walkways, plazas, landscaping, permanently affixed utility systems and equipment, and other improvements located on the Land. 1.4.2 Project. For purposes of this Lease, the term "Project" shall mean the Land and all Improvements. ARTICLE II TERM OF LEASE 2.1 Term. The term of this Lease (the "Term") shall commence on the Effective Date, and unless sooner terminated under the provisions hereof, shall expire on the day preceding the ninety-ninth (99th) anniversary of the Effective Date (the "Expiration Date"). The expiration or sooner termination of the Term shall be referred to as "Lease Termination." 2.2 Lease Year. For purposes of this Lease, "Lease Year" shall mean each calendar year, or partial calendar year during the Term. ARTICLE III RENT 3.1 Rent. Tenant shall pay to Landlord, rent for the Land ("Rent") in the amount of One Dollar ($1.00) per Lease Year (or portion thereof for the first and last Lease Year of the Term) prepaid on the date of closing for Tenant's construction financing for the Project to Landlord at the address shown in Section 17.6.2 or such other place as Landlord may designate in writing. For so long as the Project is subject to the affordability requirements ("Affordability Requirements") set forth in Section 6.3 as the term of such Affordability Requirements may be extended pursuant to this Section 3.1, there shall be no increase in Rent during the Term. No later than 90 days prior to the expiration of the term of the Affordability Requirements and no later than 90 days prior to the expiration of each extension of such term, if any, thereafter, Tenant shall provide written notice to Landlord informing Landlord of whether or not Tenant desires to extend the term of the Affordability Requirements and the de. sired term of any such extension. The decision to extend the term of the Affordability Requirements, the length of each extension, and the number of extensions shall be made in Tenant's sole discretion. Tenant shall have the 675831 2 right to extend the term of the Affordability Requirements notwithstanding the failure of Tenant to provide written notice to Landlord within any applicable 90-day notice period and notwithstanding any provision that time is of the essence. If Tenant elects to extend the Affordability Requirements, Tenant and Landlord shall execute an amendment to this Lease which shall (i) set forth the term of the Affordability Requirements as extended, (ii) state that the Rent payable hereunder shall remain $1.00 per year through the expiration of the term of such extension, and (iii) state that the Rent has been prepaid for such extended term. If Tenant elects not to extend the Affordability Requirements, Landlord shall have the right to charge additional Rent during the portion of the Term remaining after the expiration of the Affordability Requirements. Landlord and Tenant agree to negotiate in good faith to establish the amount of such additional Rent and the terms of payment and shall execute an amendment to this Lease setting forth such terms. In no event shall the additional Rent exceed the rent for leased properties of comparable projects, taking into consideration the age and condition of the Improvements, the remaining term of the Lease, and the projected cash flow of the Project taking into consideration any applicable restrictions on rent and incorporating reasonable projections regarding vacancy rates and tenant turnover. Provided that the tenant under this Lease is Eden or a Tenant Affiliate (each as defined in Section 15.1), or a nonprofit corporation ("Nonprofit") which is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (or successor provision), or a partnership in which Eden, a Tenant Affiliate, or a Nonprofit is the general partner, the additional Rent shall not exceed 60% of Surplus Cash (as defined in the Note referenced in the Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing ("City Deed of Trust") executed by Tenant for the benefit of Landlord and recorded concurrently with the Memorandum of this Lease. 3.1.1 Non-Recourse. The provisions of this Section 3.1.1 shall apply for so long as the tenant under this Lease is anY of the following: Eden or a Tenant Affiliate, or a partnership in which Eden or a Tenant Affiliate is the general partner; provided however, this Section 3.1.1 shall also apply if Tenant's general partner is replaced by Tenant's tax credit investor, or by any entity that controls, is controlled by, or is under common control with, Tenant's tax credit investor, or by any successor general partner selected by Tenant's tax credit investor after a default by Tenant's general partner. Subject to the preceding paragraph, Tenant's obligation to pay additional Rent and other monetary obligations under this Lease shall be nonrecourse to Tenant as provided in this Section 3.1.1. Except as expressly provided in this Section 3.1.1, neither Tenant nor Tenant's partners, officers, directors, employees or agents shall have any direct or indirect personal liability for payment of additional rent or other monetary obligations under this Lease, and the sole recourse of Landlord with respect to such' payment shall be to terminate Tenant's leasehold interest in the Property; provided however, nothing contained in the foregoing limitation of liability shall: (A) impair the right of City to bring an action to terminate this Lease and evict Tenant from the Land; (B) be deemed in any way to impair the right of the City to assert the unPaid additional rent or other sums due as a demand for money within the meaning of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; 675831 3 (C) constitute a waiver of any right which City may have under any bankruptcy law to file a claim for the full amount of the indebtedness owed to City hereunder or to require that the Project shall continue to secure all of the indebtedness owed to City hereunder in accordance with this Lease; or (D) limit or restrict the ability of City to seek or obtain a judgment against Tenant to enforce against Tenant and its general parmers to: (a) recover under Sections 4.2, 5.3.1, 5.3.5, 6.9, 6.10.1, 12.1 and Article IX of this Lease (pertaining to Tenant's indemnification Obligations), or (b) recover from Tenant and its general partner(s) compensatory damages as well as other costs and expenses incurred by City (including without limitation attorney's fees and expenses) arising as a result of the occurrence of any of the following (subject to the rights of any Senior Leasehold Mortgagee (as defined in Section 16.2.3)): (i) any fraud or material misrepresentation on the part of Tenant, any general partner thereof, or any offiCer, director or authorized representative of Tenant or of any general partner thereof in connection with making or amendment of this Lease; (ii) any failure to maintain insurance on the Property and the Project as required pursuant to this Lease; (iii) failure to pay taxes, assessments or other charges due on the Property or the Project; (iv) the presence of hazardous or toxic material or waste on the Property or other violation of the Tenant's obligations under Section 6.10 of this Lease (pertaining to environmental matters); (v) the occurrence of any act or omission of Tenant that results in waste to or of the Project or the Property and which has a material adverse effect on the value of the Project or the Property; (vi) the removal or disposal of any personal property or fixtures in violation of this Lease; or (vii) the material misapplication of the proCeeds of any insurance policy or award resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Project or the Property. 675831 4 ARTICLE IV TAXES~ ASSESSMENTS AND OTHER CHARGES 4.1 Impositions. Tenant covenants and agrees to pay prior to delinquency, all real property taxes, possessory interest taxes, license and permit fees, sales, use or occupancy taxes, assessments whether general or special, ordinary or extraordinary, unforeseen, as well as foreseen, of any kind or nature whatsoever, pertaining to the Project, including, but not limited to (i) any assessment, levy, imposition or charge, in lieu of or substitution for real estate taxes, and (ii) any assessment for public improvements or benefits which is assessed, levied, or imposed upon or which becomes due and payable and a lien upon (a) the Project or any part thereof or any personal property, equipment or other facility uSed in the operation thereof, (b) the rent or income received by Tenant from subtenants or liCensees, (c) any use or occupancy of the Project, or (d) this transaction or, subject to the exclusions specified below, any document to which Tenant is a party creating or transferring an estate or interest in the Project. All of the foregoing are hereinafter referred to as "Impositions." 4.1.1 Exclusions. Impositions specifically shall exclude (i) any income, franchise, gross receipts, estate, inheritance, transfer or gift tax imposed on Landlord, and (ii) any transfer tax or increase in assessments, property tax, or possessory interest tax that is attributable to Landlord's sale or other transfer of the Land. 4.1.2 Installments. If, by law, any such Imposition is payable, or may at the option of the taxpayer be paid, in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Tenant may pay the same together with any accrued interest on the unpaid balance of such Imposition in installments as the same respectively become due and before any fine or penalty may be added thereto for the nonpayment of any such installment and interest. Any Impositions relating to tax years that are only partially included in the Term of this Lease shall be prorated between Tenant and Landlord. 4.1.3 EVidence of Payment. Upon request by Landlord, Tenant shall furnish, in form satisfactory to Landlord, evidence of payment prior to delinquency of all Impositions payable by Tenant. 4.2 Tenant Right to Contest. Tenant shall have the right before any delinquency occurs to contest or object to the amount or validity of any such Imposition by appropriate legal proceedings, but such right shall not be deemed or construed in any way as relieving, modifying or extending Tenant's covenant to pay any such Imposition at the time and in the manner required by law. Any such contest shall be conducted in accordance with and subject to the requirements of Applicable Law (as defined in Section 5.3.1) and otherwise in a manner that does not subject Landlord's title to the Land to foreclosure or forfeiture. Tenant shall indemnify, defend, protect and hold Landlord harmless from and against all claims, damages, losses, liabilities, costs and expenses (including without limitation attorneys' fees) incurred by Landlord as a result of any such contest brought by Tenant. During any contest of an Imposition, Tenant shall (by payment of disputed sums, if necessary) prevent any advertisement of tax sale, foreclosure of, or any divesting of Lessor's title, reversion or other interest in the Land or the Project. 675831 5 4.3 Tenant Duty to File. Tenant shall have the duty of making or filing any declaration, statement or report which may be necessary or advisable in connection with the determination, equalization, reduction or payment of any Imposition which is or which may become payable by Tenant under the provisions of this Article 4, and Landlord shall not be responsible for the contents of any such declaration, statement or report; provided, however Landlord shall cooperate with Tenant in connection with the foregoing, including joinder in any application pertaining thereto to the extent required under applicable law, all at no cost to Landlord. 4.4 Utilities. Tenant agrees to pay, or cause to be paid, all charges which are incurred by Tenant or which are otherwise a charge or lien against the Project during the Term, for gas, water, electricity, light, heat or power, telephone or other communication service use, or other utility use, rendered or supplied upon or in connection with the Project. Tenant shall also obtain,' or cause to be obtained, without cost to Landlord, any and all necessary permits, licenses or other authorizations required for the lawful and proper installation and maintenance upon the Land of wires, pipes, conduits and other equipment for the supply of utilities to the Project. In no event shall Landlord have any liability to Tenant, and Tenant hereby releases Landlord, from any and all claims, including but not limited to consequential damages, lost profits and similar damages that Tenant may incur as a result of any interruption, curtailment or diminishment of such utilities, other than for the active negligence or willful misconduct of Landlord. Notwithstanding the foregoing, Tenant shall have the right to challenge the amount or validity of the foregoing charges, provided that doing so does not result in the Land being subjected to any lien or other encumbrance. Landlord shall cooperate, within reasonable limits, to assist Tenant in securing utility services for the Project. ARTICLE V DEVELOPMENT OF THE LAND 5.1 Construction of Improvements. Tenant agrees to construct on the Land a 54-unit, multi-family residential rental project for seniors, together with related improvements (the "Development"), in accordance with plans and specifications approved by the City of Dublin and any other applicable governmental agency or authority. The Development shall include 53 one-bedroom units and one two-bedroom resident manager's unit, together with a community room and 31 parking spaces. 5.2 Construction Schedule. Tenant agrees to use diligent efforts to complete construction of the Development within twenty-four (24) months after the Commencement Date, subject to Unavoidable Delays incurred by Tenant. ("Unavoidable Delays" means delays due to strikes, acts of God, acts of the elements, inability to obtain labor, materials or utilities, governmental restrictions or moratoria, enemy action, earthquakes, civil commotion, war, unavoidable casualty or similar causes beyond the reasonable control of Tenant, but financial inability of Tenant 'to perform shall not be an Unavoidable Delay or an excusing cause. 675831 6 5.3 'Construction Standards. 5.3.1 General Construction Standards. All work done in connection with construction of Improvements on the Land, including any subsequent improvement, alternation or replacement, shall be conducted in a first class and workmanlike fashion in accordance with plans and specifications approved by Landlord and in compliance with all applicable local, state and federal statutes, codes, ordinances, laws and regulations (collectively, "Applicable Laws"). Tenant shall take all reasonably necessary measures to minimize any damage, disruption or inconvenience caused by such work and make adequate provision for the safety of all persons affected thereby. Tenant shall have the sole responsibility for obtaining all necessary governmental permits and approvals for the construction of the Improvements, at Tenant's sole cost and expense. Landlord shall cooperate with Tenant in connection with obtaining any such governmental permits and approvals. Tenant shall pay (or cause to be paid) all costs and expenses associated with the Improvements constructed by Tenant on the Land and shall indemnify, defend and hold Landlord harmless from and against all claims, liabilities, losses, costs and expenses (including reasonable attorneys' fees) incurred by or brought against Landlord for the failure of Tenant to pay for the cost of such work, any mechanics' or other liens filed against the Land in connection therewith, or the failure of Tenant to comply with Applicable Laws including without limitation, California Labor Code Section 1770 et seq. ("Prevailing Wage Laws") as and to the extent applicable. 5.3.2 Inspection During Construction. Tenant agrees to allow Landlord's authorized representatives, agents or employees reasonable access, upon 24 hours prior notice to inspect any construction Tenant undertakes on the Land. 5.3.3 Easements. From time to time at Tenant's request, Landlord shall, in its capacity as fee title owner to the Land, join in the grant of easements to public or private utility companies for utility service to and for the benefit of the Project. Landlord agrees to join in granting or dedicating such public or private utility or other easements as may be reasonably required for the development of the Land in accordance with this Lease. Landlord and Tenant acknowledge that it will be necessary to grant and receive certain reciprocal access, drainage, and other easements to and from the parcel owned by Landlord located adjacent to the Land. The parties agree to cooperate in determining the description, nature and extent of such easements and shall execute and record documents evidencing the same which are reasonably acceptable to both Landlord and Tenant. Without limiting the generality of the foregoing, Landlord and Tenant agree to the following: (i) Landlord shall have a parking easement in Tenant's parking lot in the location and of the dimensions designated as "Parking Easement" on Parcel Map 8144 ("Parcel Map") (attached hereto as Exhibit C) providing Landlord with exclusive rights to use such Parking Easement for senior center use; (ii) Landlord shall be entitled to install lighting in the locations designated as "PUE 1" and "PUE 2" on the Parcel Map, provided that Landlord shall be responsible for the installation, maintenance and repair of such lighting and for payment of all utility charges incurred for such lighting; (iii) Landlord shall provide Tenant with an ingress/egress/access easement across Landlord's adjacent property in the location designated as "pIEE" on the Parcel Map; and (iv) Landlord and Tenant shall provide reciprocal storm drain easements in the locations designated as "PSDE" on the Parcel Map. The Use and maintenance of the easements described in this Section shall be more particularly described in a separate easement agreement executed by the parties. 675831 7 5.3.4 Protection of Landlord. Nothing in this Lease shall be construed as constituting the consent of the Landlord, express or implied, to the performance of any labor or services, or the furnishing of any materials or any specific improvements, alterations of or repairs to the Project or any part thereof, by any contractor, subcontractor, laborer or materialman such as to give rise to any right of any such contractor, subcontractor, laborer or materialman to file a mechanic's lien or other claim against the fee title to the Land. Landlord shall have the right at all reasonable times to post, and keep posted, on the Land any notices which Landlord may deem necessary for the protection of Landlord and the Land from mechanic's liens or Other claims. Tenant shall give LandlOrd ten (10) days' prior written notiCe of the commencement of any work to be done on the Project to enable Landlord to post such notices. In addition, Tenant shall make, or cause to be made, timely payment of all monies due and legally owing to all persons doing any work or furnishing any materials or supplies to Tenant or any of its contractors or' subcontractors in connection with the Project. 5.3.5 Mechanic's Liens. Subject to Tenant's right to contest the same prior to payment, Tenant shall keep the Land and the Project free and clear of all mechanic's liens and other liens on account of work done by or for Tenant. Tenant agrees to and shall indemnify, defend and hold Landlord harmless from and against liability, loss, damages, costs and expenses (including reasonable attorney's fees) incurred by or brought against Landlord for claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished to Tenant or persons claiming under it. In the event any lien is recorded, Tenant shall, within thirty (30) days after written request from Landlord, cause such lien to be removed of record by bonding or otherwise. 5.3.6 Notice of Completion. Upon completion of construction of any Improvement, Tenant shall file or cause to be filed in the Official Records of Alameda County a Notice of Completion (the "Notice of Completion") with respect to the subject work. Upon request of Landlord, Tenant shall make available to Landlord following the completion of the Improvements a full set of as-built plans for the Improvements. 5.3.7 Use of Plans. The contracts relating to design and construction of the Project executed by and between Tenant (or Tenant's general partner or other Tenant Affiliate as defined in Section 15.1) and any architect, other design professional or any general contractor shall provide, in form and substance reasonably satisfactory to Landlord, for the assignment thereof to Landlord as security to Landlord for Tenant's performance hereunder, and Landlord shall be furnished with any such contract, together with the further agreement of the parties thereto, that if this Lease is terminated due to Tenant's default, Landlord may, at its election, use any plans and specifications to which Tenant is then entitled pursuant to any such contract upon the payment of any sums due to any party thereto. The Landlord's right to elect to use such plans and specifications shall be subordinate to and shall not defeat the rights of the Leasehold Mortgagee, and Landlord shall execute such agreements as the Leasehold Mortgagee may reasonably require to confirm such subordination. 5.3.8 Performance and Surety Bonds. Prior to the commencement of construction of any portion of the Improvements, Tenant shall purchase or cause Tenant's contractor to purchase: (A) in form reasonably satisfactory to Landlord and issued by a corporate surety reasonably acceptable to Landlord both a performance bond in an amount of not 675831 less than 100% of the cost of construction, naming Landlord and Leasehold Mortgagee as additional insureds and a payment bond in an amount of not less than 100% of the costs for labor and materials, naming Landlord and Leasehold Mortgagee as additional insureds; or (B) a letter ofcredit in an amount not less than 10% of the cost of construction, the form and substance of which shall be subject to Landlord's approval; or (C) such other form of assurance of completion the form and substance of which shall be subject to Landlord approval. "Leasehold Mortgagee" means the mortgagee or beneficiary of any Leasehold Mortgage, and in the event of a transfer of such Leasehold Mortgage, the successor Leasehold Mortgagee, upon delivery of written notice of the transfer to Landlord, who thereupon shall be deemed to be the Leasehold MOrtgagee. "Leasehold Mortgage" means a mortgage secured by the leasehold estate created by this Lease and held by a Leasehold Mortgagee. ARTICLE VI USE OF THE PROPERTY 6.1 Permitted Uses. Tenant may use the Land for the development and operation of a 54-unit multi-family residential rental project for seniors, and related ancillary facilities consistent and compatible with a multi-family residential rental project for seniors, and for no other purposes without the prior written consent of Landlord. 6.2 Occupancy Restrictions. For the full Term, no fewer than fifty-three (53) of the dwelling units in the Project shall be restricted for occupancy by households in which at least one member is a person 62 years of age or older. Residency by other persons in such dwelling units shall be in compliance with Section 51.3 of the California Civil Code. 6.3 Affordability Requirements. Subject to Tenant's option to extend as set forth in Section 3.1 hereof, for a period of fifty-five (55) years commencing upon the Effective Date, no fewer than twenty-six (26) of the dwelling units in the Project (49% of the total) shall be.both rent-restricted and occupied (or if vacant, available for occupancy) by households whose income does not exceed fifty percent (50%) of Area Median Income as adjusted for actual household size. The term "Area Median Income" shall mean the median gross annual income for households in Alameda County, adjusted for household size, as determined by the U.S. Department of Housing and Urban Development. A dwelling unit shall qualify as "rent-restricted" if the gross rent charged for such unit does not exceed thirty percent (30%) of fifty percent (50%) of Area Median Income as adjusted for assumed household size in accordance with California Tax Credit Allocation Committee ("TCAC") guidelines. As of the Effective Date, such guidelines provide that assumed household size is 1-1/2 persons for a studio apartment and 2 persons for a one-bedroom apartment. 6.3.1 Reporting Requirements. 6.3.1.1 Tenant Certification. Tenant shall obtain from each household prior to initial occupancy of each dwelling unit in the Project and on every anniversary thereafter, a written certificate containing all of the following in such format and with such supporting documentation as reasonably required by Landlord: 675831 9 (a) The identity and age of the resident who is age 62 or older; (b) The identity and age of each other member of the household or such other information reasonably required to demonstrate compliance with Section 6.2 above; and (c) Household income. Tenant shall retain such certificates for not less than three (3) years, upon request shall make the originals available for inspection by Landlord and by the Dublin Unified School District, and upon request, shall provide copies of such certificates to Landlord and the Dublin Unified School District. 6.3.1.2 Annual Report. Tenant shall submit an annual report ("Annual Report") to Landlord, which shall, at a minimum, include the following information for each dwelling unit in the Project: (i) initial occupancy date; (ii) the number of persons residing in the unit; (iii) the information specified in Section 6.3.1.1, and (iv) the monthly rent charged. Upon Landlord's request, Tenant shall include with the Annual Report, an annual income recertification and documentation verifying tenant eligibility, and such additional information as Landlord may reasonably request from time to time in order to show compliance with thisAgreement. Upon request, Landlord shall provide a copy of the Annual Report to the Dublin Unified School District. 6.4 Manager's Unit. One dwelling unit in the Project may be used as a resident manager's unit, and shall be exempt from the occupancy and rent restrictions set forth in Section 6.2 and 6.3 of this Lease. 6.5 No Condominium Conversion. Tenant shall not convert the Project to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Project during the Term of this Lease. 6.6 Nondiscrimination. There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, creed, sex, sexual orientation, marital status, familial status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Land or the Project, nor shall Tenant or any person claiming under or through Tenant 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, subtenants, sublessees or vendees in, of, or for the Project. Tenant shall include such provision in all deeds, leases, contracts and other instruments executed by Tenant, and shall enforce the same diligently and in good faith. 6.7 Binding on Successors; No Subordination. The restrictions set forth in this Article VI shall be binding upon Tenant and its successors and assigns for the full Term of this Lease, and shall not be subordinated to any interest, lien, or mortgage; provided however, the affordability restrictions specified in Section 6.2 shall be effective for a term of fifty-five (55) years commencing upon the Effective Date unless extended pursuant to Section 3.1. 675831 lO 6.8 Management and Operation of the Project; Compliance with Laws. Tenant agrees to use its best efforts to operate, maintain and manage the Project in first-class manner, subject to incidental wear and tear. Tenant, at its sole cost and expense, shall comply with all Applicable Laws pertaining to the use, operation, occupancy and management of the Project. Tenant shall not itself, and shall not permit any subtenant to use the Land or the Improvements for any unlawful purpose and shall not itself, and shall not permit any subtenant to, perform, permit or suffer any act of omission or commission upon or about the Land or the Improvements which would result in a nuisance or a violation of Applicable Law. Subject to the rights of Leasehold Mortgagees, Landlord shall have the right to review and approve the qualifications of any management entity proposed by Tenant for the Project. Landlord hereby approves Eden Management, Inc. as the management entity for the Project. Any contracting of management services by Landlord shall not relieve Landlord of its primary responsibility for proper performance of management duties. 6.9 Tenant Right to Contest. Tenant shall have the right to contest by appropriate proceedings, in the name of Tenant, and without cost or expense to Landlord, the validity or application of any Applicable Law. If cOmpliance with any Applicable Law may legally be delayed pending the prosecution of any such proceeding without the incurrence of any lien, charge or liability against the Land or Tenant's interest therein, and withoUt subjecting Tenant or Landlord to any liability, civil or criminal, for failure so to comply therewith, Tenant may delay compliance therewith until the final determination of such proceeding. Tenant shall indemnify, defend, protect and hold Landlord harmless from and against all claims, damages, losses, liabilities, costs and expenses (including without limitation attorneys' fees) incurred by Landlord as a result of any such contest brought by Tenant. 6.10 Hazardous Materials. 6.10.1 Obligations of Tenant. Tenant shall not cause or permit any Hazardous Material (as defined below) other than materials commonly used in the construction, operation and maintenance of the Project, provided such materials are used and disposed of in compliance with all applicable laws and regulations, to be brought upon, kept or used in or about the Land or the Project in violation of Applicable Law. If Tenant breaches the covenant set forth in the preceding sentence, then Tenant shall indemnify, defend, protect and hold Landlord harmless from and against all claims, demands, liabilities, losses, damages, fines, penalties, remediation orders, costs or expenses (including attorney's fees) incurred by or brought against Landlord as a result of such breach by Tenant. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by. any federal, state or local governmental agency or political subdivision because of the breach by Tenant of the terms and provisions of this Section 6.10.1. Without limiting the foregoing, if the presence of any Hazardous Material at the Project that was not in existence as of the Effective Date results in any contamination of the Project in violation of Applicable Law, Tenant shall promptly take all actions at its sole expense as are necessary to remediate the Project as required by law; provided that Landlord's approval of such actions shall first be obtained, which approval may be withheld in Landlord's sole discretion. During such time that City is the owner of improvements located at 7600 Amador Valley Boulevard (including without limitation, the senior center under construction' as of the 675831 1 1 date hereof), Tenant's obligations under this Section shall not apply to Hazardous Material released from such property, the uses thereof, or the improvements located thereon. 6.10.2 Definition of Hazardous Material. As used in this Lease, the term "Hazardous Material" means any hazardous, explosive or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is (a) defined as a "hazardous waste," "extremely hazardous waste' or "restricted hazardous waste" under Sections 25115, 25117 or 15122.7, or is listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6. 5 (Hazardous Waste Control Law), (b) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (c) defined as "hazardous material," "hazardous substance," or "hazardou. s waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (d) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (e) petroleum, (f) asbestos, (g) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 30, (h) designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. § 1317), (i) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 41 U.S.C. § 6901 et seq. (42 U.S.C. § 6903), or (j) defined as a "hazardous substance" pursuant to Section 101 oft he Comprehensive Environmental Response, Compensation and Liability Act, 41 U.S.C. § 9601 et seq. (42 U.S.C. § 9601). ARTICLE VII SURRENDER AND RIGHT TO REMOVE 7.1 Ownership During Term. 7.1.1 Improvements. During the Term of this Lease, all Improvements constructed on the Land by Tenant as permitted or required by this Lease shall, subject to the terms of this Lease, be and remain the property of Tenant. 7.1.2 Personal Property. All personal property, furnishings, trade fixtures and equipment installed by Tenant in, on or around the~ Project which (i) are not attached to.the Land so as to cause substantial damage upon removal, and (ii) are not necessary for the normal operation and occupancy of the Project, shall be the personal property of Tenant (the "Personal Property"). At any time during the Term, Tenant shall have the right to remove the Personal Property provided Tenant shall repair any damage caused by the removal of such Personal Property. Personal Property shall not include any portion or part of major building components or fixtures necessary for the operation of the basic building systems (such as carpeting, elevators, escalators, chillers, boilers, plumbing, electrical systems, lighting, sanitary fixtures and HVAC systems) which shall be deemed a part of the Improvements. 675831 12 7.2 Ownership at Lease Termination. 7.2.1 Improvements. Upon the expiration or earlier termination of the Lease ("Lease Termination") the Improvements shall unconditionally be and become the property solely of Landlord, and no compensation therefor shall be due or paid by Landlord to Tenant for any part thereof, and this Lease shall operate as a conveyance and assignment thereof. Upon Lease Termination, Tenant shall surrender to Landlord the Land and the Improvements in good order, condition and repair, reasonable wear and tear excepted, free and clear of all liens, claims and encumbrances, subleases, other than those matters existing prior to the Effective Date or matters subsequently created or consented to by Landlord. Upon Lease Termination, at Landlord's request Tenant agrees to execute, acknowledge and deliver to Landlord such recordable instruments as are necessary or desirable to confirm the termination of the Lease and all Tenant's rights hereunder and to perfect Landlord's right, title and interest in and to the Land and the Improvements. 7.2.2 Personal Property. Any Personal Property may be removed prior to Lease Termination by Tenant; provided, however, the removal shall be with due diligence, and without expense to Landlord, and any part of the Land damaged by such removal shall be promptly repaired. Any Personal Property which remains on the Land for thirty (30) days after the Lease Termination may, at the option of Landlord, be deemed to have been abandoned and either may be retained by Landlord as its property or may be disposed of in accordance with Applicable Law. If requested by Landlord within a reasonable time but not less than six months prior to the termination of this Lease, upon Lease Termination Tenant shall, at Tenant's sole cost and expense, remove all Personal Property, or portions thereof designated by Landlord. 7.3 Condition of Improvements at Lease Termination. Landlord has entered this. Lease in reliance on the fact that, at Lease Termination, Landlord will receive from Tenant the Improvements in good condition and repair, reasonable wear and tear excepted and reflecting the age of the Improvements at such time and Landlord's willingness during the Term of this Lease to consent to the encumbrance of Tenant's interest in the Land and Improvements for rehabilitation or reconstruction financing. At any time during the Term, upon reasonable advance notice and during normal business' hours, Landlord may inspect the Development to confirm that it is being properly maintained as required herein. Following its inspection, Landlord may deliver to Tenant written notification of any portions of the Development which Landlord has determined is not being properly maintained and Tenant shall promptly comply with the provisions of this Lease regarding such items; provided, the failure of Landlord to inspect or to notify Tenant of any default hereunder shall not be a waiver of Landlord's right to enforce Tenant's maintenance and repair obligations hereunder. 7.4 Survival. The provisions of this Article 7 shall survive Lease Termination. 675831 1 3 ARTICLE VIII INSURANCE 8.1 Insurance. Tenant, at' its sole cost and expense, during the Term hereof shall keep and maintain the policies of insurance set forth in Exhibit 13, attached hereto and incOrporated herein and shall comply with all other requirements set forth in such Exhibit. ARTICLE IX INDEMNIFICATION BY TENANT Tenant shall indemnify, defend, protect and save Landlord and Landlord's elected and appointed officials, employees, officers and agents (collectively hereafter the "Indemnitees") harmless from and against any and all claims, liabilities, losses, damages, fines, penalties, claims, demands, sUits, actions, causes of action, judgments, costs and expenses (including without limitation reasonable attorneys' fees and court costs) (collectively "Claims") arising during the Term frOm conduct or management of or from any work or thing whatsoever done in or on the Land or Improvements, and will further indemnify and save Indemnitees harmless from and against any and all Claims arising during the Term from any condition of any Improvement constrUcted by Tenant on the Land, or arising from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or arising from any negligence of Tenant, or any of its agents, contractors, servants, employees, sublessees or licensees, or arising from any accident, injury or damage whatsoever caUsed to any person occurring during the Term in Or on the Land or the Improvements, or from the furnishing of labor or materials by Tenant, and from and against all costs, attorney's fees, expenses and liabilities incurred in or about any such claim or action or proceeding brought thereon. In the event any such action or proceeding is brought against Landlord by reason of any such claim, Tenant, upon notice from Landlord, covenants to defend such action or proceeding by counsel reasonably satisfactory to Landlord. If an insurer under insurance required to be maintained by Tenant hereunder shall undertake to defend the Landlord under a reservation of rightS with respect to ultimate coverage and Landlord shall reasonably deem it necessary to retain independent counsel with respect to such matter, Tenant shall pay the reasonable fees of such counsel. The obligations of Tenant under this Article 9 shall not apply to any claims or other matters resulting from the breach or default by Landlord under this Lease, or from the gross negligence or willful misconduct of Landlord, its agents, employees or consultants. ARTICLE X DAMAGE AND DESTRUCTION 10.1 Damage or DestrUction. In the event of any damage to or destruction of the Improvements during the Term, Tenant shall restore and rebuild the Improvements as nearly as possible to their condition immediately prior to such damage or destrUction, subject to any restrictions imposed by changes in Applicable Law and the consent of Leasehold Mortgagee, and 675831 14 provided that insurance proceeds are made available for the restoration or rebuilding and the restoration or rebuilding is financially feasible. Tenant shall commence diligently and continuously to carry out such rebuilding to full completion as soon as possible. Unless Lessor agrees otherwise in writing, Tenant shall commence reconstruction of the Improvements within sixty (60) days following the date upon which insurance proceeds are made available for such work. Upon the occurrence of damage or destruction, all insurance proceeds paid in respect of such damage or destruction shall be applied to the payment of the costs of the restoration and rebuilding required to be performed by Tenant pursuant to this Lease. The insurance proceeds shall be held in trust by the senior Leasehold Mortgagee or a financial institution agreed upon by Landlord, Leasehold Mortgagee and Tenant (the "Insurance Trustee"), with the costs of such trust to be a first charge' against the insurance proceeds. After the completion of the restoration and rebuilding of the Improvements, any remaining insurance proceeds shall be paid to Tenant and Tenant shall be entitled to retain the same. 10.2 Rebuilding by Tenant. The funds held by the Insurance Trustee shall be held in trust and shall be applied to the cost of rebuilding. Any funds held by the Insurance Trustee following final completion of rebuilding and payment of all costs and expenses thereof and removal of any liens related thereto, shall be paid to Tenant, subject to the rights of any Leasehold Mortgagee. 10.3 Disbursement of Funds. The Insurance Trustee shall disburse funds only on a periodic basis approved by Landlord and Tenant and only upon receipt of invoices and other documentation, certified as correct by Tenant's architect, if an architect is required for the repair, evidencing satisfactory completion of the work for which payment is requested (a "Payment Request,'). Further, the Insurance Trustee shall not disburse any funds unless the payment requeSt is acComPanied bY (a) an eXecuted conditional lien release in fOrm comPlying with Calif°~i~i laW relating to all lab°r and materials described'in the payment Request and (b) an executed final lien release in form complying with California law releasing all claims for labor and materials described in the immediately preceding Payment Request and such other terms as are required by any Leasehold Mortgagee. 10.4 Notice Required. In the event of material damage to or destruction of the Improvements, or any part thereof, Tenant shall promptly give Landlord notice of such occurrence and take all actions reasonably required to protect against hazards caused by such damage or destruction. For purposes of this Article 10, damage or destruction shall be deemed to be material if the estimated cost to repair equals or exceeds One Hundred Thousand Dollars ($100,000). 10.5 Removal of Debris. If this Lease shall terminate following the occurrence of damage to or destruction of the Improvements and at a time when Tenant shall not have restored and rebuilt the Improvements, then Tenant shall, at its cost and expense after the use of any insurance proceeds released for such purpose, remove the debris and damaged portion of Improvements (including without limitation all foundations) and restore the Land or the applicable portion thereof to a neat, clean and safe condition. 10.6 Tenant's Right to Terminate. Notwithstanding any contrary provision of this Article 10, Tenant shall have the option to terminate this Lease and be relieved of the obligation 675831 15 to restore the Improvements where all or substantially all of the Improvements are substantially damaged or destroyed and such damage or destruction resulted from a cause not insured against by Tenant nor required to be insured against by Tenant under this Lease (an "Uninsured Loss"), and where all of the following occur: 10.6.1 No more than one hundred twenty (120) days following the Uninsured Loss, Tenant shall notify Landlord °fits election to terminate this Lease; to be effective, such notice must include both a copy of Tenant's notification to the Leasehold Mortgagee, if any, of Tenant's intention to exercise the option to terminate set forth in this Section 10.6, and Tenant's certification ,under penalty of perjury that Tenant has delivered or mailed such notification to the Leasehold Mortgagee in accordance with this Section 10.6.1. Landlord shall be entitled to rely upon the foregoing notice and certification as conclusive evidence that Tenant has notified the Leasehold Mortgagee regarding Tenant's desire to terminate this Lease. 10.6.2 No more than sixty (60) days following the giving of the notice required by Section 10.6.1 or such longer time as may be reasonable under the circumstances, Tenant shall, at Tenant's expense after the use of any insurance proceeds released for such purpose, remove all debris and other rubble from the Land, secure the Land against trespassers, and at Landlord's election, remove all remaining Improvements on the Land. 10.6.3 No more than thirty (30) days following Tenant's termination notice, Tenant shall deliver to Landlord a quitclaim deed to the Land in recordable form, in form and content satisfactory to Landlord and/or with such other documentation as may be reasonably requested by Landlord or any title company on behalf of Landlord, terminating Tenant's interest in the Land. 10.6.4 Within ten (10) days following Landlord's receipt of the notice referred to seCtion 10.6.1, Landlord has not received both written notice from the Leasehold Mortgagee, if any, objecting to such termination and an agreement containing an effective assignment of Tenant's interest in this Lease to such Leasehold Mortgagee whereby such Leasehold Mortgagee expressly assumes and agrees to be bound by and perform all of Tenant's obligations under this Lease. ARTICLE XI LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS If Tenant shall at any time fail to pay any Imposition or other charge payable by Tenant to a third party as required by this Lease within the time permitted, or to pay for or maintain any of the insurance policies provided for in Article 8 hereof within the time therein permitted, or to make any other payment or perform any other act on its part to be made or performed hereunder within the time permitted by this Lease, then Landlord, after thirty (30) days' written notice to Tenant and without waiving or releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to): (i) pay such Imposition or other charge payable by Tenant; (ii) pay for and maintain such insurance policies provided for in Article 8 hereof; or (iii) make such other payment or perform such other act on Tenant's part to be made or performed under this 675831 1 6 Lease; and Landlord may enter upon the Land and the Improvements for such purpose and take all such action thereon as may be reasonably necessary therefor. All sums paid by Landlord and all costs and expense incurred by Landlord in connection with the performance of any such act (together with interest thereon at the Default Rate from the respective dates of Landlord's making of each such payment) shall constitute additional Rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord on demand. The "Default Rate" shall mean interest calculated at an annual rate equal to the rate of interest most recently announced by the senior Leasehold Mortgagee at its San Francisco office as its "reference rate" but in no event more than the maximum rate of interest permitted by law. If the senior Leasehold Mortgagee or its successor.no longer issues a "reference rate," the most comparable rate of the largest bank with its corporate headquarters in California shall be used. If there is no such bank or comparable rate, then the Default Rate shall be the highest legal rate of interest that may be charged at that time. ARTICLE XII REPAIRS~ CHANGES~ ALTERATIONS AND NEW CONSTRUCTION 12.1 Repairs and Maintenance. Tenant covenants and agrees, throughout the Term, without cost to Landlord, to take good care of the Land and Improvements and to keep the same in good order and condition. Tenant shall promptly, at Tenant's own cost and expense, make all necessary repairs, interior and exterior, structural and nonstructurai, ordinary as well as extraordinary, whether contemplated or not contemplated at the time of execution of this Lease, and shall keep the Project in a well maintained, safe, clean and sanitary condition. The term "repairs" shall include replacements or renewals when necessary, and ail such repairs made by · · ,~ : , . Tenant shall be at least equal in quality and class to the original work. Tenant shall keep and maintain all portions of the Project and the sidewalks adjoining the same in a clean and orderly condition, free of accumulation of dirt, rubbish, and graffiti. From time to time during the Term, upon not less than three (3) days prior notice from Landlord, Landlord may enter the Project, or portions thereof, to determine if Tenant is properly maintaining the Project. If, following any such inspection by Landlord, Landlord delivers notice of any deficiency to Tenant, Tenant shall promptly prepare and deliver to Landlord Tenant's proposed plan for remedying the indicated deficiencies. Tenant's failure to deliver a remedial plan and to complete, within a reasonable time, remedial work shall be a default under this Lease. Landlord's failure to deliver, following any Landlord's inspection, any notice of deficiency to Tenant, shall not be a waiver of any default by Tenant under this Article 12. Tenant shall defend, indemnify and hold Landlord harmless from and against any claim, loss, expense, cost, or liability incurred by Landlord arising out of Tenant's failure to fully and timely fulfill its obligations to maintain and repair the Land and the Improvements as required hereunder. 12.2 Changes and Alterations. Tenant shall not during the Term make any changes or alterations in, to or of the Improvements, without the prior written consent of Landlord, which Landlord shall not unreasonably withhold, so long as all the following are complied with by Tenant at Tenant's sole cost and expense: 675831 1 7 (a) The change or alteration shall be in harmony with neighboring buildings and shall not materially impair the value or structural integrity of the Improvements. (b) The change or alteration shall be for a use which is permitted hereunder. (c) No change, alteration or addition shall be undertaken until Tenant shall have obtained and paid for, so far as the same may be required from time to time, all permits and authorizations of any federal, state or municipal government or departments or subdivisions of any of them, having jurisdiction. Landlord shall join in the application for such permits or authorizations whenever such action is necessary; provided, however, that Landlord shall incur no liability or expense in connection therewith. (d) Any change, alteration or addition shall be made in a good and workmanlike manner and in accordance with all applicable permits and all Applicable Laws. (e) During the period of initial construction of, or of construction of any change, alteration or addition in, to or of, the Improvements or of anY permitted demolition or new construction or of any restoration, Tenant shall maintain or cause to be maintained fire or other applicable insurance provided for in Article 8, which policy or policies by endorsement thereto, if not then covered, shall also insure any change, alteration or addition or new construction, including all materials and equipment incorporated in, on or about the Project (including excavations, foundations and footings) under a broad form all risks builders' risk form or equivalent thereof. (f) Tenant shall comply with the provisions of Section 5.3. (g) At Landlord's request, Tenant shall provide Landlord with a copy of any as-built drawings for the Improvements within sixty (60) days following the completion of the Improvements. 12.3 Exceptions to Requirement for Consent. The foregoing notwithstanding, Tenant shall not be required to obtain Landlord's prior written consent to any changes, alterations or improvements so long as all the following requirements are met: (a) The change, alteration or improvement is nonstructural. (b) The change, alteration or improvement is not visible from the exterior of any building on the Land. (c) The change, alteration or improvement has a cost of less than One Hundred Thousand Dollars ($100,000). (d) The provisions of Section 5.3 are satisfied. Notwithstanding the foregoing, Tenant shall deliver to Landlord not later than ten (10) days prior to commencement of any construction, change, alteration or repair, written notice of the proposed work, a general description of the proposed work and sufficient information to permit Landlord to post a notice of nonresponsibility on the Land. 675831 1 8 12.4 No Right to Demolish. Notwithstanding any other provisions of this Article 12, Tenant shall have no right to demolish any Improvement, once built, unless Tenant shall have received the prior written consent of Landlord which shall not be unreasonably withheld if the age and condition of the Improvements makes repair or reconstruction impractical or financially infeasible. ARTICLE XIII EMINENT DOMAIN 13.1 Eminent Domain. 13.1.1 Definitions. The roi. lowing definitions shall apply in construing the provisions of this .Article 13: (a) "Award" means all compensation, damages or interest, or any combination thereof, paid or awarded for the taking, whether pursuant to judgment, by agreement, or otherwise. (b) "Notice of intended taking" means any notice or notification on which a reasonably prudent person would rely and would interpret as expressing an existing intention of taking as distinguished from a mere preliminary inquiry or proposal. It includes, but is not limited to, the service of a condemnation summons and complaint on a party to this Lease. The notice is considered to have been received when a party to this Lease receives from the condemning agency or entity a written notice of intent to take. · (c) "Partial taking" means any taking that is not a total taking, a substantial taking, or a temporary taking. (d) "Substantial taking" means the taking of so much of the Project that the remaining portion thereof would not be economically and feasibly usable by Tenant for the then existing uses and purposes of the Project, in Tenant's reasonable judgment, but shall exclude a temporary taking. (e) "Taking" means any taking of or damage, including severance damage, to all or any part of the Project or any interest therein by the exercise of the power of eminent domain, or by inverse condemnation, or a voluntary sale, transfer or conveyance under threat of condemnation in avoidance of the exercise of the power of eminent domain or while condemnatiOn proceedings are pending. (f) "Temporary taking" means the taking of any interest in the Project for a period of less than one (1) year. (g) "Total taking'' means the taking of all or substantially all of the Project, but shall exclude a temporary taking. 675831 1 9 13.1.2 Notice. The party receiving any notice of the kind specified below shall promptly give the other party written notice of the receipt, contents and date of the notice received: (a) notice of intended taking; (b) service of any legal process relating to condemnation of all or any portion of the Project; (c) notice in connection with any proceedings or negotiations with respect to such a condemnation; or (d) notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation. Landlord and Tenant, and any Leasehold Mortgagee; each shall have the right to represent its respective interest in each proceeding or negotiation with respect to a taking or intended taking and to make full proof of their respective claims. No agreement, settlement, sale or transfer to or with the cOndemning authority shall be made without the mutual agreement of Landlord and Tenant and any Leasehold Mortgagee. Landlord and Tenant each agree to execute, acknowledge and deliver to the other any instruments that may be reasonably required to effectuate or facilitate the provisions of this Lease relating to condemnation. 13.1.3 Total or Substantial Taking. In the event of a total or substantial taking of fee title to the Land, Tenant's interest in this Lease and all obligations of Tenant subsequently accruing hereunder shall cease as of the date ofthe -vesting of title in the condemning authority; provided, however, that if actual physical possession of all or part of the Project is taken by the condemning authority prior to such date of vesting of title, Tenant's obligations to pay rent and other sums under this Lease shall terminate as of such earlier date. In the event Of a total or substantial taking of an interest in the Project other than fee title, at Tenant's option (exercisable by written notice to Landlord), Tenant's interest in this Lease and all obligations of Tenant subsequently accruing hereunder shall cease as aforesaid. 13.1.4 Award. In the event of a total or substantial taking, the award shall be apportioned as follows, in the following order: (a) If Tenant's interest in this Lease is encumbered by a Leasehold Mortgage, to the Leasehold Mortgagee as provided in the Leasehold Mortgage. (b) To Tenant's tax credit investor limited partner the amount (if any) required to cover any recapture of Iow-income housing tax credits that may result from a termination of the Lease as the result of the taking. (c) To Landlord, that portion of the balance of the award equal to the fair market value of the Land taken, in an unimproved condition, but as encumbered by this Lease. 675831 20 (d) To Tenant, that portion of the balance of the awarci equal to the fair market value of the leasehold estate created by this Lease and the Improvements (subject to Landlord's reversionary interest). (e) The balance, if any, shall be allocated between Landlord and Tenant respectively in that proportion in which (i) the fair market value of the Land and Landlord's reversionary interest in the Improvements bears to (ii) the fair market value of the leasehold estate created by this Lease and the Improvements, exclusive of Landlord's reversionary interest. 13.1.5 Temporary Taking. In the event of a temporary taking, Tenant shall be entitled to the whole award, and this Lease shall remain in full force and effect. 13.1.6 Partial Taking. In the event ora partial taking, this Lease shall remain in full force and effect, covering the remainder of the Project, and Tenant shall repair and restore any damage to the Improvements caused by such partial taking consistent with and subject to the provisions applicable to a restoration in the event of an insured casualty under Article 10, so that after completion of the restoration the Improvements shall be, as nearly as possible, in a condition as good as the condition immediately preceding the partial taking. The award for any partial taking shall be deposited and disbursed in the same manner as insurance proceeds are disbursed for restoration pursuant to Article 10 (unless the Leasehold Mortgagee elects to apply such proceeds to pay the indebtedness secured by the Leasehold Mortgage), and upon completion of the restoration, any remaining portion of the award shall be allocated as set forth in Section 13.1.6.1. 13.1.6.1 Award on Partial Taking. In.the event of a partial taking, the award shall be apportioned as follows, in the following order: (a) If Tenant's interest in this Lease is encumbered by a Leasehold Mortgage, to the Leasehold Mortgagee as provided in the Leasehold Mortgage. (b) To Tenant's tax credit investor limited parmer the amount (if any) required to cover any recapture of low-income housing tax credits that may result from a termination of the Lease as the result of the taking. (c) To Landlord, that portion of the balance of the award attributable to the fair market value of the portion of the Land taken in an unimproved condition, as encumbered by this Lease. (d) To Tenant, that portion of the balance of the award attributable to the fair market value of the leasehold estate created by this Lease and the Improvements, but only to the extent that the proceeds of the award are not used for restoration of the Improvements. (e) The balance, if any, shall be allocated between Landlord and Tenant respectively in that proportion in which (i) the fair market value of the Land as encumbered by this Lease and Landlord's reversionary interest in the Improvements bears to (ii) the fair market value of the leasehold estate created by 675831 2 1 this Lease and the Improvements exclusive of the reversionary interest of Landlord. (f) Any severance damages awarded or payable because only a portion °fthe Project is taken by eminent domain shall be (a) paid to Tenant during the first 35 years of this Lease, (b) equally divided between Tenant and Landlord during the next 35 years of this Lease (except to the extent needed to replace any Improvements taken by eminent domain with equivalent Improvements on the remainder of the Land) and (c) paid to Landlord during the remainder of the Term of this Lease. No payments shall be made to Tenant pursuant to this Section if any default by Tenant hereunder has occurred and is continuing unless and until such default is cured. 13.1.6.2 Partial Taking in Last Five Years. If a partial taking occurs during the last five (5) years of Term and the reasonably estimated cost of reconstruction work exceeds twenty-five percent (25%) of the replacement value of the Improvements, Tenant shall have the right and option to treat the same as a substantial taking by giving written notice thereof to Landlord no later than the earlier of: (a) the date of vesting of title in the condemning authority of the portion of the Project taken, or (b) the date upon which the condemning authority takes physical possession of such portion of the Project. If Tenant does give such notice the partial taking shall be considered as a substantial taking and the taking shall be subject to the provisions of Section 13.1.3. 13.1.7 Lease Provisions Controlling. The provisions of this Lease shall determine the rights and obligatiOns of the parties in connection With any condemnation, but as between Tenant and any Leasehold Mortgagee the Leasehold Mortgage shall contrOl. ARTICLE XIV MORTGAGES 14.1 Leasehold Mortgages. Tenant shall have the right, at any time and from time to time during the Term, to encumber its leasehold interest hereunder with a Leasehold Mortgage or Mortgages, provided that (a) no Leasehold Mortgage shall in any way impair (except as otherwise stated herein or as provided by law) the enforcement of Landlord's right and remedies herein and by law provided, (b) any such Leasehold Mortgage shall at all times be subject and subordinate to, and shall not affect or become a lien upon Landlord's right, title or estate in the Land or in this Lease, and (c) Tenant shall give Landlord prior written notice of any such Leasehold Mortgage, and shall accomPany such notice with a true and correct copy of any such Leasehold Mortgage. Any Leasehold Mortgage shall be subject to the terms and conditions set forth in this Article 14. 14.2 Rights of LeasehOld Mortgagee. 14.2.1 Notices. If Landlord shall have been provided with written notice of the address of any Leasehold Mortgagee, Landlord shall mail to such Leasehold Mortgagee a copy of any notice under this Lease at the time of giving suCh notice to Tenant, and no such notice 675831 22 shall be effective against such Leasehold Mortgagee, and no termination of this Lease or termination of Tenant's right of possession of the Land or reletting of the Land by Landlord predicated on the giving by Landlord of any notice shall be effective, unless Landlord gives to such Leasehold Mortgagee written notice or a copy of its notice to Tenant of such default or termination, as the case may be. 14.2.2 Right to Cure. (i) In the event of any default by Tenant under the provisions of this Lease, the Leasehold Mortgagee shall have the right to remedy or cause to be remedied such default within the same cure period as afforded Tenant hereunder, extended by an additional ninety (90) days, which cure period shall commence as against the Leasehold Mortgagee upon the receipt by the Leasehold Mortgagee of the notice of default. Landlord shall accept such performance by the Leasehold Mortgagee as if the same had been done by Tenant. (ii) The term "incurable default" as used herein means any default which cannot be reasonably cured by a Leasehold Mortgagee. The term "curable default" means any default under this Lease which is not an incurable default. Any failure to pay monetary sums shall at all times be deemed a curable default. Any failure to comply with the requirements of Section 6.2 and 6.3 hereof shall at all times be deemed a curable default, and as to Senior Leasehold Mortgagees or any entity acquiring the interest of Tenant in the Project and in this Lease as a result of the foreclosure of a Leasehold Mortgage (or an assignment or deed in lieu thereof), Landlord shall not terminate this Lease provided such party is diligently and in good faith proceeding to cure any such default. In the event of any curable default under this Lease, and if prior to the expiration of the applicable grace period specified in Section 14.2.2 (i) the Leasehold Mortgagee shall give Landlord written notice that it intends to undertake the c~ng of such. default, or to cause the same to be cured, or to exercise its rights to acqUire the leasehold interest · of Tenant by foreclosure or otherwise, and shall immediately commence and then proceed with diligence to do so, whether by performance on behalf of Tenant of its obligations under this Lease, by foreclosure or otherwise, then Landlord will not terminate or take any action to effect a termination of this Lease or re-enter, take possession of or relet the Land or similarly enforce performance of this Lease so long as the Leasehold Mortgagee is diligently and in good faith engaged in the curing of such default or effecting such foreclosure. The foregOing sentence shall not be deemed to extend the time period within which a default in the payment of money must be cured under other applicable Lease provisions. The Leasehold Mortgagee shall not be required to continue such possession or continue such foreclosure proceedings. Nothing herein shall preclude Landlord from terminating this Lease with respect to any additional default which shall occur during any period of forbearance and not be remedied within the cure period, if any, applicable to any such additional default, except that Leasehold Mortgagee shall have the same rights specified in this Article 14 with respect to any additional defaults. (iii) If the default by Tenant pertains to the failure of Tenant to complete the construction of the Development within the time period required under Section 5.2 of this Lease,' and if within one hundred twenty (120) days following written notice to Leasehold Mortgagee of such default Leasehold Mortgagee shall give Landlord written notice that it intends to undertake the curing of such default, or to cause the same to be cured, and to exercise its rights to acquire the leasehold interest of Tenant by foreclosure or otherwise in order to effectuate such cure, and 675831 23 shall immediately commence and then proceed with diligence to do so, then Landlord will not terminate or take any action to effect a termination of this Lease or re-enter, take possession of or relet the Land or similarly enforce performance of this Lease so long as the Leasehold Mortgagee is diligently and in good faith engaged in the completion of the construction of the Development or effecting such foreclosure; provided, however, Landlord shall not be obligated to forebear from a termination or other enforcement of its rights under the Lease in response to such default beyond that date which is thirty (30) months following the date of Landlord's initial default notice to the Leasehold Mortgagee under this Section 14.2.2 (iii), subject to extension due to Unavoidable Delays incurred by Leasehold Mortgagee in the completion of the construction of the Development, and subject to extension for any delay incurred by Leasehold Mortgagee as a result of legal limitations on its ability to foreclose upon the Tenant's leasehold interest. 14.2.3 Execution of New Lease. If this Lease is terminated by Tenant's trustee in bankruptcy, receiver, liquidator or other similar person on account of a default or if Tenant's interest under this Lease shall be sold, assigned or transferred pursuant to the exercise of any remedy of the Leasehold Mortgagee, or pursuant to judicial proceedings, and if (i) all monetary defaults of Tenant have been cured, and (ii) the Leasehold Mortgagee shall have arranged to the reasonable satisfaction of Landlord to cure any other curable default of Tenant under this Lease, then Landlord, within thirty (30) days (or such period as may reasonably be necessary to enable Landlord to comply with statutory requirements applicable to Landlord's lease of real property) after receiving a written request therefor, which shall be given within sixty (60) days after such termination or transfer and upon payment to it of all expenses, including attorneys' fees, incident thereto, will execute and deliver a new lease of the Land to the Leasehold Mortgagee or its affiliate or other nominee or to the purchaser, assignee or transferee, as the case may be, for the remainder of the Term, containing the same covenants, agreements, terms, provisions and limitations, as are contained herein. (i) Upon the execution and delivery of a new lease, the new tenant, in its own name or in the name of Landlord may take all appropriate steps as shall be necessary to remove Tenant from the Land, but Landlord shall not be subject to any liability for the payment of fees, including attorneys' fees, costs or expenses in connection therewith, and the new tenant shall pay all such fees, including attorneys' fees, costs and expenses, on demand, and shall make reimbursement to Landlord of all such fees, including attorneys' fees, costs and expenses, incurred by Landlord. The new tenant shall indemnify and hold Landlord harmless from any claim, liability or damage (including attorney's fees) as a result of the actiOn against Tenant. (ii) Upon execution of any new lease, the new tenant named therein shall cure all uncured breaches hereunder, except that with respect to any breach which cannot be cured by the new tenant until it obtains possession, the new tenant shall not have to make such cure before it has a right to obtain possession. Any nonmonetary cure required of the new tenant shall be commenced within ten (10) days following the date the new tenant executes the new lease or the date the new tenant has a right to obtain possession, whichever is applicable (the "Starting Date"), and thereafter shall be diligently prosecuted to completion. All monetary defaults shall have been cured prior to the execution of the new lease and any monetary defaults occurring thereafter shall be cured within ten (10) days following the Starting Date. Any failure to comply with any of the foregoing requirements shall constitute a default under the new lease. 675831 24 (iii) UPon the Starting Date, the ownership of all Improvements shall be deemed to have been transferred directly to such transferee of Tenant's interest in this Lease and the provisions of Section 7.2.1 causing such Improvements to become the property of Landlord in the event of a termination of this Lease shall be ineffective as applied to any such termination. Landlord shall execute such quitclaim deed or other instrument of conveyance as may be reasonably requested, provided such instrument shall be expressly without warranty of any kind whatsoever and Landlord shall have no responsibility with regard to the state of title so conveyed. 14.2.4 Tenant Default Under Leasehold Mortgage. If Tenant defaults under a Leasehold Mortgage, the Leasehold Mortgagee may exercise with respect to the Project any right, power or remedy under the Leasehold Mortgage which is not in conflict with the provisions of this Lease. 14.2.5 No Merger. There shall be no merger of this Lease or any interest in this Lease, nor of the leasehold estate created hereby, with the fee estate in the Land, by reason of the fact that this Lease or such interest therein, or such leasehold estate may be directly or indirectly held by or for the account of any person who shall hold the fee estate in the Land, or any interest in such fee estate, nor shall there be such a merger by reason of the fact that all or any part of the leasehold estate created hereby may be conveyed or mortgaged in a Leasehold Mortgage to a Leasehold Mortgagee who shall hold the fee estate in the Land or any interest of the Landlord under this Lease. 14.2.6 Assumption of Obligations. For the purpose of this Article 14, the making of a Leasehold Mortgage shall not be deemed to constitute an assignment or transfer of this Lease or of the leasehold estate hereby created, nor shall any Leasehold Mortgagee, as such, be deemed an assignee or transferee of this Lease or of the leasehold estate hereby created so as to require such Leasehold Mortgagee, as such, to assume the performance of any of the terms, covenants or conditions on the part of Tenant to be performed hereunder. The purchaser at any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of any Leasehold Mortgage, or the assignee or transferee of this Lease and of the leasehold estate hereby created under any instrument or assignment or transfer in lieu of the foreclosure of any Leasehold Mortgage, in order to be deemed to be an assignee or transferee and before the same shall be binding on Landlord, must assume in writing the performance of all of the terms, covenants, and conditions on the part of Tenant to be performed hereunder by an instrument, in recordable form, satisfactory to Landlord; provided however, that nothing contained herein shall be construed to require the purchaser, assignee or transferee as described above to be obligated to cure any default by Tenant. Although a purchaser, assignee or transferee shall not be obligated to cure any default, if any default is not cured, Landlord may exercise any remedy available under this Lease, including the termination of this Lease, if the default is not cured after the expiration of any applicable cure period. 14.2.7 Limitation of Leasehold Mortgagee Liability for Tenant Defaults. Notwithstanding any contrary provision hereofi (i) no Leasehold Mortgagee shall be required to pay any liens or charges that are extinguished by the foreclosure of its Leasehold Mortgage; (ii) any incurable default shall be, and shall be deemed to have been waived by Landlord upon completion of foreclosure proceedings~ or acquisition of Tenant's interest in this Lease by any 675831 25 purchaser at a foreclosure sale, or any entity who otherwise acquires Tenant's interest'from the Leasehold Mortgagee. Any entity acquiring the interest of Tenant in the Project and in this Lease as a result of the foreclosure of a Leasehold Mortgage (or an assignment or deed in lieu thereof) shall be liable to perform the obligations of Tenant under this Lease only during the period such entity retains ownership of the interest of Tenant in the Project and in this Lease. 14.3 Non-Subordination of Fee. Nothing in this Lease shall be construed as an agreement by Landlord to subordinate its fee interest in the Land or its right to rent payments hereunder or any other right of Landlord herein. Except as expressly set forth in this Article 14, no Leasehold Mortgage shall impair Landlord's ability to enforce its rights and remedies under this Lease or provided by law. Landlord shall have no obligation to encumber or otherwise subordinate its fee interest in the Land or in this Lease to the interest of any Leasehold Mortgagee in this Lease or in Tenant's leasehold estate. 14.4 Institutional Lender. Leasehold Mortgages are to be originated only by Institutional Lenders. As used in this Lease the term "Institutional Lender" shall mean any one or combination of the following: (a) Citibank; (b) a commercial or savings bank, trust company, insurance company, savings and loan association, building and loan association, pension, retirement or welfare fund, endowment fund or foundation, investment banking firm, or real estate investment trust; (c) any other institutional lender reasonably satisfactory to Landlord, or (d) any federal, state or local government entity or agency. 14.5 Landlord's Rights Under Leasehold Mortgages. 14.5.1 Notice of Tenant's Default. Tenant shall use best efforts to ensure that every Leasehold Mortgage secured by a deed of trust on Tenant's leasehold estate in the Land shall expressly provide that: (a) the lender shall give Landlord contemporaneous notice of any default by Tenant thereunder, if the failure to cure such default might result in acceleration of the maturity of the debt secured by the Leasehold Mortgage; provided however, that lender's failure to give notice shall not affect the lender's rights or ability to timely pursue all applicable remedies. In addition, within three (3) business days following Tenant's receipt of any notice of default under any financing document affecting the Property or the Project, Tenant shall provide Landlord with a copy of such notice. (b) Landlord shall have the reasonable right, but not the obligation, to cure any default by Tenant (but without obligation to do so); and (c) If Landlord shall tender payment in full of all sums required to be paid under the Leasehold Mortgage or the note secured thereby (disregarding any acceleration of maturity thereunder, but including any costs or expenses arising as a result of such default) on or before ninety (90) calendar days from the date of such notice of default from the lender to Tenant, then the lender shall accept such payment and rescind the acceleration, if any. Any sums paid by Landlord pursuant to this Section 14.5.1 shall become immediately due and payable from Tenant to Landlord as Rent due under this Lease. 675831 26 14.6 Purchase by Landlord. Landlord shall have the right and option (but not the obligation), during the period described in the last sentence of this Section 14.6, by notice in writing to the lender, to purchase any Leasehold Mortgage, the note secured thereby, and any other instruments securing or guaranteeing such note or otherwiSe evidencing any obligation secured by the Leasehold Mortgage. The purchase price therefor shall be the full amount due and owing to the lender thereunder, including any costs, expenses, and penalties payable in accordance with the terms thereof. The sale and assignment by the lender shall be without recourse or warranty by the lender, except that such lender has good title to the note (or is authorized to obtain payment or acceptance on behalf of one who has good title) and that the transfer to Landlord vests in Landlord good title to the note or notes and in all security interests securing the same, free and clear of all claims and interests of third parties. The right granted by this Section 14.6 may be exercised by Landlord at any time after the lender has declared the entire sum secured by any Leasehold Mortgage to be due and payable or has commenced proceedings to foreclose any Leasehold Mortgage or, has requested a new Lease, whichever shall first occur, and such right shall terminate ninety (90) days following receipt by Landlord of a request that Landlord exercise such right given in writing from the lender after the date such right'shall first arise as above provided. 14.7 No Voluntary Surrender/Modification. 14.7.1 No Modification. So long as any Leasehold Mortgage encumbers Tenants' leasehold interest in the Land, this Lease shall not be modified by Landlord and Tenant without the consent of the holders of such Leasehold Mortgages. 14.7.2 No Voluntary_ Surrender. So long as Tenant is not in default hereunder, LandlOrd shall not accept a voluntary surrender of the Tenant's leaSehold estate without the, prior written consent of all holders of any Leasehold MOrtgage then in effect. ARTICLE XV ASSIGNMENT~ TRANSFER~ SUBLETTING 15.1 Restrictions on Transfer or Assignment by Tenant. Except as permitted pursuant to this Article XV, Tenant shall not sell, transfer, assign, or otherwise convey ("Transfer") all or any portion of its interest in the Project Or this Lease voluntarily, involuntarily, by operation of law, or otherwise, without Landlord's prior written consent, which shall not be unreasonably withheld. Each Transfer shall comply with all requirements therefor set forth elsewhere in this Lease, and Tenant shall have no right to hypothecate or encumber its interest in this Lease or sublet all or any portion of the Land and/or the Improvements except as expressly provided under the terms of this Lease. No voluntary or involuntary assignee, sublessee, or successor in interest of Tenant shall acquire any rights or powers under this Lease except as expressly set forth herein. 15.1.1 Exceptions. Notwithstanding any contrary provision of this Lease, Landlord's consent shall not be required, and the provisions of Section 15.2 and 15.3 below shall not be applicable, with respect to the following Transfers: (A) the foreclosure of a Leasehold Mortgage or the acquisition of Tenant's interest in this Lease by an assignment or deed in lieu of 675831 27 foreclosure; (B) the first Transfer following any event described in clause (A) of this sentence; provided, however, that in connection with such a first Transfer following an event described in clause (A) above, the transferee must be experienced in the ownership, operation and management of affordable rental housing projects for seniors without a record of material violations of discrimination restrictions or other applicable state or federal laws pertaining thereto, or if such transferee does not have the experience required above, the transferee must retain a property management firm with such experience; and (C) any Transfer of Tenant's interest in the Land, the Project, or any portion thereof, or any sublease of the Land, or portion thereof, to a Tenant Affiliate. For purposes hereof, a "Tenant Affiliate" shall mean a person or entity that controls, is controlled by, or is under common control with Eden Housing, Inc., a California nonprofit public benefit corporation ("Eden"). For purposes of defining a Tenant Affiliate, "control" shall mean the ownership of fifty percent (50%) or more of the ownership interests in an entity, or in the case of a not-for-profit entity, the right to appoint fifty percent (50%) or more of such entity's board of directors. 15.2 Landlord's First Right to Acquire Leasehold Interest. Prior to any Transfer by Tenant of its interest in the Land, the Project, or any portion thereof (the "Tenant Interest") other than to Eden, Tenant shall notify Landlord in writing of its desire to consider such a Transfer (a "Transfer Notice"). Tenant shall have the right, but not the obligation, to send a Transfer Notice to Landlord prior to or concurrently with a Transfer Consent Request under Section 15.3 below; provided, however, Tenant shall not be required to have received an offer for the Tenant Interest prior, or as a condition, to sending a Transfer Notice to Landlord. Tenant shall inclUde in the Transfer Notice the purchase price for which Tenant would be willing to sell the Tenant Interest to Landlord. Within thirty (30) days after receipt of a Transfer Notice from Tenant, Landlord shall notify Tenant in writing ("Landlord's Response Notice") as to whether (i) Landl°rd is not interested in acquiring the Tenant Interest described in the Transfer Notice; (ii) Landlord is interested in acquiring the Tenant Interest described in the Transfer Notice, but is willing to do so only on the revised purchase price set forth in Landlord's Response Notice; or (iii) Landlord agrees to acquire the Tenant Interest on the purchase price and other terms and conditions set forth in the Transfer Notice. If Landlord fails to deliver Landlord's Response Notice as required above within such thirty (30) day period, or if Landlord timely delivers Landlord's Response Notice and elects clause (i) described above, then for the twelve (12) month period following the date of delivery of Landlord's Response Notice (or the required delivery date thereof if Landlord fails to deliver Landlord's Response Notice) Tenant shall be free to Transfer the Tenant Interest described in the TranSfer Notice on whatever purchase price and other terms and conditions as Tenant thereafter elects in its sole discretion, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to obtaining the Landlord's consent to such Transfer. Any Transfer by Tenant of the Tenant Interest after such twelve (12) month period shall require a new Transfer Notice from Tenant and compliance with the provisions of this Section 15.2. Notwithstanding the 12-month periods set forth in this Section 15.2, each 12-month period shall be subject to three 60-day extensions if such time is necessary to complete the closing under a purchase and sale agreement or other transfer agreement or contract entered int° within the initial 12-month period. 675831 28 If Landlord timely delivers Landlord's Response Notice and elects clause (ii) above, then Tenant shall have the right, within twenty (20) days after Tenant's receipt of Landlord's Response Notice, to either accept the revised purchase price set forth in Landlord's Response Notice or decline to accept such revised purchase price. If Tenant fails to respond to Landlord's Response Notice within such twenty (20) day period, then Tenant shall be deemed to have declined to accept the revised purchase price set forth in Landlord's Response Notice. If Tenant declines (or is deemed to have declined) to accept the revised purchase price set forth in Landlord's Response Notice, then Tenant shall thereafter be free, for the twelve (12)month period following the date of delivery of Landlord's Response Notice, to Transfer the Tenant Interest on such purchase price and other terms and conditions as Tenant thereafter elects, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to obtaining the Landlord's consent to such Transfer, except that the purchase price accepted by Tenant shall not be more than [$50,000] more favorable to the buyer than the purchase price offered by Landlord in Landlord's Response Notice. Any Transfer by Tenant of the Tenant Interest after such, twelve (12) month period shall require a new Transfer Notice from Tenant and compliance with the provisions of this Section 15.2. If Landlord timely accepts the purchase price set forth in the Transfer Notice or Tenant timely accepts the purchase price set forth in Landlord's Response Notice, then during the thirty (30) day period after such acceptance, the parties shall in good faith negotiate and execute a definitive agreement that incorporates the accepted purchase price and the other terms and conditions set forth in the Transfer Notice. If despite the parties' good faith efforts the parties are unable to complete the negotiation and execution of such definitive agreement within such thirty (30) days period, then neither party shall be obligated to proceed with the Transfer of the Tenant Interest to Landlord, and Tenant shall have the right, for the twelve (12) month period thereafter, to Transfer the Tenant Interest to another third party on such purchase price and other terms and conditions as elected by Tenant, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to the obtaining of Landlord's written consent to such Transfer. If Tenant and Landlord shall execute a definitive agreement for the Transfer of the Tenant Interest to Landlord and Landlord shall thereafter default in the performance of its obligations under such agreement, then the terms and provisions of this Section 15.2 shall thereafter be of no further force or effect and Tenant shall have the right to consummate Transfers of Tenant Interests without the application of this Section 15.2, subject to compliance by Tenant with the remaining provisions of this Article 15 with respect to the obtaining of Landlord's written consent to such Transfer. Upon any Transfer by Tenant to Landlord of its leasehold interest under this Lease, or any pOrtion thereof, pursuant to this Section 1.5.2, Tenant shall be released from any further liability or obligations under this Lease with respect to the transferred leasehold interest, to the extent such liability or obligations arises after the date of the Transfer, unless the transfer agreement or purchase and sale agreement between Tenant and Landlord provide otherwise. 15.3 Procedure for Obtaining Landlord's Consent. (a) Transfer Request. With respect to each Transfer requiring the Landlord's consent under Section 15.1, Tenant shall send to Landlord written request for Landlord's approval of the Transfer (a "Transfer Consent Request") specifying the name .and address of 675831 29 the proposed transferee and its legal composition (if applicable). Each Transfer Request shall be accompanied by all of the following: (i) An audited or certified financial statement of the proposed transferee for the two most recent calendar or fiscal years prepared in accordance with 'generally accepted accounting procedures by a certified public accounting firm sufficiently current and detailed to evaluate the proposed transferee's assets, liabilities and net worth and certified as true and correct by the proposed transferee; (ii) a description of the nature of the interest proposed to be transferred, the portion or portions of the Project affected by the Transfer, and the proposed effective date of such Transfer; (iii) a true and complete copy of the proposed assumption agreement described in Section 15.6; (iv) a complete history of the proposed transferee describing its background, its current real estate projects and location thereOf, and the background of the principals or personnel to be involved in the development or operation of the portion of the Project subject to the Transfer and stating whether the proposed transferee ever filed for bankruptcy or had projects that were foreclosed; (v) a description of all projects of the proposed transferee which during the past five (5) years have been the subject of substantial litigation; and (vi) any such other information as reasonably requested by Landlord within fifteen (15) daYs following the receipt of the above information, in order to make an informed decision whether or not to approve or disapprove the Transfer. (b) Approval of Landlord. Within thirty (30) days following receipt of all the information referred to in Section 15.3 (a), Landlord shall approve or disapprove a proposed transferee with respect to the information supplied. If Landlord fails to give Tenant written notice of its approval or disapproval of the transferee within such thirty (30) day period, it shall be deemed to have approved the transferee. 15.4 Limitations. (a) Non-Transfer Period. In no event shall Tenant request Landlord to approve any Transfer prior to the date that all of the following shall have occurred: (i) construction of the Development and related Improvements shall be complete and a certificate(s) of occupancy shall be issued with respect to the Development; and (ii) all costs and expenses with regard to the construction of the Development and related Improvements shall be paid in full, all lien periods shall have expired and there shall be no liens on the Land, the Improvements, the Landlord's fee title or any portion thereof. 675831 30 The provisions of this Section 15.4 (a) shall not be applicable to, or after, the foreclosure of a Leasehold Mortgage or the acquisition of Tenant's interest in this Lease by assignment or deed in lieu of foreclosure. (b) No Relief from Liability. No Transfer will limit, diminish or otherwise relieve Tenant of any liability described herein. The provisions of this Section 15.4 (b) shall not be applicable to any Transfer following the foreclosure of a Leasehold Mortgage or following the acquisition of Tenants' interest in this Lease by assignment or deed in lieu of foreclosure. (c) No Consent If Bankruptcy. In no event shall Landlord be required to consent or be deemed to consent to a Transfer to a party then subject to any proceedings under any insolvency, bankruptcy or similar laws. (d) Criteria for Transfer. Landlord shall be deemed to be reasonable in withholding its consent to a proposed Transfer unless both of the following shall be the case: (i) Tenant delivers to Landlord an audited financial statement of the proposed transferee for the two most recent calendar or fiscal years prepared in accordance with generally accepted accounting principles by a recognized certified accounting firm demonstrating that the proposed transferee is a viable, going concern with sufficient financial ability to own, operate and manage the Project; and (ii) the proposed transferee shall have comparable reputation and experience operating and managing properties similar to the Development as the reputation and experience of the original Tenant. 15.5 Involuntary_ and Other Transfers. Without limiting any other restrictions on transfer cOntained in this Lease, no interest of Tenant in this Lease, the Land or the Improvements shall be assignable in the following manner: (a) under an order of relief filed, or a plan of reorganization confirmed, for or concerning Tenant by a bankruptcy court of competent jurisdiction under the federal bankruptcy act or the laws of the State of Cal!fomia, whereby any interest in this Lease, the Land or the Improvements is assigned to any party which does not qualify as an approved transferee pursuant to this Lease unless such order is filed or such plan is confirmed in connection with an involuntary proceeding brought against Tenant and Tenant reacquires such transferred interest w/thin sixty (60) days after the date such order is filed or such plan is confirmed; (b) if Tenant assigns substantially all of its asSets for the benefit of its creditors; or '(c) if an order of attachment is issued by a court of competent jurisdiction, whereby any interest in this Lease, the Land or the Improvements or substantially all of Tenant's assets are attached by its creditors and such order of attachment is not stayed within sixty (60) days after the date it is issued. The transfers described in this Section 15.5 shall constitute a breach under this Lease by Tenant and Landlord shall have the right to terminate this Lease pursuant to Article 16 as a result of any such transfer taking place, in which case this Lease shall not be treated as an asset of 675831 31 Tenant. 15.6 Assumption Agreement and Release. No permitted Transfer shall be effective until any curable default hereunder shall have been cured and there shall have been delivered to Landlord an assumption agreement, executed by the transferor and the proposed transferee, whereby such transferee expressly assumes such obligations as arise and/or accrue at any time after such Transfer takes place; and whereby such transferee assumes liability for the lease obligations. The parties agree that as a condition to any Transfer taking place the transferee shall deliver to Landlord representations and warranties confirming the accuracy of the information delivered to Landlord concerning its current financial condition and its outstanding or pending liabilities. 15.7 Change in General Partner of Tenant. In addition to the restrictions on Transfers as set forth in this Article 15, Landlord shall have the right to approve any change in the identity of the general partner of Tenant, including without limitation, any admission of any new general partner or withdrawal of any existing general partner. Such approval right of Landlord shall also apply to the transfer of a majority of the ownership interest in a general partner of Tenant. Landlord shall not unreasonably withhold, delay or condition its approval under this Section 15.7. Notwithstanding any contrary provision of this Section 15.7, Landlord's approval shall not be required with respect to (i) any change in the identity or ownership of the general partner of Tenant as long as following such change the general panner of Tenant continues to be an entity which controls, is controlled by, or is under common control with Eden; or (ii) any change in the general parmer of Tenant to Tenant's tax credit investor, any entity that controls, is controlled by, or is under common control with, Tenant's tax credit investor, or any successor general partner selected by Tenant's tax credit investor after a default by Tenant's general partner. For purposes of this Article 15, "control" shall mean the right to direct the management and affairs of an entity, whether by virtue of the ownership of ownership interests, by contract, by appointment of directors or by common or overlapping boards. 15.8 Sale by Landlord. Nothing contained in this Lease shall be deemed in any way to limit, restrict or otherwise affect the right of Landlord to sell, transfer, assign or convey all or any portion of the right, title and estate of Landlord in the Land and in this Lease; provided, however, that in each such instance any such sale, transfer, assignment or conveyance shall be subject to this Lease, and Tenant's other rights arising out of this Lease shall not be affected or disturbed in any way by any such sale, transfer, assignment or conveyance. Any other prox~ision of this Lease to the contrary notwithstanding, each covenant, agreement or obligation of Landlord under this Lease relating to the ownership or use of the Project is intended to and shall constitute a covenant running with the title to the Land and shall be binding upon the owner from time to time of the Land. At such time as Landlord shall sell, transfer, assign or convey the entire right, title and estate of Landlord in the Land and in this Lease, all obligations and liability on the part of Landlord arising under this Lease after the effective date of such sale, transfer, assignment or conveyance shall terminate as to Landlord, and thereupon all such liabilities and obligations shall be binding upon the transferee. Subject to compliance with applicable law, any sale or transfer of Landlord's interest in the Land and this Lease other than to a governmental entity or agency, shall be subject to Tenant's right of first refusal on the same terms and conditions set forth in Section 15.2 above 675831 32 ARTICLE XVI BREACHES~ REMEDIES AND TERMINATION 16.1 Event of Default. Tenant shall be in default under this Lease upon the occurrence of any of the following ("Events of Default"): (i) Monetary Obligation. Tenant at any time is in default hereunder as to any monetary obligation (including without limitation, Tenant's obligation to pay taxes and assessments due on the Property or the Project, subject to Tenant's rights to contest such charges pursuant to Section 4.2), and such default continues for twenty-five (25) days after Tenant receives Notice of Breach (as defined in Section 16.2.1); (ii) Insurance. Tenant fails to obtain and maintain any policy of insurance required pursuant to this Lease, and Tenant fails to cure such default within twenty- five (25) days following receipt of Notice of Breach; (iii) Abandonment. Tenant abandons the Project; (iv) Bankruptcy. Tenant files a voluntary petition in bankruptcy or files any petition or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future federal, state or other statute, law or regulatiOn relating to bankruptcy, insolvency or other relief for debtors; or seeks or consents to or acquiesces in the appointment of any trustee, receiver or liquidator of Tenant or of all or any substantial part of its property, or of any or all of the royalties, revenues, rents, issues or profits thereof, or makes any general assigmnent for the benefit of creditors, or admits in writing its inability to pay its debts generallY as they become ' due; (v) Reorganization. A court of competent jurisdiction enters an order, judgment or decree approving a petition filed against Tenant seeking any reorganization, dissolution or similar relief under any present or future federal, state or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, and such order, judgment or decree remains unvacated and unstayed for an aggregate of sixty (60) days from the first date of entry thereof, or any trustee receiver or liquidator of Tenant or of all or any substantial part of its property, or of any or all of the royalties, revenues, rents, issues or profits thereof is appointed without the consent or acquiescence of Tenant and such appointment remains unvacated and unstayed for an aggregate of sixty (60) days, such sixty (60) day period to be extended in all cases during any period of a bona fide appeal diligently pursued by Tenant; (vi) Attachment. A writ of execution or attachment or any similar process is issued or levied against all or any part of the interest of Tenant in the Project and such execution, attachment or similar process is not released, bonded, satisfied, or vacated or stayed within sixty (60) days after its entry or levy, such sixty (60) day period to be extended during any period of a bona fide appeal diligently pursued by Tenant; (vii) Transfer. Tenant Transfers all or any portion of Tenant's interest in the Land, the Improvements or in this Lease in violation of the provisions of Article 15 and 33 fails to rescind such Transfer within thirty (30) days after written notice from Landlord or such longer period of time as Landlord may agree; (viii) Nonmonetary Obligations. Tenant is in default in any other of its promises, covenants or agreements contained herein, and such. default shall continue for sixty (60) days after Tenant receives Notice of Breach specifying the particulars of such default (or such longer time as Landlord may agree upon in writing), provided that Tenant commences to cure the default within twenty-five (25) days and thereafter prosecutes the curing of such default with due diligence and in good faith. 16.2 Notice and Opportunity to Cure. 16.2.1 Notice of Breach. Unless expressly provided otherwise in this Lease, no breach by a party shall be deemed to have occurred under this Lease unless another party first delivers to the nonperforming party a written request to perform or remedy (the "Notice of Breach"), stating clearly the nature of the obligation which such nonperforming party has failed to perform, and stating the applicable period of time, if any, permitted to cure the default. 16.2.2 Failure to Give Notice of Breach. Failure to give, or delay in giving, Notice of Breach shall not constitute a waiver of any obligation, requirement or covenant required to be performed hereunder. Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any rights and remedies as to any breach shall not operate as a waiver of any breach or of any such rights or remedies. Delay by either party in asserting any of its rights and remedies shall not deprive such party of the right to institute and maintain any action or proceeding which it may deem appropriate to protect, assert or enforce any such fights or remedies. 16.2.3 Limited Partners' Right to Cure. Subject to the rights of Leasehold Mortgagees whose liens are senior to the City Deed of Trust ("Senior Leasehold Mortgagees"), the limited partners of Tenant ("Limited Partners") shall have the right to cure any default of Tenant hereunder upon the same terms and conditions afforded to Leasehold Mortgagees pursuant to Section 14.2.2 hereof. Provided Landlord has been given written notice of the address for delivery of notices to the Limited Partners, Landlord shall deliver notice of default to the Limited Partners in accordance with Section 14.2.1. The references to "Leasehold Mortgagee" in Sections 14.2.1, 14.2.2, and 16.3 shall be deemed to include the Limited Partners. Nothing contained in this Section 16.2.3 shall affect the rights and remedies of Senior Leasehold Mortgagees or the timing with respect to the exercise thereof. 16.3 Remedies Upon Default. 16.3.1 Landlord's Remedies. Upon the occurrence of any Event of Default and in addition to any and all other rights or remedies of Landlord hereunder and/or provided by law, but subject in all events to the rights and remedies of Leasehold Mortgagees under Article 14 hereof, Landlord shall have the right to terminate this Lease and/or Tenant's possessory fights hereunder, in accordance with applicable law to re-enter the Land and take possession thereof and of the Improvements, and except as otherwise provided herein, to remove all persons and property therefrom, and to store such property at Tenant's risk and for Tenant's account, and 675831 34 Tenant shall have no further claim thereon or hereunder. In no event shall this Lease be treated as an asset of Tenant after any final adjudication in bankruptcy except at Landlord's option so to treat the same but no trustee, receiver, or liquidator of Tenant shall have any right to disaffirm this Lease. 16.3.2 Remedies Upon Abandonment. If Tenant should breach this Lease and abandon the Project, Landlord may, at its option, enforce all of its rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder. Additionally, Landlord shall be entitled to recover from Tenant all costs of maintenance and preservation of the Project, and all costs, including attorneys' and receiver's fees incurred in connection with the appointment of and performance by a receiver to protect the Project and Landlord's interest under this Lease. 16.3.3 Landlord Right to Continue Lease. In the event of any default under this Lease by Tenant (and regardless of whether or not Tenant has abandoned the Project), this Lease shall not terminate (except by an exercise of Landlord's right to terminate under Section 16.3.1) unless Landlord, at Landlord's option, elects to terminate Tenant's right to possession or, at Landlord's further option, by the giving of any notice (including, without limitation, any notice preliminary or prerequisite to the bringing of legal proceedings in unlawful detainer) to terminate Tenant's right to possession. For so long as this Lease continues in effect, Landlord may enforce all of Landlord's rights and remedies under this Lease, including, without limitation, the right to recover all rent and other monetary payments as they become due hereunder. For the purposes of this Lease, the fOllowing shall not constitute termination of Tenant's right to possession: (a) acts of maintenance or preservation or efforts to relet the Project; or (b) the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease. 16.3.4 Right to Injunction; Specific Performance. In the event of a default by Tenant under this Lease, Landlord shall have the right to commence an action against Tenant for damages, injunction and/or specific performance. Tenant's failure, for any reason, to comply with a court-ordered injunction or order for specific performance shall constitute a breach under this Lease. 16.4 Assignment of Subrents and Other Sums. Subject to the rights of any Leasehold Mortgagee, Tenant irrevocably assigns to Landlord the subrents and other sums due from Project tenants, licensees or concessionaires for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Landlord any duty to produce rents from the Project, or cause Landlord to be (a) a "mortgagee in possession" for any purpose, (b) responsible for performing any of the obligations of the sublessor under any sublease, or (c) responsible for any waste committed by subtenants or any other parties, for any dangerous or defective condition of the Project, or for any negligence in the management, upkeep, repair or control of the Project. This is an absolute assignment (subject to the rights of any and all Leasehold Mortgagees), not an assignment for security only; and Landlord's right to subrents is not contingent upon, and may be exercised without possession of, the Project. Tenant hereby authorizes Landlord, at the election of Landlord to file a UCC-1 Financing Statement reflecting this assignment with the California Secretary of State. Landlord shall provide all Leasehold Mortgagees for which Landlord has been given an address for notice purposes with not less than twenty (20) days' prior written notice preceding any enforcement by Landlord of its rights to subrents. 675831 35 16.4.1 License. Landlord confers upon Tenant a license ("License") to collect and retain the subrents, issues and profits of the Project as they become due and payable, until the occurrence of an Event of Default. Upon the occurrence of an Event of Default, the License shall be automatically revoked and, subject to any rights of any Leasehold Mortgagee, Landlord may collect and retain the subrents, issues and profits without notice and without taking possession of the Project. This right to collect subrents, issues and profits shall not grant to Landlord the right to possession, except as hereinafter provided, and neither said right, nor termination of the License, shall impose upon'Landlord the duty to produce subrents, issues or profits or to maintain all or any part of the Project. 16.4.2 Right to Receiver. Following the occurrence of an Event of Default, if Tenant fails after receipt ora Notice of Breach to cure the default within the time period set forth in this Lease, Landlord, at its option, may have a receiver appointed to take possession of Tenant's interest in the Land, the Improvements and the Project with power in the receiver (a) to administer Tenant's interest in the Land, the Improvements and the Project, (b) to colleCt all funds available in connection with the operation of the Land, the Improvements and the Project, and (c) to perform all other acts consistent with Tenant's obligations under this Lease, as the court deems proper. Landlord's rights under this Section 16.4.3 shall be subject to the rights of all Leasehold Mortgagees. 16.5 Remedies Cumulative. No remedy in this Article 16 shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease may be exercised from time to time and as often as occasion may arise or as may be deemed expedient, subject to any limitations hereinabove referred to and subject to the nonrecourse provisions set forth in Section 3.1. I. 16.6 No Election of Remedies. The rights given in this Article 16 to receive, collect or sue for any rent or rents, moneys or payments, or to enforce the terms, provisions and conditions of this Lease, or to prevent the breach or nonobservance thereof, or the exercise of any such right or of any other right or remedy hereunder or otherwise granted or arising, shall not in any way affect or impair or toll the right or power of Landlord upon the conditions and subject to the provisions in this Lease to terminate Tenant's right of possession because of any default in or breach of any of the covenants, provisions or conditions of this Lease beyond the applicable cure period. 16.7 Survival of Obligations. Nothing herein shall be deemed to affect the right of Landlord under Article 9 of this Lease to indemnification for liability arising prior to the termination of the LeaSe for personal injuries or property damage, nor shall anything herein be deemed to affect the right of Landlord to equitable relief where such relief is appropriate. No expiration or termination of the Term by operation of law, or otherwise, and no repossession of the Land or any part thereof shall relieve Tenant of its previously accrued liabilities and obligations hereunder, all of which shall survive such expiration, termination or repossession. 16.8 No Waiver. Except to the extent that Landlord may have agreed in writing, no waiver by Landlord of any breach by Tenant of any of its obligations, agreements or covenants hereunder shall be deemed to be a waiver of any subsequent breach of the same or any other 675831 3 6 covenant, agreement or obligation, nor shall any forbearance by Landlord to seek a remedy for anY breach by Tenant be deemed a waiver by Landlord of its rights or remedies with respect to such breach. ARTICLE XVII GENERAL PROVISIONS 17.1 Estoppel Certificates. At any time and from time to time, either party, on at least twenty (20) days' prior written request by the other party, shall deliver to the party requesting same a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there shall have been modifications that the same is in full force and effect as modified and stating the modifications) and the dates to which the Rent has been paid and stating whether or not, to the best knowledge of the certifying party, the other party is in default in the performance of any covenant, agreement or condition contained in this Lease and, if so, specifying each such default of which the certifying party may have knowledge. A prospective purchaser or mortgagee shall be entitled to rely on a statement delivered hereunder. 17.2 Quiet Enjoyment. Landlord covenants and agrees that Tenant, upon paying the Rent and all other charges herein provided for and observing and keeping all covenants, agreements and conditions of this Lease on its part to be observed and kept, shall quietly have and enjoy the Land during the Term of this Lease without hindrance or molestation by anyone claiming by or through Landlord, subject, however, to the exceptions, reservations and conditions of this Lease. 17.3 Landlord's Right to Enter the Land. Landlord and its agents may enter the Land or the Improvements from time to time with reasonable notice, except for emergencies in which case no notice shall be required, to inspect the same, to post notices of nonresponsibility and similar notices, and to discharge Tenant's obligations hereunder when Tenant has failed to do s° within a reasonable time after written notice from Landlord. 17.4 Representations of Landlord and Tenant. 17.4.1 Tenant hereby represents and warrants that all of the following are true and correct as of the Effective Date: (a) Tenant is a limited partnership, duly organized, validly existing and in good standing under the laws of the State of California; (b) Tenant has taken all requisite action in connection with the execution of this Lease and the undertaking of the obligations set forth herein. This Lease constitutes the legally valid and binding obligation of Tenant, enforceable against Tenant in accordance with its terms, except as it may be affected by bankruptcy, insolvency or similar laws or by legal or eqUitable principles relating to or limiting the rights of contracting parties generally; and 675831 37 (c) The execution of this Lease and the acceptance of the obligations set forth herein do not violate any court order or ruling binding upon Tenant or any provision Of any indenture, agreement or other instrument to which Tenant is a party or may be bound. Neither the entry into nor the performance of this Lease will violate, be in conflict with or constitute a default under any charter, bylaw, partnership agreement, trust agreement, mortgage, deed of trust, indenture, contract, judgment, order or other agreement, charge, right or interest applicable to Tenant. 17.4.2 Landlord hereby represents and warrants that all of the following are true and correct as of the Effective Date: (a) Landlord has taken all requisite action in connection with the execution of this Lease and the undertaking of the obligations set forth herein. This Lease constitutes the legally valid and binding Obligation of Landlord, enforceable against Landlord in accordance with its terms, except as it may be affected by bankruptcy, insolvency or similar laws or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (b) The execution of this Lease and the acceptance of the obligations set forth herein do not violate any court order or ruling binding upon Landlord or any provision of any indenture, agreement or other instrument to which Landlord is a party or may be bound. Neither the entry into nor the performance of this Lease will violate, be in conflict with or constitute a default under any charter, bylaw, · partnership agreement, trust agreement, mortgage, deed of trust, indenture, ' ii~ contract, judgment, order or other agreement, charge, right or interest applicable to Landlord. 17.5 Miscellaneous. 17.5.1 Severability. If any term or provision of this Lease or the application thereof to any person or circumstance shall, to any extent, be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. 17.5.2 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Lease shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a remm receipt; 675831 38 (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case notice is effective on delivery if delivery is confirmed by the delivery service; (iv) facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first- class or certified mail or by ovemight delivery, or (b) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next business day if it is received after 5:00 p.m. recipient's time or on a nonbusiness day. Landlord: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attention: Community Development Director Facsimile: (925) 829-9248 Tenant: Dublin Senior Limited Partnership c/o Eden Housing, Inc., general partner 409 Jackson Street Hayward, CA 94544-1567 Attention: Executive Director Facsimile: (510) 582-6523 With copy to: (Investor Limited Partner) Peoples Benefit Life Insurance Company c/o AEGON USA Realty Advisors, Inc. 400 West Market Street Louisville, KY 40202 Attn: Marsha Hicks, Counsel Facsimile: (502) 560-2207 With a copy to: AEGON USA Realty Advisors, Inc. 600 Montgomery Street, 16t~ Floor San Francisco, CA 94111 Attn: Christoph K. Gabler Facsimile: (415) 983-5558 With a copy to: C'arle, Mackie, Power & Ross LLP 100 B Street, Suite 400 Santa Rosa, CA 95401 Attention: Richard W. Power, Esq. Facsimile" (707) 526-4707 675831 39 If to the Special Limited Partner: c/o Transamerica Affordable Housing, Inc. c/o AEGON USA Realty Advisors, Inc. 600 Montgomery Street, 16th Floor San Francisco, CA 94111 Atto: David W. Kunhardt, Vice President- Community Investments Facsimile: (415) 983-5558 With copy to: (Leasehold Mortgagee) Citibank (West), F.S.B Facsimile: 17.5.3 Captions; Construction. The captions used for the sections and articles of this Lease are inserted for convenience only and shall not be used to construe this Lease. The language in all parts of this Lease shall be construed as a whole, according to its fair meaning and not strictly for or against Landlord or Tenant. 17.5.4 Successors and Assigns. Subject to the provisions hereof, this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, and wherever a reference in this Lease is made to either of the parties hereto such reference shall be deemed to include, wherever applicable, a reference to the successors and assigns of such party, as if in every case so expressed. 17.5.5 Short Form of Lease. A memorandum of lease referring to this Lease shall be executed by Landlord and Tenant and recorded in the Office of the Alameda County Recorder. 17.5.6 Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of California. 17.5.7 Attorney's Fees. Should either party hereto commence an action against the other to enforce any obligation contained herein, the prevailing party shall be entitled to recover from the other party reasonable counsel fees and costs and necessary disbursements, as determined by the court having jurisdiction over the action. 17.5.8 indemnity Includes Defense Costs. In any case where either party is obligated under an express provision of this Lease, to indemnify and to save the other party harmless from any damage or liability, the same shall be deemed to include defense of the indemnitee by the indemnitor, such defense to be through legal counsel reasonably acceptable to the indemnitee. 675831 40 17.5.9 No BrOkers; No Third-Party Beneficiaries. Landlord represents that it has not engaged any broker or agent to represent Landlord in this transaction. Tenant represents that it has not engaged any broker or agent to represent Tenant in this transaction. Each party agrees to indemnify and hold the other harmless from and against any and all liabilities or expenses, including attorneys' fees and costs, arising out of, or in connection with claims made by any broker or individual for commissions or fees as a result of the acts of the indemnifying party. There shall be no third-party beneficiaries to this Lease. 17.5.10 Disclaimer of Partnership, Lender/Borrower Relationship. The relationship of the parties under this Lease is solely that of landlord and tenant, and it is expressly understood and agreed that Landlord does not as a result of this Lease in any way nor for any purpose become a partner of Tenant or a joint venturer with Tenant in the conduct of Tenant's business or otherwise. This Lease is not intended to, and shall not be construed to, create the relationship of principal and agent, partnership, joint venture, association, or seller and buyer as between Landlord and Tenant. It is further expressly understood and agreed that this Lease is not intended to, and shall not be construed to create the relationship of lender and borrower, and Landlord does not, solely as a result of this Lease, become a lender to Tenant. 17.5.11 Entire Agreement; Amendments. This Lease contains the entire agreement between the parties relative to the leasing transaction covered hereby. All previous correspondence, communications, discussions, agreements, understandings or proposals and acceptances thereof between the parties or their representatives, whether oral or written, are deemed to have been integrated into and superseded by this Lease and are of no further force and effect except as expressly provided in this Lease. No amendment or modification hereof shall be effective for any purpose unless in writing signed by Landlord and Tenant. : 17.5.12 Time is of the Essence. Time is of the essence of this Lease and of each Provision hereof. 17.5.13 Counterparts. This Lease may be executed in one or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 17.5.14 Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City of Dublin in its capacity as Landlord hereunder is required or permitted under this Lease, such action shall be in writing, and such action may be given, made or taken by the City Manager or by any person who shall have been designated by the City Manager, without further approval by the City Council. In any approval, consent, or other determination by Landlord required hereunder, Landlord shall act reasonably and in. good faith. SIGNATURES ON FOLLOWING PA GE IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of the Effective Date. LANDLORD: CITY OF DUBLIN By: Richard C. Ambrose, City Manager Attest: City Clerk Approved as to form: Elizabeth H. Silver, City Attorney TENANT: DUBLIN SENIOR LIMITED PARTNERSHIP By: Eden Housing, Inc., a California nonprofit public benefit corporation Its: General Partner By: Linda Mandolini, Executive Director 675831 42 Exhibit A LAND (Attach legal description.) 675831 43 Exhibit B INSURANCE REQUIREMENTS (Attach insurance requiremems.) 675831 44 INSURANCE REQUIREMENTS Tenant, at its sole cost and expense, during the Term hereof shall keep and maintain the £ollowing policies of insurance: A. Property Insurance. Insurance for the risks of direct physical loss, with minimum coverage being the perils insured under the standard Causes o£Loss - Special form (ISO Form CP 10 30) or its equivalent, covering all the Improvements, all fixtures, equipment and Personal Property, located on or in, or constituting a part of, the Land, in an amount equal to one hundred percent (100%) of the full replacement cost of all such property. The insurance shall (a) cover explosion of steam and pressure boilers and similar apparatus, if any, located at the Project, and (b) Cover floods if the Land is in a Special Hazard Area, as determined by the Federal Emergency Management Agency or as shown on a National Flood Insurance Program flood map. The insurance required hereunder shall be in amounts sufficient to prevent Tenant from becoming a co-insurer under the terms of the applicable policies, with not more than a Thirty- five Thousand Dollars ($35,000) deductible (or such higher deductible approved by the Landlord, which approval shall not be unreasonably withheld) from the loss payable for any casualty. The policies of insurance carried in accordance with this Paragraph A shall contain a "replacement cost endorsement" and an "increased cost of construction endorsement." B.. Liability Insurance. Commercial general liability insurance on an "occurrence basis" covering all claims with respect to injury or damage to persons or property occurring on, in or about the Land or the Improvements. At the commencement of the Term of the Lease, andat ali times during the Term, the limits of liability under this Paragraoh B shall be not less than Two Million Dollars ($2,000,000) combined single limit per occurrence, with a deductible no greater than Thirty-five Thousand Dollars ($35,000) or such higher deductible as may be approved by Landlord, which approval shall not be unreasonably withheld. Upon receipt of written demand from Landlord, Tenant shall increase the limits of liability insurance required hereunder to the amount required by any then-existing Leasehold Mortgagee or commensurate with that generally carded by a majority of owners of other comparable projects in Alameda County, but not greater than that required by any then-existing Leasehold Mortgagee. The insurance shall also include: (i) coverage against liability for bodily injury or property damage arising out of the use, by or on behalf of Tenant, of any owned, non-owned, leased or hired automotive equipment in the conduct of any and all operations called for under this Lease; (ii) premises and operations including, without limitation, bodily injury, personal injury, death or property damage occurring upon, in or about the Land or the Improvements on any elevators or any escalators therein and on, in or about the adjoining sidewalks, streets and passageways; (iii) broad form property damage liability; EXHIBIT B (iv) additional insured and primary insured endorsements protecting Landlord and Landlord's elected and appointed officials, officers, employees and agents; and (v) personal injury endorsement. C. Worker's Compensation Insurance. Worker's compensation insurance, in the amount required under then applicable state law, covering Tenant's employees, if any, at work in or upon the Project, for not less than One Hundred Thousand Dollars ($100,000) per occurrence for all employees engaged in services or operations in connection with the Project or the Property. Tenant Shall require that any'general construction contract entered into by Tenant with regard to the initial development of the Improvements include a contractual undertaking by the. general contractor to provide worker's compensation insurance for its employees engaged in construction of the Improvements in an amount in compliance with applicable state law. D. Course of Construction Insurance. Course of construction insurance in the same amount as required in Paragraph A above for property insurance, covering all construction activities on the Land. E. General Insurance Provisions. All policies of insurance provided for in this Article shall be provided under valid and enforceable policies, in such forms and amounts as hereinbefore specified, issued by insurers licensed to do business in the State of California (or approved to do business in California and listed on the California Department of Insurance list of Eligible Surplus Lines Insurers or successor listing) and having a rating of A-/VIII or better in Best Insurance Guide or, if Best Insurance Guide is no longer in existence, a comparable rating from a comparable rating service. Prior to the Commencement Date and, thereafter, not less than thirty (30) days prior to the expiration date of each policy furnished pursuant to this Exhibit B, Tenant. shall deliver to Landlord certificates evidencing the insurance required to be carried by Tenant under this Exhibit B. If requested by Landlord, Tenant shall deliver within fifteen (15) days following such request, certified, comPlete copies of the insurance policies required in this Lease. Insurance policies to be provided herein shall meet the following: (a) Each policy of insurance obtained pursuant to this Lease., other than worker's compensation insurance, shall contain endorsements which provide (i) a waiver by the insurer of the right of subrogation against Landlord, Tenant or any subtenant for negligence of any such person, (ii) a statement that the insurance shall not be invalidated should any insured waive in writing prior t° the loss any or all right of recOvery against any party for loss accruing to the property described in the insurance policy, and (iii) a provision that no act or omission of Tenant which would otherwise result in forfeiture or reduction of the insurance therein provided shall affect or limit the obligatiOn of the insurance company to pay the amount of any loss sustained. (b) By endorsements, Landlord and its elected and appointed officials, officer, employees and agents shall be named as additional insured, as appropriate, under the liability insurance required to be maintained by Tenant hereunder. (c) Each policy required hereunder shall include a Notice of Cancellation or Change in Coverage Endorsement which shall provide that such policy shall not be cancelled or 678740-1 materially changed without at least thirty (30) days' prior written notice by registered or certified mail to Landlord. (d) All insurance policies shall provide that there shall be no exclusion from coverage for cross liability among the listed insureds. (e) Any certificate of insurance applicable to course of construction insurance to be maintained shall be deposited with Landlord Prior to commencement of construction of any Improvements. (f) Each policy shall contain an endorsement that proves that the insurance applies separately to each insured that is seeking coverage or against whom a claim is made, except with respect to the limits of liability. (g) Each policy shall be written as a primary policy not contributing with and not in excess of coverage that Landlord may carry. (h) Each policy.shall expressly provide that Landlord shall not be required to give notice of accidents or claims and that Landlord shall have no liability for premiums. (i) Notwithstanding any contrary provision of this Exhibit B, all insurance required to be carried by Tenant under this Exhibit B shall be in such amounts, with such additional coverages, and on such other terms as required by any Leasehold Mortgagee. F. Blanket Policies. Any insurance provided for in this Exhibit B may be placed by .a policy or policies Of blanket insurance; provided, however, that such policy or policies provide that the amoUnt of the t6tal insurance allocated to the Land shall be such as to furnish protection the equivalent of separate policies in the amounts herein required, and provided further that in all other respects any such policy or policies shall comply with the other provisions of this Lease. G. Waiver of Subrogation. To the extent permitted by law and the policies of insurance required to be maintained hereunder, and without affecting such insurance coverage, Landlord and Tenant each waive any right to recover against the other (a) damages for injury or death of persons, (b) damage to property, (c) damage to the Land or the Improvements or any part ' thereof, or (d) claims arising by reason of any of the foregoing, to the extent that such damages and/or claims are covered (and only to the extent of such coverage) by insurance actually carried by either Landlord or Tenant. This provision is intended to restrict each party (as permitted by law) to recover against insurance carriers to the extent of such coverage, and waive fully, and for the benefit of each, any rights and/or claims which might give rise to a right of subrogation in any insurance carrier. H. Compliance with Policy Requirements. Tenant shall observe and cOmply with the requirements of all policies of public liability, fire and other policies of insurance at any time in force with respect to the Project, and Tenant shall so perform and satisfy the requirements of the companies writing such policies that at all times companies of good standing shall be willing to write or to continue such insurance. 678740-I I. Additional Insurance. Tenant shall maintain such additional amounts or types of insurance as shall be required by any then-existing Leasehold Mortgagee, and shall have the right to carry such additional insurance as Tenant may desire from time to time or as may be required by any Leasehold Mortgagee. 678740-I