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HomeMy WebLinkAbout05 - Termination of Option to Purchase City Hall SiteCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 5 May 27, 2008 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Attorney's Office Robin Clauson, City Attorney 949- 644 -3131, rclauso city.newport- beach.ca.us SUBJECT: Termination of Option to Purchase from The Irvine Company a City Hall Site in Block 500 of Newport Center Drive ISSUE Should the City Council terminate the option to purchase the City Hall site in Block 500 of Newport Center Drive that was granted pursuant to the Zoning Implementation and Public Benefit Agreement with The Irvine Company for North Newport Center? RECOMMENDATION If the Council desires to terminate the option, it should adopt the attached Resolution authorizing the Mayor to sign a notice to terminate the option to purchase the City Hall site and authorizing the City Manager to accept the Amended and Restated Grant Deed for Parcel 3 of Parcel Map 90 -361. DISCUSSION Introduction On December 18, 2007, after holding two public hearings, the City Council adopted Ordinance No. 2007 -21, approving Development Agreement No. DA2007 -002, entitled the Zoning Implementation and Public Benefit Agreement Between the City of Newport Beach and The Irvine Company LLC Concerning North Newport Center (Fashion Island, Block 500, Block 600, and San Joaquin Plaza) (the "North Newport Center Development Agreement'). Under Section 4.8 of the North Newport Center Development Agreement, the City and The Irvine Company entered into an Option Agreement that gives the City the option to purchase a site in Newport Center Drive Block 500 for the purposes of Termination of Option to Purchase City Hall Site in Newport Center Drive Block 500 from The Irvine Company May 27, 2008 Page 2 constructing a new City Hall. Exhibit F to the North Newport Center Development Agreement contains the Option Agreement. On February 5, 2008, in a special municipal election, a majority of the City's voters voted in favor of Measure B (the "City Hall in the Park" initiative). Measure B added a new Section 425 to the City's Charter to require City Hall, the City's administrative offices, and related parking to be located on the City property bounded on the north by San Miguel Drive, the east by MacArthur Boulevard, the south by the City's Central Library, and the west by Avocado Avenue (the "City Hall Site'). Measure B, therefore, effectively curtailed the City's ability to select any location, including Newport Center Drive Block 500, for the new City Hall, other than the City Hall Site. On February 26, 2008, after holding a public hearing, the City Council adopted Resolution No. 2008 -13, declaring the results of the special municipal election for Measure B and stating that Measure B shall be deemed adopted and ratified. On the same day, the City Council adopted Resolution No. 2008 -14, stating that it wished to follow the will of the voters and develop a new City Hall on the City Hall Site. As part of Resolution No. 2008 -14, the City Council also stated that it wished to have professional advice on issues related to design of the new City Hall and a master plan for 19.8 acres owned by the City between Corona Del Mar Plaza and the Orange County Transportation Authority's Transportation Facility. As part of the resolution, the City Council also established the City Hall Design Committee to oversee and conduct a design competition City Hall and Master Plan for the property, which includes the City Hall Site specified in Measure B and the Avocado Open Space parcel, north of the site and across San Miguel Road, to be granted to the City as part of the Newport North Development Agreement. II. Public Benefits Tringered by Termination of Option A. Dedication of Avocado Open Space Parcel Section 4.6 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City an approximately 3.18 -acre site in Newport Center for open space and public facility purposes within 30 days after the earliest of the following: (1) the City has awarded a construction contract for construction of City Hall at any location within the City or (2) the City's option to purchase the Newport Center Drive Block 500 site has terminated. The 3.18 -acre site is bounded on the north by the Orange County Transportation Authority site, the east by MacArthur Boulevard, the south by Termination of Option to Purchase City Hall Site in Newport Center Drive Block 500 from The Irvine Company May 27, 2008 Page 3 San Miguel Drive, and the west by Avocado Avenue. This site is identified in the North Newport Center Development Agreement as the "Avocado Open Space Parcel." As noted above, the City Council stated in Resolution No. 2008 -14 that it wished to follow the will of the voters in approving Measure B. The City may, under the North Newport Center Development Agreement, trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel by awarding a construction contract for construction of City Hall on the City Hall Site. Given the City's design competition process to develop a master plan for both the Avocado Open Space Parcel and the City Hall Site, it will be some time before the City will have completed all necessary steps, (e.g. approve a design, define the project and complete environmental review) required to be in a position to award a construction contract for construction of City Hall. Section 4.8.1 of the North Newport Center Development Agreement provides for a four -year duration for the option to purchase the site in Newport Center Drive Block 500. The four years is counted from the Effective Date of the development agreement, which was January 18, 2008. If the City does not take action to exercise or terminate the option, then the option will automatically terminate on January 18, 2012. In that case, The Irvine Company's obligation to dedicate the Avocado Open Space Parcel will not arise until that time. Accordingly, the City can trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel more quickly by taking action to terminate the option to purchase the alternative site for the new City Hall in Newport Center Drive Block 500. B. Accelerated Dedication of Lower Castaways The Irvine Company's obligation to dedicate Lower Castaways arises upon issuance of the First Building Permit. Section 4.11 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City the bay -front Lower Castaways site for certain municipal or municipally sponsored uses upon the City's issuance of The Irvine Company's First Building Permit, as defined by Section 1.13 of the development agreement. Section 1.13 defines "First Building Permit" as follows: "First Building Permit" shall mean the first building permit that is issued for either. (i) the Parking Structure; or (ii) Termination of Option to Purchase City Hall Site in Newport Center Drive Block 500 from The Irvine Company May 27, 2008 Page 4 residential, office, or hotel development on any portion of the Property located in Newport Center Block 500, Newport Center Block 600, or San Joaquin Plaza, provided the building permit (A) is for new development that did not exist as of the date of this Agreement on the property for which the permit is being issued, (B) is not for the renovation, repair, or improvement of an existing building that does not increase the building's square footage, and (C) is not for a parking structure that is intended to serve, in whole or in part, any such new development (other than the Parking Structure, which is specifically included pursuant to clause (i)). In turn, Section 1.25 defines "Parking Structure" as follows: "Parking Structure" shall mean the multilevel parking structure to be developed on the Parking Structure Site in the event City exercises its option to acquire the Option Site, including without limitation the spaces on the ground level within the multilevel parking structure. Since the City Council intends to take the necessary steps to develop a new City Hall on the site directed in Measure B, it is unlikely the City will issue a First Building Permit associated with the option to The Irvine Company. The Irvine Company has indicated that it does not plan to request the First Building Permit (i.e., a building permit for new residential, office, or hotel development on the property covered by the North Newport Center Development Agreement) for over a year and possibly up to three years. Under the terms of the Agreement, The Irvine Company's obligation to dedicate Lower Castaways would therefore not arise until that time. The Irvine Company, however, has agreed to accelerate its dedication of Lower Castaways if the City terminates the option to purchase the site in Newport Center Drive Block 500. Specifically, The Irvine Company has agreed, by the attached letter to the City Manager, to deliver to the City the grant deed for Lower Castaways within 60 days of the City's termination of the option. C. Cooperation to Allow for City Hall on Site Specified in Measure B Section 4.10 of the North Newport Center Development Agreement provides that The Irvine Company will cooperate in good faith with the City to allow for construction of City Hall on the site specified in Measure B "[ijf the City elects Termination of Option to Purchase City Hall Site in Newport Center Drive Block 500 from The Irvine Company May 27, 2008 Page 5 to construct a new City Hall" on that site. Under Section 4.10, The Irvine Company specifically agreed "to release and terminate the use restrictions contained in the deed for the [site specked in Measure B] to allow for and accommodate construction of a new City Hall on that site." The Irvine Company had previously granted the City Hall Site to the City, and the grant deed provided that the use of the property would be limited to open space and public facilities consistent with the Planned Community District regulations ( "PC Text ") for the property. The PC Text authorizes open space and park uses. Even though the City is currently only in the planning and design stages for building a City Hall on the site, The Irvine Company has nevertheless agreed to amend the Grant Deed, (the "Amended Grant Deed ") in the form of an Amended and Restated Grant Deed, that revises the language of the use covenant to delete the reference to the PC Text, thus authorizing the use of the Property for open space and the option to construct a public facility (i.e., City Hall) on the City Hall Site. The Irvine Company has executed the attached Amended Grant Deed. The construction of City Hall on the site specified in Measure B is now consistent with the use of the property for open space and public facilities. III. Termination of Option Terminates Citv Rights and Obligations Section 1.3 of the Option Agreement provides for the City's right to terminate the option to purchase the City Hall site. Section 1.3 states that termination is effective by "delivery of written notice of termination to [The Irvine Company], which notice City shall have the right to deliver at any time during the Option Period prior to City's exercise of the Option." Section 4.8.1 of the North Newport Center Development Agreement contains the same language providing for the City's right to terminate the option. The City's termination of the option terminates the rights and obligations of the City and The Irvine Company that are established in the Option Agreement. The City's termination of the option also terminates the rights and obligations of the City and The Irvine Company that are established in Section 4.8 of the North Newport Center Development Agreement. These rights and obligations relate to the City Hall site in Newport Center Drive Block 500 and the associated parking structure. Thus, upon termination, the City will no longer need to track or act on its obligations under the Option Agreement and Section 4.8 of the North Newport Center Development Agreement. The Irvine Company will no longer need to work with the City to design a parking structure to accommodate a City Hall. Termination of Option to Purchase City Hall Site in Newport Center Drive Block 500 from The Irvine Company May 27, 2008 Page 6 IV. Benefits to Terminatina the Option If the Council adopts the attached Resolution authorizing early termination of the option the City will have followed the will of the voters, who enacted Measure B, which in essence terminated the option to build a City Hall in the 500 Block of Newport Center. Terminating this option will allow The Irvine Company to go forward with their plans to design and pull permits to build a parking structure in Block 500 by mid -2009 and as a result accelerate the following benefits under the Development Agreement: 1. Payment of /z ($13,545,000) of the Public Benefit fees for the construction of City Hall. 2. Dedication of the Avocado Open Space Parcel. 3. Dedication of Lower Castaways. Under Section 1.3 of the Option Agreement and Section 4.8.1 of the North Newport Center Development Agreement, the City can terminate the option simply by delivering written notice of the termination to The Irvine Company. The attached Resolution provides that the City Manager deliver written notice of the termination, pursuant to the notice requirements set forth in Section 24 of the North Newport Center Development Agreement The date of delivery of the written notice will trigger the time frame under which The Irvine Company will then dedicate the Avocado Open Space Parcel and Lower Castaways. As noted above, The Irvine Company will deliver to the City the grant deed for the Avocado Open Space Parcel within 30 days of termination of the option and deliver to the City the grant deed for Lower Castaways within 60 days of termination of the option. Submitted by: Ro in Clauson City Attorney Attachments: Resolution The Irvine Company letter to the City Manager Amended Grant Deed F: userslcatlshared \CCstaflReportslTermi nabng0ptionAgClean.doc RESOLUTION NO. 2008- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH TERMINATING THE OPTION TO PURCHASE FROM THE IRVINE COMPANY A CITY HALL SITE IN BLOCK 500 OF NEWPORT CENTER DRIVE WHEREAS, on December 18, 2007, after holding two public hearings, the City Council of the City of Newport Beach adopted Ordinance No. 2007 -21, approving Development Agreement No. DA2007 -002, entitled the Zoning Implementation and Public Benefit Agreement Between the City of Newport Beach and The Irvine Company LLC Concerning North Newport Center (Fashion Island, Block 500, Block 600, and San Joaquin Plaza) (the "North Newport Center Development Agreement "). WHEREAS, under Section 4.8 of the North Newport Center Development Agreement, the City and The Irvine Company LLC ( "The Irvine Company") entered into an Option Agreement that gives the City the option to purchase a site in Newport Center Drive Block 500 for the purposes of constructing a new City Hall (the "Option "). Exhibit F to the North Newport Center Development Agreement contains the Option Agreement. WHEREAS, on February 5, 2008, in a special municipal election, a majority of the City's voters voted in favor of Measure B (the "City Hall in the Park" initiative). Measure B provides for adding a new Section 425 to the City's Charter to require City Hall, the City's administrative offices, and related parking to be located on the City property bounded on the north by San Miguel Drive, the east by MacArthur Boulevard, the south by the City's Central Library, and the west by Avocado Avenue. WHEREAS, on February 26, 2008, after holding a public hearing, the City Council adopted Resolution No. 2008 -13, declaring the results of the special municipal election for Measure B and stating that Measure B shall be deemed adopted and ratified. On the same day, the City Council adopted Resolution No. 2008 -14, stating that it wished to follow the will of the voters and develop a new City Hall on the site specified in Measure B. WHEREAS, after thoroughly considering the entire record, including the public testimony and written submissions, if any, of all interested persons desiring to be heard, the City Council finds the following facts, findings, and reasons to support terminating the Option: Dedication of Open Space Parcel 1. Voter approval of Measure B amended the City's Charter to require that City Hall be located on the site identified in the Initiative. 1 2. As part of Resolution No. 2008 -14, which the City Council adopted on February 26, 2008, the City Council stated that it wished to have professional advice on issues related to design of the new City Hall and a master plan for 19.8 acres owned by the City between Corona Del Mar Plaza and the Orange County Transportation Authority's Transportation Facility. As part of the resolution, the City Council also established the City Hall Design Committee to oversee and conduct a design competition for City Hall and the master plan project, which includes the City Hall site specified in Measure B. 3. Section 4.6 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City an approximately 3.18 -acre site in Newport Center for open space and public facility purposes within 30 days after the earliest of the following: (1) the City has awarded a construction contract for construction of City Hall at any location within the City or (2) the Option has terminated. The 3.18 -acre site is bounded on the north by the Orange County Transportation Authority site, the east by MacArthur Boulevard, the south by San Miguel Drive, and the west by Avocado Avenue. This site is known as the "Avocado Open Space Parcel." 4. The City can trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel by awarding a construction contract for construction of City Hall on the site specified in Measure B. Given the City's plan to hold a design competition for City Hall and to develop a master plan for the area encompassing the site specified in Measure B, the City will not likely award a construction contract for construction of City Hall for some time. 5. Section 4.8.1 of the North Newport Center Development Agreement provides for a four -year duration for the Option. The four years is counted from the Effective Date of the development agreement, which was January 18, 2008. If the City does not take action to exercise or terminate the Option, then the Option will automatically terminate on January 18, 2012. In that case, The Irvine Company's obligation to dedicate the Avocado Open Space Parcel will not arise until that time. 6. The City can trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel more quickly by taking action now to terminate the Option. Accelerated Dedication of Lower Castaways 7. Section 4.11 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City the bay -front Lower Castaways site for certain municipal or municipally sponsored uses upon the City's issuance of The Irvine Company's First Building Permit, as defined by Section 1.13 of the development agreement. 8. The Irvine Company has indicated that it does not plan to request the First Building Permit as defined by Section 1.13 of the North Newport Center Development Agreement for at least one year from now. Under the terms of the development r: agreement, The Irvine Company's obligation to dedicate Lower Castaways would therefore not arise until that time. 9. The Irvine Company has agreed to accelerate its dedication of Lower Castaways if the City terminates the Option. Specifically, The Irvine Company has agreed to deliver to the City the grant deed for Lower Castaways within 60 days of the City's termination of the Option. Accelerated Cooperation to Allow for City Hall on Site Specified in Measure B 10. Section 4.10 of the North Newport Center Development Agreement provides that The Irvine Company will cooperate in good faith with the City to allow for construction of City Hall on the site specified in Measure B "[]f the City elects to construct a new City Hall" on that site. Under Section 4.10, The Irvine Company specifically agreed "to release and terminate the use restrictions contained in the deed for the [site specified in Measure B] to allow for and accommodate construction of a new City Hall on that site." 11. The Irvine Company had previously dedicated the site specified in Measure B to the City, and the grant deed included a reference to Planned Community District regulations that authorized open space and park uses, and that would have required amendment to construct a City Hall on the site. The City is currently only in the planning and design stages for construction of City Hall on the site specified in Measure B. The Irvine Company nevertheless agreed to enter into a Grant Deed (Amended and Restated) (the "Amended Grant Deed ") that revises the language of the deed to authorize construction of City Hall on the site specified in Measure B. 12. The Irvine Company has already executed and delivered the Amended and Restated Grant Deed. The construction of City Hall on the site specified in Measure B is now consistent with the open space and public facilities uses contained in the Amended Grant Deed. Termination of Option Terminates City Obligations 13. Section 1.3 of the Option Agreement provides for the City's right to terminate the Option. Section 1.3 states that termination is effective by "delivery of written notice of termination to [The Irvine Company], which notice City shall have the right to deliver at any time during the Option Period prior to City's exercise of the Option." Section 4.8.1 of the North Newport Center Development Agreement contains the same language providing for the City's right to terminate the Option. 14. The City's termination of the Option terminates the rights and obligations of the City and The Irvine Company that are established in the Option Agreement. The City's termination of the Option also terminates the rights and obligations of the City and The Irvine Company that are established in Section 4.8 of the North Newport Center 3 Development Agreement. These rights and obligations relate to the City Hall site in Newport Center Drive Block 500 and the associated parking structure. Conclusion 15. Termination of the Option will trigger three significant public benefits: (1) dedication of the Avocado Open Space Parcel, (2) accelerated dedication of Lower Castaways, and (3) accelerated cooperation to allow for City Hall on the site specified in Measure B. 16. Given the City Council's commitment to comply with new Charter Section 425 and develop a new City Hall on the site specified in Measure B, and based on the public benefits triggered by the City's termination of the Option, termination of the Option is in the best interests of the health, safety, and general welfare of the City, its residents, and the public. NOW, THEREFORE, BE IT RESOLVED by the City Council, as follows: 1. That the preceding recitations are true and correct and constitute the findings of the City Council for termination of the Option. 2. That the City Council terminate the Option for the reasons set forth in this resolution. 3. That the City Manager timely deliver written notice of the termination to The Irvine Company, consistent with the notice requirements under Section 24 of the North Newport Center Development Agreement. 4. That the City Manager accept and record the Amended & Restated Grant Deed. ADOPTED on the day of May 2008. ATTEST: CITY CLERK 0 MAYOR RECORDING REQUESTED BY AND WHEN RECORDED, MAIL TO: City Clerk City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92663 -3884 WITH A CONFORMED COPY TO: The Irvine Company LLC 550 Newport Center Drive Newport Beach, CA 92660 Attn: General Counsel's Office (Space Above For Recorder's Use) GRANT DEED (Amended & Restated) (Parcel 3, Parcel Map 90 -361— Newport Village) THE UNDERSIGNED GRANTOR DECLARES: This document is recorded at the request of and for the benefit of the City of Newport Beach, and therefore is exempt from the payment of a recording fee pursuant to California Government Code §§ 6103 and 27383 and from payment of documentary transfer tax pursuant to California Revenue and Taxation Code § 11922. RECITALS A. Whereas, pursuant to that certain Grant Deed recorded as Instrument No. 2007000704013 on November 28, 2007 (the "Original Grant Deed) in the Official Records of Orange County, California ( "Official Records'), The Irvine Company LLC, a Delaware limited liability company ( "Company "), as Grantor, conveyed Parcel 3 of Parcel Map 90 -361 in the City of Newport Beach, County of Orange, State of California, as per Map filed in Book 270, Pages 15 to 18, inclusive, of Parcels, in the Official Records (the "Property "), to the City of Newport Beach, a California municipal corporation and chartered City ( "City"), as Grantee. B. Whereas, the Original Grant Deed was provided to City to satisfy obligations of Company under that certain Circulation Improvement and Open Space Agreement previously entered by Company and City on June 30, 1993. Section 6(ii)(c) of the Original Grant Deed provided that the Covenants contained in the Original Grant Deed could be amended upon mutual agreement of Company and City. 30209-0091/367636.4 5/19/08 -1- C. Whereas, Section 4.10 of that certain Zoning Implementation and Public Benefit Agreement entered between City and Company on January 18, 2008 and recorded in the Official Records as Instrument No. 2008000051429 on February 4, 2008 (the "Development Agreement') requires that Company cooperate with City in releasing use restrictions contained in the Covenants of the Original Grant Deed to allow for and accommodate construction of a new City Hall on the Property if City elects to do so, and Company, being aware of City's election to so construct a new City Hall on the Property, desires to fulfill its obligations under the Development Agreement by joining City in amending and restating the Original Grant Deed in its entirety as provided herein. CONVEYANCE NOW THEREFORE, in consideration of the above and for other good and valuable consideration, the receipt of which is hereby acknowledged, THE IRVINE COMPANY LLC, a Delaware limited liability company ( "Grantor'), hereby grants to the CITY OF NEWPORT BEACH, a California municipal corporation and chartered city ( "Grantee'), in fee, the Property. EXCEPTING from the Property, any and all oil, oil rights, minerals, mineral rights, natural gas rights and other hydrocarbons by whatsoever name known, geothermal steam, any other material resources and all products derived from any of the foregoing, that may be within or under the Property, together with the perpetual right of drilling, mining, exploring and operating therefor and storing in and removing the same from the Property or any other land, including the right to whipstock or directionally drill and mine from lands outside the Property, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Property and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; but without, however, the right to drill, mine, store, explore or operate through the surface or the upper 500 feet of the subsurface of the Property; EXCEPTING from the Property, any and all water, water rights or interests therein appurtenant to, underlying or relating to the Property, or owned or used by Grantor in connection with the Property or for any beneficial use, no matter how acquired by Grantor, and including but not limited to the rights that are riparian, overlying, appropriative, prescriptive, percolating, littoral, adjudicated, statutory or contractual, but without, however, any right to enter upon the surface of the Property in the exercise of such reserved rights;. RESERVING unto Grantor, its successors and assigns, together with the right (without the consent of Grantee or any other owner of an interest in the Property) to grant, transfer or license all or a portion of the same to one or more grantees, transferees or licensees: i. Sienaee and Related Improvements. The right to install, place and maintain directional, informational and similar signage to other property owned by Grantor in Newport Beach, California, together with landscaping, landscape irrigation systems, and lighting related thereto, as well as electric, water, and drainage facilities related thereto, together with the right to enter upon the Property (without unreasonably interfering with the use of the Property as an open space area) in order to service, 30209 -0091 /367636.4 5/19/08 -2- maintain, repair, reconstruct, relocate or replace any of such facilities or improvements; provided, however, that the exercise of such right shall be subject to the discretionary approval of Grantee, and subject to the requirement that Grantor first enter into an encroachment agreement with Grantee for the proposed signage and related improvements. ii. Utilities. Non - exclusive easements on, over, under and across the Property for the maintenance and repair of all utilities, water, drainage and sewer lines within the Property on the date of recordation of this Grant Deed, together with the right of ingress and egress thereto; provided, however, that any use of the easements in this subsection shall not unreasonably interfere with the use of the Property for the purposes described in Covenant 1 below. SUBJECT TO: 1. Taxes and Assessments. General and special real property taxes and supplemental assessments, if any, for the current fiscal year; provided, however, that Grantor shall pay for (a) any such taxes and assessments applicable to the Property prior to the date of recordation of this deed, and (b) any assessments, special taxes or other payments arising from bonds, contracts, or liens created by, through or as a result of the efforts or activities of Grantor. 2. Encumbrances. All exceptions to title contained in Preliminary Report No. 2802730, dated as of October 3, 2007 and updated as of May 7, 2008, issued by First American Title Insurance Company, a copy of which is attached hereto as Exhibit A, and any and all other covenants, conditions, restrictions, reservations, rights, easements and other matters of record, apparent by reasonable inspection or known to Grantee. 3. Customary Title Exceptions. Usual and customary exceptions to title insurance consistent with ALTA policies with Regional Exceptions (Standard Coverage) issued by First American Title Insurance Company in Orange County, California. 4. Condition of Property. The requirement that Grantee accepts the Property (a) without any warranty concerning suitability for Grantee's intended use of the Property, and (b) without any warranty concerning the absence of hazardous or toxic materials. Grantee acknowledges that Grantor has not made any representations or warranties concerning the condition of the Property except as expressly contained in this Grant Deed. 5. Covenants. The following covenants, conditions, rights and restrictions (collectively, the "Covenants), which shall remain in full force and effect in perpetuity from the date of recordation of this Grant Deed, unless terminated or modified as hereinafter provided. This conveyance of the Property is made by Grantor and accepted by Grantee upon and expressly subject to these covenants. Upon the occurrence of any breach or violation of any of the Covenants without being cured within the times provided below, Grantor shall be entitled to avail itself of the remedies specified below. 30209- 0091/367636.4 5/19/08 -3- i. List of Covenants. a. Covenant 1: Use of Property. The Property shall be used for open space and public facilities uses. Notwithstanding the above, Grantee may use portions of the Property as necessary in connection with provision of public right -of- -way and construction of roadway improvements, as well as for utility relocations associated with such improvements and slope installation and maintenance related thereto, provided that (1) Grantee complies with the requirements of Covenant 2 below, and (II) Grantee, at its own cost and expense, restores and repairs any property outside of the roadway construction area that may be damaged by its construction of either the roadway or installation of improvements related thereto. b. Covenant 2: Review of Improvement Plans. With respect to any improvements proposed to be constructed on, across, under or above the Property by Grantee, Grantee shall (1) prior to the award of any design contract entered after the date of recordation of this Grant Deed for the proposed improvements, give Grantor thirty (30) days to review and comment on the proposed improvements and design plan, and (II) after the design plans have been completed and prior to award of the construction contract for such improvements, give Grantor sixty (60) days' prior notice for review and comment regarding Grantee's designed improvements or any significant changes thereto. After receipt of Grantor's comments, Grantee shall give reasonable consideration to any suggestions that Grantor provides to Grantee regarding such proposed improvements. C. Covenant 3: Maintenance and Repairs. Grantee shall maintain the Property in safe condition and in accordance with applicable laws, ordinances and regulations applicable to the Property, and shall keep the Property in attractive condition, free from garbage and debris. d. Covenant 4: No Transfer of Property. Grantee acknowledges that upon acceptance of the Property, it shall not abandon the Property nor thereafter sell, lease, exchange or in any other way transfer or convey all or any portion of its interest in the Property to a third party without the prior written approval of Grantor, which may be granted or withheld in Grantor's sole discretion; provided, however, that Grantee may (A) transfer an interest in any portion of the Property in connection with a utility installation required in connection with Grantee's permitted use of the Property; (B) transfer any portion or all of the Property to another public or quasi- public agency, maintenance district or non -profit corporation or entity that shall operate and maintain such portion or all of the Property in accordance with the uses specified in this Grant Deed; and (C) transfer any portion of the Property acquired by another entity under the power of eminent domain. ii. Matters Related to Covenants. a. General Purpose. The Covenants are hereby declared and agreed to be part of a general plan for the purpose of assuring the enhancement and protection of the value, desirability and attractiveness of that certain real property in Orange County, California, owned by Grantor or its affiliates described on Exhibit "S" attached hereto (the "Benefttted Property'). The Covenants shall run and pass with each and every portion of the Property and be binding upon and burden all persons having or acquiring any right, title or interest in the 30209-0091/367636.4 5/19/08 -4- Property (during their ownership of such interest), or any part thereof, and their successors and assigns. b. Run With the Property. Subject to the following provisions of this paragraph, the Covenants shall inure to the benefit of the Benefitted Property and the owners of the Benefitted Property and their successors and assigns, and the Benefitted Property shall be deemed the dominant tenement for purposes of the Covenants. In the event that any portion of the Benefitted Property is conveyed by Grantor or its affiliates to a third party (each parcel of the Benefitted Property so transferred is hereinafter referred to as a "Transferred Parcel'), the Covenants shall cease to benefit the Transferred Parcel unless the deed conveying the Transferred Parcel from Grantor to the transferee or a separate recorded document executed by Grantor expressly assigns to the transferee the benefits of the Covenants that run with the Transferred Parcel by specific reference to this Grant Deed (general references to appurtenances or rights related to the acquired Property will not suffice). Any owner of any Transferred Parcel who has been so assigned the ongoing benefit of the Covenants hereunder is referred to herein as a "Covenant Transferee. " Any (i) merger of Grantor or its affiliates with or into another entity, (ii). acquisition of all or a portion of the stock or equity of Grantor or its affiliates by a third party, or (iii) assignment or transfer of the Benefitted Property to a division, subsidiary or affiliated company of Grantor or such affiliates, will not be deemed a transfer of the Benefitted Property triggering the applicability of this paragraph. Every person or entity who now or hereafter owns or acquires any right, title or interest in or to any portion of the Property or any improvements thereon is and shall be conclusively deemed to have consented and agreed to every covenant, condition and restriction contained herein, whether or not any reference to this instrument is contained in the instrument by which such person acquired an interest in the Property or any such improvements. C. Amendment. The Covenants may be amended by mutual agreement of Grantor, any Covenant Transferee and Grantee. Any amendment must be recorded in the Official Records of Orange County, California. d. Term. The Covenants shall run with and bind the Property and shall inure to the benefit of and be enforceable by Grantor, unless Grantor (and, if applicable, any Covenant Transferee) record a declaration terminating the Covenants, the Covenants shall be binding absolutely and perpetually on Grantee. e. Default and Remedies. Because of the unique nature and scope of development of the Benefitted Property by Grantor and its affiliates, as well as the amount of planning, effort and time expended by such parties in reliance upon the anticipated uses of the Property and the Benefitted Property, monetary damages will not provide an adequate remedy for the damage to such planning efforts or development resulting from a breach of the Covenants. Therefore, in the event of any breach, violation or failure to comply with any of the Covenants which has not been cured within thirty (30) days after written notice from Grantor to do so (or if any such breach, violation or failure cannot be fully cured within such thirty (30) day period, then upon failure of Grantee to commence such cure within such period and thereafter to diligently complete such cure to Grantor's reasonable satisfaction), Grantor shall be entitled, in addition to any other remedy to which it may be entitled by law or equity (other than damages), to specifically enforce the performance of the Covenants and Grantee's other obligations 30209-0091/367636A 5/19/08 -5- hereunder or an injunction to enjoin the continuance of any breach or violation of the Covenants or terms of this Grant Deed. f. Waiver. No waiver by Grantor of a breach of any of the Covenants and no delay or failure to enforce any of the Covenants shall be construed or held to be a waiver of any succeeding or preceding breach of the same or any other restrictions or conditions. No waiver of any breach or failure of any of the Covenants shall be implied from any omission by Grantor to take any action on account of such breach or failure if such breach or failure persists or is repeated, and no express waiver shall affect a breach or failure other than as specified in said waiver. The consent or approval by Grantor to or of any act by Grantee requiring Grantor's consent or approval shall not be deemed to waive or render unnecessary Grantor's consent or approval to or of any subsequent similar acts by Grantee. g. Cost of Enforcement. In the event any declaratory or other legal or equitable action or proceeding shall be instituted between Grantor and Grantee to enforce any provision of these Covenants, the party prevailing in such action shall be entitled to recover its costs and expenses, including court costs and reasonable attorneys' fees, from the losing party or parties. MISCELLANEOUS. 1. Captions. The captions used herein are for convenience only and are not a part of this instrument and do not in any way limit or amplify the scope or intent of the terms and provisions hereof. 2. Application to Grantor. Notwithstanding anything herein contained to the contrary, if Grantor or any successor to Grantor reacquires title to the Property or any portion thereof, the provisions of this instrument shall automatically cease and terminate as to such reacquired property and be of no further force or effect as to Grantor or such successor. 3. Notices. All notices, consents, demands, requests and other communications provided herein shall be in writing and shall be deemed to have been duly given if and when personally served or 48 hours after being sent by United States registered mail, return receipt requested, postage prepaid, to the other party at the following respective address: If to Grantor: The Irvine Company LLC 550 Newport Center Drive Newport Beach, CA 92660 Attn: General Counsel If to Grantee: City of Newport Beach Public Works Department 3300 Newport Boulevard, (P.O. Box 1768) Newport Beach, CA 92658 -8915 Attn: City Manager 30209 -0091/367636.4 5/19/08 -6- and to: City of Newport Beach City Attorney's Office 3300 Newport Boulevard, (P.O. Box 1768) Newport Beach, CA 92658 -8915 Attn: City Attorney or at such other address as the Grantor or Grantee may designate to the other in writing. 4. Exhibits. The following exhibits are attached to this Grant Deed and incorporated herein by this reference: A. Exhibit "A" Preliminary Title Report B. Exhibit "B" Description of Benefitted Property 5. Compliance with Law and Satisfaction of Obligations. This Grant Deed is made expressly upon the understanding that it is in compliance with and fully satisfies all lawful enactments and conditions of Grantee requiring the dedication of the Property to Grantee. Grantee agrees and acknowledges that this Grant Deed and the conveyance of Property hereunder comply with all local, state and federal laws, and Grantee's acceptance of this conveyance is not prohibited under and does not violate any provision of local, state or federal law. 6. Authority. The persons executing this Grant Deed on behalf of Grantor warrant that they are duly authorized to execute this document. 7. Effect. This Grant Deed amends and restates in its entirety the Original Grant Deed for the Property referenced in Recital A above. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of blaw. V.,2006 2008. This Grant Deed shall not be effective for any purpose unless and until the Acceptance below has been duly executed by Grantee. "GRANTOR" The Irvine Company LLC, a Delaware limited liability company By: Daniel H. Young Executive Vice President By: Brigid N McMahon Assistant Secretary 30209-009W67636.4 5/19/08 -7- CERTIFICATE OF ACCEPTANCE This is to certify that the interest in real property conveyed by that certain Grant Deed (Amended & Restated) attached hereto as made by The Irvine Company LLC, a Delaware limited liability company, to the City of Newport Beach, a charter city (the "City "), is hereby accepted on May _, 2008, by the undersigned officer or agent on behalf of the City pursuant to authority conferred by Resolution No. 92 -82 of the City adopted on July 27, 1992, and the City consents to the recordation of said document in the Office of the Recorder of Orange County, State of California. City acknowledges and agrees that this Grant Deed amends and restates in its entirety the Original Grant Deed for the Property referenced in Recital A of this Grant Deed. CITY OF NEWPORT BEACH, a charter city Dated: May_, 2008 By: Name: Homer Bludau Its: City Manager City of Newport Beach STATE OF CALIFORNIA ) COUNTY OF ORANGE ) On , 2008 before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (SEAL) Notary Public in and for said State 30209 - 0091/367636.4 5/19/08 8 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On ?N-g oZC1 , 2008, before me, J0/1/ a Notary Public in and for said State, personally appeared Daniel H. Young, who proved to me on the basis of satisfactory evidence to be the person(s�rwhose name(4)�Vare subscribed to the within instrument and acknowledged to me that (je he /they executed the same i hi er /their authorized capacity(ie9), and that bye is her/their slgnature(Won the instrument the person(o, or the entity upon behalf of which the person(&) - acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal - tary Public in and for said State I, ®rm GROSSMAN Commbelon f 1736093 (SEAL) Notary Public - Camomla, Otonge County NOTARY: JONI GROSSMAN *1CWm8 KAPr30.2011 TELEPHONE # 949- 720.2582 ` COMMISSION #1736093 - COUNTY: ORANGE COUNTY COMM. EXPIRES: APRIL 30, 2011 STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) On /d t u-1, J,0 , 2008, before me, J ©A / (i / O-S S /1%A:a a Notary Public in and for said State, personally appeared Brigid D. McMahon, who proved to me on the basis of satisfactory evidence to be the perso4(s -whose nam* 1s are subscribed to the within instrument and acknowledged to me that h s e hey executed the same in his ier their authorized capacity(im), and that by his Je heir signature(s) on the instrument the person(ST or the entity upon behalf of which the person,(s)4cted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal <��� r Notary Public in and for said State (SEAL) j' m StMAN Grk�commwdon 1 1736040 Notary ►ubkc - carom own" county 3M�tt6pYrApr30,2011 30209 -00911367636.4 5/19/08 9 EXHIBIT "A" PRELIMINARY TITLE REPORT 30209 -0091/367636.4 5/19108 x: Order Number: O -SA- 2802730 (08) Page Number: 1 Updated First American Title Company 2 First American Way Santa Ana, CA 92707 Wes Wittmeyer City of Newport Beach 3300 Newport Boulevard PO Box 1768 Newport Beach, CA 92663 -3816 Phone: Fax: Customer Reference: CIOSA dedication: Parcel 3 Parcel Map 90 -361 Order Number: O -SA- 2802730 (08) Title Officer: Joe Gallagher Phone: (714)250 -3975 Fax No.: (714)913 -6387 E -Mail: jagallagher @firstam.com Borrower: Owner: City of Newport Beach Property: Vacant Land Newport Beach, CA PRELIMINARY REPORT In response to the above referenced application for a policy of title insurance, this company hereby reports brat it is prepared to Issue, or cause to be issued, as of the date hereof, a Policy or Policies of Titre Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage of said Policy or Policies are set forth in Exhibit A attached. Copies of the Policy forms should be mead. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may rat list all liens, defects, and encumbrences affecting title to the land. This report (and any supplements or amendments hereto) Is Issued solely for the purpose of facllitadng the Issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. RrstAmerzan Title Order Number: O -SA- 2802730 (08) Page Number: 2 Dated as of May 07, 2008 at 7:30 A.M. The form of Policy of title insurance contemplated by this report is: TO BE DETERMINED A specific request should be made if another form or additional coverage is desired. Tide to said estate or interest at the date hereof is vested in: THE CITY OF NEWPORT BEACH, A CALIFORNIA MUNICIPAL CORPORATION AND CHARTERED CITY The estate or interest in the land hereinafter described or referred to covered by this Report is: A fee. The Land referred to herein is described as follows: (See attached Legal Description) At the date hereof exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows: Ia. 1. FA General and special taxes and assessments for the fiscal year 2008 -2009 , a lien not yet due or payable. General and special taxes and assessments for the fiscal year 2007 -2008. First Installment: Penalty: Second Installment: Penalty: Tax Rate Area: A. P. No.: $74.35, DELINQUENT $7.44 $74.35, DELINQUENT $30.44 07 -041 442- 014 -27 The amount(s) must be verified prior to close of escrow The lien of special tax assessed pursuant to Chapter 2.5 commencing with Section 53311 of the California Government Code for Community Facilities District No. 90 -1, as disclosed by Notice of Special Tax Lien recorded August 24, 1990 as Instrument No. 90- 453226 of Official Records. (Portion of Community Facilities District included) NOTE: The above referenced Item will not show on the final title policy to be !sued to the City of Newport Beach." Fir&Arnerlcan Title Order Number: O -SA- 2802730 (08) Page Number: 3 3. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code. 4. An easement for pole lines and incidental purposes, recorded February 14, 1918 in Book 318 of Deeds, Page 90. In Favor of: Southern California Edison Company Affects: As described therein Document(s) declaring modifications thereof recorded May 18, 1949 as Book 1845, Page 120 of Official Records. 5. An easement for pipe line for water, together with the right to enter upon lands adjoining said pipe line and incidental purposes, recorded November 30, 1928 as Book 221, Page 76 of Official Records. In Favor of Affects: Laguna Beach County Water District As described therein By a Deed dated March 3, 1953 certain rights and interests in said easement were conveyed to the City of Newport Beach, together with the agreements, terms and conditions contained in said Deed which recorded April 14, 1955 in Book 3031, Page 117, Official Records. 6. A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as contained in the document recorded May 20, 1931 as Book 487, Page 3 of Official Records. 7. Abutter's rights of ingress and egress to or from freeway have been relinquished in the document recorded July 25, 1940 as Book 1047, Page 557 and October 1, 1952 in Book 2390, Page 458, both of Official Records. 8. An easement for privilege and right to extend and maintain drainage structures, excavation slopes and embankment slopes on said land adjacent to the freeway abutting thereon and incidental purposes, recorded July 25, 1940 as Book 1047, Page 557 of Official Records. In Favor of: State of California Affects: As described therein 9. An easement for pole lines and steel towers and incidental purposes, recorded June 19, 1947 as Book 1528, Page 321 of Official Records. In Favor of: Southern California Edison Company, a Corporation Affects: As described therein Document(s) declaring modifications thereof recorded January 21, 1986 as Instrument No. 86- 24793 of Official Records. 10. A waiver of any daims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as contained in the document recorded as Book 1750, Page 437 of Official Records. FirsiAmencan Title Order Number: O -SA- 2802730 (08) Page Number: 4 11. An easement for gas pipes and mains and incidental purposes, recorded August 28, 1950 as Book 2063, Page 182 of Official Records. In Favor of: Southern Counties Gas Company Affects: As described therein 12. An easement for public highway and incidental purposes, recorded August 25, 1967 as Book 8354, Page 25 of Official Records. In Favor of: State of California Affects: As described therein 13. An easement for public utilities and incidental purposes, recorded January 13, 1971 as Book 9517, Page 474 of Official Records. In Favor of. Southern Califomia Edison Company, a Corporation Affects: As described therein 14. An easement for street and highway and incidental purposes, recorded July 6, 1977 as Book 12277, Page 1310 of Official Records. In Favor of: City of Newport Beach Affects: As described therein 15. An easement for street and highway and incidental purposes, recorded December 24, 1980 as Book 13887, Page 1358 of Official Records. In Favor of: City of Newport Beach Affects: As described therein 16. An easement for storm drain and incidental purposes, recorded March 3, 1981 as Book 13967, Page 424 of Official Records. In Favor of: City of Newport Beach Affects: As described therein 17. An easement for public utilities and incidental purposes, recorded June 10, 1981 as Book 14094, Page 1037 of Official Records. In Favor of: Southern California Edison Company, a Corporation Affects: As described therein 18. Abutter's rights of ingress and egress to or from Mac Arthur Boulevard have been dedicated or relinquished on the filed Map. 19. Abutter's rights of ingress and egress to or from Avocado Avenue have been dedicated or relinquished on the filed Map. 20. The recital on said Parcel Map 90 -361 that; A 20 foot wide relocatable pedestrian /bicycle easement shall be dedicated to the City of Newport Beach by separate documents across Parcel 3 to provide access If a pedestrian /bicycle bridge is constructed across Mac Arthur Boulevard at the prolongation of Crown Drive, the easement is to provide to both Parcel 2 and Avocado Avenue with the precise alignment to be determined when HrstAmerican Title 21. 22. 23. 24. Order Number: O -SA- 2802730 (08) Page Number: 5 Mac Arthur Boulevard is widened, if the bridge is not constructed with the Mac Arthur Boulevard widening project, then the easement will be relinquished. An easement shown or dedicated on the map filed or recorded as Parcel Map. No. 90 -361 in Book 270, Pages 15 to 18 of Parcel Maps For: Ingress and egress and incidental purposes. An easement for street and highway and incidental purposes, recorded January 23, 1991 as Instrument No. 91 -31787 of Official Records. In Favor of: City of Newport Beach, a Municipal Corporation Affects: As described therein An easement for slope and drainage and incidental purposes, recorded March 11, 1996 as Instrument No. 96- 118595 of Official Records. In Favor of: City of Newport Beach, a Municipal Corporation Affects: As described therein The terms and provisions contained in the document entitled Resolution 99-3 recorded March 20, 2000 as Instrument No. 00- 143528 of Official Records. 25. A non - exclusive easements for maintenance and repair of all utilities, water, drainage and sewer lines within the property together wit the right of Ingress and egress and incidental purposes, recorded November 28, 2007 as Instrument No. 07- 704013 of Official Records. In Favor of The Irvine Company LLC, a Delaware limited liability company, successor to the Irvine company, a Michigan corporation Affects: As described therein 26. Easements, Covenants and Conditions contained In the deed from The Irvine Company LLC, a Delaware limited liability company, successor to the Irvine company, a Michigan corporation, as Grantor, to The City of Newport Beach, a California municipal corporation and chartered city, as Grantee, recorded November 28, 2007 as Instrument No. Instrument No. 07- 704013 of Official Records. Reference being made to the document for full particulars. Prior to the issuance of any policy of title insurance, the Company will require: 27. With respect to City of Newport Beach, a California municipal corporation and chartered city: a. A certificate of good standing of recent date issued by the Secretary of State of the corporation's state of domicile. b. A certified copy of a resolution of the Board of Directors authorizing the contemplated transaction and designating which corporate officers shall have the power to execute on behalf of the corporation. c. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require. First American Title Order Number: O -SA- 2802730 (08) Page Number: 6 INFORMATIONAL NOTES Note: The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than the certain dollar amount set forth in any applicable arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. If you desire to review the terms of the policy, including any arbitration clause that may be included, contact the office that issued this Commitment or Report to obtain a sample of the policy jacket for the policy that is to be issued in connection with your transaction. The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. 1. The property covered by this report is vacant land. 2. According to the public records, there has been no conveyance of the land within a period of twenty inur months prior to the date of this report, except as follows: A document recorded November 28, 2007 as Instrument No. 07- 704013 of Official Records. From: The Irvine Company LLC, a Delaware limited liability company, successor to the Irvine company, a Michigan corporation To: The City of Newport Beach, a California municipal corporation and chartered city This preliminary report/commitment was prepared based upon an application for a policy of title insurance that Identified land by street address or assessors parcel number only. It is the responsibility of the applicant to determine whether the land referred to herein is in fact the land that is to be described in the policy or policies to be issued. RrstAmerican 77t/e Order Number: O -SA- 2802730 (08) Page Number: 7 First American Title Company, Demand /Draft Sub -Escrow Deposits Orange County, California First American Trust, FSB 5 First American Way Santa Ana, CA 92707 ABA 122241255 Credit to First American Title Company Account No. 2000015040 Reference Title Order Number 2802730 and Title Officer Joe Gallagher Please wire the day before recording. Also, notify the Title Officer of your intent to wire. tirstAmerlcan Title Order Number: O -SA- 2802730 (08) Page Number: 8 LEGAL DESCRIPTION Real property in the City of Newport Beach, County of Orange, State of California, described as follows: PARCEL 3 OF PARCEL MAP NO. 90 -361, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 270, PAGES 15 TO 18 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING FROM THE PROPERTY, ANY AND ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM, ANY OTHER MATERIAL RESOURCES AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER THE PROPERTY, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFORE AND STORING IN AND REMOVING THE SAME FOR THE PROPERTY OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FOR LANDS OUTSIDE THE PROPERTY, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE PROPERTY AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED, WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES; BUT WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, STORE, EXPLORE OR OPERATE THROUGH THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF THE PROPERTY, AND; EXCEPTING FROM THE PROPERTY, ANY AND ALL WATER, WATER RIGHTS OR INTERESTS THEREIN APPURTENANT TO, UNDERLYING OR RELATING TO THE PROPERTY, OR OWNED OR USED BY GRANTOR I CONNECTION WITH PROPERTY OR FOR ANY BENEFICIAL USE, NO MATTER HOW ACQUIRED BY GRANTOR, AND INCLUDING BUT NOT LIMITED TO THE RIGHTS THAT ARE RIPARIAN, OVERLYING, APPROPRIATIVE, PRESCRIPTIVE, PERCOLATING, LITTORAL, ADJUDICATED, STATUTORY OR CONTRACTUAL, BUT WITHOUT, HOWEVER, ANY RIGHT TO ENTER UPON THE SURFACE OF THE PROPERTY IN THE EXERCISE OF SUCH RESERVED RIGHTS AS DISCLOSED BY DOCUMENT RECORDED NOVEMBER 28, 2007 AS INSTRUMENT NO. 07- 704013 OF OFFICIAL RECORDS. APN: 442- 014 -27 first American Title Order Number: O -SA- 2802730 (08) Page Number: 9 NOTICE Section 12413.1 of the California Insurance Code, effective January 1, 1990, requires that any title insurance company, underwritten title company, or controlled escrow company handling funds in an escrow or sub - escrow capacity, wait a specified number of days after depositing funds, before recording any documents in connection with the transaction or disbursing funds. This statute allows for funds deposited by wire transfer to be disbursed the same day as deposit. In the case of cashier's checks or certified checks, funds may be disbursed the next day after deposit. In order to avoid unnecessary delays of three to seven days, or more, please use wire transfer, cashier's checks, or certified checks whenever possible. If you have any questions about the effect of this new law, please contact your local Rrst American Office for more details. FirstAmerican Tide Order Number: O-SA- 2802730 (08) Page Number; 10 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) 1. CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY -1990 SCHEDULE B EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies tares or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attomeys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (1) the occupancy, use, or enjoyment of the land; (ti) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land Is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, Ilen or encumbrance resulting from a violation or alleged violation affecting the land has bean recorded in the pubrrc records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exerdse thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded In the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, ercumbrarices, adverse claims or other maters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed In writing to the Company by the insured claimant prior to the date the insured claimant became an Insured under this poky; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the Insured claimant had Paid value for the insured mortgage or for the estate or Interest insured by this policy. 4., Unenforceabilty of the lien of the Insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable "doing business" laws of the state In which the land is situated. 5. Invalidity or unenforceabiliry of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by their policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. 2. AMERICAN LAND TIME ASSOCIATION OWNER'S POLICY FORM 8 - 1970 SCHEDULE OF EXCLUSIONS FROM COVERAGE 1. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions of area of the land, or the effect of any violation of any such law, ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defeo, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the Insured caimarht; (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or Interest insured by this polity and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an Insured hereunder; (c) resulting in no loss or damage to the insured claimant; (d) attaching or RstAmencan Title Order Number: O -SA- 2802730 (08) Page Number: 11 created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest Insured by this policy. 3. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B -1970 WITH REGIONAL EXCEPTIONS When the American Land Tide Association policy is used as a Standard Coverage Policy and not as an Bdended Coverage Policy the exclusions set forth in paragraph 2 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not Insure against loss or damage by reason of the matters shown in parts one and two following: Part One I. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, Interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts In boundary Ines, shortage In area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Ads authorizing the issuance thereof; water rights, claims or trde to water. 6. Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, Imposed by law and not shown by the public record 4. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1970 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE SCHEDULE OF EXCLUSIONS FROM COVERAGE I. Any law, ordinance or governmental regulation (Including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location or any improvement now or hereafter erected on the land, or prohibiting a separation In ownership or a reduction in the dimensions or area of the land, or the effect of any violation of any such law ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, hens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the Insured claimant, (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or Interest insured by this policy or acquired the Insured mortgage and not disclosed In wr tiding by the insured claimant to the Company prior to the date such insured claimant became an Insured hereunder, (c) resulting in no ices or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent insurance is afforded herein as to any statutory lien far labor or material or to the extent insurance is afforded hereln as to assessments for street improvements under construction or completed at Date of Policy). - 4. Unenforceability of the lien of the Insured mortgage because of failure of the insured at Date of Policy or of any subsequent owner of the indebtedness to comply with applicable "doing business" laws of the state in which the land is situated. S. AMERICAN LAND TIRE ASSOCIATION LOAN POLICY- 1970 WITH REGIONAL EXCEPTIONS When the American Land Tide Association Lenders Policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy, the exclusions set forth In paragraph 4 above are used and the following exceptions to coverage appear In the policy. SCHEDULE B This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, Interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by melding inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a connect survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or In Acts authorizing the Issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. SrstAmettican Tithe Order Number: O -SA- 2802730 (08) Page Number: 12 6. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1992 WITH A.LT.A. ENDORSEMENT FORM 1 COVERAGE EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of. 1. (a) Any law, ordinance or governmental regulation (Including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (1) the occupancy, use, or enjoyment of the land; (II) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (w) environmental protection, or the effect of any violation of these lays, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, Ilen or encumbrance resulting from a violation or alleged violation affecting the land has been recorded In the public records at Date of Policy; (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date Of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Poky, but not excluding from coverage any taking which has occurred prior to Date of Policy which Would be binding on the rights of a purchase for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) whether or not reoded in the public records at Date of Policy, but created, suffered, assumed or agreed W by the insured claimant (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attxhing or created subsequent to Date of Policy (except to the extent that this policy Insures the priority of the Ilen of the insured mortgage over any statutory lien for services, labor or material or the extent Insurance Is afforded herein as to assessments for street Improvements under construction or completed at date of policy); or (e) resulting In loss or damage which would not have been sustained If the Insured claimant had paid value for the insured mortgage. 4, Unhnforceabillty of the lien of the Insured mortgage because of the Inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the Indebtedness, to comply with the applicable "doing business" laws of the state in which the land is situated. 5. Invalidity or unenformbility of the lien of the Insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit prolechon or truth in lending law. 6. Any statutory lien for services, labor or materials (or the claim of priority of any statutory lien for services, labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which Is contracted fur and commenced subsequent to Date of Policy and is not financed in whole or in part by proceeds of the indebtedness secured by the Insured mortgage which at Date of Policy the insured has advanced or is obligated to advance. 7. Any claim, which arises out of the transaction creating the interest of the mortgagee Insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (I) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the subordination of the interest of the Insured mortgagee as a result of the application of the doctrine of equitable subordination; or (iii) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the Preferential transfer results from the failure: (a) to timely record the Instrument of transfer, or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 7. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY - 1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 6 above are used and the following exceptions to coverage appear in the policy. SCHEDULE 6 This policy does not insure against less or damage (and the Company will not pay costs, attorneys' fees or e)penses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. - 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by maklrhg Inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey Would disclose, and which are not shown by public records. S. Unpatented mining claims; reservations or exceptions In patents or in Aar authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. S. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 1992 RrstAmerican Title Order Number: O-SA- 2802730 (08) Page Number: 13 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, a[temeys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (Including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (1) the occupancy, use, or enjoyment of the land; (II) the character, dimensions or location of any improvement now or hereafter erected on the land; (ii) a separation in ownership or a change in the dimenslons or area of the land or any parcel of which the land Is or was a part; or (Iv) emilronmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police pourer not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, Ilens, encumbrances, adverse claims, or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not gown to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the Insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting In no loss or damage to the Insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in less or damage which would not have been sustained If the Insured claimant had paid value for the estate or hrterest insured by this policy. 4. Any claim, which arises out of the transaction vesting in the Insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that Is based on: (I) the transaction cmatnhg the estate or Interest Insured by this policy being deemed a fraudulent conveyance or fraudulent transfer; or (11) the transaction creating the estate or interest Insured by this policy being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to Impart notice to a purchaser for value or a judgment or lien creditor. 9. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY - 1992 WITH REGIONAL EXCEPTIONS When the American land Title Association policy is used as a Standard Coverage Polley and not as an Extended Coverage Policy the exclusions set forth in paragraph 8 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not Insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: Part One: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, ar claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public retards. 4. Discrepancies, conflicts In boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims, reservations or exceptions in patents ar in Ads authorizing the issuance thereof; water rights, claims or tide to water. 6. Any Ilen, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 10. AMERICAN LAND TITLE ASSOCIATION RESIDENTIAL TITLE INSURANCE POLICY -1987 EXCLUSIONS In addition to the Exceptions In Schedule B, you are not Insured against loss, costa, attomeys' fees and expenses resulting from: Governmental police power, and the existence ar violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning: • land use * land division • Improvements on the land * environmental protection This exclusion does not apply to violators or the enforcement of these matters which appear in the public records at Policy Date. This exclusion does not limit the zoning coverage described in items 12 and 13 of Covered Tite Risks. R13tAmencan Title Order Number: O -SA- 2802730 (08) Page Number: 14 2. The right to take the land by condemning lo unless: * a notice of exercising the right appears in the public records on the Policy Date * the taking happened prior to the Policy Date and is binding on you If you bought the land without knowing of the taking. 3. Tide Risks: * that are created, allowed, or agreed to by you • that are known to you, but not to us, on the Policy Date - unless they appeared in the public records • that result in no loss to you • that first affect your tide after the Policy Date - this does not limit the labor and material lien coverage in Item 8 of Covered Tide Risks 4. Failure to pay value fir your tide. S. Lads of a right: • to any land outside the area specifically described and referred to in Item 3 of Schedule A, or • in streets, alleys, or waterways tat touch your land This exclusion does riot limit the access coverage in Item 5 of Covered Tide Risks. 1L EAGLE PROTECTION OWNER'S POLICY CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE -1998 ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE -1998 Covered Risks 14 (Subdivision Law Violation). 15 Building Permit). 16 (Zoning) and 18 (Encroachment of boundary walls or Sauces) are subject to Deductible Amounts and Minimum Dollar Limits of Liability EXCLUSIONS In addition to the Fxoeptions in Schedule B, you are not Insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes ordinances, laws and regulations concerning: a. building b. mining c. land use d. improvements on the land e. land division f. environmental protection Ibis exclusion noes not apply to violations or the enforcement of these matters IF notice of the violation or enforcement appears In the Public Records at the Policy Date. This exclusion does nut limit the coverage described in Covered Risk 14, 15, 16, 17 or 24. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not apply to violations of building codes if notice of the violation appears in the Public Records at the Policy Date. 3. The right to take the land by condemning k unless: a. a notice of exercising the right appears in the Public Records at the Policy Date; or b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking. 4. Risks: a. that are created, allowed, or agreed to by You, whether or not they appear in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they appear in the Public Records at the Policy Date; c. that result in no loss to You; or d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25. S. Failure to pay value for Your Title. 6. Lack of a right: a. to any Land outside the area specifically described and referred to in paragraph 3 of Schedule A; and b. in streets, alleys, or waterways that touch the Land. This exclusion does rot limit the coverage described in Covered Risk 11 or 18. 12. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (10/13/01) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attomeys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting a relating te (1) the occupancy, use, or enjoyment of the Land; (H) the character, dimensions a location of any Improvement now or hereafter erected on the Land; (iii) a separation in ownership or a change in the dimensions or area of the Land or any parcel of which the Land is or was a part; a (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the Land has been recorded in the Public Records at Date of Policy. This exclusion R13tAmerlcan Title Order Number: O -SA- 2802730 (08) Page Number: 15 does not limit the coverage provided under Covered Risks 12, 13, 14 and 16 of this policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violatlon affecting the land has been recorded in the Public Records at Date of Policy. This exclusion does not limit the coverage provided under Covered Risks 12, 13, 14 and 16 of this policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the Public Records at Date of Policy, but not excluding from coverage any taking which has occurred prim to Date of Policy which would be binding on the rights or a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the Insured Claimant, (b) not known to the Company, not recorded in the Public Records at Date of Policy, but known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an insured under this policy; (c) resulting in no Im or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (this paragraph does not limit the coverage provided under Covered Risks 8, 16, 18, 19, 20, 21, 22, 23, 24, 25 and 26); or (e) resulting in loss or damage which would not have been sustained if the Insured Claimant had paid value for the insured Mortgage. 4. Unenforceabllity of the hen of the Insured Mortgage because of the inability or failure of the Insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable doing business laws of the state in which the Land Is situated. 5. Invalidity or unenforceability of the lien of the Insured Mortgage, or claim thereof, which arises out of the transaction evidenced by the Insured Mortgage and Is based upon usury, except as provided In Covered Risk 27, or any consumer credit protection or truth In lending law. 6. Real property taxes or assessments of any governmental authority which become a lien on the land subsequent to Date of Policy. This excusion does not limit the coverage provided under Covered Risks 7, 8 (e) and 26. 7. Any claim of Invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to advances or modifications made after the Insured has knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This exclusion does not limit the coverage provided in Covered Risk 8. 8. tack of priority of the lien of the insured Mortgage as to each and every advance made after Date of Policy, and all Interest charged thereon, over (lens, encumbrances and other matters affecting title, the existence of which are known to the Insured at: (a) The time of the advance; or (b) The time a modification is made to the terms of the Insured Mortgage which charges the rate of interest charged, if the rate of Interest is greater as a result of the modification than it would have been before the modification. This exclusion does not limit the coverage provided In Covered Risk 8. 9. The failure of the residential structure, or any portion thereof to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This exclusion does not apply to violations of building codes if notice of the violation appears In the Public Records at Date of Policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will rot pay costs, attorneys' fees or expenses) which arise by reason of: 1. The following existing statutes, reference to which are made part of the ALTA &1 Environmental Protection Lien Endorsement incorporated into this Policy following item 28 of Covered Risks: NONE. 13. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (10/13/01) WITH REGIONAL EXCEPTIONS When the American Land Title Association loan policy with EAGLE Protection Added is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 12 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will rat pay costs, attomeye' fees or expenses) which arise by reason of: Part One: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any fads, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by maldng inquiry of persons In possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, ercroachments, or any other fads which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in ads authoring the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public Part Two HntAmerican Title PRIVACY POLICY We Are Committed to Safeguarding Customer Information In order to better serve your needs now and In the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information — particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our parent company, The First American Corporation, we have adopted this Privacy Policy to govern the use and handling of your personal information. Applicability This Privacy Policy governs our use of the information which you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines its Fairinfarmabon yaiueg a copy of which can be found on our website at www.firstam.mm. Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: • Information we receive from you on applications, forms and in other communications to us, whether in writing, In person, by telephone or any other means; Information about your transactions with us, our affiliated companies, or others; and • Information we receive from a consumer reporting agency. Use of information We request information from you for our own Therefore, we will not release your information service you have requested of us; or (2) as pen period after which any customer relationship ha control efforts or customer analysis. We may al more of our affiliated companies. Such affiliate casualty insurers, and trust and investment adh companies, home warranty companies, and escr described above, to companies that perform m financial institutions with whom we or our affiliat Former Customers to business purposes and not for the benefit of any nonaffiliated party. ffiliated parties except: (1) as necessary for us to provide the product or law. VJe may, however, store such information indefinitely, including the Such information may be used for any internal purpose, such as quality to all of the tytyppes of nonpublic personal information listed above to one or vies include rani ndal service providers, such as title insurers property and mpanies or companies involved in real estate services, such as acraisal mh anles. krtheore, we may also provide all the information we co lest, as services on our behalf, on behalf of our affiliated companies, or to other antes have pint marketing agreements. Even if you are no longer our customer, our Privacy Policy will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your inform tlon will be accordance responsibly and in arordance with this Privacy Policy and First American's Fair Information Values We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. ® 2001 The First American Corporation • All Rights Reserved EXHIBIT `B" DESCRIPTION OF BENEFITTED PROPERTY The properties described below shall constitute the "Benefitted Property" for purposes of the Grant Deed, provided that any such property shall cease being a `Benefitted Property" at such time as fee title to such property ceases to be owned by Grantor, The Irvine Land Company LLC, Irvine Community Development Company LLC, any of their respective divisions or affiliates, or a Successor Covenantee as provided in Section 5.ii.b of the Grant Deed entitled "Run With the Property." PARCELI (Fashion Island) Parcel A Parcels 1 through 9, inclusive, in the City of Newport Beach, County of Orange, State of California, as shown on Parcel Map No. 86 -399 as per Map filed in Book 221, pages 30 through 36, inclusive, of Parcel Maps, in the Office of the County Recorder of said County. Parcel B: Parcels 13 through 17, inclusive, and Lots Q, R, S, U, R -1, R -2 and R -3 of Tract No. 6015, in the City of Newport Beach, County of Orange, State of California, as per Map recorded in Book 239, pages 28 through 41, inclusive, of Miscellaneous Maps, in the Office of the County Recorder of said County. Parcel C: Parcel 1, in the City of Newport Beach, County of Orange, State of California, as shown on a Parcel Map filed in Book 67, pages 2 and 3, of Parcel Maps, in the Office of the County Recorder of said County. Parcel D: Parcel 1, in the City of Newport Beach, County of Orange, State of California, as shown on a Parcel Map filed in Book 75, page 48, of Parcel Maps, in the Office of the County Recorder of said County. Parcel E: Parcel 4 of Parcel Maps, as shown on a Map filed in Book 67, pages 2 and 3, of Parcel Maps and Lot W of Tract No. 6015, as per Map recorded in Book 239, pages 28 through 41, inclusive, of Miscellaneous Maps, all in the City of Newport Beach, County of Orange, State of California, in the Office of the County Recorder of said County, lying within the land described as Parcels 1 and 2 of that 30209 -0091/367636.4 5/19/08 1 of 2 certain Lot Line Adjustment N.B.L.L.A. 87 -3, recorded November 13, 1987, as Instrument No. 87- 640346, in the Office of the County Recorder of said County. PARCEL U (Corona del Mar Plaza) Parcel A: The southwesterly one -half of Parcel 2 as shown on Parcel Map No. 90 -361, filed in Book 270, Pages 15 to 18, inclusive, of Parcel Maps, Records of Orange County, California. Parcel B: The northeasterly one -half of Parcel 2 as shown on Parcel Map No. 90 -361, filed in Book 270, Pages 15 to 18, inclusive, of Parcel Maps, Records of Orange County, California. Parcel C: Parcel 1 of Parcel Map No. 90 -361, filed in Book 270, Pages 15 to 18, inclusive, of Parcel Maps, Records of Orange County, California. Grantor shall have the right at any time, by duly recorded amendment(s) to this Grant Deed executed only by Grantor, to unilaterally amend and/or provide further descriptions and/or depictions of all or portions of the Benefitted Property described above. 30209 -0091/367636.4 5/19/08 2 of 2 Agenda Item No. 5 May 27, 2008 RESOLUTION NO. 2008- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH TERMINATING THE OPTION TO PURCHASE FROM THE IRVINE COMPANY A CITY HALL SITE IN BLOCK 500 OF NEWPORT CENTER DRIVE WHEREAS, on December 18, 2007, after holding two public hearings, the City Council of the City of Newport Beach adopted Ordinance No. 2007 -21, approving Development Agreement No. DA2007 -002, entitled the Zoning Implementation and Public Benefit Agreement Between the City of Newport Beach and The Irvine Company LLC Concerning North Newport Center (Fashion Island, Block 500, Block 600, and San Joaquin Plaza) (the "North Newport Center Development Agreement "). WHEREAS, under Section 4.8 of the North Newport Center Development Agreement, the City and The Irvine Company LLC ( "The Irvine Company ") entered into an Option Agreement that gives the City the option to purchase a site in Newport Center Drive Block 500 for the purposes of constructing a new City Hall (the "Option "). Exhibit F to the North Newport Center Development Agreement contains the Option Agreement. WHEREAS, on February 5, 2008, in a special municipal election, a majority of the City's voters voted in favor of Measure B (the "City Hall in the Park" initiative). Measure B provides for adding a new Section 425 to the City's Charter to require City Hall, the City's administrative offices, and related parking to be located on the City property bounded on the north by San Miguel Drive, the east by MacArthur Boulevard, the south by the City's Central Library, and the west by Avocado Avenue. WHEREAS, on February 26, 2008, after holding a public hearing, the City Council adopted Resolution No. 2008 -13, declaring the results of the special municipal election for Measure B and stating that Measure B shall be deemed adopted and ratified. On the same day, the City Council adopted Resolution No. 2008 -14, stating that it wished to follow the will of the voters and develop a new City Hall on the site specified in Measure B. WHEREAS, after thoroughly considering the entire record, including the public testimony and written submissions, if any, of all interested persons desiring to be heard, the City Council finds the following facts, findings, and reasons to support terminating the Option: Dedication of Open Space Parcel 1. Voter approval of Measure B amended the City's Charter to require that City Hall be located on the site identified in the Initiative. 2. As part of Resolution No. 2008 -14, which the City Council adopted on February 26, 2008, the City Council stated that it wished to have professional advice on 1 Agenda Item No. 5 May 27, 2008 issues related to design of the new City Hall and a master plan for 19.8 acres owned by the City between Corona Del Mar Plaza and the Orange County Transportation Authority's Transportation Facility. As part of the resolution, the City Council also established the City Hall Design Committee to oversee and conduct a design competition for City Hall and the master plan project, which includes the City Hall site specified in Measure B. 3. Section 4.6 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City an approximately 3.18 -acre site in Newport Center for open space and public facility purposes within 30 days after the earliest of the following: (1) the City has awarded a construction contract for construction of City Hall at any location within the City or (2) the Option has terminated. The 3.18 -acre site is bounded on the north by the Orange County Transportation Authority site, the east by MacArthur Boulevard, the south by San Miguel Drive, and the west by Avocado Avenue. This site is known as the "Avocado Open Space Parcel." 4. The City can trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel by awarding a construction contract for construction of City Hall on the site specified in Measure B. Given the City's plan to hold a design competition for City Hall and to develop a master plan for the area encompassing the site specified in Measure B, the City will not likely award a construction contract for construction of City Hall for some time. 5. Section 4.8.1 of the North Newport Center Development Agreement provides for a four -year duration for the Option. The four years is counted from the Effective Date of the development agreement, which was January 18, 2008. If the City does not take action to exercise or terminate the Option, then the Option will automatically terminate on January 18, 2012. In that case, The Irvine Company's obligation to dedicate the Avocado Open Space Parcel will not arise until that time. 6. The City can trigger The Irvine Company's obligation to dedicate the Avocado Open Space Parcel more quickly by taking action now to terminate the Option. Accelerated Dedication of Lower Castaways 7. Section 4.11 of the North Newport Center Development Agreement provides that The Irvine Company shall dedicate to the City the bay -front Lower Castaways site for certain municipal or municipally sponsored uses upon the City's issuance of The Irvine Company's First Building Permit, as defined by Section 1.13 of the development agreement. 8. The Irvine Company has indicated that it does not plan to request the First Building Permit as defined by Section 1.13 of the North Newport Center Development Agreement for at least one year from now. Under the terms of the development agreement, The Irvine Company's obligation to dedicate Lower Castaways would therefore not arise until that time. 2 Agenda Item No. 5 May 27, 2008 9. The Irvine Company has agreed to accelerate its dedication of Lower Castaways if the City terminates the Option. Specifically, The Irvine Company has agreed to deliver to the City the grant deed for Lower Castaways within 60 days of the City's termination of the Option. Accelerated Cooperation to Allow for City Hall on Site Specified in Measure B 10. Section 4.10 of the North Newport Center Development Agreement provides that The Irvine Company will cooperate in good faith with the City to allow for construction of City Hall on the site specified in Measure B "[i]f the City elects to construct a new City Hall" on that site. Under Section 4.10, The Irvine Company specifically agreed "to release and terminate the use restrictions contained in the deed for the [site specified in Measure B] to allow for and accommodate construction of a new City Hall on that site." 11. The Irvine Company had previously dedicated the site specified in Measure B to the City, and the grant deed included a reference to Planned Community District regulations that authorized open space and park uses, and that would have required amendment to construct a City Hall on the site. The City is currently only in the planning and design stages for construction of City Hall on the site specified in Measure B. The Irvine Company nevertheless agreed to enter into a Grant Deed (Amended and Restated) (the "Amended Grant Deed ") that revises the language of the deed to authorize construction of City Hall on the site specified in Measure B. 12. The Irvine Company has already executed and delivered the Amended and Restated Grant Deed. The construction of City Hall on the site specified in Measure B is now consistent with the open space and public facilities uses contained in the Amended Grant Deed. Termination of Option Terminates City Obligations 13. Section 1.3 of the Option Agreement provides for the City's right to terminate the Option. Section 1.3 states that termination is. effective by "delivery of written notice of termination to [The Irvine Company], which notice City shall have the right to deliver at any time during the Option Period prior to City's exercise of the Option." Section 4.8.1 of the North Newport Center Development Agreement contains the same language providing for the City's right to terminate the Option. 14. The City's termination of the Option terminates the rights and obligations of the City and The Irvine Company that are established in the Option Agreement. The City's termination of the Option also terminates the rights and obligations of the City and The Irvine Company that are established in Section 4.8 of the North Newport Center Development Agreement. These rights and obligations relate to the City Hall site in Newport Center Drive Block 500 and the associated parking structure. Conclusion 3 Agenda Item No. 5 May 27, 2008 15. Termination of the Option will allow The Irvine Company to go forward with their plansAo design and pull permits to build a parking structure in Block 500 by mid- ~neRefit& (4-2) dedication of the Avocado Open Space Parcel, (a3) accelerated dedication of Lower Castaways, and (34) the amended grant deed_asseleraied cooperation to allow for City Hall on the site specified in Measure B. 16. Given the City Council's commitment to comply with new Charter Section 425 and develop a new City Hall on the site specified in Measure B, and based on the public benefits triggered by the City's termination of the Option, termination of the Option is in the best interests of the health, safety, and general welfare of the City, its residents, and the public. NOW, THEREFORE, BE IT RESOLVED by the City Council, as follows: 1. That the preceding recitations are true and correct and constitute the findings of the City Council for termination of the Option. 2. That the City Council terminate the Option for the reasons set forth in this resolution. 3. That the City Manager timely deliver written notice of the termination to The Irvine Company, consistent with the notice requirements under Section 24 of the North Newport Center Development Agreement. 4. That the City Manager accept and record the Amended & Restated Grant Deed. ADOPTED on the , day of May 2008. ATTEST: CITY CLERK C! MAYOR