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Beacon Bay, 2
BEACON BAY LEASE THIS BEACON BAY LEASE ("Lease") is entered into as of the 15ihday of February, 2013 ("Effective Date"), by and between the City of Newport Beach, a California municipal corporation, tideland's trustee, and charter city ("Lessor" or "City") and SALLY FLETCHER, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust ("Lessee"). Lessor and Lessee are sometimes individually referred to herein as "Party" and collectively as the "Parties." RECITALS A. Lessor by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes of 1978, as amended ("Beacon Bay Bill"), holds the right, title, and interest to certain tidelands and uplands commonly known as Beacon Bay and generally depicted in Exhibit "A" attached hereto and incorporated by reference. B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands from the public trust and specifically authorizes the lease of the property for residential purposes subject to certain express statutory conditions. C. As required by the Beacon Bay Bill, the consideration to be received by the City for the residential leases is the fair market rental value of such lots as finished subdivided lots with streets constructed and all utilities installed. D. On November 3, 1987, a majority of the electors in the City approved a measure authorizing the City Council to enter into residential leases in Beacon Bay for a period not to exceed fifty (50) years. E. On November 3, 1992, a majority of the electors in the City approved Measure M authorizing the City Council to lease tidelands and waterfront property consistent with the provisions of state law. F. The City Council, pursuant to the authority conferred by the electors and the Beacon Bay Bill, leased out the residential lots within Beacon Bay for fifty (50) year terms. G. The current residential leases are set to expire on July 1, 2044, which is preventing certain persons with existing leases within Beacon Bay from obtaining a traditional thirty (30) year mortgage. H. Lessor and Lessee desire a new residential lease for Beacon Bay with a new fifty (50) year term and new provisions that are reflective of current conditions. I. City has determined this Lease is consistent with the Beacon Bay Bill, the City's Charter, General Plan, Zoning Ordinances, and all other applicable state and local laws. 1 J.' The California State Lands Commission reviewed the form of this Lease and the range of consideration to be received by the City and determined that the Lease is in conformance with the provisions in the Beacon Bay Bill. 1. AGREEMENT TO LEASE 1.1 Lease. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor hereby leases to Lessee the real property commonly known as Beacon Bay Lot 2, ("Property") which is more particularly described in Exhibit "B", and generally depicted on Exhibit "A", each attached hereto and incorporated by reference herein. If Lessee is a Limited Liability Corporation ("LLC") Lessee shall provide Lessor with the name of its majority share holder at the time of execution of this Lease. The LLC may not change its majority shareholder without the prior written consent of the City's City Manager or his/her designee. If approved, a change of the majority shareholder triggers a re -appraisal of the Property and an adjustment of Base Rent pursuant to the re -appraisal process in Section 3.6(b). 1.2 Reservation of Mineral Rights. Lessor expressly reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Property and the right to grant and transfer the same, together with all necessary and convenient rights to explore for, develop, produce and extract and take the same, subject to the express limitation that any and all operations shall be carried on at levels below the depth of five hundred feet (500') from the surface of the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations concerning the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon substances specified in the City's Charter and Municipal Code. 1.3 Net Lease. This Lease is a net lease, pursuant to which Lessor has no obligation with respect to the payment of taxes, insurance, the cost of maintenance, utilities and repairs or other costs or obligations associated with the Property, except as expressly stated herein. 1.4 Termination of Prior Lease(s). Lessee affirmatively represents that: (a) the persons executing this Lease have a hundred percent (100%) of all interests in any prior lease(s) covering the Property; and (b) have authority to execute this Lease and be bound by the terms herein. Upon the execution of this Lease, any lease(s) between the City and the Lessee or any other party covering the Property shall automatically terminate and be of no further effect. Lessee shall execute and record any document(s) that may be required by City to evidence the termination of any prior lease(s) covering the Property. City shall owe no compensation to Lessee or any other party for the termination of a lease under this section. Lessee shall indemnify and hold the City harmless from any and all liability, loss, expense, damage, or claims which may arise directly or indirectly from or in connection with any allegation that the representations made is this section are false. 2 2. TERM OF LEASE 2.1 Fixed Term. The term of this Lease shall be for a fixed period of fifty (50) years commencing as of February 115, 2013 ("Commencement Date") and terminating on February jxa, 2063. The total term may not exceed fifty (50) years pursuant to the Beacon Bay Bill. 2.2 Options. Upon the written request of Lessee and in the sole and absolute discretion of City, this Lease may be terminated and a new lease (with the most current terms approved by the City and/or State Lands Commission) executed with a term not to exceed fifty (50) years pursuant to the payment of the "Option Fee" by Lessee for each year the term is extended. The new lease's term shall be the cumulative total of the purchased years under this section and the remaining years in this Lease (i.e., if ten (10) years and one (1) month remain in this Lease and five (5) years are purchased under this section the new lease shall be for a term of fifteen (15) years and one (1) month). The Option Fee shall be calculated pursuant to a specified percentage, as provided in Exhibit "C" attached hereto and incorporated by reference, of the fair market value of the Property as determined by an appraisal, multiplied by the number of years that are purchased by the Lessee (i.e., for illustrative purposes, if the specified percentage is one percent (1 %) and the appraised Property value is one hundred dollars ($100) and Lessee desires to extend the term five (5) years, Lessee would owe the City five dollars ($5) [$1 x 5 years= $5]). The Option Fee shall be paid to City by Lessee at the time of execution of the new lease. The Property appraisal shall be conducted after the City's approval of the written request submitted by Lessee. The City's approval of the written request shall be valid for six (6) months or some other time period as may be agreed upon by the parties. Lessor shall submit three (3) California licensed appraisers to Lessee; Lessee shall select one (1) appraiser from the three (3) submitted appraisers to appraise the Property. Lessee shall pay all costs associated with the appraiser and the appraisal. For purposes of the Option Fee calculation, in no event shall the appraised fair market value be less than the Property value used to determine Base Rent (as defined in Section 3.2) in Sections 3.1 and 3.2 of the then effective Lease. Because there will be no sale of the Property, the Base Rent for the new lease shall be calculated pursuant to Section 3.6(b), notwithstanding the appraisal requirement in Section 3.6(b), the parties may rely upon the appraisal conducted pursuant to this section to calculate the Base Rent. 2.3 Holdover. This Lease shall terminate and become null and void without further notice upon the expiration of the term of this Lease. Any holding over by Lessee after the expiration of the term shall not constitute a renewal or extension and shall not give Lessee any rights in or to the Property or any part thereof except as expressly provided in this Lease. Any holding over after the expiration of the term with the consent of Lessor shall be construed to be a tenancy from month-to-month on the same terms and conditions set forth in this Lease insofar as such terms and conditions can be applicable to a month-to-month tenancy, except that the rental for each month or any portion thereof during such holdover period shall be an amount equal to one 3 hundred fifty percent (150%) of one -twelfth (1/12) of the annual rental for the most recent year paid. The month-to-month tenancy may be terminated by Lessee or Lessor upon thirty (30) calendar days' prior written notice to the other. 3. RENT & TRANSFERABILITY 3.1 Rent Calculation. Annual rent for the Property shall be calculated at the rate of two and half percent (2.5%) of the total of all consideration paid for the Property or the appraised value of the Property, including any improvements or structures, but excluding any consideration paid for the transfer of personal property in connection with such transaction. The annual rent shall be adjusted from time -to -time pursuant to Section 3.3. The rent calculation provided in this section shall serve as the basis for the Base Rent (defined below) in Section 3.2. 3.2 Base Rent. Lessee agrees to pay Lessor rent for the use and occupancy of the Property, in twelve (12) equal monthly installments on the first day of each month ("Base Rent"). Said sums shall be paid in lawful money of the United States of America. If the Commencement Date is other than the first day of a month, rent during any partial month at the beginning and at the end of the lease term will be prorated. Base Rent hereunder will be Five Thousand Seven Hundred Seventy Dollars and 83/100 ($5,770.83) for an annual total of Sixty -Nine Thousand Two Hundred Fifty Dollars and no/100 ($69,250.00). Base Rent due hereunder will be subject to the rent adjustment provisions of Section 3.3 below. Lessee shall send said rent to the mailing address or send an electronic fund transfer via the web address provided in Section 3.5. Lessee shall be responsible for any delays in the mode of sending the rent payment to Lessor. (a) Base Rent shall be due on the first day of each month. If said rent is received later than the fifteenth (15th) day of the month, there shall be a delinquency charge equal to five percent (5%) of the month's Base Rent due. (b) Each monthly installment of Base Rent shall bear interest if not paid promptly on or before the date it becomes delinquent at the rate of five percent (5%) per annum from the date it becomes delinquent until it is paid by Lessee to Lessor. This interest charge shall be in addition to the delinquency charge set forth in Section 3.2(a). 3.3 Rent Adjustments. Monthly Base Rent may be adjusted on July 1St of each Lease Year (the term "Lease Year" as used herein refers to successive twelve (12) month periods, commencing with the Commencement Date of this Lease) to reflect increases or decreases in the cost of living as indicated by the Consumer Price Index described below. Monthly Base Rent may be adjusted if the Consumer Price Index for the Los Angeles — Orange County - Riverside Area, All Urban Consumers, All Items ("Index"), as published by the United States Department of Labor, Bureau of Labor Statistics ("Bureau"), increases or decreases over the Base Period Index. The initial "Base Period Index" shall be the Index for the calendar month which is four (4) months prior to the month of the Commencement Date (thus, October, 2012, which equals 240.111). The initial Base Period Index shall be compared with the Index for the same calendar month for each subsequent Lease Year ("Comparison Index"). The M Comparison Index used for a given year's adjustment calculation will become the Base Period Index for purposes of the next annual rent adjustment calculation. If the Comparison Index is higher or lower than the Base Period Index, then Base Rent for the next Lease Year shall be increased or decreased by the amount of such percentage change. Should the Bureau discontinue the publication of the above Index, or publish same less frequently, or alter same in some other manner, then the Parties shall adopt a substitute Index or substitute procedure which reasonably reflects and monitors consumer prices. Notwithstanding the Index adjustments described above, if Lessor, in its sole and absolute discretion, believes that notwithstanding such adjustments, monthly Base Rent, as adjusted, does not accurately reflect the fair market rental value of the Property, Lessor may elect to further adjust monthly Base Rent at the commencement of the thirtieth (30th) Lease Year. Lessor will provide notice to Lessee not earlier than six (6) months nor later than three (3) months prior to the expiration of the twenty-ninth (29th) Lease Year of Lessor's election to further adjust monthly Base Rent. Within fifteen (15) days thereafter, Lessor and Lessee will attempt to agree upon an adjustment in Base Rent. If Lessor and Lessee are unable to agree, the Property will be appraised to determine its fair market rental value. Lessor shall submit three (3) California licensed appraisers to Lessee; Lessee shall select one (1) appraiser from the three (3) submitted appraisers to appraise the Property. Lessor shall pay all costs associated with the appraiser and the appraisal. The fair market rental value determined by the appraiser will constitute monthly Base Rent for the thirtieth (30th) Lease Year and each successive year remaining on the Lease; provided, however, that in no event will monthly Base Rent so determined be less than that otherwise payable through the annual Index adjustments described above. 3.4 Additional Rent. All other payments from Lessee described in this Lease, whether to Lessor or third parties (i.e., for the payment of taxes, utilities, insurance, maintenance and the like) constitute "Additional Rent." Included within Additional Rent is any service charge incurred by City when processing the Rent (e.g., credit card transaction fee, etc.), such service charged shall be passed onto Lessee without any additional mark-up by the City. All references in this Lease to "Rent" include Base Rent and Additional Rent. 3.5 Place for Payment of Rent. All Rent that becomes due and payable under this Lease shall be paid to Lessor in person or by United States mail at the Cashier's Office located at 3300 Newport Boulevard, Newport Beach, California 92658, or electronically at www.newportbeachca.gov, or at any other place or places that Lessor may designate by written notice to Lessee. 3.6 Calculation of Base Rent for Leases Without Corresponding Sale. (a) Through January 1, 2015, Lessor will allow current lessees within Beacon Bay to voluntarily terminate their prior lease (that had an effective date of July 1, 1994 and an expiration date of July 1, 2044) and enter into this Lease. No transfers from the prior lease to this Lease are allowed after January 1, 2015. If a current lessee 47 terminates their prior lease and enters into this Lease prior to January 1, 2015 or if Lessee purchases additional years pursuant to Section 2.2, there will not be a sale price to calculate Base Rent. (b) The Base Rent shall be calculated at the rate of two and half percent (2.5%) of the appraised fair market value of the Property including any improvements or structures, but excluding any personal property. Lessor shall submit three (3) California licensed appraisers to Lessee; Lessee shall select one (1) appraiser from the three (3) submitted appraisers to appraise the Property. Lessee shall pay all costs associated with the appraiser and the appraisal. In no event shall the Base Rent be less than the dollar amount received by the Lessor under the former lease. The annual Base Rent shall be adjusted from time -to -time pursuant to Section 3.3. 3.7 Prohibition Against Transfer or Assignment. With the exception of the transfer and assignment provisions in Section 7 and Section 3.8, this Lease may not be transferred or assigned by Lessee. Any attempt to transfer or assign this Lease shall be an event of default subject to the remedies provided in Section 13.2. Any purported assignment or transfer in violation of this section shall be null and void. 3.8 Exempt Transfers or Assiqnments. Notwithstanding the prohibition against transfer and assignment provided in Section 3.7, the Lease may be transferred by Lessee if: (a) the transfer is caused by the death of a spouse and the full interest of the deceased spouse is transferred to a surviving spouse; (b) the transfer of an interest in this Lease is between or among tenants in common or joint tenants in ownership of the leasehold estate created by this Lease, and such tenants in common or joint tenants first acquired their respective interests in this Lease simultaneously; (c) the transfer is caused by the dissolution of the marriage of Lessee and the full interest of one of the spouses is transferred to the other spouse; (d) the transfer is to an inter vivos trust, living trust, or other similar estate planning arrangement of Lessee and the sole beneficiaries are the Lessee, the Lessee's spouse, or a tenant as contemplated in Section 3.8(b); or (e) the transfer is to a LLC; provided at the time of transfer the Lessee is the majority share holder of the LLC. The LLC may not change its majority shareholder without the prior written consent of the City's City Manager or his/her designee. If approved, a change of the majority shareholder triggers a re -appraisal of the Property and an adjustment of Base Rent pursuant to the re -appraisal process in Section 3.6(b). In the event of any transfer under this Section 3.8 the Lease term shall be for the remaining years existing on the Lease prior to the transfer (i.e., the term shall not be extended due to the transfer). 9 4. LESSOR'S TITLE Lessor covenants, represents and warrants that Lessee, its guests and permitted successors and assigns shall peaceably and quietly have, hold and enjoy the sole and exclusive use and enjoyment of the Property, or any part thereof, for the full term of this Lease and as the same may be extended as provided herein. This covenant and warranty of quiet enjoyment shall only apply to Lessor and those claiming or acting by, through or under Lessor. 5. USE AND CONDITION OF PROPERTY 5.1 Use of Property. The Property shall be used solely for residential purposes consistent with the City's Zoning and Municipal Code. Lessee may demolish, construct, remodel, reconstruct and maintain structures on the Property for residential purposes so long as the structures and construction are authorized by appropriate City permits and fully comply with all City ordinances, resolutions, regulations, policies, and plans. Lessee shall also obtain permission to construct and/or maintain structures from the Beacon Bay Community Association, California Coastal Commission, and any other private or governmental agency if required by law. Nothing in this section shall be interpreted as a pre -approval of any permit or other approval required for the use of the Property. 5.2 Maintenance of Improvements. Lessor shall not be required to make any changes, alterations, additions, improvements, or repairs in on or about all or part of the Property. Lessee shall, at all times during the term of this Lease and without any cost or expense to Lessor, keep and maintain, the Property, including, without limitation, all structures, facilities, walks, curbs, parkways and other improvements, in good order and repair and in a clean, safe, sanitary and orderly condition. Lessee shall cause to be constructed, maintained and repaired all utilities, pipes, walls, sewers, drains, and other improvements on the Property to the extent required by law or as necessary to maintain the improvement in good order and repair and safe and sanitary condition. 5.3 Compliance with Laws. Lessee shall make, or cause to be made, any additions, alterations or repairs to any structure or improvement on the Property which may be required by, and Lessee shall otherwise observe and comply with, any law, statute, ordinance, plan, resolution or policy applicable to the Property. Lessee shall indemnify, defend and hold Lessor harmless from and against any loss, liability, action, claim or damage, arising out of, or in any way related, to Lessee's failure to comply with, and perform pursuant to provisions of this Lease. All repairs, additions, and alterations to the structures or improvements on the Property shall conform to all applicable laws, ordinances, regulations, plans, policies and resolutions and all work shall be performed with reasonable diligence, completed within a reasonable time, and performed at the sole cost and expense of Lessee. 5.4 As Is Condition of Property. Lessee expressly accepts the Property "as is" and acknowledges that Lessor has made no representations or warranties as to the suitability of the Property or any construction or improvement. Lessee shall conduct all 7 tests necessary to determine the suitability of the Property for any proposed construction or improvement, including, without limitation, the amount and extent of any fill, and related factors. Lessee expressly acknowledges that Lessor shall not be liable for any damage or loss resulting from any subsurface or soil condition in, on, or under the Property or adjacent property. Lessee expressly acknowledges that, while the legislature of the State of California has purportedly removed the public trust restrictions on use of the Property pursuant to the Beacon Bay Bill, the Property may constitute filled tidelands, and Lessor has made no representation or warranty relative to the validity of the Beacon Bay Bill or the power of the legislature of the State of California to remove public trust restrictions on tidelands through legislation. Notwithstanding the foregoing, in the event of any challenge to the right and power of Lessor to lease the Property for the purposes provided in this Lease, Lessor agrees, at its sole cost and expense, to use all reasonable efforts to resist and defend against such challenge and to seek a ruling or judgment affirming and upholding the right and power of Lessor to lease the Property for the purposes provided in this Lease. 5.5 Tidelands Grant. The Property may be located on land that is the subject of a Tidelands Grant from the State of California to the City. Lessee shall not take any action that would cause the City to be in violation of any provisions of that Tidelands Grant. If the Property is located upon tidelands and the State of California terminates, or modifies the Tidelands Grant to prohibit the uses contemplated under this Lease, this Lease shall terminate as a result and the Parties shall be released from all liabilities and obligations under this Lease and Lessor shall owe no compensation to Lessee. 6. TAXES AND UTILITIES 6.1 Lessee to Pay Taxes. In addition to the Base Rent required to be paid under this Lease, Lessee shall pay any and all real and personal property taxes, including possessory interest tax (California Revenue and Taxation Code § 107.6), assessments, and other charges of any description levied or assessed during the term of this Lease by any governmental agency or entity on or against the Property, any portion of or interest in the Property, or any improvements on the Property. 6.2 Proration of Taxes. In the event that this Lease commences, terminates or expires during a tax year, Lessee shall pay the taxes for the period of such year during which this Lease was in effect. 6.3 Payment Before Delinquency. Any and all taxes and assessments and installments of taxes and assessments required to be paid by Lessee under this Lease shall be paid when due and the official and original receipt for the payment of such tax, assessment, or installment shall be given to Lessor upon request. 6.4 Contest of Tax. Lessee shall have the right to contest, oppose, or object to the amount or validity of any tax, assessment, or other charge levied on or assessed against the Property or any part thereof; provided, however, that the contest, opposition or objection must be filed before the tax, assessment or other charge at which it is directed becomes delinquent and written notice of the contest, opposition or objection : must be given to Lessor at least twenty (20) days before the date the tax, assessment, or other charge becomes delinquent. Furthermore, no such contest, opposition or objection shall be continued or maintained after the date the tax, assessment, or other charge at which it is directed becomes delinquent unless Lessee has: (a) Paid such tax, assessment, or other charge under protest prior to its becoming delinquent; or (b) Obtained and maintained a stay of all proceedings for enforcement and collection of the tax, assessment, or other charge by posting such bond or other matter required by law for such a stay; or (c) Delivered to Lessor a good and sufficient undertaking in an amount reasonably specified by Lessor and issued by a bonding corporation authorized to issue undertakings in California conditioned on the payment by Lessee of the tax, assessment or other charge together with any fines, interest, penalties, costs and expenses that may have accrued or been imposed thereon within thirty (30) days after final determination of Lessee's contest, opposition or objection to such tax, assessment or other charge. 6.5 Tax Returns and Statements. Lessee shall, as between Lessor and Lessee, have the duty of attending to, preparing, making, and filing any statement, return, report, or other instrument required or permitted by law in connection with the determination, equalization, reduction or payment of any taxes, assessments or other charges that are or may be levied on or assessed against the Property, any portion or interest in the Property, or any improvements on the Property. 6.6 Tax Hold -Harmless Clause. Lessee shall indemnify and hold Lessor and the property of Lessor, including the Property and any improvements now or hereafter located thereon, free and harmless from any liability, loss, or damage resulting from any taxes, assessments, or other charges required by this Lease to be paid by Lessee and from all interests, penalties, and other sums imposed thereon and from any sales or other proceedings to enforce collection of any such taxes, assessments, or other charges. 6.7 Utilities. Lessee shall contract in its own name and fully and promptly pay for all water, gas, heat, light, power, telephone service, and other public utilities of every kind furnished to the Property throughout the term hereof, and all other costs and expenses of every kind whatsoever of or in connection with the use, operation, and maintenance of the Property and all activities conducted thereon, and Lessor shall have no responsibility of any kind for any thereof. In the event that it is necessary for Lessor to provide any of the foregoing utilities to Lessee on a pass through basis, Lessee shall provide a separate meter for the Property and shall reimburse Lessor for Lessee's usage of such utility service within ten (10) days of Lessor's invoice to Lessee. Furthermore, Lessee shall be solely responsible for the cost and expense of any upgrade, modification or other utility installation which is required as a result of Lessee's use of the Property. 9 6.8 Payment by Lessor. Should Lessee fail to pay within the time specified in this Lease any taxes, assessments, or other charges required by this Lease to be paid by Lessee, Lessor may, upon ten (10) days prior written notice and demand to Lessee, pay, discharge or adjust such tax, assessment, or other charge for the benefit of Lessee. In such event, Lessee shall promptly on written demand of Lessor reimburse Lessor for the full amount paid by Lessor in paying, discharging or adjusting such tax, assessment or other charge, together with interest thereon at the rate of ten percent (10%) per annum from the date of payment by Lessor until the date of repayment by Lessee. Where no time within which any charge required by this Lease to be paid by Lessee is specified in this Lease, such charge must be paid by Lessee before it becomes delinquent. 7. ENCUMBERANCES 7.1 Right to Encumber. Lessee may encumber this Lease by deed of trust, mortgage, or similar instrument, in favor of any bona fide lender ("Lender" or "Mortgagee") in a bona fide loan transaction for any purpose without the consent of Lessor. To determine whether a loan is a bona fide lending transaction, and not an arrangement for transfer of the possession or title to the Property to the putative lender, Lessee and the Lender agree to provide Lessor with all documentation executed between Lessee and the Lender concerning the loan upon request of Lessor. Neither Lessee nor Lessor shall have the power to encumber Lessor's interest in the Property. Any encumbrance shall be subject to all covenants, conditions and restrictions in this Lease and to all rights and interests of Lessor except as otherwise expressly provided in this Lease. Lessee shall give Lessor prior written notice of any encumbrance. 7.2 Notice to Lender. Lessor shall have no obligation to give any Lender any written notice pursuant to this Lease unless the Lender has given Lessor written notice of its name, address, and nature of encumbrance ("Complying Lender(s)"). Lessor shall give all Complying Lenders a copy of any written notice of default, notice of termination or other notice which may affect Lessee's rights under this Lease. Notice shall be deemed given by Lessor to Lender five (5) days following deposit in the United States mail, certified and return receipt requested, postage prepaid, and sent to Complying Lender at the address furnished in writing by Complying Lender. Failure by Complying Lender to actually receive notice shall not affect Lessor's compliance with this section provided notice was deposited in the United States mail. 7.3 Modification. Lessor and Lessee agree that they will not modify, surrender or cancel this Lease by mutual agreement without providing prior written notice to the Lender. 7.4 Rights of Lender. Any Lender holding or the beneficiary of a security interest or lien on this Lease and the leasehold estate created hereby shall have the right, during the term of the Lease, to: (a) perform any act required of Lessee pursuant to this Lease; 10 (b) transfer this Lease to the purchaser at any foreclosure sale, the assignee in the event of an assignment in lieu of foreclosure, or to acquire the interest of Lessee pursuant to foreclosure or assignment and thereafter transfer this Lease to the Lender's successor. Lender shall have no right to transfer this Lease unless and until Lender has cured all defaults requiring the payment or expenditure of money by Lessee. 7.5 Right of Lender to Cure Default. Lessor shall give written notice of any default or breach of this Lease by Lessee to Complying Lenders and afford Complying Lenders the opportunity, after notice, to: (a) cure the breach or default within ten (10) days after expiration of the time period granted to Lessee for curing the default if the default can be cured by payment of money; (b) cure the breach or default within thirty (30) days after expiration of the time period granted to Lessee for curing the default when the breach or default can be cured within that period of time; or (c) cure the breach or default in a reasonable time when something other than money is required to cure the breach or default and cannot be performed within thirty (30) days after expiration of the time period granted to Lessee for curing the default, provided the acts necessary to cure the breach are commenced within thirty (30) days and thereafter diligently pursued to completion by Complying Lender. 7.6 Foreclosure in Lieu of Cure. Complying Lender may forestall termination of this Lease for a default or breach by Lessee by commencing foreclosure proceedings subject to strict compliance with the following: (a) proceedings are commenced within thirty (30) days after the later of (i) expiration of the time period granted to Lessee for curing the default, or (ii) service on Complying Lender of the notice describing the breach or default; (b) the proceedings are diligently pursued to completion in the manner authorized by law; and (c) Complying Lender performs all of the terms, covenants and conditions of this Lease requiring the payment or expenditure of money by Lessee until the proceedings are complete or are discharged by redemption, satisfaction, payment or conveyance of this Lease to Complying Lender. 7.7 New Lease. Notwithstanding any other provision of this Lease, should this Lease terminate or be terminated because of any default or breach by Lessee, Lessor shall enter into a new lease with Lender as lessee provided: 11 (a) the written request for the new lease is served on Lessor by Lender within thirty (30) days after the termination of this Lease. (b) the new lease contains the same terms and conditions as this Lease except for those which have already been fulfilled or are no longer applicable. (c) on execution of the new lease by Lessor, Lender shall pay any and all sums that would be due upon execution of the new lease, but for its termination, and shall fully remedy, or agree in writing to remedy, any other default or breach committed by Lessee that can reasonably be remedied by Lender. (d) Lender shall, upon execution of the new lease, pay all reasonable costs and expenses (including attorney's fees) incurred in terminating this Lease, recovering possession of the Property from Lessee, in preparing the new lease. (e) The new lease with Lender shall be for the remainder of the term existing in the prior Lease (i.e., if twenty-five (25) years remain on the Lease at the time of termination/breach the new lease shall be for a term of twenty-five (25) years). 7.8 Miscellaneous. The following provisions shall apply to Lessee and any Lender: (a) Any Lender shall be liable to perform the obligations of the Lessee under this Lease only so long as the Lender holds title to this Lease; and (b) Lessee shall, within ten (10) days after the recordation of any trust deed or other security instrument, record, at Lessee's sole expense, Lessor's written request for a copy of any notice of default and/or notice of sale under any deed of trust as provided by state law. 8. RESTORATION AND ENVIRONMENTAL MATTERS 8.1 Restoration of the Property. Should any improvements on the Property be damaged or destroyed by fire or other casualty or any cause whatsoever, Lessee, will cause the commencement of reconstruction to the damaged or destroyed improvements within ninety (90) days, or such other time period as may be mutually agreed upon by the Parties, after such damage and destruction and will thereafter cause such reconstruction to be diligently prosecuted to completion. 8.2 Environmental Matters. (a) Definitions. The following terms will be defined as follows: (i) Environmental Law. "Environmental Law" shall include all federal, state, and local environmental, health, and safety laws, statutes, ordinances, regulations, rules, judgments, orders, and notice requirements, which were in effect as of the date of closing, which regulate or relate to (a) the protection or clean-up of the `K environment; (b) the use, treatment, storage, transportation, handling or disposal of hazardous, toxic or otherwise dangerous substances, wastes or materials; (c) the quality of the air and the discharge of airborne wastes, gases, particles, or other emissions; (d) the preservation or protection of waterways, groundwater, or drinking water; (e) the health and safety of persons or property; or (6) impose liability with respect to any of the foregoing, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) [42 USCS §§ 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (RCRA) [42 USCS §§ 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (FWPCA) [33 USCS §§ 1251 et seq.]; the Toxic Substances Control Act (TSCA) [15 USCS §§ 2601 et seq.]; the Hazardous Materials Transportation Act (HMTA) [49 USCS §§ 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USCS §§ 136 et seq.]; the Superfund Amendments and Reauthorization Act [42 USCS §§ 6901 et seq.]; the Clean Air Act [42 USCS §§ 7401 et seq.]; the Safe Drinking Water Act [42 USCS §§ 300f et seq.]; the Solid Waste Disposal Act [42 USCS §§ 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USCS §§ 1201 et seq.]; the Emergency Planning and Community Right to Know Act [42 USCS §§ 11001 et seq.]; the Occupational Safety and Health Act [29 USCS §§ 655 and 657]; the California Underground Storage of Hazardous Substances Act [H & S C §§ 25280 et seq.]; the California Hazardous Substances Account Act [H & S C §§ 25300 et seq.]; the California Hazardous Waste Control Act [H & S C §§ 25100 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [H & S C §§ 24249.5 et seq.]; the Porter -Cologne Water Quality Act [Water C §§ 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above. (ii) Hazardous Materials. "Hazardous Materials" shall include any substance which falls within the definition of hazardous substance, hazardous waste, hazardous material, toxic substance, solid waste, or pollutant or contaminant, under any Environmental Law. (b) Lessee's Obligations. Lessee will not use, occupy, or permit any portion of the Property to be used or occupied in violation of any Environmental Law or to store any Hazardous Material. (c) Environmental Indemnity. Lessee shall indemnify, defend, and hold Lessor and Lessor's, City Council, officers, appointees, volunteers, employees, agents, successors and assigns free and harmless from and against all Damages (as defined below) that may at any time be imposed upon, incurred by, or asserted or awarded against Lessor or any of them in connection with or arising from any breach of Lessee's obligations hereunder or out of any violation by Lessee of any Environmental Law; or resulting in the imposition of any lien or claim for the recovery of any costs for environmental cleanup or other response costs relating to the release or threatened release of Hazardous Materials due to the construction of any improvements on the Property or the use or misuse of the Property by the Lessee. The term "Damages" shall mean all liabilities, demands, claims, actions or causes of action, regulatory, legislative or judicial proceedings, assessments, levies, losses, fines, penalties, damages, costs and expenses, in each case as awarded by a court or arbitrator, including, without 13 limitation: (i) reasonable attorneys', accountants', investigators', and experts' fees and expenses sustained or incurred in connection with the defense or investigation of any such liability, and (ii) costs and expenses incurred to bring the Property into compliance with Environmental Laws. The term "Damages" also includes, expressly, those Damages that arise as a result of strict liability, whether arising under Environmental Laws and regulations or otherwise. Lessee's obligations hereunder will survive the expiration or sooner termination of this Lease. 9. INDEMNITY 9.1 Indemnity Agreement. In addition to the Environmental Indemnity provided above, except to the extent caused by the sole negligence and/or willful misconduct of the Lessor, Lessee shall defend, indemnify and hold Lessor and Lessor's City Council, officers, appointees, volunteers, employees, agents, successors and assigns free and harmless from any and all liability, claims, loss, damages, or expenses resulting from Lessee's occupation and use of the Property, specifically including, without limitation, any liability, claim, loss, damage, or expense arising by reason of: (a) The death or injury of any person, including any person who is a guest or invitee of Lessee, or by reason of the damage to or destruction of any property, including property owned by Lessee or by any person who is a guest or invitee of Lessee, from any cause whatever while such person or property is in or on the Property or in any way connected with the Property or with any of the improvements or personal property on the Property; (b) The death or injury of any person, including any person who is a guest or invitee of Lessee, or by reason of the damage to or destruction of any property, including property owned by Lessee or any person who is a guest or invitee of Lessee, caused or allegedly caused by either (i) the condition of the Property, or improvements on the Property, or (ii) some act or omission on the Property by Lessee or any person in, on, or about the Property with or without the permission and consent of Lessee; (c) Any work performed on the Property or material furnished to the Property at the request of Lessee or any person or entity acting for or on behalf of Lessee; or (d) Lessee's failure to comply with any material legal or other requirement validly imposed on Lessee or the Property by a governmental agency or authority having jurisdiction over the Property. 10. CONDEMNATION 10.1 Definitions of Terms. (a) The term "total taking" as used in this Lease shall mean the taking of the entire Property under the power of eminent domain or the taking of so much of the Property as to prevent or substantially impair the use thereof by Lessee for residential purposes. 14 (b) The term "partial taking" shall mean the taking of only a portion of the Property which does not constitute a total taking as defined above. (c) The term "taking" shall include a voluntary conveyance by Lessor to an agency, authority or public utility under threat of a taking under the power of eminent domain in lieu of formal proceedings. (d) The term "date of taking" shall be the date upon which title to the Property or portion thereof passes to and vests in the condemner. 10.2 Effect of Taking. If, during the term hereof, there shall be a total taking or partial taking under the power of eminent domain, then the leasehold estate of the Lessee in and to the Property or the portion thereof taken shall cease and terminate as of the date of taking of said Property. If this Lease is so terminated in whole or in part, all Rent and other charges payable by Lessee to Lessor hereunder and attributable to the Property or portion thereof taken shall be paid by Lessee up to the date of taking by the condemner, and the Parties shall thereupon be released from all further liability in relation thereto. 10.3 Allocation of Award for Total Taking. All compensation and damages awarded for the total taking of the Property and Lessee's leasehold interest therein shall be allocated as follows: (a) The Lessor shall be entitled to an amount equal to the sum of the following: (i) The fair market value of the Property as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such fair market value by the factor for the present worth of one dollar ($1.00) at five percent (5%) per annum compound interest for the number of years remaining from the date of taking to the date of the expiration of the term of this Lease; and (ii) The present worth of Rent due during the period from the date of taking to the date of the expiration of the term of this Lease, computed by multiplying the annual rent then payable by the factor for the present worth of one dollar ($1.00) per annum at five percent (5%) per annum compound interest (Inwood Coefficient) for the number of years in such period. (b) The Lessee and the Mortgagee, if any shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinafter provided. Lessee and Mortgagee may decide between themselves how an award will be divided between them. In the event of any dispute between the Lessee and Mortgagee as to the division of an award the City may satisfy its responsibilities under this Lease by transferring any money due under this section to 15 Lessee. Lessee shall indemnify City from any and all claims or actions brought by Mortgagee or any other party for any award under this section. 10.4 Allocation of Award for Partial Taking. All compensation and damages awarded for the taking of a portion of the Property shall be allocated and divided as follows: (a) The Lessor shall be entitled to an amount equal to the sum of the following: (i) The proportionate reduction of the fair market value of the Property as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such proportionate reduction in fair market value by the factor for the present worth of one dollar ($1.00) at five percent (5%) per annum compound interest for the number of years remaining from the date of taking to the date of expiration of the term of this Lease; and (ii) The present worth of the amount by which the Rent is reduced computed by multiplying the amount by which the annual Rent is reduced by the factor for the present worth of one dollar ($1.00) per annum at five percent (5%) per annum compound interest (Inwood Coefficient) for the number of years remaining from the date of taking to the date of expiration of the term of this Lease. (b) The Lessee and the Mortgagee, if any shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinabove provided. Lessee and Mortgagee may decide between themselves how an award will be divided between them. In the event of any dispute between the Lessee and Mortgagee as to the division of an award the City may satisfy its responsibilities under this Lease by transferring any money due under this section to Lessee. Lessee shall indemnify City from any and all claims or actions brought by Mortgagee or any other party for any award under this section. 10.5 Reduction of Rent on Partial Taking. In the event of a partial taking, the Rent payable by Lessee hereunder shall be adjusted from the date of taking to the date of the expiration of the term of this Lease. Such rental adjustment will be made by reducing the Base Rent payable by Lessee in the ratio that the Fair Market Rental Value of the Property at the date of taking bears to the Fair Market Rental Value of the Property immediately thereafter. 11. BEACON BAY COMMUNITY ASSOCIATION 11.1 Membership in Association. As a material part of the consideration of this Lease, and as an express condition to the continuance of any of the rights of Lessee pursuant to this Lease, Lessee agrees to become, and during the term of this Lease to remain, a member in good standing of the Beacon Bay Community Association ("Association"). 16 11.2 Compliance with Rules and Regulations. Lessee agrees to abide by the articles of incorporation, bylaws, covenants, conditions and restrictions and any amendment thereto ("CC&Rs") attached hereto as Exhibit "D" and incorporated herein by reference, and all rules and regulations of the Association, and to pay to the Association, before delinquency, all valid dues, fees, assessments and other charges properly levied or assessed by the Association. Lessee's failure to comply with the provisions of Section 11.1 or 11.2 shall constitute a material breach of this Lease. 11.3 Use of Common Area. Lessee shall have the right to use the streets, beaches, walkways, tennis courts, docks, piers, and common landscaped areas in Beacon Bay (as depicted on Exhibit "A") and which are leased to the Association by Lessor in consideration of the maintenance thereof by such Association and Rent to be paid by individual Lessees under their respective leases. 11.4 Maintenance of Infrastructure. Lessor has no obligation to install, improve, repair, or maintain streets, curbs, gutters, water lines, sewer lines, drainage facilities, street lighting or other facilities used by the residents of Beacon Bay (Infrastructure). Lessor reserves the right to maintain streets, curbs, gutters, water lines, sewer lines', drainage facilities, street lighting, telephone and electricity lines and other Infrastructure facilities in Beacon Bay at its initial cost and to assess Lessee for a pro rata share of such costs, and to collect such costs from Lessee in the form of Rent over the remaining term of this Lease. Subject to a public health, safety, and welfare finding, Lessor reserves the right to commence improvements to the streets, curbs, gutters, water lines, sewer lines', drainage facilities, street lighting, telephone and electricity lines and other Infrastructure facilities in Beacon Bay. If Lessor constructs any improvements Lessor has the right to assess Lessee for a pro rata share of such costs, and to collect such costs from Lessee in the form of Rent over the remaining term of this Lease. 11.5 Lessor Maintenance of Common Areas. If the Association, after receiving prior written notice from Lessor, fails or ceases to maintain community facilities, Lessor may, at its option and without obligation, assume the obligations of the Association to maintain, repair, install or improve community facilities. In such event, Lessee shall pay a pro rata share of Lessor's reasonable expenses in maintaining and operating the community facilities, including a reasonable management fee or the fee charged by a management agent. Lessee's pro rata share shall be determined by dividing Lessor's costs by the number of residential lots within Beacon Bay (currently seventy-two (72) lots). Lessee's pro rata share of the annual costs incurred by Lessor shall be paid within thirty (30) days after written notice of the amount due, and any failure to pay shall constitute a material breach of this Lease. The costs of maintaining and operating community facilities shall be determined annually and solely from the financial records of Lessor. 12. INSURANCE 12.1 General Conditions. All insurance required to be carried pursuant to this Lease shall be obtained from reputable carriers licensed to conduct business in the 17 State of California. Each policy required to be carried pursuant to this Lease shall name Lessee and Lessor as additional named insureds, and shall provide that the policy may not be surrendered, cancelled or terminated, or coverage reduced, without less than twenty (20) days prior written notice to Lessor. 12.2 Fire Insurance. Lessee shall, during the term of this Lease, insure all structures and improvements on the Property against loss or damage by fire or other risk for residential structures. The insurance shall provide coverage to one hundred percent (100%) of the full insurable replacement value of all improvements on the Property, with the loss payable to Lessee and Lessor unless this Lease is terminated by Lessor for default of Lessee in which case the proceeds of insurance shall be paid to Lessor. 12.3 Liability Insurance. Lessee shall, at Lessee's sole cost and expense, procure and maintain during the term of this Lease, a broad form comprehensive coverage policy of public liability insurance which insures Lessee and Lessor against any loss or liability caused by, or in any way related to, the condition, for Lessee's use and occupation, of the Property in amounts not less than: (a) $1,000,000 per occurrence for injury to or death of, one (1) person; (b) $1,000,000 for damage to or destruction of property. These dollar amounts may be adjusted by Lessor with no less than ninety (90) days prior written notice to Lessee. 12.4 Primary Insurance Coverage. Lessee's insurance coverage shall be primary insurance and/or primary source of recovery as respects to City, its elected or appointed officers, agents, officials, employees and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Lessee's use and occupation of Property. Any insurance or self-insurance maintained by City, its officers, officials, employees and volunteers shall be excess of the Lessee's insurance and shall not contribute with it. 13. DEFAULT 13.1 Events of Default. The occurrence of any one (1) or more of the following events shall constitute a material default and breach of this Lease by Lessee: (a) The maintenance of the Property in violation of any applicable provisions of the City's Municipal Code and Zoning Code, State Law, Federal Law, and/or the Association's CC&Rs; (b) The failure by Lessee to make any payment of Rent when due if the failure continues for three (3) days after written notice has been given to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to in applicable unlawful detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this paragraph; (c) The failure by Lessee to perform any of the provisions of this Lease and any Exhibits attached hereto to be performed by Lessee, if the failure to perform continues for a period of thirty (30) days after written notice thereof has been given to Lessee. If the nature of Lessee's default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be in default if Lessee commences the cure within said thirty (30) day period and thereafter diligently prosecutes the cure to completion; or (d) The making by Lessee of any general assignment, or general arrangement for the benefit of creditors; the filing by or against Lessee of. a petition to have Lessee adjudged a bankrupt or a petition for reorganization or arrangement of any law relating to bankruptcy unless the same is dismissed within sixty (60) days; the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Property or of Lessee's interest in the Lease, where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Property or of Lessee's interest in the Lease, where such seizure is not discharged within thirty (30) days. Notices given under this paragraph shall specify the alleged default and the applicable Lease provisions, and shall demand that Lessee perform the provisions of this Lease or pay the rent that is in arrears, as the case may be, within the applicable period of time. No such notice shall be deemed a forfeiture or a termination of this Lease unless Lessor so elects in the notice. 13.2 Lessor's Remedies. In the event of any default by Lessee as defined in this Lease, Lessor may, in addition to any rights or remedies permitted by law, do the following: (a) Terminate Lessee's right to possession of the Property by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Property to Lessor. In such event, Lessor shall be entitled to recover from Lessee all amounts to which Lessor is entitled pursuant to Section 1951.2 of the California Civil Code, or any other provision of law, including, without limitation, the following: (i) The worth at the time of award of the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount of the loss that Lessee proves could be reasonably avoided: and (ii) Any other amount necessary to compensate Lessor for all detriment proximately caused by Lessee's failure to perform obligations pursuant to this Lease or which in the ordinary course of things would be likely to result from the breach, including, without limitation, the cost of recovering possession, expenses of reletting (including necessary repair, renovation and alteration, and any other reasonable costs. 19 The "worth at the time of award" of all rental amounts other than that referred to in clause (i) above shall be computed by allowing interest at the rate of five percent (5%) per annum from the date amounts accrue to Lessor. The worth at the time of award of the amount referred to in clause (i) shall be computed by discounting such amount at one (1) percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award. (b) Without terminating or affecting the forfeiture of this Lease or, in the absence of express written notice of Lessor's election to do so, relieving Lessee of any obligation pursuant to this Lease, Lessor may, but need not, relet all or a portion of the Property at any time, or from time -to -time, and on such terms and conditions as Lessor, at its sole discretion, deems appropriate. Whether or not the Property is relet, Lessee shall pay all amounts required by this Lease up to the date that Lessor terminates Lessee's right to possession of the Property. Lessee shall make such payments at the time specified in the Lease and Lessor need not wait until termination of the Lease to recover sums due by legal action. If Lessor relets all or a portion of the Property, the reletting shall not relieve Lessee of any obligation pursuant to this Lease; provided, however, Lessor shall apply the Rent or other proceeds actually collected by virtue of the reletting against amounts due from Lessee. Lessor may execute any agreement reletting all or a portion of the Property and Lessee shall have no right to collect any proceeds due Lessor by virtue of any reletting. Lessor shall not, by any reentry or reletting or other act, be deemed to: Property; (i) Have accepted any surrender by Lessee of this Lease or the (ii) Have terminated this Lease; or (iii) Have relieved Lessee of any obligation pursuant to this Lease unless Lessor has given Lessee express written notice of Lessor's election to do so. (c) Lessor may terminate this Lease by express written notice to Lessee of its election to do so. The termination shall not relieve Lessee of any obligation which has accrued prior to the date of termination. In the event of termination, Lessor shall be entitled to recover the amounts specified in this Lease. 13.3 Default By Lessor. Lessor shall not be in default under this Lease unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligation. If the nature of Lessor's obligation is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if Lessor commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. Alternatively, Lessor may in its sole and absolute discretion decide not to cure a default and instead elect to terminate this Lease. In the event of termination under this section Lessor shall owe no compensation to Lessee. 20 (a) No Damages. The parties acknowledge that Lessor would not have entered into this Lease if it were to be liable in damages under, or with respect to, this Lease or any of the matters referred to in this Lease. Accordingly, Lessee covenants on behalf of itself and its successors and assigns, not to sue Lessor (either in its capacity as lessor in this Lease or in its capacity as the City of Newport Beach) for damages or monetary relief for any breach of this Lease by Lessor or arising out of or connected with any dispute, controversy, or issue between Lessor and Lessee regarding this Lease or any of the matters referred to in this Lease -or any future amendments or enactments thereto, or any land use permits or approvals sought in connection with the Property, the parties agreeing that declaratory and injunctive relief, mandate, and specific performance shall be Lessee's sole and exclusive judicial remedies. 13.4 Stay of Obligations. Neither Party shall be under any obligation to perform or comply with its obligations pursuant to this Lease after the date of any default by the other Party. 13.5 Determination of Rental Value. In any action or unlawful detainer commenced by Lessor, the reasonable rental value of the Property shall be deemed to be the amount of Rent and/or additional monies due (such as reimbursement for costs of Infrastructure improvements or the payment of taxes or assessments) for the period of the unlawful detainer, unless Lessee shall prove to the contrary by competent evidence. 13.6 Waiver of Rights. The failure or delay of either Party to exercise any right or remedy shall not be construed as a waiver of such right or remedy or any default by the other Party. Lessor's acceptance of any Rent shall not be considered a waiver of any preexisting breach of default by Lessee other than the failure to pay the particular Rent accepted regardless of Lessor's knowledge of the preexisting breach of default at the time Rent is accepted. 13.7 Waiver of Right of Redemption. Lessee waives any right of redemption or relief from forfeiture pursuant to California Code of Civil Procedure Sections 1174 and 1179 and/or pursuant to any existing or future statutory or decisional law in the event Lessee is evicted or Lessor takes possession of the Property by reason of Lessee's default. 14. SURRENDER OF POSSESSION UPON EXPIRATION OR TERMINATION 14.1 Surrender of Property. Upon the expiration or termination of this Lease. Lessee agrees to peaceably deliver possession of, and agrees to vacate without contest, legal or otherwise, the Property. Lessor, at its sole discretion, may record a document evidencing the expiration or termination of the leasehold interest. Lessee waives any right to receive relocation assistance or similar form of payment from Lessor. 21 14.2 Removal of Improvements. Upon the expiration of the term of this Lease, and on condition that Lessee is not then in default of any of the provisions of this Lease, Lessee shall have the right to remove from the Property all buildings and improvements built or installed on the Property. Removal of any building or improvement shall be at the sole cost and expense of Lessee and removal must be complete no later than ninety (90) days after expiration of the term of this Lease. Lessee shall fill all excavations and remove all foundations, debris and other parts of the buildings or improvements remaining after removal and surrender possession of the Property to Lessor in a clean and orderly condition. In the event any of the buildings and improvements are not removed within the time provided in this paragraph they shall become the property of Lessor without the payment of any consideration to Lessee. 15. NO ATTORNEYS' FEES Should either Party be required to employ counsel to enforce the terms, conditions and covenants of this Lease, the prevailing Party shall not be entitled to attorneys' fees. 16. REMEDIES CUMULATIVE The rights, powers, elections and remedies of the Lessor or Lessee contained in this Lease shall be construed as cumulative and no one (1) of them shall be considered exclusive of the other or exclusive of any rights or remedies allowed by law, and the exercise of one (1) or more rights, powers, elections or remedies shall not impair or be deemed a waiver of Lessor's or Lessee's rights to exercise any other. 17. NO WAIVER No delay or omission of either Party to exercise any right or power arising from any omission, neglect or default of the other Party shall impair any such right or power or shall be construed as a waiver of any such omission, neglect or default on the part of the other Party or any acquiescence therein. No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease shall be construed as a waiver of any succeeding breach of the same or of any of the terms, covenants, agreements, restrictions or conditions of this Lease. 18. COMPLIANCE WITH LAWS Lessee covenants and agrees to comply with all rules, regulations, statutes, ordinances and laws of the State of California. County of Orange, City of Newport Beach, or any other governmental body or agency having lawful jurisdiction over the Property. 19. NOTICES Any notice or notices provided for by this Lease or by law, to be given or served by Lessee, may be given or served by mail, registered or certified, with postage prepaid, on the City of Newport Beach, addressed to the City Manager and City Clerk, 3300 Newport Boulevard, P.O. Box 1768. Newport Beach. California 92659-1768. or at such 22 other address as may be hereafter furnished to Lessee in writing. If notice is intended to be served by Lessor on Lessee, it may be served either (a) By delivering a copy to the Lessee personally; or (b) By depositing the notice in the United States Mail, registered or certified, with postage prepaid, to the Property or business address furnished by Lessee; or (c) If the Lessee is absent from the Property by leaving a copy with some person of suitable age and discretion who may be occupying the Property; or (d) If no one can be found, then by affixing a copy of the notice in a conspicuous place on the Property and also sending a copy through the mail addressed to the Lessee at the Property. Such service upon Lessor or Lessee shall be deemed complete upon the earlier of (i) actual delivery, or (ii) the expiration of seventy-two (72) hours from and after the deposit in the United States mail of such notice, demand or communication. If any term or provision of this Lease shall, to any extent be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall remain valid and enforceable to the fullest extent permitted by law. 21. MISCELLANEOUS 21.1 Representations. Lessee agrees that no representations as to the Property have been made by Lessor or by any person or agent acting for Lessor. Lessor and Lessee agrees and acknowledges that this document contains the entire agreement of the Parties, that- there are no verbal agreements, representations, warranties or other understandings affecting this Lease, and Lessor and Lessee, as a material part of the consideration of this Lease, waives all claims against the other for recision, damages, or otherwise by reason of any alleged covenant, agreement or understanding not contained in this Lease. 21.2 Inurement. Each and all of the covenants, conditions and agreements herein contained shall, in accordance with the context, inure to the benefit of Lessor and Lessee and apply to and bind Lessor and Lessee, as the case may be, their respective heirs, legatees, devisees, executors and administrators, successors, assigns, licensees, permittees, or any person who may come into possession or occupancy of the Property or any part thereof in any manner whatsoever. 21.3 Joint Several Liability. If Lessee consists of more than one (1) person, the covenants, obligations and liabilities of Lessee pursuant to this Lease shall be the joint and several covenants, obligations and liabilities of such persons. 23 21.4 Captions. The section and paragraph captions used in this Lease are for the convenience of the Parties and shall not be considered in the construction or interpretation of any provision. 21.5 Gender. In this Lease, the masculine gender includes the feminine and neuter and the singular number includes the plural whenever the context so requires. 21.6 Governing Law and Venue. This Lease, and all matters relating to this Lease, shall be governed by the laws of the State of California in force at the time any need for interpretation of this Lease or any decision or holding concerning this Lease arises. Venue for any legal action between the parties shall be in Orange County, California or, if appropriate, the nearest federal district court having jurisdiction over the Property. 21.7 Time of Essence. Time is expressly declared to be of the essence in this Lease. 21.8 Memorandum of Lease. Pursuant to California Government Code Section 37393 the Parties shall execute, acknowledge and Lessor may record at any time following the date hereof, a memorandum of this Lease, in the same form as that attached hereto as Exhibit "E" and incorporated herein by reference. [SIGNATURES ON NEXT PAGE] 24 IN WITNESS WHEREOF, the Parties have caused this Lease to be executed on the dates written below. APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Date: Z /7/13 By: - YZV Aaron Harp City Attorney ATTEST: AA � 1-3Date: Q� c By: ' Leilani I. Brown City Clerk L CITY OF NEWPORT BEACH, A California municipal corporation Date: By: C� David City Manager LESSEE Date: By: S Sally Fletcher Trustee, The Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust Attachments: Exhibit "A" - Depiction of Beacon Bay Exhibit "B" - Legal Description of Property Exhibit "C" - Option Fee Percentages Exhibit "D" - CC&Rs Exhibit "E" - Memorandum of Lease [END OF SIGNATURES] 25 CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA } } S.S. COUNTY OF ORANGE } On a - t - A c i3 before me, L. g. wq 1 in a Notary Public in and for said state, personally appeared S4 1)y ke. who proved to me on the basis of satisfactory evidence to be the person(.&) whose name(s) is/axe subscribed to the within instrument and acknowledged to me that4e/she/t#ey executed the same in-4is/herNwir authorized capacity(4N), and that by his/her/the�r signature(s) on the instrument the person(s.), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY of PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature C IK -W a-' . WALIN COMM. # I 12353 N s NO Public - CalifoadA 9 ORANGE COUNTY My Comm. Exp August 23, This area for official notarial seal. EXHIBIT "A" DEPICTION OF BEACON BAY See Attached 26 s�� 3 z o ao no -le-1 rt [Z! �P "0e y L0, 9 199 <'s9 11-99 S_9 ZL8 _ 908 008 t -l' 09L N bSL 8bL y= 9£L OEL bZL V M c - n Oa HJ13N O N Z 8LL oo rn � h � c°Do m v '� m ZLL ON IMVA N N N N� N N� _N N 9pL N rc, OOL 3AOJ 333H 099 s o � b99 z s N N N M M M C') MM 869 m Ob 83NOOHJS _n a M M Zb9 = Cl) Cl) M V (p 9e9 Ion 3AOJ 113113HS / N bZ9 N N 91,9Q V / bZ9 N 91,9Q LO M c - n Oa HJ13N O N Z N n 9 oo rn H h � a w m O 3AOJ 3d V:) / N LO n N O N N 1 ^fin pu'' Lc'e) Z 0 sir <'O S\ I' 139 137 135 129 125 121 y:Vat: : LEGAL DESCRIPTION OF THE PROPERTY That certain real property located in the City of Newport Beach, County of Orange, California, described as follows: The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 as all are shown on said map. RIM EXHIBIT "C" OPTION FEE PERCENTAGES LENGTH OF EXTENSION % OF FAIR MARKET VALUE OF (YEARS) PROPERTY PER YEAR OF EXTENSION 1 - 5 0.10% 6-10 0.15% 11-50 0.25% EXHIBIT "D" CC&Rs See Attached RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of Newport Beach 3300 Newport Boulevard P. O. Box 1768 Newport Beach, CA 92658-8915 D-2246 Tom Daly, Clerk -Recorder NO FEE *$ R 0 0 0 5 0 5 6 0 8 9$ 201200046439010:26 am 08/14112 210 403 A17 36 0.00 0.00 0.00 0.00 105.00 0.00 0.00 0.00 THIS SPACE FOR RECORDER'S USE ONLY. Exempt Recording Request per Government Code 27383 AMENDED AND RESTATED DECLARATION FOR BEACON BAY COMMUNITY ASSOCIATION, A PLANNED DEVELOPMENT TABLE OF CONTENTS Page ARTICLEI DEFINITIONS............................................................................................................2 Section 1.01 "Architectural Committee"..........................................................................2 Section1.02 "Articles"..................................................................................................2 Section 1.03 "Assessments.".............................................................................................2 Section1.04 "Association"...............................................................................................3 Section1.05 "Board"........................................................................................................3 Section 1.06 "Bylaws"..................................................................................................... .3 Section 1.07 "City„...........................................................................................I.....I....... .3 Section1.08 "Common Area"..........................................................................................3 Section 1.09 "Common Expenses"...................................................................................3 Section 1.10 "Covered Property ........................................................................................ 4 Section1.11 "Declarant"..................................................................................................4 Section1.12 "Declaration"...............................................................................................4 Section1.13 "Development"............................................................................................4 Section 1,14 "Exhibit".................................................................. . Section 1.15 "Governing Instruments".............................................................................4 Section1.16 "Lessee".................................................................................. ....................4 Section1.17 "Manager"....................................................................................................4 Section1.18 "Member"....................................................................................................4 Section1.19 "Mortgage"..................................................................................................4 Section1.20 "Mortgagee".................................................................................................4 Section1.21 "Mortgagor".................................................................................................5 Section1.22 "Person"......................................................................................................5 Section1.23 "Residence"..................................................................................................5 Section 1.24 "Residential Lot".........................................................................................5 Section 1.25 "Rules and Regulations"..............................................................................5 Section 1.26 "Setback" .................................................... Section 1.27 "Subdivision Map,'.......................................................................................5 AR'T'ICLE II THE PROPERTY.......................................................................................................5 Section 2.01 Property Subject to Declaration..................................................................5 Section 2.02 Use and Enjoyment of Common Area.........................................................5 Section 2.03 Maintenance by Members............................................................................7 Section 2.04 Prohibition Against Severance of Elements of Residence ...........................7 ARTICLE III THE ASSOCIATION...............................................................................................7 Section 3.01 Organization of the Association...................................................................7 Section3.02 Membership.................................................................................................8 Section3.03 Transfer........................................................................................................8 Section 3.04 Classes of Membership................................................................................8 Section3.05 Voting Rights...............................................................................................8 Section 3.06 Approval of Members..................................................................................9 Section 3.07 Membership Meetings.................................................................................9 3/1/12 10120.4 #114293 vi 1 Section 3.08 General Powers and Authority.....................................................................9 Section 3.09 Duties of the Association...........................................................................10 Section 3.10 Board of Directors......................................................................................13 Section 3.11 Inspection of Books and Records..............................................................13 Section 3.12 Resolution of Disputes...............................................................................13 ARTICLE IV ASSESSMENTS AND COLLECTION PROCEDURES......................................14 Section4.01 Covenant to Pay.........................................................................................14 Section 4.02 Purpose of Assessments.............................................................................14 Section 4,03 Assessment Period.....................................................................................14 Section 4.04 Regular Assessments.................................................................................14 Section 4.05 Special Assessments..................................................................................14 Section 4.06 Limitations on Assessments.......................................................................14 Section4.07 Late Charges..............................................................................................15 Section 4.08 Enforcement of Assessments and Late Charges........................................16 Section 4.09 Statement Regarding Assessments............................................................17 Section4.10 Reserves.....................................................................................................17 ARTICLE V USE RESTRICTIONS AND COVENANTS..........................................................17 Section 5.01 General Restrictions on Use.......................................................................17 Section 5.02 Damage Liability.......................................................................................18 Section 5.03 Equitable Servitudes..................................................................................18 ARTICLE VI ARCHITECTURAL AND DESIGN CONTROL..................................................19 Section 6.01 Architectural and Design Approval...........................................................19 Section 6.02 Architectural Committee............................................................................19 Section 6.03 Procedural Rules and Fees.........................................................................19 Section 6.04 The Board of Directors..............................................................................19 Section 6.05 No Power to Modify Setback Requirements.............................................19 Section 6.06 Nonliability for Approval of Plans............................................................19 ARTICLE VII INSURANCE ........................................................................................................20 Section 7.01 Fire and Casualty Insurance.......................................................................20 Section 7.02 General Liability and Individual Liability Insurance.................................20 Section 7.03 Other Association Insurance......................................................................20 Section 7.04 Trustee for Policies....................................................................................20 Section 7.05 Individual Insurance...................................................................................20 Section 7.06 Insurance Premiums...................................................................................21 Section 7.07 Additional Provisions.................................................................................21 ARTICLE VIII DAMAGE OR DESTRUCTION.........................................................................21 Section 8.01 Duty to Restore and Replace......................................................................21 Section 8.02 Proceeds Justifying Automatic Restoration and Repair .............................21 Section 8.03 Approval by Members of Special Assessment for Certain Restorations and Repairs............................................................................21 Section 8.04 Ordering Reconstruction or Repair............................................................22 Section 8.05 Election Not to Rebuild.............................................................................22 Section 8.06 Minor Restoration and Repair Work..........................................................22 3/1/12 10120.4 0114293 Y ii ARTICLE IX EMINENT DOMAIN.............................................................................................23 Section 9.01 Sale to Condemning Authority..................................................................23 Section 9.02 Distribution of Sales Proceeds...................................................................23 Section 9.03 Taking and Condemnation Awards...........................................................23 ARTICLE X RIGHTS OF MORTGAGEES.................................................................................23 Section10.01 Warranty....................................................................................................23 Section10.02 Subordination.............................................................................................23 Section 10.03 Notice of Default........................................................................................24 Section 10.04 Unpaid Assessments..................................................................................24 Section 10.05 Mortgagee Approval of Material Amendments........................................24 Section 10.06 Mortgagee Approval of Other Actions......................................................24 Section10.07 Liens........................................................................................................25 Section10.08 Priority.......................................................................................................25 Section10.09 Reserve Fund.............................................................................................25 Section10.10 Management...............................................................................................25 Section 10.11 Right to Inspect Books and Records..........................................................25 Section 10.12 Right to Furnish Mortgage Information.....................................................25 ARTICLE XI AMENDMENTS....................................................... Section 11.01 Amendments by Members ............................ Section H. Amendments Pursuant to Court Order.......... ..25 ..25 ..26 ARTICLE XII GENERAL PROVISIONS....................................................................................26 Section12.01 Term.......................................................................................................26 Section12.02 Enforcement...............................................................................................26 Section 12.03 Cumulative Remedies................................................................................27 Section 12.04 Nonwaiver of Remedies.............................................................................27 Section 12.05 Attorneys' Fees..........................................................................................27 Section12.06 Severability................................................................................................27 Section12.07 Binding.......................................................................................................27 Section 12.08 Interpretation..............................................................................................27 Section 12.09 Effect of Declaration ................... ............................................................... 27 Section 12.10 Limitation of Liability................................................................................27 Section 12.11 Nonliability of Officials.............................................................................27 Section 12.12 Fair Housing..............................................................................................27 Section12.13 Subleases....................................................................................................28 Section13.14 Notices.......................................................................................................28 Section 12.15 Numbers and Headings..............................................................................28 EXHIBITS Exhibit A Legal Description Exhibit B Common Area Legal Description 3/1/12 10120.4 0114293 v 111 AMENDED AND RESTATED DECLARATION FOR BEACON BAY COMMUNITY ASSOCIATION, A PLANNED DEVELOPMENT THIS DECLARATION is made as of February 28, 2012, by the City of Newport Beach ("Declarant"), a chartered municipal corporation, having been approved and adopted by Beacon Bay Community Association, a California non-profit mutual benefit corporation. RECITALS A. This Declaration amends and restates the Declaration of Covenants, Conditions and Restrictions imposed upon the Covered Property, as hereinafter defined, on or about September 24, 1979 and has been approved by the Members of Beacon Bay Community Association, a California non-profit corporation (the "Association"), in accordance with the provisions of that Declaration. B. The City of Newport Beach, referred to herein as Declarant, by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes of 1978 (the "Beacon Bay Bill"), holds the right, title and interest to certain tidelands and uplands commonly known as Beacon Bay, more particularly described in Exhibit "A" attached to and made part of this Declaration. C. Beacon Bay has been divided into individual residential lots, commonly known as 1 through and including 69 Beacon Bay and 101, 107 and 115 Harbor Island Drive, Newport Beach (the "Residential Lots"). Within Beacon Bay are certain streets, walkways, beaches, common landscaped areas and tennis courts, identified as Lots A through J and Lot 62 (the "Common Area"). Both the Residential Lots and the Common Area are shown on Exhibit "B," attached to and made part of this Declaration. D. Declarant has leased the Residential Lots to the respective members of the Association and the Common Area to the Association until July 1, 2044. The leasehold interests in the Residential Lots and in the Common Area are together referred to herein as the Covered Property. E. This Declaration is imposed by Declarant, with the approval of the Association, upon the Covered Property, a planned development subject to the provisions of the Davis - Stirling Common Interest Development Act contained in Division II, pt. 4, Title 6 of the California Civil Code, F. In furtherance of this intent, Declarant hereby declares that all of the Covered Property shall be held, conveyed, hypothecated, encumbered, leased, rented, used, occupied, and improved subject to the declarations, limitations, covenants, conditions, restrictions, reservations, rights, and easements set forth in this Declaration, as this Declaration may be amended from time to time, all of which are declared and agreed to be in furtherance of a general plan established for the purpose of enhancing and perfecting the value, desirability, and attractiveness of the Covered Property. All covenants and restrictions set forth in this Declaration shall constitute covenants running with the land and enforceable equitable servitudes upon the Covered Property, and shall be binding on and for the benefit of all of the Covered Property and all parties having or 3/1/12 10120.4 61114293 vl acquiring any right, title, or interest in all or any part of the Covered Property, including the heirs, executors, administrators, and assigns of these parties and all subsequent Lessees of all or any part of any Residential Lot within the Development. G. It is desirable for the efficient management of the Covered Property and the preservation of the value, desirability and attractiveness of the Covered Property to continue to delegate and assign the powers of managing the Covered Property, maintaining and administering the Common Area and administering and enforcing these covenants, conditions and restrictions and collecting and disbursing funds pursuant to the assessment and charges hereinafter created and referred to and to perform such other acts as shall generally benefit the Covered Property to the Beacon Bay Community Association, a California nonprofit corporation. H. The Association and the respective owners of the Residential Lots have held title to their leasehold interests in the Covered Property, and shall continue to hold title to their leasehold interests in the Covered Property subject to the protective covenants, conditions and restrictions hereafter set forth. NOTICE OF AIRPORT IN VICINITY This property is presently located in the vicinity of an airport, within what is known as an airport influence area. For that reason, the property may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example, noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the property before you complete your purchase and determine whether they are acceptable to you. ARTICLE I DEFINITIONS Section 1.01 "Architectural Committee" means -the committee or committees provided for in the Article entitled "Architectural Control". Section 1.02 "Articles" means the Articles of Incorporation of Beacon Bay Community Association and any amendments to the Articles that are filed in the Office of the Secretary of State of the State of California. Section 1.03 "Assessments." The following meanings shall be given to the Assessments hereinafter defined; "Regular Assessment" means the amount which is to be paid by each Member of the Association for Common Expenses. "Special Assessment" means a charge against a particular Member and his Residential Lot, directly attributable to the Member, to reimburse the Association for costs incurred in bringing the Member and his Residential Lot into compliance with the provisions of this Declaration, the Articles, Bylaws or Association Rules, or any other charge designated as a 3/1(12 10120.4 #114293 v1 2 Special Assessment, together with attorneys' fees and other charges payable, plus interest thereon as provided for in this Declaration. Section 1.04 "Association" means Beacon Bay Community Association, a Califomia nonprofit mutual benefit corporation. Section 1.05 "Board" means the Board of Directors of the Association. Section 1.06 `Bylaws" means the Bylaws of the Association and any amendments to the Bylaws that are or shall be adopted by the Board and approved by the Members. Section 1.07 "City" means the City of Newport Beach, a municipal corporation of the State of California. Section 1.08 "Common Area" means those portions of the Development leased by the Association for the common use and enjoyment of the Members. This Common Area includes all streets, beaches, walkways, tennis courts, docks, piers, storage areas and common landscaped areas within the Covered Property and, includes without limitation, Lots A through J, inclusive, as shown on the Subdivision Map. Section 1.09 "Common Expenses" means the actual and estimated costs of. (a) maintenance, management, operation, repair and replacement of the Common Area, and all other areas on the Covered Property which are maintained by the Association; (b) maintenance by the Association of areas within the public right-of-way of public streets in the vicinity of the Covered Property as provided in this Declaration or pursuant to agreements with the City; (c) costs of management and administration of the Association, including, but not limited to compensation paid by the Association to managers, accountants, attorneys and employees; (d) the costs of utilities, gardening and other services which generally benefit and enhance the value and desirability of the Residential Lot; (e) the costs of fire, casualty, liability, workmen's compensation and other insurance covering the Common Area; (f) the costs of any other insurance obtained by the Association; (g) reasonable reserves deemed appropriate by the Board; (h) the costs of bonding of the members of the Board, and any professional managing agent or any other person handling the funds of the Association; (i) taxes paid by the Association; 3/1/12 Io120.4 # 114293 v I 3 0) amounts paid by the Association for discharge of any lien or encumbrance levied against the Common Area or portions thereof, (k) costs incurred by the Architectural Committee or other committee established by the Board; and (1) other expenses incurred by the Association for any reason whatsoever in connection with the Common Area, or the costs of any other item or items designated by this Declaration, the Articles, Bylaws or Association Rules, or in furtherance of the purposes of the Association or in discharge of any duties or powers of the Association. Section 1.10 "Covered Property" means the leasehold interests in the Residential Lots and in the Common Area, as such terms are defined in the Recitals. Section 1.11 "Declarant" means the City of Newport Beach, the fee Lessor of the Covered Property, its successors and assigns. Section 1.12 "Declaration" means this Declaration and any amendments thereto. Section 1.1 3 "Development" means the Beacon Bay subdivision. Section 1.14 "Exhibit" means those documents so designated herein and attached hereto and each of such Exhibits is by this reference incorporated in this Declaration. Section 1.1 > "Governing Instruments" means this Declaration, the Articles and Bylaws of the Association, and any Rules and Regulations of the Association. Section 1.16 "Lessee" means the holder or holders of record of the leasehold interest in a Residential Lot created by and arising out of a lease with Declarant. "Lessee" shall not include any persons or entities who hold an interest in a Residential Lot merely as security for performance of an obligation. Section 1.17 "Manager" means any person or entity appointed by the Board to manage the Development. Section 1.18 "Member" means every person or entity entitled to membership in the Association as provided in this Declaration. Section 1.19 "Mortgage" means a mortgage or deed of trust encumbering a Residential Lot within the Development. "First Mortgage" means a mortgage that has priority over all other mortgages encumbering the same Residential Lot within the Development. Section 1.20 "Mortgagee" means a Person to whom a Mortgage is made and includes the beneficiary of a deed of trust and any guarantor or insurer of a mortgage. "Institutional Mortgagee" means a mortgagee that is a financial intermediary or depository, such as a bank, savings and loan, or mortgage company, that is chartered under federal or state law and that lends money on the security of real property or invests in such loans, or any insurance company or governmental agency or instrumentality, including the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), and the Government 3/1/12 10120.4 H114293 vi 4 National Mortgage Association (GNMA). "First Mortgagee" means a Mortgagee that has priority over all other mortgages or holders of mortgages encumbering the same Residential Lot or other portion of the Development. The term "Beneficiary" shall be synonymous with the term "Mortgagee." Section 1.21 "Mortgagor" means a Person who mortgages his, her, or its Residential Lot to another (i.e., the maker of a mortgage), and shall include the trustor of a deed of trust. The term "Trustor" shall be synonymous with the term "Mortgagor." Section 1.22 "Person" means a natural individual, a corporation, or any other entity with the legal right to hold title to real property. Section 1.23 "Residence" means the residential dwelling unit Including garages, structures and other improvements on a Residential Lot. Section 1.24 "Residential Lot" means a numbered lot shown on the Subdivision Map not including any Common Area, but including the residential dwelling unit together with garages, structures and other improvements on the same lot or parcel. Beacon Bay has been divided into individual residential lots, commonly known as I through and including 69 Beacon Bay and 101, 107 and 115 Harbor Island Drive, Newport Beach (the "Residential Lots"). Section 1.25 "Rules and Regulations" means any Rules and Regulations for Beacon Bay Community Association regulating the use of the Common Area and adopted by the Association pursuant to Section 3.08(b) of this Declaration. Section 1.26 "Setback" means those internal distances from the property line of each Residential Lot as shown on Exhibit I1. Section 1.27 "Subdivision Map" means the Record of Survey Map of Beacon Bay Subdivision recorded in Book 9, Pages 42 and 43, Records of Survey, on file in the Office of the County Recorder, Orange County, California. ARTICLE II THE PROPERTY Section 2.01 Property Subject to Declaration. All of the Covered Property shall be subject to this Declaration. Section 2.02 Use and Enjoyment of Common Area. The following provisions govern the use and enjoyment of the Common Area: (a) The Common Area shall be used solely and exclusively for vehicular ingress and egress and parking, boat storage and launching, pedestrian walkway purposes, recreational uses for Beacon Bay residents, and the property designated as Lot "62" shall be used exclusively for tennis court and park purposes and for construction and maintenance of an office and meeting facilities for Lessee in connection with the maintenance and operation of the homeowners' association in Beacon Bay. The property designated as beach property hereunder shall be used exclusively for beach purposes. 3/1/12 10120.4 4 114293 vl N Subject to the provisions of this Declaration and the provisions of the Common Area Lease between the Declarant and the Association (the "Common Area Lease"), there is an easement for ingress, egress, and support through the Common Area appurtenant to each Residential Lot. These easements shall pass with title to the Residential Lot. (c) The Members' easements over, and rights of use and enjoyment of, the Common Area shall be subject to the restrictions set forth in the Common Area Lease and in the Governing Instruments, including the following: (1) The right of the Association to adopt and enforce Rules and Regulations for the use of the Common Area. (2) The right of the Association to reasonably limit the number of guests and tenants using the Common Area while allowing for open public access to the tidelands around Beacon Bay. (3) The right of the Association to assign or otherwise control the use of any unassigned parking spaces within the Common Area; provided, however, the Association shall position any signs that limit parking and beach access to Members and their guests in a manner that does not discourage visitor and public use of the tidelands around Beacon Bay (4) The right of the Association to suspend the right of any Member, and the Persons deriving rights from any Member, to use and enjoy the Common Area for any period during which the Member is delinquent in the payment of any assessment. (5) The right of the Association to cause the construction of additional improvements in the Common Area, or to cause the alteration or removal of existing improvements in the Common Area. (6) The right of the Association to join with the Declarant in the grant or conveyance of easements, licenses, or rights-of-way in, on, or over the Common Area. (7) The rights of Declarant as described in this Declaration and in the Common Area Lease. (8) The right of the Association to reasonably restrict access to maintenance facilities or areas, landscaped areas, and similar areas of the Development. (9) The right of the Board to approve any proposed alteration or modification to the Common Area or any Residence. (d) The Association may join with the Declarant in granting to third parties easements in, on, and over the Common Area for the purpose of constructing, installing, or maintaining necessary utilities and services, and each Member expressly consents to these easements. However, no such easement can be granted if it would interfere with Member's use, occupancy, or enjoyment of his or her Residence. (e) A Member who has sold his or her Residence to a contract purchaser or who has leased the Residence shall be entitled to delegate his or her rights to use and enjoy the 3/1/12 10120.4 0114293 v1 6 Common Area to any contract purchaser or subtenant who resides in the Member's Residence, subject to reasonable regulation by the Board. If the Member makes such a delegation of rights, the Member and the Member's family, guests, employees, and invitees shall not be entitled to use and enjoy the Common Area for so long as the delegation remains effective. (f) Each Member shall be liable to the Association for any damage to the Common Area or to Association -owned property, to the extent that the damage is not covered by insurance, if the damage is sustained because of the negligence, willful misconduct, or unauthorized or improper installment or maintenance of any improvement by the.Member or the Member's family, guests, sub -tenants, contract purchasers or invitees. In the case of joint ownership of a Residence, the liability of the co-owners shall be joint and several, unless the co- owners and the Association have agreed in writing to an alternative allocation of liability. (g) Nothing in this Declaration shall limit Declarant's right to use any properties held in trust by Declarant (including tidelands) for the purposes of establishing, maintaining, and operating mitigation bank locations for Eelgrass (zoostera marina) or projects that are intended to enhance the water quality or ecosystem of Newport Bay without infringing on or limiting Beacon Bay residents' ability to operate and maintain legal and permitted residential piers. (h) The Association may not encumber the Common Area except to finance improvements thereon. Section 2.03 Maintenance by Members. Except as the Association shall be obligated to maintain and repair as provided in this Declaration, every Member shall: (a) maintain all portions of the exterior of his Residence, including without limitation, the walls, fences and roof of such Residence in good condition and repair; and (b) install and thereafter maintain in attractive condition yard landscaping of his Residential Lot in accordance with the provisions of this Article. Section 2.04 Prohibition Against Severance of Elements of Residence. Any conveyance, judicial sale, or other voluntary or involuntary transfer of the Member's entire estate shall also include the Member's Membership interest in the Association, as provided in Section 3.02 of this Declaration. Any transfer that attempts to sever those component interests shall be void. ARTICLE III THE ASSOCIATION Section 3.01 Organization of the Association. The Association is incorporated under the name of Beacon Bay Community Association, as a nonprofit corporation organized under the California Nonprofit Mutual Benefit Corporation Law. The Association is charged with the duties and invested with the powers prescribed by law and set forth in this Declaration, the Articles of Incorporation, the Bylaws and the Common Area Lease. 3/1/12 10120.4 11114293 vl 7 Section 3.02 Membershin. Every Lessee shall be a Member but there shall be only one Membership and one Voting Member per Residence. The term and provisions set forth in this Declaration, which are binding upon all Members are not exclusive, as Members shall, in addition, be subject to the terms and provisions of the Articles, Bylaws and Association Rules to the extent the provisions thereof are not in conflict with this Declaration. Membership shall be appurtenant to and may not be separated from the interest of such Member in any Residential Lot. Ownership of a leasehold interest in a Residential Lot shall be the sole qualification for membership; provided, however, a Member's voting rights may be regulated or suspended as provided in this Declaration, the Bylaws or the Association Rules. Section 3.03 Transfer, The Membership held by any Member shall not be transferred, pledged or alienated in any way, except that such Membership shall automatically be transferred to the transferee of the interest required for Membership. Any attempt to make a prohibited transfer is void and will not be reflected upon the books and records of the Association. The Association shall have the right to record the transfer upon the books of the Association without any further action or consent by the transferring Member. Section 3.04 Classes of Membership. The Association shall have one (1) class of voting membership. Section 3.05 Voting Rights. All voting rights of the Members shall be subject to the following restrictions, limitations, and requirements: (a) Except as provided in this Article, on each matter submitted to a vote of the Members, one vote may be cast for each Residential Lot owned. The Member entitled to cast the vote with respect to a Residential Lot is referred to herein as the Voting Member. (b) Fractional votes shall not be allowed. When there is more than one record Lessee of a Residential Lot ("co -Lessees), all of the co -Lessees shall be Members, but only one of them shall be entitled to cast the single vote attributable to the Residential Lot. Co -Lessees should designate in writing one of their number to vote. If no such designation is made or if it is revoked, the co -Lessees shall decide among themselves, by majority vote, how the vote associated with that Residential Lot is to be cast and which of them is the Voting Member as to that vote. Unless the Board receives a written objection in advance from a co -lessee, it shall be conclusively presumed that the voting co -Lessee is acting with the consent of his or her co - Lessees and is the Voting Member of that Residential Lot. No vote shall be cast for a Residential Lot on a particular matter if a majority of the co -Lessees present in person or by proxy cannot agree on a vote. (c) Except as provided in Section 3.05 of the Bylaws governing the removal of directors, any provision of this Declaration, the Articles, or the Bylaws that requires the approval of a specified percentage of the voting power of the Association shall require the vote or written consent of the Voting Members representing the specified percentage of the total voting power of the Association. (d) The Board shall fix, in advance, a record date or dates for the purpose of determining the Members entitled to notice of and to vote at any meeting of Members. The record date for notice of a meeting shall not be more than 90 or less than 10 days before the date 311/12 10120.4 M 114293 v 1 8 of the meeting, The record date for voting shall not be more than 60 days before the date of the meeting or before the date on which the first written ballot is mailed or solicited. The Board may also fix, in advance, a record date for the purpose of determining the Members entitled to exercise any rights in connection with any other action. Any such date shall not be more than 60 days prior to the action. (e) Every Member entitled to vote at any election of the Directors in which more than two Directors are to be elected may cumulate the Member's votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes to which the Member is entitled, or distribute the Member's votes on the same principle among as many candidates as the Member thinks fit. No Member shall be entitled to cumulate votes for a candidate or candidates unless more than two Directors are to be elected. (f) All voting rights shall be subject to the restrictions and limitations provided herein and in the Articles, Bylaws and Association Rules. Section 3.06 Approval of Members. Unless elsewhere otherwise specifically provided in this Declaration or the Bylaws, any provision of this Declaration or the Bylaws which requires the vote or written assent of the voting power of the Association shall be deemed satisfied by the following: (a) The vote in person or by proxy of the specified percentage of the Voting Members present at a meeting duly called and noticed pursuant to the provisions of the Bylaws dealing with annual or special meetings of the Members at which a quorum is present as determined in accordance with Section 2.03 of the Bylaws. (b) Written consents signed by the specified percentage of Voting Members as provided in the Bylaws. Section 3.07 Membership Meetings. Article II of the Bylaws governing meetings of the Members is hereby incorporated by reference. Section 3.03 General Powers and Authority. The Association shall have all the powers of a nonprofit mutual benefit corporation organized under the California Nonprofit Mutual Benefit Corporation Law, subject to any limitations set forth in this Declaration or in the Articles and Bylaws of the Association. It may perform all acts that may be necessary for or incidental to the performance of the obligations and duties imposed upon it by this Declaration or the other Governing Instruments. Its powers shall include, but are not limited to, the following: (a) The Association shall have the power to establish, fix, levy, collect, and enforce, and shall enforce, the payment of assessments against the Members in accordance with the procedures set out in Article IV of this Declaration, (b) The Association shall have the power to adopt reasonable Rules and Regulations governing the use of the Common Area and its facilities, and of any other Association property. These Rules and Regulations may include, but are not limited to: reasonable restrictions on use by the Members and their family, guests, employees, tenants, and invitees; rules of conduct; and the setting of reasonable fees for the use of recreational facilities. A copy of the current Rules and Regulations, if any, shall be given to each Member and shall be 3/1/12 10120.4 #114293 v 1 9 posted at conspicuous places in the Common Area. If any provision of the Rules and Regulations conflicts with any provision of this Declaration, the Articles, or the Bylaws, the Declaration, Articles, or Bylaws shall control to the extent of the inconsistency. (c) The Association shall have the right to institute, defend, settle, or intervene in litigation, arbitration, mediation, or administrative proceedings in its own name as the real party in interest and without joining with it the Members, in matters pertaining to the following; (1) Enforcement of this Declaration, the Articles, Bylaws, and Rules and Regulations. (2) Damage to the Common Area. (d) In addition to the general power of enforcement described above, the Association may discipline its Members for violation of any of the provisions of the Governing Instruments or Rules and Regulations by suspending the violator's voting rights and privileges for use of the Common Area, or by imposing monetary penalties, subject to the following limitations: (1) The accused Member shall be given notice and an opportunity to be heard with regard to the alleged violation in accordance with the provisions of Corporations Code Section 7341 and Civil Code Section 1363(b). (2) Any suspension of a Member's association privileges shall not exceed thirty (30) days for each violation. (3) If the Association imposes a monetary penalty, the Board shall distribute to each Member, by personal delivery or first-class mail, a schedule of the monetary penalties that may be assessed for those violations. (4) Except as provided in Article IV of this Declaration, relating to foreclosure for failure to pay assessments, or as a result of the judgment of a court or a decision arising out of arbitration, the Association shall in no way abridge the right of any Member to the full use and enjoyment of his or her Residence. (e) The Association, acting through the Board, shall have the power to delegate its authority, duties, and responsibilities to its officers, employees, committees, or agents, including a professional management agent. The term of any agreement with a manager for the furnishing of maintenance, repair, and related services shall not exceed one year, renewable by agreement of the parties for successive one-year periods. Such an agreement shall be terminable by either party (1) for cause on 30 days' written notice, and (2) without cause or the payment of a termination fee on 90 days' written notice, Section 3.09 Duties of the Association. In addition to the duties delegated to the Association or its agents and employees elsewhere in these Governing Instruments, the Association shall be responsible for the following: 3/1/12 10120.4 #114293 v1 10 (a) The Association, acting through the Board, shall operate, maintain, repair, and replace the Common Area, its improvements including all landscaping within the Common Area, or contract for the performance of that work, subject to the provisions of Article VIII of this Declaration relating to destruction of improvements, Article IX of this Declaration pertaining to eminent domain, and Section 2.02(f) of this Declaration relating to damage caused by Members. The foregoing areas and improvements shall be kept in a clean, sanitary, and attractive condition. The Association shall also have the exclusive right and duty to acquire and maintain any furnishings and equipment for the Common Area that it determines are necessary and proper. As a general rule, maintenance costs shall be included in the regular assessments. (b) The Association shall use the maintenance fund described in Section 4.02 of this Declaration to, among other things, acquire and pay for the following: (1) Water, sewer, trash, electrical, gas, and other necessary utility service for the Common Area; (2) The insurance policies described in Article VII of this Declaration; (3) The services of any personnel that the Board determines are necessary or proper for the operation of the Common Area; and (4) Legal and accounting services necessary or proper in the operation of the Common Area or the enforcement of this Declaration. (c) The Association shall prepare a pro forma operating budget for each fiscal year, and shall distribute a copy of the budget to each Member not less than 45 and not more than 60 days before the beginning of the fiscal year. As an alternative to the foregoing distribution of the budget, the Association may elect to do all of the following in the manner required by statute: distribute a summary of the budget to each Member, make the budget available for inspection at a designated location, and provide copies of the budget to Members on request and at the expense of the Association. The budget shall contain at least the following: (1) The estimated revenue and expenses on an accrual basis; (2) A summary (printed in bold type) of the Association's reserves that is based on the most recent review or study conducted pursuant to Civil Code Section 1365.5. This summary shall include the following: (i) the current estimated replacement cost, estimated remaining life, and estimated useful life of each major component that the Association is obligated to maintain (hereafter referred to as the "major components"); (ii) the current estimate; as of the end of the fiscal year for which the study is prepared, of the amount of cash reserves necessary to repair, replace, restore, or maintain the major components; (iii) the current amount, as of the end of the fiscal year for which the study is prepared, of accumulated cash reserves actually set aside to repair, replace, restore, or maintain the major components; and (iv) the percentage that the amount described in (iii), above, is of the amount determined for purposes of (ii), above (that is, the percentage obtained by dividing the amount described in (iii), above, by the amount described in (ii), above). 3/1/12 10120.4 # 114293 v l 11 (3) A statement as to whether the Board has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserves for such work. (4) A general statement addressing the procedures used for the calculation and establishment of reserves to defray the future repair, replacement, or additions to the major components. (d) Within 120 days after the close of each fiscal year, the Association shall prepare and distribute to the Members an annual report consisting of the following: (1) A balance sheet as of the end of the fiscal year. (2) An operating (income) statement for the fiscal year. (3) A statement of changes in financial position for the fiscal year. (4) For any fiscal year in which the gross income to the Association exceeds $75,000, a copy of the review of the annual report prepared in accordance with generally accepted accounting principles by a licensee of the California State Board of Accountancy. If this report is not prepared by an independent accountant, it shall be accompanied by the certificate of an authorized officer of the Association that the statement was prepared without independent audit or review from the books and records of the Association. (e) Within 60 days before the beginning of each fiscal year, the Association shall prepare and distribute to the Members a statement describing the Association's policies and practices in enforcing lien rights or other legal remedies for default in payment of assessments against Members. (f) Each year, the Association must provide the Owners with a summary of the provisions of Civil Code Sections 1369.510 through 1369.590. These statutes require that alternative dispute resolution be pursued before a civil action may be filed in connection with certain disputes related to enforcement of the governing documents, the Davis -Stirling Common Interest Development Act (Civ. Code § 1350 et seq.), or the Nonprofit Mutual Benefit Corporation Law (Corp. Code § 7110 et seq.). The required summary must include a specific reference to Civil Code Sections 1369.510 through 1369.590, and the statutory language set forth in Civil Code Section 1369.590(a). This summary must be provided either (1) at the time the pro forma operating budget described in Section 3.09(c) of this Declaration is distributed, or (2) in the manner specified in Corporations Cade Section 5016. (g) The Association shall provide any Member with the following documents within 10 days of the mailing or delivery of a written request therefor: (1) A copy of the Governing Instruments. (2) A copy of the most recent financial statement distributed pursuant to Section 3.09(d) of this Declaration. 311112 10120.4 k 114293 vl 12 (3) A written statement from an authorized representative of the Association specifying (i) the amount of any assessments levied on the Member's Residence that are unpaid on the date of the statement; and (ii) the amount of late charges, interest, and costs of collection that; as of the date of the statement, are or may be made a lien on the Member's Residential Lot pursuant to Section 4.08 of this Declaration. The Association may charge the Member a reasonable fee to cover its cost to prepare and reproduce those requested items. (h) The Association shall pay all real and personal property taxes and assessments levied against it, its personal property and the Common Area, Section 3.10 Board of Directors. The affairs of the Association shall be managed and its rights, duties and obligations performed by an elected Board of Directors, as provided in Article III of the Bylaws, which is hereby incorporated by reference. Section 3.11 Inspection of Books and Records. Article XI of the Bylaws, governing the duty of the Association to maintain certain books and records and the rights of Members and Directors to obtain and inspect those books and records, is hereby incorporated by reference. Section 3.12 Resolution of Disputes. As required by Civil Code Section 1363.820(a), the Association shall offer a fair, reasonable, and expeditious procedure for resolving any dispute between the Association and a member involving their rights, duties, or liabilities under the Davis -Stirling Common Interest Development Act (Civil Code Section 1350 et seq.), the Nonprofit Mutual Benefit Corporation Law (Corporations Code Section 7110 et seq.), or under the Association's governing documents. This dispute resolution procedure is supplementary to the alternative dispute resolution procedure prescribed by Civil Code Section 1369.510 et seq. as a prerequisite to commencing civil action. The dispute resolution procedure shall consist of the following: (a) Either party may initiate the procedure by making a written request to the other party to meet and confer in an effort to resolve the dispute. If the request is by the Association, the member may refuse to participate. If the request is by a member, however, the Association may not refuse to participate. (b) Within 5 days of the written request, the Board of Directors shall designate a member of the Board to meet and confer with the other party. (c) Within 10 days of the Board member's designation, the parties shall meet at a mutually convenient time and place, explain their positions to each other, and confer in good faith in an effort to resolve the dispute. (d) If the parties reach agreement on a resolution of the dispute, that resolution shall be memorialized in writing and signed by the parties with the Board designee signing on behalf of the Association. (e) An agreement reached by the parties is binding on them and may be judicially enforced provided the agreement is consistent with the authority granted by the Board of Directors to its designee, and further provided the agreement is not in conflict with law or the Association's governing documents. 3/1112 10120.4 #114293 v1 13 (f) A member of the Association may not be charged a fee to participate in the dispute resolution procedure. ARTICLE IV ASSESSMENTS AND COLLECTION PROCEDURES Section 4.01 Covenant to Pay. Each Member is deemed to covenant and agree to pay to the Association the regular and special assessments levied pursuant to the provisions of this Declaration. A regular or special assessment and any late charges, reasonable costs of collection, and interest, as assessed in accordance with the provisions of this Article, shall be a debt of the Member at the time the assessment or other sums are levied. The Member may not waive or otherwise escape liability for these assessments by nonuse of the Common Area or abandonment of the Member's Residence. Section 4.02 Purpose of Assessments. The assessments levied by the Association shall be used exclusively to defray Common Expenses and to discharge any other obligations of the Association under this Declaration. Subject to Section 4.10, all assessment payments shall be put into a maintenance fund to be used for the foregoing purposes. Section 4.03 Assessment Period. The fiscal year for the Association shall commence June I and end May 31, unless the Board decides otherwise. The regular assessment period shall commence on June 1 and terminate on May 31 of each year. Section 4.04 Regular Assessments, Within 60 days prior to the beginning of each fiscal Year of the Association, the Board shall estimate the net charges to be paid during that year, including a reasonable provision for contingencies and replacements, with adjustments made for any expected income and surplus from the prior year's fund. The estimated cash requirement shall be assessed and allocated in an equal amount for each Residential Lot. Each Member is obligated to pay assessments to the Board in equal monthly installments on or before the first day of each month unless the Board adopts an alternative method for payment. Section 4.05 Special Assessments. If the Board determines that the amount to be collected from regular assessments will be inadequate to defray the common expenses for the year due to the cost of any construction, unexpected repairs or replacements of capital improvements upon the Common Area, or any other reason, it shall make a special assessment for the additional amount needed. Special assessments shall be levied and collected in the same manner as regular assessments, except the method of payment shall be as determined by the Board. Section 4.06 Limitations on Assessments. The Board shall comply with the following requirements governing the imposition and amounts of assessments: (a) For any fiscal year, the Board may impose a regular assessment per Residential Lot that is as much as 20 percent greater than the regular assessment for the preceding fiscal year, provided (1) the Board has distributed the pro forma operating budget described in Section 3.09(c) for the current fiscal year or (2) the increase is approved by Voting 3/1112 10120A 9 114293 v 1 14 Members constituting a majority of the votes at a meeting or in an election of the Association conducted in accordance with Corporations Code Sections 7510-7527 and 7613 . (b) The Board may impose, for any fiscal year, a regular assessment per Residential Lot that is more than 20 percent greater than the regular assessment for the preceding fiscal year, or may levy special assessments that in the aggregate exceed 5 percent of the budgeted gross expenses of the Association for that fiscal year, provided the increase or levy is approved by Voting Members constituting a majority of the votes of the Association and casting a majority of the votes at a meeting or election of the Association conducted in accordance with Corporations Code Sections 7510-7527 and 7613 . (c) The Board may, without complying with the foregoing requirements, make an assessment increase that is necessary for an emergency situation. An emergency situation is an extraordinary expense that is: (1) Required by a court order. (2) Necessary to repair or maintain the Common Area or any part of it for which the Association is responsible when a threat to personal safety in the Development is discovered. (3) Necessary to repair or maintain the Common Area or any part of it for which the Association is responsible that could not have been reasonably foreseen by the Board in preparing and distributing the pro forma operating budget pursuant to Section 3.09(c). Before the Board may impose or collect an assessment in the type of emergency situation described in (3) above, it shall pass a resolution containing written findings as to the necessity of the extraordinary expense and why the expense was not or could not have been reasonably foreseen in the budgeting process, and shall distribute the resolution to the Members with the notice of assessment. (d) The Board shall notify the Members in writing of any increase in the amount of a regular or special assessment. The Board shall provide this notice by first-class mail not less than 30 or more than 60 days prior to the due date of the increased assessment. Section 4.07 Late Charges. Late charges may be levied by the Association against a Member for the delinquent payment of regular or special assessments. An assessment is delinquent 15 days after its due date. If an assessment is delinquent the Association may recover all of the following from the Member: (a) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorneys' fees. (b) A late charge not exceeding ten (10) percent of the delinquent assessment or $10, whichever is greater. (c) Interest on the foregoing sums, at an annual percentage rate of ten (10) percent, commencing 30 days after the assessment becomes due. 3/1/12 10120.4 4 114293 Y1 15 No late charge may be imposed more than once for the delinquency of the same payment. However, the imposition of a late charge on any delinquent payment shall not eliminate or supersede charges imposed on prior delinquent payments. Section 4.08 Enforcement of Assessments and Late Charges. At least 30 days before the Association can place a lien on a Residence for a past due debt for a regular or special assessment, the Association must notify the Member by certified mail of the following: (a) A general description of the Association's collection and lien enforcement procedures. (b) The method of calculation of the amount due. (c) A statement that the Member has the right to inspect the Association records. (d) A statement informing the Member that the Member's Residence may be subject to foreclosure and sale without court action. (e) An itemized statement of the charges owed by the Member, including items on the statement that indicate the amount of any delinquent assessments, the fees and reasonable costs of collection, reasonable attorney's fees, and any late charges and interest. (f) A statement that the Member will not be liable to pay the charges, interest, and costs of collection, if it is determined the assessment was paid on time. (g) The Member's right to request a meeting with the Board if the Member disputes the debt. A Member may dispute the debt by submitting to the Board a written explanation within 15 days of the mailing of the Association's notice. The Board must respond to a Member's timely explanation within 15 days of the mailing of the Member's explanation. A Member also may submit a written request to meet with the Board to discuss a payment plan for the debt. The request must be mailed within 15 days of the mailing of the Board's notice. The Board must then meet with the Member in executive session within 45 days of the mailing of the Member's request. If there is no regularly scheduled Board meeting within that time period, the Board may designate a committee of one or more members to meet with the Member. Any partial payments made toward the debt will first be applied to the assessments owed, and only after the principal owed is paid in full will the payments be applied to the fees and costs of collection, attorneys' fees, late charges, or interest. When a Member makes a payment, the Member may request a receipt and the Association shall provide it. The receipt shall indicate the date of payment and the person who received it. The Association shall provide a mailing address for overnight payment of assessments, 3/1/12 10120.4 H 114293 v1 16 A debt for a delinquent regular or special assessment and any late charges, reasonable fees and costs of collection, reasonable attorneys' fees, and interest shall become a lien on the Residence when a notice of delinquent assessment is duly recorded and mailed as provided in Section 1367.1 of the California Civil Code. Except as provided below regarding debts arising from delinquent assessments when the debt arose on or after January 1, 2006, and the delinquent amount is less than $1,800, any such lien may be enforced in any manner permitted by law, including judicial foreclosure or nonjudicial foreclosure. Any nonjudicial foreclosure shall be conducted by the trustee named in the notice of delinquent assessment or by a trustee substituted pursuant to Section 2934a of the California Civil Code, in accordance with the provisions of Sections 2924, 2924b, and 2924c of the California Civil Code. If the sums specified in the notice of delinquent assessment are paid before the completion of any judicial or nonjudicial foreclosure, the Association shall record a notice of satisfaction and release of the lien. On receipt of a written request by the Member, the Association shall also record a notice of rescission of any declaration of default and demand for sale. In accordance with Section .1367.4 of the California Civil Code, a lien securing a debt arising from a delinquent regular or special assessment when the debt arose on or after January 1, 2006, and the delinquent amount is less than $1,800, excluding accelerated assessments, late charges, fees and costs of collection, attorney's fees, and interest, shall not be enforced by judicial or nonjudicial foreclosure unless and until either (1) the debt equals or exceeds $1,800,excluding accelerated assessments, late charges, fees and costs of collection, attorney's fees, and interest, or (2) the debt secured by the lien is more than 12 months delinquent. Section 4.09 Statement Regarding Assessments. The Association shall provide any Member, upon written request, with a statement specifying (1) the amounts of the Association's current regular and special assessments and fees, and (2) the amounts of any delinquent assessments and related late charges, interest, and costs levied against the Member's Residential Lot, as provided in Section 4.08 of this Declaration. Section 4.10 Reserves. All amounts collected as reserves shall be deposited by the Association in a separate bank account to be held in trust for the purposes for which they are collected and are to be segregated from and not commingled with any other funds of the Association. ARTICLE V USE RESTRICTIONS AND COVENANTS Section 5.01 General Restrictions on Use. In exercising the right to occupy or use a Residence, Residential Lot or the Common Area and its improvements, the Member and the Member's family, guests, employees, tenants, and invitees shall not do any of the following: (a) Attempt to further subdivide a Residential Lot without obtaining the prior approval of the Association and the Declarant. 3/1/12 10120.4 N 114293 v 1 17 (b) Occupy or use a Residential Lot, or permit all or any part of a Residential Lot to be occupied or used, for any purpose other than as a private residence. Nothing in this Declaration shall prevent a Member from leasing or renting out his or her Residence, provided that it is not for transient or hotel purposes, is for a period of at least 60 days, and is subject to the Governing Instruments. (c) Permit anything to obstruct the Common Area or store anything in the Common Area without the prior consent of the Board, except as otherwise provided in the Governing Instruments. (d) Perform any act or keep anything on or in any Residential Lot or in the Common Area that will increase the rate of insurance on the Common Area without the Board's prior written consent. Further, no Member shall permit anything to be done or kept in his or her Residential Lot or in the Common Area that would result in the cancellation of insurance on any Residence or Exclusive Use Common Area or on any part of the Common Area or that would violate any law. (e) Display any sign to the public view on or from any Residential Lot or the Common Area without the prior written consent of the Board, except a sign advertising the property for sale, lease, or exchange, or advertising directions to the property, as provided in Section 712 of the California Civil Code and display any sign that discourages visitor and public use of the tidelands around Beacon Bay (f) Raise, breed, or keep animals, livestock, or poultry of any kind on a Residence or in the Common Area, except dogs, cats, or other household pets, which may be kept on Residences, subject to the Rules and Regulations. (g) Engage in any noxious or offensive activity in any part of the Development. (h) Alter or modify the exterior of any Residence without first obtaining the written consent of the Architectural Control Committee. (i) Alter, construct, or remove anything on or from the Common Area, except upon the written consent of the Board. Section 5.02 Damage Liability. Each Member shall be liable to the Association for all damage to the Common Area or other Association property that is sustained by reason of the negligence or willful misconduct of that Member or his or her family, guests, employees, tenants, and invitees to the extent that the damage is not covered by the casualty insurance obtained and maintained by the Association pursuant to Section 7.01 of this Declaration. Section 5.03 Equitable Servitudes. The covenants and restrictions set forth in this Declaration shall be enforceable equitable servitudes and shall inure to the benefit of and bind all Members. These servitudes may be enforced in accordance with the provisions of Section 12.02 of Article XII. 3/1/12 10120.4 #114293 v i 18 ARTICLE VI ARCHITECTURAL AND DESIGN CONTROL Section 6.01 Architectural and Design Approval. No building, addition, wall, fence, or alteration shall be begun, constructed, maintained, or permitted to remain on any Residential Lot, or on the Common Area, until complete plans and specifications of the proposed work have been submitted to the Architectural Committee and approved by the Board as to hannony of external design and location in relation to surrounding structures and topography. The Architectural Committee shall review the plans and specifications to determine whether they are compatible with the aforementioned standards and, if they are not, shall require that changes be made before recommending approval to the Board. Section 6.02 Architectural Committee. The Architectural Committee shall consist of not less than three nor more than five members, as fixed by the Board from time to time. (a) The Board shall have the right to appoint all members of the Committee. (b) Members appointed to the Committee shall be Members of the Association. (c) The term of the appointees shall be one year, Notwithstanding the foregoing, all members of the Committee shall serve at the will of the Board, and may be removed by the Board at any time with or without cause. (d) The Committee shall meet as often as it deems necessary to properly carry out the obligations imposed on it, unless otherwise directed by the Board. Section 6.03 Procedural Rules and Fees. The Board may establish reasonable procedural rules and assess a fee in connection with review of plans and specifications including, without limitation, the number of sets of plans to be submitted. In the event the Board fails to approve or disapprove such plans and specifications within thirty (30) days after the same have been properly submitted in accordance with any rules regarding such submission adopted by the Board, such plans and specifications will be deemed approved. Section 6.04 The Board of Directors. After the Architectural Committee has completed its review of plans and specifications submitted under this Article, the Architectural Committee shall submit such plans and specifications, together with its recommendation as to approval or disapproval, to the Board for approval or disapproval by the Board. Thereafter, the Board shall take any actions it deems necessary, in accordance with the provisions of this Declaration. Section 6.05 No Power to Modifv Setback Requirements. Nothing in this Declaration or in the Association's Articles, Bylaws or Rules shall be construed or amended to allow the Board to modify or eliminate the Setback requirements shown on the Beacon Bay Subdivision Survey Map, and any attempt to do so shall have no effect. Section 6.06 Nonliability for Approval of Plans. Plans and specifications shall be approved by the Board as to style, exterior sign, appearance and location, and are not approved for engineering design or for compliance with zoning and building ordinances, and by approving 3/1/12 10120.4 U114293 v 1 19 such plans and specifications neither the Architectural Committee, the members thereof, the Association, the Members, the Board nor Declarant assumes liability or responsibility therefor, or for any defect in any structure constructed from such plans and specifications. ARTICLE VII INSURANCE Section 7.01 Fire and Casualty Insurance. The Association shall obtain and maintain a policy or policies of fire and casualty insurance with an extended coverage endorsement for the full insurable replacement value of the improvements in the Common Area. The amount of coverage shall be determined by the Board. This insurance shall be maintained for the benefit of the Association, the Members, and their Mortgagees, as their interests may appear as named insured, subject, however, to any loss payment requirements set forth in this Declaration. Section 7.02 General Liability and Individual Liability Insurance. The Association shall obtain and maintain one or more policies of insurance that must include coverage for (1) general liability of the Association and (2) individual liability of Officers and Directors of the Association for negligent acts or omissions in that capacity. Both of the above types of coverage shall not be less than $1,000,000 covering all claims for death, personal injury, and property damage arising out of a single occurrence. The limits and coverage shall be reviewed at least annually by the Board and increased in its discretion. Section 7.03 Other Association Insurance. The Association shall purchase and maintain workers' compensation insurance to the extent necessary to comply with any applicable laws. The Association also shall purchase and maintain fidelity bond coverage that names the Association as an obligee, for any person or entity handling funds of the Association, whether or not such persons or entities are compensated for their services. This coverage shall be in an amount that is at least equal to the estimated maximum of funds, including reserve funds, in the custody of the Association or the Manager at any given time during the term of each bond. However, the aggregate amount of these bonds must not be less than 150 percent of each year's estimated amival operating expenses and reserves. The Association also may purchase and maintain a blanket policy of flood insurance, and demolition insurance in an amount that is sufficient to cover any demolition that occurs following the total or partial destruction of the Development and a decision not to rebuild. Section 7.04 Trustee for Policies. The Association, acting through its Board, is hereby appointed and shall be deemed trustee of the interests of all named insureds under all insurance policies purchased and maintained by the Association. All insurance proceeds under any of those policies shall be paid to the Board as trustee. The Board shall use the proceeds for any of the purposes specified in Article VIII of this Declaration. The Board also is authorized to negotiate loss settlements with the appropriate insurance carriers, to compromise and settle any claim or enforce any claim by any lawful action, and to execute loss claim forms and release forms in connection with such settlements. Section 7.05 Individual Insurance. Each Member shall provide fire and casualty insurance for the improvements on his or her Residence. A Member may separately insure his or her personal property, and may obtain and maintain personal liability and property damage 3/1/12 10120.4 N 114293 vl 20 liability insurance for his or her Residence, provided that the insurance contains a waiver of subrogation rights by the carrier as to the Association, Declarant, and the institutional First Mortgagees of the Member's Residential Lot. Section 7.06 Insurance Premiums. Insurance premiums for any insurance coverage obtained by the Association shall be included in the regular assessments. That portion of the regular assessments necessary for the required insurance premiums shall be used solely for the payment of the premiums when due. Section 7.07 Additional Provisions, The Association shall file a copy of each of the above insurance policies with Declarant. Except for workers compensation insurance, all of the above insurance policies shall include Declarant and its elected officials, officers, agents, representatives and employees as additional insureds. Except for worker's compensationinsurance, all policies shall be endorsed to state that coverage shall not be canceled by the insurer except after thirty (30) days' prior written notice to Declarant. The Assocaition shall give Declarant prompt and timely notice of claim made or suit instituted againt the Associaton. The Association shall grant to Declarant, on behalf of the insurer providing general liability insurance to the Association, a waiver of any right of subrogation which any such insurer may acquire against Declarant by virtue of the payment of any loss under such insurance. ARTICLE VIII DAMAGE OR DESTRUCTION Section 8.01 Duty to Restore and Replace. If any of the improvements in the Common Area are destroyed or damaged, the Association shall restore and replace the improvements, using the proceeds of insurance maintained pursuant to Article VII of this Declaration, subject to the provisions of this Article. Section 8.02 Proceeds Justifying Automatic Restoration and Repair. If the proceeds of any insurance maintained pursuant to Article VII of this Declaration for reconstruction or repair of the Common Area are equal to at least eighty-five (85) percent of the estimated cost of restoration and repair, the Board shall use the insurance proceeds for that purpose, shall levy a special assessment to provide the necessary additional funds, and shall have the improvements promptly rebuilt, unless the Members by the vote or written consent of not less than seventy-five (75) percent of the total voting power of the Association object to the restoration or repair work within sixty (60) days of the damage or destruction. Section 8.03 Approval by Members of Special Assessment for Certain Restorations and Repairs. If the proceeds of any insurance maintained pursuant to Article VII of this Declaration for reconstruction or repair of the Property are less than eighty-five (85) percent of the estimated cost of restoration and repair, any restoration and repair work must be authorized by the vote or written consent of Members representing at least seventy-five (75) percent of the total voting power of the Association. This authorization must be given within ninety (90) days of the damage or destruction and must authorize the Board to levy a special assessment to provide the necessary fiends over and above the amount of any insurance proceeds available for the work. 3/1/12 10120.4 #114293 v1 21 Section 8.04 Ordering Reconstruction or Repair. If reconstruction or repair work is to take place pursuant to this Article, the Board shall take the following steps; (a) Prepare the necessary documents, including an executed and acknowledged certificate stating that damage has occurred, describing it, identifying the improvement suffering the damage, the name of any insurer against whom claim is made, and the name of any insurance trustee, stating (if applicable) that the consent described in Section 8.03 has been obtained, and reciting that the certificate is recorded pursuant to this paragraph. That declaration shall be recorded with the Recorder of Orange County within ninety (40) days from the date of the damage or destruction. (b) Should the Association elect to replace rather than repair the improvement suffering the damage, obtain the approval of Declarant of the architectural plans of the proposed improvement. (c) Obtain firm bids (including the obligation to obtain a performance bond) from two or more responsible contractors to rebuild the Common Area in accordance with its original plans and specifications and, as soon as possible thereafter, call a special meeting of the voting Members to consider the bids. If the Board fails to do so within 60 days after the casualty occurs, any Member may obtain the bids and call and conduct the special meeting in the manner required by this paragraph. At the meeting, Members representing at least 67 percent of the total voting power may elect to reject all of the bids and thus not to rebuild, or Members representing at least 51 percent of the total voting power may elect to reject all bids requiring amounts exceeding the available insurance proceeds by more than $25,000. Failure to reject all bids shall authorize the Board to accept the unrejected bid it considers most favorable. Failure to call the special meeting or to repair the casualty damage within 12 months from the date the damage occurred shall be deemed for all purposes to be a decision not to rebuild. (d) If a bid is accepted, let the contract to the successful bidder and distribute the insurance proceeds to the contractor as required by the contract. (e) Levy a special assessment to make up any deficiency between the total insurance proceeds and the contract price for the repair or rebuilding, with the assessment and all insurance proceeds, whether or not subject to liens of mortgagees, to be used solely for the rebuilding. This assessment shall be apportioned equally to each Residential Lot. If any Member fails to pay the special assessment within 15 days after it is levied, the Board shall enforce the assessment in the manner described in Section 4,08 of this Declaration. Section 8,05 Election Not to Rebuild. Upon an election not to rebuild, the Board, as soon as reasonably possible and as agent for the Members, shall execute and record a certificate stating that the Association shall not rebuild. The net proceeds shall then be distributed to the owners of the Residential Lots equally . Section 8.06 Minor Restoration and Repair Work. The Association shall order restoration or repair work without complying with the other provisions of this Article whenever the estimated cost of the work does not exceed Twenty-five Thousand Dollars ($25,000). If insurance proceeds are unavailable or insufficient, the Association shall levy a special 3/1/12 10120.4 # 114293 v 1 22 assessment for the cost of the work. The Assessment shall be levied in the manner described in Section 4.05 of this Declaration. ARTICLE IX ENIINENT DOMAIN Section 9.01 Sale to Condemning Authority. If a governmental agency proposes to condemn all or a portion of the Common Area, the Association, with the approval of the Declarant, may sell all or any portion of its interest in the Common Area to the condemning authority if seventy-five (75) percent of the voting power of the Associations and sixty (60) percent of all institutional First Mortgagees approve the sale in advance. Any such sale shall be made by the Association in the capacity of attorney-in-fact for the Members, acting under an irrevocable power of attorney which each Member grants to the Association. The sales price shall be any amount deemed reasonable by the Board. Section 9.02 Distribution of Sales Proceeds. That portion of proceeds of a sale conducted pursuant to Section 9.01 which constitutes compensation for the condemnation of all or any portion of the improvements constructed by the Association on the Common Area and any and all compensation for the termination or diminution of the Association's interest in the Common Area Lease shall be distributed among the Members and their respective Mortgagees, as their interests may appear, and the balance of such proceeds shall be paid to the Declarant. Section 9.03 Taking and Condemnation Awards. If there is a taking by a governmental agency of all or any portion of the Common Area, the condemnation award shall be distributed to among the Declarant, the Members and their respective Mortgagees in accordance with the court judgment, if any such judgment exists. In all other cases, the proceeds shall be distributed as set forth in Section 9.02 above. ARTICLE X RIGHTS OF MORTGAGEES Section 10.01 Warrantv. The Association hereby warrants that Mortgagees of Residential Lots in the Development shall be entitled to the rights and guaranties set forth in this Article. No amendment of this Article shall affect the rights of the holder of any Mortgage recorded prior to the recordation of the amendment who does not join in the execution of the amendment. Section 10.02 Subordination. Notwithstanding any other provision of this Declaration, liens created under Section 4.08 of this Declaration upon any Residential Lot shall be subject and subordinate to, and shall not affect the rights of the holder of, the indebtedness secured by any recorded First Mortgage upon such an interest made in good faith and for value, provided that any transfer of a Residential Lot as the result of a foreclosure or exercise of a power of sale shall not relieve the new Member from liability for assessments that become due after the transfer. Such a transfer shall extinguish the lien of assessments that were due and payable prior to the transfer of the Residential Lot. 3/1/12 10120.4 #114293 v 1 23 Section 10.03 Notice of Default. A First Mortgagee, upon request, shall be entitled to written notification from the Association of any default in the performance by the Mortgagor of any obligation under the Association's Governing Instruments that is not cured within 60 days. Section 10.01 Unpaid Assessments. Any First Mortgagee who obtains title to a Residential Lot pursuant to the remedies provided in the Mortgage or foreclosure of the Mortgage shall not be liable for the Residential Lot's unpaid assessments that accrue prior to the acquisition of title to the Residential Lot by the Mortgagee. Section 10.05 Mortgagee Approval of Material Amendments. Notwithstanding Article XI of this Declaration, any amendments governing any of the following shall require the prior written approval of at least 51 percent of the First Mortgagees and at least 67 percent of the total voting power of the Members: (a) Rights to use the Common Area; (b) Members' interests in the Common Area; and (c) Any provisions expressly benefiting First Mortgagees or insurers or governmental guarantors of First Mortgages. Notwithstanding the foregoing, any First Mortgagee who receives a written request from the Board to approve a proposed amendment or amendments requiring consent under this Section who does not deliver a negative response to the Board within 30 days of the receipt of the request shall be deemed to have approved the proposed amendment or amendments. Section 10.06 Mortgagee Approval of Other Actions. Unless at least 67 percent of the First Mortgagees (based upon one vote for each First Mortgage owned), or 67 percent of the total voting power of the Members, have given their prior written approval, the Association shall not be entitled to: (a) Change the pro rata interest or obligations of any individual Residential Lot for either of the following purposes: (1) Levying assessments or charges, or allocating distributions of hazard insurance proceeds or condemnation awards; or (2) Determining the pro rata interest of each Member in the Common Area and the improvements thereon. (b) By act or omission, seek to abandon, partition, subdivide, encumber, sell, or transfer the Common Area (the granting of easements for public utilities or for other public purposes consistent with the intended use of the Common Area shall not be deemed a transfer within the meaning of this clause); (c) Use hazard insurance proceeds for losses to the Common Area for other than the repair, replacement, or reconstruction of that property, except as provided by statute in case of substantial loss to the Common Area. 3/1/12 10120.4 9 114293 v 1 24 Section 10.07 Liens. All taxes, assessments, and charges that may become liens prior to the First Mortgage under local law, shall relate only to the individual Residential Lot and not to the Development as a whole. Section 10.08 Priority. No provision of the Governing Instruments gives any Member, or any other party, priority over any rights of the First Mortgagee of the Residential Lot pursuant to its Mortgage in the case of a distribution to the Member of insurance proceeds or condemnation awards for losses to, or a taking of, all or a portion of the Common Area. Section 10.09 Reserve Fund. Association assessments shall be large enough to provide for an adequate reserve fund for maintenance, repairs, and replacement of those common elements that must be replaced on a periodic basis. The reserve fund shall be funded by the regular assessments rather than by special assessments. Section 10.10 Management. Any agreement for professional management of the Development shall not exceed three years and shall provide that either party may terminate the agreement, with or without cause and without the imposition of a termination fee, on 90 days written notice. Section 10.1 1 Right to Inspect Books and Records. Institutional First Mortgagees, upon written request, shall have the right to (1) examine the books and records of the Association during normal business hours; and (2) require the submission of any financial data furnished to the Members by the Association. Section 10.12 Right to Furnish Mortgage Information. Each !Member hereby authorizes the First Mortgagee of a First Mortgage on the Member's Residential Lot to furnish information to the Board concerning the status of the First Mortgage and the loan that it secures. ARTICLE XI AMENDMENTS Section 11.01 Amendments by Members. Subject to the other provisions of this Declaration, this Declaration may be amended as follows: (a) Any amendment or modification of the Articles hereof entitled "Covenant for Maintenance Assessments," "Nonpayment of Assessments," "Architectural Control," and "Repair and Maintenance," or of this Section shall require the affirmative vote or written approval of not less than sixty percent (60%) of the of the voting power of the Association. (b) Any amendment or modification of any Article other than those specified in subparagraph (a) above shall require the affirmative vote or written approval of a majority of the voting power of the Association. (c) An amendment or modification that requires the vote and written assent of the of the voting power of the Association as hereinabove provided shall be effective when executed by the President and Secretary of the Association who shall certify that the amendment or modification has been approved as hereinabove provided, and when recorded in the Official 3/1/12 10120.4 # 114293 v1 25 Records of the County. The notarized signatures of the Members shall not be required to effectuate an Amendment of this Declaration. (d) Notwithstanding the foregoing, any provision of this Declaration, or the Articles, Bylaws or Association Rules which expressly requires the approval of a specified percentage of the voting power of the Association for action to be taken under said provision can be amended only with the affirmative vote or written assent of not less than the same percentage of the Voting Power of the Association. Section 11.02 Amendments Pursuant to Court Order. If this Declaration requires a proposed amendment to be approved by the affirmative vote of a specified percentage (exceeding 50 percent) of the voting power of the Association, and more than 50 percent but less than the required supennajority of the voting power of the Association approve the amendment, the Association or any Member may petition the Superior Court of Orange County, California, subject to the requirements, limitations, and exceptions set forth in Civil Code Section 1356 , for an order reducing the percentage of the affirmative votes necessary for the amendment or approving the amendment. If such an order is issued, the amendment shall be acknowledged by any person designated by the Association for that purpose or, if no such designation is made, by the President of the Association, and that person shall have the amendment and the court order recorded in Orange County, California. Upon recordation, the amended provision or provisions of this Declaration shall have the same force and effect as if the amendment were adopted in compliance with every requirement imposed by this Declaration and the other governing documents. Within a reasonable time after recordation, the Association shall mail a copy of the amendment and a statement regarding the amendment to each Member. ARTICLE XII GENERAL PROVISIONS Section 12.01 Term. The provisions of this Declaration shall continue in effect for a term of tvventy-five (25) years from the date of execution. Thereafter, it shall be automatically extended for successive periods of ten (10) years, until the membership of the Association decides to terminate it. Section 12.02 Enforcement. The Association, or any Member, shall have the right to enforce by proceedings at law or in equity, all restrictions, conditions, covenants and reservations, now or hereafter imposed by the provisions of this Declaration or any amendment thereto, including the right to prevent the violation of such restrictions, conditions, covenants, or reservations and the right to recover damages or other dues for such violation. The Association or any Member shall also have the right to enforce by proceedings at law or in equity the provisions of the Articles or Bylaws and any amendments thereto. With respect to architectural control and Association Rules, the Association shall have the exclusive right to the enforcement thereof unless the Association refuses or is unable to effectuate such enforcement, in which case any Member who otherwise has standing shall have the right to undertake such enforcement. With respect to Assessment Liens, the Association shall have the exclusive right to the enforcement thereof. 3/1/12 10120.4 #114293 vl 26 Section 12.03 Cumulative Remedies. All rights, options and remedies of Declarant, the Association, or the Members under this Declaration are cumulative, and no one of them shall be exclusive of any other, and Declarant, the Association, and the Members shall have the right to pursue any one or all of such rights, options and remedies or any other remedy or relief which may be provided by Iaw, whether or not stated in this Declaration. Section 12.04 Nonwaiver of Remedies. Each remedy provided for in this Declaration is separate, distinct, and nonexclusive. Failure to exercise a particular remedy shall not be construed as a waiver of the remedy. Section 12.05 Attorneys' Fees. In any action to enforce this Declaration, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs. Section 12.06 Severability. The provisions of this Declaration shall be deemed independent and severable, and the invalidity or partial invalidity or unenforceability of any one provision shall not affect the validity or enforceability of any other provision. Section 12.07 Binding. This Declaration, as well as any amendment to it and any valid action or directive made pursuant to it, shall be binding on the Declarant and the Members and their heirs, grantees, tenants, successors, and assigns. Section 12.08 Interpretation. The provisions of this Declaration shall be liberally construed and interpreted to effectuate its purpose of creating a uniform plan for the operation of a planned development. Failure to enforce any provision of this Declaration shall not constitute a waiver of the right to enforce that provision or any other provision of this Declaration. Section 12.09 Effect of Declaration. This Declaration is made for the purpose set forth in the Recitals to this Declaration and Declarant makes no warranties or representations, express or implied as to the binding effect or enforceability of all or any portion of this Declaration, or as to the compliance of any of these Provisions with public laws, ordinances and regulations applicable thereto. Section 12.10 Limitation of Liability. The liability of any Member for performance of any of the provisions of this Declaration shall terminate upon sale, transfer, assignment, or other divestment of the Member's entire interest in his or her Residential Lot with respect to obligations arising from and after the date of the divestment. Section 12.11 Nonliability of Officials. To the fullest extent permitted by law, neither the Board, the Architectural Committee, and other committees of the Association or any member of such Board or committee shall be liable to any Member or the Association for any damage, loss or prejudice suffered or claimed on account of any decision, approval or disapproval of plans or specifications (whether or not defective), course of action, act, omission, error, negligence or the like made in good faith within which such Board, committees or persons reasonably believed to be the scope of their duties. Section 12.12 Fair Housing. Neither Declarant nor any Member shall, either directly or indirectly, forbid the conveyance, encumbrance, renting, leasing, or occupancy of the Member's Residence or Residential Lot to any person on the basis of race, color, sex, religion, ancestry, or national origin. 3/1/12 10120.4 H 114293 v 27 Section 12.13 Subleases. Any agreement for the subleasing or rental of a Residence or Residential Lot (hereinafter in this Section referred to as a "sublease") shall provide that the terms of such sublease shall be subject in all respects to the provisions of this Declaration, the Articles, the Bylaws and the Association Rules. Said sublease shall further provide that any failure by the sublessee thereunder to comply with the terms of the foregoing documents shall be a default under the sublease. All subleases shall be in writing. Any Member who shall sublease his Residence or Residential Lot shall be responsible for assuring compliance by such Member's sublessee with this Declaration, the Articles, the Bylaws and the Association Rules. Section 12.14 Notices. Any notice to be given hereunder shall be in writing and may be delivered as follows: (a) Notice to a Member shall be deemed to have been properly delivered when delivered to the Member's Residence, or placed in first class United States mail, postage prepaid, to the most recent address furnished by such Member in writing to the Association for the purpose of giving notice, or if no such address shall have been furnished, then to the street address of such Member's Residence. Any notice so deposited in the mail within the City shall be deemed delivered forty-eight (48) hours after such deposit. in the case of joint owners of a Residence any such notice may be delivered or sent to any one of the joint owners on behalf of all joint owners and shall be deemed delivery on all such joint owners. (b) Notice to the Association shall be deemed to have been properly delivered when placed in the first class United States mail, postage prepaid, to the address furnished by the Association or the address of its principal place of business. (c) The affidavit of an officer or authorized agent of the Association declaring under penalty of perjury that a notice has been mailed to any Member or Members, or to all Members, to the address or addresses shown on the records of the Association, shall be deemed conclusive proof of such mailing, whether or not such notices are actually received. Section 12.1; Numbers and Headings. As used in this Declaration, the singular shall include the plural, unless the context requires the contrary. The headings are not a part of this Declaration, and shall not affect the interpretation of any provision. Executed on 7(/b / /?' at Newport Beach, Orange, California. DECLARANT CITY OF NEWPORT BEACH, a California chartered municipal c "2By: --��. Nancy Ga er, Mayor 311112 10120.4 #114293 v1 28 Acknowledgment STATE OF CALIFORNIA ss COUNTY OF ORANGE ) On befor me, L. rl � S , a Notary Public, personal/ appeared , who proved to me on the basis of satisfactory evidence to be & person(s) whose nameN is/,Ar4 subscribed to the within instrument, and acknowledged to me that she/tf�y executed the same in Y�/her/tl� authorized capacity(k), and that by r�lher/tl r signature(>)�on the instrument the person(s), or the entity upon behalf of which the person(gacted, 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. N ry P lic L. HARRIS Commission 0 18401517 Notary PuWie • California Is Orange County M Comm. Ex Im Mar 12, 2013 3/1112 10120.4 #1 14293 v) 29 EXHIBIT A LEGAL DESCRIPTION A parcel of land situated in the projected Northwest quarter of Section 35, Township 6 South, Range 10 West, S.B.B. & M., Orange County, California, more particularly described as follows, to -wit: Beginning at the U.S. Bulkhead Station No. 200, as shown upon a map entitled "Harbor Lines, Newport Bay Harbor, California", approved May 2"d, 1936, by the Secretary of War and on file in the office of the United States District Engineer at Los Angles, California; running thence West along the U.S. Bulkhead line 147.50 feet to U.S. Station No. 137; thence North 391 48' West along said Bulkhead line 535.53 feet; thence North 23° 57' 30" East 128.34 feet to an angle point in the ordinary high tide of the Pacific Ocean in Newport Bay, as described in Court Case No. 24026 of the Superior Court of the State of California, in and for the County of Orange; thence South 390 48' East along said ordinary high We line 334.47 feet to the most Westerly comer of that certain parcel of land conveyed to the City of Newport Beach by the Irvine Company, as described in deed recorded September 251h, 1929, in Book 306, page 375 of Official Records of Orange County, Califomia; thence North 230 57' 30" East along the Northwesterly line of said parcel of land 317.57 feet; thence South 710 54' East along the Northerly lime of said parcel of land 290.24; then South 85" 43' East along the Northerly line of said parcel of land, said Northerly line being the Southerly line of Bayside Drive, 506.01 feet; thence South 424.71 feet to a point In the U.S. Govt. Bulkhead line betoveen U.S. Stations Nos. 101 and 200; thence West along said Bulkhead line 784,25 feet to the point of beginning containing approximately twelve (12) acres. 3/1/12 10120.4 #114293 vl A-1 EXHIBIT B COMMON AREA LEGAL DESCRIPTION Lots 62 and A through J as shown on that certain record of Survey fled in the Official Records of the County of Orange, State of California, as Instrument Number 5383 on February 28, 1939 covering a portion of the projected Northwest one-quarter (114) of section 35, Township 6 South, flange 10 West, S.B.B.M. 3/1/12 10120.4 #114293 v 1 B -1 1 O99 h N C1 i tLto t1 1 M NS�V N , 1 Bt�9 � M m ncn s i C', J. to � Q J.Ct 08IMVA j N � N � t ! a yo7 3AO0 3332j i N Q N C1 i tLto t1 1 M NS�V N , I N � N � t ! a yo7 3AO0 3332j i ,a am o:1213woolin iLr) ED m i tLto N M m M o'7 � M m ,a am o:1213woolin iLr) ED m tLto LO r ` � f a ao [ MOO > 3117}1$ TF CINH?laH 7 Sot C ^fid-' dam• tin �' in r I , 3AO7 3dVO �iTT tLto d vtVC%4 TF CINH?laH 7 Sot C ^fid-' dam• tin �' in r I , 3AO7 3dVO .0 1Y7.:J 1:J amu' 3/1/12 10120.4 #114293 vt B_2 I �iTT tLto .0 1Y7.:J 1:J amu' 3/1/12 10120.4 #114293 vt B_2 I p5l n M11 /cS First American 2 First American Way, Santa Ana CA 92707 ; ��sm��3 5Wwwea0 2 5 7 9w9sm� 3/11/2013 Order No: 4219279 RECEIVED 2013 IAR21 AM10-QS orr-Irr or TI C 1TY CLIERK CIT!' C � -' ;TRA(, Transmittal City Clerk City of Newport Beach PO Box 1768, 3300 Newport Beach Blvd. Newport Beach CA 92658 Enclosed please find 2 attached documents. First American Title Company Page Count 12 . First American Vitae Eagle Policy Homeowner's Policy of Title Insurance For a One -To -Four Family Residence ISSUED BY First American Title Insurance Company POLICY NUMBER 5020500-4219279 OWNER'S INFORMATION SHEET Your Title Insurance Policy is a legal contract between You and Us. It applies only to a one -to -four family residence and only if each insured named in Schedule A is a Natural Person. If the Land described in Schedule A of the Policy is not an improved residential lot on which there is located a one -to -four family residence, or if each insured named in Schedule A is not a Natural Person, contact Us immediately. The Policy insures You against actual loss resulting from certain Covered Risks. These Covered Risks are listed beginning on page 2 of the Policy. The Policy is limited by: • Provisions of Schedule A • Exceptions in Schedule B • Our Duty To Defend Against Legal Actions On Page 3 • Exclusions on page 4 • Conditions on pages 4, 5 and 6. You should keep the Policy even if You transfer Your Title to the Land. It may protect against claims made against You by someone else after You transfer Your Title. IF YOU WANT TO MAKE A CLAIM, SEE SECTION 3 UNDER CONDITIONS ON PAGE 4. The premium for this Policy is paid once. No additional premium is owed for the Policy. This sheet is not Your insurance Policy. It is only a brief outline of some of the important Policy features. The Policy explains in detail Your rights and obligations and Our rights and obligations. Since the Policy --and not this sheet --is the legal document, YOU SHOULD READ THE POLICY VERY CAREFULLY. If You have any questions about Your Policy, contact: FIRST AMERICAN TITLE INSURANCE COMPANY 1 First American Way Santa Ana, California 92707 Homeowner's Policy of Title Insurance for a One -to -Four Family Residence TABLE OF CONTENTS Form 5020500 (5-1-10) Page 1 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) Paae Pa4e OWNER'S COVERAGE STATEMENT 2 CONDITIONS COVERED RISKS 2 & 3 1. Definitions 4 OUR DUTY TO DEFEND AGAINST LEGAL ACTIONS 3 2. Continuation of Coverage 4 SCHEDULE A Insert 3. How to Make a Claim 4 & 5 Policy Number, Premium, Date and Amount 4. Our Choices When We Learn of a Claim 5 Deductible Amounts and Maximum Dollar Limits of Liability 5. Handling a Claim or Legal Action 5 Street Address of the Land 6. Limitation of Our Liability 5 & 6 1. Name of Insured 7. Transfer of Your Rights to Us 6 2. Interest in Land Covered 8. This Policy is the Entire Contract 6 3. Description of the Land 9. Increased Policy Amount 6 SCHEDULE B - EXCEPTIONS Insert 10. Severability 6 EXCLUSIONS 4 11. Arbitration 6 12. Choice of Law 6 Form 5020500 (5-1-10) Page 1 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) Homeowner's Policy of Title Insurance irst Arnerican Itle For a One -To -Four Family Residence ISSUED BY Eagle Policv First American Title Insurance Company As soon as You Know of anything that might be covered by this Policy, You must notify Us promptly in writing at the address shown in Section 3 of the Conditions. OWNER'S COVERAGE STATEMENT This Policy insures You against actual loss, including any costs, attorneys' fees and expenses provided under this Policy. The loss must result from one or more of the Covered Risks set forth below. This Policy covers only Land that is an improved residential lot on which there is located a one -to -four family residence and only when each insured named in Schedule A is a Natural Person. Your insurance is effective on the Policy Date. This Policy covers Your actual loss from any risk described under Covered Risks if the event creating the risk exists on the Policy Date or, to the extent expressly stated in Covered Risks, after the Policy Date. Your insurance is limited by all of the following: • The Policy Amount • For Covered Risk 16, 18, 19 and 21, Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A • The Exceptions in Schedule B • Our Duty To Defend Against Legal Actions • The Exclusions on page 4 • The Conditions on pages 4, 5 and 6 COVERED RISKS The Covered Risks are: 1. Someone else owns an interest in Your Title. 2. Someone else has rights affecting Your Title because of leases, contracts, or options. 3. Someone else claims to have rights affecting Your Title because of forgery or impersonation. 4. Someone else has an Easement on the Land. 5. Someone else has a right to limit Your use of the Land. 6. Your Title is defective. Some of these defects are: a. Someone else's failure to have authorized a transfer or conveyance of your Title. b. Someone else's failure to create a valid document by electronic means. c. A document upon which Your Title is based is invalid because it was not properly signed, sealed, acknowledged, delivered or recorded. d. A document upon which Your Title is based was signed using a falsified, expired, or otherwise invalid power of attorney. e. A document upon which Your Title is based was not properly filed, recorded, or indexed in the Public Records. f. A defective judicial or administrative proceeding. 7. Any of Covered Risks 1 through 6 occurring after the Policy Date. 8. Someone else has a lien on Your Title, including a: a. lien of real estate taxes or assessments imposed on Your Title by a governmental authority that are due or payable, but unpaid; b. Mortgage; c, judgment, state or federal tax lien; d. charge by a homeowner's or condominium association; or e. lien, occurring before or after the Policy Date, for labor and material furnished before the Policy Date. 9. Someone else has an encumbrance on Your Title. 10. Someone else claims to have rights affecting Your Title because of fraud, duress, incompetency or incapacity. 11. You do not have actual vehicular and pedestrian access to and from the Land, based upon a legal right. 12. You are forced to correct or remove an existing violation of any covenant, condition or restriction affecting the Land, even if the covenant, condition or restriction is excepted in Schedule B. However, You are not covered for any violation that relates to: a. any obligation to perform maintenance or repair on the Land; or b. environmental protection of any kind, including hazardous or toxic conditions or substances unless there is a notice recorded in the Public Records, describing any part of the Land, claiming a violation exists. Our liability for this Covered Risk is limited to the extent of the violation stated in that notice. Form 5020500 (5-1-10) Page 2 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) COVERED RISKS (Continued) 13. Your Title is lost or taken because of a violation of any covenant, condition or restriction, which occurred before You acquired Your Title, even if the covenant, condition or restriction is excepted in Schedule B. 14. The violation or enforcement of those portions of any law or government regulation concerning: a. building; b. zoning; c. land use; d. improvements on the Land; e. land division; or f. environmental protection, if there is a notice recorded in the Public Records, describing any part of the Land, claiming a violation exists or declaring the intention to enforce the law or regulation. Our liability for this Covered Risk is limited to the extent of the violation or enforcement stated in that notice. 15. An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 14 if there is a notice recorded in the Public Records, describing any part of the Land, of the enforcement action or intention to bring an enforcement action. Our liability for this Covered Risk is limited to the extent of the enforcement action stated in that notice. 16. Because of an existing violation of a subdivision law or regulation affecting the Land: a. You are unable to obtain a building permit; b. You are required to correct or remove the violation; or c. someone else has a legal right to, and does, refuse to perform a contract to purchase the Land, lease it or make a Mortgage loan on it. The amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. 17. You lose Your Title to any part of the Land because of the right to take the Land by condemning it, if: a. there is a notice of the exercise of the right recorded in the Public Records and the notice describes any part of the Land; or b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking. 18. You are forced to remove or remedy Your existing structures, or any part of them - other than boundary walls or fences - because any portion was built without obtaining a building permit from the proper government office. The amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. 19. You are forced to remove or remedy Your existing structures, or any part of them, because they violate an existing zoning law or zoning regulation. If You are required to remedy any portion of Your existing structures, the amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. 20. You cannot use the Land because use as a single-family residence violates an existing zoning law or zoning regulation. 21. You are forced to remove Your existing structures because they encroach onto Your neighbor's land. If the encroaching structures are boundary walls or fences, the amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. 22. Someone else has a legal right to, and does, refuse to perform a contract to purchase the Land, lease it or make a Mortgage loan on it because Your neighbor's existing structures encroach onto the Land. 23. You are forced to remove Your existing structures which encroach onto an Easement or over a building set -back line, even if the Easement or building set -back line is excepted in Schedule B. 24. Your existing structures are damaged because of the exercise of a right to maintain or use any Easement affecting the Land, even if the Easement is excepted in Schedule B. 25. Your existing improvements (or a replacement or modification made to them after the Policy Date), including lawns, shrubbery or trees, are damaged because of the future exercise of a right to use the surface of the Land for the extraction or development of minerals, water or any other substance, even if those rights are excepted or reserved from the description of the Land or excepted in Schedule B. 26. Someone else tries to enforce a discriminatory covenant, condition or restriction that they claim affects Your Title which is based upon race, color, religion, sex, handicap, familial status, or national origin. 27. A taxing authority assesses supplemental real estate taxes not previously assessed against the Land for any period before the Policy Date because of construction or a change of ownership or use that occurred before the Policy Date. 28. Your neighbor builds any structures after the Policy Date -- other than boundary walls or fences -- which encroach onto the Land. 29. Your Title is unmarketable, which allows someone else to refuse to perform a contract to purchase the Land, lease it or make a Mortgage loan on it. 30. Someone else owns an interest in Your Title because a court order invalidates a prior transfer of the title under federal bankruptcy, state insolvency, or similar creditors' rights laws. 31. The residence with the address shown in Schedule A is not located on the Land at the Policy Date. 32. The map, if any, attached to this Policy does not show the correct location of the Land according to the Public Records. OUR DUTY TO DEFEND AGAINST LEGAL ACTIONS We will defend Your Title in any legal action only as to that part of the action which is based on a Covered Risk and which is not excepted or excluded from coverage in this Policy. We will pay the costs, attorneys' fees, and expenses We incur in that defense. We will not pay for any part of the legal action which is not based on a Covered Risk or which is excepted or excluded from coverage in this Policy. We can end Our duty to defend Your Title under section 4 of the Conditions. This Policy is not complete without Schedules A and B. Form 5020500 (5-1-10) Page 3 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) EXCLUSIONS In addition to the Exceptions 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 those portions of any law or government regulation concerning: a. building; b. zoning; c. land use; d. improvements on the Land; e. land division; and f. environmental protection. This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27. 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 limit the coverage described in Covered Risk 14 or 15. 3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17. 4. Risks: a. that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they are recorded 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.e., 25, 26, 27 or 28. 5. 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 not limit the coverage described in Covered Risk 11 or 21. 7. The transfer of the Title of You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors' rights laws. CONDITIONS 1. DEFINITIONS a. Easement - the right of someone else to use the Land for a special purpose. b. Estate Planning Entity — a legal entity or Trust established by a Natural Person for estate planning. c. Known - things about which You have actual knowledge. The words "Know" and "Knowing" have the same meaning as Known. d. Land - the land or condominium unit described in paragraph 3 of Schedule A and any improvements on the Land which are real property. e. Mortgage - a mortgage, deed of trust, trust deed or other security instrument. f. Natural Person - a human being, not a commercial or legal organization or entity. Natural Person includes a trustee of a Trust even if the trustee is not a human being. g. Policy Date - the date and time shown in Schedule A. If the insured named in Schedule A first acquires the interest shown in Schedule A by an instrument recorded in the Public Records later than the date and time shown in Schedule A, the Policy Date is the date and time the instrument is recorded. h. Public Records - records that give constructive notice of matters affecting Your Title, according to the state statutes where the Land is located. i. Title - the ownership of Your interest in the Land, as shown in Schedule A. j. Trust - a living trust established by a Natural Person for estate planning. k. We/Our/Us - First American Title Insurance Company. I. You Your - the insured named in Schedule A and also those identified in Section 2.b. of these Conditions. 2. CONTINUATION OF COVERAGE a. This Policy insures You forever, even after You no longer have Your Title. You cannot assign this Policy to anyone else. b. This Policy also insures: (1) anyone who inherits Your Title because of Your death; (2) Your spouse who receives Your Title because of dissolution of Your marriage; (3) the trustee or successor trustee of a Trust or any Estate Planning Entity to whom You transfer Your Title after the Policy Date; (4) the beneficiaries of Your Trust upon Your death; or (5) anyone who receives Your Title by a transfer effective on Your death as authorized by law. c. We may assert against the insureds identified in Section 2.b. any rights and defenses that We have against any previous insured under this Policy. 3. HOW TO MAKE A CLAIM a. Prompt Notice Of Your Claim (1) As soon as You Know of anything that might be covered by this Policy, You must notify Us promptly in writing. (2) Send Your notice to First American Title Insurance Company, Attn: Claims National Intake Center, 1 First American Way, Santa Ana, California 92707. Phone: 888-632-1642. Please include the Policy number shown in Schedule A, and the county and state where the Land is located. Please enclose a copy of Your policy, if available. (3) If You do not give Us prompt notice, Your coverage will be reduced or ended, but only to the extent Your failure affects Our ability to resolve the claim or defend You. b. Proof Of Your Loss (1) We may require You to give Us a written statement signed by You describing Your loss which includes: (a) the basis of Your claim; (b) the Covered Risks which resulted in Your loss; (c) the dollar amount of Your loss; and (d) the method You used to compute the amount of Your loss. Form 5020500 (5-1-10) Page 4 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) 4. S. CONDITIONS (Continued) (2) We may require You to make available to Us records, checks, letters, contracts, insurance policies and other papers which relate to Your claim. We may make copies of these papers. (3) We may require You to answer questions about Your claim under oath. (4) If you fail or refuse to give Us a statement of loss, answer Our questions under oath, or make available to Us the papers We request, Your coverage will be reduced or ended, but only to the extent Your failure or refusal affects Our ability to resolve the claim or defend You. OUR CHOICES WHEN WE LEARN OF A CLAIM a. After We receive Your notice, or otherwise learn, of a claim that is covered by this Policy, Our choices include one or more of the following: (1) Pay the claim; (2) Negotiate a settlement; (3) Bring or defend a legal action related to the claim; (4) Pay You the amount required by this Policy; (5) End the coverage of this Policy for the claim by paying You Your actual loss resulting from the Covered Risk, and those costs, attorneys' fees and expenses incurred up to that time which We are obligated to pay; (6) End the coverage described in Covered Risk 16, 18, 19 or 21 by paying You the amount of Your insurance then in force for the particular Covered Risk, and those costs, attorneys' fees and expenses incurred up to that time which We are obligated to pay; (7) End all coverage of this Policy by paying You the Policy Amount then in force, and those costs, attorneys' fees and expenses incurred up to that time which We are obligated to pay; (8) Take other appropriate action. b. When We choose the options in Sections 4.a. (5), (6) or (7), all Our obligations for the claim end, including Our obligation to defend, or continue to defend, any legal action. c. Even if We do not think that the Policy covers the claim, We may choose one or more of the options above. By doing so, We do not give up any rights. HANDLING A CLAIM OR LEGAL ACTION a. You must cooperate with Us in handling any claim or legal action and give Us all relevant information. b. If You fail or refuse to cooperate with Us, Your coverage will be reduced or ended, but only to the extent Your failure or refusal affects Our ability to resolve the claim or defend You. c. We are required to repay You only for those settlement costs, attorneys' fees and expenses that We approve in advance. d. We have the right to choose the attorney when We bring or defend a legal action on Your behalf. We can appeal any decision to the highest level. We do not have to pay Your claim until the legal action is finally decided. e. Whether or not We agree there is coverage, We can bring or defend a legal action, or take other appropriate action under this Policy. By doing so, We do not give up any rights. 6. LIMITATION OF OUR LIABILITY a. After subtracting Your Deductible Amount if it applies, We will pay no more than the least of: (1) Your actual loss; (2) Our Maximum Dollar Limit of Liability then in force for the particular Covered Risk, for claims covered only under Covered Risk 16, 18, 19 or 21; or (3) the Policy Amount then in force. and any costs, attorneys' fees and expenses that We are obligated to pay under this Policy. b. If We pursue Our rights under Sections 4.a.(3) and 5.e. of these Conditions and are unsuccessful in establishing the Title, as insured: (1) the Policy Amount then in force will be increased by 10% of the Policy Amount shown in Schedule A, and (2) You shall have the right to have the actual loss determined on either the date the claim was made by You or the date it is settled and paid. c. (1) If We remove the cause of the claim with reasonable diligence after receiving notice of it, all Our obligations for the claim end, including any obligation for loss You had while We were removing the cause of the claim. (2) Regardless of 6.c.(1) above, if You cannot use the Land because of a claim covered by this Policy: (a) You may rent a reasonably equivalent substitute residence and We will repay You for the actual rent You pay, until the earlier of: (i) the cause of the claim is removed; or (ii) We pay You the amount required by this Policy. If Your claim is covered only under Covered Risk 16, 18, 19 or 21, that payment is the amount of Your insurance then in force for the particular Covered Risk. (b) We will pay reasonable costs You pay to relocate any personal property You have the right to remove from the Land, including transportation of that personal property for up to twenty-five (25) miles from the Land, and repair of any damage to that personal property because of the relocation. The amount We will pay You under this paragraph is limited to the value of the personal property before You relocate it. d. All payments We make under this Policy reduce the Policy Amount then in force, except for costs, attorneys' fees and expenses. All payments We make for claims which are covered only under Covered Risk 16, 18, 19 or 21 also reduce Our Maximum Dollar Limit of Liability for the particular Covered Risk, except for costs, attorneys' fees and expenses. e. If We issue, or have issued, a Policy to the owner of a Mortgage that is on Your Title and We have not given You any coverage against the Mortgage, then: (1) We have the right to pay any amount due You under this Policy to the owner of the Mortgage, and any amount paid shall be treated as a payment to You under this Policy, including under Section 4.a. of these Conditions; (2) Any amount paid to the owner of the Mortgage shall be subtracted from the Policy Amount then in force; and Form 5020500 (5-1-10) Page 5 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) CONDITIONS (Continued) (3) If Your claim is covered only under Covered Risk 8. THIS POLICY IS THE ENTIRE CONTRACT 16, 18, 19 or 21, any amount paid to the owner This Policy, with any endorsements, is the entire contract between of the Mortgage shall also be subtracted from Our You and Us. To determine the meaning of any part of this Policy, Maximum Dollar Limit of Liability for the particular You must read the entire Policy and any endorsements. Any Covered Risk. changes to this Policy must be agreed to in writing by Us. Any f. If You do anything to affect any right of recovery You claim You make against Us must be made under this Policy and is may have against someone else, We can subtract from subject to its terms. Our liability the amount by which You reduced the 9. INCREASED POLICY AMOUNT value of that right. The Policy Amount then in force will increase by ten percent 7. TRANSFER OF YOUR RIGHTS TO US (10%) of the Policy Amount shown in Schedule A each year for a, When We settle Your claim, We have all the rights and the first five years following the Policy Date shown in Schedule A, remedies You have against any person or property up to one hundred fifty percent (150%) of the Policy Amount related to the claim. You must not do anything to shown in Schedule A. The increase each year will happen on the affect these rights and remedies. When We ask, You anniversary of the Policy Date shown in Schedule A. must execute documents to evidence the transfer to 10. SEVERABILITY Us of these rights and remedies. You must let Us use If any part of this Policy is held to be legally unenforceable, both Your name in enforcing these rights and remedies. You and We can still enforce the rest of this Policy. b. We will not be liable to You if We do not pursue these 11. ARBITRATION rights and remedies or if We do not recover any a. If permitted in the state where the Land is located, You amount that might be recoverable. or We may demand arbitration. c, We will pay any money We collect from enforcing b. The law used in the arbitration is the law of the state these rights and remedies in the following order: where the Land is located. (1) to Us for the costs, attorneys' fees and expenses c. The arbitration shall be under the Title Insurance We paid to enforce these rights and remedies; Arbitration Rules of the American Land Title Association (2) to You for Your loss that You have not already ("Rules'). You can get a copy of the Rules from Us, collected; d. Except as provided in the Rules, You cannot join or (3) to Us for any money We paid out under this Policy consolidate Your claim or controversy with claims or on account of Your claim; and controversies of other persons. (4) to You whatever is left. e. The arbitration shall be binding on both You and Us. d. If You have rights and remedies under contracts (such The arbitration shall decide any matter in dispute as indemnities, guaranties, bonds or other policies of between You and Us. insurance) to recover all or part of Your loss, then We f. The arbitration award may be entered as a judgment in have all of those rights and remedies, even if those the proper court. contracts provide that those obligated have all of Your 12. CHOICE OF LAW rights and remedies under this Policy. The law of the state where the Land is located shall apply to this policy. In Witness Whereof, First American Title Insurance Company has caused its corporate name to be hereunto affixed by its authorized officers as of Date of Policy shown in Schedule A. SEPINTER 24, aG� 1163 Rrst American Title insurance Company Dennis J. Gilmore President (This Policy is valid only when Schedules A and B are attached) Timothy Kemp Secretary Copyright 2006-2010 American Land Title Association. All rights reserved. The use of this form is restricted to ALTA licensees and ALTA members in good standing as of the date of use. All other uses are prohibited. Reprinted under license from the American Land Title Association. Form 5020500 (5-1-10) Page 6 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) Homeowner's Policy of Title Insurance First � inerican 1-1tle For a One -To -Four Family Residence ISSUED BY First American Title Insurance Company Eagle Schedule A POLICY NUMBER 5020500-4219279 Name and Address of Title Insurance Company FIRST AMERICAN TITLE INSURANCE COMPANY, 1 First American Way, Santa Ana, CA 92707 File No.: O -SA -4219279 Premium: $4,120.00 Policy Amount: $2,770,000.00 Policy Date (and Time): February 19, 2013 at 3:28 P.M. Deductible Amounts and Maximum Dollar Limits of Liability for Covered Risk 16, 18, 19 and 21: Our Maximum Dollar Limit of Liability Street Address of the Land: 2 Beacon Bay, Newport Beach, California 92660 Name of Insured: $10,000 $25,000 $25,000 $5,000 Sally Fletcher, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust 2. Your interest in the Land covered by this Policy is: A Leasehold Estate created by that certain MEMORANDUM OF LEASE executed by CITY OF NEWPORT BEACH, Lessor, and PATRICK WARD AND CAROL WARD, HUSBAND AND WIFE AS JOINT TENANTS, Lessee, and subject to all of the provisions therein contained, as disclosed by SAID DOCUMENT, dated July 31, 2007 recorded August 02, 2007 as INSTRUMENT NO. 07- 484299 of Official Records of Orange County, California. An unrecorded lease dated February 15, 2013, executed by City of Newport Beach, a California municipal corporation and charter city as lessor and Sally Fletcher, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust as lessee, as disclosed by a Memorandom of Lease recorded February 19, 2013 as Instrument No. 2013000101679 of Official Records. Form 5020500 (5-1-10) Page 7 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) Your Deductible Amount Covered Risk 16: 1% of Policy Amount Shown in Schedule A or $2,500 (whichever is less) Covered Risk 18: 1% of Policy Amount Shown in Schedule A or $5,000 (whichever is less) Covered Risk 19: 1% of Policy Amount Shown in Schedule A or $5,000 (whichever is less) Covered Risk 21: 1% of Policy Amount Shown in Schedule A or $2,500 (whichever is less) Our Maximum Dollar Limit of Liability Street Address of the Land: 2 Beacon Bay, Newport Beach, California 92660 Name of Insured: $10,000 $25,000 $25,000 $5,000 Sally Fletcher, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust 2. Your interest in the Land covered by this Policy is: A Leasehold Estate created by that certain MEMORANDUM OF LEASE executed by CITY OF NEWPORT BEACH, Lessor, and PATRICK WARD AND CAROL WARD, HUSBAND AND WIFE AS JOINT TENANTS, Lessee, and subject to all of the provisions therein contained, as disclosed by SAID DOCUMENT, dated July 31, 2007 recorded August 02, 2007 as INSTRUMENT NO. 07- 484299 of Official Records of Orange County, California. An unrecorded lease dated February 15, 2013, executed by City of Newport Beach, a California municipal corporation and charter city as lessor and Sally Fletcher, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust as lessee, as disclosed by a Memorandom of Lease recorded February 19, 2013 as Instrument No. 2013000101679 of Official Records. Form 5020500 (5-1-10) Page 7 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) 3. The Land referred to in this Policy is described as: Real property in the City of Newport Beach, County of Orange, State of California, described as follows: A LEASEHOLD ESTATE CREATED BY THAT CERTAIN MEMORANDUM OF LEASE EXECUTED BY THE CITY OF NEWPORT BEACH, A CHARTERED MUNICIPAL CORPORATION, LESSOR, AND PATRICK WARD AND CAROL WARD, HUSBAND AND WIFE AS JOINT TENANTS, LESSEE, AND SUBJECT TO ALL PROVISIONS THEREIN CONTAINED, AS DISCLOSED BY SAID DOCUMENT, DATED JULY 31, 2007 RECORDED AUGUST 2, 2007 AS INSTRUMENT NO. 07-484299 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. PARCEL 1: THE WESTERLY 45 FEET OF LOT 2, AND THE EASTERLY 10 FEET OF LOT 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN UPON A RECORD OF SURVEY MAP RECORDED IN BOOK 9 PAGES 42 AND 43 OF RECORD OF SURVEYS, ON FILE IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH CERTAIN PORTIONS OF ADJOINING LOTS I AND H AS SHOWN UPON SAID MAP AND AS MORE FULLY IN SAID LEASE. PARCEL 2: THAT PORTION OF LOT "I" FRONTING THE WESTERLY 45 FEET OF LOT 1 AND THE EASTERLY 10 FEET OF LOT 1 AND EXTENDING SOUTHWARD TO THE U.S. BULKHEAD LINE. PARCEL 3: THAT PORTION OF LOT "H" FRONTING THE WESTERLY 45 FEET OF LOT 2 AND THE EASTERLY 10 FEET OF LOT 1, BEING THAT PORTION BOUNDED BY THE PROLONGATION OF THE WEST AND EAST LINES OF THE WESTERLY 45 FEET OF LOT 2 AND THE EASTERLY 10 FEET OF LOT 1 NORTHWARD TO THE BOUNDARY OF BEACON BAY SUBDIVISION. APN: 988-88-369 Form 5020500 (5-1-10) Page 8 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) ,, C, Homeowner's Policy of Title Insurance k ` FirstAmerican 7-1t1e For a One -To -Four Family Residence ISSUED BY First American Title Insurance Company R Eagle Schedule V POLICY NUMBER 5020500-4219279 File No.: O -SA -4219279 In addition to the Exclusions, You are not insured against loss, costs, attorneys' fees, and expenses resulting from: General and special taxes and assessments for the fiscal year 2013-2014, a lien not yet due or payable. 2. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code. 3. Any easements or servitudes appearing in the public records. Affects: Common Area. 4. Covenants, conditions and restrictions as contained in LEASE executed by CITY OF NEWPORT BEACH, Lessor, and J.A. BEEK, Lessee, subject to all of the provisions therein contained, as disclosed by SAID DOCUMENT dated November 09, 1927 recorded March 08, 1939 as BOOK 984, PAGE 350 of Official Records of Orange County, California. Said LEASE was amended by a(n) AMENDMENT dated NOT SET OUT as disclosed by SAID DOCUMENT recorded MARCH 9, 1939 as BOOK 988, PAGE 146, BOOK 982, PAGE 449, BOOK 987, PAGE 183; DECEMBER 8, 1945 IN BOOK 1370 PAGE 241 AND JANUARY 25, 1950 IN BOOK 1959 PAGE 189, ALL of Official Records of Orange County, California. (A) Any facts, rights, interest or claims which are not shown by the public records which could be ascertained by making inquiry of the lessors and their successors in interest, in the lease or leases described or referred to herein, and/or the sublease referred to in Schedule A, if any. (B) The effect of any failure to comply with the terms, covenants, conditions and provisions of the lease or leases described or referred to herein, and/or the sublease referred to in Schedule A, if any. 5. Covenants, conditions and restrictions as contained in LEASE executed by CITY OF NEWPORT BEACH, Lessor, and PATRICK WARD AND CAROL WARD, HUSBAND AND WIFE AS JOINT TENANTS, Lessee, subject to all of the provisions therein contained, as disclosed by MEMORANDUM OF LEASE dated July 31, 2007 recorded August 02, 2007 as INSTRUMENT NO. 07-484299 of Official Records of Orange County, California. Form 5020500 (5-1-10) Page 9 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) An unrecorded lease dated February 15, 2013, executed by City of Newport Beach, a California municipal corporation and charter city as lessor and Sally Fletcher, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust as lessee, as disclosed by a Memorandom of Lease recorded February 19, 2013 as Instrument No. 2013000101679 of Official Records. (A) Any facts, rights, interest or claims which are not shown by the public records which could be ascertained by making inquiry of the lessors and their successors in interest, in the lease or leases described or referred to herein, and/or the sublease referred to in Schedule A, if any. (B) The effect of any failure to comply with the terms, covenants, conditions and provisions of the lease or leases described or referred to herein, and/or the sublease referred to in Schedule A, if any. 6. An easement for POLE LINES AND CONDUITS and incidental purposes in the document recorded as BOOK 1075 PAGE 53 of Official Records. Any claim that any portion of the land is below the ordinary high water mark where it was located prior to any artificial or avulsive changes in the location of the shoreline or riverbank. 8. Any rights, interests, or easements in favor of the public, which exist or are claimed to exist over any portion of said land covered by water, including a public right of access to the water. 9. Any claim that any portion of the land is or was formerly tidelands or submerged lands. 10. An easement for PUBLIC UTILITY AND THE CONSTRUCTION, RECONSTRUCTION, OPERATION, MAINTENANCE AND REPAIR OF SAME and incidental purposes in the document recorded March 20, 2001 as INSTRUMENT NO. 01-159276 of Official Records. 11. An easement for PUBLIC UTILITY AND THE CONSTRUCTION, RECONSTRUCTION, OPERATION, MAINTENANCE AND REPAIR OF SAME and incidental purposes in the document recorded March 20, 2001 as INSTRUMENT NO. 03-415999 of Official Records. 12. An easement for PUBLIC UTILITY AND THE CONSTRUCTION, RECONSTRUCTION, OPERATION, MAINTENANCE AND REPAIR OF SAME and incidental purposes in the document recorded June 11, 2003 as INSTRUMENT NO. 03-679816 of Official Records. 13. An easement for UTILITIES and incidental purposes in the document recorded as BOOK 1254, PAGE 371 of Official Records. 14. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded AUGUST 14, 2012 as INSTRUMENT NO. 12-464390 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition, or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, sexual orientation, familial status, disability, handicap, national origin, genetic information, gender, gender identity, gender expression, source of income (as defined in California Government Code § 12955(p)) or ancestry, to the extent such covenants, conditions or restrictions violation 42 U.S.C. § 3604(c) or California Government Code § 12955. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. BEACON BAY COMMUNITY Homeowners Association is referenced in the above mentioned document. 15. Rights of parties in possession. Form 5020500 (5-1-10) Page 10 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) 16. The following note is for your information and will be deleted from any policy: Transfer of the subleasehold interest or leasehold interest referenced herein requires conveyance by assignment with acceptance and agreement by the assignee and consent by the sublessor or lessor. Also if the herein described property is Indian leased land any transfer or encumbrances of said subleasehold interest or leasehold interest must be approved by the Bureau of Indian Affairs. Form 5020500 (5-1-10) Page 11 of 11 ALTA Homeowner's Policy of Title Insurance (Rev. 2-3-10) 101 N N / I » \ \ % 7 RECORDING REQUESTED BY FIRST AMERICAN TITLE COMPANY RESIDENTIAL DIVISION Recording Requested By and When Recorded Return To: City of Newport Beach 3300 Newport Beach Blvd. P.O. Box 1768 Newport Beach, California 92658-8915 Attn: City Clerk (Exempt From Recording Fees Pursuant to Government Code § 27383) C4 q 1 cly1Gi- VaA (SPACE ABOVE THIS LINE FOR RECORDER'S USE) MEMORANDUM OF LEASE THIS LEASE is made and entered into between the City of Newport Beach, a California municipal corporation and charter city ("Lessor") and SALLY FLETCHER, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust ("Lessee"). Lessor hereby leases to Lessee that real property located in the City of Newport Beach, County of Orange, California, described in Exhibit 1" attached hereto ("Property"). The term of the Lease is Fifty (50) years, commencing February 16 2013, and ending February 115 , 2063. This Lease is subject to the terms, conditions and provisions of an unrecorded lease between the parties dated February -&, 2013, which is incorporated herein by reference. Unless extended by a recorded amendment or supplement hereto, this Memorandum of Lease will automatically terminate as of February �, 2063. SEE EXHIBIT "A" APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Date: Z /� By: r Aaron Harp City Attorney ATTEST: �• I� �3 Date: By: Leilani I. Brown City Clerk PO�,A O� v - 'I, CITY OF NEWPORT BEACH, ATTACHED A California municipal corporation Date: d- - 13 13 By: David City Manager LESSEE Date: I, I Sally FletcherO Trustee, The Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust 3 CALIFOh...4A ALL-PURPOSE ACKNOWLED, ,. MENT STATE OF CALIFORNIA } } S.S. COUNTY OF ORANGE } On d — l -.Lo 1-3 before me, L. R. Wal in a Notary Public in and for said state, personally appeared _:5 .11 K f -C At 't- 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 lie/she/thwy executed the same in.Ws/her/fir authorized capacity(i"), and that by his/her/tlapir signature(s) on the instrument the person(s), 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. Signature L4LIt'() __ R. WALIN M. #1862353 MA ublic - California GE COUNTY Exp August 23, 2013 This area for official notarial seal. CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA) COUNTY OF ORANGE ) On February 13, 2013 before me, M Locey, Notary Public, personally appeared David Kiff who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, 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. M. L.00EY Commission # 1864451 WITNESS my hand and official seal. _"�' Notary Public -California Orange County My Comm. Expires Oct 7, 2013 4x_ �� (SEAL) Notary Public in and for said St e OPTIONAL INFORMATION Title or Type of Document: Memorandum of Lease — Fletcher Revocable Trust EXHIBIT "1" LEGAL DESCRIPTION OF THE PROPERTY That certain real property located in the City of Newport Beach, County of Orange, California, described as follows: The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 as all are shown on said map. -i- EXHIBIT 'A' File No.: O -SA -4219279 (26) Property: 2 Beacon Bay, Newport Beach, CA 92660 A LEASEHOLD ESTATE CREATED BY THAT CERTAIN MEMORANDUM OF LEASE EXECUTED BY THE CITY OF NEWPORT BEACH, A CHARTERED MUNICIPAL CORPORATION, LESSOR, AND PATRICK WARD AND CAROL WARD, HUSBAND AND WIFE AS JOINT TENANTS, LESSEE, AND SUBJECT TO ALL PROVISIONS THEREIN CONTAINED, AS DISCLOSED BY SAID DOCUMENT, DATED JULY 31, 2007 RECORDED AUGUST 2, 2007 AS INSTRUMENT NO. 07-484299 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. PARCEL 1: THE WESTERLY 45 FEET OF LOT 2, AND THE EASTERLY 10 FEET OF LOT 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN UPON A RECORD OF SURVEY MAP RECORDED IN BOOK 9 PAGES 42 AND 43 OF RECORD OF SURVEYS, ON FILE IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH CERTAIN PORTIONS OF ADJOINING LOTS I AND H AS SHOWN UPON SAID MAP AND AS MORE FULLY IN SAID LEASE. PARCEL 2: THAT PORTION OF LOT "I" FRONTING THE WESTERLY 45 FEET OF LOT 1 AND THE EASTERLY 10 FEET OF LOT 1 AND EXTENDING SOUTHWARD TO THE U.S. BULKHEAD LINE. PARCEL 3: THAT PORTION OF LOT "H" FRONTING THE WESTERLY 45 FEET OF LOT 2 AND THE EASTERLY 10 FEET OF LOT 1, BEING THAT PORTION BOUNDED BY THE PROLONGATION OF THE WEST AND EAST LINES OF THE WESTERLY 45 FEET OF LOT 2 AND THE EASTERLY 10 FEET OF LOT 1 NORTHWARD TO THE BOUNDARY OF BEACON BAY SUBDIVISION. A.P.N. 988-88-369 O -SA -4219279 1 of 1 EXHIBIT "E" Recording Requested By and When Recorded Return To: City of Newport Beach 3300 Newport Beach Blvd. P.O. Box 1768 Newport Beach, California 92658-8915 Attn: City Clerk (Exempt From Recording Fees Pursuant to Government Code § 27383) (SPACE ABOVE THIS LINE FOR RECORDER'S USE) MEMORANDUM OF LEASE THIS LEASE is made and entered into between the City of Newport Beach, a California municipal corporation and charter city ("Lessor") and SALLY FLETCHER, Trustee of the Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust ("Lessee"). Lessor hereby leases to Lessee that real property located in the City of Newport Beach, County of Orange, California, described in Exhibit 1" attached hereto ("Property"). The term of the Lease is Fifty (50) years, commencing February 15 , 2013, and ending February A5, 2063. This Lease is subject to the terms, conditions and provisions of an unrecorded lease between the parties dated February IS , 2013, which is incorporated herein by reference. Unless extended by a recorded amendment or supplement hereto, this Memorandum of Lease will automatically terminate as of February L, 2063. APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Date: Z /x/13 CITY OF NEWPORT BEACH, A California municipal corporation Date:—2J tj� )� By: �i2I c� By: Aaron Harp David City Attorney �� City Manager ATTEST: LESSEE Date: p( `j" Date: By: Leilani I. grown City Clerk By. Sally Fletcher U Trustee, The Family Bypass Trust under The Douglas and Sally Fletcher Revocable Trust 9 CALIFORNIA ALL-PURPOSE .ACKNOWLEDGEMENT STATE OF CALIFORNIA } ) S.S. COUNTY OF ORANGE } On o2 -1 • kO 3 before me, L.R. Wal -i n a Notary Public in and for said state, personally appeared S a { l V who proved to me on the basis of satisfactory evidence to be the person(e) whose name(.&) is/.axe subscribed to the within instrument and acknowledged to me that€/she/ y executed the same in ls/her/thgir authorized capacity('�w), and that by /her/their signature(s) on the instrument the person(,&), 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. Signature LJLWO_.'�—� L. R. WALIN o-' COMM. #1862353 • Notary Public - California ORANGE COUNTY My Comm. Exp August 23, 2013 This area for official notarial seal. CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA) COUNTY OF ORANGE ) On February 13, 2013 before me, M Locey, Notary Public, personally appeared David Kiff who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. M. i_OCEY Commission # 1864451 z ,~y►° Notary Public - California Z WITNESS my hand and official seal. Orange County > My Comm. Expires Oct 7, 2013 SEAL Notary Public in and for said Stat OPTIONAL INFORMATION Title or Type of Document: Memorandum of Lease — Fletcher Revocable Trust EXHIBIT 1" LEGAL DESCRIPTION OF THE PROPERTY That certain real property located in the City of Newport Beach, County of Orange, California, described as follows: The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 as all are shown on said map. -i- RECORDING REQUESTED FIRSTAMERICAN TITLE COMPANY RESIDENTIAL DIVISION RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City Manager's Office City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 TERMINATION OF LEASEHOLD This agreement is made this 10day of February, 2013, by and between the CITY OF NEWPORT BEACH, hereinafter called "Lessor'' and PATRICK WARD AND CAROL WARD, husband and wife as joint tenants, hereinafter called "Lessee". RECITALS A. Lessor and Lessee executed a lease on August 2, 2007, and subsequently recorded August 2, 2007, by the County Recorder of Orange County, California as Instrument No. 2007000484299. By the terms of the lease, the following described property was leased to Lessee until July 1, 2044. The northwesterly 45.00 fee of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 of said Record of Survey. B. Lessee desires to terminate said lease and all rights to the possession of the lease premises and to release Lessor from its obligations under the lease, and Lessor desires to accept said termination and to release Lessee from their obligations under the lease. AGREEMENT Lessee agrees to terminate the lease as described herein above as of February 4 , 2013, and Lessor agrees to accept such termination, and Lessor and Lessee agree to discharge and release each other from all obligations under the lease as of said date. SEE EXHIBIT "A" ATTACHED EXECUTED on Ct6mQ a4 13 Z13 at Newport Beach, Orange County, California ATTEST: � h City Clerk APPR AS TO FORM: City Attorney vto CITY OF NEWPORT BEACH BY: )�, c-.- oi, ! Lessor: Dave Kiff, City Manager BY: Lessee: Patrick Ward BY: 2,2,11 Lessee: Carol Ward -'r.., LL ,.. c_. e,re 1V, N Ir, I 11III t.i, 1:',.Ilrr, .11 r AI I Ir PC, 111 7 E F I - State of California ) CALIFORNIA ALL-PURPOSE - County of Ovu e ) CERTIFICATE OF ACKNOWLEDGMENT On before me, f'� 8e-1ttjN0�-Q1q�b (here insert name and title of the officer) personally appeared %rLWctviJ p t a 2 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. _ certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. W14 ' DANIEL BELL - COMM. #1971449 Z WITNESS my hand and official seal. �° ''� Notary Public California 70 Z ` , Orange County - My Comm, Expires Mar, 82016 F Signature (Seal) 3 Zi OPTIONAL INFORMATION - s Although the information in this section is not required by law, it could prevent fraudulent removal and reattachment of this - acknowledgment to an unauthorized document and may prove useful to persons relying on the attached document. Description of Attached Document The preceding Certificate of Acknowledgment is attached to a document Method of Signer Identification titled/for the purpose of Proved to me on the basis of satisfactory evidence: _❑ form(s) of identification 0 credible witness(es) F 6 Notarial event is detailed in notary journal on: - containing pages, and dated Page # Entry # The signer(s) capacity or authority is/are as: Notary contact: ❑ Individual(s) Other 3 ❑ Attorney -in -Fact ❑ Additional Signer(s) Signer(s) Thumbprint(s) _ ❑ Corporate Officer(s) Title(s) ❑ 3 ❑ Guardian/Conservator ❑ Partner - Limited/General ❑ Trustee(s) 3 ❑ Other: representing: Name(s) of Person(s) or Entity(ies) Signer is Representing L1N3V�J:13110Nb)V`lel/10Ya_Vl{1_lrl-'C 3 31; _r(.,.;_11 -1".. .I o" J'1J:_I!3"rli. .,.._... .11,X13 r 0" "i 1_ 11 3 !"I"�JJ3 l tIN" 1111111 11U311� 111'.[IAV__li 1',"1 311 J.11'.1INl: ,ll.. © Copyright 2007-2011 Notary Rotary, Inc. PO Box 41400, Des Moines, IA 50311-0507. All Rights Reserved. Item Number 101772. Please contact your Authorized Reseller to purchase copies of this form. CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA) COUNTY OF ORANGE ) On February 13, 2013 before me, M Locey, Notary Public, personally appeared Dave Kiff who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. -------------------- M. LOCEY Commission # 1864451 �w Notary Public - California z WITNESS my hand and official seal. Orange County > My Comm. Expires Oct 7, 2013 yl�_ (SEAL) Notary Public in and for said Sta OPTIONAL INFORMATION Title or Type of Document: Termination of Leasehold — Patrick Ward and Carol Ward EXHIBIT 'A' File No.: O -SA -4219279 (26) Property: 2 Beacon Bay, Newport Beach, CA 92660 A LEASEHOLD ESTATE CREATED BY THAT CERTAIN MEMORANDUM OF LEASE EXECUTED BY THE CITY OF NEWPORT BEACH, A CHARTERED MUNICIPAL CORPORATION, LESSOR, AND PATRICK WARD AND CAROL WARD, HUSBAND AND WIFE AS JOINT TENANTS, LESSEE, AND SUBJECT TO ALL PROVISIONS THEREIN CONTAINED, AS DISCLOSED BY SAID DOCUMENT, DATED JULY 31, 2007 RECORDED AUGUST 2, 2007 AS INSTRUMENT NO. 07-484299 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. PARCEL 1: THE WESTERLY 45 FEET OF LOT 2, AND THE EASTERLY 10 FEET OF LOT 11 IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN UPON A RECORD OF SURVEY MAP RECORDED IN BOOK 9 PAGES 42 AND 43 OF RECORD OF SURVEYS, ON FILE IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH CERTAIN PORTIONS OF ADJOINING LOTS I AND H AS SHOWN UPON SAID MAP AND AS MORE FULLY IN SAID LEASE. PARCEL 2: THAT PORTION OF LOT "I" FRONTING THE WESTERLY 45 FEET OF LOT 1 AND THE EASTERLY 10 FEET OF LOT 1 AND EXTENDING SOUTHWARD TO THE U.S. BULKHEAD LINE. PARCEL 3: THAT PORTION OF LOT "H" FRONTING THE WESTERLY 45 FEET OF LOT 2 AND THE EASTERLY 10 FEET OF LOT 1, BEING THAT PORTION BOUNDED BY THE PROLONGATION OF THE WEST AND EAST LINES OF THE WESTERLY 45 FEET OF LOT 2 AND THE EASTERLY 10 FEET OF LOT 1 NORTHWARD TO THE BOUNDARY OF BEACON BAY SUBDIVISION. A.P.N. 988-88-369 O -SA -4219279 1 of 1 LEASE THIS LEASE is made and entered into as of the day of Aous�, 2007, by and between the CITY OF NEWPORT BEACH, a Charter City and municipal corporation essor"), and PATRICK AND CAROL WARD, Husband and Wife as Joint Tenants, ("Lessee"), regarding the real property commonly referred to as Beacon Bay Lot 2. RECITALS A. The City of Newport Beach, by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes of 1978 (the "Beacon Bay Bill"), holds the right, title and interest to certain tidelands and uplands commonly known as Beacon Bay and generally described in Exhibit A attached hereto and incorporated by reference. B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands from the public trust and specifically authorizes the lease of the property for residential purposes subject to certain express statutory conditions. C. Beacon Bay, including the "Westerly Portion" thereof, has been divided into individual lots, with each lot leased by the City for residential purposes until December 31, 2005. D. On November 3, 1987, a majority of electors of the City approved a measure which authorized the City Council to enter into new leases of residential lots in Beacon Bay for a period not to exceed fifty (50) years. E. On November 3, 1992, a majority of electors of the City approved Measure M which authorized the City Council to lease tidelands and waterfront property consistent with the provisions of state law. F. The City Council, pursuant to the authority conferred by the electors, entered into negotiations with current lessees and the parties have agreed on the terms and conditions of a new lease with a fifty (50) year term, provision for adjustments in lease payments to reflect changes in the value of Beacon Bay leaseholds, and a recalculation of lease payments in the event of a transfer of the Lease by the Current Lessee or any Subsequent Lessee (as defined herein). G. Lessee acknowledges that the terms and conditions of this Lease may result in Lessee paying substantially more or less than another Lessee for similar property depending upon the date this Lease is executed, the date of any subsequent transfer, and the consideration paid for transfers of similarly situated property. H. Lessee acknowledges that accurate and complete reporting to the City of all consideration paid for the transfer of this Lease is vitally important to the City in that failure to fully report all consideration could materially reduce the amount of rent received by the City from other Beacon Bay Lessees. I. Lessor and Lessee acknowledge that the City has agreed to a fifty (50) year term and limited lease payment increases in consideration of provisions which require payment of rent approximating fair market rental value, without regard to any advantage maintained by Current Lessees, upon transfer by Current Lessees and payment of deferred rent in the event the Lease is not signed on or before the Effective Date (as defined herein). J. The California State Lands Commission has reviewed the form of this Lease and determined that it is in conformance with the provisions of relevant statutes, rules and regulations, including, without limitation, the Beacon Bay Bill. K. Lessor has determined that this Lease is consistent with provisions of the Beacon Bay Bill, the Charter, General Plan and Zoning Ordinance of the City of Newport Beach, and of all other applicable state and local laws. NB1-187371.V205/24/94 L. Lessor has determined it is in the best interests of the citizens of Newport Beach to maintain the residential character of Beacon Bay and to enter into new leases with Current Lessees under the terms and conditions specified in this agreement. NOW, THEREFORE, in consideration of the foregoing recitals and the covenants in this lease, the parties agree as follows: LEASED LAND. Lessor hereby leases to Lessee the real property commonly known as Beacon Bay Lot 2 (the "Leased Land"), which is more particularly described in Exhibit B, and generally depicted on Exhibit A, each attached hereto and incorporated by reference, subject to the limitations on use specified in Section 6. As used in this Lease, the term "Premises" shall refer to the Leased Land and any improvements constructed thereon. Lessor expressly reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Leased Land and the right to grant and transfer the same, together with all necessary and convenient rights to explore for, develop, produce and extract and take the same, subject to the express limitation that any and all operations for the exploration, development, production, extraction and taking of any such substance shall be carried on at levels below the depth of five hundred feet (500') from the surface of the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations concerning the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code. 2. TERM. The term of this Lease shall commence on the Execution Date, but in no event prior to the Effective Date, and shall expire on the date fifty (50) years following the Effective Date, unless earlier terminated as provided in this Lease. 3. RENTAL. A. Definitions. For the purposes of this Lease, the following terms shall be defined as specified in this paragraph. In certain cases, the definition of the term contains operative language that affects the rights of the parties: (1) "Actual Sales Value" shall mean the total of all consideration paid for the non-exempt transfer of this Lease or the Pre-existing Lease, including the improvements on the Leased Land, from the Current Lessee, or Subsequent Lessee, to another person, excluding any consideration paid for the transfer of personal property in connection with such transaction. (2) "Average Actual Sales Value Rent" shall mean two and one-half percent (2.5 %) of the mean of the Actual Sales Value of the non-exempt transfer of a similarly situated (waterfront or interior) Beacon Bay parcels as specified in this subparagraph. Average Actual Sales Value Rent shall be the mean of the Actual Sales Value of the three similarly situated parcels most recently transferred. Exempt transfers, as defined in Paragraph 3.B(3), shall not be used to calculate Average Actual Sales Value rent. (3) "CPI" shall mean the Consumer Price Index - Los Angeles -Anaheim -Riverside Area, All Urban Consumers, All Items, published by the United States Department of Labor, Bureau of Labor Statistics (1982-1984=100). If the 1982-1984 base of said Consumer Price Index should hereafter be changed, then the new base shall be converted to the 1982-1984 base and the base as so converted shall be used. In the event that the Consumer Price Index, as now compiled and published, shall cease to be published, then the successor index shall be used provided that an appropriate conversion from the old index to the new index can feasibly be made. If such conversion cannot be made, or if no such index is published, then another index most nearly comparable thereto recognized as authoritative shall be substituted by agreement. 2 (4) "Current Lessee" shall mean the person or persons who, as of April 1, 1994 (the "Cut-off Date"), was or were the Lessee under the Pre-existing Lease. (5) "Deferred Rent" shall mean the total rent that a Current Lessee would have paid had this Lease been executed on the Effective Date, through and including the date on which this Lease was first executed, less the rent actually paid pursuant to the Pre- existing Lease, together with interest at the rate of eight percent (8%) per annum calculated on the balance due at the end of each Lease Year or portion thereof. (6) "Effective Date" shall mean July 1, 1994. (7) "Execution Date" shall mean the date when this Lease is executed by Lessee. (8) "Initial Rent" shall mean the effective net rent for the Leased Land as determined by the appraisal of George Hamilton Jones, with due consideration to the leasehold advantage created by the Pre-existing Lease, all as shown on Exhibit C attached hereto and incorporated herein by reference. (9) "Person" shall mean any natural person or natural person(s) and does not include any corporation, association, or business entity in any form except a financial institution or other bona fide lender acting in the capacity of a lender or an inter vivos or living trust. (10) "Pre-existing Lease" shall mean the Lease for the Leased Land which was effective on January 1, 1988, and would, absent this Lease, expire on July 1, 2006. (11) "Transferred" shall mean any sale, assignment, sublease or other transaction, other than an exempt transfer as defined in Paragraph 3.13(3), pursuant to which the right to possession of the premises and the right to sign a new lease identical to this Lease is transferred to another person. B. Rental Payments. Lessee shall pay annual rent in the sum of Fifty-seven thousand seventy-five and 0/100s ($57,075.00), payable at the rate of Four thousand seven hundred fifty-six and 25/100s ($4,756.25) per month. Lessee shall also pay, if applicable, deferred rent in the sum of N/A upon execution of this Lease. Rent shall be adjusted every seven (7) years after the date of transfer in accordance with the provisions of Paragraph 3.13(4). Annual rent, deferred rent, and periodic adjustments are based upon the following: 3 (1) Execution Before Effective Date. In the event this Lease is executed by the Lessee on or before the Effective Date, Rent shall be paid as follows: (a) Current Lessee: Current Lessee shall pay annual rent equal to Initial Rent as specified in Exhibit C. Thereafter, so long as there has been no transfer of this Lease by the Current Lessee (other than an exempt transfer as set forth in Paragraph 33(3), rent shall remain as specified in this subparagraph notwithstanding the provisions of Paragraph 3.13(4). (b) In the event of any transfer of this Lease to a Subsequent Lessee, the Subsequent Lessee shall pay annual rent equal to two and one-half percent (2.5%) of the Actual Sales Value determined as of the date of the transfer in accordance with the provisions of paragraph 3.A(1). Thereafter, rent shall be adjusted every seven years after the date of the transfer in accordance with the provisions of paragraph 3.13(4). (c) In the event of any transfer of this Lease to a Subsequent Lessee in a transaction other than an arm's length assignment of this Lease, and sale of the improvements on the Leased Land, if any, such as a gift or transfer by inheritance other than an exempt transfer under Paragraph 3.B(3), the Subsequent Lessee shall pay annual rent equal to the Average Actual Sales Value Rent calculated as of the date of the transfer in accordance with the provisions of Paragraph 3.A(2). (2) Execution After the Effective Date. In the event this Lease is first executed after the Effective Date, rent shall be determined and paid as follows: (a) Current Lessee/Within Five Years After Effective Date: In the event this Lease is executed by the Current Lessee within five (5) years after the Effective Date, the Current Lessee shall pay annual rent equal to Initial Rent plus a sum calculated by multiplying the difference between Initial Rent and Average Actual Sales Value Rent by a fraction equal to the number of months between the Effective Date and Execution Date, divided by sixty. The Current Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. Thereafter, so long as there has been no transfer of this Lease by the Current Lessee, rent shall remain as specified in this subparagraph, notwithstanding the provisions of Paragraph 3.B(4). (b) Current Lessee/More Than Five Years After Effective Date: In the event this Lease is executed by the Current Lessee more than five (5) years after the Effective Date, the Current Lessee shall pay annual rent equal to Average Actual Sales Value Rent calculated as of the date of execution in accordance with the provisions of Paragraph 3.A(2). The Current Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. Thereafter, rent shall be adjusted every seven (7) years after the date of execution in accordance with the provisions of Paragraph 3.13(4). (c) Subsequent Lessee: In the event the Current Lessee transfers the Pre- existing Lease to a Subsequent Lessee who wishes to sign this Lease after the Cut-off Date, the Subsequent Lessee shall pay annual rent equal to two and one-half percent (2.5%) of Actual Sales Value determined as of the date of execution and in accordance with Paragraph 3.A(1). The Subsequent Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. The annual rent shall be adjusted every seven (7) years following the Execution Date in accordance with the provisions of Paragraph 3.13(4). 4 (d) Subsequent Lessee: In the event of any transfer of this Lease to a Subsequent Lessee who wished to sign this Lease after the Cut-off Date in a transaction other than an arm's length assignment of this Lease, and sale of the improvements on the Leased Land, if any, such as a gift or transfer by inheritance other than an exempt transfer under Paragraph 3.13(3), the Subsequent Lessee shall pay annual rent equal to the Average Actual Sales Value Rent calculated as of the date of the transfer in accordance with the provisions of Paragraph 3.A(2). The Subsequent Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. The annual rent shall be adjusted every seven (7) years following the Execution Date in accordance with the provisions of Paragraph 3.B(4). (3) Exempt Transfers. The provisions of Paragraph 3.13 regarding transfers shall not operate to increase rent if: (a) Lessee is assigning an interest in this Lease to a trustee under a deed of trust for the benefit of a lender; (b) the transfer is caused by the death of a spouse and the full interest of the deceased spouse is transferred to a surviving spouse; (c) the transfer of an interest in this Lease is between or among tenants in common or joint tenants in ownership of the leasehold estate created by this Lease, and such tenants in common or joint tenants first acquired their respective interests in this Lease simultaneously; (d) the transfer or assignment is by a bona fide lender acquiring title by foreclosure or deed in lieu of foreclosure of a trust deed; or (e) the transfer is a sublease of the premises for three years or less; provided, however, that in determining the term of a sublease, any options or rights to renew or extend the sublease shall be considered part of the term whether or not exercised; (f) the transfer is caused by the dissolution of the marriage of Lessee and the full interest of one of the spouses is transferred to the other spouse; (g) the transfer is to an inter vivos trust, living trust or other similar estate planning arrangement of Lessee; provided, however, that the provisions of Paragraph 3.0 shall apply upon the death of such Lessee if the beneficiary of such trust or other arrangement is other than the surviving spouse or a tenant in common or joint tenant in ownership of the leasehold estate created by this Lease, and such tenants in common or joint tenants first acquired their respective interests in this Lease simultaneously; or (h) the transfer is to a guardian or custodian of Lessee appointed due to the physical or mental incapacity of Lessee; provided, however, that the provisions of Paragraph 3.0 shall apply upon the death of such Lessee unless the transferee is the surviving spouse or a tenant in common or joint tenant in ownership of the leasehold estate created by this Lease, and such tenants in common or joint tenants first acquired their respective interests in this Lease simultaneously. (4) Rent Adjustments. (a) Except as provided in Paragraphs 3.13(I)(a), 3.13(2)(a) and 3.13(3), on the seventh (7th) anniversary of the Execution Date of this Lease, or the seventh (7th) anniversary of the date of any transfer of this Lease by any Current or Subsequent Lessee, rent shall be adjusted to reflect any increase or decrease in the cost of living, which adjustment shall be determined as set forth hereinafter. The most recently published CPI figure shall be determined as of the date ninety (90) days prior to the adjustment date, and rent payable during the ensuing seven (7) year period shall be determined by increasing or decreasing the then current rent by a percentage equal to the percentage increase or decrease, if any, in the CPI as of the Execution Date, or the date of the most recent rental adjustment, or the date of any transfer of this Lease by any Current or Subsequent Lessee, whichever is later. In no event shall rent be increased or decreased by a sum greater than forty percent (40%) of the rent paid by Lessee as of the later of (i) the Execution Date, or (ii) the last rental adjustment date. Lessor shall endeavor to notify Lessee of rental adjustments at least forty-five (45) days prior to the end of each seventh (7th) lease year; provided, however, failure of Lessor to give forty-five (45) days' notice does not relieve Lessee from the obligation to pay increased rent or the right to pay less rent in the event of a decrease in the CPI; and, provided further, that Lessee shall have no obligation to pay rent increases which apply to any period greater than ninety (90) days prior to the receipt by Lessee of Lessor's notice of an increase in rent. (b) In the event Lessee is two or more persons owning the leasehold estate created hereby as tenants in common or joint tenants, and less than all of such persons transfer their interest in this Lease to a person other than to an existing tenant in common or joint tenant, the rent adjustment shall be prorated to reflect the percentage interest being transferred to a third party. For example, if two persons are the Lessee as tenants in common as to equal one-half interests, and one of such persons transfers his/her 50% interest to a third party, the rent shall be adjusted as provided in Paragraph 3.13(2)(c), and thereafter as provided in Paragraph 3.13(4)(a), and the resultant rental increase multiplied by the percentage transferred (50%) to determine the rental increase; provided, however, that any subsequent transfer of an interest in this Lease to such third party shall not be exempt under subparagraph 3.13(3). (5) Installment Payments/Grace Period. Lessee shall pay rent in equal monthly installments, in advance, with payment due on or before the first day of the month for which rent is paid. Rent shall be prorated during any month when a transaction which increases rent becomes effective other than the first day of that month. No late payment charge applies to payments received by Lessor on or before 5:00 P.M. on the fifteenth (15th) day of the month for which the payment is made ("Grace Period") . If a rent payment, or any portion thereof, is received by Lessor after expiration of the Grace Period, Lessee shall pay Lessor a late payment charge equal to four percent (4%) of each late payment, or portion thereof. Rent payments shall be payable to the City of Newport Beach and sent, or delivered, to the Finance Director at the address specified for service of notices. Rent shall be payable by Lessee to Lessor in such coin or currency to the United States as at the time of payment is legal tender for public and private debts. Lessor and Lessee agree that late charges specified in this paragraph represent a fair and reasonable estimate of the cost Lessor will incur by reason of any late payment by Lessee. Any late or missed payment of rent constitutes a default pursuant to paragraph 13 of this Lease. Any failure by Lessor to declare a default and initiate termination of this Lease due to a late or missed payment shall not be considered a waiver of the right of Lessor to do so for that or any other late or missed payment. C. Credit to Tidelands Fund. In calculating Initial Rent under this Lease, a credit was given to certain of the Current Lessees equal to the annual amortization of the present value of the additional property tax to be paid by such lessees during the remaining period of the Pre-existing Lease. This credit, commonly referred to as the "tax advantage", is shown on Exhibit D for each affected lot. This credit was extended by Lessor to Current Lessees as consideration for entering into this Lease. As a consideration in its approval of this Lease, the California State Lands Commission required Lessor to credit its State supervised Tidelands Trust Fund by an amount equivalent to the tax advantage derived from those lots in Beacon Bay comprising tidelands. This amount is shown on Exhibit D for each affected lot comprising tidelands. Accordingly, Lessor has unilaterally agreed to annually calculate the amount of such tax advantage derived from the 9 tidelands parcels in Beacon Bay and to credit an equivalent amount as revenue to the State supervised Tidelands Trust Fund. This provision is included in this Lease to acknowledge the agreement of Lessor with the California State Lands Commission, and does not affect the rights and obligations of Lessor or Lessee under this Lease. 4. TRANSFERS. A. Conditions Precedent to Transfer. Lessee may transfer this Lease subject to the prior written consent of Lessor, which consent shall not be unreasonably withheld, delayed or conditioned. Lessor shall consent to any transfer when Lessee and the proposed transferee have complied with the following: (1) Lessee shall furnish Lessor with executed copies of each and every document used to effect the transfer. (2) Lessee or the proposed transferee shall pay to Lessor a transfer fee of one hundred dollars ($100.00); (3) Lessee shall execute a "Termination of Leasehold Interest" for recordation; and (4) The proposed transferee shall execute a new lease and execute a "Memorandum of Lease" for recordation, which lease shall be identical to this Lease and have a term equal to the remaining term of this Lease at the time of the transfer. B. Transfer Information. The parties to any non-exempt transfer of this Lease shall provide Lessor with all information relevant to a determination of the total consideration paid for the transfer, as well as all documents which are relevant to the total consideration paid for the transfer. Lessee and the proposed transferee shall provide this information not later than forty- five (45) days prior to the proposed effective date of the transfer of this Lease. Lessor shall have the right, at its sole discretion, to commission an appraisal of the fair market value of this Lease and improvements thereon as of the date of transfer. Any such appraisal shall be completed not later than thirty (30) days after receipt by Lessor of the aforementioned information from the Lessee. If the value determined by the appraiser commissioned by Lessor exceeds the stated total consideration to be paid based on the information received from the Lessee by more than ten percent (10%), Lessor shall so notify the Lessee and provide Lessee with a full copy of such appraisal report, and said value shall be deemed the Actual Sales Value for purposes of calculating Average Actual Sales Value Rent and rental payments unless within fifteen (15) days after receiving such notice and the report the Lessee notifies Lessor that Lessee elects to cause an appraisal of the fair market value of this Lease and improvements thereon as of the date of transfer to be conducted by an independent appraiser. In such event, Lessee cause such appraisal to be completed no later than thirty (30) days after the notice to Lessor and shall provide Lessor with a full copy of the appraisal upon completion. The Actual Sales Value for purposes of calculating Average Actual Sales Value Rent and rental payments shall be the greater of (i) the stated consideration for the transfer, or (ii) the average of the two appraisals. Any appraisal commissioned by Lessor or Lessee under this Paragraph 4.13 shall be conducted by an MAI appraiser licensed to conduct business in the State of California and experienced in residential appraisals in Southern California. C. Exempt Transfer Information. Lessor's consent is not required for the "exempt transfers" referenced in Paragraph 3.B(3); provided, however, Lessee shall furnish Lessor with copies of all documents used to effect any exempt transfer. D. Audit of Subleases. It is the intent of the parties that transfers referred to in Section 3.B(3)(e) shall only be exempt from the further provisions of Paragraph 3.13 (in respect of rental adjustments) if such subleases are not substantially equivalent to, do not have substantially the same economic effect as, or are intended to disguise, a transfer by the then Lessee of all or substantially all of his/her interest in this Lease to the putative sublessee. Lessor shall at all times have the right, upon written request to the Lessee, to receive copies of all written agreements, and to be advised in full of all oral agreements, between the Lessee and any sublessee of the Leased Land. Any purported sublease of the premises which is determined to be substantially equivalent 7 to, or have substantially the same economic effect as, or is intended to disguise, a transfer by the then Lessee of all or substantially all of his/her interest in this Lease to the putative sublessee shall be void and of no force or effect, and such attempted or purported sublease shall, at the option of Lessor, (i) be an event of default by the Lessee under this Lease, or (ii) permit Lessor to treat such sublease as a transfer of this Lease subject to the provisions of Section 33. 5. ENCUMBRANCES. A. Right to Encumber. Lessee may encumber this Lease by deed of trust, mortgage, or similar instrument, in favor of any bona fide lender ("Lender") in a bona fide loan transaction for any purpose without the consent of Lessor. To determine whether a loan is a bona fide lending transaction, and not an arrangement for transfer of the possession or title to the Premises to the putative lender, Lessee and the lender agree to provide Lessor with all documentation executed between Lessee and the lender concerning the loan upon request of Lessor. Neither Lessee nor Lessor shall have the power to encumber Lessor's interest in the Leased Land. Any encumbrance shall be subject to all covenants, conditions and restrictions in this Lease and to all rights and interests of Lessor except as otherwise expressly provided in this Lease. Lessee shall give Lessor prior written notice of any encumbrance. B. Notice to Lender. Lessor shall have no obligation to give any Lender any written notice pursuant to this Lease unless the Lender has given Lessor written notice of its name, address, and nature of encumbrance ("Complying Lender") . Lessor shall give all Complying Lenders a copy of any written notice of default, notice of termination or other notice which may affect Lessee's rights under this Lease. Notice shall be deemed given by Lessor to Lender five (5) days following deposit in the United States mail, certified and return receipt requested, postage prepaid, and sent to Lender at the address furnished in writing by Lender. C. Modification. Lessor and Lessee agree that they will not modify, surrender or cancel this Lease by mutual agreement without the prior written consent of Lender. D. Rights of Lender. Any Lender holding or the beneficiary of a security interest or lien on this Lease and the leasehold estate created hereby shall have the right, during the term of the Lease, to: (1) perform any act required of Lessee pursuant to this Lease; (2) transfer this Lease to the purchaser at any foreclosure sale, the assignee in the event of an assignment in lieu of foreclosure, or to acquire the interest of Lessee pursuant to foreclosure or assignment and thereafter transfer this Lease to the Lender's successor. Lender shall have no right to transfer this Lease unless and until Lender has cured all defaults requiring the payment or expenditure of money by Lessee. E. Right of Lender to Cure Default. Lessor shall give written notice of any default or breach of this Lease by Lessee to Lender and afford Lender the opportunity, after notice, to: (1) cure the breach or default within ten (10) days after expiration of the time period granted to Lessee for curing the default if the default can be cured by payment of money; (2) cure the breach or default within thirty (30) days after expiration of the time period granted to Lessee for curing the default when the breach or default can be cured within that period of time; or (3) cure the breach or default in a reasonable time when something other than money is required to cure the breach or default and cannot be performed within thirty (30) days after expiration of the time period granted to Lessee for curing the default, provided the acts necessary to cure the breach are commenced within thirty (30) days and thereafter diligently pursued to completion by Lender. F. Foreclosure in Lieu of Cure. Lender may forestall termination of this Lease for a default or breach by Lessee by commencing foreclosure proceedings subject to strict compliance with the following: (1) proceedings are commenced within thirty (30) days after the later of (i) expiration of the time period granted to Lessee for curing the default, or (ii) service on Lender of the notice describing the breach or default; (2) the proceedings are diligently pursued to completion in the manner authorized by law; and (3) Lender performs all of the terms, covenants and conditions of this Lease requiring the payment or expenditure of money by Lessee until the proceedings are complete or are discharged by redemption, satisfaction, payment or conveyance of this Lease to Lender. G. New Lease. Notwithstanding any other provision of this Lease, should this Lease terminate or be terminated because of any default or breach by Lessee, Lessor shall enter into a new lease with Lender as lessee provided: (1) the written request for the new lease is served on Lessor by Lender within thirty (30) days after the termination of this Lease. (2) the new lease contains the same terms and conditions as this Lease except for those which have already been fulfilled or are no longer applicable. (3) on execution of the new lease by Lessor, Lender shall pay any and all sums that would be due upon execution of the new lease, but for its termination, and shall fully remedy, or agree in writing to remedy, any other default or breach committed by Lessee that can reasonably be remedied by Lender. (4) Lender shall, upon execution of the new lease, pay all reasonable costs and expenses (including attorney's fees) incurred in terminating this Lease, recovering possession of the premises from Lessee, in preparing the new lease. H. Miscellaneous. The following provisions shall apply to Lessor, Lessee and any Lender: (1) Any Lender shall be liable to perform the obligations of the Lessee under this Lease only so long as the Lender holds title to this Lease; (2) Lessee shall, within ten (10) days after the recordation of any trust deed or other security instrument, record, at Lessee's sole expense, Lessor's written request for a copy of any notice of default and/or notice of sale under any deed of trust as provided by state law. 6. USE AND MAINTENANCE. A. Use of Leased Land. The Leased Land shall be solely for residential purposes. Lessee may demolish, construct, remodel, reconstruct and maintain structures on the Leased Land for residential purposes so long as the structures and construction are authorized by appropriate City permit and fully comply with all City ordinances, resolutions, regulations, policies, and plans. Lessee shall also obtain permission to construct and/or maintain structures from the California Coastal Commission and any other state agency if required by law. B. Maintenance of Improvements. Lessor shall not be required to make any changes, alterations, additions, improvements, or repairs in on or about all or part of the Premises. Lessee shall, at all times during the term of this Lease and without any cost or expense to Lessor, keep and maintain, the Premises, including, without limitation, all structures, facilities, walks, curbs, parkways and other improvements, in good order and repair and in a clean, safe, sanitary and orderly condition. Lessee shall repair or reconstruct any improvements on the Leased Land 9 following any damage or destruction thereof, unless the improvements are being destroyed in conjunction with remodeling or reconstruction and Lessor has consented, in writing, to the damage or destruction. Lessee shall cause to be constructed, maintained and repaired all utilities, pipes, walls, sewers, drains, and other improvements on the Premises to the extent required by law or as necessary to maintain the improvement in good order and repair and safe and sanitary condition. C. Compliance with Laws. Lessee shall make, or cause to be made, any additions, alterations or repairs to any structure or improvement on the Premises which may be required by, and Lessee shall otherwise observe and comply with, any law, statute, ordinance, plan, resolution or policy applicable to the Premises. Lessee shall indemnify, defend and hold Lessor harmless from and against any loss, liability, action, claim or damage, arising out of, or in any way related, to Lessee's failure to comply with, and perform pursuant to, provisions of this subparagraph C. All repairs, additions, and alterations to the structures or improvements on the Premises shall conform to all applicable laws, ordinances, regulations, plans, policies and resolutions and all work shall be performed with reasonable diligence, completed within a reasonable time, and performed at the sole cost and expense of Lessee. D. As Is Condition of Premises. Lessee expressly accepts the Premises "as is" and acknowledges that Lessor has made no representations or warranties as to the suitability of the property or any construction or improvement. Lessee shall conduct all tests necessary to determine the suitability of the property for any proposed construction or improvement, including, without limitation, the amount and extent of any fill, and related factors. Lessee expressly acknowledges that Lessor shall not be liable for any damage or loss resulting from any subsurface or soil condition in, on, or under the Premises or adjacent property. Lessee expressly acknowledges that, while the legislature of the State of California has purportedly removed the public trust restrictions on use of the Property pursuant to the Beacon Bay Bill, the Leased Land may constitute filled tidelands, and Lessor has made no representation or warranty relative to the validity of the Beacon Bay Bill or the power of the legislature of the State of California to remove public trust restrictions on tidelands through legislation. Notwithstanding the foregoing, in the event of any challenge to the right and power of Lessor to lease the Leased Land for the purposes provided in this Lease, Lessor agrees, at its sole cost and expense, to use all reasonable efforts to resist and defend against such challenge and to seek a ruling or judgment affirming and upholding the right and power of Lessor to lease the Leased Land for the purposes provided in this Lease. 7. TAXES AND UTILITIES. It is understood by Lessor and Lessee that this Lease shall give rise to a possessory interest tax obligation and that the execution of this Lease will constitute a reassessment event which may give rise to a material increase in the possessory interest tax currently payable by Lessee under the Pre-existing Lease. Lessee shall pay, before delinquent, all utility charges and any general and special taxes, assessments or other governmental charges, if any, which may be levied on the Leased Land, and/or any improvements, including, without limitation, any possessory interest tax. Any lien for unpaid utilities, taxes, assessments or charges shall not attach to the leasehold interest but only to improvements located on the Leased Land. 8. USE AND MAINTENANCE OF COMMON AREA. Lessee shall have the right to use the streets, beaches, walkways, tennis courts, docks, piers, and common landscaped areas in Beacon Bay (as depicted on Exhibit A) and which are leased to the Beacon Bay Community Association by Lessor in consideration of the maintenance thereof by such Association and rent to be paid by individual Lessees under their respective leases. 9. MAINTENANCE AND IMPROVEMENT OF INFRASTRUCTURE. Lessor has no obligation to install, improve, repair, or maintain streets, curbs, gutters, water lines, sewer lines, drainage facilities, street lighting or other facilities used by the residents of Beacon Bay (Infrastructure). Notwithstanding Section 8 above, Lessor reserves the right, after a five (5) year period following the Effective Date and upon approval by the Lessees representing a majority of the lots in Beacon Bay, to improve and maintain streets, curbs, gutters, water lines, sewer lines', drainage facilities, 10 street lighting, telephone and electricity lines and other Infrastructure facilities in Beacon Bay at its initial cost and to assess Lessee for a pro rata share of such costs, and to collect such costs from Lessee in the form of rent over the remaining term of this Lease. 10. COMMUNITY ASSOCIATION. A. Membership in Association. As a material part of the consideration of this Lease, and as an express condition to the continuance of any of the rights of Lessee pursuant to this Agreement, Lessee agrees to become, and during the term of this Lease to remain, a member in good standing of the Beacon Bay Community Association. B. Compliance with Rules and Regulations. Lessee agrees to abide by the Articles of Incorporation, bylaws, and all rules and regulations of the Association, and to pay to the Association, before delinquency, all valid dues, fees, assessments and other charges properly levied or assessed by the Association. Lessee's failure to comply with the provisions of Paragraph A and this Paragraph B shall constitute a material breach of this Lease. C. Lessor Maintenance of Common Areas. In addition to the rights reserved to Lessor pursuant to the provisions of Section 9, if the Community Association fails or ceases to maintain community facilities, Lessor may, at its option and without obligation, assume the obligations of the Community Association to maintain, repair, install or improve community facilities. In such event, Lessee shall pay a pro rata share of Lessor's reasonable expenses in maintaining and operating the community facilities, including a reasonable management fee or the fee charged by a management agent. Lessee's pro rata share shall be determined by dividing Lessor's costs by the number of residential lots within Beacon Bay (currently seventy-two lots) . Lessee's pro rata share of the annual costs incurred by Lessor shall be paid within thirty (30) days after written notice of the amount due, and any failure to pay shall constitute a material breach of this Lease. The costs of maintaining and operating community facilities shall be determined annually and solely from the financial records of Lessor. 11. COVENANTS, CONDITIONS AND RESTRICTIONS. Lessee agrees to abide and be bound by all covenants, conditions, restrictions and reservations as contained in Exhibit E attached hereto and incorporated herein by this reference. Said covenants, conditions and restrictions shall run with the Leased Land and shall be binding on Lessee and Lessee's successors in interest. 12. INDEMNIFICATION. Lessee shall indemnify, defend and hold harmless Lessor, its City Council, Boards and Commissions, officers, agents, servants and employees from and against any and all actions, causes of action, obligations, costs, damages, losses, claims, liabilities and demands of any nature whatsoever, including reasonable attorneys' fees, regardless of the merit or outcome of any such claim or suit, arising out of, or in any way related, to the condition of the Premises, or the use or possession of the Premises by Lessee, or Lessee's employees, agents, representatives, guests or invitees, as well as any activity, work or things which may be permitted or suffered by Lessee in or on the Premises. Lessee shall indemnify, defend and hold harmless Lessor, its City Council, Boards and Commissions, officers, agents, servants and employees from and against any and all actions, causes of action, obligations, costs, damages, losses, claims, liabilities, and demands of any nature whatsoever, including reasonable attorneys' fees, accruing or resulting to any and all persons, firms or corporations furnishing or supplying work, services, materials, equipment or supplies arising from or in any manner connected to the use or possession of the Premises by Lessee or from any activity, work or things which may be permitted or suffered by Lessee in or about the Premises. Without limiting the generality of the foregoing, Lessee hereby assumes all risk of damage to property or injury to persons in or about the Premises from any cause except for damage or injury resulting from the negligence or willful, fraudulent or criminal conduct by Lessor and/or its officers, employees, agents and representatives, and Lessee hereby waives all claims in respect thereof against Lessor. 13. INSURANCE. 11 A. General Conditions. All insurance required to be carried pursuant to this Section 13 shall be obtained from reputable carriers licensed to conduct business in the State of California. Each policy required to be carried pursuant to this Section 13 shall name Lessee and Lessor as additional named insureds, and shall provide that the policy may not be surrendered, cancelled or terminated, or coverage reduced, without not less than twenty (20) days prior written notice to Lessor. B. Fire Insurance. Lessee shall, during the term of this Lease, insure all structures and improvements on the Leased Land against loss or damage by fire or other risk for residential structures. The insurance shall provide coverage to at least ninety percent (90%) of the full insurable replacement value of all improvements on the Leased Land, with the loss payable to Lessee unless this Lease is terminated by Lessor for default of Lessee in which case the proceeds of insurance shall be paid to Lessor. C. Liability Insurance. Lessee shall, at Lessee's sole cost and expense, procure and maintain during the term of this Lease, a broad form comprehensive coverage policy of public liability insurance which insures Lessee and Lessor against any loss or liability caused by, or in any way related to, the condition, for Lessee's use and occupation, of the premises in amounts not less than: (1) $500,000 per occurrence for injury to, or death of, one person; (2) $100,000 for damage to or destruction of property. 14. DEFAULT. A. Events of Default. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Lessee: (1) the abandonment of the Premises by Lessee; (2) the failure by Lessee to make any payment of rent when due if the failure continues for three (3) days after written notice has been given to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable unlawful detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this paragraph; (3) the failure by Lessee to perform any of the provisions of this Lease and any Exhibits attached hereto to be performed by Lessee, other than described in Paragraph 14.A(2) above, if the failure to perform continues for a period of thirty (30) days after written notice thereof has been given to Lessee. If the nature of Lessee's default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be in default if Lessee commences the cure within said thirty (30) day period and thereafter diligently prosecutes the cure to completion; or (4) the failure of Lessee to provide Lessor with all relevant information regarding the total consideration paid in conjunction with any transfer of this Lease; (5) the making by Lessee of any general assignment, or general arrangement for the benefit of creditors; the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt or a petition for reorganization or arrangement of any law relating to bankruptcy unless the same is dismissed within sixty (60) days; the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in the Lease, where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in the Lease, where such seizure is not discharged within thirty (30) days. Notices given under this Paragraph 14.A shall specify the alleged default and the applicable lease provisions, and shall demand that Lessee perform the provisions of this Lease or pay the rent that 12 is in arrears, as the case may be, within the applicable period of time. No such notice shall be deemed a forfeiture or a termination of this Lease unless Lessor so elects in the Notice. B. Landlord's Remedies. In the event of any default by Lessee as defined in Paragraph 14.A, Lessor may, in addition to any rights or remedies permitted by law, do the following: (1) Terminate Lessee's right to possession of the Leased Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event, Lessor shall be entitled to recover from Lessee all amounts to which Lessor is entitled pursuant to Section 1951.2 of the California Civil Code, or any other provision of law, including, without limitation, the following: (a) The worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of the loss than Lessee proves could be reasonably avoided; and (b) any other amount necessary to compensate Lessor for all detriment proximately caused by Lessee's failure to perform obligations pursuant to this Lease or which in the ordinary course of things would be likely to result from the breach, including, without limitation, the cost of recovering possession, expenses of reletting (including necessary repair, renovation and alteration) reasonable attorneys' fees, and any other reasonable costs. The "worth at the time of award" of all rental amounts other than that referred to in clause (i) above shall be computed by allowing interest at the rate of ten percent (10%) per annum from the date amounts accrue to Lessor. The worth at the time of award of the amount referred to in clause (i) shall be computed by discounting such amount at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award. (2) Without terminating or affecting the forfeiture of this Lease or, in the absence of express written notice of Lessor's election to do so, relieving Lessee of any obligation pursuant to this Lease, Lessor may, but need not, relet all or a portion of the Premises at any time, or from time to time, and on such terms and conditions as Lessor, at its sole discretion, deems appropriate. Whether or not the Premises are relet, Lessee shall pay all amounts required by this Lease up to the date that Lessor terminates Lessee's right to possession of the Premises. Lessee shall make such payments at the time specified in the Lease and Lessor need not wait until termination of the Lease to recover sums due by legal action. If Lessor relets all or a portion of the Premises, the reletting shall not relieve Lessee of any obligation pursuant to this Lease; provided, however, Lessor shall apply the rent or other proceeds actually collected by virtue of the reletting against amounts due from Lessee. Lessor may execute any agreement reletting all or a portion of the leased premises and Lessee shall have no right to collect any proceeds due Lessor by virtue of any reletting. Lessor shall not, by any reentry or reletting or other act, be deemed to: (a) Have accepted any surrender by Lessee of this Lease or the leased premises; (b) have terminated this Lease; or (c) have relieved Lessee of any obligation pursuant to this Lease unless Lessor has given Lessee express written notice of Lessor's election to do so. (3) Lessor may terminate this Lease by express written notice to Lessee of its election to do so. The termination shall not relieve Lessee of any obligation which has accrued prior to the date of termination. In the event of termination, Lessor shall be entitled to recover the amount specified in Paragraph 14.13(1). 13 C. Default By Lessor. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligation. If the nature of Lessor's obligation is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if Lessor commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. D. Stay of Obligations. Neither party shall be under any obligation to perform or comply with its obligations pursuant to this Lease after the date of any default by the other party. E. Determination of Rental Value. In any action or unlawful detainer commenced by Lessor, the reasonable rental value of the Leased Land shall be deemed to be the amount of rent and additional rent (such as reimbursement for costs of Infrastructure improvements or the payment of taxes or assessments) for the period of the unlawful detainer, unless Lessor/Lessee shall prove to the contrary by competent evidence. F. Waiver of Rights. The failure or delay of either party to exercise any right or remedy shall not be construed as a waiver of such right or remedy or any default by the other party. Lessor's acceptance of any rent shall not be considered a waiver of any preexisting breach of default by Lessee other than the failure to pay the particular rent accepted regardless of Lessor's knowledge of the preexisting breach of default at the time rent is accepted. G. Waiver of Right of Redemption. Lessee waives any right of redemption or relief from forfeiture pursuant to Code of Civil Procedure Sections 1174 and 1179 and/or pursuant to any existing or future statutory or decisional law in the event Lessee is evicted or Lessor takes possession of the Premises by reason of Lessee's default. 15. SURRENDER OF POSSESSION UPON EXPIRATION OR TERMINATION. A. Surrender of Premises. Upon the expiration or termination of this Lease, Lessee agrees to peaceably deliver possession of, and agrees to vacate without contest, legal or otherwise, the Leased Land. Lessor, at its sole discretion, may record a document evidencing the expiration or termination of the leasehold interest. Lessee waives any right to receive relocation assistance or similar form of payment. B. Removal of Improvements. Upon the expiration of the term of this Lease, and on condition that Lessee is not then in default of any of the provisions of this Lease, Lessee shall have the right to remove from the Leased Land all buildings and improvements built or installed on the Leased Land. Removal of any building or improvement shall be at the sole cost and expense of Lessee and removal must be complete no later than ninety (90) days after expiration of the term of this Lease. Lessee shall fill all excavations and remove all foundations, debris and other parts of the buildings or improvements remaining after removal and surrender possession of the Premises to Lessor in a clean and orderly condition. In the event any of the buildings and improvements are not removed within the time provided in this Paragraph 15.13, they shall become the property of Lessor without the payment of any consideration. 16. EMINENT DOMAIN. A. Definitions of Terms. (1) The term "total taking" as used in this Section 16 shall mean the taking of the entire Premises under the power of eminent domain or the taking of so much of the Leased Land as to prevent or substantially impair the use thereof by Lessee for the residential purposes. (2) The term "partial taking" shall mean the taking of a portion only of the Premises which does not constitute a total taking as defined above. 14 (3) The term "taking" shall include a voluntary conveyance by Lessor to an agency, authority or public utility under threat of a taking under the power of eminent domain in lieu of formal proceedings. (4) The term "date of taking" shall be the date upon which title to the Premises or portion thereof passes to and vests in the condemnor. B. Effect of Taking. If, during the term hereof, there shall be a total taking or partial taking under the power of eminent domain, then the leasehold estate of the Lessee in and to the Leased Land or the portion thereof taken shall cease and terminate as of the date of taking of said Leased Land. If this Lease is so terminated in whole or in part, all rentals and other charges payable by Lessee to Lessor hereunder and attributable to the Leased Land or portion thereof taken shall be paid by Lessee up to the date of taking by the condemnor, and the parties shall thereupon be released from all further liability in relation thereto. C. Allocation of Award - Total Taking. All compensation and damages awarded for the total taking of the Premises and Lessee's leasehold interest therein shall be allocated as follows: (1) The Lessor shall be entitled to an amount equal to the sum of the following: (a) The fair market value of the Premises as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such fair market value by the factor for the present worth of one dollar ($1.00) at nine percent (9%) per annum compound interest for the number of years remaining from the date of taking to the date of the expiration of the term of this Lease; and (b) The present worth of rents due during the period from the date of taking to the date of the expiration of the term of this Lease, computed by multiplying the annual rent then payable by the factor for the present worth of one dollar ($1.00) per annum at nine percent (9%) per annum compound interest (Inwood Coefficient) for the number of years in such period. (2) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinafter provided. D. Allocation of Award - Partial Taking. All compensation and damages awarded for the taking of a portion of the Leased Premises shall be allocated and divided as follows: (1) The Lessor shall be entitled to an amount equal to the sum of the following: (a) The proportionate reduction of the fair market value of the Premises as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such proportionate reduction in fair market value by the factor for the present worth of one dollar ($1.00) at nine percent (9%) per annum compound interest for the number of years remaining from the date of taking to the date of expiration of the term of this Lease; and (b) The present worth of the amount by which the rent is reduced computed by multiplying the amount by which the annual rent is reduced by the factor for the present worth of $1.00 per annum at 9% per annum compound interest (Inwood Coefficient) for the number of years remaining from the date of taking to the date of expiration of the term of this Lease. (2) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinabove provided. E. Reduction of Rent on Partial Taking. In the event of a partial taking, the rent payable by Lessee hereunder shall be adjusted from the date of taking to the date of the expiration of the term of this Lease. Such rental adjustment will be made by reducing the basic rental payable by 15 Lessee in the ratio that the Fair Market Rental Value of the Premises at the date of taking bears to the Fair Market Rental Value of the Premises immediately thereafter. 17. ATTORNEYS' FEES. Should either party be required to employ counsel to enforce the terms, conditions and covenants of this Lease, the prevailing party shall recover all reasonable attorneys' fees and charges (and court costs if applicable) incurred therein, whether or not court proceedings were commenced. 18. REMEDIES CUMULATIVE. The rights, powers, elections and remedies of the Lessor or Lessee contained in this Lease shall be construed as cumulative and no one of them shall be considered exclusive of the other or exclusive of any rights or remedies allowed by law, and the exercise of one or more rights, powers, elections or remedies shall not impair or be deemed a waiver of Lessor's or Lessee's rights to exercise any other. 19. NO WAIVER. No delay or omission of either party to exercise any right or power arising from any omission, neglect or default of the other party shall impair any such right or power or shall be construed as a waiver of any such omission, neglect or default on the part of the other party or any acquiescence therein. No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease shall be construed as a waiver of any succeeding breach of the same or of any of the terms, covenants, agreements, restrictions or conditions of this Lease. 20. COMPLIANCE WITH LAWS. Lessee covenants and agrees to comply with all rules, regulations, statutes, ordinances and laws of the State of California, County of Orange, City of Newport Beach, or any other governmental body or agency having lawful jurisdiction over the Leased Land. 21. NOTICES. Any notice or notices provided for by this Lease or by law, to be given or served by Lessee, may be given or served by mail, registered or certified, with postage prepaid, on the City of Newport Beach, addressed to the Mayor, City Manager, or City Clerk, 3300 Newport Boulevard, P.O. Box 1768, Newport Beach, California 92659-1768, or at such other address as may be hereafter furnished to Lessee in writing. If notice is intended to be served by Lessor on Lessee, it may be served either: A. By delivering a copy to the Lessee personally; or B. By depositing the Notice in the United States Mail, registered or certified, with postage prepaid, to the residence or business address furnished by Lessee; or C. If the Lessee is absent from the Leased Land by leaving a copy with some person of suitable age and discretion who may be occupying the Leased Land; or D. If no one can be found, then by affixing a copy of the notice in a conspicuous place on the Premises and also sending a copy through the mail addressed to the Lessee. Such service upon Lessor or Lessee shall be deemed complete upon the earlier of (i) actual delivery, or (ii) the expiration of seventy-two (72) hours from and after the deposit in the United States mail of such notice, demand or communication. 22. HOLDING OVER. This Lease shall terminate and become null and void without further notice upon the expiration of the term of this Lease. Any holding over by Lessee after expiration of the term shall not constitute a renewal of this Lease or give Lessee any rights in or to the Premises except as expressly provided in this Section. The 16 parties agree this Lease cannot be renewed, extended, or in any manner modified except in a writing signed by all parties. However, if Lessee, or anyone claiming under Lessee, shall remain in possession of the Premises after expiration of the term of this Lease without any agreement in writing between the parties and Lessor accepts rent from Lessee, then Lessee shall be deemed a tenant from month-to-month subject to the provisions of this Lease insofar as they may be applicable to a month-to-month tendency. The month-to-month tendency may be terminated by Lessor or Lessee upon thirty (30) days' prior written notice to the other. 23. QUIET ENJOYMENT. Lessor covenants and agrees that Lessee, upon paying the rent set forth herein and observing and keeping all covenants and agreements to be observed or kept by Lessor hereunder, shall quietly have and enjoy the Leased Land during the term of this Lease without hindrance or molestation by anyone claiming by or through Lessor. 24. SEVERABILITY. If any term or provision of this Lease shall, to any extent be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall remain valid and enforceable to the fullest extent permitted by law. 25. MISCELLANEOUS. A. Representations. Lessee agrees that no representations as to the Premises have been made by Lessor or by any person or agent acting for Lessor. Lessor and Lessee agrees and acknowledges that this document contains the entire agreement of the parties, that there are no verbal agreements" representations, warranties or other understandings affecting this agreement, and Lessor and Lessee, as a material part of the consideration of this Lease, waives all claims against the other for recision, damages, or otherwise by reason of any alleged covenant, agreement or understanding not contained in this Lease. B. Inurement. Each and all of the covenants, conditions and agreements herein contained shall,' in accordance with the context, inure to the benefit of Lessor and Lessee and apply to and bind Lessor and Lessee, as the case may be, their respective heirs, legatees, devisees, executors and administrators, successors, assigns, licensees, permittees, or any person who may come into possession or occupancy of said Leased Land or any part thereof in any manner whatsoever. Nothing in this paragraph shall in any way alter the provisions herein contained against assignment or subletting. C. Joint Several Liability. If Lessee consists of more than one person, the covenants, obligations and liabilities of Lessee pursuant to this Lease shall be the joint and several covenants, obligations and liabilities of such persons. D. Captions. The section and paragraph captions used in this Lease are for the convenience of the parties and shall not be considered in the construction or interpretation of any provision. E. Gender. In this Lease, the masculine gender includes the feminine and neuter and the singular number includes the plural whenever the context so requires. `F IN WITNESS WHEREOF, the parties have caused this Lease to be executed as of the date first above written. LESSOR: CITY OF NEWPORT BEACH, By: Title:' CITY MANAGER ATTEST: p��T CITY CLERK FOaN�P APPROVED AS TO FORM: 14 1 Z-� CITY ATTOR EY LESSEES: LOA), PATRICK WARD �A CA OL WARD 100 NOTARY PAGE STATE OF CALIFORNIA } } S.S. COUNTY OFz��V'LO } On / -�l� -' , before me,"Z6_aA -1 ,7:V6 XC a Notary Public , personally, Cci-C61 v -to- -C-L appeared , personally known to me (or 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 vy4ich the person(s) acted, executed the instrument. WITNESS mv/hlanid official s Signature STATE OF CALIFORNIA } } S.S. COUNTY OF } w°°rte BRIAN J. FOXCROFT t:s' NOTARY PUBLIC -C ALIFORNIA J, N COMMISSION # 1575867 c ORANGE COUNTY `4LIF a� My Comm. Exp. May .3, 2009 On , before me, a Notary Public , personally appeared , personally known to me (or 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. WITNESS my hand and official seal. Signature VO CL 3A V .1 31Vc c '2 �Cl o, s rri f ` r r .' : ids ��/ q`'�t� +r, i �t c'• r� �.� � y� •� , 1 s ,v OQ�o r p• ((t 5 •G1 Y a `moi L CCI '� a - •� tL o I _ ,/t�.°� `do-' C�g J Cl 1p 1 r r P fr, M ell, r rCfl �' J CIN 41 J \ 1 1 to d ►�� 1 J -'\ :�` i`�� `� po ��i r ��°° •ter � � �Cp ro �6 d � go* �a w G' 7 n Gf� Rl ? K .179* tax 6l I1' pDAD Toff •ic[• �. h ill f•-�H� •' S. � OQ. R.S� f�A6 CN •.3 s CIO .1 ll' `n ?C la7' w ��i ccs i o• m c s µ � � g � 'r .r5s• . �r.N• rt t�f' p Ssl• `Coa• �� ts• Exhibit A EXHIBIT B Beacon Bay Lot 2 described as follows: The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 as all are shown on said map. SU Cv ARY OF SALIENT FACTS AND CONCLUSIONS - continued SUMMARY OF VALUE INDICATIONS: Existing (1st year) Unencumberedi Fair Market Contract Effective Lot No. Fee Lot Valu6 Rental Value Rent Net Rent Water Front Lots A $1,330,000 $48,520 $23,125.08 $31,940.00 B $1,200,000 $43,320 $12,506.85 $22,270.00 C $1,031,000 $37,560 $16,625.04 $22,480.00 1 $947,000 $34,200 $8,020.80 $15,030.00 2 $1,131,000 $41,640 $8,825.40 $17,950.00 3 $1,263,000 $46,920 $24,250.08 $31,560.00 4 $1,318,000 $49,120 $10,458.96 $21,260.00 5 $1,341,000 $50,120 $20,012.04 $28,840.00 6 $1,386,000 $51,680 $25,000.00 $34,260.00 7 $1,210,000 $44,800 $24,999.96 $31,870.00 8 $1,177,000 $43,480 $43,750.00 $43,480.00 9 $1,298,000 $47,840 $42,500.04 $44,350.00 10 $1,342,000 $49,600 $24,999.96 $33,540.00 11 $1,122,000 $41,280 $9,020.52 $17,020.00 12 $1,100,000 $40,400 $14,250.00 $22,190.00 13 $1,100,000 $40,400 $23,625.00 $29,450.00 14 $1,243,000 $45,640 $10,312.56 $19,690.00 k 15 $1,265,000 $46,520 $10,836.47 $20,240.00 16 $1,067,000 $39,080 $8,508.48 $16,480.00 17 $1,067,000 $39,080 $16,250.04 $21,750.00 18 $1,067,000 $39,080 $8,508.48 $16,480.00 19 $1,243,000 $45,640 $10,020.02 $19,500.00 20 $1,147,000 $42,320 $8,727.84 $17,910.00 21 $1,058,000 $38,760 $20,224.50 $26,660.00 22 $1,036,000 $37,880 $41,250.00 $37,880.00 ES 1 $1,037,000 $37,880 $28,749.96 $31,920.00 ES 2 $1,037,000 $37,880 $24,625.00 $29,220.00 Subtotals: $31,563,000 $1,160,640 $519,983.08 $705,220.00 Exhibit C - Page 1 SUMMARY OF SALIENT FACTS AND CONCLUSIONS - continued V Exhibit C - Page 2 Existing (1st year) Unencumbered Fair Market Contract Effective Lot No. Fee Lot Value Rental Value Rent Net Rent Interior Lots s 23 $478,000 $14,487 $2,782.32 $6,297.00 24 $501,000 $15,237 $6,125.04 $8,897.00 25 $509,000 $15,537 $3,399.12 $6,977.00 26 $511,000 $15,612 $3,417.72 $6,942.00 27 $519,000 $15,912 $3,436.44 $7,102.00 28 $542,000 $16,775 $4,137.72 $7,785.00 29 $518,000 $15,650 $15,375.00 $15,470.00 30 $510,000 $15,462 $3,551.16 $7,102.00 31 $517,000 $15,725 $8,750.00 $10,515.00 32 $520,000 $15,837 $3,588.48 $7,217.00 33 $528,000 $16,137 $3,607.08 $7,307.00 34 $589,000 $18,200 $4,454.64 $8,490.00 35 $559,000 $17,000 $3,776.28 $7,780.00 36 $548,000 $16,662 $3,795.00 $7,672.00 37 $517,000 $15,725 $14,625.00 $15,005.00 38 $520,000 $15,837 $3,780.36 $7,967.00 39 $528,000 $16,137 $9,125.04 $11,557.00 40 $588,000 $18,162 $11,133.60 $13,572.00 41 $513,000 $15,500 $3,719.64 $7,300.00 42 $548,000 $16,662 $3,795.00 $7,672.00 43 $556,000 $16,962 $11,250.00 $13,232.00 44 $558,000 $17,037 $3,832.20 $7,787.00 45 $565,000 $17,300 $4,056.84 $7,990.00 46 $588,000 $18,162 $4,454.64 $8,492.00 47 $539,000 $16,475 $3,459.36 $7,365.00 48 $551,000 $16,775 $6,249.96 $9,305.00 49 $520,000 $15,837 $3,551.16 $7,197.00 50 $523,000 $15,950 $3,569.76 $7,240.00 51 $520,000 $15,837 $3,780.36 $7,857.00 52 $528,000 $16,137 $12,750.00 $13,927.00 53 $588,000 $18,162 $4,479.00 $8,492.00 54 $530,000 $15,987 $3,344.88 $7,227.00 55 $559,000 $17,075 $10,625.04 $12,865.00 56 $567,000 $17,375 $3,603.96 $7,915.00 57 $546,000 $16,737 $3,551.16 $7,427.00 58 $528,000 $16,137 $6,750.00 $10,007.00 59 $525,000 $16,025 $10,125.00 $12,175.00 60 $533,000 $16,325 $3,533.88 $7,315.00 Exhibit C - Page 2 SUN vIARY OF SALIENT FACTS AND CONCLUSIONS - continued Unencumbered Fair Market Lot No. Fee Lot Valu6 Rental Value Interior Lots - continued 61 $588,000 ES 3 $474,000 ES 4 $467,000 ES 5 $470,000 ES 6 $468,000 ES 7 $461,000 ES 8 $471,000 Subtotal Int.: $23,786,000 Subtotal W.F.: $31,563,000 Grand Totals: $55,349,000 $18,162 $14,225 $13,962 $14,075 $14,000 $13,737 $13.925 Existing Contract Rent $4,436.16 $8,750.04 $3,021.96 $10,000.08 $2,982.96 $2,966.04 $3,118.08 (1st year) Effective Net Rent $8,482.00 $10,325.00 $6,322.00 $11,415.00 $6,310.00 $6,057.00 $6,455.00 $-/24,b3 / $2-54,b17.1b $397,607.00 $1,160,640 $519,983.08 $705,220.00 $1,885,277 $774,600.24 $1,103,027.00 Exhibit C - Page 3 (1st year) Effective Lot No. Net Rent 'aterfront Lots A B C 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 -)0 21 22 ES 1 ES 2 Waterfront ub total: Distribution of Rents and Tax Advantage between Tidelands and Uplands* Proportionate Proportionate Annual Amort. Tidelands % % Rent Rent of PV of Tax Tax Tidelands Uplands Tidelands Uplands Advantage Advantage 5 $31,940.00 100% 0% $31,940 $0 $0 $0 $22,270.00 100% 0% $22,270 $0 $930 $930 $22,480.00 100% 0170 $22,480 $0 $1,410 $1,410 $15,030.00 100% 0170 $15,030 $0 $2,080 $2,080 $17,950.00 100% 0% $17,950 $0 $2,260 $2,260 $31,560.00 100% 0% $31,560 $0 .$560 $560 $21,260.00 100% 0% $21,260 $0 $2,610 $2,610 $28,840.00 100% 0% $28,840 $0 $1,620 $1,620 $34,260.00 100% 0% $34,260 $0 $0 $0 $31,870.00 95% 5% $30,276 $1,594 $0 $0 $43,480.00 50% 50% $21,740 $21,740 $0 $0 $44,350.00 5% 95% $2,217 $42,132 $0 $0 $33,540.00 0% 100% $0 $33,540 $0 $0 $17,020.00 070 100% $0 $17,020 $3,200 $0 $22,190.00 0% 100% $0 $22,190 $1,130 $0 $29,450.00 0% 100% $0 $29,450 $0 $0 $19,690.00 00/0 100% $0 $19,690 $2,880 $0 $20,240.00 209o' 807o $4,048 $16,192 $2,980 $596 $16,480.00 95% 5% $15,656 $824 $2,640 $2,508 $21,750.00 100% 0% $21,750 $0 $2,420 $2,420 $16,480.00 100% 0% $16,480 $0 $2,640 $2,640 $19,500.00 100% 0% $19,500 $0 $2,880 $2,880 $17,910.00 100% 0170 $17,910 $0 $2,470 $2,470 $26,660.00 100% 0% $26,660 $0 $0 $0 $37,880.00 100% 0170 $37;880 $0 $0 $0 $31,920.00 100% 0% $31,920 $0 $0 $0 $29,220.00 100% 0% $29,220 $0 $0 $0 $705,220.00 $500,848 $204,372 $34,710 $24,984 Beacon Ba\- 6,`6194 - Page 1 Exhibit D - Page 1 !C� oANDAMERICA SOUTHLAND TITLE RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO City Manager's Office City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 This Document was electronically recorded by Southland Title Company_B Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder 11111RIIIII 1 1 I� 1I I I 38.00 2007000484299 03:19pm 08/02/07 213 33 M11 5 0.00 0.00 0.00 20.00 12.00 0.00 0.00 0.00 �15_3a ( 43 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE is made and entered into by and between THE CITY OF NEWPORT BEACH, a chartered municipal corporation, herein called "Lessor", and Patrick Ward and Carol Ward, Husband and Wife as Joint Tenants, herein called "Lessee". to witness that: Lessor hereby leases to Lessee, commencing on (� ')--U-7 and ending on July 1, 2044, on the terms and conditions set forth in that certain lease by and between the parties hereto dated 7 -SI -0-7 , all the terms and conditions of which lease are made a part hereof as though fully set forth herein, all those certain premises in the County of Orange, State of California, described as follows: The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 as all are shown on said map. ,� ,/ ✓ y EXECUTED on I ' M , 2007, at Newport Beach, Orange County, California. ATTEST: P°RT G YCM(6LLRKjlJ APP ED AS TO FORM: CITY ATTORNEY LESSOR THE CITY OF NEWPORT BEACH 0 *Clf,,Y_.MANAGER: Homer Bludau wfDAVID A. KIFF FOR* Lessee: Patrick Ward 1 J Lessee: Carol Ward NOTARY PAGE STATE OF CALIFORNIA } �) S.S. COUNTY OF(0L- nS!- - } On , before me%y i a-v-CS.�o &c- V'" eF ' a Notary Public , personally ick C"-Aci Cc`r 1 -(a -'-d. appeared , personally known to me (or 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 capNy(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which a erson(s) acted, executeflge instrument. WITNESS my Signature STATE OF CALIFORNIA } ) S.S. COUNTY OF D } On �I ,before me, I/'' L • TJnVVa Notary Public , personally ctA�r �l � . �� appy, , personally own to me rItetoly ce to be the personfs whose name 4 is/ara subscribed to the within instrument and acknowledged to me that he/she4her executed the same in his/he4their authorized capacity(, and that by his/hef*rcir signatureH on the instrument the person(, or the entity upon behalf of which the person(sacted, executed the instrument. ter. BRIAN J. FOXCROFT ' NOTARY PUBLIC • CALIFORNIA COMMISSION # 1575887 N ORANGE COUNTY a My Comm. Exp. May 3, 2009 WITNESS my hand d official seal. wl�vl, QIENAFN Signature Co"ft*m # 1633477 L4 Nft" KAMC . Coftmjo lotOra VO County EXPIM Jan 25, 201 ILLEGIBLE NOTARY SEAL DECLARATION GOVERNMENT CODE 27361.7 I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT WHICH THIS STATEMENT IS ATTACHED, READS AS FOLLOWS: NAME OF NOTARY: 314 k COUNTY WHERE BOND IS FILED: a - DATE COMMISSION EXPIRES:Lo PLACE OF EXECUTION OF THIS DECLARATION: Irvine, California DATE: y COMMISSION NUMBER: 1,5- s'� f K 2 AUTHORIZED MANUFACTURES CODE: S�17 �` SOUTHLAND TITLE RON F ANDD ILLEGIBLE NOTARY SEAL DECLARATION GOVERNMENT CODE 27361.7 I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT WHICH THIS STATEMENT IS ATTACHED, READS AS FOLLOWS: NAME OF NOTARY: 'j-- /$�,(�L� ul �✓ COUNTY WHERE BOND IS FILED: DATE COMMISSION EXPIRES: `� J—// 10 PLACE OF EXECUTION OF THIS DECLARATION: Irvine, California DATE: COMMISSION NUMBER: l 6 5 f c/ --7 AUTHORIZED MANUFACTURES CODE: A- YL- 0- SOUTHLAND TITLE EXHIBIT "A' Parcel 1: ORDER NO. 27532493 The Westerly 45 feet of Lot 2, and the Easterly 10 feet of Lot 1, in the City of Newport Beach, County of Orange, State of California, as shown upon a Record of Survey map recorded in Book 9 Pages 42 and 43 of Record of Surveys, on file in the Office of the County Recorder of said County, together with certain portions of adjoining Lots I and H as shown upon said map and as more fully in said lease. Parcel 2: That Portion of Lot "I" Fronting the Westerly 45 Feet of Lot 1 and the Easterly 10 feet of Lot 1 and Extending Southward To The U.S. Bulkhead Line. Parcel 3: That Portion of Lot "H" Fronting The Westerly 45 Feet of Lot 2 and the Easterly 10 Feet of Lot 1, Being that portion bounded by the prolongation of the West and East Lines of the Westerly 45 Feet of Lot 2 and the Easterly 10 Feet of Lot 1 Northward to the Boundary of Beacon Bay Subdivision. 3 LANDAMERICA SOUTHLAND TITLE RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City Manager's Office City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 This Document was electronically recorded by Southland Title Company_B Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder 111111 11 1111111111111111111111111111111111111111111111 18.00 2007000484298 03:19pm 08/02/07 213 33 T03 5 0.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00 fa_�s3�lqa3 TERMINATION OF LEASEHOLD This agreement is made this 31 S day of 2007, by and between the CITY OF NEWPORT BEACH, hereinafter called "Lessor", and JOHN D. EVERSOLL and JESSIE J. EVERSOLL, Trustees of the Eversoll Family Trust dated 12/9/75, hereinafter called "Lessee". RECITALS A. Lessor and Lessee executed a lease on June 31, 1994, and subsequently recorded December 7, 1994, by the County Recorder of Orange County, California as Instrument No. 94-0701519. By the terms of the lease, the following described property was leased to Lessee until July 1, 2044. The northwesterly 45.00 fee of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with the southeasterly 10.00 feet of Lot 1 of said Record of Survey. B. Lessee desires to terminate said lease and all rights to the possession of the lease premises and to release Lessor from its obligations under the lease, and Lessor desires to accept said termination and to release Lessee from their obligations under the lease. AGREEMENT Lessee agrees to terminate the lease and vacate the premises as described herein above as of A - I 0`7 , and Lessor agrees to accept such termination and the premises, and Lessor and Lessee agree to discharge and release each other from all obligations under the lease as of said date. Executed at Newport Beach, California, on the day and year first above written. CITY OF NEWPORT BEACH BY: Com. �( �/1,� BY: Lessor: U Les e: John D. Eversoll, Trustee ti BY: Lesse essie J. erso I, ust NOTARY PAGE STATE OF CALIFORNIA } }S.S. COUNTY OF CNC- } �/(i n On �C71 , before me, v "�("� a Notary Public , personally �6Ak Z) Uerc- va�pcmed-- to me (or 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-bzL%hP-/they executed the same in hi4her/their authorized capacity(ies), and that by hiker/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. MICHELLE PAGE Signator Commission # 1433296 �1 Omy Notary Public - California Orange County Comm. Expires Aug 2, 2007 STATE OF CALIFORNIA } S.S. COUNTY OF Dr, } On �I before me, ` `a �� �� f��� a Notary Public , personally Gc Y bAVj &, ]I- , personally known �@--fti f * . doaGe.) to be the person( -s) whose nam*) is/afre subscribed to the within instrument and acknowledged to me that he/shekkey executed the same in his/hei t� r authorized capacityoesj,, and that by his/hevAht4 signatureks} on the instrument the person(s� or the entity upon behalf of which the person(s}-acted, executed the instrument. WITNESS my hand nd official al. ;; . tEItANI 1. BROYyN _ Commisraton # 1633477 Signature z ' ® Notary Kbllo - Cafff0mla My Comm°� Counly - Expk. Jan 25, 201 ILLEGIBLE NOTARY SEAL DECLARATION GOVERNMENT CODE 27361.7 I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT WHICH THIS STATEMENT IS ATTACHED, READS AS FOLLOWS: NAME OF NOTARY: COUNTY WHERE BOND IS FILED:_ QJ DATE COMMISSION EXPIRES: - DUD PLACE OF EXECUTION OF THIS DECLARATION: Irvine, California DATE: COMMISSION NUMBER: )Z -t 35A AUTHORIZED MANUFACTURES CODE:_ /o %U al SOUTHLAND /TITLE RON FERN ILLEGIBLE NOTARY SEAL DECLARATION GOVERNMENT CODE 27361.7 I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT WHICH THIS STATEMENT IS ATTACHED, READS AS FOLLOWS: NAME OF NOTARY: ffmw I� 1 , w ok� COUNTY WHERE BOND IS FILED:_ Dt� DATE COMMISSION EXPIRES:_ �}� , ib PLACE OF EXECUTION OF THIS DECLARATION: Irvine, California DATE: kA -Q-, . L . ;717f)1 COMMISSION NUMBER: 1Lp 3 :3 v/ -] AUTHORIZED MANUFACTURES CODE: SOUT LA D TITLE RON FERNANDO EXHIBIT "A" Parcel 1: ORDER NO. 27532493 The Westerly 45 feet of Lot 2, and the Easterly 10 feet of Lot 1, in the City of Newport Beach, County of Orange, State of California, as shown upon a Record of Survey map recorded in Book 9 Pages 42 and 43 of Record of Surveys, on file in the Office of the County Recorder of said County, together with certain portions of adjoining Lots I and H as shown upon said map and as more fully in said lease. Parcel 2: That Portion of Lot "I" Fronting the Westerly 45 Feet of Lot 1 and the Easterly 10 feet of Lot 1 and Extending Southward To The U.S. Bulkhead Line. Parcel 3: That Portion of Lot "H" Fronting The Westerly 45 Feet of Lot 2 and the Easterly 10 Feet of Lot 1, Being that portion bounded by the prolongation of the West and East Lines of the Westerly 45 Feet of Lot 2 and the Easterly 10 Feet of Lot 1 Northward to the Boundary of Beacon Bay Subdivision. 3 z City Manager's Office City of Newport Beach Recorded in Official Records, County of Orange P.O. Box 1768 Tom Daly, Clerk -Recorder Newport Beach, CA 92658-8915 11,11111l!V1111111111!'111111�1111111111111111111111111lilll !14.00 2003001191997 03'.23prr 09129103 117 92 Al2 5 0.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 /I THIS SPACE FOR RECORDER'S USE ONLY J LESSOR'S CONSENT AND AGREEMENT Loan No: 0078546694 Recitals Borrower, referred to in this Agreement as "Lessee" and as more particularly described in Exhibit A, has applied for a loan from Washington Mutual Bank, FA ("Lender) to be secured by leased property, as such property is more particularly described in Exhibit A ("Property"). Lessee currently holds or will acquire upon consummation of the pending transaction, a leasehold interest under the lease described in Exhibit A ("Lease") in which the undersigned ("Lessor") is the lessor. Agreement 1. The information on Exhibit A is incorporated herein by reference. 2. The property is subject to the Lease described in Exhibit A. The lease documents described in Exhibit A constitute the entire agreement of Lessee and Lessor regarding the Property. The lease is in full force and effect and unmodified. All rents and other charges due have been paid, there are no other defaults and the Lease is in good standing. Lessor has no knowledge of any facts which now or after the passage of time or the giving notice, or both, would constitute a default under the Lease. The payments required under the Lease are set forth in Exhibit A. Payments and notices to Lessor are deliverable as set forth in Exhibit A. Lessor has no claims outstanding against Lessee in connection with the Property. 1 Loan No: 0078546694 3. Lessor consents to the granting of a security interest in Lessee's interest in the lease to Lender. Lessor agrees to send concurrently to Lender copies of any notices sent to Lessee pertaining to Lessee's default or Lessor's intent to terminate the Lease or any part thereof by certified U.S. mail. No modification or termination of the Lease agreed upon by Lessee shall be effective without the express written consent of Lender. Notice will be provided to Lender by certified mail at the following address: Washington Mutual Bank, Collection Support MS: N010201, 9451 Corbin Ave., Northridge, CA 91324, referencing the Loan Number set forth on Exhibit A or at such other address given to the undersigned by Lender, at the same time as the notices are sent to Lessee. 4. Should the Lease be terminated for any reason prior to expiration of its stated term, Lessor shall, upon written request by Lender to Lessor made within sixty (60) days after such termination, enter into a new lease ("New Lessee") with Lender as the Lessee. The New Lease shall have a term equal to the remainder to the stated term of the Lease has it not been terminated prior to the end its stated term. The New Lease shall have the same covenants, conditions and agreements (except for any requirements which have been satisfied by Lessee prior to termination) as are contained in the lease. Lessor shall be .required to enter into the New Lease only if Lender has remedied and cured all monetary defaults under the lease and has cured or has commenced and is diligently pursing completion of the cure of all non -monetary defaults of Lessee susceptible to sure any party other than by the original Lessee. 5. This consent and agreement shall not operate to change or supercede the terms & conditions of the lease in the event of a conflict, the terms of the lease shall prevail. W X _00�xpll- Z__� Lessor 411 2 Loan No: 0078546694 liW-1y419l0N_\III IM61N►1/_1 COUNTY OF On — v before me, personally appeared personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he�she\they executed the same in his., her\their is/ er/their signature yon the instrument authorized capacity (1*1 and that by the person or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal Signature Notary Public in and for the State of 3 CATHY FISHER Commission # 1341009 Z zNotary Public - California Z 0Orange My Comm. Fires Feb 21, 2006 EXHIBIT A — LESSOR'S CONSENT AND AGREEMENT Loan No. 0078546694 Unit No. 1. Borrower's (Lessee) Name: John and Jessie Eversoll, Trustees of the Eversoll Family Trust 2. Property Address: 2 Beacon Bay, Newport Beach, CA 92660 3. Property's Legal Description (if a metes & bounds attach legal): See Attached 4. Developer/Condo Homeowners Assoc. (Lessor) Name: Beacon Bay 5. Lease (including all amendments and dates): See Attached 6. Borrower (Lessee's) Current Monthly Lease Payment Payments are current (circle either(Yes r No). 7 W $1,495.83 Deliver notices and payments to Lessor at: City Manager's Office, City of Newport Beach, P.O. Box 1768, Newport Beach, CA 92658-8915 Term of Lease: 50 Years; commenced on June 30, 1994; Expires on July 1, 2044 If applicable: Pursuant to the Lease, Lessee has the right, at its option, to renew the term of the Lease for N/A consecutive renewal terms of N/A years each. 4 ATTACHMENT TO EXHIBIT A — LESSOR'S CONSENT AND AGREEMENT Property Description The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 as all are shown on said map. 5 RECORDING REQUESTED BY UNITED TITLE COMPANY RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: CITY MANAGER'S OFFICE P.O. BOX 1768 `NEWPORT BEACH, CA 92658-8915 3D3o"l�oS 3� Recorded in Official Records, County of Orange Tom Daly, Clerk -Recorder 1i11 111111111111120.00 200300053616104.30pm 05!09103 103 91 C34 Al2 5 0.00 0.00 0.00 0 00 8.00 0.00 0.00 0.00 THIS SPACE FOR RECORDER'S USE ONLY LESSOR'S CONSENT AND AGREEMENT Loan No.: 0079603379 Recitals Borrower, referred to in this Agreement as "Lessee" and as more particularly described in Exhibit A, has applied for a loan from ❑ Washington Mutual Bank ❑ Washington Mutual Bank fsb ® Washington Mutual Bank, FA ("Lender") to be secured by leased property, as such property is more particularly described in Exhibit A ("Property"). Lessee currently holds or will acquire upon consummation of the pending transaction, a leasehold interest under the lease described in Exhibit A ("Lease") in which the undersigned ("Lessor") is the lessor. Agreement The information on Exhibit A is incorporated herein by reference. 2. The Property is subject to the Lease described in Exhibit A. The lease documents described in Exhibit A constitute the entire agreement of Lessee and Lessor regarding the Property. The Lease is in full force and effect and unmodified. All rents and other charges due have been paid, there are no defaults and the Lease is in good standing. Lessor has no knowledge of any facts which now or after the passage of time or the giving of notice, or both, would constitute a default under the Lease. The payments required under the Lease are set forth in Exhibit A. Payments and notices to Lessor are deliverable as set forth in Exhibit A. Lessor has no claims outstanding against Lessee in connection with the Property. Page 1 of 4 32802 (REV 4-00) BEACON BAY Loan No. 0079603379 3. Lessor consents to the granting of a security interest in Lessee's interest in the Lease to Lender. Lessor agrees to send concurrently to Lender copies of any notices sent to Lessee pertaining to Lessee's default or Lessor's intent to terminate the Lease or any part thereof by certified U.S. mail. No modification or termination of the Lease agreed upon by Lessee shall be effective without the express written consent of Lender. Notice will be provided to Lender by certified mail at the following address: Washington Mutual Bank, Collection Support MS: N010201, 9451 Corbin Ave, Northridge, CA 91324, referencing the Loan Number set forth on Exhibit A or at such other address given to the undersigned by Lender, at the same time as the notices are sent to Lessee. 4. Should the Lease be terminated for any reason prior to expiration of its stated term, Lessor shall, upon written request by Lender to Lessor made within sixty (60) days after such termination, enter into a new lease ("New Lease") with Lender as the lessee. The New Lease shall have a term equal to the remainder of the stated term of the Lease had it not been terminated prior to the end of its stated term. The New Lease shall have the same covenants, conditions and agreements (except for any requirements which have been satisfied by Lessee prior to termination) as are contained in the Lease. Lessor shall be required to enter into the New Lease only if Lender has remedied and cured all monetary defaults under the Lease and has cured or has commenced and is diligently pursuing completion of the cure of all nonmonetary defaults of Lessee susceptible to cure by any party other than by the original Lessee. 5. This consent & agreement shall not operate to change or supercede the terms & conditions of the lease and in the event of a conflict, the terms of the lease shall prevail. LESSOR Page 2 of 4 32802 (REV 4-00) BEACON BAY Loan No. 0079603379 STATE OF vAWA I k ss. COUNTY OF0"V On iiy'N � n03 , before me, 4I( l I. ogwW , personally appeared UOMIOL I,- �W personally known to me (or proved to me on t e basis of satisfactory evidence) to be the person(,v4 vvrhose name( is re subscribed to 4within instrument and acknowledged to me that h she/they executed the( same in hi /her/their authorized capacity(i s) and that by is er/their signature() on the instrument the person( or the entity upon behalf of w Ich the person() acted, executed the instrument. WITNESS my hand and official seal. SignatureWAIM 6-1 Notary Public in and for the State of 0i� =LEI itI I. BROWN �taommission # 1336673 Z Notary Public - Califomia Orange County My Comm. Expires Jan 25, 2006 Page 3 of 4 32802 (REV 4-00) BEACON BAY EXHIBIT A — LESSOR'S CONSENT AND AGREEMENT Loan No. 0079603379 Unit No 1. Borrower's (Lessee) Name: John D. Eversoll and Jessie J. Eversoll, trustees of The Eversoll Family Trust dated 12/9/75. 2. Property Address: 2 Beacon Bay, Newport Beach, CA 92660 3. Property's Legal Description (if a metes & bounds attach legal): See Attached 4. Developer/Condo Homeowners Assoc. (Lessor) Name: Beacon Bay 5. Lease (including all amendments and dates): See Attached I 7 Borrower (Lessee's) Current Monthly Lease Payment: Payments are current (circle eithe Yes r No). $1,495.83 Deliver notices and payments to Lessor at: City Manager's Office, City of Newport Beach, P.O. Box 1768, Newport Beach, CA 92658-8915 8. Term of Lease: 50 Years; commenced on June 31, 1994 Expires on July 1, 2044 If applicable: Pursuant to the Lease, Lessee has the right, at its option, to renew the teen of the Lease for N/A consecutive renewal terms of N/A years each. E 9 ORDER NO 30307605-35 EXHIBIT "A" 0 THE WESTERLY 45 FEET OF LOT 2, AND THE EASTERLY 10 FEET OF LOT 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN UPON A RECORD OF SURVEY MAP RECORDED IN BOOK 9 PAGES 42 AND 43 RECORD OF SURVEYS, ON FILE IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH CERTAIN PORTIONS OF ADJOINING LOTS I AND H AS SHOWN UPON SAID MAP AND AS DESCRIBED MORE FULLY IN SAID LEASE. ZC r+► RECORDING REQUESTED BY AND WHEN RECORDED MAIL T0: CITY MANAGER'S CITY OF NEWPORT P.O. BOX 1768 NEWPORT BEACH, OFFICE BEACH CA 92658-8915 YA THM SPACE ran RICOROKA'i H31 V ' � LESSOR'S CONSENT AND AGREEMENT i1 Loan No.: Recitals Borrower, referred to in this Agreement as "Lessee" and as more particularly described in Exhibit A, has applied for a loan from ❑ Washington Mutual Bank Washington Mutual Bank fsb ❑ Washington Mutual Bank, FA ('Lender") to be secured by leased property, as such property is more particularly described in Exhibit A ("Property"). Lessee currently holds or will acquire upon consummation of the pending transaction, a leasehold interest under the lease described in Exhibit A ("Lease") in which the undersigned ("Lessor") is the lessor. Agreement 1. The Informatlon on Exhibit A ie Incorporated herein by reference. 2. The Property is subject to the Lease described in Exhibit A. The lease documents described in Exhibit A constitute the entire agreement of Lessee and Lessor regarding the Property. The Lease is in full force and effect and unmodified. All rents and other charges due have been paid, there are no defaults and the Lease is in good standing. Lessor has no knowledge of any facts which now or after the passage of time or the giving of notice, or both, would constitute a defauk under the Lease. The payments required under the Lease are set forth in Exhibit A. Payments and notices to Lessor are deliverable as set forth in EXhlbit A. Lessor has no claims outstanding against Lessee in connection with the Property. Page 1 of 4 31M (%V &,§9)1LA=N SAY 7. '.a lll'�.'N 7F,bl-I�Q-hb/-;NVi4—AAO1 1Ca—a01 IA1W7A:ll Inn7'AC '110 Loan No. 3, Lessor consents to the granting of a security interest in Lessee's interest In the Lease to Lender. lessor agrees to send concurrently to Lender s intent to termiles of nate the Leaseany cor sent to Lessee pertaining to Lessees default or Lessor' any part thereof by certified U.S. mail. No modification or termination of the Lease agreed upon by Lessee shall be effective without the express written consent of Lender. Notice will be provided to Lender by certified mail at CorbinnAve,ng d Northridge, 913241 Bank, Collection Support MS: N010201, referencing the Loan Number set forth on Exhibit A or at such other address given to the undersigned by Lender, at the same time as the notices are sent to Lessee. 4. Should the Lease be terminated for any reason prior to expiration of its stated term, Lessor shall, upon wrltten request by Lender to Lessor made within sixty (60) days after such termination, enter into a new lease Mew Lease') with Lender as the lessee. The New Lease shall have a term equal to the remainder of the stated term of the Lease had it not been terminated prior to the and of its stated term. The New w Le s which ase shall have the same covenants, conditions and agreements (except for any eq have been satisfied by Lessee prior to termination) as are contained in the Lease. Lessor shall be required to enter into the New Lease only if Lender has remedied and cured all ntly monetary defaults under the cure ll nonmonet se arid has cured ry defaults of Lessee d and is susceptible usceptible'taecure pursuing completion of the cu by any parry other than by the original Lessee. 5. This consent & agreement shall not operate to change or supercede the terms & conditions of the lease and in the event of conflict, the ter of the lease shall prevail. Lessor Page 2of4 51102 (RFV x.00) DMAW" 9AY d LI i VON 66�L-LH-06-�Nf I H MOHSS3 3H1 060:11 1006 '0 '100 i Loan No. STATE OF c� f� ss. COUNTY OF VrU� tfv v beforRR e me, J �� , person ilyPappeared ,personally own to me 113111 to be the persoM4w ose name is re subscribed to within instrument and acknowledged to m hat he she/they executed the same in his her/their authorized capacltyl�) and behalf aof hif w chethee1r sip ri on(�Q acted, ed, X on texecuted the t e person or the entity p instrument. CATHY FISHER Commission # 1174329 Z Notary Public - CORMIO Zy Z Orange County MyComm. bp1res feb21, 2M2 WITNESS my hand and official seal. Slgnslure Notary Public in and for the ate of cz Page 3 of 4 aZlm =-,tet araCW hAv 'd LLi8 'ON 601-L88-W-Q1]MOd0S3 3H1 AVU: l l 1002 '08 '100 EXHI6IT A - To LESSOR'S CONSENT AND AGREEMENT IS Loan No. % Unit No. Borrower's (Lessee) Name: 2, Property Address: 31 Property's Legal Description (if a metes & bounds attach legal): 4, Developer/Condo Homeowners Assoc. (Lessor) Name'. U� 5. Lease (including all amendments and dates); 0 6, Borrower (Lessee's) Current Monthly Lease Payment: $ / 5 Payments are current (circle either Yes or No). L — Deliver notices and payments to Lessor at: Terra of Lease: Years; Commenced on�_ expires on If applicable: Pursuaint to the Lease, Lessee has the right, at its opt to renew the term of the years each. Lease for--Wconsecutive renewal terms of Page 4 of 4 i -au tKy 1-0010FACQN My 'd L lS 'ON Z6tl—LH-6t6—MI MOUS3 Di 060:l[ lOR 'OS 'M I EXHIBIT "A" DER NO.: 9124207.12 THE WESTERLY 45 FEET OF LOT 2, AND THE EASTERLY 10 FEET OF LOT 1, AS SHOWN UPON A RECORD OF SURVEY MAP RECORDED IN BOOK 9, PAGES 42 AND 43 RECORD OF SURVEYS, ON FILE IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, TOGETHER WITH CERTAIN PORTIONS OF ADJOINING LOTS I AND H AS SHOWN UPON SAID MAP AND AS DESCRIBED MORE FULLY IN SAID LEASE. u LLIE'ON Z6tiL-LSE-6ti6-W�1� MO��S3 3H1 Wb o: k lON 'oPix I. 2. 3. r-I)ER NO.: 0124207.14 SCHEDULE A THE ESTATE OR INTEREST IN THE (AND HEREINAFTER DESCRIBED OR REFERRED TO COVERED BY THIS REPORT IS: A FEE TITLE TO SAID ESTATE OR INTEREST AT THE DATE HEREOF IS VESTED IN: A LEASEHOLD AS CREATED BY THAT CERTAIN LEASE DATED JUNE 31, 1994, EXECUTED BY THE CITY OF NEWPORT BEACH, A CHARTERED MUNICIPAL CORPORATION, AS LESSOR AND JOHN D. EVERSOLL AND JESSIE J. EVERSOLL, TRUSTEES OF THE EVERSOLL FAMILY TRUST DATED 12-9-75, AS LESSEE, AS REFERENCED IN THE DOCUMENT ENTITLED 'MEMORANDUM OF LEASE,' WHICH WAS RECORDED DECEMBER 7, 1994 AS INSTRUMENT NO. 94-0701519, OFFICIAL RECORDS, FOR THE TERM AND UPON AND SUBJECT TO ALL THE PROVISIONS CONTAINED IN SAID DOCUMENT, AND IN SAID LEASE. THE LAND REFERRED TO IN THIS REPORT IS sITUATED IN THE STATE OF CALIFORNIA, COUNTY OF AN E, CITY OF NEWPORT GIACH, AND IS DESCRIBED AS FOLLOWS: SEE EXHIBIT 'A" ATTACHED HERETO AND MADE A PART HEREOF. 7 'd L198 'ON 66�t—L88-6ti6—Wd—MOUS3-3H1 TOTAL P-02 AdD:z 1001, 'AON RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City Manager's Office City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Recorded in tri. County of Orange, California Gary L., Granville, Clerk/Recorder III II I I I III II III II II I I II I II 13.00 19970018829 09, 36am 01/14/97 005 12017556 12 22 X111 3 7.00 6.00 0.00 0.00 0.00 0.00 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE is made and entered into by and between THE CITY OF NEWPORT BEACH, a chartered municipal corporation, herein called "Lessor", and John D. Eversoll and Jessie J. Eversoll, Trustees of the Eversoll Family Trust dated 12- 9-75, herein called "Lessee", to witness that: Lessor hereby leases to Lessee, commencing on December 20. 1996 and ending on July 1, 2044, on the terms ang conditions set forth in that certain lease by and between the parties hereto dated -�'- y i 9, , all the terms and conditions of which lease are made a part hereof as though fully set forth herein, all those certain premises in the County of Orange, State of California, described as follows: This Memorandum of Lease is to amend Property Description only. The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with Lot H and I and the southeasterly 10.00 feet of Lot 1 as all are shown on said map. 7 EXECUTED on 02 , 199,0, at Newport Beach, Orange County, California. LESSOR ATTEST CITY CLERK AP ROVED AS TO FORM: I ATTORNEY THE CITY OF NEWPORT BEACH CITY ANA Kevin J. Murphy see: John D. Eve oll, Trustee State of California County of Orange On`. before me, Monica S. Kutz, Notary Public, personally appeared �:Yc 1y) h, QP.r�l l end�e� e- 7 j , ❑ personally known to me - OR - � proved to me on the basis of satisfactory evidence to be the perso (s whose name M are' subscribed to the within instrument dnd acknowledged to me thathe executed the same in his her authorized capacity9k1h and that by 7eV signatur s n the instrument the persorxw, orthe enti y upon behalf of which the person acted, executed the instrument. . Monica S. Kutz dComm #1013469 NOT ^ A ORANQECOUNTYORNIA^ WITNESS my hand and official seal. Comm Expires Jan. 13, 1998 4 CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT Individual Corporate Officer Title or Type of Document Limited Partner General Partner Attorney -in -Fact Trustee(s) Number of Pages Guardian/Conservator Other: Date of Document Signer is Representing: Signer(s) Other Than Named Above State of California County of Orange On:�]_anLl dYu before me, Monica S. Kutz, Notary Public, personally appeared [;a personally known to me - OR - ❑ CAPACITY CLAIMED BY SIGNER Individual Corporate Officer Limited Partner General Partner Attorney -in -Fact Trustee(s) Guardian/Conservator Other: Signer is Representing•. proved to me on the basis of satisfactory evidence to be the person{.} whose name(s)(y subscribed to the within instrument and acknowledged to me that 6k&he t#ey-- executed the same in&t#eir authorized capacity(44, and that by i signatureN on the instrument the person, orthe entity upon behalf of which the person-() acted, executed the instrument. WITNESS my hand and official seal. DESCRIPTION OF ATTACHED DOCUMENT Title or Type of Document Number of Pages Date of Document Signer(s) Other Than Named Above r Monica S. Kutz Comm #1013469 NOTARY PUBLIC CALIFORNIA" 0 ORANGE COUNTY F Comm Expires Jan 13,1998_"I' CAPACITY CLAIMED BY SIGNER Individual Corporate Officer Limited Partner General Partner Attorney -in -Fact Trustee(s) Guardian/Conservator Other: Signer is Representing•. proved to me on the basis of satisfactory evidence to be the person{.} whose name(s)(y subscribed to the within instrument and acknowledged to me that 6k&he t#ey-- executed the same in&t#eir authorized capacity(44, and that by i signatureN on the instrument the person, orthe entity upon behalf of which the person-() acted, executed the instrument. WITNESS my hand and official seal. DESCRIPTION OF ATTACHED DOCUMENT Title or Type of Document Number of Pages Date of Document Signer(s) Other Than Named Above LEASE THIS LEASE is made and entered into as of the day of 1994, by and between the CITY ONEWPORT BEAC a Charter City and m icipal corporation ("Lessor"), and 0 A VI V. 6 @ Y`i0 � ` , t 4ti 11a _ tv ("Lessee"), regarding the real property commonly referred to as Beacon Bay Lot Z 1 v ��kee� o� �-1�.e �ve�r5b1\ �o.w;�\y �Yea \2 � 75 RECITALS A. The City of Newport Beach, by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes of 1978 (the 'Beacon Bay Bill"), holds the right, title and interest to certain tidelands and uplands commonly known as Beacon Bay and generally described in Exhibit A attached hereto and incorporated by reference. B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands from the public trust and specifically authorizes the lease of the property for residential purposes subject to certain express statutory conditions. C. Beacon Bay, including the "Westerly Portion" thereof, has been divided into individual lots, with each lot leased by the City for residential purposes until December 31, 2005. D. On November 3, 1987, a majority of electors of the City approved a measure which authorized the City Council to enter into new leases of residential lots in Beacon Bay for a period not to exceed fifty (50) years. E. On November 3, 1992, a majority of electors of the City approved Measure M which authorized the City Council to lease tidelands and waterfront property consistent with the provisions of state law. F. The City Council, pursuant to the authority conferred by the electors, entered into negotiations with current lessees and the parties have agreed on the terms and conditions of a new lease with a fifty (50) year term, provision for adjustments in lease payments to reflect changes in the value of Beacon Bay leaseholds, and a recalculation of lease payments in the event of a transfer of the Lease by the Current Lessee or any Subsequent Lessee (as defined herein). G. Lessee acknowledges that the terms and conditions of this Lease may result in Lessee paying substantially more or less than another Lessee for similar property depending upon the date this Lease is executed, the date of any subsequent transfer, and the consideration paid for transfers of similarly situated property. H. Lessee acknowledges that accurate and complete reporting to the City of all consiNration paid for the transfer of this Lease is vitally important to the City in that failure to fully report all consideration could materially reduce the amount of rent received by the City from other Beacon Bay Lessees. I. Lessor and Lessee acknowledge that the City has agreed to a fifty (50) year term and limited lease payment increases in consideration of provisions which require payment of rent approximating fair market rental value, without regard to any advantage maintained by Current Lessees, upon transfer by Current Lessees and payment of deferred rent in the event the Lease is not signed on or before the Effective Date (as defined herein). J. The California State Lands Commission has reviewed the form of this Lease and determined that it is in conformance with the provisions of relevant statutes, rules and regulations, including, without limitation, the Beacon Bay Bill. NB1-187371.V2 1 05/24/94 K. Lessor has determined that this Lease is consistent with provisions of the Beacon Bay Bill, the Charter, General Plan and Zoning Ordinance of the City of Newport Beach, and of all other applicable state and local laws. L. Lessor has determined it is in the best interests of the citizens of Newport Beach to maintain the residential character of Beacon Bay and to enter into new leases with Current Lessees under the terms and conditions specified in this agreement. NOW, THEREFORE, in consideration of the foregoing recitals and the covenants in this lease, the parties agree as follows: 1. LEASED LAND. Lessor hereby leases to Lessee the real property commonly known as Beacon Bay Lot (the "Leased Land"), which is more particularly described in Exhibit B, and generally depicted on Exhibit A, each attached hereto and incorporated by reference, subject to the limitations on use specified in Section 6. As used in this Lease, the term "Premises" shall refer to the Leased Land and any improvements constructed thereon. Lessor expressly reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Leased Land and the right to grant and transfer the same, together with all necessary and convenient rights to explore for, develop, produce and extract and take the same, subject to the express limitation that any and all operations for the exploration, development, production, extraction and taking of any such substance shall be carried on at levels below the depth of five hundred feet (500') from the surface of the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations concerning the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code. 2. TERM. The term of this Lease shall commence on the Execution Date, but in no event prior to the Effective Date, and shall expire on the date fifty (50) years following the Effective Date, unless earlier terminated as provided in this Lease. RENTAL. A. Definitions. For the purposes of this Lease, the following terms shall be defined as specified in this paragraph. In certain cases, the definition of the term contains oparative language that affects the rights of the parties: (1) "Actual Sales Value" shall mean the total of all consideration paid for, the non-exempt transfer of this Lease or the Pre-existing Lease, including the improvements on the Leased Land, from the Current Lessee, or Subsequent Lessee, to another person, excluding any consideration paid for the transfer of personal property in connection with such transaction. (2) "Average Actual Sales Value Rent" shall mean two and one-half percent (21/2%) of the mean of the Actual Sales Value of the non-exempt transfer of a similarly situated (waterfront or interior) Beacon Bay parcels as specified in this subparagraph. Average Actual Sales Value Rent shall be the mean of the Actual Sales Value of the three similarly NB1-187371.V2 2 -05/24/94 situated parcels most recently transferred. Exempt transfers, as defined in Paragraph 3.B(3), shall not be used to calculate Average Actual Sales Value rent. (3) "CPP' shall mean the Consumer Price Index - Los Angeles -Anaheim -Riverside Area, All Urban Consumers, All Items, published by the United States Department of Labor, Bureau of Labor Statistics (1982-1984=100). If the 1982-1984 base of said Consumer Price Index should hereafter be changed, then the new base shall be converted to the 1982-1984 base and the base as so converted shall be used. In the event that the Consumer Price Index, as now compiled and published, shall cease to be published, then the successor index shall be used provided that an appropriate conversion from the old index to the new index can feasibly be made. If such conversion cannot be made, or if no such index is published, then another index most nearly comparable thereto recognized as authoritative shall be substituted by agreement. (4) "Current Lessee" shall mean the person or persons who, as of April 1, 1994 (the "Cut-off Date"), was or were the Lessee under the Pre-existing Lease. (5) "Deferred Rent" shall mean the total rent that a Current Lessee would have paid had this Lease been executed on the Effective Date, through and including the date on which this Lease was first executed, less the rent actually paid pursuant to the Pre-existing Lease, together with interest at the rate of eight percent (8%) per annum calculated on the balance due at the end of each Lease Year or portion thereof. (6) "Effective Date" shall mean July 1, 1994. (7) "Execution Date" shall mean the date when this Lease is executed by Lessee. (8) 'Initial Rent' shall mean the effective net rent for the Leased Land as determined by the appraisal of George Hamilton Jones, with due consideration to the leasehold advantage created by the Pre-existing Lease, all as shown on Exhibit C attached hereto and incorporated herein by reference. (9) "Person" shall mean any natural person or natural person(s) and does not include any corporation, association, or business entity in any form except a financial institution or other bona fide lender acting in the capacity of a lender or an inter vivos or living trust. (10) "Pre-existing Lease" shall mean the Lease for the Leased Land which was effective on January 1, 1988, and would, absent this Lease, expire on July 1, 2006. rt (11) "Transferred" shall mean any sale, assignment, sublease or other transaction, other than an exempt transfer as defined in Paragraph 3.6(3), pursuant to which the right to possession of the premises and the right to sign a new lease identical to this Lease is transferred to another person. B. Rental Payments. Lessee shall pay annual rent in the sum of }VWILV� i%t V 'a V441 W 0'/100 ($ 11 .9 5 0. 0 0 ), payable at the rate AAW 6" ftl6%th,4i,,_ a%($ 1,415.83 per month. Lessee shall also pay, if applicable, deferred rent in the sumof A ($ ) upon execution of this Lease. Rent shall -shall not circle one) be adjusted every seven (7) years after the date of transfer in accordance with the provisions of Paragraph 3.B(4). Annual rent, deferred rent, and periodic adjustments are based upon the following: NB1-187371.V2 3 - 05/24/94 (1) Execution Before Effective Date. In the event this Lease is executed by the Lessee on or before the Effective Date, Rent shall be paid as follows: (a) Current Lessee: Current Lessee shall pay annual rent equal to Initial Rent as specified in Exhibit C. Thereafter, so long as there has been no.transfer of this Lease by the Current Lessee (other than an exempt transfer as set forth in Paragraph 3.6(3), rent shall remain as specified in this subparagraph notwithstanding the provisions of Paragraph 3.B(4). (b) In the event of any transfer of this Lease to a Subsequent Lessee, the Subsequent Lessee shall pay annual rent equal to two and one-half percent (21/2%) of the Actual Sales Value determined as of the date of the transfer in accordance with the provisions of paragraph 3.A(1). Thereafter, rent shall be adjusted every seven years after the date of the transfer in accordance with the provisions of paragraph 3.6(4). (c) In the event of any transfer of this Lease to a Subsequent Lessee in a transaction other than an arm's length assignment of this Lease, and sale of the improvements on the Leased Land, if any, such as a gift or transfer by inheritance other than an exempt transfer under Paragraph 3.6(3), the Subsequent Lessee shall pay annual rent equal to the Average Actual Sales Value Rent calculated as of the date of the transfer in accordance with the provisions of Paragraph 3.A(2). (2) Execution After the Effective Date. In the event this Lease is first executed after the Effective Date, rent shall be determined and paid as follows: (a) Current Lessee/Within Five Years After Effective Date: In the event this Lease is executed by the Current Lessee within five (5) years after the Effective Date, the Current Lessee shall pay annual rent equal to Initial Rent plus a sum calculated by multiplying the difference between Initial Rent and Average Actual Sales Value Rent by a fraction equal to the number of months between the Effective Date and Execution Date, divided by sixty. The Current Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. Thereafter, so long as there has been no transfer of this Lease by the Current Lessee, rent shall remain as specified in this subparagraph, notwithstanding the provisions of Paragraph 3.B(4). (b) Current Lessee/More Than Five Years After Effective Date: In the event this Lease is executed by the Current Lessee more than five (5) years after the Effective Date, the Current Lessee shall pay annual rent equal to Average Actual Sales Value Rent calculated as of the date of execution in accordance with the provisions of Paragraph 3.A(2). The Current Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. Thereafter, rent shall be adjusted every seven (7) years after the date of execution in accordance with the provisions of Paragraph 3.B(4). (c) Subsequent Lessee: In the event the Current Lessee transfers the Pre- existing Lease to a Subsequent Lessee who wishes to sign this Lease after the Cut- NB1-187371.V2 4 05/24/94 off Date, the Subsequent Lessee shall pay annual rent equal to two and one-half percent (21/2%) of Actual Sales Value determined as of the date of execution and in accordance with Paragraph 3.A(1). The Subsequent Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. The annual rent shall be adjusted every seven (7) years following the Execution Date in accordance with the provisions of Paragraph 3.13(4). (d) Subsequent Lessee: In the event of any transfer of this Lease to a Subsequent Lessee who wished to sign this Lease after the Cut-off Date in a transaction other than an arm's length assignment of this Lease, and sale of the improvements on the Leased Land, if any, such as a gift or transfer by inheritance other than an exempt transfer under Paragraph 3.13(3), the Subsequent Lessee shall pay annual rent equal to the Average Actual Sales Value Rent calculated as of the date of the transfer in accordance with the provisions of Paragraph 3.A(2). The Subsequent Lessee shall also pay all Deferred Rent concurrent with the execution of this Lease. The annual rent shall be adjusted every seven (7) years following the Execution Date in accordance with the provisions of Paragraph 3.13(4). (3) Exempt Transfers. The provisions of Paragraph 3.13 regarding transfers shall not operate to increase rent if: (a) Lessee is assigning an interest in this Lease to a trustee under a deed of trust for the benefit of a lender; (b) the transfer is caused by the death of a spouse and the full interest of the deceased spouse is transferred to a surviving spouse; (c) the transfer of an interest in this Lease is between or among tenants in common or joint tenants in ownership of the leasehold estate created by this Lease, and such tenants in common or joint tenants first acquired their respective interests in this Lease simultaneously; (d) the transfer or assignment is by a bona fide lender acquiring title by foreclosure or deed in lieu of foreclosure of a trust deed; or (e) the transfer is a sublease of the premises for three years or less; provided, however, that in determining the term of a sublease, any options or rights to renew or extend the sublease shall be considered part of the term .whether or not exercised; (f) the transfer is caused by the dissolution of the marriage of Lessee and the full interest of one of the spouses is transferred to the other spouse; (g) the transfer is to an inter vivos trust, living trust or other similar estate planning arrangement of Lessee; provided, however, that the provisions of Paragraph 3.0 shall apply upon the death of such Lessee if the beneficiary of such trust or other arrangement is other than the surviving spouse or a tenant in common or joint tenant in ownership of the leasehold estate created by this Lease, and such tenants in common or joint tenants first acquired their respective interests in this Lease simultaneously; or NB1-187371.V2 5 05/24/94 (h) the transfer is to a guardian or custodian of Lessee appointed due to the physical or mental incapacity of Lessee; provided, however, that the provisions of Paragraph 3.0 shall apply upon the death of such Lessee unless the transferee is the surviving spouse or a tenant in common or joint tenant in ownership of the leasehold estate created by this Lease, and such tenants in common or joint tenants first acquired their respective interests in this Lease simultaneously. (4) Rent Adjustments. (a) Except as provided in Paragraphs 3.6(I)(a), 3.6(2)(a) and 3.6(3), on the seventh (7th) anniversary of the Execution Date of this Lease, or the seventh (7th) anniversary of the date of any transfer of this Lease by any Current or Subsequent Lessee, rent shall be adjusted to reflect any increase or decrease in the cost of living, which adjustment shall be determined as set forth hereinafter. The most recently published CPI figure shall be determined as of the date ninety (90) days prior to the adjustment date, and rent payable during the ensuing seven (7) year period shall be determined by increasing or decreasing the then current rent by a percentage equal to the percentage increase or decrease, if any, in the CPI as of the Execution Date, or the date of the most recent rental adjustment, or the date of any transfer of this Lease by any Current or Subsequent Lessee, whichever is later. In no event shall rent be increased or decreased by a sum greater than forty percent (40%) of the rent paid by Lessee as of the later of (i) the Execution Date, or (ii) the last rental adjustment date. Lessor shall endeavor to notify Lessee of rental adjustments at least forty-five (45) days prior to the end of each seventh (7th) lease year; provided, however, failure of Lessor to give forty-five (45) days' notice does not relieve Lessee from the obligation to pay increased rent or the right to pay less rent in the event of a decrease in the CPI; and, provided further, that Lessee shall have no obligation to pay rent increases which apply to any period greater than ninety (90) days prior to the receipt by Lessee of Lessor's notice of an increase in rent. (b) In the event Lessee is two or more persons owning the leasehold estate created hereby as tenants in common or joint tenants, and less than all of such persons transfer their interest in this Lease to a person other than to an existing tenant in common or joint tenant, the rent adjustment shall be prorated to reflect the percentage interest being transferred to a third party. For example, if two persons are the Lessee as tenants in common as to equal one-half interests, and one of such persons transfers his/her 50% interest to a third party, the rent shall be adjusted as provided in Paragraph 3.6(2)(c), and thereaftevas provided in Paragraph 3.13(4)(a), and the resultant rental increase multiplied by the percentage transferred (50%) to determine the rental increase; provided, however, that any subsequent transfer of an interest in this Lease to such third party shall not be exempt under subparagraph 3.6(3). (5) Installment Payments/Grace Period. Lessee shall pay rent in equal monthly installments, in advance, with payment due on or before the first day of the month for which rent is paid. Rent shall be prorated during any month when a transaction which increases rent becomes effective other than the first day of that month. No late payment charge applies to payments received by Lessor on or before 5:00 P.M. on the fifteenth (15th) day of the month for which the payment is made ("Grace Period") . If a rent payment, or any portion thereof, is received by Lessor after NB1-187371.V2 0 05/24/94 expiration of the Grace Period, Lessee shall pay Lessor a late payment charge equal to four percent (4%) of each late payment, or portion thereof. Rent payments shall be payable to the City of Newport Beach and sent, or delivered, to the Finance Director at the address specified for service of notices. Rent shall be payable by Lessee to Lessor in such coin or currency to the United States as at the time of payment is legal tender for public and private debts. Lessor and Lessee agree that late charges specified in this paragraph represent a fair and reasonable estimate of the cost Lessor will incur by reason of any late payment by Lessee. Any late or missed payment of rent constitutes a default pursuant to paragraph 13 of this Lease. Any failure by Lessor to declare a default and initiate termination of this Lease due to a late or missed payment shall not be considered a waiver of the right of Lessor to do so for that or any other late or missed payment. C. Credit to Tidelands Fund. In calculating Initial Rent under this Lease, a credit was given to certain of the Current Lessees equal to the annual amortization of the present value of the additional property tax to be paid by such lessees during the remaining period of the Pre-existing Lease. This credit, commonly referred to as the "tax advantage", is shown on Exhibit D for each affected lot. This credit was extended by Lessor to Current Lessees as consideration for entering into this Lease. As a consideration in its approval of this Lease, the California State Lands Commission required Lessor to credit its State supervised Tidelands Trust Fund by an amount equivalent to the tax advantage derived from those lots in Beacon Bay comprising tidelands. This amount is shown on Exhibit D for each affected lot comprising tidelands. Accordingly, Lessor has unilaterally agreed to annually calculate the amount of such tax advantage derived from the tidelands parcels in Beacon Bay and to credit an equivalent amount as revenue to the State supervised Tidelands Trust Fund. This provision is included in this Lease to acknowledge the agreement of Lessor with the California State Lands Commission, and does not affect the rights and obligations of Lessor or Lessee under this Lease. 4. TRANSFERS. A. Conditions Precedent to Transfer. Lessee may transfer this Lease subject to the prior written consent of Lessor, which consent shall not be unreasonably withheld, delayed or conditioned. Lessor shall consent to any transfer when Lessee and the proposed transferee have complied with the following: (1) Lessee shall furnish Lessor with executed copies of each and every document used to effect the transfer. (2) Lessee or the proposed transferee shall pay to Lessor a transfer fee of one hundred dollars ($100.00); .h (3) Lessee shall execute a 'Termination of Leasehold Interest" for recordation; and (4) The proposed transferee shall execute a new lease and execute a "Memorandum of Lease" for recordation, which lease shall be identical to this Lease and have a term equal to the remaining term of this Lease at the time of the transfer. B. Transfer Information. The parties to any non-exempt transfer of this Lease shall provide Lessor with all information relevant to a determination of the total consideration paid for the transfer, as well as all documents which are relevant to the total consideration paid for the transfer. Lessee and the proposed transferee shall provide this information not later than forty-five (45) days prior to, the proposed effective date of the transfer of this Lease. Lessor shall have the right, at its sole discretion, to commission an appraisal of the fair market value of this Lease and improvements NB1-187371.V2 1 05/24/94 thereon as of the date of transfer. Any such appraisal shall be completed not later than thirty (30) days after receipt by Lessor of the aforementioned information from the Lessee. If the value determined by the appraiser commissioned by Lessor exceeds the stated total consideration to be paid based on the information received from the Lessee by more than ten percent (10%), Lessor shall so notify the Lessee and provide Lessee with a full copy of such appraisal report, and said value shall be deemed the Actual Sales Value for purposes of calculating Average Actual Sales Value Rent and rental payments unless within fifteen (15) days after receiving such -notice and the report the Lessee notifies Lessor that Lessee elects to cause an appraisal of the fair market value of this Lease and improvements thereon as of the date of transfer to be conducted by an independent appraiser. In such event, Lessee cause such appraisal to be completed no later than thirty (30) days after the notice to Lessor and shall provide Lessor with a full copy of the appraisal upon completion. The Actual Sales Value for purposes of calculating Average Actual Sales Value Rent and rental payments shall be the greater of (i) the stated consideration for the transfer, or (ii) the average of the two appraisals. Any appraisal commissioned by Lessor or Lessee under this Paragraph 4.6 shall be conducted by an MAI appraiser licensed to conduct business in the State of California and experienced in residential appraisals in Southern California. C. Exempt Transfer Information. Lessor's consent is not required for the "exempt transfers" referenced in Paragraph 3.6(3); provided, however, Lessee shall furnish Lessor with copies of all documents used to effect any exempt transfer. D. Audit of Subleases. It is the intent of the parties that transfers referred to in Section 3.6(3)(e) shall only be exempt from the further provisions of Paragraph 3.6 (in respect of rental adjustments) if such subleases are not substantially equivalent to, do not have substantially the same economic effect as, or are intended to disguise, a transfer by the then Lessee of all or substantially all of his/her interest in this Lease to the putative sublessee. Lessor shall at all times have the right, upon written request to the Lessee, to receive copies of all written agreements, and to be advised in full of all oral agreements, between the Lessee and any sublessee of the Leased Land. Any purported sublease of the premises which is determined to be substantially equivalent to, or have substantially the same economic effect as, or is intended to disguise, a transfer by the then Lessee of all or substantially all of his/her interest in this Lease to the putative sublessee shall be void and of no force or effect, and such attempted or purported sublease shall, at the option of Lessor, (i) be an event of default by the Lessee under this Lease, or (ii) permit Lessor to treat such sublease as a transfer of this Lease subject to the provisions of Section 3.13. 5. ENCUMBRANCES. A. Right to Encumber. Lessee may encumber this Lease by deed of trust, mortgage, or similar instrument, in favor of any bona fide lender ("Lender") in a bona fide loan transaction for any purpose without the consent of Lessor. To determine whether a loan is a bona fide lending transaction, and not an arrangement for transfer of the possession or title to the Premises to the putative lender, Lessee and the lender agree to provide Lessor with all documentation executed between Lessee and the lender concerning the loan upon request of Lessor. Neither Lessee nor Lessor shall have the power to encumber Lessor's interest in the Leased Land. Any encumbrance shall be subject to all covenants, conditions and restrictions in this Lease and to all rights and interests of Lessor except as otherwise expressly provided in this Lease. Lessee shall give Lessor prior written notice of any encumbrance. B. Notice to Lender. Lessor shall have no obligation to give any Lender any written notice pursuant to this Lease unless the Lender has given Lessor written notice of its name, address, and nature of encumbrance ("Complying Lender") . Lessor shall give all Complying Lenders a copy of any written notice of default, notice of termination or other notice which may affect Lessee's rights N81 -187371.V2 8 05/24/94 under this Lease. Notice shall be deemed given by Lessor to Lender five (5) days following deposit in the United States mail, certified and return receipt requested, postage prepaid, and sent to Lender at the address furnished in writing by Lender. C. Modification. Lessor and Lessee agree that they will not modify, surrender or cancel this Lease by mutual agreement without the prior written consent of Lender. D. Rights of Lender. Any Lender holding or the beneficiary of a security interest or lien on this Lease and the leasehold estate created hereby shall have the right, during the term of the Lease, to: (1) perform any act required of Lessee pursuant to this Lease; (2) transfer this Lease to the purchaser at any foreclosure sale, the assignee in the event of an assignment in lieu of foreclosure, or to acquire the interest of Lessee pursuant to foreclosure or assignment and thereafter transfer this Lease to the Lender's successor. Lender shall have no right to transfer this Lease unless and until Lender has cured all defaults requiring the payment or expenditure of money by Lessee. E. Right of Lender to Cure Default. Lessor shall give written notice of any default or breach of this Lease by Lessee to Lender and afford Lender the opportunity, after notice, to: (1) cure the breach or default within ten (10) days after expiration of the time period granted to Lessee for curing the default if the default can be cured by payment of money; (2) cure the breach or default within thirty (30) days after expiration of the time period granted to Lessee for curing the default when the breach or default can be cured within that period of time; or (3) cure the breach or default in a reasonable time when something other than money is required to cure the breach or default and cannot be performed within thirty (30) days after expiration of the time period granted to Lessee for curing the default, provided the acts necessary to cure the breach are commenced within thirty (30) days and thereafter diligently pursued to completion by Lender. F. Foreclosure in Lieu of Cure. Lender may forestall termination of this Lease for a default or breach by Lessee by commencing foreclosure proceedings subject to strict compliance with the following: =f: (1) proceedings are commenced within thirty (30) days after the later of (i) expiration of the time period granted to Lessee for curing the default, or (ii) service on Lender of the notice describing the breach or default; (2) the proceedings are diligently pursued to completion in the manner authorized by law; and (3) Lender performs all of the terms, covenants and conditions of this Lease requiring the payment or expenditure of money by Lessee until the proceedings are complete or are discharged by redemption, satisfaction, payment or conveyance of this Lease to Lender. NBI-187371.V2 9 05/24/94 G. New Lease. Notwithstanding any other provision of this Lease, should this Lease terminate or be terminated because of any default or breach by Lessee, Lessor shall enter into a new lease with Lender as lessee provided: (1) the written request for the new lease is served on Lessor by Lender within thirty (30) days after the termination of this Lease. (2) the new lease contains the same terms and conditions as this Lease except for those which have already been fulfilled or are no longer applicable. (3) on execution of the new lease by Lessor, Lender shall pay any and all sums that would be due upon execution of the new lease, but for its termination,and shall fully remedy, or agree in writing to remedy, any other default or breach committed by Lessee that can reasonably be remedied by Lender. (4) Lender shall, upon execution of the new lease, pay all reasonable costs and expenses (including attorney's fees) incurred in terminating this Lease, recovering possession of the premises from Lessee, in preparing the new lease. H. Miscellaneous. The following provisions shall apply to Lessor, Lessee and any Lender: (1) Any Lender shall be liable to perform the obligations of the Lessee under this Lease only so long as the Lender holds title to this Lease; (2) Lessee shall, within ten (10) days after the recordation of any trust deed or other security instrument, record, at Lessee's sole expense, Lessor's written request for a copy of any notice of default and/or notice of sale under any deed of trust as provided by state law. 6. USE AND MAINTENANCE. A. Use of Leased Land. The Leased Land shall be solely for residential purposes. Lessee may demolish, construct, remodel, reconstruct and maintain structures on the Leased Land for residential purposes so long as the structures and construction are authorized by appropriate City permit and fully comply with all City ordinances, resolutions, regulations, policies, and plans. Lessee shall also obtain permission to construct and/or maintain structures from the California Coastal Commission and any other state agency if required by law. B. Maintenance of Improvements. Lessor shall not be required to makes any changes, alterations, additions, improvements, or repairs in on or about all or part of the Premises. Lessee shall, at all times during the term of this Lease and without any cost or expense to Lessor, keep and maintain, the Premises, including, without limitation, all structures, facilities, walks, curbs, parkways and other improvements, in good order and repair and in a clean, safe, sanitary and orderly condition. Lessee shall repair or reconstruct any improvements on the Leased Land following any damage or destruction thereof, unless the improvements are being destroyed in conjunction with remodeling or reconstruction and Lessor has consented, in writing, to the damage or destruction. Lessee shall cause to be constructed, maintained and repaired all utilities, pipes, walls, sewers, drains, and other improvements on the Premises to the extent required by law or as necessary to maintain the improvement in good order and repair and safe and sanitary condition. C. Compliance with Laws. Lessee shall make, or cause to be made, any additions, alterations or repairs to any structure or improvement on the Premises which may be required by, and Lessee NB1-187371.V2 10 05/24/94 shall otherwise observe and comply with, any law, statute, ordinance, plan, resolution or policy applicable to the Premises. Lessee shall indemnify, defend and hold Lessor harmless from and against any loss, liability, action, claim or damage, arising out of, or in any way related, to Lessee's failure to comply with, and perform pursuant to, provisions of this subparagraph C. All repairs, additions, and alterations to the structures or improvements on the Premises shall conform to all applicable laws, ordinances, regulations, plans, policies and resolutions and all work shall be performed with reasonable diligence, completed within a reasonable time, and performed at the sole cost and expense of Lessee. D. As Is Condition of Premises. Lessee expressly accepts the Premises "as is" and acknowledges that Lessor has made no representations or warranties as to the suitability of the property or any construction or improvement. Lessee shall conduct all tests necessary to determine the suitability of the property for any proposed construction or improvement, including, without limitation, the amount and extent of any fill, and related factors. Lessee expressly acknowledges that Lessor shall not be liable for any damage or loss resulting from any subsurface or soil condition in, on, or under the Premises or adjacent property. Lessee expressly acknowledges that, while the legislature of the State of California has purportedly removed the public trust restrictions on use of the Property pursuant to the Beacon Bay Bill, the Leased Land may constitute filled tidelands, and Lessor has made no representation or warranty relative to the validity of the Beacon Bay Bill or the power of the legislature of the State of California to remove public trust restrictions on tidelands through legislation. Notwithstanding the foregoing, in the event of any challenge to the right and power of Lessor to lease the Leased Land for the purposes provided in this Lease, Lessor agrees, at its sole cost and expense, to use all reasonable efforts to resist and defend against such challenge and to seek a ruling or judgment affirming and upholding the right and power of Lessor to lease the Leased Land for the purposes provided in this Lease. 7. TAXES AND UTILITIES. It is understood by Lessor and Lessee that this Lease shall give rise to a possessory interest tax obligation and that the execution of this Lease will constitute a reassessment event which may give rise to a material increase in the possessory interest tax currently payable by Lessee under the Pre-existing Lease. Lessee shall pay, before delinquent, all utility charges and any general and special taxes, assessments or other governmental charges, if any, which may be levied on the Leased Land, and/or any improvements, including, without limitation, any possessory interest tax. Any lien for unpaid utilities, taxes, assessments or charges shall not attach to the leasehold interest but only to improvements located on the Leased Land. 8. USE AND MAINTENANCE OF COMMON AREA. Lessee shall have the right to use the streets, beaches, walkways, tennis courts, docks, pier;, and common landscaped areas in Beacon Bay (as depicted on Exhibit A) and which are leased to the Beacon Bay Community Association by Lessor in consideration of the maintenance thereof by such Association and rent to be paid by individual Lessees under their respective leases. 9. MAINTENANCE AND IMPROVEMENT OF INFRASTRUCTURE. Lessor has no obligation to install, improve, repair, or maintain streets, curbs, gutters, water lines, sewer lines, drainage facilities, street lighting or other facilities used by the residents of Beacon Bay (Infrastructure). Notwithstanding Section 8 above, Lessor reserves the right, after a five (5) year period following the Effective Date and upon approval by the Lessees representing a majority of the lots in Beacon Bay, to improve and maintain streets, curbs, gutters, water lines, sewer lines', drainage facilities, street lighting, telephone and electricity lines and other Infrastructure facilities in Beacon Bay at its initial cost and to assess Lessee for NB1-187371.V2 11 05/24/94 a pro rata share of such costs, and to collect such costs from Lessee in the form of rent over the remaining term of this Lease. 10. COMMUNITY ASSOCIATION. A. Membership in Association. As a material part of the consideration of this Lease, and as an express condition to the continuance of any of the rights of Lessee pursuant to this Agreement, Lessee agrees to become, and during the term of this Lease to remain, a member in good standing of the Beacon Bay Community Association. B. Compliance with Rules and Regulations. Lessee agrees to abide by the Articles of Incorporation, bylaws, and all rules and regulations of the Association, and to pay to the Association, before delinquency, all valid dues, fees, assessments and other charges properly levied or assessed by the Association. Lessee's failure to comply with the provisions of Paragraph A and this Paragraph B shall constitute a material breach of this Lease. C. Lessor Maintenance of Common Areas. In addition to the rights reserved to Lessor pursuant to the provisions of Section 9, if the Community Association fails or ceases to maintain community facilities, Lessor may, at its option and without obligation, assume the obligations of the Community Association to maintain, repair, install or improve community facilities. In such event, Lessee shall pay a pro rata share of Lessor's reasonable expenses in maintaining and operating the community facilities, including a reasonable management fee or the fee charged by a management agent. Lessee's pro rata share shall be determined by dividing Lessor's costs by the number of residential lots within Beacon Bay (currently seventy-two lots) . Lessee's pro rata share of the annual costs incurred by Lessor shall be paid within thirty (30) days after written notice of the amount due, and any failure to pay shall constitute a material breach of this Lease. The costs of maintaining and operating community facilities shall be determined annually and solely from the financial records of Lessor. 11. COVENANTS, CONDITIONS AND RESTRICTIONS. Lessee agrees to abide and be bound by all covenants, conditions, restrictions and reservations as contained in Exhibit D attached hereto and incorporated herein by this reference. Said covenants, conditions and restrictions shall run with the Leased Land and shall be binding on Lessee and Lessee's successors in interest. 12. INDEMNIFICATION. Lessee shall indemnify, defend and hold harmless Lessor, its City Council, Boards and Commissions, officers, agents, servants and employees from and against any and all actions, causes of action, obligations, costs, damages, losses, claims, liabilities and demands of any nature whatsoever, including reasonable attorneys' fees, regardless of the merit or outcome of any such claim or suit, arising out of, or in anyway related, to the condition of the Premises, or the use or possession of the Premises by Lessee, or Lessee's employees, agents, representatives, guests or invitees, as well as any activity, work or things which may be permitted or suffered by Lessee in or on the Premises. Lessee shall indemnify, defend and hold harmless Lessor, its City Council, Boards and Commissions, officers, agents, servants and employees from and against any and all actions, causes of action, obligations, costs, damages, losses, claims, liabilities, and demands of any nature whatsoever, including reasonable attorneys' fees, accruing or resulting to any and all persons, firms or corporations furnishing or supplying work, services, materials, equipment or supplies arising from or in any manner connected to the use or possession of the Premises by Lessee or from any activity, work or things which may be permitted or suffered by Lessee in or about the Premises. Without limiting the generality of the foregoing, Lessee hereby assumes all risk of damage to property or injury to N81 -187371.V2 12 05/24/94 persons in or about the Premises from any cause except for damage or injury resulting from the negligence or willful, fraudulent or criminal conduct by Lessor and/or its officers, employees, agents and representatives, and Lessee hereby waives all claims in respect thereof against Lessor. 13. INSURANCE. A. General Conditions. All insurance required to be carried pursuant to this Section 13 shall be obtained from reputable carriers licensed to conduct business in the State of California. Each policy required to be carried pursuant to this Section 13 shall name Lessee and Lessor as additional named insureds, and shall provide that the policy may not be surrendered, cancelled or terminated, or coverage reduced, without not less than twenty (20) days prior written notice to Lessor. B. Fire Insurance. Lessee shall, during the term of this Lease, insure all structures and improvements on the Leased Land against loss or damage by fire or other risk for residential structures. The insurance shall provide coverage to at least ninety percent (90%) of the full insurable replacement value of all improvements on the Leased Land, with the loss payable to Lessee unless this Lease is terminated by Lessor for default of Lessee in which case the proceeds of insurance shall be paid to Lessor. C. Liability Insurance. Lessee shall, at Lessee's sole cost and expense, procure and maintain during the term of this Lease, a broad form comprehensive coverage policy of public liability insurance which insures Lessee and Lessor against any loss or liability caused by, or in any way related to, the condition, for Lessee's use and occupation, of the premises in amounts not less than: (1) $500,000 per occurrence for injury to, or death of, one person; (2) $100,000 for damage to or destruction of property. 14. DEFAULT. A. Events of Default. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Lessee: (1) the abandonment of the Premises by Lessee; (2) the failure by Lessee to make any payment of rent when due if the failure continues for three (3) days after written notice has been given to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable unlawful detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice Gequired by this paragraph; (3) the failure by Lessee to perform any of the provisions of this Lease and any Exhibits attached hereto to be performed by Lessee, other than described in Paragraph 14.A(2) above, if the failure to perform continues for a period of thirty (30) days after written notice thereof has been given to Lessee. If the nature of Lessee's default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be in default if Lessee commences the cure within said thirty (30) day period and thereafter diligently prosecutes the cure to completion; or (4) the failure of Lessee to provide Lessor with all relevant information regarding the total consideration paid in conjunction with any transfer of this Lease; NB1-187371.V2 - 13 05/24/94 (5) the making by Lessee of any general assignment, or general arrangement for the benefit of creditors; the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt or a petition for reorganization or arrangement of any law relating to bankruptcy unless the same is dismissed within sixty (60) days; the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in the Lease, where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in the Lease, where such seizure is not discharged within thirty (30) days. Notices given under this Paragraph 14.A shall specify the alleged default and the applicable lease provisions, and shall demand that Lessee perform the provisions of this Lease or pay the rent that is in arrears, as the case may be, within the applicable period of time. No such notice shall be deemed a forfeiture or a termination of this Lease unless Lessor so elects in the Notice. B. Landlord's Remedies. In the event of any default by Lessee as defined in Paragraph 14.A, Lessor may, in addition to any rights or remedies permitted by law, do the following: (1) Terminate Lessee's right to possession of the Leased Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event, Lessor shall be entitled to recover from Lessee all amounts to which Lessor is entitled pursuant to Section 1951.2 of the California Civil Code, or any other provision of law, including, without limitation, the following: (a) The worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of the loss than Lessee proves could be reasonably avoided; and (b) any other amount necessary to compensate Lessor for all detriment proximately caused by Lessee's failure to perform obligations pursuant to this Lease or which in the ordinary course of things would be likely to result from the breach, including, without limitation, the cost of recovering possession, expenses of reletting (including necessary repair, renovation and alteration) reasonable attorneys' fees, and any other reasonable costs. The "worth at the time of award" of all rental amounts other than that referred to in clause (i) above shall be computed by allowing interest at the rate of ten percent (10%) per annum from the date amounts accrue to Lessor. The worth at the time of award of the amount referred to in clause (i) shall be computed by discounting such amount at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award. (2) Without terminating or affecting the forfeiture of this Lease or, in the absence of express written notice of Lessor's election to do so, relieving Lessee of any obligation pursuant to this Lease, Lessor may, but need not, relet all or a portion of the Premises at any time, or from time to time, and on such terms and conditions as Lessor, at its sole discretion, deems appropriate. Whether or not the Premises are relet, Lessee shall pay all amounts required by this Lease up to the date that Lessor terminates Lessee's right to possession of the Premises. Lessee shall make such payments at the time specified in the Lease and Lessor need not wait until termination of the Lease to recover sums due by legal action. If Lessor relets all or a portion of the Premises, the reletting shall not relieve Lessee NB1-187371.V2 14 05/24/94 of any obligation pursuant to this Lease; provided, however, Lessor shall apply the rent or other proceeds actually collected by virtue of the reletting against amounts due from Lessee. Lessor may execute any agreement reletting all or a portion of the leased premises and Lessee shall have no right to collect any proceeds due Lessor by virtue of any reletting. Lessor shall not, by any reentry or reletting or other act, be deemed to: (a) Have accepted any surrender by Lessee of this Lease or the leased premises; (b) have terminated this Lease; or (c) have relieved Lessee of any obligation pursuant to this Lease unless Lessor has given Lessee express written notice of Lessor's election to do so. (3) Lessor may terminate this Lease by express written notice to Lessee of its election to do so. The termination shall not relieve Lessee of any obligation which has accrued prior to the date of termination. In the event of termination, Lessor shall be entitled to recover the amount specified in Paragraph 14.6(1). C. Default By Lessor. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligation. If the nature of Lessor's obligation is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if Lessor commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. D. Stay of Obligations. Neither party shall be under any obligation to perform or comply with its obligations pursuant to this Lease after the date of any default by the other party. E. Determination of Rental Value. In any action or unlawful detainer commenced by Lessor, the reasonable rental value of the Leased Land shall be deemed to be the amount of rent and additional rent (such as reimbursement for costs of Infrastructure improvements or the payment of taxes or assessments) for the period of the unlawful detainer, unless Lessor/Lessee shall prove to the contrary by competent evidence. F. Waiver of Rights. The failure or delay of either party to exercise any right or remedy shall not be construed as a waiver of such right or remedy or any default by the other party. Lessor's acceptance of any rent shall not be considered a waiver of any preexisting breach of default by Lessee other than the failure to pay the particular rent accepted regardless of Lesaor's knowledge of the preexisting breach of default at the time rent is accepted. G. Waiver of Right of Redemption. Lessee waives any right of redemption or relief from forfeiture pursuant to Code of Civil Procedure Sections 1174 and 1179 and/or pursuant to`any existing or future statutory or decisional law in the event Lessee is evicted or Lessor takes possession of the Premises by reason of Lessee's default. 15. SURRENDER OF POSSESSION UPON EXPIRATION OR TERMINATION. A. Surrender of Premises. Upon the expiration or termination of this Lease, Lessee agrees to peaceably deliver possession of, and agrees to vacate without contest, legal or otherwise, the Leased Land. Lessor, at its sole discretion, may record a document evidencing the expiration or NB1-187371.V2 15 05/24/94 � j - termination of the leasehold interest. Lessee waives any right to receive relocation assistance or similar form of payment. B. Removal of Improvements. Upon the expiration of the term of this Lease, and on condition that Lessee is not then in default of any of the provisions of this Lease, Lessee shall have the right to remove from the Leased Land all buildings and improvements built or installed on the Leased Land. Removal of any building or improvement shall be at the sole cost and expense of Lessee and removal must be complete no later than ninety (90) days after expiration of the term of this Lease. Lessee shall fill all excavations and remove all foundations, debris and other parts of the buildings or improvements remaining after removal and surrender possession of the Premises to Lessor in a clean and orderly condition. In the event any of the buildings and improvements are not removed within the time provided in this Paragraph 15.6, they shall become the property of Lessor without the payment of any consideration. 16. EMINENT DOMAIN. A. Definitions of Terms. (1) The term "total taking" as used in this Section 16 shall mean the taking of the entire Premises under the power of eminent domain or the taking of so much of the Leased Land as to prevent or substantially impair the use thereof by Lessee for the residential purposes. (2) The term "partial taking" shall mean the taking of a portion only of the Premises which does not constitute a total taking as defined above. (3) The term "taking" shall include a voluntary conveyance by Lessor to an agency, authority or public utility under threat of a taking under the power of eminent domain in lieu of formal proceedings. (4) The term "date of taking" shall be the date upon which title to the Premises or portion thereof passes to and vests in the condemnor. B. Effect of Taking. If, during the term hereof, there shall be a total taking or partial taking under the power of eminent domain, then the leasehold estate of the Lessee in and to the Leased Land or the portion thereof taken shall cease and terminate as of the date of taking of said Leased Land. If this Lease is so terminated in whole or in part, all rentals and other charges payable by Lessee to Lessor hereunder and attributable to the Leased Land or portion thereof taken shall be paid by Lessee up to the date of taking by the condemnor, and the parties shall thereupon be released from all further liability in relation thereto. C. Allocation of Award - Total Taking. All compensation and damages awarded for the total taking of the Premises and Lessee's leasehold interest therein shall be allocated as follows: (1) The Lessor shall be entitled to an amount equal to the sum of the following: (a) The fair market value of the Premises as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such fair market value by the factor for the present worth of one dollar ($1.00) at nine percent (9%) per annum compound interest for the number of years remaining from the date of taking to the date of the expiration of the term of this Lease; and NB1-187371.V2 16 05/24/94 (b) The present worth of rents due during the period from the date of taking to the date of the expiration of the term of this Lease, computed by multiplying the annual rent then payable by the factor for the present worth of one dollar ($1.00) per annum at nine percent (9%) per annum compound interest (Inwood Coefficient) for the number of years in such period. (2) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinafter provided. D. Allocation of Award - Partial Taking. All compensation and damages awarded for the taking of a portion of the Leased Premises shall be allocated and divided as follows: (1) The Lessor shall be entitled to an amount equal to the sum of the following: (a) The proportionate reduction of the fair market value of the Premises as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such proportionate reduction in fair market value by the factor for the present worth of one dollar ($1.00) at nine percent (9%) per annum compound interest for the number of years remaining from the date of taking to the date of expiration of the term of this Lease; and (b) The present worth of the amount by which the rent is reduced computed by multiplying the amount by which the annual rent is reduced by the factor for the present worth of $1.00 per annum at 9% per annum compound interest (Inwood Coefficient) for the number of years remaining from the date of taking to the date of expiration of the term of this Lease. (2) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinabove provided. E. Reduction of Rent on Partial Taking. In the event of a partial taking, the rent payable by Lessee hereunder shall be adjusted from the date of taking to the date of the expiration of the term of this Lease. Such rental adjustment will be made by reducing the basic rental payable by Lessee in the ratio that the Fair Market Rental Value of the Premises at the date of taking bears to the Fair Market Rental Value of the Premises immediately thereafter. 17. ATTORNEYS' FEES. Should either party be required to employ counsel to enforce the terms, conditions and ggvenants of this Lease, the prevailing party shall recover all reasonable attorneys' fees and charges (and court costs if applicable) incurred therein, whether or not court proceedings were commenced. 18. REMEDIES CUMULATIVE. The rights, powers, elections and remedies of the Lessor or Lessee contained in this Lease shall be construed as cumulative and no one of them shall be considered exclusive of the other or exclusive of any rights or remedies allowed by law, and the exercise of one or more rights, powers, elections or remedies shall not impair or be deemed a waiver of Lessor's or Lessee's rights to exercise any other. NB1-187371.V2 17 05/24/94 19. NO WAIVER. No delay or omission of either party to exercise any right or power arising from any omission, neglect or default of the other party shall impair any such right or power or shall be construed as a waiver of any such omission, neglect or default on the part of the other party or any acquiescence therein. No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease shall be construed as a waiver of any succeeding breach of the same or of any of the terms, covenants, agreements, restrictions or conditions of this Lease. 20. COMPLIANCE WITH LAWS. Lessee covenants and agrees to comply with all rules, regulations, statutes, ordinances and laws of the State of California, County of Orange, City of Newport Beach, or any other governmental body or agency having lawful jurisdiction over the Leased Land. 21. NOTICES. Any notice or notices provided for by this Lease or by law, to be given or served by Lessee, may be given or served by mail, registered or certified, with postage prepaid, on the City of Newport Beach, addressed to the Mayor, City Manager, or City Clerk, 3300 Newport Boulevard, P.O. Box 1768, Newport Beach, California 92659-1768, or at such other address as may be hereafter furnished to Lessee in writing. If notice is intended to be served by Lessor on Lessee, it may be served either: A. By delivering a copy to the Lessee personally; or B. By depositing the Notice in the United States Mail, registered or certified, with postage prepaid, to the residence or business address furnished by Lessee; or C. If the Lessee is absent from the Leased Land by leaving a copy with some person of suitable age and discretion who may be occupying the Leased Land; or D. If no one can be found, then by affixing a copy of the notice in a conspicuous place on the Premises and also sending a copy through the mail addressed to the Lessee. Such service upon Lessor or Lessee shall be deemed complete upon the earlier of (i) actual delivery, or (ii) the expiration of seventy-two (72) hours from and after the deposit in the United States mail of such notice, demand or communication. ZZ 22. HOLDING OVER. This Lease shall terminate and become null and void without further notice upon the expiration of the term of this Lease. Any holding over by Lessee after expiration of the term shall not constitute a renewal of this Lease or give Lessee any rights in or to the Premises except as expressly provided in this Section. The parties agree this Lease cannot be renewed, extended, or in any manner modified except in a writing signed by all parties. However, if Lessee, or anyone claiming under Lessee, shall remain in possession of the Premises after expiration of the term of this Lease without any agreement in writing between the parties and Lessor accepts rent from Lessee, then Lessee shall be deemed a tenant from month-to-month subject to the provisions of this Lease insofar as they may be applicable to a month-to-month tendency. The month-to-month tendency may be terminated by Lessor or Lessor upon thirty (30) days' prior written notice to the other. NB1-187371.V2 18 05/24/94 23. (QUIET ENJOYMENT. Lessor covenants and agrees that Lessee, upon paying the rent set forth herein and observing and keeping all covenants and agreements to be observed or kept by Lessor hereunder, shall quietly have and enjoy the Leased Land during the term of this Lease without hindrance or molestation by anyone claiming by or through Lessor. 24. SEVERABILITY. If any term or provision of this Lease shall, to any extent be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall remain valid and enforceable to the fullest extent permitted by law. 25. MISCELLANEOUS. A. Representations. Lessee agrees that no representations as to the Premises have been made by Lessor or by any person or agent acting for Lessor. Lessor and Lessee agrees and acknowledges that this document contains the entire agreement of the parties, that there are no verbal agreements" representations, warranties or other understandings affecting this agreement, and Lessor and Lessee, as a material part of the consideration of this Lease, waives all claims against the other for recision, damages, or otherwise by reason of any alleged covenant, agreement or understanding not contained in this Lease. B. Inurement. Each and all of the covenants, conditions and agreements herein contained shall,' in accordance with the context, inure to the benefit of Lessor and Lessee and apply to and bind Lessor and Lessee, as the case may be, their respective heirs, legatees, devisees, executors and administrators, successors, assigns, licensees, permittees, or any person who may come into possession or occupancy of said Leased Land or any part thereof in any manner whatsoever. Nothing in this paragraph shall in any way alter the provisions herein contained against assignment or subletting. C. Joint Several Liability. If Lessee consists of more than one person, the covenants, obligations and liabilities of Lessee pursuant to this Lease shall be the joint and several covenants, obligations and liabilities of such persons. D. Captions. The section and paragraph captions used in this Lease are for the convenience of the parties and shall not be considered in the construction or interpretation of any provision. E. Gender. In this Lease, the masculine gender includes the feminine and. neuter and the singular number includes the plural whenever the context so requires. NB1-187371.V2 19 05/24/94 IN WITNESS WHEREOF, the parties have caused this Lease to be executed as of the date first above written. E R0�? ATTEST: CgCI FOIX �1 CITY CLERK APPRI07D AS TO FORM: ITY ATTORNEY LESSOR: CITY OF NEWPORT BEACH, By: Title: MAYOR LESSEE: NB1-187371.V2 20 - 05/24/94 a Z �CN , 7 1 � a, 1., —CA Q1� �•do "r "`� 'y'a N a( d9 •� 1 r c• % G p _ an �. � 111' cS .4�• � . ori eA r ►Sa Q, •4. ^•-)- ' o� � � d r/ •c SN r G� d � ~ '�. r � � cn 'a is •�. � �_jV' 96 o o o•; • ca • ° � � m a a v Ch Q N IO,�JYS�` Z to ' 0 a 4ti10 fOF a R 9 e• s 4 -10 TA \ 9 to Q m s Iye cv ° 1 Ib a N gr o11' W QrP° b � K •� �� ° r r _ J \ � � Jm11Z4 Iq p° IQ n, o CA �� ,> •� - ^' Ch1 � • � 3q ii �r oAcl !1C Y �� rn •�s 00 l7S. 19 00. ANo RB0R oa.e4rl 61 O flA s. Na R.S liD6 •� m 11 o n _ Ito. a .rtf - ItN so S 1 i�� � f .t�j• op .fel' 1. � � y,. Am d ��\ Exhibit \ ° '400 Beacon Bay Lot 2 described as follows: The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the office of the County Recorder, County of Orange, State of California, together with the southeasterly 10.00 feet of Lot 1 of said Record of Survey. SUMMARY OF SALIENT FACTS AND CONCLUSIONS - continued SUMMARY OF VALUE INDICATIONS: Existing (Istyear) Unencumbered Fair Market Contract Effective Lot No. Fee Lot Value Rental Value Rent Net Rent Water Front Lots A $1,330,000 $48,520 $23,125.08 $31,940.00 B $1,200,000 $43,320 $12,506.85 $22,270.00 C $1,031,000 $37,560 $16,625.04 $22,480.00 1 $947,000 $34,200 $8,020.80 $15,030.00 2 $1,131,000 $41,640 $8,825.40 $17,950.00 3 $1,263,000 $46,920 $24,250.08 $31,560.00 4 $1,318,000 $49,120 $10,458.96 $21,260.00 5 $1,341,000 $50,120 $20,012.04 $28,840.00 6 $1,386,000 $51,680 $25,000.00 $34,260.00 7 $1,210,000 $44,800 $24,999.96 $31,870.00 8 $1,177,000 $43,480 $43,750.00 $43,480.00 9 $1,298,000 $47,840 $42,500.04 $44,350.00 10 $1,342,000 $49,600 $24,999.96 $33,540.00 11 $1,122,000 $41,280 $9,020.52 $17,020.00 � 12 $1,100,000 $40,400 $14,250.00 $22,190.00 13 $1,100,000 $40,400 $23,625.00 $29,450.00 14 $1,243,000 $45,640 $10,312.56 $19,690.00 15 $1,265,000 $46,520 $10,836.47 $20,240.00 16 $1,067,000 $39,080 $8,508.48 $16,480.00 17 $1,067,000 $39,080 $16,250.04 $21,750.00 18 $1,067,000 $39,080 $8,508.48 $16,480.00 19 $1,243,000 $45,640 $10,020.02 $19,500.00 20 $1,147,000 $42,320 $8,727.84 $17,910.00 21 $1,058,000 $38,760 $20,224.50 $26,660.00 22 $1,036,000 $37,880 $41,250.00 $37,880.00 ES 1 $1,037,000 $37,880 $28,749.96 $31,920.00 ES 2 $1,037,000 $37,880 $24,625.00 $29,220.00 Subtotals: $31,563,000 $1,160,640 $519,983.08 $705,220.00 Exhibit C - Page 1 SUMMARY OF SALIENT FACTS AND CONCLUSIONS - continued Exhibit C - Page 2 Existing (1st year) Unencumbered Fair Market Contract Effective Lot No. Fee Lot Value Rental Value Rent Net Rent Interior Lots 23 $478,000 $14,487 $2,782.32 $6,297.00 24 $501,000 $15,237 $6,125.04 $8,897.00 25 $509,000 $15,537 $3,399.12 $6,977.00 26 $511,000 $15,612 $3,417.72 $6,942.00 27 $519,000 $15,912 $3,436.44 $7,102.00 28 $542,000 $16,775 $4,137.72 $7,785.00 29 $518,000 $15,650 $15,375.00 $15,470.00 30 $510,000 $15,462 $3,551.16 $7,102.00 31 $517,000 $15,725 $8,750.00 $10,515.00 32 $520,000 $15,837 $3,588.48 $7,217.00 33 $528,000 $16,137 $3,607.08 $7,307.00 34 $589,000 $18,200 $4,454.64 $8,490.00 35 $559,000 $17,000 $3,776.28 $7,780.00 36 $548,000 $16,662 $3,795.00 $7,672.00 37 $517,000 $15,725 $14,625.00 $15,005.00 38 $520,000 $15,837 $3,780.36 $7,967.00 39 $528,000 $16,137 $9,125.04 $11,557.00 40 $588,000 $18,162 $11,133.60 $13,572.00 41 $513,000 $15,500 $3,719.64 $7,300.00 42 $548,000 $16,662 $3,795.00 $7,672.00 43 $556,000 $16,962 $11,250.00 $13,232.00 44 $558,000 $17,037 $3,832.20 $7,787.00 45 $565,000 $17,300 $4,056.84 $7,990.00 46 $588,000 $18,162 $4,454.64 $8,492.00 47 $539,000 $16,475 $3,459.36 $7,365.00 48 $551,000 $16,775 $6,249.96 $9,305.00 49 $520,000 $15,837 $3,551.16 $7,197.00 50 $523,000 $15,950 $3,569.76 $7,240.00 51 $520,000 $15,837 $3,780.36 $7,857.00 52 $528,000 $16,137 $12,750.00 $13,927.00 53 $588,000 $18,162 $4,479.00 $8,492.00 54 $530,000 $15,987 $3,344.88 $7,227.00 55 $559,000 $17,075 $10,625.04 $12,865.00 56 $567,000 $17,375 $3,603.96 $7,915.00 57 $546,000 $16,737 $3,551.16 $7,427.00 58 $528,000 $16,137 $6,750.00 $10,007.00 59 $525,000 $16,025 $10,125.00 $12,175.00 60 $533,000 $16,325 $3,533.88 $7,315.00 Exhibit C - Page 2 SUMMARY OF SALIENT FACTS AND CONCLUSIONS - continued Unencumbered Fair Market Lot No. Fee Lot Value Rental Value Interior Lots - continued 61 $588,000 ES 3 $474,000 ES 4 $467,000 ES 5 $470,000 ES 6 $468,000 ES 7 $461,000 ES 8 $471,000 Subtotal Int.: $23,786,000 $18,162 $14,225 $13,962 $14,075 $14,000 $13,737 $13,925 Existing Contract Rent $4,436.16 $8,750.04 $3,021.96 $10,000.08 $2,982.96 $2,966.04 $3,118.08 (1st year) Effective Net Rent $8,482.00 $10,325.00 $6,322.00 $11,415.00 $6,310.00 $6,057.00 $6,455.00 $724,637 $254,617.16 $397,807.00 Subtotal W.F.: $31,563,000 $1,160,640 $519,983.08 $705,220.00 Grand Totals: $55,349,000 $1,885,277 $774,600.24 $1,103,027.00 Exhibit C - Page 3' Distribution of Rents and Tax Advantage between Tidelands and Uplands* Beacon Bay 6/6/94 - Page 1 Exhibit D (1st year) Proportionate Proportionate Annual Amort. Tidelands Effective % % Rent Rent of PV of Tax Tax Lot No. Net Rent Tidelands Uplands Tidelands Uplands Advantage Advantage Waterfront Lots A $31,940.00 100% 0% $31,940 $0 $0 $0 B $22,270.00 100% 0% $22,270 $0 $930 $930 C $22,480.00 100% 0% $22,480 $0 $1,410 $1,410 1 $15,030.00 100% 0% $15,030 $0 $2,080 $2,080 2 $17,950.00 100% 0% $17,950 $0 $2,260 $2,260 3 $31,560.00 100% 0% $31,560 $0 $560 $560 4 $21,260.00 100% 0% $21,260 $0 $2,610 $2,610 5 $28,840.00 100% 0% $28,840 $0 $1,620 $1,620 6 $34,260.00 100% 0% $34,260 $0 $0 $0 7 $31,870.00 95% 5% $30,276 $1,594 $0 $0 8 $43,480.00 50% 50% $21,740 $21,740 $0 $0 9 $44,350.00 5% 95% $2,217 $42,132 $0 $0 10 $33,540.00 0% 100% $0 $33,540 $0 $0 11 $17,020.00 0% 100% $0 $17,020 $3,200 $0 12 $22,190.00 0% 100% $0 $22,190 $1,130 $0 13 $29,450.00 0% 100% $0 $29,450 $0 $0 14 $19,690.00 0% 100% $0 $19,690 $2,880 $0 15 $20,240.00 20% 80% $4,048 $16,192 $2,980 $596 16 $16,480.00 95% 5% $15,656 $824 $2,640 $2,508 17 $21,750.00 100% 0% $21,750 $0 $2,420 $2,420 18 $16,480.00 100% 0% $16,480 $0 $2,640 $2,640 19 $19,500.00 100% 0% $19,500 $0 $2,880 $2,880 20 $17,910.00 100% 0% $17,910 $0 $2,470 $2,470 21 $26,660.00 100% 0% $26,660 $0 $0 $0 22 $37,880.00 100% 0% $37,880 $0 $0 $0 ES 1 $31,920.00 100% 0% $31,920 $0 $0 $0 ES 2 $29,220.00 100% 0% $29,220 $0 $0 $0 Waterfront Subtotal: $705,220.00 $500,848 $204,372 $34,710 $24,984 Beacon Bay 6/6/94 - Page 1 Exhibit D Distribution of ,,ents and Tax Advantage between Tidelands and Uplands* Beacon Bay 6/6/94 - Page 2 Exhibit D (1st year) Proportionate Proportionate Annual Amort. Tidelands Effective % % Rent Rent of PV of Tax Tax Lot No. Net Rent Tidelands Uplands Tidelands Uplands Advantage Advantage Interior Lots 23 $6,297.00 0% 100% $0 $6,297 $550 $0 24 $8,897.00 0% 100% $0 $8,897 $390 $0 25 $6,977.00 5% 95% $349 $6,628 $630 $31 26 $6,942.00 99% 1% $6,873 $69 $710 $703 27 $7,102.00 100% 0% $7,102 $0 $660 $660 28 $7,785.00 100% 0% $7,785 $0 $740 $740 29 $15,470.00 0% 100% $0 $15,470 $0 $0 30 $7,102.00 0% 100% $0 $7,102 $580 $0 31 $10,515.00 30% 70% $3,154 $7,361 $660 $198 32 $7,217.00 100% 0% $7,217 $0 $620 $620 33 $7,307.00 100% 0% $7,307 $0 $650 $650 34 $8,490.00 100% 0% $8,490 $0 $730 $730 35 $7,780.00 0% 100% $0 $7,780 $580 $0 36 $7,672.00 0% 100% $0 $7,672 $590 $0 37 $15,005.00 5% 95% $750 $14,255 $0 $0 38 $7,967.00 99% 1% $7,887 $80 $0 $0 39 $11,557.00 100% 0% $11,557 $0 $0 $0 40 $13,572.00 100% 0% $13,572 $0 $0 $0 41 $7,300.00 0% 100% $0 $7,300 $510 $0 42 $7,672.00 0% 100% $0 $7,672 $590 $0 43 $13,232.00 0% 100% $0 $13,232 $0 $0 44 $7,787.00 0% 100% $0 $7,787 $630 $0 45 $7,990.00 15% 85% $1,198 $6,792 $660 $99 46 $8,492.00 0% 100% $0 $8,492 $720 $0 47 $7,365.00 0% 100% $0 $7,365 $610 $0 48 $9,305.00 0% 100% $0 $9,305 $600 $0 49 $7,197.00 0% 100% $0 $7,197 $620 $0 50 $7,240.00 0% 100% $0 $7,240 $630 $0 51 $7,857.00 0% 100% $0 $7,857 $110 $0 52 $13,927.00 0% 100% $0 $13,927 $0 $0 53 $8,492.00 0% 100% $0 $8,492 $730 $0 54 $7,227.00 0% 100% $0 $7,227 $500 $0 55 $12,865.00 0% 100% $0 $12,865 $0 $0 56 $7,915.00 0% 100% $0 0,915 $470 $0 57 $7,427.00 0% 100% $0 $7,427 $700 $0 58 $10,007.00 0% 100% $0 $10,007 $0 $0 59 $12,175.00 0% 100% $0 $12,175 $0 $0 60 $7,315.00 0% 100% $0 $7,315 $660 $0 Beacon Bay 6/6/94 - Page 2 Exhibit D Distribution of Rents and Tax Advantage between Tidelands and Uplands* V (1st year) Proportionate Effective Lot No. Net Rent Interior Lots - continued 61 $8,482.00 ES 3 $10,325.00 ES 4 $6,322.00 ES 5 $11,415.00 ES 6 $6,310.00 ES 7 $6,057.00 ES 8 $6,455.00 Interior Lots $720 Subtotal: $397,807.00 Add Waterfront: $705,220.00 Grand Total: $1,103,027.00 of Total: 100% V *Effective Net Rents consider tax advantage. Discount rate for present value of annual advantage is 6%. Rate for amortization of advantage is 7%. Rent and advantage figures are from 10/8/93 appraisal. Lots 3, 7, and 21 have been adjusted for new contract rent real estate taxes. Beacon Bay 6/6/94 - Page 3 Exhibit D Proportionate Proportionate Annual Amort. Tidelands % % Rent Rent of PV of Tax Tax Tidelands Uplands Tidelands Uplands Advantage Advantage 0% 100% $0 $8,482 $720 $0 100% 0% $10,325 $0 $320 $320 100% 0% $6,322 $0 $500 $500 85% 15% $9,703 $1,712 $0 $0 0% 100% $0 $6,310 $500 $0 0% 100% $0 $6,057 $650 $0 0% 100% $0 $6,455 $410 $0 $109,592 $288,215 $19,930 $5,251 $500,848 $204,372 $34,710 $24,984 $610,440 $492,587 $54,640 $30,235 55% 45% 100% 55% *Effective Net Rents consider tax advantage. Discount rate for present value of annual advantage is 6%. Rate for amortization of advantage is 7%. Rent and advantage figures are from 10/8/93 appraisal. Lots 3, 7, and 21 have been adjusted for new contract rent real estate taxes. Beacon Bay 6/6/94 - Page 3 Exhibit D RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City Manager's Office City of Newport Beach 3300 Newport Boulevard New ort Beach CA 92663 h.L ..'I .� d iii IST: i:_5. ��el x._�_v His Lee n. Li 'tltalE'y� lLtl3li.Y? 4:diilStt':ti•5 LL j.i�_!i: i. SI? Lvtili�7 RE. -M, itCH PP 1 n4 i"PP_e e PT Dortal iia %3_ ig S a. = MEMORANDUM OF LEASE This MEMORANDUM OF LEASE is entered into as of the 0 day of June 1994, by and between THE CITY OF NEWPORT BEACH, a chartered municipal corporation ("Lessor"), and nlnn I `iverstAl 7EveY.soll ("Lessee"), to witness that Tvv5�ee5 0i tie Everso�l Am�\ SY 5� dere& \Z -q-- Les or and Lessee executed a lease dlted 1 , 19'U a memorandum of which was recorded on 2 , 19_U, as Instrument No. %it- 0°13120 in the Official Records of Orange County. By said lease, the Real Property described below was leased to Lessee until July 1, 2006. The parties agree to terminate said lease as of the Commencement Date set forth below, and to discharge and release each other from all obligations under said lease as of said date (other than delinquent rent or other charges, if any, owed by Lessee pursuant to said lease as of the termination). Lessor hereby leases to Lessee, commencing on July 1, 1994 (the "commencement Date"), and ending on July 1, 2044, on the terms and conditions set forth in that certain lease by and between the parties hereto executed concurrently herewith, all the terms and conditions of which are made a part hereof as though fully set forth herein, those certain premises in the City of Newport Beach, County of Orange, State of California (the "Real Property"), described as follows: The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder, County of Orange, State of California, together with the southeasterly 10.00 feet of Lot 1 of said Record of Survey. IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease as of the date first about written. - - STATE OF CALIFORNIA COUNTY OF ORANGE LESSOR: CITY OF NEWPORT BEACH By: Mayor LESSEE 1 A On June 23 , 1994, before me, tA014 ca S. kLt•4- , a Notary Public in and for said State, personally appeared Tc1Ax D. Everson , Tess; e T eyers0%1 , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name@H&fa subscribed to the within instrument and acknowledged to me that the executed the same in his/heherr authorized capacity a , and that by hWhertIIR�Isignaturee on the instrument the person, or the entity upon behalf of which the person&acted, executed the instrument. WITNESS my hand and official seal.Monica S. Kutz �o r �U*�a Signature (Seal) U Comm 01013469* 1013469 ri NOTARY PUBLIC CALIFORNIA ORANGE COUNTY 0 Comm Expires Jan 13. 1998 STATE OF CALIFORNIA ) COUNTY OF ORANGE G5�m mer �,A On xi{fFie t `1' , 1994, before me, U`to Vii e4 tz , a Notary Public in and for said State, personally appeared Cwfmie, S• Tyyylew , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(&)iSTam subscribed to the within instrument and acknowledged to me that &s -h grey executed the same in fhisl(heiftdr authorized capacity(", and that byaherftheir signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Seal) Manicy S. K u t z U Comm *1013469 tl NOTARY PUSOC CALIFORNIA" ORANGE COUNTY C) Comm Expires Jan 13 +!RA ' RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City Manager's Office City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Attn: Kenneth J. Delino . 88-0981 $7.00 C2 a P MEMORANDUM OF LEAST. �s �� s S a�`a.-►--- �G. �e 0.,r RECORDING RMUFSTED BY CONWOWFAL.TH LANE) TITLE CO RECORDED IN OFFici& RECORDS OF ORANGE COUNTY, CALIFORNIA s2 05 PM MAR -2'88 "" . c,43> Fl(,CORDER THIS MEMORANDUM OF LEASE is made and entered into by and between The City of Newport Beach, a chartered municipal corporation, herein called "Lessor," and JOHN D. EVERSOLL and JESSIE J. EVERSOLL, Trustees of the Eversoll Family Trust dated 12-9-75 herein called "Lessee," to witness that: Lessor hereby leases to Lessee for a term of eighteen (18) years commencing on January 1, 1988, and ending on July 1, 2006, on the terms and conditions set forth in that certain Lease by and between the parties hereto dated January 1, 1988, all the terms and conditions of which lease are made a part hereof as though fully set forth herein, all those certain premises in the County of Orange, State of-Calif-ornia. The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, r Page-4-2—and 43 of Record of Surveys, in the office of ,,..c County Recorder, County of Orange. State of California, together with the southeasterly 10.00 feet of Lot 1 of said Record of Survey. EXECUTED on February 17 19_88 , Newport Beach, Orange County, California. ATTEST: Anll'el�llt . (f City Clerk APPROVIED AS TO FORM: City Attorney LESSOR The City of Newport Beach X1-1 Foam LESSEE Eversol l� STATE OF CALIFORNIA COUNTY OF Orange OFFICIAL SEAL DOROTHY L. PALEN NOTARY PUBLIC - CALIFORNIA PRINCIPAL OFFICE IN ORANGE COUNTY My Commission Exp. Apr. 5, 1989 ACKNOWLEDGMENT— General —Wolcotts Form 233CA—Rev. 5-82 ©1982 WOLCOTTS, INC. (price class 8-2) ss. On this 17th day of February , in the year 1988, before me, the undersigned, a Notary Public in and for said State, personally appeared John D. Eversoll and Jessie J. Eversoll , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person_ whose names are subscribed to the within instrument, and acknowledged to me that the`— executed it. WITNESS my hand and official seal. r76 Notary Pubic in and for said State. Do"r6thy L. Palen STATE OF CALIFORNIA, COUNTY OF Orange ss. 88--098120 On this 24th day of January in the year 1988 , before me the undersigned a Notary Public in and for said State, personally appeared John C. Cox, Jr. , known to me to be the Mayor of the City of Newport Beach and Wanda E. Raggio known to me to be the City Clerk of the City of Newport Beach and known to me to be the persons who executed the within instrument on behalf of said governmental agency, and acknowledged to me that such governmental agency executed the same. WITNESS my hand and official seal. Notary Pu I in and for said State. Dorothy L. Palen ^. GM,::AL SEAL ?! DOROTHY'... R�:L -N _ m NOTARY PUBLIC - CAU'-ORNIA .o PRINCIP-M OFFICE IN ORANGE COUNTY My Commission Exp. Apr. 5, 1989 AGREEMENT TO LEASE THIS AGREEMENT TO LEASE, made and entered into on the 31st day of December, 1981, by and between the CITY OF NEWPORT BEACH, a chartered municipal corporation, hereinafter "City," and MR. AND MRS. JOHN D. EVERSOLL , hereinafter "Sublessee." T1T1/1 TTT T P� A. City holds title to and is the owner of certain harbor frontage and tidelands, together with certain uplands abutting thereon known as Beacon Bay and more particularly described in Exhibit "1" attached hereto and made a part hereof by this reference. B. Carroll B. Beek, Barton Beek, Joseph Allan Beek, Jr., and Seymour Beek jointly hold a Master Lease to said proper- ty dated January 9, 1950, which Master Lease expires on December 31, 1987. C. The "Westerly Portion" of the Beacon Bay property has been divided into individual lots and subleased for residential purposes. D. All of said subleases expire on the same date as the Master Lease, to wit: December 31, 1987. E. City believes it to be in the best interest and welfare of City: (1) that the portion of Beacon Bay which is currently leased for residential purposes remain residential in character; and (2) to enter into new agreements to lease with the sublessees under the terms, conditions and for the considera- tion as hereinafter set forth. F. It is the judgment of City that the leasing of the property hereinafter described is consistent with the trust pur- poses imposed upon such portions of the leased land which may 1 constitute tidelands as authorized by Chapter 74, Statutes of 1978. G. It is further the judgment of City that in entering into this Agreement to Lease in the future, City is acting pur- suant to its proprietary powers. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS AND THE MUTUAL COVENANTS set forth below, City and Sub- lessee hereby agree as follows: 1. City hereby agrees to lease to Sublessee and Sub- lessee hereby agrees to lease from City the real property described in Exhibit "2" attached hereto and by this reference made a part hereof (hereinafter the "Leased Land") pursuant to a lease substantially in the form of Lease which is attached -hereto marked Exhibit "C" and by this reference made a part hereof, and under the terms and conditions as set forth below. 2. In consideration of City's agreement to lease to Sublessee hereunder, Sublessee agrees to pay to City on the lst day of each month following the date of this Agreement and on the lst day of each month thereafter through the lst day of December, 1987, a sum determined by subtracting from the fair market rental value of $9,273.70 (annualized) on January 1, 1982 the payments made by Sublessee under a sublease on the Leased Land to the Master Lessee of Beacon Bay described in Paragraph A of the Recitals above. 3. The Base Rental under Paragraph 3 of the Lease, Exhibit "C" attached hereto, shall be the fair market rental value of the land on the Effective Date subject to adjustment of the base rental, hereafter "Adjusted Base Rental", as set forth in paragraphs 4 or 5 hereof. 2 constitute tidelands as authorized by Chapter 74, Statutes of 1978. G. It is further the judgment of City that in entering into this Agreement to Lease in the future, City is acting pur- suant to its proprietary powers. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS AND THE MUTUAL COVENANTS set forth below, City and Sub- lessee hereby agree as follows: 1. City hereby agrees to lease to Sublessee and Sub- lessee hereby agrees to lease from City the real property described in Exhibit 112" attached hereto and by this reference made a part hereof (hereinafter the "Leased Land") pursuant to a lease substantially in the form of Lease which is attached -hereto marked Exhibit "C" and by this reference made a part hereof, and under the terms and conditions as set forth below. 2. In consideration of City's agreement to lease to Sublessee hereunder, Sublessee agrees to pay to City on the lst day of each month following the date of this Agreement and on the lst day of each month thereafter through the lst day of December, 1987, a sum determined by subtracting from the fair market rental value of� SQ` .37 (annualized) on July 1, 1981 (the "Effective Date"), the payments made by Sublessee under a sublease on the Leased Land to the Master Lessee of Beacon Bay described in Paragraph A of the Recitals above. 3. The Base Rental under Paragraph 3 of the Lease, Exhibit "C" attached hereto, shall be the fair market rental value of the land on the Effective Date subject to adjustment of the base rental, hereafter "Adjusted Base Rental", as set forth in paragraphs 4 or 5 hereof. 2 0 4. Should any Sublessee not execute this Agreement on or prior to the Effective Date, but execute this Agreement after Effective Date and prior to December 31, 1987, the rental sum to be used in paragraph 2 hereof and the Base Rental under Paragraph 3 of the Lease, Exhibit "C" attached hereto, shall be the total of the fair market rental value of the land as established by the Appraisal Report prepared by George Hamilton Jones, M.A.I., dated November 5, 1980, plus an amount equal to the L.A. - Long Beach Consumer Price Index (C.P.I.) increase, from July 1, 1981 to the date of execution, or 1% per month increase from July 1, 1981, whichever is greater, plus an amount equal to the increase in rental value change due to the reduced lease advantage, as of the date of execution, as set forth in the effective rental value change sheet attached hereto as Exhibit "D", said total rental rate shall be referred to as Adjusted Base Rental. The different Adjusted Base Rental provided for in this paragraph is imposed unilaterally by the City out of what is deemed to be fair and equitable to those Sublessees who choose to enter into this Agreement on its Effective Date. Said difference in Adjusted Base Rentals is in no manner to be considered a penalty but moreover a procedure developed solely by City to provide the incentive to enter into this Agreement of Lease at the earliest date possible. Commencing January 1, 1988 City is under no obligation to enter into this Agreement or a Lease in the form of Exhibit "C" attached hereto with any sublessee who has not executed this Agreement and shall be free to deal with respect to the lease of any unleased portions of Beacon Bay on any terms and conditions it deems fit, either with third parties or prior sublessees. 5. Sublessee may sell, assign, exchange or convey his interest in this Agreement without prior written consent of the City, provided that upon any such transfer the provisions of 3 Section 4 of the Lease Exhibit "C" attached hereto, shall determine the amounts to be paid by assignee to City, and further provided that the assignee execute an acceptance of the assignment and an agreement to be bound by all the terms of this Agreement and to make the payments provided for hereunder which Assignment and acceptance shall be delivered to and accepted by City. Upon such assignment and acceptance, Sublessee shall be released of any further obligation and liabilities under this Agreement to Lease. 6. The parties agree to execute the Lease, Exhibit "C" hereto, during the month of December, 1987 and concurrently therewith to execute and record a short form memorandum thereof. 7. Time and each of the terms, covenants and conditions hereof are expressly made the essence of this Agreement. If Sublessee shall fail to comply with any of the terms, covenants or conditions of this Agreement, including making the payments provided for herein at the time and in the amount herein required, and shall fail to remedy such default within sixty (60) days and thereafter diligently prosecute the same to completion, or if a Sublessee shall abandon or vacate the Leased Land, City may, at its option and without further demand, terminate this Agreement. Upon service by City on Sublessee of Notice of Termination of this Agreement to Lease, notice being given in the same manner as provided in paragraph 19 of the Lease appended hereto as Exhibit "C" this Agreement to Lease shall be terminated as to Sublessee and City's obligation to enter into the Lease appended hereto as Exhibit "C" is likewise terminated and City is under no obligation whatsoever to enter into said Lease with Sublessee. In addition to termination of this Agreement to Lease, City may recover from Sublessee all damages incurred by 4 City by reason of said breach, including, without limitation, any payments due and owing from Sublessee to City and any other costs due and owing from Sublessee to City at the date of termination of this Agreement to Lease. Should either City or Sublessee be required to employ counsel to enforce the terms, conditions and covenants of this Agreement to Lease, the prevailing party shall recover all reasonable attorney's fees (and court costs if applicable) incurred therein whether or not court proceedings were commenced. 8. Sublessee agrees that he will hold and save City, its officers, agents and employees harmless from any and all claims or demands of any kind or nature whatsoever arising out of, or incident to, the use and occupancy of the Leased Land, and to indemnify City for any cost, liability or expense caused by or arising out of any injury or death of persons or damage to property which may occur upon or about the Leased Land or caused by or arising out of any activities or omission of Sublessee, his agents, employees, licensees, and/or invitees, including, without limitation, injury or death of Sublessee, his agents, employees, licensees and invitees and damage to his property or Sublessee's property; except for any damage or injury of any kind arising out of the negligence of City, its agents or employees. 9. Each and every covenant, condition and agreement hereof, in accordance with the context, shall inure to the benefit of City and apply to and bind Sublessee, their respective heirs, legatees, devisees, executors, administrators, successors, assigns, licensees, permittees, or any person who may come into possession or occupancy of the Leased Land, or any part thereof in anv manner whatsoever. 5 IN WITNESS WHEREOF, the parties have caused this Agree- ment to Lease to be executed on the date first above written. ATTEST: i City Clerk APPROVED AS TO FORM: City Attorn6y CITY OF NEWPORT BEACH By ay Sublessee 5-4-81 ci%r/ 4 n✓� . L..Z�✓�f� l D EXHIBIT "C" L E A S E THIS LEASE, made and entered into on the lst day of January, 1988, by and between the CITY OF NEWPORT BEACH, a chart- ered municipal corporation, hereinafter "Lessor", and after "Lessee." RECITALS herein - A. Lessor holds title to and is the owner of certain harbor frontage and tidelands, together with certain uplands abutting thereon known as Beacon Bay and more particularly described in Exhibit "1" attached hereto and made a part hereof by this reference. B. Carroll B. Beek, Barton Beek, Joseph Allan Beek, Jr., and Seymour Beek jointly hold a Master Lease to said proper- ty, dated January 9, 1950, which Master Lease expires on December 31, 1987. C. The "Westerly Portion" of the Beacon Bay property has been divided into individual lots and subleased for residen- tial purposes. D. All of said subleases expire on the same date as the Master Lease, to wit: December 31, 1987. E. Lessor believes it to be in the best interest and welfare of said Lessor (1) that the portion of Beacon Bay which is currently leased for residential purposes remain residential in character, and (2) to enter into new subleases with the sub - 1 lessees under the terms, conditions and for the consideration as hereinafter set forth. F. It is the judgment of Lessor that the leasing of the property hereinafter described is consistent with the trust purposes imposed upon such portions of the leased lands which may constitute tidelands as authorized by Chapter 74, Statutes of 1978. G. It is further the judgment of City that in entering into this Lease in the future, City is acting pursuant to its proprietary powers. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS AND THE MUTUAL COVENANTS set forth below, Lessor and Lessee hereby agree as follows: 1. DESCRIPTION OF LEASED PREMISES. Lessor hereby leases, and Lessee hereby accepts this lease of the real property described in Exhibit "2" attached hereto and made a part hereof by this reference under the terms and conditions as set forth below (hereinafter the "Leased Land"). 2. TERM. Unless terminated sooner as provided herein, the term of this Lease is for a period commencing on the 1st day of January, 1988, and ending on the lst day of July 2006. 3. BASE RENTAL. As base rental, Lessee agrees to pay to Lessor the sum of LLARS, ($ per month, payable on the 1st day of each month so long as this Lease remains in effect subject to a base rental adjustment, as provided in paragraph 4 below. Said rental payment is deemed to be the fair market rental value of the Leased Land as an improved subdivision lot. 4. SALE, ASSIGNMENT, SUBLEASE Lessee may sell, assign, exchange, convey or sublease his leasehold interest or encumber such interest without a prior written consent of Lessor; provided, however, that the Lessee, proposed transferee, assignee or encumbrancer shall: K (a) Furnish Lessor with an executed copy of such assignment, Trust Deed, or other document used to effect such transfer; (b) Furnish to Lessor the express agreement of the proposed transferee or encumbrance assuming, and agreeing to per- form, all of the obligations under this Lease; (c) Pay to Lessor a transfer fee of $50.00; and (d) Pay to Lessor the adjusted base rental which shall be the greater of the following: 3 above, or (i) The base rental as set forth in paragraph (ii) An amount, equal to two and one half percent (2 1/2%) of the actual sales value of the leasehold estate, including the improvements thereon, divided by twelve (12) and payable monthly. The actual sales value shall be the total value of the transfer, as established by the Assessor of Orange County or verified by Lessor. The parties to said transaction shall furnish Lessor with any information regarding the transaction as Lessor may deem necessary to verify the total value of the transaction. If said transfer transaction cannot be verified by normal and accepted methods of verification, Lessor, at its sole discretion, may cause the leasehold estate and improvements thereon to be appraised to establish the fair market value of the property, which value shall be deemed the actual sales value thereof_, as of the date of transfer, and establish thereby the adjusted base rental. The adjusted base rental shall become effective on the date of transfer. The provisions of this subparagraph shall not cause an adjustment of rentals if: (a) Lessee is assigning his interest in this Lease to a Trustee under a Deed of Trust for the benefit of the lender as provided in paragraph 5, below; or 3 (b) The transfer is caused by the death of a spouse and the full interest of the deceased spouse is transferred to the surviving spouse. 5. ENCUMBRANCES. If Lessee assigns his interest in this Lease to a Trustee under a Deed of Trust (hereinafter called "Trust Deed") for the benefit of the lender hereinafter called "Encumbrancer"), such encumbrance shall be upon and subject to the following covenants and conditions: (a) Said Trust Deed and all rights acquired there- under shall be subject to each and all of the covenants, condit- ions and restrictions set forth in this Lease and to all rights and interest of the Lessor hereunder, except as herein otherwise provided. (b) In the event of any conflict between the pro- visions of this Lease and the provisions of any such Trust Deed, the provisions of this Lease shall control. (c) Any Encumbrancer which is an established bank, savings and loan association or insurance company, and is the purchaser at a foreclosure sale, or is an assignee under an assignment in lieu of foreclosure shall be liable to perform the obligations of the Lessee under the Lease only so long as such Encumbrancer holds title to the leasehold. (d) Lessee shall furnish to Lessor a complete copy of the Trust Deed and Note secured thereby, together with the name and the address of the holder thereof. (e) Upon and immediately after the recording of the Trust Deed, Lessee, at Lessee's expense, shall cause to be recorded in the office of the Recorder of Orange County, California, a written request executed and acknowledged by Lessor for a copy of any notice of default and of any notice of sale under the Trust Deed as provided by the statutes of the State of California relating thereto. 4 (f) Lessor agrees that it will not terminate this Lease because of any default or breach hereunder on the part of Lessee if the Encumbrancer under such Trust Deed, within ninety (90) days after service of written notice on the Encumbrancer by Lessor of its intention to terminate this Lease for such default or breach, shall: (i) Cure such default or breach if the same can be cured by the payment or expenditure of money provided to be paid under the terms of this Lease; provided, however, that for the purpose of the foregoing, Encumbrancer shall not be required to pay money to cure the bankruptcy or insolvency of Lessee or to satisfy Lessee's obligations under Paragraph 12 hereof, "Indemnification", or (ii) If such default or breach is not so curable, cause the Trustee under the Trust Deed to commence and thereafter to diligently pursue to completion steps and proceed- ings for judicial foreclosure, the exercise of the power of sale under and pursuant to the Trust Deed in the manner provided by law, or accept from the Lessee an assignment in lieu of foreclo- sure; and (iii) Keep and perform all of the covenants and conditions of this Lease requiring the payment or expenditure of money by Lessee until such time as said leasehold shall be sold upon foreclosure pursuant to the Trust Deed, be released or reconveyed thereunder, sold upon judicial foreclosure or transferred by Deed in lieu of foreclosure; provided, however, if the holder of the Trust Deed shall fail or refuse to comply with any and all of the conditions of this paragraph, then and thereupon Lessor shall be released from the covenant of forebear- ance herein contained. 6. USE. The Leased Land shall be used solely for resi- dential purposes and any appurtenant uses associated therewith. Lessee agrees to comply with all laws, regulations and ordinances 5 12 of Lessor, the County and State affecting the Leased Land and any improvements located thereon. 7. TAXES AND UTILITIES. It is understood by Lessor and Lessee that this Lease may give rise to a possessory interest tax obligation. Lessee shall pay before delinquent all utility charges and any general and special taxes, assessments or other governmental charges, if any, which may be levied on the Leased Land, including any improvements located thereon or associated therewith, or any possessory interest therein arising out of or based upon the leasehold interest throughout the term hereof. Satisfactory evidence of such payments shall be made available to Lessor upon demand. Any lien for unpaid utilities, taxes, assessments or charges shall not attach to the leasehold interest but only to improvements located thereon. 8. USE AND MAINTENANCE OF COMMON AREA. Lessee shall have the right to use the streets, beaches, walkways, tennis courts, docks, piers, and common landscaped areas in Beacon Bay which shall be leased to the Beacon Bay Community Association by the City, in consideration of the maintenance thereof by such Association and fair market value rent to be paid by individual Lessees. Lessor shall not be obligated to make any repairs, alterations or improvements in or to, or upon or adjoining the Leased Land or any structure or other improvement that may be constructed or installed therein, but Lessee shall, at all times during the terms of this Lease and at its sole cost and expense, keep and maintain all buildings, structures and other improvements on the Leased Land in good order and repair, and the whole of the Leased Land and all improvements thereto free of weeds and rubbish, and in a clean, sanitary and neat condition. 9. COMMUNITY ASSOCIATION. Lessee agrees to be- come and during the term of this Lease remain a member in good standing of the Beacon Bay Community Association, and 2 to abide by the Articles of Incorporation, Bylaws and rules and regulations of said Association, now or hereafter existing, and to pay to said Association before delinquency all dues, fees, assessments and other charges from time to time duly levied or assessed in furtherance of the Association's community purpose. 10. COVENANTS, CONDITIONS AND RESTRICTIONS. Lessee agrees to abide and be bound by all covenants, conditions, restrictions and reservations as contained in Exhibit 113" attach- ed hereto and made a part hereof by this reference. Said cove- nants, conditions and restrictions shall run with the Leased Land and shall be binding on Lessee and Lessee's successors in interest. 11. INDEMNIFICATION. Lessee agrees that he will hold and save Lessor, its officers, agents and employees harmless from any and all claims or demands of any kind or nature whatsoever arising out of, or incident to, the use and occupancy of the Leased Land, and to indemnify Lessor for any cost, liability or expense caused by or arising out of any injury or death of persons or damage to property which may occur upon or about the Leased Land or caused by or arising out of any activities or omission of Lessee, his agents, employees, licensees, and/ or invitees, including, without limitation, injury or death of Lessee, his agents, employees, licensees and invitees and damage to his property or Lessee's property; except for any damage or injury of any kind arising out of the negligence of Lessor, its agents or employees. 12. NON-COMPLIANCE AND TERMINATION OF LEASE Time and each of the terms, covenants and condi- tions hereof are expressly made the essence of this Lease. If Lessee shall fail to comply with any of the terms, covenants or conditions of this Lease, including the pay- ment of rental herein reserved, at the time and in the amount herein required, and shall fail to remedy such default within 7 sixty (60) days and thereafter comply with each and every term of this Lease, or if a Lessee shall abandon or vacate the Leased Land, Lessor may, at its option, and without further notice or demand, terminate this Lease and enter upon the Leased Land and take possession thereof, and remove any and all persons therefrom with or without process of law. Lessor may elect to terminate this Lease for any event of default or breach hereof or of the covenants, conditions and restrictions contained in Exhibit "3". Should Lessor elect to terminate, it may recover from Lessee all damages incurred by Lessor by reason of such breach, including, without limitation, the cost of recovering the Leased Land, and the worth at the time of such termination of the excess, if any, of the amount of unpaid .rent and unpaid charges reserved under this Lease over the amount of the rental loss which Lessee proves could be reasonably avoided, for the remainder of the term of this Lease. Such amount shall be immediately due and payable from Lessee to Lessor, together with interest at the rate of 10% per annum from the date owing until paid. The remedies of Lessor specified herein are in addition to and cumulative of any remedies provided Lessor by statute, including the remedies provided in California Civil Code Sections 1951.2, et seg. 13. SURRENDER OF POSSESSION UPON EXPIRATION OR TERMINATION Upon the expiration or termination of this Lease, Lessee agrees to peaceably deliver possession of the Leased Land to Lessor and unconditionally agrees to vacate the Leased Land without contest, legal or otherwise. Lessee further expressly agrees to waive any and all legal rights it may have to contest vacating the Leased Land and further agrees to release Lessor from any and all claims it may have of whatever nature. Lessee further agrees to waive any relocation assistance or any other assistance from Lessor resulting from vacating the Leased Land. Lessee shall have the right prior to and for a period of ninety 0 (90) days after the expiration of this Lease to remove any build- ings or improvements appurtenant thereto from the Leased Land, except that all streets, walkways, common area landscaping, docks, piers and any other installation constructed or installed in the common areas, shall be the property of Lessor. 14. EMINENT DOMAIN A. Definition of Terms. The term "total taking" as used in this paragraph means the taking of the entire Leased Land under the power of eminent domain or the taking of so much of said Land as to prevent or substantially impair the use there- of by Lessee for the uses and purposes hereinabove provided. The term "partial taking" means the taking of a portion only of the Leased Land which does not constitute a total taking as defined above. The term "taking" shall include a voluntary conveyance by Lessor to an agency, authority or public utility under threat of a taking under the power of eminent domain in lieu of formal proceedings. The term "date of taking" shall be the date upon which title to the Leased Land or portion thereof passes to and vests in the condemnor. The term "Leased Land" means the real property belonging to Lessor, together with any and all improvemens placed thereon by Lessor or to which Lessor has gained title. B. Effect of Taking. If durng the term hereof there shall be a total taking or partial taking under the power of eminent domain, then the leasehold estate of the Lessee in and to the Leased Land or the portion thereof taken shall cease and terminate, as of the date of taking of said Land. If this Lease is so terminated in whole or in part, all rentals and other charges payable by Lessee to Lessor hereunder and attributable to the Leased Land or portion thereof taken shall be paid by Lessee up to the date of taking by the condemnor, and the parties shall thereupon be released from all further liability in relation thereto. PE C. Allocation of Award - Total Taking. All compensation and damages awarded for the total taking of the Leased Land and Lessee's leasehold interest therein shall be allocated as follows: (a) The Lessor shall be entitled to an amount equal to the sum of the following: (i) The fair market value of the Leased Land as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiply- ing such fair market value by the factor for the present worth of $1.00 at _%—% per annum compound interest for the number of years remaining from the date of taking to the date of the expiration of the term of this Lease, and (ii) The present worth of rents due dur- ing the period from the date of taking to the date of the expira- tion of the term of this Lease, computed by multiplying the annual rent then payable by the factor for the present worth of $1.00 per annum at /2 $ per annum compound interest (Inwood Coefficient) for the number of years in such period. (b) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinabove provided. D. Allocation of Award - Partial Taking All com- pensation and damages awarded for the taking of a portion of the Leased Land shall be allocated and divided as follows: (a) The Lessor shall be entitled to an amount equal to the sum of the following: (i) The proportionate reduction of the fair market value of the Leased Land as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such proportionate reduction in fair market value by the factor for the present worth of $1.00 at _�_F$ per annum compound interest for the number of years re- maining from the date of taking to the date of the expiration of the term of this Lease; and 10 (ii) The present worth of the amount by which the rent is reduced computed by multiplying the amount by which the annual rent is reduced by the factor for the present worth of $1.00 per annum at 1 -1 $ per annum compound interest (Inwood Coefficient) for the number of years remaining from the date of taking to the date of expiration of the term of this Lease. (b) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinabove provided. E. Reduction of Rent on Partial Taking. In the event of a partial taking, the rent payable by Lessee hereunder shall be adjusted from the date of taking or to the date of the expiration of the term of this Lease. Such rental adjustment will be made by reducing the basic rental payable by Lessee in the ratio that the fair market rental value of the Leased Land at the date of taking bears to the fair market value of the Leased Land immediately thereafter. 15. ATTORNEYS' FEES Should either Lessor or Lessee be required to employ counsel to enforce the terms, conditions and covenants of this Lease Agreement, the prevailing party shall recover all reasonable attorneys' fees (and court fees if applic- able) incurred therein, whether or not court proceedings were commenced. 16. REMEDIES CUMULATIVE. The rights, powers, elections and remedies of the Lessor contained in this Lease shall be construed as cumulative and no one of them shall be considered exclusive of the other or exclusive of any rights or remedies allowed by law, and the exercise of one or more rights, powers, elections or remedies shall not impair or be deemed a waiver of Lessor's right to exercise any other. 17. NO WAIVER. No delay or omission of the Lessor to exercise any right or power arising from any omission, neglect or default of the Lessee shall impair any such right or power or shall be construed as a waiver of any such omission, neglect or 11 default on the part of the Lessor or any acquiescence therein. No waiver of any breach of any of the terms, cove- nants, agreements, restrictions or conditions of this Lease shall be construed as a waiver of any succeeding breach of the same or of any of the terms, covenants, agreements, restrictions or conditions of this Lease. 18. COMPLIANCE WITH LAWS. Lessee covenants and agrees to comply with all rules, regulations, statutes, ordinances and laws of the State of California, County of Orange, City of Newport Beach, or any other governmental body or agency having lawful jurisdiction over the Leased Land. 19. NOTICES. It is mutually agreed that any notice or notices provided for by this Lease or by law, to be given or served by Lessee, may be given or served by mail, registered or certified, with postage prepaid, on the City of Newport Beach addressed to the Mayor, City Manager, or City Clerk, 3300 Newport Blvd., Newport Beach, California 92663, or at such other address as may be hereafter furnished to Lessee in writing. If notice is intended to be served by Lessor on Lessee, it may be served either: personally, or A. By delivering a copy to the Lessee B. If he be absent from the Leased Land by leaving a copy with some person of suitable age and discretion who may be occupying the Leased Land, or C. If no one can be found, then by affixing a copy of the notice in a conspicuous place on the property or also sending a copy through the mail addressed to the Lessee. Such service upon Lessor or Lessee shall be deemed complete at the expiration of forty-eight (48) hours from and after the deposit in the United States mail of such notice, demand or communication. 20. HOLDING OVER. This Lease shall terminate and be- come null and void without further notice upon the expiration of said term. Any holding over shall not constitute a renewal here - 12 of, but the tenancy shall thereafter be on a month-to-month basis and otherwise on the same terms and conditions as herein set forth. 21. MISCELLANEOUS Inurement. Each and all of the covenants, condi- tions and agreements herein contained shall, in accordance with the context, inure to the benefit of Lessor and apply to and bind Lessee, his respective heirs, legatees, devisees, executors, ad- ministrators, successors, assigns, licensees, permittees, or any person who may come into possession or occupancy of said Leased Land or any part thereof in any manner whatsoever. Nothing in this paragraph shall in any way alter the provisions herein con- tained against assignment or subletting. IN WITNESS WHEREOF, the parties have caused this Lease to be executed on the date first above written. ATTEST: WANDA E. RAGGIO City Clerk 7APPOVED AS TO FORM: City Attorney 13 4-21-81 CITY OF NEWPORT BEACH 'elA 05ZK611 BY t Mayor III ��Ii s v /� EXHIBIT "1" LEGAL DESCRIPTION OF BEACON BAY A parcel of land situated in the Northwest quarter of Section 35, Township 6 South, Range 10 West, S. B. B. & M., Orange County, California, more particularly described as follows, to wit: Beginning at the United States Bulkhead Station No. 200, as shown upon a map entitled "Harbor Lines, Newport Bay Harbor, California," approved May 2, 1936, by the Secretary of War and on file in the office of the United States District Engineer at Los Angeles, California; running thence West along the United States Bulkhead line 147.50 feet to United States Station No. 137; thence North 39048' West along said Bulkhead line 535.53 feet; thence North 23057'30" East 126.34 feet to an angle point in the ordinary high tide line of the Pacific Ocean in Newport Bay, as described in Court Case No. 24026 of the Superior Court of the State of California, in and for the County of Orange; thence South 39048' East along said ordinary high tide line 334.47 feet to the most Westerly corner of that certain parcel of land conveyed to the City of Newport Beach by The Irvine Company, as described in deed recorded September 25, 1929, in Book 306, page 375 of Official Records of Orange County, California; thence North 23057'30" East along the Northwesterly line of said parcel of land 317.57 feet; thence South 71054' East along the Northerly line of said parcel of land 290.24 feet; thence South 85043' East along the Northerly line of said parcel of land, said Northerly line being the Southerly line of Bayside Drive, 606.01 feet; thence South 424.71 feet to a point in the United States Government Bulkhead Line between United States Stations Nos. 101 and 200; thence West along said Bulkhead line 784.25 feet to the point of beginning; containing approximately twelve (12) acres. Said parcel of land is shown on Attachment 2 for identification purposes only and is not to be a part of this document. c.. � iI j 5h 1 GV �• ,, - ----` ---!' �I � R/ 55�7 r+ — til Ir< 35 �� x(11- - �--- - - -`~� 7 Q _� I 24 1 \ / �, hl �-+-_•'-_ — - -� �.I+` _-_-_- 1 `J I I I __-_._.-_ L1J Co -_---•- J O j- I r- -' U_ ~'------_-•� 3G o I I ,,,- I •i /� / I �_,•• i-= ___� i I -j 124 --e.i 43 { I b r ._,0------J I U -I i :o al -I i 31 jPt _ _ 4 59 4'T _ — --• ccr;� •%�� �.%�^\ �Q ��• � I W '?� � m ..% ! I?' Ji I � I i i...i i� 1 N � '. I �•' '='.i I c � i�• -, I 7 , 32 1' Zu II' O Ii L----- +GO �I .39 33 \ Jr \ >)I LpJ r'• \ LS. I I:' 1.- �� lye `• \. I I =a $3 I I• 46 IIV iI 34 �y^,;3 .0 r v - <i^ „--_ __..J I I L_ _ - .-�I I ca I_--___- I I - -_- i -•,- _ i 'I \ iA —" -_— N _ �——•._—_—may_—_I LOT HB/aY ;I _..._..._.J 1� kve5r_ .._._........ ._ ................784._ r`UAt3C% ANJ TR E' Oar r $'IA.31 �•.••�' 115011 S i "A,^ -SES, IF 7k SANIF.; STA.'L00 U. S. /_t </1_n Jlf, /)yLW,, D;••.:L:,i,N ;PiCA7;DNLE7TEnSkCHN7HC5---�� +� A^:R-S5:r C'"F:,;E:., TVAN LO' N0. IS � po'��0 ..� �U. ,. 01CR11CA0 L/Arf_ 1 t Attachment -----•-- .ExorEs .'.E7C/.CY, LI'`•CS y� ent 2 .•',7. ;:. ."•: nOTi : ?�,C:IC ::71417Y C/.S -'MCHT, Reference: R.S. Book 9, pages 42 sCALC INFECT and 43, R.S. Book 13, page 42 and A•J A! E OPCN S; AC_ :cls, Eastside Addition to Beacon Bay :Y ;�sr a;,cxcl Esn cs'uN:"s;NownoTHEawIsE, per Book 2, page 30 of Official_ V; Maps. _......... .. _..... _....... _ ^-- ' 1yi I•.- .�..I ' �..1�1i'+t �(' � I� �� I I �', I I I - I IC' _ _ _ y I I f ' fir` � .t-- , i I 1 I- I I I I I I 1 1 I � L•,:. I I � I I ; I•- -� l•S t,l- _J F.)_ Sew - -*-� r � •} �= I _; _ _-r-� --{ : I � I � :� �I �� I I I� Ili 6 LJII 7_� I I 9 I I �» SJ f•I- w L 110 Ill 11 SII 12 111 13 i I¢ i I �J ti� SJ Lr ; I`' !I� Iv Ili I%mill 13 !I; i5 I -may. 21 22 2 L_� J L___�'LL___J L___ 1...._J,IL---'�' --.,J;;.___.J i; -•a� •----.._ , ---•-'�'-•- ;I _..._..._.J 1� kve5r_ .._._........ ._ ................784._ r`UAt3C% ANJ TR E' Oar r $'IA.31 �•.••�' 115011 S i "A,^ -SES, IF 7k SANIF.; STA.'L00 U. S. /_t </1_n Jlf, /)yLW,, D;••.:L:,i,N ;PiCA7;DNLE7TEnSkCHN7HC5---�� +� A^:R-S5:r C'"F:,;E:., TVAN LO' N0. IS � po'��0 ..� �U. ,. 01CR11CA0 L/Arf_ 1 t Attachment -----•-- .ExorEs .'.E7C/.CY, LI'`•CS y� ent 2 .•',7. ;:. ."•: nOTi : ?�,C:IC ::71417Y C/.S -'MCHT, Reference: R.S. Book 9, pages 42 sCALC INFECT and 43, R.S. Book 13, page 42 and A•J A! E OPCN S; AC_ :cls, Eastside Addition to Beacon Bay :Y ;�sr a;,cxcl Esn cs'uN:"s;NownoTHEawIsE, per Book 2, page 30 of Official_ V; Maps. _......... .. _..... _....... EXHIBIT '.2,. The northwesterly 45.00 feet of Lot 2 as shown on the map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the office of the County Recorder, County of Orange, State of California, together with the southeasterly 10.00 feet of Lot 1 of said Record of Survey. EXHIBIT "3" DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS BEACON BAY COMMUNITY ASSOCIATION Table of Contents Article I DEFINITIONS 1 - Architectural Committee 2 - Articles and Bylaws 3 - Assessments 4 - Association 5 - Association Rules 6 - Board 7 - City 8 - Common Expenses 9 - Common Area 10- Covered Property 11- Declarant 12- Exhibit 13- Member 14- Lessee 15- Residence 16- Setback II MEMBERSHIP 1 - Membership 2 - Transfer 3 - Voting Rights 4 - Classes of Voting Membership 5 - Approval of Members III COV-:ENANT FOR MAINTENANCE ASSESSMENTS 1 - Creation of the Lien and Personal Obligation of Assessments 2 - Purpose of Assessments 3 - Regular Assessments 4 - Uniform Assessment 5 - Special Assessments 6 - No Offsets 7 - Reserves IV NONPAYMENT OF ASSESSMENTS 1 - Delinquency - Notice of Lien 3 - Foreclosure Sale (i) Page 2 2 2 2 3 3 3 3 3 4 4 4 4 4 4 4 5 0 5 5 5 5 5 C: 6 6 6 6 6 6 7 h 4 - Relationship with Mortgage Liens 8 5 - Curing of Default 9 V ARCHITECTURAL CONTROL 9 1 - Appointment of Architectural Committee 9 2 - General Provisions 9 3 - Approval and Conformity of Plans 10 4 - Nonliability for Approval of Plans 10 VI DUTIES AND POWERS OF THE ASSOCIATION 10 1 - General Duties and Powers 10 2 - General Duties of the Association 11` 3 - General Powers of the Associationon 11 4 - Association Rules 11 VII REPAIR AND MAINTENANCE 12 1 -- Repair and Maintenance by Association 12 2 - Repair and Maintenance by Lessee 12 3 - Maintenance of-Public Utilities 12 VIII USE RESTRICTIONS 12 1 - Commercial Use 12 2 - Signs 13 3 - Nuisance 13 4 - Animals 13 5 - California Vehicle Code 13 IX RIGHTS OF ENJOYMENT 13 1 - Members' Right of Enjoyment 13 2 - Delegation of Use 14 3 - Waiver of Use 14 X GENERAL PROVISIONS 14 1 - Enforcement 14 2 - No Waiver 15 3 - Cumulative Remedies 15 4 - Severability 15 5 - Covenants to Run with the Land; Term 15 6 -- Heading 15 7 - Singular Includes Plural 15 8 - Attorneys' Fees 16 9 - Notices 1.6 10- Effect of Declaration 16 1_- Personal Covenant 16 '?- Nonliability of Officials 17 13- Subleases 17 ?-'•- Amendments 17 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS BEACON BAY COMMUNITY ASSOCIATION ORANGE COUNTY, CALIFORNIA THIS DECLARATION is made this day of by the City of Newport Beach a chartered municipal corporation. Said corporation, its successors and assigns, shall hereafter be referred to as "Declarant.° R E C I T A L S A. Declarant is the fee owner of the real property described in Exhibit A to this Declaration, which shall be the Covered Property under this Declaration. This Declaration is being imposed by Declarant upon the Covered Property. B. Declarant has deemed it desirable to establish covenants, conditions and restrictions upon the Covered Property and each and every portion thereof, which will constitute a general_ scheme for the management of the Covered..Property, and for the use, occupancy and enjoyment thereof, all for the purpose of enhancing and protecting the value, desirability and attractiveness of the Covered Property and enhancing the quality of life within the Covered Property. C. It is desirable for the efficient management of the Covered Property and the preservation of the value, desirability and attractiveness of the Covered Property to delegate and assigned the powers of managing the Covered Property, maintaining and administering the Common Area and administering and enforcing these covenants, condiL o73 and restrictions and collecting and disbursing funds DD-lrsuant to the assessment and charges hereinafter create” =nd r_efer.ed to and to perform such other acts as shall generally benefit the Covered Property to the Beacon Bay C=:--,nity Assocation, a California nonprofit coroo_ a -ion. D. Declarant will hereafter hold title to and lease all Covered Property subject to certain protective covenants, conditions and restrictions hereafter set forth. Beacon_ 9/20/79 Rev. 9/24/79 NOW, THEREFORE, Declarant hereby covenants, agrees and declares that all of its interest as the same may from time to time appear in the Covered Property shall be held and conveyed subject to the following covenants, conditions, restrictions and easements which are hereby declared to be for the benefit of said interests in the Covered Property, and the owners of said interests, their successors and assigns. These covenants, conditions, restrictions and easements shall run with said interests and shall be binding upon all parties having or acquiring any right or title in said interests or any part thereof, and shall inure to the benefit of each owner thereof and are imposed upon said interests and every part thereof as a servitude in favor of each and every of said interests as the dominant tenement or tenements. ARTICLE I DEFINITIONS Unless the context clearly indicates otherwise, the following terms used in this Declaration are defined as follows: Section 1. "Architectural Committee" shall mean and refer to the committee or committees provided for in the Article hereof entitled "Architectural Control". Section 2. "Articles" and "Bylaws" shall mean and refer to the Articles of Incorporation and Bylaws of the Association as the same may from time to time be duly amended. Section 3. "Assessments:" The following meanings shall be given to the Assessments hereinafter defined: "Regular Assessment" shall mean the amount which is to be Palo by each Member of the Association for Common Expenses. "Spec -=1 Assessment" shall mean a charge against a part-icular Lessee and his Residence, directly attributable to t"e Lessee, to reimburse the Association for costs incurred in bringing the Lessee and his Residence into comol ..-,nce with the provisions of this Declaration, the Articles, Bylaws or Association Rules, or any other charge designated as a Special Assessment, together with attofneys' fees and other charges payable, plus interest thereon as provided for in this Declaration. Beacon Bay 9/20/,91 2 Rev. 9/24/79 ZCj Section 4. "Association" shall mean and refer to Beacon Bay Community Assocation, a nonprofit corporation, incorporated under the laws of the State of California, its successors and assigns. Section 5. "Association Rules" shall mean rules adopted by the Association pursuant to the Article hereof entitled "Duties and Powers of the Association." Section 6. "Board" shall mean the Board of Directors of the Association. Section 7. "City" shall mean and refer to the City of Newport Beach, California, a municipal corporation of the State of California. Section 8. "Common Expenses" shall mean and refer to the actual and estimated costs of: (a) maintenance, management, operation, repair and replacement of the Common Area, and all other areas on the Covered Property which are maintained by the Association; (b) maintenance by the Association of areas within the public right-of-way of public streets in the vicinity of the Covered Property as provided in this Declaration or pursuant to agreements with the City; (c) costs of management and administration of the Association, including, but not limited to, compensation paid by the Association to managers, accountants, attorneys and employees; (d) the costs of utilities, gardening and other services which generally benefit and enhance the value and desirability of the Community Facilities; (e) the costs of fire, casualty, liability, workmen's compensation and other insurance covering the Common Area; the costs of any other insurance obtained by the Association; (y+ reasonable reserves as deemed appropriate by the Boar ; (;) the costs of bonding of the members of the Board, any professional managing agent or any other person handling the funds of the Association; Beacon: Bay 9/20/7a 3 Rev. 9/24/79 (i) taxes paid by the Association; (j) amounts paid by the Association for discharge of any lien or encumbrance levied against the Common Area or portions thereof; -(k) costs incurred by the Architectural Committee or other committee established by the Board; and {1) other expenses incurred by the Association for any reason whatsoever in connection with the Commo: Area, or the costs of any other item or items designated �.,y this Declaration, the Articles, Bylaws or Association Ruies, or in furtherance of the purposes of the Association or in the discharge of any duties or powers of the Association. Section 9. "Common Area" shall mean all streets, beaches, walkways, tennis courts, docks, piers, and common landscaped areas, including but not limited to Lots A through J inclusive as shown on Exhibit -'U". Section 10. "Covered Property" shall mean and refer to all the real property described on Exhibit "I". Section 11. "Declarant" shall mean and refer to the City of IN:ewport Beach. Section 12. "Exhibit shall mean and refer to those documents so designated herein and attached hereto and eac',~I of such Exhibits is by this reference incorporates. in this Declaration. Section 13. "Member" shall mean and refer to every person or entity who qualifies for membership pursuant to the Article of this Declaration entitled "Membership." Sec:.icn 14. "Lessee" shall persons or entities who are lessees of a Residence. mean and refer to one or more alone or collectively the Sec - _ r)n 15. "Residence" shall_ mean and refer to a nu, lot sho,.,an on the Record of Survey Pap of Beacon Bay vision recorded in Book 9, pages 42 and 43, Reco-4s of Survey, on file in the Office of the County Rec�;Y-fer, Orange County, California; provided, however, "Rr s ce-:ce" shall not include any Common Area. shall include the residential dwelling unit 9/2C/_1 - 4 Rev. 9/24/79 together with garages, structures and other improvements on the same lot or parcel. Section 16. "Setback" shall mean and refer to those internal distances from the property line of each lot as shown on Exhibit "II". ARTICLE II MEMBERSHIP Section 1 - Membership. Every Lessee shall be a Member but there shall be only one Membership per Residence. The term and provisions set forth in this Declaration, which are binding -upon -all Lessees are not exclusive, as Lessees shall, -in addition, be subject to the terms and provisions of the Articles, Bylaws and Association Rules to the extent the provisions thereof are not in conflict with this Declaration.- Membership of Lessees shall be appurtenant to and may not be separated from the interest of such Lessee in any Residence. Ownership of a Residence shall be the sole qualification for membership; provided, however, a Member's voting rights may be regulated or suspended as provided in this Declaration, the Bylaws or the Association Rules. Section 2 - Transfer. The membership held by any Lessee shall not be transferred, pledged or alienated in any way, except that such membership shall automatically.be trap.sferred to the transferee of the interest required for meml;ership. Any attempt: to make a prohibited transfer is void and will not be reflected upon the books and records of the Association. The Association shall have the right to record the transfer upon the books of the Association without any further action or consent by the transferring Lessee. Section 3 - Voting Rights. All voting right shall be subject to the restrictions and limitations provided herein and in the Articles, Bylaws and Association Rules. Section 4- Classes of Voting Membership. The Association nave e one (1 ) class of voting membership. Sec' _ci - h\pproval _of Members. Unless elsewhere spe cif�ically provided in this Declaration or the any provision of this Declaration or the Bylaws Beacon 9/20/79 5 Rev_ 9/24/79 which requires the vote or written assent of the voting power of the Association shall be deemed satisfied by the following: (a) The vote in person or by proxy of the specified percentage at a meeting duly called and noticed pursuant to the provisions of the Bylaws dealing with annual or special meetings of the Members. (b) Written consents signed by the specified percentage of Members as provided in the Bylaws. ARTICLE III COVENANT FOR MAINTENANCE ASSESSMENTS Section 1 - Creation of the Lien and Personal Obligation of Assessments. Each Lessee is deemed to covenant and agree to pay to the Association: Regular and Special Assessments, such Assessments to be fixed, established and collected from time to time as provided in this Declaration. The Assessments, together with interest thereon, late charges, attorneys' fees and court costs, and other costs of collection thereof, as hereinafter provided, shall be a continuing lien upon the Residence against which each such Assessment is made and shall also be the personal obligation of the Lessee of such Residence at the time when the Assessment becomes due. Notwithstanding the foregoing, the Assessment lien shall not affect the priority of any other existing liens. Section 2 - Purpose of Assessments. The Assessments levied by the Association shall be used exclusively to defray Common Expenses. Section 3 - Regular Assessments. Each year the Board shall determine the amount of the Regular Assessment to be paid by each Member. The Regular Assessment shall be due and sayable on such dates as the Board may establish. Each Menber shall be sent written notice of the Regular Assessment and shall thereafter pay the Association in instalments as established by the Board. Secti-'n 4 - Uniform Assessment. Regular Assessments shall be fixed at an equal amount for each Residence. Section 5 - Special Assessments. Special Assessments may be levied by the Board from time to time. Beacon Bay 9/20/79 6 Rev. 9/24/79 Section 6 - No Offsets. All Assessments shall be payable in the amount specified by the Assessment and no offsets against such amount shall be permitted for any reason, including, without limitation, a claim that (i) the Association is not properly exercising its duties and posers as provided in this Declaration; or (ii) a Member has made and elects to make no use of the Common Areas, Section 7 - Reserves. The Regular Assessments may include reasonable amounts as determined by the Board collected as reserves for the future periodic maintenance, repair or replacement of all or a portion of the Common Area, or any other purpose as determined by the Board. All amounts collected as reserves, whether pursuant to this Section or otherwise, shall be deposited by the Board in a separate bank account to be held in trust for the purposes for which they are collected and are to be segregated from and not commingled with any other funds of the Association. Such reserves shall be deemed a contribution to the capital account of the Association by the Member. ARTICLE IV NONPAYMENT OF ASSESSMENTS Section 1 - Delinquency. Any assessment provided for in this Declaration which is not paid when due shall be delinquent on said date (the "delinquency date"). If any such Assessment is not paid within ten (10) days after delivery of notice of such delinquency from the Association, a late charge as established by the Board shall be levied and the Assessment shall bear interest from the delinquency date at the rate of ten percent (10%) per annum. The Association may at its option, and without waiving the right to judicially foreclose its. lien against the Residence, pursue any available remedies, including, without limitation, bringing an action at law against the Member personally obligated to pay the same, and/or upon compliance with the notice provisions set forth in the Section entitled "Notice of Lien" of this Article to fore::'_ose the lien against the Residence. If action is co^-:enced, there shall be added to the amount of such Assessment the late charge, interest, the costs of such action, and attorneys' fees incurred in connection with suc<: action; and in the event a judgment is obtained, such Tient shall include said late charge, interest and a rea,,onable attorney's fee, together with the costs of action. Each Member vests in the Association, or its ass-Lgns, the right and power to bring all actions at law Beat r: Bay 9/20/79 7 Rev. 9/24/79 or lien foreclosure against such Member or other Members for the collection of such delinquent Assessments. Section 2 - Notice of Lien. No action shall be brought to foreclose said Assessment lien or to proceed under the power of sale herein provided until thirty (30) days after the date a notice of claim of lien is deposited in the United States mail, certified or registered, postage prepaid, to the Lessee of said Residence, and a copy thereof is recorded by the Association in the office of the County Recorder of the County; said notice of claim of lien must recite a good and sufficient legal description of any such Residence, the record Lessee or reputed Lessee thereof, the amount claimed which shall include interest on the unpaid Assessment at the rate of ten percent (10%) per annum, a ]_ate charge as established by the Board, plus reasonable attorneys' fees and expenses of collection in connection with the debt secured by said lien, and the name and address of the claimant. Section 3 - Foreclosure Sale. Said Assessment lien may be enforced by sale by the Association, its attorney or any other person authorized by the Board to make the sale after failure of the Lessee to make the payments specified in the notice of claim of lien within said thirty (30) day period. Any such sale provided for above is to be conducted in accordance with the provisions of Sections 2924, 2924b, 2924c, 2924f, 2924g and 2924h of the Civil Code of the State of California as said statutes may from time to time be amended, applicable to the exercise of powers of sale in mortgages and deeds of trust, or in any other manner_ permitted or provided by law. Upon the affirmative vote of a majority of the voting power of the Association, the Association, through its duly authorized agents, shall have the power to bid on the Residence, using Association funds, or funds borrowed for such purpose, at the sale, and to acquire and hold, lease, mortgage and convey the same. Section 4 - Relationship with Mortqaqe Liens. (a) The lien provided for in the Article hereof entitle? "nonpayment of Assessments" for the payment of Assess:: -nt-s shall be subordinate to the lien of any mortcar7e which was recorded prior to the date any such Assess --e t becomes due. (b) If any Residence subject to a monetary -lien creates', ;y any provision hereof shall be subject to the lien o� a Mortgage: (1) the foreclosure of any lien crept_.: bl, anything set forth in this Declaration shall. Beacon �Gl, 9/20/79 8 Rev. 9/24/79 not operate to affect or impair the lien of such Mortgage; and (2) the foreclosure of the lien of said Mortgage, or the sale under a power of sale included in such Mortgage (such events being hereinafter referred to as "Events of Foreclosure") shall not operate to affect or impair the lien hereof, except that any persons who obtain an interest through any of the Events of Foreclosure, and the successors in interest, shall take title free of the lien hereof or any personal obligation for said charges as shall have accrued up to the time of any of the Events of Foreclosure, but subject to the lien hereof for all said charges that shall accrue subsequent to the Events of Foreclosure. Section 5 - Curing of Default. Upon the timely payment or other satisfaction of: (a) all delinquent Assessments specified in the notice of claim of lien, (b) all other Assessments which have become due and payable with respect to the Residence as to which such notice of claim of lien was recorded, and (c) interest, late charges, attorneys' fees and other costs of collection pursuant to this Declaration and the notice of claim of lien which have accrued, officers of the Association or any other persons designated by the Board are hereby authorized to file or record, as the case may be, an appropriate release of such notice, upon payment by the defaulting Lessee of a fee, to be determined by the Association, but not to exceed Fifty Dollars ($50.00) to cover the costs of preparing and filing or recording such release. ARTICLE V ARCHITECTURAL CONTROL Section 1 - Appointment of Architectural Committee. The Architectural Committee shall consist of not less than three (j) nor more than five (5) persons as fixed from time to time by resolution of the Board. The Bourn shall have the right to appoint the members of the Arc,itectural Committee. Persons appointed by the Board to the Architectural Committee, however, must be Member... Section 2. - General Provisions. (a) The Architectural Committee may establish reasonable procedural rules and assess a fee in connection with r_--iew of plans and specifications including, without limitaticn, the number of sets of plans to be submitted; Beacon Fav 9/20/79 9 Rev. 9/24/79 however, the Architectural Committee may delegate its plan review responsibilites to one or more members of such Architectural Committee. Upon such delegation, the approval or disapproval of plans and specifications by such persons shall be equivalent to approval or disapproval by the entire Architectural Committee. (b) In the event the Architectural Committee fails to approve or disapprove such plans and specifications within thirty (30) days after the same have been submitted in accordance with any rules regarding such submission adopted by the Architectural Committee, such plans and specifications will be deemed approved. (c) Nothing in this Declaration or in the Association's Articles, Bylaws or Rules shall be construed or amended to allow the Architectural Committee to modify or eliminate the Setback requirements shown on the Beacon Bay Subdivision Survey Map, and any attempt to do so shall have no effect. Section 3 - Approval and Conformity of Plans. No building, fence all or other structure shall be commenced, erected or maintained upon the Covered Property, nor shall there be any addition to or change to the exterior of any Residence, structure or other improvement except in compliance with plans and specifications therefor which have been submitted to and approved by the Architectural Committee as to harmony of external design and location in relation to surrounding structures and topography. Section 4 - Nonliability for Approval of Plans. Plans and specifications shall be approved by the Architectural Committee as to style, exterior design, appearance and location, and are not approved for engineering design or for ccrLiz-,liance with zoning and building ordinances, and by approving such plans and specifications neither the Architectural Committee, the members thereof, the Association, the Members, the Board nor Declarant assumes liability or responsibility therefor, or for any defect in any structure constructed from such plans and specifications. ARTICLE VI DUTIES AND POWERS OF THE ASSOCIATION Section l - General Duties and Powers. In addition to the duties a-. powers enumerated in its Articles and Bylaws, Beacon Eay 9/20/79 10 Rev. 9/24/79 or elsewhere provided for herein, and without limiting the generality thereof, the Association shall have the specific duties and powers specified in this Article. Section 2 - General Duties of the Association. The Association through the Board shall have the duty and obligation to: (a) enforce the provisions of this Declaration, the Articles, Bylaws, and Association Rules, by appropriate means and carry out the obligations of the Association hereunder; (b) maintain and otherwise manage the Common Area; (c) pay any real and personal property taxes and other charges assessed to or payable by the Association; and (d) obtain and continue in effect during the term of of the lease, in its own name a comprehensive policy of public liability insurance proving coverage for the common area, and a policy of fire and casualty insurance with coverage as the Board deems appropriate. Section 3 - General Powers of the Association. The Association through the Board shall have the power but not the obligation to: (a) employ a manager or other persons and contract with independent contractors or managing agents to perform all or any part of the duties and responsibilities of the Association; (b) borrow money as may be needed in connection with the disc-:arge of the Association's powers and duties; and (c) establish and maintain a working capital and contig _ncy fund in an amount to be determined by the Board. Said fund shall be used by the'Board as it deems fit to carry out the objectives and purposes of the Assoc=7-ion. Sect o� --- - Asso_ci��tion Rules. The Board shall have the poL;;�-- t cIopt- airtend, and repeal such rules and reg:_.' -'� is as it ueems reasonable (the "Association Ru? In t-` event of any conflict between any such rssRules and any other provisions of this D - :_:)n, o:. t e Articles or Bylaws, the provisions of the :tion. Rules shall_ be deemed to be superseded by the _ ;ion of this Declaration, the Articles or the By,_Gw_, tine ef:tent: of any such conflict. F3ezicc;:: 9/20/"i Rev. 9/24/79 5/4/81 f6 - ARTICLE VII REPAIR AND MAINTENANCE Section 1 - Repair and Maintenance by Association. The Association shall have the'duty to: (a) maintain, repair, restore, replace and make necessary improvements to the Common Area; (b) maintain all other facilities, equipment, services or aesthetic components of whatsoever nature as may from time to time be requested by the vote or written consent of a majority of the voting power of the Members; (c) pay out of the general funds of the Association the costs of any maintenance and repair made.pursuant to this section, except as otherwise herein specified as payable by particular Lessees. Section 2 -_Repair and Maintenance by Lessee. Except as the Association shall be obligated to maintain and repair as may be provided in this Declaration, every Lessee shall: (a) maintain all portions of the exterior of his Residence, including without limitation, the walls, fences and roof of such Residence in good condition and repair; and (b) install and thereafter maintain in attractive condition yard landscaping in accordance with the provisions of this Article. Section 3 - Maintenance of Public Utilities. Nothing contained herein shall require or obligate the Association to maintain, replace or restore the underground facilities or public utilities which are located within easements in the Ccramon Area owned by such public utilities. However, the Association shall take such steps as are necessary or convenient to ensure that such facilities are properly maintained, replaced or restored by such public utilities. ARTICLE VIII USE RESTRICTIONS Sectio~: 1 -_Commercial Use. No part of a Residence shall be us -2c nor any business, commercial, or nonresidential purposes. Beacon. B ay 9/20/?9 12 Rev. 9/24/79 Section 2 - Signs. No sign or billboard of any kind shall be displayed to the public view on any portion of the Covered Property; provided, however, that a Member may display on his Residence, a sign advertising its sale or lease so long as such sign shall comply with any customary and reasonable standards promulgated by the Board. Section 3 - Nuisance. No noxious or offensive activity shall be carried on upon any Residence, or any part of the Covered Property nor shall anything be done thereon which may be, or may become an annoyance or nuisance to the neighborhood, or which shall in any way interfere with the quiet enjoyment of each of the Lessees of his respective Residence. Section 4 - Animals. No animals, livestock or poultry of any kind shall be raised, bred or kept upon the Covered Property, except that dogs, cats or other household pets may be kept on the Residences, provided they are not kept, bred or maintained for any commercial purpose, or in numbers deemed unreasonable by the Board. Notwithstanding the foregoing, no animals or fowl may be kept on the Residences which in the good faith judgment of the Board or a committee selected by the Board for this purpose, result in any annoyance or are obnoxious to residents in the vicinity. All animals except cats permitted to be kept by this Section shall be kept on a leash when on any portion of the Covered Property except within a Residence. Section 5 - California Vehicle Code. The City may be allowed to impose and enforce all provisions of the applicable California Vehicle Code sections on any private streets within the Covered Property. ARTICLE IX RIGHTS OF ENJOYMENT Section. 1 —Members' Right of Enjoyment. Every Member shall na%e nonexclusive easement for use and enjoyment in and to th? Common Area and such right shall be appurtenant to and snail pass with the interest required to be a Lessee to every Residence, subject to all of the easements, covenants, conditions, restrictions and other provisions contained in this Declaration, including, without limitation, the following provisions: Beacon Bay 9/20/79 r 13 Rev. 9/2.4/79 (a) The right of the Association to limit the number of guests of Members and to limit the use of the Common Area by persons not in possession of a Residence, but owning a portion of the interest in a Residence required for membership. (b) The right of the Association to establish reasonable rules and regulations pertaining to the use of the Common Area. Section 2 - Delegation of Use. Any Member may delegate his right of enjoyment to the Common Areas to the members of his family or his tenants -who reside on his Residence, or to his guests, subject to the rules and regulations adopted by the Board. In the event and for so long as a Lessee delegates said rights of enjoyment to his tenants, said Lessee shall not be entitled to said rights unless both he and the tenant reside on the Residence in separate dwelling units which conform to all applicable municipal laws and regulations. Section 3- Waiver of Use. No member may exempt himself from personal liability for assessments duly levied by the Association, or release the Residence owned by him from the liens, charges and other provisions of this Declaration, the Articles, Bylaws and Association Rules, by waiver of the use and enjoyment of the Common Area, or the abandonment of his Residence. ARTTM.F. X GENERAL PROVISIONS Section 1 - Enforcement. The Association, or any Lessee, shall have the right to enforce by proceedings at law or in equity, all restrictions, conditions, covenants and reservations, now or hereafter imposed by the provisions of this Declaration or any amendment thereto, including the right to prevent the violation of such restrictions, conditions, covenants, or reservations and the right to recover-famages or other dues for such violation. The Associa'-ion or any Lessee shall also have the right to enforce by proceedings at law or in equity the provisions of the articles or Bylaws and any amendments thereto. With r=__oect to architectural control and Association Rules, the Association shall have the exclusive right to the en_ -_-cement thereof unless the Association refuses or is unable to effectuate such enforcement, in which case any Less -e who otherwise has standing shall have the right to un,,2ertake such enforcement. With respect to Assessment Beacon E ;av 9/20/79 14 Rev. 9/24/79 Liens, the Association shall have the exclusive right to the enforcement thereof. Section 2 - No Waiver. Failure by the Association or by any Member to enforce any covenant, condition, or restriction herein contained, or the Articles, Bylaws or Association Rules, in any certain instance or on any particular occasion shall not be deemed a waiver of such right on any such future breach of the same or any other covenant, condition or restriction. Section 3 - Cumulative Remedies. All rights, options and remedies of Declarant, the Association, or the Lessees under this Declaration are cumulative, and no one of them shall be exclusive of any other, and Declarant, the Association, and the Lessees shall have the right to pursue any one or all of such rights, options and remedies or any other remedy or relief which may be provided by law, whether or not stated in this Declaration. Section 4 - Severability. Invalidation of any one or a portion of these covenants, conditions or restrictions by judgment or court order shall in no way affect any other provisions which shall remain in full force and effect. Section 5 - Covenants to Run with the Land; Term. The covenants, conditions and restrictions of this Declaration shall run with and bind the Covered Property and shall inure to the benefit of and be enforceable by the Association or any Lessee, their respective legal representatives, heirs, successors and assigns, for a term of twenty five (25) years from the date this Declaration is recorded, after which time said covenants, conditions and restrictions shall be automatically extended for successive periods of ten (10) years, unless an instru«ent, signed by the Declarant and a majority of the then Lessees, has been recorded at least one (1) year prior to the end of any such period, agreeing to change said covenants, conditions and restrictions in whole or in part. Section -06 -_Heading. The Article and Section headings have been inserted for convenience only, and shall not be consiu?red or referred to in resolving questions of interpretation or construction. Section. 7 - Singular Includes Plural. Whenever the content of this Declaration requires same, the singular shall include the plural and the masculine shall include the feminine and the neuter. Beacon. Bay 9/20/79 15 Rev. 9/24/79 f- 1 Section 8 - Attorneys' Fees. In the event action is instituted to enforce any of the provisions contained in this Declaration, the party prevailing in such action shall be entitled to recover from the other party thereto as part of the judgment, reasonable attorneys' fees and costs of such suit. Section 9 - Notices. Any notice to be given hereunder ,shall -be in writing and may be delivered as follows: (a) Notice to a Lessee shall be deemed to have been properly delivered when delivered to the Lessee's Residence, or placed in the first class United States mail, postage prepaid, to the most recent address furnished by such Lessee in writing to the Association for the purpose of giving notice, or if no such address shall have been furnished, then to the street address of such Lessee's Residence. Any notice so deposited in the mail within the City shall be deemed delivered forty-eight (48) hours after such deposit. In the case of co -Lessees any such notice may be delivered or sent to any one of the co -Lessees on behalf of all co -Lessees and shall be deemed delivery on all such co -Lessees. (b) Notice to the Association shall be deemed to have been properly delivered when placed in the first class United States mail, postage prepaid, to the address furnished by the Association or the address of its principal place of business. (c) The affidavit of an officer or authorized agent of the Association declaring under penalty of perjury that a notice has been mailed to any Lessee or Lessees, or to all Members, to the address or addresses shown on the records of the Association, shall be deemed conclusive proof of such mailing, whether or not such notices are actually received. Section. 10 - Effect of Declaration. This Declaration is made for the purposes set forth in the Recitals to this Declaration and Declarant makes no warranties or representations, express or implied as to the binding effect or enforceability of all or any portion of this Declaration, or as to the compliance of any of these Provisior:s with public laws, ordinances and regulations applicable thereto. Section 11 - Personal Covenant. To the extent the acceptance or conveyance of a Residence creates a personal covenant between the Lessee of such Residence and Declarant or other Lessees, such personal covenant shall Beacon Bv 9/20/79 16 Rev. 9/24/79 �t terminate and be of no further force or effect from or after the date when a person or entity ceases to be an Lessee except to the extent this Declaration may provide otherwise with respect to the payment of money to the Association. Section 12 - Nonliability of Officials. To the fullest extent permitted by law, neither the Board, the Architectural Committee, and other committees of the Association or any member of such Board or committee shall be liable to any Member or the Association for any damage, loss or prejudice suffered or claimed on account of any decision, approval or disapproval of plans or specifications (whether or not defective), course of action, act, omission, error, negligence or the like made in good faith within which such Board, committees or persons reasonably believed to be the scope of their duties. Section 13 - Subleases. Any agreement for the subleasing or rental of Residence (hereinafter in this Section referred to as a "lease") shall provide that the terms of such lease shall be subject in all respects to the provisions of this Declaration, the Articles, the Bylaws and the Association Rules. Said lease shall further provide that any failure by the lessee thereunder to comply with the terms of the foregoing documents shall be a default under the lease. All leases shall be in . writing. Any Lessee who shall lease his Residence shall be responsible for assuring compliance by such Lessee's lessee with this Declaration, the Articles, the Bylaws and the Association Rules. Section 14 - Amendments. Subject to the other provisions of this Declaration, this Declaration may be amended as follows_ (a) Any amendment or modification of the Articles hereof_ entitled "Covenant for Maintenance Assessments," "Nonpayment of Assessments," "Architectural Control," and "Repair and Maintenance," or of this Section shall require the affirmative vote or written approval of not less than sixty percent (600) of the Members. (b) Any amendment or modification of any Article other tan those specified in subparagraph (a) above shall require the affirmative vote or written approval of a major i tv of the members. (c) An amendment or modification that requires the vote a^d written assent of the Members as hereinabove Beacon Eay 9/20/79 17 Rev. 9/24/79 provided shall be effective when executed by the President and Secretary of the Association who shall certify that the amendment or modification has been approved as hereinabove provided, and when recorded in the Official Records of the County. The notarized signatures of the Members shall not be required to effectuate an Amendment of this Declaration. (d) Notwithstanding the foregoing, any provision of this Declaration, or the Articles, Bylaws or Association Rules which expressly requires the approval of a specified percentage of the voting power of the Association for action to be taken under said provision can be amended only with the affirmative vote or written assent of not less than the same percentage of the Voting Power of the Association. IN WITNESS WHEREOF, Declarant has executed this instrument the day and year first herein above written. ATTEST: City Clerk APPROVED AS TO FORM: City Attorney Beacon Bay 9/20/79 CITY OF NEWPORT BEACH, a chartered municipal corporation By: Mayor 18 Rev. 9/24/79 STATE OF ) ss. COUNTY OF ) On , 19 , before me the undersigned, a Notary Public in and for said State, personally appeared ;mown to me to be the of the corporation that executed the within Instrument, known to me to be the person who executed the within Instrument on behalf of the corporation therein named, and acknowledged to me that such corporation executed the within instrument pursuant to its bylaws or a resolution of its board of directors. WITNESS my hand and official seal. [Seal] Beacon y 9/20/79 032381 Notary Public 19 Rev. 9/24/79 54 =� ----------- yARBO,q \`. / 1 1 I I.z 11 f'� I'- / 6 7 11 a ii 9 -LJ L ---I L ---J L ----J FPti'`, YI L EGEND U. S. B. H. :OT NUMOERS AND STREET ADDRESSES, IF THE SAME; STA.137 ARE SHOWN " HUS --- 3 PARCEL 10EN .-IFICATION LETTER SHOWN THUS --- U AOCF.3S5 IP DIFFERcNT THAN LOT N0, IS 5H0'IVN THUS --.-O - --- --- 7ENOTES SETBACK LINES. a 1; E.DENOT, S PUDLIC UTILITY EASEMENTS. I /✓DTES I _OTS A - J A E OPEN SPACE LOTS. SC DA"K D,STANCES ARE S' UNLESS SHOWN OTHERWISE. 47 U 0 J Q Q ill I'^6 53 I _ 1 LOT �H ISLAND DR/VE 7 —_7—_I if--------�j `----------_-- -------� r� 35 I j ` 29�T— f---------'1 L---------1 W 1------ -J 2 42--------I - LL L----- -- -� O 36 I 11 30 O i - r1 L-------� t---------- L_ — __ _ 1 ------------ 37 ! i 31 In' > I I '%' — 25 ---I ! 1 r— w I I Q J I f..•`J.- --------- '---------J I I--------� --- ---- --- .. L 44 2.j Y i _--_---_ i'-------.-� i r_----__-• i - _----- t� k � 39 c I I 2e I i C I —5 I`_____-__� I L I L_________ v-•___� I --------� .`. r-------1 j I r--------� I ------ 1 4S la'I >. I, LL 39 I Z ! j 33...----- 1, 's 46 y« I r = 40 34 L------- ' L -------I i! L--------1 I ! L -- I BAY ------ ------ � I r---1lr---, r---, r----, --- � Ilj i i I I Ili I 116'IS• 9 Ib. l r~ �� I .I I II I I! I 10 II j j 12 ii! 13 j i 14 L ---J IL ---J l-_-- �iL---i L ---J �---� r ---,i -- r---, --- ---- ----- I I Ili !II jai ,I4; I II l;: jl —!15 16 � i~ 17I� 18 19 1 20 L -_-J I L ---J ---� I L---� I 1 ---J --- --- --- --' LOT I 147.50' _ 1 STA.200 U.S. 11 ULKHEAD L/AIE N U. S. PlL•n'HE/1 /� L/NL' EXHIBIT "I" AND EXHIBIT "II" FOR THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS, ACOPd BAY COMMUNITY ASSOCIATION SKETCH SHOWING SETBACK LINES WITHIN LOTS I -G2 OF R.5.9/42 6,43, r-7 PARCELS A,B $ C OF R.S. 13/42 AND LOTS 1-B OF EASTSIDE ADDITION TO 1 cf�a BEACON BAY PER BOOK 2, PAGE 30 OF OFFICIAL MAPS. L • . ` 55 ' m --------- 56 6.1 F— I 0 I J -_t 57 e•; � IL 58 O i U d 59 ?; « I o GO V I - I \`. / 1 1 I I.z 11 f'� I'- / 6 7 11 a ii 9 -LJ L ---I L ---J L ----J FPti'`, YI L EGEND U. S. B. H. :OT NUMOERS AND STREET ADDRESSES, IF THE SAME; STA.137 ARE SHOWN " HUS --- 3 PARCEL 10EN .-IFICATION LETTER SHOWN THUS --- U AOCF.3S5 IP DIFFERcNT THAN LOT N0, IS 5H0'IVN THUS --.-O - --- --- 7ENOTES SETBACK LINES. a 1; E.DENOT, S PUDLIC UTILITY EASEMENTS. I /✓DTES I _OTS A - J A E OPEN SPACE LOTS. SC DA"K D,STANCES ARE S' UNLESS SHOWN OTHERWISE. 47 U 0 J Q Q ill I'^6 53 I _ 1 LOT �H ISLAND DR/VE 7 —_7—_I if--------�j `----------_-- -------� r� 35 I j ` 29�T— f---------'1 L---------1 W 1------ -J 2 42--------I - LL L----- -- -� O 36 I 11 30 O i - r1 L-------� t---------- L_ — __ _ 1 ------------ 37 ! i 31 In' > I I '%' — 25 ---I ! 1 r— w I I Q J I f..•`J.- --------- '---------J I I--------� --- ---- --- .. L 44 2.j Y i _--_---_ i'-------.-� i r_----__-• i - _----- t� k � 39 c I I 2e I i C I —5 I`_____-__� I L I L_________ v-•___� I --------� .`. r-------1 j I r--------� I ------ 1 4S la'I >. I, LL 39 I Z ! j 33...----- 1, 's 46 y« I r = 40 34 L------- ' L -------I i! L--------1 I ! L -- I BAY ------ ------ � I r---1lr---, r---, r----, --- � Ilj i i I I Ili I 116'IS• 9 Ib. l r~ �� I .I I II I I! I 10 II j j 12 ii! 13 j i 14 L ---J IL ---J l-_-- �iL---i L ---J �---� r ---,i -- r---, --- ---- ----- I I Ili !II jai ,I4; I II l;: jl —!15 16 � i~ 17I� 18 19 1 20 L -_-J I L ---J ---� I L---� I 1 ---J --- --- --- --' LOT I 147.50' _ 1 STA.200 U.S. 11 ULKHEAD L/AIE N U. S. PlL•n'HE/1 /� L/NL' EXHIBIT "I" AND EXHIBIT "II" FOR THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS, ACOPd BAY COMMUNITY ASSOCIATION SKETCH SHOWING SETBACK LINES WITHIN LOTS I -G2 OF R.5.9/42 6,43, r-7 PARCELS A,B $ C OF R.S. 13/42 AND LOTS 1-B OF EASTSIDE ADDITION TO 1 cf�a BEACON BAY PER BOOK 2, PAGE 30 OF OFFICIAL MAPS. L • . ` EXHIBIT "D" (BAYFRONT PARCEL LOT 12) EFFECTIVE RENTAL VALUE CHANGE WITH ASSUMED 12% PER YEAR INCREASE BASIC FORMULA: R = A (1-f) + •Cf R = Effective Net Rent A = Base Rent x CPI Increase - $735 (Common area adjustment) C = Existing Contract Rent f = Combined Present Worth and Annualizing Factor EXAMPLE: BAYFRONT PARCEL: LOT 12 Less $ 735 [ A Adjustment ( 1-f ) + ( C New Months Factor 0 8 Change Time Lease From 16/Mo. Base Adjusted Date 1/1/81 Compunding = 18,992 Rent Rental 7/81 7 1.072135 x 18,400 = 19,727.29 - 12/81 12 1.126825 x 18,400 = 20,733.58 - 1/82 13 1.138093 x 18,400 = 20,940.92 - 7/82 19 1.208109 x 18,400 = 22,229.20 - 12/82 24 1.269735 x 18,400 = 23,363.11 - 1/83 25 1.282432 x 18,400 = 23,596.75 - 12/83 36 1.430769 x 18,400 = 26,326.15 - 1/84 37 1.445076 x 18,400 = 26,589.41 - 12/84 48 1.612226 x 18,400 = 29,664.96 - 1/85 49 1.628348 x 18,400 = 29,961.61 - 12/85 60 1.816697 x 18,400 = 33,427.22 - 1/86 61 1.834864 x 18,400 = 33,761.49 - 12/86 72 2.047099 x 18,400 = 37,666.63 - 1/87 73 2.067570 x 18,400 = 38,043.29 - 12/87 84 2.306723 x 18,400 = 42,443.70 - 1/88 85 2.329790 x 18,400 42,868.14 - Less $ 735 [ A X ( 1-f ) + ( C X f 1 8 Change ) _ R Over $9,667.62- 735 = 18,992 x 0.4876140 + (793.76 x 0.512386) = 9,667.62 - 735 = 19,998 x 0.4876140 + (793.76 x 0.512386) = 10,158.30 + 5.08 735 = 20,206 x 0.537849 + (793.76 x 0.462151) = 11,234.57 + 16.21 735 = 21,494 x 0.537849 + (793.76 x 0.462151) = 11,927.47 + 23.38 735 = 22,628 x 0.537849 + (793.76 x 0.462151) = 12,537.35 +29.68 735 = 22,862 x 0.593991 + (793.76 x 0.406009) = 13,901.95 + 43.80 735 = 25,591 x 0.593991 + (793.76 x 0.406009) = 15,523.18 +60.57 735 = 25,854 x 0.656898 + (793.76 x 0.343102) = 17,256.04 +78.49 735 = 28,930 x 0.656898 + (793.76 x 0.343102) = 19,276.37 + 99.39 735 = 29,227 x 0.727591 + (1,292.52 x 0.272409) = 21,617.11 + 123.60 735 = 32,692 x 0.727591 + (1,292.52 x 0.272409) = 24,138.69 + 149.69 735 = 33,026 x 0.807296 + (1,292.52 x 0.192704) = 26,911.23 +178.36 735 = 36,932 x 0.807296 + (1,292.52 x 0.192704) - 30,063.83 +210.97 735 = 37,308 x 0.897495 + (1,292.52 x 0.102505) = 33,616.50 + 247.72 735 = 41,709 x 0.897495 + (1,292.52 x 0.102505) = 37,565.84 + 288.57 900 = 41,968 x - - - = 41,968.14 + 334.10 V T; EXHIBIT "D° (INTERIOR LOT 32) EFFECTIVE RENTAL VALUE CHANGE WITH ASSUMED 12% PER YEAR INCREASE BASIC FORMULA: R - A(I-f) +Cf R - Effective Net Rent A - Base Rent x CPI Increase -$735 (Comm. Area Adj.) C - Existing Contract Rent f = Combined Present Worth and Annualizing Factor EXAMPLE: INTERIOR PARCEL: LOT 32 Adjustment New Months Factor 0 - Time Lease From 1%/Mo. Base Adjusted Less 8 Change Date 1/1/81 Compounding Rent Rental $ 735 [A X (1-f) + ( C X f) 1 = R Over $3,860.98 7/81 7 1.072135 x 7,750 = 8,309.05 - 73S = 7,574 x 0.4876140 + (327.42 x 0.512386) = 3,860.98 12/81 12 1.126825 x 7,750 = 8,732.89 - 735. = 7,998 x 0.4876140 + (327.42 x 0.512386) = 4,067.65 + 5.35 1/82 13 1.138093 x 7,750 = 8,820.22 - 735 = 8,085 x 0.537849 + (327.42 x 0.462151) . = 4,499.95 + 16.55 7/82 19 1.208109 x 7,750 = 9,362.84 - 735 = 8,628 x 0.537849 + (327.42 x 0.462151) = 4,791.79 + 24.11 12/82 24 1.269735 x 7,750 = 9,840.44 - 735 = 9,105 x 0.537849 + (327.42 x 0.462151) = 5,048.67 +30.76 1/83 25 1.282432 x 7,750 = 9,938.85 - 735 = 9,204 x 0.593991 + (327.42 x 0.406009) = 5,599.94 +45.04 12/83 36 1.430769 x 7,750 = 11,088.46 - 735 = 10,353 x 0.593991 + (327.42 x 0.406009) = 6,282.80 + 62.73 1/84 37 1.445076 x 7,750 = 11,199.34 - 735 = 10,464 x 0.656898 + (327.42 x 0.343102) = 6,986.34 +80.95 12/84 48 1.612226 x 7,750 = 12,494.75 - 735 = 11,760 x 0.656898 + (327.42 x 0.343102) = 7,837.30 +102.99 1/85 49 1.628348 x 7,750 = 12,619.70 - 735 = 11,885 x 0.727591 + (533.15 x 0.272409) = 8,792.44 + 127.73 12/85 60 1.816697 x 7,750 = 14,079.40 - 735 = 13,344 x 0.727591 + (533.15 x 0.272409) = 9,854.50 +155.23 1/86 61 1.834864 x 7,750 = 14,220.19 - 735 = 13,485 x 0.807296 + (533.15 x 0.192704) = 10,989.28 +184.62 12/86 72 2.047099 x 7,750 = 15,865.02 - 735 = 15,130 x 0.807296 + (533.15 x 0.192704) = 12,317.14 +219.02 1/87 73 2.067570 x 7,750 = 16,023.67 - 735 = 15,289 x 0.897495 + (533.15 x 0.102505) = 13,776.16 + 256.80 12/87 84 2.306723 x 7,750 = 17,877.10 - 735 = 17,142 x 0.897495 + (533.15 x 0.102505) = 15,439.60 + 299.89 1/88 85 2.329790 x 7,750 = 18,055.87 - 900 = 17,156 x - - - = 17,155.87 + 344.34 RESOLUTION NO. 10040 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH APPROVING AN AGREEMENT TO LEASE AND LEASE OF BEACON BAY RESIDENTIAL LOTS AND AGREEMENT TO LEASE AND LEASE OF BEACON BAY COMMON AREA CONSISTENT WITH CHAPTER 74, STATUTES OF 1978 AND THE CHARTER OF THE CITY OF NEWPORT BEACH WHEREAS, the City owns certain tidelands and uplands in an area known as Beacon Bay; and WHEREAS, on January 9, 1950 City entered into a master lease to said property with Carroll B. Beek, Barton Beek, Joseph Allan Beek, Jr. and Seymour Beek jointly, which master lease expires on December 31, 1987; and WHEREAS, the westerly portion of the Beacon Bay property has been divided into individual lots and sublet for residential purposes; and WHEREAS, all said subleases will expire on the same date as the master lease, December 31, 1987; and WHEREAS, the City Council finds it to be in the public interest and the welfare of the City that the portion of Beacon Bay which is currently leased for residential purposes remain residental in character and that to enter into new agreements to lease with the sublessees under terms and conditions set forth in the Agreement to Lease and Lease is in the public interest; and WHEREAS, the City Council finds that it is in the best interest and welfare of the City that the streets, walkways, 1 common areas, landscaped areas, beaches and other areas presently leased to the Beacon Bay Community Association should remain in said status in consideration of the Beacon Bay Community Association maintaining said areas at no expense to the City and further providing that the areas designated as tidelands within said leased area remain open, available and accessible to the public; and WHEREAS, Chapter 74, Statutes of 1978 permits the leasing of the residential lots in Beacon Bay which are located on tidelands; and WHEREAS, said Statute provides that the maximum term of leases of residential lots in Beacon Bay located on tidelands shall not exceed fifty years; and WHEREAS, Section 1402 of the Charter of the City of Newport Beach permits the leasing and re-leasing of water front property, provided the property was under lease as of January 11, 1957, the date of adoption of said provision of the Charter of the City of Newport Beach; and WHEREAS, the City Council hereby finds that the maximum lease term for the residential lots in Beacon Bay shall not exceed twenty-five years for the following reasons: A. Section 420 of the Charter of the City of Newport Beach prohibits the City entering into a lease in excess of twenty-five years without voter approval. B. The City Council finds it undesirable to commit the residential portion of Beacon Bay to residential use for a period longer than twenty-five years. At the termination of a twenty- five year lease renewal, the City Council of the City of Newport 2 Beach will be given another opportunity to determine whether or not residential uses on that property are appropriate or whether other uses are more appropriate. A lease term longer than twenty-five years would be an excessive commitment for this particular residential use of tidelands and uplands property owned by the City of Newport Beach. C. The extension of the residential lease term beyond twenty-five years would provide very little financial advantage to the City. An analysis of rental values has shown that a 35 year Lease will only increase the rental by 12.4% per annum. Therefore, the modest increase in lease payments to the City do not offset the disadvantage of committing the land to residential uses for a period longer than twenty-five years; and WHEREAS, the City Council hereby finds and determines that the leasing of the subject property is an act by the City of Newport Beach in its proprietary capacity and further that the execution of the Agreements to Lease the respective residential lots and the common areas in the westerly portion of Beacon Bay binds the City of Newport Beach to execute the Leases of said properties in December, 1987, and said execution of said Leases by and on behalf of the City of Newport Beach constitutes a ministerial act and a furtherance of the obligation of the City of Newport Beach hereby created. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Newport Beach that pursuant to the recitals hereinabove set forth, the Charter of the City of Newport Beach and Chapter 74, Statutes of 1978, the form of Agreement to Lease and Lease of the residential lots in Beacon Bay, respectively attached hereto, be and they are hereby approved. 3 BE IT FURTHER RESOLVED that the Agreement to Lease and Lease of the Common Area of Beacon Bay, respectively attached hereto, be and they are hereby approved. BE IT FURTHER RESOLVED that the Mayor and City Clerk are hereby authorized and directed to execute each individual Agreement to Lease the respective residential lots in the westerly portion of the Beacon Bay property and the common areas in the western portion of the Beacon Bay property and that the Mayor and City Clerk of the City of Newport Beach are further authorized and directed to execute said Lease for the respective residential lots in the westerly portion of the Beacon Bay property and the common areas of the western portion of the Beacon Bay property during the month of December, 1987, provided that the Sublessees and the Beacon Bay Community Association and their heirs, devisees, and assigns, as the case might be, have fully performed and executed their obligation under said Agreements to Lease. ATTEST: City Clerk ADOPTED this llthday of May , 1981. 0 ayo I, WANDA E. ANDERSEN, City Clerk, do hereby certify the foregoing to be a full, true and correct copy of Resolution No. 10040 adopted by the City Council at their regular meeting held May 11, 1981. City Clerk