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LEASE <br />THIS LEASE is made and entered into as of the day of 994, by and between the CITY <br />OF NEWPORT BEACH, a Charter City and icipal corporation ("Lessor"), and <br />1- w mks _ - __V I o 1 a . N aDD 1 e A ._ V> D 10, ("Lessee"), regarding the real property commonly <br />referred to as Beacon Baja Lot � 6 . <br />RECITALS <br />A. The City of Newport Beach, by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes <br />of 1978 (the "Beacon Bay Bill"), holds the right, title and interest to certain tidelands and uplands commonly <br />known as Beacon Bay and generally described in Exhibit A attached hereto and incorporated by reference. <br />B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands from the public trust and <br />specifically authorizes the lease of the property for residential purposes subject to certain express statutory <br />conditions. <br />C. Beacon Bay, including the "Westerly Portion" thereof, has been divided into individual lots, with each <br />lot leased by the City for residential purposes until December 31, 2005. <br />D. On November 3, 1987, a majority of electors of the City approved a measure which authorized the <br />City Council to enter into new leases of residential lots in Beacon Bay for a period not to exceed fifty (50) <br />years. <br />E. On November 3, 1992, a majority of electors of the City approved Measure M which authorized the <br />City Council to lease tidelands and waterfront property consistent with the provisions of state law. <br />F. The City Council, pursuant to the authority conferred by the electors, entered into negotiations with <br />current lessees and the parties have agreed on the terms and conditions of a new lease with a fifty (50) year <br />term, provision for adjustments in lease payments to reflect changes in the value of Beacon Bay leaseholds, <br />and a recalculation of lease payments in the event of a transfer of the Lease by the Current Lessee or any <br />Subsequent Lessee (as defined herein). <br />G. Lessee acknowledges that the terms and conditions of this Lease may result in Lessee paying <br />substantially more or less than another Lessee for similar property depending upon the date this Lease is <br />executed, the date of any subsequent transfer, and the consideration paid for transfers of similarly situated <br />property. <br />H. Lessee acknowledges that accurate and complete reporting to the City of all consiNration paid for <br />the transfer of this Lease is vitally important to the City in that failure to fully report all consideration could <br />materially reduce the amount of rent received by the City from other Beacon Bay Lessees. <br />I. Lessor and Lessee acknowledge that the City has agreed to a fifty (50) year term and limited lease <br />payment increases in consideration of provisions which require payment of rent approximating fair market <br />rental value, without regard to any advantage maintained by Current Lessees, upon transfer by Current <br />Lessees and payment of deferred rent in the event the Lease is not signed on or before the Effective Date <br />(as defined herein). <br />J. The California State Lands Commission has reviewed the form of this Lease and determined that <br />it is in conformance with the provisions of relevant statutes, rules and regulations, including, without <br />limitation, the Beacon Bay Bill. <br />NB1-187371.V2 1 05/24/94 <br />