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01-19-2016 Item 11 Final Agreement of Purchase and Sale
Agreement of Purchase and Sale Palm Development Site December 2011 TABLE OF CONTENTS ARTICLE I -DEFINITIONS .......................................................................................................... 1 Section 1.01 861/863 Palm Building .............................................................................. 1 Section 1.02 861 /863 Palm Parcel. ................................................................................. 1 Section 1.03 861 /863 Palm Parcel Agreement.. .............................................................. 1 Section 1.04 Closing ....................................................................................................... 1 Section 1.05 Closing Date ................................................................................................ 1 Section 1.06 Closing Payment. ....................................................................................... 1 Section 1.07 Escrow ........................................................................................................ 2 Section 1.08 Escrow Company ....................................................................................... 2 Section 1.09 Escrow Instructions .................................................................................... 2 Section 1.10 Monterey Improvements ............................................................................ 2 Section 1.11 Monterey Parcels Agreement. .................................................................... 2 Section 1.12 Monterey Real Property ............................................................................. 2 Section 1.13 Palm Development Site .............................................................................. 2 Section 1.14 Palm Real Property .................................................................................... 2 Section 1.15 Preliminary Title Report ............................................................................ 3 Section 1.16 Purchase Price ............................................................................................. 3 Section 1.17 Real Property .............................................................................................. 3 Section 1.18 Title Company ............................................................................................ 3 ARTICLE II -PURCHA SE AND SALE ....................................................................................... 3 Section 2.01 Purchase and Sale ....................................................................................... 3 Section 2.02 Purchase Price ............................................................................................ 3 Section 2.03 Payment for Mitigation of Public Parking Removal.. ................................ 3 Section 2.04 Payment. ..................................................................................................... 4 Section 2.05 No Restrictions on City 's Use of Property Prior to Closing ...................... 4 Section 2.06 Due Diligence; Condition of Property ....................................................... 5 Section 2.07 Release ........................................................................................................ 6 ARTICLE III-TITLE TO PALM DEVELOPMENT SITE .......................................................... 7 Section 3.01 Condition of Title of Palm Development Site ............................................ 7 Section 3.02 Evidence of Title ........................................................................................ 8 Section 3.03 Title Vesting ............................................................................................... 8 ARTICLE IV -CLOSING .............................................................................................................. 8 Section 4.01 Closing ....................................................................................................... 8 Section 4.02 Conditions to Closing --City ..................................................................... 8 Section 4.03 Conditions to Closing --Copelands ........................................................... 9 Section 4.04 Time for Closing ...................................................................................... 10 Section 4.05 Deposits by City ....................................................................................... 10 Section 4.06 Deposits by Copelands ............................................................................. 11 Section 4.07 Escrow Company's Actions ..................................................................... 11 Section 4.08 Early Termination .................................................................................... 11 ARTICLE V -ADJUSTMENT AND PRORATIONS ................................................................ 12 Section 5 .01 Section 5.0 2 Taxe s ........................................................................................................ 12 Utilities and Contracts .............................................................................. 12 12 15201 1 Palm Dev Si te Fina l.d ocx ARTICLE VI -CLOSING COSTS; NO BROKERS ................................................................... 12 Section 6.01 Copelands to Pay All Closing Costs ........................................................ 12 Section 6.02 No Brokerage Commissions .................................................................... 12 Section 6.03 Other Closing Costs ................................................................................. 13 Section 6.04 Post-Closing Prorations ............................................................................ 13 ARTICLE VII-POST CLOSING OBLIGATIONS .................................................................... 13 Section 7.01 Limitations and Restrictions on the Use of Palm Development Site; Reverter. 13 Section 7 .02 Survival of Obligations Post-Closing ....................................................... 14 ARTICLE VIII -INDEMNIFICATIONS .................................................................................... 14 Section 8.01 Indemnification by City ........................................................................... 14 Section 8.02 Indemnification by Copelands ................................................................. 14 ARTICLE IX -REMEDIES ......................................................................................................... 14 Section 9.01 Section 9.02 Right to Cure ............................................................................................ 14 Tennination .............................................................................................. 14 Section 9.03 Remedies upon Tennination .................................................................... 15 Section 9.04 Post-Closing Remedies; Right of Reverter. ............................................. 15 ARTICLE X-COPELANDS' REPRESENTATIONS AND WARRANTIES ........................... 16 Section 10.01 Representations and Warranties of Copelands ...................................... 16 ARTICLE XI -MISCELLANEOUS ............................................................................................ 16 Section 11.01 Section 11.02 Section 11.03 Section 11.04 Section 11.05 Notices ................................................................................................... 16 Governing Law; Plurality; and Gender. ................................................. 17 Amendment. ........................................................................................... 1 7 Authorization ......................................................................................... 17 Ti1ne of Essence ..................................................................................... 17 Section 11.06 Attorneys' Fees for Transaction and for Disputes ................................. 17 Section 11.07 Consent to Jurisdiction .......................................................................... 18 Section 11.08 Captions ................................................................................................. 18 Section 11. 09 Entire Agreement. .................................................................................. 18 Section 11.10 Counterparts ........................................................................................... 18 Section 11.11 Successors and Assigns ......................................................................... 18 Section 11.12 Tax Reporting ........................................................................................ 19 Section 11.13 Force Majeure ....................................................................................... 19 ARTICLE XII -EXHIBITS .......................................................................................................... 19 12152011 Palm Dev Site Final.docx AGREEMENT OF PURCHASE AND SALE Palm Development Site This Agreement ("Agreement") is made and entered into as of December fJ_, 2011, by and between SLO CHINATOWN, LLC, a California limited liability company ("Copelands"), and the CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ("City"). City and Copelands are each a "Party" hereto, and are sometimes collectively referred to as "Parties". AGREEMENT ARTICLE I -DEFINITIONS The following terms shall have the meanings set fo11h in this Article I when used in this Agreement: Section 1.01 861/863 Palm Buildigg."861/863 Palm Building" means any and all structures located on the 861/863 Palm Parcel, commonly referred to as the "Yung building". The 861/863 Palm Buildings are scheduled for demolition and will no longer be located on the 861/863 Palm Parcel at the time of Closing pursuant to this Agreement. Section 1.02 861/863 Palm Parcel."8611863 Palm Parcel" means that certain real property generally described as 861 and 863 Palm Street, San Luis Obispo, California, APN #002-416-031, which is currently owned by CP Mission, LLC, a California limited liability company, which has the same owners as Copelands, but which will be owned by the City at the time of Closing . The legal description of the 861/863 Palm Parcel is attached hereto as Exhibit A. Section 1. 03 61 1 63 Palm Parcel Agreement. "8611863 Palm Parcel Agreement" means that certain Agreement of Purchase and Sale -861/863 Palm Parcels, to be executed and delivered between the City and CP Mission, LLC, pursuant to which Copelands will sell the 861/863 Palm Parcel to the City. Section 1.04 Clo ing. "Closing" means the date upon which and the process by which Escrow Company will conclude and consummate the purchase and sale of the Palm Development Site and as more fully described in Article IV below. Section 1.05 Closing Date. "Closing Date" shall mean the date on which the Closing occurs. Section 1.06 Closing Payment. "Closing Payment" means the monetary consideration to be paid by Copelands to City for the Palm Development Site as more fully described in Section 2.04 below. 1215201 l Palm Dev Site Final.docx 1 Section 1.07 Escrow. "Escrow" means the escrow to be established at Escrow Company for the transfer of the Palm Development Site as defined below. The Escrow shall be established by Copelands not later than fifteen (15) business days prior to the Closing Date. Section 1.08 Escrow Com an ."Escrow Company" means First American Title Insurance Company, National C01mnercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut Creek, California 94596, or such other escrow company doing business in San Luis Obispo County, California, as Copelands and City may designate. Section 1.09 Escrow Instructions. "Escrow Instructions" means the directions to the Escrow Company provided herein and in such additional instructions prepared by Escrow Company and approved by the Parties. This Agreement shall constitute joint escrow instructions to Escrow Company. The Parties shall execute such additional instructions not inconsistent with the provisions of this Agreement which may be reasonably required by Escrow Company. The Parties shall be bound by Escrow Company's general instructions, but if any conflict between the provisions of this Agreement and the provisions of Escrow Company's general instructions exists or arises, then the provisions of this Agreement shall control. Section 1.10 Montere lm rovements. "Monterey Improvements" means those certain improvements to be constructed by Copelands on the Monterey Parcels as entitled by San Luis Obispo City Council Resolution No. 10128 (2009 Series), adopted November 17, 2009, or as such entitlements subsequently may be modified and approved by the City in the normal exercise of its development review authority following request therefor by Cope lands. Section 1.11 Monterey Parcel Agreement. "Monterey Parcels Agreement" means that certain Agreement of Purchase and Sale -Monterey Parcels, to be executed and delivered between the City and Copelands. Section 1.12 Monterey Real Property."Monterey Real Property" means the land and appurtenant rights, interests, easements, tenements, estates and improvements which consist of the portion of the Real Property which is adjacent to Monterey Street, as identified with particularity in the Monterey Parcels Agreement, and, prior to the Closing under this Agreement, will have been transferred by the City to Copelands, will no longer contain a City surface parking lot, but will be improved with the Monterey Improvements. Section 1.13 Palm Development Site."Palm Development Site" means the land and appurtenant rights, interests, easements, tenements, estates and improvements to be acquired by Copelands which consist of the Palm Real Property and the 861/863 Palm Parcels. The legal description of the Palm Development Site shall be prepared and approved by the parties hereto following a survey of the Real Property as described in the Monterey Parcels Agreement, and thereupon shall be attached to this Agreement and incorporated as if set forth in full herein. Section 1.14 Palm Real Property."Palm Real Property" means the portion of the Real Property which does not include the Monterey Real Property. The legal description of the Palm Real Property shall be prepared and approved by the parties hereto following a survey of the 12152011 Palm Dev Site Final.docx 2 Real Property as described in the Monterey Parcels Agreement, and thereupon shall be attached to this Agreement and incorporated as if set forth herein as Exhibit B. Section 1.15 Preliminmy Title Rep rl. "Preliminary Title Report" means the Preliminary Report on the Palm Real Property prepared by First American Title Insurance Company, dated November 21, 2011, as Commitment No.: NCS-512999-CC , attached hereto as Exhibit C-1 and the Preliminary Report on the 861/863 Palm Parcel, prepared by First American Title Insurance Company, dated November 4, 2011, as Commitment No.: NCS-512995-CC, attached hereto as Exhibit C-2 . Section 1.16 Purchase Price. "Purchase Price" means the monetary consideration to be paid by Copelands to City for the Palm Development Site as more fully described in Section 2.02 below. Section 1.17 Real Pro er . "Real Property" means the land and appurtenant rights and improvements which consists of five (5) parcels located in the block between Palm and Monterey Streets and Morro and Chorro Streets in San Luis Obispo County, California and identified as two (2) portions of APN #002-416-034, and three (3) portions of APN #002-416- 029, as described in the Monterey Parcels Agreement. Section 1.18 Title C om an ."Title Company" means First American Title Company, National Commercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut Creek, California 94596, or such other title company doing business in San Luis Obispo County, California, as Copelands and City may designate . ARTICLE II -PURCHASE AND SALE Section 2.01 Purchase and Sale. City agrees to sell to Copelands, and Copelands agrees to purchase from City, the Palm Development Site upon the terms and conditions set forth in this Agreement. Section 2.02 Purchase Price. The purchase price for the Palm Development Site is Four Htrndred Fifty-three Thou and Two Hundred and On Dollars ($453 ,20 J ), plus an amount equal to Three Hlmdred Sixty-six and 67/100 Dollars ($366.67) for each month or part thereof from (and including) July 2011 , unti.l the month in which the Closing occurs to be paid all cash through the Escrow at the Closing. Section 2.03 Payment for Mitigation of Public Parking Removal. In addition to the Purchase Price, Copelands shall pay in cash through the Escrow at the Closing the "Palm Parking Mitigation Payment") (as defined below) to City. The Palm Parking Mitigation Payment is a fee that shall be the amount paid at the Closing to compensate the City for a portion of the 155 displaced surface parking spaces (the "Displaced Surface Parking") that will be removed as a result of project construction on the Palm Development Site, as identified in Table 3.2-4 of the Addendum to the Environmental Impact Report for the Real Property, dated September, 2009 (the "2009 EIR"). The Palm Parking Mitigation Payment will be equal to $17,796 (as adjusted 12152011 Palm Dev Site Final.docx 3 below) multiplied by the number of Palm Lost Spaces (as defined below). The Parties acknowledge that certain parking spaces on the Palm Development Site will be pennanently lost as a result of the redevelopment contemplated hereunder (the "Palm Lost Spaces"). The number of Palm Lost Spaces shall be equal to 15 5 minus the number of parking spaces lost as a result of the planned reconfiguration of the 'ity s exi ting surface parking lot as provided in the Monterey Paree]· Agreement (the 'Monterey Lost paces'). By way of example, if there are 41 Monterey Lost Spaces then the PaJm Lo t paces will be equal to 114. (For avoidance of doubt, the Palm Lost Spaces, and the Palm Parking Mitigation Payment provided for herein, are in addition to and exclusive of the Monterey Lost Spaces and the Monterey Parking Mitigation Payment provided for in the Monterey Parcels Agreement.) The Monterey Lost Spaces will be as shown on the parking reconfiguration diagram to be attached to the Monterey Parcels Agreement as Exhibit D. $17, 796 is the current in-lieu parking fee as adopted by the City, which amount will increase as of July 1, 2012, and each July thereafter due to an inflation escalator adopted as part of the City's fee resolutions duly adopted by the ity ouncil, until the losing Date occurs. If there are 141 Palm Lost Spaces, the Parties estimate that the Palm Parking Mitigation Payment will be not less than Two Million Twenty-eight Thousand Seven Hundred Forty-four Dollars ($2,028,744), and acknowledge the amount shall increase as the City's in-lieu parking fee increases over time. Unmet parking demand caused by the Project does not include any of the Displaced Surface Parking and therefore, for avoidance of doubt, the parties acknowledge that the Palm Parking Mitigation Payment required hereunder is and shall be separate from, and in addition to, any parking in-lieu fees required by City or any of its departments charged with granting permits required for the Project in connection with any unmet parking demand caused by the Project. Section 2.04 Payment. The Purchase Price plus the Palm Parking Mitigation Payment (collectively, the "Closing Payment") shall be paid as follows: at least one business day prior to the Lo ing, the cash due from Copelands under Sections 2.02 and 2.03 of this Agreement shall be deposited by the Copelands into Escrow by wire transfer or cashier's check. Section 2.05 No Re trictions on City's Use of Property Prior to Closing. City's use and management of the Palm Development Site prior to the Closing shall not be restricted or limited in any way by the terms of this Agreement, subject only to City taking no irreversible action that would preclude its ability to deliver title to the Palm Development Site as contemplated in Section 3.01 of this Agreement. For avoidance of doubt, and without limitation of the foregoing, City may pursue and enter into lot mergers, reciprocal access agreements, leases, ground leases, licenses and any other land use management action deemed appropriate in the sole and absolute discretion of City prior to the Closing hereunder. Notwithstanding the foregoing, Copelands will lease a portion of the Palm Real Property which consists of the property commonly known as 955 Morro, San Luis Obispo, from the City pursuant to that certain Lease attached hereto as Exhibit E (the "955 Morro Lease"). The 955 Morro Lease shall provide for nominal rent of $500 per month and Copelands will be responsible for upkeep, maintenance and insurance on the building which is the Premises. Sublease revenue for the Premises in excess of nominal rent and expenses will be split 50/50 between the City and Copelands. Copelands will consult with City about potential tenants yet Copelands will control !215201 l Palm Dev Site Final.docx 4 and have sole discretion on tenant selection consistent with applicable zoning and other City laws and regulations. Parking adjacent to 955 Morro will continue to be used by the City until the Palm Development Site is transferred to Copelands. The term of the 955 Mono Lease will end on the Closing Date, or, if this Agreement terminates, may be terminated by written notice. Section 2.06 .Due Diligence; Condition f Pro1 erty. Copelands acknowledges that, prior to the Closing, it shall have perfonned such due diligence as it elects to perform as to the condition and all other aspects of the Palm Development Site, the title to the Palm Development Site and the suitability of the site of the Palm Development Site for the proposed uses and construction. Copelands further acknowledges that prior to the Closing contemplated hereunder, Copelands owned the 861/863 Palm Parcel, which it transferred to the City, and further that Copelands undertook to remove certain asbestos from the buildings located on 861/863 Palm Parcel as described in the 861/863 Palm Parcel Agreement and the Monterey Parcels Agreement, and prior to the Closing shall have completed its obligations thereunder. Copelands further acknowledges that it has or shall have inspected, investigated and tested the condition of the soil and the geology of the site and the presence of hazardous substances or archaeological materials and shall have accepted such conditions, and all aspects of the Palm Development Site in its "AS-IS, WHERE-IS" condition with all faults and defects, whether patent or latent, known or unknown. Further, in entering into this Agreement and closing the Escrow contemplated hereunder, Copelands expressly represents and warrants to City (i) that Copelands is relying and shall rely solely on its own due diligence to evaluate all aspects of the Palm Development Site and its suitability for Copelands' planned development without any representations and warranties of any kind or nature concerning the Palm Development Site or any aspect thereof, either express or implied, from or on behalf of City or any of its employees, agents or independent contractors, except as othe1wise expressly provided in this Agreement, (ii) that neither City nor any of its employees, agents or independent contractors has made or is authorized to make any representation or warranty of any kind or nature concerning the Palm Development Site, any aspect thereof, or its suitability, either express or implied, nor any warranty, representation or promises of remediation or cure including, without limitation, any representation or warranty regarding the geological, subsurface, environmental, architectural, engineering or other physical aspects or condition of the Palm Development Site, including without limitation any subsidence or other issues arising from the possible presence of a subterranean creek under or near the Palm Development Site, the rents, income, expenses, market or other financial aspects or condition of the Palm Development Site, the compliance with the Palm Development Site with any applicable law, code, rule or regulation including without limitation any environmental protection, pollution, land use, handicapped access or other laws, the zoning of the Palm Development Site, the accuracy or completeness of any documents, information or other data concerning the Palm Development Site or any aspect thereof furnished or to be furnished to Copelands by or on behalf of City or any of its employees, agents or independent contractors or in any other manner concerning the Palm Development Site or any aspect thereof, (iii) that any and all due diligence materials provided by the City to Copelands were and are solely for Copelands' specific and limited use in connection with its due diligence and evaluations concerning the Palm Development Site, (iv) that any due diligence materials prepared by any third party is being furnished to Copelands as an accommodation only without 12152011 Palm Dev Site Final.docx 5 any warranty by City or such third party as to the accuracy or completeness thereof, except as otherwise expressly provided by any separate agreement between Copelands and any such third party, and (v) that City, and any agency of City, shall not have any obligations whatsoever to perfonn any tests, prepare any reports, make any repairs or take any other action, including governmental actions, or incur any expense with respect to the Palm Development Site, except as otherwise expressly provided in this Agreement. Section 2.07 Release. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE LEASE FOR 955 MORRO, COPELANDS AND ANYONE CLAIMING BY, THROUGH OR UNDER COPELANDS FULLY AND IRREVOCABLY RELEASES CITY, AND EACH OF ITS EMPLOYEES, OFFICERS, DIRECTORS, REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PARENT COMPANIES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS, FIRMS, CORPORATIONS AND ORGANIZATIONS ACTING ON ITS BEHALF ("RELEASED CITY PARTIES"), FROM ANY AND ALL CLAIMS THAT IT MAY NOW HA VE OR HEREAFTER ACQUIRE AGAINST ANY OF THE RELEASED CITY PARTIES FOR ANY AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES, EXPENSES, DEMANDS, CLAIMS, ACTIONS OR CAUSES OF ACTION (COLLECTIVELY "CLAIMS") ARISING FROM OR RELATED TO THE CONDITION OF THE PALM DEVELOPMENT SITE INCLUDING, WITHOUT LIMITATION, ANY PATENT OR LATENT CONSTRUCTION DEFECTS OR INADEQUACIES IN THE CONDITION OF THE PROPERTY, INCLUDING COST OF REPAIR OR CORRECTION, ERRORS, OMISSIONS, OR OTHER CONDITIONS, LATENT OR OTHERWISE, GEOTECHNICAL AND SEISMIC, AFFECTING THE PROPERTY OR ANY PORTION THEREOF WHETHER OR NOT DISCOVERED PRIOR TO COPELANDS' INSPECTION OF THE PALM DEVELOPMENT SITE, INCLUDING, WITHOUT LIMITATION: (A) ENVIRONMENTAL MATTERS WHICH WERE: (i) DESCRIBED OR REFERRED TO IN THE ENVIRONMENTAL REPORTS OR IN ANY ENVIRONMENTAL AUDIT OBTAINED BY COPELANDS OR ELSEWHERE IN THIS AGREEMENT, THE 861/863 PALM PARCEL AGREEMENT OR THE MONTEREY PARCELS AGREEMENT; OR (ii) DISCOVERABLE BY PRUDENT INVESTIGATION AT ANY TIME PRIOR TO THE CLOSING; OR (iii) OTHERWISE DISCLOSED BY CITY TO COPELANDS OR DISCOVERED BY COPELANDS AT ANY TIME PRIOR TO THE CLOSING; (B) THE ITEMS DESCRIBED IN SECTION 2.06 ABOVE; AND (C) ANY ERRORS, OMISSIONS OR DEFECTS COMMITTED OR CAUSED BY ANY AGENT, EMPLOYEE, CONTRACTOR, OR OTHER PERSON PERFORMING 12152011 Palm Dev Site Final.docx 6 WORK OR TAKING ACTION IN CONNECTION WITH THE PALM DEVELOPMENT SITE ON BEHALF OF CITY OR ITS PREDECESSORS; NOTWITHSTANDING THE FOREGOING, SUCH RELEASE BY COPELANDS OF RELEASED CITY PARTIES SHALL NOT EXTEND TO ANY FRAUD BY CITY UPON COPELANDS, WHICH IS EXPRESSLY RESERVED BY COPELANDS ON BEHALF OF ITSELF AND ANYONE CLAIMING BY, THROUGH OR UNDER COPELANDS. THIS RELEASE INCLUDES ANY AND ALL CLAIMS OF WHICH COPELANDS IS PRESENTLY UNAWARE OR WHICH COPELANDS DOES NOT PRESENTLY SUSPECT TO EXIST WHICH, IF KNOWN BY COPELANDS, WOULD MATERIALLY AFFECT COPELANDS' RELEASE TO CITY. COPELANDS SPECIFICALLY WAIVES THE PROVISION OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE REFLECTS THAT ALL OF THE PALM DEVELOPMENT SITE IS SOLD BY CITY AND PURCHASED BY COPELANDS SUBJECT TO THE FOREGOING. IT IS NOT CONTEMPLATED THAT THE PURCHASE PRICE WILL BE INCREASED IF COSTS TO COPELANDS ASSOCIATED WITH THE PALM DEVELOPMENT SITE PROVE TO BE LESS THAN EXPECTED NOR WILL THE PURCHASE PRICE BE REDUCED IF THE COPELANDS' PLAN TO DEVELOP THE PALM DEVELOPMENT SITE LEADS TO HIGHER COST PROJECTIONS. THIS PROVISION SHALL SURVIVE THE CLOSE OF ESCROW AND RECORDING OF THE GRANT DEED. I Cope land s' Jniti a ls : :;;?'~,... I Ci ty's Initials : :d"Ff"J"L ARTICLE III -TITLE TO PALM DEVELOPMENT SITE Section 3.01 Condition of Title of Palm Development Site. Upon Closing, City shall deliver the Palm Development Site to Copelands subject to no leases and occupancies. Title to the Palm Development Site shall be conveyed by City to Copelands by a grant deed in form and substance shown on Exhibit D hereto (the "Grant Deed"), and subject to the following "Conditions of Title": (a) A lien to secure payment ofreal estate taxes and supplemental taxes, if any, not delinquent; 12152011 Palm Dev Site Final.docx 7 (b) Matters affecting the condition of title created by or with the written consent of Cope lands, or approved by Copelands in writing; (c) Report; (d) Printed exceptions and exclusions as specified on the Preliminary Title Lease for 955 Morro; and ( e) Any such other lot mergers, reciprocal access easements or any other land use management action that the City has entered into after the date of this Agreement and which has become an encumbrance of record on the Palm Development Site, each of which shall be allowed in the City's sole discretion during its ownership of the Palm Development Site; provided that no such encumbrance to title remaining at the time of Closing may interfere with the Copelands' ability to develop the Project. Section 3.02 Evidence of Title. Delivery of title to the Palm Development Site in accordance with Section 3.01 above shall be evidenced by the willingness of the Title Company to provide its written commitment to issue, upon Closing, recordation of the Grant Deed, and payment of its regularly scheduled premium, an ALT A Standard Coverage Owner's Policy in the appropriate amount showing title to the Palm Development Site vested in Copelands, or Copelands' allowable assignee, subject to the Conditions of Title described in Section 3.01. Section 3.03 Title Vesting. Title shall be vested in the Palm Development Site in the name of Cope lands as provided above, or Copelands' allowable assignee. Cope lands shall provide written notice to the Parties and Escrow Company of any such allowable assignee not less than five (5) business days prior to the Closing. ARTICLE IV -CLOSING Section 4.01 ClosLng. The sale and purchase transaction contemplated by this Agreement shall be consummated pursuant to the Escrow Instructions not later than June 30, 2020 (the "Outside Closing Date") through an escrow established at the Escrow Company. Section 4.02 Conditions to Closin --Ci . The City's obligation to transfer or cause the transfer of the Palm Development Site to the Copelands shall be subject to the fulfillment of the conditions precedent (the "City Conditions") set forth below: (a) Related Agreements. Copelands (or its related companies) shall have executed and delivered to City the following agreements: (i) the 861/863 Palm Parcel Agreement; (ii) Monterey Parcels Agreement; (c) Lease for 955 Morro Street; (iv) Release and Waiver; and (v) the Lease for Public Parking. (b) Closing wider 8611863 Palm Parcel Agreement and Monterey Parcels Agreement. The closing shall have occurred under the 861/863 Palm Parcel Agreement and the Monterey Parcels Agreement. 12152011 Palm Dev Site Final.docx 8 (c) onstruction on Palm Development ite. The Copelands shall have provided evidence reasonably satisfactory to the City that it is prepared to commence construction on the Palm Development Site in accordance with San Luis Obispo City Council Resolution No. 10128 (2009 Series), adopted November 17, 2009, and in conformity with the 2009 EIR (including without limitation the reuse of the Shanghai Low Restaurant sign), or as such entitlements subsequently may be modified and approved by the City in the normal exercise of its development review authority following request therefor by Copelands (the "Project") as follows: (i) the Cope lands have obtained pennits for construction of the Project (the "Permits") and the Pennits have not expired; (ii) the Copelands shall have provided to the City documents evidencing the financial resources, from lenders and from equity funds and investors as may be necessary, in a sufficient amount to complete the construction and equipping of the Project in accordance with a budget prepared by Copelands; (iii) the Copelands have entered into construction contracts for the Project evidencing that the work of construction can be completed within the budget; and (iv) the Copeland have submitted evidence to the City that a binding contract has been entered into or i · nol appropriate, between Copelands and an operator of the completed Project. ( d) Construction on Monterey Parcel . Construction of the Monterey Improvements on the Monterey Real Property has been substantially completed within four ( 4) years of the Closing under the Monterey Parcels Agreement and Copel ands thereafter is diligently pursue completion thereof. (e) SatisfactioJ-1 of Copelands' Condition . Copelands shall have certified that all of the Copelands' Conditions have been satisfied and Copelands is obligated to buy the Palm Development Site. (f) Perfonnance by Copelands. Copelands shall have perfonned all obligations to be performed by Copelands, and shall have made all deliveries required of Copelands, pursuant to this Agreement prior to Closing. Section 4.03 Conditions to Closing --Copelands. The Copelands' obligation to purchase the Palm Development Site from the City shall be subject to the fulfillment of the conditions precedent (the "Copelands' Conditions") set forth below: (a) Related A reements. City shall have executed and delivered to Copelands (or its related companies) the following agreements: (i) the 861/863 Palm Parcel 12152011 Palm Dev Site Final.docx 9 Agreement; (ii) Monterey Parcels Agreement; (c) Lease for 955 Morro Street; (iv) Release and Waiver; and (v) the Lease for Public Parking. (b) Closing under 861/863 Palm Parcel Agreement and Monterey Parcels A reernent. The closing shall have occurred under the 861/863 Palm Parcel Agreement and the Monterey Parcels Agreement. ( c) ondition of Property; Title. The Title Company shall have committed to insure good title to the Palm Development Site as described in the Subdivision Map (as defined in the Monterey Parcels Agreement) by issuing a title policy in the form described in Section 4.03( d) below in the amount equal to the Purchase Price plus the Palm Parking Mitigation Payment, subject only to only to the Conditions of Title described in Section 3.01. ( d) Title Conditions. The Closing shall also be conditioned on the commitment of the Title Company to issue, upon payment of its regularly scheduled premium, its owner's extended ALTA Form 1970(B) coverage policy of title insurance, with the endorsements described below, excluding all bankruptcy exceptions, showing title to the Palm Development Site vested ofrecord in the transferee subject (the "Title Policy"). The Title Policy shall contain endorsements required by Copelands. ( e) atisfaction of City Conditions. City shall have certified that all of the City Conditions have been satisfied and City is obligated to sell the Palm Development Site. (f) Performance by City. City shall have performed all obligations to be performed by City, and shall have made all deliveries required of City, pursuant to this Agreement prior to Closing. Section 4.04 Time for Closing. The Closing shall take place fifteen (15) days after the conditions set forth in Sections 4.02 and 4.03 above have been satisfied, but no later than the Outside Closing Date. The date of the Closing may be extended by agreement of the parties. On the Closing Date, sole and exclusive possession of the Palm Development Site shall be delivered to Copelands, or its allowable assignee, by City. Section 4.05 Deposits by City. No later than one business day before the Closing Date, City shall deposit with Escrow Company: (a) The Grant Deed in the form attached hereto as Exhibit D duly executed by City, acknowledged and in recordable form, (b) Ifrequired by Escrow Company, City's FIRPTA Affidavit in a form reasonably acceptable to City, duly executed by City. 12152011 Palm Dev Site Final.docx 10 (c) If required by Escrow Company, a California Fonn 593-C Real Estate Withholding Exemption Certificate on Form 593-C, or equivalent, duly executed by City ("Form 593-C"). ( d) Such other bills of sale, assignments and other instruments of transfer or conveyance as Copelands may reasonably request or as may be otherwise necessary to evidence and effect the sale, assignment, transfer, conveyance and delivery of the Palm Development Site to Cope lands. Section 4.06 De osit s b Co elands.No later than one business day before the Closing Date, Copelands shall deposit with Escrow Company: a) The monies required pursuant to Sections 2.02, 2.03 and 6.01. b) Counterpart originals of the document listed in Sections 4.05( a) above. c) Such other instruments or documents as may be necessary to effect the sale, assignment, transfer, conveyance and delivery of the Palm Development Site to Copelands. Section 4.07 Escrow Company ' Acti ns. Upon the Closing Date, when Escrow Company holds the items required to be deposited by City and Copelands as described above, Escrow Company is prepared to issue and deliver to Copelands the Title Policy, and Escrow Company has received written authorization to close the escrow from Copelands and City, Escrow Company is hereby instructed and authorized to: a) Record the Grant Deed in the Office of County Recorder of the County. b) Pay any transfer taxes. c) Instruct the County Recorder to return the Grant Deed to Copelands. d) Disburse to City from the funds deposited into Escrow by Copelands the Purchase Price less City's share of prorations and other closing costs hereunder. e) Disburse from funds deposited by Cope lands amounts toward payment of all other items chargeable to the account of Copelands hereunder, and disburse the balance of such funds, if any, to Copelands. f) Deliver to Copelands the Non-foreign Affidavit, if any, the Form 593-C, if any, and the Title Policy. Section 4.08 Ea:rly Termination. Either the City or the Copelands may terminate this Agreement by providing written notice thereof to the other party, and no Closing shall thereafter occur hereunder, if: 1215201 ! Palm Dev Site Final.docx 11 (a) Constrnction of the Monterey Improvements on the Monterey Real Property has not been substantially completed within four (4) years of the Closing under the Monterey Parcels Agreement; or (b) Copelands has not submitted constrnction plans for the Project by the date which is seven (7) years from the date this Agreement was executed and delivered by the parties. Upon the termination of this Agreement as provided in this Section, Escrow shall be can.celled , all in tnunent sha ll be returned to the parties who deposited the same, cash d posited in E crow if any hall be returned to the Copeland and the Copeland shall pay any title and escrow cancellation charg s. ARTICLE V -ADJUSTMENT AND PRORA TIO NS At Closing, the following items shall be adjusted and prorated between Copelands and City by the Escrow Company: Section 5.01 Taxes. Taxes and assessments on the Palm Development Site for the period prior to the Closing shall not be prorated, as the Palm Development Site shall have been exempt from properly taxes prior to the Clo ing as a result of it wnership by City; however, as of the Closing, the Palm Development Site ·hall be subject to real property taxes and assessments, all of which shall be paid by Copelands outside of Escrow. Section 5.02 Utilities and ontracts. All costs, ifany, ofutilities furnished to the Palm Development Site shall be prorated as of the Closing Date. ARTICLE VI -CLOSING COSTS; NO BROKERS Section 6.01 o 'ts. At Closing Copelands shall pay all of the cost of the Closing, includi11g without limitation all fees and costs for releasing all encumbrances, li ens and security interests ofrecord which are not allowable Conditions to Title, all of City's outside counsel fees for the transaction contemplated hereunder and not paid prior to Closing pursuant to ection l l .06, all applicable sale , use docume11ta1y or other transfer taxes ari ing out of tbe sa le of the Palm Development Site, the premium for the Title Policy for the Palm Development ite and any endorsement requested by Copelands and all fee to the Escrow Company. Section 6.02 No Brokerage Cammi sion . Each of City and Cope lands represents and warrants to the other that it has not dealt with or been represented by any brokers or finders in connection with the purchase and sale of the Palm Development Site. Each Party shall indemnify and hold the other free and harmless from and against all costs and liabilities including, without limitation, attorneys' fees and the costs and expenses of litigation, for causes of action or proceedings which may be instituted by any other broker, agent or finder, licensed or 12152011 Palm Dev Site Final.docx 12 otherwise, claiming through, under or by reason of the conduct of the indemnifying Party in connection with this transaction. Section 6.03 Other Clos ing Costs. Any and all other closing costs related to the transaction shall be paid by the Parties in the manner consistent with customary practice in San Luis Obispo County. Section 6.04 Post-lo sing Proration . Should any real estate taxes, bonds, assessments, utilities, other expenses of the Palm Development Site or liens relating to periods before the Closing Date be omitted from such prorations for any reason, including without limitation late assessment or Title Company error, then after the Closing, City shall remain solely responsible for, and shall promptly pay before delinquency, any such real estate taxes, bonds, assessments, utilities, other expenses of the Property or liens relating to periods before the Closing Date. This obligation shall survive the Closing. ARTICLE VII -POST CLOSING OBLIGATIONS Section 7.01 Limitations and Restrictions on the Use of Palm Development Site; Reverter. After the Closing, Copelands agree to promptly commence construction on the Project and to diligently pursue such construction to completion thereafter. The parties agree, and the Grant Deed for the Palm Development Site shall reflect, that until substantial completion of the Project in accordance with the Permits: (i) the use of the Palm Development Site shall be limited and restricted to the construction of the Project in accordance with the Penni ts; (ii) the Copelands shall not encumber the Palm Development Site except as security for construction loans to finance the construction of the Project; and (iii) the City has the right ofreverter and a power of termination (Civil Code section 885.010) to cause the title of the Copelands to the Palm Development Site to terminate and to revert to the City (a) if the construction of the Project in accordance with the Permits does not commence within six (6) months of permit issuance, or (b) if construction is commenced but is not diligently pursued by Copelands to completion within twenty-four (24) months of the Closing Date, or within such additional period of time to which the City may consent in writing upon demonstration by Copelands of diligence and good cause, such consent not to be unreasonably withheld. Upon the timely substantial completion of the Project in accordance with the Permits, the City shall execute and deliver to the Copelands, a Certificate of Completion in substantially the form attached hereto as Exhibit F, which shall acknowledge that the deed restriction and any right of reverter in favor of the City have terminated. In the event the City, being entitled to do so, causes the title to the Palm Development Site to revert to the City, then the City shall pay to the Copelands (a) an amount equal to the Purchase Price as set forth in Section 2.02 above and (b) only if the parking on the Palm Development Site shall not have been removed as of the time the City exercises its right of reverter, an additional amount equal to the amount paid by Copelands for the Palm Parking Mitigation Payment. If, at the time of City's exercise of its reverter, Copelands has removed any or all of the existing parking on the Palm Development Site, City shall be entitled to retain the Palm Parking Mitigation Payment paid to it by Copelands. In the event the City, being entitled to do so, causes the title to the Palm Development Site to revert to the City, the City shall be 1215201 l Palm Dev Site Final.docx 13 entitled pennanently to retain title to the 861/863 Palm Parcel and shall have no obligation to offer, return, or sell title to the 861/863 Palm Parcel to Copelands. Section 7.02 Surviv al of Obligations Pos t-C lo ing . Without limitation, the obligations of Copelands set forth in this Article VII shall survive the Closing of the Escrow and the recordation of the Grant Deed. ARTICLE VIII-INDEMNIFICATIONS Section 8.01 lndemni fi c ation by ity . As of the Closing Date, City shall indemnify, defend and hold Copelands hannless of, against and from any and all liabilities, claims, demands and expenses, of any kind or nature (except those items which by this Agreement specifically become the obligation of Copelands) accruing on or before the Closing Date, including any claim for labor, materials or supplies in connection with work performed on the Palm Development Site, and which are in any way related to the ownership or operation of the Palm Development Site. Section 8.02 Indemni fi cation by Copeland . As of the Closing Date, Copelands shall indemnify, defend and hold City harmless of and from any and all liabilities, claims , demands and expenses of any kind or nature (except those items which by this Agreement specifically remain the obligation of City) accruing after the Closing Date, including any claim for labor, materials or supplies in connection with work performed on the Palm Development, and all expenses related thereto including, without limitation, court costs and attorneys' fees. Without limitation, from and after the date of execution of this Agreement, Copelands shall also indemnify and defend City, using counsel approved by City in its absolute discretion, from any and all third party challenges to this Agreement or any of the transactions contemplated hereunder or any challenge to any entitlement, approval or environmental impact report ("EIR") proposed, drafted, or certified in connection with any of the foregoing transactions, including any supplement or addendum thereto. ARTICLE IX -REMEDIES Section 9.01 Right to ure. Should either Party default under any of its obligations hereunder other than its obligation to close by the Outside Closing Date, the other Party shall provide notice of such default to the defaulting Party, who will be allowed to cure any such default for a period of five (5) business days after notice is given the defaulting Party. No grace or cure period is allowed for the failure of either Party to cause the Closing to occur prior to or on the Outside Closing Date. Section 9.02 Termination. Should the Closing not occur on or before the Outside Closing Date for any reason other than the default of City under this Agreement, then this Agreement shall be terminated, and City shall be entitled to keep any option or deposit or other payments, and Copelands acknowledges and agrees it shall have no rights either to any option or deposit or other payments or to bring any action seeking specific performance of this Agreement, damages for its breach, or refund of any option or deposit or other payments. In addition, upon 12152011 Palm Dev Site Final.docx 14 termination of this Agreement, the City shall be entitled permanently to retain title to the Palm Development Site (including without limitation the 861/863 Palm Parcel) and shall have no obligation to offer, return, or sell title to said real property to Copelands. Cope lands and City agree that in the event the Closing fails to occur because of Cope lands' default, breach or failure to perform hereunder and not due to City's wrongful acts, omissions or breach tb damage to City would be extremely difficult and impracticable to ascertain, and that therefore the right of City to permanently retain any option, deposit and other payments as well a title to the PalmD velopment Site (including without limitation the 861/863 Palm Parcel) is a reasonable estimate of the damages to City. Accordingly, Copelands agrees that upon (I) Copeland ' recei.pt of notice of uch default or breach from City, (2) failure by Copelands to cure said breach, default or failure to perfonn within 3 days after receipt of such notice, and (3) failure to clo e escrow occurs because of such brea ch default or failure to perform then ity hall retain any option , depo it or oth r payment (and all interest earned thereon) previou ly delivered to ity and title to the Palm Development Site as liquidated damage , a City ole remedy in the event o f any uch material breach or default by Copelands hereunder. Initials of Copelands: ~ Initials of City: -IH}\ Section 9.03 Remedie upon Termination. In the event of any termination of this Agreement not caused by the default of either of the Parties hereto which is not cured within any applicable cure period, this Agreement shall be of no further force or effect, and neither of the Paitie shall have any recourse against the other nor any ri.ghl to file a Ii pendens or to bring an action for specific performance hereunder. Should either Party default under it obligation pursuant to this Agreement and should such default re ult in the Closing failing to occur prior to the Outside losing Date then the non-defaulting Party shall have the right to bring an action against the defaulting Party seeking specific perfonnance of this Agreement. eel ion 9.04 Po t-Clo ing Remedie ; Right of Reverter. In the event that Copelands defaults in performing any of it po t-clo i11g obligations under thi Agreement, and fail to cure any such default within the cure period provided pursuant to Section 9.01 then City shaU have the right to seek specific performance as well as any other rights or remedies to which City may be entitled lrnder appJjcable law . In addition to, and not in lieu of the foregoing, should Copelands fail to complete any of its post-clo ing obligations stated in Article VII timely, such failme shall constitute a default by Copelands hereunder, and City shall have the right to exercise its right of reverter and to cause title to the Palm Development Site to revert to City by filing a doclUn nt indicating its election to exercise it right ofreverter with the County Recorder's Office for the County of an Lui Obispo California and by paying to Copelands the amounts indi.cated in Section 7.01. Cop lands hereby agrees that in such event, it shall have no right to challenge or take any action what oever to prevent City from exercising its right to reverter, nor to attempt to have such reverter overturned, nor to bring any action against City or any of its employees or agents seeking damages or any other relief as a result of City's action to enforce its reversionary rights. 12152011 Palm Dev Site Final.docx 15 ARTICLE X -COPELANDS' REPRESENTATIONS AND WARRANTIES Section 10 .01 Repre entations and Wa1Tanties of ope.land . Copelands makes the following representations and warranties to City: a) Copelands is a California limited liability company duly organized and validly existing under the laws of the State of California, and is qualified to do business in the State of California. b) Copelands has the right, power and authority to enter into this Agreement and to perfonn its obligations hereunder, and the person(s) executing this Agreement on behalf of Copelands have the right, power and authority to do so. c) This Agreement constitutes the legal, valid and binding obligation of Cope lands enforceable against Copelands in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, moratorium and other principles relating to or limiting the rights of contracting parties generally. Neither this Agreement nor the consummation of any of the transactions contemplated hereby violates or shall violate any provision of any agreement or document to which Copelands is a party or to which Copelands is bound. No consent from any third party is required before the Palm Development Site may be purchased by Copelands. d) Copelands is not bankrupt or insolvent under any applicable Federal or state standard. Copelands has not filed for protection or relief under any applicable bankruptcy or creditor protection statute. Copelands has not been threatened by creditors with an involuntary application of any applicable bankruptcy or creditor protection statute. Copelands is not entering into the transactions described in this Agreement with an intent to defraud any creditor or to prefer the rights of one creditor over any other. City and Copelands have negotiated this Agreement at arms-length and the consideration to be paid represents fair value for the assets to be transferred. All representations and warranties of Cope lands in this Agreement are made as of the date of this Agreement and as of the Closing, and shall survive the Closing and the recordation of the Grant Deed. It shall be a material default if Copelands is unable to make such representations and warranties truthfully as of the Closing Date. ARTICLE XI -MISCELLANEOUS Section 11.01 Noti.ce . All notices, demands or other communications of any type (collectively "Notices") given by City to Copelands or by Copelands to City, whether required by this Agreement or in any way related to this transaction, shall be sufficient if in writing and delivered by hand or Federal Express or similar courier service to the person to whom the Notice is directed or mailed by United States Mail, as a Registered or Certified item, Return Receipt Requested, at or to the addresses specified in this section. Notices delivered by mail shall be deposited in a Post Office or other depository under the care or custody of the United States Postal Service, enclosed in a wrapper with proper postage affixed, addressed as follows: 12152011 Palm Dev Site Final.docx 16 City: With copies to: Copelands: With Copies to: City of San Luis Obispo 990 Palm Street San Luis Obispo, California 93401 Attention: City Manager City Attorney 990 Palm Street San Luis Obispo, California 93401 Thomas M. Copeland, Manager SLO Chinatown, LLC Post Office Box 12260 San Luis Obispo, California 93406 Suzanne Fryer Cope lands' Properties 1026 Chorro Street, Suite 200 Post Office Box 12260 San Luis Obispo, California 93406 Section 11.02 Governing Law; Plurality; and Gender. This Agreement shall be construed and interpreted in accordance with the laws of the State of California. Where required for proper interpretation, words in the singular shall include the plural; the masculine gender shall include the neuter and the feminine, and vice versa. Section 11.03 Amendment. This Agreement may not be modified or amended, except by an agreement in writing signed by the parties to this Agreement. The parties may waive any of the conditions contained in this Agreement or any of the obligations of the other party under this Agreement, but any such waiver shall be effective only if in writing and signed by the party waiving such conditions or obligations. Section 11.04 Authori z ation. The person executing this Agreement on behalf of Copelands hereby warrants and represents to City that all necessary legal prerequisites to that party's execution of this Agreement have been satisfied and that he or she is fully authorized to do so and to bind the party of whose behalf he or she signs. The person executing this Agreement on behalf of City claims to do so to the extent the authority to do so has been duly delegated to that person by the City Council of the City in accordance with applicable law. Section 11.05 Time of Essence. Time is of the essence in this Agreement. Section 11.06 Attorney Fee . for Transaction and for Disputes. Copelands shall pay all of the City's outside counsel's fees and costs incurred in connection with the documentation and negotiation of this Agreement as of the date of the execution of this Agreement upon the City's execution and delivery of this Agreement to Copelands, and all of City's other outside counsel fees at Closing. If it becomes necessary for either party to file a suit to enforce this Agreement 12152011 Palm Dev Site Final.docx 17 or any provisions contained in this Agreement, or to seek damages for a breach, the prevailing party shall be entitled to recover, in addition to all other remedies or damages, reasonable attorneys' fees incurred in such suit. Section 11.07 Consent to Jurisdiction. City and Copelands agree that any suit, action or other legal proceeding arising out of or in connection with this Agreement may be brought, and shall be brought only, in a superior or municipal court of the County of San Luis Obispo, State of California and hereby consent to the jurisdiction of any such court in any such suit, action or proceedings. City and Copelands hereby waive any objection which such party may have to the laying of any such suit, action or proceeding in any such court. Section 11.08 Ca tion . The description headings of the several Articles, Sections and Paragraphs contained in this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Agreement. Section 11.09 Entire Agreement. Except for the agreements also described in this Agreement, this Agreement, including the Exhibits attached to this Agreement, constitutes the entire agreement among the parties pertaining to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements and understandings of the parties in connection therewith, including but not limited to that certain Option to Purchase Real Property, dated as of November 5, 2003, Modification to Option to Purchase Real Property, dated as of April 3, 2008, Second Modification to Option to Purchase Real Property, dated as of July 1, 2008 and Third Modification to Option to Purchase Real Property, dated as of July 1, 2011. No representation, warranty, covenant, agreement or condition not expressed in this Agreement shall be binding upon the parties to this Agreement or shall affect or be effective to interpret, change or restrict the provisions of this Agreement. Section 11.10 Counter art . A counterpart of this Agreement with separate but fully executed signature pages attached thereto shall have the full force and effect of an original executed instrument. Section 11.11 uccessor and Assigns. This Agreement shall not be assignable by either party, and nothing contained herein shall inure to the benefit of other parties. Until completion of construction of the Project, the Copelands shall not make or create any sale, assignment, hypothecation or other transfer of ownership with respect to this Agreement or the Palm Development Site or the control of its uses, either voluntarily or by operation of law, without the prior approval of the City, which may be granted or denied in the City's sole discretion. Any such transfer made in contravention of this Agreement shall be void. Notwithstanding the foregoing, the following transfers shall be permitted: (a) After the Closing, a hypothecation creating a security interest encumbering the fee interest in the Palm Development Site a construction loan to complete the Project; (b) Any transfer directly resulting from the foreclosure of a security interest or 12152011 Palm Dev Site Final.docx 18 the granting of a deed in lieu of foreclosure of a security interest permitted under the preceding paragraph; and ( c) Any transfer to an entity which is 100% owned by the Copelands, or if not 100% owned, the majority of the beneficial interests in such entity is owned by the Copelands and the entity is controlled by the Copelands, and the Copel ands deliver to the City satisfactory evidence of such ownership and control. ection I l . J 2 Tax Re ortin . E crow ompany is designated the "rea I e tat reporting person" for purpose · of Section 6045 of the Intern a l R evenue Code of 1986, as ame nd ed and Treasury Regulations Section J .6045 4 , and any in struction or settlement statement pre pared by Escrow Company shall o provide. Escrow Company shall be re spon ible for filing Form 1099 S with th e lntemal Revenue Service. Section 11.13 Force Maj eure. Neither Party shall be liable for any failure or delay in its perfonnance under this Agreement (other than for delay in the payment of money due and payable hereunder) if and to the extent said failures or delays are caused by causes beyond that Party's control that occur wiU10ut its fault or negligence, including without limitation, fire, expl sion, flood, severe weather, accident, strike, govermnental act, embargo, shortages of labor, materials or fuel, failure by, or inability of, contractors or other third parties to perform, computer system failure, war or military action, riot, or civil disturbance; provided that, as a condition to its claim of nonliability, the Party experiencing the difficulty shall give the other Party written notice of any such failure or delay promptly and in any event not later than five (5) business days after such failure or delay begins and such notice shall de cribe in detail the reason for such failure or delay. Further, such Party experiencing the difficulty shall use all commercially reasonable efforts to correct the failure or delay as quickly as possible under the circumstances. Dates by which performance obligations are scheduled to be met will be extended for a period of time equal to the time lost due to any delay so caused. ARTICLE XII -EXHIBITS All Exhibits shall be approved by each party, which approval shall be evidenced by such party's initials on each Exhibit hereto. Exhibit A Legal Description of 861/863 Palm Parcels Exhibit B Legal Description of Palm Real Property Exhibit C-1 Preliminary Title Report for 861/863 Palm Exhibit C-2 Preliminary Title Report for Palm Real Property Exhibit D Form of Grant Deed 12152011 Palm Dev Site Final.docx 19 Exhibit E Exhibit F 12152011 Palm Dev Site Final.docx 955 Morro Lease Form of Certificate of Completion [Signature page follows] 20 This Agreement is executed by the parties as of the date first written above . SLO CHINATOWN, LLC, a California limited liability company By /4,,,~=~ ~L Thomas M. Copf 1;:{l Its: Manager CITY OF SAN LUIS OBISPO, a municipal corporation and Charter City By:~~~ yor Attest: Approved as to Form: 12152011 Palm Dev Site Final.docx 21 4. The land referred to in this Commitment is situated in the City of San Luis Obispo, County of San Luis Obispo, State of California, and is described as follows: ALL THAT PART OF BLOCK 14 OF THE CITY OF SAN LUIS OBISPO, IN THE COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED MAY 1, 1878 IN BOOK A, PAGE 168 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF SAID BLOCK, DISTANT THEREON NORTH 53°38' EAST, 143.33 FEET FROM THE MOST WESTERLY CORNER OF SAID BLOCK, SAID POINT BEING THE MOST NORTHERLY CORNER OF THE PROPERTY CONVEYED TO FERDINANDO CHIESA BY DEED DATED JULY 1, 1912 IN BOOK 93, PAGE 136 OF DEEDS; THENCE SOUTH 36°22' EAST, 70.25 FEET TO THE MOST WESTERLY CORNER OF THE PROPERTY CONVEYED TO SERAFINO J. MARTINELLI AND CARMEL MARTINELLI BY DEED DATED FEBRUARY 8, 1966 AND RECORDED APRIL 1, 1966 IN BOOK 1391, PAGE 479 OF OFFICIAL RECORDS; THENCE SOUTH 81°22' EAST, 8.13 FEET TO A POINT; THENCE NORTH 53°38' EAST, 36.75 FEET TO A POINT; THENCE NORTH 8°38' EAST, 8.13 FEET TO A POINT; THENCE NORTH 36°22' WEST, 70.25 FEET TO THE SOUTHERLY LINE OF PALM STREET; THENCE ALONG THE SOUTHERLY LINE OF PALM STREET SOUTH 53°38' WEST, 48.25 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION THEREOF INCLUDED WITHIN THE PRESENT LINES OF PALM STREET. APN: 002-416-031 Exhibit A to Palm Development Agreement Exhibit B to AGREEMENT OF PURCHASE AND SALE Palm Development Site Legal Description of Palm Development Site [to be attached by the Parties before Closing] Form No. 1068-2 Commitn \No.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 1 First American Title Insurance Company National Commercial Services November 04, 2011 Copelands' Properties PO Box 12260 San Luis Obispo, CA 93406 Phone: (805)593-0200 Fax: (805)593-0109 Customer Reference: Order Number: Escrow Officer: Phone: Email: Property: 1850 Mt. Diablo Blvd., Suite 300 Walnut Creek, CA 94596 861 & 863 Palm Street NCS-512995-CC Pamela Nicolini (925)927-2173 pnicolini@firstam.com 861 arid 863 Palm Street, San Luis Obispo, CA Attached please find the following item(s): Commitment Thank You for your confidence and support. We at First American Title Insurance Company maintain the fundamental principle: Page 1 Customer First! Rrst American Title Insurance Company Exhibit C-1 to Palm Development Agreement ( Form No. 1068-2 Commitn 'No.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 2 First American Title INFORMATION The Title Insurance Commitment is a legal contract between you and the company. It is issued to show the basis on which we will issue a Title Insurance Policy to you. The Policy will insure you against certain risks to the land title, subject to the limitations shown in the policy. The Company will give you a sample of the Policy form, if you ask. The Commitment is based on the land title as of the Commitment Date. Any changes in the land title or the transaction may affect the Commitment and the Policy. The Commitment is subject to its Requirements, Exceptions and Conditions. This information is not part of the title insurance commitment. TABLE OF CONTENTS Agreement to Issue Policy Schedule A 1. 2. 3. 4. Commitment Date Policies to be Issued, Amounts and Proposed Insured Interest in the Land and Owner Description of the Land Schedule B-1 -Requirements Schedule B-2 -Exceptions Conditions Page 2 YOU SHOULD READ THE COMMITMENT VERY CAREFULLY. If you have any questions about the Commitment, please contact the issuing office. Exhibit C-1 to Palm Development Agreement Page 3 4 4 4 4 Form No. 1068-2 Commitn No.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 3 COMMITMENT FOR TITLE INSURANCE Issued by First American Title Agreement to Issue Policy We agree to issue a policy to you according to the terms of this Commitment. When we show the policy amount and your name as the proposed insured in Schedule A, this Commitment becomes effective as of the Commitment Date shown in Schedule A. If the Requirements shown in this Commitment have not been met within six months after the Commitment Date, our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy. Our obligation under this Commitment is limited by the following: The Provisions in Schedule A. The Requirements in Schedule B-1. The Exceptions in Schedule B-2. The Conditions. This Commitment is not valid without Schedule A and Sections 1 and 2 of Schedule B. Page 3 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitn. . No.: NCS-512995-CC Page Number: 4 ALTA Plain Language Commitment SCHEDULE A 1. Commitment Date: October 20, 2011 at 7:30 A.M. 2. Policy or Policies to be issued: Amount (A) ALTA Standard Owner Policy -2006 $To Be Determined Proposed Insured: City of San Luis Obispo (B) ALTA Extended Loan Policy -2006 $To Be Determined Proposed Insured: To Be Determined 3. (A) The estate or interest in the land described in this Commitment is: Fee (B) Title to said estate or interest at the date hereof is vested in: CP MISSION, LLC, A CALIFORNIA LIMITED LIABILilY COMPANY 4. The land referred to in this Commitment is situated in the City of San Luis Obispo, County of San Luis Obispo, State of california, and is described as follows: Page 4 ALL THAT PART OF BLOCK 14 OF THE CilY OF SAN LUIS OBISPO, IN THE COUNlY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED MAY 1, 1878 IN BOOK A, PAGE 168 OF MAPS, IN THE OFFICE OF THE COUNlY RECORDER OF SAID COUNlY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF SAID BLOCK, DISTANT THEREON NORTH 53°38' EAST, 143.33 FEET FROM THE MOST WESTERLY CORNER OF SAID BLOCK, SAID POINT BEING THE MOST NORTHERLY CORNER OF THE PROPERlY CONVEYED TO FERDINANDO CHIESA BY DEED DATED JULY 1, 1912 IN BOOK 93, PAGE 136 OF DEEDS; THENCE SOUTH 36°22' EAST, 70.25 FEET TO THE MOST WESTERLY CORNER OF THE PROPERlY CONVEYED TO SERAFINO J. MARTINELLI AND CARMEL MARTINELLI BY DEED DATED FEBRUARY 8, 1966 AND RECORDED APRIL 1, 1966 IN BOOK 1391, PAGE 479 OF OFFICIAL RECORDS; THENCE SOUTH 81°22' EAST, 8.13 FEET TO A POINT; THENCE NORTH 53°38' EAST, 36.75 FEET TO A POINT; THENCE NORTH 8°38' EAST, 8.13 FEET TO A POINT; THENCE NORTH 36°22' WEST, 70.25 FEET TO THE SOUTHERLY LINE OF PALM STREET; THENCE ALONG THE SOUTHERLY LINE OF PALM STREET SOUTH 53°38' WEST, 48.25 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION THEREOF INCLUDED WITHIN THE PRESENT LINES OF PALM STREET. Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitr. No.: NCS-512995-CC ALTA Plain Language Commitment Page Number : 5 APN: 002-416-031 Page 5 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitr, . No.: NCS-512995-CC ALTA Plain Language Commitment The following requirements must be met: SCHEDULE B SECTION ONE REQUIREMENTS Page Number: 6 (A) Pay the agreed amounts for the interest in the land and/or the mortgage to be insured . (B) Pay us the premiums, fees and charges for the policy. (C) Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured must be signed, delivered and recorded. (D) You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions. (E) Releases(s) or Reconveyance(s) of Item(s): None (F) Other: None (G) You must give us the following information: 1. Any off record leases, surveys, etc. 2. Statement(s) of Identity, all parties. 3. Other: None The following additional requirements, as indicated by "X", must be met: [X] (H) Provide information regarding any off-record matters, which may include, but are not limited to: leases, recent works of improvement, or commitment statements in effect under the Environmental Responsibility Acceptance Act, Civil Code Section 850, et seq . The Company's Owner's Affidavit form( as provided by company) must be completed and submitted prior to close in order to satisfy this requirement. This Commitment will then be subject to such further exceptions and/or requirements as may be deemed necessary. [] (I) An ALTA/ACSM survey of recent date, which complies with the current minimum standard detail requirements for ALTA/ACSM land title surveys, must be submitted to the Company for review. This Commitment will then be subject to such further exceptions and/or requirements as may be deemed necessary. [X] (J) The following LLC documentation is required: (i) a copy of the Articles of Organization (ii) a copy of the Operating Agreement, if applicable (iii) a Certificate of Good Standing and/or other evidence of current Authority to Conduct Business within the State (iv) express Company Consent to the current transaction Page 6 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitri No.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 7 [] (K) The following partnership documentation is required : (i) a copy of the partnership agreement, including all applicable amendments thereto (ii) a Certificate of Good Standing and/or other evidence of current Authority to Conduct Business within the State (iii) express Partnership Consent to the current transaction [] (L) The following corporation documentation is required: (i) a copy of the Articles of Incorporation (ii) a copy of the Bylaws, including all applicable Amendments thereto (iii) a Certificate of Good Standing and/or other evidence of current Authority to Conduct Business within the State (iv) express Corporate Resolution consenting to the current transaction [X] (M) Based upon the Company's review of that certain partnership/operating agreement dated not disclosed for the proposed insured herein, the following requirements must be met: Any further amendments to said agreement must be submitted to the Company, together with an affidavit from one of the general partners or members stating that it is a true copy, that said partnership or limited liability company is in full force and effect, and that there have been no further amendments to the agreement. This Commitment will then be subject to such further requirements as may be deemed necessary. [] (N) A copy of the complete lease, as referenced in Schedule A, #3 herein, together with any amendments and/or assignments thereto, must be submitted to the Company for review, along with an affidavit executed by the present lessee stating that it is a true copy, that the lease is in full force and effect, and that there have been no further amendments to the lease. This Commitment will then be subject to such further requirements as may be deemed necessary. [X] (0) Approval from the Company's Underwriting Department must be obtained for issuance of the policy contemplated herein and any endorsements requested thereunder. This Commitment will then be subject to such further requirements as may be required to obtain such approval. [] (P) Potential additional requirements, if ALTA Extended coverage is contemplated hereunder, and work on the land has commenced prior to close, some or all of the following requirements, and any other requirements which may be deemed necessary, may need to be met: [] (Q) The Company's "Mechanic's Lien Risk Addendum" form must be completed by a Company employee, based upon information furnished by the appropriate parties involved. [] (R) The Company's "Indemnity Agreement I" must be executed by the appropriate parties. [] (S) Financial statements from the appropriate parties must be submitted to the Company for review. [] (T) A copy of the construction contract must be submitted to the Company for review. [] (U) An inspection of the land must be performed by the Company for verification of the phase of construction. Page 7 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitr, , No.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 8 SCHEDULE B SECTION TWO EXCEPTIONS Any policy we issue will have the following exceptions unless they are taken care of to our satisfaction. The printed exceptions and exclusions from the coverage of the policy or policies are set forth in Exhibit A attached. Copies of the policy forms should be read. They are available from the office which issued this Commitment. 1. General and special taxes and assessments for the fiscal year 2011-2012. First Installment: $ 3,761.25, DUE Penalty: $ 0.00 Second Installment: $ 3,761.25, PAYABLE Penalty: $ 0.00 Tax Rate Area: 003-008 A. P. No.: 002-416-031 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. The terms and provisions contained in the document entitled "SEISMIC RETROFIT AGREEMENT'' recorded JUNE 29, 2010 as INSTRUMENT NO. 2010029993 OF OFFICIAL RECORDS. 4. Rights of parties in possession. Page 8 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitr, No.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 9 INFORMATIONAL NOTES 1. According to the latest available equalized assessment roll in the office of the county tax assessor, there is located on the land a(n) COMMERCIAL STRUCTURES known as 861 AND 863 PALM STREET, SAN LUIS OBISPO, CA. 2. According to the public records, there has been no conveyance of the land within a period of twenty-four months prior to the date of this report, except as follows: None 3. This preliminary report/commitment was prepared based upon an application for a policy of title insurance that identified land by street address or assessor's parcel number only. It is the responsibility of the applicant to determine whether the land referred to herein is in fact the land that is to be described in the policy or policies to be issued. The map attached, if any, may or may not be a survey of the land depicted hereon. First American 1itle Insurance Company expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. *****To obtain wire instructions for deposit of funds to your escrow file please contact your Escrow Officer.***** Page 9 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitm, ,~o.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 10 CONDITIONS 1.. DEFINITIONS (a)"Mortgage" means mortgage, deed of trust or other security instrument. (b)"Public Records" means title records that give constructive notice of matters affecting the title according to the state law where the land is located. 2. LATER DEFECTS The Exceptions in Schedule B -Section Two may be amended to show any defects, liens or encumbrances that appear for the first time in the public records or are created or attached between the Commitment Date and the date on which all of the Requirements (a) and (c) of Schedule B -Section One are met. We shall have no liability to you because of this amendment. 3. EXISTING DEFECTS If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances, we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing. 4. LIMITATION OF OUR LIABILITY Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an error in this Commitment, our liability will be limited to your actual loss caused by your relying on this Commitment when you acted in good faith to: comply with the Requirements shown in Schedule B -Section One or eliminate with our written consent any Exceptions shown in Schedule B -Section Two. We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you. 5. CLAIMS MUST BE BASED ON THIS COMMITMENT Any claim, whether or not based on negligence, which you may have against us concerning the title to the land must be based on this commitment and is subject to its terms. Page 10 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 ALTA Plain Language Commitment ... ....... I ~ First American Title . @/'f Privacy Information We Are Committed to Safeguarding Customer Information Commitm._ ,fo .: NCS-512995-CC Page Number : 11 In order to better serve your needs now and In the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such Information -particularly any personal or financial Information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our subsidiaries we have adopted this Privacy Polley to govern the use and handling of your personal lnfonmation. Applicability This Privacy Policy governs our use of the Information that you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines its Fair Information Values. Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: • Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means; • Information about your transactions with us, our affiliated companies, or others; and • Information we receive from a consumer reporting agency. Use of Information We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party. Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law. We may, however, store such Information indefinitely, including the period after which any customer relationship has ceased. Such information may be used for any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies and escrow companies. Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies or to other financial institutions with whom we or our affiliated companies have joint marketing agreements. former Customers Even if you are no longer our customer, our Privacy Polley will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your Information. We restrict access to nonpublic personal information about you to those individuals and entitles who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values. We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal Information. Information Obtained Through Our Web Site First American Financial Corporation is sensitive to privacy issues on the Internet. We believe It is Important you know how we treat the information about you we receive on the Internet. In general, you can visit First American or Its affiliates' Web sites on the World Wide Web without telling us who you are or revealing any Information about yourself. Our Web servers collect the domain names, not the e-mail addresses, of visitors. This information is aggregated to measure the number of visits, average time spent on the site, pages viewed and similar information. First American uses this information to measure the use of our site and to develop ideas to improve the content of our site. There are times, however, when we may need information from you, such as your name and email address. When information is needed, we will use our best efforts to let you know at the time of collection how we will use the personal information. Usually, the personal information we collect Is used only by us to respond to your Inquiry, process an order or allow you to access specific account/profile information. If you choose to share any personal infonmation with us, we will only use it in accordance with the policies outlined above. Business Relationships First American Financial Corporation's site and its affiliates' sites may contain links to other Web sites. While we try to link only to sites that share our high standards and respect for privacy, we are not responsible for the content or the privacy practices employed by other sites. Cookies Some of First American's Web sites may make use of "cookie" technology to measure site activity and to customize information to your personal tastes. A cookie is an element of data that a Web site can send to your browser, which may then store the cookie on your hard drive. fla;tAtn . .:om uses stored cookies. The goal of this technology is to better serve you when visiting our site, save you time when you are here and to provide you with a more meaningful and productive Web site experience. Fair Information Values Fairness We consider consumer expectations about their privacy in all our businesses. We only offer products and services that assure a favorable balance betWeen consumer benefits and consumer privacy. Public Record We believe that an open public record creates significant value for society, enhances consumer choice and creates consumer opportunity. We actively support an open public record and emphasize its Importance and contribution to our economy. Use We believe we should behave responsibly when we use information about a consumer in our business. We will obey the laws governing the collection, use and dissemination of data. Accuracy We will take reasonable steps to help assure the accuracy of the data we collect, use and disseminate. Where possible, we will take reasonable steps to correct inaccurate information. When, as with the public record, we cannot correct Inaccurate information, we will take all reasonable steps to assist consumers in identifying the source of the erroneous data so that the consumer can secure the required corrections. Education We endeavor to educate the users of our products and services, our employees and others in our industry about the importance of consumer privacy. We will instruct our employees on our fair Information values and on the responsible collection and use of data. We will encourage others in our industry to collect and use information In a responsible manner. Security We will maintain appropriate facilities and systems to protect against unauthorized access to and corruption of the data we maintain. Form SO-PRIVACY (8/1/09) Page 1of1 Privacy Information (2001-2010 First American Financial Corporation) Page 11 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitm, .~o.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 12 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE} 1. CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY-1990 SCHEDULE B EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; ( c) resulting in no loss or damage to the insured claimant; ( d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained ifthe insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable "doing business" laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by their policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. 2. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B -1970 SCHEDULE OF EXCLUSIONS FROM COVERAGE I. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions of area of the land, or the effect of any violation of any such law, ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 3. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B -1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 2 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B Page 12 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitm , .4o.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 13 This policy does not insure against loss or damage by reason of the matters shown in parts one and two following : Part One I. 2 . 3. D 0 0 Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records . Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. Easements, claims of easement or encumbrances which are not shown by the public records. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. Any lien, or right to a lien , for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records . 4. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1970 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE SCHEDULE OF EXCLUSIONS FROM COVERAGE I . Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions or area of the land, or the effect of any violation of any such law ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant, (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy or acquired the insured mortgage and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder, ( c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent insurance is afforded herein as to any statutory lien for labor or material or to the extent insurance is afforded herein as to assessments for street improvements under construction or completed at Date of Policy). O Unenforceability of the lien of the insured mortgage because of failure of the insured at Date of Policy or of any subsequent owner of the indebtedness to comply with applicable "doing business" laws of the state in which the land is situated. 5. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association Lenders Policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy, the exclusions set forth in paragraph 4 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One l. 2 . 3. 0 0 0 Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. Easements, claims of easement or encumbrances which are not shown by the public records. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. Un patented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 6. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1992 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1 (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy; (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. Page 13 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitm~ .~o.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 14 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; ( c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent that this policy insures the priority of the lien of the insured mortgage over any statutory lien for services, labor or material or the extent insurance is afforded herein as to assessments for street improvements under construction or completed at date of policy); or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage. D Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable "doing business" laws of the state in which the land is situated. o Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. o Any statutory lien for services, labor or materials (or the claim of priority of any statutory lien for services, labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which is contracted for and commenced subsequent to Date of Policy and is not financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance. D Any claim, which arises out of the transaction creating the interest of the mortgagee insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine of equitable subordination; or (iii) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 7. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 6 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 8. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -1992 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of th is policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: I. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; ( c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or Page 14 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitrr, No.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 15 (e) resulting in loss or damage which would not have been sustained ifthe insured claimant had paid value for the estate or interest insured by this policy. D Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the estate or interest insured by this policy being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the transaction creating the estate or interest insured by this policy being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 9. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 8 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: Part One: I. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real 2. 3. D D D property or by the public records. Any facts, rights, interests, or claims which are ·not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. Easements, claims of easement or encumbrances which are not shown by the public records. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 10. AMERICAN LAND TITLE ASSOCIATION RESIDENTIAL TITLE INSURANCE POLICY -1987 EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning: * land use * land division * improvements on the land * environmental protection This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. This exclusion does not limit the zoning coverage described in items 12 and 13 of Covered Title Risks. 2. The right to take the land by condemning it, unless: * a notice of exercising the right appears in the public records on the Policy Date *the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking. 3. Title Risks: *that are created, allowed, or agreed to by you * that are known to you, but not to us, on the Policy Date -unless they appeared in the public records * that result in no loss to you * that first affect your title after the Policy Date -this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks 4. Failure to pay value for your title. 5. Lack of a right: * to any land outside the area specifically described and referred to in Item 3 of Schedule A, or * in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks. 11. EAGLE PROTECTION OWNER'S POLICY CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE -1998 ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE -1998 Covered Risks 14 (Subdivision Law Violation). 15 (Building Permit). 16 (Zoning) and 18 (Encroachment of boundary walls or fences) are subject to Deductible Amounts and Maximum Dollar Limits of Liability EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from : Page 15 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 CommitmL .Jo.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 16 1. Governmental police power, and the existence or violation of any law or government regulation. This includes ordinances, laws and regulations concerning: a. building b. zoning c. land use d. improvements on the land e. land division f. environmental protection This exclusion does not apply to violations or the enforcement of these matters if notice of the violation or enforcement appears in the Public Records at the Policy Date. This exclusion does not limit the coverage described in Covered Risk 14, 15, 16, 17 or 24. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not apply to violations of building codes if notice of the violation appears in the Public Records at the Policy Date. 3. The right to take the Land by condemning it, unless: a. a notice of exercising the right appears in the Public Records at the Policy Date; or b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking. 4. Risks: a. that are created, allowed, or agreed to by You, whether or not they appear in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they appear in the Public Records at the Policy Date; c. that result in no loss to You; or d. that first occur after the Policy Date -this does not limit the coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25. 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 18. 12. THIRD GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (1/01/08) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or(iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion l(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b)Any governmental police power. This Exclusion l(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; ( c) resulting in no loss or damage to the "Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or (e) resulting in loss or damage which would not have been sustained ifthe Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury, or any consumer credit protection or truth-in-lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26. 6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25. 8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6. 13. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -2006 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to Page 16 (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; Exhibit C-1 to Palm Development Agreement Form No. 1068-2 Commitrr, 1\10.: NCS-512995-CC ALTA Plain Language Commitment Page Number: 17 or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion l(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion l(b) does not modify or limit the coverage provided under Covered Risk 6. 2 . Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; ( c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing- business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-lending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. 7 . Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk ll(b). 14. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -2006 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 13 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land . 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions In patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 15. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -2006 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to Page 17 (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection;or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion l(a) does not modify or limit the coverage provided under Covered Risk 5. Exhibit C-1 to Palm Development Agreement Form No. 1068-2 ALTA Plain Language Commitment Commitm, .fo.: NCS-512995-CC Page Number: 18 (b) Any governmental police power . This Exclusion l(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; ( c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risks 9 and 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer; or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. 16. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -2006 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 15 above are used and the following exceptions to coverage appear in the policy . SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records . 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records . Page 18 Exhibit C-1 to Palm Development Agreement Form No. 1068-2 ALTA Plain Language Commitment Commitrr, No.: NCS-512999-CC Page Number: 1 November 21, 2011 Amended First American Title Insurance Company National Commercial Services Copelands' Properties PO Box 12260 San Luis Obispo, CA 93406 Phone: (805)593-0200 Fax: (805)593-0109 Customer Reference: Order Number: Escrow Officer: Phone: Email: Property: 1850 Mt. Diablo Blvd., Suite 300 Walnut Creek, CA 94596 Palm/ Monterey/ Morro/ Chorro St. NCS-512999-CC Pamela Nicolini (925)927-2173 pnicol ini@fi rstam .com 877 Palm Street, 955 Morro Street, San Luis Obispo, CA Attached please find the following item(s): Commitment Thank You for your confidence and support. We at First American Title Insurance Company maintain the fundamental principle: Customer First! Arst American Title Insurance Company Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitm, .~o.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 2 First American Title INFORMATION The 1itle Insurance Commitment is a legal contract between you and the company. It is issued to show the basis on which we will issue a Title Insurance Policy to you. The Policy will insure you against certain risks to the land title, subject to the limitations shown in the policy. The Company will give you a sample of the Policy form, if you ask. The Commitment is based on the land title as of the Commitment Date. Any changes in the land title or the transaction may affect the Commitment and the Policy. The Commitment is subject to its Requirements, Exceptions and Conditions. This information is not part of the title insurance commitment. TABLE OF CONTENTS Agreement to Issue Policy Schedule A 1. 2. 3 . 4. Commitment Date Policies to be Issued, Amounts and Proposed Insured Interest in the Land and Owner Description of the Land Schedule 8-1 -Requirements Schedule 8-2 -Exceptions Conditions 2 YOU SHOULD READ THE COMMITMENT VERY CAREFULLY. If you have any questions about the Commitment, please contact the issuing office. Exhibit C-2 to Palm Development Agreement Page 3 4 4 4 4 Form No. 1068-2 Commitr. .1No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 3 COMMITMENT FOR TITLE INSURANCE Issued by Arst American Title Agreement to Issue Policy We agree to issue a policy to you according to the terms of this Commitment. When we show the policy amount and your name as the proposed insured in Schedule A, this Commitment becomes effective as of the Commitment Date shown in Schedule A. If the Requirements shown in this Commitment have not been met within six months after the Commitment Date, our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy. Our obligation under this Commitment is limited by the following : The Provisions in Schedule A. The Requirements in Schedule B-1. The Exceptions in Schedule B-2. The Conditions. This Commitment is not valid without Schedule A and Sections 1 and 2 of Schedule B. 3 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitn . _ 1No.: NCS-512999-CC Page Number: 4 ALTA Plain Language Commitment SCHEDULE A 1. Commitment Date: November 02, 2011 at 7:30 A.M. 2. Policy or Policies to be issued: Amount (A) ALTA Owner's Policy $TBD ALTA Standard Owner Policy -2006 Proposed Insured: Copelands' Properties (B) ALTA Loan Policy $TBD ALTA Extended Loan Policy -2006 Proposed Insured: To be determined 3. (A) The estate or interest in the land described in this Commitment is: Fee Simple (B) Title to said estate or interest at the date hereof is vested in: City of San Luis Obispo, a municipal corporation, as to Parcels 1, 2, 3 and 6; and City of San Luis Obispo, a municipal corporation of California, as to Parcels 4 and 5 4. The land referred to in this Commitment is situated in the City of San Luis Obispo, County of San Luis Obispo, State of California, and is described as follows: 4 PARCEL 1: THAT PORTION OF BLOCK 14 OF THE MAP OF THE TOWN OF SAN LUIS OBISPO, IN THE CITY OF SAN LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP FILED FOR RECORD MAY 1, 1878, IN BOOK A, PAGE 168, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF MONTEREY STREET, IN SAID CITY, DISTANT THEREON, NORTH 54° 06' EAST, 109.31 FEET FROM THE NORTHEASTERLY CORNER OF CHORRO AND MONTEREY STREET, THENCE NORTH 35° 54' WEST, 80.00 FEET TO A POINT; THENCE NORTH 54° 06' EAST 12.67 FEET TO A POINT; THENCE NORTH 35° 54' WEST, 34.17 FEET TO A POINT; THENCE NORTH 33° 02' WEST, 148.54 FEET TO A POINT; THENCE NORTH 36° 22' WEST, 86.50 FEET TO A POINT ON THE SOUTHERLY LINE OF PALM STREET AS SHOWN ON SAID MAP; THENCE ALONG SAID SOUTHERLY LINE NORTH 53° 38' EAST, 12.00 FEET TO A POINT; THENCE SOUTH 36° 22' EAST, 70.25 FEET TO A POINT; THENCE SOUTH 81° 22' EAST, 8.13 FEET TO A POINT; THENCE NORTH 53° 38' EAST 36. 75 FEET TO A POINT; THENCE NORTH 8° 38' EAST, 8.13 FEET TO A POINT; THENCE NORTH 36° 22' WEST, 12. 75 FEET TO A POINT; THENCE NORTH 50° 13' EAST, 38.16 FEET TO A POINT; THENCE SOUTH 35° 54' EAST, 148.56 FEET TO A POINT; THENCE SOUTH 54° 06' WEST, 45.75 FEET TO A POINT; THENCE SOUTH 35° 54' EAST, 146.00 FEET TO A POINT ON THE NORTHERLY LINE OF SAID MONTEREY STREET, THENCE ALONG SAID LINE SOUTH 54° 06' WEST, 72.44 FEET TO THE POINT OF BEGINNING. Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commit1. • No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 5 EXCEPTING THEREFROM THAT PORTION THEREOF INCLUDED WITHIN THE PRESENT LINE OF MONTEREY STREET. 5 APN: A PORTION OF 002-416-029 PARCEL 2: THAT PORTION OF BLOCK 14 OF THE MAP OF THE TOWN OF SAN LUIS OBISPO, IN THE CITY OF SAN LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP FILED FOR RECORD MAY 1, 1878, IN BOOK A, PAGE 168, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF MONTEREY STREET, IN SAID CITY, DISTANT NORTH 54° 6' EAST, 227 FEET 6 INCHES FROM THE NORTHEASTERLY CORNER OF CHORRO AND MONTEREY STREETS; THENCE RUNNING NORTH 54°6' EAST ALONG SAID NORTHERLY LINE OF MONTEREY STREET, 52 FEET AND 6 INCHES TO THE SOUTHWESTERLY CORNER OF THE LOT FORMERLY OWNED BY MRS. N. E. CALL; THENCE NORTH 33° 22' WEST ALONG THE WESTERLY LINE OF SAID LOT OF MRS. N. E. CALL, 351 FEET TO THE SOUTHERLY LINE OF PALM STREET; THENCE SOUTH 53° 38' WEST ALONG SAID SOUTHERLY LINE OF PALM STREET, 107 FEET TO THE NORTHWESTERLY CORNER OF THE LOT FORMERLY OWNED BY B. BRIZZOLARA; THENCE SOUTH 36° 22' EAST ALONG THE WESTERLY LINE OF SAID BRIZZOLARA LOT, 56.36 FEET TO A POINT; THENCE NORTH 53° 38' EAST AND PARALLEL WITH THE SOUTHERLY LINE OF PALM STREET, 38.08 FEET TO THE EASTERLY LINE OF A LOT CONVEYED BY NATHAN AND ISSAC GOLDTREE TO W. J. OAKS, BY DEED DATED AUGUST 21, 1882 AND RECORDED IN BOOK 0, PAGE 431 OF DEEDS AND FOLLOWING; THENCE SOUTH 35° 54' EAST ALONG THE EASTERLY LINE OF SAID OAKS LOT, 296 FEET TO THE NORTHERLY LINE OF MONTEREY STREET AND THE POINT OF BEGINNING. EXCEPTING THEREFROM ALL THAT PORTION THEREOF INCLUDED WITHIN THE PRESENT LINES OF MONTEREY STREET. APN: A PORTION OF 002-416-029 PARCEL 3: THAT PORTION OF LOTS 2 AND 3 OF THE MAP OF THE SUBDIVISION OF PART OF BLOCKS 14 & 18, IN THE CITY OF SAN LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED IN BOOK 1, PAGE 43 OF RECORD OF SURVEYS, DESCRIBED AS A WHOLE AS FOLLOWS: BEGINNING AT THE MOST NORTHERLY CORNER OF LOT 1 OF SAID BLOCK; THENCE SOUTH 53° 38' WEST ALONG THE NORTHWESTERLY LINE OF LOTS 1 AND 2, 89.65 FEET TO THE TRUE POINT OF BEGINNING; WHICH POINT BEARS NORTH 53° 38' EAST, 0.35 FEET FROM THE MOST WESTERLY CORNER OF SAID LOT 2; THENCE SOUTH 33° 23' 50" EAST, 100.1 FEET TO A POINT IN THE SOUTHEASTERLY LINE OF SAID LOT 3, SAID POINT BEING NORTH 53° 38' EAST, 0.56 FEET FROM THE MOST SOUTHERLY CORNER OF SAID LOT 3; THENCE SOUTH 53° 38' WEST ALONG THE SOUTHEASTERLY LINE OF SAID LOT 3, 0.56 FEET TO THE MOST SOUTHERLY CORNER OF SAID LOT; THENCE NORTH 33° 16' 30" WEST ALONG THE SOUTHWESTERLY LINE OF SAID LOTS 3 AND 2, 100.14 FEET TO THE MOST WESTERLY CORNER OF SAID LOT 2; THENCE NORTH 53° 38' EAST ALONG THE NORTHWESTERLY LINE OF SAID LOT 2, 0.35 FEET TO THE TRUE POINT OF BEGINNING. APN: A PORTION OF 002-416-029 PARCEL 4: LOTS 4 AND 10 AND THAT CERTAIN PARCEL OF LAND DESIGNATED AS "ALLEY" OF THE MAP OF THE SUBDIVISION OF PART OF BLOCKS 14 & 18, IN THE CITY OF SAN LUIS OBISPO, Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr. . No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 6 COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF FILED IN BOOK 1, PAGE 43 OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. 6 APN: A PORTION OF 002-416-034 PARCEL 5: THE NORTHWESTERLY 5.5 FEET OF LOT 12 OF THE MAP OF THE SUBDIVISION OF PART OF BLOCKS 14 & 18, IN THE CITY OF SAN LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF FILED IN BOOK 1, PAGE 43 OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MEASURED AT RIGHT ANGLES AND ADJACENT TO THE NORTHWESTERLY LINE OF SAID LOT. THE SIDE LINE TO BE EXTENDED OR SHORTENED TO TERMINATE ON THE NORTHEASTERLY AND SOUTHWESTERLY LINES OF SAID LOT. APN: A PORTION OF 002-416-034 PARCEL 6: LOTS 1, 2 AND 3 OF THE MAP OF THE SUBDIVISION OF PART OF BLOCKS 14 & 18, IN THE CITY OF SAN LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF FILED IN BOOK 1, PAGE 43 OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THAT PORTION THEREOF DESCRIBED IN THE DEED TO C. A. MAINO, ET UX, RECORDED APRIL 7, 1953 IN BOOK 704, PAGE 439 OF OFFICIAL RECORDS. APN: A PORTION OF 002-416-034 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr. . No.: NCS-512999-CC ALTA Plain Language Commitment The following requirements must be met: SCHEDULE B SECTION ONE REQUIREMENTS Page Number: 7 (A) Pay the agreed amounts for the interest in the land and/or the mortgage to be insured . (B) Pay us the premiums, fees and charges for the policy. (C) Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured must be signed, delivered and recorded. (D) You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions. (E) Releases(s) or Reconveyance(s) of Item(s): None (F) Other: None (G) You must give us the following information: 1. Any off record leases, surveys, etc. 2. Statement(s) of Identity, all parties. 3. Other: The following additional requirements, as indicated by "X", must be met: [X] (H) Provide information regarding any off-record matters, which may include, but are not limited to: leases, recent works of improvement, or commitment statements in effect under the Environmental Responsibility Acceptance Act, Civil Code Section 850, et seq . The Company's Owner's Affidavit form (as provided by company) must be completed and submitted prior to close in order to satisfy this requirement. This Commitment will then be subject to such further exceptions and/or requirements as may be deemed necessary. [] (I) An ALTA/ACSM survey of recent date, which complies with the current minimum standard detail requirements for ALTA/ ACSM land title surveys, must be submitted to the Company for review. This Commitment will then be subject to such further exceptions and/or requirements as may be deemed necessary. [] (J) The following LLC documentation is required: (i) a copy of the Articles of Organization (ii) a copy of the Operating Agreement, if applicable (iii) a Certificate of Good Standing and/or other evidence of current Authority to Conduct Business within the State (iv) express Company Consent to the current transaction 7 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr. . No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 8 [] (K) The following partnership documentation is required : (i) a copy of the partnership agreement, including all applicable amendments thereto (ii) a Certificate of Good Standing and/or other evidence of current Authority to Conduct Business within the State (iii) express Partnership Consent to the current transaction [] (L) The following corporation documentation is required: (i) a copy of the Articles of Incorporation (ii) a copy of the Bylaws, including all applicable Amendments thereto (iii) a Certificate of Good Standing and/or other evidence of current Authority to Conduct Business within the State (iv) express Corporate Resolution consenting to the current transaction [] (M) Based upon the Company's review of that certain partnership/operating agreement dated for the proposed insured herein, the following requirements must be met: Any further amendments to said agreement must be submitted to the Company, together with an affidavit from one of the general partners or members stating that it is a true copy, that said partnership or limited liability company is in full force and effect, and that there have been no further amendments to the agreement. This Commitment will then be subject to such further requirements as may be deemed necessary. [] (N) A copy of the complete lease, as referenced in Schedule A, #3 herein, together with any amendments and/or assignments thereto, must be submitted to the Company for review, along with an affidavit executed by the present lessee stating that it is a true copy, that the lease is in full force and effect, and that there have been no further amendments to the lease. This Commitment will then be subject to such further requirements as may be deemed necessary. [X] (0) Approval from the Company's Underwriting Department must be obtained for issuance of the policy contemplated herein and any endorsements requested thereunder. This Commitment will then be subject to such further requirements as may be required to obtain such approval. [] (P) Potential additional requirements, if ALTA Extended coverage is contemplated hereunder, and work on the land has commenced prior to close, some or all of the following requirements, and any other requirements which may be deemed necessary, may need to be met: [] (Q) The Company's "Mechanic's Lien Risk Addendum" form must be completed by a Company employee, based upon information furnished by the appropriate parties involved. [] (R) The Company's "Indemnity Agreement I" must be executed by the appropriate parties. [] (S) Financial statements from the appropriate parties must be submitted to the Company for review. [] (T) A copy of the construction contract must be submitted to the Company for review . [] (U) An inspection of the land must be performed by the Company for verification of the phase of construction. B Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr, _'No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 9 SCHEDULE B SECTION TWO EXCEPTiONS Any policy we issue will have the following exceptions unless they are taken care of to our satisfaction. The printed exceptions and exclusions from the coverage of the policy or policies are set forth in Exhibit A attached. Copies of the policy forms should be read. They are available from the office which issued this Commitment. 1. General and special taxes and assessments for the fiscal year 2011-2012 are exempt. If the exempt status is terminated an additional tax may be levied. Account No. 002-416-029 2. General and special taxes and assessments for the fiscal year 2011-2012 are exempt. If the exempt status is terminated an additional tax may be levied. Account No. 002-416-034 3. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code. 4. Water rights, claims or title to water, whether or not shown by the public records. 5. The effect of a map purporting to show the land and other property, filed October 9, 1895 in Book 1, Page 43 of Record of Surveys. (Affects Parcels 2 through 6) 6. An easement for alley and incidental purposes, recorded October 20, 1905 in Book 68 of Deeds, Page 37. In Favor of: Affects: Lena Spence Parcel 4 7. The effect of a map purporting to show the land and other property, filed July 21, 1952 in Book 6, Page 57 of Record of Surveys. (Affects Parcel 2) 8. An easement for ingress and egress and incidental purposes, recorded May 12, 1914 in Book 101 at Page 85 of Deeds of Official Records. In Favor of: Clara Sauer, et al. Affects: Parcel 1 9. The effect of a map purporting to show the land and other property, filed April 16, 1953 in Book 6, Page 89 of Record of Surveys. (Affects Parcels 2 through 4, and 6) 10 . The effect of a map purporting to show the land and other property, filed September 20, 1956 in Book 8, Page 34 of Record of Surveys. 9 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 ALTA Plain Language Commitment (Affects Parcels 1 through 4, and 6) Commitn. . No.: NCS-512999-CC Page Number: 10 11. The terms and provisions contained in the document entitled "Grant Deed" recorded April 1, 1966 as Instrument No. 7026 and July 5, 1966 as Instrument No. 14144 in Book 1402, Page 177, both of Official Records. (Affects Parcel 1) 12. Rights of parties in possession. INFORMATIONAL NOTES 1. According to the latest available equalized assessment roll in the office of the county tax assessor, there is located on the land a(n) commercial structure known as 877 Palm Street, San Luis Obispo, California. (Affects Parcels 1 through 3) 2. According to the latest available equalized assessment roll in the office of the county tax assessor, there is located on the land a(n) commercial structure known as 955 Morro Street, San Luis Obispo, California. (Affects Parcels 4 through 6) 3. According to the public records, there has been no conveyance of the land within a period of twenty-four months prior to the date of this report, except as follows: None 4. This preliminary report/commitment was prepared based upon an application for a policy of title insurance that identified land by street address or assessor's parcel number only. It is the responsibility of the applicant to determine whether the land referred to herein is in fact the land that is to be described in the policy or policies to be issued. The map attached, if any, may or may not be a survey of the land depicted hereon. First American Title Insurance Company expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. *****To obtain wire instructions for deposit of funds to your escrow file please contact your Escrow Officer.***** CONDITIONS 1. DEFINITIONS (a)"Mortgage" means mortgage, deed of trust or other security instrument. (b)"Public Records" means title records that give constructive notice of matters affecting the title according to the state law where the land is located. 2. LATER DEFECTS 10 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 ALTA Plain Language Commitment Commitn . . No.: NCS-512999-CC Page Number: 11 The Exceptions in Schedule B -Section Two may be amended to show any defects, liens or encumbrances that appear for the first time in the public records or are created or attached between the Commitment Date and the date on which all of the Requirements (a) and (c) of Schedule B -Section One are met. We shall have no liability to you because of this amendment. 3. EXISTING DEFECTS If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances, we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing. 4. LIMITATION OF OUR LIABILITY Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an error in this Commitment, our liability will be limited to your actual loss caused by your relying on this Commitment when you acted in good faith to: comply with the Requirements shown in Schedule B -Section One or eliminate with our written consent any Exceptions shown in Schedule B -Section Two. We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you. 5. CLAIMS MUST BE BASED ON THIS COMMITMENT Any claim, whether or not based on negligence, which you may have against us concerning the title to the land must be based on this commitment and is subject to its terms. 11 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr. . No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 12 ~ I First American Title Privacy Information We Are Committed to Safeguarding Customer Information In order to better serve your needs now and in the Future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information -particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our subsidiaries we have adopted this Privacy Policy to govern the use and handling of your personal information. Applicability Tllis Privacy Policy governs our use of the Information that you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines Its Fair Information Values. Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: • Information we receive from you on applications, forms and in other communications to us, whether In writing, in person, by telephone or any other means; • Information about your transactions with us, our affiliated companies, or others; and • Information we receive from a consumer reporting agency. Use of Information We request information from you for our own legitimate business purposes and not For the benefit of any nonaffiliated party. Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law. We may, however, store such information indefinitely, including the period after which any customer relationship has ceased. Such information may be used For any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies and escrow companies. Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies or to other financial institutions with whom we or our affiliated companies have joint marketing agreements. Former Customers Even if you are no longer our customer, our Privacy Policy will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values. We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. Information Obtained Through Our Web Site First American Financial Corporation is sensitive to privacy issues on the Internet. We believe it is important you know how we treat the information about you we receive on the Internet. In general, you can visit First American or its affiliates' Web sites on the World Wide Web without telling us who you are or revealing any information about yourself. Our Web servers collect the domain names, not the e-mail addresses, of visitors. Tllis information is aggregated to measure the number of visits, average time spent on the site, pages viewed and similar Information. First American uses this information to measure the use of our site and to develop ideas to improve the content of our site. Tllere are times, however, when we may need information from you, such as your name and email address. When information is needed, we will use our best efforts to let you know at the time of collection how we will use the personal information. Usually, the personal information we collect is used only by us to respond to your inquiry, process an order or allow you to access specific account/profile information. If you choose to share any personal information with us, we will only use it in accordance with the policies outlined above. Business Relationships First American Financial Corporation's site and its affiliates' sites may contain links to other Web sites. While we try to link only to sites that share our high standards and respect for privacy, we are not responsible for the content or the privacy practices employed by other sites. Cookies Some of First American's Web sites may make use of "cookie" technology to measure site activity and to customize information to your personal tastes. A cookie is an element of data that a Web site can send to your browser, which may then store the cookie on your hard drive. flrn(Arn.rom uses stored cookies. Tlle goal of this technology is to better serve you when visiting our site, save you time when you are here and to provide you with a more meaningful and productive Web site experience. Fair Information Values Fairness We consider consumer expectations about their privacy in all our businesses. We only offer products and services that assure a favorable balance between consumer benefits and consumer privacy. Public Record We believe that an open public record creates significant value for society, enhances consumer choice and creates consumer opportunity. We actively support an open public record and emphasize its importance and contribution to our economy. Use We believe we should behave responsibly when we use information about a consumer in our business. We will obey the laws governing the collection, use and dissemination of data. Accuracy We will take reasonable steps to help assure the accuracy of the data we collect, use and disseminate. Where possible, we will take reasonable steps to correct inaccurate information. When, as with the public record, we cannot correct inaccurate information, we will take all reasonable steps to assist consumers in identifying the source of the erroneous data so that the consumer can secure the required corrections. Education We endeavor to educate the users of our products and services, our employees and others in our industry about the importance of consumer privacy. We will instruct our employees on our fair information values and on the responsible collection and use of data. We will encourage others in our industry to collect and use information in a responsible manner. Security We will maintain appropriate facilities and systems to protect against unauthorized access to and corruption of the data we maintain. Form SO-PRIVACY (8/1/09) Page 1 of 1 Privacy Information (2001-2010 First American Financial Corporation) 12 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr. _No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 13 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) 1. CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY -1990 SCHEDULE B EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or by the public records . 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; ( c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable "doing business" laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by their policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. 2. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B -1970 SCHEDULE OF EXCLUSIONS FROM COVERAGE I. Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions of area of the land, or the effect of any violation of any such law, ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 3. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY FORM B -1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 2 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B 13 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr, _No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 14 This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One 1. 2, 3. D D D Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. Easements, claims of easement or encumbrances which are not shown by the public records. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records. 4. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1970 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE SCHEDULE OF EXCLUSIONS FROM COVERAGE I , Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a reduction in the dimensions or area of the land, or the effect of any violation of any such law ordinance or governmental regulation. 2. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records at Date of Policy. 3 . Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the insured claimant, (b) not known to the Company and not shown by the public records but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy or acquired the insured mortgage and not disclosed in writing by the insured claimant to the Company prior to the date such insured claimant became an insured hereunder, ( c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent insurance is afforded herein as to any statutory lien for labor or material or to the extent insurance is afforded herein as to assessments for street improvements under construction or completed at Date of Policy). O Unenforceability of the lien of the insured mortgage because of failure of the insured at Date of Policy or of any subsequent owner of the indebtedness to comply with applicable "doing business" laws of the state in which the land is situated. S. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1970 WITH REGIONAL EXCEPTIONS When the American Land Title Association Lenders Policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy, the exclusions set forth in paragraph 4 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage by reason of the matters shown in parts one and two following: Part One I. 2 . 3 . D D D Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. Easements, claims of easement or encumbrances which are not shown by the public records. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 6. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -1992 WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: I. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy; 14 (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr. . No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 15 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; ( c) resulting in no loss or damage to the insured claimant; ( d) attaching or created subsequent to Date of Policy (except to the extent that this policy insures the priority of the lien of the insured mortgage over any statutory lien for services, labor or material or the extent insurance is afforded herein as to assessments for street improvements under construction or completed at date of policy); or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage. O Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable "doing business" laws of the state in which the land is situated. D Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. o Any statutory lien for services, labor or materials (or the claim of priority of any statutory lien for services, labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which is contracted for and commenced subsequent to Date of Policy and is not financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance. O Any claim, which arises out of the transaction creating the interest of the mortgagee insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine of equitable subordination; or (iii) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 7. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY-1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 6 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records . 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. 3. Easements, claims of easement or encumbrances which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. 5. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. 6. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 8. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -1992 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: I . (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or 15 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr, . No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 16 (e) resulting in loss or damage which would not have been sustained ifthe insured claimant had paid value for the estate or interest insured by this policy. D Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the estate or interest insured by this policy being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the transaction creating the estate or interest insured by this policy being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 9. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -1992 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 8 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: Part One: I. 2. 3. D D D Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of persons in possession thereof. Easements, claims of easement or encumbrances which are not shown by the public records. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by public records. Unpatented mining claims; reservations or exceptions in patents or in Acts authorizing the issuance thereof; water rights, claims or title to water. Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 10. AMERICAN LAND TITLE ASSOCIATION RESIDENTIAL TITLE INSURANCE POLICY -1987 EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning: * land use * land division * improvements on the land * environmental protection This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. This exclusion does not limit the zoning coverage described in items 12 and 13 of Covered Title Risks. 2. The right to take the land by condemning it, unless: * a notice of exercising the right appears in the public records on the Policy Date * the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking. 3. Title Risks: * that are created, allowed, or agreed to by you * that are known to you, but not to us, on the Policy Date -unless they appeared in the public records * that result in no loss to you * that first affect your title after the Policy Date -this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks 4. Failure to pay value for your title. 5. Lack of a right: * to any land outside the area specifically described and referred to in Item 3 of Schedule A, or * in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks. 11. EAGLE PROTECTION OWNER'S POLICY CL TA HOMEOWNER'S POLICY OF TITLE INSURANCE -1998 ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE -1998 Covered Risks 14 (Subdivision Law Violation). 15 (Building Permit). 16 (Zoning) and 18 (Encroachment of boundary walls or fences) are subject to Deductible Amounts and Maximum Dollar Limits of Liability EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from: 16 Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitr, • No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 17 1. Governmental police power, and the existence or violation of any law or government regulation. This includes ordinances, laws and regulations concerning : a. building b. zoning c. land use d. improvements on the land e. land division f . environmental protection This exclusion does not apply to violations or the enforcement of these matters if notice of the violation or enforcement appears in the Public Records at the Policy Date . This exclusion does not limit the coverage described in Covered Risk 14, 15, 16, 17 or 24. 2 . The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not apply to violations of building codes if notice of the violation appears in the Public Records at the Policy Date. 3 . The right to take the Land by condemning it, unless: a . a notice of exercising the right appears in the Public Records at the Policy Date; or b. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking . 4. Risks : a. that are created, allowed , or agreed to by You, whether or not they appear in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they appear in the Public Records at the Policy Date; c. that result in no loss to You ; or d. that first occur after the Policy Date -this does not limit the coverage described in Covered Risk 7, 8 .d, 22, 23, 24 or 25. 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 18. 12. THIRD GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (1/01/08) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or(iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. Th is Exclusion l(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b)Any governmental police power. This Exclusion l(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16 . 2 . Rights of eminent domain . This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3 . Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; ( c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24 , 27 or 28); or (e) resulting in loss or damage which would not have been sustained ifthe Insured Claimant had paid value for the Insured Mortgage . 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing business laws of the state where the Land is situated. 5 . Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury, or any consumer credit protection or truth-in-lending law . This Exclusion does not modify or limit the coverage provided in Covered Risk 26. 6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk ll(b) or 25. 8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6 . 13. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -2006 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees , or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, 17 prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; Exhibit C-2 to Palm Development Agreement Form No. 1068-2 Commitn No.: NCS-512999-CC ALTA Plain Language Commitment Page Number: 18 or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion l(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion l(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; ( c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing- business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-lending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk ll(b). 14. AMERICAN LAND TITLE ASSOCIATION LOAN POLICY -2006 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 13 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 15. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -2006 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, 18 prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection;or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion l(a) does not modify or limit the coverage provided under Covered Risk 5. Exhibit C-2 to Palm Development Agreement Form No. 1068-2 ALTA Plain Language Commitment Commitn . . 1 No.: NCS-512999-CC Page Number: 19 (b) Any governmental police power. This Exclusion l(b) does not modify or limit the coverage provided under Covered Risk 6. 2 . Rights of eminent domain . This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3 . Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; ( c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risks 9 and 10); or ( e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4 . Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer; or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. 16. AMERICAN LAND TITLE ASSOCIATION OWNER'S POLICY -2006 WITH REGIONAL EXCEPTIONS When the American Land Title Association policy is used as a Standard Coverage Policy and not as an Extended Coverage Policy the exclusions set forth in paragraph 15 above are used and the following exceptions to coverage appear in the policy. SCHEDULE B This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2 . Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4 . Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 19 Exhibit C-2 to Palm Development Agreement Exhibit D Palm Development Agreement When recorded return to: GRANT DEED For valuable consideration, the receipt of which is hereby acknowledged, CITY OF SAN LUIS OBISPO, a municipal corp ration and a chartered city organized and existing under the Cons titution f the State f Califo rnia ("Grantor"), hereby grants to SLO CIDNATOWN, LLC, a California limited liabi lity company (' Grantee"), certain real property (herein called ''P roperty") specifically described on lhe atta hed Exhibit A incorporated herein by this reference, on the terms and conditions set forth herein. The Property is conveyed to cany out the pub.lie purposes of that certain Agreement of Purchase and a le -Palm D vel pment Site ('Agreement"), a public document in the records of the Clerk of City of San Luis Obispo dated 20 11 . TJ1e Agreement was approved by the City Council of the ity of San Lui Obisp on December l 3 2011. IN WITNESS WHEREOF, Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers thereunder duly authorized, as of this __ day of 20 ----~ GRANTOR: City of San Luis Obispo, a municipal corporation and charter city By: ______________ _ -------~ , Mayor APPROVED AS TO FORM AND LEGAL EFFECT: City Attorney Dated: ---------- Exhibit A Legal Description of the Property [to be completed] GrantDeedPa lm DevSite-121411 STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -NET 1. Basic Provisions ("Basic Provisions"). 1.1 Parties: This Lease ("Lease"), dated for reference purposes only December 13, 2011 is made by and between the CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ("Landlord") and SLO CHINATOWN, LLC, a California limited liability company ("Tenant"), (collectively the "Parties'', or individually a "Party"). 1.2 Premises : That certain real property, including all improvements therein or to be provided by Landlord under the terms of this Lease, and commonly known as 955 Morro Street, San Luis Obispo, located in the County of San Luis Obispo, State of California and generally described as (describe briefly the nature of the property and, if applicable, the "Project", if the property is located within a Project): In addition to the building which is located at 955 Morro Street, the Project also includes a parking lot adjacent thereto (the "Parking Lot") The Parking Lot is not included in the Premises and Tenant shall have no right to park in the Parking Lot. 1.3 Term : month to month beginning on , 2012][the Closing Date, as that term is defined in that certain Agreement of Purchase and Sale --Monterey Parcels Agreement , dated as of even date herewith ("Commencement Date") and ending on the effective date of the Termination Notice ("Expiration Date ")] ("Original Term"). This Lease may be terminated on not less than ninety (90) days prior written notice (the "Termination Notice") as set forth in Paragraph 3 .1 below (See also Paragraph 3) 1.4 Early Possession: Such time as the parties may agree ("Early Possession Date") (See also Paragraphs 3.2 and 3.3) 1.5 Base Rent: Five hundred dollars ($500) per month ("Base Rent") plus Additional Transfer Rent, if any, payable on the first of each month commencing on the Commencement Date or Early Possession Date, whichever is earlier. (See also Paragraphs 4 and 12 .1 (b)) o If this box is checked , there are provisions in this Lease for the Base Rent to be adjusted. 1.6 Base Rent and Other Monies Paid Upon Execution: (a) Base Rent: $1000, for the first and last months' Base Rent, (b) Security Deposit: $-0-("Security Deposit"). (See also Paragraph 5) (c) Association Fees: $-0-, for the period __ , (d) Other : $-0-, for __ (e) Total Due Upon Execution of this Lease : $1000 . 1.7 Agreed use : any lawful use (See also Paragraph 6) 1.8 Insuring Party. Tenant is the "Insuring Party" unless otherwise stated herein . (See also Paragraph 8) 1.9 Real Estate Brokers : (See also Paragraph 15) NONE. 1.10 Guarantor. NONE 1.11 Attachments . Attached hereto are the following, all of which constitute a part of this Lease : o an Addendum consisting of Paragraphs_ through _; X a plot plan depicting the Premises; o a current set of the Rules and Regulations ; o a Work Letter; o other (specify): _______ _ 2. Premises. 2 .1 Letting . Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises , for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein , any statement of size set forth in this Lease, or that may have been used in calculating Rent, is an approximation which the Parties agree is reasonable and any payments based thereon are not subject to revision whether or not the actual size is more or less. Note: Tenant is advised to verify the actual size prior to executing this Lease. 2.2 Condition . Landlord shall deliver the Premises to Tenant broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs ("Start Date") in its AS -IS, WHERE-IS condition, with no representations or warranties as to the Condition of the Premises whatsoever. 2.3 Compliance. Tenant acknowledges that it has performed such due diligence as it elects or has elected to perform as to the condition and all other aspects of the Premises, the title to the Premises and the suitability of the site of the Premises for the proposed uses . Tenant further acknowledges that it has or shall have inspected, investigated and tested all aspects of the Premises, and that Tenant is relying and shall rely solely on its own due diligence to evaluate all aspects of the Premises and its suitability for Tenant's purposes without any representations and warranties of any kind or nature concerning the Premises or any aspect thereof, either express or implied, from or on behalf of City or any of its employees , agents or independent contractors. In entering into th is Lease, Tenant agrees and accepts the Premises in its "AS-IS, WHERE-IS" condition with all faults and defects, whether patent or latent, known or unknown . Tenant is responsible for determining whether or not the Applicable Exhibit E to Palm Development Agreement Requirements, and especially the zoning, are appropriate for Tenant's intended Use and acknowledge that past uses of the Premises may no longer be allowed. Tenant shall be responsible for correction of any and all conditions of the Premises that are not in compliance with any applicable laws governing the Premises or any part thereof, at any time during the Original Term, and any extension term, of this Lease, at Tenant's sole expense, whether or not such expenses are capital in nature. 2.4 Acknowledgements. Tenant acknowledges that: (a) it has been advised by Landlord to satisfy itself with respect to the condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Tenant's intended use, (b) Tenant has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Landlord nor Landlord's agents have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Landlord acknowledges that ii is Landlord's sole responsibility to investigate the financial capability and/or suitability of Tenant. 3. Term. 3.1 Term; Termination. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3. The Parties acknowledge that Landlord and Tenant have entered into that certain Agreement of Purchase and Sale --Palm Development Site, dated as of even date herewith (the "Purchase Agreement"), pursuant to which Tenant has the right to purchase certain real property including the Premises under certain conditions specified therein. Landlord shall have the right to terminate this Lease on not less than ninety (90) days prior written notice to Tenant, which notice may not be given by Landlord until the Purchase Agreement has been terminated as provided therein. Nothing in this Paragraph, however, shall prevent either party from exercising its rights to early termination of this Lease as provided herein. 3.2 Early Possession. If Tenant totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall begin on the early Possession Date . All other terms of this Lease (including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such early possession shall not affect the Expiration Date . 3.3 Delay In Possession . Landlord agrees to use its best commercially reasonable efforts to deliver possession of the premises to Tenant by the Commencement Date. If, despite said efforts, Landlord is unable to deliver possession by such date, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease . Tenant shall not, however, be obligated to pay Rent or perform its other obligations until Landlord delivers possession of the Premises and any period of Rent abatement that Tenant would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Tenant would otherwise enjoy under terms hereof, but minus any days of delays caused by the acts or omissions of Tenant. If possession is not delivered within 60 days after the Commencement Date, Tenant may, at its option, by notice in writing within 10 days after the end of such 60 day period, cancel this Lease, in which event the parties shall be discharged from all obligations hereunder. If such written notice is not received by Landlord within said 10 day period, Tenant's right to cancel shall terminate. If possession of the Premises is not delivered with 120 days after the Commencement Date, this Lease shall terminate unless other agreements are reached between Landlord and Tenant, in writing. 3.4 Tenant Compliance. Landlord shall not be required to deliver possession of the Premises to Tenant until Tenant complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Tenant shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Landlord's election to withhold possession pending receipt of such evidence of insurance. Further , if Tenant is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Landlord may elect to withhold possession until such conditions are satisfied. 4. Rent. 4.1. Rent Defined. All monetary obligations of Tenant to Landlord under the terms of this Lease (except for the Security Deposit), including without limitation any sublease rents due to Landlord, are deemed to be rent, as are all obligations of Tenant to pay Taxes and Insurance payments to third parties as provided elsewhere herein (collectively, "Rent"). 4.2 Payment. Tenant shall cause payment of Rent due to Landlord to be received by Landlord (and Taxes, and Insurance payments to be received by the relevant third parties) in lawful money of the United States , without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due . All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Landlord is inaccurate such inaccuracy shall not constitute a waiver and Tenant shall be obligated to pay the amount set forth in this Lease . Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Landlord at its address stated herein or to such other persons or place as Landlord may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Landlord's rights to the balance of such Rent. regardless of Landlord's endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Tenant to Landlord is dishonored for any reason, Tenant agrees to pay to Landlord the sum of $25 in addition to any Late Charge and Landlord, at its option, may require all future Rent be paid by cashier's check . Payments will be applied first to accrued late charges and attorney's fees, second to accrued interest, then to Base Rent, and any remaining amount to any other outstanding charges or costs. 5. [intentionally omitted] 6. Use. 6.1 Use. Tenant shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Tenant shall not use or permit the use of the Premises in a manner that is unlawful, creates damage , waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties . Other than guide, signal and seeing eye dogs, Tenant shall not keep or allow in the Premises any pets, animals , birds, fish, or reptiles . Landlord shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical PAGE 2 OF 15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOC IATION INITIALS FORM MTN-5-5/05E systems therein, and/or is not significantly more burdensome to the Premises. If Landlord elects to withhold consent, Landlord shall within 7 days after such request give written notification of same, which notice shall include an explanation of Landlord's objections to the change in the Agreed Use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance or waste whose presence, use or manufacture, disposal, transportation or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Landlord to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to hydrocarbons, petroleum, gasoline and/or crude oil or any products, by products or fractions thereof. Tenant shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substance, without the express written consent of Landlord and timely compliance (at Tenant's expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the installation or, use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with Applicable requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Landlord to any liability therefor. If addition, Landlord may condition the consent to any Reportable Use upon receiving such additional assurances as Landlord reasonably deems necessary to protect itself, the public the Premises and/or the environment against damage, contamination injury and or liability, including but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or requiring Tenant to provide a security deposit (b) Duty to Inform Landlord. If Tenant knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Landlord, Tenant shall immediately give written notice of such fact to Landlord, and provide Landlord with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance. (c) Tenant Remediation. Tenant shall not cause or knowingly permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Tenant's expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused, permitted or materially contributed to by Tenant or its invitees or permittees or pertaining to or involving any Hazardous Substance in or on the Premises during the term of this Lease, by or for Tenant or its invitees or permittees. (d) Tenant Indemnification. Tenant shall indemnify, defend and hold Landlord, its agents, employees, lenders and ground Landlord, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgment, claims, expenses, penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Tenant, its invitees or permittees (provided however, that Tenant shall have no liability under the Lease with respect to underground migration of any Hazardous Substances under the Premises from adjacent properties not caused or contributed by Tenant) ... Tenant's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or knowingly permitted by Tenant, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Landlord and Tenant shall release Tenant from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Landlord in writing at the time of such agreement. (e) [intentionally omitted] (f) [intentionally omitted] (g) Landlord Termination Option. If a Hazardous Substance Condition (see paragraph 9.1 (e)) occurs during the term of this Lease, unless Tenant is legally responsible therefore (in which case Tenant shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Landlord's rights and Paragraph 6.2(d) and Paragraph 13), Landlord may, at Landlord's option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such conditions exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Tenant, within 30 days after receipt by Landlord of knowledge of the occurrence of such Hazardous Substance Condition, of Landlord's desire to terminate this Lease as of the date 60 days following the date of such notice. This Lease shall thereafter terminate as of the date specified in Landlord's notice of termination. 6.3 Tenant's Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Tenant shall, at Tenant's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements provided, however that Tenant may instead terminate this Lease unless Landlord notifies Tenant in writing, within 10 days after receipt of Tenants termination notice that Landlord has elected to pay the actual cost thereof. If Tenant elects termination, Tenant shell immediately cease the use of the Premises which require such capital expenditure and deliver to Landlord written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Tenant could legally utilize the Premises without commencing such capital expenditure. Tenant shall, within 10 days after receipt of Landlord's written request, provide Landlord with copies of all permits and other documents, and other information evidencing Tenant's compliance with any Applicable Requirements specified by Landlord, and shall immediately upon receipt, notify Landlord in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Tenant or the Premises to comply with any Applicable Requirements. PAGE 3OF15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOC IAT ION INITIALS FORM MTN-5-5/05E 6.4 Inspection; Compliance. Landlord and Landlord's "Lender" (as defined in Paragraph 30) and consultants shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting the condition of the Premises and for verifying compliance by Tenant with this Lease. The cost of any such inspections shall be paid by Landlord. In addition, Tenant shall provide copies of all relevant material safety data sheets (MSDS) to Landlord within 10 days of the receipt of a written request therefor. 7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations. 7 .1 Tenant's Obligations. (a) In General. Subject to the provisions of Paragraph 2.2(Condition), 2.3 (Compliance), 6.3 (Tenant's Compliance with Applicable Requirements), 7.2 (Landlord's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Tenant shall, at Tenant's sole expense, keep the Premises, all Utility Installations (intended for Tenant's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Tenant, and whether or not the need for such repairs occurs as a result of Tenant's use, any prior use, the elements or the age of such portion of the Premises) and to maintain service contracts relating thereto, as appropriate, including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical and telecommunication wiring, gas and water pipes, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass, skylights, , signs and sidewalks located in, on, or adjacent to the Premises. Tenant, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Tenant's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Tenant shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary, the exterior repainting of the Building. (b) [intentionally omitted) (c) Failure to Perform. If Tenant fails to perform Tenant's obligations under this Paragraph 7.1, Landlord may enter upon the Premises after 10 days' prior written notice to Tenant (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Tenant's behalf, and put the Premises in good order, condition and repair, and Tenant shall promptly pay to Landlord a sum equal to 115% of the cost thereof. (d) Replacement. Subject to Tenant's indemnification of Landlord as set forth in Paragraph 8.7 below, and without relieving Tenant of liability resulting from Tenant's failure to exercise and perform good maintenance practices, if an item described in Paragraph 7.1 (b) cannot be repaired to a commercially reasonable standard, then either (i) such item should be replaced by Lessee, and the cost thereof shall be including in the Lessee Operating Expenses or (ii) Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the actual cost thereof. If Lessee elects termination, Lessee shell immediately cease the use of the Premises which require such replacement and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such replacement, if any. 7.2 Landlord's Obligations. Subject to the provisions of Paragraphs 2.2(Condition), 2.3 (Compliance), 9 (Damage or Destruction), and 14 (Condemnation), it is intended by the Parties hereto that Landlord have no obligation, in any manner whatsoever, to repair and maintain the Premises or any part thereof, or the equipment therein including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical and telecommunication wiring, gas and water pipes, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass, skylights, signs and sidewalks located in, on, or adjacent to the Premises., all of which obligations are intended to be that of the Tenant. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance, replacement and repair of the Premises, and they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease. 7.3 Utility Installations; Trade Fixtures; Alterations. (a) Definitions. The term "Utility Installations" refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall mean Tenant's machinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Tenant Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Tenant that are not yet owned by Landlord pursuant to Paragraph 7.4(a). (b) Consent. Tenant shall not make any Alterations or Utility Installations to the Premises without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed. Tenant may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Landlord, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to $50,000 in the aggregate or a sum equal to $50,000 in any one year. Notwithstanding the foregoing, Tenant shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Landlord. Landlord may, as a precondition to granting such approval, require Tenant to utilize a contractor chosen and/or approved by Landlord. Any Alterations or Utility Installations that Tenant shall desire to make and which require the consent of the Landlord shall be presented to Landlord in written form with detailed plans. Consent shall be deemed conditioned upon Tenant's: (i) acquiring all applicable governmental permits, (ii) furnishing Landlord with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike PAGE 4 OF 15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOC IATION INITIALS FORM MTN-5-5/05E manner with good and sufficient materials. Tenant shall promptly upon completion furnish Landlord with as-built plans and specifications. For work which costs an amount in excess of $50,000 in any one year, Landlord may condition its consent upon Tenant providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Tenant's posting an additional Security Deposit with Landlord. (c) Liens; Bonds . Tenant shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Tenant shall give Landlord not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Landlord shall have the right to post notices of non-responsibility. If Tenant shall contest the validity of any such lien, claim or demand, then Tenant shall, at its sole expense defend and protect itself, Landlord and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Landlord shall require, Tenant shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Landlord against liability for the same. If Landlord elects to participate in any such action, Tenant shall pay Landlord's attorneys' fees and costs. 7.4 Ownership; Removal; Surrender; and Restoration. (a) Ownership. Subject to Landlord's right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Tenant shall be the property of Tenant, but considered a part of the Premises. Landlord may, at any time, elect in writing to be the owner of all or any specified part of the Tenant Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Tenant Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Landlord and be surrendered by Tenant with the Premises. (b) Removal. By delivery to Tenant of written notice from Landlord not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Landlord may require that any or all Tenant Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Landlord may require the removal at any time of all or any part of any Tenant Owned Alterations or Utility Installations made without the required consent. (c) Surrender; Restoration. Tenant shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12 months or less, then Tenant shall surrender the Premises in the same condition as delivered to Tenant on the Start Date with NO allowance for ordinary wear and tear. Tenant shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Tenant owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Tenant. Tenant shall completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Tenant to the amounts required by applicable law (except for Hazardous Substances which were deposited via underground migration from areas outside of the Premises, or if applicable, the Premises). Trade Fixtures shall remain the property of Tenant and shall be removed by Tenant. Any personal property of Tenant not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Tenant and may be disposed of or retained by Landlord as Landlord may desire. The failure by Tenant to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Landlord shall constitute a holdover under the provisions qf Paragraph 26 below. 8. Insurance; Indemnity. 8.1 Payment For Insurance. Tenant shall pay for all insurance required under Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Landlord under Paragraph 8.2(b) in excess of $2,000,000 per occurrence .. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Tenant to its insurance company, with a copy of the invoice and payment instrument sent to Landlord, within 1 O days following receipt of an invoice. 8.2 Liability Insurance. (a) Carried by Tenant. Tenant shall obtain and keep in force a Commercial General Liability policy of insurance protecting Tenant and Landlord as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $2,000,000.00 per occurrence with an annual aggregate of not less than $5,000,000.00. Tenant shall add Landlord as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization's "Additional Insured-Managers or Landlords of Premises" Endorsement. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Tenant's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Tenant nor relieve Tenant of any obligation hereunder. Tenant shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Landlord, whose insurance shall be considered excess insurance only. (b) Carried by Landlord. Landlord shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Tenant. Tenant shall not be named as an additional insured therein. Landlord may elect to self-insure. 8.3 Property Insurance -Building, Improvements and Rental Value. (a) Building and Improvements. Tenant shall obtain and keep in force a policy or policies in the name of Landlord, with loss payable to Landlord, any ground-Landlord, and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. If Landlord is the Insuring Party, however, Tenant Owned Alterations and Utility Installations, Trade Fixtures, and Tenant's personal property shall be insured by Tenant under Paragraph 8.4 rather than by Landlord. If the coverage is available and PAGE 5 OF 15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASS OC IATI ON INITIALS FORM MTN-5-5/05E commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Consumers for the city nearest where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence, and Tenant shall be liable for such deductible amount in the event of an Insured Loss. (b) [intentionally omitted] (c) [intentionally omitted] 8.4 Tenant's Property; Business Interruption Insurance. (a) Property Damage. Tenant shall obtain and maintain insurance coverage on all of Tenant's personal property, Trade Fixtures, and Tenant Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Tenant for the replacement of personal property, Trade Fixtures and Tenant Owned Alterations and Utility Installations. Tenant shall provide Landlord with written evidence that such insurance is in force. (b) [intentionally omitted] (c) No Representation of Adequate Coverage. Landlord makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Tenant's property, business operations or obligations under this Lease. 8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of at least A-, VII VI, as set forth in the most current issue of "Best's Insurance Guide", or such other rating as may be required by a Lender. Tenant shall not do or permit to be done anything which invalidates the required insurance policies. Tenant shall, prior to the Start Date, deliver to Landlord certified copies of policies of such insurance or certificates evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Landlord. Tenant shall, at least 10 days prior to the expiration of such policies, furnish Landlord with evidence of renewals or "insurance binders" evidencing renewal thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant to Landlord upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same. 8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Tenant and Landlord each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Landlord or Tenant, as the case may be, so long as the insurance is not invalidated thereby. 8.7 Indemnity. Except for Landlord's negligence or willful misconduct, Tenant shall indemnify, protect, defend and hold harmless the Premises, Landlord and its agents, Landlord's master or ground Landlord, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Tenant. If any action or proceeding is brought against Landlord by reason of any of the foregoing matters, Tenant shall upon notice defend the same at Tenant's expense by counsel reasonably satisfactory to Landlord and Landlord shall cooperate with Tenant in such defense. Landlord need not have first paid any such claim in order to be defended or indemnified. 8.8 Exemption of Landlord and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Landlord or its agents, neither Landlord nor its agents shall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise or other property of Tenant, Tenant's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant of Landlord or from the failure of Landlord or its agents to enforce the provisions of any other lease in the Project, or (iii) injury to Tenant's business or for any loss of income or profit therefrom. Instead, it is intended that Tenant's sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Tenant is required to maintain pursuant to the provisions of paragraph 8. 8.9 Failure to Provide Insurance. Tenant acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose Landlord to risks and potentially cause Landlord to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or portion thereof that Tenant does not maintain the required insurance and/or does not provide Landlord with the required binders or certificates evidencing the existence of the required insurance, the Base Rent shall be automatically increased, without any requirement for notice to Tenant, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Landlord will incur by reason of Tenant's failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Tenant's Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Tenant of its obligation to maintain the insurance specified in this Lease. 9. Damage or Destruction. PAGE 6 OF 15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION INITIALS FORM MTN-5-5/05E 9.1 Definitions. (a) "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other than Tenant Owned Alterations and Utility Installations, which can reasonably be repaired in 6 months or less from the date of the damage or destruction. Tenant shall notify Landlord in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (b) "Premises Total Destruction" shall mean damage or destruction to the Premises, other than Tenant Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the damage or destruction. Tenant shall notify Landlord in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Tenant Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved. (d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Landlord at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation. (e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2, in, on, or under the Premises which requires repair, remediation, or restoration. 9.2 Partial Damage -Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Tenant shall, at Tenant's expense, repair such as soon as reasonably possible . 9.3 Partial Damage -Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Tenant (in which event Tenant shall make the repairs at Tenant's expense), Landlord may either: (i) repair such damage as soon as reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Tenant within 30 days after receipt by Landlord of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Landlord elects to terminate this Lease, Tenant shall have the right within 10 days after receipt of the termination notice to give written notice to Landlord of Tenant's commitment to pay for the repair of such damage without reimbursement from Landlord. Tenant shall provide Landlord with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Landlord shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Tenant does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice. 9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the negligence or willful misconduct of Tenant, Landlord shall have the right to recover Landlord's damages from Tenant, except as provided in Paragraph 8.6. 9.5 Damage. If at any lime there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Loss, Tenant may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination notice to Landlord within 30 days after the date of occurrence of such damage. 9.6 Abatement of Rent; Tenant's Remedies. (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Tenant is not responsible under this Lease, the Base Rent payable by Tenant for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Tenant's use of the Premises is impaired. All other obligations of Tenant hereunder shall be performed by Tenant, and Landlord shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein. (b) Remedies. If Landlord is obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Tenant may, at any lime prior to the commencement of such repair or restoration, give written notice to Landlord and to any Lenders of which Tenant has actual notice, of Tenant's election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Tenant gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. "Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs. 9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Tenant to Landlord. Landlord shall, in addition, return to Tenant so much of Tenant's Security Deposit, if any, as has not been, or is not then required to be, used by Landlord. 10. Real Property Taxes. 10.1 Definition. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Landlord in the Premises or the Project, Landlord's right to other income therefrom, and/or Landlord's business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located. Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of PAGE 7OF15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASS OC IATI O N INITIALS FORM MTN-5-5/0SE events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied or assessed on machinery or equipment provided by Landlord to Tenant pursuant to this Lease. 10.2 Payment of Taxes. In addition to Base Rent, Tenant shall pay the Real Property Tax installment due prior to the applicable delinquency date. If any such installment shall cover any period of time prior to or after the expiration or termination of this Lease, Tenant's share of such installment shall be prorated. 10.3 [intentionally omitted] 10.4 Personal Property Taxes. Tenant shall pay, prior to delinquency, all taxes assessed against and levied upon Tenant Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Tenant. When possible, Tenant shall cause its Tenant Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. If any of Tenant's said property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant's property within 10 days after receipt of a written statement setting forth the taxes applicable to Tenant's property. 11. Utilities and Services. Tenant shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered or billed to Tenant, Tenant shall pay a reasonable proportion, to be determined by Landlord, of all charges jointly metered or billed. There shall be no abatement of rent and Landlord shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident. repair or other cause beyond Landlord's reasonable control or in cooperation with governmental request or directions . 12. Assignment and Subletting. 12.1 Landlord's Consent Not Required. (a) Subject to Section 12.2(a), Tenant may assign, transfer, mortgage or encumber (collectively, "assign or assignment") or sublet all or any part of Tenant's interest in this Lease or in the Premises without Landlord's prior written consent, provided that Tenant provides notice to Landlord of, and consults with Landlord concerning, such subtenants, assignees or transferees. (b) Tenant shall pay Landlord each month Additional Transfer Rent (as defined below) following any assignment or subletting of the Premises. Additional Transfer Rent shall mean an amount equal to 50% of Tenant's Net Additional Revenue. "Tenant's Net Additional Revenue" shall mean the rent payable by any assignee or subtenant to Tenant, including any amounts paid in reimbursement for any expenses paid by Tenant (the "Sublease Rent") minus Tenant Operating Expenses. Tenant Operating Expenses shall mean (i) Base Rent payable to Landlord; (ii) amounts payable by Tenant for Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations made under this Lease;, (iii) amount payable by Tenant for Insurance required under this Lease; (iv) amounts payable by Tenant for Real Property Taxes; (v) amounts payable by Tenant for utilities and services as provided in Section 11; and (vi) reasonable amounts actually incurred by Tenant as costs of subleasing or assigning, including such brokers fees, attorney fees, costs of improvements, allowances, fees paid to the Tenant and its attorneys, and other related out of pocket costs as are reasonably necessary to sublease and maintain the Premises (collectively, "Sublease Expenses"). Sublease Expenses shall be subtracted from the Sublease Rent in the month in which incurred and carried forward until deducted in full. Tenant may calculate Tenant Operating Expenses on an estimated basis and pay Landlord's share of Tenant's Net Additional Revenue of such basis. Not later than 90 days after the end of each calendar year, Tenant shall reconcile the Sublease Rent and Tenant Operating Expenses for the prior calendar year by delivering a written itemization thereof to Landlord. When the actual amount of the Tenant's Net Additional Revenue is determined, an appropriate lump sum adjustment shall be made between Landlord and Tenant with respect to Landlord's share thereof, with any excess payments made by Landlord credited to Tenant's next payment of Rent, or at Lease expiration or earlier termination, by payment to Tenant within 30 days of such determination, and any deficiency to be paid by Tenant within thirty (30) days after notice to Landlord of such determination. (c) [intentionally omitted] (d) [intentionally omitted] (e) [intentionally omitted] (f) [intentionally omitted] (g) [intentionally omitted] 12.2 Terms and Conditions Applicable to Assignment and Subletting. (a) Regardless of Landlord's consent, no assignment or subletting shall: (i) be effective without the express written assumption by such assignee or subtenant of the obligations of Tenant under this Lease, (ii) release Tenant of any obligations hereunder, (iii) alter the primary liability of Tenant for the payment of Rent or for the performance of any other obligations to be performed by Tenant, or (iv) fail to comply with applicable zoning and other laws and regulations. (b) Landlord may accept Rent or performance of Tenant's obligations from any person other than Tenant pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Landlord's right to exercise its remedies for Tenant's Default or Breach. (c) or subletting. Landlord's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment (d) In the event of any Default or Breach by Tenant, Landlord may proceed directly against Tenant, any Guarantors or anyone else responsible for the performance of Tenant's obligations under this Lease, including any assignee or subtenant, without first exhausting Landlord's remedies against any other person or entity responsible therefor to Landlord, or any security held by Landlord. PAGE 6OF15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOC IATION INITIALS FORM MTN-5-5/05E (e) (intentionally omitted] (f) Any assignee of, or subtenant under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Tenant during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Landlord has specifically consented to in writing. (g) [intentionally omitted] 12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Tenant of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: (a) Tenant hereby assigns and transfers to Landlord all of Tenant's interest in all Rent payable on any sublease, and Landlord may collect such Rent and apply same toward Tenant's obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Tenant's obligations , Tenant may collect said Rent. In the event that the amount collected by Landlord exceeds Tenant's then outstanding obligations any such excess shall be refunded to Tenant. Landlord shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the subtenant for any failure of Tenant to perform and comply with any of Tenant's obligations to such subtenant. Tenant hereby irrevocably authorizes and directs any such subtenant, upon receipt of a written notice from Landlord stating that a Breach exists in the performance of Tenant's obligations under this Lease, to pay to Landlord all Rent due and to become due under the sublease. Subtenant shall rely upon any such notice from Landlord and shall pay all Rents to Landlord without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Tenant to the contrary. (b) In the event of a Breach by Tenant, Landlord may, at its option, require subtenant to attorn to Landlord, in which event Landlord shall undertake the obligations of the sublandlord under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Landlord shall not be liable for any prepaid rents or security deposit paid by such subtenant to such sublandlord or for any prior Defaults or Breaches of such sublandlord . (c) Any matter requiring the consent of the sublandlord under a sublease shall also require the consent of Landlord. (d) No subtenant shall further assign or sublet all or any part of the Premises without Landlord's prior written consent. (e) Landlord shall deliver a copy of any notice of Default or Breach by Tenant to the subtenant, who shall have the right to cure the Default of Tenant within the grace period, if any, specified in such notice. The subtenant shall have a right of reimbursement and offset from and against Tenant for any such Defaults cured by the subtenant. 13. Default; Breach; Remedies. 13.1 Default; Breach. A "Default" is defined as a failure by the Tenant to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease . A "Breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Tenant to cure such Default within any applicable grace period : (a) The abandonment of the Premises ; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism . (b) The failure of Tenant to make any payment of Rent or any Security Deposit required to be made by Tenant hereunder, whether to Landlord or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Tenant. (c) The commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Tenant, where such actions continue for a period of 3 business days following written notice to Tenant. (d) The failure by Tenant to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) an Estoppel Certificate, (iv) a requested subordination , (v) evidence concerning any guaranty and/or Guarantor, (vi) any document requested under Paragraph 42, (vii) material safety data sheets (MSDS), or (viii) any other documentation or information which Landlord may reasonably require of Tenant under the terms of this Lease, where any such failure continues for a period of 30 days following written notice to Tenant. (e) A Default by Tenant as to the terms, covenants, conditions or provisions of this Lease, other than those described in subparagraphs 13.1 (a), (b), (c) or (d), above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Tenant's Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Tenant commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion. (f) The occurrence of any of the following events : (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C . §101 or any successor statute thereto (unless, in the case of a petition filed against Tenant, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within 30 days; or (iv) the attachment. execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (g) The discovery that any financial statement of Tenant or of any Guarantor given to Landlord was materially false. PAGE 9 OF 15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION INITIALS FORM MTN-5-5/05E (h) [intentionally omitted] 13.2 Remedies. If Tenant fails to perform any of its affirmative duties or obligations, within 1 O days after written notice (or in case of an emergency, without notice), Landlord may, at its option, perform such duty or obligation on Tenant's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Tenant shall pay to Landlord an amount equal to 120% of the costs and expenses incurred by Landlord in such performance upon receipt of an invoice therefor. In the event of a Breach, Landlord may, with or without further notice or demand, and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such Breach: (a) Terminate Tenant's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession to Landlord. In such event Landlord shall be entitled to recover from Tenant: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Tenant proves could have been reasonably avoided; (iii) 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 such rental loss that the Tenant proves could be reasonably avoided; and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by the Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Landlord in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Landlord to mitigate damages caused by Tenant's Breach of this Lease shall not waive Landlord's right to recover damages under Paragraph 12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Landlord shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Landlord may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Tenant under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Tenant to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Landlord to the remedies provided for in this Lease and/or by said statute. (b) Continue the Lease and Tenant's right to possession and recover the Rent as it becomes due, in which event Tenant may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Landlord's interests, shall not constitute a termination of the Tenant's right to possession. (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Tenant's right to possession shall not relieve Tenant from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Tenant's occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Landlord to or for Tenant of any cash or other bonus, inducement or consideration for Tenant's entering into this Lease, all of which concessions are hereinafter referred to as "Inducement Provisions," shall be deemed conditioned upon Tenant's full and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Tenant, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Landlord under such an inducement Provision shall be immediately due and payable by Tenant to Landlord, notwithstanding any subsequent cure of said Breach by Tenant. The acceptance by Landlord of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Landlord of the provisions of this paragraph unless specifically so stated in writing by Landlord at the time of such acceptance. 13.4 Late Charges. Tenant hereby acknowledges that late payment by Tenant of Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Landlord by any Lender. Accordingly, if any Rent shall not be received by Landlord within 5 days after such amount shall be due, then, without any requirement for notice to Tenant, Tenant shall immediately pay to Landlord a one-time late charge equal to 10% of each such overdue amount or $100, whichever is greater. The Parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of such late payment. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Landlord's option, become due and payable quarterly in advance. 13.5 Interest. Any monetary payment due Landlord hereunder, other than late charges, not received by Landlord, when due as to scheduled payments (such as Base Rent) or within 30 days following the date on which it was due for non- scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments. The interest ( "Interest") charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4. 13.6 Breach by Landlord. (a) Notice of Breach. Landlord shall not be deemed in breach of this Lease unless Landlord fails within a reasonable time to perform an obligation required to be performed by Landlord. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Landlord, and any Lender whose name and address shall have been furnished Tenant in writing for such purpose, of written notice specifying wherein such obligation of Landlord has not been performed; provided, however, that if the nature of Landlord's obligation is such that more than 30 days are reasonably required for PAGE 10 OF 15 INITIALS El(hibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASS OCIATIO N INITIALS FORM MTN-5-5/05E its performance , then Landlord shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion. (b) Performance by Tenant on Behalf of Landlord. In the event that neither Landlord nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Tenant may elect to cure said breach at Tenant's expense and offset from Rent the actual and reasonable cost to perform such cure, or Tenant may elect to cure such breach at Tenant's expenses and pursue an action at law or in equity against Landlord including without limitation an action seeking specific performance of this Lease t. Tenant shall document the cost of said cure and supply said documentation to Landlord. 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the Building is taken by Condemnation, Tenant may, at Tenant's option, to be exercised in writing within 10 days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Tenant does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation . Condemnation awards and/or payments shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided , however, that Tenant shall be entitled to any compensation paid by the condemner for Tenant's relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Tenant, for purposes of Condemnation only, shall be considered the property of the Tenant and Tenant shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Landlord shall repair any damage to the Premises caused by such Condemnation. 15. Brokerage Fees . 15.1 Representations and Indemnities of Broker Relationships. Tenant and Landlord each represent and warrant to the other that it has had no dealings with any person , firm, broker or finder in connection with this Lease, and that no one is entitled to any commission or finder's fee in connection herewith. Tenant and Landlord do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys' fees reasonably incurred with respect thereto. 16. Estoppal Certificates. (a) Each Party (as "Responding Party") shall within 10 days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current "Estoppal Certificate" form published by the AIR Commercial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party . (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if Landlord is the Requesting Party, not more than one month's rent has been paid in advance . Prospective purchasers and encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate . (c) If Landlord desires to finance, refinance, or sell the Premises, or any part thereof, Tenant and all Guarantors shall deliver to any potential lender or purchaser designated by Landlord such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Tenant's financial statements for the past 3 years. All such financial statements shall be received by Landlord and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 17. Definition of Landlord. The term "Landlord" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Tenant's interest in the prior lease . In the event of a transfer of Landlord's title or interest in the Premises or this Lease, Landlord shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Landlord . Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Landlord shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Landlord . Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Landlord shall be binding only upon the Landlord as hereinabove defined . 18. Severablllty . The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days. 20. Limitation on Liability. The obligations of Landlord under this Lease shall not constitute personal obligations of Landlord or its city council members, administrators, managers , employees, contractors, counsel, or agents, and Tenant shall look to the Premises, and to no other assets of Landlord, for the satisfaction of any liability of Landlord with respect to this Lease, and shall not seek recourse against Landlord's partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction . 21. Time of Essence . Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. PAGE 11OF15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION INITIALS FORM MTN-5-5/05E 22. No Prior or Other Agreements. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. 23. Notices. 23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Tenant's taking possession of the Premises, the Premises shall constitute Tenant's address for notice. A copy of all notices to Landlord shall be concurrently transmitted to such party or parties at such addresses as Landlord may from time to time hereafter designate in writing. 23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 24. Waivers. (a) No waiver by Landlord of the Default or Breach of any term, covenant or condition hereof by Tenant, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Tenant of the same or of any other term, covenant or condition hereof. Landlord's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to, or approval of, any subsequent or similar act by Tenant, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. (b) The acceptance of Rent by Landlord shall not be a waiver of any Default or Breach by Tenant. Any payment by Tenant may be accepted by Landlord on account of moneys or damages due Landlord, notwithstanding any qualifying statements or conditions made by Tenant in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Landlord at or before the time of deposit of such payment. (c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE. 25. [intentionally omitted]. 26. No Right To Holdover. Tenant has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Tenant holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Landlord to any holding over by Tenant. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Tenant are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. 29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. 30. Subordination; Attornment; Non-Disturbance. 30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Tenant agrees that the holders of any such Security Devices (in this Lease together referred to as "Lender") shall have no liability or obligation to perform any of the obligations of Landlord under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Tenant, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. 30.2 Attornment. In the event that Landlord transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Devise to which this Lease is subordinated (i) Tenant shall, have the right to terminate this Lease or, at its election, subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Tenant and such new owner, and (ii) Landlord shall thereafter be relieved of any further obligations hereunder (but not of its obligations under that certain Agreement of Purchase and Sale -Palm Development Site, to be executed and delivered between the City and SLO Chinatown, LLC, a California limited liability company) and such new owner shall assume all of Landlord's PAGE 12 OF 15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOC IATIO N INITIALS FORM MTN-5-5/05E obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior Landlord or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Tenant might have against any prior Landlord, (c) be bound by prepayment of more than one month's rent, or (d) be liable for the return of any security deposit paid to any prior Landlord which was not paid or credited to such new owner. 30.3 Non-Disturbance. With respect to Security Devices entered into by Landlord after the execution of this Lease, Tenant's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non- Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Tenant's possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Tenant is not in Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Landlord shall, if requested by Tenant, use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Landlord is unable to provide the Non-Disturbance Agreement within said 60 days, then Tenant may, at Tenant's option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement. 30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Landlord or a Lender in connection with a sale, financing or refinancing of the Premises, Tenant and Landlord shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein. 31. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred. In addition, Landlord shall be entitled to attorneys' fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation). 32. Landlord's Access; Showing Premises; Repairs. Landlord and Landlord's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Landlord may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect to Tenant's use of the Premises. All such activities shall· be without abatement of rent or liability to Tenant. 33. Auctions. Tenant shall not conduct, nor permit to be conducted, any auction upon the Premises without Landlord's prior written consent. Landlord shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction. 34. Signs. Landlord may not place on the Premises any signs at any time other than following the giving of a notice of termination of this Lease without Tenant's prior written consent. All signs must comply with all Applicable Requirements. 35. Termination; Merger. Unless specifically stated otherwise in writing by Landlord, the voluntary or other surrender of this Lease by Tenant, the mutual termination or cancellation hereof, or a termination hereof by Landlord for Breach by Tenant, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Landlord may elect to continue any one or all existing subtenancies. Landlord's failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Landlord's election to have such event constitute the termination of such interest. 36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Landlord's actual reasonable costs and expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Tenant for any Landlord consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Tenant upon receipt of an invoice and supporting documentation therefor. Landlord's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Tenant of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Landlord at the time of such consent. The failure to specify herein any particular condition to Landlord's consent shall not preclude the imposition by Landlord at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 1 O business days following such request. 37. [intentionally omitted] 38. Quiet Possession. Subject to payment by Tenant of the Rent and performance of all of the covenants, conditions and provisions on Tenant's part to be observed and performed under this Lease, Tenant shall have quiet possession and quiet enjoyment of the Premises during the term hereof. 39. [intentionally omitted] 40. [intentionally omitted] 41. Security Measures. Tenant hereby acknowledges that the Rent payable to Landlord hereunder does not include the cost of guard service or other security measures, and that Landlord shall have no obligation whatsoever to provide PAGE 13 OF 15 INITIALS Exhibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATIO N INITIALS FORM MTN-5-5/05E same. Tenant assumes all responsibility for the protection of the Premises, Tenant, its agents and invitees and their property from the acts of third parties. 42. Reservations. Landlord reserves to itself the right, from lime to time, to grant, without the consent or joinder of Tenant, such easements, rights and dedications that Landlord deems necessary, and to cause the recordalion of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Tenant. Tenant agrees to sign any documents reasonably requested by Landlord to effectuate any such easement rights, dedication, map or restrictions. 43. Performance Under Protest. If at any lime a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid "under protest" with 6 months shall be deemed to have waived its right to protest such payment. 44. Authority; Multiple Parties; Execution. (a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority. (b) If this Lease is executed by more than one person or entity as "Tenant", each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Tenants shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Tenants, and Landlord may rely on the same as if all of the named Tenants had executed such document. (c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto. 47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Tenant's obligations hereunder, Tenant agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises. 48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease .. D is 00 is not attached to this Lease. 50. Americans with Disabilities Act. Since compliance with the Americans with Disabilities Act (ADA) is dependent upon Tenant's specific use of the Premises, Landlord makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Tenant's use of the Premises requires modifications or additions to the Premises in order to be in ADA compliance, Tenant agrees to make any such necessary modifications and/or additions at Tenant's expense. LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE PREMISES. ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR TENANT'S INTENDED USE. WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED. PAGE 14 OF 15 INITIALS Exh ibit E to Palm Development Agreement ©2001 -AIR COMMERCIAL REAL ESTATE ASSOC IATIO N INITIALS FORM MTN-5-5/05E The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures. Executed at: San Luis Obispo, California On : ______________ ~ By TENANT: SLO CHINATOWN, LLC, a California limited liability company By : _____________ _ Name Printed: Thomas M. Copeland Title: Manager Address : P.O. Box 12260 San Luis Obispo , CA 93406 Telephone :(805) 593-0200 Facsimile:(805) 593-0109 Federal ID No . ------------ Executed at: San Luis Obispo, California On : ---------------~ By LANDLORD: CITY OF SAN LUIS OBISPO, a municipal corporation and charter city By: _____________ _ Name Printed : ___________ _ Title:--------------- By: _____________ _ Name Printed : ___________ _ Title :--------------- Address:-------------- Telephone :L_) __________ _ Facsimile:L_) Federal ID No . ___________ _ NOTICE: These forms are often modified to meet changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800, Los Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.: (213) 687-8616. © Copyright 2001 -By AIR Commercial Real Estate Association. All rights reserved. No part of these works may be reproduced in any form without permission in writing. PAGE 15 OF 15 INITIALS Exh ibit E to Palm Development Agreement '1:>2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION INITIALS FORM MTN-5-5/05E ,--~-~;;;;n;:;;----- 1 I I ,-' -----1 I : 60.00' ------!" Ol '!. 126.00' 48.16 ' i ~ I 9 ;;t H--------------~ 126.00' CHORRO STREET 134.58' I ' I ' L ___ tI:: I ---------------------1 0 10' 20' ----SCALE 119.38' 40' Ol :'> Ol "l. • REAL PROPERTY MORRO STREET EXHIBIT A 955 MORRO BUILDING Exhibit E to Palm Development Agreement I 216.72' Exhibit F to Agreement of Purchase and Sale -Palm Development Site RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Certificate of Completion City of San Luis Obispo, a municipal corporation and a chartered city organized and existing under the Constitution of the State of California ("Grantor"), hereby certifies with respect to Section 7.01 of that certain Agreement of Purchase and Sale-Palm Development Site, dated as of December_, 2011, executed by SLO Chinatown, LLC, a limited liability company ("Grantee") in favor of Grantor, and that certain Grant Deed recorded in the Official Records of the County of San Luis Obispo County on , 200 _, as document number _____ , with respect to the real property more specifically described in Exhibit 1 attached hereto (collectiv ely, the "Property Restrictions"), as follows: 1. The Project has been substantially completed in accordance with the P ermits ; and 2 . All covenants and obligations of Grantee and its successors and assigns under the Property Restrictions, including without limitation the right of reverter and power of termination of Grantor, have ceased and terminated . All capitalized terms not otherwise defined in this Certificate of Completion shall have the meaning given in the Property Restrictions. This Certificate of Completion has been duly executed by an authorized person on behalf of Grantor as of 200 . APPROVED: City Attorney City of San Luis Obispo PalmDevPSAExhibitFCertComplete-12 1411 12/14/2011 GRANTOR: CITY OF SAN LUIS OBISPO, a municipal corporation and Charter City By: Its: