ucd west village student commercial ground lease

8/6/2019 UCD West Village Student Commercial Ground Lease

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COMMUNITY COLLEGE LEASETHE REGENTS OF THE UNIVERSITY OF CALIFORNIAa California public corporation

("University")-AND-

LOS RIOS COMMUNITY COLLEGE DISTRICT,a political subdivision of the State ofCalifornia("Los Rios")May 25, 2010


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TABLE OF CONTENTSPage

ARTICLE I DEFINITIONS ................................................................................................. 1Definitions ........................................................................................... 1ection 1.1

ARTICLE II GRANT, TERM AND CONDITION ............................................................ 10Section 2.1Section 2.2

Lease .................................................................................................. 10Tenn ................................................................................................... 10Condition ofLeased Land .................................................................. 11ection 2.3

ARTICLE III PERMITTED USE ........................... ............................................................. 13Section 3.1Section 3.2Section 3.3Section 3.4Section 3.5Section 3.6Section 3.7Section 3.8

Use ofLeased Land ............ ............................................................... 13- Construction Staging ......................................................................... 13

Waste; Nuisance ................................................................................ 13Hazardous Substances ........................................................................ 14Maintenance ofLeased Land and Project Improvements .................. 15Compliance With Applicable Laws ................................................... 15Right to Contest ................................................................................. 16Advertising and Signs ........... ......................................... .................... 16University 's Reserved Uses ............................................................... 17

\Section 3.9

ARTICLE IV CONSTRUCTION AND IMPROVEMENT OF LEASED LAND .............. 18Section 4.1Section 4.2Section 4.3Section 4.4Section 4.5Section 4.6Section 4.7Section 4.8Section 4.9Section 4.10

Project Improvements ........................................................................ 18DIG and CCCPD ............................................................................... 19University Plan Review ..................................................................... 19Compliance with Applicable Laws .................................................... 20Mitigation Measures .......................................................................... 21Los Rios' Contractors ........................................................................ 21Utilities and Other Facilities .............................................................. 21Evidence ofCompletion .................................................................... 22University Inspections ....................................................................... 23As-Built Plans .................................................................................... 23

Section 4.11 Ownership ofProject Improvements ................................................. 24ARTICLE V LEASE CONSIDERATION ......................................................................... 24

Section 5.1 Annual Rent ....................................................................................... 24-1 -


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Section 5.2Section 5.3Section 5.4Section 5.5Section 5.6Section 5.7Section 5.8

TABLE OF CONTENTS(continued)Page

Payment For Project Improvements ................................................... 24University Fees .................................................................................. 25Municipal Fees ................................................................................... 25Mitigation Fees .................................................................................. 25Development Documents ................................................................... 25Other Payments .................................................................................. 25Net Lease; No Rent Abatement or Reduction ................................... 25

ARTICLE VI TAXES AND ASSESSMENTS .................................................................... 26Section 6.1Section 6.2Section 6.3Section 6.4Section 6.5

Taxes and Assessments ...................................................................... 26Liens and Delinquencies .................................................................... 27Los Rios' Right to Contest ................................................................ 27Replacement Taxes ............................................................................ 27Survival .............................................................................................. 27

ARTICLE VII IN"SURANCE ................................................................................................. 28Section 7.1Section 7.2Section 7.3Section 7.4Section 7.5Section 7.6Section 7.7Section 7.8Section 7.9Section 7.10

Construction Related Insurance ......................................................... 28Insurance Generally ........................................................................... 29Periodic Increases .............................................................................. 30Los Rios Not Relieved ....................................................................... 30Proofof Insurance .............................................................................. 30Compliance with Requirements ofCarriers ....................................... 31Non-Contributing ............................................................................... 31Form ofPolicies ................................................................................. 31Settlement ofClaims ......................................................................... 31Self Insurance .................................................................................... 32

ARTICLE VllI DAMAGE OR DESTRUCTION .................................................................. 32Section 8.1 Insured Risk ....................................................................................... 32Section 8.2 Uninsured Risk .................................................................................. 32

ARTICLE IX CONDEMNATION ....................................................................................... 33Section 9.1 Lease Governs .................................................................................... 33Section 9.2 Total Taking; Termination; Distribution ofAward ........................... 33

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TABLE OF CONTENTS(continued)Page

Section 9.3 Partial Taking; Affect; Restoration; Distribution ofAward .............. 34Section 9.4 Temporary Taking; Affect; Distribution ofAward ........................... 35Section 9.5 Notice ................................................................................................. 35

ARTICLE X ASSIGNMENT AND SUBLETTING .......................................................... 35ARTICLE XI INDEMNITY, CLAIMS, LIENS AND ENCUMBRANCES ....................... 36

Section 11.1Section 11.2Section 11.3Section 11.4

Los Rios Indemnity ........................................................................... 36University Indemnity ......................................... ............................. 36Covenailt Against Encumbrances ...................................................... 37Survival .............................................................................................. 37

ARTICLE XII HOLDING OVER, SURRENDER, OWNERSHIP OF PROJECTIMPROVEMENTS ........................................................................................ 37Section 12.1Section 12.2Section 12.3Section 12.4Section 12.5Section 12.6

Holding Over ..................................................................................... 37Ownership ofProject Improvements ................................................. 37Surrender ofLeased Land .................................................................. 38Abandoned Property .......................................................................... 38Relocation .......................................................................................... 39Survival .............................................................................................. 39

ARTICLE XIII DEFAULT ............................................................................................, ....... 39Section 13.1Section 13.2Section 13.3Section 13.4Section 13.5

Default by Los Rios ........................................................................... 39Default by University ........................................................................ 40Remedies ofUniversity ..................................................................... 40Remedies ofLos Rios ........................................................................ 41Remedies are Cumulative ........: ................................................. : ..... 42

Section 13.6 Failure of Los Rios to Perform Required Acts .................................. 42ARTICLE XIV FINANCING ................................................................................................. 43

Section 14.1Section 14.2Section 14.3Section 14.4Section 14.5

Controlling Provisions ....................................................................... 43Financing ........................................................................................... 43Transfer .............................................................................................. 44Notice to Leasehold Mortgagee ......................................................... 45Request for Notice ofDefaults .......................................................... 45

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Section 14.6Section 14.7Section 14.8Section 14.9Section 14.10Section 14.11

TABLE OF CONTENTS(continued) PageLeasehold Mortgagee's Cure Rights .................................................. 45New Lease ......................................................................................... 47Merger ............................................................................................... 47No Modification, Etc ......................................................................... 48Limitation on Leasehold Mortgagee Liability ................................... 48Conflict .............................................................................................. 48

ARTICLE XV QUIET ENJOYMENT .................................................................................. 48ARTICLE XVI EQUAL OPPORTIJNITY ............................................................................. 49

Section 16.1 Los Rios' Obligations ........................................................................ 49Section 16.2 Univers ity 's Right and Remedies ...................................................... 49

ARTICLE XVII RIGHT OF FIRST REFUSAL ...................................................................... 49Section 17.1 Los Rios Decision to Sell Project and Assign Lease ......................... 49Section 17.2 Right ofFirst Offer and Right of First Refusal .................................. 49

ARTICLE XVIII MISCELLANEOUS ...................................................................................... 50Section 18.1Section 18.2Section 18.3Section 18.4Section 18.5Section 18.6Section 18.7Section 18.8Section 18.9Section 18.1 0Section 18.11Section 18.12Section 18.13Section 18.14Section 18.15Section 18.16

Notices ............................................................................................... 50Brokerage Commissions .................................................................... 51Nonmerger of Fee and Leasehold Estates .......................................... 51Entry of Leased Land by University .................................................. 51Force Majeure Delay ......................................................................... 51Time of the Essence ........................................................................... 52Waiver ............................................................................................... 52Captions ............................................................................................. 52Governing Law .................................................................................. 52Entire Agreement ............................................................................... 52Right to Request Injunction ............................................................... 52Severability ........................................................................................ 53Late Charge and Interest Rate to be Paid ........................................... 53Representations and Warranties by Los Rios .................................... 53Representations and Warranties by University ................................. 53Relationship of Parties ....................................................................... 54

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Section 18.17Section 18.18Section 18.19Section 18.20Section 18.21Section 18.22

TABLE OF CONTENTS(continued) PageAttorneys' Fees and Costs ...................................................... ........... 54Survival ofCovenants .... ..................................................................... 54Binding Effect ................................................................................... 54Execution in Counterparts ................................................................. 54Memorandum ofLease ................................................ : .................... 54Press Releases .................................................................................... 54

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ExhibitA-I:ExhibitA-2:Exhibit A-3l!.'xhibit B:l!.'xhihit c:Exhibit C-l.'Exhibit C-2:Exhibit D:Jxhlbit E:Exltibit F:Exhibit G:Exhibit H:Exhibit I:l!.Xhlbit J:Exhibit K:Schedule J7.2:

TABLE OJ? CONTENTS(continued)

West Village Land AreaLeased LandDJlJSD ParcelImplementation PlanPad Area ImprovementsDeferred ImprovementsConstruction Provisions For Deferred ImprovementsUniversity FeesAssignment of WarrantiesUniversity Services Required CapacityReservedMitigation MeasuresLos Rios ConsultantsConsent To Assignment OfDevelopment DocumentsMemorandum OfLeaseRight Of First Offer And Right Of First Refusal

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"Assessments" shall mean any and all possessory use taxes and assessments or levies orcharges assessed or imposed against the Leased Land, the Project and/or the ProjectImprovements made by any municipal government or political subdivision for localimprovements or any other governmental agency; provided, however, that "Assessments" shallnot include the Municipal Fees imposed, created or adopted by University."Building" shall mean each of hree (3) separate improvements, one (1) constructed for

each of hree (3) phases of the Project Improvements."Business Day" shall mean each calendar day other than Saturday, Sunday and any daywhich is observed as a federal or University holiday."Campus" shalfinean any facility owned, operated or occupied by the University ofCalifornia at Davis, other than any of the Project Improvements leased pursuant to this Lease,together with all associated unimproved land and access routes."CCCPD" shall mean the Chancellor's Committee on Campus Planning and Design ofUniversity's Davis campus administration."Claims" shall mean any and all claims, suits, causes of action, demands, losses,

damages, diminution ofproperty value, liabilities, fines, penalties, costs, taxes, charges,administrative and judicial proceedings, orders, judgments, remedial actions and compliancerequirements, including, without limitation, enforcement and clean-up actions, third-party tortand property claims, natural resource damages and other expenses (including, without limitation,attorneys' and consultants' and experts' fees and costs of defense)."Completion" shall mean the approval by the State Fire Marshall for occupancy of anygiven Building."Condemned Land Value" shall have the meaning set forth in Section 9.1(e) of thisLease."Construction Drawings" shall mean the 70% construction drawings for any givenBuilding."County" shall mean the County ofYolo, State ofCalifornia."CPI Index" shall mean the Consumer Price Index - All Urban Consumers, for the SanFrancisco-Oakland-San Jose Area, reflecting All Items, published by the Bureau of Labor

Statistics of the United States Department ofLabor (1982-84=100). If the base year of the CPIIndex is changed, then the calculation hereunder shall be made utilizing the appropriateconversion factor published by the Bureau ofLabor Statistics (or successor agency) to reflect thebase year of the CPI Index herein specified. Ifno such conversion factor is published, then theparties shall, i f possible, make the necessary calculation to achieve such conversion. I f suchcalculation is not possible, or if publication of the CPI Index is discontinued, or if the basis ofcalculating the CPI Index is materially changed, the term "CPI Index" shall mean comparablestatistics on the cost ofliving as computed by an agency of the United States Governmentperfonning a function similar to the Bureau ofLabor Statistics, or, ifnone, by a substantial and

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"Environmental Consultanf' shall mean a third party consultant with expertise in theclean-up and remediation of Hazardous Substances who has been selected by Los Rios andreasonably approved by the University.

"Environmental Remediation Plan" shall mean a plan for clean-up and remediation ofHazardous Substances which is designed to (x) comply with all Applicable Laws, (y) achieve along-term solution for the affected land area that will permit the use of the affected land area forthe uses contemplated in connection with the Master Project, and (z) ensure that monitoring orother facilities are not required to be maintained on the affected land area past the end of theTerm.

"Extension Oppon" shall have the meaning set forth in Section 2.2(a) of this Lease."Extension Term" shall have the meaning set forth in Section 2.2(a) of this Lease."Force Majeure" shall mean a prevention, delay or stoppage of a party's performance of

its obligations under this Lease which arises as a result of (i ) events beyond the reasonablecontrol, prevention and foreseeability of he party affected by the delay, including, withoutlimitation, strikes, acts of God, inability to obtain labor or materials, governmental restriction ordelay (but only to the extent that any such delay is not attributable to the failure of he partywhose performance is delayed to comply with requirements imposed by Applicable Laws),enemy action, civil commotion, fire, or other casualty, but (x) expressly excluding fmanciaIinability, and (y) expressly acknowledging that the actions of any party's employees, agents andcontractors are to be deemed to be within the reasonable control, prevention and forseeability ofsuch party for the purposes of his definition, or (ii) with respect to a claim of Force Majeure by(x) Los Rios as the affected party, any University Default, which adversely affects such affectedparty's ability to perform, and (y) University as the affected party , any Los Rios Default whichadversely affects University' s ability to perform.

"Fun Insurable Replacement Value" means one hundred percent (100%) of the actualcost to replace any given Building (without deduction for depreciation but with standardexclusions such as foundations, excavations, paving and landscaping, as applicable to specificperils), including the costs of demolition and debris removal, an increased cost of constructionendorsement and, in the case of builders risk or course of construction insurance, materials andequipment not in place but in transit to or delivered to the Project. The Full InsurableReplacement Value initially shall be determined at Los Rios expense by an appraiser selected byLos Rios and reasonably approved by the insurer(s) and University. University may require theFull Insurable Replacement Value to be redetermined, at Los Rios expense, every five (5) years,by an appraiser selected by Los Rios and reasonably approved by the insurer(s) and University

"Governmental Authorizations" shall mean any and all consents, approvals, andpermits of applicable governmental authorities having jurisdiction over the Leased Land as maybe necessary for construction, ownership, use, occupancy, management, operation, repair and/ormaintenance the Project Improvements, with the exception of the University Authorizations.

"Hazardous Substance" shall mean (a) any material or substance defmed as (i) a"hazardous waste", "extremely hazardous waste" or "restricted hazardous waste" under-4-


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Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of he California Healthand Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control law); (li) a "hazardoussubstance" under Section 26316 of the California Health and Safety Code, Division 20, Chapter6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (iii) a "hazardous material,""hazardous substance" or "hazardous waste" under Section 25501 of the California Health andSafety Code, Division 20, Chapter 6.95, "Hazardous Substance" under Section 25281 of theCalifornia Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage ofHazardous Substances); (iv) a "hazardous substance" pursuant to Section 101 of theComprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 etseq. (42 U.S.C. 9602) or any regulations promulgated thereunder or pursuant thereto; (v) a"hazardous waste" pursuant to the Resource Conservation and Recovery Act. 42 U.S.C. 6901et seq. (42 U.S.C. 6901) or any regulations promulgated thereunder or pursuant thereto; (b) anymaterial or substance listed under Article 9 or defined as "hazardous" or "extremely hazardous"pursuant to Article 11 of Title 22 of the CalIfornia Administrative Code, Division 4, Chapter 20;(c) any material or substance designated as a "hazardous substance" pursuant to Section 311 ofthe Clean Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant to Section307 of the Clean Water Act (33 U.S.C. 6903) or any regulations promulgated thereunder orpursuant thereto; (d) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleumhydrocarbons; (e) asbestos and asbestos-containing material, in any form, whether friable ornon-friable; (f) polychlorinated biphenyls; (g) lead and leadcontaining materials; or (h) anyadditional substance, material or waste found to be a pollutant, contaminant, hazardous waste orhazardous substance in any reported decision of a federal or California state court, or which iscustomarily considered a hazardous substance or hazardous waste by reputable environmentalengineering firms and gives rise to liability under any federal or California common law theorybased on nuisance or strict liability.

"Hazardous Substance Condition" shall mean the presence of any HazardousSubstance on or about the Leased Land which is in violation of any Applicable Laws."Hazardous Substance Response Report" shall mean an environmental report preparedby the Environmental Consultant with respect to any Hazardous Substance Condi tion which shallreflect, with reasonable specificity, (i) the nature of the subject Hazardous Substance Condition,

(ii) an Environmental Remediation Plan for the remediation and clean-up of such HazardousSubstance Condition, (iii) an estimated timeline for performance of the clean-up and remediationoutlined in the Environmental Remediation Plan, and (iv) an estimated budget for completing theclean-up and remediation outlined in the Environmental Remediation Plan.

"Implementation Plan" shall mean the document entitled "West Village ImplementationPlan" dated November 2006, attached hereto as Exhibit B, as amended from time to time.

"Lease" shall mean this Ground Lease, as it may be amended from time to time bywritten agreement of University and Los Rios.

"Leased Land" shall have the meaning set forth in Recital C of this Lease."Leasehold Mortgagee" shall mean any bank, savings and loan association, pension

fund, insurance company, bond issuer, or other institutional financial lender who is a party to any-5-


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Land Area and be designed to incorporate approximately three hundred forty-three (343)single-family residences and apartment style housing for approximately nineteen hundred andeighty (1,980) students, together with amenities."Municipal Fees Amount" shall have the meaning set forth in Section 5.4 of his Lease."New Lease" shall have the meaning set forth in Section 14.6(a)(iii) of this Lease."Net Awards and Payments" shall have the meaning set forth in Section 9.1(t) of thisLease."Notices" shall have the meaning set forth in Section 18.1 of this Lease"Official Records" shall mean the Official Records of he County Recorder of YoloCounty, California"Outside Delivery Date" shall mean June 15,2010."Pad Area Improvements" shall mean the improvements described in Exhibit Cattached hereto."Partial Taking" shall have the meaning set forth in Section 9.1(c) of this Lease."Permitted Use" shall have the meaning set forth in Section 3.1 of this Lease."Physical Condition Claims" shall mean any and all demands, liens, claims, legal oradministrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costsor expenses whatsoever (including, without limitation, court costs and attorneys' fees anddisbursements), whether direct or indirect, known or unknown, foreseen or unforeseen, that mayarise on account of or in any way be connected with the Project and/or the Project Improvementsand the development thereof, including, without limitation, (i) any such items resulting from,arising out ofor otherwise connected to the physical condition of he Leased Land or the PadImprovements, including, without limitation, all structural and seismic elements, all mechanical,electrical, plumbing, sewage, heating, ventilating, air conditioning and other systems, theenvironmental condition of the Leased Land, the Pad Improvements and/or the Access Areasand the presence of Hazardous Materials on, under or about the Leased Land, the PadImprovements and/or the Access Areas, and (ii) any such items arising in connection with theenforcement of any federal, state and local statutes, regulations, rules, ordinances, and all othergovernmental requirements (including orders ofcourt) applicable to the Leased Land and/or theProject Improvements, or any portion thereof, including, without limitation, any Applicable

Laws."Plans and Specifications" shall mean the Preliminary Plans with respect to any givenBuilding which have been approved by the University pursuant to Section 4.2."Preliminary Plans" shall mean the Schematic Plans, DesignDevelopment Plans andthe Construction Drawings, specifications, and schedules which are to be submitted for approval

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by DIG, the CCCPD and the University with respect to any given Building.-7-


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"Pre-Commencement Termination Option" shall have the meaning set forth in Section2.2 of this Lease."Private Restr ictions" shall have the meaning set forth in Section 3.6 of this Lease."Project" shall have the meaning set forth in Recital B of this Lease."Project Certification" shall mean a written notice issued by the DSA within 120 daysafter occupancy with respect to any given Building certifying that such Building is complete andready for occupancy."Project Improvements" shall mean collectively the improvements to be constructedupon the Leased Land, as more particularly depicted within the Plans and Specifications for eachBuilding, including, five hundred (500) parking spaces, up to three buildings containing anaggregate of up to sixty thousand (60,000) assignable square feet of area, as the same may bemodified pursuant to the terms of this Lease, together with any and all alterations to any portion

thereof"Project Financing" shall have the meaning set forth in Section 14.2 of this Lease."Project Financing Documents" shall have the meaning set forth in Section 14.2 ofthisLease."Restore" or "Restoration" shall mean the repair, replacement or reconstruction ofdamage or destruction caused to the Project Improvements to at least substantially the samecondition as existed prior to such damage or destruction."Schematic Plans" shall mean the 100% schematic architectural drawings with respect

to any given Building."Subdivision Map" shall mean that certain Amended Map Subdivision Map No. 4947West Village recorded in the Official Records of he County as Book 2010 ofMaps, pages 32through 53, on May 14,2010, as may be amended from time to time.' 'Taking'' shall have the meaning set forth in Section 9.1(a) of this Lease."Taxes" shall mean all real property taxes, assessments, possessory use or interest taxes,and other similar governmental fees, assessments and charges, and other similar governmentalcharges, whether general or special, ordinary or extraordinary, which may be levied, assessed,charged or imposed, or may become a lien or charge upon the Leased Land, the Project, the

Project Improvements or any part or parts thereof, or upon Los Rios' estate created by this Lease,including, without limitation, possessory use taxes affecting land, any buildings, any parkingfacilities or any other improvements now or hereafter at any time during the Term located at oron the Leased Land.' 'Temporary Taking" shall have the meaning set forth in Section 9.1(d) of this Lease.' 'Term'' shall mean the tenn ofthis Lease as set forth in Section 2.2 of this Lease.

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"Term Expiration Date" shall mean the date which is one day preceding the sixty-fifth(65th) anniversary of the Delivery Date, as the same may be extended for any Extension Term."Title Exceptions" shall have the meaning set forth in Section 2.3(b) of this Lease."Total Taking" shall have the meaning set forth in Section 9.1(b) of this Lease."University" shall have the meaning set forth in the preamble of his Lease."University Authorizations" shall mean any and all consents, approvals, and permits ofUniversity as may be necessary, as determined by University from time to time, for construction,ownership, use, occupancy, management, operation, repair andlor maintenance the ProjectImprovements."University Fees" shall have the meaning set forth in Section 5.3 ofthis Lease."University Indemnitees" shall have the meaning set forth in Section 11.1 of his Lease."University Parties" shall mean (i) University, and (ii) the employees, agents andcontractors ofUniversity, and any materialmen or supplier who is accessing the Access Areasandlor the Leased Land in connection with work to be performed by University pursuant to thisLease, if any there be; provided, however, that in no event shall University Parties include anystudent of the University or any employee who is merely accessing the Leased Land as an owner

or occupant ofany residence within the Master Project."University Regulations" shall mean all existing and future policies, procedures, andregulations promulgated by University as reasonably applied, pertaining to the use ofUniversity's property generally and to activities taking place on the Campus, including, withoutlimitation, those relating to health, safety, and traffic enforcement."University Services Required Capacity" shall mean with respect to any givenBuilding, the service capacity for domestic water, sanitary sewer and storm water identified on

Exhibit F attached hereto with respect to such Building."West Village Land Area" shall mean the approximately two hundred twenty (220) acreparcel of real property depicted upon ExhibitA-l attached to this Lease."Work" shall mean Los Rios' construction activities and obligations with respect to theProject Improvements, including, without limitation, any site preparation performed, or to beperformed, on or about the Leased Land and the obligation for payment for any costs and

expenses associated with the foregoing."Work Outside Commencement Date" shall mean the second (2nd) anniversary of heDelivery Date."Work Outside Completion Date" shall mean twenty-second (22 nd) anniversary of theDelivery Date.

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ARTICLE IIGRANT, TERM AND CONDITION

Section 2.1 Lease. In consideration of the covenants and agreements to be observedand performed by the parties hereto, effective as of the Delivery Date, University hereby leasesto Los Rios, and Los Rios hereby hires from University, the Leased Land to be used solely forthe Permitted Use. Subject to the rights reserved to University hereunder, including, withoutlimitation the rights set forth in Section 3.9 and the rights.in connection with construction of heDeferred Improvements set forth in Exhibit C-2 attached hereto, Los Rios shall have the right tothe exclusive use of the Leased Land for the purposes set forth in this Lease. In addition,subject to the terms and conditions of this Lease, including, without limitation, the obligation tocomply with all Applicable Laws, University hereby grants to Los Rios and the other Los RiosParties, a non-exclusive license to enter upon (i) those road and street areas of he Wes t VillageLand Area, and (li) those road and street areas of he Campus which are owned or controlled bythe University and lie West of State Route 113 that are reasonably necessary in order to obtainaccess to the Leased Land for purposes of allowing Los Rios to perform its obligations andenjoy its rights and privileges hereunder (collectively herein the "Access Areas"). Withoutlimiting the foregoing, Los Rios acknowledges that certain road and street areas within the WestVillage Land Area will be controlled by WVCP until delivery of such roads and streets toUniversity pursuant to the terms of he Master Ground Lease arid that such areas shall notconstitute Access Areas until such delivery has occurred.

) Section 2.2 Term. The term (''Term'') of this Lease shall commence on the DeJiveryDate and expire on the Term Expiration Date, unless this Lease is sooner tenninated pursuant tothe terms hereof. On or before the Delivery Date, University shall complete, or shall cause tobe completed, the Pad Area Improvements (excluding the Deferred Improvements) which aredescribed in Exhibit C attached hereto. Notwithstanding the foregoing, or anything to thecontrary herein, if the University has not tendered possession of he Leased Land to Los Rioswith the Pad Area Improvements (excluding the Deferred Improvements) completed, asrequired herein, on or before the Outside Delivery Date, then Los Rios shall have the option(herein, the "Pre-CommencementTermination Option") to terminate this Lease withoutfurther liability or obligation hereunder and without the obligation to pay University thepayments set forth in A ~ T I C L E V. The Pre-Commencement Termination Option must beexercised, i f at all, by Notice from Los Rios to University given not more than sixty (60) daysfollowing the Outside Delivery Date; provided, however, that (i) ifUniversity tenderspossession of the Leased Land to Los Rios with the Pad Area Improvements (excluding theDeferred Improvements) completed, as required herein within such sixty (60) day period, or (ii)if Los Rios fails to exercise the Pre-Commencement Termination Option in a timely manner, asprovided for above, the Pre-Commencement Termination Option shall be void and of no forceor effect.

(a) Options to Extend the Term. Los Rios shall have one (1) option (the"Extension Option") to extend the Term of his Lease for a consecutive period of one hundredtwenty (120) months beyond the original Term Expiration Date (such extension the "ExtensionTerm"). The Extension Option is personal to Los Rios, and may only be exercised by Los Rios,not by any successor or assign of Los Rios.-10-


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(b) Option Election Procedures. The Extension Option must be exercised, ifat all, by Notice (herein, an "Election Notice") from Los Rios to University given not more thansix (6) months nor less than three (3) months prior to the original Term Expiration Date. TheExtension Option and Los Rios' delivery of an Election Notice shall be effective only if (i) noLos Rios Default is then occurring under this Lease, nor (ii) is any event then occurring whichwith the giving of Notice or the passage of time, or both, would constitute a Los Rios Defaulthereunder, either at the time of Los Rios' delivery of he Election Notice or the time ofcommencement of the Extension Term, and (iii) any Leasehold Mortgage encumbering LosRios' Interest has been paid in full and such Leasehold Mortgagee's interest has been releasedprior to the delivery of any such Election Notice. I f Los Rios fails to exercise the ExtensionOption in a timely manner, as provided for above, the Extension Option shall be void and ofnoforce or effect.

Section 2.3 Condition of Leased Land.(a) Delivery of Pad Area Improvements. In accordance with Section 6.4 of

the Master Ground Lease, between West Village Community Partnership, LLC ("WVCP") andthe University (the "Master Ground Lease"), WVCP shall construct the Pad AreaImprovements (including the Deferred Improvements) on Pad One (known herein as the LeasedLand) according to the specifications set forth in Master Ground Lease, Exhibit I (part 2)(Exhibit Cto this Lease) and deliver such improvements to University upon completion(provided, however, that the Deferred Improvements shall be completed after the Delivery Dateas set forth in Exhibit C-l hereto and Exhibit C-2 attached hereto). In turn, University shalldeliver the Leased Land with the Pad Area hnprovements in the same condition as received fromWVCP to Los Rios on the Delivery Date (subject to the deferred delivery of he DeferredImprovements as set forth in Exhibit C-l hereto ,and Exhibi t C-2 attached hereto). Universityshall assign to Los Rios on the Delivery Date all warranties, whether express or implied, withrespect to the Pad Area Improvements, whether from WVCP, University'S contractor orWVCP's contractor, by delivery of an assignment in the form attached as Exhibit E.

(b) Los Rios' Investigation. Los Rios accepts the Leased Land, including thePad Area Improvements, "as is/in its present condition/with all faults" without representationor warranty ofUniversity and subject to all encumbrances, liens, restrictions, or other mattersaffecting title as of the Effective Date (collectively, ''Title Exceptions"), w h e t ~ e r such TitleExceptions are ofrecord or not. Los Rios acknowledges that it has had the advice of suchindependent attorneys, professional consultants and experts as i t deems necessary in connectionwith its investigation and study of the Leased Land and has, to the extent it deemed necessary,independently investigated the condition of he Leased Land, including, without limitation, thePad Area Improvements, the soils, hydrology and seismology thereof, title to the Leased Land,the Applicable Laws. Without limiting the foregoing, Los Rios acknowledges that it has beenprovided copies of and has reviewed all matters reflected within any Entitlement Documentsexisting prior to the Effective Date and that the construction, use, occupancy, management,operation, repair and maintenance of the Project Improvements, and all portions thereof, and alluse of the Leased Land shall be subject to compliance with the Entitlement Documents, whethersuch Entitlement Documents are obtained or in effect prior to or after the Effective Date.

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(e) Suitability of Site. University makes no warranty as to the suitability ofthe Leased Land for construction of the Project or any portion thereof. University makes nocovenants or warranties respecting the condition of he soil, subsoil or any other condition of theLeased Land or the Pad Area Improvements, nor does University make any covenant,representation or warranty regarding the suitability of the Leased Land or the Pad AreaImprovements for the proposed development, construction or use by Los Rios. Without limitingthe foregoing, Los Rios acknowledges that the soil on the Leased Land or the Pad AreaImprovements mayor may not be suitable for the purposes intended by Los Rios or be of suchcharacter and condition so as to require special engineering for construction of the ProjectImprovements. Notwithstanding anything to the contrary herein, University shall not beresponsible for any land subsidence, soil instability or damage resulting therefrom on the LeasedLand or the Pad Area l1pprovements except and to the extent caused by University's negligenceand University shall not be required or obligated to make any changes, alterations, additions,improvements or repairs in, on, under or about the Leased Land or any real property adjacent toor serving as ingress or egress from the Leased Land.

(d) Waiver and Release. Los Rios on behalf of itself and its successors andassigns waives its right to recover from, and forever releases and discharges, University and theUniversity Indemnitees, and their respective heirs, successors, personal representatives andassigns, from any and all Physical Condition Claims, whether direct or indirect, known orunknown, foreseen or unforeseen. Los Rios hereby acknowledges and agrees that neitherUniversity nor any other University Indemnitees have made any representation or warrantywhatsoever in connection with the Leased Land, the Pad Area Improvements, the Project and/orthe Project Improvements. Los Rios hereby further acknowledges and agrees that (i) neitherUniversity or any other University Indemnitees shall be liable for any Physical ConditionClaims, (ii) neither University or any other University Indemnitees shall be liable for damage orinconvenience to Los Rios' business or for any loss of income or profit therefrom, or for anyconsequential, indirect, incidental, special, punitive, or exemplary damages, irrespective ofwhether or not such losses or damages arise from the negligence or misconduct of any UniversityIndemnitees, and (iii) Los Rios, on behalf of itself and its successors and assigns, waives its rightto recover from and forever releases University and the University Indemnitees, and theirrespective heirs, successors, personal representatives and assigns, from liability with respect to(x) any Physical Condition Claims, and (y) any damage or inconvenience to Los Rios' businessor any loss of income or profit therefrom, or for any consequential, indirect, incidental, special,punitive, or exemplary damages, in either such case, whether any of the matters identified initems (x) or (y) were direct or indirect, known or unknown, foreseen or unforesecn andirrespective of whether or not any losses, damages or claims with respect to such matters arisefrom the negligence or misconduct of any University Indemnitee. In connection with theforegoing, Los Rios expressly waives the benefits of Section 1542 of the California Civil Code,which provides as follows:

"A GENERAL RELEASE DOES NO T EXTEND TO CLAIMS WHICHTHE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN msOR HER FAVOR AT THE TIME OF EXECUTING TH E RELEASE,WHICH IF KNOWN BY IDM OR HER MUST HAVE MATERIALLYAFFECTED IDS OR HER SETTLEMENT WITH THE DEBTOR."

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LOS RIOS ACKNOWLEDGES AND AGREES THAT IT HAS BEEN REPRESENTED BYLEGAL COUNSEL OF ITS CHOICE IN CONNECTION WITH THIS LEASE, AND THATSUCH COUNSEL HAS EXPLAINED TO LOS RIOS THE PROVISIONS OF THISSECTION 2.3. BY INITIALING BELOW, LOS RIOS CONFIRMS IT HAS AGREED TOTHE PROVISIONS OF THIS SECTION 2.3.LOS RIOS' INITIALS:

ARTICLE IIIPERMITTED USE

Section 3.1 Use of Leased Land. The Leased Land shall be used solely for theconstruction and maintenance of he Project Improvements and use, occupancy, management,operation, repair and maintenance of the Project Improvements for educational purposes as acommunity college center, including, classrooms and related administrative offices, foodserviceand storage (collectively, the "Permitted Use"). Any change to the Permitted Use shall requirethe prior written consent of University, which consent may be granted or withheld inUniversity's sole and absolute discretion. A change to the use of all or any portion of theLeased Land or the Project Improvements which has not been approved in writing by Universityshall constitute a Los Rios Default under this Lease.

Section 3.2 Construction Staging. At all times during the Term, Los Rios shallperform all construction staging for the Project Improvements on the Leased Land. Los Riosshall fence such staging area and maintain it in good order.Section 3.3 Waste; Nuisance. Los Rios shall not use, and shall prevent all other LosRios Parties from using, any portion of the Leased Land for any use which constitutes a waste,

nuisance or unreasonable annoyance to University or which violates Applicable Laws or whichconstitutes a trespass, or for any illegal purpose. Without limiting the generality of theforegoing and notwithstanding anything to the contrary herein, Los Rios acknowledges andagrees that University shall have the right to limit uses of he Leased Land by Los Rios thatgenerate extraordinary noise, odors, hours of operation or other matters which would impact thequiet enjoyment of the Master Project, or any port ion thereof, by the residents thereof; provided,however, that University acknowledges that Los Rios customary hours of operation includeevening classes that run as late as 11 :00 p.m. (California time) on weekdays and include classeson weekends. Los Rios further agrees at all times during the Term, at its sole cost, to maintainthe Leased Land in a clean and sanitary manner and agrees to ensure that: (i) no vehicle orequipment on the Leased Land shall emit exhaust which is in violation of any Applicable Laws;(ii) no sound pressure level is permitted or created on or emanating from the Leased L ~ d whichwill interfere with the quiet enjoyment ofany real property adjacent to the Leased Land orwhich will create a nuisance or violate any Applicable Laws; (iii) neither Los Rios or any of itsemployees, agents, contractors or invitees will transmit, generate or receive anyelectromagnetic, microwave or other radiation which is hannful or hazardous to any person orproperty in, on or about the Leased Land or any real property adjacent to the Leased Land orwhich interferes with the operation of any electrical, electronic, telephonic or other equipmentwherever located, whether on the Leased Land or any real property adjacent to the Leased Land;

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(iv) no vibration discernible outside the Leased Land is created or permitted; or (v) no intenseglare, light or heat is produced or permitted except within an enclosed or screened area and thenonly in such manner that the glare, light or heat shall not be discernible outside the LeasedLand. Los Rios further agrees that, if any activity by Los Rios or any Los Rios Partiesconstitutes waste, nuisance or unreasonable annoyance to University or otherwise violatesApplicable Laws or constitutes a trespass, or any illegal purpose, then Los Rios shall promptlyuse commercially reasonable efforts to correct the situation, at Los Rios' sole cost and expense,to University's reasonable satisfaction

Section 3.4 Hazardous Substances. Without limiting the generality of Section 3.6below, Los Rios agrees that during its use and occupancy of he Leased Land that neither LosRios or any other Los Rios Parties shall (1) permit Hazardous Substances to be present on orabout the Leased Land; or (2) use, store, handle, release, emit, discharge, generate, abate,dispose or transport any Hazardous Substance on, in, under, near or emanating from the LeasedLand. Notwithstanding the foregoing, the Los Rios Parties may (x) handle, abate, dispose ortransport any Hazardous Substances which were present on the Leased Land prior to theEffective Date so long as such Hazardous Substances are handled, abated, disposed of and/ortransported in full compliance with all Applicable Laws and otherwise in a safe and prudentmanner, and (y) use Hazardous Substances in quantities and of a type customarily used (i) in theordinary course of construction activities for the construction of he Project Improvements,and/or (ii) in the ordinary occupancy, management, operation, repair and/or maintenance ofprojects similar to the Project Improvements so long as such Hazardous Substances aretransported, stored and used in full compliance with all Applicable Laws and otherwise in a safeand prudent manner.

(a) Notice to University. Los Rios shall promptly notify University of(i) Los Rios' receipt of any notice, request, demand, inquiry or order, whether oral or written,from any government agency, alleging failure by Los Rios, the Project, the ProjectImprovements and/or the Leased Land to comply with Applicable Laws, or (ii) the discovery byLos Rios of any release, discharge, or emission of any Hazardous Substances, or of the existenceof any other condition or occurrence, which may constitute or pose a significant present orpotential hazard to human health and safety or to the environment, whether or not such event ordiscovery necessitates any report to any other person or government agency and whether or notsuch release, discharge or emission is caused by Los Rios, or (iii) the occurrence of any event orexistence ofany condition that would cause a breach of any of he covenants set forth in thisSection 3.4. Receipt of such notice shall no t be deemed to create any obligation on the part ofUniversity to defend or otherwise respond to any such notification.

(b) Los Rios Response and Remedy. Los Rios shall promptly respond toand remedy (by removal and proper disposal or such other methods as shall be reasonablyrequired), to the full satisfaction of the University and all applicable governmental agencies, anycondition upon the Leased Land, including, without limitation, on, in, under or about any ProjectImprovements, which constitutes a violation of Applicable Laws with respect to HazardousSubstances and/or any release or discharge of any Hazardous Substances resulting from use,occupancy, management, operation, repair and/or maintenance of he Project Improvementsand/or the Leased Land by any Los Rios Parties or presence of and/or the actions of any LosRios Parties on or about the Leased Land and/or the Access Areas. All such action shall be done

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in Los Rios' name, and at Los Rios' sole cost and expense. For purposes of this Section 3.4, theterm "respond" shall include, but not be limited to, the investigation of enviromnentalconditions, the preparation of feasibility reports or remedial plans, and the performance ofanycleanup, remediation, containment, maintenance, monitoring or restoration work. Any suchactions shall be performed in a good, safe, workmanlike manner and shall minimize any impacton the businesses or operations conducted at the Leased Land. Without limiting the foregoing,University shall have the right, but not the obligation, prior or subsequent to a Los Rios Default,following no less than twenty-four (24) hours notice and an opportunity for Los Rios andUniversity to meet and confer regarding any proposed response, without in any way limitingUniversity's other rights and remedies under this Lease, to enter upon the Leased Land, or totake such other actions as it deems necessary or advisable, to investigate, clean up, remove orremediate any Hazardous Substances or contamination by Hazardous Substances present on, in,at, under, or emanating from, the Leased Land in violation of Los Rios' obligations under ~ h i s Section 3.4. Notwithstanding any other provision of this Lease, University shall also have theright, at its election, in its own name or as Los Rios ' agent, to negotiate, defend, approve andappeal, at Los Rios' expense, any action taken or order issued by any governmental agency orauthority with regard to any such Hazardous Substances or contamination by HazardousSubstances. All costs and expenses paid or incurred by University in the exercise of he rightsset forth in this Section 3.4 shall be payable by Los Rios upon demand together with Interest, asdefined in Section 18.13 below, computed from the date such funds are expended by University.

(c) Surrender Condition. Los Rios shall surrender the Leased Land toUniversity, upon the expiration or earlier termination of his Lease in a condition which complieswith the provisions of Section 12.3 below.(d) SurvivaL Los Rios' obligations and liabilities pursuant to the provisions

of this Section 3.4 shal l survive the expiration or earlier termination of this Lease.Section 3.5 Maintenance of Leased Land and Project Improvements. During theTerm of this Lease, Los Rios shall, at Los Rios' sole cost and expense, maintain the LeasedLand and the project Improvements in first class condition and otherwise in a good, clean,attractive and sanitary and safe order, condition, habitability and repair consistent with thestandards of community college facilities located in the Northern California region. Los Rios'maintenance obligations shall include (i) the obligation to maintain the Project Improvements ingood condition and repair, and (ii) the obligation to maintain all unimproved areas within theLeased Land in good condition and perform erosion and dust/dirt control measures with respectto such unimproved areas (including, without limitation, hydro seeding or such other measuresas are mutually agreed by the parties sufficient to prevent any material adverse impact to anyreal property adjoining the Leased Land).Section 3.6 Compliance With ADDIicable Laws. Subject to Los Rios' right tocontest in accordance with Section 3.7 below, Los Rios shall, at its sole cost and expense, at alltimes during the Term, comply with, and cause all other Los Rios Parties, to comply with (a) allApplicable Laws, including, but not limited to, (i) acquisition ofand compliance with allpermits, licenses, orders, requirements, approvals, plans and authorizations which are or maybecome necessary for conduct of Los Rios' operations on the Leased Land, including, withoutlimitation, the construction, use, occupancy, management, operation, repair and maintenance of

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the Project Improvements; and (ii) compliance with all regulatory requirements relating to suchoperations or the substances and equipment used therein; (b) the Entitlement Documents now inforce or which may hereafter be in force, and (c) all recorded covenants, conditions andrestrictions affecting the Leased Land ("Private Restrictions") now in force or which mayhereafter be in force.

Section 3.7 Ri&ht to Contest.(a) At Los Rios' sole cost and expense, Los Rios, by appropriate legalproceedings brought in good faith and diligently prosecuted in its name, may contest the validity

or applicability to the Leased Land, the Project, or any part thereof, of any Applicable Laws;provided, however, that if any such contest or proceeding is, with University's prior writtenconsent (to be granted or withheld in University's sole discretion), maintained in the names ofboth Los Rios and University, it shall be maintained without cost to University, and Los Riosshall indemnify, protect, defend (with counsel reasonably approved by University) and hold theUniversity Indemnitees and the Leased Land hannless from Los Rios' failure to observe orcomply with the contested Applicable Laws during the contest.

(b) University reserves the right to contest the applicability to the LeasedLand or validity of any Applicable Laws; provided, however, that if any such contest orproceeding is, with Los Rios' prior written consent (to be granted or withheld in Los Rios' solediscretion), mainWned in the names ofboth Los Rios and University, it shall be maintainedwithout cost to Los Rios, and University shall indemnify, protect, defend (with counselreasonably approved by Los Rios) and hold the Los Rios Indemnitees and the Leased Landhannless from University's failure to observe or comply with the contested Applicable Lawsduring the contest.(c) Immediately upon receipt ofnotice ofaction or proceeding from anygovernmental agency alleging a violation ofApplicable Laws and seeking to enforce any legalrequirement on the Leased Land, the development of the Leased Land, or the use, occupancy,management, operation, repair and/or maintenance of any portion of the Project, Los Rios shallgive University written notice of such claims.

Section 3.8 Adyertisin& and Signs.(a) Location and Placement ofSips. Neither Los Rios nor any employees,agents, contractors or invitees, including, without limitation, the Leasehold Mortgagee, shallplace, construct or maintain any signs, advertisements, names, insignia, trademarks, descriptivematerial, or any other similar item, on any portion of he Leased Land which has not been

approved by University in writing. To the extent feasible, the parties shall resolve any issuesconcerning placement of signs during the process of design and approval of the ProjectImprovements set forth in Article IV hereof. Any signs or graphics installed on Leased Landshall be installed by Los Rios at its sole cost and expense. IfLos Rios violates this provision anddoes not cure such violation within five (5) Business Days following written notice of suchviolation, University, at Los Rios' cost, may remove any item placed, constructed or maintainedthat does not comply with the provisions of his Section 3.8.

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(b) University Name. Neither Los Rios nor any employees, agents,contractors or invitees, including, without limitation, the Leasehold Mortgagee, shall have oracquire any property right or interest in the name "The University of California," "The Regents,""UCD," "UC Davis," or any pennutation thereof which may imply any connection of Los Riosor the Project Improvements with the University of California. University reserves the right,exercisable in Universi ty's sole discretion, upon not less than six (6) months prior written noticeto Los Rios, to change the address of the Leased Land or any portion thereof at any time, andLos Rios waives all claims for damages caused by any such change, except that Universityagrees to pay the reasonable actual costs incurred by Los Rios for the address change but not toexceed Ten Thousand Dollars ($10,000).

Section 3.9 University's Reserved Uses.(a) Reservation ofOll. Gas. Water and Mineral Rights. Notwithstandinganything to the contrary herein, University reserves to i tsel f the sole and exclusive right toprospect for, drill for, produce, and take and remove any subsurface water, oil, gas, or other

hydrocarbon or mineral substances and accompanying fluids, including all geo1h:ennal resourcesfrom the Leased Land, including the rights to drill, maintain subsurface pressures, and utilizesubsurface storage space for natural substances. Los Rios shall have no right or claim to anysuch subsurface water, oil, gas or other hydrocarbon or mineral substances and accompanyingfluids, including, without limitation, the existing water wells located upon the Leased Land, andthe same may be taken and removed by University without any compensation to Los Rios inconnection therewith. Notwithstanding the foregoing, during the tenn of his Lease, Universityshall (i) not drill or otherwise access such resources from the surface of the Leased Land,(ii) exercise University's rights with respect to such resources, other than subsurface water, if atall, only from reserves which are located at the depth offive hundred (500) feet from the surfaceof the Leased Land, through methods of slant drilling from locations outside of the Leased Land,(iii) maintain subsurface pressures in connection with any such extraction activities, and utilizesubsurface storage space for natural substances only, and (iv) not disturb the quiet enjoyment andpeaceful use of he Leased Land in connection with any exercise of he rights set forth in thisSection 3.9(a).

(b) Easements. University reserves to itself the right to grant to others in thefuture non-exclusive utility and other easements over, under, through, across or on the LeasedLand in locations that will not unreasonably interfere with Los Rios' use of the Leased Land;provided, however, that any such utilities will be located under ground. Any interference arisingas a result of construction of improvements related to such utility systems and facilities shall betemporary, and all work on the Leased Land shall proceed expeditiously. Los Rios shall begiven reasonable notice before commencement of any work on the Leased Land with respect toany such easement. In the event the installation or maintenance of improvements within the areaof such easements causes any damage to the Leased Land, or any portion thereof, including butnot limited to pavement, landscaping and sidewalks, University shall promptly repair the same,or cause the same to be repaired, to its prior condition at no cost or expense to Los Rios.

(e) Davis Joint Unified School District. University reserves to itself theright to terminate this Lease at any time during the Tenn as it relates to a portion of the LeasedLand of approximately one acre in the Southeast comer of he Leased Land (as shown on Exhibit-17-


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A-3 attached hereto and incorporated by this reference) for the purpose of entering into a groundlease with the Davis Joint Unified School District for such portion ("DJUSD Parcel") to be usedby DJUSD for a school site. On such termination University and Los Rios shall substitute arevised Exhibit A-2 to reflect such termination, and Los Rios shall execute any additionalinstruments reasonably required by University, including a Memorandum ofLease. Universitywill provide Los Rios with not less than six months prior written notice of its intent to terminatethe Lease for such purpose. Los Rios agrees to use best efforts to negotiate a Reciprocal Parkingand Maintenance Agreement with DruSD to allow for shared parking, access and maintenance.

(d) Telecommunications Facilities. University reserves to itself theexclusive right to maintain and operate, and/or to grant to others in the future licenses oreasements for the placement and operation of, telecommunications facilities on or about theLeased Land. In connection with the foregoing, Los Rios hercby acknowledges and agrees that,except upon receipt of University's written consent, which may be granted or withheld inUniversity's sole discretion, Los Rios shall have no right to grant any lease, sublease, license orother right of use to any telecommunications provider intending to operate any tower, antennae,dish or other equipment for the purpose of transmitting, retransmitting or boosting transmissionof any telecommunications technology, including, without limitation, any cellular telephoneservice, WIFI or other internet connectivity service, and digital television. Notwithstanding theforegoing, Los Rios shall have the right to procure telephone service, wireless and internet accessfor the Project for the use of its faculty, staff and students.

ARTICLE IVCONSTRUCTION AND IMPROVEMENT OF LEASED LAND

Section 4.1 Project Improvements. Los Rios shall, at its sole cost and expense,design and construct the Project Improvements upon the Leased Land in accordance with thePlans and Specifications applicable to any given Building. University and Los Riosacknowledge that Los Rios intends to construct the Project in two or three phases containingapproximately twenty thousand (20,000) assignable square feet per phase with associatedparking sufficient to meet the demands of the intended use of the subject phase and amenities ineach phase. Each Building will have its own Plans and Specifications (respectively "BuildingPlans and Specifications"). Los Rios shall commence construction of the first Building to belocated at the northeast comer of the Leased Land on or before the Work OutsideCommencement Date and shall diligently prosecute construction of he first Building so that thefirst Building is completed on or before the fifth anniversary of the Delivery Date. Los Riosshall complete the remaining Buildings so that the entire Project is completed on or before theWork Outside Completion Date. Los Rios shall provide to University such written confirmationas University may reasonably request confirming that any given Building has been completed inaccordance with the Building Plans and Specifications. Notwithstanding the foregoing oranything to the contrary herein, Los Rios acknowledges and agrees that, without limiting anyother remedies University may have in connection with any Los Rios Default, University mayterminate this Lease in its entirety upon the failure ofLos Rios to achieve Completion of theProject Improvements on or before the Work Outside Completion Date. All Work shall bedesigned, constructed, and performed in a good and workmanlike manner and in accordance withthe respective Building Plans and Specifications, the Governmental Authorizations, the

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Applicable Laws, the University Authorizations and in substantial compliance with the DesignStandards, including, without limitation, the requirements established by the Uniform BuildingCode, Uniform Mechanical Code, Uniform Plumbing Code, National Electric Code, the DSAand all applicable provisions of the California Administrative Code and/or the CaliforniaEducation Code.

Section 4.2 DIG Coordination. As reasonably requested by University, Los Riosshall coordinate with DIG during design of any given Building and shall permit the DIG toparticipate in the process ofpreparation of he Preliminary Plans with respect to any givenBuilding (respectively "Building Preliminary Plans"). Without limiting the foregoing, LosRios acknowledges that the DIG shall (i) be permitted to assist Los Rios in review andpreparation of he Building Preliminary Plans to advance the design, character and qualitystandards for the Project Improvements to ensure compliance with the vision for the MasterProject established in the Implementation Plan, (ii) act as an information depository and sourcegathering necessary input from University constituents, in order to facilitate the design reviewof the Building Preliminary Plans with respect to any given Building, and (iii) report to theCCCPD on the consistency of each stage of design with the Implementation Plan. Infurtherance of the goals of the DIG and the Implementation Plan, Los Rios shall meet with theDIG at regular intervals during the design and preparation of the Building Preliminary Planswith respect to any given Building to obtain input and comment from the DIG at interim stagesof the design preparation. Without limiting the foregoing, with respect to any given Buildingand as reasonably required by University, Los Rios shall consult with the DIG prior topreparation of the Schematic Plans, and again prior to preparation ofDesign Development Plansand finally at Construction Drawings. Without limiting the foregoing, Los Rios acknowledgesthat the CCCPD shall serve as the initial review body, (following coordination with DIG), onbehalfof the University which shall be tasked with (i) assuring consistency of he design of anygiven Building with (x) the concepts approved by the U n i v ~ r s i t y in the Implementation Plan,and (y) the vision for the Master Project established in the Implementation Plan, and(ii) reporting to the University on the consistency of each stage of design of any given Buildingwith the Implementation Plan.

Section 4.3, University Desien Review and ApprovaL(a) Plans and Specifications. For each Building or Major Alteration to one

or more Buildings, Los Rios shall submit six (6) sets of the Schematic Plans for such Building toUniversity for the purpose of obtaining design approval from The Regents of he University ofCalifornia. The Schematic Plans shall be consistent with the Design Standards and shall show inreasonable detail the proposed type of use, size, land coverage, shape, height, location, material,color scheme and elevation of the given BUilding, including, without limitation, all parkingareas, all ingress and egress to streets and roads, and all grading and landscaping. The design forthe first Building of the Project Improvements was approved by The Regents on February 3,2009.

(b) Basis of Approval. Without limiting the generality of the foregping,University may disapprove any submittal of Preliminary Plans (i) which is not in conformitywith the Design Standards or any applicable Entitlement Documents, or (ii) which conflictsfunctionally or aesthetically with (x) other existing or proposed improvements which will

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comprise the Master Project, or (y) University's master utility, circulation, or general aesthetic,or (z) architectural plans and criteria for the Project Improvements, including, but not limited to,such matters as adequacy of site, dimensions or external structural appearance, relation oftopography, grade, and elevation of the Leased Land, considered in conjunction withneighboring sites and nearby streets, and the effect of location and use of he proposed ProjectImprovements on neighboring sites, all as reasonably detennined by University.

(c) Campus and Regents' Approvals. As described in Section 4.2 above,the Schematic Plans for any given Building will be approved at the Campus level through DIGand CCCPD and then presented to The Regents for approval. The University will either approveor disapprove a submittal of Schematic Plans and, i f approved, it will return to Los Rios onecomplete set of the subject Schematic Plans bearing the University's written endorsement. TheUniversity's failure to respond shall be deemed as its disapproval of he subject Schematic Plans(or modification, as applicable). I f he University disapproves of the subject Schematic Plans,the University and Los Rios agree to cooperate reasonably with each other in resolving anyobjections of the University to the subject Schematic Plans. Once the Schematic Plans for anygiven Building have been approved by The Regents, the Design Development Plans and theConstruction Drawings will be reviewed and approved at the campus level by DIG and CCCPD.Section 4.4 Compliance with Applicable LawS. Subject to Los Rios' right to contest

in accordance with Section 3.7 above, Los Rios shall construct the Project Improvements, inaccordance with Applicable Laws. Los Rios shall furnish University with copies of allcertificates and approvals relating to any Work or installation done by Los Rios that may berequired by Applicable Laws or any governmental authorities with jurisdiction of such Work inconnection with the construction of he Project Improvements.(a) Permits for Project Improvements. Without limiting the generality of

the provisions of Section 4.2 above, Los Rios shall be responsible for (i) obtaining allGovernmental Authorizations and University Authorizations applicable to the ProjectImprovements, (ii) paying all fees related to the Project Improvements, including, all designreview and pennit fees, and (iii) paying all costs and expenses ofcomplying with therequirements of all Governmental Authorizations and University Authorizations applicable to theProject Improvements.

(b) University Cooperation. University, in its capacity as lessor under thisLease, will reasonably cooperate with Los Rios, at no cost or expense to University, in obtainingall Governmental Authorizations required to be obtained by Los Rios pursuant to this Lease.Said cooperation of University, in its capacity as lessor under this Lease, shall include promptexecution by a duly authorized officer of University of such documents and instruments as arereasonably necessary to obtain such Governmental Authorizations. University, in its capacity aslessor under this Lease, may, and, if required by Applicable Laws, shall, join in Los Rios'application for any Governmental Authorizations. Notwithstanding the foregoing, (i) in no eventshall University be required to cooperate with Los Rios in any effort which Universityreasonably believes either to be (x) illegal, (y) contrary to the terms of he EntitlementDocuments, or (z) contrary to terms of this Lease, and (ii) nothing herein contained shall limitthe rights that University has in connection with any review of the Work and/or the ProjectImprovements conducted pursuant to Section 4.9, or that University otherwise has in its role as a

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governmental authority reviewing any request for the grant of any required GovernmentalAuthorizations and/or University Authorizations, or that University otherwise has in its role as"he entity promulgating and enforcing any University Regulations.

Section 4.5 Mitigation Measures. Los Rios shall perfonn, or cause to be performed,the mitigation measures which are set forth in the chart of Mitigation Measure Responsibilitiesattached hereto as ExhibitH. Notwithstanding the foregoing, while the chart of MitigationMeasmes Responsibilities reflects obligations with respect to mitigation measures currentlyrequired, including those required in the Entitlement Documents, Los Rios acknowledges thatthe chart of Mitigation Measures Responsibilities may not reflect an exhaustive list of allmitigation measures tha t may be required by any Applicable Laws or governmental authoritieshaving jurisdiction over the Leased Land in connection with their review and grant of requiredapprovals for development of he Project Improvements. Los Rios further acknowledges thatLos Rios shall perform, or cause to be performed, all mitigation measures which are now or inthe future required in connection with the development, construction, use, occupancy,management, operation, repair and/or maintenance of the Project Improvements, including,without limitation, any mitigation measures set forth in the Entitlement Documents.

Section 4.6 Los Rios' Contractors. All construction activities, including, withoutlimitation, all Work with respect to the Project Improvements, shall be performed only pursuantto written contracts by competent contractors and subcontractors which are duly licensed underthe laws of he State of California Without limiting the foregoing, prior to entering into acontract with Los Rios' Contractor for construction of all or any portion of the projectImprovements, Los Rios shall obtain University's written consent, such consent not to beunreasonably withheld, to the form of he general contract. All construction contracts, whetherwith Los Rios' Contractor or any subcontractor, shall provide that (i) the applicable contractoragrees to indemnify, protect, defend (with counsel reasonably approved by University) and holdharmless the University Indemnitees from and against any claims, costs, liability or loss arisingfrom personal injury, death or property damage to the extent arising from the willful ornegligent acts, errors, or omissions of such contractor, (ii) the applicable contractor waives allrights of subrogation and recovery such contractor has against all University Indemnitees onaccount of any loss or damage arising from any cause to the extent covered by any insurancemaintained by or required to be maintained by such contractor pursuant to ARTICLE VII orany of the applicable Development Documents, and (iii) in the event that this Lease istenninated in connection with a Los Rios Default hereunder, then at University's election, to beexercised in University's sole discretion, the respective contractor/subcontractor will recognizeUniversity as the assignee of he contract under the same terms and conditions as contained inthe subject contract; p r o v i d e ~ however, that University shall have no liability or obligationunder such contract until University has elected, in a written notice to the subjectcontractor/subcontractor, to exercise its right to assume the subject contract, and thenUniversity's liability shall be limited to payment obligations a r i s ~ g solely on or after the dateof such assumption by University.

Section 4.7 Utilities and Other Facilities,(a) University Supplied Utilities. At all times during the Tenn from andafter the issuance of a Project Certification with respect to any given Building comprising the

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Project, University shall provide electricity, sanitary sewer, storm water and domestic waterservices at the University Services Required Capacity with respect to such Building; provided,however, that such services may from time to time be subject to temporary interruption incidentto the making of repairs, alterations, improvements, or due to conditions constituting ForceMajuere and such temporary interruptions shall not be deemed an eviction ofLos Rios or relieveLos Rios from any of its obligations hereunder. In the case of any such temporary interruptions,University shall diligently prosecute the necessary repairs, alternations, and improvements andshall use commercially reasonable efforts to minimize any disruption to Los Rios.Notwithstanding the foregoing or anything to the contrary herein, University shall not be liablefor any consequential, indirect, incidental, special, punitive, or exemplary damages, or for anyloss of income or profit, in either case arising from any failure or inadequacy of the sanitarysewer, storm water or domestic services to beprovided by University pursuant to this Section4.7(a).

(b) Cost ofUtilities. Except for the Pad Area Improvements to beconstructed by University as provided in this Lease, all costs associated with bringing requiredutilities (both temporary and permanent) from the point oforigin to the point of connection to theProject Improvements (whether related to on-site improvements or off-site improvements),including, without limitation, related professional, engineering and consultant fees, servicecharges, meters, and the costs ofconnections (including, without limitation, any hook-up fees)assessed by any utility company and/or government agency, shall be paid by Los Rios. Thepoint ofconnection for all such utilities shall be at the property line of the Leased Land. Inaddition, Los Rios shall pay to University the costs for such sanitary sewer, storm water anddomestic water services as a part of the Municipal Fees to be paid pursuant to Section 5.4.

(c) Easements for Los Rios' Utilities. Los Rios shall not enter into anycontract or agreement with any government agency, special district or public utility withreference to sewer, water, gas, telephone, storm drain and other utility lines, landscapeimprovements, lighting, utility facilities, improvements and/or connections, lines, pipes,distribution systems or easements and the like, unless and until University has entered into aneasement, license or similar agreement with such party pursuant to Section 3.9(b) above. LosRios hereby acknowledges and agrees that University shall be under no obligation to grant anysuch license or easement unless University receives such indemnities or other legal protectionswith respect to such easements or license as University customarily obtains from third partyutility providers that provide services to University.

Section 4.8 Evidence of Completion. Prior to occupancy of any given Building, LosRios shall obtain approval of he State Fire Marshall with respect to such Building and shallprovide University with a copy thereof. In addition, Los Rios shall cause all ofLos Rios'consultants listed on Exhibit I, or their respective replacements for later phases of construction,to provide a written statement to University certifying that the subject consultant has reviewedthe Work performed with respect to the Building and found the subject Work to be insubstantial conformance with the Building Plans and Specifications and all Applicable Laws.Within five (5) days after the Completion of any Building, as applicable, Los Rios shall file orcause to be filed a notice of completion as defined and provided for in California Civil CodeSection 3093. Without limiting the foregoing, or anything to the contrary herein, Los Rios

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shall, at Los Rios' sole cost and expense, promptly after receipt of notice from the DSA ofnon-conformance of any Work, correct any such non-conformance noted by the DSA.

Section 4.9 University Inspections. Notwithstanding the provisions of Section 4.8above or anything to the contrary herein, University and the State Fire Marshal shall at all timeshave access to the site where Work is being performed for the pwpose of inspecting any givenBuilding for compliance with the Building Plans and Specifications, Applicable Laws and goodconstruction practices related to fire, life and safety design and construction. Los Rios shallprovide safe and proper facilities for such access and inspection.

(a) Non-Conformance. Should University observe any Work related to fire,life and safety design and construction which University or the State Fire Marshal reasonablybelieves does not comply with Applicable Laws, the Building Plans and Specifications and/orwith good construction practices, University shall notify Los Rios and University may pursueany of its remedies under this Lease, including, without limitation, the remedies set forth in thisSection 4.9 or those set forth in Section 13.3 below. Los Rios shall have an obligation topromptly correct the non-conformance pursuant to Seetion 4.9(b), below.

(b) Correction by Los Rios. Los Rios shall, at Los Rios' sole cost andexpense, promptly after receipt of University's notice ofnon-confonnance pursuant to Section4.9(a) above, correct any such non-conformance noted by University. Los Rios shall keep onfile all written communications between Los Rios and the DSA, Los Rios' Architect and LosRios' Contractor, which University shall have the right to rev iew and copy at its own expense. IfLos Rios fails to correct any such non-conformance in a timely manner University may pursueany of its remedies under this Lease (subject to Los Rios' right to correct any such non-conformance pursuant to this Section 4.9(b, including, without limitation, the remedies setforth in this Seetion 4.9 or those set forth in Seetion 13.3 below.

(c) Disclaimer. Neither the inspection of any Work by the University norUniversity's approval of any Work nor the approval of any plans or submissions presented byLos Rios or its employees, agents or contractors, including, without limitation, the Plans andSpecifications, shall constitute an opinion or warranty by University or any of the otherUniversity Parties of heir adequacy, nor shall it make University responsible for Work withrespect to which an approval is given or for any defect or deficiency with respect to any Workand/or the Plans and Specifications.

(d) Nonresponsibility. With the exception of the assignment of warrantieswith respect to the Pad Area Improvements provided herein and causing WVCP to construct theDeferred Improvements, University shall not be deemed to have incurred or assumed anyobligation or responsibility in connection with any Work performed on the Leased Land.Nothing in this Lease nor any act or failure to act on the part of University shall be construed as awarranty or representation as to the adequacy or fitness of he Project Improvements or as awaiver of a claim by University for any defect or deficiency with respect to the ProjectImprovements, the Development Documents or of the Work.

Section 4.10 As-Built Plans. Within ninety (90) days after DSA's issuance of a ProjectCertification with respect to any given Building, Los Rios' Architect shall, at no cost to-23-


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University, furnish a complete set of "as-builf' record documents with respect to such Building,as follows:(a)

electronic format.Record Drawin&s. Two complete bond sets, and a CD ROM, in an

(b) Specifications. One annotated hard copy and a CD-ROM, formatted inthe most current version ofMSWord. Each specification section shall be saved by file (i.e.,15400.doc, 15950.doc).The record drawings shall be made from the record set of drawings kept by Los Rios'Contractor, including revisions and changes made during the course of construction based onmarked-up prints and other data furnished to Los Rios' Architect by Los Rios' Contractor.Changes shall be accurately noted and cross-referenced. Each page of the drawings shallprominently note the words "Record Documents."

Section 4.11 Ownership of Project Improvements. The Project Improvements shallbe owned by Los Rios until the expiration or earlier termination of this Lease, whereupon theProject Improvements shall become the property of University without any further or additionalaction required of the parties hereto.

ARTICLE VLEASE CONSIDERATION

Section 5.1 Annual Rent. Los Rios shall pay University annual rent in the amount ofOne Dollar (SI.00) per year; provided, however, that annual rent for the Term of he Lease inthe aggregate amount of Sixty-Five Dollars ($65.00) shall be paid in advance on the EffectiveDate. In the event the Term is extended for the Extension Term as provided in Section 2.2above, then during the Extension Term Los Rios shall pay University annual rent in the amountof One Dol lar (S1.00) per year; provideQ, however, that annual rent for the Extension Term ofthe Lease in the ~ g r e g a t e amount ofTen Dollars ($10.00) shall be paid in advance on or beforethe sixty-fifth (65 ) anniversary of the Delivery Date.

Section 5.2 Payment For Project Improvements. In addition to the annual rentpayable by Los Rios pursuant to Section 5.1 above, Los Rios shall pay to University, on theDelivery Date, an amount equal to Four Million Five Hundred Thousand Dollars(S4,500,000.00) as reimbursement to University for the costs of completion ofthe Pad AreaImprovements and for Los Rios' share of the costs of off-site infrastructure serving the LeasedLand, which shall be paid as follows: (a) Three Million Five Hundred Thousand Dollars($3,5000,000) shall be paid in cash less the holdback amount allocated for the DeferredImprovements as provided in Exhibit C-J attached hereto and to be paid to the University asprovided in Exhibit C-2 attached hereto; and (b) One Million Dollars ($1,000,000) shall be paidin "in-kind" by allowing University use of Los Rios' classrooms or other space rent free