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COMMUNITY COLLEGE LEASE

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
a California public corporation
("University")
-AND-
LOS RIOS COMMUNITY COLLEGE DISTRICT,
a political subdivision of the State of California
("Los Rios")
May 25, 2010
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TABLE OF CONTENTS
Page )
ARTICLE I DEFINITIONS ................................................................................................. 1
Definitions ............................................................................................ 1 Section 1.1
ARTICLE II GRANT, TERM AND CONDITION ............................................................ 10
Section 2.1
Section 2.2
Lease .................................................................................................. 10
Tenn ................................................................................................... 10
Condition of Leased Land .................................................................. 11 Section 2.3
ARTICLE III PERMITTED USE ......................................................................................... 13
Section 3.1
Section 3.2
Section 3.3
Section 3.4
Section 3.5
Section 3.6
Section 3.7
Section 3.8
Use of Leased Land ............ ............................................................... 13
- Construction Staging .......................................................................... 13
Waste; Nuisance ................................................................................. 13
Hazardous Substances ........................................................................ 14
Maintenance of Leased Land and Project Improvements .................. 15
Compliance With Applicable Laws ................................................... 15
Right to Contest ................................................................................. 16
Advertising and Signs ........... ....................................... .. ........ ............ 16
University's Reserved Uses ............................................................... 17
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Section 3.9
ARTICLE IV CONSTRUCTION AND IMPROVEMENT OF LEASED LAND .............. 18
Section 4.1
Section 4.2
Section 4.3
Section 4.4
Section 4.5
Section 4.6
Section 4.7
Section 4.8
Section 4.9
Section 4.10
Project Improvements ........................................................................ 18
DIG and CCCPD ................................................................................ 19
University Plan Review ..................................................................... 19
Compliance with Applicable Laws .................................................... 20
Mitigation Measures .......................................................................... 21
Los Rios' Contractors ........................................................................ 21
Utilities and Other Facilities .............................................................. 21
Evidence of Completion .................................................................... 22
University Inspections ....................................................................... 23
As-Built Plans .................................................................................... 23
Section 4.11 Ownership of Project Improvements ................................................. 24
ARTICLE V LEASE CONSIDERATION .......................................................................... 24
Section 5.1 Annual Rent ....................................................................................... 24
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Section 5.2
Section 5.3
Section 5.4
Section 5.5
Section 5.6
Section 5.7
Section 5.8
TABLE OF CONTENTS
(continued)
Page
Payment For Project Improvements ................................................... 24
University Fees .................................................................................. 25
Municipal Fees ................................................................................... 25
Mitigation Fees .................................................................................. 25
Development Documents ................................................................... 25
Other Payments .................................................................................. 25
Net Lease; No Rent Abatement or Reduction .................................... 25
ARTICLE VI TAXES AND ASSESSMENTS .................................................................... 26
Section 6.1
Section 6.2
Section 6.3
Section 6.4
Section 6.5
Taxes and Assessments ...................................................................... 26
Liens and Delinquencies .................................................................... 27
Los Rios' Right to Contest ................................................................. 27
Replacement Taxes ............................................................................ 27
Survival .............................................................................................. 27
ARTICLE VII IN"SURANCE ................................................................................................. 28
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7.10
Construction Related Insurance ......................................................... 28
Insurance Generally ........................................................................... 29
Periodic Increases .............................................................................. 30
Los Rios Not Relieved ....................................................................... 30
Proof of Insurance .............................................................................. 30
Compliance with Requirements of Carriers ....................................... 31
Non-Contributing ............................................................................... 31
Form of Policies ................................................................................. 31
Settlement of Claims .......................................................................... 31
Self Insurance ..................................................................................... 32
ARTICLE VllI DAMAGE OR DESTRUCTION ................................................................... 32
Section 8.1 Insured Risk ....................................................................................... 32
Section 8.2 Uninsured Risk ................................................................................... 32
ARTICLE IX CONDEMNATION ....................................................................................... 33
Section 9.1 Lease Governs .................................................................................... 33
Section 9.2 Total Taking; Termination; Distribution of Award ........................... 33
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TABLE OF CONTENTS
(continued)
Page
Section 9.3 Partial Taking; Affect; Restoration; Distribution of Award .............. 34
Section 9.4 Temporary Taking; Affect; Distribution of Award ........................... 35
Section 9.5 Notice ................................................................................................. 35
ARTICLE X ASSIGNMENT AND SUBLETTING .......................................................... 35
ARTICLE XI INDEMNITY, CLAIMS, LIENS AND ENCUMBRANCES ....................... 36
Section .11.1
Section 11.2
Section 11.3
Section 11.4
Los Rios Indemnity ............................................................................ 36
University Indemnity ......................................... : ~ ............................. 36
Covenailt Against Encumbrances ...................................................... 37
Survival .............................................................................................. 37
ARTICLE XII HOLDING OVER, SURRENDER, OWNERSHIP OF PROJECT
IMPROVEMENTS ........................................................................................ 37
Section 12.1
Section 12.2
Section 12.3
Section 12.4
Section 12.5
Section 12.6
Holding Over ..................................................................................... 37
Ownership of Project Improvements ................................................. 37
Surrender of Leased Land .................................................................. 38
Abandoned Property .......................................................................... 38
Relocation .......................................................................................... 39
Survival .............................................................................................. 39
ARTICLE XIII DEFAULT ............................................................................................ , ........ 39
Section 13.1
Section 13.2
Section 13.3
Section 13.4
Section 13.5
Default by Los Rios ........................................................................... 39
Default by University ......................................................................... 40
Remedies of University ...................................................................... 40
Remedies of Los Rios ........................................................................ 41
Remedies are Cumulative ........ : .................................................. : ...... 42
Section 13.6 Failure of Los Rios to Perform Required Acts .................................. 42
ARTICLE XIV FINANCING .................................................................................................. 43
Section 14.1
Section 14.2
Section 14.3
Section 14.4
Section 14.5
Controlling Provisions ....................................................................... 43
Financing ............................................................................................ 43
Transfer .............................................................................................. 44
Notice to Leasehold Mortgagee ......................................................... 45
Request for Notice of Defaults .......................................................... 45
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Section 14.6
Section 14.7
Section 14.8
Section 14.9
Section 14.10
Section 14.11
TABLE OF CONTENTS
(continued)
Page
Leasehold Mortgagee's Cure Rights .................................................. 45
New Lease .......................................................................................... 47
Merger ................................................................................................ 47
No Modification, Etc ......................................................................... 48
Limitation on Leasehold Mortgagee Liability ................................... 48
Conflict .............................................................................................. 48
ARTICLE XV QUIET ENJOYMENT ................................................................................... 48
ARTICLE XVI EQUAL OPPORTIJNITY ............................................................................. 49
Section 16.1 Los Rios' Obligations ........................................................................ 49
Section 16.2 University's Right and Remedies ...................................................... 49
ARTICLE XVII RIGHT OF FIRST REFUSAL ....................................................................... 49
Section 17.1 Los Rios Decision to Sell Project and Assign Lease ......................... 49
Section 17.2 Right of First Offer and Right of First Refusal .................................. 49
ARTICLE XVIII MISCELLANEOUS ...................................................................................... 50
Section 18.1
Section 18.2
Section 18.3
Section 18.4
Section 18.5
Section 18.6
Section 18.7
Section 18.8
Section 18.9
Section 18.1 0
Section 18.11
Section 18.12
Section 18.13
Section 18.14
Section 18.15
Section 18.16
Notices ............................................................................................... 50
Brokerage Commissions .................................................................... 51
Nonmerger of Fee and Leasehold Estates .......................................... 51
Entry of Leased Land by University .................................................. 51
Force Majeure Delay .......................................................................... 51
Time of the Essence ........................................................................... 52
Waiver ................................................................................................ 52
Captions ............................................................................................. 52
Governing Law .................................................................................. 52
Entire Agreement ............................................................................... 52
Right to Request Injunction ............................................................... 52
Severability ........................................................................................ 53
Late Charge and Interest Rate to be Paid ........................................... 53
Representations and Warranties by Los Rios .................................... 53
Representations and Warranties by University .................................. 53
Relationship of Parties ....................................................................... 54
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Section 18.17
Section 18.18
Section 18.19
Section 18.20
Section 18.21
Section 18.22
TABLE OF CONTENTS
(continued)
Page
Attorneys' Fees and Costs ................................................................. 54
Survival of Covenants .... ..................................................................... 54
Binding Effect .................................................................................... 54
Execution in Counterparts .................................................................. 54
Memorandum of Lease ................................................ : ..................... 54
Press Releases .................................................................................... 54
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Exhibit A-I:
Exhibit A-2:
Exhibit A-3
l!.'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 J 7.2:
TABLE OJ? CONTENTS
(continued)
West Village Land Area
Leased Land
DJlJSD Parcel
Implementation Plan
Pad Area Improvements
Deferred Improvements
Construction Provisions For Deferred Improvements
University Fees
Assignment of Warranties
University Services Required Capacity
Reserved
Mitigation Measures
Los Rios Consultants
Consent To Assignment Of Development Documents
Memorandum Of Lease
Right Of First Offer And Right Of First Refusal
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Page
COMMUNITY COLLEGE LEASE
THIS COMMUNITY COLLEGE LEASE (this "Lease") is made and entered into as
of the __ day of ,2010 (the "Effective Date") by and between THE
REGENTS OF THE UNIVERSITY OF CALIFORNIA, a California public corporation
("University"), and the I_OS RIOS COMMUNITY COLLEGE DISTRICT, a political
subdivision of the State of California ("Los Rios").
RECITALS
A. University is the owner in fee simple of approximately two hundred twenty (220)
acre parcel ofland comprising the West Village Land Area. The community to be known as
West Village is intended to be developed upon the West Village Land Area, which is part of the
Campus. Unless otherwise defined in these ReciLals, all capitalized terms used in these Recitals
shall have the meanings ascribed thereto in Section 1.1 below.
B. Los Rios wishes to develop a community college campus project (the "Project")
consisting of up to three (3) buildings containing an aggregate area of up to sixty thousand
(60,000) assignable square feet which may be used for classrooms, administration and amenities
for faculty, staff and students.
C. Subject to the terms and conditions herein, University is willing to lease to Los
Rios, and Los Rios is willing to lease from University, that portion of the West Village Land
Area as shown on Exhibit A-2 and as designated on the Subdivision Map (collectively, the
"Leased Land") for the purposes described in this Lease.
NOW, THEREFORE, in consideration ofthe foregoing, the mutual covenants herein
contained, and for other good and valuable consideration, receipt and sufficiency of which is
hcreby acknowledged. and upon and subject to the terms and conditions herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Lease, the following definitions shall
apply:
"Access Areas" shall have the meaning set forth in Section 2.1 of this Lease.
"Applicable Laws" shall mean federal, state and local statutes, regulations, rules,
ordinances, and all other governmental requirements (including orders of court) applicable to the
Project, the Project Improvements (including, the construction, ownership, use, occupancy,
management. operation, repair andlor maintenance thereof), Los Rios' Interest and any activiLy
of Los Rios undertaken pursuant to this Lease. including, without limitation, Govemmental
Authorizations, the Entitlement Documents. the University Authorizations, the University
Regulations, the California Education Code, the requirements of the DSA and any applicable
"prevailing wage" requirements.
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"Assessments" shall mean any and all possessory use taxes and assessments or levies or
charges assessed or imposed against the Leased Land, the Project and/or the Project
Improvements made by any municipal government or political subdivision for local
improvements or any other governmental agency; provided, however, that "Assessments" shall
not include the Municipal Fees imposed, created or adopted by University.
"Building" shall mean each of three (3) separate improvements, one (1) constructed for
each of three (3) phases of the Project Improvements.
"Business Day" shall mean each calendar day other than Saturday, Sunday and any day
which is observed as a federal or University holiday.
"Campus" shalfinean any facility owned, operated or occupied by the University of
California 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 of
University's Davis campus administration.
"Claims" shall mean any and all claims, suits, causes of action, demands, losses,
damages, diminution of property value, liabilities, fines, penalties, costs, taxes, charges,
administrative and judicial proceedings, orders, judgments, remedial actions and compliance
requirements, including, without limitation, enforcement and clean-up actions, third-party tort
and 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 any
given Building.
"Condemned Land Value" shall have the meaning set forth in Section 9.1(e) of this
Lease.
"Construction Drawings" shall mean the 70% construction drawings for any given
Building.
"County" shall mean the County of Yolo, State of California.
"CPI Index" shall mean the Consumer Price Index - All Urban Consumers, for the San
Francisco-Oakland-San Jose Area, reflecting All Items, published by the Bureau of Labor
Statistics of the United States Department of Labor (1982-84=100). If the base year of the CPI
Index is changed, then the calculation hereunder shall be made utilizing the appropriate
conversion factor published by the Bureau of Labor Statistics (or successor agency) to reflect the
base year of the CPI Index herein specified. If no such conversion factor is published, then the
parties shall, if possible, make the necessary calculation to achieve such conversion. If such
calculation is not possible, or if publication of the CPI Index is discontinued, or if the basis of
calculating the CPI Index is materially changed, the term "CPI Index" shall mean comparable
statistics on the cost ofliving as computed by an agency of the United States Government
perfonning a function similar to the Bureau of Labor Statistics, or, if none, by a substantial and
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responsible periodical or publication of recognized authority most closely approximating the
result which would have been obtained using the CPI Index.
"Deferred Improvements" shall mean the Pad Area Improvements not completed by the
Delivery Date as described in Exhibit C-l to be constructed in the area depicted on such exhibit.
"Delivery Date" shall mean the date University tenders possession of the Leased Land to
Los Rios with the Pad Area Improvements (excluding the Deferred Improvements) completed as
contemplated by Section 2.3(a) below.
"Demolisb(ed)" or "Demolition" shall mean demolition of Project Improvements,
removal of all debris resulting therefrom, and restoration of the Leased Land to a condition
specified by the University, but which shall not be a better condition than the Leased Land was
in immediately prior to the Effective Date.
"Design Development Plans" shall mean the 1 00% design development documents with
respect to any given Building.
"Design Standards" shall mean the Implementation Plan, and all DSA requirements, and
any and all updates, amendments or replacements thereof, whenever occurring.
"Development Agreements" shall mean collectively, the agreements between Los Rios
and Los Rios' Contractor pertaining to development of the Project Improvements, the
agreements between Los Rios and Los Rios' Architect pertaining to any element of the Project, )
the agreements between Los Rios and Los Rios' engineer pertaining to any element of the
Project.
"Development Documents" shall mean all plans, schematics, drawings, specifications
and documents evidencing governmental approvals or partial approvals; permits; environmental
documents; soil, engineering and planning studies; construction drawings and working drawings
and the like, pertaining to the Project Improvements, including, without limitation, the Building
Plans and Specifications.
"DIG" shall mean the Design Implementation Group formed by University and the
developer of the Master Project.
"DSA" shall mean the Division of the State Architect of the State ofCalifomia.
"Effective Date" shall have the meaning set forth in the preanlble of this Lease.
"EIR" shall mean the 2003 LRDP EIR, as amended and updated by the 2005 Addendum
No. 1 thereto and any and all updates, amendments or replacements thereof, whenever occurring.
"Election Notice" shall have the meaning set forth in Section 2.2(b) of this Lease.
Documents" shall mean collectively, the LRDP, the EIR, the
Plan, the Governmental Authorizations and the University Authorizations.
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"Environmental Consultanf' shall mean a third party consultant with expertise in the
clean-up and remediation of Hazardous Substances who has been selected by Los Rios and
reasonably approved by the University.
"Environmental Remediation Plan" shall mean a plan for clean-up and remediation of
Hazardous Substances which is designed to (x) comply with all Applicable Laws, (y) achieve a
long-term solution for the affected land area that will permit the use of the affected land area for
the uses contemplated in connection with the Master Project, and (z) ensure that monitoring or
other facilities are not required to be maintained on the affected land area past the end of the
Term.
"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 reasonable
control, prevention and foreseeability of the party affected by the delay, including, without
limitation, strikes, acts of God, inability to obtain labor or materials, governmental restriction or
delay (but only to the extent that any such delay is not attributable to the failure of the party
whose performance is delayed to comply with requirements imposed by Applicable Laws),
enemy action, civil commotion, fire, or other casualty, but (x) expressly excluding fmanciaI
inability, and (y) expressly acknowledging that the actions of any party's employees, agents and
contractors are to be deemed to be within the reasonable control, prevention and forseeability of
such party for the purposes of this 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 affected
party's ability to perform, and (y) University as the affected party, any Los Rios Default which
adversely affects University's ability to perform.
"Fun Insurable Replacement Value" means one hundred percent (100%) of the actual
cost to replace any given Building (without deduction for depreciation but with standard
exclusions such as foundations, excavations, paving and landscaping, as applicable to specific
perils), including the costs of demolition and debris removal, an increased cost of construction
endorsement and, in the case of builders risk or course of construction insurance, materials and
equipment not in place but in transit to or delivered to the Project. The Full Insurable
Replacement Value initially shall be determined at Los Rios expense by an appraiser selected by
Los Rios and reasonably approved by the insurer(s) and University. University may require the
Full 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, and
permits of applicable governmental authorities having jurisdiction over the Leased Land as may
be necessary for construction, ownership, use, occupancy, management, operation, repair and/or
maintenance 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
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Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health
and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control law); (li) a "hazardous
substance" under Section 26316 of the California Health and Safety Code, Division 20, Chapter
6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (iii) a "hazardous material,"
"hazardous substance" or "hazardous waste" under Section 25501 of the California Health and
Safety Code, Division 20, Chapter 6.95, "Hazardous Substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances); (iv) a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et
seq. (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. 6901
et seq. (42 U.S.C. 6901) or any regulations promulgated thereunder or pursuant thereto; (b) any
material 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 of
the Clean Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant to Section
307 of the Clean Water Act (33 U.S.C. 6903) or any regulations promulgated thereunder or
pursuant thereto; (d) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum
hydrocarbons; (e) asbestos and asbestos-containing material, in any form, whether friable or
non-friable; (f) polychlorinated biphenyls; (g) lead and lead containing materials; or (h) any
additional substance, material or waste found to be a pollutant, contaminant, hazardous waste or
hazardous substance in any reported decision of a federal or California state court, or which is
customarily considered a hazardous substance or hazardous waste by reputable environmental )
engineering firms and gives rise to liability under any federal or California common law theory
based on nuisance or strict liability.
"Hazardous Substance Condition" shall mean the presence of any Hazardous
Substance on or about the Leased Land which is in violation of any Applicable Laws.
"Hazardous Substance Response Report" shall mean an environmental report prepared
by the Environmental Consultant with respect to any Hazardous Substance Condition which shall
reflect, 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 Hazardous
Substance Condition, (iii) an estimated timeline for performance of the clean-up and remediation
outlined in the Environmental Remediation Plan, and (iv) an estimated budget for completing the
clean-up and remediation outlined in the Environmental Remediation Plan.
"Implementation Plan" shall mean the document entitled "West Village Implementation
Plan" 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 by
written 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 )
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Project Financing Documents, holds a security interest in Los Rios' Interest pursuant thereto, and
has been approved by University, as provided in Section 14.2.
"Leasehold Mortgagee Affiliate" shall mean an entity controlling, controlled by or
under common control with Leasehold Mortgagee.
"Leasehold Mortgagee Excluded Obligations" shall mean any monetary obligations of
Los Rios pursuant to items (a) through (i) of Section 11.1 with respect to events first occurring
or conditions existing prior to the date Leasehold Mortgagee acquires Los Rios' Interests in this
Lease or enters into a New Lease.
"Lender's Notice" shall have the meaning set forth in Section 14.6(a) of this Lease.
"Los Rios" shall mean the Los Rios Community College District, a political subdivision
of the State of California.
"Los Rios' Architect" shall mean Stafford King Wiese and any subsequent architect
hired by Los Rios with respect to any element of the Project.
"Los Rios' Contractor" shall be detennined in accordance with Los Rios' policies and
procedures and Applicable Law.
"Los Rios Default" shall have the meaning set forth in Section 13.1 of this Lease.
"Los Rios' Interest" shall mean Los Rios' entire interest in (i) the Leased Land, (ii) the
Project, (iii) the Project Improvements, and (iv) this Lease.
"Los Rios Indemnitees" shall have the meaning set forth in Section 11.2 of this Lease.
"Los Rios Parties" shall mean (i) Los Rios, (ii) the employees, agents and contractors of
Los Rios, (iii) any materialmen or supplier who is accessing the Access Areas and/or the Leased
Land in connection with the Work who has been engaged by any of the parties referenced in the
preceding items (i) and (ii), (iv) the volunteers of Los Rios, and (v) the faculty, staff and students
of Los Rios.
"LRDP" shall mean the UC Davis Long Range Development Plan, dated October 2003,
and approved by University in November 2003, as amended, updated or replaced from time to
time.
"Major Alteration" shall mean any alteration in excess of One Hundred Thousand
Dollars ($100,000) to any Building after Completion (excluding painting and replacement of
flooring).
"Master Ground Lease" shall have the meaning set forth in Section 2.2 of this Lease.
"Master Projecf' shall mean a residential development which is intended to be
constmcted upon the West Village Land Area the first phase of which is intended to be
constructed upon an approximately one hundred thirty (130) acre portion ofthe West Village
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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 and
eighty (1,980) students, together with amenities.
"Municipal Fees Amount" shall have the meaning set forth in Section 5.4 of this 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 this
Lease.
"Notices" shall have the meaning set forth in Section 18.1 of this Lease
"Official Records" shall mean the Official Records of the County Recorder of Yolo
County, California
"Outside Delivery Date" shall mean June 15,2010.
"Pad Area Improvements" shall mean the improvements described in Exhibit C
attached 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 or
administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs
or expenses whatsoever (including, without limitation, court costs and attorneys' fees and
disbursements), whether direct or indirect, known or unknown, foreseen or unforeseen, that may
arise on account of or in any way be connected with the Project and/or the Project Improvements
and the development thereof, including, without limitation, (i) any such items resulting from,
arising out of or otherwise connected to the physical condition of the Leased Land or the Pad
Improvements, including, without limitation, all structural and seismic elements, all mechanical,
electrical, plumbing, sewage, heating, ventilating, air conditioning and other systems, the
environmental condition of the Leased Land, the Pad Improvements and/or the Access Areas
and the presence of Hazardous Materials on, under or about the Leased Land, the Pad
Improvements and/or the Access Areas, and (ii) any such items arising in connection with the
enforcement of any federal, state and local statutes, regulations, rules, ordinances, and all other
governmental requirements (including orders of court) applicable to the Leased Land and/or the
Project Improvements, or any portion thereof, including, without limitation, any Applicable
Laws.
"Plans and Specifications" shall mean the Preliminary Plans with respect to any given
Building which have been approved by the University pursuant to Section 4.2.
"Preliminary Plans" shall mean the Schematic Plans, DesignDevelopment Plans and
the 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. )
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"Pre-Commencement Termination Option" shall have the meaning set forth in Section
2.2 of this Lease.
"Private Restrictions" 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 days
after occupancy with respect to any given Building certifying that such Building is complete and
ready for occupancy.
"Project Improvements" shall mean collectively the improvements to be constructed
upon the Leased Land, as more particularly depicted within the Plans and Specifications for each
Building, including, five hundred (500) parking spaces, up to three buildings containing an
aggregate of up to sixty thousand (60,000) assignable square feet of area, as the same may be
modified 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 ofthis
Lease.
"Restore" or "Restoration" shall mean the repair, replacement or reconstruction of
damage or destruction caused to the Project Improvements to at least substantially the same
condition 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. 4947
West Village recorded in the Official Records of the County as Book 2010 of Maps, pages 32
through 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 governmental
charges, 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 parking
facilities or any other improvements now or hereafter at any time during the Term located at or
on 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
(65
th
) 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 this Lease.
"University Authorizations" shall mean any and all consents, approvals, and permits of
University as may be necessary, as determined by University from time to time, for construction,
ownership, use, occupancy, management, operation, repair andlor maintenance the Project
Improvements.
"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 this Lease.
"University Parties" shall mean (i) University, and (ii) the employees, agents and
contractors of University, and any materialmen or supplier who is accessing the Access Areas
andlor the Leased Land in connection with work to be performed by University pursuant to this
Lease, if any there be; provided, however, that in no event shall University Parties include any
student of the University or any employee who is merely accessing the Leased Land as an owner
or occupant of any residence within the Master Project.
"University Regulations" shall mean all existing and future policies, procedures, and
regulations promulgated by University as reasonably applied, pertaining to the use of
University's property generally and to activities taking place on the Campus, including, without
limitation, those relating to health, safety, and traffic enforcement.
"University Services Required Capacity" shall mean with respect to any given
Building, 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) acre
parcel of real property depicted upon ExhibitA-l attached to this Lease.
"Work" shall mean Los Rios' construction activities and obligations with respect to the
Project Improvements, including, without limitation, any site preparation performed, or to be
performed, 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 (2
nd
) anniversary of the
Delivery Date.
"Work Outside Completion Date" shall mean twenty-second (22
nd
) anniversary of the
Delivery Date.
-9-
)
ARTICLE II
GRANT, TERM AND CONDITION
Section 2.1 Lease. In consideration of the covenants and agreements to be observed
and performed by the parties hereto, effective as of the Delivery Date, University hereby leases
to Los Rios, and Los Rios hereby hires from University, the Leased Land to be used solely for
the Permitted Use. Subject to the rights reserved to University hereunder, including, without
limitation the rights set forth in Section 3.9 and the rights.in connection with construction of the
Deferred Improvements set forth in Exhibit C-2 attached hereto, Los Rios shall have the right to
the 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 to
comply with all Applicable Laws, University hereby grants to Los Rios and the other Los Rios
Parties, a non-exclusive license to enter upon (i) those road and street areas of the West Village
Land Area, and (li) those road and street areas of the Campus which are owned or controlled by
the University and lie West of State Route 113 that are reasonably necessary in order to obtain
access to the Leased Land for purposes of allowing Los Rios to perform its obligations and
enjoy its rights and privileges hereunder (collectively herein the "Access Areas"). Without
limiting the foregoing, Los Rios acknowledges that certain road and street areas within the West
Village Land Area will be controlled by WVCP until delivery of such roads and streets to
University pursuant to the terms of the Master Ground Lease arid that such areas shall not
constitute Access Areas until such delivery has occurred.
) Section 2.2 Term. The term (''Term'') of this Lease shall commence on the DeJivery
Date and expire on the Term Expiration Date, unless this Lease is sooner tenninated pursuant to
the terms hereof. On or before the Delivery Date, University shall complete, or shall cause to
be completed, the Pad Area Improvements (excluding the Deferred Improvements) which are
described in Exhibit C attached hereto. Notwithstanding the foregoing, or anything to the
contrary herein, if the University has not tendered possession of the Leased Land to Los Rios
with the Pad Area Improvements (excluding the Deferred Improvements) completed, as
required herein, on or before the Outside Delivery Date, then Los Rios shall have the option
(herein, the "Pre-Commencement Termination Option") to terminate this Lease without
further liability or obligation hereunder and without the obligation to pay University the
payments set forth in A ~ T I C L E V. The Pre-Commencement Termination Option must be
exercised, if at all, by Notice from Los Rios to University given not more than sixty (60) days
following the Outside Delivery Date; provided, however, that (i) if University tenders
possession of the Leased Land to Los Rios with the Pad Area Improvements (excluding the
Deferred 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, as
provided for above, the Pre-Commencement Termination Option shall be void and of no force
or effect.
(a) Options to Extend the Term. Los Rios shall have one (1) option (the
"Extension Option") to extend the Term of this Lease for a consecutive period of one hundred
twenty (120) months beyond the original Term Expiration Date (such extension the "Extension
Term"). 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.
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(b) Option Election Procedures. The Extension Option must be exercised, if
at all, by Notice (herein, an "Election Notice") from Los Rios to University given not more than
six (6) months nor less than three (3) months prior to the original Term Expiration Date. The
Extension Option and Los Rios' delivery of an Election Notice shall be effective only if (i) no
Los Rios Default is then occurring under this Lease, nor (ii) is any event then occurring which
with the giving of Notice or the passage of time, or both, would constitute a Los Rios Default
hereunder, either at the time of Los Rios' delivery of the Election Notice or the time of
commencement of the Extension Term, and (iii) any Leasehold Mortgage encumbering Los
Rios' Interest has been paid in full and such Leasehold Mortgagee's interest has been released
prior to the delivery of any such Election Notice. If Los Rios fails to exercise the Extension
Option in a timely manner, as provided for above, the Extension Option shall be void and of no
force 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") and
the University (the "Master Ground Lease"), WVCP shall construct the Pad Area
Improvements (including the Deferred Improvements) on Pad One (known herein as the Leased
Land) 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 Date
as set forth in Exhibit C-l hereto and Exhibit C-2 attached hereto). In turn, University shall
deliver the Leased Land with the Pad Area hnprovements in the same condition as received from
WVCP to Los Rios on the Delivery Date (subject to the deferred delivery of the Deferred
Improvements as set forth in Exhibit C-l hereto ,and Exhibit C-2 attached hereto). University
shall assign to Los Rios on the Delivery Date all warranties, whether express or implied, with
respect to the Pad Area Improvements, whether from WVCP, University'S contractor or
WVCP'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 the
Pad Area Improvements, "as is/in its present condition/with all faults" without representation
or warranty of University and subject to all encumbrances, liens, restrictions, or other matters
affecting title as of the Effective Date (collectively, ''Title Exceptions"), w h e t ~ e r such Title
Exceptions are of record or not. Los Rios acknowledges that it has had the advice of such
independent attorneys, professional consultants and experts as it deems necessary in connection
with its investigation and study of the Leased Land and has, to the extent it deemed necessary,
independently investigated the condition of the Leased Land, including, without limitation, the
Pad 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 been
provided copies of and has reviewed all matters reflected within any Entitlement Documents
existing 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 all
use of the Leased Land shall be subject to compliance with the Entitlement Documents, whether
such Entitlement Documents are obtained or in effect prior to or after the Effective Date.
-11-
)
)
(e) Suitability of Site. University makes no warranty as to the suitability of
the Leased Land for construction of the Project or any portion thereof. University makes no
covenants or warranties respecting the condition of the soil, subsoil or any other condition of the
Leased 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 Area
Improvements for the proposed development, construction or use by Los Rios. Without limiting
the foregoing, Los Rios acknowledges that the soil on the Leased Land or the Pad Area
Improvements mayor may not be suitable for the purposes intended by Los Rios or be of such
character and condition so as to require special engineering for construction of the Project
Improvements. Notwithstanding anything to the contrary herein, University shall not be
responsible for any land subsidence, soil instability or damage resulting therefrom on the Leased
Land or the Pad Area l1pprovements except and to the extent caused by University's negligence
and 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 to
or serving as ingress or egress from the Leased Land.
(d) Waiver and Release. Los Rios on behalf of itself and its successors and
assigns waives its right to recover from, and forever releases and discharges, University and the
University Indemnitees, and their respective heirs, successors, personal representatives and
assigns, from any and all Physical Condition Claims, whether direct or indirect, known or
unknown, foreseen or unforeseen. Los Rios hereby acknowledges and agrees that neither
University nor any other University Indemnitees have made any representation or warranty
whatsoever in connection with the Leased Land, the Pad Area Improvements, the Project and/or
the Project Improvements. Los Rios hereby further acknowledges and agrees that (i) neither
University or any other University Indemnitees shall be liable for any Physical Condition
Claims, (ii) neither University or any other University Indemnitees shall be liable for damage or
inconvenience to Los Rios' business or for any loss of income or profit therefrom, or for any
consequential, indirect, incidental, special, punitive, or exemplary damages, irrespective of
whether or not such losses or damages arise from the negligence or misconduct of any University
Indemnitees, and (iii) Los Rios, on behalf of itself and its successors and assigns, waives its right
to recover from and forever releases University and the University Indemnitees, and their
respective 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' business
or 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 in
items (x) or (y) were direct or indirect, known or unknown, foreseen or unforesecn and
irrespective of whether or not any losses, damages or claims with respect to such matters arise
from the negligence or misconduct of any University Indemnitee. In connection with the
foregoing, Los Rios expressly waives the benefits of Section 1542 of the California Civil Code,
which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ms
OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY IDM OR HER MUST HAVE MATERIALLY
AFFECTED IDS OR HER SETTLEMENT WITH THE DEBTOR."
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LOS RIOS ACKNOWLEDGES AND AGREES THAT IT HAS BEEN REPRESENTED BY
LEGAL COUNSEL OF ITS CHOICE IN CONNECTION WITH THIS LEASE, AND THAT
SUCH COUNSEL HAS EXPLAINED TO LOS RIOS THE PROVISIONS OF THIS
SECTION 2.3. BY INITIALING BELOW, LOS RIOS CONFIRMS IT HAS AGREED TO
THE PROVISIONS OF THIS SECTION 2.3.
LOS RIOS' INITIALS:
ARTICLE III
PERMITTED USE
Section 3.1 Use of Leased Land. The Leased Land shall be used solely for the
construction and maintenance of the Project Improvements and use, occupancy, management,
operation, repair and maintenance of the Project Improvements for educational purposes as a
community college center, including, classrooms and related administrative offices, foodservice
and storage (collectively, the "Permitted Use"). Any change to the Permitted Use shall require
the prior written consent of University, which consent may be granted or withheld in
University's sole and absolute discretion. A change to the use of all or any portion of the
Leased Land or the Project Improvements which has not been approved in writing by University
shall constitute a Los Rios Default under this Lease.
Section 3.2 Construction Staging. At all times during the Term, Los Rios shall
perform all construction staging for the Project Improvements on the Leased Land. Los Rios
shall 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 Los
Rios 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 which
constitutes a trespass, or for any illegal purpose. Without limiting the generality of the
foregoing and notwithstanding anything to the contrary herein, Los Rios acknowledges and
agrees that University shall have the right to limit uses of the Leased Land by Los Rios that
generate extraordinary noise, odors, hours of operation or other matters which would impact the
quiet enjoyment of the Master Project, or any portion thereof, by the residents thereof; provided,
however, that University acknowledges that Los Rios customary hours of operation include
evening classes that run as late as 11 :00 p.m. (California time) on weekdays and include classes
on weekends. Los Rios further agrees at all times during the Term, at its sole cost, to maintain
the Leased Land in a clean and sanitary manner and agrees to ensure that: (i) no vehicle or
equipment 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 which
will interfere with the quiet enjoyment of any real property adjacent to the Leased Land or
which will create a nuisance or violate any Applicable Laws; (iii) neither Los Rios or any of its
employees, agents, contractors or invitees will transmit, generate or receive any
electromagnetic, microwave or other radiation which is hannful or hazardous to any person or
property in, on or about the Leased Land or any real property adjacent to the Leased Land or
which interferes with the operation of any electrical, electronic, telephonic or other equipment
wherever located, whether on the Leased Land or any real property adjacent to the Leased Land;
-13-
)
)
(iv) no vibration discernible outside the Leased Land is created or permitted; or (v) no intense
glare, light or heat is produced or permitted except within an enclosed or screened area and then
only in such manner that the glare, light or heat shall not be discernible outside the Leased
Land. Los Rios further agrees that, if any activity by Los Rios or any Los Rios Parties
constitutes waste, nuisance or unreasonable annoyance to University or otherwise violates
Applicable Laws or constitutes a trespass, or any illegal purpose, then Los Rios shall promptly
use 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 3.6
below, Los Rios agrees that during its use and occupancy of the Leased Land that neither Los
Rios or any other Los Rios Parties shall (1) permit Hazardous Substances to be present on or
about 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 Leased
Land. Notwithstanding the foregoing, the Los Rios Parties may (x) handle, abate, dispose or
transport any Hazardous Substances which were present on the Leased Land prior to the
Effective Date so long as such Hazardous Substances are handled, abated, disposed of and/or
transported in full compliance with all Applicable Laws and otherwise in a safe and prudent
manner, and (y) use Hazardous Substances in quantities and of a type customarily used (i) in the
ordinary course of construction activities for the construction of the Project Improvements,
and/or (ii) in the ordinary occupancy, management, operation, repair and/or maintenance of
projects similar to the Project Improvements so long as such Hazardous Substances are
transported, stored and used in full compliance with all Applicable Laws and otherwise in a safe
and 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 Project
Improvements and/or the Leased Land to comply with Applicable Laws, or (ii) the discovery by
Los Rios of any release, discharge, or emission of any Hazardous Substances, or of the existence
of any other condition or occurrence, which may constitute or pose a significant present or
potential hazard to human health and safety or to the environment, whether or not such event or
discovery necessitates any report to any other person or government agency and whether or not
such release, discharge or emission is caused by Los Rios, or (iii) the occurrence of any event or
existence of any condition that would cause a breach of any of the covenants set forth in this
Section 3.4. Receipt of such notice shall not be deemed to create any obligation on the part of
University to defend or otherwise respond to any such notification.
(b) Los Rios Response and Remedy. Los Rios shall promptly respond to
and remedy (by removal and proper disposal or such other methods as shall be reasonably
required), to the full satisfaction of the University and all applicable governmental agencies, any
condition upon the Leased Land, including, without limitation, on, in, under or about any Project
Improvements, which constitutes a violation of Applicable Laws with respect to Hazardous
Substances and/or any release or discharge of any Hazardous Substances resulting from use,
occupancy, management, operation, repair and/or maintenance of the Project Improvements
and/or the Leased Land by any Los Rios Parties or presence of and/or the actions of any Los
Rios Parties on or about the Leased Land and/or the Access Areas. All such action shall be done
-14-
in Los Rios' name, and at Los Rios' sole cost and expense. For purposes of this Section 3.4, the
term "respond" shall include, but not be limited to, the investigation of enviromnental
conditions, the preparation of feasibility reports or remedial plans, and the performance of any
cleanup, remediation, containment, maintenance, monitoring or restoration work. Any such
actions shall be performed in a good, safe, workmanlike manner and shall minimize any impact
on 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 and
University to meet and confer regarding any proposed response, without in any way limiting
University's other rights and remedies under this Lease, to enter upon the Leased Land, or to
take such other actions as it deems necessary or advisable, to investigate, clean up, remove or
remediate 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 the
right, at its election, in its own name or as Los Rios' agent, to negotiate, defend, approve and
appeal, at Los Rios' expense, any action taken or order issued by any governmental agency or
authority with regard to any such Hazardous Substances or contamination by Hazardous
Substances. All costs and expenses paid or incurred by University in the exercise of the rights
set forth in this Section 3.4 shall be payable by Los Rios upon demand together with Interest, as
defined 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 to
University, upon the expiration or earlier termination of this Lease in a condition which complies )
with the provisions of Section 12.3 below.
(d) SurvivaL Los Rios' obligations and liabilities pursuant to the provisions
of this Section 3.4 shall survive the expiration or earlier termination of this Lease.
Section 3.5 Maintenance of Leased Land and Project Improvements. During the
Term of this Lease, Los Rios shall, at Los Rios' sole cost and expense, maintain the Leased
Land 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 the
standards of community college facilities located in the Northern California region. Los Rios'
maintenance obligations shall include (i) the obligation to maintain the Project Improvements in
good condition and repair, and (ii) the obligation to maintain all unimproved areas within the
Leased Land in good condition and perform erosion and dust/dirt control measures with respect
to such unimproved areas (including, without limitation, hydro seeding or such other measures
as are mutually agreed by the parties sufficient to prevent any material adverse impact to any
real property adjoining the Leased Land).
Section 3.6 Compliance With ADDIicable Laws. Subject to Los Rios' right to
contest in accordance with Section 3.7 below, Los Rios shall, at its sole cost and expense, at all
times during the Term, comply with, and cause all other Los Rios Parties, to comply with (a) all
Applicable Laws, including, but not limited to, (i) acquisition of and compliance with all
permits, licenses, orders, requirements, approvals, plans and authorizations which are or may
become necessary for conduct of Los Rios' operations on the Leased Land, including, without
limitation, the construction, use, occupancy, management, operation, repair and maintenance of
-15-
)
the Project Improvements; and (ii) compliance with all regulatory requirements relating to such
operations or the substances and equipment used therein; (b) the Entitlement Documents now in
force or which may hereafter be in force, and (c) all recorded covenants, conditions and
restrictions affecting the Leased Land ("Private Restrictions") now in force or which may
hereafter be in force.
Section 3.7 Ri&ht to Contest.
(a) At Los Rios' sole cost and expense, Los Rios, by appropriate legal
proceedings 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 written
consent (to be granted or withheld in University's sole discretion), maintained in the names of
both Los Rios and University, it shall be maintained without cost to University, and Los Rios
shall indemnify, protect, defend (with counsel reasonably approved by University) and hold the
University Indemnitees and the Leased Land hannless from Los Rios' failure to observe or
comply with the contested Applicable Laws during the contest.
(b) University reserves the right to contest the applicability to the Leased
Land or validity of any Applicable Laws; provided, however, that if any such contest or
proceeding is, with Los Rios' prior written consent (to be granted or withheld in Los Rios' sole
discretion), mainWned in the names of both Los Rios and University, it shall be maintained
without cost to Los Rios, and University shall indemnify, protect, defend (with counsel
reasonably approved by Los Rios) and hold the Los Rios Indemnitees and the Leased Land
hannless from University's failure to observe or comply with the contested Applicable Laws
during the contest.
( c) Immediately upon receipt of notice of action or proceeding from any
governmental agency alleging a violation of Applicable Laws and seeking to enforce any legal
requirement 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 shall
give University written notice of such claims.
Section 3.8 Adyertisin& and Signs.
(a) Location and Placement of Sips. Neither Los Rios nor any employees,
agents, contractors or invitees, including, without limitation, the Leasehold Mortgagee, shall
place, construct or maintain any signs, advertisements, names, insignia, trademarks, descriptive
material, or any other similar item, on any portion of the Leased Land which has not been
approved by University in writing. To the extent feasible, the parties shall resolve any issues
concerning placement of signs during the process of design and approval of the Project
Improvements set forth in Article IV hereof. Any signs or graphics installed on Leased Land
shall be installed by Los Rios at its sole cost and expense. If Los Rios violates this provision and
does not cure such violation within five (5) Business Days following written notice of such
violation, University, at Los Rios' cost, may remove any item placed, constructed or maintained
that does not comply with the provisions of this Section 3.8.
-16-
1
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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 or
acquire 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 Rios
or the Project Improvements with the University of California. University reserves the right,
exercisable in University's sole discretion, upon not less than six (6) months prior written notice
to Los Rios, to change the address of the Leased Land or any portion thereof at any time, and
Los Rios waives all claims for damages caused by any such change, except that University
agrees to pay the reasonable actual costs incurred by Los Rios for the address change but not to
exceed Ten Thousand Dollars ($10,000).
Section 3.9 University's Reserved Uses.
(a) Reservation ofOll. Gas. Water and Mineral Rights. Notwithstanding
anything to the contrary herein, University reserves to itself the sole and exclusive right to
prospect 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 resources
from the Leased Land, including the rights to drill, maintain subsurface pressures, and utilize
subsurface storage space for natural substances. Los Rios shall have no right or claim to any
such subsurface water, oil, gas or other hydrocarbon or mineral substances and accompanying
fluids, including, without limitation, the existing water wells located upon the Leased Land, and
the same may be taken and removed by University without any compensation to Los Rios in
connection therewith. Notwithstanding the foregoing, during the tenn of this Lease, University
shall (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 at
all, only from reserves which are located at the depth offive hundred (500) feet from the surface
of 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 utilize
subsurface storage space for natural substances only, and (iv) not disturb the quiet enjoyment and
peaceful use of the Leased Land in connection with any exercise of the rights set forth in this
Section 3.9(a).
(b) Easements. University reserves to itself the right to grant to others in the
future non-exclusive utility and other easements over, under, through, across or on the Leased
Land 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 arising
as a result of construction of improvements related to such utility systems and facilities shall be
temporary, and all work on the Leased Land shall proceed expeditiously. Los Rios shall be
given reasonable notice before commencement of any work on the Leased Land with respect to
any such easement. In the event the installation or maintenance of improvements within the area
of such easements causes any damage to the Leased Land, or any portion thereof, including but
not 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 the
right to terminate this Lease at any time during the Tenn as it relates to a portion of the Leased
Land of approximately one acre in the Southeast comer of the Leased Land (as shown on Exhibit
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)
A-3 attached hereto and incorporated by this reference) for the purpose of entering into a ground
lease with the Davis Joint Unified School District for such portion ("DJUSD Parcel") to be used
by DJUSD for a school site. On such termination University and Los Rios shall substitute a
revised Exhibit A-2 to reflect such termination, and Los Rios shall execute any additional
instruments reasonably required by University, including a Memorandum of Lease. University
will provide Los Rios with not less than six months prior written notice of its intent to terminate
the Lease for such purpose. Los Rios agrees to use best efforts to negotiate a Reciprocal Parking
and Maintenance Agreement with DruSD to allow for shared parking, access and maintenance.
(d) Telecommunications Facilities. University reserves to itself the
exclusive right to maintain and operate, and/or to grant to others in the future licenses or
easements for the placement and operation of, telecommunications facilities on or about the
Leased 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 in
University's sole discretion, Los Rios shall have no right to grant any lease, sublease, license or
other 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 transmission
of any telecommunications technology, including, without limitation, any cellular telephone
service, WIFI or other internet connectivity service, and digital television. Notwithstanding the
foregoing, Los Rios shall have the right to procure telephone service, wireless and internet access
for the Project for the use of its faculty, staff and students.
ARTICLE IV
CONSTRUCTION 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 the
Plans and Specifications applicable to any given Building. University and Los Rios
acknowledge that Los Rios intends to construct the Project in two or three phases containing
approximately twenty thousand (20,000) assignable square feet per phase with associated
parking sufficient to meet the demands of the intended use of the subject phase and amenities in
each phase. Each Building will have its own Plans and Specifications (respectively "Building
Plans and Specifications"). Los Rios shall commence construction of the first Building to be
located at the northeast comer of the Leased Land on or before the Work Outside
Commencement Date and shall diligently prosecute construction of the first Building so that the
first Building is completed on or before the fifth anniversary of the Delivery Date. Los Rios
shall complete the remaining Buildings so that the entire Project is completed on or before the
Work Outside Completion Date. Los Rios shall provide to University such written confirmation
as University may reasonably request confirming that any given Building has been completed in
accordance with the Building Plans and Specifications. Notwithstanding the foregoing or
anything to the contrary herein, Los Rios acknowledges and agrees that, without limiting any
other remedies University may have in connection with any Los Rios Default, University may
terminate this Lease in its entirety upon the failure of Los Rios to achieve Completion of the
Project Improvements on or before the Work Outside Completion Date. All Work shall be
designed, constructed, and performed in a good and workmanlike manner and in accordance with
the respective Building Plans and Specifications, the Governmental Authorizations, the
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Applicable Laws, the University Authorizations and in substantial compliance with the Design
Standards, including, without limitation, the requirements established by the Uniform Building
Code, Uniform Mechanical Code, Uniform Plumbing Code, National Electric Code, the DSA
and all applicable provisions of the California Administrative Code and/or the California
Education Code.
Section 4.2 DIG Coordination. As reasonably requested by University, Los Rios
shall coordinate with DIG during design of any given Building and shall permit the DIG to
participate in the process of preparation of the Preliminary Plans with respect to any given
Building (respectively "Building Preliminary Plans"). Without limiting the foregoing, Los
Rios acknowledges that the DIG shall (i) be permitted to assist Los Rios in review and
preparation of the Building Preliminary Plans to advance the design, character and quality
standards for the Project Improvements to ensure compliance with the vision for the Master
Project established in the Implementation Plan, (ii) act as an information depository and source
gathering necessary input from University constituents, in order to facilitate the design review
of the Building Preliminary Plans with respect to any given Building, and (iii) report to the
CCCPD on the consistency of each stage of design with the Implementation Plan. In
furtherance of the goals of the DIG and the Implementation Plan, Los Rios shall meet with the
DIG at regular intervals during the design and preparation of the Building Preliminary Plans
with respect to any given Building to obtain input and comment from the DIG at interim stages
of the design preparation. Without limiting the foregoing, with respect to any given Building
and as reasonably required by University, Los Rios shall consult with the DIG prior to
preparation of the Schematic Plans, and again prior to preparation of Design Development Plans
and finally at Construction Drawings. Without limiting the foregoing, Los Rios acknowledges )
that the CCCPD shall serve as the initial review body, (following coordination with DIG), on
behalf of the University which shall be tasked with (i) assuring consistency of the design of any
given Building with (x) the concepts approved by the 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 Building
with 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 to
University for the purpose of obtaining design approval from The Regents of the University of
California. The Schematic Plans shall be consistent with the Design Standards and shall show in
reasonable 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 parking
areas, all ingress and egress to streets and roads, and all grading and landscaping. The design for
the 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 conformity
with the Design Standards or any applicable Entitlement Documents, or (ii) which conflicts
functionally 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 of
topography, grade, and elevation of the Leased Land, considered in conjunction with
neighboring sites and nearby streets, and the effect of location and use of the proposed Project
Improvements 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 DIG
and CCCPD and then presented to The Regents for approval. The University will either approve
or disapprove a submittal of Schematic Plans and, if approved, it will return to Los Rios one
complete set of the subject Schematic Plans bearing the University's written endorsement. The
University's failure to respond shall be deemed as its disapproval of the subject Schematic Plans
(or modification, as applicable). If the University disapproves of the subject Schematic Plans,
the University and Los Rios agree to cooperate reasonably with each other in resolving any
objections of the University to the subject Schematic Plans. Once the Schematic Plans for any
given Building have been approved by The Regents, the Design Development Plans and the
Construction 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, in
accordance with Applicable Laws. Los Rios shall furnish University with copies of all
certificates and approvals relating to any Work or installation done by Los Rios that may be
required by Applicable Laws or any governmental authorities with jurisdiction of such Work in
connection with the construction of the 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 all
Governmental Authorizations and University Authorizations applicable to the Project
Improvements, (ii) paying all fees related to the Project Improvements, including, all design
review and pennit fees, and (iii) paying all costs and expenses of complying with the
requirements of all Governmental Authorizations and University Authorizations applicable to the
Project Improvements.
(b) University Cooperation. University, in its capacity as lessor under this
Lease, will reasonably cooperate with Los Rios, at no cost or expense to University, in obtaining
all 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 prompt
execution by a duly authorized officer of University of such documents and instruments as are
reasonably necessary to obtain such Governmental Authorizations. University, in its capacity as
lessor 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 event
shall University be required to cooperate with Los Rios in any effort which University
reasonably believes either to be (x) illegal, (y) contrary to the terms of the Entitlement
Documents, or (z) contrary to terms of this Lease, and (ii) nothing herein contained shall limit
the rights that University has in connection with any review of the Work and/or the Project
Improvements 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 Governmental
Authorizations and/or University Authorizations, or that University otherwise has in its role as
"the 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 Responsibilities
attached hereto as Exhibit H. Notwithstanding the foregoing, while the chart of Mitigation
Measmes Responsibilities reflects obligations with respect to mitigation measures currently
required, including those required in the Entitlement Documents, Los Rios acknowledges that
the chart of Mitigation Measures Responsibilities may not reflect an exhaustive list of all
mitigation measures that may be required by any Applicable Laws or governmental authorities
having jurisdiction over the Leased Land in connection with their review and grant of required
approvals for development of the Project Improvements. Los Rios further acknowledges that
Los Rios shall perform, or cause to be performed, all mitigation measures which are now or in
the 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, without
limitation, all Work with respect to the Project Improvements, shall be performed only pursuant
to written contracts by competent contractors and subcontractors which are duly licensed under
the laws of the State of California Without limiting the foregoing, prior to entering into a
)
contract with Los Rios' Contractor for construction of all or any portion of the project _)
Improvements, Los Rios shall obtain University's written consent, such consent not to be
unreasonably withheld, to the form of the general contract. All construction contracts, whether
with Los Rios' Contractor or any subcontractor, shall provide that (i) the applicable contractor
agrees to indemnify, protect, defend (with counsel reasonably approved by University) and hold
harmless the University Indemnitees from and against any claims, costs, liability or loss arising
from personal injury, death or property damage to the extent arising from the willful or
negligent acts, errors, or omissions of such contractor, (ii) the applicable contractor waives all
rights of subrogation and recovery such contractor has against all University Indemnitees on
account of any loss or damage arising from any cause to the extent covered by any insurance
maintained by or required to be maintained by such contractor pursuant to ARTICLE VII or
any of the applicable Development Documents, and (iii) in the event that this Lease is
tenninated in connection with a Los Rios Default hereunder, then at University's election, to be
exercised in University's sole discretion, the respective contractor/subcontractor will recognize
University as the assignee of the contract under the same terms and conditions as contained in
the subject contract; however, that University shall have no liability or obligation
under such contract until University has elected, in a written notice to the subject
contractor/subcontractor, to exercise its right to assume the subject contract, and then
University's liability shall be limited to payment obligations solely on or after the date
of such assumption by University.
Section 4.7 Utilities and Other Facilities,
(a) University Supplied Utilities. At all times during the Tenn from and
after 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 water
services 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 incident
to the making of repairs, alterations, improvements, or due to conditions constituting Force
Majuere and such temporary interruptions shall not be deemed an eviction of Los Rios or relieve
Los 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 and
shall use commercially reasonable efforts to minimize any disruption to Los Rios.
Notwithstanding the foregoing or anything to the contrary herein, University shall not be liable
for any consequential, indirect, incidental, special, punitive, or exemplary damages, or for any
loss of income or profit, in either case arising from any failure or inadequacy of the sanitary
sewer, storm water or domestic services to be provided by University pursuant to this Section
4.7(a).
(b) Cost of Utilities. Except for the Pad Area Improvements to be
constructed by University as provided in this Lease, all costs associated with bringing required
utilities (both temporary and permanent) from the point of origin to the point of connection to the
Project Improvements (whether related to on-site improvements or off-site improvements),
including, without limitation, related professional, engineering and consultant fees, service
charges, meters, and the costs of connections (including, without limitation, any hook-up fees)
assessed by any utility company and/or government agency, shall be paid by Los Rios. The
point of connection for all such utilities shall be at the property line of the Leased Land. In
addition, Los Rios shall pay to University the costs for such sanitary sewer, storm water and
domestic 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 any
contract or agreement with any government agency, special district or public utility with
reference to sewer, water, gas, telephone, storm drain and other utility lines, landscape
improvements, lighting, utility facilities, improvements and/or connections, lines, pipes,
distribution systems or easements and the like, unless and until University has entered into an
easement, license or similar agreement with such party pursuant to Section 3.9(b) above. Los
Rios hereby acknowledges and agrees that University shall be under no obligation to grant any
such license or easement unless University receives such indemnities or other legal protections
with respect to such easements or license as University customarily obtains from third party
utility providers that provide services to University.
Section 4.8 Evidence of Completion. Prior to occupancy of any given Building, Los
Rios shall obtain approval of the State Fire Marshall with respect to such Building and shall
provide University with a copy thereof. In addition, Los Rios shall cause all of Los 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 reviewed
the Work performed with respect to the Building and found the subject Work to be in
substantial 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 or
cause to be filed a notice of completion as defined and provided for in California Civil Code
Section 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 of non- ')
conformance of any Work, correct any such non-conformance noted by the DSA.
Section 4.9 University Inspections. Notwithstanding the provisions of Section 4.8
above or anything to the contrary herein, University and the State Fire Marshal shall at all times
have access to the site where Work is being performed for the pwpose of inspecting any given
Building for compliance with the Building Plans and Specifications, Applicable Laws and good
construction practices related to fire, life and safety design and construction. Los Rios shall
provide 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 reasonably
believes does not comply with Applicable Laws, the Building Plans and Specifications and/or
with good construction practices, University shall notify Los Rios and University may pursue
any of its remedies under this Lease, including, without limitation, the remedies set forth in this
Section 4.9 or those set forth in Section 13.3 below. Los Rios shall have an obligation to
promptly correct the non-conformance pursuant to Seetion 4.9(b), below.
(b) Correction by Los Rios. Los Rios shall, at Los Rios' sole cost and
expense, promptly after receipt of University's notice ofnon-confonnance pursuant to Section
4.9(a) above, correct any such non-conformance noted by University. Los Rios shall keep on
file all written communications between Los Rios and the DSA, Los Rios' Architect and Los
Rios' Contractor, which University shall have the right to review and copy at its own expense. If
Los Rios fails to correct any such non-conformance in a timely manner University may pursue )
any 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 set
forth 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 nor
University's approval of any Work nor the approval of any plans or submissions presented by
Los Rios or its employees, agents or contractors, including, without limitation, the Plans and
Specifications, shall constitute an opinion or warranty by University or any of the other
University Parties of their adequacy, nor shall it make University responsible for Work with
respect to which an approval is given or for any defect or deficiency with respect to any Work
and/or the Plans and Specifications.
(d) Nonresponsibility. With the exception of the assignment of warranties
with respect to the Pad Area Improvements provided herein and causing WVCP to construct the
Deferred Improvements, University shall not be deemed to have incurred or assumed any
obligation 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 a
warranty or representation as to the adequacy or fitness of the Project Improvements or as a
waiver of a claim by University for any defect or deficiency with respect to the Project
Improvements, the Development Documents or of the Work.
Section 4.10 As-Built Plans. Within ninety (90) days after DSA's issuance of a Project
Certification with respect to any given Building, Los Rios' Architect shall, at no cost to
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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 in
the 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 on
marked-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 shall
prominently note the words "Record Documents."
Section 4.11 Ownership of Project Improvements. The Project Improvements shall
be owned by Los Rios until the expiration or earlier termination of this Lease, whereupon the
Project Improvements shall become the property of University without any further or additional
action required of the parties hereto.
ARTICLE V
LEASE CONSIDERATION
Section 5.1 Annual Rent. Los Rios shall pay University annual rent in the amount of
One Dollar (SI.00) per year; provided, however, that annual rent for the Term of the Lease in
the aggregate amount of Sixty-Five Dollars ($65.00) shall be paid in advance on the Effective
Date. In the event the Term is extended for the Extension Term as provided in Section 2.2
above, then during the Extension Term Los Rios shall pay University annual rent in the amount
of One Dollar (S1.00) per year; provideQ, however, that annual rent for the Extension Term of
the Lease in the ~ g r e g a t e amount ofTen Dollars ($10.00) shall be paid in advance on or before
the sixty-fifth (65 ) anniversary of the Delivery Date.
Section 5.2 Payment For Project Improvements. In addition to the annual rent
payable by Los Rios pursuant to Section 5.1 above, Los Rios shall pay to University, on the
Delivery 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 Area
Improvements and for Los Rios' share of the costs of off-site infrastructure serving the Leased
Land, 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 Deferred
Improvements as provided in Exhibit C-J attached hereto and to be paid to the University as
provided in Exhibit C-2 attached hereto; and (b) One Million Dollars ($1,000,000) shall be paid
in "in-kind" by allowing University use of Los Rios' classrooms or other space rent free, the
details of such use to be mutually agreed to by the parties and memorialized in a writing signed
by both University and Los Rios.
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Section 5.3 University Fees. Los Rios shall pay the University the amounts set forth
in Exhibit D attached hereto (such amounts herein, the "University Fees") as compensation for
the costs and expenses which will be incurred by the University in connection with facilitating
the construction of the Los Rios facilities. The University Fees shall be payable by Los Rios to
University respect to each respective Building comprising the Project Improvements in four (4)
equal quarterly installments with respect to each such Building, due and payable with respect to
the subject Building beginning on the first day of the first calendar quarter following
commencement of the construction of each respective Building and continuing on the first day
of each succeeding calendar quarter until fully paid.
Section 5.4 Municipal Fees. After the issuance of a Project Certification with respect
to any given Building, Los Rios shall pay to University monthly fees for the provision of
domestic water, wastewater, and storm water services based upon University's actual costs to
provide stich services but not to exceed City of Davis fees for like services. In addition, Los
Rios shall pay to University monthly fees for the provision of street and landscape maintenance
for the Access Areas, fire and police service in the amount reasonably allocated to the Leased
Land by University from time to time (such allocated amount herein, the "Municipal Fees
Amounf').The Municipal Fees will be adjusted annually by actual increased costs to the
University but in no event to exceed a CPI increase without the prior written consent of Los
Rios. Municipal Fees shall be payable in advance on or before the first day of each calendar
month during the Term and any extensions or renewals thereof, without abatement offset,
rebate, credit or deduction for any reason whatsoever. No Municipal Fees shall be payable
during construction of the first Building.
Section 5.5 Miti&ation Fees. Los Rios shall pay to University on the Delivery Date
an amount equal to $4,000 per acre in Swainson's Hawk Habitat Mitigation fees to reimburse
the University for its performing mitigation measures to offset the impact of developing the
Leased Land (net of the DJUSD Parcel). The total acreage for the Leased Land is 6.29 acres
and the approximate size of the DJUSD Parcel is 1 acre (including some parking). Accordingly,
the Swainson's Hawk Habitat Mitigation fees due from Los Rios is Twenty-One Thousand, One
Hundred and Sixty Dollars ($21,160). University will bear the cost of agricultural mitigation
measures triggered by the Project Improvements as required under the Entitlement Documents.
Section 5.6 Development Documents. Los Rios hereby grants University a security
interest in all Development Documents and Development Agreements as security for Los Rios'
performance under this Lease, including, without limitation, the obligation to construct the
Project Improvements as provided in Section 4.1 above. In connection with the foregoing, Los
Rios hereby acknowledges and agrees that all Development Documents and all Development
Agreements shall provide that, in the event that this Lease is terminated in connection with a
Los Rios Default hereunder, then at University's election, to be exercised in University's sole
discretion, the respective party thereunder will recognize University as the assignee of the Los
Rios' rights; provided, however, that University shall have no liability or obligation under any
contract which is a part of such Development Documents andlor Development Agreements until
University has elected, in a written notice to the subject party, to exercise its right to assume the
subject contract, and then University's liability shall be limited to payment obligations arising
solely on or after the date of such assumption by University. Without limiting the foregoing,
(i) all Development Agreements shall provide that the contracting party waives all rights of
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J
)
subrogation and recovery such contracting party has against all University Indemnitees on
account of any loss or damage arising from any cause to the extent covered by any insurance
maintained by or required to be maintained by such contracting party pursuant to ARTICLE
VII or any of the applicable Development Documents, and (ii) prior to entering into any
Development Agreements, Los Rios shall obtain University's written consent, such consent not
to be unreasonably withheld, to the form of the subject Development Agreement. Los Rios will
not assign, pledge, encumber, or otherwise grant a security interest in the Development
Documents and/or Development Agreements to or in favor of any other person or entity. In
order to enable University to perfect its security interest in the Development Documents, Los
Rios shall cooperate with University in filing a customary UCC-l financing statement to be
filed in University's favor, and before construction of the first Building commences, Los Rios
shall obtain consents from parties to the Development Documents and Development
Agreements in the form attached hereto as Exhibit J. Upon termination of this Lease, Los Rios
shall (i) execute such documents and agreements as shall be reasonably required by University
to convey to University, or to a third party named by University, Los Rios' right, title, and
interest in any and all Development Documents with respect to any given Building for which a
Certification of Oceupancy has not then been issued and for which University elects to have so
conveyed; and (li) deliver any and all such Development Documents to University.
Section 5.7 Other Payments. Los Rios agrees to pay, as additional rent for the
Leased Land, within thirty (30) days after University's demand therefor (unless another time for
payment is set forth in this Lease) all other amounts and sums which Los Rios is obligated to
payor reimburse to University under the provisions of this Lease or otherwise. All such sums
shall be deemed to be additional rent hereunder.
Section 5.8 Net Lease; No Rent Abatement or Reduction. With the exception of
the University's obligation to deliver the Leased Land in accordance with Section 2.2 and
Section 2.3(a) above, the parties hereto have assumed that University will not have to pay any
expense or incur any liabilities of any kind in any way relating to, or in connection with, Los
Rios' Interest, the Leased Land, the Project, the Project Improvements, or any portion thereof,
during the Term. In connection with the foregoing, Los Rios hereby assumes the obligation to
make all payments of fees, costs and expenses in connection with the ownership, construction,
use, occupancy, management, operation, repair and/or maintenance of Los Rios' Interest, the
Leased Land, the Project, the Project Improvements, or any portion thereof, that arise or accrue
during the Term.
ARTICLE VI
TAXES AND ASSESSMENTS
Section 6.1 Taxes and Assessments. During the Term, Los Rios shall pay, prior to
the delinquency date thereof all Taxes and Assessments which may be levied, assessed, charged
or imposed, or may become a lien or charge upon Los Rios' Interest, the Leased Land, the
Project and/or the Project Improvements. Los Rios shall pay the actual amount of all Taxes and
Assessments directly to the appropriate taxing authorities. In connection with the foregoing,
Los Rios shall promptly provide University with a copy of any notice of Taxes and/or
Assessments and the related bill for the Leased Land, the Project and/or the Project
-26-
Improvements received by Los Rios together with a copy of evidence of payment of such bill by
Los Rios. University shall reasonably cooperate with Los Rios to pursue appropriate
exemptions with respect to Taxes and Assessments; provided, however, that University shall not
be obligated to pursue administrative or judicial proceedings or incur third party costs and
expenses.
Section 6.2 Liens and Delinquencies. Los Rios shall prevent any Tax or Assessment
required to be paid by Los Rios from becoming a delinquency lien upon the Leased Land, the
Project, the Project Improvements or any part thereof. The University Indemnitees shall in no
way be obligated to pay such delinquent Taxes and Assessments, but, if Los Rios fails to cure
such default with respect to the payment of Taxes and Assessments within the cure period set
forth in Section 13.1(t) below, such default shall constitute a Los Rios Default hereunder and,
in addition to the remedies set forth in Section 13.3 below, Los Rios authorizes University to
make such payment for the account of Los Rios. Any amounts so paid by University shall
become immediately due and payable to University by Los Rios and shall bear interest at the
rate provided in Section 18.13 below from the date of payment by University to date of
repayment by Los Rios.
Section 6.3 Los Rios' Right to Contest Los Rios shall have the right, at its own
expense, to contest the amount or validity of any Tax or Assessment by appropriate proceedings
diligently conducted in good faith. As a condition precedent to Los Rios' contesting any Tax or
Assessment, Los Rios shall (i) comply with Applicable Laws respecting such contest, (ii) give
University prior written notice of Los Rios' intent to so contest said amount or validity, and
(iii) in order to protect University from any sale or foreclosure against the Los Rios' Interest, )
the Leased Land, the Project, the Project Improvements or any part thereof, provide, prior to the
date required to prevent any foreclosure against or sale of the Los Rios' Interest, the Leased
Land, the Project, the Project Improvements and/or any part thereof, a good and sufficient
surety bond or other security deemed appropriate by University in the amount of such Tax or
Assessment plus estimated penalties which may be imposed. Los Rios shall bear any and all
costs, liability or damage, including attorney's fees and costs arising out of such contest.
Section 6.4 Replacement Taxes. If at any time during the Term the basis of real
property taxation prevailing at the commencement of such Term shall be altered so that in
addition to, or in lieu of, or as a substitute for, the whole or any part of the real property taxes
now levied, assessed or imposed against the Leased Land, there shall be levied, assessed or
imposed upon or against University a tax on rents, a Lease fee measured by rents, a so-called
"value added tax," or any other tax in lieu or fee resulting from a revision of the present real
property tax laws, then and in any such event the same shall be included and deemed within the
meaning and purview of the teon "Taxes" and Los Rios shall be responsible for that portion of
any such tax or fee equal to the amount that would have been levied, assessed or imposed on
University assuming the Leased Land constituted all of University's real property.
Section 6.S Survival. Los Rios' obligations and liabilities pursuant to the provisions
of this ARTICLE VI shall survive the expiration or earlier termination of this Lease.
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ARTICLE VII
INSURANCE
Section 7.1 Construction Related Insurance. During construction of the Project
Improvements, or any portion thereof, Los Rios shall maintain the following insurance:
(a) Builder's Risk Insurance. At all times during the course of construction
of the Project Improvements, Los Rios shall maintain an all-risk Builder's Risk (Course of
Construction) insurance policy for one hundred percent (100%) of the replacement cost of all
materials and equipment to be furnished for the Work whether or not located on or in the Leased
Land, including improvements hereinafter constructed or installed, provided that if any portion
of the Project Improvements which has been completed is thereafter no longer covered by such
Builder's Risk (Course of Construction) policy at a time when such portion of the Project
Improvements is still required to be insured by Los Rios hereunder, then Los Rios shall
thereupon obtain the property insurance required pursuant to Section 7.2(a) below. Any such
insurance shall insure against direct physical loss or damage by fire, lightning, wind, storm,
explosion; collapse, underground hazards, vandalism, malicious mischief, glass breakage and
such other causes as are covered by such form of insurance. Such policy (ies) shall include
(a) an endorsement for broad form property damage, breach of warranty, demolition costs and
debris removal, (b) a "replacement cost endorsemenf' in amount sufficient to prevent Los Rios
from becoming a co-insurer under the terms of the policy, but in any event in an amount not less
than 100% of the then full replacement cost. The replacement cost coverage shall be for work
performed and equipment, supplies and materials furnished on the Leased Land and for Project
Improvements, as the case may be, or to any bonded warehouse for storage pending
incorporation into the Work, without deduction for physical depreciation and with a deductible
not exceeding $100,000 per occurrence. In addition, nothing in this Section 7.1 shall be
construed to relieve Los Rios of full responsibility for loss of or damage to materials not
incorporated in the Work or elsewhere, or to relieve Los Rios of its responsibilities referred to
under this ARTICLE Vll.
(b) Professional Liabilitv. When any architect, engineer, or consultant is
employed by Los Rios to perform professional services for the Work, Los Rios shall cause
Professional Liability (Errors & Omissions) Insurance, specifically and exclusively designated
for the Leased Land and/or the Project Improvements, to be carried by each architect, engineer,
or consultant hired directly or indirectly by Los Rios to perform professional services for any
part of the Work. Such insurance shall provide a minimum coverage limit per claim of not less
than $1,000,000 for each claim and $2,000,000 in the aggregate, or such lesser amount as
University may approve, in writing. Such policy may be written on a "claims made" basis
provided it has a retroactive date of placement prior to or coinciding with the commencement of
any professional services performed on any part of the Work, continues until the Completion of
the construction of the Project Improvements, and includes at least a three (3) year discovery
period for submitting claims following Completion of the Work. Such policy shall provide
coverage against loss or liability arising out of negligent or innocent errors, omissions and
misfeasance of the insured party in performing its contractual and professional obligations
relating to the design, engineering and construction of the Work, as the case may be, or
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subsequent alteration or work of improvement, as applicable, and shall include such
endorsements as reasonably required by University.
Section 7.2 Insurance Generally. At all times during the Term, as may be extended
by the Extension Term, and during any holdover period, Los Rios shall obtain and keep in force
for the benefit of Los Rios and University as their respective interests may appear insurance
against such risks and in such amounts as University or any lender holding a security interest in
the fee may reasonably require from time to time, or such greater amounts or additional risks as
are required by any Leasehold Mortgagee. Without limiting the generality of the foregoing, Los
Rios shall obtain and keep in force the following minimum levels of insurance:
(a) Property Insurance: Los Rios shall maintain, or cause to be maintained,
property insurance for the perils covered by a standard fire insurance policy, extended coverage
perils, smoke damage, vandalism, malicious mischief, sprinkler leakage, boiler, machinery and
pressure vessel, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil
commotion, aircraft, vehicles at all times following the issuance of a Project Certification with
respect to any building comprising a portion of the Project, in an amount equal to the then-
applicable Full Insurable Replacement Value of such building All such policies shall specify
that proceeds shall be payable at replacement cost unless not repaired or replaced, in which case
policy will pay actual cash value.
(b) Liability Insurance. Los Rios further agrees at all times during the Term
to maintain, and shall cause any contractors or consultants hired by Los Rios in connection with J
the design or construction of any part of the Project Improvements to procure and continuously
maintain in full force and effect, insurance to cover its activities in connection with this Lease,
the Leased Land and/or the Project Improvements for bodily injury, personal injury and property
damage as follows:
(i) Business Auto Liability. for autos owned, hired, scheduled or
non-owned with a combined single limit no less than $1,000,000 per occurrence;
(ii) Commercial General Liability, through one or more primary
and umbrella or excess coverage liability policies as determined by Los Rios, insuring against
claims for bodily injury, personal injury, and property damage occurring on or about the Leased
Land or the Access Areas, or otherwise in connection with the construction, use, occupancy,
management, operation, repair and/or maintenance of the Project Improvements, with coverage
limits of not less than:
(1) General Aggregate (Bodily Injury, Property Damage): $3,000,000.
(2) Product/Completed Operations Aggregate: $3,000,000
(3) Personal and Advertising Injury: $1,000,000
(4) Each Occurrence: $1,000,000
(c) Worker's Compensation. Workers' Compensation insurance, in an
amount and form sufficient to meet all applicable governmental requirements, and Employer's
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Liability coverage with limits of not less than One Million Dollars ($1,000,000) for bodily injury
or death to anyone or more persons per accident, One Million Dollars ($1,000,000) bodily injury
by disease each employee, and One Million Dollars ($1,000,000) policy limit for bodily injury
by disease. Such policies shall cover all persons providing labor or services to or on behalf of
Los Rios, its Los Rios' Contractor, subcontractors or consultants and all risks to such persons
arising out of construction, use or occupancy of Leased Land, repair of or entry onto the Leased
Land, prior to the Completion Date of the Work.
(d) Pollution Liability. Sudden and accidental Pollution Liability Insurance
on an occurrence basis with minimum limits of $250,000 for each loss and $1,000,000 in the
aggregate, for bodily injury, property damage, clean-up costs, and claim expenses. Such
coverage shall extend to any activities involving transportation and/or hauling of hazardous
materials.
Section 7.3 Periodic Increases. The minimum policy limits specified in Section 7.1
and Section 7.2 shall be subject to increase from time to time at the reasonable direction of
University; provided, however, that such increases shall not occur more frequently than every
four years and shall not exceed the amount of coverage generally carried in connection with
projects and business operations of a similar nature in the Davis area.
Section 7.4 Los Rios Not Relieved. It is expressly understood that the limits on
insurance coverages and the specific t y ~ s of insurance coverages required herein shall not in
any way limit the liability of Los Rios hereunder.
Section 7.5 Proof of Insurance. At the request of University, Los Rios shall cause to
be delivered to University a complete certified copy of each such insurance policy or renewal or
replacement insurance policy obtained by Los Rios, its contractors, architects, engineers, and
other consultants. Provided University approves in writing, Los Rios may purchase and secure
insurance meeting the insurance requirements herein referenced to protect University, Los Rios,
contractor and subcontractors of all tiers under a Controlled Insurance Program (wrap-up
insurance program). Without limiting the foregoing, upon execution of this Lease and/or prior
to commencement of any construction of the Work, Los Rios shall cause to be delivered to
University, as evidence of the insurance policies required by this Lease, Certificates of
Insurance that (i) shall be on forms acceptable to University, (ii) shall provide for no
cancellation or modification of coverage without 30 days prior written notice to University,
(iii) shall show all companies affording coverage, (iv) shall use the legal name of the Los Rios,
its contractors, architects, engineers, or other consultants, as the Named Insured, and (v) shall
name The Regents of the University of California as Certificate Holder in the following manner:
Real Estate Services
University of California, Davis
One Shields Avenue
Davis, California 95616-8678
Attention: Executive Director, Real Estate Services
Tel. (530) 754-8573
Fax: (530) 752-5808
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Intentionally deleted.
Section 7.6 Compliance with Requirements of Carriers. Los Rios shall at all times
observe and comply with the requirements of all of Los Rios' policies of insurance in force with
respect to the Leased Land, or any part thereof, and Los Rios shall so perfonn and satisfy the
requirements of the companies writing such policies so that, at all times, companies of good
standing complying with the requirements of this ARTICLE.
Section 7.7 Non-Contributing. All insurance required to be carried by Los Rios
pursuant to this ARTICLE shall be non-contributing with any insurance carried by any
additional insureds under said policies.
Section 7.8 Form of Policies. All insurance required to be carried by Los Rios
pursuant to this ARTICLE shall be maintained by Los Rios with insurance carriers licensed
and approved to do business in the State of California, baving a general policyholders rating of
not less than "A-" and financial rating of not less than "VIn" in the most current Best's Key
Rating Guide or with a loint Powers Authority. In no event will such insurance be terminated
or otherwise allowed to lapse prior to tennination of this Lease, or such longer period as may be
specified herein. Each policy of insurance required hereunder shall provide that it shall not be
cancelled or modified without thirty (30) days prior written notice to University and shall name
The Regents of the University of California as Certificate Holder.
Section 7.9 Settlement of Claims. If any portion of the Project Improvements shall
be damaged or destroyed by an insured peril and if, pursuant to this ARTICLE, any poJ;1ion of )
such proceeds are payable to University, then Los Rios shall not settle, adjust or compromise
any insurance claim with respect to such damage without first obtaining the consent and
approval of University to any proposed settlement, adjustment or compromise of any such
insurance claim, except that nothing herein shall be construed to limit or restrict the rights of
any Leasehold Mortgagee with respect to the disposition of any such proceeds.
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Section 7.10 Self Insurance. Notwithstanding anything to the contrary herein, upon
receipt of Notice of University's approval, not to be unreasonably withheld, of any proposed
self insured retention program Los Rios seeks to maintain, Los Rios shall have the right to
maintain a self insured retention program with respect to any of the insurance coverages
required to be maintained by Los Rios pursuant to this ARTICLE Vll; provided, however,
prior to commencing any self insured retention program, Los Rios shall provide University with
a detailed description of the proposed program. University and Los Rios acknowledge and
agree that any self insured retention program that Los Rios elects to maintain in lieu of
insurance required to be carried by Los Rios hereunder shall be treated as the respective
insurance required to be carried by Los Rios hereunder; provided, however, that if Los Rios
elects to maintain a self insured retention program, University shall be afforded the same
benefits and protections as if Los Rios carried insurance with a third party insurance company
satisfying the requirements of this Lease.
ARTICLEVIn
DAMAGE OR DESTRUCTION
Section 8.1 Insured Risk If, during the Term, any portion of any given Building(s)
is wholly or partially damaged or destroyed by a risk covered by insurance, or required to be
covered by insurance under any term of this Lease, such damage or destruction shall not
tenninate this Lease, and Los Rios shall, at its sole cost and expense, promptly repair and
Restore the Building(s) to substantially the same condition as existed immediately prior to such
damage or destruction unless University gives its prior written approval to do otherwise. Such
Restoration shall be commenced promptly and prosecuted with due diligence. Without limiting
the foregoing, if the portion of the Building(s) so damaged or destroyed has a fair market value
of more than Fifty Thousand ($50,000.00), Los Rios shall give University prompt Notice of
such damage or destruction.
Section 8.2 Uninsured Risk. If during the Term, any portion of any given Building(s)
is wholly or partially damaged or destroyed by risk not insured and not required to be insured
under this Lease, Los Rios shall give University Notice of such damage or destruction detailing
facts that qualify the casualty under this provision. At such time, University and Los Rios shall
negotiate in good faith as to the feasibility of Los Rios Restoring the Building(s) taking into
account factors such as availability of funds for the Restoration, the timing of the Restoration,
and the projected impact on the retail portion of West Village if the Project is not restored. If
Los Rios and University detennine that Los Rios should Restore, Restoration by Los Rios shall
be commenced promptly and prosecuted to Completion with due diligence. If Los Rios and
University determine that Los Rios should not Restore the Project, this Lease shall terminate
upon sixty (60) Business Days Notice from University to Los Rios, and (i) Los Rios shall leave
the Project Improvements in place, unless University shall request Los Rios to Demolish such
Project 'Improvements or any portion thereof; (li) Los Rios' right, title and interest in the Project
Improvements and the Development Documents related to the Project Improvements shall
automatically and without additional compensation to Los Rios become the property and vest in
University, and (iii) Los Rios shall execute such documents as University may request to
memorialize the termination of this Lease and the transfer to University of all interests of Los
Rios in the Project Improvements and the Development Documents. .
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ARTICLE IX
CONDEMNATION
Section 9.1 Lease Governs. In the event of any Taking during the Tenn, the rights
and obligations of the parties with respect to such appropriation and any Net Awards and
Proceeds in connection therewith shall be as provided in this ARTICLE.
(a) Takin& Defined. ''Taking'' shall mean any acquisition or taking of all or
any portion of the Leased Land, or this Lease, or any interest therein or right accruing thereto,
pursuant to or in anticipation of the exercise of the power of condemnation or eminent domain,
or by reason of the temporary requisition of the use or occupancy of the Leased Land, or any part
thereof, by any governmental or quasi-governmental authority, civil or military, or any other
agency empowered by law to take property in the State of California or under the laws of the
United States of America under the power of eminent domain.
(b) Total Taking Defined. A "Total Taking" shall mean:
(i) a Taking of all of the Leased Land other than for a temporary
purpose; or
(ti) at the option of Los Rios, a Taking of so much of the Leased
Land as to substantially impair, or to render uneconomical, in Los Rios' reasonable judgment,
the and/or operation of the Project Improvements on the Leased Land.
(c) Partial Taking Defined. A "Partial Taking" shall mean a Taking which
does not constitute a Total Taking, as defined in Section (b) above.
(d) Temporary Taking Defmed. A "Temporary Taking" shall mean a
Taking for temporary use or occupancy.
(e) Condemned Land Value Defined. The term "Condemned Land
Value" shall mean the fair market value of the condemned portion of the Leased Land,
considered as unimproVed and unencumbered by this Lease, and without reference to, or
inclusion of, University's reversionary interest in the value of the Project Improvements.
(I) Net Awards and Payments Defined. The term "Net Awards and
Payments" shall mean any awards and other payments or compensation payable to either
University or Los Rios, as the case may be, in connection with a Taking, less costs, fees and
expenses of either University or Los Rios (including, without limitation, reasonable attorneys'
fees and costs) incurred in the collection thereof.
Section 9.2 Total Taking; Termination; Distribution of Award. In the event of a
Total Taking, this Lease shall terminate effective on the date of surrender of possession of the
Leased Land, or so much thereof or interest therein as has been taken, to the condemning
authority. Los Rios shall continue to pay all amounts due hereunder and, in all respects, keep,
observe and perform all of the terms, covenants, agreements and conditions of this Lease to be
kept, observed and performed by Los Rios until the date of such termination with the exception
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of the obligation to complete the Project Improvements. Net Awards and Payments shall be
allocated between University and Los Rios as follows:
(a) First, to pay University the Condemned Land Value;
(b) Second, to any Leasehold Mortgagee pursuant to the Project Financing
Documents, as and to the extent provided therein, for payment of all sums secured by any such
Project Financing Documents that remain outstanding, together with its reasonable out-of-pocket
expenses and charges in collecting the Net Awards and Payments, including without limitation,
its reasonable attorneys' fees incurred in connection with the Taking;
(c) Third, to Los Rios in an amount equal to the fair market value of the
Project Improvements so taken, less any amount of the Net Awards and Payments distributed to
Leasehold Mortgagee pursuant to Section 9.2(b) above; and
(d) Fourth, the balance of the Net Awards and Payments shall be paid to
University.
Notwithstanding anything to the contrary set forth above, any portion of the Net Awards and
Payments which has been specifically designated by the condemning authority or in the
judgment of any court to be payable to University or Los Rios on account of any interest in the
Leased Land or the Project Improvements separate and apart from the Condemned Land Value
and the value of the Project Improvements, shall be paid to University or Los Rios, as applicable,
as so designated by the condemning authority or judgment; provided, however, neither Los Rios
nor Leasehold Mortgagee shall be entitled to receive any portion of the Net Awards and
Payments if the allocation of such portion would result in a reduction of the Condemned Land
Value.
Section 9.3 Partial Taking; Affect; Restoration; Distribution of Award. In the
event of a Partial Taking, this Lease shall remain in full force and effect with respect to that
portion of the Leased Land not so taken. Los Rios shall promptly commence and proceed with
due diligence to effect Restoration of the Project Improvements on the remaining portion of the
Leased Land as nearly as practicable to their condition and character immediately prior to such
Taking and shall thereafter continue to construct the Project Improvements on the remaining
portion of the Leased Land as and when required hereunder. Net Awards and Payments shall be
allocated between University and Los Rios as follows.
(a) First, to pay University the Condemned Land Value;
(b) Second, to pay costs of Restoration incurred by Los Rios;
(c) Third, to any Leasehold Mortgagee pursuant to the Project Financing
Documents as and to the extent provided therein, for payment of all sums secured by any such
Project Financing Documents that remain outstanding with respect to the portion of the Leased
Land so taken, together with its reasonable out-of-pocket expenses and charges in collecting the
Net Awards and Payments, including without limitation, its reasonable attorneys' fees incurred
in connection with the Taking;
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(d) F o ~ to Los ruos in an amount equal to the fair market value of the
Project Improvements so taken, less any Net Payment and Award amount distributed to
Leasehold Mortgagee pursuant to Section 9.3(c) above; and
(e) Fifth, the balance of the Net Payment and Award shall be paid to
University .
Notwithstanding anything to the contrary set forth above, any portion of the Net Awards and
Payments which has been specifically designated by the condemning authority or in the
judgment of any court to be payable to University or Los ruos on account of any interest in the
Leased Land or the Project Improvements separate and apart from the Condemned Land Value
and the value of the Project Improvements, shall be paid to University or Los Rios, as applicable,
as so designated by the condemning authority or judgment; provided, however, neither Los Rios
nor Leasehold Mortgagee shall be entitled to receive any portion of the Net Awards and
Payments if the allocation of such portion would result in a reduction of the Condemned Land
Value.
Section 9.4 Temporary Taking; Affect; Distribution of Award. In the event of a
Temporary Taking, this Lease shall remain in full force and effect, and a fair and equitable
extension of time for Los Rios' Completion of construction of the Project Improvements with
respect to the portion of the Leased Land affected by such Temporary Taking shall be permitted
hereunder, with such extension of time to be determined according to the nature and extent of
the Temporary Taking and the duration and extent of the interruption of Los Rios' operations
due to such Temporary Taking. Los Rios shall be entitled to claim, recover and retain any Net )
Awards and Payments made on account of such Temporary Taking; provided, however, that if
the period of such Temporary Taking extends beyond the Term, the Net Awards and Payments
shall be apportioned between University and Los Rios as of the date of expiration of the Term.
Section 9.5 Notice. Upon any party receiving notice of or becoming aware of any
condemnation proceedings, or threat thereof, such party shall promptly give Notice to the other
party in the manner specified in Section IS.I.
ARTICLE X
ASSIGNMENT AND SUBLETTING
In no event shall Los Rios be permitted to assigD less than all of Los Rios' Interest.
Except for an assignment to Leasehold Mortgagee, in order to secure Project Financing, Los Rios
shall not assign, sublease, pledge or hypothecate Los Rios' Interest, whether directly or
indirectly, without the prior written consent of University, which consent may be granted or
withheld or conditioned in University's sole and absolute discretion. If Los Rios attempts to
assign, sublease, pledge or hypothecate all or any portion of Los Rios' Interest without
University's written consent, as provided in the preceding sentence, then, it shall be a default
under Section 13.1 below, and, in addition to the remedies set forth in Section 13.3 below, at
University's election, to be exercised in University's sole and absolute discretion, such attempted
assignment, sublease, pledge or hypothecation shall be void and of no force or effect. Without
limiting the foregoing, for the purposes of this Lease, a transfer of any direct or indirect interest
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of Los Rios, either in one (1) transaction or a series of related transactions shall be deemed to be
an assignment of Los Rios' Interest under this Lease and shall require University's consent as
provided above.
ARTICLE XI
INDEMNITY, CLAIMS, LIENS AND ENCUMBRANCES
Section 11.1 Los Rios Indemnity. Los Rios shall indemnify, protect, defend (with
counsel reasonably acceptable to University) and hold University, the University of California,
Davis and their respective employees, directors, officers and agents (collectively, "University
Indemnitees") harmless from any Claims to the extent resulting from, arising out of or
connected with: (a) personal injury, death, or property damage resulting from, arising out of or
connected with the willful misconduct or negligent acts, errors or omissions of any Los Rios
Party; (b) the conduct or activities by any Los Rios Party on the Leased Land or the Access
Areas, including, any Claims for damage or destruction to the Leased Land or any real property
adjacent to or serving as ingress or egress from the Leased Land to the extent such damage or
destruction results from or arises out of or is otherwise connected with such activities; (c) the
presence of any Hazardous Substances on the Leased Land, the Access Areas andlor any real
property adjacent to the Leased Land and/or the Access Areas which presence arises in
connection with a breach of Los Rios' obligations under Section 3.4 of this Lease, including,
without limitation, any Claims for the costs of environmental or technical risk assessment, any
cleanup or remedial cost, and the costs of any monitoring, sampling or analysis, and any
diminution in property value; (d) any violation by any of the Los Rios Parties of any Applicable
Laws relating to the construction of the Project Improvements and/or to the use, occupancy,
management, operation, repair andlor maintenance of the Leased Land, the Project
Improvements and/or the Access Areas; (e) any contest by Los Rios conducted pursuant to
Section 3.7 above andlor Section 6.3; (f) Los Rios' breach of the representations and warranties
identified in Section 18.2 and/or Section 18.14 below; (g) Los Rios' failure to surrender its
interest in the Leased Land, or any part thereof, as required hereunder, at the expiration or
sooner termination of this Lease; (h) any and all Claims brought by any Los Rios Party or any
Leasehold Mortgagee with respect to relocation benefits asserted pursuant to Applicable Laws,
including, without limitation, California Government Code Section 7260 (et. seq.) and/or
implementing regulations; and (i) any other breach by Los Rios under this Lease; p r o v i d ~
however, in each case Los Rios shall have no obligation to indemnify or hold any University
Indemnitees harmless from any Claim to the extent such Claim results from or arises out of the
willful misconduct or negligent acts, errors or omissions of any University Indemnitees.
Section 11.2 University Indemnity. University shall indemnify, protect, defend (with
counsel reasonably acceptable to Los Rios) and hold Los Rios and its employees, directors,
officers and shareholders (collectively, "Los Rios Indemnitees") harmless from any Claims to
the extent either resulting from, arising out of or otherwise connected with: (a) personal injury,
death, or property damage resulting from or arising out of or otherwise connected with the
willful misconduct or negligent acts, errors or omissions of University; (b) personal injury,
death, or property damage resulting from or arising out of or connected with the willful
misconduct or negligent acts, errors or omissions of any University Party which occur during or
in connection with such University Party's access to the Access Areas and/or the Leased Land
in connection with work to be performed by University in connection with the Pad Area
-36-
Improvements; ( c) the conduct or activities by any University Party, on or about the Leased )
Land and/or the Access Areas, which arise in connection with the work to be performed by
University in connection with the Pad Area Improvements; (d) any contest by University
conducted pursuant to Se<:tion 3.7(b) above; and (e) University's breach of any of the
representations and warranties identified in Se<:tion 18.2 below and/or Section 18.15 below;
provided, however, University shall have no obligation to indemnify or hold any Los Rios
Indemnitee harmless from any Claim to the extent such Claim results from or arises out of the
willful misconduct or negligent acts, errors or omissions of any Los Rios Indemnitee.
Se<:tion 11.3 Covenant Against Encumbrances. Los Rios shall not, and shall have no
right to, encumber University's interest in the Leased Land, and Los Rios covenants to keep
University's interest in the Leased Land and each and every part thereof at all times free and
clear of any and all liens and encumbrances of any kind whatsoever arising out ofthe acts or
omissions of Los Rios or any other Los Rios Party, including, without limitation, those liens and
encumbrances created by the performance by any Los Rios Parties Qf any Work, or labor or
furnishing of any material, supplies or equipment to the Leased Land and/or any Los Rios
Parties. No such payment shall be construed as rent under this Lease. Should Los Rios fail to
discharge or cause to be discharged any such claim oflien within thirty (30) days after service
on Los Rios, then University may pay, adjust, compromise and discharge any such lien or claim
oflien on such terms and manner as University may deem appropriate. In such event, Los Rios
shall immediately reimburse University for the full amount paid by University in connection
with such lien or claim of lien, including any attorneys' fees or costs, or other costs expended
by University, together with interest at the rate provided in Section 18.13 from the date of oJ
payment by University to date of repayment by Los Rios. Los Rios agrees to pay reasonable
attorneys' fees, costs, charges and other expenses which University may incur in negotiating,
settling, defending, and otherwise protecting University and University's interest in the Leased
Land, and every part thereof, from and against such liens or claims.
Section 11.4 Snrvival. The obligations and liabilities of each party pursuant to the
provisions of this ARTICLE shall survive the expiration or earlier termination of this Lease.
ARTICLE XII
HOLDING OVER, SURRENDER,
OWNERSHIP OF PROJECT IMPROVEMENTS
Section 12.1 Holding Over. No holding over after the tennination or expiration of this
Lease shall be permitted. No holding over by Los Rios after expiration or earlier termination
shall constitute a renewal or extension of this Lease, nor shall it give Los Rios any rights in or to
the Leased Land, or any part thereof.
Se<:tion 12.2 Ownership of Project Improvements. Except as hereinafter set forth,
Los Rios shall be the owner of all portions of the Project Improvements constructed upon the
Leased Land. Upon expiration or earlier termination of this Lease, all portions of the Project
Improvements then located on the Leased Land shall automatically vest in, revert to and
become the property of University without compensation to, or requirement of consent or other
act of, Los Rios, and without the necessity of deed, bill of sale, conveyance or other act or
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agreement of Los Rios, and without any payment of any kind or nature by University to Los
Rios, to any Leasehold Mortgagee or to any other person. Los Rios shall thereafter have no
further rights thereto or interest therein. Upon or at any time after the date ofthe expiration or
earlier termination of this Lease, Los Rios shall, without charge to University, (i) deliver to
University the originals (if originals are not available, copies) of all Development Documents
with respect to Project Improvements or alterations thereto for which a Project Certification has
not yet been issued, (ii) if requested by University, promptly execute, acknowledge and deliver
to University any deed, bill of sale or other similar instrument requested by University to
evidence that Los Rios' right, title, and interest in and to the Project Improvements has been so
conveyed to University, and (iii) cause Leasehold Mortgagee to record a release of any security
interest Leasehold Mortgagee haslhad in the Project Improvements and/or any portion of the
Los Rios' Interest.
Section 12.3 Surrender of Leased Land.
(a) Surrender of Title. Upon the expiration or earlier termination
of this Lease, Los Rios shall deliver possession of its interest in the Leased Land and every part
thereof to University (including the Project Improvements), free and clear of all liens and
encUlllbrances other than (i) those existing at the Effective Date, (ii) those created by University,
and (iii) those liens and encumbrances approved in writing by University, in the exercise of
University's sole and absolute discretion, with the express agreement of University that such
liens and encumbrances may survive the expiration or earlier termination of this Lease. This
obligation includes the obligation to discharge all liens and encumbrances which may exist upon
the early termination of this Lease and which may survive such termination.
(b) Surrender Condition. Upon the expiration or earlier termination of this
Lease, Los Rios shall surrender the Leased Land and the Project Improvements to University in
good condition, order and repair (ordinary wear and tear considering age and use excepted), free
of Los Rios' personal property and all debris, waste or Hazardous Substances placed on, about or
near the Leased Land by Los Rios or Los Rios' employees, agents, contractors or invitees, and in
a condition which complies with all Applicable Laws related to Hazardous Substances and any
additional requirements of University that are reasonably necessary to protect the value of the
Leased Land due to any such personal property, debris, waste or Hazardous Substances placed
on, about or near the Leased Land by Los Rios or any other Los Rios Parties, including, without
limitation, the obtaining of any closure permits or other governmental permits or approvals
related to any such Hazardous Substances in, on or about the Leased Land.
Section 12.4 Abandoned Property. If any personal property of Los Rios is not
removed upon the expiration or earlier termination oftbis Lease, University may, at
University's election, use Los Rios' personal property without compensation and without
liability for use or damage until Los Rios' removal of such personal property, or University may
store such personal property for the account and at the cost of Los Rios. The election of one
remedy for anyone item shall not foreclose an election of any other remedy for another item or
for the same item at a later date. Without limiting the foregoing, all property that Los Rios
abandons shall, at University's election, become University's property upon termination of this
Lease.

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Section 12.5 Relocation. Except in the case of a Taking under Article IX above, Los
Rios waives any and all claims for relocation benefits asserted pursuant to Applicable Laws,
including, without limitation, California Government Code Section 7260 (et. Seq.) and/or
implementing regulations. Without limiting the generality of the foregoing, Los Rios hereby
waives, and shall execute such documents as shall be reasonably required to evidence such
waiver, of all rights and benefits to any relocation benefit or assistance arising in connection
with (a) any tennination of this Lease by reason of a Los Rios Default hereunder; or (b)
expiration of this Lease upon the Term Expiration Date.
Section 12.6 Survival. Los Rios' obligations and liabilities pursuant to the provisions
of this ARTICLE shall survive the expiration or earlier termination of this Lease.
ARTICLEXID
DEFAULT
Section 13.1 Default by Los Rios. Any default or breach of this Lease by Los Rios
shall be governed by this ARTICLE and the cure periods provided herein. The occurrence of
any of the following shall, at University's election, constitute a material default and breach of
this Lease (herein, a "Los Rios Default"):
(a) Los Rios failure to continuously operate the Project Improvements for the
Permitted Use from and after the issuance of a Project Certification with respect to any Project
Improvements which failure continues for a consecutive period of ninety (90) days following )
written notice from the University, except where such failure is the result of damage or
destruction of such Project Improvements which precludes such operation;
(b) Los Rios' failure to pay to University any amount due and payable
hereunder within thirty (30) days after the original due date;
(c) A failure by Los Rios to commence the Work on or before the Work
Outside Commencement Date;
(d) A failure by Los Rios to complete each phase of the Work by the
milestone dates set forth in Exhibit L;
(e) A failure by Los Rios to cause the construction of the Project
Improvements to reach Completion on or before the Work Outside Completion Date;
(I) A failure by Los Rios to observe and perform any other provision of this
Lease to be observed or performed by Los Rios, when such failure continues for (i) twenty-four
(24) hours after Notice from University if such failure creates an imminent risk of bodily harm or
significant property damage, or (ii) thirty (30) days after Notice thereof by University to Los
Rios; provided, however, that if the nature of such default is such that the same cannot
reasonably be cured within such 24-hour or 30-day period, as applicable, Los Rios shall not be
deemed to be in default if Los Rios shall, within such 24-hour or 30-day period, as applicable,
commence such cure and thereafter shall diligently prosecute the same to completion within not )
more than ninety (90) days; or
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(g) The making by Los Rios of any general assignment for the benefit of
creditors, or the filing of a petition to have Los Rios adjudicated a bankrupt, or the filing of a
petition for reorganization or arrangement with respect to either Los Rios under any law relating
to bankruptcy unless in the case of a petition filed against Los Rios, the same is dismissed within
sixty (60) days; or the appointment of a trustee or receiver to take possession of substantially all
of Los Rios' assets located on the Leased Land or of the Los Rios' Interest, when possession is
not restored to Los Rios within sixty (60) days; or the attachment, execution or other judicial
seizure of substantially all of Los Rios' assets located on the Leased Land or of the Los Rios'
Interest, when such seizure is not discharged within sixty (60) days.
Seetion 13.2 Default by University. University shall be in default hereunder only if
University shall fail to perform an obligation under this Lease when such failure continues for a
period of thirty (30) days after Notice thereof by Los Rios to University; provided, however, if
more time is reasonably required for University's performance, then University shall not be in
default if it commences performance within such 30-day period and thereafter diligently
proceeds to completion. Notwithstanding the foregoing or anything to the contrary herein,
University shall not be liable for damage or inconvenience to Los Rios' business or for any loss
of income or profit therefrom, or for any consequential, indirect, incidental, special, punitive, or
exemplary damages, notwithstanding any such default by University.
Section 13.3 Remedies of University. Subject to the provisions of this Lease regarding
rights of Leasehold Mortgagees, if a Los Rios Default occurs then University may resort,
cumulatively or in the alternative to the following remedies as well as to anyone or more other
remedies provided by law or equity. University's remedies shall be subject to the requirements
of Applicable Laws, including, without limitation, California Civil Code Sections 1951 through
1952.2, inclusive, and California Code of Civil Procedure Section 1159, et al. relating to actions
for unlawful detainer, forcible entry and forcible detainer.
(a) Termination. University may at University's election, exercisable in its
sole and absolute discretion, and subject to Applicable Laws, terminate this Lease by giving Los
Rios Notice of termination, with a copy of such Notice delivered to Leasehold Mortgagee in the
manner provided in Section 14.4 below. On the giving of such a Notice, and subject to
Applicable Laws, all Los Rios' rights in the Leased Land, the Project Improvements, and every
part thereof, shall terminate. University shall not be deemed to have terminated this Lease unless
University shall have so declared in writing to Los Rios, nor shall University be deemed to have
accepted or consented to an abandonment by Los Rios by performing acts intended to maintain
or preserve the Leased Land or the Project Improvements, making efforts to relet the Leased
Land or appointing a receiver to protect University's interest under this Lease. Immediately after
Notice oftennination, Los Rios shall surrender and vacate the Leased Land and all Project
Improvements in the surrender condition required pursuant to Section 12.3 above, and
University may reenter and take possession of the Leased Land and all Project Improvements
and eject all parties in possession or eject some and not others or eject none. Without limiting
the foregoing but in connection with any termination of this Lease, University shall have the
right to obtain equitable relief when such relief is otherwise appropriate, including, the relief
provided by California Code of Civil Procedure Sections 1159 et at., relating to actions for
unlawful detainer, forcible entry ,and forcible detainer. In the event of any termination ofthis
Lease, Los Rios' right, title and interest in Project Improvements and the Development
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Documents related to the Project Improvements shall automatically and without additional )
compensation to Los Rios become the property and vest in University. Upon any tennination of
this Lease, Los Rios shall execute such documents as University may request to memorialize the
termination of this Lease as to University and the Leased Land and the transfer to University of
all interests of Los Rios in the Project Improvements and the Development Documents.
(b) Recovery of Damages. In addition to any other remedies University may
have, it may recover from Los Rios all damages it may reasonably incur by reason of Los Rios
Default, including without limitation, the cost of recovering the Leased Land, the cost of
completing construction of the Project Improvements then under construction and reasonable
attorneys' fees and expenses and all other amounts recoverable pursuant to Section 1951.2 of the
California Civil Code; provided, however, with the sole exception of any liability of Los Rios for
diminution in value of the Leased Land, the Access Areas and/or any real property adjacent to
the Leased Land and/or the Access Areas arising pursuant to Section 3.4 and/or item ( c) of
Section 11.1 above, Los Rios shall not be liable for damage or inconvenience to University's
business or for any loss of income or profit therefrom, or for any consequential, indirect,
incidental, special, punitive, or exemplary damages, notwithstanding any Los Rios Default.
(c) University May Require Strict Performance. University may require
strict performance of all covenants and obligations herein as the same shall accrue or become
due, including, but not limited to, the right to require Los Rios to complete construction of the
Project Improvements, the right to recover rent and charges equivalent to rent without
terminating this Lease and have the right of action therefor without awaiting the end of the Term.
(d) No Waiver. University's election to perform any obligation of Los Rios
on Los Rios' failure or refusal to do so shall not constitute a waiver of any right or remedy for
Los Rios' default, and Los Rios shall promptly reimburse University for all costs and expenses
arising therefrom upon demand, together with interest computed from the date such costs and
expenses are incurred by University and an administration fee equal to ten percent (10%) of such
costs and expenses.
(e) Remedies are Cumulative. Each and all of the rights, powers, privileges,
options, or remedies given University by this Lease are cumulative and no one of them is
exclusive of the other or exclusive of any remedies provided by law, and the exercise of one
right, power, privilege, option, or remedy by University shall not impair University's right to any
other.
Section 13.4 Remedies of Los Rios. Subject to the provisions of this Lease regarding
rights of Leasehold Mortgagees, if a University Default occurs then Los Rios may resort,
cumulatively or in the alternative to the following remedies as well as to anyone or more other
remedies provided by law or equity. Los Rios' remedies shall be subject to the requirements-of
Applicable Laws.
(a) Termination. Los Rios may at Los Rios' election, exercisable in its sole
and absolute discretion, and subject to Applicable Laws, terminate this Lease by giving
University Notice of termination. On the giving of such a Notice, and subject to Applicable
Laws, all Los Rios' rights in the Leased Land, the Project Improvements, and every part thereof,
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shall terminate. Los Rios shall not be deemed to have terminated this Lease unless Los Rios
shall have so declared in writing to University. Immediately after Notice of termination, Los
Rios shall surrender and vacate the Leased Land and all Project Improvements in the surrender
condition required pursuant to Section 12.3 above, and University may reenter and take
possession of the Leased Land and all Project Improvements and eject all parties in possession or
eject some and not others or eject none. Without limiting the foregoing but in connection with
any termination of this Lease, University shall have the right to obtain equitable relief when such
relief is otherwise appropriate, including, the relief provided by California Code of Civil
Procedure Sections 1159 et al., relating to actions for unlawful detainer, forcible entry and
forcible detainer. In the event of any tennination of this Lease, Los Rios' right, title and interest
in Project Improvements and the Development Documents related to the Project Improvements
shall automatically and without additional compensation to Los Rios become the property and
vest in University. Upon any termination of this Lease, Los Rios shall execute such documents
as University may request to memorialize the termination of this Lease as to University and the
Leased Land and the transfer to University of all interests of Los Rios in the Project
Improvements and the Development Documents.
(b) Recovery of Damages. In addition to any other remedies Los Rios may
have, it may recover from University all damages it may reasonably incur by reason of
University Default, including reasonable attorneys' fees and expenses and all other amounts
recoverable pursuant to Section 1951.2 of the California Civil Code; provided, however,
University shall not be liable for damage or inconvenience to Los Rios' business or for any loss
of income or profit therefrom, or for any consequential, indirect, incidental, special, punitive, or
exemplary damages, notwithstanding any University Default.
(c) Los Rios May Require Strict Performance. Los Rios may require strict
performance of all covenants and obligations herein as the same shall accrue or become due.
(d) No Waiver. Los Rios' election to perform any obligation of University
on University's failure or refusal to do so shall not constitute a waiver of any right or remedy for
University's default, and University shall promptly reimburse Los Rios for all costs and expenses
arising therefrom upon demand, together with interest computed from the date .such costs and
expenses are incurred by Los Rios and an administration fee equal to ten percent (10%) of such
costs and expenses.
Section 13.5 Remedies are Cumulative. Each and all of the rights, powers, privileges,
options, or remedies given Los Rios by this Lease are cumulative and no one of them is
exclusive of the other or exclusive of any remedies provided by law, and the exercise of one
right, power, privilege, option, or remedy by Los Rios shall not impair Los Rios' right to any
other.
Section 13.6 Failure of Los Rios to Perform Reguired Acts. University shall have
the right but not the obligation to undertake any Work or other obligation that Los Rios is
required to perform under this Lease and that Los Rios fails or refuses to perform in a timely
and efficient manner (irrespective of whether such failure rises to the level of a Los Rios
Default); provided, however, that except in the case of any condition which University
reasonably determines will constitute an emergency or threat to the safety or security of the
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Leased Land or any Project Improvements, Los Rios shall not be deemed to have failed or ')
refused to perfonn any act in a timely and efficient manner until the expiration of any applicable
notice and cure period. All costs incurred by University in performing any such repair for the
account of Los Rios shall be repaid by Los Rios to University upon demand, together with
interest computed from the date such costs and expenses are incurred by University and an
administration fee equal to ten percent (10%) of such costs and expenses. Nothing contained in
this Section 13.6 shall impair the rights of University with regard to defaults or remedies under
the remaining portion of this ARTICLE. In no event shall this section be construed to give
University the right to construct, at Los Rios' cost, any Phase of the Project not then under
construction.
ARTICLE XIV
FINANCING
Section 14.1 Controlling Provisions. Los Rios acknowledges that, in no event shall
University's fee title in the Leased Land or its reversionary or future interest in the Leased Land
be subject or subordinate to the lien of any loans, mortgages, deeds of trust, other leases, liens
and encumbrances that may hereafter be permitted to be placed by Los Rios on Los Rios'
Interest.
Section 14.2 Financing. Los Rios shall, at its sole cost and expense, obtain all
financing necessary for the Completion of the Project Improvements ("Project Financing"); )
provided, however. University shall have the right to review and approve, in the exercise of its
reasonable discretion, (A) the identity of any proposed Leasehold Mortgagee, and (B) the terms
of any note, deed of trust, mortgage, security agreement or other document to be entered into by
Los Rios in connection with any Project Financing which will be secured by all or any portion
of Los Rios' Interest (such documents collectively herein "Project Financing Documents");
provided, further however. that University shall not withhold its approval of any proposed
Leasehold Mortgagee which (1) has greater than Five Billion Dollars ($5,000,000,000.00) in
assets, (ll) has expertise in construction lending for projects similar in type and size to the
Project Improvements, and (III) is either (x) a national or state chartered bank or savings and
loan association, (y) an insurance company which is licensed and authorized to do business in
the State of California, or (z) a pension fund which is licensed and authorized to do business in
the State of California. In the event Los Rios obtains a loan secured by all or any portion of Los
Rios' Interest, University will execute all documents or instruments reasonably required by the
Leasehold Mortgagee and approved by University, provided that:
(a) University shall not be required to sign any deed of trust, mortgage, note,
or other document or agreement obligating University to pay any portion of the Project
Financing, or otherwise become obligated thereunder;
(b) No lien, charge or encumbrance created by or arising under or in
connection with the Project Financing Documents shall constitute a lien or encumbrance upon
University's fee title in the Leased Land;
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I (c) Any lien in favor of the Leasehold Mortgagee on Los Rios' Interest shall
expire on or before the date of expiration of the instrument which is the source of Los Rios'
Interest;
(d) The Project FinanciJIg Documents impose no fmancial obligations on
University, contingent or otherwise;
(e) The Project Financing Documents shall neither subordinate nor affect
University's right to convey, mortgage, encumber, or otherwise hypothecate in any way
University's fee title in the Leased ~ d ;
(t) Except as otherwise provided in this ARTICLE XIV, neither the
Leasehold Mortgagee nor anyone claiming by, through or under the Leasehold Mortgagee shall,
by virtue of such claim, acquire any greater rights than Los Rios then had under this Lease;
(g) The Project Financing Documents shall be subject to all conditions,
covenants and restrictions of this Lease and to all rights of University hereunder;
(b) The Project Financing Documents shall provide (i) that not less than
ninety (90) days before the Leasehold Mortgagee's consummation of a foreclosure on Los Rios'
Interest or completion of any negotiations to accept a transfer in lieu of such foreclosure, the
Leasehold Mortgagee shall notify University in writing that such proceedings or negotiations
have been or are to be commenced, and University shall have the right, but not the obligation,
prior to the consummation of any such foreclosure or acceptance of any transfer in lieu thereof to
purchase the Project Financing Documents and the indebtedness which they evidence or secure
at a purchase price equal to the full amount then owing under the Project Financing Documents,
in accordance with their terms; (ii) the Leasehold Mortgagee's agreement to give University
notice of any default by Los Rios under the Project Loan Documents which the Leasehold
Mortgagee gives to Los Rios in writing, at the same time and in the same manner that such
notice is delivered to Los Rios (and no such notice shall be valid with respect to University
unless a copy is so delivered to University); and (iii) the Leasehold Mortgagee's agreement to
accept performance of any of Los Rios' obligations from University;
(i) All insurance proceeds arising from damage or destruction of the Project
Improvements shall be made available for restoration thereof, subject to Los Rios' satisfaction of
the terms and conditions set forth in the Project Financing Docwnents relating to the use of such
proceeds for any such restoration, which provisions shall be subject to the reasonable approval of
University; and
(j) The Project Financing Documents shall not be cross defaulted or cross
collateralized with any other loan, line of credit, or other financial obligations of any other party,
including, Los Rios.
Section 14.3 Transfer. The consent of University shall not be required for any transfer
of (i) L o ~ Rios' Interest to Leasehold Mortgagee or any other person or entity by foreclosure,
deed in lieu of foreclosure, court order or other transfer pursuant to the Project Financing
Documents, or (ii) Leasehold Mortgagee's interest in this Lease and the Project Improvements,
as a successor to Los Rios' Interest, to any Leasehold Mortgagee Affiliate. Except as provided
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in the preceding sentence, no transfer of Leasehold Mortgagee's or Leasehold Mortgagee )
Affiliate's estate under this Lease and in the Project Improvements as a successor to Los Rios'
Interest to any other person or entity shall be effective until the following conditions have been
satisfied: (x) the transferee shall have given notice to University in writing of such transfer,
setting forth the name and address of the transferee, the effective date of the transfer, and the
express agreement of the transferee to assume and agree to perform all of the obligations under
this Lease required of Los Rios to be performed, together with a copy of the document by which
such assignment was made; and (y) University shall have approved any proposed transferee's
financial capability and development experience in light of Los Rios' obligations under this
Lease, which approval shall not be unreasonably withheld.
Section 14.4 Notice to Leasehold Mortgagee. Concurrently with the execution of
Project Financing Documents for any loan secured by Los Rios' Interest, LosRios or the
Leasehold Mortgagee shall furnish to University the name and address of the Leasehold
Mortgagee. University shall thereafter give Leasehold Mortgagee a duplicate copy of each
Notice concerning default or conditions relating to default which University may from time to
time give Los Rios under the terms of this Lease at the time and in the manner that each such
Notice is given to Los Rios. No Notice delivered pursuant to Section 13.1 above shall be valid
with respect to Los Rios unless a copy of such Notice is delivered to Leasehold Mortgagee as
provided in this Section 14.4.
Section 14.5 Request for Notice of Defaults. Upon the recording of any deed of trust
constituting a Project Financing Document, Los Rios shall, at Los Rios' expense, cause to be _)
recorded in the Official Records, a written request, executed and acknowledged by University,
for a copy of all notices of default and all notices of sale under such deed of trust, as provided
by the laws of the State of California. Los Rios shall include in the body of such recorded deed
of trust itself a request for notice having the effect described above.
Section 14.6 Leasehold Mortgagee's Cure Rights. Notwithstanding anything to the
contrary herein, the rights of Leasehold Mortgagee under this ARTICLE shall be cumulative
and no failure to exercise the rights under this Section 14.6 shall prevent Leasehold Mortgagee
from exercising its rights under Section 14.7 below.
(a) After receipt by Los Rios of a Notice of default under this Lease and the
expiration of any applicable period of cure given to Los Rios under this Lease or such Notice
without Los Rios' having cured the default so noticed, University shall deliver an additional
notice ("Lender's Notice") to the Leasehold Mortgagee specifying the default and stating that
Los Rios' period of cure has expired without Los Rios' having cured the noticed default.
Leasehold Mortgagee shall thereupon have the additional periods of time to cure any uncured
default, as set forth below, without payment -of default charges, fees, late charges or interest that
might otherwise be payable by Los Rios. University shall not terminate this Lease, or otherwise
exercise any of its other remedies under this Lease if:
(i) with respect to a default which can be cured by the payment of
money, within thirty (30) days following the Leasehold Mortgagee's receipt of Lender's Notice,
the Leasehold Mortgagee pays to University or causes University to be paid the amount of
money owed; provided, however, that so long as Leasehold Mortgagee initiates foreclosure or
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other appropriate proceedings to obtain possession or control of the Leased Land within such
thirty (30) day period and thereafter diligently prosecutes such foreclosure or other appropriate
proceedings, then Leasehold Mortgagee shall be relieved from Leasehold Mortgagee Excluded
Obligations and University shall not exercise its rights to tenninate this Lease due to Los Rios'
failure to pay any amounts due to University with respect to such Leasehold Mortgagee
Excluded Obligations;
(il) with respect to a default which cannot be cured by the payment
of money (except as provided in clause (iii) below), sixty (60) days after the Leasehold
Mortgagee's receipt of the Lender's Notice, the Leasehold Mortgagee (A) cures the default, or
(B) if the default reasonably requires more than sixty (60) days to cure, within such 60-day
period commences to cure such default and diligently prosecutes the same to completion within a
reasonable time thereafter; or
(iii) with respect to a default that cannot be cured by payment or
without possession of the Leased Land, the Leasehold Mortgagee initiates foreclosure or other
appropriate proceedings to obtain possession or control of the Leased Land within thirty (30)
days after receipt of the Lender's Notice, cures all other defaults reasonably capable of cure, and
complies with all other covenants and conditions of this Lease reasonably capable of compliance
by Leasehold Mortgagee. Leasehold Mortgagee shall then have sixty (60) days following the
later to occur of (A) the date of execution and delivery of a "New Lease" (as defined below), or
(B) the date on which Leasehold Mortgagee or its designee is able to occupy the Leased Land
following eviction of or vacating by Los Rios, to cure such default, except that, if any such
default, by its nature, is such that it cannot practicably be cured within such 60-day period, then
Leasehold Mortgagee shall have such time as shall be reasonably necessary to cure the default,
so long as Leasehold Mortgagee commences such cure within such 60-day period and thereafter
diligently prosecutes the cure to completion.
(b) University agrees to accept perfonnance by the Leasehold Mortgagee of
all cures, conditions and covenants as though performed by Los Rios, and agrees to permit the
Leasehold Mortgagee access to the Leased Land to take all such actions as may be necessary or
useful to perform any condition or covenants of the Lease or to cure any default of Los Rios.
(c) Upon the Leasehold Mortgagee's acquisition of Los Rios' Interest by
foreclosure or otherwise pursuant to its rights under the Project Financing Documents, or if a
receiver is appointed, this Lease shall continue in full force and effect and University shall treat
the Leasehold Mortgagee or the Mortgagee Affiliate as tenant under this Lease. If the Leasehold
Mortgagee cures all defaults by Los Rios and does not acquire this Lease, or if the Leasehold
Mortgagee takes any step to enforce its rights and thereafter Los Rios cures such defaults (which
cure University shall be obligated to accept) and the Leasehold Mortgagee then terminates all
enforcement proceedings, then this Lease shall remain in full force and effect between University
and Los Rios.
(d) So long as the Leasehold Mortgagee is prevented by any process or
injunction issued by any court or by any statutory stay, or by reason of any action by any court
having jurisdiction of any bankruptcy or insolvency proceeding involving Los Rios, from
commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof,
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the Leasehold Mortgagee shall not be deemed for that reason to have failed to commence such
proceedings or to have failed to diligently prosecute such proceedings.
(e) The Leasehold Mortgagee shall not be required to cure any defaults of Los
Rios under this Lease that are personal to Los Rios and, consequently, are not susceptible of cure
by Leasehold Mortgagee.
(I) Notwithstanding anything to the contrary in this ARTICLE, nothing in
this ARTICLE shall waive or release Los Rios from any obligations to University with respect
to the Leasehold Mortgagee Excluded Obligations and University may maintain and prosecute,
at any time, a breach of contract action against Los Rios in connection with, any amounts owed
to University by Los Rios with respect to any Leasehold Mortgagee Excluded Obligations.
)
Section 14.7 New Lease. If this Lease is terminated prior to the end of the Term as a
result of any Los Rios Default or rejection by Los Rios in bankruptcy or otherwise expires by its
terms at a time when the financial obligations owed to Leasehold Mortgagee under the Project
Financing Documents have not been satisfied in full, University shall enter into a new Lease
(collectively, the "New Lease") with the Leasehold Mortgagee or the Leasehold Mortgagee's
nominee covering the Leased Land, provided that the Leasehold Mortgagee (i) requests such
New Lease by written notice to University within thirty (30) days after written notice by
University to the Leasehold Mortgagee of termination or expiration of this Lease, and (ii) cures,
within thirty (30) days following University granting such New Lease to Leasehold Mortgagee,
all prior defaults of Los Rios that can be cured by the payment of money or that are reasonably
capable of being cured by the Leasehold Mortgagee; provided, however, that if any prior default )
(other than those that can be cured by the payment of money) is not capable ofb,eing cured
within such 3D-day period, Leasehold Mortgagee or its nominee shall have a reasonable period
of time following University granting such New Lease to cure such Los Rios default provided
that Leasehold Mortgagee or its nominee !X)mmences cure of such default within such 3D-day
period and thereafter diligently prosecutes sUch cure to completion. The New Lease shall be
effective at the date of such termination of this Lease and shall include only the covenants,
agreements, conditions, provisions, restrictions and limitations contained in this Lease.
Concurrently with entering into any New Lease, University shall, by suitable conveyance,
transfer to the Leasehold Mortgagee or its nominee title to all improvements on the Leased
Land, if any, which are encumbered by the lien of the Project Financing Documents and
become vested in University as a direct result of University's termination of this Lease or the
expiration of the Term hereof, as opposed to those Project Improvements for which title has
vested in University (and for which Leasehold Mortgagee was to have released its lien) pursuant
to the other terms of this Lease; provided, however, that any such transfer by University to
Leasehold Mortgagee shall be subject to University's reversionary rights contained in this
Lease. The Leasehold Mortgagee or any other purchaser at a foreclosure sale or other
conveyance pursuant to rights under the Project Financing Documents (or the Leasehold
Mortgagee or its nominee if one of them enters into a New Lease with University) shall succeed
to all the interest of Los Rios in any amounts paid by Los Rios to University under this Lease.
Section 14.8 Mere;er. So long as the Leasehold Mortgagee holds a deed of trust
encumbering Los Rios' Interest, the fee title to the Leased Land and the estate created by this
Lease, shall not merge unless the Leasehold Mortgagee expressly consents to the merger in )
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writing. This provision shall apply even if Los Rios or University or any third party acquires
both the fee title and this Lease.
Section 14.9 No Modification. Etc. This Lease shall not, without the prior written
consent of the Leasehold Mortgagee, be modified, amended, surrendered or terminated, with the
exception of (i) termination at the expiration of the Term of this Lease or pursuant to Section
13.3 above (but subject to the Leasehold Mortgagee's cure rights under this ARTICLE XIV),
or (ii) termination pursuant to either ARTICLE VIII or ARTICLE IX.
Section 14.10Limitation on Leasehold Mortgagee Liability. The Leasehold
Mortgagee shall not be liable to perform Los Rios' obligations under this Lease, unless and unlil
the Leasehold Mortgagee acquires this Lease or enters into a New Lease; provided, however, in
no event shall Leasehold Mortgagee be liable for any Leasehold Mortgagee Excluded
Obligalions. The liability of the Leasehold Mortgagee acquiring this Lease shall be limited to
the Leasehold Mortgagee's interest in this Lease acquired by Leasehold Mortgagee. The
Leasehold Mortgagee shall not be liable for any such obligations under this Lease following the
assignment of its interest under this Lease to any transferee. An interest in a deed of trust
securing any unpaid part of the purchase price for this Lease and related interests shall not be
considered retention of an interest in this Lease for purposes of this Section.
Section 14.l1Cooflict. In the event of any conflict between the provisions of this
ARTICLE and the other provisions of this Lease, the provisions of this ARTICLE shall
control.
ARTICLE XV
QUIET ENJOYMENT
Subject to the rights of University hereunder, including, without limitation, the rights
reserved to University in Section 3.9, the rights of inspection afforded to University in Section
4.9 above, the remedies afforded to University in Section 13.3 and Section 13.6 and the rights of
entry afforded to University in Section 18.4, Los Rios shall lawfully, peaceably and quietly hold,
occupy and enjoy the Leased Land without disturbance, interruption or hindrance by University,
or any person or entity claiming by or through University. Notwithstanding the foregoing or
anything to the contrary herein, Los Rios acknowledges that University's exercise of the righls 0("
University hereunder, including, without limitation, the rights reserved to University in Section
4.9 above, the remedies afforded to University in Section 13.3 and Section 13.6 and the rights of
entry afforded to University in Section 18.4, shall not constitute any interference with or
disruption of Los Rios' use, occupancy or enjoyment of the Leased Land or interference with or
disruption of any of Los Rios' rights under this Lease, nor otherwise entitle Los Rios to any
compensation or damages. University shall in no event be liable in damages or otherwise, nor
shall Los Rios be released from any obligation hereunder, because of the interruption of any
service, or a termination, interruption or disturbance attributable to an event of Force Majeure or
any act or neglect of University or its employees, contractors, agents or invitees, or any person
claiming by or through University. Notwithstanding anything to the contrary herein, the
University Indemnitees shall not be liable, under any circumstances, for damage or
inconvenience to Los Rios' business or for any loss of income or profit therefrom, or for any
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consequential, indirect, incidental, special, punitive, or exemplary damages, notwithstanding that
any of the University Indemnitees have been informed of the possibility of such damages or is
negligent or otherwise in breach of the terms of this Lease.
ARTICLE XVI
EQUAL OPPORTUNITY
Section 16.1 Los Rios' Obligations. Neither Los Rios nor any other Los Rios Parties
shall discrilninate against any person employed or seeking employment on the Leased Land
because of race, color, marital status, age, religion, sex, sexual orientation, handicap or national
origin. Los Rios shall ensure, and shall use commercially reasonable efforts to ensure that all
other Los Rios Parties ensure, by policy and action, that all persons employed by them or
seeking employment from them on the Leased Land are treated without regard to race, color,
marital status, age, religion, sex, sexual orientation. handicap or national origin. Such action
shall include, but shall not be limited to, the following: hiring, upgrading, transfer or demotion,
testing or placement, recruitment or recruitment advertising, layoff or termination, rates of pay
or other forms of compensation, overtime or shift assignments, as well as selection for training,
including apprenticeship. All contracts between Los Rios and any other Los Rios Parties shall
contain a provision obligating the parties thereto to comply with the tenns of this Section 16.1.
Section 16.2 University's Right and Remedies. In the event Los Rios fails to comply
with the tenns of Section 16.1 and Los Rios fails to cure such failure within sixty (60) days
toll owing written notification by University, University may bring judicial action against Los
Rios to compel compliance or to recover any actual damages proximately caused by Los Rios
noncompliance.
ARTICLE XVII
RIGHT OF FIRST REFUSAL
Section 17.1 Los Rios Decision to SeU Project and Assign Lease. If Los Rios
detennines to sell all or any part of the Project and assign this Lease (collectively, a "Transfer
of Project"), Los Rios is required do so in compliance with the provisions of Education Code
Sections 81360 et. seq. governing Los Rios's conveyance of surplus property (the "Education
Code Transfer Requirements"). If Los Rios has complied with the Education Code Transfer
Requirements and is able to implement a Transfer of Project with a third party, then the
following provisions of this Article XVII shaH apply.
Section 17.2 night of First Offer and Right of First Refusal. It is the intent of the
parties that University be given an opportunity to purchase the Project prior to any Transfer of
Project to a third party, at the price and on the terms that would otherwise be paid by such third
party. As more particularly provided in Schedule 17.2 attached hereto, Los Rios agrees to otTer
the Project to University at a time and in a manner to facilitate such purchase by Un.iversity, if it
can do so in full compliance with Applicable Law.
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ARTICLE XVIII
MISCELLANEOUS
Section 1S.1 Notices. All notices, statutory notices, demands, statements or
communications (collectively, "Notices") given or required to be given by either party to the
other hereunder shall be in writing, and shall be (i) sent by United States certified or registered
mail, postage prepaid, return receipt requested, or (ii) sent by recognized overnight delivery
service (such as, but not limited to, Federal Express, DHL or UPS) with tracking capability, or
(iii) sent by facsimile transmission, so long as the facsimile machine of the sender produces a
written confirmation of such transmission and a copy of such notice, demand, statement or other
communications is deposited with a recognized national overnight delivery service with
tracking capability on the same day as it is sent by facsimile, or (iv) delivered personally, in
each case addressed as follows: (a) to Los Rios at the appropriate address set forth below, or to
such other place as Los Rios may from time to time designate in a Notice to University; or
(b) to University at the addresses set forth below, or to such other firm or to such other place as
University may from time to time designate in a Notice to Los Rios. Any Notice will be
deemed given (x) three (3) Business Days following the date it was deposited in the United
States Mail as provided in this Section 1S.1, or (y) on the Business Day following deposit with
a recognized overnight delivery service (delivery charges prepaid or billed to sender) for next
Business Day delivery, or (z) on the same day, if sent by facsimile transmis,sion prior to 5:00
p.m. (California time), with a written confirmation produced by the facsimile machine of the
sender, and so long as a copy of such notice, demand, statement or other communication is
deposited with a recognized national overnight delivery service with tracking capability on the
same day, or (w) on the date personal delivery is made, if given by personal delivery. Notices
shall be sent to the following addresses, or to such other address in the U n i ~ e d States as
University or Los Rios may from time to time designate by like notice.
If to University:
with a copy to:
Real Estate Services
University of California, Davis
One Shields Avenue
Davis, California 95616-8678
Attention: Executive Director, Real Estate Services
Real Estate Services
The Regents of the University of California
1111 Franklin Street, 6th Floor
Oakland, California 94607
Attn: Director,
Real Estate Services Group
Office of the General Counsel
University of California
1111 Franklin Street, 8th Floor
Oakland, California 94607
Attention: James D. Agate, Esq.
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If to Los Rios:
with a copy to:
Los Rios Community College District
1919 Spanos Court Sacramento, California 95825
Attention: General Services
Los Rios Community College District
1919 Spanos Court Sacramento, California 95825
Attention: General Counsel
Any Notice of default sent to Los Rios hereunder shall be simultaneously sent to each Leasehold
Mortgagee, provided that University has been given Notice of the identity and address of such
Leasehold Mortgagee as is required by Section 14.4.
Section 18.2 Brokerage Commissions. University and Los Rios each represents and
warrants to the other that neither it nor its officers or agents nor anyone acting on its behalfhas
dealt with any real estate broker in the negotiating or making of this Lease.
Section 18.3 Nonmerger of Fee and Leasehold Estates. If under any circumstances
both University's and Los Rios' estates in the Leased Land, or any portions thereof, become
vested in the same owner, this Lease nevertheless shall not be extinguished by application of the
doctrine of merger except at the express election of the owner and with the express written
consent oEany lender holding a security interest in the Leased Land and/or Los Rios' Interests.
Section 18.4 Entry of Leased Land by University. In addition to the rights of )
inspection granted to University pursuant to Section 3.4 and Section 4.9 above, representatives
of University may enter the Leased Land, including the Project Improvements, during normal
business hours for the purpose of inspection. University shall give Los Rios twenty four (24)
hours prior notice of such entry, except in the case of an emergency. Notwithstanding the
foregoing or anything to the contrary herein, Los Rios acknowledges that public health and
safety personnel retained by University, including, without limitation, fIre, police and other life
safety professionals, may enter the Leased Land at any time in the course of performing their
duties for the University, whether or not such persons are then currently on active duty" or "off
duty" and no such access by such professionals shall constitute any interference with or
disruption of Los Rios' use, occupancy or enjoyment of the Leased Land or interference with or
disruption of any of Los Rios' rights under this Lease, nor otherwise entitle Los Rios to any
compensation or damages.
Section 18.5 Force Majeure Delay. Notwithstanding any other provision of this Lease
to the contrary, if either party shall be delayed or prevented from completing the performance of
any act required by this Lease within the timeframe required hereunder as a result of an event
constituting Force Majeure, then performance of such act shall be excused for a period
equivalent to the period such Force Majeure continues to delay or prevent such performance;
provided, however, as a condition to claiming the benefIt of any such additional time for
performance due to an event of Force Majeure, the party so delayed or prevented from
performance shall notify the other party of such event of Force Majeure within fIfteen (15) days
of the delayed party's knowledge tbereofand the nature of its impact upon such party's
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performance and shall thereafter keep the other party regularly informed of the status of such
event of Force Majeure.
Section 18.6 Time of the Essence. Time limits in this Lease are to be strictly observed.
Time is of the essence in the performance of each and every obligation and covenant of the
parties thereon.
Section 18.7 Waiver. No waiver by University at any time of any of the terms,
conditions, or covenants of this Lease shall constitute a later waiver of the same or any other
term, condition, or covenant of this Lease, nor of the strict and prompt performance thereof by
Los Rios. University's delay, failure, or omission to reenter the Leased Land, or to exercise any
right, power, privilege, option, or remedy arising from any default, shall not impair such right,
power, privilege, option, or remedy which University has, nor be construed as University's
waiver or relinquishment of any such right, power, privilege, option, or its acquiescence to a
default. University shall not be required to give notice in order to restore or revive either (i)
time as of the essence hereof, nor (ii) any other covenant or condition, after University has
waived a default in one or more instances. No right, power, privilege, option, or remedy of
University shall be construed as being exhausted or discharged by the exercise thereof in one or
more instances.
Section 18.8 Captions. The captions and section headings used herein are for
convenience only and are not a part of this Lease and do not in any way limit or amplify the
terms and provisions hereof.
Section 18.9 Governing Law. This Lease shall be interpreted in accordance with and
governed by the laws of the State of California. The language in all parts of this Lease shall be,
in all cases, construed according to its fair meaning and not strictly for or against University or
Los Rios.
Section 18.10Entire Agreement. This Lease together with the Exhibits hereto contain
all covenants, terms, provisions and agreements between University and Los Rios relating in
any manner to the construction, rental, use, and occupancy of the Leased Land and other matters
set forth in this Lease. No prior agreement or understanding with respect to the same shall be
valid or of any force or effect, and no covenant, term, provision or agreement of this Lease can
be altered, changed, modified or added to, except in writing, signed by University and Los Rios.
No representation, inducement understanding, or anything of any nature whatsoever made,
stated, or represented on behalf of either party hereto, either orally or in writing, has induced
and other party to enter into this Lease except as set forth in this Lease.
Section 18.11Right to Request Injunction. In the event of any violation or threatened
violation by either party of any of the terms, covenants, and conditions herein contained, in
addition to the other remedies herein provided, each party shall have the right to petition for
injunctive relief against such violation or threatened violation in a court of competent
jurisdiction.
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Section 18.12Severability. If any clause, sentence or other portions of this Lease shall J
become illegal, null or void for any reason, or shall be held by any court of competent
jurisdiction or be so, the remaining portions thereof shall remain in full force and effect.
Section 18.13Late Charge and Interest Rate to be Paid. If Los Rios shall fail to pay
to University any amount payable hereunder within fifteen (15) days of when such amount is
due, then in addition to any other remedy available to University hereunder, Los Rios shall pay
to University the amount due plus six percent (6%) annually on a compounding basis
("Interesf') of such unpaid amount until such sum is paid.
Section 18.14Renresentations and Warranties bv Los Rios. _As a material
inducement to University to enter into this Lease, Los Rios represents and warrants the
following:
<a) Power and Authority. That it is a Political Subdivision of the State of
California, duly organized, validly existing and in good standing under the laws of the State of
California; that it has all necessary power and authority to enter into this Lease and to carrv
out the transactions contemplated herein; and that the execution and delivery hereof and the
performance by Los Rios of Los Rios' obligations hereunder will not violate or constitute an
event of default under the terms and provisions of any agreement, law or court order to which
Los Rios is a party or by which Los Rios is bound the remedy for which default would have a
material adverse effect on Los Rios' ability to perform its obligations hereunder.
(b) Authorization. Valid Oblieations. That all actions required to be taken )
by or on behalf of Los Rios to authorize it to execute, deliver and perform its obligations under
this Lease have been taken, and that this Lease is a valid and binding obligation of Los Rios
enforceable in accordance with its terms, except as the same may be affected by bankruptcy,
insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting
the rights of contracting parties generally.
<c) EXeutine Parties. That the persons executing this Lease on behalf of Los
Rios have full power and authority to bind Los Rios to the terms hereof.
Section 18.15Renresentations and Warranties by University. As a material
inducement to Los Rios to enter into this Lease, University represents and warrants the
following:
(a) Power and Authority. That.it is a California public corporation, duly
organized, validly existing and in good standing under the laws of the State of California; that it
has all necessary power and authority to enter into this Lease and to carry out the transactions
contemplated herein; and that the execution and delivery hereof and the performance by
University of University's obligations hereunder will not violate or constitute an event of default
under the terms and provisions of any agreement, law or court order to which University is a
party or by which University is bound the remedy for which default would have a material
adverse effect on University's ability to perform its obligationS hereunder.
(b) Authorization. Valid Oblieations. That all actions required to be taken
by or on behalf of University to authorize it to execute, deliver and perform its obligations under
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this Lease have been taken, and that this Lease is a valid and binding obligation of University,
enforceable in accordance with its terms except as the same may be affected by bankruptcy,
insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting
the rights of contracting parties generally.
(c) Executing Parties. That the persons executing this Lease on behalf of
University have full power and authority to bind University to the tenns hereof.
Section 18.16Relationship of Parties. Nothing contained in this Lease or any of the
Exhibits attached hereto shall be deemed or construed by the parties or by any third person to
create the relationship of principal and agent, or of partnership or of joint venture, or of any
association between University and Los Rios, and none of the provisions contained in this Lease
or any of the Exhibits attached hereto or any acts of the parties shall be deemed to create any
relationship other than lessor and lessee between University and Los Rios, nor shall this Lease
be construed, except as expressly provided, to authorize either to act as agent for the other.
Section 18.17 Attorneys' Fees and Costs. In the event University or Los Rios
commences any action at law or equity against the other to enforce rights under this Lease, the
prevailing party shall recover from the other party reasonable attorneys' fees, charges and costs
(including the allocated cost of staff counsel of University and Los Rios).
Section 18.18Survival of Covenants. All covenants which, by their terms, are not to be
perfonned before the expiration or earlier termination of this Lease shall survive the expiration
or earlier termination hereof.
Section 18.19Binding Effect. The provisions of this Lease shall bind or benefit the
heirs, executors, administrators, successors and assigns of the original parties to this Lease.
Section 18.20Execution in Counterparts. This Lease may be executed in counterparts,
each of which shall constitute an original of such Lease, but all of which shall constitute one
and the same instrument.
Section 18.21Memorandum of Lease. Concurrently with the execution of this Lease,
the parties shall execute and acknowledge a Memorandum of Lease substantially in the fonn
attached hereto as Exhibit K, which memorandum shall be filed in the Official Records.
Section 18.22Press Releases. University and Los Rios shall use good faith efforts to
coordinate with each other, as much as is reasonably practicable, any press releases issued with
respect to the execution of this Lease, the future completion and opening of any of the buildings
comprising the Project, and future joint projects and operations between University and Los
Rios relating to the Leased Land and the use thereof. Any violation of this provision by either
University or Los Rios shall not constitute a default under this Lease.
{EXECUTION PAGE FOLLOWS PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and
year fIrst above written.
~ : o r
UNIVERSITY: THE REGENTS OF THE UNIVERSITY OF CALIFORNIA,
a California public corporation
By:
Name:
-----------------------
Anne Shaw
I ~ : ________________________ __
Associate Secretary of the Regents
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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LosRIos:
By: __ ~ - + ~ ~ ~ ~ ~ ~ __ __
Name:J
Its: Deputy Chancellor
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