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HomeMy WebLinkAboutCT 99-04; Villages of La Costa Oaks & Ridge; Tentative Map (CT) (12)K -> , <\ 28001 RECORDING REQUESTED BY: Real Estate Collateral Management Company c/o Morrow Development, Inc. 1903 Wright Place, Suite 180 Carlsbad, CA 92008 Attn: Fred M. Arbuckle DOC ft 2003-0766001 ri * JUN 27, 2003 3:05 PM OFFICIAL RECORDS SAN DIEGO COUKTY RECORDER'S OFICE GREGORY J. SKITH, COUNTY RECORDER FE8: 164.00 Space Above For Recorder's Use F& 53P DECLARATION OF DEVELOPMENT COVENANTS, CONDITIONS AND RESTRICTIONS FOR LA COSTA OAKS CARLSBAD, CA RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 5/14/03 Description: San Diego,CA Document - Year.DocID 2003.766001 Page: 1 of S3 Order: 0698 Comment: DECLARATION OF DEVELOPMENT COVENANTS, CONDITIONS AND RESTRICTIONS This DECLARATION OF DEVELOPMENT COVENANTS, CONDITIONS AND RESTRICTIONS (the "Declaration") is executed, to be effective upon its recordation, between REAL ESTATE COLLATERAL MANAGEMENT COMPANY, a Delaware corporation ("RECM") and SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership ("Builder") with reference to the facts set forth below. RECITALS A. RECM is the owner of that certain real property situated in the City of Carlsbad, State of California, described in Exhibit "A" attached hereto and incorporated herein (the "Property"). B. The Property is one or more Neighborhood(s) in La Costa Oaks ("La Costa Oaks"). La Costa Oaks is one of three Villages in the master planned community known as the Villages of La Costa. C. RECM intends to convey the Property to Builder for the purposes of developing on the Property a residential project for sale to the public, and Builder, by acceptance of the real property subject to this Declaration, has represented to RECM that it is acquiring the Property for development in accordance with the covenants, conditions, rights, restrictions and limitations set forth in this Declaration and the other Acquisition Documents (as hereinafter defined), and RECM is conveying the Property to Builder on the basis of Builders's continuing compliance with such restrictions. D. Builder has agreed with RECM that Builder will develop the Property in accordance with the Master Final Map (as hereafter defined) and the applicable Neighborhood Final Map (as hereafter defined) recorded against the Property and all governmental approvals and requirements associated therewith. In the event of a conflict, the most recent final map shall control. Each Builder, by acceptance of a deed, acknowledges that the covenants, conditions and restrictions set forth in this Declaration are intended to constitute a general scheme for the development of the Property as part of La Costa Oaks, for the purposes of enhancing and protecting the value, desirability and attractiveness of the Property and the entire La Costa Oaks community and enhancing the quality of life therein. , RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1S21395.7 2 5/14AB Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 2 of 53 Order: 0698 Comment: 88003 NOW, THEREFORE, RECM and Builder hereby covenant, agree and declare that all of its interest as the same may from time to time appear in the Property shall be held and conveyed subject to the following covenants, conditions and restrictions. These covenants, conditions and restrictions shall run with the Property or any portion into which it may be divided until released as provided herein and shall be binding upon all parties having or acquiring any right or title in the Property or any part thereof, and subject to any restrictions set forth below, shall inure to the benefit of the fee owners of the Benefitted Property and are imposed upon the Property and every part thereof as a servitude in favor of the Benefitted Property and every portion thereof as the dominant tenement or tenements. ARTICLE 1 DEFINITIONS Except as otherwise expressly provided herein, the following words and phrases, when used herein, shall have the meanings set forth below. 1.1 Definitions. All of the definitions contained in the Acquisition Documents (defined below) are, unless stated otherwise in this document, incorporated herein by reference. The following additional terms shall have the following meaning whenever used in mis Declaration or in any other Acquisition Documents, except where the context clearly indicates otherwise. 1.2 Acquisition Documents. The term "Acquisition Documents" means collectively all of the written agreements executed by and between Builder and RECM, recorded and unrecorded, concerning the development of the Property, and include, without limitation, the following instruments: (i) the Purchase Agreement (defined below); (ii) the Repurchase Option Agreement (defined below); (iii) the Memorandum of Repurchase Option Agreement (as defined in the Repurchase Option Agreement); (iv) the Payment and Performance Agreement (defined below); (v) the Performance Deed of Trust (defined below); (vi) this Declaration; (vii) the License Agreement (defined below); (viii) the Agreement for Right of First Refusal (defined below); and (ix) RECM's GrantDeed. 1.3 Agreement for Right of First Refusal. The term "Agreement for Right of First Refusal" means that certain agreement between RECM and Builder which sets forth the rights of RECM to purchase the Property, or any portion thereof, from Builder and is one of the Acquisition Documents. 1.4 Assignment. The term "Assignment" means mat certain Assignment Agreement between RECM, as assignor, and Builder, as assignee, which sets forth the terms and conditions under which RECM has assigned to Builder certain deposits, fees and credits as more fully described therein. RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 3 S/14/03 Description: San Diego,CA Document-rear.DocID 2003.766001 Page: 3 of 53 Order: 06S8 Comment: -?80Q4 1.5 Benefitted Property. The term "Benefitted Property" means the real property described in Exhibit nB" attached hereto and incorporated herein so long as such Benefitted Property is owned by RECM or the Master Association (as hereafter defined). 1.6 Builder. The term"Builder" initially means Shea Homes Limited Partnership, a California limited partnership and thereafter, upon the conveyance of the Property by Shea Homes Limited Partnership, a California limited partnership, to one or more persons or entities (excluding purchasers pursuant to a Qualifying Sale of a Residence), respectively, who are alone or collectively the record owner of fee simple title to a portion of the Property, other than RECM, but excluding those having any such interest merely as security for the performance of an obligation. 1.7 Builder's Marketing Program. The term "Builder's Marketing Program" means the marketing program developed by Builder to market Residences on the Property, pursuant to the provisions of Section 6.2 of this Declaration. 1.8 Builder's Project Documents. The term "Builder's Project Documents" shall refer I collectively to the documents described in Section 3.2 of this Declaration. I • 1.9 Business Day. The term "Business Day" means any day other than a Saturday or Sunday or legal holiday in the State of California. 1.10 City. The term "City" means the City of Carlsbad. 1.11 Community Association. The term "Community Association" means the La Costa Oaks Community Association which has been formed for the purposes of maintaining the I Community Association Common Area (as hereinafter defined) and performing certain other duties I and functions benefitting La Costa Oaks as provided in the Community Declaration. 1.12 Community Association Common Area. The term "Community Association Common Area" means the common area owned by the Community Association and designated as the "Community Common Area" in the Community Declaration. 1.13 Community Declaration. The term "Community Declaration" means the Declaration of Covenants, Conditions and Restrictions ofLa Costa Oaks, and any amendments thereto, recorded in the Official Records of the County of San Diego covering the Property and other real property in La Costa Oaks. l - - j 1.14 Construction Improvements. The term "Construction Improvements" means , buildings, outbuildings, underground installations, structures, slope, grading and grading alterations, j roads, curbs, gutters, storm drains, utilities, driveways, parking areas, fences, entry or other signage ! and monuments, screening walls and barriers, retaining walls, stairs, decks, windbreaks, plantings, RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 4 5/14/03 Description: San Diego,CA Document-rear.DocID 2003.766001 Page; 4 of 53 Order: 0698 Comment: 28005 planted trees and shrubs, sidewalks, poles, signs, loading areas, and all other structures and development of every type and kind. 1.15 Development Declaration. The term "Development Declaration" or "Declaration" means this Declaration of Development Covenants, Conditions and Restrictions recorded against the Property. 1.16 Districts. The term "Districts" shall refer to the Districts referenced in Article 9 of this Declaration. 1.17 DRE. The term "DRE" means the California Department of Real Estate or such other governmental agency of the State of California authorized to administer the sale of subdivided lands pursuant to Sections 11000 et seq. of the California Business and Professions Code, or any similar California statute hereinafter enacted. 1.18 Existine Approvals. The term "Existing Approvals" shall refer collectively to any and all approvals relating to the Property, which, as of the recordation date of this Declaration, were approved by the City or other Governmental Agency, including without limitation, the following: City of Carlsbad General Plan Amendment (GPA 98-01) Villages of La Costa Master Plan (MP 98-01) Final Program Environmental Impact Report (EIR 98-07) including Mitigation Monitoring and Reporting Program, CEQA Findings/Statement of Overriding Considerations Local Facilities Management Plan Zone 11 (LFMP 11(B)) Tentative Tract Map (CT 99-04) - tentative map/conditions Subdivision Tract Map (CT 99-04-01) - final map no. 14379 Hillside Development Permit (HDP 99-02) Planned Residential Development Permit for Neighborhood 3.9 (PRO 01-08) Mass Grading Permit; Grading Permit No. GR020001 Tentative Tract Map for Neighborhoods 3.10/3.11 (CT 02-02) - tentative map/conditions approved by City Council on November 12,2002 Planned Residential Development Permit for Neighborhoods 3.10/3.11 (PRD 02-01) - approved by City Council on November 12,2002 Neighborhood 3.10/3.11 Grading Permit; Grading Permit No. GR030004 Tentative Tract Map for Neighborhoods 3.12/3.13 (CT 02-03) - approved by City Council on November 12,2002 Subdivision Tract Map 14604 - Neighborhood 3.12/3.13 final map Neighborhood 3.12/3.13 Grading Permit; Grading Permit No. GR030005 Villages of La Costa Master Plan Amendment (MP 98-01(A)) - two unit density transfer approved by City Council on November 12,2002 RECM/La Costa Oaks^Shea Development Declaration 27817-6; 1621395.7 5 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 5 of 53Order: 0658 Comment: 28006 Tentative Tract Map for Neighborhood 3.14 (CT 02-04) - approved by City Council on November 12,2002 Neighborhood 3.14 Grading Permit; Grading Permit No. GR030007 Tentative Tract Map for Neighborhood 3.15 (CT 02-05) - approved by City Council on November 12,2002 Neighborhood 3.15 Grading Permit; Grading Permit No. GR030006 1996 Parks Agreement First Amended and Restated Affordable Housing Agreement Imposing Restrictions on Real Property dated November 12,2002 Other Governmental Agencies US Department of the Interior, Federal Fish and Wildlife Threatened/Endangered Species Incidental Take PermitNumberPRT-818041 and California Department of Fish and GameSection2081 and2835 Management Authorizations (Tracking No. 2081-1995- 014-5) both pursuant to that certain "Implementation Agreement Regarding the City of Carlsbad/Fieldstone/La Costa Associates Habitat Conservation Plan/On-Going Multi-Species Plan" dated June 7,1995 US Army Corps of Engineers Clean Water Act Section 404 Permit No. 992005400-TCD California Department of Fish and Game Section 1603 Authorization No. 5-349-99 California Regional Water Quality Control Board (San Diego Region) Waste Discharge Requirements and Section 401 Water Quality Certification (Order No. 2001-322) NPDES Permit No. 9 37S317133 (Mass Grading; DWG NO. 397-1A) NPDESPennitNo.937S319809(Neighborhood3.10/3.11Grading;DWGNo.399- 6A) NPDES Permit No. 9 37S319810 (Neighborhood 3.12/3.13 Grading; DWG No. 399- 7A) NPDES Permit No. 9 37S319811 (Neighborhood 3.14 Grading; DWG No. 399-8A) NPDES Permit No. 9 37S319812 (Neighborhood 3.15 Grading; DWG No. 399-9A) 1998 Villages of La Costa School Impact Mitigation Agreement (between RECM and Encinitas Union School District) 1.19 Governmental Agencies or Governmental Agency. The term "Governmental Agencies" or "Governmental Agency" means any local, county, state and/or federal governmental or quasi-governmental agencies, authorities or regulatory bodies and any public or private utility companies having jurisdiction over the Property. 1.20 Government Approvals. The term "Government Approvals" means all necessary permits, approvals, or other authorizations that may be necessary or requires to improve, construct and sell Residences (as hereafter defined) and other Improvements (as hereafter defined) on the Property. RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 ° 5/14/03 Description: San. Diego,CA Document-year.DocID 2003.766001 Page: 6 of S3 Order: 0698 Comment: 2 80 or 1.21 Improvements. The term "Improvements" shall refer collectively to the Construction Improvements and Landscape Improvements. 1.22 La Costa Oaks. The term "La Costa Oaks" means the real property identified as such in the Master Plan (as hereafter defined). 1.23 La Costa Oaks Design Guidelines. The term "La Costa Oaks Design Guidelines" means the La Costa Oaks Design Guidelines Manual distributed to Builder by RECM prior to recordation of this Declaration which provides certain architectural, landscaping, signage and other design and development guidelines for La Costa Oaks and all amendments thereto, prepared by RECM to regulate the design and development of the Improvements that Builder will be developing on the Property as provided herein. 1.24 La Costa Oaks Disclosure Program. The term "Disclosure Program" shall refer to the disclosure program which may be formed and administered by RECM pursuant to Section 8.3 of this Declaration. 1.25 Landscape Improvements. The term "Landscape Improvements" means any plantings, ground cover, trees and shrubbery existing on any portion of the Property, now or in the future, together with any alterations, systems and equipment installed in order to maintain such plantings, ground cover, trees and shrubbery. 126 License Agreement. The term "License Agreement" means the License Agreement executed by RECM and Builder whereby RECM granted to Builder certain rights to use certain La Costa Oaks proprietary rights (as described in the License Agreement). 1.27 Master Final Map. Theterm"MasterFinaIMap"referstoCarlsbadSubdivisionTract Map No. 99-04-01 final subdivision map of record covering the Property and other real property in La Costa Oaks. 1.28 Master Marketing Program. The term "Master Marketing Program" means the La Costa Oaks marketing program and manual provided to Builder which sets forth certain advertising and marketing guidelines, and any amendments thereto, prepared by RECM to regulate the form, content, type, location and timing of all forms of advertising by Builder for the Property and La Costa Oaks. 1.29 Master Plan. The term "Master Plan means the Villages of La Costa Master Plan (MP 98-01) and any amendments thereto, on file with the City. 130 Merchant Builder. The term "Merchant Builder* means the owner of subdivided lots within one or more Neighborhood Final Maps (as hereafter defined) for construction of a Residence (as hereafter defined) for sale to the public. RECM/La Costa Oaks/Shea Development Declaration 27817-6;lg21395.7 .7 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.756001 Page: 7 of 53 Order: 0698 Comment: S8008 1.31 Neighborhood Final Map. The term "Neighborhood Final Map" means the "Master Final Map" (defined above). 1.32 Payment and Performance Agreement. The term "Payment and Performance Agreement" means that certain Payment and Performance Agreement between RECM and Builder, which sets forth certain post-closing obligations between RECM and Builder. 1.33 Performance Deed of Trust. The term "Performance Deed of Trust" means that certain Performance Deed of Trust and Assignment of Rents securing payment and performance of certain obligations pursuant to the Payment and Performance Agreement and other Acquisition Documents. 1.34 Phase of Development. The term "Phase of Development" means a portion of the : Property for which the DRE has issued a Public Report.i .i 1.35 Prime. The term "Prime" means the rate announced from time to time by The Wall Street Journal,or its successor-in-interest as the prime or reference rate. 1.36 Public Report. The term "Public Report" means the Final Subdivision Public Report obtained by Builder for sales of Residences to the public. 1.37 Purchase Agreement The term "Purchase Agreement" means that certain Purchase Agreement and Escrow Instructions between RECM, as seller and Builder, as buyer, which sets forth the terms and conditions under which Builder purchased the Property from RECM and is one of the Acquisition Documents. 1.38 Qualifying Sale of a Residence. The term "Qualifying Sale of a Residence" means the close of escrow for the sale of a Residence to a member of the home buying public pursuant to a Public Report. 1.39 RE£M. The term "RECM" means Real Estate Collateral Management Company, a Delaware corporation, and to RECM*s successors and assigns if such successors and assigns own all or any portion of the Benefitted Property and are expressly named as successor to RECM in a ! document executed by RECM, or a successor, recorded in the Office of the County Recorder assigning the rights and duties of RECM hereunder to such successor with such successor to RECM accepting and assuming the assignment of such rights and duties. 1.40 Repurchase Option Agreement. The term "Repurchase Option Agreement" means that certain Repurchase Option Agreement between Builder and RECM, which sets forth the terms and conditions under which RECM may reacquire the Property from Builder and is one of the Acquisition Documents, and any memorandum thereof. I RECM/La Costa Oaks/Shea i Development Declaration , 27817-6;1821395.7 8 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 8 of 53 Order: 0698 Comment: 1.41 Residence. The term "Residence" means a subdivided lot together with the single- family dwelling unit constructed thereon. 1.42 Supplementary Declaration. The term "Supplementary Declaration" means one or more supplementary declarations which may be recorded by RECM, or its successor, as Declarant under the Community Declaration annexing all or a portion of the Property to the Community Declaration. 1.43 Unavoidable Delay. The term "Unavoidable Delay" means any prevention, delay or stoppage due to acts of God, governmental restrictions, governmental regulations, governmental controls, judicial orders, enemy or hostile governmental action, civil commotion, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, shall excuse the performance by that party for a period equal to the actual prevention, delay or stoppage, provided that the party prevented, delayed or stopped shall have used its diligent efforts to mitigate the situation causing the prevention, delay or stoppage and shall have given the other party written notice thereof within ten (10) days of such event causing the prevention, delay or stoppage. Notwithstanding anything to the contrary contained in this Section, in the event any work performed by Builder or Builder's contractors results in a strike, lockout and/or labor dispute against Builder or Builder's contractors alone (except as part of any industry- or trade-wide program of rolling or targeted strikes, lockouts and/or labor disputes), the strike, lockout and/or labor dispute shall not alone excuse the performance by Builder of the provisions of this Declaration. ARTICLE 2 REQUIRED APPROVALS AND PERMITS 2.1 Government Approvals. Except as otherwise specifically provided in this Declaration or the other Acquisition Documents, Builder shall obtain, at its sole expense, all City and other Governmental Approvals which may from time to time be required for Builder's development of the Property. At all times, Builder's development of the Property shall be in compliance with all ordinances, laws and regulations relating to the Property, La Costa Oaks, and Builder's development thereon. 2.2 Existing Approvals. Builder shall not seek to amend, modify or terminate any of the Existing Approvals without the prior written consent of RECM, which consent may be withheld in RECM's sole and absolute discretion. Builder acknowledges that any change to the Existing Approvals will have an impact on the balance of La Costa Oaks. Builder further covenants, and agrees that it will not seek to increase the number of Residences which can be constructed on the Property in excess of the number shown on the Neighborhood Final Map. RECM/La Costa Oaks/Shea Developmtnt Declaration 27817-6; 1821395.7 9 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 9 of 53 Order: 06B8 Comment: 28010 2.3 No Liability. The review and approval by RECM of any materials submitted to it under this Declaration shall not be deemed to be an acknowledgment by RECM that such submitted materials are in conformance with existing laws, statutes and regulations or that such documents are accurate or enforceable. Without limiting the generality of the foregoing, review by RECM of any Public Reports or other disclosures or compliance by Builder with any La Costa Oaks Disclosure Program shall not constitute approval by RECM of the accuracy of such Public Report and other disclosures or an acknowledgment that such Public Report or disclosures contain all items which should be disclosed to purchasers of Residences in the La Costa Oaks. Builder shall indemnify, protect, defend (with legal counsel acceptable to RECM) and hold RECM harmless from and against any losses, damages, liabilities, costs and expenses (including, without Limitation, attorneys' fees) arising from or attributable to the accuracy of any representations of Builder and/or the failure of Builder to make disclosures regarding the La Costa Oaks to purchasers ofResidences in the La Costa Oaks. Notwithstanding the foregoing, Builder shall not be obligated to indemnify RECM for any losses, damages, liabilities, costs and expenses arising from or attributable to any disclosures required to be included verbatim by RECM within Builder's disclosure materials provided such disclosures are included by Builder in strict accordance with RECM's written instructions. ARTICLE 3 APPROVAL OF DEVELOPMENT PLANS 3.1 Approval bv RECM. Prior to submirtal to the City or any Governmental Agencies of any plans or applications for excavation, grading or the construction of any Improvements on the Property and prior to commencing any excavation, grading, or the construction of any Improvements on the Property, Builder shall submit its Development Plans (as defined below) to RECM for review and approval in accordance with the provisions of this Declaration, the La Costa Oaks Design Guidelines and the Existing Approvals. 3.2 Development Plans. As more particularly described in the La Costa Oaks Design Guidelines, before Builder commences and/or performs any excavation, grading or site improvement of the Property or the construction or installation of any Construction Improvements or Landscape Improvements, the plans for such construction work shall be reviewed and approved by RECM. Builder shall submit to RECM in accordance with the schedules for submittal and the submirtal process set forth in the La Costa Oaks Design Guidelines, and obtain RECM's written approval of, each of the following in accordance with the requirements set forth in the La Costa Oaks Design Guidelines (collectively the "Development Plans"), which approval shall not be unreasonably withheld or delayed: (a) Location map; (b) Site plan; RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 10 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 10 of 53... Order: 0696 Comment: 38011 requests in writing. (c) Grading plan; (d) Landscape architectural drawings; (e) Streetscene drawings; (f) Floor plans, building sections and elevations; (g) Sample board of exterior building materials and colors; (h) Details of signage and monumentation; (i) Drawings of model home complex, parking and sales office; (j) Estimated construction schedule; (k) Temporary sign designs; (I) Permanent sign designs; and (m) Any other plans, specifications or documents that RECM reasonably Builder shall submit two (2) copies of each of the items enumerated above except that Builder is only obligated to deliver one (1) sample board. Builder shall also submit to RECM (for its information and files only) as soon as available, a copy of all grading plans and improvement plans obtained by Builder for the model home complex to be constructed on the Property, if any, as approved by the City. RECM may require such detail in the Development Plans submitted for its review and approval as it deems necessary or proper and may postpone its approval of any Development Plans submitted until it has received and had an opportunity to review all materials required to be submitted at the then applicable review stage (as delineated on the La Costa Oaks Design Guidelines). 3.22 Conditions to Approval. RECM will approve Development Plans submitted for its approval only if, in the reasonable judgment of RECM, the improvement work contemplated therein satisfies all requirements set forth in the Acquisition Documents and the La Costa Oaks Design Guidelines. RECM shall have the right to disapprove any Development Plans submitted to it in the event (i) such Development Plans do not conform to the requirements of this Declaration or the La Costa Oaks Design Guidelines, (ii) the Development Plans are incomplete and/or the Development Plans are deemed by RECM to be contrary to the best interests of the La Costa Oaks or (iii) the Development Plans have not been prepared and/or submitted in conformance with the requirements of the La Costa Oaks Design Guidelbes. In addition, RECM may condition its RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1S21395.7 11 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 11 of 53_ Order: 0698 Comment: approval upon the Builder's agreement to: (a) make such changes therein as RECM deems appropriate; (b) grant any required maintenance easements to RECM or the Community Association, as applicable, provided the easements do not materially and adversely affect Builder's development of the Property; (c) convey any Community Association.Common Area to the Community Association as required pursuant to the Declaration; or (d) reimburse RECM or the Community Association, as applicable, for the cost of maintenance. All discretionary actions taken by RECM pursuant to this Section 3.2.1 shall be done or exercised in a reasonable manner. 3 2.3 StreetNames. The names of all streets on the Property are already established by the Existing Approvals and any changes are subject to RECM's prior approval and shall be consistent with the names of neighborhoods and streets in La Costa Oaks, the La Costa Oaks Design Guidelines and the City's street name policy. 3.3 Review and Approval Procedures. As more particularly described in the La Costa Oaks Design Guidelines, Development Plans will be reviewed in three stages: Pre-Design Review, Preliminary Design Review and Final DesignReview. Submittals of all Development Plans and any other documents or items required to be submitted under the La Costa Oaks Design Guidelines shall be reviewed and approved or disapproved by RECM in accordance with the procedures set forth below, which approvals shall not be unreasonably withheld. 3.3.1 Review of Submitted Materials. Initial submittals ofDevelopment Plans shall be reviewed and approved or disapproved by RECM within a reasonable time from RECM's receipt thereof. The failure of RECM to deliver notice of approval within ten (10) Business Days after receipt of the initial submittals of the Development Plans shall be deemed to be RECM's disapproval of Builder's initial submittals of Development Plans. If Builder's submittals are deemed disapproved by RECM, RECM shall use commercially reasonable efforts to provide Builder with the reasons for such deemed disapproval within ten (10) Business Days after Builder inquires into the reasons for such deemed disapproval. 3.3.2 Amendments. No material change shall be made to any document or other item subject to RECM's written approval under the terms hereof, unless and until such document or other item is resubmitted to RECM for its approval as provided herein and such changes shall be effective only after RECM's written approval. Any amendments, revisions or modifications (nAmendment(s)n) to any of the Development Plans shall be reviewed and approved or disapproved by RECM in writing. If RECM disapproves any such items, RECM shall state the reasons for such disapproval in a notice delivered to Builder. The failure of RECM to deliver notice of approval within ten (10) Business Days after receipt of any Builder proposed Amendment shall be deemed to be RECM's disapproval of Builder's proposed Amendment. Builder shall resubmit, within ten (10) Business Days of receipt of RECM's written request for corrections or revisions, a new set of the portion of the Development Plans which have been disapproved which incorporates RECM's corrections or revisions. In the event further resubmittals are required, they shall be resubmitted RECM/La Costa Oaks/Shea Development Declaration 27817-6; 182I39S.7 12 5/14/03 Description: San Diego,CA Document-Year.DocXD 2003.766001 Page: 12 of 53__ Order: 0698 Comment: within five (5) Business Days following notification by RECM. If Builder fails to resubmit such revised Development Plans, any approval previously given shall be deemed revoked. 3.4 No Waiver of Future Approvals. RECM's approval of any Development Plans shall not be deemed to constitute a waiver of any right to withhold approval or consent to any other Development Plans. 3.5 Scope of Review. RECM shall not be responsible for reviewing, nor shall, its approval of any Development Plans be deemed an approval from the standpoint of structural safety, architectural or engineering design or confbrmance with building or other codes. Neither RECM nor any member thereof nor any agents of RECM shall be liable for any damage, loss or prejudice suffered or claimed by Builder or any successor in interest to Builder and Builder shall indemnify, protect, defend (with legal counsel acceptable to RECM) and hold RECM harmless from and against all damage, loss or prejudice suffered or claimed by any third party on account of (i) any defects in any plans, drawings, specifications or other documentation submitted as part of the Development Plans, reviewed or approved in accordance with the foregoing provisions, or for any structural or other defects in any work done according to such plans, drawings, specifications or other documentation, (ii) the approval or disapproval of any Development Plans, whether or not defective, (iii) the construction or performance of any work whether or not pursuant to approved Development Plans or (iv) the development of the Property or any portion thereof by Builder. 3.6 Variances. RECM may, in its reasonable discretion, authorize variances from compliance with any of the requirements of the La Costa Oaks Design Guidelines and Master Plan. Any such variance must be in writing. The granting of a variance by RECM shall not in any way affect Builder's obligation to comply with all Governmental Approvals and Existing Approvals affecting the Property. 3.7 La Costa Oaks DesignJjuidelines. RECM has the right, at any time, to revise or amend the La Costa Oaks Design Guidelines or grant variances from the Design Guidelines to other Merchant Builders; provided, however, no such revisions or amendments shall require Builder to modify or change any of Builder's Development Plans which have already been submitted and approved by RECM and all applicable Governmental Agencies. RECM shall deliver a copy of any amendment to the La Costa Oaks Design Guidelines to Builder. 3.8 Construction of Improvements. Builder covenants and agrees that (a) construction of Improvements on the Property will not be commenced or implemented, nor submitted to the City or other Governmental Agency, until the Development Plans therefor, have first been approved in writing pursuant to this Article 3, and (b) development of the Property and construction of Improvements thereon shall be completed in substantial accordance with the Development Plans, as approved by RECM. RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1S21395.7 13 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 13 of 53 Order: 0698 Comment: 3.9 Controlling Document. In the event of any inconsistency between this Declaration, the Master Plan, and the La Costa Oaks Design Guidelines, the more restrictive provisions shall control. 3.10 Inspections by RECM- RECM shall have the right, but not the obligation, to enter the Property and inspect all work performed by Builder in accordance with the provisions set forth below. 3.10.1 Notice of Completion. Upon completion of any Improvements (exclusive of the Residences), Builder shall supply RECM with a notice of completion issued by Builder or Builder's architect or engineer, as applicable, certifying that the Improvements have been completed and are in compliance with the Development Plans, previously approved by RECM. 3.10.2 Inspection. Throughout the course of construction and until the earlier of (i) sixty (60) days after the submission of the notice of completion or (ii) a Qualifying Sale of a Residence, RECM, or its duly authorized representatives, will have the right to enter onto the Property to determine whether the Improvements conform with the approved Development Plans. If RECM determines that the work does not comply with the approved Development Plans, it will notify Builder in writing of the noncompliance, specifying the particulars of noncompliance, and Builder will promptly remedy the noncompliance. 3.10.3 Failure to Remedy Noncompliance. If, upon the expiration of thirty (30) days from the date of notification of noncompliance from RECM, Builder shall have failed to remedy such noncompliance, or commenced remediation within such thirty (30) day period but shall not be diligently pursuing the same to completion, then Builder shall be deemed to be in default under this Declaration. RECM shall thereafter have the right, but not the obligation, to remove or alter the noncomplying Improvements, in which case, Builder shall be obligated to reimburse RECM for the costs of such removal or alteration together, which amounts shall be due and payable within ten (10) days after receipt of a statement from RECM. If any amounts are not paid when due, they shall bear interest from the date due at the greater annual rate of (i) ten percent (10%) or (ii) Prime plus two percent (2%), but not to exceed the maximum amount allowed by law. RECM shall also have the right to pursue any remedy at law or in equity against Builder for failure to perform its obligations under this Declaration. ARTICLE 4 DEVELOPMENT OF PROPERTY 4.1 Covenant to Construct. Builder has represented to RECM that it has purchased the Property to develop it with Residences to be sold to the public when and as provided in this Declaration and that such representation was a material consideration which induced RECM to sell the Property to Builder. Builder further represents and agrees that it shall (a) use commercially RECM/La Costa Oaks'Sbta Development Declaration 27817-6; 1821395.7 14 5/14/03 description: San Diego,CA Document-rear.DocID 2003.756001 Page: 14 of S3 Order: 0698 Comment: reasonable efforts to construct Residences and (b) not sell the Property or any portion thereof unless it has been improved with Residences, Construction Improvements, Landscaping Improvements and other Improvements otherwise permitted by RECM. Builder further acknowledges that if it had not agreed to undertake such commitments (subject to Unavoidable Delay), RECM would not have agreed to sell the Property to Builder under the terms and conditions set forth in the Purchase Agreement, and if Builder fails to use commercially reasonable efforts to perform diligently and in good faith such commitments (subject to Unavoidable Delay), such failure of performance will adversely affect the development and marketing of the balance of the La Costa Oaks. 4.1.1 Continuous Operations and Completion. Subject to Unavoidable Delay, Builder shall proceed diligently and continuously with the development, construction and sale of all of the Residences and the construction of all Improvements that Builder is obligated to construct on the Property as provided herein. Builder's development of the Property may be accomplished in one or more continuous Phase(s) of Development. Builder shall at all times maintain the Property in a clean, orderly and weed-free condition and shall not permit any nuisance to be maintained on the Property. Upon a default by Builder of its maintenance obligations hereunder, RECM shall be. entitled to enter onto the Property upon five (5) days prior notice to Builder (except in an emergency, in which case no prior notice need be given) and perform such maintenance on behalf of Builder. Builder shall pay, to RECM, within ten (10) days after request therefor, RECM*s costs for such maintenance. If Builder foils to reimburse such costs when due, such costs shall bear interest from the date due at the greater annual rate of (i) ten percent (10%) or (ii) Prime rate plus two percent (2%) but not to exceed the maximum interest rate allowed by law and RECM shall be entitled to. place a lien against the Property in accordance with, the provisions of Article 11 of this Declaration or pursue any other remedy provided under this Declaration. 4.1.2 Sale of Residences. Builder shall not convey any subdivided lot in the Property unless and until the lot is improved with a Residence. Builder shall conduct reasonable marketing efforts to sell all of the Residences in the Property and Builder shall not operate a rental apartment or for-lease community on the Property. No Residence on the Property shall contain more • square feet of habitable living space than shown for such Residence in the Development Plans therefor approved by RECM. For purposes of the foregoing, garages, atriums, patios and the like shall not be included in "habitable living space" unless it is converted by Builder prior to a Qualifying Sale of a Residence. Builder shall not make any such conversion unless it is shown as an option on its approved Development Plans. 4.1.3 Grading. The Builder has made or, prior to the construction of any improvements on the Property, will make its own test to ascertain the amount and extent of the present fill and/or any subsurface or soil condition upon or in connection with the Property and there shall be no liability to RECM because of or resulting from any fill or any subsurface or soil condition upon or in connection with the Property, including without limitation subsurface, geologic or ground water conditions. RECM/La Costa Oaks/Shea Development Declaration 27817-6:1821395.7 15 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 15 of 53 Order: 0698 Comment: 280J6 42 Landscaping. Subject to Section 3.7 of this Declaration, as part of its Landscaping Improvements, Builder shall install upon the Property, the landscaping and trees required to be installed under the La Costa Oaks Design Guidelines, the Master Plan, the Builder's Improvements (as defined and described in the Payment and Performance Agreement) and under any of the Acquisition Documents. Such landscaping and trees shall be installed in the locations required under the La Costa Oaks Design Guidelines and shall satisfy the criteria specified in the La Costa Oaks Design Guidelines and Master Plan. In no event shall Builder remove any trees from the Property without the prior consent of RECM. 4.3 Escrows. All sales of Residences shall be accomplished through a sales escrow at a duly quali fied and licensed escrow company selected by Builder. 4.4 Public Easements. Upon request by RECM, Builder shall grant directly to a public utility or other Governmental Agency any easement or other right in the nature of the easements and rights reserved by RECM in any of the Acquisition Documents. 4.5 No Hazardous Substance Activity. Builder shall not engage in any hazardous substance activity or allow its agents, contractors or employees (hereafter "Builder's Representatives") to do so in violation of any federal, state or local environmental law, policy, regulation or ordinance applicable to the Property (hereafter "Environmental Laws"). Builder shall keep and maintain, and cause Buildefs Representatives to keep and maintain the Property which Builder has acquired or otherwise performed any work upon in compliance with, and Builder shall not cause or permit the Property or any other portion of the La Costa Oaks to be in violation of any Environmental Laws. In the event any investigation, site monitoring, containment, cleanup, removal, restoration or other remedial work of any kind or nature (the "Remedial Work") is required under any Environmental Laws, any judicial order, by any Governmental Agency or in response to any hazardous substance claims because of, or in connection with, the breach by Builder of any of its obligations under this Declaration or any of the Acquisition Documents or the current or future presence, suspected presence, threatened or existing release or suspected release of a hazardous substance in or into the air, soil, groundwater, surface water or soil vapor at, on, under or about the Property, or transportation of a hazardous substance to or from the Property in violation of any Environmental Laws, Builder shall, within such period of time as may be required under applicable law, regulation or order, commence to perform, or cause to be commenced, and thereafter diligently prosecute to completion all such Remedial Work. Should Builder at any time default in or fail to perform or observe any of its obligations under this Section, RECM shall have the right but not the obligation, without limitation to any of RECM's other rights hereunder, upon twenty (20) days' written notice to Builder, to perform this same, and Builder shall pay to RECM, immediately upon demand, all costs and expenses incurred by RECM in connection therewith, including without limitation its attorneys' fees, which are due ten (10) days following invoice therefore. Any amounts not paid when due shall bear interest from the date due at the greater annual rate of (i) ten percent (10%) or (ii) Prime plus two percent (2%), but not to exceed the maximum rate allowed by law, and RECM/La Costa Oaks/Shea Development Declaration 27817-6-.I821395.7 16 . 5/14/03 Description: Sun Diego,CA Document-Year.DocID 2003.766001 Page: 16 of 53 Order: 0698 Comment: — 2801? may, at the election of RECM, become a lien on Builder's Property, pursuant to Section 11.1.4 of this Declaration. 4.6 Storm Water Pollution Prevention Plan. 4.6.1 REClvfs Obligations. (a) KECMcurrentlymaintainsayear-roundstormwatermanagementand compliance protocol that RECM believes complies with the priorities, guidelines, criteria and regulations set forth in the State Water Resources Control Board General Construction Storm Water Permit, Water Quality Order 99-08-DWQ ("General Permit") for La Costa Oaks, which includes all streets, sidewalks, and common areas. RECNTs responsibilities under the General Permit include the preparation, submission and implementation of a Storm Water Pollution Prevention Plan ("SWPPP") that includes, but is not limited to, the development and implementation of site inspection and reporting, site testing and reporting, and personnel training to eliminate unauthorized discharges of storm water and non-storm water. RECM may also be required to implement other storm water management and discharge requirements pursuant to CalifomiaRegional Water Quality Control Board San Diego Regional Order No. 2001-01, as may be amended from time to time ("Order No. 2001-01"), and any other plans, ordinances, requirements, including but not limited to any Standard Urban Storm Water Mitigation Plans adopted by the City pursuant to Order No. 2001-01, as may be amended from time to time. (b) RECMs SWPPP generally identifies the potential site-specific construction/contractor activities that could cause pollutants in storm water and provides a description of the temporary and permanent Best Management Practices ("BMP's") and other measures to be implemented to prevent storm water discharges that cause or contribute to the failure to satisfy a water quality objective. The goal of the SWPPP and BMP's is to eliminate unauthorized discharges of all construction-related materials, wastes, spills, and residues, which must be securely stored and retained onsite to eliminate any increase in transport thereof from La Costa Oaks to streets, drainage, receiving waters, and adjacent properties by run-off or wind due to the construction activities. (c) Pursuant to the above-referenced Order No. 2001-01, implementing ordinances, policies or requirements of the City, or pursuant to conditions of approval applicable to the Property, RECM may be required to comply with new or additional requirements of an Urban Run-OffManagement Program ("URMP") imposed by the City to reduce discharges of pollutants and flows following construction and Builder shall likewise comply with any such new or additional requirements. 4.6.2 Builder's Obligations. CornmencingontheCloseofEscrow.Builderandany Builder Representatives shall obtain coverage and fully comply with the priorities, guidelines, criteria and regulations set forth in the General Permit and Existing Approvals, which applies to all RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 17 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 17 of 53 Order: 0698 Comment: storm water discharges associated with the Property. The responsibilities of Builder under the General Permit, Order No. 2001-01, theURMP, and/or the implementing ordinances, policies and/or requirements of the City, though independent ofRECM, are the same as those for RECM as set forth in Subsections 4.6.1(a), (b) aud (c) above. The specific obligations of Builder, as they relate to this Agreement with RECM are as follows: (a) Non-Storm and Storm Water Discharges: (i) Discharges of Non-Storm Water. Builder and Builder's Representatives shall not discharge non-storm water, reclaimed water, and/or runoff containing reclaimed water, from the Property to storm water conveyances or waters of the State of California or United States except as allowed by the General Permit, Order No. 2001-01, the URMP, the Existing Approvals, and/or the implementing ordinances, policies and/or requirements of the City, as they may be amended from time to time. (ii) Discharges of Storm Water. Builder and Builder's Representatives shall not discharge storm water containing sediment or pollutants from the Property in quantities or concentrations exceeding those which would have occurred in the pre-construction condition of the Property, except as expressly authorized in a valid permit or authorization by each Governmental Agency having jurisdiction thereof. Builder shall not discharge any other contaminants in storm water that cause or contribute to the failure to satisfy a water quality objective for the receiving water as established in the General Permit, Order No. 2001-01, the URMP, and/or the implementing ordinances, policies and/or requirements of the City, as may be amended from time to time. (b) SWPPP. (i) Builder will submit a new Notice of Intent ("NOI") package to the State Water Resources Control Board on or before the earlier to occur of (a) the Close of Escrow for the Property, or (b) Builder's commencement of construction activities on the Property. (ii) Prior to the expiration of the Due Diligence Period in the Purchase Agreement, Builder shall have reviewed the existing SWPPP, determine if it is appropriate for the construction activity being or to be undertaken on the Property, and if it is in compliance with Section A of the current General Permit RECM makes no representation and/or warranties, express or implied, regarding the completeness, accuracy, and/or sufficiency of RECM's SWPPP and/or BMP's, and RECM shall not be liable for Builder's use, reliance upon, and/or interpretation thereof. If the Builder determines that the existing SWPPP is not appropriate or not in compliance, Builder shall as soon as reasonably possible, but in no event later than the expiration of the Due Diligence Period, advise RECM in writing of Builder's conclusions. If Builder Closes Escrow on the Property, thennotIaterthanfifleen(15)daysfollowingtheCloseofEscrowforthe Property and in any event prior to Builder's commencement of construction on the Property, Builder shall notify RECM of RECM/La Costs Oaks/Shea Development Deckrarion 27E17-6; 1821395.7 18 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.166001 Page: 18 of S3 Order: 0698 Comment: Builder's intent to amend the current SWPPP or develop a new SWPPP for its Property, which amendment or new SWPPP for Builder's Property shall be completed within forty-five (45) calendar days of such determination, which shall be subject to RECM's prior written consent in its reasonable discretion and shall be at least as restrictive as the existing SWPPP. Such consent shall not be interpreted as a determination that Builder's SWPPP is adequate, and shall not cause RECM to be liable for, or estop RECM from filing a claim against Builder, for any deficiencies, omissions or errors in the Builder's SWPPP. (iii) Builder shall implement BMP's in accordance with the time schedule provided in RECM's SWPPP, to prevent and reduce erosion, to control sediment, and to prevent the discharge of non-storm water and contaminated storm water as set forth in RECM's SWPPP. To the extent the requirements of Builder's SWPPP and RECM's SWPPP are different, Builder shall be required to satisfy most rigorous requirements set forth in both plans. , (iv) Builder shall audit all of Builder's Representatives to ensure compliance with the site and trade specific BMP's as set forth in all applicable SWPPPs and then current rules, permits, regulations, ordinances and policies. (c) Builder shall comply with any requirements of the Regional Water Quality Control Board with respect to Order No. 2001-01 to the extent applicable to Builder and shall comply with the requirements of the City as a co-permittee pursuant to such order as may be imposed upon Builder or RECM with respect to an URMP following completion of construction. Upon adoption by the City, any and all URMP's may be imposed upon Builder through requirements of the City or requirements imposed by the Community Declaration or any applicable subassociation governing the Property. (d) Pollution Monitoring and Sampling Program: (i) As of August 1, 2001, Resolution No. 2001-046 of the California Regional Water Quality Control Board requires all SWPPPs to have a program in place to monitor and sample storm water discharge for silt, sediment and non-visible pollutants. (ii) RECM has established a Monitoring and Sampling Program ("Monitoring and Sampling Program") for discharges of storm water from the portions of La Costa Oaks still subject to its ownership, which includes streets, sidewalks and common areas. (iii) Builder shall establish a written Monitoring and Sampling Program for all water that discharges from the Property. Within fifteen (15) days following the Close of Escrow for the Property and in any event prior to the commencement of construction on the Property, Builder shall either (a) engage the services of an independent storm water management consultant to advise and to assist in the development and execution of a Monitoring and Sampling Program that is found to be acceptable to RECM and that is consistent, to the maximum extent RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 *" B?.-;c-lption: San Diego,CA Document-Year.DocID 2003.766001 Page: 19 of 53 Order: 0698 Comment: possible, with the priorities, guidelines, criteria and regulations set forth in the General Permit and Existing Approvals; or (b) elect to coordinate its Monitoring and Sampling Program with RECM's program by contracting with RECM's storm water management consulting firm. The Builder's Monitoring and Sampling Program shall be subject to RECM's prior written consent, in its reasonable discretion. Such consent shall not be interpreted as a determination by RECM that the Builder's Monitoring and Sampling Program is adequate, and shall not cause RECM to be liable for, or estop RECM from filing a claim against Builder, for any deficiencies, omissions or errors in the Builder's Monitoring and Sampling Program. (e) Subsequent Purchasers. Builder shall impose on any subsequent purchaser of the Property, including but not limited to a residential purchaser, as applicable, the obligation to comply with RECM's SWPPP, RECM's BMP's, the General Permit, Order No. 2001-01, the URMP, the Existing Approvals, and/or the implementing ordinances, policies and/or requirements of the City, as they may be amended from time to time. RECM shall not be liable for any failures by a subsequent purchaser of the Property to comply with the foregoing requirements, and Builder shall protect, defend, indemnify and hold RECM harmless for any such failure pursuant to Section 4.6.3 below. 4.6.3 Indemnity. Exclusive of and in addition to any other indemnity set forth in this Agreement, as of the date of change of ownership, Builder shall, at Builder's sole expense, indemnify, defend, and hold harmless RECM and RECM's directors, officers, employees, partners, affiliates, agents, successors, and assigns against any and all liabilities, obligations, penalties, fines, claims, actions (including remedial or enforcement actions of any kind and administrative or judicial proceedings, orders, or judgements), damages (including consequential and punitive damages), and costs (including attorney, consultant, expert fees and expenses, and Builder's fees) arising from any acts or omissions attributable to Builder and/or any Builder Representatives, whether intentional or negligent, that result in any violations and/or losses arising out of or resulting from discharge of storm water containing sediment from the Property to the La Costa Oaks or to the waters of the State of California or United States b quantities or concentrations exceeding those which would have occurred in the pre-construction condition of the Property and/or the discharge of any other contaminants in storm water that cause or contribute to the failure to satisfy a water quality obj ective for the receiving water as established in the San Diego Regional Water Quality Control Board Plan; save and except claims or liability arising through the sole negligence or willful misconduct (as provided by California Civil Code Section 2782) of RECM or its agents, employees or assigns. This indemnification applies whether or not the concentrations of any such contamination is material, the concentrations exceed state or federal maximum contaminant or action levels, or any government agency has issued a cleanup order. Failure to defend may, at the sole discretion of RECM, be grounds for termination or suspension by the RECM of the Agreement as provided herein. This indemnification shall extend to claims, damages, liabilities, judgments, demands, and losses and expenses that occur before and after completion of the construction, marketing and sale of the Property and until such claims are absolutely barred by any applicable statute of limitations. This indemnity is included in the indemnification provisions of Section 113 of this Declaration. RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1S21395.7 20 5/14/03 Description: San Diego,CA Document-year.DocID 2003.766001 Page: 20 of 53-- Order: 0698 Comment: 28021 4.7 Maintenance or Warranty Program. Builder shall adopt and thereafter administer a homeowner maintenance or warranty program to cover the construction of all Residences. Such maintenance or warranty program shall be submitted to RECM for review and approval, and thereafter shall not be revised without the prior written approval of RECM. RECM, in reviewing any maintenance or warranty program assumes no liability or .responsibility for any maintenance or warranty expressed or implied by such program. Approval by RECM is not an acknowledgment that such maintenance or warranty program is sufficient for Builder's homebuyers or that the maintenance or warranty program is in conformance with existing laws, statutes or regulations. ARTICLES CABLE TELEVISION; DIGITAL COMMUNICATIONS 5.1 Cable Television and Master Antennae System. Except as expressly authorized by Federal or State law, no television, cellular, digital, radio, satellite dish or other electronic antennae or device of any type shall be constructed, erected or otherwise placed on any portion of the Property without RECM's prior written consent, which may be withheld in its sole and absolute discretion. Except as expressly authorized by Federal or State law, no cable television or radio system or other equipment for the purpose of emitting or receiving or distributing any form of electromagnetic emission in any form shall be permitted on the Property. 5.2 Residence Wiring Requirement/Standards. Builder shall install and pre-wire all Residences strictly in accordance with the "Villages of La Costa 'Low-Voltage' Pre-Wiring Guidelines" dated October, 2002 and prepared by the Broadband Group (and any amendment thereto) as a standard feature (not as an option or upgrade) prior to the Qualifying Sale of a Residence. ARTICLE 6 MASTER MARKETING PROGRAM 6.1 Marketing Program. Builder acknowledges and agrees that the Property is an integral part of La Costa Oaks and that the successful marketing of Residences in the Property depends, in part, upon the development of a master marketing program for all of La Costa Oaks ("Master Marketing Program") by RECM. Accordingly, Builder hereby agrees to participate in the Master Marketing Program on the terms and conditions set forth herein. Builder further agrees that, with respect to any marketing activities undertaken by Builder, Builder shall comply with the Master Marketing Manual. The Master Marketing Program shall be administered by RECM, or its successor, in its sole business discretion. Such program shall include marketing for all of La Costa Oaks and may, at the sole discretion of RECM (a) refer to facilities and housing products other than those to be constructed on the Property and (b) not refer specifically to the Residences constructed RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 21 5/14/03 Description: San Diego,CA Document-year.DocID 2003.766001 Page: 21 of S3 Order: 0698 Comment: by Builder on the Property. Builder's failure to comply with the Master Marketing Programs shall constitute a default under this Declaration. All Qualifying Sales of Residences shall be accomplished through a sales escrow at an escrow company authorized to do business in California and selected by Builder, in its sole discretion ("Residence Escrow Company"), provided that Builder shall deliver written notice to RECM within ten (10) days of its selection of the Residence Escrow Company. 6.2 RECM's Approval of Builder's Marketing Program. In addition to Builder's compliance with the Master Marketing Program, Builder shall develop and implement its own marketing program for the Residences that Builder develops on the Property ("Builder's Marketing Program"). Builder's Marketing Program shall be coordinated with the Master Marketing Program and shall, at all times, conform to the guidelines set form in the Master Marketing Program. Builder shall not offer Residences for sale or lease to the public unless and until Builder has obtained RECM's written approval of Builder's Marketing Program. Builder's Marketing Program shall include, without limitation (a) Builder's marketing goals and strategies, (b) the name(s) and logo(s) under which the Property is to be marketed and (c) Builder's overall plan for any magazines, newspapers, brochures, billboards, press releases, collateral and promotional materials, and other forms of advertising pertaining to the Property. RECM's review and approval shall be limited to insuring that Builder's Marketing Program complies with the Acquisition Documents and the Master Marketing Program and the RECM overall development plan for La Costa Oaks. If requested by RECM, Builder shall provide a copy of all distribution and/or publication materials to RECM, as soon as available. Builder shall resubmit to RECM for its approval any advertisements or promotional materials which deviate from the previously submitted Builder's Marketing Program. By approving Builder's Marketing Program, RECM assumes no liability for its compliance with applicable laws and regulations, or the accuracy of any representations made therein. Builder shall indemnify, protect, defend (with counsel acceptable to RECM), and hold RECM harmless from all liability arising from Builder's Marketing Program and Builder agrees that such indemnity is included in the indemnification provisions of Section 11.3 hereof. Notwithstanding the foregoing, Builder shall not be obligated to indemnify RECM for any losses, damages, liabilities, costs and expenses arising from or attributable to any disclosures required to be included verbatim by RECM within Builder's disclosure materials or Marketing Program materials; provided such disclosures are • included by Builder in strict accordance with RECM's written instructions. i 6.3 Names of Neighborhood. In connection with the marketing and development of Residences on its Property, Builder shall be obligated to refer to its neighborhood by the names and, if applicable, logos approved by RECM. Any marketing names, logos, or themes developed or used by Builder shall be subject to the prior approval of RECM, which approval may be withheld in RECM's reasonable discretion. 6.4 Use of La Costa Oaks Name. Any use by Builder of the name "La Costa Oaks" or any logos developed by RECM shall comply with the requirements of the License Agreement and the Master Marketing Program. RECM/La Costa Oaks'Shea Development Declaration 27817-3; 1821395.7 22 S/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 22 of 53 Order: 0698 Comment: 2SG23 6.5 Conflict In the event of any conflict between the provisions of this Article 6 and the Master Marketing Program, the more restrictive provisions shall apply. ARTICLE 7 SIGNAGE AND SALES OFFICE 7.1 Slpas. KECM shall have the right to place on the Property advertising and identification signs in conjunction with RECM's merchandising plan for La Costa Oaks. All signage installed by Builder shall conform to the requirements of the La Costa Oaks Design Guidelines and the Master Marketing Program. As more particularly specified in the La Costa Oaks Design Guidelines, Builder may place advertising signs (a) on the Property or elsewhere in La Costa Oaks only after RECM's prior written approval of the location, content and appearance thereof, and (b) outside La Costa Oaks only after RECM's prior written approval of the location, content and appearance thereof. Except as provided in the preceding sentence, Builder shall not place or display any other signs, flags, displays or other such marketing devices pertaining to the Builder's development anywhere within La Costa Oaks. Notwithstanding the foregoing, it shall be Builder's sole expense and obligation to obtain approval of all signage as may be required by applicable law, including the City's Sign Ordinance. 7.2 Right to Remove Sienage. In addition to the remedies of RECM set forth in the Payment and Performance Agreement, in the event Builder installs any signage not approved under this Declaration, and Builder fails to remove such signage within ten (10) days after request therefor by RECM, RECM shall have the right to enter onto the real property on which the sign is installed and remove the sign and the costs of removal, together with an administrative charge equal to fifteen percent (15%) of RECM's removal costs, shall be paid by Builder to RECM within ten (10) days after receipt of a statement therefor from RECM. Any amounts not paid when due shall bear interest from the date due at the greater annual rate of (i) ten percent (10%) or (ii) Prime plus two percent (2%), but not to exceed the maximum rate allowed by law and may, at the election of RECM, become a lien on Builder's Property, pursuant to Section 11.1.4 of this Declaration. 7.3 Sales Office and Models. If Builder is selling Residences to members of the public under authority of a Public Report, as a material part of its marketing program, Builder shall install and operate the following on the Property in accordance with the requirements of this Development Declaration and the La Costa Oaks Design Guidelines: 7.3.1 A sales office that is either a freestanding building or is within a Residence (or model home) that has been specifically designed as a sales office. The location and design of the sales office are subject to RECM's prior approval, which approval shall not be unreasonably withheld; and RECM/La Cos* Oaks/Shea Development Declaration 27817-6; 1821395.7 23 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 23 of 53 Order: 065B Comment: 28024 7.3.2 A professionally furnished and landscaped model home or homes representative of the types of Residences being offered for sale, together with adequate parking and other features consistent with the La Costa Oaks Design Guidelines. ARTICLE 8 MASTER DECLARATION; ORE PROCESSING 8.1 Community Association Documents. Builder, by its execution of this Agreement, acknowledges receipt of the Community Declaration, Bylaws of La Costa Oaks Community Association ("Bylaws"), Articles of Incorporation of La Costa Oaks Community Association ("Articles") and the proposed budget ("Budget") for the operation of the Community Association, which documents have been or will be submitted to the California Department of Real Estate ("DRE"). (Herein, the Community Declaration, Bylaws, Articles, and Budget are collectively referred to as the "Community Association Documents.") Builder acknowledges that such Community Association Documents are subject to further modification as may be deemed reasonably necessary by RECM. RECM covenants and agrees that it will provide to Builder any changes to the Community Association Documents and Builder agrees that it will cooperate with RECM and will, upon request of RECM, promptly execute or consent to any amendments to the Community Declaration to accommodate any changes to the Community Declaration. 8.2 DRE Approvals. BuildershallnotsubmitanydocumentstotheDREunlessanduntil Builder has complied with all of the requirements set forth hi this Article, including, without limitation, obtaining the approvals from RECM set forth below. If RECM has not delivered notice of its specific approval of any of the documents listed in Section 8.2.2 (first phase submittals) within forty-five (45) days of Builder's submittal of such documents, then RECM shall be deemed to have disapproved of such documents. If RECM has not delivered notice of its specific approval of any of the documents listed in Section 8.2.3 (subsequent phase submittals) within ten (10) Business Days ofBuilder's submittal of such documents, then RECM shall be deemed to have disapproved of such documents. If Builder's submittals are deemed disapproved by RECM, RECM shall use commercially reasonable efforts to provide Builder with the reasons for such deemed disapproval within ten (10) Business Days after Builder inquires into the reasons for such deemed disapproval. Notwithstanding the foregoing, if after the expiration ofREQvTs review period for either first phase submittals or subsequent phase submittals Builder delivers written notice to RECM, which notice references this Section of this Agreement and that states that RECM will be deemed to have approved of the documents if RECM fails to respond to the notice within ten (10) Business Days, then RECM shall be deemed to have approved the documents after ten (10) Business Days after receipt of the notice. 8.2.1 Master File. To the extent that RECM or another Merchant Builder, has not previously submitted to the DRE a Master File, that Builder will, if so requested by RECM, submit RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 24 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 24 of 53 Order: 0698 Comment: the Master File to the DRE. As used herein, "Master File" shall mean the first DRE file which is submitted to the DRE for issuance of a Public Report in La Costa Oaks by a Merchant Builder. If Builder is selected to submit the Master File, then Builder acknowledges that the timely filing of Builder's application for a Public Report will have a material effect on the ability of all the other Merchant Builders within La Costa Oaks to process their applications for a Public Report. Accordingly, Builder agrees that RECM shall have the right to control the timely filing of the Master File by Builder. If RECM selects Builder to submit the Master File, Builder agrees that it will submit the Master File by the date which is the later of (a) fifteen (15) days after receipt by Builder of the RECM DRE documents. As used herein, the term "RECM DRE Documents" shall mean, the Declaration of Covenants, Conditions and Restrictions of La Costa Oaks, Bylaws of La Costa Oaks Community Association, Articles of Incorporation of La Costa Oaks Community Association, Form Subsidy Agreement, Budget for the La Costa Oaks Community Association, and any other documents required to be submitted by RECM in connection with the first submittal of a Builder's application to the DRE or (b) thirty (30) days after RECM's selection of Builder to submit the Master File. Builder agrees that it will, upon receipt of any notices or deficiencies from the DRE relating to the Master File, immediately, but no later than three (3) Business Days after receipt deliver copies of such notices or deficiencies to RECM and any other designated representatives of RECM. Builder further agrees that it will, within ten (10) Business Days of issuance of any such notices or deficiencies from the DRE promptly respond thereto (but no later than fifteen (15) Business Days thereafter) so as to complete the expeditious filing and approval of the Master File. To the extent that any deficiency from the DRE relates to items prepared by RECM, then Builder shall cooperate with RECM in responding to any such deficiency if Builder fails to perform its obligations [ hereunder, then in addition to RECM's other remedies hereunder, RECM shall have the right to designate another Merchant Builder to submit the Master File and in such case Builder shall cooperate in the transition of the Master File to the other Merchant Builder. 8.2.2 First Phase Documents. Prior to the submittal of the first phase of Builderls application with the DRE, Builder shall submit to RECM, for its review and approval, the following documents: i (a) A Phasing Plan designating all of the proposed Phases within the | Property and designating any real property to be conveyed in fee title to the Community Association ("Community Association Property") and any Common Maintenance Areas (i.e., easement areas) within the Property. The Phasing Plan should be color-coded to designate each of these Phases; (b) A Preliminary Title Report covering the first phase; (c) A copy of any Sample Homeowners Grant Deeds for the phase; (d) A copy of theRECMSupplementary Declaration Questionnaire which will be provided by RECM; RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 25 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.755001 Page: 25 of 53_ Order: 0698 Comment: (e) A copy of Builder's proposed Deposit Receipt, Offer to Purchase Property and Escrow Instructions; (f) A copy of Builder's proposed Disclosures; (g) A copy of Builder's proposed form of Subsidy Agreement pursuant to tbe terms of which Builder shall subsidize the Regular Assessments so that no homeowner shall pay more or less than $200 per month for the 12 month period commencing on the date of annexation of the Property into the Community Association; provided however that the actual assessment of the Regular Assessments is not less than $200 per month and if the actual assessment is less than S200 per month, then each homeowner shall pay the actual assessment amount without any subsidy by Builder, (h) A copy of any notices of special tax which Builder will be delivering to its prospective purchasers; (i) A copy of the 624 Application completed by Builder, and (j) Any other documents reasonably requested by RECM. 8.2.3 Subsequent Phases. In connection with the request for issuance of Final Subdivision Public Reports or Conditional Public Reports by the DRE for any subsequent Phases, Builder shall submit the following documents: (a) A legal description of the real properly included in the applicable Phase; (b) A Preliminary Title Report covering the Phase; and (c) Blacklined copies of any changes that Builder has made in connection with the then-current Phase to any of the documents Builder submitted with its first phase. 8.2.4 Subsidy Obligations. Builder shall subsidize the regular assessments otherwise levied by the Community Association under the Community Declaration payable by homeowner so that no homeowner shall pay more or less than the amount specified in Subsection 8.2.2{g) above per month for a period of one (1) full year following annexation of such Residence to the Community Association. Builder may elect to further extend the duration of the subsidy (but shall not change the required amount), provided Builder obtains the prior approval of RECM. Builder shall be required to use the form of Subsidy Agreement submitted by RECM to the DRE. If Builder desires to make any changes to the form of Subsidy Agreement provided by RECM to Builder, Builder shall provide a blacklined copy of the Subsidy Agreement Form to RECM for its prior review and approval. RECM/LB Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 26 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 26 of 53 Order: 0698 Comment: - • 8.2.5 Alternative Dispute Resolution Procedures. Builder acknowledges and agrees that the Community Declaration sets forth an Alternative Dispute Resolution procedure for the resolution of disputes in Article 15 of the Community Declaration. RECM makes no warranties or representations regarding the enforceability of the Alternative Dispute Resolution provisions. Builder acknowledges that RECM shall have the right to review and approve any dispute resolution procedures set forth by Builder in its sales documents. If requested by RECM, Builder shall provide to RECM a summary or analysis of any Alternative Dispute Resolutionprocedure utilized by Builder and any differences in such Dispute Resolution procedures from the provisions set forth by RECM in the Community Declaration. 8.2.6 Cooperation With Amendments. Builder has acquired the Property subject to the Community Declaration or subject to the right of RECM to annex the Property to the Community Declaration and has, prior to its acquisition of the Property received and reviewed and approved the other Community Association Documents. Builder acknowledges that such Community Association Documents are subject to further modification, including without limitation, modifications required to conform with the regulatory requirements of the DRE or for any changes in law or other regulatory requirements. RECM covenants and agrees that it will provide to Builder any changes to the Community Association Documents and Builder agrees that, notwithstanding anything to the contrary contained herein, it will acquire and accept the Property, subject to the • Community Association Documents, as such documents may be modified or amended from time to time by RECM ("Community Association Document Amendments"). RECM shall endeavor to provide a copy of all Community Association Document Amendments to Builder, but Builder will not have the right to approve any Community Association Document Amendment Builder shall cooperate fully with RECM in finalizing and recording all the Community Association Document Amendments. Such cooperation shall include, without limitation: (a) providing any signatures or consents requested by RECM to (i) accommodate any changes to the Community Association Documents required by the DRE or other Governmental Agencies or (ii) as RECM may otherwise deem to be necessary or appropriate, and (b) promptly signing, if requested by RECM, all Community Association Document Amendments to be recorded and causing all persons and entities with liens or encumbrances against the Property that were imposed as a result of Builder's actions to sign such consents and subordination documents as RECM's title insurer may require to insure the continuing record title priority of the Community Declaration or other applicable recorded document Any consents or approvals or other documents shall be delivered to RECM within ten (10) days after request therefor by RECM. Builder acknowledges that the Community Declaration may encumber all or a portion of La Costa Oaks, but that RECM reserves the right not to make all or any portion thereof subj ect to the Community Declaration. 8.2.7 Supplementary Declarations. As a condition to the issuance of a Public Report, Builder will be required, even if Builder's property is already subject to the Community Declaration, to obtain approval from the DRE and record a Supplementary Declaration in a form prepared by RECM. Builder shall comply with any and all procedures established by RECM in RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 27 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 27 of 53 Order: 0698 Comment: connection with the request for issuance of a Supplementary Declaration including, without limitation, strictly complying with the requirements set forth above. Builder shall be solely responsible for preparing any subordinations required to establish the lien of the Supplementary Declaration as senior to any deeds of trust or other encumbrances encumbering Builder's Property. The obligations of RECM under this Section shall remain in effect only so long as RECM is the Declarant under the Community Declaration. The Supplementary Declarationmay also include such other additions, modifications and easements as may be deemed necessary by KBCM in connection with La Costa Oaks. 8.2.8 Subdivision Processing. All subdivision processing through the DRE shall be conducted through Chicago Title Company or such other subdivision processor approved by RECM (the "Subdivision Processor"). The costs for such subdivision processing shall be borne by Builder. 8.2.9 No Liability. The review and approval by of any materials submitted to it under this Article 8 shall not be deemed to be an acknowledgment by RECM that the submitted materials conform with existing laws, statutes, and regulations or that the documents are accurate or enforceable. Without limiting the generality of the foregoing, review by RECM of any Public Reports or use by Builder of any disclosures provided by RECM or compliance by Builder with any disclosure requirements shall not constitute approval by RECM of the accuracy of such Public Report or other disclosures or any other documents submitted by Builder to RECM for approval or an acknowledgment that the Public Report or disclosures or any other documents submitted by Builder to RECM for approval contain all items which should be disclosed to purchasers of Residences in La Costa Oaks. Builder shall indemnify, protect, defend (with legal counsel acceptable to RECM) and hold RECM harmless from and against any losses, damages, liabilities, costs and expenses (including, without limitation, attorneys' fees) arising from or attributable to Builder's sales and marketing program, including the accuracy of any representations or the failure of Builder to make disclosures regarding La Costa Oaks to purchasers of Residences. This indemnity is included in the indemnification provisions of Section 113 of this Declaration. Notwithstanding the foregoing, Builder shall not be obligated to indemnify RECM for any losses, damages, liabilities, costs and expenses arising from or attributable to any disclosures required to be included verbatim by RECM within Builder's disclosure materials if the disclosures are required by RECM to be included by Builder hi strict accordance with RECM's written instructions. 8.3 Disclosures. Builder acknowledges that RECM may require Builder to make certain supplemental disclosures to Builder's purchasers in addition to disclosures required in connection with the Public Report. RECM will, from time to time, provide a summary of the items which should be disclosed by Builder and Builder will prepare disclosures incorporating such information into Builder's sales program ("Required Disclosure Items"). As an accommodation only, RECM may provide to Builder sample disclosures but Builder is not obligated to use the sample disclosures. If Builder elects not to use the sample disclosures, Builder shall prepare its own disclosures incorporating the required Disclosure Items. RECM's disclosure program may require, without RECM/La Costa Oaks/Shea Development Declaration 27817-f; 1821395.7 28 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 28 of 53 Order: 0698 Comment: limitation, (i) substantive disclosures to potential purchasers of all or any portion of the Property, and/or (ii) the requirement that Builder include an acknowledgment and acceptance provision in all deposit receipt contracts or any similar agreements contemplating the sale or transfer of any portion of the Property. Builder shall, upon request of RECM, provide to RECM copies of any sales documents prepared by Builder and executed by potential purchasers. Builder's Public Reports covering the Property shall be required to contain any disclosures required from time to time by RECM. However, any disclosures provided by RECM shall not limit the obligation of Builder to make its own investigations and determinations regarding those matters which should be disclosed by Builder. RECM shall indemnify, protect, defend (with legal counsel reasonably acceptable to Builder) and hold Builder harmless from and against any losses, damages, liabilities, costs and expenses (including reasonable attorneys' fees) directly arising solely from any disclosures required by RECM to be included verbatim within Buildefs sales program or Public Report disclosure materials; provided that such disclosures are included by Builder in strict accordance with RECM's written instructions. 8.4 Transfer of Voting Rights. Builder hereby irrevocably transfers to RECM with foil power of substitution, as the true and lawful attorney, agent and proxy of Builder, all of the voting rights to which Builder is or will be entitled, coupled with an interest, for and in the name,.place and stead of Builder, to vote upon any and all matters which may lawfully come before the "Members" of the Community Association (as such term is defined in the Community Declaration). Builder acknowledges that RECM has significant interests and rights to protect under the Community Declaration and that this proxy is given to protect such interests and to further secure Builder's duties under the Community Declaration and the Acquisition Documents. The proxy granted herein shall be irrevocable by Builder and shall terminate with respect to voting rights under the Community Declaration attributable to each individual Residence on the Property when the individual Qualifying Sale of a Residence occurs. Builder further acknowledges that RECM may, at any time, terminate this transfer and quitclaim to Builder the full right and authority to cast such votes thereafter. The proxy granted to RECM pursuant to this Section shall not be construed as an assumption by RECM of any liability whatsoever resulting from or arising out of Builder's activities in connection with the ownership or development of, construction upon or resale of the Property and Builder shall indemnify, protect, defend (with legal counsel acceptable to RECM) and hold RECM harmless from and against any and all losses, claims or other liabilities arising from Builder's activities in connection therewith in accordance with Sections 11.2 and 113 below. RECM/La Costa Oaks'Shea Development Declaration 27817-6;1821395.7 29 S/14A53 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 29 of S3 Order: 0698 Comment: B3030 ARTICLE 9 PUBLIC FACILITIES FINANCING DISTRICTS Builder acknowledges that the Property is presently encumbered by and subject to (1) the City-wide CFD No. I, (2) the San Dieguito Union School District CFD No. 94-2 and (3) the Olivenhain Municipal Water District Assessment District No. 96-1 (collectively the "Districts"). Builder shall not take any action which would in any way interfere with the operation of the Districts or decisions made or actions taken by RECM with respect to the Districts or the bond financing relating thereto, including, without limitation, the timing of commencement of Impositions any charges, special taxes or assessments, the amount of any charges, special taxes or assessments Impositions, the allocation of any charges, special taxes or assessments and the use of any charges, special taxes or assessments the Impositions so collected by the Districts. ARTICLE 10 CONVEYANCE OF EASEMENTS AND FEE INTERESTS IN LOTS 10.1 Easements to RECM. In addition to an v easements created or reserved under any of the Acquisition Documents, RECM shall have an easement on, under, through and across the Property for the purpose of completing RECM's Improvements required to be completed under the Payment and Performance Agreement and for the purpose of performing any obligations or exercising any rights of RECM under the Existing Approvals and this Development Declaration. Upon (he completion of RECM's Improvements and such other purposes as are necessary for RECM's development of the La Costa Oaks and the expiration of all warranty periods and maintenance obligations of RECM with respect to such RECM's Improvements, RECM's right of entry herein granted shall terminate. Builder shall not directly or indirectly interfere with RECM in performing its obligations under the Existing Approvals and Acquisition Documents. The foregoing easements and rights of entry are in addition to any and all easements and rights of entry authorized and reserved in the Community Declaration. RECM shall use its commercially reasonable efforts to use such easements in a manner so as not to unreasonably interfere with Buyer's development of the Property. 10.2 Easements Under Master Final Subdivision Map. Builder acknowledges and agrees that, subsequent to the conveyance of the Property to Builder, RECM intends to file and record one or more additional Final Subdivision Tract Maps for La Costa Oaks. Builder acknowledges that, prior to the recordation of any future Final Subdivision Tract Map and/or prior to the acceptance of any dedications by the City or other Governmental Agencies required in connection with the recordation of future Final Subdivision Tract Maps, it may be necessary for other builders within La Costa Oaks to obtain utility easements, limited construction easements or other rights of entry over the Property in connection with the development of such other parcel(s) for the construction of fences and similar improvements. Builder agrees that it will grant, at no cost to RECM or such other RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 30 5/14/03 Description: San Diego,CA Cocument-rear.DocID 2003.766001 Page: 30 of S3 Order; 06S8 Comment: 28031 builders within the La Costa Oaks, utility and construction easements on, over, through, under and across the Property, for access, utility or such other purposes as are reasonably necessary for the development of such other parcels in La Costa Oaks. 10.3 Conveyance of Property to Community Association. Certain areas within the Property may have been designated or reserved in fee Existing Approvals for future conveyance to the Community Association as easements. Builder covenants and agrees that it will convey to the Community Association any such areas as easements without cost or expense to the Community Association or RECM. Until such areas are conveyed, Builder shall have responsibility to maintain such portions of the Property in accordance with the maintenance requirements of this Declaration, the Existing Approvals and the other Acquisition Documents. Such conveyance shall be made within seven (7) days after request therefor by the applicable Governmental Agency or RECM. Any property to be conveyed to the Community Association shall be conveyed in accordance with any phasing requirements of RECM under the budget submitted by RECM to the DRE. ARTICLE 11 REMEDIES 11.1 Enforcement of Restrictions. The covenants, restrictions and limitations of this, Declaration shall be subject to the additional provisions set forth below. 11.1.1 General Purpose and Constructive Notice. The terms and conditions of this Declaration shall run and pass with each and every portion of the Property and shall be binding upon Builder, its successive owners and assigns, and shall benefit the Benefitted Property. Every person or entity who now or hereafter owns or acquires any right, title or interest in or to any portion of the Property is and shall be conclusively deemed to have consented and agreed to every restriction, provision, covenant, condition, right and limitation contained herein, whether or not any reference to this Declaration is contained in the instrument by which such person or entity acquired an interest in the Property. 11.1.2 Inspection. RECM or its authorized representatives may from time to time, at any reasonable hours, enter upon and inspect the Property and any improvements thereon to verify compliance with the Existing Approvals, Acquisition Documents and this Declaration. 11.1.3 Defaults. The occurrence of any of the following shall constitute a default under this Declaration: (a) The failure of Builder to pay any amounts when due under this Declaration; and RECM/La Costa Oaks/Shea Development Declaration 27Bt7-6;1821395.7 31 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 31 of 53 Order: 06S8 Comment: (b) For any non-monetary defaults for which a time period for cure has been provided in this Declaration, Builder shall be in default if Builder fails to cure such default within the time periods specified in this Declaration; and/or (c) For any non-monetary defaults for which no time period for cure or performance has been specified in this Agreement, Builder shall be in default if Builder has not effected a cure within ten (10) days after delivery of a notice specifying the breach from RECM; provided, however, in the case of such a breach of any of Builder's obligations hereunder which is not capable of being cured within said ten (10) day period, no default shall be deemed to have occurred so long as Builder commences to cure such default within said ten (10) day period and thereafter diligently and continuously prosecutes the same to a conclusion; provided, however, that in no event shall such cure period extend for a period beyond sixty (60) days from the initial notice of default. 11.1.4 Remedies. In the event of a default by Builder, RECM shall have all the following remedies: (a) Damages. RECM may bring a suit for damages for any compensable breach of or noncompliance with any of the terms of this Declaration, a suit for declaratory relief to determine the enforceability of any of the terms of this Declaration and any other legal or equitable remedy available at law or equity. (b) Equity. Builder acknowledges that its Default may cause RECM to suffer material inj ury or damage not compensable in money and that RECM shall be entitled to bring an action in equity or otherwise for specific performance to enforce compliance with the terms of this Declaration, or bring an action for an injunction to enjoin the continuance of any such breach or violation thereof. (c) Lien. Any amounts payable to RECM by Builder hereunder which are not paid when due together with interest, costs and reasonable attorneys' fees incurred by RECM in connection with such costs, shall be the personal obligation of the Builder. RECM may bring a suit or suits at law to collect such obligations. Any judgment rendered in any such action shall include a sum for reasonable attorneys' fees in such amount that the Court may adjudge against Builder. In addition to the foregoing, upon the filing of a notice of delinquent assessments hi the Office of the County Recorder, such amounts shall be a charge on the land and a continuing lien upon the Property. Said lien shall be for the use and benefit of RECM and may be foreclosed by any sale conducted under California Civil Code, Sections 2924,2924(b) and 2924(c) or through judicial foreclosure. 11.1.5 Remedies Cumulative. The remedies of RECM contained in this Declaration shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and RECM/La Costa Oaks/Shea Development Declaration 27817-$; 1821395.7 32 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 32 of 53 Order: 0698 Comment: RECM shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law or equity, whether or not stated in this Agreement. 11.2 Release. 11.2.1 Release by RECM. RECM may release any portion of the Property from the lien of this Declaration at any time and for any reason without the Builder's approval Upon fee Qualifying Sale of a Residence by Builder (but not upon the sale of four (4) or more Residences to any person or entity for resale to the public), this Agreement shall automatically be released from the Lot on which the Residence is located. 11.2.2 Quitclaim Deed. RECM agrees that it shall deliver to Builder for use at the closing of a Qualifying Sale of a Residence, within five (5) days after receipt of a written request therefor, a quitclaim deed in recordable form conveying all interests ofRECM under this Declaration in each legal lot as to which Builder requests release from this Declaration, upon the occurrence of any of the following: (a) delivery to RECM of a copy of a valid certificate of occupancy certifying that each legal parcel which Builder desires to release from this Declaration for purposes of a Qualifying Sale of a Residence has been, or, prior to the closing, will be, improved with a single family residence and RECM's reasonable satisfaction that such improvementshavebeen constructed in accordance with the plans for the legal parcel submitted by Builder to RECM pursuant to the terms of this Declaration. (b) the Expiration Date of this Declaration. 112.3 Recording ofRelease. Any release of a Residence or any other portion of the Property from the lien of this Declaration shall be executed by RECM and upon recordation in the County's official records, the Residence or other property described in such release shall no longer be deemed a part of the Property and shall be free of all of the terms and provisions of this Declaration. 11.3 Indemnity and Waiver. 11.3.1 No Liability ofRECM. Except as provided in Section 1133 below, to the maximum extent permitted by law, RECM and RECM's past, present and future employees, partners, officers, directors, shareholders, parents, affiliates, members, managers, agents, contractors, consultants, and its representatives (including without limitation Morrow Development, Inc. and representatives (collectively ("RECM's Agents")) and its and their respective successors and assigns (collectively, the "Indemnitees") shall not be liable for any loss, damage, injury or claim of any kind or character to any person or property arising from or caused by (i) the condition of the Property, the development or use of the Property and/or the construction, use or sale or other conveyance of RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 33 5/14/03 Description: San Diego,CA Document-Year.DocXD 2003.766001 Page: 33 o£ 53 Order: 065B Comment: 28034 Residences or other improvements, (ii) a representation by Builder or Builder's Representatives, (iii) a defect in the design or construction of any improvement on the Property or the physical condition of the Property, including, without limitation, grading of the Property or land adjacent to the Property, whether performed by RECM before or after the date of conveyance of the Property to Builder and any surface and subsurface conditions, (iv) the presence on the Property of any threatened or endangered species, or any archaeological sites, artifacts or other matters of archaeological significance, (v) any act, omission or representation of Builder or any of Builder's Agents, employees, licensees, invitees or contractors, (vi) an accident or casualty on the Property caused by or attributable to Builder's or Builder's Representatives acts or omissions on the Property, (vii) any breach by Builder in the performance of its obligations under this Declaration or the other Acquisition Documents or in connection with any disclosures or the failure of Builder to make any disclosures pursuant to Article 2 of this Declaration or (viii) the application of the principles of strict liability in connection with the Property, (ix) a violation or alleged violation by Builder, its employees or agents of any law now or hereinafter enacted, (x) a slope failure or subsurface geologic or groundwater condition, (xi) the design, construction, engineering or other work with respect to the Property or La Costa Oaks or the construction of Residences or any other improvements thereon provided or performed by or caused by or attributable to Builder or Builder's Representatives either before or after the Close of Escrow, (xii) the act or failure to act of any homeowner of any of the Residences or other portions of the Property (whether or not any of the Indemnitees are on the board of directors of such association or are on a committee thereof or are an officer, agent or representative thereof), (xiii) failure of any purchaser or transferee of any portion of the Property, including, without limitations, purchasers of Residences and any homeowner association to be given any disclosure or information as required to be given to such purchaser or transferee by law, (xiv) the delivery of the Natural Hazards Disclosure Statement, (xv) any other cause whatsoever in connection with Builder's use of the Property or Builder's performance under this Declaration or the other Acquisition Documents or a breach by Builder of any obligation under this Declaration or the other Acquisition Documents, (xvi) any Hazardous Substances Effects (as defined in Section 7.102 of the Purchase Agreement), (xviii) the impact of all Governmental Actions, Governmental Fees or other matters affecting the Property, or the timing, cost or improvement thereof, (xix) RECM^ failure to disclose any information concerning natural hazard areas, any construction defects, errors, omissions or other conditions, latent or otherwise, geotechnical and seismic, affecting the Property or any portion thereof including, without limitation, environmental matters which were: (a) described or referred to in the environmental report(s) or in any environmental audit obtained by Builder, or (b) reasonably discoverable by prudent investigation during the due diligence period or at any time prior to the Close of Escrow; or (c) otherwise disclosed by RECM to Builder or discovered by Builder at any time prior to the Closing, and/or (xx) any acts or omissions attributable to Builder, Builder's subsequent purchasers, and/or any Builder Representatives, whether intentional or negligent, that result in any violations and/or losses arising out of or resulting from discharge of storm water containing sediment from the Property to La Costa Oaks or to the waters of the State of California or United States in quantities or concentrations exceeding those which would have RECM/La Costa Oaks/Shea Development Declaration 27S17-«;18213?5.7 34 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 34 of 53 Order: 0698 Comment: 28035 occurred in the pre-construction condition of the Property, and/or the discharge of any other contaminants in storm water that cause or contribute to the failure to satisfy water quality obj ectives for the receiving water as established in the San Diego Regional Water Quality Control Board Plan (collectively the "Assumed Risks"). 11.3.2 Release: Indemnification. Except as specifically provided in Section 11.3.3 below, Builder, for itself and for the Builder's Representatives, hereby releases, waives, discharges, covenants not to sue, indemnifies, protects, defends (with legal counsel acceptable to RECM) and agrees to hold harmless RECM and its Indemnitees, and each of them, from and against any and all liabilities, losses, damages, actions (including but not limited to remedial or enforcement actions of any kind and administrative or judicial proceedings, orders and/or judgments), causes of action injuries, claims, costs and expenses (including, without limitation, reasonable attorneys' fees and costs) except fees and costs of enforcing this indemnity of any kind or character to any person or property arising from, related to or caused by the Assumed Risks. The foregoing waiver and indemnity shall apply to any claim or action brought by a private party or by a Governmental Agency under any statute or common law now or hereinafter in effect and is intended to apply with respect to loss, damage, injury or claim arising before or after the conveyance of all of the Residences on the Property. With respect to design, construction methods, materials, locations and other matters for which RECM has given or will give its approval, recommendation or other direction, the foregoing waiver and indemnity shall apply irrespective of RECM's approval, recommendation or other direction. Builder agrees that the above waiver and release extends to all claims of any nature and kind whatsoever, known or unknown, suspected or unsuspected. BUILDER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS LEGAL COUNSEL AND, FOR ITSELF AND FOR THE BUILDER'S REPRESENTATIVES, SUCCESSORS AND ASSIGNS, WAIVES THE BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASES, WHICH IF KNOWN BY HIM MUST HAVE ...... MATERIALLY 'AFFECTED HIS SETTLEMENT WITH THE DEBTOR." BUILDER'S INITIALS The indemnification as it relates to Section 11.3.1(xvi) above, applies whether or not the concentrations of any such contamination is material, the concentrations exceed state or federal maximum contaminant or action levels, or any government agency has issued a cleanup order. Failure to defend any of the Assumed Risks may, at the sole and absolute discretion of RECM, be grounds for termination by RECM of the Declaration. This indemnification shall extend to claims, RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.6 35 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 35 of 53 Order: 0698 Comment: ^ ' 38036 damages, liabilities, judgments, demands, and losses and expenses that occur after completion of construction, marketing and sale of the Property and until such claims are absolutely barred by any applicable statutes of limitation. Notwithstanding anything to the contrary set forth in this Section, nothing contained in this Section shall operate to relieve RECM or the other Indemnitees from (a) RECM's obligations under this Declaration and the Payment and Performance Agreement or (b) any loss, damage, injury or claim found by a court of competent jurisdiction to have been caused solely by the gross negligence or willful misconduct of RECM or the other Indemnitees (but the act or failure to act of any consultant, contractor, or other agent or representative of RECM or any Indemnitee shall not be attributed to RECM or such Indemnitee). 11.3.3 Caryeout for Third Party Contractors and Consultants. Notwithstanding the provisions of Sections 113.1 and 113.2, RECM's ThirdParty Contractors and Consultants (defined below) shall not be released from liability or indemnified pursuant to this Section 11.3 for negligent or defective work on the Property; provided the following conditions are satisfied by Builder (a) all obligations of Builder to release and/or indemnify RECM and any other parties contained in this Declaration shall include, without limitation, an obligation to indemnify, protect, defend and hold harmless RECM and RECM's Agents (excluding the Third Party Contractors and Consultants) to the same extent as may otherwise be provided herein, for any claims, cross claims or cross complaints filed or asserted against or involving RECM or any of RECM's Agents by any person or entity against whom Builder has filed an action or otherwise asserted a claim, (b) Builder shall have paidRECM for any self insured retentions ("SIRs") or similar deductibles that RECM may be required to pay, with respect to such claim, with respect to any insurance coverage provided by RECM on its own behalf or on behalf of RECM's Agents; (c) Builder immediately, and before proceeding against or making any claim or threat against any of the Third Party Contractors and Consultants for negligent or defective work on the Property, shall jointly notify RECM and the applicable Third Party Contractors and Consultants in writing of the claim or damage or injury and give RECM, RECM's Agents and/or the Third Party Contractors and Consultants) an opportunity to cure prior to tendering any claim and taking any action against RECM, RECM's Agents and/or any Third Party Contractor or Consultant, including without limitation the filing of any lawsuit, cross-complaint or other proceeding, whether judicial or otherwise; provided that nothing in this Section shall be deemed to impose any obligations on RECM, RECM's Agents or the Third Party Contractors and Consultants to take any action to cure; and (d) any liability accruing to, claims made against, or indemnity obligations of the Thirty Party Contractors and Consultants shall be limited to the extent such parties are liable or bear responsibility on a proportional fault basis only for negligent or defective work on the Property and the Third Party Contractors and Consultants shall not have joint and several liability. If it is adjudged by a court of competent jurisdiction, or agreed to in a settlement agreement involving the Third Party Contractors and Consultants, that the Third Party Contractors and Consultants are liable for negligent or defective work on the Property, then to the extent that it has been finally adjudicated, or agreed to in a settlement agreement involving the Third Party Contractors and Consultants that the Third Party Contractors and Consultants are liable and the proportional share of such Third Parry's Contractors and Consultants has been specified by the court in such final adjudication or in the settlement agreement, RECM shall reimburse Builder, RECM/La Costa Oaki'Shca Development Declaration 27857-6; 1821395.7 36 5/14/03 Description; San Diego,CA Document-1'ear.DocID 2003.766001 Page: 36 of 53 Order: 0698 Comment: SSO'ST within thirty (30) days of such final adjudication or execution of the settlement agreement by all parties to the settlement agreement, the same proportional percentage of any SIR paid by Builder under RECNfs insurance policy pursuant to subsection (b) above. If the Third Party Contractors and Consultants and Builder enter into a settlement agreement regarding negligent or defective work on the Property, the settlement agreement shall specify the proportional share, if any, of the Third Party Contractors and Consultants liability so that the proportional share of any SIR pai d by Builder under RECM's insurance policy pursuant to subsection (b) above can be determined. As used herein, the term "Third Party Contractors and Consultants" means the construction contractors, subcontractors, other contractors, design professionals and consultants employed by RECM or otherwise involved in the physical improvement of the Property; provided that in no event will Morrow Development, Inc. be deemed to be (or included as) aThird Party Contractor or Consultant under any circumstance, but instead Morrow will be entitled to all the same release and indemnity rights as RECM. The limited rights provided to Builder herein are personal to Builder and may not be assigned to any third parties. 11.4 Survival of Covenants. Builder covenants that this Article 11 shall survive the conveyance of the Residences that Builder constructs on the Property. 11.5 Subordination of the Lien to First Mortgages, The lien for the delinquent assessments herein shall be subordinate to the lien of any first mortgage now or hereafter placed upon the Property subject to assessment, and the sale or transfer of any of the Property pursuant to judicial or non-judicial foreclosure of a first deed of trust shall extinguish the lien of such assessments as to payment which became due prior to such sale or transfer. For purposes of this Section 11.5, the phrases "first mortgage" and "first deed of trust" shall mean the beneficiary of a deed of trust which has priority under the recording statutes of the State of California over all other deeds of trust or mortgages encumbering the Property. ARTICLE 12 TERM OF DECLARATION; AMENDMENT OF DECLARATION 12.1 Term. Unless sooner terminated by the mutual, written consent of RECM and Builder and except to the extent released pursuant to Section 11.2, this Declaration, including the covenants, conditions and restrictions contained herein shall continue to be effective for a period of thirty (30) years after the date of recordation of this Declaration. 12.2 Amendment. This Declaration may be amended only with the prior written consent of RECM and Builder. RECMTLa Costa Oaks/Shea Development Declaration 27817-6; 1821395.7 37 5/14/03 Description: San Diego,CA Document-year.DocID 2003.766001 Page: 37 of 53 Order: 0698 Comment: " ' ' •" ~ 28QS8 ARTICLE 13 GENERAL PROVISIONS 13.1 Construction ofDeclaration. The agreements contained herein shall not be construed in favor of or against either party, but shall be construed as if both parties prepared this Declaration. Builder and RECM acknowledge that they have been represented, or have had the opportunity to be represented, by counsel of their own choice. Neither Builder nor RECM is relying upon any legal advice from the other party's counsel regarding the subj ect matter thereof. B oth parties acknowledge that they understand the terms and conditions of this Declaration and the terms and conditions of all other documents and agreements executed in connection herewith and that they sign the same freely. Neither Builder nor RECM shall deny the enforceability of any provision of this Declaration or any of the other documents or agreements executed in connection herewith on the basis that it did not have legal counsel or that it did not understand any such term or condition. 132 Captions. The captions used in this Declaration are for convenience only and are not a part of this Declaration and do not in any way limit or amplify the terms and provisions hereof. 13.3 Governing Law. This Declaration and the documents in the form attached as exhibits hereto shall be governed by and construed under the internal laws of the State of California without regard to choice of law rules. This Declaration shall be deemed made and entered into and to be performed in San Diego County. 13.4 Time of the Essence. Time is of the essence of each and every provision of this Declaration and the Builder, by execution of this Declaration, specifically acknowledges the importance of observing each and every time period in this Declaration. 13.5 Successors and Assigns. Subject to the restrictions and prohibitions on assignment set forth in the Acquisition Documents, each and all of the covenants and conditions of this Declaration will inure to the benefit of and be binding upon the successors in interest of RECM and the successors, heirs, representatives and assigns of Builder. As used in this Section, "successors" means successors to the parties' interest in the Property, successors to all or substantially all of the parties' assets, and successors by merger or consolidation. 13.6 Waiver. No waiver by a party of a breach of any of the terms, covenants or conditions of this Declaration will be construed or held to be a waiver of any succeeding or preceding breach of the same or any other term, covenant or condition herein contained. No waiver of any default by a party under this Declaration will be implied from any omission by the other party to take any action on account of the default if the default persists or is repeated, and no express waiver will affect any default other than as specified in the waiver. The consent or approval by a party to or of any act by the other requiring consent or approval does not waive or render unnecessary the consent or approval to or of any subsequent similar acts. RECM/La Costa Oaksfthea Development Declaration 27817-6; IS2139S.7 38 5/I4AJ3 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 36 of 53 Order: 0698 Comment: 28Q39 13.7 Attorney's Fees. In the .event any action or proceeding shall be instituted in connection with this Declaration, including without limitation the enforcement of any indemnification obligation contained -herein;: the losing party shall pay to the prevailing party a reasonable sum-for attorneys'- fees -and.-_cp_sts incurred in bringing or defending such action or proceeding and/or enforcing any judgment granted therein, all of which shall be deemed to have accrued upon the commencement of such'action or proceeding and shall be paid whether or not such action or proceeding is prosecuted to final judgment. Any judgment or order entered in such action or proceeding shall contain a specific provision providing, for the recovery of attorneys' fees and costs, separate from the judgment, incurred in enforcing such judgment. The prevailing party shall be determined by the trier of fact based upon an assessment of which party's major arguments or positions taken in the proceedings could fairly be said to have prevailed over the other party's major arguments or positions on major disputed issues. For the purposes of this section, attorneys' fees shall include, without limitation, fees incurred in the following: (1) post-judgment motions; (2) contempt proceedings; (3) garnishment, levy, and debtor and third party examinations; (4) discovery; and (5) bankruptcy litigation. This Section is intended to be expressly severable from the other provisions of this Declaration, is intended to survive any judgment and is not to be deemed merged into the judgment. 13.8 Waiver of Right to Jury Trial. Builder and RECM hereby waive their respective rights to trial by jury of any contract or ton claim, counterclaim, cross-complaint or cause of action in any action, or proceeding, or hearing brought by either party against the other on any matter arising out of or in any way connected with this Declaration, the relationship of Builder and RECM or the Property, including any claim of injury or damage or the enforcement of any remedy under any current or future law, statute, regulation, code or ordinance. The parties also waive the right to an award of punitive damages in connection with any of the foregoing. Builder's Initials RECM's Initials 13.9 Severabiliry: Interpretation. If any phrase, clause, sentence, paragraph, section, article or other portion of this Declaration is held by any court of competent jurisdiction to be illegal, null or void or against public policy, the remaining portions of this Declaration will not be affected thereby and will remain in force and effect to the fullest extent permissible by law. This Declaration and any ambiguities or uncertainties contained in this Declaration shall be equally and fairly interpreted for the benefit of and against all parties to this Declaration and shall further be construed and interpreted without reference to the identity of the party or parties preparing this document, it being expressly understood and agreed that the parties hereto participated equally in the negotiation and preparation of this Declaration or have had equal opportunity to do so. Accordingly, the parties hereby waive the legal effect of California Civil Code Section 1654 or any successor and/or amended statute which in part states that in cases of uncertainty, the language of the contract should be interpreted most strongly against the party who caused the uncertainty to exist. RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.6 39 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 39 of 53 Order: 0698 Comment: 58040 13.7 Attorney's Fees. In the event any action or proceeding shall be instituted in connection with this Declaration, including without limitation the enforcement of any indemnification obligation contained herein, the losing party shall pay to the prevailing party a reasonable sum for attorneys' fees and costs incurred in bringing or defending such action or proceeding and/or enforcing any judgment granted therein, all of which shall be deemed to have accrued upon the commencement of such action or proceeding and shall be paid whether or not such action or proceeding is prosecuted to final judgment. Any judgment or order entered in such action or proceeding shall contain a specific provision providing for the recovery of attorneys' fees and costs, separate from the judgment, incurred in enforcing such judgment. The prevailing party shall be determined by the trier of fact based upon an assessment of which party's major arguments or positions taken in the proceedings could fairly be said to have prevailed over the other party's major arguments or positions on major disputed issues. For the purposes of this section, attorneys' fees shall include, without limitation, fees incurred in the following: (1) post-judgment motions; (2) contempt proceedings; (3) garnishment, levy, and debtor and third party examinations; (4) discovery; and (5) bankruptcy litigation. This Section is intended to be expressly severable from the other provisions of this Declaration, is intended to survive any judgment and is not to be deemed merged into the judgment. 13.8 Waiver of Right to Jury Trial. Builder and RECM hereby waive their respective rights to trial by jury of any contract or tort claim, counterclaim, cross-complaint or cause of action in any action, or proceeding, or hearing brought by either party against the other on any matter arising out of or in any way connected with this Declaration, the relationship of Builder and RECM or the Property, including any claim of injury or damage or the enforcement of any remedy under any current or future law, statute, regulation, code or ordinance. The parties also waive the right to an award of punitive damages in connection with any of the foregoing. Builder's Initials RECM's Initials 13,9 Severabilitv: Interpretation. If any phrase, clause, sentence, paragraph, section, article or other portion of this Declaration is held by any court of competent jurisdiction to be illegal, null or void or against public policy, the remaining portions of this Declaration will not be affected thereby and will remain in force and effect to the fullest extent permissible by law. This Declaration and any ambiguities or uncertainties contained in this Declaration shall be equally and fairly interpreted for the benefit of and against all parties to this Declaration and shall further be construed and interpreted without reference to the identity of the party or parties preparing this document, it being expressly understood and agreed that the parties hereto participated equally in the negotiation and preparation of this Declaration or have had equal opportunity to do so. Accordingly, the parties hereby waive the legal effect of California Civil Code Section 1654 or any successor and/or amended statute which in part states that in cases of uncertainty, the language of the contract should be interpreted most strongly against the party who caused the uncertainty to exist. RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.6 39 5/14/03 Description: San Diego, CA Document -year. DocID 2003.766001 Page: 4.0 of 53 Order: 0698 Comment: 28041 13.10 Gender and Number. In this Declaration (unless the context requires otherwise), the masculine, feminine and neuter genders and the singular and the plural include one another. 13.11 Entire Agreement. This Declaration together with the other Acquisition Documents constitutes the entire agreement between the parties pertaining to the subject matter of this Declaration, .and all prior and contemporaneous agreements, representations, negotiations and understandings of the parties, oral or written, are hereby superseded and merged herein. The foregoing sentence shall not affect the validity of any instruments executed by the parties in the form of the exhibits attached to this Declaration. 13.12 Notice and Payments. Any notice to be given or other document to be delivered by any party to the other or others under this Declaration, and any payments from Builder to RECM, may be delivered as follows: To RECM at its business office: With a copy to: With a copy to: Real Estate Collateral Management Company c/o Morrow Development, Inc. 1903 Wright Place, Suite 180 Carlsbad, CA 92008 Arm: Mr. Fred Arbuckle Facsimile No.: (760)929-2705 Telephone No.: (760) 929-2701 Real Estate Collateral Management Company c/o HFC Commercial Financial Services 2700 Sanders Road Prospect Heights, IL 60070 Attn: David A. Watts Facsimile No.: (847) 205-7450 Telephone No.: (847) 564-7355 Luce, Forward, Hamilton & Scripps LLP 11988 El Camino Real, Suite 200 San Diego, CA 92130 Attn: Ronald W. Rouse, Esq. Facsimile No.: (858)523-4307 . Telephone No.: (858) 720-6326 RECM/La Costa Oaks/Shea Development Declaration 27817-6; 182139S.7 40 5/14/03 Description; San Diego,CA Document-Year.DocID 2003.766001 Page: 41 of 53 Order: 0658 Cojnment: t S8Q4S To Builder at its business office: With a copy to: With a copy to: Luce, Forward, Hamilton & Scripps LLP 600 West Broadway, Suite 2600 San Diego, CA 92101 Attn: Lynne D. Kaelin, Esq. Facsimile No.: (619)446-8254 Telephone No.: <619) 699-2582 Shea Homes Limited Partnership 10721 Treena Street, Suite 200 San Diego, CA 92131-1039 Attn: Mr. Paul Barnes, Director Acquisition And Community Development Facsimile No.: (858) 549-0112 Telephone No.: (858) 549-3156 Hecht, Solberg, Robinson, Goldberg & Bagley LLP 600 West Broadway, Suite 800 San Diego, CA 92101 Attn: Michael A. Van Home, Esq. Facsimile No.: (619) 232-6828 Telephone No.: (619) 239-3444 Chicago Title Company 925 B Street San Diego, CA 92101 Attn: Lori Brandt, Escrow Officer Facsimile No.: (619)544-6229 Telephone No.: (619)544-6254 Chicago Title Company 925 B Street San Diego, CA 92101 Attn: Ken Cyr, Title Officer Facsimile No.: (619)544-6279 Telephone No.: (619)544-6238 Any party may from time to time, by written notice to the other, designate a different address, which shall be substituted for the one above specified. Unless otherwise specifically provided for in this Declaration, all notices, payments, demands or other communications shall be in writing and shall be deemed to have been duly given and received (i) upon personal delivery to an officer of any party or (ii) as of the third Business Day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as set forth above, or (iii) the Business Day of confirmed delivery if delivered by Federal Express or other equivalent overnight delivery system. If to Escrow Agent to: If to Title Officer to: RECM/La Caste Oaks/Shea Development Declaration 27817-6; 1821395.7 41 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 42 of 53 Order: 0698 Comment: . .._ 88041 Facsimile numbers are provided solely as an accommodation and shall not be effective for delivery of notices under this Declaration. 13.13 No Partnership or Joint Venture. Builder and RECM expressly acknowledge and agree that they are not joint venturers or partners, and do not have fiduciary duties with respect to one another, in any manner whatsoever, in connection with the acquisition, development or conveyance of the Property. The relationship of Builder and RECM under this Declaration is, and shall at all times remain, solely that of master developer and merchant builder with respect to all covenants and obligations hereunder, and RECM neither undertakes nor assumes any responsibility or duty to Builder or to any other person with respect to the Property or this Declaration) or the other Acquisition Documents, except as expressly provided in this Declaration or the other Acquisition Documents. Notwithstanding any other provision of this Declaration: (i) RECM is not, and shall not be construed as, a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of Builder and RECM does not intend to ever assume such status; (ii) RECM does not intend to ever assume any responsibility to any person for the quality, suitability, safety or condition of the Property; and (iii) RECM shall not be deemed responsible for or a participant in any acts, omissions or decisions of Builder. Builder further covenants and agrees that it will not assert the existence of any of the relationships or liabilities enumerated in Subsections (i) through (iii) hereof and will indemnify, protect, defend (with legal counsel acceptable to RECM) and hold RECM harmless from any damages, li abilities, costs or expenses (including attorneys' fees and costs) resulting from any such claim or action. 13.14 Modification. No modification, waiver, amendment, discharge or change of this Declaration shall be valid unless it is in writing and signed by the party against which the enforcement of such modification, waiver, amendment, discharge or change is or may be sought. 13.15 Joint and Several Liability. If either party consists otmore than one person or entity, the liability of each such person signing this Declaration will be joint and several. 13.16 Counterparts. This Declaration may be executed in counterparts, each of which, when taken together, will constitute a fully executed original.-. 13.17 Exhibits and Schedules. All Exhibits and Schedules attached hereto are incorporated herein by reference. 13.18 Authority. If Builder is a limited liability company, partnership, or corporation each person signing this Declaration on behalf of Builder represents and warrants that he /she has full authority to sign for the company and that this Declaration binds the limited liability company, partnership or corporation. 13.19 No Third Party Beneficiary Rights. Without limiting the generality of the foregoing subsection, RECM shall not be liable to any contractor, subcontractor, supplier, laborer, 1 architect, engineer, purchaser or any other party for services performed or materials supplied or for j ! RECM/U Costa Oaks/Shea | Development Declaration ! 27817-6; 182U95.7 42 5/l4/0j Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 43 of S3 Order: 0698 Comment: any causes of action arising out of or in connection with the construction sale or other conveyance of improvements on the Property. RECM shall not be liable for any debts or claims accruing in favor of any such parties against Builder or others against the Property. Builder is not and shall not be an agent of RECM for any purposes. RECMshallnotbedeemedtobeinprivityofcontractwith any contractor or provider of services on the Property or any purchaser or transferee of the Property or any portion thereof. Nor shall any payment of funds directly to a contractor, subcontractor or provider of services be deemed to create any third party beneficiary status or recognition of same by RECM. Approvals granted by RECM for any matters covered under this Declaration or any Acquisition Documents shall be construed to be solely for the benefit of Builder. Reviews, observations, inspections and testing of any work or improvement on the Property by RECM or RECM's consultants or insurance carriers shall be solely for the benefit of RECM and shall not be deemed to create any third party beneficiary status for any purchaser or transferee of the Property for Builder's insurance carriers or for any other third party. 13.20 Assignment by RECM. RECM may, at any time, assign or otherwise transfer its rights and obligations under this Declaration, without the prior consent of Builder. Effective as of the date of such assignment or transfer, Builder shall look solely to the assignee or transferee for performance of RECM's obligation under this Declaration and RECM shall be released from all obligations under this Agreement and have no further liability under this Agreement Builder covenants and agrees that it will promptly execute any documents required in connection with the assignment or transfer of RECM's rights hereunder. [Remainder of Page Intentionally Left Blank] RECM/La Costa Oaks/Shea Development Declaration 27817-*; 1821395.7 43 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 44 of 53 Order: 0698 Comment: 28045 13.21 Authority of Morrow Development. The parties acknowledge and agree that Morrow Development, Inc., a California corporation, is RECM's authorized development representative for purposes of administering this Declaration and the other Acquisition Documents, including the approval or disapproval of any matters; provided however, Morrow Development, Inc. is not authorized to execute or amend this Declaration or any of the other Acquisition Documents. The parties have executed this Declaration as of the dates set forth below. RECM: BUILDER: REAL ESTATE COLLATERAL MANAGEMENT COMPANY, a Delaware corporation Name: David A. Watts Title: Vice President Dated: SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership By: J.F. SHEA, LLC, a Delaware limited liability company its general partner By: Name: Title: Dated: By: Name:_ Title: Dated: RECM/La Costa Oaks/Shea Development Declaration 27817-6; 182)395.6 44 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 45 of 53 Order: 0698 Comment: 2804B 13.21 Authority of Morrow Development. The parties acknowledge and agree that Morrow Development, Inc., a California corporation, is RECM's authorized development representative for purposes of administering this Declaration and the other Acquisition Documents, including the approval or disapproval of any matters; provided however, Morrow Development, Inc. is not authorized to execute or amend this Declaration or any of the other Acquisition Documents. The parties have executed this Declaration as of the dates set forth below. RECM: REAL ESTATE COLLATERAL MANAGEMENT COMPANY, a Delaware corporation Bv: Name: David A. Watts Title: Vice President Dated: BUILDER: SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership By: J.F. SHEA, LLC, a Delaware limited liability company By- Name: n Title: Dated:1:-t By:_V CJ^I Name: Title: " Dated: t-fecc^V RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.6 44 5/14/03 Description: San Ciego/CA Document-rear.DocID 2003.766001 Page: 46 of S3 Order: 069B Comment: - ...... 28047 ACKNOWLEDGMENT STATE OF CALIFORNIA- ) COUNTY OF On 03 _, before me _, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said County and State OFFICIAL SEAL- DIANA C MORENO NOTARY PUBLIC, STATE OF "-WOW5 MY COMMISSION BQHaS![SEAL] RECM/La Costa Oaks/Shea Development Declaration 27817-6; 1821395.6 46 5/14/03 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 47 of 53 Order: 0698 Comment: • — 28048. ACKNOWLEDGMENT STATE OF CALIFORNIA PJU& personally appeared rvfl tn me salii>faeiui.y cvideftee) N> be the person£s) whose name^is/arg subscribed to the within instrument and acknowledged to me that he/she/they^ executed the same in his/her/theirauthorized capacity(issi, and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person£sj_acted, executed the instrument. WITNESS my hand and official seal. County and State STATE OF CALIFORNIA ) COUNTY OF )ss. ) ELIZABETHS. BlUST Commiulonf 1361522 Notary Public - Callfomit San Dtago County My Conrn BplrMJun 17.2006 [SEAL] On .before me _, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said County and State [SEAL] RECM/La Costa Oaks/Shea Development Declaration 27817-6; IE21395.6 45 5/14/03 .Description: San Diego,CA Document-rear.DocID 2003.766001 Page: 48 of 53 Order: 0658 Comment: : - • - ' """ 380.49 EXHIBITS Exhibit "A" Legal Description of Property Exhibit "B" Legal Description of Benefitted Property 47 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 49 of 53 Order: 0698 Comment: 28Q56 EXHIBIT "A" LEGAL DESCRIPTION Lots 1 through 71 inclusive of Carlsbad Tract Map No. 99-04^)1, Villages of La Costa - La Costa Oaks South, in the City of Carlsbad, County of San Diego, State of California, according to the map thereof No.14379, Filed in the office of the County Recorder of San Diego County on April 29, 2002. Exhibit "A" ^ Development Dedaration 27817-6; 1821395.7 1 5/14/03 Description: San Diego,CA Document-year.DocID 2003.766001 Page: 50 of 53 Order: 0698 Comment: 28Q51 EXHIBIT "B" LEGAL DESCRIPTION (BENEFTTTED PROPERTY) LOTS 162 THROUGH 170 INCLUSIVE, LOTS 179 THROUGH 188 INCLUSIVE, LOTS 190 THROUGH 193 INCLUSIVE AND LOT 197 OF CARLSBAD TRACT MAP NO. 99-04-01, VILLAGES OF LA COSTA-LA COSTA OAKS SOUTH, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF NO. 14379, FILED IN THE OFnCE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON APRIL 29,2002. LOTS 171 AND 172 INCLUSIVE OF CARLSBAD TRACT MAP NO. 99-04-01, VILLAGES OF LA COSTA-LA COSTA OAKS SOUTH, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF NO. 14379, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON APRIL 29, 2002. LOTS 1 THROUGH 97 INCLUSIVE OF CARLSBAD TRACT MAP NO. 02-03, VILLAGES OF LA COSTA - LA COSTA OAKS SOUTH, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOFNO. 14604, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SANDE5GO COUNTY ON JUNE 3,2003. LOTS 1 THROUGH 68 INCLUSIVE OF CARLSBAD TRACT MAP NO. 02-04, VILLAGES OF LA COSTA - LA COSTA OAKS SOUTH, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF NO. 14617, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON JUNE 23, 2003. LOTS 1 THROUGH 102 INCLUSIVE OF CARLSBAD TRACT MAP NO. 02-05, VILLAGES OF LA COSTA-LA COSTA OAKS SOUTH, IN THE CITY OF CARLSBAD, COUNTY OF SAN DffiGO,STATEOFCALIFORNIA,ACCORDINGTOTHE MAP THEREOFNO. 14618,FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON JUNE 23, 2003. THAT PORTION OF THE SOUTHEAST QUARTER AND THE NORTHEAST QUARTER OF SECTION 30, AND THAT PORTION OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 29, AND THAT PORTION OF THE SOUTHWEST QUARTER OF SECTION 29, AND THAT PORTION OF THE NORTHWEST QUARTER OF SECTION 32, ALL IN TOWNSHIP 12 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, ACCORDING TO THE OFFICIAL PLAT THEREOF, IN THE CITY OF Exhibit "B" lopmen.D. 27817-6;182I395.7 1 5/14/03 Description: San Diego,CA Document-rear.DocID 2003.755001 Page: 51 of 53 Order: 0698 Comment: "~ 38OS* CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 29, AS SHOWN AND ACCEPTED ON THAT RECORD OF SURVEY NO. 17206, FILED IN THE OFFICE OF SAID COUNTY RECORDER NOVEMBER 29, 2001; THENCE ALONG THE EASTERLY AND NORTHEASTERLY BOUNDARY OF SAID RECORD OF SURVEY NO. 17206, NORTH 00'08'32" EAST, 2719.39 FEET; THENCE NORTH 89'25'03" WEST, 585.47 FEET;.THENCE NORTH 35'25'54" WEST, 286.43 FEET TO A POINT ON A NON-TANGENT 1000.00 FOOT RADIUS CURVE, CONCAVE NORTHEASTERLY, A RADIAL TO SAID POINT BEARS SOUTH 3r03'20B WEST; THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 11 '04'23" A DISTANCE OF 193.26 FEET; THENCE TANGENTNORTH 47'52'17" WEST, 400.09;THENCE TANGENT 400.00 FOOT RADIUS CURVE, CONCAVE NORTHEASTERLY; THENCE NORTHWESTERLY ALONG THE ARC OF SATO CURVE THROUGH A CENTRAL ANGLE OF 12'57'53" A DISTANCE OF 90.51 FEETTO APOINT ON THE EASTERLY BOUNDARY LINE OF LOT 233 OF MAP NO. 14379, IN THE CITY OF CARLSBAD, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DffiGO COUNTY ON APRIL 29,2002; THENCE LEAVING SAID NORTHEASTERLY BOUNDARY OF SATO RECORD OF SURVEYNO. 17206, ALONG THE EASTERLY BOUNDARY LINE OF SAID MAP NO. 14379 AND NON-TANGENT TO SATO CURVE, SOUTH 00'14'35" WEST, 170.13; THENCE SOUTH 70'30I00" WEST, 85.00 FEET; THENCE SOUTH 59'41'32" WEST, 167.00 FEET; THENCE SOUTH 43'42'32" WEST, 260.00 FEET; THENCE SOUTH 13'05'33" EAST, 215.17 FEET; THENCE SOUTH 37>17102" WEST, 147.00 FEET; THENCE SOUTH 02'00'00" WEST, 187.00 FEET; THENCE SOUTH 61'OS^O" EAST, 153.00 FEET; THENCE SOUTH Ol'06'lO" EAST, 236.00 FEET; THENCE SOUTH 73'14'00" WEST, 140.00 FEET; THENCE SOUTH 41 •22'40" WEST, 283.50 FEET; THENCE SOUTH 1 l'25'OO" WEST, 125.00 FEET; THENCE SOUTH 27'00'00" EAST, 213.00 FEET; THENCE SOUTH 57'00100" EAST, 91.89 FEET; THENCE SOUTH 07-OQ'OO" EAST, 99.87 FEET; THENCE SOUTH 54'00'00" WEST, 242.13 FEET; THENCE SOUTH 25'00'00" WEST, 139.00 FEET; THENCE SOUTH 47'45'00" WEST, 132.50 FEET; THENCE SOUTH 04'45'00" WEST, 46.00 FEET; THENCE SOUTH 26WOO" EAST, 83.00 FEET; THENCE SOUTH 74' lO'OO" EAST, 46.00 FEET; THENCE NORTH 72WOO" EAST, 65.00 FEET; THENCE SOUTH 35'47'00" EAST, 135.00 FEET; THENCE SOUTH SrOO'OO" WEST, 154.00 FEET; THENCE SOUTH 63"i3W WEST, 69.00 FEET; THENCE SOUTH 49*33'00n WEST, 195.50 FEET; THENCE SOUTH SO'tWOO" WEST, 107.50 FEET; THENCE NORTH 85'32'00" WEST, 247.00 FEET; THENCE NORTH 88'43'00n WEST, 110.00 FEET; THENCE NORTH 76'33'30" WEST, 165.00 FEET; THENCE SOUTH 71-16'00" WEST, 70.50 FEET; THENCE NORTH 85'28'30" WEST, 222.00 FEET; THENCE SOUTH 69'20'00" WEST, 98.00 FEET; THENCE SOUTH e^SO'CO" WEST, 135.00 FEET; THENCE SOUTH 54-30W WEST, 181.00 FEET; THENCE SOUTH SO'SS'OO" WEST, 253.00 FEET; THENCE SOUTH 07'20'00n WEST, 74.00 FEET; THENCE SOUTH 02'10'24" WEST, 79.23 FEET; THENCE NORTH 89'42'16n EAST, 2210.25 FEET; THENCE SOUTH 89'53'58" Exhibit "B" 25S222S" to Development Declaration 27817-6:1821395.7 2 Description: San Diego,CA Document-Year.DocID 2003.766001 Page: 52 of 53 Order: 0698 Comment: ~ — — - — • 2805^3 EAST, 593.52 FEET; THENCE SOUTH IS'OO'OO" WEST, 156.80 FEET; THENCE SOUTH 26'00'00" WEST, 65.00 FEET TO A POINT ON THE NORTHERLY LINE OF THAT DEED RECORDED AUGUST 20,1981 AS FILE NO. 81 -266030 OF OFFICIAL RECORDS; THENCE LEAVING SAID EASTERLY BOUNDARY LINE OF SAID MAP NO. 14379 AND FOLLOWING THE NORTHERLY AND NORTHEASTERLY LINES OF SAID DEED, SOUTH 89-53'58" EAST, 209.12 FEET, TO A TANGENT 470.00 FOOT RADIUS CURVE, CONCAVE SOUTHERLY; THENCE EASTERLY AND SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 36'03'42" A DISTANCE OF 295.82 FEET; THENCE SOUTH 53'50'16" EAST, 386.84 FEET; THENCE SOUTH 35-23'44n WEST, 30.75 FEET; THENCE SOUTH 63'42'16" EAST, 424.16 FEET; THENCE SOUTH 76'40'16" EAST, 288.30 FEET, TO A POINT ON THE BOUNDARY LINE OF SATO MAP NO. 14379; THENCE ALONG SAID BOUNDARY LINE, NORTH 48'26'40" EAST, 390.95 FEET; THENCE NORTH 00' 19'30" WEST, 541.37 FEET TO A POINT ON THE SOUTHERLY LINE OF SATO SECTION 29 AS SHOWN ON SAID RECORD OF SURVEY NO. 17206; THENCE ALONG SAID SOUTHERLY LINE SOUTH 89'2772" WEST, 892.65 FEET TO THE TRUE POINT OF BEGINNING. CONTAINING 162.72 ACRES, MORE OR LESS. Exhibit "B" RECM/u Cosa (Ms/Shea Development DeclarationDevelopment Declaration f 27817-6; 1821395.7 3 Description: San Diego,CA Document-rear.DocJO 2003.766001 Page: 53 of 53 Order: 0658 Comment: - • — ._ ..