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HomeMy WebLinkAbout; Poseidon Channelside LLC; 2009-0605539; OtherDOC# 2009-0605539 RECORDING REQUESTED BY: Carlsbad City Clerk's Office WHEN RECORDED MAIL TO: City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 OCT30, 2009 12:03 PM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE DAVID L BUTLER, COUNTY RECORDER FEES: 168.00 PAGES: Illllllilllllllllllllllli f«V' 41s" » > <7,u' I1 54 III III SPACE ABOVE THIS LINE FOR RECORDER'S USE This document is exempt from the payment of a recording fee pursuant to Government Code Section 6103. Amended and Restated Development Agreement A Development Agreement between CITY OF CARLSBAD and POSEIDON TABLE OF CONTENTS 1 DEFINITIONS AND EXHIBITS 2 1.1 Definitions 2 1.2 Exhibits 7 2 GENERAL PROVISIONS 8 2.1 Binding Effect of Agreement 8 2.2 Legal Interest in Property 8 2.3 Term 8 2.4 Sale, Transfer or Assignment 8 2.5 Amendment or Cancellation of Agreement 11 2.6 Termination 11 2.7 Liability 11 2.8 Compliance With Environmental Law 12 3 DEVELOPMENT OF THE PROJECT 12 3.1 Permitted Uses 12 3.2 Vested Rights 12 3.3 Effect of Agreement on Land Use Regulations 13 3.4 Timing of Development 13 3.5 Changes and Amendments 13 3.6 Reservations of Authority 14 3.7 Public Works 15 3.8 Provision of Real Property Interests by the City 15 3.9 Regulation by Other Public Agencies 16 3.10 Tentative Tract Map Extension 16 3.11 Poseidon Obligation to Obtain and Maintain Insurance 16 4 PUBLIC BENEFITS 16 4.1 Intent 16 4.2 Mitigation Measures and Fees 16 4.3 Dedications 17 5 FINANCING OF APPURTENANT FACILITIES; OTHER PUBLIC FINANCING; USE OF PUBLIC RIGHTS OF WAY 18 5.1 Appurtenant Facilities 18 5.2 Other Public Financing 18 5.3 Use of Public Rights of Way 18 6 ANNUAL REVIEW 23 6.1 Periodic Review 23 6.2 Opportunity to Be Heard 23 6.3 Information to Be Provided Poseidon 24 7 INCORPORATION AND ANNEXATION 24 7.1 Intent 24 7.2 Incorporation 24 7.3 Annexation 24 8 DEFAULT AND REMEDIES 24 8.1 Remedies in General 24 8.2 Termination by City. The City may terminate this Agreement upon a termination of the Water Purchase Agreement by the District pursuant to Section 2.3.4 thereof 25 8.3 Liquidated Damages for Poseidon's Failure to Amend This Agreement Upon Relocation of Plant Facilities 25 8.4 Specific Performance 25 8.5 Release and Reservation 26 8.6 Termination of Agreement for Default of Poseidon 26 8.7 Termination of Agreement for Default of the City 27 8.8 Rights, Remedies for Negligence, Willful Misconduct 27 9 THIRD PARTY LITIGATION; INDEMNIFICATION 27 9.1 General Plan Litigation 27 9.2 Third Party Litigation Concerning Agreement 27 9.3 Breaches of Agreement; Property Damage, Bodily Injury or Death 28 9.4 Indemnification Procedure 28 9.5 Survival 29 10 MORTGAGEE PROTECTION 29 11 MISCELLANEOUS PROVISIONS 29 11.1 Recordation of Agreement 29 11.2 Further Actions 30 11.3 Amendment 30 11.4 Entire Agreement 30 11.5 Notices 30 11.6 Controlling Law 31 11.7 Headings 31 11.8 Cumulative Rights; Waiver 31 11.9 Liberal Construction 31 11.10 Severability 31 11.11 Good Faith and Fair Dealing 31 11.12 No Third Party Beneficiaries 31 11.13 Execution in Counterparts 32 11.14 Time of the Essence 32 11.15 Number, Gender 32 11.16 Relationship 32 11.17 Joint and Several Obligations 32 11.18 Force Majeure 32 11.19 Mutual Covenants 32 11.20 Successors in Interest 33 11.21 Jurisdiction and Venue 33 11.22 Project as a Private Undertaking 33 11.23 Eminent Domain 33 11.24 Agent for Service of Process 33 11.25 Authority to Execute 33 11.26 Commission Approval Required 34 11.27 Approval Procedure 34 AMENDED AND RESTATED DEVELOPMENT AGREEMENT This Agreement, entered into as of the Effective Date, by and between the City and Poseidon, is made with respect to the following facts: RECITALS WHEREAS, the City is authorized to enter into binding development agreements with persons having legal or equitable interests in real property for the development of such property, pursuant to Section 65864, et seq. of the Code; and, WHEREAS, pursuant to Section 65865 of the Code, the City has adopted Chapter 21.70 of the Carlsbad Municipal Code, establishing rules and regulations for consideration of development agreements; and, WHEREAS, Poseidon and the City have agreed to enter into a development agreement and proceedings have been taken in accordance with Chapter 21.70 and otherwise in accordance with the rules and regulations of the City; and, WHEREAS, by electing to enter into this Agreement, the City shall bind future City Councils of the City by the obligations specified herein and limit the future exercise of certain governmental and proprietary powers of the City; and, WHEREAS, the terms and conditions of this Agreement have undergone extensive review by the City and the City Council of the City and have been found to be fair, just and reasonable; and, WHEREAS, the best interests of the citizens of the City and the public health, safety and welfare will be served by entering into this Agreement; and, WHEREAS, the Project (as hereinafter defined) is consistent with, and includes elements specifically intended to advance the goals of the State of California related to, the protection, maintenance and where feasible enhancement and restoration of the overall quality of the coastal zone environment and to maximize public access and recreational opportunities along the coast, and includes public dedication of several acres of ocean and lagoon front property that has been agreed to by Poseidon as described in Exhibit 5 of the Precise Development Plan (POP 00-02); and, WHEREAS, all of the procedures of CEQA have been met with respect to the Project and this Agreement; and, WHEREAS, by Council Resolution No. 2006-156. the City Council, after making appropriate findings, certified the Environmental Impact Report 03-05 for the Project, dated June 13, 2006, under the provisions of CEQA; and, WHEREAS, by Council Resolution No. 2009-233, the City Council, after making appropriate findings, approved the Addendum to Environmental Impact Report 03-05 for the Project; dated September 15, 2009 under the provisions of CEQA; and, WHEREAS, this Agreement and the Project are consistent with the City's General Plan and the Precise Development Plan applicable to the Property; and, WHEREAS, all actions taken and approvals given by the City have been duly taken or approved in accordance with Chapter 21.70 and with all applicable legal requirements for notice, public hearings, findings, votes, and other procedural matters; and, WHEREAS, pursuant to the Approval Ordinance, the City Council approved a development agreement on June 20, 2006, which was submitted for consideration with the Approval Ordinance; and, WHEREAS, subsequent to the City Council's adoption of the Approval Ordinance, but prior to the Effective Date, the parties desired to amend and restate in its entirety the development agreement approved by the Approval Ordinance to clarify certain rights and obligations concerning Poseidon's use of Public Ways; and, WHEREAS, pursuant to the Amended Approval Ordinance, the City Council approved this amended and restated Agreement; and, WHEREAS, development of the Project in accordance with this Agreement will provide substantial benefits to the City and will further important policies and goals of the City; and, WHEREAS, this Agreement will eliminate uncertainty in planning and provide for the orderly development of the Project, ensure progressive installation of necessary improvements, provide for public services appropriate to the development of the Project, and generally serve the purposes for which development agreements under Sections 65864, et seq. of the Code and Chapter 21.70 are intended; and, WHEREAS, Poseidon has incurred and will in the future incur substantial costs in the development of the Project in accordance with this Agreement in order to assure vesting of legal rights to develop the Project in accordance with this Agreement. NOW, THEREFORE, in consideration of the above recitals and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: COVENANTS 1 DEFINITIONS AND EXHIBITS. 1.1 Definitions. When used in this Agreement, the following terms shall have the meaning set forth below: 1.1.1 "Agreement" means this Amended and Restated Development Agreement. 1.1.2 "Agreement Date" means the date this Agreement is fully executed by the parties. 1.1.3 "Amended Approval Ordinance" means the City Ordinance No. CS-059, which became effective on October 22, 2009, approving this Agreement. 1.1.4 "Approval Ordinance" means the City Ordinance No. NS-807, which became effective on July 20, 2006, approving the development agreement submitted therewith. 1.1.5 "Approved Public Ways" means, subject to modification in accordance with Section 5.3.3 hereof, the Public Ways described on Exhibit "E" attached hereto. 1.1.6 "Appurtenant Facilities" means Product Water distribution assets, whether or not located at the Power Plant, consisting of appurtenant and ancillary facilities, including without limitation (a) pipelines, pump stations and other facilities within the City that are necessary or convenient for the use, conveyance, storage, and distribution of desalinated seawater, and (b) such incidental appurtenant and ancillary facilities as are located in the Cities of Oceanside, San Marcos or Vista, California. 1.1.7 "Cabrillo" means Cabrillo Power I, LLC, a Delaware limited liability company, its successors and assigns, and the successors in interest to all or any part of Cabrillo's interest in the Property. 1.1.8 "CEQA" means the California Environmental Quality Act, California Public Resources Code Sections 21000 et seq. 1.1.9 "City" means the City of Carlsbad, California, a municipal corporation and a general law city formed under the laws of the State of California. 1.1.10 "City Council" means the duly elected members of the City Council of the City, as those members may from time to time be elected. 1.1.11 "City Engineer" means the City Engineer of the City. 1.1.12 "City Indemnitees" means the City Council, officers, agents, employees and independent contractors of the City. 1.1.13 "City Manager" means the City Manager of the City. 1.1.14 "City Planning Director" means the Planning Director of the City. 1.1.15 "Code" means the California Government Code. 1.1.16 "Commission" means the California Coastal Commission. 1.1.17 "Default" means (a) with respect to either party, any failure to perform any material duty or obligation under this Agreement, (b) with respect to Poseidon, any Event of Default with respect to Poseidon under the Water Purchase Agreement, and (c) with respect to the City, any Event of Default with respect to the District under the Water Purchase Agreement. 1.1.18 "Development" means the improvement of the portion of the Property subject to the Leasehold for the purposes of completing the structures, improvements and facilities comprising the Plant Facilities, including, but not limited to: grading; the construction of infrastructure and public facilities, whether located within or outside the portion of the Property subject to the Leasehold that are related to the Plant Facilities; the construction of buildings and structures; and the installation of landscaping. "Development" does not include the maintenance, repair, reconstruction or redevelopment of any building, structure, improvement or facility after the construction and completion thereof. 1.1.19 "Development Approvals" means all permits and other entitlements for use, subject to approval or issuance by the City, the RDA or the Commission, as applicable, in connection with: (a) Development of the portion of the Property subject to the Leasehold and (b) the Appurtenant Facilities, including, but not limited to: (1) Project EIR; (2) Precise Development Plan (PDP 00-02(6)) and any amendments thereto; (3) Coastal Development Permit; (4) Redevelopment Permit and any amendments thereto as of the date of the Amended Approval Ordinance; (5) Improvement Plans; (6) Grading permit(s); (7) Habitat Management Plan Permit and any amendments thereto as of the date of the Amended Approval Ordinance; (8) Easements; (9) Right of Way Permit; (10) Haul Route Permit; (11) Oversize Load Permit; (12) This Agreement and any amendments thereto as of the date of the Amended Approval Ordinance; (13) Special Use Permit; and (14) Building Permit(s). 1.1.20 "Development Plan" means the Existing Development Approvals and the Existing Land Use Regulations applicable to Development of the Project on the Property subject to the Leasehold. 1.1.21 "District" means the Carlsbad Municipal Water District, a municipal water district. 1.1.22 "Effective Date" means the last to occur of the following: (a) the date the Amended Approval Ordinance becomes effective, (b) the date that the Agreement is fully executed by the parties, (c) the date the Commission approves this Agreement, or (d) the date Cabrillo has provided the consent. 1.1.23 "Encroachment Application" means an application submitted to a public agency, other than the City or the District, for an encroachment permit to permit excavation in Public Ways. 1.1.24 "Existing Development Approvals" means all Development Approvals approved or issued prior to the Agreement Date. Existing Development Approvals include the approvals incorporated herein as Exhibit "C" and all other approvals which are a matter of public record on the Agreement Date. 1.1.25 "Existing Land Use Regulations" means all Land Use Regulations in effect on the Agreement Date. Existing Land Use Regulations include the Land Use Regulations incorporated herein as Exhibit "D" and all other Land Use Regulations which are a matter of public record on the Agreement Date. Existing Land Use Regulations do not include Police Power Regulations. 1.1.26 "Golf Course" means that certain municipal golf course, commonly known as The Crossings at Carlsbad, or The Crossings, located in the area bounded by Faraday Avenue and Cannon Road on the North, Palomar Airport on the East, Palomar Airport Road on the South, and Hidden Valley Road on the West. 1.1.27 "Indemnified Party" means the City or the City Indemnitees, where the context so requires. 1.1.28 "Joint Powers Authority" means any joint powers authority formed under Section 6500 et seq. of the Code. 1.1.29 "Land Use Regulations" means all ordinances, resolutions, codes, rules, regulations and official policies of the City, other than the Police Power Regulations, governing the development and use of land, including without limitation the permitted use of land, the density or intensity of use, subdivision requirements, the maximum height and size of proposed buildings, the provisions for reservation or dedication of land for public purposes, and the design, improvement and construction standards and specifications applicable to the development of the Property. 1.1.30 "Lease" means that certain Ground Lease and Easement Agreement, dated July 11, 2003, and entered into by and between Poseidon and Cabrillo, as amended and restated on September 14, 2009. 1.1.31 "Leasehold" means Poseidon's interest in the Property under the terms and conditions of the Lease. 1.1.32 "Memorandum" means a short form of this Agreement, in recordable form. 1.1.33 "MGD" means million gallons per day. 1.1.34 "Mortgagee" means a mortgagee of a mortgage, a beneficiary under a deed of trust or any other security-device lender, and their successors and assigns. 1.1.35 "Plant Facilities" means production assets consisting of a reverse-osmosis seawater desalination plant. 1.1.36 "Police Power Regulations" means any City ordinance, resolution, code, rule, regulation or official policy, governing: (a) public health, safety, morals and welfare, in general, and the control and abatement of nuisances, in particular; (b) the granting of right of way permits and the conveyance of rights and interests which provide for the use of or the entry upon public property (excluding any Development Approvals or any rights of way necessary to implement the Project as specified in the Development Approvals); or (c) the exercise of the power of eminent domain. 1.1.37 "Poseidon" means Poseidon Resources (Channelside) LLC, a Delaware limited liability company, its successors and assigns, and the successors in interest to all or any part of Poseidon's interest in the Project. 1.1.38 "Power Plant" means the Encina Power Station owned and operated by Cabrillo. 1.1.39 "Product Water" means desalinated seawater produced from the Project. 1.1.40 "Project" means, generally, the Development of the portion of the Property subject to the Leasehold contemplated by the Development Plan as such Development Plan may be further defined, enhanced or modified pursuant to the provisions of this Agreement, and specifically, the development of an integrated reverse-osmosis desalination plant comprising: (a) the Plant Facilities; and (b) the Appurtenant Facilities; provided, however that if the District elects to own or have a Joint Powers Authority own facilities pursuant to Section 9.2 of the Water Purchase Agreement, such facilities shall be excluded from the definition of Project hereunder. The Project is expected to have the capacity to produce and convey approximately 25 MOD to 55 MOD of Product Water, but the scope of the Project, including without limitation the location of the Appurtenant Facilities, may be further defined, enhanced or modified pursuant to the provisions of the Development Approvals. 1.1.41 "Property" means the real property described on Exhibit "A" and depicted on Exhibit "B" to this Agreement. 1.1.42 "Public Ways" means the surface of and space below, any public freeways, highways, streets, ways, alleys, and all other dedicated rights-of-way or easements, and places and other City owned property as the same now or may hereafter exist within the City. Notwithstanding the foregoing, for purposes of this Agreement and the rights granted herein, in no event shall Public Ways mean any rights of way on, in, under, about or in any way relating to the Golf Course. 1.1.43 "RDA" means the Carlsbad Housing and Redevelopment Commission. 1.1.44 "Reservations of Authority" means the rights and authority excepted from the assurances and rights provided to Poseidon under this Agreement and reserved to the City under Sections 3.6 through 3.6.4 of this Agreement. 1.1.45 "Right-of-Way Right" means the nonexclusive right to use the Approved Public Ways for the purpose of constructing, maintaining, repairing and operating the Appurtenant Facilities for the delivery of Product Water from the Plant Facilities to customers (which may include, but are not limited to, the District) through the use of the Appurtenant Facilities. 1.1.46 "Right-of-Way Term" means that period commencing with the grant of the Right-of-Way Right on the Effective Date and continuing for a period of forty (40) years thereafter. 1.1.47 "Subsequent Development Approvals" means all Development Approvals required subsequent to the Agreement Date in connection with development of the Project. 1.1.48 "Subsequent Development Exaction" means any requirement of the City in connection with or pursuant to any Subsequent Land Use Regulation or Subsequent Development Approvals for the dedication of land, the construction of improvements or public facilities, or the payment of fees in order to lessen, offset, mitigate or compensate for the impacts of development on the environment or other public interests. 1.1.49 "Subsequent Land Use Regulations" means any Land Use Regulations adopted and effective after the Agreement Date. 1.1.50 "Vault Structures" means such structures that permit periodic or regular access, for routine maintenance or otherwise, for flow control facilities, pressure regulators, surge control and similar facilities. 1.1.51 "Water Purchase Agreement" means that certain Water Purchase Agreement, dated as of September 28, 2004, and entered into by and between Poseidon and the District, as the same shall be amended from time to time. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit "A" - Legal Description of the Property. Exhibit "B" - Map depicting Property and its location. Exhibit "C" -- Existing Development Approvals. Exhibit "D" - Existing Land Use Regulations. Exhibit "E" - Approved Public Ways. Exhibit "F" - Quitclaim Deed. 7 2 GENERAL PROVISIONS. 2.1 Binding Effect of Agreement. This Agreement runs with, and is binding upon, the Leasehold and the Project. Development of the Project is authorized by the Development Approvals and, except as otherwise provided for herein, shall be carried out only in accordance with the terms of the Development Approvals. Notwithstanding anything in this Agreement to the contrary, this Agreement shall only apply to the Development of the Project on the Property subject to the Leasehold, and shall not apply to any other development of the Property. 2.2 Legal Interest in Property. Poseidon represents and covenants that Cabrillo is the owner of the fee simple title to the Property, and that, as of the Agreement Date, Poseidon has a legal interest in the Property pursuant to the Lease. 2.3 Term. The term of this Agreement shall commence on the Effective Date and shall continue for a period of forty (40) years thereafter, unless the Agreement is terminated or the term is modified or extended pursuant to the provisions of this Agreement. 2.4 Sale. Transfer or Assignment. 2.4.1 Right to Assign. Poseidon shall have the right to sell, transfer or assign this Agreement, in whole or in part, if and only if it meets the conditions set forth in clauses (a) and (b) below: (a) Either: (1) The sale, transfer or assignment is made in connection with a sale, transfer or assignment, voluntarily or involuntarily, by operation of law or otherwise, of all or a part of the Project and the prior written consent of the City is obtained; or (2) The sale, transfer or assignment is made in connection with a sale, transfer or assignment, voluntarily or involuntarily, by operation of law or otherwise, of all or a part of Poseidon's interest in the Leasehold and the prior written consent of the City is obtained; or (3) The sale, transfer or assignment is made in connection with a permitted assignment of the Water Purchase Agreement; and (b) The proposed assignee has provided the City Manager with an executed agreement, in a form reasonably acceptable to the City, providing therein that such purchaser, transferee or assignee expressly and unconditionally assumes all the duties and obligations of Poseidon under this Agreement, including but not limited to the financial obligations of Poseidon set forth herein. (c) Any sale, transfer or assignment not made in compliance with the foregoing conditions shall constitute a default by Poseidon under this Agreement. Notwithstanding the failure of any purchaser, transferee or assignee to execute the agreement required by Paragraph (b), above, of this Subsection 2.4.1, and regardless of whether such purchaser, transferee or assignee has succeeded to Poseidon's interest in the Project, the Property or the Leasehold voluntarily or 8 involuntarily, by operation of law or otherwise, the burdens of this Agreement shall be binding upon such purchaser, transferee or assignee, but the benefits of this Agreement shall not inure to such purchaser, transferee or assignee until and unless such agreement is executed. (d) Poseidon may transfer or assign all or a portion of the Right- of-Way Right, and Poseidon's obligations under this Agreement with respect to the Appurtenant Facilities, to a Joint Powers Authority, provided that the City Engineer approves such transfer or assignment in writing. As part of this transfer or assignment, the City may, but is not obligated to, release Poseidon from its obligations under this Agreement for such Appurtenant Facilities as may be assigned. Poseidon may appeal any disapproval by the City Engineer regarding such transfer or assignment of the Right-of-Way Right in accordance with the City's then-existing procedure for appealing such decisions. 2.4.2 Condemnation. In reliance upon the terms, covenants and conditions set forth in this Agreement, the City and (or) the RDA have (has) incurred and/or will incur costs and expenses, including but not limited to costs and expenses to finance or refinance the construction and installation of public improvements of benefit to the Project, a portion of which are expected to be reimbursed to the City as mitigation fees pursuant to Section 4 of this Agreement. The parties intend that the right to this mitigation fee and the recordation of this Agreement reflecting the mitigation fee obligation, which runs with Poseidon's Leasehold and the Project under this Agreement, constitute a compensable interest in the Property held by the City and/or the RDA (the "City/RDA Property Interest"). If at any time during the term of this Agreement: (a) all or any portion of Poseidon's interest in the Project or its interest in the Lease or the real property underlying the Project (the "Poseidon Property Interest") is taken under the power of eminent domain, or if there is a voluntary conveyance in lieu of or under the threat of eminent domain, (b) Poseidon is no longer obligated to pay the mitigation fee pursuant to Section 4 of this Agreement, and (c) the acquiring party does not agree to pay such mitigation fee, the provisions of this Section 2.4.2 shall apply. (1) If a court or jury renders a total, undivided award of compensation in a condemnation action without apportioning the award between the Poseidon Property Interest and the City/RDA Property Interest, then the parties agree (absent an agreement upon how the undivided sum should be shared), to request the court to conduct a second phase of the trial to apportion the award between the City and/or the RDA, on the one hand, and Poseidon, on the other hand, in accordance with their respective property interests. In such a second phase, the City and/or RDA shall present evidence of the value of their and/or its interest as described in subsection (3) below, and Poseidon shall present evidence of the value of its interest according to the method of valuation which it believes is most appropriate under the circumstances and timing of the condemnation. If the amount of the undivided award is insufficient to compensate the City and/or the RDA, on the one hand, and Poseidon, on the other hand, based on each party's method of valuation, then it is the parties' intent that the court shall equitably apportion the undivided award (without any preference or priority being applied to the interest of either the City and/or the RDA, on the one hand, or Poseidon, on the other hand). (2) If there is a voluntary conveyance by Poseidon of the Poseidon Property Interest or any part thereof to a public or quasi-public agency or entity (the "Condemning Agency") in lieu of or under threat by the Condemning Agency to take the Poseidon Property Interest, or any portion thereof, by eminent domain proceedings, Poseidon shall include in the voluntary sales price the present value (calculated as of the date of the voluntary conveyance using as a discount rate the Standard & Poor's (S&P) Composite Yield Table, prepared by the Bond Market Association, showing the yield composites of AA-rated municipal bonds with 20-year maturities (the "S&P Composite Bond Yield Index") for the month immediately preceding the month in which the voluntary conveyance occurs) of the estimated property taxes that the City, the District or the RDA would receive from the construction, operation and ownership of the Project on the Property, from the date of the voluntary conveyance to the end of the term of this Agreement, and within thirty (30) days of receipt of the voluntary sales proceeds or the first installment thereof if there is an installment sale, shall pay to the City and/or the RDA such present value (or in the case of an installment sale a portion thereof based on the relative amount of such present value and the aggregate voluntary sales price). (3) If at any time during the term of this Agreement there is a taking of an interest in the Project under the power of eminent domain, as more particularly set forth in and subject to Section 2.4.2(1) above, then, as between the City and/or the RDA, on the one hand, and Poseidon, on the other hand, the parties agree that the value of the City/RDA Property Interest shall be calculated as follows: the value shall be equal to the unamortized value of the total cost and expenses incurred by the City and/or the RDA pursuant to this Agreement, determined by calculating the present value (calculated as of the date of the taking using as a discount rate the S&P Composite Bond Yield Index for the month immediately preceding the month in which the taking occurs) of the estimated property taxes that the City, the District or the RDA would receive from the construction, operation and ownership of the Project on the Property, from the date of the taking to the end of the term of this Agreement. (4) Within ten (10) days after receipt thereof, each party shall give the other party copies of any notice received with respect to a proposed or pending taking under power of eminent domain of any portion of the Project or the real property underlying the Project. Poseidon shall give the City and RDA written notice at least ten (10) days prior to entering into an agreement voluntarily conveying all or any portion of the Poseidon Property Interest in lieu of or under the threat of eminent domain. (5) This Section 2.4.2 shall not apply to any Condemning Agency that has an agreement with the City and/or the RDA with respect to the payment of a mitigation fee (including that certain Agreement Memorializing Certain Understandings and Establishing a Framework for Cooperation, dated as of April 28, 2005, by and between the San Diego County Water Authority, the City, the District and the RDA). (6) If (a) at any time during the term of this Agreement there is a taking of an interest in the Project under the power of eminent domain (or by a voluntary conveyance in lieu thereof), as more particularly set forth in Section 2.4.2(1) or (2) above, (b) the Condemning Agency does not have an agreement with the City and/or the RDA with respect to the payment of a mitigation fee, (c) the Condemning Agency 10 nonetheless pays some or all of the mitigation fee required by Section 4 of this Agreement, (d) the City or the RDA has received payment for the City/RDA Property Interest pursuant to Section 2.4.2(1) or (2) above and (5) in the case of an award being apportioned pursuant to Section 2.4.2(1) above Poseidon receives less than its proposed value of its interest, then the City shall pay Poseidon (or shall cause the RDA to pay to Poseidon) such installments of the mitigation fee received from the Condemning Agency, within thirty (30) days of the date the City and/or RDA receives such payments, until such time as Poseidon has received an amount equal to the amount paid to the City and/or RDA pursuant to Section 2.4.2(1) or (2) above set forth. 2.4.3 Subsequent Assignment. Any subsequent sale, transfer or assignment of this Agreement after an initial sale, transfer or assignment of this Agreement shall be made only in accordance with and subject to the terms and conditions of this Section. 2.5 Amendment or Cancellation of Agreement. This Agreement may be amended or cancelled in whole or in part only by written consent of all parties in the manner provided for in Code Section 65868. This provision shall not limit any remedy of the City or Poseidon as provided by this Agreement. 2.6 Termination. The parties acknowledge and agree that, except for Section 2.7 hereof, this Agreement is intended to run with the Leasehold and the Project and to be binding on successors and assigns of the parties hereto. Accordingly, even if Poseidon is no longer the lessee under the Lease or the owner of the Project, this Agreement shall not be deemed terminated, but shall continue in full force and effect unless any of the following events occurs: (a) Expiration of the term of this Agreement stated in Section 2.3; (b) Entry of a final non-appealable judgment setting aside, voiding or annulling the adoption of the Amended Approval Ordinance; (c) The adoption of a referendum measure repealing the Amended Approval Ordinance; or (d) The Project does not commence operation within ten (10) years after the Agreement Date. Termination of this Agreement shall not constitute termination of any other land use entitlements approved for the Project or the portion of the Property subject to the Leasehold. Upon the termination of this Agreement, no party shall have any further right or obligation hereunder except with respect to any obligation to have been performed prior to such termination or with respect to any default in the performance of the provisions of this Agreement which has occurred prior to such termination or with respect to any obligations which are specifically set forth as surviving the termination of this Agreement. 2.7 Liability. The parties acknowledge and agree that Poseidon Resources (Channelside) LLC shall have no further liability under this Agreement in the event of: (a) A sale, transfer or assignment of this Agreement pursuant to Section 2.4.1; 11 (b) Acquisition of Poseidon's interest in the Project as described in Section 2.4.2; or (c) Poseidon otherwise ceases the Development of the Project. The release of liability in this Section 2.7 shall apply to Poseidon Resources (Channelside) LLC only, and not to any successor in interest, by operation of law or otherwise, to Poseidon Resources (Channelside) LLC. 2.8 Compliance With Environmental Law. Poseidon shall operate and maintain the Project in accordance with all applicable state and federal environmental laws, notwithstanding any exemption that Poseidon may otherwise have under international trade rules. 3 DEVELOPMENT OF THE PROJECT. 3.1 Permitted Uses. The Project shall be used and developed only for the purposes more particularly set forth in the Development Plan and for such other uses that may be mutually agreed upon by the parties hereto in accordance with Subsequent Development Approvals and the applicable provisions of the Code relating to the amendment of development agreements. In particular, the permitted uses of the portion of the Property subject to the Leasehold, the density and intensity of use, the maximum height and size of proposed buildings, the production capacity of the Plant Facilities, and provisions for reservation and dedication of land for public purposes shall be those set forth in the Development Plan. 3.2 Vested Rights. Unless amended or terminated in the manner specified in this Agreement (and subject to the provisions of this Agreement), or unless Poseidon otherwise agrees, Poseidon shall have the rights and benefits afforded by this Agreement and this Agreement shall be enforceable by Poseidon and the City notwithstanding the occurrence of any of the following after the Agreement Date: (a) any growth control measure or any development moratorium, or (b) any change in the applicable general or specific plans, zoning, subdivision or building regulations adopted by the City which alter or amend the Development Approvals, or (c) the adoption of any new or amended ordinance, resolution, rule, regulation, requirement or official policy, other than any of the Police Power Regulations, that is inconsistent with, or more burdensome on Poseidon than, the Development Approvals so as to prevent or materially adversely affect development, financing, construction or operation in accordance with the Development Approvals. Unless Poseidon otherwise consents in writing, this Section shall be construed to prohibit the City from applying to the Project any development moratorium that is adopted specifically to prohibit the construction of the Project, or as an interim measure pending contemplated General Plan, specific plan or zoning changes, or as a general growth control management measure without other bona fide reasons relating to unforeseeable emergency situations (as described in Section 3.2.1, below). The Project shall remain subject to all Subsequent Development Approvals required to complete the Project as contemplated by the Development Plan. 3.2.1 Exceptions to Vested Rights. Notwithstanding any provision to the contrary contained herein, and without limiting the generality of Section 3.6, the City expressly reserves the right to apply to the Project: (a) Reservations of Authority made under Section 3.6; (b) any of the Police Power Regulations; or (c) any development 12 moratorium, limitation on the delivery of City-provided utility services, or other generally applicable emergency rule, regulation, law or ordinance (collectively an "Emergency Measure") which meets all of the following criteria: (i) such Emergency Measure is based on genuine health, safety and general welfare concerns (other than general growth management issues); (ii) such Emergency Measure arises out of an emergency situation, as declared by the President of the United States or the Governor of California, or as declared by the Mayor or City Council of the City of Carlsbad; and (iii) such Emergency Measure, as based upon its terms or its effect as applied, does not apply exclusively or primarily to the Project. 3.3 Effect of Agreement on Land Use Regulations. Except as otherwise provided under the terms of this Agreement, including without limitation Section 3.2.1 above, the rules, regulations and official policies governing permitted uses of the portion of the Property subject to the Leasehold, the density and intensity of use of the portion of the Property subject to the Leasehold, the maximum height and size of proposed buildings, and the design, improvement and construction standards and specifications applicable to development of the Project shall be the Existing Land Use Regulations. In connection with any Subsequent Development Approval, the City shall exercise its discretion in accordance with the Development Plan, and as provided by this Agreement including without limitation Section 3.2.1 hereof. The City shall accept for processing, review and action all applications for Subsequent Development Approvals, and such applications shall be processed in the normal manner for processing such matters. 3.4 Timing of Development. The parties acknowledge that Poseidon cannot at this time predict when or the rate at which the Project will be developed. Such decisions depend upon numerous factors which are not within the control of Poseidon, such as approvals from other government agencies, availability of subsidies from Metropolitan Water District of Southern California or others, interest rates, construction completion and other similar factors. Since the California Supreme Court held in Pardee Construction Co. v. City of Camarillo (1984) 37 Cal.Sd 465, that the failure of the parties therein to provide for the timing of development resulted in a later adopted initiative restricting the timing of development to prevail over such parties' agreement, it is the parties' intent to cure that deficiency by acknowledging and providing that Poseidon shall have the right to develop the Project in such order and at such rate and at such times as are more particularly described in the Water Purchase Agreement, subject only to any additional or different timing requirements set forth in the Development Plan. 3.5 Changes and Amendments. The parties acknowledge that refinement and further development of the Project will require Subsequent Development Approvals and may demonstrate that changes are appropriate and mutually desirable in the Existing Development Approvals. If Poseidon finds that a change in the Existing Development Approvals is necessary or appropriate, Poseidon shall apply for Subsequent Development Approvals to effectuate such change and the City shall process and act on such application in accordance with the Existing Land Use Regulations, except as otherwise provided by this Agreement, including the Reservations of Authority. If approved, any such change in the Existing Development Approvals shall be incorporated herein as an addendum to Exhibit "C," and may be further changed from time to time as provided in this Section. Unless otherwise required by law, as determined in the City's reasonable discretion, a change to the Existing Development 13 Approvals shall not require an amendment to this Agreement, provided such change does not: (a) Alter the permitted uses of the Property as a whole; or, (b) Increase the density or intensity of use of the Project as a whole; or, (c) Increase the maximum height and size of permitted buildings; or, (d) Increase the production capacity of the Plant Facilities; or, (e) Delete a requirement for the reservation or dedication of land for public purposes within the Property as a whole; or, (f) Constitute a project requiring a subsequent or supplemental environmental impact report pursuant to Section 21166 of the Public Resources Code. 3.6 Reservations of Authority. 3.6.1 Limitations. Reservations and Exceptions. Notwithstanding any other provision of this Agreement, the City shall have the following Reservations of Authority with respect to application of Subsequent Land Use Regulations to the Development of the Project. (a) Processing fees and charges of every kind and nature imposed by the City to cover the estimated and/or actual costs to the City of processing applications for Development Approvals or for monitoring compliance with any Development Approvals granted or issued. (b) Procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, appeals and any other matter of procedure. (c) Regulations governing construction standards and specifications including, without limitation, the City's Building Code, Plumbing Code, Mechanical Code, Electrical Code, Fire Code and Grading Code. (d) Regulations imposing Subsequent Development Exactions; provided, however, that no such Subsequent Development Exaction shall be applicable to development of the Project unless such Subsequent Development Exaction is applied uniformly to development, either throughout the City or within the South Carlsbad Redevelopment Area. No such Subsequent Development Exaction shall apply if its application to the Project would have a material adverse effect on the development of the Project for the uses and to the density or intensity of development set forth in the Development Plan. (e) Regulations which may be in conflict with the Development Plan but which are reasonably necessary to protect the public health, safety, morals and welfare. To the extent possible, any such regulations shall be applied and construed so as to provide Poseidon with the rights and assurances provided under this Agreement. 14 (f) Regulations which are not in conflict with the Development Plan; provided that such regulations do not have a material adverse effect on the development of the Project. Any regulation, whether adopted by initiative or otherwise, limiting the rate or timing of development of the Project shall be deemed to conflict with the Development Plan and shall therefore not be applicable to the development of the Project. (g) Regulations which are in conflict with the Development Plan, provided Poseidon has given written consent to the application of such regulations to development of the Project. 3.6.2 Subsequent Development Approvals. This Agreement shall not prevent the City, in acting on Subsequent Development Approvals, from applying Subsequent Land Use Regulations which do not conflict with the Development Plan (provided that such regulations do not have a material adverse effect on the development of the Project). 3.6.3 Modification or Suspension by State or Federal Law. If State or Federal laws or regulations, whether existing on or enacted after the Agreement Date, prevent or preclude compliance with one or more of the provisions of this Agreement, such provisions of this Agreement shall be modified or suspended as may be necessary to comply with such State or Federal laws or regulations, provided, however, that this Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations and to the extent such laws or regulations do not render such remaining provisions impractical to enforce. 3.6.4 Intent. The parties acknowledge and agree that the City is restricted in its authority to limit its police power by contract and that the foregoing limitations, reservations and exceptions are intended to reserve to the City all of its police power which cannot be so limited, including without limitation the Police Power Regulations. This Agreement shall be construed, contrary to its stated terms if necessary, to reserve to the City all such power and authority which cannot be restricted by contract. 3.7 Public Works. If Poseidon is required by this Agreement to construct any public works facilities which will be dedicated to the City or any other public agency upon completion, and if required by applicable laws to do so, Poseidon shall perform such work in the same manner and subject to the same requirements as would be applicable to the City or such other public agency should it have undertaken such construction. 3.8 Provision of Real Property Interests by the City. In any instance where Poseidon is required to construct any public improvement on land not owned by Poseidon, Poseidon shall at its sole cost and expense provide or cause to be provided, the real property interests necessary for the construction of such public improvements. If Poseidon is unable, and upon a snowing that it has exhausted all legal remedies available to it, including without limitation the rights under Sections 1001 and 1002 of the California Civil Code, to acquire the real property interests necessary for the construction of such public improvements, and if so requested by Poseidon and upon Poseidon's provision of adequate security for costs the City may reasonably incur, then: (a) the City may negotiate the purchase of the necessary real property interests to allow Poseidon to construct the public improvements as required by this Agreement; and (b) if 15 necessary, in accordance with the procedures established by law, the matter may be brought before the City Council to, in its discretion, make the findings necessary to use its power of eminent domain to acquire such required real property interests. Poseidon shall pay all costs associated with such acquisition or condemnation proceedings. This Section 3.8 is not intended by the parties to impose upon: (x) the City a duty to acquire any land or otherwise exercise any power of eminent domain; or (y) upon Poseidon an enforceable duty to acquire land or construct any public improvements on land not owned by Poseidon, except to the extent that Poseidon elects to proceed with the Development of the Project, and then only in accordance with valid conditions imposed by the City upon the Development of the Project under applicable legal authority. 3.9 Regulation by Other Public Agencies. The parties acknowledge that other public agencies not within the control of the City possess authority to regulate aspects of the development of the Project separately from or jointly with the City, and this Agreement does not limit the authority of such other public agencies. If any revisions or corrections of the Development Plan approved by the City shall be required by any government official, agency, department or bureau having jurisdiction over the development of the Project (except the City), Poseidon and the City shall cooperate in reasonable efforts in complying with such requirements, to obtain waiver of such requirements or to develop a mutually acceptable alternative. 3.10 Tentative Tract Map Extension. Notwithstanding the provisions of Section 66452.6 of the Code, no tentative subdivision map or tentative parcel map, heretofore or hereafter approved in connection with development of the Project, shall be granted an extension of time except in accordance with the Existing Land Use Regulations. 3.11 Poseidon Obligation to Obtain and Maintain Insurance. Before commencing any improvement or construction work pursuant to any City-approved permit on the Project, Poseidon shall obtain and maintain the insurance as required under Section 12 of the Water Purchase Agreement. 4 PUBLIC BENEFITS. 4.1 Intent. The parties acknowledge and agree that this Agreement and the development of the Project will result in substantial benefits for Poseidon, and the City. 4.2 Mitigation Measures and Fees. 4.2.1 Payment: Waiver: No Contest. Poseidon and its successors in interest shall pay a mitigation fee to the City equal to the property taxes that the City, the District or the RDA would receive from the construction, ownership, use and occupancy of the Project on the portion of the Property subject to the Leasehold; provided, however, that this shall not apply to any successor which has an agreement with the City with respect to the payment of a mitigation fee (including that certain Agreement Memorializing Certain Understandings and Establishing a Framework for Cooperation, dated as of April 28, 2005, by and between the San Diego County Water Authority, the City, the District and the RDA). Notwithstanding the foregoing, such mitigation fee shall be waived so long as Poseidon or its successors in interest shall pay and continue to pay, as and when due, property taxes due under state law for the construction, ownership, use and occupancy of the portion of the Property subject to the Leasehold, and shall not claim a partial or full exemption from payment for such tax. 16 Neither Poseidon nor any of its successors in interest shall contest the payment of (a) any property taxes validly imposed under applicable law or (b) the mitigation fee above described; provided however that this shall not prevent Poseidon or its successors from contesting that such taxes were not correctly calculated. 4.2.2 No Discriminatory Fees. The City agrees that for the term of this Agreement, so long as the City, the District or the RDA is paid property taxes from the construction, ownership, use and occupancy of the Project on the portion of the Property subject to the Leasehold, or the mitigation fee described in Section 4.2.1, the City agrees that it will not levy, set or impose any taxes, fees, rates or charges in a discriminatory manner against Poseidon. For example and not by way of limitation, so long as the City, the District or the RDA is paid property taxes from the construction, ownership, use and occupancy of the Project on the portion of the Property subject to the Leasehold, or the mitigation fee described in Section 4.2.1, the City will not attempt to collect from Poseidon a franchise fee, tax, or other monetary charge levied only on businesses which produce or sell water. Further, if such discriminatory fee, tax or charge is adopted by the City, Poseidon and its successors shall be exempt therefrom. 4.2.3 Continuation of Fees. Should all or any portion of the Property become part of a city or another county, the fees payable pursuant to Section 4.2 shall remain and still be payable to the City. 4.2.4 Security. The performance of the terms and conditions of Sections 4.2.1 and 8.3 shall, upon the closing of the construction financing (the "Financing"), for the Project, be secured by a deed of trust and a security agreement encumbering the Leasehold and the Project. Each of such deed of trust and security agreement shall be in a form reasonably acceptable to both parties. The City's rights under each of the deed of trust and the security agreement shall subordinated to the prior payment in full of the lenders providing the Financing pursuant to an agreement with the City acceptable to such lenders. 4.2.5 Preliminary Security. The performance of the terms and conditions of Section 4.2.1 shall be secured by a deed of trust encumbering the Leasehold and the Project. The deed of trust shall be: (a) in a form reasonably acceptable to the parties, (b) be recorded within ninety (90) days after the parties agree upon the form thereof and (c) released upon the earlier of (x) a termination of this Agreement pursuant to Section 2.6 or (y) a recordation of this Agreement pursuant to Section 11.27(d). 4.2.6 Accounting Requirements. With respect to any fee the City receives or costs the City recovers pursuant to this Agreement, in general, or this Section 4, in particular, the City shall comply with the requirements of Section 21.70.025 of the Carlsbad Municipal Code and Section 66006 et seq. of the Code. 4.3 Dedications. Poseidon acknowledges that one of the Development Approvals other than this Agreement shall require Cabrillo, prior to the issuance of precise grading or building permits, to make an offer of dedication of real property to the City as described in Condition 23 of Planning Commission Resolution No. 6632. 17 5 FINANCING OF APPURTENANT FACILITIES: OTHER PUBLIC FINANCING: USE OF PUBLIC RIGHTS OF WAY. 5.1 Appurtenant Facilities. The City will use commercially reasonable efforts to cooperate with Poseidon in obtaining subsidies, grants or external funding, including without limitation funds available under Proposition 50, to pay for the construction of Appurtenant Facilities required as part of the Development Plan. The City also agrees that, to the extent any such subsidies, grants or external funding is available to finance such Appurtenant Facilities, the City may join with Poseidon in applying therefor. Notwithstanding the foregoing, the parties acknowledge and agree that nothing contained in this Agreement shall be construed as requiring the City or the City Council of the City to join with Poseidon to apply for such subsidies, grants or external funding. 5.2 Other Public Financing. The City shall have no obligation to use public financing of any kind, including, without limitation, a community facilities district, an assessment district or other land-secured financing, for financing the construction, maintenance or operation of public infrastructure or other improvements, including without limitation roads or pipelines. 5.3 Use of Public Rights of Way. Except as set forth in Section 5.3.2, the City shall provide without charge, and shall cause any governmental agency under its control to provide without charge, Poseidon access to any Public Ways required for the construction or installation of the Appurtenant Facilities to deliver Product Water to the District from the Project. The City's obligations under this Section 5.3 shall apply only to Public Ways already in existence or planned as of the Effective Date as described in Exhibit E to this Agreement, or such additional Public Ways as approved by the City Engineer as set forth in this Agreement, and shall not apply to any rights of way on, in, under, about or in any way relating to the Golf Course. Nothing set forth in this Section 5.3 shall require the City to provide without charge, or to cause any governmental agency under its control to provide without charge, access to any required Public Ways for the Appurtenant Facilities to deliver Product Water from the Project to any purchaser of Product Water other than the District. The parties acknowledge that: (1) Poseidon's use of and access to the Public Ways is for the public purpose of delivery of wholesale product water to the District and other public agencies; and (2) such use and access is integral to the District's public purpose of providing water to the District customers under Section 21.20 of the Water Purchase Agreement. 5.3.1 Right-of-Wav Term. The Right-of-Wav Right is granted to Poseidon for the Right-of-Way Term; provided, however, that if the Appurtenant Facilities cease to operate and are abandoned for a period that exceeds three (3) years, then the City shall have the right to give notice to Poseidon that the City intends to terminate this Agreement. If the Appurtenant Facilities are not operating within ninety (90) days after Poseidon's receipt of notice of the City's intent to terminate this Agreement pursuant to the preceding sentence, then the City shall have the right to terminate this Agreement by delivery of written notice to Poseidon. For the avoidance of doubt, the Appurtenant Facilities shall not be deemed to have been abandoned so long as Poseidon is diligently seeking to repair, modify or maintain the Plant Facilities and/or the Appurtenant Facilities. If Poseidon abandons or is deemed to have abandoned the Appurtenant Facilities, then: (a) all right, title and interest in and to the Appurtenant Facilities immediately shall transfer to and vest in the City; and (b) Poseidon hereby appoints the City Manager as Poseidon's attorney in fact to 18 execute and record, on Poseidon's behalf, a quitclaim deed, substantially in the form of Exhibit "F" attached hereto, transferring all right, title and interest in and to the Appurtenant Facilities to the City. 5.3.2 Fee for Right-pf-Wav Right. The rights and privileges herein granted are upon the express condition that Poseidon, as consideration therefor and as compensation for the use of the Approved Public Ways as herein authorized and permitted, shall pay an annual fee to the City of Two Thousand Five Hundred Dollars ($2,500.00), commencing on the Effective Date and continuing on the same day of each consecutive year thereafter. 5.3.3 Modification of Public Ways. The Approved Public Ways may be modified from time to time, at Poseidon's request, to include other Public Ways so long as: (a) such modifications are permitted under the Development Approvals and (b) such modifications have been approved in writing by the City Engineer. For purposes of obtaining written approval from the City Engineer, Poseidon shall submit proposed modifications to the Approved Public Ways (including delivery of an updated Exhibit "E" hereto reflecting the proposed modifications and such other maps, descriptions and other information as may be reasonably requested by the City Engineer) directly to the City Engineer. The City Engineer promptly shall approve or disapprove of any proposed modification; provided, however, the City Engineer shall not unreasonably withhold or condition its approval; provided further, however, that if the City Engineer does not provide its approval or disapproval of a proposed modification within thirty (30) days of submission of the same by Poseidon, then such proposed modification shall be deemed disapproved for all purposes. Upon the City Engineer's approval of any modifications to the Approved Public Ways, the updated Exhibit "E" delivered in connection therewith automatically shall become Exhibit "E" hereto for all purposes. Unless otherwise required by law, as determined in the City's reasonable discretion, a change to the Approved Public Ways described in Exhibit "E" shall not require an amendment to this Agreement. If the City Engineer disapproves or is deemed to have disapproved of a proposed modification to the Approved Public Ways, then the City Engineer shall provide Poseidon, in reasonable detail, its reasons for such disapproval and permit Poseidon thirty (30) days to cure the same. If Poseidon attempts to cure the disapproval of the proposed modification to the Approved Public Ways, then the City Engineer promptly shall approve or disapprove of any proposed cure; provided, however, the City Engineer shall not unreasonably withhold or condition its approval; provided further, however, that if the City Engineer does not provide its approval or disapproval of a proposed cure within thirty (30) days of submission of the same by Poseidon, then such proposed cure shall be deemed disapproved for all purposes. If the City Engineer disapproves or is deemed to have disapproved of Poseidon's attempt to cure, then Poseidon may appeal such disapproval to the City Manager in accordance with the City's then-existing procedure for appealing such decisions. 5.3.4 Recordation of Memorandum Against Approved Public Ways. After the final determination of the Approved Public Ways, Poseidon shall prepare the Memorandum, which shall be sufficient to provide constructive notice to third parties of Poseidon's rights in the Approved Public Ways under Section 5.3 hereof. Poseidon shall submit the draft Memorandum to the City for its review and approval, which shall not be unreasonably withheld, conditioned or delayed. If the City does not approve the draft Memorandum, the City shall promptly notify Poseidon of the reason(s) for such disapproval. Upon the City's approval of the Memorandum, the City shall cause an authorized representative of the City to execute, and cause to be acknowledged, the Memorandum. Poseidon shall be authorized to record the Memorandum in the official records of the County of San Diego, State of California. In the event of changes to the 19 Approved Public Ways, Poseidon may prepare an amendment to the Memorandum from time-to-time, as appropriate, to reflect such changes. Poseidon shall submit the amendment to the Memorandum to the City for review, approval, execution, acknowledgment and recordation in the same manner as the Memorandum 5.3.5 Reservation of Rights. In addition to any rights specifically reserved to the City by this Agreement, the City reserves to itself every right and power vested in the City by applicable law, as well as the Charter of the City and any ordinance adopted by the City Council, but only to the extent the exercise of such rights shall be consistent with the Poseidon's rights, and the City's obligations, under this Agreement. This Agreement does not relieve Poseidon from any of its obligations to comply with any applicable law that is of general application and related to work in City streets, including, but not limited to, any law that applies to the use, removal or relocation of property in City streets, except as specifically prescribed herein. Further, nothing set forth in this Section 5.3 shall permit Poseidon access to Public Ways without first obtaining all necessary permits for work, including without limitation Right of Way Permits, Haul Route Permits, Oversize Load Permits, and otherwise in accordance with the Development Plan. This Section 5.3.4 is not intended to, and shall not be construed so that it does, limit either the Parties' rights and obligations under this Agreement, or their rights and obligations under applicable law related to the abrogation of contracts by the City or other governmental entities. 5.3.6 Right-of-Wav Permit. Nothing set forth in this Section 5.3 shall permit Poseidon access to Public Ways or access to property of private utilities or public agencies other than the City or the District, without first applying for and obtaining a Right-of-Way Permit from the City in accordance with City Municipal Code Chapter 11.16, as in existence on the Agreement Date, and all other necessary permits that are more particularly described in Section 1.1.19 or that are issued by the State of California or other private or public entity and that are applicable to the area where work will be occurring; provided, however, that, except as permitted in this Agreement, the City shall not charge an additional fee or cost to Poseidon to obtain the Right-of-Way Permit or such other permits described in Section 1.1.19. Poseidon may submit separate applications for separate Right-of-Way Permits and such other permits described in Section 1.1.19. Further, the City has determined that an encroachment agreement described in Municipal Code Chapter 11.16 is not and will not be necessary in order for Poseidon to obtain a Right-of-Way Permit to access the Public Ways or otherwise exercise its rights under this Agreement. As part of the Right-of-Way Permit process, Poseidon acknowledges that such Right-of-Way Permit shall provide that Poseidon shall submit to the City, prior to any construction of any facilities covered by the Right of Way Permit, a pipeline construction plan, which shall include the following required items: (a) Bonding, contractor insurance requirements, and contractor licensing which meets then-current City requirements; (b) Detailed construction inspection requirements for replacement of City facilities, soil compaction, and City inspection of Appurtenant Facilities; and 20 (c) Detailed conditions for traffic control and right-of-way restoration consistent with then-current mitigation measures required and adopted by the City. 5.3.7 Construction Practices. (a) Standards. Poseidon shall perform all construction and maintenance of Appurtenant Facilities that are located within the Public Ways in accordance with the City's Municipal Code, state and federal laws and all applicable industry construction and maintenance practices and procedures, subject to the following terms and conditions: (1) the encroachment shall be installed and maintained in a safe and sanitary condition at the sole cost, risk, and responsibility of Poseidon and its successors in interest; (2) in accordance with Article IX hereof, Poseidon, and after an assignment of the Right of Way Right pursuant to Section 2.4.1(d), Poseidon's assignee, at all times shall save, indemnify, hold harmless and defend the City and the City Indemnitees from any and all claims, demands, losses, damages, or expenses resulting from the construction, maintenance, use, repair or removal of the Appurtenant Facilities installed hereunder, including any loss, damage, or expense arising out of loss or damages to property and injury to or death of persons; and (3) whatever rights and obligations are or were acquired by the City with respect to the applicable Public Ways shall remain and continue in full force and effect and shall in no way be affected by City's grant of permission to construct and maintain the Appurtenant Facilities. Poseidon shall follow all applicable construction standards and plan standards and specifications as shown in the City of Carlsbad Engineering Standards Volumes 1, 2, 3 and 4, latest edition. Poseidon further shall submit a TIER 3 SWPPP, in compliance with current requirements and provisions established by the San Diego Regional Water Quality Control Board, and a Storm Water Management Plan, in compliance with City of Carlsbad Standard Urban Storm Water Mitigation Plan, to the satisfaction of the City Engineer. (b) Vault Structures. All Vault Structures located within the City or the District shall be located outside of Public Ways, where possible, and in any event outside of traveled ways. If Poseidon shall identify any private property that is required for a facility needing a Vault Structure, Poseidon and the City shall work cooperatively to obtain such private property, on a commercially reasonable basis, from the owner(s) thereof, at Poseidon's expense. The procedure set forth in Section 3.8 of this Agreement shall apply to the acquisition of private property for Vault Structures. (c) No Burden on Public Ways. Poseidon shall not erect, install, construct, repair, replace or maintain the Appurtenant Facilities in such a fashion as to unduly burden the present or future use of the Public Ways. If the City in its reasonable judgment determines that any portion of the Appurtenant Facilities is imposing an undue burden, Poseidon at its expense, shall modify the Appurtenant: Facilities, or take such other actions as the City may reasonably determine are in the public interest, to remove or alleviate the burden, and Poseidon shall do so within the time period reasonably established by the City and at no cost to the City. (d) Restoration of Property. At its sole cost and expense, Poseidon shall restore, to the City's and the District's then-existing standards (including without limitation to any hereafter adopted trench cut ordinance), any portion of the Public Ways that is damaged by the construction, operation, repair, maintenance or removal of the Appurtenant Facilities substantially to the same or better condition than that which existed prior to the disturbance. Poseidon shall, at its sole cost and expense, restore and replace any other property, real or personal, disturbed, damaged or in any 21 way injured by or on account of Poseidon, or by its acts or omissions, to substantially the same or better condition as such property was in immediately prior to the disturbance, damage or injury. Without limiting the generality of the foregoing, Poseidon shall be responsible for restoration and repair of failed trenches, damaged streets, curbs and gutters, driveways, traffic control loop detectors and other public facilities, all to the satisfaction of the City Engineer, and shall warrant said work for its effective life. Such restoration required by this Section 5.3.6(d) shall start promptly but no more than thirty (30) days after Poseidon, or any of its officers, employees or agents, becomes aware of the problem, and shall be diligently performed until completion. (e) Private Property. Poseidon shall be subject to all laws and regulations regarding private property in the course of constructing, operating, repairing, maintaining, or removing the Appurtenant Facilities. 5.3.8 Repair Costs. Poseidon shall pay to the City on demand an amount equal to all costs of all repairs to City property made necessary by any of the operations of Poseidon under the Right-of-Way Right, and the City, at Poseidon's sole cost and expense, shall undertake and perform such repairs to completion. Notwithstanding the foregoing, with the City Engineer's consent, which may be withheld in the City Engineer's sole discretion, after obtaining all necessary permits, and if the same can be done without undue inconvenience to the public use of the Public Ways, Poseidon itself may make repairs to streets, sidewalks, curbs and gutters, at its sole cost and expense, to the satisfaction of the City Engineer and in accordance with City specifications, regulations and applicable permits for installation and construction. 5.3.9 Possessory Interest Tax. By accepting this Agreement, Poseidon acknowledges that notice is hereby given to Poseidon that use or occupancy of any public property pursuant to the authorization herein set forth may create a possessory interest which may be subject to the payment of property taxes levied upon such interest. Poseidon shall be solely liable for, and shall pay and discharge prior to delinquency, any and all possessory interest taxes or other taxes levied against Poseidon's right to possession, occupancy or use of any public property pursuant to any right of possession, occupancy or use created by this Agreement, and shall hold the City harmless, and free and clear of any liability for such tax. If Poseidon fails to pay and discharge prior to delinquency, any and all such possessory interest taxes or other taxes levied, then the City or the District may, but shall not be obligated to, pay and discharge the same, and in that event, the District may offset any such amount so paid against amounts due from the District to Poseidon pursuant to the Water Purchase Agreement. 5.3.10 Records. Poseidon shall prepare and furnish to the City Manager or the City Manager's designee, in a form prescribed by the City Manager, as-built plans for the Plant Facilities, emergency response plans (including without limitation a hazardous materials response plan and a fire response plan), all documents, records, reports, audits, cost-accounting, disclosures or manuals required under the Water Purchase Agreement, and such other reports with respect to Poseidon's operations, affairs, transactions, or property as may be reasonably necessary or appropriate to the performance of any of the duties of the City Manager or designee in connection with this Agreement. 5.3.11 Permits. The parties acknowledge that: (a) some public agencies or private utilities either may not allow a non-public agency that does not have a franchise agreement to be the permittee of an encroachment permit or may not allow a non-public agency to obtain necessary project permits; and (b) as a result, Poseidon 22 from time to time may request the City to execute, on Poseidon's behalf, either Encroachment Applications, which, if approved so that encroachment permits issue thereon, would permit the City or Poseidon to excavate and construct Product Water pipelines in Public Ways, or other permit applications. The City is willing to execute such Encroachment Applications or other permit applications, provided, however, that, in each such case Poseidon shall comply with all permit and license agreement conditions, and in accordance with Article IX hereof, in each such case Poseidon shall save, indemnify, hold harmless and defend, at its expense, including attorneys' fees, the City and the City Indemnitees, from and against any and all loss, costs, fees, expenses or liability whatsoever, including without limitation any liability for bodily injury and/or death to any person or damage to any property of anyone, arising out of or based upon the issuance and/or use of each such encroachment or other permit and the placement and subsequent operation and maintenance of said encroachment. If such Encroachment Permit is obtained by the City, the City, if permitted by the terms of the Encroachment Permit, shall allow Poseidon to act as the City's agent for the use of any facilities or areas permitted or authorized by the Encroachment Permit necessary for the construction, operation, repair, maintenance or removal of the Appurtenant Facilities in order to supply wholesale product water to the customers of the District pursuant to the Water Purchase Agreement. 5.3.12 Survival of Section 5.3. Unless this Agreement is earlier terminated in accordance with Section 8 hereof, the terms and provisions of this Section 5.3 shall: (a) survive the natural expiration of the term of this Agreement; and (b) terminate, and be of no further force or effect, upon the expiration of the Right-of- Way Term. 6 ANNUAL REVIEW. 6.1 Periodic Review. The City Council shall review the extent of good faith substantial compliance by Poseidon with the terms of this Agreement annually, on or before each anniversary of the Effective Date. Subject to the notice and cure procedure set forth in Section 8.6, such a periodic review may result in termination of this Agreement, provided a Default has been established under the terms of this Agreement. Pursuant to Government Code Section 65865.1, as amended, Poseidon shall have the duty to demonstrate its good faith compliance with the terms of this Agreement at such review. The parties recognize that this Agreement and the documents incorporated herein could be deemed to contain many requirements and that evidence of each and every requirement would be a wasteful exercise of the parties' resources. Accordingly, Poseidon shall be deemed to have satisfied its duty of demonstration if it presents substantial evidence to the City of its good faith and substantial compliance with the provisions of this Agreement, including any information concerning the numbers, types, densities, heights and sizes of structures completed and of any reservations and dedications to the City. Any party may address any requirement of this Agreement during the review. However, ten (10) days' written notice of any requirement to be addressed shall be made by the requesting party. If at the time of review an issue not previously identified in writing is required to be addressed, the review at the request of either party shall be continued to afford sufficient time for analysis and preparation. Poseidon shall pay the City's reasonable costs incurred in conducting annual review in accordance with this Agreement. 6.2 Opportunity to Be Heard. Upon written request to the City by Poseidon, Poseidon shall be permitted an opportunity to be heard orally and/or in writing at a 23 noticed public hearing regarding its performance under this Agreement. Poseidon shall be heard before the City Council at any required public hearing concerning a review of action on the Agreement. 6.3 Information to Be Provided Poseidon. The City shall deposit in the mail to Poseidon a copy of staff reports and related exhibits concerning contract performance a minimum of ten (10) calendar days prior to any such review or action upon this Agreement by the City Council. 7 INCORPORATION AND ANNEXATION. 7.1 Intent. If all or any portion of the Property subject to the Leasehold is annexed to or otherwise becomes a part of another city or another county, the parties intend that this Agreement shall survive and be binding upon such other jurisdiction. 7.2 Incorporation. If at any time during the term of this Agreement, another city is incorporated comprising all or any portion of the Property subject to the Leasehold, the validity and effect of this Agreement shall be governed by Section 65865.3 of the Code. 7.3 Annexation. Poseidon and the City shall oppose, in accordance with the procedures provided by law, the annexation to any other city of all or any portion of the Property subject to the Leasehold unless both Poseidon and the City give written consent to such annexation. 8 DEFAULT AND REMEDIES. 8.1 Remedies in General. The parties would not have entered into this Agreement without the limits on damages set forth herein. Accordingly, the parties agree that each of the parties hereto may pursue any remedy at law or equity available for breach of any provision of this Agreement, subject to the following: (a) The City and all persons acting on behalf of the City shall not be liable in damages to Poseidon, or to any successor in interest, or to any other person. Poseidon covenants not to sue for monetary damages or claim any monetary damages: (1) for any breach of this Agreement or for any cause of action which arises out of this Agreement; or (2) for taking, impairment or restriction of any property right or interest as the result of or arising under or pursuant to this Agreement, but excluding claims based upon applicable obligations of the City acting in its governmental capacity and not as a party to this Agreement, and reserving the reserved rights and remedies described in Sections 8.5 and 8.8; or (3) arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. (b) Poseidon shall not be liable in monetary damages to City, or to any person acting on behalf of City, and City covenants not to sue for damages or claim any monetary damages: 24 (1) for failure to construct and operate the Project or any breach of this Agreement or for any cause of action which arises out of this Agreement; or (2) arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement; (3) provided, however, that City reserves the right to sue for any sums, including without limitation any sums due pursuant to Section 4 of this Agreement, that are specifically required to be paid by Poseidon or its successors pursuant to this Agreement, and provided further, however, the City also reserves the rights and remedies described in Section 8.8. Nothing in this Section 8.1 shall be construed to limit or otherwise effect the remedies available to Poseidon and the District under the Water Purchase Agreement. 8.2 Termination by City. The City may terminate this Agreement upon a termination of the Water Purchase Agreement by the District pursuant to Section 2.3.4 thereof. 8.3 Liquidated Damages for Poseidon's Failure to Amend This Agreement Upon Relocation of Plant Facilities. Provided the Desalination Project has commenced Commercial Operation (as that term is defined in the Water Purchase Agreement), if all of or a material portion of the Plant Facilities are relocated to real property that is not encumbered by this Agreement, then Poseidon agrees to amend this Agreement in all respects necessary to provide for this Agreement to encumber the real property to which the Plant Facilities are so relocated. If Poseidon fails to do so and fails to pay the mitigation fees payable pursuant to Section 4.2.1 of this Agreement, Poseidon shall be in Default of this Agreement, and shall pay liquidated damages to the City in the initial amount of Fifteen Million Dollars ($15,000,000.00), to compensate the City for a portion of the mitigation fees that would be payable pursuant to Section 4 of this Agreement. Such amount of liquidated damages shall be reduced by One Million Dollars ($1,000,000) for each year that Poseidon pays the property taxes or mitigation fee pursuant to Section 4.2.1 of this Agreement. By signing or initialing in the space provided below, Poseidon and the City acknowledge and agree that it would be impractical and extremely difficult for the City to estimate its costs and losses as the result of the failure to pay such mitigation fees, and that under the circumstances as they exist as of the date of execution of this Agreement, the surcrpf the liquidated damages set forth above is a reasonable estimate of costs th^(t)^^^it)^would incur in the event of such faflpre/j Initials of Authorized Initials ftf Authorized Signatory on Poseidon's Signatory on City'; Behalf Behalf 8.4 Specific Performance. The parties acknowledge that, except as provided in Sections 8.1(b)(3) and 8.3 above and 8.8 below, money damages and remedies at law generally are inadequate and that specific performance and other non-monetary 25 relief are the exclusive remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: (a) Money damages are unavailable against City, or against Poseidon except as provided herein; (b) Due to the size, nature and scope of the Project, it will not be practical or possible to restore the Property subject to the Leasehold to its preexisting condition once implementation of this Agreement has begun. After such implementation Poseidon may be foreclosed from other choices it may have had to utilize the Property subject to the Leasehold and provide for other benefits. Poseidon has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement, and will be investing even more significant time and resources in implementing the Project in reliance upon these terms, and it will not be possible to determine the sum of money that would adequately compensate Poseidon for such efforts. By the same token, City will have invested substantial time and resources and will have permitted irremediable changes to the land and increased demands on the surrounding infrastructure and will have committed, and will continue to commit, to development in reliance upon the terms of this Agreement, and it would not be possible to determine a sum of money which would adequately compensate City for such undertakings. For this reason, the parties hereto agree that, except as otherwise provided in this Agreement, if any party fails to carry out its obligations under this Agreement, an injured party shall be entitled to non-damages remedies, including the remedy of specific performance of this Agreement. 8.5 Release and Reservation. Except for non-damage remedies, including the remedy of specific performance and judicial review as provided for in Section 8.4, Poseidon, for itself, its successors and assignees, hereby releases the City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, including, but not limited to, any claim or liability, based or asserted, pursuant to Article I, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon the City because it entered into this Agreement or because of the terms of this Agreement; provided, however, that Poseidon reserves all of its otherwise applicable rights and remedies in the event of an actual condemnation, inverse condemnation or inappropriate taking, restriction or regulation by the City, which are rights and remedies Poseidon otherwise has as a property owner. 8.6 Termination of Agreement for Default of Poseidon. The City may terminate this Agreement for any Default by Poseidon; provided, however, that, except as set forth below in the next clause of this Section 8.6, the City may terminate this Agreement pursuant to this Section for a monetary default if Poseidon fails, neglects or refuses to make any payment within fifteen (15) days of the date due; provided further, however, that the City may terminate this Agreement pursuant to this Section for non- payment of the annual fee required under Section 5.3.2 hereof only after providing written notice to Poseidon of such non-payment and if Poseidon fails to pay such fee within thirty (30) days after Poseidon's receipt of such notice; and provided further, however, that the City may terminate this Agreement pursuant to this Section for a non- monetary default only after providing written notice to Poseidon of Default setting forth the nature of the Default and the actions, if any, required by Poseidon to cure such 26 Default and, where the Default can be cured, Poseidon has failed to take such actions and cure such Default within sixty (60) days after Poseidon's receipt of such notice or, in the event that such Default cannot be cured within such sixty (60) day period but can be cured within a longer time, Poseidon has failed to commence the actions necessary to cure such Default within such sixty (60) day period and to diligently proceed to complete such actions and cure such Default. 8.7 Termination of Agreement for Default of the City. Poseidon may terminate this Agreement for any Default by the City only after providing written notice to the City of Default setting forth the nature of the Default and the actions, if any, required by the City to cure such Default and, where the Default can be cured, the City has failed to take such actions and cure such Default within sixty (60) days after the City's receipt of such notice or, in the event that such Default cannot be cured within such sixty (60) day period but can be cured within a longer time, the City has failed to commence the actions necessary to cure such Default within such sixty (60) day period and to diligently proceed to complete such actions and cure such Default. 8.8 Rights. Remedies for Negligence. Willful Misconduct. Nothing in this Agreement shall be deemed to waive or limit any rights and remedies that the parties otherwise would have against the other in the absence of this Agreement with respect to injury caused by the negligence or willful misconduct of a party. 9 THIRD PARTY LITIGATION: INDEMNIFICATION. 9.1 General Plan Litigation. The City has determined that this Agreement is consistent with its General Plan and the Precise Development Plan, and that the General Plan and the Precise Development Plan meet all requirements of law. Poseidon has reviewed the General Plan and the Precise Development Plan and concurs with the City's determination. The parties acknowledge that: (a) In the future there may be litigation challenging the legality, validity and adequacy of certain provisions of the General Plan or Precise Development Plan or other, similar challenges; and, (b) If successful, such challenges could delay or prevent the performance of this Agreement and the development of the Project. The City shall have no liability in damages under this Agreement for any failure of the City to perform under this Agreement or the inability of Poseidon to develop the Project as contemplated by the Development Plan or this Agreement as the result of a judicial determination that on the Agreement Date, or at any time thereafter, the General Plan or the Precise Development Plan, or portions thereof, are invalid or inadequate or not in compliance with law. 9.2 Third Party Litigation Concerning Agreement. In the event of any legal action instituted by a third party (not a party to this Agreement) or any governmental entity or official (other than the City or an official of the City), challenging the validity of any provision of this Agreement or the other Development Approvals or any City action relating thereto, the parties hereby agree to cooperate in defending said action; provided, however Poseidon shall indemnify and hold harmless City from all litigation 27 expenses, including reasonable attorneys' fees and costs, arising out of any legal action instituted by such third party (not a party to this Agreement), or other governmental entity or official (other than City or an official of the City) challenging the validity of any provision of this Agreement, or the other Development Approvals or any City action relating thereto. City shall promptly notify Poseidon of any such action and City shall cooperate in the defense thereof. 9.3 Breaches of Agreement; Property Damage. Bodily Injury or Death. In addition to the provisions of Sections 5.3.9 and 9.2 above, Poseidon shall save, indemnify, hold harmless and defend, at its expense, including attorneys' fees, the City and the City Indemnitees from and against any and all loss, costs, fees, expenses or liability whatsoever, arising out of or based upon any breach or alleged breach of this Agreement by Poseidon. Poseidon shall not, however, be required to indemnify the City Indemnitees with respect to any loss, costs, fees, expenses or liability arising through the gross negligence or willful misconduct of the City. 9.4 Indemnification Procedure. In any situation in which Poseidon is required to indemnify the Indemnified Party pursuant to this Agreement, as a condition thereto the Indemnified Party shall give Poseidon reasonably prompt notice of any matter for which indemnification is sought hereunder. The Indemnified Party shall cooperate in the defense of such claim (and pending assumption of defense, the City, in its good faith judgment, may take such steps to defend itself against such claim as it deems appropriate to protect its interests). Poseidon shall pay the Indemnified Party's reasonable out-of-pocket expenses incurred in connection with such cooperation and such steps taken to defend itself pending Poseidon's assumption of defense. Poseidon shall keep the Indemnified Party reasonably informed as to the status of the defense of such claim. After notice from Poseidon to the Indemnified Party of the assumption, and the defense of a claim, Poseidon shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than those expenses referred to above. Poseidon, at its own expense and through counsel chosen by it (which counsel shall be reasonably acceptable to the Indemnified Party), shall defend any such claim; provided, however, that if, in the Indemnified Party's reasonable judgment at any time, either a conflict of interest arises between Poseidon and the Indemnified Party or if there are defenses which are different from or in addition to those available to Poseidon and/or the Indemnified Party and the representation of both parties by the same counsel would be inappropriate, then in each such case the Indemnified Party shall have the right to employ a separate law firm in each applicable jurisdiction (if necessary) ("Separate Counsel"), to represent the Indemnified Party in any action or group of related actions (which firm or firms shall be reasonably acceptable to Poseidon), and in that event: (a) the reasonable fees and expenses of such Separate Counsel shall be paid by Poseidon (it being understood, however, that Poseidon shall not be liable for the expenses of more than one Separate Counsel with respect to any claim (even if against multiple Indemnified Parties)); and (b) Poseidon shall have the right to conduct its own defense in respect of such claim. If Poseidon does not defend against a claim, the Indemnified Party may defend, compromise and settle such claim and shall be entitled to indemnification hereunder (to the extent permitted by this Agreement). Notwithstanding the foregoing, Poseidon shall not, without the Indemnified Party's prior written consent (which shall not be unreasonably withheld, conditioned or delayed), settle or compromise any claim or consent to the entry of any judgment unless: (x) there 28 is no finding or admission of any violation of law or any violation of the rights of any person and no effect on any other claims that may be made against the Indemnified Party; and (y) the sole relief provided is monetary damages that are paid in full by Poseidon. 9.5 Survival. The provisions of this Sections 9.1 through 9.4, inclusive, shall survive the termination of this Agreement or the natural expiration of the term of this Agreement. 10 MORTGAGEE PROTECTION. The parties hereto agree that this Agreement shall not prevent or limit Poseidon, in any manner, at Poseidon's sole discretion, from encumbering the Project or any portion thereof or any improvement thereon by any mortgage, deed of trust or other security device securing financing with respect to the Project. The City acknowledges that the lenders providing such financing may require certain Agreement interpretations and modifications and agrees upon request, from time to time, to meet with Poseidon and representatives of such lenders to negotiate in good faith any such request for interpretation or modification. The City will not unreasonably withhold its consent to any such requested interpretation or modification provided such interpretation or modification is consistent with the intent and purposes of this Agreement. Any Mortgagee of the Project shall be entitled to the following rights and privileges: (a) Neither entering into this Agreement nor a breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any mortgage on the Project made in good faith and for value, unless otherwise required by law. (b) Any Mortgagee of any mortgage or deed of trust encumbering the Project, or any part thereof, which has submitted a request in writing to the City in the manner specified herein for giving notices, shall be entitled to receive written notification from the City of any Default by Poseidon in the performance of Poseidon's obligations under this Agreement concurrently with the receipt of any such notice by Poseidon. (c) The Mortgagee shall have the right, but not the obligation, to cure a Default during the remaining cure period allowed Poseidon under this Agreement. (d) Subject to compliance with the provisions of Section 2.4.1(b) of this Agreement, any Mortgagee who comes into possession of the Project, or any part thereof, pursuant to foreclosure of the mortgage or deed of trust, or deed in lieu of such foreclosure, shall take the Project, or part thereof, subject to the burdens of, and shall be entitled to the benefit of, the terms of this Agreement. 11 MISCELLANEOUS PROVISIONS. 11.1 Recordation of Agreement. As more particularly set forth below in Section 11.27, this Agreement and any amendment or cancellation thereof shall be recorded against the Leasehold by the Clerk of the City Council filing a copy of this Agreement or any such amendment with the San Diego County Recorder within the period required by Section 65868.5 of the Code. 29 11.2 Further Actions. Each of the parties shall cooperate with and provide reasonable assistance to the other to the extent contemplated hereunder in the performance of all obligations under this Agreement and the satisfaction of the conditions of this Agreement. At any time and from time to time after the date hereof, each Party agrees to take such actions and to execute and deliver such documents as each other Party may reasonably request to effectuate the purposes of this Agreement. 11.3 Amendment. Except as otherwise provided in this Agreement, neither this Agreement nor any provision hereof may be waived, modified, amended, discharged, or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such writing. 11.4 Entire Agreement. This Agreement and the Water Purchase Agreement constitute the entire understanding among the parties with respect to the matters set forth herein, and supersede all prior or contemporaneous understandings or agreements among the parties with respect to the subject matter hereof, whether oral or written. 11.5 Notices. As used in this Agreement, "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. Any notice, approval, consent, waiver or other communication required or permitted to be given or to be served upon any party in connection with this Agreement shall be in writing. Such notice shall be personally served, sent by facsimile, sent prepaid by registered or certified mail with return receipt requested, or sent by reputable overnight delivery service, such as Federal Express, and shall be deemed given: (a) if personally served, when delivered to the party to whom such notice is addressed; (b) if given by facsimile, when sent, provided that the confirmation sheet from the sending fax machine confirms that the total number of pages were successfully transmitted; (c) if given by prepaid or certified mail with return receipt requested, on the date of execution of the return receipt; or (d) if sent by reputable overnight delivery service, such as Federal Express, when received. Such notices shall be addressed to the party to whom such notice is to be given at the address below specified. Either party may, by notice given at any time and sent in accordance with this Section, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. If to CITY, to: City of Carlsbad 1200 Carlsbad Village Drive Carlsbad ,CA 92008 Attn: City Manager Fax No. (760) 729-9461 If to Poseidon, to: Poseidon Resources (Channelside) LLC 501 West Broadway, Suite 2020 San Diego, CA. 92101 Attn: President Fax No.: (619) 595-7892 30 11.6 Controlling Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of California, without giving effect to any choice-of-law or conflicts-of-laws rule or principle that would result in the application of any other laws. 11.7 Headings. Headings, titles and captions are for convenience only and shall not constitute a portion of this Agreement or be used for the interpretation thereof. 11.8 Cumulative Rights; Waiver. The rights created under this Agreement, or by law or equity, shall be cumulative and may be exercised at any time and from time to time. No failure by any party to exercise, and no delay or omission by any party in exercising any rights, shall be construed or deemed to be a waiver thereof, nor shall any single or partial exercise by any party preclude any other or future exercise thereof or the exercise of any other right. Any waiver of any provision or of any breach of any provision of this Agreement must be in writing, the term "waive" or its equivalent must be used in such writing, and any waiver by any party of any breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Agreement. The failure of any party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered or construed or deemed a waiver of any provision or any breach of any provision of this Agreement or deprive that party of the right thereafter to insist upon strict adherence to that term or provision or any other term or provision of this Agreement. 11.9 Liberal Construction. This Agreement constitutes a fully-negotiated agreement among commercially sophisticated parties, each assisted by legal counsel, and the terms of this Agreement shall not be construed or interpreted for or against any party hereto because that party or its legal representative drafted or prepared such provision. 11.10 Severability. If any provision of this Agreement shall be ruled invalid, illegal or unenforceable, then the parties shall: (a) promptly negotiate a substitute for such provision which shall, to the greatest extent legally permissible, therein effect the intent of the parties in such invalid, illegal or unenforceable provision; and (b) negotiate such changes in, substitutions for or additions to the remaining provisions of this Agreement as may be necessary in addition to and in conjunction with clause (a) above to give effect to the intent of the parties without the invalid, illegal or unenforceable provision. To the extent that the parties are able to negotiate such changes, substitutions or additions as set forth in the preceding sentence, and the intent of the parties with respect to the essential terms of the Agreement may be carried out without the invalid, illegal or unenforceable provision, then the balance of this Agreement shall not be affected, and this Agreement shall be construed and enforced as if such invalid, illegal or unenforceable provision did not exist. 11.11 Good Faith and Fair Dealing. The parties hereto acknowledge and agree that the performances required by the provisions of this Agreement shall be undertaken in good faith, and with all parties dealing fairly with one another. 11.12 No Third Party Beneficiaries. Except as provided in Sections 9.3 and 9.4, and this Section 11.12, this Agreement does not create, and shall not be construed to 31 create, any rights enforceable by any person, partnership, corporation, joint venture, limited liability company or other form of organization or association of any kind that is not a party to this Agreement. Notwithstanding the foregoing, the RDA and the District are intended beneficiaries of this Agreement, with the right to enforce this Agreement in accordance with its terms. 11.13 Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon, provided such signature page is attached to any other counterpart identical thereto except for having an additional signature page executed by the other party. 11.14 Time of the Essence. Time is of the essence of each and every provision of this Agreement. Unless business days are expressly provided for, all references to "days" herein shall refer to consecutive calendar days. If any date or time period provided for in this Agreement is or ends on a Saturday, Sunday or federal, state or legal holiday, then such date shall automatically be extended to the next day which is not a Saturday, Sunday or federal, state or legal holiday. 11.15 Number. Gender. Where a word or phrase is defined in this Agreement, its other grammatical forms have a corresponding meaning. As used herein, and as the circumstances require, the plural term shall include the singular, the singular shall include the plural, the neuter term shall include the masculine and feminine genders, the masculine term shall include the neuter and the feminine genders, and the feminine term shall include the neuter and the masculine genders. 11.16 Relationship. Nothing in this Agreement shall be deemed to constitute either party a partner, agent or legal representative of the other party, neither party is acting as the agent of the other in any respect hereunder, each party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement, and no partnership, joint venture or other association of any kind is formed by this Agreement. No liability or benefits, such as workers' compensation, pension rights or liabilities, other provisions or liabilities arising out of or related to a contract for hire or employer/employee relationship, shall arise or accrue to any party's agent or employee as a result of this Agreement or its performance. 11.17 Joint and Several Obligations. If at any time during the term of this Agreement the Project is owned, in whole or in part, by more than one owner, all obligations of such owners under this Agreement shall be joint and several, and the Default of any such owner shall be the Default of all such owners. 11.18 Force Maieure. Neither party shall be deemed to be in Default where failure or delay in performance of any of its obligations under this Agreement is caused by an event of Force Majeure. "Force Majeure" as used herein shall have the meaning more particularly set forth in Section 17 of the Water Purchase Agreement. 11.19 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the party benefited thereby of the covenants to be performed hereunder by such benefited party. 32 11.20 Successors in Interest. The burdens of this Agreement shall be binding upon all successors in interest to the parties to this Agreement; provided, however, that Cabrillo shall not be considered a successor in interest to Poseidon in any circumstance including, without limitation, the termination of the Lease, unless Cabrillo specifically agrees in writing to be a successor. Subject to Section 2.4 of this Agreement, the benefits of this Agreement shall inure to the successors in interest to the parties to this Agreement. Subject to the receipt of any consent of Cabrillo required under the Lease, all provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the Leasehold for a time period (the "Enforceability Period") that is equal to either (a) the term of the Lease (including any extensions of the term of the Lease), or (b) the term of this Agreement, if but only if the Poseidon Property Interest is taken by eminent domain or there is a voluntary conveyance, regardless of whether in lieu of or under the threat of eminent domain, and in connection therewith the Lease is terminated. Subject to the receipt of any consent of Cabrillo required under the Lease, each covenant to do or refrain from doing some act hereunder with regard to development of the Project and the Leasehold: (x) is for the benefit of and is a burden upon every portion of the Project and the Property subject to the Leasehold for the Enforceability Period; (y) runs with the Project and the Property subject to the Leasehold and each portion thereof for the Enforceability Period; and (z) is binding upon each party and each successor in interest during ownership of the Project or the Leasehold or any portion thereof for the Enforceability Period. 11.21 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by a party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of San Diego, State of California, and the parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 11.22 Project as a Private Undertaking. The parties specifically understand and agree that the development of the Project is a private development. The only relationship between the City and Poseidon is that of a government entity regulating the development of a private Project and the lessee, grantee and developer of such Project. 11.23 Eminent Domain. No provision of this Agreement shall be construed to limit, restrict or require the exercise by the City of its power of eminent domain. 11.24 Agent for Service of Process. Poseidon shall designate and maintain Corporation Service Company (or a similar national company) as its agent for the purpose of service of process in any court action arising out of or based upon this Agreement, and the delivery to such agent of a copy of any process in any such action shall constitute valid service upon Poseidon. If for any reason service of such process upon such agent is not feasible, then in such event Poseidon may be personally served with such process out of this County and such service shall constitute valid service upon Poseidon. 11.25 Authority to Execute. Each party warrants and represents that this Agreement has been duly authorized by such party. Each party shall deliver to the other party copies of such resolutions, certificates or written assurances evidencing authorization to execute, deliver and perform this Agreement. 33 11.26 Commission Approval Required. This Agreement shall not become effective unless and until it is approved by the Commission, as required by Code Section 65869. 11.27 Approval Procedure. The following procedure shall govern approval of this Agreement: (a) Prior to City Council consideration of this Agreement, Poseidon shall execute this Agreement; provided, however, that Poseidon shall have the right prior to the Agreement Date of this Agreement to withdraw its execution based upon the terms and conditions contained in the Development Approvals, in which case this Agreement shall be of no force or effect. (b) City Council shall undertake all necessary proceedings to consider this Agreement. Approval by the City shall be by adoption of the Amended Approval Ordinance. (c) Following adoption of the Amended Approval Ordinance, the Mayor shall execute this Agreement on behalf of the City, and take such steps as may be required to obtain Commission approval as described above in Section 11.26. (d) This Agreement shall be effective on the Effective Date. As provided in Code Section 65868.5, the City shall cause a copy of this Agreement to be recorded against the Leasehold by the Clerk of the City Council filing a copy of this Agreement with the San Diego County Recorder within ten (10) days following the Effective Date. Poseidon shall pay any recording costs. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year below set forth. Dated: I °j S" , 2009 "CITY" CITY OF CARLSBAD APPROVED AS TO FORM: ATTEST: Bv (S1 'CLAUDE A. LEWIS, Mayor [SIGNATURES CONTINUED ON NEXT PAGE.] 34 Dated:2009 "POSEIDON" Poseidon (Channelside) LLC, a Delaware limited liability company Name:......Title: 35 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of _ On //7 /? A? 9 before me>f Date ' — personally appeared . . Here Insert Name anitle of the Officer ruJ^U-^ . Name(s) of Signer(s) SHERRY A. FREISINGER Commission * 1727064 Notary Public - California | San 0<ego County ~ MvComm.EnplwtFabM.2011 I Place Notary Seal Above who proved to me on the basis of satisfactory evidence to be the person(^f whose namej$ is/arX subscribed to the within instrument and acknowledged to me that he/sKe/th^ey executed the same in his/Ker/tfcreir authorized capacity(i0s), and that by his/h/^r/trjeir signature^) on the instrument the person(^), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my •ira -Signati OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: ^/V-kc/ *~L) Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: D Individual D Corporate Officer — Title(s): D Partner — D Limited D General D Attorney in Fact RIGHT THUMBPRINT OF SIGNER Signer's Name: D Individual D Corporate Officer — Title(s): D Partner — D Limited D General D Attorney in Fact RIGHT THUMBPRINT OF SIGNER D Trustee D Guardian or Conservator n Other: Signer Is Representing: Top of thumb here D Trustee D Guardian or Conservator D Other: Signer Is Representing: Top of thumb here ©2007 National Notary Association • 9350 De Soto Ave., P.O. Box 2402 • Chatsworth, CA 91313-2402 • www.NationalNotary.org Item #5907 Reorder: Call Toll-Free 1 -800-876-6827 STATE OF CALIFORNIA COUNTY OF SAN DIEGO } } ss } personally appeared ~>fefcr before me ri ho proved to me on the C basis of satisfactory evidence to be the peKsdn^f whose name$gQjs/$(§ subscribed to the within instrument and acknowledged to me that he/she/tbey executed the same in his/hentrreir authorized capacity(ifcg), and that by his/her/their signature^on the instrument the persontey or the entity upon behalf of which the person(#f acted, executed the instrument I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Witness my hand and official seal. Signature OFFICIAL SEAL Ana Angelica Beltran-Garcia^NOTARYPUBLIC-CALIFORNIA & COMM. NO. 1807466 - SAN DIEGO COUNTY I MY COMM. EXP. JUL 26.. .20121 STATE OF CALIFORNIA COUNTY OF SAN DIEGO On personally appeared } } ss before me, , who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Witness my hand and official seal. Signature 36 CONSENT OF PROPERTY OWNER Cabrillo Power I, LLC, a Delaware limited liability company ("Cabrillo"), is the owner of the Property that is the subject of the Precise Development Plan and Desalination Plant Case No. DA 05-01 (Planning Commission Resolution No. 6090). Poseidon Resources (Channelside) LLC, a Delaware limited liability company ("Poseidon"), currently is the lessee of the Property under the terms and conditions of that certain Ground Lease and Easement Agreement, dated July 1 1 , 2003, by and between Cabrillo and Poseidon, as amended and restated on A«au<,-r 3.5 3.00*7 2009. Cabrillo hereby consents to the entering into of that certain Development Agreement between the City of Carlsbad and Poseidon, to which this Consent is attached and which affects Poseidon's interest, as lessee, in the Property. Dated:"Cabrillo" CABRILLO POWER I, LLC, a Delaware limited liability company By: /^JLfc*V, Name: Title:-s i STATE OF CALIFORNIA } } ss COUNTY OF SAN DIEGO } On •&«• U(*>*,*^-1**>\ before me, personally appeared V^&r-f- £, who proved to me on the basis of satisfactory evidence to be the personfa-) whose name(s^ is/a£e subscribed to the within instrument and acknowledged to me that he/sJse/tJRey executed the same in his/r%r/ttrpir authorized capacity(ips), and that by his/her/trjeir signature^) on the instrument the person(^) or the entity upon behalf of which the person(e) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Witness my b^nd andWficial seal. OFROALSEALI DAREN VASS f Signature EXHIBIT "A" Legal Description of the Property EXHIBIT 'A' LEGAL DESCRIPTION FOR THE LEASED PREMISES THAT PORTION OF PARCEL 4 PER CERTIFICATE OF COMPLIANCE RECORDED OCTOBER 30, 2001 AS DOCUMENT NO. 2001-0789068, AND AS SHOWN ON RECORD OF SURVEY NO. 17350, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE MOST SOUTHEASTERLY CORNER OF THAT PORTION OF SAID PARCEL 4 LYING WESTERLY OF THE 100.00 FOOT WIDE RIGHT-OF-WAY OF THE ATCHISON TOPEKA AND SANTA FE RAILROAD, ALSO BEING A POINT ON THE WESTERLY LINE OF SAID 100.00 FOOT WIDE RIGHT-OF-WAY OF THE ATCHISON TOPEKA AND SANTA FE RAILROAD; THENCE ALONG SAID WESTERLY LINE, NORTH 22°30'13" WEST, 1319.08 FEET; THENCE LEAVING SAID WESTERLY LINE, SOUTH 67°29'47" WEST, 58.72 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 67°31'21" WEST, 229.72 FEET; THENCE NORTH 40°03'53" WEST, 199.13 FEET; THENCE SOUTH 66°28'49" WEST, 45.93 FEET; THENCE NORTH 22°28'46" WEST, 587.13 FEET; THENCE NORTH 67°31'14" EAST, 338.82 FEET; THENCE SOUTH 22°37'35" EAST, 536.65 FEET; THENCE SOUTH 20°08'20" EAST, 115.20 FEET; THENCE SOUTH 22°37'35" EAST, 124.38 FEET TO THE TRUE POINT OF BEGINNING. ATTACHED HERETO IS A PLAT LABELED EXHIBIT 'C' AND BY THIS REFERENCE MADE A PART THEREOF. ALL DISTANCES SHOWN HEREON ARE GRID DISTANCES. TO COMPUTE GROUND DISTANCES, DIVIDE GRID DISTANCES BY 0.999963440. ALL BEARINGS SHOWN HEREON ARE GRID, BASED UPON CALIFORNIA COORDINATE SYSTEM ZONE 6, NAD-83, AND EPOCH 1991.35. SAID PARCEL OF LAND CONTAINS 5.703 ACRES, MORE OR LESS GARY'L. HUS} DATE L.S. 7019" EXPIRATION DATE 6/30/2010 T:\SURVEY\2398\2009-07-13 - Plats\Legals\Exhibit B-reconfig-Pemianent Lease Area.doc EXHIBIT'S" Map of the Property LEGAL DESCRIPTION: A PORTION OF PARCEL 4 PER CERTIFICATE OF COMPLIANCE RECORDED OCTOBER 30, 2001 AS DOCUMENT NO. 2001-0789068, AND AS SHOWN ON RECORD OF SURVEY NO. 17350, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STA TE OF CALIFORNIA. ASSESSORS PARCEL NO: 210-OW-4J BASIS OF BEARINGS: THE BASIS OF BEARINGS FOR THIS DRAWING IS THE HORIZONTAL CONTROL BASED ON THE CALIFORNIA COORDINATE SYSTEM ZONE 6, NAD 83, AS DETERMINED LOCALLY BY THE LINE BETWEEN FIRST ORDER CONTROL POINTS 057 AND 141 PER RECORD OF SURVEY NO. 17271, I.E. N40'39'21HW. LEGEND: OWNER: CABRILLO POWER I LLC 4600 CARLSBAD BOULEVARD CARLSBAD, CALIFORNIA 92008 PHONE: (760) 268-4011 SURVEYOR OF WORK: PROJECT DESIGN CONSULTANTS 701 B STREET SUITE 800 SAN DIEGO, CALIFORNIA 9210) PHONE: (619) 235-6471 INDICATES EXISTING PROPERTY LINE INDICATES POINT OF COMMENCEMENT INDICATES TRUE POINT OF BEGINNING INDICATES THE LEASED PREMISES AREA = 5.703 ACRES. MORE OR LESS AN VICINITY MAP NO SCALE GARY L REGISTRATION EXPIRES 6/30/2010 DATE APPLICANT: POSEIDON RESOURCES 501 WEST BROADWAY SUITE 2020 SAN DIEGO. CALIFORNIA 92101 PREPARED BY: PROJECT DESIGN CONSULTANTS 70? B STREET SUITE 800 SAN DIEGO, CALIFORNIA 92101 THE LEASED PREMISES EXHIBIT 'B1 SHEET 1 OF 2 A.P.N. 210-010-43 T: \SURVEY\239S\20Q9-07-13 - Plats\PlatC-reconfig-LeasedPremisesShtOt.dwg PARCEL 3 ROS 17350 PARCEL 4 ROS 17350 PARCEL 4 ROS 17350 PARCEL 4 CERTIFICATE OF COMPLIANCE RECORDED OCTOBER 3O, 2OO1 FILE NO. 2OO1-O789O68 T.P.O.B. PARCEL 7 ROS 17350 RAILROAD RIGHT-OF-WAY PJVI 19380 P.O.C. PARCEL 5 ROS 17350 \ PCL, 8 ;" = 400'\ APPLICANT: POSEIDON RESOURCES 501 WST BROADWAY SUITE 2020 SAN DIEGO, CALIFORNIA 92)01 PREPARED BY: PROJECT DESIGN CONSUL TANTS 707 B STREET SUITE 800 SAN DIEGO, CALIFORNIA 92)01 THE LEASED PREMISES EXHIBIT 'B1 SHEET 2 OF 2 A.P.N. 210-OW-4J T: \SURV£r\2398\2009-07-13 - Plots\P/alC-reconHg-LeosedPremisesSbt02.<l»-g EXHIBIT 'c' (a) Final EIR 03-05; Findings of Fact; Statement of Overriding Considerations; and Mitigation and Monitoring and Reporting Program, approved by the adoption of City Council Ordinance/Resolution No. 2006-156, on June 13, 2006, on file in the City Clerk's Office, and incorporated by reference herein. (b) Addendum to Final EIR 03-05 (EIR 03-05(A), approved by the adoption of City Council Ordinance/Resolution No. 2009-233, on September 15, 2009, on file in the City Clerk's Office, and incorporated by reference herein. (c) Precise Development Plan Amendment POP 00-02(6), approved by the adoption of City Council Ordinance/Resolution No. CS-058, on September 15, 2009, on file in the City Clerk's Office, and incorporated by reference herein. (d) Specific Plan 144(J), approved by the adoption of City Council Resolution No. CS-057, on September 15, 2009, on file in the City of Carlsbad Planning Department, and incorporated by reference herein. (e) Coastal Development Permit CPD 04-41, approved by the adoption of Resolution 6096, on May 3, 2006, on file in the City Clerk's Office, and incorporated by reference herein. (f) South Carlsbad Coastal Redevelopment Permit Amendment (RP 05-012(A), approved by the adoption of City of Carlsbad Housing and Redevelopment Commission Resolution No. 477, on September 15, 2009, on file in the City Clerk's Office , and incorporated by reference herein. (g) This Amended and Restated Development Agreement DA 05-01 (A), approved by the adoption of City Council Ordinance No. CS-059, on September 15, 2009, on file in the City Clerk's Office, and incorporated by reference herein. (h) Habitat Management Plan Permit Amendment HMPP 05-08(A), approved by the adoption of Resolution No. 2009-233, on September 15, 2009, on file in the City Clerk's Office, and incorporated by reference herein. (i) Special Use Permit SUP 05-04, approved by the adoption of Resolution No. 6093, on May 3, 2006, on file in the City Clerk's Office, and incorporated by reference herein. EXHIBIT V (Existing Land Use Regulations) a. City of Carlsbad General Plan as amended through Resolution No. 2008-320, on file in the City Clerk's Office and incorporated herein by reference; b. City of Carlsbad Municipal Code Title 21 (Zoning Ordinance) as amended through Ordinance CS-026, on file in the City Clerk's Office and incorporated herein by reference; c. City of Carlsbad Precise Development Plan POP 00-02(6) as amended through Ordinance No. CS-058, on file in the Planning Department and incorporated herein by reference; d. South Carlsbad Coastal Redevelopment Plan, dated September 2005, adopted November 2005, by the adoption of Ordinance NS-779, Resolution No. 2005- 333, and Resolution No. 404, on file in the City Clerk's Office, and incorporated herein by reference; e. Specific Plan 144(J), as amended through City of Carlsbad Ordinance No. CS- 057, on file in the Planning Department and incorporated herein by reference. EXHIBIT 'E' Approved Public Ways OCEANSIDE OCEANSIDE FCF ^ ^ J SAN 'ARCOS CARLSBAD FCF CARLSBAD CARLSBAD FCF /AQUEDUCTFCF CARLSBAD ARLSBAD FCF PROPOSED 54" PIPELINE PROPOSED54" PIPELINE / PROPOSED PIPELINE ROUTE - — - CITY BOUNDARY * PROPOSED TURNOUT/FLOW CONTROL FACILITY SCALE: 1 = 3000 —B—6 —0 3000 6000 PRODUCT WATER DELIVERY SYSTEM FOR CARLSBAD SEAWATER DESALINATION PROJECT OCTOBER 2009 EXHIBIT 'E1 EXHIBIT 'F' (Quitclaim Deed) RECORDING REQUESTED BY Clerk, City Council City of Carlsbad AND WHEN RECORDED MAIL TO: CITY OF CARLSBAD 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attn: City Attorney (SPACE ABOVE FOR RECORDER'S USE) This document is exempt from the payment of a recording fee pursuant to Government Code Section 6103. QUITCLAIM DEED DOCUMENTARY TRANSFER TAX $ Computed on the consideration of value of property conveyed; OR Computed on the consideration or value less liens or encumbrances remaining at the time of sale. Signature of Declarant or Agent determining tax Firm Name: FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Poseidon Resources (Channelside) LLC, a Delaware limited liability company, as grantor, hereby quitclaims to the City of Carlsbad, a Municipal Corporation, as grantee, all of grantor's right, title and interest in and to that certain real property more particularly described on Exhibit 1 attached hereto and incorporated herein by this reference. Dated: , 20_ Poseidon (Channelside) LLC, a Delaware limited liability company By: Name: Title: STATE OF CALIFORNIA } } ss COUNTY OF SAN DIEGO } On , before me, personally appeared , who 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. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Witness my hand and official seal. Signature EXHIBIT 1 (LEGAL DESCRIPTION - APPURTENANT FACILITIES) CERTIFICATION FOR ACCEPTANCE OF DEED This is to certify that the interest in real property conveyed by the Quitclaim Deed, dated , from Poseidon Resources (Channelside) LLC, a Delaware limited liability company, to the City of Carlsbad, a Municipal Corporation, is hereby accepted by the City Council of the City of Carlsbad, California, pursuant to Resolution No. , adopted on , and the grantee consents to the recordation thereof by its duly authorized officer. DATED: Name: Title: City Clerk (SEAL) #258553-v4;0071329/000001