Exhibit 10.1


 


LEASE OF MODEL HOMES


 


THIS AGREEMENT hereby
establishes a Lease (“Lease”) of
the Premises described herein, and this Lease is entered into by and between
BRIGHTWATER MODELS LLC, a Delaware limited liability company, hereinafter
referred to as “Landlord”
and SIGNAL LANDMARK, a California corporation, hereinafter referred to as “Tenant”, as follows:


 


1.            Leased Premises.  Landlord hereby leases to Tenant and Tenant
hereby rents from Landlord, upon the terms and conditions hereinafter
contained, the Property, consisting of seventeen (17) furnished model
homes located at the following addresses, together with all property
appurtenant thereto and all furnishings contained therein which were acquired
by Landlord in Landlord’s purchase of the Model Homes, hereinafter called
individually, a “Model Home”
and collectively, the “Model Homes”:


 


4612,
4622, 4632, 4636, 4562, 4552, 4546, and 4542 Wellfleet Drive, Huntington Beach,
CA 92649; and:  4491, 4501, 4511, 4521,
4512, 4502, 4492, 4482, and 4472 Oceanridge Drive, Huntington Beach, CA 92649


 


Tenant
acknowledges that this Lease constitutes a lease under a sale/leaseback
transaction with Landlord, and as such, Tenant accepts the Premises in its
present condition.  As used in this
Lease, the “Premises” means such number of
the Model Homes that remain subject to this Lease at a specified time.


 


2.            Lease Term.  The term of this Lease shall commence upon
the close of escrow in which Landlord acquired title to the Premises ( “Commencement Date”) and continue
for a period of thirty-six (36) months (“Initial
Term”).  The Tenant shall
have the option to extend the Initial Term pursuant to the provisions contained
in Exhibit “A” attached hereto.


 


Provided
Tenant is not in Default under this Lease and would not be in Default with the
passage of time or the giving of notice or both, Tenant shall have the right to
elect an early termination of this Lease with respect to all the applicable
Model Homes in a given product line upon the terms and conditions set forth in
this Paragraph (each, an “Early Termination Option”).  Each Early Termination Option must be
exercised, if at all, by written notice delivered by Tenant to Landlord after
at least ninety percent (90%) of the production homes and/or the lots
designated for such Model Home product line have been sold (sales contract
signed and escrow opened), but in no event sooner than two (2) years
after the Commencement Date.  Effective
upon the date of an Early Termination Option notice, the provisions of
Paragraph 24 below shall apply, and effective upon the close of escrow for
the sale of any Model Home that was subject to an Early Termination Option, the
term of this Lease shall terminate with respect to such Model Home while the
Lease shall continue in full force and effect with respect to the remaining
Premises.


 


3.            Rent.


 


(a)           Rent.  On the Commencement Date, Tenant shall prepay
to Landlord rent for the first six (6) months of the Lease term in
the amount of One Million Five Hundred Fifty-Six Thousand Seven Hundred
Eighty-Seven Dollars ($1,556,787) plus a daily rent amount of Eight


 


1

















 


Thousand
Six Hundred Thirty Dollars ($8,630) for the number of calendar days from
the Commencement Date thru December 31, 2008.  Commencing on July 1, 2009, Tenant
agrees to pay to Landlord at Landlord’s address given herein, without demand or
setoff, in lawful money of the United States of America, the annual rent (“Rent”) set forth on Schedule 1 for each Model Home
which is a part of the Premises, which Rent amount shall be payable in equal
monthly installments in advance, on the first (1st) day of each
calendar month during the term of this Lease. 
Any necessary Rent prorations will be made on an actual day basis.  Tenant shall make all required payments of
applicable taxes as provided below in Paragraph 6.  Further, all other charges to be paid by
Tenant hereunder, including, without limitation, real property taxes and
assessments, payments for homeowners association dues, insurance and repairs,
if any, shall be considered additional rent for the purposes of this Lease (“Additional Rent”).


 


(b)           Rent
Decrease.  In the event
that Tenant elects an Early Termination Option, effective upon the close of
escrow for such Model Home sale, the Rent shall decrease by an amount equal to
the then current Rent amount for such Model Home.


 


(c)           Late
Payments.  Tenant
acknowledges that late payment by Tenant of any Rent or other sums payable to
Landlord under this Lease will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of such costs being extremely difficult and
impracticable to ascertain.  Therefore,
if any Rent or other sum payable to Landlord by Tenant is not received within
ten (10) days of when due, Tenant shall pay to Landlord no later than
ten (10) calendar days after such due date an additional sum equal to
six percent (6%) of such overdue payment. 
Landlord and Tenant hereby agree that such late charge represents a fair
and reasonable estimate of the costs that Landlord will incur by reason of any
such late payment.  Additionally, all
such delinquent Rent or other sums payable to Landlord, plus this late charge,
shall bear interest from the date such late charge is assessed at the then
maximum lawful rate permitted to be charged by Landlord.  In addition, in the event that Tenant fails
to pay any Additional Rent when due, Tenant shall be responsible for any and
all late fees, penalties, interest and expenses associated with such failure to
timely pay.


 


4.            Permitted Use.  Tenant shall have the sole and exclusive
right to the use of the Premises during the term hereof for the purpose of
displaying the same to the public as Model Homes in connection with Tenant’s
sales program for the Brightwater project and for all purposes related thereto,
including but not limited to use for sales office space, photo shoots,
promotional and community events.  Tenant
shall not use or permit the Premises to be used for any other purpose without
the prior written consent of Landlord, which consent Landlord may withhold in
its sole and absolute discretion.  At
Tenant’s sole cost and expense, Tenant shall procure, maintain and hold
available for Landlord’s inspection, all governmental licenses and permits
required for the proper and lawful conduct of Tenant’s business from and at the
Premises.  Tenant shall maintain the
Premises in compliance with any and all CC&Rs and all laws, statutes,
zoning restrictions, ordinances or governmental laws, rules, regulations or requirements
of any duly constituted public authority having jurisdiction over the Premises
now or hereafter in force.  Tenant shall
not use or occupy the Premises in violation of any of the foregoing.  Tenant shall not commit or suffer to be
committed any waste in or upon the Premises and shall maintain the Premises in
accordance with Paragraph 8 below.


 


2

















 


5.            Surrender Of Premises;
Holding Over.  Upon
expiration of the term of this Lease, Tenant shall surrender to Landlord the
Premises in good condition, except for ordinary wear and tear.  If Tenant, with
Landlord’s consent, remains in possession of any portion of the Premises after
expiration or termination of the term of this Lease, or after the date in any
notice given by Landlord to Tenant terminating this Lease, such possession by
Tenant shall be deemed to be a month-to-month tenancy terminable on written
thirty (30) day notice at any time, by either party.  All provisions of this Lease, except those
pertaining to term and rent, shall apply to the month-to-month tenancy.  Tenant shall pay monthly rent, in advance, in
an amount equal to one hundred fifteen percent (115%) of the monthly Rent
amount, plus all Additional Rent, property taxes and any other amounts to be
paid by Tenant under this Lease.  During
such month-to-month tenancy, Tenant shall indemnify, defend and hold Landlord
harmless from all loss or liability, including, without limitation, any loss or
liability resulting from any claim against Landlord made by any succeeding
tenant or any third party purchaser resulting from Tenant’s failure to
surrender the Premises, together with, in each case, actual attorneys’ fees and
costs.


 


6.            Taxes.  Tenant shall pay, at least ten (10) days
before delinquency, all real property taxes and personal property taxes,
assessments, license fees and public charges levied, assessed or imposed upon
the Premises and Tenant’s business operations. 
Tenant shall provide Landlord evidence of said payment no later than
ten (10) days before delinquency. 
As used herein, real property taxes means all taxes, assessments
(general and special) and other impositions or charges which may be taxed,
charged, levied, assessed or imposed upon all or any portion of or in relation
to the Premises or any portion thereof, any leasehold estate in the Premises or
measured by rent from the Premises, including any increase caused by the
transfer, sale or encumbrance of the Premises or any portion thereof.  Real property taxes shall also include any
form of assessment, levy, penalty, charge or tax (other than estate,
inheritance, net income or franchise taxes) imposed by any authority having a
direct or indirect power to tax or charge, including, without limitation, any
city, county, state, federal or any improvement or other district, whether such
tax is: (a) determined by the area of the Premises or the rent or other
sums payable under this Lease; (b) upon or with respect to any legal or
equitable interest of Landlord in the Premises or any part thereof; (c) upon
this transaction or any document to which Tenant is a party creating a transfer
in any interest in the Premises; (d) in lieu of or as a direct substitute
in whole or in part of or in addition to any real property taxes on the
Premises; or (e) in consideration for services, such as police protection,
fire protection, street, sidewalk and roadway maintenance, refuse removal or
other services that may be provided by any governmental or quasi-governmental
agency from time to time which were formerly provided without charge or with
less charge to property owners or occupants.


 


If
Tenant shall fail to timely pay any real property taxes or personal property
taxes, Landlord shall have the right, but not the obligation, to (i) pay
the same, in which case Tenant shall immediately repay such amount to Landlord
including interest at the maximum interest rate permissible by law from the
date paid by Landlord until the date of payment by Tenant, and/or (ii) exercise
any and all remedies available to Landlord under this Lease.


 


Tenant’s
liability to pay taxes shall be prorated on the basis of a 365 day year to
account for any portion of a tax year included at the expiration of the Term of
this Lease.  With respect to any
assessments which may be levied against or upon the Premises, or which under
the laws then in


 


3

















 


effect
may be evidenced by improvements or other bonds or may be paid in annual
installments, only the amount of such annual installments (with appropriate
proration for any partial year) and interest due thereon shall be included
within the computation of the annual taxes levied against the Premises.  If this Lease terminates with respect to any
of the Model Homes on a date earlier than the end of a fiscal tax year,
Landlord or escrow company (should any such Model Homes then be subject to a
sale escrow) shall deliver to Tenant a statement setting forth the amount of
taxes to be paid by Tenant prorated to the date of termination.  Tenant shall pay to Landlord or escrow
company (should any such Model Homes then be subject to a sale escrow), as the
case may be, such prorated amount within five (5) days of Tenant’s
receipt of the statement.  Tenant’s
failure to pay any taxes required to be paid under this Lease shall constitute
a Default under this Lease.


 


7.            Utilities and Other
Expenses.  Tenant agrees
to pay, before they become delinquent, all charges for gas, electric, water,
sewer, internet, cable and telephone furnished to the Premises during the term
of this Lease, including all installation, connection and disconnection
charges.  Landlord shall not be required
to incur any expenses or other charges directly applicable to the Premises, so
that all impositions, insurance premiums, utility expenses, construction costs,
repair and maintenance expenses, and all other costs and expenses, general or
special, ordinary or extraordinary, foreseen or unforeseen, of every kind or
nature whatsoever, shall be paid or discharged by Tenant.


 


8.            Maintenance.


 


Tenant
shall maintain and keep the Premises in first class repair and appearance and
in accordance with the maintenance manual provided to Landlord upon Landlord’s
purchase of the Property, including, without limitation, maintaining and
repairing all walls, floors, ceilings, doors, exterior and interior windows and
fixtures, electrical, plumbing and sewerage systems, window frames, gutters and
downspouts, the heating, ventilating and air conditioning systems servicing the
Premises, the outside areas of the Premises and every part thereof including, without
limitation, the landscaping (including replacement thereof), sprinkler system,
walkways, site lighting as well as damage caused by Tenant, its agents,
employees, invitees or any other persons. 
Upon expiration or termination of this Lease, Tenant shall surrender the
Premises to Landlord in the same condition as existed at the commencement of
the Term, except for reasonable wear and tear, or damage caused by fire or
other casualty for which Landlord has received all funds necessary for
restoration of the Premises.


 


Tenant’s
failure timely to pay any of the charges in connection with the performance of
its maintenance and repair obligations to be paid under this Paragraph 8 shall
constitute a material default under this Lease subject to cure as set forth
below.


 


Upon
termination of this Lease, Landlord and Tenant will jointly inspect the
Premises for the purpose of preparing a list of corrective work.  In the event the Premises have sustained
damage beyond normal wear and tear (taking into account Tenant’s obligation to
maintain and keep the Premises in first class repair and appearance), Tenant
will, at its own expense, repair such damage. 
It is also agreed that upon expiration of the Lease, the Premises will
be restored to its


 


4

















 


original
condition except for normal wear and tear and the required improvements to
convert each Model Home to obtain a Certificate of Occupancy described in
Paragraph 9 below.


 


If
Tenant refuses or neglects to repair and maintain the Premises as required
hereunder and to the reasonable satisfaction of Landlord, Landlord may at any
time following ten (10) days from the date on which Landlord shall
make a written demand on Tenant to effect such repair and maintenance, enter
upon the Premises and make such repairs and/or maintenance, and Landlord shall
have no liability to Tenant for any loss or damage that may accrue to Tenant’s
merchandise or other property (unless such loss or damage is caused by Landlord’s
gross negligence or willful misconduct) or to Tenant’s business by reason
thereof, and upon completion thereof, Tenant shall pay to Landlord Landlord’s
costs for making such repairs plus five percent (5%) for overhead, upon
presentation of a bill therefor.  Said
bill shall include interest at the maximum rate permitted by law on said costs
from the date of completion of the maintenance and repairs by Landlord.


 


9.            Alterations.


 


Tenant
shall not make any significant alterations to the Premises outside of ordinary
and customary enhancements for model homes to the Model Homes without Landlord’s
prior written consent; provided, however, in no event may Tenant make any
alterations to the Premises that would require a change to the current plans
and specifications for the Premises without Landlord’s prior written consent.


 


As
of the end of the term of this Lease or earlier termination thereof as to any
of the Model Homes, Tenant shall have completed all improvements necessary to
convert each Model Home to a habitable condition, to provide a minimum of
two (2) garage spaces per Model Home, and to obtain a Certificate of
Occupancy from the applicable governing public agencies for each Model
Home.  Tenant shall secure all
appropriate governmental approval and permits, and shall complete all such
alterations in compliance with current plans and specifications (modified to
the extent necessary to comply with any changes to the then applicable laws, rules and
regulations) provided said plans include a minimum of two (2) garage
spaces per Model Home, and in compliance with all applicable laws, statutes and
regulations, Tenant shall pay all costs for such alterations and shall keep the
Premises free and clear of all mechanics’ liens which may result from such
improvements; provided, however, Landlord shall reimburse Tenant for such
improvements, up to an aggregate amount of Five Hundred Thousand
Dollars ($500,000) (the “Tenant Improvement
Allowance”), upon Tenant’s completion of such improvements in
compliance with the provisions of this Paragraph 9, including, without
limitation, the delivery to Landlord of satisfactory evidence that the Premises
are free and clear of mechanic’s liens, for any of the Model Homes; provided,
further, in the event that Landlord exercises its rights under this Lease to construct
any of the improvements required under this Paragraph 9, Landlord may
utilize the Tenant Improvement Allowance to pay the costs of any such
improvements.  All costs and expenses
incurred in completing such improvements and obtaining each Certificate of
Occupancy in excess of the Tenant Improvement Allowance shall be borne solely
by Tenant.  During the conversion
process, Tenant will continue to pay Rent to Landlord in the amount stated in
this Lease.  In the event that Tenant has
not obtained a Certificate of Occupancy for all of the Model Homes as of the
termination date of this Lease, Tenant shall be considered to be a


 


5

















 


holdover
Tenant pursuant to Paragraph 5 above until such time as a Certificate of
Occupancy is received for such Model Homes.


 


10.          Release and Indemnity.


 


As
material consideration to Landlord, Tenant agrees that Landlord, its affiliates
and their respective partners, members, managers, employees, agents, trustees,
beneficiaries, officers, directors, shareholders, divisions, subsidiaries and
successors (collectively, “Indemnitees”)
shall not be liable to Tenant, its agents, employees, sublessees, invitees,
licensees and other persons claiming under Tenant for any of the following events,
provided that such events were not caused by any Indemnitee:  (i) loss or damage to the Premises by
theft or otherwise, (ii) consequential damages arising out of any loss of
the use of the Premises or any equipment or facilities therein; or (iii) any
injury or damage to person or property on the Premises resulting from fire,
explosion, gas, electricity, water or rain which may leak from any part of the
Premises or from pipes, appliances or plumbing work therein or from the roof,
street, sub-surface or from any other place on the Premises or resulting from
dampness or any other cause whatsoever on the Premises.  Landlord shall not be liable for any latent
defects in the Premises.  Tenant shall
give prompt notice to Landlord in case of fire or accidents on the Premises,
and of defects therein or in the fixtures or equipment located therein.


 


To
the fullest extent permitted by law, Tenant agrees to indemnify, defend (with
counsel reasonably satisfactory to Landlord) and hold harmless the Indemnitees
from (i) all claims, actions, liabilities, and proceedings arising from
the Premises or Tenant’s use of the Premises or the conduct of its business or
from any activity, work or thing done, permitted or suffered in or about the
Premises, and any breach or material default in the performance of any
obligation to be performed by Tenant under the terms of this Lease, or arising
from any act, neglect, fault or omission of Tenant, or of its agents,
contractors, employees or invitees, and (ii) any and all costs, attorneys’
fees, expenses and liabilities incurred with respect to any such claims,
actions, liabilities, or proceedings, and in the event any actions or
proceedings shall be brought against Landlord by reason of any such
claims.  Tenant, upon notice from Landlord,
shall defend the same at Tenant’s expense by counsel reasonably approved in
writing by Landlord.  Tenant hereby
assumes all risk of damage to property or injury to person in, upon or about
the Premises from any cause whatsoever during the term of the Lease, other than
such damage or injury that is caused by any Indemnitee, and Tenant hereby
waives all its claims in respect thereof against Landlord.


 


As
used herein, the term “liabilities”
shall include all suits, actions, claims and demands and all expenses
(including attorneys’ fees and costs of defense) incurred in or about any such
liability and any action or proceeding brought thereon.  If any claim shall be made or any action or
proceeding brought against Landlord on the basis of any liability described in
this Paragraph, Tenant shall, upon notice from Landlord defend the same at
Tenant’s expense by counsel reasonably satisfactory to Landlord.  It is understood that payment shall not be a
condition precedent to recovery upon the foregoing indemnity.


 


11.          Insurance.  Tenant agrees to maintain in full force and
effect throughout the entire term of this Lease, the insurance described on Exhibit “B” attached
hereto.  All premiums and the payment of
all deductible amounts are the sole responsibility of the Tenant.  In the event of any


 


6

















 


casualty
or loss covered (or required to be covered) by such insurance, all proceeds
shall be applied to the repair, reconstruction or replacement of the damaged
improvements or, if Landlord terminates this Lease pursuant to the provisions
of Section 12 below, all such proceeds shall be paid to Landlord.


 


12.          Destruction.


 


If
during the Term of this Lease, any portion of the Premises is damaged or
destroyed and such damage or destruction can, in Tenant’s reasonable
estimation, be repaired within one hundred eighty (180) days following
such damage or destruction, this Lease shall remain in full force and effect
and Tenant shall promptly commence to repair and restore the damage or
destruction to substantially the same condition as existed prior to such damage
and shall complete such repair and restoration with due diligence in compliance
with all then existing laws.  If (a) such
damage or destruction cannot, in Tenant’s reasonable estimation, be repaired
within one hundred eighty (180) days following such damage or destruction;
or (b) the damage or destruction occurs within the last three (3) months
of the Term of this Lease, then Landlord may, in its sole discretion, terminate
this Lease by delivery of notice to Tenant within thirty (30) days of the
date Landlord learns of the damage and Landlord shall be entitled to receive
all proceeds from insurance policies for any such damage or destruction, other
than any proceeds paid for Tenant’s sales office furniture and equipment.


 


In
the event of repair, reconstruction and restoration by Tenant as herein
provided, the Rent, Additional Rent and any other amounts payable under this
Lease shall not be abated.  Tenant shall
not be entitled to any compensation or damages for loss of the use of the whole
or any part of the Premises, damage to Tenant’s personal property and/or any
inconvenience or annoyance occasioned by such damage, repair, reconstruction or
restoration.


 


The
provisions of California Civil Code Section 1932, Subsection 2, and Section 1933,
Subsection 4, and any other similarly enacted statute or court decision
relating to the abatement or termination of a lease upon destruction of the
Premises, are hereby waived by Tenant; and the provisions of this
Paragraph 12 shall govern in case of such destruction.


 


13.          Condemnation.


 


(a)           Definitions.  The following definitions shall apply: (i) “Condemnation” means (1) the
exercise of any governmental power of eminent domain, whether by legal
proceedings or otherwise by Condemnor and (2) the voluntary sale or
transfer by Landlord to any Condemnor either under threat of condemnation or
while legal proceedings for condemnation are proceeding; (ii) “Date of Taking” means the date the
Condemnor has the right to possession of the property being condemned; (iii) “Award” means all compensation, sums
or anything of value awarded, paid or received on a total or partial
Condemnation; and (iv) “Condemnor”
means any public or quasi-public authority, or private corporation or
individual, having a power of Condemnation.


 


(b)           Obligations
to be Governed by Lease. 
If during the term of this Lease there is any taking of all or any part
of the Premises, the rights and obligations of the parties shall be determined
pursuant to this Lease.


 


7

















 


(c)           Total or
Partial Taking.  If the
Premises are totally taken by Condemnation, this Lease shall terminate on the
Date of Taking.  If any of the Model
Homes are taken by Condemnation, this Lease shall remain in full force and
effect and on the Date of Taking the Rent shall be reduced by an amount equal
to the portion of the Rent allocated to such Model Homes.  Each party hereby waives the provisions of Section 1265.130
of the California Code of Civil Procedure and any present or future law
allowing either party to petition the court to terminate this Lease in the
event of a partial taking of the Premises.


 


If
the Premises are totally or partially taken by Condemnation, Tenant shall not
assert any claim against Landlord or the Condemnor for any compensation because
of such taking, and Landlord shall be entitled to receive the entire amount of
the Award without any deduction for any estate or interest of Tenant.


 


14.          Default.  The occurrence of any of the following shall
constitute a material default (“Default”)
by Tenant:  (a) A failure to pay
Rent or any other sums to be paid by Tenant under this Lease no later than
ten (10) days after when due; (b) Abandonment of the Premises
(failure to occupy and operate the Premises for thirty (30) consecutive
days shall be deemed an abandonment); (c) The making by Tenant of any
general assignment for the benefit of creditors; the filing by or against
Tenant of a petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Tenant, the same is dismissed within sixty
(60) days); the appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where possession is not restored to Tenant within
sixty (60) days; the attachment, execution or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease where such seizure is not discharged
within sixty (60) days; or if this Lease shall, by operation of law
or otherwise, pass to any person or persons other than Tenant; (d) The
failure to perform any other provision of this Lease or the Purchase and Sale
and Escrow Instructions, as amended (the “Contract”)
entered into between Tenant, as seller, and Landlord, as buyer, for the
purchase and sale of the premises to Landlord, which remains uncured
sixty (60) days after notice thereof from Landlord; or (e) a Credit
Facility Default.  As used herein, a “Credit Facility Default” means, (i) the
receipt by Tenant or any of the borrowers or guarantors or any of their
respective affiliates of a written notice of default that seeks acceleration of
the payment of indebtedness (a “Notice of Default”),
and (ii) Tenant or Tenant’s affiliates fail to obtain an injunction or
stay regarding the acceleration within forty-five (45) days from the date
of the Notice of Default under any deed of trust which secures either (1) the
$100,000,000 Senior Secured Revolving Credit Agreement dated as of September 15, 2006
among California Coastal Communities, Inc., as Borrower, and Signal
Landmark and Signal Landmark Holdings Inc., and certain others named therein as
Guarantors, and Keybank National Association, as Lender, Swingline Lender and
Agent, and Wachovia Bank, N.A., as Syndication Agent, and the other financial
institutions which are or may become a lender party thereto, as amended; or (2) the
$125,000,000 Senior Secured Term Loan Agreement dated as of September 15, 2006,
as amended, among California Coastal Communities, Inc., as Borrower, and
certain subsidiaries of the borrower from time to time party thereto, as
guarantors, and Keybank National Association, as Lender and Agent, and the
other financial institutions which are or may become a lender party thereto, or
any credit facility(ies) replacing either or both


 


8

















 


of
the above (collectively, “Credit Facilities”).  Tenant shall promptly send to Landlord copies
of any written notices of default sent to Tenant under any of the Credit
Facilities.


 


15.          Landlord’s Remedies.


 


Landlord
shall have the remedies described in this Paragraph 15 if Tenant is in
Default.  These remedies are not
exclusive; they are cumulative and in addition to any remedies now or later
allowed by law.  Upon any such Default,
Landlord may terminate Tenant’s right to possession of the Premises at any
time.  No act by Landlord other than
giving notice to Tenant shall terminate this Lease.  Acts of maintenance, efforts to relet the
Premises, or the appointment of a receiver on Landlord’s initiative to protect
Landlord’s interest under this Lease shall not constitute a termination of
Tenant’s right to possession.  Upon
termination of Tenant’s right to possession, Landlord has the right to recover
from Tenant pursuant to California Civil Code Section 1951.2: (a) The
worth at the time of award of any unpaid Rent which had been earned at the time
of termination of Tenant’s right to possession; (b) The worth at the time
of award of the amount by which the unpaid Rent which would have been earned
after the date of termination of Tenant’s right to possession until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; (c) The worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; (d) Any other amount, including court costs, reasonable attorney
fees and collection costs, necessary to compensate Landlord for all detriment
proximately caused by Tenant’s Default.  “The
worth”, as used for Items (a) and (b) in this Paragraph 15. is
to be computed by allowing interest at the lesser of sixteen percent (16%)
per annum or the maximum rate Landlord is permitted to charge by law.  Landlord shall also have the right to continue
this Lease in full force and effect pursuant to California Civil Code Section 1951.4
and recover rent as it comes due, if Tenant has the right to sublet the
Premises or assign this Lease, subject only to reasonable limitations.


 


Landlord
shall also have the right, with or without terminating this Lease, to re-enter
the Premises and remove all persons and Tenant’s personal property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant or disposed of in a
reasonable manner by Landlord.  No
re-entry or taking possession of the Premises by Landlord pursuant to this
Paragraph 15 shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant or unless the
termination thereof is decreed by a court of competent jurisdiction.


 


16.          Default By Landlord.  The occurrence of any of the following shall
constitute a material default by Landlord: 
(a)  The making by Landlord of any general assignment for the
benefit of creditors; the filing by or against Landlord of a petition to have
Landlord adjudged a bankrupt or a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Landlord, the same is dismissed within sixty (60) days); the
appointment of a trustee or receiver to take possession of substantially all of
Landlord’s assets or of Landlord’s interest in this Lease, where possession is
not restored to Landlord within sixty (60) days; the attachment, execution
or other judicial seizure of substantially all of Landlord’s assets or of
Landlord’s interest in this Lease where such seizure is not discharged
within sixty (60) days; The failure to perform the obligations of
Landlord under Lease or the


 


9

















 


Contract;
provided, however, Landlord shall not be in default hereunder unless Landlord
fails to perform the obligations required of Landlord within
forty-five (45) days after written notice by Tenant to Landlord specifying
wherein Landlord has failed to perform such obligation; provided, however, that
if the nature of Landlord’s obligation is such that more than
forty-five (45) days is required for performance, then Landlord shall not
be in default if Landlord commences performance within such forty-five (45) day
period and thereafter diligently prosecutes the same to completion.  In no event shall Tenant have the right to
terminate this Lease as a result of Landlord’s default or to offset or deduct
Rent or Additional Rent; Tenant’s remedies shall be limited to any other remedy
available at law or in equity.  Nothing
herein contained shall be interpreted to mean that Tenant is excused from
paying Rent or any other amounts due hereunder as a result of any default by
Landlord it being understood that Tenant’s obligation to pay Rent and
Additional Rent is an independent covenant of this Lease.


 


17.          Entry of Premises and
Performance by Landlord.


 


Landlord
and its authorized representatives shall have the right to enter the Premises
at all reasonable times, subject to reasonable prior notice given the
circumstances (and no notice shall be required in the event of an emergency),
for any of the following purposes: (a) To determine whether the Premises
are in good condition and whether Tenant is complying with its obligations
under this Lease; (b) To do any necessary maintenance and to make any
restoration to the Premises that Landlord has the right to perform under this
Lease; (c) To post “for sale” signs during the last sixty (60) days
of the Term, or during any period while Tenant is in Default, after allowing
for the applicable cure period provided herein; (d) To show the Premises
to prospective brokers, agents and/or buyers during the last sixty (60)
days of the Term; (e) To do any other act or thing necessary for the
safety or preservation of the Premises; or (f) To discharge Tenant’s
obligations hereunder when Tenant has failed to do so in accordance with the
terms of this Lease, including, without limitation, to convert each Model Home
to habitable condition pursuant to Paragraph 9 above.  Landlord shall not be liable in any manner
for any inconvenience, disturbance, loss of business, nuisance or other damage
arising out of Landlord’s entry onto the Premises as provided in this
Paragraph 17, unless caused by Landlord’s gross negligence or willful
misconduct.  Tenant shall not be entitled
to an abatement or reduction of Rent or Additional Rent if Landlord exercises
any rights reserved in this Paragraph 17. 
Tenant shall provide Landlord a key upon request with which to unlock
all the doors in, upon and about the Premises, excluding Tenant’s vaults and
safes.


 


All
covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant’s sole cost and expense
without any abatement of Rent or Additional Rent.  If Tenant shall fail to pay any sum of money,
other than Rent, required to be paid by it hereunder or shall fail to perform
any other act on its part to be performed hereunder, and such failure shall
continue for ten (10) days after notice thereof by Landlord (or such
other period as specifically provided herein), Landlord may, without waiving or
releasing Tenant from any obligations of Tenant, but shall not be obligated to,
make any such payment or perform any such other act on Tenant’s part to be made
or performed in this Lease; provided, however, all sums so paid by Landlord and
all necessary incidental costs together with interest thereon at the lesser of
sixteen percent (16%) or the maximum rate an individual is permitted to
charge by law from the date of such payment by Landlord, shall be payable to
Landlord on demand.  Tenant 


 


10
















 


covenants
to pay any such sums, and Landlord shall have (in addition to all other rights
or remedies of Landlord) the same rights and remedies in the event of the
nonpayment thereof by Tenant as in the case of Default by Tenant in the payment
of the Rent.


 


18.           Notices.  All notices or other communications required
or permitted hereunder shall be in writing and shall be personally delivered or
sent by certified mail, postage prepaid, return receipt requested, delivered or
sent by telex, facsimile, cable or via a reliable overnight courier such as
Federal Express, and shall be deemed received upon the earlier of (a) if
personally delivered or via overnight courier, the date of delivery to the
address of the person to receive such notice; (b) if mailed, upon the date
of receipt as disclosed on the return receipt; or (c) if given by
facsimile, when sent if received by 5:00 p.m. on a business day, otherwise
the next business day.  Any notice,
request, demand, direction or other communication sent by facsimile must be
confirmed within forty-eight (48) hours by letter mailed or delivered in
accordance with the foregoing.


 


	
  If to Tenant, to:

  	
  Signal Landmark

  
	
   

  	
  6
  Executive Circle, Suite 250

  
	
   

  	
  Irvine,
  California 92614

  
	
   

  	
  Attention:
  Raymond J. Pacini

  
	
   

  	
  Telephone:
  (949) 250-7781

  
	
   

  	
  Facsimile:
  (949) 250-7784

  
	
   

  	
   

  
	
  With a copy to:

  	
  Gregory
  W. Preston, Esq.

  
	
   

  	
  Corporate
  Law Solutions, P.C.

  
	
   

  	
  2112
  Business Center Drive, 2nd Floor

  
	
   

  	
  Irvine,
  California 92612

  
	
   

  	
  Telephone:
  (949) 252-9252

  
	
   

  	
  Facsimile:
  (949) 757-0667

  
	
   

  	
   

  
	
  If to Landlord, to:

  	
  c/o
  IHP Capital Partners

  
	
   

  	
  19800
  MacArthur Boulevard, Suite 700

  
	
   

  	
  Irvine,
  California 92612

  
	
   

  	
  Attention:
  Douglas C. Neff

  
	
   

  	
  Telephone:
  (949) 655-7003

  
	
   

  	
  Facsimile:
  (949) 851-8284

  
	
   

  	
   

  
	
  With a copy to:

  	
  IHP
  Capital Partners

  
	
   

  	
  19800
  MacArthur Boulevard, Suite 700

  
	
   

  	
  Irvine,
  California 92612

  
	
   

  	
  Attention:
  Legal Department

  
	
   

  	
  Telephone:
  (949) 851-2121

  
	
   

  	
  Facsimile:
  (949) 655-9035

  



 


or
such other address as shall, from time to time, be supplied in writing by any
party to the others.  If any notice or
other document is sent by certified mail, postage prepaid, with return receipt
requested, addressed as above provided, the same shall be deemed served or
delivered


 


11

















 


within
forty-eight (48) hours after deposit in the United States mail.  Notices delivered by overnight service shall
be deemed to have been given one (1) business day after delivery of
the same, charges prepaid, to the U.S. postal service or private courier.  If any notice is sent by facsimile
transmission the same shall be deemed served or delivered when sent if
confirmation of the transmission thereof is received by 5:00 p.m. on a
business day, otherwise the next business day. 
Any notice or other document sent or delivered in any other manner shall
be effective only if and when received. 
Rejection or other refusal to accept delivery, or the inability to
deliver because of a changed address of which no notice was given, shall be
deemed to constitute receipt of notice or other communication sent.


 


19.           Waiver.  No delay or omission in the exercise of any
right or remedy by Landlord shall impair such right or remedy or be construed
as a waiver.  No act or conduct of
Landlord, including, without limitation, acceptance of the keys to the
Premises, shall constitute acceptance of the surrender of the Premises by
Tenant before the expiration of the Lease Term. 
Only written notice from Landlord to Tenant shall constitute acceptance
of the surrender of the Premises and accomplish termination of this Lease.  Landlord’s consent to or approval of any act
by Tenant requiring Landlord’s consent or approval shall not be deemed to waive
or render unnecessary Landlord’s consent to or approval of any subsequent act
by Tenant.  Any waiver by Landlord of any
Default must be in writing and shall not be a waiver of any other Default
concerning the same or any other provision of this Lease.


 


20.           Limitation of Liability.  In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns of Tenant covenant and agree
that, in the event of any actual or alleged failure, breach or default
hereunder by Landlord or otherwise pertaining to any obligation of Landlord in
respect of the Premises:   Tenant
acknowledges that State of California Public Employees’ Retirement System (“System”) is an indirect investor in
Landlord.  Notwithstanding any other term
or provision of this Lease, System’s liability hereunder is solely that of a
limited partner, and no personal or direct liability shall at any time be
asserted or enforceable against the investors in Landlord, System, System’s
Board, or any of their constituent members, partners, employees, directors,
officers, shareholders or agents on account of or arising out of any
obligations arising out of or related to this Lease.  Tenant agrees that it shall look solely to
Landlord’s interest in the Premises for the enforcement of any claims against
Landlord arising hereunder or related hereto, and waives any claim against the
investors in Landlord, including without limitation System, irrespective of the
compliance or noncompliance now or in the future with any requirements relating
to the limitation of liability of limited partners.


 


Tenant
agrees that each of the foregoing provisions shall be applicable to any
covenant or agreement either expressly contained in this Lease or imposed by
statute or at common law.


 


21.           Professional Fees.


 


(a)           If Landlord or
Tenant should reasonably engage any professional including, without limitation,
attorneys, appraisers, accountants, environmental or other consultants for the
purpose of bringing suit for possession of the Premises, for the recovery of
any sum due under this Lease, or because of the breach of any provisions of
this Lease, or for any other relief against Landlord or Tenant hereunder, or in
the event of any other litigation between the parties with


 


12

















 


respect to this Lease, then
all costs and expenses reasonably incurred, including, without limitation,
professional fees such as appraisers, accountants’, attorneys’ and other
consultants’ fees, incurred by the prevailing party therein shall be paid by
the other party, which obligation on the part of the other party shall be
deemed to have accrued on the date of the commencement of such action and shall
be enforceable whether or not the action is prosecuted to judgment.


 


(b)           If Landlord is named
as a defendant in any suit brought against Tenant in connection with or arising
out of Tenant’s occupancy hereunder, Tenant shall pay to Landlord its costs and
expenses reasonably incurred in such suit including, without limitation, its
actual professional fees such as appraisers’, accountants’ and attorneys’ fees.


 


22.           Estoppel Certificate.


 


(a)           Within ten (10) days
following any written request which Landlord may make from time to time, Tenant
shall execute and deliver to Landlord a statement (“Estoppel
Certificate”) certifying the following, to the extent that such
items are accurate, true and correct to the commercially reasonable knowledge
of Tenant:  (i) the date of
commencement of this Lease; (ii) the fact that this Lease is unmodified
and in full force and effect (or, if there have been modifications, stating the
nature and date of such modifications); (iii) the date to which the rent
and other sums payable under this Lease have been paid; (iv) that there
are no current material defaults under this Lease by either Landlord or Tenant
except as specified in Tenant’s statement; and (v) such other matters
requested by Landlord.  Landlord and
Tenant intend that any statement delivered pursuant to this Paragraph 22
may be relied upon by any lender of Landlord or its affiliates, mortgagee,
beneficiary, purchaser or prospective purchaser of the Premises or any interest
therein.


 


(b)           Tenant’s failure to
deliver such statement within such time shall constitute a Default under this
Lease and Landlord may, at Landlord’s option, terminate this Lease, and shall
be conclusive upon Tenant (i) that this Lease is in full force and effect,
without modification except as may be represented by Landlord, and (ii) that
there are no uncured defaults in Landlord’s performance.


 


23.           Liens.  Tenant shall, within sixty (60) days
(but in no event later than the close of escrow date for the sale of any of the
Model Homes) after receiving notice of the filing of any mechanic’s lien for
material or work claimed to have been furnished to the Premises on Tenant’s
behalf or at Tenant’s request, discharge the lien or post a bond equal to the
amount required by statute with a bonding company reasonably satisfactory to
Landlord.  If Tenant posts a bond, it
shall contest the validity of the lien with all due diligence.  Tenant shall indemnify, defend and hold Landlord
harmless from any and all losses and costs incurred by Landlord as a result of
any such liens attributable to Tenant. 
If Tenant does not discharge any lien or post a bond for such lien
within such sixty (60) day period (but in no event later than the close of
escrow date for the sale of any of the Model Homes), Landlord may discharge
such lien at Tenant’s expense and Tenant shall promptly reimburse Landlord for
all costs incurred by Landlord in discharging such lien including, without
limitation, attorney’s fees and costs and interest on all sums expended at the
maximum interest rate permitted by law. 
Tenant shall provide Landlord with not less than ten (10) days
prior written notice of its intention to have work performed at or materials


 


13

















 


furnished
to the Premises so that Landlord may post appropriate notices of
non-responsibility.  Failure to post a
bond or discharge any lien in excess of Ten Thousand Dollars ($10,000)
shall constitute a Default under this Lease. 
Notwithstanding any provision of this Lease to the contrary, including,
without limitation, Paragraph 15, Tenant shall have no additional cure
periods with respect to the discharge of any such liens.


 


24.           Disposition of Model Homes
upon Lease Termination.


 


(a)           Within
twenty (20) days after (i) Landlord’s receipt of Tenant’s Early
Termination Option notice pursuant to Paragraph 2 above, or (ii) Landlord’s
election to terminate this Lease pursuant to Paragraph 25 below, Landlord
shall notify Tenant in writing (“Landlord’s Re-sale Notice”)
of Landlord’s listing price for the applicable Model Homes (the “Early Termination Listing Price”).  In addition, no sooner than sixty (60)
days prior to expiration of the term of this Lease, Landlord shall deliver to
Tenant Landlord’s Re-Sale Notice specifying Landlord’s desire to resell all or
any portion of the Premises and Landlord’s listing price for such Model Home
(the “Listing Price”).  Tenant shall have the right, but not the
obligation, to notify Landlord within ten (10) calendar days from the
date of Landlord’s Re-sale Notice, to elect to purchase any such Model Homes
for the Early Termination Listing Price or the Listing Price, as the case may
be.  In the event that Tenant timely
elects to purchase any Model Homes pursuant to this Paragraph 24(a),
Tenant shall deposit with an escrow established by Tenant with a nationally
recognized title company selected by Tenant, a good faith deposit equal to
three percent (3%) of the Early Termination Listing Price or the Listing Price,
as the case may be, which deposit shall be non refundable to Tenant should it
fail to perform its obligation to close the acquisition of the Model
Homes.  The closing of a purchase and
sale shall be held at the principal office of the title company no later than
forty-five (45) days after Tenant’s election to purchase the Model Homes
pursuant to this Paragraph 24. 
Tenant shall pay the Early Termination Listing Price or the Listing
Price, as the case may be, by a confirmed wire transfer of funds.  Landlord’s sale of any of the Model Homes to
Tenant shall not waive any Default of Tenant or any rights or remedies Landlord
may have under this Lease.


 


(b)           In the event that
Tenant does not timely elect to purchase any of the Model Homes pursuant to Paragraph 24(a) above,
and provided Tenant is not in Default under this Lease and would not be in
Default with the passage of time or the giving of notice or both, and provided
that Tenant or its affiliate, Hearthside Homes, Inc., is then a licensed
real estate broker in the State of California, Landlord shall enter into an
exclusive listing agreement with Tenant or such affiliate, giving Tenant or
such affiliate the exclusive right to sell such Model Homes for
ninety (90) days, and agreeing to pay Tenant or such affiliate a five
percent (5%) commission with respect to each sale, and Tenant shall
immediately commence using its diligent efforts to sell the Model Homes to
third party purchasers.  Tenant shall
utilize its typical and customary marketing program utilized for the sell out
of its production homes in the Brightwater project.  In the instance where the sale to a third
party purchaser is consummated by Tenant utilizing the services of a licensed
sales agent or broker unrelated to Tenant or its affiliate, then Tenant shall
be obligated to pay all sale commissions, at the close of escrow for any such
sale, to such procuring agent or broker. 
Tenant shall be responsible for all marketing expenses and closing costs
associated with any such sale of the Model Homes.  In the event that Tenant has not opened
escrow for the sale of all of the Model Homes within the ninety (90) day
exclusive listing period,


 


14

















 


Landlord reserves the right
to engage another broker to sell such Model Homes and Tenant shall have no
further right to any compensation from Landlord or any third party with respect
to any such sale.


 


25.           Landlord’s Right to
Purchase and Leaseback Additional Models.  In the event that Tenant desires to construct
new model homes anywhere within the Brightwater community, Landlord shall have
the right, in its sole discretion, to either purchase and leaseback such new
model homes on similar terms as contained in this Lease or to terminate this
Lease and sell the Model Homes.  Landlord
shall provide written notice to Tenant of Landlord’s election within ten (10) days
of Landlord’s receipt of Tenant’s written notice to Landlord that Tenant
desires to construct new model homes in the community.  Should Landlord elect to terminate this Lease
pursuant to this Paragraph 25, the provisions of Paragraph 24 shall
apply.


 


26.           Assignment of Lease.


 


Tenant
shall not assign or encumber its interest in this Lease or the Premises or
sublease all or any part of the Premises or allow any other person or entity to
occupy or use all or any part of the Premises without first obtaining Landlord’s
consent, in Landlord’s sole and absolute discretion.  Any assignment, encumbrance or sublease
without Landlord’s prior written consent shall be voidable and at Landlord’s
election, shall constitute a Default. 
Landlord’s waiver or consent to any assignment or subletting shall not
relieve Tenant or any assignee or sublessee from any obligation under this
Lease whether or not accrued.


 


If
Tenant is a partnership or limited liability company, a withdrawal or change,
voluntary, involuntary or by operation of law, of any partner or member, or the
dissolution of the partnership or limited liability company, shall be deemed a
voluntary assignment.  If Tenant is a
corporation, any dissolution, merger, consolidation or other reorganization of
Tenant, or sale or other transfer of a controlling percentage of the capital
stock of Tenant, or the sale of any assets of Tenant other than in the ordinary
course of business shall be deemed a voluntary assignment.  The phrase “controlling percentage” means
ownership of and right to vote stock possessing at least twenty-five
percent (25%) of the total combined voting power of all classes of Tenant’s
capital stock issued, outstanding and entitled to vote for election of
directors.  The preceding two sentences
of this paragraph shall not apply to corporations the stock of which is traded
through a public exchange or in the over-the-counter or electronic bulletin
board markets.  If Tenant requests
Landlord to consent to a proposed assignment or subletting Tenant shall pay to
Landlord, whether or not consent is ultimately given, Landlord’s attorneys’
fees and other expenses incurred in connection with such request.


 


No
interest of Tenant in this Lease shall be assignable by involuntary assignment
through operation of law (including, without limitation, the transfer of this
Lease by testacy or intestacy).  Each of
the following acts shall be considered an involuntary assignment:  (a) If Tenant is or becomes bankrupt or
insolvent, makes an assignment for the benefit of creditors, or institutes
proceedings under the Bankruptcy Act in which Tenant is the bankrupt; or if
Tenant is a partnership or consists of more than one person or entity, if any
partner of the partnership or other person or entity is or becomes bankrupt or
insolvent, or makes an assignment for the benefit of creditors; or (b) If
a writ of attachment or execution is levied on this Lease; or (c) If in


 


15

















 


any
proceeding or action to which Tenant is a party, a receiver is appointed with
authority to take possession of the Premises. 
An involuntary assignment shall constitute a Default by Tenant and
Landlord shall have the right to elect to terminate this Lease, in which case
this Lease shall not be treated as an asset of Tenant.


 


Tenant
acknowledges and agrees that Landlord shall have the absolute right, at any
time and without the need for consent of Tenant, to (a) assign all or any
portion of its interest under this Lease, or (b) to assign all or any
portion of its interest under this Lease either absolutely or collaterally as
security for a loan or loans made to Landlord or to an affiliate of
Landlord.  The lender exercising its
remedies pursuant to any such assignment shall be entitled to become the
Landlord.  Upon request of Landlord,
Tenant shall consent, in writing, to any such assignment and shall provide such
written consent and estoppel statement as may be reasonably requested by the assignee
or lender(s) providing such financing to Landlord or its affiliate.  Upon request, Tenant shall pay Rent and any
other amounts due from Tenant under this Lease as directed by Landlord and the
lender providing any such financing to Landlord or Landlord’s affiliate.


 


27.           Subordination.  Without the necessity of any additional
document being executed by Tenant for the purpose of effecting a subordination,
and unless otherwise elected by Landlord or any mortgagee or any beneficiary of
a deed of trust with a lien on any portion of the Premises, this Lease shall be
subject and subordinate at all times to the lien of any mortgage or deed of
trust which may now exist or hereafter be executed in any amount for which the
Premises, or any portion thereof, is specified as security.  In the event that any mortgage or deed of
trust is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination, attorn to and become
the tenant of the successor in interest to Landlord, at the option of such successor
in interest.  Tenant covenants and agrees
to execute and deliver, upon demand by Landlord and in the form requested by
Landlord any additional documents evidencing the priority or subordination of
this Lease with respect to any such the lien of any such mortgage or deed of
trust.  Tenant hereby irrevocably
appoints Landlord as attorney-in-fact of Tenant to execute, deliver and record
any such document in the name and on behalf of Tenant.


 


28.           Miscellaneous Provisions.


 


(a)           Time of
Essence.  Time is of the
essence of each provision of this Lease.


 


(b)           Successors
and Assigns.  This Lease
shall be binding on and inure to the benefit of the parties and their
successors and assigns, except as provided in Paragraph 26 herein.


 


(c)           Landlord’s
Consent.  Any consent
required by Landlord under this Lease must be granted in writing and may be
withheld by Landlord in its sole and absolute discretion, unless otherwise
expressly provided herein.


 


(d)           Commissions.  Each party represents that it has not had
dealings with any real estate broker, finder or other person with respect to
this Lease in any manner.  Tenant shall
hold Landlord free and harmless and indemnify and defend Landlord from any
liabilities, damages or


 


16

















 


claims of any real estate
broker, finder or other person with respect thereto, including attorneys’ fees
and costs.


 


(e)           Landlord’s
Successors.  In the event
of a sale or conveyance by Landlord of the Premises, the same shall operate to
release Landlord from any liability under this Lease, and in such event
Landlord’s successor in interest shall be solely responsible for all
obligations of Landlord under this Lease the full assumption of which by such
successor being an absolute condition of any such sale or conveyance of the
Premises.


 


(f)            Prior Agreement or Amendments.  This Lease contains all of the agreements of
the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreement or understanding pertaining to any such matter
shall be effective for any purpose.  No
provisions of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective
successors-in-interest.


 


(g)           Recording.  Either Tenant or Landlord may record a short
form memorandum of this Lease (“Memorandum of Lease”)
in the form attached hereto as Exhibit “C”
, and Landlord and Tenant shall execute and acknowledge such form if requested
to do so by the other party; provided, however, as a condition to Tenant’s
right to record a Memorandum of Lease, Tenant shall deliver to Fidelity
National Title Company (“Escrow Holder”),
27708 Jefferson Avenue, Suite 201, Temecula, California 92590, Attention
Gwen Bianco, properly executed and acknowledged Quitclaim Deed in the form
attached hereto as Exhibit “D”,
one for each Model Home, together with instructions to Escrow Holder
satisfactory to both Tenant and Landlord, instructing Escrow Holder to hold
such Quitclaim Deeds and to record such Quitclaim Deeds with respect to the
Model Homes then owned by Landlord in the Official Records of Orange County,
California upon Escrow Holder’s receipt of Landlord’s written notice to Escrow
Holder and to Tenant that this Lease has been terminated as to such Model
Homes.


 


(h)           Separability.  Any provision of this Lease which shall prove
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and all other provisions of this Lease shall remain in
full force and effect.


 


(i)            No Partnership or Joint Venture.  Nothing in this Lease shall be deemed to
constitute Landlord and Tenant as partners or joint venturers.  It is the express intent of the parties
hereto that their relationship with regard to this Lease and the Premises be
and remain that of lessor and lessee.


 


(j)            Interpretation.  This Lease shall be construed and interpreted
in accordance with the laws of the state in which the Premises are
located.  This Lease constitutes the
entire agreement between the parties with respect to the matters covered herby,
except for such guarantees or modifications as may be executed in writing by
the parties from time to time.  When
required by the context of this Lease, the singular shall include the plural, and
the masculine shall include the feminine and/or neuter.


 


(k)           Joint and
Several Liability.  If
there is more than one Tenant under this Lease, each and every provision of
this Lease shall be binding on each and every one of the Tenants, and


 


17

















 


they shall be jointly and
severally liable hereunder.  Landlord
shall have the right to join any or all of them in any proceeding or to proceed
against them in any order.


 


(l)            Qualification; Authority.  Each individual executing this Lease on
behalf of an entity represents and warrants that such entity is duly formed and
authorized to do business in the State of California and that he or she is duly
authorized to execute and deliver this Lease on behalf of such entity in
accordance with authority granted under the formation documents of such entity,
and that this Lease is binding upon such entity in accordance with their
respective terms.


 


(m)          Counterparts.  This Lease may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same document.


 


[The remainder of this page intentionally
left blank]


 


18

















 


IN
WITNESS WHEREOF, the parties hereto have executed this Lease created hereby as
of December 31, 2008.


 


	
  “LANDLORD”

  	
  BRIGHTWATER
  MODELS LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  IHP
  Investment Fund III, L.P.,

  
	
   

  	
   

  	
  a
  California limited partnership, Its Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Institutional
  Housing Partners III L.P.,

  
	
   

  	
   

  	
   

  	
  a
  California limited partnership

  
	
   

  	
   

  	
   

  	
  Its
  General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  IHP
  Capital Partners,

  
	
   

  	
   

  	
   

  	
   

  	
  a
  California corporation

  
	
   

  	
   

  	
   

  	
   

  	
  Its
  General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  BRIAN P. MCGOWAN

  
	
   

  	
   

  	
   

  	
   

  	
  Brian P. McGowan

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  DONALD S. GRANT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Donald
  S. Grant

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Executive
  Vice President

  



 


 


	
  “TENANT”

  	
  SIGNAL
  LANDMARK, a California corporation,

  
	
   

  	
  Successor
  by Merger to Signal Bolsa Corporation,

  
	
   

  	
  a
  California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RAYMOND J. PACINI

  	
   

  
	
   

  	
   

  	
  Raymond
  J Pacini,

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  



 


19