Agenda packet, first session — Palmdale City Council, June 3, 2025 (part 3 of 4)

SECTION 4. The Authority hereby approves the proposed Housing Agreement on the terms set forth in this Resolution and in a form approved by the Executive Director with approval by Authority Legal Counsel.

SECTION 5. The Authority hereby authorizes its Executive Director , or designee, to execute the Housing Agreement and to execute all documents and take all actions necessary and convenient to carry out and implement the Housing Agreement and to administer the Authority’s obligations, responsibilities and duties to be performed thereunder.

SECTION 6. The Authority Secretary shall certify to the adoption of this resolution.

PASSED, APPROVED and ADOPTED this 3rd day of June, 2025.

____________________________
Richard J. Loa, Chair

APPROVED AS TO FORM: ATTEST:

___________________________ ____________________________ Alexandra Halfman Rochelle Scott,
Acting Authority Attorney Authority Secretary

I, Rochelle Scott , Authority Secretary of the Housing Authority of the City of Palmdale, California, do hereby certify that the foregoing resolution was duly passed, approved, and adopted by the Housing Authority of the City of Palmdale at a special meeting of said Authority held on the 3rd day of June, 2025 by the following roll call vote:

AYES:

NOES:___________________________________________________________

ABSTAIN:______________________ABSENT:__________________________

Date: ______________________ __________________________________ Rochelle Scott, Authority Secretary

AFFORDABLE HOUSING AGREEMENT

BY AND BETWEEN

HOUSING AUTHORITY

OF THE CITY OF PALMDALE

AND

VICTORY OUTREACH

(A-9241)

513 East Avenue Q4

June 3, 2025

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page ii
APN: 3008-013-902

TABLE OF CONTENTS

Page

Article I SUBJECT OF AGREEMENT ......................................................................................... 1 Section 101 Definitions .................................................................................................... 1 Section 102 Purpose of Agreement .................................................................................. 7 Section 103 Authority ...................................................................................................... 8 Section 104 Developer ..................................................................................................... 8 Section 105 Prohibition Against Transfers ...................................................................... 8 Article II AUTHORITY’S LEASE OF PROPERTY TO DEVELOPER .................................... 10 Section 201 Condition of Property ................................................................................. 10 Section 202 Ground Lease ............................................................................................. 10 Article III REHABILITATION OF IMPROVEMENTS ............................................................. 11 Section 301 Scope of Work ............................................................................................ 11 Section 302 Land Use Approvals ................................................................................... 11 Section 303 Construction Drawings and Related Documents ........................................ 11 Section 304 Project Costs ............................................................................................... 12 Section 305 Authority Loan ........................................................................................... 12 Section 306 Schedule of Performance ............................................................................ 12 Section 307 Local, State and Federal Laws ................................................................... 12 Section 308 Nondiscrimination During Construction .................................................... 15 Section 309 Indemnification and Insurance ................................................................... 15 Section 310 Disclaimer of Responsibility by Authority ................................................ 20 Section 311 Rights of Access ......................................................................................... 20 Section 312 Taxes, Assessments, Encumbrances and Liens .......................................... 20 Section 313 Rights to Plans ............................................................................................ 21 Section 314 Release of Construction Covenants ............................................................ 21 Article IV USE OF PROPERTY ........................................................................................... 22 Section 401 Uses ............................................................................................................ 22 Section 402 Maintenance of Property ............................................................................ 24 Section 403 Obligation to Refrain from Discrimination ................................................ 25 Section 404 Effect and Duration of Covenants .............................................................. 26 Section 405 Effect of Violation of Terms and Provisions of Agreement ...................... 27 Article V DEFAULTS, REMEDIES AND TERMINATION ...................................................... 27 Section 501 Defaults – General ...................................................................................... 27 Section 502 Institution of Legal Actions ........................................................................ 28 Section 503 Applicable Law .......................................................................................... 28 Section 504 Acceptance of Service of Process .............................................................. 28 Section 505 Rights and Remedies Cumulative .............................................................. 28 Section 506 Damages ..................................................................................................... 29 Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page iii
APN: 3008-013-902

Section 507 Specific Performance ................................................................................. 29 Section 508 Termination by Authority Before Closing ................................................. 29 Section 509 Termination by Authority After Closing .................................................... 30 Section 510 Termination by Either Party ....................................................................... 30 Article VI GENERAL PROVISIONS .......................................................................................... 30 Section 601 Notices, Demands and Communications between Parties ......................... 30 Section 602 Conflicts of Interest .................................................................................... 31 Section 603 Nonliability of Authority Officials and Employees ................................... 31 Section 604 Force Majeure ............................................................................................. 31 Section 605 Inspection of Books and Records ............................................................... 31 Section 606 Real Estate Commissions ........................................................................... 31 Section 607 Approvals ................................................................................................... 31 Section 608 No Partnership ............................................................................................ 32 Section 609 Compliance With Law ................................................................................ 32 Section 610 Incorporation by Reference ........................................................................ 32 Section 611 Interpretation .............................................................................................. 32 Section 612 No Third Party Beneficiaries ...................................................................... 33 Section 613 Authority to Sign ........................................................................................ 33 Section 614 Time of Essence ......................................................................................... 34 Article VII ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS ................................. 34

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page iv
APN: 3008-013-902

ATTACHMENTS

ATTACHMENT NO. 1 LEGAL DESCRIPTION
ATTACHMENT NO. 2 SITE MAP
ATTACHMENT NO. 3 FORM OF AGREEMENT CONTAINING COVENANTS ATTACHMENT NO. 4 FORM OF ASSIGNMENT OF AGREEMENTS
ATTACHMENT NO. 5 FORM OF ASSIGNMENT OF RENTS AND LEASES ATTACHMENT NO. 6 FORM OF AUTHORITY DEED OF TRUST
ATTACHMENT NO. 7 FORM OF AUTHORITY NOTE
ATTACHMENT NO. 8 FORM OF ENVIRONMENTAL INDEMNITY
ATTACHMENT NO. 9 FORM OF GROUND LEASE
ATTACHMENT NO. 10 FORM OF MEMORANDUM OF LEASE
ATTACHMENT NO. 11 METHOD OF FINANCING
ATTACHMENT NO. 12 FORM OF NOTICE OF AFFORDABILITY

RESTRICTIONS
ATTACHMENT NO. 13 PROJECT BUDGET
ATTACHMENT NO. 14 SCHEDULE OF PERFORMANCE
ATTACHMENT NO. 15 SCOPE OF WORK
ATTACHMENT NO. 16 FORM OF ASSIGNMENT OF LURA

AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN HOUSING

AUTHORITY OF THE CITY OF PALMDALE AND VICTORY OUTREACH
(A-9241)

This AFFORDABLE HOUSING AGREEMENT (this “Agreement”) is entered into as of June 3, 2025 by and between the HOUSING AUTHORITY OF THE CITY OF PALMDALE , a public body corporate and politic (“ Authority”), and VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (“Developer”). Authority and Developer (individually, a “Party” and collectively, the “Parties”) hereby agree as follows:

RECITALS

A. Developer desires to lease from Authority certain real property, including all Improvements thereon, located at 513 East Avenue Q4 in the City of Palmdale, California, legally described as set forth in Attachment No. 1 and illustrated on the site map attac hed to this Agreement as Attachment No. 2 (the “Property”).

B. Developer proposes to rehabilitate four existing two- bedroom residential units located on the Property resulting in four units of rental housing that are affordable to Very Low Income households who are at risk of homelessness or currently unhoused exclusi vely at an Affordable Rent as more particularly described in this Agreement, including the Scope of Work (the “Project”).

C. Developer proposes to finance the Project with a loan from the City of Palmdale of Los Angeles County Measure H Funds and Authority’s carry of the prepaid lease payments for the Property, or alternative financing proposed by Developer and approved by Authority.

D. Developer’s acquisition and use of the Property pursuant to this Agreement, and the fulfillment generally of this Agreement are in the vital and best interests of the City of Palmdale and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements.

Now, therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I SUBJECT OF AGREEMENT

Section 101 Definitions

For purposes of this Agreement, the following capitalized terms have the following meanings:

“Affiliate” means (i) any Person directly or indirectly controlling, controlled by or under common control with another Person, (ii) any Person owning or controlling 10% or more of the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 2
APN: 3008-013-902

outstanding voting securities of such other Person or (iii) if that other Person is an officer, director, member or partner, then any company for which such Person acts in any such capacity. The term “control” as used in the immediately preceding sentence means the power to direct the management or the power to control election of the board of directors. It shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indire ctly, more than 50% of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity.

“Affordable Rent” has the meaning set forth in California Health and Safety Code Section 50053 for very low income households. The Parties have agreed that rents for the units shall not exceed the respective amounts set forth in this Agreement and the Agreement Containing Covenants.

“Agreement Containing Covenants” means the Agreement Containing Covenants which sets forth the affordable housing requirements for the Project, substantially in the form attached hereto as Attachment No. 3, as it may be amended from time to time.

“Assignment of Agreements” means the assignment by Developer to Authority of plans, contracts and permits, in the form of Attachment No. 4 to this Agreement, as it may be amended from time to time.

“Assignment of LURA ” means the assignment by Authority to Developer of Owner obligations under the LURA substantially in the form of the Assignment of Rents and Leases attached as Attachment No. 16 to this Agreement, as it may be amended from time to time.

“Assignment of Rents and Leases ” means the assignment by Developer to Authority substantially in the form of the Assignment of Rents and Leases attached as Attachment No. 5 to this Agreement, as it may be amended from time to time.

“Authority Deed of Trust” means the leasehold deed of trust in which Developer is the trustor and Authority is the beneficiary, securing the Authority Loan, substantially in the form of Attachment No. 6 to this Agreement, as it may be amended from time to time.

“Authority Loan” means Authority’s carry back of the Lease Prepayment, in the amount of and pursuant to the terms and conditions described in the Method of Financing, evidenced by the Authority Note and secured by the Authority Deed of Trust.

“Authority Loan Documents” means this Agreement, the Authority Note, the Authority Deed of Trust, the Assignment of Rents and Leases, the Assignment of Agreements, the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 3
APN: 3008-013-902

Agreement Containing Covenants, the Notice of Affordability Restrictions, the Environmental Indemnity, the Ground Lease, the Memorandum of Lease and the UCC1 Financing Statement.

“Authority Note” means the promissory note evidencing the Authority Loan, substantially in the form of Attachment No. 7 to this Agreement, as it may be amended from time to time.

“City” means the City of Palmdale, California, a municipal corporation, and any assignee of or successor to its rights, powers and responsibilities.

“City Loan” means the City’s loan of County of Los Angeles Measure H Funds to pay the rehabilitation costs of the Project, in the amount and pursuant to the terms and conditions described in the Method of Financing, evidenced by a City promissory note and secured by a second lien priority City leasehold deed of trust.

“Closing” means the point in time when all conditions precedent to the ground lease of the Property from Authority to Developer and the funding of the Authority Loan have been satisfied, in accordance with the Method of Financing.

“Completion” means the point in time at which all of the following have been satisfied:
(i) issuance of a certificate of occupancy for the Project by City, (ii) recordation of a notice of completion pursuant to California Civil Code Section 3093, (iii) submission to Authority of unconditional lien releases or waivers obtained by Developer or Developer’s agent, (iv) certification by the Project architect (or if none, then by the Developer’s contractor) that the Project (with the exception of minor “punch list” items) has been completed in a good and workmanlike manner and in substantial compliance with the approved plans and specifications, (v) disposition of any mechanic’s liens that have been recorded or stop notices that have been delivered to Authority, so that any such liens shall have been paid, settled, bonded or insured around or otherwise extinguished or discharged and Authority has been provided satisfactory evidence of such payment, settlement, bond, title insurance or title insurance commitment or discharge, including without limitation all statutory waivers; and (vi) the time for Developer’s contractor, suppliers and subcontractors to file a claim pursuant to California Civil Code Sections 3115-3117 has expired.

“Conditions” means, with respect to the Property and the Improvements located thereon, the condition of the soil, geology, the presence of known or unknown faults or defects, or Hazardous Materials, the suitability of the Property for its intended uses or the condition of any related public improvements.

“Construction Period ” means the period of time commencing upon the Closing and ending at Completion.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 4
APN: 3008-013-902

“Environmental Indemnity ” means the indemnity by Developer in the form of the Environmental Indemnity attached to this Agreement as Attachment No. 8, as it may be amended from time to time.

“Force Majeure” or “Force Majeure Event” means the following events, provided that they actually delay and interfere with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the Party claiming such interference: war, insurrection, strikes, lock- outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, acts of terrorism, epidemics, quarantine restricti ons, freight embargoes, lack of transportation, governmental restrictions or priority, litigation (including litigation challenging the validity of this transaction or any element thereof), unusually severe weather, inability to secure necessary labor, mat erials or tools, delays of any contractor, subcontractor, or suppliers, acts of the other Party, acts or failure to act of any Governmental Authority (except acts or failure to act of Authority shall not excuse performance by Authority), the imposition of any applicable moratorium by a Governmental Authority or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the Party claiming such delay and interference.

Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until the Party claiming such delay and interference delivers to the other Party written notice describing the event, its cause, when and how such Party obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any Party claiming a Force Majeure Delay shall deliver such written notice within 10 days after it obtains actual knowledge of the event.

“Force Majeure Delay” means a delay in taking any action required by this Agreement, proximately caused by the occurrence of a Force Majeure Event.

“Governmental Authority” means the United States, the State of California, the County of Los Angeles, the City, or any other political subdivision in which the Property is located, and any court or political subdivision, authority or instrumentality having jurisdiction over the Property.

“Hazardous Materials” has the meaning set forth in the Environmental Indemnity.

“Improvements” means the improvements located on the Property, to be rehabilitated in accordance with this Agreement, including, without limitation, the Scope of Work and the Ground Lease.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 5
APN: 3008-013-902

“Lease Prepayment” means Developer’s prepayment of the annual lease payments over the term of the Ground Lease, which prepayment shall be carried back by Authority in the form of the Authority Loan.

“Leasehold Interest” means the leasehold interest in the Property that is created by the Ground Lease between the Parties.

“LURA” means that certain Land Use Restriction Agreement entered into by and between the former Community Redevelopment Agency of the City of Palmdale, as “Owner” therein, and the Resolution Trust Corporation, as Receiver for Homefed Bank, F.A., and recorded in the official records, Recorder’s Office of Los Angeles County, on January 18, 1996, as Instrument No. 96- 94063, with respect to Property, as it may be amended from time to time. Reference is hereby made to that certain unrecorded Property Transfer Ag reement and Joint Escrow Instructions entered into by and between the Authority and New Beginning Outreach Foundation, a California nonprofit public benefit corporation (“ NBO”) and dated as of July 11, 2018, pursuant to which, concurrently with the recordation of the Memorandum of Assignment of LURA, NBO conveyed the Property to Authority and assigned the LURA to Authority, and Authority assumed all of the obligations of the Owner pursuant to the LURA.

“Memorandum of Lease ” means a document substantially in the form of the Memorandum of Lease attached to this Agreement as Attachment No. 10, as it may be amended from time to time.

“Method of Financing ” means the method of financing attached to this Agreement as Attachment No. 11, as may be amended from time to time.

“Notice of Affordability Restrictions” means the Notice of Affordability Restrictions on Transfer of Real Property, substantially in the form attached to this Agreement as Attachment No. 12, as it may be amended from time to time.

“Operating Costs” means the reasonable and customary costs to operate the Project, set forth by Developer in its annual operating budget approved by Authority.

“Permitted Transfer” means any of the following:

a. An assignment of this Agreement and all of Developer’s interests in the Property to an Affiliate of Developer or a conveyance back from the Affiliate to Developer;

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 6
APN: 3008-013-902

b. The lease for occupancy of all or any part of the Improvements on the Property in accordance with this Agreement, the Ground Lease, and the Agreement Containing Covenants;

c. The granting of easements or permits to facilitate the rehabilitation of the Property in accordance with this Agreement; and

d. Any transfer approved in writing by the Authority Executive Director or designee, at his or her sole discretion.

“Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign.

“Plans” means the rehabilitation plans and drawings (if any) prepared on behalf of Developer for the Project in accordance with this Agreement.

“Project Budget ” means the applicable schedule of Project Costs attached to this Agreement as Attachment No. 13.

“Project Costs ” means all costs which are actually incurred by Developer for the acquisition of the Leasehold Interest and the rehabilitation of the Improvements on the Property, and includes, without limitation, all of the items of cost set forth in the Project Budget and similar costs, fees and expenses approved by the Authority Executive Director, but not including Operating Costs.

“Restricted Period” means 55 years following the Closing.

“Schedule of Performance” means the schedule of performance attached to this Agreement as Attachment No. 14.

“Scope of Work” means the scope of work attached to this Agreement as Attachment No.

15. “Title Company” means First American Title Insurance Company or another title insurance company mutually acceptable to the Parties.

“Title Insurance Policies ” means and includes the following ALTA extended coverage policies of title insurance issued by the Title Company:

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 7
APN: 3008-013-902

a. An owner’s policy of leasehold title insurance in favor of Developer, together with such endorsements as Developer may reasonably require and Authority approved, insuring Developer’s leasehold title, in the amount of the Acquisition Loan; and

b. A lender’s policy or policies of title insurance in favor of Authority, together with such endorsements as Authority may reasonably require, insuring the lien of the Authority Deed of Trust in the amount of the Authority Loan.

“Transfer” means:

a. The sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project.

b. “Transfer” also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Developer, or any conversion of Developer to an entity form other than that of Developer at the time of execution of this Agreement, except that, a cumulative change in ownership interest of any general partner of Developer of 49% or less shall not be deemed a “Transfer” for purposes of this Agreement.

c. Notwithstanding paragraphs a. and b., “Transfer” shall not include Permitted Transfers.

“UCC1” means a UCC1 Financing Agreement in a form suitable for filing with the California Secretary of State and recording against the Leasehold Interest.

“Very Low Income” has the meaning given in California Health and Safety Code Section 50105.

Section 102 Purpose of Agreement

The purpose of this Agreement is to assist with financing of the acquisition and rehabilitation of four residential units to be operated as four units of rental housing that is affordable exclusively to Very Low Income households who are at risk of homeles sness or currently unhoused. The use of the Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the City of Palmdale and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. Pursuant to and Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 8
APN: 3008-013-902

conditioned upon the terms of this Agreement, Authority shall make the Authority Loan to Developer, and Developer shall rehabilitate and operate the Improvements on the Property.

Section 103 Authority

a. Authority is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under the Housing Authorities Law of the State of California.

b. The principal office of Authority for purposes of receiving notices pursuant to this Agreement is as follows:

Housing Authority of the City of Palmdale
Attn: Executive Director
38250 Sierra Highway, 2
nd Floor
Palmdale, California 93550-3609

c. “Authority” as used in this Agreement includes the Housing Authority of the City of Palmdale and any assignee of or successor to its rights, powers and responsibilities.

Section 104 Developer

a. Developer is VICTORY OUTREACH- PALMDALE, a California nonprofit corporation.

b. The address of Developer for purposes of receiving notices pursuant to this Agreement is as follows:

Victory Outreach
37419 25
th Street East
Palmdale, California 93550

c. Whenever the term “Developer” is used herein, such term shall mean and include:
(i) Developer as of the date hereof and (ii) any assignee of or successor to its rights, powers and responsibilities approved by Authority or permitted by this Agreement.

Section 105 Prohibition Against Transfers

a. The qualifications and identity of Developer are of particular concern to Authority.

It is because of those qualifications and identity that Authority has entered into this Agreement Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 9
APN: 3008-013-902

with Developer. No voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein.

b. Except for Permitted Transfers, Developer shall not assign all or any part of this Agreement without the prior written approval of Authority. Authority agrees to reasonably give such approval if, in the reasonable determination of Authority, the proposed reconstituted Developer is comparable in all material respects (including experience, character and financial capability) to Developer. Any such change (or assignment of this Agreement in connection therewith) shall be by instruments satisfactory to the A uthority Executive Director or designee, and be subject to the approval by the Authority Executive Director or designee of evidence of the proposed assignee’s qualifications to meet the obligations of Developer under this Agreement.

c. For the reasons cited above, Developer represents and agrees for itself and any successor in interest that, except for Permitted Transfers, there shall be no cumulative change in ownership interest of greater than 49%, or with respect to the identity of th e parties in control of Developer or the degree thereof, by any method or means, without Authority’s prior written approval.

d. Developer shall promptly notify Authority of any and all changes whatsoever in the identity of the parties in control of Developer or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. This Agreement may be terminated by Authority, and Authority may exercise its remedies pursuant to the Authority Loan Documents if there is any significant change (voluntary or involuntary) in the membership, management or control of Developer (other than such changes occasioned by the death or incapacity of any individual).

e. Developer shall not, except for Permitted Transfers or as permitted by this Agreement, assign or attempt to Transfer the whole or any part of the Property, without prior written approval of Authority, except as expressly permitted by this Agreement and the other Authority Loan Documents. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. Any such proposed transferee shall have the qualifications and financial responsibil ity necessary and adequate as may be reasonably determined by Authority, to fulfill the obligations undertaken in this Agreement by Developer. Any such proposed transferee, by instrument in writing satisfactory to Authority and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of Authority shall expressly assume all of the obligations of Developer under this Agreement and agree to be subject to all conditions and restrictions applicable to Developer in this Agreement. There shall be submitted to Authority for review all instruments and other legal documents proposed to affect any such transfer, and if approved by Authority, then its approval shall be indicated to Developer in writing.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 10
APN: 3008-013-902

f. In the absence of specific written agreement by Authority, no Transfer, or approval thereof by Authority, shall be deemed to relieve Developer or any other party from any obligations under this Agreement.

ARTICLE II AUTHORITY’S LEASE OF PROPERTY TO DEVELOPER

Section 201 Condition of Property

a. No person acting on behalf of Authority is authorized to make, and by execution of this Agreement, Developer acknowledges that neither Authority nor any person acting on behalf of Authority has made any representation, agreement, statement, warranty, guara ntee or promise regarding the zoning, construction, physical condition or other status of the Property.

b. Developer acknowledges and agrees that Authority makes no representations and warranties, express or implied, as to the Property. It is understood and agreed that with respect to the physical condition of the Property, it is being leased on an “as is”, “w here is” and “with all faults” basis and is subject to any condition which may exist. Developer hereby expressly acknowledges and agrees that it is relying solely upon its inspections, examination, and evaluation of the Property in leasing the Property on an “as is”, “where is” and “with all faults” basis.

c. It shall be the sole responsibility of Developer, at Developer’s expense, to investigate and determine all Conditions of the Property and its suitability for the uses to which the Property is to be put in accordance with this Agreement. If the Conditions of the Property are not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the responsibility and obligation of Developer, without cost to Authority, to take such action or cause such action to be taken, as may be necessary to place the Property in all respects in a condition entirely suitable for its use in accordance with this Agreement.

d. Commencing upon the Closing, Developer agrees to perform, or cause to be performed, the clean-up of any Hazardous Materials on, in, under or within the Property, without cost or expense to Authority. Developer shall defend, indemnify and hold harmless Authority and its officers, agents, employees, contractors and attorneys from any claims, liability, injury, damages, costs an d expenses (including, without limitation, the cost of any required cleanup of Hazardous Materials, and the cost of reasonable attorneys’ fees) which may be sustained as the result of Hazardous Materials relating to the Property. As a condition precedent to the Closing, Developer shall execute and deliver to Authority the Environmental Indemnity.

Section 202 Ground Lease

The term of the Ground Lease shall commence at the Closing and shall continue thereafter until the 55
th anniversary of the Closing, unless earlier terminated in accordance with its terms. As Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 11
APN: 3008-013-902

a condition precedent to the Closing, the Title Company shall be prepared to issue the respective Title Insurance Policies to the Parties.

ARTICLE III REHABILITATION OF IMPROVEMENTS

Section 301 Scope of Work

The Improvements shall be rehabilitated in accordance with and within the limitations established in the Scope of Work, Plans approved by Authority pursuant to this Agreement and permits issued by City.

Section 302 Land Use Approvals

a. It is the responsibility of Developer, without cost to Authority, to ensure that zoning of the Property and all applicable City land use requirements shall be such as to permit rehabilitation of the Improvements and the use, operation and maintenance of such Improvements in accordance with the provisions of this Agreement.

b. The following shall be conditions of the Closing: (i) if necessary, Developer shall submit and Authority Executive Director or designee shall approve 100% complete construction drawings, and (ii) Developer shall obtain all entitlements, approvals, varianc es and permits necessary for the rehabilitation of the Improvements. Without cost to Authority, Authority shall provide appropriate technical assistance to Developer in connection with Developer’s obtaining all necessary entitlements, permits and approvals for the rehabilitation of the Improvements.

c. Nothing contained herein shall be deemed to entitle Developer to any City permit or other City approval necessary for the rehabilitation of the Improvements, or waive any applicable City requirements relating thereto. This Agreement does not (i) grant any land use entitlement to Developer, (ii) supersede, nullify or amend any condition which may be imposed by City in connection with approval of the work described herein, (iii) guarantee to Developer or any other party any profits from the Property or (iv) amend any City laws, codes or rules. This is not a development agreement as provided in California Government Code Section 65864.

Section 303 Construction Drawings and Related Documents

If necessary, Developer shall prepare and submit construction drawings and related documents for the rehabilitation of the Improvements to Authority for review (including, without limitation, architectural review) and written approval at the times establis hed in the Schedule of Performance. Any items so submitted and approved in writing by Authority shall not be subject to subsequent disapproval. Authority approval shall not be unreasonably withheld.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 12
APN: 3008-013-902

Section 304 Project Costs

a. Except for the financing expressly set forth in this Agreement, including the Authority Loan and the City Loan, the cost of acquiring the Property and rehabilitating the Improvements shall be the responsibility of Developer, as provided in the Method of Fi nancing.

The Project Costs are set forth in the Project Budget, which shall be subject to change from time- to-time as provided in the Method of Financing.

b. Developer has proposed, and Authority has approved, the Project Budget.

Developer acknowledges that Authority is relying on Developer’s experience and expertise in establishing the Project Costs, and Developer represents that the Project Budget is based on the best, good faith estimate of Developer of the costs that are likely to be incurred for the Project.

Section 305 Authority Loan

Subject to and conditioned on the terms and conditions of this Agreement, Authority shall provide Developer with financial assistance which consists of the Authority Loan. The Authority Loan shall be deemed fully funded at Closing. The Authority Loan sha ll be repaid according to the terms and conditions of the Authority Note.

Section 306 Schedule of Performance

a. The Parties shall perform all acts respectively required of such Party in this Agreement within the times provided in the Schedule of Performance. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing by Developer and the Authority Executive Director.

b. After the Closing, Developer shall promptly begin and thereafter diligently prosecute to completion the rehabilitation of the Improvements as provided in the Scope of Work.

Developer shall begin and complete all construction and development within the times specified in the Schedule of Performance, with such reasonable extensions of said times as may be granted by Authority.

c. During periods of construction, Developer shall submit to Authority a written report of the progress of the construction when and as requested by Authority. The report shall be in such form and detail as may be reasonably required by Authority and shall i nclude a reasonable number of construction photographs (if requested) taken since the last report by Developer.

Section 307 Local, State and Federal Laws; Relocation

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 13
APN: 3008-013-902

a. Developer hereby agrees to carry out the rehabilitation, construction, development (as defined by applicable law) and operation of the improvements on the Property, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable federal and state labor laws, including, without limitation, the payment of state prevailing wages for the Project. Developer also covenants and warrants that it will comply with all applicable laws, ordinances, codes, rules and regulations of the state local and federal governments, and all amendments thereto. Developer also agrees to take such action as the federal, state or local government may direct to enforce aforesaid provisions. b. Developer hereby agrees that Developer shall have the obligation to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that Developer shall have the obligation to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that Developer shall have the obligation, a t Developer’s sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer shall indemnify, protect, defend and hold harmless the Authority and the hereinafter defined Indemnified Parties, with counsel reasonably acceptable to Authority, from and against any and all loss, liability, damage, claim, cost, expense, and/or “increased costs” (including labor costs, penalties, reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the rehabilitation, construction, development (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Developer of any applicable local, state and/or federal law, including, without limitation, any applicabl e federal and/or state labor laws (including, without limitation, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any o ther similar law; (3) failure by Developer to provide any required disclosure, representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Developer to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by Developer to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. The foregoing indemnity shall survive termination of this Agreement.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 14
APN: 3008-013-902

c. It is agreed by the parties that, in connection with the construction, development (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), Developer shall bear all risks of payment or non payment of state prevailing wages and/or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. “Increased costs” as used in this Section 312 shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time.
d. Developer shall be responsible for obtaining all permits and approvals required by City for the rehabilitation of the Improvements, ensuring that the use of the Property for the purposes described in this Agreement complies with the zoning and other City land use regulations (including any applicable exemptions and/or exceptions) applicable to the Property at the time of Closing.

e. Relocation

(i) All rights to possession of all portions of the Property necessary for rehabilitation and operation of the Project shall be cleared by Developer at Developer’s cost and expense. The relocation of any occupants or businesses, if any, required for rehabilit ation and operation of the Project, including provisions of relocation assistance and benefits pursuant to applicable federal and state relocation laws shall be the financial responsibility of Developer.

(ii) All of the cost and expenses incurred or to be incurred by Developer to cause the vacating of the Property and/or relocation of all occupants and businesses from the Property for rehabilitation and operation of the Project (including, but not limited to, payments made to displaced persons and businesses, pre- or post-relocation rental payments, fees and actual expenses of attorneys, relocation consultants and other experts employed to effect the relocation of occupants and businesses, etc.) shall be the financial responsibility of Developer. Any costs arising related in any respect to such displacement, such as, but without limitation, claims for loss of business goodwill, payment for furniture, fixtures and equipment, payment for leasehold bonus value, and any other compensable interest under applicable federal and state relocation laws shall be the financial responsibility of Developer.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 15
APN: 3008-013-902

iii) Developer hereby covenants and agrees to indemnify, save, protect, hold harmless, pay for and defend the Authority, the City, and their respective elected officials, officers, employees, agents, consultants, contractors, attorneys and representatives (col lectively, the “Indemnified Parties”) from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs, or expenses, including, without limitation, reasonable consultants’ and reasonable attorneys’ fees, or relocation benefits claimed or payable under the relocation laws which may now or in the future be incurred or suffered by the Indemnified Parties by reason of, or resulting from, in full or in part, or in any respect whatsoever from the displacement of businesses or other occupants of the Property pursuant to this Agreement. The foregoing indemnity shall survive termination of this Agreement and shall continue after Completion.

(iv) Developer, on behalf of itself and any and all successors and assigns, hereby fully and finally releases the Authority and the Indemnified Parties from any and all manner of actions, causes of actions, suits, obligations, liabilities, judgments, executions, debts, claims, and demands of every kind and nature whatsoever, known and unknown, which Developer or any of its successors or assigns may now have or hereafter obtain against the Authority or the Indemnified Parties by reason of, arising out of, re lating to, or resulting from, in full or in part, Developer’s election to acquire leasehold title to the Property. The Parties agree that, with respect to the release of claims as set forth above, all rights under Section 1542 of the California Civil Code and any similar law of any state or territory of the United States are expressly waived. Section 1542 reads as follows:

Civil Code Section 1542. A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.
________________
Developer’s Initials

Section 308 Nondiscrimination During Construction

Developer, for itself and its successors and assigns, agrees that during the rehabilitation of the Improvements provided for in this Agreement, Developer shall not discriminate against any employee or applicant for employment on any basis prohibited by state or federal law, including without limitation, race, color, religion, sex or national origin.

Section 309 Indemnification and Insurance

a. Developer agrees to and shall, to the fullest extent permitted by law, defend, indemnify and hold Authority, City and their respective officers, employees, contractors and Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 16
APN: 3008-013-902

agents harmless from and against all claims, liabilities, damages, losses, expenses, attorneys’ fees and costs that is caused, in whole or in part by any of the following: (i) any act or omission of Developer or its contractors, suppliers or vendors, of any contracting t ier, in connection with its performance or nonperformance of this Agreement, (ii) the breach of any obligations of Developer hereunder, including, without limitation, the obligation to comply with the provisions of the LURA (iii) any act or omission during the period commencing with execution of this Agreement by Authority and until Completion of the rehabilitation of the Improvements, of Developer or its contractors, suppliers or vendors, of any contracting tier, or anyone directly or indirectly employed by any of them, or anyone for whose acts Developer may be liable, (iv) the use during the period commencing with execution of this Agreement by Authority and until Completion of the rehabilitation of the Improvements, of any products, material or equipment furnished by Developer or its contractors, suppliers or vendors, of any contracting tier, (v) the existence, release, presence or disposal on, in, under, about or adjacent to the Property of any Hazardous Materials, (vi) the development, c onstruction, marketing, use, operation or condition of the Property and the improvements thereon by Developer, its contractors, subcontractors, agents, employees or other persons acting on Developer’s behalf, (vii) Any accident, personal injury or casualty on the Property or the improvements thereon, (viii) any Plans or designs for improvements prepared by or on behalf of Developer or its contractors, subcontractors, agents, employees or other persons acting on Developer’s behalf, including without limitation any errors or omissions with respect to such Plans or designs, (ix) any loss or damage to Authority resulting from any inaccuracy in or breach of any representation or warranty of Developer, or resulting from any breach or default by Developer, under this Agreement, (x) claims of any kind in connection with the purchase of the Property including, without limitation, claims for relocation assistance pursuant to the California Relocation Law, Government Code Section 7260, inverse condemnation, taking, thre atened taking or temporary taking or loss of good will, and/or (xi) any and all actions, claims, damages, injuries, challenges and/or costs or liabilities arising from the approval of any and all entitlements or permits for the Project by the Authority.
b. The obligation to indemnify will not be construed to negate, abridge, or otherwise reduce other rights or obligations of indemnity which would otherwise exist as to the Authority or the Indemnified Parties. The foregoing indemnification will apply to the extent of the violation of a legal duty, including but not limited to active or passive negligence, strict liability, breach of contract, or intentional or willful misconduct, by Developer or its contractors, suppliers, or vendors, of any contracting tier, or anyone directly or indirectly employed by any of them, or anyone for whose acts Developer may be responsible. The Authority and Indemnified Parties will be entitled to recover attorneys’ fees incurred as a result of Developer’s failure to provide the d efense and indemnity required by this Section. The foregoing indemnities will survive termination of this Agreement. c. Such obligation shall not be construed to negate, abridge or otherwise reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this Section 309. The foregoing indemnification by Developer shall apply to the extent of the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 17
APN: 3008-013-902

violation of a legal duty, including, without limitation, active or passive negligence, strict liability, breach of contract or intentional or willful misconduct, by Developer or its contractors, suppliers or vendors, of any contracting tier, or anyone directly or indirectly employed by any of them, or anyone for whose acts Developer may be liable. Indemnitees shall be entitled to recovery of any attorneys’ fees incurred as a result of Developer’s failure to provide the defense and indemnity required by this Section 309. This Section 309 shall survive the expiration or termination of this Agreement. d. At the times indicated in paragraphs (i) through (iv) below, Developer shall furnish or cause to be furnished to Authority evidence of the following policies of insurance, naming Developer as insured and, except as to the insurance described in paragraph (iv), below, Authority and City as additional insureds. The insurance described in paragraph (ii) shall be obtained prior to the initial rent- up of the apartments. All such insurance shall be kept in force for the term of the Ground Lease.

(i) Fire Policies: Prior to commencement of construction, Developer shall furnish evidence of, and shall thereafter maintain or cause to be maintained a policy or policies of insurance against loss or damage to the Property or the Improvements and all property of an insurable nature located upon the Property, resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies. Such insurance shall be maintained in an amount not less than 100% of the full insurable value of the Improvements, as defined herein in paragraph d.

(ii) Rental Income Insurance: Prior to commencement of rental activities, Developer shall furnish evidence of, and shall thereafter maintain or cause to be maintained use and occupancy or business interruption or rental income insurance against the perils of fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies, in an amount that is acceptable to the Parties.

(iii) Liability Insurance : Developer shall maintain liability insurance to protect against loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever on or about the Property, resulting directly or indirectly from any acts or activities of Developer, or any person acting for Developer, or under its respective control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person occurring on or about the Property, or in connection with Developer’s activities thereon, caused directly or indirectly by or from acts or activities of Developer, or any person acting for Developer, or under its control or direction. Such property damage and personal injury insurance shall also provide for and protect Authority against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall be maintained in full force and effect during the term of the Ground Lease in the following amounts:

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 18
APN: 3008-013-902

a. During any rehabilitation work of the Property: commercial general liability in a general aggregate amount of not less than Ten Million Dollars ($ 10,000,000) and Five Million Dollars ($5,000,000) per occurrence ; Pollution/ Environmental Liability of not less than Five Million Dollars ($5,000,000) limit per occurrence basis ; Products and Completed Operations Aggregate of not less than Ten Million Dollars ($ 10,000,000) and Five Million Dollars ($5,000,000) each occurrence ; Commercial Automobile Liability of not less than Five Million Dollars ($5,000,000) per occurrence combined single limit, including owned, non-owned and hired automobile coverage, and Employer’s Liability of not less than One Million Dollars ($1,000,000) each accident, One Million Dollars ($1,000,000) disease each employe, and One Million Dollars ($1,000,000) disease each policy.

b. Following completion of rehabilitation work of the Property: commercial general liability in a general aggregate amount of not less than Four Million Dollars ($4,000,000) and Two Million Dollars ($2,000,000) per occurrence ; Pollution/ Environmental Liability of not less than Two Million Dollars ($2,000,000) limit per occurrence basis; Products and Completed Operations Aggregate of not less than Four Million Dollars ($ 4,000,000) and Two Million Dollars ($2,000,000) each occurrence ; Commercial Automobile L iability of not less than Two Million Dollars ($2,000,000) per occurrence combined single limit, including owned, non-owned and hired automobile coverage; and Employer’s Liability of not less than One Million Dollars ($1,000,000) each accident, One Million Dollars ($1,000,000) disease each employee, and One Million Dollars ($1,000,000) disease each policy.

It is the mutual intent of the Parties that the levels of insurance coverage described herein shall be and remain comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County. At any time and from time t o time, either Party may provide notice to the other Party that the level of insurance being maintained by Developer is no longer comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County, and request that the minimum limit hereinabove designated shall be changed (either increased or decreased) accordingly. The Party receiving such request shall not unreasonably withhold its consent to such change. Developer agrees that provisions of this paragraph as to maintenance of insurance shall not be construed as limiting in any way the extent to which Developer may be held responsible for the indemnification of Authority or the payment of damages to persons or property resulting from Developer’s activities, or the activities of any person or persons for which Developer is responsible.

compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with the Project or the operation thereof by Developer, and in an amount of not less than $1,000,000 per accident, bodily injury, or disease. Notwithstanding the foregoing, Developer may, in compliance with the laws of the State of California and in lieu of maintaining such insurance, self-insure for workers’ compensation in which e vent Developer shall deliver to Authority evidence that such self - insurance has been approved by the appropriate State authorities.

e. Developer shall cause all contractors and subcontractors performing work relating to the Project to maintain insurance of the types and in the amount described in this Section 309.

Developer must cause its architects (if any) and engineers also to maintain Architects and Engineers Professional Liability (Errors and Omissions) insurance on per occurrence basis during any rehabilitation work of the Property of not less than Five Million Dollars ($5,000,000) and in a general aggregate amount of not less than Five Million Dollars ($5,000,000) and, following any rehabilitation work of the Property, not less than Two Million Dollars ($2,000,000) and in a general aggregate amount of not less than Two Million Dollars ($2,000,000).

f. The term “full insurable value” as used in this Section 309 means the actual replacement cost (excluding the cost of excavation, foundation and footings below the lowest floor and without deduction for depreciation) of the Improvements on the Property immediately before such casualty or other loss, including the c ost of construction, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Developer shall cause the full insurable value to be determined from time to time by appraisal by the insurer, by agreement between the Parties or by an appraiser mutually acceptable to the Parties, not less often than once every three years.

g. All policies shall name Authority and City as additional insureds and/or loss payees as their interests may appear. Policy endorsements providing the additional insured/loss payee shall be included with Certificates of Insurance.

h. All insurance provided under this section shall be for the benefit of Developer, Authority and City. Developer agrees to timely pay all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance. Developer agrees to submit policies of all insurance required by this S ection, or certificates evidencing the existence thereof and additional insured endorsements, to Authority not less than 15 days prior to the Closing, indicating full coverage of the contractual liability imposed hereby. All insurance herein provided for shall be effected under policies issued by insurers of recognized responsibility, licensed and admitted to do business in the State of California (or if not admitted in California shall have a “General Policyholders Rating” of at least “A-” as set forth in the most current issue of “Best’s Key Rating Guide”), reasonably Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 20
APN: 3008-013-902

approved by Authority. All policies or certificates of insurance shall provide that such policies shall not be canceled or limited in any manner without at least 20 days’ prior written notice to Authority.

i. If Developer fails or refuses to procure or maintain insurance as required by this Agreement, the Authority shall have the right, at Authority’s election, and upon 10 days’ prior notice to Developer, to procure and maintain such insurance. The premiums pa id by Authority shall be treated as a loan due from Developer, which Developer agrees to pay on the first day of the month following the date on which the premiums were paid. Authority shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s).

Section 310 Disclaimer of Responsibility by Authority

Authority neither undertakes nor assumes nor shall have any responsibility, right or duty to Developer or to any third party to review, inspect, supervise, pass judgment upon or inform Developer or any third party of any matter in connection with the Property or the Project, whether with respect to the quality, adequacy or suitability of the plans, any labor, service, equipment or material furnished to the Project, any person furnishing the same or otherwise. Developer and all third parties shall rely upon their own judgment regarding such matters, and any review, inspection, supervision, exercise of judgment or information supplied to Developer or to any third party by Authority in connection with such matter is for the public purpose of providing affordable housing, and neither Developer nor any third party is entitled to rely thereon.

Section 311 Rights of Access

Commencing upon the Closing, representatives of Authority and City shall have the reasonable right of access to the Property, upon two business days’ written notice to Developer (except in the case of an emergency, in which case Authority shall provide such notice as may be practical under the circumstances), without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including, without limitation, the inspection of the work being performed.

Section 312 Taxes, Assessments, Encumbrances and Liens

Commencing upon the Closing, Developer shall pay prior to delinquency all real estate taxes and assessments assessed and levied on or against the Property and Developer’s Leasehold Interest. Prior to Completion, Developer shall not place, or allow to be placed, on title to the Property or any portion thereof or any interest therein, any mortgage, trust deed, encumbrance or lien not authorized by this Agreement. In addition, Developer shall remove, or shall have removed, any levy or attachment made on the Property (or any portion thereof or interest therein), or shall assure the satisfaction thereof within a reasonable time but in any event prior to a sale thereunder.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 21
APN: 3008-013-902

Nothing herein contained shall be deemed to prohibit Developer from contesting the validity or amount of any tax assessment, encumbrance or lien, or to limit the remedies available to Developer in respect thereto.

Section 313 Rights to Plans

a. All work product prepared pursuant to this Agreement, including, without limitation, all Plans, construction documents, soils tests and similar reports, permits and other entitlements are hereby assigned to Authority as security for Developer’s obligations hereunder.

In the event that either this Agreement or the Ground Lease is terminated by Authority, Developer shall, within 10 days of such termination, transmit all such work product to Authority.

b. To effectuate the assignment described in paragraph a., concurrently with executing this Agreement, Developer shall execute and deliver to Authority the Assignment of Agreements, granting to Authority all of Developer’s rights to: (i) the Plans prepared pursuant to this Agreement, (ii) the contracts between Developer and its architect (if any) and between Developer and its general contractor, (iii) all permits relating to the Project and (iv) all similar rights and property interests. If no such work product exists or will exist, then execution and delivery to Authority of the Assignment of Agreements shall not be required.

Section 314 Release of Construction Covenants

a. Promptly after Completion of the Improvements constituting the Project in its entirety, as generally and specifically required by this Agreement, Authority shall furnish Developer with a Release of Construction Covenants upon written request therefor by Developer.

Authority shall not unreasonably withhold such Release of Construction Covenants, and such Release of Construction Covenants shall be issued so long as Developer has constructed and developed the Project in accordance with this Agreement and the Plans approved by Authority.

Such Release of Construction Covenants shall be, and shall so state, conclusive determination of satisfactory completion of all of the construction required by this Agreement.

b. The Release of Construction Covenants shall be in such form as to permit it to be recorded in the official records of Los Angeles County. A Release of Construction Covenants for rehabilitation of less than the Improvements constituting the Project in its entirety shall not be recorded.

c. If Authority refuses or fails to furnish a Release of Construction Covenants after written request from Developer, then Authority shall, within 30 days of the written request, provide Developer with a written statement of the reasons Authority refused or failed to furnish a Release of Construction Covenants. The statement shall also contain Authority’s opinion of the action Developer shall take to obtain a Release of Construction Covenants. If the reason for such refusal Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 22
APN: 3008-013-902

is confined to the immediate availability of specific items or materials for landscaping, and/or minor items, then Authority shall issue its Release of Construction Covenants upon the posting of a bond by Developer with Authority in an amount representing the fair value of the work not yet completed.

d. Such Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code.

ARTICLE IV USE OF PROPERTY

Section 401 Uses

a. Developer covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property or any part thereof or any interest therein) that Developer, its successors and assigns shall use the Property exclusively to provide f our units of affordable housing for rental to Very Low Income households who are at risk of homelessness or currently unhoused at an Affordable Rent as provided in the Ground Lease and the Agreement Containing Covenants.

b. The Parties acknowledge that this Agreement is subject to the provisions of California Health and Safety Code Section 33418 (as applied to the use of the Low and Moderate Income Housing Asset Fund by California Health and Safety Code Section 33476.1), whic h provides in pertinent part:

“(a) An Agency will monitor, on an ongoing basis, any housing affordable to persons and families of low or moderate income developed or otherwise made available pursuant to any provisions of this part. As part of this monitoring, an Agency will require owners or managers of the housing to submit an annual report to the Agency. The annual reports will include for each rental unit the rental rate and the income and family size of the occupants... The income information required by this section will be suppl ied by the tenant in a certified statement of a form provided by the Agency.”

Accordingly, Developer shall submit to Authority on an annual basis the annual report required by California Health and Safety Code Section 33418. The annual report shall include for each residential unit the rental rate and the income and family size of the occupants. The income information shall be supplied by the tenant in a certified statement on a form provided by Authority. Developer shall provide for the submission of such information in its lease or occupancy agreements with tenants.

c. Prior to the Closing, Developer shall submit to the Authority Executive Director for approval a proposed plan for managing and operating the Project, which shall include a Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 23
APN: 3008-013-902

proposed staffing plan to assure a satisfactory level of management, maintenance, and security services (the “Management Plan”). Approval of the Management Plan by the Authority Executive Director or designee shall be a condition precedent to the Closing. Developer shall manage and operate the Property in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by Developer and the Authority Executive Director or designee, for the entire Restricted Period.

d. Developer shall submit no later than 45 days before the beginning of each fiscal year of the Restricted Period an estimated annual budget for management of the Property (the “Annual Operating Budget”) in accordance with the Management Plan. The Annual Operating Budget shall include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, taxes and special assessment levies, prorated amount required for insurance and all other expenses incident to the operati on of the Project and shall show the expected revenues to pay such expenses, including annual debt service requirements and reserve fund deposits and balances. The Annual Operating Budget, including any amendments proposed by Developer, shall be subject to the approval of the Authority Executive Director. Within 30 days following its receipt of the Annual Operating Budget, Authority shall deliver to Developer its written approval or disapproval thereof, which approval shall not be unreasonably withheld. If Authority disapproves the Annual Operating Budget, then it shall set forth its reasons with reasonable specificity, and Developer shall submit a revised Annual Operating Budget for Authority’s review.

e. Developer shall submit to Authority no later than 45 days before the beginning of each fiscal year of the Restricted Period a “Proposed Use of Residual Receipts Plan” for Authority’s approval of Developer’s intended use of the residual receipts. Within 30 days following its receipt of the Proposed Use of Residual Receipts Plan, Authority shall deliver to Developer its written approval or disapproval thereof, which approval shall not be unreasonably withheld. If Authority disapproves the Proposed Use of Re sidual Receipts Plan, then it shall set forth its reasons with reasonable specificity, and Developer shall submit a revised Proposed Use of Residual Receipts Plan for Authority’s review.

f. Beginning on the date of first occupancy of the Project, and for each fiscal year of the Restricted Period, Developer shall submit on a quarterly basis a quarterly report for the management of the Property (the “Quarterly Report”) in a form that is reasonably acceptable to the Authority Executive Director. The Quarterly Report shall include a cash flow report, profit and loss statement, budget to date figures, staffing level (including positions and, if not full -time, hours worked), and occupancy report. The Authority Executive Director, in his/her sole discretion may waive the requirement of the Quarterly Report for one or more monthly reporting periods.

However, such waiver shall not operate to waive any subsequent requirement to submit a Quarterly Report.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 24
APN: 3008-013-902

g. The Agreement Containing Covenants shall contain appropriate provisions implementing this Section 401.

Section 402 Maintenance of Property

a. Prior to the Closing, Developer shall prepare and submit to the Authority Executive Director or designee for review and approval a program for the exterior and interior maintenance of the Property and the Improvements (the “ Maintenance Program”) and a proposed first -year budget for its implementation (the “Annual Maintenance Budget”).

b. The Maintenance Program shall describe in reasonable detail the standards to be followed in maintaining the interior and exterior of the Improvements, including a schedule indicating the proposed frequency of each element of maintenance, and shall include, at a minimum, the following: periodic cleaning of the interior and exterior of the Improvements, including windows, removing graffiti, removing debris and waste materials and otherwise maintaining indoor and outdoor areas of the Property, maintaining any lawns, plants, shrubs and trees or other landscaping planted on the Property, performing inspections of all exterior features to determine whether repairs are required, conducting periodic protective treatments such as rust removal and caulking, conducting repairs to facades, roof, doors, windows and other exterior features, maintaining fencing and other security devices and systems, periodic repainting of the exterior, periodic repainting of the interior units and common areas, periodic replacing of the interior unit carpets, checking and repairing or replacing as need of building systems, including, without limitation, the heating and cooling systems, smoke alarms, carbon monoxide alarms, and water heaters, checking interior unit appliances and monitoring interior unit bathrooms for mold/mildew. The Maintenance Program, including amendments proposed by Developer, shall be subject to the approval of the Authority Executive Director.

c. At all times during the Restricted Period, Developer shall maintain the Property and the Improvements in accordance with the approved Maintenance Program. To implement this requirement, Developer agrees to budget sufficient funds to pay for all reasonably anticipated costs (as indicated in the Annual Maintenance Budget to be submitted to Authority with the proposed Annual Operating Budget). If Developer fails to maintain the Property and the Improvements in accordance with the approved Maintenance Program , then Authority shall have the right, but not the obligation, to enter the Property, correct any violation, and hold Developer responsible for the cost thereof, and such cost, until paid, shall constitute a lien on the Property. Authority agrees that it shall not exercise its rights under this paragraph until Authority has given notice to Developer and Developer fails to cure such default within 30 days; provided, however, that Developer shall have such additional time as may be reasonably necessary in order to cure such default if Developer has commenced to cure within such 30- day period and is diligently prosecuting the cure to completion; and provided further, that if Developer’s failure to maintain the Property has, in Authority’s reasonable judgment, created a condition that presents an immediate threat to health Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 25
APN: 3008-013-902

and safety, then Authority is only required to give such notice as is reasonable under the circumstances.

d. The Agreement Containing Covenants shall contain appropriate provisions implementing this Section 402.

Section 403 Obligation to Refrain from Discrimination

Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof or interest therein, there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, sexual orientation, marital status, race, color, creed, religion, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. All deeds, leases or contracts shall contain or be subject to substantially the following nondi scrimination or nonsegregation clauses:

1. In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”

Notwithstanding the preceding paragraph, the provisions relating to discrimination on the basis of familial status shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code nor be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of Section 12955 of the California Government Code shall also apply to the preceding paragraph.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 26
APN: 3008-013-902

2. In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased.”

3. In contracts: There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees of the land.”

Section 404 Effect and Duration of Covenants

The covenants established in this Agreement shall, without regard to technical classification and designation, be binding on Developer and any successor in interest to the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 27
APN: 3008-013-902

Property or any part thereof or interest therein for the benefit and in favor of Authority, its successors and assigns, and City.

Section 405 Effect of Violation of Terms and Provisions of Agreement

Authority and City are deemed beneficiaries of the terms and provisions of this Agreement and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit this Agreement and the covenants running with the land have been provided. Authority and City shall have the right if the covenants contained in this Agreement are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants are entitled.

ARTICLE V DEFAULTS, REMEDIES AND TERMINATION

Section 501 Defaults – General

a. Subject to Force Majeure Delay, failure or delay by either Party to perform any term or provision of this Agreement constitutes a default under this Agreement. The Party who fails or delays shall immediately commence to cure, correct or remedy such failur e or delay and complete such cure, correction or remedy with reasonable diligence.

b. The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the injured Party. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. Except as otherwise expressly provided in this Agreement, any failures or delays by either Party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either Party in asserting any of its rights and remedies shall not deprive either Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

c. If a monetary event of default occurs, then prior to exercising any remedies hereunder, the injured Party shall give the Party in default written notice of such default. The Party in default shall have a period of seven days after such notice is given wit hin which to cure the default prior to exercise of remedies by the injured Party.

d. If a non -monetary event of default occurs, then prior to exercising any remedies hereunder, Authority shall give Developer notice of such default. If the default is reasonably capable of being cured within 30 calendar days after such notice is received or deemed received, then Developer shall have such period to effect a cure prior to exercise of remedies by Authority.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 28
APN: 3008-013-902

If the default is such that it is not reasonably capable of being cured within 30 days, and Developer (i) initiates corrective action within said period and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then De veloper shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Authority, but in no event shall such period exceed 60 days from the date such notice is received or deemed received.

In no event s hall Authority be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default.

Section 502 Institution of Legal Actions

Subject to the notice and cure provisions of Section 501 in addition to any other rights or remedies (and except as otherwise provided in this Agreement), either Party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions shall be instituted in the Superior Court of the County of Los Angeles, State of California, in any other appropriate court of that county, or in the United States District Court for the Central District of California.

Section 503 Applicable Law

The internal laws of the State of California shall govern the interpretation and enforcement of this Agreement, without reference to the principles relating to conflicts of law.

Section 504 Acceptance of Service of Process

a. If legal action is commenced by Developer against Authority, then service of process on Authority shall be made by personal service upon the Authority Executive Director or in such other manner as may be provided by law.

b. If legal action is commenced by Authority against Developer, then service of process on Developer shall be made by personal service upon Developer (or upon an officer of Developer) and shall be valid whether made within or without the State of California, or in such manner as may be provided by law.

Section 505 Rights and Remedies Cumulative

Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies shall not preclude the exerci se by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 29
APN: 3008-013-902

Section 506 Damages

If either Party defaults with regard to any of the provisions of this Agreement, then subject to the notice and cure provisions of Section 501, the defaulting Party shall be liable to the non- defaulting Party for any damages caused by such default, and the non- defaulting Party may, after such notice and opportunity to cure (but not before) commence an action for damages against the defaulting Party with respect to such default.

Section 507 Specific Performance

If either Party defaults with regard to any of the provisions of this Agreement, then subject to the notice and cure provisions of Section 501, the non-defaulting Party, at its option, may, after such notice and opportunity to cure (but not before) commence an action for specific performance of the terms of this Agreement pertaining to such default.

Section 508 Termination by Authority Before Closing

Notwithstanding anything in this Agreement or the Ground Lease to the contrary, Authority shall have the right to terminate this Agreement, in its sole discretion and without further notice to Developer and without requirement of the expiration of any cure period, in the event of any one or more of the following:

a. Developer fails to submit to Authority evidence of financing or fails to satisfy any other condition precedent to the occurrence of the Closing as provided in the Method of Financing within the time established therefor in the Schedule of Performance and h as failed to cure such default within 30 days after receiving written notice from Authority;

b. Developer assigns or attempts to assign any of Developer’s rights in and to the Property or any portion thereof or interest therein, or this Agreement or any portion hereof, except as permitted by this Agreement;

c. Except for a Permitted Transfer, there is substantial change in the ownership of Developer, or with respect to the identity of the parties in control of Developer, or the degree thereof contrary to the provisions of Section 105; or

d. Developer fails to submit any of the reports, plans, drawings (if necessary) and related documents required by this Agreement by the respective dates provided in this Agreement therefor, and has failed to cure such default within 30 days after receiving wr itten notice from Authority.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 30
APN: 3008-013-902

Section 509 Termination by Authority After Closing

After the Closing, but before Completion, Authority shall have the right to terminate this Agreement if any of the following defaults occur:

a. Developer fails to commence rehabilitation of the Improvements as required by this Agreement and such breach is not cured within the time provided in Section 501;

b. Developer abandons or substantially suspends rehabilitation of the Improvements and such breach is not cured within the time provided in Section 501;

c. Developer assigns or attempts to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer of the Property, or any part thereof, in violation of this Agreement, and such breach is not cured within the time provided in Section 501; or

d. Developer otherwise materially breaches this Agreement, and such breach is not cured within the time provided in Section 501.

Section 510 Termination by Either Party

Prior to the Closing, either Party shall have the right to terminate this Agreement if the other Party is in default of any material term or provision of this Agreement, and, following notice, fails to cure such default within the time provided in Section 501.

ARTICLE VI GENERAL PROVISIONS

Section 601 Notices, Demands and Communications between Parties

Formal notices, demands and communications between the Parties shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Parties, as designated in Section 103 and 104, respectively. Such written notices, demands and communications may be sent in the same manner to such other addresses as either Party may from time to time designate by mail as provided in this Section 601. Any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by the recipient; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 31
APN: 3008-013-902

Section 602 Conflicts of Interest

a. No member, official or employee of Authority shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is, directly or indirectly, interested.

b. Developer warrants that it has not paid or given, and shall not pay or give, any third party any money or other consideration for obtaining this Agreement.

Section 603 Nonliability of Authority Officials and Employees

No member, official, employee or consultant of Authority shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by Authority or for any amount that may become due to Developer or to its successor, or on any obligations under the terms of this Agreement.

Section 604 Force Majeure

In addition to specific provisions of this Agreement, performance by either Party shall not be deemed to be in default where delays or defaults are due to Force Majeure Events.

Section 605 Inspection of Books and Records

Developer shall maintain at a location in Los Angeles County complete, accurate, and current records pertaining to the Property and the Project for a period of five years after the creation of such records, and shall permit any duly authorized representative of Aut hority to inspect and copy records, during regular business hours. Records shall be kept accurate and current.

Section 606 Real Estate Commissions

Neither Party shall be liable for any real estate commissions, brokerage fees or finders’ fees which may arise from this transaction. The Parties each represent to the other that it has employed no broker, agent or finder in connection with this transaction.

Section 607 Approvals

a. Except as otherwise expressly provided in this Agreement, approvals required of either Party shall not be unreasonably withheld or delayed. All approvals shall be in writing.

Except as otherwise expressly provided in this Agreement, failure by either Par ty to approve a Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 32
APN: 3008-013-902

matter within the time provided for approval of the matter shall not be deemed a disapproval, and failure by either Party to disapprove a matter within the time provided for approval of the matter shall not be deemed an approval.

b. Except as otherwise expressly provided in this Agreement, approvals required of Authority shall be deemed granted upon the written approval of the Authority Executive Director or designee. Notwithstanding the foregoing, the Authority Executive Director or designee may, in his or her sole discretion, refer to the governing body of Authority any item requiring Authority approval; otherwise, “Authority approval” shall mean and refer to approval by the Authority Executive Director or designee.

Section 608 No Partnership

Nothing contained in this Agreement shall be deemed or construed to create a partnership, joint venture, or any other similar relationship between the Parties or cause Authority to be responsible in any way for the debts or obligations of Developer or any other Person.

Section 609 Compliance With Law

Developer agrees to comply with all the requirements now in force, or which may hereafter be in force, of all municipal, county, state and federal authorities, pertaining to the development and use of the Property and the Improvements, as well as operations conducted thereon. The judgment of any court of competent jurisdiction, or the admission of Developer in any action or proceeding, whether Authority be a party thereto or not, that Developer has violated any such ordinance or statute shall be conclusive of that fact as between the Parties.

Section 610 Incorporation by Reference

Each of the attachments and exhibits attached hereto is incorporated herein by this reference.

Section 611 Interpretation

a. The language in all parts of this Agreement shall in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against either Party. The Parties acknowledge and agree that this Agreement has been prepared jo intly by the Parties and has been the subject of arm’s length and careful negotiation over a considerable period of time, that each Party has been given the opportunity to independently review this Agreement with legal counsel, and that each Party has the requisite experience and sophistication to understand, interpret and agree to the particular language of the provisions hereof. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement shall not Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 33
APN: 3008-013-902

be interpreted or construed against the Party preparing it, and instead, other rules of interpretation and construction shall be utilized.

b. If any term or provision of this Agreement, the deletion of which would not adversely affect the receipt of any material benefit by either Party, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agree ment shall not be affected thereby and each other term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. It is the intention of the Parties that in lieu of each clause or provision of this Agreement that is illegal, invalid or unenforceable, there be added as a part of this Agreement an enforceable clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible.

c. The captions of the articles, sections and subsections herein are inserted solely for convenience and under no circumstances are they or any of them to be treated or construed as part of this instrument.

d. References in this instrument to this “Agreement” mean, refer to and include this instrument as well as any riders, exhibits, addenda and attachments hereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in this instrument. Any references to any covenant, condition, obligation and/or undertaking “herein”, “hereunder”, or “pursuant hereto” (or language of like import) mean, refer to, and include the covenants, obligations and undertakings exis ting pursuant to this instrument and any riders, exhibits, addenda and attachments or other documents affixed to or expressly incorporated by reference in this instrument.

e. As used in this Agreement, and as the context may require, the singular includes the plural and vice versa, and the masculine gender includes the feminine and vice versa.

Section 612 No Third Party Beneficiaries

This Agreement is made solely and specifically between the Parties and their respective successors and assigns; and, except as expressly provided otherwise in this Agreement, no other person shall have any rights, interest or claims under this Agreement or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.

Section 613 Authority to Sign

Developer hereby represents that the person executing this Agreement on behalf of Developer has full authority to do so and to bind Developer to perform pursuant to the terms and conditions of this Agreement.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 34
APN: 3008-013-902

Section 614 Time of Essence

Time is of the essence with respect to the performance of each of the covenants and agreements contained in this Agreement.

ARTICLE VII ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS

a. This Agreement shall constitute the entire understanding and agreement of the Parties.

b. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the Parties with respect to all (or any part of or any interest in) the Property.

c. All waivers of the provisions of this Agreement shall be in writing and signed by the appropriate authorities of the relevant Party, and all amendments hereto shall be in writing and signed by the appropriate authorities of the Parties to be bound thereby. This Agreement and any provisions hereof may be amended by mutual written agreement by Developer and the Authority Executive Director, subject to review and approval by Authority’s governing body as needed to comply with applicable law and Authority policies and procedures.

d. This Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original, but all of which together shall constitute one Agreement binding on the Parties.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Page 35
APN: 3008-013-902

IN WITNESS WHEREOF , the Parties have signed this Agreement as of the date first written above.

“AUTHORITY”

HOUSING AUTHORITY OF THE CITY OF
PALMDALE, a public body, corporate and
politic

By: _________________________________
Salvador Mendez
City Manager Pro Tem

ATTEST:

By: _________________________________
Roxanne Faber
Authority Secretary

APPROVED AS TO FORM:

By:_________________________________
Alexandra Halfman
Acting Authority Attorney

KANE, BALLMER & BERKMAN
Authority Special Counsel

By: ________________________________
Susan Apy

“DEVELOPER”

VICTORY OUTREACH - PALMDALE,
a California nonprofit corporation

By: ___________________________________
Michael Gonzalez
President

ATTEST:

By: ___________________________________
Christina Gonzalez
Secretary

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 1

LEGAL DESCRIPTION

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 1 – Legal Description
APN: 3008-013-902

ATTACHMENT NO. 1

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

LOT 239 OF TRACT NO. 14561, IN THE CITY OF PALMDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 410, PAGES 23 TO 27 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

APN: 3008-013-902
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 2

SITE MAP

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 3

FORM OF AGREEMENT CONTAINING COVENANTS

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 1

Recording Requested by
and When Recorded Return to:

City Clerk, City of Palmdale
38300 Sierra Highway, Suite C
Palmdale, California 93550-4611

SPACE ABOVE THIS LINE FOR RECORDER’S USE

GOVERNMENT BUSINESS
Free Recording
(Cal. Govt. Code §27383)

Victory Outreach Agreement No. A-9241
APN: 3008-013-902

AGREEMENT CONTAINING COVENANTS

BY AND BETWEEN HOUSING AUTHORITY OF THE CITY OF PALMDALE AND

VICTORY OUTREACH-PALMDALE

THIS AGREEMENT CONTAINING COVENANTS (this “ ACC”), dated as of ______________________, 2025, is entered into by and between the HOUSING AUTHORITY OF THE CITY OF PALMDALE , a public body corporate and politic (“ Authority”), and VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (“Developer”).

WHEREAS, for the purpose of providing four units of housing that shall be affordable to Very Low Income households who are at risk of homelessness or currently unhoused exclusively, the Parties have entered into an Affordable Housing Agreement dated as of June 3, 2025 (the “Agreement”), which is incorporated herein by this reference, and any capitalized term that is not otherwise defined in this ACC shall have the meaning ascribed to such term in the Agreement; and

WHEREAS, the Agreement contains certain provisions relating to the use of the Property.

NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE

RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES COVENANT AND AGREE AS FOLLOWS:

1. Developer hereby covenants and agrees on behalf of itself and its successors and assigns in the Property or any portion thereof or any Improvements thereon or any interest therein that Developer and such successors and assigns shall rehabilitate the Improv ements on the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 2

Property, consisting of a residential apartment building containing four rental units and associated amenities, in accordance with the Authority Loan Documents and plans approved by City.

Developer hereby covenants and agrees on behalf of itself and its successors and assigns in the Property or any portion thereof or any Improvements thereon or any interest therein that Developer and such successors and assigns shall comply with all provisions of the LURA, whether affirmative or negative in nature, and that Developer, its successors and assigns shall carry out the rehabilitation, construction, development, and operation of the Improvements on the Property in compliance with the LURA.

2. Maximum Incomes.

a. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, that Developer, its successors and assignees shall use the Property exclusively as housing to provide four units of affordable housing for Very Low Income households who are at risk of homelessness or currently unhoused, subject to all of the terms and conditions of this ACC. The four two- bedroom units shall be rented as housing exclusively to Very Low Income households who are at risk of homelessness or currently unhoused at an Affordable Rent as provided in California Health and Safety Code Section 50053 for very low income households (an “Affordable Rent”).
b. For purposes of this ACC, the maximum incomes of eligible tenants shall be determined on the basis of the income limits for Very Low Income households, adjusted for household size, in the Los Angeles-Long Beach SMSA, published approximately annually by the California Department of Housing and Community Development (“HCD”). If HCD discontinues publishing such income limits, then the term “Very Low Income” shall mean a household income that does not exceed 50% of the area median income (the “ Area Median Income”), adjusted for household size.
c. Household income shall be determined using the income sources set forth in Section 6914 of Title 25 of the California Code of Regulations. Immediately prior to a prospective tenant’s occupancy of an affordable unit, Developer shall obtain and maintain on file an income computation and certification form from such prospective tenant dated immediately prior to the date of initial occupancy. Developer shall verify that the income information provided by an applicant is accurate by following all applicable Aut hority policies and procedures and by taking one or more of the following steps as a part of the verification process: (i) obtaining two pay stubs from the most recent pay periods, (ii) obtaining a written verification of income and employment from applicant’s current employer, (iii) obtaining an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either agency, (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, then obtaining other verification of such applicant’s income as is reasonably satisfactory or (v) obtaining such other information as may be reasonably required. Developer shall update the foregoing records annually and provide copies of updated tenant eligibility records and monthly rental records to Authority for review. Upon review of such Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 3

records, Authority may at its option perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein.

Developer shall retain the records described in this Section for a period of five years after the date each record was created.

3. Maximum Rents.

a. Rents charged to a tenant shall not exceed rents that are affordable to Very Low Income households. The maximum rent, including a reasonable utility allowance for utilities and services (excluding telephone) to be paid by Very Low Income households is set forth below:

(i) In the case of a Very Low Income household, the maximum rent shall be a rent that does not exceed 30% of 50% of the Area Median Income, adjusted for household size appropriate to the unit.

(ii) For purposes of determining Affordable Rent, household size appropriate to the unit shall mean two persons in the case of a one -bedroom unit and three persons in the case of a two-bedroom unit.
b. This affordability requirement shall continue in effect for the full Term of this ACC.
c. Failure to comply with the affordability requirements of this ACC is an event of default under the terms of the Authority Loan. Pursuant to the Authority Note evidencing the Authority Loan, subject to the right to cure, the Authority Loan shall be due and payable immediately if the housing does not meet the affordability requirements of this ACC. d. Upon request, the Authority Executive Director shall notify Developer of the maximum rents that may be charged, based on the then- current Area Median Income (not to exceed an Affordable Rent), and the maximum income of households who are eligible to occupy the Property. Developer shall submit to Authority for review and approval its initial rent schedule and utility allowances, 30 days prior to initial rental of the units, and on an annual basis thereafter.

Rental rates may be adjusted, and income determinations performed, annually, at the time of lease renewal. Developer shall provide tenants not less than 30 days’ prior written notice before implementing any increase in rents.

4. Developer, its successors and assigns shall not charge rents in excess of an Affordable Rent. If Developer has charged a tenant rent in excess of an Affordable Rent, then Developer shall immediately reimburse the tenant the amount of overpayment, with interest, from the date of rental payment, at the highest non-usurious rate of interest permitted by law, within 10 days of such determination. Developer may increase rents not more than once annually, subject to any applicable rent control ordinance then in effect, but in no event shall rent be greater than the rent permitted by the adjusted rent limits.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 4

5. Developer shall adopt written tenant selection policies and criteria that meet the following requirements and are approved by Authority:

a. Are consistent with the purpose of providing affordable housing for Very Low Income households.

b. Are reasonably related to program eligibility and the applicants’ ability to perform the obligations of the lease.

c. Provide for:

(i) The selection of otherwise eligible tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and

(ii) The prompt written notification to any rejected applicant of the grounds for any rejection;

d. Provide first priority in the selection of qualifying occupants to persons displaced by projects assisted by Authority; and

e. Provide information to and otherwise attract eligible qualifying occupants from all racial, ethnic and gender groups in the housing market area. The Parties shall cooperate to effectuate this provision during Developer’s initial lease -up of the Property and as vacancies occur.

6. Developer, its successors and assigns shall not refuse to accept for occupancy otherwise eligible qualifying occupants that are holders of a certificate or voucher under 24 CFR part 982-Section 8 Tenant-Based Assistance: Unified Rule for Tenant-Based Assistance under the Section 8 Rental Certificate Program and the Section 8 Rental Voucher Program or to the holder of a comparable document evidencing participation in a HOME tenant -based rental assistance program because of the status of the prospective t enant as a holder of such certificate of family participation, rental voucher or comparable HOME tenant-based assistance document.

7. Provisions regarding Leases.

a. Leases shall have terms of not less than one year, unless upon mutual agreement between tenant and Developer the lease agreement may be based on a month-to-month rental. The lease may not contain any of the following provisions (in which references to “owner” shall mean Developer, its successors or assigns):

(i) Agreement by the tenant to be sued, to admit guilt or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 5

(ii) Agreement by the tenant that the owner may take, hold or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties thereto. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. The owner may dispose of this personal property in accordance with state law;

(iii) Agreement by the tenant not to hold the owner or the owner’s agents legally responsible for any action or failure to act, whether intentional or negligent;

(iv) Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant;

(v) Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties thereto;

(vi) Agreement by the tenant to waive any right to a trial by jury;

(vii) Agreement by the tenant to waive the tenant’s right to appeal, or to otherwise challenge in court, a court decision in connection with the tenant housing agreement; and

(viii) Agreement by the tenant to pay attorneys’ fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay such costs, including owner’s reasonable attorneys’ fees, if t he tenant loses.

8. Developer, its successors or assigns may not terminate a lease or refuse to renew the lease of a tenant, except: for serious or repeated violation of the terms and conditions of the lease, for violation of applicable federal, state or local law or for other good cause. Any termination or refusal to renew shall be provided by Developer’s service upon the tenant of a written notice specifying the grounds for the action in the time and manner proscribed by law.

9. Developer shall maintain the Improvements on the Property in compliance with all applicable housing quality standards and local code requirements and shall keep the Property free from any unreasonable accumulation of debris or waste materials. Prior to the recordation of this ACC, Developer shall prepare and submit to the Authority Executive Director for approval a Maintenance Program for the maintenance of the Property and the Improvements. For the Term of this ACC, Developer, its successors and assigns, shall maintain the Property and the Improvements in accordance with the Authority- approved Maintenance Program, as the same may be amended from time to time with the prior written approval of the Authority Executive Director. If Developer Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 6

fails to maintain the Property and the Improvements in accordance with the approved Maintenance Program, then Authority shall have the right, but not the obligation, to enter the Property and the improvements, correct any violation, and hold Developer responsible for the cost thereof, and such cost, until paid, shall constitute a lien on the Property.

10. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, national origin, religion or sex in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property.

All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

a. In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”

b. In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, subless ees, subtenants or vendees in the premises herein leased.”

c. In contracts: There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 7

of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, locati on, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees of the land.”

11. Prior to the recordation of this ACC, Developer shall prepare and submit to the Authority Executive Director for approval a Management Plan describing Developer’s proposed plans for managing and operating the Property. The initial Management Plan is subj ect to the requirements set forth in the Agreement. For the Term of this ACC, Developer shall manage and operate the Property in accordance with the Authority- approved Management Plan, as the same may be amended from time to time with the prior written approval of the Authority Executive Director. If at any time Authority determines that the Property is not being managed or maintained in accordance with the approved Management Plan, Developer shall change its management personnel or the practices compl ained of, upon receipt of written notice from Authority. In accordance with the Management Plan, Developer shall submit:

a. No later than 45 days before the beginning of each fiscal year, an Annual Operating Budget. The Annual Operating Budget shall include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, taxes and speci al assessment levies, prorated amount required for insurance and all other expenses incident to the operation of the Project and shall show the expected revenues to pay such expenses, including annual debt service requirements and reserve fund deposits and balances. The Annual Operating Budget, including any amendments proposed by Developer, shall be subject to the approval of the Authority Executive Director. Within 30 days following its receipt of the Annual Operating Budget, Authority shall deliver to D eveloper its written approval or disapproval thereof, which approval shall not be unreasonably withheld. If Authority disapproves the Annual Operating Budget, then it shall set forth its reasons with reasonable specificity and Developer shall submit a revised Annual Operating Budget for Authority’s review. b. On the first day of each month of the fiscal year, beginning on the date of first occupancy, a Quarterly Report for the management of the Property. The Quarterly Report shall include a cash flow report, profit and loss statement, budget to date figures, s taffing level (including positions and, if not full -time, hours worked), and occupancy report. The Authority Executive Director in his or her sole discretion may waive the requirement of the Quarterly Report for one or more quarterly reporting periods. However, such waiver shall not operate to waive any future right of Authority to require a subsequent Quarterly Report. c. In connection with the Annual Operating Budget and Quarterly Report, Developer shall be obligated to use the Residual Receipts (as such term is defined in the Authority Note) for uses approved by Authority. No later than 45 days before the beginning of ea ch fiscal Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 8

year, Developer shall prepare and submit to Authority an annual “Proposed Use of Residual Receipts Plan” for administrative approval prior to spending the Residual Receipts on such approved uses.
d. In addition to the Annual Operating Budget, Quarterly Report and annual Proposed Use of Residual Receipts Plan, Developer shall annually submit to Authority a Use of Residual Receipts Report describing the programs provided by Developer.

12. The covenants established in this ACC and any amendments hereto approved by the Parties shall, without regard to technical classification and designation, be binding for the benefit and in favor of Authority, its successors and assigns, and City. The requirements of this ACC shall commence at the Closing and shall remain in effect for the longest feasible time, but not less than 55 years from the Closing (the “Term”), except that the nondiscrimination provisions of Section 10 shall remain in perpetuity.

13. Authority and City are deemed beneficiaries of the terms and provisions of this ACC and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit this ACC and the covenants running with the land have been provided. Authority and City shall each have the right if the covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this ACC and covenants are entitled, without regard to whether Authority or City is or remains an owner of any land or interest therein to which such covenants relate.

14. This ACC may be executed in several counterparts, each of which is an original, and all of which together constitute but one and the same document.

[Remainder of Page Intentionally Left Blank; Signatures on Following Page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902 Page 9

IN WITNESS WHEREOF, the Parties have executed this ACC as of the date first set forth above.

“AUTHORITY”

HOUSING AUTHORITY OF THE CITY
OF PALMDALE, a public body, corporate
and politic

By: ________________________________
Salvador Mendez
City Manager Pro Tem

ATTEST:

By: ________________________________
Roxanne Faber
Authority Secretary

APPROVED AS TO FORM:

By: ________________________________
Alexandra Halfman
Acting Authority Attorney

KANE, BALLMER & BERKMAN
Authority Special Counsel

By: ________________________________
Susan Apy

“DEVELOPER”

VICTORY OUTREACH - PALMDALE,
a California non profit corporation

By: ___________________________________
Michael Gonzalez
President

ATTEST:

By: ___________________________________
Christina Gonzalez
Secretary

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of _____________________ )

On ____________________, before me, ____________________________, a Notary Public, 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 _____________________________

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 3 – Form of Agreement Containing Covenants APN: 3008-013-902

State of California )
County of _____________________ )

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 A

LEGAL DESCRIPTION

A leasehold interest created by that certain Ground Lease between the HOUSING AUTHORITY OF THE CITY OF PALMDALE and VICTORY OUTREACH - PALMDALE, a California nonprofit corporation, dated as of ___________, 2025, in the real property described as follows:

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 4

FORM OF ASSIGNMENT OF AGREEMENTS

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 4 – Form of Assignment of Agreements APN: 3008-013-902 Page 1

ASSIGNMENT OF AGREEMENTS FROM VICTORY OUTREACH-PALMDALE TO

HOUSING AUTHORITY OF THE CITY OF PALMDALE
(A-9241)

FOR VALUE RECEIVED, the undersigned, VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Developer”), assigns to the HOUSING AUTHORITY OF THE CITY OF PALMDALE, a public body, corporate and politic (“Authority”), all of its right, title and interest in and to:

1. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, the “Architectural Agreements”); and

2. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively the “Plans and Specifications”)

heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity (collectively “Architect”), for or on behalf of Developer in connection with the rehabilitation of the Improvements on the Property described in Exhibit A attached. This Assignment of Agreements (this “Assignment”) is subject to the prior rights of any lender whose lien is senior to the Authority Deed of Trust. The Plans and Specifications, as of the date hereof, are those which Developer has heretofore, or will hereafter deliver to Authority.

This Assignment constitutes a present and absolute assignment to Authority as of the date that it is executed by Developer (the “Effective Date”), subject to the terms and provisions of the Affordable Housing Agreement by and between Developer and Authority, dated as of June 3, 2025 (the “Agreement”) wherein such assignment only becomes enforceable upon a breach and failure to cure by Developer as set forth therein; provided, however, that Authority confers upon Developer the right to enforce the terms of the Architectural Agreements and Developer’s rights to the Plans and Specifications so long as no default or event which would constitute a default after notice or the passage of time, or both, has occurred and is continuing under the Agreement. Upon the occurrence of a default or event which would constitute a default after notice or the passage of time, or both, under the Agreement, Authority may, in its sole discretion, give notice to Architect of its intent to enforce the rights of Developer under the Architectural Agreements and of its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Developer shall , within 10 days after receipt of notice from Authority that Authority intends to enforce its rights under this Assignment, transmit all Plans and Specifications to Authority, subject to any required third-party consent, which Developer must use its best efforts to obtain . Developer acknowledges that by accepting this Assignment, Authority does not assume any of Developer’s obligations under the Architectural Agreements or with respect to the Plans and Specifications.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 4 – Form of Assignment of Agreements APN: 3008-013-902 Page 2

Developer represents and warrants to Authority, as of the Effective Date, that: (i) all Architectural Agreements entered into by Developer are in full force and effect and are enforceable in accordance with their terms , and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements, (ii) all copies of the Architectural Agreements and Plans and Specifications delivered to Authority are complete and correct and (iii) Developer has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications.

Developer agrees: (i) to pay and perform all obligations of Developer under the Architectural Agreements, (ii) to enforce the payment and performance of all obligations of any other person or entity under the Architectural Agreements, (iii ) not to modify the existing Architectural Agreements nor to enter into any future Architectural Agreements without Authority’s prior written approval except as otherwise may be permitted in the Agreement and (iv) not to assign further (other than assignment in connection with a loan which is senior in priority to Authority’s assignment), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications without Authority’s prior written consent.

This Assignment secures performance by Developer of all obligations of Developer under the Agreement. This Assignment is supplemented by the provisions of the Agreement and said provisions are incorporated herein by this reference.

The term “Agreement ” as used herein also means any future amendments and implementation agreements between the Parties regarding the Agreement which refer to this Assignment. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Agreement.

This Assignment shall be governed by the internal laws of the State of California, except to the extent that Federal laws preempt the laws of the State of California, and Developer consents to the jurisdiction of any Federal or State Court within the State of California having proper venue for the filing and maintenance of any action arising hereunder and agrees that the prevailing party in any such action shall be entitled, in addition to any other recovery, to reasonable attorneys’ fees and costs.

This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns and successors-in-interest of the Parties; provided, however, that this shall not be construed and is not intended to waive any restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by Developer contained in the Agreement.

This Assignment may be executed in several counterparts, each of which is an original, and all of which together constitute but one and the same document.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 4 – Form of Assignment of Agreements APN: 3008-013-902 Page 3

The attached Schedule 1 and Exhibit A are incorporated herein by this reference.

“DEVELOPER”
VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

Date: _____________________________

ATTEST:

By:

Christina Gonzalez
Secretary
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 4 – Form of Assignment of Agreements APN: 3008-013-902 Schedule of Unpaid Claims

SCHEDULE 1

SCHEDULE OF UNPAID CLAIMS

[behind this page]
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 4 – Form of Assignment of Agreements APN: 3008-013-902 Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 5

FORM OF ASSIGNMENT OF RENTS AND LEASES

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 1

Recording Requested by
and When Recorded Return to:

City Clerk, City of Palmdale
38300 Sierra Highway, Suite C
Palmdale, California 93550-4611

SPACE ABOVE THIS LINE FOR RECORDER’S USE

GOVERNMENT BUSINESS
Free Recording
(Cal. Govt. Code §27383)

Victory Outreach Agreement No. A-9241
APN: 3008-013-902

ASSIGNMENT OF RENTS AND LEASES FROM VICTORY OUTREACH-

PALMDALE TO HOUSING AUTHORITY OF THE CITY OF PALMDALE

THIS ASSIGNMENT OF RE NTS AND LEASES ( this “Assignment”), dated as of ______________________, 2025, is made by VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Assignor”), in favor of the HOUSING AUTHORITY OF THE CITY OF PALMDALE , a public body corporate and politic , its successors, and assigns (“Assignee”).

RECITALS

A. Assignor is the owner of a leasehold interest in the real property described in Exhibit A attached hereto, pursuant to that certain Ground Lease between Assignee and Assignor dated as of ______________________, 2025, and is the owner of all of the personalty, fixtures, and improvements now or hereafter located thereon or attached thereto now existing or to be constructed thereon. Said real property, personalty, fixtures, and the improvements are herein referred to collectively as the “Premises”.

B. Assignee has agreed to make the Authority Loan to Assignor in the amount of $580,000 pursuant to the terms of an Affordable Housing Agreement by and between Assignor and Assignee, dated as of June 3, 2025 (the “Agreement”), as evidenced by the Authority Note .

The Authority Loan is secured by the Authority Deed of Trust.

In order to induce Assignee to make the Authority Loan to Assignor, Assignor has agreed to execute this Assignment.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 2

NOW THEREFORE, with reference to the foregoing and in reliance thereon and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor agrees as follows:

AGREEMENT

1. All initially capitalized terms used herein, unless otherwise defined or required by context, shall have the meaning ascribed to them in the Agreement.

2. Subject to the prior rights of any lender whose lien is senior to the Authority Deed of Trust held by Assignee (a “Senior Lender”), Assignor hereby absolutely grants, sells, assigns, transfers and sets over to Assignee, by this Assignment, all of Assignor ’s interests, whether now existing or hereafter acquired, in all subleases and other occupancy agreements of any nature, now or hereafter covering all or any part of the Premises, together with all exte nsions, renewals, modifications or replacements of said subleases and occupancy agreements, and together with any and all guarantees of the obligations of the sublessees and occupants (individually, a “Sublessee”) thereunder, whether now existing or hereafter executed, and all extensions and renewals of said guarantees. Said subleases and occupancy agreements, together with any and all guarantees, modifications, extensions and renewals thereof , are hereinafter referred to individually as a “Sublease” and collectively as the “Subleases”.

3. Assignor’s purpose in making this Assignment is to relinquish to Assignee its right to collect and enjoy the rents, roy alties, issues, profits, income and other benefits at any time accruing by virtue of the Subleases (collectively, “Rents and Profits”).

4. The P arties intend that this Assignment shall be a present, absolute and unconditional assignment and shall, immediately upon execution, give Assignee the right to collect the Rents and Profits and to apply them in payment of the principal and interest and all other sums payable on the indebtedness and other obligations under any of the Authority Loan Documents, as well as all other sums payable under the Authority Deed of Trust or any other instrument given as security for the indebtedness . However, Assignee hereby grants to Assignor a license to collect and use, subject to the provisions set forth below, the Rents and Profits as they respectively become due and to enforce the Subleases, so long as there is no default by Assignor in performance of the terms, covenants or provisions of any of the Authority Loan Documents , after the expiration of any applicable notice and cure periods. Nothing contained herein, nor any collection of Rents and Profits by Assignee or by a receiver, shall be construed to ma ke Assignee a “mortgagee in possession” of the Premises so long as Assignee has not entered into actual possession of the Premises.

5. Upon the occurrence of any default , after the expiration of any applicable notice and cure periods, under the terms and conditions of any of the Authority Loan Documents , this Assignment shall constitute a direction and full authority to each Sublessee under any Sublease Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 3

and each guarantor of any Sublease to pay all Rents and Profits to Assignee without proof of the default relied upon. Assignor hereby irrevocably authorizes each Sublessee and guarantor to rely upon and comply with any notice or demand by Assignee for the payment to Assignee of any Rents and Profits due or to become due.

6. Assignor represents and warrants as to each Sublease now or hereafter covering all or any portion of the Premises, unless Assignee has been otherwise advised in writing by Assignor:

a. That each Sublease is in full force and effect;

b. That no material default exists on the part of the Sublessee thereunder or Assignor;

c. That no rent in excess of one month’s rent has been collected in advance;

d. That no Sublease or any interest therein, except to the extent required by a Senior Lender, if any, has been previously assigned or pledged; and

e. That all rent due to date under each Sublease has been collected and no concession has been granted to any Sublessee in the form of a waiver, release, reduction, discount or other alteration of rent due or to become due except as previously disclosed to Assignor in writing.

7. Assignor agrees with respect to each Sublease:

a. If any Sublease provides for a security deposit paid by the Sublessee to Assignor and subject to the prior rights, if any, of a Senior Lender, then this Assignment transfers to Assignee all of Assignor’s right, title and interest in and to each such security deposit; provided, however, that Assignor shall have the right to retain said security deposit so long as Assignor is not in default, after the expiration of any applicable notice and cure periods, under any of the Authority Loan Documents ; and provi ded further that Assignee shall have no obligation to the Sublessee with respect to such security deposit unless and until Assignee comes into actual possession and control of said security deposit.

b. If any Sublease provides for the abatement of rent during repair of the leased Premises by reason of fire or other casualty, then Assignor shall furnish rental insurance to Assignee, the policies to be with companies and in form, content, policy limits and terms as are customary in the case of entities owning similar property or assets similarly situated.

c. Each Sublease shall remain in full force and effect despite any merger of the interest of Assignor and any Sublessee thereunder . Except as may be otherwise provided in the Agreement, Assignor shall not terminate any Sublease (except pursuant to the terms of the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 4

Sublease upon a default by any Sublessee thereunder), or materially modify or amend any Sublease or any of the terms thereof, or grant any concessions in connection therewith or accept a surrender thereof, without the prior written consent of Assignee, which consent shall not be unreasonably withheld.

d. Assignor shall not collect any Rents and Profits more than 30 days in advance of the date on which they become due under the terms of any Sublease.

e. Assignor shall not discount any future accruing Rents and Profits.

f. Assignor shall not consent to any assignment of any Sublease, or any subletting thereunder, whether or not in accordance with its terms, on any terms less favorable than those that would reflect an arm ’s length transaction in light of prevailing market conditions (subject to the rent restrictions applicable to the Premises), without the prior written consent of Assignee, except as may be otherwise provided in the Agreement.

g. Except as may be otherwise provided in the Agreement, Assignor shall not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law.

h. Assignor shall faithfully perform and discharge all obligations of the sublessor under each Sublease, and shall give prompt written notice to Assignee of any notice of Assignor’s default received from any Sublessee or any other person and furnish Assignee with a complete copy of said notice . Assignor shall appear in and defend, at no cost to Assignee, any action or proceeding arising under or in any manner connected with any Sublease. If requested by Assignee, Assignor shall enforce each Sublease and all remedies available to Assignor against the Sublessee in the case of default under the Sublease by the Sublessee.

i. Except as otherwise provided in the Agreement , and except for residential subleases entered into in the ordinary course of business, Assignor shall give Assignee written notice immediately upon entering into a Sublease of any part of the Premises and shall promptly upon request of Assignee provide to Assignee a true and correct copy of each executed Sublease .

Upon written notice from Assignee to Assignor, such Sublease shall be deemed included in this Assignment as though originally listed herein. At Assignee’s option, such notice may be recorded, without cost to Assignor, in the Official Records of Los Angeles County, California, which notice shall refer to this Assignment.

j. Except as otherwise provided in the Agreement , at Assignee ’s option, Assignor shall not hire, retain or contract with any third party for property management services with respect to the Premises, without the prior written approval of Assignee of such party and the terms of its contract for management services.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 5

k. Nothing herein shall be construed to impose any liability or obligation on Assignee under or with respect to any Sublease . Assignor shall indemnify, defend, and hold Assignee, its officers, directors, agents, employees and representatives (each, an “Indemnitee”) harmless from and against any and all liabilities, losses and damages that any Indemnitee may incur under any Sublease or by reason of this Assignment, and of and from any and all claims and demands whatsoever that may be asserted against any Indemnitee by reason of any alleged obligations to be performed or discharged by Assignee under any Sublease or this Agreement, unless any of the foregoing arises from or results from the gross negligence or willful misconduct of any Indemnitee. Should any Indemnitee incur any liability, loss or damage under any Sublease or by reason of this Assi gnment and such liability, loss or damage falls within the foregoing indemnification, Assignor shall immediately upon demand reimburse such Indemnitee for the amount thereof together with all costs and expenses and reasonable attorneys ’ fees (based on itemized invoices for time and charges) and court costs incurred by such Indemnitee . All of the foregoing sums shall bear interest at the maximum rate permitted by law from demand by Indemnitee until paid. Any Rents and Profits collected by Assignee may be applied by Assignee, in its discretion, in satisfaction of any such liability, loss, damage, claim, demand, cost, expense or fees.

8. Assignor hereby grants to Assignee the following rights:

a. Upon a default as described in the Agreement, Assignee shall be deemed to be the creditor of each Sublessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership or other debtor relief proceedings affecting such Sublessee, without obligation on the part of Assignee, however, to file timely claims in such proceedings or otherwise pursue creditor’s rights therein.

b. Assignee shall have the right to assign Assignor’s right, title and interest in the Subleases to any subsequent holder of the Authority Deed of Trust or any participating interest therein or to any person acquiring title to all or any part of the Premises through foreclosure or otherwise. Any subsequent assignee shall have all the rights and powers herein provided to Assignee.

c. Assignee shall have the right (but not the obligation), upon any default under the Authority Deed of Trust or the Agreement , to take any action as Assignee may deem necessary or appropriate to protect its security, including, without limitation, appearing in any action or proceeding and performing any obligations of t he sublessor under any Sublease, and Assignor agrees to pay, on demand, all costs and expenses, including, without limitation , reasonable attorneys’ fees and court costs incurred by Assignee in connection therewith, together with interest thereon at the rate of 10% per annum.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 6

d. Upon any default under any of the Authority Loan Documents (subject to any notice and cure provisions), and without notice to or consent of Assignor, Assignee shall have the following rights (none of which shall be construed to be obligations of Assignee):

i. Assignee shall have the right under this Assignment to use and possess, without rental or charge, the f ixtures, equipment, and personal property of Assignor located in or on the Premises and used in the operation or occupancy thereof. Assignee shall have the right to apply any of the Rents and Profits to pay installments due for personal property rented or purchased on credit, insurance premiums on p ersonal property, or other charges relating to personal property in or on the Premises . However, this As signment shall not make Assignee responsible for the control, care, management, or repair of the Premises or any personal p roperty or for the carrying out of any of the terms or provisions of any Sublease.

ii. Assignee shall have the right to apply the Rents and Profits and any sums recovered by Assignee hereunder to the outstanding Indebtedness, as well as to charges for taxes, insurance, improvements, maintenance, and other items relating to the operation of the Premises.

iii. Assignee shall have the right to take possession of the Premises, manage and operate the Premises and Assignor ’s business thereon, and to take possession of and use all books of account and financial records of Assignor and its property managers or representatives relating to the Premises.

iv. Assignee shall have the right to execute new Subleases of any part of the Premises, including Subleases that extend beyond the term of the Authority Deed of Trust.

v. Assignee shall have the right to cancel or alter any existing Subleases.

vi. Assignee shall have the irrevocable authority, as Assignor ’s attorney-in-fact, such authority being coupled with an interest, to sign the name of Assignor and to bind Assignor on all papers and documents relating to the operation, leasing and maintenance of the Premises.

e. All of the foregoing rights and remedies of Assignee are cumulative, and Assignee shall also have upon the occurrence of any such default all other rights and remedies provided under any of the Authority Loan Documents or other agreement between the Parties, or otherwise available at law or in equity or by statute subject to the nonrecourse clause set forth in the Authority Note.

9. Failure of Assignee to avail itself of any terms, covenants, or conditions of this Assignment for any period of time or for any reason shall not constitute a waiver thereof.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 7

10. Notwithstanding any future modification of the terms of any of the Authority Loan Documents, this Assignment and the rights and benefits hereby assigned and granted shall continue in favor of Assignee in accordance with the terms of this Assignment.

11. This Assignment shall be binding upon and inure to the benefit of the respective heirs, legal representatives, successors and assigns of the Parties (including, without limitation, in the case of Assignee, any third parties now or hereafter acquiring any interest in the indebtedness or other obligations of Assignor under the Authority Note or the Authority Deed of Trust or a part thereof, whether by virt ue of assignment, participation or otherwise) . The words Assignor, Assignee and Sublessee, wherever used herein, shall include the persons and entities named herein or in any Sublease and designated as such and their respective heirs, legal representatives, successors and assigns, provided that any action taken by the named Assignee or any successor, designated as such by an instrument recorded in the Official Records of Los Angeles County, California, referring to this Assignment, shall be sufficient for all purposes notwithstanding that Assignee may have theretofore assigned or participated any interes t in the obligation to a third party. All words and phrases shall be taken to include the singular or plural number, and the masculine, feminine or neuter gender, as may fit the case.

12. Any change, amendment, modific ation, abridgment, cancellation or discharge of this Assignment or any term or provision hereof shall be invalid without the written consent of Assignee.

13. Upon payment to Assi gnee of the full amount of the i ndebtedness and other obligations secured hereby and by the Authority Note and the Authority Deed of Trust , as evidenced by a recorded satisfaction or release of the Authority Deed of Trust , this Assignment shall be void and of no further effect. In such event, Assignee shall cooperate with Assignor to execute such instruments as may be reasonably necessary to remove the lien of this instrument from the Official Records of Los Angeles County.

14. All notices, demands, approvals, and other communications provided for herein shall be in writing and be delivered by overnight air courier, personal delivery, or registered or certified U.S. mail, postage prepaid with return receipt requested to the appropriate party at its address as follows:

If to Assignor: Victory Outreach
37419 25
th Street East
Palmdale, California 93550

If to Authority: Housing Authority of the City of Palmdale 38250 Sierra Highway
Palmdale, California 93550
Attention: Manager
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 8

Addresses for notice may be changed from time to time by written notice to the other Party.

If any communication is given by U.S. Mail in the manner hereinabove described, then it shall be effective upon the earlier of (i) three days after deposit in a Post Office or other official depository under the care and custody of t he United States Postal Service or (ii ) actual receipt, as indicated by the return receipt. I f given by personal delivery, or by overnight air courier, then it shall be effective when delivered to the appropriate address set forth above.

15. This Assignment may be recorded in the Official Records of Los Angeles County, California, and Assignor shall pay any and all fees, charges, costs and expenses of such recording.

16. If any provision hereof is determined to be illegal or unenforceable for any reason, then the remaining provisions hereof shall not be affected thereby.

17. This Assignment shall be governed by and construed in accordance with the internal laws of the State of California.

18. If Assignee should bring any action to enforce its rights hereunder at law or at equity, then Assignor shall reimburse Assignee for all reasonable attorneys ’ fees and costs expended in connection therewith.

[Remainder of Page Intentionally Left Blank; Signature(s) on Following Page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Page 9

19. This Assignment may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original, but all of which together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the undersigned Assignor has executed this Assignment as of the date first above written.

“ASSIGNOR”

VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President
Date: _____________________________

ATTEST:

By:

Christina Gonzlez
Secretary

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902

State of California )
County of _____________________ )

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 _____________________________

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 5 – Form of Assignment of Rents and Leases APN: 3008-013-902 Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF

PALMDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 6

FORM OF AUTHORITY DEED OF TRUST

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 1

Recording Requested by
and When Recorded Return to:

City Clerk, City of Palmdale
38300 Sierra Highway, Suite C
Palmdale, California 93550-4611

SPACE ABOVE THIS LINE FOR RECORDER’S USE

GOVERNMENT BUSINESS
Free Recording
(Cal. Govt. Code §27383)

Victory Outreach Agreement No. A-9241
APN: 3008-013-902

LEASEHOLD DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) BY VICTORY OUTREACH-PALMDALE FOR

THE BENEFIT OF HOUSING AUTHORITY OF THE CITY OF PALMDALE

This Leasehold Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) (this “ Deed of Trust ”) is made ______________________, 2025 by VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (hereinafter referred to as “Trustor”) (whose address is 37419 25th Street East, Palmdale, California 93550), to FIDELITY NATIONAL TITLE COMPANY, (hereinafter called “Trustee”), for the benefit of the HOUSING AUTHORITY OF THE CITY OF PALMDALE, a public body corporate and politic (hereinafter called “Beneficiary”), whose address is 38250 Sierra Highway, 2nd Floor Palmdale, California 93550-3609. Trustor is the owner of the leasehold estate (the “ Leasehold Estate”) in the land hereinafter described which was created, granted and conveyed by that certain Ground Lease by and between Beneficiary as lessor, and Trustor as lessee, dated as of ______________________, 2025, as amended from time to time (the “ Ground Lease”), with respect to the real property described in this Deed of Trust.

Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION all present and future right, title and interest of Trustor in and to the following property (the “Trust Estate”):

(a) The Leasehold Estate and all of Trustor’s rights, title and interest under the Ground Lease pertaining to that certain real property in the City of Palmdale, County of Los Angeles, State of California more particularly described in Exhibit A attached hereto and by this reference made a part hereof (hereafter referred to as the “Subject Property”);

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 2

(b) All buildings, structures and other improvements now or in the future located or to be constructed on the Subject Property (the “Improvements”);

(c) all tenements, hereditaments, appurtenances, privileges, franchises and other rights and interests now or in the future benefiting or otherwise relating to the Subject Property or the Improvements, including easements, rights -of-way and development rights (the “Appurtenances”). (The Appurtenances, together with the Subject Property and the Improvements, are hereafter referred to as the “Real Property”);

(d) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management, operation leasing or occupancy of the Trust Estate, including those past due and unpaid;

(e) all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code (the “ UCC”), and whether existing now or in the future) now or in the future located at, upon or about, or affixed or attached to or installed in, the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances, building materials and supplies, generators, boilers, furnaces, water tanks, heating ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property, but not including personal property that is donated to Trustor (the “Goods,” and together with the Real Property, the “Property”); and

(f) all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the future) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the P roperty or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits, approvals and other governmental authorizations, (ii) improvement plans and specifications and architectural drawings (if any), (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects (if any), engineers, sales agents, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties , guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims , demands, awards, settlements and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 3

agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all other types of intangible personal property of any kind or nature and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (the “Intangibles”).

Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estate described above in which a security interest may be created under the UCC (collectively, the “ Personal Property ”). This Deed of Trust constitutes a security agreement under the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary.

Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a “secured party” under the UCC and other applicable California law.

Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sect ions 9502(c) and 9604 of the UCC.

FOR THE PURPOSE OF SECURING , in such order of priority as Beneficiary may elect, the following:

(1) due, prompt and complete observance, performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following:

(a) a promissory note in the original principal amount of $580,000 executed by Trustor of even date herewith (the “Authority Note”);

(b) the Affordable Housing Agreement dated as of June 3, 2025 (the “Agreement”), between Trustor and Beneficiary;

(c) the Agreement Containing Covenants (including rental restrictions) between Trustor and Beneficiary, recorded concurrently herewith (the “Agreement Containing Covenants”); and

(2) payment of indebtedness of Trustor to Beneficiary in the principal sum of $580,000 or so much thereof as shall be advanced, evidenced by the Authority Note, with interest, according to the terms of the Authority Note.

The Agreement, including all a ttachments thereto, and the documents and instruments executed by Trustor in connection with the Project, including the Authority Loan Documents described in Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 4

the Agreement (collectively referred to as the “Secured Obligations ”) and all of their terms are incorporated herein by reference, and this conveyance secures any and all extensions, amendments, modifications or renewals thereof however evidenced, and additional advances evidenced by any note reciting that it is secured hereby. Any capitalized term that is not otherwise defined in this Deed of Trust has the meaning ascribed to such term in the Agreement.

AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:

1. That Trustor shall pay the Authority Note at the time and in the manner provided therein, and perform the obligations of Trustor as set forth in the Secured Obligations at the time and in the manner respectively provided therein;

2. That Trustor shall not permit or suffer the use of any of the Property for any purpose other than the uses permitted by the Agreement and the Agreement Containing Covenants;

3. That the Secured Obligations are incorporated in and made a part of this Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, Beneficiary, at its option, may declare the whol e of the indebtedness secured hereby to be due and payable;

4. That, subject to the prior rights of any lender whose lien is senior to this Deed of Trust (“Senior Lender”), all rents, profits and income from the Trust Estate are hereby assigned to Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the Agreement;

5. That upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period, Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the Trust Estate and operate same and collect the rents, profits and income therefrom;

6. That Trustor shall keep the I mprovements hereafter constructed on the Subject Property in accordance with the Agreement insured against loss by fire and such other hazards, casualties, and contingencies as may reasonably be required in writing from time to time by Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies. In no event shall the amounts of coverage be less than one -hundred percent of the insurable value of the Property. Suc h policies shall be endorsed with standard mortgage clause with loss payable to Beneficiary and certificates thereof together with copies of original policies shall be deposited with Beneficiary;

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 5

7. To pay, at least 10 days before delinquency, any taxes and assessments affecting the Property, to pay, when due, all encumbrances, charges and liens, with interest, on the Property or any part thereof which appear to be prior or superior hereto and to pay all costs, fees and expenses of this Deed of Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting t he legality thereof in good faith and by appropriate proceedings and Trustor has adequate funds immediately available to pay any liabilities contested pursuant to this Paragraph 7;

8. To keep the Property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon, to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed a nd materials furnished therefor, to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon (subject to Trustor’s right to contest the validity or applicability of laws or regulations), not to commit or permit waste thereof, not to commit, suffer or permit any act upon the Property in violation of law and/or covenants, conditions and/or restrictions affecting the Property and not to permit or suffer any material alteration of or addition to the buildings or improvements hereafter constructed in or upon the Property without the consent of Beneficiary;

9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorneys’ fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear;

10. Should Trustor fail, after the giving of notice and the expiration of any applicable cure period, to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, may pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto and, in exercising any such powers, may pay nec essary expenses, employ counsel and pay its reasonable fees. Notwithstanding the foregoing, in the event of default under this Deed of Trust, Beneficiary may also require Trustor to maintain and submit additional records. Beneficiary shall specify in writing the particular records that must be maintained and the information or reports that must be submitted;

11. Beneficiary shall have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 6

by Beneficiary shall be added to the principal sum secured hereby;

13. That the funds to be advanced hereunder are to be used in accordance with the Secured Obligations and upon the failure of Trustor, after the giving of notice and the expiration of any applicable cure period, to keep and perfor m all the covenants, conditions and agreements of said agreements, the principal sum and all arrears of interest, and other charges provided for in the Authority Note shall at the option of Beneficiary of this Deed of Trust become due and payable, anything contained herein to the contrary notwithstanding;

14. Trustor further covenants that it shall not voluntarily create, suffer or permit to be created against the property subject to this Deed of Trust any lien or liens except as permitted by the Secured Obligations or otherwise approved by Beneficiary, and further that it shall keep and maintain the Property free from the claims of all persons supplying labor or materials which shall enter into the construction of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor shall , at Beneficiary’s written request, within 30 days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary first provide a written request, prior to foreclosure) record in the official records of Los Angeles County, California, a surety bond in an amount one-and-one-half times the amount of such claim item in order to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary;

15. That any and all I mprovements made or about to be made upon the premises covered by the Deed of Trust, and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated, now or hereafte r, by lawful authority, and that the same shall upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office; and

16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of Beneficiary a reasonable charge for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2 Title 14, Division 3, of the California Civil Code.

IT IS MUTUALLY AGREED THAT:

17. Should the Property or any part thereof be taken or damaged by reason of any public Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 7

improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, then subject to the rights of a Senior Lender, if any, Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage.

Subject to the rights of a Senior Lender, if any, all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting the Property, are hereby assigned to Beneficiary. After deducting therefrom all its expenses, including attorney s’ fees, the balance of the proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, shall be applied to the amount due under the Authority Note secured hereby. No amount applied to the reduction of the principal shall relieve Trustor from making regular payments as required by the Authority Note;

18. Upon default by Trustor in making any payments provided for in the Authority Note secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the Secured Obligations, and if such default is not cured within the respective time provided therefor in Paragraph 34 below, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust, the Authority Note and all documents evidencing expenditures secured hereby;

19. a. Prior to the repayment in full of the Authority Loan, Trustor shall not assign or attempt to assign the Agreement or any right therein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the Project thereon, or any portion thereof or interest therein (referred to hereinafter as a “ Transfer”), without prior written approval of Beneficiary, except as otherwise permitted in the Authority Note. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. If consent should be given, then any such transfer shall be subject to this Paragraph 19, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein, subject to the provisions of subparagraph e(3) below of this Paragraph

successors and assigns, and for the benefit of Beneficiary shall expressly assume all of the obligations of Trustor under the Agreement and the Authority Loan Documents, and agree to be subject to all conditions and restrictions applicable to Trustor in this Deed of Trust, subject to the provisions of subparagraph e(3) below of this Paragraph 19. There shall be submitted to Beneficiary for review all instruments and other legal documents proposed to effectuate any such transfer, and if approved by Beneficiary, its approval shall be indicated to Trustor in writing.

c. In the absence of specific written agreement by Beneficiary, no unauthorized Transfer, or approval thereof by Beneficiary, shall be deemed to relieve Trustor or any other party from any obligations under the Agreement or any other Authority Loan Document.

d. If a Transfer occurs before the payment in full of the Authority Loan and without the prior written consent of Beneficiary, then the net proceeds shall be paid to Beneficiary to the extent necessary to pay in full the accrued interest, if any, current interest and remaining principal balance of the Authority Loan.

e. (1) As used herein, “Transfer” also means the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project, except as provided in subparagraph e(3) below of this Paragraph 19.

(2) “Transfer” shall also include the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Trustor, or any conversion of Trustor to an entity form other than that of Trustor at the time of execution of the Agreement , except that a cumulative change in ownership interest of any general par tner of 49% or less shall not be deemed a “Transfer” for purposes of this Deed of Trust.

(3) Notwithstanding subparagraphs (1) and (2), above, “Transfer” shall not include any of the following Permitted Transfers:
(a) An assignment of the Agreement and all of Trustor’s interests in the Property to an Affiliate of Trustor or a conveyance back from the Affiliate to Trustor;
(b) The lease for occupancy of all or any part of the
Improvements on the Property in accordance with the
Secured Obligations;
(c) The granting of easements or permits to facilitate the rehabilitation of the Property in accordance with the
Agreement; and
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 9

(d) Any transfer approved in writing by Beneficiary’s Executive Director or designee, at his or her sole discretion.

f. Beneficiary shall not unreasonably withhold, condition, or delay its approval of any matter for which its approval is required hereunder. Any disapproval shall be in writing and contain Beneficiary’s reasons for disapproval;

20. After the lapse of such time as may then be required by law following the recordation of a notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof . Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale to payment of (i ) the expenses of such sale, together with the reasonable expenses of this Deed of Trust including therein reasonable Trustee’s fees or attorney s’ fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale, (ii) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee’s deed, (iii) all sums expended under the terms hereof, not then repaid, with accrued interest at the rate specified in the Authority Note, (iv) all other sums then secured hereby and (v) the remainder, if any, to the person or persons legally entitled thereto;

21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of re cord, which, when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee;

22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law;

23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, and upon surrender of this Deed of Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 10

Trust and the Authority Note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in such reconveyance of any matters or fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto”;

24. The trust created hereby is irrevocable by Trustor;

25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term “Beneficiary” shall include not only the original Beneficiary hereunder but also any future owner and holder including pledgees, of the Authority Note secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several;

26. Trustee accepts this Deed of Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law , Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee . Beneficiary, at its option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed here under. Without conveyance of the Property, the successor trustee shall succeed to all the title, power and duties conferred upon Trustee herein and by applicable law;

27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the address set forth on the first page of this Deed of Trust;

28. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such lea ses and rental and occupancy agreements, and such other information regarding the premises and their use as may be requested by Beneficiary;

29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the purpose of financing the construction of Improvements on the Property, to provide four residential units to be operated as rental housing that is affordable to Very Low Income households who are at risk of homelessness or currently unhoused at an Affordable Rent, and such dwelling units shall be occupied exclusively by such persons as set forth in the Secured Obligations;

30. Trustor agrees that, except as otherwise provided in the Authority Note , upon sale Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 11

or refinancing of the Property or any part thereof, the entire principal balance of the debt secured by this Deed of Trust, plus any accrued but unpaid interest thereon, shall at the option of Beneficiary be immediately due and payable;

31. The obligation to repay the Authority Loan is a nonrecourse obligation of Trustor and its partners. Neither Trustor nor any of its general or limited partners, nor any other party, shall have any personal liability for repayment of the loan. The sole recourse of Beneficiary shall be the exercise of its rights against the Property and any related security for the Authority Loan.

Notwithstanding the foregoing, Beneficiary may recover directly from Trustor or from any other party:

(a) any damages, costs and expenses incurred by Beneficiary as a result of fraud or any criminal act or acts of Trustor or any partner, shareholder, officer, director or employee of Trustor, or of any member or general or limited partner of Trustor, or of any member or general or limited partner of such member or general or limited partner;

(b) any damages, costs and expenses incurred by Beneficiary as a result of any misappropriation of funds provided for the construction of the Project, as described in the Agreement, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds;

(c) any and all amounts owing by Trustor pursuant to the indemnification regarding Hazardous Substances pursuant to the Environmental Indemnity; and

(d) all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Beneficiary shall pay Trustor’s reasonable court costs and attorneys’ fees if Trustor is the prevailing party in any such enforcement or collection action);

32. Notwithstanding specific provisions of this Deed of Trust, non -monetary performance hereunder shall not be deemed to be in default where delays or defaults are proximately caused by a Force Majeure Event, provided such event actually delays and interferes with the timely performance of the matter, and, despite the exercise of diligence and good business practices, such event is beyond the reasonable control of Trustor. Notwithstanding the foregoing, no such event shall constitute a Force Majeure Event unless and until Trustor delivers to Beneficiary written notice describing the event, its cause, when and how Trustor obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Trustor shall deliver such written notice within 10 days after it obtains actual knowledge of the event;

33. If the rights and liens created by this Deed of Trust are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the Secured Obligations, then the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 12

unsecured portion of such obligations shall be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations, and all performance and payments made by Trustor shall be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations;

34. (a) Subject to the extensions of time set forth in Paragraph 32 above, and subject to the further provisions of this Paragraph 34, failure or delay by Trustor to perform any term or provision respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes a default under this Deed of Trust.

(b) Beneficiary shall give written notice of default to Trustor, specifying the default complained of by Beneficiary. Failure or delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default.

(c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

(d) If a monetary event of default occurs, then prior to exercising any remedies hereunder, Beneficiary shall give Trustor written notice of such default. Trustor shall have a period of seven days after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary.

(e) If a non -monetary event of default occurs, then prior to exercising any remedies hereunder, Beneficiary shall give Trustor notice of such default. If the default is reasonably capable of being cured within 30 days, then Trustor shall have such period to effect a cure prior to exercise of remedies by Beneficiary. If the default is such that it is not reasonably capable of being cured within 30 days, and Trustor (i) initiates corrective action within said period and (ii) diligently, continually and in good faith works to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. If Trustor fails to take corrective action or cure the default within a reasonable time, then Beneficiary shall give Trustor notice thereof, who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. In no event shall Beneficiary be precluded from exercising remedies if its rights become or are about to become materially jeopardized by any failure to cure a default or if the default is not cured within 60 days after the first notice of default is given.

(f) Except as otherwise may be required in order to comply with the provisions of California Civil Code Section 2924 et seq., any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, shall be deemed delivered upon its Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 13

transmission, any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S.

35. This Deed of Trust shall be subordinate and junior to the deed of trust securing a Senior Loan, if any. Following the reconveyance of the deed of trust securing a Senior Loan, this Deed of Trust shall be subordinate and junior to the deed of tr ust in favor of the maker of a permitted permanent or take- out loan, if any . Beneficiary’s Executive Director or his or her designee shall execute such instruments as may be necessary in order to subordinate the lien of this Deed of Trust, to the deed of trust securing any Senior Loan. In the event of a default or breach by Trustor of any security instrument securi ng a Senior Loan described in this Paragraph 35, Beneficiary shall have the right to cure the default prior to completion of any foreclosure. In such event, Beneficiary shall be entitled to reimbursement by Trustor of all costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements shall be a lien against the Property and added to the obligation secured by this Deed of Trust until repaid, with interest at the highest rate permitted by law; and

[Remainder of Page Intentionally Left Blank; Signatures on Following Page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Page 14

36. This Deed of Trust may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original, but all of which together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year set forth above.

“TRUSTOR”

VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

ATTEST:

By:

Christina Gonzalez
Secretary

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902

State of California )
County of _____________________ )

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 _____________________________

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 6 – Form of Authority Deed of Trust APN: 3008-013-902 Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 7

FORM OF AUTHORITY NOTE

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 7 – Form of Authority Note APN: 3008-013-902 Page 1

PROMISSORY NOTE

SECURED BY DEED OF TRUST

TO HOUSING AUTHORITY

OF THE CITY OF PALMDALE
(A-9241)

0% Palmdale, California
$580,000 ______________________, 2025

FOR VALUE RECEIVED, VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Borrower”), hereby promises to pay to the HOUSING AUTHORITY OF THE CITY OF PALMDALE , a public body corporate and politic (“Authority”), or order, a principal amount of $580,000, as the Authority Loan pursuant to the Affordable Housing Agreement dated as of June 3, 2025 (the “Agreement”) by and between Borrower (“Developer ” therein) and Authority, incorporated herein by this reference. Borrower shall pay interest at the rate, in the amount and at the time hereinafter provided.

Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. In addition, the following terms shall have the following meanings:

“Default Rate of Interest” means 1% over the Prime Rate announced by Bank of America.

“Low Income ” shall have the meaning given to the term “lower income” in California Health and Safety Code Section 50079.5.

“Note” means this promissory note evidencing the Authority Loan.

“Operating Expenses ” means actual, reasonable and customary costs, fees and expenses directly attributable to the operation, maintenance and management of the Property, expressly including, without limitation: debt service on any leasehold mortgage loan pre-approved by Authority in its sole and absolute discretion other than the Authority Loan, property taxes and assessments, maintenance costs (including materials and labor), reasonable and customary payments to a replacement reserve account, painting, cleaning, repairs and alterat ions, landscaping, utilities, rubbish removal, certificates, permits and licenses, sewer charges, real and personal property taxes and assessments, insurance, security, cable television, satellite and similar facilities, a reasonable property management fee, not to exceed 5% of effective gross income, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves) and fees and Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 7 – Form of Authority Note APN: 3008-013-902 Page 2

expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party. The calculation of Operating Expenses shall be subject to the reasonable approval of Authority.

“Residual Receipts” means (i) the Revenue minus (ii ) the Operating Expenses, calculated on a 12-month basis.

“Revenue” means the gross rental income from the Property, and any other income to Borrower derived from the ownership, operation and management of the Property.

1. This Note evidences the obligation of Borrower to Authority for the repayment of the Authority Loan.

2. This Note is payable at the principal office of Authority, 38250 Sierra Highway, 2
nd Floor, Palmdale, California 93550, or at such other place as the holder hereof may inform Borrower in writing, in lawful money of the United States.

3. This Note is secured by the Authority Deed of Trust.

4. The Authority Loan is a deferred payment loan. There are no scheduled payments. The principal balance of the Authority Loan and all accrued and unpaid interest shall be due and payable on ______________________, 20______, ( 55 years after the date of this Note) ; provided, however, that Borrower shall be obligated to use Residual Receipts as described in Section 5 below. The Authority Loan shall accrue interest at the rate of 0% simple interest per annum from the date of this Note. In the event of an uncured default under any of the Authority Loan Documents, the Authority Loan shall bear simple interest at the Default Rate of Interest from the date of the expiration of the cure period for such default.

5. Prior to the expiration of the term hereof, as additional consideration in order to induce Authority to make the Authority Loan to Borrower, Borrower shall be obligated to use the Residual Receipts for housing related programs that are consistent with the City of Palmdale Neighborhood Improvement Strategy to benefit Very Low Income and Low Income households. Borrower or its agent shall prepare and submit to Authority, annually, a “Proposed Use of Residual Receipts Plan” for administrative approval prior to spending the Residual Receipts on such approved uses. The annual Proposed Use of Residual Receipts Plan shall describe the community outreach programs to be provided to the P roject, which shall be consistent with the City of Palmdale Neighborhood Improvement Strategy and provide for a minimum of two community outreach events per year.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 7 – Form of Authority Note APN: 3008-013-902 Page 3

6. The Authority Loan is immediately due and payable upon any breach or default by Borrower under any of the Authority Loan Documents , or any documents executed in connection with the Authority Loan, now or hereafter securing this Note (including any amendment, modification or extension thereof) which is not cured in the time provided for such cure. Upon the failure of Borrower to perform or observe any term or provision of this Note, or upon the occurrence of any event of default under the terms of any of the Authority Loan Documents or any documents executed in connection with the Authority Loan, which is not cured or waived within the respective time period provided herein or therein, the holder may exercise its rights or remedies hereunder or thereunder.

7. Any breach by Borrower of the provisions of Section 105 of the Agreement constitutes a default under this Note. The cure periods under the Agreement and this Note in connection with such a default shall run concurrently.

8. Borrower waives presentment for payment, demand, protest and notices of dishonor and of protest, the benefits of all waivable exemptions and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasona ble attorneys’ fees, which may be incurred by the holder hereof, in the enforcement of thi s Note, the Authority Deed of Trust or any term or provision of either.

9. (a) Subject to the extensions of time set forth in Section 10 below, and subject to the further provisions of this Section 9, failure or delay by Borrower to perform any material term or provision of this Note constitutes a default under this Note.

(b) Authority shall give written notice of default to Borrower, specifying the default complained of by Authority. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default.

(c) Any failures or delays by Authority in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Authority in asserting any of its rights and remedies shall not deprive Authority of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies.

(d) If a monetary event of default occurs, prior to exercising any remedies hereunder, then Authority shall give Borrower written notice of such default.

Borrower shall have a period of seven calendar days after such notice is received or deemed received within which to cure the default prior to exercise of remedies by Authority.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 7 – Form of Authority Note APN: 3008-013-902 Page 4

(e) If a non-monetary event of default occurs, then prior to exercising any remedies hereunder, Authority shall give Borrower notice of such default. If the default is reasonably capable of being cured within 30 calendar days after such notice is received or deemed received, then Borrower shall have such period to effect a cure prior to exercise of remedies by Authority. If the default is such that it is not reasonably capable of being cured within 30 days, and Borrower (i) initiates corre ctive action w ithin said period and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Borrower shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Authority, but in no event shall such period exceed 60 days from the date such notice is received or deemed received. In no event shall Authority be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default.

(f) A notice of default shall be deemed given only if either (i) dispatched by first class mail, registered or certified, postage prepaid, return rec eipt requested, to the address specified for Borrower in Section 13 below or (ii) by personal delivery (including by means of professional messenger or courier service such as United Parcel Service or Federal Express) to the address specified for Borrower in Section 13 below. Receipt shall be deemed to have occurred on the earlier of (i) the date of successfully completed electronic facsimile transmission (if followed by delivery of a “hard” copy) or (ii) the date marked on a written postal service or messenger or courier service receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable). If either Party gives notice of a change of address in the manner specified in this paragraph, then all notices, demands and communications originated after receipt of the change of address (or the effective date specified in the notice of change of address, if later) shall be transmitted, delivered or sent to the new address.

10. Notwithstanding specific provisions of this Note, non- monetary performance hereunder shall not be deemed to be in default where delays are due to causes beyond the control and without the fault of Borrower (an “ Enforced Delay”), provided that they actually delay and interfere with the timely performance of the matter to which they would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of Borrower, including a Force Majeure Event.

Notwithstanding the foregoing, no Force Majeure Event shall constitute an Enforced Delay unless and until Borrower delivers to Authority written notice describing the event, its cause, when and how Borrower obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Borrower shall deliver such written notice within 10 business days after it obtains actual knowledge of the event.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 7 – Form of Authority Note APN: 3008-013-902 Page 5

11. If the rights created by this Note are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, then the remaining obligations must be completely performed and paid.

12. The obligation to repay the Authority Loan is a nonrecourse obligation of Borrower. Neither Borrower nor any other party shall have any personal liability for repayment of the Authority Loan. The sole recourse of Authority with respect to repayment of the Authority Loan shall be the exercise of its rights against the Property and the improvements and any related security for the Authority Loan. Notwithstanding the foregoing, Authority may:

(i) obtain a judgment or order (including, without limitation, an injunction) requiring Borrower or any other party to perform (or refrain from) specified acts other than repayment of the Authority Loan; and

(ii) recover directly from Borrower or any other party:

(A) any damages, costs and expenses incurred by
Authority as a result of fraud or any criminal act or acts of Borrower or any shareholder, officer, director or employee of Borrower;

(B) any damages, costs and expenses incurred by
Authority as a result of any misappropriation of funds provided for the rehabilitation of the improvements, as described in the Agreement, rents and revenues from the operation of the Improvements, or proceeds of insurance policies or condemnation proceeds;

(C) any and all amounts owing by Borrower pursuant to
Borrower’s indemnification regarding Hazardous Substances pursuant to the Agreement; and

(D) all court costs and attorneys’ fees reasonably
incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Authority shall pay Borrower’s reasonable court costs and attorneys’ fees if Borrower is the prevailing party in any such enforcement or collection action).

13. The address of Borrower for purposes of receiving notices pursuant to this Note is as follows: Victory Outreach , 37419 25
th Street East, Palmdale, California
93550, Facsimile number: 661-274-9288.

[Remainder of Page Intentionally Left Blank; Signature(s) on Following Page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 7 – Form of Authority Note APN: 3008-013-902 Page 6

14. In addition to the other terms of this Note, Borrower hereby agrees and acknowledges that, notwithstanding any internal accounting procedures or provision pertaining to the use of receipts, payments, reserves and distributions contained in its organizational documents, the terms of this Note and the Agreement shall control as to the use of the Authority Loan provided under the Agreement and all operating income from the Project.

IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year set forth above.

“BORROWER”

VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

ATTEST:

By:

Christina Gonzalez
Secretary
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 8

FORM OF ENVIRONMENTAL INDEMNITY

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 1

ENVIRONMENTAL INDEMNITY BY VICTORY OUTREACH -PALMDALE

IN FAVOR OF HOUSING AUTHORITY OF THE CITY OF PALMDALE
(A-9241)

THIS ENVIRONMENTAL INDEMNITY ( this “Indemnity”), dated as of ______________________, 2025, is made by VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (“Borrower”), whose address for purposes of giving notice is 37419 25
th Street East, Palmdale, California 93550, in favor of the HOUSING AUTHORITY OF THE CITY OF PALMDALE, a public body corporate and politic (“Authority”), whose address for purposes of giving notice is 38250 Sierra Highway, 2nd Floor, Palmdale, California 93550- 4611.

WITNESSETH

WHEREAS, Borrower is the owner of a leasehold interest in the real property in the City of Palmdale pursuant to the Ground Lease, as more particularly described on Exhibit A attached hereto and made a part hereof, and the Improvements thereon (collectively referred to as the “Property”);

WHEREAS, the Parties entered into an Affordable Housing Agreement, dated as of June 3, 2025 (the “Agreement”), pursuant to which Authority agreed to make a loan to Borrower for the purpose of rehabilitating a four -unit apartment building for rental to Very Low Income households who are at risk of homelessness or currently unhoused ; and

WHEREAS, Borrower has agreed to execute and deliver to Authority this Indemnity in order to induce Authority to make the Authority Loan.

NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Borrower hereby agrees as follows:

1. ADDITIONAL DEFINITIONS

For the purpose of this Indemnity, “ Hazardous Materials ” shall include, without limitation, substances defined as “extremely hazardous substances ”, “hazardous substances ”, “hazardous materials ”, “hazardous waste ” or “toxic substances ” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.

Sections 11001-11050, the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq. and those substances defined as “hazardous waste” in Section 25117 of the California Health and Sa fety Code, as “infectious waste” in Section 25117.5 of the Ca lifornia Health and Safety Code or as “hazardous substances” in Section 25316 of the California Health and Safety Code or “hazardous materials” as defined in Section 353 of the California Vehicle Code, and in the regulations adopted Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 2

and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity shall have the meanings ascribed to them in the Agreement.

2. COVENANTS AND INDEMNITY

The following covenants and indemnities are hereby given and made by Borrower:

2.1 Covenants.

(a) Borrower covenants that it shall comply with any and all laws, regulations, and/or orders which may be promulgated, from time to time, with respect to the discharge and/or removal of Hazardous Materials, to pay immediately when due the costs of the removal of, or any other action require d by law with respect to, any such Hazardous Materials, and to keep the Property free of any lien imposed pursuant to any such laws, regulations or orders.

(b) Borrower covenants that the Property shall not, while Borrower is the lessee thereof, be used for any activities involving, directly or indirectly, the use, generati on, treatment, storage, release or disposal of any Hazardous Materials, except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine construction, operation and maintenance of the Property.

(c) Borrower further agrees that Borrower shall not release or dispose of any Hazardous Materials at the Property without the express written approval of Authority and that any such release or disposal shall be effected in strict compliance with all applicable laws and all conditions, if any, established by Authority.

(d) Authority shall have the right, at any time, to conduct an environmental audit of the Property at Authority’s expense, unless Hazardous Materials are found, then at Borrower’s sole cost and expense, and Borrower shall cooperate in the conduct of any such environmental audit. Other than in an emergency, such audit shall be conducted only after prior notice has been given to Borrower and only in the presence of a representative of Borrower.

Borrower shall give Authority and its agents and employees access to the Property to remove, or otherwise to mitigate against the effects of, Hazardous Materials.

(e) Borrower shall not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by federal or state regulations respecting such material, and, with respect to any such material currently present at the Property, Borrower shall promptly either (i) remove or cause to be removed any material that such regulations deem hazardous and require to be removed or (ii) otherwise comply with such federal and state regulations, at Borrower's sole cost and expense . If Borrower shall fail to so do within the cure period permitted under applicable law, regulation, or order, then Authority may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with the applicable law, regulation or order, and the costs thereof shall be added to the Obligations of Borrower under this Section 2.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 3

(f) Borrower shall immediately advise Authority in writing of any of the following: (i) any pending or threatened environmental claim against Borrower or the Property, (ii) any condition or occurrence on the Property that (A) results in noncom pliance by Borrower with any applicable environmental law, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental law or (C) could reasonably be anticipated to form the basis of an envi - ronmental claim against the Property or Borrower.

2.2 Indemnity. Borrower shall indemnify, protect and hold Authority harmless from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedi ngs, costs, disbursements or expenses (including, without limitation, attorneys’ and experts’ fees and disbursements) of any kind or of any nature whatsoever (collectively, the “ Obligations”) which may at any time be imposed upon, incurred by or asserted or awarded against Authority and arising from or out of:

(a) The presence of any Hazardous Materials on, in, under or affecting all or any portion of the Property or any surrounding areas;

(b) The breach of any covenant made by Borrower in Section 2.1 hereof; or

(c) The enforcement by Authority of any of the provisions of this Section 2.2 or the assertion by Borrower of any defense to its obligations hereunder. Subject to the qualifications set forth in Section 2.3 below, Borrower shall be liable for payment and performance of the Obligations to the full extent ( but only to the extent) of the P roperty and assets (including Borrower’s leasehold interest in the Property) which constitute security for such Obligations. If default occurs in the timely and proper paym ent and performance of any such Obligations, then any judicial proceedings brought by Authority against Borrower shall be limited to the protection and preservation of the Property, the preservation, enforcement and foreclosure of the liens, mortgages, assignments, rights and security interests securing such Obligations and enforcement and collection of such Obligations f or which Borrower remains directly liable. If there is a foreclosure of any such liens, mortgages, assignments, rights and security inter ests by power of sale or otherwise, then no personal judgment for any deficiency thereon shall be sought or obtained by Authority against Borrower, or its officers, directors, agents, attorneys, servants or employees.

2.3 Exceptions to Non-Recourse Liability. Notwithstanding the foregoing:

(a) Authority may proceed against any other person or entity whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and

(b) Authority may recover personally from any person or entity:

(1) any damages, costs and expenses incurred by Authority as a result of the negligence of such person or entity, involving, directly or indirectly, the use, generati on, Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 4

treatment, storage, release or disposal of any Hazardous Materials by such person or entity or by others; provided, however, that neither Borrower nor any officer, director, agent, attorney, servant or employee of Borrower shall have any personal liability if the act or omission complained of was performed in good faith and was not reckless, wanton, intentional or grossly negligent;

(2) any damages, costs and expenses incurred by Authority as a result of fraud or any criminal act or acts of Borrower or any partner, shareholder, officer, director or employee of Borrower, or of any general partner of Borrower relating to the use, generati on, treatment, storage, release or disposal of any Hazardous Materials; and

(3) all court costs and attorneys ’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Authority shall pay Borrower’s reasonable court costs and attorneys ’ fees if Borrower is the prevailing party in any such enforcement or collection action).

3. BORROWER’S UNCONDITIONAL OBLIGATIONS

3.1 Unconditional Obligations. Borrower hereby agrees that the Obligations shall be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of the Authority Loan Documents or affecting any of the rights of Authority with respect thereto. The obligations of Borrower hereunder shall be absolute and unconditional irrespective of:

(a) The validity, regularity, or enforceability of the Authority Loan Documents or any other instrument or document executed or delivered in connection therewith;

(b) Any alteration, amendment, modification, release, termination or cancellation of any of the Authority Loan Documents, or any change in the time, manner or place of payment of, or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Authority Loan Documents;

(c) Any extension of the maturity of the Authority Loan or any waiver of, or consent to any departure from, any provision contained in any of the Authority Loan Documents;

(d) Any exculpatory provision in any of the Authority Loan Documents limiting Authority’s recourse to property encumbered by the Authority Deed of Trust, or to any other security, or limiting Authority’s rights to a deficiency judgment against Borrower;

(e) Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the Authority Loan, or any release, amendment, waiver of, or consent to any departure from any provision of, any other Borrower or guarantee given in respect of the Authority Loan;

(f) The insolvency or bankruptcy of Borrower or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the Authority Loan; or Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 5

(g) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any other indemnitor or guarantor with respect to the Authority Loan or any or all of the Obligations.

3.2 Continuation. This Indemnity (i) is a continuing indemnity and shall remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the payment in full of the Authority Loan, the release or other extinguishment of the Authority Loan or any security for the Authority Loan) and (ii) shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by Authori ty upon the insolvency, bankruptc y or reorganization of Borrower, or otherwise, all as though such payment had not been made.

3.3 Termination. Notwithstanding the payment (and performance) in full of all of the Obligations and the payment (or performa nce) in full of all of Borrower’s obligations under the Authority Loan Documents, this Indemnity shall not terminate if any of the following shall have occurred:

(a) Authority has at any time or in any manner participated in the management or control of, taken possession of (whether personally, by agent or by appointment of a receiver), or taken title to the Property or any portion thereof, whether by foreclosure, deed in lieu of foreclosure, sale under power of sale or otherwise; or

(b) There has been a change, between the date hereof and the date on which all of the Obligations are paid and performed in full, in any Hazardous Materials laws, the effect of which may be to make a lender or mortgagee liable in respect of any of the Obligat ions, notwithstanding the fact that no event, circumstance or condition of the nature described in paragraph (a) above ever occurred.

4. WAIVER

Borrower hereby waives the following:

(a) Promptness and diligence;

(b) Notice of acceptance and notice of the incurrence of any obligation by Borrower;

(c) Notice of any action taken by Authority, Borrower, or any other interested party under any Authority Loan Document or under any other agreement or instrument relating thereto;

(d) All other notices, demands, and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving B orrower of its Obligations hereunder;

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 6

(e) The right to a trial by jury with respect to any dispute arising under, or relating to, this Indemnity;
(f) Any requirement that Authority protect, secure, perfect or insure any security interest or lien in or on any property subject thereto;

(g) Any requirement that Authority exhaust any right or take any action against Borrower or any other person or collateral; and

(h) Any defense that may arise by reason of:

(1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons;

(2) The failure of Authority to file or enforce any claim against th e estate (in probate, bankruptcy or any other proceedings) of any person or persons; or

(3) Any defense based upon an election of remedies by Authority, including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of Borrower or any other right of Authority to proceed against Borrower.

5. NOTICES
Any notice, demand, statement, request or consent made hereunder shall be in writing and shall be personally delivered, or mailed by first-class registered or certified mail, postage prepaid, return receipt requested, to the address set forth in the first paragraph of this Indemnity, above, of the Party to whom such notice is to be given (or to such other address as the Parties, shall designate in writing).

Any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof.

6. MISCELLANEOUS

6.1 Borrower shall make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to Authority at its address specified in the first paragraph hereof.

6.2 No amendment of any provision of this Indemnity shall be effective unless it is in writing and signed by the Parties, and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, shall be effective unless it is Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 7

in writing and signed by Authority, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

6.3 No failure on the part of Authority to exercise, and no delay in exercising, any right hereunder or under any other Authority Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of Authority provided herein and in the other Authority Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of Authority under any Authority Loan Document against any party thereto are not conditional or contingent on any attempt by Authority to exercise any of its rights under any other Authority Loan Document against such party or against any other person or collateral.

6.4 Any provision of this Indemnity that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction.

6.5 This Indemnity shall (i) be binding upon Borrower and Borrower’s successors and assigns and (ii) inure, together with all rights and remedies of Authority hereunder, to the benefit of Authority, its directors, officers, employees and agents, any successors to Authority’s interest in the Property, any other person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of Authority’s rights and remedies under the Authority Loan Documents, any successors to any such person, and all directors, o fficers, employees and agents of all of the aforementioned parties . Without limiting the generality of clause (ii ) of the immediately preceding sentence, Authority may, subject to, and in accordance with, the provisions of the Authority Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under any other Authority Loan Document, to any other person, and such other person shall thereupon become vested with all of the rights and obligati ons in respect thereof that were granted to Authority herein or otherwise. None of the rights or obligations of Borrower hereunder may be assigned or otherwise transferred without the prior written consent of Authority.

6.6 Borrower hereby (i ) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Los Angeles County in any action or proceeding arising out of or relating to this Indemnity, (ii) waives any defense based on doctrines of venue or forum non conveniens or similar rules or doctrines and (iii) irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in such California or federal court.

Borrower irrevocably consent s to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity, above. Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 8

6.7 The title of this Indemnity and the captions used herein are inserted only as a matter of convenience and for reference and shall in no way define, limit or describe the scope or the intent of this Indemnity or any of the provisions hereof.

6.8 This Indemnity shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of California applicable to contracts made and to be performed therein, except to the extent that the laws of the United States preempt the laws of the State of California.

[Remainder of Page Intentionally Left Blank; Signatures on Following Page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Page 9

6.9 This Indemnity may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date first set forth above.

“BORROWER”

VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

ATTEST:

By:

Christina Gonzalez
Secretary

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 8 – Form of Environmental Indemnity APN: 3008-013-902 Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 9

FORM OF GROUND LEASE

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902

GROUND LEASE

BY AND BETWEEN

HOUSING AUTHORITY

OF THE CITY OF PALMDALE

AND

VICTORY OUTREACH-PALMDALE

(A-9241)

513 East Avenue Q4
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page i

TABLE OF CONTENTS

Article I ADDITIONAL DEFINITIONS ....................................................................................... 2 Article II LEASE OF PROPERTY ................................................................................................. 2 Section 201 Purpose of Lease .................................................................................................... 2 Section 202 Leased Area ........................................................................................................... 2 Section 203 Assignment of Utility Rights ................................................................................. 3 Section 204 Recorded Encumbrances ........................................................................................ 3 Article III TERM ............................................................................................................................ 3 Section 301 Commencement and Term ..................................................................................... 3 Article IV CONSIDERATION FOR LEASE ................................................................................. 4 Section 401 Obligations and Covenants; Rent........................................................................... 4 Section 402 Recordable Quitclaim Deed. .................................................................................. 4 Article V USE OF PROPERTY AND SITE CONDITIONS. ........................................................ 4 Section 501 Use of Property. ..................................................................................................... 4 Section 502 Compliance with Law. ........................................................................................... 4 Section 503 Site Conditions. ...................................................................................................... 5 Section 504 Hazardous Materials. ............................................................................................. 5 Article VI REHABILITATION OF IMPROVEMENTS ON PROPERTY ................................. 10 Section 601 Rehabilitation of Improvements. ......................................................................... 10 Section 602 Contractors and Subcontractors ........................................................................... 10 Section 603 Permits ................................................................................................................. 11 Section 604 Performance of Work ........................................................................................... 11 Section 605 Release of Construction Covenants ..................................................................... 12 Section 606 Ownership of Improvements................................................................................ 13 Section 607 No Liens on Landlord’s Interest .......................................................................... 13 Section 608 Removal of Liens on Leasehold Interest ............................................................. 14 Section 609 Notice of Completion ........................................................................................... 14 Article VII ALTERATIONS ........................................................................................................ 14 Section 701 Alterations ............................................................................................................ 14 Article VIII NO LIABILITY OF LANDLORD ........................................................................... 15 Section 801 No Liability of Landlord. ..................................................................................... 15 Section 802 Discovery of Any Toxic Substance ..................................................................... 16 Article IX MAINTENANCE AND REPAIRS ............................................................................. 16 Section 901 Maintenance and Repairs ..................................................................................... 16 Section 902 Repairs ................................................................................................................. 17 Section 903 Landlord’s Obligation .......................................................................................... 17 Article X DAMAGE OR DESTRUCTION .................................................................................. 17 Section 1001 Tenant to Give Notice .......................................................................................... 17 Section 1002 Repair of Damage or Destruction ........................................................................ 17 Section 1003 Application of Insurance Proceeds ...................................................................... 18 Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page ii

Section 1004 Tenant’s Obligations ............................................................................................ 19 Section 1005 Option to Terminate ............................................................................................. 19 Article XI ENTRY BY LANDLORD .......................................................................................... 20 Article XII UTILITIES AND SERVICES ................................................................................... 20 Section 1201 Utilities and Services ........................................................................................... 20 Section 1202 Easements ............................................................................................................ 20 Article XIII PROHIBITION AGAINST ENCUMBRANCE OR TRANSFER ........................... 21 Section 1301 Prohibitions .......................................................................................................... 21 Section 1302 Consent to Assignment ........................................................................................ 22 Article XIV TAXES AND IMPOSITIONS ................................................................................. 23 Article XV INSURANCE ............................................................................................................. 23 Section 1501 Required Insurance .............................................................................................. 23 Section 1502 Disposition of Insurance Proceeds ....................................................................... 27 Article XVI DEFENSE, INDEMNIFICATION AND HOLD HARMLESS ............................... 27 Article XVII EMINENT DOMAIN.............................................................................................. 28 Section 1701 Tenant to Give Notice .......................................................................................... 28 Section 1702 Total Taking ......................................................................................................... 28 Section 1703 Partial Taking ....................................................................................................... 28 Section 1704 Application of Awards and Other Payments ....................................................... 29 Article XVIII COMPLIANCE WITH ALL LAWS ..................................................................... 30 Article XIX PERMITS AND LICENSES .................................................................................... 30 Article XX PRODUCTION OF REPORTS, RECORDS AND STATEMENTS ........................ 30 Article XXI NONDISCRIMINATION ........................................................................................ 30 Article XXII LEASEHOLD MORTGAGES................................................................................ 32 Section 2201 Leasehold Mortgages ........................................................................................... 32 Section 2202 No Subordination of Fee ...................................................................................... 33 Section 2203 Notice to Landlord ............................................................................................... 33 Section 2204 Notice to Leasehold Mortgagee ........................................................................... 33 Section 2205 Leasehold Mortgagee’s Rights ............................................................................ 34 Section 2206 Obligations of Leasehold Mortgagee Upon Acquisition of Leasehold Estate .............................................................................................................................. 34 Section 2207 No Modification or Termination of Lease Without Leasehold Mortgagee’s Consent ................................................................................................................ 35 Section 2208 Right of Leasehold Mortgagee to Cure Default ................................................... 35 Section 2209 Foreclosure in Lieu of Curing Default ................................................................. 36 Section 2210 Assignment of Lease Upon Foreclosure .............................................................. 36 Section 2211 New Lease to Leasehold Mortgagee .................................................................... 37 Section 2212 No Merger of Estates ........................................................................................... 38 Section 2213 Amendments for Benefit of Leasehold Mortgagee .............................................. 39 Section 2214 Restriction on Landlord’s Right to Encumber its Interest ................................... 39 Section 2215 Restriction on Subordination of Tenant’s Interest ............................................... 39 Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page iii

Section 2216 Multiple Leasehold Mortgages ............................................................................ 39 Article XXIII EVENTS OF DEFAULT ....................................................................................... 39 Section 2301 Events of Default ................................................................................................. 40 Section 2302 Procedures for Declaring an Event of Default ..................................................... 40 Article XXIV REMEDIES ........................................................................................................... 41 Section 2401 Right of Termination............................................................................................ 41 Section 2402 Transfer of Interest Upon Termination ................................................................ 42 Section 2403 Damages ............................................................................................................... 42 Section 2404 Specific Performance ........................................................................................... 42 Section 2405 Cumulative Remedies .......................................................................................... 42 Section 2406 Limited Recourse ................................................................................................. 42 Article XXV INTEREST ON PAST DUE OBLIGATIONS ....................................................... 43 Article XXVI NOTICES............................................................................................................... 43 Article XXVII ESTOPPEL CERTIFICATE ................................................................................ 44 Article XXVIII SURRENDER ..................................................................................................... 44 Section 2801 Surrender .............................................................................................................. 44 Section 2802 Title to Improvements .......................................................................................... 44 Section 2803 Removal of Personal Property ............................................................................. 44 Section 2804 Holdover .............................................................................................................. 45 Article XXIX NO CONFLICT OF INTEREST, WARRANTY .................................................. 45 Section 2901 No Conflict of Interest ......................................................................................... 45 Section 2902 Warranty Against Speculation ............................................................................. 45 Article XXX ADDITIONAL PROVISIONS ............................................................................... 46 Section 3001 Time of Essence ................................................................................................... 46 Section 3002 Waiver .................................................................................................................. 46 Section 3003 Costs of Litigation................................................................................................ 46 Section 3004 Institution of Legal Actions ................................................................................. 46 Section 3005 Applicable Law .................................................................................................... 47 Section 3006 Acceptance of Service of Process ........................................................................ 47 Section 3007 Relationship of Parties ......................................................................................... 47 Section 3008 Counterparts ......................................................................................................... 47 Section 3009 Captions for Convenience .................................................................................... 47 Section 3010 Entire Agreement ................................................................................................. 48 Section 3011 Construction ......................................................................................................... 48 Section 3012 Tenant’s Payment of Property Taxes ................................................................... 48 Section 3013 Recording of Memorandum of Lease .................................................................. 48 Section 3014 Severability .......................................................................................................... 48 Section 3015 Binding Effect ...................................................................................................... 49

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page iv

EXHIBITS

EXHIBIT A LEGAL DESCRIPTION

EXHIBIT B SITE MAP
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 1

GROUND LEASE

BY AND BETWEEN HOUSING AUTHORITY OF THE CITY OF PALMDALE AND

VICTORY OUTREACH-PALMDALE
(A-9241)

This Ground Lease (this “Lease”), dated as of ______________________, 2025, is entered into by and between the HOUSING AUTHORITY OF THE CITY OF PALMDALE , a public body corporate and politic (“Landlord”), and VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Tenant”), and is made with reference to the following:

RECITALS

A. Landlord is the owner of that certain real property located within the City of Palmdale, County of Los Angeles, State of California (the “ Property”), as more particularly described in Exhibit A and shown on Exhibit B, each attached hereto and incorporated herein by this reference.

B. Landlord desires to enter into this Lease with Tenant subject to and in accordance with all of the terms and conditions of that certain Affordable Housing Agreement, dated as of June 3, 2025, by and between the Parties (the “Agreement”).

C. The Agreement requires the rehabilitation, operation, and maintenance on the Property for rental to Very Low Income households who are at risk of homelessness or currently unhoused exclusively at an Affordable Rent of a two -story residential apartment building containing four two- bedroom rental units (the “ Units”) with one-car carport parking space per unit, and all ancillary and related improvements for the Property, all as described in the Scope of Work (the “Project”).

D. Pursuant to the Agreement, and to assist in providing housing within Palmdale, California that is affordable to Very Low Income households who are at risk of homelessness or currently unhoused exclusively , Landlord is providing to Tenant the Authority Loan.

E. The Parties desire to enter into a 55 -year ground lease of the Property in order to allow Tenant to rehabilitate, operate, and maintain the Project on the Property on the terms and conditions set forth in the Authority Loan Documents.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parties hereby agree as follows:

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 2

ADDITIONAL DEFINITIONS

Unless otherwise defined herein, capitalized terms shall have the meanings ascribed to them in the Agreement.

“Construction Financing Event” means the point in time when all conditions precedent to the funding of the Authority Loan have been satisfied, in accordance with the Method of Financing.

“Leasehold Mortgage ” means an instrument that pledges Tenant’s interest in the Improvements and/or Leasehold Interest in the Property as security for a loan, with Landlord’s prior written consent.

“Leasehold Mortgagee ” means, individually or collectively, as applicable, any or all beneficiaries of a Leasehold Mortgage.

LEASE OF PROPERTY

Section 201 Purpose of Lease

The purpose of this Lease is to provide for the rehabilitation, maintenance, management and operation of the Project in accordance with the Agreement Containing Covenants and applicable law. Tenant shall not occupy or use the Property, or permit the Property to be used or occupied, nor do or permit anything to be done in, on or about the Property, in whole or in part, for any other purpose or for any purpose not permitted by this Lease, the Agreement, the Agreement Containing Covenants, the LURA, and applicable law.

Section 202 Leased Area

Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Property on the terms and conditions set forth in this Lease. Landlord also leases to Tenant, and Tenant leases from Landlord, Landlord’s right, title and interest in and to any easements and rights of way, present or reversionary, which are appurtenant to the Property; provided however, that Landlord reserves to itself, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following:

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 3

(a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights and other hydrocarbon substances by whatsoever name known, geothermal resources and all products derived from any of the foregoing, that may be within or under the land, t ogether with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from the Property or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Property, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of the Property; and

(b) Any and all water, water rights or interests therein, no matter how acquired by Landlord, together with the right and power to explore, drill, redrill, remove and store the same from the Property or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by Landlord, whether such water rights shall be riparian, overlying, appropriative, percolating, littoral, prescriptive, adjudicated, statutory or contractual; but without, however, any right to enter upon the surface of the Property in the exercise of such rights and, provided further, that the exercise of any such rights by Landlord shall not result in any damage or injury to the Improvements constructed on the Property by Tenant, including, without limitation, any subsidence of all or any part of such Improvements.

Section 203 Assignment of Utility Rights

Landlord, by virtue of its fee title to the Property, may hold certain rights, entitlements or credits with respect to utility capacity, connections, etc. (the “ Utility Rights”). Landlord hereby assigns said Utility Rights to Tenant as an incidence of its leasehold interest in the Property.

Section 204 Recorded Encumbrances

This Lease and the interest of Tenant hereunder are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights -of-way and easements of record.

TERM

Section 301 Commencement and Term

The term of this Lease (“Term ”) shall commence upon the date of the Construction Financing Event and shall continue thereafter until the 55 th anniversary of the Construction
Financing Event.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 4

CONSIDERATION FOR LEASE

Section 401 Obligations and Covenants; Rent

Landlord is entering into this Lease with Tenant in consideration of Tenant’s obligations and covenants contained herein. Landlord shall lease the Property to Tenant for a fully capitalized rent equal to the fair market value of the Property (“ Rent”). Landlord hereby acknowledges that Tenant is deemed to have prepaid the Rent in full upon the Construction Financing Event through Landlord’s carry back of the capitalized Rent in the form of the Authority Loan.

Section 402 Recordable Quitclaim Deed

At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within 30 days after written demand by Landlord, a valid and recordable quitclaim deed covering the Property and the Improvements, free and c lear of all liens and encumbrances.

USE OF PROPERTY AND SITE CONDITIONS

Section 501 Use of Property

Tenant shall use the Property solely for the rehabilitation of the Project in accordance with the Agreement, including the Scope of Work, and the maintenance and operation of the Project in accordance with this Lease, the Agreement, and the Agreement Containing Covenants.

Section 502 Compliance with Law

Tenant shall carry out the rehabilitation and operation of the Project on the Property in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws. Tenant shall indemnify, protect, defend and hold harmless Landlord, City, and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to Landlord and City, from and against any and all loss, liability, damage, claim, cost, expense and/or increased costs (including labor costs, penalties, reasonable attorneys’ fees, court and litigation costs and fees of expert witnesses) in connection with the rehabilitation and/or operation of the Project. The foregoing indemnity shall survive termination of this Lease and shall continue after recordation of the Release of Construction Covenants.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 5

Section 503 Site Conditions

(a) All portions of the Property, and all Improvements thereon, which are leased to Tenant by Landlord shall be leased in an “as is” condition, with no warranty, express or implied, by Landlord as to the condition of the soil, its geology or the presence of known or unknown faults or the presence of any Hazardous Materials, and it shall be the sole responsi bility of Tenant, at Tenant’s expense, to investigate and determine the condition of the Improvements, the soil conditions of the Property and the suitability of the Property for the rehabilitation of the Project.

If the condition of the Improvements, the soil conditions of the Property, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Property shall be put, then it is the sole responsibility and obligation of Tenant to take such action as may be necessary to place the Property and the conditions thereof in all respects in a condition entirely suitable for the rehabilitation of the Property as described in the Agreement, including, without limitation, the Scope of Work which may include demolition, clearing or moving buildings, structures or other Improvements, and removal of Hazardous Materials.

(b) Tenant hereby releases Landlord, City and their respective officers, employees, agents and consultants from any and all claims, liabilities, losses, damages, judgments, costs or expenses arising from or connected to any and all matters or statements of fact affecting the Property concerning or related to the physical condition of the Property.

Section 504 Hazardous Materials

(a) “Hazardous Materials” means and includes the following:

1. a “Hazardous Substance” as defined by Section 9601 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq. or as “Hazardous Waste” as defined by Section 6903 of the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq.;

2. an “Extremely Hazardous Waste”, a “Hazardous Waste” or a “Restricted Hazardous Waste”, as defined by The Hazardous Waste Control Law under Sections 25115, 25117 or 25122.7 of the California Health and Safety Code, or is listed or identified pursuant to Section 25140 of the California Health and Safety Code;

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 6

3. a “Hazardous Material”, “Hazardous Substance”, “Hazardous Waste”, or “Toxic Air Contaminant” as defined by the California Hazardous Substance Account Act, laws pertaining to the underground storage of hazardous substances, hazardous materials release resp onse plans or the California Clean Air Act under Sections 25316, 25281, 25501, 25501.1, 117690 or 39655 of the California Health and Safety Code;

4. “Oil” or a “Hazardous Substance” listed or identified pursuant to Section 311 of the Federal Water Pollution Control Act, 33 U.S.C. Section 1321;

5. materials, substances and wastes listed or defined as a “Hazardous Waste”, “Extremely Hazardous Waste” or an “Acutely Hazardous Waste” pursuant to Chapter 11 of Title 22 of the California Code of Regulations Sections 66261.1 - 66261.126;

6. materials, substances and wastes listed by the State of California under Proposition 65 Safe Drinking Water and Toxic Enforcement Act of 1986 as a chemical known by the State to cause cancer or reproductive toxicity pursuant to Section 25249.8 of the California Health and Safety Code;

7. a material which due to its characteristics or interaction with one or more other substances, chemical compounds or mixtures, damages or threatens to damage, health, safety or the environment, or is required by any law or public agency to be remediated, i ncluding remediation which such law or government agency requires in order for the Property to be put to any lawful purpose;

8. any material whose presence would require remediation pursuant to the guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual, whether or not the presence of such material resulted from a leaking underground fuel tank;

9. pesticides regulated under the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136 et seq.;

10. asbestos, PCBs, and other substances regulated under the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq.;

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 7

11. any radioactive material including, without limitation, any “source material”, “special nuclear material”, “by -product material”, “low -level wastes”, “high - level radioactive waste”, “spent nuclear fuel” or “transuranic waste”, and any other radioactive m aterials or radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq ., the Nuclear Waste Policy Act, 42 U.S.C.

Sections 10101 et seq., or pursuant to the California Radiation Control Law, California Health and Safety Code Sections 114960 et seq.;

12. materials, substances and wastes regulated under the Occupational Safety and Health Act, 29 U.S.C. Sections 651 et seq ., or the California Occupational Safety and Health Act, California Labor Code Sections 6300 et seq.; and/or

13. materials, substances and wastes regulated under the Clean Air Act, 42 U.S.C. Sections 7401 et seq . or pursuant to the California Clean Air Act, Sections 3900 et seq. of the California Health and Safety Code.

(b) Tenant hereby represents and warrants that the rehabilitation, construction and uses of the Project and Property permitted under the Agreement and this Lease do not require the presence of any Hazardous Materials on the Property that cannot or shall not be kept, stored, used and maintained in compliance with all applicable laws and the manufacturer’s guidelines.

(c) If at any time during the Term, any Hazardous Material is present on, in or under the Property (including, without limitation, the soil and groundwater) in violation of applicable law, then Tenant shall at no expense to Landlord, at the earliest practicable date, remove such Hazardous Materials from the Property (including, without limitation, any Hazardous Materials in the soil or groundwater) and any surrounding areas to which such Hazardous Materials may have migrated in accordance with and to the extent required by any and all applicable Legal Requirements. The Parties intend to require Tenant to remove all Hazardo us Materials from the Property and surrounding areas to which such Hazardous Materials may have migrated to the extent required by applicable law, if such Hazardous Materials are present at levels of concentration which require removal under applicable law . If, at any time during the Term, Landlord has reasonable cause to believe one or more Hazardous Materials may be present on, in or under the Property in violation of applicable law, then Landlord may, by written notice, inform Tenant of the basis for Landlord’s concern and require Tenant to cause the Property to be tested for such Hazardous Material(s) at Tenant’s sole expense, in accordance with a testing plan and schedule first approved in writing by Landlord. Tenant shall submit a testing plan to Landlord within 30 days after the date of Landlord’s notice, and cause the testing to begin within 30 days from Landlord’s approval of the testing plan.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 8

(d) Tenant shall not bring or allow to be brought onto the Property or use or store on the Property any Hazardous Materials without the prior express written consent of Landlord, except for those Hazardous Materials (including, without limitation, fuel stored in motor vehicles) customarily used in the ordinary course of business in the use and operation of the Property and the Improvements.

(e) The following covenants pertain to Tenant’s occupancy and use of the Project and Improvements:

(1) No underground storage tanks for Hazardous Materials shall be installed without the prior written approval of Landlord’s Executive Director.

(2) Landlord, or its officers, employees, contractors or agents shall at all times have the right to go upon and inspect the Property and Improvements and the operations conducted thereon to assure compliance with the requirements herein stated. Landlord shall provide reasonable prior notice to Tenant of such entry, and shall seek to minimize interference with Tenant’s use of the Property and Improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. This inspection may include taking samples for testing of substances and materials present and/or testing soils on the Property and the Improvements. Landlord shall indemnify, defend and hold harmless Tenant from and against any claims, liabilities, losses and damage caused by Landlord during any such inspections, and shall be responsible for the prompt repair and/or restoration of any such damage caused by Landlord during any such inspection.

(3) Tenant shall be responsible for posting on the Property and the Improvements all notices and signage required by Section 25249.6 of the California Health and Safety Code and regulations promulgated pursuant thereto. Tenant shall also complete and file all business response plans or inventories required by Chapter 6.95 of the California Health and Safety Code and regulations promulgated pursuant thereto. Tenant shall concurrently file a copy of such business response plan or inventory with Landlord.

(4) Tenant shall immediately notify Landlord in writing of the release of any Hazardous Material on the Property or Improvements in violation of applicable law.

(5) Tenant shall, to the extent required by applicable law, immediately remove all Hazardous Materials located on the Property and Improvements and shall dispose of such Hazardous Materials in a safe and legal manner. Tenant shall immediately disclose to Landlord its disposal of any Hazardous Material located on the Property and Improvements and upon Landlord’s written request shall provide written documentation of its safe and legal disposal.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 9

(f) Tenant shall be responsible for and bear the entire cost of removal and disposal of Hazardous Materials. Landlord may also pass through to Tenant any and all clean- up costs incurred by Landlord as a result of Tenant’s activities on the Property and Improvements or the presence of any Hazardous Material(s) on, in or under the Property and Improvements after the commencement of this Lease. Upon termination of this Lease, Tenant is required, in accordance with all applicable laws, to remove from the Pro perty and Improvements all equipment or improvement to the Property that is contaminated by Hazardous Materials.

(g) By this Lease, Tenant provides to Landlord, effective upon the date of this Lease, an indemnification of Landlord, City, and their respective members, officers, employees, agents, contractors and consultants, relating to the environmental condition of the Property and the presence of Hazardous Materials thereon. Therefore, Tenant hereby agrees to indemnify, defend and hold harmless Landlord, City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions, suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages, costs and expenses (including, without limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring or tes ting of Hazardous Materials, and reasonable attorneys’ fees) resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any Hazardous Materials to or from, the Property or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation or Hazardous Materials on, under, in or about, to or from, the Property.

(h) From the date of this Lease, Tenant hereby waives, releases and discharges Landlord, City and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and adminis trative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys’ fees) arising out of or in any way connected with Landlord’s or Tenant’s use, maintenance, ownership or operation of the Property, any Hazardous Substances on the Property, or the existence of Hazardous Substances contamination in any state on the Property, however the Hazardous Substances came to be placed there, except that arising out of the intentional mis conduct of Landlord, City or their respective employees, officers or agents. Tenant acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows:

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 10

________ Initialed by Tenant’s authorized signatory

As such relates to Section 503 above, and this Section 504 , Tenant hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code.

REHABILITATION OF IMPROVEMENTS ON PROPERTY

Section 601 Rehabilitation of Improvements

Tenant shall rehabilitate or cause to be rehabilitated the Improvements on the Property, with financing as provided in the Method of Financing, in accordance with this Lease and the Agreement, including the Scope of Work. Prior to the commencement of any work or construction, Tenant shall:

(a) Notify Landlord in writing, at least 10 days in advance of commencing construction or delivery of materials to the Property, of Tenant’s intention to commence the work. Landlord shall have the right to post and maintain on the Property any notices of non-responsibility provided for under applicable law, and to have access to the Property at all reasonable times to satisfy itself that Tenant is carrying out construction in accordance with the terms of this Lease, the Agreement and the Plans, and is com plying with all applicable laws and regulations, including, without limitation, those regulations pertaining to safety of the construction site.

(b) Procure and deliver to Landlord at Tenant’s expense, evidence of issuance of all required permits and approvals, including, without limitation, building permits, zoning and planning approvals and all required approvals from any governmental agencies and bodies having jurisdiction over the Project.

Section 602 Contractors and Subcontractors

For purposes of this Section, the terms “contractor”, “subcontractor”, “contract” and “subcontract”, shall refer to all tradespersons, contractors, subcontractors, construction managers, materialmen or suppliers furnishing services or materials in connect ion with the construction of the Improvements, and contracts or agreements, written or oral, with them. Landlord shall have the right to disapprove any and all contractors and subcontractors used by Tenant for construction of the Project, to which Landlor d has reasonable objection, which approval shall not be unreasonably delayed or withheld.

(a) Tenant’s contracts with general contractors and subcontractors shall give Landlord the right to receive notices of Tenant’s default under said contracts and shall give Landlord a reasonable opportunity to cure any such default and the right (but not the obligation) to assume Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 11

Tenant’s obligations and rights under such contracts if Tenant commits an Event of Default under this Lease. Landlord’s exercise of its rights pursuant to this Section 602 shall not be in lieu of or constitute a waiver of any other right Landlord may have against Tenant, any guarantor or surety or any other person or entity.

(b) Tenant shall comply, and Tenant shall require all of Tenant’s contractors and subcontractors to comply, with all laws, statutes, ordinances, regulations, building codes, zoning codes and regulations and the orders, judgments, rules, regulations and requirements of all federal, state, local and municipal governments (collectively, “Legal Requirements”) in connection with the performance of all work on the Property.

(c) Tenant shall not, and Tenant shall require that all Tenant’s contractors and subcontractors shall not, discriminate against any employee or applicant for employment on the basis of disability, race, religion or creed, sex, marital status, national origin, condition of having Acquired Immune Deficiency Syndrome or sexual orientation.

Section 603 Permits

(a) Tenant shall obtain all permits, licenses and other governmental approvals and authorizations required for the rehabilitation or operation of the Improvements.

(b) Before allowing occupancy or use of any portion of the Improvements, Tenant, at its own cost and expense, shall obtain and deliver to Landlord partial, temporary or final Certificate(s) of Occupancy in the form customarily issued by the appropriate governmental authority.

Section 604 Performance of Work

(a) Any and all rehabilitation or construction work shall be done diligently, in conformity with all Legal Requirements, in a good and workmanlike manner, and in accordance with the terms of the Agreement, including, without limitation, the Scope of Work, the Plans, and under the supervision of an architect (if any) approved by Landlord. Once Tenant commences rehabilitation of the Improvements, as set forth in the Schedule of Performance, Tenant shall diligently pursue completion of the work within the time set forth in the Schedule of Performance, subject to Force Majeure Delays. The rehabilitation work shall be deemed to be completed for purposes of this Section once a Release of Construction Covenants is recorded in the official records of Los Angeles County (“Official Records”), as set forth in Section 605 below.

(b) Tenant agrees it shall take all safety measures reasonably required (taking into consideration usual and customary practices in the construction industry) to protect persons in, on and around the Property from injury or damage caused by or resulting from or in connection with Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 12

the performance of any work during all phases of construction. All work performed under this Lease shall be performed in such a manner as to meet or exceed the safety standards outlined by applicable State of California safety regulations. In addition to any other obligation set forth herein, Tenant shall maintain the Property free of hazards to persons and property resulting from its operations. Any hazardous condition noted by Tenant shall immediately be reported to Landlord.

(c) All work shall be performed in a manner so as not to unreasonably impair or interfere with the use, occupancy or enjoyment of adjacent property, or with any business conducted on adjacent property.

(d) All areas of the Property that are used for staging areas for the storage of material and equipment, construction shacks and workers’ parking areas shall be located, to the extent reasonably practicable, away from public view in areas remote from pedestri an and vehicular traffic, and shall be fenced or otherwise barricaded as appropriate.

(e) At all times during the performance of work for any phase of the Project, all areas other than the actual construction site and the staging area shall, to the extent reasonably practicable, be kept clean and free of mud, dust, equipment or construction materials related to the work.

Section 605 Release of Construction Covenants

(a) After Completion of all rehabilitation or construction work to be performed by Tenant upon the Property pursuant to the terms of the Agreement, the Plans and this Lease, Landlord shall furnish Tenant with a Release of Construction Covenants, in such form as to permit it to be recorded in the Official Records, upon written request therefor by Tenant. Landlord shall not unreasonably withhold such Release of Construction Covenants. Such Release of Construction Covenants shall constitute evidence of sati sfactory Completion of the construction required pursuant to the terms of the Agreement, the Plans and this Lease, and the Release of Construction Covenants shall so state.

(b) If Landlord refuses or fails to furnish a Release of Construction Covenants for the Property after written request from Tenant, then Landlord shall provide Tenant with a written statement of the reasons Landlord refused or failed to furnish the Release of Construction Covenants for the Property. The statement shall also contain Landlord’s opinion of the action Tenant must take in order to obtain a Release of Construction Covenants for the Property, but it need not contain technical information or instructions. If the reason for such refusal is confined to the immediate availability of specific items of landscaping or other minor items or the failure to complete “punch list” items, then Landlord shall issue the Release of Construction Covenants upon the posting of a bond or other security instrument in form and content acceptable to Landlord and Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 13

in an amount representing the fair value of the work not yet completed, which bond or other security instrument shall secure Tenant’s obligation to complete all outstanding items of construction and rehabilitation within 60 days following the issuance of t he Release of Construction Covenants.

(c) Such Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of Tenant to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the work on the Property or any part thereof. Such Release of Construction Covenants is not a notice of completion under Section 3093 of the California Civil Code.

Section 606 Ownership of Improvements

All Improvements on the Property, whether existing on the Property as of the date this Lease is executed or thereafter constructed by Tenant, shall be owned by Tenant until expiration of the Term or earlier termination of this Lease. Tenant shall not remove any Improvement from the Property or waste, destroy or modify any Improvements on the Property, except as permitted by this Lease. The Parties covenant for themselves and all persons claiming under them that the Improvements are real property. Upon the expiration or termination of this Lease, all Improvements and fixtures shall become the sole property of Landlord. Tenant shall not be required to remove any Improvements or fixtures on the Property upon the expiration or earlier termination of this Lease, except as otherwise expressly provided herein.

Section 607 No Liens on Landlord’s Interest

Under no circumstance whatsoever shall any lien, including any mechanic’s lien, stop notices, materialmen’s lien or any lien for goods, labor, material, services or work delivered or performed on the Property, attach to or encumber Landlord’s fee or reversi onary interest in the Property. If any mechanic’s lien, stop notice, materialmen’s lien, or any other lien is filed against the Property for work done or claimed to have been done or for materials or services furnished or claimed to have been furnished with respect to the Property at any time during the Term, or at any time whatsoever arising because of any action or inaction by Tenant or any subtenant, or any other person claiming or having any right related to any part of the Property, then such lien shall be discharged by Tenant at its sole cost and expense in a timely manner no later than 90 days thereafter, whether by payment, release or posting of a bond or other similar assurance. Landlord may, in its sole and complete discretion, bond or discharge the same by paying the amount claimed to be due, and Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together with reasonable attorneys’ fees and costs, plus interest on those sums, fees and costs from the date of payment, at the highest rate allowed by law.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 14

Section 608 Removal of Liens on Leasehold Interest

If Tenant does not cause to be recorded the bond described in California Civil Code Section 3143 or otherwise protect its leasehold interest under any alternative or successor statute, and a final judgment has been entered against Tenant by a court of com petent jurisdiction for the foreclosure of a mechanic’s, materialmen’s, contractor’s or subcontractor’s lien claim, and if Tenant fails to stay the execution of the judgment by lawful means or to pay the judgment, then Landlord shall have the right, but not the duty, to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or both. Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together with reasonable attorneys’ fees and costs, plus interest on those sums, fees, and costs from the date of payment at the highest rate allowed by law.

Section 609 Notice of Completion

On completion of Improvements to the Property, Tenant shall file or cause to be filed a notice of completion pursuant to California Civil Code Section 3093. Tenant hereby appoints Landlord as Tenant’s attorney-in-fact to file the notice of completion on Tenant’s failure to do so after the work of improvement has been substantially completed.

ALTERATIONS

Section 701 Alterations

(a) After the Improvements have been rehabilitated in accordance with the provisions of Article VI , Tenant may, at Tenant’s sole expense, make alterations to such Improvements.

Tenant may do so only in compliance with all applicable Legal Requirements and all requirements of the Plans, and only with the prior written approval of Landlord, which shall not be unreasonably withheld or delayed.

(b) All alterations shall be done promptly and in a good and workmanlike manner and shall be in quality and class at least equal to the original work or installations in the Property.

However, if materials of the same type as those used for the original work are unavailable, or if due to changes in technologies in the building industry, the use of materials of the same type as those used for the original work would be impractical, or if materials of the same type as those used for the original work are pr ohibitively expensive, then Tenant shall have the right to use material of a type different from those used for the original work provided that the use of such material is in compliance with all applicable Legal Requirements and such material is of a quality and class equivalent to the original materials used.

(c) Tenant may from time to time after completion of construction of the Improvements as provided herein, without Landlord’s prior approval, perform alterations to the Improvements Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 15

that are interior and nonstructural alterations, additions and improvements (“ Permitted Alterations”) so long as the Permitted Alterations:

(l) are performed in compliance with all of the provisions of this Lease, and would not result in any violation of any provision of this Lease;

(2) would not result in a change in the character of the Improvements or the use for which they were intended;

(3) would not involve or result in any change in the exterior design, materials, colors or appearance of the buildings, or any part thereof;

(4) would not be of lesser quality;

(5) would not result in the diminution of the value of the Property;

(6) would not require an excessive expense to readapt the Property to marketable use upon the termination of this Lease; and

(7) would not weaken the structural strength of any building on the Property.

(d) Tenant shall not, without the prior written consent of Landlord, demolish or remove all or any structural part of the building after recordation of the Release of Construction Covenants.

NO LIABILITY OF LANDLORD

Section 801 No Liability of Landlord

Tenant accepts the Property in its “as is” condition as of the date of execution of this Lease.

Tenant warrants and represents that Tenant has fully and completely inspected all aspects of the Property and has fully satisfied itself as to the condition and value of the Property and the suitability of the Property or any part thereof for the construction of the Improvements. Tenant acknowledges that Landlord has not made any representation in connection with the Property or in any way relating to this Lease . In addition to the indemnifications set forth in Article XVI below, Landlord shall have no liability to Tenant, or its successors, assigns, residents, subtenants or guests, of any kind whatsoever for, in connection with, or as a result of, the ownership or operation of the Property or in connection with the Property, at any time during the Term, whether for any damage or injury to any persons whatsoever or to any property of Tenant or of any other person, for any reason whatsoever, for any injury to Tenant’s residents, subtenants or others for actions or inactions after the date of the execution of this Lease, proximately caused by:

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 16

(a) Construction, operation or maintenance of any of the Improvements, or the condition of any part of the Property.

(b) Heating, ventilation or air conditioning systems, electrical wiring, plumbing, dampness, water, gas, steam or other pipes or sewage, or the breaking of any electrical wire, bursting, leaking or running of water from any tank, washstand, water closet or waste pipe, supply pipe, sprinkler system, radiator or any other pipe now or hereinafter installed on or about the Property.

(c) Fire, explosion, discharge or release of any gas, vapor, liquid or any other substance, falling plaster, electricity or smoke, being or occurring on, at or in connection with the Property.

(d) Acts of Tenant or any subtenant, occupant, user, licensee or invitee of all or any part of the Property.

(e) Any latent defect in or condition of the Property or any Improvement or real or personal property, which at any time may be erected or situated thereon; provided, however, that Landlord shall be liable for a latent defect in the Property if Landlord knew of such latent defect and Landlord failed to disclose such latent defect to Tenant.

(f) The loss or theft of any property of Tenant or any other person at, on, or around the Property.

(g) The cessation, interruption, suspension, failure or inadequacy of any utilities furnished to the Property or any apparatus or appliance used in connection therewith.

Section 802 Discovery of Any Toxic Substance

During the term of this Lease, Landlord shall have the sole and absolute discretion to terminate this Lease upon the discovery of any Hazardous Material which renders the Property unsuitable for its designated use without environmental mitigation measures which are determined by Landlord, in its sole and absolute discretion, to be unacceptable, excessive or unfeasible.

MAINTENANCE AND REPAIRS

Section 901 Maintenance and Repairs

Tenant, at its own expense, shall maintain and keep the Property and all Improvements thereon in good repair and in a decent, safe and sanitary condition, in accordance with the terms of the Agreement Containing Covenants. Tenant shall also make any repair s, structural or Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 17

nonstructural, interior or exterior, to the Property necessary by reason of alterations made by Tenant or by the acts or omissions of Tenant, or its employees, agents, subtenants, licensees, invitees or others, or by normal wear and tear, the elements, or other casualty or cause. Such routine maintenance may be performed by Tenant without notice to or permission of Landlord.

Section 902 Repairs

When used in this Section, the term “repairs” applies to all equipment, machinery, apparatus and fixtures of every kind used in connection with the operation and maintenance of the Property and all Improvements thereon and shall be deemed to include replacements, restorations and renewals of the equipment, machinery, apparatus and fixtures. Tenant shall have the right at any time and from time to time to remove and to dispose of the equipment, machinery, apparatus and fixtures; provided, however, that Tenant shall promptly replace same with other equipment, machinery, apparatus or fixtures which are equally effective.

Section 903 Landlord’s Obligation

The Parties intend that Landlord shall have no obligation, in any manner whatsoever, to repair or maintain the Property, or any Improvements constructed thereon, or the equipment therein, whether structural or nonstructural. These obligations are the sole responsibility of Tenant, except to the extent that the need for such repairs or maintenance is proximately caused by Landlord’s negligent acts or omissions. Tenant expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Tenant the right to make repairs at Landlord’s expense or terminate this Lease because of Landlord’s failure to keep the Property in good order, condition and repair.

DAMAGE OR DESTRUCTION

Section 1001 Tenant to Give Notice

In case of any damage to or destruction of the Property or the Improvements, or any part thereof, in excess of an amount equal to $25,000 escalated from the date of commencement of this Lease in accordance with the applicable consumer price index, Tenant s hall, within 10 days after Tenant becomes aware or reasonably should have become aware of such damage or destruction, give written notice thereof to Landlord, generally describing the nature and extent of such damage or destruction.

Section 1002 Repair of Damage or Destruction

(a) Tenant covenants and agrees that in case of damage to or destruction of the Property or Improvements by any cause, insured or uninsured, it shall, subject to the provisions of this Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 18

Section, restore, repair, replace or rebuild the Property and Improvements as nearly as possible to the condition, quality and class they were in, immediately prior to such damage or destruction.

Tenant shall commence the restoration, repairs, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by Landlord (such restoration repairs, replacement, rebuilding, alterations and additions, together with any temporary repairs and property protection pending complet ion of the work shall be referred to hereinafter as “Restoration”) within 30 days of such damage or destruction, plus any additional period reasonably required to obtain Net Insurance Proceeds, to be used to pay all or a portion of the costs of such Restoration and shall complete such Restoration within a reasonable time thereafter.

(b) As used herein, the term “ Net Insurance Proceeds ” means the gross insurance proceeds paid by an insurer to Tenant for loss or damage to the Property and Improvements, less any and all costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred to recover said proceeds. Subject to the terms of any Leasehold Mortgage, Tenant agrees to promptly commence and prosecute to completion the settlement of insurance proceeds with respect to an event of damage to or destruction of the Improvements or the Property.

(c) Tenant agrees that, notwithstanding any other provision of this Lease, upon an event of damage or destruction to the Improvements, Tenant shall at its sole cost and expense (whether or not Tenant terminates or intends to terminate this Lease pursuant to Section 1005 below) and immediately take or cause to be taken such actions and complete such work as is necessary to assure the safe condition of the damaged Improvements pending their ultimate disposition. In any instance where Tenant has the right to terminate this Lease, rather than restore the Improvements, if Tenant elects not to terminate this Lease, then Tenant must promptly restore the Improvements.

Section 1003 Application of Insurance Proceeds

Insurance proceeds from policies of insurance carried under Section 1501 which are received on account of any damage to or destruction of the Property or the Improvements thereon, or any portion thereof, (less the costs, fees and expenses incurred in the collection thereof, including, without limitation, attorneys’ fees and expenses), if Tenant does not make the election permitted in Section 1005 below, shall be applied as follows, subject to the rights of Leasehold Mortgagees:

(a) Within a reasonable time and in any event within 180 days after the damage to or destruction of the Property or the Improvements, Tenant shall furnish, or cause to be furnished to Landlord and Leasehold Mortgagees, if any, evidence satisfactory to Landlord and each Leasehold Mortgagee, (i) of the total cost of Restoration of the damaged or destroyed Improvements and (ii) that the total amount of money available to Tenant shall, when added to the insurance proceeds Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 19

received and available to pay for the Restoration pursuant to the terms of this Section, be sufficient to pay the cost of such Restoration.

(b) Net Insurance Proceeds received on account of any damage to or destruction of the Improvements, or any part thereof, shall be paid to Tenant or as Tenant may direct from time to time as Restoration progresses, or to the holder of the Leasehold Mortgage, a s set forth in the Leasehold Mortgage documents, solely to pay (or reimburse Tenant for) the cost of Restoration.

Upon receipt by Landlord and Leasehold Mortgagees, if any, of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic’s or similar liens for labor or materials supplied in connection therewith, which have not been adequately provided for, the balance, if any, of such proceeds shall be paid to Tenant.

(c) Insurance proceeds held by the recipient upon a termination of this Lease, and not required to be paid to the Leasehold Mortgagees, shall be applied first to the expense of clearing the Property of rubble and next shall be paid to Landlord pursuant to the provisions of this Lease, and then to Tenant.

Section 1004 Tenant’s Obligations

If the Net Insurance Proceeds actually available to Tenant and recovered with respect to any insured damage or destruction, less the cost of recovery, are insufficient to pay the entire cost of such Restoration, then Tenant covenants to use reasonable eff orts to secure additional funding to remedy such insufficiency to restore, repair, replace or rebuild the Improvements.

Section 1005 Option to Terminate

If at any time during the term of this Lease, any buildings or Improvements located on the Property are destroyed, in whole or in part, by fire, theft, the elements or any other cause (collectively hereinafter referred to as a “Casualty”), then this Lease shall continue in full force and effect; provided, however, that Tenant, subject to the rights of Leasehold Mortgagees, shall have the option of terminating this Lease on the last calendar day of any month by giving Landlord at least 30 days’ prior written notice of Tenant’s intent to do so and by removing, within 120 days of the Casualty, at Tenant’s own cost and expense, all debris and remains of the damaged Improvements from the Property, where:

(a) Any buildings or Improvements located on the Property are so damaged or destroyed by a Casualty during the last five years of the Term of this Lease that such buildings or Improvements cannot be repaired and restored at a cost which is less than 50% of the cost to replace all of the buildings and Improvements located on the Property if totally destroyed; or

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 20

(b) Any buildings or Improvements hereafter located on the Property are damaged or destroyed by a Casualty at any time during the term of this Lease and either (i) insurance proceeds available to Tenant from the insurance required in Section 1501 or by a Leasehold Mortgage are not sufficient to cover 100% of the cost, less $100,000, to repair and restore such damaged or destroyed buildings or Improvements or (ii) the damage or destruction results from a Casualty that is not required to be insured by Tenant under the terms of this Lease or a Leasehold Mortgage, and for which Tenant has not obtained such insurance, and the cost to repair and restore such damaged or destroyed buildings or Improvements is more than $100,000.

ENTRY BY LANDLORD

Landlord and its agents, representatives, employees and independent contractors shall have the right to enter the Property in order to ascertain whether Tenant is complying with its obligations under this Lease, the Agreement and the Agreement Containing C ovenants, and for any other purpose permitted under this Lease; provided, however, that such entry shall not unnecessarily or unreasonably disturb lawful occupants of the Property. Neither the right of entry reserved by this Article, nor the exercise thereof, shall impose any responsibility or liability on Landlord for the care or supervision of the Property or Improvements on the Property.

UTILITIES AND SERVICES

Section 1201 Utilities and Services

Tenant, at its sole expense, shall maintain or shall cause to be maintained, all utility lines, whether located on or off the Property, servicing the Property. Tenant shall pay promptly all assessments, deposits, rents, costs, connection and tap-in fees and other charges for the connection of utilities, including any fees or charges imposed by any utility company or governmental entity or agency for making such connections. Tenant expressly agrees that Tenant shall pay all charges for fuel, gas, water, electricity, light, heat, power, telephone or other communication services, and all other utilities or services necessary to carry on the operations of Tenant. Tenant shall indemnify Landlord from, and defend and hold Landlord harmless against, any claim, liability, damage, loss, cost or expense in connection with such charges. Landlord may, after giving Tenant at least 10 business days’ notice and an opportunity to cure, pay or cause to be paid any items or charges which are delinquent. Thereafter, on de mand by Landlord, Tenant shall pay and reimburse Landlord for such items or charges, with interest at the highest rate allowed by law, from the date of payment by Landlord until Landlord is repaid in full by Tenant.

Section 1202 Easements

Landlord agrees at the request of Tenant and at Tenant’s sole cost and expense (or at the expense of the utility company or other third party) to join in the grant of easements over the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 21

Property that are necessary to obtain required utility services to the Project. Any such grant of an easement over the Property must be approved in writing by Landlord, which approval shall not be unreasonably withheld.

PROHIBITION AGAINST ENCUMBRANCE OR TRANSFER

Section 1301 Prohibitions

(a) The qualifications and identity of Tenant are of particular concern to Landlord. It is because of those qualifications and identity that Landlord has entered into this Lease with Tenant. No voluntary or involuntary successor in interest of Tenant shall a cquire any rights or powers under this Lease except as expressly set forth herein and in Article XXI .

(b) Except for Permitted Transfers, Tenant shall not assign or sublease all or any part of this Lease without the prior written approval of Landlord. Landlord agrees to reasonably give such approval if, in Landlord’s reasonable determination, the proposed rec onstituted Tenant is comparable in all material respects (including experience, character and financial capability) to Tenant as of the date of this Lease. Any such change (or assignment or sublease of this Lease in connection therewith) shall be by instr uments satisfactory to Landlord’s Executive Director (or his/her designee), and be subject to the approval by Landlord’s Executive Director (or his/her designee) of evidence of the proposed assignee’s qualifications to meet the obligations of Tenant under this Lease.

(c) For the reasons cited above, Tenant represents and agrees for itself and any successor in interest that, except for Permitted Transfers, there shall be no cumulative change in ownership interest of Tenant of greater than 49%, or with respect to the identit y of the parties in control of Tenant or the degree thereof, by any method or means, without Landlord’s prior written approval.

(d) Tenant shall promptly notify Landlord of any and all changes whatsoever in the identity of the parties in control of Tenant or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. Landlord m ay exercise its remedies under this Lease, if there is any significant change (voluntary or involuntary) in membership, management or control of Tenant (other than such changes occasioned by the death or incapacity of any individual).

(e) Tenant shall not, except for Permitted Transfers or as permitted by this Lease, initiate a Transfer without prior written approval of Landlord, except as expressly permitted by this Lease. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 22

determined by Landlord, to fulfill the obligations undertaken in this Lease by Tenant. Any such proposed transferee, by instrument in writing satisfactory to Landlord and in form recordable among the land records, for itself and its successors and assigns , and for the benefit of Landlord shall expressly assume all of the obligations of Tenant under this Lease and agree to be subject to all conditions and restrictions applicable to Tenant in this Lease. There shall be submitted to Landlord for review all instruments and other legal documents proposed to affect any such transfer; and if approved by Landlord, its approval shall be indicated to Tenant in writing. Any attempt to effectuate a Transfer, except for Permitted Transfers or as permitted by this Leas e, without Landlord’s approval, shall be null and void and any transferee under such attempted Transfer shall acquire no right or interest by reason of such attempted Transfer.

Notwithstanding the foregoing, Tenant may: (i) lease the Units, in conformance with the Agreement Containing Covenants, without the written consent of Landlord and (ii) enter into a management agreement with an entity approved in writing by Landlord, in i ts reasonable discretion, and approved by the Leasehold Mortgagees.

Section 1302 Consent to Assignment

Subject to the limitations on transfer set forth in Section 1301 , Landlord agrees that it shall not unreasonably withhold its consent to a proposed assignment of this Lease to an assignee if all of the following conditions are met:

(a) Tenant is not in default of any provision of this Lease, or any other agreement with Landlord or City in connection with this Property.

(b) Landlord has issued the Release of Construction Covenants to Tenant.

(c) Tenant has demonstrated to Landlord’s satisfaction in Landlord’s reasonable discretion that the proposed assignee is financially sound and possesses a reputation and experience in owning and managing Very Low Income residential units that is at least comparable to that of Tenant. Any assignment of this Lease shall be in writing and shall be executed by the assignee who shall assume this Lease and all the agreements, terms, obligations, liabilities, covenants and conditions on the part of Tenant, and a duplicate original of such assignment and assumption shall be delivered to Landlord before the same shall be effective. The original named Tenant shall not be relieved of its obligation pursuant to this Lease, the Agreement Containing Covenants or the Agreement.

(d) The proposed assignee must agree to assume, and be bound by, all of the terms, conditions and obligations of Tenant pursuant to this Lease, the Agreement Containing Covenants and the Agreement.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 23

TAXES AND IMPOSITIONS

Subject to Tenant’s right to claim any exemption to which it may be entitled under State law, Tenant shall directly bear, pay and discharge all Taxes and Impositions before the first day on which a penalty or interest may accrue or be assessed thereon for nonpayment (or, if no penalty or interest thereon may accrue or be assessed, then before such Taxes and Impositions become delinquent or past due). “ Taxes” and “Impositions” mean and include all real property taxes, possessory interest taxes, personal pr operty taxes and special assessments imposed, levied or assessed on the Property or Improvements thereon. Taxes and Impositions include all costs, expenses and charges of any kind whatsoever (whether foreseen or unforeseen) which may become due or owing with respect to all or any part of the Property during the term of this Lease. Taxes and Impositions include, without limitation, all ad valorem taxes and other assessments, water and sewage charges, and governmental impositions and charges of every kind and nature whatsoever, extraordinary as well as ordinary, which shall or may during the Term be charged, laid, levied, assessed, imposed upon or become payable out of, or become liens upon, or arise in connection with the ownership, leasing, operation, use, occupancy or possession of the Property or with respect to the privilege of entering into or holding this Lease, or leasing space within the Property, regardless of whether assessed or levied upon or payable by Tenant or Landlord. Pursuant to California Health and Safety Code Section 37001.5, and subject to Tenant’s right to claim any exemption to which it may be entitled under State law, Tenant shall pay taxes on the assessed value of the entire Property and not merely on the assessed value of its Leasehold Interest.

In the event of nonpayment of any Tax or Imposition, Landlord may, after giving Tenant at least 10 business days’ notice of its intention to do so, pay or cause to be paid any item or items of Taxes and Impositions which are delinquent or past due. Tenant shall pay and reimburse Landlord therefor when requested to do so by Landlord, and the same shall become due and payable, with interest at the highest rate permissible by law from the date of Landlord’s payment of said Tax or Imposition, until Landlord is repaid in full by Tenant.

INSURANCE

Section 1501 Required Insurance

(a) At the times indicated in paragraphs (i) through (iv) below, Tenant shall furnish or cause to be furnished to Landlord evidence of the following policies of insurance, naming Tenant as insured and, except as to the insurance described in paragraph (iv), below, Landlord and City as additional insureds. The insurance described in paragraph (ii) shall be obtained prior to the initial rent-up of the apartments. All such insurance shall be kept in force for the term of this Lease.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 24

(i) Fire Policies: Prior to commencement of construction, Tenant shall furnish evidence of, and shall thereafter maintain or cause to be maintained a policy or policies of insurance against loss or damage to the Property or the Improvements and all property of an insurable nature located upon the Property, resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies. Such insurance shall be m aintained in an amount not less than 100% of the full insurable value of the Improvements.

(ii) Rental Income Insurance: Prior to commencement of rental activities, Tenant shall furnish evidence of, and shall thereafter maintain or cause to be maintained use and occupancy or business interruption or rental income insurance against the perils of fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies, in an amount that is acceptable to the Parties.

(iii) Liability Insurance : Tenant must maintain public liability insurance, to protect against loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever on or about the Property, resulting directly or indirectly from any acts or activities of Tenant, or any person acting for Tenant, or under its respective control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person occurring on or about the Property, or in connection with Tenant’s activities thereon, caused directly or indirectly by or from acts or activities of Tenant, or any person acting for Tenant, or under its control or direction.

Such property damage and personal injury insurance must also provide for and protect Landlord against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance must be maintained in full force and effect during the Term of this Lease in the following amounts:

a. During any rehabilitation work of the Property: commercial general liability in a general aggregate amount of not less than Ten Million Dollars ($10,000,000) and Five Million Dollars ($5,000,000) per occurrence; Pollution/ Environmental Liability of not less than Five Million Dollars ($5,000,000) limi t per occurrence basis; Products and Completed Operations Aggregate of not less than Ten Million Dollars ($10,000,000) and Five Million Dollars ($5,000,000) each occurrence; Commercial Automobile Liability of not less than Five Million Dollars ($5,000,000) per occurrence combined single limit, including owned, non-owned and hired automobile coverage, and Employer’s Liability of not less than One Million Dollars ($1,000,000) each accident, One Million Dollars ($1,000,000) disease each employe, and One Million Dollars ($1,000,000) disease each policy.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 25

b. Following completion of rehabilitation work of the Property: commercial general liability in a general aggregate amount of not less than Four Million Dollars ($4,000,000) and Two Million Dollars ($2,000,000) per occurrence; Pollution/ Environmental Liability of not less than Two Million Dollars ($2,000,000) limit per occurrence basis; Products and Completed Operations Aggregate of not less than Four Million Dollars ($4,000,000) and Two Million Dollars ($2,000,000) each occurrence; Commercial Automobile L iability of not less than Two Million Dollars ($2,000,000) per occurrence combined single limit, including owned, non-owned and hired automobile coverage; and Employer’s Liability of not less than One Million Dollars ($1,000,000) each accident, One Million Dollars ($1,000,000) disease each employee, and One Million Dollars ($1,000,000) disease each policy.

It is the mutual intent of the Parties that the levels of insurance coverage described herein shall be and remain comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County. At any time and from time t o time, either Party may provide notice to the other Party that the level of insurance being maintained by Tenant is no longer comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County, and request tha t the minimum limit hereinabove designated shall be changed (either increased or decreased) accordingly. The Party receiving such request shall not unreasonably withhold its consent to such change. Tenant agrees that provisions of this paragraph as to maintenance of insurance shall not be construed as limiting in any way the extent to which Tenant may be held responsible for the indemnification of Landlord or the payment of damages to persons or property resulting from Tenant’s activities, or the activities of any person or persons for which Tenant is responsible.

(iv) Workers’ Compensation Insurance : Tenant must maintain workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the workers’ compensation laws now in force in Califor nia, or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such workers’ compensation insurance must cover all persons employed by Tenant in connection with the Project and must cover liability within statutory limits for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with the Project or the operation thereof by Tenant, and in an amount of not less than $1,000,000 per accident, bodily injury, or disease. Notwithstanding the foregoing, Tenant may, in compliance with the laws of the State of California and in lieu of maintaining such insurance, self -insure for workers’ compensation in which event Tenant must deliver to Landlord evidence that such self -insurance has been approved by the appropriate State authorities.

(b) Tenant must cause all contractors and subcontractors performing work relating to the Project to maintain insurance of the types and in the amount described in this Section 1501 .

Tenant must cause its architects (if any) and engineers also to maintain Architects and Engineers Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 26

Professional Liability (Errors and Omissions) insurance on per occurrence basis during any rehabilitation work of the Property of not less than Five Million Dollars ($5,000,000) and in a general aggregate amount of not less than Five Million Dollars ($5,000,000) and , following any rehabilitation work of the Property, not less than Two Million Dollars ($2,000,000) and in a general aggregate amount of not less than Two Million Dollars ($2,000,000).

(c) The term “full insurable value” as used in this Section 1501 means the actual replacement cost (excluding the cost of excavation, foundation and footings below the lowest floor and without deduction for depreciation) of the Improvements on the Property immediately before such casualty or other loss, including the cost of construction, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Tenant shall cause the full insurable value to be determined from time to time by appraisal by the insurer, by agreement between the Parties or by an appraiser mutually acceptable to the Parties, not less often than once every three years.

(d) All policies must name Landlord and City as additional insureds and/or loss payees as their interests may appear. Policy endorsements providing the additional insured/loss payee must be included with Certificates of Insurance.

(e) All insurance provided under this section must be for the benefit of Tenant, Landlord and City. Tenant agrees to timely pay all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance. Tenant agrees to submit policies of all insurance required by this Section, or certificates evidencing the existence thereof and additional insured endorsements, to Landlord not less than 15 days prior to t he Construction Financing Event, indicating full coverage of the contractual liability imposed hereby. All insurance herein provided for must be effected under policies issued by insurers of recognized responsibility, licensed and admitted to do business in the State of California (or if not admitted in California shall have a “General Policyholders Rating” of at least “A-” as set forth in the most current issue of “Best’s Key Rating Guide”), reasonably approved by Landlord. All policies or certificates of insurance must provide that such policies shall not be canceled or limited in any manner without at least 20 days’ prior written notice to Landlord.

(f) If Tenant fails or refuses to procure or maintain insurance as required by this Lease, then ‘Landlord shall have the right, at Landlord’s election, and upon 10 days’ prior notice to Tenant, to procure and maintain such insurance. The premiums paid by Landlord shall be treated as a loan due from Tenant, which Tenant agrees to pay on the first day of the month following the date on which the premiums were paid. Landlord shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s).

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 27

Section 1502 Disposition of Insurance Proceeds

(a) Subject to the provisions of subsection (b) below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Tenant during the Term shall be payable, under the provisions of the policy of insurance, to Tenant, or, if such loss or damage involves the need for Tenant to obtain any governmental approvals or permits, jointly to the Parties, and said proceeds shall constitute a trust fund to be used for the repair, restoration or reconstruction of the Improvem ents in accordance with plans and specifications approved in writing by Landlord.

(b) Notwithstanding the foregoing paragraph, within the period during which there is an outstanding Leasehold Mortgage on all or part of the Property and Improvements, distribution of said proceeds shall be subject to the prior rights of such Leasehold Mortgagees.

(c) If this Lease is terminated by mutual agreement of the Parties, and the Improvements are not repaired, restored or reconstructed, the insurance proceeds shall be applied first to payments due under this Lease from Tenant to Landlord, second to restore the Pr operty to a neat and clean condition, and finally any excess shall be paid to Tenant. Provided, however, that within any period when there is an outstanding mortgage or deed of trust upon the Improvements, such proceeds shall be applied first to discharge the debt secured by the mortgage and then for the purposes and in the order set forth above in this paragraph.

(d) Tenant hereby waives any claim against Landlord, City and their respective members, officers, agents, employees and volunteers, and for any loss covered by insurance of the type specified in Section 1501, and Tenant shall obtain from its insurance company or companies a waiver of any right of subrogation that it may have against Landlord or City.

DEFENSE, INDEMNIFICATION AND HOLD HARMLESS

Tenant hereby agrees to defend, indemnify and hold harmless Landlord, City, and their respective members, officers, agents, employees and volunteers (hereinafter collectively referred to as “Indemnitees”) from and against any and all loss, damage, cost, expense, liability, claims, demands, suits, attorneys’ fees and judgments arising directly or indirectly from or in any manner connected to Tenant’s possession, occupancy, or use of the Property or arising from or in any manner connected to Tenant’s business, activities, operations, services or work conducted in, on or about the Property regardless of a ny active or passive negligence by any or all Indemnitees, except as otherwise stated herein.

Tenant further agrees to indemnify, defend and hold harmless Indemnitees from and against all loss, damage, costs, expense, liability, claims, demands, suits, attorneys’ fees and Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 28

judgments arising from or in any manner connected to the furnishing or supplying of any work, services, materials, equipment or supplies to Tenant or on Tenant’s behalf by any persons, firms, corporations or other entities in, on or about the Property.

Without limiting the generality of the foregoing, Tenant agrees that Indemnitees shall not be liable for any injury to Tenant’s business or any loss of income therefrom, or for damage to the goods, wares, merchandise, Improvements or other property of Tenant, or to Tenant’s officers, agents, employees, invitees, customers, contractors, or any other person in, on or about the Property or for damages to any of Tenant’s officers, agents, employees, invitees, customers or contractors.

Notwithstanding the foregoing, Tenant shall not be responsible for those claims arising due to the gross negligence or willful misconduct of Indemnitees.

EMINENT DOMAIN

Section 1701 Tenant to Give Notice

In case of a taking of all or any part of the Property and Improvements through the exercise of the power of eminent domain (“ Taking”), or the commencement of any proceedings or negotiations which might result in such Taking, Tenant shall promptly give written notice thereof to Landlord, generally describing the nature and extent of such Taking or the nature of such proceedings or negotiations, and the nature and extent of the Taking which might result therefrom, as the case may be.

Section 1702 Total Taking

In case of a Taking of the entire Property and Improvements, or in case of the taking of only a part of the Property and Improvements, leaving the remainder of the Property and Improvements in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder, this Lease shall terminate as of the date title vests in the condemning authority or the date the condemning authority is entitled to possession, whichever first occurs. A Taking of the Property and Improvements of the character referred to in this Section that results in the termination of this Lease is referred to herein as a “Total Taking.”

Section 1703 Partial Taking

In case of a Taking of the Property and Improvements other than a Total Taking (a “Partial Taking”), (i) this Lease shall remain in full force and effect as to the portion of the Property and Improvements remaining immediately after such Partial Taking, without any abatement or Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 29

reduction of any sum payable hereunder and (ii) Tenant, to the extent the awards or payments, if any, on account of such Partial Taking shall be sufficient for the purpose, at its expense, but first subject to Section 1704 (a) below, shall within a reasonable period of time commence and complete, or cause to be commenced and completed, Restoration of the Property and Improvements as nearly as possible to its value, condition, and character immediately prior to such Partial Taking, with such alterations and additions as may be made at Tenant’s election pursuant to and subject to the terms of Section 701 , except for any reduction in area caused thereby; provided, however, that in case of a Partial Taking for temporary use Tenant shall not be required to effect Restoration until such Partial Taking is terminated.

Section 1704 Application of Awards and Other Payments

Awards and other payments on account of a Taking, less costs, fees and expenses incurred in the collection thereof (“Net Awards and Payments”) shall be applied as follows:

(a) In case of a Taking other than a Total Taking or a Taking for temporary use, Tenant shall furnish to Landlord and any Leasehold Mortgagee evidence satisfactory to Landlord and the Leasehold Mortgagee of the total cost of the Restoration required by Section 1703.

(b) Net Awards and Payments received on account of a Taking other than a Total Taking or a Taking for temporary use shall be held and applied as provided with respect to proceeds of insurance in Subsection (a) above. The balance, if any, shall be paid to the Parties as their respective interests may appear in the Property and the Improvements.

First: There shall be paid to each Leasehold Mortgagee, in the order of its priority, an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Leasehold Mortgage, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Leasehold Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the Taking.

Second: To the Parties, as their respective interests may appear in the Property and the Improvements; provided, however, that any payment to a Leasehold Mortgagee or pursuant to the preceding paragraph shall be charged against Tenant’s interest.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 30

Section 1705 COMPLIANCE WITH ALL LAWS

Tenant shall conduct its operations in compliance with all applicable state or federal laws, and with all ordinances, rules and regulations, in effect or hereinafter adopted by City, the County of Los Angeles, the State of California and the United States.

PERMITS AND LICENSES

Tenant shall, at its sole cost and expense, obtain and maintain during the Term, all appropriate licenses, permits and certificates that may be required in connection with the construction of the Improvements, and the operation of the Project and the provision of services hereunder.

PRODUCTION OF REPORTS, RECORDS AND STATEMENTS

Tenant shall maintain such records as are reasonably required by Landlord in order to verify compliance with the terms of this Lease, the Agreement and the Agreement Containing Covenants. Tenant shall, within 10 business days of their receipt or completion, submit copies to Landlord of all annual budgets, financial statements, audits and all other reports, records and statements that pertain to or are in any manner connected with the Property. The records, reports, statements and other documents of Tenant that pertain to or are in any manner connected with the Property shall be available for inspection and copying by Landlord during normal business hours, but shall be kept confidential by Landlord and shall not be disclosed to any other person without Tenant’s prior written approval, except as may be otherwise required by law. Tenant shall pay to Landlord the fees required by the Agreement Containing Covenants, in connection with affordability monitoring and reporting.

NONDISCRIMINATION

Tenant covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof or interest therein, there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, sexual orientation, marital status, race, color, creed, religion, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall Tenant, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 31

Notwithstanding the preceding paragraph, the provisions relating to discrimination on the basis of familial status shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code nor be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.1, and 799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of Section 12955 of the California Government Code shall also apply to the preceding paragraph.

Notwithstanding the preceding paragraph, the provisions relating to discrimination on the basis of familial status shall not be construed to apply to housing for older Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 32

persons, as defined in Section 12955.9 of the California Government Code nor be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of Section 12955 of the California Government Code shall also apply to the preceding paragraph.

LEASEHOLD MORTGAGES

Section 2101 Leasehold Mortgages

Tenant may grant one or more Leasehold Mortgages encumbering Tenant’s interest in the Improvements and/or Tenant’s leasehold interest under this Lease to an institutional lender only with Landlord’s prior written consent.

(a) The Leasehold Mortgage shall cover no interest in any real property other than Tenant’s interest in the Improvements or some portion thereof, and the leasehold estate of Tenant under this Lease. The Leasehold Mortgage shall state on its face that it does not encumber in any way Landlord’s fee interest in the Property and Landlord’s interest under this Lease.

(b) Leasehold Mortgages may be made only for the purposes of financing necessary and appropriate to pay Project Costs.

(c) The amount of a loan secured by a Leasehold Mortgage prior to the issuance of a Release of Construction Covenants shall not, when added to the amounts secured by other Leasehold Mortgages, exceed the total Project Costs.

(d) Any Leasehold Mortgage is to be given only to a responsible bona fide institutional lender. For the purposes hereof, the term “institutional lender” means a bank, savings and loan association, thrift and loan association, savings bank, pension fund, insurance company, real estate Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 33

investment trust, nonprofit public benefit corporation, governmental agency or other comparable or similar entity authorized to make loans in the State of California.

Section 2102 No Subordination of Fee

Landlord’s reversionary fee interest in the Property and Landlord’s rights and interests, as lessor, in the Property and this Lease, including, without limitation, Landlord’s right to receive any sums from Tenant, shall not be subordinated to the rights of any lien, mortgage or security interest (including, without limitation, the rights of any Leasehold Mortgagees) granted in Tenant’s interest under this Lease or granted by Tenant. Notwithstanding the foregoing, a Leasehold Mortgagee shall have all of the rights set forth in the Leasehold Mortgage, as approved by Landlord in accordance with Section 2101 above, to the extent that such rights are not inconsistent with the terms of this Lease, including the right to commence an action against Tenant for the appointment of a receiver and to obtain possession of the Property under and in accordance with the te rms of said Leasehold Mortgage; provided, however, that all obligations of Tenant hereunder are kept current, including, without limitation, the payment of sums owing under this Lease and curing of all defaults and Events of Default hereunder.

Section 2103 Notice to Landlord

Tenant shall require each Leasehold Mortgagee to give Landlord the right to receive notices of an event of default by Tenant under the applicable Leasehold Mortgage and the right to cure such default in the same period of time as is given to Tenant thereunder plus an additional 10 business days with respect to those defaults that are curable; provided, however, that during such ten business day period, Leasehold Mortgagee shall have the right to commence, but not complete its remedies on account of such default. If and to the extent Tenant fails to cure such default, and Landlord exercises its right to cure the same, then Tenant shall reimburse Landlord for all of Landlord’s reasonable costs and expenses, including, without limitation, reasonable attorneys ’ fees. Landlord may record in the Official Records a request for notice of default.

Section 2104 Notice to Leasehold Mortgagee

Landlord, if requested by Leasehold Mortgagee, shall mail to Leasehold Mortgagee a duplicate copy of notices Landlord may from time to time give to or serve on Tenant, pursuant to or relating to this Lease. Tenant shall at all times keep Landlord informed in writing of the name and mailing address of such Leasehold Mortgagee and any changes in Leasehold Mortgagee’s mailing address. Notices or other communications permitted by this or any other Section of this Lease, or by law, to be served on or given to Leasehold Mortgagee by Landlord, shall be deemed duly served on or given to Leasehold Mortgagee by deposit in the United States mail, registered or certified, return receipt requested or by overnight courier, addressed to Leasehold Mortgagee at Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 34

the last mailing address for Leasehold Mortgagee furnished in writing to Landlord by Tenant or Leasehold Mortgagee. The date of notice shall be the date marked on the return receipt.

Section 2105 Leasehold Mortgagee’s Rights

Leasehold Mortgagee shall have the right, without further consent of Landlord, at any time during the Term to:

(a) Do any act or thing required of Tenant under this Lease, and such act or thing done and performed by Leasehold Mortgagee shall be as effective to prevent a forfeiture or loss of Tenant’s rights under this Lease as if done by Tenant itself;

(b) Do any act or thing required of Tenant, and enforce the obligations of Tenant, under any regulatory agreement recorded against Tenant’s leasehold estate in connection with the Leasehold Mortgage;

(c) Transfer, convey or assign the right, title and interest of Tenant in and to the leasehold estate created by this Lease to a purchaser at a foreclosure sale, whether the foreclosure is conducted pursuant to court order or pursuant to a power of sale conta ined in a Leasehold Mortgage; and

(d) Acquire and succeed to the right, title and interest of Tenant under this Lease by virtue of a foreclosure proceeding or deed in lieu of foreclosure, whether the foreclosure is conducted pursuant to a court order or pursuant to a power of sale contained i n a Leasehold Mortgage, or by virtue of a transfer in lieu of foreclosure (“ Foreclosure”) and, following such Foreclosure, transfer, convey or assign the right, title and interest of Tenant in and to the leasehold estate granted by this Lease to a third party.

Section 2106 Obligations of Leasehold Mortgagee Upon Acquisition of Leasehold Estate

If the holder of a Leasehold Mortgage, or another party through a foreclosure sale, acquires the leasehold estate created hereunder or otherwise acquires possession of the Property and Improvements pursuant to available legal remedies, then Landlord shall look to such holder to perform the obligations of Tenant hereunder only from and after the date of foreclosure or possession and shall not hold such holder responsible for the past actions or inactions of Tenant.

Notwithstanding the foregoing, (i) on and after the date of such foreclosure or possession, such holder shall be required to perform and abide by each and every obligation of Tenant under this Lease; provided, however, that Landlord and such holder shall negotiate in good faith changes to the Schedule of Performance, Scope of Work and Method of Financing as may be necessary to make construction of the Improvements feasible and (ii) on and after the date of such foreclosure Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 35

or possession, Landlord shall have the right to enforce each and every provision of this Lease against such holder. Nothing herein is intended or shall be construed to limit or restrict Landlord’s rights and remedies against Tenant, provided that Landlord’ s pursuit of such remedies shall not affect the rights of the holder of a Leasehold Mortgage to the use, enjoyment or operation of the Property and Improvements.

Section 2107 No Modification or Termination of Lease Without Leasehold Mortgagee’s Consent

The Parties hereby expressly stipulate and agree, that they shall not modify this Lease in any way nor cancel or terminate this Lease by mutual agreement, nor shall Tenant surrender its interest in this Lease, without the written consent of Leasehold Mort gagees. The Parties further agree that each shall not take advantage of any provisions of the United States Bankruptcy Code that would result in a termination of this Lease or make it unenforceable.

Section 2108 Right of Leasehold Mortgagee to Cure Default

Before Landlord may terminate this Lease because of a default under or breach of this Lease by Tenant, Landlord must (i) give written notice of the default or breach and (ii) give written notice of the failure of Tenant to cure the default or breach (the “ Second Default Notice”) to Leasehold Mortgagee concurrently with the transmittal of such notices to Tenant, and afford the Leasehold Mortgagee the opportunity to:

(a) Cure the breach or default (including payment of all accrued and delinquent Rent) at any time prior to the 60
th day after service on Leasehold Mortgagee of the Second Default Notice, where the default can be cured by the payment of money to Landlord or another person;

(b) Cure the breach or default within 90 days after service on Leasehold Mortgagee of the Second Default Notice, where the breach or default must be cured by something other than the payment of money and can reasonably be cured within that time; or

(c) Cure the breach or default in such reasonable time as may be required where something other than the payment of money is required to cure the breach or default and cannot be reasonably cured within 90 days after service on Leasehold Mortgagee of the Second Default Notice, provided that acts to cure the breach or default are commenced within that time period after service of the Second Default Notice on Leasehold Mortgagee by Landlord and are thereafter diligently continued by Leasehold Mortgagee.

If, to complete the cure of the default or breach, Leasehold Mortgagee requires access to the Property and Project, the foregoing cure period shall not commence until Leasehold Mortgagee obtains possession of the property, provided that the Leasehold Mortgagee diligently seeks to Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 36

obtain such possession by a foreclosure action or otherwise and diligently pursues such action all within the time periods set forth in Section 2202 below. If Leasehold Mortgagee completes the cure of the default or breach in a timely and proper manner, then Landlord shall accept the cure as fulfilling the terms of this Lease.

Section 2109 Foreclosure in Lieu of Curing Default

Notwithstanding any other provision of this Lease, a Leasehold Mortgagee may forestall termination of this Lease by Landlord for a default under or breach of this Lease by Tenant, by commencing proceedings to foreclose its Leasehold Mortgage, whether the f oreclosure is conducted pursuant to a court order or pursuant to a power of sale contained in a Leasehold Mortgage, or by virtue of a transfer in lieu of foreclosure. Commencement of the foreclosure shall not, however, forestall termination of this Lease by Landlord for the default or breach by Tenant unless:

(a) It occurs within 60 days after service on Leasehold Mortgagee of the Second Default Notice;

(b) It is diligently pursued; and

(c) Leasehold Mortgagee keeps and performs all of the terms, covenants and conditions of this Lease (including the payment of Rent, including past due Rent, under this Lease) requiring the payment or expenditure of money by Tenant, accruing after commencement of the foreclosure, until the foreclosure is complete or is discharged by redemption, satisfaction, payment or conveyance of the leasehold estate to Leasehold Mortgagee.

Section 2110 Assignment of Lease Upon Foreclosure

Provided that a Leasehold Mortgagee gives written notice of transfer to Landlord setting forth the name and address of the transferee as well as the effective date of the transfer, the written consent of Landlord shall not be required for transfer of Tenant’s right, title and interest under this Lease to:

(a) a purchaser, which may include the Leasehold Mortgagee, at a foreclosure sale of a Leasehold Mortgage, whether the foreclosure is conducted pursuant to court order or pursuant to a power of sale in the instrument creating the Leasehold Mortgage; or

(b) a purchaser from Leasehold Mortgagee after foreclosure, where Leasehold Mortgagee was the purchaser of Tenant’s interest at the foreclosure sale of the Leasehold Mortgage, or acquired Tenant’s interest by transfer in lieu of foreclosure. The purchase from the Leasehold Mortgagee shall be subject to all the terms and conditions of this Lease. The Leasehold Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 37

Mortgagee, the purchaser at a foreclosure sale, or the purchaser from the Leasehold Mortgagee shall be subject to all the terms and conditions of this Lease except that (i) the time for performance of any unperformed acts required by Article VI of this Lease shall be extended for a period equal to the delay in performance of the act caused by Tenant’s inability or failure to perform the act and the time required to transfer this Lease to the purchaser at a foreclosure sale and/or to the purchaser from Leasehold Mortgagee, (ii) the performance of acts required by this Lease that have already been performed and purchaser’s liability for acts or inactions of the original Tenant shall be excused; provided, however, that on and after the date of such possession, (A) the purchaser shall be obligated to bring the management and maintenance of the Project into compliance with the Agreement Containing Covenants and (B) Landlord shall have the right to enforce each and every provision of this Lease against such purchaser with respect to matters arising or continuing after such date of possession and (iii) Leasehold Mortgagee shall be able to absolutely assign or transfer this Lease regardless of the date of the assignment and any purchaser, assignee or transferee of this Lease from Leasehold Mortgagee shall be able to assign this Lease without the approval or consent of Landlord regardless of the date of the assignment.

Section 2111 New Lease to Leasehold Mortgagee

Notwithstanding any other provision of this Lease, if this Lease terminates because of a default which cannot be cured by Leasehold Mortgagee, including, without limitation, the insolvency or bankruptcy of Tenant, then Landlord shall, within 30 days after the request set forth in Subsection (a) below is received, execute and deliver a new Lease for the Property and Project to the Leasehold Mortgagee, provided that:

(a) A written request for the new Lease is served on Landlord by Leasehold Mortgagee within 60 days after service on Leasehold Mortgagee of notice that this Lease has terminated and Landlord agrees to give Leasehold Mortgagee notice of such termination.

(b) The new Lease ( i) is for a term ending on the same date the term of this Lease would have ended had not this Lease been terminated and (ii) contains the same covenants, conditions and provisions as are contained in this Lease, except that the Leasehold Mortgagee shall be able to absolutely assign or transfer the new Lease regardless of the date of the assignment and a purchaser, assignee or transferee of this Lease from Leasehold Mortgagee shall be able to assign or transfer this Lease without the approval or consent of Landlord regardless of the date of the assignment.

(c) After termination of this Lease but before the expiration of the period within which Leasehold Mortgagee has to request and receive a new Lease, Landlord shall not terminate existing subleases under which sublessee is not in default, or enter into new subleases for the Property or Project, and Landlord shall account to Leasehold Mortgagee for all subtenant rents during such period.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 38

(d) The new Lease shall be subject to all existing subleases under which each such sublessee is not in default and shall be assignable by Leasehold Mortgagee without further approval or consent by Landlord provided the conditions of this Section are satisfied.

(e) The new Lease shall:

(i) Extend the time for performance of unperformed acts required by Article VI of this Lease for a period equal to the delay in performance of the act caused by Tenant’s inability or failure to perform the act, and the time required to terminate this Lease, execute a new Lease to Leasehold Mortgagee, and Leasehold Mortgagee’s timely assignment of such new Lease; and

(ii) Excuse the performance of an act required by Article VI of this Lease that has already been performed and excuse the new Tenant from acts or inactions of the original Tenant; provided, however, that on and after the date of such possession, (i) the new Tenant shall be obligated to bring the management and maintenance of the Project into compliance with the Agreement Containing Covenants and (ii) Landlord shall have the right to enforce each and every provision of the new Lease with respect to matters arising or continuing after the date of the new Lease, includi ng, without limitation, to Article VI , against the new Tenant and provided further, that Leasehold Mortgagee and Leasehold Mortgagee’s assignee as Tenant under the new Lease, shall be liable for removal or bonding of all mechanic’s liens, stop notices, materialmen’s liens, or any liens for go ods, labor, material, services or work manufactured for, delivered to, or performed on, the Property.

(f) The new Lease and the Leasehold Mortgage shall have the same priority as the original Lease and the Leasehold Mortgage on the original Lease, and intervening liens shall not have priority over the new Lease or Leasehold Mortgage.

(g) Leasehold Mortgagee, on execution of the new Lease, shall pay to Landlord all of Landlord’s reasonable costs and expenses, including reasonable attorneys’ fees and court costs incurred in terminating this Lease, recovering possession of the Property and P roject from Tenant, and preparing the new Lease.

Section 2112 No Merger of Estates

During the existence of any Leasehold Mortgage, if the same person or entity holds the leasehold estate created by this Lease and Landlord’s reversionary interest or fee interest in the Property, then such estates shall remain separate and there shall be no merger without the consent of each Leasehold Mortgagee.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 39

Section 2113 Amendments for Benefit of Leasehold Mortgagee

The Parties shall cooperate in including in this Lease, by suitable amendment from time to time, provisions which may reasonably be requested by a Leasehold Mortgagee or proposed Leasehold Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in this Article and allowing such Leasehold Mortgagee reasonable means to protect or preserve its Leasehold Mortgage on the occurrence of a default under the terms of this Lease; provided, however, that such amendment shall not have a material adverse effect on Landlord’s rights or obligations under this Lease. The Parties each agree to execute and deliver (and to acknowledge, if necessary for recording purposes) any agreement necessary to effect such amendment.

Section 2114 Restriction on Landlord’s Right to Encumber its Interest

Landlord shall not mortgage, hypothecate, pledge or encumber its interest in the Property or any part thereof without the prior written consent of the holder of a Leasehold Mortgage that is senior in priority to Landlord’s Leasehold Mortgage (“ Senior Leasehold Mortgage ”) (if any), unless there is an express recognition of Tenant’s rights under this Lease and subordination of the new lender’s lien on Landlord’s interest in the Property to this Lease, which subordination shall be in a form acceptable to Tenant and the holder of such Senior Leasehold Mortgage.

Section 2115 Restriction on Subordination of Tenant’s Interest

Any subordination or attempted subordination of this Lease by Tenant to a mortgage, deed of trust, encumbrance or other security interest in Landlord’s interest in the Property or any part thereof shall be void ab initio and shall have no force or effect unless first agreed to in writing by the holder of a Senior Leasehold Mortgage.

Section 2116 Multiple Leasehold Mortgages

Where there is a right herein to be exercised by a Leasehold Mortgagee and there exists more than one Leasehold Mortgage, the right may be exercised in the order of priority of each Leasehold Mortgage.

EVENTS OF DEFAULT

The occurrence of one or more of the events described below shall constitute a material default and a breach of this Lease, entitling Landlord to terminate this Lease prior to the expiration of the Term.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 40

Section 2201 Events of Default

The following shall constitute an “Event of Default” by Tenant:

(a) Subject to Force Majeure Delays and other provisions of this Lease that may modify the provisions hereof, failure by Tenant to commence or to complete construction of the Improvements according to the scheduled time periods set forth in the Schedule of Pe rformance, and in accordance with the drawings (if any) delivered to Landlord and the Scope of Work.

(b) After Tenant commences construction of the Improvements on the Property, Tenant’s abandonment of the Project for a period of 30 days or more.

(d) Except as expressly permitted in this Lease, an attempted or purported Transfer, without the prior written consent of Landlord.

(e) The sale of Tenant’s interest in the Property or any portion thereof, under attachment, execution or similar legal process, or Tenant is adjudicated as bankrupt or insolvent, or an order for relief is entered against Tenant under Federal Bankruptcy Code, and such adjudication or order is not vacated within 10 days.

(f) The commencement of a case under any chapter of the Federal Bankruptcy Code, by or against Tenant or any guarantor of Tenant’s obligations hereunder, or the filing of a voluntary or involuntary petition proposing the adjudication of Tenant or any guarantor of Tenant’s obligations hereunder as bankrupt or insolvent, unless the same is dismissed within 90 days.

(g) The appointment of a receiver or trustee for the business or property of Tenant (except by a Leasehold Mortgagee) or any guarantor of Tenant’s obligations hereunder, unless such appointment is vacated within 10 days of its entry.

(h) The discovery by Landlord that any financial statement or other material financial information delivered by Tenant to Landlord is materially false.

(i) The occurrence of any other event described as constituting an “Event of Default” elsewhere in this Lease that is not cured within the time provided for herein.

Section 2202 Procedures for Declaring an Event of Default

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 41

(a) Landlord shall give written notice of default to Tenant, specifying the default complained of. Failure or delay in giving such notice shall not constitute waiver of a default, nor shall it change the time of default. Except as otherwise expressly provid ed in this Lease, failures or delays by Landlord in asserting any of its rights and remedies as to a default shall not operate as waiver of the default or of such rights or remedies. Delays by Landlord in asserting any of its rights and remedies shall not deprive Landlord of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce such rights or remedies.

(b) If a monetary event of default occurs, prior to exercising its remedies hereunder, then Landlord shall give Tenant written notice of such default. Tenant shall have 10 days after such notice is given within which to cure the default, prior to Landlord’s exercise of remedies.

(c) If a non -monetary event of default occurs, then prior to exercising any remedies hereunder, Landlord shall give Tenant notice of such default. If the default is reasonably capable of being cured within 30 calendar days after such notice is received or de emed received, Tenant shall have such period to effect a cure prior to exercise of remedies by Landlord. If the default is such that it is not reasonably capable of being cured within 30 days, and Tenant (i) initiates corrective action within said per iod and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Tenant shall have such additional time as is reasonably necessary in order to cure the default prior to exercise of any remedies by Landlord, but in no event shall such period exceed 60 days from the date such notice is received or deemed received. In no event shall Landlord be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default.

REMEDIES

Upon, or at any time after, the declaration of an Event of Default, and if permitted hereunder, the following remedies shall apply.

Section 2301 Right of Termination

Landlord shall have the right to terminate this Lease and Tenant’s right to possession of the Property by giving notice of such termination to Tenant. Upon the date of the giving of such notice (or, if such notice specifies a later date for such termination, then upon such later date), this Lease and Tenant’s right to possession hereunder and all of Tenant’s right, title and interest hereunder, in and to the Property and Improvements, shall expire and terminate on such date.

Landlord shall be entitled to recover from Tenant all damages proximately caused by such default.

In the event of termination of this Lease, Landlord shall have the option of assuming the existing master tenancies and sub-tenancies, if any.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 42

Section 2302 Transfer of Interest Upon Termination

If Landlord terminates this Lease as provided above, then all of the right, title, estate and interest of Tenant in and to the following shall automatically pass to, and vest in, and belong to Landlord, without further action on the part of either Party: (i) the Property including, without limitation, the land, the Improvements, and any alterations thereto, (ii) all unaccrued rents, income, receipts, revenues, issues, and profits issuing from the Property or any part thereof and (iii) all insurance policies and all proceeds thereof. Although not required to effectuate the automatic termination of Tenant’s interest in the Property, Tenant agrees that upon Landlord’s termination of this Lease, Tenant shall execute any document, including a quitclaim deed, and perform any act reasonably necessary to evidence the termination of its interest in the Property.

Section 2303 Damages

Subject to the limited recourse provisions of Section 2406 below, if either Party defaults with regard to any of the provisions of this Lease, then subject to the notice and cure provisions of Section 2202 , the defaulting Party shall be liable to the non-defaulting Party for damages caused by such default, and the non- defaulting Party may, after such notice and opportunity to cure (but not before) commence an action for damages against the defaulting Party with respect to such default.

Section 2304 Specific Performance

If either Party defaults with regard to any of the provisions of this Lease, then subject to the notice and cure provisions of Section 2202 , the non-defaulting Party, at its option, may, after such notice and opportunity to cure (but not before) commence an action for specific performance of the terms of this Lease pertaining to such default.

Section 2305 Cumulative Remedies

Landlord shall have the right to pursue, in addition to the remedies expressly enumerated herein, any remedy now or hereafter available under state or federal laws, including a proceeding to compel specific performance by Tenant. No remedy or election by either Party hereunder shall be deemed exclusive, but shall, wherever possible, be cumulative with all other remedies available at law or in equity.

Section 2306 Limited Recourse

Each obligation of Tenant under this Lease is a nonrecourse obligation of Tenant. Neither Tenant nor any other party shall have any personal liability for payment of obligations to Landlord.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 43

Notwithstanding the foregoing, Landlord may recover directly from Tenant or any other party:

(a) any damages, costs and expenses incurred by Landlord as a result of fraud or any criminal act or acts of Tenant or any shareholder, officer, director or employee of Tenant;

(b) any damages, costs and expenses incurred by Landlord as a result of any misappropriation of funds provided for the rehabilitation of the Improvements, rents and revenues from the operation of the Improvements or proceeds of insurance policies or condemnation proceeds;

(c) any and all amounts owing by Tenant pursuant to the indemnification regarding Hazardous Substances given in this Lease; and

(d) all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Landlord shall pay Tenant’s reasonable court costs and attorneys’ fees if Tenant is the prevailing party in any such enforcement or collection action).

INTEREST ON PAST DUE OBLIGATIONS

Except as expressly provided herein, amounts due to either Party, not paid when due, after the expiration of the permitted period to cure hereunder, shall bear interest at the maximum rate then allowable by law, from the due date. Payment of such interes t shall not excuse or cure a default under this Lease.

NOTICES

All notices, demands, and requests for approval to be given under this Lease shall be given in writing, and shall be deemed served when delivered personally, or shall be deemed served 72 hours after the deposit thereof in the United States mail, postage prepaid, registered or certified mail, addressed as hereinafter provided.

To Landlord: HOUSING AUTHORITY OF

THE CITY OF PALMDALE
38250 Sierra Highway, 2
nd Floor
Palmdale, CA 93550-4611
Attn: Executive Director

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 44

To Tenant: Victory Outreach
37419 25th Street East
Palmdale, CA 93550

ESTOPPEL CERTIFICATE

Each Party shall, at any time, and upon not less than 10 days’ prior written notice from the other Party, execute, acknowledge and deliver to the requesting Party a statement in writing: (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification, and certifying that this Lease, as so modified, is in full force and effect) and (ii) acknowledging that there are not, to such Party’s knowledge, any uncured defaults hereunder, or specifyi ng such defaults, if any, as are claimed. Any such statement may be conclusively relied upon by a prospective purchaser or encumbrancer of the Property.

SURRENDER

Section 2701 Surrender

Tenant shall, on the last day of the Term or upon any earlier termination of this Lease, peaceably and quietly surrender and yield immediate possession of the entire Property, including the Improvements thereon, to Landlord. Tenant shall not remove from the Property any appurtenant fixtures attached or used in connection with the operation of the Improvements and necessary for the proper operation thereof. All such fixtures and all operating manuals necessary for the operation of the Improvements shall be surrendered and delivered to Landlord upon expiration or termination of this Lease.

Section 2702 Title to Improvements

The Parties agree that upon expiration of the Term, or upon an earlier termination of this Lease, title to and ownership of all Improvements shall automatically vest in Landlord without the execution of any further instrument and without any payment by Landlord therefor. Tenant shall, at Landlord’s request and without payment therefor, promptly execute, acknowledge and deliver to Landlord a quitclaim deed in recordable form conveying and transferring to Landlord all right, title and interest of Tenant in and to the leasehold interest and the Improvements.

Section 2703 Removal of Personal Property

On the last day of the Term or upon an earlier termination of this Lease, Tenant shall remove all of its personal property not required to be surrendered. Personal property not removed by Tenant upon the last day of the Term or upon an earlier termination of this Lease shall be deemed abandoned, and may be appropriated, sold, destroyed, or otherwise disposed of by Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 45

Landlord following 10 days’ prior written notice to Tenant. Tenant shall pay to Landlord all reasonable costs and expenses incurred in receiving, storing or disposing of same and for restoring any damage to the Property caused by such personal property or the removal thereof from the Property.

Section 2704 Holdover

If Tenant fails to surrender possession of the Property, or any part thereof, at the expiration of the Term or upon an earlier termination of this Lease, then the continuance in possession of Tenant shall constitute a “holding over” by Tenant on a month-to-month basis for which Tenant is and shall be liable to pay rent at fair market value as such rent is determined by Landlord in its sole and absolute discretion. A holding over by Tenant after the expiration or earlier termination of this Lease shall not constitute a renewal or extension of the Term.

NO CONFLICT OF INTEREST, WARRANTY

Section 2801 No Conflict of Interest

Each Party covenants that neither they, nor any of their agents or employees who presently exercise any function or responsibility in connection with this Lease, have or shall have, or shall acquire, any financial interest which constitutes a conflict of interest under applicable City, state or federal laws, ordinances, rules and regulations, including the Political Reform Act of 1974 (California Government Code Sections 81000 et seq. ), as it may be amended from time to time.

No member, officer, or employee of either Party or the governing body of the locality in which the Project is situated, nor any member of the governing body of the locality in which Tenant was activated, and no other public official of such locality or localities who exercises any functions or responsibilities with respect to the Project, during his or her tenure or for two years thereafter, shall have any interest, direct or indirect, in this Lease or the proceeds thereof.

Section 2802 Warranty Against Speculation

Tenant hereby represents and warrants that this Lease, the rehabilitation of the Improvements, and its other undertakings pursuant hereto shall be used exclusively for the purpose of providing affordable housing for Very Low Income tenants, and not for speculati on in land holding. Tenant further recognizes:

(a) The importance of the rehabilitation of the Project to the general welfare of the community;

(b) The substantial financing and other public aids that have been made available by law and by Landlord for the purpose of making such rehabilitation possible; Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 46

(c) The fact that a change in ownership or control of Tenant or of a part thereof, or any other act or transaction involving or resulting in a change in ownership, or with respect to the identity of the parties in control of Tenant or the degrees thereof, is for practical purposes a transfer or disposition of the Property and Improvements, except as to Permitted Transfers set forth in the Agreement;

(d) The Property is not to be acquired or used for speculation, but only for rehabilitation and operation by Tenant in accordance with the terms of the Agreement and this Lease.

The qualifications and identity of Tenant, and its principals, are of particular concern to the community and Landlord. Tenant further recognizes that it is because of such qualifications and identity that Landlord is entering into this Lease with Tenant.

ADDITIONAL PROVISIONS

Section 2901 Time of Essence

Except as otherwise specifically provided in this Lease, time is of the essence in connection with each and every provision contained herein.

Section 2902 Waiver

No waiver by either Party of any provision hereof shall be deemed to be a waiver of any other provision hereof, or of any subsequent breach of the same or any other provision. No Party’s consent to, or approval of, any act shall be deemed to render unnecessary the obtaining of such Party’s consent to or approval of any subsequent act. The acceptance of any payment hereunder shall not be a waiver of any preceding breach of any provision hereof, other than the failure to make such payment itself, regardless of such Party’s knowledge of the preceding breach at the time of acceptance of such payment.

Section 2903 Costs of Litigation

If legal action is necessary to enforce a provision hereof, or for damages by reason of an alleged breach of a provision of this Lease, then the prevailing party shall be entitled to receive from the losing Party all costs and expenses, and such amount as the court may adjudge to be reasonable attorneys’ fees for the costs incurred by the prevailing party in such action or proceeding.

Section 2904 Institution of Legal Actions

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 47

Subject to the notice and cure provisions of Section 2202 above and the limited recourse provisions of Section 2306 above, in addition to any other rights or remedies (and except as otherwise provided in this Lease), either Party may institute legal action to cure, correct or remedy a default, to recover damages for a default, or to obtain any other remedy consistent w ith the purpose of this Lease. Such legal actions must be instituted in the Superior Court of the County of Los Angeles, State of California, in any other appropriate court of that County, or in the United States District Court for the Central District of California.

Section 2905 Applicable Law

The internal laws of the State of California shall govern the interpretation and enforcement of this Lease, without reference to the principles governing conflicts of law.

Section 2906 Acceptance of Service of Process

(a) If a legal action is commenced by Tenant against Landlord, then service of process on Landlord shall be made by personal service upon Landlord’s Executive Director or in such other manner as may be provided by law.

(b) If a legal action is commenced by Landlord against Tenant, then service of process on Tenant shall be made by personal service upon Tenant (or upon an officer of Tenant) and shall be valid whether made within or without the State of California, or in such manner as may be provided by law.

Section 2907 Relationship of Parties

Nothing contained in this Lease shall be deemed or construed to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association the Parties, other than that of landlord and tenant.

Section 2908 Counterparts

This Lease may be executed in several counterparts, each of which is an original, and all of which together constitute but one and the same instrument.

Section 2909 Captions for Convenience

The captions herein are for convenience and reference only and are not a part of this Lease, and do not in any way limit, define, or amplify the terms and provisions hereof.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 48

Section 2910 Entire Agreement

This Lease represents the full and complete understanding of every kind or nature whatsoever between the Parties, in connection with the lease of the Property, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions hereof.

Section 2911 Construction

The Parties agree that each Party and its counsel have reviewed this Lease, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not apply in the interpretation of this Lease, or any amendments or exhibits hereto.

Section 2912 Tenant’s Payment of Property Taxes

To the extent required by California Health and Safety Code Section 33673, but subject to Tenant’s rights to claim exemptions under California Revenue and Taxation Code Section 214, Tenant shall pay real property taxes upon the entire assessed value of the Property and not merely the assessed value of its leasehold interest in the Property.

Section 2913 Recording of Memorandum of Lease

A Memorandum of Lease shall be recorded in the Official Records upon commencement of this Lease.

Section 2914 Severability

If any provision of this Lease is adjudged invalid or unenforceable by a court of competent jurisdiction, then the remaining provisions of this Lease shall not be affected thereby, and shall be valid and enforceable to the fullest extent permitted by law.

[Remainder of Page Intentionally Left Blank; Signatures on Following Page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Page 49

Section 2915 Binding Effect

This Lease, and the terms, provisions, promises, covenants, and conditions hereof, shall be binding upon and shall inure to the benefit of the Parties and their respective heirs, legal representatives, successors and assigns.

IN WITNESS WHEREOF, the Parties have executed this Lease as of the date first set forth above.
“LANDLORD”

HOUSING AUTHORITY OF THE CITY OF

PALMDALE,
a public body, corporate and
politic

By: _________________________________
Salvador Mendez
City Manager Pro Tem

ATTEST:

By: _________________________________
Roxanne Faber
Authority Secretary

APPROVED AS TO FORM:

By:_________________________________
Alexandra Halfman
Acting Authority Attorney

KANE, BALLMER & BERKMAN
Authority Special Counsel

By: ________________________________
Susan Apy

“TENANT”

VICTORY OUTREACH - PALMDALE,
a California nonprofit corporation

By: ___________________________________
Michael Gonzalez
President

ATTEST:

By: ___________________________________
Christina Gonzalez
Secretary

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 9 – Form of Ground Lease APN: 3008-013-902 Exhibit B – Site Map

EXHIBIT B

SITE MAP

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 10

FORM OF MEMORANDUM OF LEASE

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 10 – Form of Memorandum of Lease APN: 3008-013-902 Page 1

Recording Requested by
and When Recorded Return to:

City Clerk, City of Palmdale
38300 Sierra Highway, Suite C
Palmdale, California 93550-4611

SPACE ABOVE THIS LINE FOR RECORDER’S USE

GOVERNMENT BUSINESS
Free Recording
(Cal. Govt. Code §27383)

Victory Outreach-Palmdale Agreement No. A-9241
APN: 3008-013-902

DOCUMENTARY TRANSFER TAX:

City $___________________.

County of Los Angeles $_______________.

Computed on the basis of the full value of interest or property conveyed.

_____________________________________
Signature of Declarant or Agent

MEMORANDUM OF LEASE BY AND BETWEEN HOUSING AUTHORITY OF THE

CITY OF PALMDALE AND VICTORY OUTREACH-PALMDALE

THIS MEMORANDUM OF LEASE ( this “Memorandum”), dated as of ______________________, 2025, is entered into by and between the HOUSING AUTHORITY OF THE CITY OF PALMDALE , a public body corporate and politic (“Landlord”), and VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (“Tenant”).

RECITALS

A. Landlord and Tenant have entered into that certain Ground Lease dated as of ______________________, 2025 (the “Lease”) pursuant to which Landlord leased to Tenant and Tenant leased from Landlord certain real property more particularl y described in Exhibit A, attached hereto and incorporated herein by this reference (the “Property”).

B. Landlord and Tenant desire to execute this Memorandum in order to provide constructive notice of the Lease to third parties.

OPERATIVE PROVISIONS

1. Lease Commencement and Term. Landlord has leased the Property to Tenant for a term commencing on ______________________, 2025 and continuing thereafter until the 55th Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 10 – Form of Memorandum of Lease APN: 3008-013-902 Page 2

anniversary of the date this Memorandum is recorded in the official records of Los Angeles County, California.

2. Lease Terms. The terms and provisions of the Lease are hereby incorporated into this Memorandum by this reference.

3. Leasehold Deeds of Trust. Provisions for leasehold mortgages are contained in the Lease.

4. Assignment. Tenant ’s rights under the Lease may not be assigned except in compliance with the terms of the Lease.

5. Successors and Assigns. This Memorandum and the Lease bind and inure to the benefit of the parties thereto and their respective, permitted heirs, successors in interest , and assigns, subject, however, to the terms of the Lease concerning assignment. The provisions of this Memorandum are solely for the purpose of providing notice of the Lease and, in the event of any conflict between the provisions of this Memorandum and the provisions of the Lease, the provisions of the Lease shall prevail.

IN WITNESS WHEREOF, the parties hereto have executed this Memorandum as of the date first set forth above.

“LANDLORD”

HOUSING AUTHORITY OF THE CITY OF
PALMDALE, a public body, corporate and
politic

By: _________________________________
Salvador Mendez
City Manager Pro Tem

ATTEST:

By: _________________________________
Roxanne Faber
Authority Secretary

APPROVED AS TO FORM:

By:_________________________________
Alexandra Halfman
Acting Authority Attorney

KANE, BALLMER & BERKMAN
Authority Special Counsel
By: ________________________________
Susan Apy

“TENANT”

VICTORY OUTREACH - PALMDALE,
a California nonprofit corporation

By: ___________________________________
Michael Gonzalez

ATTEST:

By: ___________________________________
Christina Gonzalez

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 10 – Form of Memorandum of Lease APN: 3008-013-902 Page 3

State of California )
County of _____________________ )

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 _____________________________

State of California )
County of _____________________ )

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 _____________________________
Affordable Housing Agreement Agreement No. A-_______
Victory Outreach Attachment No. 10 – Form of Memorandum of Lease APN: ___________ Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFFERED TO HEREIN BELOW IS SITUATED IN THE CITY OF

PALMDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

SAID COUNTY

APN:3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 11

METHOD OF FINANCING

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 11 – Method of Financing APN: 3008-013-902 Page 1

METHOD OF FINANCING

This is the Method of Financing attached to the Affordable Housing Agreement (the “Agreement”) dated as of June 3, 2025, by and between the HOUSING AUTHORITY OF THE CITY OF PALMDALE , a public body corporate and politic (“ Authority”), and VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (“ Developer”), relating to Developer’s rehabilitation of a four-unit apartment building, to be used exclusively to provide four residential units to be operated as rental housing that is affordable to Very Low Income households who are at risk of homelessness or currently unhoused at an Affordable Rent, subject to all of the terms and conditions of the Authority Loan Documents.

The Project shall be financed by a combination of the Authority Loan, the City Loan, and Developer funds, as needed. Developer may utilize other financing sources approved by the Authority Executive Director, so long as such alternative financing does not result in increased costs to Authority or City.

1. Definitions. Any capitalized term not otherwise defined herein has the meaning ascribed to such term in the Agreement.

2. Total Costs. The Parties estimate that the total Project Costs, including, without limitation, acquisition and rehabilitation, shall be approximately $941,145. Developer shall be responsible to provide funds if and as needed to pay for cost overruns and contingencies not funded by the Authority Loan and City Loan.

3. Project Budget. The Parties anticipate that all Project Costs shall be as set forth in the Project Budget. The Project Budget shall be subject to change from time to time, subject to the prior written approval of the Authority Executive Director or designee (which approval shall not be unreasonably withheld) and subject to and conditioned on such further review and approval by the Authority Board as is needed to satisfy applicable law and Authority policies and procedures, upon which approval the Proje ct Budget shall be replaced by the approved revised Project Budget. Developer shall demonstrate, to the satisfaction of the Authority Executive Director, that all Developer funds shall be available for payment of Project Costs when and as required by this Method of Financing.

4. Authority Loan.

(a) The Authority Loan represents Authority’s carry back of Developer’s prepayment of the Ground Lease over its term, in the amount of $580,000 (“Lease Prepayment”).

The Lease Prepayment is included in the principal amount of the Authority Loan, which shall be repaid to Authority pursuant to the terms of the Authority Note.

(b) In accordance with and subject to the terms and conditions of the Agreement and this Method of Financing, Authority agrees to make the Authority Loan to Developer, and Developer agrees to borrow such funds for the payment of Project Costs.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 11 – Method of Financing APN: 3008-013-902 Page 2

(c) At the Closing for the Project, the Parties shall execute and deliver such instruments and documents as may be necessary to evidence and secure the Authority Loan consistent with the terms of the Agreement and this Method of Financing, and in a form that is acceptable to the Authority Executive Director or designee, including the following instruments:

(1) the Agreement Containing Covenants;

(2) the Notice of Affordability Restrictions;

(3) the Authority Note;

(4) the Authority Deed of Trust;

(5) the Assignment of Rents and Leases;

(6) the Assignment of Agreements (if applicable);

(7) the Environmental Indemnity;

(8) the UCC1 Financing Statement;

(9) the Ground Lease; and

(10) the Memorandum of Lease; and

(11) Assignment and Assumption of the LURA in substance and form prepared by the Authority and in such form to be recorded in the Official Records, Los Angeles County Recorder’s Office.

5. Recordation. Upon the Closing, the Title Company shall record the Authority Loan Documents, and such other documents as approved or requested by the Authority, in accordance with instructions provided by Authority and shall be prepared to issue to Authority an ALTA lender’s policy of title insurance, insuring the priority of the Authority Deed of Trust as a lien on the Property, in amounts and with endorsements as Authority may determine is appropriate.

6. Disbursement of Authority Loan.

(a) The Authority Loan shall be deemed disbursed at the Closing.

(b) Prior to issuance of the Release of Construction Covenants for the Property, Developer shall be required to establish a replacement reserve fund (the “Replacement Reserve”) in order to provide adequate cash supplements to replace medium and/or long- term capital improvements with respect to the Property. The Replacement Reserve shall be initially funded with any remaining contingency funds if and as set forth in the approved Project Budget.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 11 – Method of Financing APN: 3008-013-902 Page 3

(c) Authority shall have the right to review and audit all records of Developer pertaining to any payment by Authority. Said records must be maintained for a period of five years after Completion.

7. Repayment Terms. The repayment terms of the Authority Loan are set forth in the form of Authority Note.

8. Conditions Precedent to Closing.

(a) The Closing is conditioned upon each of the following occurring to the satisfaction of the Authority Executive Director prior to the time for the Closing set forth in the Schedule of Performance:

(i) Developer submits evidence that the final working drawings (if any) have been approved by City, and, to the extent required by the Agreement, the Authority Executive Director or designee;

(ii) Unless performing the rehabilitation work itself, Developer submits a copy of the fully executed contract with a licensed contractor approved by the Authority Executive Director or designee, covering all rehabilitation work required by the Agreement and the approved final working drawings (if any);

(iii) Developer submits a final Project Budget, current as of the Closing, demonstrating to the satisfaction of the Authority Executive Director or designee the availability of sufficient funds to pay all Project Costs;

(iv) Developer submits evidence of the insurance policies and endorsements required by the Agreement;

(v) Developer submits evidence satisfactory to the Authority Executive Director or designee that Developer has satisfied all conditions precedent to the issuance of all permits necessary for the rehabilitation of the Project, other than payment of fees (provided that funds have been budgeted therefor in the Project Budget);

(vi) Developer submits for Authority review and approval the Maintenance Program, as required by the Agreement;

(vii) Developer submits for Authority review and approval the Annual Operating Budget, as required by the Agreement;

(viii) Developer submits for Authority review and approval the Management Plan, as required by the Agreement;

(ix) Developer submits for Authority review and approval a Proposed Use of Residual Receipts Plan describing the community outreach programs to be provided to the Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 11 – Method of Financing APN: 3008-013-902 Page 4

Project;

(x) Developer submits for Authority review and approval documentation satisfactory to the Executive Director demonstrating that any required relocation from the Property has been carried out in conformance with the Agreement and applicable state and federal law;

(xi) Title Company is prepared to issue the Title Insurance Policies;

(xii) Developer duly executes and delivers to Authority or into escrow the Authority Loan Documents, and such other documents as approved or requested by the Authority, including, without limitation, an Assignment and Assumption of the LURA as described above; and

(xiii) The Authority Executive Director determines that Developer is not in default of its obligations to Authority under the Agreement.

Notwithstanding the foregoing, Authority, in the sole discretion of the Authority Executive Director, may waive any of the foregoing conditions precedent to the Closing. A waiver of any of the foregoing conditions shall not operate in any way as a waiver, or estoppel with respect to, any subsequent or other failure to comply with such condition, or any other condition contained in this Method of Financing, the Agreement or any of the Authority Loan Documents.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 12

FORM OF NOTICE OF AFFORDABILITY RESTRICTIONS

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 12 – Form of Notice of Affordability Restrictions APN: 3008-013-902 Page 1

Recording Requested by
and When Recorded Return to:

City Clerk, City of Palmdale
38300 Sierra Highway, Suite C
Palmdale, California 93550-4611

SPACE ABOVE THIS LINE FOR RECORDER’S USE

GOVERNMENT BUSINESS
Free Recording
(Cal. Govt. Code §27383)

Victory Outreach-Palmdale Agreement No. A-9241
APN: 3008-013-902

Notice of Affordability Restrictions on Transfer of Property

NOTICE IS HEREBY GIVEN that pursuant to California Health and Safety Code Section 33334.3(f), the Housing Authority of the City of Palmdale, a public body corporate and politic, is recording this Notice of Affordability Restrictions on Transfer of Property ( this “Notice”) with regard to the property located at 513 East Avenue Q4, Palmdale, California and more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Property”).

The Property is subject to the Agreement Containing Covenants ( the “Covenants”) recorded concurrently herewith, which restricts the use of the Property as follows:

Four residential units shall be rented exclusively to Very Low Income households who are at risk of homelessness or currently unhoused at an Affordable Rent as provided in California Health and Safety Code Section 50053 for very low income households. The maximum incomes of eligible Very Low Income households shall be determined on the basis of the applicable income limits for Los Angeles County, published approximately annually by the California Department of Housing and Community Development.

The affordability restrictions imposed on the Property by the Covenants are scheduled to expire on the date that is 55 years after the recordation of this Notice. This Notice is recorded for the purpose of providing notice only and it in no way modifies the provisions of the Covenants.

This Notice may be executed in any number of counterparts, each of which, when so executed and delivered, will be an original, but all of which together shall constitute but one and the same instrument.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 12 – Form of Notice of Affordability Restrictions APN: 3008-013-902 Page 2

“AUTHORITY”

HOUSING AUTHORITY OF THE CITY OF PALMDALE, a public body, corporate and politic

By: _________________________________
Salvador Mendez
City Manager Pro Tem

ATTEST:

By: _________________________________
Roxanne Faber
Authority Secretary

APPROVED AS TO FORM:

By:_________________________________
Alexandra Halfman
Acting Authority Attorney

KANE, BALLMER & BERKMAN
Authority Special Counsel

By: ________________________________
Susan Apy

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 12 – Form of Notice of Affordability Restrictions APN: 3008-013-902 Page 3

State of California )
County of _____________________ )

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 _____________________________
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 12 – Form of Notice of Affordability Restrictions APN: 3008-013-902 Page 4

CONSENT TO RECORDATION
The undersigned, owner of the L easehold Interest in real propert y legally described in Exhibit A, hereby consents to the recordation of this N otice against the Leasehold Interest in the Property.

VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

ATTEST:

By:

Christina Gonzalez
Secretary
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 12 – Form of Notice of Affordability Restrictions APN: 3008-013-902 Page 5

State of California )
County of _____________________ )

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 _____________________________

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 12 – Form of Notice of Affordability Restrictions APN: 3008-013-902 Page 6

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 13

PROJECT BUDGET

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 13 – Project Budget
APN: 3008-013-902

ATTACHMENT NO. 13

PROJECT BUDGET

Sources

Authority Loan $580,000
City Loan $361,145

Total $941,145

Uses

Property Acquisition Costs $580,000
Rehabilitation Costs $271,457
Rehabilitation Contingency $ 89,688
(Replacement/Repair Reserve, if funds remaining)

Total $941,145

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 14

SCHEDULE OF PERFORMANCE

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 14 – Schedule of Performance APN: 3008-013-902 Page 1

ATTACHMENT NO. 14

SCHEDULE OF PERFORMANCE

1. Execution of Affordable Housing Agreement
by Authority . The Authority Executive
Director shall execute and deliver the
Agreement to Developer.

As soon as feasible after submission of
executed Agreement by Developer.

2. Signed General Contract . Unless performing
the rehabilitation work itself, Developer shall
have entered into a contract with a reputable
and licensed general contractor, approved by
Authority.

Not later than the scheduled date of the
Closing.

3. Submittal – Form of Unit Lease. Developer
shall have submitted to Authority for review
and approval the form of the proposed unit
lease or occupancy agreement.

Not later than 30 days prior to the
scheduled date of the Closing.

4. Submittal of Management and Maintenance
Plan. Developer shall have submitted to
Authority for review and approval a proposed
Management Plan and Maintenance Plan for
the Project in conformity with the management
and maintenance requirements of the
Agreement.

Not later than 30 days prior to the
scheduled date of the Closing.

5. Closing. All conditions precedent to the
Closing shall have been satisfied.

Not later than July 31, 2025.

6. Commencement of Rehabilitation Work . All
conditions precedent to the start of
construction shall be satisfied , and Developer
shall start rehabilitation of the Improvements.

Not later than one week after Authority’s
lease of the Property to Developer.

7. Completion of Rehabilitation Work .

Developer shall have completed rehabilitation
of the I mprovements in accordance with the
Scope of Work and the Agreement.

Not later than October 31, 2025.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 14 – Schedule of Performance APN: 3008-013-902 Page 2

8. Submittal-Tenant Selection and Eligibility
Plan. Developer shall prepare and submit for
approval the proposed tenant selection and
eligibility plan for the Project.

At least three months prior to occupancy
of the Project.

9. Lease-Up. Developer shall have achieved
lease-up of all of the units in the Project.

Not later than one month after Completion
of rehabilitation.

NOTES:

1. Deadlines set forth in this Schedule of Performance are subject to the enforced delay provisions of Section 604 of the Agreement.

2. Extensions may be approved in writing pursuant to Section 307 of the Agreement.

3. Descriptions of items of performance and deadlines in this Schedule of Performance are not intended to supersede more complete descriptions in the text of the Agreement; and in the event of any conflict between the text of the Agreement and this Schedule of Performance, the text of the Agreement shall govern.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 15

SCOPE OF WORK

[behind this page]
Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 15 – Scope of Work
APN: 3008-013-902

ATTACHMENT NO. 15

SCOPE OF WORK

The Improvements to be rehabilitated consist of a two-story residential apartment building containing four two-bedroom rental units with one-car carport parking space per unit, and all ancillary and related improvements for the Property. Rehabilitation shall include, without limitation:

1. Replacing air conditioning units;

2. Installing new water heaters;

3. Repairing walls;

4. Installing new flooring;

5. Replacing windows and screens;

6. Repairing the roof;

7. Painting the interior and exterior; and

8. Landscaping and installing energy efficient light fixtures.

The plans and specifications of the Project shall be subject to Authority’s approval.

The rehabilitation shall be carried out in compliance with all applicable permits, building codes and standards in effect in Palmdale, California . Developer shall be responsible for the costs of complying with all permit, building codes and standards, and fee requirements of City.

Upon completion of the rehabilitation, Developer shall use the Property exclusively to provide four residential units to be operated as rental housing that is affordable to Very Low Income households who are at risk of homelessness or currently unhoused at an Affordable Rent, subject to all of the terms and conditions of the Authority Loan Documents.

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 16

FORM OF ASSIGNMENT OF LURA

[behind this page]

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 16 – Form of LURA Assignment APN: 3008-013-902 Page 1

Recording Requested by
and When Recorded Return to:

City Clerk, City of Palmdale
38300 Sierra Highway, Suite C
Palmdale, California 93550-4611

SPACE ABOVE THIS LINE FOR RECORDER’S USE

GOVERNMENT BUSINESS
Free Recording
(Cal. Govt. Code §27383)

Victory Outreach Agreement No. A-9241
APN: 3008-013-902

ASSIGNMENT AND ASSUMPTION OF

LAND USE RESTRICTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION OF LAND USE RESTRICTION
AGREEMENT (this “Assignment”), dated as of ______________________, 2025 (“Effective Date”), is entered into by and between the HOUSING AUTHORITY OF THE CITY OF PALMDALE, a public body corporate and politic (“ Authority”), and VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Developer”).

WHEREAS, for the purpose of providing four units of housing that shall be affordable to Very Low Income households who are at risk of homelessness or currently unhoused exclusively, the Parties have entered into an Affordable Housing Agreement dated as of June 3, 2025, as it may be amended from time to time (the “Affordable Housing Agreement”), which is incorporated herein by this reference, and any capitalized term that is not otherwise defined in this Assignment shall have the meaning ascribed to such term in the Affordable Housing Agreement; and

WHEREAS, Developer is the owner of a leasehold interest in that certain real property (the “Property”) located in Palmdale, California more particularly described in Exhibit A which is attached hereto and incorporated herein by this reference, pursuant to the Ground Lease entered into between the Authority and Developer dated as of ___________, 2025, which was entered into in furtherance of the Affordable Housing Agreement; and

WHEREAS, the Property is subject to that certain Land Use Restriction Agreement (“LURA”) entered into by and between the former Community Redevelopment Agency of the City of Palmdale, as “ Owner” therein, and the Resolution Trust Corporation, as Receiver for Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 16 – Form of LURA Assignment APN: 3008-013-902 Page 2

Homefed Bank, F.A., and recorded in the official records, Recorder ’s Office of Los Angeles County (“Official Records”), on January 18, 1996 as Document No. 96-94063; and

WHEREAS, pursuant to that certain unrecorded Property Transfer Agreement and Joint Escrow Instructions entered into by and between the Authority and New Beginning Outreach Foundation, a California nonprofit public benefit corporation (“ NBO”) and dated as of July 11, 2018, pursuant to which, concurrently with the recordation of the Memorandum of Assignment of LURA recorded in the Official Records on __________________, 2018 as Document No. 2018___________, NBO conveyed the Property to Authority and assigned the LURA to Authority, and Authority assumed all of the obligations of the Owner pursuant to the LURA; and

WHEREAS, as required by the Affordable Housing Agreement, Authority shall assign the LURA to Developer.

NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE

RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES COVENANT AND AGREE AS FOLLOWS:

1. Assignment and Assumption.

a. Effective upon the Effective Date, Authority hereby assigns to Developer, and Developer hereby assumes from Authority all of the Authority’s duties, obligations, and liabilities under the LURA, including the obligations of the “Owner” pursuant to the LURA. Developer agrees to execute such further instruments or documents which may be necessary or appropriate to effectuate such assignment and assumption. Effective upon the Effective Date, Authority shall no longer have any duties, obligations, or liabilities as “Owner” under the LURA. Such duties, obligations, and liabilitie s shall al l be duties, obligations, and liabilitie s of Developer and its successors and assigns.
b. Effective upon the Effective Date, Developer covenants and agrees (for itself, its successors, assigns, and every successor in interest to the Property or any part thereof) that Developer, such successors, and such assigns shall fulfill all obligations of “Owner” under the LURA.
c. The provisions of the LURA to be performed by Developer, whether affirmative or negative in nature, are intended to and shall bind Developer and its successors and assigns at any time, and shall inure to the benefit of the Resolution Trust Corporation, as Receiver for Homefed Bank, F.A. and its successors and assigns.
d. Developer shall execute any and all documents in recordable form necessary to subject the Property to the covenants and restrictions contained in the LURA.

2. Binding Affect. This Assignment shall be binding upon and shall inure to the benefit of Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 16 – Form of LURA Assignment APN: 3008-013-902 Page 3

the parties hereto and their respective successors and assigns.

3. Amendments. This Assignment shall not be altered, amended or otherwise modified, except as set forth in a written document executed by the parties hereto.

4. Governing Law. This Assignment and all questions arising in connection herewith shall be governed by and construed in accordance with the internal laws of the state of California.

6. Counterparts. This Assignment may be executed in several counterparts, each of which is an original, and all of which together constitute but one and the same document.

IN WITNESS WHEREOF, the Parties have executed this Assignment as of the date first set forth above.

“AUTHORITY”

HOUSING AUTHORITY OF THE CITY
OF PALMDALE, a public body, corporate
and politic

By: ________________________________
Salvador Mendez
City Manager Pro Tem

ATTEST:

By: ________________________________
Roxanne Faber
Authority Secretary

APPROVED AS TO FORM:

By: ________________________________
Alexandra Halfman
Acting Authority Attorney

KANE, BALLMER & BERKMAN
Authority Special Counsel

By: ________________________________
Susan Apy
“DEVELOPER”

VICTORY OUTREACH - PALMDALE,
a California non profit corporation

By: ___________________________________
Michael Gonzalez
President

ATTEST:

By: ___________________________________
Christina Gonzalez
Secretary

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 16 – Form of LURA Assignment APN: 3008-013-902

State of California )
County of _____________________ )

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 _____________________________

Affordable Housing Agreement Agreement No. A-9241
Victory Outreach Attachment No. 16 – Form of LURA Assignment APN: 3008-013-902

State of California )
County of _____________________ )

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 A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

MEASURE H LOAN AGREEMENT

BY AND BETWEEN

THE CITY OF PALMDALE

AND

VICTORY OUTREACH

(A- 9242)

513 East Avenue Q4

June 3, 2025

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page i
APN: 3008-013-902

TABLE OF CONTENTS
Page
ARTICLE I SUBJECT OF AGREEMENT .........................................................................2 Section 101 Purpose of the Agreement. ...............................................................2 Section 102 Definitions........................................................................................2 Section 103 The Property.....................................................................................6 Section 104 City ...................................................................................................6 Section 105 Developer .........................................................................................7 Section 106 Assignments and Transfers. .............................................................7 ARTICLE II FINANCING ..................................................................................................8 Section 201 Use of Measure H Funds..................................................................8 Section 202 City Loan Terms ..............................................................................9 Section 203 Disbursement of City Loan ..............................................................9 Section 204 Security ............................................................................................9 Section 205 Conditions Precedent to Closing ......................................................9 ARTICLE III REHABILITATION OF IMPROVEMENTS ............................................10 Section 301 Scope of Work ...............................................................................10 Section 302 Land Use Approvals ......................................................................11 Section 303 Construction Drawings and Related Documents ...........................11 Section 304 Project Costs ..................................................................................11 Section 305 City Loan .......................................................................................12 Section 306 Schedule of Performance ...............................................................12 Section 307 Local, State and Federal Laws; Relocation....................................12 Section 308 Nondiscrimination During Construction........................................15 Section 309 Indemnification and Insurance .......................................................15 Section 310 Disclaimer of Responsibility by City .............................................19 Section 311 Rights of Access ............................................................................19 Section 312 Taxes, Assessments, Encumbrances and Liens .............................19 Section 313 Rights to Plans ...............................................................................19 Section 314 Release of Construction Covenants ...............................................20 Section 315 Effect and Duration of Covenants ..................................................21 ARTICLE IV DEFAULTS AND REMEDIES .................................................................21 Section 401 Defaults - General ..........................................................................21 Section 402 Institution of Legal Actions ...........................................................22 Section 403 Applicable Law ..............................................................................22 Section 404 Acceptance of Service of Process ..................................................22 Section 405 Rights and Remedies Are Cumulative ...........................................22 Section 406 Damages .........................................................................................22 Section 407 Specific Performance .....................................................................23 Section 408 Termination by City .......................................................................23 ARTICLE V GENERAL PROVISIONS...........................................................................24 Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page ii
APN: 3008-013-902

Section 501 Notices ...........................................................................................24 Section 502 Force Majeure ................................................................................24 Section 503 Conflict of Interest .........................................................................24 Section 504 Nonliability of City Officials and Employees ...............................25 Section 505 Inspection of Books and Records ..................................................25 Section 506 Approvals .......................................................................................25 Section 507 Real Estate Commissions ...............................................................26 Section 508 Construction and Interpretation of Agreement ..............................26 Section 509 Time of Essence .............................................................................27 Section 510 No Partnership ...............................................................................27 Section 511 Compliance with Law ....................................................................27 Section 512 Binding Effect ................................................................................27 Section 513 No Third Party Beneficiaries .........................................................27 Section 514 Authority to Sign............................................................................27 Section 515 Incorporation by Reference............................................................27 Section 516 Counterparts ...................................................................................28 Section 517 Severability ....................................................................................28 ARTICLE VI ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS .................28 Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page iii
APN: 3008-013-902

ATTACHMENTS

ATTACHMENT NO. 1 SITE MAP
ATTACHMENT NO. 2 LEGAL DESCRIPTION
ATTACHMENT NO. 3 PROJECT BUDGET
ATTACHMENT NO. 4 FORM OF CITY NOTE
ATTACHMENT NO. 5 FORM OF CITY DEED OF TRUST
ATTACHMENT NO. 6 FORM OF ASSIGNMENT OF AGREEMENTS
ATTACHMENT NO. 7 FORM OF ENVIRONMENTAL INDEMNITY
ATTACHMENT NO. 8 FORM OF ASSIGNMENT OF RENTS
ATTACHMENT NO. 9 MEASURE H LOAN REQUIREMENTS

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 1
APN: 3008-013-902

MEASURE H LOAN AGREEMENT BY AND BETWEEN

THE CITY OF PALMDALE AND VICTORY OUTREACH
(A-9242)

This MEASURE H LOAN AGREEMENT (this “Agreement”) is entered into as of June 3, 2025 by and between THE CITY OF PALMDALE , a municipal corporation (“City”), and VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (“ Developer”). City and Developer (individually, a “Party” and collectively, the “Parties”) hereby agree as follows:

RECITALS

A. Developer has entered into an Affordable Housing Agreement dated as of June 3, 2025 with the HOUSING AUTHORITY OF THE CITY OF PALMDALE, a public body corporate and politic (“ Authority”), as it may be amended or modified from time to time ( the “AHA”).

B. The AHA provides for the Authority to lease to Developer certain real property, including all Improvements thereon, located at 5 13 East Avenue Q4 in the City of Palmdale, California, illustrated on the site map attached to this Agreement as Attachment No. 1 and legally described as set forth in Attachment No. 2 (the “Property”).

C. The AHA obligates Developer to rehabilitate four existing two-bedroom residential units located on the Property resulting in four units of rental housing that are affordable to Very Low Income households who are at risk of homelessness or currently unhoused exclusively at an Affordable Rent as more particularly described in the AHA, including the Scope of Work attached thereto (the “Project”).

D. Developer proposes to finance the Project with a loan from the City of Los Angeles County Measure H Funds (“ Measure H Funds ”) to perform the rehabilitation work and Authority’s carry of the prepaid lease payments for the Property, or alternative financing proposed by Developer and approved by Authority.

E. Developer wishes to borrow and City wishes to lend Measure H Funds in the amount of Three Hundred Sixty-One Thousand One Hundred Forty- Five Dollars ($ 361,145) (“City Loan”), which will be used exclusively for payment of rehabilitation costs of the Project.

F. City’s making of the City Loan pursuant to this Agreement and the fulfillment generally of this Agreement are in the vital and best interests of the City, and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 2
APN: 3008-013-902

Now, therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I SUBJECT OF AGREEMENT
Section 101 Purpose of the Agreement.

The Recitals set forth above are true and accurate, and incorporated herein. Developer has submitted a proposal for the use of Measure H Funds for an eligible activity under that certain Funding Agreement between County of Los Angeles and the City of Palmdale for Homeless Services, Contract Number: HI -23-009 dated as of September 17, 2023, as it may be amended from time to time (the “County Funding Agreement”). The rehabilitation of the Property and use of the Property in accordance with the AHA and this Agreement will promote the objectives in the County Funding Agreement to prevent and combat homelessness.

Section 102 Definitions.

For purposes of this Agreement, the following capitalized terms will have the following meanings:
“Affiliate” means (i) any Person directly or indirectly controlling, controlled by or under common control with another Person, (ii) any Person owning or controlling 10% or more of the outstanding voting securities of such other Person or (iii) if that other Person is an officer, director, member or partner, then any company for which such Person acts in any such capacity. The term “control” as used in the immediately preceding sentence means the power to direct the management or the power to control election of the board of directors. It shall be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indirectly, more than 50% of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity.

“Affordable Rent” has the meaning set forth in the AHA.

“Agreement Containing Covenants” means the Agreement Containing Covenants which sets forth the affordable housing requirements for the Project, substantially in the form attached to the AHA as Attachment No. 3, as it may be amended from time to time.

“Assignment of Agreements ” means the assignment by Developer to City of plans, contracts and permits, in the form of Attachment No. 6 to this Agreement, as it may be amended from time to time.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 3
APN: 3008-013-902

“Assignment of Rents and Leases ” means the assignment by Developer to City substantially in the form of the Assignment of Rents and Leases attached as Attachment No. 8 to this Agreement, as it may be amended from time to time. “Authority Loan” means the loan by Authority to Developer in the amount and pursuant to the terms and conditions of the AHA, which shall be evidenced by a promissory note and secured by leasehold deed of trust in senior lien position.
“City” means the City of Palmdale, California, a municipal corporation, and any assignee of or successor to its rights, powers and responsibilities.

“City Deed of Trust ” means the second lien priority leasehold deed of trust in which Developer is the trustor and City is the beneficiary, securing the City Loan, substantially in the form of Attachment No. 5 to this Agreement, as it may be amended from time to time.

“City Loan” means the City’s loan of Measure H Funds to pay the rehabilitation costs of the Project, in the amount of Three Hundred Sixty-One Thousand One Hundred Forty-Five Dollars ($361,145), evidenced by the City Note and secured by the City Deed of Trust. “City Loan Documents” means this Agreement, the City Note, the City Deed of Trust, the Assignment of Rents and Leases, the Assignment of Agreements, the Environmental Indemnity, and the UCC1.
“City Note” means the promissory note evidencing the City Loan, substantially in the form of Attachment No. 4 to this Agreement, as it may be amended from time to time. “City Manager” means the City Manager of the City of Palmdale, or designee. “Closing” means the point in time when (i) all conditions precedent to the Closing as set forth in this Agreement have been satisfied; (ii) all conditions precedent to the C losing under the AHA, as set forth in the AHA, have been satisfied; and (iii) the City Loan Documents are executed (and recorded against the Property as applicable) in accordance with all of the terms and conditions of this Agreement.
“Closing Date” means the date on which the Closing is scheduled to take place , set forth in the Schedule of Performance attached to the AHA as Attachment No. 14. “Completion” means the point in time at which all of the following have been satisfied:
(i) issuance of a certificate of occupancy for the Project by City, (ii) recordation of a notice of completion pursuant to California Civil Code Section 3093, (iii) submission to City of unconditional lien releases or waivers obtained by Developer or Developer’s agent, (iv) certification by the Project architect (or if none, then by the Developer’s contractor) that the Project (with the exception of minor “punch list” items) has been completed in a good and workmanlike manner and in substantial compliance with the approved plans and specifications, (v) disposition of any mechanic’s liens that have been recorded or stop notices that have been delivered to City , Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 4
APN: 3008-013-902

so that any such liens shall have been paid, settled, bonded or insured around or otherwise extinguished or discharged and City has been provided satisfactory evidence of such payment, settlement, bond, title insurance or title insurance commitment or discharge, including without limitation all statutory waivers; and (vi) the time for Developer’s contractor, suppliers and subcontractors to file a claim pursuant to California Civil Code Sections 3115-3117 has expired.

“Environmental Indemnity” means an instrument substantially in the form attached to this Agreement as Attachment No. 7, as it may be amended from time to time.

“Escrow” means First American Title Insurance Company or another title insurance company mutually acceptable to the Parties.

“Force Majeure” or “Force Majeure Event” means the following events, provided that they actually delay and interfere with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the Party claiming such interference: war, insurrection, strikes, lock- outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, acts of terrorism, epidemics, quarantine restrictions, freight embargoes, lack of transpo rtation, governmental restrictions or priority, litigation (including litigation challenging the validity of this transaction or any element thereof), unusually severe weather, inability to secure necessary labor, materials or tools, delays of any contract or, subcontractor, or suppliers, acts of the other Party, acts or failure to act of any Governmental Authority (except acts or failure to act of City shall not excuse performance by City), the imposition of any applicable moratorium by a Governmental Authority or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the Party claiming such delay and interference.

“Force Majeure Delay” means a delay in taking any action required by this Agreement, proximately caused by the occurrence of a Force Majeure Event.

“Ground Lease ” means the lease of the Property from Authority to Developer for the purpose of rehabilitating and operating the Project, substantially in the form of the Ground Lease attached to the AHA as Attachment No. 9, as it may be amended from time to time. “Hazardous Materials” has the meaning set forth in the Environmental Indemnity. “Improvements” means the improvements located on the Property, to be rehabilitated in accordance with the AHA, including, without limitation, the Scope of Work and the Ground Lease.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 5
APN: 3008-013-902

“Leasehold Interest” means the leasehold interest in the Property that is created by the Ground Lease.

“Operating Costs” means the reasonable and customary costs to operate the Project, set forth by Developer in its annual operating budget approved by Authority.

“Permitted Transfer” means any of the following:

a. An assignment of this Agreement and all of Developer’s interests in the Property to an Affiliate of Developer or a conveyance back from the Affiliate to Developer;

b. The lease for occupancy of all or any part of the Improvements on the Property in accordance with this Agreement, the AHA, the Ground Lease, and the Agreement Containing Covenants;

c. The granting of easements or permits to facilitate the rehabilitation of the Property in accordance with the AHA; and

d. Any transfer approved in writing by the City Manager or designee, at his or her sole discretion.

“Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign.

“Plans” means the rehabilitation plans and drawings (if any) prepared on behalf of Developer for the Project in accordance with the AHA.
“Project Budget ” means the applicable schedule of Project Costs attached to this Agreement as Attachment No. 3.
“Project Costs ” means all costs which are actually incurred by Developer for the acquisition of the Leasehold Interest and the rehabilitation of the Improvements on the Property, and includes, without limitation, all of the items of cost set forth in the Project Budget and similar costs, fees and expenses approved by the City Manager, but not including Operating Costs. “Schedule of Performance” means the document attached to the AHA as Attachment No. 14, as it may be amended from time to time, which is incorporated herein by this reference. “Scope of Work” means the document attached to the AHA as Attachment No. 15, as it may be amended from time to time, which is incorporated herein by this reference. “Senior Lender” means the Authority, as the maker and holder of the Authority Loan.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 6
APN: 3008-013-902

“Title Company” means First American Title Insurance Company or another title insurance company mutually acceptable to the Parties.
“Title Insurance Policy” means and includes the following ALTA extended coverage policies of title insurance issued by the Title Company: a lender’s policy or policies of title insurance in favor of City , together with such endorsements as City may reasonably require, insuring the lien of the City Deed of Trust in the amount of the City Loan.

“Transfer” means:

c. Notwithstanding paragraphs a. and b., “Transfer” shall not include Permitted Transfers.

“UCC1” means a UCC1 Financing Agreement in a form suitable for filing with the California Secretary of State and recording against the Leasehold Interest.

“Very Low Income” has the meaning given in California Health and Safety Code Section 50105.

Section 103 The Property.

The “Property” is that certain property in the City of Palmdale, illustrated on the site map (Attachment No. 1) and as described in the legal description (Attachment No. 2). Developer will have a Leasehold Interest as of the Closing.

Section 104 City
a. The City is a municipal corporation of the State of California , organized and existing under the laws of the State of California and the Palmdale Municipal Code.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 7
APN: 3008-013-902

b. The address of the City for purposes of receiving notices pursuant to this Agreement will be City of Palmdale, 38300 Sierra Highway, Palmdale, California 93550, Attention: City Manager.
c. “City” as used in this Agreement includes the City of Palmdale, California, and any assignee or successor to its rights, power and responsibilities.

Section 105 Developer
a. The Developer is VICTORY OUTREACH-PALMDALE, a California nonprofit corporation.
b. The address of Developer for purposes of receiving notices pursuant to this Agreement shall be:

Victory Outreach
37419 25th Street East
Palmdale, California 93550.

c. Whenever the term “Developer” is used herein, such term means and includes: (1) the Developer as of the date hereof; or (2) an assignee of or successor to its rights, powers and responsibilities expressly permitted by this Agreement.

Section 106 Assignments and Transfers.
a. Developer represents and agrees that its undertakings pursuant to this Agreement are for the purpose of rehabilitating the Property and operating the Project and providing affordable housing on the Property and not for speculation in land holding. Developer further recognizes that the qualifications and identity of Developer are of particular concern to the City, in light of the following: (1) the importance of the improvement of the Property to the general welfare of the community; (2) the public assistance that has been made available by law and by the City for the purpose of making such development possible; and (3) the fact that a change in ownership or control of Developer or any other act or transaction involving or resulting in a significant change in ownership or control of Developer , is for all practical purposes a transfer or disposition of the property then owned by Developer . Developer further recognizes that it is because of such qualifications and identity that the City is entering into this Agreement with Developer. Therefore, no voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein. b. For the reasons cited above, Developer represents and agrees for itself and every successor in interest that Developer shall not assign all or any part of this Agreement, or any interest herein, without the prior written approval of the City. Subject to review of documentation effectuating any such proposed assignment or transfer, the City agrees to reasonably give such approval if the assignment is a Permitted Transfer.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 8
APN: 3008-013-902

c. For the reasons cited above, Developer represents and agrees for itself and every successor in interest that, without the prior written approval of the City, there shall be no significant change in the ownership of Developer or in the relative proportions thereof, or with respect to the identity of the parties in control of Developer or the degree thereof, by any method or means, except Permitted Transfers.
d. Any assignment or transfer of this Agreement or any interest herein or significant change in ownership of Developer, other than a Permitted Transfer, shall require the approval of the City, which may be withheld in its sole and absolute discretion. To the extent the City’s approval of an assignment or transfer is required by this Agreement, in granting or withholding its approval, the City shall base its decision upon the relevant experience, financial capability and reputation of the proposed assignee or transferee, and the effect, if any, of such proposed transfer on the public purposes of this Agreement. In addition, the City shall not have any obligation to approve any assignment or transfer of this Agreement, or any interest herein, or significant change in ownership of Developer that would result in payment of consideration to any Person from the net proceeds of a sale or refinance of the Leasehold Interest in the Property or the Project, or any portion thereof or interest therein.
e. Developer shall promptly notify the City of any and all changes whatsoever in the identity of the parties in control of Developer or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. This Agreement may be terminated by the City if there is any significant change (voluntary or involuntary) in membership, management o r control, of Developer (other than such changes occasioned by the death or incapacity of any individual), if such change is not a Permitted Transfer.

ARTICLE II FINANCING
Section 201 Use of Measure H Funds
Developer hereby warrants to the City and agrees that the City Loan will be used solely for the purpose of paying rehabilitation costs of the Project. Developer acknowledges receipt of the County Funding Agreement and Developer’s knowledge and understanding of the terms and conditions set forth in the County Funding Agreement for use of the Measure H Funds , as such terms and conditions may be amended from time to time . Developer covenants and agrees to comply with all of the terms and conditions set forth in the County Funding Agreement for use of the Measure H Funds by City (referred to therein as “Local Jurisdiction”), as may be applicable to the Developer’s use of the Measure H Funds for the Project, and/or by any contractor or subcontractor of City, as such terms and conditions may be amended from time to time . For informational purposes only, and not to limit in any way the terms and conditions set forth in the County Funding Agreement for use of the Measure H Funds, attached hereto as Attachment No. 9 is an excerpt of certain of such terms and conditions as exist of the date of this Agreement and does not include all such terms and conditions. Developer shall refer to the actual County Funding Agreement for any and all applicable terms and conditions , as such terms and conditions may be amended from time to time.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 9
APN: 3008-013-902

Section 202 City Loan Terms
In accordance with and subject to the terms and conditions of this Agreement, City agrees to lend to Developer, and Developer agrees to borrow from City, the City Loan. At or prior to the Closing, the City and Developer will execute and deliver such instruments and documents as may be necessary to evidence and secure the City Loan, consistent with the terms of this Agreement, each in a form that is acceptable to the City Manager.

Section 203 Disbursement of City Loan
a. The City Loan shall be disbursed based on requests for payment from Developer for actual expenses incurred or paid for rehabilitation of the Property in accordance with the AHA.

Requests for payment must be submitted by Developer in a format approved by t he City, with adequate and proper documentation of eligible costs incurred in compliance with this Agreement and standard City practice. The City Loan shall be disbursed based upon City’s receipt of contractor invoices and other information and documenta tion (e.g., lien releases) requested or required by the City Manager. The City shall have the right to condition any disbursement upon receipt and approval of such documentation, evidence or information that the City may request, including, but not limited to, vouchers, invoices, and architect’s, inspector’s and/or engineer’s periodic certifications of the percentage and/or stage of construction that has been completed.

b. Disbursements upon requests for payment may be subject to a ten percent (10%) retention, as determined in the sole and absolute discretion of the City. The City shall have the right in its sole discretion to make disbursements of funds directly to third parties entitled to such payment. Developer may submit a final invoice upon Completion. Final payment, including retention previously withheld, shall be made after the City has determined that Developer has submitted all documentation of the final cost of completing the Project, and proof of Completion of the Project.

c. The City shall have the right to review and audit all records of Developer pertaining to any payment by the City. Said records shall be maintained for a period of five years after termination or expiration of the County Funding Agreement.

Section 204 Security
Developer’s obligation to repay the City Loan will be secured by the City Deed of Trust, to be recorded as a second priority lien against the Leasehold Interest.

Section 205 Conditions Precedent to Closing
The Closing is conditioned upon each of the following occurring to the satisfaction of the City prior to the time for the Closing set forth in the Schedule of Performance:

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 10
APN: 3008-013-902

a. All conditions to the Closing (as set forth in the AHA) to the AHA have been satisfied in accordance with the AHA;
b. Developer submits a final Project Budget, current as of the Closing date, demonstrating to the satisfaction of the City the availability of sufficient funds to pay all Project Costs;
c. Developer submits evidence of the insurance policies and endorsements required Section 309c of this Agreement;
d. Developer deposits into Escrow payment and performance bonds, including a multiple-obligee rider naming the City of Palmdale and Authority, in a form approved by the City; e. Title Insurance Company is prepared to issue the T itle Insurance Policy required by the City;
f. Developer duly executes and delivers to the City the following City Loan documents:

1. City Note;

2. City Deed of Trust;

3. Assignment of Rents;

4. Assignment of Agreements; and

5. Environmental Indemnity.
g. The City determines that Developer is not in default of its obligations to the City under this Agreement.

Notwithstanding the foregoing, the City may waive any of the foregoing conditions precedent to the Closing. A waiver of any of the foregoing conditions will not operate in any way as a waiver or estoppel with respect to any subsequent or other failure to c omply with such condition, or any other condition contained in this Section 205 or any of the City Loan documents.

ARTICLE III REHABILITATION OF IMPROVEMENTS
Section 301 Scope of Work

The Improvements shall be rehabilitated in accordance with and within the limitations established in the Scope of Work, Plans approved by Authority pursuant to th e AHA, this Agreement, and permits issued by City.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 11
APN: 3008-013-902

Section 302 Land Use Approvals

a. It is the responsibility of Developer, without cost to City , to ensure that zoning of the Property and all applicable City land use requirements shall be such as to permit rehabilitation of the Improvements and the use, operation and maintenance of such Improvements in accordance with the provisions of this Agreement.

b. The following shall be conditions of the Closing: (i) if necessary, Developer shall submit and City Manager or designee shall approve 100% complete construction drawings , and (ii) Developer shall obtain all entitlements, approvals, variances and permits necessary for the rehabilitation of the Improvements. Without cost to City, City shall provide appropriate technical assistance to Developer in connection with Developer’s obtaining all necessary entitlements, permits and approvals for the rehabilitation of the Improvements.

Section 303 Construction Drawings and Related Documents

If necessary, Developer shall prepare and submit construction drawings and related documents for the rehabilitation of the Improvements to City for review (including, without limitation, architectural review). Any items so submitted and approved in writing by City shall not be subject to subsequent disapproval. City approval shall not be unreasonably withheld.

Section 304 Project Costs

b. Developer has proposed, and City has approved, the Project Budget. Developer acknowledges that City is relying on Developer’s experience and expertise in establishing the Project Costs, and Developer represents that the Project Budget is based on the best, good faith estimate of Developer of the costs that are likely to be incurred for the Project.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 12
APN: 3008-013-902

Section 305 City Loan

Subject to and conditioned on the terms and conditions of this Agreement, City shall provide Developer with financial assistance which consists of the City Loan. The City Loan shall be repaid according to the terms and conditions of the City Note.

Section 306 Schedule of Performance

a. After the Closing, Developer shall promptly begin and thereafter diligently prosecute to completion the rehabilitation of the Improvements as provided in the Scope of Work.

Developer shall begin and complete all construction and development within the tim es specified in the Schedule of Performance, with such reasonable extensions of said times as may be granted by Authority.

b. During periods of construction, Developer shall submit to City a written report of the progress of the construction when and as requested by City . The report shall be in such form and detail as may be reasonably required by City and shall include a reasonable number of construction photographs (if requested) taken since the last report by Developer.

Section 307 Local, State and Federal Laws; Relocation

a. Developer hereby agrees to carry out the rehabilitation, construction, development (as defined by applicable law) and operation of the Improvements on the Property, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable federal and state labor laws, including, without limitation, the payment of state prevailing wages for the Project. Developer also covenants and warrants that it will comply with all applicable laws, ordinances, codes, rules and regulations of the state local and federal governments, and all amendments thereto. Developer also agrees to take such action as the federal, state or local government may direct to enforce aforesaid provisions. b. Developer hereby agrees that Developer shall have the obligation to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that Developer shall have the obligation to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that Developer shall have the obligation, a t Developer’s sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer shall indemnify, protect, defend and hold harmless the City and the hereinafter defined Indemnified Parties, with counsel reasonably acceptable to City, from and against any and all loss, liability, damage, claim, cost, expense, and/or Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 13
APN: 3008-013-902

“increased costs” (including labor costs, penalties, reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the rehabilitation, construction, development (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Developer of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure by Developer to provide any required disclosure, representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Developer to provide and maintain any and all bonds to secure the payment to contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by Developer to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. The foregoing indemnity shall survive termination of this Agreement. c. It is agreed by the P arties that, in connection with the construction, development (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), Developer shall bear all risks of payment or non payment of state prevailing wages and/or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. “Increased costs” as used in this Section 312 shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time.
d. Developer shall be responsible for obtaining all permits and approvals required by City for the rehabilitation of the Improvements, ensuring that the use of the Property for the purposes described in this Agreement complies with the zoning and other City land use regulations (including any applicable exemptions and/or exceptions) applicable to the Property at the time of Closing.

e. Relocation

(i) All rights to possession of all portions of the Property necessary for rehabilitation and operation of the Project shall be cleared by Developer at Developer’s cost and expense. The relocation of any occupants or businesses, if any, required for rehabilitation and operation of the Project, including provisions of relocation assistance and benefits pursuant to applicable federal and state relocation laws shall be the financial responsibility of Developer.

(ii) All of the cost and expenses incurred or to be incurred by Developer to Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 14
APN: 3008-013-902

cause the vacating of the Property and/or relocation of all occupants and businesses from the Property for rehabilitation and operation of the Project (including, but not limited to, payments made to displaced persons and businesses, pre- or post-relocation rental payments, fees and actual expenses of attorneys, relocation consultants and other experts employed to effect the relocation of occupants and businesses, etc.) shall be the financial responsibility of Developer. Any costs arising related in any respect to such displacement, such as, but without limitation, claims for loss of business goodwill, payment for furniture, fixtures and equipment, payment for leasehold bonus value, and any other compensable interest under applicable federal and state relocation laws shall be the financial responsibility of Developer.

(iii) Developer hereby covenants and agrees to indemnify, save, protect, hold harmless, pay for and defend the Authority, the City, and their respective elected officials, officers, employees, agents, consultants, contractors, attorneys and representatives (col lectively, the “Indemnified Parties”) from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs, or expenses, including, without limitation, reasonable consultants’ and reasonable attorneys’ fees, or relocation benefits claimed or payable under the relocation laws which may now or in the future be incurred or suffered by the Indemnified Parties by reason of, or resulting from, in full or in part, or in any respect whatsoever from the displacement of businesses or other occupants of the Property pursuant to this Agreement. The foregoing indemnity shall survive termination of this Agreement and shall continue after Completion.

(iv) Developer, on behalf of itself and any and all successors and assigns, hereby fully and finally releases the City and the Indemnified Parties from any and all manner of actions, causes of actions, suits, obligations, liabilities, judgments, executions, debts, claims, and demands of every kind and nature whatsoever, known and unknown, which Developer or any of its successors or assigns may now have or hereafter obtain against the City or the Indemnified Parties by reason of, arising out of, relating to, or resulting from, in full or in part, Developer’s election to acquire leasehold title to the Property. The Parties agree that, with respect to the release of claims as set forth above, all rights under Section 1542 of the California Civil Code and any similar law of any state or territory of the United States are expressly waived. Section 1542 reads as follows:

________________
Developer’s Initials

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 15
APN: 3008-013-902

Section 308 Nondiscrimination During Construction

Developer, for itself and its successors and assigns, agrees that during the rehabilitation of the Improvements provided for in this Agreement, Developer shall not discriminate against any employee or applicant for employment on any basis prohibited by sta te or federal law, including without limitation, race, color, religion, sex or national origin.

Section 309 Indemnification and Insurance

a. Developer agrees to and shall, to the fullest extent permitted by law, defend, indemnify and hold Authority, City and their respective officers, employees, contractors and agents harmless from and against all claims, liabilities, damages, losses, expenses, attorneys’ fees and costs that is caused, in whole or in part by any of the following: (i) any act or omission of Developer or its contractors, suppliers or vendors, of any contracting t ier, in connection with its performance or nonperformance of this Agreement, (ii) the breach of any obligations of Developer hereunder, (iii) any act or omission during the period commencing with execution of this Agreement by City and until Completion of the rehabilitation of the Improvements, of Developer or its contractors, suppliers or vendors, of any contracting tier, or anyone directly or indirectly employed by any of them, or anyone for whose acts Developer may be liable, (iv) the use during the period commencing with execution of this Agreement by City and until Completion of the rehabilitation of the Improvements, of any products, material or equipment furnished by Developer or its contractors, suppliers or vendors, of any contracting tier, (v) the existence, release, presence or disposal on, in, under, about or adjacent to the Property of any Hazardous Materials , (vi) the development, construction, marketing, use, operation or condition of the Property and the improvements thereon by Developer, its contractors, subcontractors, agents, employees or other persons acting on Developer’s behalf, (vii) any accident, personal injury or casualty on the Property or the improvements thereon, (viii) any Plans or designs for improvements prepared by or on behalf of Developer or its contractors, subcontractors, agents, employees or other persons acting on Developer’s behalf, including without limitation any errors or omissions with respect to such Plans or designs, (ix) any loss or damage to City resulting from any inaccuracy in or breach of any representation or warranty of Developer, or resulting from any breach or default by Developer, under this Agreement, (x) claims of any kind in connection with the purchase of the Property including, without limitation, claims for relocation assistance pursuant to the California Relocation Law, Government Code Section 7260, inverse condemnation, taking, threatened taking or temporary taking or loss of good will, and/or (xi) any and all actions, claims, damages, injuries, challenges and/or costs or liabilities arising from the approval of any and all entitlements or permits for the Project by the City. b. The obligation to indemnify will not be construed to negate, abridge, or otherwise reduce other rights or obligations of indemnity which would otherwise exist as to the City or the Indemnified Parties. The foregoing indemnification will apply to the extent of the violation of a legal duty, including but not limited to active or passive negligence, strict liability, breach of contract, or intentional or willful misconduct, by Developer or its contractors, suppliers, or vendors, of any contracting tier, or anyone directly or indirectly employed by any of them, or anyone for whose acts Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 16
APN: 3008-013-902

Developer may be responsible. The City and Indemnified Parties will be entitled to recover attorneys’ fees incurred as a result of Developer’s failure to provide the defense and indemnity required by this Section. The foregoing indemnities will survive termination of this Agreement. c. At the times indicated in paragraphs (i) through (iv) below, Developer shall furnish or cause to be furnished to City evidence of the following policies of insurance, naming Developer as insured and, except as to the insurance described in paragraph (iv), below, Authority and City as additional insureds. The insurance described in paragraph (ii) shall be obtained prior to the initial rent-up of the apartments. All such insurance shall be kept in force for the term of the Ground Lease.
(i) Fire Policies: Prior to commencement of construction, Developer shall furnish evidence of, and shall thereafter maintain or cause to be maintained a policy or policies of insurance against loss or damage to the Property or the Improvements and all property of an insurable nature located upon the Property, resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies. Such insurance shall be maintained in a n amount not less than 100% of the full insurable value of the Improvements, as defined herein in paragraph d.

(iii) Liability Insurance : Developer shall maintain liability insurance to protect against loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever on or about the Property, resulting directly or indirectly from any acts or activities of Developer, or any person acting for Developer, or under its respective control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person occurring on or about the Property, or in connection with Developer’s activities thereon, caused directly or indirectly by or from acts or activities of Developer, or any person acting for Developer, or under its control or direction. Such property damage and personal injury insurance shall also provide for and protect City against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall be maintained in full force and effect during the term of the Ground Lease in the following amounts:

($5,000,000) each occurrence; Commercial Automobile Liability of not less than Five Million Dollars ($5,000,000) per occurrence combined single limit, including owned, non-owned and hired automobile coverage, and Employer’s Liability of not less than One Million Dollars ($1,000,000) each accident, One Million Dollars ($1,000,000) disease each employe, and One Million Dollars ($1,000,000) disease each policy.

b. Following completion of rehabilitation work of the Property: commercial general liability in a general aggregate amount of not less than Four Million Dollars ($4,000,000) and Two Million Dollars ($2,000,000) per occurrence; Pollution/ Environmental Liability of not less than Two Million Dollars ($2,000,000) limit per occurrence basis; Products and Completed Operations Aggregate of not less than Four Million Dollars ($4,000,000) and Two Million Dollars ($2,000,000) each occurrence; Commercial Automobile L iability of not less than Two Million Dollars ($2,000,000) per occurrence combined single limit, including owned, non-owned and hired automobile coverage; and Employer’s Liability of not less than One Million Dollars ($1,000,000) each accident, One Million Dollars ($1,000,000) disease each employee, and One Million Dollars ($1,000,000) disease each policy.

It is the mutual intent of the Parties that the levels of insurance coverage described herein shall be and remain comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County. At any time and from time to time, either Party may provide notice to the other Party that the level of insurance being maintained by Developer is no longer comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County, and request that the minimum limit hereinabove designated shall be changed (either increased or decreased) accordingly. The Party receiving such request shall not unreasonably withhold its consent to such change. Developer agrees that provisions of this paragraph a s to maintenance of insurance shall not be construed as limiting in any way the extent to which Developer may be held responsible for the indemnification of City or the payment of damages to persons or property resulting from Developer’s activities, or the activities of any person or persons for which Developer is responsible.

(iv) Workers’ Compensation Insurance : Developer shall maintain workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the workers’ compensation laws now in force in Cal ifornia, or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such workers’ compensation insurance shall cover all persons employed by Developer in connection with the Project and sha ll cover liability within statutory limits for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with the Project or the operation thereof by Developer, and in an amount of not less than $1,000,000 per accident, bodily injury, or disease. Notwithstanding the foregoing, Developer may, in compliance with the laws of the State of California and in lieu of maintaining such insurance, self-insure for workers’ Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 18
APN: 3008-013-902

compensation in which event Developer shall deliver to City evidence that such self-insurance has been approved by the appropriate State authorities.

d. Developer shall cause all contractors and subcontractors performing work relating to the Project to maintain insurance of the types and in the amount described in this Section 309.

e. The term “full insurable value” as used in this Section 309 means the actual replacement cost (excluding the cost of excavation, foundation and footings below the lowest floor and without deduction for depreciation) of the Improvements on the Property immediately before such casualty or other loss, including the c ost of construction, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Developer shall cause the full insurable value to be determined from time to time by appraisal by the insurer, by agreement between the Parties or by an appraiser mutually acceptable to the Parties, not less often than once every three years.

f. All policies shall name Authority and City as additional insureds and/or loss payees as their interests may appear. Policy endorsements providing the additional insured/loss payee shall be included with Certificates of Insurance.

g. All insurance provided under this section shall be for the benefit of Developer, Authority and City. Developer agrees to timely pay all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance. Developer agrees to submit policies of all insurance required by this S ection, or certificates evidencing the existence thereof and additional insured endorsements, to City not less than 15 days prior to the Closing, indicating full coverage of the contractual liability imposed hereby. All insurance herein provided for shall be effected under policies issued by insurers of recognized responsibility, licensed and admitted to do business in the State of California (or if not admitted in California shall have a “General Policyholders Rating” of at least “A-” as set forth in the most current issue of “Best’s Key Rating Guide”), reasonably approved by Authority. All policies or certificates of insurance shall provide that such policies shall not be canceled or limited in any manner without at least 20 days’ prior written notice to City.

h. If Developer fails or refuses to procure or maintain insurance as required by this Agreement, the City shall have the right, at City ’s election, and upon 10 days’ prior notice to Developer, to procure and maintain such insurance. The premiums paid by City shall be treated as a loan due from Developer, which Developer agrees to pay on the first day of the month Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 19
APN: 3008-013-902

following the date on which the premiums were paid. City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s).

Section 310 Disclaimer of Responsibility by City

City neither undertakes nor assumes nor shall have any responsibility, right or duty to Developer or to any third party to review, inspect, supervise, pass judgment upon or inform Developer or any third party of any matter in connection with the Property or the Project, whether with respect to the quality, adequacy or suitability of the plans, any labor, service, equipment or material furnished to the Project, any person furnishing the same or otherwise. Developer and all third parties shall rely upon thei r own judgment regarding such matters, and any review, inspection, supervision, exercise of judgment or information supplied to Developer or to any third party by City in connection with such matter is for the public purpose of providing affordable housing, and neither Developer nor any third party is entitled to rely thereon.

Section 311 Rights of Access

Commencing upon the Closing, representatives of Authority and City shall have the reasonable right of access to the Property, upon two business days’ written notice to Developer (except in the case of an emergency, in which case City shall provide such notice as may be practical under the circumstances), without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including, without limitation, the inspection of the work being performed.

Section 312 Taxes, Assessments, Encumbrances and Liens

Nothing herein contained shall be deemed to prohibit Developer from contesting the validi ty or amount of any tax assessment, encumbrance or lien, or to limit the remedies available to Developer in respect thereto.

Section 313 Rights to Plans

a. All work product prepared pursuant to this Agreement, including, without limitation, all Plans, construction documents, soils tests and similar reports, permits and other entitlements are hereby assigned to City as security for Developer’s obligations hereunder. In the Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 20
APN: 3008-013-902

event that this Agreement is terminated by City , Developer shall, within 10 days of such termination, transmit all such work product to City.

b. To effectuate the assignment described in paragraph a., concurrently with executing this Agreement, Developer shall execute and deliver to City the Assignment of Agreements, granting to City, subject to any rights of a Senior Lender, all of Developer’s rights to: (i) the Plans prepared pursuant to the AHA and this Agreement, (ii) the contracts between Developer and its architect (if any) and between Developer and its general contractor, (iii) all permits relating to the Project and (iv) all similar righ ts and property interests. If no such work product exists or will exist, then execution and delivery to City of the Assignment of Agreements shall not be required.

Section 314 Release of Construction Covenants

a. Promptly after Completion of the Improvements constituting the Project in its entirety, as generally and specifically required by the AHA and this Agreement, City shall furnish Developer with a Release of Construction Covenants upon written request therefor by Developer.

City shall not unreasonably withhold such Release of Construction Covenants, and such Release of Construction Covenants shall be issued so long as Developer has rehabilitated the Project in accordance with the AHA, this Agreement and the P lans approved by Authority and City. Such Release of Construction Covenants shall be, and shall so state, conclusive determination of satisfactory completion of all of the construction required by this Agreement.

c. If City refuses or fails to furnish a Release of Construction Covenants after written request from Developer, then City shall, within 30 days of the written request, provide Developer with a written statement of the reasons City refused or failed to furnish a Release of Construction Covenants. The statement shall also contain City ’s opinion of the action Developer shall take to obtain a Release of Construction Covenants. If the reason for such refusal is confined to the immediate availability of specific items or materials for landscaping, and/or minor items, then City shall issue its Release of Construction Covenants upon the posting of a bond by Developer with City in an amount representing the fair value of the work not yet completed.

d. Such Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 21
APN: 3008-013-902

Section 315 Effect and Duration of Covenants
The covenants established in this Agreement will, without regard to technical classification and designation, be binding for the benefit and in favor of the City for the Restricted Period as set forth in the AHA.

ARTICLE IV DEFAULTS AND REMEDIES
Section 401 Defaults - General
a. Subject to the extensions of time set forth in Section 502, failure or delay by either Party to perform any term or provision of this Agreement constitutes a default under this Agreement. The Party who fails or delays must commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence. b. The injured P arty shall give written notice of default to the P arty in default, specifying the default complained of by the injured P arty. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. Except as otherwise expressly provided in this Agreement, any failures or delays by either Party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either Party in asserting any of its rights and remedies shall not deprive either P arty of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. c. If a monetary event of default occurs, prior to exercising any remedies hereunder, the injured Party shall give the party in default written notice of such default. The Party in default shall have a period of ten (10) calendar days after such notice is received or deemed received within which to cure the default prior to exercise of remedies by the injured Party. d. If a non -monetary event of default occurs, prior to exercising any remedies hereunder, the injured Party shall give the party in default notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, the P arty in default shall have such period to effect a cure prior to exercise of remedies by the injured Party. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and the Party in default (1) initiates corrective action within said period, and (2) diligently, continually, and in good faith works to effect a cure as soon as possible, then the Party in default shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the injured party, but in no event shall such period exceed sixty (60) days from the date such notice is received or deemed received. In no event shall the injured Party be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 22
APN: 3008-013-902

Section 402 Institution of Legal Actions
In addition to any other rights or remedies (and except as otherwise provided in this Agreement), either P arty may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Los Angeles, State of California, in any other appropriate court of that county.

Section 403 Applicable Law
The internal laws of the State of California shall govern the interpretation and enforcement of this Agreement, without giving effect to the principles governing conflicts of laws.

Section 404 Acceptance of Service of Process
a. In the event that any legal action is commenced by the Developer against the City, service of process on the City will be made by personal service upon the City Manager or in such other manner as may be provided by law.
b. In the event that any legal action is commenced by the City against the Developer, service of process on the Developer will be made by personal service upon the Developer (or upon a general partner, managing member or officer of the Developer) and will be valid whether made within or without the State of California, or in such manner as may be provided by law.

Section 405 Rights and Remedies Are Cumulative
Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies will not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.

Section 406 Damages
Subject to the notice and cure provisions of Section 401, if either Party defaults with regard to any of the provisions of this Agreement, the non- defaulting Party will serve written notice of such default upon the defaulting P arty. If the default is not cured withi n the time provided in Section 401, the defaulting Party will be liable to the non-defaulting Party for any damages caused by such default, and the non-defaulting Party may thereafter (but not before) commence an action for damages against the defaulting Party with respect to such default.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 23
APN: 3008-013-902

Section 407 Specific Performance
Subject to the notice and cure provisions of Section 401, if either Party defaults with regard to any of the provisions of this Agreement (except with respect to monetary defaults) , the non- defaulting Party will serve written notice of such default upon the defaulting P arty. If the default is not cured within the time provided in Section 401, the non-defaulting P arty, at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Agreement pertaining to such default.

Section 408 Termination by City
a. If Developer fails to comply with County Funding Agreement or the terms and conditions of the City Loan, the City may take one or more of the following actions, as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the deficiency or more severe enforcement action by the City.
(2) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (3) Wholly or partly suspend or terminate the City Loan. (4) Take other remedies that may be legally available.
b. Subject to the notice and cure provisions of Section 401, the City will have the right to terminate this Agreement prior to Closing by providing written notice to Developer in the event any of the following occurs:
(1) failure of any condition precedent to the occurrence of the Closing; or (2) E xcept for a Permitted Transfer, Developer (or any successor in interest) assigns or attempts to assign this Agreement or the AHA or any right herein or therein in violation of this Agreement or the AHA; or
(3) there is substantial change in the ownership of the Developer , or with respect to the identity of the parties in control of Developer, or the degree thereof in violation of this Agreement.
c. After the Closing, subject to the notice and cure provisions of Section 401, the City will have the right to terminate this Agreement by providing written notice to Developer , and all outstanding amounts due under the City Note, including accrued interest, will become immediately Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 24
APN: 3008-013-902

due and payable by Developer in the event of a default by Developer, including but not limited to the following:
(1) Developer fails to commence construction of the Project within the time provided in the Schedule of Performance, subject to Force Majeure delays; or (2) Developer abandons or suspends the Project for a period of thirty (30) days; or
(3) except for a Permitted Transfer, there is substantial change in the ownership of the Developer, or with respect to the identity of the parties in control of Developer, or the degree thereof in violation of this Agreement; or
(4) except for a Permitted Transfer, Developer assigns or attempts to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer of the Property , or any part thereof, in violation of this Agreement; or
(5) Developer fails to comply with the County Funding Agreement or the terms and conditions of the City Loan or otherwise materially breaches this Agreement.

ARTICLE V GENERAL PROVISIONS
Section 501 Notices
Formal notices, demands and communications between the Parties shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Parties, as designated in Section 104 and 105, respectively. Such written notices, demands and communications may be sent in the same manner to such other addresses as either Party may from time to time designate by mail as provided in this Section 501. Any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by the recipient; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof.

Section 502 Force Majeure
In addition to specific provisions of this Agreement, performance by either Party shall not be deemed to be in default where delays or defaults are due to Force Majeure Events.

Section 503 Conflict of Interest
a. No member, official, or employee of City will have any personal interest, direct or indirect, in this Agreement, nor will any such member, official, or employee participate in any Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 25
APN: 3008-013-902

decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she is, directly or indirectly, interested. b. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement.

Section 504 Nonliability of City Officials and Employees No member, official, agent, legal counsel or employee of City will be personally liable to Developer, or any successor in interest in the event of any default or breach by City or for any amount which may become due to Developer or successor or on any obligation under the terms of this Agreement.

Section 505 Inspection of Books and Records
a. Developer will maintain complete, accurate, and current records pertaining to the performance of this Agreement and to the Property for a period of five (5) years after the creation of such records, and will permit any duly authorized representative of the City to inspect and copy records, during regular business hours upon reasonable advance notice. Records must be kept accurate and current.
b. The City reserves the right to inspect, monitor, and observe work and services performed by Developer at any and all reasonable times. c. The City reserves the right to audit the records of Developer any time during the performance of this Agreement and for a period of five years after final payment is made under this Agreement.

Section 506 Approvals
a. Except as otherwise expressly provided in this Agreement, approvals required of City or Developer in this Agreement, including the attachments to this Agreement, will not be unreasonably withheld or delayed. All approvals will be in writing. Failure by either P arty to approve a matter within the time provided for approval of the matter will not be deemed a disapproval, and failure by either Party to disapprove a matter within the time provided for approval of the matter will not be deemed an approval.
b. Except as otherwise expressly provided in this Agreement, approvals required of the City will be deemed granted by the written approval of the City Manager or designee .

Notwithstanding the foregoing, the City Manager may, in his or her sole discretion, refer to the City Council any item requiring City approval; otherwise, “City approval” means and refers to approval by the City Manager or designee.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 26
APN: 3008-013-902

Section 507 Real Estate Commissions
Neither Developer nor City will be liable for any real estate commissions or brokerage fees which may arise from this Agreement. Developer and City each represents that it has engaged no broker, agent or finder in connection with this Agreement.

Section 508 Construction and Interpretation of Agreement a. The language in all parts of this Agreement will in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against any P arty. The Parties hereto acknowledge and agree that this Agreement has been prepared jointly by the Parties and has been the subject of arm’s length and careful negotiation over a considerable period of time, that each Party has been given the opportunity to independently review this Agreement with legal counsel, and that each P arty has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement will not be interpreted or construed against the P arty preparing it, and instead other rules of interpretation and construction will be utilized.
b. If any term or provision of this Agreement, the deletion of which would not adversely affect the receipt of any material benefit by any party hereunder, will be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement will not be affected thereby and each other term and provision of this Agreement will be valid and enforceable to the fullest extent permitted by law. It is the intention of the P arties hereto that in lieu of each clause or provision of this Agreement that is illegal, invalid, or unenforceable, there be added as a part of this Agreement an enforceable clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible. c. The captions of the articles, sections, and subsections herein are inserted solely for convenience and under no circumstances are they or any of them to be treated or construed as part of this instrument.
d. References in this instrument to this “Agreement” mean, refer to and include this instrument as well as any riders, exhibits, addenda and attachments hereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in this instrument. Any references to any covenant, condition, obligation, and/or undertaking “herein,” “hereunder,” or “pursuant hereto” (or language of like import) means , refer to, and include the covenants, obligations, and undertakings existing pursuant to this instrument and any riders, exhibits, addenda, and attachments or other documents affixed to or expressly incorporated by reference in this instrument.
e. As used in this Agreement, and as the context may require, the singular includes the plural and vice versa, and the masculine gender includes the feminine and vice versa.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 27
APN: 3008-013-902

Section 509 Time of Essence
Time is of the essence with respect to the performance of each of the covenants and agreements contained in this Agreement.

Section 510 No Partnership
Nothing contained in this Agreement will be deemed or construed to create a partnership, joint venture, or any other similar relationship between the P arties hereto or cause City to be responsible in any way for the debts or obligations of Developer or any other Person.

Section 511 Compliance with Law
Developer agrees to comply with all the requirements now in force, or which may hereafter be in force, of all municipal, county, state and federal authorities, pertaining to the Project. The judgment of any court of competent jurisdic tion, or the admission of Developer or any lessee or permittee in any action or proceeding against them, or any of them, whether City be a party thereto or not, that Developer, lessee or permittee has violated any such ordinance or statute in the development and use of the Property will be conclusive of that fact as between City and Developer.

Section 512 Binding Effect
This Agreement, together with the agreements, covenants and warranties contained herein, will be binding on and will inure to the benefit of the P arties hereto and all of their respective successors and assigns, whether voluntary or involuntary or by agreement or operation of law.

Section 513 No Third Party Beneficiaries
The parties to this Agreement acknowledge and agree that the provisions of this Agreement are for the sole benefit of City and Developer, and not for the benefit, directly or indirectly, of any other persoP or entity, except as otherwise expressly provided herein.

Section 514 Authority to Sign
Developer hereby represents that the persons executing this Agreement on behalf of Developer have full authority to do so and to bind Developer to perform pursuant to the terms and conditions of this Agreement.

Section 515 Incorporation by Reference
Each of the attachments and exhibits attached hereto is incorporated herein by this reference.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 28
APN: 3008-013-902

Section 516 Counterparts
This Agreement may be executed by each party on a separate signature page, and when the executed signature pages are combined, will constitute one single instrument.

Section 517 Severability
If any provision of this Agreement will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remaining provisions of this Agreement will not be affected thereby, but this Agreement will be construed as if such invalid, illegal or unenforceable provisions had not been contained herein, and the remainder of this Agreement will be construed as if the invalid, illegal, or unenforceable provision had never been contained in it.

ARTICLE VI ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS
a. This Agreement, including all of the Attachments appended to this Agreement, constitutes the entire understanding and agreement of the Parties. b. This Agreement integrates all of the terms and conditions mentioned herein or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to all or any part of the subject matter hereof. c. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of City or Developer , and all amendments to this Agreement must be in writing and signed by the appropriate authorities of City and Developer. [Remainder of Page Intentionally Left Blank; Signatures on Following Page]

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Page 29
APN: 3008-013-902

IN WITNESS WHEREOF, the City and Developer have signed this Agreement as of the date first written above.
“CITY”

CITY OF PALMDALE

By: _________________________________
Salvador Mendez
City Manager Pro Tem

ATTEST:

By: _________________________________
Roxanne Faber
City Clerk

APPROVED AS TO FORM:

By:_________________________________
Alexandra Halfman
Acting City Attorney

KANE, BALLMER & BERKMAN
City Special Counsel

By: ________________________________
Susan Apy

“DEVELOPER”

VICTORY OUTREACH - PALMDALE,
a California nonprofit corporation

By: ___________________________________
Michael Gonzalez
President

ATTEST:

By: ___________________________________
Christina Gonzalez
Secretary

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 1

SITE MAP

[behind this page]

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 2

LEGAL DESCRIPTION

[behind this page]

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 2 – Legal Description
APN: 3008-013-902

ATTACHMENT NO. 2

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 3

PROJECT BUDGET

[behind this page]
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 3 – Project Budget
APN: 3008-013-902

ATTACHMENT NO. 3

PROJECT BUDGET

Sources

Authority Loan $580,000
City Loan $361,145

Total $941,145

Uses

Property Acquisition Costs $580,000
Rehabilitation Costs $271,457
Rehabilitation Contingency $ 89,688
(Replacement/Repair Reserve, if funds remaining)

Total $941,145

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 4

FORM OF CITY NOTE

[behind this page]
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 4– Form of City Note
APN: 3008-013-902 Page 1

PROMISSORY NOTE

SECURED BY DEED OF TRUST

TO THE CITY OF PALMDALE
(A-9242)

0% Palmdale, California
$361,145 ______________________, 2025

FOR VALUE RECEIVED, VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Borrower”), hereby promises to pay to the CITY OF PALMDALE, a municipal corporation (“City”), or order, a principal amount of $361,145, as the City Loan pursuant to the Measure H Loan Agreement dated as of June 3, 2025 (the “Agreement”) by and between Borrower (“Developer ” therein) and City , incorporated herein by this reference. Borrower shall pay interest at the rate, in the amount and at the time hereinafter provided.

Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Agreement. In addition, the following terms shall have the following meanings:

“Default Rate of Interest” means 1% over the Prime Rate announced by Bank of America.

“Low Income ” shall have the meaning given to the term “lower income” in California Health and Safety Code Section 50079.5.

“Note” means this promissory note evidencing the City Loan.

“Operating Expenses ” means actual, reasonable and customary costs, fees and expenses directly attributable to the operation, maintenance and management of the Property, expressly including, without limitation: debt service on any leasehold mortgage loan pre-approved by City in its sole and absolute discretion other than the City Loan, property taxes and assessments, maintenance costs (including materials and labor), reasonable and customary payments to a replacement reserve account, painting, cleaning, repairs and alterations, landscaping, utilities, rubbish removal, certificates, permits and licenses, sewer charges, real and personal property taxes and assessments, insurance, security, cable television, satellite and similar facilities, a reasonable property management fee, not to exceed 5% of effective gross income, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings (other than from reserves) and fees and expenses of accountants, attorneys, consultants and other professionals, including annual audits and tax return preparation costs payable to a third party. The calculation of Operating Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 4– Form of City Note
APN: 3008-013-902 Page 2

Expenses shall be subject to the reasonable approval of City.

“Residual Receipts” means (i) the Revenue minus (ii ) the Operating Expenses, calculated on a 12-month basis.

“Revenue” means the gross rental income from the Property, and any other income to Borrower derived from the ownership, operation and management of the Property.

1. This Note evidences the obligation of Borrower to City for the repayment of the City Loan.

2. This Note is payable at the principal office of City, 38300 Sierra Highway, Palmdale, California 93550, or at such other place as the holder hereof may inform Borrower in writing, in lawful money of the United States.

3. This Note is secured by the City Deed of Trust.

4. The City Loan is a deferred payment loan. There are no scheduled payments. The principal balance of the City Loan and all accrued and unpaid interest shall be due and payable on ______________________, 20______, (55 years after the date of this Note); provided, however, that Borrower shall be obligated to use Residual Receipts as described in Section 5 below. The City Loan shall accrue interest at the rate of 0% simple interest per annum from the date of this Note. In the event of an uncured default under any of the City Loan Documents, the City Loan shall bear simple interest at the Default Rate of Interest from the date of the expiration of the cure period for such default.

5. Prior to the expiration of the term hereof, as additional consideration in order to induce City to make the City Loan to Borrower, Borrower shall be obligated to use the Residual Receipts for housing related programs that are consistent with the City of Palmdale Neighborhood Improvement Strategy to benefit Very Low Income and Low Income households. Borrower or its agent shall prepare and submit to City , annually, a “Proposed Use of Residual Receipts Plan” for administrative approval prior to spending the R esidual Receipts on such approved uses. The annual Proposed Use of Residual Receipts Plan shall describe the community outreach programs to be provided to the Project, which shall be consistent with the City of Palmdale Neighborhood Improvement Strategy and provide for a minimum of two community outreach events per year.

6. The City Loan is immediately due and payable upon any breach or default by Borrower under any of the City Loan Documents , or any documents executed in connection with the City Loan, now or hereafter securing this Note (including any amendment, modification or extension thereof) which is not cured in the time provided for Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 4– Form of City Note
APN: 3008-013-902 Page 3

such cure. Upon the failure of Borrower to perform or observe any term or provision of this Note, or upon the occurrence of any event of default under the terms of any of the City Loan Documents or any documents executed in connection with the City Loan, which is not cured or waived within the respective time period provided herein or therein, the holder may exercise its rights or remedies hereunder or thereunder.

7. Any breach by Borrower of the provisions of Section 106 of the Agreement constitutes a default under this Note. The cure periods under the Agreement and this Note in connection with such a default shall run concurrently.

8. Borrower waives presentment for payment, demand, protest and notices of dishonor and of protest, the benefits of all waivable exemptions and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasona ble attorneys’ fees, which may be incurred by the holder hereof, in the enforcement of this Note, the City Deed of Trust or any term or provision of either.

(b) City shall give written notice of default to Borrower, specifying the default complained of by City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default.

(c) Any failures or delays by City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by City in asserting any of its rights and remedies shall not deprive City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies.

(d) If a monetary event of default occurs, prior to exercising any remedies hereunder, then City shall give Borrower written notice of such default. Borrower shall have a period of seven calendar days after such notice is received or deemed received within which to cure the default prior to exercise of remedies by City.

(e) If a non-monetary event of default occurs, then prior to exercising any remedies hereunder, City shall give Borrower notice of such default. If the default is reasonably capable of being cured within 30 calendar days after such notice is received or deemed received, then Borrower shall have such period to effect a cure prior to exercise of Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 4– Form of City Note
APN: 3008-013-902 Page 4

remedies by City . If the default is such that it is not reasonably capable of being cured within 30 days, and Borrower (i) initiates corre ctive action within said period and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Borrower shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by City, but in no event shall such period exceed 60 days from the date such notice is received or deemed received. I n no event shall City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default.

Notwithstanding the foregoing, no Force Majeure Event shall constitute an Enforced Delay unless and until Borrower delivers to City written notice describing the event, its cause, when and how Borrower obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Borrower shall deliver such written notice within 10 business days after it obtains actual knowledge of the event.

12. The obligation to repay the City Loan is a nonrecourse obligation of Borrower. Neither Borrower nor any other party shall have any personal liability for Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 4– Form of City Note
APN: 3008-013-902 Page 5

repayment of the City Loan. The sole recourse of City with respect to repayment of the City Loan shall be the exercise of its rights against the Property and the improvements and any related security for the City Loan. Notwithstanding the foregoing, City may:

(ii) recover directly from Borrower or any other party:

(A) any damages, costs and expenses incurred by City as a result of fraud or any criminal act or acts of Borrower or any shareholder, officer, director or employee of Borrower;

(B) any damages, costs and expenses incurred by City as a result of any misappropriation of funds provided for the rehabilitation of the improvements, as described in the Agreement, rents and revenues from the operation of the Improvements, or proceeds of insurance policies or condemnation proceeds;

(C) any and all amounts owing by Borrower pursuant to
Borrower’s indemnification regarding Hazardous Substances pursuant to the Agreement; and

(D) all court costs and attorneys’ fees reasonably
incurred in enforcing or collecting upon any of the foregoing exceptions (provided that City shall pay Borrower’s reasonable court costs and attorneys’ fees if Borrower is the prevailing party in any such enforcement or collection action).

[Remainder of Page Intentionally Left Blank; Signature(s) on Following Page]

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 4– Form of City Note
APN: 3008-013-902 Page 6

14. In addition to the other terms of this Note, Borrower hereby agrees and acknowledges that, notwithstanding any internal accounting procedures or provision pertaining to the use of receipts, payments, reserves and distributions contained in its organizational documents, the terms of this Note and the Agreement shall control as to the use of the City Loan provided under the Agreement and all operating income from the Project.

IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year set forth above.

“BORROWER”

VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

ATTEST:

By:

Christina Gonzalez
Secretary
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 5

FORM OF CITY DEED OF TRUST

[behind this page]
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 1

Recording Requested by
and When Recorded Return to:

City Clerk, City of Palmdale
38300 Sierra Highway, Suite C
Palmdale, California 93550-4611

SPACE ABOVE THIS LINE FOR RECORDER’S USE

GOVERNMENT BUSINESS
Free Recording
(Cal. Govt. Code §27383)

Victory Outreach Agreement No. A-9242
APN: 3008-013-902

LEASEHOLD DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) BY VICTORY OUTREACH-PALMDALE FOR

THE BENEFIT OF THE CITY OF PALMDALE

This Leasehold Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) (this “ Deed of Trust ”) is made ______________________, 2025 by VICTORY OUTREACH-PALMDALE, a California nonprofit corporation (hereinafter referred to as “Trustor”) (whose address is 37419 25th Street East, Palmdale, California 93550), to FIDELITY NATIONAL TITLE COMPANY, (hereinafter called “Trustee”), for the benefit of the CITY OF PALMDALE, a municipal corporation (hereinafter called “Beneficiary”), whose address is 38300 Sierra Highway, Palmdale, California 93550. Trustor is the owner of the leasehold estate (the “Leasehold Estate”) in the land hereinafter described which was created, granted and conveyed by that certain Ground Lease by and between Beneficiary as lessor, and Trustor as lessee, dated as of ______________________, 2025, as amended from time to time (the “Ground Lease”), with respect to the real property described in this Deed of Trust.

(b) All buildings, structures and other improvements now or in the future located or to Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 2

be constructed on the Subject Property (the “Improvements”);

(f) all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the fut ure) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the P roperty or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits, approvals and other governmental authorizations, (ii) improvement plans and specifications and archite ctural drawings (if any), (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects (if any), engineers, sales agents, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims , demands, awards, settlements and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 3

options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all other types of intangible personal property of any kind or nature and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (the “Intangibles”).

Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a “secured party” under the UCC and other applicable California law.

Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sect ions 9502(c) and 9604 of the UCC.

FOR THE PURPOSE OF SECURING , in such order of priority as Beneficiary may elect, the following:

(1) due, prompt and complete observance, performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following:

(a) a promissory note in the original principal amount of $361,145 executed by Trustor of even date herewith (the “City Note”);

(b) the Measure H Loan Agreement dated as of May 6 , 2025 (the “Agreement”), between Trustor and Beneficiary; and

(2) payment of indebtedness of Trustor to Beneficiary in the principal sum of $361,145 or so much thereof as shall be advanced, evidenced by the City Note, with interest, according to the terms of the City Note.

The Agreement, including all a ttachments thereto, and the documents and instruments executed by Trustor in connection with the Project, including the City Loan Documents described in the Agreement (collectively referred to as the “Secured Obligations ”) and all of their terms are incorporated herein by reference, and this conveyance secures any and all extensions, amendments, modifications or renewals thereof however evidenced, and additional advances evidenced by any note reciting that it is secured hereby. Any capitalized term that is not otherwise defined in this Deed of Trust has the meaning ascribed to such term in the Agreement.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 4

AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:

1. That Trustor shall pay the City Note at the time and in the manner provided therein, and perform the obligations of Trustor as set forth in the Secured Obligations at the time and in the manner respectively provided therein;

2. That Trustor shall not permit or suffer the use of any of the Property for any purpose other than the uses permitted by the Agreement and the Agreement Containing Covenants;

7. To pay, at least 10 days before delinquency, any taxes and assessments affecting the Property, to pay, when due, all encumbrances, charges and liens, with interest, on the Property or any part thereof which appear to be prior or superior hereto and to pay all costs, fees and expenses of this Deed of Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be required to pay and discharge any such tax, assessment, charge or Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 5

levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings and Trustor has adequate funds immediately available to pay any liabilities contested pursuant to this Paragraph 7;

11. Beneficiary shall have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by Beneficiary shall be added to the principal sum secured hereby;

12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at the rate specified in the City Note;
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 6

13. That the funds to be advanced hereunder are to be used in accordance with the Secured Obligations and upon the failure of Trustor, after the giving of notice and the expiration of any applicable cure period, to keep and perfor m all the covenants, conditions and agreements of said agreements, the principal sum and all arrears of interest, and other charges provided for in the City Note shall at the option of Beneficiary of this Deed of Trust become due and payable, anything contained herein to the contrary notwithstanding;

IT IS MUTUALLY AGREED THAT:

17. Should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, then subject to the rights of a Senior Lender, if any, Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 7

proceedings, or to make any compromise or settlement, in connection with such taking or damage.

Subject to the rights of a Senior Lender, if any, all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting the Property, are hereby assigned to Beneficiary. After deducting therefrom all its expenses, inc luding attorney s’ fees, the balance of the proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, shall be applied to the amount due under the City Note secured hereby. No amount applied to the reduction of the principal shall relieve Trustor from making regular payments as required by the City Note;

18. Upon default by Trustor in making any payments provided for in the City Note secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the Secured Obligations, and if such default is not cured within the respective time provided therefor in Paragraph 34 below, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust , the City Note and all documents evidencing expenditures secured hereby;

19. a. Prior to the repayment in full of the City Loan, Trustor shall not assign or attempt to assign the Agreement or any right therein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the Project thereon, or any portion thereof or interest therein (referred to hereinafter as a “ Transfer”), without prior written approval of Beneficiary, except as otherwise permitted in the City Note. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. If consent should be given, then any such transfer shall be subject to this Paragraph 19, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein, subject to the provisions of subparagraph e(3) below of this Paragraph

19. b. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by Beneficiary, to fulfill the obligations undertaken by Trustor in the Agreement and the City Loan Documents. Any such proposed transferee, by instrument in writing satisfactory to Beneficiary and in form recordable among the official records of Los Angeles County, California, for itself and its successors and assigns, and for the benefit of Beneficiary shall expressly assume all of the obligations of Trustor under the Agreement and the City Loan Documents, and agree to be subject to all conditions and restrictions applicable to Trustor in this Deed of Trust , subject to the provisions of subparagraph e(3) below of this Paragraph 19. There shall be submitted to Beneficiary for review all instruments and other legal documents proposed to effect uate any such transfer, and if approved by Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 8

Beneficiary, its approval shall be indicated to Trustor in writing.

d. If a Transfer occurs before the payment in full of the City Loan and without the prior written consent of Beneficiary, then the net proceeds shall be paid to Beneficiary to the extent necessary to pay in full the accrued interest, if any, current interest and remaining principal balance of the City Loan.

(3) Notwithstanding subparagraphs (1) and (2), above, “Transfer” shall not include any of the following Permitted Transfers:
(a) An assignment of the Agreement and all of Trustor’s interests in the Property to an Affiliate of Trustor or a conveyance back from the Affiliate to Trustor;
(b) The lease for occupancy of all or any part of the
Improvements on the Property in accordance with the
Secured Obligations;
(c) The granting of easements or permits to facilitate the rehabilitation of the Property in accordance with the
Agreement; and
(d) Any transfer approved in writing by Beneficiary’s City Manager or designee, at his or her sole discretion.

f. Beneficiary shall not unreasonably withhold, condition, or delay its approval of any matter for which its approval is required hereunder. Any disapproval shall be in Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 9

writing and contain Beneficiary’s reasons for disapproval;

20. After the lapse of such time as may then be required by law following the recordation of a notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof . Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale to payment of (i ) the expenses of such sale, together with the reasonable expenses of this Deed of Trust including therein reasonable Trustee’s fees or attorney s’ fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale, (ii) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee’s deed, (iii) all sums expended under the terms hereof, not then repaid, with accrued interest at the rate specified in the City Note, (iv) all other sums then secured hereby and (v ) the remainder, if any, to the person or persons legally entitled thereto;

22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law;

23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, and upon surrender of this Deed of Trust and the City Note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in such reconveyance of any matters or fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto”;

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 10

24. The trust created hereby is irrevocable by Trustor;

25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term “Beneficiary” shall include not only the original Beneficiary hereunder but also any future owner and holder including pledgees, of the City Note secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several;

27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the address set forth on the first page of this Deed of Trust;

30. Trustor agrees that, except as otherwise provided in the City Note, upon sale or refinancing of the Property or any part thereof, the entire principal balance of the debt secured by this Deed of Trust, plus any accrued but unpaid interest thereon, shall at the option of Beneficiary be immediately due and payable;

31. The obligation to repay the City Loan is a nonrecourse obligation of Trustor and its Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 11

partners. Neither Trustor nor any of its general or limited partners, nor any other party, shall have any personal liability for repayment of the loan. The sole recourse of Beneficiary shall be the exercise of its rights against the Property and any related security for the City Loan.

Notwithstanding the foregoing, Beneficiary may recover directly from Trustor or from any other party:

(c) any and all amounts owing by Trustor pursuant to the indemnification regarding Hazardous Substances pursuant to the Environmental Indemnity; and

33. If the rights and liens created by this Deed of Trust are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the Secured Obligations, then the unsecured portion of such obligations shall be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations, and all performance and payments made by Trustor shall be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations;

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 12

(f) Except as otherwise may be required in order to comply with the provisions of California Civil Code Section 2924 et seq., any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, shall be deemed delivered upon its transmission, any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S.

Postal Service), shall be deemed received on the docume nted date of receipt by Trustor and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof; Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 13

35. This Deed of Trust shall be subordinate and junior to the deed of trust securing a Senior Loan, if any. Following the reconveyance of the deed of trust securing a Senior Loan, this Deed of Trust shall be subordinate and junior to the deed of tr ust in favor of the maker of a permitted permanent or take-out loan, if any . Beneficiary’s City Manager or his or her designee shall execute such instruments as may be necessary in order to subordinate the lien of this Deed of Trust, to the deed of trust securing any Senior Loan. In the event of a default or breach by Trustor of any security instrument securing a Senior Loan described in this Paragraph 35, Beneficiary shall have the right to cure the default prior to completion of any foreclosure. In such event, Beneficiary shall be entitled to reimbursement by Trustor of all costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements shall be a lien against the Property and added to the obligation secured by this Deed of Trust until repaid, with interest at the highest rate permitted by law; and

[Remainder of Page Intentionally Left Blank; Signatures on Following Page]

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Page 14

IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year set forth above.

“TRUSTOR”

VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

ATTEST:

By:

Christina Gonzalez
Secretary

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902

State of California )
County of _____________________ )

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 _____________________________

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 5 – Form of City Deed of Trust APN: 3008-013-902 Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 6

FORM OF ASSIGNMENT OF AGREEMENTS

[behind this page]
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 6 – Form of Assignment of Agreements APN: 3008-013-902 Page 1

ASSIGNMENT OF AGREEMENTS FROM VICTORY OUTREACH-PALMDALE

TO THE CITY OF PALMDALE
(A-9242)

FOR VALUE RECEIVED, the undersigned, VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Developer”), assigns to the CITY OF PALMDALE , a municipal corporation (“City”), all of its right, title and interest in and to:

heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity (collectively “Architect”), for or on behalf of Developer in connection with the rehabilitation of the Improvements on the Property described in Exhibit A attached. This Assignment of Agreements (this “Assignment”) is subject to the prior rights of any lender whose lien is senior to the City Deed of Trust . The Plans and Specifications, as of the date hereof, are those which Developer has heretofore, or will hereafter deliver to City.

This Assignment constitutes a present and absolute assignment to City as of the date that it is executed by Developer (the “Effective Date ”), subject to the terms and provisions of the Measure H Loan Agreement by and between Developer and City, dated as of June 3, 2025 (the “Agreement”) wherein such assignment only becomes enforceable upon a breach and failure to cure by Developer as set forth therein; provided, however, that City confers upon Developer the right to enforce the terms of the Architectural Agreements and Developer’s rights to the Plans and Specifications so long as no default or event which would constitute a d efault after notice or the passage of time, or both, has occurred and is continuing under the Agreement. Upon the occurrence of a d efault or event which would constitute a d efault after notice or the passage of time, or both, under the Agreement, City may, in its sole discretion, give notice to Architect of its intent to enforce the rights of Developer under the Architect ural Agreements and of its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Developer shall, within 10 days after receipt of notice from City that City intends to enforce its rights under this Assignment, transmit all Plans and Specifications to City, subject to any required third- party consent, which Developer must use its best efforts to obtain. Developer acknowledges that by accepting this Assignment, City does not assume any of Developer’s obligations under the Architectural Agreements or with respect to the Plans and Specifications.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 6 – Form of Assignment of Agreements APN: 3008-013-902 Page 2

Developer represents and warrants to City , as of the Effective Date, that: (i) all Architectural Agreements entered into by Developer are in full force and effect and are enforceable in accordance with their terms , and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements, (ii) all copies of the Architectural Agreements and Plans and Specifications delivered to City are complete and correct and (iii ) Develope r has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications.

Developer agrees: (i) to pay and perform all obligations of Developer under the Architectural Agreements, (ii) to enforce the payment and performance of all obligations of any other person or entity under the Architectural Agreements, (iii ) not to modify the existing Architectural Agreements nor to enter into any future Architectural Agreements without City ’s prior written approval except as otherwise may be permitted in the Agreement and (iv) not to assign further (other than assignment in connection with a loan which is senior in priority to City’s assignment), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications without City’s prior written consent.

This Assignment may be executed in several counterparts, each of which is an original, and all of which together constitute but one and the same document.

The attached Schedule 1 and Exhibit A are incorporated herein by this reference.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 6 – Form of Assignment of Agreements APN: 3008-013-902 Page 3

“DEVELOPER”
VICTORY OUTREACH-PALMDALE, a California nonprofit corporation

By:

Michael Gonzalez
President

Date: _____________________________

ATTEST:

By:

Christina Gonzalez
Secretary
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 6 – Form of Assignment of Agreements APN: 3008-013-902 Schedule of Unpaid Claims

SCHEDULE 1

SCHEDULE OF UNPAID CLAIMS

[behind this page]
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 6 – Form of Assignment of Agreements APN: 3008-013-902 Exhibit A – Legal Description

EXHIBIT A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF PALMDALE,

COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

APN: 3008-013-902

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach
APN: 3008-013-902

ATTACHMENT NO. 7

FORM OF ENVIRONMENTAL INDEMNITY

[behind this page]
Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 7 – Form of Environmental Indemnity APN: 3008-013-902 Page 1

ENVIRONMENTAL INDEMNITY BY VICTORY OUTREACH-PALMDALE

IN FAVOR OF THE CITY OF PALMDALE
(A-9242)

THIS ENVIRONMENTAL INDEMNITY ( this “Indemnity”), dated as of ______________________, 2025, is made by VICTORY OUTREACH- PALMDALE, a California nonprofit corporation (“Borrower”), whose address for purposes of giving notice is 37419 25
th Street East, Palmdale, California 93550, in favor of the CITY OF PALMDALE , a municipal corporation (“City”), whose addres s for purposes of giving notice is 38300 Sierra Highway, Palmdale, California 93550.

WITNESSETH

WHEREAS, the Parties entered into a Measure H Loan Agreement , dated as of June 3, 2025 (the “Agreement”), pursuant to which City agreed to make a loan to Borrower for the purpose of rehabilitating a four-unit apartment building for rental to Very Low Income households who are at risk of homelessness or currently unhoused; and

WHEREAS, Borrower has agreed to execute and deliver to City this Indemnity in order to induce City to make the City Loan.

NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Borrower hereby agrees as follows:

1. ADDITIONAL DEFINITIONS

Sections 11001-11050, the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq. and those substances defined as “hazardous waste” in Section 25117 of the California Health and Sa fety Code, as “infectious waste” in Section 25117.5 of the Ca lifornia Health and Safety Code or as “hazardous substances” in Section 25316 of the California Health and Safety Code or “hazardous materials” as defined in Section 353 of the California Vehicle Code, and in the regulations adopted and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity shall have the meanings ascribed to them in the Agreement.

Measure H Loan Agreement Agreement No. A-9242
Victory Outreach Attachment No. 7 – Form of Environmental Indemnity APN: 3008-013-902 Page 2

2. COVENANTS AND INDEMNITY

The following covenants and indemnities are hereby given and made by Borrower:

2.1 Covenants.

(c) Borrower further agrees that Borrower shall not release or dispose of any Hazardous Materials at the Property without the express written approval of City and that any such release or disposal shall be effected in strict compliance with all applicable laws and all conditions, if any, established by City.

(d) City shall have the right, at any time, to conduct an environmental audit of the Property at City’s expense, unless Hazardous Materials are found, then at Borrower’s sole cost and expense, and Borrower shall cooperate in the conduct of any such environmental audit. Other than in an emergency, such audit shall be conducted only after prior notice has been given to Borrower and only in the presence of a representative of Borrower. Borrower shall give City and its agents and employees access to the Prop erty to remove, or otherwise to mitigate against the effects of, Hazardous Materials.

Palmdale City CouncilJune 3, 2025

Palmdale City Council
June 3, 2025