KOTTINGER GARDENS PHASE 1 - AFFORDABLE HOUSING LOAN AGMT

lien of the Deed of Trust. Developer's indemnification obligations pursuant to this Section shall not extend to Claims to the extent arising from the gross negligence or willful misconduct of the Indemnitees, and are subject to the additional terms set forth in Section 11.2 below. 7.3 Disclosure. Developer represents and warrants that except as disclosed to City in writing, as of the date hereof to the current actual knowledge of Developer's principals Developer has received no notice,warning, notice of violation, administrative complaint,judicial complaint, or other formal or informal notice alleging that conditions on the Property are or have ever been in violation of any Hazardous Materials Law or informing Developer that the Property is subject to investigation or inquiry regarding Hazardous Materials on the Property or the potential violation of any Hazardous Materials Law; and(ii) Developer has disclosed to City all information, records,and studies in Developer's possession or reasonably available to Developer relating to the Property concerning Hazardous Materials. Developer hereby acknowledges and agrees that(i)this Section is intended as the City's written request for information(and the Developer's response)concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5(d)(2), and (ii) each representation and warranty in this Agreement or any of the other City Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by the City and the Developer to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. 7.4 City's Rights. In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an"affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the City's or the Trustee's rights and remedies under the Deed of Trust, the City may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a)to (1) waive its lien on such environmentally impaired or affected portion of the Property and(2)exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against the Developer to judgment, and(b)any other rights and remedies permitted by law. For purposes of determining the City's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Developer shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Developer knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including(but not limited to) reasonable attorneys' fees, incurred by the City in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b)to determine the degree to which the Property is environmentally impaired,plus interest thereon at the default rate specified in the Note, until paid, shall be added to the indebtedness secured by the Deed of Trust and shall be due and payable to the City upon its demand made at any time following the conclusion of such action. OAK#4822-6539-6013 v6 25