ASSIGNMENT OF CERTIFICATE OF MEMBERSHIP AND BENEFICIAL INTEREST

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Noreen Payne
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1 ASSIGNMENT OF CERTIFICATE OF MEMBERSHIP AND BENEFICIAL INTEREST The undersigned hereby assigns to,, rights or membership, and beneficial interest, in MONARCH BAY LAND ASSOCIATION, A CALIFORNIA MUTUAL BENEFIT CORPORATION, associated with the sublease interest of the undersigned the real property commonly known as MONARCH BAY DRIVE, Dana Point, CA Dated: SELLER: By: By:

2 CERTIFICATE OF MEMBERSHIP AND BENEFICIAL INTEREST THIS CERTIFIES THAT, (HEREINAFTER MEMBER ) IS A MEMBER IN GOOD STANDING IN MONARCH BAY LAND ASSOCIATION, A CALIFORNIA MUTUAL BENEFIT CORPORATION (HEREINAFTER ASSOCIATION ), AND IS THE HOLDER OF A BENEFICIAL INTEREST IN THE RIGHTS OF THE ASSOCIATION UNDER THE ASSOCIATION OPTION DESCRIBED BELOW. THIS MEMBERSHIP AND BENEFICIAL INTEREST IS TRANSFERABLE ONLY ON THE BOOKS OF THE ASSOCIATION BY THE HOLDER HEREOF PERSONALLY IN ACCORDANCE WITH THE PROVISIONS OF THE ARTICLES AND BYLAWS OF THE ASSOCIATION. THE NATURE OF THE ASSOCIATION OPTION AND HOLDER S BENEFICIAL INTEREST THEREIN ARE AS SET FORTH BELOW. THE MONARCH BAY COMMUNITY AND THE ASSOCIATION OPTION A. MMB, LLC, a California limited liability company, as successor to Sanwa Bank California, as Trustee, owns the fee interest in the property commonly known as Monarch Bay, consisting of two hundred fourteen residential lots ( The Residential Lots ), private streets and common area, and a beach club, hereinafter collectively the Monarch Bay Community ;

3 B. The Monarch Bay Community is subject to a Ground Lease dated July 1, 1960, between First Western Bank and Trust Company, predecessor Trustee to Sanwa Bank California, and Laguna Niguel Corporation. A memorandum of said Ground Lease is recorded in Book 5311, page 44 Official Records of Orange County; C. The Monarch Bay Community is, in turn, subject, in part, to two hundred and fourteen Subleases which create the Residential Lots. MEMBER is the owner of the Sublessee interest in a Residential Lot described on Exhibit I attached hereto. A memorandum of said Sublease was recorded on November 15, 1962 in the official records of Orange County as document number 11139; D. ASSOCIATION, is a California Mutual Benefit Association formed for the purpose of acquiring an option to acquire fee title to lands within The Monarch Bay Community and making available to MEMBERS the option to acquire fee title to the lot which they sublease; E. ASSOCIATION is Optionee under that certain Option Agreement dated September 2, 1988, between Sanwa Bank California, Trustee, and ASSOCIATION, ( The Association Option ) whereby ASSOCIATION has the option to purchase all right, title and interest of Sanwa Bank California to The Monarch Bay Community; F. The legal documents entered into in 2012 contemplated further sales of fee interests in Residential Lots. Escrows have been opened for additional sales in 2016 and no other sales are expected prior to UNDER THE CURRENT OPTION AGREEMENT, THE GROUND LEASE AND INDIVIDUAL RESIDENTIAL LOT LEASES EXPIRE IN 2020 WITH NO PROVISION FOR EXTENDING THEM. The legal documents may be viewed at:

4 GRANT OF BENEFICIAL INTEREST AGREEMENT 1. RELATIONSHIP TO THE ASSOCIATION OPTION, ARTICLES AND BYLAWS: All rights of a MEMBER with respect to the Beneficial Interest herein set forth are subject to the terms and conditions of the Association Option, and all provisions of the Articles and Bylaws of the ASSOCIATION, as such Articles and Bylaws may be amended from time to time, including, without limitation, the provisions of the Bylaws governing the exercise of the Association Option. The ASSOCIATION, acting in accordance with its Articles of Incorporation and Bylaws, retains and reserves the right to modify or amend the Association Option at any time during the existence of the Option with the consent and agreement of the Optionor. In the event of any conflict between the Bylaws of the ASSOCIATION and this Certificate, the provisions of the Bylaws shall control. 2. GRANT OF BENEFICIAL INTEREST: Provided that ASSOCIATION elects to exercise the Association Option, and subject to the provisions of paragraph 1 hereof, ASSOCIATION hereby grants to MEMBER the right to purchase fee title to the residential Lot described on Exhibit I attached hereto, together with those rights in the streets, beach club lots, and other common areas, created by the Covenants, Conditions, and Restrictions to be recorded pursuant to the Association Option, equal in all respects to the interest of all other owners of Residential Lots in Monarch Bay, upon the terms and conditions hereinafter set forth. 3. THE PURCHASE PRICE: The purchase price shall be 65% of the value of the Residential Lot subleased by MEMBER determined as set forth and utilized in the determination of fair market value in the Association Option (Member s Lot Value ), plus a 1/214th share of any residual or unallocated value as set forth in paragraph 6.3 (iii) of the Association Option, reduced by all sums credited to MEMBER pursuant to the Articles and Bylaws of the ASSOCIATION. In addition, MEMBER shall pay, or reimburse ASSOCIATION for, a pro-rata share of the costs of exercise of the Association Option and transfer title of MEMBER S Residential Lot to MEMBER. Said purchase price shall be payable in cash upon close of escrow.

5 4. RESTRICTION OF TRANSFERABILITY OF MEMBER S BENEFICIAL INTEREST: MEMBER S Beneficial Interest shall be deemed appurtenant to the Residential Lot described on Exhibit I attached hereto, and it shall not be separately assigned, transferred or hypothecated either voluntarily or by operation of law, buy may be hypothecated along with the subleasehold interest, assigned to an assignee and subsequent owner of the subleasehold interest in said Residential Lot, and shall be deemed assigned to the sublessor in the event of a termination of the subleasehold interest by reason of sublessee s default under the sublease. Any attempt by MEMBER to sever and transfer MEMBER S Beneficial Interest separate and apart from the Residential Lot in Monarch Bay to which it is appurtenant, shall be void and shall confer no rights of any kind upon the purported transferee. 5. EXERCISE OF MEMBER S RIGHTS PURSUANT TO HIS BENEFICIAL INTEREST: At any time not earlier than January 1, 2018, and not later than June 30, 2018, MEMBER shall notify ASSOCIATION in writing of his election to exercise or not exercise his rights under Beneficial Interest herein provided. It is contemplated that ASSOCIATION will notify MEMBER of the necessity to exercise or waive exercise of the MEMBER S right under the Beneficial Interest, but such notice shall not be mandatory, and it shall not be the responsibility of ASSOCIATION to give appropriate notice to MEMBER. If such notice is given by ASSOCIATION, notice to any current co-owner of the Beneficial Interest shall be deemed valid and proper notice to all other co-owners. Failure to notify ASSOCIATION in writing of election to exercise MEMBER S rights under the Beneficial Interest within the time limits set forth above shall be deemed an irrevocable election to forego exercise of MEMBER S rights. If ASSOCIATION shall have submitted to MEMBER a form of notice for exercise of MEMBER S rights under the Beneficial Interest, all persons and parties then holding any interest in MEMBER S subleasehold as sublessee shall execute and return said form of notice to ASSOCIATION. In addition, at the request of ASSOCIATION, MEMBER shall furnish reasonable evidence of the ability of MEMBER to satisfy the financial obligations associated with exercise of his rights.

6 6. JOINDER IN AGREEMENT WITH SANWA BANK: By acceptance of membership and rights under the Beneficial Interest, as evidenced by execution of this Certificate of Membership and Beneficial Interest, MEMBER hereby accepts and agrees to be bound by the provisions of Paragraph 28 of the Association Option which provides in pertinent part as follows: The parties intend that this Agreement will serve to avoid the litigation of issues similar to those which were presented in Louis E. Scott, et al. v. The Irvine Company, et al., Orange County Superior Court case, by vesting the optionee with the ability to make available to each Sub-Tenant the fee title to each Sub-Tenant s Residential Lot upon the expiration of the term of the Lease. The avoidance of a Sub-Tenant asserting the right to acquire the fee title to such Sub-Tenant s Residential Lot, an extension of the term of the Lease, or any other right which is not available to such Sub-Tenant pursuant to the express provisions of the Lease or this Agreement is therefore a material inducement to the Optionor to enter into this Agreement. Should a Sub-Tenant, acting individually, with a class, or in any other capacity, directly or indirectly assert a claim, right, or cause of action against the Optionor, the purpose of which is to require the Optionor to suffer or incur a duty or obligation for the benefit of such Sub-Tenant which is in addition to or which contravenes, amends or supercedes the terms of and or the duties and obligations which are prescribed unto the Optionor in this Agreement, and/or in the Lease, except as to the claims, rights, causes of action against Optionor based on a contract unrelated to the Lease and/or Option or the negligent or wrongful misconduct of Optionor, the Optionor shall give notice thereof to the Optionee in that manner which is provided for in Paragraph 17 hereto. Upon receipt of such written notice, Optionee shall provide a reasonable indemnity procedure to ensure Optionor that it shall incur no cost or expense with respect to such claim, right or cause of action. A reasonable indemnity procedure shall include, but not be limited to, the establishment of escrow (with appropriate instructions) funded with an amount reasonably calculated to cover all costs and expenses of the litigation (e.g. legal fees) and a reasonable undertaking by a financially responsible party to pay judgement against Optionor. Should the reasonable indemnity procedure not in good faith be agreed to within sixty (60) days after the Optionor shall have given such notice, this Agreement shall, without need of further action or notice, terminate in the same manner as though the Optionee had failed to pay that consideration which is provided for in Paragraph 4 herein. 7. FURTHER DOCUMENTS: During the term of MEMBER S membership, ASSOCIATION and MEMBER agree to execute and deliver such documents as the other party may from time to time reasonably request, confirming that MEMBER is a member in good standing of ASSOCIATION, that MEMBER S right under the Beneficial Interest are in full force and effect, and not amended, or if amended, how amended, and that such party is not aware of any

7 default by the requesting party, or if in default, the nature of the default. Upon exercise of MEMBER S rights under the Beneficial Interest, the parties shall execute and deliver such escrow instructions and/or other documents as may reasonably be required to effect exercise of The Association Option, and transfer of title as herein provided. 8. DOCUMENTATION OF TERMINATION OR NON-EXERCISE OF RIGHTS OF BENEFICIAL INTEREST: In the event that MEMBER S membership shall be terminated, or MEMBER shall elect not to exercise his rights of Beneficial Interest, MEMBER agrees to execute and deliver in recordable form such quitclaim deed or other documentation as may reasonably be required to evidence termination of his membership and rights of Beneficial Interest. 9. MEMBERSHIP IN MONARCH BAY LAND ASSOCIATION: As a condition to the continued effectiveness of MEMBER S right of Beneficial Interest, MEMBER shall become and continue to be a member in good standing of ASSOCIATION, including payment of all dues and assessments as provided in the Articles and Bylaws of ASSOCIATION as in effect from time to time. In the event of any default under the provisions of this paragraph, ASSOCIATION may notify MEMBER in writing of such default, and if said default shall not be cured in full within ninety (90) days after delivery of such notice, ASSOCIATION may declare MEMBER S membership and right to Beneficial Interest terminated, null and void, and if no further force and effect. 10. WAIVER OF CLAIMS AND INDEMNITY: MEMBER acknowledges that the exclusive inducement for his becoming a member of ASSOCIATION, and executing any documents associated therewith is his desire to set the 1990 rental adjustment in advance and to obtain an opportunity to purchase the fee interest in his Residential Lot. While MEMBER has been presented information and documents by representatives of ASSOCIATION, it is acknowledged that such information and documents were presented without any representation

8 or warranty with respect to relevance or accuracy. MEMBER hereby waives the right to recover for ASSOCIATION, its officers, directors, employees, accountants, attorneys, agents and successors for any and all liability, claims, costs, damages, demands and expenses resulting from the transaction contemplated herein or in the Association Option, including any benefit which may arise under California Civil Code Section 1542 which provides as follows: A general release does not extend to claims which the creditor does not know or expect to exist in his favor at the time of executing the release, which if known to him must have materially affected the settlement with the debtor. MEMBER further acknowledges that he has been informed of, and consents to, (a) a release and waiver by ASSOCIATION of any and all claims of whatever nature against its officers, directors, employees, accountants, attorneys, and agents arising out of negotiation, drafting, execution, formation and administration of The Association Option and all associated matters; and (b) the agreement of the ASSOCIATION to indemnify and hold such persons harmless from any and all liability, claims, costs, damages, demands and expenses resulting from such actions. 11. ATTORNEY FEES AND COSTS: Should any litigation be commenced between the parties hereto concerning the subject matter hereof, the party prevailing in such litigation shall be entitled to a reasonable sum as attorney s fees, which shall be determined by the court in such litigation or in a separate action brought for that purpose. 12. ENTIRE AGREEMENT: This document, and those documents referred to herein, sets forth all rights and obligations between the parties, and any agreement or representation respecting the subject matter hereof not expressly set forth in this document is null and void. 13. NOTICES: Any notices hereunder shall be in writing, shall be delivered or addressed to the addresses given below, and be deemed duly served when personally delivered or when deposited in the United States mail, first class postage prepaid. Notice by mail shall be deemed received on the third day after deposit in the mail.

9 To ASSOCIATION: PROGRESSIVE COMMUNITY MANAGEMENT PUERTA REAL, SUITE 300 MISSION VIEJO, CA To MEMBER: Monarch Bay Drive Dana Point, CA MONARCH BAY LAND ASSOCIATION: By By OWNER: By: By:

10 EXHIBIT I CERTIFICATE OF BENEFICIAL INTEREST Lot, Tract, as shown on a map thereof recorded in Book, pages of Miscellaneous Maps, Orange County, California.

ADDENDUM NO. 4 TO OPTION AGREEMENT AND ESCROW INSTRUCTIONS

ADDENDUM NO. 4 TO OPTION AGREEMENT AND ESCROW INSTRUCTIONS THIS ADDENDUM NO. 4 TO OPTION AGREEMENT AND ESCROW INSTRUCTIONS (this "Addendum 4") is entered into on April 11, 2016 (the "Effective Date"),