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NOW THEREFORE, in consideration of the benefits received by the Owner and the public purposes served by the Program, Owner and City agree as follows: 1. Inclusionary Unit. The real property, which is the subject of this Agreement, is described more fully described in Exhibit A attached here and incorporated by this reference. Said real property ("Property") is hereby designated as an affordable inclusionary housing unit and shall be subject to the terms and conditions herein set forth. This Agreement runs with the Property and is binding on the parties hereto and their successors and assigns and on all purchasers of the Property for that period of time the affordable inclusionary unit is in place and being used either wholly or partially for residential purposes. Program Reouirements. a. Affordability Restrictions. Owner, by and for itself and any successors in interest, hereby covenants and agrees that the Property shall be sold only to Eligible Households at a price not to exceed the Adjusted Resale Price, as defined in Section 12, and that during the term of this Agreement all of the requirements and restrictions of this Agreement shall apply. b. Eligible Household. There shall be no sale or other transfer of the Property without Certification by the City that the transferee is an Eligible Household and that the Property is being transferred at a price not to exceed the adjusted resale price, which is capped at an "Affordable Housing Cost." Any sale or other transfer of the Property in violation of this covenant shall be void. C. Principal Residence Requirement. Each Transferee of the Property shall occupy the Property as his/her/their principal residence for the duration of his/her/their ownership. Without limiting the generality of the 'foregoing, any absence from the Property by Owner for a period of ninety (90) or more days shall be deemed an abandonment of the Property as the principal residence of Owner in violation of the c:oWitions of this Section. Upon request by the City made from time to time, the Owner of the Property shah submit an affidavit to the City certifying that the Property is the Owner's principal residence and provide such documents and other eviderxe as may be requested to verify Owner's compliance with this requirement. Abandonment of the Property shall constitute an Option Event (as defined in Section 5 below) and shall entitle the City to exercise its Option to purchase the Property. 3. Grant of Option to Purchase. Owner hereby grants to the City an option ("Option") to purchase all of Owner's right, title and interest in and to the Property upon the occurrence of an Option Event (defined in Section 5 below), subject to the terms and conditions contained herein. 4. Assignment of the Option. The City may assign the Option to another government entity, a non-profit affordable housing provider or an Eligible Household. The City's assignment of the Option shall not extend any time limits contained herein with respect to the exercise period of the Option or the period within which the Property must be purchased. 5. Events Giving Rise to Right to Exercise Option. The City shall have the right to exercise its Option upon the occurrence of any of the following events (each, an "Option Event"): Receipt of a Notice of intent to Transfer (defined in Section 6 below); b. Any actual, attempted or pending sale, conveyance, transfer, lease or other attempted disposition of the Property or of any estate or interest therein, except as provided in Section 16 below, C. Any actual, attempted or pending encumbrance of the Property, including without limitation by way of mortgage or deed of trust, or by judgment, mechanics, tax or other lien, except as provided in Section 17 below; d. Recordation of a notice of default and/or notice of sale pursuant to California Civil Code section 2924 (or successor provisions) under any deed of trust or mortgage with a power of sale encumbering the Property; Commencement of a judicial foreclosure proceeding regarding the Property; Execution by Owner of any deed in lieu of foreclosure transferring ownership of the Property; 783016-1