ASSIGNMENT AGREEMENT AND CONSENT
(MASTER RESIDENCY AGREEMENT)
THIS ASSIGNMENT AGREEMENT AND CONSENT (this "Assignment11), made as of
February 14, 2017, by and among CAPSTONE-SAN DIEGO LLC, a Delaware limited liability
company (the "Borrower");. BANK OF AMERICA, N.A., a national banking association (the
"Lender"); and THE TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY acting as the
State of California in its higher education capacity (the "University");
WITNES SETH:
A.
Lender is _making a loan to Borrower in the original principal amount of
$38,000,000.00 (the "Loan") pursuant to that certain Construction Loan Agreement dated
February 14, 2017, between .Borrower and Lender (to_gether with all extensions, renewals,
modifications, substitutions, amendments, restatements, replacements and supplements thereof:
the "Loan Agreemm~").

The Loan is secured by,. among other things, the Mortgage which grants Lender a
:first lien on the Borrower's leasehold estate in the Property and is evidenced by, among other
instruments, documents and agreements, the Note.
B.

C.
Pursuant to that certain Master Residency Agreement dated February 13, 2017
between Borrower and University with respect to the Property (together with any amendments
and modifications thereto and any supplemental agreements provided for therein, the
"Agreement") (a true and correct copy of which Agreement is attached hereto as Exhibit A).
D.
Lender requires as a condition to the making of the Loan that Borrower assign to
Lender, the Borrower's right title and interest in th~ Agreement.

E.
Any capitalized term used herein but not defined -shall have the meaning ascribed
to such tenn in the Loan Agreement.

AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agret? as follows:
1.
The Borrower hereby assigns~ transfers and sets over unto the Lender all of the
Borrower's right, title and interest (the 11Assigned Rights'') in and to the Agreement.
2.
In connection with its assignment of the Agreement to the Lendert the Borrower
covenants and agrees that:
(a)

the Agreement is in full force and effect, free from any defaults;

(b)
the Borrower has the full right, power and authority to assign its interest in
and to the Agreement to the Lender, free and clear of the rights of any other person or entity
whatsoever, and the Borrower has not made any other assignment -of the Agreement, or of any of

 its rights thereunder, except a~ herein provided, nor in any way encumbered or lessened its rights
under the Agreement;
(c)
the Borrower shall comply with the terms and provisions of, and shall
perfonn all things required to be perfonned by it under, the Agreement and
(d)
the Borrower shall execute and deliver any and all documentation that
may be required by the Lender, and/or its successors or assigns, in order to effectuate and perfect
this assignment.
·
3.
By accepting this Assignment, the Lender hereby ·grants to the Borrower the
license to exercise all of the Borrower's rights, and to enforce all of the University's obligations,
under the Agreement; provided, however, upon the occurrence and during the continuance of any
Event of Default under the Note, the Loan Agreement, the Mortgage, or any of the other Loan
Documents, the Lender shall irrunediately have the right (but not the obligation) to tenninate
.such license.

4.
Notwithstanding the terms of any other provision contained in this Assignment,
(a) the Borrower shall at all times remain liable under the Agreement to perform all of its duties
and obligations thereunder to the same extent as if this Assignment had not been executed; (b)
the exercise by the Lender of any of the Assigned Rights shall not release the Borrower from any
of its duties or obligations under the Agreement; and (c) the Lender shall not have any obligation
or liability under the Agreement by reason of, or arising out of, this Assignment, and the Lender
shall not be obligated to perform any of the obligations or duties of the Borrower under the
Agreement, or to make payment or to make any inquiry of the sufficiency of any payment or
property received by the Borrower, or to present or enforce any right or payment assigned under
this Assignment; provided, 1-}..9wever. that subject to .the covenants and limitations of the
Borrower contained in the Loan Documents and so long as no Event of Default shall have
occurred and be continuing, the Borrower may, pursuant to the license granted in paragraph 3
above. exercise all rights under or with respect to the Agreement, including the right to collect
and receive all monies due or to become due under the Agreement, the right to receive
perfonnance under the Agreement, the right to make demands for payment or perfonnance under
the Agreement, and the right to enforce all rights and exercise all remedies under the Agreement.
5.
Upon the occurrence and during the continuance of an Event of Default, the
Lender may, at its option, without notice to or demand upon the Borrowey (both of which are
hereby waived for the purposes of this paragraph 5) and without regard to the adequacy of the
security for the Obligations, in addition to all other rights and remedies provided under any of
the other Loan Documents, without regard to whether any or all of such other rights and
remedies have been or are to be exercised. and with or without taking possession of the Property,
demand, sue upon or otherwise enforce the Agreement with full power as though the Lender
were the Borrower named in the Agreement, and amend, revise. release or otherwise change the
same as may seem proper to the Lender. The exercise by the Lender of the rights granted in this
paragraph shall not be considered a waiver of any Default. Any monies actually received by the
Lender pursuant to the exercise of any of the rights and remedies granted in this Assignment
shall be applied as provided in the Loan Documents.

2

 6.
The Lender shall not b.e liable for any loss ·sustained by the Borrower resulting
from the Lender's failure to enforce the Agreement (whether before or after a Default) or from
any other act or omission of the Lender in connection with the Property, nor shaU the Lender be
obligated to perform or discharge any obligation, duty or liability under the Agreement or under
or by reason of this Assignment. The Borrower shall, and does hereby agree to, indemnify the
Lender for, and hold the Lender hannless from, any and all liability, los.s or damage which may
be incurred by Lender under the Agreement or under or by reason of this Assignment and. from
any and all claims and demands whatsoever which may be asserted against the Lender by reason
of any alleged obligations or undertakings on its part to perform or distharge any of the tenns,
covenants or agreements contained in the Agreement, but excluding any such loss, liability,
damage, claim or demand resulting from the Lender's willful misconduct or gross negligence.
Should the Lender incur any liability for which indemnity is provided herein under the
Agreement or under or by reason of this Assignment or in defense of any such claims or
demands, the amount of such liability, including costs~ expenses and reasonable attorneys' fees,
shall be secured by this Assignment and by the Mortgage, shall constitute Obligations and shall
be. repayable as provided in the Mortgage. Except as otherwise provided in this Assignment-and
without limiting any rights and remedies provided herein to the other parties here.to, it is
understood and agreed that neither this Assignment nor the exercise by the Lender of any of its
rights or remedies under this Assignment or under any of the other Loan Documents shall be
deemed to make the Lender responsible or liable in any manner with respect to the Property or
the occupancy, use, operation or maintenance of all or any part of the Property1 nor shall this
Assignment operate to make the Lender responsible or liable for any waste committed on the
Property by any contractors under any contract or any other person or entity or for any d~gerous
or defective condition of the Property or for any negligence in the management, upkeep,
operation, repair or control of the Property resulting in loss, injury or death to. any contractor,
licensee, employee, stranger of or to the Borrower or any other person or entity.

7.
The BotTower hereby irrevocably authorizes and directs the University, upon
receipt of written notice from the Lender to the effect that an Event of Default. exists, to attorn to
the Lender in replacement of Borrower under the Agreement and to pay, observe and otherwise
perform the obligations under the Agreement to or for the Lender or its designee as though the
Lender or such designee were the Borrower named in the Agreement, and to continue to do so
until otherwise notified by the Lender. The University shall have no duty to inquire or
investigate as to whether an Event of Default shall actually have occurred or whether this
Assignment shall have tenninated, and the University shall not be liable to the Borrower or its
successors or assigns for acting in reliance on the ~nder's notification as provided in this
paragraph. The Lender-agrees to use reasonable efforts to provide the Borrower with a copy of
any such notification; provided, however, that the failure to do so shall not affect the Lender's
rights under this Assignment.
8.
Nothing contained in this Assignment and no act done or omitted by the Lender
pursuant to the powers and rights granted to it under this Assignment shall be deemed to be a
waiver by the Lender of its rights and remedies under the Note, the Loan Agreement, the
Mortgage, or any of the other Loan Documents, and this Assignment is made and accepted
without prejudice to any of the rights and remedies possessed by the Lender under the terms of
any other Loan Documents. The right of the Lender to collect the Obligations and to enforce any
other security for the Obligations held by it, whether pursuant to. any other Loan Documents or
3

 otherwise, may be exercised by the Lender either prior to, simultaneously with or subsequent to
any action taken by the Lender under the terms of this Assignment. All obligations of the
Borrower and the rights of the Lender hereunder shall be in addition to, and not in limitation of:
those contained in the Note, the Loan Agreement, the Mortgage and all of the other Loan
Documents, and those provided by applicable law.
9.
Upon written request of the Borrower after all Obligations have been irrevocably
paid, in full, the Lender shall reassign and deliver to the Borrower, without warranty, the
Agreement and related documents) if any, in which the Lender shall have any interest under this
Assignment and which shall then be held by the Lender or be in its possessie>n and the interest of
the Lender in the Agreement shall terminate; provided, however, the failure of Borrower to
request, or Lender to deliver, a reassignment ·shall not affect the automatic termination aforesaid
upon the. irrevocable payment, in full, of al1 of the Obligations.

10.
Nothing herein contained shall be construed to alter, affect or impair any of the
obligations of the Borrower under the Note, the Loan Agreement, the Mortgage or any of the
other Loan Documents.
11.

The University hereby consents to:
(a)

the assignment by the Borrower to the Lender of the Assigned Rights as

provided herein;
(b)

any subsequent transfer of the Assigned Rights by the Lender to any

person or entity that may succeed to the Lender's interest in the Lo.an Agreement (by merger,
consolidation, purchase of the Lender's rights under the Loan Agreement, or otherwise) prior to
the Lender's exercise of the rights and the enforcement of remedies upon a default by the
Borrower pursuant hereto and to any person or entity who may succeed to the title to the
Property by way of foreclosure, deed in lieu of foreclosure, or otherwise, subsequent to a Default
by Borrower under the Loan Agreement or any of the other Loan Documents; and
(c)
any other subsequent transfer of the Assigned Rights by the Lender in
connection with the Lender's exercise of its rights and enforcement of its remedies hereunder, at
law, in equity or otherwise.
In each instance, University's obligations to perform on behalf of the new assignee shall
be subject to University being given notice of such assignment within a reasonable time after the
effective date of such assignment.
12.
The University agrees and confinns to the Lender and to any transferee or
assignee permitted under paragraph 11 hereof that:
(a)
the assignment referred to in paragraph 1 shall bind and be fully effective
against the Ui;riversity;
(b)

such assignment shall not constitute a breach of or default under the

Agreement;

4

 (c)
each representation, warranty, covenant, and agreement of the University
in the Agreement shall continue in full force and effect, inure to the benefit of and be enforceable
by the Lender and any transferee or assignee permitted under paragraph 11 to the. same extent as
if the Lender or such transferee or assignee were named in the place of the Borrower in the
Agreement, provided that the Borrower (or the Lender or such transferee or assignee in its stead)
continues to fulfill all of its obligations pursuant to the Agreement which thereafter accrue and
thereafter does not default thereunder;
(d)
the Lender or such transferee or assignee ~hall not be liable for any
obligation or duty of the Borrower under the Agreement nor shall such assignment give rise to
any duty or obligation on the part of the Lender or such transferee or assignee as a result of
·enforcement of its security unless the Lender or such transferee or assignee has notified the
University1 in writing, that it intends to assert its rights under the Agreement and, requires the
University to continue to perform thereunder in which event the Lender or such transferee or
assignee shall be liable for the obligations and duties of Borrower under the Agreement which
arise subsequent to the date the Lender or such transferee or assignee assumes the Agreement;
(e)
such assignment shall not relieve the Borrower from any duty, debt or
obligation owing to the University; ·
(f)
as of the date of delivery of thjs Assignment by the University, the
Borrower is not in default under, and the-University may not exercise any right to terminate, the
Agreement;
(g)
as of the date of delivery of this Assignment by the University, the
Agreement has not been terminated or modified;
(h)
the Agreement shall not; without the prior written consent of the Lender~
be modified or, unless (subject to the provisions of Section 14 hereof), pursuant to the terms of
the Agreement, terminated; and

the University has not previously consented to any assignment, transfer or
hypothecation of the Agreement or any of the Assigned Rights.
(i)

13.

The University represents and warrants as follows:

(a)
The University is an agency and higher education institution of the State
of California and is authorized to enter into this Assignment.
(b)
Each of the Agreement and this Assignment has been duly executed and
delivered and each is a valid and binding obligation of the University.

(c)
The University is not in default with respect to the Agreement and has no
knowledge, as of the date of execution hereof, of any claims or rights of set-off by the University
or by any of its affiliates or parent against Bqrrower.
14.
The University agrees that, notwithstanding any right it may have under the
Agreement, at law, in equity or otherwise, so long as this Assignment shall be in effect, the
5

 University shall not, upon any default under the Agreement by the Borrower) or any assignee
thereof, exercise any 'right that it may have to terminate the Agreement or exercise any other
remedy thereunder unless it shall have given the Lender at least thirty (30) days' prior written
notice of its intent to tenninate the Agreement or exercise a specified remedy thereunder and the
Lender shall have failed within such time to cure (if such default concerns the payment of
money), or commence to cure and be diligently pursuing such cure of (if such default does not
concern the payment of money), the condition giving rise to such right to terminate or exercise a

remedy.
15.
Notwithstanding any other provision of this Assignment, in the event that either
(a) the Borrower's interest in the Property shall be sold, assigned or otherwise transferred
pursuant to the exercise of any right, power or remedy by the Lender, or pursuant to judicial
proceedings, or (b) the Borrower rejects the Agreement under Title 11, United States Codet or
other similar Federal or state statute, and such rejection is approved by the appropriate
bankruptcy court, and, the Agreement shall have been terminated pursuant to the tenns thereof
by reason of a default or a rejection by the Borrower or a trustee in bankruptcy under Title 11,
United States Code, or other similar Federal or state statute, the University shall, within fifteen
(15) days after receipt of written request therefor, execute and deliver to the Lender, or its
nominee, purchaser, assignee or transferee, as the case may be, an agreement for the remainder
of the term of the Agreement and with the same terms as are contained therein.
16.
The University agrees. that, following written notice from the Lender that an
Event of Default under the Loan Documents shall have occurred. and be continuing, it will make
all payments, if any, due and to become due from it to the Borrower under or in connection with
the Agreement by check or other means payable to the Borrower directly to the Lender at its
address set forth on the signature pages hereof (or to such other person or entity or other address
as may be specified in writing by the Lender). In the, event that the Lender requests the
University to make any payment or otherwise to perfonn at the Lender1s direction in respect of
the Agreement, any and all payments made by the University pursuant to such request and any
performance by the University of its other obligations under the Agreement at the request of the
Lender shall fully satisfy and discharge the University's obligations to make such payments to or
perform such obligations at the request of the Borrower pursuant to the Agreement as if paid to
or perfonned for the Borrower. The Borrower hereby releases and agrees to hold the University
harmless from any and all liability for making payments to or as directed by the Lender in
accordance_ herewith.
17.

[Intentionally Deleted]

18.
This Assignment shall be governed by and construed in accordance with the laws
of the State of California.
19,
This Assignment shall be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective permitted successors and assigns.

20.
This Assignment may be modified, amended or rescinded only by a writing
·expressly referring to this Assignment and signed by all of the parties hereto.

6

 21.
If any provision of this Assignment shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
22.
The Borrower releases the University from any and all liability to the Borrower
arising from the making of any payment or otherwise performing pursuant to the direction of the
Lender or any transferee or assignee permitted under paragraph 11 hereof.

23.
11

All notices, requests, consents, demands and other comnnmications (collectively,

11

Notices ) required or pennitted to be given under this Assignment shall be in wri.ting and shall

be given to such party at its address, or facsimile number set forth on the signature pages hereof,
or at such other address, or facsimile number as such party may hereafter specify for the purpose
of notice to the other party and shall be either delivered personally or sent by facsimile or
certified mail, return receipt requested, postage prepaid, and shall be deemed to have been made
or given when delivered.
24.

Qi:mute R~~olu.tjgn Provision.

This Section is referred to as the "Dispute Resolution Provision. 11 Each Party hereto
agrees that this Dispute Resolution Provision is a material inducement for their entering into this
Agreement.
(a)
Scope. This Dispute Resolution Provision concerns the resolution of any
disputes, controversies, c.laims, counterclaims, allegations of liability, theories of damage, or
defenses (collectively, a "Claim" or "Claims") between Lender, on the one hand, and Borrower
and/or University, on the other hand (each side being, for the purposes of this Dispute Resolution
Provision, a "Party" and the two sides together being ~e- "ffil1te~"), regardless of whether based
on federal, state, or local law, statute, ordinance, regulation, contract, common law, or any other
source, and regardless of whether foreseen or unforeseen, suspected or unsuspected, or fixed or
contingent at the time of this Assignment, including but not limited to Claims that arise out of or
relate to: (i) this Assignment (including any renewals, exte.-isions, or modifications); or (ii) any
document related to this Assignment. For purposes of this Dispute Resolution Provision only,
the tenns "Lender" or " ~11 or "Parties" (to the extent referring to or including Lender) shall
include any parent corporation, subsidiary or affiliate of Lender, the tenns 11Borrower" or "Party"
or "Parties" (to the extent referring to or including Borrower) shall include any parent
corporation, subsidiary or affiliate of Borrower and the tenns "University" or 11Party'' or "Parties"
(to the extent referring to or including University) shall include the State of California or any
agency, department1 or other political subdivision of the State of California, as applicable.

Judicial Reference. Any Claim brought by any Par~y in a California sti;tte court
shall be resolved by a general reference to a referee (or a panel of referees) as provided in
California Code of Civil Procedure Section 638. The referee (or presiding referee of the panel)
shall be a retired Judge or Justice of the California state court system. The referee(s) shall be
selected by mutual written agreement of the Parties. If the Parties do not agree, ·the referee(s)
shall be selected by the Presiding Judge of the Court (or his or her representative) as provided in
Caiifornia Code of Civil Procedure Section 640. The. referee{s) shall hear and determine all
issues relating to the Claim, whether of fact or of law, and shall do so in accordance with the
(b)

7

 Laws of the State of California, and shall report a statement of decision. The referee(s) shall be
empowered to enter equitable as well as legal relief, provide all temporary or provisional
remedies, enter equitable and legal orders. tha~ will be binding on the Parties, and rule on any
motio11 which would be authorized in court ·litigation, including motions to dismiss, for summary
judgment, or for summary adjudication. The referee(s) shall award legal fees and costs
(including the fees of the referee(s)) relating to the judicial reference proceeding,. and to any
related litigation or arbitration, in accordance with the terms of this Agreement. The award that
results from the decision of the referee(s) shall be entered as a judgment in the court that
appointed the referee(s), in accordance with the provisions of California Code of Civil Procedure
Sections 644(a). Pursuant to California Code of Civil Procedure Sections 645, the Parties
reserve the right to seek appellate review of any judgment or order, including but not limited to,
orders pertaining to class certification, to the same extent permitted in a court oflaw.
(c)
Arbitration Provisions. The Parties agree that judicial reference pursuant to
Subsection Cb) above is the preferred method of dispute resolution of all Claims, ;when available.
The Parties therefore agree that injunctive relief, including a temporary restr~ining order, without
the posting of any bond •or security, shall be appropriate to enjoin the prosecution of any
arbitration proceeding where the Claims at issue become subject to (and as long as they remain
subject to) judicial reference pursuant to ~ubsection (hl above, provided that, subject to the
provisions of ,Subsection (g) below, a Party moves for such relief within thirty (30) days of its
receipt of a demand for arbitration of a Claim. However, with r~spect to any Claim brought in a
forum other than a California state court, or brought in a Califomia state court but judicial
reference pursuant to Subsectign..(b) above is not available or enforced by the court, subject to
the provisions of Subsection (g) below, the arbitration provisions in this Sug§ection (c)
(collectively, the "Arbitration Provision§") ·shall apply to the Claim. In addition, if either of the
Parties serves demand for arbitration of a Claim in accordance with these Arbitration Provisions,
and the other Party does not move to enjoin the arbitration proceeding within thirty (30) days of
receipt of the demand, the right to judicial reference shall be waived and, ·subject to the
provisions of Subsection (g) below, the Claim shall remain ·subject to these Arbitration
Provisions thereafter. The inclusion of these Arbitration Provisions in this Agreement shall not
otherwise be deemed as any limitation or waiver of the judicial reference provisions. The
Arbitration Provisions are as follows:
For any Claim for which these Arbitration Provisions apply, the Parties
agree that at the request of any Party to this Agreement, such Claim shall be
resolved by binding arbitration. The Claims shall be governed by the Laws of the
State of California without regard to its conflicts of law p1inoiples. The Federal
Arbitration Act, 9 U.S.C. §§ 1 et seq. (the "Federal Arbitration Act 11 ), shall apply
to the construction, interpretation, and enforcement of these Arbitration
Provisions, as well as to the confirmation of or appeal from any arbitration award.
(i)

Arbitration proceedings will be determined in accordance. with the Federal
Arbitration Act, the then-current Commercial Finance rules and procedures of the
American Arbitration Association or any successor thereof ("MA") (or any
successor rules for arbitration of financial services disputes), and the terms of
these Arbitratio.n Provisiops. In the event of any inconsistency, the tenns of these
Arbitration Provisions shall control. The arbitration shall be administered by the
(ii)

8

 Parties and not the AAA and shall be conducted, tmless otherwise required by
Law, at a location selected solely by Let1der in any U.S. state where real or
tangible personal property collateral for this credit is lo.cated or where Borrower
has a place of business. If there is no such state, Lender shall select a location in
California.
(iii)

If aggregate Claims are One Million Dollars ($1,000~000) or less:

(A)
All issues shall be heard and determined by one neutral arbitrator.
The arbitrator shall have experience with commercial financial services disputes
and,. if possible~ prior judicial experience, and shall be selected pursuant to the
AAA "Arbitrator S~lect: List and AppointmentH process, to be initiated by
Lender. If the AAA 11Arbitrator Select; List and Appointment" process is
unavailable, Lender shall initiate any successor process offered by the AAA or a
similar process offered by any other nationally recognized alternative dispute
resolution organization.
(B)
Unless the arbitrator has a dispositive motion under advisement or
unforeseeable and W1avoidable conflicts arise (as detennined by the arbitrator)1 all
arbitration hearings shall commence within ninety (90) days of the appointment of
the arbitrator, and under any circumstances the award of the arbitrator shall be
issued within one hundred twenty (120) days of the appointment of the arbitrator.
(C)
A Party shall be entitled to take no more than two (2) fact
depositions, one or both of which may be taken in accordance with Fed. R. Civ. P.
30(b)(6), plus depositions of any experts designated by the other· Party, each of
seven (7) hours or les~, during pre-bearing discovery.
(D)
There shall be no written discovery re.quests except a Party may
serve document requests on the other Party not to exceed twenty (20) in number,
including subparts. The requests shall be served within forty-five (45) days of the
appointment of the arbitrator and shall be responded to within twenty-one (21)
days of service.

(iv)

If aggregate Claims exceed One Million Dollars ($1,000,000):

(A)
The issues shall be heard and determined by one neutral arbitrator
selected as above unless either Party requests that all issues be heard and
determined by three (3) neutral arbHrators. In that. event, each Party shall select
an arbitrator with experience with commercial financial services disputes, and the
two arbitrators shall select a third arbitrator, who shall have prior judicial
experience. If the arbitrators cannot agree, the third arbitrator shall be selected
pursuant to the AAA "¾bitrator Select: List and Apnointment 11 process, to be
initiated by Lender.
(B)

Unless the arbitrator(s) have a dispositive motion under

advisement or o.ther good cause is shown (as detennined by the arbitrator(s)), all
arbitration hearings shall commence within one hundred twenty (120) days of the
9

 appointment of the arbitrator(s), and under any circumstances the award of the
arbitrator(s) shall be issued within one hundred eighty (180) days of the
appointment of the arbitrator(s).
(C)
A Party shall be entitled to take no more than five (5) fact
depositions, one or more of which may be taken in accordance with Fed. R. Civ.
P. 30(b)(6), plus depositions of any experts designated by the other Party, each of
seven (7) hours or less, during pre-hearing. discovery.
(D)
There shall be no written discovery requests except a Party may
setve document requests on the other Party not to exceed thirty (30) in number,
including subparts. The requests shall be served within forty-five (45) days of the
appointment of the arbitrator(s) and shall be responded to within twenty~one (21)
days of service,
(v)
Where a Party intends to rely upon the testimony of an expert on an issue
for which the Party bears the burden of proof, the expert(s) must be disclosed
within thirty (30) days following the appointment of the arbitrator(s), including a
written report in accordance with Fed. R. Civ. P. 26(a){2)(B). The arbitrator(s)
shall exclude any expert not disclosed strictly in accordance herewith. The other
Party shall have the right within thirty (30) days thereafter to take the deposition
of the expert(s) (upon payment of the expert's reasonable fees for the in•
deposition time), and to identify rebuttal expert(s), including a written report in
accordance with Fed. R. Civ. P. 26(a)(2)(B).
(vi)
The arbitrator(s) shall consider and rule on motions by the Parties to
dismiss for failure to state a claim; to compel; and for summary judgment, in a
manner substantively consistent with the corresponding Federal Rules of Civil
Procedure. The- arbitrator(s) shall enforce the 11Apex 11 doctrine with regard to
requested depositions of high-ranking executives of both Parties.
The
arbitrator(s) shall exclude any Claim not asserted within thirty (30) days
following the demand for arbitration. This shall not prevent a Party from revising
the calculation of damages on any existing theory. All discovery shall close at
least one ( 1) week before any scheduled hearing date, and all hearing exhibits
shall have been exchanged by the same deadline or they shall not be given weight
by the arbitrator(s).
(vii) The arbitrator(s) will give effect to applicable statutes of limitations in
detennining any Claim and shall dismiss the Claim ifit is barred by the statutes of
limitations. For purposes of the application of any statutes of limitations, the
service of a written demand for arbitration or counterclaim pursuant to the notice
section of this Agreement i's the equivalent of the filing of a lawsuit. At the
request of any Party made at any time, including at confirmation of an award, the
resolution of a statutes of limitations defense to any Claim shall be decided de
novo by a court of competent jurisdiction rather than by the arbitrator(s).
Otherwise, any dispute concerning these Arbitration Provisions or whether a

10

 Claim is arbitrable shall be determined by the arbitrator(s), except as otherwise set
forth in this Dispute Resolution Provision.
(viii) The arbitrator(s) shall have the power tQ award legal fees and costs
relating to the arbitration proceeding and any related litigation or arbitration,
pursuant to the terms of this Agreement. The arbitrator(s) shall provide a written
statement of reasons for the award. The arbitration award may be submitted to
any court having jurisdiction to be confirmed and have judgment entered and
enforced.
·
(ix)
The filing of a court action 'is not intended to constitute a waiver of the
right of any Party, including the suing Party, thereafter to require submittal of the
Claims to arbitration.

(x)
The arbitration proceedings shall be private. All documents, transcripts,
and filings received by any Party shall not be disclosed by the recipient to any
third parties other than attorneys, accountants, auditors, and financial advisors
acting in the course of their representation, or as otherwise ordered by a court of
competent jurisdiction. Any award also shall be kept confidential, although this
specific requirement shall be void once the award must be submitted to a court for
enforcement. The Parties agree that injunctive relief, including a temporary
restraining order~ from a trial court is the appropriate relief for breach of this
Subsection, and they waive any security or the posting of a bond as a requirement
for obtaining such relief
(d)
Self-Help. This Dispute Resolution Provision does not limit the right of any·Party
to: (i) exercise selfbelp remedies, such as but not limited to, setoff~ (ii) initiate judicial or nonjudicial foreclosure against any real or personal property collateral; (iii) exercise-any judicial or
power of sale rights; or (iv) act in a court of law to obtain an interim remedy, such as but not
limited to, injunctive. relief, writ of possession or appointment of a receiver, or additional or
supplementary remedies.
(e)
Class Action Waiver. Any arbitration or court trial (whether before a judge or
jury or pursuant to judicial reference) of any Claim will take place on an individual basis without
resort to any fonn of class or representative action (the 11 Class Action W.!!,iver"). THE CLASS
ACTION WAIVER PRECLUDES ANY PARTY FROM PARTICIPATING IN OR BEING
REPRESENTED IN ANY CLASS OR REPRESENTATIVE ACTION REGARDING A
CLAIM. Regardless of anything else in this Dispute Resolution Provision, the validity and effect
of the Class Action Waiver may be detennined only by a court or referee and not by an
arbitrator. The Parties to this Agreement acknowledge that the Class Action Waiver is material
and essential to the arbitration of any disputes between the Parties and is nonseverable from the
agreement to arbitrate Claims. If the Class Action Waiver is limited,. voided, or found
unenforceable, then the Parties1 agreement to arbitrate shall be null and void with respect to such
proceeding, subject to the right to appeal the limitation or invalidation of the Class Action
Waiver.
THE PARTIES ACKNOWLEDGE AND AGREE THAT UNDER NO
CIRCUMSTANCES WILL A CLASS ACTION BE ARBITRATED.

11

 (f)
Jury Waiver. By agreeing to judicial reference or binding arbitration, the Parties
irrevocably and voluntarily waive any right they may have to a trial by jury as permitted by Law
in respect of any Claim. Furthennor~, without intending in any way to limit the provisions
hereof, to the extent any Claim •is not submitted to judicial reference or arbitration, the Parties
irrevocably and voluntarily waive any right they may have to a trial by jury to the extent
permitted by Law in respect of such Claim. This waiver of jury trial shall remain in effect even
if the Class Action Waiver is limited, voided, or found unenforceable. WHETHER THE

CLAIM IS DECIDED BY JUDICIAL REFERENCE, BY ARBITRATION, OR BY
TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE
EFFECT OF THIS DISPUTE RESOLUTION PROVISION IS THAT THEY ARE
GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY
LAW, EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER DOCUMENTS
CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION, AND (ill) CERTIFIES THAT
THIS WAIVER IS KNOWINGLY, WILLINGLY, AND VOLUNTARILY MADE.
Real Property Secured Claim. Notwithstanding any provision in this Agreement
or any other Loan Document to the contrary, in no event shall the Arbitration Provisions apply to
any Claim if the Claim, at the time of the proposed submission to arbitration, arises from or
relates to an obligation to Lender secured by real propel.'ty. In this case, all of the parties to this
Agreement, in their sole and absolute discretion, must consent to submission of the Claim to
(g)

arbitration.

·

25.
Patriot Act Compliance. Lender hereby notifies each of Borrower and University
that pursuant to the requirements of the Uniting and Strengthening America by Providing
Appropriate Tools Required to futercept and Obstruct Terrorism Act (USA Patriot Act) (Title III
of Pub. L. 107•56 (signed into law October 26, 2001)) (as the same may be amended from time
to time, and corresponding provisions of future laws, the "Patriot Act 11) Lender is required to
obtain, verify and record infonnation that identifies Borrower (anq. as may be applicable,
University), which information includes the name and address of Borrower (and as may be
applicable, University) and other information that will allow Lender to identify Borrower (and as
may be applicable, University) in accordance with the Patriot Act. Borrower and University
hereby further covenant and agree that each of Borrower and University shall: (a) promptly
following a written request by Lender, provide all documentation and other infonnation that
Lender requests in order to comply with its ongoing obligation under all applicable "know your
customer" and .anti-money laundering rules and regulations, including the Patriot Act and (b)
comply fully in all respects with the Patriot Act.
26.
This Assignment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original ~d all of which taken together shall constitute but one and the same agreement. The

12

 signature page of any signed cm;mterpart may .be removed and attached to another counterpart to
form a single fully executed document.
Signatures may be by facsimile or in pdf file which shall be given the same effect
as original signatures.
27.

[Signature Pages Follow]

13

 IN WITNESS WHEREOF, this Assignment is executed as of the date first above written.
BORROWER:

C~STONE-SAN DIEGO LLC, a Delaware
limited liability company

By: CAPSTONE DEVELOPMENT PARTNERS,
LLC, an.Alabama.limited liability company;
its Sole Manager

~·~
· ~ . Mol<.ees

Manager

AD.DRESS:

Capstone-San Diego LLC
402 Office Park Drive; Suite 199
Birmingham, AL 35223

LENDER:
BANK OF AMERICA, N.A.•
a national banking association
By:._ _ _ _ _ _ _ _ _ _ _ _ _ _ __

Mark D. Tanis, Senior Vice President
ADDRESS:
Mark Tanis
Sr. Vice President
Bank Qf America., N.A.
114 Market Street, Suite 212
Roanoke, VA 24011
Facsimile: (540) 983-1994

14

 .
IN WITNESS WHEREOF, this Assignment is executed as of the date first above written.
BORROWER:
CAPSTONE--SAN DIEGO LLC> a Delaware
limited liability company

By: CAPSTONE DEVELOPMENT PARTNERS,
LL~ au Alabama limited liability ·company,
its Sole M~er

By. _ _ _ _ _ _ _ _ _ _ _ __

Bnwe D. McKee, Manager

ADDRESS:
Capstone-San Diego LLC
402 Office Parle Drive, Suite 199
Binningham, AL 35223

LENDER:
BANK OF AMERICA, N.A.,
a national banking assocWion

~-J?.~

By. _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

Mark D. Tanis, Senior Vice President
ADDRESS:
Mark Tanis
Sr. Vice President
Bank of America, N.A.
114 Market Street, Suite 212
Roanoke, VA 24011
Facsimile: (540) 983w7994

14

 UNIVERSITY:
THE TRUSTEES OF THE CALIFORNIA STA TEUNlVERSITY, acting as 'the State of California.in
its 'higher education capacity

ADDRESS:

Facsimile:

{5.l,W279v5

15

fl.,,. Nf? ...

r&>

Z 2-

 EXHIBIT A

 

MASTER RESIDENCY AGREEMENT
·
~ MASTER RESIDENCY AGREEMENT
(1his ",Mli!lement") dated es of the
11
day o ~201_!:/_ (the "Effective Date ) is by and between THE TRUSTEES OF THE
CALIFOR.N.IA STATE UNIVERSITY. acting as the State of California in ifs higher
education capacity (11 SDSU11) and CAPSTONE SAN DIEGO LLC, a Delaware limited liability
company ("Owner").

/Jjh

W l IN E S S ETH:

WHEREAS, pursuant to that certain Ground Lease by and between Owner and the San
Diego State University Research Foundation, doing business as San Diego State SDSU Research
Foundation (the "Foundatio~" or ~lLessgr") dated April 12, 2016,. as amended from time-to-time
(the "{!round Lease"), Owner is the ovvner of a lessee ground l~ase interest in the building and
other improvements (collectively, the "Improvements") to be constructed on that certain real
property located at 5030 College Avenue in the City of San Diego» in the State QfCalifomia (the
"State11)~ as more parti,cularly described on Exhibit A attached hereto (the "L!m!;l"; together with
the Improvements, the "froject"); and
WHEREAS, the Project shall consist of (a) an 8,5 unit student housing project with a
minimum of 307 beds and. a maximum of 327 beds, .together with all Improvements, fixtures,
:furnishings, equipment, amenities, and associated site infrastructure necessary for the operation
thereof on the Land;
WHEREAS, Owner and Manager (initially, Asset Campus USA LLC, a Texas limited
liability company) are parties to the Management Agreement (initially that certain Property
Management Agreement dated as of the 13th day of February, 2017~ a true and correct copy of
which is attached hereto as EMibit B). Pursuant to the terms and conditions of the Manag~mf.lnt
Agreement, the Manager will perform various. obligations with respect to the management of the
Project, which obligations are further described as tl1e "Manager's Obligations" in the
Management Agreement;
WHEREAS, Owner and SDSU are parties to that certain Operations and Services
Agreement dated as of the 13th day of February, 2017, a true and correQt copy of which is
attached hereto as Exhibit C (the "O&S Agreement"), Pursuant to the terms and conditions of
the O&S Agreement, certain of the obligations and duties thereunder that would otherwise
constitute a porti.on of the Manager's Obligations, and that are further described in the O&S
Agreement as the 'tServices'', will be performed by SDSU rather than the Manager,

WHEREAS, Owner and SDSU desire to enter into this Agreement for the purpose of
SDSU master licensing various of the beds within the Project pursuant to the terms and
conditions hereof; and
·

1

 WHEREAS, any capitalized terms used herein and not defined herein shall have the
meanings ascribed to such terms in the Ground Lease, the Management Agreement or the O&S
Agreement. respectively.

NOW, THERE.FORE,. in consideration of the premises, the mutual covenants and
agreements herein set forth by each party hereto to be kept and performed, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby express]y
acknowledged by each party hereto, Owner and SDSU,, intending to be legally bound, do hereby
mutually covenant and agree as follows:
This Agreement and all rights of the parties hereunder are expressly subject to the terms
and conditions hereinafter set forth, all of which parties hereto respectively agree to keep. abide
by and perform during the tetm hereof.

1.
Definitions. As used in. this Agreement, the following te1ms shall have the
following meanings:
"Agreement" shall have the meaning assigned to it in the introductory paragraph hereof.

''Authorized Pwner Renresentative" shall mean Robert Brown.
"Authorized SDSU R~.[entative" shall mean the Director of Housing Administration.
•~Effective Date" shall have the meaning assigned to it in the introductory paragraph
hereof

"Ground Lease" shall have the meaning assigned to it in the Recitals hereof.
11

Improvements" shall have the meaning assigned to it in the Recitals hereof.

"Land" shall have the meaning assigned to it in the Recitals hereof.

c'Lessor,, shall have the meaning assigned to it in the Recitals hereof.
"Mru.1agement Aru1~ment" shall mean, initially that certain Property Management
Agreement dated as of the 13 th day of February, 2017,. a true and correct copy of which is
attached hereto as Exhibit B, and shall also mean any successor Property Management
Agreement(s) entered into by and between Owner and any successor Manager with
respect to the property management of the Project during the term of the Ground Lease.
~'Manager" shall mean, initially Asset Campus USA LLC, a Texas limited liability

company, and shall also mean any successor property manager for the Project that enters
into a Property Management Agreement with Owner during the term of the Ground
Lease.

2

 "M~ster License" shall have the meaning assigned to it in Section 3 hereof.
"Master License Fee" shall have the me·aning assigned to it in Section 3.8 hereof,
~~Master License Notice" shall have the meaning assigned to it in Section 3.3.1 hereof.
0

0&8 Agreement" shall have the meanjng assigned to it in the Recitals hereof.

"Ownel.'0 shall have the meaning ·assigned to it in the introductory paragraph hereof.
11

Proj~f1 shall have the meaning assigned to .it in the Recitals hereof.

"Residents" shall have the meaning assigned to it in the Leasing and Operations Protocol
set fo1th in Exhibit ''D" of the O&S Agreement.
'•SDSU" shall have the meaning assigned to it in the introductory paragraph hereof.

"State'' shall have the meaning assigned to it in the Recitals hereof.
"Supplemental Master License Notice" shall have the meaning assigned to it in Section
3.3.2 hereof.
"Tenn" shall have the meaning assigned to it ·in Section 2 hereof.
In the event the.re shall be any conflict between the use of any capitalized t~nns in this

Agreement that are defined in the Ground Lease) the Management Agreement and/or the O&S
Agreement, such conflicts shall be resolved in favor of the use of the capitalized terms that are
defined first, in the Ground Lease~ then in the. O&S Agreement, and finaly, in the Management
Agreement.
2.
Term. The initial tenn of this Agreement shall commence upon the Effective
Date and shall conclude at midnigh4 Pacific Time on the fifth (5 th) anniversary of the Effective
Date; provided however, that this Agreement shall automatically renew for successive five (5)
year periods thereafter unless either SDSU or Owner shall deliver notice to the other party hereto
not less than twelve (12) months prior to the co.nclusion Qf the initial five (5) year term or the
conclusion of any successive five (5) year renewal periods thereafter, of its election not to extend
the then-existing initial term or any successive five (5) year renewal period thereafter (as
applicable) (the ~'Renewal Notice Deadline"). Owner shall provide notice to SDSU of each
upcoming Renewal Notice Deadline no later than thirty (30) days prior to the Renewal ·Notice
Deadline. The period of time duri1,1g which this Agreement shall be in effect is described herein
as the "Term".
3.

Master License. SDSU desires, from time to time durmg the Term, and in all

instances for a period equal to a Lease Year or multiples of a Lease Year, master license
("Master License") such number of beds within the Project, as further described below:
3

 3.1. Minimum Term of Master License. The minimum term of the Master
License shall be for a single Lease Year.
3.2. Minimum Number of Beds. The Master License shall, at all times during
the Term, be for the greater of twenty-five (25) beds or such number of beds as is set
forth in the applicable Master License Notice.

3,3,

Master License Notice and Supplemental Master License Notice.

3.3. l. Master Lie<mse ~oti~. On or before August 1, 2017~ SDSU shall deliver
a written notice to Owner, which written notice shall set forth the number
of beds that SDSU desires to Master License for the first Lease Year of the
Project. Thereafter, on "or before the 1st day of June of each calendar year
thereafter during the Teim SDSU shall deliver a written notice to Owner
of the num~r of beds that SDSU offers to Maste.r License for tl1e next
following Lease Year, such that the written notice· indica,ting an offer by
SDSU to Master-License. beds in the Project for a particular Lease Year
shall be delivered to Owner no less than fourteen (14) months prior to the
first day of the Lease Year to which it is applicable. The written notic.es
delivered by SDSU to Owner pursuant to this Section J.3.1 are referred to
collectively as a ~~Master License Notice". Owner shall, no later than the
date of the Future Services Meeti,ng of each calendar year, provide notice
to SDSU of the upcoming requirement for SDSU to deliver a Master
License Notice. In the event that SDSU shall fail to timely deliver a
Master License Notice. to Owner for any particular Lease Year, SDSU
shall be deemed to have delivered a Master License Notice to Owner
indicating its offer to M~ster License the number of beds subJect to the
Master License du.ring the immecliately preceding Lease Year. Upon the
delivery or deemed delivery by SDSU to Owner of a· Master License
Notice, SDSU shall be obligated to Master License such number of beds
set forth in such Master License Notice or deemed Master License Notice,
as applicable, pursuant to the tenns and conditions of this Agreement.
3.3.2. ~upulemental Master License Notice. Subsequent to the delivery by
SDSU of a Master License Notice for a particular Lease Year, SDSU may
deliver one or more additional written notices to Owner, which additional
written notice(s) shall set forth the additional number of beds (in ~ddition
to the occupancy that is the subject of the Master License Notice) that
SDSU offers to Master License for such Lease Year. The written notice(s)
delivered by SDSU pursuant to this Section 3.3.2 are referred to
cqllectively as a "Su:i:ml1:tmental Master License Notice". In the event that
SDSU shall deliver one or more Supplemental Master License Notices,
SDSU shall be obligated to Master License such number of beds set forth
in such Supplemental Master License Notice(s), pursuant to the same
terms and conditions of this Agreement applicable to~ and as a component
4

 of, the Master License that is the subject of the Master License Notice,
subject to the following conditions and exceptions:

3.3.2. l.

The obligation of Owner to include the number of beds that
are the subJect of any Supplemental Master License Notice(s) and
make such beds available under the Master License for the
applicable Lease Year shall only ~se, and shall be limited to~ the
extent that Owner dete.rmines there are beds available in the
Project for the applicable Lease Year that is the •~ubject of such

Supplemental Master License Notice(s) at the time such
Supplemental Master License Notice(s) are delivered by SDSU to
Owner.
3.3.2.2.

The Supplemental Master License Notice(s) may not
specify or request that the occupancy that is the subject of the
Supplemental Master License Notice(s) be applicable to any
particular beds in the Project.

3.3.2.3.

The Master License Fee applicable to the
occupancy that is the subject of any Supplemental Master License
Notice(s) shall be equal to the number of beds applicable to such
Supplemental Master License Notice(s) multiplied by the sum of
the then~cu.rrent market rental rate per-bed for the Project (as
determined by Owner)t and shall be in addition to the Master

License Fee applicable to the occupancy that is the subject of the
Master License Notice for the same Lease Year.
3.4. Master Lioense Bed Selection. If SDSU desires that the Master License
(other than that component of the Master License that is the subject of any Supplemental
Master License Notice(s)) be applicable to any particular beds in the Project, SDSU shall
specify such desire in the Master License Notice; provided however, that the final
determination of which beds in the Project will be the subject of the Master License in
any particular Lease Year shall be made by Owner in its reaso!lably exercised discretio~
.or if delegated by Owner to Manager, by Manager in its reasonably exercised discretion
as a component of the Managees Obligations under the Management Agreement. The
particular beds within the Project subject to the Master License may change from Lease
Year to Lease Year.
3.5. SDSU License Agreements. Each Resident of the Project who resides in a
bed that is the subject of the Master License shall, prior to the occupancy of a bed in the
Project, ente.r into an SDSU License Agreement in accordance with the Leasing and
Operations Protocol set forth in Exhibit ';D" of the O&S Agreement. A true and correct
copy of each SDSU License Agreement entered into pursuant to the Master License shall
be provided to Owner and Manager prior to any such Resident taking occupancy of a hed
pursuant to the Master License, and the occupancy of a bed in the Project by each such
Resident shall' at all times be subject to the tenns and oonditions of the SDSU License
5

 Agreement~ the Management Agreement and the O&S Agreement, each as applicable.
Services to be p.rovided. by SDSU under the O&S Agreement and by the Manager under
the Management Agreement shal1 be applicable to Residents under the Master License on
the same basis as all other Re:ddents of the Project. The SDSU License Agreements
,provided to each Resident of the Project shall contain the same relevant tenns and
conditions of License Agreements provided to SDSU' s student residents. .In addition to
the Maste.r License Fee, SDSU shall be responsible for. and shall pay to Owner~ damages
charges attributable to each Resident who has occupied a bed in the Project pursuant to
an SDSU License Agreement. in such amounts as are applicable to Residents occu:Pying
beds in the Project pursuant to Project Housing Contracts.
3.6. QQ.s;rations arid Services Agreement. The Master Lic~nse shall at all times
be performed in a manner consistent with the obligations of Owner and SDSU under the
O&S Agreement, including without limitation the Leasing and Operations Protocol and
the Matrix of Responsibilities.
3.7. Management Agr~ement. The Master License shall at all times be
perfonned in a manner consistent with the Management Agreement, as well as the
policies, rules and regulations of SDSU and CSU.

3.8. Master License Fee. For each Lease Year applicable to the Master
License, SDSU shall pay to Owner a fee equal to the .number of beds applicable to the
Master Licen~ for such Lease Year, multiplied by the sum of the per-bed rental rate
established by Owner for the Project for such Lease Year (the ;~l\1~ter License Fe~");
provided, however, that the annual increase in the Master License fee payable to Owner
in any Lease Year shall not exceed the amount which .is the greater of (i) three percent
(3%) or (ii) the percentage. increase in SDSU's per-bed rental rate for the Lease Year.
The Master License Fee for each Lease Year shall be payable in two (2) equal
installments, with the first .(1 st) installment being paid on or before the first (l 5r) day of
the applicable Lease Year, and with the second (2 nd) instalhnent being paid on or before
the first (1st) day of the .second semester of the applicable Lease Year. Irrespective of the
number of beds actually occupied by Residents pursuant to the Master License, and
regardless of whether such occupancy shall be for less than an entire Lease Year, the
Master License. Fee shall be calculated based on the entire number of beds that are the
supject of the Master License Notice, and for the entire Lease. Year(s) that are the subject
of the Master License. The component of the Master License Fee that is applicable to the
beds that are the subject of any Supplemental Master License Notice(s) shall be
calculated separately in accordance with. Section 3.3.2.3 hereof, and shall be in addition
to the Master License Fee that is applicable to the beds that are the subject of a Master
License. Notice.
3.9. Master License Occupancy. To the extent that SDSU shall fail to .fill all
beds that are the subject of the Master License, Owner shall direct Manager to use best
efforts to rent such unoccupied beds that are the subject of the Master License to be
occupied by Residents; ·provided, however, that Owner shall have no obligation to make
6

 efforts to or cause Manager to make efforts to rent unoccupied beds that are the subject of
the Master License until all other beds at the Project have been licensed to Residents ..
4.
ColliJ.boration; Dispute Resolution. SDSU acknowledges and agrees that the
Master License must be utilized in a coo,perative and collaborative manner with the services
being provided by the Manager under t,be Management Agreement, and the parties hereto
acknowledge. and agree that such cooperation and collaboration shall be in tlw best interest of the
Residents of the Project. In the event that one or more disputes shall arise between SDSU and
the Property Manager with respect to the provision of the Services by SDSU hereunder, and the
provision of Services by the Property Manager under the Property Management Agreement,
respectively, the parties shall uncf.ertake best efforts to resolve such disputes informally. If a
dispute -cannot be resolved by the parties, SDSUi the Property Manager and the Owner each
agree to designate a senior representative, who shall each have the authority to settle or
compromise the dispute, and who shall meet at a mutually agreeable time and place within thirty
(30) days. If after the initial dispute resolution the dispute is unresolved, the parties shall, prior
to initiation of any .litigation, bring the dispute to the next meeting of the Operations Committee
in a further effort to resolve the matter.

5.
Access to Project. SDSU) its employees and agents, shall have the right to enter
the Project at all reasonable times as is necessary and/or appropriate in the utilization of the
Master License, subject in all r~spects to the rights of Residents under their SDSU License
Agreements and/or Project Housing Contracts, as applicable, or otherwise as a matter of law;
provided that SD$U shall not unreasonably interfere with the operations of the Project and shall
comply v.ith the Owner's reasonable instructions. Notwithstanding any contrary provision
withln this Section 5, SDSU shall have the absolute .right (but not the obligation) to enter the
Project any time without liability to Owner in the event of emergencies involving human .health
or safety, the avoidance of physical damage or other damage to the Project or the enforcement of
SDSU's policies with respect to student housing.
6.

Insurance and Indemnification.
6.1.

Owner's Insurance.

6.1. l. Liabilitx Insurance. Owner shall purchase and maintain or cause
to be purchased and maintained and keep in effect at all times during the Term
insurance against claims for personaJ injuri.es (including death) or property
damage occurring in or about the Project, under a policy of commercial general
liability insurance. such that the total available limits will not be less than
$2,000,000 per occurrence and $4,000,000 aggregate, which may be satisfied by
any combination of primary. secondary, umbrella and other coverages, naming
SDSU, the Board 0f Trustees of the California State University, beneficiaries,
members, officers. directors, managers, employees, agents; auxiliaries.
contractors, volunteers, successors and assigns as additional insureds
6. 1.2. Workers• Compegsation Insurance. Owner shall purchase and
maintain or cause to be purchased and maintained and keep in effect at all times

7

 during the Term workers compensation and employers .liability insurance as
required by the Stat~ of Californfa Work~rs• Compensation statutes with the
following limits: $500,000 .each accident, $500,000 each employee/disease and
$t,OOO,OOO policy limit/disease. This policy shall include endorsement for All
State coverage for state of hire.
6.1.3. Automobile Liability Insurance.

Owner shall purchase and

maintain or cause to be purchased and maintained and keep in effect at all times
during the Term business automobile liability insurance~ with minimum limits of
$1,000,000 per occllll."ence combined single limit, to include non~owned and hired
motor vehicles~ applicable to claims arising from bodily injury, death or property
damage arising out of the ownership, maintenance. or use of any automobile.
6.1 .4. Property Insurance. Following the Opening Date., Owner shall
maintain and keep in effect (or cause to be maintained and kept in effect) at all
times during the Tenn property insurance on the Project and Improvements
against loss or damage by fire, lightning, windstorm. hai~ explosio~ vandalism
and malicious mischief. ·such insurance shall be written on a replacement cost
basis in the amount of the full replacement cost of the Project (but excluding the
value of roads, foundations, sutface parking areas and similar improvements)
subject, however to commercially reas.onable sublimits for buildings of this type.
6.1.5. Evidence of Insurance. Prior to the commencement of any work at
the Leased Premises by or on behalf of Owner, and no less than annually
thereafter, Owner shall deliver to SDSU certificates of insurance and any

additional documentation reasonably requested by SDSl! (including, without
limitation, policy endorsements) to assure compliance with this Section 6.1.5. To
the extent available, the certificates and endorsements required by this Section
6.1.5 shall contain a provision that coverages afforded will .not be cancelled upon
no less than thlrty (30) dayf prior written notice (ten (10) days for nonpayment)
to SDSU prio.r to any lapse, cancellation, or a reduction in coverage. All
coveragest conditions, limits and ep.dorsements shall remain in full force and
effect as required in this Agreement. SDSU acknowledges that other parties may
also be named as additional insureds to the insurance policies required herein.
6.l.6. Failure· to Satisfy. Failure on the part of Owner to meet the
material requirements concerning insurance in this Section 6.1.6 shall constitute a
breach of this Agreement, or, in SDSU's discretion, SDSU shall have the right,
but not the obligation following written notice to Owner, to procure or renew such
insurance and pay any and all premiums in connection therewith, and all monies
so paid by SDSU shall be repaid by Owner in full and without reduction upon
demand and shall constitute an expense of the Project.

6.2.

Waiver of Subrogation. Each of SDSU and Owner hereby waives and releases,
and shall cause its respective insurers to waive and release, any claims, causes of
action or other rights of any nature that each party may have against the other
8

 pruty, arising out of property damage to the Project, the Improvements, the

Leased Premises or any other property owned or leased by such party which at the
time of such damage is located at the Project, to the extent that such party actua1ly
carries or is required hereby to carry insurance on the damaged real or pe_rsonal
property. Without limitation on the generality of the foregoing, the foregoing is
intended., among other matters, to act as a waiver by each property insurer of
SDSU and Owner of its subrogation rights· against such parties and as a mutual
release of insured casualty. Anything in this Agreement ·to the contrary
notwithstanding, the waivers and releases contained in this Section 6.2 shall not
apply to claims, causes. of action and other rights of any nature in respect of
damage to property owned or .leased by SDSU or Owner which property at the
time the damage occurs ·is not located at the Project.
6.3.

Self..Insurance.

The policies specified herein,. may provide coverage which

contains deductibles or self~insured retentions. If these are expressly stated in the
policles and expressly accepted by Owner, Owner shall be. solely responsible .for
any deductible and/or self-insured retention.
6.4.

Indemnification by Owner. Owner shall indemnify, hold harmless a.nd, if elected
by SDSU, defend SDSU and its trustees, beneficiaries. members, partners.
shareholders~ officers, directors, managers, employees, agents, contractors,
volunteers, successors and assigns from and against any and all claims. demands,
liabilities~ losses, gamagesr costs and e.xpenses (including, without limitation,
reasonable attorney's fees and litigation expenses) in respect of bodily iajury to or
death of a person or damage to tangible personal property owned by a third party
to the extent arising or resulting from the negligent acts or omissions (including,
but not limited to, willful-miscondµct) of Owner or any ofits members, managers,
directors, officers, employees, agents, contractors. successors and assigns in
respect of the Project. This indemnity shall not be construed to include claims,
demands, liabilities, losses, damages, costs and expenses to the extent arising
from the .negligent acts or omissions of SDSU or its trustees. beneficiaries,
members~ officers, directors, managers, employees, agents, auxiliaries,

contractors, volunteers. successors and assigns.

6.5.

Indemnification by SDSU. Only to the extent permitted by applicable law, SDSU
shall indemnify, hold harmless and~ if el~ted by Owner and/or any .Lend~r,
defend Owner, any Lender and their members, manage'.r$, investors, partners,
directors, ofticers, employees, agents, contractors, successors and assigns from
and against any and all claims, demand.st liabilities, losses, damages, costs and
expenses (including, without limitation, reasonable attomey';:.i fees and litigation
expenses) in respect of bodily injury to or death of a person or damage to tangible
personal property owned by a third party to the extent arising or resulting from the
negligent acts or omissions (including, but not limited to, willful misconduct) of
SOSU or any of its. trustees, bene.ficiariei:;. members. partntn"s, shareholders,
officers, directorst ,managers, employees, agents, contractors, volunteers,
successors and assigns in respect of the Project. This indemnity shall not be
9

 construed to include claims, demands 1 liabilities, losses, damages, costs and

ex;penses to the extent arising from the negligent acts or omissions of Owner or its
members-, managers, investors, partners. .directors, officers, employees, agents.
contractors. successors and assigns. SDSU and Owner acknowledge that the
indemnity provided in this Section 6 may not be penni:tted by applicable law.
6.6,

SDSU's Insurance. The Board of Trustees of the California State University is

generally self~insured under California Government Code Sections 11007.4 and
11007.8.
7.

Default; Remedies.

7.1. The occurrence of any of the following shall constitute an Event of Default,
aft.er the expiration of any applicable cure period, by Owner hereunder:
7.1.1. Owner shall have failed to observe or perform any covenant or
obligation of Owner hereunder and Owner shall not have cured such failure
within thirty (3 0) days after Owne.r shall hav~ received written notice thereof fro~
SDSU; provided~ however, that if such failure cannot with diligent effort be cured
within sixty (60) days,. Owner shall not be in d~fault her~µnder if Owner shall
have commenced action to remedy such failure promptly following notice thereof
and shall have diligently prosecuted such action jn good faith thereafter, and shall
cure such default within ninety (90) days after Owner shall have received wiitten
notice thereof from SDSU; or
7.1.2. The occurrence and continuance of any of the following events for
sixty (60) days unless dismissed or discharged. within such time: (i) the filing. of a
petition by or against Owner under any bankruptcy, insolvency or other similar
law now or hereafter 1n effect; (ii) the commencement of any action or proceeding
for the appointment of a receiver or trustee of the property of Owner; or (iii) the
making by Owner of an assignment for the benefit of creditors.
7.2, Upon the occurrence and during the continuance of an Event of Default
(after the- expiration on of any applicable cure period) by Owner, SDSU shall be entitled
to exercise any one or more or all of the following remedies:
7.2.1. SDSU may exercise any right or remedy available at law or in
equity; or
7.2.2. SDSU~ without additional notice, may cure such Event of Default

on the part of Owner, at Owner• s expense-, and Owner shall promptly reimburse
SDSU for all reasonable costs and expenses incurred by SDSU, plus interest at the

Default Rate.
7.2.3. SDSU may tenninate this Agreement;

10

 SDSU's exercise of any of its rights under this section shall not constitute
a waiver, release or relinq\lishment of any other rights it may have under
this agreement Notwithstanding the foregoing, SDSU expressly waives,
releases,. and relinquishes any and all right to recover damages or any
other sum against Own.et, except to the extent of Owner's interest in this
Agreement.
7.3.
Notwithstanding anything to the contrary contained herein, if SDSU
claims that an Event of Default has occurred~ and Owner has contested such claim, then
SDSU may not tenninate this Agreement unless and until SDSU obtains a final,
unap_pealable adjudication of the claim which confirms that an Event of Default has
occurred, and Owner fails to cure the Event of Default within. sixty (60) days after such
adjudication becomes final and unappealable.
7.4.
The occurrence of any of the following shall constitute an Event of
Default by SDSU hereunder:

7.4.1. SDSU shall have failed to remit to Owner any amounts or
expenses that SDSU agreed to pay or stipulated to be paid by SDSU to Owner
hereu,ider, including the Master License Fee, and such failure continues ·for sixty
{60) days following SDSU's receipt of written notice thereoffro.m Owner; or

7.4.2. SDSU shall have failed to observe or perform any other covenant
or obligation of SDSU hereunder and SDSU shall not have cured such failure
within sixty (60) days after SDSU shall have received written notice thereof from
Owner; provided, however, that if such failure is such as cannot with diligent
effort be cured within sixty (60) days, SDSU shall not be in. default hereunder if
SDSU shall have commenced action to remedy such failure promptly following
notice thereof and shall have diligently prosecuted such action in good faith
thereafter and shall cure such default within ninety (90) days after SDSU shall
have received written notice thereof from Owner.
7.5. Upon the occurrence and during the continuance of an Event of Default by
SDSU, Owner shall be entitled to exercise any one or more or all of the following
-remedies:
7.5.1. Owner may terminate this Agreement;
7.5.2. Owner may exercise any othe.r right or remedy available at law or
in equity; or
7,5.3. Owner. without additional notice, may cure such Event of Default
on the part. of SDSU, at SDSU's expense, and SDSU shall promptly reimburse
Owner for all reasonable costs and expenses incurred by Owner, _plus interest at
the Default Rate.
11

 Notwithstanding the foregoing 1 Owner expressly waives, releases, and relinquishes any
and all right to recover damages or any other sum agai~st SDSU, except to the extent o.f SDSU's
interest in this Agreement.

8.
Broker's Commissions. Each party represents and warrants to the other that it has
not dealt with any real estate brokers in conne·ction with this Agreement and each party shall
indemnify the other against all costs, expenses and liabilities, including, without li~itation,
reasonab~e· attorneys' fees, arising out any breach by it of the foregoing representation and

warranty.
9.
Notices. All notices, requests, demands. or other communications required or
permitted to be served hereunder or by law between SDSU and Owner shall be in writing and
delivered by a recognized overnight courier service (such as Fed Ex), by certified or registered
mail, return receipt requested, or by successful and electronically confirmed e-mail transmission
(with a copy to follow by one of the prior two delivery methods), addressed to the parties at the
addresses specified below, or to such other address as a party shall specify ·by written notice to

the other.
Ifto SDSU:

Business and Financial Affairs
5500 Campanile Dr
San Diego, CA 921.82-1999
Attention: Robert Schulz
AyP Real Estate Planning & Develo_pment
Facsimile: 619,594.6017
Email; rschulz@sdsu.edu

With a copy to:

Office of Hm.tsing Administration
5500 Campanile Dr
San Diego, CA 92182-1999

Attention: Eric Hansen
Facsimile: 619 594 6202
Email: ehansen@mail.sdsu.edu
Ifto Owner:

Capstone San Diego, LLC
402 Office Park Drive, Suite 199
Birmingham, Alabama 35223
Attention: Bruce McKee
Facsimile: (205)949--5064
Email: bmckee@capstonemail.com

With a copy to:

Capstone Development Partners, LLC
402 Office Park Drive, Suite 199
Birmingham, Alabama 35223
Attention: Tonia N. Christensen, Esq.
Facsimile: (205)949-5064
12

 Email: tchristensen@capstonemailcom
All notices given in accordance with the tenns hereof shall be deemed received on the
next business day if sent by overnight courier, on the same day if sent by e~mail before 5 P.M.
(local time in the locale of the addressee) on a business day, or on the third (3 rd) business day
following deposit with the United States Mail as a registered or certified matter with postage
prepaid. Either p/llty hereto may change the address .for receiving notices, requests, demands or
other comrnuni.cation by notice sent in accordance with the terms of this Section 9. Notices. by a
party may be given on its behalf by its attorney.
10.

Waiver. Neither party shall be deemed, by any act of omission or commission, to

have waived any of its rights or remedies under this Agreement unless the waiver is in writing
and signed by such party. Any such waiver shall be applicable only to the extent specifically set
forth in the writing. A waiver of one event shall not be construed as continuing or as a bar to or
waiver of any right or remedy to a subsequent event.
11.,
Interpretation. The language in all parts of this Agreement shall in all cases be
construed as a whole and simp.ly according to its fair meaning and. not strictly fur nor against any
of the parties, and the construction of this Agreement and any of its various provisions shall be
unaffected by any claims. whether or not justified~ that it has been prepared, wholly or in
substantial part, by or on behalf of any of the parties, The parties do not intend to become, and
nothing contained in this Agreement shall be interpreted to deem that Owner and SDSU are,
partners or joint venturers in any way or that Owner is an agent or representative of SDSU for
any purpose or in any manner whatsoever. A male or female person may be referred to in this
Lease by a neuter or masculb,1.e pi:onoun. The singular includes the plural, and the plural includes
the singular. · A provision of the Agreement which prohibits a party from _performing an action
shall be construed so as to prohibit the party from performfng the action or from pennitting
others to peiforrn the action. Except to the extent, if any, to which this Agreement specifies.
otherwise, each party shall 'be deemed to be required to perform its obligations under this
Agreement at its own expense, and each party shall be pennitted to exercise its rights and
privileges only at its own expense. Words such as ·•hereby,1' '"herein," and ''hereunder" and
words of similar import shall be construed to refer to th.is Agreement in its entirety. "Including"
means ''including but not lirnlted to." '".Include~~ means "include but not limited to." ''Any''
means "any and all." Except to the extent the context requires otherwise, '~may'1 means ~'may but
shall not be obligated to." "At any time" means "at any time and fro.rn time to time." An
expense incurred on behalf of a party shall be deemed to have been incurred by the party. An
obligation performed on a party's be:t).alf and pursuant to its ·request or consent shall be deen:ied
to have been performed by the party. If a party is required not to unreasonably withhold consent
or approval, the party sh.all also be required not to unreasonably delay or condition such consent
or approval. The captions of this Agreement are for convenience of reference only and shall not
define or limit any of the terms or provisions heJ;eof,
12.
Binding Effect. All tenns1 covenants, conditions and agreements contained in this
Agreement shall extend to and be binding upon the parties hereto and their respective successors
and assigns the same as if they were in every case named and expressed and the same shall be
construed as covenants running with the land. The words "SDSU" and 11 0wner" as hereinabove
13

 us·ed in this Agreement shall mean SDSU and Owner as mentioned herein, .and also, where not
inhibited by the context of this Agreement, their respective successors and assigns.
A.
SDSU's and .Ownm•·~ Liabili1)'.. SDSU's and Owner's trustees, beneficiaries,
members, partners, shareholders, managers; directors, officers, employees, representatives,
agents; ·contractors, volunteers, successors and assigns shall not be personally liable under this
Agreement. Owner and SDSU shall each first look solely to the other party's respective interest
in the Leased Premises and the Project for the collection of any judgment or with respect to any
attachment, execution, or other writ of process to be sought, issued or levi.ed with respect to
claims under this Agreement.
13.
Partial Invalidity, If any term, covenant or condition of this Agreement shall be
invalid or unenforceable, the remainder of this Agreement shall not be affe'cted thereby, and each
term, covenant and condition of this .Lease shall be valid and shall be enforced to the extent
permitted by law, provided that such partial invalidity does not prevent either Owner or SDSU
from realizing the benefit of its bargain·pursuant to this Agreement, including but not limited to
possession of the Leased Premises and the use thereof in all material respects as contemplated by
this Agreement.
14.
Governing Law; Consent to Exclusive Jurisdiction. This Agreement shall be
construed in accordance with and governed by the laws of the State of California, without regard
to conflict of laws princ.~ples. Unless otherwise required by applicable law or the Constitution of
the State of California, for the purpose of any suit, action or proceeding arising out of or relating
to this Agreement, each of SDSU and Owner hereby irrevocably consents and submits to the

jurisdiction and venue of the San Diego County Superior Court and the United St.ates District
Court for the Southe.rn District of the State of California. Each of SDSU and Owner irrevocably
waives any objection that it may now or hereafter have to the laying of venue of any ·such suit.
action or proceeding brotight in either such court and any claim that such suit, action or

proceeding brought in such court has been brought in an inconvenient forwn. In addition to any
fonn of service of process otherwise pennitted by law, service in any such action may be given
by certified or registered mail, return receipt requestedt and shall be deemed served upon the
actual delivery thereof in such manner to the party intended to be served, which service shall be
adequately established by the receipt for such delivery, Notwithstanding anything contained
herein to the contrary, SDSU is not waiving its right to claim any exemptions, privilege and
immunities as may be provided by applicable. California law or the Constitution of the State of
California.
J!ll'Y Trial Waiver. TO THE EXTENT PERMITTED BY LAW, SDSU AND
OWNER EACH HEREBY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
LITIGATION, CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF OR 1N ANY WAY PERTAINING OR RELATING TO THIS
AGREEMENT, ANY DEALINGS OF THE PARTIES HERETO WITI-1 RESPECT TO THIS
AGREEMENT OR THE ENFORCEMENT OF THIS LEASE.
15,

16.
Captions. The captions herein are inserted for convenience of reference and shall
not be limiting or determinative in the construction or interpretation hereof.
14

 17,
Force Majeure. If either party shall be prevented or delayed from punctually
perfonning any obligation or satisfying any condition under this Agreement (other than an
obligation ot condition requiring the making of any payment hereunder) by Force Majeure, then
the time to perfo:nn such obligation or satisfy such condition shall be extended for a period. equal
to the duration of the delay caused by such event plus ten (10) days, If either party sh.all, as a
result of any such event, be unable to exercise any .right or option within any time limit provided
therefor in this Agreement, such time limit shall be deemed extended for a period equal to the
duration of the.delay caused by such event plus ten (10) days.

18.
N:o!!!iru,ility of SDSU and Owner.Qf.fjcials and Employees. No regent, trustee,
officer, official, employee, agent or representative of SDSU shall be personally liable to Owner
or any successor in interest, in the event of any default or breach by .SDSU fo.r any amoW1.t which
may become due to Owner or any successor in interest, or any obligation. incurred under the
terms of this Agreement. No officer, official. employee, agent, auxiliary, member or
representative of Owner or of any direct or indirect owner of Owner shall be personally liable to
SDSU or any successor in interest, h1 the event of any default or breach by Owner for any
amount which may become due to SDSU or any successor in interest, or any obligation incurred
under the terms of this Agreement.
19.
Prior Agreements and Discussions. Any agreements between SDSU on the one
hand and Owner on the other hand before the date of this Agreement and relating to the subject
matter hereof are superseded by this Agreement. All prior negotiations relative to the subject
matter hereof are merged into this Agreement. The submission of any unexecuted copy of this
Agreement shall not constitute an offer to be legally bound by the provisions of the document
submitted; and no party s'halJ be bound by this Agreement until it is executed and delivered by
both parties.
20.
No Third Party Rights. Except as expressly provided herein to• the contrary,
nothing in this Agreement shall be construed to permit anyone other than SDSU, Owner, the
Leasehold Mortgagees and their respective successors and assigns to rely upon the covenants and
agreements herein contained nor to give any such third party a cause of action (as a third party
beneficiary or otherwise) on account of any nonperformance hereunder. Notwithstanding the
foregoing, to the extent th.at this Agreement confers upon. or grants to any Leasehold Mortgagee
any .right, remedy or claim under, or by reason of this Agreement, the Leasehold .Mortgagee is
hereby explicitly recognized as being a third party beneficiary hereunder and may enforce any
such right, remedy or claim conferred, given or granted herem1der.
21.
Entire Agreement; Amendment This Agreem~nt and the Exhibits and Schedules
hereto embody the entire agreement and understanding between the parties hereto with respect to
the subject matter hereof, and supersedes all prior agreements ,and understandings between the
parties hereto with respect to the subject matter hereof. This Agreement ~y be changed,
waived} discharged or tenninated only by an instrument in writing signed by both SDSU and
Owner. The Exhibits to this Agreement are as follows:
Exhibit A

Land
15

 Exhibit.B

Management Agreement

ExhibitC

O&S Agreement

22.
Intellectual Propeny Rights. Except as otherwise provided herein with respect to
signage, marketing and advertising, no party may use the intellectual property rights of the other
party without the written perm issi.on of the other party.
23.
Other Damages. Vvhenever either party may seek or claim damages against the
other pl1rty (whether by reason of a breach of this Agreement by such party, in enforcement of
any indemnity obligation, for misrepresentation or breach of warranty, or otherwise), neither
SDSU nor Owner shall seek, nor shall there be awarded or granted by any court. arbitrator, or
other adjudicator, any speculative, collateral, punitive, or indirect damages, whether such breach
shall be willful, knowing, intentional, deliberate, or otherwise. The parties intend that any
damages awarded to either party sh~U be limited to actual, direct damages sustained by the
aggrieved party. Neither party shall be liable for any loss of profits suffered or claimed to have
been suffered by the other.
Business Days. In the event any period of time provided for in this Agreement
ends on a day other than a business day on which banks are generally open for a full day for
business, such ending date shall automatically be extended to the next business day.
24.

25.
Counterparts. This Agreement may be executed in any number o.f counterparts,
each of which when so executed shall be deemed to be an original and all of which taken

together shall constitute one and the same agreement. Signature and acknowledgment pages may
be taken from one counterpart and inserted in other counterparts to form a single document.
26.
Confidentiality. SDSU is subject to the California Public Records Act (CPRA).
Except (a) as required by law. be it the CPRA or otherwise,(b) for disclosure to the parties'
respective attorneys, representatives, or (c) Property Manager to facilitate the shared governance
arrangement for the Project contemplated herein, SDSU and Owner shall not publicize to third
parties any information regarding the relationship between Owner and SDSU. including any
communications preceding the execution of this Agreement, except as may be. agreed upon by
SDSU and Owner SDSU and Owner acknowledge that the other party will have all remedies
available by law or in equity in the event of a breach of this Section 29 by SDSU, Owner or their
respective Affiliates.

27.
Authorized Representatives. Any action required to be taken by Owner or SDSU
hereunder shall be taken by the Authorized Owner Representative or Authorized SDSU
Representative, as applicable.

[Remainder ofPage Left Blank Intentionally]

16

 IN WITNESS WHEREOF. the parties hereto have caused this Agreement to be executed
by their duly authorized representatives on the date first written above.
SDSU:
THE TRUSTEES OF THE CALIFORNIA
STATE UNIVERSITY, acting as
of
California in it's hig11e~mc~~

OWNER:

CAPSTONE - SAN DIEGO LLC,
a Deiaware limited liability company

Capst.one Development Partners, LLCt

By:

an Alabama limited liability company
Its:

Manager

By:._ ___,,._ _ _ _ _ _ _ _ _ __

Name:
Title:

------------------------

17

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement _to be executed
by their dµly authorized representatives on the date first written above.
SDSU:
SAN DIEGO STATE UNIYERSXTY
By;_ _ _ _ _ _ _ _ _ _ _ __

Name:~-----------

Title;_ _ _ _ _~ - - - - - -

OWNER:
HSRE-CAPSTONE SDSU, LLC.
a Delaware. limited liability company

By:
Its:

17

Capstone Development Partners, LLC,
an Alabama limited liability company
Manager

 List of Exhibits

Exhibit A

-

Land

Exhibit B

-

Management Agreement

ExhibitC

-

O&S Agreement

18

 Exhibit "A"
Land
Real property in the City of San Diego, County of San Diego, State of California,
described as follows:

THAT PORTION OF LOT 21 OF RANCHO MISSION OF SAN DIEGO, IN THE
CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO THE PARTITION MAP OF SAID RANCHO MADE lN THE
ACTION OF JUAN M. lJUCO, ET AL, VS. THE COMMERCIAL BANK OF SAN
DfEGO, ET AL, AND ON FILE IN THE OFFICE OF THE COUNTY CLERK OF
SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWESTERLY CORNER OF LOT 8 IN BLOCK 4 OF
COLLEGE PARK V,Nr.T NO. I, ACCORDING TO MAP THEREOF NO. 2l96~ FILED
lN THE OFF[CE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY;
THENCE ALONG THE BOUNDARY OF SAID UNIT NO. l AS FOLLOWS:
NORTH 80°12'10'1 EAST, 156.09 FEET; NORTH 61°52 130 11 EAST, 130.00 FEET;
SOUTH 28°07'30" EAST, 205.00 FEET; SOUTH 61°52'30 11 WEST~ 130.00 FEET;
SOUTH 41 °02'29'' WEST, I I0.00 FEET TO THE MOST NOR.THERL Y CORNER OF
LOT 4 [N BLOCK 5 AS SHOWN ON SAID MAP NO. 2196; THENCE ALONG THE
NORTHWBSTERL Y LINE OF SAID LOT 4 SOUTH 24°5 l 132 11 WBST• 60.00 FEET;
THENCE NORTHWESTERLY IN A STRAIGHT LINE TO THE POINT OF
BEGlNNING.

APN: 467-150-29-00

19

 Exhibit 

Management Agreement

20

 

Exhibit 

0&8 Agreement

2.1



 

 

OPERATIONS AND SERVICES AGRE'EMENT
THIS OPERATIONS AND SERVICES AGREEMENT (this ';Agreement") dated the

L2. day of _EJ, .(""""'",,.... 2017 (the ;~Effectjve Date'') is by and between THE TRUSTEES
OF THE CALIFORNIA STATE UNIVERSITY, acting as the State of California ir:,. it's
higher education capacity c•soSU"), and CAPSTONE - SAN DIEGO LLC, a Delaware
limited liability company ("Owner").
WITNESSETII:
WHEREAS, Owner and the San Diego State University Foundation, doing business as
San Diego State SDSU Research Foundation (the '"Foundation" or the "Lessorn) are parties to
the ground lease agreement dated the 12th day of April, 201.6 (the ~'Lease;''), pursuant to. th,e te,rm.s
and copditions ·of which Owner is leasing the Leased Premises from Lessor, and on which is
·developing, constructing, owning and operating the Project; and
WH~REAS, Owner desires to ·engage SDSU to provide various leasing, mal'keting.
operational,• programmatic and other services with respect to the Project.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements herein set forth by each party hereto to be kept a:nd performed, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby expressly
acknowledged by each party hereto, Owner and SDSU, intending to be legally bouruli do hereby
mutually covenant and agree as follows:
1.
Definitions. As used in this Agreement-i the following terms shall have the
following meanings:
"8J~reemenr shall mean this Operating and Services Agreement.

"Authorized Qw:v,er Representative" shall mean.Robert B-rown.
''Authorized SDSU Representative.. shall mean the Director of Housing
Administration.
4

'Coromunity Policles & Stan2!JI4s'' shall have the meaning assigned to it in
Exhibit "D'\
"CPI" shall mean the current Consumer Price Index for All Urban Consumers, all
items (1982-84ul00), most recently published by the U.S. Department of Labor, Bureau of
Labor Statistics. If the CPI (i) is ·not published for a given calendar monthi then the
Consumer Price Index for that month shall be the Consumer Price Index published for the
most recent prior calendar. month or other period for which it is so published; and (ii)
hereafter uses a different standard reference base or is otherwise revised, an adjustment
shall be made therei.n for the purpQses of this Agreement using the conversion factor,
formulB.i. or table for making that adjustment as is published by the BLS, or if the BLS
does not publish the same> then as is published by Prentice.Hall, Inc,, the Bureau of
National Affairs, Commer~ Clearing House, or any other nationally recognized
1

 publisher of similar statistical infonnation, as selected by the Owner; and (iii) ceases to
be published, then for the purposes of this Agreement there shall be substituted for it such
other index as the parties may agree. upo~ or in the absence of such an agreement within
a ten (10) day discussion petiod, the Consumer Price Index last issued prior to the month
and year in question.

"Qi§plaoe4. Residents" shall have the meaning assigned to it in Sectjon 7 hereof.
'".Effective .Date•~ shall have the meaning assigned to it in the introductory
paragraph hereof.
0

:Future Services Meeting" shall have the meaning assigned to it in Section 3

hereof.

.

"Leasing
$ection 3.4. L

and Operations Protocol" -shall have the meaning assigned to it in

"Master I,icense" shall have the meaning set forth in the Master Residency
Agreement.

''Master ,Residency Agreement" shall mean that certain agreement by and between
Owner and SDSU dated February 13, 2017 and pursuant to which SDSU master licenses
a portion of the beds within the ProJect.
uMatrix gf Resnonsigilities" shall have the mean.mg assigned to it in Section 3.1
hereof.
"Operations Committee~1 shall have the meaning ·assigned to it in ~ection ;i

hereof.
"Permitted Project Resid~nts·"· shall have the meaning set forth in ~xhibit "D".
"Project Housing Coµtracts" has the meaning assigned to it in Exhibit "IY'.
"Property Managei;'' shall mean any third party property management company
engaged by the Owner to provide propl'rty management-related services to the Project.
uPropep:y Management Agreement,, shall mean the property management
agreement that shall exist between the Owner and any Property Manager with respect to
the Project.

'~Residential f;ducatipn Program" shall have the meaning assigned to such term in
Section 3,6 hereof.
Residents'' shall mean shall mean any Permitted Project Resident who licenses. a
bed at the Project.
'

4

2

 1

ResLtt:e•~ shall mean the residential life component of SDSU's Office of Housing
Administration and Residential Edu~tiou.
•

"SDSU' shall have the meaning assigned to it in the introductory paragraph

hereof.
"SDSU License Agi:eement(s)" shall mean all student housing license agreements
entered into by SDSU, as agent for and on behalf of the Owner. with SDSU Students.
"SDSU's Reasonabl~ Appro'V!,r' shall mean written approval by an Authorized

SDSU Representative, which approval shall not be unreasonably conditioned, withheld or
delayed; provided that in no event shall SDSU be. r~u.ited to consent to any matter that
(a) would contravene the existing terms of this Agreement in the absence of a duly
executed amendment hereof, (b) would contravene or be inconsistent with .a CSU or
SDSU policy, rule -or regulation, or (c) would be expected, in the sole, absolute and
unfettered discretion of SDSU, to create any risk to health or public safety or with respect
to SDSU students, faculty staff, volunteets or visitors. 'Except where otherwise provided
in this Agreement, SDSU, shall not be deemed to have granted its approval for any
purpose under this Agreement as ·a result of SDSU's failure to respond to any notice
given hereunder, except as follows: (i) SDSU was .notified of such request for approval in
accordance with this Agreement,. (iO the greater of ten ( l 0) days or other time specified in
this Agreement has expire~ (.iii) SDSU is notified a second time o.f such request for
approval in accordance with this Agreement and (iv) the greater of ten (10) days or other
time specified in this A~ment have expired wi.th respect to such second notice.
..SDSU Student$." shall have the meaning assigned to it in Exhibit nD".
~'Services" shall have the meaning assi,gned to it in Section 3 hereof.
·'Services Fee" shall have the meaning assigned to it in S~ction 4 hereof.

"Services Fee Fixed Compone_m" shall mean those portions of the Services Fee
designated as such in Exhibit ~1E'\
''Serv.ices Fee Variable Component" shall mean those portions of the Services Fee
designated as such in Ex;htoit "'E".
'•Staffing Pla;n" shall have the meaning assigned to it i'n Section 3.1 hereof.
~~Temporary Hou.sing" shall have the meaning assigned to it in Section 7 hereof.
'~Term" shall have the meaning assigned to it in Section 2 hereof.
Capitalized terms used in this Agreement and not specifically defined herein but which

are defined in the Lease .shall have the meaning assigned to such terms in the Lease.
2.
Agreement Term. The term of this Agreement (the •~Term") shall commence
upon the Effective Date and shall conclude at midnigh~ Pacific Time a,t the end of the seventQ

3

 (th) Lease Year; provided however, that this Agreement shall automatically renew for

successive five (5) year periods thereafter unless either ·snSU or Owner shall deliver notice to
the other party hereto (the "Renewal Notice"), not less than twelve (12) months prior to the
conclusion of the initial seven (7) year term or the conclusion of any successive frve (5) year
renewal period thereafter (the "Renewal Notic·e Deadline")i of its election not to extend the then~
existing i.niti'al term or any sucoessive five (5) year renewal period thereafter (as applicable.
Owner shall provide notice to SDSU of each upcoming Ren~l Notice Deadline no later than
thirty (30) days prior to the Renewal Notice Deadline. TM period of time during which this
Agreement shall 'be in effect is described. herein as the "Tenn,'.
·
3,
Service~. Pursuant to the tenns .and conditions of this Agreement, and in
consideration of the payment by Owner to SDSU of the Services Fee, SDSU shall provide the
services with respe,ct to the Project as are mutually agreed to in writing by Owner and SDSU
(collectively, the "Services"). On or before May 15 of each Lease Year during the Term,
commencing May 15 1 20181. Owner and SDSU shall meet to discuss and reach agreement with
respect to the Services to be provided during the Lease Year next following such date (each a
"Future Semces Meeting''). If within thirty (30) days o.f a Future Services Meeting Owner and
SDSU shall have not reached a specific written agreement with respect to 'the Services. to be
provided by SDSU in the next following Lease Year~ then absent a subsequent agreement to the
contrazy between Owner and SDSU, the Services to be provided the next following Lease Year
will be the same as the Services that are being provided in the eurrent Lease Year. The ,Services
to be provided fro.m the inception of the Tenn through the conclusion of the initial Lease Year
are as follows:
3.1.
Matrix of Resporwibilitiett, SDSU,. by and through ResLife. and the
Property Man~er shall work to.g~ther in a shared _governance arrangement with respect
to the Matrix of Responsibilities, as further described on ~bi1 1'A" attached hereto (the
"Matrix of Responsibilities~').. Notwithstanding the foregoing, SDSU shall have the right
to delegate any of its obligations as- set forth in the Matrix of Responsibilities to an
auxiliary of SDSU, if determined by SDSU to be in its best interest.

3.2. Residential Education Program§, ·1n accordance with the Matrix of
Responsibilities~ ResLife shall establish and oversee the implementation of various
living~leaming, social, educational, student condu~t and crisis management activities and
programs (as more particularly described on Exhibit ' 48 1' attached hereto, collectively, the
"Residentiru Education Programst1 at the Projec~ for the benefit of the Residents of the
Project. The Residential Education. .Program.~ may vary from time to time; provided,
however> that the Residential Education Programs will be similar in concept and
substanc·e. to what is currently known ~n SDSU' s on-campus housing as "Aztec Journey".
3.3.

Staffing.

3.3.1. SDSU Staffing Plan. SDSU shall appoint. superv.i.se and evaluate
the required staffing for the Residential Education Programs within the Project
who shall serve as a liaison between the Residents of the Project and ResLife,
develop and coordinate a comprehensive education programming· model for the
Residents, and shall provide crisis intervention consultant services fot any

4

 Resident's care needs on a twenty-four (24) hour per das,~ seven {7) day per week
basis, throughout the Term. St:affing to be provided by SDSU with respect to the
Project shall be in. accordance with the staffing p.lan further described on Exhibit
uQ" attached hereto (the ·t'S!§.ffing Plan'').
3.3.2 . .Property Manager Staffing Plfm. Owner shall cause the Property
Manager, pursµant to the terms and conditions of the Property Management
Agreement, to arrange for a sufficient number of capable employees to enable
Property Manager to carry out its obligations and duties under the Proper\:y
Management Agreement. All matters pertaining to the employment, supervision,
promotion and discharge of such employees shall be the responsibility of the
Property Manager under the Property Management Agreement. At a minimum~
the Property Manager shall be required to employ the following personnel
pursuant to the terms and conditions o.f the. Property Management Agreement: (i)
one general manager who is a full .time professional staff member,. having
experience in student housing or related field; (ii) on.e or more assistant managers
whose responsibilities will include assisting the general manager in the overall
operation of the Project; and (iii) one or more maintenance personnel whose
responsibilities will include daily groundskeeping and Qomro.on area cleaning,
including interior a:nd exterior c:ommon areas, to ensure that the Project meets the
criteria set forth in the Property Management Agreement.

3.4.

Lming.

3.4.1. Leasing and Operations Protocol. The management and operation
of the Project shall be coordinated between the Property Manager and SDSU, and
shall be in accordance with the protocol further described on Eptlbit "-n~: attached
hereto (collectively. the "Leasing and Qyerations Protoco~J.
3.4.2. Leasing 1zy: S,PS'U. SD:SU shall be afforded the opportunity to
enter into SDSU License Agreements with SDSU Students for up to one hundred
percent (100%) of the beds in the Project (irrespective of the number of beds that
are the subject of a Master License), subject to the limitations on the Services Fee
as set forth in S@ti.on 4 hereof as may be adjusted as contemplated in Section

4.2.3.
3.5.
Marketing and Pr.o,!Ilotion. SDSU shall promote the Project as an SDSUaffiliated third party housing option for SDSU students. Subject to the conditions and

limitations below, SDSU will identify the Project ·as a residential housing option for
SDSU students in SDSU marketing and on the official SDSU Office of Housing
Administration and Residential Education on-campus websites alongside and equal with
other SDSU on campus student housing offerings. The form and contents of the
marketing materials used on the website and in SDSU-distrlbuted materials will be
prepated by the Property .Manager, subject to SDSU's Reasonable Approval. and shall

include the following:

5

 3.5.l. SDSU will identify the Project

as. a residential housing option for

SDSU students alongside a.nd equal with its other non-freshmen
"apartment" facilities in all SDSU marketing by the SDSU Office
of Housing Administration and Residential Education, as well as

on each department's official w.e'bsite;
3.5.2. SDSU will permit the Property Manager to advertise and market
the Project on SDSU property, subject to the prior review and with
SDSU' s Reasonable Approval of the location. form, quantity and
content of such advertising, and shall include a link to the Project
on the SDSU Office of Housing Administration and Resid~tial
Education websites;
3.5.3. The Project will be included in any SDSU Office of Housing
Administration and Residential Education brochures on the
website that refers to the Project as the SDSU housing option for
non-freshmen
students,. other
than
fresbmen..oriented
communications;

3.5.4. Opportunities will be provided for the Property Manager to present
programs in the SDSU residence halls during the spring of each
year regarding the Project;
3.5.5. Owner shall have the right to advertise the Project in the SDSU

re$idence halls, housing office and any other advertising areas on
SDSU's cam.pus,. includ~ng on any electronic signboards, that may
be operated by the SDSU Office of Housing Administration and
Residential Education,; and
3.5.6. Owner shall have the right to advertise the Project at various
events on the campus of SDSU. as determined by Owner to be
beneficial to the marketing and leasing efforts for the Project;
provided however, advertisement of the Project at "non-housing"

events on the campus of SDSU will be an expense of Project. with

such expense being calculated on the same rate and basis as
applicable to the costs for SOSU' s Office of Housing

Administration and Residential Education to advertise at such

events.
3.. 6.

Safety and Security. SDSU shall provide ·the Project and Residents with

safety and security services through the SDSU Police Department similarly provided to
student housing facilities and the residents of such facilities on the campus of SDSU.
3.7. Transportation. If SDSU at any point during the Term operates a
shuttle/transportation system for the. benefit of SDSU students residing off campus or in
SDSUMowned housing. at Owner~s request SDSU shall include, as reasonably feasible,
the Project. as a stop on the transit and commuting service routes between the Project and

.6

 the SDSU campus provided such transportation route is convenient to the Project. SDSU
shall advise Owner as to whether including the Project as a stop on such transit and
commuting service routes will result in any expense to OW11:er and/or the Project, and if
adding a transit stop at the Project will result in any expense to Owner and/or the Project,
Owner may elect not to include the Project as a stop on such transit and commuting

service routes. As-of the date of this Agreement, no such transportation system exists.

3.8. Naming Righ!!l(Sigmige. Owner shall be permitted tG state in any
advertising, marketing materials
in the Projecf·s logo that it is ..affiliated with
SDSU''. However, any iwe of SDSU1 s-name1 logo or trademark used in the name of the
· Project or mounted on any internal or external wall ·of the Project will be done only with
SDSU's Reasonable Approval, The exact wording and usage ofSDSU's name, as well as
the usage of SDSU' s name on any Project sign.age, shall .be determined through good
faith discussions between SDSU and .Owner.

and

3.9. C9Uaboration and Cooperation; Dispute Resolution. SDSU acknowledges
and agrees that the Services, including those set forth in the Matrix of Re.sponsibilities,
must be provided in a cooperative· and collaborative manner with the services being
provided by the Property Manager under· the Property Management Agreement, and the
parties hereto acknowledge and agree that such cooperation and collaboration shall be in
the best interests of the Residents of the Proj~. In the event that one or more disputes
shall arise between SDSU and the 'Property Manager with respect to the provision of the
Services by SDSU hereunder, and the provision of services by the Property Manager
under the Property Management Agreement, respectively, the parties shall make best
efforts to resolve such disputes informally. If a dispute cannot be resolved by the parties,
SDSU, the Property Manager and the Owner each agree to designate a senior
representative, who shall each have the authority to settle or compromise the dispute, and
who shall meet at a mutually agreeable time and place within thirty (30) days. If after the
initial dispute resolution the dispute is unresolved, the parties shall, prior to initiation of
any litigation, bring the dispute to the next meeting of the Operations Committee in a
further effort to resol'Ve the matter.
4.

Services Fee.

4.1. Descriruion. In .consideration of the performance by SDSU of the
Services, the Owner shall pay a fee to SOSU as further described on, and as calculated
pursuant to, Exhibit ~'E" -atta~hed hereto (colle<:tively, the "Services &e"). The Services
Fee shall not, absent written agreement to the contrary by·Owner and SDSU, be, adjusted
as a·result of any change$ in the Services provided by SDSU as contemplated in Section
3* and shall only be adjusted as provided in Section 4.2 below.
4.2.

Service Fee Adjustments.
4.2.1. Se,cyices Fee Fixed Component.
The Services Fee Fixed
Component, as described on E~bit nE1:, be. increased annually by

an amount equal to the greater of CPI or two and one"half percent
(2.5%); provlded however, that the Services Fee Fixed Component

7

 for a particular Lease Year shall not be adjusted. by an amount
greater than three and one•half percent (3.5%) in any year unless
there is a corresponding offset in other Project revenues or
expenses approved by SDSU and Owner ..
4.2'.2. Servi<;tts 'Fee Variable CottlpOnept, The Services Fee Variable
Component, as desc:cibed on E:$ibit 0 E'~ shall be calculated based
on the total Project revenues resulting from payments under SDSU
Lic'ense Agreements entered into by SDSU with SDSU Students,
and the Services Fee for Variable Component shall be subject to
adjustment upward or downward based on increases or decreases
in Project revenue from payments under SDSU License
Agreements entered into by SDSU with SDSU Students from
Lease Year to Lease Year.
4.2.3. Applicability of apd Limitations .Qn Services Fee. The Services
Fee shall riot.be appHcabl:e to occUpancy of any beds in the Project
pum.umt to the terms and conditions of the Master Residency
Agreement.

4.3. Timing of Payment. The Services Fee shall be paid by Owner to SDSU in
arrears,, in a single lump sum payment, on or before September 30, during each Lease
Year for the preceding Lease Year occurring during the Tenn.
5.
Qm;rations Com.mjttee. Owner shall cause,. beginning on the Effective Date and
continuing throughout the Tenn, there to be a Project operations committee (the 11 Qperations
Committee") to provide advice, consultation and r-eoommendations with respect ~o the
management and operations of the Project. The Operations Committee shall be comprised of:
(a) two (2) members appointed by SDSU; and (Q) two (2) members appointed by Owner. The
Operations Committee shall ·be a.dvjsory in nature, and the advice~ consultation and/or
recommendations of the Operations Committee shall be non•binding upon SDSU, the Owner or
the Property Manager, respectively, and shall not serve to amend or modify any agreements by
and among any of SDSU, the Owner and/or the Property Manager, including without limitation
the Lease, this Agreement or the Property Management Agreement In matters concerning the
Property Manager and Property Manager's services and responsibilities, the Property Manager
shall not be a member of the Operations Committee and shall not be entitled to vote on any
matter on which the members of the Operations Committee vote, but shall be entitled to have a
representative present -at meeti"Qgs of the Operations Coiµmittee. The Operations Committee
shall meet not less than once monthly during the first Lease Year, and subsequent to the first
Lease Year, the Operations Committee shall meet not less than twice per Lease Year, or at such
greater frequency as .may be approved by a simple majority of the members of the Operations
Committee.

6.
Access to Proj~ct SDSU, its employees and agents, shall have the right to enter
the Proj.ect at all reasonable times as is necessary and/or appropriate in the provision of the
Services, subject in all respect to the rights of Residents under their Project rental agreements or
otherwise as a matter of law; provided that SDSU shall not unreasonably interfere with the

8

 operations of the Project and shall comply with Owner's reasonable instructions.
Notwithstanding any contrary provision within this SectiQJI 6, S.DSU shall have the ab59lute
right (but not the obligati0n) to enter the Project at an:y time without liability to Owner in the
event of emergencies involving human health or: safety, the avoidance of physical damage or
other damage ·to the Project, or the enforcement of SDSU's policies with respect to student

housing.
7.

Failure of Project to Achieve SQbstantial Cgmpl~tion by the Target Completjon

Date.. In the event that Owner shall fail to cause the Project to achieve Substantial Completion
in accordance with _the provisions of Article 4 of the Lease by the Target Completion Date
(subject to adjustment as provided in Lease), then in lieu of all other damages related to timely
completion of the Project, the Owner shall provide the following:
7.1.

Alternative accommodations (the "Temporary Housing") far each Resident who
is a party to a valid rental agre·ement for hous'ing at the Project and whose room
is not reasonably capable of being occupied for its intended purposes (the

"Displaced Residents");
7.2.

Temporary storage facilities for any Displaced Residents for storage of such

Displaced Residents' personal property iten,.s;
7.3.

A meal stipend for each Disp.laced Resident housed in the Tem,porat:y Housing
Who does not have reasonably convenient access to campus dining or other

cooldng facilities; and
7.4.

For any such Temporary Housing that is more than one and one half (1 1/2)
miles from the campus of SDSU, Owner shall also provide periodic vehicular
transportation for the Displaced Residents from the. Temporary HQw;i'ng to the
campus of SDSU, and back from the campus of SDSU to the Temporary
Housing.

In the event that SDSU shall prov-ide all or aqy portion of the Temporary Housing for some or
all of the Displaced Residents, which SDSU is not obligated to do, Owner shall reimburse to
SDSU the following amount per student per day for each such Displaced Resident that is
housed in Temporary Housing on the campus of SDSU:
Displaced Residents Temporarily Housed in Single~ $41.31 per day
Displaced Residents Temporarily Housed in Double - $34.38 per day

8.

Insurance/Indemnification.
8.1.

Ownees Insmance.

8.1.1. Liability Insurance. Owner shall purchase and maintain or cause to be

purchased and .maintained and keep in effect at all times- during the Tenn
insurance against claims for pei-sonal injmies (including death) or pro~
damage ocourting in or about the Project, under a policy of commercial
9

 genera! liability insuranc~, such that the total available limits will not be
less than $2~000,000 per occurrence and $4.000,000 aggregate, which may
be·.satisfied by any combination of primary, secondary, umbrella and other
coverages, naming SDSU, the Board of Trustees of the California State
University~ beneficiaries, mem~,- officers, directors, managers,
employees, agents, auxiliaries, contractors, volunteers, suocess()rs and
assigns as additional insureds.
8.1.2. Workers• Compensatign]nsuran~. Owner ~hall purchase and maintain or
cause to be purchased and maintained and keep in effect at all ti.mes
during the Term -workers compensation and employers ~iability insurance
as. required by the State of California Workers' Compensation statutes
with the following limits: $500,000 e.a.ch accident $500.000 each
employee/disease and $1.,0-00,000 polity limit/disease. This policy shall
include endorsement for All State coverage for state ofhire.
8.1.3. 4'-utomobile Liability Insurance. Owner shall purchase and maintain or
cause to be purchased and maintained and keep in effect at all times
during the Term business automobile liability lnsuranceJ with minimum
limits of $1,000,000 per occurrence comb4led single limit, to include nonowned and hired motor vehicles, applicable claims arising from bodily
iajucy, death or property damage arising out of the . ownership,
maintenance or use of any automobile.

to

8.1 .4. Propem7 Insurance. Following the Opening Date, Owner shall maintain
and keep in effect (or cause ta be maintained and kept in effect) at all
times during the Temi property insurance on the Project and
Improvements against loss or damage by fire. lightning, windstorm, hail,
explosion, vandalism and malicious mischief. Such irtsunm.ce shall be
written on a replacement cast basis in the amount of the full replacement
cost of the Project (but e..xcluding the value of roads, foundationsJ surface
parking are£IS. and shnilar improvements) subject, however to
commercially reasonable. sublimits for buildings of this type.
8.1.5. Evidence of Insurance. Prior to the commencement of any work at the
Leased Premises by o.r OQ. behalf of Owner, and no less than annually
thereafter, Owner shall deliver to SDSU certificates of insurance and any
additional documentation reasonably :requested by SDSU (including.
without limitation, policy endorsements)
assure compliance with this
Section 8.1.5. To the extent available, the certificates and endorsements
reqe.ired by this Section 8, 1.5 shall contain a provision that coverages
afforded will not be cancelled upon no less than thirty (30) days' prior
written notice (ten (10) days for nonpayment) to SDSU prior to any lapse,
cancellation> or a reduction in coverage. All coverages, conditions, limits
and endqrsements shall remain in full force and effect a.'3 required in this
Agreement. SDSU acknowledges that other parties may also be named as
additional insureds to the insurance policies required herein.

to

10

 ·8.1.6. Faihge to Satisfy. Failure on the part of Owner to meet the material
requirements concerning insurane·e in this Section 8.1.6 shall constitute a

breach of this Agl.'eement or, in SDSU's discretion, SDSU shall have the
right, but not the obligation following written notice to Owner, to procure
or renew sucb, insurance and pay any and all premiums in connection
therewith, ~d ·aJl monies so paid' by SDSU shall b.e repaid by Owner in
full and without-reduction upon o.e~and and shall constitute an expense of
the Project.
8.2.
Wruver of Subrogation. Each of SDSU and Owner hereby waives and
releases, and shall cause: its respective insurers to waive and release1 any claims, causes
of action or other rights of any nature that each party may have against the other party.
~rising out of property damage to the Project; the Improvements. the Leased Premises or
any other property owned or leased by such party which at the time of such damage is
located at the Project, to the extent that such party actually carries or is required hereby to
carry insurance on the damaged real or personal property. Without limitation on the
generality of the foregoing, the foregoing is intende~ among other matters, to act as a
waiver by each property insurer of SDSU and ~ r of its subrogation rights ag$.st
such parties and as a mutual release of insured casualty, Anything in this Agreement to
the contrary notwithstanding, the waivers and releases contained in 1;.his Section
shall
not apply to claims, causes of action and other rights of any .nature in respect of damage
to property owned or leased by SDSU or Owner which property at the time the. clama.ge
occurs is not located at the Project.

a.2

8.3.

lntentionaJJy Omitted.

8.4. Indemnifioatlon by Owner. Owner shall indemnify, hold harmless antt if
elected by SDSU, defenq SDSU and its. trustees. beneficiaries, members, partnera,
shareholders, officers, directors, managers, employees, agents, contractors~ volunteers,
successors and assigns from and against any and all ~laims, demands,. liabilities, losses,
damages, costs and expenses (including, without limitation, reasonable attorney's fees
and litigation expenses) in respect of bodily injury to or death of a person or damage to
tangible. personal property owned by a third party to the extent arising or resulting from.
the negligent acts or omissions (including, but not limited to, willful misconduct) of
Owner or. any of its memb.ersi managers, directors, officers, employees, ~ agents,
contractors., successors and assigns in respect of the Project. This indemnity shall not be
-construed to include claims, demands, liabilities, losses, damages, costs and expenses to
the extent arising from the grossly negligent acts or omissions of SDSU or its trustees,
beneficiaries, members, officers, directors, managers, employees, agents, auxiliaries,
contractors, volunteers, successors and assigns.
8.5.
Indemnification by SDSU. Only to the extent pennitted 'by applicable
law1- SDSU shall indemnify,. hold harmless and, if elected by Owner and/or any Lender,
defend Owner, any Lender and their members, managers, investors, partners, directors,
officers, employees, agents, e<;>ntr.actors, successors and assigns from and.against any and
all claims,. demands~ liabilitie•s, los~s. Qamage~. costs and expenses (including, without
limitation, reasonable attorney's fees and liti.gatiQn expenses) in respect of bodily injµry

11

 to or death of a person or damage to tangible personal property owned by a third party to
the extent arising or resulting from the negligent acts or omissions (inol:uding,, but not
limited to, willful misconduct) of SDSU or any of its trustees, beneficiari~s, members,
partners, shareholders~ officers, directors, managers, employees,. agents, contractors,

volunteers, successors and -assigns ..in respect of the Project.. This indemnity shall not be
construed to include :claimsi demands~ liabilities, losses, damages, costs and expenses to
the extent arising (rom the w..-ossly negligent acts or o,nlssions .of Owner or its members,
manage~, investors., partners, directors, officers, employees, agents, contractors,
successors and assigns. SDStJ and Own.er acknowledge that the indemnity provided in
this Section 10 may-not be permitted by applicable law.

8.6.

SDSU's Insurance.

The Board of Trustees of the California State University is generally self-insured
under California Govemment Code Sections t 1007.4 and 11007.8

9.

Default; Remedies.

.9 .1. The occurrence ·of any of the following shall constitute an Event of Default
by Owner hereunder:
9.1.1. Owner shall have failed to pay any Services Fee payable wider
Secg9n 4 when due or any other sum required or stipulated to be pa.id by Owner
to SDSU heretmder, and such failure continues for thirty (30) days following

Owner's receipt of written notice thereofftom SDSU; or
9.1.2. Owner shall have failed to· observe· or perform any other covenant
or obligation of Owner hereunder. and Owner shall not have cured such failure
within sixty (60) days after Owner shall have received ~tten notice thereof from
SDSU; provided, however, that if such failure cannot wit]) diligent effort be cured
within. sixty (60) days, Owner shall ·not be in default hereunder if Owner shall
have commenced action to remedy such failure promptly·following notice thereof
and shall have diligently prosecuted such action in good faith thereafter, and shall
cure such default within ninety (90) days after Owner shall have received written
notice thereof from SDSU; or
9.1.3. The occurrence and contin'Q.8.nce of any of the following events for
sixty (60) days unless dismissed or discharged within such time: (i) the filing of a
petition by or against Owner under any bankruptcy, insolvency or other similar
law now or hereafter in effect; (ii) the commencement of any action or proeeeding
for the appointment of a receiver or trustee o.f the property of Owner; or (iii) the
making by Owner of an assignment for the benefit of creditors
9.2.

Upon the occurrence and during the continuance of an Event of Default by
Owner, SDSU shall be entitle<;I., subject to the provisions of Se·ction 15, to exercise any

one or more or all of the following remedies:

12

 9.2.1. SDSU may exercise any right or remedy available at law or in

equity; or
9.2.2. SDSU, without additional notice, may cure such Event of Default
on the part of Owner, at Owner's· expenset and owner shall promptly reimburse
SDSU for all .reasonable costs and expenses incurred by SDSU, plus interest at the
Default Rate.

9.2.3. SDSU may terminate this Agreement.
9.3.

SDSU's exercise of any of its rights under this section shall not constitute

a waiver, release or relinqui.sbment of any other rights it may have under this agreement.
In the event that SDSU terminates this Agreement pursuant to this ~ection 9 as a result of
an Event of Default other
a failure by Owner to pay Services Fees as and when
required under this Agreemen4 Owner shall, concurrently with and as a condition to such
terminationt pay to SDSU an amount equal to all Services Fees due under Section 4 and
other sums required or stipulated to be paid by Owner to SDSU hereunder that are unpaid
and have accrued through the date of such tem:i.ina:tion,

than

9.4.
The occurrence of any of the following shall constitute an Event of
Defaul1 by SDSU hereunder-:
9.4.1. SDSU shall have failed to remit to Owner any amounts or

expenses that SDSU agreed to pay or stipulated to be paid by SDSU to Owner
hereunder and such failure continues for sixty (60) days following SDSU*s receipt
of written notice thereof from Owner; or
9.4.2. SDSU shall have failed to observe or perform any other covenant
or obligation of SDSU hereuader and SDSU shall not. have cured such failure
within sixty (60) days after SDSU shall have received written notice thereof from
Owner; pr-0vided, however, that if such failure is such as cann0t with diligent
effo.rt be cmed within sixty (60) days~ SDSU shall .not be in default hereunder if
SDSU shall have commenced action to remedy such failure promptly followi~
notice thereof and shall have diligently prosecuted such action in. g9od faith
thereafter and shall cure such default within ninety (90) days after SDSU shall
have received written notice thereof from Ownel'.
9.5.
Vpon·the occurrence and during the continuance of'an Event of Default by
SDSU, Owner shaU subject to the provisions of Section 15, be entitled to exercise any
one or more or all of the following remedies:

9.5.1. Own~rmay terminate this Agreement;
9.5.,2. Owner may exercise any other right 0r remedy available at law or
in equity; or
9.5.3. Owner, without additional notice. may cure such Event of Default
on the part of SDSU, at SDSU's expense> and SDSU shall promptly reimburse

l3

 Owner for all reasonable costs and expenses incun1ed by Owner, plus interest at
the Default Rate.
10.
Broker's Commissions, Each party represents and warrants to the other that it has
not dealt with. any real estate brokers in connection with this Agreement, and each party shall
indemnify the other against all costs, expenses and liabilities, including, without limitation,
reasonable attorneys' fees, arising out any breach by it of the fore&oing representation and

warrancy.
11.
Notices. All notices, requests, demands or other communications required or
permitted to be served hereunder or by law between SDSU and Owner shall be in writing and
delivered by a recognized overnight courier service (such as Fed Ex.), .by certified or registered
mailj return receipt requested, or by successful and eleetronically confirmed e-mail transmission
(with a copy to follow by one of the prior two delivery methods), addressed to the parties at the
addresses specified below, or to such other address as a party shall specify by written notice to
the other.
Jfto SDSU:

Business and Financial Affairs
5500 Campanile Dr
San Diego, CA. 92182-1999
Attention: Robert Schulz
AVP Real Estate Planning & Development
Facsimile: 619.594.6017
Email: rschulz@sdsu.edu

With a copy to:

Office of Housing Administration
5500 Campanile Dr
San Diego, CA 92182-1999
Attention: Eric Hansen
Facsimile: 619 594 6202
Email: ehansen@.mEJ,il.sdsu.edu

lfto Owner:

Capstone - San Diego LLC
402 Office Park Drive_ Suite 199
Birmingham, AL 3522'3
Attention: Bruce McKee
Facsimile: (205)949-5064
E•mail: bmc.kee@capstonemail.com

With a copy to:

Capston~ Development Partners, LLC
402 Office Park Drive, Suite 199
Birm.ingham,.AL 35223
Attention: Tonia N. Christensen, Esq.
Facsimile: (205)949•5064
E~mail: tchrif;\~.Q~~-o@capstonem?til,com

14

 All notices given in accordance with the terms hereof shall be deemed received on the
next business- day if sent by overnight -courier, on the same day if sent by e-mail before 5 P.M.
(local time in the loc·ale of the addressee) on a business dayi or on the third (3rd) business day
following de.posit with the United States Mail as a registered or certified matter with postage
prepaid. Either party hereto may change the address for receiving notices, requests, demands or
other communication by notice sent in accordance with the tenns of this Section 9. Notices by a
·party may be given on its behalf by its attorney.
12.
Waiver. Neither party shall be deemed, by any act of omission or commission. to
have waived any of its rights or remedies under this Lease unless the waiver is in writing and
signed by such party. Any such waiv~r shall be applicable only to the extent specifically set
forth in the writin;g. A waiver of one event shall not be construed as continuing or as a bar to or
waiver of any right or remedy to a subsequent event.
13.
Interpret!!;ti.Qn. The language in all parts of this Agreement shall in $.II cases be
construed as a whole and simply accor.ding to its fair meaning and not ·strictly for nor against any
of the parties, and the construction of this Agreement and any of its various provisions shall be
unaffected by any claims~ whether or not justifie~ that it has been prepared~ wholly or in
substantial part, by or on behalf of any of the parties. The partie-s do not intend to become, and
nothing contained in this Agreement shall be interpreted to deem that Own.er and SDSU are,
partners or joint venturers in any way or that Owner is an agent or representative of SDSU fot
any purpose or in any manner whatsoever. A male or female person may be referred to in this
Lease by a neuter or masculine pronoun. The singular includes the plural. and the plural includes
the singular. A provision of the Agreement which prohibits a party from pel'forming an actj:on
shall be construed so as to prohibit the p~ from perfonning the action or from permitting
others to perform the J:l.Ction. Except to the extent, if any, to which this Agreement specifies
otherwise, each party shall be deemed to be required ·to perform its obligations under this
Agreement at its own expense, and each party shall be permitted. to exercise its rights and
p1ivileg~s only at its own expense. Words such as "hereby," "here~" and "hereunder" and
words of similar imp9rt shall be construed to refer to this Agreement in its entirety, i'lncluding"
means "including but not limited to.'' ~Include" means '~include but not limited to." "Any"
means 1•any and all." Except to the extent the context .requires otherwise, ' 1roayn means ''may but
shall not be obligated to.'' "At any time" means. "at any time and from time to time." An
expense incurred on behalf of a party shall be deemed to have been incurred by the party. An
obligation performed on a party's ·behalf and pursuant to its request or consent shall be qeemed
to have been performed.by the party. Ifa party is required not to unreasonably withhold consent
or approval, the party shall also be ·required not to unreasonably delay o.r condition SU(lh consent
or approval. The captions of this Agreement are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
14.
:§:in.ding Effect. All terms, covenants1 conditions and agreements contained in thls
Agreement shall extend to and be binding· upon the parties h~reto and their respective successors
and assigns the sam.e as if they were ·in every case named. and expressed and the same shall be
construed as covenants running with the land. The words "SDSU" and "Owner" as hereinabove
used in this Agreement shall mean SDSU and Owner as mentioned herein; and also, where ·not
inhibited by the cOQ.text of this Agreement, their respective successors and assigns,
15

 15.
SDSU~s and Owner's Liability. SDSU's and Owner's trustees, beneficiaries,
members, partners1 shareholders, managers, directo1:s1 officers, employees~ representatives,
agents, contractors. volunteers, successors and assigns shall not be personally liable under this
Agreement. Owner and SDSU shall each first look solely to the other party's respective·interest
in the Leased PJ;mnises and the Project for the collection of any judgment or with respect to any
attachment, execution, or other writ of process to be sought, issued or levied with respect to
claims under this Agreement.
16.

Partial Invalidit,x. If any tenn, covenant or condition of this Agreement shall be

invalid or unenforceable, the re.mainder of this Agreement shall not be affected thereby, and each
~ covenant and condition of this Le~e shall be valid and shalt be enforced to the extent
permitted by law, provided that -such partial invalidity does uot prevent either Owner or SDSU
from realizing tb.lil benefit of its batg~in pursuant to this Agreement, including but not limited to
possessfon of the Leased P1:emises and the use th~reof in all material respects. as contemplated by
this Agreement
17.
Governing ,Law; Consent to Exclusive Jmisdjction,. This Agreement shall be
construed in accordance with and governed by the laws of the State of California. without regard
to conflict of laws principles. Unless otherwise required by applicable law or the Constitution of
the State of California, for the purpose of any suit, action or proceeding arising out of or relating
to this Agreement, each of·SDSU and Owner hereby irrevocably consents and submits to th~
jurisdiction and venue of the SM: Diego County Superior Court and the United States District
Court for the Southern District of the State. of .California. .Each of SDSU and Owner irrevocably
waives any objection. that it may now or hereafter have. to the laying of venue e,f any such suit.
action or proceeding brought in either such court and any claim that such suit, action or
proceeding brought in such court has been brought Jn an inconvenient forum. In addition to any
fonn of service of process otherwise permitted by law, service in any such action may be given
by certified or registered mail. return receipt requested, and shall be deemed served upon thei
actual delivery thereof in such manner to th.e party intended to be served, which service sh.all be
adequately established by the receipt for such delivexy. Notwithstanding anything contained
herein to the contrary, SDSU is not waiving its right to claim any exemptions~ privilege and
immunities as may be provided by applicable federal law, Califomia law or the Constitution of
the State of California.
18.

Jury Trial Waiy_er. TO THE EXTENT PERMITTED BY LAW, SDSU AND

OWNER EACH HE,REBY WAIVES ALL RJGHT TO A TRIAL BY JURY 1N ANY
LITIOATION, CLAIM, COUNTERCLAIM. SETOFF, DEMAND, ACTI.ON OR CAUSE OF
ACTION ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATING TO THJS
AGREEMENT, ANY DEALINGS. OF THE PARTIES HERETO WITH RESPECT TO THIS
AGREEMENT OR THE ENFORCEMENT OF THIS LEASE,
19.
Captions. The captions herein are inserted for convenience of reference and shalJ
not be limiting or detettninative in. the construction or interpretation herepf.
20.
Force M,ajeyre. If either party shall be prevented or del~yed from pu~ctually
performing any obligation or satisfying any condition under this Agreement (other than an

obligation. or couditi'c.)n requiring the making of any payment hereunder) by Force Majeure, then·

16

 the time to perform, sµoh obligation or satisfy sueh eop.ditiOij shall be extended for a period equal
to the duration of the dela;y ~aused by suwi event plus· ten (10) days. If either party shall, as a
result of any such event, be unable to exercise any right or option within any time limit provided
therefor in this Agreement. such ti'Q"le limit shall be deemed. extended for a period equal to the
duration of the delay caused by such event plus ten ( I0) days.
21.
Nonliability of SDS.U and Owner Officials and Employe~s. No regent, trustee,
officer, official, employee, agent or representative of SDSU shall be personally liable to Owner
or any successor in interest in the event of any default or breach by SDSU for any amount which
mey become due to Owner or any successor in interest, or. any obligation incurred under the
terms of this Agreement. No officer, official, employee, agent, auxiliary, member or
representative of Owner• or of any dttect or indire.ct owner of Owner shall be personally liable to
SDSU or any successor in interest in the event of any default or breach by Owner for any
amoimt which .may become due to SDSU or any s.uccessor in interest, or any obligation incurred
under the terms of this Agreement.
22.
Prior Agreem-ents and Discussions. Any agreements betvveen SDSU on the one
hand and Owner on the other hand before the date of this Agreement and relating to the subject
matter hereof are superseded by this Agreement. All prior negotiations relative to the subJect
matter hereof are merged into this Agreement. The submission of any unex:ecuted copy of this
Agreement shall not constitute an offer to be legally bound by the provisions of the doc:umeµt
submitted; and no party shall be bound by this Agrooment until it .is· executed and delivered by
both parties.
23.
No Third Party Rights. Except as expressly provided herein to the contrary,
nothing in this Agre~ment shall be construed to permit anyone other than .SDSUt Owner, the
Leasehold Mortgagees and their respective successors .and assigns to rely upon the covenants and
agreements he.rein contained nqr to give any such third party a cause of action (as a third party
beneficiary or otherwise) on account of any nonperfonn.ance hereunder. Notwithstanding the
foregoing) to the extent that this· Agreement confers upon or grants to any Leasehold Mortgagee
any right, remedy or claim under, or by reason of this Agreement, the Leasehold Mortgagee is
hereby explicitly recognized as being a third party beneficiary hereunder and may enforce any
such right, remedy or claim conferred. given or-gran~ hereunder.
24,
&itite Agreement; Amendment. This Agreement and the Exhibits and Schedules
hereto embody the entire agreement and understanding between the parties hereto with respect to
the. subject matter .hereof, a.nd supersedes all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof. This Agreement may be changed.
waived, discharged or tenninated only by an 'insttu.ment in writing signed by both SDSU and
Owner. The Exhibits to this Agreement are .as follows:

.Exhibit A
E'Xbi.bit B
ExhibitC
ExhibitD

ExhibitE

Matrix of Responsibilities
Residential Education Programs
Staffing Plan
Leasing and Operations Protocol
Services Fee

17

 25.
Intellectual Ptppertt Rights. Except as otherwise provided herein with resp·ect to
signage, marketing and advertising, no party may use the intellectual property rights of the other
party without the written permission of the other party.

26.
ilifilrr Damages. Whenever either party may seek or claim damages against the
other party (whether by reason of a breach of this Agreement by suoh party, in enforcement of
any .indemnity obltgation, for misrepresentation or breach of wananty. or other.wise), neither
SDSU nor Owner shall seek, nor shall there be awarded or granted by any court, arbitrator, or
other adjudicator, any speculative~ collateral~ punitive, or indirect damages, whether such breach
shall be willful, knowing, intentional, deliberate, or otherwise. The parties intend that any
damages awarded to either party shall be limited to actual, direct damages sustained by the
aggrieved party. Neither party shall be liable· for any loss of profits suffered or claimed to have
been suffered by the other.
27.
Business Oays. In the event ~y period of time provided for in this Agreement
ends on a d~y other than a business day on which banks are generally open for .a full day for
business, such ending date shall automatically be extended to the next business day.
Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be dee.rµed to be an original and all of which taken
28.

together shall constitute one and the same agreement Signature and acknowledgment pages may
be taken from one counterpart and inserted in other counterparts to form a single document.
29.

Cowdentiality. SDSU is subject to the Callfomia Public Records Act (CPRA).

Except (a) as required by law:, be it the CPRA or otherwise,(b) for disclosure to the parties'
respective attorneys, representatives, or (c) .Property Manager to facilitate the shared g~vemance
arrangement for the Prqject contemplated herein, SDSU and Owner shall not publicize to third
parties any information regarding the relationship between Owner and SDSU, including any
communications preceding the execution of this ,Agreement, except as may be agreed upon by
SDSU and Owner SDSU and Owner acknowledge that the other party will have all retnedies
available by law or in equity in the event of a breaoh of this Section 29 by SDSU, Own.er or their
respective Affiliates.
30.
Authorized Representative:§. Any action required to be taken by Owner or SDSU
hereunder shall be taken by the Authorized Owner Representative or Authorized SDSU
Representative, as applicable.

18

 IN WI1NESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized: representatives on the date first written above.
SDSU:
THE TRUSTEES OF THE CALIFORNIA
ST ATE UNIVF;RSIT
. g as the State of
· California · J.t!tl-i'.rilmi!;,eE1~tion capacity

OYa:fER:
CAPSTONE- SAN DIEGO LLC,
a Delaware limited liability company

By Capstone Development Partners, LLC,
an Alabama limited liability company
Its: Manager
By: _ _ _ _ _ _ _ _ _ _ _ __

·------------

Name:

----------

Title:

19

 1N WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives on the date first \vrltten above.

,SD/;iU:

SAN DIEGO STATE UNIVERSITY

By:_____________
Name:._ _ _ _ _ _ _ _ _ _ __
Title:,_ _ _ _ _ _ _ _ _ _ __

OWNER:

CAPSTONE- SAN DIEGO LLC,
a Delaware limited liability company
By:

Capstone Development Partners, LLC,
an Alabama limited liability company

Its:

Manager

19

 List of Exhibits
Exhibit A

-

EKhibitB

~

Exhibit C

-

Matrix of Responsibilities
Residential Education Programs
Staffmg Plan
Leasing and Operations Protocol

-

Services Fee

Exhibit D
Exhibit E

20

 gigghibit 

Matrix of Responsibilities

 

EXHIBIT A
Responsibility Matrix
5030 College Avenue
Final Review Draft 2017-01-31
''X" In J>ropmy Manager's (Mamioer) or the Unlvm/ty's (SDSll) eotumn lndl«ltes Finl'// Rmponslb/fliy fer 1:1 /llnctton. "$" lndlaitet "$hafl!dH itvns tllcit ~u/re dO$tr
,;q/lab!ltOflon ktwttn the Managerg/td SPSIJ, with the desl rnrted pany a~tirlfl ftnril ll!$panslb1/Tly for f1111 Ji,mctloll,
M;m;iger 511areii•
Gener;,I Mmlnlstr.n:ive Fulldlons
SDSU
Owtnlf
Notet/Comments
"An

X

M•na~menl •nd Facllltles staffing

Secuilty Staff

)(

$

II

s

,II

s

Suk: ~~lldl111 SVSMJ provldea by M,na1w, $0SU
Polle, tltpartrnent wfll provide st!Vl£111$ slmllar as
~~r o~mpus sl\ldont h.ousl1111 t.Kllltlu per Sec.
'1L6oftlu1 A"""'mant
F1'011t Dflk SUfflna 111111)8~ by Manapr. ;;wU
Resident /\S$lstlnt (ltA.) perform de,k hoYrJ ~r
Exhibit t. <l>ofllH Plan.
Rt$ldenu c:an apply throuah sow Houstn1 Plmlllor
ilhrcu1h Mano,ger. ProcesslflC Of applh:atlons to b'I
lfurt11er dbc<.t.uvd with Ma-sa,""'-«U.

'

Front De.!k Staffln1
Anplkatlon~

II

l

L\t11n.se AQ:reement Wrilln11, Pre~rat!on, RKOl'd Tml(fna:

II

t.ollectlon of Rent
Renul Qlllec:tlon Asslstern:~ (Hoias·on SWdent RKorw,

IC

s

II

·s

l(

I(

sosu t1i collect re11tmim t'l>sldents on SOS\J License
Agm,rmmu. Manager to collect rent m>m resklen11
'"" Ptall:CI HouslM Contlik:t.S,
SOSU to place holds 011 dellni:ruent aC<;011n1.t.

X

l

Manager/SDSU to collaborate on ,ntotcemerrt of
re:l\tel aartemunts. sosu to enkmie Student
Conduct Codnnd OommunltyPolldel &stendards,

'
Renlal /lirffme11t Compliance Enforoem<tnt

II

Da11111ge BllHllll
R_,, As11Bnmeim

5

s

Rental AQ:reement Cancellation 1'11201!ss and Approvals

II

RIXllYIChangtOs

creation of Annual Dlldget • Asset Ma1111g,;,mani

"

IC

$

s
s

II
IC

X

IHD

K
X

revJew/ann~t.

JI

X

RateAl)prov•I

X

X

MQve.ln Proce111 Admlnl51mlon
r,,lall OlftliDUtlon (U,.,.,,,Carrc,us MuUi

X
K

5

Commo11 Are~ Sjlace R~tlans/Sched ullr,g/setUp/deanVp
Insurance PQ!lcv Mqu!slliCH1 Malnt!na=

X

s

K

l;!Hry Mt Information Tracktn1 arid

X

Mllllilfllll'/SOSU to proms Ill R!qtll:$11 for
c:ancellJtiQn In colllbCll'atlon, o.mer \\0 approve
releaJ.,.,
Comblnatlon of be# pract!cea fl'ffll botti Minascr
~nd Sl)SIJ, Mallll(er t11 provide ~~'lies on Exetl
s.....ad•heet to $fl_'i:J I fnr bilfln•
'fBD
Prep,~ bV MaMger • Owner pl'O'Ad" final
IDPl'Olllill.
Pnlpared by SOW, Presen~d to OWner for

creation of Ann~• I Budiet • R11sldenee Ufe
Cn•Slte EmplllV~• Compeniatlon •n<I BeneRts • I\Q&I MaMgement
on-Site Employee ComoenSJilon aoc! Benen11 • Rruldence: Ufe
Evaluat1011 of'AUet Manqemeot SUff
Evaluallon or Ru!<lence Ul'e Staff
11n;ni::l•I Reportln,s, Ae1:0i'd1 ana Book !(..,ping. A.sset M•n•11<1ment
fllianda1 Reportln,. Reooi'ds and Book .ICeePtns • Retldenu IJfe
rmanc-lal Aid Fundlng/Dl!lbU1leme11t Nouncatlon
l¼te OeVelopmen1

Evtc.tlon Proteedlr,gs
Pllrldng I.cits • Permitting
Pai1dt1g Lots• Pllrklng entcrcement

SOSU U~nse Aareement ,n<I Pro!~ H(l4.lll"C
Conlffl:IJ «- Include ldel'ltlcal subftantfv,i terms a/Ill
provlslON, Owner to nwlew and epprove ,nnuany.

X

K
X

x·
X
X
X

X

=rcll & P""""t11nllN! Fund1
TI!()

111,w $et as part of annuel b\Jdg!Jt develoDment.
MuJI meat flnanclns 11:111cwre requ!re111,nts, OWner
nrovldes final , ...........1
M•~r to prov1611 lacllltles aupport and Mov.-tn
k;,glstlc.s, Collebtmllon with SDS4.I prweaffs fQt rest
of talrlOt",

MaU delivered dln,c[N .to oroJ~.
Manager rtSponslble for dally service:, mall'll'enance,
de.anl r,g of IIN)Ce, 50SU 10 coordlnfte 'l'lld1 Mana1er
or an" ...,clal events.
o be crovlded thr'oul!h Manairer and OWner,
udl;lil or Nol't'~'fr'l1er\t (studfflt aQOOl.fnt statU$),
OWMt h'laV act to ll'JIC1: lfvloiMJOll ,re not !>tine
addm••ecl.

s

X

X

s

R•portlna

Satlsm:tlc;m survev Implementation and RePOrtina Resulu

Media f«dallonnnd Response
lnclemem: Weathclr and Emers•nc:v Prepa~c:m•u
Annual Audit

student Oeveklpment and Reskll!l'lt'! Llf-e Functions
Operallon of 11e,!dentlal Llf• Pro&ram
Staffing of Re,kl'lnll~I Life Proi!"'m
Tralnlns of Re1laentla1 LIie Program Starr
S\lp1rvt,1on of Rtslaentlal Ute Prosram 5"ff

Collaoon,!1011 RqUlred to develop prot0004 oil'
Manapr t11p0rt1n1 requJl'!nnent:s to sosu·,r>d

X
X

Manaetrtl> !ldml"lsterannu•I 11.UV'l!V, Quutlon
c:<:,Drd Ination 1111th msu.
ManMff to coordlnaie lhroLMZh SDSJJ •nd Owner.
Ncitlfi®tlont for l!,clemel'I\' wc""'er thr,,...h SDSU,

X

s
$
l(

Man~ger

n~-u,e.

X

1 -.. ,,..

X

Shared•

sosu

OvMer

Notes/COmrnoob

X
X

s

X
X

Fadllti111 tflllnln« 1111 Man,,.,r,

 SUbmlt'dr'II lncidont RP.llOIU to Oo)Snated Judlcl.l Ll•bDfl
~dJ~d1catlon Of UnM<l'lllt\l Condu.t C¢de vK11<1tlom

s

X
X

t\dJudle11tlon cf VlolatloM l1f f;Ommunlty RUie$ laulde, contl'llct, etc.)
Meaiam,11 al Re>l!dent C:Onflk:tli <roomm11w, ,uttemate. other)
udieial/llenavioral eomn.t re1m1natloru

s

X
X
X

Aft<!r--hour1 student-related Enlllr'i!et\CV Re1i:ionse
MarketlnJ functlcns

M;i!IIIJlel'

Sh.Ired•

X

s

Collateral Mateml o,iallon

X

s

K

s

FacllftV FunctiOIIS
Estau115111111lnl of Preventltiva Malntenanca Plan

5

i:r11SU on-can pr'l)f.!sslonal s\llfl for P<lllee, Fins,
MO<lk:.11 to follow SDSU -..is

SDSU

owner Notes/COmmellt$

M,"""°r io wane cloiely with sosv on marketlr,c
pl•Mlr,,c to devel,;,p the most
marketing for
the ...nlect,
Pro.fffl Will be marl(l)t!Jd DY sosu tlOWln, iimllarto
other non•ll'eshman apartment facllitle•• Manaser
will lnll mamtlnr 1ffiltU to make wre we are
-t+tn~ ...i.:.t wo, need
M1terlal, Will be prolvded to SOSU for revlew and

.,,.,.,lvtt

)(

f,.Nlbatk,

X
l(

X
X

s
s

X

Mllnapr

Shai;td•

sosu

Dual I.Hslrt« llOD=eh •• d.«lbed In A«reernent.

owner

Notff/Con1111ent1

)C

c;:apitil Project P!annllll & llMlern1mtatk111
Malntenanet Stilffinl
Independent MalnU:nan,;e Co!IIJador S,f11CUon10ver1Rm;
1nvest1pt1011 anti Re.s01utlo111 of Service Raqw,u
,,...,.ng and Rop,;,,tlng SeNl<:e Rc,quest!! ,nd Resolutlons

X

Room u,na ltlon Reports • MO'll1:-ln

X

D1mue Asses~m,nts l0<>rt m-ut)
Mamtena= supply OrderiJII •rid lnvenwrv MalnU:nance
Nl!lotlatlr,s Vendor Contnu;bi
Dat,reommu111e1111on Se!Vices ,or PrQp,rtv
C.l'Qul\Cls Maintenance llncludlng landSCllpmg, Uttet & snow removal)
i>;,oonc Lots/Garage • Ma1nt'1n•nce, UJrntfnr, Cle;lnup
Waste Manqet'lleflt • 111moval of trash ar.d recvc,lng

X
X
X

11

~ftet•hOUI'$ ~Ht\l Emergen,;y R&Sponse

X

l'MllitV TAlnlnB f<1r Res Ufe Stllff
Fll'II SV$tem Maintenance end 1n,111e,,:K1M

S0SU wtll lllldl'ci$ Col)CIUCI (:Qde ar.cl Cornm1mlty
~lcv vtolatlOI\$ In ,..,._boratlon with Mtn,""r.

)(

Marut1n111'1,nnlns

CQltatll!ral Meteiial Appl'OVII
Merketlll8' lmph:,mentatton
Manlns U1tm.abels
UniWllJtY~owel """"" to cimpus Events/facllltle.1
A~plkanons & l.llllslng
Ellll'ltOnlc Medi, DevelOPm<lrrt ~nd Malnten,,w:e

TDD, Determine report1na SVJti!m l>etw«en
!i().$1)/Manaser, 11\ddent reports to ti. pl'IWkled to
Mi"""'!f for lnsuranct1 renD111rur.

Capltlll "'qU!Ut!I sutrmlthd a.t part Qlinnuat budl'I(
annr'0\1111 nroceas

X
)(

X
K

"°"""'"

s

Ma.,,,..er to utlllze se/Vli;e Ofder tracklnd
\'BD SDSU to assist wfth -.in RCRJ
,oD. sr,sv to HS lat wltll room ch~k$ wltl, m11111ger
a f t e r ~ Manager to provtd, ,rty dam;,ge
a11Swments tor blllln",

s

SOSU ;,nd Manager 10 d""etop on..:111 or11ercen,;y
ton'!llt:1: orotcc:ols

s

X
)C

X

s

F1,.Drlll$

X
K
K

s

s

K°fff'/Fobd/Aa:,m Q,rdl

X

s.~~rity camem

X

l.cW voitase $v$tefn$ Mlllntenarii»

II

Tn1lnlng to be provided on water shut-off, plunel"II
t~llaU, lock d,angu, ~enns/V\wiillll/updttlng
work a!de11, 111:c, for profeSJIQnal and AA staff.

M•~--r.

SDSIJ a. SDSIJ Polk:e,
Stand ,time S\'ffilm lly Manaser. Ext,rt<1r dooB,
~m,tQt'tohave tontrol ~ - . Unite~
~ "'"'e ell!:Clronlc ha "'"~re
MalntlllMd 1w M11n..,,.,.,

 Exhibit "B,,

Residential Education Programs·

DRAFT - Aztec Journey Model - Sophomore Success Program
Mission: To promote and maintain
University that fosters engagement
to life after college

a conununity of second year

scholars at San Diego State

and success that leads to graduation and a smooth transition

: .~,~-

.,

'

,'

.

. ',;; {}(~

.· Ae~demi<iantii'.r.':>.

c~t~·~r 'P.t#tfijriig ·

•. ~ 't\~ade111ic.\advi's1~i<:'

;~ Fa·~~dty ~1ei1tors ' . ,
. • Career assessment·
t:\fl~~,p-repa r~tl{)A
-,:career . . \i,,ssment
.., . ,...

High Impact.
Learning·

Opportunities
• Studv abroad
• Undergraduate
Fese·arch · ~~~

• t28iJ!rfflft~ril¥ stJrv ice

. !:\f:~~--:·:~~::::-::
iy;;r:}. , .
. .

Students will be exposed to and engage in a variety of experiences designed to
enhance their se·cond year including:
•
•
•
•
•
•
•
•

Academic advising for major selection and graduation evaluation
Mentorships with faculty
Career assessments and preparation for internships
Leadership opportunities in student organizations
Wellness Initiatives focused on healthy living
Financial literacy
Community dialogue around citizenship and being a good neighbor
Study abroad opportunities

 I Undergraduate research
a Small and large group community service experiences

 

Exhibit '~c•~
Staffing Platt
1. SDSU Stafting.

i.

SDSU shall arrange for a sufficient number of capable employees to enable the
SDSU Residential Education Office f'REO") to carry out its obligations and
duties under the· Matrix of Responsibilities and the Residential Education
Program. All matters pertaining to the employm.ent, compensation, supervision,
promotion, discharge and' other aspects of employment of such employees shall be
the responsibility ofSDSU.

ii.

SDSU REO smul employ at least the following personn~l from the inception of
the Term through the conclusion of the initial Lease Year: (i) Residence Hall
Coordinator who is ~ full•titne professional staff member, having experience in
residence life or a related field; (ii) Up to five (5) Community Assistants wh9se
responsibilities who will assist. the Residence Hall Coordinator with the
implementation of the Residential Educatio.n Programs (as more particularly
described in Ex:ttlbit "8 2'. Subsequent to the initial Lease Year, and depending
upon changes (if any) in the Services for subsequent Lease Years, SDSU REO
rpay employ either more or less personnel to pe.rform the Services; pr-ovided
however, absent written agreement by Owner and SDSU to the contrary, the
Services Fee shall not be adjusted as a result of suoh changes .in personnel.

Staff Position
Reside.nee Hall Coordinato'r

'Prin,tar.v Responsibilities

Shall ditectly oversee the. implementation of
the Residence Education Program for the
Facility in conjunction with SDSU Residential

Education Office.
Community Assistants

Shall assist the Residence Hall Coordinator
with the implementation of the Residence

Education Program.
Shall provide three (3) hours of front desk
duties weekly.

 Lea.sin& and Operations Protocol
At all times during the term of this Agreement, the Project shall be operated under the following

.

~~

1. Leasing.
i.

Leasing by the Universitx:. SDSU shall be afforded the opportanity to enter into
SDSU License Agreements with SDSU Students for up to one hundred percent
(100%) of the beds in the Project (irrespective of the number of beds that are the
subject of a Master License). All SDSU License Agreements shall be on the then
current form of rental license agreement provided for SDSU License Agreements
approved by Owner, SOSU and Property Manager. The SDSU License
Agreement shall be approved in collaboration between the Owner, SDSU and the
Property Manager in advance of the leasing period and shall offer the Project. as a
twelve (12) month resident occupancy period. The fonn of SDSU License
Agreement shall include the .right of the Owner to exercise remedies., up to and
including termination of the SDSU License Agreement in the event the Resident
who is a party to any sueh SDSU License Agreement is tenninated as a student of
the University for violent, threatening or materially disruptive behavior; provided
however, any such -disciplinary measures., up to and including termination, shall in
any event be in accordance with all applicable federal and state laws.

ii.

Leasing by the Prqperty Manager. .At t.he written direction of the Owner, Property
Manager shall be responsible for the leasing or licensing of the residential beds at
the Project to Permitted Project Residents (as defined below) acceptable to Owner
with respect to any beds iri the Project that are v®Mt at any time. All Project
Housing Co.ntracts shall be on the then current form for Project Housing
Contractsp approved by Owner, SDSU and the Property Manager, Property
Manager shall agree to use commercially reasonable efforts to have the Project
fully rented, and1 in connection therewith, Property Manager shall act as the
leasing agent as provided in the Property Management Agreement, and subje.ct to
the terms of the Ground Lease.

iii.

Except as pertaining to obligations of SDSU students under the Student Conduct
Code, the Community Policies & Standards under the SDSU License Agreement
and Project Housing C-Onttact shall have identical substantive terms and
provisions.
·
·

iv.

The Property Manager shall provide for the· following priority with respect to the

rental of beds at the Project. The order of priority set forth below is intended to
guide the marketing efforts of the .Ptoperty Manager in collaboration with SDSU
and shall not liµiit or restrict Property Manager from entering into a Proj.ect
Housing Contract with .any Pennitted ·Project Resident nor require Owner to

 terminate any Project Housing Contract with any Permitted Project Resident. As
used herein, 0 Pemiitted PtoJect Residents" shall be. limite:d1 except as otherwise
required by law (including·the Fair Housill.$ Aot)y to residents identified below:

v.

vi.

a.

SDSU Students currently living in on-campus 'facilities of SDSU and
those students how are currently living, offi.eampus in non•SDSU
residential facUities;

b.

Transfer students applying for admission to SDSU;

c.

Freshman applying for admission to SDSU; and

d.

Faculty and staff of SDSU.

As used herein, ~'SDSU Student" shall mean an individual who is enrolled as a
student at SDSU.

Billing and Collections.
a.

SDSU wiU be responsible for the billing and coll~tion of all rents
and other charges payable by SDSU Students under SDSU License
Agreements and Property Manager will be responsible for the billing
and collection of all rents and other charges payable by any
Residents under Project Housing Contracts per the tenns ·of the

,Property· Management Agreement.
2. Community Policies & Standards. In an effort to align the experience of the Residents to
other SDSU onwcampus facilities, Community Policies & Standards .for the Project shall
be established that mirror the current SDSU Housing Policies & Regulations and shall
effect all Residents living in the Project. The. Community Policies & Standards shall be
adopted and published from time to time by the Property Manager in consultation with
the Operations Committee (the "Com.mu.nit, Policies & Standards"). Each SDSU
License Agreement and Housing Project Contract shall require the Resident to
acknowledge and agree to follow the Community Policies & Standards. The Community
Policies & 'St.andards are a component of the SDSU Guide. to Community Living and
Roommate Agreement,
3. Emergency Procedures. Owner shall cause Property Manager to establish emergency
procedures for all Residents of the Project, including thQse Residents with disabilities, in
accordance. with SDSU standards a$ published in the SDSU Guide to Community .Living

and Roommate Agreement, industry standards and applicable local and state ordinances.
codes, roles, regulatkms and laws. Such emergency procedur~s shall be reviewed and
updated by Property Manager from time-to-time.

 Exhibit 

 

Services Fee
?Add detailed Fee Schedule?

 

EXHIBITE
SERVICES FEE

SERVICES FEE - FIXED COMPONENT

Residence Hall Coordinator

Community Assistants (up to 5 CA's)

Resident Activity Fee
Front Desk coordinator

Annual Salary-Year l Base
OPE
Board Plan -Yr l Base
Rent Free Apartment
Board Plan -Yr 1 Base
Stipend
Rent Free Bedroom

$49,120
59% of Annual Salary
$6,152

j

$50/resident

$6152/CA
$1,500/CA

Provided by Manager

SERVICES FEE - VARIABLE COMPONENT

Overhead (e.g., Recruitment,
selection, training, supervision)
Year l Supplies to be Capitalized In
REO Service, Supplies, and Equipment
Man~gement Start-Up Costs
REO Administrative Fee

OHA Administrative Fee

Marketing, Application, Bllling

BFA Administrative Fee
Cre4it Card fee

Pass Through Convenience Fee

1.0% ofTotal Gross Revenue
0,3% of SDSU License Agreement

Gross Revenue
1.25% of SOSU License Agreement
Gross Revenue
1.0% of sosu License Agreement
Gross Revenue
0.75% of SDSU License Agreement
Gross Revenue 2C Actual Credit card

Fee

sosu Student Account Services

cashiering, Account Mgt., Collections

SOSU Police/ Public Safety

First response

1.0% of SDSU Llcense Agreement
Gross Revenue
0.5% of Total Gross Revenue