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ATTACHMENT 2 Section 1. Grant of O tp ion. City hereby grants to Developer the option to ground lease the Land for the purpose of rehabilitating, developing and operating the Project thereon for the consideration and under the terms and conditions set forth in this Agreement (the "Option"). Section 2. Term of Option: Exercise. a. Term. The term of the Option (the "Term") shall be for a period commencing on the date of this Agreement and ending on December 31, 2021 (the "Term") unless extended by mutual agreement of the Parties. During the Term, Developer and City staff agree to negotiate in good faith to the terms and conditions to be included in a ground lease of the Land from City to Developer ("Ground Lease") consistent with this Agreement. The Term of the Option shall end on the date set forth above or, if earlier, on the effective date of the Ground Lease. b. Exercise of Option. At any time following approval of the Ground Lease by City and before the expiration of the Term, and so long as the Developer is not then in default under this Agreement or any other agreements with City, Developer may exercise the Option by giving written notice to City (the "Option Notice"). c. Expiration. The Option shall expire at midnight on the last day of the Term. If the expiration of the Term falls on a Saturday, Sunday or legal holiday in the State of California, then the Option maybe exercised on the next following business day. Upon termination of the Option and a written request by City, Developer shall sign and deliver a quitclaim deed or such other document as maybe reasonably required by City to evidence the termination of the Option. Section 3. Option Consideration. The Option is granted in consideration of Developer's obligation to negotiate in good faith for the Ground Lease and for advancement of the Project. The Option consideration is related to the Option only and in no way relates to Ground Lease payments that will be owed to City. In addition, concurrently with the execution of this Agreement, Developer shall pay and deliver to City the sum of One Hundred Dollars ($100.00) as separate and independent consideration ("Independent Consideration") for City's execution of this Agreement and agreement to grant the Option on and subject to the terms and conditions of this Agreement. The Independent Consideration is non-refundable to Developer in the event this Agreement terminates prior to Developer's exercise of the Option. Section 4. Transfer of the Development. a. Conveyance Documents. Following delivery of the Option Notice and satisfaction of all the conditions precedent set forth in Section 5 below, the City and the Developer shall enter into the Ground Lease for the Land (consistent with the terms set forth herein and such other terms as maybe agreed upon by City and Developer). b. Ground Lease of the Property. The Ground Lease shall be in accordance with the following terms: 2 OAK #4811-5363-1135 v2