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2.4 On May 19, 2004, Colton Non -Profit filed a separate action against the
<br />City and the Agency entitled Colton Non -Profit .Senior Housing, Inc. v. City of Colton, el al.,
<br />Case No. SCV SS 115619 (the "Colton Non -Profit Action"). The complaint in the Colton Non -
<br />Profit Action (the "Cross -Complaint") sought declaratory relief regarding Colton Non -Profit's
<br />ownership of, and right to operate. Colton Palms, as well as the ownership of the Turner
<br />Settlement Funds and the Turner Settlement Earned Interest. On August 5, 2004, the City and
<br />the Agency filed an answer to the Coss -Complaint generally denying all claims made therein
<br />(the "Cross -Answer").
<br />2.5 It is now the intention of the Parties to settle and dispose oC fully.. finally
<br />and completely, any and all existing or 11otcntial claims, demands, obligations, damages,
<br />liabilities, complaints, suits, actions, causes of action, and rights of appeal, both known and
<br />unknown, as set forth below.
<br />3. SETTLEMENT TERMS:
<br />This Settlement Agreement shall be effective as of the date: (a) the Parties have
<br />exchanged fully executed counterparts ol'this Agreement; and (b) each person who is a resident
<br />and/or a lessee of Colton Palms has executed and delivered to the Parties a release of claims in
<br />the form attached hereto as Exhibit A (the "Effe,,tive Date").
<br />3.1 Operation of Colton Palms
<br />3.
<br />LI Colton Palms shall remain open and operating until all
<br />tenants/households identified pursuant to Section 3.1.3 below, have vacated their units
<br />at Colton Palms, but in no event beyond ,July 1, 2007 (the "Operating Period").
<br />Notwithstanding the foregoing, the Parties hcreto reserve their respective ri-lits to seek
<br />an earlier termination of the Operating Period in the event that Colton Palms is
<br />determined to be uninhabitable in accordance with applicable law. Neither the City nor
<br />the Agency shall take any action to close Colton Palms or dissolve Colton Non -Profit on
<br />the grounds of Colton Non -Profit's failure to Ibllow corporate formalities or comply
<br />with the terms of its Bylaws, so long as Colton Non -Profit, in good fluth, reasonably
<br />attempts to comply with such corporate formalities and Bylaws.
<br />3.
<br />1.2 During the Operating Period, neither the City nor the
<br />Agency shall take any action, directly or indirectly, to precipitate, encourage, pressure
<br />or force in any way, any resident or lessee ol' Colton Palms to vacate or abandon their
<br />unit at Colton Palms. Also during the Operating Period, neither Colton Non-Protit nor
<br />any officer or agent of said corporation shall take any action, directly or indirectly, to
<br />compel. encou al c. pressure or force in any way, any resident or lessee of Colton Palms
<br />to remain as a tenant of Colton Palms. However, nothing in this Section 3.1 .2 shall
<br />prevent the City, the Agency, or Colton Non -Profit from exercising its rights and
<br />obligations under any federal, state or local statute, ordinance, law, or rule.
<br />3.1.3 Colton Non -Profit hereby certifies that as of the Effective
<br />Date, there are fifty-one (51) qualified tenant/households leasing apartments within
<br />Colton Palms (the "Residents'). On the Effective Date, Colton Non -Profit shall provide
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