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LAKE SAN MARCOS RESORT AND COUNTRY CLUB

LEASE AGREEMENT

This LAKE SAN MARCOS COUNTRY CLUB LEASE AGREEMENT ("Lease") by and between Citizens Development Corp, a California Corporation, hereinafter "Lessor", and the Country Greens Homeowners Association, hereinafter "Lessee", is effective as of June 1, 2008.

RECITALS

FIRST: Lessor is the owner of certain real property located in the County of San Diego, State of California commonly known as the Lake San Marcos Resort and Country Club ("LSM"). Included within LSM are a Lake (Lake San Marcos), "Lodge" and related Recreational Facilities which are owned, operated and maintained by Lessor.

A. That portion of LSM consisting of the "Lake" and remote picnic area with picnic tables and restroom facilities is more particularly described in Exhibit "A", attached hereto and incorporated herein by this reference. The Lake does not include any docks, wharfage areas, the marina on the Lake or any other fixtures which are currently on the Lake and/or which the Lessor may put on, in, or near the Lake during the Term of this Lease.

B. That portion of LSM consisting of the "Lodge" is more particularly described as a large meeting hall called "the Pavilion", a Conference Center, a meeting room called the Gallery Room, the Billiards Room and a meeting room called the Club Room. The Lodge does not include the golf courses, country club, snack bar and restaurants.

C. That portion of LSM consisting of the Recreational Facilities (also known as "the Facilities") includes the two swimming pools with changing area and restrooms, four tennis courts, three paddle tennis courts, a sandy beach area, lawns, walkways, and parking lot in and around the Lodge, as well as the remote Lake picnic area with picnic tables and restroom facilities referenced in Section "A" above. The Lodge and adjacent Recreation Facilities are shown in Exhibit "B" attached hereto and incorporated herein by this reference.

SECOND: Lessee is a subdivision in the Lake San Marcos community consisting of One Hundred Eight (108) dwelling units and the land thereof commonly known as the COUNTRY GREENS HOMEOWNERS ASSOCIATION.

THIRD: This Lease between Lessor and Lessee relates solely to the Lake, Lodge and Recreational Facilities described above.

FOURTH: Lessor and Lessee desire by this Lease to define the rights and duties of each party in respect to Lessee’s Lease of the "Lake", "Lodge" and "Facilities".

DEFINITIONS

As used in this Lease the following terms shall have the following meanings:

1. Dwelling Unit: Shall mean and refer to the One Hundred Eight (108) single family residences governed by the Country Greens Homeowners Association.

2. Resident: Shall mean only the owner-occupant and family of a "dwelling unit", which Resident is a member of the Country Greens Homeowners Association, or the tenant and family of such Resident who occupies said dwelling unit for a continuous period of sixty (60) days or more.

3. Other Lake San Marcos Resident: A legal owner/occupant of a dwelling unit within the Lake San Marcos Project Development, other than of the COUNTRY GREENS HOMEOWNERS ASSOCIATION.

4. Premises: The Lake, Lodge and Facilities as a collective unit and as more fully described in Exhibits "A" and "B," attached hereto.

Now therefore, In consideration of the mutual promises herein contained, Lessor and Lessee ("the Parties") mutually covenant and agree to the below terms and conditions.

TERMS AND CONDITIONS

1. Lease. Lessor leases to Lessee for the benefit of its Residents, and Lessee leases from the Lessor, the non-exclusive right to use and enjoy in common with Other Lake San Marcos Residents having similar Leases with Lessor and with others to whom the Lessor has or may in the future grant such use, the Lake, Lodge and Facilities subject to the following terms and conditions. The extent to which Lessor may grant others use of the Lake and the Lodge shall be subject to the condition that the extent of use and enjoyment of the Premises by Lessee shall not be diminished from the status in effect at the date of this Lease. Residents of the LSM community who have similar Leases with Lessor for the LSM Lake, Lodge and Facilities, shall have priority use over non lease holders.

2. Term. The term of this Lease shall be for approximately Ten (10) Years commencing June 1, 2008 and terminating on December 31, 2018. Lessee shall have the option to extend the term of the Lease by up to two (2) successive five (5) year terms under the same terms and conditions as this Lease by providing no less than ninety (90) days written notice of its intent to exercise such option. Thereafter, unless either side provides sixty (60) days written notice to the other party of its intention to NOT renew the Lease, the Lease will automatically extend for an additional five year term, subject to all of the existing terms and conditions set forth in this Lease.

3. Rent. Lessee shall pay to Lessor as rent for the use of the Lake, Lodge and Facilities and for the maintenance and supervision services thereof during the term of the Lease and for any extensions of said Term, a sum determined as follows:

a. The initial annual rental shall be Thirty Thousand One Hundred Eighty-Six and 00/100 Dollars ($30,186.00), and shall be due and payable on a monthly basis starting June 1^st, of 2008. Thereafter, monthly payments shall be due on or before the 1^st of the month of each year. If the monthly payments are not received within thirty (30) days of the due date for said payment, Lessee shall be subject to a one and one half percent (1.5%) per month interest charge on the unpaid balance, in addition to the past due rental payment.

b. After the commencement year, which shall begin June 1, 2008, the annual rental period shall thereafter commence on the first day of each January and end on the thirty-first day of December of that same year. The initial annual rental period shall for the purpose of this Lease be deemed to have commenced on June 1, 2008.

c. Payment of rent shall be made to Lessor at its address listed below or to such other persons or place as Lessor may from time to time designate in writing. Lessor’s acceptance of a payment and/or endorsement and negotiation of a check from Lessee which is less than the amount then due shall not be deemed an accord and satisfaction that Lessor has agreed to accept a lesser amount, nor is it a waiver of Lessor’s rights to the balance in full of such Rent, regardless of any language on Lessee’s check attempting to so state. In the event any check, draft or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $50.00 in addition to any late fee, and Lessor at its option may require all future payments due from Lessee to be by cashier’s check.

d. The annual rental payment for the Lake, Lodge and Facilities after the initial rental year (June 1, 2008 through December 31, 2008) shall be a maximum of four percent (4%) of the annual rental charged for the preceding year.

e. Lessor shall notify Lessee in writing on or before September 30^th each year of the annual rent to be assessed for the following rental period effective January 1^st.

4. Scope of Rent. Lessee understands and agrees that the rental payments do not include the use of any docks, wharfage area, the marina on the Lake, golf courses, snack bar and restaurants, or any other property not encompassed within the definitions and descriptions of the Lake, Lodge and Facilities as set forth above and in attachments Exhibit A and B. _____________

Lessee’s Initials

5. Rules and Regulations. Only Lessee’s Residents and their invited guests shall be entitled to use the Lake, Lodge and Facilities under this Lease, which entitlement is subject to such Rules and Regulations as may from time to time be promulgated and established by Lessor or Lessor's successors in interest. Lessor at its sole discretion may limit the number of guests a Member may bring to the Lake and Lodge Facilities, unless such Member is renting the Lake and Lodge Facilities. Any changes or additions to the Rules and Regulations shall only be such as may be reasonably necessary for the upkeep and use of the Lake, Lodge, and Facilities and/or the safety and health of Lessee and others having the right to use the Lake, Lodge and Facilities. Such changes and/or additions shall not substantially interfere with or reduce the rights and privileges of the Residents to use the Lake, Lodge and Facilities pursuant to the terms of this Lease Agreement. Lessee acknowledges receipt of a copy of the most current Rules and Regulations (attached hereto as Exhibit "C") governing the use of Lake, Lodge and Facilities effective December 2, 2007. Upon any material changes thereto, Lessee shall immediately be provided with an updated copy of the Rules and Regulations with all changes, additions or deletions clearly identified. Until Lessee has been provided with a copy of such updated Rules and Regulations, Lessee and its Residents shall not be bound by any of those change(s), addition(s) and/or deletion(s), but will be held to the requirements of the attached Rules and Regulations.

6. Use of Lake, Lodge and Facilities. So long as Lessee is not in default in the payment of its rental payments or in the performance of any of the covenants, terms and conditions of this Lease, Lessee’s Residents and their invited guests will have the nonexclusive right to use the Lake, Lodge, and Facilities. In using said Lake, Lodge and Facilities, Lessee and its Residents shall at all times do so in a careful, safe and proper manner, having due regard for the safety, rights and interests of other users, and shall in making use thereof abide and comply with all of the Rules and Regulations promulgated by Lessor applicable thereto, and shall further observe and comply with the laws and requirements of all municipal, county, state and federal authorities now in force or which may hereafter be in force pertaining to the use of the Lake, Lodge and Facilities.

7. Redevelopment and Relocation. Lessor reserves the right to redevelop and/or relocate the Lake, Lodge and Facilities, at its sole discretion, within the Lake San Marcos Resort and Country Club, and Lessor will provide Lessee with at least sixty (60) days prior written notice of such redevelopment and/or relocation commencing. Lessor agrees to take all reasonable measures to minimize any and all adverse effects upon Lessee’s rights pursuant to the term of this Lease during such redevelopment and/or relocation. To the extent Lessee and its Residents are unable to use the Lake, Lodge or Facilities during any redevelopment and/or relocation, Lessee’s semi-annual rental payments will be reduced proportionate to the number of days that the Lake, Lodge and/or Facilities could not be used.

8. Maintenance, Supervision and Costs. Lessor will maintain, supervise and control the Lake, Lodge, and Facilities and pay all costs of maintenance, supervision and control. Lessor shall maintain the Premises in substantially the same or improved condition as when leased, reasonable wear and tear and damage by elements excepted, and at all times in a neat, clean and sanitary condition and in full compliance with all public rules, regulations, laws and ordinances as may from time to time be applicable. Lessor shall supervise and control the use of the Premises and those using same in a manner calculated to promote and protect the interests of Lessee and others authorized to use the Premises.

9. Default; Breach; Remedies. A "Default" is defined as a failure by the Lessee or Lessor to comply with or perform any of the covenants, terms and/or conditions of this Lease or the Rules and Regulations under this Lease. A "Breach" is defined as the occurrence of one or more Defaults, and the failure to cure such Default within the applicable grace period, if any.

a. If Lessee defaults in the payment of any rental payments required under this Lease, or violates or is in Default under any other terms, covenants or conditions of this Lease and/or the Rules and Regulations referred to in Section 5 above, and fails to cure such Default(s) or correct such violations within thirty (30) days following written notice thereof, Lessor may at its option, on written notice to Lessee, terminate this Lease and sue to recover any damages sustained as a result of Lessee’s Breach, including, but not limited to rental arrearages and late fees.

b. The rights and remedies given Lessor hereunder (i) are cumulative to all other rights and remedies now or hereafter extended to Lessor by law or by the terms of this Lease; (ii) shall extend to and be binding upon any assignee of Lessee hereunder; and (iii) shall extend to and accrue to the benefit of any person or entity to whom Lessor might grant, assign or transfer the Lake, Lodge and/or Facilities.

c. If Lessor defaults in the maintenance and operation requirements of this Lease, or limits the Lessee's use and enjoyment of the Premises, or is in default under any term, covenant, or condition of this Lease, and fails to correct such violation within sixty (60) days following written notice of same, Lessee shall have the right to cancel this Lease. The rights and remedies given the Lessee hereunder (i) are cumulative to all other rights and remedies now or hereafter extended to the Lessee by law or by the terms of this Lease, (ii) shall extend to, and be binding upon, any assignee of Lessee, and (iii) shall extend to and accrue to the benefit of any person or entity to whom the Lessee might grant, assign or transfer this Lease.

10. Mutual Limitation of Liability & Covenant Not to Sue.

Excluding claims for breach of this Lease, the Parties mutually agree that each will hold the other harmless and free from any damages arising from claims, suits or liability on account of, or related to, any act or omission, or alleged act or omission of the Party, or any of its officers, agents, representatives, employees or servants.

Lessee agrees that should any Resident seek to pursue a tort claim or legal action for damages against Lessor arising out of or in any way relating to the privileges conferred upon a Resident as a result of this Lease Agreement, Lessee shall refrain from: (i) filing a claim against CDC and/or Lake San Marcos Country Club for such damages alleged by a Resident; (ii) joining in a claim against CDC and/or LSM. Nothing in this paragraph, however, prohibits Lessee from filing a cross-complaint against CDC, LSM or any Resident should Lessee be brought into any claim or legal action by any party thereto.

Lessee agrees that in the event Lessee reserves and/or uses the Lake, Lodge and/or Recreation Facilities for an HOA sponsored event, it shall execute the same waiver form and/or indemnity agreement that any other party reserving or sponsoring an event is required to sign.

11. Assignment or Transfer by Lessor. Lessee understands and agrees that Lessor may grant, assign or transfer its title and interest in the Lake, the Lodge, and/or the Facilities. Upon such conveyance, and the transferee’s acceptance of all of Lessor’s obligations, duties and liabilities hereunder as to the property conveyed, Lessor shall be relieved of any obligation to perform any of its covenants and conditions hereunder as to the property conveyed. Such grant, assignment or transfer of title and interest by Lessor, however, shall not relieve Lessee of any of its obligations under this Lease to the new owner/Lessor of the Lake, Lodge and/or Facilities.

12.. Assignment by Lessee. This Lease may not be assigned by Lessee without the express written consent of Lessor, which shall not be unreasonably withheld. Lessee’s unauthorized assignment of this Lease shall constitute grounds for immediate termination of this Lease upon three (3) days written notice from Lessor.

13. Waiver – Lessor.

a. No waiver by Lessor of the Default or Breach of any term, covenant or condition of this Lease by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor’s consent to, or approval of any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.

b. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

14. Waiver – Lessee. No waiver by Lessee of the Default or Breach of any term, covenant or condition of this Lease by Lessor, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessor of the same or of any other term, covenant or condition hereof. Lessee’s consent to, or approval of any act shall not be deemed to render unnecessary the obtaining of Lessee’s consent to, or approval of, any subsequent or similar act by Lessor, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.

15. Counterparts. This Lease may be executed in counterparts, each of which shall be considered an original but all of which shall constitute one Lease. Facsimile signatures shall be construed as originals for all purposes with respect to this Lease.

16. Dispute Resolution.

a. In the event any claim or controversy arises with regard to the terms and conditions of this Lease, including but not limited to the collection of Rental Payments, or because of the Breach of any provision hereof by either Party, the Parties agree to a two-tiered dispute resolution procedure. 1) In case of a dispute, the Parties agree to first meet, in person, with or without the presence of their respective attorneys, in an attempt to informally resolve the dispute (Negotiation). 2) This Negotiation shall occur no later than ten (10) business days from the date of receipt from the other Party of a request for Negotiation. 3) If this Negotiation fails, then the Parties shall meet for structured negotiations with the assistance of a neutral third party mediator from Judicial Arbitration and Mediation Services (JAMS), or such other third party mediator as may be agreed by the parties, to try to reach a mutually satisfactory resolution (Mediation). This Mediation shall occur no later than fifteen (15) business days from the date of receipt from the other Party of a request for Mediation. Only after Mediation, if a resolution cannot be reached, may a Party seek the assistance of the courts. Lessor and Lessee shall each pay their own costs and legal fees incurred in participating in the Negotiation and Mediation process(es).

b. The Parties further agree that if either Party refuses to first Negotiate and then Mediate, but instead goes directly to the courts, even if such Party is determined by the courts to be the prevailing party, said Party shall not be entitled to any of its attorneys’ fees and costs of such litigation and/or court intervention. This paragraph expressly provides that this "waiver of attorneys’ fees and costs" in the event of a Party’s refusal to first Negotiate and Mediate is not reciprocal; in other words, if the "non-refusing Party", prevails in court, that Party shall be entitled to recovery of its attorneys' fees and costs as set forth below.

17. Venue and Jurisdiction. This Lease shall be interpreted in accordance with the laws of the State of California and any action brought to enforce any terms or conditions of this Lease shall be brought in a court of competent jurisdiction in San Diego County.

18. Entire Agreement. This Lease constitutes the entire agreement between the Parties. Any prior agreements, promises, negotiations or representations not expressly set forth in this Lease are of no force and effect. Any change, addition, deletion or amendment to this Lease shall be of no force and effect unless it is in writing and signed by both Lessor and Lessee.

19. Notice and Demands. All notices and demands herein required to be given by Lessor to Lessee or Lessee to Lessor shall be in writing and delivered in person or by first class mail to the following addresses:

a. Lessor: Citizens Development Corp

Post Office Box 279

San Marcos, CA 92079-0279

Phone: 760-744-0237/760-591-4053 Fax

b. Lessee: Country Greens Homeowners Association

c/o _________________________________

address_____________________________

____________________________________

Phone:

FAX:________________________________

Notices and Demands sent by e-mail and/or fax shall not be deemed received.

20. Recordation. A short-form memorandum of this Lease, fully signed and properly acknowledged may be recorded by either party.

21. General Provisions. For the understanding, interpretation and enforcement of this Lease the following principles shall apply:

a. The present tense of verbs include the future authorities now in force or which may hereafter be in force pertaining to the use of said Facilities.

b. The masculine gender includes the feminine and the neuter.

c. The singular number includes the plural and the plural the singular.

d. The word "shall" is mandatory; the word "may" is permissive.

e. Time is hereby expressly declared to be of the essence for the execution of this Lease and of all covenants, terms, conditions, agreements and obligations herein contained.

f. This Lease, and the whole thereof applies to and binds the executors, administrators, successors and assigns each of the parties hereto and all the parties shall be jointly and severally liable hereunder.

22. Warranty of Authority. All Parties to this Lease warrant and affirm that execution of the Lease and its performance thereof is within the Parties’ legal and duly authorized powers.

23. Additional Documents. Each of the Parties agrees upon demand by the other to make, execute and deliver such other documents as are reasonably necessary to carry out the terms and conditions of this Lease.

24. Attorneys’ Fees. Except for a Party who refuses to participate in the Dispute Resolution process as set out in Section 16 above, if either Party hereto brings an action or proceeding in court (including any cross-complaint, counterclaim or third-party claim) against the other Party by reason of a breach by the other Party or otherwise arising out of this Lease, the non-prevailing Party shall pay to the prevailing party in such action or proceeding all of the prevailing party’s costs and expenses of suit, including reasonable attorneys’ fees, which shall be payable whether or not such action is prosecuted to a judgment.

IN WITNESS WHEREOF, the Parties hereto have signed this Lease on the date(s) and year stated below.

LESSOR: CITIZENS DEVELOPMENT CORP

Dated: ____________________ _____________________________________________ ROBERT ("BOB") HILBER

Chief Operating Officer

LESSEE: Country Greens Homeowners Association

Dated: ___________________ _____________________________________________

(signature)

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(print name & title)