HomeMy WebLinkAboutGuillon, Inc. - Butte Creek Property Corporation 2018-02-20 CROSS REFMo, 1718-13t'
LEASE AGREEMENT WITH OPTION TO PURCHASE
THIS LEASE AGREEMENT WITH OPTION TO PURCHASE ("Agreement") is entered
into as of February 20th, 2018, ("Effective Date") by and between the City of Ukiah, a general
law municipal corporation (the "Landlord"), and Butte Creek Property Corporation ("the
Tenant") as 1031 exchange accommodator for Guillon Inc.
RECITALS
A. These Recitals refer to and utilize certain capitalized terms defined in
Article I, Section 2 of this Agreement. The parties intend to refer to those definitions in
connection with the use of capitalized terms in these Recitals and the Agreement.
B. The City is the fee owner of certain unimproved real property located in the City,
as more particularly described in the legal description in Exhibit A attached hereto (the
"Property"). The City selected Tenant to be the Tenant of a rental housing project on the
Property. The parcels comprising the Property are designated with the following Mendocino
County Assessor's Parcel Numbers ("APNs"): 002-153-30 and 002-153-04. Parcels to be merged
as part of the entitlement process.
C. The City desires to lease the Property to Tenant with an option to purchase on
terms as further stated herein, together with rights, privileges, easements, servitudes and
appurtenances thereto for development of approximately 35 market -rate dwelling units for lease
(collectively, the "Improvements." and together with the Property, the "Project"). The lease will
include obligations of the Tenant to construct the Project and to maintain and manage the Project
as rental housing, after it is constructed.
D. The attached Exhibit B is a conceptual Property plan for development of
the Property (the "Conceptual Property Plan") showing the general design and layout of the
Project on the Property, and also showing the general location and boundaries of the Property.
E. The City has determined that the Tenant will contract with Guillon Inc. to
develop and manage the housing required by this Lease and Guillon, Inc. has the necessary
expertise, skill and ability to carry out the commitments set forth in this Agreement and that this
Agreement is in the best interests of the City.
F. The Tenant intends to finance the construction of the Project with a loan
secured by a Leasehold Mortgage. Certain provisions of this lease are intended to provide the
Lender protections for its Leasehold Mortgage and to secure repayment of the loan.
ARTICLE I
LEASE AGREEMENT
1. Lease. Upon satisfaction of the preconditions to the lease in Section 3 on and after the
Commencement Date, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
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the Property described in Exhibit A, together with rights, privileges, easements, servitudes and
appurtenances thereto.
This Lease is granted for, among other things, the purpose of enabling and permitting
Tenant to finance, construct, manage and maintain the Project on the Leased Premises.
2. Definitions. In addition to the terms defined elsewhere in this Agreement, the following
definitions shall apply throughout this Agreement.
(a) "Actually known to the City" or "actual knowledge" means information
possessed by a City officer or employee that has been reduced to writing and
retained as a permanent record of the City.
(b) "City Council" means the governing body of the City.
(c) "Lease/Option Agreement" means this Agreement.
(d) "City" means the City of Ukiah.
(e) "Effective Date" is the earliest date on which both parties have executed this
agreement.
(0 "Commencement Date" means the date when Tenant has received all project
entitlements as provided in Section 3(b).
"Rent Commencement Date" shall be July 15th, 2018 and shall be prorated
accordingly for July, 2018 only. Tenant's subsequent monthly rent payments to
Landlord shall be on the first day of each month thereafter for the entire term of
the lease and further defined in Exhibit D.
(g)
(h) "Certificate of Occupancy" shall mean a document issued by the local
government agency or building department certifying the building's compliance
with applicable building codes and indicating it is suitable for occupancy or
habitation.
(i) "Entitlements" shall mean obtaining necessary approvals for the right to develop
the property which are further defined in Section 3 (b).
(j) "Construction Plans" means all construction documentation upon which the
Tenant and the Tenant's contractors shall rely in building each and every part of
the Project (including landscaping, parking, and common areas) and a time
schedule for construction.
(k) "Tenant" means Butte Creek Property Corporation, and its successors and assigns
as permitted by this Agreement.
(I) "Escrow" means the escrow established with the Escrow Company for the
purpose of conveying the Property from the City to the Tenant.
(m) "Escrow Company" means Redwood Empire Title Company.
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(n) "Event of Default" has the meaning set forth in Part I, Section 17 and 18 as
applicable.
(o) "Hazardous Materials" means:
(i) any "hazardous substance" as defined in Section 101(14) of Comprehensive
Environmental Response, Compensation, and Liability Act 1980 ("CERCLA") (42
U.S.C. Section 9601(14)) or Section 25281(d) or 25316 of the California Health
and Safety Code at such time;
(ii) any "hazardous waste," "infectious waste" or "hazardous material" as
defined in Section 25117, 25117.5 or 25501(j) of the California Health and Safety
Code at such time;
(iii) any other waste, substance or material designated or regulated in any way as
"toxic" or "hazardous" in the RCRA (42 U.S.C. Section 6901 et seq.), CERCLA
Federal Water Pollution Control Act (33 U.S.C. Section 1521 et seq.), Safe
Drinking Water Act (42 U.S.C. Section 3000 (f) et seq.), Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), Clear Air Act (42 U.S.C. Section 7401 et
seq.), California Health and Safety Code (Section 25100 et seq., Section 3900 et
seq.), or California Water Code (Section 1300 et seq.) at such time; and
(iv) any additional wastes, substances or material which at such time are
classified, considered or regulated as hazardous or toxic under any other present or
future environmental or other similar laws relating to the Project.
The term "Hazardous Materials" shall not include: (i) construction materials,
gardening materials, household products, office supply products or janitorial
supply products customarily used in the construction, maintenance, rehabilitation,
or management of residential property or associated buildings and grounds, or
typically used in household activities, or (ii) certain substances which may contain
chemicals listed by the State of California pursuant to California Health and Safety
Code Sections 25249.8 et seq., which substances are commonly used by a
significant portion of the population living within the region of the Project,
including, but not limited to, alcoholic beverages, aspirin, and tobacco products.
(p) "Hazardous Materials Laws" means all federal, state, and local laws, ordinances,
regulations, orders and directives pertaining to Hazardous Materials in, on or under
the Project or any portion thereof.
(q) "Improvements" has the meaning in Recital C, to be managed in accordance with
Part I, Section 6(g) of this Agreement.
(r) "Leasehold Mortgage" means a security interest in this Property to secure a loan to
Tenant for the design and construction and to otherwise finance the Project.
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(s) "Leased Premises" means the Property, including all improvements constructed
thereon.
(t) "Lender" means a lender whose loan for the design and construction of the
Improvements as part of the Project is secured by a Leasehold Mortgage.
(u) "Project" has the meaning given in Recital C.
(v) "Property" means the real property to be leased with an option to purchase and
developed by the Tenant pursuant to this Agreement as described in Exhibit A.
(w) "Term" means the term of the Lease, which shall begin on the Commencement
Date and end fifty (50) years thereafter, or until an earlier termination of the Lease
as further provided herein, including close of escrow after Tenant exercises its
option to purchase the Property.
(x) "Title Company" means Redwood Empire Title Company.
3. Pre -conditions to Lease Commencement Date.
The requirements set forth in this Section 3 are conditions precedent to the Tenant's
obligation to lease the Property from the City.
(a) Temporary Right of Entry. The City hereby grants a right of entry to the
Property to the Tenant for the sole purposes of performing a land survey and conducting soils
and other testing which require access to the Property (the "Temporary Right of Entry"). The
Tenant agrees at all times to keep the Property free and clear of all liens, encumbrances, and
clouds upon title that could result from the exercise of the Temporary Right of Entry.
(b) Entitlements. Tenant shall obtain from City of Ukiah a Site Development
Permit, Building Permit, and Use Permit which shall be collectively referred to as "Entitlements"
which are no longer subject to appeal or judicial challenge.
(c) Indemnity. Without limiting the generality of the indemnification set forth
in Section 16, the Tenant agrees to indemnify, defend, and hold the City harmless against all
claims, including but not limited to mechanics liens and personal or property damage, arising
from the entry of the Tenant or its agents, employees, contractors or subcontractors onto the
Property, or created as a result of the Tenant's exercise of this Temporary Right of Entry. The
Tenant further agrees that all survey and testing work performed pursuant to this Temporary
Right of Entry shall be made at the Tenant's sole cost. The Commencement Date shall be
deemed to have commenced upon Tenant receiving its Entitlements. Tenant shall restore the
Property to the condition it was in before the Tenant performed any soils or other testing
pursuant to Section 3 (a).
(d) Preliminary Title Report. Tenant shall order from Escrow Company a
preliminary title report ("Pre -lease PTR") on the condition of title to the Property. The Tenant
shall have no obligation to enter this Lease, if it disapproves any information in said report,
including any exceptions listed in the report. Upon approval of the report, the City shall not take
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any action to change the condition of title to the Property as set forth in the Preliminary Title
Report other than changes necessary or appropriate to implement or as expressly authorized by
this Agreement, including, but not limited to, recording a memorandum of lease or a Leasehold
Mortgage.
4. Term of Lease. This Lease shall commence upon the Commencement Date and shall
continue thereafter for a period of fifty (50) years or until Tenant exercises and completes the
option to purchase in Article II of this Agreement. Notwithstanding anything herein to the
contrary, this Lease shall terminate at such time, if ever, that Tenant or its successors or assigns
acquire the Property from Landlord pursuant to the Option to purchase granted in Article
II below. If Tenant grants a Leasehold Mortgage, the lease term shall extend 20 years beyond the
maturity date of the loan secured by the Leasehold Mortgage and not less than 10 years beyond
the full amortization of the loan.
5. Lease Payments. Monthly lease payments in the amount of three thousand five hundred
fifty five dollars and fifty eight cents ($3,555.58), and as further defined in Exhibit D for the
entire lease term, shall commence on July 15th, 2018. Pro -rated lease payments for July 2018
only shall be one thousand seven hundred twenty dollars and forty four cents ($1,720.44). Lease
payments shall be paid monthly and due by the 10th day of each month following the Rent
Commencement Date. Rent not received by the 10th day of any given month during the lease
Term shall be considered delinquent and subject to interest at the simple annual rate of 12% of
the delinquent rent from the date of the delinquency until paid in full.
6. Use. Tenant may occupy and use the Leased Premises during the Term for purposes of
constructing, operating, and maintaining rental housing as further provided in this Section 6.
(a) Approval of Final Development Plans. The Tenant shall apply for approval by the
City of the development plans for the Project (the approved development plans shall be referred
to as the "Final Development Plans"). Tenant shall provide a copy of the Final Development
Plans to the City.
(b) Compliance with the California Environmental Quality Act ("CEQA"). At Tenant's
expense, the City will arrange for the preparation and certification of the appropriate
environmental review documents required by CEQA. No provision of this Agreement shall be
deemed to limit in any way the exercise of the City's discretion in reviewing and certifying
environmental documents or in exercising its authority to adopt or amend zoning ordinances,
land use and subdivision approvals or other exercises of its local police powers. The Tenant shall
execute and comply with the City's standard agreement requiring the Tenant to indemnify and
defend the City in any action to review, set aside or annul decisions made by the City to comply
with CEQA or other land use or subdivision approvals made by the City in connection with the
Tenant's pursuit of the Project.
(c) Other Governmental Approvals. Promptly following City approval of the Final
Development Plans, the Tenant shall apply for and exercise diligent good faith efforts to obtain
all other governmental approvals, including certification of environmental documents under
CEQA and any applicable use or Property development and building permits, necessary for
development and operation of the Project.
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(d) Construction Pursuant to Laws. The Tenant shall cause all work performed in
connection with the Project to be performed in compliance with all applicable laws, ordinances,
rules and regulations of federal, state, county or municipal governments or agencies. Each
element of the work shall proceed only after procurement of each permit, license, or other
authorization that may be required for such element by any unit of federal, state or local
government with jurisdiction to approve such element, and the Tenant shall be responsible to the
City for the procurement and maintenance thereof, as may be required of the Tenant and all
entities engaged in work on the Project.
(e) Mechanics Liens.
(i) Responsibility for Payment. Tenant hereby agrees that it will pay or cause to
be paid all costs for work done by it, and it will keep the Property and Improvements clear of all
mechanics' liens on account of work done by Tenant or persons claiming under it.
(ii). Security. If Tenant shall desire to contest any claim of lien it shall furnish
City adequate security pursuant to Section 3143 and such other applicable provisions of the
California Civil Code, plus estimated costs and interest, or a bond of a responsible corporate
surety in such amount as is necessary to release the lien, or provide City with evidence that
enforcement of the lien is stayed. If a final judgment establishing the validity or existence of a
lien for any amount is entered, Tenant shall pay and satisfy the same at once.
(iii). In Case of Default. If Tenant shall be in default in paying any charge for
which a mechanics' lien claim and suit to foreclose the lien have been filed, and shall not have
given City security to protect the Property, Improvements and City against such claims of Lien,
then City may, but shall not be obligated to, pay the said claim and any costs, and the amount so
paid, together with reasonable attorneys' fees incurred in connection therewith, shall be
immediately due and owing from Tenant to City, and Tenant agrees to and shall pay the same
with interest at the legal rate of ten percent (10%).
(iv) Notice of Lien. Should any claims of lien be filed against the Property or
Improvements or any action affecting the title to such property be commenced, the party
receiving notice of such lien or action shall forthwith give the other party and the Lender written
notice thereof
(f) Development schedule. Tenant shall complete its obligations under Sections 6(a) -(d)
as follows:
6(a) By August 31, 2018
6(b) By September 30, 2018
6(c) By October 31, 2018
6(d) By August 31, 2019
The deadlines for completing these task shall be extended by the amount of time Tenant's
performance is delayed due to circumstances beyond its control despite its reasonable best
efforts, including, but not limited to, acts of god, delays caused by the City or the acts or
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omissions of other agencies of the state or federal government (not resulting from the acts or
omissions of Tenant), strikes, and wars, civil unrest and similar disruptions.
(g) Management and Maintenance. Upon issuance by the City's Building Official of a
final certificate of occupancy, Tenant shall exercise reasonable diligence to rent the dwelling
units in the Project at fair market rents and to operate and maintain the Project in good condition
and the dwelling units in accordance with Division 3, Part 4, Title 5, Chapter 2 of the California
Civil Code, commencing with Section 1940, and other applicable provisions of local, state and
federal law, including the proper care and maintenance of common areas and landscaping. The
Tenant may sublease the dwelling units in the Project without the approval of the City. The
subleases shall contain usual and customary terms and conditions which Tenant shall enforce.
7. Utilities. Payment for Utilities (as defined herein) will be the responsibility of the Tenant
who is solely responsible for ensuring the Leased Premises are in such condition that the utility
companies can properly connect and provide all of the services used by and in connection with
the Leased Premises during the term of the Lease. As used herein, the term "Utilities" shall
include electricity, telephone, internet access, Cable TV, gas, water, solid waste collection,
wastewater service, and storm water facilities to the Leased Premises.
8. Taxes. Tenant shall be responsible for all real estate and public improvement taxes, ad
valorem taxes, possessory interest taxes and similar taxes and assessments against the Leased
Premises.
9. Maintenance, Repair Alterations, Liens, and Signage. Tenant, at its expense, may make
any alterations, changes, improvements, or additions to the Leased Premises, to prepare and
make the Leased Premises suitable for the uses authorized by Section 6. Any alterations,
changes, improvements or additions to the Leased Premises shall remain with the Leased
Premises in accordance with Section 6 (e).
10. Insurance. Tenant shall at all times during the term hereof, produce and continue in
force Comprehensive General or Commercial Liability Insurance, Automobile Insurance,
Workers' Compensation and Employer's Liability Insurance, and maintain property loss
insurance, including loss resulting from fire, or other perils, insuring the Improvements for
replacement cost, all in accordance with Exhibit "C" of this Agreement. Any Lender shall be a
named insured under all insurance policies affecting the Leased Premises and shall be entitled to
receive prompt notice of a casualty or condemnation. In an effort to ensure adequate insurance
coverage, Tenant shall use industry standard best practices to ensure the Project is covered for
full replacement cost. Furthermore, Tenant and its insurance carrier shall reassess coverage
annually to ensure adequate coverage in case of partial or total loss and further defined in Exhibit
C section (a)(iv). City may require increases in all of Tenant's insurance policy limits for all
insurance to be carried by Tenant as set forth in this Section, if such increases are commercially
reasonable. All proceeds from property loss insurance shall be paid either to the Escrow Agent to
be applied to either (1) repair or restore the premises, with the Escrow Agent controlling the
disbursement of such proceeds, or (2) repay a loan to the Lender.
11. Hazardous Materials.
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(a) Certain Covenants and Agreements. The Tenant hereby covenants and agrees
that:
(i) The Tenant shall not knowingly permit the Project or any portion
thereof to be a location for the use, generation, treatment, manufacture, storage, disposal or
transportation of Hazardous Materials or otherwise knowingly permit the presence of Hazardous
Materials in, on or under the Project.
(ii) The Tenant shall keep and maintain the Project and each portion
thereof in compliance with, and shall not cause or permit the Project or any portion thereof to be
in violation of, any Hazardous Materials Laws.
(iii) Upon receiving actual knowledge of the same, the Tenant shall
immediately advise the City in writing of: (A) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened against the Tenant
or the Project pursuant to any applicable Hazardous Materials Laws; (B) any and all claims made
or threatened by any third party against the Tenant or the Project relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials
(the matters set forth in the foregoing clause (A) and this clause (B) are hereinafter referred to as
"Hazardous Materials Claims"); (C) the presence of any Hazardous Materials in, on or under the
Project; or (D) the Tenant discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Project classified as "borderzone property" under the
provisions of California Health and Safety Code, Sections 25220 et seq., or any regulation
adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Project under any Hazardous Materials Laws. The City
shall have the right to join and participate in, as a party if it so elects, any legal proceedings or
actions initiated in connection with any Hazardous Materials Claims, and to have its reasonable
attorney's fees in connection therewith paid by the Tenant.
(iv) Without the City's prior written consent, which shall not be
unreasonably withheld, and which the City shall promptly grant or deny, the Tenant shall not
take any remedial action in response to the presence of any Hazardous Materials on, under, or
about the Project (other than in emergency situations or as required by governmental agencies
having jurisdiction in which case the City agrees to provide its consent), nor enter into any
settlement agreement, consent decree, or other compromise in respect to any Hazardous
Materials Claims.
(b) Indemnity. Without limiting the generality of the indemnification set forth
in Section 16, the Tenant hereby agrees to indemnify, protect, hold harmless and defend (by
counsel reasonably satisfactory to the City), the City, its City Council members, officers, and
employees from and against any and all claims, losses, damages, liabilities, fines, penalties,
charges, administrative and judicial proceedings and orders, judgments, remedial action
requirements, enforcement actions of any kind, and all costs and expenses incurred in connection
therewith (including, but not limited to, the fees and expenses of attorneys, experts, consultants
or investigators), arising directly or indirectly, in whole or in part, out of: (1) the failure of the
Tenant or its employees, agents, contractors or subcontractors to comply with any Hazardous
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Materials Law relating in any way whatsoever to the handling, treatment, presence, removal,
storage, decontamination, cleanup, transportation or disposal of Hazardous Materials into, on,
under or from the Project; (2) the presence in, on or under the Project of any Hazardous
Materials or any releases or discharges of any Hazardous Materials into, on, under or from the
Project occurring from and after Tenant's acquisition of the Property; or (3) any activity carried
on or undertaken on or off the Project, prior or subsequent to the conveyance of the Property to
the Tenant, and whether by the Tenant or any employees, agents, contractors or subcontractors of
the Tenant, in connection with the handling, treatment, removal, storage, decontamination,
cleanup, transport or disposal of any Hazardous Materials at any time located or present on or
under the Project; provided, however, that the indemnification for activities undertaken off the
Project shall only apply to activities undertaken by the Tenant or its employees, agents,
contractors or subcontractors. The foregoing indemnity shall further apply to any residual
contamination on or under the Project, or affecting any natural resources, and to any
contamination of any property or natural resources arising in connection with the generation, use,
handling, treatment, storage, transport or disposal of any such Hazardous Materials, and
irrespective of whether any of such activities were or will be undertaken in accordance with
Hazardous Materials Laws.
(c) No Limitation. The Tenant hereby acknowledges and agrees that the Tenant's
duties, obligations and liabilities under this Agreement, including, without limitation, under
subsection (b) above, are in no way limited or otherwise affected by any information the City
may have concerning the Project and/or the presence within the Project of any Hazardous
Materials, whether the City obtained such information from the Tenant or from its own
investigations, unless such information was actually known to the City at the time of execution
of this Agreement and/or the time of the close of escrow for the conveyance of the Property to
the Tenant but not disclosed pursuant to Section 11(a).
12. Delivery and Quiet Enjoyment. Landlord shall deliver the Leased Premises on the
Commencement Date free of any parties in possession, and shall provide Tenant with quiet
enjoyment without interference thereafter during the Term.
13. Title. Landlord warrants further that no third party has superior title or interest in the
Leased Premises, and that no prior or existing interest shall interfere with the terms of the subject
Lease. Landlord shall not interfere with Tenant's right to quiet enjoyment of the Premises.
Landlord represents and warrants to Tenant that as of the Effective Date, there will be no
monetary liens of any type whatsoever encumbering the Leased Premises.
14. Damage or Destruction. If at any time during the Term, all or any portion of the Leased
Premises shall be damaged or destroyed by fire or other casualty, then Tenant shall, if insurance
proceeds are insufficient, have the option to either rebuild the improvements or cancel the lease.
In the event that insurance proceeds are insufficient and the lease is canceled, insurance proceeds
shall be disbursed in the following order: (1) rent payments due to the City up to the date of lease
cancellation, if any (2) outstanding taxes due up to the date of lease cancellation, if any (3) the
loan paid off (4) the land restored to its original condition at the time of lease commencement
and (5) the remainder of proceeds disbursed to Tenant. If there are insufficient insurance
proceeds to restore the premises as required by (4), Tenant shall provide sufficient funding to
complete said restoration.
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All repairs, alterations or restorations undertaken by Tenant pursuant to
this Section 14 shall be completed diligently in a good and workmanlike manner and Landlord
will assign any warranties relating thereto to Tenant.
15. Landlord Right of Access. Landlord has the right with no less than 24 hours notice to
Tenant, bona fide emergencies excepted, to enter the Leased Premises periodically for inspection
or in connection with the improvement or repair of and the providing of utilities and other
services to the Leased Premises.
16. Indemnification, Defense and Hold Harmless Obligations. Except for the sole
negligence or willful misconduct of Landlord, its employees and agents, and to the extent
permitted by law, Tenant agrees to indemnify, defend and hold harmless Landlord and its
officers, directors, members and employees (each, a "Landlord Party") from and against any and
all losses, liabilities, damages, costs and expenses (including reasonable attorneys' fees) resulting
from claims by third parties for injuries to any person and damage to or theft or misappropriation
or loss of property occurring in the Leased Premises or caused by Tenant's use and operation of
the Leased Premises or the Property. If any action or proceeding is brought against any Landlord
Party by reason of any such claim, then Tenant, upon notice from Landlord, shall defend the
claim at Tenant's expense with counsel of Tenant's choice.
17. Tenant Defaults. The occurrence of any one or more of the following events shall
constitute a material default and breach of this Agreement by Tenant:
(a) Material default and breach:
(i). Any failure by Tenant to make any payment to City required hereunder
as and when due, including all payments due under Section 5, including late fees and interest,
where such failure continues for ten (10) days after written notice from City to Tenant and to any
Lender whose loan is secured by the Leasehold Mortgage, that the such payment is past due.
(ii) The failure of Tenant to design, receive approval for and construct the
Project, or any part thereof, by the time for performance set forth in Section 6(0 for any period
of thirty (30) days after written notice of the default from City to Tenant and to any Lender shall
constitute a material breach of this Agreement.
(iii) A failure by Tenant to observe and perform any other provisions of
this Agreement to be observed or performed by Tenant, including its obligations under Section
6(g), where such failure continues for thirty (30) days after written notice thereof by City to
Tenant and to any Lender; provided, however, that if the nature of such default is such that the
same cannot reasonably be cured within such thirty (30) day period, Tenant shall not be deemed
to be in default if Tenant or the Lender shall within such period commence such cure and
thereafter diligently prosecute the same to completion.
(iv) The making by Tenant of any general assignment for the benefit of
creditors; the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt of or a
petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the
case of a petition filed against Tenant, the same is dismissed within sixty (60) days); the
appointment of a trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises, or of Tenant's interest in this Agreement, where possession is not
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restored to Tenant within thirty (30) days; or the attachment, execution or other judicial seizure
of substantially all of Tenant's assets located on the Property or of Tenant's interest in this
Agreement, where such seizure is not discharged within thirty (30) days. Without limiting the
foregoing, the parties agree and will not contest in any proceeding, including a proceeding in the
United States Bankruptcy Court, that this Agreement is an executory contract or lease under 11
U.S.C. § 365, which Tenant would be required to either assume or reject within 60 days of filing
the bankruptcy petition, and under which the Tenant must not be in default and with respect to
which the Tenant would be required to provide adequate assurances that it would fully perform
in the future. The parties further agree that Tenant's failure to make all deposits and payments
due under this Agreement after a bankruptcy petition is filed shall constitute "cause," as that term
is defined under Section 362(d)(1) of the Bankruptcy Code, and shall require the bankruptcy
court, following a hearing on an order shortening time, to lift the automatic stay to permit
recovery by City of the Premises. Customer agrees that all post-petition deposits and payments
due hereunder are administrative obligations and that they shall be so treated in any plan to be
submitted by a debtor-in-possession.
(b) Right to Terminate Lease. In the event of any such material default by
Tenant, then in addition to any other remedies available to City at law or in equity, City shall
have the immediate option to terminate this Agreement and all rights of Tenant hereunder by
giving written notice of such intention to terminate. However, any such termination shall be
without prejudice to interests of any Lender.
(c) Lender Right to Cure. If Tenant grants a Leasehold Mortgage, the secured
Lender shall have the right to written notice from City of any breach or default by Tenant of any
material term of this Agreement, including the failure by Tenant to make any payment to City in
the amount and at the time required by this Agreement. Within 60 days from the date said notice
is given, Lender shall have the right, but not the obligation, to cure the Tenant's default,
18. City Defaults; Tenant Termination Rights. If City should be in default in the
performance of any of its obligations under this Agreement, which default continues for a period
of more than thirty (30) days after receipt of written notice from Tenant specifying such default,
or if such default is of a nature to require more than thirty (30) days to remedy and continues
beyond the time reasonably necessary to cure (provided City must have undertaken procedures to
cure the default within such thirty (30) day period and diligently pursue such efforts to cure to
completion), Tenant may, in addition to availing itself of any other remedies available at law and
in equity, at its option, upon written notice, terminate this Agreement; provided such termination
is approved by a Lender with a Leasehold Mortgage.
19. Surrender of Premises. Upon expiration or termination of this Agreement other than
upon Tenant exercising its option to purchase the Property in accordance with this Agreement,
Tenant shall quit and surrender the Premises with all the improvements thereon in as good state
and condition as the same were when Tenant commenced the use thereof, reasonable wear and
tear excepted. Upon expiration of the fifty (50) year term, Tenant shall have the right to purchase
the land pursuant to Exhibit D or extend the Lease for an additional twenty (20) years.
20. Protections for Lender and Any Leasehold Mortgage. These provisions and any other
provisions of this Lease referencing a Lender are to assure the Lender that it has effective
remedies to enforce a Leasehold Mortgage and the terms of any loan agreement with Tenant.
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(a) Without the approval of Landlord, Tenant may grant Lender a Leasehold
Mortgage.
(b) A Lender (without the participation of the Tenant) may exercise any
extensions of this Agreement provided herein on behalf of the Tenant.
(c) The Lender has the right without the approval of Tenant to cure any potential
lease default and to access the Leased Premises to cure any defaults under this Lease by Tenant.
(d) If the Tenant fails to cure any default of a material term of this Agreement
within the time allowed for such a cure, a Lender shall have sixty (60) additional days to cure the
default.
(e) If any default of a material provision of this Agreement by Tenant is not
susceptible to cure by the Lender (such as a default related to the financial condition or identity
of the tenant/borrower or any lease guarantor), the Landlord must offer to enter a new lease with
the Lender on the same terms and conditions as stated herein, if the Lender forecloses or
otherwise seeks to obtain possession of the leasehold estate.
(f) Notwithstanding any other provision of this Agreement, in the event of the
Tenant filing for protection under the U.S. Bankruptcy Code, the Landlord will enter into a new
lease with the Lender for the Leased Premises on the same terms and conditions as stated in this
Agreement.
(g) In the event that the Lease terminates for any reason (including in the event of
the Tenant's default, the failure or inability of the Tenant to exercise an extension option, or a
Tenant lease rejection in a bankruptcy proceeding), the Landlord shall enter into a new lease with
the Lender on the same terms and conditions as stated in this Agreement for the then -remaining
term of this Lease.
(h) Upon foreclosure or assignment in lieu of foreclosure under a Leasehold
Mortgage, Landlord shall recognize the Lender or its designee as the Tenant with all of the rights
and obligations of the Tenant for the remaining term of the Lease. The exercise of remedies by
the Lender shall not require any consent from, or notice to, the Landlord. After default by Tenant
under the terms of the loan agreement and/or Leasehold Mortgage, the Lender taking actual or
constructive possession of the Leased Premises, including through the use of a receiver, shall not
be deemed to be a default under this Agreement.
(i) This Agreement cannot be modified, amended, supplemented or terminated,
and the Landlord will not accept surrender of the Leased Premises (other than at the expiration of
the term), without the prior written consent of the Lender.
(j) Notwithstanding any other provision of this Agreement, in the event that the
Lender obtains, either through foreclosure, an assignment of the lease in lieu thereof, or any
other method, title to the leasehold estate, the Lender, as a successor tenant under this Lease,
shall only be liable for defaults under the Lease that occurred after the Lender obtained
possession of the leasehold estate. In addition, the Lender's liability shall be limited to its
interest in the Lease.
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(k) The Lease cannot be modified, amended, supplemented or terminated, and the
Landlord shall not accept surrender of the leased premises (other than at the expiration of the
term), without the prior written consent of the Lender.
(1) The Lender is a named insured under all insurance policies affecting the
leased premises. Second, the lender should be entitled to receive prompt notice of a casualty or
condemnation. Third, all proceeds should be paid either to the lender or an escrow account
subject to instructions requiring the escrow holder to disburse the escrowed funds to either (1)
repair or restore the premises, such disbursements controlled by the escrow holder or the Lender,
or (2) repay the loan and further defined per Paragraph 14.
(m) In the event that the fee interest and leasehold interests in the Leased
Premises are held by the same entity, the two interests shall remain separate and not result in a
merger of title.
(n) The Lender is a third -party beneficiary of those provisions of this Agreement
that protect the interests of the Lender in the Leasehold Mortgage and is entitled to enforce those
provisions against the Landlord and the Tenant.
(o) The Lender has the right to cure any event that has a deleterious effect on the
current and continued operation of the Project in compliance with Section 6 (h).
ARTICLE II
OPTION AGREEMENT
1. Option. Commencing on the first day of the thirteenth (13`h) year of the Lease term, Tenant
shall have an option to purchase the Property. The Tenant must exercise the option within a period of
twenty (20) years from the day it may first exercise the option to purchase the Property ("the Option
Period"). The Tenant shall exercise the option to purchase by giving Landlord written notice that
Tenant is exercising the option (the "Option Notice Date"). Tenant shall not have an option to
purchase the Property, unless Tenant is in full compliance with the terms of this Agreement on the
Option Notice Date.
Within five (5) days of the Option Notice Date, the City shall open Escrow with the Escrow
Company. In accordance with escrow instructions approved by the Parties, the option purchase
price, as determined pursuant to Article II, Section 2.a of this Agreement, shall be deposited by
Tenant into Escrow prior to the close of escrow, and shall be paid to the City at the Close of Escrow
as further provided in Article II, Section 2.c.(i).
2. Terms of Purchase of the Property.
a. Purchase Price: For the purchase of the Property, City agrees to accept from
Tenant and Tenant agrees to pay to City ten percent (10%) of the fair market value of the Property
in its improved condition ("Purchase Price"). Unless the parties agree to another method of
determining fair market value, fair market value shall be the appraised fair market value of the
Property on the Option Notice Date. An appraisal using the replacement cost approach and/or
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income approach and/or comparable sales approaches in accordance with the Uniform Standards
of Professional Appraisal Practice adopted by the Appraisal Standards Board of the Appraisal
Foundation shall be made by a Member of the Appraisal Institute (MAI) approved by Tenant and
City. Each party shall pay one-half (1/2) of the appraisal fee. If the Parties fail to agree on a single
appraiser within 10 days after the Option Notice Date, each party shall retain an MAI appraiser at
its own expense. The appraisal or appraisals shall be completed within sixty (60) days after the
appraiser or appraisers are retained. The Purchase Price shall be the lower of the values determined
using the income and comparable sales methods of appraisal. However, if the appraised fair market
values determined by the two appraisals are within 10% of each other, the fair market value shall
be the average of the two appraisals.
b. Condition of Title: Title to the Property shall be free and clear of all liens,
except for any property taxes not yet due, recorded easements, CC&R's, or deed restrictions, and
all leases, liens, easements and encumbrances approved by Tenant or allowed pursuant to Article
I, Section 3(d) of this Agreement.
c. Escrow: Tenant shall open escrow with Title Company within five (5) days
from the Option Notice Date to purchase the Property ("Purchase Escrow"). The parties shall
deliver escrow instructions to the escrow agent within 14 days from the Option Notice Date, which
shall include the following:
(i). Closing date: Purchase Escrow for the acquisition of the Property shall
close within ninety (90) days from the Option Notice Date, unless otherwise extended by
the mutual consent of Tenant and the City.
(ii) Preliminary title report and title insurance: Tenant shall have 30 days
from the Option Notice Date to approve a preliminary title report. Tenant may disapprove
the report only if exceptions are reported which did not appear in the preliminary title report
issued under Article I, Section 3(d) above, excepting taxes and assessments due. If Tenant
disapproves the report, it must provide written notice of such disapproval to CITY and the
CITY must remove at its cost any reported exceptions which did not appear in the
Preliminary Title Report issued under Article I, Section 3(d) above, excepting taxes and
assessments due or liens or other encumbrances created or caused by Tenant or Lender. If
Tenant fails to provide such timely written notice, it shall be deemed to have waived all
objections to title. The Escrow Company must issue prior to closing a CLTA title insurance
policy in the amount of the total purchase price, listing only those exceptions approved by
Tenant as provided in Article II, Section 2.b above.
d. CITY Disclosures: City discloses the following information concerning the
condition of the Property:
(i) Flood Hazard Area Disclosure: The Property or a portion thereof is
not located within a Federal Emergency Management Tenant (FEMA) "Special
Flood Hazard Area."
(ii) Geologic Hazard Zone: The Property is not located within a Special
Studies Zone as designated under Public Resources Code §§ 2021-2625.
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e. Closing costs: Tenant and City shall each pay one-half of all escrow fees. Tenant
shall pay all the title insurance costs of said conveyance. Assessments and insurance
premiums, if any, shall be prorated between the parties from the date the deed is recorded
in the official records of Mendocino County. All pro -rations shall be made on the basis of
a 365 day year or 30 day month as applicable.
f. Payment of purchase: Tenant shall deposit the Purchase Price with the Title
Company by certified check or electronic funds transfer on or before the date established
for the Close of Purchase Escrow on the purchase of the Option Property.
g. Tax Withholding: Under the Foreign Investment in Real Property Tax Act
(FIRPA; 26 USC §1445), every buyer of U.S. real property must, unless an exemption
applies, deduct and withhold from a seller's proceeds 15% of the gross sales price. No
withholding is required if the Tenant certifies under penalty of perjury that it is not a foreign
person within the meaning of the Act. The Tenant hereby certifies under penalty of perjury
that it is not a "foreign person" within the meaning of FIRPA and CITY is not required to
and shall not withhold any portion of the gross sales price for state or federal capital gains
tax.
h. Parties to Negotiation Additional Conditions. On or after the Option Notice Date,
the Parties shall negotiate in good faith any additional terms and conditions on the purchase of the
Property, which are commercially reasonable and commonly included in an agreement for the
purchase of commercial real property in the City of Ukiah.
ARTICLE III
MISCELLANEOUS PROVISIONS:
1. Entire Agreement. This Agreement and any addenda or exhibits thereto constitute the
entire agreement between Landlord and Tenant and supersede all previous agreements between
Landlord and Tenant. No prior written or prior or contemporaneous oral promises or
representations shall be binding between Landlord and Tenant. Section captions herein are for
convenience only and neither limit nor amplify the provisions of this Agreement.
2. Further Instruments. Landlord will, whenever and as often as it shall be reasonably
requested to do so by Tenant, and Tenant will, whenever and as often as it shall be reasonably
requested to do so by Landlord, execute, acknowledge, and deliver, or cause to be executed,
acknowledged, and delivered, any and all instruments and documents as may be reasonably
necessary in order to complete the transactions herein provided and to carry out the intent and
purposes of this Agreement.
3. Commissions. Each party hereto agrees to indemnify and hold harmless the other party
from and against any and all liabilities, costs, damages, and expenses of any kind or character
arising from any claims for brokerage or finders fees, commissions, or other similar fees in
connection with the transactions covered by this Agreement insofar as such claims shall be based
upon alleged arrangements or agreements made by such party or on their behalf.
4. Time. Time is of the essence with respect to the performance of all obligations provided
in this Agreement and the consummation of all transactions contemplated by this Agreement.
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5. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but such counterparts together shall constitute one and the same
instrument.
6. Severability. In case any one or more of the provisions contained in this Agreement shall
for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision hereof, and the invalid, illegal
or unenforceable provision shall be reformed to the minimum extent necessary to make the
provision valid, legal, and enforceable.
7. Construction. The parties acknowledge that each party and their counsel have reviewed
and revised this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments or exhibits hereto.
8. Notices. Any notice which may or shall be given under the Agreement shall be in writing
and shall either be delivered by hand or sent by United States mail, registered or certified or by
Federal Express or a similar courier service, postage prepaid, addressed to the parties hereto at
the respective addresses provided below. Such addresses may be changed from time to time by
either party giving notice as provided above. Notice shall be deemed delivered when received by
the addressee (if delivered by hand), when postmarked (if sent by mail), or twenty-four
(24) hours after delivery to the courier service for overnight delivery.
TENANT: Butte Creek Property Corporation
c/o Dawn Stafford, President
901 Bruce Road, Suite 130
Chico, CA 95928
LANDLORD: City of Ukiah
Attention: Sage Sangiacomo, City Manager
Ukiah Civic Center
300 Seminary Ave.
Ukiah, CA 95482
Telephone: 707-463-6217
Fax: 707-463-6204
9. Amendments and Survival. This Agreement will not be amended, changed, or extended
except by written instrument signed by both parties hereto. The provisions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their respective legal
representatives, successors, heirs, and assigns.
10. Subletting or Assignment. Except as provided below regarding the sublease of
individual rental units, the Tenant shall not sublease or assign this Lease, without the prior
written consent of the Landlord, which consent Landlord agrees it will not unreasonably
withhold, delay or condition, provided, however, the original Tenant (Butte Creek Property
Corporation) may assign this Lease to Guillon Inc. without Landlords prior consent, but must
give CITY notice of such assignment. In the event of any assignment, the City will release the
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prior assigning Tenant from any duties or liabilities under this Agreement upon the effective date
of such assignment. Upon Tenant complying with Article I, Section 5, Tenant may sublease
individual rental units in the Project without the City's consent.
11. Memorandum of Lease and Option. Promptly upon the request of Tenant, Landlord
agrees to execute and acknowledge a "Memorandum of Lease, Option" in form satisfactory to
Tenant and sufficient for recording in the Official Records of Mendocino County. The
Memorandum of Lease and Option to Purchase will contain a provision acknowledging that the
Memorandum of Lease and Option to Purchase will be automatically released if the Lease is
either rightfully terminated by a party having a right to so terminate as provided herein, the
Lease expires or Tenant purchases the Property.
12. Estoppel Certificates. Tenant and Landlord shall each, at any time and from time to
time, within twenty (20) days after written request therefore by the other party certify to the best
of their knowledge, in a written instrument duly executed, to the requesting party: (a) as to
whether this Agreement has been supplemented or amended; (b) as to the validity and force and
effect of this Agreement in accordance with its terms as then constituted; (c) as to the existence
of any default by the requesting party pursuant to this Agreement; (d) as to the existence of any
offsets, counterclaims or defenses on the part of the party so certifying; (e) as to the
Commencement Date and the expiration date of the Term of the Lease; and (f) as to the amounts
of Rent payable under the Lease.
13. Landlord's Covenants, Representations and Warranties. Landlord represents and
warrants to Tenant that:
(a) Landlord has all requisite power and authority to own the Property (including, but
not limited to, the Leased Premises), enter into this Agreement, and consummate the transactions
contemplated in this Agreement. Landlord has duly authorized the execution and delivery of this
Agreement such that all documents to be executed by Landlord are its valid, legally binding
obligations and are enforceable against it in accordance with their terms.
(b) The persons executing this Agreement and any and all documents on behalf of
Landlord have the legal power, right, and actual authority to bind Landlord.
(c) Landlord's execution of this Agreement and its consummation of the transaction
do not breach any agreement or constitute a default or a condition that would ripen into a default
under any agreement to which Landlord is a party or by which all or part of the Property are
bound. Furthermore, Landlord's execution of this Agreement and its consummation of the
transaction do not violate any order, rule, or regulation applicable to Landlord or the Property of
any court or any federal, state, or municipal regulatory body or administrative agency or other
governmental body.
(d) No representation, warranty, or statement of Landlord in this Agreement or in any
document or information furnished to Tenant misstates or omits any material fact necessary to
make the statements or facts contained therein not misleading.
14. Tenant's Covenants, Representations and Warranties. Tenant represents and warrants to
Landlord that:
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(a) Tenant has all requisite power and authority to enter into this Agreement, and
consummate the transactions contemplated in this Agreement. Tenant has duly authorized the
execution and delivery of this Agreement such that all documents to be executed by Tenant are
its valid, legally binding obligations and are enforceable against it in accordance with their terms.
(b) The persons executing this Agreement and any and all documents on behalf of
Tenant have the legal power, right, and actual authority to bind Tenant.
(c) Tenant's execution of this Agreement and its consummation of the transactions do
not breach any agreement or constitute a default or a condition that would ripen into a default
under any agreement to which Tenant is a party. Furthermore, Tenant's execution of this
Agreement and its consummation of the transactions do not violate any order, rule, or regulation
applicable to Tenant of any court or any federal, state, or municipal regulatory body or
administrative agency or other governmental body.
(d) No permission, approval, or consent by third parties or governmental authorities is
required for Tenant to consummate the transactions contemplated by this Agreement.
(e) No representation, warranty, or statement of Tenant in this Agreement or in any
document or information furnished to Landlord misstates or omits any material fact necessary to
make the statements or facts contained therein not misleading.
15. Governing Law. The Parties expressly agree that this Agreement will be governed by,
interpreted under, and construed and enforced in accordance with the laws of the State of California.
The Parties mutually consent to jurisdiction and venue in the courts of Mendocino County and
waive any objections to the jurisdiction or venue of such courts.
This Lease Agreement with Option to Purchase is executed to be effective as of the
Effective Date.
LANDLORD:
CITY OF UKIAH
ATTEST:
TENANT:
BUTTE CREEK PROPERTY CORPORATION
_ By:
• :' • mo, City Manager Dawn Stafford, Presiden
lua44,64
Kristine Lawler, City Clerk
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EXHIBIT A
Legal Description of Site
Beginning at a point on the South line of Norton Street at the Northwest corner of that parcel of
land conveyed by Addieline Rogers, et al, to AJ. Ekdahl, by deed dated July 15,1919, recorded in
Book 156 of Deeds, Page 70, Mendocino County Records; thence Westerly along the Southerly
line of Norton Street 75 feet; thence Southerly 264 1/2 feet to the Northwest corner of the land
conveyed by Norton Wagenseller to G.H. Singley by deed dated November 18,1902, recorded in
Book 90 of Deeds, Page 166, Mendocino County Records; thence Easterly along the Northerly
line of said Singley land 75 feet to the Southwest corner of the above mentioned Ekdahl land;
thence Northerly along the Westerly line of said Ekdahl land 264 '/2 feet to the point of
beginning.
Together with the following:
Beginning in the East line of Main Street at the Southwest corner of land of Perley Crawford, et
al as described in Tract 2 in the Deed recorded May 22,1952 in Book 317 of Official Records,
Page 81, Mendocino County Records, being 121 feet South of the South line of Norton Street;
thence Southerly along the East line of Main Street 182 feet to the Northwest corner of land of
Clarence F. and Lillian Ganter as described in Deed recorded October 10,1945 in Book 192 of
Official Records, Page 129, Mendocino County Records; thence East along the North line of the
last mentioned Lot, 180 feet to its Northeast corner; thence North 182 feet to the Southeast
comer of land of George M. and Georgia Portlock as described in Deed recorded July 15, 1946
in Book 200 of Official Records, Page 210, Mendocino County Records; thence West 180 feet to
the point of beginning.
Excepting therefrom that portion conveyed in the Deed executed by Alice E. Lamb to the City of
Ukiah dated September 4, 1962, recorded September 12, 1962 in Book 606 of Official Records,
Page 211, Mendocino County Records.
APN: 002-153-04 and 002-153-30
The intent of this description is to voluntarily merge the above described property into one legal
parcel.
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SITE PLAN
EXHIBIT B
Conceptual Plans
4 I
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EXHIBIT C
Insurance Requirements
(a) Required Coverage. The Tenant and its successors and assigns to the
Property pursuant to this Agreement shall maintain and keep in force, at the Tenant (or its
successors') sole cost and expense, the following insurance applicable to the Project:
(i) Worker's Compensation insurance, including Employer's Liability coverage, with
limits not less than One Million Dollars ($1,000,000) each accident, to the extent required by
law, which must be increased if required by California Workers' Compensation Laws.
(ii) Comprehensive General Liability insurance with limits not less than Two Million
Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property
Damage, including coverages for Contractual Liability, Personal Injury, Broad Form Property
Damage, Products and Completed Operations (this requirement may be satisfied by
Comprehensive General Liability insurance with limits not less than One Million Dollars
($1,000,000) each occurrence and umbrella coverage providing the remaining One Million
Dollars ($1,000,000) of coverage).
(iii) Comprehensive Automobile Liability insurance with limits not less than One Million
Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property
Damage, including coverages for owned, non -owned and hired vehicles, as provided, however,
that if the Tenant do not own or lease vehicles for purposes of this Agreement, then no
automobile insurance shall be required and the parties to this Agreement shall initial this
provision signifying same.
(iv) After completion of construction, property insurance covering the Project covering
all risks of loss (other than earthquake), including flood (if required), for one hundred percent
(100%) of the replacement value, with deductible, if any, acceptable to the City, naming the City
as Loss Payees, as its interest may appear. Tenant's insurance policy shall be reassessed annually
to ensure coverage for the full replacement cost of the Project and adjusted accordingly.
(v) During construction of the Improvements, Builder's Risk insurance in an amount
required by the Construction Lender.
(vi) Insurance policy limits shall be subject to an increase, whenever the CPI increases by
more than 10% over the base year or over the year of the most recent adjustment in the policy
limit. "CPI" means the Consumer Price Index For San Francisco -Oakland -San Jose, CA, All
Items (base year 1982-1984 = 100), published by the United States Department of Labor, Bureau
of Labor Statistics. "Base year" means the first full year after the Effective Date. "Year of the
most recent adjustment" means the year in which the policy limit was most recently increased
based on the CPI. The CPI in any year shall be the average monthly CPI for that year. For any
claims related to this project, the Contractor's insurance coverage shall be primary insurance
with respect to the City, its officers, officials, employees, and volunteers. Any insurance or self -
21
insurance maintained by the City, its officers, officials, employees, or volunteers shall be in
excess of the Contractor's insurance and shall not contribute with it.
(b) Contractor's Insurance. The Tenant shall cause any general contractor or
agent working on the Improvements under direct contract with the Tenant to maintain insurance
of the types and in at least the minimum amounts described in subsections (a)(i), (a)(ii), and
(a)(iii) above, and shall require that such insurance shall meet all of the general requirements of
subsection (c) below. Subcontractors working on the Project under indirect contract with the
Developer shall be required to maintain the insurance described in subsections (a)(i), (a)(ii) and
(a)(iii) above, except that the Comprehensive General Liability insurance limits shall not be less
than One Million Dollars ($1,000,000) each occurrence combined single limit. Liability and
Comprehensive Automobile Liability insurance to be maintained by such contractors and agents
pursuant to this subsection shall name as additional insureds the City, the City Council, and their
officers, agents, and employees.
(c) General Requirements. The required insurance shall be provided under an
occurrence form, and the Tenant shall maintain such coverage continuously throughout the
Term. Should any of the required insurance be provided under a form of coverage that includes
an annual aggregate limit or provides that claims investigation or legal defense costs be included
in such annual aggregate limit, such annual aggregate limit shall be three times the occurrence
limits specified above.
Comprehensive General Liability, Comprehensive Automobile Liability and Property
insurance policies shall be endorsed to name as additional insureds the City and its City Council
members, officers, agents, employees, and volunteers.
All policies and bonds shall be endorsed to provide thirty (30) days prior written notice of
cancellation, reduction in coverage, or intent not to renew to the address established for notices
to the City pursuant to Section 8 of the Lease/Option Agreement.
(d) Certificates of Insurance. Prior to entering into possession, the Tenant
shall provide certificates of insurance and policy endorsements and upon the City's request
complete insurance policies, in form and with insurers reasonably acceptable to the City,
evidencing compliance with the requirements of this Section. All certificates and endorsements
are to be received and approved by the City before work commences. Builder's Risk insurance
shall be endorsed to name the City (and its officers and employees) as additional insureds and to
name Lender as the loss payee.
(e) Upon completion of construction, Tenant shall provide proof of open
perils insurance, [excluding earthquake] on the completed improvements for not less than their
replacement cost with an admitted California insurance company approved by City.
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EXHIBIT D
Lease Payment Schedule
Annual land lease payments (payable in equal monthly installments) for years:
1-10
$42,667
Lockout
Annual land lease payments (payable in equal monthly installments) for years:
11-12
$58,042
Lockout
Annual land lease payments (payable in equal monthly installments) for years:
13-20
$56,375
Option
Annual land lease payments (payable in equal monthly installments) for years:
21-30
$71,750
Option
Annual land lease payments (payable in equal monthly installments) for years:
31-40
$87,125
Option 31-33
Annual land lease payments (payable in equal monthly installments) for years:
41-50
$102,500
Lockout 34-50
Option to either extend lease for an additional 20 years and/or buyout shall be negotiated upon
expiration of the initial fifty (50) year Term of this Lease.
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