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HomeMy WebLinkAboutStaff Report 4.A 02/07/2011(i) DATE: February 7"i, 2011 TO: Honorable Mayor and Members of the City Council through City Manager Honorable Chair and Members of the Commission through Executive Director FROM: Bonne Gaebler, Housing Administrator SUBJECT: (1) Resolution Of The City Council Of The City Of Petaluma Approving Termination Of Memorandum Of Understanding With Petaluma Ecumenical Properties Regarding The Property At 951 Petaluma Boulevard South and Authorizing the Execution of the Documents and Further Action in Connection Therewith (2) Resolution Of The PCDC Approving A Purchase And Sale Agreement And A Commercial Lease Agreement By And Between The Petaluma Comrruunity Development Commission And PEP Housing For The Purchase And Leaseback Of Real Property Located At 951 Petaluma Boulevard South And Authorizing The Execution Of Documents And Further Action In Connection Therewith RECOMMENDATION It is recommended that the City Council/Commission adopt the attached resolutions approving the termination of a Memoranduun Of Understanding with Petaluma Ecumenical Properties regarding the property at 951 Petaluma Boulevard South and approving a Purchase And Sale Agreement and a Coumnercial Lease Agreement by and between the Petaluma Community Development Commission And PEP Housing for the purchase and leaseback of real property located at 951 Petaluma Boulevard South and authorizing the execution of documents and further action in connection therewith. BACKGROUND The City of Petaluma has historically acted in partnership with nonprofit developers to address the Council and PCDC's goal of providing safe, decent, affordable housing for the community's low-income seniors. As part of that goal, the City assisted Petaluma Ecumenical Properties (PEP Housing) in the purchase of property at 951 Petaluma Boulevard South to serve as a corporate office facility and a future senior housing development. The City's initial financial participation (2006) consisted of a "deferred second loan" in the amount of S 1,432,000. That loan was secured by a Deed of Trust and evidenced by a Note and a Memorandrun of Understanding (MOU) containing certain conditions regarding future development of the site. PEP also holds a first mortgage with First Community Bank in the Agenda Review: City Managesj City Attorneynance Director amount of $965,976. Due to the economic downturn, a financial restructuring is necessary to provide PEP with the financial aid to more efficiently address its primary mission of providing affordable senior housing. The actions required to achieve that restructuring are to terminate the existing MOU, pay off PEP's first loan with the bank in the course of PCDC's purchase of the property and enter into a lease -back agreement between PCDC and PEP. Public noticing of these actions was conducted; no comments have been received as of the distribution of this staff report. DISCUSSION The payments on PEP's first mortgage to First Community Bank are beyond PEP's current capacity to pay. At the outset of PEP's purchase of the site, a sizeable portion of those payments was offset by a commercial tenant. That tenant vacated the site at the downturn of the commercial real estate market and, following an extensive marketing effort, PEP has been unable to locate another tenant. PEP Housing and City staffs developed a plan of action, which was initially presented to Council in April, 2010. Step one of the strategy was Council approval of the sale of a PEP property to be utilized to pay down the first mortgage; that has been completed. Step two was initiated at May budget hearings when Council approved a budget allocation to complete the purchase/sale/leaseback transaction. During the preparation for step two above, a concern was raised about the City's absorbing this loan ($965,976). Attempts by both City staff and PEP to modify, extend or refinance the existing loan did not result in either any viable alternatives or in terms which PEP believed were within its means to accept. FINANCIAL ANALYSIS Following the PEP Board of Directors' request that the City become their partner in the purchase and lease -back of this property, a fiscal analysis was completed to determine the gains and/or losses of the transaction. The first step in exercising our due diligence was a request that PEP provide the City with an updated appraisal, which was completed in October 2010. The value of the property at that time was $1,920,000 (a decrease in value from an original appraisal value of $2.7 M conducted in June 2006. This decrease was expected due to the real estate downturn). In establishing the staff recommendation to complete this purchase/leaseback transaction, it was determined that the best case scenario is as follows: $965,700 will be utilized to payoff the loan (funds for the purchase were approved by Council and are available in the housing fund). In the meanwhile, annual rents will provide revenue of $24,000 /year. The worst case scenario is as follows: foreclosure of the property; the City loses our deferred silent second investment of $1,432,000; and PEP loses its investment of $311,000 plus mortgage payments. 2 ATTACHMENTS 1. Resolution terminating existing MOU 2. Termination of City MOU I Resolution for Purchase and Leaseback 4. Purchase and Sale Agreement and Lease 3 ATTACHMENT #1 Resolution No. Of the City of Petaluma, California RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA APPROVING TERMINATION OF MEMORANDUM OF UNDERSTANDING WITH PETALUMA ECUMENICAL PROPERTIES REGARDING THE PROPERTY AT 951 PETALUMA BOULEVARD SOUTH AND AUTHORIZING THE EXECUTION OF DOCUMENTS AND FURTHER ACTION IN CONNECTION THEREWITH WHEREAS, in June 2006 the City of Petaluma entered into a Memorandum of Understanding ("MOU") with Petaluma Ecumenical Properties, a California nonprofit public benefit corporation ("PEP") and First Community Bank (`Bank") regarding the purchase by PEP of the real property located at 951 Petaluma Boulevard South (tire "Property"), located in the Petaluma Community Development Project Area (the "Project Area"), for development of portions of the Property as affordable senior housing; and WHEREAS, the MOU documented Bank's first loan to PEP in the amount of $1,250,000, and City's second loan to PEP in the amount of $1,432,000 from the Low and Moderate Income Housing Fund of the Petaluma Community Development Commission ("PCDC"), for a portion of the purchase price and feasibility costs. Both loans were evidenced by promissory notes and secured by deeds of trust recorded in the Official Records of Sonoma County; and WHEREAS, as a result of adverse market conditions, the expected housing development and other actions contemplated by the MOU have not occurred; and WHEREAS, PCDC desires to purchase the Property and lease it back to PEP for a term not to exceed four years, pending development of the Property for affordable housing, and PCDC and PEP will enter into a Purchase and Sale Agreement and Commercial Lease, whereby the Bank loan will be paid in full prior to close of escrow. NOW, THEREFORE, BE 1T RESOLVED that the City Council of the City hereby: Approves the Termination of Memorandum of Understanding with Petaluma Ecumenical properties and First Community Bank, attached as Exhibit A, and authorizes the City Manager or his designee to execute it, and to make such changes, with the advice of counsel, which do not materially or substantially increase the City's obligations thereunder. 2. Authorizes the City Manager or his designee to sign all documents, including without limitation a Release and Reconveyance, to make all approvals and to take all actions necessary or appropriate to implement the Termination of Memorandum of Understanding and the City's responsibilities thereunder. ATTACUNIE, NT #2 TERMINATION OF MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF PETALUMA AND PETALUMA ECUMENICAL PROPERTIES REGARDING THE PROPERTY AT 951 PETALUMA BOULEVARD SOUTH This Termination of Memorandum of Understanding ("Termination Agreement") is entered into as of , 2011 ("Effective Date") by and among the City of Petaluma, a California municipal corporation ("City"), Petaluma Ecumenical Properties, a California nonprofit corporation ("PEP"), and First Community Bank (the "Bank"). City, PEP and Bank are referred to herein individually as "Party" and collectively as the "Parties". RECITALS A. On July 25, 2006, City and PEP entered into that certain Memorandum of Understanding ("MOU") regarding the purchase by PEP of the real property located at 951 Petaluma Boulevard South in the City of Petaluma and commonly known as Sonoma County Assessor's Parcel Number 008-530-007, as more particularly described in Exhibit A attached hereto (the "Property"). As set forth in the MOU, PEP intended to occupy an existing office building and to develop the vacant portion of the Property as an affordable senior housing development. B. Pursuant to Resolution 2006-111 N.C.S., adopted by the City Council of the City on June 5, 2006, City authorized a loan to PEP in the amount of One Million Four Hundred Thirty Two Dollars ($1,432,000) for a portion of the purchase price and feasibility costs for the Property ("City Loan"). Pursuant to the MOU, PEP agreed to split the Property into an "Office Parcel" for its use and a "Residential Parcel" for the housing development. The MOU provided that the City Loan would be used solely for acquisition, feasibility costs and eventual development of the Residential Parcel. The MOU further provided that within five years, PEP would diminish the size of the Office Parcel and transfer the additional available land to the Residential Parcel. C. Bank agreed to lend PEP approximately One Million Two Hundred Fifty Thousand Dollars ($1,250,000) pursuant to the terms of agreements and documents between PEP and Bank for acquisition of the Property. Bank executed the MOU solely for purposes of agreeing to the future proposed lot line adjustment and reconveyance from the lien of Bank's Deed of Trust of the Residential Parcel. D. Pursuant to the MOU, PEP executed that certain Promissory Note ("City Note") and that certain Deed of Trust and Assignment of Rents ("City Deed of Trust"), recorded on July 31, 2006, in the Official Records of Sonoma County (the "Official Records") as Instrument No. 2006094344. E. As a result of adverse market conditions, the lot line adjustment has not occurred and the affordable housing project has not been developed by PEP. The Petaluma 5 Community Development Commission ("PCDC") desires to purchase the Property from PEP, and PEP desires to sell the Property to PCDC for such use as it determines, in its sole and absolute discretion, is appropriate. In the interim, PCDC is willing to lease the Premises, as defined in a proposed Commercial Lease Agreement, to PEP through August 30, 2014. Approval of the proposed Purchase and Sale Agreement and Commercial Lease Agreement with PEP is scheduled for consideration by PCDC following a noticed public hearing on February 7, 2011. F. Accordingly, the Parties desire to terminate the MOU as set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows. Recitals. The foregoing Recitals are true and correct and made a part hereof. 2. Termination of MOU. Upon PCDC's approval of the Purchase and Sale Agreement and Commercial Lease Agreement, the MOU and all rights and obligations of the Parties thereunder, except such matters as are expressly stated therein to survive such termination, are and shall be hereby terminated. 3. Forgiveness of City Loan and Release and Reconvevance by City. City agrees to forgive repayment of the City Loan and to execute and cause to be recorded in the Official Records a Release of Note and Reconveyance of Property Interest with respect to the City Note and City Deed of Trust. 4. Release and Reconvevance by Bank. In connection with the close of escrow for PCDC's purchase of the Property, Bank's loan shall be fully repaid from PCDC's purchase price, and upon such payment Bank therefore agrees to execute and cause to be recorded in the Official Records a Release of Note and Reconveyance of Property with respect to Bank's security interest in the Property. 5. Further Assurances. The Parties agree to execute such other documents and to take such other and further actions as necessary to effectuate the purposes of this Agreement. 6. Mutual Release. Except as to Surviving Obligations, which are not waived or relinquished by the Parties, the Parties hereby release and discharge one another and their successors and assigns, agents, employees and representatives from any and all obligations, claims, actions and liabilities, whether past, present or future, of whatever character, known or unknown, by reason of or existing in connection with the MOU (the "Settled Obligations"). The Parties acknowledge that they have read and understand the terms of Section 1542 of the California Civil Code, which provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. The Parties hereby waive and relinquish all rights and benefits they, and each of them, may have under Civil Code Section 1542 with respect to the Settled Obligations, and acknowledge that the consequence of such waiver and relinquishment is that no Party may make a claim against another Party for damages that may be discovered in the future with respect to the Settled Obligations. 7. Litiaation Costs. If any legal action or other proceeding, including arbitration or action for declaratory relief, is brought to enforce this Agreement or because of an alleged breach or default in connection with this Agreement, the prevailing Party shall be entitled to recovery reasonable attorneys' fees and other costs of such legal action or other proceeding, in addition to any other relief to which such Party may be entitled. 8. Non-Liabilitv of Officials. EmDlovees and Aaents. No member, official, employee or agent of City shall be personally liable to the other Parties or their successors in interest in the event of any default or breach by City in connection with this Agreement. 9. Entire Agreement. This Agreement, including Exhibit A attached hereto and incorporated herein by this reference, contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof. 10. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument. 11. Severabilitv. If any term, provision, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unenforceability. 12. Governina Law: Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of Sonoma County, California or in the Federal District Court for the Northern District of California. 13. Construction. The Parties have had a full and fair opportunity to review and negotiate the provisions of this Agreement, and therefore any ambiguities herein shall not be construed or resolved against the drafting Party. SIGNATURES ON FOLLOWING PAGE. IN WITNESS WHEREOF, the Parties have executed this Termination of Memorandum of Understanding as of the date first written above. CITY OF PETALUMA In John Brown, City Manager Attest: Claire Cooper, City Clerk Approved as to form: Eric W. Danly, City Attorney PETALUMA ECUMENICAL PROPERTIES A Mary Stompe, Executive Director FIRST COMMUNITY BANK la 9 1 Legal Description of Property (Attach Legal Description) I430849A 10 ATTACHMENT W Resolution No. PETALUMA COMMUNITY DEVELOPMENT COMMISSION RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT AND A COMMERCIAL LEASE AGREEMENT BY AND BETWEEN THE PETALUMA COMMUNITY DEVELOPMENT COMMISSION AND PEP HOUSING FOR THE PURCHASE AND LEASEBACK OF REAL PROPERTY LOCATED AT 951 PETALUMA BOULEVARD SOUTH AND AUTHORIZING THE EXECUTION OF DOCUMENTS AND FURTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the Petaluma Community Development Commission ("PCDC") is a redevelopment agency existing pursuant to the Community Redevelopment Law, California Health and Safety Code Section 33000 et seg., ("CRL"), and pursuant to the authority granted thereunder has the responsibility to carry out the Redevelopment Plan ("Redevelopment Plan") for the Petaluma Community Development Project Area ("Project Area"); and WHEREAS, Petaluma Ecumenical Properties, a California nonprofit public benefit corporation ("PEP"), is the owner of real property in Sonoma County, California located at 951 Petaluma Boulevard South in the City of Petaluma, and more particularly identified as Assessor's Parcel No. 008-530-007 (the "Property"); and WHEREAS, PEP desires to sell the Property and the PCDC desires to acquire the Property to facilitate development of affordable housing, and in the interim to lease the Property back to PEP for a term not to exceed four years; and WHEREAS, the PCDC and PEP have negotiated a purchase and sale agreement ("Purchase and Sale Agreement") substantially in the form on file with the City Clerk, for the purchase of the Property for $965,976, which price is supported by market data; and WHEREAS, the PCDC has finds available from its Low and Moderate hmcome Housing Fund for the purchase; and WHEREAS, the PCDC and PEP have also negotiated a Commercial Lease Agreement ("Lease") pursuant to which PEP can retain its administrative office on the Property for a term not to exceed four years, pending development of affordable housing; and I1 WHEREAS, the Property is located in the Project Area, and the purchase and leaseback of the Property as provided for in the Purchase and Sale Agreement and in the Lease are consistent with and further the goals and objectives of the Redevelopment Plan and the current hnplementation Plan. NOW, THEREFORE, BE IT RESOLVED THAT the Petaluma Community Development Commission hereby approves the Purchase and Sale Agreement and the Lease, attached as Exhibit A, and authorizes the City Manager or his designee to execute the Purchase and Sale Agreement and the Lease, and to male such changes, with the advice of counsel, which do not materially or substantially increase the PCDC's obligations thereunder, to sign all documents, to make all approvals and to take all actions necessary or appropriate to implement the Purchase and Sale Agreement and the Lease and the PCDC's responsibilities thereunder. 12 ATTACHMENT #4 DRAFT PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into effective as of , 2011, (the "Effective Date") by and between Petaluma Ecumenical Properties, a California nonprofit public benefit corporation ("Seller") and the Petaluma Community Development Commission, a public body, corporate and politic ("Buyer"). Seller and Buyer are hereinafter referred to individually as "Party" and collectively as "Parties." RECITALS A. Seller is the fee owner of that certain real property in Sonoma County, California, known as Sonoma Assessor's Parcel Number 008-530-007, located at 951 Petaluma Boulevard South in the City of Petaluma, and more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the "Land"). B. hl accordance with the terrns and conditions contained herein, Buyer desires to purchase, and Seller desires to sell, the Land together with all improvements located thereon and all easements, hereditaments, and appurtenances belonging to or inuring to the benefit of Seller and pertaining to the Land (all of the foregoing collectively hereinafter, the "Property"). C. Buyer is a redevelopment agency existing pursuant to the Community Redevelopment Law, California Health and Safety Code Section 33000 et seq., and pursuant to the authority granted thereunder, Buyer has the responsibility to carry out the Redevelopment Plan ("Redevelopment Plan") for the Petaluma Community Development Project Area ("Project Area"). D. The Property is located in the Project Area, and the purchase of the Property as provided for in this Agreement is consistent with and furthers the goals and objectives of the Redevelopment Plan and Buyer's current hnplementation Plan. E. Concurrently herewith, Seller and the City of Petaluma, a California municipal corporation (the "City") have entered or will enter into that certain Tennination of Memorandum of Understanding, incorporated herein by this reference, whereby the City will forgive an existing loan to Seller in the amount of One Million Four Hundred Thirty Two Dollars ($1,432,000) (the "City Loan") and will execute and record a Release of City Note and Reconveyance of Property Interest secured by a City Deed of Trust. Pursuant thereto, Seller shall be released from and have no further obligation to Buyer or City in connection with the City Loan. 13 NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. 1. Agreement to Sell and Purchase. Seller agrees to sell and Buyer agrees to purchase the Property subject to the terms and conditions of this Agreement. 2. Purchase Price. The purchase price for the Property shall be Nine Hundred Sixty Five Thousand, Nine Hundred Seventy -Six U.S. Dollars ($965,976) ("Purchase Price"). 3. Convevance of Title. On February 28,2011 ("Conveyance Date"), unless extended in writing by mutual agreement of the Parties, Seller shall convey by grant deed to Buyer marketable fee simple title to the Property, free and clear of all recorded and unrecorded liens, encumbrances, assessments, leases and taxes except: (A) The provisions and effect of the Redevelopment Plan; (B) Taxes and assessments for the fiscal year in which the escrow for this transaction closes, which shall be prorated as of the Conveyance Date, and all taxes and assessments for future periods; and (C) Such other conditions, liens, encumbrances, restrictions and exceptions as may be approved in writing by Buyer ("Permitted Exceptions"). 4. Escrow; Escrow Instructions. The Parties have established an escrow (the "Escrow"), Number 0812006465 -JJ, to consummate the purchase and sale of the Property pursuant to this Agreement at the office of Old Republic Title Company, 201 First Street, Suite 101, CA 94952, to the attention of Julie James ("Title Company" or "Escrow Agent") or such other title company as may be mutually agreed upon by the Parties. Within five (5) business days of the Effective Date of this Agreement, the Parties shall deposit with the Escrow Agent an executed copy of this Agreement, which shall serve as the joint escrow instructions of Buyer and Seller for this transaction, together with such additional instructions as may be executed by the Parties and delivered to the Escrow Agent. 5. Title Documents. Buyer has caused, or will cause concurrently with the establishment of escrow pursuant to Section 4, the Title Company to deliver to Buyer and Seller a preliminary title report ("Preliminary Report") on the Property issued by the Title Company, setting forth all liens, encumbrances, easements, restrictions, conditions, pending litigation, judgments, administrative proceedings, and other matters of record affecting Seller's title to the Property, together with complete and legible copies of all documents relating to exceptions listed in the Preliminary Report ("Title Exceptions"). Buyer shall approve as a Permitted Exception or shall disapprove each Title Exception within five (5) calendar days following the Effective Date of this Agreement. Buyer's failure to object within such period shall be deemed to be an 14 approval of the Title Exceptions. If Buyer objects to any Title Exception, Seller shall use its commercial best efforts at Seller's sole expense to remove from title or otherwise satisfy each such exception no later than five (5) calendar days prior to the Conveyance Date and in a form that is reasonably satisfactory to Buyer. If Seller fails to remove or satisfy any Title Exception to the satisfaction of Buyer, Buyer shall have the option, in its sole discretion, to terminate this Agreement or to accept title subject to such exception. In the event Buyer elects to terminate this Agreement, all ftmds and documents deposited into escrow by or on behalf of the Parties shall be returned to the depositing Party, and all rights and obligations hereunder shall terminate except for those rights and obligations which expressly survive termination pursuant to the terms of this Agreement. It shall be a condition to the purchase of the Property and payment of the Initial Payment that Title Company issue a CLTA Owner's Title Insurance Policy ("Title Policy") in the amount of the Purchase Price for the benefit and protection of Buyer, showing title to the Property vested in Buyer, subject only to the Permitted Exceptions, including such endorsements as may reasonably be requested by Buyer, no later than the Conveyance Date, conditioned only upon the payment of the premium for the Title Policy and all Buyer requested endorsements. 6. Escrow Documents and Funds. (A) Seller. (i) No later than two (2) business days prior to the Conveyance Date, Seller shall deposit into escrow all of the following: (a) a Grant Deed, substantially in the form attached hereto as Exhibit B ("Grant Deed"), duly executed and acknowledged, conveying to Buyer good and marketable fee simple title to the Property, subject only to the Permitted Exceptions approved pursuant to this Agreement; (b) Seller's affidavit of non -foreign status and Seller's certification that Seller is a resident of California, each executed by Seller raider penalty of perjury as required by slate and federal law; (c) Rent pursuant to the Lease (defined below); and (d) Such additional duly executed instruments and documents as the Escrow Agent may reasonably require to consummate the transaction contemplated hereby. 15 (B) Buyer. (i) No later than two (2) business days prior to the Conveyance Date, Buyer shall deposit into escrow all of the following: (a) A duly executed Certificate of Acceptance in the form shown in Exhibit C, as required by California Government Code Section 27281; (b) A fully executed lease of the Property from Buyer to Seller (the "Lease"), substantially in the form of the attached Exhibit D; and (c) Such additional duly executed instruments and documents as the Escrow Agent may reasonably require to consummate the transaction contemplated hereby. (ii) No less than one (1) business day prior to the Conveyance Date, Buyer shall deposit into escrow all of the following: (a) The Purchase Price, as adjusted by any prorations between the Parties; (b) As applicable, all governmental conveyance fees, transfer taxes, escrow fees and recording fees; and (c) The cost of the Title Policy and any requested endorsements; and (d) such additional duly executed instruments and docu vents as the Escrow Agent may reasonably require to consurmnate the transaction contemplated hereby. (C) In the event that Seller elects to have Buyer advance the charges otherwise due from Seller pursuant to Section 6, Buyer shall deposit such charges and such amount shall be deducted from the amount of the Purchase Price otherwise due to Seller. 7. Seller's Leaseback. Buyer agrees that cormnencing on March 1, 2011 and continuing through December 31, 2014 (the "Rental Period"), Buyer will lease back to Seller that portion of the Property consisting of the existing buildings thereon but excluding the existing dock ("Leasehold Premises"). Thereafter, without limiting Seller's obligations pursuant to the Lease, Seller's use and occupancy of the Leasehold Premises will be subject to all of the following conditions, all of which shall survive the Conveyance Date, as described more fully in the form of Lease attached hereto as Exhibit D. 16 (A) Seller will pay all costs and expenses related to Seller's use of the Leasehold Premises which accrue prior to or during the Rental Period. Such costs and expenses shall include, without limitation, all costs and expenses attributable to, paid, or incurred in connection with the operation, repair, and maintenance of the Leasehold Premises; all water, sewer and utility charges; all insurance premiums; and all charges for refuse disposal, janitorial services, landscape maintenance and other services provided to the Leasehold Premises. (B) Seller will pay, prior to delinquency, all real property taxes; possessory interest taxes; license and permit fees; sales, use or occupancy taxes; and general and special assessments pertaining to the Leasehold Premises which accrue prior to or during the Rental Period. (C) Seller will lease the Leasehold Premises in its as -is condition as of the commencement of the Rental Period. Seller acknowledges that Buyer shall have no responsibility for the repair or maintenance of the Leasehold Premises, and Seller releases Buyer from all Claims related in whole or in part, directly or indirectly, to the condition of the Leasehold Premises. (D) Seller will not use or permit Hazardous Materials (as defined in Exhibit E) to be used in, on or under the Leasehold Premises. Seller may use or permit the use of cleaning and maintenance supplies used in the ordinary course of Seller's operations and used and disposed of in compliance with all state, federal and local laws, rules and regulations including, without limitation, Environmental Laws as defined in Exhibit E. (E) Seller shall comply with all state, federal and local laws, rules and regulations in connection with its use and occupancy of the Leasehold Premises. (F) Seller shall indemnify, defend (with counsel reasonably acceptable to Buyer) and hold harmless Indemnitees, from and against all liability, loss, cost, expense (including without limitation attomeys' fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order and damage (all of the foregoing collectively "Claims") which directly or indirectly, in whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused or related to: (i) Seller's use and occupancy of the Leasehold Premises, or (ii) any negligence of Seller or its agents, contractors, employees or invitees. (G) Throughout the Rental Period, Seller shall maintain, at Seller's expense: (i) Comprehensive General Liability insurance issued by a carrier authorized to sell insurance in the State of California, written on an occurrence basis, and providing coverage for bodily injury, death and property damage caused by or occurring in connection with Seller's use and occupancy of the Leasehold Premises with a policy limit of at least Two Million U.S. Dollars ($2,000,000) 17 per occurrence; (ii) Workers' Compensation insurance in compliance with the requirements of law; and (iii) property insurance providing coverage against fire, casualty loss and damage to the Leasehold Premises. Seller shall provide Buyer with satisfactory evidence of the foregoing insurance coverage prior to the comrnencement of the Rental Period and, upon Buyer's request, of its continuance in force throughout the Rental Period. The foregoing insurance policies shall be primary and noncontributing with respect to any policies issued by Buyer and shall name Buyer and the City of Petaluma as additional insured and/or loss payees, as their interests may appear. 8. Full and Comnlete Settlement. Seller hereby acknowledges that the Purchase Price, and Buyer's Lease to Seller as set forth herein, constitutes the full and complete settlement of any and all claims for compensation and damages against Buyer, by reason of Buyer's acquisition of the Property and any dislocation of Seller from same, including without limitation, any and all rights to participation in the redevelopment of property in the Project Area, the value of the Property, any and all claims in inverse condemnation or condemnation, and any and all relocation benefits that Seller may be entitled to, including without limitation advisory assistance, actual and reasonable moving expenses, and reasonable and necessary reestablishment expenses (collectively, "Relocation Benefits") pursuant to the California Relocation Assistance Law (Government Code Section 7260 et seq.) and implementing regulations, as the same may be amended (collectively, "Relocation Act"), the nature of which is fully known by Seller, and any and all other claims that Seller may have, whether or not specifically mentioned herein, relating directly or indirectly to Buyer's acquisition of the Property and Seller's subsequent lease of the Leasehold Premises. hi consideration of Seller's agreement to purchase the Property and lease the Leasehold Premises to Seller as set forth herein, Seller hereby voluntarily and knowingly waives, releases and discharges forever any and all rights, demands, liabilities, obligations, claims or causes of action in law or equity of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising, including without limitation any potential claims for Relocation Benefits under the Relocation Act, arising from or relating in any manner to Buyer's acquisition of the Property, the future termination of the Lease, or Seller's future development or use of the Property or the Leasehold Premises, and further waives all attorneys' fees, costs, disbursements, and expenses incurred in connection therewith. Seller is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides: is A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. As such provisions relate to this Section 8, Seller hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. Seller's Initials By: Seller acknowledges that it may have sustained damage, loss, costs or expenses which are presently unknown and unsuspected, and which mat give rise to additional damage, loss, costs or expenses in the future. Seller also acknowledges that changes in law may occur in the future which may apply retroactively and may allow Seller to be entitled to further claims for damage, loss, costs or expenses which are presently unknown and unsuspected. Nevertheless, Seller hereby acknowledges that this Agreement has been negotiated and agreed upon in light of that, and hereby expressly waives any and all rights which it may have under California Civil Code Section 1542, or under any statute or common law or equitable principle of similar effect. This acknowledgment and release survives the Conveyance Date and termination of the Lease. 9. Due Diligence and AS -IS Sale. Seller agrees to make available to Buyer within five (5) business days following the Effective Date, any and all infonnation, studies, reports, investigations, contracts, and other obligations concerning or relating to the Property which are in Seller's possession or which are reasonably available to Seller, including without limitation surveys, studies, reports and investigations concerning the Property's physical, environmental or geological condition, habitability, or the presence or absence of Hazardous Materials in, on or under the Property and the compliance by the Property with Environmental Laws, as set forth in Exhibit E. During the period commencing on the Effective Date and ending on the tenth (10 day after the Effective Date ("Due Diligence Period") Buyer may, at Buyer's expense, undertake an inspection, testing and review of the Property to determine if the Property is suitable for Buyer's intended use. During the Due Diligence Period, Buyer or its agents shall have the right, upon reasonable notice to Seller, to enter upon the Property for the purpose of inspecting, examining, surveying and reviewing the Property. Buyer shall obtain Seller's written consent, which Seller shall not unreasonably withhold, to any proposed physical testing of the Property. Buyer shall repair and return the Property to its original condition after such testing, at Buyer's expense. 19 Should Buyer fail to approve the condition of the Property for its intended use in writing with five (5) calendar days following the end of the Due Diligence Period, Buyer shall have the right, exercisable by giving written notice to Seller, to cancel the escrow, terminate this Agreement, and recover any and all amounts paid by Buyer to Seller or deposited with the Escrow Agent by or on behalf of Buyer. The exercise of this right by Buyer shall not constitute a waiver by Buyer of any other rights Buyer may have at law or equity. Buyer acknowledges and agrees that: (i) by purchasing the Property, Buyer shall be deemed to have approved of all legal, environmental, zoning, land use, seismic, title, survey and physical characteristics and conditions of the Property; and (ii) the Property is to be purchased, conveyed to, and accepted by Buyer in its condition as of the end of the Due Diligence Period, "AS IS" WHERE IS AND WITH ALL FAULTS, and no patent or latent defect or deficiency in the condition of the Property, whether or not known or discovered, shall affect the rights of either Seller or Buyer hereunder, nor shall the Purchase Price be reduced as a consequence thereof. 10. Convevance of Title. The Parties intend for conveyance of the Property to occur as soon as practicable following the Effective Date, but in any event no later than September 30, 2010, unless extended by mutual agreement of the Parties or unless this Agreement is terminated pursuant to the terms hereof or extended by mutual agreement of the Parties. The Escrow Agent shall cause the conveyance to occur by: (i) causing the Grant Deed to be recorded in the official records of Sonoma County, California; (ii) issuing the Title Policy and delivering same to Buyer; (iii) delivering to Seller the monies constituting the Purchase Price; and (iv) delivering to Buyer the original Grant Deed, together with a conformed copy thereof indicating recording information thereon. Possession of the Property shall be delivered to Buyer on the Conveyance Date. 11. Buver's Conditions to Convevance. Buyer's obligation to purchase the Property is conditioned upon: (i) the perforriance by Seller of each obligation to be performed by Seller under this Agreement within the applicable time period, or the waiver by Buyer of such obligation; (ii) Seller's representations and warranties contained in this Agreement being true and correct as of the Effective Date and the Conveyance Date; and (iii) the commitment by Title Company to issue and deliver the Title Policy, subject only to the Permitted Exceptions and payment of the regularly scheduled premium therefor. Should any condition to closing fail to occur, excepting any such conditions that have been waived by Buyer, Buyer shall have the right, exercisable by giving written notice to Seller, to cancel the escrow, terminate this Agreement, and recover any and all amounts paid by Buyer to Seller or deposited with the Escrow Agent by or on behalf of Buyer. The exercise of this right by Buyer shall not constitute a waiver by Buyer of any other rights Buyer may have at law or in equity. 20 12. Seller's Conditions to Closing. Seller's obligation to sell the Property pursuant to this Agreement is conditioned upon: (i) the performance by Buyer of each obligation to be performed by Buyer under this Agreement within the applicable time period, or waiver by Seller of such obligation; and (ii) Buyer's representations and warranties contained in this Agreement being true and correct as of the Effective Date and the Conveyance Date. 13. Seller's Renresentations and Warranties. Seller hereby represents and warrants that except as disclosed in writing to Buyer, as of the Effective Date and as of the Conveyance Date: (i) to Seller's actual knowledge there are no buried or partially buried storage tanks located on the Property; (ii) Seller has received no notice, warning, notice of violation, administrative complaint, judicial complaint, or other formal or informal notice alleging that conditions on the Property are or have ever been in violation of any environmental law or informing Seller that the Property is subject to investigation or inquiry regarding hazardous materials on the Property or the potential violation of any environmental law; (iii) there is no monitoring program required by the Environmental Protection Agency or any other governmental agency currently in effect concerning the Property; (iv) the Property has never been used as a dump or landfill; (v) Seller has disclosed to Buyer all information, records, and studies in Seller's possession or reasonably available to Seller relating to the Property concerning hazardous materials; (vi) Seller has not received any notice from any governmental authority of any threatened or pending zoning, building, fire, or health code violation or violation of other governmental regulations concerning the Property that have not previously been corrected; (vii) no contracts, licenses, leases or commitments regarding the maintenance or use of the Property or allowing any third party rights to use the Property are in force which affect the Property or which will survive the Conveyance Date; (viii) to Seller's actual knowledge there are no threatened or pending actions, suits, or administrative proceedings against or affecting the Property or any portion thereof or the interest of Seller in the Property; (ix) to Seller's actual knowledge there are no threatened or pending condemnation, eminent domain, or similar proceedings affecting the Property or any portion thereof; (x) Seller has not received any notice from any insurer of defects of the Property which have not been corrected; (xi) to Seller's actual knowledge all information that Seller has delivered to Buyer, either directly or through Seller's agents, is accurate and complete; (xii) Seller is not a "foreign person" under Section 1445 of the Internal Revenue Code; and (xiii) Seller has disclosed all material facts concerning the Property which are actually known to Seller. Seller further represents and warrants that this Agreement and all other documents delivered or to be delivered in connection herewith prior to or on the Conveyance Date: (a) have been duly authorized, executed, and delivered by Seller; (b) are binding obligations of Seller; (c) are collectively sufficient to transfer all of Seller's right, title and interest in and to the Property; and (d) do not violate the provisions of any agreement to which Seller is a party or which affects the Property. Seller further represents and warrants that the person(s) who has (have) executed this Agreement on behalf of Seller is (are) authorized to do, that Seller has the legal right to enter 21 into this Agreement and to perform all of its tenns and conditions, and that this Agreement is enforceable against Seller in accordance with its tens. Seller shall notify Buyer of any facts that would cause any of the representations contained in this Agreement to be materially untrue as of the Conveyance Date and which would adversely affect the Property. If, before the Conveyance Date, Buyer reasonably believes that a fact so disclosed by Seller materially (i.e., reasonably likely to cost in excess of $100,000 to correct) and adversely affects the Property, Buyer shall have the option to terminate this Agreement by delivering written notice thereof to Seller. In the event Buyer elects to terminate this Agreement, all funds and documents deposited into escrow by or on behalf of Buyer shall be returned to Buyer, and all rights and obligations hereunder shall terminate unless expressly stated herein to survive termination. In the event Buyer elects to proceed notwithstanding Buyer's lmowledge of the material, adverse condition, Buyer shall be deemed to have accepted the subject condition to the sante extent as if Buyer had discovered the condition itself and had nevertheless approved said condition. Seller shall indemnify, defend (with counsel reasonably acceptable to Buyer) and hold harmless Indemnitees from all loss, cost, liability, expense, damage or other injury, including without limitation, attorneys' fees and all other costs and expenses incurred by reason of, or in any manner resulting from the breach of any representation or warranty contained in this Section 13. This indemnification shall survive termination of this Agreement and the Conveyance Date. 14. Seller's Covenants. Seller covenants that from the Effective Date and through the Conveyance Date, Seller: (i) shall not permit any liens, encumbrances, or easements to be placed on the Property, other than Permitted Exceptions; (ii) shall not enter into any agreement regarding the use, sale, rental, management, repair, improvement, or any other matter affecting the Property that would be binding on Buyer or the Property after the Conveyance Date other than the Lease without the prior written consent of Buyer; (iii) shall not permit any act of waste or act that would tend to diminish the value of the Property for any reason, except that caused by ordinary wear and tear; and (iv) shall maintain the Property in its condition as of the Effective Date, ordinary wear and tear excepted, and shall manage the Property substantially in accordance with Seller's established practices. 15. Buver's Rearesentations, Warranties and Covenants. Buyer represents, warrants and covenants that this Agreement and all other documents delivered in connection herewith, prior to or on the Conveyance Date: (i) have been duly authorized, executed, and delivered by Buyer; (ii) are binding obligations of Buyer; and (iii) do not violate the provisions of any agreement to which Buyer is a party. Buyer further represents and warrants that the persons who have executed this Agreement on behalf of Buyer are duly authorized to do, that Buyer has the legal right to enter into this Agreement and to perform all of its terms and conditions, and that this Agreement is enforceable against Buyer in accordance with its terms. 16. Indemnification. 22 (A) Seller Indemnification. Seller agrees to defend (with counsel reasonably acceptable to Buyer), indemnify and hold harmless Indemnitees fiom and against any and all claims, liens, demands, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, and all costs incurred in cormection therewith (including without limitation actual attorneys' fees and costs of experts and consultants) arising from (i) any obligation of Seller not expressly assumed by the Buyer related to the ownership or operation of the Property prior to the Conveyance Date, but excluding any obligation related to existing hazardous materials; (ii) personal injury or property damage relating to the Property which occurred prior to the Conveyance Date and not caused by the acts or omissions of the Buyer or Buyer's agents, employees, or invitees; and (iii) the breach of any of Seller's representations made under this Agreement. The indemnity contained in this subsection shall survive the termination of this Agreement and the Conveyance Date. (B) Buver Indemnification. Buyer agrees to defend, indemnify and hold Seller harmless from and against any and all claims, liens, demands, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, and all costs incurred in connection therewith (including without limitation actual attorneys' fees and costs of experts and consultants) arising from (i) any obligation of Buyer related to Buyer's ownership or operation of the Property after the Conveyance Date; (ii) personal injury or property damage relating to the Property which occurred after the Conveyance Date and was not caused by the acts or omissions of Seller or Seller's employees, agents, board members, or officers ; and (iii) the breach of any of Buyer's representations made under this Agreement. The indemnity contained in this Section 16 shall survive the termination of this Agreement and the Conveyance Date. 17. Damage and Destruction. In the event of any damage or other loss to the Property, or any portion thereof, caused by fire or other casualty prior to the Conveyance Date in an amount not exceeding Fifty Thousand Dollars ($50,000), Buyer shall not be entitled to terminate this Agreement, but shall be obligated to purchase the Property as provided in this Agreement, without abatement in the Purchase Price, provided that Seller shall: (i) assign and transfer to Buyer all of Seller's rights under any insurance policy covering the damage or loss, and all claims for monies payable from Seller's insurer(s) in connection with the damage or loss, and (ii) pay to Buyer on the Conveyance Date the amount of Seller's deductible under the insurance policy or policies covering the damage or loss. In the event of damage or destruction of the Property or any portion thereof prior to the Conveyance Date in an amount in excess of Fifty Thousand Dollars ($50,000), Buyer may elect either to terminate this Agreement upon written notice to Seller, or to consummate the purchase of the Property, in which case Seller shall (i) assign and transfer to Buyer all of Seller's rights under any insurance policy covering the damage or loss, and all claims for monies payable from Seller's insurer(s) in connection with the damage or loss, and (ii) pay to Buyer on the Conveyance Date the amount of Seller's deductible under the insurance policy or policies covering the damage or loss. In the event Buyer elects to terminate this Agreement, all finds and documents deposited into escrow by or on behalf of Buyer shall be returned to Buyer, and all rights and obligations hereunder shall tenninate, except such obligations as expressly survive termination of this Agreement. 18. Brokers. Each Party warrants and represents to the other that no person or entity can properly claim a right to a real estate commission, brokerage fee, finder's fee, or other 23 compensation with respect to the transaction contemplated by this Agreement. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section 18 shall survive the termination of this Agreement and the Conveyance Date. 19. Assianment. Buyer shall have the right to assign all rights and obligations under this Agreement to any party affiliated with Buyer and no approval of any such assignment shall be necessary. 20. Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section 20. All such notices shall be sent by: (A) Personal delivery, in which case notice is effective upon delivery; (B) Certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confinned by a return receipt; (C) Nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case notice is effective on delivery if delivery is confirmed by the delivery service; (D) Facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first- class or certified mail or by overnight delivery, or (b) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next business day if it is received after 5:00 p.m. recipient's time or on a non -business day. Buyer: Petaluma Community Development Commission 11 English Street Petaluma, CA 94952 Attention: Housing Administrator Telephone: (707) 778-4555 Facsimile: (707) 778-4586 Seller: Petaluma Ecumenical Properties/PEP Housing 951 Petaluma Boulevard South Petaluma, CA 94952 24 Attention: Executive Director Telephone: (707) 762-2336 Facsimile: (707) 762-4657 21. Litieation Costs. If any legal action or any other proceeding, including arbitration or action for declaratory relief, is brought for the enforcement of this Agreement or because of an alleged breach or default in connection with this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys' fees and other costs, in addition to any other relief to which such Party may be entitled. 22. Waivers, Modification. No waiver of any breach of any covenant or provision of this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no waiver shall be valid unless in writing and executed by the waiving party. An extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act, and no extension shall be valid unless in writing and executed by the waiving party. This Agreement may be amended or modified only by a written instrument executed by the Parties. 23. Successors. This Agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors and assignees of the Parties. 24. Provisions Not Mereed With Deeds. None of the provisions, terms, representations, warranties and covenants of this Agreement are intended to or shall be merged by the Grant Deed, and neither the Grant Deed nor any other document shall affect or impair the provisions, terms, representations, warranties and covenants contained herein. Without limiting the generality of the foregoing, Seller's representations, warranties and covenants contained herein shall survive the Conveyance Date. 25. Construction. The section headings used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since both Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. 26. Action or ADaroval. Where action and/or approval by Buyer is required under this Agreement, the City Manager or designee may act on and/or approve such matter unless the City Manager determines in his or her discretion that such action or approval requires referral to Buyer's Board for consideration. The time periods afforded Buyer for any event, inspection, feasibility, due diligence, escrow closing or otherwise shall not be extended by any such referral to Buyer's Board. 25 27. Entire Aereement. This Agreement, including Exhibits A through E attached hereto and incorporated herein by this reference, contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter thereto. 28. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. 29. Severabilitv. If any term, provision, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless the rights and obligations of the Parties have been materially altered or abridged thereby. 30. No Third Partv Beneficiaries. Nothing in this Agreement is intended to or shall confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder. 31. Parties Not Co -Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co -venturers, or principal and agent with one another. 32. Non -Liability of Officials. Emnlovees and Aeents. No member, official, employee or agent of Buyer shall be personally liable to Seller or its successors in interest in the event of any default or breach by Buyer or for any amount which may become due to Seller or its successors in interest pursuant to this Agreement. 33. Time of the Essence. Time is of the essence for each condition, term, obligation and provision of this Agreement. 34. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. 35. Time for Performance. When the time for performance of any obligation under this Agreement is to be measured from another event, such time period shall include the day of the other event. If the day of the time for performance is not a regular business day, then the time for such performance shall be by the regular business day following such day. SIGNATURES ON FOLL0IVING PAGE 26 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. ATTEST: HA BUYER: PETALUMA COMMUNITY DEVELOPMENT COMMISSION A public body, corporate and politic IN Claire Cooper, Agency Secretary APPROVED AS TO FORM: LM Eric W. Danly, Agency Counsel John Brown, Executive Director SELLER: PETALUMA ECUMENICAL PROPERTIES A California nonprofit public benefit corporation ME Mary Stompe, Executive Director 27 Exhibit A LEGAL DESCRIPTION 28 Exhibit B Recording Requested by And when recorded, return to: Petaluma Community Development Commission P. O. Box 61 Petaluma, CA 94952-2610 Attn: City Cleric EXEMPT FROM RECORDING FEES PER GOVERNMENTCC (SPACE A13OVETLES LINE RESERVED FOR RECORDER'S USB) RVIII-IMMKONW11 For valuable consideration, receipt of which is hereby acknowledged, Petaluma Ecumenical Properties, a California nonprofit corporation ("Grantor") hereby grants to the Petaluma Community Development Commission, a public body, corporate and politic ("Grantee") all that real property located in the City of Petaluma, County of Sonoma, State of California described in Exhibit A attached hereto and incorporated herein. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of , 2011. PETALUMA ECUMENICAL PROPERTIES Im Mary Stompe, Executive Director 29 Exhibit A to Grant Deed (Attach legal description.) 30 State of California ) ss. County of Sonoma ACKNOWLEDGMENT On 20 before me, a Notary Public, in and for said State and County, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and aclmowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. NOTARY PUBLIC 31 Exhibit C FORM OF CERTIFICATE OF ACCEPTANCE This is to certify that the interest in real property conveyed by the Grant Deed dated , 2011, executed by Executive Director Mary Stompe Petaluma Ecumenical Properties, a California nonprofit public benefit corporation, to the Petaluma Community Development Commission, a public body, corporate and politic ("Agency"), is hereby accepted on behalf of the Agency by pursuant to authority conferred by Resolution No. , adopted by the Agency on , 2011, and that the Grantee consents to recordation of the Grant Deed by its duly authorized officer. Dated 2011 By: ATTEST: In APPROVED AS TO FORM: 10 Eric W. Danly, Agency Counsel 32 State of California ) ss. County of Sonoma ACKNOWLEDGMENT On 20 before me, a Notary Public, in and for said State and County, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. NOTARY PUBLIC 33 FORM OF COMMERCIAL LEASE AGREEMENT This Commercial Lease Agreement (the "Lease" ") is entered into as of , 2011, by and between the Petaluma Community Development Commission, a public body, corporate and politic ("Landlord") and Petaluma Ecumenical Properties, a California nonprofit public benefit corporation ("Tenant"). Landlord and Tenant are hereinafter referred to individually as "Party" and collectively as "Parties." RECITALS A. The Parties have entered into that certain Purchase and Sale Agreement (the "Purchase and Sale Agreement") whereby Landlord has purchased from Tenant, and is the fee simple owner of, that certain real property and improvements thereon, in Sonoma County, California, known as Sonoma County Assessor's Parcel Number 008-530-007, located at 951 Petaluma Boulevard South in the City of Petaluma, as more particularly described and illustrated in Exhibit A attached hereto (the "Property"). B. Pursuant to the Agreement, Landlord shall lease the Premises, defined below, to Tenant for a definite terns. C. The form of Lease was approved by Landlord's Board of Directors at a duly noticed public hearing on February 7, 2011. D. The Parties desire to enter into the Lease on the terns and conditions provided herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 1. PREMISES: Landlord hereby rents to Tenant the existing buildings located on the Property, but excluding the existing dock, as described and illustrated in Exhibit B attached hereto (the "Premises") in accordance with the provisions of this Lease. 2. TERM: The term of this Lease shall commence on March 1, 2011 ("Commencement Date") and continue through September 30, 2014, unless terminated sooner in accordance with the provisions of this Lease (the "Rental Period"). The Parties agree to execute and record a Memorandum of this Lease in the official records of Sonoma County. 3. RENT AND ADDITIONAL RENT: Tenant shall pay amoral rent for the period March 1, 2011 through February, 2014 in the sum of $2,000/month for the use and occupancy of the Premises, due as of the Commencement Date and each anniversary thereof. Tenant further agrees to pay as rent, throughout the entire Rental Period, all sums, costs, expenses, and other payments that Tenant agrees to pay pursuant to any of the provisions of this Lease (collectively, "Additional Rent"). If Tenant fails to pay timely any Rent or Additional Rent, Landlord shall have, in addition to all other rights and remedies at law or in equity, all of 34 the rights and remedies provided for herein. Rent and Additional Rent shall be payable at the address designated in Section 21 or such other place as Landlord may designate in writing. 4. TRIPLE NET LEASE: This is a triple net lease to Landlord. It is the intent of the Parties that the Rent shall be an absolutely net return to Landlord. Tenant shall pay all costs and expenses relating to Tenant's occupancy of the Premises of any kind or nature whatsoever. Such costs and expenses include, without limitation, all amounts attributable to, paid or incurred in connection with Tenant's operation, repair, maintenance (whether interior or exterior) and management of the Premises; all taxes and assessments; insurance premiums; security; janitorial services; labor; costs of licenses, permits and inspections; and all other costs and expenses incurred or paid by Tenant with respect to the Premises. 5. USE: Tenant shall use the Premises solely for the purpose of administrative offices. Tenant shall obtain and keep in effect all licenses and entitlements required for this use of the Premises and shall comply with all terms and conditions of said licenses and entitlements. Tenant shall not physically damage, fail to maintain and repair, or conduct any nuisance on the Premises, or do, suffer or permit anything to be done or kept on the Premises that would in any way subject Landlord to any liability, increase the premium rate or adversely affect or cause a cancellation of any insurance relating to the Premises or the Property. If any act or omission of Tenant results in any such premium increase, upon Landlord's demand Tenant shall pay to Landlord the amount of such increase. 6. COMPLIANCE WITH LAWS. Tenant shall procure and maintain all governmental approvals, permits and licenses required for the lawful conduct of Tenant's perrnitted use of the Premises and shall comply with all state, federal and local laws, rules and regulations in connection with its use and occupancy of the Premises. 7. UTILITIES AND SERVICES: Tenant shall pay when due all charges or assessments for telephone, water sewer, gas, heat, electricity, garbage disposal, trash disposal and all other utilities and services that are supplied to the Premises. 8. MAINTENANCE AND REPAIR: Tenant shall maintain the Premises in a clean and sanitary condition. Landlord shall have no obligation to make repairs to or perform maintenance of the Premises. Without limiting the provisions in Section 4 of this Lease, Tenant shall pay all costs and expenses attributable to or incurred in connection with Tenant's use and occupancy of the Premises, including janitorial and landscape maintenance services. Ii the event that Tenant fails to maintain or keep the Premises in good repair or if Tenant's acts or omissions result in a nuisance or health or safety risk, at Landlord's option, Landlord may perform any such required maintenance and repairs. Within ten (10) days of Tenant's receipt of Landlord's invoice therefore, Tenant shall pay Landlord's costs incurred in connection with such repairs. 9. SECURITY: Tenant is responsible for providing its own security on the Premises as Tenant deems necessary in its sole discretion. 10. TAXES AND ASSESSMENTS: Throughout the Tenn, Tenant shall pay prior to delinquency, all applicable real property taxes, possessory interest taxes, license and pen -nit fees, 35 sales, use or occupancy taxes, assessments whether general or special, ordinary or extraordinary, foreseen or unforeseen, of any kind or nature whatsoever pertaining to the Premises or a part thereof (collectively, "Impositions"). Upon request by Landlord, Tenant shall furnish, in a form satisfactory to Landlord, evidence of payment prior to delinquency of all Impositions paid by Tenant. 11. AS -IS CONDITION OF PREMISES: Tenant is leasing the Premises in its "AS IS" condition as such condition exists as of the Commencement Date. 12. FUTURE ALTERATIONS AND REPAIRS: Tenant shall not make alterations to the Premises without the prior written consent of Landlord. Landlord agrees that Tenant is entitled to make repairs as part of its normal maintenance and risk tnanagenment programs. 13. INDEMNITY: Tenant shall indemnify, defend (with counsel reasonably acceptable to Landlord) and hold Landlord, the City of Petaluma, and their officers, agents, employees, contractors, guests and invitees (collectively, "Indemnitees") harmless from and against any and all claims, demands, liabilities, losses, damages, expenses and causes of actions ("Losses") arising out of or in connection with Tenant's use, occupation, operation or management of the Premises; its failure to comply with any of its obligations contained in this Lease; or any negligence of Tenant or any of Tenant's agents, contractors or agents, provided that Tenant shall not be obligated to indemnify, defend or hold a person or entity harmless for Losses resulting from that person's or entity's sole negligence or willful misconduct. Tenant's indemnity obligation set forth herein shall survive the termination or expiration of this Lease with respect to any claims or liabilities arising out of injury or damage to person or property which occurs during the Term. 14. INSURANCE REOUIREMENTS: During the term of this Lease, all extensions thereof, hold -over periods or any other occupancy of the Premises by Tenant, Tenant shall maintain at its sole cost and expense, the following insurance coverages: (i) Comprehensive General Liability insurance issued by a carrier authorized to sell insurance in the State of California, written on an occurrence basis, and providing coverage for bodily injury, death and property damage caused by or occurring in connection with Seller's use and occupancy of the Leasehold Premises with a policy limit of at least Two Million U.S. Dollars ($2,000,000) per occurrence; (ii) Workers' Compensation insurance in compliance with the requirements of law; and (iii) property insurance providing coverage against fire, casualty loss and damage to the Premises. Seller shall provide Buyer with satisfactory evidence of the foregoing insurance coverage prior to the commencement of the Rental Period and, upon Buyer's request, of its continuance in force throughout the Rental Period. The foregoing insurance policies shall be primary and noncontributing with respect to any policies issued by Buyer and shall name Buyer and the City of Petaluma as additional insureds and/or loss payees, as their interests may appear. 15. NON-DISCRIMINATION: Tenant hereby covenants by and for itself and its successors and assigns, and all persons claiming Linder or through it, and this Lease is made and accepted upon and subject to the conditions that there shall be no discrimination against or segregation of any person or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of 36 the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Premises nor shall Tenant or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, subtenants or vendees in the Premises. 16. HAZARDOUS SUBSTANCES: Tenant will not use or permit Hazardous Materials (as defined in Exhibit E to the Purchase and Sale Agreement) to be used in, on or under the Premises. Tenant may use or permit the use of cleaning and maintenance supplies used in the ordinary course of Tenant's operations and used and disposed of in compliance with all state, federal and local laws, rules and regulations including, without limitation, Environmental Laws (as defined in Exhibit E to the Purchase and Sale Agreement). Tenant agrees that it will comply with all laws pertaining to the use, storage, transportation and disposal of any hazardous substance at the tern is defined in applicable law. Tenant shall indemnify, defend and hold harmless Indemnitees from all claims, liabilities, losses, damages, expenses and causes of action ('Losses") arising out of or involving any hazardous substance brought on to the Premises during the time Tenant uses the Premises or has the right to use the Premises, provided that Tenant shall not he obligated to indemnify, defend or hold a person or entity harmless for losses resulting from that person's or entity's sole negligence or willful misconduct. Tenant's obligations pursuant to this Section 16 shall apply to the cost of investigation, removal, remediation, restoration and/or abatement and shall survive the expiration or termination of this Lease. 17. RIGHT OF ENTRY AND USAGE: Landlord shall have the right to inspect the Premises at any time during the tenn of this Lease, provided that the Tenant is given advance notice of any inspection and that Tenant be allowed to accompany said inspection. 18. SUBLETTING: Tenant shall not assign this Lease or sublet any portion of the Premises without the prior written consent of Landlord. 19. DEFAULT: Tenant shall be in default of this Lease upon the occurrence of any of the following ("Events of Default"): (i) the failure to pay any monetary obligation when due, (ii) the failure to obtain and maintain insurance required by this Lease, (iii) the voluntary or involuntary transfer of all or any portion of Tenant's interest in the Premises without Landlord's prior written consent, or (iv) a default in the performance of any term, provision, covenant or agreement pursuant to this Lease. Upon the occurrence of an Event of Default, the non - defaulting party shall deliver a notice to the non-performing party ("Notice of Default") stating the nature of the obligation which such non-performing party has failed to perform, and stating the applicable period of time, if any, permitted to cure the default. Failure to give, or delay in giving, a Notice of Default shall not constitute a waiver of any obligation or covenant required to be performed hereunder. 20. TERMINATION: REMEDIES. Upon the occurrence of any Event of Default, and in addition to any and all other rights or remedies of Landlord hereunder and/or provided at law or in equity, Landlord shall have the right to terminate this Lease and Tenant's possessory rights hereunder in accordance with applicable law. No remedy specified in this Lease shall be considered exclusive of any other remedy, but the same shall be cumulative. 37 21. NOTICES: All notices shall be deemed given when made in writing and deposited in the United States mail, certified, postage prepaid and addressed to such party the following address: To Landlord: Petaluma Conummity Development Commission I l English Street Petaluma, CA 94952 Attention: Housing Administrator Telephone: (707) 778-4555 Facsimile: (707) 778-4586 To Tenant: Petaluma Ecumenical Properties/PEP Housing 951 Petaluma Boulevard South Petaluma, CA 94952 Attention: Executive Director Telephone: (707) 762-2336 Facsimile: (707) 762-4657 Either Party may change its address for the receipt of notices by giving written notice of change to the other Party. Either Party may give personal notice to the other Party. 22. FAILURE TO VACATE: In the event that Tenant holds over, Landlord's shall have all remedies as may be available to Landlord at law or in equity. In addition, Tenant shall indemnify, defend (with counsel reasonably acceptable to Landlord) and hold harmless Landlord and the City of Petalurna from all Losses resulting from Tenant's failure to vacate pursuant to this Lease. This indemnity shall survive the expiration or termination of the Lease. 23. DISPOSITION OF IMPROVEMENTS: Prior to the expiration or termination of this Lease, Tenant shall (i) remove all personal equipment, improvements, fixtures and property placed on the Premises by Tenant, (ii) repair any damage caused by said removal, and (iii) restore the Premises to its condition on the Commencement Date, less normal wear and tear, except as Landlord may otherwise approve in writing. Except as expressly provided herein, upon the expiration or earlier termination of this Lease all existing structures and other improvements on the Premises shall unconditionally be and become the sole property of Landlord, and Tenant shall have no right to compensation therefore. In the event that Tenant does not remove its personal property within thirty (30) days after Lease expiration or termination, Landlord, at its option, may deem such property abandoned and either retain or dispose of it in accordance with applicable law. 24. NO RELOCATION ASSISTANCE: Pursuant to the Purchase and Sale Agreement, Tenant has entered into a full and complete settlement of any claims for relocation benefits, and Tenant acknowledges and reaffirms its voluntary and knowing waiver of such claims. Tenant's acknowledgment and release survives the expiration or termination of the Lease. 38 25. INDEPENDENT CONTRACTOR: This Lease shall not be construed or interpreted to create a partnership or joint venture between Landlord and Tenant. 26. CORPORATE AUTHORITY: Each individual executing this Lease on Tenant's behalf represents and warrants that he or she is duly authorized to execute and deliver this Lease on Tenant's behalf and that this Lease is binding on Tenant in accordance with its terns. 27. SEVERABILITY: The determination that a provision of this Lease is illegal or unenforceable shall not affect any other provision of this Lease. 28. BINDING CLAUSE: The provisions, covenants and conditions of this Lease shall extend to, be binding upon and insure to the benefit of the heirs, executors, administrators, successors and assigns of the respective Parties hereon. 29. SECTION HEADINGS: All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provisions of this Lease. 30. ESSENCE OF TIME: Time is of the essence for every provision, covenant and condition of this Lease. 31. ENTIRE AGREEMENT: This Lease contains all the agreements of the parties hereto and supersedes all prior negotiations. There have been no representations by Landlord or understandings made between Landlord and Tenant other than those set forth in this Lease. 32. AMENDMENT: This Lease may only be modified or amended by a written instrument duly executed by the Parties hereto. IN WITNESS WHEREOF, this Lease has been executed by the Parties hereto as of the date listed below. SIGNATURES ON FOLLOWING PAGE. 39 TENANT Petaluma Ecumenical Properties Mary Stompe, Executive Director LANDLORD Petaluma Community Development Commission John Brown, Executive Director Attest: 0 Claire Cooper, Agency Secretary Approved as to Form: to Eric W. Danly Agency Counsel 40 Exhibit A [Attach Property Legal Description] 41 Exhibit B (Attach Description and Man of Premises] 42 Exhibit C Form of Memorandum of Lease RECORDING REQULiSTED BY AND WHEN RECORDED RETURN TO: Petaluma Community Development Commission P. O. Box 61 Petaluma, CA 91952-2610 Aim: City Clerk Ext:NtPT FROM RECORDING PERS PER GOVERNMENT CODE 446103.27383 Space above this line for Recorder's use. MEMORANDUM OF LEASE This Memorandum of Lease (this "Memorandum"), dated for reference purposes as of , 2011, by and between the Petaluma Colmmmity Development Commission, a public body, corporate and politic ("Landlord") and Petaluma Ecumenical Properties, a California nonprofit public benefit corporation, ("Tenant"), in reference to and consideration of that certain Commercial Lease Agreement dated as of , 2011 ("Effective Date"), by and between Landlord and Tenant (the "Lease"). I . The purpose of this Memorandum is to provide notice of the existence of the Lease which is incorporated herein by this reference. 2. Landlord is the owner of fee title to the Property located at 951 Petaluma Boulevard South, in the City of Petaluma, California, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the "Property"). 3. Pursuant to the Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the existing improvements located on tine Property (the "Premises") subject to all of the teens and conditions set forth in the Lease. 4. The term of the Lease shall be March 1, 2011, to and including February 28, 2014. 5. The Lease contains a nondiscrimination covenant pursuant to California Community Redevelopment Law, health and Safety Code Section 33000 et seq. 6. In the event of any conflict between this Memorandum and the teens and conditions of the Lease, the terms and conditions of the Lease shall control. 43 7. This Memorandum may be executed in counterparts, each of which shall be an original, and all of which together shall constitute one fully -executed agreement. 44 IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date set forth above. PETALUMA COMMUNITY PROPERTIES DEVELOPMENT COMMISSION L60 John Brown, Executive Director Attest: Claire Cooper, Agency Secretary Approved as to form: Eric W. Danly, Agency Counsel TENANT PETALUMA ECUMENICAL in Mary Stompe, Executive Director SIGNATURES MUST BE NOTARIZED. 45 Exhibit A to Memorandum of Lease (Attach Legal Description) 46 FORM OF ACKNOWLEDGMENT STATE OF CALIFORNIA ) ss. COUNTY OF SONOMA On 20_, before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that lie/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (seal) 47 Exhibit E HAZARDOUS MATERIALS; ENVIRONMENTAL LAW Hazardous Materials. The terns "Hazardous Materials" means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by- product thereof; (ii) asbestos and any material containing asbestos; (iii) any substance, material or waste regulated by or listed (directly or by reference) as a "hazardous substance", "hazardous material", "hazardous waste", "toxic waste", "toxic pollutant', "toxic substance", "solid waste" or "pollutant or contaminant' in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control Act [15 U.S.C. 2601, et seq]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safely Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter -Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is defined as such or regulated by any "Superfund" or "Superlien" law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products. Environmental Laws. The term "Environmental Laws" means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the enviromnent, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into conunerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or 48 hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinicing Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter -Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as each of the foregoing now exist or are hereafter amended, together with any regulations promulgated thereunder. 951 staffreponforseptemberl 3th/h 49 MENIORANDUM OF UNDERSTANDING BETWEEN THE CITY OFTETALUMA AND PETALUMA ECUMENICAL PROPERTIES - 951 S. PETALUMA BOULEVARD PROPERTY July 25, 2006 Project Purpose This Memorandum of Und..erstanding ("MOU") is entered into to document and describe an agreement between ,the City of Petaluma, a California municipal corporation, ("City") and Petaluma Ecumenical Properties, a California nonprofit corporation ("PEP"). PEP is purchasing property located at 951 S. Petaluma Boulevard in tbe,Cityof Petaluma, commonly known as A.P.N. 008-530-007 ("the Property") for the approximate sum of $2,682,000. This parcel includes an: existing office building and land which is intended by PEP to be used for a future affordable senior housing: development. First Community Banlr, is, a -party to .this Agreem ' ent,isolely for the purposes stated in subparagraph, D of the, Section entitled Property Q-tynership,and City's Secured Interest below, and for no other purpose. Other than as stated in said, subparagraph D, First Community Bank makes no promise& and undertakes ;no obligations under this MOU, and its relationship with PEP is governed solely by the terms of its agreements and loan documents with PEP independent of this MOU. In Resolution 2006-111 N,C.S.,a,dppted by the City Council, of the City of Petaluma on June 5, 2006, City authorized a loan to PEP in the amount of $1,432,000.00, for a portion of the purchase price and feasibility costs for the Property. PEP intends to split the lot into two -parcels. One parcel I will contain the existing office building and re I lated parking ("the Office Parcel"). The remaining parcel will be used to.construct affordable senior hou sing, ("tliO'Rcsi denti a] Parcel"). All of the City's loan?'to PEP:shall be used only for acquisition, feasibility costs and development of the eventual Residential Parcel. No part of City's loan to PEP shall be used for any upkeep, maintenance, repair, reconstruction, or other use related to the 'eventual Office Parcel, nor,,shall any portion of City's loan to PEP be used for PEP's operating expenses xpenses and/or other costs not, directly related to acquisition, feasibility costs and development of the eventual Residential Parcel. It is :further the intent of City and of PEP that within five (5) years of the close of escrow on the,acquisition of the Property by PEP, PEP will diminish the size of the structure on th6,Off-66 Parcel by approximately 04016 and transfer additional land made available thereby'to theResideDtial Parcel. I PEP expects to accomplish said addition of land to the Residential Parcel by means of a lot line adjustment. At suchtime as'such,additional land is added, or-ab6ut to be added, to the Residential Parcel. PEP will "request that City authorize an additionaI contribution and/or loan to PEP ot$80'0,000 for development of affordable senior liousing on the.Residential Parcel, subject to such ftirther agreements and conditions. as PEP' and City may agree upon. MOU — City of Petaluma and PEP Re 951 S. Petaluma blvd. Page I of 4 V847164 Property Ownershipand City's Secured Interest a The Property will be owned by PEP. The parties, to this Agreement understand that acquisition of the Property will be financed as follows:. A. PEP will pay $50,000 in cash at close of escrow. B. First Community Bank will lend to PEP -approximately $1,250,000, subject,to the terms of agreements and loariAocuments between First Community Bank and PEP independent, of, this MOU. This loan by First Community Bank will 'be secured by a note and first Deed of Trust on the entire Property. C. City Will lend to PEP the sum of:$1,432,0,00 which will be secured by a note and second deed of trust on the entire Property, junior only to the first t� ri Dedd. of Trusdesc. bed above. A condition of City's loan to PEP is that the Residential Parcel bd used to develop affordable senior housing. D. At such time as the lot line adjustment described above is ready to record in the Officia"I Records of Sonoma County, California, City shall reconvey from the lien of its Deed of Trust the Office Parcel; at such time, First Commu.nity*Bank.sliall rcconvey from the lien of its Deed of Trust the Residential ParceL Lop to value 'for parcel retained shall not exceed xceed 75% g ray Default and,, City's Option o In the event that PEP materially defaults on its obligations,to,First Community Bank prior to such time as First Community Bank reconveys the Residential Parcel from the lien of First Cornmunity-Bank7s,Deed. of Trust, PEP grants City the -option to acquire all of PEPs interest in the.Prog6rty for the sum of $1.00. 'If City elects, in its 'sole discretion, not. to exercise said option, PEP agrees to cure the default,usina reserves to maintain debt service on its. obligations to First Community Bank -until such time as the Property can besold. Upon any sale of the Property under this provision andlor this MOU, PEP guarantees that City will be repaid the ,entirety,., 1'000/o,, of City's original loan for acquisitioii'of the Property as a condition of City's satisfaction of PEP's note to City and reconveyance ofCity's Deed of Trust. Notwithstanding any resort by Citylothe security 9f City's Deed of Trust, should there be a shortfall in funds from any sale t&,repay,City's original loan, PEP separately and contractually agrees hereby agrees to repay said shortfall from its reserve funds, MOU — City of Petaluma and PEP Re- 95I 'S. Petaluma Blvd. Page 2 of 4 V847164 Should any'sale of the Property under this provision and/or this MOU result in funds in excess, of those needed to satisfyTEP's obligations to City and/or PEP's obligation ' s to First Community Bank pursuant to: their respective Deeds of Trust, ("Excess Equity") PEP and City agree that said Excess Equity shall be apportioned 20% to PEP and 80% to, City, in recognition of City's provision of the public monies comprising the loan funds described herein, provided however that the terms of the paragraph shall be,operatiVe,only 'after a default by PEP pursuant to its"obligations, under the aforementioned Deeds of Trust andlor MOU. PROJECT RESPONSIBILITIES PEP will be responsliblefor: ® Management of the Property and development oversight. Maintenance of the PrQpertyin such a fashion as to ensure timely payment of property taxes, insurance and monthly mortgagepayments. Provision of an annual report to City showing Property cash flow, copies of leases and other information sufficient to allow City to make aft informed judgment .regarding the viability of PEP's continued ownership and, the proposed affordable senior housing project. Adding the City, as an additional `insured on its property and general I i ability coverage; for the Property. City will be responsible for: Provision of acquisition'loan funding in the amount ,bf $1,432,000. LEGAL INFORMATION This MOU will become effective when signed by all parties. It may be modified gn . "at anytime byjbint written agreement of the parfids'iher"6tb. The agreement, of FirstCbmmunify Bank is required only as to written modification involving SUbparagra0h, D above, and not otherwise. PEP prohibits ;di'scrirnination.in.its'programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs and. marital orfamilial status. MOU — City of Petaluma and PEP Re 951 S-, Petaluma'Blvd, Page 3 of 4 #847164 M The indiViduals•executing this.MOU warrant andrepresent that they execute this MOU in the legal capacities stated and that each signatory has the legal authority to enter into this MOU on behalf of the organization, public agency or entity stated. 'Dated: July 2006 / -26-- Michael A. Bierman, City Manager City of Petaluma 11 English St. Petaluma, CA 94952 Approved as to form: OA Eric W. Danly, City Attorney 'V Dated: Julyt�)I, 2006 mpe,, cutiv hector Mary Sto Eic 2tor Petaluma Ecumenical Properties 3920 Cypress Drive, Ste. B Petaluma, CA 94954 Dated: July _, 2006 First Commu�ity Bank e By 14 Its MOU — City of Petaluma and PEP Re 951 S. Petaluma Blvd. Page 4 of 4 0847164 COP ( ' Y [>:MERCIAL LEASE AND DEPOSIT RECEIPT ��."T AGENCY -RELATIONSHIP CONFIRMATION., The following agency relationship is hereby confirmed for this transaction and s ers=' r y prior agency -election (if no'2g ncy relationship, insert "NONE" ): LISTING AGENT: -��j .is the anent of (check one): (Print Firm Name) the Lessor exclusivelyr both the Lessee and the Lessor_ LFAS114G AGENT: _ -_ I /4_.-____.___ _ _-, .. - (if not the same as the Listing Agent) is the agent of (check one): _(Print FBm Name) 'the Lessee exclusively; or ; the -Lessor exclusively; or both the'.Lessee and the Lessor. Note: This confirmation DOESrNOT fake the place of the AGENCY DISCLOSURE form which may be required bylaw. RECEIVEDFROM < Jr , hereinafter 7�rG� /�C` CMCJ hereinafter referred 1a as LESSEE, the sum of G�as a deposit which well Delon to Lessor and will b .. - .. �-�-, dollars). evidenced b pp Y __.. G � _ - _ _.-._ .. __._. _ . ... _ P 9 e applied as follows: f� TOTAL RECEIVED BALANCE DUE PRIOR TO OCCUPANCY Rent for the period from - to _ . - .. $ ^1 i 5 ���1 c=' _s s 7i 77 r� Security deposit (not applicable toward last month's rent) ...... $ $ 'f Other _ _ ' g g $ - tri - 0 E30 TOTALIn the event this Lease is not 'acce ted b the Lessor within $ days, � S �� ___. S� p y �he total deposit received will be refunded. Lessee offers to lease from Lessor the premises,situated in the City of i%/i'+I County of State of�'Fil (r` P?/ -1a+� . described as consisting of approximately rrS� ,- square feet, upon the following terms and conditions: 1. TERM. The term will commence on (date), and end on (date) 2. RENT. The base rent,will be $ Lf ,-f 7sel% per month payable on the /-2-r'day of each month. After the first 12 months the rent will be adjusted as follows: effective upowthe first day of the month immediatelpfollowing the expiration of 12 months from, date of commencement'of the term, and upon the expiration.,of each 12 months thereafter, in accordance with changes in the U.S. Consumer Price Index for All Urban Consumers (1982-84 = 100). or >( (other'index), ('CPI").'The baser rent will be.increased to an amount equal to the monthly renL multiplie by a fraction, the numerator of which is the CPI for the second calendar month immediately preceding the adjustment date, and the denominator of which is the CPI - for the second calendar month preceding the commencement of the Lease term; provided however, that the monthly rent will not less than that immediately, preceding the adjustment. All nts will be paid to Lessor or"his,orher authorized agent, at the.following address rte` �i�rpttl &11bSf�c Wil/ or at such other places as may be designated by Lessor from time to time. In.the event rent is not received by Lessor within days after due date, Lessee agrees to pay a late charge of $ /t—r, plus interest at tr % per annum on the delinquent amount. Lessee further agrees'to pay S ,�� for each dishonored bank check. The late charge period is not a grace period, and Lessor. is entitled to make written demand for any rent if not paid when due. 3.'COMMON AREA EXPENSES. If checked •. Lessee agrees to pay, in addition to the'base monthly rental set forth in item 2- °/6 of common area operating' expenses, including utility and service costs, insur'ance and real'property taxes. Tenant's monthly share of said expenses at the commencement of the tem is $ 4., USE. The premises are to be used for'the operation of _ C' _�jEvc .e ir.o and for no, other purpose, without prior written consent of Lessor. Lessee will not commit any waste upon the premises, or any nuisance or act>which may disturb the quiet enjoyment of any'tenant in the building. 5:, USES,PROHIBITED.,Lessee will not use any portion of'the, premises for,pbrposes other than,those specified. No'usemill'be;,made or N' permitted to be made upon the premises, nor acts done, which.will increase the existing rate:of insurance upon the property,,or cause cancellation of insurance 'eolicies covering the property.. Lessee will not conduct or permit any.sale by auction on the premises: 6. ASSIGNMENT AND SUBLETTING. Lessee will not,assign,ihis Lease or, sublet any,portion;ofthe premises withoutprior written consent of the Lessor, which will not.be unreasonably withheld. Any such assignment or subletting without consent will be void and, at the option of the Lessor -will terminale this Lease. T. ORDINANCES AND STATUTES. Lessee will comply with.alf statutes, ordinances, and requirements'.of all municipal, state and federal authorities,now in force, or which may later be in force; regarding the use of the premises. The commencement orpendency of any state or federal court abatement proceeding affecting the use of the premises will, at the 'option of the Lessor, be deemed a breach of this Lr , Lessee- [J has read this page, CAUT)ON: The 'copyright laws of the United States forbid the unauthorized reproduction of this form by any means including scanning or computerized formats. Page 1 of 4 J FORM '1o7.1(10.2003) COPYRIGHT'eY'PROrESS10N4LPIJRLISHING,NDVAT0,CA 14151681.2164 p PROFE-SS16KAL Form generated by: True Forms' hom REVEAL LTJ sYsTEMS, Inc: 640-499-9612 f� A UB LI 5 H 1 N r" Proper-ty Address "! "n- Gt 'a.MAINTEWANCE.REPAIRS,.ALTERATIONS'. Unless otherwise indicated Lessee' -acknowledges that the premises are in good order and repair. Lessee will, at his or her own expense, maintain the pre and in a' g6o&:and safe condition, including plate glass, electrical wiring.- plumbing and healing and air conditioning installations, and any.olher system or equipment. the premises will be surrendered, PI termination of the,Lesse, in as good condition as received, normal wear and tear:ekeepted. Lessee will be responsible for all repairs required, during the term of the lease, except the following which will be maintained ained by Lessor: roof, exterior walls, structural foundations (including any retrofitting required by governmental authorities) and the following: Lessee will, Vwill not maintain the properly adjacent 16 the premises, such as sidewalks, driveways, lawns, and shrubbery, which would otherwise be maintained by Lessor." No improvement or atleraill on of the prernises, will be -made without the,pridr Written consent of the Lessor. Priorto the commencement of any substantial repair, improvement, or alteration, Lessee will give Lessor at,least two (2)'days written notice in order that Lessor may .post appropriate notices to avoid any liability for liens. 9. ENTRY AND INSPECTION. Lessee will permit1essor or Lessor's agents to enter the premises at reasonable times and upon reasonable notice for the purpose: of inspecting the premises, and will permit Lessor, at anyllime.,within sixty (60) days prior to the expiration of this Lease, to place upon the premises'any usual "For Lease" signs, and permit persons desiring to lease the premises to inspect the premises at reasonable times. 10. INDEMNIFICATION OF LESSOR. Lessor will not,be liable.for any damage or injury to lessee, or any other person, or to any properly, occurring on the premises. Lessee agrees to hold Lessor harmless from any Jairns for'damages arising out of Lessee's use of the premises, and to indemnify Lessor for any expense incurred by Lessor indefendingany such claims. 11. POSSESSION. IfLessor is unable10 deliver possession of the premises at the corrinh e n cement date set fiorlh above, Lessor will not be liable for any damage caused by the delay, nor will this Lease be void or voidable, but Lessee. �vjl not be liable for any rent until,possessioh i , i delivered., Lessee may terminate this Lease if Possession is not delivered, within Y-5 days of the commencement term;in Item 1. 12. LESSEE'S INSURANCE Lessee,- at his or her expense maintain -plate glass, public liability; and properly damage insurance insuring Lessee,and Lessor With mini - mum coverage as follows- 6 -e -X,6,0 i4l_ - 1-14-5[bi Lessee -will provide Lessor with a Ce�ftiflcate of Insurance showing Lessor as additional insured, The policy willrequire ten (10) day's written notice to Lessor prior to cancellation or materia( change of Coverage. 13., LESSOR'S INSURANCE. Lessor Will maintain hazard insurance covering o6e,,hundfed percent (100%) actual cash value of the improvements rovernents throughout the Lease: term. Lessons insurance will not insure Lessee's personal property, leasehold improvements, or trade fixtures. 14. SUBROGATION. T0,1he maximum extent permitted by insurance policies which may be owned by the parties, Lessor and Lessee waive any and all rights of subrogation againsLeach other which might otherwise exist. 16. UTILITIES. Lessee - ' agrees that he or,she will be responsible for the payment of,all utilities, including water, gas, electricity, heat and other 'seNices delivered to the premises, eicept: . - ­ - ... VG- `C'-_-7­7VA,1S-- -- 16; SIGNS. Lessee will not -place, maintain, nor permit, any, sign or awning omany,exteddr door, wall, or window ofthe premises without the express written consent of Lessor, which will not be unreasonably withheld, and of,`appTppriate governmental authorities. 17. ABANDONMENT OF PREMISES.. Lessee will not Vacate or abandon the premises,at, any,lime during the term of this Lease. If Lessee does abandon or vacate the premises, or is dispossessed by process of)aw, of otherwise, any personal properly belonging to Lessee left on the premises Will be deemed to be abandoned, at the option of Lessor. 18. CONDEMNATION- It any part of the prern I ises is condemned for public use, and, a part remains which is susceptible of occupation by Lessee; this Lease Will, as'to the part taken, term ina te,,as of the date the condemn or acquires possession Lessee will be required to pay such proportion.of the rent remaining term -as the value of the premises remaining bears to the total valueof'the premises at the date of con demnation:;prov . ided, however,, t . hat eit her,parly may, at his or her option, terminate this Lease as of the date the condemnor acquires possession. I n the . event thpt.the premises are condemned in whole, or,the remainder is not susceptible for use by,the: Lessee,. this, Lease will Ierm iniale'u.pon the date whichihe'condemnor acquires possession. All sums which may be payable.on account of -any I candemnatioW w'ili,belphg solely to the"'Lessoc, excephhat Lessee will be entitled to retain any amount awarded to him_.o(her for.his or'her 1rade,fixluresland prioving;expenses- 19. TRADE FIXTURES. Nny'and all improvements, mad eJo the premises during the term will belong tothe'Lessar, except trade fixtures of the Lessee. Lessee--, may;. upon temii nation,,re move all his or her trade fixtures, but will pay for all costs necessary to repair any damage to the preMiSeSrcccasldh6dbj'th-e removal. 20. DESTRUCTION, OF PREMISES. In the ev6nt,ofa parlial"destruction 0(the premises during'` the term, from any cause except acts or omissionofLessee, Lessorrwill,p . romptly repair the premises, provided that such repairs can be reasonably made within sixty (60) days. Such partial destruction will not , terminatethis Lease, except that Lessee will ;be entitled to,a proportionate reduction of'rent while such reP21117,5-��e upon being made, based the extent to which 'the making of such repairs interferes With the business of Lessee on the Lessee r has read this page, CAUTION: Thi copyright 12WS of theUnited States16rbid the unauthorized reproduction of this form by any n-wans including scanning or computerized formats. Page 2 of 4 FORM 107.2 (10.2003) COFYRlr.Hr EY PROFESSIONAL PUBLISHING, NDVATC, CA 4415) 884.2164 ion PROFESSIONAL Form generated by. Tr ueForms'* from REVEAL 6R.1jSYSTEMS, inc. 800-4998512 PUBLISHINC, ,,4 t� 'I , Property-Addre premises; If the repairs:cannot be made, within sixty. (60) days, this Lease may be terminated at the option of either party by giving written notice to the other party within,the sixty (60) day period. V. HAZARDOUS MATERIALS. Lessee will not ' use, store, or dispose of -any hazardous substances upon the premises, except the use and storage of such substances that are customarily used in Lessee's business;;ancl are in compliance With all environmental laws, Hazardous .substances means any hazardous waste, substance or toxic materials regulated under any environmental laws or regulations applicable to the property. Lessee will be responsible for the cost of removal of any toxic contamination caused by lessee's use of the premises. 22. INSOLVENCY. The appointment of a receiver, an assignment for the benefits of creditors, or the filing of a petition in bankruptcy by or against Lessee, will constitute A breach of this Lease by Lessee. 23. DEFAULT. In the event,of any breach -of this Lease by Lessee, Lessor 'may, at his or her option, terminate the Lease and recover fromLessee: (a) the worth at.the time of award. of the unpaid tent -which had been earned al,the time of termination; (b) the worth at the time of award of the amount by which the,unpaid rent which would have bEien,eamed after termination until the time of the award exceeds the amount of such rental loss4hat the Lessee provesco6fcllhave beenseasonably av6idk,(c),the worth at the time of award of the amount by -which the unpaid rent for the balance of the term after the time of -award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and..(d) any other amount necessary to compensate Lessor forall the detriment proximately caused by the Lessee's failure to perform , his or her obligations under the Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, that portion of any leasing commission paid by, Lessor and applicable to the unexpired "arm of the lease. Lessor may, in the, alternative, continue thisLease,in -effect, as long asLessor,does not terminate Lessee's right to possession, and Lessor may. enforce all.of Lessor's rights and remedies under, the Lease, including Iha�right toirecover the rent as it becomes due under the Lease. If said breach of Lease continues, Lessor may, at anytime thereafter, elect to terminate the Lease. These provisions wilt not limit any other rights or remedies which Lessor may have. 24, SECURITY. The security deposi t will secure the performance of the'Lessae!s obligations, Lessor may, but will not be obligated to, apply all or portions of the deposit on account of Lessee's obligations. Any balance remaining upon -,termination will be returned to Lessee. Lessee will not have the night to apply the security deposit in payment of the fast month's rent:, 25. DEPOSIT REFUNDS. The balance of all deposits will be refunded withifi;three (3) weeks (or as otherwise required, by law), from date possession is delivered to Lessor or his, or her authorized thorized agent, together with a statement showing any charges made against the deposits by Lessor. 26. ATTORNEY FEES. In any action, arbitration, or other procee.ding.inv6lving a dispute between Lessor and Lessee arising out of this Lease, the prevailing party will be entitled to reasonable attorney fee, expert witness fees, and costs. 27: WAIVER. No failure of Lessor to enforce any term of this, Lease will be deemed tobe a waiver. 20. NOTICES. Any notice which either party may or is required to give, will be:given by.mailing the notice, postage prepaid, to Lessee at the premises, or to Lessor at the address shown in Item 2_or at such other placesTas may be,designoted in writing by the parties from time to time. Notice will be effective rNe (5)4ays afterrmailing, or on Personal delivery, or when receipt is acknowledged in writing, 29. HOLDING OVER. Any holding over after the expiration of this Lease, with the consent of Owner, will be a month -lo -month tenancy at a monthly rent of S Tj5D - , payable in advance and otherwise subject to the terms of this Lease, as applicable, until either party will terminate the tenancy by giving the,other Party thirty (30) days written notice. 30. TIME. Time is of the essence of this Lease. 31. HEIRS, ASSIGNS, SUCCESSORS.: This Lease is binding upon and inures to the benefit of the heirs, assigns, and successors of the ,parties, 32, TAX INCREASE. EASE. In the event there is any increase during any year ofthe,4erm of this tease in real estate taxes over and above the amount, of -such taxes assessed for the tax year cluring,which the term of this Lease commences, rices, Lessee will pay to Lessor an amount equal to % of the increase in taxes,"Upon'the land and building' in whichthe leased premises are,siluated. In the event that such taxes,are,assessed for a tax.year extending beyond the term of the Lease, theobligation of Lessee will be prorated. Lessee will not be resp risible foriany,tax increase occasioned solely by a sale or transfer of the premises by Lessor. 33: OPTION TO RENEW. Provided that Lessee.is not in default in the:performance of this Lease, Lessee will have the option to renew the Lease fo I r an additional -term of _ months cbmmerfcing!at the expiration of the initial Lease term. All of the terms and conditions of the Lease will:apply during thejenewal term, except that the monthly.reni will be the sum Of's which will be adjusted after commencement of the renewal termin accordance with the cost of living,increase,provis ion set forth in Item 2. The option will be exercised by written notice given toLessor not less than days prior to the expiration of the initial Lease term, if notice isnot given within the time specified, this Option will expire. 34. AMER[CANS WITI-I'DISABILITIES ACT. The parties are alerted to the existence of, the America ns,With Disabilities Act, which may Al '. IN require, fly struc.Lural modifications. The parties are;advised to consult with a professional familiar with the requirements of the Ad. Lessee has read this page. CAUTION: Thea.cc yright laws of the United States forbid the unauthorized reproduction of this form by any means including scanning or cc uterized formats. Page,3pf 4 F6RM107:3(10-2003) COPYRIGHT I!YPROFESStONALPUBLISHttJG;NDVAID.CA PROFESSIONAL PUBLISRING Form generated by: True Forms* from rEEVEAL(v_jk' SYSTEMS, Inc, 800-499-99-12 1. PropFrty Addressc -"Z.Lr LrL lr� .' G%7'l-{ i !'r LL•' l' �'Q 35. LESSOR'S LIABILITY. In the event of a transfer of.Lessor's title or intaresl to,the property during the term of this Lease, Lessee agrees that the grantee of such tille,or interest will be substituted as the Lessor under this Lease, and the original Lessor will be released of all further'liability; provided,,that.all deposits.will betransferred to the grantee. - 36. ESTOPPEL.CERTIFICATE. (a) On ten (110) days' priorwritten.notice from Lessor, Lessee will execute, acknowledge, and deliver to lessor a statement in writing: I certifying,that this Lease is unmodtfied,andtin full force and effect or, if modified, slating the nature of such modification and certifying,that this Lease, as so modified, .is in full force:and:effect), the amount of any security deposit, and the date to which the rent and other charges are paid in advance, if,any; and (2] acknowledoing that there are not, to Lessee's knowledge, any uncured defaults on the part of�Lessor, or specifying such defaults,if any are claimed. Any such statement may be conclusively relied upon by any prosspective buyer or encumbrancer of the premises. (b) At Lessor's option, Lessee's failure'to deliver such statement within, such time will be a material breach of this Lease or will be conclusive upon Lessee: [1] that this Lease is'in full force and effect'without modification except.as maybe represented by Lessor, [2] that there are no uncured defaults in Lessor's performance;'and [3] that not more than one month's rent has been paid in advance. (c), If Lessor desires to finance, refinance, or sell the premises, or any part thereof, Lessee, agrees to deliver to any lender or buyer designated by Lessor such financial;stalements of'Lessee as maybe reasonably required by such lender or buyer. All financial statements Will be'received by the Lessoror the lender or buyer in confidence and will befused arily for the purposes set forth. 37. SUBORDINATION. This Lease, at Lessor's option; will.be subordinate to any mortgage, deed of trust, or other security now existing or later placed upon the property; provid'edhowever; that Lessee's right.to quiet possession will not be disturbed if Lessee is not in default on the payment of rent or other provision of this lease. 38. ENTIRE AGREEMENT: The foregoing -constitutes the entire agreement between the parties and may be modified only in writing signed by all,parties. The following exhibits area part of this Lease: ExhibitA: Exhibit B: - 39. ADDITIONAL TERMS AND CONDITIONS_ �The undersigned Lessee acknowledge th 'the or she has thoroughly read and approved e'nGh of a provisions contained in this Cffer, and agrees to the to and condittons• a fledl tr-- Date L �'Z ' Lessee. Date Receipt for deposit acknowledged by Date ACCEPTANCE The undersigned Lessor accepts the toregoing Offer and, agrees to lease the premises on the terns and conditions set forth above. NOTICE: The amount or rate of real estate commissionsis not fixed by taw. They are set by eachbroker individually and mzy be' negotiable between the owner and broker. The Lessor agrees to pay to • • . - ,.-- . , ,'­_- _ . , the Broker in this transaction. the sum of $ for, sen•ices,rendered and authorizes Broker to deduct sa9d'sum from the deposit received from Lessee. I n the event the Lease is extended �for a definite period of time or on a month-to-month basis after expiration of the original term, Lessor will pay to Broker an additional commission of % of.the total rental for the, extended period. This commission will be' due and payable at the commencement of the extended period if for a fixed term, or if on a month-to=month basis, at the termination of Lessee's occupancy or"one year, whichever is earlier. Inany action for commission, the prevailing partywill be entitled to reasonable attorney fees. Lessor Date Lessor Date Lessor's Address Lessor's Telephone Lessor's Fax Lessee acknowledges receipt of a copy of the accepted. Lease on (date) Gnrlie�tl CAUTION: The copyright laws ofthe United States forbid the unauthorized reproduction of this form by any means including scannlrlg or computerized formats. Page 4 of.4 FORM 107-4(10-2003) 'COPPF.IGNT 9Y FP.GiESGtOftRLFLSLISHtNG, NOPHOFESSIQNALVATO. CA ,1i5166�•:tGl ©PUBLtSIlfffti r"arm generated by: True Forms" trom REVEAL SYSTEMS, Inc, 800-499-9512 � 4 Addendum 0nelo' Commercial Lease and Deposit Receipt By and behv.een Petaluma Ecumenical Properties dba PEP.'Properties (Lessor) and the Sonoma County Alano Club(Lessee) 1. Rent" shall be adjusted in year three from the base rate established in year one. Rent shall increase by the amount of change in the°CPI. 2. Lessee to, be responsible for payment of 64% of the water and sewer charges within 15 days; of receipt of the bill_ from, Lessor. (6500/10,195=.64) 3. Failure by Lessee to obtain `welfareexemption from property tax' from the Sonoma County Assessor's office will result in additional rent of $1000 per month. 4. This document is contingent upon PEP'S successful close of escrow on the property. 5. This document supersedes all other agreements. 1. ,!• .._ '� �, Lessee's Initials `'s �Y� G l Lessor's Initial w J Rental income: Expenses*- |nteroat-exp |nouUohoa Prop" taxes PG&E'(PEPHuuaing) Water Maintenance Office cleaning Total Expenses Net cash flow Year Year Year Year Year Notes: 58500 58500 62010 62010 62010 ' 87504 87504 87504 87504 ' 3000 3000� 3000 3000 3080 u000 12000 12000 12000 12000 2/3 ofpmperty wouid be tax exempt 4200 4200 4200 4200 4200 2400 240Q 2400 2400 2408 6000 6080 6000' OODO GOOO 600 600 6000 ODOO 121104 121104 121104 121104 1211,04 -62604 -62604 -59094 -59994 -59094