82816.00017\45176857.7
REAL PROPERTY EXCHANGE AGREEMENT
CITY OF SANTA ROSA
AND
MUSEUM ON THE SQUARE, LLC
Dated August , 2026
Exhibit A
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i
Table of Contents
Page
1. Background ................................ ................................ ................................ ......................... 1
2. Agreement of Exchange and Conveyances ................................ ................................ ..........3
3. Consideration ................................ ................................ ................................ ...................... 4
4. Opening of Escrow; Exchange Process ................................ ................................ ................ 4
5. Due Diligence; Property Reports; Access; Termination Right ................................ .............. 4
6. Title Review and Title Insurance ................................ ................................ ......................... 7
7. Development Agreement ................................ ................................ ................................ .....9
8. Closing Conditions ................................ ................................ ................................ .............. 9
9. Closing; Closing Expenses; Prorations; Taxes ................................ ................................ ... 10
10. Representations and Warranties ................................ ................................ ......................... 15
11. Covenants Pending Closing ................................ ................................ ............................... 19
12. Default; Remedies ................................ ................................ ................................ ............. 22
13. Miscellaneous................................ ................................ ................................ .................... 25
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1 Exchange Agreement
THIS REAL PROPERTY EXCHANGE AGREEMENT (" Agreement") is made as of August , 2026 (the "Effective Date"), by and between the CITY OF SANTA ROSA, a California municipal corporation (" City"), and MUSEUM ON THE SQUARE , LLC, a California limited liability company (" MOTS"). City and MOTS are sometimes referred to collectively as the "Parties" and individually as a "Party."
1. Background.
1.1 City is the owner of certain real property located in the City of Santa Rosa, County of Sonoma, State of California, commonly known as 90 Santa Rosa Avenue (APN: 009-073-023), 631 1st Street (APNs: 009 -073-019, 009 -073-020, 009 -073-021 009 -073-022), 655 1st Street (APN: 009-073-018), and a portion of 100 Santa Rosa Avenue (APN: 009-191-021), Santa Rosa, California, as more particularly described in this Agreement and Exhibit A attached hereto and incorporated by reference (collectively, the "City Properties").
1.2 MOTS is the owner of certain real property commonly known as 520 3rd Street (APN: 010-063-027) (aka 521 2 nd Street, APN: 010-063-019), Santa Rosa, California 95401, as more particularly described in this Agreement and Exhibit A (the "MOTS Property").
1.3 City intends to retain approximately 1.61 acres of 100 Santa Rosa Avenue for potential open sp ace, park, recreational use, public access, flood contr ol and/or other public purposes (the “Retained Land”), and such Retained Land is excluded from the City Properties to be conveyed to MOTS. In connection with the Retained Land, the Parties shall execute and record at Closing the encroachment agreement attached as Exhibit M (the “Encroachment Agreement”) to account for the existing building encroachment onto the Retained Land.
1.4 The Parties desire to exchange the City Properties for the MOTS Property (the “Exchange”), with the agreed valuation of the City Properties credited against the agreed valuation of the MOTS Property and the remaining balance to be paid by City in cash at Closing, subject to prorations, credits, holdbacks, offsets, and adjustments expressly provided in this Agreement and the other Transaction Documents.
1.5 As of the Effective Date, some of the MOTS Property is occupied by the following commercial tenants (collectively, the “Existing Tenants”) under the following leases:
(a) Lease between MOTS and TLCD Architecture, a California corporation dated January 7, 2014, as amended, occupying a portion of the second floor (“TLCD”); (b) Lease between MOTS and Dickenson Peatman & Fogarty, PC dated January 25, 2021, occupying a portion of the second floor (“Dickenson Peatman”); (c) Lease between MOTS and VisiQuate, Inc., a Delaware corporation dated July 31, 2016, as amended by that First Amendment to Lease dated January 25, 2021, occupying a portion of the third floor (“VisiQuate”);
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2 (d) Lease between MOTS and Carle Mackie Power and Ross LLP (“CMPR”), dated September 1, 2025, occupying Suite 500, a portion of the fifth floor; (e) Lease between MOTS and WaFed dated June 26, 2013, as amended , occupying such portion of the MOTS Property as disclosed by MOTS; and (f) Lease between MOTS and Hugh Futrell Corporation, a California corporation, dated November 5, 2021, occupying such portion of the MOTS Property as disclosed by MOTS.
1.6 The Parties contemplate that this Agreement will be implemented together with grant deeds, escrow instructions, title insurance commitments, work letters, leaseback documents, City’s relocation arrangements for the Approved Existing Leases (each a “Relocation Plan”), the Encroachment Agreement, assignment and assumption of Approved Existing Leases, bills of sale, general assignments, tenant notice letters, estoppels, sublease or early occupancy approvals, as may be necessary or appropriate for consummation of the Exchange (collectively, the "Transaction Documents").
1.7 For purposes of this Agreement, “Approved Existing Leases” mean the following leases: VisiQuate, TLCD, CMPR , and Dickenson Peatman, as included in the assignment and assumption of leases attached as Exhibit F. Estoppels in substantially the form attached as Exhibit K will be required from the tenants under all Approved Existing Leases to be dated no later than 30 days after the Effective Date (and at City’s option, updated to be no less than 30 days prior to Closing), without any substantive revisions, qualifications or additions that are reasonably objectionable to City and not disclosing any landlord or Existing Tenant default or dispute (a “Clean Estoppel ”). Notwithstanding the foregoing, the Parties acknowledge that CMPR’s estoppel will note that MOTS has not completed the basement parking and gym obligations required under the CMPR lease, but City agrees that such specific acknowledgement will be considered a Clean Estoppel for that tenant. If City does not receive a Clean Estoppel from each tenant under an Approved Existing Lease within such thirty (30) day period, City may terminate this Agreement by written notice to MOTS, whereupon except for obligat ions that expressly survive termination, neither party shall have any further rights or obligations hereunder.
1.8 The Parties contemplate that a separate development agreement pursuant to Government Code Section 65864 et seq. will be negotiated and processed for MOTS’ benefit for the City Properties in connection with this Agreement, as more particularly described in Section 7 (the "Development Agreement" or "DA").
1.9 The Parties acknowledge the Exchange contemplated under this Agreement is conditioned upon, among other things, required approvals by the City Council of the City of Santa Rosa and the board of North Bay Equity Fund I, LLC, completion of applicable Surplus Land Act processing, completion of any legally required CEQA review or determination, Government Code Section 65402 review, and final approval and effectiveness of the DA ordinance in form and content acceptable to both Parties. The Parties intend that such matters be reviewed during the Due Diligence Period to the extent provided in Section 5.1 and completed before Closing as explained herein.
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3 2. Agreement of Exchange and Conveyances. Subject to the terms and conditions of this Agreement, at Closing City shall convey the City Properties to MOTS, and MOTS shall convey the MOTS Property to City. The City Properties and the MOTS Property are sometimes referred to collectively as the “ Exchange Properties” and individually as an “ Exchange Property.” For each Exchange Property, the Party conveying such Exchange Property is the “Conveying Party,” and the Party acquiring such Exchange Property is the “Acquiring Party.”
2.1 City Conveyance to MOTS. City shall convey to MOTS fee title to the City Properties by grant deed in substantially the form attached as Exhibit B , subject to the rights granted to MOTS under the Encroachment Agreement.
2.2 MOTS Conveyance to City. MOTS shall convey to City fee title to the MOTS Property by grant deed in substantially the form attached as Exhibit C.
2.3 Legal Descriptions. The legal descriptions for the City Properties, Retained Land, and the MOTS Property shall be finalized before Closing and shall be attached to or incorporated in the applicable Transaction Documents.
2.4 Interests Included in Conveyance. Except as expressly excluded by this Agreement, each conveyance shall include the applicable land, together with all privileges, rights, easements, appurtenances, development rights, entitlements, air rights, water rights, rights-of-way, streets, alleys, passages, and other rights appurtenant to or used in connection with such land; all buildings, structures, systems, facilities, fixtures, parking areas, machinery, equipment, apparatus, appliances, and other improvements located thereon or used in connection therewith, collectively, the "Improvements"; and all other rights and assets expressly assigned under the Transaction Documents.
2.5 Personal Property; Bill of Sale . Except as expressly provided in this Agreement or a bill of sale approved by the Acquiring Party, each Exchange Property shall be delivered free of movable personal property and debris, subject only to items that the Acquiring Party expressly elects to assume, purchase, or retain in writing prior to Closing. City is not conveying any personal property to MOTS. At Closing, MOTS shall execute and deliver a bill of sale in the form attached hereto as Exhibit G for any approved personal property being transferred to City. Any bill of sale from MOTS to City shall convey the approved personal property free and clear of liens and shall assign all assignable warranties, guarantees, indemnities, and similar rights re lating to such personal property.
2.6 General Assignment; Assignment of Approved Existing Leases; Other Assets.
At Closing, each Conveying Party shall execute and deliver a general assignment in the form attached hereto as Exhibit H-1 or H-2, as applicable, assigning to the Acquiring Party, to the extent owned by and assignable by such Conveying Party and approved by the Acquiring Party, all permits, licenses, consents, registrations, approvals, plans, specifications, engineering drawings, as-built plans, wa rranties, guarantees, indemnities, claims, causes of action, and other tangible or intangible assets relating to the applicable Exchange Property. Leases shall be assigned only under a separate assignment and assumption of Approved Existing Leases in the f orm attached hereto as Exhibit F. No contract, lease, license, permit, warranty, obligation, or liability shall be assumed by an Acquiring Party unless expressly assumed in writing by such Acquiring Party.
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4 3. Consideration.
3.1 Agreed Values of the Exchange Properties. For purposes of this Agreement, the Parties agree that:
(a) The value of the MOTS Property is Fifteen Million Seven Hundred Thousand Dollars ($15,700,000) (the "MOTS Value"), and
(b) The aggregate value of the City Properties is Eleven Million One Hundred Fifty-Three Thousand One Hundred Thirty-Two Dollars ($11,153,132) (the "City Value").
3.2 Property Value Credit. At Closing, the City Value shall be credited against the MOTS Value.
3.3 Balance Payment. Subject to prorations, credits, holdbacks, offsets, and adjustments expressly provided in the Transaction Documents, City shall deposit with Escrow Holder at Closing, by wire transfer of immediately available funds, Four Million Five Hundred Forty-Six Thousand Eight Hundred Sixty-Eight Dollars ($4,546,868) (the "Balance Payment").
3.4 Tax Valuation Matters. The Parties shall include in the Transaction Documents appropriate provisions addressing property tax reassessment and related tax valuation matters, with final tax values of the Exchange Properties to be established and confirmed at Closing.
4. Opening of Escrow; Exchange Process.
4.1 Within five (5) business days after the Effective Date, the Parties shall open an escrow (“Escrow”) with North Coast Title Company, 1101 College Avenue, Suite 100, Santa Rosa, California 95404, Patti Billing and Kelsey Way, escrow officers, telephone (707) 566-0900 (“Escrow Holder” or “Title Company”). In the event of any conflict between this Agreement and the escrow instructions submitted by either party to Escrow, this Agreement shall control unless the escrow instructions expressly state that they amend this Agreement and are signed by both Parties.
4.2 The conveyance of the City Properties to MOTS and the conveyance of the MOTS Property to City are mutually dependent and shall close concurrently. Each party shall be obligated, subject to satisfaction or waiver of all conditions to Closing pursuant to Section 8 below, to tender performance as required under this Agreement, unless the other party is in default, in which case Section 12 shall govern.
5. Due Diligence; Property Reports; Access; Termination Right.
5.1 Due Diligence Period. Each Party shall have eighty -five (85) calendar days following the Effective Date to complete its due diligence and approve title, environmental condition, leases, the relocation coordination and plan (as applicable) , physical condition, economic assumptions, tests, and all other matters relevant to its acquisition of the applicable Exchange Property (the "Due Diligence Period"). All expenses relating to each Relocation Plan attributable to the Approved Existing Leases shall be borne by City. During the Due Diligence Period, City shall review and satisfy itself regarding all aspects of the MOTS Property, and if 82816.00017\45176857.7
5 satisfied, seek approval by the completion of the Due Diligence for all required regulatory, legislative, tenant -related, Relocation Plans, funding, and approval matters, including Surplus Land Act processing, Government Code Section 65402 review, CEQA , relocation plan and cost estimates, Approved Existing Lease buyout/sublease/assignment arrangements, FF&E costs, and the TI Work Letter budget and funding approvals. City’s approval of the MOTS Property during the Due Diligence Period shall include but not be limited to the conditions under this Section 5 as well as other matters included in Sections 5.2, 5.3, 5.4, 5.5 and 6.
5.2 Property Reports. Each Party shall, within ten (10) business days after the Effective Date, deliver to the other Party, or make available through a database or secure data file, the “Property Reports” for the Exchange Property it is conveying that are listed on Exhibit J and are in such Party’s possession or reasonable control. The delivering Party shall provide a reasonably current index of materials posted to the document library and shall maintain access to the document library through the Due Diligence Period. The Par ties acknowledge that the scope of relevant “Property Reports” may differ for the City Properties and the MOTS Property based on the acquiring Party’s anticipated use, evaluation, occupancy, redevelopment, or operation of the applicable Exchange Property.
(a) “Property Reports” means the “Preliminary Documents,” the “Additional Documents,” the written disclosure materials identified on Exhibit J, and any additional specific documents reasonably requested by the Acquiring Party and in the Conveying Party’s possession or reasonable control, in each case to the extent reasonably relevant to the Acquiring Party’s evaluation, use, occupancy, operation , redevelopment, or ownership of the applicable Exchange Property.
(b) “Preliminary Documents” means the core due diligence materials identified on Exhibit J and in the Conveying Party’s possession or reasonable control that are reasonably relevant to the Acquiring Party’s evaluation of the applicable Exchange Property, including, as applicable, title materials, surveys, plans, as -builts, soils and geotechnica l reports, structural and mechanical reports, environmental reports, property condition reports, permits, inspection records, violation notices, lease files, rent rolls, service contract materials, warranties, and governmental correspondence.
(c) “Additional Documents” means other written materials identified on Exhibit J or reasonably requested by the Acquiring Party, and in the Conveying Party’s possession or reasonable control, that reasonably relate to the applicable Exchange Property, including, as applicable, contracts, easements, covenants, restrictions, maintenance records, management records, insurance materials, utility materials, tenant correspondence, relocation materials, sublease materials, applications, notices, approvals, waivers, and governmental communications. (d) Exhibit J shall identify the categories of documents each Party expects to provide for the Exchange Property it is conveying based on the Acquiring Party’s anticipated use and evaluation of that Exchange Property. During the Due Diligence Period, the Acquiring Part y may make reasonable written requests for additional specific documents not listed on Exhibit J, and the Conveying Party shall respond in good faith by producing such documents if they exist and are in its possession or reasonable control, or by advising that such documents do not exist or are not in its possession or reasonable control.
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6 (e) Nothing in this Section requires either Party to produce materials protected by attorney-client privilege, work product doctrine, public records law limitations, confidentiality obligations, or third-party reliance restrictions, or to prepare new reports or create documents that do not already exist.
(f) Delivery or availability of “Property Reports” shall not limit any express representation, warranty, covenant, condition, or remedy under this Agreement, except as expressly provided in the as-is, release, and known/disclosed matters provisions of this Agreement.
5.3 Access and Cooperation. During the Due Diligence Period, each Party shall reasonably cooperate in good faith to permit the other Party and its consultants, contractors, and representatives to enter the applicable Exchange Property for inspections, testing, surveys, and performance of work necessary or appropriate for the inspecting Party's prospective occupancy and use, subject to reasonable prior notice and reasonable site rules.
5.4 Intrusive Testing. If either Party proposes any test involving drilling, boring, subsurface investigation, destructive testing, or other intrusive investigation, such Party shall obtain the other Party's prior written approval. The inspecting Party shall comply with applic able laws and shall repair any damage caused to the applicable Exchange Property.
5.5 City’s CEQA Review.
(a) For purposes of City's review under the California Environmental Quality Act, Public Resources Code Section 21000 et seq. and the CEQA Guidelines (" CEQA"), the discretionary actions contemplated by this Agreement include City's action to dispose of or exchange the City Properties and City's action to acquire the MOTS Property. City shall satisfy the CEQA requirements applicable to the Exchange before Clos ing by considering, adopting, certifying, approving, or determining the legally required CEQA document or determination, as determined by City in its independent judgment, which may include, as legally appropriate, a Notice of Exemption, Negative Declarati on, Mitigated Negative Declaration, Environmental Impact Report, or other lawful CEQA determination.
(b) City shall file any legally required Notice of Exemption or Notice of Determination and shall satisfy any applicable CEQA waiting or limitations period to the extent such period is made a condition to Closing.
(c) Nothing in this Agreement predetermines, commits City to, or limits City's discretion regarding any CEQA exemption, negative declaration, mitigated negative declaration, environmental impact report, mitigation measure, project alternative, finding, statement of overriding considerations, project approval, denial, or condition. All such matters remain subject to City's independent judgment as lead agency or responsible agency, as applicable.
5.6 Termination During Due Diligence Period. During the Due Diligence Period, either Party may terminate this Agreement in its sole discretion by written notice delivered to the other Party before expiration of the Due Diligence Period. Upon timely cancellation, this Agreement shall terminate, except for obligations that expressly survive termination, and neither 82816.00017\45176857.7
7 Party shall have any further obligation to proceed to Closing, or any claim, remedy, damages, reimbursement right, specific performance right, or other recourse against the other Party by reason of such termination.
5.7 Approval Deemed Upon Expiration. Upon expiration of the Due Diligence Period without timely cancellation by either Party, each Party shall be deemed to have approved or waived all due diligence contingencies except for title matters, Closing conditions, and other matters expressly preserved in this Agreement or the Transaction Documents.
5.8 Preparation of Legal Descriptions. During the Due Diligence Period, the Parties shall cooperate in good faith to finalize the legal descriptions and any required plat maps for the City Properties, the MOTS Property, the Retained Land , and the Leaseback. The final legal descriptions shall be reasonably approved by the Parties and the Title Company before Closing and incorporated into the applicable grant deeds, Leaseback, and other Transaction Documents.
6. Title Review and Title Insurance.
6.1 Preliminary Reports. Within five (5) days after opening of Escrow, each Conveying Party shall cause Escrow Holder to issue to the Acquiring Party a current preliminary title report or commitment, together with copies of all underlying exception documents, for the applicable Exchange Property.
6.2 Title Approval. Each Party shall have the right to review and approve, in its sole and absolute discretion, the following items for its Exchange Property:
(a) A Title Commitment issued by the Title Company and dated no earlier than the Effective Date (“Title Commitment”).
(b) Legible copies of all documents, whether recorded or unrecorded, referred to in the Title Commitment, and
(c) An ALTA Survey of the Exchange Property, which may be obtained by a Party at such party’s sole cost and expense (“Survey”). (Items (a) through (c) are collectively referred to as the “ Title Documents ”). Escrow Holder shall order and have delivered to the parties no later than five (5) business days after the Effective Date, the Title Documents described in Sections 6.2(a) and (b) above.
6.3 Parties’ Title Notice. Prior to the last day of the Due Diligence Period, each Party may approve or disapprove (in its sole and absolute discretion) the Title Documents for the respective Exchange Property by delivering written notice to the other Party (“ Title Notice ”) specifying each title defect or matter to which such Party objects (“ Title Defect”) and each Title Company requirement (“Title Requirement”) which must be satisfied by the Conveying Party in order for the Approved Title Policy (as defined below) to be issued for the applicable Exchange Property at the Closing. For purposes of this Agreement, (a) the term “Approved Title Policy” shall mean an ALTA Standard Coverage Owner’s Policy of Title Insurance (2021 Form) issued by the Title Company as of the date and time of the recording of the applicable grant deed at Closing, in the amount of the MOTS Value or City Value, as applicable, insuring the Acquiring 82816.00017\45176857.7
8 Party as owner of good, marketable and indefeasible fee simple title to the Exchange Property, containing such title endorsements as may be designated by such Party in its Title Notice and subject only to the Permitted Exceptions (as defined below) for the applicable Exchange Property, and (b) the term “Permitted Exceptions” shall mean the title exceptions approved by such Party pursuant to this Agreement, and real estate taxes and assessments not yet due and payable. All voluntary monetary liens (other than current taxes) shall be removed by the Conveying Party at or prior to Closing. If a Party fails to deliver a Title Notice to the other Party prior to the expiration of the Due Diligence Period, such Party shall be deemed to have disapproved the Title Documents and such Party shall have the option of (i) terminating this Agreement pursuant to this Section 6.3 or (ii) elect to proceed with the transaction contemplated by this Agreement. Notwithstanding anything stated to the contrary in this Section 6.3 or this Agreement, there also shall be no exception for mechanics liens in an Approved Title Policy (provided, however, that the Acquiring Party, and not Conveying Party, shall be responsible for removing any mechanics liens against the Exchange Property which solely arise from any inspections or tests conducted by the Acquiring Party or its agents in connection with such Party’s feasibility studies).
6.4 Conveying Party’s Title Notice. Within five (5) business days after receiving the Acquiring Party’s Title Notice, if any, Conveying Party shall deliver to the Acquiring Party written notice (“Conveying Party’s Title Notice”) of those Title Defects which such Party covenants and agrees to either eliminate or cure to Acquiring Party’s reasonable satisfaction by the Closing Date and those Title Requirements which Conveying Party agrees to satisfy by the Closing Date.
Conveying Party’s failure to deliver its Title Notice to Acquiring Party within the time period specified above shall be deemed to constitute Conveying Party’s election not to eliminate or cure any such Title Defect or to satisfy any such Title Requirements. If C onveying Party elects (or is deemed to have elected) not to eliminate or cure any Title Defects or to not satisfy any Title Requirements, then Acquiring Party shall have the right, by written notice delivered to Conveying Party within five (5) days of receipt of Conveying Party’s Title Notice or within five (5) days after the expiration of the time period during which Conveying Party is entitled to deliver Conveying Party’s Title Notice, whichever occurs first, to either (i) waive its prior notice as to the Title Defects which Conveying Party has elected (or is deemed to have elected) not to cure and those Title Requirements which Conveying Party has elected (or is deemed to have elected) not to satisfy or (ii) terminate this Agreement as provided in this Section 6.4 and Section 8.5 of this Agreement. If Acquiring Party fails to deliver any written notice within such five (5) day period, Acquiring Party shall be deemed to have waived its prior notice as to Title Defects and Title Requirements pursuant to (i) above.
6.5 Disapproval of Liens and Monetary Encumbrances. Notwithstanding anything to the contrary contained in this Agreement, Acquiring Party disapproves all monetary and financing liens and encumbrances affecting the applicable Exchange Property (other than liens for non-delinquent real property taxes and assessments). Conveying Party covenants to cause all such liens to be eliminated at Conveying Party’s sole cost and expense (including all pre -payment penalties and charges) prior to or concurrently with the Closing; provided, however, that Conveying Party shall not be required to remove or otherwise eliminate any mechanics’ or materialmen’s liens which solely arise from any tests, inspections, surveys or investigations conducted by Acquiring Party or Acquiring Party’s agents, contractors or consultants in connection with Acquiring Party’s feasibility studies of the applicable Exchange Property. 82816.00017\45176857.7
9 6.6 Title Policies. As a condition to City’s obligation to close, Title Company shall be irrevocably committed to issue to City an ALTA extended coverage owner’s policy of title insurance for the MOTS Property, together with such endorsements as City may reasonably require, subject only to matters approved or deemed approved by City under this Agreement. As a condition to MOTS’ obligation to close, Title Company shall be irrevocably committed to issue to MOTS an ALTA Standard coverage owner’s policy of title insurance for th e City Properties, together with such endorsements as MOTS may reasonably require, subject only to matters approved or deemed approved by MOTS under this Agreement. The title policies described in this Section are collectively, the “Title Policies,” and individually, a “Title Policy.” Each Party shall pay its own title insurance premiums and endorsement costs as Acquiring Party.
6.7 Permitted Exceptions. Each conveyance shall be subject only to taxes not yet due, exceptions of record approved or deemed approved by the Acquiring Party, and any specific matters expressly provided in this Agreement, including the Leaseback terms , the Encroachment Agreement, and approved lease or occupancy matters as to the MOTS Property.
7. Development Agreement.
7.1 DA Processing. From and after the Effective Date and prior to Closing, the Parties shall negotiate a DA for the City Properties pursuant to MOTS’ possession and development of the City Properties post -Closing. The DA shall be subject to all required public review and approval processes, including Planning Commission consideration, City Council approval, second reading, final passage and adoption of the DA ordinance, expiration of the applicable effective/referendum period, and the DA becoming effective in form and conte nt acceptable to both Parties, subject in all respects to CEQA, public hearings, required findings, discretionary approvals, and final agreement of the Parties. The Parties anticipate that negotiation and processing of the DA will occur concurrently with the Due Diligence Period, with the current target schedule contemplating: Planning Commission consideration of the DA, City Council first reading of the DA ordinance, City Council second reading/final passage, and expiration of the applicable ordinance effective/referendum period before Closing.
7.2 No Regulatory Commitment. Nothing in this Agreement constitutes City approval of, commitment to approve, or agreement to recommend any DA, project, entitlement, CEQA determination, fee program, parking agreement, park agreement, or other discretionary approval. All such matters r emain subject to applicable law, City's full discretion in its governmental, regulatory, and police power capacities, and Parties’ mutual approval of the DA subject to Section 8.1(b) below.
8. Closing Conditions.
8.1 Mutual Conditions. The obligation of each Party to close this Exchange is conditioned upon satisfaction or written waiver (which may be withheld in either Party’s sole discretion) of each of the following:
(a) Completion of any legally required CEQA review or determination and expiration of any applicable CEQA period in connection with the DA; 82816.00017\45176857.7
10 (b) Planning Commission consideration of the DA , and approval of the DA by City Council , including second reading, final passage and adoption, expiration of the applicable ordinance effective/referendum period, MOTS’ approval of the DA adopted by City Council and the DA’s effectiveness;
(c) Satisfaction or waiver of all other closing conditions set forth in this Agreement and the Transaction Documents;
(d) The representations and warranties of the Parties being true and correct in all material respects as of the Effective Date and Closing; (e) Title Company being irrevocably committed to issue the Parties the Title Policies as required in Section 6.6; and
(f) The Parties’ approval of proration of expenses and security deposit credits, if any.
8.2 City Exclusive Conditions to Close. City's obligation to close is further conditioned upon: (i) no uncured Material Environmental Condition affecting the MOTS Property, (ii) no lease, occupancy right, service contract, or other contract surviving Closing except for the Leaseback, Approved Existing Leases and Service Contracts or to the ext ent approved by City in writing, (iii) MOTS delivering the MOTS Property, including its Building System s, in good working order, and in accordance with Section 9.9 and 11.2 , and (iv) completion or other agreed schedule of the MOTS Property Conditional Work.
8.3 MOTS Exclusive Conditions to Close. MOTS' obligation to close is further conditioned upon: (i) City's representations and warranties being true and correct in all material respects as of the Effective Date and Closing and (ii) City delivering the City Properties as required by Section 9.8 including City's completion or agreed resolution of the City Property Conditional Work within City's cost cap and other limitations set forth in this Agreement.
8.4 City Regulatory Processing. City shall prosecute completion of applicable regulatory review and approvals in the ordinary course of City procedures and in accordance with applicable laws, public hearing requirements, and the separate capacities provision of this Agreement. Nothing in this Agreement obligates City, acting in its governmental, regulatory, or police power capacity, to approve any discretionary matter or to limit its discretion under applicable law.
8.5 Failure of Conditions. If a condition to Closing is not satisfied or waived by the Closing Date, either Party may terminate this Agreement by written notice to the other Party, subject to any rights or remedies arising from the other Party's default and subject to survival of obligations that expressly survive termination.
9. Closing; Closing Expenses; Prorations; Taxes.
9.1 Closing Date. Closing shall occur the later of: (x) December 15, 2026 , or such other date during the week of December 15, 2026, as the Parties may agree, and (y) five (5) business days after satisfaction or waiver of all conditions to Closing, but in no event later than 82816.00017\45176857.7
11 December 31, 2026, unless extended by mutual written agreement of the Parties or as expressly provided further below. The date on which Closing occurs is the “Closing Date,” If the DA/CEQA Closing conditions under Sections 8.1(a) and 8.1(b) have not been satisfied by the Closing Date solely as a result of a City Delay, the Closing Date shall be extended to the earlier of June 30, 2027 or 10 calendar days after satisfaction of the DA/CEQA Closing conditions. (a) For purposes of this Section, “City Delay” means City’s failure to meet the Closing Date, subject to force majeure or any delay caused by a failure by MOTS to respond timely or at all.
(b) MOTS shall provide comments, objections, or requested revisions to any DA terms, approval conditions, agenda materials, or related transaction materials submitted to MOTS for review within two (2) business days after receipt, to the extent such review is necessary to meet City agenda, posting, staff report, or hearing deadlines. MOTS’ failure to respond within such period shall not be deemed approval of discretionary City actions, but shall result in the Closing Date and the date that constitutes a City Delay (including extension payment due under Section 9.1(c)) being extended by the number of business days following such two business day period until MOTS does respond.
(c) During any extension period causing the Closing Date to extend beyond December 31 , 202 6, solely caused by a City Delay, City shall pay into Escrow an extension payment of $37,500 per month prorated daily, as MOTS’s sole remedy for such City Delay. The first extension payment shall be deposited into Escrow on the first business day following commencement of the City Delay, and each subsequent payment shall be deposited on the first business day of each month thereafter, prorated daily. Escrow shall immediately release each payment to MOTS ; provided, however, that if Closing occurs during a month for which an extension payment has been made, the payment shall be prorated through the Closing Date and the remaining amount credited to City at Closing . No payment shall be due for any period in which delay is caused in whole or in part by any matter other than a City Delay, or after City terminates this Agreement due to failure of a Closing Condition or inability to complete legally required environmental review or approvals. If the Closing has not occurred by June 30, 2027 due to failure of a Closing condition or inability to complete legally required environmental review or approvals, then the parties shall meet and confer to determine the manner of proceeding regarding the transaction. In no event shall the extension payments exceed $450,000 in total. The Parties acknowledge that the extension payment was specifically negotiated as a reasonable estimate of the additional costs and burdens MOTS may incur from a delayed Closing , which would be difficult to determine, and is not a penalty. Nothing in this Section requires City to approve the DA, certify or adopt any CEQA document or finding, approve the transaction, or take any action inconsistent with CEQA or other applicable law.
9.2 Escrow Fees and Expenses. Escrow fees and expenses shall be divided equally between City and MOTS.
9.3 Title Insurance. Each Party shall bear its own title insurance premiums and title endorsement costs as Acquiring Party of the applicable Exchange Property. 82816.00017\45176857.7
12 9.4 Documentary Transfer Taxes. The conveyance of the MOTS Property to City is exempt from Documentary transfer tax due to statutory exemption. MOTS shall be responsible for documentary transfer tax as to the conveyance of the City Properties to MOTS. Each Party, as Acquiring Party of the Exchange Property it is acquiring, shall be responsible for preparing and filing any required Preliminary Change of Ownership Report (“ PCOR”) in connection with such conveyance. Each Party shall reasonably cooperate with the other and Escrow Holder in preparing, executing, and recording any documentary transfer tax affidavits, exemption statements, PCORs, or other closing documents required in connection with the conveyances.
9.5 Prorations. Taxes, assessments, rents, utilities, operating expenses, and other recurring income and expenses relating to the Exchange Properties shall be prorated as of Closing in the manner set forth in the escrow instructions and consistent with this Agreement. I f final amounts are not known at Closing, the Parties shall make a good -faith estimate at Closing and reconcile promptly after final amounts are known. If following Closing either Party discovers an error in the prorations or receives any trailing bill, in voice, statement, or other charge relating to the applicable Exchange Property for the period prior to Closing, such Party shall notify the other Party and provide reasonable supporting documentation. The Parties shall cooperate with each other for one hundred eighty (180) days after Closing to complete any such reconciliation, and any required adjustment shall be paid within thirty (30) days after receipt of reasonably sufficient documentation. Failure to present any such trailing bill or adjustment within such 180-day period shall be deemed a waiver of such reimbursement or adjustment, except in the case of fraud or intentional misrepresentation.
9.6 Legal, Consulting, and Advisory Fees. Except as otherwise expressly provided in this Agreement, each Party shall bear its own legal, consulting, advisory, and other professional fees and costs in connection with negotiation, documentation, due diligence, approval, and consummation of the Exchange and Transaction Documents.
9.7 Escrow Instructions. When Escrow Holder has received all documents and funds, has received notification from MOTS and City that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived, and Title Company is irrevocably committed to issue the Title Policies, then, and only then, and only as part of a single integrated closing in which neither Party’s conveyance or funding occurs unless the other Party’s corresponding conveyance and funding occurs concurrently, Escrow Holder shall:
(a) Record the grant deeds for the conveyance of: (i) the MOTS Property to City with Certificate of Acceptance and (ii) the City Properties to MOTS; (b) Cause the Title Company to issue: (i) the Title Policy to City for title to the MOTS Property and (ii) the Title Policy to MOTS for title to the City Properties; (c) To the extent not otherwise delivered to the Parties outside of Escrow, deliver to the Parties: conformed copies of the grant deeds and fully executed copies of the remaining Transaction Documents, including the Leaseback, General Assignments, Bill of Sale , Assignment and Assumption of Approved Existing Leases, the Encroachment Agreement , and other Closing documents processed by Escrow Holder at Closing; and 82816.00017\45176857.7
13 (d) Deliver the Balance Payment (as adjusted pursuant to any prorations made at Closing) to MOTS, together with the prepaid Base Rent due under the Leaseback for the initial term, as a separate lease payment and not as additional exchange consideration.
9.8 Delivery and Occupancy of City Properties.
(a) 631 1st Street and 655 1st Street. At Closing, 631 1st Street and 655 1st Street shall be delivered vacant, with movable personal property removed, and with exterior areas and grounds in broom clean condition and in compliance with applicable City vacant building ordinances.
(b) 90 Santa Rosa Avenue and 100 Santa Rosa Avenue. At Closing, the conveyed portion of 90 Santa Rosa Avenue and 100 Santa Rosa Avenue shall be conveyed subject to the Leaseback, and the Retained Land shall remain owned by City and excluded from the conveyance to MOTS, and be subject to the Encroachment Agreement.
9.9 Delivery and Occupancy of MOTS Property. At Closing, the MOTS Property shall be conveyed broom clean, subject only to the Approved Existing Leases (and occupancy as set forth below) and other matters expressly approved or assumed by the Parties in writing before expiration of the Due Diligence Period, with MOTS Property Conditional Work pursuant to Section 11.2 completed to City’s reasonable satisfaction. (a) Ground Floor. The ground floor shall be delivered vacant with movable materials removed, except for lobby and related access areas. (b) Second Floor. The second floor shall be delivered subject to Approved Existing Leases with TLCD and Dick enson Peatman with remaining space generally vacant, including one shell suite, unless and to the extent such leases are bought out, subleased, or otherwise terminated pursuant to the Parties' negotiations with tenants and final relocation matters set forth in the Transaction Documents.
(c) Third Floor. The third floor shall be delivered generally vacant except for the Approved Existing Lease with VisiQuate, including one shell suite. (d) Fourth Floor. The fourth floor shall be delivered vacant except for cubicles, furniture, fixtures, equipment, or other personal property assumed by City in its sole discretion and identified in writing before Closing, as documented in the Bill of Sale. (e) Fifth Floor. The fifth floor shall be delivered subject to the Approved Existing Lease with CMPR.
(f) No Other Possessory Interests. Other than the Approved Existing Leases and matters expressly approved by City in writing, MOTS represents, warrants, and covenants that there are and at Closing will be no leases, licenses, tenancies, occupancy rights, possession rights, use rights, conce ssions, storage rights, parking rights, options, rights of first refusal, rights of first offer, purchase rights, or other possessory or acquisition interests affecting the MOTS Property.
82816.00017\45176857.7
14 (g) Service Contracts. MOTS shall disclose to City all current maintenance agreements, service contracts, management agreements, utility contracts, equipment leases, warranties, licenses, brokerage agreements, vendor contracts, construction contracts, and other contracts affecting the MOTS Property and list same on the attached Exhibit E (collectively, the “Service Contracts”). Except for the Approved Existing Leases, no such contract shall survive Closing or bind City unless City expressly approves and assumes it in writing before Closing.
MOTS shall terminate, satisfy, and pay in full all contracts not so approved, and shall deliver evidence of termination or non -survival reasonably acceptable to City. City shall notify MOTS before expiration of the Due Diligence Period which, if any, Service Contracts City elects to approve and assume at Closing. No Service Contract shall sur vive Closing or bind City unless listed on Exhibit E and expressly approved and assumed by City in writing. (h) MOTS Responsibility for Pre -Closing Tenant Matters. MOTS shall remain responsible for all tenant obligations, defaults, claims, liabilities, and concessions arising from or relating to the period before Closing, whether asserted before or after Closing. Except for a termination agreement with WaFed, no le ase amendment, side letter, buyout, retention arrangement, or sublease shall bind City unless expressly disclosed to, agreed, and assumed by City in writing.
(i) Relocation Matters. Subject to their obligations under the Agreement including completing the Relocation Plan for the Approved Existing Leases prior to the expiration of the Due Diligence Period, the Parties shall cooperate with each other throughout escrow in connection with all matters concerning tenant relocation. On or before Closing, City may elect to accept assignment of an Approved Existing Lease and thereafter negotiate a buyout or termination of such lease (pre or post -Closing) with the Existing Tenants. The Dickenson Peatman arrangement shall be addressed in either a Relocation Plan or may include early occupancy, sublease approval, assignment, or buyout terms, including rent and FF&E amounts approved by City. MOTS acknowledges that City shall have no obligation for relocation costs payable to Hugh Futrell Corporation or WaFed tenancies. Nothing in this provision is intended to extend the City’s Due Diligence Period regarding accepting MOTS Property and any of the tenancies. (j) Hugh Futrell Corporation. As a condition to City’s obligation to close, Hugh Futrell Corporation, a California corporation, shall waive relocation benefits for its occupancy in the MOTS Property and shall vacate and surrender its premises on or before Closing, in form and substance reasonably acceptable to City.
(k) No Additional Landlord Lease Claim. MOTS acknowledges that City may undertake tenant Relocation Plans, assignments, buyouts, or other Existing Tenant -related arrangements in connection with the Exchange. If Closing occurs, except for any obligations owed by City to MOTS under the Assignment of Leases, MOTS shall have no separate claim against City for any landlord, reversionary, lease-value, relocation, condemnation, or other compensation arising from the Approved Existing Leases or any relocation, assignment, buyout, or termination thereof. The parties acknowledge and agree the Balance Payment is MOTS’ consideration for the MOTS Property and all such interests.
9.10 Leaseback of Portion of 100 Santa Rosa Avenue and 90 Santa Rosa Avenue .
Following Closing, City shall lease back a portion of 100 Santa Rosa Avenue and 90 Santa Rosa 82816.00017\45176857.7
15 Avenue from MOTS pursuant to a mutually acceptable lease form approved by the Parties and attached as Exhibit D (the " Leaseback"). The lease for the Leaseback shall be executed and delivered at Closing. At Closing, City shall deposit with Escrow Holder Two Dollars ($2.00) as the Base Rent (as defined in the Leaseback) payable for the initial term of the Leaseback, and Escrow Holder shall disburse such amount to MOTS at Closing pursuant to Section 9.7(d).
9.11 Survival. The provisions of this Section shall survive Closing.
10. Representations and Warranties.
10.1 Mutual Authority. Each Party represents and warrants that it has the legal power and authority to enter into this Agreement, subject to required public and organizational approvals expressly provided in this Agreement, and that the person signing this Agreement on behalf of such Party has been duly authorized to do so.
10.2 No Conflicts. Each Party represents and warrants that, to its knowledge and subject to required approvals, execution and performance of this Agreement will not violate any agreement, judgment, order, or applicable law binding on such Party or the Exchange Property it is conveying.
10.3 Interests in Property. Each Party represents and warrants that, to its knowledge, no party has any interest in or claim against the Exchange Property it is conveying other than matters reflected in the applicable title report, disclosed leases and occupancy rights, and matters expressly disclosed in writing to and approved by the Acquiring Party.
10.4 Notices of Violations, Litigation, and Environmental Conditions. Each Party represents and warrants that, except as disclosed in writing to the Acquiring Party, it has not received written notice of violations of law, pending litigation, condemnation, or environmental contamination affecting the Exchange Property it i s conveying, other than matters disclosed in Phase I reports, inspection reports, environmental reports, lease materials, title documents, or other due diligence materials provided to the Acquiring Party.
10.5 Options; Rights of First Refusal or First Offer. Each Party represents and warrants that it has not granted any option, right of first refusal, right of first offer, purchase right, repurchase right, participation right, or similar acquisition right affecting the Exchange Property it is conveying, except for rights expressly created by this Agreement, the Leaseback, or a Transaction Document approved by the Acquiring Party in writing.
10.6 City Limited Representations. City's representations regarding the City Properties are limited to City's actual present knowledge, without duty of inquiry or investigation, and to matters disclosed in the Property Reports.
(a) City represents only that, except as disclosed in the Property Reports or otherwise disclosed in writing to MOTS, City has not received written notice of litigation, condemnation, or currently outstanding violations of Environmental Laws affecting the City Properties.
(b) Except as expressly stated in this Agreement, City makes no representation or warranty regarding physical condition, suitability, development feasibility, 82816.00017\45176857.7
16 entitlement feasibility, environmental condition, hazardous materials condition, building systems, utilities, permits, licenses, occupancy, zoning, or compliance matters affecting the City Properties.
(c) To the best of its knowledge, all operating records, title materials, plans, permits, warranties, notices, and other documents delivered or made available to MOTS by or on behalf of City are true, correct, and complete copies of what they purport to be in all material respects, have not been modified except as disclosed therein, and do not omit information necessary to make the submission materially accurate and complete. (d) Other than the Leaseback and matters expressly disclosed to and approved by MOTS in writing, City represents and warrants that no party has or will have at Closing any lease, license, tenancy, occupancy right, possession right, use right, concession, stora ge right, parking right, or other possessory interest in or claim to the City Properties. (e) Except for City’s contracts necessary for the Leaseback, City represents and warrants that no maintenance contract, management agreement, equipment lease, utility contract, leasing agreement, brokerage agreement, vendor contract, construction contract, warranty obligation, or other contract affecting the City Properties will survive Closing or bind MOTS unless expressly disclosed to and approved or assumed by MOTS in writing. City shall be solely responsible for terminating and paying all such unapproved co ntracts and for any claims arising from their termination or non-assumption.
10.7 MOTS Representations.
(a) To the best of MOTS’ knowledge, which shall mean the knowledge of Hugh Futrell, without duty of inquiry or investigation, all Property Reports, lease files, Service Contracts, tenant materials, operating records, title materials, plans, permits, warranties, notices, and other documents delivered or made available to City by or on be half of MOTS are true, correct, and complete copies of what they purport to be in all material respects, have not been modified except as disclosed therein, and do not omit information necessary to make the submission materially accurate and complete.
(b) Other than the Approved Existing Leases and matters expressly disclosed to and approved by City in writing, MOTS represents and warrants that no party has or will have at Closing any lease, license, tenancy, occupancy right, possession right, use right, co ncession, storage right, parking right, or other possessory interest in or claim to the MOTS Property. (c) MOTS represents and warrants that no Service Contract, maintenance contract, management agreement, equipment lease, utility contract, leasing agreement, brokerage agreement, vendor contract, construction contract, warranty obligation, or other contract aff ecting the MOTS Property will survive Closing or bind City unless expressly disclosed to and approved or assumed by City in writing. MOTS shall be solely responsible for terminating and paying all such unapproved contracts and for any claims arising from t heir termination or non-assumption.
(d) MOTS represents and warrants that, as of Closing, the MOTS Property, including all mechanical, electrical, plumbing, HVAC, elevator, fire/life-safety, access, security, 82816.00017\45176857.7
17 roof, building envelope, window, basement, drainage, utility, and other building systems serving the MOTS Property (collectively, " Building Systems"), improvements, common areas, access systems, elevators, roof, building envelope, windows, basement areas, fire/life -safety systems, and utility systems, will be in good working order and repair, free of material defects, free of uncured building, fire, life-safety, accessibility, zoning, environmental, or other legal violations, and delivered in the condition required by Sections 9.9 and 11.2, subject only to matters expressly disclosed in Property Reports or otherwise disclosed to City prior to the expi ration of the Due Diligence Period and not objected to by City in writing prior to the expiration of the Due Diligence Period.
(e) MOTS represents and warrants that MOTS has not received written notice of and is not aware of any uncured violation of law, pending litigation, condemnation, governmental enforcement matter, or environmental contamination, or to the best of its knowledge, threatened litigation affecting the MOTS Property. (f) MOTS represents and warrants, without limiting any other MOTS representation, that except for matters expressly disclosed in Property Reports and approved by City in writing, the MOTS Property is not in violation of Environmental Laws, there has been no Release of Hazardous Materials requiring reporting or remediation, MOTS has not received any notice of violation, claim, investigation, or enforcement relating to Hazardous Materials or Environmental Laws, and no condition exists at the MOTS Property that wo uld reasonably be expected to require mandatory remediation or impose material environmental liability on City after Closing.
(i) Environmental Definitions. For purposes of this Agreement:
(1) "Environmental Laws " means the Comprehensive
Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, the Clean Water Act, the Safe Drinking Water and To xic Enforcement Act, the Carpenter -Presley- Tanner Hazardous Substance Account Act, the California Water Code, and any other federal, state, or local law, statute, rule, regulation, ordinance, order, or requirement regulating or proscribing the use, storage , disposal, presence, cleanup, transportation, Release, or threatened Release of Hazardous Materials.
(2) “Hazardous Materials" means any substance, material, or waste that is designated, defined, classified, or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant, or contaminant under any Environmental Law, including petroleum hydrocarbons, crude oi l, petroleum products, PCBs, lead, asbestos, mold, flammable explosives, infectious materials, and radioactive materials. (3) "Release" means any spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping, disposing, abandonment, or discarding into the environment of any Hazardous Materials, including any container or receptacle containing Hazardous Materials.
82816.00017\45176857.7
18 (4) "Material Environmental Condition " means any
Hazardous Materials condition, violation of Environmental Laws, required reporting or remediation obligation, governmental enforcement matter, or third-party environmental claim that would reasonably be expected to materially impair City’s acquisition, occupancy, financing, public use, or operation of the MOTS Property.
10.8 As-Is Conveyance. Except for the express representations, warranties, covenants, and work obligations set forth in this Agreement and the Transaction Documents, each Exchange Property shall be conveyed in its "as -is, where-is" condition, with all faults, whether known or unknown, and without any representation or warranty by the Conveying Party as to physical condition, suitability, zoning, development feasibility, or environmental condition.
10.9 Disclosure of Material Changes. Each Party shall promptly disclose to the other Party any material change in the condition of the Exchange Property it is conveying, including any environmental contamination, material casualty, condemnation notice, material lease or occupancy matter, service contract matter, or violation notice discovered after the Effective Date and before Closing.
10.10 No Claims for Known or Disclosed Matters. Without limiting the as -is provisions of this Agreement, an Acquiring Party shall not assert any objection, claim, breach, default, indemnity claim, exchange or purchase value, or Balance Payment reduction, or post - closing complaint against the Conveying P arty based on a matter that the Acquiring Party or its consultants, agents, attorneys, or representatives actually knew before Closing, discovered during due diligence, or that was disclosed in the approved Property Reports, title materials, leases, surveys, inspection reports, environmental reports, or written disclosures before Closing, unless the Acquiring Party expressly preserved the matter by written notice before Closing and the Parties agreed in writing to preserve it. For purposes of the City Prop erties, any knowledge, notice, document, report, inspection result, observation, disclosure, or other information known, received, obtained, discovered, or available to MOTS or any person or entity acting for or on behalf of MOTS in connection with this Ag reement, the DA, the City Properties, or MOTS’ due diligence shall be imputed to MOTS, whether or not such information was actually communicated to the individual signing this Agreement on behalf of MOTS.
10.11 Survival/Limitation on Damages for any Post Closing Breach . The representations and warranties in this Section shall survive Closing for twelve (12) months (the “Survival Period ”), unless a longer survival period is expressly stated in the Transaction Documents, and shall survive termination only to the extent necessary to enforce obligations that expressly survive termination. Neither Party shall be liable to the other for specu lative, consequential, special, punitive, or lost profit damages. No claim for breach of any such representation or warranty shall be actionable or payable unless written notice describing the specific nature of such breach is given to the breaching Party before expiration of the Survival Period, and an a ction is commenced in a court having jurisdiction within thirty (30) days after expiration of the Survival Period. In no event shall the total liability of either Party for all breaches of such Party’s representations and warranties set forth in Section 10 of this Agreement exceed Two Hundred Thousand and No/100 Dollars ($200,000.00).
10.12 Disclaimer and Release. Effective as of Closing, each Acquiring Party, on behalf of itself and its successors and assigns, releases the Conveying Party from all claims, demands, 82816.00017\45176857.7
19 losses, liabilities, costs, expenses, causes of action, and damages arising out of or relating to the physical condition, environmental condition, title condition, development feasibility, suitability, use, occupancy, value, or condition of the Exchange Pr operty acquired by such Acquiring Party, whether known or unknown, except for: (a) express representations and warranties that survive Closing; (b) fraud or intentional misrepresentation; (c) indemnity obligations that expressly survive Closing; (d) prorations and post-Closing adjustment obligations; (e) obligations under the Leaseback; and (f) obligations under any approved post -Closing work agreement, holdback, or completion agreement.
EACH PARTY HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 (“SECTION 1542”), WHICH IS SET FORTH BELOW:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR
OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
BY INITIALING BELOW, EACH PARTY HEREBY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF THE FOREGOING WAIVERS AND RELEASES.
MOTS’ Initials __________ City’s Initial:
11. Covenants Pending Closing.
11.1 City Property Conditional Work. City shall deliver the City Properties at Closing in "as-is, where-is" condition, subject to City completing the following work (the “City Property Conditional Work”) at City's sole cost and expense, or otherwise resolving such work in a manner approved by the Parties:
(a) Public Toilet Removal. City shall remove the public toilet system located in front of 90 Santa Rosa Avenue and repair any damage to the sidewalk or flatwork caused by such removal unless waived in writing by MOTS.
(b) Hazardous Materials Work. City shall perform removal or remediation of hazardous materials (“City Hazmat Work”) present at 631 1st Street and 655 1st Street, but not at the main City Hall building located at 100 Santa Rosa Avenue or 90 Santa Rosa Avenue, unless otherwise agreed in writing by City, to the extent included within a mutually agreed upon scope and budget to be determined upon receipt of the environmental assessment report commissioned and paid by City and anticipated during Due Diligence Period (the “ Hazmat Report ”). The standard for the City Hazmat Work shall be of commercial occupancy and development. (i) Reports; Meet and Confer . Upon City’s receipt of the Hazmat Report, City shall provide such reports to MOTS. The Parties shall meet and confer in good faith regarding the scope, timing, permitting, level of cleanup, delivery condition, and whether any extensions to Closing are reasonably necessary due to permitting or work timing. The parties agree 82816.00017\45176857.7
20 that the general scope is expected to include removal of lead paint and asbestos for the buildings MOTS anticipates to immediately occupy or renovate. No remediation will be required for 90 Santa Rosa Avenue and 100 Santa Rosa Avenue prior to Closing due to the building being occupied by City staff. City shall contract for and complete such remediation work that is agreed upon within its Cost Cap and make best efforts, subject to delays caused by force majeure, la bor strikes, or other commercially excusable events outside City’s control, to complete by the Closing Date.
(ii) Cost Cap. City's cost obligations for the City Hazmat Work shall not exceed Four Hundred Fifty Thousand Dollars ($450,000) in the aggregate (the “ Cost Cap”), inclusive of the cost of all testing, consultant costs, removal, remediation, and related work paid or reimbursed with grant funds, in the aggregate. Any removal, remediation, or related work above the Cost Cap shall not be City's obligation. The Cost Cap shall exclude the cost of the Hazmat Report.
(c) Excess Work. The Parties shall negotiate in good faith any further adjustments to scope and timing reasonably required for City Hazmat Work recommended at 100 Santa Rosa Ave. and 90 Santa Rosa Ave. , in consideration of the Hazmat Report and Cost Cap, including whether work exceeding City's Cost Cap will be deferred for MOTS to perform after Closing (as owner of the City Properties) or handled through an agreed credit, reimbursement, escrow holdback, or work letter mechanism.
11.2 MOTS Property Conditional Work. MOTS shall deliver the MOTS Property at Closing in "as-is, where-is" condition, subject to the occupancy and condition required in Section
9.9 and completion by MOTS before Closing, at MOTS' cost, of the work described in an updated Property Condition Report (the “PCA Report”) commissioned by and paid for by City and which shall include the following (collectively, the “MOTS Property Conditional Work”):
(a) Roof Work. Construction of a new roof , or r oof and roof membrane repairs, shall be agreed upon by MOTS and City during the Due Diligence Period and completed by MOTS prior to Closing. If such roof work is not completed before Closing, the Parties shall agree on a closing credit, escrow ho ldback, reimbursement, or post -Closing work mechanism based on the estimated cost of such work in the PCA Report. If the Parties do not agree during the Due Diligence Period on the scope of any required roof work or related credit, holdback, reimbursement, or post -Closing work mechanism, either Party may exercise its rights under Section 5.6 before expiration of the Due Diligence Period. (b) Water Infiltration Work. Water infiltration repairs relating to window systems and basement areas (but not fluctuations of water table managed by standard sump pump operations).
(c) East Façade Work . On the east facade of the MOTS Property, MOTS shall: (i) Remove all ivy/brush and pressure wash, and (ii) if the pressure wash does not fix the appearance to City's satisfaction, then MOTS shall paint such façade portions of the MOTS Property as necessary, ensuring that such painting does not create a patched appearance. 82816.00017\45176857.7
21 (d) Any other items mutually agreed by the Parties in the final MOTS Property Conditional Work scope.
(e) Legal Compliance. All work performed by MOTS under this Section shall be completed in compliance with the Americans with Disabilities Act and any other applicable laws.
(f) Completion Documentation. Before Closing, MOTS shall deliver to City reasonably available permits, inspection sign-offs, contractor warranties, lien releases, close-out documents, and evidence of completion for the MOTS Property Conditional Work and shall assign to City, to the extent assignable, all warranties applicable to such work. (g) Failure to Complete. If MOTS has not completed the MOTS Property Conditional Work or prepared the MOTS Property to deliver in the occupancy and condition as required in Section 9.9, City may delay Closing for a reasonable period until such completion has occurred, approve a wr itten holdback, credit, reimbursement, or post -closing work mechanism agreed between the Parties, or terminate this Agreement if the failure remains uncured after notice and applicable cure periods.
(h) Prevailing Wage Indemnity. To the extent prevailing wage requirements apply to any work performed by or on behalf of MOTS under this Agreement, MOTS shall cause its contractors and subcontractors to comply with all applicable prevailing wage Labor Code §1720 et seq. and implementi ng regulations of the Department of Industrial Relations, and related public works requirements. MOTS shall indemnify, defend, and hold harmless City and its officers, officials, employees, agents, and representatives from and against any claim, assessment, penalty, back wage claim, withholding, stop notice, enforcement action, or liability arising from MOTS’ or its contractors’ failure to comply with such requirements. This subsection shall survive Closing or the earlier termination of this Agreement. (i) MOTS represents that prior to entering into this Agreement, MOTS was in the process of making (and intended to complete) repairs contemplated in this subsection 11.2, including, but not limited to, the roof , painting and water infiltration work with its own funds.
Notwithstanding the preceding sentence, MOTS remains solely responsible for determining and complying with all applicable prevailing wage requirements and shall indemnify City as provided herein.
11.3 Ordinary Course. From and after the Effective Date until the Closing, each Party covenants and agrees that it shall operate and manage its Exchange Property in the same manner as prior to the Effective Date and for MOTS, in accordance with the Approved Existing Leases; provided, however, neither Party shall have any obligation to make any improvements or alterations to the Exchange Property required by all applicable laws, ordinances, rules and regulations affecting such Property, except as agreed for the City Property Co nditional Work, MOTS Property Conditional Work, City TI Work, Leaseback, and other obligations expressly set forth in this Agreement.
11.4 No New Encumbrances. Before Closing, neither Party shall create or permit any new lease, occupancy agreement, lien, encumbrance, easement, option, right of first refusal, or 82816.00017\45176857.7
22 other interest affecting the Exchange Property it is conveying without the Acquiring Party's prior written consent, except for matters expressly permitted under this Agreement or required by applicable law.
11.5 Further Assurances. Each Party shall execute such additional documents and take such additional actions as may be reasonably necessary to carry out the intent of this Agreement and consummate the Exchange, provided that no Party shall be required to assume obligations materially greater than those set forth in this Agreement without its written consent.
11.6 City Tenant Improvements at MOTS Property.
(a) Scope and Work Letter. During the Due Diligence Period, City shall engage a space planner, at its cost, and provide MOTS with a detailed description of desired improvements to the MOTS Property for City’s occupancy after Closing (the “ City TI Work”).
The scope, pricing, scheduling, payment, allowance assumptions, and performance requirements for the City TI Work, which shall be performed by MOTS, shall be set forth in a tenant improvement work letter (“TI Work Letter”) attached as part of Exhibit I. (b) Prevailing Wages. All City TI Work performed by MOTS or others shall be subject to prevailing wage requirements as set forth in Section 11.2(h) and the TI Work Letter.
12. Default; Remedies.
12.1 Notice and Cure. If either Party defaults under this Agreement, the non-defaulting Party shall give written notice describing the default with reasonable specificity. The defaulting Party shall have ten (10) business days after receipt of such notice to cure the default, or, if the default is not reasonably capable of being cured within ten (10) business days, to commence cure within such period and diligently prosecute cure to completion, provided that cure must occur before Closing unless otherwise agreed in writing.
12.2 Failure of Conditions; No-Fault Termination. If any condition to Closing is not satisfied or waived by the Party entitled to the benefit of such condition, and such failure is not caused by the default of the other Party, either Party may terminate this Agreement by written notice, and neither Party shall have any further liability except for obligations that expressly survive termination.
12.3 Exchange Remedies; Specific Performance.
(a) Integrated Concurrent Exchange . The Parties acknowledge and agree that this Agreement constitutes a single, integrated exchange transaction, and that the conveyance of the City Properties, on the one hand, and the conveyance of the MOTS Property, on the other hand, are mutually dependent, reciprocal, and expressly conditioned upon each other. The Closing shall occur, if at all, only through a single escrow in which all deeds, funds, and other Closing deliveries are held and released as one integrated transaction. In no event shall eithe r Party be required to convey its Exchange Property, deposit funds, deliver possession, release documents or funds from escrow, or otherwise close unless the other Party simultaneously does the same in accordance with this Agreement.
82816.00017\45176857.7
23 (b) Time of the Essence. Time is of the essence with respect to the Parties’ concurrent Closing obligations and the performance of all acts required to complete the exchange contemplated by this Agreement.
(c) Remedies. Subject to this Section 12.3, Section 13.2 and Section 13.3, if, after expiration of the Due Diligence Period and satisfaction or waiver of all conditions to Closing, either Party fails or refuses to convey the Exchange Property it is required to convey, deposit required Closing documents, or otherwise close in br each of this Agreement, the non -defaulting Party shall have, as its sole and exclusive remedies for such pre-Closing breach:
(i) the non-defaulting Party may waive such default and proceed to Closing, to the extent feasible, or may pursue specific performance, to the extent available and adequate to make the non -defaulting Party whole, solely to enforce Closing as a concurrent e xchange of the City Properties and the MOTS Property through escrow; and (ii) only if specific performance is unavailable, denied, deemed inadequate, or not capable of being completed after the non-defaulting Party has pursued specific performance in good faith (or the non-defaulting Party, in good faith believes that specific performance will not adequately compensate the non-defaulting Party), the non-defaulting Party may waive any rights to specific performance and solely seek actual direct and consequential (including lost opportunity/profit) monetary damages, subject to the limitations set forth in this Agreement.
Consequential damages must be actual, non -speculative, proximately caused, reasonably foreseeable, proven with reasonable certainty, and limited to damages affecting or relating to the non-defaulting Party’s own Exchange Property . Subject to the foregoing requirements and limitations, MOTS may recover only consequential damages affecting or relating to the MOTS Property, and City may recover only consequential damages affecting or relating to the City Properties. Neither Party shall be liabl e to the other for speculative, exemplary or punitive damages. In no event shall the total liability of either Party for monetary damages for all pre - Closing breaches under this Agreement exceed Five Hundred Thousand Dollars ($500,000) in the aggregate, except for fraud or intentional misrepresentation, which cap shall exclude each party’s reasonable attorneys’ fees. The Parties acknowledge that these limitations were specifically negotiated and are a material inducement to each Party’s execution of this Agreement and neither Party would have entered into this Agreement without these limitations.
Any dispute regarding default, entitlement to specific performance or adequacy of specific performance, defenses to specific performance, or damages shall be resolved by judicial reference pursuant to Section 13.2. The Parties intend to avoid a plenary court action except to the limited extent necessary to appoint a referee, obtain provisional or equitable relief, enter or enforce judgment on the referee’s decision, or otherwise effectuate the remedies expressly pe rmitted by this Section 12.
(d) No Partial Specific Performance; No Standalone Closing. Specific performance may be sought only to compel a simultaneous Closing of both sides of the Exchange.
Under no circumstances may specific performance be used to require either Party to: (i) convey its Exchange Property before or without the concurrent co nveyance of the other Party’s Exchange Property; (ii) deposit funds or release funds from escrow before or without the concurrent 82816.00017\45176857.7
24 satisfaction of the other Party’s Closing obligations; (iii) specifically perform one leg of the Exchange as a standalone purchase and sale transaction; or (iv) accept any monetary adjustment, offset, substitute performance, or other altered economic arran gement in lieu of the concurrent exchange contemplated by this Agreement, unless that Party expressly agrees in writing. (e) No Conversion to Cash Transaction. Without limiting the foregoing, specific performance shall not be used to require City to acquire the MOTS Property for cash without the concurrent conveyance of the City Properties, to require MOTS to acquire the City Properties for cash without the conc urrent conveyance of the MOTS Property, or otherwise to convert the Exchange into a one-sided purchase and sale transaction, unless the affected Party expressly agrees in writing.
(f) Escrow Mechanics; Simultaneous Release . The Parties shall execute such joint escrow instructions as are reasonably necessary to implement the intent of this Section, including instructions that escrow shall not release any deed, funds, or other Closing deliveries unless and until escrow is in a position to close both conveyances concurrently. Any deeds to be recorded at Closing shall be recorded simultaneously or, if exact simultaneity is not possible, in the order and manner directed by escrow as part of a single coordinated Closing in which n either Party bears the risk of the other Party’s nonperformance after release. (g) No Duty of Independent Tender After Repudiation or Failure of Concurrent Closing Condition. If one Party repudiates this Agreement, states that it will not close, or otherwise makes clear that it will be unable or unwilling to satisfy its Closing obligations, the other Party shall not be required to tender independent performance, convey its Exc hange Property, deposit funds, or otherwise proceed with Closing except as part of a concurrent Closing or as may be required to preserve its right to specific performance under applicable law. (h) Preservation of Other Express Contract Rights . Termination under this Section shall not affect any express right elsewhere in this Agreement to recovery of escrow cancellation charges, attorneys’ fees, or costs, to the extent expressly provided in this Agreement, but no Party shall be entitled to remedies other than those expressly set forth in this Section, subject to such express surviving rights.
(i) City Remedies for MOTS Property Conditional Work or Delivery Default.
Without limiting City’s other rights, if MOTS fails to complete the MOTS Property Conditional Work, deliver the MOTS Property in the condition required by this Agreement, terminate unapproved contracts, deliver required tenant or relocation documentation, or satisfy any other City condition to Closing, City may, in its sole discretion: (a) require cure before Closing; (b) extend Closing for a reasonable period; (c) require an escrow holdback, credit, reimbursement agreement, or post -Closing completion agre ement acceptable to City; (d) terminate this Agreement; or (e) pursue any other remedy available under this Agreement or applicable law. (j) MOTS Remedies for City Property Conditional Work Default. Subject to applicable laws and Section 12.3(c), if City fails to complete the City Property Conditional Work within the agreed scope and the Cost Cap, MOTS may require City to complete such work within the agreed scope and Cost Cap before Closing, accept a mutually agreed credit, holdback, or post- 82816.00017\45176857.7
25 Closing mechanism, or terminate this Agreement if the failure remains uncured after notice and applicable cure periods. City shall have no obligation or liability for City Property Conditional Work above the $450,000 cap unless City expressly agrees in writing. (k) Survival. Unless stated otherwise in a Transaction Document, the provisions of this Section shall survive termination or Closing to the extent necessary to enforce rights or obligations that arose before termination or Closing or that expressly survive Closing.
13. Miscellaneous.
13.1 Assignment. Neither Party may assign its rights or obligations under this Agreement or the Transaction Documents without the prior written consent of the other Party, which consent may be withheld in such Party's reasonable discretion, except as otherwise expressly provided in the DA or other Transaction Documents approved by the Parties. Any attempted assignment in violation of this Section shall be void.
13.2 Judicial Reference. Each Party knowingly and voluntarily agrees that any civil action or proceeding involving a dispute arising out of or relating to this Agreement shall be heard and determined by general judicial reference pursuant to California Code of Civil Procedure (CCP) Sections 638 through 645.2, except as expressly provided below. (a) Such proceeding shall be conducted in Sonoma County, California, with California rules of evidence and discovery applicable to such proceeding. By agreeing to Judicial Reference as provided in CCP sections 638 through 645.2, the Parties will have waived th eir rights to trial by jury.
(b) The referee shall be a retired judge or other neutral referee experienced in California real estate transactions and public agency transactions. If the Parties cannot agree on a referee within ten (10) business days after written demand by either Party, ei ther Party may apply to the Superior Court of California, County of Sonoma, for appointment of the referee. (c) The referee shall hear and determine all issues, whether of fact or law, including equitable issues, entitlement to specific performance, defenses, damages, attorneys’ fees and costs, and any limitations on remedies under this Agreement. The referee shall issue a written statement of decision. Any judgment may be entered on the referee’s decision in the same manner as if the matter had been tried by the court.
(d) The Parties intend to avoid ordinary civil litigation to the fullest extent permitted by law. Court proceedings shall be limited to appointment of the referee, entry or enforcement of judgment on the referee’s decision, provisional or injunctive relief nec essary to preserve the status quo or protect the Exchange Properties, or such other court involvement as is necessary to effectuate this Section.
(e) The fees and costs of the referee shall initially be advanced equally by the Parties, subject to final allocation by the referee in the statement of decision. Nothing in this Section limits the requirement in Section 12.3 that the non-defaulting Party first pursue specific performance, to the extent available, before seeking damages. 82816.00017\45176857.7
26 13.3 Separate City Capacities; No Regulatory Commitment. The Parties acknowledge that, with respect to this Agreement and the Transaction Documents, City is acting both (a) in its proprietary capacity as property owner and contracting party, and (b) in its governmental, regulatory, legislative, and police powe r capacities. The Parties intend that such capacities, and any associated approvals, rights, and obligations, be separately identified and addressed in the Transaction Documents. Nothing in this Agreement shall bind or restrict City's exercise of governmen tal, regulatory, legislative, or police power authority except to the extent expressly authorized by law and approved through the required public process. No provision of this Agreement shall be construed as City’s approval of, commitment to approve, or agreement to recommend any DA, project, entitlement, CEQA determination, Surplus Land Act determination, Government Code Section 65402 determination, fee program, parking agreement, park agreement, or other discretionary approval.
13.4 Casualty; Condemnation . If, before Closing, either Exchange Property is damaged by fire, earthquake, flood, vandalism, or other casualty, or becomes subject to any threatened or pending condemnation, taking, or similar governmental proceeding, the Conveying Party shall promptly give written notice to the Acquiring Party describing the event and its estimated impact. If the casualty, damage, taking, or proceeding would, in the reasonable judgment of the Acquiring Party, materially impair the value, use, occupancy, operation, or development of the affected Exchange Property, then the Acquiring Party may, by written notice delivered before Closing: (a) terminate this Agreement as to the entire Exchange, whereupon neither Party shall have any further obligation except for obligations that expressly survive termination; (b) elect to proceed to Closing without reduction in value, in which case the Acquiring Party shall receive any insurance proceeds or condemnation awards payable with respect to such event to the extent not previously applied to restoration; or (c) if the Parties so agree in writing, proceed to Closing with a mutually agreed credit, holdback, assignment of claims, restoration obligation, or other adjustment reflected in the Transaction Documents. No Party shall be obliga ted to close if a material casualty or condemnation affecting the Exchange Property it is to acquire has occurred and the applicable Acquiring Party has not elected in writing to proceed.
13.5 Notices. All notices, demands, approvals, and other communications provided for in this Agreement shall be in writing and shall be effective (a) when personally delivered to the recipient at the recipient’s address set forth below; (b) five business days after de posit in a sealed envelope in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the recipient as set forth below; or (c) one business day after deposit with a recognized overnight courier or de livery service, addressed to the recipient as set forth below, whichever is earlier. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business da y immediately following such Saturday, Sunday or legal holiday. Email notices may be used for convenience only, unless otherwise agreed by the parties in writing, and shall be deemed delivered one (1) business day after delivery if sent after 5 pm, or received the same day if sent on a business day between 8:00 am and 5:00 pm, and a duplicate shall be sent via USPS on the same day as the email.
(a) To City City of Santa Rosa
Attn: City Manager and Real Estate Manager
100 Santa Rosa Avenue,
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27 Santa Rosa, CA 95404
Email: [email protected] and [email protected]
with a copy to: Best Best & Krieger LLP
Attn: Nancy Park
500 Capitol Mall, Suite 2500
Sacramento, CA 95814
[email protected]
(b) To MOTS Museum on the Square, LLC
Attn: Hugh Futrell
Email: [email protected]
520 3rd Street
Santa Rosa, CA 95401
with a copy to: Michael Garcia
Beyers Costin Simon, PC
200 4th Street, Suite 400
Santa Rosa, CA 95401
[email protected]
Either party may change its address by written notice to the other given in the manner set forth above.
13.6 References. Unless otherwise indicated, (a) all Article, Section, Schedule and Exhibit references are to the articles, sections, schedules and exhibits of this Agreement, and (b) all references to days are to calendar days. All the Schedules and Exhibits attached hereto are incorporated herein by this reference. Whenever under the terms of this Agreement the time for performance of a covenant or condition falls upon a Saturday, Sunday or California state holiday, such time for performance shall be extended to the next business day. The headings used in this Agreement are provided for convenience only and this Agreement shall be interpreted without reference to any headings. The masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so indicates or requires.
13.7 Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action arising out of or relating to this Agreement shall be brought in a court of competent jurisdiction in Sonoma County, California, unless applicable law requires another venue.
13.8 Amendment and Waiver. No amendment, modification, waiver, or discharge of this Agreement shall be valid unless in writing and signed by both Parties. No waiver of any breach shall be deemed a waiver of any other breach or future breach.
13.9 Successors. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. 82816.00017\45176857.7
28 13.10 Interpretation. This Agreement shall be deemed to have been prepared jointly by the Parties, and no provision shall be construed against either Party on the basis that such Party drafted the provision.
13.11 Brokers; Indemnity. The Parties represent that no broker, finder, or similar person is entitled to a commission or fee in connection with this Agreement. Each Party shall indemnify, defend, and hold harmless the other Party from and against any claim for brokerage commissions, finder's fees, or similar compensation arising through the indemnifying Party. This Section shall survive Closing or termination.
13.12 Prevailing Party Fees. In any action or proceeding to enforce or interpret this Agreement, the prevailing Party shall be entitled to recover its reasonable attorneys' fees and costs, including fees and costs on appeal and in enforcing any judgment.
13.13 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect to the extent permitted by law.
13.14 No Personal Liability. No member, council or board member, officer, employee, agent, member, manager, or representative of either Party shall be personally liable for any obligation of such Party under this Agreement.
13.15 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Signatures transmitted electronically shall be deemed originals for purposes of this Agreement to the extent permitted by applicable law.
13.16 Entire Agreement. This Agreement and the Transaction Documents constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior negotiations, proposals, letters of intent, understandings, and agreements, whether written or oral, except for provisions that the Parties expressly agree in writing shall survive.
13.17 Confidentiality and Publicity. City is a public entity and as such, this Agreement, upon its presentation for approval at Santa Rosa City Council at a duly called and agendized public meeting, shall be subject to the Public Records Act and the Freedom of Information Act.
13.18 Merger; Survival. Except as otherwise expressly provided in this Agreement or the Transaction Documents, the delivery and acceptance of grant deeds and the Closing shall not merge or extinguish any covenant, agreement, representation, warranty, indemnity, obligation, or adjustment that by its terms contemplates performance or enforcement after Closing or that is expressly stated to survive Closing or termination. All such provisions shall survive for the period expressly stated, or if no period is stated, for the period reasonably necessary to give effect to such provision. No provision shall survive Closing or termination except as expressly provided in this Agreement or the Transaction Documents, or as necessary to enforce rights and obligations arising from a breach occurring before Closing or termination.
13.19 Exhibits; Form Approval as Closing Condition. As a condition to each Party’s obligation to close, all exhibits, schedules, and Transaction Documents identified in this Agreement as requiring future completion, attachment, approval, or execution, including the 82816.00017\45176857.7
29 Leaseback, Assignment and Assumption of Approved Existing Leases, Bill of Sale, TI Work Letter, relocation arrangements, escrow instructions, and any other material Exhibit or Transaction Document, shall have been completed in form and substance reasonably acceptable to both Parties and, to the extent required by this Agreement, approved by the City Council and the board of North Bay Equity Fund I, LLC. No Party shall be obligated to close unless and until such documents have been finalized and approved as required. No draft exhibit, placeholder exhibit, or form marked “TBD,” “NTD,” or otherwise incomplete shall be binding unless and until approved in writing by the Party against whom enforcement is sought.
13.20 Signature Authority.
(a) City Authority. The City representative signing this Agreement shall be authorized pursuant to approval by the City Council of the City of Santa Rosa, and the City representative signing any grant deed, Leaseback, escrow instructions, and other Transaction Documents shall have all authority required under applicable law and City approvals. (b) MOTS Authority. The MOTS representative signing this Agreement shall be authorized pursuant to approval by the board of North Bay Equity Fund I, LLC, as managing member of MOTS, and the MOTS representative signing any grant deed, Leaseback, escrow instructions, and othe r Transaction Documents shall have all authority required under applicable organizational documents and approvals.
[Signatures on following page]
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30 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the Effective Date.
CITY:
CITY OF SANTA ROSA,
a California municipal corporation
By:
Jason Nutt, Interim City Manager
Attest:
Dina Manis, City Clerk
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
By: _________________________________
Nancy A. Park, Special Counsel for City
[Signatures continue on following page]
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31 MOTS:
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC, its Manager
By: Futrell/Walter/Pacific, LLC, its Manager
By:
Hugh Futrell, Manager
APPROVED AS TO FORM:
Beyers Costin Simon, PC
By:
Michael Garcia, Attorney for MOTS
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32 Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing Agreement and accepts the instructions contained therein.
Dated: ______________, 20___
By:
Name:
Title:
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33 Exhibit Index
EXHIBIT A Exchange Properties
EXHIBIT B Form of Grant Deed - City Properties to MOTS
EXHIBIT C Form of Grant Deed - MOTS Property to City
EXHIBIT D Lease for City Leaseback of 90 Santa Rosa Ave and 100 Santa Rosa Ave EXHIBIT E Existing Service Contracts in 520 3rd Street
EXHIBIT F Form of Assignment and Assumption of Approved Existing Leases EXHIBIT G Form of Bill of Sale
EXHIBIT H-1 Form of General Assignment
EXHIBIT H-2 Form of General Assignment
EXHIBIT I City Tenant Improvement Work Letter
EXHIBIT J Property Reports and Disclosure Schedule
EXHIBIT K Estoppel Certificate
EXHIBIT L Non-Foreign Status Certificate
EXHIBIT M Encroachment Agreement
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34 EXHIBIT A
Exchange Properties
[See attached legal descriptions]
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35 Exhibit A Continued
Legal Description of 520 3rd Street (aka 521 2nd Street), Santa Rosa, CA 95401 (MOTS Property)
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36 Exhibit A Continued
Legal Description of 90 Santa Rosa Avenue, Santa Rosa, CA 95404
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37 Exhibit A Continued
Legal Description of 631 1st Street, Santa Rosa, CA 95404
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38 82816.00017\45176857.7
39 Exhibit A Continued
Legal Description of 655 1st Street, Santa Rosa, CA 95404
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40 Exhibit A Continued
Legal Description of Portion of 100 Santa Rosa Avenue, Santa Rosa, CA 95404
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41 Exhibit A Continued
Legal Description of Retained Land
Approximately 1.6 acres of 100 Santa Rosa Avenue
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42 EXHIBIT B
Form of Grant Deed - City Properties to MOTS
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
MOTS
__________________, CA
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN: __________________
Grant Deed
The undersigned Grantor(s) declare(s):
Computed on full value of property conveyed, or
Computed on full value less value of liens and encumbrances remaining at time of sale.
Unincorporated area City of Santa Rosa and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, CITY OF SANTA ROSA, a California municipal corporation
hereby GRANT(S) to
MUSEUM ON THE SQUARE, LLC, a California limited liability company the following described real property in the City of Santa Rosa, County of Sonoma, State of California:
SEE ATTACHED EXHIBIT A
Dated: _______________, 20___
City of Santa Rosa,
a California municipal corporation
By: ___________________________________
Jason Nutt, Interim City Manager
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43 EXHIBIT A to Grant Deed
Legal Description
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44 ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF ) On , 20___ before me, , 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 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.
Signature:
(seal)
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45 EXHIBIT C
Form of Grant Deed - MOTS Property to City
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
City of Santa Rosa
Attn: City Manager and Real Estate Manager
100 Santa Rosa Avenue,
Santa Rosa, CA 95404
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN: __________________
Grant Deed
The undersigned Grantor(s) declare(s): City of Santa Rosa is exempt from property taxes (R&T Code Section 11922)
Documentary transfer tax is $0.
Computed on full value of property conveyed, or
Computed on full value less value of liens and encumbrances remaining at time of sale.
Unincorporated area City of Santa Rosa and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, MUSEUM ON THE SQUARE, LLC, a California limited liability company hereby GRANT(S) to
CITY OF SANTA ROSA, a California municipal corporation
the following described real property in the City of Santa Rosa, County of Sonoma, State of California:
SEE ATTACHED EXHIBIT A
Dated: _______________,
20___
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC, its Manager
By: Futrell/Walter/Pacific, LLC, its Manager
By:
____________________________________
Hugh Futrell, Manager
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46 EXHIBIT A to Grant Deed
Legal Description
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47 ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
COUNTY OF ) On , 20___ before me, , 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 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.
Signature:
(seal)
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48 CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the interest in real property conveyed by the Grant Deed dated __________________, 2026, from MUSEUM ON THE SQUARE, LLC, a California limited liability company, to the City of Santa Rosa, is hereby accepted by the undersigned officer on behalf of the City of Santa Rosa, pursuant to the authority conferred by Resolution No. _______, adopted by the City Council of the City of Santa Rosa on , and the Grantee consents to recordation thereof by its duly authorized officer.
Dated: _________________, 20___ City of Santa Rosa
By
Jason Nutt, Interim City Manager
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49 EXHIBIT D
Lease for City Leaseback of Portions of 100 Santa Rosa Ave. and 90 Santa Rosa Ave.
LEASE
This Lease Agreement (“ Lease”) is made as of _______________, 2026, by and between MUSEUM ON THE SQUARE , LLC, a California limited liability company (“ Landlord”), and the CITY OF SANTA ROSA, a California municipal corporation (“Tenant” or “City”).
1. Background. Landlord and Tenant are parties to that certain Real Property Exchange Agreement dated _______________, 2026 (“Exchange Agreement”). Pursuant to the Exchange Agreement, City conveyed to Landlord certain real property that includes a portion of 100 Santa Rosa Avenue and 90 Santa Rosa Avenue , Santa Rosa, California, as described further in the Exchange Agreement. In connection with Closing under the Exchange Agreement, Landlord and City desire to enter into this Lease to permit City to continue occupying and leasing a portion of 100 Santa Ros a Avenue and 90 Santa Rosa Avenue after Closing. Capitalized terms used but not defined in this Lease have the meanings given to them in the Exchange Agreement.
2. Premises.
2.1 100 Santa Rosa Ave . Landlord leases to Tenant, and Tenant leases from Landlord, the entirety of the building located at 100 Santa Rosa Ave, as depicted on Exhibit A attached to this Lease (the “100 Building” and the “100 Premises”).
2.2 90 Santa Rosa Ave. Landlord also leases to Tenant, and Tenant leases from Landlord, the entirety of the building located at 90 Santa Rosa Ave., as depicted on Exhibit B attached to this Lease (the “90 Building” and the “90 Premises”).
2.3 Collective Reference . The 100 Premises and the 90 Premises are sometimes referred to collectively as the “ Premises.” Unless expressly stated otherwise, provisions of this Lease applicable to the Premises, including provisions regarding rent, use, access, maintenance, insurance, indemnity, default, remedies, parking, surrender, and notices, shall apply to both Premises.
3. Term.
3.1 100 Premises Term. The term of this Lease as to the 100 Premises shall commence on the Closing Date under the Exchange Agreement (“ Commencement Date”) and shall expire on the date that is two (2) years after the Commencement Date (“Expiration Date”), unless earlier terminated pursuant to this Lease.
3.2 90 Premises Term . The term of this Lease as to the 90 Premises shall commence on the Closing Date under the Exchange Agreement and expire on the date that is one (1) year after the Commencement Date, unless earlier terminated pursuant to this Lease. Expiration or earlier termination of this Lease as to the 90 Premises shall not terminate this Lease as to the 100 Premises.
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50 4. City Termination Right. Tenant may terminate this Lease for any reason by giving Landlord not less than one hundred twenty (120) days’ prior written notice. The termination date stated in Tenant’s notice shall be the “Early Termination Date.” Tenant shall have no obligation to pay any termination fee, premium, penalty, or unamortized cost in connection with an early termination under this Section.
5. Base Rent; Security Deposit; Additional Rent. Tenant shall pay Landlord annual rent in the amount of One Dollar ($1.00) per year (“ Base Rent”). Base Rent for the term will be prepaid by City to Landlord through Escrow at Closing under the Exchange Agreement. No security deposit is due under this Lease. All other amounts payable by Tenant under this Lease other than Base Rent are “Additional Rent.” “Rent” means Base Rent and Additional Rent.
6. Triple Net Lease; Taxes.
6.1 Triple Net . This Lease is intended to be a triple net lease except for Landlord’s real estate taxes as provided in Section 6.2. Except as expressly provided in this Lease, Tenant shall be responsible, at Tenant’s sole cost, for all utilities, maintenance, repairs, insurance, compliance, janitorial, security, operating costs, landscaping, and other costs solely relating to Tenant’s use, occupancy, operation, and maintenance of the Premises during the term.
6.2 Landlord’s Real Estate Taxes . Landlord shall be responsible for all real estate taxes and assessments imposed on Landlord’s fee ownership of the Premises or the larger parcel of which the Premises are a part (but not for any Retained Land contained in the parcel owned by City). Tenant shall not be required to reimburse Landlord for any real estate taxes.
6.3 Tenant Taxes and Charges. Tenant is a tax exempt entity, and as such, is not subject to any taxes, assessments, fees, charges, or utility charges imposed by any taxing jurisdiction on Tenant’s personal property, Tenant’s possessory interest, or Tenant’s use or occupancy of the Premises.
7. Use. Tenant may use the Premises for municipal offices, public administration, public services, storage, parking, access, governmental operations, and uses incidental or related to City’s municipal operations. Tenant shall not use the Premises for any unlawful purpose.
8. Condition of Premises.
8.1 Condition. Tenant accepts the Premises in its “AS IS” condition as of the Commencement Date, subject to the terms of the Exchange Agreement.
8.2 CASp Disclosure. Landlord discloses the Building located on the Premises has not undergone inspection by a Certified Access Specialist (CASp) as referenced in California Civil Code Section 1938 (e) which provides: "A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, 82816.00017\45176857.7
51 the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises." Pursuant to the foregoing Section 1938(e), Tenant acknowledges and agrees that, if Tenant wishes to have the Premises inspected by a CASp: (i) Tenant must notify Landlord on or before the date when Tenant executes this Lease pursuant to the election below; (ii) the inspection will be at Tenant's sole cost and expense; (iii) the inspection must be scheduled through Landlord and in coordination with the Building’s property manager; (iv) any repairs or modifications necessary to correct any violation of construction-related accessibility standards that is noted in the CASp repor t shall be Tenant’s responsibility; and (v) Tenant must provide a copy of the CASp report to Landlord on completion.
9. Maintenance and Repairs.
9.1 Tenant Responsibility. Tenant shall contract directly with any necessary utilities/service providers, and pay for such services directly, including but not limited to: gas service, electrical service, alarm and security service, sewer service, trash service, janitorial service, landscaping service, regular HVAC service, locksmith service, pest control service, and backflow service and any other service necessary for its occupancy. Tenant shall maintain the Premises in substantially the condition existing as of the Commencement Date, ordinary wear and tear, Hazardous Material remediation , casualty, and condemnation excepted. Tenant shall be responsible for ordinary maintenance, repairs, utilities, janitorial service, security, and compliance relating to Tenant’s use and occupancy of the Premises. Tenant shall be responsible for any liability arising out of Tenant’s use including, but not limited to, fees, costs and expenses relating to ADA compliance.
9.2 Landlord Responsibility . Landlord shall have no maintenance, repair, replacement, utility, security, janitorial, operating, or compliance (including ADA) obligations, responsibilities, or liabilities with respect to the Premises during the term, except to the extent caused by Landlord’s gross negligence, willful misconduct, or material breach of this Lease.
9.3 Proration. At the end of the term, utility, service, and other recurring expenses payable by Tenant shall be prorated as of the date Tenant surrenders possession.
9.4 No Expansion of Exchange Agreement Obligations. Nothing in this Lease expands, limits, or modifies the Parties’ obligations under the Exchange Agreement with respect to Hazardous Materials, conditional work, environmental matters, or post -closing obligations, except as expressly stated in this Lease. In the event of any conflict, the Exchange Agreement shall govern.
10. Insurance.
10.1 Tenant Coverage . Tenant shall maintain, or self -insure through a self - insurance program, risk pool, joint powers insurance authority, or commercially available insurance, coverage reasonably appropriate for Tenant’s use and occupancy of the Premises, including general lia bility coverage and coverage for Tenant’s personal property, furniture, fixtures and equipment. Landlord shall be named as an additional insured on Tenant’s liability coverage to the extent commercially available or permitted under Tenant’s self -insurance or risk management program.
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52 10.2 Landlord Coverage . Tenant shall maintain, or cause to be maintained, commercially reasonable property coverage for the 100 Building, 90 Building, and Premises, including Tenant improvements, against fire and other casualty risks customarily insured against by owners of comparable properties, in amounts reasonably determined by City but not less than any amount reasonably required by Landlord’s lender, to the extent commercially available through Tenant’s insurance, self -insurance, risk pool, joint powers insurance authority, or other risk management program. Such coverage may be maintained in Tenant’s name, provided that Landlord and any lender reasonably designated by Landlord shall be named as loss payee, mortgagee, additional insured, or additional covered party, as applica ble, as their interests may appear and to the extent permitted under Tenant’s insurance or risk management program.
Landlord shall maintain commercially reasonable commercial general liability insurance for claims arising from Landlord’s ownership of, or activities at, the Premises, with limits of not less than $2,000,000 per occurrence and $4,000,000 aggregate.
10.3 Evidence of Coverage . Upon Landlord’s written request, Tenant shall provide Landlord evidence of insurance, self-insurance, or risk pool coverage.
10.4 Waiver of Subrogation . To the extent permitted by law and applicable insurance or risk pool arrangements, each Party waives claims against the other for insured losses to the extent covered by insurance, self-insurance, or risk pool coverage.
11. Parking; Signs. Except as set forth in this Lease, Tenant shall have the exclusive use of the parking area at the Premises. Tenant may, at Tenant’s cost and without Landlord consent, install, maintain, replace, and remove signage reasonably necessary for Tenant’s municipal operations, subject to applicable law. Landlord, its affiliates, consultants, and invitees may use up to six (6) parking spaces in the parking lot on the 100 Premises, in a location reasonably approved by Tenant. Landlord shall, at its sole cost, stripe and identify such spaces, and Landlord’s use shall not unreasonably interfere with Tenant’s use, access, security, or municipal operations.
12. Hazardous Materials. The Parties acknowledge and agree that the scope of any agreed remediation of Hazardous Materials pre-Commencement Date, and the parties’ respective rights, obligations, and liabilities with respect to that remediation, shall be governed solely by the Exchange Agreement and not by this Lease. Any issue regarding Tenant’s liability for remediation or pre -existing environmental conditions shall be determined under the Exchange Agreement .
Tenant shall not cause or permit any Hazardous Materials (as defined below) to be released at the Premises during the term, except for ordinary and customary office, maintenance, cleaning materials used, stored, and disposed of in compliance with applicable laws. Tenant shall be solely responsible for any Hazardous Materials release caused by Tenant or Tenant’s employees, contractors, and agents during the term. Tenant shall not be responsible for, and Landlord shall remain responsible for, any Hazardous Materials or environmental condition: (a) caused by Landlord, its contractors, agents, tenants, or invitees; (b) migrating to, from, or through the Premises, except to the extent caused by Tenant; (c) arising from any work performed by Landlord affecting portions of the Premises or the larger property. “Hazardous Material" shall mean any product, substance, chemical, material or waste regulated by any federal, state, or local government authority, including but not limited to hazardous substances under CERCLA, hazardous waste under RCRA, and 82816.00017\45176857.7
53 substances designated as hazardous under the Toxic Substances Control Act or any similar state law, whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injuri ous to the public health, safety or welfare, the environment or the Premises; (ii) regulated or monitored by any governmental authority; or (iii) a basis for potential liability of Landlord to any governmental agency or third party under any applicable sta tute or common law theory.
Hazardous Materials shall include, without limitation, hydrocarbons, petroleum, gasoline, crude oil, hazardous waste under RCRA, Per - and Polyfluoroalkyl Substances (PFAS), Perfluorooctane Sulfonic Acid (PFOS), Perfluorooctanoic Acid (PFOA), petroleum products, asbestos, and polychlorinated biphenyls (PCBs) substances designated as hazardous under the Toxic Substances Control Act or any similar state law or any products or byproducts thereof.
13. Alterations. Tenant may perform ordinary maintenance, repairs, replacements, cabling, furniture installation, security improvements, and non -structural alterations reasonably necessary for Tenant’s use, provided such work complies with applicable law and Section 9.
Tenant shall not perform demolition, structural alteration, expansion, redevelopment, or material exterior alteration without Landlord’s prior written consent not to be unreasonably withheld or otherwise authorized and agreed under the Exchange Agreement . Tenant shall not be required to obtain Landlord’s consent for non-structural alterations or any alterations which cost $25,000 or less in the aggregate.
14. Landlord Access.
14.1 Premises. Landlord may enter the interior of the Premises with two (2) business days’ prior written notice to Tenant for inspection, repair, maintenance, showing, financing, sale, or other commercially reasonable purposes, subject to Tenant’s reasonable security requirements and operational needs. Landlord may enter without prior notice in an emergency.
Landlord may access exterior areas on the Premises without prior notice. During any such access Landlord shall not unreasonably interfere with Tenant’s access, securi ty, public meetings, or municipal operations, nor conduct loud or disruptive activities during City meetings or business hours.
15. Assignment and Subletting. Tenant shall not assign this Lease or sublet the Premises without Landlord’s prior written consent, not to be unreasonably withheld, conditioned, or delayed. Landlord acknowledges and agrees Tenant may allow City departments, City contractors, City consul tants, public agencies, the Santa Rosa school district, and governmental service providers to use portions of the Premises without such use constituting an assignment or sublease.
16. SNDA; Non-Disturbance. This Lease shall be subordinate to any mortgage, deed of trust, or other financing encumbrance affecting Landlord’s interest in the Premises only if the holder of such encumbrance executes and delivers to Tenant a commercially reasonable non - disturbance a greement providing that Tenant’s rights under this Lease shall not be disturbed.
Landlord shall use commercially reasonable efforts to obtain any such non-disturbance agreement requested by Tenant.
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54 17. Estoppel. Within twenty (20) days after written request from Landlord, Tenant shall provide a commercially reasonable estoppel certificate stating, to Tenant’s actual knowledge, whether this Lease is in effect, whether this Lease has been amended, the Commencement Date, the Expiration Date, whether Tenant has given or received any uncured default notice, and such other factual matters as may be reasonably requested. Tenant’s failure to deliver an estoppel shall not be deemed an admission or waiver unless Landlord gi ves a second written notice and Tenant fails to respond within ten (10) days after receipt of the second notice.
18. Default; Notice and Cure.
18.1 Tenant Default. Tenant shall be in default under this Lease if: (a) Tenant fails to pay any Rent when due and such failure continues for ten (10) days after written notice from Landlord; (b) Tenant fails to perform any non-monetary obligation under this Lease and such failure continues for thirty (30) days after written notice from Landlord, provided that if the failure cannot reasonably be cured within thirty (30) days, Tenant shall not be in default if Tenant commences cure within such period and diligently prosecutes cure to completion , provided that such default can be cured; (c) Tenant assigns this Lease or sublets the Premises in violation of this Lease; or (d) Tenant fails to surrender the Premises as required by this Lease after expiration or earlier termination.
18.2 Landlord Default. Landlord shall be in default under this Lease if Landlord fails to perform any obligation under this Lease and such failure continues for thirty (30) days after written notice from Tenant, provided that if the failure cannot reasonably be cured within th irty (30) days, Landlord shall not be in default if Landlord commences cure within such period and diligently prosecutes cure to completion. If Landlord’s default materially interferes with Tenant’s access, possession, utilities, safety, or municipal opera tions, Landlord shall commence cure as soon as reasonably practicable.
18.3 Any default notice shall describe the alleged default with reasonable specificity and identify the action required to cure.
19. Remedies.
19.1 Landlord Remedies. If Tenant defaults beyond applicable notice and cure periods, Landlord may pursue the following remedies, subject to this Lease and applicable law:
(a) terminate this Lease by written notice to Tenant; (b) recover unpaid Rent and other actual, direct dama ges caused by Tenant’s default; (c) recover possession of the Premises by lawful process; (d) perform Tenant’s unperformed maintenance or repair obligations under Section 9.1 and recover the reasonable actual cost as Additional Rent; and (e) seek injunctive or declaratory relief for a non-monetary default. Landlord shall not use self-help, lockout, utility interruption, or other interference with Tenant’s municipal operations except as expressly permitted by law.
19.2 Tenant Remedies. If Landlord defaults beyond applicable notice and cure periods, Tenant may pursue the following remedies, subject to this Lease and applicable law: (a) terminate this Lease by written notice to Landlord; (b) seek injunctive, declaratory, or specific performance relief to protect Tenant’s possession, access, utilities, or use of the Premises; (c) cure Landlord’s default, after notice and opportunity to cure except in an emergency, and recover 82816.00017\45176857.7
55 Tenant’s reasonable actual costs; and (d) recover actual, direct damages caused by Landlord’s default.
19.3 Damages Limitation . Neither Party shall be liable to the other for speculative, consequential, special, punitive, or lost profit damages.
20. Holdover. If Tenant remains in possession of the Premises after the Expiration Date or earlier termination date without Landlord’s written consent, Tenant shall be a tenant at sufferance only, and no holdover shall extend the term or create a month-to-month tenancy unless Landlord agrees in writing. During any holdover period, Tenant shall continue to pay all Additional Rent and shall pay Landlord a holdover charge equal to $40,000.00 per month, prorated for partial months. No holdover charge shall be due to the extent Tenant’s continued possession results from delay in substantial completion of the City TI Work in the MOTS Property for its intended municipal operations, as required under the Exchange Agreement and TI Work Letter. In that event, the Parties shall meet and confer in good faith regarding the anticipated completion date, move schedule, and surrender timing. If Tenant gives Landlord written notice of its intent to vacate, Tenant shall have a reasonable transition period, not to exceed one hundred twenty (120) days after the MOTS Property is substantially complete and available for Tenant’s occupancy, before any holdover charge begins. Acceptance of payment shall not constitute Landlord’s consent to the holdover or waive Landlord’s right to recover possession. Tenant shall not be liable for speculative, consequential, special, punitive, or lost profit damages arising from any holdover. The holdover charge in this Section applies only to Tenant’s holdover in the Premises.
21. Surrender. Upon expiration or earlier termination of this Lease, Tenant shall surrender the Premises broom clean, with Tenant’s movable personal property removed, and in substantially the condition required under this Lease, ordinary wear and tear, casualty, and condemnation excepted. Tenant shall repair damage caused by Tenant’s removal of personal property.
22. Eminent Domain. If all or a material portion of the Premises is taken by eminent domain, inverse condemnation, or sale in lieu of condemnation so as to materially impair City’s continued use of the Premises, City may terminate this Lease upon written notice, effective as of the date possession is required to be surrendered. Landlord shall be entitled to any award for its fee interest, and City may separately pursue any award for City’s personal property, relocation costs, moving costs, or other compensable interest, so lon g as such award does not reduce Landlord’s fee award. Nothing in this Section limits City’s governmental, regulatory, police power, or eminent domain authority. Each party waives the provisions of California Code of Civil Procedure Section 1265.130 allowing either party to petition the Superior Court to terminate this Lease in the event of a partial taking of the premises.
23. Casualty. If all or substantially all of the Premises are damaged or destroyed by casualty or if the casualty prevents City from reasonably continuing its municipal operations from the Premises, or from the undamaged portion of the Premises, City may terminate this Lease by 30 days written notice to Landlord.
23.1 If the casualty affects only a portion of the Premises and does not prevent City from reasonably continuing its municipal operations from the undamaged Premises, this 82816.00017\45176857.7
56 Lease shall continue in effect as to the undamaged and usable portion of the Premises.
Notwithstanding the foregoing, if the remaining undamaged Premises are too small to be practicable, City may terminate and pursue substitute Premises. Otherwise, City ma y continue to occupy and use the undamaged portion of the Premises, and Tenant shall continue to perform its obligations under this Lease to the extent reasonably practicable.
23.2 If City does not terminate this Lease under this Section 2 3, Tenant shall continue to operate its business in the undamaged portion of the Premises to the extent reasonably practicable.
23.3 Landlord shall have no obligation to restore the Premises unless expressly agreed in writing. Each Party shall retain any insurance proceeds payable under its own policies.
Landlord shall retain all insurance proceeds payable under Landlord’s property insu rance for the Building, Premises, and other property owned by Landlord. Tenant shall retain all insurance proceeds payable under Tenant’s insurance, self -insurance, or risk pool coverage for Tenant’s personal property, furniture, trade fixtures, equipment, and other property owned by Tenant.
24. Indemnity. Tenant shall indemnify, defend, and hold harmless Landlord from claims, liabilities, damages, costs, and expenses arising from Tenant’s use or occupancy of the Premises during the applicable term or in any way relating to Tenant’s use of any parking spaces outside of the Premises, including, but not limited to, any and all ADA and other required compliance under this Lease, except to the extent caused by Landlord’s gross negligence, willful misconduct, or material breach of this Lease. This Section shall survive expiration or earlier termination of this Lease.
25. Successors; Transfer by Landlord. This Lease shall bind and benefit the Parties and their respective successors and permitted assigns. Landlord shall not transfer its interest in the Premises unless the transferee takes subject to this Lease and assumes Landlord’s obligations first arising from and after the transfer.
26. Notices. Notices under this Lease shall be given in the manner provided in the Exchange Agreement, to the notice addresses for Landlord and Tenant stated in the Exchange Agreement, unless a Party gives written notice of a different address for purposes of this Lease.
To Tenant City of Santa Rosa,
Attn: City Manager and Real Estate Manager
100 Santa Rosa Avenue,
Santa Rosa, CA 95404
Email: [email protected] and [email protected]
with a copy to: Best Best & Krieger LLP
Attn: Nancy Park
500 Capitol Mall, Suite 2500
Sacramento, CA 95814
[email protected]
To Landlord Museum on the Square, LLC [Landlord to provide address prior to Lease commencement]
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57 Attn: Hugh Futrell
Email: [email protected]
with a copy to: Michael Garcia
Beyers Costin Simon
200 4th Street, Suite 400
Santa Rosa CA 95401
27. Public Records. Landlord acknowledges that Tenant is a public entity and this Lease and related records may be subject to disclosure under the California Public Records Act or other applicable law.
28. No Personal Liability; Limited Landlord Liability. No council member, member, officer, official, employee, agent, member, manager, representative, volunteer or constituent owner of either Party shall be personally liable for any obligation under this Lease.
With respect to Landlord, Tenant’s recourse shall be limited to Landlord’s interest in the Premises and any applicable insurance proceeds. Nothing in this Section limits Landlord’s liability for actual, direct property damage caused by Landlord’s gross negligence, willful misconduct, or material breach of this Lease.
29. No Third -Party Beneficiaries; Severability. This Lease is for the benefit of Landlord and Tenant only and creates no third -party beneficiary rights. If any provision is held invalid or unenforceable, the remaining provisions shall remain in effect to the fullest extent permitted by law.
30. Governing Law; Venue. This Lease shall be governed by and construed in accordance with the laws of the State of California. Venue for any action arising out of this Lease shall be in Sonoma County, California, unless applicable law requires another venue.
31. Time of Essence. Time is of the essence for each obligation under this Lease.
32. Attorneys’ Fees. In any action or proceeding to enforce or interpret this Lease, the prevailing Party shall be entitled to recover reasonable attorneys’ fees and costs.
33. Waiver; Accord; and Satisfaction. No delay or omission in the exercise of any right or remedy of Landlord on any default by Tenant shall impair such right or be construed as a waiver. The receipt and acceptance by Landlord of delinquent rent shall not constitute a waiver of any other d efault; it shall constitute only a waiver of timely payment for the particular rent payment involved. No payment by Tenant or receipt by Landlord of a lesser amount than the rent payment herein stipulated shall be deemed to be other than on account of the rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the bala nce of such rent or pursue any other remedy provided in this Lease.
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58 34. Entire Agreement; Conflict. This Lease, the Exchange Agreement, and the Transaction Documents contain the Parties’ agreement regarding this Lease. As to day-to-day use, occupancy, maintenance, surrender, and operation of the Premises after Closing, this Lease shall control. As to Closing conditions and conveyance obligations under the Exchange Agreement, the Exchange Agreement shall control.
35. Counterparts; Electronic Signatures. This Lease may be executed in counterparts. Signatures transmitted electronically shall be deemed originals for purposes of this Lease to the extent permitted by applicable law.
[Signatures on following page]
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59 IN WITNESS WHEREOF, the Parties hereto have caused this Lease to be duly executed as of the Effective Date.
CITY/TENANT:
CITY OF SANTA ROSA,
a California municipal corporation
By:
Jason Nutt, Interim City Manager
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
By: _________________________________
Nancy A. Park, Special Counsel for City
LANDLORD:
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC, its Manager
By: Futrell/Walter/Pacific, LLC, its Manager
By:
Hugh Futrell, Manager
APPROVED AS TO FORM:
By:
Attorney for Landlord
82816.00017\45176857.7
60 Exhibit A to Exhibit D
(the “100 Building” and the “100 Premises”)
The above image is approximate and excludes the Retained Land, subject to the Encroachment Agreement.
82816.00017\45176857.7
61 Exhibit B to Exhibit D
(the “90 Building” and the “90 Premises”).
The above image is approximate and excludes the Retained Land, subject to the Encroachment Agreement.
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62 EXHIBIT E
Existing Service Contracts in 520 3rd Street
Scope Vendor
Elevator Inspection (annual and 5 year) TKE
Elevator emergency monitoring Advanced Security
Fire Pump Inspection George Sweet & CO
Fire Pump Fuel Filling Flyers Energy
Fire Sprinklers inspection Santa Rosa Fire Equip
Fire Sprinklers - 5 year testing Santa Rosa Fire Equip
Fire Standpipe testing Santa Rosa Fire Equip
Fire Alarm Monitoring Advanced Security
Building Generator Inspection George Sweet & CO
Smoke screens SmokeGuard
Radio Fequency EERC - Red Cloud Wireless
Backflow testing Checkrite Backflow
Fire Extinguishers Certification Santa Rosa Fire Equip
HVAC - Rooftop maintenance MatrixHG
HVAC - Interior Maintenance MtrixHG
Rooftop Water Chemical treatment Merias Water solutions Building Common Area, CMPR and HFC
Cleaning
Optima
Landcape CL Lopez
General Building Maintenance Items HFC
Window Washing Varies
Lobby Mat Exchange Vestis
Trash Service Recology
Interior Plant Maintenance Jeans Greens
Document Shredding Itengrity
PG&E Electrical & Gas
AT&T Internet / Fire Alarm/ Elevator Phone
Comcast Phone
Downtown Action Organization Street Services
City of Santa Rosa Water
Door & Elevator Access Controls Advanced Security
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63 EXHIBIT F
Form of Assignment and Assumption of Approved Existing Leases
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
City of Santa Rosa
Attn: City Manager and Real Estate Manager
100 Santa Rosa Avenue,
Santa Rosa, CA 95404
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
SPACE ABOVE THIS LINE FOR RECORDER’S USE
ASSIGNMENT OF LEASES
This ASSIGNMENT OF LEASES (the “Assignment”), dated as of the Effective Date (as defined below), is by and between MUSEUM ON THE SQUARE , LLC, a California limited liability company (“Assignor”), and CITY OF SANTA ROSA, a California municipal corporation (“Assignee”) who, in consideration of the promises and covenants set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, agree as follows:
1. Background. Pursuant to those leases listed in Schedule 1 hereto, as such may have been amended (the “ Leases”), the improved real property located at 520 3rd Street, Santa Rosa, California 95401 (the “Property”) is occupied by the tenants as more particularly described in the Leases. Concurrently herewith, Assignee has acquired the Property from Assignor. In connection with the acquisition by Assignee of title in and to the Property, Assignor desires to assign its interest in the Leases to Assignee, and Assignee desires to accept assignment thereof on the terms and conditions set forth herein.
2. Assignment. Effective as of the Effective Date, Assignor hereby assigns to Assignee all of its right, title and interest in and to the Leases and any guaranties and warranties related thereto. Assignor hereby agrees to indemnify Assignee against and hold Assignee harmless from any and all cost, liability, loss, damage or expense including without limitation reasonable attorneys’ and experts’ fees and costs, arising out of facts or circumstances occurring at the Property prior to the Effective Date and relating to claims of personal injury and/or property damage.
3. Assumption. Assignee hereby accepts the assignment set forth in Section 2 above, and hereby assumes all of Assignor’s obligations under the Leases arising or accruing on and after the Effective Date. Assignee hereby agrees to indemnify Assignor against and hold Assignor 82816.00017\45176857.7
64 harmless from any and all cost, liability, loss, damage or expense, including without limitation reasonable attorneys’ and experts’ fees and costs, arising out of facts or circumstances occurring at the Property on and after the Effective Date and relating to claims of personal injury and/or property damage occurring during Assignee’s ownership of the Property.
4. Effective Date . This Assignment shall be conditioned and effective upon the conveyance to Assignee of record fee title to the Property (the “Effective Date”).
5. Binding on Successors. This Assignment shall be binding on and shall inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns.
6. Further Assurances . Each of the parties shall execute and deliver any and all additional papers, documents and other assurances and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations under this Agreement and to carry out the intent of the parties.
7. Counterparts. This Assignment may be executed in two (2) or more counterparts, each of which shall be deemed an original (including copies sent to a party by electronic transmission as against the party signing such counterpart), but which together shall constitute one and the same instrument.
8. Prevailing Party Fees. In any action or proceeding to enforce or interpret this Assignment, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs, including fees and costs on appeal and in enforcing any judgment. [Signatures on following page]
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65 IN WITNESS WHEREOF, the parties have executed this Assignment as of the Effective Date.
ASSIGNEE:
CITY OF SANTA ROSA,
a California municipal corporation
By:
Jason Nutt, Interim City Manager
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
By: _________________________________
Nancy A. Park, Special Counsel for City
[Signatures continue on following page]
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66 ASSIGNOR:
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC, its Manager
By: Futrell/Walter/Pacific, LLC, its Manager
By:
Hugh Futrell, Manager
APPROVED AS TO FORM:
By:
Attorney for MOTS
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67 SCHEDULE 1 TO ASSIGNMENT OF LEASES
LEASES TO BE ASSIGNED
(a) Lease between MOTS and TLCD Architecture, a California corporation , dated January 7, 2014, as amended, occupying a portion of the second floor of the Property; (b) Lease between MOTS and Dickenson Peatman & Fogarty, PC , dated January 25, 2021, occupying a portion of the second floor of the Property; (c) Lease between MOTS and VisiQuate, Inc., a Delaware corporation , dated July 31, 2016, as amended by that First Amendment to Lease dated January 25, 2021, occupying a portion of the third floor of the Property; and
(d) Lease between MOTS and Carle Mackie Power and Ross LLP , dated September 1, 2025 occupying Suite 500, a portion of the fifth floor of the Property.
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68 EXHIBIT G
Form of Bill of Sale
(MOTS Property to City)
This Bill of Sale (the “ Bill of Sale ”) is made as of _______________, 20___, by MUSEUM ON THE SQUARE, LLC, a California limited liability company (“Transferor”).
FOR VALUABLE CONSIDERATION, as set forth in that certain Real Property Exchange Agreement dated , 2026 (the “Agreement”), Transferor hereby sells, transfers, assigns and delivers to the CITY OF SANTA ROSA, a California municipal corporation (“ Transferee”), any and all personal property listed on Schedule 1 (the “Personal Property”) located within or used in connection with that certain improved real property located at 520 3rd Street, Santa Rosa CA under the Agreement (the “Real Property”).
1. Transferor hereby assigns all warranties, guarantees and indemnities, whether those warranties are express or implied, and all similar rights which Transferor may have against any other manufacturer or supplier of the Personal property or any portion thereof or against any seller, engineer, contractor or builder, in respect of the Personal Property.
2. Transferor at any time at or after the date of this Bill of Sale shall execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Transferee, and shall ta ke any other action consistent with the terms of this Bill of Sale that may reasonably be requested by Transferee for the purpose of granting and confirming to Transferee, or reducing to Transferee’s possession, any or all of the Personal Property. If requested by Transferee, Transferor further agrees to prosecute or otherwise enforce in its own name for the benefit of Transferee any claims, rights or benefits included in the Personal Property that require prosecution or enforcement in Transferor’s name. Transferor also hereby appoints Transferee as its agent to act in Transferor’s name and on Transferor’s behalf to take any action necessary to effect the transfer of any of the Personal Property to Transferee, or prosecute or otherwise enforce any claims, rights or benefits included in the Personal Property in Transferor’s name, including bringing suit in Transferor’s name.
3. This Bill of Sale shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.
TRANSFEROR:
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC,
its Manager
By: Futrell/Walter/Pacific, LLC,
its Manager
By: ______________________________
Name: Hugh Futrell
Title: Manager
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69 SCHEDULE 1
PERSONAL PROPERTY INVENTORY
• Mounted Lobby Photographs
• Mounted Directories (2)
• Basement Pumps and Pump Hoses
• Exterior Moveable Metal Planters
• Fobs and Fob Entry Systems to Extent Not Real Property Fixtures or Property of Tenants • Lock Keys
• Any Desks and Tables Located in Fire Control Room
• Any cables, connections or materials left by Police in former Police Space, 1st Floor
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70 EXHIBIT H-1
Form of General Assignment
(MOTS Property to City)
This Assignment (the “Assignment”) is dated for reference purposes only as of by MUSEUM ON THE SQUARE, LLC, a California limited liability company (“Assignor”).
FOR VALUABLE CONSIDERATION, as set forth in that certain REAL PROPERTY EXCHANGE AGREEMENT dated , 2026 (the “ Agreement”), Assignor hereby assigns and transfers to the CITY OF SANTA ROSA, a California municipal corporation (“Assignee”), following:
A. All equipment leases, service and/or maintenance agreements and contracts relating to the MOTS Property (as defined in the Agreement) (collectively, the “ Contracts”)[, as more particularly described in Schedule 1 attached hereto];
B. All permits, licenses, consents, registrations and other similar approvals applicable to the MOTS Property (collectively, the “Approvals”)[, which Approvals are more particularly described in Schedule 2 attached hereto];
C. All as-built plans and specifications for: (1) the MOTS Property; (2) any and all improvements used in connection with the operation or occupancy of the MOTS Property or located upon the MOTS Property (the “ Improvements”); and (3) any and all personal property owned by Assignor located within or used in connection with the operation of the MOTS Property and Improvements (the “Personal Property”) (collectively, the “Plans”); and
D. All warranties of which Assignor is the beneficiary (the “ Warranties”) with respect to the Improvements or Personal Property.
This Assignment shall not supersede the Agreement and, in the event of conflict between this Assignment and the Agreement, the Agreement shall control.
This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns.
This Assignment shall take effect the last to occur of the following: (i) full execution by all parties, as shown by the last date entered below the parties’ signatures and (ii) upon the consummation of the transaction between Assignee and Assignor.
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71 IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first above written.
ASSIGNOR:
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC,
its Manager
By: Futrell/Walter/Pacific, LLC,
its Manager
By: ______________________________
Name: Hugh Futrell
Title: Manager
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72 Schedule 1/Schedule 2
82816.00017\45176857.7
73 EXHIBIT H-2
Form of General Assignment
(City Properties to MOTS )
This Assignment (the “Assignment”) is dated for reference purposes only as of by CITY OF SANTA ROSA, a California municipal corporation(“Assignor”).
FOR VALUABLE CONSIDERATION, as set forth in that certain REAL PROPERTY EXCHANGE AGREEMENT dated , 2026 (the “Agreement”), Assignor hereby assigns and transfers to the MUSEUM ON THE SQUARE, LLC, a California limited liability company(“Assignee”), the following:
A. All equipment leases, service and/or maintenance agreements and contracts relating to the City Properties (as defined in the Agreement ) (collectively, the “Contracts”)[, as more particularly described in Schedule 1 attached hereto];
B. All permits, licenses, consents, registrations and other similar approvals applicable to the City Properties (collectively, the “Approvals”)[, which Approvals are more particularly described in Schedule 2 attached hereto];
C. All as-built plans and specifications for: (1) the City Properties; (2) any and all improvements used in connection with the operation or occupancy of the City Properties or located upon the City Properties (the “Improvements”); and (3) any and all personal property owned by Assignor located within or used in connection with the operation of the City Properties and Improvements (the “Personal Property”) (collectively, the “Plans”); and
D. All warranties of which Assignor is the beneficiary (the “Warranties”) with respect to the Improvements or Personal Property.
This Assignment shall not supersede the Agreement and, in the event of conflict between this Assignment and the Agreement, the Agreement shall control.
This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns.
This Assignment shall take effect the last to occur of the following: (i) full execution by all parties, as shown by the last date entered below the parties’ signatures and (ii) upon the consummation of the transaction between Assignee and Assignor.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first above written.
ASSIGNOR:
CITY OF SANTA ROSA,
a California municipal corporation
By:
Jason Nutt, Interim City Manager
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74 EXHIBIT I
City Tenant Improvement Work Letter
WORK LETTER AGREEMENT
This Work Letter ( “Work Letter”) is attached to and incorporated into that certain Real Property Exchange Agreement dated , 2026 ( “Agreement”), by and between City of Santa Rosa, a California municipal corporation ( “City”), and Museum on the Square, LLC, a California limited liability company ( “MOTS”). Capitalized terms used but not defined in this Work Letter have the meanings given to them in the Agreement.
1. Purpose. This Work Letter addresses the process for planning, approving, paying for, and performing the City Tenant Improvement Work for City’s occupancy of the MOTS Property located at 520 3rd Street (aka 521 2nd Street), Santa Rosa, California, under Section 11.6 of the Agreement. The City Tenant Improvement Work shall be performed only to the extent approved by City in writing and authorized under this Work Letter.
City shall have no obligation to proceed with, fund, reimburse, or pay for any City Tenant Improvement Work unless the applicable scope, plans, budget, schedule, payment terms, and any required City Council a uthorization or appropriation have been approved by City in writing. If City and MOTS do not agree on the Preliminary Plan or Final Plan, or if City does not authorize commencement of the City Tenant Improvement Work, neither party shall be in default, and MOTS shall not be required to commence the City Tenant Improvement Work unless and until the required approvals and authorizations are obtained.
2. Representatives; Delegation.
(a) MOTS designates Hugh Futrell as MOTS’ representative for this Work Letter. City designates as City’s representative for this Work Letter. Each Party may change its representative by written notice to the other Party. All material notices, approvals, scope comments, schedule comments, cost comments, payment requests, change orders, inspection requests, and completion documentation relating to this Work Letter shall be provided by the designated representatives.
(b) MOTS remains liable to City for its obligations under Section 11.6 of the Agreement and this Work Letter but delegates to Futrell Sonoma Corporation ( FSC), a California licensed general contractor, performance of the work set forth in this Work Letter, and assigns to FSC all fees and payments that may become due to MOTS from City in consideration of such work. Such payments shall be made by the City to MOTS. This delegation is not intended to create a contractual relationship or any privity between City and FSC, make FSC a third-party beneficiary, or release MOTS from any obligation or liability under this Work Letter or the Exchange Agreement , and the Parties acknowledge the delegation is solely a courtesy for the benefit of MOTS.
3. City TI Work. The “City TI Work” means tenant improvement, space planning, interior improvement, cabling, furniture coordination, access/security, demising, finish, office layout, and related work desired by City for City’s occupancy or use of the MOTS Property after Closing. The 82816.00017\45176857.7
75 City TI Work may include improvements to shell space or other vacant space within the MOTS Property, but shall not include MOTS Property Conditional Work unless City expressly agrees in writing.
4. City Space Plan and Desired Improvements. During the Due Diligence Period, City shall engage a space planner at its cost and provide MOTS , prior to the end of the Due Diligence period, with a space plan, programming information, specifications, and/or written description of desired City TI Work (the “Space Plan”).
5. Preliminary Plan. After City provides MOTS with the Space Plan, MOTS shall engage design consultants (including but not limited to architect, mechanical, electrical and plumbing engineers, Title 24 experts) and FSC to:
(a) Do an initial review of the Space Plan, raising clarification questions for the purpose of enabling the City to revise or further detail the Space Plan to provide adequate information for the Preliminary Plan described below; and
(b) Develop and provide City with the Preliminary Plan, a preliminary design (which may be an annotation of the Space Plan) and cost estimate (broken down by line item).
Following receipt of the Preliminary Plan, City shall (1) approve the Preliminary Plan, or (2) set forth requested revisions to the Preliminary Plan, which may include design or specification changes. When City approves the Preliminary Plan, in its origin al or revised form, MOTS shall proceed to prepare the Final Plan described below.
6. Final Plan . If approved by City, the Preliminary Plan shall be followed by a Final Plan developed by MOTS which when submitted to City shall include:
(a) scope of work and line item costs;
(b) plans, drawings, and specifications, to be submitted for building permit; (c) contractor and subcontractor pricing (which shall reflect, to the extent reasonably possible, actual bids received);
(d) permitting assumptions;
(e) schedule assumptions;
(f) long-lead items;
(g) proposed phasing, if any;
(h) proposed payment schedule;
(i) proposed retainage, if any;
(j) Hard Costs and General Conditions (as defined below), and the proposed overhead and profit markup structure; and
(k) assumptions, exclusions, and clarifications, including contingency
7. City Scope Revision and Value Engineering. After receipt of the Final Plan described in Section 6, City shall have twenty (20) business days after receipt to review the proposed scope, pricing, assumptions, phasing, and other components of the City TI Work and (1) approve the Final Plan and author ize submission of building permit applications or (2) request revisions to 82816.00017\45176857.7
76 reduce cost, eliminate or defer components, revise materials or finishes, modify design assumptions, change phasing, or otherwise value engineer the City TI Work. MOTS shall cooperate in good faith with City in evaluating requested revisions and shall, wi thin a further twenty (20) business days, revise the necessary Final Plan to reflect any value engineering or scope modifications requested by City. City’s exercise of this review and value engineering right shall not obligate City to proceed with the City TI Work unless and until City approves the Final (or as applicable) revised Final Plan and authorizes commencement of work.
If City has not approved an applicable submission within ninety (90) days after City’s receipt of the first complete submission for such stage of review, then either Party may request a senior-level meet and confer to determine whether the applicable scope, budget, phasing, or sched ule should be revised, deferred, or abandoned. No failure to approve any submission within such ninety (90) day period shall automatically terminate this Agreement or this Work Letter, constitute a default by either Party, or obligate City to proceed with, fund, reimburse, or pay for any unapproved City TI Work.
8. TI Work; Authorization. After approval of the Final Plan, availability for issuance of all required building permits, and incorporation into the Final Plan of any cost adjustments resulting from plan check or permitting requirements, City shall have 60 calendar days to obtain any required final City Council approval or appropriation and to authorize commencement of the City Tenant Improvement Work. If City does not authorize commencement within such 60-day period, City may elect not to proceed with the City Tenant Improvement Work at that time, in which case neither party shall be in default, City shall have no obligation to pay for unperformed or unapproved work, and MOTS shall have no obligation to commence construction unless and until City provides written authorization.
9. Effect of Non-Approval or Non-Authorization. If City rejects the Preliminary Plan or Final Plan, or does not authorize commencement of the City Tenant Improvement Work under Section 8, then MOTS shall not be required to proceed with the applicable City Tenant Improvement Work, and City shall not be required to pay for any unperformed or unapproved work. City shall pay MOTS for work expressly approved in writing by City and actually incurred before City’s notice of rejection, non -approval, or non -authorization, subject to the documentation and payment requirements of this Work Letter. MOTS shall promptly provide City with copies of all plans, drawings, estimates, specifications, and other work product prepared for the City Tenant Improvement Work for which City has paid.
No rejection, non -approval, non -authorization, suspension, or termination of the City Tenant Improvement Work shall affect MOTS’ obligations under the Agreement or Lease, including MOTS’ delivery obligations, MOTS Property Conditional Work, indemnities, wa rranties, lien obligations, closeout obligations, or any obligations that expressly survive.
10. Effect of Approval. City’s approval of the Preliminary and Final Plan shall constitute City’s acknowledgment that such drawings correctly depict the layout and design of the City TI Work desired by City.
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77 11. City Approval Required. No City TI Work cost, scope, schedule, change order, payment obligation, reimbursement obligation, construction obligation, substitution, or permit -driven cost increase shall bind City except as set forth in the Preliminary or Final Plan, this Work Letter or the Agreement generally.
12. Performance of City TI Work. MOTS shall be liable for its and FSC’s obligations under this Work Letter. City acknowledges the delegation provisions of Section 2(b) of this Work Letter.
MOTS shall cause the City TI Work to be performed by properly licensed contractors in compliance with applicable laws, permits, codes, ADA requirements to the extent applicable, any City-approved project labor agreement or similar labor compliance requirement applicable to the City TI Work, and applicable prevailing wage requirements. MOTS shall be responsible for coordinating all contractors, subcontractors, suppliers, and consultants performing City TI Work, and for their acts, omissions, delays, defective work, and noncompliance. No contractor, subcontractor, supplier, or consultant shall have any contractual relationship with City unless City expressly agrees in writing.
13. Payment and Markup for City TI Work. City shall pay MOTS for approved City TI Work as follows:
(a) Initial Review of Space Plan, Preparation of Preliminary and Final Plans. (1) Actual third party design consultant costs, without markup; (2) reproductions, at actual cost plus 10%; and (3) Actual costs billed from Futrell Sonoma Corporation, in accordance with the billing schedule attached as Exhibit I-1 but with a cap of $50,000 for preparation, submittal and approval of the Preliminary Plan. Invoices from MOTS for this work shall be presented monthly and payable to MOTS within fifteen calendar days thereafter. Expressly, initial review of the Space Plan and Preparation of the Preliminary Plan, along with payment for such work are anticipated to occur pre-closing.
(b) Improvements. For construction of the Final Plan improvements payments shall be as follows:
(1) for Subcontractors and material suppliers ( Hard Costs), actual invoiced third party cost plus 12%; (2) for General Conditions Costs (General Conditions), actual invoiced costs plus 12%; and for (3) Insurance Costs ( Insurance), actual invoiced costs without markup. Building permit application and issuance costs shall be paid by City.
“Hard costs ” means the actual amounts paid to third -party contractors, subcontractors, and suppliers for labor, materials, equipment incorporated into the work, and other direct construction costs of the City TI Work approved by City.
“General Conditions ” means those costs shown on the line items set forth in Exhibit I-2, including but not limited to on-site labor, .5 FTE project manager, .5 site superintendent, incidental materials, temporary power and electricity, garbage removal, security fencing, minor repairs, protective covers, screens and tarps, water and sewer, te mporary toilets, public sidewalk protection, traffic control, fuels, and such other costs conventionally included within general conditions.
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78 “Insurance” means the actual cost for liability and builder’s risk and other coverages provided by MOTS to City under this Work Letter.
Except for the approved fees described above, no separate or additional markup, fee, overhead, profit, general conditions charge, supervision charge, construction management fee, development fee, administration fee, staff time, legal fee, accounting fee, i nsurance charge, procurement charge, or other indirect charge may be charged by MOTS or its contractors unless specifically approved in writing by City or expressly permitted under this Agreement. City shall have no obligation to pay any internal costs of MOTS except to the limited extent expressly included in this section or the approved Final Plan.
14. Progress Payments; Backup; Retainage. Each request for progress payment shall be submitted no more than monthly and shall include reasonable supporting documentation, including invoices, applications for payment, contractor and subcontractor billing detail, proof of payment if requested by Ci ty, schedule status, and conditional lien releases to the extent applicable. City may withhold payment for defective work, incomplete work, disputed charges, unapproved work, failure to provide required backup, failure to maintain the schedule as approved, or failure to provide required lien releases or other documentation. City shall pay invoices for City TI Work actually performed and properly documented within thirty (30) days of receipt. Retainage requirements will be set forth in the Final Plan.
15. Final Reconciliation of Costs. Because City shall pay actual third-party costs, on a cost-plus basis, plus the approved markup as described in Section 1 3, the Parties shall reconcile the final cost of the City TI Work after completion. Within thirty (30) days after Final Completion, MOTS shall submit a final accounting of actual Hard Costs and General Conditions , together with supporting documentation reasonably requested by City. If City has overpaid, MOTS shall promptly refund or credit the overpayment. If City has underpaid for properly approved and documented work, City shall pay the undisputed balance in acc ordance with the Agreement and this Work Letter.
16. Change Orders for City TI Work. No change order shall be effective unless approved by City in writing before the changed work is performed. Each proposed change order shall include a reasonably detailed description of the change, cost impact, schedule impact, and supporting contractor p ricing. City shall not be responsible for oral change orders or field directives not approved in writing by City. Any permit comments, code -required revisions, substitutions, or unforeseen conditions affecting cost or schedule shall be processed through a written change order if they would increase cost, delay completion, or materially alter the approved scope. City shall promptly act on all such documented change order requests.
17. Schedule; Milestones; Delay Notices. MOTS shall include in the Final Plan a proposed schedule for the City TI Work, including reasonable milestone dates for permit submission, permit issuance, procurement of long -lead items, construction start, Substantial Completion (as defined in Section 22) punchlist completion, and Final Completion, as applicable. MOTS shall promptly notify City in writing of any actual or anticipated delay affecting the approved schedule, describing the cause of delay and the expected schedule impact. To the extent delay is caused by City’s failure to respond within the time periods expressly stated in this Work Letter, the approved schedule 82816.00017\45176857.7
79 shall be extended day -for-day for such City -caused delay. MOTS shall bear the risk of delays caused by MOTS, its contractors, suppliers, or subcontractors, except to the extent otherwise expressly approved by City in writing.
18. Inspection Rights During Construction. City and its consultants, representatives, and agents shall have the right, upon reasonable advance notice and subject to reasonable safety requirements, to inspect the City TI Work during construction for purposes of confirming general progress, consistency with the approved plans and specifications, and general compliance with this Work Letter. No such review or inspection by City shall relieve MOTS of responsibility for means, methods, sequencing, coordination, legal compliance, safety, or completion of the City TI Work.
19. Materials and Substitutions. Except to the extent authorized under the Final Plan, MOTS shall not make any material substitution in approved materials, finishes, fixtures, equipment, or systems for the City TI Work without City’s prior written approval. Any proposed substitution shall be submitted in writing with sufficient supporting information for City to evaluate the proposed change, including cost impact, schedule impact, and any effect on function, durability, maintainability, or appearance.
20. Site Safety; Protection of Building and Occupants. MOTS shall cause the City TI Work to be performed in a safe manner and in compliance with applicable safety laws and regulations.
MOTS shall take commercially reasonable measures to protect the MOTS Property, existing improvements, utilities, common areas, and occupied tenant areas from damage caused by the City TI Work, and shall coordinate utility interruptions, noise -producing work, dust -producing work, and access restrictions with City and affected occupants to the extent reasonably practicable. Any damage caused by MOTS or its contractors in connection with the City TI Work shall be repaired by MOTS at its sole cost.
21. Insurance. Before commencement of any City TI Work, MOTS shall cause its contractor or contractors performing the City TI Work to maintain, and to require all subcontractors to maintain as applicable, insurance of the types and in the amounts customarily carried for comparable work, including at a minimum: (a) commercial general liability insurance, written on an occurrence form, with limits of not less than Two Million Dollars ($2,000,000) combined single limit per occurrence and in the aggregate, covering bodily in jury, property damage, personal injury, completed operations, contractual liability, and products/completed operations; (b) workers’ compensation insurance as required by applicable law and employer’s liability insurance with commercially reasonable limits; and (c) builder’s risk insurance, on a completed value or course-of-construction basis, covering the City TI Work, materials, and equipment incorporated into or to be incorporated into the City TI Work against risks of direct physical loss during the cou rse of construction with City as named insured for the builder’s risk policy. The City shall be named as an additional insured on the commercial general liability policy to the extent available for ongoing and completed operations. Upon request, MOTS shall provide City with certificates of insurance or other reasonable evidence of coverage. City’s receipt, review, or failure to object to such evidence of coverage shall not limit MOTS’ obligations under this Work Letter or the Agreement.
22. Substantial Completion; Punchlist; Final Completion. 82816.00017\45176857.7
80 (a) “Substantial Completion” means the stage at which the City TI Work is sufficiently complete in accordance with the approved scope, plans, and specifications so that City can occupy and use the applicable area for its intended purpose, subject only to minor punchlist items and ite ms that do not materially interfere with such occupancy or use.
(b) “Final Completion” means completion of the City TI Work, including all punchlist items, final closeout documentation, final permit signoffs to the extent applicable, and satisfaction of all other requirements for final payment under this Work Letter.
(c) When MOTS believes the City TI Work has achieved Substantial Completion, MOTS shall notify City and request an inspection. City shall have ten (10) business days after receipt of such notice to inspect the City TI Work and deliver a punchlist of incomplete or defective items reasonably identified by City and consistent with th is Work Letter. MOTS shall complete the punchlist items within a reasonable period approved by City. (d) Neither Substantial Completion, occupancy by City, nor any payment by City shall constitute acceptance of defective or incomplete work or waive MOTS’ obligation to complete punchlist items and correct defective work.
23. Closeout Documentation. As a condition to final payment for the City TI Work, MOTS shall deliver to City, to the extent applicable and reasonably available: (a) copies of permits and final inspection signoffs; (b) contractor warranties and manufacturer warranties; (c) operation and maintenance manuals for installed equipment and systems; (d) as-built drawings, redlines, or other record drawings to the extent available; (e) final conditional and unconditional lien releases to the extent applicable; (f) evidence of completion reaso nably satisfactory to City; and (g) such other customary closeout documentation as may be required under the approved scope or reasonably requested by City.
24. Correction of Defective Work; Warranty. MOTS shall cause the City TI Work to be free from defects in workmanship and materials for a period of one (1) year after Final Completion of the applicable phase or stage, as evidenced by final sign -off of the applicable building permit or issuance of the applicable certificate of occupancy , or such longer period as may be provided by any contractor or manufacturer warranty. If City notifies MOTS of defective work during the applicable warranty period, MOTS shall cause such defective work to be corrected within a reasonable time. If MOTS fail s to commence and diligently pursue correction of defective work after reasonable notice, City may, after an additional reasonable notice period if practicable, cause the correction to be made and MOTS shall reimburse City for the reasonable cost thereof t o the extent such correction was MOTS’ responsibility under this Work Letter. This Section supplements, and does not limit, any assignable contractor or manufacturer warranties.
25. Timing of City TI Work. The Parties anticipate that some or all City TI Work may be planned before Closing and will be performed after Closing. Completion of the City TI Work shall not be a condition to Closing and shall not excuse MOTS from completing the MOTS Property Conditional Work.
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81 26. Access and Coordination. MOTS shall reasonably coordinate City TI Work with City, existing tenants, building operations, and any other work at the MOTS Property. MOTS shall not perform City TI Work in a manner that unreasonably interferes with City’s intended occupancy, existing tenant rights, or completion of the MOTS Property Conditional Work.
GENERAL PROVISIONS
27. Liens. Each Party shall timely pay amounts it is obligated to pay under this Work Letter. MOTS shall keep the MOTS Property free and clear of all mechanics’ liens, stop payment notices, bonded stop notices, claims, and other encumbrances arising from work performed by or through MOTS under this Work Letter. MOTS shall promptly discharge, bond a round, or otherwise resolve any such lien or claim in a manner reasonably acceptable to City.
28. Prevailing Wage. To the extent prevailing wage requirements apply to any work performed by or on behalf of MOTS under this Work Letter, MOTS shall require its contractors and subcontractors to comply with Labor Code section 1720 et seq., applicable Department of Industrial Relations requirements, and all related public works requirements. MOTS’ indemnity obligations under Section 11.2( h) of the Agreement apply to this Work Letter and shall survive Closing or the earlier termination of this Agreement.
29. Prevailing Wage Indemnity. MOTS shall indemnify, defend, and hold harmless City and its officers, officials, employees, agents, and representatives from and against any claim, assessment, penalty, back wage claim, withholding, stop notice, enforcement action, or liability arising f rom MOTS’ or its contractors’ failure to comply with applicable prevailing wage or public works requirements. This Section shall survive Closing or the earlier termination of this Agreement.
30. No Assumption by City. City’s review, approval, inspection, acceptance of documentation, occupancy, or Closing shall not make City responsible for MOTS’ means, methods, contractors, costs, permits, legal compliance, prevailing wage compliance, liens, or completion obligations, except to the extent expressly assumed by City in writing in the approved Final Plan.
31. No Waiver of MOTS Delivery Obligations. Nothing in this Work Letter limits MOTS’ obligation to deliver the MOTS Property in the condition required by the Agreement, including the delivery requirements, representations, warranties, lease matters, service contract matters, and closing conditions set forth in the Agreement.
32. Conflict. If this Work Letter conflicts with the Agreement, the Agreement shall control.
33. Survival. This Work Letter and MOTS’ obligations under this Work Letter shall survive Closing to the extent necessary to enforce warranties, indemnities, lien releases, completion obligations, payment obligations, post -Closing work agreements, or any other obligati ons that expressly survive under the Agreement or this Work Letter.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the Effective Date.
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82 CITY:
CITY OF SANTA ROSA,
a California municipal corporation
By: ______________________________
Jason Nutt, Interim City Manager
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
By: ______________________________
Nancy A. Park, Special Counsel for City
MOTS:
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC, its Manager
By: Futrell/Walter/Pacific, LLC, its Manager
By: ______________________________
Hugh Futrell, Manager
Futrell Sonoma Corporation Exhibit I-1
Billing Rate
2026
Staff Hourly Rate
Principal - CEO 351
Principal - Executive Vice President 266
Chief Operating Officer - Construction 186
Chief Operating Officer - Enterprise 165
Superintendent 180
General Manager - Hospitality 150
Project Manager 165
Senior Property Manager 117
Senior Acountant - Construction 122
Construction Coordinator 117
Accounting Coordinator 96
Maintenance Coordinator 102
Administrative Assistant 80
Reimbursements
Reproductions Cost plus 10%
Travel Out of 50 mile radius only; .75/mile
EXHIBIT I-2
501 Site Office Costs
502 Soils Testing
503 Special Inspections
504 Hazmat Testing
505 Architectural
506 Civil Engineer
507 Str. Engineer
508 MEP
509 Landsc Architect
510 Parking/Meter Fees
511 Staking
512 Temp. Water
513 Temp. Power
514 Constr. Cleaning
515 Garbage
516 Portable Toilets
517 Incidental materials
518 Incidental Labor
519 Security
520 Temp Fencing
521 Crane and Lifts
522 Scaffolding
523 Barricades and Signage
524 Neighboring Property Cost
525 Fire Exting./Boxes
526 Erosion Control
527 Temp. Waterproofing
528 Reproductions
550 Personnel Reimbursements
599 Other
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83 EXHIBIT J
Property Reports and Disclosure Schedule
MOTS:
• All Building Plans Possessed by MOTS
• Electronic versions of Plans in Dropbox or at Draftech Site • Materials Related to Basement Parking
• Water Infiltration – correspondence, Expenditures, Reports • All third party inspections possessed by MOTS
• Parking Agreement with City of Santa Rosa
• Fact of City-Installed and Owned Camera System (roof) • Development and Disposition Agreement
• Fact of Damaged Window, North Façade (cause unknown)
• Fact of Need for ADA compliant moveable thresholds at Exterior Balconies • Fact of Periodic smell, Third Floor Men’s Bathroom (cause unknown) • Fact of Occasional indigent persons occupying Exterior first Floor Courtyard or (although never observed) Basement Lift Access way
• Fact of Stairway to Basement Lift Access way not Code-compliant • Fact Gate to Basement Access way Stairway Not designed to Be Shut and Locked • Fact Members of Public Sometimes Wait for Buses standing in building parking lot • Fact Parking Lot is not ADA-stripped and signed
• Fact Roof condition TBD
• Mounting Holes Visible in Blade Sign, Exterior
• Fact Tunnel connecting Building to ATT building (east), current condition not examined • Fact Basement Understood to extend below Sidewalk, Third Street • Fact Crosswalk across Third Street at Building Entrance proposed with Plan but not approved by City Traffic Engineer
• Fact In Basement, former Pac Bell abandoned infrastructure (including elevator core shafts and pit resting on sludge and gravel base
CITY:
• Building Plans
• Environmental Reports
• Property Condition Assessments
• Reports
• Seismic Report
• Service Contracts
• Survey Documents
• Title Documents
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84 EXHIBIT K
Estoppel Certificate
To: City of Santa Rosa, a California municipal corporation ("City") Re: With respect to the property located at ___________________ (the "Property") under the " Lease" dated ____________________, between _____________ ____________________ (" Landlord") and _________________________ as "Tenant" with respect to " Premises" described in the Lease as approximately ____________ rentable square feet; as set forth in Paragraph 1 below.
Ladies and Gentlemen:
This Estoppel Certificate (" Estoppel") is furnished by Tenant to City in furtherance of the acquisition of the Property. Tenant understands that City is relying upon Tenant's statements and agreements in connection with buying the Property. Tenant hereby represents and certifies to, and agrees with, City as set forth below.
1. A true, correct and complete copy of the Lease, including any and all amendments, is attached to this letter as Exhibit A. The Lease has not been amended or modified in any way, nor are there any side letters or other arrangements relating to the Premises or the Property, except for the following [if no exceptions are stated, deemed NONE ]:
.
2. The Lease has not been assigned, nor have the Premises been sublet, in whole or in part, except as hereinafter stated [if no exceptions are stated, deemed NONE ]:
.
3. The Lease is presently in full force and effect according to its terms and is the valid and binding obligation of Tenant. The Lease expires on ______________.
4. Neither Tenant nor Landlord is in default under the Lease nor does any state of facts exist that with the passage of time or the giving of notice, or both, could constitute a default under the Lease. All conditions under the Lease to be satisfied by Landlord as of the date hereof (including all work, if any, to be performed by Landlord in the Premises or the Property) have been satisfied, and all contributions, if any, required to be paid by Landlord under the Lease to date for improvements to the Premises have been paid, except as hereafter stated [if no exceptions are stated, deemed NONE]:
.
5. Tenant is in possession of the Premises and is fully obligated to pay and is paying the rent and other charges due under the Lease and is fully obligated to perform and is performing all of the other obligations of Tenant under the Lease, except as hereafter stated [if no exceptions are stated, deemed NONE]: .
6. The Lease does not provide for any payments (including, without limitation, rent credits) by Landlord to Tenant that are presently due and payable, or that are due and payable in the future, except as hereafter stated [if no such payments or credits are stated, deemed NONE]:
.
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85 7. Rent currently due under the Lease is as follows: ___________________ and is paid current as of _______________. Except as hereafter stated, no rent has been paid more than one (1) month in advance of the due date and a security deposit of ___________ has been deposited with Landlord [if no advance rents or security deposits are stated, deemed NONE]:
8 Except as hereafter stated , Tenant has no options to extend the Lease, to lease additional space at the Property, or to purchase the Property, and Tenant has no right of refusal with respect to leasing additional space at the Property or with respect to purchasing the Property [ if no such options or rights of refusal are stated, deemed NONE]:
.
9. The undersigned is duly authorized to execute this Estoppel on behalf of Tenant. This Estoppel shall inure to the benefit of City and its successors and assigns and shall be binding upon Tenant and Tenant's successors and permitted assigns.
TENANT:
By:
Name:
Title:
DATE:
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86 EXHIBIT L
Transferor’s Certification Of Non-Foreign Status
Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the CITY OF SANTA ROSA, a California municipal corpo ration (the “Transferee”), that withholding of tax under Section 1445 of the Code will not be required upon the transfer of a U.S. real property interest to the Transferee by MUSEUM ON THE SQUARE , LLC, a California limited liability company (the “Transferor”), the undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor’s U.S. employer identification number is _______________; and
3. The Transferor’s office address is ______________________________________.
The Transferor understands that this Certificate may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this Certification and, to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.
DATED: ________________, 20___.
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC,
its Manager
By: Futrell/Walter/Pacific, LLC,
its Manager
By:
Name: Hugh Futrell
Title: Manager
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87 EXHIBIT M
Encroachment Agreement
ENCROACHMENT AGREEMENT
This Encroachment Agreement (“ Agreement”) is made as of ____________, 2026, by and between MUSEUM ON THE SQUARE, LLC, a California limited liability company (“MOTS” or “Owner”), and the CITY OF SANTA ROSA , a California municipal corporation (“ City”).
MOTS and City are sometimes referred to individually as a “Party” and collectively as the “Parties.”
1. Background
A. City and M OTS are parties to that certain Real Property Exchange Agreement dated ____________, 2026 (“Exchange Agreement”).
B. Under the Exchange Agreement, City is conveying certain real property to MOTS, including a portion of 100 Santa Rosa Avenue, Santa Rosa, California, together with certain other City Properties as more particularly described in the Exchange Agreement (the “MOTS Parcel”).
C. City is retaining approximately 1.61 acres of 100 Santa Rosa Avenue (“Retained Land”) for potential open space, park, recreational use, public access, flood contr ol and/or other public purposes, as further described in the Exchange Agreement.
D. A portion of the existing building and/or related improvements located on the MOTS Parcel encroaches onto the Retained Land, as more particularly depicted or described on Exhibit A attached hereto (the “ Encroachment Area ”). The Parties desire to confirm the limited right of such existing encroachment to remain, subject to the terms of this Agreement.
E. Capitalized terms used but not defined in this Agreement have the meanings given to them in the Exchange Agreement.
2. Grant of Encroachment and Access Rights. City grants to MOTS a non- exclusive, continuing right to maintain the existing building encroachment within the Encroachment Area, subject to the terms of this Agreement. This Agreement applies only to the existing encroachment shown or described on Exhibit A and does not authorize MOTS to expand, enlarge, relocate, reconstruct, or materially alter the encroachment, except for ordinary repair and maintenance or as otherwise approved by City in writing.
3. Term. This Agreement shall remain in effect in perpetuity unless terminated by a written agreement executed by City and MOTS, or their successors, and recorded in the Official Records of Sonoma County. If a future lot line a djustment, grant deed, easement, or other recorded instrument eliminates the need for the encroachment rights granted herein, the Parties shall execute and record an appropriate termination of this Agreement.
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88 4. Permitted MOTS Use. MOTS may use, maintain, repair, and access the Encroachment Area solely as reasonably necessary for the continued existence, use, maintenance, and repair of the existing building encroachment. MOTS shall not use the Encroachment Area for any unrelated purpose without City’s prior written approval.
5. Maintenance and Repair. MOTS shall maintain, repair, and keep in safe condition, at its sole cost, the portion of the existing building and related improvements located within the Encroachment Area. MOTS shall perform such work in a manner that does not unreasonably interfere wit h City’s ownership, operation, maintenance, or use of the Retained Land.
6. No Interference by MOTS . MOTS shall not expand, enlarge, relocate, reconstruct, or materially alter the encroachment, and shall not construct new improvements within the Encroachment Area, except as approved by City in writing. MOTS shall not use the Encroachment Area in a manner that materially impairs City’s access to, use of, maintenance of, or public purposes for the Retained Land . City shall not unreasonably interfere with MOTS’ continued use and maintenance of the existing building encroachment, provided MOTS complies with this Agreement.
7. City Rights Preserved . Except for the limited encroachment rights expressly granted to MOTS under this Agreement, City retains all rights of ownership, use, access, operation, maintenance, repair, improvement, and control over the Retained Land. Nothing in this Agreement transfers any fee interest in the Retained Land to MOTS or creates any right of adverse possession, prescriptive easement, implied easement, or other property right except as expressly stated in this Agreement. Nothing in this Agreement limits City’s governmental, regulatory, police power, permitting, inspection, code enforcement, CEQA, public works, park, stormwater, or other public agency authority.
8. County Flood Contro l; Third-Party Easements . The Parties acknowledge that portions of the Retained Land or Encroachment Area may be subject to existing easements, including easement rights held by the Sonoma County Flood Control and Water Conservation Distric t under that certain Flood Control and Water Conservation Easement, as described in Book 1961 Page 725 Official Records of Sonoma County.
9. Insurance. MOTS shall maintain commercially reasonable insurance for its ownership and activities on the MOTS Parcel.
10. No Fee . No separate fee shall be payable for this Agreement. The consideration for this Agreement is included in the consideration under the Exchange Agreement.
11. Covenant Running With the Land . This Agreement and the rights and obligations contained herein shall run with the land and shall bind and ben efit City, MOTS, and their respective successors, assigns, transferees, and future owners of the Retained Land and MOTS Parcel.
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89 12. Miscellaneous. This Agreement shall be governed by California law with exclusive v enue for all disputes held in Sonoma County, California. This Agreement may be amended only by a written instrument signed by City and MOTS, or their successors. This Agreement is for the benefit of the Parties and their successors and assigns only and creates no third-party benefic iary rights. Notices shall be given in the manner provided in the Exchange Agreement. If any provision is held invalid or unenforceable, the remaining provisions shall remain in effect to the fullest extent permitted by law. In the event that either party hereto brings any action or files any proceeding in connection with the enforcement of its respective rights under this Agreement or as a consequence of any breach by the other party of its obligations hereunder, the prevailing party in such action or proceeding shall be entitled to recover its reasonable attorneys' fees and costs from the losing party. This Agreement shall be effective upon the Closing under the Exchange Agreement.
[SIGNATURES ON FOLLOWING PAGE]
82816.00017\45176857.7
90 CITY:
CITY OF SANTA ROSA,
a California municipal corporation
By: ___________________________
Jason Nutt
Interim City Manager
Approved as to form:
BEST BEST & KRIEGER LLP
By: ___________________________
Nancy A. Park, Special Counsel for City
MOTS:
MUSEUM ON THE SQUARE, LLC,
a California limited liability company
By: North Bay Equity Fund I, LLC, its Manager
By: Futrell/Walter/Pacific, LLC, its Manager
By: ___________________________
Hugh Futrell, Manager
Approved as to form:
By: ___________________________
Attorney for MOTS
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91 Exhibit A to Encroachment Agreement
Encroachment Area
[See attached]