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<br />/0 -/.3/0 <br /> <br />REDWOOD SHORES CHILD CARE CENTER <br />LAND LEASE TERM SHEET <br />7/26/00 <br />LAST REVISED 10/27/00 <br /> <br />This term sheet outlines the basic terms and conditions under which Max A. Keech or his <br />assignee ("Lessee") will enter into a long term ground lease of an approximately 1.2 net acre <br />parcel of land from the City or Redwood City ("Lessor") and commence negotiations on a final <br /> <br />lease agreement. <br /> <br />1. Leased Premises: The eastern portion of the City Water Tank property (commonly <br />known as APN# 046-081-730) as shown on attachments 1 and 2. The leased premises <br />contain approximately 1.6 acres of which approximately 1.2 acres is net of the anticipated <br /> <br />shoreline access area. <br /> <br />2. Lease Term: The lease term shall commence upon the start of construction and shall be <br />for an initial period of 31 years and shall allow for two extensions at the option of the <br /> <br />lessee for periods of 10 and 9 years, respectively. <br /> <br />3. Lease Rate: The lease rate for the initial term shall be $l,OOO.OO/year NNN with the <br />lessee responsible for all on-going costs of the property. The lease rate for the first <br />extended term shall be 9% per year of the fair market value of the land based on a <br />property appraisal which reflects the property's use restriction. The value of the site shall <br />be reappraised at the inception of the second extended term. The lease rate for each <br /> <br />extended term shall be escalated yearly by the Bay Area CPI subject to a minimum and <br />maximum escalation of 2% and 5% per year, respectively. The lease shall also contain a <br /> <br />standard appraisal dispute resolution should the parties disagree on fair market value <br /> <br />4. Commencement Date: The lease shall commence and Lessor shall delivery possession of <br />the property to Lessee upon issuance of a grading or building permit for the project. <br />