Safesy Diector Philip Dore 40204-2011 Sewvice Dizector Rober Gilchsxt 440-204-2011 Bulding-Elecsical [Richard Kise 440-204-2045 Bulding Maintenance Robert Evane 440-204-2089 Community Dev. 40204-2020 Bagincesing Dept Jie Reagaa '$40.204-2003 Fire Dept Chief Tom Beowe 440-204-2220 Police Dept. Chief Cel River #40-204-2103 Suxeet Dept Chuck Camera 90-2494 Utes Dept Corey Timko 140-204-2270 The City of Lorain, Ohio Tony Krasienko Mayor August 31, 2010 Industrial Realty Group Attn: Stuart Lichter 12214 Lakewood Blvd. Downey, CA 90242 Re: Letter of Intent to Redevelopment St. Joseph Community Center Dear Mr. Lichter: ‘The purpose of this Letter of Intent (“LOI”) is to set forth the basic terms that would be acceptable to South Shore Community Development Corporation (“SSCDC”) and other stakeholders including but not limited to the City of Lorain, County of Lorain, State of Ohio and Industrial Realty Group, LLC (IRG”) to engage the process of redevelopment and management of the facility known as the St. Joseph Community Center. The following is intended to set forth the basic terms under which the parties may commence negotiating a definitive written agreement providing for the possible change of control of SSCDC for puposes of restoring and preserving the St. Joseph Community Center (a “Development Agreement”). The parties recognize that the St. Joseph Community Center is a valuable public asset but is in a current state of ‘turmoil because of high vacancy rates, substantial deferred maintenance and general economic conditions. ‘The basic terms and understandings of the parties for the redevelopment and mianagement of the SJCC are as follows: 1. SSCDC shall maintain a Board of Directors composed of nine (9) members. At all times during which IRG is contractually bound to manage the St. Joseph Community Center, not fewer than five (5) members of the Board of Directors of SSCDC shall be individuals recommended by IRG based on their knowledge, skills or experience with property redevelopment and/or management. The remaining four (4) members of the Board of Directors shall bbe composed of three (3) persons recommended by the City of Lorain and one (1) person recommended by the County of Lorain. 200 West Erie ve., Lorain, Ohiol 44952 / Phone: 440-204-2002 / Fax: 440-204-2542 ‘www ctyoflorain.org2. Pending board approval of all items set forth in this section, Community Health P and/or its affiliates shall agree to contribute certain of its real estate holdings within the v of the St. Joseph Community Center to SSCDC and/or the City of Lorain as more specifically identified in Exhibit A attached hereto and incorporated by reference. Community Health Partners shall transfer ownership of such buildings and lands to the City of Lorain or its designee at such time as is determined by the City of Lorain. The parties acknowledge that transfer of ownership of such parcels is subject to the release of collateral security rights of current lien holders and further subject to the rights of tenant Lorain County Health and Dentistry under its current lease agreement. In addition, Community Health Partners will contribute funding, beginning in 2011 not to exceed twenty five percent (25%) of the overall cost, but in no case exceeding Three Hundred Sixty Thousand Dollars ($360,000.00) paid over a period of three (3) years for the demolition and environmental abatement of the Reidy-Scanlan building, the parking garage, the old gas station, and Building D of the St. Joseph Community Center. The City of Lorain will apply for Clean Ohio funds for purposes of demolishing and remediating any environmental conditions with respect to the Reidy-Scanlan building, the parking garage, the old gas station, and Building D of the St. Joseph Community Center. IRG shall have the right to select a consultant and IRG will assist in managing the process and submittals to the Clean Ohio Program. The Reidy-Scanlan building and the parking garage will be demolished and remediated prior to the transfer of such properties to SSCDC. SSCDC shall partition and transfer Building D of the St. Joseph Community Center if necessary, for purposes of the application for Clean Ohio funds and the demolition of said building. Once the structures have been demolished, these parcels shall be conveyed to SSCDC. CHP and the City of Lorain will each pay one-half (1/2) of a title examination cost expected to be approximately One Thousand Five Hundred Dollars ($1,500.00). CHP will not be required to pay any survey fees deemed necessary for purposes of this transaction. 3. Community Health Partners will also agree to contribute the parking deck it currently ‘owns that serves the St. Joseph Community Center to the City of Lorain or its designee without further obligation for maintenance, Until such time as the parking deck is demolished by the City of Lorain, SSCDC will provide general and routine maintenance of the parking deck but shall not be required to provide major repairs and upkeep. SSCDC will ensure that parking is available to occupants of the Occupational Health building. 4. The City of Lorain shall agree to contribute, or otherwise contribute as permitted by law, all grant money received with respect to SSCDC for the preservation of the St. Joseph ‘Community Center and its related improvements. ‘These include: lyQ Ne cily}Cane A) $166,500-HUDEDI Ee ew Develo Ke B) _$480,000.00-EECBG Fae*s ACE Comne ais Eek ban C) $200,000.00 (approx) — HHS Grant must be spent by 9/30/2010. erste Coma5. The State of Ohio shall agree to subordinate its mortgage lien encumbering title to the property to accommodate other potential financing, and shall agree to forgive one-half (1/2) of the $2.7 million dollar loan; the remaining one-half (1/2) of the loan shall be subject to a forbearance agreement under which the amount owed shall not continue to accrue interest and SSCDC will not be responsible for making principal payments pursuant to the loan until such time as there is surplus cash flow. “Surplus cash flow” shall be precisely defined in the final agreement, but is intended to be an amount net of regularly scheduled loan payments to other SSCDC lenders (if any), a commercially reasonable management fee, all operating expenses of the St. Joseph Community Center, and funding tenant improvements. The payments on the state Joan shall be ten percent (10%) of surplus cash flow. The balance of surplus cash flow shall be ‘used by SSCDC for the creation and funding of adequate reserves and for such other expenditures as may be consistent with the operation of the St. Joseph Community Center and SSCDC’s charitable purposes. Prior to closing, IRG will provide an initial annual budget for the St. Joseph Community Center. Regular financial reports in the form of quarterly statements shall be provided by SSCDC to the State of Ohio, the County of Lorain, and the City of Lorain. When requested by SSCDC ot lenders of SSCDC, the State of Ohio, Department of Development, will provide written subordination of its loan and/or such further consent and approval, including a whole or partial release of its mortgage, necessary or required for the creation of additional indebtedness. The State shall not unreasonably withhold or condition the provisions of such subordination of its loan and/or such further consent, approval, or release and the same shall be provided by the State within thirty (30) days of written request therefor. 6. The City of Lorain shall fund a Two Hundred Fifty Thousand Dollar ($250,000.00) operating loan to SSCDC for purposes of funding the operating losses arising on or after ‘August I, 2010 with respect to the St. Joseph Community Center facility upon such terms and conditions as are hereinafter agrced upon. 7. The City of Lorain will use its best efforts to identify, apply for and procure future federal, state and local grants as may assist in the rehabilitation and restoration of the St. Joseph Community Center facility 8. SSCDC shall agree to operate the St. Joseph Community Center in such manner as to permit the Veterans (fairs Clinic to complete its occupancy of the St. Joseph Community Center in accordance with the terms of that certain lease made between SSCDC and the VA on ‘or about September 8, 1997 as amended. The lease cannot be amended unless such amendment is approved by the City of Lorain, County of Lorain and State of Ohio whose approval shall not be unreasonably withheld, delayed or conditioned. 9. SSCDC shall pay all operating expenses incurred in the operation of the St. Joseph Community Center for a term not less the remaining term of the lease made by and between SSCDC and the VA on or about September 8, 1997, as amended. 10. IRG or an IRG affiliate satisfactory to the City of Lorain and County of Lorain] will execute an agreement to manage the St. Joseph Community Center on behalf of the SSCDC fora term not less than sixty (60) months. Such management agreement shall be in form andsubstance consistent with such management agreements as are commercially reasonable and made for management of facilities such as the St. Joseph Community Center. Such management agreement shall be subject to approval by the Board of SSCDC and the City of Lorain and [County of Lorain], which approval shall not be unreasonably withheld, and the State of Ohio shall have the opportunity to review the management agreement. In the event the grants listed in paragraph 4 of this letter and Clean Ohio funds are not secured for redevelopment of the St. Joseph Community Center, IRG (or its affiliate) shall have the right to terminate the management agreement upon not less than ninety (90) days prior written notice to SSCDC given after the announcement of Clean Ohio Grants through the competitive funding process conducted in 2011 ‘Transaction Date: This transaction shall close not later than September 15, 2010. This letter is not legally binding and is intended to identify the general terms and conditions upon which the parties propose to redevelop the SIC. The parties’ assent to the general terms is evidenced by their execution of this Letter of Intent. Agreed To: CITY OF LORAIN Industrial Realty Group, LLC (or its assigns) py: _ 4M. By ride: Ayue- City of Leaps Title: South Shore Community Development Center Community Health Partners By: By: saa SES Title: Title County of Lorain State of Ohio Department of Development Ty pesaes ees Sa eA By: Title: Title:EXHIBIT A ____ Description Parcel No. I Health & Dentistry 2 Health & Dentistry 3 Health & Dentistry 4 Health & Dentistry 3. Health & Dentistry 6 Health & Dentistry 7 Building G 8 Building G : Surface lot 10 Surface lot i Surface lot 12 ‘Surface lot 3 Surface lot 14 Building G 15 Building G 16. Building G 17 Building G 18 Building G 19 Parking Deck 20 Reidy-Scanlan_ 21 Surface lot west of Reidy- Scanlan 22 Parcel on comer of 21st and Reid Avenue (old gas station)